UgoMedia Interactive Corporation
10011-123 St. NW, Suite 2303
Edmonton, Alberta, Canada N7V 1X4
November 20, 2002
Sciax Technology Inc.
233 Carlaw Ave Suite 401
Toronto, ON, Canada
M4M 3N6
Re: Proposed Combination involving UgoMedia
Interactive Corporation of Sciax Technology Inc.
Gentlemen:
This Letter of Intent memorializes a proposal with respect
to the acquisition by UgoMedia Interactive Corporation, a Nevada
corporation, ("UgoMedia") of Sciax Technology ("Sciax").
UgoMedia and Sciax shall be collectively referred to herein as
the "Parties" and each separately as a "Party".
1. The Combination
(a) Sciax will merge (the "Combination") with a wholly-
owned Ontario subsidiary of UgoMedia ("Acquisitionco"), to form a
new Ontario corporation ("Amalco") which will be a wholly-owned
subsidiary of UgoMedia.
(b) In connection with the Combination, UgoMedia shall issue
to the shareholders of Sciax 20,000,000 shares of UgoMedia's
Common Stock. The shares shall be restricted securities which
may not be transferred except as permitted under US securities
laws. In connection with the Combination, UgoMedia, as the sole
shareholder of Acquisitionco, will receive 100 common shares of
Amalco, being all of the issued and outstanding shares of Amalco.
(c) In addition, Sciax shall pay four hundred fifty thousand
dollars ($450,000) USD in cash to UgoMedia , as follows:
(i) a non-refundable [subject to paragraph 2.d] deposit of
twenty five thousand ($25,000) USD shall be paid by
wire transfer to Airam Capital Group, Inc. on the
execution of this Letter of Intent;
(ii) Concurrent with the signing of the definative Agreement
a further seventy-five thousand ( $75,000) USD payment
will be made via wire transfer payable to Airam Capital
Group Inc.
(iii) the remaining $350,000 shall be paid in the form
of a promissory note (the "Note"), bearing interest at
the rate of 6% per annum. The Note shall be repaid on
the first anniversary of the Closing;
provided that Sciax may prepay the outstanding balance (both
principal and interest) of the Note at any time without penalty.
The Note may be divided, assigned and used to pay debts or other
obligations of UgoMedia, and thereafter any payments due on the
Note shall be paid directly to such assignee[s]. Further, The
Board of Directors of Ugomedia has the option to issue to any
assignee of the Note, in whole or in part, the right to acquire
shares of UgoMedia at the bid price, up to $.20 per share upon
reassignment back to UgoMedia of any unpaid principal and/or
interest on the Note.
(d) On Closing: (i) Sciax will be merged with Acquisitionco
into Amalco and will cease to exist as a separate corporation;
(ii) Amalco will be responsible for all debts and liabilities of
both Sciax and Acquisitionco incurred prior to the date of
amalgamation; (iii) Amalco will become a wholly owned subsidiary
of UgoMedia; and (iv) the stockholders/partners of Sciax will
become stockholders of UgoMedia.
(e) On Closing, Aldo Rotondi and the current directors of
Sciax; namely Ken Smart as well as Nitin Amersey and two other
individuals to be appointed by Ken Smart will be elected or
appointed to the UgoMedia Board of Directors.
(f) On Closing, the new Board of Directors may elect to
change the name of UgoMedia.
(g) On or before Closing, each Party shall take all appropriate
and necessary corporate action to authorize the transactions
contemplated in this Letter of Intent and obtain all required
approvals and consents to the Combination, including but not
limited to approval by their respective Boards of Directors and
approval by their shareholders, if necessary.
(h) Prior to Closing, the issued and outstanding share capital
of UgoMedia shall be adjusted as set out in Schedule "A",
including but not limited to the transfer by Aldo Rotondi and
Nevada Fund of 1,367,323 common shares each back to UgoMedia's
treasury.
