Attached files
EXHIBIT 99.2
[PROPALMS LOGO APPEARS HERE]
Mr. Gary Ball
President
Infrared Systems International
15 N. Longspur Drive
The Woodlands, TX 77380
RE: LETTER OF INTENT FOR THE REORGANIZATION OF INFRARED SYSTEMS INTERNATIONAL
Dear Mr. Ball:
This letter of intent (the "Letter of Intent") shall confirm our mutual
intentions to engage in negotiations leading to a definitive agreement (the
"Agreement") by which Propalms, Inc. ("PRPM"), with its principal place of
business at Unit 4, Park Farm Courtyard, Easthorpe, Malton, North Yorkshire Y017
6QX, United Kingdom will sell its ownership in its subsidiary, Focus Systems,
Inc. ("FS") to Infrared Systems International, with its principal place of
business at 15 N. Longspur Drive, The Woodlands, TX 77380 ("IFRS") in return for
a controlling interest in IFRS.
We propose that formal agreements (the "Transaction Agreements") describing the
transactions outlined below (the "Transactions") be negotiated and executed by
our respective Boards of Directors and that the Transaction Agreements contain
the following general terms and conditions.
A. THE TRANSACTIONS.
(i) At the Closing Date, PRPM will acquire eighty-nine and nine tenths
percent (89.9%) percent of the outstanding common shares of IFRS (the "Purchase
Shares") for an aggregate purchase price (the "Purchase Price") of Two Hundred
Thousand Dollars ($200,000). The Purchase Price shall consist of a cash payment
of Thirty Thousand Dollars ($30,000) at the Closing Date and a promissory note
(the "Note") for One Hundred Seventy Thousand Dollars ($170,000). The Note shall
be payable in twelve equal monthly instalments of $14,166.66 commencing ninety
(90) days after the Closing Date, shall not bear interest if paid when due, and
shall be secured by the Purchase Shares (subject to release of 600,000 of the
Purchase Shares upon timely receipt of the first of the twelve equal monthly,
300,000 of the Purchase Shares upon timely receipt of each of the second through
eleventh of the twelve equally monthly instalments, and the balance of the
Purchase Shares upon the timely receipt of the twelfth of the twelve equal
monthly instalments). Based on the currently outstanding common stock of IFRS of
1,167,279 Shares, the number of Purchase Shares is expected to be 11,557,217
shares. In the event that an instalment of the Note is not paid when due, which
non-payment is not cured within five (5) business days after written notice
thereof, the balance of the Note and the Purchase Shares remaining in escrow
shall be transferred to Gary Ball
(ii) Immediately after the issuance of the Purchase Shares by IFRS at the
Closing Date, IFRS will acquire all of the outstanding common shares of FS (the
"FS Acquisition") in exchange for 3,000,000 shares of common stock of IFRS (the
"Acquisition Shares"). IFRS shall own 100% of the equity of FS immediately after
the FS Acquisition. The Acquisition Shares shall be valued at Fifty Cents
($0.50) per share.
(iii) At the Closing, (1) all IFRS corporate records, board minutes, bank
records and bank accounts will be transferred to PRPM, (2) all Directors and
officers of IFRS shall resign, and (3) William Wright will be appointed
Chairman, President and CEO of IFRS.
(iv) Immediately following the closing of the FS Acquisition, PRPM shall
transfer the Purchase Shares and the Note to William Wright in exchange for Mr.
Wright's assumption of the Note, which assumption shall include a full release
of PRPM's obligations by IFRS. William Wright will be solely responsible for
payment of the Note.
(v) Prior to the Closing Date, IFRS will incorporate a subsidiary ("IFRS
Sub") and will on the Closing Date transfer all of its assets (including the
Purchase Price) to IFRS Sub. IFRS Sub will assume all of the liabilities of IFRS
as of the Closing Date and will agree to indemnify IFRS against any liabilities
existing on the Closing Date or arising from the business of IFRS Sub. IFRS Sub
shall be managed solely by Gary Ball until either of the events specified in
A(iii) below occurs.
(vi) Gary Ball shall be solely responsible for managing IFRS Sub, and shall
receive in consideration for his management services such cash management fee
from IFRS Sub or right to purchase shares of IFRS Sub as the Board of Directors
of IFRS shall determine prior to the Closing. All expenses of IFRS Sub,
including the cost of the financial information provided by it to IFRS for
preparation of IFRS financial statements, shall be borne by IFRS Sub.
(vii) IFRS will, at the sole expense of IFRS Sub and upon the written
election of Gary Ball delivered within twelve (12) months after the Closing
Date, either (1) distribute 100% of the outstanding stock of IFRS Sub to the
then-holders of Common Stock of IFRS other than (a) holders of the Purchase
Shares or the Acquisition Shares) and (b) persons holding Common Stock of IFRS
issued after the Closing Date other than shares of Common Stock issued or
issuable to Gary Ball pursuant to A(v) above, (2) upon the sale of substantially
all of the assets of IFRS Sub to a third party, distribute the net proceeds
therefrom to the holders of Common Stock of IFRS who would have received shares
of IFRS Sub pursuant to clause (1) above, or (3) provided that the fair market
value of IFRS is then less than $1,000,000, sell IFRS Sub to Gary Ball for the
then-agreed fair market value of the IFRS Sub, subject to indemnification by
Gary Ball of IFRS for any liabilities of IFRS Sub.
