Letter of Intent Eraskh Winery Ltd.
Exhibit
10.7
Letter of
Intent Eraskh Winery Ltd.
Xxxxxxx
Enterprises International, Inc.
00000
Xxxxxx Xxxxxx, Xxxxx 0-X
Xxxxx
Xxxxxxxxx, XX 00000
U.S.A.
11/18/2007
Eraskh
Winery;
Ltd.
Dear
Xx.Xxxxxxxx:
This
letter of intent (this "LOP), shall set forth the preliminary understanding and
agreement between Xxxxxxx Enterprises International, Inc (the "Purchaser") and
Xx. Xxxxxxxx (the "Seller"), with respect to an acquisition transaction (the
"Transaction"), pursuant to which the Purchaser will acquire not less than 52%
of the outstanding equity, on a fully diluted basis, of Eraskh Winery, Ltd., an
Armenian corporation (the "Company"). That understanding and agreement between
the Purchaser and the Seller is as follows:
1. The
Purchaser, following the merger of the Company with another company that is
publicly traded in the United States, shall purchase from the Seller and the
Seller shall sell to the Purchaser shares of capital stock in the Company (the
"Shares") that represent not less than 52% of the outstanding capital stock of
the Company, on a fully diluted basis. The Shares shall be sold free and clear
of any and all 'liens, pledges, security interests, mortgages or other
encumbrances of any nature whatsoever. For purposes hereof, references to the
Purchaser shall include the entity that is the surviving corporation of the
merger transaction between the Purchaser and such publicly traded
corporation.
2. The
purchase price for the purchase of the Shares shall be US$
(the “Purchase Price"). The Purchase price shall be paid in full at the
closing of the Transaction (the" Closing"), and shall be paid US$ in
cash and US$
in shares of the Purchaser's publicly traded common stock. The
Purchaser's common stock shall be valued for purposes of the Transaction at the
average of the closing prices per share for the five (5) trading days
immediately preceding the Closing.
3. The
Closing of the Transaction shall be subject to the Purchaser and the Seller
entering into a definitive purchase agreement (the "Purchase Agreement") and
such other documentation that is customary for a transaction of the nature and
complexity of the Transactions and that is mutually agreeable to the Purchaser
and the Seller. The Purchase Agreement shall contain such representations and
warranties, covenants binding the Purchaser both before and after the Closing,
conditions to closing, rights of termination, indemnification obligations and
conditions to closing (including, without limitation, delivery of certificates
and opinions of legal counsel) as a Customary for purchase agreements for
transactions of the nature and complexity of the Transaction. The Closing of the
Transaction shall also be subject to complying with all applicable laws and
regulations and obtaining all necessary governmental approvals and/or consents
and may be required by the Armenian governmental and regulatory
authorities.
4. In
addition to the Purchase Agreement, the Purchase and the Seller shall enter into
a customary shareholders agreement (the "Shareholders Agreement") to govern
their Respective rights and obligations to each other relating to ownership of
capital stock in the Company. The Shareholders Agreement shall, among other
things, provide for a right of first refusal in favor of the Purchaser with
respect to any proposed transfer of capital stock of the Company by the Seller,
customary drag-along and tag-along rights, the composition of the board of
directors of the Company and a voting agreement from the Seller agreeing to vote
his shares as directed by the CEO of the Purchaser. The Seller shall also enter
into a non-competition agreement (the "Non-Competition Agreement"), which will
provide that the Seller and his affiliates shall not, directly or indirectly
engage in any business or activity that would in any way compete with or
interfere with the business or activities of the Company following the Closing
of the Transaction. The entering into of the Shareholders Agreement and
Non-Competition Agreement shall also be a condition to the Closing of the
Transaction.
5. The
Purchase Price shall be subject to adjustment based upon variances from an
agreed upon balance sheet at the time of the signing of the Purchase Agreement,
including, without limitation, which are a result of changes inventory at hand
at Closing. The Purchase Agreement shall provide for a minimum inventory at the
Closing. The Closing of the Transaction shall also be conditioned upon there
being no material adverse change in, or occurrence with respect to, the
business, operations, assets, prospects, and condition ( financial or otherwise)
of the Company including, without limitation, changes due to political and or
governmental occurrences or matters in Armenia.
6. The
Purchaser and the Seller agree to negotiate the Purchase Agreement and the other
documentation referred to in this LOI in good faith, and to use their best
efforts to consummate the Transaction in accordance with the terms and
provisions outlined in this LOI The Purchaser and the Seller shall use their
best efforts to finalize the Purchase Agreement and the other documentation
referred to in this LOI within 6 months of the execution and delivery of this
LOI.
