Exhibit 10.1
THIS AGREEMENT is made on the ____ day of June, 2004
BETWEEN
(1) Hall Effect Technologies Limited, a company registered in England
number 03344705 whose registered office is Xxxx 0 Xxxxxx Xxxx,
Xxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxx, XX0 0XX ("the Company")
(2) Xxxxxxxx Xxxxxx Xxxxxx of Easter Xxxxx, Xxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxx, XX0 0XX ("the Employee")
and
(3) Hall Effect Medical Products Inc, a company organised and existing
under the laws of the State of Delaware, United States of America
and Sports Information and Publishing Corp., a company formed
under the laws of the State of Colorado, United States of America
("the Parents")
WHEREAS (a) the Board of the Company ("the Board") has approved the terms of
this Agreement and (b) the Parents have agreed to guarantee the obligations of
the Company
IT IS AGREED AS FOLLOWS:
1. Definition
In this Agreement:
1.1 "Associated Company" means a subsidiary and any
other company which is for
the time being a holding
company (as defined in the
Companies Xxx 0000 section
736) of the Company or any
subsidiary of any such holding
company.
1.2 "Subsidiary" means a subsidiary (as
defined by the Companies Xxx
0000 section 736) for the time
being of the Company.
2. Appointment
The Company shall employ the Employee and Employee shall serve the Company
as Senior Executive Officer or in such other capacity of an equivalent
status as the Company may reasonable require on and subject to the terms
and conditions specified herein. If the Company becomes a subsidiary of an
Associated Company whose shares trade in the United States, the Employee
shall also serve as Chief Executive Officer of such Associated Company and
a member of its board of directors without any additional compensation.
3. Duration of the Employment
3.1 The employment commenced on 1 December 2003 ("the Commencement Date")
and subject to clause 14 below shall continue for an initial period of
three years and may be terminated by the Company giving to the
Employee not less than twelve months written notice or by the Employee
giving to the Company not less than six months written notice. For the
avoidance of doubt the earliest date on which said notice given by the
Company may cause Employee's employment to terminate is 30 November
2006. Unless sooner terminated in accordance with the above, the
Employee's employment hereunder shall continue on a year-to-year basis
after 30 November 2006.
3.2 Notwithstanding clause 3.1 above, the employment shall terminate when
the Employee reaches the normal retiring age of 65.
3.3 The Employee's period of continuous employment began on 23 July 2000.
The employment is not continuous with any previous employment.
3.4 The Employee warrants that he is not bound by or subject to any court
order, agreement, arrangement or undertaking which in any way
restricts or prohibits him from entering into this Agreement or from
performing his duties hereunder.
4. Duties
4.1 During the continuance of his employment hereunder the Employee shall:
(a) faithfully and diligently perform such duties and exercise such
powers consistent with his position as may from time to time be
assigned or vested in him by the Board;
(b) during the normal working hours specified in clause 5 (unless
prevented by ill health or accident and except during holidays
permitted by this Agreement) devote the whole of his time,
attention and abilities to carrying out his duties hereunder;
(c) obey the reasonable and lawful directions of the Board;
(d) comply with all of the Company's rules, regulations, policies and
procedures from time to time in force;
(e) keep the Board at all times promptly and fully informed (in
writing if so requested) of his conduct of the business of the
Company and any Associated Company and provide such explanations
in connection therewith as the Board may require;
(f) use his best endeavours to promote, develop and extend the
interests and reputation of the Company and its Associated
Companies and not to do anything which is to their detriment.
4.2 The Company reserves the right to require the Employee to carry out
the duties of another position of equivalent status either in addition
to or instead of his duties as Senior Executive Officer and the
Company shall be at liberty to appoint any other person or persons to
act jointly with the Employee as Senior Executive Officer or in any
position to which he may be assigned from time to time.
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4.3 The Employee shall if and for so long as the Company requires and
without any further remuneration than that provided for in this
Agreement:
(a) carry out the duties of his position on behalf of any Associated
Company
5. Hours and Place of Work
5.1 The Employee shall work such hours and at such times as are necessary
for the proper performance of his duties, being not less than 37 hours
per week to suit the given workload.
5.2 The Employee shall carry out his duties at any location which is
consistent with the interests of the Company and it is anticipated
that the Employee may frequently carry out duties from his home.
However, the Company may require the Employee to work at any place
within the United Kingdom on either a temporary or an indefinite
basis.
