March 16, 2017

 

 

LETTER OF INTENT

 

 

 

Dear Karthik Mani,

 

 

This exclusive binding Letter of Intent (“LOI”) sets forth the basic terms under
which SocialPlay USA, Inc.., a Nevada corporation will engage in a corporate
transaction between itself, SAP Inc., and Karthik Mani (collectively, SPLY, SAP,
& KM shall be sometimes referred to herein as the “Parties” and individually a
“Party”). The basic terms of the proposed transaction are as follows:

 

1. Acquisition Agreement and Exclusive Option to Purchase

No later than March 31, 2017, the Parties shall enter into a definitive
Acquisition Agreement with an Exclusive Option for SPLY to Purchase up to 100%
of SAP, as defined herein (“Acquisition Agreement”).

2. Cash Investment, Share Issuance and Royalty

The parties agree that the valuation of SAP and its assets, as defined in
“Schedule A” attached hereto, for purposes of this transaction is $1,000,000, of
which a cash investment in SAP of $300,000 will result in a 30% equity
acquisition by SPLY, and upon exercise of the Exclusive Option to Purchase, SPLY
shall issue common shares valued of up to $700,000 to KM, to acquire the
remaining 70% of SAP. The calculation will be based on the five day trading
average price of the SPLY shares on the OTCQB Marketplace prior to the date of
exercise of the Option (example- $700,000 divided by trading price @ $1.00 per
share =700,000 shares). Upon purchase of the remaining 70% of SAP, KM shall
retain a “Gross Profits” royalty on all future revenue received by SAP in its
normal course of business. The royalty shall be established by the parties under
separate agreement prior to completion of 2.(b)(v) below, and shall be
negotiated within the parameters of 3-12%.

(a)Cash Investment: In order to acquire an undivided 30% equity interest in SAP,
SPLY shall:

(i) Deliver to SAP $50,000 towards the “Total Cash Investment” upon execution of
this LOI.

   

 

(ii) Upon satisfaction by SAP of “Milestone 1” as defined in “Schedule B”
attached hereto, deliver to SAP an additional $100,000 towards the “Total Cash
Investment” no later than 15 days from execution of definitive Acquisition
Agreement.

(iii) Upon satisfaction by SAP of “Milestone 2” as defined in “Schedule C”
attached hereto, deliver to SAP an additional $150,000 towards the “Total Cash
Investment” no later than 75 days from execution of definitive Acquisition
Agreement.

Upon completion of all payments as set forth above, SAP shall immediately issue
and/or cause to be issued sufficient shares of its capital in the name of SPLY
equal to 30% of its issued and outstanding stock. All obligations under 2.(a)
above must be completed prior to commencement of 2.(b) below.

(b) Share Issuance: In order to acquire up to 100% equity interest in SAP, SPLY
shall:

(iv) At its sole option, no later than 150 days from execution of definitive
Acquisition Agreement, issue to KM, $200,000 worth of shares of its common
stock, to acquire an additional undivided 19% equity interest in SAP by way of a
share exchange with KM.

(v) At its sole option, upon completion of 2.(b)(iv) above, and no later than
180 days from execution of definitive Acquisition Agreement, issue to KM,
$500,000 worth of shares of its common stock, to acquire the remaining undivided
51% equity interest in SAP by way of a share exchange with KM.

Upon completion of 2.(a) and 2.(b) above, SPLY shall have completed the
acquisition of 100% of SAP, subject to the execution of a retained royalty
agreement.

(c) Escrow and Leak-Out :

(i) Escrow: Shares identified in 2.(b)(iv) & (v) above (collectively, the
“Acquisition Shares”) and paid to KM shall have an escrow provision mutually
agreed upon by the Parties. The purpose of the escrow is to ensure an orderly
release of the stock to the market through a leak out provision, as defined in
2(c)(ii), below (“Leak-Out”), and in compliance with the SEC regulatory
restrictions on sale (reportable beneficial ownership and affiliate status) and
will only allow for release once the assets value has been established through
proof of concept trial.

