Exhibit 10.1

January 7, 2019

 

KB Medical Systems, LLC

1990 K St NW

Suite 5R

Washington, DC 20006

 

 

Gentleman:

 

We are pleased to deliver this letter of intent (“LOI”) which sets forth the
preliminary terms and conditions of the proposed acquisition of the assets of KB
Medical Systems, LLC (“KB”) by Solei Systems, Inc. (“SOLI” or the “Company”) ,
free and clear of all debts, liabilities and claims of any creditor of or
claimant against KB Medical Systems, LLC, except as expressly listed on Schedule
“1” or as otherwise agreed by the parties at Closing. The proposed acquisition
will be undertaken through the issuance of common shares of SOLI to KB Medical
Systems, LLC in a transaction that qualifies for non-recognition treatment under
Section 351 of the Internal Revenue Code of 1986, as amended (the “Code”),
having an average market value at closing of $ 15 million (the “Stock”), based
on the average market closing price for SOLI common stock for the five (5)
trading days ending the day prior to the day of the closing (the “Acquisition”),
plus an additional $5 million in capital contributions to the business of KB
known as CareClix after the Acquisition.

 

The terms of the Acquisition and other transactions contemplated in connection
therewith which are set forth herein are based upon the Company’s preliminary
and limited review of certain information concerning the business, assets,
operations, condition and prospects of KB Medical Systems and CareClix.
Therefore, the Company reserves the right to modify the tax, legal and/or
accounting structure of the Acquisition and any another relevant terms contained
herein based upon the results of its due diligence investigation. It is
understood that, as part of the Acquisition, SOLI will form a new subsidiary
corporation (the “Subsidiary”) to acquire, own and operate the Assets, subject
to the Liabilities and the business known as CareClix.

 

1.       Definitive Agreement. It is currently contemplated that the Acquisition
will consist of the acquisition of all of the business, assets and subsidiaries
of KB Medical Systems, LLC, including CareClix, except for any assets expressly
to be excluded from the Acquisition as listed on Schedule “2”, free and clear of
any claims, debts, security interests, pledges or other liabilities of any kind
of KB other than those listed on Schedule “1” (the Liabilities”) and shall be
approved by KB and the members of KB, in exchange for the Stock. The terms and
provisions of the Acquisition shall be described in a definitive acquisition
agreement (the “Agreement”) by and between the Company, KB and the members of KB
which shall contain the terms and conditions set forth in this LOI, as modified
and amended by subsequent negotiations of the parties, and such representations
and warranties, covenants, indemnities and conditions that are usual and
customary in an Acquisition of this kind. If the Agreement has not been approved
and executed by the Board of Directors of the Company, by KB and by the members
of KB, on or before January 31, 2019, this LOI shall expire and the transactions
as anticipated hereunder shall be deemed to have expired without execution,
unless otherwise agreed to in writing by the parties.

 

2.       Consideration. The consideration for the Acquisition shall be shares of
common stock of SOLI with an aggregate value of $15 million at Closing (the
“Stock”) (which will qualify under Section 351 of the Code) with commitment by
SOLI to provide an additional $5 in working capital, to be used as operating
capital for the new subsidiary of SOLI and for such other purposes as is agreed
in the Definitive Agreement. In exchange for the Consideration, at Closing (as
defined below), KB shall transfer and convey the Assets as directed in the
Agreement and shall indemnify and hold harmless the Company from any liability,
loss or cost relating to the Company’s liabilities, other than the liabilities
to be assumed by the new Subsidiary of SOLI. All shares of common stock to be
issued by SOLI pursuant to the transactions contemplated hereby shall be deemed
to be unregistered “restricted securities” as defined by Rule 144 of the
Securities Act of 1933, as amended (the “Securities Act”) unless otherwise
agreed.

 

3.       Closing. Closing (“Closing”) shall take place within ten (10) days
after the completion of due diligence as specified in the Agreement, and the
satisfaction of all conditions to Closing in the Agreement, including all
regulatory compliance requirements, but in no case later than March 31, 2019,
unless otherwise agreed by the parties.

 

4.       Reserved.

 

5.       Representations; Covenants. The parties hereby represent and warrant
that the execution and delivery of this LOI does not, and the consummation of
the transactions contemplated hereby will not, breach, cause a default under or
require the receipt of one or more consents or approvals of any party to, any
existing or proposed contracts, arrangements or understandings to

which he, she or it is a party except as otherwise provided in this LOI.

