SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) : September 29, 1999
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TAKE -TWO INTERACTIVE SOFTWARE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-29230 51-0350842
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(State or other jurisdiction (Commission ( I.R.S. Employer
of incorporation) File Number) Identification No.)
575 Broadway, New York, New York 10012
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(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(212) 334-6633
Not Applicable
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Former name or former address, if changed since last report
<PAGE>
Item 2. Acquisition of Assets.
Acquisition of DMA
On September 29,1999, the Company acquired all of the outstanding capital
of stock of DMA Design Holdings Limited ("DMA Holdings") for (pound)1.00
and assumed approximately $11,900,000 of indebtedness. DMA Holdings holds
all of the outstanding capital stock of DMA Design Limited, the developer
of the Grand Theft Auto series.
The source of the consideration paid in the transaction was cash on hand.
The amount of the consideration paid by the Company was determined by
negotiation.
Item 5. Other Events.
Acquisition of Minority Interest of Bungie Software
On August 11, 1999, the Company agreed to purchase 19.9 % of the
outstanding capital stock of Bungie Software Products Corporation
("Bungie") for $5 million. In addition, the Company entered into an
agreement with Bungie pursuant to which the Company was granted the
exclusive right to distribute four PC titles, including Halo and ONI, in
North America, and publish these titles in Europe. The Company was also
granted certain rights for console versions of these products and new
products developed by Bungie. The Company agreed to make recoupable
advances and pay royalties to Bungie for these rights.
Acquisition of Triad Distributors
On August 31,1999, the Company, through its wholly owned Canadian
subsidiary, purchased all of the issued and outstanding capital stock of
Triad Distributors, Inc. ("Triad") and Global Star Software Ltd. ("Global")
for $700,000 in cash and the issuance of 162,500 shares of restricted
common stock. Triad is a leading Canadian distributor of third-party
computer software and videos games and Global is a leading Canadian budget
publisher.
Acquisition of CD Verte
On September 30,1999, the Company acquired all of the outstanding capital
stock of CD Verte, S.p.A. for $2.2 million, consisting of (i) $200,000 in
cash, $800,000 payable on December 1, 1999 and the balance (subject to
downward adjustment based on net income of the acquired entity) over a
three-year period. CD Verte is a leading distributor and publisher of
computer software and video games in Italy.
<PAGE>
Item 7. Exhibits.
Exhibit 1- Stock Purchase Agreement between the Company and Infogrames
Entertainment SA.
Exhibit 2- Stock Purchase Agreement by and among the Company, Take-Two
Interactive Software Canada Ltd, Triad, Global and the stockholders of
Triad and Global.
Exhibit 3- Stock Purchase Agreement by and among the Company, CD Verte,
S.p.A. and the stockholders of CD Verte, S.p.A.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: October 4, 1999
TAKE-TWO INTERACTIVE SOFRWARE, INC.
By /s/ Ryan A. Brant
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Name: Ryan A. Brant
Title: Chief Executive Officer
DATED 29 SEPTEMBER 1999
INFOGRAMES ENTERTAINMENT SA
TAKE TWO INTERACTIVE SOFTWARE INC.
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AGREEMENT
TO BUY AND SELL
DMA DESIGN HOLDINGS LIMITED
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GARRETTS
180 Strand
London
WC2R 2NN
Phone: 0171 344 0344
Fax: 0171 438 2518
Ref: MDLD/DCR
<PAGE>
THIS AGREEMENT is made on 29 September 1999
BETWEEN:
(1) INFOGRAMES ENTERTAINMENT SA, a company incorporated in France (registered
number RCS Lyon B341 699 106) whose registered office is at 82 - 84 rue
du 1er Mars 1943, 69100 Villeurbanne, France (the "Seller"); and
(2) TAKE TWO INTERACTIVE SOFTWARE INC., a Delaware Corporation whose business
address is at 575 Broadway, New York, New York 10012, USA (the "Buyer").
BACKGROUND:
(A) DMA Design Holdings Limited (the "Company"), a company incorporated in
England and Wales (registered no. 3736771) whose registered office is at
21 Castle Street, Castlefield, Manchester M3 4SW, has an authorised share
capital of (pound)1,000 comprising 1,000 ordinary shares of (pound)1
each, one of which is issued and legally and beneficially owned by the
Seller (the "Sale Share").
(B) DMA Design Limited (the "Subsidiary"), a company incorporated in England
and Wales (registered no. 3312220) and whose registered office is at The
Green House, 33 Bowdon Street, Sheffield, South Yorkshire S1 4HA, has an
authorised share capital comprising 1,000 ordinary shares of (pound)1
each, one of which is issued and legally and beneficially owned by the
Company (the "Subsidiary Share").
(C) The Seller has agreed to sell and the Buyer has agreed to buy the Sale
Share on the terms and subject to the conditions of this Agreement.
THE PARTIES AGREE as follows:
1 INTERPRETATION
1.1 In this Agreement:
Attack/Clan Wars Assignment means the assignment of intellectual
property in the computer games "Attack"
and "Clan Wars" between the Subsidiary
and Gremlin Interactive Limited dated
the date of this Agreement;
Assigned Games means the computer games "Attack", "Clan
Wars" and "Tanktics";
Business Day means a day other than a Saturday or
Sunday on which banks generally in the
City of London are open to transact
normal business;
Buyer's Group Company means each of the Buyer and its parent
undertaking(s) and any subsidiary
undertaking(s) of any of them, in each
case from time to time (and including,
for the avoidance of doubt the Company
and the Subsidiary);
<PAGE>
Claim means a claim (whether in contract, tort
or otherwise) by the Buyer under or in
relation to clause 4 or clause 9 or the
Tax Deed or for misrepresentation;
Companies Act means the Companies Act 1985;
Completion means completion of the sale and
purchase of the Sale Share in accordance
with clause 3;
Completion Accounts means the accounts of the Subsidiary
prepared in accordance with clause 2.5;
Encumbrance means a mortgage, pledge, charge, lien
or assignment or any other encumbrance,
priority or security interest or
arrangement of any kind, or other type
of preferential arrangement (including a
title transfer and retention agreement)
having similar effect;
First Share Sale Agreement the agreement dated the date of this
Agreement to buy and sell the share in
the Subsidiary and to lend and borrow
money for that purpose between Gremlin
Holdings Limited as seller, the Company
as buyer and borrower and the Seller as
lender;
IPR Assignments means the Wild Metal Country Assignment,
the Tanktics Assignment and the
Attack/Clan Wars Assignment;
Key Person means a person who immediately after
Completion is a director of the
Subsidiary or was employed or engaged as
an employee of the Subsidiary in the
capacity of manager or producer or in a
more senior capacity (other than the
directors of the Subsidiary who will
resign in accordance with clause 3.1.4);
Liabilities all liabilities, duties, commitments and
obligations of every description (but
excluding Tax Liabilities ), whether
deriving from contract, common law,
statute or otherwise, whether present or
future, actual or contingent or
ascertained or unascertained and whether
owed or incurred severally or jointly or
as a principal or surety;
Reorganisation means the reorganisation of the group of
companies comprising the Seller's Group
Companies, the Company and the
Subsidiary which took place between 1
July 1999 (inclusive) and Completion
including the IPR Assignments, the First
Share Sale Agreement, the Second Share
Sale Agreement and the waiver by Gremlin
Group Plc on 2 August 1999 of an amount
of(pound)3,871,000 owed by the
Subsidiary (and for the avoidance of
doubt the reorganisation shall not
include any actions carried out by the
Subsidiary in the ordinary course of its
business);
<PAGE>
Second Share Sale Agreement means the agreement dated the date of
this Agreement to buy and sell the
shares in Gremlin Group PLC between the
Company as seller and Ocean Holdings
Limited as buyer;
Secondment Agreement means the secondment agreement in agreed
form between Gremlin Interactive
Limited, the Subsidiary and the Buyer in
respect of the Secondment of two
employees of Gremlin Interactive Limited
to the Subsidiary;
Seller's Group Company means each of the Seller and its parent
undertaking(s) and any subsidiary
undertaking(s) of any of them, in each
case from time to time;
Tanktics Assignment means the assignment of intellectual
property in the computer game "Tanktics"
between the Subsidiary and Gremlin
Interactive Limited dated the date of
this Agreement;
Tax shall have the meaning given to it in
the Tax Deed;
Tax Deed means the tax deed in agreed form to be
entered into between the Buyer and the
Seller;
Tax Liability shall have the meaning given to it in
the Tax Deed;
Uncapped Claims means any Claims (whether in contract,
tort or otherwise) and whether for
breach of warranty or misrepresentation
in respect of the warranties in clause
4.2.1 to 4.2.8, the indemnities in
clauses 9.1.2 and 9.1.3 or under the Tax
Deed; and
Wild Metal Country Assignment means the assignment of intellectual
property in and certain publishing
agreements relating to the computer game
"Wild Metal Country" between the Buyer,
the Subsidiary and Gremlin Interactive
Limited and dated the date of this
Agreement. 1.2 In this Agreement, a
reference to:
1.2.1 a clause or party or schedule, unless the context otherwise
requires, is a reference to a clause of or a party or schedule to
this Agreement;
1.2.2 a person includes, unless the context otherwise requires, a
reference to a body corporate, association, governmental
authority, public body, trustee or partnership;
1.2.3 a document is a reference to the document as from time to time
supplemented or varied;
1.2.4 a "subsidiary undertaking" or a "parent undertaking" is to be
construed in accordance with section 258 of the Companies Act;
1.2.5 "control" is to be construed in accordance with section 416 of
ICTA;
<PAGE>
1.2.6 a document in the "agreed form" means the document in the form
agreed and, for the purposes of identification only, signed or
initialled by or on behalf of the Seller and the Buyer. A list of
these documents is set out in schedule 3;
1.2.7 a person includes a reference to the person's legal personal
representatives, successors and lawful assigns; and
1.2.8 a statutory provision includes a reference to the statutory
provision as modified or re-enacted or both from time to time
before the date of this Agreement and any subordinate legislation
made under the statutory provision before the date of this
Agreement.
1.3 The headings in this Agreement do not affect its interpretation.
1.4 In this Agreement, the words "include", "includes" and "including" are to
be construed as if they were immediately followed by the words "without
limitation".
1.5 Any statement in this Agreement which refers to "so far as the Seller is
aware" or any similar expression shall be limited to the awareness which
the Seller and/or Chris Stockwell (the company secretary of Gremlin Group
Plc) actually has.
2 AGREEMENT TO BUY AND SELL AND PRICE
2.1 The Seller agrees to sell with full title guarantee and the Buyer agrees
to buy the Sale Share and each right attaching or accruing to the Sale
Share on or after the date of this Agreement, free of any option, claim
or Encumbrance.
2.2 Subject to clause 2.3 below, as consideration for the Sale Share the
Buyer agrees to pay the Seller the sum of (pound)1 (receipt of which is
hereby acknowledged) and to procure that at Completion the Company repays
(or to repay on behalf of the Company) the (pound)3,251,703 owed by the
Company to the Seller pursuant to the loan created under the First Share
Sale Agreement, provided that all other indebtedness owed by the Company
or the Subsidiary to any Seller's Group Company shall be dealt with in
accordance with clause 6.
2.3 The Seller shall reimburse to the Buyer out of the amount paid under
clause 2.2 (for itself and acting as trustee for the Company) the amount
(if any) by which the Net Asset Value (as determined in accordance with
clauses 2.4 and 2.5 below) is below (pound)-3,500,000 (negative three
million five hundred thousand) less X (where X is (pound)500,000 less the
amount of any Claims (other than Uncapped Claims or a Claim in respect of
the indemnity in clause 9.1.1 or the warranty in clause 4.2.10) which
have been finally determined against the Seller). For the avoidance of
doubt no reimbursement shall be made of the consideration paid until the
amount by which the Net Asset Value is below (pound)-3,500,000 (negative
three million five hundred thousand) when aggregated with all Claims
(other than Uncapped Claims or a Claim in respect of the indemnity in
clause 9.1.1) which are finally determined against the Seller exceeds
(pound)500,000, in which event a reimbursement shall be made only in
respect of the excess over (pound)500,000.
2.4 For the purposes of this clause 2, "Net Asset Value" shall mean the
amount paid up or credited as paid up on the issued share capital of the
Subsidiary plus the reserves of the Subsidiary plus the retained earnings
of the Subsidiary (or less the amount standing to the debit of the profit
and loss account of the Subsidiary) less any amount included in the above
which is attributable to minority interests, goodwill assets and/or other
intangible assets in each case as at the date of Completion and as
finally determined in accordance with clause 2.5.
<PAGE>
2.5 For the purpose of determining the amount of the Net Asset Value:
2.5.1 The Seller shall as soon as practicable following Completion (and
in any event on or before 13 October 1999) deliver to the Buyer
draft Completion Accounts prepared by the Seller (together with
copies of all working papers relating to the preparation of the
draft Completion Accounts). In order to prepare the draft
Completion Accounts the Buyer shall (and shall procure that the
Subsidiary shall) give all such reasonable assistance, documents,
information and access to premises and personnel of the Subsidiary
as the Seller shall require in order to prepare the draft
Completion Accounts in the time required. Such draft Completion
Accounts will:
(a) comprise a pro forma balance sheet and statement of income
in respect of the Subsidiary;
(b) be in respect of the period from 30 June 1999 to the date
of Completion; and
(c) be prepared using the same accounting policies as, on the
same basis as and in all respects in a manner consistent
with the audited accounts of the Subsidiary for the period
to 30 June 1999 (the "Audited Accounts").
2.5.2 The Buyer shall raise no dispute in relation to the value of work
in progress (relating to computer games in development) in the
Audited Accounts (such figure being(pound)816,044) and
acknowledges and accepts that the value of "work in progress"
(relating to computer games in development) which will appear in
the pro forma balance sheet of the Completion Accounts shall be
calculated from such figure using the same accounting policies as,
on the same basis as and in all respects in a manner consistent
with the Audited Accounts (provided that account shall be taken of
(pound)200,000 in respect of the sale by the Subsidiary of rights
in the Assigned Games) and no dispute shall be raised and no
adjustment shall be made to that amount in determining the Net
Asset Value in accordance with this clause 2.5. The Buyer also
agrees that no provision shall be made or any amount accounted for
in the Completion Accounts for any Tax Liability arising or which
may arise in connection with the waiver on 2 August 1999 by
Gremlin Group PLC of an amount of(pound)3,871,000 owing by the
Subsidiary to Gremlin Group PLC for the purposes of the
calculation of the Net Asset Value and without prejudice to the
Buyer's rights (but subject to its obligations) under the Tax
Deed.
2.5.3 Following receipt of the draft Completion Accounts from the
Seller, the Buyer shall be entitled to examine these with a view
to agreeing the Seller's calculation of the Net Asset Value. The
calculation of the Net Asset Value and Completion Accounts
prepared by the Seller shall be final and binding upon the parties
to this Agreement unless, prior to the expiry of 45 days following
their delivery to the Buyer, the Buyer serves notice on the Seller
stating that it wishes to dispute the same giving a detailed
written explanation of its grounds for wishing to do so and
incorporating any adjustment which the Buyer would wish to be made
to the draft Completion Accounts and its own calculation of the
Net Asset Value.
2.5.4 If a dispute is raised by the Buyer as to the draft Completion
Accounts and/or the Net Asset Value and such dispute is not
settled by agreement between the Buyer and the Seller within 30
days after the Buyer notifies the Seller of the dispute pursuant
to sub-clause 2.5.3 above, then either the Seller or the Buyer
<PAGE>
may instruct an independent firm of chartered accountants (the
"Independent Accountants") appointed by agreement or in default of
agreement by the President of the Institute of Chartered
Accountants of England and Wales (acting as experts and not as
arbitrators) to determine the dispute in question (having regard
to the criteria for determining Net Asset Value in clauses 2.4 and
2.5) within 30 days of such instruction and the determination of
such firm (whose costs shall be borne as such firm shall direct or
(in default of direction) by the parties in equal proportions)
shall be final and binding on the parties in all circumstances and
each of the parties shall on request promptly supply to the Seller
or the Buyer (or their respective professional advisers) and the
Independent Accountants (as appropriate) all such assistance,
documents and information as they may respectively require for the
purpose of the determination pursuant to Clause 2.5.4 and the
parties shall use all reasonable endeavours to procure the due and
prompt determination of the Net Asset Value and finalisation of
the Completion Accounts.
2.6 The Buyer must pay (or procure the Company to pay, as the case may be)
the amount due under clause 2.2 as may be adjusted in accordance with
clause 2.3 in cash by telegraphic transfer to the following bank account
(or to such other account as the Seller may direct):
Account bank and branch: Societe Generale Lyon Entreprises Bank
Bank code: 30003
Agency code: 02280
Account name: Infogrames Entertainment SA
Account no: 00078014698
2.7 There is no clause 2.7
2.8 There is no clause 2.8
2.9 There is no clause 2.9
2.10 There is no clause 2.10
2.11 The Seller will procure that prior to Completion the overdraft of the
Subsidiary held at the National Westminster Bank plc is reduced to an
amount that is not more than (pound)3,988,905 and the Seller shall fully
and effectively indemnify the Buyer (for itself and as trustee for the
Company or the Subsidiary and their respective officers, directors and
employees) against any and all loss, damage or liability (and all costs,
charges, interest, fines, penalties and expenses relating to such loss,
damage or liability) as a result such overdraft exceeding
(pound)3,988,905 at the date of Completion.
3 COMPLETION
3.1 Completion must take place at the offices of Garretts at 180 Strand,
London WC2R 2NN immediately after execution of this Agreement when:
3.1.1 the Buyer must:
<PAGE>
(a) pay (or procure payment of) the amounts due under clauses
2.2, 6.6, 6.7 and 6.8; and
(b) give or make available to the Seller the items listed in
schedule 1;
3.1.2 the Seller must give or make available to the Buyer the items
listed in schedule 2;
3.1.3 the Seller must procure that a meeting of the board of directors
of the Company takes place at which the directors resolve to:
(a) approve for registration the transfer of the Sale Share to
the Buyer or its nominee(s) and the entry of the
transferee(s) in the register of members of the Company
(subject to the production of a properly stamped transfer);
(b) change the Company's registered office to Hogarth House,
29-31 Sheet Street, Windsor;
(c) revoke all existing mandates for the operation of the bank
accounts of the Company and replace them with new mandates
as required by the Buyer;
(d) change the Company's accounting reference date to 31
October;
(e) accept the resignations of Michel Lanne, David Ward, Thomas
Schmider, Jean-Marie Dura and Bruno Bonnell as directors
and Gary Warburton as secretary which have been provided in
the agreed form and appoint Kelly Sumner and Gerry Tucker
as directors and Gerry Tucker as secretary with effect from
the end of the meeting;
(f) acknowledge that Deloitte, Touche, Tohmatsu had not yet
formally acknowledged their appointment as auditors of the
Company and could not therefore resign and to appoint
PricewaterhouseCoopers as auditors of the Company at a
remuneration to be agreed and subject to their consent; and
3.1.4 immediately after the board meeting of the Company has taken
place, the Seller must ensure that a meeting of the board of
directors of the Subsidiary takes place at which the directors
resolve to:
(a) change the Subsidiary's registered office to Hogarth House,
29-31 Sheet Street, Windsor;
(b) revoke all existing mandates for the operation of the bank
accounts of the Subsidiary and replace them with new
mandates as required by the Buyer;
(c) change the Subsidiary's accounting reference date to 31
October;
(d) accept the resignations of James North-Hearn, Ian Stewart
and Jenny Richards Stewart, Jean-Marie Dura and Michel
Lanne as directors and Chris Stockwell as secretary and
which have been provided in the agreed form appoint Kelly
Sumner and Gerry Tucker as directors and Gerry Tucker as
secretary with effect from the end of the meeting; and
<PAGE>
(e) accept the resignation of Pannell Kerr Foster as auditors
and appoint PricewaterhouseCoopers as auditors at a
remuneration to be agreed and subject to their consent.
3.2 The Seller shall not be obliged to complete this Agreement unless the
Buyer complies fully with the requirements set out in clause 3.1.1 above
or any such requirements are waived by the Seller.
3.3 The Buyer shall not be obliged to complete this Agreement unless the
Seller complies fully with the requirements set out in Clauses 3.1.2 to
3.1.4 above or any such requirements are waived by the Buyer.
3.4 The Seller shall (and shall procure that any other Seller's Group Company
or their respective professional advisers shall) on, and at all times
after Completion, execute and do all such deeds, documents, acts and
things as the Buyer shall reasonably require at or after Completion for
assigning to or vesting in the Buyer or its nominees the full beneficial
ownership of, and legal title to, the Sale Share, and for giving full
effect to this Agreement.
4 WARRANTIES
4.1 The Seller and the Buyer each warrant to the other that:
4.1.1 it has all necessary power and authority to execute and deliver,
and to perform all its obligations and exercise all its rights
under, this Agreement and all documents to be executed by it under
this Agreement, and that such execution, delivery, performance of
obligations and exercise of rights have been duly authorised by
all necessary corporate action; and
4.1.2 this Agreement has (and all documents to be executed by it under
this Agreement have) been duly executed by a duly authorised
representative of the Seller or the Buyer (as the case may be) and
constitute(s) the valid and binding obligations of the Seller or
the Buyer (as the case may be).
4.2 The Seller warrants to the Buyer that as at Completion:
4.2.1 the information in respect of the Company and the Subsidiary set
out in the section headed "Background" above is true, complete and
accurate;
4.2.2 the Seller is the sole legal and beneficial owner of the Sale
Share and the Company is the sole legal and beneficial owner of
the Subsidiary Share;
4.2.3 the Sale Share and the Subsidiary Share have been properly
allotted and issued and are fully paid or credited as fully paid;
4.2.4 there is no Encumbrance, and there is no agreement, arrangement or
obligation to create or give an Encumbrance, in relation to the
Sale Share or the Subsidiary Share and no person has claimed to be
entitled to an Encumbrance in relation to either of them;
4.2.5 other than this Agreement, there is no agreement, arrangement or
obligation requiring the transfer, redemption or repayment of, or
the grant to any person of the right (whether conditional or
unconditional) to require the transfer, redemption or repayment of
the Sale Share or the Subsidiary Share (including an option or
right of pre-emption or conversion);
<PAGE>
4.2.6 the Sale Share comprises the entire issued share capital of the
Company and the Subsidiary Share comprises the entire issued share
capital of the Subsidiary and there is no agreement, arrangement
or obligation requiring, constituting or effecting the allotment,
issue or transfer of any additional securities (including loan
capital) of the Company or the Subsidiary (including an option or
right of pre-emption);
4.2.7 so far as the Seller is aware, the schedule of employees of the
Subsidiary produced by the Seller at Completion contains a full
and accurate list of all of the employees of the Subsidiary as at
31 August 1999 and full and accurate details of the salary
payments made to those employees on that date;
4.2.8 other than the indebtedness owed by the Company to the Seller as
created by the First Share Sale Agreement and the obligations of
the Company under the power of attorney granted to Ocean Holdings
Limited under clause 4.1.1(c) of the Second Share Sale Agreement,
the Company has no Liabilities other than shareholder funds;
4.2.9 other than the Reorganisation, the signing of the lease of the
Edinburgh office of the Subsidiary by the Subsidiary and the
arrangements entered into at or about the time of Completion and
which are listed in any of the schedules 1, 2 or 3, since 30 June
1999, so far as the Seller is aware, the Subsidiary has been
operated and its business conducted in the ordinary course of
business; and
4.2.10 so far as the Seller is aware, there has been no sale, transfer or
other disposition (other than by way of security to a bank which
has been fully discharged or other security granted solely for the
benefit of the Subsidiary) by the Subsidiary of any rights it had
to receive any income (whether by royalty or otherwise) in respect
of the exploitation of the video games known as "Grand Theft Auto"
and "Grand Theft Auto 2" and any products or merchandise derived
from those video games.
4.3 Each party acknowledges that the other is entering into this Agreement in
reliance on each warranty given by that party in clause 4.
