EXHIBIT 2.1
EXECUTION COPY
SHARE EXCHANGE AGREEMENT
BY AND AMONG
SPORTS INFORMATION AND PUBLISHING CORP.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
HEMP TRUSTEES LIMITED (AS THE CORPORATE TRUSTEE OF THE HEMP EMPLOYEE BENEFIT
TRUST),
▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇▇▇ ▇▇▇▇▇▇▇,
WESTEK LIMITED
AND
THE HOLDERS OF SECURITIES OF
HALL EFFECT MEDICAL PRODUCTS, INC.
DATED AS OF JUNE 30, 2004
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EXHIBITS
EXHIBIT A Articles of Amendment to the Articles of Incorporation of
Sports Information
EXHIBIT B Articles of Exchange
EXHIBIT C Shareholders Agreement
EXHIBIT D INTENTIONALLY BLANK
EXHIBIT E Guaranty Agreement
EXHIBIT F Stock Option Plan
EXHIBIT G Stock Option Agreement with Management Group
EXHIBIT H INTENTIONALLY BLANK
EXHIBIT I Restated Articles of Incorporation
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SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement (this "AGREEMENT") is made and entered into as of
the 30th day of June, 2004, by and among (A) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and certain other
stockholders of Sports Information, as members of the "New Shareholder Group"
(hereinafter defined) who have executed this Agreement on the signature pages
hereof (collectively, the "NEW SHAREHOLDERS"); (B) Westek Limited, a company
organized and existing under the laws of England (the "WESTEK"); (C) Abacus
Trust Company Limited, a company organized and existing under the laws of the
Isle of Man (the "MAJORITY SHAREHOLDER"), in its capacity as trustee of the
Westek Limited Employee Trust (the "WESTEK EMPLOYEE TRUST"), (D) those
additional persons who have executed this Agreement on the signature pages
hereof under the heading "Minority Shareholders" (collectively, the "MINORITY
SHAREHOLDERS"); (E) ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇, individuals (collectively,
the "MANAGEMENT GROUP"); (F) SPORTS INFORMATION AND PUBLISHING CORP., a
corporation formed under the laws of the State of Colorado ("SPORTS
INFORMATION"), (G) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual (the "SPORTS INFORMATION
PRINCIPAL STOCKHOLDER") and (H) HEMP Trustees Limited, a company organized and
existing under the laws of England and Wales as corporate trustee of the HEMP
Employee Benefit Trust ("HEMP TL").
The New Shareholders, HEMP TL, the Majority Shareholder and the Minority
Shareholders are hereinafter collectively referred to as the "HEMP
SHAREHOLDERS". The HEMP Shareholders and the Management Group are collectively
sometimes referred to as the "HEMP SECURITY-HOLDERS". Sports Information, the
HEMP Security-holders and the Sports Information Principal Stockholder are
referred to herein individually as a "Party" and collectively as the "Parties."
PREAMBLE
WHEREAS, The HEMP Shareholders are the record and beneficial owners of
100% of the issued and outstanding capital stock of HALL EFFECT MEDICAL
PRODUCTS, INC., a corporation organized and existing under the laws of the State
of Delaware, United States of America ("HEMP");
WHEREAS, the HEMP TL holds 3,000,000 shares of HEMP Common Stock, as
herein after defined (the "HEMP TL SHARES"), and has undertaken to issue nil
cost options to acquire such 3,000,000 shares (the "HEMP TL OPTIONS") to the
members of the Management Group;
WHEREAS, Bridge Lenders (as hereinafter defined) have rights to convert
promissory notes for 750,000 shares of HEMP Common Stock (the "HEMP Bridge
Lenders' Stock").
WHEREAS, Sports Information has proposed to acquire HEMP pursuant to an
exchange transaction (the "EXCHANGE") whereby, pursuant to the terms and subject
to the conditions of this Agreement, all of the HEMP Shareholders shall exchange
100% of the issued and outstanding shares of HEMP common stock, $.001 par value
per share (the "HEMP COMMON STOCK") and 100% of the issued and outstanding
shares of HEMP preferred stock, $.001 par value per share (the "HEMP PREFERRED
STOCK," and collectively with the HEMP Common Stock, the "HEMP CAPITAL STOCK"),
for (a) 34,343,662 shares of 4% voting redeemable convertible shares of
preferred stock of Sports Information (the "SPORTS INFORMATION PREFERRED
STOCK"), and (b) 38,636,620 shares of common stock of Sports Information, par
value $.001 per share (the "SPORTS INFORMATION COMMON STOCK");
WHEREAS, pursuant to the terms and conditions of the Exchange and this
Agreement, HEMP TL shall exchange all of the HEMP TL Shares for 12,878,873
shares of Sports Information Common Stock (the "HEMP TL SPORTS INFORMATION
SHARES") and HEMP TL shall issue to the members of the Management Group options
entitling such Persons to acquire options over the HEMP TL Sports Information
Shares in satisfaction of the undertaking by HEMP TL (the "HEMP TL SPORTS
INFORMATION OPTIONS");
WHEREAS, Sports Information has agreed to issue 3,219,718 shares of
Sports Information Common Stock to the Bridge Lenders in settlement of the
existing promissory notes entitling the Bridge Lenders to convert outstanding
debt to 750,000 shares of HEMP Common Stock;
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WHEREAS, the obligation of the Parties to effect the Exchange is
subject to the conditions set forth in Article V hereof;
WHEREAS, the Parties intend that the Exchange qualify as a tax free
exchange transaction within the meaning of Section 351 of the Internal Revenue
Code of 1986, as amended (the "CODE"); and
WHEREAS, the Parties are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by the
provisions of Section 4(2) of the Securities Act of 1933, as amended (the
"SECURITIES ACT").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations and warranties contained herein, the Parties hereto,
intending to be legally bound, hereby agree as follows:
CERTAIN DEFINITIONS
In addition to the definitions contained in SCHEDULE 1 annexed hereto,
incorporated by reference herein and made a part hereof, as used in this
Agreement, the following additional terms shall have the meanings set forth
below:
"APPLICABLE LAW" means any domestic or foreign law, statute, regulation, rule,
policy, guideline or ordinance applicable to the businesses of the Parties, the
Exchange and/or the Parties.
"BRIDGE LENDERS" means the holders of promissory notes issued by the
Corporations totalling $500,000 entitling each holder to convert the outstanding
debt at a rate of 1.5 shares of HEMP Common Stock for each $1 owed.
"BUSINESS OF THE CORPORATIONS" means the invention, design, manufacture, sale,
licensing or otherwise exploiting products and devices used in medical and other
applications and incorporating the Hall Effect science and technologies.
"DOLLAR" and "$" means lawful money of the United States of America.
"GAAP" means generally accepted accounting principles in the United States of
America as promulgated by the American Institute of Certified Public Accountants
and the Financial Accounting Standards Board or any successor institutes
concerning the treatment of any accounting matter.
"EXCHANGE SECURITIES" means the collective reference to (a) 34,343,662 shares of
Sports Information Series A Preferred Stock, duly registered in the name of each
of the Majority Shareholder and the Minority Shareholders, all as specified on
Schedule 1.3(a) to this Agreement; (b) all 25,757,747 shares of Sports
Information Common Stock, duly registered in the name of each of the New
Shareholders, all as specified on Schedule 1.3(b) to this Agreement and (c) the
12,878,873 HEMP TL Sports Information Shares to be exchanged for HEMP TL Shares.
"FULLY-DILUTED HEMP SHARES" means, at any applicable point in time, the issued
and outstanding shares of HEMP Capital Stock, on a fully-diluted basis, after
giving effect to (a) all issued and outstanding shares of HEMP Common Stock, (b)
all issued and outstanding shares of HEMP Preferred Stock if any, (c) all shares
of HEMP Capital Stock issuable upon exercise of any outstanding options,
warrants or other rights to purchase HEMP Capital Stock, and/or (d) all shares
of HEMP Capital Stock issuable upon conversion of any outstanding notes,
preferred stock, or other securities convertible into or exchangeable for shares
of HEMP Capital Stock.
"FULLY-DILUTED SPORTS INFORMATION SHARES" means, at any applicable point in
time, the issued and outstanding Shares of Sports Information capital stock, on
a fully-diluted basis, after giving effect to (a) all issued and outstanding
Shares of Sports Information Common Stock, (b) all issued and outstanding shares
of Sports Information Preferred Stock if any, (c) all Shares of Sports
Information capital stock issuable upon exercise of any outstanding options,
warrants or other rights to purchase Sports Information capital stock, and/or
(d) all Shares of Sports Information capital stock issuable upon conversion of
any outstanding notes, preferred stock, or other securities convertible into or
exchangeable for Shares of Sports Information capital stock.
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"HEMP SHARES" means, at any applicable point in time, the issued and outstanding
shares of HEMP Common Stock and HEMP Preferred Stock.
"INTELLECTUAL PROPERTY" means all (i) patent and patent rights, trademarks and
trademark rights, trade names and trade name rights, copyrights and copyright
rights, service marks and service ▇▇▇▇ rights, and all pending applications for
and registration of the same; (ii) brand names, trade dress, business and
product names, logos and slogans, and (iii) proprietary technology, including
all know-how, trade secrets, quality control standards, reports (including test
reports), designs, processes, market research and other data, computer software
and programs (including source codes and related documentation), formulae,
inventions and other ideas, methodologies, and technical information, (iv)
claims of the owner of any intellectual property for infringement of its rights
by a third party, no matter when arising, and (v) other intellectual property.
"MATERIAL ADVERSE EFFECT" with respect to any entity or group of entities means
any event, change or effect that has or would have a materially adverse effect
on the financial condition, business or results of operations of such entity or
group of entities, when taken as a consolidated whole.
"PERSON" means any individual, corporation, partnership, trust or unincorporated
organization or a government or any agency or political subdivision thereof.
"SPORTS INFORMATION" refers to Sports Information and Publishing Corp., a
Colorado corporation and its successor InVitro Medical Devices, Inc., a Delaware
corporation unless the context indicates otherwise.
ARTICLE I
THE EXCHANGE
1.1 OWNERSHIP OF THE SHARES. The HEMP Preferred Stock are owned of
register and (with the exception of the Majority Shareholder, which holds the
relevant shares on trust for the Westek Limited Employee Trust) beneficially by
the Majority Shareholder and those Minority Shareholders listed on SECTION
1.1(a) TO THE DISCLOSURE SCHEDULE annexed hereto, and the HEMP Common Stock is
owned by the HEMP Shareholders as listed on SECTION 1.1(b) TO THE DISCLOSURE
SCHEDULE.
1.2 TRANSFER OF THE HEMP SHARES. Subject to the terms and conditions of
this Agreement, at the Closing, the HEMP Shareholders hereby agree to transfer,
convey, assign, set over and deliver ("TRANSFER") to Sports Information with
full title guarantee, and Sports Information shall acquire and accept from the
applicable HEMP Shareholders, all and not less than all of the HEMP Shares
respectively held by each of them, free and clear of all Encumbrances. Each of
the HEMP Shareholders do hereby waive all rights of pre-emption, other
restrictions on Transfer and rights of veto or otherwise, which have or may have
been conferred on any or all of them, or otherwise, in respect of the Transfer
of the HEMP Shares to Sports Information under this Agreement.
1.3 CONSIDERATION FOR TRANSFER OF THE HEMP SHARES AND HEMP MANAGEMENT
GROUP OPTIONS; ALLOCATION OF CONSIDERATION.
(a) At the Closing and in sole consideration for the Transfer
of the HEMP Preferred Stock, Sports Information shall deliver to the Majority
Shareholder and the Minority Shareholders an aggregate of 34,343,662 shares of
4% voting, convertible Series A preferred stock, $.001 par value per share, of
Sports Information (the "SPORTS INFORMATION SERIES A PREFERRED STOCK"). The
aggregate number of shares of Sports Information Series A Preferred Stock shall
be allocated amongst the Majority Shareholder and the Minority Shareholders in
the manner set forth on SCHEDULE 1.3(a) TO THE DISCLOSURE SCHEDULE annexed
hereto. The respective rights, privileges and designations of the Sports
Information Series A Preferred Stock are as set forth in the articles of
amendment to the Sports Information articles of incorporation annexed hereto as
EXHIBIT A and made a part hereof (the "SPORTS INFORMATION SERIES A PREFERRED
STOCK ARTICLES OF AMENDMENT").
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(b) At the Closing, and in sole consideration for the Transfer
of the HEMP Common Stock, Sports Information shall deliver to the New
Shareholders an aggregate of 25,757,747 shares of Sports Information Common
Stock and to HEMP TL an aggregate of 12,878,873 shares of Sports Information
Common Stock. The 25,757,747 shares of Sports Information Common Stock shall be
allocated amongst the New Shareholders in the manner set forth on SCHEDULE
1.3(b) TO THE DISCLOSURE SCHEDULE annexed hereto.
1.4 CAPITALIZATION OF SPORTS INFORMATION. At the Closing Sports
Information shall be authorized by its certificate of incorporation to issue an
aggregate of 50,000,000 shares of common stock, $.001 par value per share (the
"SPORTS INFORMATION COMMON STOCK") and an aggregate of 35,000,000 shares of
preferred stock, $.001 par value per share, containing such rights, designations
and privileges as the board of directors of Sports Information may from time to
time designate (the "SPORTS INFORMATION PREFERRED STOCK"). At Closing (a) an
aggregate of 34,343,662 shares of Sports Information Series A Preferred Stock
shall be allocated amongst the Majority Shareholder and the Minority
Shareholders in the manner set forth on SCHEDULE 1.3(a) TO THE DISCLOSURE
SCHEDULE annexed hereto, (b) an aggregate of 25,757,747 shares of Sports
Information Common Stock shall be issued to the New Shareholders described on
SCHEDULE 1.3(b) TO THE DISCLOSURE SCHEDULE annexed hereto, and (c) the HEMP TL
Sports Information Shares, constituting 12,878,873 shares of Sports Information
Common Stock, shall be issued to HEMP TL in exchange for the HEMP TL Shares.
1.5 RIGHTS AND PRIVILEGES OF SPORTS INFORMATION SERIES A PREFERRED
STOCK. The Sports Information Series A Preferred Stock shall:
(a) have a priority over all of the shares of Sports
Information Common Stock on liquidation or sale of Sports Information, at the
rate of $1.00 per share of Sports Information Series A Preferred Stock, or a
liquidation preference of $34,343,662 as to all shares of Sports Information
Series A Preferred Stock;
(b) pay an annual dividend (at the option of Sports
Information, either in cash or in additional shares of Sports Information Common
Stock), at an annual rate of 4% per annum;
(c) vote with Sports Information Common Stock on all matters
as to which shareholders of Sports Information are entitled to vote, on an "as
converted" basis, as though all outstanding shares of Sports Information Series
A Preferred Stock had been converted into Sports Information Common Stock
immediately prior to the taking of the record date for all stockholders entitled
to vote at any regular or special meeting of stockholders of Sports Information;
(d) be convertible at any time at the option of the holder
into Common Stock, at the rate of one share of Sports Information Common Stock
for each outstanding share of Sports Information Series A Preferred Stock at any
time commencing 15 months after the Closing Date provided that the shares of
Sports Information shall have traded at a price of $3.00 per share for at least
30 consecutive trading days and at anytime after 18 months after the Closing
Date;
(e) if fully converted into shares of Sports Information
Common Stock immediately upon issuance at Closing, would represent, in the
aggregate not less than 47% of the issued and outstanding shares of Sports
Information Common Stock issued to and committed for issuance to all members of
the Management Group, the New Shareholder Group and the HEMP Security-holders;
and
(f) contain such other rights, privileges and designations as
shall be set forth in the Sports Information Series A Preferred Stock Articles
of Amendment annexed hereto as EXHIBIT A and made a part hereof.
