EXHIBIT 10.1 - Letter of Intent
Dental Spas, LLC
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
February 23, 2006
Private and Confidential
Xx. Xxx X. Xxxxxx
President and Chief Executive Officer
Mobile Nation, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Re: "Letter of Intent" ("LOI"), for the Share Exchange Agreement involving
Dental Spas, LLC ("DSL") and Mobile Nation, Inc. (the "Company") a publicly
traded company.
Dear Xx. Xxxxxx:
In furtherance to our recent conversations, Dental Spas, LLC is pleased to
submit this proposal for purposes of consummating the proposed transaction with
Mobile Nation, Inc. ("Mobile Nation" or the "Company"), which will result in a
business combination involving the Company and DSL.
This LOI sets forth the principal terms of a proposed transaction regarding the
issuance of approximately 13,764,000 shares of a combination of the Company's
common and preferred stock, in exchange for the transfer of 100% of the shares
or membership interests of DSL to the Company (the "Exchange"). Whichever form
the Exchange takes, the objective will be to place all the assets of BriteSmile
Spas, LLC (pursuant to the Purchase Agreement dated January 13, 2006 consisting
of 17 dental spas formerly owned by BriteSmile, Inc. and certain US and
international product distribution rights) into the control and the direct or
indirect ownership of the Company and to fund the transaction and working
capital for the business with $27 million of debt and equity proceeds from a
private offering of the Company's stock. This LOI is a non-binding expression
of the general terms and conditions of the Exchange transaction, subject to
specific terms and conditions that will be set forth in a mutually acceptable
definitive Share Exchange Agreement hereinafter (the "Exchange Agreement")
providing for the Exchange, which is to be approved by both parties' Board of
Directors and signed by their appointed representatives; however, the following
agreement set forth in the balance of this paragraph shall be binding on the
parties: For a period of 60 days following execution of this LOI by the second
party to sign, (1) unless this LOI is terminated by DSL due to adverse due
diligence findings regarding the business, financial condition or liabilities
of the Company, (2) unless the DSL-BriteSmile Purchase Agreement is terminated,
DSL shall not engage in negotiations with, or accept any offer from, another
party to effect a reverse merger of DSL or any affiliate into an SEC registered
company, and neither the Company nor Xxx Xxxxxx shall engage in negotiations
with, or accept any offer from, another party to effect a business combination
between the Company and another company. This LOI will contain appropriate
representations and warranties, as well as customary covenants, indemnification
and conditions in form and substance satisfactory to both DSL and the Company
and their respective counsels, and an opportunity for DSL to perform
appropriate due diligence inquiries and review of the Company's SEC filings and
other related documents to determine the business, financial condition and
liabilities of the Company.
1. Representations and Warranties.
Representations and warranties of the Company. (i) The Company is a fully
reporting publicly-traded company that trades under the trading symbol XXXX.XX.
The Company has 20,000,000 shares of common stock, with a $.001 par value per
share (the "Common Shares") authorized, of which approximately 573,500 shares
of Common Stock are issued and outstanding, and 10,000 authorized shares of
preferred stock with a $40.00 par value per share (the "Preferred Shares"), of
which 0 shares are outstanding. The Company has made no commitments,
contingent or otherwise, to issue any securities of the Company or any
subsidiary thereof to any person. The Company has now, and will have at the
closing of the transactions contemplated by the Exchange Agreement (the
"Closing"), all requisite legal and corporate power and authority to enter into
and perform its obligations under the Exchange Agreement, upon the action of
its board of directors and without consent of or prior notification to
shareholders; however, to effect this end, the Company may need to accept
convertible debt from DSL's equity investor and convert such debt to preferred
stock after the Closing and after effecting an amendment to the Company's
governing documents permitting the Company to issue blank check preferred stock
upon the authorization of its board of directors. (ii) All information
relating to or concerning the Company set forth in the LOI and Exchange
Agreement or provided to DSL in writing or orally by senior management or
counsel to DSL in connection with the transactions contemplated hereby is and
shall be true and correct in all material respects. No event or circumstance
known to the Company has occurred or exists with respect to the Company or its
business, properties, prospects, operations or financial condition, which has
not been disclosed.
(iii) The minute books of the Company are maintained by the Company and contain
accurate summary records of all meetings and written consents to action of the
Company's stockholders, the Board of Directors and all committees, if any,
appointed by the Board. The Company is SOX compliant and current with all SEC
filings and audit reports accurately and completely reflect all material
information purported to be shown therein in all material respects. (iv)
Pending the Closing, MTNT shall issue no Preferred or Common Shares or grant
any rights to be issued Preferred or Common Shares. Representations and
warranties of both parties. (v) Between the date of this LOI and the closing of
the Exchange transaction, each party will continue to conduct its business as
it is presently conducted subject to the terms and conditions of this
agreement. Pending the Closing, each party agrees that there will be no
material adverse change to their business or their capitalization.
2. Transaction. The terms and conditions of the Exchange transaction shall
include the following:
(a) Prior to the Closing, the Company will have 573,500 Common Shares issued,
outstanding and committed. This is to represent approximately four percent (4%)
fully diluted of the post-Closing issued and outstanding shares.
(b) DSL's members and one or more investors providing funds for the purchase of
the dental spas in connection with the transaction shall receive an aggregate
of approximately 13,764,000 shares of Company Common and Preferred Stock. This
shall represent approximately ninety-six percent (96%) fully diluted of the
post-Closing issued and outstanding shares. If the transaction is taxable to
the parties, each party's obligation to proceed to Closing shall be subject to
the reasonable satisfaction of such party that substantial taxable income shall
not be recognized by such party or its members or shareholders in connection
with the transactions contemplated by the Exchange transaction and Agreement.