5.3 For the avoidance of doubt, the Employee shall be entitled to pursue
outside business research and academic interests providing that those
interests do not prevent the Employee from carrying out his duties
hereunder to the best of his ability and providing that his outside
interests do not conflict with the interests of the Company in any
respect whatsoever.
6. Remuneration
6.1 The Employee shall be paid by the way of remuneration for his services
during his employment hereunder a salary for serving as an Executive
Officer of the Company at the rate of (pound)130,000 per annum for the
period 6 months from the Commencement Date, rising to (pound)150,000
per annum thereafter. Such salary shall be paid by equal monthly
instalments in arrears on the last day of every month and shall accrue
from day to day. Such salary shall be reviewed at the end of each
financial year of the Company and shall be increased provided that the
performance of the Employee in the reasonable opinion of the Board
justifies such increase. Notwithstanding anything to the contrary
contained in the Articles of Association of the Company or of any
Associated Company the Employee shall not be entitled to any other
remuneration either as director or employee of the Company or any
Associated Company.
6.2 Payment of salary to the Employee shall be made either by the Company
or by an Associated Company and, if by more than one company, in such
proportions as the Board may from time to time think fit.
6.3 The Employee shall not under any circumstances either directly or
indirectly receive or accept for his own benefit any commission,
rebate, discount, gratuity or profit from any person, company or firm
having business with the Company or any Associated Company.
6.4 The Employee shall be eligible to receive up to a maximum of 4,829,577
share options in terms of the agreed stock option agreement attached
as Schedule A hereto.
6.5 A cash-control and profit performance based bonus scheme will be
operated on an annual basis commencing with fiscal year 2005 and
thereafter. A bonus equal to 10% of Employee's then salary shall be
payable if the Associated Company and its consolidated subsidiaries,
including the Company (collectively, the "Group") shall achieve 100%
of the net income after tax budget targets established prior to each
fiscal year by the Board. At such time as the net income after tax
budget target shall equal or exceed (US) $5,000,000, such bonus shall
be subject to increase on a pro-rata basis to a maximum of 100% of
Employee's then salary if the Group shall achieve 200% of the net
income after tax target established by the Board for such fiscal year.
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6.6 The Company acknowledges that it currently owes the Employee the sum
of (pound)26,500 in accrued and unpaid salary. Such amount shall be
paid to the Employee on June 30, 2004, or such earlier time as the
Associated Company shall raise not less than (U.S.)$3,000,000 in
financing. In the event such financing shall not be obtained, such
accrued salary shall only be paid out of Company cash flow at such
time and in such manner as shall be determined by the Board of the
Company.
7. Deductions
The Employee hereby authorises the Company to deduct from his remuneration
under this Agreement any sums due from him to the Company including,
without limitation, any overpayments, loans or advances made to him by the
Company, the cost of repairing any damage or loss to the Company's property
caused by him and any losses suffered by the Company as a result of any
negligence or breach of duty by the Employee.
8. Expenses
The Company shall reimburse the Employee in respect of all expenses
reasonably incurred by him in the proper performance of his duties, subject
to his providing such receipts or other evidence as the Company may
require.
9. Holiday
9.1 The Employee shall be entitled to paid holiday for all relevant bank
and public holidays and a further 20 working days holiday in each
holiday year (being the period from 1st January to 31st December). The
Employee may only take this holiday at such times as are agreed with
the Board and the Board may direct the employee to take holiday on
particular days, notice of which will be given.
9.2 In the holiday year in which the employment hereunder commenced or
terminates the entitlement to holiday shall accrue on a pro rata basis
for each month of service.
9.3 If on the termination of the employment hereunder, howsoever
occurring, the Employee has exceeded his accrued holiday entitlement
the excess may be deducted from any sums due to him. If the Employee
has holiday entitlement still owing, the Company may at its sole
discretion, require the Employee to take such outstanding holiday
during any notice period or make payment in lieu thereof.
9.4 Holiday entitlement for one year cannot be taken in subsequent holiday
years. Failure to take holiday entitlement in the appropriate holiday
year will lead to forfeiture of any accrued holiday not taken without
any right to payment in lieu thereof.
10. Sickness Benefit
10.1 The Company shall continue to pay the Employee's salary during any
period of absence on medical grounds up to a maximum of 26 weeks in
any rolling period of 12 months, provided that the Employee shall from
time to time if required:
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(a) supply the Company with medical certificates covering any period
of sickness or incapacity exceeding seven days (including
weekends); and
(b) undergo at the Company's expense a medical examination by a
doctor appointed by the Company.
