Exhibit 10.1
SHAREHOLDER PURCHASE AGREEMENT
B E T W E E N:
UGOMEDIA INTERACTIVE CORPORATION,
a Nevada corporation ("UGOMEDIA")
- and -
4137639 CANADA INC.,
a Canadian corporation which is a wholly-owned subsidiary of Ugomedia ("SUB")
- and -
SCIAX TECHNOLOGY INC.,
a Canadian corporation ("SCIAX")
- and -
ALL OF THE SHAREHOLDERS OF SCIAX,
as more particularly set forth in Schedule 3.6
(each, a "SHAREHOLDER" and collectively, the "SHAREHOLDERS")
WHEREAS pursuant to the terms of a common stock purchase agreement dated
January 8, 2003 between Ugomedia, Sub and Sciax ("PURCHASE AGREEMENT"), Sciax
agreed to an exchange of all of its outstanding common stock for exchangeable
shares of Sub and preferred shares of Ugomedia, all as more particularly set
forth in the Purchase Agreement;
AND WHEREAS the Shareholders of Sciax wish to be bound by the terms of the
Purchase Agreement and provide certain additional obligations and
representations relating to the transactions contemplated by the Purchase
Agreement;
AND WHEREAS the parties wish to amend certain terms of the Purchase
Agreement;
AND WHEREAS unless specifically defined herein or unless the context
otherwise requires, defined terms used herein shall have the meanings ascribed
to such terms in the Purchase Agreement;
NOW THEREFORE for good and valuable consideration, the receipt and
sufficiency of which is hereby irrevocably acknowledged, the parties, intending
to be legally bound hereby, hereby covenants and agrees as follows:
ARTICLE 1
ASSUMPTION OF PURCHASE AGREEMENT
1.1 Each of the Shareholders acknowledges having had an opportunity to review
the Purchase Agreement, having had the opportunity to consult with independent
legal, tax and other advisors of their own choice and at their expense, and
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understands each of the provisions of this Agreement, the Purchase Agreement and
the documentation to be delivered in accordance therewith.
1.2 Each of the Shareholders agrees that he, she or it shall be bound by all of
the provisions of the Purchase Agreement respecting the sale of Sciax Shares (as
hereinafter defined) beneficially owned by the Shareholders as if the
Shareholders were original signatories thereof.
1.3 Each of Ugomedia and Sub agrees that all of the terms of the Purchase
Agreement to the benefit of Sciax shall apply to each of the Shareholders as if
each Shareholder was an original signatory thereof.
ARTICLE 2
AMENDMENT OF PURCHASE AGREEMENT
2.1 The parties agree that Section 2.1 of the Purchase Agreement shall be
deleted in its entirety and replaced with the following:
2.1 Purchase and Sale.
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(a) Subject to all the terms and conditions of this Agreement, at the
Closing, Sub shall purchase from the Shareholders, and the
Shareholders shall sell to Sub, an aggregate of 21,100,000 shares of
the common stock in the capital of Seller (the "SCIAX SHARES")
beneficially owned by the Shareholders. In consideration, Buyer or Sub
shall deliver to the Shareholders for each Sciax Share beneficially
owned by the Shareholder immediately before the Closing 0.90521327
(calculated as 21,100,000 divided into 19,100,000) voting common
shares of Buyer ("BUYER COMMON SHARES").
(b) Notwithstanding the foregoing, Xxx Xxxxx, a Shareholder, shall,
instead of Buyer Common Shares, exchange each Sciax Share beneficially
owned by Xxx Xxxxx immediately before the Closing for 0.226303317
(calculated as 21,100,000 divided into 4,775,000) voting preferred
shares of Buyer ("PREFERRED SHARES") and 0.90521327 (calculated as
21,100,000 divided into 19,100,000) exchangeable shares of Seller
("EXCHANGEABLE SHARES") exchangeable into Buyer Common Shares.