5 USE OF NAMES ETC.
5.1 The Buyer unconditionally and irrevocably agrees with and undertakes to
the Seller (acting for itself and as trustee for each other Seller's
Group Company) to procure that the Company and the Subsidiary (and their
respective directors, officers, employees and agents) will, without cost
to any Seller's Group Company:
5.1.1 as soon as possible (and in any event within one month) after
Completion, remove from all letterhead, business cards and other
stationery, circulars and advertisements and on any signs or on
any other assets used by the Company or the Subsidiary (or any of
their respective agents) all references to;
5.1.2 with effect from Completion, not use or carry on business under,
or seek to register or acquire any right, title or interest in or
to, any mark, logo, name, symbol or device which is similar to or
which may be confused with that of;
5.1.3 with effect from Completion, otherwise represent or hold
themselves out as being in any way connected with;
<PAGE>
the Seller or any other Seller's Group Company and its and their
respective marks, logos, names, symbols or devices (excluding for the
avoidance of doubt the Subsidiary's name, logos and marks).
5.2 The Seller unconditionally and irrevocably agrees with and undertakes to
the Buyer (acting for itself and as trustee for the Company and the
Subsidiary) to procure that each Seller's Group Company (and their
respective directors, officers, employees and agents) will, without cost
to any Buyer's Group Company:
5.2.1 as soon as possible (and in any event within one month) after
Completion, remove from all letterhead, business cards and other
stationery, circulars and advertisements and on any signs or on
any other assets used by any Seller's Group Company (or any of
their respective agents) all references to;
5.2.2 with effect from Completion, not use or carry on business under,
or seek to register or acquire any right, title or interest in or
to, any mark, logo, name, symbol or device which is similar to or
which may be confused with that of;
5.2.3 with effect from Completion, otherwise represent or hold
themselves out as being in any way connected with;
the Company and the Subsidiary and their respective marks, logos, names,
symbols or devices.
6 TERMINATION OF CERTAIN FINANCIAL OBLIGATIONS
6.1 Subject to the other provisions of this Agreement, the Seller
unconditionally and irrevocably agrees with and undertakes to the Buyer
(acting as trustee for the Company and the Subsidiary) as soon as
possible (and in any event within one month of the Seller becoming aware)
after Completion to:
6.1.1 release and discharge (or procure the release and discharge of as
and when such become known to the Seller) the Company and the
Subsidiary from; and
6.1.2 waive (or procure the waiver of) all rights against the Company
and the Subsidiary arising from or in relation to;
each liability, obligation and undertaking of any nature whatsoever
(whether actual or contingent and whether due for payment or not), which
the Company and/or the Subsidiary owe(s) or has or have before or at
Completion to:
(a) a Seller's Group Company (except for the amounts owed by the
Company to the Seller as created by the First Sale Agreement);
and/or
(b) any other person (each a "Seller's Security Beneficiary"):
(i) for the benefit of; or
(ii) in respect of a liability, obligation or undertaking of any
nature whatsoever (whether actual or contingent) of,
a Seller's Group Company,
without any provision or consideration for such release, discharge or
waiver by the Company or the Subsidiary.
<PAGE>
6.2 Without in any way affecting clause 6.1, the Seller agrees to pay the
Buyer (acting for itself and as trustee for the Company and the
Subsidiary) on demand an amount equal to the amount of each loss,
liability and cost suffered or incurred by the Company or the Subsidiary
with effect from or after Completion because of or in relation to a
liability, obligation or undertaking of any nature whatsoever which the
Company or the Subsidiary owes or has before or at Completion to any
Seller's Group Company, and/or a Seller's Security Beneficiary.
6.3 Subject to the other provisions of this Agreement and to the extent
permitted by law, the Buyer unconditionally and irrevocably agrees with
and undertakes to the Seller (acting for itself and as trustee for each
other Seller's Group Company) as soon as possible (and in any event
within one month of the Buyer becoming aware) after Completion to:
6.3.1 release and discharge (or procure the release and discharge of as
and when such become known to the Buyer) each Seller's Group
Company from; and
6.3.2 waive (or procure the waiver of) all rights against each Seller's
Group Company arising from or in relation to,
each liability, obligation or undertaking of any nature whatsoever
(whether actual or contingent and whether due for payment or not), which
that Seller's Group Company owes or has before or at Completion to:
(a) the Company and/or the Subsidiary; and/or
(b) any other person (each a "Buyer's Security Beneficiary"):
(i) for the benefit of; or
(ii) in respect of a liability, obligation or undertaking of any
nature whatsoever (whether actual or contingent) of,
the Company and/or the Subsidiary in respect of the business of
the Company and/or Subsidiary as conducted immediately after
Completion, including:
(1) the guarantee granted to Take Two Interactive Software,
Inc. by Gremlin Group plc (Company No. 3216645) in support
of the obligation of the Subsidiary to develop the game
Grand Theft Auto 2 under the agreement dated 22 May 1998
(as amended);
(2) the guarantee granted by Gremlin Group PLC in support of
the obligations of the Subsidiary to The East Old Dock
Company Limited (registered no. 135999) under the Missives
of Lease of Second Floor Office Accommodation, Building 1,
Commercial Quay, 74 Commercial Street, Leith, Edinburgh EH6
6LX dated 2 September 1999 among those parties;
(3) the guarantee granted by Gremlin Holdings Limited
(registered no. 3049932) in support of the obligations of
the Subsidiary to Barry Gold under the sublease of the Unit
2.7 Discovery House, Lindsay V, Lindsay Court, Dundee dated
1 October 1997 among those parties; and.
<PAGE>
(4) the guarantees and security granted by the Seller's Group
Companies to the National Westminster Bank plc in respect
of the financial obligations of the Company and the
Subsidiary;
without any provision or consideration for such release discharge or
waiver by such Seller's Group Companies.
6.4 Without in any way affecting clause 6.3, the Buyer agrees to pay the
Seller (acting for itself and as trustee for each other Seller's Group
Company) on demand an amount equal to the amount of each loss, liability
and cost suffered or incurred by each Seller's Group Company with effect
from or after Completion because of or in relation to a liability,
obligation or undertaking of any nature whatsoever which the Seller's
Group Company owes or has before or at Completion to the Company and/or
the Subsidiary, and/or a Buyer's Security Beneficiary.
6.5 For the avoidance of doubt, nothing in this clause 6 affects the
obligation of the Company to repay the loan to the Seller created by the
First Share Sale Agreement which will be satisfied by the obligation of
the Buyer under clause 2.2 to procure that the Company repays to the
Seller the amounts set out in clause 2.2 (provided that the Seller
undertakes to the Buyer (for itself and as trustee for the Company) that
following such payments, the Company shall have no further indebtedness
to the Seller) or any of the other payments set out in this clause 6 or
any of the obligations assumed by the parties under the IPR Assignments
or any of the agreements entered into at or about the time of Completion
and which are listed in any of schedules 1, 2 and 3, and nor does
anything in this clause 6 affect any agreement or arrangement entered
into after execution of this Agreement. 6.6 The Buyer undertakes to the
Seller (for itself and as trustee for each Seller's Group Company) that
the Buyer will procure that the Subsidiary will pay (or the Buyer will
itself pay on behalf of the Subsidiary) (pound)250,000 (representing the
balance of inter company payables and receivables between the Subsidiary
and Gremlin Interactive Limited) to Gremlin Interactive Limited and such
amount shall be payable at Completion.
6.7 The Buyer undertakes to the Seller (for itself and as trustee for each
Seller's Group Company) that the Buyer will at Completion pay the
(pound)249,532 owed by the Buyer to Gremlin Interactive Limited and the
Buyer (as agent for the Subsidiary) acknowledges that the 80%
contribution payment (in consideration for development work carried out
by the Subsidiary on the game "Wild Metal Country") payable by Gremlin
Interactive Limited to the Subsidiary in connection with "Wild Metal
Country" (which would otherwise be payable out of the $400,000 payment)
has already been paid to the Subsidiary in full and final settlement of
any and all amounts payable by Gremlin Interactive Limited to the
Subsidiary in respect of "Wild Metal Country".
6.8 The Buyer undertakes to the Seller (for itself and as trustee for each
Seller's Group Company) that the Buyer will procure that the Subsidiary
will pay (or the Buyer will itself pay on behalf of the Subsidiary) the
fees payable by the Subsidiary to Gremlin Interactive Limited under the
Secondment Agreement.
6.9 For the avoidance of doubt, except in respect of the Secondment
Agreement, the Seller (for itself and as agent for each Seller's Group
Company) acknowledges and agrees that the Buyer and each Buyer's Group
Company shall be released fully and finally from any and all obligations
of any kind to any Seller's Group Company whether past or future in
relation to the interactive entertainment products known as "Grand Theft
<PAGE>
Auto" and "Grand Theft Auto 2" and all other products and merchandise
derived from such products.
6.10 If any Seller's Group Company becomes aware of any matter which is
reasonably likely to give rise to a claim against the Buyer under the
indemnities in this clause 6, the provisions of paragraph 4 of schedule 4
shall, mutatis mutandis, apply to such claim.
6.11 If any Buyer's Group Company becomes aware of any matter which is
reasonably likely to give rise to a claim against the Seller under the
indemnities in this clause 6, the provisions of paragraph 4 of schedule 4
shall, mutatis mutandis, apply to such claim.
7 CONFIDENTIALITY
7.1 Subject to clause 7.2 and clause 8, each party must treat as strictly
confidential all information received or obtained as a result of entering
into or performing this Agreement or otherwise obtained, including all
information which relates to:
7.1.1 the negotiations relating to this Agreement or any document
referred to in this Agreement; or
7.1.2 the provisions or subject matter of this Agreement or any document
referred to in this Agreement; or
7.1.3 in the case of the Seller, each Buyer's Group Company, and, in the
case of Buyer, each Seller's Group Company and, in each case,
their respective businesses, including future projects, business
development and planning, commercial relationships and
negotiations, and financial and tax affairs.
7.2 A party may disclose information which would otherwise be confidential if
and to the extent:
7.2.1 required by the law of any relevant jurisdiction or for the
purposes of any judicial proceedings; or
7.2.2 required by any recognised securities exchange or by any
regulatory or governmental body to which either party is subject
or submits; or
7.2.3 the information is disclosed on a strictly confidential basis to
that party's professional advisers, auditors or bankers for the
purpose of advising that party in connection with this Agreement;
or
7.2.4 the information is disclosed to a director, officer or employee of
a Buyer's Group Company or Seller's Group Company (as the case may
be) whose function requires him to have the information; or
7.2.5 the information has come into the public domain otherwise than
through a fault of that party; or
7.2.6 the other party has agreed to the disclosure in writing;
but a party may only disclose under clauses 7.2.1 and 7.2.2 after
consultation (where practical) with the other party.
<PAGE>
8 ANNOUNCEMENTS
8.1 Subject to clause 8.2, neither the Seller nor the Buyer may make or issue
at any time any announcement, circular or other publicity relating to any
matter referred to in this Agreement without the other party's prior
written approval to the form and content of the announcement.
8.2 Clause 8.1 does not apply to any announcement, circular or other
publicity required by the law of any relevant jurisdiction or by the
rules or regulations of any recognised securities exchange or of any
regulatory or governmental body to which either party is subject or
submits. In such an event, the party making or sending the announcement,
circular or other publicity must, as far as practical, consult with the
other party as to the form and content of the announcement.
9 SELLER'S INDEMNITY
9.1 The Seller will at all times indemnify and hold the Buyer (for itself and
acting as trustee for the Company and the Subsidiary and their respective
officers, directors and employees) each an "Indemnified Person", fully
and effectively indemnified against any and all loss, damage or Liability
(and all costs, charges, interest, fines, penalties, reasonable
professional fees and expenses incidental or relating to or arising in
connection with any such loss, damage or liability) suffered by an
Indemnified Person (whether or not foreseeable or contemplated) and
arising as a result of or in connection with the following:-
9.1.1 the Assigned Games; and/or
9.1.2 the Reorganisation (other than in respect of obligations and
liabilities expressly assumed by the Company or the Subsidiary in
the IPR Assignments or the First and Second Share Sale
Agreements); and/or
9.1.3 any breach of the warranty in clause 4.2.8; and/or
9.1.4 any breach of warranty in clause 4.2.9.
9.2 For the avoidance of doubt no Claim under Clause 9.1 shall be made by the
Buyer in respect of any Tax Liability, any Claim in respect of any Tax
Liability shall be made under the Tax Deed.
10 LIMITATIONS ON SELLER'S LIABILITY
10.1 The Seller's liability for Claims shall be limited or excluded (as the
case may be) as set out in Schedule 4 and conduct in respect of any
Claims shall be governed by Schedule 4.
10.2 Any payment made by the Seller to the Buyer pursuant to any claim under
this Agreement shall be treated as a reduction in the consideration
11 TAX DEED AND TAXATION
11.1 The provisions of the Tax Deed shall apply in relation to Tax and any Tax
Liabilities.
<PAGE>
11.2 The Buyer shall procure that, following Completion, the Company and/or
the Subsidiary (as the case may be) co-operates promptly and fully with
any reasonable request of the Seller in respect of any accounting period
of the Company and/or the Subsidiary (as the case may be) ended on or
before Completion or the accounting period current at Completion to make
such claims or elections as directed by the Seller in respect of:
11.2.1 group relief (as defined in section 402 ICTA); and/or
11.2.2 advance corporation tax under section 240 ICTA; and/or
11.2.3 tax refunds under section 102 Finance Act 1989;
provided that the Buyer shall not be obliged to procure the surrender of
any Relief (as defined in the Tax Deed) which has been included as an
asset in or taken into account in computing any provision for Tax or
deferred Tax in the Completion Accounts which is reflected in Net Asset
Value (as defined in clause 2).
11.3 If the amount of the Net Asset Value takes account of amounts received or
receivable in respect of any surrender of any Relief by the Company or
the Subsidiary and the Company or the Subsidiary shall not receive such
amount, or such amount shall be liable to be repaid then, to the extent
so taken into account, the Seller shall on demand pay to the Buyer an
amount equal to the amount not received or the amount liable to be
repaid.
11.4 If the amount of the Net Asset Value takes account of surrenders of
Relief to the Company or the Subsidiary and such Relief is non-existent
or is lost or cancelled, in whole or in part, then the Seller shall on
demand pay to the Buyer an amount equal to the value attributed to such
Relief, or the relevant part thereof, in the computation of Net Asset
Value unless and to the extent that payment has been made under the Tax
Deed.
12 NON-SOLICITATION
12.1 The Seller agrees with the Buyer that, without prejudice to any other
duty imposed by law or equity, neither the Seller nor any Seller's Group
Company will without the prior written consent of the Buyer (which
consent will be withheld only in so far as may be reasonably necessary to
protect the legitimate interests of the Buyer, the Company or the
Subsidiary) either by itself, its employees or agents or otherwise
howsoever, on its own account or in conjunction with or as principal,
partner, director, employee, consultant or agent or otherwise on behalf
of any other person or entity for a period of one year following
Completion, directly or indirectly:
(a) solicit the employment or engagement of any Key Person; or
(b) procure or assist any third party so to solicit any Key Person
(whether or not such person would commit any breach of his
contract with the Company or the Subsidiary) unless such Key
Person had ceased to be employed or engaged by the Company or (as
the case may be) more than 3 months previously.
12.2 The Seller agrees with the Buyer that the restrictive covenants herein
contained are reasonable and necessary for the protection of the value of
the Sale Share and the Company and the Subsidiary and the Seller agrees
that having regard to that fact those covenants do not work harshly on
it.
<PAGE>
12.3 While the restrictions aforesaid are considered by the parties to be
reasonable in all the circumstances, it is agreed that if any such
restrictions taken together shall be adjudged to go beyond what is
reasonable in all the circumstances for the protection of the interests
of the Buyer but would be adjudged reasonable if part or parts of the
wording thereof were deleted or amended or qualified or the periods
thereof were reduced then the relevant restriction or restrictions shall
apply with such modification or modifications as may be necessary to make
it or them valid and effective.
12.4 Without prejudice to any other rights or remedies that the Buyer may
have, the Seller acknowledges and agrees that damages alone would not be
an adequate remedy for any breach by the Seller of the provisions of this
clause and that, accordingly, the Buyer shall be entitled without proof
of special damage to the remedies of injunction, specific performance and
other equitable relief for any threatened or actual breach of the
provisions of this clause by the seller.
12.5 Each of the obligations on the Seller contained in the above provisions
of this clause constitutes an entirely separate and independent
restriction on the Seller notwithstanding that they may be contained in
the same sub-clause, paragraph, sentence or phrase.
13 GENERAL
13.1 No provision of this Agreement by virtue of which this Agreement is
subject to registration under the Restrictive Trade Practices Act 1976
(the "RTPA") shall, in the event that this Agreement is registerable but
is not a non-notifiable agreement under the RTPA, take effect until the
day after the date on which particulars of the Agreement have been
furnished to the Director General of Fair Trading pursuant to the RTPA.
For the purposes of this clause, "Agreement" includes this Agreement and
any other relevant agreement or arrangement of which it forms a part.
13.2 No variation of this Agreement is effective unless made in writing and
signed by or on behalf of each party.
13.3 The provisions of this Agreement survive, and are not in any way to be
affected by, Completion, so that, to the extent that they remain to be
performed or are capable of subsisting, they remain in full force and
effect and are binding on, and enforceable by, the parties.
13.4 If any provision of this Agreement is illegal or unenforceable, this does
not affect the enforceability any other provision of this Agreement.
13.5 Either party may assign its rights (but not its obligations) under this
Agreement to any subsidiary undertaking of the relevant party, provided
that if such assignee ceases to be subsidiary undertaking of such party
the assignee shall be required to reassign such rights to a subsidiary
undertaking of the original party.
13.6 No failure to exercise, and no delay in exercising, any right or remedy
in connection with this Agreement operates as a waiver of that right or
remedy. No single or partial exercise of any right or remedy under this
Agreement precludes any other or further exercise of that right or remedy
or the exercise of any other right or remedy. A waiver of any breach of
this Agreement is not to be deemed to be a waiver of any subsequent
breach.
13.7 The rights and remedies conferred upon the parties by this Agreement are
cumulative and are not exclusive of any other rights or remedies provided
by law
<PAGE>
13.8 Each party must pay its own costs in relation to the preparation,
negotiation and execution of this Agreement and the transactions of which
it forms part (including, without limitation, the costs of their
respective professional advisers).
13.9 Each party must do and execute, or arrange for the doing and executing
of, each necessary act, document and thing reasonably within its power to
implement this Agreement.
13.10 This Agreement may be executed in any number of counterparts each of
which when executed and delivered is an original, but all counterparts
together constitute the same document.
14 NOTICES
14.1 A notice or other communication to be given under or in connection with
this Agreement must be in writing and delivered personally or sent by
first class post or by air courier or by fax to the party to be served at
its address set out in this Agreement or at another address or to a fax
number which it may from time to time notify to the other party in
accordance with this clause.
14.2 Subject to Clause 14.3 (and in the absence of evidence of earlier
receipt), any notice or other communication is deemed to be served:
14.2.1 if delivered personally, when left at the address of the relevant
party;
14.2.2 if posted first class or sent by air courier, two Business Days
after posting or sending it; and
14.2.3 if sent by fax, when the sender receives a confirmation of a
transmission.
14.3 If a notice or communication is served or deemed served on a day which is
not a Business Day, it is deemed served on the next Business Day.
15 ENTIRE AGREEMENT
15.1 This Agreement (together with the documents referred to in it or executed
at Completion) constitutes the entire and only agreement between the
parties with respect to its subject matter and replaces and extinguishes
all prior drafts, agreements, arrangements, understandings, commitments,
representations, warranties, undertakings and statements (in whatever
form) regarding that subject matter.
15.2 The Buyer acknowledges that no Seller's Group Company (nor any of its
officers, employees, advisers or agents) has made or given (and the Buyer
has not relied on or been induced to enter into this Agreement (or any of
the documents referred to in it or executed at Completion) in reliance
on) any representation, warranty or statement (in whatever form) of any
nature whatsoever in relation to the subject matter of this Agreement
other than the warranties given in clause 4.
15.3 The Buyer hereby irrevocably and unconditionally waives, in the absence
of fraud, any rights which it might otherwise have had to seek to rescind
or terminate this Agreement or to claim damages against the Seller or any
other Seller's Group Company for, or arising out of, any representation
or breach of any warranty not contained in this Agreement.
<PAGE>
16 ACCESS TO INFORMATION
16.1 During the period of two years after Completion:-
16.1.1 if any business information Required for the Business of the
Company or the Subsidiary is not in the possession of the Buyer or
readily discoverable by the Buyer but is in the possession or
under the control of or available to any Seller or any other
Seller's Group Company, the Seller shall (provided that the Buyer
meets the Seller's out of pocket expenses) procure that such
business information is provided to the Buyer reasonably promptly
on request; and
16.1.2 if any books or records of any Seller or any other Seller's Group
Company contain business information relating to the Company or
the Subsidiary, the Seller shall (provided that the Buyer meets
the Seller's out of pocket expenses) procure that copies of the
relevant parts of such books or records are given to the Buyer
reasonably promptly on request;
provided that such period shall be extended to six years after Completion
in respect of any such business information or copies of such books or
records which are required by the Company or the Subsidiary to comply
with any law applicable in relation to the business of the Company or the
Subsidiary.
16.2 For the purposes of this clause, "Required for the Business" means any
business information of the Company or the Subsidiary which is or has in
the last 2 years been used in the business of the Company or the
Subsidiary and is needed by the Company or the Subsidiary to carry on its
business in the same manner as it is presently carried on or is needed to
fulfil any of its present contracts, plans or projects in relation to the
business of the Company or the Subsidiary or to comply with any law
applicable in relation to the business of the Company or the Subsidiary.
17 GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS
17.1 This Agreement is governed by, and is to be construed in accordance with,
English law.
17.2 The courts of England and the courts of France have jurisdiction to the
exclusion of all other courts to hear and decide any suit, action or
proceedings, and to settle any disputes, which may arise out of or in
connection with this Agreement (respectively, "Proceedings" and
"Disputes") and, for these purposes, each party irrevocably submits to
the jurisdiction of the courts of England and the courts of France.
17.3 Each party irrevocably waives any objection which it might at any time
have to the courts of England or the courts of France being nominated as
the forum to hear and decide any Proceedings and to settle any Disputes
and agrees not to claim that the courts of England or the courts of
France are not a convenient or appropriate forum.
17.4 Process by which Proceedings are begun in England may be served on the
Seller by being delivered to Infogrames United Kingdom Limited, 21 Castle
Street, Castlefield, Manchester, M3 4SW, marked for the attention of the
Company Secretary and may be served on the Buyer by being delivered to
Take Two Interactive Software Europe Limited, Hogarth House, 29-31 Sheet
Street, Windsor, Berkshire, marked for the attention of the Managing
Director. This clause 17.4 does not prevent the service of process in any
other lawful manner.
<PAGE>
SCHEDULE 1
ITEMS FOR DELIVERY BY THE BUYER AT COMPLETION
1 A copy, certified to be a true copy by a director or secretary of the
Buyer, of a resolution of the Buyer's board of directors (or an
authorised committee of the board) in terms consistent with the warranty
given by the Buyer in clause 4.1.
2 A deed of release in a form satisfactory to the Seller executed by
National Westminster Bank plc in respect of guarantees and security
granted by each Seller's Group Company in support indebtedness of the
Subsidiary.
3 A counterpart duly executed by the Buyer of the Wild Metal Country
Assignment between the Buyer, the Subsidiary and Gremlin Interactive
Limited in the agreed form annexed to this Agreement .
4 Evidence in a form satisfactory to the Buyer that the overdraft of the
Subsidiary has been paid off by the Buyer.
5 A counterpart duly executed by the Buyer of the Tax Deed in the agreed
form annexed to this Agreement.
6 A counterpart duly executed by the Buyer of the Secondment Agreement.
<PAGE>
SCHEDULE 2
ITEMS FOR DELIVERY BY THE SELLER AT COMPLETION
1 A duly executed transfer of the Sale Share in favour of the Buyer or as
it directs together with the relevant share certificates for the Sale
Share and the Subsidiary Share (or an indemnity in a form satisfactory to
the Buyer in the case of any missing certificate).