10.2 Payment of the Employee's salary pursuant to clause 10.1 shall be
inclusive of any Statutory Sick Pay to which the Employee may be
entitled under the legislation and regulations in force from time to
time.
10.3 If the Employee's absence shall be occasioned by the actionable
negligence of a third party in respect of which damages are
recoverable, then all sums paid by the Company shall constitute loans
to the Employee, who shall:
(a) forthwith notify the Company of the relevant circumstances and of
any claim, compromise, settlement or judgment made or awarded in
connection therewith;
(b) give to the Company such information concerning the above matters
as the Company may reasonably require; and
(c) if the Company so requires, refund to the Company such sum (not
exceeding the lesser of:
(i) the amount of damages recovered by him under such
compromise, settlement or judgment; and
(ii) the sums advanced to him in respect of the period of
incapacity) as the Company may determine.
11. Pension
11.1 There is no Company Pension scheme applicable to the Employee and no
contracting out certificate is in force under the Social Security
Xxxxxxxx Xxx 0000 in respect of the Employee's employment under this
Agreement.
12. Confidential Information and Company Documents
12.1 The Employee shall neither during the Employment (except in the proper
performance of his duties) nor at any time (without limit) after the
termination of the employment (howsoever the same is determined and
whether in breach of contract or otherwise):
(a) divulge or communicate to any person, company, business, entity
or other organisation;
(b) use for his own purposes or for any purposes other than those of
the Company or any Associated Company; or
(c) through any failure to exercise due care and diligence, cause any
unauthorised disclosure of any trade secrets or confidential
information relating to the Company or any Associated Company but
so that these restrictions shall cease to apply to any
information which shall become available to the public generally
otherwise than through the default of the Employee or that may be
required to be disclosed by law or by any Governmental Authority.
12.2 "Confidential Information" shall mean details of suppliers and their
terms of business, details of customers and their requirements, the
prices charged to and terms of business with customers, techniques and
capabilities, product information, market information, processes,
formulae., trade secrets, marketing plans and sales forecasts,
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financial information, results and forecasts (save to the extent that
these are included in published audited accounts), any proposals
relating to the acquisition or disposal of a company or business or
any part thereof or to any proposed expansion or contraction of
activities, details of employees and officers and of the remuneration
and other benefits paid to them, information relating to research
activities, inventions, secret processes, designs, formulae and
product lines, any information which the Employee is told is
confidential and any information which has been given to the Company
or any Associated Company in confidence by customers, suppliers or
other persons,
12.3 All notes, memoranda, records, lists of customers and suppliers and
employees, correspondence, documents, computer and other disks and
tapes, data listings, codes, designs and drawings and other documents
and material whatsoever (whether made or created by the Employee or
otherwise) relating to the business of the Company or any Associated
Company (and any copies of the same);
(a) shall be and remain the property of the Company or the relevant
Associated Company; and
(b) shall be handed over by the Employee to the Company or to the
relevant Associated Company on demand and in any event on the
termination of the employment.
13. Inventions and Intellectual Property
13.1 The parties foresee that the Employee may make inventions or create
other intellectual property in the course of his duties hereunder and
agree that in this respect the Employee has a special responsibility
to further the interests of the Company (and its Associated
Companies);
It shall be part of the normal duties of the Employee at all times to
consider in what manner and by what new methods or devices the
products, services, processes, equipment or systems of the Company or
any Associated Company with which he is concerned or for which he is
responsible might be improved and promptly to give to the Secretary of
the Company full details of any invention or improvement which he may
from time to time make or discover in the course of his duties and to
further the interests of the Company with regard thereto.
13.2 Any invention or improvement, design, process, information, copyright
work, trade xxxx or trade name or get-up made, created or discovered
by the Employee during the continuance of his employment hereunder
(whether capable of being patented or registered or not and whether or
not made or discovered in the course of his employment hereunder in
conjunction with or in any way affection or relating to the business
of any company in the Group or capable of being used or adapted for
use therein or in connection therewith shall forthwith be disclosed to
the Company and shall (subject to Sections 39 to 43 of the Patents Act
1977) belong to and be the absolute property of the Company or
Associated Company as the Company may direct.