(ii) Leak-Out: Acquisition shares issued to KM shall be subject to Leak Out
provisions that will consist of (a) a one year prohibition on the sale or
transfer of the SPLY Shares and (b) a prohibition on the sale of more than 50%
of the SPLY Shares in each 90 day period thereafter (and not more than 33% per
month), provided that any SPLY shares that may be sold in a 90 day period that
are not sold may be sold at any time after the end of such 90 day period. In
furtherance of enforcing this Leak-Out provision, KM agrees that all shares
issued shall be issued in certificated form with four (4) certificates in equal
amounts and SPLY’s counsel, Laxague Law, Inc. (attention: Joe Laxague), shall
keep physical custody of any share certificate(s) and will release such
certificates in accordance with the Leak-Out.

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3. Material Breach

Where either Party fails to meet its obligations pursuant to the Acquisition
Agreement in any material way, the non-breaching party shall notify the
breaching party of such breach (“Notice of Breach”) and the breaching party
shall then have 30 days in which to cure the breach (“Cure Period”). Where such
beach is not cured within the Cure Period, the non-breaching Party shall have
the sole right to: (i) waive such failure; or (ii) receive an additional 15%
royalty originally designated for the breaching party until a total of
$1,500,000 attributable to the additional 15% royalty has been collected by the
non-breaching Party.

4. Conditions to Closing.

(a) The obligation of SAP and KM to consummate the transactions described herein
shall be subject to the following conditions precedent. However, SAP and KM
retains the exclusive right to waive (in writing) any covenant or warranty found
in this Section:

 

(i) The execution and delivery by SPLY, SAP and KM of the Acquisition Agreement
in accordance with the time frame set forth in Article 1 of this Agreement and
such other documents, instruments and agreements as shall be reasonably deemed
necessary by mutual agreement of the Parties in order to consummate the
transactions contemplated herein in such form as the Parties shall deem
appropriate. The Acquisition Agreement shall contain, in addition to the terms
set forth herein, customary representations, warranties, covenants, conditions,
indemnities, escrows and other standard terms and provisions, as agreed to
between the Parties.

 

(ii) SAP and KM shall have conducted and completed to its sole satisfaction a
business, legal, tax and financial due diligence review of SPLY which shall be
completed by the day immediately prior to Closing.

 

(iii) Receipt by SPLY of all necessary regulatory and third party approvals,
consents and waivers, including any stockholder and Board of Directors' required
with respect to the transaction.

 

(iv) There shall not be any material adverse change in the financial condition
of SPLY from the date hereof through the date of Closing.

 

(v) Other than as indicated in Article 1, at Closing, none of the assets
underlying the Agreement shall be subject to any lien or encumbrance of any
character whatsoever or any adverse claims by any third parties.

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(b) The obligation of SPLY to consummate the transactions described herein shall
be subject to the following conditions precedent. However, SPLY retains the
exclusive right to waive (in writing) any covenant or warranty found in this
Section:

 

(i) The execution and delivery of the Acquisition Agreement in accordance with
the time frame set forth in Article 1 of this Agreement and such other
documents, instruments and agreements as shall reasonably be deemed necessary by
the Parties in order to consummate the transactions contemplated hereby in such
form as the Parties shall approve. The Acquisition Agreement shall contain, in
addition to the terms set forth herein, customary representations, warranties,
covenants, conditions, indemnities, escrows and other standard terms and
provisions, as agreed to between the Parties.

 

(ii) Receipt of all necessary regulatory and third party approvals, consents and
waivers, including any stockholder and Board of Directors' approvals with
respect to the transaction. SAP shall have obtained the necessary consents and
waivers of stockholders and members of the Board of Directors with respect to
the transaction prior to Closing.

 

(iii) Receipt of all information from SAP and KM (including that regarding the
assets underlying the Acquisition Agreement and, if applicable the audited
financial information regarding those assets, with the cost of such audit and
any related expenses to be paid by SPLY) that SPLY will need to include in the
report on Form 8-K to be filed with the US Securities and Exchange Commission.

 

5. Conditions Subsequent to Closing. Within Four (4) business days of the
Acquisition Agreement, SPLY shall complete and file all necessary reports with
the Securities and Exchange Commission including, but not limited to, a Current
Report on Form 8-K disclosing all material terms of the Agreement.

