MobilePro Corp 6701 Democracy Blvd. Suite 300 Bethesda, MD 20817
 |
MobilePro
Corp
0000
Xxxxxxxxx Xxxx.
Suite
300
Bethesda,
MD 20817
|
January
5, 2006
Mr.
Xxxxx
Xxxxxxxx, CEO
Kite
Broadband, LLC and Kite Networks, Inc.
000
X.
Xxxxx Xx., Xxxxx X
Ridgeland,
MS 39157
Dear
Xxxxx:
This
Letter of Intent summarizes the primary terms upon which Mobilepro Corp.,
a
Delaware corporation or an affiliate (“Buyer”) intends to acquire from Kite
Broadband, LLC, a Mississippi limited liability company and its non-Buyer
members (“KB”) all of the non-Buyer membership interests and from Kite Networks,
Inc., a Mississippi corporation and its shareholders (“KN”) 100% of the issued
and outstanding capital stock of Kite Networks, Inc. (the “Stock”). With respect
to such transactions, the parties generally intend to negotiate a Stock Purchase
Agreement for the acquisition of KN and a transfer agreement and waiver of
rights agreement for the acquisition of KB and other ancillary agreements
as
will be reasonably requested by either party and reasonably agreed to by
the
other party including customary Officer’s Certificates ("Definitive
Agreements"), such Definitive Agreements being generally contemplated to
be in
accordance with the following terms:
| 1. |
Purchase
Consideration.
At the closing of the transaction (“Closing”), Buyer will pay to KB’s
non-Buyer members 76,500,000 shares of MobilePro’s common stock
$.001
par value per share (“Common Stock”) and to KN’s shareholders 13,500,000
shares of Common Stock
with all such shares of Common Stock to have customary piggyback
registration rights plus demand registration rights commencing on
the
6-month anniversary of the Closing of the transaction. Buyer will
pay all
expenses associated with the registration inclusive of attorneys
fees
associated with the issuer’s opinion. Shareholders will bear expenses and
legal fees associated with retention of their own counsel, if required.
|
49%
of
any current assets minus liabilities of KB and 100% of any current assets
minus
liabilities of KN will be added to the purchase price, with such payment
made in
stock at the rate of one share for every 17.4 cents of addition to the
appropriate ownership group.
As
a
condition to the Closing, Buyer, KB and KN or employees of KN will enter
into
such other agreements as MobilePro reasonably deems appropriate which is
expected to include employment and/or consulting contracts with key employees
including Xx. Xxxxxxxx. It is currently contemplated that Xxxxx will retain
most
if not all of KN’s employees post-closing. The employment and/or consulting
contracts with such key employees shall be entered into contemporaneously
with
the execution of the Definitive Agreements and shall become an integral part
of
such documents.
1
|
2.
|
Conditions
to Effectiveness.
The effectiveness of the Definitive Agreements will be subject
to the
satisfaction of the following
conditions:
|
| a. |
Due
Diligence; Access.
Following execution of this Letter of Intent by Xxxxx, KB and KN
and
before January 13, 2006, Buyer shall conduct an investigation into
KN’s
assets, properties, contracts, employees, financial statements,
projections, operations, network, technologies, and businesses (“Due
Diligence Period”). Buyer, in its sole and absolute discretion shall be
satisfied with the results of such due diligence investigation. KN
agrees
to make its reasonable efforts to fully cooperate with Xxxxx in the
conduct of its due diligence investigation under the intended timeframe.