13.3 The Employee if and whenever required so to do by the Company shall at
the expense of the Company or such Associated Company as the Company
may direct:
(a) apply or join with the Company or such Associated Company in
applying for letters patent or other protection or registration
in the United Kingdom and in any other part of the world for any
such invention, improvement, design, process, information, work,
trade xxxx, trade name or get-up as aforesaid; and
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(b) execute and do all instruments and things necessary for vesting
the said letters patent or other protection or registration when
obtained and all right title and interest to and in the same
absolutely and as sole beneficial owner in the Company or such
Associated Company or in such other person as the Company may
specify.
13.4 The Employee hereby irrevocably and unconditionally waives all Rights
under Chapter IV Copyright, Designs and Patents Xxx 0000 in connection
with his authorship of any existing or future copyright work in the
course of his employment hereunder, in whatever part of the world such
rights may be enforceable including without limitation:
(a) the right conferred by Section 77 of that Act to be identified as
the author of any such work; and
(b) the right conferred by Section 80 of that Act not to have any
such work subjected to derogatory treatment
13.5 The Employee hereby irrevocable appoints the Company to be his
Attorney in his name and on his behalf to execute and do any such
instrument or thing and generally to use his name for any invention,
improvement, design, process, information, copyright work, trade xxxx,
trade name or get-up made, created or discovered by the Employee
during the continuance of the employment hereunder (whether capable of
being patented or registered or not and whether or not made or
discovered in the course of the Employee's duties) in any way
affecting or relating to the business of the Company or any Associated
Company or capable of being used or adapted for use therein or in
connection therewith shall forthwith be disclosed to the Company and
shall (subject to Sections 39 to 43 of the Patents Act 1977) belong to
be the absolute property of the Company or such Associated Company as
the Company may direct.
13.6 Nothing in this clause shall be construed as restricting the rights of
the Employee or the Company under Sections 39 to 43 Patents Xxx 0000.
14. Termination
14.1 The appointment of the Employee hereunder shall be subject to
termination by the Company:
(a) by not less than twelve months' notice in writing given at any
time while the Employee shall have been incapacitated by reason
of ill health or accident from performing duties hereunder for a
period of or periods aggregating 180 days in the preceding twelve
months provided that if at any time during the currency of such a
notice the Employee shall provide a medical certificate
satisfactory to the Board to the effect that he has fully
recovered his physical and/or mental health and that no
recurrence of illness or incapacity can reasonable be anticipated
the Company shall withdraw the notice;
(b) by summary notice in writing if the Employee shall have:
(i) committed any serious breach of repeated or continued (after
warning) any material breach of his obligations hereunder;
or
(ii) been guilty of conduct tending to bring himself or the
Company or any Associated Company into disrepute; or
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(iii)become bankrupt or had an interim order made against him
under the Insolvency Xxx 0000 or compounded with his
creditors generally; or
(iv) failed to perform his duties to a satisfactory standard,
after having received a written warning from the Company
relating to the same; or
(v) been convicted of an offence under any statutory enactment
or regulation relating to insider dealing. Any delay by the
Company in exercising such right of termination shall not
constitute a waiver thereof;
(vi) become of unsound mind.
14.2 If the Company becomes entitled to terminate the appointment of the
Employee hereunder pursuant to clause 14.1.(b) it shall be entitled
(but without prejudice to its right subsequently to terminate such
appointment on the same or any other ground) to suspend the Employee
on full pay.
14.3 The Company reserves the right to give the Employee pay in lieu of any
notice of termination (whether given by the Company or by the
Employee).
14.4 During all or part of any period of notice of termination (whether
given by the Company or the Employee), the Company shall be under no
obligation to assign any duties to the Employee or to provide any work
for him and shall be entitled to exclude him from its premises,
provided that this shall not affect the Employee's entitlement to
receive his normal salary and other contractual benefits.
14.5 On the termination of his appointment hereunder howsoever arising the
Employee shall:
(a) at any time or from time to time thereafter at the request of the
Company resign from office and shall transfer without payment to
the Company or as the Company may direct any qualifying shares
provided by it, provided however that such resignation shall be
given and accepted to the basis that it is without prejudice to
any claims which the Employee may have against any such company
arising out of the Agreement or of the termination of the
Employment; and
(b) forthwith deliver to the Company all documents, statistics,
accounts, records, programs and other items of whatsoever nature
of description which may be in his possession or under this
control which relate in any way to the business or affairs of the
Company or any of its Associated Companies and no copies of any
such documents as aforesaid or any part thereof shall be retained
by him. In addition the Employee shall deliver up all credit
cards, motor cars, car keys and other property of or relating to
the business of the Company or of any Associated Company which
may be in his possession or under his power or control.