1.6 CLOSING AND EFFECTIVE TIME.
(a) The Closing of the Transfer of the Shares and the issuance
by Sports Information of the Consideration (the "CLOSING") shall take place at
the offices of ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ not later than five days after all of the conditions
to closing specified in this Agreement (other than those conditions requiring
the execution or delivery of a Document or the taking of some action at the
Closing) have been fulfilled or waived by the Party entitled to waive that
condition; provided, however, that (a) the Parties shall use their best efforts
to effect the Closing by July 31, 2004, and (b) the Closing may ▇▇▇▇
▇
place by facsimile or other means as may be mutually agreed upon in advance by
the Parties. The date on which the Closing is held is referred to in this
Agreement as the "CLOSING DATE."
(b) The effective time of the Exchange (the "EFFECTIVE TIME")
shall occur upon the filing with the Secretary of State of the State of Delaware
of Articles of Exchange (the "ARTICLES OF EXCHANGE") substantially in the form
of EXHIBIT B and executed in accordance with the applicable provisions of the
Colorado Revised Statutes, or at such later time as may be agreed to by Sports
Information and HEMP and specified in the Articles of Exchange. Provided that
this Agreement has not been terminated pursuant to Article VII, the Parties will
cause the Articles of Exchange to be filed as soon as practicable after the
Closing.
1.7 DELIVERIES AT CLOSING BY HEMP SECURITY-HOLDERS.
1.7.1 At the Closing, subject to the terms and conditions of
this Agreement, the HEMP Security-holders other than HEMP TL shall execute
and/or deliver (as applicable), or cause to be executed and/or delivered, to
Sports Information, the documents and instruments referred to in Section 1.7.1
(a) - (c) below:
(a) certificates representing all of the HEMP Shares other
than those held by HEMP TL, accompanied by duly executed stock transfer forms
transferring such HEMP Shares to Sports Information and otherwise in good
form for Transfer, or if any HEMP Share certificates have been lost or
destroyed, an indemnity from such HEMP Shareholder in form and content
approved by Sports Information or its counsel before execution of this
Agreement, including a power of attorney coupled with an interest in favour
of Sports Information entitling Sports Information to exercise all rights,
whether voting or otherwise, attaching to such HEMP Shares pending
registration of share transfers;
(b) a shareholders' agreement duly executed by each of the
HEMP Shareholders, the Management Group, the Sports Information Principal
Stockholder and Sports Information, substantially in the form of EXHIBIT C
attached hereto (the "SHAREHOLDERS AGREEMENT");
(c) such other Documents as may be reasonably requested by
Sports Information and approved in good faith by the HEMP Shareholders and
the Management Group and their respective counsel, that are necessary to
effect the Closing.
1.7.2 At the Closing, subject to the terms and conditions of
this Agreement, HEMP TL shall execute and/or deliver (as applicable), or cause
to be executed and delivered, to Sports Information a certificate representing
all of the HEMP TL Shares, accompanied by a duly executed stock transfer form
transferring the HEMP Shares to Sports Information or its nominee and otherwise
in good form for Transfer or, if the HEMP TL Share certificate shall have been
lost, or destroyed, an indemnity from HEMP TL in form and content satisfactory
to Sports Information and its counsel, including a power of attorney coupled
with an interest in favour of Sports Information entitling Sports Information to
exercise all rights of ownership, including but not limited to voting rights,
attaching to such HEMP TL Shares, pending registration of the share transfers.
1.8 DELIVERIES AT CLOSING By SPORTS INFORMATION. At the Closing,
subject to the terms and conditions of this Agreement, Sports Information shall
execute and deliver or cause to be executed and delivered to the HEMP
Shareholders and the Management Group (as applicable):
(a) certificates evidencing 34,343,662 shares of Sports
Information Series A Preferred Stock, duly registered in the name of each of the
Majority Shareholder and the Minority Shareholders, all as specified on Schedule
1.3(a) to this Agreement;
(b) certificates evidencing all 25,757,747 shares of Sports
Information Common Stock, duly registered in the name of each of the New
Shareholders, all as specified on Schedule 1.3(b) to this Agreement;
(c) certificates evidencing all HEMP TL 12,878,873 shares of
Sports Information Common Stock duly registered in the name of HEMP TL,
representing the HEMP TL Sports Information Shares;
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(d) a guaranty agreement, substantially in the form of EXHIBIT
E attached hereto, pursuant to which Sports Information shall unconditionally
and irrevocably guaranty the obligations of HEMP to the Majority Shareholder
under the Majority Shareholder Note (the "Guaranty Agreement");
(e) a stock option plan of Sports Information to be approved
by the Board of Directors and compensation committee of Sports Information under
which an aggregate of up to 21,434,788 shares of Sports Information Common Stock
(excluding the shares of Sports Information Common Stock held by HEMP TL
underlying the HEMP TL Sports Information Options) shall be reserved for
issuance to key employees of Sports Information and the Corporations, all in the
form of EXHIBIT F annexed hereto (the "SPORTS INFORMATION STOCK OPTION PLAN");
(f) Incentive Stock Options to purchase up to 4,829,577 shares
of Sports Information Common Stock issued to each of the members of Management
Group, to be approved by the Board of Directors and compensation committee of
Sports Information all upon the terms and subject to the conditions set forth in
EXHIBIT G attached hereto (the "MANAGEMENT GROUP INCENTIVE OPTIONS");
(g) evidence of satisfaction of obligations to the Bridge
Lenders to HEMP; and
(h) a copy of a filing receipt or certified copy of the Sports
Information Series A Preferred Stock Articles of Amendment from the Secretary of
State of Colorado, evidencing the filing and recordation of the Sports
Information Series A Preferred Stock Articles of Amendment; and
(i) such other Documents as may be reasonably requested by the
HEMP Security-holders and necessary to effect the Closing.
1.9 RESTRICTIONS ON RESALE
(a) THE EXCHANGE SECURITIES. The Exchange Securities will not
be registered under the Securities Act, or the securities laws of any state, and
cannot be transferred, hypothecated, sold or otherwise disposed of until; (i) a
registration statement with respect to such securities is declared effective
under the Securities Act, or (ii) Sports Information receives an opinion of
counsel for the stockholders, reasonably satisfactory to counsel for Sports
Information, that an exemption from the registration requirements of the
Securities Act is available.
The certificates representing the number of Exchange Securities for
which the HEMP Shares shall have been issued pursuant to this Agreement shall
contain a legend substantially as follows:
"THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL A
REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED EFFECTIVE UNDER
SUCH ACT, OR SPORTS INFORMATION RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER REASONABLY SATISFACTORY TO COUNSEL FOR SPORTS INFORMATION THAT
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS
AVAILABLE."
1.10 EXCHANGE OF CERTIFICATES
(a) After the Closing Date and pursuant to a customary letter
of transmittal or other instructional form provided by the Exchange Agent to the
HEMP Security-holders, the HEMP Security-holders shall be required to surrender
all their HEMP Shares to the Exchange Agent, and the HEMP Security-holders shall
be entitled upon such surrender to receive in exchange therefor certificates
representing the proportionate number of Exchange Securities into which the HEMP
Shares theretofore represented by the stock transfer forms so surrendered shall
have been exchanged pursuant to this Agreement. Until so surrendered, each
outstanding certificate or agreement which, prior to the Closing Date,
represented HEMP Shares shall be deemed for all corporate purposes, subject to
the further provisions of this Article II, to evidence the ownership of the
number of whole Exchange
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Securities for which such HEMP Shares have been so exchanged. No dividend
payable to holders of Exchange Securities of record as of any date subsequent to
the Closing Date shall be paid to the owner of any certificate which, prior to
the Closing Date, represented HEMP Shares, until such certificate or
certificates representing all the relevant HEMP Shares, together with a stock
transfer form, are surrendered as provided in this Article I or pursuant to
letters of transmittal or other instructions with respect to lost certificates
provided by the Exchange Agent.
(b) All Exchange Securities for which the HEMP Shares shall
have been exchanged pursuant to this Article II shall be deemed to have been
issued in full satisfaction of all rights pertaining to the HEMP Shares.
(c) All certificates representing HEMP Shares converted into
the right to receive Exchange Securities pursuant to this Article I shall be
furnished to Sports Information subsequent to delivery thereof to the Exchange
Agent pursuant to this Agreement.
(d) On the Closing Date, the stock transfer book of HEMP shall
be deemed to be closed and no transfer of HEMP Shares shall thereafter be
recorded thereon.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SPORTS INFORMATION
AND THE SPORTS INFORMATION PRINCIPAL STOCKHOLDERS
Except as set forth in the schedules to this Agreement, disclosure in
any one of which shall apply to any and all representations and warranties made
in this Agreement, and except as otherwise disclosed in writing to the HEMP
Security-holders and Sports Information and the Sports Information Principal
Stockholder hereby jointly and severally represent and warrant to the HEMP
Security-holders, as of the date of this Agreement and as of the Closing Date,
as follows:
SECTION 2.01 ORGANIZATION, STANDING AND POWER.
Sports Information is a company duly incorporated, validly existing and
in good standing under the laws of the State of Colorado and has corporate power
and authority to conduct its business as presently conducted by it and to enter
into and perform this Agreement and to carry out the transactions contemplated
by this Agreement. Sports Information is duly qualified to do business as a
foreign corporation doing business in each state in which it owns or leases real
property and where the failure to be so qualified and in good standing would
have a Material Adverse Effect on Sports Information or its business. Sports
Information does not have an ownership interest in any corporation, partnership
(general or limited), limited liability company or other entity, whether foreign
or domestic (collectively such ownership interests including capital stock).
SECTION 2.02 CAPITALIZATION.
(a) There are 60,000,000 shares of capital stock of Sports Information
authorized, consisting of 50,000,000 shares of common stock, $.001 par value per
share (the "SPORTS INFORMATION COMMON STOCK") and 10,000,000 shares of preferred
stock $.001 par value per share and as of the date of this Agreement, there are
5,020,000 shares of Sports Information Common Stock issued and outstanding.
(b) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ owns of record and beneficially 4,000,000 shares
of Sports Information Common Stock. The balance of the Sports Information Common
Stock issued and outstanding includes Sports Information Common Stock in the
public float and restricted Sports Information Common Stock. Except as disclosed
in Section 2.02(a) above, no Sports Information Common Stock has been reserved
for issuance to any Person, and there are no other outstanding rights, warrants,
options or agreements for the purchase of Sports Information Common Stock except
as provided in this Agreement. All outstanding shares of Sports Information
Common Stock are validly issued, fully paid, non-assessable, not subject to
pre-emptive rights and have been issued in compliance with all state and federal
securities laws or other Applicable Law.
(c) As at the date of this Agreement and on the Closing Date, the
Fully-Diluted Sports Information Shares shall be 17,240,000 shares of Common
Stock. After giving effect to the change of domicile of Sports
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Information and the related reverse stock split contemplated hereby, the
Fully-Diluted Sports Information Shares shall be 86,200,000 shares of Sports
Information Stock on the Closing Date of the Exchange.
SECTION 2.03 AUTHORITY FOR AGREEMENT.
The execution, delivery, and performance of this Agreement by Sports
Information has been duly authorized by all necessary corporate and shareholder
action, and this Agreement, upon its execution by the Parties, will constitute
the valid and binding obligation of Sports Information enforceable against it in
accordance with and subject to its terms, except as enforceability may be
affected by bankruptcy, insolvency or other laws of general application
affecting the enforcement of creditors' rights. The execution, delivery and
performance of this Agreement and compliance with its provisions by Sports
Information will not violate any provision of Applicable Law and will not
conflict with or result in any breach of any of the terms, conditions, or
provisions of, or constitute a default under (whether with or without notice or
lapse of time or both), Sports Information's Certificate of Incorporation or
Bylaws, in each case as amended, or, in any material respect, any indenture,
lease, loan agreement or other agreement or instrument to which Sports
Information is a party or by which it or any of its properties are bound, or any
decree, judgment, order, statute, injunction, charge, rule or regulation or
other restriction of any governmental agency applicable to Sports Information
except to the extent that any breach or violation of any of the foregoing would
not constitute or result in a Material Adverse Effect on Sports Information.
Except as set forth in SCHEDULE 2.03, no consent, filing with or notification
to, or approval or authorization of any governmental, regulatory or other
authority is required on the part of Sports Information in connection with the
execution, delivery and performance of this Agreement.
SECTION 2.04 ISSUANCE OF SPORTS INFORMATION MERGER SHARES
The Exchange Securities issuable to the HEMP Stockholders as the
holders of the HEMP Shares will when issued pursuant to this Agreement be duly
and validly authorized and issued, fully paid and non-assessable.
SECTION 2.05 FINANCIAL STATEMENTS.
(a) Sports Information has made available to HEMP copies of its audited
financial statements at September 30, 2002 and 2003 and for the fiscal years
then ended, and the unaudited financial statement as at March 31, 2004 and for
the six months then ended (collectively, "SPORTS INFORMATION FINANCIAL
STATEMENTS").
(b) Each set of financial statements (including, in each case, any
related notes thereto) contained in the Sports Information Financial Statements
was prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto). Such
financial statements fairly present the consolidated financial position of
Sports Information as at the dates thereof and the consolidated results of their
operations and their consolidated cash flows for the periods then ended,
subject, in the case of unaudited interim financial statements, to normal,
recurring year-end audit adjustments.
(c) To the knowledge of Sports Information, except as disclosed in the
consolidated financial statements contained in the Sports Information Financial
Statements or on SCHEDULE 2.05(c) hereof, there has been no material change in
the financial condition, operations or business of Sports Information since
September 30, 2003.
(d) Except as otherwise disclosed in the consolidated financial
statements contained in the Sports Information Financial Statements, Sports
Information does not have any liabilities.
SECTION 2.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 2004:
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets, or condition of Sports Information or (ii) any
damage, destruction, or loss to Sports Information (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets, or condition of Sports Information;
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(b) Sports Information has not (i) amended its articles of
incorporation; (ii) declared or made, or agreed to declare or make, any payment
of dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed, or agreed to purchase or redeem, any
outstanding capital stock; (iii) waived any rights of value which in the
aggregate are extraordinary or material considering the business of Sports
Information; (iv) made any material change in its method of management,
operation, or accounting; (v) entered into any other material transaction; (vi)
made any accrual or arrangement for payment of bonuses or special compensation
of any kind or any severance or termination pay to any present or former officer
or employee; (vii) increased the rate of compensation payable or to become
payable by it to any of its officers or any of its employees whose monthly
compensation exceeds $5,000; or (viii) made any increase in any profit sharing,
bonus, deferred compensation, insurance, pension, retirement, or other employee
benefit plan, payment, or arrangement made to, for, or with its officers,
directors, or employees;
(c) Sports Information has not (i) borrowed or agreed to borrow any
funds or incurred, or become subject to, any material obligation or liability
(absolute or contingent) except liabilities incurred in the ordinary course of
business; (ii) paid any material obligation or liability (absolute or
contingent) other than current liabilities reflected in or shown on the most
recent Sports Information balance sheet, and current liabilities incurred since
that date in the ordinary course of business; (iii) sold or transferred, or
agreed to sell or transfer, any of its assets, properties, or rights (except
assets, properties, or rights not used or useful in its business which, in the
aggregate have a value of less than $5,000), or cancelled, or agreed to cancel,
any debts or claims (except debts or claims which in the aggregate are of a
value of less than $5,000); (iv) made or permitted any amendment or termination
of any contract, agreement, or license to which it is a party if such amendment
or termination is material, considering the business of Sports Information; or
(v) issued, delivered, or agreed to issue or deliver any stock, bonds or other
corporate securities including debentures (whether authorized and unissued or
held as treasury stock);
(d) to the best knowledge of Sports Information, Sports Information has
not become subject to any law or regulation which materially and adversely
affects, or in the future may adversely affect, the business, operations,
properties, assets, or condition of Sports Information; and
(e) as at the date of this Agreement and as at the Closing Date, the
aggregate Sports Information liabilities which would be required to be disclosed
on a balance sheet prepared in accordance with GAAP do not and will not exceed
$75,000 in the aggregate.
