Exhibit 2.5
CONFIDENTIAL August 17, 1999
LETTER OF INTENT
Stock Purchase Agreement
Eastern Shore Net Incorporated
I. ACQUIRING ENTITY
Sitestar Corporation (the "Buyer" "Sitestar"),
incorporated in the State of Nevada, will purchase
(the "Purchase") Eastern Shore Net Incorporated, a
Nevada corporation (the "Company" "ESN"); its
principal owner being Mr. Xxxx Xxxxxxxx (the
"Principal Shareholder"). The Company is represented
by Optimum Strategic Finance (OSF) through Mr. Xxxxx
Xxxxxxxx. (the "Intermediary").
II. STRUCTURE AND CONSIDERATION
Buyer will purchase 100% the Company's stock. The
aggregate consideration for the transaction will be
approximately $192,000 paid in common stock in
Sitestar at a $3.00 per share strike price.
III. PURCHASE CONSIDERATION
Purchase consideration is based on the Company's
aggregate net worth and general financial performance
at closing being not less than as reflected on data
provided to the Buyer during negotiations. Should the
aggregate net worth and/or the general financial
performance at the closing differ, the purchase price
shall be subject to adjustment accordingly. Assets of
the Company are to include all balance sheet items
and other assets presently utilized in the ISP
business. A definitive list of assets and
accompanying obligations shall be compiled and agreed
upon by Buyer and the Company. The additional terms
and conditions of the purchase consideration will be
addressed in the definitive agreement.
IV. PAYMENT STRUCTURE
Buyer will deliver to the Shareholders stock
certificates equal to the purchase price at the
closing and the execution of a definitive agreement.
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CONFIDENTIAL August 17, 1999
V. COVENANTS
A. Purchase price will be adjusted to reflect a multiple
of one (1) year's gross revenues, based on number of
accounts at the close of the transaction. Should the
number of accounts differ from the current 800, the
purchase price will be adjusted accordingly. The
current offer of $192,000 is based on ESN delivering
Sitestar 800 customers at closing.
B. One half (50%) of the shares issued to ESN in
consideration of this transaction will be registered in
Sitestar's SB-2 Registration Statement. ESN will have
the option to sell these shares as soon as the
Registration statement is deemed effective. The SB-2
will begin no later than 150 days from the close of
this transaction. The remaining shares will be
restricted from sale on the public market for a period
of one (1) year from the date of the transaction.
C. At the end of the period of restriction, in the event
that the per share value should fall below $3.50 for a
consecutive ten (10) day period, Sitestar will issue
ESN additional shares, on a dollar-for-dollar basis, to
eliminate any ESN loss in value due to market decline.
D. ESN will structure a fair-market lease for a Sitestar
office in its existing facility for a period of one (1)
year. Included in this agreement will be the right for
Sitestar to display signage on ESN's marquis.
E. Each party shall be responsible for their own legal and
transactional expenses.
F. Sitestar will provide seven (7) employees, to be named
by Xx. Xxxxxxxx at closing, unlimited dial-up internet
access, free of charge. This access will only be
subject to termination in the event that Sitestar
divests its ISP operations.
VI. NON-COMPETE CONTRACTS
Principal Shareholder will enter into a non-compete
contract pertaining to internet access, web
development and web hosting with Buyer for a period
of thirty six (36) months. This agreement will be in
effect for all customers acquired during the
transaction. ESN will have the right to solicit new
web development customers,
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CONFIDENTIAL August 17, 1999
not included in the transaction. The non-compete
agreement will not include designated unpaid accounts
(which will not be included in determining the size
of the transaction) or other e-commerce sites
currently under development by ESN. The terms and
conditions of this agreement will be addressed in the
definitive agreement.
VII. TIMETABLE FOR CLOSING
It is the objective of the Buyer to close the
acquisition within thirty (30) days from the
execution of this letter. Buyer's obligation to close
the acquisition will be subject to (i) the execution
of the definitive purchase agreement and related
documentation (collectively the "Definitive
Agreement") reflecting the terms of the acquisition
as set forth herein and containing representations,
warranties covenants and agreements of the Seller,
satisfactory in form and substance to Buyer; (ii) the
receipt of all material consents and approvals
necessary for the consummation of the acquisition and
the ongoing operation of the business of the Seller;
(iii) the absence of any material adverse change in
the business, assets, condition (financial or
otherwise), or prospects of the Seller.
VIII. CONDUCT OF BUSINESS
From the date of your acceptance hereof, through the
closing date, the Seller shall conduct its business
only in the ordinary course and consistent with
relationships and goodwill existing on the date
hereof and promptly notify Buyer of any emergency or
other change in the ordinary course of the Seller's
business
IX. EXCLUSIVITY
For a period of thirty (30) days following the
execution of this agreement, the Seller will not
directly or indirectly through any officer, employee,
stockholder, director, agent, affiliate or otherwise
(i) enter into any agreement, agreement in principal
or commitment (whether or not legally binding)
relating to any business combination with,
recapitalization of, or acquisition or purchase of
all or a significant portion of the assets of , or a
material portion of the equity interest in the Seller
or relating to any similar transaction (a "Competing
Transaction"), (ii) solicit, initiate or encourage
the submission of any proposal or offer from any
person or entity relating to any Competing
Transaction, or (iii) participate in any discussions
or negotiations regarding a
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CONFIDENTIAL August 17, 1999
Competing Transaction. The Seller shall notify the
Buyer promptly if any proposal regarding a Competing
Transaction (or any inquiry or any contact with any
person or entity with respect thereto) is made and
shall advise Buyer of the contents thereof. In
addition, the Seller will immediately terminate all
discussions, negotiations or agreements now pending
with other potential participants in a Competing
Transaction.
X. ACCESS
Seller agrees to provide Buyer and its advisors with
timely and reasonable access to the Company and all
information that any of them reasonably requests.
XI. CONFIDENTIALITY
The purchase price and terms of this agreement and
acquisition will be held by the parties in strict
confidence and will not be disclosed to anyone other
than the agents or representatives and financing
sources of the parties who need to know such
information in connection with the transaction
completed hereby.
XII. BINDING EFFECT
This letter does not constitute a binding obligation
to effect the acquisition, it is understood that such
obligation shall arise only from the Definitive
Agreement.
XIII. CLOSING
A. Subject to completion of final due diligence,
accounting review and the completion of legal
documentation, the closing date of this transaction
will be at a place, and on a date mutually
acceptable to Buyer and the Company, and the date at
the very latest September 17, 1999.
B. Buyer and the Company agree that OSF has represented
the Company on this transaction, and that the
Company is solely responsible for all fees.
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CONFIDENTIAL August 17, 1999
Please evidence your agreement with the foregoing by executing this agreement in
the space provided below. We very much look forward to working with you towards
the successful completion of this transaction and building a mutually beneficial
relationship.
AGREED AND ACCEPTED:
Eastern Shore Net Incorporated Sitestar Corporation
/s/ Xxxx X. Xxxxxxxx /s/ Xxxxxxx X. Xxxxxx
------------------------- ------------------------
By: Xxxx Xxxxxxxx By: Xxxxxxx X. Xxxxxx
President President
Date: August 17, 1999 Date: August 17, 1999
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