UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF
SECURITIES Pursuant to Section 12(b) or (g) of
the Securities Exchange Act of 1934
SportsPrize Entertainment Inc.
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(Exact name of registrant as specified in its charter)
Nevada 98-0207616
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
225 S. Sepulveda Blvd., Suite 360,
Manhattan Beach, CA 90266
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (310) 374-1898
Securities to be registered under Section 12(b) of the Act:
None None
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Title of each class to be so registered Name of each exchange on which each
class is to be registered
Securities to be registered under Section 12(g) of the Act:
Common Shares, Par Value of $0.001 per Share
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(Title of Class)
Not Applicable
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(Title of Class)
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THE EXHIBIT INDEX APPEARS ON
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TABLE OF CONTENTS
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Item 1. Description of Business..............................................................................1
Item 2. Financial Information...............................................................................37
Item 3. Properties..........................................................................................42
Item 4. Security Ownership of Certain Beneficial Owners and Management......................................43
Item 5. Directors, Executive Officers, Promoters and Control Persons........................................44
Item 6. Executive Compensation..............................................................................47
Item 7. Certain Relationships and Related Transactions......................................................50
Item 8. Legal Proceedings...................................................................................51
Item 9. Market Price of and Dividends on Registrant's Common Equity and Related Stockholder Matters.........51
Item 10. Recent Sales of Unregistered Securities.............................................................52
Item 11. Descriptions of Registrant's Securities to be Registered............................................53
Item 12. Indemnification of Directors and Officers...........................................................53
Item 13. Financial Statements and Supplementary Data.........................................................54
Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure................54
Item 15. Financial Statements and Exhibits...................................................................54
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NOTE REGARDING FORWARD LOOKING STATEMENTS
Except for statements of historical fact, certain information contained in
this registration statement constitutes "forward-looking statements," including
without limitation statements containing the words "believes," "anticipates,"
"intends," "expects" and words of similar import, as well as all projections of
future results. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results or
achievements of the Registrant to be materially different from any future
results or achievements of the Registrant expressed or implied by such
forward-looking statements. Such factors include, but are not limited to the
following: the Registrant's limited operating history; undercapitalization;
risks involving new product development; unpredictability of future revenues;
competition; management of growth and integration; risks of technological
change; the Registrant's dependence on key personnel; marketing relationships
and third party suppliers; reliance on advertisers; risks of new business areas,
competition and low barriers to entry; uncertain acceptance of the Internet as
an advertising medium; uncertain acceptance of the Registrant's SportsPrize
Tournament; limited experience in sales and marketing of advertising; dependence
on continued growth in use of the Internet; the Registrant's ability to protect
its intellectual property rights and uncertainty regarding infringing
intellectual property rights of others; risk of technological change; capacity
and systems disruptions; liability for Internet content; government regulations;
security risks; year 2000 compliance risks and the other risks and uncertainties
described under "Description of Business - Risk Factors" in this registration
statement.
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Item 1. Description of Business.
Introduction
We, SportsPrize Entertainment Inc., were incorporated in the State of Nevada on
August 25, 1995 as "Par Golf, Inc." with an authorized share capital of
25,000,000 shares of common stock with a par value of $0.001 per share. On
August 21, 1997, we amended our Articles of Incorporation to change our
authorized share capital to 25,000,000 shares, consisting of 20,000,000 shares
of common stock with a par value of $0.001 per share and 5,000,000 shares of
preferred stock with a par value of $0.001 per share, and to change our name to
"Kodiak Graphics Company".
On May 14, 1999, we acquired all of the issued and outstanding shares of
SportsPrize Inc., a Nevada corporation, pursuant to a statutory share exchange.
In connection with the share exchange, we amended our Articles of Incorporation
to change our name to "SportsPrize Entertainment Inc." on May 21, 1999.
In June, 1999, we amended our Articles of Incorporation to change our authorized
share capital to 105,000,000 shares consisting of 100,000,000 shares of common
stock with a par value of $0.001 per share and 5,000,000 shares of preferred
stock with a par value of $0.001 per share.
Our common stock is currently quoted on the National Association of Securities
Dealers' over-the-counter bulletin board (the "OTCBB") and trades under the
symbol "JOCK". However, we will lose our eligibility for quotation on January 3,
2000, unless this registration statement is declared effective without
outstanding comments from the staff of the Securities and Exchange Commission
("SEC") and we are current in our Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), reporting obligations. There can be no assurance
that we will remain eligible for quotation on the OTCBB.
We intend to engage in the business of marketing and promoting sports products,
entertainment, merchandise and other goods and services on the Internet.
SportsPrize Inc. is our sole subsidiary. We have not been subject to any
bankruptcy, receivership or other similar proceedings.
The History of Our Company before Our Acquisition of SportsPrize Inc.
We were generally inactive until August 1997. In August 1997, we commenced the
business of marketing advanced graphic technologies and services by offering
print and screen services to the wholesale and retail sectors of the screen,
print and publication industries. We did not generate sufficient revenues to
make this business plan commercially viable and abandoned this business plan in
late 1998.
In May 1999, we acquired SportsPrize Inc., a company in the process of
designing, developing, building and operating an Internet portal focused on the
sports and entertainment sectors of the Internet market. We intend to engage in
the business of marketing and promoting sports-related
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products, entertainment, merchandise and other goods and services on the
Internet through our Web site at http://www.SportsPrize.com.
We are currently in the process of developing technologies related to our
business and intend to launch our SportsPrize.com(TM) Web site in October, 1999.
We are also in the process of developing strategic relationships with sports
marketing groups, sporting goods and equipment manufacturers, advertisers,
sponsors, entertainment and service providers, athletes and other sports and
entertainment companies to provide content and to offer goods and services on
our SportsPrize.com Web site. We cannot assure you that we will successfully
complete the develop of the technology required to launch our Web site as
planned or that we will be capable of generating any revenues or earning any
profits from our operations. We have not entered into any arrangements or
agreements with strategic partners and we cannot assure you that these
relationships will develop.
Our Acquisition of SportsPrize Inc.
Agreement and Plan of Share Exchange
On May 7, 1999, we entered into an Agreement and Plan of Share Exchange (the
"Exchange Agreement") with SportsPrize Inc. pursuant to which we acquired all of
the issued and outstanding share capital of SportsPrize Inc. in a statutory
share exchange. As a result of the Share Exchange, SportsPrize Inc. became our
wholly-owned subsidiary. Under the terms of the Exchange Agreement:
(a) We agreed to issue 10,000,000 shares of our common stock (the "Exchange
Shares") for 5,804,000 shares of common stock of SportsPrize Inc. or 1.7229
shares of our common stock for each share of SportsPrize Inc. We issued the
Exchange Shares at a deemed price of $0.01 per share. The Exchange Shares
were issued pursuant to an exemption from registration under Rule 506 of
Regulation D of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Except for certain principal shareholders, the holders of the Exchange
Shares agreed that, provided the Company effected a registration statement
to register such shares for resale pursuant to the Securities Act (the
"Resale Registration"), to such shareholders would hold 50% or more of
their respective Exchange Shares for at least six months.
(c) We undertook to use our best efforts to file a resale registration
statement with the SEC to register the Exchange Shares for resale under the
Securities Act.
(d) We agreed to complete a $2,500,000 private placement of 1,666,665 shares of
our common stock at a price of $1.50 per share (the "Initial Financing"),
subject to the payment of a finder's fee of $70,000 to Sonora Capital Corp.
("Sonora").
(e) We agreed to use reasonable efforts to arrange three additional financings
(the "Additional Financings"), each in the amount of $840,000, as follows:
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(i) one to close at the end of July 1999 (the "July Financing") at a price
which is the greater of $3.00 per share or 75% of the ten day average
OTCBB closing price of our common stock for the ten days prior to the
close of the July Financing. On July 27, 1999, we completed a
$1,000,000 private placement of our shares at $4.00 per share. See
"Recent Sales of Unregistered Securities";
(ii) one to close at the end of October 1999 (the "October Financing") at a
price which is the greater of $4.00 per share or 75% of the ten day
average OTCBB closing price of our common stock for the ten days prior
to the close of the October Financing; and
(iii)one to close at the end of December 1999 (the "December Financing")
at a price which is the greater of $5.00 per share or 75% of the ten
day average OTCBB closing price of our common stock for the ten days
prior to the close of the December Financing.
(f) We agreed to adopt a stock option plan and reserve 3,000,000 shares of our
common stock for issuance under the Plan at a price of no less than $0.25
per share. In addition, we agreed to grant options to acquire 805,000
shares of our common stock to certain option-holders of SportsPrize Inc. on
a one-for-one basis; and
(g) We undertook to file a registration statement with the SEC under the
Exchange Act to register our common stock and to become a reporting issuer
under the Exchange Act.
Agreement Among Certain Principal Vendors
Under the terms of the Exchange Agreement, certain principal shareholders of
SportsPrize Inc., namely Jeffrey Paquin, Randy L. Daggitt, James Brown, Michael
Slater, Anthony Vecchio and Gang Consulting Inc. (the "Principal Vendors"),
entered into an escrow agreement dated for reference May 7, 1999 (the "Escrow
Agreement"), which provides, among other things, that the Principal Vendors
place 2,530,150 of their Exchange Shares into escrow for a period of up to one
year (the "Escrowed Shares"). The Principal Vendors agreed to contribute the
Escrowed Shares to our Company for issuance as compensation and signing bonuses
to enable us to hire and attract key management personnel. If the Escrowed
Shares are not granted as compensation and signing bonuses, the Principal
Vendors agreed that the Escrowed Shares would be released pro rata: 50% to the
Principal Vendors, as a group, and 50% to Sonora.
Our Agreements with Sonora
On May 7, 1999, we entered into an agreement with Sonora under which we agreed,
upon closing of the Additional Financings, to pay Sonora a finder's fee equal to
2.5% of the aggregate gross proceeds derived from the Additional Financings,
provided that the Additional Financings are fully completed with minimum gross
proceeds of $2,500,000.
On May 21, 1999, we entered into an agreement with Sonora under which Sonora
agreed to assist us with corporate affairs and to assist us with investor
relations activities. In consideration
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for Sonora's services, we have agreed to pay Sonora the sum of $20,000 per month
or such other amount as agreed upon on a month-to-month basis.
The Business of SportsPrize Entertainment Inc.
Overview
Our mission will be to establish a leading Internet sports entertainment,
merchandising and promotion portal through our SportsPrize.com(TM) Web site. We
intend to build an on-line sports entertainment and e-commerce community that
appeals to sports fans from around the world. We intend to generate revenues by
selling advertising and merchandising sports related goods, products and
services through our Web site.
We believe we can create a competitive advantage over other Internet portals by
offering visitors the opportunity to play a pool type game developed by us
called the "SportsPrize Tournament." We anticipate the SportsPrize Tournament
will integrate the excitement of sports pools with the communication and
marketing powers of the Internet. We intend to offer our SportsPrize Tournament
as free entertainment to visitors of our Web site who register to become members
of the "SportsPrize Team." By becoming a SportsPrize Team member, the member can
play in SportsPrize Tournaments and earn opportunities to win prizes and gifts.
The SportsPrize Tournament is designed to combine the concepts of sports pools
with traditional "odds" type stakes into an entertainment and marketing format
on the Internet to attract visitors to our Web site.
The e-commerce Industry
The term "e-commerce" was developed with the increase of business to consumer
transactions conducted over the Internet and the World Wide Web. As interest in
the Web developed during the 1990's and, as the number of consumers with access
to the Internet grew, companies established Web sites for marketing purposes (to
promote their corporate or brand identity or to provide information about their
products) soon began using those sites for marketing, merchandising and sales
purposes. Businesses use the Internet as a means to shorten the sales cycle by
appealing to a broad audience and eliminating middlemen in the distribution
channel. The information that is presented on a Web site is delivered in a
focused manner to targets who are intentionally looking for specific
information. The Internet can reduce costs and level the playing field for small
and large businesses, allowing them to extend their reach globally. As well, the
availability of sophisticated Internet and Web technology, stronger security
mechanisms, and the increasing acceptance of the new communications medium are
fueling the use of e-commerce by businesses and consumers.
We believe that the way in which certain products and services will be directly
or indirectly sold in the future will increasingly shift toward the Internet.
Businesses throughout the world are developing their Web strategies to take
advantage of this shift in the way consumers search for product and service
related information, and purchase goods and services. We believe that an
increasing percentage of business advertising budgets will be allocated to Web
promotion and
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marketing strategies. We believe advertisers are and will look for portals that
have the volume of users that match the demographic and psychographic profile of
their target consumer.
We anticipate that our focus on sports entertainment and recreation will create
attractive demographic consumer profiles for merchandisers and marketers of
sports related goods and services. As a result, we anticipate that we will be
able to sell banner advertising and sponsorships, and enter into promotional
joint ventures with a broad spectrum of sports related business.
Competition
The on-line sports entertainment market in which we intend to compete is
comprised of a number of competitors, and we expect competition to increase. We
also compete with other non-sports related Internet sites for the time and
attention of consumers and for advertising and sponsorship revenues. Competition
among Internet portals is intense and is expected to increase significantly in
the future. Our Internet site will also compete with a variety of companies that
provide similar offerings through one or more media, such as print, radio and
television. To compete successfully, we must develop and deliver popular,
original, entertaining, information and compelling product offerings. In our
areas of focus (games, sports-related discussion communities, sports
merchandising and Internet shopping), we intend to compete with various Internet
sites, such as SportsLine USA, Inc., CBS Sportsline, ESPN Sports Zone, Wall
Street Sports, Sports Zone and others. All of these competitors currently offer
a wider range of products, services, information and news than we contemplate
offering, which products and services may be more attractive to Internet users
than SportsPrize.com(TM) and, consequently, may dissuade users from accessing
our Web site.
We believe our ability to remain competitive will depend, to a great extent,
upon our ability to be a leader in the production and marketing of novel and
unique interactive sports-related entertainment games for the Internet. To be
successful, we must deliver a product to the customer that is user friendly and
we must respond effectively to the challenges of technological change and
innovation by continually enhancing our products and services. The competitive
factors affecting the success of our Web site include the following: product
functionality; performance and reliability; customer support; and cost
effectiveness of our advertising offerings.
Regulation
There are currently few laws or regulations directly applicable to access to, or
commerce on, the Internet. Due to the increasing popularity and use of the
Internet, it is possible that laws and regulations may be adopted, covering
issues such as user privacy, defamation, pricing, taxation, content regulation,
quality of products and services, and intellectual property ownership and
infringement. Such legislation could expose us to substantial liability as well
as slow the growth in use of the Internet and decrease the acceptance of the
Internet as a communications and commercial medium. We may be required to incur
significant expenses in complying with any new regulations and restrictions.
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The European Union has recently adopted privacy and copyright directives that
may impose additional burdens and costs on international operations. In
addition, several telecommunications carriers, including America's Carriers'
Telecommunications Association, are seeking to have telecommunications over the
Internet regulated by the Federal Communications Commission, or FCC, in the same
manner as other telecommunications services.
Because the growing popularity and use of the Internet has burdened the existing
telecommunications infrastructure and many areas with high Internet usage have
begun to experience interruptions in phone services. Local telephone carriers,
such as Pacific Bell, have petitioned the FCC to regulate the Internet and to
impose access fees. Increased regulation or the imposition of access fees could
substantially increase the costs of communicating on the Web, potentially
decreasing the demand for our service or the ability to access our Web site.
A number of proposals have been made at the federal, state and local level that
would impose additional taxes on the sale of goods and services through the
Internet. Such proposals, if adopted, could substantially impair the growth of
e-commerce and could adversely affect us.
Congress recently passed (and the President has signed into law) the Digital
Millennium Copyright Act, which is intended to reduce the liability of online
service providers for listing or linking to third-party Web sites that include
materials that infringe copyrights. Congress also recently passed (and the
President has signed into law) the Children's Online Protection Act and the
Children's Online Privacy Act, which will restrict the distribution of certain
materials deemed harmful to children and impose additional restrictions on the
ability of online services to collect user information from minors. Further,
Congress recently passed (and the President has signed into law) the Protection
of Children from Sexual Predators Act, which mandates that electronic
communication service providers report facts or circumstances from which a
violation of child pornography laws is apparent. We cannot currently predict the
effect, if any, that this legislation will have on our business. There can be no
assurance that this legislation will not impose significant additional costs on
our business or subject us to additional liabilities. Moreover, the
applicability to the Internet of existing laws governing issues such as property
ownership, copyright, defamation, obscenity and personal privacy is uncertain.
We may be subject to claims that our services violate rules, regulations or
applicable laws or the rights of third parties. Any new legislation or
regulation in the United States or abroad or the application of existing laws
and regulations to the Internet could damage our business.
In addition, our proposed SportsPrize Tournament may be subject to state and
local laws related to sweepstakes and contests. We do not intend to charge any
fees for playing the SportsPrize Tournament or charge any fees for receiving
prizes or gifts. Although we do not believe our SportsPrize Tournament violates
any federal, state and local laws, there can be no assurance that future
federal, state or local legislation or regulations will not adversely affect our
operation of the SportsPrize Tournament. Any such legislation may have a
material adverse affect on our business and results of operations.
Due to the global nature of the Internet, it is possible that the governments of
other states and foreign countries might attempt to regulate our transmissions
or prosecute us for violations of
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their laws. We might unintentionally violate such laws. Such laws may be
modified, or new laws may be enacted, in the future. Any such development could
damage our business.
Our Product
To build and retain membership in our on-line Sportprize.com(TM) community, we
have developed the SportsPrize Tournament, a proprietary game that both
challenges and rewards sports enthusiasts. The SportsPrize Tournament allows
sports fans compete head to head in sports pool-type contests and trivia games
for chances to win discounts on merchandise featured on our Web site, cash and
prizes. Our goal is to use competition and the rewards of the SportsPrize
Tournament to attract visitors to our Web site and to keep members visiting on a
regular basis. The SportsPrize Tournament is anticipated to offer a continuous
stream of new weekly competitions covering sports from around the world.
Registration to play the SportsPrize Tournament will require members to provide
us with certain demographic information. We intend to use the SportsPrize
Tournament to gather demographic and marketing information from our members on
an on-going basis. We also intend to gather specific demographic information
that is requested by our advertisers and sponsors. The SportsPrize Tournament is
anticipated to be structured so that players are progressively rewarded in
proportion to the quality and quantity of demographic information they provide.
The SportsPrize Tournament
A New Type of On-Line Competition
We believe the SportsPrize Tournament is an entirely new type of on-line
sports/entertainment experience. Rather than the standard Web site portal
offerings, we intend to incorporate gaming odds and spreads concepts with a game
that challenges players with a series of questions related to various sports
from around the world.
Tournament Structure
SportsPrize Tournament players are challenged to test their knowledge of and
insight into their favorite sports, teams and players against other players in
pre-determined competitive groups. Private competitions will be encouraged where
members can play against their friends or co-workers, or private competitions
can be created for members by associations with which they are affiliated, such
as their school, social or sports club, or neighborhood.
Each player who registers as a member will be required to complete a
registration form to become a SportsPrize Team Member. Each member will qualify
to play in a SportsPrize Tournament game and will automatically be entered in a
series of pre-selected, public competitions based on their address. These games
are anticipated to be structured as cascading competitions, so a player from
Atlanta, Georgia will be automatically entered into the world, USA, Georgia, and
Atlanta competitions. In addition, a player may organize a private competition
among at least five of his friends and register that private competition.
Results from competitions will be tracked and reported.
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Tournament Game Play
Each Tuesday morning a new weekly SportsPrize Tournament game will begin. Active
players are automatically entered into their public and private weekly
competitions as well as the ongoing monthly, quarterly and annual competitions.
Playing is designed to be simple and fun. Each player will be awarded 100 points
at the start of each weekly SportsPrize Tournament game. Additional points may
be earned by clicking on special advertising banners that are displayed on the
SportsPrize.com(TM) Web site. Each week, ten questions will be created relating
to upcoming sporting events for each of a number of different categories. The
game is played with entry tickets with one to five questions selected per entry.
The more selections on an entry, the more points a player can accumulate. If the
player answers all the questions correctly, they will earn the maximum number of
points. Players can elect to submit entries from a single category or from
multiple categories. Players may play any categories they choose, and may submit
selections as long as they have weekly points in their account. Help screens for
each question will provide background information, such as historical
statistics, pertinent to that question, allowing sports novices to compete with
experts on an equal footing.
The SportsPrize Tournament configuration is designed to provide players with
multiple layers of strategy to contend with - from deciding on which sports
categories to select, to choosing the number of questions to play within that
entry. The result is anticipated to create an interactive environment, which
will test knowledge and intuition, and provide a multi-level competition with
numerous chances to win.
Winning Prizes
Everyone who plays in the SportsPrize Tournament will have a chance to win
prizes and to receive product discounts. We anticipate that there will be four
different ways to win. First, all world competition players will earn special
Winners Mall discounts based on their scores. Second, the top 100 weekly scorers
will be entered into the weekly drawing for special prizes in each of their
sponsored public or private competitions as well as the ongoing monthly,
quarterly and annual prize drawings in those competitions. Third, there will be
additional first, second and third place prizes awarded to the top scorers in
each sponsored competition. Fourth, "instant" prizes will also be awarded at
random every week, to add to the fun and excitement of the SportsPrize
Tournament.
The more a player plays, the more chances a player will have to win and to see
his name among the leaders, and the more chances to qualify for the $1,000,000
annual grand prize drawing of weekly public pool winners in the world
competition.
The SportsPrize.com(TM) Community
Membership on the SportsPrize Team will be free and there will be no charge to
enter the SportsPrize.com(TM) community. We anticipate that members will be able
to enter into an Internet
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community that allows them to view live sporting news feeds, check up-to-date
sporting results, communicate with other SportsPrize Team Members and
professional athletes in chat rooms, get personal E-mail and monitor SportsPrize
Tournament rankings.
We believe that the most successful Web sites and portals are those that develop
a comprehensive community. We anticipate that the SportsPrize.com(TM) community
will be a true on-line community focused on news, events, e-commerce and
interactive services for people who love sports. We intend to meet the needs of
sports fans for information, services, entertainment, merchandise and equipment
with the communication and promotional program of marketers through innovative
sponsorship structures, on-line commerce relationships with strategic partners
and content provided on SportsPrize.com(TM). Other than our contract to obtain
sports news feeds, we have not entered into any agreements to provide other
services; however, we anticipate that we will establish strategic relationships
with service providers that will provide a variety of the services on the
SportsPrize Web site.
By becoming part of the SportsPrize.com(TM) Team, we anticipate members will be
able to share their interests in any number of sports in a variety of ways,
including playing in the SportsPrize Tournament, creating their own Tournament
groups, sharing on-line shopping discounts, exchanging news and views in chat
rooms, using interactive services for on-line access to experts such as athletes
and coaches, buying and selling merchandise with other members through the
SportsPrize Auction, and keeping in touch with family and friends by E-mail. We
intend to have a regular dialog with our members and to encourage them to
provide feedback on our shopping environments. We also intend to institute a
SportsPrize shopping panel, recruited from our members who will be made part of
our future e-commerce strategy through a regular series of moderated chats with
management. In this way, we believe we will be able to anticipate the needs and
interests of our membership and help to insure that our overall merchandising
strategies in our shopping venues will be attractive to our members. We also
intend to create a sports advisory panel to help us create unique and special
merchandising opportunities, such as discount incentives and special instant
coupon offers. We have commenced the process of identifying sponsors and
establishing relationships with professional athletes, coaches and sports
organizations. We, however, have not secured any such sponsorships or
relationships, and we cannot assure you that we will successfully obtain any
sponsorships or establish any relationships as planned.
The on-line interactivity of the SportsPrize.com(TM) community is expected to
connect members with each other and our sponsors and strategic partners on many
levels: global, regional, state or provincial and local. We plan to bring the
world of sports to members' homes and offices and to enrich our members' world
of sports with the communication powers of the Internet. We believe that the
SportsPrize.com(TM) community will allow members to expand and enrich their love
of sports in a whole new way.
Market Strategy
We do not plan to compete head-on with existing sports entertainment Web sites.
Instead, we anticipate SportsPrize.com(TM) will fill a complementary market
niche that will combine the entertainment value of interactive games and the
challenge of sports competition with on-line
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merchandising, promotion and marketing in an innovative way. We, with brand-name
strategic partners and innovative sponsorship relationships, intend to position
SportsPrize.com(TM) as a portal for on-line sports enthusiasts to replicate the
success of other on-line communities, such as those focused on women's needs and
wants, and person-to-person on-line trading.
Revenue Opportunities
We intend to generate revenues and profits from three primary sources:
advertising and sponsorship programs, e-commerce merchandising and operating an
auction site.
Advertising Revenues & Sponsorship Program
We intend to generate revenues by selling advertising to merchandisers and
manufacturers of sports related goods, products and services. We anticipate that
our unique concept will attract advertisers by generating multiple interactions
between members of the SportsPrize.com(TM) community and our advertisers and
sponsors. When members visit, whether for SportsPrize Tournament play, sports
news, chat or on-line shopping, they will be encouraged, through SportsPrize
Tournament rewards and other incentives, to view several advertiser pages. For
example, players will be awarded extra incentives if they click on various
banners or view various promotional materials posted on our Web site by our
sponsors.
The resulting traffic generated by multiple page views is anticipated to provide
economic returns to advertisers and sponsors, leading ultimately to increased
advertising revenue and commissions to us. We will also build a membership
database, which we hope to leverage as a source of further direct and indirect
revenue.
We also intend to develop the SportsPrize Sponsorship Program, which we hope
will be a principal revenue source. This multi-platform program is targeted to
advertisers or strategic alliance partners of sports related merchandise,
equipment manufacturers, news organizations and sports event promoters. We
anticipate that our sponsors will place informational and promotions links,
product and sports information, advertising and other sports related information
on our SportsPrize.com(TM) Web site. The program is anticipated to include
endorsements and specific licensing sanctions, which is intended to create
interest in the content. We intend to charge our sponsors sponsorship fees for
participation in the SportsPrize Sponsorship program.
On-line Merchandising
We may also realize revenue from our own on-line shopping operations, the
SportsPrize Winners Mall, the SportsPrize Clearance Mall and the SportsPrize
Retail Mall. We intend to generate commissions from direct sales from its linked
sponsors and advertisers' catalogue program.
SportsPrize Auction Site
The SportsPrize Auction is designed to facilitate e-commerce transactions of
merchandise and authenticated sports memorabilia.
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The SportsPrize Marketing System - Advertising and Sponsorships
The SportsPrize Tournament is designed to be an Internet marketing system with
built-in features and incentives to attract players, keep them committed, and
induce them to get their friends to visit our Web site and play. These features
and incentives are expected to include:
o An annual $1,000,000 prize draw for the weekly public pool winners. Players
are assigned to public pools based on data disclosed when registering for
the SportsPrize.com(TM) community.
o Flexibility that allows players to create their own private pools, which
generate opportunities for permission marketing (solicited advertising) as
well as new levels of more precisely targeted sponsorship and advertising
opportunities targeted at market segments in specific geographic areas.
o Pop-up redemption notices that notify winners as they play and allow them
to keep playing and claim their prize later.
o A results and rankings system that informs players of their ranking in a
particular contest, which we believe will generate further marketing and
communications opportunities.
o Rewards for logging on, such as being entered in "fantasy draws" for
tickets to the sporting events or experiences and immediate discounts on
merchandise.
We believe that these features will create interest in the SportsPrize.com(TM)
Web site and attract a number of visits on a regular basis. We anticipate that
our unique concept will attract advertisers by generating multiple interactions
between SportsPrize Team Members and our advertisers and sponsors. We intend to
strategically construct our Web site to incorporate the SportsPrize Tournament,
sports news, chat or on-line shopping, rewards and other incentives to direct
traffic to our advertiser and sponsor pages.
We believe that the resulting traffic generated by multiple page views will
provide benefits to advertisers and sponsors, leading ultimately to increased
advertising revenue and commissions to us. We also intend to build a membership
database, which we may leverage as a source of further direct and indirect
revenue in the future.
We have not entered into any agreements to sell advertising or sponsorships. We
are in the process of building relationships with distributors, merchandisers,
manufacturers and other e-commerce companies; however, we cannot assure you that
we will successfully sell any advertising or sponsorships or enter into any
revenue generating relationships. Internet advertising is highly competitive and
many advertisers require statistical verification of the demographic profiles
and number of impressions (visits) that a Web site is capable of delivering.
Based on our lack of an operating history, this historical data is not
available, which may adversely affect our ability to sell advertising and
sponsorships or to enter into any revenue generating relationships. Our
inability to sell advertising or sponsorships may have a material adverse affect
on our business and results of operations.
11
<PAGE>
SportsPrize e-Commerce Sites
We intend to offer shopping venues on our Web site that will allow our members
to purchase sports-related merchandise, goods and services from us or from
sponsors who post product and service offerings on our e-commerce malls. We
intend to allow SportsPrize Team members and SportsPrize Tournament winners to
be able to redeem points for prizes and discounts on merchandise.
o Our Winners Mall will feature select sports equipment, sportswear and
accessories and sports related merchandise offered directly by us or
posting sponsors. This is intended to be a premier on-line sports shopping
experience.
o Our Clearance Mall will offer quality sports related merchandise at
clearance sale prices. This venue is expected to feature a limited stock of
varying sports equipment at one-of-a-kind close-out prices. Clearance Mall
merchandise is expected to change weekly to provide new and interesting
product selections with every visit.
o Our Retail Mall is anticipated to be an on-line sports department store
with a full range of sports gear and wear at better than retail prices.
This e-commerce site is designed to be a one-stop, on-line shopping
destination for sports lovers. The Retail Mall is expected to be comprised
of e-commerce companies already selling goods on-line. We anticipate that
we will enter into revenue sharing agreements with these companies related
to revenues generated as a result of traffic directed by the
SportsPrize.com(TM) Web site.
We have not entered into any relationships with distributors, merchandisers,
manufacturers or other e-commerce companies related to offering and selling
products in any of our SportsPrize Malls. We cannot assure you that we will
successfully attract merchandisers to post advertisements on the
SportsPrize.com(TM) Web site or to retain retail space in our SportsPrize Mall.
We may not be able to secure merchandise on acceptable terms or be able to offer
products at competitive prices. If we are unable to offer a broad range of
merchandise or to attract a broad range of e-commerce retailers to offer
merchandise and/or services on our SportsPrize.com(TM) Web site, our business
and results of operations will be adversely affected.
The SportsPrize Auction
Our SportsPrize Auction is expected to be a premier on-line auction of licensed
and authenticated sports memorabilia. Through our SportsPrize Auction,
SportsPrize Team members will also be able to buy, sell and trade goods,
services and tickets with other SportsPrize.com(TM) community members through
on-line personal trading.
We also anticipate the SportsPrize Auction will offer one-of-a-kind memorabilia
items selected and authenticated exclusively for us by the leading firms in the
industry. Major sports are expected to be represented; items could include
actual sports gear ranging from baseballs and pucks to uniforms and famous
sports venue artifacts. We also anticipate that we will arrange for
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<PAGE>
items to be signed by professional athletes and sold on the SportsPrize Auction,
and we may arrange for athletes and sports celebrities to be present at signing
ceremonies.
By providing authenticated sports memorabilia and a secure person-to-person
trading site for sports enthusiasts, we anticipate the SportsPrize Auction will
be positioned to become the e-commerce choice of on-line traders for sports
merchandise. We anticipate the SportsPrize Auction will offer a broad range and
quality of merchandise and services to attract buyers and sellers. We intend to
generate revenues for facilitating the SportsPrize Auction and providing related
services by charging a transaction fee to post ads and sell merchandise.
There are several auction sites operating on the Internet, many of which are
well established and have greater resources than us and will offer a broader
line of merchandise goods and services than the SportsPrize Auction. We believe
that our particular focus on sports related merchandise may provide us with a
competitive advantage for auctioning sports-related products and services. We
cannot assure you that we will be able attract buyers and sellers as
anticipated.
Development of the SportsPrize Business
The SportsPrize business strategy and business plan was developed by SportsPrize
Inc., our wholly owned subsidiary. Our President, Jeffrey Paquin, was the
founder and President of SportsPrize Inc. and assisted in the development of the
SportsPrize.com(TM) business plan and business strategy.
Development of Our Business to Date
Since May 14, 1999, we have taken the following steps to implement our business
plan:
o Acquired SportsPrize Inc.
o Developed the prototype of the SportsPrize Tournament.
o Developed the initial operating software for the SportsPrize.com(TM) Web
site.
o Secured computer software licenses related to the SportsPrize technology.
o Filed a patent application related to certain SportsPrize technology.
o Completed initial funding totaling $3,500,000, providing sufficient capital
to develop our plan to the revenue generation stage, and arranged for
additional financing of up to $1.7 million.
o Retained a qualified consulting group to assist us in defining and
prioritizing our business objectives.
o Commenced structuring our Board of Directors with the addition of two
individuals; Alan Gerson and Abe Carmel, both of whom have considerable and
varied business experience.
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o Retained core executive and management personnel and retained an executive
recruitment firm to source appropriate candidates to structure our
executive and management needs.
o Made a trademark application for SportsPrize.com(TM) in both the United
States and Canada.
o Negotiated consulting and software development agreements with the
following parties:
<TABLE>
Consultant Services
- ---------- --------
<S> <C>
Interactive Marketing IMI is providing us with strategic marketing and operational
Inc. ("IMI") guidance up to and after the launch of our SportsPrize
Tournament and SportsPrize e-commerce sites.
Kaleidoscope Sports and Kaleidoscope is assisting us in securing key executive personnel
Entertainment, LLC and forging key strategic alliances with major professional sports
("Kaleidoscope") leagues and players associations.
Las Vegas Sports DBC Sports will support our SportsPrize Tournament by providing all
Consultants Inc. necessary sports statistical information, as well as develop questions
(d.b.a. DBC Sports) for the Tournament.
("DBC Sports")
Intershop Communications, Intershop is providing us with the software and implementation
Inc. ("Intershop") necessary to complete the infrastructure to host our various
e-commerce sites.
Frontier Global Center Frontier will host the SportsPrize.com(TM) Web site and deliver the web
("Frontier") content to our online audience.
</TABLE>
Agreements Related to Our Business
In connection with our acquisition of SportsPrize Inc., we acquired all of the
assets of SportsPrize Inc. and assumed the rights to technologies, know-how and
assets that are related to our business including several agreements with
various strategic entities.
Technology Development Agreement
We acquired and assumed 100% of the interest and rights in the
SportsPrize.com(TM) Web site and games, including the SportsPrize Tournament
created by John Thompson, Vice-President of Research and Development of
SportsPrize Inc. The development of these technologies was coordinated and
overseen by Thomas Cove, Vice-President of Technology of SportsPrize Inc., who
together with software programmers and developers, Quad-linq Software Inc.,
created the patent pending technology that will be used in connection with our
SportsPrize.com(TM) Web site.
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<PAGE>
IMI - Marketing Consulting Agreement
As a result of the share exchange, we assumed a marketing consulting agreement
(the "IMI Agreement") with IMI dated as of May 6, 1999 from SportsPrize Inc.
Pursuant to the terms of the IMI Agreement, IMI will provide us with overall
strategic and tactical marketing and operational strategy, including
recommendations for the operational, revenue, marketing and organizational
issues involved in the launch of the SportsPrize.com(TM) Web site for a period
of one year. IMI shall, during the first 180 days of the term, provide the
following services:
(i) the creation and operation of our planned retailing areas;
(ii) a review of the structure and operation of the
SportsPrize.com(TM) games;
(iii) a review of all legal and regulatory issues relating to the
conduct of the SportsPrize.com(TM) games;
(iv) site design, navigation, hosting, hardware and connectivity
issues reviews;
(v) database design, capabilities and report functionalities
consulting;
(vi) the creation of a "go-to-market" plan for securing media and
event partners and for promotion;
(vii) assistance in identifying key management and advisory board
members; and
(viii) consulting services related to developing revenue models from
such sources as advertising, e-commerce, sponsorships, promotions
and subscriptions, and retailing.
In consideration for the services provided by IMI, we have agreed to:
(i) pay IMI a monthly retainer of $25,000 over the first three
months;
(ii) pay IMI a monthly retainer of $30,000 for each of the nine
subsequent months;
(iii) pay IMI 15% of any and all of our recurring net revenues
resulting from advertising, sponsorship and promotional revenues
generated by sales and agreements that IMI directly brings to us
during the term of the IMI Agreement and any extensions thereto.
IMI will also be entitled to that commission on other direct
revenue opportunities with respect to which we request IMI's
assistance in developing and closing;
(iv) issue IMI 600,000 shares, of which 400,000 shares are to be were
issued as of the effective date of the IMI Agreement and,
provided the IMI Agreement is not cancelled at the end of the
first 180 days, IMI shall be offered and have the right to
purchase 200,000 shares on the 181st day at a price of $0.01 per
share. We also agreed to provide full "piggyback" registration
rights, at our expense, in the event we file a registration
statement to register shares under the Securities Act. IMI agreed
that when such shares become free trading, IMI would limit the
shares it offers for sale in any single week to 5% of the
previous weeks' total share trading volume.
Kaleidoscope - Consulting Agreement
As a result of the share exchange, we assumed an agreement with Kaleidoscope,
dated as of May 1, 1999, from SportsPrize Inc. (the "Kaleidoscope Agreement").
Kaleidoscope is in the
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<PAGE>
business of planning, designing, marketing, selling and consulting for various
sports related ventures and properties. Pursuant to the terms of the
Kaleidoscope Agreement, Kaleidoscope will perform the following functions, for
an initial period of six months, which commenced on May 15, 1999:
(i) provide a list of highly qualified candidates to serve as our
President and a list of highly qualified candidates to serve as
our spokesperson, and advise and work with us to negotiate the
relevant employment contracts;
(ii) prepare a strategic plan to secure presentations with major
professional sports leagues and players associations for the
endorsement of our SportsPrize Tournament and Web site;
(iii) assist IMI and us in creating an overall marketing and
operational strategy for the promotional revenue, marketing and
partnership issues involved in the launching the
SportsPrize.com(TM) Web site, including:
(a) identifying and procuring e-commerce partners;
(b) securing commitments for endorsements;
(c) securing commitments by advertisers;
(d) identifying and securing special events sponsors and
sponsorships; and
(e) identifying and procuring strategic media partners.
(iv) consult and oversee the implementation and execution of the
strategies and recommendations of Kaleidoscope.
In consideration for the services provided by Kaleidoscope, we have agreed
to:
(i) pay Kaleidoscope six monthly payments of $20,000, commencing on
May 15, 1999;
(ii) grant Kaleidoscope a two-year option to purchase up to 100,000
shares of our common stock at $0.25 per share, with resale
restrictions for a one year period from the date of purchase; and
(iii) grant Kaleidoscope a two-year option to purchase an additional
100,000 shares of our common stock at $0.25 per share, with
resale restrictions for a one year period from the date of
purchase, if Kaleidoscope:
(a) successfully produces a list of highly qualified individuals
to serve as our President or in the alternative has provided
us with a well known spokesperson; and
(b) has approached, unless otherwise decided by us, two of the
four major professional sports leagues for approval and
endorsement of our SportsPrize Tournament
(iv) grant Kaleidoscope an option to purchase an additional 300,000
shares of our common stock at a price equal to the average
closing price of our shares less 20%, for a period of ten days
preceding the completion of the conditions set forth in (iii)
above, with resale restrictions for a one year period from the
date of purchase,
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<PAGE>
provided that Kaleidoscope reasonably completes the conditions
set forth in (iii) above. The shares will be released to
Kaleidoscope at 30,000 shares per month over a period of ten
months. Kaleidoscope agrees to sell its shares into the market at
a volume of no greater than 2 1/2% of the volume of the preceding
weeks total amount of our traded shares after expiration of the
resale restrictions.
DBC Sports - News Wire Service
We entered into a data and service agreement with DBC Sports, dated as of May
26, 1999 (the "DBC Sports Agreement"). DBC Sports, a subsidiary of Data
Broadcasting Corporation, provides a sports statistical data base and media
information, distributes headline news, and scores statistics and game
information. Pursuant to the terms of the DBC Sports Agreement, DBC Sports will
provide us with the following, for a period of three years, which commences on
June 1, 1999:
(i) all sports information necessary to conduct the weekly
SportsPrize Tournament, including the questions for the
Tournament, and statistical content including results of sporting
events; and
(ii) additional technical and research staff necessary to gather and
provide data in sports categories where information may not be
readily available, including developing relationships with
various sports leagues.
In consideration for the services provided by DBC Sports, we have agreed to pay
to DBC Sports:
(i) $8,500 per month from June 1, 1999 to August 1, 1999;
(ii) $11,000 per month from September 1, 1999 to November 1, 1999;
(iii) $15,000 per month from December 1, 1999 to March 1, 2000; and
(iv) $20,000 per month from April 1, 2000 to termination of the DBC
Sports Agreement.
Intershop - Letter Agreement
We entered into a letter agreement with Intershop dated June 24, 1999 (the
"Intershop Agreement"). We will deploy Intershop's e-commerce solutions to
customize and streamline our online storefront. We anticipate that integrating
Intershop's technology with the SportsPrize.com(TM) business model will provide
a turn-key solution allowing members of the SportsPrize community to browse,
select and purchase sports merchandise and memorabilia online at the
SportsPrize.com(TM) e-commerce stores. Pursuant to the terms of the Intershop
Agreement, Intershop will provide the following services by way of a
professional services consulting agreement:
(i) on-site solution definition;
(ii) off-site solution definition; and
(iii) development and implementation of the SportsPrize.com e-commerce
Web site component.
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<PAGE>
Frontier - Master Service Agreement
We entered into a master service agreement with Frontier dated July 22, 1999
(the "Frontier Agreement"). Pursuant to the Frontier Agreement, Frontier, a
provider of innovative, scalable end-to-end Internet solutions, high-speed
servers and a software system will be installed at its facilities. Sun E250 and
E450 servers, suitable for large-scale and mission-critical applications, will
support the data warehousing and e-commerce applications intrinsic to the
SportsPrize model. Pursuant to the terms of the Frontier Agreement, Frontier
will sell and provide to us, in consideration for the applicable fees as set
forth in a service order, the following:
(i) Internet connectivity services;
(ii) the lease or purchase by us of equipment to provide such services
and the installation of such equipment;
(iii) the lease of space suitable to store and operate such equipment;
(iv) management, planning and consulting resources to support such
services, including maintenance and operation of such equipment;
and
(v) the licensing of software to provide such services, which
together comprise an Internet connectivity and co-location
package to support our Web site.
Trademarks and Patents
We have applied for trademark registration and protection for "SportsPrize.com"
in Canada and the United States. We have also applied for patent protection in
the United States for our system and method for delivering targeted advertising
through our on-line SportsPrize Tournament marketing system. However, we have
not been granted any patents, copyrights or trademarks. In the event we
determine that we have created an asset whose value can be protected, we will
attempt to protect our proprietary assets by applying for patents, copyrights or
trademarks. In addition, we will endeavor to rely on trade secret laws and
non-disclosure and confidentiality agreements with our employees and consultants
who have access to our proprietary technology.
Employees
As of July 27, 1999, we had seven full-time employees or consultants. From time
to time, we may retain additional consultants and consulting firms to provide us
with special expertise in developing marketing, software and telecommunications
technologies.
Plan of Operation
Our plan of operation is based on estimates of our management. Set out below is
a summary of our plan of operation and operating budget for our business and for
our administration and marketing for the fiscal period ending June 30, 2000.
Summary of Plan of Operation
Our corporate plan of operation for the period July 1, 1999 to June 30, 2000 is
heavily concentrated within the initial six month period ending December 31,
1999 during which we
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<PAGE>
intend to launch our Web site. Once our SportsPrize.com(TM) Web site is up
operating live (projected to be in the third quarter of 1999), we plan to
continue ongoing enhancements and development of the overall Web site and
service. In addition, in the first six months of 2000, we intend to focus up to
75% of our budget towards marketing and promotion, including special events
promotions. The other ongoing objective will be to continue establishing
strategic alliances with corporate sponsors, e-commerce partners for
reciprocating advertising and exclusive merchandising. We also intend to
continue to build on the community based aspects of the SportsPrize.com(TM) Web
site by increasing sporting information, news and chat room content, and by
enhancing educational and training links for our members.
During the third and fourth quarter of 1999, we intend to complete the
following:
Description
- --------------------------------------------------------------------------------
Beta Testing: Complete development of SportsPrize Tournament software
technology:
i. Beta 1: Integrate the graphics
ii. Beta 2: Opening to select focus test groups
iii. Beta 3: Functioning live with final graphics
- --------------------------------------------------------------------------------
Network: computer hardware and related equipment purchased, installed and tested
- --------------------------------------------------------------------------------
E-Commerce: custom programming, purchase software, install and test
- --------------------------------------------------------------------------------
Sales and Marketing:
i. Complete initial Marketing Plan
ii. Determine prizes
iii. Secure Sponsors
iv. Follow-up Marketing Plan
- --------------------------------------------------------------------------------
Recruitment of Executive Management personnel:
i. President/Chief Executive Officer
ii. Chief Technical Officer/Chief Operating Officer
iii. Vice-President of Merchandising
iv. Vice-President of Corporate Finance
- --------------------------------------------------------------------------------
Open new corporate head office in Los Angeles area
- --------------------------------------------------------------------------------
Enter into strategic relationships with other e-commerce sites
- --------------------------------------------------------------------------------
Merchandising:
i. Complete list of suppliers for each store, including memorabilia and
auction product
ii. Merchant account, E-commerce supports systems
- --------------------------------------------------------------------------------
Corporate development:
i. Establish Sport Advisory Board with representatives from major sports
categories
ii. Strategic alliance with a major sports network iii. Strengthen Board
of Directors to maximum of nine including outside directors
- --------------------------------------------------------------------------------
Investor relations and promotion:
i. Hire corporate/public relations media firm
- --------------------------------------------------------------------------------
During the first two quarters, we intend to concentrate our efforts on marketing
our SportsPrize Web site to users, sponsors and advertisers; soliciting feedback
on our service offerings from users, sponsors and advertisers; selling
advertising and sponsorships; increasing sales revenues
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<PAGE>
of products offered through our SportsPrize Malls; obtaining additional
endorsements from professional athletes, coaches and sports organizations;
building additional relationship with strategic partners; developing new
technology and service offerings; and enhancing and improving our services.
We cannot assure you that we will successfully complete all of items
contemplated in our plan of operation on a timely basis, if at all. Our ability
complete our plan of operation will be dependent on a number of factors, some of
which are beyond our control, including our ability to raise additional
financing on acceptable terms, our ability to develop our technology on a timely
basis, our ability to attract advertisers and sponsors and the acceptance of our
SportsPrize Tournament.
Summary of Operating Budget
Our operating budget for our plan of operation ("Operating Budget") is estimated
to be approximately $24,500,000 for the period beginning July 1, 1999 and ending
June 30, 2000. Our projected Operating Budget is as follows:
<TABLE>
Category July - December, 1999 January - June, 2000 Total
<S> <C> <C> <C>
Operating
Research and Development $ 500,000 $ 750,000 $ 1,250,000
Sales and Marketing 1,150,000 15,000,000 16,150,000
General and Administrative 1,225,000 2,250,000 3,475,000
Financings Costs 125,000 500,000 625,000
------------ -------------- --------------
Total operating 3,000,000 18,500,000 21,500,000
Other
Capital expenditures 700,000 600,000 1,300,000
Software development 400,000 300,000 700,000
Inventory 400,000 600,000 1,000,000
------------ -------------- --------------
$ 4,500,000 $ 20,000,000 $24,500,000
============ ============== ==============
</TABLE>
As of July 27, 1999, we had approximately $2,800,000 in cash, and we are
currently expending approximately $175,000 per month. There can be no assurance
that our actual expenditures for the period beginning July 1, 1999 through June
30, 2000 will not exceed our estimated Operating Budget. Actual expenditures
will depend on a number of factors, some of which are beyond our control,
including, among other things, timing of the launch of the SportsPrize Web site,
our ability to generate revenues from advertising, sponsorships, e-commerce
sales and our auction site; the availability of financing on acceptable terms;
reliability of the assumptions of management in estimating cost and timing;
certain economic and industry factors; the time expended by consultants and
professionals and fees associated with developing strategic relationships
related to our business plan; our ability to enter into strategic relationships
with third parties; the success of our SportsPrize Tournament and our ability to
attract visitors to our SportsPrize Web site. If the actual expenditures for
such costs exceed the estimated costs or if we are incapable of generating
revenues from our operations, we will be required to raise additional financing
or to defer certain expenditures to meet other obligations.
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We anticipate we will need to raise approximately $22 million to meet our
projected Operating Budget requirements through the second quarter of 2000. We
intend to raise additional financing to fund our Operating Budget by issuing
equity or debt through a combination of private and public financings. We cannot
assure you that we will successfully raise additional financing on acceptable
terms, if at all. If we cannot raise additional financing, we anticipate that we
will reduce our projected expenditures related to marketing our SportsPrize Web
site to the public and concentrate our resources on selling advertising and
sponsorships and developing the technologies related to our SportsPrize Web site
and the SportsPrize Tournament. The failure to meet certain expenditures may
cause us to default on material obligations and such default may have a material
adverse effect on our business and results of operations.
Risk Factors
We have included information in this registration statement that contains
"forward looking statements." Our actual results may materially differ from
those projected in the forward looking statements as a result of risks and
uncertainties. Although we believe that the assumptions made and expectations
reflected in the forward looking statements are reasonable, we cannot assure you
that the underlying assumptions will, in fact, prove to be correct or that
actual future results will not be different from the expectations expressed in
this report. An investment in our securities is speculative in nature and
involves a high degree of risk. You should read this registration statement
carefully and consider the following risk factors.
Undercapitalization
We are dependent upon the proceeds of the Additional Financings contemplated in
the Exchange Agreement in order to implement our business plan. Unless we can
obtain such financing, we will be unable to conduct our business or to otherwise
carry out all of our proposed business activities. There is no assurance that we
will be able to raise the funds sought in the Additional Financings in a timely
manner, if at all.
We also anticipate we may need to seek additional capital in the amount of $20
million or more during the next 12 months, and no assurance can be given that
any additional financing would be available or, if available, that it would be
available on terms acceptable to us. Furthermore, any issuance of additional
securities may result in dilution to the then existing shareholders. If adequate
funds are not available; we will lack sufficient capital to pursue our business
fully, which will have a material adverse effect upon our ability to meet our
business projections.
We have a Limited Operating History and a History of Losses, which Makes Our
Ability to Continue as a Going Concern Questionable
We have incurred net losses since our inception and anticipate that we will
continue to incur losses for the foreseeable future. Due to a number of factors,
we do not believe that our revenues will be sufficient to support our operations
in fiscal 1999. Therefore, in the foreseeable future, we believe that such
expenses will increase our net losses, and we cannot assure you that we will
ever be profitable.
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We are a development stage company and our operations are subject to all of the
risks inherent in light of the expenses, difficulties, complications and delays
frequently encountered in connection with the formation of any new business.
These risks include:
- our significant dependence on products and services with only limited
market acceptance;
- our ability to develop and upgrade our infrastructure, including
internal controls, transaction processing capacity, data storage and
retrieval systems and our Web site;
- competition;
- our need to manage changing operations;
- our reliance upon the Internet for commerce;
- our reliance upon general economic conditions;
- our reliance upon strategic relationships;
- regulatory risks associated with our business; and
- our dependence upon the hiring of key personnel.
Because we have only recently begun operations, it is difficult to evaluate our
business and our prospects. Our revenue and income potential is unproven and our
business model is still emerging. We cannot assure you that we will attract
registered users, advertisers, consumers and network affiliates or achieve
significant revenues or operating margins in future periods. We cannot guarantee
we will ever achieve commercial success.
As of July 27, 1999, we had approximately $2,800,000 in cash, and we are
currently expending approximately $175,000 per month. While we anticipate
raising additional capital through sales of our common stock or debt, we cannot
assure you that we will be able to obtain adequate financing or on terms
favorable to us, to support our operations. Our ability to continue after
October 1999 will depend on our ability to obtain additional financings.
Uncertain Ability to Conduct the Business; Unpredictability of Future Revenues
Our ability to achieve our plans will depend on a variety of factors, some of
which may be beyond our control. These factors include our ability to attract,
train and retain qualified, experienced personnel and management. Failure to
maintain adequate operating and financial controls or unexpected difficulties
encountered during the start up of operations could adversely affect our
business, financial condition and results of operations. There can be no
assurance that we will adequately manage our intended operations or address all
of the changing demands that our operations will impose. Failure to effectively
manage growth and to evaluate and improve
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<PAGE>
management, operating and financial controls or the difficulties encountered as
a result of growth could adversely affect our financial condition and results of
operations.
As a result of our limited operating history and the emerging nature of the
Internet, including Internet-based advertising, services and electronic
commerce, we are unable to forecast our expenses and revenues accurately. We
believe that due primarily to the relatively brief time the Internet has been
available to the general public, there are several uncertainties related to the
successful operation of any form of Internet-based business. Our current and
future estimated expense levels are based largely on our estimates of future
revenues and may increase considerably. Few, if any, of our operating expenses
can be quickly or easily reduced, such as the laying off of personnel or
reducing our commitment to our consultants and service providers, in a manner
which would not cause a material adverse effect to our business, financial
condition and operating results. In addition, we may be unable to adjust
spending in a timely manner to compensate for any unexpected expenditures; and a
shortfall in actual revenues as compared to estimated revenues would have an
immediate material adverse effect on our business, financial condition and
operating results.
We Cannot Assure You that There Will Be a Continued Market for Our Shares
Currently, our common shares are traded on the OTCBB under the symbol "JOCK." On
January 4, 1999, the SEC approved eligibility rules for issuers quoted on the
OTCBB and established minimum eligibility requirements for all securities quoted
on the OTCBB. As a result of the eligibility rules, we must (i) register our
shares with the SEC under Section 13 or 15(d) of the Exchange Act, and (ii) be
current in our required filings to remain eligible for quotation on the OTCBB.
Accordingly, this registration statement must clear all SEC staff comments to
comply with the eligibility requirements. If we do not clear all SEC staff
comments on or before January 3, 2000, our shares will be delisted from the
OTCBB, and the market value of our shares may be materially adversely affected.
We cannot assure you that we will be able to fully comply with our eligibility
requirements on or before January 3, 1999. Although we have filed this
registration statement to become a reporting company under the Exchange Act,
there can be no assurance that such registration statement will clear the
comments of the SEC, that we will maintain eligibility for quotation on the
OTCBB or that a public market for our shares will be sustained.
Reliance on Advertisers
We currently have no relationships or agreements with advertisers, and we
believe that any relationships developed with advertisers will be terminable
within a short period of time. Consequently, our advertising customers, if any,
may move their advertising to competing Internet sites, or from the Internet to
traditional media, quickly and at relatively low costs, thereby increasing our
exposure to competing pressures and fluctuations in revenues and operating
results. In selling Internet-based advertising, we will likely depend on
advertising agencies, which exercise substantial control over the placement of
advertising for their clients.
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Our success will depend on our ability to convince advertisers and advertising
agencies of the benefits of advertising on our SportsPrize Web site, and on our
ability to retain, broaden and diversify our future base of advertising
customers. In order to generate significant advertising revenues, we will depend
on the development of a larger base of users possessing demographic
characteristics attractive to advertisers. If we are unable to attract and
retain paying advertising customers or are forced to offer lower than
anticipated advertising rates, our business, financial condition and operating
results will be materially adversely affected and we may never achieve
commercial success.
We are currently seeking to negotiate sponsorship arrangements with third
parties to provide sponsored services and placements on our Web site in addition
to banner advertising. In connection with these arrangements, we may receive
sponsorship fees as well as a portion of transaction revenues received by
sponsors in return for minimum levels of user impressions or "click throughs."
To the extent implemented, these arrangements expose us to potentially
significant financial risks, including the risk that we fail to deliver required
minimum levels of user impressions or click throughs (in which case, these
agreements typically provide for adjustments to the fees payable thereunder or
"make good" periods) and that third party sponsors do not renew the agreements
at the end of their terms. We anticipate that certain of these arrangements will
require us to integrate sponsors' content with our services, which may require
the dedication of resources and significant programming and design efforts to
accomplish.
There can be no assurance that we will be able to attract sponsors or that we
will be able to renew sponsorship arrangements, if any, when they expire. In
addition, we anticipate we will grant exclusivity provisions to certain of our
sponsors. Such exclusivity provisions may have the effect of preventing us, for
the duration of such exclusivity arrangements, from accepting advertising or
sponsorship arrangements within a particular subject matter in our Web site or
across our entire service. Our inability to enter into further sponsorships or
advertising arrangements as a result of its exclusivity arrangements could have
a material adverse effect on our business, financial condition and operating
results.
We Depend on Our Key Personnel for Success
Our future success will depend on certain key management, marketing, sales and
technical personnel. We primarily rely upon consultants and advisors who are not
employees. The loss of key personnel could have an adverse effect on our
operations. We do not maintain key-man life insurance on any of our key
personnel. Competition for qualified employees is intense, and an inability to
attract, retain and motivate additional, highly skilled personnel required for
expansion of operations and development of technologies could adversely affect
our business, financial condition and results of operations. Although we have
made application to obtain directors' and officers' insurance, there can be no
assurance that we will be able to obtain such insurance or in such amounts or on
terms that are acceptable to us. We cannot assure you we will be able to retain
our existing personnel or attract additional, qualified persons when required
and on acceptable terms.
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We May be Required to Sell Additional Common Stock or Parties May Exercise
Options and Warrants that Cause Dilution of Your Shares
The number of shares of our outstanding common stock held by non-affiliates is
large relative to the trading volume of our common stock. Any substantial sale
of our common stock or even the possibility of such sales occurring may have an
adverse effect on the market price of our common stock.
At July 27, 1999, we had outstanding options to purchase an aggregate of
2,055,000 shares of our common stock.
We have also reserved up to an additional 945,000 shares of common stock for
issuance upon exercise of options which have not yet been granted under our
stock option plan. Holders of the options are likely to exercise them when, in
all likelihood, we could obtain additional capital on terms more favorable than
those provided by the options. However, there can be no assurance that such
options will be exercised. Further, while our options are outstanding, our
ability to obtain additional financing on favorable terms may be adversely
affected.
We have Capacity Constraints and System Development Risks that could Damage Our
Customer Relations or Inhibit Our Possible Growth, and We May Need to Expand Our
Management Systems and Controls Quickly
Our success and our ability to provide high quality customer service, largely
depends on the efficient and uninterrupted operation of our computer and
communications systems and the computers and communication systems of our third
party vendors in order to accommodate any significant numbers or increases in
the numbers of consumers and advertisers using our service. Our success also
depends upon us and our vendors' abilities to rapidly expand
transaction-processing systems and network infrastructure without any systems
interruptions in order to accommodate any significant increases in use of our
service. We have engaged Frontier to provide an Internet solution and server for
our Web site, and are dependent on Frontier's ability to deliver such services.
Although we anticipate that we and our vendors will enhance and expand our
respective transaction-processing systems and network infrastructure as they
grow, we and our vendors may experience periodic systems interruptions and
infrastructure failures, which we believe may cause customer dissatisfaction and
may adversely affect our results of operations. Limitations of our and our
vendors' technology infrastructure may prevent us from maximizing our business
opportunities.
While we believe that both our and our vendors' data repositories, financial
systems and other technology resources will be secure from security breaches or
sabotage, we cannot assure you that this will continue to be true as technology
changes and becomes more sophisticated. In addition, we expect that many of our
and our vendors' software systems may be custom-developed and that our and our
vendors may rely on employees and certain third-party contractors to develop and
maintain these systems. If certain of these employees or contractors become
unavailable, we and our vendors may experience difficulty in improving and
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maintaining these systems. Furthermore, we expect that we and our vendors may
continue to be required to manage multiple relationships with various software
and equipment vendors whose technologies may not be compatible, as well as
relationships with other third parties to maintain and enhance their technology
infrastructures. Our and our vendors' failure to achieve or maintain high
capacity data transmission and security without system downtime and to achieve
improvements in our respective transaction processing systems and network
infrastructure could adversely affect our business and results of operations.
Risks of New Business Areas
The success of our business strategy will depend to a significant extent on our
ability to successfully develop the SportsPrize Tournament and to expand our
offerings beyond solely relying on Internet-based advertising revenues into
areas such as subscription-based products and services and e-commerce, in
addition to successfully developing new Internet products and services. There
can be no assurance that we will be able to develop the SportsPrize Tournament
into an operating game or that visitors or potential advertisers or sponsors
will accept the concept of the SportsPrize Tournament. There can also be no
assurance that we will successfully expand into other areas, develop and launch
any new entertainment concepts or enhance existing ones.
In addition, expansion into new business areas and new entertainment offerings
may bring us into direct competition with new competitors. Any expansion of
product offerings or operations, or new games developed and launched by us that
are not favorably received by Internet users could damage our reputation or the
SportsPrize.com(TM) brand. There is also substantial risk that our SportsPrize
Tournament may be subject to regulatory review by state and federal regulatory
authority as the size of the prizes grow. Although we do not intend to charge
visitors to the SportsPrize Web any registration fees, require any purchase to
play the SportsPrize Tournament, charge any cost to deliver prizes or gifts or
otherwise imply that a purchase is required to play the SportsPrize Tournament,
there can be no assurance that the SportsPrize Tournament will not be subject to
investigation or review by federal, state local regulatory authorities. We do
not anticipate the SportsPrize Tournament will violate federal or state gaming
laws.
Expansion into new business areas or the development and launching of new games
will also require significant additional expenses and programming and other
resources and will strain our management, financial and operational resources.
Furthermore, any expansion of business areas and the developing and launching of
new games, as well as the enhancement of our contemplated SportsPrize
Tournament, will necessarily rely on untested business models. To date, we have
generated no revenues and have not entered into any agreements with sponsors,
advertisers or other third party revenue sources, and there can be no assurance
that we will be able to generate any revenues from these sources in the future.
Our failure to develop and launch the SportsPrize Web in a cost effective and
timely manner will have a material adverse effect on our business, financial
condition and operating results.
There can be no assurance that our venture will ever achieve profitability, and
a failure by us to recover the substantial investment required to launch and
operate such a venture would have a material adverse effect on our business,
financial condition and operating results.
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Competition
The on-line sports entertainment market in which we compete is comprised of
numerous competitors, and we expect competition to increase. We also compete
with other non-sports related Internet sites for the time and attention of
consumers and for advertising and subscription revenues. Competition among
Internet sites is intense and is expected to increase significantly in the
future. Our Internet site will compete against a variety of companies that
provide similar offerings through one or more media, such as print, radio,
television and the Internet. To compete successfully, we must develop and
deliver popular, original, entertaining, informative and compelling product
offerings to attract Internet users and to support advertising and sponsorship
fees. Our areas of focus include games, sports-related discussion communities,
sports merchandising and Internet shopping. We will compete with various
companies and Internet sites, such as SportsLine USA, Inc., CBS Sportsline, ESPN
Sports Zone, Wall Street Sports, Sports Zone, and others. All of these
competitors currently offer a wider range of products, services, information and
news than we contemplate offering, which products and services may be
sufficiently attractive to Internet users and, consequently, may dissuade them
from visiting our SportsPrize Web site. If we are unable to attract a
significant number of Internet users to our Internet site, our business,
financial condition and operating results will be materially adversely affected
and we may cease to be a commercially viable enterprise.
Low Barriers to Entry
The market for Internet-based products and services is relatively new, intensely
competitive and rapidly evolving. There are minimal barriers to entry, and
current and new competitors can launch new Internet sites at a relatively low
cost within relatively short time periods. In addition, we compete for the time
and attention of Internet users with thousands of non-profit Internet sites
operated by, among other persons, individuals, government and educational
institutions. Existing and potential competitors also include magazine and
newspaper publishers, cable television companies and start-up ventures attracted
to the Internet market. Accordingly, we expect competition to persist and
intensify and the number of competitors to increase significantly in the future.
Should we seek in the future to attempt to expand the scope of our Internet site
and product offerings, it will compete with a greater number of Internet sites
and other companies. Because the operations and strategic plans of existing and
future competitors are undergoing rapid change, it is extremely difficult for us
to anticipate which companies are likely to offer competitive products and
services in the future. There can be no assurance that our SportsPrize Web site
will compete successfully.
Uncertain Acceptance of the Internet as an Advertising Medium;
Lack of Measurement Standards
Use of the Internet by consumers is at a very early stage of development and
market acceptance of the Internet as a medium for information, entertainment,
commerce and advertising is subject to a high level of uncertainty. We believe
that our success depends upon our ability to obtain significant revenues from
our Internet operations, which will require the development and acceptance of
the Internet as an advertising medium. We believe that most advertisers and
advertising agencies have limited experience with the Internet as an advertising
medium and
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neither advertisers nor advertising agencies have devoted a significant portion
of their advertising budgets to Internet-related advertising to date. In order
for us to generate advertising revenues, advertisers and advertising agencies
must direct a portion of their budgets to the Internet as a whole, and
specifically to our Web site. There can be no assurance that advertisers or
advertising agencies will be persuaded, or able, to allocate or continue to
allocate portions of their budgets to Internet-based advertising, or if so
persuaded or able, that they will find Internet-based advertising to be more
effective than advertising in traditional media such as television, print or
radio, or in any event decide to advertise on our Internet sites. Moreover,
there can be no assurance that the Internet advertising market will develop as
an attractive and sustainable medium that we will achieve market acceptance of
our products or that we will be able to execute our business strategy
successfully.
Acceptance of the Internet among advertisers and advertising agencies will also
depend on the level of use of the Internet by consumers, which is highly
uncertain, and on the acceptance of the alternative new model of conducting
business and exchanging information presented by the Internet. Advertisers and
advertising agencies that have invested resources in traditional methods of
advertising may be reluctant to modify their media buying behavior or their
systems and infrastructure to use Internet based advertising. Furthermore, no
standards to measure the effectiveness of Internet based advertising have yet
gained widespread acceptance, and there can be no assurance that such standards
will be adopted or adopted broadly enough to support widespread acceptance of
Internet-based advertising. If Internet-based advertising is not widely accepted
by advertisers and advertising agencies, our business, financial condition and
operating results will be materially adversely affected and we may cease to be a
commercially viable enterprise.
Uncertain Acceptance of the Company's SportsPrize Tournament
We believe our commercial viability depends in large part upon our ability to
develop and provide the SportsPrize Tournament and our ability to successfully
attract and retain users with demographic characteristics valuable to the
various advertisers and advertising agencies. There can be no assurance that our
products and services will be attractive enough to a sufficient number of
Internet users to generate advertising revenues. There also can be no assurance
that we will be able to anticipate, monitor and successfully respond to rapidly
changing consumer tastes and preferences so as to attract a sufficient number of
users to our SportsPrize Web site within the demographics desirable to
advertisers and advertising agencies.
Internet users can freely navigate and instantly switch among a large number of
Internet sites, many of which offer competitive entertainment products and
services, making it difficult for us to distinguish our product offerings and
attract users. In addition, many other Internet sites offer very specific,
highly targeted single sports event media that may have greater appeal than the
broad range sports categories anticipated to be offered on our SportsPrize Web
site. In addition, users of the Internet who do not use the most recent browser
or operating platform software will have greater difficulty in accessing and
navigating our SportsPrize Web site than would users who use the most recent
versions of such software. Such difficulty could cause Internet users to cease
using our SportsPrize Web site. If we are unable to develop original and
compelling Internet-based entertainment in a manner that allows us to attract,
retain and expand a loyal user-
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base targeted by advertisers and advertising agencies, then we will be unable to
generate sufficient advertising or subscription revenues, and our business,
financial condition and operating results will be materially adversely affected
and we may achieve commercial viability.
Limited Experience in Sales and Marketing of Advertising
Few of our senior management team have any significant experience in selling
advertising on the Internet or any other medium, and few members of our senior
management team have any significant experience in the Internet industry or
providing entertainment on the Internet. Achieving acceptance by potential
advertisers and advertising agencies of our Internet sites as a viable marketing
forum will require us to develop and maintain relationships with key advertisers
and advertising agencies, and there can be no assurance that any such
relationships will be developed, on a timely basis or at all.
Dependence on Continued Growth in the Use of the Internet
Rapid growth in the use of and interest in the Internet is a recent phenomenon,
and there can be no assurance that acceptance and use of the Internet will
continue to develop or that a sufficient base of users will emerge to support
our business. Revenues from our Internet operations will depend largely on the
widespread acceptance and use of the Internet as a source of information and
entertainment and as a vehicle for commerce in goods and services. The Internet
may not be accepted as a viable commercial medium for a number of reasons,
including potentially inadequate development of the necessary infrastructure,
lack of timely development of enabling technologies or lack of commercial
support for Internet-based transactions and advertising. To the extent that the
Internet continues to experience an increase in users, an increase in frequency
of use or an increase in the bandwidth requirements of users, there can be no
assurance that the Internet infrastructure will be able to support the demands
placed upon it. In addition, the Internet could lose its viability as a
commercial medium due to delays in the development or adoption of new standards
and protocols required to handle increased levels of Internet activity, or due
to increased government regulation. Changes in or insufficient availability of
telecommunications services to support the Internet also could result in slower
response times and could adversely affect use of the Internet generally and of
our Internet sites in particular. If use of the Internet does not continue to
grow or grows more slowly than expected, or if the Internet infrastructure does
not effectively support growth that may occur, our business, financial condition
and operating results would be materially adversely affected.
Uncertain Protection of Intellectual Property Rights
We anticipate our success will depend significantly on our proprietary
technology. We intend to rely primarily on a combination of patent, copyright,
trademark and trade secret laws, license agreements, non-disclosure agreements
and other contractual provisions to establish, maintain and protect our
proprietary rights in our products and technology, all of which afford only
limited protection. We have applied for intellectual property protection, and we
have put in place agreements attempting to protect our intellectual property.
There can be no assurance that our intellectual property protection applications
will be granted or that we will be able to continue to successfully negotiate
agreements protecting our intellectual property. In addition,
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despite our efforts to protect our proprietary rights, unauthorized parties may
attempt to copy aspects of our products or services or to obtain and use
information that we regard as proprietary. Third parties may also independently
develop similar technology without breach of our proprietary rights. In
addition, the laws of some foreign countries do not protect the proprietary
rights to the same extent as do the laws of the United States.
Uncertainty Regarding Infringing Intellectual Property Rights of Others
Although we do not believe that our business will infringe the intellectual
property rights of others, claims of infringement are becoming increasingly
common as the software industry develops and legal protections are applied to
software products. Litigation may be necessary to protect our proprietary
technology, and third parties may assert infringement claims against us with
respect to their proprietary rights. Any claims or litigation can be
time-consuming and expensive regardless of their merit. Infringement claims
against us could cause product release delays, require us to redesign our
products or require us to enter into royalty or license agreements, which
agreements may not be available on terms acceptable to us or at all.
Risks of Technological Change
The market for Internet-based products and services is characterized by rapid
technological developments, frequent new product introductions and evolving
industry standards. The emerging character of these products and services and
their rapid evolution will require that we continually improve the performance,
features and reliability of our Internet-based products and services,
particularly in response to competitive offerings. There can be no assurance
that we will be successful in responding quickly, cost effectively and
sufficiently to these developments. In addition, the widespread adoption of new
Internet technologies or standards could require substantial expenditures by us
to modify or adapt our Internet sites and services and could fundamentally
affect the character, viability and frequency of Internet-based advertising,
either of which could have a material adverse effect on our business, financial
condition and operating results. In addition, new Internet-based products,
services or enhancements offered by us may contain design flaws or other defects
that could require costly modifications or result in a loss of consumer
confidence, either of which could have a material adverse effect on our
business, financial condition and operating results.
Capacity Constraints and System Disruptions
The satisfactory performance, reliability and availability of our SportsPrize
Web site and our computer network infrastructure are critical to attracting
Internet users and maintaining relationships with advertising customers. Our
Internet-based advertising revenues will be directly related to the number of
advertisement impressions delivered by us. We have engaged Frontier to provide
an Internet solution to meet our systems requirements. System interruptions that
result in the unavailability of our Internet sites or slower response times for
users would reduce the number of advertisements delivered and reduce the
attractiveness of our Internet sites to users and advertisers. We may experience
periodic systems interruptions from time to time in the future. Additionally,
any substantial increase in traffic on our Internet site may require us to
expand and adapt our computer network infrastructure. Our inability to add
additional computer
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software, hardware and bandwidth to accommodate increased use of our Internet
sites may cause unanticipated system disruptions and result in slower response
times.
There can be no assurance that we will be able to expand our computer network
infrastructure on a timely basis to meet increased use. Any system interruptions
or slower response times resulting from the foregoing factors could have a
material adverse effect on our business, financial condition and operating
results. We are dependent on Frontier and on other third parties for
uninterrupted Internet access. In addition, we are dependent on various third
parties for substantially all of our information. Loss of such services from any
one or more of such third parties may have a material adverse effect on our
business, financial condition and operating results. No assurance can be given
as to whether, or on what terms, we would be able to obtain such services from
other third parties in the event of the loss of any of such services.