SECTION 2.07 INTELLECTUAL PROPERTY AND INTANGIBLE ASSETS.
To the knowledge of Sports Information, Sports Information has full
legal right, title and interest in and to all of the intellectual property
utilized in the operation of its business. No rights of any other person are
violated by the use by Sports Information of any intellectual property. None of
the intellectual property utilized in the operation of the business of Sports
Information has ever been declared invalid or unenforceable, or is the subject
of any pending or, to the knowledge of Sports Information, threatened action for
opposition, cancellation, declaration, infringement, or invalidity,
unenforceability or misappropriation or like claim, action or proceeding.
SECTION 2.08 GOVERNMENTAL CONSENT
No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other federal, state, county, local or other foreign governmental
authority, instrumentality, agency or commission or any third party, including a
party to any agreement with Sports Information, is required by or with respect
to Sports Information in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for such consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as may be required under (i) applicable securities
laws, or (ii) Colorado law.
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SECTION 2.09 LITIGATION
There is no action, suit, investigation, audit or proceeding pending
against, or to the best knowledge of Sports Information threatened against or
affecting, Sports Information or any of its assets or properties before any
court or arbitrator or any governmental or other body, agency or official.
SECTION 2.10 INTERESTED PARTY TRANSACTIONS
Sports Information is not indebted to any officer or director of Sports
Information (except for compensation and reimbursement of expenses incurred in
the ordinary course of business and payment of which is not overdue), and no
such person is indebted to Sports Information, except as disclosed in the
reports filed with the Securities and Exchange Commission.
SECTION 2.11 COMPLIANCE WITH APPLICABLE LAWS.
The business of Sports Information has not been, and is not being,
conducted in violation of any Applicable Law, except for possible violations
which both individually and also in the aggregate have not had and are not
reasonably likely to have a Material Adverse Effect. No investigation or review
by any governmental entity with respect to Sports Information is pending or, to
the knowledge of Sports Information after reasonable inquiry, threatened, nor
has any governmental entity indicated an intention to conduct the same, except
for investigations or reviews which both individually and also in the aggregate
would not have, nor be reasonably likely to have, a Material Adverse Effect.
Sports Information is a fully compliant reporting company under the Securities
Exchange Act of 1934, as amended, and has not been threatened or subject to
delisting on any exchange on which it is traded.
SECTION 2.12 NO UNDISCLOSED LIABILITIES.
There are no liabilities or debts of Sports Information of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of circumstances
which could reasonably be expected to result in such a liability or debt.
SECTION 2.13 TAX RETURNS AND PAYMENT
Sports Information has duly and timely filed all Tax Returns required
to be filed by it and has duly and timely paid all Taxes shown thereon to be
due, except as reflected in the Sports Information Financial Statements. Except
as disclosed in the Sports Information Financial Statements, there is no claim
for Taxes that is a lien against the property of Sports Information other than
liens for Taxes not yet due and payable, none of which Taxes is material. Sports
Information has not received notification of any audit of any Tax Return of
Sports Information being conducted or pending by a Tax authority, no extension
or waiver of the statute of limitations on the assessment of any Taxes has been
granted by Sports Information which is currently in effect, and Sports
Information is not a party to any agreement, contract or arrangement with any
Tax authority or otherwise, which may result in the payment of any amount in
excess of the amount reflected on the Sports Information Financial Statements.
SECTION 2.14 LABOR AND EMPLOYMENT MATTERS
Except for the Sports Information Principal Stockholder, Sports
Information has one employee. Sports Information is not a party to or bound by
any collective bargaining agreement or any other agreement with a labor union,
and, to the knowledge of Sports Information, there has been no effort by any
labor union or any other person during the twenty-four (24) months prior to the
date hereof to organize any employees or consultants of Sports Information who
are not already members of a collective bargaining unit into one or more
collective bargaining units, nor, to the knowledge of the Sports Information,
are any such efforts being conducted. There is no pending or, to the knowledge
of Sports Information, threatened labor dispute, strike or work stoppage which
affects or which may affect the business of Sports Information, or which may
interfere with its continued operations. To the knowledge of Sports Information,
neither Sports Information nor any agent, representative or employee thereof has
within the last twenty-four (24) months committed any unfair labor practice as
defined in the National Labor Relations Act, as amended, and there is no pending
or threatened charge or complaint against Sports Information by
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or with the National Labor Relations Board or any representative thereof. There
has been no strike, walkout or work stoppage involving any of the employees or
consultants of Sports Information during the twenty-four (24) months prior to
the date hereof. Sports Information has complied, in all material respects, with
applicable laws, rules and regulations relating to employment, civil rights and
equal employment opportunities or other employment practices, including but not
limited to, the Civil Rights Act of 1964, the Fair Labor Standards Act, the
Americans with Disabilities Act, as amended and the Immigration Reform and
Control Act of 1986, as amended. Sports Information has received no notice of
any claim before any governmental body brought by or on behalf of any employee,
prospective employee, former employee, retiree, labor organization or other
representative of employees or any governmental body or, to the knowledge of
Sports Information is any such claim threatened against Sports Information.
Sports Information is not a party to, or otherwise bound by, any order relating
to its employees or employment practices. Sports Information has paid in full to
all of its employees all wages, salaries, commissions, bonuses, benefits and
other compensation due and payable to such employees. No current or former
employee of Sports Information is (i) absent on a military leave of absence
and/or eligible for rehire under the terms of the Uniformed Services Employment
and Reemployment Rights Act, or (ii) absent on a leave of absence under the
Family and Medical Leave Act.
SECTION 2.15 EMPLOYEE BENEFITS
There is no employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and (ii)
no other benefit plan, program, contract or arrangement of any kind whatsoever,
covering the employees or consultants of Sports Information or which is
sponsored, maintained or contributed to by Sports Information or to which Sports
Information has an obligation to contribute (all such employee benefit plans and
other benefit plans, programs, contracts or arrangements hereinafter
individually and collectively called the "EMPLOYEE BENEFIT PLAN(S)").
SECTION 2.16 BUSINESS; LIABILITIES.
The sole operating business of Sports Information is fully described in its Form
10-KSB for its fiscal year ended September 30, 2003. Sports Information acts as
a publisher of sports related information. No revenues from these activities
were generated during the six-month period ended March 30, 2004. Except as
aforesaid, Sports Information has no operating business and no operating
subsidiaries, and by the Closing Date, Sports Information shall have no greater
than $75,000 of total balance sheet and contingent liabilities, and no
commitments to incur liabilities.
SECTION 2.17 SPORTS INFORMATION PUBLIC FILINGS
All public filings by Sports Information under the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), are true, correct and complete in all
material respects, are not misleading and do not omit to state any material fact
which is necessary to make the statements contained in such public filings not
misleading in any material respect. All Sports Information public filings under
the Exchange Act have been timely made.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE HEMP SECURITY-HOLDERS.
Each of the Majority Shareholder and the Minority Shareholders severally (not
jointly and severally) warrants to Sports Information that the statements
contained in Sections 3.1, 3.2 and 3.20 are true and accurate as of the date of
this Agreement, except as fairly disclosed in the Disclosure Schedule delivered
by such HEMP Security-holders to Sports Information on the date hereof (the
"DISCLOSURE SCHEDULE"); PROVIDED, HOWEVER, that (a) the several warranties of
each of the signatories hereto comprising the former shareholders of Hall Effect
shall only be applicable to the extent that those statements directly relate to
it or him, the shares in Hall Effect formerly held by it or him or to Hall
Effect, and (b) the several warranties of the signatories hereto comprising the
former shareholders of Jopejo shall only be applicable to the extent that those
statements directly relate to it or him, the shares in Jopejo formerly held by
it or him or to Jopejo. Each of Westek, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ does hereby severally
(not jointly and severally) represent and warrant to Sports Information that, to
the best of their knowledge in their capacities as senior executive officers of
Hall Effect
13
and Jopejo (or otherwise), the statements contained in all provisions of this
Article III, to the extent relating to Hall Effect and Jopejo (and not, for the
avoidance of doubt, any statements relating to the HEMP Shareholders), are true
and accurate as of the date of this Agreement, except as fairly disclosed in the
Disclosure Schedule. The New Shareholders jointly and severally represent and
warrant only to matters affecting HEMP prior to its acquisition of 100% of the
capital stock of Hall Effect and Jopejo. HEMP TL represents and warrants to
Sports Information that the statements contained in Section 3.1 and 3.2 which
refer to it are true and accurate as at the date of the Agreement.
3.1 ORGANIZATION, STANDING AND AUTHORITY; OWNERSHIP OF SHARES. HEMP is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of Hall Effect and Jopejo (collectively, the
"CORPORATIONS") is a corporation validly existing and in good standing under the
laws of England and Wales. Each of HEMP and the Corporations have the full
corporate power and corporate authority to execute, deliver and perform each
Related Agreement to which it is a party. Each of HEMP and the Corporations are
qualified to do business and is in good standing in each jurisdiction in which
the nature of its business or the properties owned or leased by it requires
qualification. Each of the HEMP Security-holders has all right, power and
authority to execute and deliver this Agreement and each Related Agreement to
which he or it is a party and to perform his or its obligations hereunder and
thereunder. The Majority Shareholder and certain of the Minority Shareholders
are the registered and (with the exception of the Majority Shareholder, which
holds the relevant shares on trust for the Westek Limited Employee Trust) the
beneficial owners of all of the HEMP Preferred Stock listed on SECTION 3.1(a) TO
THE DISCLOSURE SCHEDULE, HEMP TL and the New Shareholders are the beneficial
owners of all of the HEMP Common Stock listed on SECTION 3.1(b) TO THE
DISCLOSURE SCHEDULE, in each case free and clear of all liens, claims, security
interests and encumbrances of any type or description and there are no options,
agreements or other Encumbrances of any other person, firm or corporation in
existence which could restrict or limit the respective HEMP Shareholder's
ability to transfer to Sports Information good and marketable title to all of
the HEMP Shares free and clear of all such liens, claims, security interests and
encumbrances.
3.2 AUTHORIZATION OF AGREEMENT. The execution, delivery and performance
of this Agreement and all Related Agreements by the HEMP Security-holders other
than HEMP TL to which it is a party have been duly authorized by all necessary
corporate and individual action. This Agreement constitutes, and each Related
Agreement when executed by the HEMP Security-holders and all other intended
parties to them, will constitute, the valid and binding obligation of each of
the HEMP Security-holders other than HEMP TL enforceable against it and him,
except to the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights in general and subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). This Agreement constitutes valid and binding obligations on
HEMP TL enforceable against it in accordance with its terms.
3.3 CONTRACTUAL CONSENTS OF THIRD PARTIES. The execution, delivery and
performance by each of the Corporations of each Related Agreement to which it is
or will be a party and the execution, delivery and performance by each of the
HEMP Security-holders of this Agreement and each Related Agreement to which it
or he is or will be a party, and the consummation of the transactions
contemplated hereby and thereby by the Corporations and the HEMP
Security-holders will not (a) violate or conflict with the respective memoranda
of association or articles of association of the Corporations and the HEMP
Security-holders (if any), (b) conflict with, or result in the breach of, or
termination of, or constitute a default under (whether with notice or lapse of
time or both), or accelerate or permit the acceleration of the performance
required by, any Contract, order, judgment or decree, to which either of the
Corporations or any of the HEMP Security-holders is a party or by which any of
its or his properties are bound or subject, (c) constitute a violation of any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any governmental agency, or court to
which either of the Corporations or any of the HEMP Security-holders is subject
or (d) result in the creation of any Encumbrance upon the HEMP Shares, or the
assets or properties of HEMP or the Corporations.
3.4 FINANCIAL STATEMENTS. Descriptions of the Corporations' financial
accounting policies and practices with respect to revenue recognition,
inventory, recording and accrual of expenses, write down of assets, and
depreciation are set forth in SECTION 3.4 OF THE DISCLOSURE SCHEDULE (the
"ACCOUNTING PRINCIPLES"). The Corporations have provided to Sports Information
true, complete and correct copies of the audited balance sheets of each of the
Corporations as at September 30, 2001, September 30, 2002 and June 30, 2003, and
the related audited statements of income (loss) and statements of cash flows for
the two fiscal years ended September 30, 2002 and for
14
the nine months ended June 30, 2003 (the "FINANCIAL STATEMENTS"). The Financial
Statements were prepared in accordance with the books and records of the
Corporations and using the Accounting Principles consistently applied. There are
no non-recurring items of income in excess (individually or in the aggregate) of
$10,000 in any of the Financial Statements constituting statements of income,
except as reported as such on separate line items in such Financial Statements.
To the best knowledge of the Shareholder Group, the Financial Statements are
capable of being audited in accordance with the requirements of Section 5.14 of
this Agreement. HEMP is a recently formed corporation and has no historical
financial statements.
3.5 ABSENCE OF MATERIAL ADVERSE CHANGE; DISTRIBUTIONS. Since September
30, 2002, the Corporations have operated only in the ordinary course and since
that date, there has not been any change in the business, operations, results of
operations, assets or condition (financial or otherwise) of the Corporations
that has had or might reasonably be expected to have a Material Adverse Effect.
Without limiting the generality of the foregoing, except as set forth on
SCHEDULE 3.5 TO THE DISCLOSURE SCHEDULE, since that date:
(a) the Corporations have not, in a single transaction or a
series of related transactions, sold, transferred, or disposed of any of its
assets, tangible or intangible, which, individually or in the aggregate, have a
fair market value in excess of $10,000, other than sale of products and services
in the ordinary course of business;
(b) the Corporations have not entered into any Material
Contract;
(c) no Person (including the Corporations and the HEMP
Security-holders) has accelerated, terminated, modified, or cancelled any
Material Contract;
(d) the Corporations have not incurred any loans or borrowings
or granted or suffered to exist any Encumbrance upon any of its assets, tangible
or intangible;
(e) the Corporations have not made any capital expenditure (or
series of related capital expenditures) either involving more than $10,000 or
outside the ordinary course of business;
(f) the Corporations have not made any capital investment in,
any loan to, or any acquisition of the securities or (otherwise than in the
ordinary course of business) assets of, any other Person (or series of related
capital investments, loans, and (otherwise than in the ordinary course of
business) acquisitions);
(g) the Corporations have not issued any note, bond, or other
debt security or created, incurred, assumed, or guaranteed or otherwise become
liable for any indebtedness except in the ordinary course of business;
(h) the Corporations have not delayed or postponed the payment
of accounts payable or other Liabilities or accelerated the delivery of any
products or services or the collection of any accounts receivable;
(i) the Corporations have not cancelled, compromised, waived,
or released any right or claim;
(j) the Corporations have not licensed, sold or otherwise
transferred any rights under or with respect to any Intellectual Property;
(k) there has been no change made or authorized in the
articles of incorporation or bylaws of the Corporations;
(l) the Corporations have not issued any of its capital stock,
or granted any options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its capital stock;
(m) the Corporations have not directly or indirectly, (i)
made, paid or declared any dividend or distribution in respect of its capital
stock, or repurchased or redeemed any such capital stock (ii) paid any interest
15
or principal in respect of, or otherwise made any payment in connection with,
any indebtedness held by Westek Limited, (iii) paid any management or other fees
to the HEMP Security-holders or any of his Affiliates, (iv) made any other
payment in respect of any liability, obligation or commitment to the HEMP
Security-holders or any of their Affiliates, (v) assumed, guaranteed, or
otherwise become liable (directly or contingently) for any liability or
obligation of the HEMP Security-holders or any of their Affiliates, or (vi)
entered into any other transaction, commitment or understanding with the HEMP
Security-holders or any of their Affiliates or for the benefit of any of them;
(n) the Corporations have not experienced any damage or
destruction to or loss of (whether or not covered by insurance) to its property
in excess of $10,000 in the aggregate;
(o) the Corporations have not entered into any employment
contract or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
(p) the Corporations have not granted any increase in the base
compensation of any of its directors, officers, or employees outside the
ordinary course of business;
(q) the Corporations have not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors, officers, or
employees (or taken any such action with respect to any other Employee Benefit
Plan);
(r) the Corporations have not made any other change in
employment terms for any of its directors, officers, and employees outside the
ordinary course of business;
(s) the Corporations have not made or pledged to make any
charitable or other capital contribution;
(t) there has not been any other occurrence, event, incident,
action, failure to act, or transaction outside the ordinary course of business
involving the Corporations;
(u) the Corporations have not made an election with respect to
Taxes that was not previously made, nor has it changed or revoked an election
with respect to Taxes that was previously made; and
(v) the Corporations have not committed or agreed, orally or
in writing, to any of the foregoing and the giving of notice by any Person or
the passage of time will not result in the occurrence of any of the foregoing.