B. TRANSACTION AGREEMENTS.
The Transaction Agreements shall include, contain or provide:
(i) CLOSING CONDITIONS. IFRS's and PRPM's respective obligations to
complete the Transactions shall be subject to the satisfaction of usual and
customary conditions (any of which is susceptible to waiver by the party
affected detrimentally), which shall include, without limitation, the following:
a. PRPM, IFRS, and (where applicable) William Wright shall have
executed mutually satisfactory Transaction Agreements
consistent with the terms set forth in this Letter of
Intent;
b. The Board of Directors of IFRS and Board of Directors and,
if required by applicable law, the stockholders of PRPM
shall have approved the transactions contemplated hereby. If
it is determined that approval of the stockholders of IFRS
is required to approve the transactions contemplated hereby,
IFRS shall have the right to terminate this Letter of
Intent.
c. Each of IFRS and PRPM shall have been satisfied with the
results of its review and investigation of the other's
business;
d. As of the Closing Date, IFRS shall have filed with the
Securities and Exchange Commission all periodic filings
required by the Securities Exchange Act to that date and
shall provide sufficiently documented books and records to
PRPM to allow subsequent filings to be prepared.
e. As of the Closing Date, there shall not be pending any
litigation to which IFRS or PRPM is a party and which is
reasonably likely to have a material adverse effect on the
businesses of IFRS or PRPM, as applicable, or the proposed
Transactions;
f. IFRS and PRPM shall have received all permits,
authorizations, regulatory approvals and third party
consents necessary for the consummation of the Closing of
the Transaction Agreements, and all applicable legal
requirements shall have been satisfied.
g. As of the Closing Date, the common stock of IFRS shall be
listed for quotation on the OTCBB;
h. Immediately prior to the Closing on the Closing Date, the
total outstanding capital stock of IFRS shall consist of
1,167,279 common shares and no preferred shares, and there
shall be no options, warrants or rights to acquire capital
stock of IFRS whether for additional consideration or on
conversion other than as provided in the Transaction
Agreements;
i. No less than ten days prior to the Closing Date, IFRS shall
have mailed to its shareholders of record an information
statement in compliance with SEC Rule 14f-1, and PRPM and
William Wright shall provide to IFRS the information
required to be provided in such information statement;
[NOTE; RULE 14F-1 REQUIRES THE FILING OF SUCH NOTICE AT
LEAST 10 DAYS PRIOR TO THE DATE OF A CHANGE IN A MAJORITY OF
DIRECTORS; WE CAN EITHER DELAY THE CLOSING UNTIL 10 DAYS
AFTER SUCH FORM IS FILED, OR WE CAN DELAY THE DATE THAT A
MAJORITY OF DIRECTORS OF IFRS IS CHANGED UNTIL AFTER THE
CLOSING, WHEN THE 10 DAY NOTICE HAS BEEN SATISFIED.
j. There shall not be any material adverse change in, or effect
on, either of IFRS's or FS' assets, financial condition,
operating results, customer and employee relations, or
business prospects or the financial statements theretofore
supplied by IFRS or PRPM which is, or may reasonably be
expected to be, materially adverse to the respective
business, operations (as now conducted), assets, prospects
or condition, financial or otherwise, of IFRS and FS or to
the proposed Transactions.
(ii) REPRESENTATIONS AND WARRANTIES. Customary and usual
representations and warranties by the parties, and the principal executive
officer of each of the parties shall certify these representations and
warranties "to the best of his personal knowledge and information."
(iii) INDEMNIFICATION. The Transaction Agreements shall contain
customary and usual indemnification and hold harmless provisions.
(iv) EXPENSES. The parties shall bear their own expenses prior to the
Closing.
(v) CONDUCT OF BUSINESS PRIOR TO CLOSING. Until consummation or
termination of the Transaction Agreements, IFRS and FS will conduct business
only in the ordinary course and the assets of IFRS and FS shall not be sold or
disposed of except in the ordinary course of business or with the written
consent of the other party.
C. MISCELLANEOUS PROVISIONS.
(i) CONSUMMATION OF TRANSACTIONS. The Transaction Agreements shall be
prepared and executed as soon as practicable.
