ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made effective as of the 4th day of March, 2004
AMONG:
XXXXXXX XXXXXXXXX
(the "Principal Shareholder")
OF THE FIRST PART
AND:
MDK SPORTS & ENTERTAINMENT INC.,
-------------------------------
a Delaware corporation
("MDK Sports")
OF THE SECOND PART
AND:
IMAGE INNOVATIONS HOLDINGS INC.,
-------------------------------
a Nevada corporation
("Image Innovations")
OF THE THIRD PART
AND:
IMAGE INNOVATIONS SPORTS & ENTERTAINMENT INC.,
---------------------------------------------
a Delaware corporation
("Image Sports")
OF THE FOURTH PART
WHEREAS:
A. MDK Sports is the legal and beneficial owner of all inventory, personal
property and material contracts necessary for the celebrity image memorabilia
business carried on by MDK Sports;
B. Image Sports has agreed to acquire all inventory, personal property and
material contracts necessary for the celebrity image memorabilia business
carried on by MDK Sports in consideration of the delivery to MDK Sports of
shares of the common stock of Image Innovations;
C. Image Innovations has agreed to issue the shares of common stock of Image
Innovations necessary to enable Image Sports to acquire all inventory, personal
property and material contracts necessary for the celebrity image memorabilia
business carried on by MDK Sports;
D. The Boards of Directors of each of Image Innovations, Image Sports and MDK
Sports have approved and adopted this Agreement;
E. The Principal Shareholder is a principal of MDK Sports and joins in the
execution of this Agreement in order to provide certain representations,
warranties and covenants to Image Innovations and Image Sports; and
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F. The parties previously entered into a merger agreement dated March 19, 2004
for the merger of MDK Sports and Image Sports, which merger agreement has been
terminated by agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of covenants and
agreements set forth herein and of the sum of $1.00 paid by each party to the
other, the receipt of which is hereby acknowledged, the parties hereto agree
each with the other as follows:
ARTICLE 1.
DEFINITIONS
1.1 Definitions. The following terms have the respective meanings
specified in this Article, unless the context indicates otherwise.
(a) "Agreement" shall mean this Agreement, and all the exhibits,
schedules and other documents attached to or referred to in the
Agreement, and all amendments and supplements, if any, to this
Agreement;
(b) "Assets" shall mean the Inventory, the Personal Property and the
Material Contracts;
(c) "Exchange Act" shall mean the United States Securities Exchange Act
of 1934, as amended;
(d) "Inventory" shall mean all inventory of MDK Sports as set forth in
Disclosure Schedule 3.11 attached hereto;
(e) "Material Contracts" shall mean all material contracts to which MDK
Sports is party as set forth in Disclosure Schedule 3.15 attached
hereto;
(f) "Personal Property" shall mean all personal property of MDK Sports
as set forth in Disclosure Schedule 3.10 attached hereto;
(g) "SEC" shall mean the Securities and Exchange Commission;
(h) "Securities Act" shall mean the United States Securities Act of
1933, as amended; and
1.2 Schedules. The following schedules are attached to and form part of
this Agreement:
Disclosure Schedule 3.3 - List of Shareholders of MDK Sports
Disclosure Schedule 3.7 - List of Liabilities
Disclosure Schedule 3.10 - Personal Property
Disclosure Schedule 3.11 - List of Inventory
Disclosure Schedule 3.12 - Employees and Consultants
Disclosure Schedule 3.14 - Leases
Disclosure Schedule 3.15 - Material Contracts
1.3 Currency. All dollar amounts referred to in this Agreement are in
United States funds, unless expressly stated otherwise.
ARTICLE 2.
THE ASSET PURCHASE
2.1 The Asset Purchase. MDK Sports hereby agrees to sell, transfer and
assign the Assets to Image Sports free and clear of all liens, charges,
encumbrances and securities interests and Image Innovations agrees to purchase
the Assets free and clear of all liens, charges, encumbrances and securities
interests, each on the terms and subject to the conditions of this Agreement.
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2.2 Closing. As soon as practicable following the satisfaction or waiver
of the conditions set forth in Section 6 of this Agreement, and provided that
this Agreement has not been terminated pursuant to Section 9, the parties to
this Agreement will hold a closing (the "Closing") for the purpose of confirming
the purchase and sale of the Assets at a time and date mutually agreed upon by
the parties. Unless otherwise agreed by the parties, the Closing will take place
at the offices of the lawyers for Image Innovations or at such other location as
agreed to by the parties. The date on which the Closing actually occurs is
referred to as the "Closing Date." At the Closing, the parties will execute and
exchange all documents, certificates and instruments contemplated by this
Agreement. The parties agree to use commercially reasonable efforts and all due
diligence to cause the Closing to be consummated on or before March 5, 2005
unless such date is extended by the mutual agreement of the parties.
