EXHIBIT 2.3
MERGER AGREEMENT BETWEEN XXXXXXX XXXXXX,
XXXXXX XXXXX, XXXXX XXXXXXXX, PICKEM SPORTS, INC.
AND INTERNET SPORTS NETWORK, INC.
MERGER AGREEMENT
MADE EFFECTIVE AS OF THE 1st DAY OF March, 1999 (the "Effective Date").
BETWEEN: XXXXXXX XXXXXX, of 000 Xxxx Xxxxxx, Xxxxxxx, Xxxxxx, 00000 ("Xx. Xxxxxx");
XXXXXX XXXXX, of 000 Xxxxxxxx Xxx., Xxxx Xxxx, Xxxxxxxxxx 00000 ("Xx. Xxxxx"); and
XXXXX XXXXXXXX, of 0000 Xxxxxxx Xxx, Xxxxxxx Xxxx, Xxxxxxxxxx, 00000
("Xx. Xxxxxxxx");
(individually a "Vendor" and collectively the "Vendors")
AND: PICKEM SPORTS, INC. (Corporate Charter No. 19971836 D), a corporation incorporated under
the laws of Maine, U.S.A., having a registered office at
X.X. Xxx 0000, Xxxxxxxx, Xxxxx, 00000 7230, and an office at 0000 Xxxxxxxx Xxxxxx, Xxxxx
Xxxxx, Xxxx Xxxx, Xxxxxxxxxx, 00000;
("Targetco")
AND: INTERNET SPORTS NETWORK, INC., a company incorporated under the laws of Florida
having a place of business at #000 - 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0;
(the "Merger Parent")
WHEREAS:
The authorized share capital of Targetco consists of 2,000 common shares
without par value of which 300 common shares (the "Targetco Shares") are
issued and outstanding;
The Vendors are the registered and beneficial owners of the Targetco Shares as
follows:
Xx. Xxxxxx as to 100 Targetco Shares
Xx. Xxxxx as to 100 Targetco Shares
Xx. Xxxxxxxx as to 100 Targetco Shares
-------------------
Total Targetco Shares: 300;
===================
The Vendors and the Merger Parent have agreed to merge Targetco with a
wholly-owned subsidiary of the Merger Parent to be incorporated under the
laws of California (the "Subsidiary"), in the course of which merger the
Vendors shall exchange the Targetco Shares for shares of the Merger Parent
and cash consideration as described herein, on the terms and conditions set
forth in this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants
and agreements herein contained, the parties hereto do covenant and agree
(the "Agreement") each with the other as follows:
1. MERGER AND EXCHANGE OF SHARES
1.1 Subject to the terms and conditions of this Agreement, the Vendors and
the Merger Parent each agree to merge Targetco with the Subsidiary in
accordance with Articles of Merger to be filed in Maine and California, and
the Vendors agree to transfer their Targetco Shares to the Merger Parent in
connection with the merger, and in connection therewith the Merger Parent
agrees to deliver to the Vendors on the Closing Date consideration (the
"Consideration") comprised of THREE MILLION U.S. DOLLARS (U.S.$3,000,000)
(the "Cash Portion") and ONE MILLION, EIGHT HUNDRED SIXTY-SEVEN THOUSAND NINE
HUNDRED AND NINETY-FIVE (1,867,995) common shares of the Merger Parent (the
"Merger Parent's Shares").
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1.2 Upon the merger of Targetco with the Subsidiary:
(a) the surviving corporation shall be a California corporation
with Articles of merger and Bylaws in the form attached to
this Agreement as Schedule "M"; and
(b) the initial directors and officers of the surviving
corporation shall be as described in Schedule "N".
1.3 The Cash Portion of the Consideration shall be delivered by the Merger
Parent to the Vendors by wire transfer or bank cashier's cheque, and the
Merger Parent's Shares shall be issued to the Vendors at a price of U.S.$1.75
per Merger Parent's Share, as follows:
Xx. Xxxxxx as to U.S.$1,000,000 and 622,665 Merger Parent's Shares
Xx. Xxxxx as to U.S.$1,000,000 and 622,665 Merger Parent's Shares
Xx. Xxxxxxxx as to U.S.$1,000,000 and 622,665 Merger Parent's Shares
------------------------------------------------------
Totals: U.S.$3,000,000 and 1,867,995 Merger Parent's Shares.
1.4 The Merger Parent may apply to have its shares listed for public trading
on a recognized stock exchange in Canada or the United States (the
"Listing"). To facilitate the potential Listing of the Merger Parent, each of
the Vendors acknowledges to and agrees with the Merger Parent that the Merger
Parent's Shares will be subject to the following transfer restrictions, and
the certificates issued for the Merger Parent's Shares will bear a
corresponding legend:
(a) if the Listing does not occur within two years after the
Closing Date, then all the Merger Parent's Shares shall be
released from any transfer restrictions under this Agreement,
and may thereafter be transferred in accordance with the
articles of the Merger Parent and applicable law; and
(b) if the Listing does occur within two years after the Closing
Date, then the following portions of the Merger Parent's
Shares shall be released from any transfer restrictions under
this Agreement, and may thereafter be transferred in
accordance with the articles of the Merger Parent and
applicable law:
(i) 25% shall be released one year after the Listing;
(ii) a further 25%, for a total of 50%, shall be released
fifteen months after the Listing;
(iii) a further 25%, for a total of 75%, shall be released
eighteen months after the Listing; and
(iv) a further 25%, for a total of 100%, shall be released
twenty-one months after the Listing.
1.5 The transactions contemplated under this Agreement shall be completed at
the offices of the Merger Parent's solicitors, Messrs. Xxxxxxx & Xxxxxx, P.O.
Box 48800, 2100-1111 West Georgia Street, Vancouver, British Columbia, or at
such other place as may be agreed upon by the parties in writing, at 11:00
o'clock a.m. local time in Vancouver, British Columbia (the "Time of
Closing") on 12 March 1999 or on such other date as may be determined in
accordance with this Agreement or by further agreement in writing between the
parties (the "Closing Date").
1.6 Contemporaneously with the execution and delivery of this Agreement, the
Merger Parent shall pay to the attorney for the Vendors, in trust, a
non-refundable deposit in the sum of U.S.$300,000 (the "Deposit"), such
deposit to be held in trust pending the Closing Date. The Vendors shall be
liable to return the Deposit only if they fail to complete the transactions
contemplated in this Agreement and the Merger Parent is not in default.
2. CONDITIONS PRECEDENT
2.1 The Merger Parent's obligation to carry out the terms of this Agreement
and to complete its transactions contemplated under this Agreement is subject
to the fulfilment of each of the following conditions that:
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(a) by the Subject Removal Date (defined below), the Merger Parent
shall have been able to complete the Merger Parent's
Investigation (defined below) with results to its reasonable
satisfaction;
(b) by the Subject Removal Date, the Merger Parent shall have, or
indirectly through Targetco shall have, entered into written
employment and non-competition agreements with each of the
Vendors (the "Employment Agreements"), substantially in the
form which appears as Schedule "A" to this Agreement;
(c) by the Subject Removal Date, the directors of the Merger
Parent shall have approved of this Agreement and all of the
transactions contemplated under this Agreement, in their
absolute discretion;
(d) at the Time of Closing, the solicitors for the Vendors shall
provide an opinion dated as of the Closing Date, the form of
which appears as Schedule "B" to this Agreement;
(e) as of the Time of Closing, the Vendors and Targetco shall have
complied with all of their respective covenants and agreements
contained in this Agreement; and
(f) as of the Time of Closing, the representations and warranties
of the Vendors or any one of them contained in this Agreement
or contained in any certificates or documents delivered by
them or any one of them pursuant to this Agreement shall be
completely true as if such representations and warranties had
been made by the Vendors as of the Time of Closing;
The conditions set forth above are for the exclusive benefit of the Merger
Parent and each may be waived by the Merger Parent in whole or in part at or
before the time indicated for removal, without prejudice to any remedies that
may otherwise be available to the Merger Parent.