(i) Subject to approval of the Board of Directors, UgoMedia
Amalco shall sign an Investor Relation Program Contract with
Airam Capital as per Schedule "C". This is intended to enhance
shareholder awareness in post-Combination UgoMedia.
(j) A list of current assets shall be provided by UgoMedia as
soon as possible after signing of this letter of intent.
(k) Plan of action regarding roles and responsibilities,
including payment of costs and expenses, after execution of this
letter of intent follows as Schedule B.
2. Due Diligence, Confidentiality, and Further Covenants
(a) From the date hereof, each Party will make
available to the other Party and its authorized representatives
for review their respective financial statements, books, records,
corporate documents and other information as the other Party or
its authorized representatives may reasonably request, and each
Party shall have the opportunity to meet with attorneys,
accountants and key personnel of the other Party to discuss the
financial and business conditions of that other Party and to make
such further investigations as may be deemed necessary and
prudent. The Parties agree to cooperate with each other in
complying with these requests and providing such materials as the
other Party may request.
(b) All confidential information which each Party or any of
its officers, employees, agents, consultants, or representatives
(the "Receiving Party"), may possess or may receive in the future
pertaining to the business, affairs and financial or other
condition of the other Party (the "Disclosing Party"), shall not
be utilized, disclosed or made available to any other person or
entity other than current members of the Board of Directors,
officers, employees, agents, consultants, or representatives of
either Party for their due diligence use under this Letter of
Intent at any time without the express written consent of the
Disclosing Party. Notwithstanding the foregoing, neither Party
will be obliged to maintain confidentiality in respect of
information that:
(i) is or becomes available in the public domain, other
than by an act or omission of the Receiving Party or any
employee, agent or other person acting for or on behalf of
the Receiving Party;
(ii) is lawfully acquired by the Receiving Party from
another source without restriction; or
(iii) is required to be disclosed by law or ordered to
be disclosed by a court, administrative agency or other
governmental body with jurisdiction over the parties,
provided the Receiving Party will first have provided the
Disclosing Party with prompt written notice of such required
disclosure and will take reasonable steps to allow the
Disclosing Party to seek a protective order with respect to
the confidentiality of the information required to be
disclosed. The Receiving Party will promptly co-operate
with and assist the Disclosing Party in connection with
obtaining such protective order, at the Disclosing Party's
expense.
(c) Notwithstanding the foregoing, the Parties acknowledge
and agree that:
(i) each Party shall, on or before Closing, make all such
filings as may be required to be made by it under any
applicable laws or regulations in order to consummate the
transactions contemplated in this Letter of Intent;
(ii) each Party shall co-operate with the other Parties with
respect to all such filings, including providing all
information about the Party that such other Parties may
require for such filings;
(iii) without limiting the generality of the foregoing:
(1) within five (5) days of the execution of this Letter of
Intent UgoMedia is required to and shall prepare and file
with the U.S. Securities and Exchange Commission ("SEC") a
Form 8-K Current Report with respect to the same, and shall
issue a press release mutually acceptable to the Parties
which shall also be filed as an exhibit to the Form 8-K; and
(2) not less than thirty (30) days before Closing, UgoMedia
is required to and shall prepare and file with the SEC and
deliver to its shareholders a properly prepared information
statement on Schedule 14F; and
(iv) all other public notices to third parties and all other
publicity concerning the transactions contemplated by this
Letter of Intent shall be jointly planned and co-ordinated
by the Parties and no Party shall act unilaterally in this
regard without the prior consent of the other Party, such
approval not to be unreasonably withheld.
(d) The deposits set forth in 1.c.i and ii shall be
refundable on only the following two conditions:
Until Sciax delivers an opinion of counsel that its
shareholders have ratified the Combination in accordance
with all applicable laws by 12/15/02, UgoMedia may engage in
merger or business combination negotiations with other
parties. If UgoMedia determines to go forward with another
party prior to the Date, at the time a letter of intent or
similar document is signed with such other party, UgoMedia
shall refund the deposit. Until Closing, if UgoMedia shall
make any material misrepresentation of fact in writing
concerning itself or the transaction prior to Closing, and
UgoMedia is given written notice of same by Sciax and is not
able to cure within a reasonable time but in any event not
to exceed 14 days, then UgoMedia shall refund the deposit.