3.6 CUSTOMER AND SUPPLIERS.
SECTION 3.6 OF THE DISCLOSURE SCHEDULE sets forth, for the fiscal
periods ended September 30, 2002 and the nine months ended June 30, 2003, the
top ten major customers and the top five major suppliers of the Corporations
indicating materials and/or services supplied or purchased and a list
identifying unwritten key arrangements with same, including rebate and incentive
arrangements.
3.7 ACCOUNTS RECEIVABLE. The Corporations have provided to Sports
Information a copy of the schedule of their accounts receivable as of June 30,
2003, December 31, 2002, together with an aging analysis.
16
3.8 NO LITIGATION; COMPLIANCE WITH LAWS; PERMITS.
(a) There is no outstanding claim or other Proceeding pending
by or against, or, to the knowledge of the HEMP Security-holders, threatened by
or against, the Corporations (including at law or in equity or before or by any
Governmental Authority or arbitrator), or affecting or relating to, the Shares
or the assets of the Corporations.
(b) Each of the Corporations is in compliance in all material
respects with all applicable laws. Without limiting the generality of the
foregoing, the Corporations are in compliance in all material respects with all
laws relating to (i) employment, including any relating to workers'
compensation, equal employment opportunity, nondiscrimination, immigration,
wages, hours, benefits, collective bargaining, and the payment of social
security and similar taxes and (ii) the environment, health, and safety, in each
case, applicable to the Corporations, its business and its assets and
properties.
(c) No written notice has been received by the HEMP
Security-holders or the Corporations during the past three years alleging any
violation of law by the Corporations.
(d) The Corporations have all Permits, including without
limitation all Permits that are required pursuant to environmental, health or
safety laws for the occupation of its facilities used or held for use by the
Corporations and the operation of its business, necessary for the conduct and
operation of its businesses as currently conducted, including owning and using
the assets and properties of the Corporations in the manner the Corporations
currently owns and uses the same ("MATERIAL PERMITS"). The Material Permits are
listed in SECTION 3.8 OF THE DISCLOSURE SCHEDULE and are valid and in full force
and effect. The Corporations are in material compliance with the terms and
conditions of all Material Permits. No Permit and no notice to any Governmental
Authority is required on the part of the HEMP Security-holders in connection
with the execution, delivery and performance of this Agreement or any Related
Agreement.
3.9 NO UNDISCLOSED LIABILITIES. The Corporations have no Liability
(and, to the knowledge of the HEMP Security-holders, there is no basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against them giving rise to any Liability), except
for (a) Liabilities set forth on the June 30, 2003 Balance Sheet and in the
amount set forth therein, and (b) trade accounts payable and Liabilities which
have arisen after the date of the June 30, 2003 Balance Sheet in the ordinary
course of business (none of which results from, arises out of, relates to, is in
the nature of, or was caused by any breach of contract, breach of warranty,
tort, infringement, or violation of law).
3.10 TAXES.
(a) The Corporations have filed with the appropriate Taxing
Authorities all Tax returns that they were or are required to file. All such Tax
returns were correct and complete in all material respects. All Taxes owed by
the Corporations that are or have been due and payable have been paid. The
Corporations are not currently the beneficiary of any extension of time within
which to file any Tax Return. In the past seven years, no claim has ever been
made by an authority in a jurisdiction where the Corporations does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction, and, to
the knowledge of the Corporations, there is no basis for such a claim. There are
no Encumbrances on any of the assets of the Corporations that relate to Taxes
(other than Taxes not yet due and payable).
17
(b) The Corporations have withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.
(c) There is no dispute or claim concerning any Tax Liability
of the Corporations either (i) claimed or raised by any authority in writing to
the Corporations or (ii) as to which the Corporations have knowledge based upon
personal contact with any agent of such authority. SECTION 3.10 OF THE
DISCLOSURE SCHEDULE lists all Tax returns filed in the United Kingdom or in any
other country or territory with respect to the Corporations for taxable periods
ended on or after December 31, 2000, indicates those Tax returns that have been
audited, and indicates those Tax returns that currently are the subject of
audit. The Corporations have delivered to the Buyer correct and complete copies
of all Tax returns, examination reports, and statements of deficiencies assessed
against or agreed to by the Corporations since September 30, 2000.
(d) The Corporations have not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(e) The unpaid Taxes of the Corporations (i) did not, as of
June 30, 2003, exceed its reserve for Tax Liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) set forth on the face of the June 30, 2003 Balance Sheet and (ii) will
not exceed that reserve as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of such Corporations in
filing their Tax Returns.
3.11 MATERIAL CONTRACTS. SECTION 3.11 OF THE DISCLOSURE SCHEDULE
contains a true, complete and correct list of each Material Contract. The HEMP
Security-holders have made available to Sports Information true complete and
correct copies of all written Material Contracts. All Material Contracts are in
writing. To the knowledge of the HEMP Security-holders, each of the Material
Contracts is valid and in full force and effect. Except for defaults that,
individually or in the aggregate, have not had and will not have a Material
Adverse Effect (a) neither the Corporations nor, to the knowledge of the HEMP
Security-holders, any other party to any Material Contract is in default under
the terms thereof and (b) there has been no written claims of any material
default. No party to any Material Contract has notified the HEMP
Security-holders of its intention to cease to perform any material obligations
required to be performed by it thereunder or withhold any material payment
required to be made by it thereunder.
3.12 LABOR MATTERS. During the past three years, there has not been,
(a) any strike, slowdown, picketing or organized work stoppage by any of the
Employees, (b) any proceeding pending against or, to the knowledge of the HEMP
Security-holders, threatened against, the Corporations relating to the alleged
material violation of any law pertaining to labor relations or other employment
matters, including any charge or complaint filed by an employee or union with
any Governmental Authority, (c) any application for certification of a
collective bargaining representative or other effort to organize any of its
respective Employees for the purpose of forming or joining a union, or (d) any
lockout of any Employees by the Corporations.
3.13 EMPLOYEE BENEFIT PLANS AND BENEFIT ARRANGEMENTS. The Corporations
have provided to Sports Information copies of all existing Employee Benefit
Plans and all such Employee Benefit Plans are listed on SECTION 3.13 OF THE
DISCLOSURE SCHEDULE.
(a) Each Employee Benefit Plan (and each related trust, insurance
contract, or fund) complies in form and in operation in all material respects
with the applicable requirements of the applicable laws in England governing
pensions and other Employee Benefit Plans.
(b) The Corporations' execution of, and the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee, officer, director, agent or consultant of the Corporations to
severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement or (ii) accelerate the time of payment or
vesting, or increase the amount of any compensation or other benefit (whether
under any Employee Benefit Plan or otherwise) to any such employee, officer,
director, agent or consultant.
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(c) There are no pending claims by or on behalf of any Employee Benefit
Plan or by or on behalf of any individual participant or beneficiary of an
Employee Benefit Plan alleging breach of fiduciary duty or breach of any
provision of the Employee Benefit Plan to pay benefits on the part of the
Corporations or any of its officers, directors or employees, nor to the
knowledge of the HEMP Security-holders, is there any threatened claim or any
basis for such a claim.
3.14 PERSONAL PROPERTY; INTELLECTUAL PROPERTY RIGHTS.
(a) All of the personal property (other than Intellectual Property)
reflected in the June 30, 2003 Balance Sheet is in existence (except for
dispositions made in the ordinary course of business since the date of the June
30, 2003 Balance Sheet). The Corporations have good and marketable title to all
of its assets and properties, free and clear of all Encumbrances and such assets
and properties consist of all of the assets and properties required by the
Corporations to conduct its business consistent with past practice. To the
knowledge of the HEMP Security-holders, there are no material defects, latent or
patent, in the personal property. The machinery or equipment of the Corporations
are in proper operating condition and repair (subject to normal wear and tear).
(b) The Corporations owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property used for the
operation of the Corporations' business as presently conducted. Each item of
Intellectual Property owned or used by the Corporations immediately prior to the
Closing hereunder will be owned or available for use by the Corporations on
identical terms and conditions immediately subsequent to the Closing hereunder.
The Corporations have taken all necessary and desirable action to maintain and
protect each item of Intellectual Property that it owns or uses. SECTION 3.14(b)
OF THE DISCLOSURE SCHEDULE sets forth a true, correct and complete list
(together with description, registration number and registration date) of each
item of Intellectual Property owned by the Corporations or used in the operation
of the Corporations' business, and, to the extent registered with any
Governmental Authority, the name, date of registration and registration number
of each such item. The Corporations have not interfered with, infringed upon,
misappropriated, or violated any rights in Intellectual Property of third
parties in any material respect, and has not within the past three years
received any claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation thereof. To the knowledge of the
HEMP Security-holders, no third party has interfered with, infringed upon,
misappropriated, or violated in any material respect any Intellectual Property
of the Corporations. The Intellectual Property of the Corporations constitutes
all the Intellectual Property that is material to the conduct of the business of
the Corporations as now conducted. All software used or held for use by the
Corporations are owned by the Corporations or used or held for use in accordance
with all applicable Contracts, and the Corporations have paid all amounts
required to be paid in connection therewith. The Corporations have taken
reasonable steps to protect its Confidential Information and trade secrets. Each
independent contractor that has provided material services to the Corporations,
and each employee that has provided material services to the Corporations
otherwise than in the normal course of his or her employment, have agreed to
assign to the Corporations all inventions developed in the course of such
services.
3.15 INSURANCE. SECTION 3.15 OF THE DISCLOSURE SCHEDULE contains a
true, correct and complete list of all insurance policies pursuant to which the
Corporations are insured excluding, however, any insurance policies related to
Employee Benefit Plans or Benefit Arrangements. All of the Corporations'
insurance policies are in full force and effect in accordance with their terms.
Except for routine non-material claims by Employees, there are no pending claims
under such insurance policies. The Corporations have not failed to give any
material notice or present any material claim under any such policy in a due and
timely fashion. There are no outstanding unpaid claims by the Corporations under
any such policy. The Corporations have not received a notice of cancellation or
non-renewal of any such policy. The Corporations have been covered (in the case
of Hall Effect) during the past five years and (in the case of Jopejo) since
Jopejo commenced business by insurance in scope and amount customary and
reasonable for the business in which it has engaged during such period.
3.16 EMPLOYEES. SECTION 3.16 OF THE DISCLOSURE SCHEDULE contains a
true, correct and complete list of the name, start date, current annual salary,
amount of any bonuses paid for the fiscal year ended September 30, 2002, expense
accounts, other special benefits or perquisites (including the use of an
automobile), and the amounts of accrued sick days and vacation days of each
Employee. To the knowledge of the HEMP Security-holders, no Employee recently
has threatened to terminate his or her employment. Neither the Corporations nor,
to the knowledge of the HEMP Security-holders, any Employee, is restricted,
directly or indirectly, by any Contract,
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including any agreement regarding confidentiality, from carrying on the business
of the Corporations anywhere in the world. There are no claims pending or, to
the knowledge of the HEMP Security-holders, threatened regarding compensation
(including but not limited to claims related to sales commissions, minimum wage
or overtime) or any other conditions or terms of employment or the termination
thereof concerning the business of the Corporations. There have been no promises
or undertakings by the Corporations to continue the employment of any employee
or contractor for a fixed or stated duration or to continue or increase the
compensation of any employee or contractor (otherwise than as provided in the
relevant contract). The Corporations have no liability with respect to
independent contractors who perform or have performed services for the
Corporations under any Employee Benefit Plan or other benefit arrangements of
any kind whatsoever or under applicable law. The Corporations have kept complete
and up-to-date employment records required by applicable law to be created and
maintained in connection with its business. All of the individuals who provide
services to the Corporations are employees of the Corporations.
3.17 AFFILIATED TRANSACTIONS.
The Corporations have directly and indirectly conducted or otherwise
operated their business only through assets and properties owned or leased by
them. No asset or property of any kind or nature not owned or leased by the
Corporations are used in or necessary to the business of the Corporations as
presently conducted, including the software or other media in which or on which
any information, knowledge, data or records relating thereto exists.
Except as set forth in SECTION 3.17 OF THE DISCLOSURE SCHEDULE, the
Corporations do not owe any amount to, or have any Contract with, (other than
amounts reimbursable for expenses and salary arising in the ordinary course of
business to such individuals and consistent with past practices), any member of
the HEMP Security-holders or their Affiliates or any of its other directors,
officers, employees or consultants.
Except as set forth in SECTION 3.17 OF THE DISCLOSURE SCHEDULE, none of
the HEMP Security-holders or his Affiliates owns any asset or property used by
the Corporations.
3.18 Intentionally omitted.
3.19 REAL PROPERTY.
(a) The Corporations do not own, directly or indirectly, any
freehold interest in real property.
(b) SECTION 3.19 OF THE DISCLOSURE SCHEDULE sets forth a true
and correct list of all real property leased or subleased to the Corporations.
The HEMP Security-holders has delivered to Sports Information correct and
complete copies of the leases and subleases referred to in SECTION 3.19 OF THE
DISCLOSURE SCHEDULE (as amended to date). With respect to each lease and
sublease listed in SECTION 3.19 OF THE DISCLOSURE SCHEDULE:
(i) all facilities leased or subleased by the
Corporations have received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation thereof and have
been operated and maintained in accordance with applicable laws, rules, and
regulations; and
(ii) all facilities leased or subleased thereunder
are supplied with utilities and other services necessary for the operation of
said facilities.
3.20 TITLE TO THE HEMP SHARES. The HEMP Security-holders are the true
and lawful registered holders and (with the exception of the Majority
Shareholder, which holds the relevant shares on trust for the Westek Limited
Employee Trust) beneficial owners, of the HEMP Shares listed opposite the name
of each of the HEMP Security-holders members on SECTION 2.1(a) TO THE DISCLOSURE
SCHEDULE and SECTION 2.1(b) TO THE DISCLOSURE SCHEDULE hereto, free and clear of
all Encumbrances. Upon the consummation of the Exchange, Sports Information will
receive good and valid title to all of the HEMP Shares, free and clear of all
Encumbrances. Other than the rights and obligations arising under this
Agreement, none of the HEMP Shares is subject to any rights of any other Person
to acquire the same. None of the HEMP Shares is subject to any Encumbrances or
restrictions on transfer thereof except those imposed by applicable laws.