2.2 The Vendor's respective obligations to carry out the terms of this
Agreement and to complete their respective transactions contemplated under
this Agreement are subject to the fulfilment to their satisfaction of each of
the following conditions that:
(a) at the Time of Closing, the solicitors for the Merger Parent
shall provide an opinion dated as of the Closing Date, the
form of which appears as Schedule "C" to this Agreement;
(b) as of the Time of Closing, the Merger Parent shall have
complied with all of its covenants and agreements contained in
this Agreement; and
(c) at the Time of Closing, the representations and warranties of
the Merger Parent contained in this Agreement or contained in
any certificates or documents delivered by it pursuant to this
Agreement shall be completely true as if such representations
and warranties had been made by the Merger Parent as of the
Time of Closing.
The conditions set forth above are for the exclusive benefit of each of the
Vendors and may be waived by each of them in whole or in part at or before the
Time of Closing, without prejudice to any remedies that may otherwise be
available to the Vendors.
2.3 The Subject Removal Date shall be March 1, 1999.
3. COVENANTS, AGREEMENTS AND ACKNOWLEDGMENTS
3.1 The Vendors and Targetco jointly and severally covenant and agree with
the Merger Parent that the Vendors and Targetco shall:
(a) from and including the Effective Date through to and including
the Time of Closing, permit the Merger Parent, through its
directors, officers, employees and authorized agents and
representatives
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(collectively the "Merger Parent's Representatives") at its
own cost, full access to Targetco's books, records and
property including, without limitation, all of the Assets,
contracts and minute books of Targetco, so as to permit the
Merger Parent to make such investigation (the "Merger Parent's
Investigation") of Targetco as the Merger Parent deems
necessary, provided that the Merger Parent's Investigation
shall be undertaken in a reasonable manner and fashion so as
not to interfere with the daily business operations of
Targetco;
(b) from and including the Effective Date through to and including
the Time of Closing, do all such acts and things necessary to
ensure that all of the representations and warranties of the
Vendors or any one of them contained in this Agreement or any
certificates or documents delivered by them or any one of them
pursuant to this Agreement remain true and correct;
(c) from and including the Effective Date through to and including
the Time of Closing, preserve and protect the goodwill,
Assets, business and undertaking of Targetco and, without
limiting the generality of the foregoing, carry on the
business of Targetco in a reasonable and prudent manner; and
(d) from and including the Effective Date through to and
including the Time of Closing, keep confidential all
discussions and communications (including all information
communicated therein) between the parties, and all written
and printed materials of any kind whatsoever exchanged by
the parties, and, if so requested by the Merger Parent, the
Vendors and Targetco shall arrange for any director,
officer, employee, authorized agent or representative of
Targetco to enter into and the Vendors themselves shall
enter into a non-disclosure agreement with the Merger
Parent in a form acceptable to the Merger Parent acting
reasonably, which form shall permit confidential disclosure
to the Vendors' consultants, accountants and attorneys to
the extent necessary for them to verify the representations
and warranties contained in this Agreement.
3.2 The Vendors and Targetco jointly and severally covenant and agree with
the Merger Parent that, from and including the Effective Date through to and
including the Time of Closing, the Vendors and Targetco shall not do any such
act or thing that would render any representation or warranty of the Vendors
or any one of them contained in this Agreement or any certificates or
documents delivered by them or any one of them pursuant to this Agreement
untrue or incorrect.
3.3 The Vendors and Targetco jointly and severally covenant and agree with
the Merger Parent that, from and including the date the directors of the
Merger Parent approve of this Agreement and all of the transactions
contemplated under this Agreement and the Purchaser has completed its
investigation to its satisfaction, the Vendors and Targetco shall not
negotiate with any other person in respect of a merger of any of the Targetco
Shares or any part of the Assets, other than a sale of part of the Assets in
the ordinary course of Targetco's business.
3.4 The Vendors jointly and severally acknowledge to and agree with the
Merger Parent that the Merger Parent's Investigation shall in no way limit or
otherwise adversely affect the rights of the Merger Parent as provided for
hereunder in respect of the representations and warranties of the Vendors
contained in this Agreement or in any certificates or documents delivered by
them pursuant to this Agreement.
3.5 The Merger Parent covenants and agrees with the Vendors and with
Targetco that the Merger Parent shall:
(a) from and including the Effective Date through to and including
the Time of Closing, do all such acts and things necessary to
ensure that all of the representations and warranties of the
Merger Parent contained in this Agreement or any certificates
or documents delivered by it pursuant to this Agreement remain
true and correct; and
(b) from and including the Effective Date through to and including
the Time of Closing and subject to any obligations imposed by
law or as a result of any application for listing on a stock
exchange, keep
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confidential all discussions and communications (including all
information communicated therein) between the parties, and all
written and printed materials of any kind whatsoever exchanged
by the parties, and, if so requested by the Vendors or by
Targetco, the Merger Parent shall arrange for any of the
Merger Parent's Representatives to enter into, and the Merger
Parent itself shall enter into, a non-disclosure agreement
with the Vendors and Targetco in a form acceptable to the
Vendors and Targetco acting reasonably, which form shall
permit confidential disclosure to the Merger Parent's
consultants, accountants and attorneys to the extent necessary
for them to verify the representations and warranties
contained in this Agreement.
3.6 The Merger Parent covenants and agrees with the Vendors and with
Targetco that, from and including the Effective Date through to and including
the Time of Closing, the Merger Parent shall not do any such act or thing
that would render any representation or warranty of the Merger Parent
contained in this Agreement or any certificates or documents delivered by it
pursuant to this Agreement untrue or incorrect.
4. REPRESENTATIONS AND WARRANTIES
4.1 In order to induce the Merger Parent to enter into this Agreement and
complete its transactions contemplated hereunder, the Vendors jointly and
severally represent and warrant to the Merger Parent that:
(a) Targetco was and remains duly incorporated under the laws
of the State of Maine.
