WOLF INDUSTRIES INC.
x/x 000 - 000 Xxxxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
Tel (000) 000-0000 Fax (000) 000-0000
Toll Free: (000) 000-0000
June 25, 1999
WITHOUT PREJUDICE
GPT Management Ltd.
0000 - 00xx Xxxxxx
Xxxx Xxxxxxxxx, X. X.
X0X 0X0
Attention: Xx. Xxxx Xxxxxxxx
LETTER AGREEMENT
Dear Sirs,
This binding Letter Agreement sets forth the understanding of the principal
terms upon which Wolf Industries Inc. ("Wolf") proposes to effect a business
combination (the "Business Combination") with GPT Management Ltd. ("GPT") and
Xxxxxx Engineering Inc. ("AEI").
The result of the Business Combination will be that each of AEI, GPT and Wolf
will hold, as described below, an equity interest in AEI Trucolor Inc.
("Trucolor"), a non-reporting British Columbia company.
In general terms, the main points of agreement are as follows:
1. Trucolor is the owner of a Dental Colour Analyzer (the "Analyzer") used in
the dental field, as well as accompanying technology and associated
industrial and intellectual property rights and any improvements thereto,
all as defined in a certain Technology Purchase and Assignment Agreement
dated June 27, 1996 (the "June 1996 Agreement"), including improvements
made by AEI and Wolf (collectively, the "Technology").
2. GPT will own a 40% equity interest in Trucolor, Wolf a 15% interest and AEI
a 25% interest. GPT's equity interest will include the interest, if any,
belonging to the original investors, (Xxxxxx and Xxxxxxx Xxxxxx, Great
Abilities, et al), in the development of the Analyzer. The interest, if
any, of Xxxx Xxxxx will be the responsibility of AEI.
3. EAW Enterprises Ltd. ("EAW") will own, as Escrowholder only, a 20% interest
in the shares of Trucolor, until such time as the events contained in
paragraph 7 below are completed, and agrees to vote its interest in concert
with GPT during that entire period.
4. Immediately upon execution of this Letter Agreement, GPT and EAW will enter
into discussions with EFOS with a view to that company continuing with the
further development of the Analyzer.
It is agreed between the parties that approaches may be made concurrently,
by EAW and GPT on behalf of Trucolor, to other, arm's length, would-be
manufacturers/distributors of the Analyzer (the "Third Party" or "Third
Parties"), and that, should such an offer to further develop the Analyzer be
made by a Third Party, same will be subject to the expiry of an initial
exclusive period of time granted in favour of EFOS, such period to be agreed to
between EAW and GPT, acting reasonably and in good faith. After such time, any
Third Party offer will be considered on its merits and decided upon by EAW and
GPT, acting in good faith.
It is agreed between the parties that EAW will play an active role during
the term of this Letter Agreement regarding the implementation of a strategic
alliance with EFOS and with respect to negotiations with Third Parties.
5. In the event an agreement is reached, either with EFOS or with a Third
Party, EAW's interest in Trucolor will be transferred to Wolf immediately
upon there having been realized to Trucolor, in cash, an aggregate,
after-tax benefit of at least $750,000.00.
If there is no agreement reached with EFOS or, failing that, with a Third
Party, within 365 days of this Letter Agreement, as contemplated in paragraph 4
above, EAW will transfer its 20% interest to GPT.
6. In the event an agreement is reached with EFOS, or with a Third Party, as
described in paragraph 4 above, all parties hereto agree to be bound by
same and to make available their proportionate share of equity in Trucolor,
to the extent that EFOS, or a Third Party, requires that it become the
majority owner of the shares of Trucolor.
By way of example, in the event an agreement is reached whereby either EFOS
or a Third Party acquires a 60% equity interest in Trucolor, GPT would continue
to hold a 16% equity interest and Wolf/AEI a 24% interest.
