Exhibit 2
MERGER AGREEMENT
THIS AGREEMENT dated for reference the 18th day of September, 2002
AMONG:
MODERNGROVE ENTERTAINMENT, INC., a public company duly incorporated
pursuant to the laws of the State of Nevada, having offices at
Xxxxx 0, 0000 Xxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxx 00000 and trading
on the Over-The-Counter Bulletin Board Exchange ("OTC-BB") under
the symbol "MODG";
(hereinafter referred to as "MODG")
OF THE FIRST PART
AND:
IMMEDIATEK, INC., a private company duly incorporated pursuant to
the laws of the State of Texas, and having offices at Suite 1200,
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxxxxxxx, Xxxxx 00000;
(hereinafter referred to as "IMMEDIATEK")
OF THE SECOND PART
WHEREAS:
(A) Immediatek is a privately-held ESP company, the business of which is
more-fully described in the August 2002 Business Plan incorporated by
reference herein;
(B) MODG is a fully-reporting publicly-traded company in good standing and
current in all filings with the U. S. Securities and Exchange Commission
("SEC"); and,
(C) MODG and Immediatek have agreed to merge their respective businesses
according to the terms and conditions hereafter set out;
NOW THEREFORE THIS AGREEMENT WITNESSES that for and in consideration of
the sum of $10.00 now paid by MODG to Immediatek, and for other good and
valuable consideration, the receipt and sufficiency whereof is hereby
acknowledged by Immediatek, the parties agree as follows:
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ARTICLE 1 - INTERPRETATION
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1.1 Interpretation
In this Agreement, unless otherwise provided:
(a) "Business Day" means a day, other than a Saturday or a Sunday, on which
the Dallas, Texas branch of the United States Federal Reserve Bank is
open for the transaction of business;
(b) "ESP Business" means the business of Immediatek as further detailed in
that company's August 2002 business plan;
(c) "Preferred Shares" means the Class A Convertible Preferred Shares of
MODG, each share of which may, at the bearer's option, be immediately
converted into one hundred (100) Shares of MODG;
(d) "Shares" means common shares without par value in the share capital of
MODG;
(e) Any words defined elsewhere in the Agreement shall have the particular
meaning ascribed thereto;
(f) Words (including defined terms) using or importing the singular number
include the plural and vice versa and words importing one gender only
shall include all genders and words importing persons in this Agreement
shall include individuals, partnerships, corporations and any other
entities, legal or otherwise;
(f) The headings used in this Agreement are for ease of reference only and
shall not affect the meaning or the interpretation of this Agreement;
(g) All accounting terms not defined in this Agreement shall have the
meanings generally ascribed to them under GAAP; and,
(h) Unless otherwise stated, a reference herein to a numbered or lettered
ARTICLE, paragraph, clause or schedule refers to the ARTICLE, paragraph,
clause or schedule bearing that number or letter in this Agreement. A
reference to "this Agreement", "hereof", "hereunder", "herein" or words
of similar meaning, means this Agreement including the schedules hereto,
together with any amendments thereof.
1.2 CURRENCY
All dollar amounts expressed herein shall be currency of the United States of
America.
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ARTICLE 2 - REPRESENTATIONS AND WARRANTIES
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2.1 Mutual Representations and Warranties
MODG and Immediatek represents and warrants to one another and the other
parties hereto that:
(a) it is a body corporate duly incorporated or continued, organized and
validly subsisting under the laws of its incorporating or continued
jurisdiction; and,
(b) it has full power and authority to carry on its business and to enter
into this Agreement and any agreement or instrument referred to or
contemplated by this Agreement; and,
(c) all corporate authorizations have been obtained for the execution of this
Agreement and for the performance of its obligations hereunder; and,
(d) no proceedings are pending for and it is unaware of any basis for
the institution of any proceedings leading to its dissolution or
winding-up.
