EXHIBIT 10.4
SHAREHOLDER AGREEMENT
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THIS AGREEMENT made the 5th day of January 2006.
BETWEEN:
INNOVATIVE LOYALTY SOLUTIONS INC. a corporation incorporated under the
laws of the Province of Ontario
("ILS")
- And -
CONSORTEUM INC., a corporation incorporated under the laws of the Province
of Ontario
("CONSORTIUM")
-And -
XXXXXXX XXXXXXX and XXXXXXX XXXXXX
(collectively the "SHAREHOLDERS")
BACKGROUND
Each of ILS and Consorteum wish to set out the desired terms and
conditions governing the operation of a joint venture to supply a loyalty card
program called My Golf Rewards (the "Program") to the golf industry.
The parties have caused a company to be incorporated in Ontario under the
name My Golf Rewards Inc. ("MGR").
This agreement amongst shareholders will outline the management
responsibilities and ownership percentage amongst the shareholders of MGR,
NOW THEREFORE, in consideration of the premises, the mutual covenants
contained in this Agreement and other consideration (the receipt and sufficiency
of which are acknowledged), the parties agree as follows:
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ARTICLE I
AGREEMENT TERMS
1.1 AGREEMENT. Each party acknowledges and agrees that the terms, conditions,
rights and obligations in respect of the operation of MGR shall be governed by
this Agreement.
1.2 INITIAL INVESTMENT. The parties acknowledge that Consorteum has provided
access to an initial investment to MGR of up to $250,000 commencing on or before
February 1, 2007.
1.3 LICENCE. From such funds, MGR has acquired a Fidelisoft licence to use and
exploit the software and other intellectual property necessary for MGR to carry
on the Program and its business.
1.4 ADDITIONAL ONGOING FUNDS. It is agreed that additional investments may be
required on an ongoing basis for operational and marketing costs of the Program.
Consorteum at its discretion may source funding for MGR from additional
investors or parties at any time. The parties acknowledge and agree that such
may result in dilution of their respective share ownership positions.
1.5 SHAREHOLDER INTEREST. As the major investor in MGR, Consorteum holds a 49%
ownership stake, ILS holds a 25% ownership stake and each of the Shareholders
holds a 13% ownership stake in MGR.
1.6 REVENUE AND PROFIT SHARE POSITION. The Shareholders waive their right to
receive dividends paid out of the MGR program until Consorteum has received
repayment of funds advanced to MGR by it. Once Consorteum's debt has been repaid
in full and ongoing MGR operational costs are covered out of gross revenues, all
parties will share in net profits based on their respective share ownership
percentages. At that time, ILS and the Shareholders will be responsible for all
of the costs of the program in relation to respective percentage ownership.
1.7 EQUITY PURCHASE. Consorteum and the Shareholders will offer ILS the option
to purchase up to an additional 24% equity stake in MGR. ILS may purchase this
equity at anytime up until December 31, 2013 based on the following terms.
1. ILS will pay 50% of the market value of the additional equity
acquired; provided that the minimum price will be the amount of
Consorteum's initial investment into the program, plus 50% of such
amount
2. Consorteum and the Shareholders will transfer equity to ILS pro rata
to their respective shareholdings.
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1.8 DISCLOSURE OF EXPENDITURE. It is agreed that all expenditures connected to
the development of the Program be fully disclosed, recognised and agreed upon by
Consorteum prior to payment or approval to funding. This includes all
expenditures to date relating to the program, and all future expenditure.