And if the Employee should fail to do so the Company is hereby
irrevocable authorised to appoint some person in his name and on his
behalf to sign and do any documents or things necessary to give effect
thereto.
15. Restrictive Covenants
15.1 For the purposes of Clause 15.2 the following words shall have the
following meanings:-
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(a) "Company Business" shall mean the business of inventing,
designing, manufacturing, selling, licensing or otherwise
exploiting products and devices used in medical and other
applications and incorporating the Hall Effect science and
technology;
(b) "Company Services" shall mean any services (including but not
limited to technical and product support, technical advice and
customer services) in connection with products and devices used
in medical and other applications and incorporating the Hall
Effect science and technology;
(c) "Confidential Information" shall have the meaning ascribed hereto
in Clause 12.2;
(d) "Restricted Business" shall mean Company Business or business of
a similar kind;
(e) "Restricted Services" shall mean Company Services or services of
a similar kind;
(f) "Termination Date" means the date of termination of the
Employee's employment hereunder.
15.2 The Employee hereby undertakes that during the continuance of his
employment by the Company and for a period of twelve months after the
termination thereof, howsoever the same is determined, he will not
without the prior written consent of the Company (such consent not to
be unreasonably withheld) whether by himself, through his employees or
agents or otherwise howsoever and whether on his own behalf or on
behalf of any other person, firm, company or other organisation,
directly or indirectly:
(a) solicit or induce or endeavour to solicit or induce any person
who on the termination date was a director, manager or consultant
of the Company with whom the Employee had dealings during his
employment to cease working for or providing services to the
Company, whether or not any such person would thereby commit a
breach of contract;
(b) employ or otherwise engage in the business of researching into,
developing, manufacturing, distributing, selling, supplying or
otherwise dealing with the Restricted Business or Restricted
Services any person who was during the Employee's employment
employed or otherwise engaged by the Company and who by reason of
such employment or engagement is in possession of any trade
secrets or confidential information as defined paragraph 12.2
relating to the Company Business or who has acquired influence
over the Company's customers and prospective customers.
15.3 The Employee hereby undertakes with the Company that he will not at any
time:
(a) during the continuance of his employment or after the date of
termination thereof engage in any trade or business or be associated
with any person, firm or company engaged in any trade or business
using the name(s) Hall Effect Technologies or incorporating the words
Hall Effect,
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(b) after the termination of his employment in the course of carrying on
any trade or business, claim, represent or otherwise indicate any
present association with the Company or any Associated Company or for
the purpose of carrying on or retaining any business or customer,
claim represent or otherwise indicate any past association with the
Company or any other company in the Group.
15.4 The Employee hereby undertakes that for a period of twelve months from
the date of termination of his employment he shall not whether
directly or indirectly either on his own account or for any other
person, firm or company, be engaged, employed or interested in
Restricted Business or Restricted Services in any part of the world.
15.5 Clauses 15.1 to 15.4 shall apply howsoever the Employment is
determined and whether or not such termination is connected with or
results from a breach of this Agreement on the part of the Employee or
the Company.
15.6 While the restrictions in this Clause 15 (on which the Employee has
had the opportunity to take independent advice, as the Employee hereby
acknowledges) are considered by the parties to be reasonable in all
the circumstances, it is agreed that if any such restrictions, 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 Company or an Associated Company but would
be adjudged reasonable if part or parts of the wording thereof were
deleted, the relevant restriction or restrictions shall apply with
such deletion(s) or modification(s) as may be necessary to make it or
them valid and effective.
16. Grievance and Disciplinary Procedure
16.1 If the Employee wishes to obtain redress of any grievance relating to
employment or is dissatisfied with any reprimand, suspension or other
disciplinary step taken by the Company, he shall apply in writing to
the Chief Executive, setting out the nature and details of any such
grievance or dissatisfaction. The Employee must then promptly answer
(in writing) if required such questions (if any) as the Chief
Executive/member of the Board wishes to put to him on the matter
before the Board comes to a decision. The decision of the Board on
such matters shall be final.