(c) The parties acknowledge that the aggregate number of Preferred Shares,
Buyer Common Shares and Exchangeable Shares to be issued shall be as
set out in Schedule 3.3 hereof and that each Preferred Share shall
carry four votes for every one Buyer Common Share. The Preferred
Shares, Exchangeable Shares and Buyer Common Shares shall hereinafter
be referred to as the "SHARE CONSIDERATION".
2.2 The parties hereto agree that the Purchase Agreement shall be further
amended as follows:
(a) Section 2.2(b) is hereby deleted in its entirety and replaced with the
following:
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Two (2) promissory notes ("Notes") issued on Closing by Buyer,
one to Xxxx Xxxxxxx and/or Airam Capital Group in the amount of
US$175,000 and one to Xxxxxxx Xxxxx and/or Nevada Fund in the
amount of US$175,000 to satisfy debts and obligations of
Ugomedia, including funds advanced by Xxxx Xxxxxxx and/or Airam
Capital Group and Xxxxxxx Xxxxx and/or Nevada Fund to the Buyer
and redemption proceeds owing by the Buyer to Xxxx Xxxxxxx and
Nevada Fund pursuant to the redemption set forth in Section 7.4
of the Purchase Agreement. The Notes shall bear interest at the
rate of 6% simple interest per annum. The Notes shall be repaid
on the first anniversary of the Closing Date, subject to
prepayment in whole or in part at any time without premium or
penalty. The Notes shall be secured by the guarantee of the
Seller. Buyer agrees to provide satisfactory evidence to Seller
prior to Closing of the amounts owing to Xxxx Xxxxxxx or Airim
Capital Group and Xxxxxxx Xxxxx or Nevada Fund. Holders of the
Notes shall have the option at any time prior to the due date so
long as there is no default to convert all unpaid principal and
accrued interest into common shares of stock of Buyer ("Buyer
Common Stock") at the rate of US$0.20 per share. This option may
be exercised in whole or in part at any time prior to repayment
of the Notes. If there is a default in the Notes, then holders of
the Notes shall have the option at any time the Notes are in
default to convert all unpaid principal and accrued interest into
shares of stock of Buyer at the lower of (i) US$0.20 per share;
and (ii) the average trading price of the Buyer Common Stock for
the twenty (20) day period immediately prior to the date of the
option exercise notice from the holders. This option may be
exercised in whole or in part at any time the Notes are in
default. Further, to the extent any shares are acquired under
this option, the owners of these shares if the option is
exercised collectively, shall have a one time right to require
that Buyer register the shares for resale within 90 days of such
request on a registration statement filed with the Securities
Exchange Commission ("SEC") and kept effective until all such
shares are resold, all at Buyer's expense.
(b) The second sentence of Section 2.4 of the Purchase Agreement is hereby
deleted in its entirety and replace with the following: "Buyer
undertakes to obtain the necessary shareholder consent for the Name
Change."
(c) Section 2.5 of the Purchase Agreement shall be amended to refer to
"consulting agreements" instead of "employment agreements".
(d) Section 2.8 of the Purchase Agreement is hereby deleted in its
entirety and replaced with the following:
2.8 OSC Order. If necessary, Buyer shall, following the Closing
Date, use its best efforts to cause its legal counsel to apply to
the Ontario Securities Commission for a ruling pursuant to
subsection 74(1) of the Securities Act (Ontario) to permit the
distribution of the Share Consideration without a prospectus
being filed under the Securities Act (Ontario).
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(e) Section 2.10 of the Purchase Agreement is hereby deleted in its
entirety.
(f) The intellectual property agreement referred to in Section 2.13 of the
Purchase Agreement shall be an option agreement in favour of Xxx Xxxxx
for the purchase of the intellectual property of Sciax at fair market
value in the event of bankruptcy or insolvency of Ugomedia or Sciax
and a right of first refusal for the purchase of the intellectual
property of Sciax at fair market value in the event of the sale of the
intellectual property to a third party.