6. Expenses. Except as may be otherwise set out in the Acquisition Agreement,
the Parties shall pay each of their respective legal, accounting and any other
out-of-pocket expenses incurred in connection with this transaction, whether or
not the transaction is consummated. All finder’s fees, if any, shall be the
responsibility of the party incurring such fee, but shall in no way change the
terms hereof. Neither Party shall be fiscally responsible to the other in the
event that the transaction contemplated herein does not occur.

7. Confidentiality. The provisions of the Confidentiality Agreement previously
executed by the Parties shall remain in full force and effect.

8. Publicity; Public Companies. The Parties acknowledge that SPLY is a publicly
held company and as such is subject to certain United States federal and state
securities laws concerning the trading of its securities and all parties agree
to comply with all such applicable laws. No Party hereto shall, and each shall
cause their respective affiliates not to, issue any press release or otherwise
make any public statement or respond to any press inquiry with respect to this
letter or the transactions contemplated hereby without the prior approval of the
other party, which approval will not be unreasonably withheld, except as may be
required by law. Notwithstanding, no press release or public announcement shall
be made by either Party until after Closing and then only with written approval
of the Parties.

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9. Preparation of Acquisition Agreement. Upon approval by SAP and KM, as
evidenced by the return of this Agreement in its fully executed form, our
counsel in coordination with your counsel shall prepare the Acquisition
Agreement which shall contain certain provisions in accordance with the terms
found herein together with such customary terms and conditions as the Parties
mutually agree to.

10. Good Standing. At Closing, each of the Parties shall be in good standing as
corporations in their respective jurisdictions of incorporation and neither
shall be in violation of any United States federal or state securities or other
local laws governing either public or private companies.

 

 

11. No Shop. SPLY, SAP and KM agree that from the date of this Letter of Intent
until March 31, 2017, neither party nor any of affiliates, officers, directors,
employees, agents, or advisors thereof shall, directly or indirectly, solicit
offers from, negotiate with or in any manner encourage or consider any proposal
of any other person or entity relating to the subject matter herein, in whole or
in part.

12. Miscellaneous. This letter and the terms herein are open until March 31,
2017. Unless extended by mutual agreement in writing, if the Parties do not,
despite acting in good faith, enter into an Acquisition Agreement by that date,
this Letter shall terminate automatically. This Letter shall be governed by, and
construed in accordance with, the laws of the State of Nevada, without giving
effect to the principles of conflicts of laws thereof. This letter may be
executed in counterparts, each of which shall be an original, but all such
counterparts shall together constitute one and the same instrument.

Please indicate your agreement to the foregoing in the space provided below and
return it to the undersigned within two days of the date hereof.

 

Very truly yours,

 

SocialPlay USA, Inc.

 

 

By: /s/ Robert Rosner

Name: Robert Rosner

Title: President and CEO

 

 

AGREED TO AND ACCEPTED AS OF

THE DATE FIRST ABOVE WRITTEN:

 

Spot and Pay Inc.

 

 

By: /s/ Karthik Mani

Name: Karthik Mani

Title: President

 

AGREED TO AND ACCEPTED AS OF

THE DATE FIRST ABOVE WRITTEN:

 

 

By: /s/ Karthik Mani

Karthik Mani

  

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Schedule A 

 

 

Assets from SAP Spot and Pay application framework

•Spot and Pay Backend Application and frontend including iOS and Android
Application

•IP of Spot and Pay

•Source code, Innovation and any proprietary algorithm/tools used to make Spot
and Pay

•Servers and Infrastructure that makes Spot and Pay

 

Current Charity (variable pay) and Retail (fixed pay) application

 

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Schedule B

 

 

Milestone 1

•Complete the backend message system from Entity to consumer.

                                                 Immediate message after
pay/donate

                                                 Weekly scheduled message

•OnDemand message  

•Complete production setup - Commercial grade application setup in Cloud

•Get app into Playstore

•Get app into AppStore

 

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Schedule C

 

  

Milestone 2

•Signup clients (3-5) to Spot & Pay system

 

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