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Letter Of Intent

Letter of Intent

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 This Letter of Intent involves

NET ELEMENT INTERNATIONAL, INC. | Net Element International, Inc | TOT Group, Inc

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Title: LETTER OF INTENT
Date: 7/3/2013
Industry: Computer Services     Sector: Technology

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STRICTLY PRIVATE AND CONFIDENTIAL

 

TOT Group + Quickpay Letter of Intent


 

Letter of intent

 

This Letter of Intent (the "Agreement") is made as of June 27, 2013 (the “Effective Date”) by and between the Buyer and the Seller(s) listed below.

 

Term

Description

Buyer:

TOT Group, Inc., a Delaware Corporation (“ TOT ”). TOT is a wholly owned subsidiary of Net Element International, Inc. (“ NETE ”).

Seller(s):

Quickpay USA, Inc. (USA) - 100%

 

UPC-Kazakhstan, LLP, (KZ) - 100%

 

United Processing System of Panama, Inc. (PA) - 100%

 

Quickpay Multinational Payment System LTD (UAE) – 25%

 

MPS, LLC (RU) – 100%

 

MPS, LTD (HK) - 100%

 

Quickpay Columbia SAS (CO) – 100%

 

System Quickpay, LLC (KG) – 90%

 

Express MIT, LLC (KG) – 90%

 

(“QUICKPAY”)

 

Proposed transaction:

TOT will form new entities to mirror a structure needed to accommodate foreign jurisdictions; names to be determined (“NEWCO”).

 

Ilya Shurygin will be appointed as a President of NEWCO. All local new companies for international development shall be formed as subsidiaries of NEWCO.

 

QUICKPAY will contribute all of its assets, technology, intellectual property and other items that constitute the Business as defined below – (collectively, the “Assets”) to NEWCO. The contribution of the Assets to NEWCO is hereafter referred to as the “Contribution”. QUICKPAY and its officers represent and warrant to TOT that

 

(i) such assets are all of the assets currently used in the operation of the current business of QUICKPAY which includes but is not limited to the development, implementation and sales of payments acceptance terminals and customer relationship management and payments acceptance platform (the “ Business ”) and are sufficient to carry on such Businesses; and (ii) such Assets are free of liens or debt (except as disclosed) and they have not been pledged to any third party; and QUICKPAY shall provide such other warranties typically associated with a transaction of this nature.

 

 

 

Page 1 of 6

 

 

STRICTLY PRIVATE AND CONFIDENTIAL

 

TOT Group + Quickpay Letter of Intent


 

Term

Description

Consideration for the Transaction:

(a)   NEWCO will assume QUICKPAY’s auditable debt of approximately $1,500,000 (221,500,000 KZT and 721,013 RUR) as set forth in detail on “ Exhibit A ” hereto);

 

(b)  At closing of the Contribution, NEWCO will issue to QUICKPAY common stock of NEWCO, representing upon such issuance 35.5% of the total issued and outstanding common stock of NEWCO (the “Quickpay Shares”);

 

(c)   TOT to provide business resources (capital, business relationships and corporate governance) to commercialize the product in the target markets;

 

(d)  TOT will provide QUICKPAY with required resources for QUICKPAY to expand within Russia & to expand QUICKPAY within Russia & CIS, United States and Latin America markets including marketing, product development and business development expense;

 

(e)   Buyer shall have the sole and exclusive right, but not the obligation, at all times to purchase from Seller and Seller agrees to sell to Buyer, the Quickpay Shares (the “Option”). The aggregate Option exercise price for the total Quickpay Shares is set forth below (the “Exercise Price”). The Exercise Price shall be determined based upon the fair market value of the QUICKPAY Shares as of the end of the calendar month immediately preceding the date as to when a valuation is requested in accordance with the terms of this Option. A mutually acceptable, qualified third party appraiser shall determine the valuation of NEWCO.

 

Standstill/Conduct of Business:

TOT and QUICKPAY shall take any and all actions necessary and convenient to consummate the Contribution transaction (“Transaction”) QUICKPAY will refrain from taking any action, which would impair or delay the consummation of the Transaction.

 

QUICKPAY shall operate its businesses in the ordinary course and refrain from any extraordinary transactions during the negotiation of the proposed Transaction.

 

Representations & Warranties:

Typical for the contemplated Transaction and stock issuance.

 

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STRICTLY PRIVATE AND CONFIDENTIAL

 

TOT Group + Quickpay Letter of Intent


 

Term

Description

Transaction Closing Conditions:

The consummation of the Transaction and the Contribution is subject to the satisfaction (or TOT’s written waiver in its sole and absolute discretion) of the following conditions precedent:

 

(a)          The completion of definitive documentation relating to the Contribution containing representations, warranties, covenants and indemnities customary for the contemplated transaction and dependent on the results of TOT’s due diligence of QUICKPAY and the Business;

 

(b)           The completion of all due diligence of QUICKPAY and the Business (including, without li


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