EXHIBIT 10.1

 

July 12, 2016

 

David Polinsky, CEO

GiftBoxCenter, LLC

90 Booth Ave

Englewood NJ, 07631

 

Ladies and Gentlemen:

 

The purpose of this binding letter of intent is to set forth certain
understandings and agreements between Knight Knox Development Corp., a Nevada
corporation ("Knight"), and GiftBoxCenter, LLC, a New Jersey limited liability
company ("Giftbox") with respect to the potential acquisition by the Knight of
GBC Sub, Inc., a Nevada corporation ("Sub") which is wholly-owned by GiftBox and
which is the successor to all of the assets and operations of GiftBox (the
"Transaction").

 

Item

Description

 1.

Structure

GiftBox is a privately held limited liability company. Knight is a publicly
traded corporation currently quoted on the OTC Markets and filing reports with
the Securities and Exchange Commission (the "SEC") under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), shares of whose common stock were
registered on a registration statement under the Securities Act of 1933, as
amended (the "Securities Act").

 

GiftBox and Sub will enter into a reverse triangular merger with Knight and a
newly formed acquisition subsidiary of Knight, which merger (the "Merger") shall
qualify as a tax-free reorganization under the US Internal Revenue Code, and
pursuant to which all of the outstanding capital stock of Sub will be cancelled
in exchange for shares of Knight common stock ("Common Stock") to be issued to
GiftBox; and simultaneously Knight will conduct a private placement offering
(the "PPO") of its Common Stock on the terms described below.

 

The anticipated closing date for the Merger and at least the Minimum PPO (as
defined below) (the "Closing Date") will be on or before August 30, 2016,
subject to completion and delivery of audited and interim unaudited financial
statements of Sub and pro forma financial statements, all compliant with
applicable SEC regulations for inclusion under Item 2.01(f) and/or 5.01(a)(8) of
SEC Form 8-K (the "Financial Statements").

 

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Item

Description

 

 

 

 

 

The closing of the Merger will occur upon (a) the closing of at least the
Minimum PPO, (b) the completion and delivery by GiftBox to Knight of the
Financial Statements and (c) execution of definitive documentation of the Merger
and the other transactions described in this Letter of Intent (collectively, the
"Transaction" or "Transactions") satisfactory to the parties.

 

All references in this Letter of Intent to "$" or "dollars" are to United States
dollars, unless otherwise specifically provided.

 

 

 

2.

Merger and Split-Off

The definitive merger agreement among Knight, GiftBox, Sub and the acquisition
subsidiary ("Merger Agreement") will contain customary representations and
warranties for a transaction of this type, as mutually agreed between the
parties, including the following representations, warranties and covenants to be
made by Knight (and the acquisition subsidiary, as applicable) on the date of
the Merger Agreement and on the Closing Date:

 

(a) Knight is a US corporation in good standing whose shares are presently
eligible for quotation on the OTC Markets (or another over-the-counter market to
be agreed on) and not subject to any notice of suspension or delisting;

 

(b) Knight has complied with all applicable federal and state securities laws
and regulations, including being current in all of its reporting obligations
under federal securities laws and regulations; and all prior issuances of
securities have been either registered under the Securities Act, or exempt from
registration and there are no material outstanding SEC comments; and Knight is
not in violation or breach of, conflict with, in default under (with or without
the passage of time or the giving of notice or both) any provisions of (a)
Knight incorporation documents or (b) any mortgage, indenture, lease, license or
any other agreement or instrument;

 

(c) no order suspending the effectiveness of any registration statement of
Knight under the Securities Act or the Exchange Act has been issued by the SEC
and, to Knight's knowledge, no proceedings for that purpose have been initiated
or threatened by the SEC;

 

(d) Knight is not and has not, and the past and present officers, directors and
affiliates of Knight are not and have not, been the subject of, nor does any
officer or director of Knight have any reason to believe that Knight or any of
its officers, directors or affiliates will be the subject of, any civil or
criminal proceeding or investigation by any federal or state agency alleging a
violation of securities laws;

 

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Item

 

Description

 

 

 

 

 

 

(e) Knight is not and has not been the subject of any voluntary or involuntary
bankruptcy proceeding, nor is it or has it been a party to any material
litigation or, within the past four years, the subject of any threat of material
litigation; litigation shall be deemed "material" if the amount at issue exceeds
the lesser of $10,000 per matter or $25,000 in the aggregate;

 

(f) Knight has not, and the past and present officers, directors and affiliates
of Knight have not, been the subject of, nor does any officer or director of
Knight have any reason to believe that Knight or any of its officers, directors
or affiliates will be the subject of, any civil, criminal or administrative
investigation or proceeding brought by any federal or state agency;

 

(g) Knight does not, on the Closing Date, have any liabilities, contingent or
otherwise, including but not limited to notes payable and accounts payable,
except as set forth in the Merger Agreement (which shall not exceed $25,000 in
the aggregate, exclusive of professional fees and expenses related to the
Transactions and Brokers' Fees (as defined below), which are payable as set
forth below); and

 

(h) the issued and outstanding share capital of Knight, immediately prior to the
Closing Date, has been duly authorized and is validly issued, is fully paid,
non-assessable, and has been issued in accordance with all applicable laws,
including, but not limited to, the Securities Act and state Blue Sky laws..