7. The
Purchaser shall be free to engage in a due diligence examination of the
business, operations, assets, prospects and condition (financial and otherwise)
of the Company for the period from the date of the execution and delivery of
this LOl though the date that is ten ( 10) days prior to the Closing, In order
to facilitate that due diligence examination, the Seller agrees that the Seller
shall cause the Company to provide the Purchaser and the Purchaser's attorneys,
accountants, and financial advisors with such information and documentation
(including without limitation, the books and records of the Company), as the
Purchaser may reasonably request. The Seller shall cause the Company to ensure
that the Company's attorneys, accountants and fanatical advisors also cooperate
with the Purchaser's reasonable requests in connection with the due diligence
examination. The Purchaser and the Company shall enter into a customary
confidentiality agreement to protect the confidentiality of the information that
the Purchaser receives during its due diligence examination.
8. The
Purchaser, the Seller and he Company shall cause the terms and conditions of
this LOI to be kept confidential and shall not disclose the terms and provisions
of this LOI or the intent to the parties to consummate the Transaction, without
the prior written consent of the other parties hereto, which consent shall not
be unreasonably withheld, delayed or conditioned. The foregoing shall not apply
to any disclosure that may be required by applicable law or regulation or by the
rules or requirements of any securities exchange or trading market. None of the
Purchase, the Seller or the Company will issue and press release or make any
public communication regarding this LOI or the Transaction without the prior
written consent of the other parties, which consent shall not be unreasonably
withheld delayed or conditioned, and in any event only after giving the other
parties an opportunity to review and comment on the press release or the
substance of the proposed public announcement.
9. The
Seller agrees that the Seller and the Company and the directors, officers, and
employees of the Company and the respective attorneys, financial advisors,
affiliates bankers and other representatives of the Seller and the Company shall
not, directly or indirectly, from the date of this LOI until the termination of
this LOI in accordance with its terms, engage in and discussions or negotiations
with any third party ( other than the Purchaser) or induce or facilitate any
such negotiations with any third party with respect to the acquisition of
capital stock in, or the assets of, the Company or any transaction that is
competitive with or would interfere with the Transaction ( an "Acquisition
Transaction"), nor shall any of them provide any information to any third party
regarding and Acquisition Transaction. If any of such entities or individuals is
engaged in any discussions or negotiations with any third party (other than the
Purchaser) regarding an Acquisition Transaction, that entity or individual shall
immediately cease any such discussions or negotiations. The Seller shall
immediately notify the Purchaser if the Seller or the Company or any of their
respective affiliates or representatives or any other person referred to in this
Section 9 receives an inquiry from a third party regarding an Acquisition
Transaction, The obligations of the Seller and the Company set forth in this
Section 9 are a material inducement for the Purchase to enter into this LOI and
the Purchase shall be indemnified and held harmless from all lost opportunities
damages, cost and expenses (including, without limitation, attorneys' fees and
expenses) incurred as a result of a breach of this Section 9.
10. This
LOl sets forth the entire understanding of the Purchaser and the Seller with
respect to the Transaction and it shall supersede and replace all prior and/or
contemporaneous understandings, agreements, discussions and negotiations (
whether written or oral) with respect to the Transaction and the subject matter
hereof; all of which are merged herein. This LOI may not be amended, modified,
waived, except by an instrument signed by the Purchase and the
Seller.
11. This
LOl shall be governed by and construed in accordance with the laws of the State
of New York, U.S.A., without regard to any of its conflicts of law principles
which could result in the application of the laws of another jurisdiction.
Should their be any dispute regarding this LOI, the dispute shall be exclusively
settled by binding arbitration, which shall be conducted in accordance with the
rules and procedures of the International Chamber of Commerce. The arbitration
shall take place in [Geneva, Switzerland] and shall be conducted in the English
language.
12. The
Purchaser and the Seller do not enter into the Purchase Agreement by ________
2008, upon not less than fifteen (15) days prior written notice to the other,
with the Purchase or the Seller may terminate this LOI.
13. It
is intended that this LOI be superseded by the Purchase Agreement, which if and
when executed and delivered shall set forth the definitive understanding and
agreement between the Purchase and the Seller with respect to the Transaction.
This LOI is not intended to obligate the parties to enter into the Purchase
Agreement or to consummate the Transaction. Notwithstanding the foregoing,
Sections 6, 7,8,9,10,11, 12 and 14 of this LOI and this Section 13 shall
constitute the legal and binding obligations of the Purchaser, the Seller, and
the Company as applicable. This LOI may not be assigned by the Purchaser or the
Seller, without the prior written consent of the other, except that the
Purchaser may assign this LOI to an affiliate that is owned or controlled by the
Purchaser.
14. This
LOI may be executed in multiple counterparts, each of which shall be an
original, and all of which, when taken together shall constitute one and the
same document. This LOI may be executed by facsimile signature, which shall
constitute a legal and valid signature for all purposes of this
LOI.
Please
confirm your agreement to the terms and provisions of this LOI be executing and
returning to the Purchaser the enclosed copy of this LOI.
Very
truly yours,
XXXXXXX
ENTERPRISES INTERNATIONAL, INC.
By:
Xxxxxxx Xxxxxx
C.E.O
AGREED
AND ACCEPTED:
Wine
Plant of Erashk LLC
ERASKH
WINERY, LTD
By:
R. Tevonyan
Director
