LETTER OF INTENT TO ACQUIRE MOJITO BRANDS INC.
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EXHIBIT
2.1
TO
ACQUIRE
MOJITO
BRANDS INC.
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Full
Motion Beverage Inc.
Personal
and Confidential
December
22, 2008
VIA
HAND DELIVERY & FIRST CLASS USPS MAIL
Mojito
Brands, Inc.
Xxxx
Xxxxxxxx, CEO
000 Xxxxx
Xxxx Xxxx
Xxx
Xxxxxxxx, X.X. 00000
Re:
Letter of Intent for Acquisition
Dear Xx.
Xxxxxxxx:
This
letter confirms our understanding of the mutual present intentions of FULL
MOTION BEVERAGE, INC. (the "Purchaser"), MOJITO BRANDS, INC (the "Company") and
XXXX XXXXXXXX (the “Majority Shareholder”) with respect to the principal terms
and conditions under which the Purchaser will acquire all of the outstanding
capital stock of the Company. Such transaction is hereinafter
referred to as the "Acquisition."
The
obligations of the parties hereto to consummate the Acquisition are subject to
the negotiation and execution of the Purchase Agreement referred to in paragraph
3 below. Accordingly, this letter is intended solely as a basis for
further discussion and is not intended to be and does not constitute a legally
binding agreement; provided, however, that the provisions set forth in
paragraphs 6, 7, 9, 10, 11, 12, 13 and 14 below and this paragraph shall be
binding upon the parties hereto and, only with respect to paragraphs 9, 12, and
13 shall survive the termination hereof. This letter shall not confer
on any person or entity, other than the parties hereto, any rights or
remedies.
1. Purchase of
Stock. At the closing (the "Closing"), subject to the satisfaction
of all conditions precedent contained in the Purchase Agreement, the Purchaser
will purchase all of the outstanding capital stock, warrants, options and
convertible securities of the Company, free and clear of any liens, charges,
restrictions or encumbrances thereon (collectively, the
"Shares"). The Purchaser may assign some or all of its rights
hereunder prior to the Closing to one or more of its
subsidiaries. After further review, at the Purchaser's election, the
Acquisition may be modified so that the Purchaser acquires the Shares through a
merger between the Purchaser or one of its subsidiaries and the Company (the
"Merger").
2. Purchase
Price. The purchase price for the Shares will consist of
3,580,000 post reverse shares of the Purchaser’s Common Stock. The
Purchaser’s Common Stock will only be issued without registration or
qualification to a limited number of institutional holders of the Company
acceptable to the Purchaser and to the Principal Shareholder. The
Purchaser has separately provided to the Company the Purchaser’s capitalization
table showing outstanding shares, options and warrants.
3. Definitive
Agreement. The Purchaser, the Majority Shareholder and the Company
hereby agree to use reasonable diligence to commence good faith negotiations in
order to execute and deliver a definitive stock purchase or merger agreement
relating to the Acquisition (the "Purchase Agreement") acceptable to parties
hereto within 10 days of Company’s acceptance of this letter. All
terms and conditions concerning the Acquisition shall be stated in the Purchase
Agreement (or agreements to be entered into pursuant to the Purchase Agreement),
including without limitation, representations, warranties, covenants, holdback
provisions and indemnities that are usual and customary in a transaction of this
nature as such may be mutually agreed upon between the parties.
4. Representations and
Warranties. The Purchase Agreement will contain representations and
warranties customary to transactions of this type, including without limitation,
representations and warranties by the selling shareholders and the Company as to
(a) the accuracy and completeness of the Company's financial statements for the
past three years [to the extent three years is available] and current financial
statements; (b) disclosure of all the Company's contracts, commitments and
liabilities, direct or contingent; (c) the physical condition, suitability,
ownership and absence of liens, claims and other adverse interests with respect
to the Company's assets; (d) the selling shareholders’ ownership of the Shares;
(e) the absence of liabilities with respect to the Company, other than as set
forth in the balance sheet dated November 1, 2008, and liabilities incurred in
the ordinary course of business since that date; (f) the absence of a material
adverse change in the condition (financial or otherwise), business, properties,
assets or prospects of the Company; (g) the absence of pending or threatened
litigation, claims, investigations or other matters affecting the Acquisition;
(h) the Company's compliance with laws and regulations applicable to its
business and obtaining all licenses and permits required for its business; and
(i) the due incorporation, organization, valid existence, good standing and
capitalization of the Company.
5. Conditions to Consummation
of the Acquisition. The obligation of the Purchaser with
respect to the Acquisition shall be subject to satisfaction of conditions
customary to transactions of this type, including without limitation, (a)
receipt and approval by the Purchaser of the Company's last year end [audited]
financial statements and current financial statements; (b) execution of the
Purchase Agreement by all parties; (c) the obtaining of all requisite
regulatory, administrative, governmental or third party authorizations and
consents; (d) absence of a material adverse change in the condition (financial
or otherwise), business, properties, assets or prospects of the Company; (e)
absence of pending or threatened litigation, claims, investigations or other
matters affecting the Company or the Acquisition; (f) satisfactory completion by
the Purchaser of a due diligence investigation of the Company; and (g)
confirmation that the representations and warranties of the selling shareholders
and the Company are true and accurate in all respects; (h) the
Purchaser obtaining financing, if necessary; and (i) the Principal Shareholder
having entered into a consulting and non-competition agreement acceptable to the
Purchaser.
6. Access to
Company. The Company will give the Purchaser and its
representatives full access to any personnel and all properties, documents,
contracts, books, records and operations of the Company relating to its
business. The Company will furnish the Purchaser with copies of documents and
with such other information as the Purchaser may request.