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3.21 CAPITAL STOCK. Except for this Agreement and the Related
Agreements, there exists no outstanding options, warrants, subscription or other
rights or arrangements relating to, or with respect to, any equity interest in
the Corporations. The Corporations are not a participant in any joint venture or
partnership with any other Person. Neither of the Corporations have any
subsidiaries or any equity investment in any other Person. The authorized share
capital of the Corporations is set forth on SECTION 3.21 OF THE DISCLOSURE
SCHEDULE which also sets forth the name and address of each holder of ordinary
shares of the Corporations and cumulative redeemable preference shares of Hall
Effect, and the number of shares held, beneficially or of register, by each such
Person. Except as set forth on SECTION 3.21 OF THE DISCLOSURE SCHEDULE, neither
of the Corporations have authorized or issued any preference shares. All of the
issued shares in the respective capitals of the Corporations are duly authorized
and validly issued and fully paid. None of such shares was issued in violation
of any preemptive or preferential right.
3.22 OFFICERS AND DIRECTORS. SECTION 3.22 OF THE DISCLOSURE SCHEDULE
lists all of the officers and directors of the Corporations as of the date of
this Agreement.
3.23 POWERS OF ATTORNEY; BANK AND SECURITY ACCOUNTS. The Corporations
have not given any power of attorney to any Person other than its officers and
directors in their capacities as such, including with respect to any of the
assets or properties of the Corporations. The HEMP Security-holders has not
given any power of attorney to any Person in respect of any of the HEMP Shares
or any shares in the Corporations. The only bank accounts and security accounts
of the Corporations are those listed in SECTION 3.23 OF THE DISCLOSURE SCHEDULE.
3.24 BREACH OF WARRANTY. Each of the HEMP Security-holders, ▇▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇▇▇ severally warrants to the others that it or he is not aware of
any fact, matter or thing that is inconsistent with any of the statements set
out in this Article III or which would render any such statement false,
inaccurate or misleading.
ARTICLE IV
CERTAIN COVENANTS AND AGREEMENTS
SECTION 4.01 COVENANTS OF HEMP SECURITY-HOLDERS
Each of the HEMP Security-holders (other than HEMP TL) severally (not
jointly and severally) covenants and agrees that, during the period from the
date of this Agreement until the earlier of the Closing Date or the date of
termination of this Agreement, he or it will take such steps as lie within his
or its powers to procure that HEMP shall, other than as contemplated by this
Agreement or for the purposes of effecting the Exchange and Closing pursuant to
this Agreement or other than to the extent no Material Adverse Effect would be
incurred, conduct its business and the business of the Corporations, only as
presently operated and solely in the ordinary course, and consistent with such
operation. In addition to the foregoing and, in connection therewith, each of
the HEMP Security-holders (other than HEMP TL) severally (not jointly and
severally) undertakes that he or it shall take such steps as lie within his or
its powers to procure that HEMP and the Corporations do not, without the prior
written consent of Sports Information, do any of the following:
(a) amend its Certificate of Incorporation or Bylaws, or Articles of
Association or Memoranda of Association of the Corporations;
(b) pay or agree to pay to any employee, officer or director
compensation that is in excess of the current compensation level of such
employee, officer or director other than salary increases or payments made in
the ordinary course of business or as otherwise provided in any contracts or
agreements with any such employees;
(c) merge or consolidate with any other entity or acquire or agree to
acquire any other entity;
(d) sell, transfer, or otherwise dispose of any material assets
required for the operations of HEMP and the Corporations' business except in the
ordinary course of business, consistent with past practices;
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(e) create, incur, assume, or guarantee any material indebtedness for
money borrowed except in the ordinary course of business, or create or suffer to
exist any mortgage, lien or other encumbrance on any of its material assets,
except those in existence on the date hereof or those granted pursuant to
agreements in effect on the date of this Agreement or provided to or by Sports
Information and/or any of its Affiliates;
(f) make any material capital expenditure or series of capital
expenditures except in the ordinary course of business;
(g) declare or pay any dividends on or make any distribution of any
kind with respect to the HEMP Securities;
(h) fail to notify Sports Information immediately in the event of any
material loss of or damage to any of HEMP and the Corporations' material assets;
(i) fail to pay premiums in respect of all present insurance coverage
of the types and in the amounts as are in effect as of the date of this
Agreement;
(j) fail to seek to preserve the present material employees, reputation
and business organization of the Corporations or the Corporations' relationship
with its significant clients and others having business dealings with it;
(k) issue any additional HEMP Shares or share capital of either of the
Corporations or take any action affecting the capitalization of HEMP or the
Fully-Diluted HEMP Shares, or the share capital of either of the Corporations;
(l) fail to use commercially reasonable efforts to comply with and not
be in default or violation under any known law, regulation, decree or order
applicable to the Corporations' business, operations or assets where such
violation would have a Material Adverse Effect;
(m) grant any severance or termination pay to any director, officer or
any other employees of the Corporations, other than pursuant to agreements in
effect on the date of this Agreement or as otherwise disclosed in the documents
delivered pursuant to this Agreement;
(n) change any of the accounting principles or practices used by it,
except as may be required as a result of a change in law or in GAAP, whether in
respect of Taxes or otherwise;
(o) terminate or waive any material right of substantial value other
than in the ordinary course of business; and
(p) enter into any material contract or commitment other than in the
ordinary course of business.
SECTION 4.02 COVENANTS OF SPORTS INFORMATION AND SPORTS INFORMATION PRINCIPAL
STOCKHOLDER
Sports Information and the Sports Information Principal Stockholder
each covenant and agree that, during the period from the date of this Agreement
until the earlier of the Closing Date or the date of termination of this
Agreement, Sports Information shall, and the Sports Information Principal
Stockholder shall procure that Sports Information shall, other than as
contemplated by this Agreement or for the purposes of effecting the Exchange and
Closing pursuant to this Agreement, conduct its business as presently operated
and solely in the ordinary course, and consistent with such operation, and, in
connection therewith, without the written consent of the HEMP Stockholders,
Sports Information, and the Sports Information Principal Shareholder shall
procure that Sports Information:
(a) except as otherwise contemplated by this Agreement, and except for
the change of domicile from Colorado to Delaware contemplated hereby shall not
amend its Certificate of Incorporation or Bylaws;
22
(b) shall not pay or agree to pay to any employee, officer or director
compensation that is in excess of the current compensation level of such
employee, officer or director other than salary increases or payments made in
the ordinary course of business or as otherwise provided in any contracts or
agreements with any such employees;
(c) shall not merge or consolidate with any other entity or acquire or
agree to acquire any other entity;
(d) shall not create, incur, assume, or guarantee any indebtedness for
money borrowed except in the ordinary course of business, or create or suffer to
exist any mortgage, lien or other Encumbrance on any of its assets, except those
in existence on the date hereof or those granted pursuant to agreements in
effect on the date of this Agreement or provided to or by HEMP and the
Corporations and/or any of their respective Affiliates;
(e) shall not make any capital expenditure or series of capital
expenditures except in the ordinary course of business;
(f) shall not declare or pay any dividends on or make any distribution
of any kind with respect to the Sports Information shares;
(g) shall pay premiums in respect of all present insurance coverage of
the types and in the amounts as are in effect as of the date of this Agreement;
(h) shall seek to preserve the present employees, reputation and
business organization of Sports Information and Sports Information's
relationship with its clients and others having business dealings with it;
(i) except for the change of domicile from Colorado to Delaware
contemplated hereby, shall not change its outstanding capital stock or issue any
shares or take any action affecting the capitalization of Sports Information;
(j) shall use commercially reasonable efforts to comply with and not be
in default or violation under any law, regulation, decree or order applicable to
Sports Information's business or operations where such violation would have a
Material Adverse Effect;
(k) shall not grant any severance or termination pay to any director,
officer or any other employees of Sports Information, other than pursuant to
agreements in effect on the date of this Agreement or as otherwise disclosed in
the documents delivered pursuant to this Agreement;
(l) shall not change any of the accounting principles or practices used
by it, except as may be required as a result of a change in law or in GAAP,
whether in respect of Taxes or otherwise;
(m) shall not terminate or waive any right of substantial value other
than in the ordinary course of business;
(n) shall not enter into any material contract or commitment;
(o) shall not sell, transfer or otherwise dispose of any assets;
(p) notify the HEMP Shareholders immediately in the event of any
material loss of or damage to any of Sports Information's assets; and
(q) shall agree to comply with the terms of the HEMP Share Purchase
Agreement.
SECTION 4.03 ADDITIONAL COVENANTS AND AGREEMENTS. The Parties other than the
HEMP TL hereto do hereby mutually covenant and agree as to the matters set forth
in Sections 4.03(a) through (o) below, and (a) all Parties, excluding HEMP TL,
do hereby severally covenant and agree as to the matters set forth in Section
4.03(p) and (q) below:
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(a) TAX-FREE REORGANIZATION. The Parties intend that the Exchange
qualify as a Tax-free exchange under Sections 351 of the Code, as amended, and
the Parties will take the position for all purposes that the Exchange shall
qualify under such Section.
(b) ANNOUNCEMENT. No Party shall issue any press release or otherwise
make any public statement with respect to this Agreement or the transactions
contemplated hereby without the prior consent of the other Parties hereto (which
consent shall not be unreasonably withheld or delayed), except as may be
required by applicable law or securities regulation. Notwithstanding anything in
this Section 4.03 to the contrary, the Parties will, to the extent practicable,
consult with each other before issuing, and provide each other the opportunity
to review and comment upon, any such press release or other public statements
with respect to this Agreement and the transactions contemplated hereby whether
or not required by Applicable Law.
(c) NOTIFICATION OF CERTAIN MATTERS. Each of the HEMP Security-holders
shall take such steps as lie within their respective powers to procure that HEMP
shall give prompt written notice to Sports Information, and Sports Information
shall give prompt written notice to HEMP and the HEMP Stockholders, of the
relevant Party or Parties becoming aware of:
(i) The occurrence, or nonoccurrence, of any event the
occurrence, or nonoccurrence, of which would be reasonably likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Closing Date; and
(ii) Any material failure of HEMP or the Corporations, on the
one hand, or Sports Information, on the other hand, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder.
(d) REASONABLE BEST EFFORTS. Before Closing, upon the terms and subject
to the conditions of this Agreement, the Parties agree to use their respective
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable (subject to
applicable laws) to consummate and make effective the Exchange and other
transactions contemplated by this Agreement as promptly as practicable
including, but not limited to:
(i) The preparation and filing of all forms, registrations and
notices required to be filed to consummate the Exchange, including without
limitation, any approvals, consents, orders, exemptions or waivers by any third
party or governmental entity; and
(ii) The satisfaction of the other Party's conditions
precedent to Closing.
(e) ACCESS TO INFORMATION
(i) INSPECTION BY HEMP SECURITY-HOLDERS. Sports Information
will make available for inspection by HEMP Security-holders and their advisers,
during normal business hours and in a manner so as not to interfere with normal
business operations, all of Sports Information's records (including tax
records), books of account, premises, contracts and all other documents in
Sports Information's possession or control that are reasonably requested by HEMP
Security-holders or their advisers to inspect and examine the business and
affairs of Sports Information. Sports Information will cause its managerial
employees and regular independent accountants to be available upon reasonable
advance notice to answer questions of HEMP Security-holders concerning the
business and affairs of Sports Information. HEMP Security-holders will treat and
hold as confidential any information they receive from Sports Information in the
course of the reviews contemplated by this Section 4.03(e). No examination by
HEMP Security-holders will, however, constitute a waiver or relinquishment by
HEMP Security-holders of its rights to rely on Sports Information's covenants,
representations and warranties made herein or pursuant hereto.
(ii) INSPECTION BY SPORTS INFORMATION. HEMP Security-holders
will make available for inspection by Sports Information, during normal business
hours and in a manner so as not to interfere with normal business operations,
all of HEMP's records (including tax records), books of account, premises,
contracts and all other documents in the HEMP and the Corporations' possession
or control that are reasonably requested by Sports Information to inspect and
examine the business and affairs of HEMP and the Corporations. HEMP will cause
its
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managerial employees and regular independent accountants to be available upon
reasonable advance notice to answer questions of Sports Information concerning
the business and affairs of HEMP and the Corporations. Sports Information will
treat and hold as confidential any information they receive from HEMP and the
Corporations in the course of the reviews contemplated by this Section 4.03(e).
No examination by Sports Information will, however, constitute a waiver or
relinquishment by Sports Information of its rights to rely on HEMP's covenants,
representations and warranties made herein or pursuant hereto.
(f) SPORTS INFORMATION CHANGE OF DOMICILE. Prior to the Closing Date of
the Exchange, Sports Information shall consummate a change of domicile from
Colorado to Delaware and related stock split, pursuant to which the 5,000,000
presently issued and outstanding shares of Sports Information Common Stock shall
be increased to 10,000,000 shares of Sports Information Common Stock and the
Fully-Diluted Sports Information Common Stock immediately prior to the Exchange
shall represent not more than 11.6% of the Fully-Diluted Sports Information
Common Stock immediately following the Exchange (the "SPORTS INFORMATION STOCK
Split").
(g) APPROVAL BY SPORTS INFORMATION PRINCIPAL STOCKHOLDERS. By their
execution and delivery of this Agreement, the Sports Information Principal
Stockholder does hereby approve, adopt and ratify this Exchange Agreement, the
Exchange and all of the transactions contemplated hereby and pursuant to all
exhibits hereto.
(h) (INTENTIONALLY OMITTED)
(i) RESIGNATION OF OFFICERS AND DIRECTORS. At the Closing Date of the
Exchange, all existing officers of Sports Information and all current members of
the board of directors of Sports Information shall tender their written
resignations as officers and directors of Sports Information, such resignations
to be executed and delivered as deeds and to contain acknowledgements that the
officer or member has no claims for compensation or otherwise against Sports
Information, whether for compensation for loss of office or otherwise.
(j) CERTIFICATE OF INCORPORATION. At the Closing Date of the Exchange,
Sports Information shall, by written consent of the Sports Information Principal
Shareholder, have organized a Delaware corporation under the name InVitro
Medical Devices, Inc. ("IVMD") whose articles of incorporation shall (i)
authorize for issuance an aggregate of 85,000,000 shares of capital stock, of
which 50,000,000 shares shall be Common Stock, and 35,000,000 shares shall be
shares of preferred stock containing such rights, designations and privileges as
the board of directors may from time to time designate, and (ii) contain such
other terms and conditions as shall be set forth in the certificate of
incorporation of IVMD annexed hereto as EXHIBIT I and made a part hereof (the
"IVMD CERTIFICATE OF INCORPORATION"). Sports Information shall hold one share of
IVMD, shall be the sole shareholder of IVMD and shall merge into IVMD in order
to change the domicile of Sports Information from Colorado to Delaware
immediately prior to the Closing Date. References herein to "Sports Information"
shall, wherever appropriate, refer to IVMD.
(k) ARTICLES OF AMENDMENT. At the Closing Date of the Exchange, Sports
Information shall cause to be filed with the Secretary of State of the State of
Colorado, the Sports Information Series A Preferred Stock Articles of Amendment.
(l) OPERATIONS AND CORPORATE GOVERNANCE. Following the Closing of the
transactions contemplated by this Agreement and following the Exchange and the
transactions contemplated by this Exchange Agreement:
(i) The registered office of the Corporations shall remain in
England, and Sports Information will locate its principal executive offices in
such location in the U.S. as shall be acceptable to the Board of Directors of
Sports Information;
(ii) The Board of Directors of each of Sports Information,
HEMP and the Corporations shall consist of seven persons, two of whom shall be
designated by the Management Group, two of whom shall be designated by the New
Shareholder Group, and three of whom shall be designated by the Majority
Shareholder;
25
(iii) Not less than two of the directors of Sports Information
shall be independent directors within the meaning of the Sarbanes Oxley Act of
2002 as applicable to members of the audit committee of a "listed issuer," being
one of the directors designated by the New Shareholder Group and one of the
directors designated by the Majority Shareholder; and
(iv) The Majority Shareholder and Minority Shareholders
(acting by vote of a majority of the shares of Sports Information Preferred
Stock held by the such shareholders) shall have the sole right to appoint the
Chairman of the Board of Directors and the Finance Director (or Chief Financial
Officer) of each of the Public Company, Purchaser and the Corporations.