2.2 MODG's Representations and Warranties
MODG represents and warrants to Immediatek that:
(a) MODG is a Nevada corporation, and is in good standing with all applicable
Federal, State and local regulatory authorities;
(b) MODG is presently authorized by its Articles of Incorporation to issue up
to two hundred million (200,000,000) shares of common stock with no par
value, and up to five million (5,000,000) Series A Preferred Shares with a
par value of $0.001 each;
(c) There are currently 30,650,700 Common Shares and 0 Preferred Shares of
MODG stock which are issued and outstanding;
(d) Except as described above, there are no other equity or debt securities of
MODG, authorized or unissued;
(e) The shareholders of MODG have no preemptive rights;
(f) There are no proceedings pending for, nor is MODG aware of any basis for
the institution of any proceedings leading to the placing of MODG into
bankruptcy or subject to any other laws governing the affairs of insolvent
corporations;
(g) There are no outstanding agreements or options to acquire or purchase the
MODG corporate shell or any portion thereof;
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(h) There are no writs, injunctions, orders or judgments outstanding, no law
suits, claims proceedings or investigations pending or threatened,
relating to the officers, directors or business affairs of MODG, nor, to
the knowledge of MODG, is there any basis for such law suits, claims,
proceedings or investigations being instituted or filed;
(i) The treasury shares and the authorized but unissued shares of MODG are not
subject to any stock options and /or warrants, and MODG agrees that it
will not enter into any such warrants or options during the term of this
agreement or any extension thereof;
(j) The treasury shares and the authorized but unissued shares of MODG common
stock are free and clear of all defects, liens, encumbrances, and adverse
claims; and,
(k) The Board of Directors of MODG has adopted a binding resolution
authorizing MODG to enter into this agreement, and to perform all of the
acts contemplated herein.
2.3 IMMEDIATEK's Representations and Warranties
Immediatek represents and warrants to MODG that:
(a) Immediatek is the legal and beneficial owner of the ESP Business described
in the August 2002 Business Plan;
(b) Immediatek is a Texas corporation, and is in good standing with all
applicable Federal, State and local regulatory authorities;
(c) MODG is presently authorized by its Articles of Incorporation to issue up
to one million (1,000,000) shares of common stock with no par value;
(d) There are currently 1,000,000 common shares stock which are issued and
outstanding;
(e) Except as described above, there are no other equity or debt securities of
Immediatek authorized or unissued;
(f) There are no proceedings pending for, nor is Immediatek aware of any basis
for the institution of any proceedings leading to the placing of
Immediatek into bankruptcy or subject to any other laws governing the
affairs of insolvent corporations;
(g) There are no outstanding agreements or options to acquire or purchase the
Immmediatek ESP Business or any portion thereof;
(h) There are no writs, injunctions, orders or judgments outstanding, no law
suits, claims proceedings or investigations pending or threatened,
relating to the officers, directors or business affairs of Immediatek,
nor, to the knowledge of Immediatek, is there any basis for such law
suits, claims, proceedings or investigations being instituted or filed;
and,
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(i) The Board of Directors of Immediatek has adopted a binding resolution
authorizing Immediatek to enter into this agreement, and to perform all of
the acts contemplated herein.
2.4 Other Commitments & Representations by MODG
Until such time as Immediatek and MODG conclude this Agreement, the officers
and Directors of MODG shall maintain the Company in good standing with the SEC
and all applicable regulatory agencies by making the necessary filings and
other such corporate actions in timely fashion.
MODG acknowledges that it shall file this Agreement as part of an 8-K report
with the SEC within three (3) Business Days of Closing of this Transaction, and
that any and all charges associated with said filing shall be for its own
accounts.
MODG's current management team and Board of Directors shall provide their full
and complete assistance to Immediatek in preparation of the appropriate
materials and documents necessary to hold the next Annual General Shareholder's
Meeting of MODG. Such areas of assistance are understood to include, but are
not limited to: (1) preparation of MODG's Annual Report; (2) proxy statements
of business affairs requiring shareholder approval, including possible changes
in the Articles of Incorporation and By-Laws of MODG, and (3) initiating the
required procedures of calling a Special Shareholder's Meeting and / or Annual
General Meeting.