(g) Section 5.5 is hereby amended to replace "9,634,666" with "9,834,666"
and to replace "6,000,000" with "6,200,000".
(h) The second sentence of Section 7.4 of the Purchase Agreement is hereby
deleted in its entirety and replaced with the following: "Prior to
Closing, Xxxx Xxxxxxx will have returned to treasury 2,267,343 shares
in consideration for the promissory note described in Section 2.2(b)
and the Nevada Fund shall have returned to treasury 1,367,323 shares
in consideration for the promissory note described in Section 2.2(b)".
(i) The second sentence of the second paragraph of Schedule 2.7 shall be
deleted in its entirety and replace with the following: "The maximum
number of Buyer's Common Stock that may be sold each year shall be a
number of shares equal to 4% of the issued and outstanding Buyer's
Common Stock on December 31 of the prior year (or as otherwise
permitted by SEC guidelines)."
2.3 Except as amended by this Article 2, the Purchase Agreement remains in full
force and effect in accordance with its terms.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each of the Shareholders hereby severally and not jointly represents and
warrants to Ugomedia and Sub, and acknowledges that Ugomedia and Sub are relying
on such representations and warranties in connection with the purchase of the
Sciax Shares, that:
3.1 BINDING OBLIGATION. Each Shareholder has the right (and, if a corporation,
the power and authority) to enter into this Agreement, to sell the Sciax Shares
owned by the Shareholder in the manner contemplated herein and to perform all of
the Shareholder's obligations under this Agreement. This Agreement constitutes a
legal, valid and binding obligation of each Shareholder, enforceable against
each Shareholder in accordance with its terms subject to:
(a) bankruptcy, insolvency, moratorium, reorganization and other laws
relating to or affecting the enforcement of creditors' rights
generally, and
(b) the fact that equitable remedies, including the remedies of specific
performance and injunction, may only be granted in the discretion of a
court.
3.2 NO OTHER PURCHASE AGREEMENTS. Except in respect of any rights under
agreements which shall be exercised in full or cancelled prior to the Closing,
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no person has any agreement, option, understanding or commitment or any right or
privilege (whether by law, pre-emptive or contractual) capable of becoming an
agreement, option or commitment, including convertible securities, warrants or
convertible obligations of any nature, for the purchase, subscription, allotment
or issuance of, or conversion into, any of the unissued shares in the capital of
Sciax or any securities of Sciax.
3.3 OWNERSHIP. Each Shareholder represents and warrants that such Shareholder is
the registered and beneficial owner of the Sciax Shares listed opposite such
Shareholder's name in Schedule 3.3 annexed hereto, free and clear of all liens,
charges, security interests, encumbrances and rights of others.
3.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for applicable requirements
under the Securities Act of 1933 (United States) ("SECURITIES ACT") and the
Securities Act (Ontario) no filing with, and no permit, authorization, consent
or approval of, any public or governmental body or authority is necessary for
the consummation by any Shareholder of the transactions. Neither the execution
or delivery of this Agreement by any Shareholder, nor the consummation by any
Shareholder of the transactions, nor compliance by any Shareholder with any of
the provisions hereof, will (a) result in any breach of the articles of
incorporation or by-laws of the Shareholder (if a corporation), (b) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation,
acceleration or change in the award, grant, vesting or determination) under,
require the consent of any third party under, or give rise to creation of any
encumbrance upon each Shareholder's Shares under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
contract, lease, agreement, arrangement or other instrument or obligation to
which any Shareholder is a party or by which any of them or may be bound or (c)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to any Shareholder or any of their respective properties or assets.
3.5 RESIDENCE OF SHAREHOLDER. Each Shareholder is not a non-resident of Canada
for the purposes of the Income Tax Act (Canada) ("ITA").