2.3 Directors and Officers. The directors and officers of Image Sports
upon Closing will be the following persons: Xxxxx Xxxxxx, Director and CEO,
Xxxxxx Xxxxxxxx, Director and CFO and Xxxxxxx Xxxxxxxxx, Director and COO.
2.4 Consideration. As consideration of the sale, transfer and assignment
of the Assets by MDK Sports to Image Sports, Image Sports will deliver to MDK
Sports an aggregate of 4,000,000 shares of Image Innovations Common Stock on
Closing. All certificates representing the shares of Image Innovations Common
Stock issued on Closing will be endorsed with the following legend pursuant to
the Securities Act in order to reflect that the fact that the shares of Image
Innovations Common Stock will be issued to MDK Sports pursuant to exemptions
from the registration requirements of the Securities Act:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AND HAVE
BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT. SUCH SECURITIES MAY NOT BE REOFFERED FOR
SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION UNDER THE ACT."
2.5 Additional Shares of Image Innovations Common Stock. Image Sports
agrees to deliver to MDK Sports the following shares of Image Innovations Stock
upon achievement of the milestones set forth below, provided that no shares will
be issuable in the event that the milestone is not achieved for whatever reason:
(a) an aggregate of 2,500,000 shares of Image Innovations Common Stock
will be issued to MDK Sports in the event that each of the
conditions listed below are met:
(i) The trademark License Agreement made on the 25th day of June
2003, by and among Xxxxx Corporation d/b/a Xxxxx Racing and
Phizer Inc. and Authentic Legends is transferred to Image
Sports;
(ii) The Authentic Legends Affiliations Agreement by and between
Millennium International Sports and Entertainment, LLC and
Xxxxx Xxxxxxxx dated 5th day of November, 2003 whereby Xxxxx
Xxxxxxxx is to create a unique original work of art on canvas
using the likeness of Xxxx Xxxxxx is transferred to Image
Sports; and
(b) an aggregate of 1,500,000 shares of Image Innovations Common Stock
will be issued to MDK Sports in the event that a Trademark License
Agreement is made by and among Xxxx Xxxxxxx'x Race team and Xxxx
Xxxxxxx'x Sponsor and Image Sports.
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ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF MDK SPORTS AND
THE PRINCIPAL SHAREHOLDER
MDK Sports and the Principal Shareholder each jointly and severally
represent and warrant to Image Innovations, and acknowledge that Image
Innovations are relying upon such representations and warranties, in connection
with the execution, delivery and performance of this Agreement, notwithstanding
any investigation made by or on behalf of Image Innovations, as follows:
3.1 Organization and Good Standing. MDK Sports is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
to carry on its business as now being conducted. MDK Sports is duly qualified to
do business and is in good standing as a foreign corporation in each of the
jurisdictions in which it owns property, leases property, does business, or is
otherwise required to do so, where the failure to be so qualified would have a
material adverse effect on the business of MDK Sports taken as a whole.
3.2 Authority. MDK Sports has all requisite corporate power and authority
to execute and deliver this Agreement and any other document contemplated by
this Agreement to transfer the Assets to Image Sports (collectively, the "MDK
Sports Transfer Documents") to be signed by MDK Sports and to perform its
obligations thereunder and to consummate the sale of the Assets. The execution
and delivery of each of the MDK Sports Transfer Documents by MDK Sports and the
consummation of the sale of the Assets have been duly authorized by its Board of
Directors and by all of the shareholders of MDK Sports. No other corporate or
shareholder proceedings on the part of MDK Sports are necessary to authorize
such documents or to consummate the sale of the Assets. This Agreement has been,
and the other MDK Sports Transfer Documents when executed and delivered by MDK
Sports as contemplated by this Agreement will be, duly executed and delivered by
MDK Sports and this Agreement is, and the other MDK Sports Transfer Documents
when executed and delivered by MDK Sports as contemplated hereby will be, the
valid and binding obligation of MDK Sports enforceable in accordance with their
respective terms, except (1) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (2) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (3) as limited by public policy.
3.3 Capitalization of MDK Sports. The entire authorized capital stock and
other equity securities of MDK Sports consists of 1,500 no par value shares of
MDK Sports Common Stock (the "MDK Sports Common Stock"). There are 1,000 shares
of MDK Sports Common Stock issued and outstanding as of the date of this
Agreement, all of which are owned by the Shareholders in the amounts set forth
in Disclosure Schedule 3.3. There are no outstanding options, warrants,
subscriptions, conversion rights, or other rights, agreements, or commitments
obligating MDK Sports to issue any additional shares of MDK Sports Common Stock,
or any other securities convertible into, exchangeable for, or evidencing the
right to subscribe for or acquire from MDK Sports any shares of MDK Sports
Common Stock.