2.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties contained in this Article are conditions on
which the parties have relied in entering into this Agreement and shall survive
the execution hereof and the acquisition of any interest in the ESP Business by
MODG hereunder, and each party will indemnify and save the other harmless from
all loss, damage, costs, actions and suits arising out of or in connection with
any breach of any representation, warranty, covenant, agreement or condition
made by them and contained in this Agreement. A party may waive any of such
representations, warranties, covenants, agreements or conditions in whole or in
part at any time without prejudice of its right in respect of any other breach
of the same or any other representation, warranty, covenant, agreement or
condition.
This is the sole Agreement between the parties, and the terms and conditions of
this Agreement shall replace and supercede any and all other agreements between
the parties. This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The provisions and terms
of this Agreement shall be binding upon the successors, assigns and heirs of
all parties hereto.
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ARTICLE 3 - TERMS OF ACQUISITION & PAYMENT
3.1 Grant of Exclusive Right to Acquire
Subject as hereinafter provided, Immediatek hereby grants to MODG the sole and
exclusive right to acquire an undivided 100% right, title and interest in and
to all of Immediatek's ESP Business, free and clear of all charges,
encumbrances and claims save and except for those set forth in the audited
financial statements of Immediatek as of the date hereof.
3.2 Payment for ESP Business
Within three (3) Business Days of signing this Agreement, MODG shall issue to
Immediatek the sum of four million (4,000,000) Preferred Class A Shares in full
payment for the ESP Business of Immediatek (the "Payment").
The MODG Preferred Class A Shares shall have a conversion rate of one (1)
preferred share equals one hundred (100) MODG common shares.
Immediately upon signing this Agreement, MODG shall take such necessary steps
as to increase its authorized capital to a minimum of five hundred million
(500,000,000) common shares so as to facilitate Immediatek's immediate
conversion of the Preferred Class A Shares into MODG common shares.
Upon receipt of this payment, MODG's corporate officers and directors shall
immediately resign in favor of a new management team and Board of Directors as
shall be nominated / designated by Immediatek.
The new management team for the company shall include Xxxx Xxxx (CEO); Xxx
XxXxxx (President) and Xxx Xxxxx (Corporate Secretary).
The initial Immediatek nominees for Directors shall be: Xxxx Xxxx (Chairman of
the Board), Xxx XxXxxx and Xxx Xxxxx.
MODG representatives shall then deliver to MODG copies of all of the company's
past and present legal council copies of all books and records pertaining to
MODG (collectively, the " Corporate Data") in the possession of MODG.
MODG shall also render any and all other assistance required to Immediatek in
order to facilitate and orderly transition of the business enterprise.
Failure to make such Payment or provide a copies of the Corporate Data shall
constitute an irrevocable breach of this Agreement and render the provisions
thereof null and void, except that MODG shall be bound by any outstanding
obligations provided for herein.
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3.3 MODG Agrees to Make Filing For Name Change & New Trading Symbol
Immediately Prior to Closing
Immediately prior to closing of this Agreement, MODG and/or its counsel shall
execute all necessary paperwork required by the State of Nevada and other
Federal, State and/or local regulatory authorities (as well as MODG's current
transfer agent) necessary to change the name of the business from "ModernGroove
Entertainment, Inc." to "Immediatek, Inc." in addition to securing a new
trading symbol and CUSIP number.
3.4 Indemnification Provisions
MODG shall indemnify Immediatek against all claims, liabilities, and causes of
action (including, but not limited to, violations of federal or state
securities or environmental laws or regulations) and against all taxes,
penalties, or forfeiture which may be due or come due as a result of any act of
MODG prior to the date of this Agreement.
ARTICLE 4 - JURISDICTION & ARBITRATION
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4.1 Choice of Law
All matters arising out of this Agreement shall be determined and decided under
the laws, regulations and rules of the State of Texas in the jurisdiction in
which Immediatek is located.
4.2 Single Arbitrator
Any matter required or permitted to be referred to arbitration hereunder will
be determined by a single arbitrator to be appointed by the parties hereto.
4.3 Prior Notice
Any party may refer any such matter to arbitration by written notice to the
other party and, within ten (10) days after receipt of such notice, the parties
will agree on the appointment of an arbitrator.