(m) AUDITED FINANCIAL STATEMENTS. Not later than 15 days prior to the
Closing Date, the HEMP Shareholders shall cause the Corporations to provide to
Sports Information true, complete and correct copies of the audited balance
sheets of each of the Corporations as at September 30, 2001, September 30, 2002
and September 30, 2003 in relation to Hall Effect and as at July 31, 2001, July
31, 2002 and July 31, 2003 in relation to Jopejo, and the related audited
statements of income (loss) and statements of cash flows for the three fiscal
years ended September 30, 2003 in relation to Hall Effect and July 31, 2003 in
relation to Jopejo and for the six months ended March 30, 2004 (the "AUDITED
FINANCIAL STATEMENTS"). The Audited Financial Statements will: (i) be prepared
in accordance with are in accordance with generally accepted accounting
principles in the United States ("US GAAP") and present fairly the financial
position of the Corporations as of September 30, 2001, September 30, 2002 and
September 30, 2003, and the results of operations for the fiscal periods then
ended, (ii) comply in all material respects with Regulation S-X, as promulgated
under the United States Securities Act of 1933, as amended and (iii) have been
prepared using the Accounting Principles, applied consistently.
(n) SPORTS INFORMATION STOCK OPTION PLAN. At the Closing Date of the
Exchange, Sports Information shall have adopted the Sports Information Stock
Option Plan in the form of EXHIBIT F annexed hereto, and shall have issued the
9,659,154 Management Group Incentive Options pursuant to EXHIBIT G annexed
hereto.
(o) NOTICE OF DEVELOPMENTS. Each Party shall give prompt written notice
to the others of any development causing a breach of any of its representations
and warranties contained in this Agreement. No disclosure by any Party pursuant
to this Section 4.03(o), however, shall be deemed to amend or supplement the
Disclosure Schedule or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.
(p) NON-COMPETITION AND OTHER RESTRICTIVE COVENANTS AGREEMENT
(i) During the three (3) year period immediately following the
Closing Date (the "RESTRICTIVE PERIOD"), each of the HEMP Shareholders (other
than HEMP TL and the Majority Shareholder) and each of the Management Group
severally agrees with Sports Information for its own benefit and, separately, as
a trustee for each of HEMP and the Corporations, not to, directly or indirectly,
and to cause its Affiliates not to, directly or indirectly, whether as an owner,
proprietor, security-holder, equity holder, partner, officer, director,
employee, manager or consultant or in any other capacity (collectively,
"CAPACITY"), compete with the Business of the Corporations.
(ii) During the Restrictive Period, except as may be for the
sole and direct benefit of Sports Information, HEMP or the Corporations, each
member of the HEMP Shareholders (other than HEMP TL and the Majority
Shareholder) and the Management Group severally agrees not to directly or
indirectly, and to cause his Affiliates not to directly or indirectly, in any
Capacity, (i) solicit, induce, or attempt to induce (or assist or direct any
Person to solicit, induce or attempt to induce) any customer of the Corporations
(A) to cease doing business in whole or in part with or through Sports
Information, HEMP or the Corporations, or (B) to do business with any other
Person that sells goods or performs services similar to or competitive with
those provided by Sports Information, HEMP or the Corporations, including the
invention, design, manufacture, sale, licensing or otherwise exploiting products
and devices used in medical and other applications and incorporating the Hall
Effect science and technologies ("COMPETITIVE BUSINESS"); (ii) engage alone or
with any other Person in any Competitive Business; (iii) realize any economic
benefit arising from or related to doing any Competitive Business in whole or in
part with any current customers of the Corporations , or (iv) manufacture, sell,
license, design or attempt to sell or license any Intellectual Property,
technology, products, parts, assemblies or components which could constitute a
Competitive
26
Business to or for any customer of Sports Information, HEMP or the Corporations.
At any time during the Restrictive Period, the term "customer," as used in this
Section 4.03(p), includes any Person (x) who was during the Restrictive Period,
a customer of the any of Sports Information, HEMP or the Corporations, and (y)
who was a customer at any time within the two year period immediately preceding
such time. Notwithstanding the foregoing, the passive ownership by any member of
the HEMP Shareholders or the Management Group or their respective Affiliates of
less than five percent (5%) of the securities of any publicly traded entity
shall not be deemed a breach of this Section 4.03(p).
(iii) During the Restrictive Period, each member of the HEMP
Shareholders (other than HEMP TL and the Majority Shareholder) and the
Management Group severally agrees not to, directly or indirectly, and to cause
his Affiliates not to, directly or indirectly, in any Capacity, (a) make any use
of or disclose any Confidential Information or (b) solicit or employ or attempt
to solicit or employ any employees of Sports Information, HEMP or the
Corporations.
(iv) Each of the HEMP Shareholders (other than HEMP TL and the
Majority Shareholder) and the Management Group acknowledges and agrees that (i)
each of the covenants set forth in this Section 4.03(p) is necessary for the
protection of the Corporations, HEMP and Sports Information and that the nature
and scope of each such covenant is reasonable and that having regard to those
facts those covenants do not work harshly on him; (ii) there may be no adequate
remedy at law for any breach of said covenants, and the Corporations, HEMP
and/or Sports Information shall therefore be entitled to injunctive relief
without the necessity of posting any bond or showing any actual damages in the
event of a breach or threatened breach thereof by any member of the HEMP
Shareholders, the Management Group or any of their respective Affiliates; (iii)
to the extent any provisions of this Section 4.03(p) cannot be enforced in full,
it shall be enforced to the maximum extent permitted by law, and any
unenforceable provision in whole or in part shall not impair any other provision
hereunder; (iv) without prejudice to the acknowledgement and agreement in (i)
above, if any of the provisions of this Section 4.03(p), by themselves or taken
together, shall be adjudged to go beyond what is reasonable in all the
circumstances for the protection of the legitimate interests of the
Corporations, HEMP and Sports Information but would be adjudged reasonable if
part or parts of the wording in this Section 4.03(p) of words used in this
Section 4.03(p) (in the case of those definitions, only to the extent of their
application to this Section 4.03(p)) were deleted or amended or qualified or the
periods thereof were reduced or the range of products dealt with were thereby
reduced in scope, then the relevant restriction or restrictions shall apply on
the basis of such modification or modifications to this Section 4.03(p) of the
words used in this Section 4.03(p) (to the extent only of their application to
this Section 4.03(p)) as may either be necessary or as may be reasonably
required by either of the Corporations, HEMP or Sports Information to make it or
them valid and effective; and (v) each member of the HEMP Shareholders and the
Management Group acknowledges that he has had the opportunity to take
independent advice on the restrictions in this Section 4.03(p).
(q) CANCELLATION OF FUNDING OBLIGATIONS Upon the Financing
Group Stockholders (as defined in the HEMP Share Purchase Agreement) arranging
the additional financings (as also defined in the HEMP Share Purchase
Agreement), all contractual or other obligations, if any, of Westek to continue
to fund any of the operations of either of the Corporations shall be cancelled
and deemed to be of no further force or effect. Subject to the following, to the
extent that the Financing Group Stockholders do not arrange the additional
financings, Westek will provide or procure that any of such shortfall that is
required by Jopejo is provided. Westek shall, by reason of this Section 4.03(q),
be under no obligation to provide or procure funding to a greater extent than it
would have otherwise been under an obligation to provide. Subject to Westek
providing or procuring the payment of such shortfall, its contractual or other
obligations to continue to fund any of the operations of either of the
Corporations shall be cancelled and deemed to be of no further force or effect.
(r) SPECIAL PROVISIONS APPLICABLE TO THE MAJORITY SHAREHOLDER.
The Parties hereto do hereby acknowledge that the Majority Shareholder is a
professional trustee that holds interests as a trustee in businesses and
entities, in addition to the Westek Employee Trust, and as trustee of the Westek
Employee Trust will not become involved in the management of either of the
Corporations, HEMP or Sports Information. Accordingly, it is expressly
understood and agreed that the provisions of Sections 4.01, 4.03(c),
4.03(e)(ii), and 4.03(m) will only apply to the Majority Shareholder to the
extent that it shall only be required to use its power at any regular or special
meeting of shareholders of the relevant corporation to vote in favour of or
against a particular resolution.
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ARTICLE V
CONDITIONS OF CLOSING
5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF SPORTS INFORMATION AND THE
NEW SHAREHOLDERS. Consummation of the purchase of the HEMP Securities by Sports
Information is also subject to the fulfillment on or prior to the Closing Date
of each of the following conditions:
(a) The representations and warranties contained in Article
III hereof (with specific reference, inclusive of the Disclosure Schedule) shall
be true and correct at and as of the Agreement Date and shall be true and
correct in all material respects at and as of the Closing Date as if made on the
Closing Date, provided that the representation and warranties that are qualified
as to materiality shall be true and correct in all respects at and as of the
Closing Date as if made on the Closing Date.
(b) The HEMP Shareholders, the Management Group and the
Corporations shall each have performed or complied in all material respects with
all obligations, agreements and covenants required to be performed by them or it
hereunder or under the Related Agreements (as appropriate) prior to or on the
Closing Date, including all covenants and agreements on their part to be
performed, as set forth in Article IV above.
(c) There shall not have occurred since April 30, 2004 any
Material Adverse Effect or any event which could reasonably be expected to have
a Material Adverse Effect on the business, operations, results of operations,
condition, financial or otherwise, or prospects of the Corporations or its
assets and properties.
(d) The HEMP Security-holders other than HEMP TL shall have
caused the release of any and all Encumbrances on the HEMP Shares or shares in
the respective capitals of the Corporations.
(e) No action, claim, suit, investigation, litigation or
proceeding shall be pending or threatened before any court, or governmental
agency or other quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (i) prevent
consummation of any of the transactions contemplated by this Agreement, (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following the Closing or later consummation thereof, (iii) affect adversely the
right of Sports Information to own the HEMP Shares and to control the
Corporations and the Business, (iv) affect adversely the right of the
Corporations to own its assets and to operate the Business or any portion
thereof or (v) be reasonably likely to result in a Material Adverse Effect (and
no such injunction, judgment, order, decree, ruling, or charge shall be in
effect).
5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE HEMP SECURITY-HOLDERS.
Consummation of the sale of the HEMP Shares by the HEMP Security-holders is
subject to the fulfillment on or prior to the Closing Date of each of the
following conditions:
(a) The representations and warranties of Sports Information
and the New Shareholders contained herein and in any Related Agreement shall be
true and correct as of the date hereof and shall be true and correct in all
material respects as of the Closing Date, provided that the representation and
warranties that are qualified as to materiality shall be true and correct in all
respects at and as of the Closing Date as if made on the Closing Date.
(b) Sports Information and the New Shareholders shall each
have performed or complied in all material respects with all obligations,
agreements and covenants required to be performed by them or it hereunder prior
to or on the Closing Date, including all covenants and agreements on their part
to be performed, as set forth in Article IV above.
(c) Sports Information shall have delivered and/or properly
assigned to the HEMP Security-holders at or prior to the Closing all of the
documents, agreements and instruments required to be delivered or assigned by
any one or more of such Persons pursuant to Section 1.8 of this Agreement.
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(d) No action, claim, suit, investigation, litigation or
proceeding shall be pending or threatened before any court, or governmental
agency or other quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (i) prevent
consummation of any of the transactions contemplated by this Agreement, or (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following the Closing or later consummation thereof or (iii) affect adversely
the right of Sports Information to own the HEMP Shares and control HEMP, the
Corporations and the Business.
(e) Each of the HEMP Security-holders shall have received
clearance from the Inland Revenue under the Taxation of Chargeable Gains ▇▇▇
▇▇▇▇ that the sale of those of the HEMP Shares held by it, in consideration of
the allotment of Sports Information Common Stock, will not trigger a charge to
capital gains tax.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION BY THE HEMP SECURITY-HOLDERS. Subject to the
provisions of this Article VI, each of the HEMP Security-holders hereby
severally agrees to indemnify, defend and hold harmless each Sports Information
Indemnified Party from and against any and all Losses incurred or suffered
arising out of any material breach of any warranty that is contained in Article
III in this Agreement and which is binding upon that HEMP Security-holder.
6.2 INDEMNIFICATION BY SPORTS INFORMATION AND THE SPORTS INFORMATION
PRINCIPAL STOCKHOLDER. Subject to the provisions of this Article VI, Sports
Information and the Sports Information Principal Stockholder hereby jointly and
severally agree to indemnify, defend and hold harmless each HEMP Security-holder
Indemnified Party from and against any and all Losses incurred or suffered
arising out of any breach of any representation or warranty in this Agreement
and/or in any Related Agreement made or given by Sports Information and the
Sports Information Principal Stockholder or any one or more of them.
6.3 OTHER INDEMNIFICATION ARRANGEMENTS.
(a) Notwithstanding the other provisions of this Article VI,
no Indemnitor shall be liable under this Article VI or otherwise for a breach of
representation or warranty unless the Indemnitee gives notice of a claim against
such Indemnitor giving reasonable details of the claim and the events which gave
rise to the claim and, if practicable, the Indemnitee's genuine pre-estimate of
the amount of the claim not later than 18 months (the "CLAIMS PERIOD") after the
Closing Date (and for the avoidance of doubt, claims asserted in writing before
such date shall be deemed timely made regardless of whether litigation or
arbitration proceedings are commenced by such date) and proceedings in respect
of any claim so notified are commenced (by the issue and service of a claim
form) within six months of such notification if the claim is not settled within
such six month period. Such limitation shall not apply to Indemnifiable Claims
arising out of an inaccuracy of a statement, or a breach of warranty, as
applicable, set forth in Section 3.20, which shall survive the Claims Period
without limitation.
(b) The obligations with respect to any Indemnifiable Claim
arising under Section 6.1 or otherwise are subject to the limitations that the
Sports Information Indemnified Parties may not make or bring any claim against
any of the HEMP Security-holders in respect of any Indemnifiable Claims unless
the aggregate amount of all Losses therefor from time to time incurred or
suffered (and/or threatened to be incurred or suffered) by all Sports
Information Indemnified Parties collectively exceeds $100,000 (the "THRESHOLD"),
after which point the Sports Information Indemnified Parties shall be entitled
to indemnification for the amount of such Losses only in excess of the
Threshold. All Losses of all Sports Information Indemnified Parties shall be
aggregated in determining whether the Threshold has been reached. If the Closing
occurs, the HEMP Security-holders shall have no right of contribution against
the Corporations, or any of its directors, officers of employees (except where
such person is also one of the HEMP Security-holders) for any Indemnifiable
Claims arising under Section 6.1(a) or otherwise that relate solely to this
Agreement, but may have such right with regard to Indemnifiable Claims arising
under the Related Agreements.
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(c) Subject to the last sentence of this Section 6.03(c) and
the provisions of Section 6.6 below, the aggregate Liabilities of each one of
the HEMP Security-holders and Westek in respect of this Agreement shall not
exceed the market value of any Sport Information and Publishing Corp shares
(including therein the shares underlying any options to purchase Sport
Information Shares) held by it or him or, in the case of Westek, those held by
the Majority Shareholder, on a date that shall be one (1) business day after the
date of consummation of the transactions contemplated by this Agreement. As used
herein, the term "market value" means the product of (A) the number of shares of
common stock of Sport Information or number of shares of common stock of Sport
Information underlying any options held by any of the HEMP Security-holders or,
in the case of Westek, those held by the Majority Shareholder, multiplied by (B)
the closing price per share of the shares of Sport Information common stock on
the date in question (the date payment is due to be made or one (1) business day
after the date of consummation of the transactions contemplated by this
Agreement, as applicable), as such shares are traded on the NASD
over-the-counter bulletin board or on any national securities exchange.
