EXHIBIT 99.1
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WESTERN TRANSITIONS, INC.
0000 XXXX XXXXXXXXXX XXXX., XXXXX X
XXX XXXXX, XXXXXX, 00000
November 10, 2005
Board of Directors
Gotaplay Interactive, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxx, Chairman and CEO
Re: Plan of Share Exchange Between Western Transitions, Inc. and
Gotaplay Interactive, Inc.
Dear Xx. Xxxxx:
This letter is intended to express the general terms of the Plan of Share
Exchange to be formalized between Western Transitions, Inc., a publicly held
Nevada corporation ("WTI") and Gotaplay Interactive, Inc., a privately held
Nevada corporation ("GII"). The objective of our discussions has been the
execution and consummation, as soon as feasible, of a formal agreement between
WTI and GII and the GII shareholders (the "Exchange Agreement") which, among
other things, would provide for the various matters set forth below.
1. Plan of Share Exchange and Reorganization of the Companies. The board of
directors of WTI and GII have completed an initial evaluation of the business
plan, financial statements and other relevant corporate documents of the other,
and have concluded that a share exchange transaction, whereby WTI would issue
shares of its common stock equal to ownership of not less than 55% of its
outstanding shares in exchange for 100% of the then outstanding shares of GII
would be in the best interest of both companies. It is the intent of the parties
hereto that the proposed share exchange of GII with WDI be effected as a
tax-free transaction pursuant to Section 368 of the Internal Revenue Code.
2. Terms of Reorganization.
(a) WTI Capitalization. WTI's total authorized capital consists of
100,000,000 shares of Common Stock, par value $0.001 per share. As of the date
hereof there are 13,272,127 Common Shares of WTI issued and outstanding. No
options or warrants have been issued or are outstanding.
(b) Prior to Closing, WTI may, at its discretion, issue up to 450,000 Units
at a purchase price of $1.00 per Unit, each Unit consisting of one common share
and one half (1/2) common stock purchase warrant, each warrant exercisable to
purchase one (1) share of WTI's common stock for a period of one year at an
exercise price of $1.50. As a result, the number of WTI's issued and outstanding
common stock at closing shall be no greater than 13,722,127 shares.
(c) Immediately following the Closing, the new members of the WTI Board of
Directors appointed pursuant to Section 2(f) below will cause WTI to engage the
consulting services of Capital Group Communications Inc. ("CGC"), pursuant to
the terms of that certain proposed agreement, a copy of which has been provided
to management of GII, which includes the obligation for WTI to issue 1,300,000
common shares of WTI in favor of CGC.
(d) GII Capitalization. GII's total authorized capital consists of
500,000,000 Common Shares, par value $0.0001 per share, 10,000,000 shares of
Class A Common Stock, par value $0.0001 per share and 10,000,000 Preferred
Shares, par value $0.0001 per share. As of the date of this letter there are
17,020,000 common shares of issued and outstanding and 13,100,000 warrants. It
is anticipated that the number of issued and outstanding common shares will
remain the same. However, GII shall undertake all action necessary to cancel the
aforementioned 13,100,000 warrants prior to Closing.
(e) Share Exchange.
(i) On or about December 15, 2005 (hereinafter the "Closing Date" or
the "Closing"), the GII shareholders shall tender their respective shares in GII
to WTI in exchange for an aggregate of 17,020,000 common shares of WTI. Each GII
shareholder shall receive shares of WTI's common stock on a pro rata basis to
their respective shareholdings in GII immediately prior to the Closing. In the
Closing documents, GII will represent and warrant that they will take no actions
to register the new WTI shares for a period of two years.
(ii) GII also acknowledges that it has due and owing loans in the
aggregate principal amount of $505,387, which is owed to three separate parties.
Immediately following the Closing herein, GII shall provide to WTI all
documentation necessary to convert these loans into common shares of WTI at a
price of $1.00 per share.
(f) Officers and Directors. At Closing, the current Board of Directors and
officers of XXX shall resign their respective positions with WTI and appoint
those persons designated by GII in their place.
(g) Shareholder Action. Prior to the Closing Date, the WTI Board of
Directors shall call a special shareholders meeting, or otherwise obtain the
consent of a majority of the holders of WTI's voting securities pursuant to the
laws of the State of Nevada, for the purpose of (i) approving the transaction
proposed herein; (ii) amend its Articles of Incorporation to change the name of
WTI to "Gotaplay Interactive, Inc." (or such other name as proposed by GII);
(iii) providing any applicable dissenter's rights afforded to the GII
shareholders pursuant to the laws of the State of Nevada, if applicable; and
(iv) such other reasonable matters as may be requested by management of GII to
cause the intent of this letter to be adopted and ratified.
3. Financial Condition of WTI. As of the Closing Date, WTI balance sheet
will reflect nominal assets and no liabilities.
4. Financial Condition of GII. GII hereby represents and warrants that the
unaudited balance sheet of GII, dated September 30, 2005 will reflect total
assets of approximately $298,659, total liabilities of $699,320 and shareholder
equity of $400,662, except as related to subsequent information as provided by
GII to WTI. GII further represents and warrants that no
negative material changes to its financial statements have occurred since
September 30, 2005, other than as disclosed by XXX to WTI.
