PROPOSED TRANSACTION
BETWEEN
DATALOGIC INTERNATIONAL, INC., Buyer
AND
KIBOGA SYSTEMS, INC., SELLER
THIS LETTER OF INTENT SHALL EXPIRE AS OF 5:00 PM CDT ON THURSDAY, SEPTEMBER
11, 2003, UNLESS FULLY EXECUTED BY THE PARTIES PRIOR THERETO
(FAXED SIGNATURES ARE ACCEPTABLE)
September 11, 2003
Xx. Xxxxx Xxxxxx, President
Datalogic International, Inc.
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Dear Xx. Xxxxxx:
The purpose of this letter is to set forth the suggested terms of a
proposed transaction between Datalogic International, Inc., a
Delaware corporation, ("Buyer") and Kiboga Systems, Inc., a Texas
corporation, ("Seller") wherein Buyer shall acquire all of the
outstanding shares of stock of Seller in accordance with the terms
below. It is understood that the surviving company shall be Buyer.
I. THE PRINCIPAL TERMS OF THE PURCHASE AND SALE WOULD BE AS FOLLOWS:
A. Buyer will merge with and/or acquire all of the outstanding
shares of Seller, free and clear of all liens, encumbrances or
claims, in a stock for stock exchange.
B. The assets held by the Seller and to be acquired
by this merger are all properties and assets owned by
Seller, or otherwise employed, used or available for use
in Seller's Business [the "Business" being defined as
the developing, manufacturing and distributing software
packages to law enforcement agencies throughout the
United States] real or personal, tangible or intangible,
of every kind and nature, wherever located, as of the
date of closing, which shall include:
1. all those assets as represented on the current financial
statements of Seller; and
2. no other liabilities in excess of those which are disclosed
on the current financial statements of Seller
C. The consideration to be paid by Buyer will be as follows:
1. On or before the closing of any merger or acquisition
transaction between the parties hereto, Buyer shall execute
a 4 to 1 reverse stock split applicable to all of its
approximately 35,824,996 shares of outstanding common stock
and to all common stock underlying any of its warrants,
preferred stock and stock options.
2. All outstanding options or warrants held by management or
affiliates of Buyer will be cancelled and any preferred
stock held by management or affiliates of Buyer will be
converted prior to the closing of any definitive merger or
acquisition between Buyer and Seller.
3. Buyer shall then issue the following to the Seller, in
exchange for all of the Seller's issued and outstanding
stock:
a. Five Hundred Thousand (500,000) common
shares in aggregate to the shareholders of
Kiboga; and.
b. Four Million Two Hundred Thousand
(4,200,000) preferred shares in aggregate to
the shareholders of Kiboga with the preferred
shares having an attribute of three (3) votes
per share and no other attributes or preferences.
4. The assets and liabilities of Buyer are and will be
accurately represented on the financial statements of
Buyer as of the date of closing of any merger or
acquisition of Seller.
D. The transaction contemplated herein is subject to the execution
and delivery by the parties hereto of a mutually satisfactory
definitive agreement containing representations and warranties
(which would survive the Closing), covenants and closing
conditions of a type which are customarily included in such
agreements, including, but not limited to, mutual indemnification
provisions.
II. THE TRANSACTION CONTEMPLATED HEREIN WOULD ALSO BE SUBJECT TO:
A. The approval thereof by the stockholders of Buyer and Seller, as
regarding all actions necessary to effectuate the proposed
transaction which require said shareholder approval;
B. Buyer and Seller being satisfied with the results of their
respective "due diligence" investigations of the businesses,
liabilities, properties and assets;
C. The Purchase/Merger Agreement will provide, as a condition to
close, that there be (1) no material adverse change in the
Business or the financial statements of Buyer and Seller from the
date of signing to the closing date; or (2) material deviation in
Seller's or Buyer's representations and warranties prior to the
Closing Date;
D. The receipt of all required third party, governmental and
administrative consents and approvals; and
E. The filing of a proxy statement by Buyer whereby new Directors
would be provided as nominated by the current Board of Seller, and
the transaction contemplated by this letter including any reverse
split would be presented for shareholder approval and approved
by said shareholders;
III. DUE DILIGENCE/CONFIDENTIALITY/GOOD FAITH PROVISIONS:
A. Buyer and its representatives, and Seller and its
representatives, shall each be given access, during normal
business hours and upon prior notification, to the other's
facilities, employees, books and records for the purpose of
conducting a "due diligence" investigation. Both parties agree
that all confidential information which is obtained by each in
connection with the foregoing shall be maintained on a
confidential basis, in accordance with the terms of the previously
executed non-disclosure agreements. Both parties further agree
that if the transactions contemplated hereby are not consummated
for any reason whatsoever, they shall promptly return to the other
all written manifestations of said confidential information
(and all copies thereof). Each party shall cooperate fully
in connection with any investigation hereunder.
B. As long as Buyer is proceeding in good faith with respect to the
transaction contemplated hereby, the Seller shall not, nor shall
its officers, directors or shareholders, authorize or permit the
Seller's officers, directors or employees or any investment
banker, financial advisor, attorney, accountant or other
representative of the Seller to sell, agree to sell or enter into
any arrangements or negotiations or authorize any third party
to enter into negotiations or solicit offers of any type relating
to the sale, transfer or other disposition of the Seller's assets
or capital stock (including any merger or consolidation involving
the Seller), however, that the foregoing prohibition shall
terminate if a definitive agreement has not been executed and
delivered by the parties within seven (7) days from the date of
execution. The definitive agreement will provide for a closing
date on or about September 19, 2003 (the "Closing") unless
otherwise extended by mutual agreement of the parties hereto.
IV. PUBLIC ANNOUNCEMENTS:
A. Prior to the issuance of any press releases or any other public
statements with respect to the contents of this document or the
transactions contemplated hereby, each party shall agree in
writing as to the content, manner and timing of any such release
or statement, except as may be required by law or applicable
stock exchange or SEC.
V. FINDERS FEE/BROKER FEE/TRANSACTION COSTS:
A. The parties state that no individuals and/or entities who are not
directors, officers, employees or affiliates of Buyer or Seller
have assisted in this transaction and no finder's fees,
commissions, brokerage fees or like payments need or shall be
paid.
B. Simultaneous with the execution of a binding purchase and sale
agreement related hereto, Buyer and Seller shall jointly execute
consulting agreements with the current CEO and current President
of Buyer, as consideration for assistance with the transition
contemplated herein.
C. The exchange is intended to be tax-free stock for stock exchange
reorganization under the Internal Revenue Code.
D. Buyer and Seller shall have received all permits, authorizations,
regulatory approvals and third party consents necessary for the
consummation of the change of domicile and/or the Closing of the
Plan of Reorganization, and all applicable legal requirements
shall have been satisfied.
Except for the provisions of paragraphs III and IV (which are intended to be
binding), this letter of understanding does not, and is not intended to,
constitute a legally binding obligation on the part of any of the parties
hereto. It does, however, constitute a statement of the intention of said
parties to promptly proceed in good faith with respect to the transactions
contemplated hereby. If the foregoing is in accordance with your
understanding, please so acknowledge by signing a copy of this letter and
returning it to the undersigned.
Very truly yours,
Kiboga Systems, Inc.
By:
/s/ Xxxx X. Xxxxxx
___________________________________
Xxxx X. Xxxxxx, Chairman & CEO
AGREED TO AND ACCEPTED AS OF
THIS 11 DAY OF SEPTEMBER, 2003
Datalogic International, Inc.
By:
/s/ Xxxxx Xxxxxx
____________________________
Xxxxx Xxxxxx, President, COO and CFO