Our Internet operations are vulnerable to interruption by fire, earthquake,
power loss, telecommunications failure and other events beyond our control.
There can be no assurance that interruptions in service will not materially
adversely affect our operations in the future. While we carry business
interruption insurance to compensate us for losses that may occur, there can be
no assurance that such insurance will be sufficient to provide for all losses or
damages incurred by us.
Liability for Internet Content; Government Regulations
As a publisher and a distributor of content over the Internet, we face potential
liability for defamation, negligence, copyright, patent or trademark
infringement and other claims based on the nature and content of the materials
that we publish or distribute. In addition, we could be exposed to liability
with respect to the content or unauthorized duplication of material indexed in
our search services. Although we intend to carry liability insurance, our
insurance may not cover potential claims of this type or may not be adequate to
indemnify us for all liability that may be imposed. Any imposition of liability
that is not covered by insurance or is in excess of insurance coverage could
have a material adverse effect on our business, financial condition and
operating results. Although there are currently few laws and regulations
directly applicable to the Internet, it is possible that new laws and
regulations will be adopted covering issues such as, among other things,
pricing, characteristics and quality of Internet products and services. As a
provider of Internet-based products and services, we are subject to the
provisions of existing and future federal and local legislation that could be
applied to our operation. Such legislation could also dampen the growth of the
Internet generally and decrease the acceptance of the Internet as an advertising
medium, and could, thereby, have a material adverse effect on our business,
financial condition and operating results.
Security Risks
We intend to institute certain security measures designed to protect our
Internet site and other operations from unauthorized use and access. Such
measures cannot guarantee complete security, however, and a party who is able to
circumvent our security measures could misappropriate proprietary information or
cause interruptions in our Internet operations. We may be required to expend
significant capital and resources to protect against the threat of such
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security breaches or to alleviate problems caused by such breaches. Concerns
over the security of Internet transactions and the privacy of users may also
inhibit the growth of the Internet generally, particularly as a means of
conducting commercial transactions. To the extent that our activities or the
activities of any third party contractors involve the storage and transmission
of proprietary information, such as computer software or credit card numbers,
security breaches could expose us to a risk of loss or litigation and possible
liability. There can be no assurance that contractual provisions attempting to
limit our liability in such areas will be successful or enforceable, or that
parties will accept such contractual provisions as part of our agreements.
Year 2000 Compliance
The "Year 2000" issue concerns the potential exposures related to the automated
generation of business and financial misinformation resulting from the
application of computer programs which have been written using two digits,
rather than four, to define the applicable year of business transactions. We
have completed our review of the potential impact of Year 2000 issues and do not
anticipate any significant costs, problems or uncertainties associated with
becoming Year 2000 compliant. Our failure or failure of our software providers
to adequately address the Year 2000 issue could result in misstatement of
reported financial information or otherwise adversely affect our business
operations. See, "Financial Information - Year 2000 Compliance."
We May Not be Able to Protect Our Internet Domain Name
We anticipate that the Internet domain name, "SportsPrize.com(TM)" will be an
extremely important part of our business. Governmental agencies and their
designees generally regulate the acquisition and maintenance of domain names.
The regulation of domain names in the United States and in foreign countries may
be subject to change in the near future. Governing bodies may establish
additional top-level domains, appoint additional domain name registrars or
modify the requirements for holding domain names. As a result, we may be unable
to acquire or maintain relevant domain names in all countries in which we
conduct business. Furthermore, the relationship between regulations governing
domain names and laws protecting trademarks and similar proprietary rights is
unclear. Therefore, we may be unable to prevent third parties from acquiring
domain names that are similar to, infringe upon or otherwise decrease the value
of our trademarks and other proprietary rights.
We Do Not Intend to Declare Dividends
We have never declared or paid any cash dividends on our capital stock. We
currently intend to retain any future earnings for funding growth and,
therefore, do not expect to pay any dividends in the foreseeable future.
Our Shares are Considered Penny Stocks and are Subject to the Penny Stock Rules
Rules 15g-1 through 15g-9 promulgated under the Exchange Act impose sales
practice and disclosure requirements on certain brokers-dealers who engage in
certain transactions involving "a penny stock." Subject to certain exceptions, a
penny stock generally includes any non-
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NASDAQ equity security that has a market price of less than $5.00 per share. If
our shares have a market price of less than $5.00 per share then our shares will
be deemed penny stock for the purposes of the Exchange Act. The additional sales
practice and disclosure requirements imposed upon brokers-dealers may discourage
broker-dealers from effecting transactions in our shares, which could severely
limit the market liquidity of the shares and impede the sale of our shares in
the secondary market.
Under the penny stock regulations, a broker-dealer selling penny stock to anyone
other than an established customer or "accredited investor" (generally, an
individual with net worth in excess of $1,000,000 or an annual income exceeding
$200,000, or $300,000 together with his or her spouse) must make a special
suitability determination for the purchaser and must receive the purchaser's
written consent to the transaction prior to sale, unless the broker-dealer or
the transaction is otherwise exempt. In addition, the penny stock regulations
require the broker-dealer to deliver, prior to any transaction involving a penny
stock, a disclosure schedule prepared by the Commission relating to the penny
stock market, unless the broker-dealer or the transaction is otherwise exempt. A
broker-dealer is also required to disclose commissions payable to the
broker-dealer and the registered representative and current quotations for the
securities. Finally, a broker-dealer is required to send monthly statements
disclosing recent price information with respect to the penny stock held in a
customer's account and information with respect to the limited market in penny
stocks.
Risks Associated with Our Portal
The Results of Operations for our Portal Will Vary Depending on a Number of
Factors
We anticipate the operating results of our Portal will vary widely depending on
a number of factors, some that are beyond our control. These factors are likely
to include:
o demand for our online services by registered users, advertisers and
consumers, including the number of searches performed by registered
users, consumers and the rate at which they click-through to paid
search listing advertisements;
o prices paid by advertisers using our service;
o costs of attracting consumers to our Web site, including costs of
receiving exposure on third-party Web sites and advertising costs;
o costs related to forming strategic relationships;
o loss of strategic relationships;
o our ability to significantly increase our distribution channels;
o competition;
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o the amount and timing of operating costs and capital expenditures
relating to expansion of our operations;
o costs and delays in introducing new services and improvements to
existing services;
o changes in the growth rate of Internet usage and acceptance by
consumers of electronic commerce;
o technical difficulties, system failures or Internet downtime;
o government regulations related to our business and to the Internet;
o our ability to upgrade and develop our information technology systems
and infrastructure;
o costs related to acquisitions of technologies or businesses; and
o general economic conditions, as well as those specific to the Internet
and related industries.
Because we have had no operating history, it is difficult to accurately forecast
the revenues, if any, that will be generated by us.
We plan to significantly increase our operating expenses to expand our marketing
and sales operations, establish customer support capabilities and fund the
development of our portal. We have based our current and future expense levels
on the operating plans and estimates of future revenue for our portal. We
anticipate that the expenses related to our portal may increase. Our revenue and
operating results are difficult to forecast because they generally depend upon
the volume of the searches conducted on our portal, the amounts paid by
advertisers for keyword search listings on the portal and the number of
advertisers that bid on the service, none of which are under our control. As a
result, we may be unable to adjust our spending in a timely manner to compensate
for any unexpected revenue shortfall. We also may be unable to increase our
spending and expand our operations in a timely manner to adequately meet user
demand to the extent it exceeds our expectations.
The Success of Our Portal Depends upon Achieving a Critical Mass of Registered
Users, Advertisers and Consumers
The success of our portal will be dependent upon achieving significant market
acceptance of our Web site portal by registered users, advertisers and
consumers. Internet advertising in general is at an early stage of development.
Most potential advertisers have only limited experience advertising on the
Internet and have not devoted a significant portion of their advertising
expenditures to Internet advertising. Advertising through priority placement on
our search service in particular will be introduced in the future, and we cannot
predict the level of its acceptance as an advertising medium, even if we achieve
initial market acceptance. Although
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we believe that our portal will offer a cost-effective advertising solution, our
competitors and potential competitors may offer more cost-effective advertising
solutions, which could damage our business. In addition, although we believe our
portal will provide more relevant search results than those provided by
traditional search methods, our service may not achieve significant acceptance
by registered users and consumers. Failure to achieve and maintain a critical
mass of registered users; advertisers and consumers would seriously harm our
business.
Our Portal May be Dependent upon Online Marketing Partners, and Our Future
Success is Dependent Upon Developing a Relationship with a Network of Affiliates
We anticipate that our portal may depend on traffic from a limited number of
third party Web sites. We anticipate we will obtain traffic from these sources
pursuant to short-term agreements. We currently have no agreements in place and
there can be no assurance that they will be successful in obtaining any of these
agreements on commercially acceptable terms.
We also believe that our future success in penetrating our target markets
depends in part on our ability to further develop and maintain relationships
with network affiliates. These network affiliates provide their users with our
portal search capabilities on their sites or direct their traffic to our Web
site. We believe these relationships are important in order to facilitate broad
market acceptance of our service and enhance our sales. Our future ability to
attract consumers to our portal service may be dependent upon the growth of our
network of affiliates, which has not yet been established. If we are unable to
obtain agreements or arrangements for traffic on commercially acceptable terms
or to establish a relationship with a network of affiliates, our portal business
may never be successfully launched.
The Portal Industry is Highly Competitive, and We Cannot Assure You that We will
be Able to Compete Effectively
The market for Internet products, services and advertising is new, rapidly
evolving and intensely competitive. Our portal will compete with many other
providers of Web directories, search and information services as well as
traditional media for consumer attention and advertising expenditures. We expect
competition to intensify in the future. Barriers to entry may not be
significant, and current and new competitors may be able to launch new Web sites
at a relatively low cost. Accordingly, we believe that our success may depend
heavily upon achieving significant market acceptance before our competitors and
potential competitors introduce competing services.
We anticipate that we will compete with online services, other Web sites and
advertising networks, as well as traditional offline media such as television,
radio and print for a share of advertisers' total advertising budgets. We
believe that the number of companies selling Web-based advertising and the
available inventory of advertising space has recently increased substantially.
Accordingly, we may face increased pricing pressure for the sale of
advertisements and direct marketing opportunities, which could adversely affect
our business and operating results.
35
<PAGE>
We will also compete with providers of Web directories, search and information
services, all of whom offer advertising, including, among others, America
Online, Inc. (AOL.com, NetFind and Netscape Netcenter), AskJeeves, Inc., CNET,
Inc. (Snap), Excite, Inc. (including WebCrawler and Magellan), LookSmart, Ltd.,
Lycos, Inc. (including HotBot), Microsoft Corporation (LinkExchange, Inc. and
msn.com), The Walt Disney Company/Infoseek Corporation (including the Go
Network), Goto Net and Yahoo! Inc. In addition, we expect that other companies
will offer directly competing services in the future. For example, we expect
AltaVista, a division of CMGI, to offer such a service.
Most providers of Web directories and search and information services offer
additional features and content. Also, many of these competitors, as well as
potential entrants into our market, have longer operating histories, larger
customer or user bases, greater brand recognition and significantly greater
financial, marketing and other resources than we do. Many of these current and
potential competitors can devote substantially greater resources to promotion
and Web site and systems development than we can. In addition, as the use of the
Internet and other online services increases, larger, well-established and
well-financed entities may continue to acquire, invest in or form joint ventures
with providers of Web directories, search and information services or
advertising solutions, and existing providers of Web directories, search and
information services or advertising solutions.
Providers of Internet browsers and other Internet products and services who are
affiliated with providers of Web directories and information services in
competition with our portal service may more tightly integrate these affiliated
offerings into their browsers or other products or services. Any of these trends
may increase the competition we face and could adversely affect our business and
operating results.
Our Portal Business May Be Subject to Government Regulation and Legal
Uncertainties
There are currently few laws or regulations directly applicable to access to, or
commerce on, the Internet. Due to the increasing popularity and use of the
Internet, it is possible that laws and regulations may be adopted, covering
issues such as user privacy, defamation, pricing, taxation, content regulation,
quality of products and services, and intellectual property ownership and
infringement. Such legislation could expose us to substantial liability as well
as dampen the growth in use of the Internet, decrease the acceptance of the
Internet as a communications and commercial medium, or require us to incur
significant expenses in complying with any new regulations. See, "Description of
Business - Regulation."
Due to the global nature of the Internet, it is possible that the governments of
other states and foreign countries might attempt to regulate its transmissions
or prosecute us for violations of their laws. We might unintentionally violate
such laws. Such laws may be modified, or new laws may be enacted, in the future.
Any such development could damage our business.
36
<PAGE>
Item 2. Financial Information.
Selected Financial Data
The following table sets forth selected financial data regarding our
consolidated operating results and financial position of our Company. The data
has been derived from our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States ("US GAAP"). See "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The following selected financial
data is qualified in its entirety by, and should be read in conjunction with,
the consolidated financial statements and notes thereto included elsewhere in
this registration statement. The audited consolidated financial statements of
our subsidiary, SportsPrize Inc. (formerly Beagle Ventures Resources Management
Ltd.), for the fiscal year ended February 28, 1999 are included in this
registration statement, and should be read in connection with the presented
selected financial data.
<TABLE>
Six Months
Ended Fiscal Year Ended December 31,
-------------- -------------- ------------- -------------- -------------
June 30, 1999 1998 1997 1996 1995
-------------- -------------- ------------- -------------- -------------
$ $ $ $ $
-------------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Net Sales - 2,470 3,908 - -
Gross Profit - 1,180 1,260 - -
General and 396,277 6,984 10,996 1,800 600
Administrative Expenses
Net Loss from (387,370) (5,804) (9,736) (1,800) (600)
Continuing Operations
Net Loss per Share $ 0.02 - - - -
- --------------------------------------- ------------- ----------------------------------------------------------
Six Months
Ended At December 31,
------------- --------------- ------------- ------------- --------------
June 30, 1998 1997 1996 1995
1999
------------- --------------- ------------- ------------- --------------
$ $ $ $ $
------------- --------------- ------------- ------------- --------------
Working Capital 2,204,726 (1,560) 14,004 - -
(Deficiency)
Total Assets 2,302,375 4,560 21,016 6,600 8,400
Total Liabilities 16,222 3,120 2,212 - -
Shareholders' Equity 2,286,153 1,440 18,804 6,600 8,400
Long-term Obligations - - - - -
Cash Dividends - - - - -
- --------------------------------------- ------------- --------------- ------------- ------------- --------------
</TABLE>
37
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
The information contained in this Management's Discussion and Analysis of
Financial Condition and Results of Operations contains forward looking
statements. Actual results may materially differ from those projected in the
forward looking statements as a result of certain risks and uncertainties set
forth in this registration statement. Although management believes that the
assumptions made and expectations reflected in the forward looking statements
are reasonable, there is no assurance that the underlying assumptions will, in
fact, prove to be correct or that actual future results will not be different
from the expectations expressed in this registration statement.
Overview
We originally incorporated as Par Golf, Inc. on August 25, 1995 in the State of
Nevada and were inactive until changing our name to Kodiak Graphics Company on
August 21, 1997. At this time, we commenced marketing advanced graphic
technology with complete print and screen services to the wholesale and retail
sector of the screen, print and publication industries. We failed to capitalize
on this business plan, with sales of only $6,378 for the years 1997 and 1998.
In May, 1999, we completed a statutory share exchange with SportsPrize Inc.
pursuant to the laws of the State of Nevada. With our acquisition of SportsPrize
Inc., we have implemented a new business strategy and plan, which is building a
Web-based entertainment company dedicated to creating an interactive community
on the Internet. Through our portal, SportsPrize.com(TM), we intend to provide a
multi-faceted on-line sports entertainment community. We believe the main
attraction will be the SportsPrize Tournament, a proprietary, interactive sports
game we have developed to attract interest on our Web site. We also intend to
focus on retailing sports equipment, products, memorabilia and services through
our various sporting goods malls on the Internet.
Results of Operations
Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998
We commenced material operations in the quarter ended June 30, 1999. We had no
revenues from operations during the six month periods ended June 30, 1999 and
June 30, 1998. We had operating expenses of $396,277 during the six month period
ended June 30, 1999, consisting primarily of compensation and payments to our
key consultants and research and development expenses of $271,555 and legal and
audit expenses of $56,390. Our loss during the six month period ended June 30,
1999 was of $387,370. We expect these expenses to continue to be a material
component of our expenses during the start-up phase of our development.
We earned $6,300 through the disposal of redundant assets during the quarter.
With the receipt of $2,500,000 from a private placement in May 1999 of our
common stock, we had approximately $2,100,000 of working capital as at June 30,
1999.
38
<PAGE>
We expended $41,178 on equipment during the second quarter. We will be
accelerating these expenditures in the third quarter to complete the
infrastructure for our Web site and our e-commerce operations.
We were inactive substantially all of the first quarter of 1999 and all of 1998.
Year Ended December 31, 1998 Compared to December 31, 1997
Throughout both these years we did not have any material business operations. We
did not raise any capital in 1998. In 1997, we issued 2,564,000 shares for net
cash proceeds of $21,940. The proceeds of the private placement in 1997 was used
to fund our base operations in 1998. We ended 1998 with minimal cash on hand.
Our loss for 1998 was $5,804 compared to $9,736 in 1997. This is comprised
primarily of basic operating expenses, as our revenues were minimal ($2,470 in
1998 and $3,908 in 1997).
Year Ended December 31, 1997 Compared to December 31, 1996
Our first full fiscal period was 1996 and, like 1997 and 1998, we did not have
any substantive operations. In 1996, we had no cash expenses. Also during 1996,
we did not issue any common stock nor did we have any cash on hand.
Liquidity and Capital Resources
Since our Share Exchange with SportsPrize Inc., we have raised a total of
$3,500,000 less financing fees of $98,000. We completed our initial substantial
funding coinciding with the Share Exchange by issuing 1,666,665 shares of our
common stock at a price of $1.50 per share, providing us with $2,500,000, less a
finder's fee of $70,000 paid to Sonora. We also completed a private placement in
July 1999, the first of three financings to be completed as part of our Share
Exchange with SportsPrize Inc., of 250,000 shares of our common stock at a price
of $4.00 per share, providing us with $1,000,000. Sonora received a finder's fee
of 2.5% for these private placements.
As a result of the private placement subsequent to June 30, 1999, we currently
have working capital of approximately $2,800,000, which will be used to develop
our infrastructure. Our current working capital requirements are approximately
$175,000 per month. This will increase to approximately $525,000 when we are
fully staffed and our Web site portal is ready to begin full commercial
operations.
We anticipate that we will require additional capital of approximately
$1,500,000 to fund our operations through December 31, 1999. We anticipate we
will complete additional private placements of our common stock to raise
$1,500,000 by the end of the third quarter of 1999. We cannot assure you that we
will successfully complete the planned additional private placements on
acceptable terms, if at all.
39
<PAGE>
In addition to the anticipated 1,500,000 private placements, we anticipate we
will need to raise approximately $20.5 million to meet our projected Operating
Budget requirements through the second quarter of 2000. We intend to raise
additional financing to fund our Operating Budget by issuing equity or debt
through a combination of private and public financings. We cannot assure you
that we will successfully raise additional financing on acceptable terms, if at
all. If we cannot raise additional financing, we anticipate that we will reduce
our projected expenditures related to marketing our SportsPrize Web site to the
public and concentrate our resources on selling advertising and sponsorships and
developing the technologies related to our SportsPrize Web site and the
SportsPrize Tournament. The failure to meet certain expenditures may cause us to
default on material obligations and such default may have a material adverse
effect on our business and results of operations.
Recent Financings
Our current business activities and operations have been funded to date through
issuance of shares of our common stock in the following transactions:
<TABLE>
Summary of Transactions
- -------------------------------------------------------------------------------------------------
Total
Number of Consideration for
Shares Shares ($)
-------------------- --------------------
<S> <C> <C>
Private Placement at $1.50 per share 1,666,665 $2,499,997.50
Private Placement at $4.00 per share 250,000 1,000,000.00
-------------------- --------------------
TOTAL 1,916,665 $3,499,997.50
========= =============
</TABLE>
Year 2000 Compliance
The Year 2000 issue arises with the change in century and the potential
inability of information systems to correctly "rollover" dates to the new
century. To save on computer storage space, many systems were programmed with a
two-digit century (i.e. December 31, 1999 would appear as 12/31/99) assuming
that all years would be part of the 20th century. On January 1, 2000, systems
with this programming will default to 01/01/1900 instead of 01/01/2000, and
calculations using or reporting the date will not be correct and errors will
arise (the "Year 2000 Issue"). To prevent this from occurring, information
systems need to be updated to ensure they recognize dates during and after the
Year 2000.
The potential exists that we are exposed to a risk that certain aspects of our
businesses will fail or suffer impairment as a result of internally operated or
externally contracted hardware or software systems and services not being able
to correctly "rollover" dates to the new century. The risk stems from our
reliance on certain hardware, software and services to carry out the daily
operation of our proposed respective businesses. The exposure may result from,
among other things, the use of computers, general software and servers for
office purposes and data storage; connections to and use of the services of
Internet Service Providers and telephone companies for office purposes and
customer and investor relations; the software underlying the operation of the
40
<PAGE>
portal Web site and the on-line e-commerce operation; and the servers that `play
and distribute' the on-line game.
We have only been operating and developing our respective businesses during the
last 6 months and the office hardware, administrative general software, custom
developed special purpose software, servers and services of Internet Service
Providers and telephone companies have been acquired during this period. As a
result, and in consultation with the suppliers of this hardware, software and
services, we believe the related systems that we intend, directly or indirectly,
to use in our respective businesses are Year 2000 compliant. Our due diligence
also included an evaluation of supplier provided technology and the
implementation of new policies to require our suppliers to confirm that they
have disclosed and will correct Year 2000 compliance issues. Although we are
relying primarily on systems developed with current technology and on systems
designed to be Year 2000 compliant, we may have to replace, upgrade or reprogram
certain systems to ensure that all interfacing technology will be Year 2000
compliant when running jointly.
In the event that we incur expenses associated with resolving Year 2000
compliance issues, we intend to expense the operating costs as they are incurred
and capitalize the capital costs as they are incurred. However, our purchases of
hardware and general and specific purpose software have been relatively recent,
and the more expensive of the hardware and general and specific software items
that we have purchased are covered under warranties that will extend over the
rollover period to January 1, 2000. As a result, we do not expect to incur any
major operating or capital expenditures that would have a material impact on our
financial condition or results of operations. Our Year 2000 compliance costs to
date have been non-material and are estimated to be less than $2,000.
While we believe that our hardware and general and specific purpose software
applications will be Year 2000 compliant, there can be no assurance until the
Year 2000 occurs that all systems will function adequately.
We do not currently anticipate any disruption in our operations as the result of
the Year 2000 issue. We do not have any information concerning the Year 2000
compliance status of our suppliers and customers that would affect our
operations. Any failure of our material systems, our vendors' material systems
or the Internet to be Year 2000 compliant may have a material adverse effect on
our business and results of operations.
In order to protect against the possibility of any material disruption in our
operations as the result of the Year 2000, issue we have taken or will be taking
the following precautions:
- developed, initiated and maintained procedures that ensure that the
information stored on the office computer hard drives are backed up on
a regular basis and stored safely;
- copies of the source code for the special purpose software are
maintained in secure offsite locations by the developers of the
software;
- install a backup server; and
- implemented a policy of acquiring name brand hardware and retained
experienced consultants upon whose warranties we believe that we can
rely.
41
<PAGE>
New Accounting Pronouncements
In March 1997, the Financial Accounting Standards Board or FASB issued Statement
of Financial Accounting Standards SFAS No. 128, "Earnings per Share." This
Statement establishes standards for computing and presenting earnings per share
("EPS") and applies to all entities with publicly-held common shares or
potential common shares. This Statement replaces the presentation of primary EPS
and fully-diluted EPS with a presentation of basic EPS and diluted EPS,
respectively. Basic EPS excludes dilution and is computed by dividing earnings
available to common stockholders by the weighted-average number of common shares
outstanding for the period. Similar to fully diluted EPS, diluted EPS reflects
the potential dilution of securities that could share in the earnings. The
adoption of SFAS No. 130 did not have a material effect on our reported EPS
amounts.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income,"
which is effective for fiscal years beginning after December 15, 1997. SFAS No.
130 establishes standards for reporting and display of comprehensive income and
its components in financial statements. The adoption of SFAS No. 130 did not
have a material effect on our financial statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which is effective for fiscal years
beginning after December 15, 1997. SFAS No. 131 establishes standards for the
way a public business enterprise reports certain information about operating
segments, and discloses enterprise-wide information about its products and
services, activities in different geographic areas, and its reliance on major
customers. The adoption of this Statement did not have a material effect on our
financial statements.
Statement of Financial Standards No. 132, "Employees' Disclosures about Pension
and Other Post-retirement Benefits," standardizes the disclosure requirements
for pensions and other post-retirement benefits. This statement requires
additional information on changes in benefit obligations and fair values of plan
assets. It revises prior standards and is effective for years beginning after
December 15, 1997. Because the Company does not currently have any significant
employee benefit plans nor does it intend to initiate any in the near-term,
there should be no impact on its financial statements.
Item 3. Properties.
Pursuant to the IMI Agreement, we have an understanding with IMI to use their
offices as our principal business office without financial obligation for a
period of six months, ending on November 15, 1999. Our principal business office
is located at 225 S. Sepulveda Boulevard, Suite 360, Manhattan Beach,
California.
We also currently rent a research and development office at 101 West 5th Avenue,
Vancouver, British Columbia, Canada, on a month-to-month basis. Our monthly
payments are approximately $2,200.
42
<PAGE>
We do not presently own or lease any other property or real estate.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
Security Ownership of Certain Beneficial Owners.
The following table sets forth certain information concerning the number of
shares of our common stock owned beneficially as of July 27, 1999 by: (i) each
person (including any group) known to us to own more than five percent (5%) of
any class of our voting securities, (ii) each of our directors, and (iii)
officers and directors as a group. Unless otherwise indicated, the shareholders
listed possess sole voting and investment power with respect to the shares
shown.
<TABLE>
Title of Class Name and Address of Amount and Nature of Percentage of Class
Beneficial Owner Beneficial Ownership
- ----------------------------- ----------------------------- ---------------------------- ---------------------------
<S> <C> <C> <C>
Common Shares Lamplighter Investments Ltd. 1,088,888 5.59%
88 Ellis Road
Crowthorne Berks, England
RG45 6PN
- ----------------------------- ----------------------------- ---------------------------- ---------------------------
Common Shares Strathburn Investments Inc. 1,088,888 5.59%
3rd Floor, Northfolk House
Frulerick Street
P.O. Box N1836
Nassau, Bahamas
- ----------------------------- ----------------------------- ---------------------------- ---------------------------
Common Shares James A. Brown 1,033,740 (1) 5.31%
5453 West Vista Court
West Vancouver, B.C.
Canada V7W 3G8
- ----------------------------- ----------------------------- ---------------------------- ---------------------------
Common Shares Randy L. Daggitt 1,033,740 (1) 5.31%
12714 25A Avenue
Surrey, B.C.
Canada V4A 5R5
- ----------------------------- ----------------------------- ---------------------------- ---------------------------
Common Shares Jeffrey D. Paquin 1,333,740 (2) 6.74%
4775 Woodgreen Drive
West Vancouver, B.C.
Canada V7S 2Z9
- ----------------------------- ----------------------------- ---------------------------- ---------------------------
Common Shares Michael J. Slater 1,033,740 (1) 5.31%
5289 Keith Road
West Vancouver, B.C.
Canada V7W 2M9
- ----------------------------- ----------------------------- ---------------------------- ---------------------------
Common Shares Anthony A. Vecchio 1,033,740 (1) 5.31%
4728 Woodvalley Place
West Vancouver, B.C.
Canada V7S 2X3
- ----------------------------- ----------------------------- ---------------------------- ---------------------------
Common Shares Officers and Directors as a 3,128,624 (3) 16.06%
Group
- ----------------------------- ----------------------------- ---------------------------- ---------------------------
</TABLE>
(1) Of which 433,740 shares are held in escrow pursuant to an Escrow Agreement
dated May 7, 1999.
(2) Of which 300,000 shares are beneficially exercisable to acquire such shares
and of which 433,740 shares are held in escrow pursuant to an Escrow
Agreement dated May 7, 1999.
(3) Of which 975,000 shares the owners have the right to acquire beneficial
ownership and of which 433,740 shares are held in escrow pursuant to an
Escrow Agreement dated May 7, 1999.
Security Ownership of Management.
We are not aware of any arrangement that might result in a change in control in
the future.
43
<PAGE>
Item 5. Directors, Executive Officers, Promoters and Control Persons.
Directors and Officers
All of our directors are elected annually by the shareholders and hold office
until the next annual general meeting of shareholders or until their successors
are duly elected and qualified, unless they sooner resign or cease to be
directors in accordance with our Articles and Bylaws. The date of our next
annual regular general meeting has yet to be determined. Our executive officers
are appointed by and serve at the pleasure of our Board of Directors.
As at July 27, 1999, the following persons were our directors and/or executive
officers,:
- ---------------------------------------------------------------- -------------
Director/
Officer/
Name and present office held Employee since
- ---------------------------------------------------------------- -------------
Jeffrey D. Paquin, May 14, 1999
President, Director
- ---------------------------------------------------------------- -------------
Donald Robert MacKay, May 14, 1999
Chief Financial Officer and Treasurer
- ---------------------------------------------------------------- -------------
Michael Wiedder, June 24, 1999
Vice-President of Marketing
- ---------------------------------------------------------------- -------------
John Thompson, Vice-President of Research and Development May 14, 1999
- ---------------------------------------------------------------- -------------
Skye Cove, Vice-President of Technology May 14, 1999
- ---------------------------------------------------------------- -------------
David R. Bissett, May 14, 1999
Secretary
- ---------------------------------------------------------------- -------------
Alan Gerson, July 8, 1999
Director
- ---------------------------------------------------------------- -------------
Abe Carmel, July 8, 1999
Director
- ---------------------------------------------------------------- -------------
The following is a brief biographical information on each of the officers,
directors and significant employees listed:
Jeffrey D. Paquin, age 36, has been our President and a director since May 14,
1999. Mr. Paquin is a lawyer and is currently President of JD Paquin Personal
Law Corporation. Mr. Paquin's corporate experience includes directorships in the
following emerging public companies: Broadwater Development Inc., a natural
resource exploration company listed on the Vancouver Stock Exchange, from 1996
to 1997; Solar Pharmaceuticals Ltd., a manufacturer and supplier of medical
devices and services formally listed on the Vancouver Stock Exchange, from 1995
to 1998; and Watson Bell Communications Inc., (now Cosworth Ventures), listed on
the Vancouver Stock Exchange, from 1993 to 1995. Mr. Paquin was the President
and Director of SportsPrize Inc. from its inception to May 14, 1999.
Bob MacKay, age 47, has been our Chief Financial Officer since May 14, 1999 and
our Treasurer since June 30, 1999. Mr. MacKay has been a Certified Management
Accountant since 1991. Mr. MacKay was the Chief Financial Officer of Advanced
Gaming Technology, Inc. from
46
<PAGE>
1995 to 1998; the manager of business analysis of TCG International Inc. from
1994 to 1995; and a senior financial accountant of GLENTEL Inc. from 1989 to
1993.
Michael Wiedder, age 40, has been our Vice-President of Marketing since June 24,
1999. Mr. Wiedder founded and served as C.E.O. of Online Expo, an Internet
exposition and conference produced in Los Angeles, San Francisco and New York.
Mr. Wiedder has been involved in the Internet marketing industry since 1994.
John Thompson, age 41, has been our Vice-President of Research and Development
since May 14, 1999. Mr. Thompson created and developed the SportsPrize
Tournament game. Mr. Thompson spent 14 years as an oddsmaker and sports analyst
with the British Columbia Lottery Corporation. Mr. Thompson was a Vice-President
of SportsPrize Inc. prior to the Share Exchange.
Skye Cove, age 23, has been our Vice-President of Technology since May 14, 1999.
Since 1994, Mr. Cove has been a student or a computer programming consultant.
Mr. Cove was a Vice-President of SportsPrize Inc. prior to the Share Exchange.
David R. Bissett, age 45, has been our Secretary since May 14, 1999. Mr. Bissett
is a partner of the law firm Scott, Bissett, of Vancouver, British Columbia,
Canada, and specializes in securities law. He is a past Chair of the Securities
Subsection of the British Columbia branch of the Canadian Bar Association. Mr.
Bissett served as Secretary of SportsPrize Inc. prior to the Share Exchange.
Alan Gerson, age 52, has been a director since July 8, 1999. Mr. Gerson's
experience includes broadcast and cable television, e-commerce, live event
marketing, and the Internet. Mr. Gerson was a longtime senior executive at NBC,
Inc. and from 1991 to 1994 was the Executive Vice-President of the Home Shopping
Network. In 1994, he consulted for various media, interactive marketing and
electronic commerce companies. In 1995, Mr. Gerson joined Ticketmaster Corp. as
Senior Vice-President of Television and Business Development and oversaw
Ticketmaster's Direct Marketing Division and the launch of the Ticketmaster
Online store. In 1996, Mr. Gerson held an executive consulting position with
Softbank Interactive Marketing. From 1997 to date, Mr. Gerson serves as
President and Chief Executive Officer of WorldSite Networks, Inc. under an
executive consulting arrangement, until establishing Interactive Marketing Inc.
Abe Carmel, age 66, has been a director since July 8, 1999. Since 1986, Mr.
Carmel has lead Carmel Associates LLC, an international investment banking firm
which specializes in the financing and marketing of high technology, Internet
and telecommunications companies.
Members of the Board of Directors are elected by our shareholders. Our Board of
Directors meets periodically to review significant developments affecting our
company and to act on matters requiring Board approval. Although the Board of
Directors delegates many matters to others, it reserves certain powers and
functions to itself. Our audit committee is directed to review the scope, cost
and results of the independent audit of our books and records, the results of
the annual audit with management and the adequacy of our accounting, financial
and operating controls; to recommend annually to the Board of Directors the
selection of the
47
<PAGE>
independent auditors; to consider proposals made by the Registrant's independent
auditors for consulting work; and to report to the Board of Directors, when so
requested, on any accounting or financial matters.
None of our directors or executive officers is a party to any arrangement or
understanding with any other person pursuant to which said he was elected as a
director or officer.
None of our directors or executive officers has any family relationship with any
other officer or director.
None of our officers or directors have been involved in the past five years in
any of the following: (1) bankruptcy proceedings; (2) subject to criminal
proceedings or convicted of a criminal act; (3) subject to any order, judgment
or decree entered by any court limiting in any way his or her involvement in any
type of business, securities or banking activities; or (4) subject to any order
for violation of federal or state securities laws or commodities laws.
Item 6. Executive Compensation.
As of December 31, 1998, our sole named executive officer was Joseph Ochoa. On
April 3, 1999, Joseph Ochoa was replaced by William Turner as our sole named
executive officer. On May 14, 1999, William Turner was replaced by Jeffrey D.
Paquin, our President, as our sole named executive officer.
No compensation was paid to a named executive officer during the financial year
ended December 31, 1998. Subsequent to the financial year ended December 31,
1998 to June 30, 1999, Jeff Paquin was paid $7,500 in his capacity as a named
executive officer.
The following table contains information concerning compensation paid to named
executive officers during the financial year ended December 31, 1998.
<TABLE>
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation Long-Term Compensation
-----------------------------------------------------------------------
Awards Pay-outs
---------------------------------------
Other Securities LTIP
Annual Restricted Under-lying Payouts All Other
Compen- Stock Options/ Compen-
Name and Salary Bonus sation Award(s) SARs (#) sation
Principal Position Year ($) ($) ($) ($) ($)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joseph Ochoa (1) nil nil nil nil nil nil nil nil
-------------------------------------------------------------------------------------------------------------------
</TABLE>
Note:(1) There was no compensation paid by us during the last financial year
ended December 31, 1999 to any named executive officer.
48
<PAGE>
Stock Options
During our most recently completed financial year ended December 31, 1998, no
stock options or share purchase options were granted to or exercised by a named
executive officer and no long-term incentive plan awards were made to a named
executive officer. No share purchase options were outstanding during the
financial year ended December 31, 1998. We do not have a defined benefit or
actuarial plan.
The following table contains information concerning options granted paid to
named executive officers during the financial year ended December 31, 1998.
<TABLE>
===================================================================================================================
OPTION/SAR GRANTS IN LAST FINANCIAL YEAR
===================================================================================================================
Individual Grants
Market Value of Common
Name Number of % of Total Shares Underlying Options
Securities Options/SARs Exercise or on the
Underlying Granted to Base Price Expiration Date of Grant
Options/SARs Employees in ($/Sh) Date ($/Common Share)
Granted Financial Year
======================== ============= ============== ================ =============== ============================
<S> <C> <C> <C> <C> <C> <C>
Joseph Ochoa nil nil nil nil nil
===================================================================================================================
</TABLE>
Note:(1) There were no options granted by us during the last financial year
ended December 31, 1999.
The following is a summary of the share purchase options exercised by our
officers, directors and employees during the financial year ended December 31,
1999:
<TABLE>
====================================================================================================================
AGGREGATED OPTION/SAR EXERCISES DURING THE LAST
FINANCIAL YEAR END AND FINANCIAL YEAR-END OPTION/SAR VALUES
====================================================================================================================
Value of Unexercised
Common Shares Unexercised Options in-the-Money
Acquired on Aggregate at Financial Options/SARs at
Exercise Value Realized Year-End Financial Year-End
Name (#) ($) (#) ($)
- --------------------------- -------------------- ------------------- --------------------- -------------------------
<S> <C> <C> <C> <C>
Joseph Ochoa (1) nil nil nil nil
- --------------------------- -------------------- ------------------- --------------------- -------------------------
</TABLE>
Note:(1) There were no options outstanding during the last financial year ended
December 31, 1999.
The following is a summary of long-term incentive plans granted to our officers,
directors and employees during the financial year ended December 31, 1999:
49
<PAGE>
<TABLE>
====================================================================================================================
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
====================================================================================================================
Number of Performance or Threshold Target Maximum
Shares, Units Other Period ($ or #) ($ or #) ($ or #)
or Other Rights Until
Name (#) Maturation or
Pay out
- --------------------------- ----------------- ---------------- ------------- ------------- -------------------------
<S> <C> <C> <C> <C> <C>
Joseph Ochoa (1) nil nil nil nil nil
- --------------------------- ----------------- ---------------- ------------- ------------- -------------------------
</TABLE>
Note:There were no options granted by us during the last financial year ended
December 31, 1999.
Description of 1999 Stock Option Plan
Pursuant to the Share Exchange, we agreed to adopt a stock option plan to issue
up to 3,000,000 shares of our common stock as incentive stock options to our
current and future key employees and consultants. Our 1999 Stock Option Plan
("1999 Plan") became effective on June 21, 1999. As at July 27, 1999, we granted
options to acquire 2,055,000 common shares. The following is a summary of the
principal features of the 1999 Plan.
Under the 1999 Plan, the total number of shares of common stock reserved for
issuance 3,000,000 shares of our common stock, which may be Incentive Stock
Options ("ISOs") within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended, or nonqualified stock options. If any outstanding option
expires or is terminated for any reason, the shares of common stock allocable to
the unexercised portion of that option may again be subject to an option to the
same optionee or to a different person eligible under the 1999 Plan.
The option grant program is administered by the Board of Directors or a
committee of two or more members of the Board. Plan administrators have sole
authority to prescribe the form, content and status of options to be granted,
select the eligible recipients, determine the timing of option grants, determine
the number of shares subject to each grant, the exercise price, vesting
schedule, and term for which any option will remain outstanding, provided,
however, that the exercise price for any option granted may not be less than the
fair market value per share of the common stock at the date of grant. The Board
of Directors has the authority to determine the terms and restrictions on all
restricted option awards granted under the 1999 Plan, and in general, to
construe and interpret any provision of the 1999 Plan.
The exercise price for outstanding option grants under the 1999 Plan may be paid
in cash or in shares of common stock valued at fair market value on the exercise
date, having shares withheld from the amount of shares of common stock to be
received by the optionee, by delivery of an irrevocable subscription agreement
obligating the optionee to take and pay for the shares of common stock to be
purchased within one year of the date of such exercise, through a same-day
cashless exercise program or a reduction in the amount of any liability on our
behalf to the optionee, or by such other consideration and method of payment for
the issuance of shares to the extent permitted by applicable laws.
50
<PAGE>
Under the 1999 Plan, no stock option can be granted for a period longer than ten
years or for a period longer than five years for ISOs granted to optionees
possessing more than 10% of the total combined voting power of all of our
classes of stock. Unless extended by the Plan administrators until a date not
later than the expiration date of the option, the right to exercise an option
terminates 90 days after the termination of an optionee's employment,
contractual or director relationship with the Company. If the optionee dies or
is disabled, the option will remain exercisable for a period of one year after
the termination of employment or relationship with us.
Subsequent to December 31, 1998, pursuant to the statutory share exchange, we
have agreed to issue options to acquire shares of our common stock to the option
holders of SportsPrize Inc. at the time of the share exchange. We reserved
805,000 shares of our common stock for issuance pursuant to such options, of
which 300,000 options were granted to Jeffrey Paquin, a named executive officer.
Compensation of Directors
Our Directors do not receive any stated salary for their services as directors
or members of committees of the Board of Directors, but by resolution of the
Board, a fixed fee and expenses of attendance may be allowed for attendance at
each meeting. Directors may also serve our company in other capacities as an
officer, agent or otherwise, and may receive compensation for their services in
such other capacity.
During our most recently completed financial year ended December 31, 1998, no
director of the registrant was compensated for any service as a director. There
is currently no arrangement or agreement to compensate any directors for their
service as a director.
Executive Officer Consulting Agreement
We entered into a Consulting Agreement dated March 1, 1999, with Jeffrey D.
Paquin, a named executive officer for a period of one year. Mr. Paquin will
provide corporate financing and business strategy consulting services in
consideration for $7,500 per month.
Item 7. Certain Relationships and Related Transactions.
Transactions with Management and Others
Except for (a) the ownership of our securities, (b) the compensation described
herein, and (c) advances to and by certain officers to cover expenses, all of
which were reimbursed or repaid without interest, none of our directors,
executive officers, holders of ten percent of our outstanding shares of common
stock, or any associate or affiliate of such person, have, to our knowledge, had
a material interest, direct or indirect, during the three fiscal years ended
December 31, 1996, 1997, 1998 and the fiscal six month period ended June 30,
1999, or in any proposed transaction which may materially affect us.
51
<PAGE>
David Bissett is our Secretary. Mr. Bissett is also a partner in a Canadian law
firm Scott, Bissett, which is our Canadian counsel.
Under the terms of the statutory share exchange, certain shareholders of
SportsPrize Inc., namely Jeffrey Paquin, Randy L. Daggitt, James Brown, Michael
Slater, Anthony Vecchio and Gang Consulting Inc. (the "Principal Vendors"),
entered into an escrow agreement dated for reference May 7, 1999, which
provides, among other things, that the Principal Vendors place 2,530,150 of
their shares into escrow for a period of up to one year (the "Escrowed Shares").
The Principal Vendors agreed to contribute the Escrowed Shares to us for
issuance as compensation and signing bonuses to hire and attract key management
personnel. If the Escrowed Shares are not granted as compensation and signing
bonuses by us, the Principal Vendors agreed that the Escrowed Shares would be
released pro rata: 50% to the Principal Vendors as a group and 50% to Sonora. We
have a consulting agreement with Mr. Paquin. See, "Executive Compensation --
Executive Officer Consulting Agreement."
Indebtedness of Management
Since the beginning of our last fiscal year, none of the following persons have
been indebted to us or our subsidiary in an amount in excess of $60,000: (i)
director or executive officer, (ii) nominee for election as a director, (iii)
member of the immediate family of a person specified in (i) or (ii), (iv)
corporation or organization (other than us or our majority owned subsidiary) of
which any of the persons specified in (i) or (ii) is an executive officer or
partner or is, directly or indirectly, the beneficial owner of ten percent or
more of any class of equity securities, (v) any trust or other estate in which
any of the persons specified in (i) or (ii) has a substantial beneficial
interest or as to which such person serves as a trustee or in a similar
capacity.
Item 8. Legal Proceedings.
To the best of our knowledge, we are not subject to any active or pending legal
proceedings or claims against us or any of our properties. However, from time to
time, we may become subject to claims and litigation generally associated with
any business venture.
Item 9. Market Price of and Dividends on Registrant's Common Equity and Related
Stockholder Matters.
Our common stock is approved for trading on the OTCBB under the symbol "JOCK".
The following table sets forth, for the periods indicated, the range of the high
and low bid quotations (as reported by NASD). There were no trades of our
securities on the OTCBB prior to the second quarter of 1999.
The bid quotations set forth below, reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not reflect actual transactions:
52
<PAGE>
OTCBB
-------------------- ------------------ ----------------- ------------------
1999 High Low Volume
-------------------- ------------------ ----------------- ------------------
2nd Quarter $9.00 $3.00 8,079,400
-------------------- ------------------ ----------------- ------------------
On July 27, 1999, the last reported sales price of our common stock, as reported
by the NASD was $3.25.
As of July 27, 1999, there were 90 holders of record of our common stock.
We have not declared or paid any cash dividends on our common stock since our
inception, and our Board of Directors currently intends to retain all earnings
for use in the business for the foreseeable future. Any future payment of
dividends will depend upon our results of operations, financial condition, cash
requirements and other factors deemed relevant by our Board of Directors.
Item 10. Recent Sales of Unregistered Securities.
In 1995, we initially issued 9,000,000 shares of common stock (the "Original
Shares") at $0.001 per share for legal services and services rendered to the
Registrant in connection with the forming, organizing and developing of the
business plan, valued at $9,000. The issuance of Original Shares was exempt from
registration under the provisions of Section 4(2) of the Securities Act, as
amended.
In 1997, we issued 2,564,000 shares of our common stock for $0.01 per share to
raise $26,640. This offering was made to 42 subscribers, 21 of which were
resident in Nevada and 21 were outside the United States. The offering was not
underwritten. This sale was exempt from registration in reliance upon Rule 504
under Regulation D promulgated under the Securities Act. The aggregate offering
price did not exceed $1,000,000, and the offering was otherwise in compliance
with Rules 501 and 502 promulgated under the Securities Act. No fees or
commissions were paid in connection with the transaction.
In April, 1999, as part of a capital reorganization, we issued 5,000,000 shares
of our common stock at a deemed value of $0.01 per share, and we redeemed
9,000,000 shares of our common stock held by two shareholders, at a deemed value
of $0.001 per share. The share issuance was made to 11 subscribers, all of which
were resident outside the United States. The offering was not underwritten. This
sale was exempt from registration in reliance upon Rule 504 under Regulation D
promulgated under the Securities Act. The aggregate offering price did not
exceed $1,000,000, and the offering was otherwise in compliance with Rules 501
and 502 promulgated under the Securities Act. No fees or commissions were paid
in connection with the transaction.
In May, 1999, we issued 1,666,665 shares of our common stock at $1.50 per share
to raise $2,499,997.50. This offering was made to three subscribers outside the
United States. The offering was not underwritten. The sale was exempt from
registration under Regulation S promulgated under the Securities Act. No
placement agent was retained in connection with the offering. A finder's fee was
paid in cash in the amount equal to 2.5% of the gross proceeds.
53
<PAGE>
In May, 1999, we issued 10,000,000 shares of our common stock at a deemed price
of $0.01 per share pursuant to a statutory share exchange whereby we acquired
all of the issued and outstanding shares of SportsPrize Inc., our wholly owned
subsidiary, by exchanging 1.7229 shares of our common stock for each share of
common stock of SportsPrize Inc. The share exchange was effected pursuant to a
statutory share exchange under the laws of Nevada. The sale was exempt from
registration in reliance upon Section 4(2), Rule 506 under Regulation D and/or
Regulation S promulgated under the Securities Act. No fees or commissions were
paid in connection with the transaction.
In July, 1999, we issued 250,000 shares of our common stock at $4.00 per share
to raise $1,000,000. This offering was made to three subscribers outside the
United States. The offering was not underwritten. This sale was exempt from
registration under Regulation S promulgated under the Securities Act. A finder's
fee was paid to Sonora in cash in the amount equal to 2.5% of the gross
proceeds. This offering was the first of three offerings to be completed as part
of our Share Exchange Agreement with SportsPrize Inc.
Item 11. Descriptions of Registrant's Securities to be Registered.
Our authorized share capital consists of 100,000,000 shares of common stock with
a par value of $0.001 per share and 5,000,000 shares of preferred stock with a
par value of $0.001 per share (collectively, the "Shares"). At July 27, 1999,
there were 19,480,665 shares of common stock issued and outstanding and no
shares of preferred stock issued and outstanding. An additional 2,055,000 shares
of common stock have been allotted and reserved for issuance pursuant to
outstanding options to purchase shares.
Holders of common stock are entitled (i) to receive ratable dividends from funds
legally available for distribution when and if declared by the Board of
Directors; (ii) to share ratably in all of our assets available for distribution
upon our liquidation or winding up; and (iii) to one vote for each share held of
record on each matter submitted to a vote of shareholders. The common stock does
not have cumulative voting, pre-emptive, purchase or conversion rights. There
are no sinking fund provisions in relation to the common stock and they are not
liable to further calls or to assessment by us.
There are no restrictions on the repurchase or redemption of common stock by us
provided that we are not insolvent at the time of such repurchase or redemption
nor would be made insolvent by such action.
We are limited in our ability to pay dividends on our common stock by
limitations under Nevada General Corporation Law if (i) we would be unable to
pay our debts as they become due in the ordinary course of business or (ii) we
would be insolvent (total liabilities plus the amount require to satisfy
preferential shareholder rights on liquidation exceed total assets) after making
such distribution. We currently have no intention of paying dividends on our
common stock.
The preferred stock may contain special preferences as determined by our Board
of Directors, including, but not limited to, the bearing of interest and
convertibility into shares of common stock.
54
<PAGE>
Item 12. Indemnification of Directors and Officers
Our Articles of Incorporation and Bylaws require us to indemnify to the fullest
extent permitted by Nevada law, each person that we have the power to indemnify.
Nevada law permits a corporation, under specified circumstances, to indemnify
its directors, officers, employees or agents against expenses (including
attorney's fees), judgments, fines and amounts paid in settlements actually and
reasonably incurred by them in connection with any action, suit or proceeding
brought by third parties by reason of the fact that they were or are directors,
officers, employees or agents of the corporation, if such directors, officers,
employees or agents acted in good faith and in a manner they reasonably believed
to be in or not opposed to the best interests of the corporation and, with
respect to any criminal action or proceeding, had no reason to believe their
conduct was unlawful. In a derivative action, that is, one by or in the right of
the corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent that
the court in which the action or suit was brought shall determine upon
application that the defendant directors, officers, employees or agents are
fairly and reasonably entitled to indemnity for such expenses despite such
adjudication of liability.
Our Articles of Incorporation and Bylaws also contain provisions stating that no
director shall be liable to us or any of our stockholders for monetary damages
for breach of fiduciary duty as a director, except with respect to (1) a breach
of the director's duty of loyalty to the corporation or its stockholders, (2)
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) liability under Nevada law (for unlawful payment
of dividends, or unlawful stock purchases or redemptions) or (4) a transaction
from which the director derived an improper personal benefit. The intention of
the foregoing provisions is to eliminate the liability of our directors or our
stockholders to the fullest extent permitted by Nevada law.
Item 13. Financial Statements and Supplementary Data.
Not Applicable.
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
55
<PAGE>
Item 15. Financial Statements and Exhibits.
The following financial statements and related schedules are included in this
Item:
(a) Financial Statements
Consolidated Financial Statements of SportsPrize Entertainment Inc.
(formerly Kodiak Graphics Company) as at June 30, 1999.
Audited Financial Statements of SportsPrize Entertainment Inc. (formerly
Kodiak Graphics Company) for the years ended December 31, 1996, 1997 and
1998.
Audited Financial Statements of SportsPrize Inc. (formerly Beagle Ventures
Resources Management Ltd.) for the year ended February 28, 1999.
(b) Exhibits
Exhibit Number Description
- -------------- ------------------------------------------------------------
2.1 Articles of Share Exchange
3.1 Articles of Incorporation of Par Golf, Inc. effective August
25, 1995
3.2 Articles of Amendment to Par Golf, Inc. effective August 21,
1997
3.3 Articles of Amendment to Kodiak Graphics Company effective
May 21, 1999
3.4 Articles of Amendment to SportsPrize Entertainment, Inc.
effective June, 1999
3.5 Bylaws of Par Golf Inc.
10.1 Form of Stock Option Agreement
10.2 Form of Stock Option Plan
10.3 Escrow Agreement by and between Kodiak Graphics Company of
the first part, Randy Daggitt, Jeff Paquin, James Brown,
Michael Slater, Anthony Vecchio and Gang Consulting Inc. of
the second part and Clark, Wilson of the third part, dated
May 7, 1999
10.4 Service Agreement by and between SportsPrize Inc. (formerly
SportsPrize Entertainment, Inc.) and Jeffrey D. Paquin,
dated March 1, 1999
10.5 Service Agreement by and between SportsPrize Inc. (formerly
SportsPrize Entertainment, Inc.) and John Thompson, dated
March 1, 1999
10.6 Service Agreement by and between SportsPrize Inc. (formerly
SportsPrize Entertainment, Inc.) and Donald Robert MacKay,
dated March 1, 1999
10.7 Service Agreement by and between SportsPrize Entertainment,
Inc. and Olson Cove Consulting, dated March 1, 1999
10.8 Agreement and Contract for Services by and between
SportsPrize Entertainment, Inc. and Michael Wiedder, dated
June 17, 1999
10.9 Agreement and Contract for Services by and between
SportsPrize Entertainment, Inc. and Ronald Sheridan, dated
July 1, 1999
10.10 Contract by and between SportsPrize Inc. and Quad-Linq
Software Inc., dated February 18, 1999 and Addendum thereto
dated May 12, 1999
10.11 Acquisition Agreement by and between SportsPrize Inc. and
Justin Tighm Innovative Games Inc., dated March 1, 1999 and
Addendum thereto dated May 21, 1999
10.12 Private Placement Subscription Agreement by and between
Kodiak Graphics Company and Lamplighter Investments Ltd.,
dated May 6, 1999
10.13 Private Placement Subscription Agreement by and between
Kodiak Graphics Company and Strathburn Investments Inc.,
dated May 6, 1999
10.14 Private Placement Subscription Agreement by and between
Kodiak Graphics Company and Lamplighter Investments Ltd.,
dated July 15, 1999
10.15 Private Placement Subscription Agreement by and between
Kodiak Graphics Company and Strathburn Investments Inc.,
dated July 15, 1999
10.16 Marketing Consulting Agreement by and between Interactive
Marketing Inc. and SportsPrize Entertainment, Inc., dated
May 6, 1999
10.17 Agreement by and between Kaleidoscope Sports &
Entertainment, LLC and SportsPrize Entertainment, Inc.,
dated May 1, 1999
10.18 Assignment and Assumption Agreement by and between
Kaleidoscope Sports & Entertainment, LLC and SportsPrize
Entertainment Inc. effective as of May 14, 1999
10.19 Data and Service Agreement by and between Las Vegas Sports
Consultants, Inc. (dba DBC Sports) and SportsPrize
Entertainment, Inc., dated May 26, 1999
10.20 Letter Agreement by and between Intershop Communications,
Inc. and SportsPrize Entertainment Inc., dated June 29, 1999
10.21 Master Service Agreement by and between Frontier Global
Center and SportsPrize Entertainment Inc., dated July 22,
1999
10.22 Agreement and Plan of Share Exchange by and between Kodiak
Graphics Company and Sportsprize Entertainment, Inc. dated
May 7, 1999
10.23 Letter Agreement by and between Kodiak Graphics Company and
Sonora Capital Corp., dated May 7, 1999
10.24 Investor Relations Agreement by and between SportsPrize
Entertainment Inc. and Sonora Capital Corp., dated May 21,
1999
10.25 Form of Confidentiality Agreement
21.1 List of Subsidiaries of the Registrant
27.1 Financial Data Schedule
56
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: August 10, 1999
SPORTSPRIZE ENTERTAINMENT, INC.
Per:
/s/ Jeffrey D. Paquin
- -----------------------------------
Jeffrey D. Paquin, President
/s/ Bob MacKay
- -----------------------------------
Bob MacKay, Chief Financial Officer
57
<PAGE>
Exhibit Number Description
- -------------- ------------------------------------------------------------
2.1 Articles of Share Exchange
3.1 Articles of Incorporation of Par Golf, Inc. effective August
25, 1995
3.2 Articles of Amendment to Par Golf, Inc. effective August 21,
1997
3.3 Articles of Amendment to Kodiak Graphics Company effective
May 21, 1999
3.4 Articles of Amendment to SportsPrize Entertainment, Inc.
effective June, 1999
3.5 Bylaws of Par Golf Inc.
10.1 Form of Stock Option Agreement
10.2 Form of Stock Option Plan
10.3 Escrow Agreement by and between Kodiak Graphics Company of
the first part, Randy Daggitt, Jeff Paquin, James Brown,
Michael Slater, Anthony Vecchio and Gang Consulting Inc. of
the second part and Clark, Wilson of the third part, dated
May 7, 1999
10.4 Service Agreement by and between SportsPrize Inc. (formerly
SportsPrize Entertainment, Inc.) and Jeffrey D. Paquin,
dated March 1, 1999
10.5 Service Agreement by and between SportsPrize Inc. (formerly
SportsPrize Entertainment, Inc.) and John Thompson, dated
March 1, 1999
10.6 Service Agreement by and between SportsPrize Inc. (formerly
SportsPrize Entertainment, Inc.) and Donald Robert MacKay,
dated March 1, 1999
10.7 Service Agreement by and between SportsPrize Entertainment,
Inc. and Olson Cove Consulting, dated March 1, 1999
10.8 Agreement and Contract for Services by and between
SportsPrize Entertainment, Inc. and Michael Wiedder, dated
June 17, 1999
10.9 Agreement and Contract for Services by and between
SportsPrize Entertainment, Inc. and Ronald Sheridan, dated
July 1, 1999
10.10 Contract by and between SportsPrize Inc. and Quad-Linq
Software Inc., dated February 18, 1999 and Addendum thereto
dated May 12, 1999
10.11 Acquisition Agreement by and between SportsPrize Inc. and
Justin Tighm Innovative Games Inc., dated March 1, 1999 and
Addendum thereto dated May 21, 1999
10.12 Private Placement Subscription Agreement by and between
Kodiak Graphics Company and Lamplighter Investments Ltd.,
dated May 6, 1999
10.13 Private Placement Subscription Agreement by and between
Kodiak Graphics Company and Strathburn Investments Inc.,
dated May 6, 1999
10.14 Private Placement Subscription Agreement by and between
Kodiak Graphics Company and Lamplighter Investments Ltd.,
dated July 15, 1999
10.15 Private Placement Subscription Agreement by and between
Kodiak Graphics Company and Strathburn Investments Inc.,
dated July 15, 1999
10.16 Marketing Consulting Agreement by and between Interactive
Marketing Inc. and SportsPrize Entertainment, Inc., dated
May 6, 1999
10.17 Agreement by and between Kaleidoscope Sports &
Entertainment, LLC and SportsPrize Entertainment, Inc.,
dated May 1, 1999
10.18 Assignment and Assumption Agreement by and between
Kaleidoscope Sports & Entertainment, LLC and SportsPrize
Entertainment Inc. effective as of May 14, 1999
10.19 Data and Service Agreement by and between Las Vegas Sports
Consultants, Inc. (dba DBC Sports) and SportsPrize
Entertainment, Inc., dated May 26, 1999
10.20 Letter Agreement by and between Intershop Communications,
Inc. and SportsPrize Entertainment Inc., dated June 29, 1999
10.21 Master Service Agreement by and between Frontier Global
Center and SportsPrize Entertainment Inc., dated July 22,
1999
10.22 Agreement and Plan of Share Exchange by and between Kodiak
Graphics Company and Sportsprize Entertainment, Inc. dated
May 7, 1999
10.23 Letter Agreement by and between Kodiak Graphics Company and
Sonora Capital Corp., dated May 7, 1999
10.24 Investor Relations Agreement by and between SportsPrize
Entertainment Inc. and Sonora Capital Corp., dated May 21,
1999
10.25 Form of Confidentiality Agreement
21.1 List of Subsidiaries of the Registrant
27.1 Financial Data Schedule
<PAGE>
Sportsprize Entertainment, Inc.
(formerly Kodiak Graphics Company)
CONSOLIDATED FINANCIAL STATEMENTS
as at June 30, 1999
(unaudited)
<PAGE>
<TABLE>
Sportsprize Entertainment, Inc
(formerly Kodiak Graphics Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
as at
June 30, February 28,
1999 1999
(unaudited ) (audited )
------------------- -------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (387,370) $ (144,125)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 2,269 3,430
(Gain) loss on sale of investments (6,300) 71,455
(Loss) gain on foreign exchange 2,487 (1,278)
Purchase of Goodwill (6,124)
Change in operating assets and liabilities:
Accounts receivable (18,256) --
Prepaid expenses (61,192) -9,113
Software development costs -- (17,000)
Accounts payable (1,220) 2,847
Accrued liabilities 14,111 484
----------------- -------------------
Net cash used in continuing operations (461,595) (93,300)
Net cash used by discontinued operations -- (6,819)
----------------- -------------------
Net cash used in operating activities (461,595) (100,119)
Cash flows from investing activities:
Proceeds from sale of investments 49,243 157,794
Purchases of marketable securities (47,129) (243,078)
Purchase equipment (5,229) (3,649)
Software development costs (35,949) --
Organization costs (3,000) (16,175)
----------------- -------------------
Net cash used in investing activities (42,064) (105,108)
----------------- -------------------
Cash flows from financing activities:
Proceeds from issuance of common stock 2,647,465 265,759
Share issuance costs (70,000) (26,187)
----------------- -------------------
Net cash provided by financing activities 2,577,465 239,572
----------------- -------------------
Net change in cash and cash equivalents 2,073,806 34,345
Cash and cash equivalents at beginning of period 34,345 34,345
------------------- -------------------
Cash and cash equivalents at end of period $ 2,108,151 $ 34,345
=================== ===================
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ -- $ --
Non cash investing and financing activities: $ -- $ --
</TABLE>
<PAGE>
<TABLE>
Sportsprize Entertainment, Inc.
(formerly Kodiak Graphics Corporation)
CONSOLIDATED BALANCE SHEETS
as at
June 30, February 28,
1999 1999
(unaudited) (audited)
------------------- -------------------
<S> <C> <C>
ASSETS
Current
Cash and cash equivalents $ 2,108,151 $ 34,345
Accounts receivable, net 18,256 --
Portfolio Investments (note 2) 24,236 26,350
Prepaid expenses 70,305 9,113
------------------- -------------------
2,220,948 69,808
------------------- -------------------
Equipment
Computers 8,878 3,649
Less: - accumulated depreciation (1,022) (730)
------------------- -------------------
7,856 2,919
------------------- -------------------
Other
Goodwill (note 4) 6,124 --
Software development (note 3) 52,949 17,000
Organization costs, net 14,498 13,475
------------------- -------------------
73,571 30,475
------------------- -------------------
Total assets $ 2,302,375 $ 103,202
=================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable $ 1,627 $ 2,847
Accrued liabilities
Salaries, and other compensation -- --
Other 14,595 484
------------------- -------------------
16,222 3,331
------------------- -------------------
Stockholders' Equity
Common stock - $0.001 par value
authorized 100,000,000 shares;
issued and outstanding 19,230,665 19,231 4,424
Preferred stock - $0.001 par value
authorized 5,000,000 shares;
issued and outstanding nil -- --
Additional paid - in capital 2,798,417 239,571
Accumulated deficit (531,495) (144,125)
------------------- -------------------
2,286,153 99,871
------------------- -------------------
$ 2,302,375 $ 103,202
=================== ===================
</TABLE>
<PAGE>
<TABLE>
Sportsprize Entertainment, Inc.
(formerly Kodiak Graphics Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS
for the periods ended
June 30, February 28,
1999 1999
(4 months) (12 months)
(unaudited) (audited)
------------------- -----------------
<S> <C> <C>
Revenues -- $ --
------------------- -----------------
Operating expenses
General and administration 218,933 39,370
Sales and marketing 175,075 23,966
Depreciation and amortization 2,269 3,430
------------------- -----------------
396,277 66,766
------------------- -----------------
Operating loss (396,277) (66,766)
Other expense
Foreign exchange (2,487) 1,278
Interest income 5,094 32
Interest expense (395)
Gain (loss) on sale of investments 6,300 (71,455)
------------------- -----------------
Loss before (387,370) (137,306)
Discontinued operations -- (6,819)
------------------- -----------------
Net loss for the period (387,370) $ (144,125)
=================== =================
Accumulated deficit
Beginning (144,125) $ --
Net loss (387,370) (144,125)
------------------- -----------------
Ending (531,495) $ (144,125)
=================== =================
</TABLE>
<PAGE>
Sportsprize Entertainment, Inc.
(formerly Kodiak Graphics Corporation)
Notes to the Financial Statements
as at June 30, 1999
1. Name change
Effective May 21, 1999 the Company changed it's name from Kodiak Graphics
Company to Sportsprize Entertainment, Inc. This was done to reflect the new
business direction of the Company, and was done simultaneously with the
share exchange consummated with Sportsprize, Inc. effective May 14, 1999 (
see note 4 )
2. Portfolio Investments
The Company carries these investments at cost.
3. Software Development
In accordance with Statement of Financial Accounting Standard 86, "
Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed, ' the Company capitalizes the direct costs associated
with the development of software products.
Capitalized costs will be amortized over the estimated product life on a
straight line basis, commencing with the completion of the software.
4. Reverse Merger - Sportsprize Entertainment Inc.
Effective May 14, 1999, Sportsprize Entertainment, Inc. ( formerly Kodiak
Graphics Corporation ) acquired all the issued and outstanding shares of
Sportsprize Inc. ( formerly Sportsprize Entertainment Inc., formerly Beagle
Ventures Resources Management, Inc.) , a private company. Each shareholder
of Sportsprize Inc. received 1.7229 shares of Sportsprize Entertainment
Inc., for a total of 10,000,000 shares. Sportsprize Inc. is developing an
interactive sports entertainment and marketing system designed to be
operated over the Internet.
This transaction is considered a reverse merger for accounting purposes,
and is being accounted for using the purchase method.
These consolidated financial statements include the accounts of Sportsprize
Entertainment, Inc. (formerly Kodiak Graphics Inc.) and Sportsprize Inc.
(formerly Sportsprize Entertainment, Inc. and Beagle Ventures Resources
Management Inc.)
The Goodwill generated from the acquisition will be amortized over the
current year.
<PAGE>
KODIAK GRAPHICS COMPANY
(Formerly Par Golf, Inc.)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page Number
-----------
<S> <C>
ACCOUNTANT'S REPORT........................................................................................1
FINANCIAL STATEMENT:
Balance Sheet.....................................................................................2
Statement of Operations and Deficit Accumulated During the Development Stage......................3
Statement of Changes in Stockholders'Equity.......................................................4
Statement of Cash Flows...........................................................................5
Notes to the Financial Statements.................................................................6
</TABLE>
<PAGE>
DAVID E. COFFEY 3651 Lindell Rd. - Suite H Las Vegas, NV 89103
- --------------------------------------------------------------------------------
Certified Public Accountant (702) 871-3979
To the Board of Directors and Stockholders
of Kodiak Graphics Company
(Formerly Par Golf, Inc.)
Las Vegas, Nevada
I have audited the accompanying balance sheet of Kodiak Graphics Company (a
development stage company) as of December 31, 1998 and the related statements of
operations, cash flows and changes in stockholders' equity for the period from
August 25, 1995 to December 31, 1998. These financial statements are the
responsibility of Kodiak Graphics Company's management. My responsibility is to
express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit of the financial statements provide a reasonable basis
for my opinion.
In my opinion, the accompanying financial statements present fairly, in all
material respects, the financial position of Kodiak Graphics Company as of
December 31, 1998 and the results of operations, cash flows and changes in
stockholders' equity for the year then ended in conformity with generally
accepted accounting principles.
/s/ David Coffey C.P.A.
David Coffey C.P.A.
March 30, 1999
<PAGE>
KODIAK GRAPHICS COMPANY
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1998
<TABLE>
ASSETS
<S> <C>
Cash $ 411
Organizational costs less accumulated amortization of $4,200 3,000
Deposits 315
Prepaid rents 834
----------
Total Assets $ 4,560
==========
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable:
Stockholders $ 3,000
Sales taxes 120
----------
Total Liabilities 3,120
Stockholders' Equity
Common stock, authorized 25,000,000 shares at $.001 par value, issued and
outstanding 11,564,000 shares 11,564
Additional paid-in capital 7,816
Deficit accumulated during the development stage (17,940)
----------
Total Stockholders' Equity 1,440
Total Liabilities and Stockholders' Equity $ 4,560
==========
</TABLE>
The accompanying notes are an integral
part of these financial statements
-2-
<PAGE>
KODIAK GRAPHICS COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
FOR THE YEAR ENDED DECEMBER 31, 1998
(With Cumulative Figures From Inception)
<TABLE>
Inception
Year ended Aug. 25, 1995
Dec. 31, 1998 To Date
--------------- ---------------
<S> <C> <C>
Sales $ 2,470 $ 6,378
Cost of sales (1,290) (3,938)
-------------- --------------
Gross margin 1,180 2,440
Expenses
Amortization 1,800 6,000
Bank charges 79 115
Bookkeeping 355 355
Consulting 300 5,685
Licenses and fees 238 501
Office expense 192 342
Rent 3,467 6,467
Telephone 417 779
Utilities 136 136
-------------- --------------
Total expenses 6,984 20,380
Net loss (5,804) $ (17,940)
==============
Deficit accumulated, beginning of year (12,136)
--------------
Deficit accumulated during the development stage
$ (17,940)
==============
</TABLE>
The accompanying notes are an integral
part of these financial statements
-3-
<PAGE>
KODIAK GRAPHICS COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM AUGUST 25, 1995 (DATE OF INCEPTION)
TO DECEMBER 31, 1998
<TABLE>
Common Stock
--------------------------------- Additional
Paid-in
Shares Amount Capital Total
--------------- ------------ --------------- -----------
<S> <C> <C> <C> <C>
Balance, August 25, 1995 -- $ -- $ -- $ --
Issuance of common stock for services 9,000,000 9,000 0 9,000
Less net loss 0 0 0 (600)
--------------- ------------ --------------- -----------
December 31, 1995 9,000,000 9,000 0 8,400
Less net loss 0 0 0 (1,800)
--------------- ------------ --------------- -----------
December 31, 1996 9,000,000 9,000 0 6,600
Issuance of common stock for cash 2,564,000 2,564 24,076 26,640
Less offering cost 0 0 (4,700) (4,700)
Net loss 0 0 0 (9,736)
--------------- ------------ --------------- -----------
Balance, December 31, 1997 11,564,000 11,564 19,376 18,804
Less offering cost 0 0 (11,560) (11,560)
Net loss 0 0 0 (5,804)
--------------- ------------ --------------- -----------
Balance, December 31, 1998 11,564,000 $ 11,564 $ 7,816 $ 1,440
=============== ============ =============== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements
-4-
<PAGE>
KODIAK GRAPHICS COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
(With Cumulative Figures From Inception)
<TABLE>
Inception
Year ended Aug. 25, 1995
Dec. 31, 1998 To Date
------------- ---------------
<S> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net loss $ (5,804) $ 17,940)
Noncash expenses included in net loss Amortization 1,800 6,000
Increase in accounts payable 908 3,120
Increase in deposits 200 (315)
Increase in prepaid rent (834) (834)
-------------- ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES (3,730) (9,969)
CASH FLOWS USED BY INVESTING ACTIVITIES
NET CASH USED BY
INVESTING ACTIVITIES 0 0
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 0 2,564
Additional paid-in capital 0 24,076
Less offering costs (11,560) 16,260)
-------------- ------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES (11,560 10,380
-------------- ------------
NET INCREASE IN CASH (15,290) $ 411
============
CASH AT BEGINNING OF PERIOD 15,701
--------------
CASH AT END OF PERIOD $ 411
==============
Supplemental disclosure of cash flow information:
Issuance of common stock in exchange for organizational costs $ 9,000 $ 9,000
============== ============
</TABLE>
The accompanying notes are an integral
part of these financial statements
-5-
<PAGE>
KODIAK GRAPHICS COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1998
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated on August 25, 1995 under the laws of the
state of Nevada. The business purpose of the Company is to engage in
providing advanced graphic technology with complete print and screen
services to the wholesale and retail sector of the screen, print and
publication industries.