3. Conditions Precedent to Obligations to Perform
The Closing and each Party's obligations under this Letter
of Intent are conditional on the following conditions being
satisfied on or before Closing:
(a) the completion of a due diligence investigation by each
Party, with each Party and its legal counsel, financial advisers,
accountants and other agents being satisfied with the results of
such investigation;
(b) the representations and warranties of each Party made
herein shall be true and accurate as of the date of Closing;
(c) compliance with all applicable legal and/or regulatory
requirements;
(d) completion of all required corporate and shareholder actions
and approvals, if any;
(e) UgoMedia shall have a sufficient number of authorized but
unissued and unreserved shares of common stock to consummate the
transaction contemplated hereby;
(f) there shall have been no material adverse change in the
business, assets, liabilities of either Party or in the Reporting
Issuer Status and Listing Status (as defined in s.4(b) below) of
UgoMedia;
(g) each Party shall have received an opinion of counsel to the
other Party regarding its incorporation and existence, its
authorized and issued capital, the due authorization, execution
and delivery of this Letter of Intent and any ancillary
documents, compliance with relevant securities laws, and such
other matters as are customary in transactions of this type or as
counsel to the receiving Party may reasonably request.
4. Representations and Warranties
(a) Sciax hereby represents and warrants to UgoMedia as
follows and acknowledges that UgoMedia is relying on these
representations and warranties in entering into this Letter of
Intent and performing its obligations hereunder.
(i) Due Incorporation - Sciax is a corporation duly
incorporated and validly existing under the laws of the Province
of Ontario.
(ii) Capacity and Due Authorization - Sciax has the power and
capacity and good and sufficient right and authority to enter
into this Letter of Intent on the terms and conditions herein set
forth, to perform its obligations under this Letter of Intent.The
execution and delivery of this Letter of Intent and the
completion of the transactions contemplated herein has been duly
and validly authorized by all necessary corporate action on the
part of Sciax.
(iii) Absence of Conflict - Sciax is not a party to, bound
or affected by any agreement which would be violated, breached or
terminated by, or which would result in creation or imposition of
any encumbrance upon any of the shares or assets of Sciax as a
consequence of the execution and delivery of this Letter of
Intent or the consummation of the transactions contemplated in
this Letter of Intent. The consummation of transactions
contemplated herein do not and will not conflict with, or result
in a breach of, or constitute a default under the terms or
conditions of any constating documents of Sciax, any court or
administrative order or process, any agreement or instrument to
which Sciax is party or by which it is bound.
(iv) Regulatory Approvals - Except as set out in s. 2(c)(iii)
above, no governmental or regulatory authorization, approval,
order, consent or filing is required on the part of Sciax in
connection with the execution, delivery and performance of this
Letter of Intent and the performance of Sciax's obligations under
this Letter of Intent.
(v) Share Capital - The authorized and issued share capital of
Sciax is as set out in the financial statements of Sciax attached
hereto as Schedule "D".
(vi) No Options - Except as set out in this Letter of Intent, no
third party has any agreement, warrant, option or right, or a
right capable of becoming an agreement to acquire control of
Sciax, to acquire all or substantially all of the assets of
Sciax, or to carry out a business combination with Sciax;
(vii) Permits - To the best of its knowledge, Sciax has
obtained all permits, certificates, approvals, registrations and
licenses which are required for the operation of its business as
it is presently being conducted, and no violations thereof have
been experienced, noted, or recorded, and no proceeding is
pending or threatened to revoke or limit any of them.
(viii) Subsidiaries - Sciax has no subsidiary companies.
(ix) Financial Statements - Sciax's financial statements attached
hereto as Schedule "D" are substantially true and correct in
every material respect and present fairly the financial position
of Sciax and the results of its operations for the periods then
ended, in accordance with Canadian GAAP applied on a consistent
basis.