Buyer will cooperate with KN in conducting due diligence in a reasonable
manner during normal business hours so as to minimize any possible
disruption to the KN’s operations. If at any time during the Due Diligence
Period, the results of Xxxxx’s due diligence investigation are not fully
satisfactory to Buyer for any reason in its sole discretion, Buyer
shall
be entitled to notify KB and KN within five days of ceasing due diligence
that Buyer has ceased due diligence and is canceling this Letter
of
Intent. If Buyer ceases due diligence for any reason, the ‘No-Shop’ in
Section 3(a) is immediately released. During the same time period,
KB and
KN shall likewise conduct due diligence regarding Buyer’s financial
condition, contracts, employees, financial statements and projections,
including but not limited to due diligence of any third party investment
advisors. KB and KN shall in their sole discretion be satisfied with
the
results of such investigation. Xxxxx agrees to make its reasonable
efforts
to fully cooperate with KB and KN in the conduct of their due diligence
investigation under the intended timeframe. KN and KB will cooperate
with
buyer in conducting due diligence in a reasonable manner during normal
business hours so as to minimize any possible disruption to the Buyer’s
operations. If at any time during the Due Diligence Period, the results
of
KB and KN’s due diligence investigations are not fully satisfactory to KB
and KN for any reason in its sole discretion, KB and/or KN shall
be
entitled to notify Buyer within five days of ceasing due diligence
that KB
or KN has ceased due diligence and is canceling this Letter of Intent.
|
| b. |
Third
Party Consents and Approvals.
Buyer and Seller shall have received all necessary consents and
waivers of
third parties, governmental entities and potential beneficiaries
of the
management earn-out for KB.
|
2
| c. |
Definitive
Agreements.
Definitive Agreements containing customary representations, warranties,
covenants and indemnities by Buyer and KN and KB shall have been
executed
and delivered.
|
| d. |
Approval.
The board of directors of Buyer and the board of directors and
Stockholders of KN and board of managers and members of KB shall
have
approved the Definitive Agreements and the transactions contemplated
therein. Buyer understands and acknowledges that the shareholders
of KN
will be required to approve the Definitive Agreements by a majority
vote
and that the members of KB will each individually have to agree
and
approve the sale of its membership units in KB and individually
execute
the aforesaid agreements.
|
| e. |
Closing.
Each party acknowledges that transactions contemplated in this Letter
of
Intent is to be expedited as is reasonable, and that they generally
contemplate using diligent efforts to close the transaction by January
23,
2006.
|
| 3. |
Miscellaneous.
|
a. No-Shop.
In
consideration of the expense and effort that will be expended by Buyer in
due
diligence and the negotiation of the Definitive Agreements, neither KN, KB
nor
its Members or Stockholders or affiliates will, directly, indirectly or
otherwise, solicit or entertain offers from, negotiate with or in any manner
encourage, discuss, accept or consider any proposal of any other person or
entity relating to a transaction of the type set forth herein until the earlier
to occur of the Closing, the date on which Buyer, KB and KN agree in writing
to
discontinue negotiations regarding such a transaction on the terms set forth
herein, or January 23, 2006.
b. Definitive
Agreements; Consents.
Buyer,
KB and KN shall negotiate in good faith to arrive at mutually acceptable
Definitive Agreements for approval, execution and delivery on the earliest
practicable date. Buyer, KB and KN shall cooperate with each other and proceed,
as promptly as is reasonably practicable, to seek to obtain all necessary
consents and approvals, if any, from third parties or governmental entities,
and
to endeavor to comply with all other legal or contractual requirements for,
or
preconditions to, the execution and consummation of the Definitive
Agreements.
c. Confidentiality.
Each of
Buyer, KB and KN and certain of its respective members and/or Stockholders
covenant and agree that, except as consented to by the parties, neither they
nor
any of their respective officers, directors, employees, agents or
representatives will disclose any confidential information of the other to
any
third party, except (i) as required by law, or (ii) to a party’s accountants,
lawyers, employees, advisors, and representatives in connection with evaluating
whether to proceed with negotiating and closing the transactions contemplated
herein, or (iii) in connection with obtaining consents required by the
Definitive Agreements. Notwithstanding this section 3(c), a press release
announcing this letter of intent shall be issued by Buyer to comply with
SEC
rules regarding material disclosures. KB and KN shall have the reasonable
right
of prior review of such press release.
