WOOZYFLY, INC. New York, NY, 10001 August 28, 2009
Exhibit
10.1
WOOZYFLY,
INC.
000
Xxxxx Xxxxxx, Xxxxx 1878
New
York, NY, 10001
August
28, 2009
STW
RESOURCES, INC.
0000
Xxxxxx, Xxxxx X
Houston,
Texas 77027
Attn:
Xxxx Xxxxx, CEO & President
Re: Proposed
merger between Woozyfly, Inc.("Acquiror"), Merger
Sub, a wholly owned subsidiary of Acquiror and STW Resources, Inc.
(“Acquiree").
Ladies
and Gentlemen:
This
letter will confirm the recent discussions we have had with you relative to the
proposed exchange of 26,293,075 shares of common stock, $.001 par value per
share, of Acquiror (“Shares”) and the issuance of Dilutive Securities as set
forth in Schedule A (“Dilutive Securties”) for all, of the issued and
outstanding voting capital stock of Acquiree. The objective of our discussions
has been the execution and consummation, as soon as feasible and subject to the
Bankruptcy Court Approval, of a formal agreement between Acquiror and Acquiree
(the "Acquisition Agreement") which, among other things, would provide for the
various matters set forth below:
Woozyfly,
Inc., (the “Acquiror”), is a corporation incorporated under the laws of Nevada.
The Common Stock of the Acquiror is traded on the Over-the-Counter Bulletin
Board under the symbol “WZYF”.
STW
Resources, Inc. (the “Acquiree”), a corporation incorporated under the laws of
Nevada, which plans to provide water reclamation technology to the oil and gas
industry in partnership with GE Water Process & Technologies, a division of
GE Ionics Inc..
1. Acquiror
will create a wholly owned subsidiary (“Merger Sub”) incorporated under the laws
of Nevada. Acquiree will be merged into Merger Sub with Merger Sub
being the surviving corporation. In consideration for the acquisition of 100% of
the outstanding capital stock of Acquiree, Acquiror shall issue Shares to the
shareholders of Acquiree. All of the Acquiror’s Common Stock will be
delivered upon the closing of this transaction (the “Closing Date”), with the
condition that the exchange will be made with no more than 35 non-accredited
Acquiree shareholders and an unlimited number of accredited shareholders and the
transaction will not otherwise violate the provisions of the Securities Act of
1933, as amended, or any other applicable securities laws.
This
exchange is intended to qualify as a tax-free reorganization under Section 368
and/or Section 351 of the Internal Revenue Code, and the Acquiror Common Stock
received by the Acquiree shareholders will be received on a tax-free
basis. The shares to be issued by Acquiror will be “restricted
securities” as defined in Rule 144 under the Securities Act of 1933, and an
appropriate legend will be placed on the certificates representing such shares,
with stop transfer orders placed against them. The specific form of
the reorganization under Section 368 shall be mutually determined by the
respective management with the advice of counsel for the parties
hereto.
2. Upon
Closing, all outstanding shares, options, warrants, convertible securities and
other rights to acquire the securities of Acquiree shall exchanged for like
securities of the Acquiror, and Acquiree will become merged into a wholly owned
subsidiary of Acquiror (the “Merger”).
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3. Immediately
upon closing of the Merger, it is anticipated that the equity interests of the
Acquiror will be held approximately as follows:
4. Definitive
Agreement. Upon the acceptance of this letter by Xxxxxxxx,
Acquiree and Acquiror will promptly negotiate, in good faith, the terms of a
Definitive Agreement, provided, however, that if the parties negotiate in good
faith but fail to reach agreement, the parties shall have satisfied this
provision. The Definitive Agreement will be in a form customary for
transactions of this type and will include, in addition to those matters
specifically set forth in this letter, customary representations, warranties,
indemnities, covenants and agreements of the Acquiror and the Acquiree,
customary conditions of closing and other customary matters.
5. Due Diligence
Investigation. Acquiree and Acquiror will promptly begin and
diligently pursue an investigation of the legal, business and financial
condition of the other company. Acquiree and Acquiror will extend their full
cooperation to the other company and its lawyers, accountants and other
representatives in connection with such investigation. The entry into the
Definitive Agreement contemplated by this letter shall be conditional upon
Acquiree’s and Acquiror’s complete satisfaction with such
investigation.
6. Public
Announcements. Subject to applicable law, any public
announcement relating to this transaction will be mutually agreed upon and
jointly made by Acquiree and Acquiror. Each party shall review other
parties press release and shall approve by email.
7. Filings and
Applications. Each party shall cooperate fully with the other
party in furnishing any necessary information required in connection with the
preparation, distribution and filing of any filings, applications and notices
which may be required by federal, state and local governmental or regulatory
agencies.
8. Conditions to Close by
Acquiree. Acquiree’s completion of the Merger will be conditional upon
the following:
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i.
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the
results of due diligence to be conducted by Acquiree and its
representatives shall be satisfactory to Acquiree in its sole
discretion;
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ii.
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Acquiree
shall be satisfied that there have been no adverse changes to the business
or financial condition of Acquiror between the date of the financial
statements of Acquiror currently on file with the Securities and Exchange
Commission and the Closing Date, including that Acquiror has not incurred
any material liabilities or
contingencies;
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iii.
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Acquiror
shall be in good standing as a corporation in its state of
incorporation.
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iv.
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within
60 days of the signing of the Definative Agreement, Acquiror shall
exit reorganization relief under the provisions of
Chapter 11 of Title 11 of the United States Code (the “ Bankruptcy
Code ”), which the Acquiror is currently being administered under the
caption In re Woozyfly, Inc. Case No. 09-13022 (JMP) (the “
Chapter 11 Case ”);
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v.