3.4 Subsidiaries. MDK Sports does not have any subsidiaries.
3.5 Actions and Proceedings. There is no claim, charge, arbitration,
grievance, action, suit, investigation or proceeding by or before any court,
arbiter, administrative agency or other governmental authority now pending or,
to the best knowledge of MDK Sports or the Principal Shareholder, threatened
against MDK Sports or which involves any of the business, or the properties or
assets of MDK Sports.
3.6 Compliance. MDK Sports has operated in material compliance with all
laws, rules, statutes, ordinances, orders and regulations applicable to its
business. MDK Sports has not received any notice of any violation thereof, nor
is MDK Sports aware of any valid basis therefore.
3.7 Financial Representations. Except as set forth in Disclosure Schedule
3.7, MDK Sports does not have any liabilities or obligations either direct or
indirect, matured or unmatured, absolute, contingent or otherwise. For purposes
of this Agreement, the term "liabilities" includes, any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost,
expense, obligation or responsibility, fixed or unfixed, known or unknown,
asserted xxxxxx or inchoate, liquidated or unliquidated, secured or unsecured.
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3.8 Tax Matters. MDK Sports have paid all taxes of any nature required to
be paid and have timely filed all tax returns which are required to be filed.
3.9 Absence of Changes. Except as set forth in Disclosure Schedule 3.7,
MDK Sports has not:
(a) incurred any liabilities;
(b) sold, encumbered, assigned or transferred any of its assets;
(c) created, incurred, assumed or guaranteed any indebtedness for money
borrowed, or mortgaged, pledged or subjected any of the assets or
properties of MDK Sports to any mortgage, lien, pledge, security
interest, conditional sales contract or other encumbrance of any
nature whatsoever;
(d) declared, set aside or paid any dividend;
(e) entered into any agreement or contract; or
(f) agreed, whether in writing or orally, to do any of the foregoing.
3.10 Personal Property. Disclosure Schedule 3.10 contains a list of all
material equipment, furniture, fixtures and other tangible personal property and
assets owned or leased by MDK Sports. Except as disclosed on Disclosure Schedule
3.10, MDK Sports possesses all property and items necessary for the continued
operation of the business of MDK Sports as presently conducted. All of such
items are in good operating condition (normal wear and tear excepted), and are
reasonably fit for the purposes for which such item is presently used. No
material equipment, furniture, fixtures and other tangible personal property and
assets owned or leased by MDK Sports is subject to any mortgage, lien, pledge,
security interest, conditional sales contract or other encumbrance of any nature
whatsoever
3.11 Inventory. Disclosure Schedule 3.11 contains a list of all inventory
owned by MDK Sports. All such inventory is in good condition and is fit for
re-sale without discount. All inventory listed in Disclosure Schedule 3.11 is
owned by MDK Sports free and clear of any mortgage, lien, pledge, security
interest, conditional sales contract or other encumbrance of any nature
whatsoever
3.12 Employees and Consultants. Disclosure Schedule 3.12 lists the name,
address, date of hire, title or position, compensation and benefits of each
employee or consultant of MDK Sports. All employees and consultants have been
paid all salaries, wages, income and any other sum due and owing to them by MDK
Sports as at the end of the most recent completed pay period.
3.13 Benefit Plans. MDK Sports has no Employee Benefit Plans within the
meaning of the Employee Retirement Income Security Act of 1974, as amended, and
the rules and regulations promulgated thereunder.
3.14 Real Property. MDK Sports does not own any real property. Disclosure
Schedule 3.14 lists all leases, subleases or other real property interests
(collectively, "Leases") to which MDK Sports is a party or bound. Each of the
Leases are legal, valid, binding, enforceable and in full force and effect in
all material respects. All rental and other payments required to be paid by MDK
Sports pursuant to any such Leases have been duly paid and no event has occurred
which, upon the passing of time, the giving of notice, or both, would constitute
a breach or default by any party under any of the Leases. The Leases will
continue to be legal, valid, binding, enforceable and in full force and effect
on identical terms following the Closing Date. MDK Sports has not assigned,
transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in
the Leases or the leasehold property pursuant thereto. MDK Sports has delivered
a true and complete copy of each of the Leases to Image Innovations.