(x) Assets and Liabilities - Sciax has no assets or liabilities
except as set out in its financial statements attached hereto as
Schedule "D".
(xi) No Material Changes - Since the end of the period reported
on in Sciax's Financial Statements, Sciax has carried on its
business in the ordinary course of business and there have been
no material adverse changes.
(xii) Bankruptcy / Liquidation - No proceedings have been
taken, are pending or have been authorized, and no receiver or
trustee has been appointed for Sciax by Sciax or by any other
person in respect to the bankruptcy, insolvency, liquidation,
dissolution or winding up of Sciax.
(xiii) Litigation - Except as oulined herein there are no
judgements, decrees, injunctions, rulings or orders of any court,
arbitrator, federal, provincial, state, municipal or other
governmental authority, department, commission, board, bureau or
agency, or any actions, suits, grievances or proceedings (whether
or not on behalf of Sciax) commenced, pending or threatened
against or relating to Sciax which may result in the imposition
of a encumbrance on the shares or assets of Sciax, impose
material liabilities on Sciax, or which may prevent, delay, make
illegal or otherwise interfere with the consummation of the
transactions contemplated in this Letter of Intent. A statement
of claim has been filed against Sciax by a Swiss supplier. A copy
of the statement of claim is appended hereto.
(xiv) Capitalization - Subsequent to the merger closing and
for a period of 18 months thereafter, Ugomedia shall not
undertake a reverse split or similar action with respect to its
stock. SCIAX is bound by this representation and agreement.
(b) UgoMedia hereby represents and warrants to Sciax as
follows and acknowledges that Sciax is relying on these
representations and warranties in entering into this Letter of
Intent and performing its obligations hereunder:
(i) Due Incorporation - UgoMedia is a corporation duly
incorporated and validly existing under the laws of the State of
Nevada.
(ii) Capacity and Due Authorization - UgoMedia has the power and
capacity and good and sufficient right and authority to enter
into this Letter of Intent on the terms and conditions herein set
forth, to perform its obligations under this Letter of Intent.
The execution and delivery of this Letter of Intent and the
completion of the transaction contemplated herein has been duly
and validly authorized by all necessary corporate action on the
part of UgoMedia.
(iii) Absence of Conflict - UgoMedia is not a party to, bound
or affected by any agreement which would be violated, breached or
terminated by, or which would result in creation or imposition of
any Encumbrance upon any of the shares or assets of UgoMedia as a
consequence of the execution and delivery of this Letter of
Intent or the consummation of the transactions contemplated in
this Letter of Intent. The consummation of transactions
contemplated herein do not and will not conflict with, or result
in a breach of, or constitute a default under the terms or
conditions of any constating documents of UgoMedia, any court or
administrative order or process, any agreement or instrument to
which UgoMedia is party or by which it is bound.
(iv) Regulatory Approvals - Except as set out in s.2(c)(iii)
above, no governmental or regulatory authorization, approval,
order, consent or filing is required on the part of UgoMedia in
connection with the execution, delivery and performance of this
Letter of Intent and the performance of UgoMedia's obligations
under this Letter of Intent.
(v) Reporting Issuer Status - UgoMedia is a reporting company in
the United States under U.S. Securities Law, but is not a
"reporting issuer" in any province or territory of Canada, as
that term is defined under Canadian securities law (the foregoing
state of affairs being hereinafter known as the "Reporting Issuer
Status").
(vi) Listing Status - The common shares of UgoMedia are quoted
for trading on the Bulletin Board under the symbol "UGMI".
UgoMedia is in good standing with the Bulletin Board and is not
in default under any of its rules, policies or by-laws (the
foregoing state of affairs being hereinafter known as the
"Listing Status").
(vii) Financial Statements - UgoMedia's audited financial
statements for the year ended December 31, 2001, and its
unaudited financial statements period ended September 30, 2002,
as filed with the SEC (collectively, the "UgoMedia Financial
Statements"), are substantially true and correct in every
material respect and present fairly the financial position of
UgoMedia and the results of its operations for the periods then
ended, in accordance with U.S. GAAP applied on a consistent
basis.