No person will be appointed as an arbitrator hereunder unless such person
agrees in writing to act.
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4.4 No Agreement on the Arbitration
If the parties cannot agree on a single arbitrator as provided in this Section
4.4, or if the person appointed is unwilling or unable to act, either party may
submit the matter to arbitration before a single arbitrator in accordance with
the laws governing arbitration within the State of Texas, more specifically,
the rules and regulations of the American Arbitration Association.
4.5 Conduct of Arbitration
Except as specifically provided in this Article 4, an arbitration hereunder
shall be conducted in accordance with the rules and regulations of the American
Arbitration Association. The arbitrator shall fix a time and place within the
jurisdiction in which the Property is located for the purpose of hearing the
evidence and representations of the parties and he shall preside over the
arbitration and determine all questions of procedure not provided for under
such Act or this Article 4.
After hearing any evidence and representations that the parties may submit, the
arbitrator shall make an award and reduce the same to writing and deliver one
copy thereof to each of the parties. The decision of the arbitrator will be
made within forty-five (45) days after his appointment, subject to any
reasonable delay due to unforeseen circumstances. The expense of the
arbitration shall be paid as specified in the award. The award of the single
arbitrator shall be final and binding upon each of the parties.
ARTICLE 5 - DEFAULT AND TERMINATION
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5.1 Default
If at any time during the term of the Agreement, MODG fails to perform any
obligation required to be performed hereunder or is in breach of a warranty
given herein, Immediatek may terminate this Agreement, but only if:
(a) Immediatek Representative shall have first given to MODG a notice of
default containing particulars of the obligation which MODG has not performed,
or the warranty breached; and,
(b) MODG has not, within thirty (30) days following delivery of such notice
of default, cured such default or, if it is not reasonably possible to cure the
default within such thirty (30) days, commenced proceedings to cure such
default by appropriate payment or performance (MODG hereby agreeing that should
it so commence to cure any default it will prosecute the same to completion
without undue delay).
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Should MODG fail to comply with the provisions of sub-Section (b) above,
Immediatek may thereafter terminate this Agreement, and Immediatek shall hold
MODG liable for any obligations remaining as a result of this Agreement.
ARTICLE 6 - REGULATORY APPROVAL
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This Agreement and the obligations herein may be subject to, or require the
approval of, the OTC-BB, SEC or other Federal, State or local regulatory
authorities. Furthermore, Immediatek acknowledges that MODG may be required
by law to disclose to certain securities regulatory authorities certain
information with respect to the business and the identity of Immediatek and
its principals. Immediatek agrees that it shall promptly complete, sign and
deliver all documentation required by applicable securities laws and regulatory
policies in connection with this Agreement, executed as and when required.
ARTICLE 7 - GENERAL
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7.1 Time of the Essence
Time shall be of the essence of this Agreement.
7.2 Further Acts
Subject to the other Sections of this Agreement, each party shall make
reasonable efforts in good faith, at the request of any other party, and at the
expense of the requesting party, to execute and deliver any further documents
and do all acts and things as that party may reasonably require in order to
carry out the true intent and meaning of this Agreement.
7.3 No Partnership
Nothing in this Agreement or in the relationship of the parties hereto shall be
construed as in any sense creating a partnership among the parties or as giving
to any party any of the rights or subjecting any party to any of the creditors
of the other parties.
7.4 Parties of Interest
This Agreement shall endure to the benefit of and be binding upon the parties
and their respective personal representatives, administrators, heirs,
successors and permitted assigns.
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7.5 Governing Law
This Agreement shall be construed and governed exclusively by the regulations
and rules of the United States of America in the Federal jurisdiction in which
the Property is located, except where matters are expressed herein to be
subject to arbitration, the laws of the United States of America applicable
therein, and the Federal courts of the United States of America shall have
exclusive jurisdiction to hear and determine all disputes arising hereunder.
Each of the parties hereto irrevocably attorns to the jurisdiction of said
courts and consents to the commencement of proceedings in such courts.
This Section shall not be construed to affect the rights of a party to enforce
a judgement or award outside the United States of America, including the right
to record and enforce a judgement or award in any other jurisdiction or the
jurisdiction in which the Property is situated.