2 A deed of release executed in a form satisfactory to the Buyer by
National Westminster Bank plc in respect of guarantees and any security
granted by the Company and/or Subsidiary in support indebtedness of each
Seller's Group Company.
3 A copy of a letter from National Westminster Bank plc in a form
satisfactory to the Buyer consenting to the pre-sale reorganisation,
notwithstanding the terms of the existing security documentation granted
by any Seller's Group Company.
4 A counterpart duly executed by Gremlin Holdings Limited, the Company and
the Seller of the First Share Sale Agreement in the agreed form annexed
to this Agreement.
5 A counterpart duly executed by the Company and Ocean Holdings Limited of
the Second Share Sale Agreement in the agreed form annexed to this
Agreement together with a copy of the Power of Attorney granted to Ocean
Holdings Limited pursuant to the Second Share Sale Agreement.
6 The waiver signed by Gremlin Group PLC in favour of the Subsidiary
waiving(pound)3,871,000 of inter-company dated 2 August 1999.
7 A counterpart duly executed by the Subsidiary and Gremlin Interactive
Limited of the Wild Metal Country Assignment in the agreed form annexed
to this Agreement.
8 A counterpart duly executed by the Subsidiary and Gremlin Interactive
Limited of the Tanktics Assignment in the agreed form annexed to this
Agreement.
9 A counterpart duly executed by the Subsidiary and Gremlin Interactive
Limited of the Attack/Clan Wars Assignment in the agreed form annexed to
this Agreement.
10 A counterpart duly executed by the Subsidiary and Gremlin Interactive
Limited of the Secondment Agreement.
11 The resignations in the agreed form annexed to this Agreement of the
resigning directors and the secretary from their respective offices in
the Company and the Subsidiary, together with copies of the relative
Companies House Forms 288b.
12 The resignation in the agreed form annexed to this Agreement of Pannell
Kerr Forster as auditors of the Subsidiary containing a statement under
section 394 of the Companies Act together with evidence that the
statements have been deposited at the registered office of the
Subsidiary.
13 A counterpart duly executed by the Seller of the Tax Deed in the agreed
form annexed to this Agreement.
14 Schedule of employees of the Subsidiary containing details of all
employees of the Subsidiary as at 31 August 1999 and details of salary
payments made to those employees on that date.
<PAGE>
15 Copies of the resolutions passed at the Board Meetings referred to in
clauses 3.1.3 and 3.1.4.
16 The statutory books, certificate(s) of incorporation and of incorporation
on change of name of the Company and the Subsidiary.
17 A power of attorney from the Seller granted to the Buyer in respect of
the Sale Share.
<PAGE>
SCHEDULE 3
AGREED FORM DOCUMENTS
1 Wild Metal Country Assignment.
2 Tanktics Assignment.
3 Attack/Clan Wars Assignment.
4 First Share Sale Agreement.
5 Second Share Sale Agreement together with the Power of Attorney granted
to Ocean Holdings Limited pursuant to clause 4.1.1(c).
6 Waiver signed by Gremlin Group PLC in favour of the Subsidiary
waiving(pound)3,871,000 of inter-company debt.
7 Secondment Agreement.
8 Letters:
(a) to the Company from each of Michel Lanne, Thomas Schmider,
Jean-Marie Dura and Bruno Bonnell resigning as directors and from
Gary Warburton resigning as secretary; and
(b) to the Subsidiary from each of Jean-Marie Dura, Michel Lanne,
James Hearn, Ian Stewart and Jenny Richards Stewart resigning as
directors and from Chris Stockwell resigning as secretary.
9 Letter from Pannell Kerr Foster to the Subsidiary resigning as auditors
and containing a statement under section 394 of the Companies Act.
10 Tax Deed to be entered into by the Buyer and the Seller.
11 Power of attorney from the Seller granted to the Buyer in respect of the
Sale Share.
<PAGE>
SCHEDULE 4
LIMITATIONS ON SELLER'S LIABILITY
1 LIMITATIONS ON AMOUNT
1.1 The Seller shall not be liable for a Claim unless and until the Seller's
aggregate liability for all such Claims exceeds:
1.1.1 in the case of all Claims (other than Uncapped Claims or a Claim
in respect of the indemnity in clause 9.1.1 or the warranty in
clause 4.2.10); Z (where Z = (pound)500,000 less any amount by
which the Net Asset Value (as determined in accordance with
clauses 2.4 and 2.5) is below (pound)-3,500,000 (negative three
million five hundred thousand) (in which event the Seller shall be
liable only for the excess over and above Z); and
1.1.2 in the case of Uncapped Claims or a Claim in respect of the
indemnity in clause 9.1.1 or the warranty in 4.2.10; (pound)32,500
(in which event the Seller shall be liable only for the excess
over (pound)32,500).
1.2 The Seller's total aggregate liability for all Claims other than Uncapped
Claims is limited to(pound)6,750,000 (including all legal and other
professional costs, fees, charges and expenses of the Seller).
1.3 The Seller's total aggregate liability in respect of Uncapped Claims
shall not be limited by references to any maximum liability.
2 TIME LIMITS FOR BRINGING CLAIMS
2.1 The Seller shall not be liable for a Claim unless it receives from the
Buyer written notice of the Claim (stating in reasonable detail the
matter giving rise to the Claim and the nature and, where practicable,
amount of the Claim):
2.1.1 on or before the sixth anniversary of Completion in respect of a
Claim under the Tax Deed;
2.1.2 on or before 31 January 2001 in respect of any Claim under the
warranty in clause 4.2.9 or the indemnity in clause 9.1.4 or the
warranty in clause 4.2.10;
2.1.3 on or before the first anniversary of Completion in respect of any
Claim under the indemnity in clause 9.1.1; and
2.1.4 on or before the fourth anniversary of Completion in respect of
any other Claim including an Uncapped Claim (other than a Claim
under the Tax Deed).
2.2 Any Claim which has been made against the Seller (and which has not been
previously satisfied, settled or withdrawn) shall be deemed to have been
withdrawn and shall become fully barred and unenforceable on the expiry
of the period of one year commencing on the date on which the Seller
received notice of the Claim in accordance with paragraph 2.1 or in the
case of a Claim based on a contingent liability (which has been notified
to the Seller in accordance with paragraph 2.1), commencing on the date
on which that contingent liability shall have become an actual liability,
unless legal proceedings in respect of the Claim shall have been issued
and served on the Seller.
<PAGE>
3 NO LIABILITY IF LOSS IS OTHERWISE COMPENSATED
3.1 Neither the Buyer nor the Company or the Subsidiary shall be entitled to
recover more than once in respect of the same loss.
3.2 No Claim shall be made in respect of any matter to the extent that such
matter has been fully reflected in the calculation of the Net Asset Value
pursuant to clause 2.5.
3.3 The Seller shall not be liable to the extent that the matter giving rise
to the Claim is an amount for which the Company or the Subsidiary
recovers (without damage, loss, liability, expense or prejudice to any
Buyer's Group Company) under any insurance policy held by or in the name
of any Buyer's Group Company.
3.4 Save in the case of a Claim under the Tax Deed nothing in this Schedule 4
shall restrict or limit the Buyer's general obligation at law where
applicable to mitigate any loss or damage which it may suffer as a result
of a matter giving rise to a Claim.
3.5 The Seller shall not be liable for a Claim if and to the extent that:
3.5.1 the Claim is attributable (in whole or in part) to, or is
increased as a result of, the passing or coming into force of, or
any change in, after the date of this Agreement, any law, rule,
regulation, directive, interpretation of the law or any
administrative practice of any government, governmental
department, agency or regulatory body or any increase in the rates
of Tax or any imposition of Tax, in any such case not actually or
prospectively in force at the date of this Agreement; or
3.5.2 save in the case of a Claim under the Tax Deed the Claim arises
directly as a result of an act or omission of a Buyer's Group
Company occurring after Completion where such Buyer's Group
Company knows (or ought reasonably to know) that such act or
omission would give rise to such Claim and is other than (a) in
the ordinary course of business of the Company or the Subsidiary
or (b) pursuant to a legally binding obligation entered into prior
to Completion or (c) with written consent of the Seller; or
3.5.3 it is excluded under Clause 3 of the Tax Deed; or
3.5.4 save in the case of a Claim under the Tax Deed the matter giving
rise to the Claim was allowed, provided for or reserved in the
Completion Accounts or was specifically referred to or taken into
account in the Completion Accounts or in the notes to those
accounts.
4. CONDUCT OF CLAIMS
4.1 If any Buyer's Group Company becomes aware of any matter which is
reasonably likely to give rise to a Claim or upon any Claim being made
other than a Claim under the Tax Deed (to which Clause 6 of the Tax Deed
shall apply) the following provisions shall apply:
4.1.1 the Buyer shall as soon as reasonably practicable give detailed
written notice to the Seller of the matter and shall consult with
the Seller with respect to the matter;
4.1.2 the Buyer shall not make, and shall procure that no other Buyer's
Group Company shall make, any admission of liability in respect of
or compromise or
<PAGE>
settle the matter without the prior written consent of the Seller
(such consent not to be unreasonably withheld or delayed);
4.1.3 (subject to the Seller undertaking to maintain the confidentiality
of the same) the Buyer shall make available to the Seller at the
Seller's expense and upon reasonable notice and in such manner as
does not materially disrupt the business of the Buyer or any of
the Buyer's Group Companies, all relevant details documentation
and correspondence in relation to such Claim and by prior
arrangement and during normal business hours permit the Seller to
inspect the relevant accounts, books and records of the Company or
the Subsidiary and to have access to such information as the
Seller may reasonably require in order to investigate fully the
merits of such claim.
4.1.4 the Buyer shall, and shall procure that each Buyer's Group
Company, retains and preserves all relevant assets, documents,
records and information within the power, possession or control of
the Buyer's Group Company relating to the Company and the
Subsidiary which are or are reasonably likely to be relevant in
connection with any Claim for so long as any actual or prospective
Claim remains outstanding;
4.1.5 the Seller shall at its own cost be entitled to copies of any of
the details documentation, correspondence, accounts, books,
records and information referred to in paragraph 4.1.3; and
4.1.6 the Buyer shall and shall procure that each Buyer's Group Company
will at the Seller's expense:
(a) take such reasonable action and institute such proceedings,
and give such information and assistance, as the Seller may
reasonably request to dispute, resist, appeal, compromise,
defend, remedy or mitigate the matter or to enforce against
any person (other than the Seller) the rights of each
Buyer's Group Company in relation to the matter; and
(b) in connection with any proceedings related to the matter
(other than against the Seller) use professional advisers
nominated by the Seller with the approval of the Buyer
(such approval not be unreasonably withheld or delayed);
and in each case on the basis that the Seller shall indemnify the
Buyer and each Buyer's Group Company for all reasonable costs and
expenses properly incurred as a result of any request or
nomination by the Seller.
4.2 Provided that if the Seller does not take any action as aforesaid within
60 days of notice being given to the Seller, the Company, the Subsidiary
or the Buyer shall be free to defend or pay or settle the claim as they
may in their absolute discretion think fit.
4.3 The Seller's rights pursuant to Clause 4.1 are subject to the following:
4.3.1 no failure by the Buyer to give any notice under Clause 4.1 shall
relieve the Seller of any liability under this Agreement;
4.3.2 notwithstanding the Seller's election to appoint professional
advisors to represent the Seller in an action, the Buyer shall
have the right to employ separate professional advisors, and, the
Seller shall bear the reasonable fees, costs and expenses of such
separate professional advisors if (i) the use of professional
advisors chosen by the Seller would present such professional
<PAGE>
advisors with a conflict of interest, or (ii) the Seller has not
employed professional adviser in accordance with paragraph
4.1.6(a) within 60 days, or (iii) the Seller shall authorise the
Buyer to employ separate professional advisors at the expense of
the Seller;
4.3.3 the Seller may not exercise its right pursuant to Clause 4.1 if
the Claim (i) is reasonably likely to result in imprisonment of
any officers of the Buyer or any Buyer's Group Company or (ii) is
reasonably likely to result in a criminal penalty or fine against
the Buyer or any Buyer's Group Company;
4.3.4 the Seller shall not and has no authority to (i) settle or
compromise any claim by or against any Buyer's Group Company
without the Buyer's prior written consent (not to be unreasonably
withheld or delayed) or (ii) take any action, or make any omission
which it knows or should reasonably have known would cause the
officers of the Buyer, or any Buyer's Group Company to be in
breach of their fiduciary duties or which would cause the Buyer or
any Buyer's Group Company or any of their respective officers or
employees to be in breach of any law or regulation;
4.3.5 Where any action is taken by the Seller pursuant to this clause,
it shall keep the Buyer fully informed and copied with
correspondence and shall consult the Buyer prior to taking such
action and in so doing shall act in good faith with no damage or
prejudice to the business of the Buyer or any Buyer's Group
Company.
5. RECOVERY FROM THIRD PARTIES
5.1 Save as provided in clause 5.2 where the Seller pays to the Buyer an
amount in respect of any Claim (the "Payment") and the Company or the
Subsidiary or the Buyer (or any other Buyer's Group Company) either
recovers or is entitled to recover (whether by reason of insurance,
payment, discount, credit, relief or otherwise) from a third party any
sum which is referable to a fact, matter, event or circumstance giving
rise to a Claim or obtains relief or other saving or benefit which is so
referable which, in each case, if received prior to the Claim would have
reduced the amount of the Payment, the Buyer shall (or, as appropriate,
shall procure that the Company or the Subsidiary and each Buyer's Group
Company shall):
5.1.1 as soon as reasonably practicable notify the Seller and provide
such information and assistance as the Seller may reasonably
require relating to such right of recovery or such other relief,
saving or benefit and the steps taken or to be taken by the Buyer
or (as the case may be) Buyer's Group Company in connection with
it;
5.1.2 keep the Seller informed of the progress of any action taken and
provide it with copies of all relevant correspondence and
documentation
and if the Buyer, the Company or the Subsidiary receives or obtains such
a payment, relief, saving or benefit, the Buyer shall forthwith repay to
the Seller so much of the Payment as is so reduced and does not exceed
the sum received from the third party (less any reasonable costs incurred
in recovering or obtaining such payment, saving or benefit and any tax
actually suffered (and which is not reclaimable) on such amount).
5.2 This paragraph 5 shall not apply to any matter or Claim falling within
the scope of the Tax Deed.
<PAGE>
EXECUTED by the parties
Signed by )
o )
for an on behalf of )
INFOGRAMES ENTERTAINMENT SA )
)
Signed by )
o )
for an on behalf of )
TAKE TWO INTERACTIVE SOFTWARE INC. )
)
STOCK PURCHASE AGREEMENT
AGREEMENT dated as of August 31, 1999 (the "Agreement"), by and among
TAKE-TWO INTERACTIVE SOFTWARE, INC., a Delaware corporation ("Take-Two US");
TAKE-TWO INTERACTIVE SOFTWARE CANADA INC., an Ontario corporation ("Take-Two
Canada" and together with Take-Two US, the "Purchasers"); TRIAD DISTRIBUTORS
INC., an Ontario corporation ("Triad"); GLOBAL STAR SOFTWARE LIMITED, an Ontario
corporation ("Global"); and Craig McGauley ("Craig"), Damian Cristiani
("Damian") and Lucy Cristiani ("Lucy"), the shareholders of Triad and Global
(collectively, the "Shareholders").
W I T N E S S E T H :
WHEREAS, the Shareholders are the owners of all of the issued and
outstanding capital stock of Triad and Global (the "Triad and Global Shares");
WHEREAS, Triad and Global are in the business of distributing software
games and other items at wholesale (the "Business");
WHEREAS, the Purchasers wish to purchase all of the Triad and Global Shares
from the Shareholders, upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereto do hereby agree as follows:
1. Purchase and Sale of Triad and Global Shares.
Subject to the terms and conditions set forth in this Agreement and in
reliance upon the representations, warranties, covenants and conditions herein
contained, the Shareholders shall sell, convey, assign, transfer and deliver to
the Purchasers all of the Triad and Global Shares, free and clear of any and all
liens, adverse claims, security interests, pledges, mortgages, charges and
encumbrances of any nature whatsoever as follows: (i) to Take-Two US, 23 shares
in the capital of Triad and 150 shares in the capital of Global and (ii) to
Take-Two Canada, 7 shares in the capital of Triad and 50 shares in the capital
of Global.
2. Purchase Price.
2.1. Consideration. Subject to Section 2.2 below, the purchase price (the
"Purchase Price") for the purchase of the Triad and Global Shares by the
Purchasers shall be an aggregate of (i) 162,500 unregistered shares (the "Stock
Consideration") of the common stock, $.01 par value, of Take-Two US ("Take-Two
Common Stock") payable by Take-Two US, which Stock Consideration shall be issued
ratably among the Shareholders in accordance with Schedule 2.1 hereof, 144,000
shares of which are deliverable upon the execution hereof and the balance of
which are deliverable in accordance with the terms of the Escrow Agreement (as
defined below), and (ii) a cash payment of $500,000 (the "Cash Consideration")
in United States Dollars ("US$") payable by Take-Two Canada, US$250,000 of which
is payable upon the
<PAGE>
execution hereof, and the balance of which is payable in accordance with the
escrow agreement (as defined below).
2.2. Purchase Price Adjustment. The Purchasers shall deposit in escrow with
Stikeman, Elliott (the "Escrow Agent") pursuant to the escrow agreement (the
"Escrow Agreement") attached hereto as Exhibit A 18,500 shares of Take-Two
Common Stock and US$250,000 in cash. The Escrow Agreement shall provide that to
the extent that Triad's and Global's combined stockholders' equity on the date
hereof, as determined by an audit undertaken by the Purchasers within SIXTY (60)
days from the date hereof, is less than US$250,000, then the Purchase Price
shall be reduced on a dollar for dollar basis, and to the extent that such
stockholders' equity is negative, the Purchase Price shall be reduced by US$2.00
for every US$1.00 of negative equity. The escrow agreement shall also contain
provisions allowing the shareholders, acting reasonably, to dispute the
determination of the audit, provided that an audit conducted by an independent
third-party shall be binding on the parties. Any calculation of stockholders'
equity shall include any bonus to be made to the employees of Triad and Global.
3. Deliveries. Simultaneous with the execution of this Agreement, the
parties shall deliver the following in accordance with the terms and conditions
of this Agreement:
(a) The Purchasers shall deliver:
(i) to the Shareholders and the Escrow Agent in accordance with
Section 2 hereof, stock certificates, registered in the names of the
Shareholders, representing 162,500 shares of Take-Two Common Stock
against share certificates representing the Triad and Global Shares;
(ii) a cash payment of US$500,000 by certified cheques payable to
the Shareholders and the Escrow Agent in accordance with Section 2
hereof and an aggregate cash payment of US$200,000 by certified cheque
payable to Craig and Damian in accordance with the Non-Competition
Agreements (as defined in Section 5.4 hereof);
(iii) the Employment Agreements and Non-Competition Agreements
(as defined in Section 5.4 hereof);
(iv) copies of the resolutions of the Board of Directors of
Take-Two US and the resolutions of the shareholders of Take-Two Canada
authorizing each Purchaser to execute and deliver the documents it is
obligated to deliver pursuant to this Agreement, to perform its
obligations hereunder, duly certified by the Secretary or Assistant
Secretary of the respective Purchaser;
(v) the opinion of Tenzer Greenblatt LLP relating to the Stock
Consideration in form and substance attached hereto as Exhibit B-1 and
the opinion of Stikeman, Elliott relating to Take-Two Canada in form
and substance attached hereto as Exhibit B-2; and
(vi) the Escrow Agreement.
(b) Triad and Global and the Shareholders, as the case may be, shall
deliver:
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<PAGE>
(i) share certificates representing all of the issued and
outstanding Triad and Global Shares, duly endorsed for transfer by the
Shareholders, together with evidence satisfactory to the Purchasers
that they or their nominees have been entered upon the books of Triad
and Global as the holders of the shares;
(ii) copies of the resolutions of the Board of Directors of Triad
and Global, and the written consent of the Shareholders, authorizing
Triad and Global to execute and deliver the documents it is obligated
to deliver pursuant to this Agreement, to perform its obligations
hereunder, duly certified by the Secretary or Assistant Secretary of
Triad and Global;
(iii) certificates of the Secretary or Assistant Secretary of
Triad and Global certifying as to (i) the charter documents and
by-laws of each of Triad and Global, the incumbency and to the
specimen signatures of the officers of Triad and Global executing the
documents pursuant to this Agreement on behalf of such corporation;
(iv) the legal opinion of Lafleur Brown in form and substance
attached hereto as Exhibit C;
(v) certificate of status, compliance or good standing with
respect to each of Triad and Global of the appropriate authority in
the Province of Ontario and of each jurisdiction in which either Triad
or Global carries on its business;
(vi) the Employment Agreements duly executed by Craig and Damian
and the Non-Competition Agreements duly executed by Craig, Damian and
Lucy;
(vii) resignations of Craig and Damian as directors of Triad and
Global, together with general releases; and
(viii) the Escrow Agreement.
4. Representations and Warranties as to Triad and Global and Shareholders.
Each of the Shareholders hereby, jointly and severally, represents and warrants
to each of the Purchasers as follows:
4.1. Organization, Standing and Power. Each of Triad and Global is a
corporation duly incorporated, organized, validly existing and in good
standing under the laws of the Province of Ontario, with full corporate
power and authority to own, lease and operate its properties and to carry
on the Business, as presently conducted by it. There are no provinces,
states or other jurisdictions in which the character and location of any of
the properties owned or leased by Triad or Global, or the conduct of its
Business, makes it necessary for it to qualify to do business as a foreign
corporation and where it has not so qualified, except for those
jurisdictions in which the failure to so qualify would not have a material
adverse effect on the Business or operations of Triad or Global. Copies of
the Articles of Incorporation of each of Triad and Global and all
amendments thereto, and of the By-laws of each of Triad and Global, as
amended to date, and each of Triad's and Global's corporate books
(containing original corporate minutes
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<PAGE>
and resolutions in Triad's and Global 's possession) have been furnished to the
Purchasers and are complete, correct and accurate.
4.2. Capitalization. The authorized capital of Triad consists of an
unlimited number of common shares, of which 30 shares are issued and
outstanding and held of record as set forth in Schedule 4.2 hereto. The
authorized capital of Global consists of an unlimited number of common
shares, of which 200 shares are issued and outstanding and held of record
as set forth in Schedule 4.2 hereto. There are no outstanding options,
warrants, rights, calls, commitments, conversion rights, puts, plans or
other agreements of any character, whether written or oral, to which either
the Shareholders, Triad or Global is a party or otherwise bound which
provide for the acquisition or disposition of any of the Triad and Global
Shares or any of the securities of Triad or Global. All of the issued and
outstanding shares of Triad and Global have been duly and validly issued
and are fully paid and nonassessable and have not been issued in violation
of any preemptive or similar right or any applicable laws.
4.3. Ownership of Triad and Global Shares. Each of the Shareholders
has good and marketable title to, and owns of record and beneficially, all
of the issued and outstanding Triad and Global Shares held by him or her as
set forth in Schedule 4.2 hereto, free and clear of any and all liens,
adverse claims, security interests, pledges, mortgages, charges and
encumbrances of any nature whatsoever.
4.4. Interests in Other Entities.
(a) Neither Triad nor Global (A) owns, directly or indirectly, of
record or beneficially, any voting shares or other equity securities
of any other entity, (B) has any ownership interest, direct or
indirect, of record or beneficially, in any partnership, joint venture
or other unincorporated entity, or (C) has any obligation, direct or
indirect, present or contingent, (1) to purchase or subscribe for any
interest in, advance or loan monies to, or in any way make investments
in, any person or entity or (2) to share any profits from any entity.