(b) Targetco:
(i) is a "private issuer" as that term is defined in any
applicable securities legislation (the "Securities Act");
(ii) does not maintain an office or mailing address, or have
any employees, agents or equipment (including any computer
server equipment) in any jurisdiction other than its
jurisdiction of incorporation, California and Oregon; and
(iii) is in good standing with respect to the filing of annual
reports in the jurisdiction of its incorporation and in each
jurisdiction in which it carries on business;
(c) the authorized and issued share capital of Targetco is as set
forth in paragraphs A and B of the recitals to this Agreement;
(d) the Targetco Shares are validly issued and outstanding fully
paid and non-assessable common shares of Targetco registered
in the names of, and beneficially owned by, the Vendors as set
forth in paragraph B of the recitals to this Agreement free
and clear of all voting restrictions, trade restrictions,
liens, charges or encumbrances of any kind whatsoever;
(e) except for the Targetco Shares, there are no shares, options,
convertible debentures, documents, instruments or other
writings of any kind whatsoever which may constitute a
"security" of Targetco as that term is defined in the
Securities Act or any other applicable legislation and, except
as is provided for by operation of this Agreement, there are
no options, agreements or rights of any kind whatsoever to
acquire all or any part of the Targetco Shares or any interest
in them or in any other share capital of Targetco;
(f) the constating documents of Targetco have not been altered
since its incorporation on 27 February 1997;
(g) all of the material transactions of Targetco have been
promptly and properly recorded or filed in or with the books
or records of Targetco, and the minute books of Targetco
contain all records of the meetings and proceedings of
shareholders and directors of Targetco since its date of
incorporation;
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(h) to the best of their knowledge, information and belief,
Targetco holds all licences and permits that are required for
carrying on its business in the manner in which such business
has been carried on;
(i) Targetco is the registered and beneficial owner of all of the
properties and assets (collectively the "Assets") listed on
Schedule "D" to this Agreement, and such Assets represent all
of the property and assets used by Targetco and which are
necessary or useful in the conduct of its business;
(j) Targetco has the corporate power to own the Assets owned by it
and carry on the business carried on by it and Targetco is
duly qualified to carry on business in all jurisdictions in
which it carries on business;
(k) Targetco has good and marketable title to the Assets free and
clear of all liens, charges and encumbrances of any kind
whatsoever save and except those specified as "Permitted
Encumbrances" on Schedule "D" to this Agreement;
(l) to the best of their knowledge, information and belief, no
third party privacy or intellectual property rights, including
without limitation, copyright, trade secret or patent rights,
were violated in the creation, compilation or acquisition of
the Assets by Targetco or by any party through whom Targetco
acquired title;
(m) all machinery and equipment of any kind whatsoever comprised
in the Assets are in reasonable operating condition and in a
state of reasonable maintenance and repair taking into account
their age and use;
(n) all of the bank accounts and safety deposit boxes of Targetco
are listed on Schedule "D" to this Agreement;
(o) Targetco does not maintain insurance against loss of, or
damage to, the Assets or public liability;
(p) the unaudited financial statements of Targetco for its
financial years ended 31 December 1997 and 1998 (collectively
the "Targetco Financial Statements"), copies of which appear
as Schedule "E" to this Agreement, are true and correct in
every material respect and present fairly and accurately the
financial position and results of the operations of Targetco
for the periods then ended, and the 1998 Targetco Financial
Statement has been prepared in accordance with generally
accepted accounting principles applied on a consistent basis;
(q) the books and records of Targetco disclose all material
financial transactions of Targetco arising subsequent to the
preparation of the Targetco Financial Statements and such
transactions have been fairly and accurately recorded;
(r) since 31 December 1998:
(i) no dividends or other distributions of any kind
whatsoever on any shares in the capital of Targetco have
been made, declared or authorized, except as disclosed
in the Targetco Financial Statements;
(ii) Targetco has not become indebted to the Vendors or any
one of them, except for current employment compensation as
described in Schedule "F";
(iii) none of the Vendors or any other officer, director or
employee of Targetco has become indebted or under obligation
to Targetco on any account whatsoever; and
(iv) Targetco has not guaranteed or agreed to guarantee any
debt, liability or other obligation of any kind whatsoever of
any person, firm or corporation of any kind whatsoever;
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(s) there are no material liabilities of Targetco, whether direct,
indirect, absolute, contingent or otherwise which are not
disclosed or reflected in the Targetco Financial Statements
except those incurred in the ordinary course of business since
the date the Targetco Financial Statements were prepared, all
of which are recorded in the books and records of Targetco;
(t) the accounts receivable of Targetco shown on the Targetco
Financial Statements or recorded in the books and records of
Targetco are bona fide, good and collectible without set-off
or counterclaim;
(u) since 31 December 1998:
(i) there has not been any material adverse change of any kind
whatsoever in the financial position or condition of Targetco
or any damage, loss or other change of any kind whatsoever in
circumstances materially affecting the business or Assets or
the right or capacity of Targetco to carry on its business;
(ii) Targetco has not waived or surrendered any right of any kind
whatsoever of material value;
(iii) Targetco has not discharged, satisfied or paid any lien,
charge or encumbrance of any kind whatsoever or obligation or
liability of any kind whatsoever other than current
liabilities in the ordinary course of its business or as
expressly permitted under this Agreement, ;
(iv) the business of Targetco has been carried on in the ordinary
course;
(v) except as set forth in Schedule "G", no new machinery or
equipment of any kind whatsoever has been ordered by, or
installed or assembled on the premises of, Targetco; and
(vi) except as set forth in Schedule "G", no capital expenditures
exceeding in the aggregate $10,000 have been authorized or
made by Targetco;
(v) the directors, officers, employees, contractors and
consultants of Targetco and all of their compensation
arrangements with Targetco, whether as directors, officers or
employees of, or as independent contractors or consultants to,
Targetco, are as listed on Schedule "F" to this Agreement;
(w) no payments of any kind whatsoever have been made or
authorized by Targetco to or on behalf of the Vendors or any
one of them or to or on behalf of any of the directors,
officers, employees contractors or consultants of Targetco
except in accordance with those compensation arrangements
specified on Schedule "F" to this Agreement or except as
contemplated by this Agreement;
(x) there are no pensions, profit sharing, group insurance or
similar plans or other deferred compensation plans of any kind
whatsoever affecting Targetco other than those specified on
Schedule "F" to this Agreement;
(y) Targetco is not now, and has never been, a party to any
collective agreement with any labour union or other
association of employees of any kind whatsoever;
(z) the contracts and agreements included on Schedules "A" and "F"
to this Agreement and those additional contracts and
agreements specified on Schedule "G" to this Agreement
(collectively the "Material Contracts") constitute all of the
material contracts and agreements of Targetco. In particular,
Targetco does not maintain insurance of any kind;
(aa) Targetco has not licensed, leased, transferred, disposed of or
encumbered any of the Assets in any way, or permitted any
third party access to any of the Assets, including in
particular the source code to the computer software and the
contestant and subscriber information included in the Assets,
except in accordance with the terms of the Material Contracts;
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(bb) except as is noted on Schedule "G" to this Agreement, the
Material Contracts are in good standing in all respects and
not in default in any respect;
(cc) except as is noted on Schedule "G" to this Agreement, Targetco
can terminate all of their obligations under each of the
Material Contracts without liability on not more than one
month's notice;
(dd) all tax returns and reports of Targetco required by law to be
filed have been filed and are substantially true, complete and
correct and all taxes and other government charges of any kind
whatsoever of Targetco have been paid or accrued in the
Targetco Financial Statements;
(ee) Targetco has been assessed for all applicable income and other
tax remittances for all of its full or partial fiscal years to
and including its fiscal year ended 31 December, 1997;
(ff) Targetco has not:
(i) acquired any property from a person, otherwise than at
arm's length, for proceeds greater than the fair market value
thereof; or
(ii) disposed of anything to a person, otherwise than at arm's
length, for proceeds less than the fair market value thereof;
(gg) Targetco has made all elections required to have been made
under all applicable tax legislation in connection with any
distributions made by it and all such elections were true and
correct and made in the prescribed form and within the
prescribed time period;
(hh) adequate provision has been made for taxes payable by Targetco
for the current period for which tax returns are not yet
required to be filed and there are no agreements, waivers or
other arrangements of any kind whatsoever providing for an
extension of time with respect to the filing of any tax return
by, or payment of, any tax or governmental charge of any kind
whatsoever by Targetco;
(ii) they are not aware of any contingent tax liabilities of
Targetco of any kind whatsoever or any grounds which would
prompt a reassessment of Targetco including aggressive
treatment of income and expenses in earlier tax returns filed;
(jj) there are no amounts outstanding and unpaid for which
Targetco has previously claimed a deduction under any
applicable tax legislation;
(kk) Targetco has made all collections, deductions, remittances and
payments of any kind whatsoever and filed all reports and
returns required by it to be made or filed under the
provisions of all applicable statutes requiring the making of
collections, deductions, remittances or payments of any kind
whatsoever in those jurisdictions in which it carries on
business;
(ll) to the best of their knowledge, there are no actions, suits,
judgments, investigations or proceedings of any kind
whatsoever outstanding, pending or threatened against or
affecting Targetco at law or in equity or before or by any
federal, provincial, state, municipal or other governmental
department, commission, board, bureau or agency of any kind
whatsoever and there is no basis therefor;
(mm) to the best of their knowledge, Targetco is not in breach of
any law, ordinance, statute, regulation, bylaw, order or
decree of any kind whatsoever;
(nn) the Vendors and Targetco have good and sufficient right and
authority to enter into this Agreement and complete their
respective transactions contemplated under this Agreement on
the terms and conditions set forth herein;
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(oo) to the best of their knowledge, the execution and delivery of
this Agreement, the performance of their respective
obligations under this Agreement and the completion of their
respective transactions contemplated under this Agreement will
not:
(i) conflict with, or result in the breach of or the
acceleration of any indebtedness under, or constitute
default under, the constating documents of Targetco
or any indenture, mortgage, agreement, lease, licence
or other instrument of any kind whatsoever to which
Targetco, the Vendors or any one or more of them is a
party or by which any one of them is bound, or any
judgment or order of any kind whatsoever of any court
or administrative body of any kind whatsoever by
which any one of them is bound; and
(ii) result in the violation of any law or regulation of
any kind whatsoever by any of the Vendors or by
Targetco;
(pp) neither Targetco nor the Vendors nor any of them has
incurred any liability for brokers' or finder's fees of
any kind whatsoever with respect to this Agreement or any
transaction contemplated under this Agreement; and
(qq) the representations and warranties of the Vendors contained
in this Agreement disclose all material facts specifically
relating to the transactions involving the Vendors and
Targetco contemplated under this Agreement which
materially and adversely affect, or in the future may
materially and adversely affect, their respective
abilities to perform their respective obligations under
this Agreement.