 

The Merger Agreement will contain customary indemnification provisions to secure
breaches of representations and warranties reasonably satisfactory to the
parties and such other terms and provisions as shall be mutually agreed upon
between GiftBox and Knight consistent with the provisions in this Letter of
Intent.

 

Closing of the Merger and of at least the Minimum PPO will each be a condition
precedent to the other and will occur simultaneously.

 3.

Private Placement Offering

Knight will conduct a private placement offering pursuant to Regulation D (506
C) under the Securities Act and any and all applicable state securities laws
(the "PPO") for a minimum of $1,500,000 (the "Minimum PPO") and a maximum of
$2,500,000 (the "Maximum PPO").

 

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Item

 

Description

 

 

 

4.

Consideration; Capitalization

 

Upon the closing of the Merger and the Minimum PPO, Knight shall have an
authorized capitalization of 75,000,000 shares of Common Stock. Each share of
Common Stock will be entitled to one vote per share.

 

In consideration for the Merger, GiftBox will receive, in exchange for all of
outstanding shares of capital stock of Sub, on a fully-diluted basis an
aggregate of 10,000,000 restricted shares of Knight Common Stock.

 

The stockholders of Knight prior to the Merger and PPO will retain in the
aggregate, after giving effect to the Split-Off, 3,280,000 shares of Knight
Common Stock.

 

Upon the Closing Date, the Board of Directors of Knight shall have adopted a
2,500,000-share Equity Incentive Plan (the "EIP") covering outstanding GiftBox
options and for the future issuance, at the discretion of the Board, of
incentive awards to officers, key employees, consultants and directors. Knight
will grant 250,000 options to Kristen Kuliga which vest over 4 years for serving
on the BOD. Knight will also grant 1,000,000 shares of common stock to Evan
Levine to serve as CEO and director which will vest over 4 years.

 

The actual and fully diluted capitalizations of Knight upon Closing of the
Merger will be mutually agreed upon between the parties.

 5.

Financial Statements of GiftBox; Signing Date

On or prior to the Closing Date, GiftBox shall provide the Financial Statements.
It is contemplated that the definitive agreements (e.g., the Merger Agreement,
PPO agreements) will be signed on or before the last day of the Exclusivity
Period (as hereinafter defined).

 

 

6.

Board of Directors; Officers; Employment Agreements

On the Closing Date, the Board of Directors of Knight shall be of the size and
have the members that GiftBox and Knight shall mutually agree, provided that a
majority of the directors will be independent and designated by GiftBox.

 

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Item

 

Description

 

 

 

 

 

 

On the Closing Date, all of the current officers and directors of Knight shall
resign and, simultaneously therewith, (a) the new Board of Directors shall be
appointed as described above; and (b) such officers shall be appointed as shall
be determined by GiftBox, to include Evan Levine as Chief Executive Officer
David Polinsky as Executive Chairman. The Chief Executive Officer of Knight, and
such other employees as GiftBox shall designate, shall, upon the Closing, each
have an employment agreement with Knight (with a minimum term of two (2) years
for the CEO) mutually satisfactory to GiftBox, Knight and the employee.

 

 

 

 

7.

Restriction on Sale; No Shorting

 

All securities issued pursuant to the Merger will be "restricted securities" as
defined in Rule 144 and shall be subject to all applicable resale restrictions
specified by federal and state securities laws.

 

At Closing, Giftbox and all officers and directors, and designated key
employees, if any (each a "Restricted Holder"; collectively the "Restricted
Holders"), shall enter into lock-up agreements with Knight for a term of twelve
(12) months from the effectiveness of a Registration Statement registering the
resale of shares (subject to earlier termination (a) upon listing of the Common
Stock on the New York Stock Exchange, NYSE MKT or NASDAQ or (b) with the written
approval of the lead underwriter of any underwritten public offering of Knight's
securities for gross proceeds of at least $20 million (a "Qualified Public
Offering")), whereby they will agree to certain restrictions on the sale or
disposition (including pledge) of all of the Common Stock of Knight held by (or
issuable to) them.

 

In addition, each shareholder, other than public shareholders shall agree that
it will not, for a period of twenty-four (24) months following the Closing Date,
directly or indirectly, effect or agree to effect any short sale (as defined in
Rule 200 under Regulation SHO of the Exchange Act) of shares of Common Stock,
whether or not against the box, establish any "put equivalent position" (as
defined in Rule 16a-1(h) under the Exchange Act) with respect to the Common
Stock, borrow or pre-borrow any shares of Common Stock, or grant any other right
(including, without limitation, any put or call option) with respect to the
Common Stock, or do any of the foregoing with respect to any security that
includes, relates to or derives any significant part of its value from the
Common Stock or otherwise seek to hedge its position in the Common Stock.