3.6 INVESTMENT REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Each of the
Shareholders hereby agree to provide to Ugomedia on or before Closing a
stockholder's certificate in the form of Exhibit 3.7A or 3.7B.
3.7 COVENANTS OF SHAREHOLDERS. Each of the Shareholders severally and not
jointly covenants to Ugomedia, Sub and Sciax that each Shareholder will not
sell, assign or transfer any of Buyer Common Stock received by the Shareholder
in connection with the Purchase Agreement except (i) pursuant to an effective
registration statement under the Securities Act, (ii) in conformity with the
volume and other limitations of Rule 144 promulgated under the Securities Act,
or (iii) in a transaction which, in the opinion of independent counsel to the
Shareholder delivered to Ugomedia and satisfactory to Ugomedia, is not required
to be registered under the Act.
ARTICLE 4
ACKNOWLEDGEMENT
4.1 Ugomedia shall place the following legend (and any other appropriate legend)
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on each certificate or instrument representing Share Consideration acquired
under this Agreement:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES OR BLUE SKY LAWS OF ANY STATE AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR IN A TRANSACTION WHICH IS NOT
SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE ACT OR ANY APPLICABLE
SECURITIES OR BLUE SKY LAWS AND, IN THE CASE OF A TRANSACTION NOT
SUBJECT TO SUCH REGISTRATION REQUIREMENTS, UNLESS THE ISSUER HAS
RECEIVED AN OPINION OF COUNSEL TO THE HOLDER REASONABLY SATISFACTORY
TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE
ACT.
4.2 COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and transfer of the Share
Consideration will be subject to and conditioned upon compliance by the
Shareholder with all applicable U.S., Canadian, provincial, state and federal
laws and regulations and with all applicable requirements of any stock exchange
or automated quotation system on which Share Consideration may be listed or
quoted at the time of such issuance or transfer.
ARTICLE 5
GENERAL
5.1 Each party covenants and agrees to take all such steps, execute all such
documents and do all such acts and things as may be necessary to give full
effect to this Agreement and to implement to their full extent the provisions
hereof.
5.2 Notice to the Shareholders shall be given at the addresses set forth in
Schedule 3.6.
5.3 This Agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein.
5.4 Time shall be of the essence of this Agreement.
5.5 In this Agreement, the use of the singular shall include the plural and vice
versa, the use of gender shall include the masculine, feminine and neuter
genders and the word "person" shall include an individual, a trust, a
partnership, a trustee, an executor, an administrator or other legal or personal
representative, a body corporate or public, an association or other incorporated
or unincorporated organization or entity.
5.6 This Agreement shall be binding upon the Shareholders and the heirs,
executors, administrators, successors, permitted assigns and legal
representatives of the Shareholder.
5.7 COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which taken together
shall be deemed to constitute one and the same instrument. Counterparts may be
executed either in original or faxed form and the parties adopt any signatures
received by a receiving fax machine as original signatures of the parties;
provided, however, that any party providing its signature in such manner shall
promptly forward to the other party an original of the signed copy of this
Agreement which was so faxed.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
this ___ day of February, 2003.
UGOMEDIA INTERACTIVE
CORPORATION
By:
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Name: Xxxx Xxxxxxx
Title: President
4137639 CANADA INC.
By:
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Name: Xxxx Xxxxxxx
Title: President
SCIAX TECHNOLOGY INC.
By:
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Name: Xxx Xxxxx
Title: Chief Executive Officer
SIGNATURE PAGE OF SHAREHOLDERS ON NEXT PAGE
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SIGNATURE PAGE OF SHAREHOLDERS TO SHAREHOLDERS PURCHASE AGREEMENT.
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WITNESS XXX XXXXX
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WITNESS XXXXX XXXXXX
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WITNESS XXXXXXXXX X. XXXXX
1144193 ONTARIO LTD.
Per:
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Name:
Title:
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WITNESS YAZDAN MAZAIR
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WITNESS XXXXXXX XXXXXXXX
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