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3.15 Material Contracts and Transactions. Disclosure Schedule 3.15
contains a list of all material contracts, agreements, licenses, permits,
arrangements, commitments, instruments, understandings or contracts, whether
written or oral, express or implied, contingent, fixed or otherwise, to which
MDK Sports is a party (collectively, the "Contracts"). The Contracts constitute
all contracts, agreements, licenses, permits and agreements necessary for the
conduct of the business of MDK Sports as carried out to the date of this
Agreement and as represented to Image Innovations. Each Contract is in full
force and effect, and there exists no material breach or violation of or default
by MDK Sports under any Contract nor by any other party to a Contract, or any
event that with notice or the lapse of time, or both, will create a material
breach or violation thereof or default under any Contract by MDK Sports or by
any other party to a Contract. The continuation, validity, and effectiveness of
each Contract will in no way be affected by the consummation of the transactions
contemplated by this Agreement. Except as listed on Disclosure Schedule 3.15,
there exists no actual or threatened termination, cancellation, or limitation
of, or any amendment, modification, or change to any Contract. A true, correct
and complete copy (and if oral, a description of material terms) of each
Contract, as amended to date, has been furnished to Image Innovations.
3.16 Certain Transactions. MDK Sports is not indebted, directly or
indirectly, to any of its officers, directors or shareholders or to their
respective spouses or children, in any amount whatsoever; none of said officers,
directors or shareholders, or any members of their immediate families, are
indebted to MDK Sports or have any direct or indirect ownership interest in any
firm or corporation with which MDK Sports has a business relationship, or any
firm or corporation that competes with MDK Sports. MDK Sports is not a guarantor
or indemnitor of any indebtedness of any other person, firm or corporation.
3.17 No Brokers. MDK Sports has not incurred any obligation or liability
to any party for any brokerage fees, agent's commissions, or finder's fees in
connection with the purchase and sale of the Assets contemplated by this
Agreement for which Image Innovations would be responsible.
3.18 Minute Books. The minute books of MDK Sports contain a complete
summary of all meetings of directors and shareholders since the time of
incorporation of such entity and reflect all transactions referred to in such
minutes accurately in all material respects.
3.19 Completeness of Disclosure. No representation or warranty by MDK
Sports in this Agreement nor any certificate, schedule, statement, document or
instrument furnished or to be furnished to Image Innovations pursuant hereto
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact required to be stated herein or therein or
necessary to make any statement herein or therein not materially misleading.
ARTICLE 4.
INVESTMENT COVENANTS, REPRESENTATIONS AND WARRANTIES
OF MDK SPORTS
MDK Sports covenants with and represents and warrants to Image Innovations
as follows, and acknowledges that Image Innovations is relying upon such
covenants, representations and warranties in connection with the issuance of
shares of Image Innovations Common Stock to MDK Sports, as follows:
4.1 MDK Sports is an investor in securities of companies in the
development stage and acknowledges that it is able to fend for itself, can bear
the economic risk of its investment, and has such knowledge and experience in
financial or business matters such that it is capable of evaluating the merits
and risks of the investment in the Image Innovations Common Stock.
4.2 MDK Sports believes it has received all the information MDK Sports
considers necessary or appropriate for deciding whether to execute this
Agreement, including a copy of the Image Innovations SEC Documents. MDK Sports
further represents that MDK Sports has had an opportunity to ask questions and
receive answers from the directors and officers of Image Innovations regarding
the terms and conditions of this Agreement and the business, properties,
prospects and financial condition of Image Innovations. MDK Sports has had full
opportunity to discuss this information with MDK Sports' legal and financial
advisers prior to execution of this Agreement.
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4.3 MDK Sports acknowledges that this Agreement has not been reviewed by
the SEC and that the shares of Image Innovations Common Stock will be issued
pursuant to an exemption from registration under the Securities Act.
4.4 MDK Sports understands that the shares of Image Innovations Common
Stock they will be issued will be characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired in a transaction
not involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the
Securities Act only in certain limited circumstances. In this connection, MDK
Sports represents that MDK Sports is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.
4.5 The Image Innovations Common Stock will be acquired by MDK Sports for
investment for MDK Sports's own account, not as a nominee or agent, and not with
a view to the resale or distribution of any part thereof, and that MDK Sports
has no present intention of selling, granting any participation in, or otherwise
distributing the same. MDK Sportss does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
share of Image Innovations Common Stock to be issued on Closing.
4.6 MDK Sports is an "Accredited Investor" as defined by Rule 501 of
Regulation D of the 1933 Act.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF
IMAGE INNOVATIONS
Image Innovations and Image Sports jointly and severally represent and
warrant to MDK Sports and acknowledge that MDK Sports is relying upon such
representations and warranties in connection with the execution, delivery and
performance of this Agreement, notwithstanding any investigation made by or on
behalf of MDK Sports, as follows:
5.1 Organization and Good Standing. Image Innovations and Image Sports are
each duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and have all requisite corporate power and
authority to own, lease and to carry on its respective businesses as now being
conducted. Image Innovations is duly qualified to do business and is in good
standing as foreign corporations in each of the jurisdictions in which it owns
property, leases property, does business, or is otherwise required to do so,
where the failure to be so qualified would have a material adverse effect on the
businesses, operations, or financial condition of Image Innovations. Image
Sports has not carried on any business or acquired any assets or incurred any
liabilities since its incorporation, other than by reason of execution of this
Agreement.