The Company will adopt accounting policies and procedures based upon
the nature of future transactions.
The Company's financial statements are prepared using the accrual
method of accounting.
NOTE B ORGANIZATION COSTS
Organization costs are capitalized and amortized over 60 months.
NOTE C ACCOUNTS PAYABLE STOCKHOLDERS
One of the Company's officer and stockholder has advanced to the
Company $3,000 for working capital. This advance is evidenced by a
demand note, without interest and it is unsecured.
NOTE D RELATED PARTY TRANSACTIONS
The Company has paid two of its officers $1,000 each for serving in
these position during the initial development stage of the Company.
The sales of $2,324, which represent 86% of the sales of the Company,
were made to two customers.
NOTE E COMPANY NAME CHANGE
On July 17, 1997, the directors and shareholders approved amending the
Articles of Incorporation in order to change the name of the
Corporation from Par Golf, Inc. to "Kodiak Graphics Company".
The accompanying notes are an integral
part of these financial statements
-6-
<PAGE>
KODIAK GRAPHICS COMPANY
(Formerly Par Golf, Inc.)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page Number
-----------
<S> <C>
ACCOUNTANT'S REPORT........................................................................................1
FINANCIAL STATEMENT:
Balance Sheet.....................................................................................2
Statement of Operations and Deficit Accumulated During the Development Stage......................3
Statement of Changes in Stockholders'Equity.......................................................4
Statement of Cash Flows...........................................................................5
Notes to the Financial Statements.................................................................6
</TABLE>
<PAGE>
DAVID E. COFFEY 3651 Lindell Rd. o Suite H Las Vegas, NV 89103
- --------------------------------------------------------------------------------
Certified Public Accountant (702) 871-3979
To the Board of Directors and Stockholders
of Kodiak Graphics Company
(Formerly Par Golf, Inc.)
Las Vegas, Nevada
I have audited the accompanying balance sheet of Kodiak Graphics Company (a
development stage company) as of December 31, 1997 and the related statements of
operations, cash flows and changes in stockholders' equity for the period from
August 25, 1995 to December 31, 1997. These financial statements are the
responsibility of Kodiak Graphics Company's management. My responsibility is to
express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit of the financial statements provide a reasonable basis
for my opinion.
In my opinion, the accompanying financial statements present fairly, in all
material respects, the financial position of Kodiak Graphics Company as of
December 31, 1997 and the results of operations, cash flows and changes in
stockholders' equity for the year then ended in conformity with generally
accepted accounting principles.
/s/ David Coffey C.P.A.
David Coffey C.P.A.
January 18, 1998
<PAGE>
KODIAK GRAPHICS COMPANY
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
ASSETS
<S> <C>
Cash $ 15,701
Organizational costs less accumulated amortization of $4,200 4,800
Deposits 515
----------
Total Assets $ 21,016
==========
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable:
Stockholders $ 2,100
Sales taxes 112
----------
Total Liabilities 2,212
Stockholders' Equity
Common stock, authorized 25,000,000 shares at $.001 par value, issued and
outstanding 11,564,000 shares 11,564
Additional paid-in capital 19,376
Deficit accumulated during the development stage (12,136)
----------
Total Stockholders' Equity 18,804
Total Liabilities and Stockholders' Equity $ 21,016
==========
</TABLE>
The accompanying notes are an integral
part of these financial statements
-2-
<PAGE>
KODIAK GRAPHICS COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
FOR THE YEAR ENDED DECEMBER 31, 1997
(With Cumulative Figures From Inception)
<TABLE>
Inception
Year ended Aug. 25, 1995
Dec. 31, 1997 To Date
--------------- -----------------
<S> <C> <C>
Sales $ 3,908 $ 3,908
Cost of sales (2,648) (2,648)
--------------- ----------------
Gross margin 1,260 1,260
Expenses
Amortization 1,800 4,200
Bank charges 36 36
Consulting 5,385 5,385
Licenses and fees 263 263
Office expense 150 150
Rent 3,000 3,000
Telephone 362 362
--------------- ----------------
Total expenses 10,996 13,396
Net loss (9,736) $ (12,136)
================
Deficit accumulated, beginning of year (2,400)
---------------
Deficit accumulated during the development stage
$ (12,136)
===============
</TABLE>
The accompanying notes are an integral
part of these financial statements
-3-
<PAGE>
KODIAK GRAPHICS COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM AUGUST 25, 1995 (DATE OF INCEPTION)
TO DECEMBER 31, 1997
<TABLE>
Common Stock
--------------------------------- Additional
Paid-in
Shares Amount Capital Total
--------------- ------------ --------------- -----------
<S> <C> <C> <C> <C>
Balance, August 25, 1995 -- $ -- $ -- $ --
Issuance of common stock for services
9,000,000 9,000 0 9,000
Less net loss 0 0 0 (600)
--------------- ------------ --------------- -----------
December 31, 1995 9,000,000 9,000 0 8,400
Less net loss 0 0 0 (1,800)
--------------- ------------ --------------- -----------
December 31, 1996 9,000,000 9,000 0 6,600
Issuance of common stock for cash 2,564,000 2,564 24,076 26,640
Less offering cost 0 0 (4,700) (4,700)
Net loss 0 0 0 (9,736)
--------------- ------------ --------------- -----------
Balance, December 31, 1997 11,564,000 11,564 19,376 18,804
=============== ============ =============== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements
-4-
<PAGE>
KODIAK GRAPHICS COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
(WITH CUMULATIVE FIGURES FROM INCEPTION)
<TABLE>
Inception
Year ended Aug. 25, 1995
Dec. 31, 1997 To Date
---------------- ---------------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (9,736) $ (12,136)
Noncash expenses included in net loss Amortization 1,800 4,200
Increase in accounts payable 2,212 2,212
Increase in deposits (515) (515)
---------------- ---------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES (6,239) (6,239)
CASH FLOWS USED BY INVESTING ACTIVITIES
NET CASH USED BY
INVESTING ACTIVITIES 0 0
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 2,564 2,564
Additional paid-in capital 24,076 24,076
Less offering costs (4,700) (4,700)
---------------- ---------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 21,940 21,940
---------------- ---------------
NET INCREASE IN CASH 15,701 $ 15,701
===============
CASH AT BEGINNING OF PERIOD 0
----------------
CASH AT END OF PERIOD $ 15,701
================
Supplemental disclosure of cash flow information:
Issuance of common stock in exchange for organizational costs $ 9,000 $ 9,000
================ ===============
</TABLE>
The accompanying notes are an integral
part of these financial statements
-5-
<PAGE>
KODIAK GRAPHICS COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated on August 25, 1995 under the laws of the
state of Nevada. The business purpose of the Company is to engage in
providing advanced graphic technology with complete print and screen
services to the wholesale and retail sector of the screen, print and
publication industries.
The Company will adopt accounting policies and procedures based upon
the nature of future transactions.
NOTE B ORGANIZATION COSTS
Organization costs are capitalized and amortized over 60 months.
NOTE C PUBLIC STOCK OFFERING
The Company completed a public stock offering and sold 2,564,000
shares of its common stock for $25,640 at $.01 per share. The net
proceeds of the offering will be used to provide advanced graphic
technology with complete print and screen services to the wholesale
and retail sector of the screen, print and publication industries.
NOTE D RELATED PARTY TRANSACTIONS
The Company has agreed to pay two of its officers $1,000 each for
serving in these position during the initial development stage of the
Company.
NOTE E COMPANY NAME CHANGE
On July 17, 1997, the directors and shareholders approved amending the
Articles of Incorporation in order to change the name of the
Corporation from Par Golf, Inc. to "Kodiak Graphics Company".
<PAGE>
PAR GOLF, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page Number
-----------
<S> <C>
ACCOUNTANT'S REPORT........................................................................................1
FINANCIAL STATEMENT:
Balance Sheet.....................................................................................2
Statement of Operations and Deficit Accumulated During the Development Stage.....................3
Statement of Changes in Stockholders'Equity.......................................................4
Statement of Cash Flows...........................................................................5
Notes to the Financial Statements.................................................................6
</TABLE>
<PAGE>
DAVID E. COFFEY 3651 Lindell Rd. o Suite H Las Vegas, NV 89103
- --------------------------------------------------------------------------------
Certified Public Accountant (702) 871-3979
To the Board of Directors and Stockholders
of Par Golf, Inc.
Las Vegas, Nevada
I have audited the accompanying balance sheet of Par Golf, Inc. (a
development stage company) as of December 31, 1996 and the related statements of
operations, cash flows and changes in stockholders' equity for the period from
August 25, 1995 to December 31, 1996. These financial statements are the
responsibility of Par Golf, Inc.'s management. My responsibility is to express
an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit of the financial statements provide a reasonable basis
for my opinion.
In my opinion, the accompanying financial statements present fairly, in all
material respects, the financial position of Par Golf, Inc. as of December 31,
1996 and the results of operations, cash flows and changes in stockholders'
equity for the year then ended in conformity with generally accepted accounting
principles.
/s/ David Coffey C.P.A.
David Coffey C.P.A.
January 16, 1998
<PAGE>
PAR GOLF, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1996
<TABLE>
ASSETS
<S> <C>
Organizational costs less accumulated amortization of $2,400 $ 6,600
----------
Total Assets $ 6,600
==========
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable $ 0
----------
Total Liabilities 0
Stockholders' Equity
Common stock, authorized 25,000,000 shares at $.001 par value, issued and
outstanding 9,000,000 shares 9,000
Deficit accumulated during the development stage (2,400)
----------
Total Stockholders' Equity 6,600
Total Liabilities and Stockholders' Equity $ 6,600
==========
</TABLE>
The accompanying notes are an integral
part of these financial statements
-2-
<PAGE>
PAR GOLF, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
FOR THE YEAR ENDED DECEMBER 31, 1996
(WITH CUMULATIVE FIGURES FROM INCEPTION)
<TABLE>
Inception
Year ended Aug. 25, 1995
Dec. 31, 1996 To Date
--------------- --------------
<S> <C> <C>
Sales $ 0 $ 0
Expenses
Amortization 1,800 2,400
--------------- --------------
Total expenses 1,800 2,400
Net loss (1,800) $ (2,400)
==============
Deficit accumulated, beginning of year (600)
---------------
Deficit accumulated during the development stage
$ (2,400)
===============
</TABLE>
The accompanying notes are an integral
part of these financial statements
-3-
<PAGE>
PAR GOLF, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM AUGUST 25,
1995 (DATE OF INCEPTION) TO DECEMBER 31, 1996
<TABLE>
Common Stock
--------------------------------- Additional
Paid-in
Shares Amount Capital Total
--------------- ------------ --------------- -----------
<S> <C> <C> <C> <C>
Balance, August 25, 1995 -- $ -- $ -- $ --
Issuance of common stock for services
9,000,000 9,000 0 9,000
Less net loss 0 0 0 (600)
--------------- ------------ --------------- -----------
December 31, 1995 9,000,000 9,000 0 8,400
Less net loss 0 0 0 (1,800)
--------------- ------------ --------------- -----------
December 31, 1996 9,000,000 9,000 0 6,600
=============== ============ =============== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements
-4-
<PAGE>
PAR GOLF, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
(WITH CUMULATIVE FIGURES FROM INCEPTION)
<TABLE>
Inception
Year ended Aug. 25, 1995
Dec. 31, 1996 To Date
--------------- --------------
<S> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net loss $ (1,800) $ (2,400)
Noncash expenses included in net loss Amortization 1,800 2,400
--------------- --------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 0 0
CASH FLOWS USED BY INVESTING ACTIVITIES
NET CASH USED BY
INVESTING ACTIVITIES 0 0
CASH FLOWS FROM FINANCING ACTIVITIES
NET CASH PROVIDED BY
FINANCING ACTIVITIES 0 0
--------------- --------------
NET INCREASE IN CASH 0 $ 0
==============
CASH AT BEGINNING OF PERIOD 0
---------------
CASH AT END OF PERIOD $ 0
===============
Supplemental disclosure of cash flow information:
Issuance of common stock in exchange for organizational
costs $ 9,000 $ 9,000
=============== ==============
</TABLE>
The accompanying notes are an integral
part of these financial statements
-5-
<PAGE>
PAR GOLF, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated on August 25, 1995 under the laws of the
state of Nevada. The business purpose of the Company is to engage in
providing advanced golf concepts for the golfing professionals.
The Company will adopt accounting policies and procedures based upon
the nature of future transactions.
NOTE B ORGANIZATION COSTS
Organization costs are capitalized and amortized over 60 months.
NOTE C SUBSEQUENT EVENTS-- PUBLIC STOCK OFFERING IN 1997
The Company completed a public stock offering and sold 2,564,000
shares of its common stock for $25,640 at $.01 per share.
NOTE D SUBSEQUENT EVENTS-- COMPANY NAME CHANGE IN 1997
On July 17, 1997, the directors and shareholders approved amending the
Articles of Incorporation in order to change the name of the
Corporation from Par Golf, Inc. to "Kodiak Graphics Company".
The accompanying notes are an integral
part of these financial statements
-6-
<PAGE>
SPORTSPRIZE ENTERTAINMENT, INC. (FORMERLY
BEAGLE VENTURES RESOURCES MANAGEMENT, INC.)
(A DEVELOPMENT STAGE COMPANY)
TABLE OF CONTENTS
FEBRUARY 28, 1999
Page
Independent Auditor's Report 2
Financial Statements:
Balance Sheet 3
Statement of Income 4
Statement of Stockholders' Equity 5
Statement of Cash Flows 6
Notes to Financial Statements 7 - 11
<PAGE>
[Geneyne Hodges, CPA Letterhead]
1135 Terminal Way
Sutie 208B
Reno, NV 89502
Phone (775) 332-2985
Fax (775) 332-2986
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Stockholders
Sportsprize, Inc.
Reno, Nevada
I have audited the accompanying balance sheet of Sportsprize, Inc.,
formerly Sportsprize Entertainment, Inc., formerly Beagle Ventures Resources
Management, Inc., (a development stage company) as of February 28, 1999 and the
related statements of loss, stockholders' equity and cash flows for the period
March 6, 1999 (date of inception) to February 28, 1999. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Sportzprize, Inc., (a
development stage company) as of February 28, 1999, and the results of its
operations and its cash flows for the period March 6, 1999 (date of inception)
to February 28, 1999 in conforming with generally accepted accounting
principles.
/s/ Geneyne A. Hodges
May 25, 1999
2
<PAGE>
SPORTSPRIZE ENTERTAINMENT, INC. (FORMERLY
BEAGLE VENTURES RESOURCES MANAGEMENT, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
FEBRUARY 28, 1999
<TABLE>
ASSETS
------
<S> <C>
CURRENT ASSETS
Cash and cash equivalents - (Note 3) $ 34,345
Investments - (Note 1b) 26,350
Prepaid expenses 9,113
------------
69,808
------------
EQUIPMENT - (Notes 1d & 4) 2,919
OTHER ASSETS
Software development costs (Note 1e) 17,000
Organizational costs 13,475
------------
30,475
------------
$ 103,202
============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 2,847
Accrued liabilities 484
-----------
3,331
STOCKHOLDERS' EQUITY 99,871
------------
$ 103,202
============
</TABLE>
The accompanying notes are an integral part of this financial statement.
3
<PAGE>
SPORTSPRIZE ENTERTAINMENT, INC. (FORMERLY
BEAGLE VENTURES RESOURCES MANAGEMENT, INC.)
(A DEVELOPMENT COMPANY)
STATEMENT OF INCOME
PERIOD FROM MARCH 6, 1998 (DATE OF INCEPTION)TO FEBRUARY 28, 1999
REVENUES $ -0-
OPERATING EXPENSES
Consulting 31,164
Rent 6,628
Legal 5,887
Miscellaneous 5,615
Telephone 4,758
Office 3,215
Amortization 2,700
Travel 2,282
Entertainment 2,057
Accounting 1,730
Depreciation 730
----------------
66,766
Loss from operations (66,766)
OTHER INCOME (EXPENSE)
Gain on Exchange 1,278
Interest Income 32
Interest expense (395)
Loss on sale of Investments (71,455)
------------
(70,540)
Loss before provision for federal income taxes (137,306)
PROVISION FOR FEDERAL INCOME TAXES -0-
Loss from continuing operations (137,306)
LOSS FROM DISCONTINUED OPERATIONS (Note 8) (6,819)
-----------
Net loss $ (144,125)
The accompanying notes are an integral part of financial statement.
4
<PAGE>
SPORTSPRIZE ENTERTAINMENT, INC. (FORMERLY
BEAGLE VENTURES RESOURCES MANAGEMENT, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM MARCH 6, 1998 (DATE OF INCEPTION) TO FEBRUARY 28, 1999
COMMON STOCK
.001 PAR VALUE 25,000,000 SHARES AUTHORIZED
4,424,000 SHARES ISSUED AND OUTSTANDING
<TABLE>
ADDITIONAL
COMMON STOCK PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
-------------- ------------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, March 6, 1998 -- $ -- $ -- $ -- $ --
Net loss (144,125) (144,125)
Stock issued 4,424,000 4,424 239,572 -- 243,996
-------------- ------------- --------------- -------------- -------------
Balance, February 28, 1999 4,424,000 $ 4,424 $ 239,572 $ (144,125) $ 99,871
============== ============= =============== ============== =============
</TABLE>
The accompanying notes are an integral part of this financial statement.
5
<PAGE>
SPORTSPRIZE ENTERTAINMENT, INC. (FORMERLY
BEAGLE VENTURES RESOURCES MANAGEMENT, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
PERIOD FROM MARCH 6, 1998 (DATE OF INCEPTION) TO FEBRUARY 28, 1999
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (144,125)
Adjustments to reconcile net loss to net cash used
by operating activities:
Provision for depreciation and amortization 3,430
Loss on sale of marketable securities 71,455
Gain on exchange (1,278)
Changes in operating assets and liabilities:
Increase in prepaid expenses (9,113)
Increase in software development costs (17,000)
Increase in accounts payable 2,847
Increase in accrued liabilities 484
------------------
Net cash provided by continuing operations (93,300)
Net cash used by discontinued operations (6,819)
------------------
Net cash used by operating activities (100,119)
------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of marketable securities 157,794
Purchases of marketable securities (243,078)
Purchases of equipment (3,649)
Organization costs (16,175)
--------------------
Net cash used by investing activities (105,108)
------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock (net of financing costs
of $26,187) 239,572
------------------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 34,345
CASH AND CASH EQUIVALENTS AT
BEGINNING PERIOD -0-
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 34,345
====================
</TABLE>
The accompanying notes are an integral part of this financial statement.
6
<PAGE>
SPORTSPRIZE ENTERTAINMENT, INC. (FORMERLY
BEAGLE VENTURES RESOURCES MANAGEMENT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Sportsprize
Entertainment, Inc. (formerly Beagle Ventures Resources Management, Inc. (A
Development Stage Company), (the Company) is presented to assist in
understanding the Company's financial statements. These accounting procedures
conform to generally accepted accounting principles and have been consistently
applied in the preparation of the financial statements.
a) Business Activity
The Company, formerly known as Beagle Ventures Resources Management,
Inc., changed its name to Sportprize Entertainment, Inc. on February
25, 1999. The Company is currently engaged in the business of
marketing and promoting sports merchandise on the Internet.
Previously, the Company was engaged primarily in acquiring the rights
to explore and exploit the commercial mineral potential, specifically
diamonds, in property located in the Province of Alberta, Canada.
Management uses estimates and assumptions in preparing these financial
statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets
and liabilities, and the reported revenues and expenses. Actual
results could vary from the estimates that were used.
b) Marketable Securities
The Company accounts for marketable securities in accordance with
Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." This statement
requires securities which are available for sale to be carried at fair
value, with changes in fair value recognized as a separate component
of stockholders' equity.
As of February 28, 1999, the fair value of the securities did not
materially differ from the cost. Therefore, there were no changes in
fair market value to recognize in stockholders' equity for the period
then ended.
c) Accounting Basis for Recording Income
The books and records of the Company are kept on the accrual basis for
financial reporting and income tax purposes.
7
<PAGE>
SPORTSPRIZE ENTERTAINMENT, INC. (FORMERLY
BEAGLE VENTURES RESOURCES MANAGEMENT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
d) Equipment and Depreciation
Equipment is stated at cost. Expenditures for maintenance and repairs
are expensed as incurred while renewals and betterments are
capitalized.
Depreciation and amortization are provided for in amounts sufficient
to relate the cost of depreciable assets to operations over their
estimated service lives, principally on the straight-line and double
declining balance methods.
e) Software Development Costs
In accordance with Statement of Financial Accounting Standards 86,
"Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed," the Company capitalizes the direct costs
associated with the development of software products.
Capitalized costs are amortized over the estimated product life on the
straight line basis. Unamortized costs are carried at the lower of
book value or net realizable value.
f) Income Taxes
Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due.
8
<PAGE>
SPORTSPRIZE ENTERTAINMENT, INC. (FORMERLY
BEAGLE VENTURES RESOURCES MANAGEMENT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1999
NOTE 2 - DEVELOPMENT STAGE OPERATIONS
The Corporation was formed in Nevada March 6, 1998. Operations have been
devoted primarily to raising capital, acquiring property rights, marketing,
research and development, and administrative functions.
NOTE 3 - CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. As of February 28, 1999
cash and temporary investments consisted of the following:
Demand deposits $ 34,345
============
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment, stated at cost as of February 28, 1999 consisted of
the following:
Office Equipment $ 3,649
Less: Accumulated depreciation (730)
----------------
$ 2,919
================
NOTE 5 - MINERAL PROPERTY RIGHTS
The Company had entered into a one-year option agreement with Jody Dahrouge
and Halferdahl & Associates, Ltd. (collectively the "Optionor") to purchase
mineral property rights located in the Province of Alberta, Canada. The Company
terminated this option.
9
<PAGE>
SPORTSPRIZE ENTERTAINMENT, INC. (FORMERLY
BEAGLE VENTURES RESOURCES MANAGEMENT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1999
NOTE 6 - CONTINGENCIES
On February 18, 1999, the Company entered into a software development
contract with QUAD-LINQ Software, Inc., a British Columbia Company, consisting
of certain sports pool and lottery schemes that demonstrate significant online
betting applications within the Internet and lotto industry "The Product."
QUAD-LINQ Software, Inc. has agreed to provide their services, know-how and
ability and facilities to deliver the Company a tested working product that is
commercially viable and meets the Company's objectives. QUAD-LINQ has agreed to
insure as part of its service that the product is operational and functioning
over the Company's web site over the Internet. In consideration of QUAD-LINQ
performing these services for the Company, upon the execution of this agreement,
the Company has paid a retainer of approximately one-third ($17,000) of the
agreed upon price of $50,000. The remaining two installments of $16,500 each,
are due on March 30, 1999, and on the product delivery date, respectively.
Additionally, the Company will issue 200,000 Common Class A shares from its
treasury into an escrow account. These shares will be issued to QUAD-LINQ on a
performance basis. 100,000 shares will be released from escrow on the product
delivery date. The remaining 100,000 shares will be released when the systems
and products have been tested and are in operation on the Company's Web site.
The Company shall also pay to QUAD-LINQ Software, Inc a royalty of five
percent (5%) per annum on the first one million dollars ($1,000,000) in net
sales of the product manufactured, used, licensed, or sold by the Company, and
three percent (3%) on the net sales over one million dollars.
In March 1999, the Company entered into a one year service agreement with
five different parties. These agreements require the company to pay $11,000 -
$19,000 per month.
Additionally 225,000 shares of common stock are to be issued pursuant to an
exemption from registration available under Regulation S of the United States
Securities Act of 1933, as amended, as consideration for entering into the
service agreements. An additional 425,000 shares are to be delivered into escrow
until satisfaction of certain performance conditions are met.
10
<PAGE>
SPORTSPRIZE ENTERTAINMENT, INC. (FORMERLY
BEAGLE VENTURES RESOURCES MANAGEMENT, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1999
Note 6 - Contingencies (Continued)
The Company is also directed to issue incentive stock options exercisable
to acquire 675,000 common shares for no less than $.25 per share and 100,000
shares for no less than $.50 per share.
NOTE 7 - RELATED PARTY TRANSACTIONS
The Company has paid Jeffrey Paquin $3,000 for legal fees rendered for the
preparation of offering memorandum, $4,018 in consulting fees, and $15,416 for
loan repayment.
NOTE 8 - DISCONTINUED OPERATIONS
During 1999, the Company disposed of its mining and mineral exploration
operations and incurred a one-time loss of $6,819.
NOTE 9 - SUBSEQUENT EVENTS
On May 7, 1999, the Board of Directors approved an agreement and plan of
share exchange by and among Kodiak Graphics Company. Kodiak wishes to acquire
the entire issued and outstanding share capital of the company in exchange for
shares of Kodiak, making the Company the wholly owed subsidiary of Kodiak.
Sportsprize and Kodiak entered into a letter agreement on April 22, 1999
pursuant to which Kodiak has agreed to acquire all of the issued and outstanding
shares of common stock of Sportsprize, subject to the approval of the
Sportsprize shareholders, in exchange for 10,000,000 shares of common stock of
Kodiak. Each of the Constituent Corporations has, subject to the approval of
Sportsprize shareholders, adopted this statutory plan of share exchange.
This the Share Exchange is intended to qualify as a reorganization under
Section 368(a)(1)(B) of the Internal Revenue Code.
On May 13, 1999, the Company filed a Certificate of Amendment to Articles
of Incorporation with the Nevada Secretary of State to change the legal name of
the company to Sportsprize, Inc.
11
EXHIBIT 2.1
FILED
THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
MAY 14 1999
No. C4582-98
/s/ Dean Heller
DEAN HELLER, SECRETARY OF STATE
ARTICLES OF SHARE EXCHANGE
between
KODIAK GRAPHICS COMPANY
a Nevada corporation
and
the holders of the entire issued share capital of
SPORTSPRIZE ENTERTAINMENT, INC.
a Nevada corporation
In accordance with NRS 92A.200
The undersigned, William Turner, being the Secretary of Kodiak Graphics
Company, a Delaware corporation, ("Kodiak") and David Bissett, being the
Secretary of Sportsprize Entertainment, Inc., a Nevada corporation,
("Sportsprize")(collectively, the "Constituent Corporations"), DO HEREBY CERTIFY
as follows:
(1) The Constituent Corporations in the share exchange (the "Exchange")
are:
Kodiak Graphics Company, a Nevada corporation, whose principal business
office is located at 2034 Western Avenue, Las Vegas, Nevada, 89102; and
Sportsprize Entertainment, Inc, a Nevada corporation, whose principal
business office is located at 555 - 999 Canada Place, Vancouver, British
Columbia, V6C 3E1.
(2) An Agreement and Plan of Share Exchange dated as of May 7, 1999 (the
"Plan of Share Exchange") has been approved, adopted, and executed by each of
the Constituent Corporations in accordance with NRS 92A.200 et seq. of the
Nevada Corporations Act.
(3) Approval of the Exchange was not required by the owners of Kodiak.
(4) Approval of the Exchange was required by the owners of Sportsprize and
the Plan of Share Exchange was duly approved by unanimous written consent of the
owners of Sportsprize effective on May 12, 1999 in accordance with NRS 92A.120
of the Nevada Corporations Act.
(5) The Plan of Share Exchange is on file at the Registered Office of
Kodiak located at 2034 Western Avenue, Las Vegas, Nevada, 89102, and a copy of
the Plan will be furnished by Kodiak, on the request and without cost to any
owner of any entity which is a party to this Exchange.
(6) The Exchange shall become effective at 5:00 p.m. Nevada time on the
date on which these Articles of Share Exchanged are filed by the Secretary of
State of the state of Nevada.
<PAGE>
2
IN WITNESS WHEREOF, the parties hereto have caused these Articles of Share
Exchange to be duly executed as of this 13th day of May, 1999.
Kodiak Graphics Company,
a Nevada corporation
By: /s/ William Turner
--------------------------------------------
William Turner, Secretary/President
State/Province of British Columbia )
) ss.
County/City of Vancouver )
On May 13, 1999, personally appeared before me, a Notary Public, William
Turner, who acknowledged that he executed the above instrument.
/s/ [Illegible]
------------------------------------------------
Signature of Notary
Sportsprize Entertainment, Inc.,
a Nevada corporation
By: /s/ David Bissett
--------------------------------------------
David Bissett, Secretary
State/Province of British Columbia )
) ss.
County/City of Vancouver )
On May 13, 1999, personally appeared before me, a Notary Public, David
Bissett, who acknowledged that he executed the above instrument.
/s/ Graham H. Scott
------------------------------------------------
Signature of Notary
GRAHAM H. SCOTT
Barrister & Solicitor
1040 - 899 West Hastings Street
Vancouver, B.C. V6C 2W2
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
PAR GOLF, INC.
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, have this day voluntarily associated ourselves
together for the purpose of forming a Corporation under and pursuant to the laws
of the State of Nevada, and we do hereby certify that:
ARTICLE I
NAME OF THE CORPORATION
The exact name of the Corporation shall be and hereby is:
Par Golf, Inc.
ARTICLE II
RESIDENT AGENT OF THE CORPORATION
The resident Agent of the Corporation is Max C. Tanner, Esq., The Law
Office of Max C. Tanner, 2950 East Flamingo Road, Suite G, Las Vegas, Nevada
89121.
ARTICLE III
DURATION OF THE CORPORATION
The Corporation shall have perpetual existence.
<PAGE>
ARTICLE IV
PURPOSES OF THE CORPORATION
The purpose, object and nature of the business for which this Corporation
is organized are:
(a) To engage in any lawful activity;
(b) To carry on such business as may be necessary, convenient, or
desirable to accomplish the above purposes, and to do all other things
incidental thereto which are not forbidden by law or by these Articles
of Incorporation.
ARTICLE V
POWERS OF THE CORPORATION
The powers of the Corporation shall be those powers granted by 78.060 and
78.070 of the Nevada Revised Statutes under which this corporation is formed. In
addition, the Corporation shall have the following specific powers:
(a) To elect or appoint officers and agents of the Corporation and to fix
their compensation;
(b) To act as an agent for any individual, association, partnership,
corporation or other legal entity;
(c) To receive, acquire, hold, exercise rights arising out of the
ownership or possession thereof, sell, or otherwise dispose of, shares
or other interests in, or obligations of, individuals, associations,
partnerships, corporations, or governments;
(d) To receive, acquire, hold, pledge, transfer, or otherwise dispose of
shares of the corporation, but such shares may only be purchased,
directly or indirectly, out of earned surplus;
(e) To make gifts or contributions for the public welfare or for
charitable, scientific or educational purposes, and in time of war, to
make donations in aid of war activities.
2
<PAGE>
ARTICLE VI
CAPITAL STOCK
Section 1.
Authorized Shares. The total number of shares which this Corporation is
authorized to issue is 25,000,000 shares of Common Stock at $.001 par value per
share.
Section 2.
Voting Rights of Shareholders. Each holder of the Common Stock shall be
entitled to one vote for each share of stock standing in his name on the books
of the Corporation.
Section 3.
Consideration for Shares. The Common Stock shall be issued for such
consideration, as shall be fixed from time to time by the Board of Directors. In
the absence of fraud, the judgment of the Directors as to the value of any
property for shares shall be conclusive. When shares are issued upon payment of
the consideration fixed by the Board of Directors, such shares shall be taken to
be fully paid stock and shall be non-assessable. The Articles shall not be
amended in this particular.
Section 4.
Pre-emptive Rights. Except as may otherwise be provided by the Board of
Directors, no holder of any shares of the stock of the Corporation, shall have
any preemptive right to purchase, subscribe for, or otherwise acquire any shares
of stock of the Corporation of any class now or hereafter authorized, or any
securities exchangeable for or convertible into such shares, or any warrants or
other instruments evidencing rights or options to subscribe for, purchase, or
otherwise acquire such shares.
Section 5.
Stock Rights and Options. The Corporation shall have the power to create
and issue rights, warrants, or options entitling the holders thereof to purchase
from the corporation any shares of its capital stock of any class or classes,
upon such terms and conditions and at such times and prices as the Board of
Directors may provide, which terms and conditions shall be incorporated in an
instrument or instruments evidencing such rights. In the absence of fraud, the
judgment of the Directors as to the adequacy of consideration for the issuance
of such rights or options and the sufficiency thereof shall be conclusive.
3
<PAGE>
ARTICLE VII
ASSESSMENT OF STOCK
The capital stock of the Corporation after the amount of the subscription
price has been fully paid in, shall not be assessable for any purpose, and no
stock issued as fully paid up shall ever be assessable or assessed. The holders
of such stock shall not be individually responsible for the debts, contracts, or
liabilities of the Corporation and shall not be liable for assessments to
restore impairments in the capital of the Corporation.
ARTICLE VIII
DIRECTORS OF THE CORPORATION
For the management of the business, and for the conduct of the affairs of
the Corporation, and for the future definition, limitation, and regulation of
the powers of the Corporation and its directors and shareholders, it is further
provided:
Section 1.
Size of Board. The members of the governing board of the Corporation shall
be styled directors. The number of directors of the Corporation, their
qualifications, terms of office, manner of election, time and place of meeting,
and powers and duties shall be such as are prescribed by statute and in the
by-laws of the Corporation. The name and post office address of the directors
constituting the first board of directors, which shall be ONE (1) in number are:
NAME ADDRESS
---- -------
MAX C. TANNER 2950 E. Flamingo, Suite G
Las Vegas, Nevada 89121
Section 2.
Powers of Board. In furtherance and not in limitation of the powers
conferred by the laws of the State of Nevada, the Board of Directors is
expressly authorized an empowered:
(a) To make, alter, amend, and repeal the By-Laws subject to the power of
the shareholders to alter or repeal the By-Laws made by the Board of
Directors.
4
<PAGE>
(b) Subject to the applicable provisions of the ByLaws then in effect, to
determine, from time to time, whether and to what extent, and at what
times and places, and under what conditions and regulations, the
accounts and books of the Corporation, or any of them, shall be open
to shareholder inspection. No shareholder shall have any right to
inspect any of the accounts, books or documents of the Corporation,
except as permitted by law, unless and until authorized to do so by
resolution of the Board of Directors or of the Shareholders of the
Corporation;
(c) To issue stock of the Corporation for money, property, services
rendered, labor performed, cash advanced, acquisitions for other
corporations or for any other assets of value in accordance with the
action of the board of directors without vote or consent of the
shareholders and the judgment of the board of directors as to value
received and in return therefore shall be conclusive and said stock,
when issued, shall be fully-paid and non-assessable.
(d) To authorize and issue, without shareholder consent, obligations of
the Corporation, secured and unsecured, under such terms and
conditions as the Board, in its sole discretion, may determine, and to
pledge or mortgage, as security therefore, any real or personal
property of the Corporation, including after-acquired property;
(e) To determine whether any and, if so, what part, of the earned surplus
of the Corporation shall be paid in dividends to the shareholders, and
to direct and determine other use and disposition of any such earned
surplus;
(f) To fix, from time to time, the amount of the profits of the
Corporation to be reserved as working capital or for any other lawful
purpose;
(g) To establish bonus, profit-sharing, stock option, or other types of
incentive compensation plans for the employees, including officers and
directors, of the Corporation, and to fix the amount of profits to be
shared or distributed, and to determine the persons to participate in
any such plans and the amount of their respective participations.
(h) To designate, by resolution or resolution passed by a majority of the
whole Board, one or more committees, each consisting of two or more
directors, which, to the extent permitted by law and authorized by the
resolution or the By-laws, shall have and may exercise the powers of
the Board;
5
<PAGE>
(i) To provide for the reasonable compensation of its own members by
By-Law, and to fix the terms and conditions upon which such
compensation will be paid;
(j) In addition to the powers and authority herein before, or by statute,
expressly conferred upon it, the Board of Directors any exercise all
such powers and do all such acts and things as may be exercised or
done by the corporation, subject, nevertheless, to the provisions of
the laws of the State of Nevada, of these Articles of Incorporation,
and of the By-Laws of the Corporation.
Section 3.
Interested Directors. No contract or transaction between this Corporation
and any of its directors, or between this Corporation and any other corporation,
firm, association, or other legal entity shall be invalidated by reason of the
fact that the director of the Corporation has a direct or indirect interest,
pecuniary or otherwise, in such corporation, firm, association, or legal entity,
or because the interested director was present at the meeting of the Board of
Directors which acted upon or in reference to such contract or transaction, or
because he participated in such action, provided that: (1) the interest of each
such director shall have been disclosed to or known by the Board and a
disinterested majority of the Board shall have nonetheless ratified and approved
such contract or transaction (such interested director or directors may be
counted in determining whether a quorum is present for the meeting at which such
ratification or approval is given); or (2) the conditions of N.R.S. 78.140 are
met.
ARTICLE IX
LIMITATION OF LIABILITY OF OFFICERS OR DIRECTORS
The personal liability of a director or officer of the corporation to the
corporation or the Shareholders for damages for breach of fiduciary duty as a
director or officer shall be limited to acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law.
ARTICLE X
INDEMNIFICATION CLAUSE
Each director and each officer of the corporation may be indemnified by the
corporation as follows:
6
<PAGE>
(a) The corporation may indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative other than an action by or in the right of the
corporation), by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually and
reasonably incurred by him in connection with the action, suit or
proceeding, if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of
the corporation and with respect to any criminal action or proceeding,
had no reasonable cause to believe this conduct was unlawful. The
termination of any action, suite or proceeding, by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its
equivalent, does not of itself create a presumption that the person
did not act in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the corporation, and
that, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
(b) The corporation may indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed
action or suit by or in the right of the corporation, to procure a
judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him
in connection with the defense or settlement of the action or suit, if
he acted in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to
which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals there from, to be liable
to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the
action or suit was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances of
the case the person
7
<PAGE>
is fairly and reasonably entitled to indemnity for such expenses as
the court deems proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in subsections (a) and
(b) of this Article, or in defense of any claim, issue or matter
therein, he must be indemnified by the corporation against expenses,
including attorney's fees, actually and reasonably incurred by him in
connection with the defense.
(d) Any indemnification under subsections (a) and (b) unless ordered by a
court or advanced pursuant to subsection (e), must be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee
or agent is proper in the circumstances. The determination must be
made:
(i) By the stockholders;
(ii) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act,
suit or proceeding;
(iii) If a majority vote of a quorum consisting of directors who
were not parties to the act, suit or proceeding so orders,
by independent legal counsel in a written opinion; or
(iv) If a quorum consisting of directors who were not parties to
the act, suit or proceeding cannot be obtained, by
independent legal counsel in a written opinion.
(e) Expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding must be paid by the corporation as
they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on
behalf of the director or officer to repay the amount if it is
ultimately determined by a court of competent jurisdiction that he is
not entitled to be indemnified by the corporation. The provisions of
this subsection do not affect any rights to advancement of expenses to
which corporate personnel other than directors or officers may be
entitled under any contract or otherwise by law.
(f) The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
8
<PAGE>
(i) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under
the certificate or articles of incorporation or any bylaw,
agreement, vote of stockholders or disinterested directors or
otherwise, for either an action in his official capacity or an
action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to subsection
(b) or for the advancement of expenses made pursuant to
subsection (e) may not be made to or on behalf of any director or
officer if a final adjudication establishes that his acts or
omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action.
(ii) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
ARTICLE XI
PLACE OF MEETINGS AND CORPORATE RECORD BOOKS
Subject to the laws of the State of Nevada, the shareholders and the
Directors shall have power to hold their meetings, and the Directors shall have
power to have an office or offices and to maintain the books of the Corporation
outside the State of Nevada, at such place or places as may from time to time be
designated in the By-Laws or by appropriate resolution.
ARTICLE XII
AMENDMENT OF ARTICLES
The provisions of these Articles of Incorporation may be amended, altered
or repealed from time to time to the extent and in the manner prescribed by the
laws of the State of Nevada, and additional provisions authorized by such laws
as are then in force may be added. All rights herein conferred on the directors,
officers and shareholders are granted subject to this reservation.
9
<PAGE>
ARTICLE XIII
INCORPORATOR
The name and address of the sole incorporator signing these Articles of
Incorporation is as follows:
NAME POST OFFICE ADDRESS
---- -------------------
1. Max C. Tanner 2950 East Flamingo Road, Suite G
Las Vegas, Nevada 89121
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 25th day of August, 1995.
/s/ Max C. Tanner
------------------------------------------
MAX C. TANNER
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
On August 25, 1995 personally appeared before me, a Notary Public, Max C.
Tanner, who acknowledged to me that he executed the foregoing Articles of
Incorporation for Par Golf, Inc., a Nevada corporation.
/s/ Patricia Perkins
------------------------------------------
Notary Public
[NOTARY SEAL]
NOTARY PUBLIC
STATE OF NEVADA
County of Clark
PATRICIA PERKINS
My Appointment Expires May 22, 1999
[RECEIVED STAMP]
RECEIVED
AUG 25, 1999
Secretary of State
10
EXHIBIT 3.2
FILING STAMP
------------
[FILED
In the Office of the
Secretary of State of the
STATE OF NEVADA
C14398-95
August 21, 1995
/s/ Dean Heller
DEAN HELLER, SECRETARY OF STATE]
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
PAR GOLF, INC.
Pursuant to NRS 78.385 and 78.390, the undersigned President and Secretary
of Par Golf, Inc. do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened,
held on the 17th day of July, 1997, adopted resolutions to amend the original
articles as follows:
Article I is hereby amended to read as follows:
The exact name of the Corporation is: Kodiak Graphics Company
Article VI Section 1 is hereby amended to read as follows:
Section 1. Authorized Shares. The total number of shares which this
Corporation is authorized to issue is 25,000,000 Shares of Capital Stock at
$.001 par value per share.
(a) The total number of shares of Common Stock which this Corporation
is authorized to issue is 20,000,000 shares at $.001 par value
per share.
(b) The total number of shares of Preferred Stock which this
Corporation is authorized to issue is 5,000,000 shares at $.001
par value per share, which Preferred Stock may contain special
preferences as determined by the Board of Directors of the
Corporation, including, but not limited to, the bearing of
interest and convertibility into shares of Common Stock of the
Corporation.
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is 9,000,000; that the said change
and amendment have been consented to and approved by a unanimous vote of the
stockholders of each class of stock outstanding and entitled to vote thereon.
/s/ Joseph Ochoa
--------------------------------------
Joseph Ochoa, President
/s/ Tina Ochoa
--------------------------------------
Tina Ochoa, Secretary
State of Nevada )
) ss.
County of Clark )
On August 12, 1997, personally appeared before me, a Notary Public, Joseph
Ochoa, President of Par Golf, Inc. and Tina Ochoa, Secretary of Pro Golf, Inc.,
who acknowledged that they executed the above instrument.
/s/ Lise-Lotte Rizocka
NOTARY SEAL ----------------------------------------
LISE-LOTTE RIZOCKA Signature of Notary
Notary Public - State of Nevada
Appointment Recorded in Clark County
My Appointment Expires July 25, 2000
EXHIBIT 3.3
FILED
THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
MAY 21 1999
No. C14398-95
/s/ Dean Heller
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
FOR PROFIT NEVADA CORPORATION
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
- Remit in Duplicate -
1. Name of Incorporation: "Kodiak Graphics Company"
2. The articles have been amended as follows (provide article numbers, if
applicable):
Article I of the Articles of Incorporation of the Corporation be amended to
read in full as follows:
"Article I. NAME The name of this corporation is Sportsprize
Entertainment Inc."
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a
vote by classes or series, or as may be required by the provisions of the
articles of incorporation have voted in favour of the amendment is: 90%
4. Signatures:
/s/William Turner
-------------------------------------
President and Secretary
(acknowledgement required)
<PAGE>
-2-
City of: Vancouver )
Province of: British Columbia )
On April 30, 1999 before me, the undersigned a notary public personally appeared
William Turner, personally known to me (or provided to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized
capacity, and that by his signature on the instrument the person or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal
/s/Nestor Vlod Nestor
Nestor Vlod Nestor
Printed Name of Notary Public
My Commission expires: Unrestricted Commission, For Life [seal]
- --------------------------------------------------------------------------------
EXHIBIT 3.4
FILED
THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
------- 1998
No. C14398-95
/s/ Dean Heller
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
FOR PROFIT NEVADA CORPORATION
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
- Remit in Duplicate -
1. Name of Incorporation: "Sportsprize Entertainment Inc."
2. The articles have been amended as follows (provide article numbers, if
applicable):
Article VI Section 1 of the Corporation's Articles of Incorporation is
hereby amended to read as follows:
"Section 1. Authorized Shares. The total number of shares which this
Corporation is authorized to issue is 105,000,000 Shares of Capital Stock
at $.001 par value per share.
(a) The Total number of shares of Common stock which this Corporation is
authorized to issue is 100,000,000 shares at $.001 par value per
share.
(b) The total number of shares of Preferred Stock which this Corporation
is authorized to issue is 5,000,000 shares at $.001 par value per
share, which Preferred Stock may contain special preferences as
determined by the Board of Directors of the Corporation, including,
but not limited to, the bearing of interest and convertibility into
shares of Common Stock of the Corporation."
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a
vote by classes or series, or as may be required by the provisions of the
articles of incorporation have voted in favour of the amendment is: 100%
4. Signatures:
/s/ William Turner, President
---------------------------------
President and Secretary
(acknowledgement required)
<PAGE>
City of: Vancouver )
Province of: British Columbia )
On May 11, 1999 before me, the undersigned a notary public personally appeared
William Turner, personally known to me (or provided to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized
capacity, and that by his signature on the instrument the person or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal
/s/Asha Lohia
- --------------------------------
Asha Lohia
- --------------------------------
Printed Name of Notary Public
My Commission does not expire: [seal]
EXHIBIT 3.5
BY-LAWS OF
PAR GOLF, INC.
ARTICLE I
SHAREHOLDERS
Section 1.01 Annual Meeting. The annual meeting of the shareholders shall
be held at such date and time as shall be designated by the board of directors
and stated in the notice of the meeting or in a duly-executed waiver of notice
thereof. If the corporation shall fail to provide notice of the annual meeting
of the shareholders as set forth above, the annual meeting of the shareholders
of the corporation shall be held during the month of November or December of
each year as determined by the Board of Directors, for the purpose of electing
directors of the corporation to serve during the ensuing year and for the
transaction of such other business as may properly come before the meeting. If
the election of the directors is not held on the day designated herein for any
annual meeting of the shareholders, or at any adjournment thereof, the president
shall cause the election to be held at a special meeting of the shareholders as
soon thereafter as is convenient.
Section 1.02 Special Meetings. Special meetings of the shareholders may be
called by the president or the Board of Directors and shall be called by the
president at the written request of the holders of not less than 51% of the
issued and outstanding shares of capital stock of the corporation.
All business lawfully to be transacted by the shareholders may be
transacted at any special meeting at any adjournment thereof. However, no
business shall be acted upon at a special meeting, except that referred to in
the notice calling the meeting, unless all of the outstanding capital stock of
the corporation is represented either in person or by proxy. Where all of the
capital stock is represented, any lawful business may be transacted and the
meeting shall be valid for all purposes.
Section 1.03 Place of Meetings. Any meeting of the shareholders of the
corporation may be held at its principal office in the State of Nevada or such
other place in or out of the United States as the Board of Directors may
designate. A waiver of notice signed by the shareholders entitled to vote may
designate any place for the holding of such meeting.
Section 1.04 Notice of Meetings.
(a) The secretary shall sign and deliver to all shareholders of record
written or printed notice of any meeting at least ten (10) days, but not
more than sixty (60) days, before the date of such meeting; which notice
shall state the place, date and time of the meeting, the general nature of
the business to be transacted, and, in the case of any meeting at which
directors are to be elected, the names of nominees, if any, to be presented
for election.
PARGOLFMINUTES\BYLAWS Page 1
<PAGE>
(b) In the case of any meeting, any proper business may be
presented for action, except that the following items shall be valid
only if the general nature of the proposal is stated in the notice or
written waiver of notice:
(1) Action with respect to any contract or transaction
between the corporation and one or more of its directors or
another firm, association, or corporation in which one or more of
its directors has a material financial interest;
(2) Adoption of amendments to the Articles of Incorporation;
or
(3) Action with respect to the merger, consolidation,
reorganization, partial or complete liquidation, or dissolution
of the corporation.
(c) The notice shall be personally delivered or mailed by first
class mail to each shareholder of record at the last known address
thereof, as the same appears on the books of the corporation, and the
giving of such notice shall be deemed delivered the date the same is
deposited in the United States mail, postage prepaid. If the address
of any shareholder does not appear upon the books of the corporation,
it will be sufficient to address any notice to such shareholder at the
principal office of the corporation.
(d) The written certificate of the person calling any meeting,
duly sworn, setting forth the substance of the notice, the time and
place the notice was mailed or personally delivered to the several
shareholders, and the addresses to which the notice was mailed shall
be prima facie evidence of the manner and fact of giving such notice.
Section 1.05 Waiver of Notice. If all of the shareholders of the
corporation shall waive notice of a meeting, no notice shall be required, and,
whenever all of the shareholders shall meet in person or by proxy, such meeting
shall be valid for all purposes without call or notice, and at such meeting any
corporate action may be taken.
Section 1.06 Determination of Shareholders of Record.
(a) The Board of Directors may at any time fix a future date as a
record date for the determination of the shareholders entitled to notice of
any meeting or to vote or entitled to receive payment of any dividend or
other distribution or allotment of any rights or entitled to exercise any
rights in respect of any other lawful action. The record date so fixed
shall not be more than sixty (60) days prior to the date of such meeting
nor more than sixty (60) days prior to any other action. When a record date
is so fixed, only shareholders of record on that date are entitled to
notice of and to vote at the meeting or to receive the dividend,
distribution or allotment of rights, or to exercise their rights, as the
case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date.
PARGOLFMINUTES\BYLAWS Page 2
<PAGE>
(b) If no record date is fixed by the Board of Directors, then (1) the
record date for determining shareholders entitled to notice of or to vote
at a meeting of shareholders shall be at the close of business on the
business day next preceding the day on which notice is given or, if notice
is waived, at the close of business on the day next preceding the day on
which the meeting is held; (2) the record date for determining shareholders
entitled to give consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is necessary, shall be the
day on which written consent is given; and (3) the record date for
determining shareholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto, or the sixtieth (60th) day prior to the date of such
other action, whichever is later.
Section 1.07 Quorum: Adjourned Meetings.
(a) At any meeting of the shareholders, a majority of the issued and
outstanding shares of the corporation represented in person or by proxy
shall constitute a quorum.
(b) If less than a majority of the issued and outstanding shares are
represented, a majority of shares so represented may adjourn from time to
time at the meeting, until holders of the amount of stock required to
constitute a quorum shall be in attendance. At any such adjourned meeting
at which a quorum shall be present, any business may be transacted which
might have been transacted as originally called. When a shareholders'
meeting is adjourned to another time or place, notice need not be given of
the adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken, unless the adjournment is for
more than ten (10) days in which event notice thereof shall be given.
Section 1.08 Voting.
(a) Each shareholder of record, such shareholder's duly authorized
proxy or attorney-in-fact shall be entitled to one (1) vote for each share
of stock standing registered in such shareholder's name on the books of the
corporation on the record date.
(b) Except as otherwise provided herein, all votes with respect to
shares standing in the name of an individual on the record date (included
pledged shares) shall be cast only by that individual or such individual's
duly authorized proxy or attorney-in-fact. With respect to shares held by a
representative of the estate of a deceased shareholder, guardian,
conservator, custodian or trustee, votes may be cast by such holder upon
proof of capacity, even though the shares do not stand in the name of such
holder. In the case of shares under the control of a receiver, the receiver
may cast votes carried by such shares even though the shares do not stand
in the name of the receiver provided that the order of the court of
competent jurisdiction which appoints the receiver contains the authority
to cast votes carried by such shares. If shares stand in the name of a
minor, votes may be cast only by the duly-appointed guardian of the estate
of such minor if such guardian has provided the
PARGOLFMINUTES\BYLAWS Page 3
<PAGE>
corporation with written notice and proof of such appointment.
(c) With respect to shares standing in the name of a corporation on
the record date, votes may be case by such officer or agents as the by-laws
of such corporation prescribe or, in the absence of an applicable by-law
provision, by such person as may be appointed by resolution of the Board of
Directors of such corporation. In the event no person is so appointed, such
votes of the corporation may be cast by any person (including the officer
making the authorization) authorized to do so by the Chairman of the Board
of Directors, President or any Vice President of such corporation.
(d) Notwithstanding anything to the contrary herein contained, no
votes may be cast by shares owned by this corporation or its subsidiaries,
if any. If shares are held by this corporation or its subsidiaries, if any,
in a fiduciary capacity, no votes shall be cast with respect thereto on any
matter except to the extent that the beneficial owner thereof possesses and
exercises either a right to vote or to give the corporation holding the
same binding instructions on how to vote.
(e) With respect to shares standing in the name of two or more
persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, husband and wife as community property, tenants by the
entirety, voting trustees, persons entitled to vote under a shareholder
voting agreement or otherwise and shares held by two or more persons
(including proxy holders) having the same fiduciary relationship respect in
the same shares, votes may be cast in the following manner:
(1) If only one such person votes, the votes of such person binds
all.
(2) If more than one person casts votes, the act of the majority
so voting binds all.
(3) If more than one person casts votes, but the vote is evenly
split on a particular matter, the votes shall be deemed cast
proportionately as split.
(f) Any holder of shares entitled to vote on any matter may cast a
portion of the votes in favor of such matter and refrain from casting the
remaining votes or cast the same against the proposal, except in the case
of elections of directors. If such holder entitled to vote fails to specify
the number of affirmative votes, it will be conclusively presumed that the
holder is casting affirmative votes with respect to all shares held.
(g) If a quorum is present, the affirmative vote of holders of a
majority of the shares represented at the meeting and entitled to vote on
any matter shall be the act of the shareholders, unless a vote of greater
number or voting by classes is required by the laws of the State of Nevada,
the Articles of Incorporation and these By-Laws.
PARGOLFMINUTES\BYLAWS Page 4
<PAGE>
Section 1.09 Proxies. At any meeting of shareholders, any holder of shares
entitled to vote may authorize another person or persons to vote by proxy with
respect to the shares held by an instrument in writing and subscribed to by the
holder of such shares entitled to vote. No proxy shall be valid after the
expiration of six (6) months from the date of execution thereof, unless coupled
with an interest or unless otherwise specified in the proxy. In no event shall
the term of a proxy exceed seven (7) years from the date of its execution. Every
proxy shall continue in full force and effect until its expiration or
revocation. Revocation may be effected by filing an instrument revoking the same
or duly-executed proxy bearing a later date with the secretary of the
corporation.
Section 1.10 Order of Business. At the annual shareholders meeting, the
regular order of business shall be as follows:
(1) Determination of shareholders present and existence of
quorum;
(2) Reading and approval of the minutes of the previous meeting
or meetings;
(3) Reports of the Board of Directors, the president, treasurer
and secretary of the corporation, In the order named;
(4) Reports of committee;
(5) Election of directors;
(6) Unfinished business;
(7) New business;
(8) Adjournment.
Section 1.11 Absentees Consent to Meetings. Transactions of any meeting of
the shareholders are as valid as though had at a meeting duly-held after regular
call and notice if a quorum is present, either in person or by proxy, and if,
either before or after the meeting, each of the persons entitled to vote, not
present in person or by proxy (and those who, although present, either object at
the beginning of the meeting to the transaction of any business because the
meeting has not been lawfully called or convened or expressly object at the
meeting to the consideration of matters not included in the notice which are
legally required to be included therein), signs a written waiver of notice
and/or consent to the holding of the meeting or an approval of the minutes
thereof. All such waivers, consents, and approvals shall be filed with the
corporate records and made a part of the minutes of the meeting. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person objects at the beginning of the meeting to the transaction of
any business because the meeting is not lawfully called or convened and except
that attendance at a meeting is not a waiver of any right to object to the
consideration of matters not included in the
PARGOLFMINUTES\BYLAWS Page 5
<PAGE>
notice of such objection is expressly made at the beginning. Neither the
business to be transacted at nor the purpose of any regular or special meeting
of shareholders need be specified in any written waiver of notice, except as
otherwise provided in Section 1.04(b) of these By-Laws.
Section 1.12 Action Without Meeting. Any action which may be taken by the
vote of the shareholders at a meeting may be taken without a meeting if
consented to by the holders of a majority of the shares entitled to vote or such
greater proportion as may be required by the laws of the State of Nevada, the
Articles of Incorporation, or these By-Laws. Whenever action is taken by written
consent, a meeting of shareholders needs not be called or noticed.
ARTICLE II
DIRECTORS
Section 2.01 Number, Tenure and Qualification. Except as otherwise provided
herein, the Board of Directors of the corporation shall consist of at least one
(1) but no more than nine (9) persons, who shall be elected at the annual
meeting of the shareholders of the corporation and who shall hold office for one
(1) year or until their successors are elected and qualify.
Section 2.02 Resignation. Any director may resign effective upon giving
written notice to the chairman of Board of Directors, the president, or the
secretary of the corporation, unless the notice specifies a later time for
effectiveness of such resignation. If the Board of Directors accepts the
resignation of a director tendered to take effect at a future date, the Board or
the shareholders may elect a successor to take office when the resignation
becomes effective.
Section 2.03 Reduction in Number. No reduction of the number of directors
shall have the effect of removing any director prior to the expiration of his
term of office.
Section 2.04 Removal.
(a) The Board of Directors or the shareholders of the corporation, by
majority vote, may declare vacant the office of a director who has been
declared incompetent by an order of a court of competent jurisdiction or
convicted of a felony.
Section 2.05 Vacancies.
(a) A vacancy in the Board of Directors because of death, resignation,
removal, change in number of directors or otherwise may be filled by the
shareholders at any regular or special meeting or any adjourned meeting
thereof or the remaining director(s) by the affirmative vote of a majority
thereof. A Board of Directors consisting of less than the maximum number
authorized in Section 2.01 of ARTICLE II constitutes vacancies on the Board
of Directors for purposes of this paragraph and may be filled as set forth
above
PARGOLFMINUTES\BYLAWS Page 6
<PAGE>
including by the election of a majority of the remaining directors. Each
successor so elected shall hold office until the next annual meeting of
shareholders or until a successor shall have been duly-elected and
qualified.
(b) If, after the filling of any vacancy by the directors, the
directors then in office who have been elected by the shareholders shall
constitute less than a majority of the directors then in office, any holder
or holders of an aggregate of five percent (5%) or more of the total number
of shares entitled to vote may call a special meeting of shareholders to be
held to elect the entire Board of Directors. The term of office of a
director shall terminate upon such election of a successor.
Section 2.06 Regular Meetings. Immediately following the adjournment of,
and at the same place as, the annual meeting of the shareholders, the Board of
Directors, including directors newly elected, shall hold its annual meeting
without notice, other than this provision, to elect officers of the corporation
and to transact such further business as may be necessary or appropriate. The
Board of Directors may provide by resolution the place, date and hour for
holding additional regular meetings.
Section 2.07 Special Meetings. Special meetings of three Board of Directors
may be called by the chairman and shall be called by the chairman upon the
request of any two (2) directors or the president of the corporation.
Section 2.08 Place of Meetings. Any meeting of the directors of the
corporation may be held at its principal office in the State of Nevada, or at
such other place in or out of the United States as the Board of Directors may
designate. A waiver or notice signed by the directors may designate any place
for holding of such meeting.
Section 2.09 Notice of Meetings. Except as otherwise provided in Section
2.06, the chairman shall deliver to all directors written or printed notice of
any special meeting, at least three (3) days before the date of such meeting, by
delivery of such notice personally or mailing such notice first class mail, or
by telegram. If mailed, the notice shall be deemed delivered two (2) business
days following the date the same is deposited in the United States mail, postage
prepaid. Any director may waive notice of any meeting, and the attendance of a
director at a meeting shall constitute a waiver of notice of such meeting,
unless such attendance is for the express purpose of objecting to the
transaction of business threat because the meeting is not properly called or
convened.
Section 2.10 Quorum: Adjourned Meetings.
(a) A majority of the Board of Directors in office shall constitute a
quorum.
(b) At any meeting of the Board of Directors where a quorum is not
present, a majority of those present may adjourn, from time to time, until
a quorum is
PARGOLFMINUTES\BYLAWS Page 7
<PAGE>
present, and no notice of such adjournment shall be required. At any
adjourned meeting where a quorum is present, any business may be transacted
which could have been transacted at the meeting originally called.
Section 2.11 Action Without Meeting. Any action required or permitted to be
taken at any meeting of the Board of Directors or any committee thereof may be
taken without a meeting if a written consent thereto is signed by all of the
members of the Board of Directors or of such committee. Such written consent or
consents shall be filed with the minutes of the proceedings of the Board of
Directors or committee. Such action by written consent shall have the same force
and effect as the unanimous vote of the Board of Directors or committee.
Section 2.12 Telephonic Meetings. Meetings of the Board of Directors may be
held through the use of a conference telephone or similar communications
equipment so long as all members participating in such meeting can hear one
another at the time of such meeting. Participation in such a meeting constitutes
presence in person at such meeting.
Section 2.13 Board Decisions. The affirmative vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
Section 2.14 Powers and Duties.
(a) Except as otherwise provided in the Articles of Incorporation or
the laws of the State of Nevada, the Board of Directors is invested with
the complete and unrestrained authority to manage the affairs of the
corporation, and is authorized to exercise for such purpose as the general
agent of the corporation, its entire corporate authority in such manner as
it sees fit. The Board of Directors may delegate any of its authority to
manage, control or conduct the current business of the corporation to any
standing or special committee or to any officer or agent and to appoint any
persons to be agents of the corporation with such powers, including the
power to sub-delegate, and upon such terms as may be deemed fit.
(b) The Board of Directors shall present to the shareholders at annual
meetings of the shareholders, and when called for by a majority vote of the
shareholders at a special meeting of the shareholders, a full and clear
statement of the condition of the corporation, and shall, at request,
furnish each of the shareholders with a true copy thereof.
(c) The Board of Directors, in its discretion, may submit any contract
or act for approval or ratification at any annual meeting of the
shareholders or any special meeting properly called for the purpose of
considering any such contract or act, provided a quorum is present. The
contract or act shall be valid and binding upon the corporation and upon
all the shareholders thereof, if approved and ratified by the affirmative
vote of a majority of the shareholders at such meeting.
(d) In furtherance and not in limitation of the powers conferred by
the laws of the State of Nevada, the Board of Directors is expressly
authorized and empowered to issue
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stock of the Corporation for money, property, services rendered, labor
performed, cash advanced, acquisitions for other corporations or for any
other assets of value in accordance with the action of the Board of
Directors without vote or consent of the shareholders and the judgment of
the Board of Directors as to the value received and in return therefore
shall be conclusive and said stock, when issued, shall be fully-paid and
non-assessable.
Section 2.15 Compensation. The directors shall be allowed and paid all
necessary expenses incurred in attending any meetings of the Board.
Section 2.16 Board Officers.
(a) At its annual meeting, the Board of Directors shall elect, from
among its members, a chairman to preside at the meetings of the Board of
Directors. The Board of Directors may also elect such other board officers
and for such term as it may, from time to time, determine advisable.
(b) Any vacancy in any board office because of death, resignation,
removal or otherwise may be filled by the Board of Directors for the
unexpired portion of the term of such office.
Section 2.17 Order of Business. The order of business at any meeting of the
Board of Directors shall be as follows:
(1) Determination of members present and existence of quorum;
(2) Reading and approval of the minutes of any previous meeting
or meetings;
(3) Reports of officers and committeemen;
(4) Election of officers;
(5) Unfinished business;
(6) New business;
(7) Adjournment.
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ARTICLE III
OFFICERS
Section 3.01 Election. The Board of Directors, at its first meeting
following the annual meeting of shareholders, shall elect a president, a
secretary and a treasurer to hold office for one (1) year next coming and until
their successors are elected and qualify. Any person may hold two or more
offices. The Board of Directors may, from time to time, by resolution, appoint
one or more vice presidents, assistant secretaries, assistant treasurers and
transfer agents of the corporation as it may deem advisable; prescribe their
duties; and fix their compensation.
Section 3.02 Removal; Resignation. Any officer or agent elected or
appointed by the Board of Directors may be removed by it whenever, in its
judgment, the best interest of the corporation would be served thereby. Any
office may resign at any time upon written notice to the corporation without
prejudice to the rights, if any, of the corporation under any contract to which
the resigning officer is a party.
Section 3.03 Vacancies. Any vacancy in any office because of death,
resignation, removal, or otherwise may be filled by the Board of Directors for
the unexpired portion of the term of such office.
Section 3.04 President. The president shall be the general manager and
executive officer of the corporation, subject to the supervision and control of
the Board of Directors, and shall direct the corporate affairs, with full power
to execute all resolutions and orders of the Board of Directors not especially
entrusted to some other officer of the corporation. The president shall preside
at all meetings of the shareholders and shall sign the certificates of stock
issued by the corporation, and shall perform such other duties as shall be
prescribed by the Board of Directors.
Unless otherwise ordered by the Board of Directors, the president shall
have full power and authority on behalf of the corporation to attend and to act
and to vote at any meetings of the shareholders of any corporation in which the
corporation may hold stock and, at any such meetings, shall possess and may
exercise any and all rights and powers incident to the ownership of such stock.
The Board of Directors, by resolution from time to time, may confer like powers
on any person or persons in place of the president to represent the corporation
for these purposes.
Section 3.05 Vice President. The Board of Directors may elect one or more
vice presidents who shall be vested with all the powers and perform all the
duties of the president whenever the president is absent or unable to act,
including the signing of the certificates of stock issued by the corporation,
and the vice president shall perform such other duties as shall be prescribed by
the Board of Directors.
Section 3.06 Secretary. The secretary shall keep the minutes of all
meetings of the shareholders and the Board of Directors in books provided for
that purpose. The secretary shall
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attend to the giving and service of all notices of the corporation, may sign
with the president in the name of the corporation all contracts authorized by
the Board of Directors or appropriate committee, shall have the custody of the
corporate seal, shall affix the corporate seal to all certificates of stock duly
issued by the corporation, shall have charge of stock certificate books,
transfer books and stock ledgers, and such other books and papers as the Board
of Directors or appropriate committee may direct, and shall, in general perform
all duties incident to the office of the secretary. All corporate books kept by
the secretary shall be open for examination by any director at any reasonable
time.
Section 3.07 Assistant Secretary. The Board of Directors may appoint an
assistant secretary who shall have such powers and perform such duties as may be
prescribed for him by the secretary of the corporation or by the Board of
Directors.
Section 3.08 Treasurer. The treasurer shall be the chief financial officer
of the corporation, subject to the supervision and control of the Board of
Directors, and shall have custody of all the funds and securities of the
corporation. When necessary or proper, the treasurer shall endorse on behalf of
the corporation for collection checks, notes and other obligations, and shall
deposit all monies to the credit of the corporation in such bank or banks or
other depository as the Board of Directors may designate, and shall sign all
receipts and vouchers for payments made by the corporation. Unless otherwise
specified by the Board of Directors, the treasurer shall sign with the president
all bills of exchange and promissory notes of the corporation, shall also have
the care and custody of the stocks, bonds, certificates, vouchers, evidence of
debts, securities and such other property belonging to the corporation as the
Board of Directors shall designate, and shall sign all papers required by law,
by these By-laws or by the Board of Directors to be signed by the treasurer. The
treasurer shall enter regularly in the books of the corporation, to be kept for
that purpose, full and accurate accounts of all monies received and paid on
account of the corporation and whenever required by the Board of Directors, the
treasurer shall render a statement of any or all accounts. The treasurer shall
at all reasonable times exhibit the books of account to an directors of the
corporation and shall perform all acts incident to the position of treasurer
subject to the control of the Board of Directors. The treasurer shall, if
required by the Board of Directors, give a bond to the corporation in such sum
and with such security as shall be approved by the Board of Directors for the
faithful performance of all the duties of the treasurer and for restoration to
the corporation in the event of the treasurer's death, resignation, retirement,
or removal from office, of all books, records, papers, vouchers, money and other
property belonging to the corporation. The expense of such bond shall be borne
by the corporation.
Section 3.09 Assistant Treasurer. The Board of Directors may appoint an
assistant treasurer who shall have such powers and perform such duties as may be
prescribed by the treasurer of the corporation or by the Board of Directors, and
the Board of Directors may require the assistant treasurer to give a bond to the
corporation in such sum and with such security as it may approve, for the
faithful performance of the duties of assistant treasurer, and for the
restoration to the corporation, in the event of the assistant treasurer's death,
resignation, retirement or removal from office, of all books, records, papers,
vouchers, money and other property belonging to the corporation. The expense of
such bond shall be borne by the corporation.
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ARTICLE IV
CAPITAL STOCK
Section 4.01 Issuance. Shares of capital stock of the corporation shall be
issued in such manner and at such times and upon such conditions as shall be
prescribed by the Board of Directors.
Section 4.02 Certificates. Ownership in the corporation shall be evidenced
by certificates for shares of stock in such form as shall be prescribed by the
Board of Directors, shall be under the seal of the corporation and shall be
signed by the president or the vice president and also by the secretary and an
assistant secretary. Each certificate shall contain the name of the record
holder, the number, designation, if any, class or series of shares represented,
a statement of summary of any applicable rights, preferences, privileges, or
restrictions thereon, and a statement that the shares are assessable, if
applicable. All certificates shall be consecutively numbered. The name and
address of the shareholder, the number of shares, and the date of issue shall be
entered on the stock transfer books of the corporation.
Section 4.03 Surrender: Lost or Destroyed Certificates. All certificates
surrendered to the corporation, except those representing shares of treasury
stock, shall be canceled and no new certificates shall be issued until the
former certificate for a like number of shares shall have been canceled, except
that in case of a lost, stolen, destroyed or mutilated certificate, a new one
may be issued therefor. However, any shareholder applying for the issuance of a
stock certificate in lieu of one alleged to have been lost, stolen, destroyed or
mutilated shall, prior to the issuance of a replacement, provide the corporation
with hi, her or its affidavit of the facts surrounding the loss, theft,
destruction or mutilation and an indemnity bond in an amount and upon such terms
as the treasurer, or the Board of Directors, shall require. In no case shall the
bond be in amount less than twice the current market value of the stock and it
shall indemnify the corporation against any loss, damage, cost or inconvenience
arising as a consequence of the issuance of a replacement certificate.
Section 4.04 Replacement Certificate. When the Articles of Incorporation
are amended in any way affecting the statements contained in the certificates
for outstanding shares of capital stock of the corporation or it becomes
desirable for any reason, including, without limitation, the merger or
consolidation of the corporation with another corporation or the reorganization
of the corporation, to cancel any outstanding certificate for shares and issue a
new certificate therefor conforming to the rights of the holder, the Board of
Directors may order any holders of outstanding certificates for shares to
surrender and exchange the same for new certificates within a reasonable time to
be fixed by the Board of Directors. The order may provide that a holder of any
certificate (s) ordered to be surrendered shall not be entitled to vote, receive
dividends or exercise any other rights of shareholders until the holder has
complied with the order provided that such order operates to suspend such rights
only after notice and until compliance.
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Section 4.05 Transfer of Shares. No transfer of stock shall be valid as
against the corporation except on surrender and cancellation by the certificate
therefor, accompanied by an assignment or transfer by the registered owner made
either in person or under assignment. Whenever any transfer shall be expressly
made for collateral security and not absolutely, the collateral nature of the
transfer shall be reflected in the entry of transfer on the books of the
corporation.
Section 4.06 Transfer Agent. The Board of Directors may appoint one or more
transfer agents and registrars of transfer and may require all certificates for
shares of stock to bear the signature of such transfer agent and such registrar
of transfer.
Section 4.07 Stock Transfer Books. The stock transfer books shall be closed
for a period of ten (10) days prior to all meetings of the shareholders and
shall be closed for the payment of dividends as provided in Article V hereof and
during such period as, from time o time, may be fixed by the Board of Directors,
and, during such periods, no stock shall be transferable.
Section 4.08 Miscellaneous. The Board of Directors shall have the power and
authority to make such rules and regulation not inconsistent herewith as it may
deem expedient concerning the issue, transfer and registration of certificates
for shares of the capital stock of the corporation.
ARTICLE V
DIVIDENDS
Section 5.01 Dividends may be declared, subject to the provisions of the
laws of the State of Nevada and the Articles of Incorporation, by the Board of
Directors at any regular or special meeting and may be paid in cash, property,
shares of corporate stock, or any other medium. The Board of Directors may fix
in advance a record date, as provided in Section 1.06 of these By-laws, prior to
the dividend payment for the purpose of determining shareholders entitled to
receive payment of any dividend. The Board of Directors may close stock transfer
books for such purpose for a period of not more than ten (10) days prior to the
payment date of such dividend.