(viii) Assets and Liabilities - UgoMedia has no assets or
liabilities except as set out in the UgoMedia Financial
Statements.
(ix) Share Capital - The authorized share capital of UgoMedia is
as set out in the UgoMedia Financial Statements, of which there
are 8,734,666 issued and outstanding shares of common stock and
nil shares of preferred stock. After certain actions to be
completed prior to Closing as set out in Schedule "A", UgoMedia
will have approximately 6,000,000 shares of common stock issued
and outstanding.
(x) UgoMedia Shares - The UgoMedia shares to be issued to the
shareholders of Sciax at Closing will be validly issued as fully-
paid and non-accessible.
(xi) No Options - Except as set out in this Letter of Intent, and
except for outstanding warrants to purchase 395,000 common shares
of UgoMedia, no third party has any agreement, warrant, option or
right, or a right capable of becoming an agreement for the
purchase of any issued or unissued shares of UgoMedia or
securities convertible into such shares, or to require UgoMedia
to convert or exchange any securities into or for shares in the
capital of UgoMedia, or to purchase, redeem or otherwise acquire
any of the issued and outstanding shares in the capital of
UgoMedia.
(xii) Permits - To the best of its knowledge, UgoMedia has
obtained all permits, certificates, approvals, registrations and
licenses which are required for the operation of the business
presently being carried on by it, and no violations thereof have
been experienced, noted, or recorded, and no proceeding is
pending or threatened to revoke or limit any of them.
(xiii) Subsidiaries - Except for Acquisitionco (to be
incorporated), UgoMedia has no subsidiaries and does not own,
directly or indirectly, any shares or interest in any other
entity.
(xiv) No Material Changes - Since the end of the period
reported on in UgoMedia's Financial Statements, UgoMedia has
carried on its business in the ordinary course of business and
there have been no material adverse changes.
(xv) Bankruptcy / Liquidation - No proceedings have been taken,
are pending or have been authorized, and no receiver or trustee
has been appointed for UgoMedia by UgoMedia or by any other
person in respect to the bankruptcy, insolvency, liquidation,
dissolution or winding up of UgoMedia.
(xvi) Litigation - There are no judgements, decrees,
injunctions, rulings or orders of any court, arbitrator, federal,
provincial, state, municipal or other governmental authority,
department, commission, board, bureau or agency, or any actions,
suits, grievances or proceedings (whether or not on behalf of
UgoMedia) commenced, pending or threatened against or relating to
UgoMedia which may result in the imposition of a Encumbrance on
the UgoMedia Shares, impose material liabilities on UgoMedia, or
which may prevent, delay, make illegal or otherwise interfere
with the consummation of the transactions contemplated in this
Letter of Intent.
(xvii) Taxes - UgoMedia is not in arrears or in default in
respect of the payment of any applicable taxes or the filing of
any required tax return.
(xviii) Ugo Media will make available Form 10B5 upon the final
execution of this agreement.
5. Indemnification
Sciax will agree to indemnify and hold harmless UgoMedia
with respects to all losses arising out of any breach of
representation, warranty or covenant of Sciax made pursuant to
the agreement, including, without limitation, any representation
or warranty with respect to the existence of litigation or
threatened litigation which may effect the Assets. UgoMedia will
agree to indemnify and hold harmless Sciax with respect to all
losses arising out of any breach of any representation, warranty
or covenant of UgoMedia made pursuant to the Agreement. The
definitive Agreement will contain a comprehensive indemnity.
6. Termination
This Letter of Intent may be terminated only by mutual
written consent of the Parties hereto and may be extended only
upon mutual written consent of the Parties. If the terms and
conditions of this letter are not fulfilled and the Agreement is
not finalized and executed prior to December 15, 2002 or any
extensions thereof, this Letter of Intent shall automatically
expire and be void and of no further effect. This letter of
Intent shall be subject to the terms and conditions set forth
herein.