5.2 Authority. Image Innovations and Image Sports have all requisite
corporate power and authority to execute and deliver this Agreement and any
other document contemplated by this Agreement (collectively, the "Image
Innovations Documents") to be signed by Image Innovations and Image Sports and
to perform their obligations thereunder and to consummate the purchase of the
Assets. The execution and delivery of each of the Image Innovations Documents by
Image Innovations and Image Sports and the consummation by Image Innovations and
Image Sports of the purchase of the Assets have been duly authorized by their
respective Board of Directors and no other corporate or shareholder proceedings
on the part of Image Innovations or Image Sports are necessary to authorize such
documents or to consummate the purchase of the Assets. This Agreement has been,
and the other Image Innovations Documents when executed and delivered by Image
Innovations and Image Sports as contemplated by this Agreement will be, duly
executed and delivered by Image Innovations and Image Sports and this Agreement
is, and the other Image Innovations Documents when executed and delivered by
Image Innovations and Image Sports, as contemplated hereby will be, the valid
Page 7 of 16
and binding obligations of Image Innovations and Image Sports enforceable in
accordance with their respective terms, except (1) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, (2) as limited
by laws relating to the availability of specific performance, injunctive relief,
or other equitable remedies, and (3) as limited by public policy.
5.3 Capitalization of Image Innovations. The entire authorized capital
stock and other equity securities of Image Innovations ("Image Innovations
Stock") consists of 50,000,000 shares of common stock, par value $0.001 ("Image
Innovations Common Stock"). There are 19,370,000 shares of Image Innovations
common stock and no shares of Image Innovations Preferred Stock issued and
outstanding as of the date of this Agreement. There are share purchase warrants
to purchase 1,200,000 shares of Image Innovations Stock outstanding. There are
incentive stock options to purchase 1,000,000 shares of Image Innovations Stock
outstanding. Other than as set forth in this Section 5.3, there are no
outstanding options, warrants, subscriptions, phantom shares, conversion rights,
or other rights, agreements, or commitments obligating Image Innovations to
issue any additional shares of Image Innovations Stock, or any other securities
convertible into, exchangeable for, or evidencing the right to subscribe for or
acquire from Image Innovations any shares of Image Innovations Stock.
5.4 Capitalization of Image Sports. The entire authorized capital stock
and other equity securities of Image Sports ("Image Sports Stock") consists of
1,500 shares of common stock, par value $0.001 ("Image Sports Common Stock").
There are 1,500 shares of Image Sports common stock issued and outstanding as of
the date of this Agreement. There are no outstanding options, warrants,
subscriptions, phantom shares, conversion rights, or other rights, agreements,
or commitments obligating Image Sports to issue any additional shares of Image
Sports Stock, or any other securities convertible into, exchangeable for, or
evidencing the right to subscribe for or acquire from Image Innovations any
shares of Image Sports Stock.
5.5 Validity of Image Innovations Common Stock Issuable upon Closing. The
shares of Image Innovations Common Stock to be issued to the Shareholders upon
completion of the purchase of the Assets in accordance with this Agreement will,
upon issuance, have been duly and validly authorized and, when so issued in
accordance with the terms of this Agreement, will be duly and validly issued,
fully paid and non-assessable.
5.6 Actions and Proceedings. There is no claim, charge, arbitration,
grievance, action, suit, investigation or proceeding by or before any court,
arbiter, administrative agency or other governmental authority now pending or,
to the best knowledge of Image Innovations or Image Sports, threatened against
Image Innovations or Image Sports which involves any of the business, or the
properties or assets of Image Innovations or Image Sports that, if adversely
resolved or determined, would have a material adverse effect on the business,
operations, assets, properties, prospects or conditions of Image Innovations or
Image Sports taken as a whole. There is no reasonable basis for any claim or
action that, based upon the likelihood of its being asserted and its success if
asserted, would have such a material adverse effect.