4.2 The representations and warranties of the Vendors contained in this
Agreement shall be true at the Time of Closing as though they were made at
the Time of Closing and they shall survive the completion of the transactions
contemplated under this Agreement and remain in full force and effect
thereafter for the benefit of the Merger Parent for a period of five (5)
years after the Time of Closing in respect of representations and warranties
relating to tax matters, and for a period of two (2) years after the Time of
Closing in respect of all other representations and warranties.
4.3 The Merger Parent shall complete the Merger Parent's Investigation no
later than the Subject Removal Date.
4.4 In order to induce the Vendors to enter into this Agreement and complete
their respective transactions contemplated hereunder, the Merger Parent
represents and warrants to the Vendors that:
(a) the Merger Parent was and remains duly incorporated under the
laws of Florida and the Merger Parent is in good standing with
respect to the filing of annual reports in that jurisdiction;
(b) the Subsidiary will on the Closing Date be duly incorporated
under the laws of California and will be in good standing with
respect to the filing of annual reports in that jurisdiction;
(c) as of the Effective Date, the authorized share capital of the
Merger Parent consists of 50,000,000 common shares with a par
value of $0.001 per share, of which 12,885,229 common shares
were issued and outstanding (the "Effective Date Issued
Capital");
(d) as of the Closing Date, the authorized share capital of the
Subsidiary will consist of 10,000,000 shares, of which
1,000,000 shares will be issued and outstanding in the name of
the Merger Parent;
(e) on the Closing Date, the Merger Parent's Shares shall be
validly issued and outstanding fully paid and non-assessable
common shares of the Merger Parent registered in the names of,
and beneficially owned by, the Vendors as set forth in
paragraph 1.2 of this Agreement, and all of the Effective Date
Issued Capital shall be validly issued and outstanding fully
paid and non-assessable common shares of the Merger Parent;
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(f) as of the Effective Date, except for the Effective Date Issued
Capital and except as disclosed in Schedule "K" there were no
shares, options, convertible debentures, documents,
instruments or other writings of any kind whatsoever which may
constitute a "security" of Merger Parent as that term is
defined in the applicable securities legislation;
(g) as of the Effective Date, the constating documents of the
Merger Parent had not been altered since its merger on 22
February 1999. Copies of the Merger Parent's articles of
incorporation and bylaws are attached to this Agreement as
Schedule "L";
(h) all tax returns and reports of the Merger Parent required by
law to be filed have been filed and are substantially true,
complete and correct and all taxes and other government
charges of any kind whatsoever of the Merger Parent have been
paid or accrued in the Merger Parent Financial Statements;
(i) all of the material transactions of the Merger Parent have
been promptly and properly recorded or filed in or with the
books or records of the Merger Parent, and the minute books of
the Merger Parent contain all records of the meetings and
proceedings of shareholders and directors of the Merger Parent
since its date of incorporation;
(j) to the best of their knowledge, information and belief, the
Merger Parent holds all licences and permits that are required
for carrying on its business in the manner in which such
business has been carried on;
(k) the Merger Parent has the corporate power to own the assets
owned by it and carry on the business carried on by it and the
Merger Parent is duly qualified to carry on business in all
jurisdictions in which it carries on business;
(l) to the best of its knowledge, information and belief, no third
party privacy or intellectual property rights, including
without limitation, copyright, trade secret or patent rights,
were violated in the creation, compilation or acquisition of
assets by the Merger Parent or by any party through whom the
Merger Parent acquired title;
(m) the unaudited financial statements of the Merger Parent for
its fiscal year ended 30 April 1998 and the unaudited
financial statements of the Merger Parent for the interim six
month period ended 31 October 1998 (collectively the "Merger
Parent Financial Statements"), copies of which appear as
Schedule "L" to this Agreement, are true and correct in every
material respect and present fairly and accurately the
financial position and results of the operations of the Merger
Parent for the periods then ended and the Merger Parent
Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a
consistent basis;
(n) the books and records of the Merger Parent disclose all
material financial transactions of the Merger Parent arising
subsequent to the preparation of the Merger Parent Financial
Statements and such transactions have been fairly and
accurately recorded;
(o) except as disclosed to the Vendors in the Schedules to this
Agreement, there are no material liabilities of the Merger
Parent, whether direct, indirect, absolute, contingent or
otherwise which are not disclosed or reflected in the Merger
Parent Financial Statements except those incurred in the
ordinary course of business since the date the Merger Parent
Financial Statements were prepared, all of which are recorded
in the books and records of the Merger Parent;
(p) to the best of its knowledge, there are no actions, suits,
judgments, investigations or proceedings of any kind
whatsoever outstanding, pending or threatened against or
affecting the Merger Parent at law or in equity or before or
by any federal, provincial, state, municipal or other
governmental
10
department, commission, board, bureau or agency of any kind
whatsoever, except that a potential claim against the Merger
Parent has been threatened by Digital Data Networks, Inc.
