PCMT CORPORATION Jerusalem, Israel 95508
PCMT
CORPORATION
0
Xxxxxx Xxxxxx
Jerusalem,
Israel 95508
(000)
000-0000
|
November
14,
2007
|
Strictly
Confidential
Xx.
Xxxxxxx Xxxxxx
Chief
Executive Officer
Suspect
Detection Systems Ltd.
00
Xxxxxxxx Xxxxxx
Tel
Aviv
Israel
|
Re:
|
Letter
of Intent between PCMT Corporation and Suspect Detection Systems
Ltd.
|
Dear
Sir/Madam:
This
letter hereby sets forth the non-binding intent with respect to the proposed
acquisition by the undersigned, PCMT Corporation, a Delaware corporation
(“PCMT”), of all of the issued and outstanding capital stock of Suspect
Detection Systems Ltd., an Israeli corporation (“SDS”), in consideration for no
less than 28,600,000 shares of common stock of PCMT, representing no less than
31% of the issued and outstanding share capital of PCMT subjected to the federal
trading rules of the USA.
The
proposed terms of the Transaction are as follows:
1. Definitive
Agreement.
Consummation
of the Transaction as contemplated hereby will be subject to the negotiation
and
execution of a mutually satisfactory definitive
share exchange agreement or merger agreement
(the
“Definitive Agreement”), setting forth the specific terms and conditions of the
Transaction. The execution of the Definitive Agreement by both parties is
subject to approval by the Board of Directors, approval by all the shareholders
of SDS, and the completion by PCMT of a satisfactory review of the legal,
financial and business condition and prospects of SDS. The
parties will use their reasonable best efforts to negotiate in good faith the
Definitive Agreement, which will contain, among other standard terms and
conditions, the following provisions:
|
(a)
|
In
consideration for the transfer of all of the issued and outstanding
shares
of SDS to PCMT, PCMT will issue no less than 28,600,000 PCMT shares
to SDS
shareholders, which amount will constitute no less than 31% of the
issued
and outstanding shares of common stock of PCMT.
|
|
(b)
|
The closing of the Transaction shall take place after PCMT has raised a minimum of $500,000 as contemplated by its $1,440,000 offering as approved by the board of directors of PCMT. If there is a Closing of the Transaction, the proceeds from the offering will be coordinated between the Company and Xx. Xxxxxxx Xxxxxx. |
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(c)
|
Any
necessary third-party consents shall be obtained prior to Closing
Date,
including but not limited to any consents required to be obtained
from
PCMT’s and SDS’s respective lenders, creditors, vendors and
lessors.
|
|
(d)
|
PCMT
shall be reasonably satisfied with the accounting treatment of the
Transaction for accounting and financial statement purposes, including
without limitation the receipt of audited financial statements of
SDS in
accordance with applicable rules to the Securities and Exchange
Commission.
|
2. Conduct
of Business.
Prior
to the execution of a Definitive Agreement and the closing of the Transaction,
SDS will conduct its operations in the ordinary course consistent with past
practice and will not issue any capital stock, warrants, options or other rights
or commitments of any character to subscribe for purchase from SDS, or
obligating SDS to issue, any shares of any class of the capital stock of SDS
or
any securities convertible into or exchangeable for such shares, in each case,
other than as required under the Definitive Agreement nor will SDS make any
distributions, dividends or other payments to any affiliate or
shareholders.
3. Public
Announcements.
Neither
party will make any public disclosure concerning the matters set forth in this
letter of intent or the negotiation of the proposed Transaction without the
prior written consent of the other party, which consent shall not be
unreasonably withheld. If and when either party desires to make such public
disclosure, after receiving such prior written consent, the disclosing party
will give the other party an opportunity to review and comment on any such
disclosure in advance of public release. Notwithstanding the above, to the
extent that either party is advised by counsel that disclosure of the matters
set forth in this letter of intent is required by applicable securities laws
or
to the extent that such disclosure is ordered by a court of competent
jurisdiction or is otherwise required by or in accordance with the law, then
such disclosing party will provide the other party, if reasonably possible
under
the circumstances, prior notice of such disclosure as well as an opportunity
to
review and comment on such disclosure in advance of the public
release.
4. Confidentiality
Agreement.
Except
as required by applicable law or for the purpose of enhancing this Letter of
Intent and the Transaction , neither party shall disclose nor permit its
directors, representatives, officers, employees and advisors, including
accountants and legal advisors, who receive transaction information to discuss
the terms of this letter of intent.