ARTICLE VI
OFFICES; RECORDS; REPORTS; SEAL AND FINANCIAL MATTERS
Section 6.01 Principal Office. The principal office of the corporation In
the State of Nevada shall be the Law Offices of Max C. Tanner, 2950 East
Flamingo Road, Suite G, Las Vegas, Nevada 89121, and the corporation may have an
office in any other state or territory as the Board of Directors may designate.
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Section 6.02 Records. The stock transfer books and a certified copy of the
By-laws, Articles of Incorporation, any amendments thereto, and the minutes of
the proceedings of the shareholders, the Board of Directors, and committees of
the Board of Directors shall be kept at the principal office of the corporation
for the inspection of all who have the right to see the same and for the
transfer of stock. All other books of the corporation shall be kept at such
places as may be prescribed by the Board of Directors.
Section 6.03 Financial Report on Request. Any shareholder or shareholders
holding at least five percent (5%) of the outstanding shares of any class of
stock may make a written request for an income statement of the corporation for
the three (3) month, six (6) month, or nine (9) month period of the current
fiscal year ended more than thirty (30) days prior to the date of the request
and a balance sheet of the corporation as of the end of such period. In
addition, if no annual report for the last fiscal year has been sent to
shareholders, such shareholder or shareholders may make a request for a balance
sheet as of the end of such fiscal year and an income statement and statement of
changes in financial position for such fiscal year. The statement shall be
delivered or mailed to the person making the request within thirty (30) days
thereafter. A copy of the statements shall be kept on file in the principal
office of the corporation for twelve (12) months, and such copies shall be
exhibited at all reasonable times to any shareholder demanding an examination of
them or a copy shall be mailed to each shareholder. Upon request by any
shareholder, there shall be mailed to the shareholder a copy of the last annual,
semiannual or quarterly income statement which it has prepared and a balance
sheet as of the end of the period. The financial statements referred to in this
Section 6.03 shall be accompanied by the report thereon, if any, of any
independent accountants engaged by the corporation or the certificate of an
authorized officer of the corporation that such financial statements were
prepared without audit from the books and records of the corporation.
Section 6.04 Right of Inspection.
(a) The accounting books and records and minutes of proceedings of the
shareholders and the Board of Directors and committees of the Board of
Directors shall be open to inspection upon the written demand of any
shareholder or holder of a voting trust certificate at any reasonable time
during usual business hours for a purpose reasonably related to such
holder's interest as a shareholder or as the holder of such voting trust
certificate. This right of inspection shall extend to the records of the
subsidiaries, if any, of the corporation. Such inspection may be made in
person or by agent or attorney, and the right of inspection includes the
right to copy and make extracts.
(b) Every director shall have the absolute right at any reasonable
time to inspect and copy all books, records and documents of every kind and
to inspect the physical properties of the corporation and/or its subsidiary
corporations. Such inspection may be made in person or by agent or
attorney, and the right of inspection includes the right to copy and make
extracts.
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Section 6.05 Corporate Seal. The Board of Directors may, by resolution,
authorize a seal, and the seal may be used by causing it, or a facsimile, to be
impressed or affixed or reproduced or otherwise. Except when otherwise
specifically provided herein, any officer of the corporation shall have the
authority to affix the seal to any document requiring it.
Section 6.06 Fiscal Year. The fiscal year-end of the corporation shall be
the calendar year or such other term as may be fixed by resolution of the Board
of Directors.
Section 6.07 Reserves. The Board of Directors may create, by resolution,
out of the earned surplus of the corporation such reserves as the directors may,
from time to time, in their discretion, think proper to provide for
contingencies, or to equalize dividends or to repair or maintain any property of
the corporation, or for such other purpose as the Board of Directors may deem
beneficial to the corporation, and the directors may modify or abolish any such
reserves in the manner in which they were created.
ARTICLE VII
INDEMNIFICATION
Section 7.01 Indemnification. The corporation shall, unless prohibited by
Nevada Law, indemnify any person (an "Indemnitee") who is or was involved in any
manner (including, without limitation, as a party or a witness) or is threatened
to be so involved in any threatened, pending or completed action suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative, including without limitation, any action, suit or proceeding
brought by or in the right of the corporation to procure a judgment in its favor
(collectively, a "Proceeding") by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other entity or enterprise, against all Expenses and Liabilities actually and
reasonably incurred by him in connection with such Proceeding. The right to
indemnification conferred in this Article shall be presumed to have been relied
upon by the directors, officers, employees and agents of the corporation and
shall be enforceable as a contract right and inure to the benefit of heirs,
executors and administrators of such individuals.
Section 7.02 Indemnification Contracts. The Board of Directors is
authorized on behalf of the corporation, to enter into, deliver and perform
agreements or other arrangements to provide any Indemnitee with specific rights
of indemnification in addition to the rights provided hereunder to the fullest
extent permitted by Nevada Law. Such agreements or arrangements may provide (i)
that the Expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding, must be paid by the corporation as they are
incurred and in advance of the final disposition of any such action, suit or
proceeding provided that, if required by Nevada Law at the time of such advance,
the officer or director provides an undertaking to repay such amounts if it is
ultimately determined
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by a court of competent jurisdiction that such individual is not entitled to be
indemnified against such expenses, (iii) that the Indemnitee shall be presumed
to be entitled to indemnification under this Article or such agreement or
arrangement and the corporation shall have the burden of proof to overcome that
presumption, (iii) for procedures to be followed by the corporation and the
Indemnitee in making any determination of entitlement to indemnification or for
appeals therefrom and (iv) for insurance or such other Financial Arrangements
described in Paragraph 7.02 of this Article, all as may be deemed appropriate by
the Board of Directors at the time of the execution of such agreement or
arrangement.
Section 7.03 Insurance and Financial Arrangements. The corporation may,
unless prohibited by Nevada Law, purchase and maintain insurance or make other
financial arrangements ("Financial Arrangements") on behalf of any Indemnitee
for any liability asserted against him and liability and expenses incurred by
him in his capacity as a director, officer, employee or agent, or arising out of
his status as such, whether or not the corporation has the authority to
indemnify him against such liability and expenses. Such other Financial
Arrangements may include (i) the creation of a trust fund, (ii) the
establishment of a program of self-insurance, (iii) the securing of the
corporation's obligation of indemnification by granting a security interest or
other lien on any assets of the corporation, or (iv) the establishment of a
letter of credit, guaranty or surety.
Section 7.04 Definitions. For purposes of this Article:
Expenses. The word "Expenses" shall be broadly construed and, without
limitation, means (i) all direct and indirect costs incurred, paid or
accrued, (ii) all attorney's fees, retainers, court costs, transcripts,
fees of experts, witness fees, travel expenses, food and lodging expenses
while traveling, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service, freight or other transportation fees
and expenses, (iii) all other disbursements and out-of-pocket expenses,
(iv) amounts paid in settlement, to the extent permitted by Nevada Law, and
(v) reasonable compensation for time spent by the Indemnitee for which he
is otherwise not compensated by the corporation or any third party,
actually and reasonably incurred in connection with either the appearance
at or investigation, defense, settlement or appeal of a Proceeding or
establishing or enforcing a right to indemnification under any agreement or
arrangement, this Article, the Nevada Law or otherwise; provided, however,
that "Expenses" shall not include any judgments or fines or excise taxes or
penalties imposed under the Employee Retirement Income Security Act of
1974, as amended (`ERISA") or other excise taxes or penalties.
Liabilities. "Liabilities" means liabilities of any type whatsoever,
including, but not limited to, judgments or fines, ERISA or other excise
taxes and penalties, and amounts paid in settlement.
Nevada Law. "Nevada Law" means Chapter 78 of the Nevada Revised
Statutes as amended and in effect from time to time or any successor or
other statutes of Nevada having similar import and effect.
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This Article. "This Article" means Paragraphs 7.01 through 7.04 of
these By-Laws or any portion of them.
Power of Stockholders. Paragraphs 7.01 through 7.04, including this
Paragraph, of these By-Laws may be amended by the stockholders only by vote
of the holders of sixty-six and two-thirds percent (66 2/3%) of the entire
number of shares of each class, voting separately, of the outstanding
capital stock of the corporation (even though the right of any class to
vote is otherwise restricted or denied); provided, however, no amendment or
repeal of this Article shall adversely affect any right of any Indemnitee
existing at the time such amendment or repeal becomes effective.
Power of Directors. Paragraphs 7.01 through 7.04 and this Paragraph of
these By-Laws may be amended or repealed by the Board of Directors only by
vote of eighty percent (80%) of the total number of Directors and the
holders of sixty-six and two-thirds percent (66 2/3) of the entire number
of shares of each class, voting separately, of the outstanding capital
stock of the corporation (even though the right of any class to vote is
otherwise restricted or denied); provided, however, no amendment or repeal
of this Article shall adversely affect any right of any Indemnitee existing
at the time such amendment or repeal becomes effective.
ARTICLE VIII
BY-LAWS
Section 8.01 Amendment. Amendments and changes of these By-Laws may be made
at any regular or special meeting of the Board of Directors by a vote of not
less than all of the entire Board, or may be made by a vote of, or a consent in
writing signed by the holders of a majority of the issued and outstanding
capital stock.
Section 8.02 Additional By-Laws. Additional by-laws not inconsistent
herewith may be adopted by the Board of Directors at any meeting of the Board of
Directors at which a quorum is present by an affirmative vote of a majority of
the directors present or by the unanimous consent of the Board of Directors in
accordance with Section 2.11 of these By-laws.
CERTIFICATION
I, the undersigned, being the duly elected secretary of the Corporation, do
hereby certify that the foregoing By-laws were adopted by the Board of Directors
on the 25th day of August, 1995.
/s/ Tina Ochoa
-----------------------------------------
Tina Ochoa, Secretary
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EXHIBIT 10.1
STOCK OPTION AGREEMENT
Sportsprize Entertainment Inc.
(formerly Kodiak Graphics Company)
1999 STOCK OPTION PLAN
THIS AGREEMENT is entered into as of the _____ day of _______, 1999 ("Date
of Grant") between Sportsprize Entertainment Inc., a Nevada corporation (the
"Company"), and __________________________ (the "Optionee").
WHEREAS, the Board of Directors of the Company (the "Board") has approved
and adopted the 1999 Stock Option Plan (the "Plan"), pursuant to which the Board
is authorized to grant to employees and other selected persons stock options to
purchase common stock, without par value, of the Company (the "Common Stock");
WHEREAS, the Plan provides for the granting of stock options that either
(i) are intended to qualify as "Incentive Stock Options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
(ii) do not qualify under Section 422 of the Code ("Non-Qualified Stock
Options");
WHEREAS, the Board has authorized the grant to Optionee of options to
purchase a total of ________ shares of Common Stock (the "Options"), which
Options are intended to be (select one):
----------- Incentive Stock Options
----------- Non-Qualified Stock Options;
NOW, THEREFORE, the Company agrees to offer to the Optionee the option to
purchase, upon the terms and conditions set forth herein and in the Plan,
_________ shares of Common Stock. Capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Plan.
1. Exercise Price. The exercise price of the options shall be $ ___ per
share.
2. Limitation on the Number of Shares. If the Options granted hereby are
Incentive Stock Options, the number of shares which may be acquired upon
exercise thereof is subject to the limitations set forth in Section 5(a) of the
Plan.
3. Vesting Schedule. The Options are exercisable in accordance with the
following vesting schedule:
(a) ___% of the Options may be exercised after ________.
(b) ____% of the Options may be exercised after ________.
4. Options not Transferable. This Option may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise)
other than by will, by applicable laws of descent and distribution or (except in
the case of an Incentive Stock Option) pursuant to a qualified domestic
relations order, and shall not be subject to execution, attachment or similar
process; provided, however, that if this Option represents a Non-Qualified Stock
Option, such Option is transferable without payment of consideration to
immediate family members of the Optionee or to trusts or partnerships
established exclusively for the benefit of the Optionee and the Optionee's
immediate family members. Upon any attempt to transfer, pledge, hypothecate or
otherwise dispose of any Option or of any right or privilege conferred by the
Plan contrary to the provisions thereof, or upon the sale, levy or attachment or
similar process upon the rights and privileges conferred by the Plan, such
Option shall thereupon terminate and become null and void.
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<PAGE>
5. Investment Intent. By accepting the option, the Optionee represents and
agrees that none of the shares of Common Stock purchased upon exercise of the
Option will be distributed in violation of applicable federal and state laws and
regulations. In addition, the Company may require, as a condition of exercising
the Options, that the Optionee execute an undertaking, in such a form as the
Company shall reasonably specify, that the Stock is being purchased only for
investment and without any then-present intention to sell or distribute such
shares.
6. Termination of Employment and Options. Vested Options shall terminate,
to the extent not previously exercised, upon the occurrence of the first of the
following events:
(i) Expiration: Ten (10) years; except, that the expiration date of
any Incentive Stock Option granted to a greater-than ten percent (>
10%) shareholder of the Company shall not be later than five (5) years
from the Date of Grant.
(ii) Termination for Cause: The date of an Optionee's termination of
employment or contractual relationship with the Company or any Related
Corporation for cause (as determined in the sole discretion of the
Plan Administrator).
(iii) Termination Due to Death or Disability: The expiration of one
(1) year from the date of the death of the Optionee or cessation of an
Optionee's employment or contractual relationship by reason of
Disability (as defined in Section 5(g) of the Plan). If an Optionee's
employment or contractual relationship is terminated by death, any
Option held by the Optionee shall be exercisable only by the person or
persons to whom such Optionee's rights under such Option shall pass by
the Optionee's will or by the laws of descent and distribution.
(iv) Termination Due to Cessation of Service as a Director: The
expiration of ninety (90) days from the date an Optionee, if a
director of the Company, ceases to serve as a director of the Company.
(v) Termination for Any Other Reason: The expiration of three (3)
months from the date of an Optionee's termination of employment or
contractual relationship with the Company or any Related Corporation
for any reason whatsoever other than cause, death or Disability (as
defined in Section 5(g) of the Plan).
Each unvested Option granted pursuant hereto shall terminate immediately upon
termination of the Optionee's employment or contractual relationship with the
Company for any reason whatsoever, including death or Disability unless vesting
is accelerated in accordance with Section 5(f) of the Plan.
7. Stock. In the case of any stock split, stock dividend or like change in
the nature of shares of Stock covered by this Agreement, the number of shares
and exercise price shall be proportionately adjusted as set forth in Section
5(m) of the Plan.
8. Exercise of Option. Options shall be exercisable, in full or in part, at
any time after vesting, until termination; provided, however, that any Optionee
who is subject to the reporting and liability provisions of Section 16 of the
Securities Exchange Act of 1934 with respect to the Common Stock shall be
precluded from selling or transferring any Common Stock or other security
underlying an Option during the six (6) months immediately following the grant
of that Option. If less than all of the shares included in the vested portion of
any Option are purchased, the remainder may be purchased at any subsequent time
prior to the expiration of the Option term. No portion of any Option for less
than fifty (50) shares (as adjusted pursuant to Section 5(m) of the Plan) may be
exercised; provided, that if the vested portion of any Option is less than fifty
(50) shares, it may be exercised with respect to all shares for which it is
vested. Only whole shares may be issued pursuant to an Option, and to the extent
that an Option covers less than one (1) share, it is unexercisable.
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Each exercise of the Option shall be by means of delivery of a notice of
election to exercise (which may be in the form attached hereto as Exhibit A) to
the Secretary of the Company at its principal executive office, specifying the
number of shares of Common Stock to be purchased and accompanied by payment in
cash by certified check or cashier's check in the amount of the full exercise
price for the Common Stock to be purchased. In addition to payment in cash by
certified check or cashier's check, an Optionee or transferee of an Option may
pay for all or any portion of the aggregate exercise price by complying with one
or more of the following alternatives:
(i) by delivering to the Company shares of Common Stock previously
held by such person or by the Company withholding shares of Common
Stock otherwise deliverable pursuant to exercise of the Option, which
shares of Common Stock received or withheld shall have a fair market
value at the date of exercise (as determined by the Plan
Administrator) equal to the aggregate purchase price to be paid by the
Optionee upon such exercise;
(ii) by delivering a properly executed exercise notice together with
irrevocable instructions to a broker promptly to sell or margin a
sufficient portion of the shares and deliver directly to the Company
the amount of sale or margin loan proceeds to pay the exercise price;
or
(iii) by complying with any other payment mechanism approved by the
Plan Administrator at the time of exercise.
It is a condition precedent to the issuance of shares of Common Stock that the
Optionee execute and deliver to the Company a Stock Transfer Agreement, in a
form acceptable to the Company, to the extent required pursuant to the terms
thereof.
9. Holding Period for Incentive Stock Options. Period for Incentive Stock
Options. In order to obtain the tax treatment provided for Incentive Stock
Options by Section 422 of the Code, the shares of Common Stock received upon
exercising any Incentive Stock Options received pursuant to this Agreement must
be sold, if at all, after a date which is later of two (2) years from the date
of this agreement is entered into or one (1) year from the date upon which the
Options are exercised. The Optionee agrees to report sales of such shares prior
to the above determined date to the Company within one (1) business day after
such sale is concluded. The Optionee also agrees to pay to the Company, within
five (5) business days after such sale is concluded, the amount necessary for
the Company to satisfy its withholding requirement required by the Code in the
manner specified in Section 5(l)(2) of the Plan. Nothing in this Section 9 is
intended as a representation that Common Stock may be sold without registration
under state and federal securities laws or an exemption therefrom, or that such
registration or exemption will be available at any specified time.
10. Subject to 1999 Stock Option Plan. The terms of the Options are subject
to the provisions of the Plan, as the same may from time to time be amended, and
any inconsistencies between this Agreement and the Plan, as the same may be from
time to time amended, shall be governed by the provisions of the Plan, a copy of
which has been delivered to the Optionee, and which is available for inspection
at the principal offices of the Company
11. Professional Advice. The acceptance of the Options and the sale of
Common Stock issued pursuant to the exercise of Options may have consequences
under federal and state tax and securities laws which may vary depending upon
the individual circumstances of the Optionee. Accordingly, the Optionee
acknowledges that he or she has been advised to consult his or her personal
legal and tax advisor in connection with this Agreement and his or her dealings
with respect to Options for the Common Stock. Without limiting other matters to
be considered, the Optionee should consider whether upon the exercise of
Options, the Optionee will file an election with the Internal Revenue Service
pursuant to Section 83(b) of the Code.
12. No Employment Relationship. Whether or not any Options are to be
granted under this Plan shall be exclusively within the discretion of the Plan
Administrator, and nothing contained in this Plan shall be construed as giving
any person any right to participate under this Plan. The grant of an Option
shall in
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no way constitute any form of agreement or understanding binding on the Company
or any Related Company, express or implied, that the Company or any Related
Company will employ or contract with an Optionee for any length of time, nor
shall it interfere in any way with the Company's or, where applicable, a Related
Company's right to terminate Optionee's employment at any time, which right is
hereby reserved,
13. Entire Agreement. This Agreement is the only agreement between the
Optionee and the Company with respect to the Options, and this Agreement and the
Plan supersede all prior and contemporaneous oral and written statements and
representations and contain the entire agreement between the parties with
respect to the Options
14. Notices. Any notice required or permitted to be made or given hereunder
shall be mailed or delivered personally to the addresses set forth below, or as
changed from time to time by written notice to the other:
The Company: Sportsprize Entertainment Inc.
Attention: Jeffrey Paquin, President
The Optionee: ---------------------------------------
---------------------------------------
---------------------------------------
(address)
Sportsprize Entertainment Inc.
By: --------------------------- ---------------------------------------
Its: --------------------------
THERE MAY NOT BE PRESENTLY AVAILABLE EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS FOR THE ISSUANCE OF
SHARES OF STOCK UPON EXERCISE OF THESE OPTIONS. ACCORDINGLY, THESE OPTIONS
CANNOT BE EXERCISED UNLESS THESE OPTIONS AND THE SHARES OF STOCK TO BE ISSUED
UPON EXERCISE OF THESE OPTIONS ARE REGISTERED OR AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS IS AVAILABLE.
THE SHARES OF STOCK ISSUED PURSUANT TO THE EXERCISE OF OPTIONS WILL BE
"RESTRICTED SECURITIES" AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933
AND WILL BEAR A LEGEND RESTRICTING RESALE UNLESS THEY ARE REGISTERED UNDER STATE
AND FEDERAL SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE
COMPANY IS NOT OBLIGATED TO REGISTER THE SHARES OF STOCK OR TO MAKE AVAILABLE
ANY EXEMPTION FROM REGISTRATION.
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EXHIBIT A
Notice of Election to Exercise
This Notice of Election to Exercise shall constitute proper notice pursuant
to Section 5(h) of the Sportsprize Entertainment Inc. 1999 Stock Option Plan
(the "Plan") and Section 8 of that certain Stock Option Agreement (the
"Agreement") dated as of the ____ day of _______, 1999 between Sportsprize
Entertainment Inc. (the "Company") and the undersigned.
The undersigned hereby elects to exercise Optionee's option to purchase
__________ shares of the common stock of the Company at a price of $__________
per share, for aggregate consideration of $______, on the terms and conditions
set forth in the Agreement and the Plan. Such aggregate consideration, in the
form specified in Section 8 of the Agreement, accompanies this notice.
The undersigned has executed this Notice this ____ day of __________, 19__.
----------------------------------------
Signature
----------------------------------------
Name (typed or printed)
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EXHIBIT 10.2
Sportsprize Entertainment Inc.
(formerly Kodiak Graphics Company)
1999 STOCK OPTION PLAN
This 1999 Stock Option Plan (the "Plan") provides for the grant of options
to acquire shares of common stock, $ 0.001 par value (the "Common Stock"), of
Sportsprize Entertainment Inc., a Nevada corporation (the "Company"). Stock
options granted under this Plan that qualify under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), are referred to in this Plan as
"Incentive Stock Options." Incentive Stock Options and stock options that do not
qualify under Section 422 of the Code ("Non-Qualified Stock Options") granted
under this Plan are referred to collectively as "Options."
1. PURPOSES.
The purposes of this Plan are to retain the services of valued key
employees and consultants of the Company and such other persons as the Plan
Administrator shall select in accordance with Section 3 below, to encourage such
persons to acquire a greater proprietary interest in the Company, thereby
strengthening their incentive to achieve the objectives of the shareholders of
the Company, and to serve as an aid and inducement in the hiring of new
employees and to provide an equity incentive to consultants and other persons
selected by the Plan Administrator.
2. ADMINISTRATION.
This Plan shall be administered initially by the Board of Directors of the
Company (the "Board"), except that the Board may, in its discretion, establish a
committee composed of two (2) or more members of the Board or two (2) or more
other persons to administer the Plan, which committee (the "Committee") may be
an executive, compensation or other committee, including a separate committee
especially created for this purpose. The Committee shall have the powers and
authority vested in the Board hereunder (including the power and authority to
interpret any provision of the Plan). The members of any such Committee shall
serve at the pleasure of the Board. A majority of the members of the Committee
shall constitute a quorum, and all actions of the Committee shall be taken by a
majority of the members present. Any action may be taken by a written instrument
signed by all of the members of the Committee and any action so taken shall be
fully effective as if it had been taken at a meeting. The Board or, if
applicable, the Committee is referred to herein as the "Plan Administrator."
Subject to the provisions of this Plan, and with a view to effecting its
purpose, the Plan Administrator shall have authority to reasonably (i) construe
and interpret this Plan; (ii) define the terms used in the Plan; (iii)
prescribe, amend and rescind the rules and regulations relating to this Plan;
(iv) correct any defect, supply any omission or reconcile any inconsistency in
this Plan; (v) grant Options under this Plan; (vi) determine the individuals to
whom Options shall be granted under this Plan and whether the Option is an
Incentive Stock Option or a Non-Qualified Stock Option; (vii) determine the time
or times at which Options shall be granted under this Plan; (viii) determine the
number of shares of Common Stock subject to each Option, the exercise price of
each Option, the duration of each Option and the times at which each Option
shall become exercisable; (ix) determine all other terms and conditions of the
Options; and (x) make all other determinations and interpretations necessary and
advisable for the administration of the Plan.
The Board or, if applicable, the Committee may delegate to one or more
executive officers of the Company the authority to grant Options under this Plan
to employees of the Company who, on the Date of Grant, are not subject to
Section 16 of the Exchange Act with respect to the Common Stock
("Non-Insiders"), and are not "covered employees" as such term is defined for
purposes of Section 162(m) of the Code ("Non-Covered Employees"), and in
connection therewith the authority to determine: (i) the number of shares of
Common Stock subject to such Options; (ii) the duration of the Option; (iii) the
vesting schedule for determining the times at which such Option shall become
exercisable; and (iv) all other terms and conditions of such Options. The
exercise price
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for any Option granted by action of an executive officer or officers pursuant to
such delegation of authority shall not be less than the fair market value per
share of the Common Stock on the Date of Grant. Unless expressly approved in
advance by the Board or the Committee, such delegation of authority shall not
include the authority to accelerate vesting, extend the period for exercise or
otherwise alter the terms of outstanding Options. The term "Plan Administrator"
when used in any provision of this Plan other than Sections 2, 5(f), 5(m), and
11 shall be deemed to refer to the Board or the Committee, as the case may be,
and an executive officer who has been authorized to grant Options pursuant
thereto, insofar as such provisions may be applied to persons that are
Non-Insiders and Non-Covered Employees and Options granted to such persons.
3. ELIGIBILITY.
Incentive Stock Options may be granted to any individual who, at the time
the Option is granted, is an employee of the Company or any Related Corporation
(as defined below) ("Employees"). Non-Qualified Stock Options may be granted to
Employees and to such other persons who are not Employees as the Plan
Administrator shall select. Options may be granted in substitution for
outstanding Options of another corporation in connection with the merger,
consolidation, acquisition of property or stock or other reorganization between
such other corporation and the Company or any subsidiary of the Company. Options
also may be granted in exchange for outstanding Options. No person shall be
eligible to receive in any fiscal year Options to purchase more than 2,000,000
shares of Common Stock (subject to adjustment as set forth in Section 5(m)
hereof). Any person to whom an Option is granted under this Plan is referred to
as an "Optionee." Any person who is the owner of an Option is referred to as a
"Holder."
As used in this Plan, the term "Related Corporation" shall mean any
corporation (other than the Company) that is a "Parent Corporation" of the
Company or "Subsidiary Corporation" of the Company, as those terms are defined
in Sections 424(e) and 424(f), respectively, of the Code (or any successor
provisions) and the regulations thereunder (as amended from time to time).
4. STOCK.
The Plan Administrator is authorized to grant Options to acquire up to a
total of 3,000,000 shares of the Company's authorized but unissued, or
reacquired, Common Stock. The number of shares with respect to which Options may
be granted hereunder is subject to adjustment as set forth in Section 5(m)
hereof. In the event that any outstanding Option expires or is terminated for
any reason, the shares of Common Stock allocable to the unexercised portion of
such Option may again be subject to an Option granted to the same Optionee or to
a different person eligible under Section 3 of this Plan; provided however, that
any canceled Options will be counted against the maximum number of shares with
respect to which Options may be granted to any particular person as set forth in
Section 3 hereof.
5. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted under this Plan shall be evidenced by a written
agreement approved by the Plan Administrator (the "Agreement"). Agreements may
contain such provisions, not inconsistent with this Plan, as the Plan
Administrator in its discretion may deem advisable. All Options also shall
comply with the following requirements:
(a) Number of Shares and Type of Option.
Each Agreement shall state the number of shares of Common Stock to
which it pertains and whether the Option is intended to be an Incentive Stock
Option or a Non-Qualified Stock Option. In the absence of action to the contrary
by the Plan Administrator in connection with the grant of an Option, all Options
shall be Non-Qualified Stock Options. The aggregate fair market value
(determined at the Date of Grant, as defined below)
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of the stock with respect to which Incentive Stock Options are exercisable for
the first time by the Optionee during any calendar year (granted under this Plan
and all other Incentive Stock Option plans of the Company, a Related Corporation
or a predecessor corporation) shall not exceed $100,000, or such other limit as
may be prescribed by the Code as it may be amended from time to time. Any
portion of an Option which exceeds the annual limit shall not be void but rather
shall be a Non-Qualified Stock Option.
(b) Date of Grant.
Each Agreement shall state the date the Plan Administrator has deemed
to be the effective date of the Option for purposes of this Plan (the "Date of
Grant").
(c) Option Price.
Each Agreement shall state the price per share of Common Stock at
which it is exercisable. The exercise price shall be fixed by the Plan
Administrator at whatever price the Plan Administrator may determine in the
exercise of its sole discretion; provided that the per share exercise price for
an Incentive Stock Option or any Option granted to a "covered employee" as such
term is defined for purposes of Section 162(m) of the Code ("Covered Employee")
shall not be less than the fair market value per share of the Common Stock at
the Date of Grant as determined by the Plan Administrator in good faith;
provided further, that with respect to Incentive Stock Options granted to
greater-than-ten percent (> 10%) shareholders of the Company (as determined with
reference to Section 424(d) of the Code), the exercise price per share shall not
be less than one hundred ten percent (110%) of the fair market value per share
of the Common Stock at the Date of Grant as determined by the Plan Administrator
in good faith; and, provided further, that Options granted in substitution for
outstanding options of another corporation in connection with the merger,
consolidation, acquisition of property or stock or other reorganization
involving such other corporation and the Company or any subsidiary of the
Company may be granted with an exercise price equal to the exercise price for
the substituted option of the other corporation, subject to any adjustment
consistent with the terms of the transaction pursuant to which the substitution
is to occur.
(d) Duration of Options.
At the time of the grant of the Option, the Plan Administrator shall
designate, subject to paragraph 5(g) below, the expiration date of the Option,
which date shall not be later than ten (10) years from the Date of Grant in the
case of Incentive Stock Options; provided, that the expiration date of any
Incentive Stock Option granted to a greater-than-ten percent ( > 10%)
shareholder of the Company (as determined with reference to Section 424(d) of
the Code) shall not be later than five (5) years from the Date of Grant. In the
absence of action to the contrary by the Plan Administrator in connection with
the grant of a particular Option, and except in the case of Incentive Stock
Options as described above, all Options granted under this Section 5 shall
expire ten (10) years from the Date of Grant.
(e) Vesting Schedule.
No Option shall be exercisable until it has vested. The vesting
schedule for each Option shall be specified by the Plan Administrator at the
time of grant of the Option prior to the provision of services with respect to
which such Option is granted; provided, that if no vesting schedule is specified
at the time of grant, the Option shall vest according to the following schedule:
Number of Years Percentage of Total
Following Date of Grant Option Vested
- ------------------------------------- ----------------------------------
One 25%
Two 50%
Three 75%
Four 100%
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The Plan Administrator may specify a vesting schedule for all or any
portion of an Option based on the achievement of performance objectives
established in advance of the commencement by the Optionee of services related
to the achievement of the performance objectives. Performance objectives shall
be expressed in terms of one or more of the following: return on equity, return
on assets, share price, market share, sales, earnings per share, costs, net
earnings, net worth, inventories, cash and cash equivalents, gross margin or the
Company's performance relative to its internal business plan. Performance
objectives may be in respect of the performance of the Company as a whole
(whether on a consolidated or unconsolidated basis), a Related Corporation, or a
subdivision, operating unit, product or product line of either of the foregoing.
Performance objectives may be absolute or relative and may be expressed in terms
of a progression or a range. An Option that is exercisable (in full or in part)
upon the achievement of one or more performance objectives may be exercised only
following written notice to the Optionee and the Company by the Plan
Administrator that the performance objective has been achieved.
(f) Acceleration of Vesting.
The vesting of one or more outstanding Options may be accelerated by
the Plan Administrator at such times and in such amounts as it shall determine
in its sole discretion. The vesting of Options also shall be accelerated under
the circumstances described in Section 5(m) below.
(g) Term of Option.
Vested Options shall terminate as provided for in the Option and, to
the extent not previously exercised, upon the occurrence of the first of the
following events: (i) the expiration of the Option, as designated by the Plan
Administrator in accordance with Section 5(d) above; or (ii) the expiration of
one year from termination of an Optionee's employment or contractual
relationship by reason of death or Disability (as defined below) unless, in the
case of a Non-Qualified Stock Option, the exercise period is extended by the
Plan Administrator until a date not later than the expiration date of the
Option. Upon the death of an Optionee, any vested Options held by the Optionee
shall be exercisable only by the person or persons to whom such Optionee's
rights under such Option shall pass by the Optionee's will or by the laws of
descent and distribution of the state or county of the Optionee's domicile at
the time of death and only until such Options terminate as provided above. For
purposes of the Plan, unless otherwise defined in the Agreement, "Disability"
shall mean medically determinable physical or mental impairment which has lasted
or can be expected to last for a continuous period of not less than twelve (12)
months or that can be expected to result in death. The Plan Administrator shall
determine whether an Optionee has incurred a Disability on the basis of medical
evidence acceptable to the Plan Administrator. Upon making a determination of
Disability, the Plan Administrator shall, for purposes of the Plan, determine
the date of an Optionee's termination of employment or contractual relationship.
Unless accelerated in accordance with Section 5(f) above, unvested
Options shall terminate immediately upon termination of employment of the
Optionee by the Company for any reason whatsoever, including death or
Disability. For purposes of this Plan, transfer of employment between or among
the Company and/or any Related Corporation shall not be deemed to constitute a
termination of employment with the Company or any Related Corporation. For
purposes of this subsection, employment shall be deemed to continue while the
Optionee is on military leave, sick leave or other bona fide leave of absence
(as determined by the Plan Administrator). The foregoing notwithstanding,
employment shall not be deemed to continue beyond the first ninety (90) days of
such leave, unless the Optionee's re-employment rights are guaranteed by statute
or by contract.
(h) Exercise of Options.
Options shall be exercisable, in full or in part, at any time after
vesting, until termination. If less than all of the shares included in the
vested portion of any Option are purchased, the remainder may be purchased at
any subsequent time prior to the expiration of the Option term. No portion of
any Option for less than fifty (50) shares (as adjusted pursuant to Section 5(m)
below) may be exercised; provided, that if the vested portion of any Option is
less than fifty (50) shares, it may be exercised with respect to all shares for
which it is vested. Only whole
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shares may be issued pursuant to an Option, and to the extent that an Option
covers less than one (1) share, it is unexercisable.
Options or portions thereof may be exercised by giving written notice
to the Company, which notice shall specify the number of shares to be purchased,
and be accompanied by payment in the amount of the aggregate exercise price for
the Common Stock so purchased, which payment shall be in the form specified in
Section 5(i) below. The Company shall not be obligated to issue, transfer or
deliver a certificate of Common Stock to the Holder of any Option, until
provision has been made by the Holder, for the payment of the aggregate exercise
price for all shares for which the Option shall have been exercised and for
satisfaction of any required tax withholding obligations associated with such
exercise. During the lifetime of an Optionee, Options are exercisable only by
the Optionee or in the case of a Non-Qualified Stock Option, transferee who
takes title to such Option in the manner permitted by subsection 5(k) hereof.
(i) Payment upon Exercise of Option.
Upon the exercise of any Option, the aggregate exercise price shall be
paid to the Company in cash or by certified or cashier's check. In addition, the
Holder may pay for all or any portion of the aggregate exercise price by
complying with one or more of the following alternatives:
(1) by delivering to the Company shares of Common Stock previously
held by such Holder, or by the Company withholding shares of Common Stock
otherwise deliverable pursuant to exercise of the Option, which shares of Common
Stock received or withheld shall have a fair market value at the date of
exercise (as determined by the Plan Administrator) equal to the aggregate
exercise price to be paid by the Optionee upon such exercise;
(2) by delivering a properly executed exercise notice together with
irrevocable instructions to a broker promptly to sell or margin a sufficient
portion of the shares and deliver directly to the Company the amount of sale or
margin loan proceeds to pay the exercise price; or
(3) by complying with any other payment mechanism approved by the Plan
Administrator at the time of exercise.
(j) Rights as a Shareholder.
A Holder shall have no rights as a shareholder with respect to any
shares covered by an Option until such Holder becomes a record holder of such
shares, irrespective of whether such Holder has given notice of exercise.
Subject to the provisions of Section 5(m) hereof, no rights shall accrue to a
Holder and no adjustments shall be made on account of dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights declared on, or created in, the Common Stock for which the
record date is prior to the date the Holder becomes a record holder of the
shares of Common Stock covered by the Option, irrespective of whether such
Holder has given notice of exercise.
(k) Transfer of Option.
Options granted under this Plan and the rights and privileges
conferred by this Plan may not be transferred, assigned, pledged or hypothecated
in any manner (whether by operation of law or otherwise) other than by will, by
applicable laws of descent and distribution or (except in the case of an
Incentive Stock Option) pursuant to a qualified domestic relations order, and
shall not be subject to execution, attachment or similar process; provided
however, that any Agreement may provide or be amended to provide that a
Non-Qualified Stock Option to which it relates is transferable without payment
of consideration to immediate family members of the Optionee or to trusts or
partnerships or limited liability companies established exclusively for the
benefit of the Optionee and the Optionee's immediate family members. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of any
Option or of any right or privilege conferred by this Plan contrary to the
provisions hereof, or upon the sale, levy or any attachment or similar process
upon the rights and privileges conferred by this Plan, such Option shall
thereupon terminate and become null and void.
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<PAGE>
(l) Securities Regulation and Tax Withholding.
(1) Shares shall not be issued with respect to an Option unless the
exercise of such Option and the issuance and delivery of such shares shall
comply with all relevant provisions of law, including, without limitation,
Section 162(m) of the Code, any applicable state securities laws, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations thereunder
and the requirements of any stock exchange or automated inter-dealer quotation
system of a registered national securities association upon which such shares
may then be listed, and such issuance shall be further subject to the approval
of counsel for the Company with respect to such compliance, including the
availability of an exemption from registration for the issuance and sale of such
shares. The inability of the Company to obtain from any regulatory body the
authority deemed by the Company to be necessary for the lawful issuance and sale
of any shares under this Plan, or the unavailability of an exemption from
registration for the issuance and sale of any shares under this Plan, shall
relieve the Company of any liability with respect to the non-issuance or sale of
such shares.
If required by applicable law or regulation an applicable legend may
be stamped on the certificates representing such shares in order to assure an
exemption from registration. The Plan Administrator also may reasonably require
such other documentation as may from time to time be necessary to comply with
federal and state securities laws.
(2) The Holder shall pay to the Company by certified or cashier's
check, promptly upon exercise of an Option or, if later, the date that the
amount of such obligations becomes determinable, all required federal, state,
local and foreign withholding taxes that result upon exercise of an Option or
from a transfer or other disposition of shares of Common Stock acquired upon
exercise of an Option or otherwise related to an Option or shares of Common
Stock acquired in connection with an Option. A Holder may satisfy such
obligation by complying with one or more of the following alternatives:
(A) by delivering to the Company shares of Common Stock
previously held by such Holder or by the Company withholding shares of
Common Stock otherwise deliverable pursuant to the exercise of the
Option, which shares of Common Stock received or withheld shall have a
fair market value at the date of exercise equal to any withholding tax
obligations arising as a result of such exercise, transfer or other
disposition;
(B) by executing appropriate loan documents approved by the Plan
Administrator by which the Holder borrows funds from the Company to
pay any withholding taxes due under this Paragraph 2, with such
repayment terms as the Plan Administrator shall select; or
(C) by complying with any other payment mechanism approved by the
Plan Administrator from time to time.
(3) The issuance, transfer or delivery of certificates of Common Stock
pursuant to the exercise of Options may be delayed until the applicable
requirements of the federal and state securities laws and the required
withholding provisions of the Code have been met and that the Holder has paid or
otherwise satisfied any withholding tax obligation as described in (2) above.
(m) Stock Dividend or Reorganization.
(1) If (i) the Company shall at any time be involved in a transaction
described in Section 424(a) of the Code (or any successor provision) or any
"corporate transaction" described in the regulations thereunder; (ii) the
Company shall declare a dividend payable in, or shall subdivide or combine, its
Common Stock or (iii) any other event with substantially the same effect shall
occur, the Plan Administrator shall, subject to applicable law, with respect to
each outstanding Option, proportionately adjust the number of shares of Common
Stock subject to such Option and/or the exercise price per share so as to
preserve the rights of the Holder substantially proportionate to the rights of
the Holder prior to such event, and to the extent that such action shall include
an increase or decrease in the number of shares of Common Stock subject to
outstanding Options, the number of shares available under Section 4 of this Plan
shall automatically be increased or decreased, as the case
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may be, proportionately, without further action on the part of the Plan
Administrator, the Company, the Company's shareholders, or any Holder.
(2) In the event that the presently authorized capital stock of the
Company is changed into the same number of shares with a different par value, or
without par value, the stock resulting from any such change shall be deemed to
be Common Stock within the meaning of the Plan, and each Option shall apply to
the same number of shares of such new stock as it applied to old shares
immediately prior to such change.
(3) If the Company shall at any time declare an extraordinary dividend
with respect to the Common Stock, whether payable in cash or other property, the
Plan Administrator shall, subject to applicable law, and with respect to each
outstanding Option, proportionately adjust the number of shares of Common Stock
subject to such Option and/or adjust the exercise price per share so as to
preserve the rights of the Holder substantially proportionate to the rights of
the Holder prior to such event, and to the extent that such action shall include
an increase or decrease in the number of shares of Common Stock subject to
outstanding Options, the number of shares available under Section 4 of this Plan
shall automatically be increased or decreased, as the case may be,
proportionately, without further action on the part of the Plan Administrator,
the Company, the Company's shareholders, or any Holder.
(4) The foregoing adjustments in the shares subject to Options shall
be made by the Plan Administrator, or by any successor administrator of this
Plan, or by the applicable terms of any assumption or substitution document.
(5) The grant of an Option shall not affect in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure, to merge, consolidate or dissolve,
to liquidate or to sell or transfer all or any part of its business or assets.
6. EFFECTIVE DATE; TERM.
Incentive Stock Options may be granted by the Plan Administrator from time
to time on or after the date on which this Plan is adopted (the "Effective
Date") through the day immediately preceding the tenth anniversary of the
Effective Date. Non-Qualified Stock Options may be granted by the Plan
Administrator on or after the Effective Date and until this Plan is terminated
by the Board in its sole discretion. Termination of this Plan shall not
terminate any Option granted prior to such termination. Any Incentive Stock
Options granted by the Plan Administrator prior to the approval of this Plan by
the shareholders of the Company in accordance with Section 422 of the Code shall
be granted subject to ratification of this Plan by the shareholders of the
Company within twelve (12) months before or after the Effective Date. [Any
Option granted by the Plan Administrator to any Covered Employee prior to the
approval of this Plan by the shareholders of the Company in accordance with such
Code provision shall be granted subject to ratification of this Plan by the
shareholders of the Company within twelve (12) months before or after the
Effective Date.] If such shareholder ratification is sought and not obtained,
all Options granted prior thereto and thereafter shall be considered
Non-Qualified Stock Options and any Options granted to Covered Employees will
not be eligible for the exclusion set forth in Section 162(m) of the Code with
respect to the deductibility by the Company of certain compensation.
7. NO OBLIGATIONS TO EXERCISE OPTION.
The grant of an Option shall impose no obligation upon the Optionee to
exercise such Option.
8. NO RIGHT TO OPTIONS OR TO EMPLOYMENT.
Whether or not any Options are to be granted under this Plan shall be
exclusively within the discretion of the Plan Administrator, and nothing
contained in this Plan shall be construed as giving any person any right to
-7-
<PAGE>
participate under this Plan. The grant of an Option shall in no way constitute
any form of agreement or understanding binding on the Company or any Related
Company, express or implied, that the Company or any Related Company will employ
or contract with an Optionee for any length of time, nor shall it interfere in
any way with the Company's or, where applicable, a Related Company's right to
terminate Optionee's employment at any time, which right is hereby reserved.
9. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Common Stock issued
upon the exercise of Options shall be used for general corporate purposes,
unless otherwise directed by the Board.
10. INDEMNIFICATION OF PLAN ADMINISTRATOR.
In addition to all other rights of indemnification they may have as members
of the Board, members of the Plan Administrator shall be indemnified by the
Company for all reasonable expenses and liabilities of any type or nature,
including attorneys' fees, incurred in connection with any action, suit or
proceeding to which they or any of them are a party by reason of, or in
connection with, this Plan or any Option granted under this Plan, and against
all amounts paid by them in settlement thereof (provided that such settlement is
approved by independent legal counsel selected by the Company), except to the
extent that such expenses relate to matters for which it is adjudged that such
Plan Administrator member is liable for willful misconduct; provided, that
within fifteen (15) days after the institution of any such action, suit or
proceeding, the Plan Administrator member involved therein shall, in writing,
notify the Company of such action, suit or proceeding, so that the Company may
have the opportunity to make appropriate arrangements to prosecute or defend the
same.
11. AMENDMENT OF PLAN.
The Plan Administrator may, at any time, modify, amend or terminate this
Plan or modify or amend Options granted under this Plan as necessary to maintain
compliance with applicable statutes, rules or regulations; provided however, no
amendment with respect to an outstanding Option which has the effect of reducing
the benefits afforded to the Holder thereof shall be made over the objection of
such Holder; further provided, that the events triggering acceleration of
vesting of outstanding Options may be modified, expanded or eliminated without
the consent of Holders. The Plan Administrator may condition the effectiveness
of any such amendment on the receipt of shareholder approval at such time and in
such manner as the Plan Administrator may consider necessary for the Company to
comply with or to avail the Company and/or the Optionees of the benefits of any
securities, tax, market listing or other administrative or regulatory
requirement.
Effective Date: ---------------------------.
EXHIBIT 10.3
ESCROW AGREEMENT
THIS AGREEMENT dated for reference the 7th day of May, 1999 (the "Effective
Date").
AMONG:
KODIAK GRAPHICS COMPANY, a company duly incorporated under the
laws of the State of Nevada, and having an office at 2034 Western
Avenue, Las Vegas, Nevada, U.S.A., 89102
(the "Kodiak")
OF THE FIRST PART
AND:
RANDY DAGGITT, JEFF PAQUIN, JAMES BROWN, MICHAEL SLATER, ANTHONY
VECCHIO and GANG CONSULTING INC., all c/o Suite 1500 - 885 West
Georgia Street, Vancouver, British Columbia, Canada, V6C 3E8
(collectively the "Principal Vendors")
OF THE SECOND PART
AND:
CLARK, WILSON, Barristers & Solicitors, of Suite 800 - 885 West
Georgia Street, Vancouver, British Columbia, Canada, V6C 3H1
(the "Escrow Agent")
OF THE THIRD PART
<PAGE>
-2-
WITNESSES THAT WHEREAS:
A. Pursuant to a Share Exchange Agreement (the "Share Exchange Agreement"),
dated May __, 1999, between Kodiak, the Principal Vendors and the other
shareholders (the "Other Vendors") of Sportsprize Entertainment Inc.
("Sportsprize"), Kodiak has agreed to purchase all of the issued and outstanding
shares in the capital of Sportsprize in consideration of, among other things,
Kodiak issuing an aggregate of 10,000,000 common shares (the "Purchase Shares")
in the capital of Kodiak to the Principal Vendors and the Other Vendors;
B. The Share Exchange Agreement further provides that the Principal Vendors
will deliver to the Escrow Agent and deposit in escrow 2,556,410 of the Purchase
Shares (the "Escrow Shares") to be held by the Escrow Agent;
C. The Escrow Shares will be held in escrow and used to satisfy signing
bonuses and fees which will be paid to certain high level management recruited
and outside consultants retained in the future by Kodiak or Sportsprize;
D. Kodiak and the Principal Vendors desire to appoint the Escrow Agent, and
the Escrow Agent has agreed to act as escrow agent to hold the Escrow Shares in
accordance with the terms and conditions of this Agreement and the Share
Exchange Agreement;
THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration (the receipt and sufficiency
of which are hereby acknowledged), the parties covenant and agree as follows:
I. INTERPRETATION
1.1 Any capitalized term not defined herein shall have the meaning ascribed
thereto in the Share Exchange Agreement.
1.2 In this Agreement:
(a) the headings have been inserted for convenience of reference only and
in no way define, limit, or enlarge the scope or meaning of the
provisions of this Agreement;
(b) all references to any party, whether a party to this Agreement or not,
will be read with such changes in number and gender as the context or
reference requires; and
(c) when the context hereof makes it possible, the word "person" includes
in its meaning any firm and any body corporate or politic.
<PAGE>
-3-
2. DEPOSIT OF ESCROW SHARES
2.1 The Principal Vendors will, on closing of the Share Exchange Agreement,
deliver share certificate(s) representing the Escrow Shares, together with Stock
Powers of Attorney duly endorsed for transfer of all of the Escrow Shares with
signatures duly guaranteed, to the Escrow Agent for deposit in escrow with the
Escrow Agent on the terms of this Agreement and the Share Exchange Agreement.
3. ESCROW PROVISIONS - ESCROW SHARES
3.1 The Principal Vendors hereby direct the Escrow Agent to retain the Escrow
Shares, and not to do or cause anything to be done to release the same from
escrow except in accordance with this Agreement. The Escrow Agent accepts its
responsibilities hereunder and agrees to perform them in accordance with the
terms hereof.
3.2 The Escrow Agent will hold the Escrow Shares in escrow and undelivered
until written confirmation (the "Confirmation") executed by each of the
following:
(a) Clive Barwin or another authorized representative of the Board of
Directors of Sonora Capital Corp., and
(b) Jeff Paquin or any one of the Principal Vendors (other than Gang
Consulting Inc.),
is received, in which case the Escrow Agent shall deliver certificates
representing the number of Escrow Shares as instructed in the Confirmation.
3.3 If there are any Escrow Shares held by the Escrow Agent on the first
anniversary of the Effective Date, then the Escrow Agent is authorized and
directed to deliver such Escrow Shares as follows:
(a) as to 50% of such Escrow Shares to Sonora Capital Corp.; and
(b) as to 50% of such Escrow Shares to the Principal Vendors pro-rata
based upon the number of Purchase Shares that each of the Principal
Vendors deposited into Escrow.
3.4 The registered owner of any Escrow Shares held by the Escrow Agent is
entitled to exercise all voting rights attached to such Escrow Shares.
3.5 The Escrow Shares will not be sold, assigned, hypothecated, alienated,
released from escrow, transferred within escrow or otherwise in any manner
dealt with except in accordance with this Agreement or as may be required
by reason of the bankruptcy of the
<PAGE>
-4-
Principal Vendors, in which case the Escrow Agent will hold the Escrow Shares
subject to this Agreement, for whatever person, firm or corporation shall be
legally entitled to be or become the registered owner thereof.
4. THE ESCROW AGENT
4.1 In exercising the rights, duties and obligations prescribed or confirmed by
this Agreement, the Escrow Agent will act honestly and in good faith and will
exercise that degree of care, diligence and skill that a reasonably prudent
person would exercise in comparable circumstances.
4.2 Kodiak and the Principal Vendors jointly and severally covenant and agree
from time to time and at all times hereafter well and truly to save, defend and
keep harmless and fully indemnify the Escrow Agent, its successors, and assigns,
from and against all loss, costs, charges, suits, demands, claims, damages and
expenses which the Escrow Agent, its successors or assigns may at any time or
times hereafter bear, sustain, suffer or be put unto for or by reason or on
account of its acting pursuant to this Agreement or anything in any manner
relating thereto or by reason of the Escrow Agent's compliance in good faith
with the terms hereof.
4.3 In case proceedings should hereafter be taken in any court respecting any
of the Escrow Shares, the Escrow Agent will not be obliged to defend any such
action or submit its rights to the court until it has been indemnified by other
good and sufficient security in addition to the indemnity given in Clause (b)
against its costs of such proceedings.
4.4 The Escrow Agent will have no responsibility in respect of loss of any of
the Escrow Shares except the duty to exercise such care in the safekeeping
thereof as it would exercise if the Escrow Shares belonged to the Escrow Agent.
The Escrow Agent may act on the advice of counsel but will not be responsible
for acting or failing to act on the advice of counsel.
4.5 The Escrow Agent will not be bound in any way by any contract between the
parties hereto whether or not it has notice thereof or of its terms and
conditions and the only duty, liability and responsibility of the Escrow Agent
will be to hold the Escrow Shares as herein directed and to pay and deliver the
same to such persons and other such conditions as are herein set forth. The
Escrow Agent will not be required to pass upon the sufficiency of the Escrow
Shares or to ascertain whether or not the person or persons who have executed,
signed or otherwise issued or authenticated the said documents have authority to
so execute, sign or authorize, issue or authenticate the said documents or any
of them, or that they are the same persons named therein or otherwise to pass
upon any requirement of such instruments that may be essential of their
validity, but it shall be sufficient for all purposes under this Agreement
insofar as the Escrow Agent is concerned that the said documents are deposited
with it as herein specified by the parties executing this Agreement with the
Escrow Agent.
4.6 In no event will the Escrow Agent be deemed to have assumed any liability
or responsibility for the sufficiency, form and manner of making any notice or
demand provided for
<PAGE>
-5-
under this Agreement or of the identity of the persons executing the same, but
it shall be sufficient if any writing purporting to be such a notice, demand or
protest is served upon the Escrow Agent in any manner sufficient to bring it to
its attention.
4.7 In the event that any of the Escrow Shares are attached, garnished or
levied upon under any court order, or if the delivery of such property is stayed
or enjoined by any court order or if any court order, judgment or decree is made
or entered affecting such property or affecting any act by the Escrow Agent, the
Escrow Agent may, in its sole discretion, obey and comply with all writs,
orders, judgments or decrees so entered or issued, whether with or without
jurisdiction, notwithstanding any provision of this Agreement to the contrary.
If the Escrow Agent obeys and complies with any such writs, order, judgment or
decrees it will not be liable to any of the parties hereto or to any other
person, firm or corporation by reason of such compliance, notwithstanding that
such writs, orders, judgments or decrees may be subsequently reversed, modified,
annulled, set aside or vacated.
4.8 Except as herein otherwise provided, the Escrow Agent is authorized and
directed to disregard in its sole discretion any and all notices and warnings
which may be given to it by any of the parties hereto or by any other person,
firm, association or corporation. It will, however, obey the order, judgment or
decree of any court of competent jurisdiction, and it is hereby authorized to
comply with and obey such orders, judgements or decrees and in case of such
compliance, it shall not be liable by reason thereof to any of the parties
hereto or to any other person, firm, association or corporation, even if
thereafter any such order, judgment or decree may be reversed, modified,
annulled, set aside or vacated.
4.9 If the Escrow Agent receives any written instructions contrary to the
instructions contained in this Agreement, the Escrow Agent may continue to hold
the Escrow Shares until the lawful determination of the issue between the
parties hereto.
4.10 If protest is made to any action contemplated by the Escrow Agent under
this Agreement, the Escrow Agent may continue to hold the Escrow Shares until
the right to the documents is legally determined by a court of competent
jurisdiction or otherwise.
4.11 If written notice of protest is made by either Kodiak or the Principal
Vendors to the Escrow Agent to any action contemplated by the Escrow Agent under
this Agreement, and such notice sets out reasons for such protest, the Escrow
Agent will be entitled to continue to hold the Escrow Shares until the right to
the documents is legally determined by a court of competent jurisdiction or
otherwise.
4.12 The Escrow Agent may resign as Escrow Agent by giving not less then ten
(10) days' notice thereof to each of Kodiak and the Principal Vendors. Kodiak
and the Principal Vendors may terminate the Escrow Agent by giving to the Escrow
Agent a notice of termination executed by each of them not less than ten (10)
days' prior to the proposed date of termination. The resignation or termination
of the Escrow Agent will be effective and the Escrow Agent will cease to be
bound by this Agreement on the date that is ten (10) days after the date of
receipt of
<PAGE>
-6-
the termination notice given hereunder or on such other date as the Escrow
Agent, Kodiak and the Principal Vendors may agree upon. All indemnities granted
to the Escrow Agent will survive the termination of this Agreement or the
resignation or termination of the Escrow Agent.
4.13 Notwithstanding anything herein to the contrary, the Escrow Agent may act
upon any written instructions given by the Principal Vendors and Kodiak jointly.
4.14 Notwithstanding anything to the contrary contained herein, in the event of
any dispute arising between Kodiak and the Principal Vendors or between any
other persons or between any of them with respect to the Share Exchange
Agreement, this Agreement or any matters arising thereto, or with respect to the
any of the Escrow Shares, the Escrow Agent may in its sole discretion deliver
and interplead the Escrow Shares into court and such delivery and interpleading
will be an effective discharge to the Escrow Agent.
4.15 The Escrow Agent is under no responsibility to take any action whatsoever
unless and until the reasonable fees and disbursements of the Escrow Agent due
or reasonably expected to accrue are paid in full.
5. COUNTERPARTS
5.1 This Agreement may be executed in several counterparts, each of which will
be deemed to be an original and all of which will together constitute one and
the same instrument.
6. GENERAL
6.1 Except as herein otherwise provided, no subsequent alteration, amendment,
change or addition to this Agreement will be binding upon the parties hereto
unless reduced to writing and signed by the parties.
6.2 This Agreement will enure to the benefit of and be binding upon the parties
and their respective heirs, executors, administrators, successors, and assigns.
6.3 The parties will execute and deliver all such further documents, do or
cause to be done all such further acts and things, and give all such further
assurances as may be necessary to give full effect to the provisions and intent
of this Agreement.
6.4 This Agreement will be governed by and construed in accordance with the law
of British Columbia.
6.5 Any notice required or permitted to be given under this Agreement will be
in writing and may be given by delivering, sending by electronic facsimile
transmission or other means of electronic communication capable of producing a
printed copy, or sending by prepaid registered mail posted in Canada the United
States and Australia, the notice to the addresses set forth on the first page of
this agreement (or to such other address or facsimile number as any
<PAGE>
-7-
party may specify by notice in writing to another party). Any notice delivered
or sent by electronic facsimile transmission or other means of electronic
communication capable of producing a printed copy on a business day will be
deemed conclusively to have been effectively given on the day the notice was
delivered, or the transmission was sent successfully, as the case may be. Any
notice sent by prepaid registered mail will be deemed conclusively to have been
effectively given on the third business day after posting; but if at the time of
posting or between the time of posting and the third business day thereafter
there is a strike, lockout, or other labour disturbance affecting postal
service, then the notice will not be effectively given until actually delivered.
6.6 Time is of the essence of this Agreement.
6.7 Delivery of an executed copy of this Agreement by electronic facsimile
transmission or other means of electronic communication capable of producing a
printed copy will be deemed to be execution and delivery of this Agreement on
the date of such communication by the party so delivering such copy, subject to
delivery of an originally executed copy of this Agreement to the other party
hereto within two weeks of the date of delivery of the copy sent via the
electronic communication.
6.8 It is understood and agreed by the parties to this Agreement that the only
duties and obligations of the Escrow Agent are those specifically stated herein
and no other.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed under
seal and delivered this ____ day of _________, 1999.
CLARK, WILSON
Per: /s/ Bernard Pinsky
------------------------------------
Partner
KODIAK GRAPHICS COMPANY
Per: /s/ William Turner, President
------------------------------------
Authorized Signatory
GANG CONSULTING INC.
Per: /s/ Authorized Signatory
------------------------------------
Authorized Signatory
<PAGE>
SIGNED, SEALED AND DELIVERED by )
RANDY DAGGITT in the presence of: )
)
)
/s/ Jeff Paquin )
- -------------------------------------- )
Name )
- -------------------------------------- ) /s/ Randy Daggitt
Address ) ----------------------
- -------------------------------------- ) RANDY DAGGITT
)
- -------------------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED by )
JEFF PAQUIN in the presence of: )
)
/s/ Michael Slater )
- -------------------------------------- )
Signature )
- -------------------------------------- ) /s/ Jeff Paquin
Print Name ) --------------------
- -------------------------------------- ) JEFF PAQUIN
Address )
- -------------------------------------- )
)
- -------------------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED by )
JAMES BROWN in the presence of: )
)
/s/ Jeff Paquin )
- -------------------------------------- )
Name )
- -------------------------------------- ) /s/ James Brown
Address ) --------------------
- -------------------------------------- ) JAMES BROWN
)
- -------------------------------------- )
Occupation )
<PAGE>
SIGNED, SEALED AND DELIVERED by )
MICHAEL SLATER in the presence of: )
)
/s/ Jeff Paquin )
- -------------------------------------- )
Signature )
- -------------------------------------- ) /s/ Michael Slater
Print Name ) --------------------
- -------------------------------------- ) MICHAEL SLATER
Address )
- -------------------------------------- )
)
- -------------------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED by )
ANTHONY VECCHIO in the presence of: )
)
/s/ Jeff Paquin )
- -------------------------------------- )
Signature )
- -------------------------------------- ) /s/ Anthony Vecchio
Print Name ) --------------------
- -------------------------------------- ) ANTHONY VECCHIO
Address )
- -------------------------------------- )
)
- -------------------------------------- )
Occupation )
EXHIBIT 10.4
SERVICE AGREEMENT
THIS AGREEMENT dated for reference the 1st day of March, 1999.
BETWEEN:
Jeffrey D Paquin, Lawyer and business man, residing at 4775 Woodgreen
Drive, West Vancouver, British Columbia
("JDP.")
OF THE FIRST PART
AND:
Sportsprize Entertainment Inc.,
A body corporate incorporated under the laws of the
State of Nevada, U.S.A.
("Sportsprize")
OF THE SECOND PART
WHEREAS:
A. Jeffrey Paquin ("JDP") is a Director and President of Sportsprize
Entertainment Inc.
B. Sportsprize wishes to pay JDP. to provide services to Sportsprize, and to
continue toserve as an officer of Sportsprize and perform the duties of the
office of President of Sportsprize, on the terms and subject to the conditions
set out herein.
NOW, THEREFORE, THIS AGREEMENT WITNESSES that the parties mutually agree as
follows:
1. Engagement: Sportsprize engages JDP., to provide the services of President
to Sportsprize to serve as an officer of Sportsprize and perform the duties
of the office of President of Sportsprize.
2. Term: The term ("Term") of the engagement ("Engagement") deemed to have
commenced on the date of execution and will end on the first anniversary,
unless terminated pursuant to this Agreement.
3. Duties and Obligations of JDP: During the Term, JDP. will:
<PAGE>
2
(a) Make himself available for election to the office of President of
Sportsprize, as determined by the Board of Directors (the "Board") of
Sportsprize.
4. Performance: JDP. will perform the duties hereunder as follows:
(a) Subject to ill health, JDP. will provide the services of President to
Sportsprize during each day that is a business day in the Term.
5. Remuneration: In consideration of the services to be provided by JDP.
hereunder, Sportsprize will:
(a) pay JDP. US$ 3,500 (or such other amount as the parties may agree in
writing) per calendar month during the Term on the last day of each
month or, if such days are not business days, on the first prior day
that is a business day;
(1) Once JDP becomes a full time employee of Sportsprize, JDP. shall
receive from Sportsprize USD $7,500 per Month. Further, once the
company achieves an income revenue that is at least equal to the
companies operating costs, then the parties will renegotiate
JDP's monthly remuneration to a rate considered at par to
industry standards.
(b) Reimburse JDP, for all reasonable expenses incurred by JDP. in the
performance of the duties as President .
(b) In the absolute discretion of the Board, grant JDP stock options in
accordance with the rules and regulations of applicable regulatory
authorities. The minimum number of options to be issued per year will
be 300,000 at a price no less than $0.25 per share, and subject to the
appropriate regulatory bodies.
6. Termination: The following will govern termination under this Agreement:
(a) If JDP agrees to become a full-time employee of Sportsprize, JDP. may
deliver to Sportsprize a notice to terminate this Engagement on a day
not less than 30 days after the day of such delivery and the
Engagement will terminate at the expiration of such 30-day period.
(b) if JDP wishes to terminate his employment or this agreement he shall
give the company thirty days notice, and will not receive any further
stock incentives thereafter.
(b) Sportsprize may terminate the Engagement without notice and without
any payment in lieu of notice if:
(i) JDP. is guilty of any wilful act, neglect, or conduct that causes
substantial damage or discredit to Sportsprize, or
(ii) JDP. is convicted of any offense involving fraud.
<PAGE>
3
(c) Sportsprize may terminate the Engagement on notice given not less than
one- (1) months prior to the effective date of termination. Upon such
termination, JDP. will be paid a severance allowance as follows:
Six months income and no more than two thirds of any remaining stock
incentives still outstanding
7. Disclosure: JDP will refrain from making public or disclosing to any person
who is not an officer or direction of Sportsprize any information that may
come to the knowledge of Sky during the Term respecting the business
dealings of Sportsprize or any of the clients of Sportsprize.
8. 1. Indemnity: JDP. will indemnify and save harmless Sportsprize from and
against any and all damages or losses resulting from:
(a) Any breach of this Agreement on the part of JDP., or
(c) Any act or omission of JDP. where such constitutes gross negligence or
wilful misconduct, but no act of JDP will, of itself, be deemed gross
negligence or wilful misconduct if it is done or omitted at the
instruction or with the concurrence of the Board.
2. Sportsprize shall execute an Indemnification Agreement in favour of
JDP acting out his duties as an executive Officer of the Company.
9. Assignment: JDP may not assign all or any part of its interest in this
Agreement or delegate the performance of his duties hereunder to any other
person without the written consent of Sportsprize.
10. Miscellaneous:
(a) Each party will, on the request of the other, execute and deliver such
other agreements, deeds, documents, and instruments, and do such
further acts and things as the other may reasonably request in order
to evidence, carry out and give full force and effect to the terms,
conditions, intent and meaning of this Agreement.
(b) If any provision of this Agreement is invalid or unenforceable for any
reason whatsoever, such provision will be severable from the remainder
of this Agreement, the validity of the remainder will continue in full
force and effect and this Agreement will be construed as if it had
been executed without the invalid or unenforceable provision.
(c) No consent or waiver express or implied, by either party to or of any
breach by the other party in the performance by the other of any or
all of its obligations under this Agreement:
<PAGE>
4
(i) Will be valid unless it is in writing and specifically stated to
be a consent or waiver pursuant to this subsection,
(ii) May be relied on by the other as a consent or waiver to or of any
other breach or default of the same or any other obligation,
(iii)Will constitute a general consent or waiver under this
Agreement, or
(iv) Will eliminate or modify the need for a specific consent or
waiver pursuant to this subsection in any other instance.
(d) Notices, requests, demands, or directions to one party to this
Agreement by another will be in writing and will be delivered as
follows:
If to Sportsprize at:
----------------------------------
----------------------------------
If to JDP. at:
4775 Woodgreen Drive, West Vancouver BC., V7S 2Z9
Attention: Jeffrey Paquin
Or to such other address as may be specified by one party to the other
in a notice given in the manner provided in this subsection.
(e) This Agreement is made in British Columbia with the intention that its
construction and validity and all other issues related to its
administration will, in all respects, be governed by the laws
prevailing in that Province.
(f) In the event of any dispute between the parties in respect of the
interpretation of this Agreement or any matter to be agreed on, such
dispute will be determined by a single arbitrator appointed and acting
pursuant to the Commercial Arbitration Act (British Columbia) and the
decision of the arbitrator will be final and binding on the parties.
<PAGE>
5
(g) This Agreement constitutes the entire agreement between the parties
and there are no representations or warranties, express or implied,
statutory or otherwise, and no agreement collateral hereto other than
as expressly set forth or referred to herein.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the
day first above written.
Sportsprize Entertainment Inc.
By it's authorized signatory:
/s/Illegible
- ------------------------------------
Secretary/treasurer
/s/Jeffrey D. Paquin
- ------------------------------------
Jeffrey D Paquin
EXHIBIT 10.5
SERVICE AGREEMENT
THIS AGREEMENT dated for reference the 1st day of March, 1999.
BETWEEN:
John Gordon Thompson.of 6368 Crescent Court, Delta British Columbia
V4K 4Y5
("THOMPSON")
OF THE FIRST PART
AND:
Sportsprize Entertainment Inc.,
A body corporate incorporated under the laws of the
State of Nevada, U.S.A.
("SEI")
OF THE SECOND PART
WHEREAS:
A. Thompson has fourteen years experience in sports related gaming operations
with the British Columbia Lottery Corporation.
B. SEI wishes for Thompson to serve as an officer of SEI and perform the
duties of the office of Vice President of Research and Development of SEI, on
the terms and subject to the conditions set out herein.
NOW, THEREFORE, THIS AGREEMENT WITNESSES that the parties mutually agree as
follows:
1. Engagement: SEI engages Thompson and Thompson agrees, to serve as an
officer of SEI and perform the duties of the office of Vice President of
Research and Development of SEI described in subsection 3(a), on the terms
and subject to the conditions set out herein.
2. Term: The term ("Term") of the engagement ("Engagement") pursuant to
section 1 will be deemed to have commenced on the date of execution and
will end on the first anniversary, unless terminated pursuant to this
Agreement.
3. Duties and Obligations of THOMPSON: During the Term, THOMPSON will:
[Initials]
<PAGE>
2
(a) Make himself available for election to the Office of Vice President of
SEI, including, without limitation, performance of each of the
following duties:
(i) Acting as, and accepting the appointment to the Office of
Vice President of Research & Development.
(ii) Recommending product specifications.
(iii) Responsibility for preparing specifications for product
development and software design.
(iv) Designing and implementing procedures for product and
software development.
(v) Assuming responsibility for direction and development of
product.
(vi) Undertaking strategic planning in all present and future
product development.
(vii) Monitoring and evaluating the product design and systems
support
(viii) Maintaining liaison with key personnel such as software
developers, designers, writers engineers and systems support
staff.
(ix) Participating in corporate strategies for product roll out;
including presentations, board meetings etc.
(x) Assisting the President and otherwise acting in accordance
with his instructions.
(b) Be liable to his own income tax pursuant to the Income Tax Act and any
other applicable legislation.
4. Performance: Thompson and Thompson will perform their duties hereunder as
follows:
(a) Subject to ill health of Thompson, he will provide the services to SEI
during each day that is a business day in the Term.
(b) During the Term to performing the duties described in subsection 3(a)
to the best of his skill and ability.
5. Remuneration: In consideration of the services to be provided by Thompson
hereunder, SEI will:
[Initials]
<PAGE>
3
(a) pay Thompson USD$ 3,500 (or such other amount as the parties may agree
in writing) per calendar month during the Term on the last day of each
month or, if such days are not business days, on the first prior day
that is a business day;
(1) Once Thompson Completes and delivers a working Product that has
been Beta tested on SEI web-site and is available for commercial
use, SEI shall increase the payments to Thompson to USD $5,000
per month.
(2) Once the Product is has been put into commercial use, meaning
that SEI is able to achieve revenue as a result of the working
product, then Thompson shall receive a total of $7,000 per month.
(b) Reimburse Thompson for all reasonable expenses incurred by him in the
performance of the duties described in subsection 3(a) and will
provide to SEI such particulars of such expenses as SEI may reasonably
require;
(C) grant to Thompson, Incentive Stock Options in the amount 150,000
shares priced at $0.25
6. Termination: The following will govern termination under this Agreement:
(a) SEI may terminate the Engagement without notice and without any
payment in lieu of notice if:
(i) Thompson is guilty of any wilful act, neglect, or conduct that
causes substantial damage (materially injure the reputation of
SEI) or discredit to SEI, or
(ii) Thompson is convicted of any offense involving fraud.
(b) SEI may terminate the Engagement on notice given not less than one-
(1) months prior to the effective date of termination. Upon such
termination, Thompson will be paid in an amount equivalent to three
months remuneration as set out in section 5.
7. Disclosure: Thompson will, refrain from making public or disclosing to any
person who is not an officer or direction of SEI any information, not
already in the public domain, that may come to the knowledge of Thompson
during the Term respecting the business dealings of SEI or any of the
clients of SEI.
8. Indemnity: 1. Thompson will indemnify and save harmless SEI from and
against any and all damages or losses resulting from:
(a) Any breach of this Agreement on the part of Thompson, or
[Initials]
<PAGE>
4
(a) Any act or omission of Thompson where such constitutes gross
negligence or wilful misconduct, but no act of Thompson will, of
itself, be deemed gross negligence or willful misconduct if it is done
or omitted at the instruction or with the concurrence of the Board.
2. SEI will provide a separate Indemnification Agreement to Thompson in
respect to his duties as an officer of SEI
9. Miscellaneous
(a) Each party will, on the request of the other, execute and deliver such
other agreements, deeds, documents, and instruments, and do such
further acts and things as the other may reasonably request in order
to evidence, carry out and give full force and effect to the terms,
conditions, intent and meaning of this Agreement.
(b) If any provision of this Agreement is invalid or unenforceable for any
reason whatsoever, such provision will be severable from the remainder
of this Agreement, the validity of the remainder will continue in full
force and effect and this Agreement will be construed as if it had
been executed without the invalid or unenforceable provision.