 

6. Conditions to Close. In addition to the other conditions to Closing specified
herein and others which are included in the Agreement, the following will be
conditions to proceeding with the Acquisition: (i) execution by each Party of
the Agreement; (ii) approval of the Agreement and the Acquisition by the Members
of KB Medical Systems in compliance with applicable state corporate law and
federal and state securities laws; (iii) delivery of the Consideration to KB
Medical Systems free of Liabilities; (iv) completion of the Acquisition and
transfer of the Assets to the newly formed subsidiary of SOLI, including all
required regulatory compliance; and (v) completion of due

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diligence to the satisfaction of the Company. In addition, the Definitive
Agreement will include provisions for the following conditions, as hereafter
agreed by the parties:

 

(a)Securing of the agreed working capital of $5 million by SOLI to be
contributed to the business of CareClix held by the Subsidiary as working
capital within 120 days after Closing;

(b)A provision for reversal of the Acquisition at the option of the Members of
KB, by unanimous vote, in the event the full amount provided for in Section 6(a)
has not been completed as provided therein, in which event all of the Shares of
SOLI issued to KB at Closing shall be returned to SOLI and cancelled and the
Subsidiary shall convey to KB all of the Assets, subject to any then existing
liabilities incurred in due course of the CareClix business;

(c)A “make-up” provision under which the total number of Shares of SOLI issued
as the Consideration at Closing shall be adjusted (upward but not downward) such
that the aggregate value of the Shares issued at Closing plus any such make-up
shares, shall be equal to not less than $15 million, based on the trailing ten
(10) day average closing price of SOLI common stock on the open market for the
period commencing 18 months after SOLI common stock is admitted to trading on
the OTC Markets or such other public market on which the shares are then traded.

(d)An undertaking that certain designated officers or principals of the CareClix
business will be employed by the Subsidiary as officers or principals, on such
terms and conditions as are agreed to among the parties at Closing;

(e)A provision that the existing operating managers of the CareClix business
shall continue to operate the CareClix business in the Subsidiary, under the
guidance of the SOLI Board of Directors after Closing, as set forth in
appropriate agreements between the Subsidiary and each such party.

(f)Such other provisions as SOLI, KB and the Members of KB shall agree upon.

 

7.       Access to KB Medical Systems; Operation in Ordinary Course. Following
the execution of this LOI and prior to Closing, KB Medical Systems will cause or
permit representatives of the Company to have reasonable access, during normal
business hours, to KB Medical Systems’ management, records, facilities,
accountants, auditors, attorneys and other advisors. During such period and
except as otherwise provided in this LOI, KB will (a) operate only in the
ordinary course of business, (b) take commercially reasonable efforts to
maintain the value of its business as a going concern and preserve its goodwill
and its relationships with customers, suppliers, creditors, contractors and
employees, and (c) notify the Company of any material adverse change with
respect to KB Medical Systems’ condition, business, assets, operations or
prospects.

 

8.       Public Announcements. The Parties hereto will not make public
announcements or other disclosures concerning the transaction set forth in this
LOI until and unless the Agreement is prepared and executed by all parties as
provided herein, and then only as required by regulatory or contractual
disclosure requirements, but not without the prior written consent of the other
parties hereto, which consent will not be unreasonably withheld. Notwithstanding
the foregoing, any of the Parties may at any time make any announcements which
are required by applicable law so long as such Party promptly upon learning of
such requirement notifies the other parties of such requirement and discusses
with the other party in good faith the exact wording of any such announcement.

 

9.       Confidentiality.

(a)       The Parties recognize that in the course of undertaking the efforts
contemplated by this letter, each of them may have access to confidential or
proprietary information belonging to the other Party and the further agree that
they remain bound by that certain [Nondisclosure Agreement] dated July 17, 2018,
by and between the parties hereto.

 

10.       Cooperation; Expenses. The Parties will reasonably cooperate with each
other in order to effect the transactions contemplated by this LOI as promptly
as practicable. Each Party will be responsible for its own costs and expenses,
including, without limitation, fees and expenses of attorneys, accountants,
auditors, appraisers, bankers and other third parties, incurred by such Party in
connection with the Acquisition, including without limitation costs and expenses
related to the structuring of the Acquisition, the preparation and negotiation
of this LOI and the Agreement, and the conduct of a meeting of the shareholders
or members of any Party required to approve the Acquisition and such costs shall
not be included in the Liabilities.