Notwithstanding the foregoing, except if the provisions of Section 6.6 below
shall be applicable, the maximum aggregate Liability of in respect of this
Agreement of: (i) the Management Group members shall not exceed the sum of
$2,400,000; (ii) the HEMP TL shall not exceed the net market value (net of taxes
and selling expenses) of the securities of Sport Information representing the
entire corpus of such trust as at the date payment is due to be made in respect
of any of such Liabilities, and (iii) the Majority Shareholder shall not exceed
the net market value (net of taxes and selling expenses) of the securities of
Sport Information representing the entire corpus of such trust as at the
business day immediately prior to the date payment is due to be made in respect
of any of such Liabilities.
(d) Indemnitee agrees to give to the Indemnitor prompt written
notice of any claim with respect to which it may be entitled to indemnity or
damages hereunder (but the obligations of Indemnitor under this Article 6.3 or
otherwise shall not be impaired by failure to give such notice except to the
extent said failure actually causes Losses to, or prejudices the rights of
Indemnitor). Indemnitor shall have the right to (and shall upon the request of
Indemnitee) assume, with counsel reasonably satisfactory to Indemnitee, the
defense of any such claim brought by a third party. After Indemnitor's written
confirmation of the assumption of the defense of any such claim and its
obligation to indemnify and hold harmless Indemnitee in respect thereof
Indemnitor shall not be responsible for the legal fees and expenses of counsel
independently retained by Indemnitee during the continuance of such assumption
(but shall be liable for any such fees and expenses other than during the
continuance of such assumption). Indemnitor may effect any settlement,
adjustment or other compromise (collectively, "SETTLEMENT") of any such claim
without the consent of Indemnitee if Indemnitor has paid, or made adequate
provision for the payment of, the amount of such Settlement at the time thereof
and obtained a complete release respecting any such claims against the
Indemnitee, as applicable, provided that before entering into any Settlement
that involves any remedy other than the payment of money by Indemnitor,
Indemnitor shall obtain the prior written consent of Indemnitee, which shall not
be unreasonably withheld, denied or delayed. Indemnitee may, at its election,
employ counsel at its own expense in connection with the handling of any such
claim. Indemnitee shall have the right to enter into any Settlement of any such
claim provided Indemnitee shall not be entitled to any indemnification or
damages hereunder in connection with the payment of any amounts pursuant to any
Settlement agreed to by it unless such Settlement is consented to in writing by
Indemnitor, which consent shall not be unreasonably withheld, denied or delayed.
The Parties agree to cooperate with each other in connection with the defense,
negotiation or Settlement of any claim of a third party.
(e) The Indemnitee shall not be entitled to claim more than
once in respect of the same loss or damage.
(f) The Indemnitee shall not have any claim under this
Agreement in respect of any matter to the extent that the facts which might
result in a claim or possible claim were fairly disclosed in the Disclosure
Schedule or in this Agreement or the other documents referred to in this
Agreement.
(g) No HEMP Security-holder shall be liable for any claim
under this Agreement if and to the extent that a liability arises or is
increased as a result of any act or omission of Sports Information (or any
persons deriving title from it), HEMP or either Corporation after Closing done
or suffered other than:
30
(i) pursuant to a legally binding obligation entered
into by the Corporation concerned before Closing; or
(ii) in order to comply with any law.
(h) No Indemnitor shall have a liability for a claim under
this Agreement unless and until such claim reaches final determination, which
means:
(i) the relevant Indemnitor(s) and the Indemnitee
agreeing a settlement in respect of the relevant claim or it being otherwise
satisfied; or
(ii) an order or a decree of a court of competent
jurisdiction being given in proceedings in respect of a relevant claim and such
order or decree being final and not or no longer appealable.
(i) If any claim under this Agreement is based upon a
liability that is contingent only an Indemnitor shall not be liable to make any
payment to an Indemnitee, unless and until such contingent liability becomes an
actual liability and is discharged and in the case of a claim under the
warranties set out in Section 3 loss is proven.
(j) Where an Indemnitee is at any time entitled to recover
from some other Person any sum in respect of any matter giving rise to a claim
under this Agreement the Indemnitee shall (and shall procure that the relevant
Corporation shall (as appropriate)) undertake all reasonable steps to enforce
such recovery prior to taking any actions (other than notifying the Indemnitor
of the claim) against an Indemnitor and in the event that an Indemnitee or a
Corporation or HEMP shall recover any amount from such other Person the amount
of the claim against an Indemnitor shall be reduced by the amount recovered less
the reasonable costs incurred by the Indemnitee or the relevant Corporation or
HEMP in recovering that sum from such other person.
(k) If an Indemnitor makes any payment to an Indemnitee or
either Corporation in relation to any claim under this Agreement and the
Indemnitee or any Corporation or HEMP subsequently receives from a third party
any amount referable to, or any benefit which would not have been received but
for the circumstances giving rise to, the subject matter of that claim, the
Indemnitee shall, once it or either Corporation or HEMP has received such amount
or benefit, immediately repay or procure the repayment to the Indemnitor of
either:
(i) the amount of such receipt (after deducting an
amount equal to the reasonable costs of the Indemnitee or either Corporation or
HEMP incurred in recovering such receipt and any taxation payable on it); or if
lesser,
(ii) the amount paid in respect of such claim by the
Indemnitor together with any interest or repayment supplement paid to the
Indemnitee or the Corporation or HEMP in respect of it.
(l) Nothing in this Section shall in any way affect or
prejudice the Indemnitee's common law duty to mitigate its loss.
(m) a HEMP Security-holder's liability in respect of any
breach or non fulfillment of the warranties in Article III and/or the
indemnities under this Article VI shall be extinguished or reduced if and to the
extent that:
(i) any allowance, provision or reserve is made or
otherwise noted, taken account of, or reflected in the Financial Statements or
the matter to which such liability relates was taken into account in computing
the amount of such provision or reserve; or
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(ii) the claim would not have arisen but for an
alteration or enactment (other than a re-enactment) of any statute, statutory
instrument or regulation or other legislative or regulatory act or imposition or
any change in the requirements or published practice or extra statutory
concession of a taxation authority (whether of the United Kingdom or elsewhere)
which was announced or enacted or imposed or became effective on or after the
date of this Agreement, whether with or without retrospective effect, or any
judgement delivered after the date of this Agreement; or
(iii) the claim arises as a result of the withdrawal
on or after the date of this Agreement of any published practice or extra
statutory concession of a taxation authority (whether of the United Kingdom or
elsewhere) having general application, whether with or without retrospective
effect; or
(iv) the claim arises as a result of the withdrawal
on or after the date of this Agreement of any written agreement or
administrative arrangement of either of the Corporations made with the Inland
Revenue or any other taxation authority, whether with or without retrospective
effect; or
(v) the claim arises as a result of any changes on or
after the date of this Agreement of the applicable accounting standards; or
(vi) the claim arises as a result of any changes on
or after the Closing Date in the accounting or taxation policies or practices of
either of the Corporations, including, without limitation, the policies and
practices in terms of which the Corporations values its assets, makes provisions
or recognizes liabilities or the length of any accounting period; or
(vii) the claim would not have arisen or would have
been reduced but for failure or omission by the Corporations after the Closing
Date to make any claim, election, surrender or disclaimer or give any notice or
consent or do any other thing the making, giving or doing of which was taken
into account in computing the provision for taxation in the accounts.
(n) Sports Information hereby acknowledges and agrees that
none of the HEMP Security-holders nor any person on their behalf makes or has
made any representation or promise or gives or has given any warranty, assurance
or undertaking to Sports Information with respect to the matters provided for in
this Agreement other than as expressly set out in Article III. Sports
Information hereby further acknowledges and admits that it has not entered into
this Agreement (or any of the documents referred to in it or executed at
Closing) in reliance on any representation, promise, warranty, assurance or
undertaking, written or oral to or by whomsoever made other than the warranties
set out in Article III.
(o) The HEMP Security-holders shall have no liability in
respect of any matter of which Sports Information or its professional advisers
were aware, or which a prudent purchaser having taken professional advice ought
reasonably to be aware, as a result of its due diligence review.
(p) Sports Information and the Sports Information Principal
Stockholder jointly and severally confirm and warrant to the HEMP
Security-holders that there are no circumstances (save as disclosed in the
Disclosure Schedule) within the knowledge of Sports Information or its
professional advisers or any of the Sports Information Principal Stockholders or
their professional advisers at the date of this Agreement which will or may
reasonably be expected may entitle Sports Information and the Sports Information
Principal Stockholders or any one or more of them to make a claim under this
Agreement and in so far as there are such circumstances and provided that the
extent of the knowledge of Sports Information or its professional advisers or
any of the Sports Information Principal Stockholders or their professional
advisers as at the date of this Agreement was such that they (or any one or more
of them) ought reasonably to have appreciated that the matter will or may
entitle them to make such a claim, Sports Information and the Sports Information
Principal Stockholders will not be entitled to make any claim in respect
thereof.
(q) Sports Information and the Sports Information Principal
Stockholders irrevocably and jointly and severally agree with and undertake to
the HEMP Security-holders that notwithstanding any other provisions of this
Agreement or any rule of law to the contrary:
32
(i) The HEMP Security-holders can refer to a document
in the Disclosure Schedule and attach or annex to the Disclosure Schedule files
of disclosure documents without making detailed disclosures of the contents of
such disclosure documents with reference to a particular warranty in the section
headed "Specific Disclosures" in the Disclosure Schedule and that all such
references and the contents of the disclosure documents shall constitute and be
deemed to have constituted full, fair and effective disclosure, with the result
that the HEMP Security-holders' liability under or pursuant to the warranties
shall be limited and/or excluded accordingly as long as the matter to be
disclosed and its relevance to the subject matter of the warranty ought
reasonably to be apparent to Sports Information or its professional advisers if
it or they had reviewed fully the copy of the relevant document attached or
annexed to the Disclosure Schedule; and
(ii) Sports Information and the Sports Information
Principal Stockholders have had the opportunity to review fully all documents
and information listed in the annexes to the Disclosure Schedule.
6.4 None of the Majority Shareholder or the Minority Shareholders shall
be subject to any Liabilities under this Agreement if and to the extent that
recovery in respect of the matter giving rise to such Liabilities is made by any
Person under the HEMP Share Purchase Agreement.
6.5 Notwithstanding the fact that the Sports Information Principal
Stockholders give or make certain representations, warranties, undertakings,
covenants and agreements in this Agreement jointly and severally with Sports
Information, each of the Sports Information Principal Stockholders irrevocably
undertakes to the HEMP Security-holders and Sports Information not to seek any
contribution from, or make any other claim against, Sports Information in
respect of any Liabilities that any of the Sports Information Principal
Stockholders may suffer or incur pursuant to this Agreement.
6.6 FRAUD. The limitations set out in this Article VI shall not apply
to an Indemnitor in respect of Liabilities arising from fraud or dishonesty or
willful non-disclosure on the part of that Indemnitor, its agents or advisers.
ARTICLE VIII
MISCELLANEOUS
7.1 TERMINATION. The Parties may terminate this Agreement as provided
below:
(a) Sports Information and the HEMP Security-holders may
terminate this Agreement by mutual written agreement at any time prior to the
Closing.
(b) Sports Information may terminate this Agreement by giving
written notice to the HEMP Security-holders at any time prior to the Closing (i)
if any of the HEMP Security-holders has breached any material representation,
warranty, or covenant contained in this Agreement, Sports Information has
notified the HEMP Security-holders in writing of the breach, and the breach has
continued without cure for a period of 10 days after the notice of breach or
(ii) if the Closing shall not have occurred on or before June 30, 2004 (the
"OUTSIDE CLOSING DATE"), unless the failure results primarily from Sports
Information or the Sports Information Principal Stockholder itself or himself
breaching any material representation, warranty, or covenant on its or his part
to be observed or performed that is contained in this Agreement.
(c) The HEMP Security-holders together holding not less than
75% of the outstanding HEMP Shares may terminate this Agreement by giving
written notice to Sports Information at any time prior to the Closing (i) if
Sports Information or any of the Sports Information Principal Stockholders have
breached any material representation, warranty, or covenant contained in this
Agreement, any HEMP Security-holder has notified Sports Information in writing
of the breach, and the breach has continued without cure for a period of 10 days
after the notice of breach or (ii) if the Closing shall not have occurred on or
before the Outside Closing Date, unless the failure results primarily from any
of the HEMP Security-holders/Party or Parties wishing to exercise the right of
termination themselves breaching any representation, warranty, or covenant on
their part to be observed or performed that is contained in this Agreement.
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7.2 EFFECT OF TERMINATION.
(a) If any Party terminates this Agreement pursuant to Section
8.1, all rights and obligations of the Parties hereunder shall terminate without
any Liability of any Party to any other Party (except for any Liability of any
Party then in breach).
(b) As a material inducement to Sports Information and the
HEMP Security-holders entering into this Agreement, each such Party and each of
the other Parties hereby agrees that, notwithstanding anything contained
elsewhere in this Agreement, if this Agreement is terminated prior to Closing
due to any Party's breach, the non-breaching Parties' sole remedy against the
breaching Party shall be arbitration for monetary damages, and not a suit for
injunctive relief.
7.3 ENTIRE AGREEMENT, SURVIVAL.
(a) This Agreement, and the documents referred to in it,
constitute the entire agreement and understanding of the Parties and supersede
any previous agreements made or existing between the Parties or any of them
before or simultaneously with this Agreement and relating to the subject matter
of this Agreement (all of which shall be deemed to have been terminated by
mutual consent with effect from the date of this Agreement). For the avoidance
of doubt, the provisions of the HEMP Share Purchase Agreement shall continue in
full force and effect.
(b) Each of the Parties acknowledges and agrees that on
entering into this Agreement, and the documents referred to herein, does not
rely on, and shall have no remedy in respect of, any statement, representation,
warranty or understanding (whether negligently or innocently made) of any person
(whether party to this Agreement or not) other than as expressly set out in this
Agreement.
(c) The only remedy available to a Party for a breach of this
Agreement shall be for breach of contract under the terms of this Agreement.
(d) Nothing in this Section 7.3 shall, however, operate to
limit or exclude any liability for fraud.
(e) Except as otherwise permitted by this Agreement no change
to its terms shall be effective unless it is in writing and signed by or on
behalf of each of the Parties.
7.4 JURISDICTION AND GOVERNING LAW.
(a) Subject to the dispute resolution provisions provided
elsewhere in this Agreement this Agreement shall be governed by and construed in
accordance with the laws of England.
(b) The Parties hereby submit to the exclusive jurisdiction of
the courts of England for all purposes in connection with this Agreement.
7.5 SCHEDULES; TABLES OF CONTENTS AND HEADINGS, NOTICES. Any section of
the Disclosure Schedule required to be attached and not attached to this
Agreement on the Agreement Date shall be deemed to have been attached thereto
with the following thereon: "NONE." The table of contents and section headings
of this Agreement and titles given to Schedules to this Agreement are for
reference purposes only and are to be given no effect in the construction or
interpretation of this Agreement. All notices and other communications under
this Agreement shall be in writing and shall be deemed given when (a) delivered
personally (including by confirmed legible facsimile transmission and
contemporaneous first-class mailing for overnight delivery), (b) delivered by a
responsible overnight courier service, or (b) five business days after being
deposited first class, or airmail class if to a different country, in the mails,
in each such case delivered or mailed to the Parties at the addresses set forth
below (or to such address as a Party may have specified by notice given to the
other Parties pursuant to this provision).