16.2 Any disciplinary rules applicable to the Employee are available for
inspection at the Company Secretary's office at any time upon
reasonable notice.
17. Novation
17.1 Subject to the Transfer of Undertakings (Protection of Employment)
Regulations 1981, if the Employee shall have been offered but shall
unreasonably have refused to agree to the transfer of this Agreement
by way of novation to a company which has acquired or agreed to
acquire the whole or substantially the whole of the equity share
capital of the Company, the Employee shall have no claim against the
Company in respect of the termination of appointment hereunder by
reason or the subsequent voluntary winding-up of the Company or of the
disclaimer or termination of this Agreement by the Company within one
month after such acquisition.
18. Notices
Any notice in writing to be served hereunder may be given personally to the
Employee or to the Secretary of the Company (as the case may be) or may be
posted to the Company (for the attention of its Secretary) at the
registered office for the time being or to the Employee either at his
address given above or at his last known address. Any such notice sent by
post shall be deemed served twenty four hours after it is posted and in
proving such service it shall be sufficient to prove that the notice was
properly addressed and put in the post.
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19. Guarantee
The Parents unconditionally and irrevocably jointly and severally guarantee
to the Employee the full due and punctual performance and observance by the
Company of all of the Company's obligations under the terms of this
Agreement and all other documents referred to in this Agreement. If the
Company fails in the full due and punctual performance and observance of
its obligations hereunder and thereunder, and if the Employee elects to
hold the Parents to be bound by this Agreement, then the Parents shall be
responsible for complying with any such obligations of the Company which
have not been met in full, and shall be liable for any and all costs,
claims, expenses and awards incurred by the Employee as a result of any
breach of such obligations by the Company, as if they were a primary
obligator and not a surety. The Parents shall also be liable for any and
all costs, claims, expenses and awards incurred by the Employee as a result
of any breach by either of the Parents of their obligations in terms of
this Agreement.
20. Interpretation
The headings to the Clauses are for convenience only and have no legal
effect.
21. Choice of Law, Submission to Jurisdiction and Address For Service
21.1 This Agreement shall be governed by and interpreted in accordance with
English law.
21.2 The parties hereby submit to the jurisdiction of the High Court of
Justice in England but this Agreement may be enforced by the Company
in any court of competent jurisdiction
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IN WITNESS whereof this Agreement has been executed the day and year first above
written as a Deed by the parties hereto.
Signed as a Deed by
Hall Effect Technologies Limited ...............................................
Director Director
Signed as a Deed by.............................................................
XXXX XXXXXX
WITNESSED BY
Signed as a Deed by.............................................................
Hall Effect Medical Products Inc
Director Director
Signed as a Deed by.............................................................
Sports Information and Publishing Corp
Director Director
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Schedule A to Employment Agreement
----------------------------------
NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SHARES ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE. NEITHER THE
SECURITIES REPRESENTED HEREBY MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED NOR MAY THE SHARES BE ISSUED UPON EXERCISE UNLESS SUCH SECURITIES AND
SHARES ARE REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS OR THE COMPANY RECEIVES AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH SALE, TRANSFER, PLEDGE OR ISSUANCE IS EXEMPT FROM REGISTRATION.
SPORTS INFORMATION AND PUBLISHING CORP.
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement"), is made as of this
______ day of June, 2004 by and between Sports Information and Publishing Corp.,
a Colorado corporation (the "Company"), and [Xxxx Xxxxxx] [Xxxxx Xxxxxxx]
("Optionee").
R E C I T A L
Pursuant to the [2003] Stock Option Plan (the "Plan") of the Company,
the Board of Directors of the Company or a committee to which administration of
the Plan is delegated by the Board of Directors (in either case, the
"Administrator") has authorized the granting to Optionee of an incentive stock
option to purchase the number of Shares of the Company specified in Paragraph 1
hereof, at the price specified therein, such option to be for the term and upon
the terms and conditions hereinafter stated.
A G R E E M E N T
NOW, THEREFORE, in consideration of the promises and of the undertakings of
the parties hereto contained herein, it is hereby agreed:
1. Number of Shares; Option Price. Pursuant to said action of the
Administrator, the Company hereby grants to Optionee the option ("Option") to
purchase, upon and subject to the terms and conditions of the Plan, up to
4,829,577 shares of common stock (the "Shares") of the Company at a price of
$_______ per share.