1.9 BOARD REPRESENTATION. All parties will vote their shares in MGR to ensure
that ILS will be entitled to have two nominees on the board, Consortium will be
entitled to have two nominees on the board and the Shareholders will be entitled
to have one nominee on the board. of directors of MGR.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 ILS WARRANTIES. ILS represents and warrants to Consorteum as follows
(acknowledging that Consorteum is relying on the representations and warranties
of ILS contained in this Agreement and any agreement, certificates or other
document delivered by ILS pursuant hereto in connection with this Agreement):
(a) ILS has the capacity and authority and has taken all necessary
action to enter into, execute and deliver this Agreement;
(b) This Agreement constitutes and the agreements and other instruments
contemplated herein when executed will constitute valid and binding
obligations of ILS enforceable in accordance with the terms hereof
and thereof subject, however, to limitations with respect to
enforcement imposed in connection with laws affecting the rights of
creditors generally including, without limitation, applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws
and to the extent that equitable remedies such as specific
performance and injunction are in the discretion of the court from
which they are sought; and
(c) No consent, licence, approval, order or authorization of or
registration, filing or declaration with any governmental authority
that has not been obtained or made by ILS and no consent of any
third party is required to be obtained by ILS in connection with the
execution, delivery and performance by ILS of this Agreement or the
consummation of the transactions contemplated by the Program.
2.2 CONSORTEUM WARRANTIES. Consorteum represents and warrants to ILS as follows
(acknowledging that ILS is relying on the representations and warranties of
Consorteum contained in this Agreement and any agreement, certificates or other
document delivered by Consorteum pursuant hereto in connection with this
Agreement):
(a) Consorteum has the capacity and authority and has taken all
necessary action to enter into, execute and deliver this Agreement;
(b) This Agreement constitutes and the agreements and other instruments
contemplated herein when executed will constitute valid and binding
obligations
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of Consorteum enforceable in accordance with the terms hereof and
thereof subject, however, to limitations with respect to enforcement
imposed in connection with laws affecting the rights of creditors
generally including, without limitation, applicable bankruptcy,
insolvency, moratorium reoganization or similar laws and to the
extent that equitable remedies such as specific performance and
injunction are in the discretion of the court from which they are
sought; and
(c) No consent, licence, approval, order or authorization of, or
registration, filing or declaration with any governmental authority
that has not been obtained or made by Consorteum and no consent of
any third party is required to be obtained by Consorteum in
connection with the execution, delivery and performance by
Consorteum of this Agreement or the consummation of the transactions
contemplated by the Program.
2.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of ILS and Consorteum contained in this Agreement and contained in
any document or certificate given pursuant to this Agreement shall continue for
an indefinite period.
ARTICLE 3
GENERAL
3.1 TIME. Time shall be of the essence of this Agreement and of every part
hereof and no extension or variation of this Agreement shall operate as a waiver
of this provision.
3.2 NOTICES. All communications which may be or are required to be given by
either party to the other herein, shall (in the absence of any specific
provision to the contrary) be in writing and delivered or sent by prepaid
registered mail or fax to the parties at their following respective addresses:
For: Consorteum Inc.
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Consorteum Inc.
00-000 Xxxxxxxxx Xx Xxxx,
Xxxxxxx
Xxxxxxx
X0X 0X0
Attn: Xx. Xxxxx Xxxxxxxx
Facsimile: 0-000-000-0000
For: Innovative Loyalty Solutions Inc.
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Innovative Loyalty Solutions Inc.
000 Xxxxxxxx Xxxxx, Xxxx 00
Xxxxxxx, XX
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Att: Xx. Xxxx Xxxxxxx
Facsimile:
For: the Shareholders
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X/X Xxxxxxx Xxxxxxx
Xxxxx 000, 000 Xxxxxxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxx
And if any such communication is sent by prepaid registered mail, it shall,
subject to the following sentence, be conclusively deemed to have been received
on the third business day following the mailing thereof and, if delivered or
faxed, it shall be conclusively deemed to have been received at the time of
delivery or transmission. Notwithstanding the foregoing provisions with respect
to mailing, in the event that it may be reasonably anticipated that, due to any
strike, lockout or similar event involving an in postal service, any payment
or communication will not be received by the addressee by no later than the
third (3rd) business day following the mailing thereof then the mailing of any
such payment or communication as aforesaid shall not be an effective means of
sending the same but rather any payment or communication must then be sent by an
alternative means of transportation which it may reasonably be anticipated will
cause the payment or communication to be received reasonably expeditiously by
the addressee. Either party may from time to time change its address herein
before set forth by notice to the other of them in accordance with this section.