(ii) CONFIDENTIALITY: PUBLIC ANNOUNCEMENTS. Each party shall maintain
the confidentiality of and shall not disclose any of the terms of this Letter of
Intent (including its existence or the fact that the parties are in
negotiations) and any other information related to the other party, or its
representatives or affiliates, except to the extent required by law (provided
that any party so required shall provide the other party with the contents of
such disclosure as soon as reasonably practicable prior to making such
disclosure), for a period of two (2) years. It is understood that all press
releases or other public communications of any sort relating to this Letter of
Intent or the transactions contemplated herein, including the method of release
for publication thereof, shall be subject to the written approval of each of the
parties hereto; provided, however, that the parties shall be entitled to make
such disclosures as may be required pursuant to applicable law or the lawful
requirements of any governmental agency or by order of a court of competent
jurisdiction.
(iii) EXCLUSIVITY. The parties agree that they shall not negotiate with
any other third parties (other than affiliates thereof) with respect to the
issues contained herein for a period of forty-five (45) days from and after the
execution of this Letter of Intent unless the Transaction Agreements are not
executed within twenty (20) days after the date hereof, in which event this
provision shall be of no effect.
(iv) NOTICES. All notices or other information deemed required or
necessary to be given to any of the parties shall be given at the following
addresses.
INFRARED SYSTEMS INTERNATIONAL
Mr. Gary Ball
President and Director
15 N. Longspur Drive
The Woodlands, TX 77380
T: 281-419-1955
WITH A COPY TO:
Edward T. Swanson, Esq.
2071 N. Altadena Drive
Altadena, CA 91001
T: 310-283-1035
PRPM
Propalms, Inc.
Unit 4
Park Farm Courtyard
Easthorpe
Malton
North Yorkshire Y017 6QX
United Kingdom
T: 44-1653-696060
WITH A COPY TO:
________________________
________________________
________________________
________________________
Kimberly L. Graus, Esq.
4949 SR 64 E, #141
Bradenton, Fl. 34208
T: 941-747-5290
WILLIAM WRIGHT
________________________
________________________
________________________
________________________
WITH A COPY TO:
________________________
________________________
________________________
________________________
(v) GOVERNING LAW. The transactions which are contemplated herein, to
the extent permitted, shall be governed by and construed in accordance with the
laws of the State of Nevada.
(iv) ACCESS TO BOOKS AND RECORDS. Each party and its agents, attorneys
and representatives shall have full access to the property, books and records of
the other party (the confidentiality of which the investigating party agrees to
retain) for purposes of conducting due diligence.
(v) COUNTERPARTS. This Letter of Intent may be executed in any number
of counterparts and each such counterpart shall be deemed to be an original
instrument, but all of such counterparts together shall constitute one
agreement.
(vi) CONFIDENTIAL INFORMATION. As used in this Letter of Intent,
"Confidential Information" means all nonpublic information disclosed by the one
party or its agents to the other that is designated as confidential or that,
given the nature of the information or the circumstances surrounding its
disclosure, reasonably should be considered as confidential. Confidential
Information includes, without limitation (i) nonpublic information relating to
the party's technology, customers, business plans, promotional and marketing
activities, finances and other business affairs, and (ii) third-party
information that the party is obligated to keep confidential.
The parties may use Confidential Information only in pursuance of its
business relationship with the other party. Except as expressly provided in this
Letter of Intent, neither party will disclose Confidential Information to anyone
without the other party's prior written consent, provided however, that consent
is granted for the parties disclosure of such confidential information to their
respective attorney's and accountants, where necessary. Each party will take all
reasonable measures to avoid disclosure, dissemination or unauthorized use of
Confidential Information, including, at a minimum, those measures it takes to
protect its own confidential information of a similar nature.
IFRS intellectual property contains information subject to foreign
disclosure restrictions under ITAR (International Traffic in Arms Control
Regulation). All technical information for any and all Infrared Applications is
transferred and protected under the subsidiary IFRS Sub, and the direct
custodial care of Gary E. Ball.
(vii) EFFECT OF THIS LETTER OF INTENT. This Letter of Intent is
intended merely as a guide in the negotiations and preparation of the Agreement
on terms and conditions satisfactory to the parties hereto, and nothing
contained herein shall be construed to preclude other provisions from being
included in the Agreement, provided that such other provisions are consistent
with the content of this Letter of Intent and otherwise satisfactory to the
parties hereto. While the parties intend to proceed promptly to complete and
execute the Agreement, it is expressly understood that this is a Letter of
Intent only, and no liability or obligation of any nature whatsoever is intended
to be created between either of the parties hereto except as set forth in
Paragraphs C(ii) (Confidentiality), C(iii) (Exclusivity) and C((vii)
(Confidential Information) hereof.
Please acknowledge that this Letter of Intent correctly sets forth our
intentions at this point by countersigning the enclosed duplicate original of
this Letter of Intent in the space provided below and returning one fully
executed original to PRPM.
Sincerely,
/s/ ROBERT ZYSBLAT
_________________________
Robert Zysblat
President, Propalms, Inc.
AGREED AND ACCEPTED BY:
/s/ GARY BALL January 28, 2010
_________________________
Gary Ball
Chairman and CEO
Infrared Systems International
15 N. Longspur Drive
The Woodlands, TX 77380
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YO17 6QX
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