(c) No consent or waiver express or implied, by either party to or of any
breach by the other party in the performance by the other of any or
all of its obligations under this Agreement:
(i) Will be valid unless it is in writing and specifically stated to
be a consent or waiver pursuant to this subsection,
(ii) May be relied on by the other as a consent or waiver to or of any
other breach or default of the same or any other obligation,
(iii)Will constitute a general consent or waiver under this
Agreement, or
(iv) Will eliminate or modify the need for a specific consent or
waiver pursuant to this subsection in any other instance.
(d) Notices, requests, demands, or directions to one party to this
Agreement by another will be in writing and will be delivered as
follows:
If to Sportsprize at:
----------------------------------
----------------------------------
If to Thompson at:
[Initials]
<PAGE>
5
----------------------------------
----------------------------------
Attention: Mr. Thompson
Or to such other address as may be specified by one party to the other
in a notice given in the manner provided in this subsection.
(e) This Agreement is made in British Columbia with the intention that its
construction and validity and all other issues related to its
administration will, in all respects, be governed by the laws
prevailing in that Province.
(f) In the event of any dispute between the parties in respect of the
interpretation of this Agreement or any matter to be agreed on, such
dispute will be determined by a single arbitrator appointed and acting
pursuant to the Commercial Arbitration Act (British Columbia) and the
decision of the arbitrator will be final and binding on the parties.
[Initials]
<PAGE>
6
(g) This Agreement constitutes the entire agreement between the parties
and there are no representations or warranties, express or implied,
statutory or otherwise, and no agreement collateral hereto other than
as expressly set forth or referred to herein.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the
day first above written.
Sportsprize Entertainment Inc.
By it's authorized signatory:
/s/ Jeff Paquin
- ------------------------------------
Jeff Paquin
John Thompson
By his signatory:
/s/ John Thompson
- ------------------------------------
John Thompson
EXHIBIT 10.6
SERVICE AGREEMENT
THIS AGREEMENT dated for reference the 1st day of March, 1999.
BETWEEN:
Donald Robert Mackay, CMA., 1840 Redwood Drive, Surrey,
British Columbia
("Bob")
OF THE FIRST PART
AND:
Sportsprize Entertainment, Inc.,
A body corporate incorporated under the laws of the
State of Nevada, U.S.A.
("SEI")
OF THE SECOND PART
WHEREAS:
A. Bob is a certified Management Accountant, with over twenty years experience
as Chief Financial Officer, Senior Financial Accountant for Reporting Companies.
Mr. Mackay received his Bachelor of Commerce Degree from the University of
British Columbia in 1976.
B. SEI wishes to obtain from Bob, and Bob has agreed to provide to SEI,
accounting services and to serve as an officer of SEI and perform the duties of
the office of Chief Financial Officer of SEI, on the terms and subject to the
conditions set out herein.
NOW, THEREFORE, THIS AGREEMENT WITNESSES that the parties mutually agree as
follows:
1. Engagement: SEI engages Bob and Bob agrees, to provide professional
accounting services to SEI and to serve as an officer of SEI and perform
the duties of the office of Chief Financial Officer of SEI described in
subsection 3(a), on the terms and subject to the conditions set out herein.
2. Term: The term ("Term") of the engagement ("Engagement") pursuant to
section 1 will be deemed to have commenced on the date of execution and
will end on the first anniversary, unless terminated pursuant to this
Agreement.
[Initials]
<PAGE>
2
3. Duties and Obligations of Bob: During the Term, Bob will:
(a) Make himself available for election to the Office of Chief Financial
Officer of SEI, including, without limitation, performance of each of
the following duties:
(i) Acting as, and accepting the appointment to the Office of
Chief Financial Officer.
(ii) Recommending accounting and financial reporting systems.
(iii) Responsibility for preparing monthly banking
reconciliation's, financial statements, accounts payable,
financial reports necessary for Regulatory Filings etc.
(iv) Designing and implementing procedures for corporate
accounting.
(v) Assuming responsibility for direction and development of
corporate filings.
(vi) Undertaking strategic planning in the Office of CFO.
(vii) Monitoring and evaluating the financial systems support.
(viii) Maintaining liaison with key Regulatory Personnel.
(ix) Participating in corporate strategies for product roll out;
including presentations, board meetings etc.
(x) Assisting the President and otherwise acting in accordance
with his instructions.
(b) Be liable to his own income tax pursuant to the Income Tax Act and any
other applicable legislation.
4. Performance: Bob will perform his duties hereunder as follows:
(a) Subject to ill health of Bob, he will provide the services to SEI
during each day that is a business day in the Term.
(b) Bob will devote four hours of his time and energy during normal
business hours on each business days during the Term to performing the
duties described in subsection 3(a) to the best of his skill and
ability.
(c) Notwithstanding subsections (a) and (b), Bob will not be required to
provide the services to SEI on statutory holidays and at such times
and during such periods, being not less than ____ weeks in the
aggregate in respect of the year of the Term, as the parties may
reasonably agree in respect of vacation for Bob.
[Initials]
<PAGE>
3
5. Remuneration: In consideration of the services to be provided by Bob
hereunder, SEI will:
(a) pay Bob USD$2,000 (or such other amount as the parties may agree in
writing) per calendar month during the Term on the last day of each
month or, if such days are not business days, on the first prior day
that is a business day;
(1) Issue Bob 150,000 shares under Regulation "s".
(2) Upon the filing and receipt of the Form 10 with the Securities
and Exchange Commission, SEI will issue to Bob 100,000 stock
options at a price not to be less than usd$.25.
(b) Reimburse Bob for all reasonable expenses incurred by him in the
performance of the duties described in subsection 3(a) and will
provide to SEI such particulars of such expenses as SEI may reasonably
require;
6. Termination: The following will govern termination under this Agreement:
(a) SEI may terminate the Engagement without notice and without any
payment in lieu of notice if:
(i) Bob is guilty of any wilful act, neglect, or conduct that causes
substantial damage or discredit to SEI, or
(ii) Bob is convicted of any offense involving fraud.
(b) SEI may terminate the Engagement on notice given not less than one-
(1) months prior to the effective date of termination. Upon such
termination, Bob will be paid a severance allowance as follows:
One months income.
(c) In the event that Bob becomes permanently disabled prior to
termination of the Engagement hereunder, SEI may terminate the
Engagement in which case the provisions of subsection 6(a) will apply.
(d) In the event the Bob shall become a full time employee then this
Agreement shall be rescinded and replaced with a new Employment
Agreement.
7. Disclosure: Bob will, refrain from making public or disclosing to any
person who is not an officer or direction of SEI any information that may
come to the knowledge of Pat during the Term respecting the business
dealings of SEI or any of the clients of SEI.
[Initials]
<PAGE>
4
8. Indemnity: bob will indemnify and save harmless SEI from and against any
and all damages or losses resulting from:
(a) Any breach of this Agreement on the part of Bob, or
(b) Any act or omission of Bob where such constitutes gross negligence or
wilful misconduct, but no act of Bob will, of itself be deemed gross
negligence or wilful misconduct if it is done or omitted at the
instruction or with the concurrence of the Board.
9. Miscellaneous
(a) Each party will, on the request of the other, execute and deliver such
other agreements, deed, documents, and instruments, and do such
further acts and things as the other may reasonably request in order
to evidence, carry out and give full force and effect to the terms,
conditions, intent and meaning of this Agreement.
(b) If any provision of this Agreement is invalid or unenforceable for any
reason whatsoever, such provision will be severable from the remainder
of this Agreement, the validity of the remainder will continue in full
force and effect and this Agreement will be construed as if it had
been executed without the invalid or unenforceable provision.
(c) No consent or waiver express or implied, by either party to or of any
breach by the other party in the performance by the other of any or
all of its obligations under this Agreement:
(i) Will be valid unless it is in writing and specifically
stated to be a consent or waiver pursuant to this
subsection,
(ii) May be relied on by the other as a consent or waiver to or
of any other breach or default of the same or any other
obligation,
(iii) Will constitute a general consent or waiver under this
Agreement, or
(iv) Will eliminate or modify the need for a specific consent or
waiver pursuant to this subsection in any other instance.
(d) Notices, requests, demands, or directions to one party to this
Agreement by another will be in writing and will be delivered as
follows:
If to SEI at:
--------------------------------
[Initials]
<PAGE>
5
--------------------------------
If to Bob at:
1840 Redwood Drive
Surrey, B.C. V1P 1M6
Attention: Mr. Bob Mackay
Or to such other address as may be specified by one party to the other
in a notice given in the manner provided in this subsection.
(e) This Agreement is made in British Columbia with the intention that its
construction and validity and all other issues related to its
administration will, in all respects, be governed by the laws
prevailing in that Province.
(f) In the event of any dispute between the parties in respect of the
interpretation of this Agreement or any matter to be agreed on, such
dispute will be determined by a single arbitrator appointed and acting
pursuant to the Commercial Arbitration Act (British Columbia) and the
decision of the arbitrator will be final and binding on the parties.
[Initials]
<PAGE>
6
(g) This Agreement constitutes the entire agreement between the parties
and there are no representations or warranties, express or implied,
statutory or otherwise, and no agreement collateral hereto other than
as expressly set forth or referred to herein.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the
day first above written.
Sportsprize Entertainment Inc.
By it's authorized signatory:
/s/ Jeff Paquin
- -------------------------------------
Robert MacKay, CMA
By his signatory:
/s/ Bob MacKay
- -------------------------------------
Bob MacKay
EXHIBIT 10.7
SERVICE AGREEMENT
THIS AGREEMENT dated for reference the 1st day of March, 1999.
BETWEEN:
Olson Cove Consulting Ltd., a body corporate incorporated under
The laws of the Province of British Columbia
("OCCL.")
OF THE FIRST PART
AND:
Sportsprize Entertainment Inc.,
A body corporate incorporated under the laws of the
State of Nevada, U.S.A.
("SEI")
OF THE SECOND PART
WHEREAS:
A. Thomas Cove ("Thomas") is an employee of Olson Cove Consulting Ltd.
B. SEI wishes to obtain from OCCL. and OCCL. has agreed to provide to SEI, the
services of Thomas to serve as an officer of SEI and perform the duties of the
office of Vice President Technical Operations of SEI, on the terms and subject
to the conditions set out herein.
NOW, THEREFORE, THIS AGREEMENT WITNESSES that the parties mutually agree as
follows:
1. Engagement: SEI engages OCCL., and OCCL. agrees, to provide the services of
Thomas to SEI to serve as an officer of SEI and perform the duties of the
office of Vice-President Technical Operations of SEI described in
subsection 3(a), on the terms and subject to the conditions set out herein.
2. Term: The term ("Term") of the engagement ("Engagement") pursuant to
section 1 will be deemed to have commenced on the date of execution and
will end on the first anniversary, unless terminated pursuant to this
Agreement.
[Initials]
<PAGE>
2
3. Duties and Obligations of Thomas: During the Term, OCCL. will:
(a) Make Thomas available for election to the office of Vice-President of
technical Operations of SEI as from time to time determined by the
Board of Directors (the "Board") of SEI, including, without
limitation, performance of each of the following duties:
(i) Acting as, and accepting the appointment to the office of
Vice president of Technical Operations.
(ii) Recommending methods and models of execution of product
development plans.
(iii) Responsibility for management of overall product delivery
(iv) Designing and implementing procedures for product
development, including software and graphics design, web
site and Internet functions in relation to product delivery.
(v) Assuming responsibility for direction of the software
writers, engineers and designers, ensuring schedule
requirements quality controls.
(vi) Undertaking strategic planing including the use case models,
identification of technical, resource and budgetary
constraints.
(vii) Monitoring and evaluating the product design and systems
support for operations.
(viii) Maintaining liaison with key personnel such as software
writers, engineers, systems support teams and customers.
(ix) Participating in corporate strategies
(x) Assisting the President and otherwise acting in accordance
with his instructions.
(b) Be liable to comply with the withholding and other requirements of the
Income Tax Act and any other applicable legislation in respect of any
remuneration paid by OCCL to Thomas.
4. Performance: OCCL. and Thomas will perform their duties hereunder as
follows:
(a) Subject to ill health of Thomas, OCCL. will provide the services of
Thomas to SEI during each day that is a business day in the Term.
[Initials]
<PAGE>
3
(b) OCCL. will cause Thomas to devote at least Half all of his time and
energy during normal business hours on each business day during the
Term to performing the duties described in subsection 3(a) to the best
of his skill and ability.
(c) Notwithstanding subsections (a) and (b), OCCL. will not be required to
provide the services of Thomas to SEI on statutory holidays and at
such times and during such periods, being not less than two weeks in
the aggregate in respect of each year of the Term, as the parties may
reasonably agree in respect of vacation for Thomas
5. Remuneration: In consideration of the services to be provided by OCCL.
hereunder, SEI will:
(a) pay OCCL. US$ 2000 (or such other amount as the parties may agree in
writing) per calendar month during the Term on the last day of each
month or, if such days are not business days, on the first prior day
that is a business day;
(1) Once Thomas becomes a full time employee of SEI, OCCL. shall
receive from SEI USD $5,000 per Month. Further, once the company
achieves an income revenue that is at least equal to the
companies operating costs, then the parties will renegotiate
Thomas's monthly remuneration to a rate considered at par to
industry standards.
(2) Issue OCCL 25,000 common class A voting shares as a signing bonus
upon the execution of this Agreement,
(3) Issue OCCL 125,000 Common Shares but to be held in escrow only to
be released to Thomas on the performance of the following;
i. One half (62,500) on July 1.1999.
ii. One half (62,500) on the first anniversary of this Agreement
(b) Reimburse OCCL. or Thomas, as the case may be, for all reasonable
expenses incurred by OCCL. and Thomas in the performance of the duties
described in subsection 3(a) and OCCL. and Thomas, as the case may be,
will provide to SEI such particulars of such expenses as SEI may
reasonably require;
(c) Grant OCCL stock options in accordance with the rules and regulations
of applicable regulatory authorities. The minimum number of options to
be issued per year will be 100,000 at a price no less than $0.50 per
share, and subject to the appropriate regulatory bodies.
6. Termination: The following will govern termination under this Agreement:
(a) If Thomas agrees to become a full-time employee of SEI, OCCL. may
deliver to SEI a notice to terminate the Engagement on a day not less
than 30 days after the day of such delivery and the Engagement will
terminate at the expiration of such 30-day period, provided that
Thomas will then be deemed to replace and to substitute for OCCL. for
all purposes of this Agreement and the provisions of this
[Initials]
<PAGE>
4
Agreement will be construed mutatis mutandis with respect to such
replacement and substitution.
(b) if Thomas wishes to terminate his employment or this agreement he
shall give the company thirty days notice, and will not receive any
further stock incentives thereafter.
(c) SEI may terminate the Engagement without notice and without any
payment in lieu of notice if:
(i) OCCL. Or Thomas is guilty of any wilful act, neglect, or conduct
that causes substantial damage or discredit to SEI, or
(ii) OCCL. Or Thomas is convicted of any offense involving fraud.
(d) SEI may terminate the Engagement on notice given not less than one-
(1) months prior to the effective date of termination. Upon such
termination, OCCL. will be paid a severance allowance as follows:
One months income.
(e) In the event that Thomas becomes permanently disabled prior to
termination of the Engagement hereunder, SEI may terminate the
Engagement in which case the provisions of subsection 6(a) will apply.
7. Disclosure: Thomas will refrain from making public or disclosing to any
person who is not an officer or direction of SEI any information that may
come to the knowledge of Thomas during the Term respecting the business
dealings of SEI or any of the clients of SEI.
8. 1. Indemnity: OCCL. will indemnify and save harmless SEI from and against
any and all damages or losses resulting from:
(a) Any breach of this Agreement on the part of OCCL., or
(b) Any act or omission of OCCL. where such constitutes gross negligence
or wilful misconduct, but no act of Thomas will, of itself, be deemed
gross negligence or wilful misconduct if it is done or omitted at the
instruction or with the concurrence of the Board.
2. SEI shall execute an Indemnification Agreement in favour of Thomas
acting out his duties as an executive Officer of the Company.
[Initials]
<PAGE>
5
9. Assignment: Thomas may not assign all or any part of its interest in this
Agreement or delegate the performance of Thomas's duties hereunder to any
other person without the written consent of SEI.
10. Miscellaneous:
(a) Each party will, on the request of the other, execute and deliver such
other agreements, deeds, documents, and instruments, and do such
further acts and things as the other may reasonably request in order
to evidence, carry out and give full force and effect to the terms,
conditions, intent and meaning of this Agreement.
(b) If any provision of this Agreement is invalid or unenforceable for any
reason whatsoever, such provision will be severable from the remainder
of this Agreement, the validity of the remainder will continue in full
force and effect and this Agreement will be construed as if it had
been executed without the invalid or unenforceable provision.
(c) No consent or waiver express or implied, by either party to or of any
breach by the other party in the performance by the other of any or
all of its obligations under this Agreement:
(i) Will be valid unless it is in writing and specifically stated to
be a consent or waiver pursuant to this subsection,
(ii) May be relied on by the other as a consent or waiver to or of any
other breach or default of the same or any other obligation,
(iii)Will constitute a general consent or waiver under this
Agreement, or
(iv) Will eliminate or modify the need for a specific consent or
waiver pursuant to this subsection in any other instance.
(d) Notices, requests, demands, or directions to one party to this
Agreement by another will be in writing and will be delivered as
follows:
If to Sportsprize at:
----------------------------------
----------------------------------
If to OCCL. at:
921 Roslyn Blvd.
North Vancouver, BC
V7G 1P4
[Initials]
<PAGE>
6
Attention: Thomas Cove.
Or to such other address as may be specified by one party to the other
in a notice given in the manner provided in this subsection.
(e) This Agreement is made in British Columbia with the intention that its
construction and validity and all other issues related to its
administration will, in all respects, be governed by the laws
prevailing in that Province.
(f) In the event of any dispute between the parties in respect of the
interpretation of this Agreement or any matter to be agreed on, such
dispute will be determined by a single arbitrator appointed and acting
pursuant to the Commercial Arbitration Act (British Columbia) and the
decision of the arbitrator will be final and binding on the parties.
[Initials]
<PAGE>
7
(g) This Agreement constitutes the entire agreement between the parties
and there are no representations or warranties, express or implied,
statutory or otherwise, and no agreement collateral hereto other than
as expressly set forth or referred to herein.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the
day first above written.
Sportsprize Entertainment Inc.
By it's authorized signatory:
/s/ Jeff Paquin
- ------------------------------------
Jeff Paquin
Olson Cove Consulting Ltd.
By it's authorized signatory:
/s/ Thomas Cove
- ------------------------------------
Thomas Cove
EXHIBIT 10.8
AGREEMENT AND CONTRACT FOR SERVICES
EFFECTIVE DATE: June 17, 1999
BETWEEN:
SPORTSPRIZE ENTERTAINMENT INC., a company carrying on
business at 225 S. Sepulveda Blvd., Suite 360,
Manhattan Beach, California, U.S.A. 90266
(hereinafter called "Sportsprize")
MICHAEL WIEDDER, who resides at 950 2nd Street,
Santa Monica, California, U.S.A. 90403
(hereinafter called "Wiedder")
WHEREAS:
A. Wiedder is an expert in Internet Marketing, Promotions and Start-up
Websites.
B. SportsPrize wishes to utilize this expertise to quickly and efficiently
develop the marketing, sales and promotion of the Sportsprize Entertainment
Inc.
In exchange of mutual consideration and promise contained herein, Wiedder agrees
to provide consulting and management services to Sportsprize for a period of six
months, beginning June 17th, 1999 and ending December 17th, 1999. At the end of
the six months, an additional one year agreement may be negotiated if mutually
agreed upon by both parties.
Wiedder will provide the following services for Sportsprize:
1. Implement and execute the soft and hard launch strategy and execution of
Sportsprize.
2. Develop e-commerce partnerships, strategic alliances and cross promotions,
which enhance the web-site and improve the corporate revenue model.
3. Oversee, develop and implement the affiliate marketing program and
sponsorship programs for Sportsprize, working closely with the Company's
marketing consultants, Interactive Marketing Inc. and Kaleidoscope Ltd.
4. Wiedder will accept appointment as the officer of VP Marketing. In his
capacity as VP Marketing, Wiedder is expected to assist, strategize and
help implement in other areas of the business on an as needed basis, as if
Wiedder was going the company as a full time executive. This could include
assisting in securing additional employees in marketing and other divisions
of the company, location of office space, merchandise supply relationships,
and other general business matters, which would be part of the general
management team.
[Initials]
<PAGE>
COMPENSATION
Wiedder will be compensated as follows:
1. FEES: $12,500 USD with no deductions per month starting and payable on July
1, 1999 and then $12,500 USD per month, payable on the first of each month,
beginning August 1, 1999 and ending with the final $12,500 USD payment on
December 1st. If both parties decide to renew the agreement for an
additional year the payment will continue on the 1st of each month at the
$12,500 USD rate.
2. EXPENSES: Wiedder will also receive expense reimbursements for phone, fax,
mail, company travel, entertainment and Secretarial services as needed.
Administrative expense reimbursements will be paid on the last day of each
month, beginning July of 1999. Travel, hotel and entertainment expenses
will be reimbursed immediately.
3. SHARES: Wiedder will also receive as compensation 50,000 free-trading
(Subject to SEC Rules & Regulations) options to purchase common stock at a
price of .50 cents per share exercisable in increments of 8,333 shares per
month for the six month term of this contract. These options will expire
after 36 months from the date of this agreement.
It is intended that the options are immediately exercisable at the end of each
month starting in July of 1999 subject to the company filing an options plan
with proper authorization that will qualify options to be exercisable, and
subject to the rules of the SEC regarding exercise and sale of options and
shares.
MERGERS AND ACQUISITIONS
In the event of a company merger and/or (handwritten & initialed) acquisition
during the initial 6-month period or during the extended period if still under
contract then all (400,000) of the options will vest immediately.
RENEWAL
If both parties agree to renew the contract for an additional year, Wiedder will
receive additional 350,000 free-trading (subject to SEC Rules &B Regulations)
options to purchase common stock at the market price at the time of the new
agreement but priced no higher than USD $4.00 per shares. The options would be
subject to an equal monthly vesting period over 18 months (@ a rate of 19,445
shares per month).
These options will expire after 36 months from the date the contract is renewed.
All options will be subject to adjustment if the company does a split or reverse
split of its common shares.
ASSIGNMENT
[Initials]
<PAGE>
Wiedder may also assign the stock to a corporation or other entity subject to
his own tax liability, and any applicable Rules and Regulations.
CONFIDENTIAL INFORMATION
The parties hereto acknowledge and agree that Wiedder by virtue of his contract
with Sportsprize will have access to confidential information and therefore
Wiedder agrees that during the term of this Agreement and on termination or
expiry of the same, for any reason whatsoever, he will divulge or utilize to the
detriment of the company any such confidential or secret information so
obtained.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
18th day of June 1999.
THE COMMON SEAL OF
SPORTSPRIZE ENTERTAINMENT, INC.
Was hereto affixed in the presence of:
/s/ [Illegible] /s/ Jeffrey D. Paquin
- --------------------------------- -----------------------------------
Witness JEFFREY D. PAQUIN
SIGNED, SEALED AND DELIVERED
By MICHAEL WIEDDER In the presence of:
/s/ [Illegible] /s/ Michael Wiedder
- --------------------------------- -----------------------------------
Witness MICHAEL WIEDDER
EXHIBIT 10.9
AGREEMENT AND CONTRACT FOR SERVICES
EFFECTIVE DATE: July 1, 1999
BETWEEN:
SPORTSPRIZE ENTERTAINMENT INC., a company carrying on business at 225
S. Sepulveda Blvd., Suite 360, Manhattan Beach, California, U.S.A.
90266
(Hereinafter called "Sportsprize")
RONALD SHERIDAN, who resides at 7515 Range Avenue, Play Del Rey
California 90293
(Hereinafter called "Sheridan")
WHEREAS:
A. Sheridan has considerable experience in Internet Marketing, Promotions and
Start-up Websites.
B. Sportsprize wishes to utilize this expertise to assist the Vice President
of Marketing in his efforts to quickly and efficiently develop the
marketing and promotion of Sportsprize acting as the "Affiliate Marketing
Manager".
In exchange of mutual consideration and promise contained herein, Sheridan
agrees to provide consulting and management services to Sportsprize for a period
of six months, beginning July 1, 1999 and ending January 1, 2000. At the end of
the six months, an additional one -year agreement may be negotiated if mutually
agreed upon by both parties.
SERVICES
Sheridan, acting as Affiliate Marketing Manager, will provide the VP of
Marketing for Sportsprize with assistance with the following:
1. Implement and execute the soft and hard launch marketing strategy of the
Sportsprize.com web site.
2. Develop e-commerce partnerships, strategic alliances and cross promotions,
which enhance the web site and improve the corporate revenue model.
3. Oversee, develop and implement the affiliate marketing program and
sponsorship programs for Sportsprize, working closely with the Company's
marketing consultants, Interactive Marketing Inc. and Kaleidoscope Ltd.
[Initials]
<PAGE>
4. In his capacity as Affiliate Marketing Manager, Sheridan is expected to
assist, strategize and help the VP of Marketing implement in other areas of
the business on an as needed basis. This could include assisting in
securing additional merchandise supply relationships and other general
business matters, which would be part of the general management team.
COMPENSATION
Sheridan will be compensated as follows:
1. SALARY: $6,667 USD with no deductions per month, starting and payable one
half ($3,333.50) on July 15, 1999, then on the first and fifteenth of each
month ending with the final $3,333.50 USD payment on January 1. If both
parties decide to renew the agreement for an additional year the payment
will continue on the 1st of each month at the $6,667 USD rate.
2. EXPENSES: Expense reimbursements for phone, fax, mail, company travel,
entertainment and secretarial services as needed. Administrative expense
reimbursements will be paid on the last day of each month, beginning August
of 1999. Travel, hotel and entertainment expenses will be reimbursed
immediately.
3. STOCK OPTIONS: Sheridan will also receive as compensation 100,000
free-trading (Subject to SEC Rules & Regulations) options to purchase
common stock at a price of $2.00 per share exercisable in increments of
2,777 shares per month for 36 months. These options will expire after 36
months from the date of the Option Agreement.
It is intended that the options are immediately exercisable at the end of each
month starting in August of 1999, subject to Sportsprize filing an Options Plan
that will qualify options to be exercisable, and subject to the rules of the SEC
regarding exercise and sale of options and shares.
MERGER OR ACQUISITION
In the event of a company merger or acquisition during the initial 6-month
period or during the extended one-year period, then as long as Sheridan is still
employed, all the options will vest immediately.
All options will be subject to adjustment if the Company does a split or reverse
split of its common shares.
CONFIDENTIAL INFORMATION
The parties hereto acknowledge and agree that Sheridan by virtue of employment
with Sportsprize will have access to confidential and secret information or
expiry of the same, for any reason whatsoever, he will not divulge or utilize to
the detriment of the Company and such confidential or secret information so
obtained.
[Initials]
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the 8th day of July 1999.
THE COMMON SEAL OF
SPORTSPRIZE ENTERTAINMENT, INC.
Was hereto affixed in the presence of:
/s/ Jeffrey D. Paquin
- ------------------------------ ----------------------------------
Witness JEFFREY D. PAQUIN, PRESIDENT
SIGNED, SEALED AND DELIVERED
By RONALD SHERIDAN In the presence of:
/s/Witness /s/ Ronald Sheridan
- ------------------------------ ----------------------------------
Witness RONALD SHERIDAN
EXHIBIT 10.10
CONTRACT
THIS AGREEMENT IS DATED FOR REFERENCE the 18th day of February, 1999
(hereinafter referred to as the "Agreement").
BETWEEN:
QUAD-LINQ SOFTWARE INC., a British Columbia company with a place of
business and postal address at #401-889 West Pender Street, Vancouver,
British Columbia (hereinafter referred to as "QUAD-LINQ")
AND:
BEAGLE VENTURES RESOURCES MANAGEMENT, INC., a State of Nevada, USA
company with a place of business and postal address at #1500-885 West
Georgia Street, Vancouver, British Columbia (hereinafter referred to
as the "Client")
WHEREAS:
A. QUAD-LINQ is a corporation providing services relating to the design and
development of software programs and systems;
B. The Client wishes to hire QUAD-LINQ as a contractor for the purpose of
providing the services set out in Schedule "A" to this Agreement
(hereinafter referred to as "Schedule A");
THEREFORE, in consideration of the mutual promises contained in this
agreement, QUAD-LINQ and the Client agree as follows:
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GENERAL
1. QUAD-LINQ's authorized representative is Roger L. Betterton, who has full
authority to act as agent of QUAD-LINQ in all matters pertaining to this
agreement.
2. The Client's authorized representative is Jeffrey D. Paquin (the "Client's
Representative").
3. The Client's Representative has full authority to act as agent of the
Client in all matters pertaining to this Agreement.
EMPLOYMENT RELATIONSHIP
4. QUAD-LINQ is an independent contractor and is not an employee of the Client
and is therefore not entitled to any benefits or payments other than as set
out in this Agreement and Schedule C to this Agreement.
SERVICES PROVIDED
5. QUAD-LINQ will provide services to the Client according to the terms set
out in Schedule A.
6. If a change to this Agreement or its schedule(s) is required by QUAD-LINQ
or the Client after this Agreement has been executed, any such change must
be in writing and signed by QUAD-LINQ and the Client (hereinafter referred
to as the "Parties") in order to be binding on either or both of the
Parties.
7. The services provided by QUAD-LINQ under this Agreement are subject to
review by the Client according to the terms and on the dates specified in
Review Schedule to this Agreement (hereinafter referred to as "Schedule
B").
PAYMENT FOR SERVICES PROVIDED
8. QUAD-LINQ's fee (the "Fee") and Payment Schedule, for providing the
services set out in Schedule A, are set out in Schedule "C" to this
Agreement (hereinafter referred to as "Schedule C").
9. QUAD-LINQ may submit interim statements of account for services rendered to
the Client from time to time for payment by the Client.
10. The Client shall pay the Fee to QUAD-LINQ on the terms set out in this
Agreement and in Schedule C.
11. QUAD-LINQ may incur certain expenses (hereinafter referred to as the
"Disbursements") in carrying out this Agreement and in providing the
services as set out in Schedule A. Upon QUAD-LINQ providing the Client with
a statement
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<PAGE>
of the Disbursements, the Client shall pay QUAD-LINQ for those
Disbursements notwithstanding that the Disbursements may not be disclosed
in Schedule A or in Schedule C.
CONFLICT OF INTEREST
12. QUAD-LINQ represents that it has made every reasonable effort to ascertain
that it may perform the services set out in Schedule A without placing
itself in a situation of conflict of interest. If a situation arises or new
facts become evident which, in the opinion of QUAD-LINQ, places QUAD-LINQ
in a conflict of interest should it perform the services set out in
Schedule A then QUAD-LINQ may, upon notice to the Client, terminate this
Agreement (hereinafter referred to as a "Conflict Termination"). If there
is a Conflict Termination, the Client shall pay QUAD-LINQ for services
rendered up to the time when the conflict of interest arose or was
discovered. In either case, the Client shall also pay QUAD-LINQ for any
Disbursements incurred by QUAD-LINQ to the date of Conflict Termination.
ASSIGNMENT OF AGREEMENT/EMPLOYMENT OF SUB-CONTRACTORS
13. QUAD-LINQ may not assign the whole of this Agreement except with the
Client's written consent.
14. Notwithstanding the foregoing, QUAD-LINQ may hire any person, firm, or
corporation as subcontractor to perform any or all of the services set out
in Schedule A.
ACKNOWLEDGEMENT OF DEVELOPER
15. QUAD-LINQ will be recognized on the introduction of the software as the
original developer and Client will be recognized for any modifications
developed by their organization.
PROPERTY IN MATERIALS AND PROGRAMS
16. If, in the course of providing the services set out in Schedule A,
QUAD-LINQ develops or produces any programs, resources, images, procedures,
manuals or other materials (hereinafter referred to as the "Resources") for
the use of the Client, the property and all rights to the contents and form
of the Resources become and remain the property of Client.
CONFIDENTIALITY, ACCESS TO CLIENT DOCUMENTS AND INFORMATION
17. The Client shall provide all information and copies of documents which may
be reasonably necessary for QUAD-LINQ (or its assignee or sub-contractor)
to be able to provide the services as set out in Schedule A.
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18. QUAD-LINQ shall take all reasonable precautions to ensure that no
information or documents provided to QUAD-LINQ (or its assignee or
sub-contractor) by the Client shall be made public or shall be provided to
any person by any means unless specifically authorized in writing by the
Client.
TERMINATION BY QUAD-LINQ
20. QUAD-LINQ may terminate this Agreement if:
a. completion or continuation of this Agreement would place QUAD-LINQ or
its employees, assignees or sub-contractors, in a position of conflict
of interest which was not consented to by the parties whose interests
might be compromised; or
b. the Client has failed to pay QUAD-LINQ's statements of account when
due; or
c. the Client has not provided information, documents or participation
reasonably required by QUAD-LINQ to perform the services set out in
Schedule A.
If QUAD-LINQ terminates this Agreement for the reasons set out in (b) or (c)
above, the Client shall pay QUAD-LINQ the entire amount due to QUAD-LINQ
(notwithstanding that QUAD-LINQ has not completed the services set out in
Schedule A) pursuant to the Payment Schedule which amount shall become
immediately due and payable.
TERMINATION BY THE CLIENT
21. The Client may terminate this Agreement:
a. at any time and without cause upon 10 days written notice to QUAD-LINQ
if QUAD-LINQ or its employees, assignees or sub-contractors
unreasonably fails to perform the services set out in Schedule A upon
payment of the Disbursements incurred by QUAD-LINQ (or its assignee or
sub-contractor) including any amounts owing by QUAD-LINQ to its
assignee or sub-contractor.
b. at the time of any scheduled review as set out in Schedule B, if the
services provided by QUAD-LINQ at that time do not reasonably satisfy
the criteria set out in the Schedule B and provided that the Client
shall pay QUAD-LINQ for all services rendered and Disbursements
incurred up to that time.
c. at any time, with 10 days written notice to QUAD-LINQ, if the subject
matter of the services set out in Schedule A ceases to exist and upon
payment of:
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i. QUAD-LINQ's Disbursements incurred to the date of termination;
and
ii. QUAD-LINQ's fee (including applicable taxes) for services
provided to the date of termination; and
iii. payment to QUAD-LINQ of an amount equal to 50% of the fee which
QUAD-LINQ would have been entitled to charge for the services
remaining to be performed as set out in Schedule A.
AGENCY RELATIONSHIP BETWEEN THE PARTIES
22. QUAD-LINQ, its shareholders, directors, agents, employees, and assignees
are the agents of the Client in all matters pertaining to the carrying out
of this Agreement.
INDEMNITY
23. The Client agrees that the Client shall indemnify and save harmless
QUAD-LINQ and its shareholders, directors, agents, employees, and assignees
from all actions and claims against QUAD-LINQ or its shareholders,
directors, agents, employees, and assignees arising from the performance of
this Agreement or use of the Resources.
24. With respect to any action in defamation arising from the performance of
this Agreement or use of the Resources, the Client shall be deemed to have
published all reports, memoranda, recommendations and oral statements in
connection with the subject matter of this Agreement and all other matters
reasonably arising from the subject matter of the services set out in
Schedule A to this Agreement.
WARRANTIES
25. QUAD-LINQ makes no warranties or conditions, express or implied, and there
are expressly excluded all implied or statutory warranties or conditions of
merchantability or fitness for a particular purpose and those arising by
statute or otherwise in law or from a course of dealing or usage of trade.
Any stated express warranties are in lieu of all liabilities or obligations
for damages arising out of or in connection with the delivery, use,
performance or licensing of the Resources or in connection with any
services performed under this Agreement.
LIMITATION OF LIABILITY
26. QUAD-LINQ will only be liable for work done directly by QUAD-LINQ or its
employees. QUAD-LINQ will not be liable for any consequences which are the
direct or indirect result of any unauthorized work performed by anyone not
an employee of QUAD-LINQ.
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27. In no event whatsoever will QUAD-LINQ be liable for indirect,
consequential, exemplary, incidental, special or other similar damages,
including but not limited to lost profits, lost business revenue, failure
to realize expected savings, other commercial or economic loss of any kind
or any claim against the Client by any other party arising out of or in
connection with the delivery, use, performance or licensing of the
Resources or in connection with any services performed under this Agreement
or any breach of this Agreement, even if the Client has been advised of the
possibility of such damages.
CHOICE OF LAW
28. The laws of the Province of British Columbia shall govern this Agreement
and any disputes arising from this Agreement.
DISPUTE RESOLUTION
29. All disputes arising out of or in connection with this Agreement, or in
respect of any defined legal relationship associated therewith or derived
therefrom, shall be referred to and finally resolved by arbitration
administered by the British Columbia International Commercial Arbitration
Centre ("BCICAC") pursuant to its rules, or if the Parties otherwise agree,
by any other arbitrator and pursuant to rules as agreed upon.
30. If the Parties agree not to have their dispute arbitrated by the BCICAC,
then any legal action with respect to this Agreement shall be commenced at
a court registry and be heard by a court within the City of Vancouver.
SUCCESSORS AND ASSIGNS
31. This Agreement shall enure to the benefit and be binding upon QUAD-LINQ and
Client and their respective heirs, executors, administrators, successors
and assigns. "Successors" include any corporation resulting from the
amalgamation of a corporation with any other corporation.
ENTIRE AGREEMENT
32. This Agreement, including the Schedules attached hereto, comprise the
entire Agreement between QUAD-LINQ and the Client.
EFFECTIVE DATE
33. This Agreement comes into force on the date on which it is signed by
QUAD-LINQ or by the Client, whichever is the later date.
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EXECUTION BY TELECOPY
34. This Agreement may be executed by the parties and transmitted by facsimile
transmission and if so executed and transmitted this agreement will be for
all purposes as effective as if the parties had delivered an executed
original agreement.
CONSTRUCTION
35. In this Agreement, except as expressly otherwise provided or as the context
otherwise requires:
a. the headings and captions will be considered as provided for
convenience only and as not forming a part of this Agreement and will
not be used to interpret, define or limit the scope, extent or intent
of this Agreement or any of its provisions;
b. the words "include" or "including" when following any general term or
statement are not to be construed as limiting the general term or
statement to the specific items or matters set forth or to similar
items or matters but rather as permitting it to refer to all other
items or matters that could reasonably fall within its broadest
possible scope;
c. an accounting term not otherwise defined has the meaning assigned to
it under, and all accounting matters will be determined in accordance
with, Generally Accepted Accounting Principles as consistently
applied;
d. a reference to currency means United States currency unless
specifically indicated otherwise;
e. a reference to a statute includes every regulation made pursuant
thereto, all amendments to the statute or to any such regulation in
force from time to time and any statute or regulation that supplements
or supersedes such statute or any such regulation;
f. a reference to time or date is to the local time or date in Vancouver,
British Columbia, unless specifically indicated otherwise;
g. a reference to a particular corporation includes the corporation
derived from the amalgamation of the particular corporation or of a
corporation to which such reference is extended by this clause (g),
with one or more other corporations;
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h. a word importing the masculine gender includes the feminine or neuter;
a word importing the singular includes the plural and vice versa.
IN WITNESS of the foregoing this Agreement has been signed by the authorized
signatories for QUAD-LINQ and the Client on the dates noted below:
SIGNED by Roger L. Betterton, ) QUAD-LINQ SOFTWARE INC., by
authorized signatory for QUAD-LINQ ) its authorized signatory:
SOFTWARE INC., on the 18th day of )
February, 1999 in the presence of: ) /s/ Roger L. Betterton
Name: John Thompson ) ---------------------------
--------------------------- )
Address: 6328 Crescent Crt. )
------------------------ )
Delta, BC )
SIGNED by Jeffrey D. Paquin, ) BEAGLE VENTURES RESOURCES
authorized signatory for BEAGLE ) MANAGEMENT, INC., by
VENTURES RESOURCES ) its authorized signatory:
MANAGEMENT, INC., on the )
18th day of Feb, 1999 in ) /s/ Jeffrey D. Paquin
the presence of: ) ---------------------------
Name: /s/ Chris Georgelin )
--------------------------- )
Address: #401-889 W. Pender, Vanc. )
------------------------ )
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<PAGE>
SCHEDULE A - 1.1
Schedule of Services
The software development contract consists of certain sportspool lottery schemes
that demonstrate significant on-line betting applications within the Internet
and lotto industry (the "Product").
In consideration of the premises and agreements set forth, the parties agree as
follows:
1. Deliver Commercial Product. QUAD-LINQ agrees to provide their services,
know-how and ability and facilities to deliver to Client a tested working
Product that is commercially viable and meets Client's objectives, as set
out in the detailed Acceptance Plan, defining what both Parties to this
agreement interperate the final Product to, (attached hereto), on or before
the six month anniversary of this agreement (the "Delivery Date").
a. To establish Operation Systems. QUAD-LINQ agrees to insure as part of
its service that the product is operational and functioning over the
Company's web site over the Internet.
b. To provide a schedule. QUAD-LINQ agrees to provide a schedule for
incremental releases, system design, graphics testing and deployment
of the Product.
2. QUAD-LINQ agrees that we will not during the term of this Agreement, and
for an additional six months, provide either directly or indirectly,
software development services to any Person or Entity anywhere that in any
way competes with the business of the Client.
3. QUAD-LINQ shall make available to Client all Product Technology.
4. Immediately following the execution of this Agreement and anytime
thereafter QUAD-LINQ shall provide to Client, at Client's request, copies
of all reports, drawings, specifications and blueprints, software and
systems relating to any method, product, apparatus or article used in
producing the Product. All material remains proprietary to Client.
5. QUAD-LINQ will immediately provide written notice to Client of any and all
improvements, discoveries and inventions which may be conceive or make,
either alone or while working with others during the term of this Agreement
and which relate to the Product and will immediately upon request by Client
and at its expense, execute and deliver any and all instruments and papers
necessary or desirable to submit Applications for Letters patent and obtain
Letters patent with respect to the inventions, improvements and
discoveries, and in general will do all
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SCHEDULE A - 1.2
Schedule of Services
lawful acts and things as may be requested by Client to obtain Letters patent in
any and all countries.
The schedule of services will consist of the following:
Week 1-3 (2/18/99 - 3/8/99)
Familiarization of Product Concept (Player and Administrative Interface)
- Develop Presentation
Week 4-6 (3/9/99 - 3/29/99)
Registration/Member Database (Player Interface)
- Database Development
- Registration Process
- Member Lookup Process
- Change Personal Information/Password
- Confirmation E-Mail
Week 7-12 (3/30/99 - 4/19/99)
Play Card (Player Interface)
- Play-Card Display Interface
- Integration into Placed-Bets Database
- Confirmation E-Mail
- CSV File Import
Week 13-14 (4/20/99 - 5/3/99)
Posting Results (Administrative Interface)
- Post-Results Interface
- Integration with Placed Bets/Prize Pool Database
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SCHEDULE A - 1.3
Schedule of Services
Week 15-16 (5/25/99 - 6/7/99)
Prize Pool Database (Player Interface)
- Database Development
- Integration with Placed-Bets Database and Play Card Display
Week 17-19 (6/8/99 - 6/28/99)
Play Card Administration (Administrative Interface)
- Database Development (Groups Database)
- Play Card Editor (Start/End Bet Time, Close Time, and Groups)
- Security ACL (Per Play Card)
- CSV File Import (Play Cards' Group)
Week 20-21 (6/29/99 - 7/12/99)
Placed Bets Database (Player Interface)
- Payout Calculation
- Trend Analysis
Week 22-23 (7/13/99 - 7/26/99)
System Administration (Administrative Interface)
- Paramutual Prize Share Configuration (% of Winnings for House)
- Member Administratin (Remove Members, Change Passwords, etc.)
- ACL Setup for Play Cards
Week 24-26 (7/27/99 - 8/16/99)
Final Implementation and Testing
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SCHEDULE B
Review Schedule
<TABLE>
Modules Completed Date Authorized Representative
- ------- -------------- -------------------------
<S> <C> <C>
A. Familiarization of ____________ ______________________
Product Concept
B. Registration/Member ____________ ______________________
Database
C. Play Card ____________ ______________________
D. Placed Bets Database ____________ ______________________
E. Prize Pool Database ____________ ______________________
F. Play Card Administration ____________ ______________________
G. Posting Results ____________ ______________________
H. System Administration ____________ ______________________
I. Final Implementation ____________ ______________________
and Testing
</TABLE>
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SCHEDULE C
Fee
1. In consideration of QUAD-LINQ performing services for Client, Client
agrees:
a. upon the execution of this Agreement to deliver a retainer of one
third the total agreed upon costs of USD$50,000. Additional second and
third payments March 30th 1999 and on the Delivery Date.
b. upon the execution of this Agreement by all the parties agree to issue
and deliver to QUAD-LINQ 200,000 Common Class A Shares issued from
Client's treasurey (hereinafter referred to as "Treasurey Shares") in
the authorized capital of Client, on a performance bases;
i. 100,000 released from escrow on the Delivery Date.
ii. 100,000 released when the systems and product have been tested
and are in operation on Client's Web site.
2. QUAD-LINQ may charge interest on accounts remaining outstanding more than
30 days at a rate of 18% per annum calculated monthly.
3. Client shall also pay to QUAD-LINQ a royalty (the "Royalty") of 5% per
annum on the first One Million dollars in the Net Sales of the Product
manufactured, used, licensed, or sold by Client, 3% on Net sales over one
million. "Net Sales" as used in this Agreement shall mean the net revenue
received by Client in connection with the manufacture, use, license, or
sale of the Product developed under this Agreement including receipts from
design services, prototyping, software licensing, product licensing, player
spend/sales but does not include any sums collected by Client for and paid
to a taxing authority for retail sales, excise or similar taxes imposed by
any governmental authority and does not include credits for any returned
Product and allowances for unreturned defective Product.
4. Commencing on the earliest of the dates set forth in Schedule C section 5,
Client shall deliver to QUAD-LINQ within 60 days after each anniversary
date of this Agreement during the term of this Agreement a report showing
for the preceding 12 months the amount of the Gross Sales and operational
cost an expenses during that period and the amount of the Royalty accrued
during that period.
5. The Royalty provided for herein shall be paid concurrently with the
rendering of the report to QUAD-LINQ. The Royalty payments shall commence
on the earlier of the fourth anniversary date of this Agreement or the
first anniversary date of this Agreement after the date to which the
Product is first put into commercial use.
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6. In order that the Royalty payable under this Agreement may be determined,
and the reports provided for herein be verified, Client agrees:
a. to keep full, complete and accurate books and records showing the
quantity of sales directly related to the Product, and records of
sales of each and every Product manufactured, used, sold, licensed,
shipped or otherwise disposed of by Client under this Agreement.
7. Client agrees to develop, manufacture, sell, distribute, license and to use
its best efforts to promote and market the Product.
8. Client shall have the absolute right at any time to assign, transfer,
sublicense, sublet or encumber its interest in the Product, and/or the
Licensed Rights granted to it without the written consent of QUAD-LINQ
provided that any assignee, transferee, sublicencee shall assume the
obligations of Client hereunder.
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ADDENDUM TO AGREEMENT
Dated May 12, 1999
BETWEEN:
QUAD-LINQ SOFTWARE INC.,
("Quad-linq")
AND:
SPORTSPRIZE ENTERTAINMENT INC., (FORMERLY BEAGLE VENTURES
RESOURCES MANAGEMENT, INC.)
("The client")
WHEREAS:
i. The parties the original Agreement Dated the 18th day of February, 1999.,
wish to set out certain changes related to services design and development
of the software programming and systems.
ii. The client wishes to extent the services of Quad-linq over and above the
services set out in schedule "A" to this Agreement.
IN CONSIDERATION of the promises, and the covenants and the agreements set
forth, the parties agree as follows:
TERMS
1. Quad-linq shall devote a minimum of 600 man-hours of software programming
and development time to Sportsprize over the next
<PAGE>
20 days in order to complete the recent version of the Sportsprize game as
define herein.
"Game" includes the following:
i. Email functions
ii. Chat rooms
iii. Bulletin boards
iv. The tournaments, world, national, regional, and private.
v. Basic story board graphics
vi. Coordinate and implement graphics supplied by the "design group" to be
recommended by the Client.
2. Quad-linq shall complete all necessary testing of the Game by July 1, 1999.
3. Quad-linq shall make it self available, on an hourly rate of $80.00, to the
Client, for any non-game components (e-commerce and auction) related to the
Clients web-site
PAYMENTS
1. The client shall immediately pay Quad-linq the balance of the original
$50,000 pursuant to the original Agreement. ($16,000)
2. Pay quad-linq an additional$80,000 when the Game is complete and ready for
testing (June 1. 1999)
3. Pay quad-linq $30,000 on July 1,1999 if Quad-link completes all testing and
the game is fully operational. If Quad-link is unable to meet the July 1,
1999 deadline then Quad-linq shall be subject to a $20,000 "penalty" and
the Client will only be liable to pay Quad-linq $10,000. For added
certainty "penalty" is not applicable if the following collateral events
occur:
i. Uncontrollable circumstances related to graphics to be provided by the
Design group hired by the Client.
ii. Benchmarking the Game software is delayed with hardware
implementation.
<PAGE>
4. The client shall pay Quad-linq an hourly rate of $80.00 for any additional
software development and programming services not related to the actual
Game itself, (i.e. e-commerce, and auction).
ROYALTIES
1. Quad-linq agrees to surrender any and all rights to the royalties set out
in this Agreement, in exchange for 50,000 stock options in the Clients
Authorized Capital at a price of $.25 per share. Options shall have a
minimum duration of two years.
IN WITNESS WHEREOF the parties hereto have executed this agreement on the day
first written above.
/s/Jeffrey Paquin
- -----------------------------------
Jeffrey Paquin, President
Sportsprize Entertainment Inc.
/s/Roger Betterton
- -----------------------------------
Roger Betterton, president & CEO.
Quad-linq Software Inc.
EXHIBIT 10.11
ACQUISITION AGREEMENT
THIS AGREEMENT dated for reference the 1st day of March, 1999.
BETWEEN:
Sportsprize Entertainment Inc.,
A body corporate incorporated under the laws
of the State of Nevada, U.S.A.
("SEI")
OF THE FIRST PART
AND:
Justin Tighm Innovative Games Inc., of
6368 Crescent Court,
Delta, B.C., V4K 4Y5
("JT INC")
OF THE SECOND PART
WHEREAS:
A. JT INC. has developed certain sports lottery schemes that demonstrate
on-line betting applications within the entertainment and lottery industry (the
"Product");
B. SEI wishes to obtain from JT INC. the exclusive right to improve, enhance,
modify, and develop the Product including ownership of any new software and
computer codes, trademarks and patents to the Product;
C. The parties desire to set forth the terms and conditions of the exclusive
ownership and licensing rights of the Product.
IN CONSIDERATION of the premises, and the covenants and agreements set forth,
the parties agree as follows:
1. Definitions
1.1 In this Agreement (including the recitals) except as expressly provided or
the context otherwise requires:
[Initials]
<PAGE>
2
(a) "Agreement means this Agreement including the recitals and schedules
hereto, as amended and supplemented;
(b) "Treasury Shares" means restricted common shares issued from SEI's
treasury;
(c) "Performance Escrow Shares" means Treasury Shares of SEI that qualify
to become free trading common shares upon JT INC. meeting certain
performance requirements;
(d) "Person" means and includes an individual, partnership, corporation,
joint stock company, joint venture, society, trust or unincorporated
association or other entity;
(e) "Subject-Matter" shall means the Products and all software, web site
designs, and sport betting applications, which are related to the
product;
(f) "Letters Patent and Applications for Letters Patent" shall include all
letters patent and applications for letters patent which may be, or
may have been filed for the Product by JT INC., or for him or in his
name or on his behalf at any time, or which have been issued, or may
be issued to him, or his benefit, whether filed or issued in the
United States of America, the Dominion of Canada or any country
whatever, and any reissues, divisions or continuations thereof;
(g) "New Product" shall include any and all inventions, software, computer
codes, technology, industrial design, trade secrets, research or
development data and know-how, designs, applications and prototypes
relating to the Subject-Matter whether or not patentable, and shall
include all engineering or scientific information; processes and
formulae; manufacturing data and procedures; machinery, apparatus and
equipment design; reports, composition of matter, drawings,
specifications and blueprints relating to any method, product,
apparatus or articles used in producing the Subject-Matter;
(i) "Trade-Marks" shall means all trade-marks including all trade names,
words or logos, certification marks and distinguishing guises which
may be, or may have been filed or registered for the Product by JT
INC., or for him or in his name or on his behalf at any time, or which
have been issued, or may be issued to him, or his benefit, whether
registered or filed in the United States of America, the Dominion of
Canada or any country whatever.
[Initials]
<PAGE>
3
2. JT INC.'s Covenants
2.1 Ownership. JT INC. grants to SEI Inc., subject to the conditions set forth
in this Agreement, an exclusive and transferable ownership of the Product and
New Products throughout the world which shall include the Exclusive Licensed
Rights and the exclusive right to manufacture, sell, distribute, license and put
into use throughout the world the Subject-Matter embodying the Product set forth
or claimed by this Agreement.
2.2 Future Inventions. JT INC. agrees to extend this agreement to include any
and all future patents, patent applications, inventions, discoveries,
improvements in products, New Products, processes and manufacturing techniques
relative to the Subject-Matter falling within the scope of the Letters patent
and Applications for Letters Patent and Product included in the Licensed Rights.
2.3 Disclosure Service. JT INC. shall promptly disclose to SEI Inc at no charge
all Product now in his possession and any discoveries or inventions which are an
improvement to the Product which he may conceive or make, at any time, either
alone or while working with others or which may hereafter come into his
possession during the term of this agreement and to also promptly disclose to
SEI any discovery or invention which is an improvement on the invention claimed
in any Letters patent or Applications for Letters patent which he makes or
acquires during the term of this Agreement and shall make available to SEI all
information relating thereto, including blueprints, sketches, drawings, designs
and other data, all such discoveries or inventions shall be deemed to be part of
the Subject-Matter for all purposes of this Agreement.
2.4 JT INC.'s Restrictions. JT INC. agrees that he will not during the term of
this Agreement, either directly or indirectly, grant to any Person anywhere any
further use or license or sublicense to manufacture, sell, distribute, license
or put into use any Product covered by this Agreement or to use the Licensed
Rights.
2.5 Access to Plans and Advice. Immediately following the execution of this
Agreement JT INC. shall provide to SEI copies of all his reports, drawings,
specifications and blueprints relating to any method, product, apparatus or
article used in producing the Subject-Matter.
2.6 Letters patent and Applications for Letters Patent. JT INC. will
immediately provide written notice to SEI of any and all improvements,
discoveries and inventions which he may conceive or make, either alone or while
working with others during the term of this Agreement and which relate to the
Product and will immediately upon request by SEI and at its expense, execute and
deliver any and all instruments and papers necessary or desirable to submit
Applications for Letters patent and obtain Letters patent with respect to the
inventions, improvements and discoveries, and in general will do all lawful acts
and things as may be requested by SEI to obtain Letters patent in any and all
countries.
3. SEI Covenants
[Initials]
<PAGE>
4
3.1 Initial Consideration. In consideration of JT INC. granting SEI the
ownership of the Product, SEI agrees:
(a) Upon the execution of this Agreement by all the parties SEI agrees to
issue and deliver to JT INC. 50,000 Bonus common Class A Voting shares
in the authorized capital of SEI;
(b) Issue to JT INC. 300,000 Common Class A Shares, to be held in escrow
and released upon JT INC. meeting certain performance requirements as
set out below;
i. SEI shall to JT INC. 300,000 Performance Escrow Common Class A Shares
when JT INC. delivers a working commercial Product ready for
commercial use on a SEI Inc web site.
3.2 Royalty. Commencing the eighteenth Month of this Agreement SEI shall begin
to pay to JT INC. a royalty (the "Royalty") of 1% per annum on the Gross Revenue
Sales (first million) and 5% (over one million) of the revenue directly related
to the Product and New Products manufactured, used, licensed, or sold by SEI
"Gross Sales" as used in this Agreement shall mean the gross revenue received by
SEI in connection with the manufacture, use, license, or sale, or advertising
revenue as a result of the Products this Agreement including receipts from
design services, prototyping, software licensing, product licensing,
advertising, mailing lists, but does not include any sums collected by SEI for
and paid to a taxing authority for retail sales, excise or similar taxes imposed
by any governmental authority and does not include credits for any returned
Produce and allowances for unreturned defective Product. SEI will follow
generally accepted accounting principles (GAPP).
3.3 Royalty Statements. Commencing on the earliest of the dates set forth in
section 3.4, SEI shall deliver to JT INC. within 60 days after each anniversary
date of this Agreement during the term of this Agreement a report showing for
the preceding 12 months the amount of the Gross Sales during that period and the
amount of the Royalty accrued during that period.
3.4 Royalty Payments. The Royalty provided for herein shall be paid
concurrently with the rendering of the report to JT INC.. The Royalty payments
shall commence on the earlier of the second anniversary date of this Agreement
or the first anniversary date of this Agreement after the date to which the
Product is first put into commercial use.
3.5 Records. In order that the Royalty payable under this Agreement may be
determined, and the reports provided for herein be verified, SEI agrees:
(a) To keep full, complete and accurate books and records showing the
quantity of Product manufactured and records of sales of each and
every Product manufactured, used, sold, licensed, shipped or otherwise
disposed of by SEI under this Agreement.
[Initials]
<PAGE>
5
3.6 Payment for Letters Patent and Applications for Letters Patent. SEI agrees
to apply for Letters Patent or Applications for Letters patent with respect to
any invention, improvements and discoveries SEI shall be responsible for all
costs and expenses incurred in connection therewith.
3.7 Confidentiality. SEI shall ensure that all persons (third Parties,
employees, independent contractors, investors, etc.) maintain the trade secret
information in confidence and sign Confidentiality Agreements.
3.8 Exploitation of Product. SEI agrees to develop, manufacture, sell,
distribute, and license and to use its best efforts to promote and market the
Product.
4. Cancellation for Default
4.1 This Agreement shall be subject to cancellation by JT INC. if SEI shall
fail to make the Royalty payments when due and in the manner stated provided,
however, that if JT INC. cancels this License Agreement, JT INC. shall give SEI
90 days' notice in writing of SEI's default or omission constituting grounds for
cancellation, and of its election to cancel this Agreement. In the event of
termination, SEI shall not be relieved of its obligations, nor of its duty to
make Royalty payments for all Subject-Matter made, on hand, in stock or anywhere
under the control of SEI, and SEI shall have the right to sell or license
Product and shall account and make payments as required. If SEI fails to remedy
the arrears following notice from JT INC., which triggers JT INC.'s rights to
terminate this Agreement then JT INC. shall be entitled to an assignment of
ownership of the Products.
5. Termination
5.1 JT INC. shall have the right to terminate this Agreement at any time on or
after the filing by SEI of an assignment in bankruptcy, or on or after SEI is
either bankrupt or insolvent or after any adjudication that applications for the
reorganization, readjustment or rearrangement of the business of SEI under any
law or governmental regulation relating to bankruptcy or insolvency, or on or
after the appointment of a receiver for all or substantially all of the property
or assets of SEI, or on or after the making by SEI of any assignment or
attempted assignment for the benefit of creditors, or on or after the
institution by SEI of any proceedings for the winding-up of its business. In
such a case ownership of the technology shall revert back to JT INC.
6. No waiver
6.1 No failure or delay on the part of JT INC. to exercise his right of
termination or cancellation nor any default by SEI shall be construed to
prejudice JT INC." right of termination or cancellation for default or for any
other subsequent defaults.
[Initials]
<PAGE>
6
7. Notices
7.1 Any notice, demand, direction, report or other communication required or
permitted to be given under this agreement shall be effectually made or given if
delivered by prepaid private courier or by facsimile transmission to the address
of each of the parties set out below:
To John JT INC.:
----------------------------------------
----------------------------------------
To SEI Ventures Resources Management Inc:
----------------------------------------
----------------------------------------
Or to such other address or facsimile numbers as either party may designate in
the manner set out above. Any notice, demand, direction, report or other
communication shall be deemed to have been given and received on the day of
prepaid private courier delivery or facsimile transmission.
8. Service Contract
8.1 Concurrently with the execution of this Agreement SEI shall enter into a
service contract with JT INC. substantially in the form and on the terms set out
in Schedule "A" attached hereto and forming part hereof whereby JT INC. shall be
required to devote substantially all of his time and efforts to further
developing the Product.
9. Arbitration
9.1 All disputes, controversies or claims arising out of or in connection with
or in relation to this Agreement shall be determined by a single arbitrator
appointed and acting pursuant to the Commercial Arbitration Act (British
Columbia) and the decision of the arbitrator will be final and binding on the
parties.
10. Governing Law
10.1 This Agreement is and will be deemed to be an agreement made in and
pursuant to the laws of the Province of British Columbia and for all purposes
will be exclusively governed by and construed and enforced in accordance with
the laws of the Province of British Columbia and the applicable laws of the
Federal Parliament of Canada. Any actions shall be in the Jurisdiction of BC.
11. Further Assurances
[Initials]
<PAGE>
7
11.1 JT INC. and SEI will execute and deliver all such further documents and
instruments and do all acts and things as may be reasonably required to carry
out the full intent and meaning of this Agreement.
12. Successors and Assigns
12.1 This Agreement shall enure to the benefit and be binding upon JT INC. and
SEI and their respective heirs, executors, administrators, permitted successors
and permitted assigns. "Successors" include any corporation resulting from the
amalgamation of a corporation with any other corporation.
13. Entire Agreement
13.1 This Agreement constitutes the entire agreement between the parties and all
prior verbal and written negotiations, communications and agreements between JT
INC. and SEI and their respective representatives are superseded by this
Agreement. This Agreement may not be modified or amended except by an instrument
in writing signed by all parties.
14. Counterparts
14.1 This Agreement may be executed in any number of original counterparts, with
the same effect as if the parties had signed the same document, and will become
effective when one or more counterparts have been signed by all the parties and
delivered to each of the other parties. All counterparts will be construed
together and evidence only one agreement which, notwithstanding the dates of
execution of any counterparts, will be deemed to be dated the date first above
written, and only one of which need to be produced for any purpose.
[Initials]
<PAGE>
8
15. Execution by Telecopy
15.1 This Agreement may be executed by the parties and transmitted by facsimile
transmission and if so executed and transmitted this agreement will be for all
purposes as effective as if the parties had delivered an executed original
agreement.
16. Construction
16. In this Agreement, except as expressly otherwise provided or as the context
otherwise requires:
(a) The headings and captions will be considered as provided for
convenience only and as not forming a part of this Agreement and will
not be used to interpret, define or limit the scope, extent or intent
of this Agreement or any of its provisions;
(b) The words "include" or "including" when following any general term or
statement are not to be construed as limiting the general term or
statement to the specific items or matters set forth or to similar
items or matters but rather as permitting it to refer to all other
items or matters that could reasonably fall within its broadest
possible scope;
(c) An accounting term not otherwise defined has the meaning assigned to
it under, and all accounting matters will be determined in accordance
with, Generally Accepted Accounting Principles as consistently
applied;
(d) A reference to currency means United States currency unless
specifically indicated otherwise;
(e) A reference to a statute includes every regulation made pursuant
thereto, all amendments to the statute or to any such regulation in
force from time to time and any statute or regulation that supplements
or supersedes such statute or any such regulation;
(f) A reference to time or date is to the local time or date in Vancouver,
British Columbia, unless specifically indicated otherwise;
(g) A reference to a particular corporation includes the corporation
derived from the amalgamation of the particular corporation or of a
corporation to which such reference is extended by this clause (g),
with one or more other corporations;
[Initials]
<PAGE>
9
(h) A word importing the masculine gender includes the feminine or neuter;
a word importing the singular includes the plural and vice versa.
IN WITNESS WHEREOF the parties have set their hands and seals this 1st day of
March, 1999.
Sportsprize Entertainment Inc.
By it's authorized signatory:
Per:
/s/ [Illegible]
- ---------------------------------
SIGNED, SEALED AND DELIVERED )
In the presence of: )
)
/s/ [Illegible] )
- --------------------------------- )
- --------------------------------- ) /s/ [Illegible]
- --------------------------------- ) ----------------------------------
) Justin Tighm Innovative Games Inc.
)
<PAGE>
ADDENDUM TO THE
ACQUISITION AGREEMENT
THIS ADDENDUM dated for reference the 21st day of May, 1999.
BETWEEN:
Sportsprize Entertainment Inc.,
A body corporate incorporated under the laws
of the State of Nevada, U.S.A.
("SEI")
OF THE FIRST PART
AND:
Justin Tighm Innovative Games Inc., of
6368 Crescent Court,
Delta, B.C., V4K 4Y5
("JT INC")
OF THE SECOND PART
WHEREAS:
A. JT INC has a royalty right as set out in the original Acquisition Agreement
B. B. SEI wishes to obtain back from JT INC. the right to that Royalty;
IN CONSIDERATION of the premises, and the covenants and agreements set forth,
the parties agree as follows
1. TERMS
JT INC shall surrender any and all claims rights or interests in the
royalties to the original Agreement.
<PAGE>
2. SEI Covenants
SEI shall grant to JT INC consideration in the amount of 25,000 stock
options in the Company at a price of $0.25 per share, with a maximum term
of two years from the date of this addendum.
IN WITNESS WHEREOF the parties have set their hands and seals this 21 day of
May, 1999.
Sportsprize Entertainment Inc.
By it's authorized signatory:
Per:
/s/ [Illegible]
- ---------------------------------
SIGNED, SEALED AND DELIVERED )
In the presence of: )
)
/s/ Bob Mackay )
- --------------------------------- )
- --------------------------------- )
- --------------------------------- ) ----------------------------------
) Justin Tighm Innovative Games Inc.
) Per /s/ [Illegible]
EXHIBIT 10.12
THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT RELATES TO AN OFFERING OF
SECURITIES IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS
DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT").
NONE OF THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
(THE "AGREEMENT") RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, AND, UNLESS
SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S.
PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.
PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
(Foreign/Overseas Subscribers)
TO: KODIAK GRAPHICS COMPANY, a Nevada Corporation (the "Company")
2034 Western Avenue
Las Vegas, Nevada 89102
Purchase of Shares
------------------
1. Subscription
1.1 The undersigned (the "Subscriber") hereby irrevocably subscribes for and
agrees to purchase 555,555 shares (the "Shares") at a price of US$1.50 per Share
(such subscription and agreement to purchase being the "Subscription"), for the
total purchase price of US$833,332.50 (the "Subscription Proceeds"), which is
tendered herewith, on the basis of the representations and warranties and
subject to the terms and conditions set forth herein. This Subscription is part
of a private placement of up to US$2,500,000.
1.2 The Company hereby irrevocably agrees to sell, on the basis of the
representations and warranties and subject to the terms and conditions set forth
herein, to the Subscriber the Shares.
1.3 Subject to the terms hereof, the Subscription will be effective upon its
acceptance by the Company.
2. Payment
2.1 The Subscription Proceeds must accompany this Subscription and shall be
paid by certified cheque or bank draft drawn on a U.S. chartered bank made
payable to the Company. If the funds are wired to the Company or to its agent or
lawyers, those agents or lawyers are authorized to immediately deliver the funds
to the Company.
3. Documents Required from Subscriber
3.1 The Subscriber must complete, sign and return to the Company two (2)
executed copies of this Agreement.
3.2 The Subscriber shall complete, sign and return to the Company as soon as
possible on request by the Company any documents, questionnaires, notices and
undertakings as may be required by regulatory authorities, stock exchanges and
applicable law.
<PAGE>
-2-
4. Closing
4.1 Closing of the offering of the Shares (the "Closing") shall occur on May
15, 1999 or on such other date as may be determined by the Company (the "Closing
Date").
5. Acknowledgements of Subscriber
5.1 The Subscriber acknowledges and agrees that:
(a) the Shares have not been registered under the 1933 Act, or under any
state securities or "blue sky" laws of any state of the United States,
and, unless so registered, may not be offered or sold in the United
States or to U.S. Persons, as that term is defined in Regulation S
under the 1933 Act ("Regulation S"), except pursuant to an exemption
from, or in a transaction not subject to, the registration
requirements of the 1933 Act;
(b) the decision to execute this Agreement and purchase the Shares agreed
to be purchased hereunder has not been based upon any oral or written
representation as to fact or otherwise made by or on behalf of the
Company and such decision is based entirely upon a review of the news
releases of the Company and any public information filed with the
Securities and Exchange Commission in compliance, or intended
compliance, with applicable securities legislation. If the Company has
presented a business plan to the Subscriber, the Subscriber
acknowledges that the business plan may not be achieved or be
achievable;
(c) by execution hereof the Subscriber has waived the need for the Company
to communicate its acceptance of the purchase of the Shares pursuant
to this Agreement;
(d) the Company is entitled to rely on the representations and warranties
and the statements and answers of the Subscriber contained in this
Agreement, and the Subscriber will hold harmless the Company from any
loss or damage it or they may suffer as a result of the Subscriber's
failure to correctly complete this Agreement;
(e) it will indemnify and hold harmless the Company and, where applicable,
its respective directors, officers, employees, agents, advisors and
shareholders from and against any and all loss, liability, claim,
damage and expense whatsoever (including, but not limited to, any and
all fees, costs and expenses whatsoever reasonably incurred in
investigating, preparing or defending against any claim, lawsuit,
administrative proceeding or investigation whether commenced or
threatened) arising out of or based upon any representation or
warranty of the Subscriber contained herein or in any document
furnished by the Subscriber to the Company in connection herewith
being untrue in any material respect or any breach or failure by the
Subscriber to comply with any covenant or agreement made by the
Subscriber to the Company in connection therewith;
(f) the issuance and sale of the Shares to the Subscriber will not be
completed if acceptance would be unlawful or if, in the discretion of
the Company, acting reasonably, acceptance is not in the best
interests of the Company;
(g) it has been advised to consult its own legal, tax and other advisors
with respect to the merits and risks of an investment in the Shares
and with respect to applicable resale restrictions and it is solely
responsible (and the Company is not in any way responsible) for
compliance with applicable resale restrictions;
(h) the Shares are not listed on any stock exchange or automated dealer
quotation system and no representation has been made to the Subscriber
that the Shares will become listed on any stock exchange or automated
dealer quotation system; except that currently certain market makers
make market in shares of the Company on the non-NASDAQ
Over-the-Counter Bulletin Board;
<PAGE>
-3-
(i) it is outside the United States when receiving and executing this
Subscription Agreement and is acquiring the Shares for its own
account, for investment purposes only, and not with a view to, or for,
resale, distribution or fractionalization thereof, in whole or in
part, and no other person has a direct or indirect beneficial interest
in such Shares; or, if not, it is an accredited investor as defined by
US securities laws;
(j) the Shares may not be offered or sold to a U.S. Person or for the
account or benefit of a U.S. Person (other than a distributor) prior
to the end of the Restricted Period (as defined herein), if
applicable;
(k) the Company is under no obligation to register or qualify the Shares
on behalf of the Subscriber or to assist the Subscriber in complying
with any exemption from registration and qualification under the 1933
Act and applicable state securities laws, or any form of exemption
therefrom;
(l) in the view of the Securities and Exchange Commission, the statutory
and regulatory basis for the exemption claimed for the offer and sale
of the Shares, although in technical compliance with Regulation S,
would nonetheless not be available if the offering is part of a plan
or scheme to evade the registration provisions of the 1933 Act;
(m) this Agreement is not enforceable by the Subscriber unless it has been
accepted by the Company; and
(n) the Company will pay a finders fee, in cash, equal to 2.8% of the
gross proceeds received by the Company from the sale of the Shares.
The subscriber further acknowledges that the finder and its officers,
directors, employees and affiliates may, from time to time, hold
positions in securities of the Company.