3.3 GOVERNING LAW. This Agreement and the rights and obligations and relations
of the parties hereto shall be governed by and construed in accordance with the
laws of the Province of Ontario and the federal laws of Canada applicable
therein (but without giving consideration to any conflict of laws rules). The
parties hereto agree that the Courts of Ontario shall have jurisdiction to
entertain any action or other legal proceedings based on any provisions of this
Agreement Each party hereto does hereby astern to the jurisdiction of the Courts
of the Province of Ontario.
3.4 HEADING. The headings in this Agreement and in the Schedules hereto are
inserted solely for convenience of reference and do not affect the
interpretation thereof or define, limit or commit the contents of any provision
of this Agreement.
3.5 ASSIGNMENT AND ENSUREMENT. Neither this Agreement nor any rights or
obligations hereunder shall be assignable by any party hereto without the prior
written consent of each of the other parties, which consent may be unreasonably
withheld. Subject thereto, this Agreement shall ensure to the benefit of and be
binding upon the parties hereto and their respective successors (including any
successor by reason of amalgamation of any party hereto), heirs and permitted
assigns.
3.6 ENTIRE AGREEMENT. With respect to the subject matter of this Agreement, this
Agreement (a) sets forth the entire agreement between the parties hereto and any
persona who
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have in the past or who are now representing either of the parties hereto, (b)
supersedes all prior understandings and communications between the parties
hereto or any of them, oral or written, and (c) constitutes the entire agreement
between the parties hereto. Each party hereto acknowledges and represents that
this Agreement is entered into after full investigation and that no party is
relying upon any statement or representation made by any other which is not
embodied in this Agreement Each party hereto acknowledges that he or it shall
have no right to rely upon any amendment, praise, modification, statement or
representation made or occurring subsequent to the execution of this Agreement
unless the same is in writing and executed by each of the parties hereto. This
Agreement is not intended to settle any obligations or disputes between the
parties, and therefore all claims are preserved.
3.7 FURTHER ASSURANCES. The parties hereto shall with reasonable diligence do
all such things and provide all such reasonable assurances as may be required to
consummate the transactions contemplated hereby, and each party hereto shall
provide such further documents or instruments required by the other party as may
be reasonably necessary or desirable to effect the purpose of this Agreement and
carry out its provisions.
3.8 WAIVER. The failure of any party to this Agreement to enforce at any time
any of the provisions of this Agreement or any of its rights in respect thereto
or to insist upon strict adherence to any term of this Agreement will not be
considered to be a waiver of such provision, right or term or in any way to
affect act the validity of this Agreement or deprive the applicable party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement. The exercise by any party to this Agreement of any of its
rights provided by this Agreement will not preclude or prejudice such party from
exercising any other right it may have by reason of this Agreement or otherwise,
irrespective of any previous action or proceeding taken by it hereunder. Any
waiver by any party hereto of the performance of any of the provisions of this
Agreement will be effective only if in writing and signed by a duly authorized
representative of such party.
3.9 NUMBER. In this Agreement and unless the context otherwise requires, words
importing the singular number only shall include the plural and vice versa,
words importing the masculine and feminine genders and vice versa and words
importing persons shall include individuals, partnerships, associations, trusts,
unincorporated organizations and corporations and vice versa.
3.10 COUNTERPARTS. - This Agreement may be executed in any number of
counterparts and all such counterparts shall for all purposes constitute one
agreement, binding on the parties hereto, provided each party hereto has
executed at least one counterpart, and each shall be deemed to be an original,
notwithstanding that all parties are not signatory to the same counterpart.
This contract will supersede all previous agreement written or oral.
DATED the 5th day of January, 0000
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XXXXXXXXXX XXXXXXX SOLUTIONS
Per: /s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
CONSORTEUM, INC.
Per: /s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
/s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