(b) None of the Shareholders (A) owns, directly or indirectly, of
record or beneficially, any voting shares or other equity securities
of, or have any debt outstanding to or from, any other entity engaged
in the same or similar business to the Business (Except for ownership
interests in publicly traded companies not exceeding 10% of the voting
shares thereof set forth on schedule 4.4 (B) hereof), (B) has any
ownership interest, direct or indirect, of record or beneficially, in
any partnership, joint venture or unincorporated entity engaged in the
same or similar business to the Business, or (C) has any obligation,
direct or indirect, present or contingent, (1) to purchase or
subscribe for any interest in, advance or loan monies to, or in any
way make investments in, any person or entity engaged in the same or
similar business to the Business, or (2) to share any profits from any
entity engaged in the same or similar business to the Business,
(Except for ownership interests in publicly traded companies not
exceeding 10% of the voting shares thereof set forth on schedule 4.4
(B)).
4.5. Authority.
(a) The execution and delivery by the Shareholders and Triad and
Global of this Agreement and of all of the agreements to be executed
and delivered by each of
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<PAGE>
them pursuant hereto (the " Triad and Global Documents"), the
performance by each of them of their respective obligations hereunder
and thereunder, and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all
necessary corporate action on the part of each of Triad and Global
(including, but not limited to, the consent of the Shareholders and
each of Triad's and Global's Board of Directors) and each of Triad and
Global has all necessary corporate power with respect thereto.
(b) The Shareholders are each individuals having all necessary
capacity, power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. This Agreement
is, and when executed and delivered by the Shareholders and Triad and
Global (to the extent that they are parties thereto), the Triad and
Global Documents to be delivered by any of them pursuant hereto will
be, the valid and binding obligation of the Shareholders and Triad and
Global (to the extent that they are parties thereto) enforceable
against each of them in accordance with their respective terms.
4.6. Noncontravention. Except as set forth on Schedule 4.6, neither
the execution and delivery by the Shareholders or Triad and Global of this
Agreement or of any agreement to be executed and delivered by the
Shareholders and/or Triad and Global pursuant hereto, nor the consummation
of any of the transactions contemplated hereby or thereby, nor the
performance by the Shareholders or Triad and Global of their respective
obligations, as the case may be, hereunder or thereunder, will (nor with
the giving of notice or the lapse of time or both would) (a) conflict with
or result in a breach of any provision of the Articles of Incorporation or
By-laws of either of Triad or Global, or (b) give rise to a default, or any
right of termination, cancellation or acceleration, or otherwise be in
conflict with or result in a loss of contractual benefits to Triad or
Global or under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement or other instrument or
obligation to which it is a party or by which Triad or Global or any of the
Shareholders may be bound or to which Triad or Global or the Business may
be subject , or require any consent, approval or notice under the terms of
any such document or instrument, or (c) violate any order, writ,
injunction, decree, law, statute, rule or regulation of any court or
governmental authority which is applicable to Triad or Global or any
Shareholder, or the Business, or (d) result in the creation or imposition
of any lien, claim, charge, restriction or encumbrance upon any of the
properties or assets of Triad or Global, or (e) interfere with or otherwise
adversely affect the ability of Triad and Global to carry on the Business
on substantially the same basis as is now conducted by Triad and Global.
4.7. Litigation. Except as set forth in Schedule 4.7, there are no
suits or actions, or administrative, arbitration or other proceedings or
governmental investigations, pending or threatened against or relating to
Triad or Global or the Business or any of the Shareholders in their
capacity as shareholders of Triad and Global. There are no judgments,
orders, stipulations, injunctions, decrees or awards in effect which relate
to Triad or Global, the Business or the operation of Triad or Global, the
effect of which is (A) to limit, restrict, regulate, enjoin or prohibit
Triad's or Global 's operation in any area, or the acquisition of any
properties, assets or businesses, or (B) otherwise materially adverse to
the Business or Triad or Global.
4.8. No Violation of Law.
(a) Neither Triad, Global nor any of the Shareholders are
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<PAGE>
engaging in any activity or omitting to take any action as a result of
which: (A) they are in violation of any law, rule, regulation, zoning
or other ordinance, municipal by-law, statute, order, injunction,
decision, ruling, award or decree, or any other requirement of any
court or governmental or administrative body or agency, applicable to
Triad and Global or the Business ("Laws"), including, but not limited
to, those relating to: occupational safety and health; business
practices and operations; labor practices; employee benefits; and
zoning and other land use.
(b) Neither Triad, Global nor any of the Shareholders are
engaging in any activity or omitting to take any action as a result of
which they are in violation of any Laws relating to environmental and
ecological protection (e.g., the use, storage, handling, transport or
disposal of pollutants, contaminants or hazardous or toxic materials
or wastes, and the exposure of persons thereto).
4.9. Financial Statements. Triad and Global have herewith delivered to
the Purchasers combined financial statements consisting of (i) the
unaudited balance sheet at June 30, 1998, and the related statements of
income, stockholders' equity and cash flows for the eleven months then
ended, which have been reviewed by Malcolm Weinstein, chartered accountant
and (ii) the unaudited combined balance sheet at March 31, 1999, and the
related statements of income, stockholders' equity and cash flows for the
nine months then ended (collectively, the "Financial Statements"). The
Financial Statements were prepared in accordance with Canadian generally
accepted accounting principles ("GAAP"), consistently applied, and present
fairly the financial position of Triad and Global as at the dates thereof
and the results of operations for the periods and the cash flow indicated.
The books and records of Triad and Global are complete and correct, have
been maintained in accordance with good business practices, and reflect the
basis for the financial condition, results of operations and cash flow of
Triad and Global as set forth in the Financial Statements.
4.10. Guaranties. Schedule 4.10 hereto is a complete and accurate list
and summary description of all written guaranties currently in effect
heretofore issued by the Shareholders to any bank or other lender in
connection with any credit facilities extended by such creditors to Triad
or Global (collectively, the "Guaranties"), including the name of such
creditor and the amount of the indebtedness, together with any interest and
fees currently outstanding.
4.11. Absence of Undisclosed Liabilities. Neither Triad nor Global has
any liabilities or obligations of any nature whatsoever, whether accrued,
matured, unmatured, absolute, contingent, direct or indirect or otherwise,
which have not been (a) in the case of liabilities and obligations of a
type customarily reflected on a corporate balance sheet, prepared in
accordance with GAAP, set forth on the Financial Statements, or (b)
incurred in the ordinary course of business since March 31, 1999, or (c) in
the case of other types of liabilities and obligations, described in any of
the Schedules delivered pursuant hereto or omitted from said Schedules in
accordance with the terms of this Agreement, or arising under contracts or
leases listed in such Schedules or other contracts or leases which are
omitted from such Schedules in accordance with the terms of this Agreement,
or (d) incurred, consistent with past practice, in the ordinary course of
business of Triad and Global (in the case of liabilities and obligations of
the type referred to in clause (a) above).
4.12. Accounts Receivable; Inventories. The accounts and notes
receivable which are reflected on the Financial Statements are good and
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<PAGE>
collectible in the ordinary course of business at the aggregate recorded
amounts thereof, less the respective amount of the allowances for doubtful
accounts and notes receivable, if any, reflected thereon, and are not
subject to offsets other than in the ordinary course of business. The
accounts and notes receivable of Triad and Global which were added after
March 31, 1999, are good and collectible in the ordinary course of
business, less the amount of the allowance(s) for doubtful accounts and
notes receivable, if any, reflected thereon (which allowances were
established on a basis consistent with prior practice), and are not subject
to offsets other than in the ordinary course of business. The inventories
reflected on the Financial Statements and thereafter added consist of items
of a quality and quantity usable or saleable in the ordinary course of
business, except for obsolete materials, slow-moving items, materials of
below standard quality and not readily marketable items, all of which DO
NOT EXCEED US$50,000 OR have been written down to net realizable value or
adequately reserved against on the books and records of Triad and Global.
All inventories are stated at the lower of cost or market in accordance
with generally accepted accounting principles.
4.13. Absence of Changes. Since March 31, 1999, there has not been (a)
any adverse change (other than as is normal in the ordinary course of
business, e.g., inventory level changes) in the condition (financial or
otherwise), assets, liabilities, business, prospects, results of operations
or cash flows of Triad or Global or the Business (including, without
limitation, any such adverse change resulting from damage, destruction or
other casualty loss, whether or not covered by insurance), (b) any waivers
by Triad or Global of any right, or cancellation of any debt or claim, of
material value, (c) any declarations, set asides or payments of any
dividend or other distributions or payments in respect of the Triad and
Global Shares, or (d) any changes in the accounting principles or methods
which are utilized by Triad or Global.
4.14. Properties. Except as set forth on Schedule 4.14, Triad and
Global has good and valid title to all of the properties and assets,
reflected on the Financial Statements as owned by it or thereafter
acquired, except properties or assets sold or otherwise disposed of in the
ordinary course of business, free and clear of any and all mortgages, liens
(excluding liens for current Taxes, as defined in subparagraph 4.17, (b)
hereof), pledges, claims, charges and encumbrances of any nature
whatsoever. All plants, structures and equipment which are utilized in the
Business, or are material to the condition (financial or otherwise) of
Triad or Global are owned or leased by Triad or Global. Neither Triad nor
Global owns any real property. Neither Triad nor Global is a party to, or
under any agreement to become a party to, any lease with respect to real
property other than the leases listed in Schedule 4.14 (the "Leases"),
copies of which have been provided to the Purchasers. Each Lease is in good
standing, creates a good and valid leasehold estate in the property thereby
demised and is in full force and effect without amendment, except as
disclosed in Schedule 4.14. With respect to each Lease (i) all rents and
additional rents have been paid, (ii) no waiver, indulgence or postponement
of the lessee's obligations has been granted by the lessor, (iii) there
exists no event of default or event, occurrence, condition or act
(including the completion of the transactions contemplated by this
Agreement) which, with the giving of notice, the lapse of time or the
happening of any other event or condition, would become a default under the
Lease, and (iv) to the best knowledge of the Shareholders, all of the
covenants to be performed by any party (other than either Triad or Global)
under the Lease have been fully performed. Schedule 4.14 contains a list of
all of the Leases setting out, in respect of each Lease, a description of
the leased premises (by municipal address and proper legal description),
the term of the Lease, the rental payments under the Lease
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(specifying any breakdown of base rent and additional rents), any rights of
renewal and the term thereof, and any restrictions on assignment or change
of control of Triad or Global, as the case may be.
4.15. Intellectual Property. Schedule 4.15 is a complete and correct
list of all (A) United States, Canadian and foreign patents, trademark and
trade name registrations, trademarks and trade names, brandmarks and brand
name registrations, servicemarks and servicemark registrations, assumed
names and copyrights and copyright registrations, computer software,
computer programs owned in whole or in part or used in the Business, and
all applications therefor, licenses and other agreements to which either
Triad or Global is a party to or otherwise bound which relates to any of
the foregoing. Except as expressly set forth in Schedule 4.15, (A) Triad
and Global owns or has the right to use all of the foregoing; (B) no
proceedings have been instituted, are pending or threatened, which
challenge the rights of Triad or Global in respect thereto or the validity
thereof; and (C) to the best knowledge of the Shareholders, none of the
aforesaid violates any laws, statutes, ordinances or regulations, or has at
any time infringed upon or violated any rights of others, or is being
infringed by others.
4.16. Banks; Powers of Attorney. Schedule 4.16 is a complete and
correct list showing (A) the names of each bank in which Triad and Global
has an account or safe deposit box and the names of all persons authorized
to draw thereon or who have access thereto, and (B) the names of all
persons, if any, holding powers of attorney from Triad and Global or the
Shareholders with respect to the Business.
4.17. Tax Matters.
(a) Each of Triad and Global has filed with the appropriate
governmental agencies (Canadian and other) all tax returns and reports
required to be filed by it, and has paid in full or contested in good
faith or made adequate provision for the payment of, Taxes (as defined
herein) shown to be due or claimed to be due on such tax returns and
reports. The provisions for Taxes which will be set forth on the
latest balance sheet included in the Financial Statements reflects and
includes adequate provisions for the payment in full of any and all
Taxes for which Triad and Global is or could be liable, whether to any
governmental entity or to other persons (as, for example, under tax
allocation agreements), not yet due for any and all periods up to and
including the date of such balance sheet; and all Taxes for periods
beginning thereafter through the Effective Time have been, or will be,
paid when due or adequately reserved against on the books of Triad and
Global and an amount of cash equal to the amount of such reserve will
have been set aside for the payment of such Taxes. Each of Triad and
Global has duly withheld all payroll taxes and other applicable taxes
and other items requiring to be withheld by it from employer wages,
and has duly deposited the same in trust for or paid over to the
proper taxing authorities. Neither Triad nor Global has executed or
filed with any taxing authority any agreement extending the periods
for the assessment or collection of any Taxes, and is not a party to
any pending or threatened action or proceeding by any governmental
authority for the assessment or collection of Taxes. Except as set
forth in Schedule 4.17, within the past three years, the income tax
returns of Triad and Global have not been reassessed to any material
degree by any taxing authority, nor has any such authority examined
any merchandise, personal property, sales or use tax returns of Triad
or Global. There is no tax lien, whether imposed by any taxing
authority, outstanding against the assets, properties or business of
Triad or Global. Neither Triad
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nor Global has agreed to make or is required to make any adjustment by
reason of a change in accounting method or otherwise. Neither Triad
nor Global is a party to any tax sharing or allocation agreement.
(b) As used herein, the term "Taxes" or "Tax" means all taxes and
governmental assessments, charges and reassessments, including but not
limited to income taxes, capital gains, estimated taxes, withholding
taxes, excise taxes, sales, use, occupancy, real property, goods and
services, ad valorem taxes, payroll related taxes (including but not
limited to premiums for worker's compensation insurance and statutory
disability insurance), employment taxes, franchise taxes and import
duties, together with any related liabilities, penalties, fines,
additions to tax or interest.
4.18. Certain Business Matters. Except as is set forth in Schedule
4.18, (a) neither Triad nor Global is a party to or bound by any
distributorship, dealership, sales agency, franchise or similar agreement
which relates to the sale or distribution of any of the products and
services of the Business, (b) neither Triad nor Global has a sole-source
supplier of significant goods or services (other than utilities) with
respect to which practical alternative sources are not available on
comparable terms and conditions (Provided however, that software products
are, by their nature unique, and Take-Two acknowledges that any software
titles which become unavailable, may not be replaced), (c) there are no
pending or threatened labor negotiations, work stoppages or work slowdowns
involving or affecting the Business, and no union representation questions
exist, and there are no organizing activities, in respect of any of the
employees of Triad or Global, (d) the product and service warranties given
by Triad and Global or by which they are bound (complete and correct copies
or descriptions of which have heretofore been delivered by Triad and Global
to the Purchasers) entail no greater obligations than are customary in the
Business, (e) neither Triad nor Global nor any Shareholder is a party to or
bound by any agreement which limits its or his, as the case may be, freedom
to compete in any line of business or with any person, or which is
otherwise materially burdensome to Triad or Global or any of the
Shareholders, and (f) neither Triad nor Global is a party to or bound by
any agreement in which any officer, director or Shareholder of Triad and
Global (or any affiliate of any such person) has, or had when made, a
direct or indirect material interest.
4.19. Certain Contracts. Schedule 4.19 is a complete and correct list
of all material contracts, commitments, obligations and understandings
which are not set forth in any other Schedule delivered hereunder and to
which either Triad or Global is a party or otherwise bound, except for (a)
purchase orders from vendors or customers and (b) each of those which (i)
were made in the ordinary course of business and (ii) either (A) are
terminable by Triad or Global (and will be terminable by Subsidiary)
without liability, expense or other obligation on 30 days' notice or less,
or (B) may be anticipated to involve aggregate payments to or by Triad or
Global of $(US)5,000 (or the equivalent) or less calculated over the full
term thereof, and (C) are not otherwise material to the Business or Triad
or Global. Complete and correct copies of all contracts, commitments,
obligations and undertakings set forth on any of the Schedules delivered
pursuant to this Agreement have been furnished by Triad and Global to the
Purchasers. Except as expressly stated on any of such Schedules, (1) each
of THE agreements listed on Schedule 4.19 is in full force and effect, no
person or entity which is a party thereto or otherwise bound thereby is in
material default thereunder, and no event, occurrence, condition or act
exists which does (or which with the giving of notice or the lapse of time
or both would) give rise to a material default
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or right of cancellation, acceleration or loss of contractual benefits
thereunder; (2) there has been no threatened cancellations thereof, and
there are no outstanding disputes thereunder; (3) none of them is
materially burdensome to Triad or Global; and (4) each of them is fully
assignable without the consent, approval, order or any waiver by, or any
other action of or with any individual or individuals, without the payment
of any penalty, the incurrence of any additional debt, liability or
obligation of any nature whatsoever or the change of any term.
4.20. Customers and Suppliers. Set forth on Schedule 4.20 is a
complete and correct list setting forth, for the twelve months ended
December 31, 1998 and the six months ended June 30, 1999, (a) the 20
largest customers of the Business and the amount for which each such
customer was invoiced, and (b) the 20 largest suppliers of the Business and
the amount of goods and services purchased from each such supplier. There
are no (i) threatened cancellations by the aforesaid customers or suppliers
with respect to the Business, (ii) outstanding disputes by such customers
or suppliers with Triad or Global and the Business, or (iii) any adverse
changes in the business relationship between the Business and any such
customer or supplier. To the best knowledge of the Shareholders, the
aforesaid suppliers and customers will continue their respective
relationships with the Business on substantially the same basis as now
exists.
4.21. Business Practices and Commitments. Set forth on Schedule 4.21
is a description of (a) Triad's and Global 's rebate and volume discount
practice, and obligations, (b) Triad's and Global 's allowance and customer
return practice and obligations, (c) Triad's and Global 's co-op
advertising and other promotional practices, (d) Triad's and Global 's
warranty practices and obligations, (e) price protection agreements, (f)
return policies and historical return rates, as each of the foregoing
relate to Triad's and Global 's customers and suppliers, and (g) co-op and
rebate and volume discount credits due to customers.
4.22. Approvals/Consents. Except as set forth on Schedule 4.22, each
of Triad and Global currently holds all governmental and administrative
consents, permits, appointments, approvals, licenses, certificates and
franchises which are necessary for the operation of the Business, all of
which are in full force and effect and are transferable to Subsidiary
without the payment of any penalty, the incurrence of any additional debt,
liability or obligation of any nature whatsoever or the change of any term
and no such consent or authorization is required and no filing with or
notice to any governmental entity is required as a condition to the lawful
completion of the transactions contemplated by this Agreement. Schedule
4.22 is a complete and correct list of all such governmental and
administrative consents, permits, appointments, approvals, licenses,
certificates and franchises. No material violations of the terms thereof
have heretofore occurred or are known by the Shareholders to exist as of
the date of this Agreement.
4.23. Nature of Securities. The Shareholders understand that as of the
date hereof (a) the Stock Consideration has not been registered under the
Securities Act of 1933, as amended (the "Act"), based upon an exemption
from such registration requirements; (b) the Stock Consideration to be
received is "restricted securities," as said term is defined in Rule 144 of
the General Rules and Regulations promulgated under the Act; (c) the Stock
Consideration to be received may not be sold or otherwise transferred
unless it has first been registered under the Act and applicable state
securities laws or an exemption from the registration provisions of the Act
and applicable state securities laws are available with respect to the
proposed sale or transfer; (d)
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the certificates evidencing the Stock Consideration will bear a legend to
the effect that the transfer thereof is restricted; and (e) stop transfer
instructions will be placed with the transfer agent for the Stock
Consideration. Each Stockholder represents that he or she is taking the
Stock Consideration for investment purposes only and not with a view toward
the distribution thereof and AS an "accredited investor" as defined under
the Act.
4.24. Insurance. Schedule 4.24 is a complete and correct list and
summary description of all contracts and policies of insurance relating to
the Business. Such policies are in full force and effect, all premiums due
and payable have been paid and no notice of cancellation has been received
by Triad or Global.
4.25. Employee Arrangements. Schedule 4.25 is a complete and correct
list and summary description of all compensation plans, agreements and
arrangements providing for benefits to Triad's and Global's employees and a
list of names and compensation of all employees of Triad and Global whose
earnings exceeded $(US)15,000 during the current fiscal year. Neither Triad
nor Global is a party to any collective bargaining agreement.
4.26. Residence. Each of the Shareholders is a resident of Canada
within the meaning of the Income Tax Act (Canada).
4.27. Year 2000. The Company's computer systems and products are Year
2000 compliant (in all material respects).
4.28. Information as to Triad and Global and the Shareholders. None of
the representations or warranties made by Triad and Global or the
Shareholders in this Agreement or in any agreement executed and delivered
by or on behalf of any of them pursuant hereto are false or misleading with
respect to any material fact, or omit to state any material fact necessary
in order to make the statements therein not misleading.
5. Representations and Warranties as to the Purchasers. The Purchasers
hereby represent and warrant to the Shareholders as follows:
5.1. Organization, Standing and Power.
(a) Take-Two US is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, with
full corporate power and authority to own, lease and operate its
properties and to carry on its business as presently conducted by it.
Take-Two Canada is a corporation duly organized, validly existing and
in good standing under the laws of the province of Ontario, with full
corporate power and authority to own, lease and operate its properties
and to carry on its business as presently conducted by it.
(b) Take-Two US has filed all forms, reports, statements and
documents required to be filed with the Securities and Exchange
Commission ("SEC") since April 14, 1997, (collectively, the "SEC
Reports"), each of which has complied in all material respects with
the applicable requirements of the Act or the Exchange Act of 1934, as
amended (the "Exchange Act"), as applicable, each as in effect on the
date so filed. Take-Two US has made available to the Shareholders, in
the form filed with the SEC (including any amendments thereto), (A)
its most recent Quarterly Report on Form 10-Q for the three months
ended April 30, 1999
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and (B) its Prospectus dated May 5, 1999 . None of such forms, reports
or documents filed by Take-Two US, when filed (except to the extent
revised or superseded by a subsequent filing with the SEC) contained
any untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
financial statements included in such forms were prepared in
accordance with generally accepted accounting principles consistently
applied, and fairly present the financial position of Take-Two US as
at the dates thereof and its results of operations for the periods
indicated, except that any unaudited financial statements are subject
to normal reoccurring adjustments which might be required as a result
of year-end audits.
5.2. Authority. The execution and delivery by each of the Purchasers
of this Agreement and of each agreement, document and instrument to be
executed and delivered by them pursuant hereto (the "Take-Two Documents"),
the compliance by the Purchasers with the provisions hereof and thereof,
and the transactions contemplated hereby and thereby, have been duly and
validly authorized by all necessary corporate actions on the part of each
of the Purchasers, as applicable, and each of the Purchasers has all
necessary corporate powers with respect thereto.
5.3. Capitalization. The authorized capital stock of Take-Two US
consists of 55,000,000 shares of Take-Two Stock and 5,000,000 shares of
Preferred Stock, par value $.01 per share. As of the date hereof
immediately prior to the issuance of the Stock Consideration, 22,874,154
shares of Take-Two Stock are issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable.
5.4. Stock Consideration. The Stock Consideration, when issued, will
be (A) duly authorized and validly issued, fully paid and non-assessable,
(B) delivered hereunder free and clear of any security interests, pledges,
mortgages, claims, liens and encumbrances of any kind whatsoever except
that the Take-Two Stock will be "restricted securities" as such term is
defined in the rules and regulations of the SEC and will be subject to
restrictions on transfers pursuant to such rules and regulations and State
laws. Take-Two US shall file an Additional Listing Application with Nasdaq
for the Stock Consideration.
5.5. Information as to Take-Two. None of the representations or
warranties made by either of the Purchasers in this Agreement or in any
agreement executed and delivered by or on behalf of either or both of them
pursuant hereto are false or misleading with respect to any material fact,
or omit to state any material fact necessary in order to make the
statements therein contained not misleading.
6. Indemnification.
6.1. Indemnification by the Shareholders. Subject to Section 6.4
below, each of the Shareholders hereby indemnifies and agrees to defend and
hold harmless the Purchasers and each of their officers, directors,
shareholders, employees and agents from and against any and all losses,
obligations, deficiencies, liabilities, damages, costs and expenses
(including, without limitation, the amount of any settlement entered into
pursuant hereto, and all reasonable legal and other expenses incurred in
connection with the investigation, prosecution or defense of any matter
indemnified pursuant hereto) which any of them may sustain, suffer or incur
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and which arise out of, are caused by, relate to, or result or occur from
or in connection with any breach by Triad or Global or any of the
Shareholders of any representation, warranty, agreement or covenant made by
any one or all of them, in this Agreement or the Triad and Global
Documents, as applicable. The foregoing indemnification shall also apply to
direct claims by the Purchasers against the Shareholders.