5. Conditions to Closing.
(a) Closing. The Closing of this proposed transaction shall take place on
or about December 15, 2005, in Englewood, Colorado at the offices of counsel for
WTI, Xxxxxx X., Xxxxxx, P.C., or such other location as the parties may so
agree. At the discretion of the parties hereto, Closing may also occur via
telephonic means.
(b) To Be Provided by GII. (i) As soon as possible, but in no event later
than 50 days following the filing of a Form 8-K with the US Securities and
Exchange Commission by WTI advising of the Closing of the transaction proposed
herein, in addition to those items which may be required to be delivered
pursuant to the terms of the applicable Share Exchange Agreements, GII shall
provide to the present Board of Directors of WTI a financial audit of its books
as of the end of its last fiscal year and unaudited financial statements for
those interim periods required to be provided the SEC under Regulation SB, as
promulgated under the Securities Act of 1933, as amended, which shall be
prepared in accordance with Generally Accepted Accounting Principles. The
audited financial statements shall be provided by an independent, SEC Certified
Public Accountant and such audit shall demonstrate financial statement
information consistent with the financial information and representations
provided or made to WTI by GII prior to Closing. Failure to provide the
aforesaid item shall release WTI from any obligations herein and, in the sole
discretion of WTI, the transaction proposed herein may be terminated. GII shall
be responsible for payment of all reasonable costs incurred by WTI in the event
this transaction fails to close due to any failure of GII to adhere to the terms
included herein;
(ii) Prior to Closing, WTI shall provide to GII a secured loan in the
minimum principal sum of $250,000 secured by all of the assets of GII. In the
event the transaction proposed herein is not consummated, XXX agrees to repay
said loan within 120 days following the date of the loan, with interest accruing
at the rate of 4% per annum; and
(iii) Upon Closing, the GII shareholders shall provide to WTI an
investment letter, duly executed by each shareholder, acknowledging that each
such shareholder is exchanging their respective securities of GII for their pro
rata applicable number of WTI Common Shares, that such shares to be acquired by
each GII shareholder are solely for their account and for investment and they
have no plan, intention, contract, understanding, agreement or arrangement with
any person to sell, assign, pledge, hypothecate or otherwise transfer to any
person such shares, or any portion thereof.
(c) Non-Delivery. Failure by GII to provide those items described
hereinabove, or failure of said audit to confirm the financial condition of GII
as previously represented herein, shall render this proposed transaction
voidable at the discretion of the present Board of Directors of WTI.
(d) Representations of WTI. WTI hereby represents that, as of the Closing
Date, it shall be current in all filings required to be tendered to the
Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange
Act of 1934, as amended, including but not limited to, filings on Forms 8-K,
10-K, 10-KSB, 10-Q and/or 10-QSB.
6. Confidentiality. Upon the signing of this Letter of Intent, WTI and GII
will provide to each other full access to their books and records and will
furnish financial and operating data and such other information with respect to
their business and assets as may reasonably be requested from time to time. If
the proposed transaction is not consummated, all parties shall keep confidential
any information (unless ascertainable from public filings or published
information) obtained concerning the other's operations, assets and business.
7. Counterparts Facsimile Execution. For purposes of this Agreement, a
document (or signature page thereto) signed and transmitted by facsimile machine
or telecopier is to be treated as an original document. The signature of any
party thereon, for purposes hereof, is to be considered as an original
signature, and the document transmitted is to be considered to have the same
binding effect as an original signature on an original document. At the request
of any party, a facsimile or telecopy document is to be re-executed in original
form by the parties who executed the facsimile or telecopy document. No party
may raise the use of a facsimile machine or telecopier machine as a defense to
the enforcement of the Agreement or any amendment or other document executed in
compliance with this Section.
8. Jurisdiction. It is the intention of the parties that the laws of the
State of Nevada govern the determination of the validity of this Agreement, the
construction of its terms and the interpretation of the rights and duties of the
parties.
9. Notices. Any notice relevant herein shall be deemed to have been
sufficiently served for all purposes if delivered personally to the party to
whom the same is directed, or, if sent, by deposit with the United States mail,
certified mail, return receipt requested postage prepaid, at such party's
address listed hereinabove, or to such other address as shall be furnished in
writing by any party to the other. Any such notice shall be deemed to have been
given three (3) days after deposited in the U.S. mail.
10. Further Action. Each party shall execute and deliver such papers,
documents and instruments, and perform such acts as are necessary or appropriate
to implement the terms hereof and the intent of the parties hereto.
11. Amendments. This Agreement may only be amended by the mutual consent of
all the parties hereto which Amendment shall be in writing, duly executed by the
parties.
This letter is not intended as a contract or to create any enforceable rights or
obligations whatsoever on the part of either party. Except as provided above, no
obligations on the part of either party with respect to the matters covered
hereby shall exist unless and until a written agreement, satisfactory in form
and substance to both parties, has been approved by their respective boards of
directors and shareholders, if necessary and executed by officers specifically
authorized to do so.
If the foregoing accurately reflects your understanding of the proposed terms
and conditions of our agreement please so indicate by signing below as
designated.
Yours truly,
WESTERN TRANSITIONS, INC.
s/Xxxx Xxxxxx
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Xxxx Xxxxxx
President
APPROVED AND ACCEPTED THIS 10th day of November, 2005.
GOTAPLAY INTERACTIVE, INC.
s/Xxxx Xxxxx
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Chairman and CEO