5.7 SEC Filings. Image Innovations has furnished or made available to MDK
Sports and the Shareholders a true and complete copy of each report, schedule,
registration statement and proxy statement filed by Image Innovations with the
SEC since the inception of Image Innovations (as such documents have since the
time of their filing been amended, the "Image Innovations SEC Documents"). Image
Innovations has timely filed with the SEC all documents required to have been
filed pursuant to the Securities Act and the Exchange Act. As of their
respective dates, Image Innovations SEC Documents complied in all material
respects with the requirements of the Securities Act, or the Exchange Act, as
the case may be, and the rules and regulations of the SEC thereunder applicable
to such Image Innovations SEC Documents, and none of Image Innovations SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
5.8 Absence of Certain Changes or Events. Except as and to the extent
disclosed in the Image Innovations SEC Documents and as contemplated by this
Agreement, there has not been any material adverse effect to the business,
operations or financial conditions of Image Innovations.
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ARTICLE 6.
CLOSING CONDITIONS
6.1 Conditions Precedent to Closing by Image Innovations and Image Sports.
The obligations of Image Innovations and Image Sports to consummate the purchase
of the Assets is subject to the satisfaction of the conditions set forth below,
unless any such condition is waived by Image Innovations and Image Sports at the
Closing. The Closing of the purchase of the Assets contemplated by this
Agreement will be deemed to mean a waiver of all conditions to Closing. These
conditions of closing are for the benefit of Image Innovations and Image Sports
and may be waived by Image Innovations and Image Sports in their discretion.
(a) Representations and Warranties. The representations and warranties
of MDK Sports and the Principal Shareholder set forth in this
Agreement will be true, correct and complete in all respects as of
the Closing Date, as though made on and as of the Closing Date and
MDK Sports and the Principal Shareholder will have delivered to
Image Innovations a certificate dated as of the Closing Date, to the
effect that the representations and warranties made by MDK Sports
and the Principal Shareholder in this Agreement are true and
correct.
(b) Performance. All of the covenants and obligations that MDK Sports
and the Principal Shareholder are required to perform or to comply
with pursuant to this Agreement at or prior to the Closing must have
been performed and complied with in all material respects.
(c) Closing Documents. This Agreement and all other MDK Sports Transfer
Documents necessary or reasonably required to consummate the sale of
the Assets to Image Sports, all in form and substance reasonably
satisfactory to Image Innovations, will have been executed and
delivered to Image Innovations.
(d) Third Party Consents. MDK Sports will have received duly executed
copies of all third-party consents and approvals necessary to
transfer the Assets to Image Sports, in form and substance
reasonably satisfactory to Image Innovations and Image Sports.
(e) Due Diligence Review. Image Innovations will be reasonably satisfied
in all respects with their due diligence investigation and review of
Image Innovations.
(f) Consultant Agreements. Xxxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxxx and
Xxxxxx Xxxxxxxxx will have entered into consulting agreements with
Innovation Sports in a form satisfactory to Image Innovations.
6.2 Conditions Precedent to Closing by MDK Sports. The obligation of MDK
Sports to consummate the sale of the Assets is subject to the satisfaction of
the conditions set forth below, unless such condition is waived by MDK Sports at
the Closing. The Closing of the purchase and sale of the Assets will be deemed
to mean a waiver of all conditions to Closing. These conditions precedent are
for the benefit of MDK Sports and may be waived by MDK Sports in its discretion.
(a) Representations and Warranties. The representations and warranties
of Image Innovations and Image Sports set forth in this Agreement
will be true, correct and complete in all respects as of the Closing
Date, as though made on and as of the Closing Date and Image
Innovations and Image Sports will have delivered to MDK Sports a
certificate dated the Closing Date, to the effect that the
representations and warranties made by Image Innovations and Image
Sports in this Agreement are true and correct.
(b) Performance. All of the covenants and obligations that Image
Innovations and Image Sports are required to perform or to comply
with pursuant to this Agreement at or prior to the Closing must have
been performed and complied with in all material respects. Image
Innovations and Image Sports must have delivered each of the
documents required to be delivered by them pursuant to this
Agreement.
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(c) Closing Documents. This Agreement and all Image Innovations
Documents, all in form and substance reasonably satisfactory to MDK
Sports, will have been executed and delivered by Image Innovations
and Image Sports, as applicable.
(d) Change in Directors. Image Innovations will have delivered to MDK
Sports a signed resolution of the directors appointing Xxxxxxx
Xxxxxxxxx to the board of Image Innovations, such that the board of
directors of Image Innovations will consist of Xxxxx Xxxxxx,
Xxxxxxxx Xxxxxxx, Xxxxxxxxxxx Xxxxx, and Xxxxxxx Xxxxxxxxx on
closing.
ARTICLE 7.
ADDITIONAL COVENANTS OF THE PARTIES
7.1 Access and Investigation. Between the date of this Agreement and the
Closing Date, MDK Sports, on the one hand, and Image Innovations, on the other
hand, will, and will cause each of their respective representatives to, (a)
afford the other and its representatives full and free access to its personnel,
properties, contracts, books and records, and other documents and data, (b)
furnish the other and its representatives with copies of all such contracts,
books and records, and other existing documents and data as required by this
Agreement and as the other may otherwise reasonably request, and (c) furnish the
other and its representatives with such additional financial, operating, and
other data and information as the other may reasonably request.
