AGGREGATE AMOUNT OF DISPUTES RESOLVED
IN FAVOR OF SPORTECH, AS SHALL BE DETERMINED BY THE INDEPENDENT ACCOUNTING FIRM
IN GOOD FAITH.
THE INDEPENDENT ACCOUNTING FIRM SHALL BE INSTRUCTED TO USE
REASONABLE BEST EFFORTS TO PERFORM
38
ITS SERVICES WITHIN THIRTY (30) DAYS OF SUBMISSION OF THE DISPUTE TO IT AND, IN
ANY CASE, AS PROMPTLY AS PRACTICABLE AFTER SUCH SUBMISSION.
IN MAKING ITS
DETERMINATION, THE INDEPENDENT ACCOUNTING FIRM SHALL ACT AS EXPERT AND NOT
ARBITRATOR.
IN RESOLVING ANY DISPUTED ITEM, THE INDEPENDENT ACCOUNTING FIRM
SHALL CONSIDER ONLY THOSE ITEMS AND AMOUNTS THAT ARE IDENTIFIED IN THE DISPUTE
NOTICE THAT SGC AND SPORTECH HAVE NOT THERETOFORE RESOLVED.
(I)
FOR THE AVOIDANCE OF DOUBT, ANY CONTINGENT CONSIDERATION
OTHERWISE DUE PURSUANT TO THIS SECTION 2.6 SHALL BE FULLY DUE AT THE SAME TIME,
AND IN THE SAME AMOUNT, PROVIDED HEREIN, NOTWITHSTANDING ANY BUSINESS
COMBINATION OR CHANGE OF CONTROL OF SPORTECH.
SECTION 2.7
TRAILING PURCHASE PRICE ADJUSTMENT. IN CONSIDERATION OF
THE CURRENT UNDERFUNDED STATUS OF THE AUTOTOTE SYSTEMS, INC. PENSION PLAN FOR
UNION EMPLOYEES, SGC SHALL REMIT TO SPORTECH THE SUM OF $750,000, TO BE PAID AT
THE RATE OF $150,000 PER YEAR ON EACH ANNIVERSARY OF THE CLOSING DATE UNTIL AND
INCLUDING THE FIFTH ANNIVERSARY OF THE CLOSING DATE.
FOR U.S. FEDERAL INCOME
TAX PURPOSES, THE PARTIES AGREE TO TREAT THE PAYMENTS MADE PURSUANT TO THIS
SECTION 2.7 AS REPAYMENTS OF PRINCIPAL ON A LOAN IN THE AMOUNT OF $697,878.44
MADE BY SPORTECH TO SGC, AND PAYMENTS OF INTEREST THEREON AS SHOWN AT
SECTION 2.7 OF THE SELLER DISCLOSURE SCHEDULE.
THE PARTIES AGREE AND
ACKNOWLEDGE THAT THE INTEREST COMPONENT OF EACH PAYMENT SHALL BE SUBJECT TO
WITHHOLDING TAX AT A RATE OF 30% IF SPORTECH SHALL HAVE FAILED TO PROVIDE TO SGC
A VALID, EXECUTED INTERNAL REVENUE SERVICE FORM W-8BEN (OR SUCCESSOR FORM) WITH
PART II COMPLETED AS REQUIRED BY SECTION 2.3(C)(VII), WHICH CONTINUES TO BE
VALID AT THE TIME OF PAYMENT, AND ANY OTHER DOCUMENTATION THAT MAY BE REQUIRED
BY APPLICABLE LAW IN EFFECT AT THE TIME SUCH PAYMENT IS MADE.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Except as set forth on the Seller Disclosure Schedule, SGC represents and
warrants to Purchasers as of the date hereof and, except with respect to the
Software Assets, as of the Closing Date, and in respect of the Software Assets,
as at the Asset Closing Date, as follows:
SECTION 3.1
ORGANIZATION AND GOOD STANDING.
EACH OF SELLERS AND SGR
IS DULY INCORPORATED OR ORGANIZED, VALIDLY EXISTING UNDER THE LAWS OF ITS
GOVERNING JURISDICTION, IS IN GOOD STANDING UNDER THE LAWS OF THE JURISDICTION
OF ITS INCORPORATION OR ORGANIZATION, AND HAS ALL REQUISITE CORPORATE OR COMPANY
POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND THOSE ANCILLARY AGREEMENTS
TO WHICH IT IS A PARTY AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY
AND THEREBY.
EACH OF THE COMPANIES AND THEIR SUBSIDIARIES (A) IS DULY
INCORPORATED OR ORGANIZED AND VALIDLY EXISTING UNDER THE LAWS OF ITS GOVERNING
JURISDICTION; (B) HAS ALL REQUISITE CORPORATE, COMPANY OR LIMITED