("DDN") in respect of a proposed merger of the Merger Parent
and DDN which did not proceed, in respect of which a written
settlement agreement has been executed without commencement of
legal proceedings;
(q) to the best of its knowledge, the Merger Parent is not in
breach of any law, ordinance, statute, regulation, bylaw,
order or decree of any kind whatsoever;
(r) the Merger Parent has good and sufficient right and authority
to enter into this Agreement and complete the transactions
contemplated under this Agreement on the terms and conditions
set forth herein;
(s) to the best of its knowledge, the execution and delivery of
this Agreement, the performance of their respective
obligations under this Agreement and the completion of their
respective transactions contemplated under this Agreement will
not:
(i) conflict with, or result in the breach of or the
acceleration of any indebtedness under, or constitute
default under, the constating documents of the Merger
Parent or any indenture, mortgage, agreement, lease,
licence or other instrument of any kind whatsoever to
which the Merger Parent is a party to or by which it
is bound, or any judgment or order of any kind
whatsoever of any court or administrative body of any
kind whatsoever by which the Merger Parent is bound;
and
(ii) result in the violation of any law or regulation of
any kind whatsoever by the Merger Parent; and
(t) the representations and warranties of the Merger Parent
contained in this Agreement disclose all material facts
specifically relating to the transactions involving the
Merger Parent contemplated under this Agreement which
materially and adversely affect, or in the future may
materially and adversely affect, the Merger Parent's
ability to perform its obligations under this Agreement.
4.5 The representations and warranties of the Merger Parent contained in
this Agreement shall be true at the Time of Closing as though they were made
at the Time of Closing and shall survive the completion of the transactions
contemplated under this Agreement and remain in full force and effect
thereafter for the benefit of the Vendors for a period of Two (2) years after
the Time of Closing.
5. INDEMNITY
5.1 Notwithstanding the completion of the transactions contemplated under
this Agreement or the Merger Parent's Investigation, the representations,
warranties and acknowledgments of the Vendors or any one of them contained in
this Agreement or any certificates or documents delivered by them or any one
of them pursuant to this Agreement shall survive the completion of the
transactions contemplated by this Agreement and shall continue in full force
and effect thereafter for the benefit of the Merger Parent for a period of
five (5) years after the Time of Closing in respect of representations,
warranties and acknowledgments relating to tax matters, and for a period of
two (2) years after the Time of Closing in respect of all other
representations, warranties and acknowledgments. If any of the
representations, warranties or acknowledgments given by the Vendors or any
one of them in this Agreement are found to be untrue or there is a breach of
any covenant or agreement in this Agreement on the part of the Vendors or any
one of them, the Vendors shall jointly and severally indemnify and save
harmless the Merger Parent from and against any and all liability, claims,
debts, demands, suits, actions, penalties, fines, losses, costs (including
legal fees and disbursements as charged by a lawyer to his own client),
damages and expenses of any kind whatsoever which may be brought or made
against the Merger Parent by any person, firm or corporation of any kind
whatsoever or which may be suffered or incurred by the Merger Parent,
directly or indirectly, arising out of or as a consequence of any such
misrepresentation
11
or breach of warranty, acknowledgment, covenant or agreement. Without in any
way limiting the generality of the foregoing, this shall include any loss of
any kind whatsoever which may be suffered or incurred by the Merger Parent,
directly or indirectly, arising out of any material assessment or
reassessment levied upon Targetco for tax, interest and/or penalties for any
period up to and including the Closing Date and all claims, demands, costs
(including legal fees and disbursements as charged by a lawyer to his own
client) and expenses of any kind whatsoever in respect of the foregoing.
5.2 Notwithstanding the completion of the transactions contemplated under
this Agreement, the representations, warranties and acknowledgments of the
Merger Parent contained in this Agreement or any certificates or documents
delivered by the Merger Parent pursuant to this Agreement shall survive the
completion of the transactions contemplated by this Agreement and shall
continue in full force and effect thereafter for the benefit of the Vendors
for a period of two (2) years after the Time of Closing. If any of the
representations, warranties or acknowledgments given by the Merger Parent in
this Agreement are found to be untrue or there is a breach of any covenant or
agreement in this Agreement on the part of the Merger Parent, the Merger
Parent shall indemnify and save harmless the Vendors from and against any and
all liability, claims, debts, demands, suits, actions, penalties, fines,
losses, costs (including legal fees and disbursements as charged by a lawyer
to his own client), damages and expenses of any kind whatsoever which may be
brought or made against the Vendors by any person, firm or corporation of any
kind whatsoever or which may be suffered or incurred by the Vendors, directly
or indirectly, arising out of or as a consequence of any such
misrepresentation or breach of warranty, acknowledgment, covenant or
agreement.
5.3 Any party (an "Indemnified Party") requesting indemnity under this
Section shall provide demand and notice of such request to the party from
whom the Indemnified Party requests indemnity (the "Indemnifying Party") in
writing, within 20 days of receipt of notice (constructive or actual) of the
claim for which indemnity is requested. The Indemnifying Party shall then
have 10 days within which to acknowledge and accept responsibility for such
indemnity. If within 10 days of notice the Indemnifying Party accepts
responsibility for indemnity under this provision, the Indemnified Party
shall cooperate with the Indemnifying Party, who shall take primary
responsibility for defense of such claim, including choice of counsel. The
Indemnified Party may retain additional counsel of their own choosing, but at
the Indemnified Party's expense. Any Indemnified Party for whose claim the
Indemnifying Party has accepted responsibility under this provision shall not
negotiate, compromise or settle any claim against the Indemnified Party
without the Indemnifying Party's written consent.
6. CLOSING DOCUMENTS
6.1 At the Time of Closing, the Vendors shall deliver to the solicitors for
the Merger Parent:
(a) a certified true copy of the resolutions of the directors of
Targetco and the Subsidiary evidencing that the directors of
the Targetco and the Subsidiary have approved this Agreement
and all of the transactions of Targetco contemplated hereunder
and the resolutions shall include specific reference to:
(i) the transfer of the Targetco Shares from the
Vendors to the Merger Parent as provided for in this
Agreement;
(ii) the cancellation of the share certificates (the "Old
Share Certificates") representing the Targetco Shares
held as set forth in paragraph B of the recitals to
this Agreement; and
(iii) approval of the Articles of Merger whereby Targetco
is merged with the Subsidiary;
(b) the Old Share Certificates;
(c) duly executed Articles of Merger in form for filing in the
States of Maine and California;
(d) the Employment Agreements referred to in subparagraph 2.1(b)
of this Agreement;
12
(e) the solicitor's opinion referred to in subparagraph 2.1(d)
of this Agreement;
(f) all the minute books and corporate seals of Targetco;
(g) a certificate of confirmation signed by the Vendors in the
form attached as Schedule "H" to this Agreement;
(h) a release in the form of Schedule "I" to this Agreement (the
"Release") from each of the Vendors of all claims against
Targetco for any outstanding amounts owing by Targetco to any
of the Vendors on account of any loans, bonuses,
reimbursements, compensation, fees, royalties, dividends or
other consideration whatsoever, except only as provided in the
Employment Agreements; and
(i) any other materials that are, in the opinion of the solicitors
for the Merger Parent, reasonably required to complete the
transactions contemplated under this Agreement.
6.2 At the Time of Closing, the Merger Parent shall deliver to the
solicitors for the Vendors:
(a) certified true copies of the resolutions of the directors of
the Merger Parent and the Subsidiary, evidencing that the
directors of the Merger Parent and the Subsidiary have
approved this Agreement and all of the transactions of the
Merger Parent and the Subsidiary contemplated hereunder;
(b) the balance of the Cash Portion after payment of the Deposit
as provided for in subparagraph 1.6 of this Agreement, which
balance is to be divided equally and paid by wire transfer or
bank cashier's cheque separately paid and addressed to each of
the three Vendors;
(c) share certificates representing the Merger Parent's Shares
registered in the individual names of the Vendors as provided
for in subparagraph 1.3 of this Agreement;
(d) the solicitor's opinion referred to in subparagraph 2.2(a)
of this Agreement; and
(e) a certificate of confirmation signed by an officer or director
of the Merger Parent in the form attached as Schedule "J" to
this Agreement.