6.2. Indemnification by the Purchasers. The Purchasers indemnify and
agree to defend and hold harmless the Shareholders from and against any and
all losses, obligations, deficiencies, liabilities, damages, costs and
expenses (including, without limitation, the amount of any settlement
entered into pursuant hereto, and all reasonable legal and other expenses
incurred in connection with the investigation, prosecution or defense of
any matter indemnified pursuant hereto), which it or he may sustain, suffer
or incur and which arise out of, are caused by, relate to, or result or
occur from or in connection with (i) any breach by either of the Purchasers
of any representation, warranty, agreement or covenant made in this
Agreement or any Take-Two Document or (ii) the guarantees by Damian and
Craig in favour of the Business Development Bank of Canada dated September
8, 1995 and September 5, 1997. The indemnification provisions herein shall
also apply to direct claims by the Shareholders against the Purchasers.
6.3. Third Party Claims. If a claim by a third party is made against
any party or parties hereto and the party or parties against whom said
claim is made intends to seek indemnification with respect thereto under
subsections 6.1 or 6.2, the party or parties seeking such indemnification
shall promptly notify the indemnifying party or parties, in writing, of
such claim, providing such details of the claim (including the claimed
amount) as are then known; provided, however, that the failure to give such
notice shall not affect the rights of the indemnified party or parties
hereunder except to the extent that such failure materially and adversely
affects the indemnifying party or parties due to the inability to timely
defend such action. The indemnifying party or parties shall have 10
business days after said notice is given to elect, by written notice given
to the indemnified party or parties, to undertake, conduct and control,
through counsel of their own choosing (subject to the consent of the
indemnified party or parties, such consent not to be unreasonably withheld)
and at their sole risk and expense, the good faith settlement or defense of
such claim, and the indemnified party or parties shall cooperate with the
indemnifying parties in connection therewith; provided: (a) all settlements
require the prior reasonable consultation with the indemnified party and
the prior written consent of the indemnified party, which consent shall not
be unreasonably withheld, and (b) the indemnified party or parties shall be
entitled to participate in such settlement or defense through counsel
chosen by the indemnified party or parties, provided that the fees and
expenses of such counsel shall be borne by the indemnified party or
parties. So long as the indemnifying party or parties are contesting any
such claim in good faith, the indemnified party or parties shall not pay or
settle any such claim; provided, however, that notwithstanding the
foregoing, the indemnified party or parties shall have the right to pay or
settle any such claim at any time, provided that in such event they shall
waive any right of indemnification therefor by the indemnifying party or
parties. If the indemnifying party or parties do not make a timely election
to undertake the good faith defense or settlement of the claim as
aforesaid, or if the indemnifying parties fail to proceed with the good
faith defense or settlement of the matter after making such election, then,
in either such event, the indemnified party or parties shall have the right
to contest, settle or compromise (provided that all settlements or
compromises require the prior reasonable consultation with the indemnifying
party
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and the prior written consent of the indemnifying party, which consent
shall not be unreasonably withheld) the claim at their exclusive
discretion, at the risk and expense of the indemnifying parties. 6.4
Limitation. In no event shall the maximum liability of each of the
Shareholders for indemnification exceed their pro rata portion of the
Purchase Price, provided that this limitation shall not apply to
third-party claims.
6.5. Assistance. Regardless of which party is controlling the defense
of any claim, each party shall act in good faith and shall provide
reasonable documents and cooperation to the party handling the defense.
7. Covenants
7.1. Consummation of Transaction. Each of the parties hereto hereby
agrees to use all reasonable efforts to cause all conditions precedent to
his or its obligations (and to the obligations of the other parties hereto
to consummate the transactions contemplated hereby) to be satisfied,
including, but not limited to, using all reasonable efforts to obtain all
required (if so required by this Agreement) consents, waivers, amendments,
modifications, approvals, authorizations, novations and licenses (including
the any required consents listed on Schedule 4.19, 7.1 or other Schedule);
provided, however, that nothing herein contained shall be deemed to modify
any of the absolute obligations imposed upon or rights of any of the
parties hereto under this Agreement or any agreement executed and delivered
pursuant hereto.
7.2. Cooperation/Further Assurances.
(a) Each of the parties hereto hereby agrees to fully cooperate
with the other parties hereto in preparing and filing any notices,
applications, reports and other instruments and documents which are
required by, or which are desirable in the reasonable opinion of any
of the parties hereto, or their respective legal counsel, in respect
of, any statute, rule, regulation or order of any governmental or
administrative body in connection with the transactions contemplated
by this Agreement. The legal, administrative costs and disbursements
incurred providing this cooperation shall be borne by the party who
seeks such cooperation.
(b) Each of the parties hereto hereby further agrees to execute,
acknowledge, deliver, file and/or record, or cause such other parties
to the extent permitted by law to execute, acknowledge, deliver, file
and/or record such other documents as may be required by this
Agreement and as the Purchasers, on the one hand, and/or Triad and
Global and/or the Shareholders, on the other, or their respective
legal counsel may reasonably require in order to document and carry
out the transactions contemplated by this Agreement. The legal,
administrative costs and disbursements incurred by the party of whom
the request is being made shall be borne by the party who sought such
request.
7.3. Broker. Each of the parties hereto represents and warrants to the
other parties that no broker or finder was engaged in connection with the
transaction contemplated by this Agreement with whom the indemnifying party
has dealt, and each of the parties shall indemnify and hold the other
harmless from and against any and all claims or liabilities asserted by or
on behalf of any alleged broker or finder for broker's fees, finder's fees,
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commissions or like payments, without regard to the indemnification
limitations contained in this Agreement.
7.4. Employment Agreements and Non Competition Agreements.
Simultaneous with the execution of this Agreement, each of Craig and Damian
will enter into an employment agreement with Triad in the form of Exhibit D
hereto (the "Employment Agreement") and each of Craig, Damian and Lucy
shall enter into a Non-Competition Agreement in the form of Exhibit E
hereto.
7.5. Stock Options. Simultaneously with the execution of this
Agreement, Take-Two US shall grant five-year options to purchase an
aggregate of 30,000 shares of Take-Two Stock, at an exercise price per
share equal to the closing price of Take-Two US's common stock on the date
hereof, to the designees of the Shareholders as set forth on Schedule 7.5.
7.6. Indebtedness. On or prior to the execution hereof, Triad and
Global shall cause Royal Bank of Canada and Business Development Bank of
Canada (the "Banks"), to enter into agreements with the TRIAD AND/OR GLOBAL
whereby the Banks will continue to provide credit to TRIAD AND/OR GLOBAL
upon terms and conditions mutually satisfactory to the parties thereto, and
arrangements satisfactory to the Purchasers shall have been made to
continue or satisfy indebtedness owed to MC Capital Corporation and Beacon
Lane Holdings Inc. other parties. Within two (2) business days after
Closing, Take-Two Canada shall make a loan of US$500,000 to Triad and
Global, evidenced by a promissory note substantially in the form attached
hereto as Exhibit 7.6 (the "Note"). The proceeds of the Note shall be used
by Triad and Global to repay the outstanding balance owed by Triad and
Global pursuant to the promissory notes held by MC Capital Corp., dated
June 9, 1999, and Beacon Lane Holdings, Inc., dated June 30, 1999 (the "MC
Capital and Beacon Notes"). Within two (2) business days after repayment of
the MC Capital and Beacon Notes, Triad and Global shall enter into a new
loan agreement with the Royal Bank of Canada and the personal guarantees to
Royal Bank of Canada by the Shareholders shall be released. Within two (2)
business days after the new loan agreement with the Royal Bank of Canada
has been entered into, Triad and Global shall repay the outstanding balance
of $1,500 owed to Craig and $24,500 owed to Damian.
7.7. Non-Compete. The provisions contained in the Non-Competition
Agreement have been specifically negotiated and the consideration therefor
is the execution and delivery of this Agreement.
8. Survival of Representations and Warranties.
Each of the parties hereto hereby agrees that all representations and
warranties made by or on behalf of him or it in this Agreement or in any
document or instrument delivered pursuant hereto shall survive the closing of
the transactions contemplated hereby for a period of one (1) year.
9. General Provisions.
9.1. Fees and Expenses. The Purchasers, on the one hand, and the
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Shareholders, on the other hand, shall be responsible for and shall, prior
to the date hereof pay the fees and expenses incurred by (i) the Purchasers
and (ii) Triad and Global and the Shareholders, respectively, in connection
with the transactions contemplated by this Agreement.
9.2. Amendment. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
9.3. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be delivered personally by
registered or certified mail (postage prepaid, return receipt requested) or
recognized overnight courier and shall be deemed to have been duly given or
made as of the date of actual delivery, at the following addresses (or at
such other address for a party as shall be specified by like notice, except
that notices of changes of address shall be effective upon receipt):
If to the Purchasers:
Take-Two Interactive Software, Inc.
575 Broadway
New York, New York 10012
Attn: Ryan Brant, CEO
with a copy to:
Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
Attn: Barry S. Rutcofsky, Esq.
If to Shareholders:
Craig McGauley
5795 Yonge Street
Unit 712
Toronto, Ontario
Canada M2M 453
Damian and Lucy Cristiani
85 Blackmore Avenue
Richmond Hill, Ontario
Canada L4B 2A2
with a copy to:
Lafluer Brown
National Bank Building
150 York Street - 14th Floor
Toronto, Ontario, Canada M5H 3E5
ATT: M. Steven Alizadeh
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9.4. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the greatest extent possible.
9.5. Entire Agreement. This Agreement and the agreements referred to
herein constitute the entire agreement, and supersede all prior agreements,
representations and undertakings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof, including the
letter of intent dated July 6, 1999.
9.6. No Assignment. This Agreement shall not be assigned by operation
of law or otherwise, and any assignment shall be null and void.
9.7. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York without regard to its
choice of law principles. Each of the Shareholders hereby agree that any
action or proceeding based on or arising out of this Agreement shall be
brought in the courts of the State of New York (New York County), United
States of America or in the courts of the United States of America for the
Southern District of New York and each of the Shareholders hereby accepts
(exclusively and unconditionally) the jurisdiction of the New York courts.
9.8. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original, but all
of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties hereto, have caused this Agreement
to be executed as of the date first written above.
TAKE-TWO INTERACTIVE SOFTWARE, INC.
By:
---------------------------------
Ryan Brant, CEO
TAKE-TWO INTERACTIVE SOFTWARE CANADA
INC.
By:
---------------------------------
-17-
<PAGE>
Larry Muller, President
TRIAD DISTRIBUTORS INC.
By:
---------------------------------
GLOBAL STAR SOFTWARE LIMITED
By:
---------------------------------
----------------------------------
Craig McGauley
----------------------------------
Damian Cristiani
----------------------------------
Lucy Cristiani
-18-
DATED 30 SEPTEMBER 1999
C.D. VERTE ITALIA SPA
AND
PIETRO GIOVANNI VAGO
AND
MAURIZIO EZIO CURIONI
AND
TAKE-TWO INTERACTIVE SOFTWARE, INC
---------------------------------------------------------------
AGREEMENT
FOR THE SALE AND PURCHASE OF
THE BUSINESS AND ASSETS OF
C.D. VERTE ITALIA SPA
---------------------------------------------------------------
HARBOTTLE & LEWIS
Hanover House
14 Hanover Square
London W1R 0BE
Ref: h154/44890_7
<PAGE>
INDEX
1. INTERPRETATION.........................................................1
2. AGREEMENT FOR SALE.....................................................1
3. PURCHASE PRICE.........................................................2
4. COMPLETION.............................................................3
5. THE BUYER'S REMEDIES...................................................5
6. REPRESENTATIONS WARRANTIES AND UNDERTAKINGS............................6
7. LIMITATIONS............................................................8
8. LIABILITIES AND APPORTIONMENTS.........................................8
9. TRADE DEBTS AND TRADE CREDITS.........................................11
10. CONTACTS..............................................................12
11. RESTRICTIONS ON SELLERS...............................................13
12. EFFECT OF COMPLETION..................................................18
13. COSTS, EXPENSES AND INSURANCE.........................................19
14. NOTICES...............................................................19
15. ENTIRE AGREEMENT/VARIATION............................................20
16. COUNTERPARTS..........................................................20
17. ANNOUNCEMENTS.........................................................20
18. GENERAL...............................................................20
19. GOVERNING LAW AND JURISDICTION........................................21
SCHEDULE 1....................................................................23
REPRESENTATION WARRANTIES AND UNDERTAKINGS....................................23
SCHEDULE 2....................................................................42
ACTION PENDING COMPLETION.....................................................42
SCHEDULE 3....................................................................44
INTERPRETATION................................................................44
<PAGE>
THIS AGREEMENT is made on 30 September 1999
BETWEEN:
(1) C.D. VERTE ITALIA SPA, an Italian company having its registered office at
Via Campo Dei Fiori 67, 21013 Gallarante, Italy ("THE SELLER");
(2) PIETRO GIOVANNI VAGO of Via Caralloffi, 6, 21100 Varese (VA), Italy
("PGV")
(3) MAURIZIO EZIO CURIONI of Via Canova, 20, 21013, Gallarate (VA) Italy
("MEC"); and (4) TAKE-TWO INTERACTIE SOFTWARE, INC a Delaware company
having its office at 575 Broadway, New York, New York 10012 ("THE BUYER"
which expression shall, where consistent with the context, include its
successors in title and assigns or any subsidiary undertaking which
Take-Two Interactive Software, Inc procures to purchase the Business and
assets of the Seller as provided for in Clause 2.1).
IT IS AGREED as follows:-
1. Interpretation
1.1 In this Agreement and its Schedules the words and expressions defined in
paragraph 1 of Schedule 3 shall, unless inconsistent with the context,
have the meanings set out in such paragraph.
1.2 This Agreement and its Schedules will be construed and interpreted in
accordance with Schedule 3.
1.3 The Schedules form part of this Agreement and will be of full force and
effect as though expressly set out in the body of this Agreement.
1.4 References to any English legal term or concept (including without
limitation any action, remedy, method of judicial procedure, legal
document, statute, court, official or any other legal concept) will in
respect of any jurisdiction other than England be construed as references
to the term or concept which most nearly corresponds to it in that
jurisdiction.
2. Agreement for Sale
2.1 The Seller agrees to sell with full title guarantee and free from any
Encumbrance and the Buyer agrees to buy or to procure that a subsidiary
undertaking of it shall buy, in each case on Completion but with effect
from the Effective Time, the Business and the following assets:-
2.1.1 the benefit (subject to the burden) of the Contracts;
2.1.2 the Fixed Plant;
<PAGE>
2.1.3 the Lease;
2.1.4 the Goodwill;
2.1.5 the Intellectual Property Rights;
2.1.6 the Machinery;
2.1.7 the Motor Vehicles;
2.1.8 the Office Equipment;
2.1.9 the Records;
2.1.10 the Stock;
2.1.11 the benefit of any amount to which the Seller is entitled from a
person (including, without limitation, an insurer) in respect of
damage or injury to any of the Assets other than amounts spent
before the Effective Time in repairing the damage or injury; and
2.1.12 all other property and assets owned by the Seller and used in
connection with the Business on the Completion Date (wherever
located).
2.2 The Property is sold subject to the interests of Leaseindustria SPA under
the Lease
3. PURCHASE PRICE
3.1 Subject to the further provisions of this Agreement, the total
consideration for the sale of the Business and Assets (the
"CONSIDERATION") shall be satisfied by the following:-
(i) the payment by the Buyer to the Seller on the date of this Agreement
of US$200,000 in cash;
(ii) the payment by the Buyer to the Seller on 1 December 1999 or within 5
days of the date of Completion (whichever is later) of US$800,000 in
cash;
(iii)the payment by the Buyer to the Seller, within 5 Business Days of the
signature by the Board of Directors of the Buyer (the "BOARD") of the
management accounts of the Buyer for each of the years ending:
(a) 31 December 1999 ("YEAR 1");
(b) 31 December 2000 ("YEAR 2"); and
(c) 31 December 2001 ("YEAR 3")
(the "COMPANY ACCOUNTS") of a percentage (X) of;
<PAGE>
for Year 1 US $400,000 in cash;
for Year 2 US $415,000 in cash;
for Year 3 US $430,000 in cash
where X shall be calculated in accordance with Clause 3.3.
3.2 The Buyer shall be entitled to set off, or (pending the determination of
the relevant amount) withhold any amounts payable by it after Completion
to the Seller against (a) the amount of any claims by the Buyer under any
Transaction Document and (b) any other sum due to the Buyer or its
Associates by any Seller party or its Associates.
3.3 For the purposes of Clause 3.1(iii):
(i) in Year 1 X shall equal actual post tax profit for financial year
ended 31 October 2000 in accordance with the Company Accounts for that
year as a percentage of US$572,000 (subject to a maximum of 100%);
(ii) in Year 2 X shall equal actual post tax profit for financial year
ended 31 October 2001 in accordance with the Company Accounts for that
year as a percentage of US$624,000 (subject to a maximum of 100%); and
(iii) in Year 3 X shall actual post tax profit for financial year ended 31
October 2002 in accordance with the Company Accounts for that year as
a percentage of US$676,000 (subject to a maximum of 100%).
4. COMPLETION
4.1 Completion shall take place on 1 November 1999 at the offices of the
Notary Public Lebano, Via Vittor Pisani 9, 2012Y Milan.
4.2 At Completion the Seller shall:
4.2.1 deliver the Italian Transfer Document;
4.2.2 give written confirmation to the Buyer that:
(a) 30 days' notice of the sale of the Business and Assets was
given to any union official to whom notice should have given
pursuant to any Italian legal or regulatory requirements,
and
(b) it has complied with all legal requirements relating to the
transfer of the Employees' employment to the Buyer.
4.2.3 deliver a certificate from the Italian tax authorities confirming
that there is no litigation pending in respect of the Seller or
its Business and Assets;
4.2.4 give the Buyer possession of those Assets which are transferable
by delivery;
<PAGE>
4.2.5 give the Buyer (if it requests and in a form reasonably
acceptable to it, including without limitation, full title
guarantee) an executed assignment of, or otherwise vest in the
Buyer, those Assets which are not transferable by delivery;
4.2.6 give the Buyer a release in the agreed form in respect of any
Encumbrance affecting any of the Assets; and
4.2.7 give the Buyer the Records.
4.3 The Buyer is not obliged to complete this Agreement unless:
4.3.1 the Seller complies with all its obligations under Clause 4; and
4.3.2 the purchase of all of the Assets is completed simultaneously
(but if the Buyer exercise its option under Clause 4.4.1,
completion of the purchase of some of the Assets does not affect
the Buyer's rights in connection with the others).
4.4 If Completion does not take place on the date set for Completion in Clause
4.1 because the Seller fails to comply with any of its obligations under
Clause 4, the Buyer may by notice to the Seller:
4.4.1 proceed to Completion to the extent reasonably practicable:
4.4.2 postpone Completion to a date not more than 28 Business Days
after the date set for Completion in Clause 4.1; or
4.4.3 terminate this Agreement.
4.5 If the Buyer postpones Completion to another date in accordance with
Clause 4.4.2, the provisions of this Agreement apply as if that other date
is the date set for Completion in Clause 4.1.
4.6 If the Buyer terminates the Agreement under Clause 4.4.3:-
(i) the Seller Parties shall indemnify the Buyer for each loss, expense or
Liability (and all costs, charges, interest, fines, penalties and
expenses) incidental to or relating to or arising in connection with
any such loss, damage or liability, including without limitation, all
expenses of the investigations and legal fees and expenses on a
solicitor and own client basis (whether or not reasonable,
foreseeable, contemplated or avoidable and whether suffered directly
or indirectly) as a result of or in connection with the Buyer failing
to proceed to Completion in accordance with this Agreement;
(ii) the Seller shall repay US$100,000 (the "Principal Amount") to the
Seller on account of the monies paid to the Buyer pursuant to Clause
3.1(i) together with interest (accruing day to day) on the Principal
Amount at a rate of 4% per annum over the base rate of National
Westminster Bank PLC from the date that payment was made by the Buyer
to the Seller pursuant to Clause
<PAGE>
3.1(i) until the date the Seller repays the Principal Amount pursuant
to this clause;
(iii)each party's further rights and obligations cease immediately on
termination, but termination does not affect a party's accrued rights
and obligations at the date of termination.
5. THE BUYER'S REMEDIES
5.1 If, on or before the date set for Completion in Clause 4.1, the Buyer
considers that the Seller is in breach of any provision of this Agreement,
the Buyer may by notice to the Seller elect to proceed to Completion or
terminate the Agreement.
5.2 If the Buyer terminates the Agreement under Clause 5.1:
5.2.1 the Seller shall indemnify the Buyer against all loss, damage or
liability suffered by the Buyer as a result of the Seller's
breach including but not limited to its costs relating to
negotiation, preparation, execution or termination of this
Agreement;
5.2.2 the Seller shall repay the amount paid by the Buyer to the Seller
under Clause 3.1(i) in accordance with the terms of Clause
4.6(ii); and
5.2.3 each party's further rights and obligations cease immediately on
termination but termination does not affect the party's accrued
rights and obligations at the date of termination.
5.3 The Seller shall indemnify the Buyer against:
5.3.1 each loss, liability and cost which the Buyer may incur in
connection with the breach of Clause 6.1 by the Seller; and
5.3.2 each cost which the Buyer may incur whether before or after the
start of an action in connection with:
(a) the settlement of the claim against the Seller in respect of
a breach or an alleged breach of Clause 6.1 for the
enforcement of the settlement; and
(b) legal proceedings against the Seller in respect of a breach
or an alleged breach of Clause 6.1 in which judgement is
given for the Buyer or the enforcement of the judgement.
6. REPRESENTATIONS WARRANTIES AND UNDERTAKINGS
6.1 The Seller Parties jointly and severally represent, warrant and undertake
to the Buyer:-
6.1.1 in the terms of Schedule 1;
<PAGE>
6.1.2 that the contents of the Buyer's Report are true, accurate and
complete in all respects and fully, clearly and accurately
divulge every matter to which they relate;
6.1.3 that upon any event occurring or matter arising which results in
any of the Warranties being unfulfilled, untrue, misleading or
inaccurate in any respect at Completion or any breach or
non-fulfilment of any of the undertakings, agreements or
obligations of the Seller Parties or any of them contained in
this Agreement the Seller Parties will as soon as reasonably
practicable thereafter notify the Buyer of the same and give
details of and, where requested, investigate fully all relevant
circumstances.
6.2 The Warranties contained in this Agreement will each remain in full force
and effect beyond and notwithstanding Completion and are each made without
prejudice to any of the others. Subject to Clause 7, no provision of this
Agreement will limit the extent or application of any Warranty and
although those contained in Schedule 1 are given subject to matters fully
and fairly disclosed in the Disclosure Letter no other information
relating to any Group Company of which the Buyer or any of its advisers
has knowledge (actual or constructive) will prejudice any claim made by
the Buyer under any such Warranties or operate to reduce any amounts
recoverable. Each disclosure in the Disclosure Letter shall (if it refers
to any separate document) identify such document with a copy of the
relevant document being attached to the Disclosure Letter; any disclosure
which fails to comply with the foregoing requirement in any respect shall
not be effective and the matters stated therein shall be deemed not to be
disclosed so that the Warranties shall continue to have full effect
without qualification in any respect by such disclosure. Notwithstanding
the above or any other provision of this Agreement:-
6.2.1 the Warranties contained in paragraph 1 and paragraph 6.1.1 of
Schedule 1 shall not be or be capable of being qualified or
discharged by any disclosure made by the Seller Parties, Clause 5
or in any other way; and
6.2.2 the Warranties shall not be or be capable of being qualified or
discharged by the Disclosure Letter, Clause 7 or in any other way
insofar as any Claim arises as a consequence of the fraud or
wilful or negligent misconduct or concealment of the Seller
Parties.