6. Representations, Warranties and Covenants of the Subscriber
6.1 The Subscriber hereby represents and warrants to and covenants with the
Company (which representations, warranties and covenants shall survive the
Closing) that:
(a) it is not a U.S. Person;
(b) it is not acquiring the Shares for the account or benefit of, directly
or indirectly, a U.S. Person;
(c) the Subscriber has the legal capacity and competence to enter into and
execute this Subscription and to take all actions required pursuant
hereto and, if the Subscriber is a corporation, it is duly
incorporated and validly subsisting under the laws of its jurisdiction
of incorporation and all necessary approvals by its directors,
shareholders and others have been obtained to authorize execution and
performance of this Subscription on behalf of the Subscriber;
(d) the entering into of this Subscription and the transactions
contemplated hereby do not result in the violation of any of the terms
and provisions of any law applicable to, or the constating documents
of, the Subscriber or of any agreement, written or oral, to which the
Subscriber may be a party or by which the Subscriber is or may be
bound;
(e) the Subscriber has duly executed and delivered this Subscription and
it constitutes a valid and binding agreement of the Subscriber
enforceable against the Subscriber;
(f) it is not an underwriter of, or dealer in, the securities of the
Company, nor is the Subscriber participating, pursuant to a
contractual agreement or otherwise, in the distribution of the Shares;
(g) it is purchasing the Shares for its own account or for an account with
respect to which it exercises sole investment discretion, and that it
or such account is an accredited investor as that term is defined in
Rule 501 under the 1933 Act (an "Accredited Investor") acquiring the
Shares for investment purposes and not for distribution;
<PAGE>
-4-
(h) it understands and agrees that none of the Shares has been registered
under the 1933 Act, and they may not be sold except as permitted in
paragraph (i) below;
(i) it understands and agrees (i) that the Shares are being offered only
in a transaction not involving any public offering within the meaning
of the 1933 Act, and (ii) that (A) if within one year after the date
of original issuance of the Shares, or if within three months after it
ceases to be an affiliate (within the meaning of Rule 144 under the
1933 Act ("Rule 144")) of the Company, it decides to resell, pledge or
otherwise transfer the Shares on which the legend as set forth below
appears, such Shares may be resold, pledged or transferred only (1) to
the Company, (2) so long as the Shares are eligible for resale
pursuant to Rule 144A under the 1933 Act ("Rule 144A"), to a person
whom the seller reasonably believes is a qualified institutional
investor buyer ("QIB") as that term is defined in Rule 144A(a)(1) that
purchases for its own account or for the account of a QIB to whom
notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A (as indicated by the box checked by the
transferor on the certificate of transfer on the reverse of the
Shares), (3) in an offshore transaction in accordance with Regulation
S (as indicated by the box checked by the transferor on the
certificate of transfer on the reverse of the Shares), (4) to an
Institutional Accredited Investor (as indicated by the box checked by
the transferor on the certificate of transfer on the reverse of the
Shares) who has certified to the Company that such transferee is an
Institutional Accredited Investor and is acquiring such security for
investment purposes and not for distribution, (5) pursuant to an
exemption from registration provided by Rule 144 (if applicable) under
the 1933 Act, or (6) pursuant to an effective registration statement
under the 1933 Act, in each case in accordance with any applicable
securities laws of any state of the United States, (B) the purchaser
will, and each subsequent holder is required to, notify any purchaser
of the Shares from it of the resale restrictions referred to in clause
(A) above, if then applicable, and (C) with respect to any transfer of
the Shares by an Institutional Accredited Investor, such holder will
deliver to the Company such certificates and other information as it
may reasonably require to confirm that the transfer by it complies
with the restrictions set forth in this paragraph (i);
(j) it understands and agrees that the notification requirement referred
to in paragraph (i) above will be satisfied by virtue of the fact that
the legend set out in Schedule A will be placed on the Shares unless
otherwise agreed by the Company;
(k) it understands and agrees that offers and sales of the Shares prior to
the expiration of a period of one year after the date of original
issuance of the Shares (the "Restricted Period") shall only be made in
compliance with the safe harbor provisions set forth in Regulation S,
pursuant to the registration provisions of the 1933 Act or an
exemption therefrom, and that all offers and sales after the
Restricted Period shall be made only in compliance with the
registration provisions of the 1933 Act or an exemption therefrom;
(l) it will not sell or otherwise transfer the Shares except as permitted
under the 1933 Act and applicable state securities laws or an
exemption therefrom;
(m) it (i) is able to fend for itself in the Subscription; (ii) has such
knowledge and experience in business matters as to be capable of
evaluating the merits and risks of its prospective investment in the
Shares; and (iii) has the ability to bear the economic risks of its
prospective investment and can afford the complete loss of such
investment;
(n) it understands and agrees that the legend set forth in paragraph (j)
above shall not be removed from any Shares purchased by it pursuant to
this Subscription unless there is delivered to the Company such
satisfactory evidence, which may include an opinion of counsel
licensed to practice law in one of the states of the United States of
America, as may be reasonably required by the Company, that such
Shares are not "restricted" within the meaning of Rule 144;
(o) if it is acquiring the Shares as a fiduciary or agent for one or more
investor accounts, it has sole investment discretion with respect to
each such account and it has full power to make the foregoing
acknowledgments, representations and agreements on behalf of such
account;
<PAGE>
-5-
(p) it understands and agrees that the Company and others will rely upon
the truth and accuracy of the acknowledgments, representations and
agreements contained in sections 5 and 6 hereof and agrees that if any
of such acknowledgments, representations and agreements are no longer
accurate or have been breached, it shall promptly notify the Company;
(q) the Subscriber is not aware of any advertisement of the Shares;
(r) no person has made to the Subscriber any written or oral
representations:
(i) that any person will resell or repurchase any of the Shares;
(ii) that any person will refund the purchase price of any of the
Shares;
(iii) as to the future price or value of any of the Shares; or
(iv) that the Shares will be listed and posted for trading on any
stock exchange or automated dealer quotation system or that
application has been made to list and post the Shares of the
Company on any stock exchange or automated dealer quotation
system.
6.2 In this Subscription, the term "U.S. Person" shall have the meaning
ascribed thereto in Regulation S.
7. Acknowledgement and Waiver
7.1 The Subscriber has acknowledged that the decision to purchase the Shares
was solely made on the basis of publicly available information. The Subscriber
hereby waives, to the fullest extent permitted by law, any rights of withdrawal,
rescission or compensation for damages to which the Subscriber might be entitled
in connection with the distribution of the Shares.
8. Legending of Shares
8.1 The Subscriber hereby acknowledges that a legend may be placed on the
certificates representing the Shares to the effect that the securities
represented by such certificates are subject to a hold period and may not be
traded until the expiry of such hold period except as permitted by applicable
securities legislation.
9. Costs
9.1 The Subscriber acknowledges and agrees that all costs and expenses incurred
by the Subscriber (including any fees and disbursements of any special counsel
retained by the Subscriber) relating to the purchase of the Shares shall be
borne by the Subscriber.
10. Governing Law
10.1 This Subscription Agreement is governed by the laws of the state of Nevada
and the federal laws of the United States applicable herein. The Subscriber, in
its personal or corporate capacity and, if applicable, on behalf of each
beneficial purchaser for whom it is acting, irrevocably attorns to the
jurisdiction of the state of Nevada.
<PAGE>
-6-
11. Survival
11.1 This Subscription, including without limitation the representations,
warranties and covenants contained herein, shall survive and continue in full
force and effect and be binding upon the parties hereto notwithstanding the
completion of the purchase of the Shares by the Subscriber pursuant hereto.
12. Assignment
12.1 This Subscription is not transferable or assignable.
13. Execution
13.1 The Company shall be entitled to rely on delivery by facsimile machine of
an executed copy of this Subscription and acceptance by the Company of such
facsimile copy shall be equally effective to create a valid and binding
agreement between the Subscriber and the Company in accordance with the terms
hereof.
14. Severability
14.1 The invalidity or unenforceability of any particular provision of this
Subscription shall not affect or limit the validity or enforceability of the
remaining provisions of this Subscription.
15. Entire Agreement
15.1 Except as expressly provided in this Agreement and in the agreements,
instruments and other documents contemplated or provided for herein, this
Agreement contains the entire agreement between the parties with respect to the
sale of the Shares and there are no other terms, conditions, representations or
warranties, whether expressed, implied, oral or written, by statute or common
law, by the Company or by anyone else.
16. Notices
16.1 All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Subscriber shall be directed to the
address on page 1 and notices to the Company shall be directed to it at 2034
Western Avenue, Las Vegas, Nevada, 89102, attention of William Turner.
17. Counterparts
17.1 This Agreement may be executed in any number of counterparts, each of
which, when so executed and delivered, shall constitute an original and all of
which together shall constitute one instrument.
IN WITNESS WHEREOF the Subscriber has duly executed this Subscription as of the
date first above mentioned.
DELIVERY INSTRUCTIONS
1. Delivery - please deliver the Share certificates to:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
<PAGE>
-7-
Registration - registration of the certificates which are to be delivered
at closing should be made as follows:
--------------------------------------------------------------------------
(name)
--------------------------------------------------------------------------
(address)
3 The undersigned hereby acknowledges that it will deliver to the Company all
such additional completed forms in respect of the Subscriber's purchase of
the Shares as may be required for filing with the appropriate securities
commissions and regulatory authorities.
Lamplighter Investments Ltd.
--------------------------------------------
(Name of Subscriber - Please type or print)
/s/ [Illegible]
--------------------------------------------
(Signature and, if applicable, Office)
--------------------------------------------
(Address of Subscriber)
Dublin 2
--------------------------------------------
(City, State or Province, Postal Code of
Subscriber)
Ireland
--------------------------------------------
(Country of Subscriber)
Handwritten
- -----------
88 Ellis Rd
Crowthorne Berks
England
RG4 56PN
<PAGE>
-8-
A C C E P T A N C E
The above-mentioned Subscription in respect of the Shares is hereby accepted by
KODIAK GRAPHICS COMPANY
DATED at Vancouver, the 6th day of May, 1999.
KODIAK GRAPHICS COMPANY
Per: /s/William Turner, President
------------------------------------
Authorized Signatory
<PAGE>
-9-
SCHEDULE A - LEGEND
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE ONE YEAR ANNIVERSARY
OF THE ISSUANCE HEREOF OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY
AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN
EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE 1933 ACT ("RULE 144A"), TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE 1933 ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (4)
TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) UNDER THE 1933 ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT
IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND
A CERTIFICATE IN THE FORM ATTACHED TO THIS SECURITY IS DELIVERED BY THE
TRANSFEREE TO THE COMPANY, (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE 1933 ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE 1933 ACT, OR (6)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, IN EACH CASE
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS SECURITY AGREES THAT
IT WILL FURNISH TO THE COMPANY SUCH CERTIFICATES AND OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES
WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT
IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER
THE 1933 ACT AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (o)(2)
OF) RULE 902 UNDER REGULATION S UNDER THE 1933 ACT."
EXHIBIT 10.13
THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT RELATES TO AN OFFERING OF
SECURITIES IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS
DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT").
NONE OF THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
(THE "AGREEMENT") RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, AND, UNLESS
SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S.
PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.
PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
(Foreign/Overseas Subscribers)
TO: KODIAK GRAPHICS COMPANY, a Nevada Corporation (the "Company")
2034 Western Avenue
Las Vegas, Nevada 89102
Purchase of Shares
1. Subscription
1.1 The undersigned (the "Subscriber") hereby irrevocably subscribes for and
agrees to purchase 555,555 shares (the "Shares") at a price of US$1.50 per Share
(such subscription and agreement to purchase being the "Subscription"), for the
total purchase price of US$833,332.50 (the "Subscription Proceeds"), which is
tendered herewith, on the basis of the representations and warranties and
subject to the terms and conditions set forth herein. This Subscription is part
of a private placement of up to US$2,500,000.
1.2 The Company hereby irrevocably agrees to sell, on the basis of the
representations and warranties and subject to the terms and conditions set forth
herein, to the Subscriber the Shares.
1.3 Subject to the terms hereof, the Subscription will be effective upon its
acceptance by the Company.
2. Payment
2.1 The Subscription Proceeds must accompany this Subscription and shall be
paid by certified cheque or bank draft drawn on a U.S. chartered bank made
payable to the Company. If the funds are wired to the Company or to its agent or
lawyers, those agents or lawyers are authorized to immediately deliver the funds
to the Company.
3. Documents Required from Subscriber
3.1 The Subscriber must complete, sign and return to the Company two (2)
executed copies of this Agreement.
3.2 The Subscriber shall complete, sign and return to the Company as soon as
possible on request by the Company any documents, questionnaires, notices and
undertakings as may be required by regulatory authorities, stock exchanges and
applicable law.
<PAGE>
-2-
4. Closing
4.1 Closing of the offering of the Shares (the "Closing") shall occur on May
15, 1999 or on such other date as may be determined by the Company (the "Closing
Date").
5. Acknowledgements of Subscriber
5.1 The Subscriber acknowledges and agrees that:
(a) the Shares have not been registered under the 1933 Act, or under any
state securities or "blue sky" laws of any state of the United States,
and, unless so registered, may not be offered or sold in the United
States or to U.S. Persons, as that term is defined in Regulation S
under the 1933 Act ("Regulation S"), except pursuant to an exemption
from, or in a transaction not subject to, the registration
requirements of the 1933 Act;
(b) the decision to execute this Agreement and purchase the Shares agreed
to be purchased hereunder has not been based upon any oral or written
representation as to fact or otherwise made by or on behalf of the
Company and such decision is based entirely upon a review of the news
releases of the Company and any public information filed with the
Securities and Exchange Commission in compliance, or intended
compliance, with applicable securities legislation. If the Company has
presented a business plan to the Subscriber, the Subscriber
acknowledges that the business plan may not be achieved or be
achievable;
(c) by execution hereof the Subscriber has waived the need for the Company
to communicate its acceptance of the purchase of the Shares pursuant
to this Agreement;
(d) the Company is entitled to rely on the representations and warranties
and the statements and answers of the Subscriber contained in this
Agreement, and the Subscriber will hold harmless the Company from any
loss or damage it or they may suffer as a result of the Subscriber's
failure to correctly complete this Agreement;
(e) it will indemnify and hold harmless the Company and, where applicable,
its respective directors, officers, employees, agents, advisors and
shareholders from and against any and all loss, liability, claim,
damage and expense whatsoever (including, but not limited to, any and
all fees, costs and expenses whatsoever reasonably incurred in
investigating, preparing or defending against any claim, lawsuit,
administrative proceeding or investigation whether commenced or
threatened) arising out of or based upon any representation or
warranty of the Subscriber contained herein or in any document
furnished by the Subscriber to the Company in connection herewith
being untrue in any material respect or any breach or failure by the
Subscriber to comply with any covenant or agreement made by the
Subscriber to the Company in connection therewith;
(f) the issuance and sale of the Shares to the Subscriber will not be
completed if acceptance would be unlawful or if, in the discretion of
the Company, acting reasonably, acceptance is not in the best
interests of the Company;
(g) it has been advised to consult its own legal, tax and other advisors
with respect to the merits and risks of an investment in the Shares
and with respect to applicable resale restrictions and it is solely
responsible (and the Company is not in any way responsible) for
compliance with applicable resale restrictions;
(h) the Shares are not listed on any stock exchange or automated dealer
quotation system and no representation has been made to the Subscriber
that the Shares will become listed on any stock exchange or automated
dealer quotation system; except that currently certain market makers
make market in shares of the Company on the non-NASDAQ
Over-the-Counter Bulletin Board;
<PAGE>
-3-
(i) it is outside the United States when receiving and executing this
Subscription Agreement and is acquiring the Shares for its own
account, for investment purposes only, and not with a view to, or for,
resale, distribution or fractionalization thereof, in whole or in
part, and no other person has a direct or indirect beneficial interest
in such Shares; or, if not, it is an accredited investor as defined by
US securities laws;
(j) the Shares may not be offered or sold to a U.S. Person or for the
account or benefit of a U.S. Person (other than a distributor) prior
to the end of the Restricted Period (as defined herein), if
applicable;
(k) the Company is under no obligation to register or qualify the Shares
on behalf of the Subscriber or to assist the Subscriber in complying
with any exemption from registration and qualification under the 1933
Act and applicable state securities laws, or any form of exemption
therefrom;
(l) in the view of the Securities and Exchange Commission, the statutory
and regulatory basis for the exemption claimed for the offer and sale
of the Shares, although in technical compliance with Regulation S,
would nonetheless not be available if the offering is part of a plan
or scheme to evade the registration provisions of the 1933 Act;
(m) this Agreement is not enforceable by the Subscriber unless it has been
accepted by the Company; and
(n) the Company will pay a finders fee, in cash, equal to 2.8% of the
gross proceeds received by the Company from the sale of the Shares.
The subscriber further acknowledges that the finder and its officers,
directors, employees and affiliates may, from time to time, hold
positions in securities of the Company.
6. Representations, Warranties and Covenants of the Subscriber
6.1 The Subscriber hereby represents and warrants to and covenants with the
Company (which representations, warranties and covenants shall survive the
Closing) that:
(a) it is not a U.S. Person;
(b) it is not acquiring the Shares for the account or benefit of, directly
or indirectly, a U.S. Person;
(c) the Subscriber has the legal capacity and competence to enter into and
execute this Subscription and to take all actions required pursuant
hereto and, if the Subscriber is a corporation, it is duly
incorporated and validly subsisting under the laws of its jurisdiction
of incorporation and all necessary approvals by its directors,
shareholders and others have been obtained to authorize execution and
performance of this Subscription on behalf of the Subscriber;
(d) the entering into of this Subscription and the transactions
contemplated hereby do not result in the violation of any of the terms
and provisions of any law applicable to, or the constating documents
of, the Subscriber or of any agreement, written or oral, to which the
Subscriber may be a party or by which the Subscriber is or may be
bound;
(e) the Subscriber has duly executed and delivered this Subscription and
it constitutes a valid and binding agreement of the Subscriber
enforceable against the Subscriber;
(f) it is not an underwriter of, or dealer in, the securities of the
Company, nor is the Subscriber participating, pursuant to a
contractual agreement or otherwise, in the distribution of the Shares;
(g) it is purchasing the Shares for its own account or for an account with
respect to which it exercises sole investment discretion, and that it
or such account is an accredited investor as that term is defined in
Rule 501 under the 1933 Act (an "Accredited Investor") acquiring the
Shares for investment purposes and not for distribution;
<PAGE>
-4-
(h) it understands and agrees that none of the Shares has been registered
under the 1933 Act, and they may not be sold except as permitted in
paragraph (i) below;
(i) it understands and agrees (i) that the Shares are being offered only
in a transaction not involving any public offering within the meaning
of the 1933 Act, and (ii) that (A) if within one year after the date
of original issuance of the Shares, or if within three months after it
ceases to be an affiliate (within the meaning of Rule 144 under the
1933 Act ("Rule 144")) of the Company, it decides to resell, pledge or
otherwise transfer the Shares on which the legend as set forth below
appears, such Shares may be resold, pledged or transferred only (1) to
the Company, (2) so long as the Shares are eligible for resale
pursuant to Rule 144A under the 1933 Act ("Rule 144A"), to a person
whom the seller reasonably believes is a qualified institutional
investor buyer ("QIB") as that term is defined in Rule 144A(a)(1) that
purchases for its own account or for the account of a QIB to whom
notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A (as indicated by the box checked by the
transferor on the certificate of transfer on the reverse of the
Shares), (3) in an offshore transaction in accordance with Regulation
S (as indicated by the box checked by the transferor on the
certificate of transfer on the reverse of the Shares), (4) to an
Institutional Accredited Investor (as indicated by the box checked by
the transferor on the certificate of transfer on the reverse of the
Shares) who has certified to the Company that such transferee is an
Institutional Accredited Investor and is acquiring such security for
investment purposes and not for distribution, (5) pursuant to an
exemption from registration provided by Rule 144 (if applicable) under
the 1933 Act, or (6) pursuant to an effective registration statement
under the 1933 Act, in each case in accordance with any applicable
securities laws of any state of the United States, (B) the purchaser
will, and each subsequent holder is required to, notify any purchaser
of the Shares from it of the resale restrictions referred to in clause
(A) above, if then applicable, and (C) with respect to any transfer of
the Shares by an Institutional Accredited Investor, such holder will
deliver to the Company such certificates and other information as it
may reasonably require to confirm that the transfer by it complies
with the restrictions set forth in this paragraph (i);
(j) it understands and agrees that the notification requirement referred
to in paragraph (i) above will be satisfied by virtue of the fact that
the legend set out in Schedule A will be placed on the Shares unless
otherwise agreed by the Company;
(k) it understands and agrees that offers and sales of the Shares prior to
the expiration of a period of one year after the date of original
issuance of the Shares (the "Restricted Period") shall only be made in
compliance with the safe harbor provisions set forth in Regulation S,
pursuant to the registration provisions of the 1933 Act or an
exemption therefrom, and that all offers and sales after the
Restricted Period shall be made only in compliance with the
registration provisions of the 1933 Act or an exemption therefrom;
(l) it will not sell or otherwise transfer the Shares except as permitted
under the 1933 Act and applicable state securities laws or an
exemption therefrom;
(m) it (i) is able to fend for itself in the Subscription; (ii) has such
knowledge and experience in business matters as to be capable of
evaluating the merits and risks of its prospective investment in the
Shares; and (iii) has the ability to bear the economic risks of its
prospective investment and can afford the complete loss of such
investment;
(n) it understands and agrees that the legend set forth in paragraph (j)
above shall not be removed from any Shares purchased by it pursuant to
this Subscription unless there is delivered to the Company such
satisfactory evidence, which may include an opinion of counsel
licensed to practice law in one of the states of the United States of
America, as may be reasonably required by the Company, that such
Shares are not "restricted" within the meaning of Rule 144;
(o) if it is acquiring the Shares as a fiduciary or agent for one or more
investor accounts, it has sole investment discretion with respect to
each such account and it has full power to make the foregoing
acknowledgments, representations and agreements on behalf of such
account;
<PAGE>
-5-
(p) it understands and agrees that the Company and others will rely upon
the truth and accuracy of the acknowledgments, representations and
agreements contained in sections 5 and 6 hereof and agrees that if any
of such acknowledgments, representations and agreements are no longer
accurate or have been breached, it shall promptly notify the Company;
(q) the Subscriber is not aware of any advertisement of the Shares;
(r) no person has made to the Subscriber any written or oral
representations:
(i) that any person will resell or repurchase any of the Shares;
(ii) that any person will refund the purchase price of any of the
Shares;
(iii) as to the future price or value of any of the Shares; or
(iv) that the Shares will be listed and posted for trading on any
stock exchange or automated dealer quotation system or that
application has been made to list and post the Shares of the
Company on any stock exchange or automated dealer quotation
system.
6.2 In this Subscription, the term "U.S. Person" shall have the meaning
ascribed thereto in Regulation S.
7. Acknowledgement and Waiver
7.1 The Subscriber has acknowledged that the decision to purchase the Shares
was solely made on the basis of publicly available information. The Subscriber
hereby waives, to the fullest extent permitted by law, any rights of withdrawal,
rescission or compensation for damages to which the Subscriber might be entitled
in connection with the distribution of the Shares.
8. Legending of Shares
8.1 The Subscriber hereby acknowledges that a legend may be placed on the
certificates representing the Shares to the effect that the securities
represented by such certificates are subject to a hold period and may not be
traded until the expiry of such hold period except as permitted by applicable
securities legislation.
9. Costs
9.1 The Subscriber acknowledges and agrees that all costs and expenses incurred
by the Subscriber (including any fees and disbursements of any special counsel
retained by the Subscriber) relating to the purchase of the Shares shall be
borne by the Subscriber.
10. Governing Law
10.1 This Subscription Agreement is governed by the laws of the state of Nevada
and the federal laws of the United States applicable herein. The Subscriber, in
its personal or corporate capacity and, if applicable, on behalf of each
beneficial purchaser for whom it is acting, irrevocably attorns to the
jurisdiction of the state of Nevada.
<PAGE>
-6-
11. Survival
11.1 This Subscription, including without limitation the representations,
warranties and covenants contained herein, shall survive and continue in full
force and effect and be binding upon the parties hereto notwithstanding the
completion of the purchase of the Shares by the Subscriber pursuant hereto.
12. Assignment
12.1 This Subscription is not transferable or assignable.
13. Execution
13.1 The Company shall be entitled to rely on delivery by facsimile machine of
an executed copy of this Subscription and acceptance by the Company of such
facsimile copy shall be equally effective to create a valid and binding
agreement between the Subscriber and the Company in accordance with the terms
hereof.
14. Severability
14.1 The invalidity or unenforceability of any particular provision of this
Subscription shall not affect or limit the validity or enforceability of the
remaining provisions of this Subscription.
15. Entire Agreement
15.1 Except as expressly provided in this Agreement and in the agreements,
instruments and other documents contemplated or provided for herein, this
Agreement contains the entire agreement between the parties with respect to the
sale of the Shares and there are no other terms, conditions, representations or
warranties, whether expressed, implied, oral or written, by statute or common
law, by the Company or by anyone else.
16. Notices
16.1 All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Subscriber shall be directed to the
address on page 1 and notices to the Company shall be directed to it at 2034
Western Avenue, Las Vegas, Nevada, 89102, attention of William Turner.
17. Counterparts
17.1 This Agreement may be executed in any number of counterparts, each of
which, when so executed and delivered, shall constitute an original and all of
which together shall constitute one instrument.
IN WITNESS WHEREOF the Subscriber has duly executed this Subscription as of the
date first above mentioned.
DELIVERY INSTRUCTIONS
1 Delivery - please deliver the Share certificates to:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
<PAGE>
-7-
2. Registration - registration of the certificates which are to be delivered
at closing should be made as follows:
--------------------------------------------------------------------------
(name)
--------------------------------------------------------------------------
(address)
3 The undersigned hereby acknowledges that it will deliver to the Company all
such additional completed forms in respect of the Subscriber's purchase of
the Shares as may be required for filing with the appropriate securities
commissions and regulatory authorities.
Strathburn Investments Inc.
--------------------------------------------
(Name of Subscriber - Please type or print)
/s/ [Illegible] Authorized Signatory
--------------------------------------------
(Signature and, if applicable, Office)
3rd Floor, Norfolk House, Frederick Street
--------------------------------------------
(Address of Subscriber)
Nassau
--------------------------------------------
(City, State or Province, Postal Code of
Subscriber)
Bahamas
--------------------------------------------
(Country of Subscriber)
<PAGE>
-8-
A C C E P T A N C E
The above-mentioned Subscription in respect of the Shares is hereby accepted by
KODIAK GRAPHICS COMPANY
DATED at Vancouver, the 6th day of May, 1999.
KODIAK GRAPHICS COMPANY
KODIAK GRAPHICS COMPANY
Per: /s/William Turner, President
------------------------------------
Authorized Signatory
<PAGE>
-9-
SCHEDULE A - LEGEND
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE ONE YEAR ANNIVERSARY
OF THE ISSUANCE HEREOF OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY
AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN
EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE 1933 ACT ("RULE 144A"), TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE 1933 ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (4)
TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) UNDER THE 1933 ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT
IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND
A CERTIFICATE IN THE FORM ATTACHED TO THIS SECURITY IS DELIVERED BY THE
TRANSFEREE TO THE COMPANY, (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE 1933 ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE 1933 ACT, OR (6)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, IN EACH CASE
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS SECURITY AGREES THAT
IT WILL FURNISH TO THE COMPANY SUCH CERTIFICATES AND OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES
WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT
IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER
THE 1933 ACT AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (o)(2)
OF) RULE 902 UNDER REGULATION S UNDER THE 1933 ACT."
EXHIBIT 10.14
THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE "AGREEMENT") RELATES TO AN
OFFERING OF SECURITIES IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S.
PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT").
NONE OF THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, AND, UNLESS SO REGISTERED, NONE
MAY BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED
HEREIN) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.
PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
(Foreign/Overseas Subscribers)
TO: SPORTSPRIZE ENTERTAINMENT INC., a Nevada Corporation
(formerly KODIAK GRAPHICS COMPANY)
2034 Western Avenue
Las Vegas, Nevada 89102
Purchase of Shares
1. Subscription
1.1 The undersigned (the "Subscriber") hereby irrevocably subscribes for and
agrees to purchase 83,333 shares (the "Shares") at a price of US $4.00 per Share
(such subscription and agreement to purchase being the "Subscription"), for the
total purchase price of US $333,332 (the "Subscription Proceeds"), which is
tendered herewith, on the basis of the representations and warranties and
subject to the terms and conditions set forth herein. This Subscription is part
of a private placement of up to US $1,000,000.
1.2 The Company hereby irrevocably agrees to sell, on the basis of the
representations and warranties and subject to the terms and conditions set forth
herein, to the Subscriber the Shares.
1.3 Subject to the terms hereof, the Subscription will be effective upon its
acceptance by the Company.
2. Payment
2.1 The Subscription Proceeds must accompany this Subscription and shall be
paid by certified cheque or bank draft drawn on a U.S. chartered bank made
payable to the Company. If the funds are wired to the Company or to its agent or
lawyers, those agents or lawyers are authorized to immediately deliver the funds
to the Company.
3. Documents Required from Subscriber
3.1 The Subscriber must complete, sign and return to the Company two (2)
executed copies of this Agreement.
3.2 The Subscriber shall complete, sign and return to the Company as soon as
possible on request by the Company any documents, questionnaires, notices and
undertakings as may be required by regulatory authorities, stock exchanges and
applicable law.
4. Closing
4.1 Closing of the offering of the Shares (the "Closing") shall occur on August
31, 1999 or on such other date as may be determined by the Company (the "Closing
Date").
<PAGE>
-2-
5. Acknowledgements of Subscriber
5.1 The Subscriber acknowledges and agrees that:
(a) the Shares have not been registered under the 1933 Act, or under any
state securities or "blue sky" laws of any state of the United States,
and, unless so registered, may not be offered or sold in the United
States or to U.S. Persons, as that term is defined in Regulation S
under the 1933 Act ("Regulation S"), except pursuant to an exemption
from, or in a transaction not subject to, the registration
requirements of the 1933 Act;
(b) the decision to execute this Agreement and purchase the Shares agreed
to be purchased hereunder has not been based upon any oral or written
representation as to fact or otherwise made by or on behalf of the
Company and such decision is based entirely upon a review of the news
releases of the Company and any public information filed with the
Securities and Exchange Commission in compliance, or intended
compliance, with applicable securities legislation. If the Company has
presented a business plan to the Subscriber, the Subscriber
acknowledges that the business plan may not be achieved or be
achievable;
(c) by execution hereof the Subscriber has waived the need for the Company
to communicate its acceptance of the purchase of the Shares pursuant
to this Agreement;
(d) the Company is entitled to rely on the representations and warranties
and the statements and answers of the Subscriber contained in this
Agreement, and the Subscriber will hold harmless the Company from any
loss or damage it or they may suffer as a result of the Subscriber's
failure to correctly complete this Agreement;
(e) it will indemnify and hold harmless the Company and, where applicable,
its respective directors, officers, employees, agents, advisors and
shareholders from and against any and all loss, liability, claim,
damage and expense whatsoever (including, but not limited to, any and
all fees, costs and expenses whatsoever reasonably incurred in
investigating, preparing or defending against any claim, lawsuit,
administrative proceeding or investigation whether commenced or
threatened) arising out of or based upon any representation or
warranty of the Subscriber contained herein or in any document
furnished by the Subscriber to the Company in connection herewith
being untrue in any material respect or any breach or failure by the
Subscriber to comply with any covenant or agreement made by the
Subscriber to the Company in connection therewith;
(f) the issuance and sale of the Shares to the Subscriber will not be
completed if acceptance would be unlawful or if, in the discretion of
the Company, acting reasonably, acceptance is not in the best
interests of the Company;
(g) it has been advised to consult its own legal, tax and other advisors
with respect to the merits and risks of an investment in the Shares
and with respect to applicable resale restrictions and it is solely
responsible (and the Company is not in any way responsible) for
compliance with applicable resale restrictions;
(h) the Shares are not listed on any stock exchange or automated dealer
quotation system and no representation has been made to the Subscriber
that the Shares will become listed on any stock exchange or automated
dealer quotation system; except that currently certain market makers
make market in shares of the Company on the non-NASDAQ
Over-the-Counter Bulletin Board;
(i) it is outside the United States when receiving and executing this
Subscription Agreement and is acquiring the Shares for its own
account, for investment purposes only, and not with a view to, or for,
resale, distribution or fractionalization thereof, in whole or in
part, and no other person has a direct or indirect beneficial interest
in such Shares; or, if not, it is an accredited investor as defined by
US securities laws;
<PAGE>
-3-
(j) the Shares may not be offered or sold to a U.S. Person or for the
account or benefit of a U.S. Person (other than a distributor) prior
to the end of the Restricted Period (as defined herein), if
applicable;
(k) the Company is under no obligation to register or qualify the Shares
on behalf of the Subscriber or to assist the Subscriber in complying
with any exemption from registration and qualification under the 1933
Act and applicable state securities laws, or any form of exemption
therefrom;
(l) in the view of the Securities and Exchange Commission, the statutory
and regulatory basis for the exemption claimed for the offer and sale
of the Shares, although in technical compliance with Regulation S,
would nonetheless not be available if the offering is part of a plan
or scheme to evade the registration provisions of the 1933 Act;
(m) this Agreement is not enforceable by the Subscriber unless it has been
accepted by the Company; and
(n) the Company will pay a finders fee, in cash, equal to 2.5% of the
gross proceeds received by the Company from the sale of the Shares.
The subscriber further acknowledges that the finder and its officers,
directors, employees and affiliates may, from time to time, hold
positions in securities of the Company.
6. Representations, Warranties and Covenants of the Subscriber
6.1 The Subscriber hereby represents and warrants to and covenants with the
Company (which representations, warranties and covenants shall survive the
Closing) that:
(a) it is not a U.S. Person;
(b) it is not acquiring the Shares for the account or benefit of, directly
or indirectly, a U.S. Person;
(c) the Subscriber has the legal capacity and competence to enter into and
execute this Subscription and to take all actions required pursuant
hereto and, if the Subscriber is a corporation, it is duly
incorporated and validly subsisting under the laws of its jurisdiction
of incorporation and all necessary approvals by its directors,
shareholders and others have been obtained to authorize execution and
performance of this Subscription on behalf of the Subscriber;
(d) the entering into of this Subscription and the transactions
contemplated hereby do not result in the violation of any of the terms
and provisions of any law applicable to, or the constating documents
of, the Subscriber or of any agreement, written or oral, to which the
Subscriber may be a party or by which the Subscriber is or may be
bound;
(e) the Subscriber has duly executed and delivered this Subscription and
it constitutes a valid and binding agreement of the Subscriber
enforceable against the Subscriber;
(f) it is not an underwriter of, or dealer in, the securities of the
Company, nor is the Subscriber participating, pursuant to a
contractual agreement or otherwise, in the distribution of the Shares;
(g) it is purchasing the Shares for its own account or for an account with
respect to which it exercises sole investment discretion, and that it
or such account is an accredited investor as that term is defined in
Rule 501 under the 1933 Act (an "Accredited Investor") acquiring the
Shares for investment purposes and not for distribution;
(h) it understands and agrees that none of the Shares has been registered
under the 1933 Act, and they may not be sold except as permitted in
paragraph (i) below;
(i) it understands and agrees (i) that the Shares are being offered only
in a transaction not involving any public offering within the meaning
of the 1933 Act, and (ii) that (A) if within one year after the date
of original
<PAGE>
-4-
issuance of the Shares, or if within three months after it ceases to
be an affiliate (within the meaning of Rule 144 under the 1933 Act
("Rule 144")) of the Company, it decides to resell, pledge or
otherwise transfer the Shares on which the legend as set forth below
appears, such Shares may be resold, pledged or transferred only (1) to
the Company, (2) so long as the Shares are eligible for resale
pursuant to Rule 144A under the 1933 Act ("Rule 144A"), to a person
whom the seller reasonably believes is a qualified institutional
investor buyer ("QIB") as that term is defined in Rule 144A(a)(1) that
purchases for its own account or for the account of a QIB to whom
notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A (as indicated by the box checked by the
transferor on the certificate of transfer on the reverse of the
Shares), (3) in an offshore transaction in accordance with Regulation
S (as indicated by the box checked by the transferor on the
certificate of transfer on the reverse of the Shares), (4) to an
Institutional Accredited Investor (as indicated by the box checked by
the transferor on the certificate of transfer on the reverse of the
Shares) who has certified to the Company that such transferee is an
Institutional Accredited Investor and is acquiring such security for
investment purposes and not for distribution, (5) pursuant to an
exemption from registration provided by Rule 144 (if applicable) under
the 1933 Act, or (6) pursuant to an effective registration statement
under the 1933 Act, in each case in accordance with any applicable
securities laws of any state of the United States, (B) the purchaser
will, and each subsequent holder is required to, notify any purchaser
of the Shares from it of the resale restrictions referred to in clause
(A) above, if then applicable, and (C) with respect to any transfer of
the Shares by an Institutional Accredited Investor, such holder will
deliver to the Company such certificates and other information as it
may reasonably require to confirm that the transfer by it complies
with the restrictions set forth in this paragraph (i);
(j) it understands and agrees that the notification requirement referred
to in paragraph (i) above will be satisfied by virtue of the fact that
the legend set out in Schedule "A" will be placed on the Shares unless
otherwise agreed by the Company;
(k) it understands and agrees that offers and sales of the Shares prior to
the expiration of a period of one year after the date of original
issuance of the Shares (the "Restricted Period") shall only be made in
compliance with the safe harbor provisions set forth in Regulation S,
pursuant to the registration provisions of the 1933 Act or an
exemption therefrom, and that all offers and sales after the
Restricted Period shall be made only in compliance with the
registration provisions of the 1933 Act or an exemption therefrom;
(l) it will not sell or otherwise transfer the Shares except as permitted
under the 1933 Act and applicable state securities laws or an
exemption therefrom;
(m) it (i) is able to fend for itself in the Subscription; (ii) has such
knowledge and experience in business matters as to be capable of
evaluating the merits and risks of its prospective investment in the
Shares; and (iii) has the ability to bear the economic risks of its
prospective investment and can afford the complete loss of such
investment;
(n) it understands and agrees that the legend set forth in paragraph (j)
above shall not be removed from any Shares purchased by it pursuant to
this Subscription unless there is delivered to the Company such
satisfactory evidence, which may include an opinion of counsel
licensed to practice law in one of the states of the United States of
America, as may be reasonably required by the Company, that such
Shares are not "restricted" within the meaning of Rule 144;
(o) if it is acquiring the Shares as a fiduciary or agent for one or more
investor accounts, it has sole investment discretion with respect to
each such account and it has full power to make the foregoing
acknowledgments, representations and agreements on behalf of such
account;
(p) it understands and agrees that the Company and others will rely upon
the truth and accuracy of the acknowledgments, representations and
agreements contained in sections 5 and 6 hereof and agrees that if any
of such acknowledgments, representations and agreements are no longer
accurate or have been breached, it shall promptly notify the Company;
<PAGE>
-5-
(q) the Subscriber is not aware of any advertisement of the Shares;
(r) no person has made to the Subscriber any written or oral
representations:
(i) that any person will resell or repurchase any of the Shares;
(ii) that any person will refund the purchase price of any of the
Shares;
(iii) as to the future price or value of any of the Shares; or
(iv) that the Shares will be listed and posted for trading on any
stock exchange or automated dealer quotation system or that
application has been made to list and post the Shares of the
Company on any stock exchange or automated dealer quotation
system.
6.2 In this Subscription, the term "U.S. Person" shall have the meaning
ascribed thereto in Regulation S.
7. Acknowledgement and Waiver
7.1 The Subscriber has acknowledged that the decision to purchase the Shares
was solely made on the basis of publicly available information. The Subscriber
hereby waives, to the fullest extent permitted by law, any rights of withdrawal,
rescission or compensation for damages to which the Subscriber might be entitled
in connection with the distribution of the Shares.
8. Legending of Shares
8.1 The Subscriber hereby acknowledges that a legend may be placed on the
certificates representing the Shares to the effect that the securities
represented by such certificates are subject to a hold period and may not be
traded until the expiry of such hold period except as permitted by applicable
securities legislation.
9. Costs
9.1 The Subscriber acknowledges and agrees that all costs and expenses incurred
by the Subscriber (including any fees and disbursements of any special counsel
retained by the Subscriber) relating to the purchase of the Shares shall be
borne by the Subscriber.
10. Governing Law
10.1 This Subscription Agreement is governed by the laws of the state of Nevada
and the federal laws of the United States applicable herein. The Subscriber, in
its personal or corporate capacity and, if applicable, on behalf of each
beneficial purchaser for whom it is acting, irrevocably attorns to the
jurisdiction of the state of Nevada.
11. Survival
11.1 This Subscription, including without limitation the representations,
warranties and covenants contained herein, shall survive and continue in full
force and effect and be binding upon the parties hereto notwithstanding the
completion of the purchase of the Shares by the Subscriber pursuant hereto.
12. Assignment
12.1 This Subscription is not transferable or assignable.
<PAGE>
-6-
13. Execution
13.1 The Company shall be entitled to rely on delivery by facsimile machine of
an executed copy of this Subscription and acceptance by the Company of such
facsimile copy shall be equally effective to create a valid and binding
agreement between the Subscriber and the Company in accordance with the terms
hereof.
14. Severability
14.1 The invalidity or unenforceability of any particular provision of this
Subscription shall not affect or limit the validity or enforceability of the
remaining provisions of this Subscription.
15. Entire Agreement
15.1 Except as expressly provided in this Agreement and in the agreements,
instruments and other documents contemplated or provided for herein, this
Agreement contains the entire agreement between the parties with respect to the
sale of the Shares and there are no other terms, conditions, representations or
warranties, whether expressed, implied, oral or written, by statute or common
law, by the Company or by anyone else.
16. Notices
16.1 All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Subscriber shall be directed to the
address on page 6 and notices to the Company shall be directed to it at 2034
Western Avenue, Las Vegas, Nevada, 89102, attention of Mr. William Turner.
17. Counterparts
17.1 This Agreement may be executed in any number of counterparts, each of
which, when so executed and delivered, shall constitute an original and all of
which together shall constitute one instrument.
IN WITNESS WHEREOF the Subscriber has duly executed this Subscription as of the
date first above mentioned.
DELIVERY INSTRUCTIONS
1. Delivery - please deliver the Share certificates to:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
2. Registration - registration of the certificates which are to be delivered
at closing should be made as follows:
--------------------------------------------------------------------------
(name)
--------------------------------------------------------------------------
(address)
<PAGE>
-7-
3. The undersigned hereby acknowledges that it will deliver to the Company all
such additional completed forms in respect of the Subscriber's purchase of the
Shares as may be required for filing with the appropriate securities commissions
and regulatory authorities.
Lamplighter Investments Ltd.
--------------------------------------------
(Name of Subscriber - Please type or print)
/s/G. Decker
--------------------------------------------
(Signature and, if applicable, Office)
88 Ellis Road, Crowthorne Berks
--------------------------------------------
(Address of Subscriber)
England, RG4 56PN
--------------------------------------------
(City, State or Province, Postal Code of
Subscriber)
--------------------------------------------
(Country of Subscriber)
<PAGE>
-8-
A C C E P T A N C E
The above-mentioned Subscription in respect of the Shares is hereby accepted by
SPORTSPRIZE ENTERTAINMENT INC.
DATED at Vancouver, the 15th day of July, 1999.
SPORTSPRIZE ENTERTAINMENT INC.
Per: /s/Jeff Paquin, President
------------------------------------
Authorized Signatory
<PAGE>
-9-
SCHEDULE A - LEGEND
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE ONE YEAR ANNIVERSARY
OF THE ISSUANCE HEREOF OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY
AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN
EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE 1933 ACT ("RULE 144A"), TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE 1933 ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (4)
TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) UNDER THE 1933 ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT
IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND
A CERTIFICATE IN THE FORM ATTACHED TO THIS SECURITY IS DELIVERED BY THE
TRANSFEREE TO THE COMPANY, (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE 1933 ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE 1933 ACT, OR (6)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, IN EACH CASE
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS SECURITY AGREES THAT
IT WILL FURNISH TO THE COMPANY SUCH CERTIFICATES AND OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES
WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT
IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER
THE 1933 ACT AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (o)(2)
OF) RULE 902 UNDER REGULATION S UNDER THE 1933 ACT."
EXHIBIT 10.15
THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE "AGREEMENT") RELATES TO AN
OFFERING OF SECURITIES IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S.
PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT").
NONE OF THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, AND, UNLESS SO REGISTERED, NONE
MAY BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED
HEREIN) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.
PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
(Foreign/Overseas Subscribers)
TO: SPORTSPRIZE ENTERTAINMENT INC., a Nevada Corporation
(formerly KODIAK GRAPHICS COMPANY)
2034 Western Avenue
Las Vegas, Nevada 89102
Purchase of Shares
1. Subscription
1.1 The undersigned (the "Subscriber") hereby irrevocably subscribes for and
agrees to purchase 83,333 shares (the "Shares") at a price of US $4.00 per Share
(such subscription and agreement to purchase being the "Subscription"), for the
total purchase price of US $333,332 (the "Subscription Proceeds"), which is
tendered herewith, on the basis of the representations and warranties and
subject to the terms and conditions set forth herein. This Subscription is part
of a private placement of up to US $1,000,000.
1.2 The Company hereby irrevocably agrees to sell, on the basis of the
representations and warranties and subject to the terms and conditions set forth
herein, to the Subscriber the Shares.
1.3 Subject to the terms hereof, the Subscription will be effective upon its
acceptance by the Company.
2. Payment
2.1 The Subscription Proceeds must accompany this Subscription and shall be
paid by certified cheque or bank draft drawn on a U.S. chartered bank made
payable to the Company. If the funds are wired to the Company or to its agent or
lawyers, those agents or lawyers are authorized to immediately deliver the funds
to the Company.
3. Documents Required from Subscriber
3.1 The Subscriber must complete, sign and return to the Company two (2)
executed copies of this Agreement.
3.2 The Subscriber shall complete, sign and return to the Company as soon as
possible on request by the Company any documents, questionnaires, notices and
undertakings as may be required by regulatory authorities, stock exchanges and
applicable law.
4. Closing
4.1 Closing of the offering of the Shares (the "Closing") shall occur on August
31, 1999 or on such other date as may be determined by the Company (the "Closing
Date").
<PAGE>
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5. Acknowledgements of Subscriber
5.1 The Subscriber acknowledges and agrees that:
(a) the Shares have not been registered under the 1933 Act, or under any
state securities or "blue sky" laws of any state of the United States,
and, unless so registered, may not be offered or sold in the United
States or to U.S. Persons, as that term is defined in Regulation S
under the 1933 Act ("Regulation S"), except pursuant to an exemption
from, or in a transaction not subject to, the registration
requirements of the 1933 Act;
(b) the decision to execute this Agreement and purchase the Shares agreed
to be purchased hereunder has not been based upon any oral or written
representation as to fact or otherwise made by or on behalf of the
Company and such decision is based entirely upon a review of the news
releases of the Company and any public information filed with the
Securities and Exchange Commission in compliance, or intended
compliance, with applicable securities legislation. If the Company has
presented a business plan to the Subscriber, the Subscriber
acknowledges that the business plan may not be achieved or be
achievable;
(c) by execution hereof the Subscriber has waived the need for the Company
to communicate its acceptance of the purchase of the Shares pursuant
to this Agreement;
(d) the Company is entitled to rely on the representations and warranties
and the statements and answers of the Subscriber contained in this
Agreement, and the Subscriber will hold harmless the Company from any
loss or damage it or they may suffer as a result of the Subscriber's
failure to correctly complete this Agreement;
(e) it will indemnify and hold harmless the Company and, where applicable,
its respective directors, officers, employees, agents, advisors and
shareholders from and against any and all loss, liability, claim,
damage and expense whatsoever (including, but not limited to, any and
all fees, costs and expenses whatsoever reasonably incurred in
investigating, preparing or defending against any claim, lawsuit,
administrative proceeding or investigation whether commenced or
threatened) arising out of or based upon any representation or
warranty of the Subscriber contained herein or in any document
furnished by the Subscriber to the Company in connection herewith
being untrue in any material respect or any breach or failure by the
Subscriber to comply with any covenant or agreement made by the
Subscriber to the Company in connection therewith;
(f) the issuance and sale of the Shares to the Subscriber will not be
completed if acceptance would be unlawful or if, in the discretion of
the Company, acting reasonably, acceptance is not in the best
interests of the Company;
(g) it has been advised to consult its own legal, tax and other advisors
with respect to the merits and risks of an investment in the Shares
and with respect to applicable resale restrictions and it is solely
responsible (and the Company is not in any way responsible) for
compliance with applicable resale restrictions;
(h) the Shares are not listed on any stock exchange or automated dealer
quotation system and no representation has been made to the Subscriber
that the Shares will become listed on any stock exchange or automated
dealer quotation system; except that currently certain market makers
make market in shares of the Company on the non-NASDAQ
Over-the-Counter Bulletin Board;
(i) it is outside the United States when receiving and executing this
Subscription Agreement and is acquiring the Shares for its own
account, for investment purposes only, and not with a view to, or for,
resale, distribution or fractionalization thereof, in whole or in
part, and no other person has a direct or indirect beneficial interest
in such Shares; or, if not, it is an accredited investor as defined by
US securities laws;
<PAGE>
-3-
(j) the Shares may not be offered or sold to a U.S. Person or for the
account or benefit of a U.S. Person (other than a distributor) prior
to the end of the Restricted Period (as defined herein), if
applicable;
(k) the Company is under no obligation to register or qualify the Shares
on behalf of the Subscriber or to assist the Subscriber in complying
with any exemption from registration and qualification under the 1933
Act and applicable state securities laws, or any form of exemption
therefrom;
(l) in the view of the Securities and Exchange Commission, the statutory
and regulatory basis for the exemption claimed for the offer and sale
of the Shares, although in technical compliance with Regulation S,
would nonetheless not be available if the offering is part of a plan
or scheme to evade the registration provisions of the 1933 Act;
(m) this Agreement is not enforceable by the Subscriber unless it has been
accepted by the Company; and
(n) the Company will pay a finders fee, in cash, equal to 2.5% of the
gross proceeds received by the Company from the sale of the Shares.
The subscriber further acknowledges that the finder and its officers,
directors, employees and affiliates may, from time to time, hold
positions in securities of the Company.
6. Representations, Warranties and Covenants of the Subscriber
6.1 The Subscriber hereby represents and warrants to and covenants with the
Company (which representations, warranties and covenants shall survive the
Closing) that:
(a) it is not a U.S. Person;
(b) it is not acquiring the Shares for the account or benefit of, directly
or indirectly, a U.S. Person;
(c) the Subscriber has the legal capacity and competence to enter into and
execute this Subscription and to take all actions required pursuant
hereto and, if the Subscriber is a corporation, it is duly
incorporated and validly subsisting under the laws of its jurisdiction
of incorporation and all necessary approvals by its directors,
shareholders and others have been obtained to authorize execution and
performance of this Subscription on behalf of the Subscriber;
(d) the entering into of this Subscription and the transactions
contemplated hereby do not result in the violation of any of the terms
and provisions of any law applicable to, or the constating documents
of, the Subscriber or of any agreement, written or oral, to which the
Subscriber may be a party or by which the Subscriber is or may be
bound;
(e) the Subscriber has duly executed and delivered this Subscription and
it constitutes a valid and binding agreement of the Subscriber
enforceable against the Subscriber;
(f) it is not an underwriter of, or dealer in, the securities of the
Company, nor is the Subscriber participating, pursuant to a
contractual agreement or otherwise, in the distribution of the Shares;
(g) it is purchasing the Shares for its own account or for an account with
respect to which it exercises sole investment discretion, and that it
or such account is an accredited investor as that term is defined in
Rule 501 under the 1933 Act (an "Accredited Investor") acquiring the
Shares for investment purposes and not for distribution;
(h) it understands and agrees that none of the Shares has been registered
under the 1933 Act, and they may not be sold except as permitted in
paragraph (i) below;
(i) it understands and agrees (i) that the Shares are being offered only
in a transaction not involving any public offering within the meaning
of the 1933 Act, and (ii) that (A) if within one year after the date
of original
<PAGE>
-4-
issuance of the Shares, or if within three months after it ceases to
be an affiliate (within the meaning of Rule 144 under the 1933 Act
("Rule 144")) of the Company, it decides to resell, pledge or
otherwise transfer the Shares on which the legend as set forth below
appears, such Shares may be resold, pledged or transferred only (1) to
the Company, (2) so long as the Shares are eligible for resale
pursuant to Rule 144A under the 1933 Act ("Rule 144A"), to a person
whom the seller reasonably believes is a qualified institutional
investor buyer ("QIB") as that term is defined in Rule 144A(a)(1) that
purchases for its own account or for the account of a QIB to whom
notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A (as indicated by the box checked by the
transferor on the certificate of transfer on the reverse of the
Shares), (3) in an offshore transaction in accordance with Regulation
S (as indicated by the box checked by the transferor on the
certificate of transfer on the reverse of the Shares), (4) to an
Institutional Accredited Investor (as indicated by the box checked by
the transferor on the certificate of transfer on the reverse of the
Shares) who has certified to the Company that such transferee is an
Institutional Accredited Investor and is acquiring such security for
investment purposes and not for distribution, (5) pursuant to an
exemption from registration provided by Rule 144 (if applicable) under
the 1933 Act, or (6) pursuant to an effective registration statement
under the 1933 Act, in each case in accordance with any applicable
securities laws of any state of the United States, (B) the purchaser
will, and each subsequent holder is required to, notify any purchaser
of the Shares from it of the resale restrictions referred to in clause
(A) above, if then applicable, and (C) with respect to any transfer of
the Shares by an Institutional Accredited Investor, such holder will
deliver to the Company such certificates and other information as it
may reasonably require to confirm that the transfer by it complies
with the restrictions set forth in this paragraph (i);
(j) it understands and agrees that the notification requirement referred
to in paragraph (i) above will be satisfied by virtue of the fact that
the legend set out in Schedule "A" will be placed on the Shares unless
otherwise agreed by the Company;
(k) it understands and agrees that offers and sales of the Shares prior to
the expiration of a period of one year after the date of original
issuance of the Shares (the "Restricted Period") shall only be made in
compliance with the safe harbor provisions set forth in Regulation S,
pursuant to the registration provisions of the 1933 Act or an
exemption therefrom, and that all offers and sales after the
Restricted Period shall be made only in compliance with the
registration provisions of the 1933 Act or an exemption therefrom;
(l) it will not sell or otherwise transfer the Shares except as permitted
under the 1933 Act and applicable state securities laws or an
exemption therefrom;
(m) it (i) is able to fend for itself in the Subscription; (ii) has such
knowledge and experience in business matters as to be capable of
evaluating the merits and risks of its prospective investment in the
Shares; and (iii) has the ability to bear the economic risks of its
prospective investment and can afford the complete loss of such
investment;
(n) it understands and agrees that the legend set forth in paragraph (j)
above shall not be removed from any Shares purchased by it pursuant to
this Subscription unless there is delivered to the Company such
satisfactory evidence, which may include an opinion of counsel
licensed to practice law in one of the states of the United States of
America, as may be reasonably required by the Company, that such
Shares are not "restricted" within the meaning of Rule 144;
(o) if it is acquiring the Shares as a fiduciary or agent for one or more
investor accounts, it has sole investment discretion with respect to
each such account and it has full power to make the foregoing
acknowledgments, representations and agreements on behalf of such
account;
(p) it understands and agrees that the Company and others will rely upon
the truth and accuracy of the acknowledgments, representations and
agreements contained in sections 5 and 6 hereof and agrees that if any
of such acknowledgments, representations and agreements are no longer
accurate or have been breached, it shall promptly notify the Company;
<PAGE>
-5-
(q) the Subscriber is not aware of any advertisement of the Shares;
(r) no person has made to the Subscriber any written or oral
representations:
(i) that any person will resell or repurchase any of the Shares;
(ii) that any person will refund the purchase price of any of the
Shares;
(iii) as to the future price or value of any of the Shares; or
(iv) that the Shares will be listed and posted for trading on any
stock exchange or automated dealer quotation system or that
application has been made to list and post the Shares of the
Company on any stock exchange or automated dealer quotation
system.
6.2 In this Subscription, the term "U.S. Person" shall have the meaning
ascribed thereto in Regulation S.
7. Acknowledgement and Waiver
7.1 The Subscriber has acknowledged that the decision to purchase the Shares
was solely made on the basis of publicly available information. The Subscriber
hereby waives, to the fullest extent permitted by law, any rights of withdrawal,
rescission or compensation for damages to which the Subscriber might be entitled
in connection with the distribution of the Shares.
8. Legending of Shares
8.1 The Subscriber hereby acknowledges that a legend may be placed on the
certificates representing the Shares to the effect that the securities
represented by such certificates are subject to a hold period and may not be
traded until the expiry of such hold period except as permitted by applicable
securities legislation.
9. Costs
9.1 The Subscriber acknowledges and agrees that all costs and expenses incurred
by the Subscriber (including any fees and disbursements of any special counsel
retained by the Subscriber) relating to the purchase of the Shares shall be
borne by the Subscriber.
10. Governing Law
10.1 This Subscription Agreement is governed by the laws of the state of Nevada
and the federal laws of the United States applicable herein. The Subscriber, in
its personal or corporate capacity and, if applicable, on behalf of each
beneficial purchaser for whom it is acting, irrevocably attorns to the
jurisdiction of the state of Nevada.
11. Survival
11.1 This Subscription, including without limitation the representations,
warranties and covenants contained herein, shall survive and continue in full
force and effect and be binding upon the parties hereto notwithstanding the
completion of the purchase of the Shares by the Subscriber pursuant hereto.
12. Assignment
12.1 This Subscription is not transferable or assignable.
<PAGE>
-6-
13. Execution
13.1 The Company shall be entitled to rely on delivery by facsimile machine of
an executed copy of this Subscription and acceptance by the Company of such
facsimile copy shall be equally effective to create a valid and binding
agreement between the Subscriber and the Company in accordance with the terms
hereof.
14. Severability
14.1 The invalidity or unenforceability of any particular provision of this
Subscription shall not affect or limit the validity or enforceability of the
remaining provisions of this Subscription.
15. Entire Agreement
15.1 Except as expressly provided in this Agreement and in the agreements,
instruments and other documents contemplated or provided for herein, this
Agreement contains the entire agreement between the parties with respect to the
sale of the Shares and there are no other terms, conditions, representations or
warranties, whether expressed, implied, oral or written, by statute or common
law, by the Company or by anyone else.
16. Notices
16.1 All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Subscriber shall be directed to the
address on page 1 and notices to the Company shall be directed to it at 2034
Western Avenue, Las Vegas, Nevada, 89102, attention of Mr. William Turner.
17. Counterparts
17.1 This Agreement may be executed in any number of counterparts, each of
which, when so executed and delivered, shall constitute an original and all of
which together shall constitute one instrument.
IN WITNESS WHEREOF the Subscriber has duly executed this Subscription as of the
date first above mentioned.
DELIVERY INSTRUCTIONS
Delivery - please deliver the Share certificates to:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
2. Registration - registration of the certificates which are to be delivered
at closing should be made as follows:
--------------------------------------------------------------------------
(name)
--------------------------------------------------------------------------
(address)
<PAGE>
-7-
3. The undersigned hereby acknowledges that it will deliver to the Company all
such additional completed forms in respect of the Subscriber's purchase of
the Shares as may be required for filing with the appropriate securities
commissions and regulatory authorities.
Strathburn Investments Inc.
--------------------------------------------
(Name of Subscriber - Please type or print)
/s/ [Illegible] Authorized Signatory
--------------------------------------------
(Signature and, if applicable, Office)
3rd Floor, Norfolk House, Frederick Street
--------------------------------------------
(Address of Subscriber)
Nassau
--------------------------------------------
(City, State or Province, Postal Code of
Subscriber)
Bahamas
--------------------------------------------
(Country of Subscriber)
<PAGE>
-8-
A C C E P T A N C E
The above-mentioned Subscription in respect of the Shares is hereby accepted by
SPORTSPRIZE ENTERTAINMENT INC.
DATED at Vancouver, B.C. the 15th day of July, 1999.
SPORTSPRIZE ENTERTAINMENT INC.
Per: /s/Jeff Paquin, President
------------------------------------
Authorized Signatory
<PAGE>
SCHEDULE A - LEGEND
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE ONE YEAR ANNIVERSARY
OF THE ISSUANCE HEREOF OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY
AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN
EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE 1933 ACT ("RULE 144A"), TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE 1933 ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (4)
TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) UNDER THE 1933 ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT
IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND
A CERTIFICATE IN THE FORM ATTACHED TO THIS SECURITY IS DELIVERED BY THE
TRANSFEREE TO THE COMPANY, (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE 1933 ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE 1933 ACT, OR (6)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, IN EACH CASE
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS SECURITY AGREES THAT
IT WILL FURNISH TO THE COMPANY SUCH CERTIFICATES AND OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES
WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT
IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER
THE 1933 ACT AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (o)(2)
OF) RULE 902 UNDER REGULATION S UNDER THE 1933 ACT."
EXHIBIT 10.16
[LOGO]
Interactive Marketing Inc.
Interactive Marketing Inc.
South Sepulveda Boulevard,
Suite 360, Manhattan Beach,
CA 90266 310.374.1898 Fax
310.374.4233
www.4interactivemarketing.com
TO: CLIVE BARWIN, SPORTSPRIZE ENTERTAINMENT, INC.
FROM: ALAN H. GERSON
SUBJECT: ENGAGEMENT AGREEMENT
DATE: MAY 6, 1999
- --------------------------------------------------------------------------------
Thank you for your interest in retaining Interactive Marketing Inc. (hereafter
IMI) to provide strategic and tactical Marketing services to Sportsprize
Entertainment, Inc., (hereinafter, "SPE"). The following represents the terms of
our engagement:
1. Term.
a) SPE will retain Interactive Marketing Inc., to provide the
services as set forth in paragraph 3 below for a term of one (1)
year, commencing upon the signing of this agreement and the
receipt of the initial monthly retainer by IMI as provided herein
(the "Effective Date"). However, it is understood and agreed by
the parties that both IMI and SPE shall have the right to cancel
this Agreement at the end of the first One Hundred and Eighty
(180) days of such term (the "Term"), upon Five (5) days written
notice.
b) In the event that this Agreement is not cancelled at the end of
the first One Hundred and Eighty (180) days of the term, the
parties agree to begin to negotiate for an extension of this
understanding not later than ninety (90) days prior to the
expiration of the full One (1) year Term, for an exclusive
negotiation period not to exceed sixty (60) days.
2. Status of Personnel. The parties acknowledge that Interactive
Marketing Inc., (hereafter IMI) will be providing services hereunder
as a non-exclusive independent contractor. IMI shall provide the
services of Andrew Batkin and Alan Gerson and such other of its
management and employees as it deems appropriate to provide the
contracted services to SPE hereunder. All such persons will be under
the specific direction and control of IMI and IMI is responsible for
their compensation and any and all other obligations of an employer or
general contractor, including but not limited to withholdings for
taxes and responsibility for any or all employee benefits. Nothing in
this agreement shall be construed to make such persons employees of
SPE for any purpose.
3. Services. IMI shall, during the first One Hundred and Eighty (180)
days of the term provide the following services under this agreement:
[Initials]
<PAGE>
a) Create an overall Marketing and Operational Strategy for the
company, which will contain strategic and tactical business
recommendations for the operational, revenue, marketing and
organizational issues involved in the launch of the
Sportsprize.com website. These strategies and recommendations
will address, among other issues:
o The creation and operation of the Four (4) planned retailing
areas.
o A review of the structure and operations of the play of the
Sportsprize.com games.
o All legal and regulatory issues relating to the conduct of
the Sportsprize.com games.
o Site design, navigation, hosting, hardware and connectivity
issues.
o Database design, capabilities and report functionalities.
o The creation of a Go to Market plan for Sportsprize.com
which will address
- Review and revision of existing business plan
- Personnel requirements and job descriptions
- Liaison with Kaleidoscope Marketing and help secure
media and event partners
- Creation of Revenue, Traffic Building and Public
Relations strategies and assistance in locating
additional resources to execute such strategies,
including public relations, ad sales representation and
promotional marketing.
o Assist in identifying key management personnel and advisory
panels
o During the course of our engagement provide close
consultation to SPE management to develop additional new
business models and revenue generation strategies for SPE,
including revisions and fine-tuning of the Go to Market Plan
as well as integrate SPE into IMI's deal flow and strategic
contacts to extend SPE's business model and create
additional opportunities for the Company.
b) IMI will undertake in good faith to meet the following timetables
with respect to the above:
i) Within 30 days of the commencement of our engagement, IMI
will deliver an Initial Business Review and Assessment of
the company's objectives, core capabilities, assets,
products and services, as well as its relationships and
available media platforms to be leveraged and meet with
Kaleidoscope Marketing to integrate them into the planning
process. Not later than the end of that period, IMI will
meet with SPE management for an Initial Review and
Assessment, and to continue to prioritize Company
objectives.
ii) Within 45 days of the commencement of our engagement, IMI
will complete its review and recommendations relating to the
Site and Game products as well as any database, hardware and
infrastructure issues, as well as an initial review of
Organizational issues.
iii) Within 60 days of the commencement of our engagement, IMI
will present an Initial Draft and Outline of its Go to
Market plan for creating multiple revenue streams from
sources such as advertising, e-commerce, sponsorships,
promotions and subscriptions,
[Initials]
2
<PAGE>
etc. relating to the exploitation of SPE content, player
following, and Retailing operations. Not later than the end
of that period, IMI will meet with SPE to review, prioritize
and finalize the strategies for that Go To Market Plan.
iv) Within 150 days following the commencement of our
engagement, IMI will deliver a detailed Interactive Go to
Market Plan, outlining strategies to create multiple
revenues streams for e-advertising, e-commerce,
e-subscriptions, that leverage interactive media and
technologies as a platform to extend the company's
capabilities, assets, products and services. These
strategies will include but not necessarily be limited to
its Game content and Retail operations and will contain our
strategic and tactical recommendations as to how SPE can
continue to maximize its consumer and trade marketing
effectiveness and generate new revenue opportunities by
leveraging its core assets and capabilities.
v) Throughout this engagement, IMI will provide close
consultation to SPE management to oversee the implementation
and execution of the strategies and tactical approaches
contained in the Plan, and to develop additional
deliverables.
vi) During the course of our engagement, IMI will integrate SPE
into its deal flow and strategic contacts to extend SPE's
business model and create additional opportunities for SPE,
and meet periodically with management to insure that IMI and
Management have the same understanding of Company goals and
objectives.
4. Compensation: It is understood and agreed by and between the parties that
in exchange for the mutual promises and undertakings contained herein that
IMI shall be compensated as follows:
a) IMI will receive a base monthly retainer fee of Twenty Five Thousand
Dollars ($25,000) for the first Three (3) months of the term and a
base monthly retainer fee of Thirty Thousand Dollars ($30,000.00) for
each subsequent month of the term, due and payable on the Effective
Date and thereafter on the first day of each subsequent full month
through the end of the Term.
b) SPE shall designate IMI as its non-exclusive Independent Sales Agent.
For acting in this capacity IMI shall receive as an additional fee,
15% of any and all of SPE's recurring Net revenues resulting from
advertising, sponsorship and promotion revenues generated by sales and
agreements that IMI directly brings to SPE during the term of this
Agreement, as extended, payable monthly for the length of the
underlying sales contract, as extended. IMI will also be entitled to
that commission on other direct revenue opportunities with respect to
which SPE requests IMI's assistance in developing and closing, payable
monthly for the length of the underlying sales contract, as the same
may extended. It is understood that the value of any prize or
merchandise promotions received by SPE shall be calculated at 50% of
the retail value of the merchandise or prize for the purpose of
calculating IMI's commission.
c) In addition, the President of SPE hereby agrees to sell to IMI or its
nominee 600,000 Reg S shares in Sportsprize Entertainment Inc. for a
price of $.01 per share. Of such total, 400,000 shares shall be
offered to IMI and available for sale immediately upon the Effective
Date of this Agreement, and, provided this Agreement is not cancelled
at the end of the first One Hundred Eighty (180) days, IMI shall be
offered and have the right to purchase the remaining 200,000 shares on
the 181st day. These shares are subject to Rule 144 and thus will not
be tradeable for a period of One (1) year. In the event that SPE
completes a registration statement or attains a small cap listing on
NASDAQ, these shares shall have full "piggyback" registration rights,
at SPE's expense, and will thus become free trading. IMI agrees that
when such shares become free trading, that IMI will limit the shares
it offers for sale in any single week to 5% of the previous weeks'
total share trading volume.
[Initials]
3
<PAGE>
d) IMI shall be entitled to reimbursement of all reasonable, necessary
and pre-approved travel, entertainment and business expenses incurred
in furtherance of SPE business and pursuant to this undertaking, upon
submission of reasonable documentation and receipts, SPE will
designate an executive to be available to make timely approval of
requests by IMI to incur reimbursable expenses on SPE's account. IMI
will be guided by SPE policy relating to business entertainment and
travel expenses, and will submit requests for reimbursement on forms
acceptable to SPE. Reimbursement will be made to IMI not later than
Thirty (30) days after submission of documentation. However, it is
understood and agreed that SPE corporate policy notwithstanding, Air
Travel of a duration of more than Three (3) hours, undertaken by
Andrew Batkin or Alan Gerson, at the request of SPE, will be booked in
the next highest level of cabin service above Coach which is available
for a required flight. With respect to other IMI employees, they will
be entitled to reimbursement for the cost of Upgrade Certificates on
such flights, and will book the underlying ticket at Coach fares.
5. Limitation of Liability. In the event of any breach of this Agreement by
either party, the limitation of any claim of loss by the non-breaching
party shall be no greater than the proven financial loss sustained by the
non-breaching party by virtue of such breach. In no event shall either
party be liable hereunder for incidental or consequential damages for any
breach of this Agreement.
6. Basis for Engagement: SPE acknowledges that IMI has been retained because
of its experience and knowledge in the field of Internet and Interactive
marketing, and that IMI will be providing its opinions and consultations
based on its accumulated knowledge and experience and that of its
principals and employees. SPE is free to accept or reject any such advice,
opinions and consultations offered, and to use, modify or reject any such
written materials prepared by IMI.
7. No Rights to Marks: Each party acknowledges that it is not being granted or
vested with any right or interest, ownership or otherwise, in or to any of
the other party's trademarks, trade-names, service marks or logos by virtue
of or pursuant to this Agreement.
8. Entire Agreement: This written Agreement constitutes the sole and only
agreement of the parties relating to the matters covered hereby. Any prior
or contemporaneous agreements, promises, negotiations or representations
not expressly set forth in the Agreement are of no force or effect. This
Agreement supercedes any and all existing contracts and agreements by the
parties with respect to the subject matter covered herein. Any and all
notices made or required hereunder shall be delivered in writing to each
party at their corporate address, attention of the respective Chief
Executive Officers.
If this Agreement, consisting of Four (4) pages including this signature page,
accurately states the terms of our Agreement, please sign below where indicated,
and return to IMI together with the payment specified in section 4a).
Sportsprize Entertainment, Inc. Interactive Marketing, Inc.
By /s/ Jeff Paquin By /s/ Alan H. Gerson
-------------------------------- ----------------------------------
Name and Title Name and Title
Jeff Paquin, President Alan H. Gerson, President
Date May 17/99 Date May, 17, 1999
--------- -------------
Acknowledged, President, Sportsprize Entertainment, Inc.
/s/ Jeff Paquin Date May/99
- ------------------------ -------
[Initials]
4
EXHIBIT 10.17
AGREEMENT
THIS AGREEMENT is made and entered into effective May 1, 1999, by and
between Kaleidoscope Sports & Entertainment, LLC, 136 Madison Avenue, 8th Floor,
New York, New York 10016 (hereinafter referred to as "Kaleidoscope") and
Sportsprize Entertainment, Inc., 885 West Georgia Street, Suite 1500, Vancouver,
British Columbia, Canada V6C 3E8 (hereinafter referred to as "Sportsprize").
AGREEMENT
WHEREAS, Kaleidoscope is a company involved in the planning, designing,
marketing, selling and consulting for various sports related ventures and
properties; and
WHEREAS, Sportsprize is a company that plans to generate revenue and
profits through Internet advertising and merchandise sales by operating a
website that offers a game concept and by selling banners, advertisements,
sponsorships and space in an online mall; and
WHEREAS, Sportsprize desires to use Kaleidoscope's knowledge of and
contacts in the sports business; and
WHEREAS, Kaleidoscope has agreed to provide certain services to Sportsprize
upon the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the mutual covenants set for the
herein, and for other good and valuable consideration, it is agreed as follows:
1. TERM OF AGREEMENT: The term of this Agreement shall be deemed to have
commenced on May 15, 1999 and shall continue for a period of six (6) months
concluding October 15, 1999, unless sooner terminated or extended in
accordance with the terms and conditions hereof.
2. KALEIDOSCOPE SERVICES: Kaleidoscope shall perform the following functions
for Sportsprize:
(a) By July 1, 1999 provide Sportsprize with a list of highly qualified
candidates to serve as President of Sportsprize and a highly qualified
list of candidates to act as Spokesman for Sportsprize. In addition,
Kaleidoscope shall advise and work with Sportsprize in negotiating the
employment contacts with such candidates; and
(b) Work closely with Sportsprize to put together the best possible
strategic plan, by July 15, 1999, for Kaleidoscope to secure
presentations with major professional sports leagues and players
associations with a view toward
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getting those leagues and players associations to either endorse or to
approve the Sportsprize concept; and
(c) Assist Sportsprize and Interactive Marketing, Inc., by July 30, 1999,
in creating an overall marketing and operational strategy for
Sportsprize, which will contain strategic and tactical business
recommendations for the promotional revenue, marketing and partnership
issues involved in the launch of the Sportsprize.com website. In this
connection, Kaleidoscope will address the following:
(i) The identification and procurement of Ecomm partners;
(ii) Endorsements for Sportsprize;
(iii) Finding advertisers and advertising for the site;
(iv) Identify and secure special events sponsors and sponsorships;
(v) Identify and procure strategic Media partners; and
(d) Consultation with Sportsprize management to oversee the implementation
and execution of the strategies and recommendations of the
Kaleidoscope plan.