7.2 Confidentiality. All information regarding the business of MDK Sports
including, without limitation, financial information that MDK Sports provides to
Image Innovations during Image Innovations' due diligence investigation of MDK
Sports will be kept in strict confidence by Image Innovations. Likewise, all
information regarding the business of Image Innovations including, without
limitation, financial information that Image Innovations provides to MDK Sports
during its due diligence investigation of Image Innovations will be kept in
strict confidence by MDK Sports.
7.3 Exclusivity. Until such time, if any, as this Agreement is terminated
pursuant to this Agreement, MDK Sports will not, directly or indirectly solicit,
initiate, entertain or accept any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits of
any unsolicited inquiries or proposals from, any person or entity (other than
Image Innovations) relating to any transaction involving the sale of the
business or assets (other than in the ordinary course of business), or any of
the capital stock of MDK Sports, or any merger, consolidation, business
combination, or similar transaction.
ARTICLE 8.
CLOSING
8.1 Closing. The Closing shall take place on the Closing Date at the
offices of the lawyers for Image Innovations or at such other location as agreed
to by the parties. Notwithstanding the location of the Closing, each party
agrees that the Closing may be completed by the exchange of undertakings between
the respective legal counsel for MDK Sports, the Principal Shareholder and Image
Innovations, provided such undertakings are satisfactory to each party's
respective legal counsel.
8.2 Closing Deliveries of MDK Sports and the Shareholders. At Closing, MDK
Sports and the Shareholders will deliver or cause to be delivered the following,
fully executed and in form and substance reasonably satisfactory to Image
Innovations:
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(a) copies of all resolutions and/or consent actions adopted by or on
behalf of the boards of directors and the shareholders of MDK Sports
evidencing approval of this Agreement and the sale of the Assets to
Image Sports;
(b) the certificates required by Section 6.1(a);
(c) a general conveyance of the Assets and all other deeds of
conveyance, bills of sale, transfer and assignments, duly executed,
in form and content satisfactory to the solicitors for Image
Innovations and Image Sports, appropriate to effectively vest good
and marketable title to the Assets in the name of Image Sports free
and clear of all encumbrances and immediately registerable in all
places where registration of such instruments is necessary or
desirable, including duly executed transfers of the Assets to Image
Sports, duly endorsed for transfer to Image Sports; and
(d) the consultant agreements contemplated by Section 6.1(f).
8.3 Closing Deliveries of Image Innovations. At Closing, Image Innovations
will deliver or cause to be delivered the following, fully executed and in form
and substance reasonably satisfactory to MDK Sports:
(a) copies of all resolutions and/or consent actions adopted by or on
behalf of the boards of directors of Image Innovations and the
shareholder and directors of Image Sports evidencing approval of
this Agreement and the purchase of the Assets;
(b) the certificates required by Section 6.2(a); and
(c) share certificates representing the 4,000,000 shares of Image
Innovations Common Stock to be issued upon consummation of the
purchase of the Assets in the name of MDK Sports endorsed with the
legend contemplated by this Agreement.
8.4 Post Closing Covenants Regarding Material Contracts. MDK Sports and
the Principal Shareholder will use their best efforts to ensure that Image
Sports will receive the full benefit of all contracts to which MDK Sports is
party and business relationships that MDK Sports has developed in connection
with its celebrity image memorabilia business.
ARTICLE 9.
TERMINATION
9.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date contemplated hereby by:
(a) mutual agreement of Image Innovations, Image Sports, the Principal
Shareholder and MDK Sports;
(b) Image Innovations, if there has been a breach by MDK Sports or the
Principal Shareholder of any material representation, warranty,
covenant or agreement set forth in this Agreement on the part of MDK
Sports or the Principal Shareholder that is not cured, to the
reasonable satisfaction of Image Innovations, within ten business
days after notice of such breach is given by Image Innovations
(except that no cure period will be provided for a breach by MDK
Sports or the Shareholders that by its nature cannot be cured);
(c) MDK Sports, if there has been a breach by Image Innovations of any
material representation, warranty, covenant or agreement set forth
in this Agreement on the part of Image Innovations that is not cured
by the breaching party, to the reasonable satisfaction of MDK
Page 11 of 16
Sports, within ten business days after notice of such breach is
given by MDK Sports (except that no cure period will be provided for
a breach by Image Innovations that by its nature cannot be cured);
(d) Image Innovations or MDK Sports, if the purchase and sale of the
Assets contemplated by this Agreement have not been consummated
prior to March 19, 2004, unless the parties agree to extend such
date; or
(e) Image Innovations or MDK Sports if any permanent injunction or other
order of a governmental entity of competent authority preventing the
consummation of the purchase and sale of the Assets contemplated by
this Agreement has become final and nonappealable.