2. Term. This Option shall expire on the day before the fifth anniversary
(the "Expiration Date") unless such Option shall have been terminated prior to
that date in accordance with the provisions of the Plan or this Agreement. The
term "Affiliate" as used herein shall have the meaning as set forth in the Plan.
3. Shares Subject to Exercise. Shares subject to exercise shall be 33.33%
of such Shares on and after the first anniversary of the date hereof, 66.66% of
such Shares on and after the second anniversary of the date hereof and 100% of
such Shares on and after the third anniversary of the date hereof. All Shares
shall thereafter remain subject to exercise for the term specified in Paragraph
2 hereof, provided that Optionee is then and has continuously been in the employ
of the Company, or its Affiliate, subject, however, to the provisions of
Paragraph 4 hereof.
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4. Conditions to Exercise. In order for the Optionee to exercise the
Option, in whole or in part, both of the following conditions shall have to be
met: (a) the Optionee shall not have ceased to be employed as a senior executive
officer of Hall Effect Technologies, Ltd., an indirect subsidiary of the
Company, prior to November 30, 2006 unless such termination of employment shall
be by reason of the death, or permanent disability of the Optionee, or shall
otherwise have been approved by the board of directors of the Company (the
Optionee abstaining in any such vote); and (b) Hall Effect Technologies, Ltd.
and Jopejo, Ltd. shall collectively achieve, at the end of any the three fiscal
periods ending in 2004, 2005 and 2006 not less than 90% of their projected
combined revenues and combined earnings before interest and taxes (operating
income), that are set forth on the annual budgets that are approved in advance
by the board of directors of the Company, with the optionees abstaining in any
such voting (the "Operating Budget").
5. Method and Time of Exercise. The Option may be exercised by written
notice delivered to the Company at its principal executive office stating the
number of Shares with respect to which the Option is being exercised, together
with:
(A) a check or money order made payable to the Company in the amount
of the exercise price and any withholding tax, as provided under Paragraph
5 hereof; or
(B) if expressly authorized in writing by the Administrator, in its
sole discretion, at the time of the Option exercise, the tender to the
Company of Shares owned by Optionee having a fair market value, as
determined by the Administrator, not less than the exercise price, plus the
amount of applicable federal, state and local withholding taxes.
Not less than 100 shares may be purchased at any one time unless the number
purchased is the total number purchasable under such Option at the time. Only
whole shares may be purchased.
6. Tax Withholding. In the event that this Option shall lose its
qualification as an incentive stock option, as a condition to exercise of this
Option, the Company may require Optionee to pay over to the Company all
applicable federal, state and local taxes which the Company is required to
withhold with respect to the exercise of this Option. At the discretion of the
Administrator and upon the request of Optionee, the minimum statutory
withholding tax requirements may be satisfied by the withholding of Shares of
the Company otherwise issuable to Optionee upon the exercise of this Option.
7. Exercise on Termination of Employment. If for any reason other than
death or permanent and total disability, Optionee ceases to be employed by the
Company or any of its Affiliates (such event being called a "Termination"), this
Option (to the extent then exercisable) may be exercised in whole or in part at
any time within six months of the date of such Termination, but in no event
after the Expiration Date; provided, however, that if such exercise of this
Option would result in liability for Optionee under Section 16(b) of the
Securities Exchange Act of 1934, then such six -month period automatically shall
be extended until the tenth day following the last date upon which Optionee has
any liability under Section 16(b), but in no event after the Expiration Date. If
Optionee dies or becomes permanently and totally disabled (as defined in the
Plan) while employed by the Company or an Affiliate or within the period that
this Option remains exercisable after Termination, this Option (to the extent
then exercisable) may be exercised, in whole or in part, by Optionee, by
Optionee's personal representative or by the person to whom this Option is
transferred by devise or the laws of descent and distribution, at any time
within six months after the death or six months after the permanent and total
disability of Optionee, but in no event after the Expiration Date. In the event
this Option is treated as a non-qualified stock option, then and to that extent,
"employment" would include service as a director or as a consultant. For
purposes of this Paragraph 6, Optionee's employment shall not be deemed to
terminate by reason of sick leave, military leave or other leave of absence
approved by the Administrator, if the period of any such leave does not exceed
90 days or, if longer, if Optionee's right to reemployment by the Company or any
Affiliate is guaranteed either contractually or by statute.
