Exhibit 10.1
MEDLINK WEST, INC.
SHAREHOLDER PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of the 23rd day
of July, 2004, by and between JMS Capital Partners, LLC ("JMSCP"), a California
corporation, AND its wholly-owned subsidiary, MedLink West, Inc. ("MLW" and/or
"Company"), AND Western Media Group Corporation ("WMGC"), a Minnesota
Corporation, together (the "Parties").
WITNESSETH:
WHEREAS, WMGC requires the Company to provide customer service and support
for its Med-Link VPN and other related products and services sold by WMGC and/or
its subsidiaries Med-Link USA, Inc. and Med-Link VPN, Inc. (the "Products") in
California, Hawaii, Michigan, Illinois and all contiguous geographic territory
West of the Mississippi and all other mutually agreed upon areas explicitly
designated in writing (the "Territory"); and
WHEREAS, the Company is willing to provide the customer services required
by WMGC in exchange for the compensation and consideration set forth herein; and
WHEREAS, the Parties are desirous of entering into this Agreement for the
purpose of setting for the their respective rights and duties in connection with
the services to be performed by the Company and the financing, management and
operation of the Company's business;
NOW, THEREFORE, it is agreed as follows:
1. Principal Office. The Company shall have its initial principal office at 000
X. Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000.
2. Term. This Agreement shall commence on July 12, 2004 and shall continue until
December 31, 2007 unless earlier terminated by either Party in accordance with
Section 11 hereunder.
3. Purchase of Stock. Each Party hereby agrees to purchase the number of shares
of the Company's Common Stock (the "Shares") for the consideration indicated
below:
a. JMSCP shall purchase 400 Shares for an initial capital contribution
of $90,341.70 representing expenses incurred as of the date of this
agreement and will contribute an additional amount of $400,000 to
maintain current operations.
b. WMGC shall purchase 400 Shares for its initial capital contribution
of the rights to provide service and support to the Products.
c. Pursuant to the terms of this Shareholder Purchase Agreement, a
board of directors of the Company shall be designated as follows:
two (2) designees of WMGC and one (1) designee of JMSCP. The board
of directors shall designate a finance oversight committee to
oversee financial considerations of the Company, including but not
limited to the determination of wages and salaries, the approval of
capital expenditures in excess of $2500, the review and approval of
budgets, and the approval of any unbudgeted expenses. The Company
shall have the ability upon unanimous consent of its board of
directors to designate additional board members, directors and
officers as needed.
d. Total number of authorized shares of the Company shall be
one-thousand (1,000). Total number of shares issued and outstanding
shall be eight-hundred (800) pursuant to Section 3 of this
agreement. Additional shares of the Company shall not be authorized
or issued without written approval and unanimous consent of the
board of directors of the Company.
4. Issuance of WMGC Stock to JMSCP. In consideration of entering into this
Agreement, and the services to be performed as set forth below, WMGC agrees to
issue to JMSCP Two Million (2,000,000) shares of its $.01 par value common stock
and One Million (1,000,000) options to purchase WMGC common stock priced at a
15% discount to the 100-day moving average of WMGC common stock, or the price as
of a mutually agreed upon date within 90 days prior to the exercise of the
option, expiring July 12, 2009.
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a. WMGC shall issue to JMSCP One Million (1,000,000) employee stock
options per increments of Five Million ($5,000,000) in single annual
aggregate gross revenue generated by the Company priced at a 15%
discount to the 100-day moving average of WMGC common stock with a
ceiling of Fifteen Million Dollars ($15,000,000) in single annual
aggregate gross revenue. Further compensation to be negotiated
beyond ceiling.
b. In the event that aggregate gross revenue for the Company exceeds
Five Million ($5,000,000), WMGC agrees to issue to JMSCP a cash
bonus of 10% of net revenue. Net revenue shall be defined, for the
purpose of this agreement, as all sales minus respective
commissions. Aggregate amounts shall be determined and billed by
full calendar year. For Example:
i. Year 1 - $6,000,000 net revenue = $600,000 to JMSCP
ii. Year 2 - $8,000,000 net revenue = $800,000 to JMSCP
iii. Year 3 - $10,000,000 net revenue = $1,000,000 to JMSCP
5. Gross Profit Distribution. Gross profit, as defined below, shall be
distributed to the Parties as follows, unless otherwise agreed:
a. 50% of Gross Profits shall be distributed to WMGC;
b. 50% of Gross Profits shall be distributed to JMSCP.
