AGREEMENT IN PRINCIPLE
CRYOPAK INDUSTRIES INC.
Xxxxx 0000-000 Xxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
September 15, 1999
Charn and Xxxx Xxx
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxxxx, X.X.
X0X 0X0
Dear Mr. and Xxx. Xxx:
RE: PURCHASE OF NORTHLAND ICE-GEL INC. AND NORTHLAND CUSTOM PACKAGING INC.
(COLLECTIVELY ("NORTHLAND")
This is to inform you that we have reached an agreement in principle in respect
of our purchase from you of your 100% equity interest in Northland. The basic
terms are as follows:
1. You will sell your 100% equity interest to us.
2. We will pay $2,000,000 in cash to you and assume up to $200,000 of
Northland debt; but if the debt is less than $200,000 we will pay in cash
the corresponding amount to you.
3. We will issue 667,000 common shares to you at a deemed value of $0.75 per
share.
4. We will also issue 500,000 performance escrow shares to you at a deemed
value of $0.75 per share, such shares to be released from escrow at the
rate of 100,000 shares per year based upon Northland achieving a minimum
$700,000 EBITDA per year.
5. Northland will enter into a 5 year employment contract with Xx. Xxx. He
will receive an annual salary of $100,000 and a bonus at the end of year 1
eaqual to 25% of EBITDA above $700,000. The bonus structure in years 2-5 is
to be negotiated at the beginning of year 2 and will be subject to mutual
agreement. He will maintain his club membership and leased car. We will
grant incentive stock options to him in respect of 250,000 common shares,
which will vest at the rate of 50,000 per year.
6. Northland will also enter into a 5 year employment contract with Xxx Xxxx.
He will receive an annual salary of $60,000 and will also receive a bonus
to be determined. He will maintain his club membership and leased car. We
will grant incentive stock options to him in respect of 100,000 common
shares, which will vest at the rate of 20,000 per year.
2
7. This agreement in principle is to be replaced as quickly as reasonably
possible with a binding formal purchase agreement. We will pay a $50,000
deposit to you on the signing of the purchase agreement. This deposit will
be non-refundable in the event that we are at fault for failing to close
this purchase.
8. The purchase agreement will be subject to satisfactory due diligence by us
and to the approval of the Vancouver Stock Exchange. It will also be
subject to us obtaining a valuation of Northland for a minimum of
$3,000,000 in a form acceptable to the Vancouver Stock Exchange.
9. The purchase agreement will clarify your respective ownership interests in
Northland as well as the allocation of the aforesaid cash and shares.
Kindly confirm that the foregoing accurately reflects the terms of our agreement
in principle by signing where indicated below. We will then immediately initiate
the process of drafting the formal purchase agreement.
Yours truly
Cryopak Industries, Inc.
Per: /s/ Xxxxx Xxxxxxx
-----------------
Xxxxx Xxxxxxx, President
Confirmed as of the above date:
/s/ Xxxxx Xxx
-------------
Xxxxx Xxx
/s/ Xxxx Xxx
------------
Xxxx Xxx