7. GENERAL
7.1 Time and each of the terms and conditions of this Agreement shall be of
the essence of this Agreement and any waiver by the parties of this paragraph
7.1 or any failure by them to exercise any of their rights under this
Agreement shall be limited to the particular instance and shall not extend to
any other instance or matter in this Agreement or otherwise affect any of
their rights or remedies under this Agreement.
7.2 The Schedules to this Agreement incorporated by reference and the
recitals to this Agreement constitute a part of this Agreement.
7.3 This Agreement constitutes the entire Agreement between the parties
hereto in respect of the matters referred to herein and there are no
representations, warranties, covenants or agreements, expressed or implied,
collateral hereto other than as expressly set forth or referred to herein.
7.4 The headings in this Agreement are for reference only and do not
constitute terms of the Agreement.
7.5 The provisions contained in this Agreement which, by their terms,
require performance by a party to this Agreement subsequent to the Closing
Date of this Agreement, shall survive the Closing Date of this Agreement.
13
7.6 No alteration, amendment, modification or interpretation of this
Agreement or any provision of this Agreement shall be valid and binding upon
the parties hereto unless such alteration, amendment, modification or
interpretation is in written form executed by the parties directly affected
by such alteration, amendment, modification or interpretation.
7.7 Whenever the singular or masculine is used in this Agreement the same
shall be deemed to include the plural or the feminine or the body corporate
as the context may require.
7.8 The parties hereto shall execute and deliver all such further documents
and instruments and do all such acts and things as any party may, either
before or after the Closing Date, reasonably require in order to carry out
the full intent and meaning of this Agreement.
7.9 Any notice, request, demand and other communication to be given under
this Agreement shall be in writing and shall be delivered by hand or by
telecopier to the parties at their following respective addresses:
to Targetco: Pickem Sports, Inc.
Attention: Xx. Xxxxxxx Xxxxxx
0000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx, 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
to Xx. Xxxxxx: XXXXXXX XXXXXX
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxx, 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
to Xx. Xxxxx: XXXXXX XXXXX
000 Xxxxxxxx Xxx.
Xxxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
to Xx. Xxxxxxxx: XXXXX XXXXXXXX
0000 Xxxxxxx Xxx
Xxxxxxx Xxxx, Xxxxxxxxxx, 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
and in the case of Targetco and each of the Vendors, with a copy to:
Xxxxxxx & Geismar, LLC
Attention: Xx. Xxxx X. Xxxxxxx
P.O. Box 7230, 000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxx, 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
To the Merger Parent or the Subsidiary:
Internet Sports Network, Inc.
#000 - 000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, X.X., X0X 0X0
Attention: Xx. Xxxxx Xxxxx
14
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to: Xxxxxxx & Xxxxxx, Barristers & Solicitors
Attention: Xx. Xxxxxx X. Xxxxxx
2100 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X., X0X 0X0
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or to such other addresses as may be given in writing by the parties hereto in
the manner provided for in this paragraph, and shall be deemed to have been
received, if delivered by hand, on the date of delivery, or if delivered by
telecopier, on the date that it is sent.
7.10 This Agreement or any rights hereunder may be assigned by the Merger
Parent, but any such assignment shall not release the Merger Parent from its
obligations hereunder.
7.11 This Agreement shall be subject to, governed by, and construed in
accordance with the laws of the State of California, and all disputes arising
under this Agreement shall be resolved in, and the parties hereto submit to
the jurisdiction of, the State or Federal Courts of California.
7.12 This Agreement may be signed by the parties in as many counterparts as
may be deemed necessary, each of which so signed shall be deemed to be an
original, and all such counterparts together shall constitute one and the
same instrument.
15
IN WITNESS WHEREOF the parties have hereunto set their hands and seals as of the
Effective Date first above written.
SIGNED, SEALED & DELIVERED )
by XXXXXXX XXXXXX )
in the presence of: )
)
/S/ XXXXX X. XXXXXX ) /S/ XXXXXXX XXXXXX
Signature of Witness ) XXXXXXX XXXXXX
)
Name: XXXXX X. XXXXXX )
Address: 000 XXXX XXXXXX )
XXXXXXX, XX 00000 )
Occupation: SELF EMPLOYED )
)
)
)
SIGNED, SEALED & DELIVERED )
by XXXXXX XXXXX )
in the presence of: )
)
/S/ XXXXX XXXXXXXX ) /S/ XXXXXX XXXXX
Signature of Witness ) XXXXXX XXXXX
)
Name: XXXXX XXXXXXXX )
Address: 0000 XXXXXXX XXX )
XXXXXXX XXXX, XX 00000 )
Occupation: VP OF TECHNOLOGY )
)
)
)
16
SIGNED, SEALED & DELIVERED )
by XXXXX XXXXXXXX )
in the presence of: )
)
/s/ XXXXXX XXXXX ) /S/ XXXXX XXXXXXXX
--------------------------------
Signature of Witness ) XXXXX XXXXXXXX
)
Name: XXXXXX XXXXX )
Address: 000 XXXXXXXX XXX )
XXXX XXXX, XX 00000 )
Occupation: VP BUSINESS DEVELOPMENT )
)
)
)
THE CORPORATE SEAL of PICKEM SPORTS, INC. )
was hereunto affixed in the presence of: )
)
) c/s
)
/s/ XXXXXXX XXXXXX )
--------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
/s/ XXXXXXX XXXXX
--------------------------------
Name: Xxxxxxx Xxxxx
Title: Treasurer
THE CORPORATE SEAL of INTERNET SPORTS )
NETWORK, INC. was hereunto affixed in the presence )
of: )
) c/s
)
)
/s/ XXXXXXX X. XXXXX
--------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
/s/ D. XXXXX XXXXX
--------------------------------
Name: X. X. Xxxxx
Title: Secretary
17
SCHEDULE "A"
EMPLOYMENT AGREEMENT
PICKEM SPORTS INC.
0000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx, 00000
To: March 1, 1999
Re: EMPLOYMENT AGREEMENT
This Agreement contains the terms and conditions of your employment with
Pickem Sports Inc. (the "Company").
You will be employed for a term (the "Term") of two (2) years commencing
effective upon closing of the Merger Agreement between you, the Company and
others dated March 1, 1999 unless your employment is terminated or the Term
is extended in accordance with the provisions of this Agreement.
1. DEFINITIONS
In this Agreement:
(a) "AFFILIATE" has the same meaning as in the corporate statute
applicable to the Company or any successor legislation, as
amended from time to time.
(b) "AGREEMENT" means this letter agreement and schedules attached
to this letter agreement, as amended or supplemented from time
to time.
(c) "BOARD" means the board of directors of the Company.
(d) "BUSINESS OF THE COMPANY" means the business carried on by the
Company from time to time, and includes without limitation the
provision of entertainment services including the distribution
of sports related information and the operation of contests
involving the predicted outcome of sporting events.
(e) "CAUSE" includes:
(i) any willful failure by you in the performance of any
of your material duties under this Agreement;
(ii) your conviction of a crime (indictable level or
penalized by incarceration or a lesser crime
involving moral turpitude), or any act involving
money or other property involving the Company or any
other member of the Group that would constitute a
crime in the jurisdiction involved;
(iii) any act of fraud, misappropriation, dishonesty,
embezzlement or similar conduct against the Company
or an Affiliate or customer of the Company;
(iv) the use of illegal drugs or the habitual and
disabling use of alcohol or drugs;
(v) any material breach of any of the terms of this
Agreement which remains uncured after the expiration
of ten days following the delivery of written notice
of such breach to you by the Company or if cure
cannot be completed within ten days after such
notice, you fail to diligently commence and pursue
such cure;
1
(vi) any threatened or actual attempt by you to secure any
personal profit in connection with the Business of
the Company or the corporate opportunities of any
member of the Group other than pursuant to this
Agreement or your investment in the Group;
(vii) any act which is materially injurious to the
Business of the Company; and
(viii) after notice from the Company and opportunity to cure
your failure to devote adequate time to the Business
of the Company, or conduct by you amounting to
insubordination or inattention to, or substandard
performance of, your duties and responsibilities
under this Agreement.
