NON-BINDING LETTER OF INTENT
US Social Scene, Inc., a Nevada Corporation, and or assigns, herein referred to
as "Buyer", hereby offers to combine all of its business operations and
subsidiaries and provide $250,000 to purchase an 85% interest in the common
stock of the company known as "Trycera Financial, Inc.", a Nevada corporation
and public company (TRYF) located at 0000 X. Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxxxx 00000, herein referred to as "Seller", under the following terms and
conditions:
1. The total purchase price shall include business operations and subsidiaries
totaling a minimum of $12M in revenues and $2.5M in net income and $250,000.00
cash for 85% of the common stock and control of Seller.
2. This is a stock sale and not an asset acquisition. It is understood that
the total outstanding common stock of the company is approximately 8,936,552
shares. The 85% interest contemplated herein would represent approximately
50,419,936 shares of voting restricted common stock resulting in a total
outstanding common stock of approximately 59,356,488 shares. Exact numbers
will be calculated when certified shareholder lists are provided by both
parties. Xxxxx and Seller believe that an exemption exists from which to issue
the 50,419,936 shares of voting restricted common stock contemplated herein,
and that an effective registration statement should not be necessary to obtain
from the SEC in order to consummate the full closing.
3. While the exact combination structure has not yet been finalized by Xxxxx
and Seller, the business intent of both parties is to execute a merger, reverse
merger or other appropriate business combination such that all assets,
liabilities and subsidiaries of Buyer and Seller will be combined together in
accordance with the fully diluted capitalization described in items 2, 4 and 5.
Additionally, it is expected that the Seller will remain as the surviving
entity, and that post closing the Seller will consummate a name change to that
of the Buyer and an application or applications will be submitted to the
appropriate entities thereafter to consummate a public stock symbol change for
the surviving combined business. The final structure selected shall meet
approval of both Xxxxx's and Xxxxxx's attorneys.
4. The Buyer recognizes that there are employee stock options outstanding for
approximately eight (8) years for approximately 2,371,250 shares of common
stock at various prices. 12,500 warrants have been previously exercised and
are included in the outstanding common shares set forth in item 2. This
agreement contemplates that these options would be favorable to the Buyer and
therefore would not be cancelled or renegotiated. Seller's existing corporate
option plan and pool of 10M authorized options will be preserved for the post
closing business.
5. The Buyer recognizes that there are warrants outstanding for approximately
seven (7) years for approximately 1,087,750 shares of common stock at various
prices. This agreement contemplates that these warrants would be favorable to
the Buyer and therefore would not be cancelled or renegotiated.
6. With the exception of potential liabilities associated with the joint sales
opportunity detailed in item 8 below, Seller warrants that its liabilities will
be less than $200,000 at the time of closing.
7. Payment terms shall consist of:
a. Full cash payment at the date of closing in certified funds payable
to the Xxxxxx X. Xxxxx PC Attorney at Law Client Trust Account escrow
service, which will then be distributed to Seller's shareholders as
directed by Xxxxxx.
b. All assets, software and equipment of Seller shall be intact on the
day of closing and shall be substantially the same as the December
31, 2007, audited 10-K annual report.
c. Xxxxx agrees to retain the employees of Seller, but has sole
discretion for future employment. All current employee agreements and
contracts shall be honored by Buyer if those individuals choose to
remain employed and are employed at the time of closing, or are
principals, investors or board members that are still with Seller at
closing.
1) Xxxxx agrees to retain Xxxxx Xxxxxx and Xxxx XxXxxxx for a
minimum of 1 year post closing for operational continuity of
Seller's prepaid card business, partnerships and contracts,
including all load network, processor, bank and association
relationships. In "good faith", Xxxxx will negotiate market
competitive employment contracts for each individual upon
completion of a three month transition period post closing.
2) Xxxxx agrees to allow Xxxxxx and XxXxxxx to operate remotely
until such a time as a mutually agreeable arrangement is made
by and between Xxxxxx, XxXxxxx and Buyer to work in Buyer
offices or remote offices.
3) Buyer expects Xxxx Xxxxxxxxx to remain as an Advisor to the
Buyer's board post closing, and for him or his designee to act
as the representative for Seller's investors, employees and
stakeholders when necessary.
4) Xxxxxxxxx designates Xxxx Xxxx as his alternate Seller
designee.
d. The purchase offer is being made by Buyer subject to the following
contingencies:
1) The business equipment list provided to Buyer shall be
inclusive of all equipment required and used in the business.
2) Buyer shall have 30 days to perform all due diligence on their
review of the business after receipt of the December 31, 2007,
audited 10-K annual report.
3) Sale is subject to verification and approval of the books and
tax records by Xxxxx or Xxxxx's accountant for calendar years
2006, 2007 and current year to date operations.
4) The final contract and related documents tied to the definitive
agreements shall meet approval of both the Buyer's and the
Seller's attorneys.