6.3 Subject to the provisions of Clause 7, without restricting the rights of
the Buyer or its ability to claim damages on any basis, the amount of any
Claim may be determined as and be deemed to be and the Seller Parties
shall at all times indemnify and keep fully and effectively indemnified
the Buyer (for itself and at its option on behalf of its officers,
employees, directors, shareholders, advisors and agents (other than the
Seller Parties)) from and in respect of:-
6.3.1 the amount of all loss, damage or Liability (and all costs,
charges, interest, fines, penalties and expenses incidental or
relating to the same (including without limitation all expenses
of investigations and legal fees and expenses on a solicitor and
own client basis) whether reasonable, foreseeable, contemplated
or avoidable and suffered directly or indirectly and/or the
<PAGE>
amount of any depletion or diminution in the value of the Assets
or the Business in each case suffered or incurred by the Buyer
directly or indirectly as a result of, in connection with or in
relation to the subject matter of such Claim; or
6.3.2 the amount by which the Business or any Assets or Liabilities of
the Buyer are respectively less or more than they would have been
had the relevant statement in Schedule 1 been true and not
misleading.
6.4 Save as otherwise provided herein and save as regards matters already
disclosed in the Disclosure Letter the rights and remedies of the Buyer in
respect of any breach of the Warranties shall not be affected by
Completion, by any investigation made by it or on its behalf into the
affairs of the Seller or the Business, by its rescinding or failing to
rescind this Agreement or by any other event or matter whatsoever.
6.5 Any liability of a Seller Party to the Buyer under this Agreement
(including its Schedules and documents referred to in this Agreement) may
be released compounded or compromised in whole or in part by the Buyer
without in any way prejudicing or affecting its rights against the other
Sellers Parties.
6.6 If the Business or any of the Assets purchased by the Buyer shall at any
time be sold or transferred the benefit of each of the Warranties may be
assigned to the purchaser or transferee of the Business or those Assets
who shall accordingly be entitled to enforce each of the Warranties
against the Seller Parties as if he were named in this Agreement as the
Buyer.
6.7 The Seller Parties warrant that between the date of this Agreement and
Completion they shall ensure that:
6.7.1 the Seller complies with Schedule 2;
6.7.2 they shall notify the Buyer immediately if they become aware of a
fact or circumstance which constitutes a breach of Clause 6 or
has caused or will cause a Warranty to become untrue, inaccurate,
incomplete or misleading at any time before Completion.
6.8 The Seller Parties will at all times indemnify and hold the Buyer (for
itself and on behalf of its officers, shareholders, directors, employees,
shareholders and advisors and agents (other than the Seller Parties))
fully and effectively indemnified against any claims, actions,
proceedings, demands, judgments, orders or enforcements and all loss,
damage or Liability (and all costs charges interest fines penalties and
expenses incidental or relating to or arising in connection with any such
loss damage or liability, including without limitation, all expenses of
investigations and legal fees and expenses on a solicitor and own-client
basis) whether or not reasonable, foreseeable, contemplated or avoidable
and whether suffered directly or indirectly as a result of or in
connection with the following:-
6.9 The Buyer undertakes to make available (subject to Completion) US$375,000
(the "EMPLOYEE FUND") for distribution to Employees nominated by the
Seller which shall
<PAGE>
be distributed by the Buyer by way of bonus. The Employee Fund shall be
reduced by any amount payable by the Buyer (by way of any tax or other
liability or other expenses) in making any payment to Employees pursuant
to this Clause.
7. LIMITATIONS
7.1 The liability of the Seller Parties in respect of any Claim shall be
limited as follows:
7.1.1 no liability shall arise unless the loss thereby sustained
(together with the aggregate amount of losses sustained arising
from previous or concurrent Claims, if any) shall exceed
US$5,000, in which case any and all such sums shall be liable to
be met in full;
7.1.2 no Claim shall be made by the Buyer (other than in respect of (a)
those Warranties in paragraph 1 of Schedule 1 or (b) fraud or
wilful misconduct or concealment), unless written notice
specifying in reasonable detail the grounds on which such Claim
is based (and so far as practicable the amount claimed) has been
given by the Buyer to any of the Seller Parties on or before the
third anniversary of Completion (the "CLAIM DATE"), Any Claim
which has been made or shall be made before the Claim Date shall
(if it has not been previously satisfied, settled or withdrawn)
be deemed to have been withdrawn and shall become fully barred
and unenforceable on the expiry of the period of six months
commencing on the receipt by any Seller Party of notice of the
Claim pursuant to this clause unless proceedings in respect
thereof shall have been commenced against any Seller Party and
for this purpose proceedings shall not be deemed to have been
commenced unless they shall have been issued and served upon any
of the Seller Parties.
8. LIABILITIES AND APPORTIONMENTS
8.1 With effect from Completion, the Seller:
8.1.1 remains responsible for all liabilities incurred by it before the
Effective Time (including, without limitation, the Trade Credits
and all outgoings and expenses owed in connection with the
Business or the Assets before the Effective Time (including,
without limitation, wages, accrued holiday pay, bonuses and other
outgoings in respect of the Employees and rents, rates and
service charges in respect of the Property));
8.1.2 remains responsible for all claims by any person outstanding
against it as at the Effective Time or arising by reason of any
act or omission by it before the Effective Time (including,
without limitation, all claims by any person in connection with
any goods or services supplied by the Seller before the Effective
Time);
8.1.3 shall (except as provided in clause 9.7) promptly pay the
liabilities referred to in clause 8.1.1. and promptly settle the
claims referred to in clause 8.1.2; and
8.1.4 shall indemnify the Buyer against each loss, liability and cost
which the Buyer may incur:
(a) in connection with the ownership or operation of the
Business or the Assets before the Effective Time; or
(b) as a result of the Seller's failure to comply with its
obligations under clause 8.1.1, 8.1.2 or 8.1.3,
including, without limitation, each loss, liability or cost
incurred as a result of defending or settling a claim alleging
such a liability (a "SPECIFIED CLAIM").
8.2 With effect from Completion the Buyer:
8.2.1 is responsible for all liabilities incurred by it in connection
with the Business and the Assets after the Effective Time
(including, without limitation, all outgoings and expenses owed
in connection with the Business or the Assets after the Effective
Time (including, without limitation, wages accrued holiday pay,
bonuses and other outgoings in respect of the Employees and
rents, rates and service charges in respect of the Property));
8.2.2 shall indemnify the Seller against each loss, liability and cost
which the Seller may incur:
(a) in connection with the ownership or operation of the
Business or the Assets after the Effective Time; or
(b) as a result of the Buyer's failure to comply with its
obligations under clause 8.2.1;
including, without limitation, each loss, liability or cost
incurred as a result of defending or settling a claim alleging
such a liability (also a "SPECIFIED CLAIM").
8.3 If a party (the "INDEMNIFIED PARTY") becomes aware of a matter which might
give rise to a Specified Claim:
8.3.1 the Indemnified Party shall notify the other party (the
"INDEMNIFIER") immediately of the matter (stating in reasonable
detail the nature of the matter and, if practicable, the amount
claimed) and consult with the Indemnifier with respect to the
matter; if the matter has become the subject of proceedings the
Indemnified Party shall notify the Indemnifier within sufficient
time to enable the Indemnifier time to contest the proceedings
before final judgment;
8.3.2 the Indemnified Party shall:
(a) take any action and institute any proceedings, and give any
information and assistance, as the Indemnifier or its
insurers may reasonably request to:
<PAGE>
(i) dispute, resist, appeal, compromises, defend, remedy or
mitigate the matter; or
(ii) enforce against a person (other than the Indemnifier)
the Indemnified Party's or its insurers' rights in
relation to the matter; and
(b) in connection with proceedings related to the matter (other
than against the Indemnifier) use advisers chosen by the
Indemnifier or its insurers and, if the Indemnifier
requests, allow the Indemnifier or its insurers the
exclusive conduct of the proceedings,
in each case if the Indemnifier indemnifies the Indemnified Party
for all reasonable costs incurred as a result of a request or
choice by the Indemnifier or its insurers;
8.3.3 if the Buyer is the Indemnified Party, clause 8.3.2 does not
apply if the Seller's or its insurers' request or choice would in
the Buyer's reasonable opinion prejudice its relationship with a
customer or supplier of the Business; and
8.3.4 the Indemnified Party may only admit liability in respect of or
settle the matter if it has first obtained the Indemnifier's
written consent (not to be unreasonably withheld or delayed).
8.4 If a payment of outgoings or expenses in respect of the Business or the
Assets for a period covering both before and after the Effective Time
(other than the Seller Prepayments) has been made by:
8.4.1 the Seller, the Buyer shall pay the Seller an amount equal to
that proportion of the payment that relates to the period after
the Effective Time; or
8.4.2 the Buyer, the Seller shall pay the Buyer an amount equal to that
proportion of the payment that relates to the period before the
Effective Time.
8.4.3 If a payment in respect of the Business or the Assets for a
period covering both before and after the Effective time (other
than Customer Prepayments) has been received by:
(a) he Seller, it is entitled to retain the proportion of the
payment that relates to the period before the Effective Time
and shall pay the Buyer an amount equal to the remainder; or
(b) the Buyer, it is entitled to retain the proportion of the
payment that relates to the period after the Effective Time
and shall pay the Seller an amount equal to the remainder.
<PAGE>
8.5 A party owing an amount under clause 8.4 or 8.5 shall pay the other party
that amount within 28 days of receipt of an invoice form the other party.
9. TRADE DEBTS AND TRADE CREDITS
9.1 Within 10 days starting on the day of Completion, the Seller shall give
the Buyer written details of
9.1.1 the amount of each Trade Debt, the name and address of the trade
debtor that owes the Trade Debt and the date on which the Trade
Debt became due and payable; and
9.1.2 the amount of each the Trade Credit, the name and address of the
trade creditor that is owed the Trade Credit and the date on
which the Trade Credit is due to be paid.
9.2 During the period starting on the day after Completion and ending on the
day 60 days after that date the Buyer shall make all reasonable efforts to
collect the Trade Debts as the Seller's agent. After that period the Buyer
has no further obligation to the Seller in respect of clause 9.
9.3 During the period specified in clause 9.2, the Seller may only assign to a
person or deal with a Trade Debt or contact a debtor whose debt is
included in the Trade Debts if it has first obtained the Buyer's written
consent.
9.4 The Buyer shall, for the purpose of collecting the Trade Debts, in all
material respects continue the practices and procedures previously used by
the Seller to collect trade debts. The Buyer is not required to take legal
proceedings to recover a Trade Debt nor to apply its own money to settle a
Trade Debt.
9.5 If the Buyer receives an amount from a debtor whose debt is included in
the Trade Debts and who is a debtor of the Buyer, the amount shall be
applied to satisfy the outstanding debts which were invoiced first to the
debtor unless the debtor allocates the amount.
9.6 The Buyer may only compromise a Trade Debt or give time or indulgence for
payment of a Trade Debt if it has first obtained the Seller's written
consent (not to be unreasonably withheld or delayed).
9.7 The Buyer shall (as the Seller's agent) apply any money it receives in
respect of the Trade Debts (less any deduction permitted by clause 9.10 or
clause 9.11) to discharge the Trade Credits. The Buyer has an absolute
discretion as to which Trade Credits to discharge and the order in which
Trade Credits are discharged. If when a Trade Credit is due to be paid the
amount of money collected from the Trade Debts (and not previously used to
discharge another Trade Credit) is less than the amount of the Trade
Credit, the Seller shall pay the Buyer the difference between those
amounts immediately after being notified by the Buyer of the difference.
<PAGE>
9.8 After all the Trade Credits have been paid, the Buyer shall within 10 days
starting on the last day of each month pay any money it has received
during that month in respect of the Trade Debts (less any deduction
permitted by clause 9.10 into the Seller's bank account.
9.9 Within 10 days starting on the last day of each month, the Buyer shall
give the Seller written details of the amounts received during that month
in respect of the Trade Debts and the amounts applied in payment of Trade
Credits or deducted in accordance with clauses 9.10 and 9.11.
9.10 The Buyer may set off each amount which the Seller is liable to pay the
Buyer in connection with this Agreement against its obligations under
clause 9.7 to discharge the Trade Credits and its obligations under clause
9.8 to pay the Seller the amount of the Trade Debts collected.
10. CONTACTS
10.1 Subject to Clauses 8.1 and 10.3.3, after Completion the Buyer shall:
10.1.1 perform all the Seller's obligations under each Contract in
accordance with the terms of the Contract; and
10.1.2 indemnify the Seller against each loss, liability and cost which
the Seller may incur as a result of the Buyer's performance of
the Seller's obligations under each Contract to the extent that
the loss, liability or cost is attributable to the Buyer's act or
omission after the Completion Date (including, without
limitation, each loss, liability and cost incurred as a result of
defending or settling a claim alleging such a liability).
10.2 The Seller shall indemnify the Buyer against each loss, liability and cost
which the Buyer may incur as a result of the Seller's performance of its
obligations under each Contract to the extent that the loss, liability or
cost is attributable to the Seller's act or omission whether before or
after the Completion Date (including, without limitation, each loss,
liability and cost incurred as a result of defending or settling a claim
alleging such a liability).
10.3 If a Contract cannot be transferred to the Buyer except by an assignment
made with a specified person's consent or by a novation agreement:
10.3.1 this Agreement does not constitute an assignment or an attempted
assignment of the Contract if the assignment or attempted
assignment would constitute a breach of the Contract;
10.3.2 both before and after the Completion Date each party shall make
all reasonable efforts to obtain the person's consent to the
assignment, or achieve the novation, of the Contract;
10.3.3 until the consent is obtained or novation is achieved, the Seller
shall do each act and thing reasonably requested of it by the
Buyer to enable performance
<PAGE>
of the Contract and to provide for the Buyer the benefits of the
Contract (including, without limitation, enforcement of a right
of the Seller against another party to the Contract arising out
of its termination by the other party or otherwise); and
10.3.4 if the arrangements in clauses 10.3.2 and 10.3.3 cannot be made
in respect of the Contract:
(a) each party shall make all reasonable efforts to ensure that
the Contract is terminated without liability to either
party; and
(b) neither party has any further obligation to the other
relating to the Contract except that the Seller shall
immediately repay to the Buyer any amount paid by the Buyer
to the Seller in respect of the Contract.
10.4 Clause 10.3 does not affect the Buyer's rights and remedies against the
Seller in respect of a Contract which the Seller has warranted is
assignable, or may be performed by the Buyer instead of the Seller,
without novation agreement.
11. RESTRICTIONS ON SELLERS
11.1 As regards the Service Arrangements proposed to be entered into between
the Buyer and PGV and MEC (the "EXECUTIVE SELLER PARTIES"):
11.1.1 the Executive Seller Parties hereby acknowledge that:
(a) it is a term of this Agreement that the said Service
Arrangements are being entered into for the purpose of
(inter alia) protecting the goodwill of the Business and
Assets; and
(b) accordingly if any Executive Seller Party shall voluntarily
leave the service of the Buyer within 3 years from
Completion or if the Buyer shall be entitled summarily to
determine such Service Arrangement, the Buyer will suffer
loss;
11.1.2 if any Executive Seller Party shall leave the service of the
Buyer prior to the expiry of such 3 year period, such Executive
Seller Party undertakes to repay to the Buyer an amount equal to
one half of US$ (which sum represents the agreed proportion of
the total consideration payable hereunder which is attributable
to the goodwill of the Business) for each complete calendar month
between the date of termination of the Executive Seller Party's
service by the Buyer and the expiry of such 3 year period, such
amount to be payable within one calendar month after the
termination of the Executive Seller Party's employment;
11.1.3 nothing in this Clause shall require the Executive Seller Parties
or any of them to make any payment to the Buyer in circumstances
in which:
<PAGE>
(a) the Buyer shall terminate the said Service Arrangement
without good cause; or
(b) the Buyer shall fail to fulfil its obligations under this
Agreement in any material respect; or
(c) the Buyer shall constructively dismiss the Executive Seller
Party without having good cause to do so; or
(d) the Executive Seller Party shall by reason of death, illness
or injury be unable to perform his obligations under the
said Service Arrangement in circumstances which would
entitle the Buyer to terminate the same.
11.2 For the purposes of this Clause the following words and expressions shall
have the following meanings:
"CUSTOMER" any person, firm or company who at any
time during the period of two years
immediately prior to the relevant Event
Date was a customer, client or licensee
of the Seller or any Relevant Associate
being a person, firm or company with
whom the Seller personally dealt on its
own behalf or that of any Relevant
Associate during the said period of two
years or for whose account the Seller
had overall responsibility;
"DISTRIBUTION BUSINESS" the business of the marketing,
purchasing, sale, licensing and
distribution of interactive
entertainment software, peripheral and
hardware products;
"THE EVENT DATES" the Completion Date and/or the
Termination Date;
"KEY PERSON" a person who is or was at any time
whilst the relevant Seller Party was
employed by or a shareholder of the
Seller:
employed or engaged as an employee,
director or consultant of the Seller or
any Relevant Associate; and
a person with whom the relevant Seller
Party personally dealt during his
employment by or the time he held shares
in the Seller; and/or
employed in the capacity of manager,
marketing or licensing executive or
developer
<PAGE>
or in a more senior capacity or who is
reasonably likely to be in possession of
any Confidential Information;
"PERIOD" the period commencing on each of the
Event Dates and ending on the date being
five years later and (in the case of the
Termination Date) two years from the
Termination Date, save that the purposes
of clause 11.3.5, such period shall
continue indefinitely;
"PROSPECTIVE CUSTOMER" any person, firm or company who has been
engaged in negotiations with the Seller
or any Relevant Associate with a view to
purchasing or contracting in relation to
services or goods supplied by the Seller
or any Relevant Associate in the period
of 12 months prior to the relevant Event
Date being a person, firm or company
with whom the relevant Seller Party
personally dealt on behalf of the Seller
or any Relevant Associate during the
said period of 12 months or for whose
account the relevant Seller Party had
overall responsibility;
"RELEVANT ASSOCIATE" the Seller and/or an Associate of the
Seller from time to time;
"RESTRICTED BUSINESS" that part or parts of the Distribution
Business which competes or compete or is
or are about to compete with that part
or parts of the business of the Seller
or any Relevant Associate with which the
relevant Seller Party was materially
involved or concerned or for which the
relevant Seller Party was responsible
within a two year period prior to the
relevant Event Date;
"SERVICES AND/OR GOODS" any services and/or goods of a kind
supplied by the Seller or any Relevant
Associate in the period of two years
immediately prior to the relevant Event
Date and with the supply of which the
relevant Seller Party was concerned
during the said two year period;
"SUPPLIER" any person, firm or company who at any
time during the period of two years
immediately prior to the relevant Event
Date was a supplier, licensor developer
of the Seller or any Relevant Associate
being a person, firm or
<PAGE>
company with whom the relevant Seller
Party personally dealt on behalf of the
Seller or any Relevant Associate during
the said period of two years or for
whose account the relevant Seller Party
had overall responsibility;
"THE TERMINATION DATE" the date on which the relevant Executive
Seller Party's Service Arrangement with
the Seller or any Relevant Associate
terminates; and
"TERRITORY" Means Italy and the Vatican City.
11.3 Each Seller Party agrees with the Buyer that, without prejudice to any
other duty imposed by law or equity, neither such Seller Party nor any
Associate of such Seller Party will without the prior written consent of
the Buyer (which consent will be withheld only in so far as may be
reasonably necessary to protect the legitimate interests of the Buyer or
the Business) either by himself, his employees or agents or otherwise
howsoever, on his own account or in conjunction with or as principal,
partner, director, employee, consultant or agent or otherwise on behalf of
any other person for the Period, directly or indirectly:
11.3.1 carry on or assist with or be concerned or interested in the
carrying on of a Restricted Business in the Territory;
11.3.2 in competition with that part or parts of the Business with which
the relevant Seller Party was involved, concerned or responsible
within a two year period prior to the relevant Event Date, supply
(or procure or assist the supply of) any Services and Goods to
any Customer or any Prospective Customer;
11.3.3 in competition with that part or parts of the Business with which
the relevant Seller Party was involved, concerned or responsible
within a two year period prior to the relevant Event Date,
canvass or solicit the custom of (or procure or assist the
canvassing or soliciting of the custom of) any Customer or any
Prospective Customer in respect of any Services and/or Goods;
11.3.4 in competition with the Business
(a) offer employment to or employ or offer or conclude contract
for services with, canvass or solicit the employment or
engagement of any Key Person; or
(b) procure or assist any third party so to offer, employ,
engage or solicit any Key Person (whether or not such person
would commit any breach of his contract with the Buyer or
any Relevant Associate) unless such Key Person had ceased to
be employed or engaged by the Buyer or any Relevant
Associate (as the case may be) more than 3 months
previously;
<PAGE>
11.3.5 interfere or seek to interfere with the continuance of supplies
to the Buyer or any Relevant Associate by any Supplier or do or
say anything likely or calculated to lead any person, firm or
company to withdraw from or cease to continue offering to the
Buyer or any Relevant Associate any goods, services or rights
enjoyed by it.
11.4 Within 30 days starting on the day of Completion the Seller Parties shall
ensure that the name of the Seller is changed so as not to include the
words "C.D. Verte" or to suggest a connection with the Business. The
Seller Parties acknowledge that reputation and goodwill is attached to the
name "C.D. Verte" and that the Buyer is acquiring all rights in the name
under this Agreement. After Completion the Seller Parties may not,
directly or indirectly, use or authorise, encourage, allow or assist a
person to use, a name or names identical or confusingly similar to "C.D.
Verte" in connection with an activity which competes directly or
indirectly with the Business.
11.5 The Seller Parties shall ensure that each Relevant Associate of them
complies with the last sentence of clause 11.4.
11.6 Each of the Seller Parties agrees with the Buyer that he will not at any
time after either of the Event Dates, whether by himself, his employees or
agents or otherwise howsoever;
11.6.1 in the course of carrying on any trade or business, claim,
represent or otherwise indicate any present association with the
Business or for the purpose of obtaining or retaining any
business or custom claim, represent or otherwise indicate any
past association with the Business;
11.6.2 without the consent of the Buyer use whether on his own behalf or
on behalf of any third party or divulge to any third party any
Confidential Information;
11.6.3 do or say anything with the intention of harming the reputation
of the Buyer or the Business or do anything which could be
anticipated to lead to any person or Undertaking ceasing to do
business with the Buyer;
11.7 Each of the Seller Parties agrees with the Buyer that the restrictive
covenants herein contained are reasonable and necessary for the protection
of the value of the Business and each of the Seller Parties agrees that
having regard to that fact those covenants do not work harshly on him.
11.8 While the restrictions aforesaid are considered by the parties to be
reasonable in all the circumstances, it is agreed that if any such
restrictions taken together shall be adjudged to go beyond what is
reasonable in all the circumstances for the protection of the interests of
the Buyer but would be adjudged reasonable if part or parts of the wording
thereof were deleted or amended or qualified or the periods thereof were
reduced or the range of products or area dealt with were thereby reduced
in scope, then the relevant restriction or restrictions shall apply with
such modification or modifications as may be necessary to make it or them
valid and effective.
<PAGE>
11.9 Each of the Seller Parties hereby agrees with the Buyer at the request of
the Buyer to enter into a direct agreement or undertaking with any company
or companies in the Buyer Group whereby he will accept restrictions and
provisions corresponding to the restrictions and provisions herein
contained (or such of them as may be appropriate in the circumstances) in
relation to such products and services and such area and for such period
as such company or companies in the Buyer Group may reasonably require for
the protection of its or their legitimate interests.
11.10 Without prejudice to any other rights or remedies that the Buyer may have,
the Seller Parties acknowledge and agree that damages alone would not be
an adequate remedy for any breach by any Seller Party of the provisions of
this clause and that, accordingly, the Buyer shall be entitled without
proof of special damage to the remedies of injunction, specific
performance and other equitable relief for any threatened or actual breach
of the provisions of this clause by any of the Seller Parties.
11.11 Each of the obligations on the Seller Parties contained in the above
provisions of this Clause constitutes an entirely separate and independent
restriction on the Seller Parties notwithstanding that they may be
contained in the same sub-clause, paragraph, sentence or phrase.