7. Assignability
This Letter of Intent shall not be assignable or
transferable by either Party.
8. Governing Laws
The validity and interpretation of this Letter of Intent
shall be governed by and construed in accordance with the laws of
the State of Nevada. The parties to this Letter of Intent agree
that any litigation arising out of the terms of the proposed
Merger set forth herein shall be commenced in courts located in
the State of Nevada, Clark County. All parties consent to the
exclusive jurisdiction and venue of the federal and state courts
located in Clark County with respect to any action arising under
this Letter of Intent.
9. Amendment
This Letter of Intent shall be amended only with the written
consent of the Parties.
10. Counterparts
This Letter of Intent may be executed in multiple
counterparts by original or facsimile signature, and each such
counterpart shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement.
11. Brokers' or Finders' Fees
Each Party shall indemnify and hold the other Party harmless
from any claim for brokerage or finders' fees arising out the
transactions contemplated hereby by any person claiming to have
been engaged by either Party.
12. Expenses
Except as provided herein, each of Sciax and UgoMedia, and
their shareholders, respectively, shall bear its own expenses in
connection with the preparation for the consummation of the
transaction contemplated by this Letter of Intent.
13. No Binding Effect
Except with respect to the non-refundable deposits and the
obligations to pay expenses set forth on Schedule B, the
understandings contained herein (i) do not constitute a binding
agreement between the Parties hereto but merely express their
intent with respect thereto and (ii) shall only become binding
when a Combination Agreement is executed and the transactions
contemplated hereby have been approved by each of the Parties.
The foregoing Letter of Intent is accepted, approved and
agreed to by UgoMedia Interactive Corporation this ___ day of
____, 2002.
UGOMEDIA INTERACTIVE CORPORATION
By:
Name: Aldo Rotondi
Title: President
The foregoing Letter of Intent is accepted, approved and
agreed to by Sciax this ___ day of ___, 2002.
SCIAX TECHNOLOGY INC.
By:
Name: Ken Smart; President & C.E.O.
Title: Chief Executive Officer
SCHEDULE "A"
UgoMedia Shares as of October UgoMedia Shares In
31, 2002 Preparation
for and After
Rotondi 2,500,000 Rotondi 682,677
Nevada Fund 2,500,000 Nevada Fund 1,132,677
Bleazard 250,000 Bleazard 400,000
S Brock 250,000 S Brock 400,000
Others 3,234,666 Others 3,384,666
------------ ------------
TOTAL 8,734,666 TOTAL 6,000,000
Sciax Shares 20,000,000
- ---------------------------------------------------------
TOTAL SHARES POST MERGER 26,000,000
Ownership Percentage Post
Original Sciax
Shareholders % 76.92%
Original Ugo
Shareholders % 23.08%
- ---------------------------------------------------------
SCHEDULE B
Sciax Responsibilities: Prior to the Close of the Merger
Agreement
(a) The execution of definitive agreements contemplated by this
Letter of Intent.
(b) Comply with all applicable legal and/or regulatory
requirements.
(c) Complete of all required corporate and shareholder actions
and approvals, if any; including any approvals of all terms and
conditions of the proposed Merger by the board of directors or
shareholders of each Party.
(d) Sciax shall pay the non-refundable earnest deposits of
$100,000 USD payable as set forth in this Letter of Intent to
Airam Capital Group, Inc.
(e) Supply information (if necessary) to UgoMedia so that
UgoMedia can prepare and file the 8-K.
UgoMedia Responsibilities Prior to the Close of the Merger
Agreement
1. Obtain Board of Directors Approval.
2. Draft and Sign a Definitive Merger Agreement.
Responsibilities of New Management Team Post Close of the Merger
Agreement
1. By operation of law, the surviving company shall be
responsible for all debts and obligations of UgoMedia prior to
the date of the merger.
2. Prepare and file the 8-K.
3. Be responsible for compiling and making all other SEC
filings after the closing.