 8.

Conditions to Closing; Name Change

The Merger Agreement shall include certain customary and other closing
conditions including the following:

 

(a) consummation of all required definitive instruments and agreements,
including, but not limited to, the Merger Agreement, PPO offering documents, the
EIP and employment agreements as specified in Section 7, in forms acceptable to
Knight and GiftBox and;

 

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Item

Description

 

 

 

 

 

 

(b) obtaining by Knight and GiftBox of all necessary board and stockholder
approvals, including but not limited to Knight stockholder approval of the EIP;

 

(c) satisfactory completion by Knight and GiftBox of all necessary business,
technical and legal due diligence;

 

(d) the completion of the offer and sale of the Minimum PPO;

 

(e) no material adverse change with respect to Sub or Knight;

 

(f) no material pending or threatened litigation against Knight, GiftBox or Sub;

 

(g) obtaining any required consents of other parties to existing agreements with
GiftBox and Sub; and

 

(h) receipt by Knight of the Financial Statements.

 

In connection with the Transactions, Knight will change its name to such name as
is specified by GiftBox. Knight may, with the permission of GiftBox, change its
name prior to the Closing Date.

 

 

 

 

9.

Pre-Closing Covenants

Knight and GiftBox shall each cooperate with the other and use their reasonable
best efforts to complete their due diligence and to execute and deliver the
Merger Agreement and all other documents necessary or desirable to effect the
Transactions as soon as possible and to thereafter satisfy each of the
conditions to closing specified thereunder.

 10.

Costs and Expenses

GiftBox, Sub and Knight will each incur legal and other costs and expenses in
connection with the negotiation of the Transactions and certain due diligence
activities relating thereto.

 

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Item

 

Description

 

 

 

 

 

 

All fees and expenses relating to the Transactions, including but not limited to
Brokers' Fees and legal and accounting fees of GiftBox, Sub and Knight, will be
payable at each closing of the PPO from the proceeds thereof.

 11.

Exclusivity; Due Diligence

From and after the date of the execution of this Letter of Intent through and
including August 31, 2016 (the "Exclusivity Period"), GiftBox and Sub hereby
covenant and agrees that they will not enter into any public offering, merger,
combination, divestiture, financing, joint venture, sale and/or acquisition
agreement in whatever form, except for agreements in the ordinary course of
business, or enter into any other transaction that would preclude the
consummation of the PPO and the Merger consistent with the terms set forth in
this Letter of Intent.

 12.

Governing Law

This Letter of Intent shall be governed and construed in accordance with the
laws of the State of New York, without giving effect to principles of conflicts
or choice of laws thereof.

 13.

Termination and Effects of Termination

The obligations of the parties to each other under this Letter of Intent shall
terminate upon the first to occur of (i) mutual agreement of the parties to
terminate this Letter of Intent, (ii) the expiration of the Exclusivity Period,
or (iii) the execution and delivery of a Merger Agreement among GiftBox, Sub,
Knight and the acquisition subsidiary, provided that the provisions and
obligations of the parties created by Sections 12 and 14 hereof and the last
sentence of this Section 13 shall survive the termination of this Letter of
Intent.

 

 

 

 

14.

Confidentiality

 

Each of the parties to this Letter of Intent agrees to maintain the
confidentiality of the terms of this Letter of Intent and the Transactions, and
not to use any information it may learn about the other party for any purpose
other than to consummate the Transactions, provided that Knight may file this
agreement as required under the Securities Act. Further, no disclosure of any
information concerning this Letter of Intent, the Transactions or any
confidential information delivered by either party to the other pursuant to this
Letter of Intent or the Transactions shall be disclosed to any other person
unless such disclosure is reasonably necessary in connection with the purposes
of this Letter of Intent and until such other person shall have first executed
and delivered a written confidentiality agreement (or is otherwise legally bound
by reasonably comparable confidentiality obligations existing under contract or
pursuant to the terms of his or her work with any party to this Agreement) by
which such person agrees to hold in confidence such confidential information.
The obligations of the parties (and of such other persons to whom confidential
information is delivered) pursuant to this paragraph shall continue
indefinitely, except as otherwise required by applicable law, governmental
regulation, stock exchange rule or court order.

 

[SIGNATURE PAGE IMMEDIATELY FOLLOWS]

 

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Please indicate your acceptance of the terms outlined in this letter agreement
regarding the Transaction as set forth herein.

 

 

KNIGHT KNOX DEVELOPMENT CORP.

    By:

/s/ James Maley

 

Name:

James Manley

  Title:

President

 

 

 

 

 

 

AGREED TO AND ACCEPTED:

 

 

 

 

 

 

This 12th day of July, 2016

 

 

 

 

 

 

GIFTBOXBOX CENTER, LLC

 

 

 

 

 

 

By:

/s/ David Polinsky

 

 

Name:

David Polinsky

 

 

Title: 

CEO

 

 

 

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