11.12 This Clause shall not preclude the Seller Parties from holding or
acquiring directly or indirectly not more that 1% in nominal value of the
issued shares or other securities of any class of any other company which
are listed or dealt in on any recognised stock exchange and held by way of
bona fide investment only.
12. EFFECT OF COMPLETION
Any provision of this Agreement and any other documents referred to in it
which is capable of being performed after but which has not been performed
at or before Completion and all Warranties and covenants and other
undertakings contained in or entered into pursuant to this agreement shall
remain in full force and effect notwithstanding Completion.
13. COSTS, EXPENSES AND INSURANCE
13.1 All costs and expenses incurred by or on behalf of the parties to this
Agreement in connection with this Agreement or any of the documents to be
executed pursuant to this Agreement will be borne solely by the party who
incurs them:
(i) to the Buyer's Accountants or the Buyer's Solicitors shall be borne
by the buyer; and
(ii) to the Sellers' Accountant or the Sellers' Solicitors shall be borne
by the Seller)
13.2 For 90 days following Completion the Sellers shall take such steps as are
reasonably available to them to maintain in good standing all insurance
policies relating to the Business and Assets, details of which are given
in the Disclosure Letter. The Buyer shall be responsible for making new
insurance arrangements for the Business and
<PAGE>
Assets as soon as reasonably practicable after Completion and undertakes
to pay on demand (against evidence thereof) to the Sellers all costs
properly attributable to keeping the said insurance arrangements in force
after Completion.
14. NOTICES
14.1 To be effective all notices consents approvals requests or other
communications relating to this Agreement must be in writing but may be
delivered personally or sent by first class prepaid (airmail if overseas)
recorded delivery post or facsimile (with a confirmation copy sent by
post) to the party to be served at its address as stated in this Agreement
or to that party's facsimile transmission number at that address or as
notified from time to time;
and if to the Buyer to:-
Take Two Interactive Software Europe Limited
Hogarth House
29-31 Sheet Street
Windsor
Berkshire
SL4 1BY
For the attention of: Kelly Sumner (with a copy to the Buyer's Solicitors)
and if to the Sellers Parties to the respective addresses set out at the
beginning of this Agreement.
14.2 A communication will be deemed to have been served as follows:-
14.2.1 if personally delivered or by overnight mail at the time of
delivery;
14.2.2 if posted at the expiration of two days (three days if overseas)
(excluding days which are not Business Days) after the envelope
containing the communication was delivered into the custody of
the postal authorities;
14.2.3 if sent by facsimile at the expiration of one day (excluding a
Business Day) after the facsimile was transmitted.
14.3 In proving service it will be sufficient to prove that the personal
delivery was made or that the envelope containing the communication was
properly addressed as a pre-paid first class (airmail if overseas)
recorded delivery letter or that the facsimile was properly addressed and
sent.
15. ENTIRE AGREEMENT/VARIATION
15.1 This Agreement (together with any Transaction Documents) constitutes the
entire agreement and understanding between the parties and supersedes any
previous agreement, arrangement or understanding between the parties in
relation to the subject matter of this Agreement.
<PAGE>
15.2 No variation of this Agreement shall be effective unless made in writing
and signed by or on behalf of each party.
16. COUNTERPARTS
This Agreement may be executed in any number of counterparts all of which
together shall constitute a single instrument.
17. ANNOUNCEMENTS
Unlessspecifically otherwise agreed in writing or required by law, no
public announcement shall be made in respect of the subject matter of this
Agreement and the parties shall co-operate with respect to any such public
announcement.
18. GENERAL
18.1 The termination of this Agreement for whatever cause shall not prejudice
or affect the rights or remedies of either party against the other in
respect of any antecedent breach of this Agreement and shall not prejudice
the rights or remedies of either party in respect of any sums or sum of
money owed or owing from one party to the other.
18.2 No failure or delay by either party in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof nor shall
any single or partial exercise by either party of any right, power or
privilege preclude any further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided
are cumulative and not exclusive of and are without prejudice to any
rights or remedies available under law or otherwise.
18.3 No breach of any provision of this Agreement shall be waived or discharged
except with the express written consent of the parties.
18.4 If any term or provision in this Agreement shall be held to be illegal or
unenforceable, in whole or in part, under any enactment or rule of law,
such term or provision or part shall to that extent be deemed not to form
part of this Agreement but the enforceability of the remainder of this
Agreement shall not be affected. The parties further agree to replace such
void or unenforceable provision of this Agreement with valid and
enforceable provisions that will achieve, to the greatest extent possible,
the economic, business and other purposes of the illegal or unenforceable
term or provision.
18.5 The parties hereby agree to participate fully in and to use their
respective reasonable endeavours to obtain any necessary clearances and
guidance from the European Commission ("THE COMMISSION") and any other
governmental or other authorities having responsibility from time to time
for the control of mergers and other competition law issues to ensure that
the provisions contained in this Agreement are fully effective and binding
against the parties for the duration provided herein.
18.6 Subject to the express provisions of this Agreement, neither party may
assign the benefit of this Agreement in whole or in part without the prior
written consent of the
<PAGE>
other Provided That the Buyer may upon giving written notice to the
Sellers, assign the benefit of this Agreement to any Connected Company.
For the purposes of this sub-clause "CONNECTED COMPANY" will mean any
Subsidiary Undertaking, Parent Undertaking or Associate of the Buyer or
any Subsidiary Undertaking of such Parent Undertaking or Associate. If
that assignee (or in the case of a series of assignments the ultimate
assignee) ceases to be a Connected Company, the rights held by the
relevant assignee shall lapse unless they are reassigned within 14 days to
the Buyer or any other person or Undertaking at that time a Connected
Company.
18.7 If the Sellers or the Buyer default in the payment when due of any sum
payable under this Agreement or the Deed (whether determined by agreement
or pursuant to an order of the Court or otherwise) the liability of the
Sellers or the Buyer (as the case may be) shall be increased to include
interest on such sum from the date when such payment was due until the
date of actual payment (as well after as before judgment) at a rate per
annum of 2 per cent above the base rate from time to time of National
Westminster Bank Plc. Such interest shall accrue from day to day.
19. GOVERNING LAW AND JURISDICTION
19.1 This Agreement and the Transaction Documents save as expressly stated
otherwise shall be governed by and construed in accordance with English
law and the parties irrevocably submit to the non-exclusive jurisdiction
of the English courts as regards any claim, dispute or matter ensuing in
relation to this Agreement and the Transaction Documents.
19.2 Each of the Sellers and the Buyer hereby irrevocably designate, appoint
and empower (in the case of the Sellers) the Sellers' Solicitors and (in
the case of the Buyer) the Buyer's Solicitors as its agent to receive for
and on its behalf service of process in any legal action, matter or
proceedings with respect to this Agreement service on whom shall be deemed
completed whether or not received by the Sellers or the Buyer as the case
may be. Each party shall inform the other in writing of any change in the
address of its process agents within 28 days. If such process agents cease
to have an address in England, the relevant party irrevocably agrees to
appoint new process agents acceptable to the other party and deliver to it
within 14 days a copy of a written acceptance of appointment by its new
process agents. Nothing contained in this Agreement shall however affect
the right to serve process in any other manner permitted by law or the
right to bring proceedings in any other jurisdiction for the purposes of
the enforcement or execution of any judgment or other settlement in any
other courts.
IN WITNESS of which this Agreement has been duly executed the day and year first
above written.
<PAGE>
SCHEDULE 1
REPRESENTATION WARRANTIES AND UNDERTAKINGS
1. CAPACITY AND AUTHORITY
1.1 Each of the Seller Parties has full power and authority and legal capacity
to enter into and perform this Agreement and/or any other Transaction
Document to which it is a party. This Agreement and the Transaction
Documents constitute or when executed will constitute binding obligations
on each of them enforceable against each in accordance with their terms
and will not give rise to any breach of any agreement or order, judgment
or decree of any court or governmental agency by or to which any Seller
Party is bound.
1.2 The Seller is in all respects duly organised and registered, validly
existing until 31 December 2050 under the laws of Italy and the Seller has
all requisite corporate power to own, lease and operate its assets and to
carry out its business as it is now being conducted, and the said business
has been conducted and is now being conducted in conformity with all
applicable laws.
2. ACCOUNTS AND FINANCE
2.1 The Latest Accounts (including all books and records relevant to them)
were prepared in accordance with [the historical cost convention on the
same basis and adopting] the same accounting principles (whether in
respect of valuation rates of depreciation or otherwise) as the Accounts
for the previous financial year and both they and their preparation accord
with Italian generally accepted accounting principles and all other
applicable statutes and regulations and:-
2.1.1 are true complete and accurate in all respects, set out accurately
and correctly all assets and liabilities (whether actual or
contingent) of the Seller as at the date of the Latest Accounts,
show a true and fair view of the financial position of the Seller at
the date of the Latest Accounts and of the profits and losses of the
Seller for the period ended on the date of the Latest Accounts are
not affected by any extraordinary or exceptional items; and
2.1.2 contain either full provision or full particulars in notes
(conforming with good accountancy practice) in respect of bad and
doubtful debts and all Liabilities of the Seller as at the date of
the Latest Accounts.
2.2 In the Latest Accounts the Seller's assets were not overvalued nor were
its Liabilities undervalued.
2.3 At the date of the Latest Accounts the value attributed to stock did not
exceed the lower of its direct cost or net realisable value, all
slow-moving stock (being stock held
<PAGE>
for a period in excess of 6 months) redundant or obsolete stock then owned
by the Seller having been written down to nil.
2.4 The rate of depreciation applied in the Latest Accounts in respect of each
fixed asset has been consistently applied over previous accounting periods
of the Seller consistently applied after the date of this Agreement will
be adequate to write down the value of such asset to its net realisable
value at a time not later than the expiration of its useful working life.
2.5 The turnover, profits and losses of the Seller shown by the Latest
Accounts have not been affected by any unusual, exceptional,
extraordinary, non-recurring or short-term item or by any other matter
which has rendered such turnover, profits or losses unusually or
artificially high or low.
2.6 The Seller has maintained its books and records accurately and in
accordance with generally accepted accounting principles and standards and
such books and records accurately reflect the Seller's current physical
stock debtors and creditors the levels of all of which do not materially
differ from the Seller's customary levels at this stage in its trading
year and are sufficient but not excessive for the normal requirements of
the Business and having regard to current orders and to orders reasonably
anticipated.
2.7 The Seller is in possession of all books, records, papers, deeds and
documents relating to its business, assets and liabilities and does not
have any of its records, systems, controls, data or information recorded,
stored, maintained, operated or otherwise wholly or partly dependent on or
held by any means which (including all means or access thereto and
therefrom) are not under the exclusive ownership and direct control of the
Seller.
2.8 The Seller has no amounts outstanding under all loan, guarantee,
acceptance and other borrowing facilities and arrangements (including,
without limitation, money raised by acceptances or debt factoring) and no
outstanding foreign exchange commitments or exposures. The Seller has not,
and will not by virtue of any aspect of the transaction hereby
contemplated, become bound or liable to be called upon to pay or repay
prematurely any indebtedness or to pay or discharge any obligation under
any guarantee, indemnity, surety, or security arrangement nor has the
Seller failed to pay or repay any indebtedness or to meet any such
obligation in full on the due date.
2.9 No loan made to the Seller is repayable now nor has the Seller received
any notice requiring repayment of any loan or which may result in any
indebtedness becoming due prior to its intended maturity date nor do any
circumstances exist which may result in the service of any such notice.
3. EVENTS SINCE THE LATEST ACCOUNTS
Since the date of the Latest Accounts there has been no adverse or
material change in the prospects or financial or trading position of the
Seller or the nature and scope of the Business or the net realisable value
of its assets or its gross and net profit margins and the Seller has not:-
<PAGE>
3.1 entered into or incurred or assumed any contract or Liability of a
material or unusual nature or which is not in the ordinary course of
trading consistent with past practice or pursuant to which the Seller is
required to make a payment in excess of US$5,000 or periodic payments
which involved or may involve total annual expenditure in excess of
US$5,000 per contract or commitment (or series or related associated
contracts and or commitments);
3.2 given any guarantee, indemnity, surety or security;
3.3 lent any amount to any person or entity, other than advances for travel
and expenses which are incurred in the ordinary course of business
consistent with past practice, not material in amount and documented by
receipts for the claimed amounts;
3.4 terminated or amended any agreement, arrangement or understanding or
waived or released any right or claim of material value;
3.5 failed to perform in accordance with their terms all contracts and orders
and (subject to any specific restrictions herein contained) discontinued
obtaining new contracts and orders in the ordinary and proper course of
trading;
3.6 let, licensed, exchanged, sold, assigned or transferred or agreed to do
any of the foregoing or otherwise part with possession or ownership or
created any Security Interest in respect of the whole or any part of its
business or undertaking or the Properties, any Intellectual Property or
other intangible asset or any material part of its assets or any material
asset or (other than in the ordinary course of trading consistent with
past practice) disposed of any of its assets;
3.7 done or omitted to do anything which might jeopardise or diminish any of
the assets, goodwill or customer list of the or the value of the Business;
3.8 entered into any unusual or imprudent foreign exchange commitment or
arrangement or failed to enter into arrangements to hedge any foreign
currency exposures where it would have been prudent to do so;
3.9 declared, set aside, or paid any dividend or made any distribution;
3.10 paid or accrued or become liable to pay any admissions, or accounting,
management and consultancy or other such fees to or entered into any
transaction with or for the benefit of the Sellers or any of their
Associates;
3.11 departed from conducting its business in its ordinary course and in
consultation with the Buyer;
3.12 entered into any transaction with or for the benefit of any of its
directors, the Seller Parties or of any Associate of any of the foregoing;
3.13 failed to keep proper accounting records or make therein true and complete
entries of all its dealings and transactions or changed its accounting
methods;
<PAGE>
3.14 entered into any borrowing, factoring or other financing or any lending
commitments being in each case commitments which are outside the ordinary
course of trading and are not material to the financial condition of any
of the Companies;
3.15 failed to pay off creditors on a timely basis;
3.16 paid or made (or made any oral or written commitments or representation to
pay or make) any bonus, increased or special salary, remuneration,
benefits or gratuitous payment to any director, officer, employee or
consultant or entered into or varied the terms of any employment,
consulting agency, agreement for personal services, compensation or
severance agreement or arrangement with any such person, or paid any
severance or termination pay.
3.17 failed to maintain in good working condition and repair, subject only to
ordinary wear and tear or suffered the repossession by the owner under any
hire purchase leasing rental or similar agreement of any of the plant and
machinery fixtures fittings equipment vehicles and other assets
represented in the Latest Accounts or subsequently acquired by the Seller;
3.18 ceased to trade with any substantial or important customer of or supplier
to the Seller or received notice of termination;
3.19 so far as the Sellers are aware, incurred any bad or doubtful debt or
learned of any circumstances making bad or doubtful any previously
incurred debt;
3.20 received any notice of:
(i) any adverse price or other changes in trading terms with any
customer and no such change is to the knowledge of the Seller
intended or likely;
(ii) the termination, or proposed or intended termination, of or changes
or desired changes to the terms of any of the Material Contracts;
3.21 issued or sold any shares of any class or any other of its securities, or
issued or created any warrants, obligations, subscriptions, options,
convertible securities or other commitments to issue shares, or accelerate
the vesting of any outstanding security;
3.22 split or combined the outstanding authorised or issued share capital of
any class or entered into any recapitalisation or agreement affecting the
number or rights of outstanding shares of any class affecting any other of
its securities;
3.23 merged, consolidated or reorganised with, or acquired any entity;
3.24 amended its Memorandum and Articles of Association;
3.25 passed any resolution in general meeting other than resolutions relating
to the routine business of annual general meetings;
3.26 agreed to any assessment by any tax authority;
<PAGE>
3.27 changed any insurance coverage or issued any certificates of insurance;
3.28 directly or indirectly redeemed, purchased or otherwise acquired or
committed to acquire any shares or other securities or other ownership
interest of any party; or
3.29 agreed to do, or entered into negotiations with respect to, any of the
things described in the preceding sub-paragraphs.
4. COMMITMENTS
4.1 There is not outstanding any option, right to acquire, right of
pre-emption, Security Interest, deposit by way of security, set off,
counterclaim, or other security, encumbrance or equity on the whole or any
part of the Seller's undertaking goodwill uncalled capital properties or
assets nor is the Seller a party to or subject to any agreement
arrangement or commitment to give or create any such thing.
4.2 The amounts borrowed by the Seller from its bankers do not exceed any of
its overdraft facilities and the total amount borrowed by the Seller (from
whatever source) does not exceed any limitation on its borrowing powers
whether contained in the Articles of Association of the Seller or in any
debenture or loan stock deed or other deed document or agreement executed
by the Seller or on its behalf or to which it is subject.
4.3 The Seller does not have any outstanding capital commitments nor has it
entered into any leasing or hire purchase or similar commitment involving
any asset with a capital value in excess of US$5,000.
4.4 Except as fully provided or reserved for in the Latest Accounts no sum is
owed by the Seller to its auditors solicitors or other professional
advisers.
4.5 The Seller has paid its creditors within the times agreed with them and
there are no debts owing by the Seller which have been due for more than
four weeks.
5. LITIGATION
5.1 The Seller is not in default under any agreement to which it is a party or
in respect of any other obligation binding upon it and it is not engaged
(whether as plaintiff defendant or otherwise) in any litigation (whether
civil or criminal), arbitration, tribunal inquiry or other proceedings or
dispute and none of the foregoing is or are pending or threatened either
by or against the Seller nor are there any facts or circumstances which
may lead to any of the foregoing or to any proceedings against any
director or employee of the Seller in respect of any act or default for
which the Seller might be vicariously liable.
5.2 No governmental or other investigation or inquiry is in progress or
threatened in respect of the Seller or its business and (so far as the
Seller Parties are aware) there are no circumstances likely to lead to any
of the same.
<PAGE>
5.3 Details of all claims, complaints or other correspondence which might have
a material effect on the Business have been disclosed to the Buyer and are
referred to in the Buyer's Report.
6. ASSETS
6.1 Ownership of Assets
6.1.1 The Seller is the sole legal and beneficial owner of and has good
and marketable title to the Assets and the Assets comprise all the
assets used in, or used in the carrying on of, the Business
(including, without limitation, all the assets which are accounted
for or referred to in the Latest Accounts) and all the Assets are in
the Seller's possession and under its control.
6.1.2 None of the Assets is subject to and there is no agreement or
commitment to give or create in respect of any of the Assets any
Security Interest.
6.1.3 None of the Assets has been purchased on terms that property does
not pass to the Seller until full payment is made by it to the
supplier.
6.1.4 There has been no exercise purported exercise or claim for any
Security Interest over any of the Assets and there is no dispute
directly or indirectly relating to any of the Assets.
6.2 Assets sufficient for the Business
6.2.1 The Assets comprise all the business of the Business and all assets
used in the Business since 1 January 1999 and which are necessary
for the continuation of the Business as carried on since that date
and as it is expected to be conducted following Completion.
6.2.2 The stock is at its normal level and is sufficient for the normal
requirements of the Business.
6.2.3 The work-in-progress is at its normal level having regard to the
operation of the Business in the ordinary course and current orders
and to orders reasonably anticipated from customers of the Seller.
6.2.4 The Seller Parties do not use, own or have any interest in any of
the Assets.
6.3 Stock
6.3.1 The Stock is of satisfactory quality, in good and marketable
condition, and saleable at normal selling prices in the ordinary
course of business.
6.3.2 None of the Stock is obsolete unusable unmarketable or inappropriate
or of limited value in relation to the Business and the Stock does
not include any stock relating to contracts which have expired or
terminated.
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6.3.3 The stocks of raw materials packaging materials and finished goods
included in the Stock are not excessive and are sufficient in
relation to the current trading and normal requirements of the
Business.
6.3.4 There has been no material change in the levels of stocks since the
date of the Latest Accounts.
6.4 Assets: General
6.4.1 There is no property, service or benefit of any description which
was available at the date of the Latest Accounts or has subsequently
become available to the Seller which will not be available to the
Buyer on the same terms after Completion.
6.4.2 All material details of the maintenance and servicing histories and
records of the computer system and software used by the Seller have
been supplied to the Buyer and such computer system and software has
been properly licensed used maintained and serviced in accordance
with the manufacturer's instructions, has not been susceptible to
breakdown malfunction or failure.
6.4.3 All computer software used by the Seller is governed by valid
licence agreements which will continue in full force and effect for
an indefinite period following Completion.
6.4.4 The Seller has in place adequate back up arrangements to ensure
continuance of its business without loss of customers, data and
without additional expense, in the event of computer hardware or
software breakdown, malfunction or in the event of power failure.
6.4.5 All documents which in any way affect the right title or interest of
the Seller in or to any of the Assets and which attract stamp duty
(or would do so if brought into the United Kingdom) or require to be
stamped with a particular stamp denoting that no duty is chargeable
or that the document has been produced to one appropriate authority
have been duly stamped within the requisite period for stamping.
6.5 Outstanding offers
No offer tender or the like relating to the Seller which is capable of
being converted into an obligation of the Seller by an acceptance or other
act of some other person firm or corporation is outstanding and details of
any potential contractual arrangements which are currently being
negotiated or discussed have been disclosed to the Buyer and are referred
to in the Buyer's Report.
6.6 Defective products and service liabilities
The Seller has not manufactured or sold stock which was or is or will
become in any material respect faulty or defective or which did not or
does not comply in any material
<PAGE>
respect with any warranties or representations expressly or impliedly made
by the Seller or with all applicable regulations standards and
requirements;
7. INTELLECTUAL PROPERTY RIGHTS
7.1 All Intellectual Property Rights relating to or used in connection with
the Business (the "BUSINESS INTELLECTUAL PROPERTY") are legally and
beneficially owned by the Seller free from any Security Interests.
7.2 All Business Intellectual Property is valid, subsisting and enforceable,
there is in full force and effect any registrations of Intellectual
Property Rights required to enable the Seller to exercise fully such
rights, and, in the case of Business Intellectual Property which is
registered, all renewal fees in respect thereof have been duly paid.
7.3 Nothing has been done by the Seller or by any other person whereby any of
the Business Intellectual Property has ceased or might cease to be valid
and enforceable or whereby any person is or will be able to seek
cancellation, rectification or any similar remedy in relation to any such
rights.
7.4 There have been no material claims, proceedings or actions and there are
no proceedings or actions pending or threatened and to the best of the
knowledge, information and belief of the Seller Parties none will arise,
impugning the title, validity or enforceability of any of the Business
Intellectual Property or claiming any right or interest thereon.
7.5 There have been and there are no infringements of any of the Business
Intellectual Property and none is threatened.
7.6 The Seller is not obliged to grant or enter into any licence, sub-licence,
assignment, consent or any other right in respect of the Business
Intellectual Property. The Intellectual Property Rights not owned by the
Business Seller but used by it in relation to the Business are used under
licences which are currently in force and no claims have been made in
respect of any such use nor are any applications pending which if pursued
or granted might be material in relation to such use.
7.7 The Business and the activities, processes, methods, products or services
now or at any time within the last six years employed in, manufactured by,
used in, dealt in, or supplied by the Seller do not now nor did they at
any time within the last six years infringe any Intellectual Property
Rights of any third party; and will not, to the best of the knowledge,
information and belief of the Seller Parties, give rise to any claim for
infringement, misuse, payment or otherwise.
7.8 The Seller is not, nor has at any time been, in breach of any agreement
relating to the use by the Seller of any Business Intellectual Property
owned by a third party and no other party to any such agreement is, or has
at any time, been in breach thereof.
7.9 All know-how, trade secrets, price or customer or supplier lists,
formulae, confidential information or secret processes relating to or used
in or in connection with the
<PAGE>
Business (the "BUSINESS KNOW-HOW") is sufficiently documented to enable
the Buyer to acquire its full benefit.