"Gross Profits" shall mean the Company's annual subscription and/or revenue
derived through the sale of WMGC Products, as defined above, and/or service(s)
minus vendor costs, derived through the sale of said WMGC Products sold under
the MLW name. Current and updated vendor costs shall be made available to MLW on
a monthly recurring or as needed basis.
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6. Company Responsibilities. The Company shall:
a. Lease, at its own expense, and provide office space in Los Angeles
as may be necessary for the Company's operations in California;
b. Provide sufficient personnel and telephone lines as necessary for
customer support and service for WMGC's Med-Link VPN product sold
under the Medlink West name, in the Territory. Customer Support
shall include the following:
(i) Provide a Medlink West help desk during regular business hours
(9:00 AM PST - 5:00 PM PST);
(ii) Retain a Netwolves, Inc. certified consultant;
(iii) Provide payment for all Company employees/consultants salaries
and commissions;
(v) Contact and introduce hospitals and other businesses in the
Territory that may be interested in utilizing the Products.
(vi) Provide marketing materials and web site for Medlink West.
The Company shall not have the authority to, and shall not:
a. Execute any agreements specifically on behalf of Western Media Group
Corporation without its written authorization to do so; or
b. Collect any fees or other remuneration from customers using the
Products unless authorized in writing by WMGC.
The Company shall have the authority to:
a. Execute Value Added Reseller (VAR) agreements exclusively under the
Medlink West name.
b. Execute agreements on behalf of the Medlink VPN with prior written
authorization from WMGC for Value Added Services (VAS) to be placed
on the Medlink West VPN interface.
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7. WMGC Responsibilities. WMGC shall:
a. Provide scheduled and unscheduled maintenance, repairs and timely
updates of the Product(s);
b. Provide 24-hour technical assistance for WMGC Product(s)
c. Provide and install the Product(s) in hospitals and other businesses
in the Territory which contract through Medlink West for the
Products;
d. Provide the Company with all software, hardware and other pertinent
updates to the Products as they are developed;
e. Provide all billing and invoicing to customers in the Territory;
f. Provide access to Medlink West customer billing records and provide
billing reports on demand;
g. Provide Med-Link West online demonstration access to WMGC Products,
including but not limited to password(s), interactive demos, VPN
PowerPoint materials; and
h. Pay Product revenue collected from customers serviced by the Company
in the Territory within 21 days of receipt.
8. License. WMGC hereby grants to the Company a revocable, non-transferable,
royalty free, license to use the trade names "Med-Link" and "Med-Link VPN" for
the limited purposes of promoting the Products and providing the services
required hereunder. The Company shall not copy nor modify, in any way, licensed
material made available pursuant to the foregoing license. All licenses granted
under this Agreement are terminable by WMGC at any time.
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a. WMGC further stipulates that all original content including, but not
limited to marketing and presentation materials, web site content,
brochures, flyers, art direction and other material generated by
Medlink West, Inc. shall remain the property of Medlink West, Inc.
9. Transfer of Shares. Without the prior written consent of all of the
Shareholders (the "Required Consent"), a Shareholder may not sell, transfer,
assign or otherwise dispose of, or permit, voluntarily or involuntarily, any
Encumbrance (as defined below) upon, all or any portion of such Shareholder's
Shares. Any such purported sale, transfer, assignment or other disposition or
Encumbrance of Shares (hereinafter collectively referred to as a "Transfer")
without the Required Consent shall be void and shall not bind the Company. If
the Required Consent to the Transfer has been obtained, such Transfer may be
made only if (i) the other provisions of this Agreement do not otherwise
prohibit the Transfer, (ii) a duly executed and acknowledged counterpart of the
instrument effecting such Transfer in form and substance satisfactory to the
Board shall have been delivered to the Company, (iii) the assignee shall have
expressly agreed to be bound by the provisions of this Agreement and to assume
all of the obligations imposed upon Shareholders hereunder, (iv) the assignor
and the assignee shall have executed or delivered such other instruments as the
Board may deem necessary or desirable to effectuate such admission, including,
but not limited to, an opinion of counsel that the Transfer complies with the
provisions of the Securities Act of 1933, as amended (the "Securities Act") as
of the date of the Transfer and any applicable securities or "Blue Sky" law of
any state or other jurisdiction, or an exemption therefrom, and (vi) the
assignor or assignee shall have paid all reasonable expenses and legal fees
relating to the Transfer and, if the Board so permits, the assignee's admission
as a Shareholder, including, but not limited to, the cost of any required
counsel's opinion and of preparing, filing and publishing any amendment to the
certificate necessary to effect such admission. For the purposes of this
Agreement, an "Encumbrance" shall mean any security interest, pledge, mortgage,
lien, charge, adverse claim, preferential arrangement or restriction of any
kind.