(f) "COMPANY" means Pickem Sports, Inc., a company incorporated
under the laws of California.
(g) "COMPETITIVE BUSINESS" means any business or enterprise that
competes with the Business of the Company.
(h) "CONFIDENTIAL INFORMATION" means all confidential or
proprietary facts, data, techniques and other information
relating to the Business of the Company which may before or
after the date of this Agreement be disclosed to you by the
Company or by any other member of the Group or which may
otherwise come within your knowledge or which may be developed
by you in the course of your employment under this Agreement
or from any other Confidential Information.
(i) "GROUP" means the Company and its Affiliates.
(j) "INTELLECTUAL PROPERTY RIGHTS" means all rights in respect of
intellectual property including, without limitation, all
patent, industrial design, integrated circuit topography,
know-how, trade secret, privacy and trade-xxxx rights and
copyright, to the extent those rights may subsist anywhere in
the universe.
(k) "PERSON" means any individual, partnership, limited
partnership, joint venture, syndicate, sole proprietorship,
company or corporation with or without share capital,
unincorporated association, trust, trustee, executor,
administrator or other legal personal representative,
regulatory body or agency, government or governmental agency
or entity however designated or constituted.
2. EMPLOYMENT
The terms of your employment will be as follows:
(a) POSITION AND RESPONSIBILITIES: You will be employed by the
Company in the position set out on Schedule "A" to this
Agreement, and you will fulfil the duties and responsibilities
set out on Schedule "A" to this Agreement, subject to changes
consistent with the usual duties and responsibilities of that
position as may be reasonably prescribed by the Board from
time to time.
(b) SCOPE OF DUTIES: During your employment, you will devote the
whole of your time, attention and abilities during normal
business hours to the duties hereby granted and accepted and
you will give the Company the full benefit of your knowledge,
expertise, technical skill and ingenuity.
(c) SALARY: You will receive an annual salary (the "Salary") in
the amount set out on Schedule "A" to this Agreement, subject
to changes by mutual agreement, payable in accordance with the
Company's standard salary payment schedule. Payment of your
Salary will be subject to income tax source deductions and
other deductions required by applicable law.
2
(d) STOCK OPTIONS: You will be entitled to participate in any
stock option plans as are now or may hereafter be established
and offered by the Company for the benefit of its employees
generally.
(e) MEDICAL, INSURANCE AND OTHER BENEFITS: You will be entitled to
participate in any medical, dental, health, life and accident
insurance programs as are now or may hereafter be established
and offered by the Company for the benefit of its employees
generally.
(f) REIMBURSEMENT OF EXPENSES: You will be entitled to
reimbursement of reasonable expenses incurred in the course of
fulfilling your employment duties and responsibilities to the
Company, as may be specifically approved by the Board in
advance or expressly permitted in accordance with the
Company's expense policies in effect from time to time.
(g) VACATION ENTITLEMENT: You will receive the period of paid
vacation set out on Schedule "A" to this Agreement. Your
vacation must be taken in accordance with the Company's
vacation policies in effect from time to time.
(h) EXTENSION OF TERM: If the Company does not prior to expiry of
the Term or any extension of the Term provide you with written
notice that the Company does not wish to extend the Term, and
if you do not prior to expiry of the Term or any extension of
the Term provide the Company with written notice that you do
not wish to extend the Term, then upon expiry of the Term and
every extension of the Term, the Term of this Agreement will
be deemed to be extended for an additional one year period on
the same terms and conditions as provided for under this
Agreement, unless otherwise agreed in writing.
3. ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS
As consideration for your employment with the Company, you covenant and agree as
follows:
(a) DISCLOSURE: You will make prompt and full disclosure to the
Company of any discovery, invention, development, production,
process, improvement or other work product conceived, made,
improved upon or participated in by you, solely or jointly, in
the course of, arising from or relating to any Intellectual
Property Rights of or your employment with the Company or any
other member of the Group (the "Work Products").
(b) ASSIGNMENT: The Company will hold all Intellectual
Property Rights in respect of the Work Products for the
exclusive benefit of the Company and you agree not to claim
or apply for registration or challenge the Company's
registration of, any such Intellectual Property Rights.
Your acceptance of the terms of this Agreement constitutes
your absolute, unconditional and irrevocable assignment,
transfer and conveyance of all past, present and future
right, title, benefit and interest in and to all
Intellectual Property Rights in respect of the Work
Products. You hereby waive in favour of the Company all
claims of any nature whatsoever that you now or hereafter
may have for infringement of any Intellectual Property
Rights for the Work Products so assigned to the Company.
To the extent that copyright may subsist in the Work
Products, you hereby waive all past, present and future
moral rights you may have.
(c) INTELLECTUAL PROPERTY PROTECTION: The Work Products and
all related Intellectual Property Rights will be the
absolute and exclusive property of the Company. The
Company may apply for patent, copyright or other
intellectual property protection in the Company's name or,
where such procedure is proper, in your name, anywhere in
the world. You will, at the Company's request, execute all
documents and do all such acts and things considered
necessary by the Company to obtain, confirm or enforce any
Intellectual Property Rights in respect of the Inventions.
In case the Company requires but is unable to secure your
signature for any such purpose in a timely manner, you
hereby irrevocably designate and appoint the Company and
any duly authorized officer or agent of the
3
Company as your agent and attorney, to act for you and in your
behalf and stead to execute any such documents and to do all
other lawfully permitted acts to carry out the intent of this
provision, with the same legal force and effect as if executed
or done by you.
4. OBLIGATIONS OF EMPLOYMENT
You further covenant and agree as follows:
(a) PERFORMANCE AND DUTY TO THE COMPANY: Throughout your
employment you will well and faithfully serve the Company and
use all reasonable endeavours to promote the interests of the
Company. You will act honestly, in good faith and in the best
interests of the Company. You will adhere to all applicable
policies of the Company.
(b) BUSINESS OF THE COMPANY: You will not, during your employment
with the Company, engage in any business, enterprise or
activity that is contrary to or detracts from the Business of
the Company or the proper fulfilment of your duties and
responsibilities to the Company.
(c) CONFIDENTIALITY: You will retain all Confidential
Information developed, utilised or received by the Company
and each other member of the Group in the strictest
confidence and will not disclose or permit the disclosure
of Confidential Information in any manner other than in the
course of your employment with and for the benefit of the
Company or as required by law or a regulatory authority
having jurisdiction. You will not use Confidential
Information for your own personal benefit or permit it to
be used for the benefit of any Person other than the
Company, either during your employment with the Company or
thereafter. You will take all reasonable precautions to
prevent any Person from having unauthorized access to
Confidential Information or use of it. In particular, you
will not record, copy, modify or part with any Confidential
Information, in whole or in part, except solely in
accordance with the written approval of the Company or only
as may be required to carry out your duties under this
Agreement. All copies of Confidential Information, and all
documents and electronic or other records which now or
hereafter may contain Confidential Information, are and
will remain the exclusive and absolute property of the
Company.
(d) EXCEPTIONS: Any obligations specified in subsection 4(c)
will not apply to the following:
(i) any information which is presently in the public
domain; or
(ii) any information that subsequently becomes part of the
public domain through no fault of your own.