3
d. Costs.
Buyer,
KB and KN shall be responsible for and bear all of their own costs and expenses
incurred in connection with the proposed transaction, including expenses
of
their respective representatives, lawyers, and accountants, incurred at any
time
in connection with pursuing or consummating the proposed transaction.
e. No
Material Changes in Business.
From and
after the date of this Letter of Intent until the earlier to occur of the
termination of this Letter of Intent or the Closing, KB and KN will use
commercially reasonable efforts to maintain their Businesses in accordance
with
its customary practices and otherwise to conduct its business in the ordinary
course in the manner in which it has heretofore been conducted and to preserve
its business relationships with customers, suppliers, and content providers.
f. Binding
Nature of Letter.
i.
Sections 1 and 2 of this Letter of Intent (collectively, the "Nonbinding
Provisions") reflect our mutual understanding of the matters described in
them,
but each party acknowledges that the Nonbinding Provisions are not intended
to
create or constitute any legally binding obligation between Buyer, KB and
KN,
and neither Buyer nor KB nor KN shall have any obligation to refrain from
competition with the other or with respect to the Nonbinding Provisions until
fully integrated, Definitive Agreements and other related documents are
prepared, authorized, executed and delivered by the parties. Until such time
as
the foregoing documents are prepared, authorized, executed and delivered
by and
between all parties, Buyer shall have the right to conduct its business and
KB
and KN shall have the right to conduct its business in the manner currently
conducted and Buyer and KB and KN shall be under no obligation to the other
except with respect to the Binding Provisions (as hereinafter defined) of
this
Letter of Intent. If the Definitive Agreements are not prepared, authorized,
executed or delivered for any reason, no party to this Letter of Intent shall
have any liability to any other party to this Letter of Intent based upon,
arising from, or relating to the Nonbinding Provisions.
ii. Upon
execution by Xxxxx, KB and KN and certain of its Stockholders of this Letter
of
Intent or counterparts thereof, Section 3 of this Letter of Intent
(collectively, the "Binding Provisions") shall constitute the legally binding
and enforceable agreement of Buyer, KB and KN (in recognition of the significant
costs to be borne by Xxxxx KB and KN in pursuing the transaction set forth
herein and further as to their mutual undertakings as to the matters described
herein). The Binding Provisions may be terminated (A) by mutual written consent
of Buyer, KB and KN; or (B) upon written notice by either Buyer or KB or
KN if
the Definitive Agreements have not been executed by January 23, 2006 provided,
however that the termination of the Binding Provisions shall not affect the
liability for breach of any of the Binding Provisions prior to the
termination.
h. Counterparts,
etc.
This
Letter of Intent may be executed in separate counterparts, none of which
need
contain the signatures of all parties, each of which shall be deemed to be
an
original, and all of which taken together constitute one and the same
instrument. Telecopied signatures shall be deemed to have the same effect
as an
original.
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If
you
are in agreement with the foregoing as a basis for negotiating Definitive
Agreements between Buyer, KB and KN and its Stockholders and Members with
respect to the matters set forth herein, please execute the enclosed duplicate
copy of this letter and return it to me by fax.
| Sincerely, | ||
| MOBILEPRO CORP. | ||
| |
|
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| By: /s/ Xxx X. Xxxxxx | ||
| Name: Xxx X. Xxxxxx | ||
|
Title: President and CEO
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Date: January 5, 2006
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Fax: 000.000.0000
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Accepted
and Agreed:
KITE
BROADBAND, LLC
By:
Name:
Xxxxx X. Xxxxxxxx, Xx.
Title:
Chief Executive Officer
Date:
January 5, 2006
KITE
NETWORKS, INC.
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
Name:
Xxxxx X. Xxxxxxxx, Xx.
Title:
President & Chief Executive Officer
Date:
January 5, 2006
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