Exhibit 10.1 Letter of Intent dated June 11, 2002 among XDOGS, Inc., bigTime
sports apparel, inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇.
XDOGS, Inc.
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June 11, 2002
Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇
bigTime sports apparel, inc.
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▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Acquisition with bigTime sports apparel, inc.
Dear ▇▇▇:
We are writing to you as the President of bigTime sports apparel, inc., an
Oklahoma corporation ("bigTime") to express XDOGS, Inc.'s ("XDOGS") intention to
acquire the assets and operations of bigTime through either a stock-for-stock or
stock-for-assets exchange (the "Transaction") to be determined by XDOGS. Except
as provided in Sections 6, 7, 8 and 9 below (the provisions of which are
binding), this letter is not intended to bind either bigTime or XDOGS to the
Transaction, but is intended solely to indicate XDOGS's intention to proceed
with a due diligence investigation of bigTime's business operations, financial
affairs and prospects and to negotiate with bigTime in good faith a definitive
agreement containing the terms and conditions set forth below (the "Definitive
Agreement").
We propose the following basic terms and conditions for the Transaction:
1. Form of Transaction. XDOGS (or a newly formed subsidiary of XDOGS formed for
the purpose of the Transaction also referred to herein as XDOGS) will issue and
deliver to bigTime Fourteen Million (14,000,000) shares of its duly authorized
common stock free and clear of all liens, claims and encumbrances in exchange
for either (a) all of the issued and outstanding capital stock of bigTime (the
"bigTime Stock"), or (b) all of the assets (whether tangible or intangible)
necessary for, used in or useful to bigTime's operations (the "bigTime Assets").
Upon closing of the Transaction, XDOGS would acquire the bigTime Stock or the
bigTime Assets free and clear of all claims, liens or encumbrances of any kind
except for those liabilities of bigTime which, after completion of due
diligence, XDOGS expressly agrees to assume (the "Assumed Liabilities").
bigTime, or its stockholder as the case may be, would remain responsible for all
other liabilities
The Transaction will be structured as a tax-free reorganization under Section
368(a)(1) of the Internal Revenue Code of 1986, as amended. The common stock
issued by XDOGS hereunder will be "restricted securities" within the meaning of
the Securities Act of 1933, as amended, and will be acquired by bigTime for
investment purposes only and not with a view to the distribution thereof.
2. Employment Arrangements. As a condition to closing the Transaction, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ agrees to become an employee of XDOGS on terms acceptable to XDOGS. The
employment arrangement shall be documented in a definitive Employment Agreement
and said agreement shall also include the terms and conditions set forth in
Section 3 below. Nothing in this Section 2 obligates XDOGS to employ any other
or all of the employees of bigTime.
3. Noncompete Agreements. As a condition to closing on the Transaction, each of
the Employees (and such other persons as the parties may agree to) would enter
into a noncompete agreement with XDOGS agreeing not to compete against XDOGS
(which shall include an agreement not to solicit XDOGS's employees) during
employment with XDOGS and for the longer of the period extending 12 months after
termination of employment with XDOGS for any reason, or through the date which
is three years after the Closing Date on the Stock Exchange.
4. Representations and Warranties by bigTime and its Major Stockholder. The
Definitive Agreement would contain customary representations and warranties by
bigTime and the Major Stockholders, relating to the business and financial
condition, assets, operations, affairs and prospects of bigTime. All of bigTime
and the Major Stockholder's representations and warranties would last for a
period of 24 months. The Definitive Agreement would require bigTime to indemnify
and hold XDOGS harmless against claims, liabilities and other expenses and
damages, including attorneys' fees and expenses, related to a breach of any
representation or warranty made by bigTime or the Major Stockholders in the
Definitive Agreement. To secure payment of any claims, one million (1,000,000)
of the XDOGS common stock shares deliverable upon the Closing Date would be
escrowed during the 24 months after Closing, pursuant to an escrow agreement
satisfactory to both parties.