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10. Legends Imprinted on Certificates. By execution of this Agreement, the
Shareholders indicate their agreement to the Transfer restrictions set forth in
Section 10 of this Agreement. The Shareholders also acknowledge that neither the
issuance nor the resale of the Shares has been registered or qualified under
applicable federal or state securities laws. The Shareholders agree that the
following legends will be imprinted on each certificate representing Shares
restricted from resale under paragraph 10 of this Agreement:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH AN
AGREEMENT AMONG SHAREHOLDERS, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY."
The Shareholders agree that the following legends will be imprinted on all
certificates representing Shares:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY BE TRANSFERRED ONLY IF THE COMPANY IS SATISFIED
THAT NO VIOLATION OF SUCH ACT IS INVOLVED."
11. Termination. This Agreement shall remain in effect until (i) the Company or
WMGC is merged into, or sells its 100% of its assets to, or exchanges stock
with, another corporation, (ii) the Company effects a public offering of its
securities, or (iii) the expiration of this Agreement as set forth in Section 2,
whichever occurs first. Upon termination of this Agreement all parties to this
Agreement shall exercise their options within 90-days after a terminable event
has occurred as listed in Section 11 above.
a. Upon the exploration, announcement or intent of a terminable event
as set forth in Section 11(i) of this Agreement, WMGC grants the
Company the Right of First Refusal to purchase WMGC's shares of the
Company.
12. Trade Secrets and Unfair Competition. The Company understands that the
business of WMGC, Med-Link USA, Inc. and Med-Link VPN, Inc. (collectedly the
"WMGC Companies") is unique. It is further understood that, in the course of
rendering services pursuant to this Agreement, or in having its shareholders or
designees serve as officers, directors or employees of the Company, the Company
will have access to the WMGC Companies' confidential and proprietary information
and trade secrets, including patentable and non-patentable technology, customer
or client lists and other items of information. The use of such items or the
solicitation the WMGC Companies' clients by the Company or its shareholders,
officers, directors, employees or agents (collectively the "MLW Parties") except
as set required by this Agreement, would materially and adversely affect the
WMGC Companies, economically and otherwise. Accordingly:
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a. The Company agrees, for itself, and for the MLW Parties, not to
disclose to others, or take or use for the MLW Parties' own purposes or the
purposes of others, during or after the term of this Agreement, any trade
secrets, confidential information, knowledge, data or know-how in the Company's
possession, whether or not acquired by work product. The Company agrees that
this obligation applies not only to technical information, but also to any
business, financial or marketing information that the WMGC Companies utilize.
Any information the WMGC Companies disclose which is not readily available to
the public shall be considered to be a trade secret unless the WMGC Companies
advise the Company otherwise.
b. The Company agrees that for a period of five years immediately
following termination of this Agreement, neither the Company nor the MLW Parties
shall interfere with the business of the WMGC Companies in any manner,
including, without limitation, by inducing an employee or associate to leave the
WMGC Companies, or by inducing a consultant or other independent contractor to
sever that person's relationship with the WMGC Companies, or disrupting the WMGC
Companies' relationships with customers, agents, representatives or vendors or
otherwise.
c. The Company agrees, for itself, and for the MLW Parties, at any time
during the term of this Agreement, or for a period of five years thereafter,
that they shall not compete, directly or indirectly, with the WMGC Companies, in
any way; provided, however, that nothing contained herein shall prevent the MLW
Parties from collectively owning, as passive shareholders, no more than 5% of a
company in the same line of business as the WMGC Companies.
