CONFIDENTIAL
PRIVILEGED AND CONFIDENTIAL
LETTER OF INTENT
APRIL 24, 2006
DEAR CHIEF EXECUTIVE OFFICER
We are pleased to submit this letter of intent (this "Letter of Intent")
reflecting the proposal of ZHEJIANG FIBERSENSE COMMUNICATION TECHNOLOGY COMPANY
LIMITED ("MGER") to enter into a definitive agreement (the "Share Exchange
Agreement"), with the shareholders of PERFISANS HOLDINGS ("MGEE"), pursuant to
which MGEE will acquire from the MGER Shareholders 100% of the issued and
outstanding share capital of MGER (the "Capital") in exchange for the issuance
of MGEE shares (the "Common Shares") necessary to represent approximately TBD%
of the issued outstanding stock of MGEE on a fully diluted basis immediately
following the closing (as defined below) of the transaction contemplated.
The Share Exchange Agreement will encompass the following terms:
1. EXCHANGE OF SHARES; ESCROW. The MGER Shareholders will deliver to MGEE 100%
of the Capital of MGER in exchange for TBD% of the issued and outstanding
shares of MGEE, calculated on a fully diluted basis and after giving effect
to the share exchange.
2. TERMS OF SHARE EXCHANGE AGREEMENT. The parties shall negotiate in good
faith to reach agreement on a reasonably acceptable Share Exchange
Agreement, to be drafted by counsel for MGER, containing customary
covenants, representations, warranties, indemnities, non-compete,
non-solicitation, anti-dilution and other provisions, it being understood
however that any shares of MGEE Common Stock issued between the date hereof
and the closing to directors and officers of MGEE will have an unlimited
indemnity from the issues thereof. The Share Exchange Agreement will
provide that (a) immediately following the Closing (as defined below), the
name of MGEE will be changed to reflect the nature and character of the
business of MGER, (b) as soon as practical following the Closing, MGER will
seek to list its securities on either the AMEX or NASDAQ exchange.
3. CONDITIONS TO CLOSING. The closing of the Share Exchange Agreement (the
"Closing")
(a) MGEE will have maintained its listing status.
(b) MGER shall represent within the Share Exchange Agreement that the
un-audited financial statements of PLGL for March 31, 2006 have been
prepared.
(c) MGEE insider shareholders shall have executed a mutually agreed
leak-out agreement with respect to sales of common shares
post-Closing.
4. EXPENSES. Each party will pay its own all fees of its legal counsel
associated with the Exchange, including the drafting, preparation and
negotiation of the Share Exchange Agreement and all other necessary
documentation.
5. ACCESS. Each party shall provide to the other party access to its books,
records, financial statements and other information as may reasonably be
necessary for the other party to complete its due diligence.
6. NO-SHOP. MGER contemplates the expenditure of substantial time and money in
connection with the preparation and negotiation of the Share Exchange
Agreement and the due diligence required thereby. Accordingly, upon
execution of this Letter of Intent and for a period of 60 days from the
date hereof (the "No-Shop Period"), neither party, directly or indirectly,
through any representative or otherwise will solicit or entertain offers
from, negotiate with or in any manner encourage, discuss, accept or
consider the proposal of any other person relating to the acquisition of
the stock of either party or business, in whole or in part, whether through
direct purchase, merger, consolidation or other business combination
without the written consent of the other party. The parties further
represent and warrant that there are no existing letters of intent, or
other agreements to which either MGER or MGEE are bound with respect to the
sale of the Company, the stock of the Company or substantially all of its
assets or that conflict with any of the foregoing transactions.
CONFIDENTIAL
7. GOVERNING LAW. This Letter of Intent shall be interpreted, construed and
enforced in accordance with the laws of New York, without giving effect to
its rule or principles governing conflicts of laws that would compel the
application of the substantive law of any other jurisdiction.
8. BINDING CONSENT. While it is understood that this Letter of Intent, with
the exception of the Section 6, does not constitute a binding agreement
between the parties, it does set forth the understanding in principle and
the present intention of the parties to enter into a definitive agreement
providing for the above understandings upon the terms and conditions
mutually acceptable to the parties.
9. TERMINATION. This Letter of Intent may be terminated:
(a) By mutual written consent of the parties;
(b) Upon execution by the parties of the Share Exchange Agreement;
(c) Upon written notice by any party that the due diligence is not
satisfactory; or
(d) Upon written notice by any party to the other party if the Share
Exchange Agreement has not been executed prior to the expiration of
the No-Shop Period; provided, however, that the termination of the
binding provisions shall not affect the liability of any party of
breach of any of the binding provisions prior to the termination. Upon
termination, the parties shall have no further obligations hereunder.
If the above meets with your approval in principle, please so indicate by
returning to us one fully executed copy of this Letter of Intent. The Letter of
Intent shall be null and void if it is not executed and received by the parties
on or before APRIL 28, 2006, at 8:00 p.m. Pacific Time.
Very truly yours,
ZHEJIANG FIBERSENSE COMMUNICATION TECHNOLOGY
COMPANY LIMITED (MGER)
By: /s/ Xxx Xxx
----------------------------------
Name: Xxx Xxx
Title: Chairman, F&P Holdings
Accepted and Agreed: PERFISANS HOLDINGS INC. (MGEE)
By: /s/ To Hon Bam
----------------------------------
Name: To Hon Bam
Title: CEO
2