8. Nontransferability. This Option may not be assigned or transferred
except by will, qualified domestic relations order or by the laws of descent and
distribution, and may be exercised only by Optionee during his lifetime and
after his death, by his personal representative or by the person entitled
thereto under his will or the laws of intestate succession.
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9. Optionee Not a Shareholder. Optionee shall have no rights as a
shareholder with respect to the Shares of the Company covered by this Option
until the date of issuance of a stock certificate or stock certificates to him
upon exercise of this Option. No adjustment will be made for dividends or other
rights for which the record date is prior to the date such stock certificate or
certificates are issued.
10. No Right to Employment. Nothing in the Option granted hereby shall
interfere with or limit in any way the right of the Company or of any of its
Affiliates to terminate Optionee's employment or consulting at any time, nor
confer upon Optionee any right to continue in the employ of, or consult with,
the Company or any of its Affiliates.
11. Modification and Termination. The rights of Optionee are subject to
modification and termination in certain events as provided in Sections 6.1 and
6.3 of the Plan.
12. Restrictions on Sale of Shares. Optionee represents and agrees that,
upon his exercise of this Option, in whole or in part, unless there is in effect
at that time under the Securities Act a registration statement relating to the
Shares issued to him, he will acquire the Shares issuable upon exercise of this
Option for the purpose of investment and not with a view to their resale or
further distribution, and that upon each exercise thereof he shall furnish to
the Company a written statement to such effect, satisfactory to the Company in
form and substance. Optionee agrees that any certificates issued upon exercise
of this Option may bear a legend indicating that their transferability is
restricted in accordance with applicable state or federal securities law. Any
person or persons entitled to exercise this Option under the provisions of
Paragraphs 5 and 6 hereof shall, upon each exercise of this Option under
circumstances in which Optionee would be required to furnish such a written
statement, also furnish to the Company a written statement to the same effect,
satisfactory to the Company in form and substance.
13. Plan Governs. This Agreement and the Option evidenced hereby are made
and granted pursuant to the Plan and are in all respects limited by and subject
to the express terms and provisions of the Plan, as it may be construed by the
Administrator. It is intended that this Option shall qualify as an incentive
stock option as defined by Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), and this Agreement shall be construed in a manner which
will enable this Option to be so qualified. Optionee hereby acknowledges receipt
of a copy of the Plan.
14. Notices. All notices to the Company shall be addressed to the Chief
Financial Officer at the principal executive office of the Company, and all
notices to Optionee shall be addressed to Optionee at the address of Optionee on
file with the Company or its subsidiary, or to such other address as either may
designate to the other in writing. A notice shall be deemed to be duly given if
and when enclosed in a properly addressed sealed envelope deposited, postage
prepaid, with the United States Postal Service. In lieu of giving notice by mail
as aforesaid, written notices under this Agreement may be given by personal
delivery to Optionee or to the Chief Financial Officer (as the case may be).
15. Sale or Other Disposition. Optionee understands that, under current
law, beneficial tax treatment resulting from the exercise of this Option will be
available only if certain requirements of the Code are satisfied, including
without limitation, the requirement that no disposition of Shares acquired
pursuant to exercise of this Option be made within two years from the grant date
or within one year after the transfer of Shares to him or her. If Optionee at
any time contemplates the disposition (whether by sale, gift, exchange, or other
form of transfer) of any such Shares, he or she will first notify the Company in
writing of such proposed disposition and cooperate with the Company in complying
with all applicable requirements of law, which, in the judgment of the Company,
must be satisfied prior to such disposition. In addition to the foregoing,
Optionee hereby agrees that before Optionee disposes (whether by sale, exchange,
gift, or otherwise) of any Shares acquired by exercise of this Option within two
years of the grant date or within one year after the transfer of such Shares to
Optionee upon exercise of this Option, Optionee shall promptly notify the
Company in writing of the date and terms of the proposed disposition and shall
15
provide such other information regarding the Option as the Company may
reasonably require immediately before such disposition. Said written notice
shall state the date of such proposed disposition, and the type and amount of
the consideration to be received for such Shares by Optionee in connection
therewith. In the event of any such disposition, the Company shall have the
right to require Optionee to immediately pay the Company the amount of taxes (if
any) which the Company is required to withhold under federal and/or state law as
a result of the granting or exercise of the Option and the disposition of the
Shares.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
SPORTS INFORMATION AND PUBLISHING CORP.
By :
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Name:
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Title:
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OPTIONEE
By :
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Name:
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Title:
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