7.6 Survival
Each party hereby agrees that all representations, warranties and other
provisions contained in this Agreement shall forever survive the execution and
delivery of this Agreement.
7.7 Severability
The invalidity or unenforceability of any provision in this Agreement shall not
affect the validity or enforceability of any other provision or part of this
Agreement, and the parties hereby undertake to renegotiate in good faith any
such invalid or unenforceable provision, with a view to concluding valid and
enforceable arrangements as nearly as possible the same as those contained in
this Agreement.
7.8 Entire Agreement
The provisions contained in this Agreement constitute the entire agreement
between the parties with respect to the subject matter and supersede all prior
communications, proposals, representations and agreements, whether oral or
written, with respect to the subject matter of this Agreement.
7.9 Notices
All notices, demands and payments under this Agreement must be in writing and
sent by certified mail, or may be delivered personally or by facsimile
transmission to the addresses as first written above, or such other addresses
as
may from time to time be notified in writing by the parties followed by the
mailing of such notice by certified mail.
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7.10 Independent Legal Advice
The parties to this Agreement acknowledge and agree that they have had
opportunity to seek independent legal advice with respect to the subject matter
of this Agreement and, further, each of parties hereby represent and warrant to
the other party that they have sought independent legal advice or waived such
advice.
7.11 Waiver
Failure by any party hereto to insist in any instance upon the strict
performance of any one of the covenants contained herein shall not be construed
as a waiver or relinquishment of such covenant. No waiver by any party hereto
of any such covenant shall be deemed to have been made unless expressed in
writing and signed by the waiving party.
7.12 Amendments
No term or provision hereof may be amended except by an instrument in writing
signed by all of the parties to this Agreement.
7.13 Counterparts
This Agreement may be executed in several counterparts (including by fax), each
of which when so executed shall be deemed to be an original and shall have the
same force and effect as an original and such counterparts together shall
constitute one and the same instrument.
ARTICLE 8 - CLOSING CONTINGENT ON DUE DILIGENCE
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8.1 Due Diligence Period
Immediatek shall be granted a period of seven (7) days from the date of this
Agreement for completion of whatever due diligence it deems necessary into the
business affairs of MODG (the "Due Diligence Period"). MODG agrees to provide
Immediatek with copies of whatever information Immediatek may reasonably deem
necessary as part of its due diligence review, including copies of MODG's SEC
filings (including 10-Q & 10-K reports) and minutes of Board of Directors
meetings. Closing and completion of the business arrangements outlined in this
Agreement shall occur no later than seven (7) days from the date of this
Agreement following Immediatek's satisfactory completion of its due diligence.
Should anything be discovered by Immediatek that Immediatek deems to be a "fatal
flaw" during the Due Diligence Period, both parties agree that this Agreement
will immediately become null and void, and neither party shall be liable to the
other for any reason.
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IN WITNESS WHEREOF the corporate seals of Immediatek and MODG have been
hereunto affixed in the presence of their duly authorized officers in that
behalf.
ModernGroove Entertainment, Inc.
By:
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Name:
Position:
STATE OF UTAH )
) ss.
COUNTY OF )
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On this day of September, 2002, personally appeared before me, a
notary public,
, who acknowledged that he had executed the above instrument.
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Notary Public in and for said state
(SEAL)
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Agreed to and accepted by the undersigned on this 18 day of September, 2002:
Immediatek, Inc.
By: /s/ Xxxx Xxxx
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Name: Xxxx Xxxx
Position: CEO
STATE OF FLORIDA )
) ss.
COUNTY OF BROWARD )
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On this 18 day of September, 2002, personally appeared before me, a
notary public,
DL# 00000000
TEXAS , who acknowledged that he had executed the above instrument.
/s/ Xxxxx Xxxxx
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Notary Public in and for said state
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(SEAL) * Notary Public XXXXX XXXXX *
* (SEAL) MY COMMISSION # CC 799305 *
* State of EXPIRES: December 23, 2002 *
* Florida Bonded Thru Notary Public Underwriters*
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