(e) RESTRICTIONS: You will comply with all of the restrictions set
forth below at all times during your employment and for a
period of eighteen months after the termination of your
employment:
(i) you will not, either individually or in conjunction
with any Person, as principal, agent, director,
officer, employee, investor or in any other manner
whatsoever, directly or indirectly, engage in or
become financially interested in any Competitive
Business within North America, except as a passive
investor holding not more than one percent of the
publicly traded stock of a corporation in which
you are not involved in management;
(ii) you will not, either directly or indirectly, on your
own behalf or on behalf of others, solicit, divert or
appropriate or attempt to solicit, divert or
appropriate to any Competitive Business, any Business
or actively sought prospective Business of the
Company or any customers with whom the Company or any
other member of the Group has current agreements
relating to
4
the Business of the Company, or with whom you have
dealt, or with whom you have supervised negotiations
or business relations, or about whom you have
acquired Confidential Information in the course of
your employment;
(iii) you will not, either directly or indirectly, on your
own behalf or on behalf of others, solicit, divert or
hire away, or attempt to solicit, divert, or hire
away, any independent contractor or any person
employed by the Company or any other member of the
Group or persuade or attempt to persuade any such
individual to terminate his or her employment with
the Company; and
(iv) you will not directly or indirectly impair or seek to
impair the reputation of the Company or any other
member of the Group, nor any relationships that the
Company or any other member of the Group has with its
employees, customers, suppliers, agents or other
parties with which the Company or any other member of
the Group does business or has contractual relations.
(f) NO PERSONAL BENEFIT: You will not receive or accept for your
own benefit, either directly or indirectly, any commission,
rebate, discount, gratuity or profit from any Person having or
proposing to have one or more business transactions with the
Company or any other member of the Group, without the prior
approval of the Board, which may be withheld.
(g) CUSTOMER CONTACTS: During your employment you will communicate
and channel to the Company all knowledge, business and
customer contacts and any other information that could concern
or be in any way beneficial to the Business of the Company.
Any such information communicated to the Company as aforesaid
will be and remain the property of the Company notwithstanding
any subsequent termination of your employment.
(h) RETURN OF COMPANY PROPERTY: Upon termination of your
employment, you will promptly return to the Company all
Company property including all written or other fixed
information including, without limitation, documents, tapes,
discs, memory devices and copies thereof, and any other
material on any medium in your possession or control
pertaining to the Business of the Company, without retaining
any copies or records of any Confidential Information
whatsoever. You will also return any keys, pass cards,
identification cards or other property belonging to the
Company.
5. TERMINATION
(a) MUTUAL AGREEMENT: Your employment may be terminated at any
time upon the mutual written agreement by the parties.
(b) RESIGNATION: If for any reason you should wish to leave the
Company you will provide the Company one month prior written
notice of your intention.
(c) WITH CAUSE: The Company may terminate your employment at any
time for Cause, immediately upon delivery by the Company to
you of a notice of termination of your employment for Cause,
in which case you will not be entitled to receive any further
compensation, severance pay, notice, payment in lieu of notice
or damages of any kind, except only any compensation accrued
and owing under this Agreement but unpaid at the date of
termination of your employment.
(d) WITHOUT CAUSE: The Company may terminate your employment at
any time without Cause by providing you with the greater of
the following:
(i) three months written notice or payment in lieu of
notice; or
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(ii) the minimum notice or payment in lieu of notice
prescribed by the employment standards legislation
applicable to the Company or any successor
legislation, as amended from time to time.
You will not be entitled to receive any further severance pay, notice,
payment in lieu of notice or damages of any kind and you will not be
entitled to receive any further compensation, except only any
compensation accrued and owing under this Agreement but unpaid at the
date of termination of your employment. Payments in lieu of notice will
be subject to all income tax source deductions and other deductions
required by law. In the event of your termination without cause by the
Company, the 18 month restriction provided for in section 4(e) shall,
with respect to subsection 4(e)(I) only, be reduced to 12 months.
6. AGREEMENT VOLUNTARY AND EQUITABLE
You acknowledge that you have carefully considered and understand the terms
of employment contained in this Agreement, that you have had the opportunity
to obtain independent legal advice regarding this Agreement, that you
consider the terms of this Agreement to be mutually fair and equitable, and
that you have executed this Agreement voluntarily and of your own free will.
7. IRREPARABLE HARM
You acknowledge and agree that any breach of section 3, subsection 4(c) or
subsection 4(e) of this Agreement by you will cause irreparable harm to the
Company and in addition to all of the remedies available to the Company by
law, the Company will be entitled to equitable relief including without
limitation, injunctive relief to ensure your compliance with section 3 and
subsections 4(c) and 4(e) of this Agreement.
8. ASSIGNMENT AND ENUREMENT
You may not assign this Agreement, any part of this Agreement or any of your
rights under this Agreement without the prior written consent of the Company.
This Agreement enures to the benefit of and is binding upon you and the
Company and your respective heirs, executors, administrators, successors and
permitted assigns.
9. SEVERABILITY
If any provision or portion of this Agreement is determined to be invalid or
unenforceable for any reason, then that provision or portion will be severed
from this Agreement, and the rest of this Agreement will remain in full force
and effect.
10. ENTIRE AGREEMENT
This Agreement contains the whole agreement between you and the Company with
respect to your employment by the Company, and there are no representations,
warranties, collateral terms or conditions, express or implied, other than as
set forth in this Agreement. This Agreement supersedes any written or oral
agreement or understanding between you and the Company. No change or
modification of this Agreement will be valid unless it is in writing and
initialled by both parties.
11. NOTICE
Any notice required or permitted to be given hereunder must be in writing and
will be sufficiently given or made if delivered or sent by registered mail to
the address of the parties set out on page 1 hereof. Any notice so given will
be deemed to have been given and to have been received on the day of delivery
if it is a business day and otherwise on the next succeeding business day or,
if mailed, on the third business day following the mailing thereof (excluding
each day during which there exists any interruption of postal services due to
strike, lockout or other cause). Addresses for notice may be changed by
giving notice in accordance with this section.
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12. NON-WAIVER
No failure or delay by you or the Company in exercising any power or right
under this Agreement will operate as a waiver of such power or right. Any
consent or waiver by you or by the Company to any breach or default under
this Agreement will be effective only in the specific instance and for the
specific purpose for which it was given.
13. SURVIVAL OF TERMS
The provisions of sections 1, 3, 5 and 7 and of subsections 4(c), 4(e), 4(g)
and 4(h) of this Agreement will survive the termination of your employment.
14. FURTHER ASSISTANCE
The parties will execute and deliver any documents and perform any acts
necessary to carry out the intent of this Agreement.
15. TIME
Time is of the essence of this Agreement.
16. GOVERNING LAWS
This Agreement will be construed in accordance with and governed by the laws
of the state in which you reside and carry out your duties and obligations
under this Agreement.
17. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
will be deemed to be an original and all of which will constitute one
Agreement.
PICKEM SPORTS, INC.
By:
--------------------
Name:
------------------
Title:
-----------------
I acknowledge and accept the terms and conditions of my employment with the
Company as set out above.
DATED this 1st day of March, 1999. ___________________________________
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SCHEDULE "A"
Employee's Name ______________
Commencement Date and Term: Commencing _______, for Two (2) Years
Position: ______________
Duties & Responsibilities ______________
Salary: $100,000 per annum
Paid Vacation: Four Weeks per annum
PICKEM SPORTS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
I acknowledge and accept the terms and conditions of my employment with the
Company as set out above.
DATED this 1st day of March, 1999.
------------------------------------