7.6 SEPARABILITY. In the event that any provision hereof would, under
applicable law, be invalid or unenforceable in any respect (a) such provision
shall be enforced to the maximum extent permissible under
34
applicable law, and (b) the invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
7.7 MISCELLANEOUS PROVISIONS.
(a) Subject and without prejudice to Section 7.2(a), all
rights and remedies of any Party under any provision of this Agreement shall be
in addition to any other rights and remedies provided for by any law of any kind
(including all forms of legal and equitable relief, including specific
performance), all rights and remedies contemplated in the preceding part of this
sentence shall be independent and cumulative, and may, to the extent permitted
by law, be exercised concurrently or separately, and the exercise of any one
right or remedy shall not be deemed to be an election of such right or remedy or
to preclude or waive the exercise of any other right or remedy.
(b) Any Party may waive compliance by another with any of the
provisions of this Agreement provided that (i) no waiver of any provision shall
be construed as a waiver of any other provision, (ii) any waiver must be in
writing and shall be strictly construed, and (iii) a waiver in any one instance
shall not be deemed a waiver in any subsequent instance.
(c) This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and permitted assigns.
Except as contemplated by Article VI, the provisions of this Agreement (i) are
for the sole benefit of the Parties, and (ii) shall not create or be deemed to
create any third party beneficiary rights in any Person not a party to this
Agreement and consequently no term of this Agreement is enforceable pursuant to
the Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇ by any person who is not a
party to it. No assignment of this Agreement or of any rights or obligations
hereunder, and no declaration of trust in respect of any such rights or the
benefit of this Agreement, may be made by any Party (by operation of law or
otherwise) without the prior written consent of the other Parties and any
attempted assignment or declaration of trust without the required consent shall
be void; provided, that (i) no such consent shall be required for Sports
Information to assign part or all of its rights under this Agreement to one or
more of its Affiliates, but no such assignment shall relieve Sports Information
of any of its obligations under this Agreement as a primary obligor and (ii)
Sports Information shall have the right, without consent, to assign this
Agreement and any agreements or other documents relating hereto, as collateral
security for Sports Information's obligations to its lenders, and such lenders
shall have the right, without consent, to assign their rights in and to this
Agreement and any such agreements, certificates or other documents, to any
purchaser or assignee of such lenders' rights, whether by foreclosure or
otherwise, but no such assignment shall relieve Sports Information of any of its
obligations under this Agreement as a primary obligor. Sports Information shall
give the HEMP Security-holders prior notice of any assignment.
(d) This Agreement may be executed via fax and in
counterparts, each of which shall be an original, but which together shall
constitute one and the same Agreement.
(e) Each Party (severally) shall indemnify and hold harmless
the other Parties from and against any and all claims for investment bankers,
brokers, finders or similar commissions ("THIRD PARTY COMMISSION") made by any
Person as a result of this Agreement and the transactions contemplated hereunder
to the extent that any such Third Party Commission was incurred, or alleged to
have been incurred, by or through that Party.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
SPORTS INFORMATION AND PUBLISHING
CORP.
By:
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and CEO
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
HEMP TRUSTEES LIMITED
By:
-------------------------------
Name:
Title:
MANAGEMENT GROUP:
----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
Easter ▇▇▇▇▇, ▇▇▇▇ Quaich, Amulree
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Cairns, Craigellachie
Aberlour, Scotland AB 38 9SL
36
MAJORITY SHAREHOLDER:
ABACUS TRUST COMPANY LIMITED AS TRUSTEE
FOR THE WESTEK LIMITED EMPLOYEE TRUST
By:
Name: _____________, Director
Address of the Majority Shareholder:
2nd Floor
60 Circular Road
▇▇▇▇▇▇▇ Isle of Man
IM1 1SA
WESTEK LIMITED
By:
Name: _____________,
Title: Director
Taurus Park
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
MINORITY SHAREHOLDERS:
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
Address:
----------------------------------------
----------------------------------------
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address:
----------------------------------------
----------------------------------------
37
UNIVERSITY OF LIVERPOOL
By: ________________________________
Name: _____________, [POSITION]
Address:
----------------------------------------
----------------------------------------
----------------------------------------
NIGEL ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Address:
----------------------------------------
----------------------------------------
UNIVERSITY OF LEEDS INNOVATIONS
LIMITED
By: __________________________
Name: _____________, Director
Address:
----------------------------------------
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Address:
--------------------------------
---------------------------------
▇▇▇▇▇ ▇▇▇▇ TECHNOLOGY LIMITED
By: __________________________
Name: _____________,
Authorized signatory
Address:
----------------------------------------
----------------------------------------
38
NEW SHAREHOLDER GROUP
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
----------------------------------------
----------------------------------------
========================================
▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
39
SCHEDULE 1
DEFINITIONS
In addition to the other terms defined in the Agreement, the following
terms shall have the following meanings when used in this Agreement:
"AFFILIATE" means, as to any Person, any other Person which, directly
or indirectly, alone or together with other Persons, controls or is controlled
by or is under common control with such Person. "CONTROL" "controlled by" and
"under common control with", as and with respect to any Person, means the power,
directly or indirectly, to direct or cause the direction of the management and
policies of such Person.
"AGREEMENT DATE" means the date of this Agreement.
"BENEFIT ARRANGEMENTS" means life and health insurance,
hospitalization, savings, bonus, deferred compensation, incentive compensation,
holiday, vacation, severance pay, sick pay, sick leave, disability, educational
assistance, tuition refund, service award, company car, scholarship, relocation,
fringe benefit, contracts and policies or practices of the Corporations
providing employee or executive compensation or benefits to Employees, whether
written or unwritten, other than Employee Benefit Plans.
"CONFIDENTIAL INFORMATION" means information with respect to the
Corporations relating to customers, suppliers, pricing information, other
financial information, techniques and capabilities, product information, market
information, processes, formulae, trade secrets, advertising and marketing
plans, current strategies and contractual relations; PROVIDED, that Confidential
Information does not mean information (i) that is or becomes part of the public
domain through no fault of the HEMP Security-holders, a Person party to or
contract with the Corporations relating to confidential or proprietary
information of the Corporations or any Affiliate, agent ore representative, or
(ii) that may be required to be disclosed by law or by any Governmental
Authority.
"CONSENTS" means consents, authorization, approvals, actions, waivers
and similar writings.
"CONTRACT" means any contract, mortgage, indenture, lease, sublease,
note, bond, deed of trust, license, sublicense, purchase order, sales order,
undertaking, understanding, plan, commitment, arrangement, instrument, or other
agreement, oral or written, formal or informal.
"JUNE 30, 2003 BALANCE SHEET" means the individual balance sheets of
the Corporations as of June 30, 2003.
"DISCLOSURE SCHEDULE" is defined in the introduction to Article III.
"DOCUMENT" means any Contract, financial statement, registration,
certificate (including officer's certificates), application, other writing or
other document.
"EMPLOYEE BENEFIT PLANS" means: (i) each "employee benefit plan," as
defined in Section 3(3) of ERISA (including any Multiemployer Plan), and (ii)
all other pension, retirement, supplemental retirement, deferred compensation,
excess benefit, profit sharing, bonus, incentive, stock purchase, stock
ownership, stock option, stock appreciation right or other equity-based
incentive, severance, salary continuation, supplemental unemployment benefits,
termination, change-of-control, health, life, disability, vacation, holiday and
fringe benefit plan, program, contract or arrangement (whether written or
unwritten, qualified or nonqualified, funded or unfunded and including any that
have been frozen or terminated) sponsored, maintained, contributed to, or
required to be contributed to, by either of the Corporations, or under which
either of the Corporations has or could have any Liability.
"EMPLOYEES" means all employees of the Corporations, including
employees on approved leaves of absence (whether family leave, workers
compensation, medical leave or otherwise).
"ENCUMBRANCE" means any mortgage, pledge, lien, charge, encumbrance,
lease, security interest, license, easement, restriction, encroachment,
condition, covenant, claim, exception, option, equity, right, other interest or
40
other encumbrance of any kind or nature (whether absolute, accrued, disputed,
contingent or otherwise) provided, that the term "Encumbrance" when used in this
Agreement shall not mean or include any obligation or undertaking of the HEMP TL
to grant to the Management Group options with respect to the HEMP TL Sports
Information Shares or the HEMP TL Shares, whether pursuant to the Letter of
Wishes or otherwise.
"EXCHANGE AGENT" means ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
"FINANCIAL STATEMENTS" means each of the Balance Sheets and the annual
and interim statements of operations, changes in cash flow and changes in
stockholders equity referred to in Section 3.4.
"GOVERNMENTAL AUTHORITY" means any United Kingdom, United States and/or
foreign federal, state, local or other governmental authority of any kind or
nature, including any department, subdivision, commission, board, bureau,
regulatory agency, agency or instrumentality thereof, any court and any
administrative agency, and any comparable body performing any governmental
functions.
"HEMP SECURITY-HOLDERS INDEMNIFIED PARTY" means each HEMP
Security-holder and any permitted assignee of any HEMP Security-holder.
"HEMP SHARE PURCHASE AGREEMENT" means the share purchase agreement
between the HEMP Security-holders, HEMP and Westek Limited dated on or around
the date of this Agreement, pursuant to which HEMP acquired the issued share
capital of the Corporations.
"INDEMNIFIABLE CLAIM" means any claim or other Proceeding with respect
to which an Indemnitee may be entitled to indemnification or damages under this
Agreement.
"INDEMNITEE" means the Party or other Person seeking indemnification or
damages pursuant to this Agreement.
"INDEMNITOR" means the Party that is required or requested to provide
indemnification or damages pursuant to this Agreement.
"INTELLECTUAL PROPERTY" means all (i) patent and patent rights,
trademarks and trademark rights, trade names and trade name rights, copyrights
and copyright rights, service marks and service ▇▇▇▇ rights, and all pending
applications for and registrations of the same; (ii) brand names, trade dress,
business and product names, logos and slogans, and (iii) proprietary technology,
including all know-how, trade secrets, quality control standards, reports
(including test reports), designs, processes, market research and other data,
computer software and programs (including source codes and related
documentation), formulae, inventions and other ideas, methodologies, and
technical information, (iv) claims of the owner of any intellectual property for
infringement of its rights by a third party, no matter when arising, and (v)
other intellectual property.
"LAW" means, as to any Person, the certificate of incorporation and
by-laws, and any statute, rule, regulation, ordinance, code, guideline, law,
judicial decision, determination, order (including any injunction, judgment,
writ, award or decree) or Consent of a court, other Governmental Authority or
arbitrator, in each case applicable to or binding upon such Person, including
the conduct of its business, or any of its assets or revenues or to which such
Person or any of its assets or revenues are subject.
"LIABILITIES" means any liabilities, commitments or other obligations
of any kind or nature whatsoever, accrued, fixed, contingent or otherwise,
liquidated or unliquidated, direct or indirect, ▇▇▇▇▇▇ or inchoate, determined,
determinable or non-determinable, due or to become due.
"LOSSES" means any and all Liabilities, losses, claims (including
allegations), demands, other Proceedings, damages, deficiencies, assessments,
judgments, fines, penalties, reasonable costs (including remediation, renewal or
response costs, and costs of investigation), and reasonable expenses (including
reasonable legal fees and expenses, including reasonable legal fees and expenses
incurred in the enforcement of the obligations under Section 6.1 or Section
6.2).
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"MATERIAL ADVERSE EFFECT" means a material adverse effect upon the
businesses, operations, results of operations, assets, condition (financial or
otherwise) of the Corporations or Sports Information (as the case may require),
when taken as a combined whole.
"MATERIAL CONTRACT" means any (i) Contract to which the Corporations
are a party or by which any of its assets or properties is bound or subject that
(a) requires an expenditure by or payment to the Corporations of more than
$15,000 for such Contract or a series of related Contracts (whether or not
performed in part); (b) requires performance or payment to or by the
Corporations after December 31, 2003; (c) materially restricts the Corporations
from engaging in its business or in using any of its assets or properties; (d)
is a collective bargaining agreement or a similar type of agreement; (e) relates
to any Real Property; (f) is a loan or credit agreement, capital lease or other
agreement for borrowed money; (g) is a guaranty, letter of credit or other
surety arrangement given by the Corporations; (h) creates an Encumbrance on any
of the assets or properties of the Corporations or the Shares; (h) is a license,
distribution or supply agreement (other than a "shrink-wrap" software license
agreement); (i) is a customer agreement (other than a purchaser order entered
into in the ordinary course of business); (j) is an agreement for the purchase
of assets or stock or related to any business combination entered into outside
the ordinary course of business; (k) relates to the employment or compensation
of any employee, former employee, consultant or former consultant of the
Corporations; or (l) otherwise is material to the Corporations or (ii) Contract
to which any of the HEMP Security-holders is a party or by which any of his
assets or properties is bound or subject that encumbers or otherwise relates to
the Shares.
"PERMITS" means all authorizations, licenses, registrations,
franchises, variances, consents, clearances, waivers, certificates, other
approvals and similar writings granted or issued by any Governmental Authority.
"PERSON" means any individual, corporation, partnership, limited
liability company, trust, association, Governmental Authority or any other
entity.
"PROCEEDINGS" means any claims, controversies, demands, actions,
lawsuits, investigations, proceedings or other disputes, formal or informal,
including any by, involving or before any arbitrator or any Governmental
Authority.
"REAL PROPERTY" means all of the real property owned and/or leased by
the Corporations, including any portion thereof, listed in SECTION 3.19 TO THE
DISCLOSURE SCHEDULE and more particularly described in the Lease.
"RELATED AGREEMENT" means any Contract (including all Contracts
delivered at the Closing) arising out of the execution, delivery or performance
of this Agreement or the HEMP Share Purchase Agreement (and terms that are
defined in the HEMP Share Purchase Agreement but are not defined in this
Agreement shall have the same meanings in this definition) (whether executed
prior to, at or subsequent to the Closing), including, without limitation (a)
the ▇▇▇▇▇▇ Employment Agreement, (b) the Cameron Employment Agreement, (c) the
Note, (d) the Sports Information Series A Preferred Stock Articles of Amendment,
(e) the Guaranty Agreement, (f) the Shareholders Agreement, (g) the HEMP Share
Purchase Agreement and the Exhibits thereto, (h) the Repurchase Option
Agreement, and (i) the Sports Information Stock Option Plan.
"TAXATION AUTHORITY" means the Inland Revenue, H.M. Customs & Excise or
any other statutory, governmental, federal, state, provincial or local
government authority, body or official.
"TAXES" means any and all taxes or assessments of any kind or nature
whatsoever, whether imposed in the United Kingdom, the United States or
elsewhere in the world, including any and all income, franchise, gross receipts,
sales, alternative, add-on, minimum, employment, real property, personal
property, business, capital stock, use and occupancy, AD VALOREM, transfer,
license, excise, stamp, other transfer, estimated, withholding, service, payroll
and recording taxes and any related penalties, charges, interest and other
additions thereto.
"TO THE KNOWLEDGE OF THE HEMP SECURITY-HOLDERS" (and reasonably similar
terms) means "to the best of the knowledge and belief of the HEMP
Security-holders after reasonable inquiry of the management of the Corporation."
42
"TO THE KNOWLEDGE OF ▇▇▇▇▇ ▇▇▇▇▇▇▇ OR ▇▇▇▇ ▇▇▇▇▇▇" (and reasonably
similar terms) means "to the best of the knowledge and belief of ▇▇▇▇▇ ▇▇▇▇▇▇▇
or ▇▇▇▇ ▇▇▇▇▇▇ after reasonable inquiry of other members of the management of
the Corporations (including each other)".
"SPORTS INFORMATION INDEMNIFIED PARTY" means Sports Information and any
permitted assignee of Sports Information.
43