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d. In the event that any portion of this Section is determined to be
unenforceable, such enforceable portion shall be severable and the balance shall
remain valid and fully enforceable. Money damages for the breach of the
foregoing covenants may not be capable of determination. Accordingly, the
foregoing covenants shall be subject to specific enforcement in any court of
competent jurisdiction.
13. Trade Secrets and Unfair Competition (continued). WMGC understands that the
business of Medlink West, Inc. ("MLW") is unique. It is further understood that,
in the course of rendering services pursuant to this Agreement, or in having its
shareholders or designees serve as officers, directors or employees of the
Company, WMGC will have access to the MLW confidential and proprietary
information and trade secrets, including but not limited to customer or client
lists, sales and marketing materials and strategies and other items of
information. The use of such items or the solicitation of MLW clients by WMGC or
its shareholders, officers, directors, employees or agents (collectively the
"WMGC Parties") except as set required by this Agreement, would materially and
adversely affect MLW, economically and otherwise. Accordingly:
a. WMGC agrees, for itself, and for the WMGC Parties, not to disclose to
others, or take or use for the WMGC Parties' own purposes or the purposes of
others, during or after the term of this Agreement, any trade secrets,
confidential information, knowledge, data or know-how in the Company's
possession, whether or not acquired by work product. WMGC agrees that this
obligation applies not only to technical information, but also to any business,
financial or marketing information that the JMSCP Companies utilize. Any
information about MLW which is not readily available to the public shall be
considered to be a trade secret unless MLW advises WMGC otherwise.
b. WMGC agrees that for a period of three years immediately following
termination of this Agreement, neither WMGC, nor the WMGC Parties shall
interfere with the business of MLW in any manner, including, without limitation,
by inducing an employee or associate to leave MLW, or by inducing a consultant
or other independent contractor to sever that person's relationship with MLW, or
disrupting MLW relationships with customers, agents, representatives or vendors
or otherwise.
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c. WMGC agrees, for itself, and for the WMGC Parties, at any time during
the term of this Agreement, or for a period of three years thereafter, that they
shall not compete, directly or indirectly, with MLW, in any way; provided,
however, that nothing contained herein shall prevent the WMGC Parties from
collectively owning, as passive shareholders, no more than 5% of a company in
the same line of business as MLW.
d. In the event that any portion of this Section is determined to be
unenforceable, such enforceable portion shall be subject to severable and the
balance shall remain valid and fully enforceable. Money damages for the breach
of the foregoing covenants may not be capable of determination. Accordingly, the
foregoing covenants shall be subject to specific enforcement in any court of
competent jurisdiction.
14. Representations, Warranties and Covenants of the Company.
a. Company is a corporation duly organized and legally existing in good
standing under the laws of the State of California, and has all the
requisite corporate power and authority to carry out its responsibilities
under this Agreement.
b. The execution, delivery and performance of this Agreement by the Company
has been duly approved by its board of directors, and no further corporate
action is necessary on the part of Company to consummate the transactions
contemplated by this Agreement, assuming due execution of this Agreement
by the Parties.
c. This Agreement constitutes a valid and binding obligation of the Company,
enforceable in accordance its terms. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated by
this Agreement will: (i) conflict with or violate any provision of the
Company's Articles of Incorporation or By-Laws; (ii) conflict with or
violate any decree, writ, injunction or order of any court or
administrative or other governmental body which is applicable to, binding
on or enforceable against the Company; or (iii) result in any breach of or
default (or give rise to any right of termination, cancellation or
acceleration) under any mortgage, contract, agreement, indenture, will,
trust or other instrument which is either binding on or enforceable
against Company or its assets.
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d. The Company has the full power, right and authority to enter into and
perform this Agreement without the consent of any person, entity, or
governmental agency, and the consummation of the transactions contemplated
by this Agreement will not result in the breach or termination of any
provision of or constitute a default under any lease, indenture, mortgage,
deed of trust or other agreement or instrument or any order, decree,
statute or restriction to which Company is a party or by which Company is
bound or to which the outstanding shares of stock of the Company or any of
the properties of the Company is subject.
Representations, Warranties and Covenants of WMGC
e. WMGC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Minnesota and has all the
requisite corporate power and authority to carry on its business as now
conducted and to consummate the transactions contemplated by this
Agreement.
f. The execution, delivery and performance of this Agreement by WMGC has been
duly approved by its board of directors, and no further corporate action
is necessary on the part of WMGC to consummate the transactions
contemplated by this Agreement, assuming due execution of this agreement
by the Parties.