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Acquiror
shall have provided Acquiree with undated written resignations of All
Acquiror’s directors;
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vi.
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Acquiror
shall have provided Acquiree with undated written resignations of all
Acquiror’s executive officers and the new board shall appoint such
executive officers;
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vii.
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all
consents and other approvals required or deemed advisable by legal counsel
for the transaction will have been
obtained;
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viii.
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all
information provided to Acquiree shall be true, complete and correct and
without omission of any material
fact;
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ix.
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approval
of Bankruptcy Judge and US Trustee;
and
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x.
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no
material changes shall have occurred to the business or assets of
Acquiror.
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9. Conditions to Close by
Acquiror. Acquiror’s completion of the Merger will be conditional upon
the following:
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i.
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the
results of due diligence to be conducted by Acquiror and its
representatives shall be satisfactory to Acquiror in its sole
discretion;
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ii.
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Acquiror
shall be satisfied that there have been no adverse changes to the business
or financial condition of Acquiree between the date of the unaudited
financial statements of Acquiree as of June 30, 2009, including that
Acquiree has not incurred any material liabilities or
contingencies;
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iii.
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Acquiree
shall be in good standing as a corporation in its jurisdiction of
incorporation.
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iv.
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on
or prior to the Closing Date, Acquiree shall have provided Acquiror
audited financial statements of Acquiree as of the years ended December
31, 2008 and reviewed unaudited financial statements for the six months
ended June 30, 2009 and 2008 in accordance with US GAAP by a PCAOB
auditor;
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x.
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Xxxxxxxx
shall have provided Acquiror with undated written resignations of All
Acquiree’s directors, except that Acquiree may appoint five (5) members to
Acquiror’s Board of Directors on the Closing
Date;
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vi.
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all
consents and other approvals required or deemed advisable by legal counsel
for the transaction will have been
obtained;
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vii.
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all
information provided to Acquiror shall be true, complete and correct and
without omission of any material
fact;
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viii.
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approval
of board of directors and shareholders of Acquiror as required by the
Acquirees Articles of Incorporation, By-Laws and the Laws of the State of
Nevada; and
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ix.
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no
material changes shall have occurred to the business or assets of
Acquiree.
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10. Post-Closing
Conditions. Completion of the Merger will conditional on the
following:
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(i)
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The
surviving company will change its name to STW Resources, Inc..
(“STW”);
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11. Confidentiality. Acquiror
nor the Acquiree shall not issue a press release, public statement or any other
communication about the Merger or this agreement without the written approval of
the other party. Except for the use of such information and documents
in connection with the proposed transactions or as otherwise required by law or
regulations Acquiror and Acquiree each agree to keep confidential any
information obtained by it from the other party in connection with its
investigations or otherwise in connection with these transactions and, if such
transactions are not consummated, to return to the other party any documents and
copies thereof received or obtained by it in connection with the proposed
transactions.
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12. Binding Effect;
Termination. The parties agree to negotiate in good faith the
terms and conditions of the Definitive Agreement until this letter is terminated
in accordance with this paragraph. The parties agree that this letter
is not intended to be a binding agreement between the parties but merely an
expression of their intent with regard to the transactions described herein, and
each party covenants never to contend to the contrary. The parties
will use their best efforts to consummate the transactions herein contemplated
within 60 days after the date of this letter of intent; provided that, in the
event a Definitive Agreement with respect to the transactions contemplated
herein is not signed within 60 days after the date of the letter of intent,
either party may terminate this letter by written notice without penalty or
liability. There shall be simultaneous execution and closing of the
Definitive Agreement.
13. It
is understood that the terms set forth in this letter may not constitute all of
the major terms which will be included in the Definative Agreement; that the
terms set forth herein are subject to further discussion and negotiation, and
that while this letter summarizes the various understandings which were reached
between the parties, this letter is not intended to create or constitute a
legally binding obligation between the parties, and neither Acquiror nor
Acquiree shall have any liability to the other party until a definitive
Acquisition Agreement and other related documents are negotiated, executed and
delivered. However, both parties pledge their best efforts to
accomplish the closing of this proposed transaction. If such
definitive Acquisition Agreement and other related documents are not executed
and delivered for any reason, neither party shall have any liability to the
other.
14. Acquiree
and Acquiror will bear their own expenses and costs of transactions contemplated
hereby, including, but not limited to, the fees of attorneys and financial
advisors.
15. At
Closing, there shall be no change in the current outstanding capital structure
of Acquiror and Acquiree including outstanding shares, options, warrants, or
related matters, except as referred to herein.
16. This
Letter of Intent may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
17. This
Letter of Intent constitutes substantially all of the material terms of the
agreement of the parties covering everything agreed upon or understood in this
transaction. There are no oral promises, conditions, representations,
understandings, interpretations or terms of any kind other than as set forth
herein. This Letter of Intent shall be construed under the laws of the State of
New York. If the foregoing accurately reflects our discussions,
please execute and return to the undersigned one copy of this
letter.
WOOZYFLY,
INC.
By:___/s/ XXXX
XXXXXXXXXXXX_____________
Name:
Xxxx Xxxxxxxxxxxx
Title: Interim
President
ACCEPTED
AND AGREED TO
THIS 29
DAY OF AUGUST 2009
STW
RESOURCES, INC.
By:_/s/ XXXX
XXXXX_____________________
Name: Xxxx
Xxxxx
Title: CEO
& President
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