3. COMPENSATION: In consideration of the rights and benefits granted pursuant
to this Agreement, Sportsprize shall pay to Kaleidoscope the following
amounts:
a. One Hundred Twenty Thousand U.S. Dollars ($120,000), such amount to be
paid in six (6) installments of Twenty Thousand U.S. ($20,000) each on
or before the fifteenth (15th) day of May, June, July, August,
September and October, 1999; and
b. Options to purchase up to One Hundred Thousand (100,000) shares of
stock in Sportsprize (currently trading on the Over The Counter market
with the trading symbol "Jock") at a price of Twenty-five Cents ($.25)
per share. Kaleidoscope shall have two (2) years from the date of this
Agreement to exercise said option; provided however, that said options
once exercised, are restricted for sale for a period of one (1) year
from the date of said purchase; and
c. Options to purchase up to One Hundred Thousand (100,000) shares of
stock in Sportsprize (currently trading on the Over The Counter market
with the trading symbol "Jock") at a price of Twenty-five Cents ($.25)
per share, upon the successful completion of Paragraphs 2(a) and 2(b)
above. In this connection, Kaleidoscope shall be deemed to have
successfully completed the requirements of Paragraphs 2(a) and 2(b)
above if it has (1) provided Sportsprize, by July 1, 1999, with a list
of highly qualified individuals to serve as President of Sportsprize
or, in the alternative, has provided Sportsprize with a well-known
spokespeople and (2) either approached two (2) of the four (4) major
professional sports leagues for approval of the Sportsprize concept or
has not approached the said professional sports leagues, after having
had discussions with Sportsprize
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as to the advisability of making such an approach and Sportsprize has
decided to forego such an approach. Kaleidoscope shall have two (2)
years from the date of this Agreement to exercise said option;
provided however, that said options once exercised, are restricted for
sale for a period of one (1) year from the date of said purchase.
d. Options to purchase up to Three Hundred Thousand (300,000) shares of
stock, in Sportsprize (currently trading on the Over The Counter
market with the trading symbol "Jock") upon the reasonably
satisfactory completion of Paragraph 2(c) above at the traded price of
Sportsprize less twenty percent (20%) per share provided, however,
that said options, once exercised, are restricted for sale for a
period of one (1) year from the date of said purchase. The traded
price of Sportsprize will be determined by the average closing price
of Sportsprize's shares (traded on the NASDAQ OTC Bulletin Board or
NASDAQ Small Cap Market or suchever market that Sportsprize's shares
shall be traded upon) for a period of Ten (10) days preceding the
agreed to completion. Said shares will be released at 30,000 shares
per month over a Ten (10) month period. It is expressly agreed that
Sportsprize will make every effort to register the shares for early
trading privileges. Kaleidoscope agrees to sell it shares into the
market at a volume of no greater than 21/2% of the true volume of the
preceding weeks total amount of traded shares in Sportsprize. The
number of shares covered by each option above shall be proportionally
adjusted for any increase or decrease in the number of accrued shares
resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the common stock, or any increase
or decrease in the number of shares.
4. EXPENSES: Kaleidoscope shall be entitled to reimbursement of all
reasonable, necessary and pre-approved travel, entertainment and business
expenses incurred in furtherance of Sportsprize business and pursuant to
this undertaking, upon submission of reasonable documentation and receipts.
Kaleidoscope will be guided by Sportsprize policy relating to business
entertainment and travel expenses, and will submit requests for
reimbursements on forms acceptable to Sportsprize on a monthly basis.
5. PAYMENTS TO KALEIDOSCOPE: All payments to be made to Kaleidoscope pursuant
to the terms of this Agreement shall be made in U.S. Dollars by check drawn
to the order of Kaleidoscope Sports & Entertainment, LLC, and mailed to it
at 136 Madison Avenue, 8th Floor, New York, New York 10016, Attention:
David Bagliebter, Esq., or to such other address as may be designated in
writing to Sportsprize from time to time by Kaleidoscope.
6. STATUS OF PERSONNEL: Kaleidoscope and Sportsprize acknowledged that
Kaleidoscope will be providing services hereunder as a non-exclusive
independent contractor. Kaleidoscope shall provide the services of David
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Bagliebter and Robert McQueen and such other of its management and
employees as it deems appropriate to provide the contracted services to
Sportsprize hereunder. All such persons will be under the specific
direction and control of Kaleidoscope and Kaleidoscope is responsible for
their compensation and any and all other obligations of an employer or
general contractor, including but not limited to withholding taxes and
responsibility for any and all employee benefits. Nothing in this Agreement
shall be construed to make such persons employees of Sportsprize for any
purpose.
7. TIME IS OF THE ESSENCE: Sportsprize acknowledges that time is of the
essence in the payment of all fees dues Kaleidoscope hereunder and hereby
agrees that in the event any payment due Kaleidoscope is not received
within fifteen (15) days of the date set forth in this Agreement for such
payment Kaleidoscope shall have the right and option to terminate this
Agreement effective upon expiration of fifteen (15) days following written
notice to Sportsprize of its election to so terminate for failure of
Sportsprize to perform in accordance with the provisions hereof, unless
such payment has been received by Kaleidoscope within such fifteen (15) day
period. The reservation of specific rights by Kaleidoscope herein shall not
preclude Kaleidoscope from exercising any other remedy it may have at law
or in equity to enforce the terms of this Agreement.
8. TERMINATION: In accordance with the terms and conditions hereof either
party shall have the right to terminate the term of this Agreement
immediately, at any time if a Default, as defined below, by the other party
has occurred and is continuing by giving written notice thereof to the
defaulting party. The term "Default" shall mean any of the following: [1]
failure of a party to comply with or perform any material provision or
condition of this Agreement and continuance of such failure for fifteen
(15) days after written notice thereof to such party; or, if the failure
cannot be cured within said 15-day period, if the other party does not
commence to cure such failure within said 15-day period and diligently
pursue such cure hereafter; [2] a party becomes insolvent, is unable to pay
its debts as they mature or is the subject of a petition in bankruptcy,
whether voluntary or involuntary, on any other proceeding under bankruptcy,
insolvency or similar laws; or makes an assignment for the benefit of
creditors; or is named in, or its property is subject to, a suit for
appointment of a received; or is dissolved or liquidated; or [3] any
warranty made in this Agreement is breached, false or misleading in any
material respect. In the event of such termination, subject to the
arbitration provisions hereof, the non-defaulting party shall be entitled
to pursue any remedy provided in law or equity, including injunctive relief
and the right to recover any and all damages it may have suffered by reason
of such Default.
9. FORCE MAJEURE: Neither party hereto shall be considered to be in default of
this Agreement, or be liable for damages thereof, for any failure of
performance hereunder occasioned by an act of God, force of nature,
accident, war or warlike activity, insurrection or civil commotion, labor
dispute, transportation delay,
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governmental regulatory action (whether or not with proper authority) or
other cause similar or dissimilar to the foregoing and beyond its
reasonable control, provided the party so affected gives prompt notice
thereof to the other. In the event of a suspension of any obligation by
reason of this section, which extends beyond sixty (60) days, the party
non-affected may, at its option, elect to cancel those aspects of this
Agreement, which are reasonably feasible to terminate.
10. NOTICES: Except of any notice required under applicable law to be given in
another manner, all notices, requests and demands as made by the parties to
this Agreement shall be in writing [at the addresses set forth below,
unless the recipient at least two (2) business days prior to the giving of
such notice shall have advised the sender, in a notice given in accordance
with this paragraph of a different address, in which case the notice shall
be addressed to such different address] by any of the following means: [1]
personal service (including service by overnight courier service); [2]
telecopy (if confirmed in writing sent by personal service or registered or
certified, first class mail, postage prepaid, return receipt requested); or
[3] registered or certified, first class mail, postage prepaid, return
receipt requested. Any notice, demand or request pursuant to either
subsection [1] or [2] hereof shall not be effective until actually received
at the address (or facsimile number) specified (and, in the case of an
electronic communication under [2] that is not received between 9:00 a.m
and 5:00 p.m., at the location of the recipient on a Business Day, such
communication shall be deemed received at 9:00 a.m. on the next Business
Day), but notices given under [3] above shall be deemed given two (2) days
following deposit in the United States mails. Any party to this Agreement
may change its address for notices by a notice to the other given in a
manner permitted under this paragraph. For purposes of this paragraph,
"Business Day" means any day other than a Saturday or Sunday, or any other
day on which national or state chartered banks located in New York are
authorized to be closed. Notices shall be as follows:
If to Kaleidoscope: David P. Bagliebter
General Counsel &
Senior Vice President,
Business Affairs
Kaleidoscope Sports & Entertainment, LLC
136 Madison Avenue
New York, New York 10016
If to Sportsprize: Sportsprize Entertainment, Inc.
Jeffrey D. Pacquin
Barrister & Solicitor
World Trade Center
555 - 999 Canada
Vancouver, B.C. V6C 3E1
11. ARBITRATION:
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A. Except as set forth with respect to third party claims, any dispute
between the parties arising from this Agreement shall be settled by
arbitration held in accordance with the Commercial Arbitration Rules
of the American Arbitration Association, except as modified by this
section. All disputes shall be referred to a single arbitrator
mutually appointed by the parties. If the parties cannot agree upon a
signal arbitrator within thirty (30) days after a demand for
arbitration is made, the dispute will be referred to an decided by a
panel of three (3) arbitrators. Within twenty (20) days following the
30-day period set forth above, each party shall select an arbitrator
and the arbitrators so selected shall, within thirty (30) days after
their selection, appoint the third arbitrator. If the arbitrators so
selected cannot agree upon a third arbitrator, such third arbitrator
shall be appointed by the President of the American Arbitration
Association. Arbitration hearings shall take place in New York, New
York. The proceedings shall commence and be completed within sixty
(60) days after the selection of the last arbitrator. The agreement of
a majority of the arbitrators, if the parties are unable to agree upon
a single arbitrator, rather than unanimity, shall be binding. Any
award rendered through this process will be final and binding upon the
parties. Unless otherwise directed by the arbitrator(s), each party
shall bear its own costs and expenses of arbitration, except that the
parties shall each bear one-half (1/2) of the costs, if any, of the
third arbitrator and any costs assessed by the American Arbitration
Association.
B. Notwithstanding the above, if there is a breach or threatened breach
by a party of a material terms of this Agreement, the other party
shall be entitled to seek injunctive relief to prevent irreparable
injury.
C. The provisions of this paragraph shall survive the expiration or
sooner termination of this Agreement.
12. RELATIONSHIP OF THE PARTIES: Kaleidoscope and Sportsprize are entering into
this Agreement as independent contractors and agree that they are not, and
shall not become or be deemed to be, agents, partners, principals or
employees of one another as a result of this Agreement or the performance
of their respective obligations hereunder. Nothing in this Agreement is
intended, or shall be deemed, to create a relationship, express or implied,
of principal and agent, employer and employee or joint venture. Each party
is responsible for providing, at their own expense, disability,
unemployment and other insurance and workers' compensation for themselves
and their subcontractors and employees.
13. GOVERNING LAW: This Agreement shall be interpreted in accordance with and
governed by the laws of the State of New York without regard to or for
conflict of laws privileges.
14. SEVERABILITY: If any provision of this Agreement shall be declared or held
by a court of competent jurisdiction or a duly constituted arbitration
panel to be invalid or
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unenforceable, such provision shall be deemed modified to the extent
necessary to be valid and enforceable, provided that such modification does
not materially alter the intent or purpose of this Agreement or the
obligations of the parties hereunder. If any such provision cannot be so
modified, such provision shall be severed wherefrom and of no force of
effect unless the severing of such provision materially alters the intent
or purpose of this Agreement or the obligations of the parties hereunder.
The remaining provisions hereof shall continue to be the valid and
enforceable obligations of the parties, all provisions hereof being
severable except as provided above.
15. CAPTIONS; HEADINGS: The captions or headings of the paragraphs of this
Agreement are for convenience only and should not be deemed to limit or in
any way affect the scope, meaning or intent of this Agreement or any
portion hereof.
16. ASSIGNMENT; BINDING EFFECT: This Agreement shall be personal to the parties
hereto, and except as provided herein, neither this Agreement nor the
rights or obligations of any party hereto shall be assigned by any party
without the prior written consent of the other party hereto. This Agreement
shall be binding upon the parties and their respective successors and
permitted assigns.
17. ENTIRE AGREEMENT; WAIVER: This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof. Neither this
Agreement nor any provision hereof shall be modified, amended, terminated,
discharged or waived except by a written instrument signed by the party to
be charged therewith. No such written waiver of any provision shall be
deemed a waiver of the breach or enforcement of any other provision thereof
or of the subsequent breach or enforcement of the same provision whether or
not such breach is similar.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year above written.
KALEIDOSCOPE SPORTS & ENTERTAINMENT, LLC
By: /s/ [Illegible]
------------------------------------
SPORTSPRIZE ENTERTAINMENT, INC.
By: /s/ [Illegible]
------------------------------------
EXHIBIT 10.18
ASSIGNMENT AND ASSUMPTION AGREEMENT
Sportsprize Entertainment Inc.
(formerly Kodiak Graphics Company)
THIS AGREEMENT is effective as of the 14th day of May, 1999 ("Date of
Grant") among Sportsprize Entertainment Inc. (formerly Kodiak Graphics Company),
a Nevada corporation (the "Company"), Sportsprize, Inc. (formerly Sportsprize
Entertainment, Inc.), a Nevada Corporation ("Sportsprize"), and Kaleidoscope
Sports & Entertainment, LLC (the "Kaleidoscope").
WHEREAS, Kaleidoscope entered into an agreement with Sportsprize
Entertainment, Inc. dated May 1, 1999 and effective May 14, 1999, attached
hereto as Exhibit A and incorporated herein, pursuant to which Kaleidoscope was
granted stock options exercisable to acquire common shares of Sportsprize
Entertainment, Inc. in consideration for certain planning, designing, marketing,
selling and consulting services (the "Consulting Agreement");
WHEREAS, the Board of Directors of the Company (the "Board") has approved,
adopted, ratified and confirmed an Agreement and Plan of Share Exchange (the
"Share Exchange Plan"), effective May 14, 1999, pursuant to which the Company
acquired all of the issued and outstanding shares of Sportsprize pursuant to a
statutory share exchange and the Board authorized the grant to certain
consultants and other selected persons stock options exercisable to purchase
common stock of the Company, with a $0.001 par value per share;
WHEREAS, the Company desires to retain the services of Kaleidoscope and
Kaleidoscope desires to deliver such services to the Company pursuant to the
terms and conditions set forth in the Consulting Agreement;
WHEREAS, the Board has determined that it is in the best interest of the
Company to assume the interest of Sportsprize in the Consulting Agreement and
Sportsprize has agreed to assign its interest in the Consulting Agreement to the
Company;
WHEREAS, the Board has determined that it is in the best interest to grant
Kaleidoscope options to acquire shares of the Company's common stock ("Common
Shares") in the amounts and subject to the terms and conditions set forth in the
Consulting Agreement (the "Options"); and
WHEREAS, the Options are not intended to qualify as "Incentive Stock
Options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
NOW, THEREFORE, for and in consideration of good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree to the assignment and assumption of the Consulting Agreement
pursuant to the terms and conditions set forth herein.
1. Assignment of Consulting Agreement.
1.1 Sportsprize hereby grants, bargains, conveys, transfers and assigns its
entire right, title and interest in the Consulting Agreement to the Company, its
successors and assigns.
1.2 It is expressly understood that effective from and after the date
hereof, the Company shall assume all of the obligations of Sportsprize arising
under or pursuant to the Consulting Agreement, including but limited to the
obligation to grant options to acquire Common Shares of the Company to
Kaleidoscope in lieu of the Options granted under the Consulting Agreement, and
agrees to duly and properly perform the obligations of
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Sportsprize thereunder from and after the date hereof. The Company further
ratifies and confirms the Consulting Agreement as if an original party thereto.
1.3 Kaleidoscope agrees and consents to the assignment of the Consulting
Agreement to the Company and agrees that the Company shall assume all of the
obligations of Sportsprize arising under or pursuant to the Consulting
Agreement, and agrees and consents to the grant of options to acquire Common
Shares of the Company in lieu of the Options. Kaleidoscope agrees to duly and
properly perform its obligations under the Consulting Agreement for the benefit
of the Company as if the Company were an original party thereto.
2. Option Grant.
2.1 Acknowledgement. The Company hereby acknowledges, ratifies and confirms
the grant of the following Options pursuant to the assignment of the Consulting
Agreement from Sportsprize to the Company.
(a) The Company hereby acknowledges the grant of Options exercisable
to acquire One Hundred Thousand (100,000) Common Shares at the
price of Twenty-five Cents ($ 0.25) per share to Kaleidoscope.
Such Options shall vest immediately and shall be fully
exercisable.
(b) The Company agrees to grant Kaleidoscope Options exercisable to
acquire One Hundred Thousand (100,000) Commons Shares at a price
of Twenty-five Cents ($.25) per share, upon the successful
completion of Paragraphs 2(a) and 2(b) set forth in the
Consulting Agreement.
(c) The Company agrees to grant Kaleidoscope Options exercisable to
acquire Three Hundred Thousand (300,000) Commons Shares upon the
reasonably satisfactory completion of Paragraph 2(c) set forth in
the Consulting Agreement at the traded price of the Company's
common shares less twenty percent (20%) per share; provided,
however, that said Options, once exercised, are restricted for
sale for a period of one (1) year from the date of said purchase.
The traded price of the Common Shares will be determined by the
average closing price of the Company's Common Shares (traded on
the NASDAQ OTC Bulletin Board or NASDAQ Small Cap Market or such
ever market that the Company's shares shall be traded upon) for a
period of Ten (10) days preceding the agreed to completion. Said
Common Shares will be released at 30,000 shares per month over a
Ten (10) month period. It is expressly agreed that the Company
will make reasonable efforts to register the shares for early
trading privileges. Kaleidoscope agrees to sell its shares into
the market at a volume of no greater than 2 1/2% of the true
volume of the preceding weeks total amount of the Company's
traded shares. The number of Common Shares covered by each option
above shall be proportionally adjusted for any increase or
decrease in the number of accrued shares resulting from a stock
split, reverse stock split, stock dividend, combination or
reclassification of the Common Shares, or any increase or
decrease in the number of shares
2.2 Options not Transferable. Unless otherwise specified in this Agreement
or by the Board, the Options granted herein may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise)
other than by will, by applicable laws of descent and distribution and shall not
be subject to execution, attachment or similar process. Upon any attempt to
transfer, pledge, hypothecate or otherwise dispose of any option or of any right
or privilege conferred herein, such Option shall thereupon terminate and become
null and void.
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2.3 Termination of Options. The Options granted herein shall terminate, to
the extent not previously exercised, on May 14, 2004. The exercise period may be
extended in the sole discretion of the Board.
2.4 Exercise of Options. Options shall be exercisable, in full or in part,
at any time after vesting, until termination; provided, however, that if
Kaleidoscope is subject to the reporting and liability provisions of Section 16
of the Securities Exchange Act of 1934 with respect to the Common Stock shall be
precluded from selling or transferring any Common Stock or other security
underlying an Option during the six (6) months immediately following the grant
of that Option. If less than all of the shares included in the vested portion of
any Option are purchased, the remainder may be purchased at any subsequent time
prior to the expiration of the Option term. Only whole shares may be issued
pursuant to an option, and to the extent that an Option covers less than one (1)
share, it is unexercisable.
Each exercise of the Option shall be by means of delivery of a notice of
election to exercise (which may be in the form attached hereto as Exhibit B) to
the Secretary of the Company at its principal executive office, specifying the
number of shares of Common Shares to be purchased and accompanied by payment in
cash by certified check or cashier's check in the amount of the full exercise
price for the Common Shares to be purchased. The Options are exercisable only by
Kaleidoscope.
2.5 No Rights as Shareholder. Kaleidoscope shall have no rights as a
shareholder with respect to the Common Stock covered by the Options until
Kaleidoscope becomes a record holder of such Common Shares, irrespective of
whether Kaleidoscope has given notice of exercise. Subject to the provisions set
forth herein, no rights shall accrue to Kaleidoscope and no adjustments shall be
made on account of dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights declared on, or
created in, the Common Stock for which the record date is prior to the date
Kaleidoscope becomes a record holder of the shares of Common Stock covered by
the Options granted herein, irrespective of whether Kaleidoscope has given
notice of exercise.
3. Entire Agreement. This Agreement is the only agreement among
Kaleidoscope, Sportsprize and the Company with respect to the Consulting
Agreement, and this Agreement shall supersede all prior and contemporaneous oral
and written statements and representations and contain the entire agreement
between the parties with respect to the Consulting Agreement and the assignment
of such agreement.
4. Notices. Any notice required or permitted to be made or given hereunder
shall be mailed or delivered personally to the addresses set forth below, or as
changed from time to time by written notice to the other:
The Company: Sportsprize Entertainment Inc.
Attention: Jeffrey Paquin, President
101 West 5th Avenue
Vancouver, British Columbia V5Y 1H9
Sportsprize, Inc. Sportsprize, Inc.
Attention: Jeffrey Paquin, President
101 West 5th Avenue
Vancouver, British Columbia V5Y 1H9
Kaleidoscope: Kaleidoscope Sports & Entertainment, LLC
Attention: David P. Bagliebter, Esq.,
General Counsel, Senior Vice President of
Business Affairs
136 Madison Avenue, 8th Floor
New York, NY 10016
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Sportsprize Entertainment Inc. Kaleidoscope Sports & Entertainment,
LLC
By: ------------------------------- By: -------------------------------
Its: ------------------------------ Its: -------------------------------
Sportsprize, Inc.
By: -------------------------------
Its: ------------------------------
THERE MAY NOT BE PRESENTLY AVAILABLE EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS FOR THE ISSUANCE OF
SHARES OF STOCK UPON EXERCISE OF THESE OPTIONS. ACCORDINGLY, THESE OPTIONS
CANNOT BE EXERCISED UNLESS THESE OPTIONS AND THE SHARES OF STOCK TO BE ISSUED
UPON EXERCISE OF THESE OPTIONS ARE REGISTERED OR AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS IS AVAILABLE.
THE SHARES OF STOCK ISSUED PURSUANT TO THE EXERCISE OF OPTIONS WILL BE
"RESTRICTED SECURITIES" AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933
AND WILL BEAR A LEGEND RESTRICTING RESALE UNLESS THEY ARE REGISTERED UNDER STATE
AND FEDERAL SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE
COMPANY IS NOT OBLIGATED TO REGISTER THE SHARES OF STOCK OR TO MAKE AVAILABLE
ANY EXEMPTION FROM REGISTRATION.
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EXHIBIT A
Consulting Agreement
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EXHIBIT B
Notice of Election to Exercise
This Notice of Election to Exercise shall constitute proper notice pursuant
to the Assignment Agreement among the undersigned, Sportsprize Entertainment
Inc. and Sportsprize, Inc. (the "Agreement") effective as of the 14th day of
May, 1999.
The undersigned hereby elects to exercise Kaleidoscope's option to purchase
__________ shares of the common stock of the Company at a price of $_________
per share, for aggregate consideration of $______, on the terms and conditions
set forth in the Agreement. Such aggregate consideration, in the form specified
in Section 2.4 of the Agreement, accompanies this notice.
The undersigned has executed this Notice this ____ day of __________,
_____.
--------------------------------------------
Signature
--------------------------------------------
Name (typed or printed)
EXHIBIT 10.19
DATA AND SERVICE AGREEMENT
DATED THIS 26th DAY OF MAY, 1999
BETWEEN:
LAS VEGAS SPORTS CONSULTANTS, INC. (dba DBC Sports), A SUBSIDIARY
OF DATA BROADCASTING CORPORATION, 3955 Point Eden Way, Hayward,
California 94545 with an address in Las Vegas, Nevada at 675
Grier Drive, Suite 201.
("DBC Sports")
AND:
SPORTSPRIZE ENTERTAINMENT INC., a Nevada Corporation with a place
of business and address at 225 S. Sepulveda Boulevard, Suite 360,
Manhattan Beach, CA 90266
("Sportsprize")
WHEREAS:
A. Sportsprize is a sports entertainment community and information Site on the
Internet. Members earn discounts and prizes by correctly selecting trivia
formatted sports results.
B. DBC Sports provides a sports statistical data base and media information;
distributing headline news, scores, statistics and game information.
C. Sportsprize wishes to purchase the information and services provided by DBC
Sports.
THEREFORE, in consideration of the mutual promises contained in this Agreement,
the parties agree as follows:
1. GENERAL
A. Sportsprize's authorized representative is Jeffrey D. Paquin, President.
B. DBC Sports' authorized representative is Karol Lucan, who has full
authority to act as agent of DBC Sports in all matters pertaining to this
Agreement.
2. SERVICES AND INFORMATION PROVIDED
A. General: the majority of the information requested by Sportsprize (as set
out in this Agreement) for the Sportsprize Game is readily available
through DBC Sports' existing statistical content. If DBC Sports does not
have the data needed, its research team will use reasonable efforts to
develop the necessary relationships to gather it, i.e. which may include
but is not limited to such statistical information as how many putts
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a golfer may have after one round, or pit stop times for NASCAR, etc. DBC
Sports shall also provide:
B. All MLB player and team information reasonably requested by Sportsprize.
C. All NFL (and also college) player and team information reasonably requested
by Sportsprize, which may include, but is not limited to categories such
as:
i. Players:
Most receptions
Most pass attempts
Longest field goal made
Shortest field goal made
ii. Teams:
Longest TD score
Shortest TD score
Most points in the 1st or 3rd quarter
D. All NBA (and also college) player and team information reasonably requested
by Sportsprize. Some results will be available the day after the event.
E. All NHL player and team information reasonably requested by Sportsprize.
3. ADDITIONAL DATA
The following sports require additional research to be provided by DBC Sports
staff or assistance directly from the individual sports headquarters:
A. Tennis. DBC Sports now has "most money won during tournament" and it is
available the day after any tournament. However, all other propositions, as
set out in this Agreement are not readily available through DBC Sports'
systems. DBC Sports' staff will use reasonable efforts to develop the
necessary relationships with the individual sports leagues to receive this
information.
B. Golf. DBC Sports has "most money won during tournament" and it is available
the day after any tournament. "Most birdies," "most bogies" and "least
strokes" would require additional research through the Internet or by
contacting sports headquarters. DBC Sports dos not currently have access
for obtaining "least putts," "longest drive" or "best fairway accuracy."
DBC Sports' staff will use reasonable efforts to develop the necessary
relationships to receive this information, as well as the following:
i. Lowest round
ii. Highest round
iii. Best score on a particular day
C. Auto racing. DBC Sports shall use reasonable efforts to obtain through the
Internet or directly from sports headquarters all of Sportsprizes'
requests.
D. Soccer: as a Tier II event, DBC Sports has not researched this area. DBC
Sports will use reasonable efforts to obtain the necessary content upon
implementation of this area.
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4. EXPANSION OF SPORTING INFORMATION
A. The above information in paragraph 3 and additional propositions are based
on limited review. DBC Sports shall use reasonable efforts to continually
work with Sportsprize to offer new propositions and increase the variety
for each of the sports around the world.
5. SPORTS CONTENT FOR THE WEBSITE
A. DBC Sports shall provide Sportsprize with the necessary real time
statistics, such as standings, category leaders, boxscores, news, results,
injuries, transactions, schedules, game summaries and previews for all the
major U.S. sports which includes: pro football, college football, pro
basketball, college basketball, pro baseball, pro hockey, golf and NASCAR.
B. DBC Sports has some limitations for tennis, golf and auto racing at this
time. DBC Sports' staff will use reasonable efforts to develop the
necessary relationships to receive this information in a timely fashion.
WEEKLY SCHEDULES AND GAME EVENT SELECTIONS
A. DBC Sports shall provide a minimum of 100 proposition events with four
players or teams per event each week. This amount will vary depending on
the current event schedules, season, etc. and can increase significantly.
B. Events to be furnished to Sportsprize by DBC Sports each Tuesday for events
starting Wednesday. Event week will be Wednesday through Tuesday.
C. Events will be forwarded by DBC Sports to Sportsprize via a mutually
acceptable file format and method.
D. DBC Sports shall insure that each sports category will initially maintain
10 propositions. Depending on the public demand as obtained by Sportsprize,
certain sports may eventually be combined or additional events added as the
customer base dictates. In addition, DBC Sports shall make recommendations
regarding various proposition additions and deletions based on its
experience with the events.
E. Results of propositions shall be furnished by DBC Sports as soon as
possible after the events are over. This data shall be forwarded via a
mutually acceptable format to Sportsprize. Certain event results may be
delayed due to compilation of the information and appropriate formatting
and possible delays from DBC Sports' sources. DBC Sports will use
reasonable efforts to provide interim results. Sportsprize may offer these
results on its site with appropriate disclaimers indicating that these are
"unofficial" results until final information is obtained and verified by
both DBC Sports and Sportsprize.
F. DBC Sports shall notify Sportsprize of all news of which it is aware and
which DBC Sports determines may affect any of the participants in any
proposition. All news
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should be forwarded as soon as received to Sportsprize via mutually
acceptable transmission (telephone, fax, e-mail, etc.).
G. DBC Sports shall provide statistics, news, scores and general sports
information which shall be provided for the Sportsprize web site via PLS,
FTP, or through our Instant Odds software. Scores and statistics shall be
real-time as available. Certain types of statistical content are available
each evening after all events are over. Others, such as boxscores and
recaps are generally available within one hour after the end of each event.
Sportsprize shall receive the information via mutually agreed upon formats
and will program accordingly to distribute on its web site.
6. TIMING
A. DBC Sports shall be ready to provide all data by June 15, 1999 when
Sportsprize anticipates launching the site for test purposes.
7. FEES FOR SERVICES
A. Sportsprize shall pay a monthly fee to DBC Sports, in advance, during the
term on the 1st day of each month without notice or demand from DBC Sports
for its services. The fee schedule shall be:
MONTHLY FEE STARTING DATE
----------- -------------
$ 8,500 June 1, 1999
$11,000 September 1, 1999
$15,000 December 1, 1999
$20,000 April 1, 2000, through
remainder of agreement
B. The initial term of the agreement shall be for three years, commencing June
1, 1999. This agreement will be automatically renewed for an additional
one-year term under the same conditions unless either party hereto provides
written notice to the other party of its intent not to renew at least 60
days prior to the end of the initial term,
8. SUCCESSORS AND ASSIGNS
A. Sportsprize or DBC Sports may not assign this agreement without the written
consent of the other party.
B. In the event of a merger of DBC Sports into another person, a sale of the
stock of DBC Sports resulting in the ownership of more than fifty percent
(50%) of the outstanding stock of DBC Sports by any person other than Data
Broadcasting Corporation or a sale of substantially all of the asserts of
DBC Sports (each a "change in control"), DBC Sports shall use commercially
reasonable efforts to assign the Agreement to the surviving entity or
purchaser of the stock or assets and have such person assume this Agreement
and DBC Sports' rights and liabilities hereunder. In the event, DBC Sports
is unable to have this Agreement assumed as set forth in the
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preceding sentence, DBC Sports shall be allowed to terminate this Agreement
upon a change in control without penalty or liability by providing
Sportsprize with six (6) months prior notice of its intention to terminate.
9. CONFIDENTIALITY, ACCESS TO SPORTSPRIZE INFORMATION
A. Sportsprize will be providing DBC Sports and it's affiliates with copies of
documents, proprietary game, marketing and promotional information. DBC
Sports shall take all reasonable steps to ensure that no information or
documents provided by Sportsprize (or its contractors) will be made public
or will be provided to any person by any means unless authorized in writing
by Sportsprize.
10. TERMINATION
A. Sportsprize may terminate this agreement at any time upon the breach of
this Agreement by DBC Sports provided however, that Sportsprize shall first
give DBC Sports written notice of its intention to terminate and reasons
therefore. DBC Sports shall have 30 days from receipt of said notice to
cure any breach.
In the event of a breach of this Agreement by DBC Sports, the parties
hereto agree that the sum of $60,000, shall be deemed to be liquidated
damages, to be delivered to Sportsprize as satisfaction of all claims of
the nondefaulting party and as the exclusive remedy for such breach which
sum the parties hereto agree is a reasonable sum considering all of the
circumstances on the effective date of this agreement, including the
relationship of such amount to the range of harm to Sportsprize that
reasonably could be anticipated and the anticipation that the actual damage
would be difficult or inconvenient to prove. In no event shall DBC Sports
be liable for any special, incidental, consequential, or punitive damages
including but not limited to loss of income or profit, whether or not
foreseen which may be incurred by Sportsprize.
B. DBC Sports may terminate this Agreement at any time should Sportsprize
breach this Agreement or fail to pay any amount due under this agreement
within 30 days of the date which payment is due. DBC Sports will have no
obligations under Paragraph 10(A) in the event of termination pursuant to
this paragraph for non-payment by Sportsprize.
11. EFFECTIVE DATE
A. This Agreement comes into force on the date on which the Parties sign it.
12. GOVERNING JURISDICTION
A. The laws of the State of Nevada shall govern this Agreement and any dispute
arising therefrom shall be heard in the appropriate court located in Clark
County, Nevada.
B. Sportsprize hereby indemnifies and holds DBC Sports harmless and undertakes
to defend DBC Sports, its directors, employees and agents against any and
all liabilities,
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actions, claims, suits, losses, damages, costs and expenses (including, but
not limited to, reasonable attorney fees and costs) arising out of
Sportsprize's breach of any representations, warranties and obligations
hereunder.
IN WITNESS of the forgoing this Agreement has been signed by the authorized
signatories for Sportsprize and DBC Sports on the dates noted below.
DATED THIS 26th DAY MAY, 1999
/s/ Jeffrey Paquin
- ---------------------------------
JEFFREY PAQUIN, PRESIDENT
SPORTSPRIZE ENTERTAINMENT INC.
/s/ Karol Lucan
- ---------------------------------
KAROL LUCAN
DBC SPORTS
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EXHIBIT 10.20
[COMPANY LOGO]
INTERSHOP
COMMUNICATIONS
June 24th, 1999
Clive Barwin
Sportsprize Entertainement, Inc.
101 West 5th Ave
Vancouver, BC V5Y 1H9
Re: Quote for Services
Mr. Barwin:
Thank you for your interest in Intershop products. We appreciate your
consideration. Intershop hereby offers the following products and prices,
subject to the terms of this letter.
Items Cost
-------- ------------------------------------------------------ --------------
Intershop Professional Services:
-------- ------------------------------------------------------ --------------
1 Solution Definition (on-site*):
2 days, 2 engineer @ $2,000/day/engineer $ 8,000
-------- ------------------------------------------------------ --------------
2 Solution Definition (off-site):
1.5 days, 2 engineers @ $2,000/day/engineer $ 6,000
-------- ------------------------------------------------------ --------------
Estimated development and implementation
3 (to be determined during solution definition):
20 days @ $ 1,600/day $32,000
-------- ------------------------------------------------------ --------------
Estimated Total $46,000
-------- ------------------------------------------------------ --------------
* Reasonable Travel and living expenses while on-site are the
responsibility of the client.
This quote is valid until June 25th, 1999.
To accept the above pricing, Sportsprize Entertainment must prior to 5:00 PM PDT
no later than Thursday, June 24
(i) Counter sign and return to me this letter;
(ii) Submit to Intershop a valid purchase order for the products listed above;
and
(iii) Accept delivery of the products by Wednesday, June 30th, 1999.
Use of the software will be governed by the standard end-user license
agreements contained with the software; the maintenance and technical support
will be provided pursuant to Intershop's current technical support policy and
associated agreement.
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[COMPANY LOGO]
INTERSHOP
COMMUNICATIONS
Professional services, including the solution definition, will be provided
under the Professional Services Consulting attached to this letter as Exhibit A
Please let me know if you have any questions or concerns. I can be reached
at (416) 566-5092. Thanks again for your interest in Intershop and we looking
forward to making this a very successful project and long-term relationship.
Sincerely yours,
/s/Naresh Shah
- -----------------------------------
Naresh Shah
VAR Territory Manager, Canada
Accepted for Sportsprize Entertainment, Inc.
/s/Bob MacKay
- -----------------------------------
Signed
June 24, 1999
- -----------------------------------
Dated
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<PAGE>
[COMPANY LOGO]
INTERSHOP
COMMUNICATIONS
Exhibit A
Professional Services Consulting Agreement
INTERSHOP Communications, Inc. ("Intershop") and Client agree as follows:
1 Scope of Services/Software.
Intershop will perform the professional services (the "Services") for
Client in support of certain specific and discrete projects (each a "Project")
as described in the attached work order(s) ("Exhibit(s)"), commencing with
Exhibit B. Intershop will use its commercially reasonable efforts to complete
any such Services and/or any project programming and materials ("Software")
described in the related Exhibit in accordance with the terms and conditions of
this Agreement. Each Project performed by Intershop for Client will be
documented in a related Exhibit which will be governed by this Agreement and
will be signed by authorized representatives of both parties. Each Exhibit will
set forth, at a minimum, the work to be done, the duration of each Project, and
the fees for the work to be performed.
2 Performance
2.1 Method. All work will be performed in a workmanlike and professional
manner by employees and contractors of Intershop. Intershop will have the right
to determine the method, details, and means of performing the work to be done
for Client. Client will have no right to, and will not, control the manner or
determine the method of accomplishing Intershop's services. Client may, however,
require Intershop's personnel at all times to observe Client's reasonable
security and safety policies. Intershop's personnel will perform their work for
Client primarily at Intershop's premises.
2.2 Acceptance. For each Project described in the related Exhibit performed
under this Agreement, Client will have a 5 day "Acceptance Period" beginning on
the date that such Software and/or Service is delivered. During the Acceptance
Period, Client will notify Intershop in writing adequately detailing any
material nonconformance of such Software and/or Service to the specifications as
set forth in the related Exhibit. If Intershop receives no notice of
nonconformity, the Software and/or Service will be deemed accepted by Client at
the end of the Acceptance Period. In the event that Client deliver Intershop
written notice of nonconformance of Software and/or Service, Intershop will cure
such material nonconformance in accordance with the Description of Work and
deliver Software or Service to Client within 10 days of receipt of nonconforming
notification.
2.3 Project Documentation. Within 10 days of delivery of Software and/or
Service, Intershop will deliver to Client related Project documentation, if
applicable.
3 Fees, Expenses, Additional Work
3.1 Fees. Client will pay Intershop fees set forth in the related Exhibit
for Services and/or Software.
3.2 Expenses. In addition to the foregoing, Client will pay Intershop its
actual out-of-pocket expenses, including travel and living, as reasonably
incurred by Intershop in furtherance of its performance hereunder.
3.3 Additional Work. The fees and charges for any follow-up, installation,
troubleshooting and/or additional work not described in the applicable exhibit
will be performed at Intershop's then-current rates for such work, if such
additional work was not caused by Intershop's negligence.
4 Ownership
4.1 Ownership. As between Client and Intershop, except as set forth below
in Section 4.2, all right, title, and interest, including copyright interests
and any other intellectual property, in and to the Software produced or provided
by Intershop for Services will be the property of Intershop. To the extent, for
any reason, any interest accrues to Client therein, Client agree to assign and,
upon its creation, automatically assign to Intershop the ownership of such
Software, including copyright interests and any other intellectual property
therein, without the necessity of any further consideration.
4.2 Client's License. Effective upon completion of the Services and/or
Software set forth in the applicable exhibit and payment by Client of the fees
and expenses invoiced by Intershop for such Services and/or Software, Client
will have a nonexclusive, nontransferable royalty-free perpetual license to use
the Software in the machine-readable form as delivered to Client for so long as
Client do not violate any provisions in this Agreement or any the related
Software License Agreement which accompanies Intershop Software.
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[COMPANY LOGO]
INTERSHOP
COMMUNICATIONS
4.3 Prohibited Activities. Client will not derive or attempt to derive the
source code or structure of all or any portion of the Software by reverse
engineering, disassembly, decompilation or any other means. Client will not
duplicate, manufacture, copy or reproduce any Software, or any portion thereof,
except as expressly permitted by Intershop.
4.4 Third-Party Interests. Client's interest in and obligations with
respect to any programming, materials, or data to be obtained from third-party
vendors, regardless of whether obtained with the assistance of Intershop, will
be determined in accordance with the agreements and policies of such vendors.
5 Intershop Proprietary Information
Client acknowledges that in order to provide the Services, it may be
necessary for Intershop to disclose to Client certain proprietary information
(scientific or technical data, information, design, process, procedure, formula,
script, software or improvement that is commercially valuable to Intershop) that
has been developed by Intershop at great expense and that have required
considerable effort of skilled professionals ("Proprietary Information"). Client
further acknowledges that the Software will of necessity incorporate such
Proprietary Information. Client agrees that it will not disclose, transfer, use,
copy, or allow access to any such Proprietary Information to any employees or to
any third parties, excepting those who have a need to know such Proprietary
Information in order to give effect to Client's rights hereunder and who have
bound themselves to respect and protect the confidentiality of such Proprietary
Information. In no event will Client disclose any such Proprietary Information
to any competitors of Intershop.
6 Warranties
6.1 Intershop warrants that:
6.1.1 Intershop's providing of the Services and/or Software described
herein does not violate any applicable law, rule, or regulation; any
contracts with third parties; or any third-party rights in any U.S. patent,
copyright, or trade secret right; and
6.1.2 Intershop has sufficient right, title, and interest in and to
the Software, exclusive of rights respecting programs, data, and materials
identified as furnished to Client by third-party vendors, to grant and
convey the rights accorded to Client under Section 4.2 hereof.
6.2 INTERSHOP MAKES NO REPRESENTATION, EXPRESS OR IMPLIED, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
7 LIMITATION OF LIABILITY
INTERSHOP'S LIABILITY HEREUNDER IS LIMITED TO THE AMOUNTS PAID BY CLIENT
DURING THE TERM OF THIS AGREEMENT FOR THE INTERSHOP PROFESSIONAL SERVICES. IN NO
EVENT WILL INTERSHOP HAVE ANY LIABILITY FOR ANY SPECIAL, INDIRECT, OR
CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOST PROFITS,
LOSS OF DATA, OR INTERRUPTION OF BUSINESS ARISING IN ANY WAY HEREUNDER UNDER ANY
THEORY OF LIABILITY, WHETHER OR NOT INTERSHOP HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
8 Termination
8.1 Termination. The Agreement may be terminated by either party upon 30
days' written notice, if the other party breaches any obligation provided
hereunder and the breaching party fails to cure such breach within the 30 day
period; provided that the cure period for any failure by Client to pay fees and
charges due hereunder will be 15 days from the date of receipt by Client of
notice of such failure.
8.2 Remaining Payments. Within 30 days of termination of this Agreement for
any reason, Intershop will submit to Client an itemized invoice for any fees or
expenses theretofore accrued under this Agreement. Client, upon payment of
accrued amounts so invoiced, will thereafter have no further liability or
obligation to Intershop whatsoever for any further fees or expenses arising
hereunder. In the event Intershop terminates this Agreement because of the
breach by Client, Intershop will be entitled to a pro rata payment for work in
progress based on the percentage of work then completed, plus the full amount of
payment attributable to programming and materials already furnished by
Intershop.
9 Independent Contractors
The parties are and will be independent contractors to one another, and
nothing herein will be deemed to cause the creation of an agency, partnership,
or joint venture between the parties. Nothing herein will be interpreted or
construed as creating or establishing the relationship of employer and employee
between Client and either Intershop or any employee or agent of Intershop.
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[COMPANY LOGO]
INTERSHOP
COMMUNICATIONS
10 Miscellaneous
This Agreement will be governed by and constructed in accordance with the
substantive laws of the State of Ohio. THE PARTIES AGREE THAT THE U.N.
CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS SHALL NOT APPLY TO
THIS AGREEMENT. The Agreement will not be construed or interpreted against the
party causing this Agreement to be drafted. This is the entire Agreement between
the parties hereto relating to the Services and supersedes any prior purchase
order, communications, advertising or representations concerning the contents of
the Services. All exhibits attached hereto are incorporated herein by this
reference. No change or modification will be valid unless it is in writing and
is signed by the parties hereto.
Accepted by Client
Name SPORTSPRIZE ENTERTAINMENT, INC.
Signed /s/ Bob MacKay
--------------------------------
Donald Robert MacKay
Date June 24, 1999
Accepted for Intershop
Name Thomas Luckenbach
Director of Prof Services
Signed /s/ Thomas Luckenbach
--------------------------------
Date 8/6/99
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Professional Services Consulting Agreement
Exhibit B
Solution Definition: Project Description and Fees
The following is the Project work order which defines the Project/Scope of Work
to be provided by Intershop to Client in accordance with the Professional
Services Agreement.
- --------------------------------------------------------------------------------
The delivery of the Description of Work is based on the following assumptions:
1. Billing for reasonable required travel costs, time, and related expenses
will be billed separately by Intershop and are the responsibility of the
Client.
2. Intershop will be provided with suitable and stable integration APIs for
the integration into any systems such as third party systems.
3. Client will be responsible for all co-location and hosting fees.
4. Client assures timely and functional delivery of all portions of the
project for which Client undertakes responsibility.
Description of Work - Solution Definition
IPS will provide a Solution Definition service for Client as part of this
description of work. The Solution Definition is equivalent to the Phase 1 of the
published IPS process of delivering custom solutions to clients. During Solution
Definition, IPS will conduct workshops with Client to identify the specific
needs of Client required of the Intershop technology. The customization,
development, and integration work necessary to meet Client specific requirements
and related pricing will be documented as part of the Solution Definition
activity. Note: This project phase does not include the actual customization of
Intershop technology.
Phase 1: Solution Definition: During Solution Definition, IPS will provide the
following document-based deliverables.
o Project Purpose and Vision
o High Level System Architecture Diagrams (Physical and Operational
Views)
o Functional Scope Matrix
o Project Plan for Phases 2-5, including a detailed description of the
Software (and/or any necessary Software customization) to be developed
along with a timeline with specific milestone deliverables for review
(hereafter, "Project Plan")
o Final Proposal (and Prices) for Phases 2-5 for all work identified
in the Project Plan
o Hardware/Software Requirements
o Success Criteria
o Meeting Minutes
Fees
Client will pay Intershop $2000 per staff-day per person, (a staff-day is one
engineer working for 8 hours.) In accordance with paragraph 2.3, Client will pay
reasonable travel and living for Intershop personnel while
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working on this project. Intershop will invoice Client at the end of each month
for time expended during the month and payment is due upon receipt.
The estimated scope of work is a total of 6 staff days: 4 staff-days of onsite
work and 3 staff-days of off-site work. Intershop agrees to provide the solution
definition for a fixed price of $14,000 (plus reasonable travel and living for
Intershop personnel while working on this project) under payment terms set forth
above.
Intershop will invoice Client on a monthly basis for work completed to date. The
parties hereby confirm that this Project as set forth above is to be completed
in accordance with the terms and conditions of the Agreement entered into by the
parties as of the Effective Date of such Agreement.
INTERSHOP Communications, Inc. Client: Sportsprize Entertainment Inc.
By: /s/ Thomas Luckenbach By: /s/ Bob MacKay
---------------------------- -------------------------------
Title: Director of Prof Services Title: CEO
EXHIBIT 10.21
FRONTIER GLOBALCENTER FRONTIER
MASTER SERVICE AGREEMENT NO GLOBALCENTER
This Master Service Agreement (this "Agreement") is entered into on the 22nd day
of July, 1999 ("Effective Date") by and between Sportsprize Entertainment Inc.
on behalf of itself and the subsidiary, affiliate, division and/or business unit
("Client") indicated on the Service Order Form attached hereto, with an office
at the address listed on the Service Order Form, and Frontier GlobalCenter, a
corporation with offices at 1154 East Arques Avenue, Sunnyvale, CA 94086, to set
forth the terms and conditions pursuant to which Frontier GlobalCenter shall
provide to Client certain Services (as defined in the Service Order). The entire
contract between the parties shall consist of this Agreement and one or more
Service Order(s). Unless otherwise agreed to by both parties, all future Service
Orders entered into between the Client and Frontier GlobalCenter will be bound
by this Agreement.
In consideration of the mutual promises and upon the terms and conditions set
forth below, the parties agree as follows:
1. NATURE OF AGREEMENT
Pursuant to this Agreement, Frontier GlobalCenter shall sell and provide to
Client, in consideration for the applicable fees as set forth in a Service Order
the following: (i) Internet connectivity services (the "Bandwidth"); (ii) the
lease (if so indicated on the Service Order) or purchase by Client of equipment
to provide such services (the "Hardware") and the installation of such
equipment; (iii) the lease of space to store and operate such Hardware
("Space"); (iv) management, planning and consulting resources to support these
services, including maintenance and operation of the Hardware ("Support"); (v)
the licensing of software to provide such Services (the "Software"), including,
without limitation, monitoring software, billing software, trouble ticketing
software, data collection and process control software, which together,
including all telecommunication and digital transmission connections and links,
all electrical and physical requirements, comprise an Internet connectivity and
co-location package to support Client's web site(s) ("Client's Web Sites") under
this Agreement and are referred to hereinafter as the "Services".
The Services shall be provided in accordance with the specifications set forth
on the Service Specification attached to this Agreement and in the Service
Order(s) hereto and made a part thereof.
2. SERVICE ORDERS
2.1 Orders. Client and Frontier GlobalCenter may execute one or more Service
Orders describing the Services that Client desires to purchase from Frontier
GlobalCenter. Each Service Order shall set forth the Services to be provided by
Frontier GlobalCenter, the specifications applicable to each item, the prices
and payment schedule, the initial term of such Services (the "Initial Service
Term") and other information the parties may mutually agree upon. No Service
Order shall be effective until executed by Frontier GlobalCenter. All Service
Orders will be subject to the terms and conditions of this Agreement, provided
however, that in the event of conflict between the terms contained in any
Service Order and terms of this Agreement, the terms contained in the Service
Order shall control.
2.2 In the event of conflict between terms in this Agreement and Service Order,
and any terms contained in client-issued order form or purchase order, the terms
of this Agreement and Service Order shall supersede any terms and conditions
that may appear in such client-issued order form or purchase order.
2.3 Cancellation. In the event that Client cancels or terminates a Service Order
at any time for any reason, other than expiration of a Service Order or a
Service Interruption (as defined below), Client agrees to pay Frontier
GlobalCenter all Monthly Recurring Charges specified in the Service Order for
the balance of the term therefore, which shall become due and owing as of the
effective date of cancellation or termination. Upon the cancellation or
termination of a Service Order by Client, Frontier GlobalCenter, shall upon
Client's written request and at no additional cost, give full cooperation and
assistance to Client to assure an orderly and efficient transition.
2.4 IP Addresses. Frontier GlobalCenter will assign on a temporary basis a
reasonable number of Internet Protocol Addresses ("IP Addresses") from the
address space assigned to the Frontier GlobalCenter by InterNIC. Client
acknowledges that the IP Addresses are the sole property of Frontier
GlobalCenter, are assigned to Client as part of the Service, and are not
"portable," as such term is used by InterNIC. Frontier GlobalCenter reserves the
right to change IP Address assignments at any time; however, Frontier
GlobalCenter shall use reasonable efforts to avoid any disruption to Client
resulting from such renumbering requirement. Frontier GlobalCenter will give
Client reasonable notice of any such renumbering. Client agrees that it will
have no right to IP Addresses upon termination of this Agreement, and that any
renumbering required by Client after termination shall be the sole
responsibility of Client.
2.5 Staffing. Except as otherwise agreed in any Service Order, Frontier
GlobalCenter shall be responsible for staffing decisions with respect to its
personnel and the provision of any Services under this Agreement, and shall have
the right to remove or replace any of its personnel assigned to perform Services
under this Agreement. Frontier GlobalCenter shall use reasonable efforts to
maintain the continuity of its personnel assigned to perform Services under this
Agreement.
3. SOFTWARE LICENSE AND RIGHTS
3.1 License. During the term of the applicable Service Order, Frontier
GlobalCenter grants Client a non-transferable, nonexclusive license to use the
Software in object code form only, solely on the Hardware, or Frontier
GlobalCenter equipment, in conjunction with the Services.
3.2 Proprietary Rights. This Agreement transfers to Client neither title nor any
proprietary or intellectual property rights to the Software, documentation, or
any copyrights, patents, or trademarks, embodied or used in connection
therewith, except for the rights expressly granted herein.
3.3 License Restrictions. Client agrees that it will not itself, or through any
parent, subsidiary, affiliate, agent or other third party,
3.3.1 Copy the Software except as expressly allowed under this Agreement. In the
event Client makes any copies of the Software, Client shall reproduce all
proprietary notices of Frontier GlobalCenter on any such copies;
3.3.2 reverse engineer, decompile, disassemble, or otherwise attempt to derive
source code from the software;
3.3.3 sell, lease, license or sublicense the Software or the documentation;
3.3.4 write or develop any derivative software or any other software program
based upon the Software or any Confidential Information (as defined below); or
3.3.5 use the Software to provide processing services to third parties, or
otherwise use the Software on a "service bureau" basis.
3.4 Software Representations and Warranties. Frontier GlobalCenter represents
and warrants that (i) it has the right, power and authority to license the
Software to Client pursuant to this Agreement free of all liens, encumbrances
and other restrictions; (ii) the Software shall operate and run in accordance
with the Service Specifications indicated in the Agreement or referenced in the
Service Order; (iii) the license furnished by Frontier GlobalCenter hereunder
and/or the use of the Software by Client in accordance with the terms and
conditions herein or in any Service Order, will not infringe upon nor violate
any patent, copyright, trade secret, or other proprietary right of any third
party; (iv) Client's use and possession of the Software consistent
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with the terms of this Agreement, shall not be adversely affected, interrupted
or disturbed by Frontier GlobalCenter or any entity asserting a claim under or
through Frontier GlobalCenter; (v) the installation and use of the Software and
any Upgrades shall not degrade, impair or otherwise adversely affect the
performance or operation of the Hardware.
4. HARDWARE TERMS AND CONDITIONS
4.1 Installation. If so indicated on the Service Order, Frontier GlobalCenter
will use commercially reasonable efforts to install the Hardware as the Hardware
is shipped to Frontier GlobalCenter. Frontier GlobalCenter will work with the
Client on an installation plan to define installation time frame and
requirements.
4.2 Purchase and Title of Hardware. If so indicated on the Service Order, Client
shall purchase the Hardware and deliver, at Client's expense, the Hardware to
the Space. Client agrees that the Hardware shall reside at the Space during the
term of this Agreement.
4.3 Lease of Hardware. If so indicated on the Service Order, Client shall lease
the Hardware, and Frontier GlobalCenter shall obtain and deliver the Hardware to
the Space. In the event Client leases the Hardware, the following terms and
conditions shall apply: The Hardware is and shall remain the property of
Frontier GlobalCenter. Client shall not have taken, or attempt to take, any
right, title or interest therein or permit any third party to take any interest
therein. Client will not transfer, sell, assign, sublicense, pledge, or
otherwise dispose of, encumber or suffer a lien or encumbrance upon or against
the Hardware or any interest in the Hardware. Client will use the Hardware only
at the Space. Client will not move the Hardware from that facility without
Frontier GlobalCenter's prior written permission. Client shall be responsible
for any damage to the Hardware caused by Client negligent or willful acts or
omissions. Client will use the Hardware only for the purpose of exercising its
rights under this Agreement.
4.4 Rent to Own. If so indicated on the Service Order, Client shall lease the
Hardware on a "rent to own" plan. In such event, all of the terms and conditions
in Section 4.3 shall apply, and the following terms and conditions shall also
apply. At the end of the term of the Service Order, providing Client is not in
breach of this Agreement, Client shall have the option to purchase the Hardware.
The purchase price shall be as indicated on the Service Order. Upon payment by
Client of the purchase price, title of the Hardware shall pass to Client at the
Space. Unless the Service Order is extended by mutual Agreement, Client shall
immediately delete, or shall allow Frontier GlobalCenter to delete all copies of
the Software and associated documentation owned by Frontier GlobalCenter, or any
other materials of Frontier GlobalCenter resident on the Hardware.
5. SPACE
5.1 Frontier GlobalCenter represents and warrants that (i) it has obtained all
necessary approvals to lease the Space to Client and to allow Client to occupy
and have access to the Space for the purpose of receiving the Services set forth
in the Service Order; (ii) it has the authority to grant Client a royalty-free,
non-transferable, non-exclusive license to occupy and have access to the Space,
and that the grant of such license shall not constitute a violation of the lease
or separate Agreement to which Frontier GlobalCenter is a party and/or by which
it is bound; and (iii) the Space shall conform with the Service Specifications
set forth in this Agreement or any Service Order.
5.2 License to Occupy. Frontier GlobalCenter grants to Client a non-exclusive
license to occupy the Space. Client acknowledges that it has been granted only a
license to occupy the Space and that it has not been granted any real property
interests in the Space. Frontier GlobalCenter represents and warrants that it
has obtained all approvals necessary, including but not limited to, permissions
from the landlord and any regulatory authorities, to operate the facility in
this manner contemplated by this Agreement.
5.3 Material and Changes. Client shall not make any construction changes or
material alterations to the interior or exterior portions of the Space,
including any material alteration to cabling or power supplies for the Hardware,
without obtaining Frontier GlobalCenter's prior written approval for Client to
have the work performed. Alternatively, Client may request Frontier GlobalCenter
to perform the work. Frontier GlobalCenter reserves the right to perform and
manage any construction or alterations within the Space areas at rates to be
negotiated between the Parties hereto, so long as the rates are commercially
reasonable. Client agrees not to erect any signs or devices to the exterior
portion of the Space without submitting the request to Frontier GlobalCenter and
obtaining Frontier GlobalCenter's prior written approval.
5.4 Damage. Client agrees to reimburse Frontier GlobalCenter for all reasonable
repair or restoration costs associated with damage or destruction in the Space
directly caused by the negligence or willful misconduct of Client's personnel.
Client's agents, Client's suppliers/contractors, or Client's visitors to he
Space during the term or as a consequence of Client's removal of the Hardware or
property installed in the Space, provided that Client shall not be liable for
any damage or destruction occurring from or out of any negligent act or omission
of Frontier GlobalCenter, its officers, directors, agents and employees.
5.5 Insurance. Unless otherwise agreed, Client agrees to maintain, at Client's
expense, for each Space, (i) Comprehensive General Liability Insurance in an
amount not less than One Million Dollars ($1,000,000) per occurrence for bodily
injury or property damage, (ii) Employer's Liability in an amount not less than
Five Hundred Thousand Dollars ($500,000) per occurrence, and (iii) Worker's
Compensation in an amount not less than that prescribed by statutory limits.
Upon reasonable request of Frontier GlobalCenter, Client shall furnish Frontier
GlobalCenter with certificates of insurance which evidence these minimum levels
of insurance.
5.6 Regulations. Client shall use its best efforts to comply with and not
violate Frontier GlobalCenter's Safety, Health and Operation Rules and
regulations relating to use of it's premises and facilities, so long as those
regulations are provided to client in writing. Client's failure to comply
materially with Frontier GlobalCenter's rules and regulations shall constitute a
material default under this Agreement. Frontier GlobalCenter may, in its sole
discretion, limit Client's access to a reasonable number of authorized Client
employees or designees. Client shall not interfere with any other clients of
Frontier GlobalCenter, or such other clients' use of the Space.
5.7 Disclaimer. Except as expressly stated herein, Frontier GlobalCenter does
not make any representation or warranty as to the fitness of the Space for
Client's use.
6. SERVICE INTERRUPTIONS
6.1 99% Network Uptime Guarantee. In the event of Network Downtime (as defined
below), the monthly fee payable for the Bandwidth, defined in the Service Order,
shall be reduced as follows:
6.1.1 if the total Downtime in the calendar month is more than seven and two
tenths (7.2) hours, but does not exceed fourteen and four tenths (14.4) hours,
the monthly Bandwidth fee for that month shall be reduced by one-third (33.3%);
and
6.1.2 if the total Downtime in the calendar month is more than fourteen and four
tenth (14.4) hours, but does not exceed twenty-one and six tenths (21.6) hours,
the monthly Bandwidth fee for that month shall be reduced by two-thirds (66.6%);
and
6.1.3 if the total Downtime in the calendar month is more than twenty-one and
six-tenths (21.6) hours the monthly Bandwidth fee for that month shall be
reduced by three-quarters (75%).
6.2 Downtime Defined. For the purposes of this Section, Downtime shall mean any
interruption of sixty (60) seconds or more in the availability of, (i) the
connection between the Client's equipment and the Frontier GlobalCenter switch
fabric; (ii) the internetwork that connects Frontier GlobalCenter switch fabric
with the Internet. For
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purposes of this Section, the Internet is deemed to consist of services that
commence where Frontier GlobalCenter transmits a Client's content to Frontier
GlobalCenter's carrier(s) at the Frontier GlobalCenter border router port(s).
Such carriers provide Frontier GlobalCenter with private and dedicated
bandwidth. Frontier GlobalCenter undertakes no obligation for the circuit or
link between Frontier GlobalCenter's facilities and such carrier's services. If
router packet loss is in excess of fifty percent (50%) and is sustained for
sixty (60) seconds or more, Frontier GlobalCenter will classify this as an
"outage." If an "outage" continues for a time period of more than two (2)
minutes, then such outage will be deemed Downtime. If the latency across the
Frontier GlobalCenter national IP backbone exceeds one hundred twenty (120)
milliseconds, Frontier GlobalCenter will classify this as Downtime.
6.3. Maintenance Windows. Frontier GlobalCenter reserves three (3) regularly
scheduled maintenance windows per week, of three hour duration, in order to
maintain and upgrade the Frontier Global IP Backbone infrastructure. Outages or
performance degradation during scheduled maintenance windows as a result of
router, switch or server maintenance, are not considered Downtime for purposes
of this section. Frontier GlobalCenter shall make all commercially reasonable
efforts to provide the client with prior notification of all scheduled and
emergency maintenance procedures.
6.4. 100% Facility Uptime Guarantee. In the event of Facility Downtime (as
defined below), the Monthly Fee payable for the Co-location Services as set
forth in the applicable Service Order shall be reduced as follows:
6.4.1. If the total Facility Downtime in the calendar month is less than, or
equal to four minutes and thirty-two seconds (4.32) the monthly Co-location
service fee for that month shall be reduced by one-third (33.3%);
6.4.2. If the total Facility Downtime in the calendar month is more than four
minutes and thirty-two seconds (4.32) the monthly Co-location service fee for
that month shall be reduced by two-thirds (66.6%).
6.4.3. Downtime Defined. For the purposes of this Section, Facility Downtime
shall mean any service interruption, only if such interruption is either due to
a facility power failure or environmental control failure.
6.5. Investigation of Service Interruptions. At Client's request, Frontier
GlobalCenter will investigate any report of Downtime, and attempt to remedy any
Downtime expeditiously. If Frontier GlobalCenter reasonably determines that all
facilities, systems and equipment furnished by Frontier GlobalCenter are
functioning properly and that Downtime arose from some other cause, Frontier
GlobalCenter can continue to investigate the Downtime cause at the client's
request and expense for labor and materials cost for services actually performed
at the usual and customary rates for similar services provided by Frontier
GlobalCenter to clients in the same locality.
6.6. Termination. Client may terminate a Service Order in the event of Downtime
of either twenty-four (24) hours of cumulative time during any continuous twelve
(12) month period, or any continuous downtime of eight (8) or more hours.
6.7. Sole Remedy. The terms and conditions of this Section shall be Client's
sole remedy and Frontier GlobalCenter's sole obligation for any Downtime.
7. USER CONTENT
7.1. Client is solely responsible for the content of any postings, data, or
transmissions using the Services ("Content"), or any other use of the Services
by Client or by any person or entity Client permits to access the Services (a
"User"). Client represents and warrants that it and any User will not use the
services for unlawful purposes (including without limitation infringement of
copyright or trademark, misappropriation of trade secrets, wire fraud, invasion
of privacy, pornography, obscenity and libel), or to interfere with or disrupt
other network users, network services or network equipment. Disruptions include
without limitation distribution of unsolicited advertising or chain letters,
repeated harassment of other network users, wrongly impersonating another such
user, falsifying one's network identity for improper or illegal purposes,
sending unsolicited mass e-mailings, propagation of computer worms and viruses,
and using the network to make unauthorized entry to any other machine accessible
via the network. If Frontier GlobalCenter has reasonable grounds to believe that
Client or a User is utilizing the Services for any such illegal or disruptive
purpose, Frontier GlobalCenter may suspend or terminate Services immediately
upon notice to Client. Client shall defend, indemnify, hold harmless Frontier
GlobalCenter from and against all liabilities and costs (including reasonable
attorney's fees) arising from any and all claims by any person arising out of
Client's use of the Services, including without limitation any content.
7.2. Acceptable Use Policy. All Frontier GlobalCenter clients are responsible
for reviewing and complying with this Acceptable Use Policy. Frontier clients
who provide services to their own users must take steps to ensure compliance by
their users with this Acceptable Use Policy. This Policy is subject to change
without notice by publication at http://www.globalcenter.net/sup. Clients are
responsible for monitoring this web site for changes.
Frontier GlobalCenter customers may not use Frontier GlobalCenter's data
distribution network, machines, or services in any manner that violates any
applicable law, regulation, treaty, or tariffs. Also customers are prohibited
from activity that includes, but is not limited to unauthorized use (or
attempted unauthorized use) of any machines or networks, denial of service
attacks, falsifying header information or user identification information,
monitoring or scanning the networks of others without prior written permission
from Frontier GlobalCenter.
7.2.1. Email. Sending unsolicited bulk email is prohibited. Sending unsolicited
bulk email from another provider advertising or implicating the use of any
service hosted by Frontier, including without limitation email, web, FTP, and
DNS services, is prohibited and is grounds for termination of those services to
users who engage in the practice. Users who send unsolicited bulk email from
Frontier accounts will be charged the cost of labor to respond to complaints.
Continuing to send someone email after being asked to stop is considered
harassment and is prohibited. Using email to disrupt (e.g., mail bombing,
"flashing," etc.) is prohibited. Sending email with falsified header information
is prohibited. Chain letters, pyramid schemes, and hoaxes are prohibited.
7.2.2. Usenet Newsgroups. Frontier GlobalCenter places no content restrictions
on newsgroup postings by its users except that (a) no illegal content, including
pyramid/Ponzi schemes, is permitted and (b) all postings should conform to the
various conventions, guidelines and local culture found in each respective
newsgroup and Usenet as a whole.
7.2.3. Posting 20 or more copies of the same article in a 45-day period
("spamming") or continued posting of off-topic articles after being warned is
prohibited. Users who engage in spamming using Frontier GlobalCenter accounts
will be charged the cost of labor to issue cancellations and respond to
complaints. Users who engage in spamming from another provider advertising or
implicating the use of any service hosted by Frontier GlobalCenter, including
without limitation email, web, FTP, and DNS services, is prohibited and is
grounds for termination of those services to those users.
7.2.4. Excessive crossposting (Breidbart Index of 20 or greater in a 45-day
period) is prohibited. The Breidbart Index (BI) is calculated by taking the sum
of the square roots of the number of newsgroups each copy of an article is
crossposted to. If two articles are posted, one crossposted to 9 newsgroups and
the other crossposted to 16 newsgroups, the BI = sqrt(9)+sqrt(16)=3+4=7.
Crossposting articles to newsgroups where they are off-topic is prohibited.
7.2.5. Posting articles with falsified header information is prohibited.
"Munging" header information to foil email address harvesting by "spammers" is
acceptable provided that a reasonable means of replying to the message
originator is given. Use of anonymous remailers is acceptable, so long as the
use is not otherwise a violation of
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this policy.
7.2.6. Users may not issue cancellations for postings except those, which they
have posted themselves, those which have headers falsified so as to appear to
come from them or in newsgroups where they are the official moderators.
8. PRICING AND PAYMENT TERMS
8.1. Payment Terms. Client shall pay the fees set forth in the Services Order
Form according to the terms set forth therein. Client agrees to pay a late
charge of two percent (2%) above the prime rate as reported by the Wall Street
Journal at the time of assessment or the maximum lawful rate, whichever is less,
for all undisputed amounts not paid within thirty (30) days of receipt of
invoice.
8.2. Late Payments. In the event of non-payment by Client of sums over-due
hereunder for more than forty-five (45) days, Frontier GlobalCenter may upon
written notice to Client either retain any equipment or other assets of Client
then in Frontier GlobalCenter's possession and sell them in partial satisfaction
of such unpaid sums, or request Client to remove equipment from Frontier
GlobalCenter's premises within ten (10) days. If Client fails to so remove,
Frontier GlobalCenter may deliver the equipment to Client at the latter's
address for notices at Client's expense for shipment and insurance, and Client
shall be obligated to accept such delivery.
8.3. Price Increases. Frontier GlobalCenter shall not increase the prices for
services during the initial term of any Service Order, but may thereafter change
prices upon sixty (60) days written notice.
9. MAINTENANCE AND SUPPORT
Frontier GlobalCenter shall provide Client with maintenance and support of the
Software and Hardware, if any ("Maintenance and Support") as specified in the
Service Specification.
9.1. Exclusions. Maintenance and Support shall not include services for problems
arising out of (a) modification, alteration or addition or attempted
modification, alteration or addition of the Hardware or Software undertaken by
persons other than Frontier GlobalCenter or Frontier GlobalCenter's authorized
representatives; or (b) programs or hardware supplied by Client.
9.2. Client Duties. Client shall document and promptly report all errors or
malfunctions of the Hardware or Software to Frontier GlobalCenter. Client shall
take all steps necessary to carry out procedures for the rectification of errors
or malfunctions within a reasonable time after such procedures have been
received from Frontier GlobalCenter. Client shall maintain a current backup copy
of all programs and data. Client shall properly train its personnel in the use
and application of the Hardware and Software.
10. TERM AND TERMINATION
10.1. Term. The term of this Agreement shall commence on the Effective Date and
continue indefinitely unless terminated in accordance with this Section 10 or
the provisions contained in Section 6.6. The initial term of each Service Order
shall be as indicated therein.
10.2. Termination Upon Default. Either party may terminate this Agreement in the
event that the other party materially defaults in performing any obligation
under this Agreement and such default continues unremedied for a period of
thirty (30) days following written notice of default. In the event this
Agreement is terminated due to Frontier GlobalCenter's breach, Frontier
GlobalCenter shall refund to Client any Services fees on a straight-line
prorated basis.
10.3. Termination Upon Insolvency. This Agreement shall terminate, effective
upon delivery of written notice by a party, (i) upon the institution of
insolvency, receivership or bankruptcy proceedings or any other proceedings for
the settlement of debts of the other party; (ii) upon the making of an
assignment for the benefit of creditors by the other party; or (iii) upon the
dissolution of the other party.
10.4. Effect of Termination. The provisions of Sections 1, 2.3, 3.2, 3.4, 7,
10.4 11, 12, 13 and 14 shall survive termination of this Agreement. All other
rights and obligations of the parties shall cease upon termination of this
Agreement. The term of any license granted hereunder shall expire upon
expiration or termination of this Agreement.
11. CONFIDENTIAL INFORMATION
All information identified disclosed by either party ("Disclosing Party") to the
other party ("Receiving Party"), if disclosed in writing, labeled as proprietary
or confidential, or if disclosed orally, reduced to writing within thirty (30)
days and labeled as proprietary or confidential ("Confidential Information")
shall remain the sole property of Disclosing Party. Except for the specific
rights granted by this Agreement, Receiving Party shall not use any Confidential
Information of Disclosing Party for its own account. Receiving Party shall use
the highest commercially reasonable degree of care to protect Disclosing Party's
Confidential Information. Receiving Party shall not disclose Confidential
Information to any third party without the express written consent of Disclosing
Party (except solely for Receiving Party's internal business needs, to employees
or consultants who are bound by a written Agreement with Receiving Party to
maintain the confidentiality of such Confidential Information in a manner
consistent with this Agreement). Confidential Information shall exclude
information (i) available to the public other than by a breach of this
Agreement; (ii) rightfully received from a third party not in breach of an
obligation of confidentiality; (iii) independently developed by Receiving Party
without access to Confidential Information; (iv) known to Receiving Party at the
time of disclosure; or (v) produced in compliance with applicable law or a court
order provided Disclosing Party is given reasonable notice of such law or order
and an opportunity to attempt to preclude or limit such production. Subject to
the above, Receiving Party agrees to cease using any and all materials embodying
Confidential Information, and to promptly return such materials to Disclosing
Party upon request.