5. Exclusivity.
In
consideration hereof and the mutual covenants and agreements contained herein,
this letter of intent until the earlier of the closing of the Transaction or
termination of this letter of intent in accordance with its terms, SDS, its
officers, directors, employees, shareholders and other representatives will
not,
and will not permit any of their respective affiliates to, directly or
indirectly, solicit, discuss, accept, approve, respond to or encourage
(including by way of furnishing information) any inquiries or proposals relating
to, or engage in any negotiations with any third party with respect to any
transaction similar to the Transaction or any transaction involving the transfer
of the controlling interest in the assets or capital stock of SDS, including,
but not limited to, a merger, acquisition, strategic investment or similar
transaction (“Acquisition Proposal”). SDS and its officers or their respective
affiliates will immediately notify PCMT in writing of the receipt of any third
party inquiry or proposal relating to an Acquisition Proposal and will provide
PCMT with copies of any such notice inquiry or proposal. Notwithstanding the
foregoing, nothing in this Section 5 will be construed as prohibiting the board
of directors of SDS from (a) making any disclosure required by applicable law
including to its shareholders; or (b) responding to any unsolicited proposal
or
inquiry to SDS (other than an Acquisition Proposal by a third party) by advising
the person making such proposal or inquiry of the terms of this Section 5.
6. Termination.
This
letter of intent may be terminated (a) by mutual written consent of the parties
hereto, (b) by either party (i) after 5:00 p.m. Eastern standard time on _______
__, 2007 if a Definitive Agreement is not executed and delivered by the parties
prior to such time, (ii) if the Transaction is enjoined by a court or any
governmental body (including if consummation of the Transaction is enjoined
pending approval by the shareholders of PCMT), (c) by PCMT, if PCMT, in its
sole
and absolute discretion, is not satisfied with the results of negotiations
for
the Transaction prior to the execution and delivery of the Definitive
Agreement.
7. No
Brokers.
Each
party represents and warrants to the other that there are no brokers or finders
entitled to any compensation with respect to the execution of this letter of
intent, and each agrees to indemnify and hold the other harmless from and
against any expenses or damages incurred as a result of a breach of this
representation and warranty.
8. Expenses.
Each of
the parties will be responsible for its own expenses in connection with the
Transaction, including fees and expenses of legal, accounting and financial
advisors. Not withstanding the above, PCMT shall participate and pay SDS up
to
the following amounts upon itemized invoices with respect thereto: (a) up to
US$20,000 accountant's fee for obtaining the Israel Tax Authority approval
(satisfactory to SDS) regarding the Transaction; and (b) up to US$15,000 legal
fees.
9. Choice
of Law.
This
letter of intent shall be governed by and construed in accordance with the
internal substantive laws of the State of New York.
10. Compliance
with the Securities Laws.
SDS
acknowledges that it and its officers, directors, shareholders and employees
and
other representatives may, in connection with their consideration of the
proposed Transaction, come into possession of material non-public information
about PCMT. Accordingly, SDS will use reasonable efforts to ensure that none
of
its officers, directors, shareholders and employees or other representatives
will trade (or cause or encourage any third party to trade) in any of the
securities which they will receive as a result of the Transaction while in
possession of any such material, non-public information.
11. Counterparts.
This
letter of intent may be executed in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument. Fax copies of signatures shall be treated as originals for all
purposes.
12. Effect.
It is
understood that this letter of intent is not an offer or a contract but is
only
a letter of intent, notwithstanding anything contained herein or otherwise
to
the contrary, and no binding commitment of any nature whatsoever shall be
implied by virtue hereof, except for the provisions set forth in Sections
2
through
12
hereof.
Except as stated in the immediately preceding sentence, (i) no binding agreement
shall exist unless and until the Definitive Agreement has been executed and
delivered by the parties, and then only as and to the extent stated therein,
and
(ii) the termination of this Letter of Intent and/or the negotiations for the
proposed transaction prior to the execution and delivery of the Definitive
Agreement for whatever reason shall not result in any obligation or liability
of
any party to the other. In addition, neither party shall have any obligation
to
continue discussions or negotiations if it determines that the Transaction
is
not in its best interests. Accordingly, each party may, in its sole discretion,
abandon or terminate these discussions or any negotiations at any time or for
any reason, without liability to itself for costs or expenses of any sort
incurred by the other party in pursuing the transactions contemplated hereby.
Further, this letter of intent does not bind any party to consummate any
transaction, either on the terms outlined herein or on any other terms.
This
letter of intent, together with the Letter Agreement dated October 18, 2007,
by
and between the parties, shall constitute the entire agreement by and among
the
parties to date with respect to the subject matter hereof and, collectively,
supersedes any and all prior agreements and understandings, oral or written,
with respect to such matters (if exist) which are hereby cancelled and null
and
void. Any change or amendment to this Letter of Intent shall be done in writing,
executed by both parties otherwise it shall have no effect.
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Very
truly yours,
PCMT
CORPORATION
By:/s/
Xxxxxxx Xxxxxx Xxxxx
Name: Xxxxxxx
Xxxxxx Xxxxx
Title: President
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Agreed
and Accepted:
SUSPECT
DETECTION SYSTEMS LTD.
By:
/s/
Xxxxxxx Xxxxxx
Name: Xxxxxxx
Xxxxxx
Title: Chief
Executive Officer