(c) All filings required to be made under federal and state laws, and the rules
and regulations promulgated there under, will be made as soon as practicable,
and in accordance with the requirements of the SEC, following the approval of
the Exchange Agreement by the respective Boards of Directors and by the members
of DSL.
(d) The Company will use up to four hundred thousand dollars ($400,000) of
escrowed funds to be provided by DSL prior to or at Closing to pay existing
liabilities and fees connected with the proposed transaction, so that the
liabilities remaining on the balance sheet of the Company (other than any debt
issued at Closing) shall not exceed $1000 in aggregate.
(e) Prior to the Closing, Company shall have 0 outstanding shares of preferred
stock.
(f) The Company will satisfy all instruments convertible into shares of Common
Stock prior to or at Closing.
(g) Both parties agree to use "best efforts" to have the Exchange Agreement
executed within the time frame necessary to fulfill the obligations of the
Purchase Agreement, but no later than 60 days from the date this LOI unless
the parties find it mutually beneficial to extend the time frame and agree to
do so in writing,
(h) On or prior to the execution of the Exchange Agreement, each company shall
obtain the necessary shareholder/member and/or board approvals to effect the
Close of the proposed transaction; however, nothing in this LOI is intended to
negate the representations and warranties of the Company set forth in paragraph
1(i).
(i) Each party shall, to its satisfaction, complete its due diligence
investigation of the other party, and its obligation to proceed to Closing
shall be subject to its evaluation of the results of such investigation.
(j) At the Closing, the officers and directors of the Company shall resign and
elect those individuals designated by DSL to serve on the Company's Board of
Directors until the next annual meeting of the shareholders of the Company.
Also, upon closing of the transaction, the officers of DSL shall be engaged on
terms (addressing titles, authority, duties etc.) acceptable to DSL and its
existing officers who shall comprise and have the right to designate the
officers of the Company for such terms as is so approved by the Board of
Directors.
(k) At the Closing DSL will be responsible for the Company name and symbol
change.
(l) DSL acknowledges it has 4 business day after the Closing to file a valid
Form 8-K as required by the Securities and Exchange Commission upon the
consummation of the transaction contemplated hereby. Additionally, DSL will
take such steps as shall be reasonable to file an updated 15-c211.
(m) The Company shall have filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.
4. Assets/Liabilities/Good Standing.
The Company warrants that it is not aware of any pending litigation, has no
unreported liabilities, and is in good standing with the State of its
incorporation.
5. Closing/Due Diligence.
This LOI is to be signed by the parties no later than close of business on
February 23, 2006. The Exchange Agreement shall be executed as soon as
practicable thereafter.
The obligations of the parties to negotiate the Exchange Agreement and to
consummate the Closing are subject to conditions that will include, but will
not be limited to, those set forth above, and the following:
(a) No events shall have occurred that individually or in the aggregate have a
material adverse effect on the business or financial condition of the Company.
(b) There shall have been received all governmental and regulatory approvals
and any consents from third parties necessary to consummate the transactions;
(d) In conducting a review and examination of the management, business,
markets, assets, liabilities and financial condition of DSL and the Company,
neither party shall become aware of any liability, condition, fact or event
that, in such party's discretion, would make the proposed acquisition
inadvisable or not in the best interests of such party;
(e) The Exchange Agreement and any other final terms of the proposed
transactions shall have been approved by the Board of Directors of DSL and the
Board of Directors of the Company;
(f) An escrow shall have been created and funded with $400,000 on terms
acceptable to Company and not inconsistent with this LOI to be released to the
Company on or before the Closing date.
6. Standstill/Confidentiality.
In consideration of a $25,000 non refundable deposit and the additional expense
to be incurred by DSL in conducting its due diligence investigation, and
preparations for the Exchange, upon the execution and return of this LOI,
accompanied by the non refundable deposit the Company agrees to terminate all
on going merger negotiations and further agrees that for a period of 60 days
from the execution of the LOI and receipt of the non refundable deposit the
Company and/or its respective representatives will not (a) take action to
negotiate, solicit, promote, encourage or facilitate (including providing any
information to any third party) any transaction with any party other than as
provided in the Exchange Agreement, or (b) disclose the transaction proposed
in this LOI or any of its terms to any person other than on a strictly need-to-
know basis or as required by the Securities and Exchange Commission's
regulations.
7. Expenses.
All expenses connected with the transactions contemplated hereby shall be the
responsibility of the party incurring the expense, unless otherwise stipulated.
8. Press Release/Miscellaneous.
The specific terms of this LOI shall not be disclosed by any party to any
person, except as may be required by the Securities and Exchange Commission's
regulations, or as may be necessary to receive requisite regulatory or
corporate approvals. The parties agree that any press release or other
announcement announcing the transaction prior to the Closing will only be made
upon their joint approval. This LOI and the Exchange Agreement shall be
governed by and construed in accordance with the laws of the State of Nevada
and the regulations of the Securities and Exchange Commission.
9. Access to Information.
Upon execution of this LOI, each party agrees to permit the other and its
employees, attorneys, accountants, investment bankers and other agents to have
full and free access, during normal business hours, to the books and records
of the other and to the other's premises, employees, customers and suppliers
(each party will work closely with the other's senior management to avoid
disruption of these relationships) for the purpose of investigating the
business and financial affairs and prospects of each other.
Please indicate your acceptance and approval of this LOI by signing and dating
below, and by returning a copy of this executed Letter to Dental Spas, LLC.
Dated: February 23, 2006
Dental Spas, LLC
By: /s/ Xxxxxx X. Xxxxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxxxx, Manager
Accepted and Agreed to:
Mobile Nation, Inc.
By: /s/ Xxx Xxxxxx, President/CEO
-------------------------------
Xxx Xxxxxx, President/CEO
Date: Feberuary 23, 2006