7. No Other
Offers. The Company and the Principal Shareholder each acknowledges
that the Purchaser will incur significant expense in connection with its due
diligence review and preparation and negotiation of the Purchase
Agreement. As a result, upon execution of this letter the Company and
the Principal Shareholder shall terminate any existing discussions or
negotiations with, and shall cease to provide information to or otherwise
cooperate with, any party other than the Purchaser and its representatives with
respect to an Acquisition Transaction (as defined below). In
addition, from and after the date hereof, none of the Company nor any of its
shareholders, subsidiaries or affiliates, or any of their respective officers,
directors, employees, members, managers, representatives or agents, will
directly or indirectly encourage, solicit, initiate, have or continue any
discussions or negotiations with or participate in any discussions or
negotiations with or provide any information to or otherwise cooperate in any
other way with, or enter into any agreement, letter of intent or agreement in
principle with, or facilitate or encourage any effort or attempt by any
corporation, partnership, company, person or other entity or group (other than
the Purchaser and its shareholders, subsidiaries or affiliates, or any of their
respective officers, directors, employees, members, managers, representatives or
agents) concerning any merger, joint venture, recapitalization, reorganization,
sale of substantial assets, sale of any shares of capital stock, investment or
similar transaction involving the Company or any subsidiary or division of the
Company (each, an "Acquisition Transaction"). The Company shall
notify the Purchaser promptly of any inquiries, proposals or offers made by
third parties to the Company or any of its shareholders, subsidiaries or
affiliates, or any of their respective officers, directors, employees, members,
managers, representatives or agents with respect to an Acquisition Transaction
and furnish the Purchaser the terms thereof (including, without limitation, the
type of consideration offered and the identity of the third
party). The Company and the Principal Shareholder shall deal
exclusively with the Purchaser with respect to any possible Acquisition
Transaction and the Purchaser shall have the right to match the terms of any
proposed transactions in lieu of such parties.
8. Conduct of
Business. The Company shall use its best efforts to preserve
intact the business organization and employees and other business relationships
of the Company; shall continue to operate in the ordinary course of business and
maintain its books, records and accounts in accordance with generally accepted
accounting principles, consistent with past practice; shall use its reasonable
best efforts to maintain the Company's current financial condition, including
working capital levels; shall not incur any indebtedness or enter into any
agreements to make business or product line acquisitions; and shall not declare
or make any dividend or stock distributions.
9. Expenses. Each
of the parties shall pay all of its expenses incident to this letter, the
Purchase Agreement and consummation of the transactions contemplated hereby and
thereby. The Principal Shareholder and the Company each represent and
warrant that there are no brokerage or finder's fees which are or will be
payable in connection with the Acquisition.
10. Confidentiality. The
Purchaser and the Company have executed a Confidentiality Agreement, dated as of
November 22, 2008, which agreement shall survive the execution and deliver of
this letter.
11. Disclosure. Without
the prior written consent of the Purchaser, the Company will cause its
directors, officers, shareholders, employees, agents, other representatives and
affiliates not to, disclose to any person the fact that discussions or
negotiations are taking place concerning the transactions contemplated hereby,
the status thereof, or the existence of this letter and the terms thereof,
unless in the opinion of such party disclosure is required to be made by
applicable law, regulation or court order, and such disclosure is made after
prior consultation with the Purchaser.
12. Termination. Subject
to the terms of this letter, upon the earlier of (a) the mutual written
agreement of the parties hereto or (b) the failure by the parties hereto to
execute and deliver the Purchase Agreement within 60 days after the Company’s
execution of this letter, this letter shall terminate and the parties shall be
released from all liabilities and obligations with respect to the subject matter
hereof, except as provided in the second paragraph of page 1 of this
letter.
13.
Dispute
Resolution. In the event of any dispute arising out of or
relating to this letter such dispute shall be resolved exclusively by
confidential binding arbitration with the New York City, New York branch of JAMS
to be governed by JAMS’ commercial rules of arbitration in effect at the time of
the commencement of arbitration and heard before one arbitrator. Each party
shall bear its own attorneys’ fees, expert witness fees, and costs incurred in
connection with any arbitration.
14. Right to Complete Due
Diligence and Acquisition. For valuable consideration, the
receipt of which is hereby acknowledged, the Company and the Principal
Shareholder agree that the Purchaser shall have the right to complete its due
diligence and to consummate the Acquisition on the terms outlined herein, and
the Company and the Majority Shareholder agree to cooperate fully and in good
faith to complete the transaction as expeditiously as possible after the
Purchaser has confirmed its due diligence investigation to its
satisfaction.
15. Counterparts. This
letter may be executed in one or more counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
instrument.
16. Governing
Law. This letter shall be governed by the laws of the State of
New York, without regard to such state’s principles of conflicts of
laws.
If the
foregoing correctly sets forth our mutual understanding, please so indicate by
signing two copies of this letter in the spaces provided below and returning one
copy to us no later than 5:00 p.m. on December 29, 2008. This letter
will expire if you have not returned to us an executed copy of this letter by
said time.
Very
truly yours,
_______________________________________
By: L.
Xxxxxx Xxxxx
Title: Chairman/President
Agreed
and Accepted this 29th Day of December, 2008
MOJITO
BRANDS, INC.
_______________________________________
By: Xxxx
Xxxxxxxx
Title: CEO
MOJITO
BRANDS, INC. – MAJORITY SHAREHOLDER
_______________________________________
By: Xxxx
Xxxxxxxx
Majority
Shareholder