7. In the event no agreement is reached with respect to the further
development of the Analyzer, either with EFOS or with a Third Party, within
the 365 day period described in paragraph 5 above, EAW will return its 20%
escrow position to GPT.
In such case, AEI will have the right to purchase from GPT the shares of
Trucolor held by GPT, provided that AEI pays to GPT, on or before the expiry of
120 days from the end of the above described 365 day period, $300,000.00, on an
after-tax basis.
8. Except as described in paragraph 6 above and unless it becomes necessary
for Trucolor to raise further monies to complete the transactions
contemplated in this Letter Agreement, the individual joint venture/equity
interests described above will not be diluted one as against another in any
manner.
9. In the event an agreement is reached with EFOS, or with a Third Party, all
benefit of same will accrue to TruColor, and no commission, bonus, finder's
fee, or any such like fee, will be payable to any particular joint venture
partner or nominee.
10. The parties to this Letter Agreement agree that a 60% vote of the
shareholders of Trucolor will be sufficient to:
(a) permit EAW and GPT, acting reasonably and in good faith, to enter into
a binding agreement on behalf of Trucolor with either EFOS or a Third
Party, as described in this Letter Agreement; and
(b) ensure that, in the event an agreement, as described in (a) above, is
reached and involves the sale or issuance of shares in the capital of
Trucolor, the remaining shareholders of Trucolor agree to vote their
shares in favour of such action and further agree to tender and
transfer their shares or take any other action with respect thereto as
may be required to effect the approved transaction, provided that such
tender, sale or issuance does not result in any dilution as between
the parties to this Letter Agreement.
The parties to this Letter Agreement also agree to execute an amendment to
the presently existing Shareholders' Agreement, (between GPT and AEI), to
include EAW and Wolf and to provide that a 60% vote of the shareholders will be
sufficient to implement subparagraphs 10(a) and (b) hereof.
11. Upon execution of this Letter Agreement, Trucolor agrees to discontinue the
litigation presently in place (Action Xx. 00 0000, Xxxxxxxx Registry). Upon
receipt by Wolf/AEI of confirmation that the litigation has infact been
discontinued, an Analyzer and the Technology will be made available to
Trucolor for immediate delivery to EFOS.
12. The parties to this Letter Agreement declare, upon execution hereof, that
the License Agreement dated April 8, 1998 between Wolf and AEI is null and
void and that Trucolor is the owner of the Technology.
13. Whether or not the transactions contemplated hereby are consummated and
except as may be specifically agreed as to particular expenses, each of the
parties to this Letter Agreement will pay its own expenses, including those
of its accountants, advisors and legal counsel, in connection with the
transactions contemplated hereby. Costs of negotiating, preparing and
executing a form of acquisition agreement with EFOS or with a Third Party,
or any monies required for the further development of the Analyzer, will be
borne by Trucolor.
14. This letter may be executed in any number of counterparts, each of which
will be deemed to be an original, but all of which together will constitute
one and the same instrument.
15. This letter will be governed by and construed in accordance with the laws
of the Province of British Columbia, without giving effect to any conflicts
of law principles.
16. This Agreement constitutes the entire Agreement between the parties and
supersedes and cancels all prior representations, communications and
Agreements between the parties hereto relating to the transactions set out
in this Agreement. No deletions to this Letter Agreement may be made
without the prior written consent of all parties.
If the foregoing correctly sets forth the understanding between us, please
execute this letter and the enclosed copies and return them to us at the address
set forth above.
Yours truly,
WOLF INDUSTRIES INC.
Per:
/s/ X. XxXxxxx
Authorized Signatory
GPT MANAGEMENT LTD.
Per:
/s/ X. Xxxxxxxx, President
June 25, 1999
Authorized Signatory
XXXXXX ENGINEERING INC.
Per:
/s/ Xxxxxx Xxxxxx
Authorized Signatory
EAW ENTERPRISES LTD.
per:
/s/ Xxxxxx Xxxxxx
Authorized Signatory