9.2 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 9.1, this Agreement will be of no further force
or effect, provided, however, that no termination of this Agreement will relieve
any party of liability for any breaches of this Agreement that are based on a
wrongful refusal or failure to perform any obligations
ARTICLE 10.
MISCELLANEOUS PROVISIONS
10.1 Effectiveness of Representations; Survival. Each party is entitled to
rely on the representations, warranties and agreements of each of the other
parties and all such representation, warranties and agreement will be effective
regardless of any investigation that any party has undertaken or failed to
undertake. The representation, warranties and agreements will survive the
Closing Date and continue in full force and effect until two (2) years after the
Closing Date.
10.2 Further Assurances. Each of the parties hereto will cooperate with
the others and execute and deliver to the other parties hereto such other
instruments and documents and take such other actions as may be reasonably
requested from time to time by any other party hereto as necessary to carry out,
evidence, and confirm the intended purposes of this Agreement.
10.3 Amendment. This Agreement may not be amended except by an instrument
in writing signed by each of the parties.
10.4 Expenses. Each party to this Agreement will bear its respective
expenses incurred in connection with the preparation, execution, and performance
of this Agreement, including all fees and expenses of agents, representatives,
counsel, and accountants.
10.5 Entire Agreement. This Agreement, the exhibits, schedules attached
hereto and the other Closing Documents contain the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior
arrangements and understandings, both written and oral, expressed or implied,
with respect thereto. Any preceding correspondence or offers are expressly
superseded and terminated by this Agreement.
10.6 Notices. All notices and other communications required or permitted
under to this Agreement must be in writing and will be deemed given if sent by
personal delivery, faxed with electronic confirmation of delivery,
internationally-recognized express courier or registered or certified mail
(return receipt requested), postage prepaid, to the parties at the following
addresses (or at such other address for a party as will be specified by like
notice):
Page 12 of 16
If to MDK Sports and to the Shareholders:
MDK SPORTS & ENTERTAINMENT INC.
Attention: Xxxxxxx Xxxxxxxxx
XX Xxx 000
Xxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Image Innovations:
IMAGE INNOVATIONS HOLDINGS, INC.
Attention: Xxxxx Xxxxxx, President
Suite 1109, 000 Xxxx Xxxxx
Xxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy (which will not constitute notice) to:
Xxxxxxx X. Xxxxxx, Esq.
X'Xxxxx & Xxxxxx PLLC
Suite 1010, 000 Xxxxxx Xxxxxx,
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
All such notices and other communications will be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, (b) in the
case of a fax, when the party sending such fax has received electronic
confirmation of its delivery, (c) in the case of delivery by
internationally-recognized express courier, on the business day following
dispatch and (d) in the case of mailing, on the fifth business day following
mailing.
10.7 Headings. The headings contained in this Agreement are for
convenience purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
10.8 Benefits. This Agreement is and will only be construed as for the
benefit of or enforceable by those persons party to this Agreement.
10.9 Assignment. This Agreement may not be assigned (except by operation
of law) by any party without the consent of the other parties.
10.10 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Nevada applicable to contracts made and
to be performed therein.
10.11 Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party.
10.12 Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
10.13 Fax Execution. This Agreement may be executed by delivery of
executed signature pages by fax and such fax execution will be effective for all
purposes.
Page 13 of 16
10.14 Schedules and Exhibits. The schedules and exhibits are attached to
this Agreement and incorporated herein.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
SIGNED, SEALED AND DELIVERED
BY XXXXXXX XXXXXXXXX in the presence of:
----------------------------- ---------------------------
Signature of Witness XXXXXXX XXXXXXXXX
-----------------------------
Address of Witness
----------------------------
MDK SPORTS & ENTERTAINMENT INC.
a Delaware corporation by its authorized signatory:
-----------------------------
Signature of Authorized Signatory
-----------------------------
Name of Authorized Signatory
----------------------------
Position of Authorized Signatory
IMAGE INNOVATIONS HOLDINGS INC.
a Nevada corporation by its authorized signatory:
-----------------------------
Signature of Authorized Signatory
-----------------------------
Name of Authorized Signatory
-----------------------------
Position of Authorized Signatory
IMAGE INNOVATIONS SPORTS & ENTERTAINMENT INC.
a Nevada corporation by its authorized signatory:
-----------------------------
Signature of Authorized Signatory
-----------------------------
Name of Authorized Signatory
-----------------------------
Position of Authorized Signatory