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g. This Agreement constitutes a valid and binding obligation of WMGC,
enforceable in accordance with its terms. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated by this Agreement will: (i) conflict with or violate any
provision of the Articles of Incorporation or By-Laws of WMGC or (ii)
conflict with or violate any decree, writ, injunction or order of any
court or administrative or other governmental body which is applicable to,
binding on or enforceable against WMGC; or (iii) result in any breach of
or default (or give rise to any right of termination, cancellation or
acceleration) under any mortgage, contract, agreement, indenture, will,
trust or other instrument which is either binding on or enforceable
against WMGC or its assets.
h. WMGC has the full power, right and authority to enter into and perform
this Agreement without the consent of any person, entity, or governmental
agency, and the consummation of the transactions contemplated by this
Agreement will not result in the breach or termination of any provision of
or constitute a default under any lease, indenture, mortgage, deed of
trust or other Agreement or instrument or any order, decree, statute or
restriction to which WMGC is a party or by which WMGC is bound or to which
the outstanding shares of stock of WMGC or any of the properties of WMGC
is subject.
This Agreement constitutes a valid and binding obligation of WMGC, enforceable
in accordance with its terms. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated by this
Agreement will: (i) conflict with or violate any provision of WMGC's Articles of
Incorporation or By-Laws; (ii) conflict with or violate any decree, writ,
injunction or order of any court or administrative or other governmental body
which is applicable to, binding on or enforceable against WMGC; or (iii) result
in any breach of or default (or give rise to any right of termination,
cancellation or acceleration) under any mortgage, contract, agreement,
indenture, will, trust or other instrument which is either binding on or
enforceable against WMGC or its assets.
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15. Miscellaneous Provisions.
a. Entire Agreement. This Agreement embody the entire agreement and
understanding of the parties to this Agreement with respect to its subject
matter and supersede all prior agreements and understandings, whether written or
oral, relating to such subject matter.
b. Notices. Any notice under this Agreement shall be deemed sufficiently
given by one party to another if in writing and if and when delivered or
tendered either in person or by the deposit of it in the United States mail, in
a sealed envelope, registered or certified, with postage prepaid, addressed to
the person to whom such notice is being given at such person's address appearing
on the records of the Company or such other address as may have been given by
such person to the Company for the purposes of notice in accordance with this
subsection. A notice not given as above shall, if it is in writing, be deemed
given if and when actually received by the party to whom it is required or
permitted to be given.
c. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
d. Successors. Anything in this Agreement to the contrary notwithstanding,
any transferee, successor, or assignee, whether voluntary, by operation of law,
or otherwise, of the shares of the Company shall be subject to and bound by the
terms and conditions of this Agreement as fully as though such person were a
signatory.
e. Further Assurances. Each of the Shareholders agrees that during the
term of this Agreement the Shareholder will take such reasonable actions as may
be necessary to effect the purposes of this Agreement.
f. Severability. Any provision of this Agreement prohibited by or unlawful
or unenforceable under any applicable law of any jurisdiction shall as to such
jurisdiction be ineffective without affecting any other provision of this
Agreement. To the full extent, however, that the provisions of such applicable
law may be waived, they are hereby waived to the end that this Agreement be
deemed to be a valid and binding agreement enforceable in accordance with its
terms.
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g. Remedies. The parties to this Agreement shall have available to them
all remedies for breach provided by law or equity. Without limiting the
generality of the foregoing, the parties agree that in addition to all other
rights and remedies available at law or in equity, the parties shall be entitled
to obtain specific performance of the obligations of each party to this
Agreement and immediate injunctive relief and that in the event any action or
proceeding is brought in equity to enforce the same, no Shareholder will urge,
as a defense, that there is an adequate remedy at law.
h. Acknowledgment of Attorney Representation. Each of the Shareholders
acknowledges that it has been represented by the counsel of its choice in the
negotiation and execution of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
JMS Capital Partners, LLC
/s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
President
Date 7/23/04
Western Media Group Corporation
/s/ Xxx Xxxxx
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Xxx Xxxxx
President
Date 7/23/04
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