12. LIMITATION OF LIABILITY
FRONTIER GLOBALCENTER'S LIABILITY FOR ALL CLAIMS ARISING OUT OF THIS AGREEMENT
SHALL BE LIMITED TO THE AMOUNT OF FEES PAID BY CLIENT TO FRONTIER GLOBALCENTER
UNDER THIS AGREEMENT. IN NO EVENT SHALL FRONTIER GLOBALCENTER BE LIABLE FOR ANY
LOSS OF DATA, LOSS OF PROFITS, COST OF COVER OR OTHER SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR INDIRECT DAMAGES ARISING FROM OR IN RELATION TO THIS AGREEMENT
OR THE USE OF THE SERVICES, HOWEVER CAUSED AND REGARDLESS OF THEORY OF
LIABILITY. THIS LIMITATION WILL APPLY EVEN IF FRONTIER GLOBALCENTER HAS BEEN
ADVISED OR IS AWARE OF THE POSSIBILITY OF SUCH DAMAGES.
13. DISCLAIMER OF WARRANTIES
EXCEPT AS OTHERWISE STATED HEREIN, FRONTIER GLOBALCENTER SPECIFICALLY DISCLAIMS
ALL WARRANTIES EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND
NON-INFRINGEMENT OF THE SYSTEM OR SERVICES PROVIDED BY FRONTIER GLOBALCENTER
HEREUNDER.
14. MISCELLANEOUS
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14.1. Independent Contractor. The relationship of Frontier GlobalCenter and
Client established by this Agreement is that of independent contractors, and
nothing contained in this Agreement shall be construed to (i) give either party
the power to direct and control the day-to-day activities of the other; (ii)
constitute the parties as partners, joint ventures, co-owners or otherwise as
participants in a joint undertaking; or (iii) allow either party to create or
assume any obligation on behalf of the other party for any purpose whatsoever.
14.2. Notices. Any notice required or permitted hereunder shall be in writing
and shall be given by registered or certified mail addressed to the addresses
first written above. Such notice shall be deemed to be given upon the earlier of
actual receipt or three (3) days after it has been sent, properly addressed and
with postage prepaid. Either party may change its address for notice by means of
notice to the other party given in accordance with this Section.
14.3. Assignment. Neither party may assign this Agreement, in whole or in part,
either voluntarily or by operation of law without express written consent of the
other party, and any attempt to do so shall be a material default of this
Agreement and shall be void.
14.4. Governing Law. This Agreement shall be interpreted according to the laws
of the State of California without regard to or application of choice-of-law
rules or principles.
14.5. Entire Agreement and Waiver. This Agreement, including all appendices,
attachments and Service Orders, shall constitute the entire Agreement between
Frontier GlobalCenter and Client with respect to the subject matter hereof and
all prior Agreements, representations, and statement with respect to such
subject matter are superseded hereby. This Agreement may be changed only by
written Agreement signed by both Frontier GlobalCenter and Client. No failure of
either party to exercise or enforce any of its rights under this Agreement shall
act as a waiver of subsequent breaches; and the waiver of any breach shall not
act as a waiver of subsequent breaches.
14.6. Severability. In the event any provision of this Agreement is held by a
court of other tribunal of competent jurisdiction to be unenforceable, that
provision will be enforced to the maximum extent permissible under applicable
law, and the other provisions of this Agreement will remain in full force and
effect.
14.7. Non-Solicitation. During the term of this Agreement and for a period of
one (1) year thereafter, client shall not directly solicit, nor directly attempt
to solicit the services, of any employee or subcontractor of Frontier
GlobalCenter without the prior written consent of the other party.
14.8. Substitution. Frontier GlobalCenter may substitute, change or modify the
Software or Hardware at any time, but shall not thereby alter the technical
parameters of the Services.
Frontier GlobalCenter
1154 East Arques Avenue
Sunnyvale, CA 94086
By ------------------------------------
Title ---------------------------------
Date ----------------------------------
Client:
By ------------------------------------
Title ---------------------------------
Date ----------------------------------
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SERVICE SPECIFICATION
Co-location Service
Frontier GlobalCenter will provide a level of service, which includes the
following features and options:
General Features
Maintenance of the Space (Including Janitorial Services):
In connection with the Space made available hereunder, Frontier GlobalCenter or
its landlord shall perform services that support the overall operation of each
Space at no additional charge to Client. Those services include the following:
o Janitorial Services
o 24 x 7 Access to the Space
o Authorized Security System Access to Raised Floor Collocation Space
o Primary A/C 110 volt Power to the Space
o Backup Power - UPS Systems & Battery Plant (30 - 60 minute
survivability objective)
o Generator Back-up (Sustained backup power)
o HVAC Systems for facility air conditioning
o Fire Control Systems
o Network Monitoring Systems
o Redundant Network Connectivity and Hardware
o 19" Rack Spaces for installation of Hardware
o Custom configurations of space to accommodate cabinets
o Lockable private caged customer areas
o 10-base-T or 100-base-T switched port with direct high speed Internet
backbone connection.
24x7 NOC support: Will provide proactive site monitoring with ExpressLane(TM)
statistics on Client information base; including bandwidth usage, statistics and
network availability reporting, host monitoring and management interface, access
to Frontier GlobalCenter incident tracking system to expedite fault resolution
and remote server reboot.
Escalation Plan and Procedures: To be provided by Frontier GlobalCenter in the
Welcome Package 5-10 days after the contract is signed.
Right-of-way and Access
Frontier GlobalCenter will allow 24 x 7 access and right-of-way to Client
Hardware located in Frontier GlobalCenter facility at no charge. Clients will be
escorted at all times while in the facility. Access to the facilities will not
be unreasonably withheld by Frontier GlobalCenter to Clients for performing
appropriate procedures and maintenance of Hardware, facilities, and systems.
MSA Rev. 2.5 April 1999
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EXHIBIT 10.22
AGREEMENT AND PLAN OF SHARE EXCHANGE
This AGREEMENT AND PLAN OF SHARE EXCHANGE (the "Agreement") is made as of
the 7th day of May, 1999 by and among Kodiak Graphics Company, a Nevada
corporation ("Kodiak "), Sportsprize Entertainment, Inc., a Nevada corporation
("Sportsprize"), and certain shareholders of Sportsprize, whose names and
addresses for service are set forth on Exhibit A to this Agreement (the
"Principal Vendors") (Kodiak and Sportsprize are collectively referred to as the
"Constituent Corporations").
RECITALS
WHEREAS Sportsprize is engaged in the business of marketing and promoting sports
merchandise on the Internet and intends to conduct its business pursuant to the
Business Plan as set forth in Exhibit B (the "Sportsprize Business"), attached
hereto and incorporated by this reference;
WHEREAS Kodiak wishes to acquire the entire issued and outstanding share capital
of Sportsprize in exchange for shares of Kodiak, and Sportsprize wishes to
become the wholly owned subsidiary of Kodiak;
WHEREAS Sportsprize and Kodiak have entered into a letter agreement dated April
22, 1999, pursuant to which Kodiak has agreed to acquire all of the issued and
outstanding shares of common stock of Sportsprize, subject to the approval of
the Sportsprize shareholders, in exchange for 10,000,000 shares of common stock
of Kodiak;
WHEREAS each of the Constituent Corporations has, subject to the approval of the
Sportsprize shareholders, adopted the statutory plan of share exchange embodied
in this Agreement (the "Share Exchange");
WHEREAS the parties intend to make certain representations, warranties,
covenants, and agreements in connection with the Share Exchange; and
WHEREAS the Share Exchange is intended to qualify as a reorganization under
Section 368(a)(1)(B) of the Internal Revenue Code (the "Code").
AGREEMENT
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, the Constituent Corporations and the Principal Vendors do hereby agree
to the Share Exchange, on the terms and conditions herein provided, as follows:
Agreement and Plan of Share Exchange
Page - 1
<PAGE>
1. The Share Exchange.
1.1. Share Exchange between Kodiak and Sportsprize. On the Effective Date
(as defined herein), by virtue of the Share Exchange and without any
action on the part of the holders thereof, all of the then outstanding
shares of common stock of Sportsprize as set forth on Schedule 1.1
(collectively, the "Sportsprize Shares") shall be exchanged as
follows:
1.1.1. All of the Sportsprize Shares shall be exchanged for, in aggregate,
ten million (10,000,000) shares of common stock of Kodiak (the
"Exchange Shares") or 1.7229 Exchange Shares for each Sportsprize
Share, rounded down to the nearest Exchange Share at the deemed value
of $0.01 per Exchange Share;
1.1.2. Each share of common stock held by Sportsprize as treasury stock
immediately prior to the Effective Time (as defined herein) shall be
cancelled and no payment shall be made with respect to such shares;
1.1.3. This Agreement, once executed, shall act without more, as evidence of
the transfer of the Sportsprize Shares to Kodiak, subject to the terms
and conditions set forth in this Agreement; and
1.1.4. Prior to the Effective Time, Kodiak shall appoint an agent (the
"Exchange Agent") for the purpose of exchanging certificates
representing Sportsprize Shares for the Exchange Shares. Promptly
after the Effective Time, Kodiak will send, or will cause the Exchange
Agent to send, to each Sportsprize shareholder at the Effective Time,
a letter of transmittal for use in such exchange, which shall specify
that the delivery shall be effected, and risk of loss and title shall
pass, only upon proper delivery of the certificates representing
Sportsprize Shares to the Exchange Agent.
1.2 Shares Not Registered. The shareholders of Sportsprize and the
Principal Vendors each acknowledge that the Exchange Shares to be
issued pursuant to the Share Exchange have not been registered
pursuant to the securities laws of any jurisdiction and are being
issued pursuant to exemptions from registration contained in the
Securities Act (British Columbia)(the "B.C. Securities Act"), the
Securities Act (Ontario) (the "Ontario Act") and the United States
Securities Act of 1933, as amended (the "1933 Act"), and the Exchange
Shares may only be sold in a jurisdiction in accordance with the
restrictions on resale prescribed under the laws of the jurisdiction
in which such shares are sold, all of which may vary depending on the
jurisdiction.
Each of the shareholders of Sportsprize is aware that Kodiak is not a
"reporting issuer" as defined in the B.C. Securities Act and the
Ontario Act and as a consequence the Exchange Shares are restricted
from transfer within the provinces of British Columbia and Ontario
indefinitely or for a period of twelve (12) months after Kodiak
becomes a "reporting issuer." Further, each of the shareholders of
Sportsprize is aware that Kodiak has no obligation or present
intention of becoming a "reporting issuer" in the Province of British
Agreement and Plan of Share Exchange
Page - 2
<PAGE>
Columbia and as a result, any shareholders of Sportsprize who are
British Columbia residents may require an exemption order from the
British Columbia Securities Commission in order to resell their
Exchange Shares and any shareholders of Sportsprize who are Ontario
residents may require an exemption order from the Ontario Securities
Commission in order to resell their Exchange Shares.
1.3 Exchange Shares Fully Paid and Non-assessable. The Exchange Shares
will be issued from the treasury of Kodiak as fully paid and
non-assessable shares and shall be free and clear of all liens,
charges and encumbrances.
1.4 Principal Vendor Escrow Agreement. On or before the Effective Date (as
defined herein), the Principal Vendors will enter into an escrow
agreement in substantially the form attached hereto as Exhibit C (the
"Escrow Agreement").
1.5 Restrictions on Resale.
1.5.1. Except as otherwise provided, all of the Sportsprize shareholders,
other than the Principal Vendors, agree that they can only resell
their Exchange Shares in accordance with the following limitations:
(a) up to fifty percent (50%) of their respective Exchange Shares
upon the effectiveness of a registration statement to register
such Exchange Shares for resale pursuant to the 1933 Act filed
with the Securities and Exchange Commission (the "SEC")(the
"Resale Registration"); and
(b) up to 100% of their respective Exchange Shares on the earlier of
six (6) month after the effectiveness of the Resale Registration
or one year after the Effective Date (as defined herein).
1.5.2. The Principal Vendors agree that they will not resell any Exchange
Shares for a period of one year from the Effective Date (as defined
herein).
2. Effective Date.
2.1 Articles of Share Exchange. As soon as practicable after satisfaction
or, to the extent permitted hereunder, waiver of all conditions to the
Share Exchange, Kodiak and Sportsprize will file Articles of Share
Exchange in substantially the form attached hereto as Exhibit D (the
"Articles of Share Exchange") with the Secretary of State of the state
of Nevada and make all other filings or recordings required by Nevada
law in connection with the Share Exchange.
2.2 Effective Date of Share Exchange. The "Effective Date" of the Share
Exchange shall be, and such term as used herein shall mean, 5:00 p.m.,
Pacific Standard Time (the "Effective Time"), on the day on which the
Articles of Share Exchange are filed in the office of the
Agreement and Plan of Share Exchange
Page - 3
<PAGE>
Secretary of State of the state of Nevada, after satisfaction of the
requirements of applicable laws of the state's prerequisites to such
filings.
2.3 Effect of Share Exchange. From and after the Effective Time, Kodiak
shall possess all the rights, privileges, powers and franchises and be
subject to all of the restrictions, disabilities and duties of
Sportsprize, all as provided under Nevada and other applicable law.
3. The Kodiak Covenant. Kodiak agrees to use reasonable efforts to
arrange three (3) financings (the "Additional Financings"), each in
the amount of $840,000; one to close at the end of July 1999 (the
"July Financing") at a price which is the greater of $3.00 per share
or 75% of the 10 day average closing price of Kodiak's common shares
(for the 10 days prior to the close of the July Financing), one to
close at the end of October, 1999 (the "October Financing") at a price
which is the greater of $4.00 per share or 75% of the 10 day average
closing price of Kodiak's common shares (for the 10 days prior to the
close of the October Financing), and one to close at the end of
December 1999 (the "December Financing") at a price which is the
greater of $5.00 per share or 75% of the 10 day average closing price
of the Kodiak's common shares (for the 10 days prior to the close of
the October Financing). The Additional Financings will be arranged by
Sonora Capital Corp. pursuant to an agreement (the "Additional
Financings Agreement") between Kodiak and Sonora Capital Corp., the
terms of which agreement will be approved by the Principal Vendors.
3.1 Resignation and Appointment of Directors. On the Effective Date,
William Turner, the sole director of Kodiak, will resign, and the
persons designated in the Certificate of Designation, attached hereto
as Schedule 3.1 (the "Certificate of Designation"), shall be appointed
as directors of Kodiak.
3.2 Securities and Exchange Commission Registrations.
3.2.1 Kodiak will, as soon as practicable after the Effective Date,
undertake to file a registration statement with the SEC to complete a
registration to register the Exchange Shares held by the Sportsprize
shareholders, other than the Exchange Shares held by Principal
Vendors, for resale pursuant to the 1933 Act.
3.2.2 Kodiak will undertake to file a Form 10-SB or other applicable
registration statement under the Securities and Exchange Act of 1934,
as amended (the "1934 Act"), with the SEC to register the class of
common stock of Kodiak on or before January 31, 2000.
3.3 Issuance of Kodiak Options. Kodiak agrees to issue up to 3 million
options exercisable to acquire shares of common stock of Kodiak at a
price of no less than $0.25 per share during the first year after the
Effective Date as follows:
Agreement and Plan of Share Exchange
Page - 4
<PAGE>
(a) Kodiak agrees to issue options, to acquire shares of Kodiak
common stock, pursuant to the terms and conditions set forth in
each of the agreements set forth on Schedule 3.3(a). Such options
shall be exercisable to acquire one (1) share of Kodiak common
stock for each Sportsprize common share (rounded down to the
nearest share) at the exercise price set forth in such agreement.
(b) Kodiak agrees to adopt a stock option plan to be administered by
an administrator to issue up to 3 million options to acquire
shares of Kodiak common stock (less the options issued pursuant
to Section 3.3(a) of this Agreement) as incentive stock options
to current and future employees of Kodiak. Such incentive stock
options, will be granted at the sole discretion of the board of
directors of Kodiak.
4. Deliveries on or before the Effective Date.
4.1 Deliveries by Sportsprize. On or before the Effective Date, the
Principal Vendors and Sportsprize will deliver to Kodiak:
(a) a certificate in the form attached hereto as Exhibit E that the
form of written consent and Notice of Special Meeting have been
sent to all of the Sportsprize shareholders;
(b) the Certificate of Designation designating the appointment of the
new directors for Kodiak;
(c) the Escrow Agreement duly executed by each of the Principal
Vendors;
(d) satisfactory proof that the issued and outstanding shares of
Sportsprize on the Effective Date have been duly issued and
registered to the Sportsprize shareholders;
(e) certified copies of resolutions of the directors of Sportsprize
authorizing the transfer of the Sportsprize Shares subject to the
relevant stock transfer forms being duly stamped and the
registration of the Sportsprize Shares in the name of Kodiak and
authorizing the issue of new share certificates representing such
shares in the name of Kodiak;
(f) all books, records and accounts of Sportsprize and any other
information necessary for Kodiak to operate and manage the
business of and the assets owned by Sportsprize;
(g) the common seal(s) of Sportsprize, if any;
(h) satisfactory evidence that the directors and shareholders of
Sportsprize have approved the transfer of the Sportsprize Shares
to Kodiak;
Agreement and Plan of Share Exchange
Page - 5
<PAGE>
(j) necessary approvals from Sportsprize and any third parties as may
be required have been obtained and are in full force and effect
with respect to the transfer of all the Sportsprize Shares to
Kodiak as contemplated herein;
(j) a letter from legal counsel representing Sportsprize in form and
substance satisfactory to counsel for Kodiak confirming that the
Sportsprize Shares will be deemed, under Nevada law, to be
converted into shares of Kodiak upon the filing the Articles of
Share Exchange with the Secretary of State of Nevada; and
(k) such other documents and instruments as counsel for Kodiak may
reasonably require to effectuate or evidence the transactions
contemplated hereby.
4.2 Deliveries by Kodiak. On or before the Effective Date, Kodiak will
deliver to Sportsprize:
(a) satisfactory evidence that the directors of Kodiak have approved
the transactions contemplated herein;
(b) the Escrow Agreement duly executed by an authorized signatory of
Kodiak;
(c) resignation of William Turner as a director and officer of
Kodiak, effective on the Effective Date;
(d) written consent appointing the persons set forth on the
Certificate of Designation as directors of Kodiak, effective on
the Effective Date;
(e) satisfactory evidence that the Kodiak has established a reserve
of not less than 10,000,000 shares of common stock of Kodiak to
be issued as Exchange Shares in connection with the Share
Exchange;
(f) satisfactory proof that the issued and outstanding shares of
Kodiak on the Effective Date have been duly issued and registered
to the shareholders set forth on Schedule 4.2(f) attached hereto;
(g) an executed and delivered private placement subscription
agreement related to a $2,500,000 private placement (the "Initial
Financing"), comprising common shares in the capital of Kodiak
issued at a price of $1.50 per share, to close on or before the
Effective Date, subject to the payment of a $70,000 finders fee
payable to Sonora Capital Corp.;
(h) a copy of the executed Additional Financings Agreement;
Agreement and Plan of Share Exchange
Page - 6
<PAGE>
(i) certified copies of resolutions of the directors of Kodiak
authorizing the issue of new share certificates representing the
Exchange Shares in the name of each Sportsprize shareholder;
(j) all necessary approvals from Kodiak and any third parties as may
be required have been obtained and are in full force and effect
with respect to the issuance of all the Exchange Shares or Kodiak
to the Sportsprize shareholders as contemplated herein; and
(k) such other documents and instruments as counsel for Sportsprize
may reasonably require to effectuate or evidence the transactions
contemplated hereby.
5. Sportsprize and Principal Vendors' Representations and Warranties.
Sportsprize and the Principal Vendors represent and warrant to Kodiak
as of the date hereof and on the Effective Date that:
5.1 Sportsprize is a corporation validly existing and in good standing
under the laws of the State of Nevada. Sportsprize has the power and
authority to carry on the Sportsprize Business as it is now conducted
and to own the assets it now owns.
5.2 Sportsprize shareholders set forth on Schedule 1.1 own all of the
issued and outstanding shares of stock of Sportsprize, free and clear
of any claim, security interest, mortgage, pledge, or other lien or
encumbrance of any kind whatsoever. Except as set forth on Schedule
1.1 or otherwise described in this Agreement, there are no outstanding
options, agreements, contracts, calls or commitments of any character
which would require the issuance by Sportsprize of any shares of
stock.
5.3 The execution, delivery and performance of this Agreement have been
duly and validly authorized and approved by Sportsprize's board of
directors, and Sportsprize has the corporate power and authority to
execute, deliver and perform this Agreement and such other instruments
as appropriate to consummate the transactions herein contemplated, to
perform and comply with all of the terms, covenants and conditions to
be performed and complied with by Sportsprize hereunder and
thereunder, and to consummate the transactions contemplated hereby and
thereby. This Agreement constitutes the valid and binding obligation
of Sportsprize, and is enforceable against Sportsprize in accordance
with its terms, except as the enforceability may be affected by
bankruptcy, insolvency or similar laws affecting creditor's rights
generally or court applied equitable remedies. Sportsprize's
execution, delivery and performance of this Agreement do not (i)
conflict with or result in a breach of any of the terms, conditions or
provisions of the articles of incorporation or bylaws of Sportsprize
or any judgment, order, injunction, decree, regulation or ruling of
any court or other governmental authority to which Sportsprize is
subject or of any agreement or contract listed on any schedule
delivered pursuant hereto or any other material agreement or contract
to which Sportsprize is a party or is subject, or constitute a default
thereunder, or (ii) give to others any rights of termination or
Agreement and Plan of Share Exchange
Page - 7
<PAGE>
cancellation of any agreement or contract listed on any schedule
delivered pursuant hereto or any other material agreement or contract
to which Sportsprize is a party or is subject, or (iii) create any
lien or encumbrance upon the assets of Sportsprize, or (iv) require
the consent, authorization or approval of any governmental agency,
body, official or authority.
5.4 Neither Sportsprize nor the Principal Vendors are aware of nor has
either failed to disclosed to Kodiak any change, event or circumstance
which would adversely affect the Sportsprize Business or the assets of
Sportsprize or prospects, operation or condition of Sportsprize or
which would reasonably be considered to reduce the value of the
Sportsprize Business or the value of Sportsprize Shares to Kodiak.
5.5 Neither Sportsprize nor the Principal Vendors have made any untrue
statement to Kodiak nor has either failed to state a material fact
that is required to be stated or that is necessary to prevent a
statement that is made from being materially false or misleading in
the circumstances in which it was made.
5.6 The Sportsprize financial statements for the year ended February 28,
1998 (the "Financial Statements") are true and correct in every
material respect and present fairly the financial position of
Sportsprize as of the dates of such statements, and the results of its
operations for the periods then ended and are prepared in accordance
with generally accepted accounting principles applied on a consistent
basis except as specifically provided therein.
5.7 All of the assets of Sportsprize are in good working order and to the
best of the Principal Vendors' knowledge contain no latent defects.
5.8 The Principal Vendors have disclosed all contracts, engagements and
commitments, whether oral or written, relating to Sportsprize.
5.9 All licenses, permits, approvals, consents, certificates,
registrations and authorizations required in the ordinary course of
the Sportsprize Business or in the use of the assets of Sportsprize
have been obtained and are in good standing and are not terminable on
the basis of a transfer in ownership of the Sportsprize Shares.
5.10 Each Principal Vendor has the full and absolute right, power and
authority to enter into this Agreement on the terms and subject to the
conditions herein set forth, to carry out the transactions
contemplated hereby and to transfer on the Effective Date, legal and
beneficial title and ownership of his or her portion of the
Sportsprize Shares to Kodiak.
5.11 The authorized capital of Sportsprize consists of 25,000,000 common
shares with a par value of $0.001, of which a total of 5,804,000
common shares have been validly issued, are outstanding and are fully
paid and non-assessable.
Agreement and Plan of Share Exchange
Page - 8
<PAGE>
5.12 All alterations, if any, to the Articles of Incorporation of
Sportsprize since its incorporation have been duly approved by the
shareholders of Sportsprize.
5.13 The corporate records of Sportsprize, as required to be maintained by
it under its statute of incorporation and constating documents, are
accurate, complete and up-to-date in all material respects and reflect
all material transactions of Sportsprize.
5.14 Sportsprize has good and marketable title to all of its assets, and
such asses are free and clear of any financial encumbrances not
disclosed in the Financial Statements of Sportsprize.
5.15 Sportsprize has filed all necessary tax returns in all jurisdictions
required to be filed by it, all returns affecting workers compensation
with the appropriate agency, corporation capital tax returns, if
required, and any other material reports and information required to
be filed by Sportsprize with any governmental authority; Sportsprize
has withheld and remitted to tax collection authorities such taxes as
are required by law to be withheld and remitted as and when due;
Sportsprize has paid all income, sales and capital taxes payable by it
as and when due; Sportsprize has paid all installments of corporate
taxes due and payable, and there is not presently outstanding nor does
Sportsprize expect to receive any notice of re-assessment from any
applicable tax collecting authority.
5.16 Sportsprize has not declared or paid any dividends of any kind or
declared or made any other distributions of any kind whatsoever
including, without limitation, by way of redemption, repurchase or
reduction of its authorized capital.
5.17 There has been no material adverse change in the financial condition
and position of Sportsprize and no damage, loss destruction or other
change in circumstances materially affecting the business, property or
assets of Sportsprize or its right or capacity to carry on business
since the date of the Financial Statements of Sportsprize.
5.18 After the date of the Financial Statements of Sportsprize, Sportsprize
has not engaged in any transaction or made any disbursement or assumed
or incurred any liability or obligation or made any commitment,
including, without limitation, any forward purchase commitment or
similar obligation, to make any expenditure which would materially
affect its operations, property, assets or financial condition.
5.19 Sportsprize has not waived or surrendered any right of substantial
value and has not made any gift of money or of any of its property or
assets. Sportsprize has carried on business in the normal course.
5.20 Sportsprize is not in default under or in breach of, or would, after
notice or lapse of time or both, be in default under any contract,
agreement, indenture or other instrument to which it is a party or by
which it is bound.
Agreement and Plan of Share Exchange
Page - 9
<PAGE>
5.21 There are no claims threatened or against or affecting Sportsprize nor
are there any actions, suits, judgments, proceedings or investigations
pending or, threatened against or affecting Sportsprize, at law or in
equity, before or by any court, administrative agency or other
tribunal or any governmental authority.
5.22 Neither Sportsprize nor any of the Principal Vendors are aware of any
infringement by Sportsprize of any registered patent, trademark or
copyright.
5.23 Sportsprize is the legal and beneficial owner of the trademark
"Sportsprize.com" (the "Trademark"), free and clear of all
encumbrances, and is not a party to or bound by any contract or any
other obligation whatsoever that limits or impairs its ability to
sell, transfer, assign or convey, or that otherwise affects, the
Trademark.
5.24 No person other than Sportsprize has been granted any interest in or
right to use all or any portion of the Trademark.
6. Kodiak Representations and Warranties. Kodiak represents and warrants
to Sportsprize and the Sportsprize shareholders as of the date hereof
and on the Effective Date that:
6.1 Kodiak is a corporation validly existing and in good standing under
the laws of the State of Nevada. Kodiak has the power and authority to
carry on the Kodiak business as it is now conducted.
6.2 The execution, delivery and performance of this Agreement have been
duly and validly authorized and approved by Kodiak board of directors,
and Kodiak has the corporate power and authority to execute, deliver
and perform this Agreement and such other instruments as appropriate
to consummate the transactions herein contemplated, to perform and
comply with all of the terms, covenants and conditions to be performed
and complied with by Kodiak hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. This
Agreement constitutes the valid and binding obligation of Kodiak, and
is enforceable against Kodiak in accordance with its terms, except as
the enforceability may be affected by bankruptcy, insolvency or
similar laws affecting creditor's rights generally or court applied
equitable remedies. Kodiak's execution, delivery and performance of
this Agreement do not (i) conflict with or result in a breach of any
of the terms, conditions or provisions of the articles of
incorporation or bylaws of Kodiak or any judgment, order, injunction,
decree, regulation or ruling of any court or other governmental
authority to which Kodiak is subject or of any agreement or contract
listed on any schedule delivered pursuant hereto or any other material
agreement or contract to which Kodiak is a party or is subject, or
constitute a default thereunder, or (ii) give to others any rights of
termination or cancellation of any agreement or contract listed on any
schedule delivered pursuant hereto or any other material agreement or
contract to which Kodiak is a party or is subject, or (iii) create any
lien or encumbrance upon the assets of Kodiak, or (iv) require the
consent, authorization or approval of any governmental agency, body,
official or authority.
Agreement and Plan of Share Exchange
Page - 10
<PAGE>
6.3 Kodiak has filed with all applicable securities and regulatory
authorities (including exchanges and markets) all information and
documents required to be filed with such authorities (the "Public
Record") and the statements set forth in the Public Record are true,
correct and complete and do not contain any misrepresentation as of
the date made and Kodiak has not filed any confidential material
change reports or similar reports.
6.4 There has not been any adverse material change in the business,
operations or affairs, financial or otherwise, of Kodiak since
December 31, 1998, being the date of the last audited financial
statements of Kodiak.
6.5 The Exchange Shares when issued will be issued as fully paid and
non-assessable shares free and clear of all liens, charges, claims or
encumbrances.
6.6 Kodiak has been approved for trading on the National Association of
Securities Dealers Over-the-Counter Bulletin Board (the "OTC BB") and
is eligible for quotation on the OTC BB as of the Effective Date.
6.7 As of the Effective Date, the authorized capital of Kodiak consists of
20,000,000 common shares with par value of $0.001 per common share and
5,000,000 of preferred shares with a par value of $0.001 per preferred
share.
6.8 As of the Effective Date, 7,564,000 common shares and no preferred
shares were issued and outstanding and have been validly issued and
are fully paid and non-assessable.
6.9 As at December 31, 1998, Kodiak had assets of $4,560 and liabilities
of $3,120.
6.10 Kodiak is not aware nor has it failed to disclose to Sportsprize and
the Sportsprize shareholders any change, event or circumstance which
would adversely affect the Exchange Shares or the prospects, operation
or condition of Kodiak or which would reasonably be considered to
reduce the value of the Exchange Shares.
6.11 Kodiak has not made any untrue statement to the Principal Vendors nor
has it failed to state a material fact that is required to be stated
or that is necessary to prevent a statement that is made from being
false or misleading in the circumstances in which it was made.
6.12 The Kodiak audited financial statement for the year ended December 31,
1998 (The "Kodiak Financial Statements"), are true and correct in
every material respect and present fairly the financial position of
Kodiak as of the dates of such statements, and the results of its
operations for the periods then ended and are prepared in accordance
with generally accepted accounting principles applied on a consistent
basis with that of the previous year except as specifically provided
therein.
Agreement and Plan of Share Exchange
Page - 11
<PAGE>
6.13 Kodiak has disclosed all contracts, engagements and commitments,
whether oral or written, relating to Kodiak.
6.14 All licenses, permits, approvals, consents, certificates,
registrations and authorizations required in the ordinary course of
Kodiak's business or in the use of the assets of Kodiak have been
obtained and are in good standing and are not terminable on the basis
of the transactions contemplated herein.
6.15 Kodiak has the full and absolute right, power and authority to enter
into this Agreement on the terms and subject to the conditions herein
set forth, to carry out the transactions contemplated hereby.
6.16 All alterations, if any, to the Articles of Incorporation of Kodiak
since its incorporation have been duly approved by the shareholders of
Kodiak.
6.17 The corporate records of Kodiak, as required to be maintained by it
under its statute of incorporation and constating documents, are
accurate, complete and up-to-date in all material respects and reflect
all material transactions of Kodiak.
6.18 Kodiak has good and marketable title to all of its assets, and such
assets are free and clear of any financial encumbrances not disclosed
in the Kodiak Financial Statements.
6.19 Kodiak has filed all necessary tax returns in all jurisdictions
required to be filed by it, all returns affecting workers compensation
with the appropriate agency, corporation capital tax returns, if
required, and any other material reports and information required to
be filed by Kodiak with any governmental authority; Kodiak has paid
all income, sales and capital taxes payable by it as and when due;
Kodiak has withheld and remitted to tax collection authorities such
taxes as are required by law to be withheld and remitted as and when
due; Kodiak has paid all installments of corporate taxes due and
payable, and there is not presently outstanding nor does Kodiak expect
to receive any notice of re-assessment from any applicable tax
collecting authority.
6.20 Kodiak has not declared or paid any dividends of any kind or declared
or made any other distributions of any kind whatsoever including,
without limitation, by way of redemption, repurchase or reduction of
its authorized capital, except as has been described to the Principal
Vendors and Sportsprize.
6.21 There has been no material adverse change in the financial condition
and position of Kodiak and no damage, loss destruction or other change
in circumstances materially affecting the business, property or assets
of Kodiak or its right or capacity to carry on business since the date
of the Kodiak Financial Statements.
6.22 After the date of the Kodiak Financial Statements, Kodiak has not
engaged in any transaction or made any disbursement or assumed or
incurred any liability or obligation
Agreement and Plan of Share Exchange
Page - 12
<PAGE>
or made any commitment, including, without limitation, any forward
purchase commitment or similar obligation, to make any expenditure
which would materially affect its operations, property, assets or
financial condition.
6.23 Kodiak has not waived or surrendered any right of substantial value
and has not made any gift of money or any of its property or assets.
Kodiak has carried on business in the normal course.
6.24 Kodiak is not in default under or in breach of, or would, after notice
or lapse of time or both, be in default under any contract, agreement
indenture or other instrument to which it is a party or by which it is
bound.
6.25 There are no claims threatened or against or affecting Kodiak nor are
there any actions, suits, judgments, proceedings or investigations
pending or, threatened against or affecting Kodiak, at law or in
equity, before or by any court, administrative agency or other
tribunal or any governmental authority.
6.26 There are no outstanding options, agreements, contracts, calls or
commitments of any character which would require the issuance by
Kodiak of any shares of stock.
7. Conditions Precedent and Termination.
7.1 Sportsprize Conditions Precedent. The obligations of Sportsprize to
close hereunder are subject to satisfaction of the following
conditions on or before the Effective Date:
(a) The Initial Financing as set forth in Section 4.2(g) herein shall
close on or before the Effective Date;
(b) Kodiak shall have entered into the Additional Financings
Agreement, subject to the terms and conditions approved by
Sportsprize;
(c) All agreements, obligations, covenants and conditions, required
by this Agreement to be performed or complied with by Kodiak
prior to or at the Effective Date hereunder, shall have been so
performed or complied with by Kodiak;
(d) the representations and warranties of Kodiak shall have been true
at the time made and shall be true as at the Effective Date;
(e) there shall have been no adverse material change in the business,
operations or affairs, financial or otherwise, of Kodiak since
the date of this Agreement;
(f) all of the transactions contemplated by this Agreement shall have
been approved, as required, by the shareholders and the directors
of Kodiak; and
Agreement and Plan of Share Exchange
Page - 13
<PAGE>
(g) on or before Effective Date, Kodiak shall have delivered to
Sportsprize a Statutory Declaration of an officer or director of
Kodiak certifying the truth, accuracy and correctness of the
Kodiak representations and warranties contained in this
Agreement.
7.2 Kodiak Conditions Precedent. The obligations of Kodiak to close
hereunder are subject to satisfaction of the following conditions on
or before the Effective Date:
(a) Sportsprize and the Principal Vendors shareholders shall have
satisfied all of their respective covenants as contemplated
herein;
(b) the representations and warranties of Sportsprize and the
Principal Vendors shall be true and correct on and as of the
Effective Date;
(c) all agreements, obligations, covenants and conditions required by
this Agreement to be performed or complied with by Sportsprize
and the Principal Vendors prior to or at the Effective Date
hereunder shall have been so performed or complied with by them;
(d) all parties whose consents are necessary to the assignment of any
of the contracts, lease or other agreements to Kodiak shall have
granted their consents thereto, including without limitation, the
landlord under any lease of the business premises of Sportsprize;
(e) no event shall have occurred, which materially and adversely
affects the value of the Sportsprize assets or the ability of
Sportsprize to carry on the Sportsprize Business as presently
conducted or contemplated, and which, in the good faith and
judgment of Kodiak, renders it unadvisable to proceed with the
filing of the Articles of Share Exchange;
(f) all of the transactions contemplated by this Agreement shall have
been approved, as required, by the shareholders and the directors
of Sportsprize; and
(g) on or before the Effective Date, Sportsprize shall have delivered
to Kodiak a Statutory Declaration of an officer or director of
Sportsprize certifying the truth, accuracy and correctness of the
Sportsprize representations and warranties contained in this
Agreement.
7.3 Special Meeting. In the event that all of the Sportsprize shareholders
do not consent to the Share Exchange, then Sportsprize will call a
Special Meeting of the Sportsprize shareholders on May 18, 1999 at
9:00 am (Pacific Standard Time) at the principal office of Sportsprize
at which Meeting the Principal Shareholders agree to vote in favour of
the Share Exchange, and take all other actions necessary to effect the
Share Exchange.
Agreement and Plan of Share Exchange
Page - 14
<PAGE>
7.4 Termination. Notwithstanding anything contained in this Agreement to
the contrary, this Agreement may be terminated and the Share Exchange
abandoned:
(a) Upon written notice at any time prior to the Effective Date by
mutual consent of the Constituent Corporations;; or
(c) If there exists a suit, action, or other proceeding commenced,
pending or threatened, before any court or other governmental
agency of the federal or state government, in which it is sought
to restrain, prohibit or otherwise adversely affect the
consummation of the Share Exchange contemplated hereby.
In exercising their rights under this Section 7.3, each of the
Constituent Corporations may act by its Board of Directors, and such
rights may be so exercised, notwithstanding the prior approval of this
Agreement by the Sportsprize shareholders.
8. Modification. Notwithstanding anything contained in this Agreement,
this Agreement may be amended or modified in writing at any time prior
to the Effective Date; provided that, an amendment made subsequent to
the adoption of this Agreement by the Sportsprize shareholders shall
not: (1) alter or change the amount or kind of shares, securities,
cash, property and/or rights to be received in exchange for or on
conversion of all or any of the shares of any class or series thereof
of the Constituent Corporations; (2) alter or change any term of the
Articles of Incorporation of a Constituent Corporation; or (3) alter
or change any of the terms and conditions of this Agreement if such
alteration or change would adversely affect the holders of any class
or series thereof of the Constituent Corporations; provided, however,
the Constituent Corporations may by agreement in writing extend the
time for performance of, or waive compliance with, the conditions or
agreements set forth herein.
In exercising their rights under this Section 8, each of the
Constituent Corporations may act by its Board of Directors, and such
rights may be so exercised, notwithstanding the prior approval of this
Agreement by the Sportsprize shareholders.
9. Each of the Constituent Corporations shall (i) keep its records and
file in connection with its federal and state income tax returns all
such information as may be required by Treas. Reg. Section 1.368-3;
(ii) for federal and state income tax purposes report the share
exchange as qualifying as a reorganization under Section 368(a)(1)(B)
of the Code; (iii) refrain from taking any position in connection with
its federal or any state income tax liability that would be
inconsistent with such qualification; and (iv) comply with all the
requirements of Section 368(a)(1)(B) applicable to such corporation.
Agreement and Plan of Share Exchange
Page - 15
<PAGE>
10. Indemnification.
10.1 Indemnification by Principal Vendors. The Principal Vendors will
indemnify and hold harmless Kodiak from any liabilities relating to
the Sportsprize Shares and Sportsprize accruing up to and including
the day before the Effective Date and in particular, will ensure that
Sportsprize has paid all wages, holiday pay, income tax, Pension Plan,
Unemployment Insurance and other compensation payable to or related to
the employees.
10.2 Indemnification by Kodiak. Kodiak will indemnify and hold the
Principal Vendors and the Sportsprize shareholders harmless from any
liabilities relating to the Exchange Shares and Kodiak accruing up to
and including the day before the Effective Date and in particular,
will ensure that Sportsprize has paid all wages, holiday pay, income
tax, Pension Plan, Unemployment Insurance and other compensation
payable to or related to the employees; and
11. Miscellaneous.
11.1 Share Exchange. This Agreement supersedes all prior agreements,
written and oral, concerning the matters contained herein.
11.2 Successors. This Agreement shall be binding upon and inure to the
benefit of the heirs and successors of each of the parties. None of
the party may assign this Agreement without the prior written consent
of the other party.
11.3 Construction. This Agreement shall be construed and enforced in
accordance with the laws of the State of Nevada. Each of Kodiak and
Sportsprize acknowledge that it was represented by competent legal
counsel or advised to seek legal counsel in the review of the terms
and conditions set forth in this Agreement and the other documents
relating to this transaction, including, but not limited to, the
documents attached as exhibits to this Agreement, and, therefore,
neither this Agreement nor any of the other documents shall be
construed against any party as the drafter.
11.4 Counterparts. This Agreement may be executed in multiple counterparts,
including facsimile counterparts, that when taken together shall
constitute a single instrument; provided that original signed
counterpart copies are delivered to each party.
11.5 Public Announcements. No party hereto shall make any public
announcement or disclosure of the terms or conditions of this
Agreement without the prior written consent of the other parties,
except that any parties' approval shall not be required as to any
statements or other information which may be required to make pursuant
to any rule or regulation of the any competent securities commissions
or otherwise required by law.
11.6 Headings. The headings of the Sections and paragraphs of this
Agreement have been inserted for convenience of reference only and
shall in no way restrict or otherwise modify any or the terms or
provisions of this Agreement.
Agreement and Plan of Share Exchange
Page - 16
<PAGE>
11.7 Severability. Any provision of this Agreement which is found to be
contrary to Nevada law or otherwise unenforceable shall not affect the
remaining terms of this Agreement, which shall be construed in such
event as if the unenforceable provision were absent from this
Agreement.
11.8 Notices. All notices, requests and other communications from any of
the parties hereto to the other shall be in writing and shall be
considered to have been duly given or served when (i) personally
delivered, (ii) when received if delivered by confirmed facsimile
transmission, air courier or other comparable delivery service, or
(iii) on the third day after deposit in the United States mail,
certified or registered, return receipt requested, postage prepaid,
addressed to the party at their address set forth on the signature
page below, or to such other address as such party may hereafter
designate by written notice.
11.9 Attorneys' Fees. In the event of any dispute hereunder between the
parties hereto, the party prevailing in any litigation instituted
hereunder shall be entitled to recover from the other its costs and
expenses thereof including, specifically, its reasonable attorneys'
fees.
11.10 Jurisdiction and Venue. Any litigation instituted hereunder shall be
venue in the appropriate state or federal courts in Las Vegas, Nevada,
as to which jurisdiction Kodiak and Sportsprize hereby consent.
The parties have executed this Agreement as of the day and year first above
written.
KODIAK GRAPHICS COMPANY, a Nevada corporation
By: /s/William Turner
-----------------------------------
Its: President
-----------------------------------
Address: 2034 Western Avenue
Las Vegas, NV 89102
Facsimile: (___) ____________
SPORTSPRIZE ENTERTAINMENT, INC., a Nevada corporation
By:/s/Jeffrey D. Paquin
-----------------------------------
Its:President
-----------------------------------
555-999 Canada Place
Vancouver, British Columbia V6C 3E1
Agreement and Plan of Share Exchange
Page - 17
<PAGE>
SPORTSPRIZE PRINCIPAL VENDORS
/s/Jeffrey D. Paquin
- --------------------------------------
Jeffrey D. Paquin
/s/ Randy L. Daggitt
- --------------------------------------
Randy L. Daggitt
/s/Anthony A Vecchio
- --------------------------------------
Anthony A. Vecchio
/s/James A. Brown
- --------------------------------------
James A. Brown
/s/Michael Slater
- --------------------------------------
Michael Slater
GANG CONSULTING INC.
By: Nancy Gray
- --------------------------------------
Its: President & Secretary
- --------------------------------------
Agreement and Plan of Share Exchange
Page - 18
<PAGE>
EXHIBIT A
List of Principal Vendors
- -------------------------
Jeffrey D. Paquin(1)
Randy L. Daggitt(1)
Anthony A. Vecchio(1)
James A. Brown(1)
Michael Slater(1)
Gang Consulting Inc.
(1) The following Principal Vendors will each transfer 100,000 shares to Gang
Consulting Inc. on May 7, 1999. Such shares will be Escrow Shares.
Address for Service of all Principal Vendors
- --------------------------------------------
c/o 1500 - 885 West Georgia Street
Vancouver, British Columbia, Canada V6C 3E8
Agreement and Plan of Share Exchange
Page - 19
<PAGE>
EXHIBIT B
Escrow Agreement
(Attached as Exhibit 10.3)
Agreement and Plan of Share Exchange
Page - 20
<PAGE>
EXHIBIT C
Articles of Share Exchange
(Attached as Exhibit 2.1
Agreement and Plan of Share Exchange
Page - 21
<PAGE>
EXHIBIT D
Certificate
(Attached)
Agreement and Plan of Share Exchange
Page - 22
<PAGE>
EXHIBIT D
Certificate
I HEREBY CERTIFY that the form of written consent and Notice of Special
Meeting was sent to all of the shareholders of Sportsprize Entertainment Inc. on
May 7, 1999.
DATED this 7th day of May, 1999.
Sportsprize Entertainment, Inc.
/s/Jeff Paquin
----------------------------------------
Jeff Paquin, President
On behalf of the Principal Vendors
/s/Jeff Paquin
----------------------------------------
Jeff Paquin
Agreement and Plan of Share Exchange
Page - 23
<PAGE>
SCHEDULE 1.1
Shareholder List of Sportsprize Enterprises, Inc.
Name of Shareholder Number of Shares Held
------------------- ---------------------
Ron Adie 20,000
Adrail Services Ltd. 80,000
Gus Apostalakos 100,000
Amarjit Berar 100,000
Charles Bingham, Todd Bingham 40,000
and Gerald Gosime
Alvin Bissett 40,000
James A. Brown 600,000 (restricted)
Robert Chase 20,000
CKS Enterprises Ltd. 40,000
Clarion Investments 40,000
Clive Barwin Computer Consultants Inc. 160,000
Corp Finance Advisory Services Inc. 20,000
Randy L. Daggitt 600,000 (restricted)
Division Eight Holdings 40,000
Ralph Belle Fleur 20,000
Gang Consulting Inc. 500,000 (restricted)
Yaraslav Grabovetsky 20,000
Nancy Gray 40,000
Steve Jeske 20,000
Justin Tigham Innovative Games 50,000
Justin Tigham Innovative Games 300,000 (escrowed)
Dave Kepkay 40,000
Donald Robert MacKay 150,000
Karen McMillan 8,000
Marble Arch Development Corp. 160,000
Meadow Park North Ltd. 140,000
James J. Murphy 20,000
Olson Cove Consulting Ltd. 25,000
Olson Cove Consulting Ltd. 125,000 (escrowed)
Jeffrey D. Paquin 600,000 (restricted)
Qual-ling Software, Inc. 100,000
Qual-ling Software, Inc. 100,000 (escrowed)
James Richards 4,000
Robert Rodda 20,000
Gary Segal 32,000
Michael J. Slater 600,000 (restricted)
Agreement and Plan of Share Exchange
Page - 24
<PAGE>
Name of Shareholder Number of Shares Held
------------------- ---------------------
D.J. Taylor 40,000
Earle Thompson 50,000
Anthony A. Vecchio 600,000 (restricted)
Wayne Yack 40,000
Yorkton Securities Inc. 100,000
----------
Total 5,804,000
==========
Agreement and Plan of Share Exchange
Page - 25
<PAGE>
SCHEDULE 3.1
Certificate of Designation
The following persons shall be appointed as directors of Kodiak Graphics
Company on the "Effective Date", as that term is defined in the Agreement and
Plan of Share Exchange dated May 7, 1999, among Kodiak Graphics Company,
Sportsprize Entertainment Inc. and certain shareholders of Sportsprize
Entertainment Inc.:
Jeff Paquin
--------------------------------
--------------------------------
--------------------------------
Agreement and Plan of Share Exchange
Page - 26
<PAGE>
SCHEDULE 3.3(a)
Options Granted by Sportsprize
Optionee Number of Options
------------------------------------------------------------------
Jeffrey Paquin 300,000
Olsen Cove Consulting 100,000
Donald Robert MacKay 100,000
Gilmour McKay Roberts
Consulting Ltd.(1)
Michael Thompson 175,000
Meadow North Park Ltd. 100,000
------------------------------------------------------------------
Total 775,000
(1) Pursuant to a letter agreement dated April 1, 1999, Sportsprize agreed to
pay to Gilmour McKay Roberts Consulting Ltd. a consulting fees (on the basis of
a monthly retainer) in the amount of $2,500 per month for a period of six
months, 50% of which may be paid in the form of Options to acquire shares of
common stock of Sportsprize at $0.25 per share.
Agreement and Plan of Share Exchange
Page - 27
<PAGE>
SCHEDULE 4.2(f)
Shareholder List of Kodiak Graphics Company
Date: APR 14, 1999 Stockholder Certificate List Page: 1
Time: 5:39PM Name Sequence
KODIAK GRAPHICS COMPANY
<TABLE>
Stkhldr Name/Address Cert Number Issued Trans Shares
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AAL7307 AERO ATLANTIC LTD
PALM CHAMBERS P O BOX 119
ROAD TOWN TORTOLA
BRITISH VIRGIN ISLANDS
1049 4/05/99 0000162 N N 450,000
JAO5195 ALMOETE, JOCELYN
COMPETETIVE EDGE, INC.
MAKATI CITY, M.M.
PHILLIPPINES
1001 9/10/97 0000108 N N 50,000
ACI7304 ANCHOR COVE INVESTMENTS INC
2 ELYSTON COURT, HOWARDS LAND
PUTNEY, LONDON
ENGLAND SW15 6QH
1046 4/05/99 0000158 N N 450,000
ACA5312 ATIENZA, ANTONIO C.
#20 EVERLASTING ST. BLK-3 LOT3
TS CRUZ SUBD. ALMANZA
LAS PINAS, M.M.
PHILLIPPINES,
1002 9/10/97 0000109 N N 26,000
AGB5313 BARILLA, ANTONIO G.
701 MIDLAND MANSION
839 PASAY ROAD, LOGASPI VILLAG
MAKATI M.M.
PHILIPPINES,
1003 9/10/97 0000110 N N 20,000
LOB5767 BARTOSIS, LOURDES O
701 MIDLAND MANSION
839 PASAY ROAD
MAKATI M M
PHILIPPINES,
1004 9/10/97 0000111 N N 50,000
CMB5197 BAUTISTA, CLEOPATRA M.
2149 INT. MAGINHANA ST.
MALATE, M.M.
PHILLIPPINES,
1005 9/10/97 0000112 N N 25,000
BCL6964 BCLM INVESTMENT CORPORATION
P O BOX 923 GENESIS BLDG 3FL
GEORGE TOWN
</TABLE>
Agreement and Plan of Share Exchange
Page - 28
<PAGE>
Date: APR 14, 1999 Stockholder Certificate List Page: 2
Time: 5:39PM Name Sequence
KODIAK GRAPHICS COMPANY
<TABLE>
Stkhldr Name/Address Cert Number Issued Trans Shares
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GRAND CAYMAN
CAYMAN ISLANDS BWI,
1053 4/05/99 0000167 N N 500,000
TCO6750 CACCIOLA, THOMAS
2800 ALT DRIVE
LAS VEGAS, NV 89107
1006 9/10/97 0000114 N N 2,500
CHO7309 CASTAWAYS HOLDINGS
PALM CHAMBER P O BOX 119
ROAD TOWN TORTOLA
BRITISH VIRGIN ISLANDS
1051 4/05/99 0000164 N N 450,000
RTC6751 CHAPTER, RICHARD T
2030 WESTERN
LAS VEGAS, NV 89102
1007 9/10/97 0000115 N N 2,500
CII7303 CRONWALL INVESTMENTS INC.
SUITE 95, EAST BAY SHOPPING CT
P O BOX N-1836
NASSAU, BAHAMAS
1045 4/05/99 0000157 N N 450,000
EPC6753 CRUZ, EVANGELINE P
091 A BONIFACIO AVE
CAINTA, RIZAL
PHILIPPINES
1009 9/10/97 0000116 N N 50,000
LAC6754 CURRENT, LINDA A
3864 SCHIFF DRIVE
LAS VEGAS, NV 89103
1010 9/10/97 0000117 N N 5,000
DWI5927 DREAMWEAVER INVESTMENTS LTD
GLENDENNING HOUSE 6/8 WICKLOW
DUBLIN 2 IRELAND
1043 4/05/99 0000155 N N 450,000
DIL7310 DYNAMIC INVESTMENTS LTD
PENTHOUSE SUITE, BUCKINGHAM SQ
WEST BAY RD, SMB, GRAND CAYMAN
CAYMAN ISLANDS BWI
1052 4/05/99 0000166 N N 450,000
</TABLE>
Agreement and Plan of Share Exchange
Page - 29
<PAGE>
Date: APR 14, 1999 Stockholder Certificate List Page: 3
Time: 5:39PM Name Sequence
KODIAK GRAPHICS COMPANY
<TABLE>
Stkhldr Name/Address Cert Number Issued Trans Shares
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SDE6755 ELUDO, SUSANA D
#205 P REYEA STREET
PASSAY CITY
PHILIPPINES
1011 9/10/97 0000118 N N 50,000
TTE5573 ENRIQUEZ, TERESA T
701 MIDLAND MANSION
839 PASAY ROAD
MAKATI M M
PHILIPPINES,
1012 9/10/97 0000153 N N 50,000
MEO1327 EVANS, MARCI 50-40-7230
6357 VICUNA DR
LAS VEGAS, NV 89102
1013 9/10/97 0000120 N N 250,000
MFO6756 FRIEDMAN, MICHAEL
2825 HIGH SAIL COURT
LAS VEGAS, NV 89117
1041 9/02/98 0000154 N 2,500
BBG5318 GIGANTE, BOBBY B.
68-B ZORRA STREET
PACTOK SFDM
MERTRO MANILA
PHILIPPINES,
1015 9/10/97 0000122 N N 15,000
AGO6757 GLASSMEYER, ARTHUR
4534 W DIABLO #103
LAS VEGAS, NV 89118
1016 9/10/97 0000123 N N 5,000
KGO6270 GORNICHEC, KRISTINE
1926 ALTIVO DRIVE
HENDERSON, NV 89014
1017 9/10/97 0000124 N N 500,000
FRH6758 HARRINGTON, FRANKLIN R
3675 S DECATUR #12
LAS VEGAS, NV 89103
1018 9/10/97 0000125 N N 20,000
CJO5206 JIMINEZ, CORAZON
5327 BEN HARRISON STREET
MAKATI CITY, M.M.
PHILLIPPINES,
1019 9/10/97 0000126 N N 50,000
LIL7302 LAMPLIGHTER INVESTMENT LTD
88 ELLIS ROAD, CROWTHORNE
BERKS, ENGLAND RG45 6PN
1044 4/05/99 0000156 N N 450,000
</TABLE>
Agreement and Plan of Share Exchange
Page - 30
<PAGE>
Date: APR 14, 1999 Stockholder Certificate List Page: 4
Time: 5:39PM Name Sequence
KODIAK GRAPHICS COMPANY
<TABLE>
Stkhldr Name/Address Cert Number Issued Trans Shares
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EMO6759 MAGDARAOG, ELENA
701 MIDLAND MANSION
1406 ESTRADA ST, SAN ANDRES
MAKATI M M,
PHILIPPINES,
1020 9/10/97 0000127 N N 5,000
RMO3975 MORATA, RIGS
54 GIL PUYAT ST
8F HOMES III PARANAQUE
METRO MANILA 1700
PHILIPPINES,
1021 9/10/97 0000128 N N 50,000
LLR3987 NEWELL, LISE-LOTTE
6897 E MESQUITE AVENUE
LAS VEGAS, NV 89110
1031 9/10/97 0000139 N N 250,000
BOJ6760 OCHOA JR, BLAS
3967 GLORY COURT
LAS VEGAS, NV 89103
*1022 9/10/97 0000131 N N 20,000
PTO4460 OCHOA, PHILLIP T
2481 OLD FORGE
#104
LAS VEGAS, NV 89121
*1023 9/10/97 0000130 N N 10,000
5006761 ONO, SEAN
3979 GLORY CT
LAS VEGAS, NV 89103
1024 9/10/97 0000132 N N 40,000
HTP6762 PALMA JR, HILARION T
1678 JACINTO ZAMORA STREET
PACO MANILA
PHILIPPINES
1025 9/10/97 0000133 N N 20,000
SPO5503 PANCHERI, SUZANNE
236 COMANCHE PLACE
HENDERSON, NV 89014
1026 9/10/97 0000134 N N 250,000
FPO5209 PASCUA, FELICISIMA
CAA COMPOUND
LAS PINAS, M.M.
PHILLIPPINES,
1027 9/10/97 0000135 N N 4,000
</TABLE>
Agreement and Plan of Share Exchange
Page - 31
<PAGE>
Date: APR 14, 1999 Stockholder Certificate List Page: 5
Time: 5:39PM Name Sequence
KODIAK GRAPHICS COMPANY
<TABLE>
Stkhldr Name/Address Cert Number Issued Trans Shares
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JNP6767 POWERS, JOSEPH N
112 HYACINTH LANE
LAS VEGAS, NV 89107
*1029 9/10/97 0000137 N N 2,500
TLP6763 POWERS, TERRY L
112 HYACINTH LANE
LAS VEGAS, NV 89107
*1028 9/10/97 0000136 N N 5,000
RPO6056 PRADO, RAYMUNDO
265 VICENTE G CRUZ
SAMPALOC M M
PHILIPPINES
1030 9/10/97 0000138 N N 30,000
CCS5213 SAURE, CHARLIE C.
#854 ROSARITO STREET
SAMP., M.M.
PHILLIPPINES,
1032 9/10/97 0000140 N N 5,000
KSO6060 SEVILLA MA, KARENINA
265 VICENTE G CRUZ
SAMPALOC M M
PHILIPPINES
1035 9/10/97 0000143 N N 50,000
BSO6057 SEVILLA, BERTHRAND
265 VICENTE G CRUZ
SAMPALOC M M
PHILIPPINES
1033 9/10/97 0000141 N N 20,000
JSO6059 SEVILLA, JOSE
265 VICENTE G CRUZ
SAMPALOC M M
PHILIPPINES
1034 9/10/97 0000142 N N 20,000
SIL7305 SPIRIT INVESTMENTS LTD
16 PROMENADE SAINT-ANTOINE
GENEVA, SWITZERLAND 1204
1047 4/05/99 0000160 N N 450,000
</TABLE>
Agreement and Plan of Share Exchange
Page - 32
<PAGE>
Date: APR 14, 1999 Stockholder Certificate List Page: 6
Time: 5:39PM Name Sequence
KODIAK GRAPHICS COMPANY
<TABLE>
Stkhldr Name/Address Cert Number Issued Trans Shares
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
_SO3980 STANKIEWICZ, MICHAEL
1725 S RAINBOW
#19B
LAS VEGAS, NV 89107
1036 9/10/97 0000144 N N 500,000
_SII7306 STRATHBURN INVESTMENTS INC
3RD FLOOR, NORTHFOLK HOUSE
FRULERICK STREET
P O BOX N1836
NASSAU, BAHAMAS,
1048 4/05/99 0000161 N N 450,000
_SD6765 SUMSION, KRISTIN
2336 CASERTA COURT
HENDERSON, NV 89014
1037 9/10/97 0000145 N N 10,000
_MC6752 SUZETTE M CLAUDIO
78 CANTON STREET
BF HOMES, PARANAQUE
PHILIPPINES
1008 9/10/97 0000113 N N 50,000
_CO7308 SWORDFISH CAPITA
PALM CHAMBER P O BOX
ROAD TOWN TORTOLA
BRITISH VIRGIN ISLANDS
1050 4/05/99 0000163 N N 450,000
_MT5214 TAN, MA. LUISA M.
839 PASAM ROAD #702
LEGASPI VILLAGE MAKITI, M.M.
PHILLIPPINES,
1038 9/10/97 0000146 N N 44,000
_LW6766 WEST, STEWART L
2010 WESTERN AVE
LAS VEGAS, NV 89102
1039 9/10/97 0000147 N N 2,500
_WO4477 WITTER, KIMBERLY
4000 W FORTUNE DR
LAS VEGAS, NV 89107
1040 9/10/97 0000149 N N 2,500
</TABLE>
Agreement and Plan of Share Exchange
Page - 33
<PAGE>
Date: APR 14, 1999 Stockholder Certificate List Page: 7
Time: 5:39PM Name Sequence
KODIAK GRAPHICS COMPANY
<TABLE>
Stkhldr Name/Address Cert Number Issued Trans Shares
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Certificates Shares
------------ ------
New 50 7,561,500
Reissued 1 2,500
51 Stockholders Restricted 0 0
Total 51 7,564,000
Agreement and Plan of Share Exchange
Page - 34
</TABLE>
EXHIBIT 10.23
SONORA CAPITAL
Suite 1000-355 Burrard Street
Vancouver, BC
V6C 2G8
May 7, 1999
Kodiak Graphics Company
2034 Western Avenue
Las Vegas, Nevada
89102
Attention: Jeff Paquin
Dear Sirs:
Re: Private Placement of Common Shares
We, Sonora Capital Corporation ("Sonora") understand that Kodiak Graphics
Company ("Kodiak") proposes to undertake three (3) private placement of common
shares during 1999 (the "Financings"). Each Financing is in the amount of
USD$840,000 on the following terms:
(a) the first Financing is to close by the end of July, 1999 at a price
which is the greater of $3.00 per share or 75% of the ten (10) day
average closing price of Kodiak's common shares on the OTC Bulletin
Board for the ten (10) days prior to the closing of the first
Financing; (a)
(b) the second Financing is to close by the end of October, 1999 at a
price which is the greater of $4.00 or 75% of the ten (10) day average
closing price of Kodiak's common shares on the OTC Bulletin Board for
the ten (10) days prior to the closing of the second Financing;
(c) the third Financing is to close by the end of December, 1999 at a
price which is the greater of $5.00 or 75% of the ten (10) day average
closing price of Kodiak's common shares on the OTC Bulletin Board for
the ten (10) days prior to the closing of the third Financing;
This letter is our agreement as follows:
<PAGE>
-2-
1. Sonora will act as agent of Kodiak to arrange for purchasers ("Purchasers")
of the Financings outside of Canada and the United States in such other
jurisdictions as may be agreed upon by Sonora and Kodiak;
2. The sale of shares to Purchasers where such sale would constitute a
distribution in any of the agreed jurisdictions will be effective pursuant
to exemptions in each of the said jurisdictions from applicable securities
legislation;
3. Upon closing of the Financings, Kodiak will pay to Sonora a commission
equal to 2.5% of the aggregate gross proceeds derived from the sale of the
shares in the Financings, provided that the Financings are fully completed
with the gross proceeds of a minimum of USD$2,500,000;
4. Kodiak acknowledges that Sonora is not a registered broker dealer and may
only arrange for Purchasers as a finder pursuant to exemptions to
applicable securities legislation;
5. Kodiak agrees to accept subscriptions from those Purchasers introduced by
Sonora, so long as the terms of the Financing are as indicated above or
reasonably amended pursuant to an agreement between Sonora and Kodiak;
6. Kodiak agrees that it will provide Sonora with updated information with
respect to its business and business plan together with any documents
necessary for the Financings (ie: subscription agreements, offering
memoranda, etc. upon request by Sonora). Until the Financings are closed,
Kodiak will provide Sonora with information relating to any material change
in its affairs within two (2) days of such material change occurring;
7. The obligations of this agreement shall be conditional upon fulfilment of
the following:
(a) Kodiak will have made all necessary filings with and obtain all
necessary approvals, consents and acceptances of the regulatory
authorities having jurisdiction so as to permit Kodiak to offer, sell,
issue and deliver Kodiak's common shares to the Purchasers;
(b) Kodiak having complied with all applicable securities legislation with
respect to the sale of the shares to the Purchasers; and
(c) Kodiak making its commercial best efforts to carry out its business
plan as presented to Sonora.
8. The closing of each of the Financings shall be completed at the offices of
Sonora on such dates to be advised by Sonora by providing Kodiak with five
(5) business days notice;
9. All shares issued to the Purchasers will have such hold periods as may be
required pursuant to applicable securities legislation;
<PAGE>
-3-
10. This agreement shall be governed by and construed in accordance with the
laws of the Province of British Columbia and the laws of Canada applicable
therein;
11. Each of the parties hereto should do or cause to be done all such acts and
things and shall execute or cause to be executed all such documents,
agreements and other instruments as may reasonably be necessary or
desirable for the purpose of carrying out their provisions and attend to
this agreement; and
12. This agreement may be executed by facsimile and in several counterparts,
each of which shall be deemed to be an original and all of which shall
together constitute one and the same instrument.
If the above is in accordance with the understanding please sign and return
to Sonora a copy of this letter whereupon this letter and your acceptance shall
constitute a binding agreement between Kodiak and Sonora.
SONORA CAPITAL
Per: /s/ Illegible
----------------------------------------
Authorized Signatory
The above offer is hereby accepted and agreed to as at the date first set out
above.
KODIAK GRAPHICS COMPANY
Per: /s/ Illegible
------------------------------
Authorized Signatory
EXHIBIT 10.24
SPORTSPRIZE ENTERTAINMENT INC.
101 West 5th Avenue
Vancouver, B.C.
V5Y 4A5
Tel: (604) 874-2766
May 21, 1999
Sonora Capital Corp.
1000 - 355 Burrard Street
Vancouver, B.C.
V6C 2G8
Dear Sir:
re: Corporate Affairs and Investor Relations
This letter will confirm the terms and conditions of the agreement reached
between Sonora Capital Corp. (the "Consultant") and Sportsprize Entertainment
Inc. (the "Company") as follows:
1. Duties
The Company hereby engages the Consultant for the purpose of assisting the
Company with corporate affairs and carrying out investor relations activities on
behalf of the Company, including, among other matters:
(a) assisting management with general corporate matters relating to
the development of the Company;
(b) assisting management of the Company in the preparation of
promotional brochures, booklets, corporate updates and other material;
(c) representing the Company in connection with its shareholder and
investor relations; and
(d) initiating and maintaining a regular program of contacting
stockbrokers, investment counselors and advisors with information
about the Company.
2. Term
Commencing May 1, 1999, the services of the Consultant will be rendered to
the Company on a month-to-month basis unless terminated in accordance with terms
and provisions hereof.
<PAGE>
2
3. Remuneration
The Company agrees to pay to the Consultant the sum of U.S.$20,000 per
month or such other amount as may be agreed between the parties hereto.
4. Confidential Information
The parties hereto acknowledge and agree that the Consultant will have
access to confidential and secret information and therefore the Consultant
agrees that during the terms of this agreement and on termination or expiry of
the same, for any reason whatsoever, it will not divulge or utilize to the
detriment of the Company any of such confidential or secret information so
obtained.
5. Termination
It is understood and agreed by and between the parties hereto that either
party may terminate this agreement in its entirety by giving the other party
written notice of termination.
Yours very truly,
SPORTSPRIZE ENTERTAINMENT INC.
Per: /s/ [Illegible]
--------------------------(signature)
/s/ [Illegible]
------------------(name - please print)
Authorized signatory
AGREED TO AND ACCEPTED
this 21st day of May, 1999
SONORA CAPITAL CORP.
Per: /s/ [Illegible]
-------------------------(signature)
/s/ [Illegible]
------------------(name - please print)
Authorized signatory
EXHIBIT 10.25
CONFIDENTIALITY AGREEMENT
In consideration for and as a result of the disclosure to
you-_________________, of _____________________________ by Sportsprize
Entertainment Inc. referred to herein as the ("Sportsprize") of certain
confidential and proprietary information relating to Software/Programs and
concept (collectively the "Property") you acknowledge the confidential and
proprietary nature of such information and agree with the Discloser to hold and
keep the same confidential as provided in this letter agreement.
As used herein, the term "Evaluation Material" refers to all information
that has been or may hereafter be provided to you by the Discloser concerning
the Property, including without limitation financial, business plan,
engineering, technical, design, title, evaluation, manufacturing, equipment,
supplier, customer, and other information, irrespective of the form of the
communication.
You agree with the Discloser to exercise all reasonable steps to safeguard
the confidentiality of the Evaluation Material and not to disclose any part of
it or any information derived therefrom to any third person except to such
limited number of your employees and advisors as (i) may require access to the
Evaluation Material for the sole purpose of assisting you in evaluating a
possible transaction with the Discloser concerning the Property and (ii) agree
in writing with the Discloser to preserve the confidentiality of such Evaluation
Material and to observe the other provisions hereof to the same extent as you
agree herein. You agree with the Discloser that you will not copy or permit any
of your outside agents, consultants or advisors to copy any of the Evaluation
material without the prior written approval of the Discloser. Promptly upon the
completion of your review of the information or upon the request of the
Discloser, but in no event later than 60 days from the date hereof, you will
return to the Discloser all Evaluation Material previously furnished to you,
together with all copies of any of the same made by you or any of your employees
or agents. Within such time period you will also destroy all notes, memoranda,
reports, and documents generated by you, your employees or agents
<PAGE>
2
related to the Evaluation material and/or any meetings or discussions concerning
same and confirm such destruction in writing to the Discloser.
You acknowledge that the Evaluation material is being furnished to you solely to
assist you in evaluating a possible transaction with the discloser related to
the Property, and you agree with the Discloser that you will not use that
Evaluation Material or any information derived therefrom for any other purpose.
the term "Evaluation Material" does not include any information, if any, which
(i) becomes generally available to the public other than as a result of a
disclosure by you or by other persons, including your employees and agents, to
whom you have disclosed such information; (ii) was available to you on a
non-confidential basis prior to its disclosure to you by the Discloser, provided
that such prior disclosure and its non-confidential status are evidenced in
writing; or (iii) becomes available to you on a non-confidential basis from a
person other than the Discloser, provided that, such person is lawfully in
possession of the information and it is obtained from that person not in
violation of any contractual, legal or fiduciary obligations to the Discloser.
You agree with the Discloser to be responsible for enforcing the confidentiality
of the Evaluation material and you agree to take such action as may be necessary
to prevent any disclosure by any of your agents or employees. You further
acknowledge that the Discloser shall be entitled to equitable relief by way of
injunction if you breach or threaten to breach any of the provisions of this
letter agreement. You agree to indemnify and save harmless the Discloser for any
and all loss, costs or damages which the Discloser may suffer as a result of a
breach by you of a term of this letter agreement.
You agree with the Discloser that neither you nor any of your employees or
agents, will, without the prior written consent of the Discloser, disclose to
any other person the fact that you are evaluating a possible transaction with
the Discloser relative to the Property.
You acknowledge and agree that neither this letter agreement nor the disclosure
of the Evaluation Material to you nor any discussions or negotiations with you
concerning the Property
<PAGE>
3
and your possible participation therein will prevent the Discloser from
negotiating with and entering into one or more agreements with others with
respect to the Property and that the Discloser shall be free to do so without
liability or obligation to you.
The Discloser makes no representation nor warranty as to the accuracy or
completeness of the Evaluation material and you agree that neither the Discloser
or any of its employees or agents shall have any liability to you or any of your
agents or employees resulting from your reliance on the accuracy or completeness
of the Evaluation Materials.
The letter agreement will enure to the benefit of and be binding upon the
Discloser and you and our respective successors, executors, legal
representatives and assigns. This letter agreement may not be assigned by you.
This letter agreement is governed by and construed in accordance with the laws
of the Province of British Columbia, Canada. You covenant and agree to enter
into such further agreements or transfer documents and to do such other things
as may be reasonably required in order to fully record and perfect the matters
provided for in this agreement.
If you are in agreement with the foregoing, please sign and return one copy of
this letter to the Discloser which will constitute your agreement with the
Disclosure with respect to the subject matter of this agreement.
Yours truly,
Jeffrey D Paquin, President
Sportsprize Entertainment Inc.
By: -----------------------------------
(Authorized Signatory)
Title: --------------------------------
BY: -----------------------------------
Title: --------------------------------
EXHIBIT 21.1
SportsPrize Inc. was incorporated in the State of Nevada on March 6, 1998 as
Beagle Ventures Resources Management Inc. with an authorized share capital of
25,000,000 shares of common stock with a par value of $0.001 per share, which
changed its name to SportsPrize Entertainment, Inc. on March 1, 1999, and to
SportsPrize Inc. on May 14, 1999.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<S> <C>
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<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Jun-30-1999
<CASH> 2108
<SECURITIES> 24
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2220
<PP&E> 0
<DEPRECIATION> 2
<TOTAL-ASSETS> 2302
<CURRENT-LIABILITIES> 16
<BONDS> 0
0
0
<COMMON> 19
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2302
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 396
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (396)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
