EXHIBIT 10.13
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: Xxxxxxx Xxxxxx, President
000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Sportsprize, Inc. Sportsprize, Inc.
Attention: Xxxxxxx Xxxxxx, President
000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Kaleidoscope: Kaleidoscope Sports & Entertainment, LLC
Attention: Xxxxx X. Xxxxxxxxxx, Esq.,
General Counsel, Senior Vice President of
Business Affairs
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
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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 __________,
_____.
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Signature
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Name (typed or printed)