 

11.       Binding Nature. This LOI is a statement of the present intent and
understanding of the Parties with respect to the Acquisition contemplated
hereby. This LOI is subject to the fulfillment of all conditions set forth
herein and the satisfaction of all legal prerequisites to the closing of the
transaction contemplated herein. It is expressly understood by the Parties that,
except as set forth in the following sentence, this LOI is not a binding
agreement or commitment of any of the Parties, and that it does not, and will
not, give rise to any legally binding obligation on the part of any of the
Parties. Notwithstanding the foregoing, this LOI constitutes a binding agreement
of the parties as to all of Sections 4, 9, 10, 11, and 13 hereof. This LOI
supersedes any prior proposals, letters or other discussions between the Parties
concerning the subject matter hereof, and all such proposals, letters or other
discussions are likewise of no binding effect and the further agree that they
remain bound by that certain [Nondisclosure Agreement] dated July 17, 2018, by
and between the parties hereto. Except as otherwise provided herein, the binding
agreements set forth in this LOI may be amended or modified only by a writing
executed by the Parties. In the event of any subsequent disagreement or
inconsistencies, the provisions of the Agreement, when executed, shall supersede
any provision of this letter.

 

12.       Counterparts. This LOI may be executed in counterparts, each of which
will be deemed an original, but all of which taken together will constitute one
and the same instrument.

 

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13.       Governing Law. All disputes under this LOI and the other agreements
and documents desirable to effect the transactions contemplated by this LOI
(“Disputes”) shall be settled by final and binding arbitration in Alexandria,
Virginia under the then effective Commercial Arbitration Rules (the “Rules”) of
the American Arbitration Association (“AAA”), as modified hereby. Judgment on
any award rendered by the arbitrator may be entered in any court having
jurisdiction. The award rendered by the arbitrator shall be final and binding on
the parties. There shall be one (1) arbitrator who shall be appointed by AAA in
accordance with the listing, striking and ranking procedure in the Rules and
such appointment shall be binding on the parties. The arbitrator shall have the
authority to award any remedy or relief that a court in the Commonwealth of
Virginia could order or grant, including specific performance of any obligation
created hereunder, the issuance of an injunction or other provisional relief, or
the imposition of sanctions for abuse or frustration of the arbitration process.
The arbitrator shall apply the law of the Commonwealth of Virginia in deciding
the merits of any Dispute. The arbitration award will be in writing. By agreeing
to arbitration, the parties do not intend to deprive any court of its
jurisdiction to issue a pre-arbitral injunction, pre-arbitral attachment, or
other order in aid of arbitration proceedings and the enforcement of any award.
Without prejudice to such provisional remedies as may be available under the
jurisdiction of a court, the arbitral tribunal shall have full authority to
grant provisional remedies and to direct the parties to request that any court
modify or vacate any temporary or preliminary relief issued by such court, and
to award damages for the failure of any party to respect the arbitrator’s orders
to that effect. In addition to damages, the arbitrator may award any remedy
provided for under applicable law and the terms hereof, including, without
limitation, specific performance or other forms of injunctive relief. It is the
intent of the Parties that any arbitration shall be concluded as quickly as
reasonably practicable. The parties shall share equally the fees and expenses of
the arbitration, unless the arbitrator shall determine that a different
allocation of such fees and expenses is appropriate in the circumstances, in
which event the arbitrator’s determination shall be final and binding upon the
parties. Under no circumstances shall there be an awards or, or the entitlement
to, any damages for lost profits, loss of bargain, contractual damages, tort
damages, or other damages based on failure or inability to complete the
Acquisition Agreement or to close the transactions contemplated for any reason
whatsoever.

 

14.       Assignment. Neither Party may assign any rights hereunder without the
prior written consent of the other Parties.

 

15.       Severability. The invalidity, illegality or unenforceability of any
provision or provisions of this Agreement will not affect any other provision of
this Agreement, which will remain in full force and effect, nor will the
invalidity, illegality or unenforceability of a portion of any provision of this
Agreement affect the balance of such provision. In the event that any one or
more of the provisions contained in this Agreement or any portion thereof shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be reformed, construed and enforced as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

16.       Notices. All notices, demands or other communications given hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person or transmitted by facsimile transmission and on the third (3rd)
calendar day after being mailed by United States registered or certified mail,
return receipt requested, postage prepaid, to the addresses herein above first
mentioned or to such other address as any Party hereto shall designate to the
other for such purpose in the manner hereinafter set forth.

 

If you agree to the foregoing, please return a signed copy of this LOI to the
undersigned no later than January 10, 2019 after which time this LOI will expire
if not so accepted.

 

 

 

Signature Page to Follow

 

 

 

 

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Solei Systems, Inc

 

__Joshua Flood,________ President______

Print Name / Title

 

 

_/s/______________________________________

Signature

 

 

January 7, 2019

Date

 

 

 

For KB Medical Systems, LLC

 

_Dr. John Korangy__________________________

Print Name / Title

 

 

_/s/_______________________________________

Signature

 

 

January 7, 2019

Date

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