5. Conditions to Closing on Stock Exchange. The Definitive Agreement would
contain a variety of terms and conditions to be satisfied by the parties prior
to Closing on the Transaction. Such conditions would include XDOGS's completion
to XDOGS's satisfaction of the investigation of the business and financial
affairs and prospects of bigTime, its operations and assets, the discovery by
XDOGS in the course of such investigation of no adverse matters affecting the
business and financial affairs and prospects of bigTime, its operations and
assets and the determination by XDOGS's independent accountants that the
financial statements of bigTime can be audited for the requisite period to
comply with SEC requirements (to the extent that XDOGS's accountants determine
that the audit is required).
6. Due Diligence Investigation. Upon execution of this letter, bigTime and the
Major Stockholders agree to permit XDOGS and its employees, attorneys,
accountants, investment bankers and other agents to have full and free access,
during normal business hours, to the books and records of bigTime and to
bigTime's premises, employees, customers and suppliers as the foregoing relates
to bigTime's operations, assets or the Transaction in general (XDOGS will work
closely with bigTime's senior management to avoid disruption of bigTime's
relationships with such parties) for the purpose of investigating the business
and financial affairs and prospects of bigTime, its operations and assets.
7. Confidentiality. Each party, for itself and its respective employees,
stockholders and agents, agrees to keep confidential (i) the existence and terms
of this letter and (ii) all confidential information provided by or through a
party to the other. Confidential information includes all business and financial
information of a party, whether disclosed prior to or after execution of this
letter, including financial statements, tax returns, business and marketing
plans and customer and supplier data. Despite the foregoing, "confidential
information" does not include publicly available information, information
obtained from a third party source not under an agreement or obligation to
maintain the confidentiality of such information and information independently
developed by a party without the use of any otherwise confidential information.
In addition, bigTime acknowledges that XDOGS, as a public company, may be
required publicly to disclose the existence of this letter and potentially its
contents. XDOGS will provide bigTime with reasonable notice prior to any such
press release and will reasonably attempt to agree with bigTime upon the written
text of any such press release prior to its public distribution.
8. No-Shop Agreement. In consideration of this letter and the time and expense
to be incurred by XDOGS in conducting its due diligence investigation of
bigTime, its operations and assets, bigTime, the Major Stockholders, employees
and agents agree not to solicit, negotiate with or provide any information to
any other person, firm or entity regarding any acquisition of the assets or
capital stock of bigTime or any merger or other business combination involving
bigTime or its assets or capital stock. This agreement shall extend through the
earlier of (i) the date of execution of the Definitive Agreement, (ii) the date
that XDOGS notifies bigTime in writing of XDOGS's intention to abandon the
proposed Transaction, or (iii) 90 days from the date of execution of this
letter. The parties agree that any breach or threatened breach of the provisions
of this Section 8 may be enjoined by a court of competent jurisdiction. bigTime
agrees to pay XDOGS a break-up fee of $50,000 if this No-Shop provision if
violated. The parties agree that the state and federal courts located in
Minneapolis, Minnesota shall have personal and subject matter jurisdiction as to
any such injunctive action.
9. Definitive Agreement, Closing Date and Operations. The parties agree promptly
to commence negotiations of the terms and conditions of the Definitive Agreement
in good faith in accordance with the provisions of this letter with the
non-binding intention of executing the Definitive Agreement on or prior to a
Closing Date of December 5, 2002. bigTime agrees promptly to provide XDOGS with
copies of any written, and a written summary of any oral, offer or solicitation
of an offer made to bigTime or any of bigTime's employees or agents after
execution of this letter relating to any acquisition of its assets or capital
stock whether by merger or otherwise or any request for information related to
the foregoing. After the execution of this letter and through the later of the
date of execution of the Definitive Agreement or expiration of the no-shop
agreement in Section 8, and except as otherwise contemplated by this letter,
bigTime agrees to operate bigTime's business in the ordinary course and in a
manner consistent with the operations thereof prior to execution of this letter.
If the provisions of this letter correctly summarize our agreement, please
indicate so by your signatures below.
Very truly yours,
XDOGS, Inc.
By: /s/ _______________________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
Agreed to and accepted:
bigTime sports apparel, inc.
By: /s/ _______________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
/s/ ___________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇ - Major Stockholder
/s/ ___________________________________________
▇▇▇▇▇ ▇▇▇▇▇▇ - Major Stockholder