8. Buyer and Seller will mutually pursue a joint sales opportunity during the
due diligence period in which to attempt the sale of all Seller branded debit
card programs (Trycera, Finium, Prime Mutual, et al) and payment reporting
product and service bundles through no less than 30 million of Buyer's
approximately 80 million opted-in email mailing list, or thirty-seven and
one-half percent (37.5%). In accordance with the Joint Sales Contract executed
between Buyer and Seller, the net proceeds of the initiative will be used to
first repay the senior bridge note in item 13 below and to then provide some or
all of the purchase money cash for item 1 above and to accrue sales initiative
bonuses for Seller over and above the purchase money requirements in item 1
above pursuant to the Joint Sales Contract executed between both parties.
9. All accounts receivable and cash are to be the property of the Buyer at
closing. The collection of the accounts receivable will continue with the
business in order to provide working capital and continuity with existing and
prospective customers. Certain cash balances currently under management by
Seller are cash deposits by Seller customers and must remain in the allocated
accounts with Seller's issuing bank partners.
10. All accounts payable and debts of the business will be the responsibility
of the Buyer at closing and will continue to be paid by the ongoing entity
owned by the Buyer.
11. Buyer and Seller anticipate the full closing to occur on or before May 2,
2008.
12. This offer is open for a period of five (5) working days from the date of
signature.
13. Upon execution of this document, both Xxxxx and Seller will be responsible
to equally fund a $75,000.00 senior bridge note within five (5) business days.
The senior bridge note will carry a 10% interest rate and will fund both the
operations of Seller and the joint sales opportunity described in item 8 until
closing. The senior bridge note will be repaid as described in item 8 in
conjunction with closing.
14. A definitive agreement to evidence this transaction will be prepared and
signed prior to closing and such agreement shall be satisfactory to both Buyer
and Seller. Time will be of the essence with this contract.
15. Conduct of Business: Upon execution of the LOI between both parties,
Seller shall conduct its business only in the ordinary course, and will not
engage in any extraordinary transactions without Buyer's prior consent,
including, without limitation:
(i) not materially increasing the annual level of compensation of any
employee, and not increasing at all the annual level of compensation of any
person whose compensation from Seller in the last preceding fiscal year
exceeded $120,000, and not granting any unusual or extraordinary bonuses,
benefits or other forms of direct or indirect compensation to any employee,
officer, director or consultant, except in amounts in keeping with past
practices by formulas or otherwise;
(ii) not increasing, terminating, amending or otherwise modifying any plan
for the benefit of employees;
(iii) not issuing any equity securities or options, warrants, rights
or convertible securities, other than for customary grants of options to new
hires;
(iv) not paying any dividends, redeeming any securities, or otherwise
causing assets of Seller to be distributed to any of its shareholders except by
way of compensation to employees who are also shareholders within the
limitations set forth above;
(v) not terminating any employees of Seller that Xxxxx has indicated that
it desires to retain subsequent to the Closing; and
(vi) not borrowing any funds, under existing credit lines or otherwise,
except as reasonably necessary for the ordinary operation of Seller's business
in a manner, and in amounts, in keeping with historical practices.
16. Disclosure: Except as and to the extent required by law, without the
prior written consent of the other party, neither Buyer nor Seller shall, and
each shall direct its shareholders or Representatives not to, directly or
indirectly, make any public comment, statement or communication with respect
to, or otherwise disclose or permit the disclosure of the existence of
discussions regarding a possible transaction among the parties or any of the
terms, conditions or other aspects of the transaction proposed in this Letter.
17. Consents: Buyer and Seller shall cooperate with each other and proceed,
as promptly as is reasonably practicable, to endeavor to comply with all legal
or contractual requirements for or preconditions to the execution and
consummation of the LOI and the Joint Sales Contract detailed in item 8.
18. Entire Agreement; Amendment: The Basic Transaction and any Non-Disclosure
Agreement between Seller and Buyer, constitute the entire agreement among the
parties, and supersede all prior oral or written agreements, understandings,
representations and warranties, and courses of conduct and dealing among the
parties on the subject matter hereof. Except as otherwise provided herein, the
Basic Transaction may be amended or modified only by a writing executed by both
parties.
19. Governing Law; Jurisdiction; Venue: This Contract shall be governed by
and construed under the laws of California without regard to principles of
conflict of laws. The parties irrevocably consent to the jurisdiction and
venue of JAMS arbitration in Orange County, California, in connection with any
action.
20. Transaction; Agreement: Both parties agree to use their respective best
efforts to initiate the joint sales opportunity in item 8 contemplated in this
Contract simultaneously with the execution of the underlying LOI.
Additional items: ____________________________________________________________
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______________________________________________________________________________
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This letter is not intended to be legally binding contract. If the above is
acceptable to you in principal, we will draft a definitive agreement and
proceed to resolve the contingencies as quickly as possible.
We look forward to working with you toward a successful conclusion to this
transaction.
/s/ Xxxxxx Xxxxxxx 04/01/08
Buyer - Xx. Xxxxxx Xxxxxxx, President and CEO Date
US Social Scene, Inc.
/s/ Xxxxx Xxxxxx 04/01/08
Seller - Xx. Xxxxx Xxxxxx, COO & CFO Date
Trycera Financial, Inc.