7.10 The Seller has taken all reasonable steps to preserve the confidentiality
of the Business Know-how and is not obliged to disclose any confidential
Business Know-how to any third party except in the ordinary or usual
course of the business of the Seller and then on condition that the
disclosure is to be treated as being of a confidential nature. The Seller
has not (except in the ordinary and normal course of business) disclosed
or permitted to be disclosed or undertaken or arranged to disclose to any
person other than the Buyer any of the Business Know-how.
7.11 There are no confidentiality or other agreements in favour of the third
parties which restrict the free use or disclosure of Business Know-how by
the Seller.
7.12 After Completion the Buyer will be entitled to use all the Intellectual
Property Rights that were used by the Seller prior to Completion.
7.13 The goods and services supplied in the course of, and the processes
employed in, the business of the Seller are free of inherent defects of
design (whether known or not).
7.14 The Business Intellectual Property and all such licences and agreements
are in full force and effect, no notice having been given on either side
to terminate them, the obligations of all parties having been fully
complied with, and no disputes having arisen or being foreseeable in
respect thereof.
7.15 No current or prior officers, employees, consultants or other personnel
engaged by the Seller claim any ownership interest or interest as licensee
in relation to any Business Intellectual Property.
8. TRADING
8.1 The trade of the Seller comprises exclusively the Business. The Seller has
no obligations or liabilities (actual, accrued or contingent) other than
those directly related to, and incurred in the ordinary course of such
trade.
8.2 A true copy of the standard terms and conditions upon which the Seller
sells and supplies products and after sales services has been disclosed to
the Buyer. Such terms and conditions apply to and govern all agreements or
arrangements for sale and supply to which the Seller is or has offered to
become party. Save as set out in such terms or as implied by law and not
capable of exclusion, neither the Seller nor any other person on its
behalf has given or made expressly or impliedly any guarantee, indemnity,
warranty or representation in respect of any goods sold or services
supplied or agreed to be sold or supplied by the Seller.
8.3 Save as set out in the Buyer's Report not more than 5 per cent of the
Seller's sales since the Date of the Latest Accounts have been made to any
single customer of the Seller (and for the purposes of this paragraph
purchases from and supplies to different entities in the same group of
companies shall be aggregated and treated as purchases from or supplies to
the same person).
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8.4 No significant customer of the Seller has in the past twelve months ceased
or indicated an intention to cease to contract with the Seller or to
substantially reduce its business with the Seller.
8.5 The Seller has disclosed details of all arrangements pursuant to which the
Seller makes sales on a "sale-or-return" basis and details of the basis
and frequency of "returns" customarily accepted by the Seller.
8.6 The maximum aggregate invoice value (before VAT or any other similar tax)
of all returns made by customers after the Latest Accounts Date in respect
of sales made by the Seller on or prior to such Date and in respect of
which customers are or will be entitled to credit or reimbursement shall
not exceed the amount to be provided for such returns in the Latest
Accounts.
8.7 To the best of the knowledge and belief of the Seller Parties:-
8.7.1 none of the Seller's present customers or suppliers will within
twelve months from today's date cease to be a customer or supplier
(as the case may be) of the Business or materially reduce his or its
purchases or supplies from or to the Business; and
8.7.2 neither the acquisition of the Business by the Buyer the disposal of
the Business by the Seller nor any change in the officers carrying
out the Business will directly or indirectly cause the Buyer to lose
the benefit of any contract right or privilege which the Business
now enjoys nor will it cause any other officers or any senior
employees to leave or resign.
8.8 The Seller has not received any notice from any supplier of goods or
services informing the Seller that the terms of its supply including (but
without limitation) the period allowed for payment are to be revised.
9. CONTRACTS
9.1 In relation to the Material Contracts:
9.1.1 the same are reduced to writing, in the name of or validly legally
assigned to the Seller, are not unauthorised, invalid or
unenforceable and (where necessary) have been appropriately
registered;
9.1.2 neither the Seller nor (to the best of the Seller Parties' knowledge
information and belief) any third party is in breach of any of the
same;
9.1.3 a list of the same is included in the Disclosure Letter and true and
complete copies of all documents setting out the terms thereof have
been delivered to the Buyer.
9.2 The Material Contracts comprise all the agreements or arrangements entered
into by the Seller which are:
<PAGE>
9.2.1 with customers whose purchases from the Seller represent more than 5
per cent of the Seller's aggregate turnover for the financial year
prior to the date of the Latest Accounts;
9.2.2 material in the context of the business of the Seller;
9.2.3 with any Trade Union;
9.2.4 continuing for the future purchase, sale or manufacture of products,
material, supplies, equipment or services requiring payment to or
from the Seller in an amount in excess of US$5,000 per annum which
is not terminable on 30 days' or less notice without cost or other
Liability at or at any time after Completion or in which the Seller
has granted or received manufacturing rights, most favoured nations
pricing provisions or exclusive marketing rights relating to any
product, group of products or territory;
9.2.5 a joint venture which has involved or is reasonably expected to
involve a sharing of profits or losses in excess of US$5,000 per
annum with any other party or consortium or partnership or agency
commission franchise or distributorship;
9.2.6 for the employment of any officer, employee or consultant, severance
agreement, non-competition agreement, non-disclosure agreement,
agreement requiring a change of control or parachute payments, or
any other type of contract or understanding with any officer,
employee or consultant which is not immediately terminable without
cost or other Liability;
9.2.7 a debenture, mortgage, promissory note, loan agreement, guarantee or
other agreement or commitment for the borrowing of money, for a line
of credit or for a leasing transaction of a type required to be
capitalised in accordance with Italian generally accepted accounting
principles;
9.2.8 a lease or other agreement under which the Seller is lessee of or
holds or operates any items of tangible personal property or real
property owned by any third party and under which payments to such
third party exceed US$5,000 per annum;
9.2.9 for the sale of any assets, properties or rights having a value in
excess of US$5,000;
9.2.10limiting or excluding its right to do business or to compete in any
area or in any field or with any person firm or company or
containing a grant to or by the Seller of any sole or exclusive or
limited (whether by reference to territory, product, customer or
supplier, type or otherwise) right;
9.2.11 to govern or exploit the Business Intellectual Property; or
9.2.12between the Seller and any of the Seller Parties or their
Associates.
<PAGE>
9.3 The Seller is not a party or subject to or under a Liability in respect of
nor has it undertaken (by assignment or otherwise) or made any offer or
tender to enter into any:-
9.3.1 contract of an onerous or long-term nature or to any contract which
is known to be or which may become unprofitable or which cannot
readily be fulfilled or performed by the Seller on time and without
undue or unusual expenditure of money or effort by the Seller or to
any contract or obligation outside the ordinary course of the
Business;
9.3.2 agreement relating to delivery of products or merchandise other than
in the ordinary course of trading;
9.3.3 guarantee or agreement for indemnity or for suretyship or any bond
or any comfort letter or similar arrangement; or
9.3.4 agreement the terms of which include any provision under which such
agreement may by reason of any change in the registered or
beneficial ownership of the shares in its capital be terminated or
become terminable by any party or be subject to any change in the
terms thereof as at today's date;
9.3.5 agreement for the provision of management or services to the Seller
which is not terminable by the Seller on less than 3 months' notice
without compensation; or
9.3.6 agreement, arrangement or understanding which in any respect is
unusual having regard to the usual practice of the Seller or other
persons carrying on businesses similar to the Business.
9.4 Except for those made in the ordinary course of the Seller's trading no
offer tender or similar thing given or made by the Seller on or before
today's date hereof and still outstanding is capable of giving rise to a
contract merely by a unilateral act of a third party.
10. INSURANCE
10.1 All of the stock assets and undertaking of and in the possession of the
Seller or which are used by the Seller in its business and which are of an
insurable nature are insured for their full replacement values against all
risks including (but without limitation) loss of profit and consequential
loss and all insurance required by statute and such insurance policies as
are normal and proper in relation to the business of the Seller have been
effected and maintained with an insurance office of good standing and
repute authorised to carry on insurance business of the relevant type and
any premiums due in respect of such insurances have been paid.
10.2 All insurances are currently in full force and effect and nothing has been
done or omitted or suffered to be done which may make any policy of
insurance void or voidable. The Buyer's Report sets out details of such
insurance policies including the
<PAGE>
effective date and amount of cover and true copies of such policies have
been disclosed to the Buyer. The Seller has complied with all conditions
attached to its insurance policies and there is no claim outstanding
pending or threatened by or against the Seller nor to the best of the
Seller Parties' knowledge and belief are there any circumstances which may
give rise to any claim in respect of product liability or of any accident
or injury (whether to property or to person) which is not fully covered by
insurance.
11. EMPLOYEES, EMPLOYMENT AND LABOUR RELATIONS
11.1 The following details are fully given in the Buyer's Report:
11.1.1 In the case of all employees of the Seller their names jobs and
short details of their terms of employment including years of
continuous service for redundancy purposes.
11.1.2 In the case of officers of the Seller, key personnel and
consultants engaged by the Seller the above details and full
details details of their terms of employment or engagement.
details of any benefit received by any employee otherwise than in cash.
11.2 None of the officers employees or consultants is contemplating leaving the
service of the Seller and none of them are (or so far as the Seller
Parties are aware will become) employees of (or engaged to provide
services to) any Seller Party or any Associate of any Seller Party.
11.3 The Seller has complied with all statutory provisions and Codes of
Practice concerning or affecting employment and working conditions and
there are in existence no circumstances which might give rise to a claim
against the Seller or Buyer under any such legislation.
11.4 The Seller is not liable (otherwise than contingently in respect of
persons currently in its employment to whom no notice of termination of
employment has been given) to make any payment to any person under any of
the statutory provisions referred to in the previous paragraph nor are
there any circumstances which would or might render the Seller liable to
make any such payment.
11.5 Any contract of employment with any officer or employee to which the
Seller is a party can be terminated by the Seller without damages or
compensation (other than that payable by statute) by giving at any time
only the minimum period of notice required by statute applicable to that
contract.
11.6 The Seller is not a party to any bargaining or union membership agreement
with any Trade Union or any other group arrangement which affects the
rights of all or any of its employees nor has any application or claim for
any such agreement or arrangement been made; no Trade Union is recognised
by the Seller for any collective bargaining purposes in respect of any of
its employees.
<PAGE>
11.7 The Seller is not engaged in any trade dispute and no strike lock out or
other form of industrial action is pending or threatened by or against the
Seller nor to the best of the knowledge and belief of the Seller Parties
is there anything likely to give rise to a dispute with any employee or
union.
11.8 No increase in the wages or salary or any improvement in the benefits of
any officer employee or consultant of the Seller or any section or class
of employees has been agreed or paid or made since the date of the Latest
Accounts nor has any negotiation for any such increase or improvement or
any demand therefor been entered into or made.
11.9 There is no scheme in operation or arrangement made by or in relation to
the Seller whereunder any person is entitled to commission or remuneration
of any sort calculated by reference to the whole or any part of the
turnover profits sales or any other results of the Seller nor is or at any
time has there been in force any share option share incentive or profit
sharing scheme operated by the Seller or in which any employee of the
Seller participates or participated in respect of his employment with the
Seller .
11.10 The Seller is not liable to pay any industrial training levy.
11.11 There are no retirement benefit schemes in operation by or in relation to
the Seller nor does the Seller contribute to any other scheme which will
provide any of its directors or employees or their respective dependants
with pensions annuities or lump sum payments upon retirement or earlier
death or otherwise and the Seller is not under any obligation (whether
legally binding or otherwise) to make any payment or pay any pension
gratuity superannuation allowance or the like to any of its present or
past officers or employees or their dependants.
12. ACCURACY OF INFORMATION AND DISCLOSURE
12.1 All statements of fact or information set out in the recitals and
schedules to this Agreement and the Buyer's Report are true, complete and
accurate in all respects.
12.2 All statements of fact and information given by the Seller Parties and any
directors, officers, auditors, financial advisers, solicitors or other
officials of the Seller Parties to any of the directors officers or
professional advisers of the Buyer after the Buyer indicated its interest
in acquiring the Seller or its Business were when given and insofar as
they or any of them have not been superseded altered or varied by matters
made known in writing to the Buyer or its professional advisers on or
prior to today's date hereof are now true complete and accurate in all
respects and there is no fact or matter not disclosed in writing to the
Buyer or any of its advisers which renders any such statements or
information untrue or misleading because of any omission or ambiguity or
for any other reason.
12.3 All statements of opinion including (but without prejudice to the
foregoing) all estimates, forecasts and/or projections given to any of the
directors officers or professional advisers of the Buyer were given in
good faith and based on reasonable assumptions and are best estimates of
the likely outcome and to the best of the
<PAGE>
knowledge and belief of the Seller Parties and there is no reason why any
such opinion should now be changed.
12.4 There has been disclosed to the Buyer and incorporated in the Buyer's
Report all information and circumstances relating to the Business which is
or could on reasonable inquiry be known to the Seller Parties and which:-
12.4.1 may be material for a buyer of the Business for value to know; or
12.4.2 might adversely affect the present or future value of the Business;
or
12.4.3 might affect the willingness of the Buyer to purchase the Business
or to purchase them for the consideration or upon the terms set out
in this Agreement.
13. SELLERS' OTHER INTERESTS AND ARMS LENGTH DEALINGS
13.1 No contract or arrangement was entered into other than in the usual course
of the Business and by way of bargain at arm's length. 13.2 Save for
ownership of the Seller, neither PGV,. MEC nor any of their respective
Associates has any interest, direct or indirect, in any business which
competes or is likely to compete with the Business;
14. STATUTORY REQUIREMENTS AND GENERAL MATTERS
14.1 The Seller is and has been in connection with the Business in compliance
with all laws, regulations and orders applicable to it, its business and
operations and all of its assets and properties and has obtained and kept
up-to-date all licences and consents needed to own or use its assets or to
enable it to carry on its business properly and in accordance with the
laws of the countries or states where it is or has been engaged in
business and there are not any circumstances which may lead to any loss or
refusal to renew any such licence or consent on terms no less advantageous
than the terms of the licences and consents currently in force.
14.2 Neither the Seller nor any of its officers has committed any criminal
illegal tortious or unlawful act (except traffic offences not being
indictable offences in the case of officers) or committed any breach of
contract or committed or omitted to do any act or thing which could give
rise to the Seller being liable to any fine, penalty, sanction, loss or
similar event.
14.3 The Seller has not had any subsidiary and it does not have nor has it had
any branch or permanent establishment or place of business or any
substantial capital assets outside its country of incorporation nor is it
or has it been:-
14.3.1 a subsidiary of any other company; nor
14.3.2the holder or beneficial owner of 5 per cent or more of any class
of share or other capital of any company or corporation whether
limited or unlimited nor has it agreed to acquire any such interest;
nor
<PAGE>
14.3.3 a member of any partnerships unincorporated company or association.
14.4 The Seller has not given any power of attorney or other authority (express
implied or ostensible) which remains outstanding or effective.
14.5 The Seller is not a party or subject to any contract or arrangement which
is invalid or which is voidable or can be rescinded or repudiated by any
party (including the Seller) and the Seller has not received or given
notice of any intention to terminate any agreement or arrangement or
repudiated or disclaimed any transaction.
14.6 The Seller has within the last six years conducted its business and
corporate affairs in all respects in accordance with all relevant laws.
15. COMPETITION
15.1 The Seller is not and has not been a party to and is not and has not been
concerned in any agreement or arrangement:-
15.1.1which has been notified to the Commission of the European
Communities or EFTA Surveillance Authority for an exemption under
Article 81(3) of the Treaty of Rome or Article 53(3) of the
Agreement on the European Economic Area;
15.1.2for which an application has been made to the Commission of the
European Communities or EFTA Surveillance Authority for a negative
clearance under Article 81 or 82 of the Treaty of Rome or Article 53
or 54 of the Agreement on the European Economic Area;
15.1.3 which is prohibited by a competition law in any jurisdiction; or
15.1.4is registerable, unenforceable or void (whether in whole or in
part) or renders it liable to civil, criminal or administrative
proceedings by virtue of any anti-trust or similar legislation in
any jurisdiction.
16. THE PROPERTIES
16.1 The Property comprise all the land and premises occupied or otherwise used
by the Seller in connection with the Business.
16.2 The Property is are used by the Company in connection with the Business
and the terms of the Lease permit such occupation and use.
16.3 The information contained in the Buyer's Report relating to the Property
is true and accurate in all respects and does not omit reference to any
document relevant to the basis upon which the Seller occupies the
Property.
16.4 The Property is free from any mortgage debenture or charge (whether
specific or floating legal or equitable) rent-charge lien or other
encumbrance securing the
<PAGE>
repayment of monies or other obligation or liability whether of the Seller
or any other party.
16.5 The Property is not subject to any liability for the payment of any
outgoings of a recurring nature.
16.6 There is no person who is in occupation or who has or claims any rights or
easements of any kind in respect of the Property adversely to the interest
right or title of the Seller.
16.7 There are no disputes relating to the Property.
16.8 The Seller has paid all outgoings (including but not limited to rent and
service charges) relating to the Property it occupies in accordance with
its contractual obligations and is not in breach of any of the terms of
the relevant Lease.
16.9 All licences consents and approvals required from the lessor under the
Lease have been obtained and complied with.
16.10 The Property is not subject to any third party interests including but not
limited to any tenancies (which expression includes subtenancies).
16.11 The Seller has at all times complied with all applicable governing
environmental legislation and there is nothing in on over or under the
Property the presence existence or condition of which constitutes a breach
of such environmental legislation nor is any manufacturing storage
generation servicing treatment disposal or other process carried on at the
Properties in such a way as to amount to a breach of the same.
16.12 The Property is insured for its full reinstatement value against the usual
comprehensive risks (including acts of terrorism) and for not less than
three years' loss of rent and against third party and public liability
claims to an adequate extent and all premiums payable in respect of
insurance policies relating to the Property which have become due have
been duly paid and no circumstances have arisen which would vitiate or
permit the insurers to avoid such policies
16.13 There is no other matter of which any of the Seller Parties are or ought
to be aware on reasonable enquiry and which adversely affects the value of
the Property or casts any doubt on the right or title of the Seller
thereto which should be revealed to the Buyer.
17. TAXES
With respect to the laws and regulations and their interpretation, the
Company has duly kept its fiscal records, has fulfilled its tax and fiscal
obligations and acted in compliance with all national and local tax and
fiscal laws and regulations and, without prejudice to the generality of
the foregoing, in particular:
(a) the Company has correctly, completely and accurately filed all tax
statements and, when acting as a tax representative of a third
party, those of the third parties concerned, and has duly filed the
V.A.T. returns and all relevant tax returns and
<PAGE>
other documents or reports in respect of taxes or other fiscal
accomplishments which are required to be filed by the Company
according to the applicable laws and regulations;
(b) the Company has duly carried out the withholdings and paid the
respective amounts according to the applicable laws and regulations;
(c) the Company has paid, within the time and in the manner prescribed
by the applicable laws and regulations, all taxes and other fiscal
obligations which it was required to pay in accordance with such
laws and regulations;
(d) as of the date of this Agreement the Company has no debt with the
tax administrations for which an adequate allocation is not already
provided in the Company records and all the allocations needed to
pay all the sums due by the Company for taxes and other fiscal
obligations which the Company has to pay and for any other deferred
or conditional tax and fiscal obligation appear in the Latest
Accounts and in the Company's records;
(e) there are no tax or other fiscal disputes pending before the
tributary commissions, financial officers, judicial authorities or
any other competent body nor has the Company been notified of any
assessment or dispute for additional taxes or other fiscal
obligations, including, but not limited to, additional taxes or
charges, interest or penalties, nor have any reports or minutes of
fiscal inspections regarding taxes or fiscal accomplishments been
drawn up;
(f) the fiscal credits of the Company posted in the Latest Accounts are
true and existing.
<PAGE>
SCHEDULE 2
ACTION PENDING COMPLETION
The Seller shall:
1. operate the Business in the usual way so as to maintain the Business as a
going concern;
2. not acquire or dispose of, or agree to acquire or dispose of, an asset
except in the usual course of the Business or assume or incur, or agree to
assume or incur, a liability, obligation, or expense (actual or
contingent) except in the usual course of the Business;
3. not make, or agree to make, capital expenditure in connection with the
Business exceeding in total (pound)10,000 (or its equivalent at the time)
or incur, or agree to incur, a commitment or commitments involving capital
expenditure exceeding in total (pound)10,000 (or its equivalent at the
time);
4. not create, or agree to create, an Encumbrance over the Property or
another of the Assets or redeem, or agree to redeem, an existing
Encumbrance over the Property or another of the Assets;
5. continue each of the insurance policies (the "POLICIES") relating to the
Business and not do or omit to do anything which would make any of the
Policies void or voidable or might result in an increase in the premium
payable under any of the Policies or prejudice the ability to effect
equivalent insurance in the future;
6. not in connection with the Business or any of the Assets enter into any
long term, onerous or unusual agreement, arrangement or obligation;
7. not amend or terminate an agreement, arrangement or obligation to which it
is a party in connection with the Business or any of the Assets;
8. only employ a person in the Business if it first obtains the Buyer's
written consent (not to be unreasonably withheld or delayed) and only for
the purpose of filling a vacancy which has arisen in the Business before
Completion;
9. not amend the terms of employment or engagement of any of the Employees
(except in the usual course of the Business) or provide, or agree to
provide, a gratuitous payment or benefit to any of the Employees (or any
of their dependants) or terminate the employment or engagement of, any of
the Employees;
10. not give, or agree to give, in connection with the Business, a guarantee,
indemnity or other agreement to secure, or incur financial or other
obligations with respect to, another person's obligations;
<PAGE>
11. not start litigation or arbitration proceedings in connection with the
Business or any of the Assets;
12. except in the usual course of the Business, not compromise, settle,
release, discharge or compound litigation or arbitration proceedings or a
liability, claim, action, demand or dispute, or waive a right in relation
to litigation or arbitration proceedings in connection with the Business
or any of the Assets;
13. conduct the Business in all material respects in accordance with all
applicable legal and administrative requirements in any jurisdiction;
14. not enter into an agreement, arrangement or obligation (legally
enforceable or not) affecting the Business or any of the Assets in which a
director or former director of the Seller or a person connected with any
of them is interested;
15. not make a payment out of a bank account except if the payment is in the
usual course of the Business and not make payments in the usual course of
the Business which exceed in total (pound)5,000 (or its equivalent at the
time); and
16. co-operate with the Buyer to:
16.1 ensure the efficient continuation of management of the Business
after Completion; and
16.2 to prepare for the introduction of the Buyer's normal working
procedures in readiness for Completion.
<PAGE>
SCHEDULE 3
INTERPRETATION
1. DEFINITIONS
"ACCOUNTS": in relation to any financial year or other specified period of
any company:
(a) the audited balance sheet of the Company (and, where relevant, the
audited consolidated balance sheet of the Company and its Subsidiary
Undertakings as at the Accounts Date in respect of the financial
year; and
(b) the audited profit and loss account of the Company (and, where
relevant, the audited consolidated profit and loss account of the
Company and its Subsidiary Undertakings) in respect of that
financial year,
together with any notes, statements or documents permitted or required by
the Companies Act (or equivalent legislation in the relevant jurisdiction)
to be made thereon or annexed or attached thereto;
"ACCOUNTS DATE": in relation to any financial year of any company, the
last day of that financial year;
"ASSETS": all the property and assets agreed to be sold and purchased
under this Agreement;
"ASSOCIATE":
(a) in respect of an Undertaking ("THE SUBJECT"), any other Undertaking
which is owned or controlled by the Subject or which owns or
controls such Subject or which is owned or controlled by another
Undertaking which owns or controls the Subject; or
(b) in relation to any person, another person which is an "associate" of
the first mentioned company person or body within the meaning of
Section 435 Insolvency Act 1986;
"AUDITORS": the auditors of the Company from time to time;
"BUSINESS": the business of the marketing, sale, licensing and
distribution of interactive entertainment hardware and software products
(including, without limitation, hardware peripherals) operated by the
Seller at the Completion Date under the name C.D. Verte Italia Spa;
"BUSINESS DAY": any day other than a Saturday, a Sunday, or a day on which
banks in London or Italy are authorised by law to close;
<PAGE>
"BUYER'S REPORT": the due diligence report dated 28 June 1999 prepared by
Coopers & Lybrand for the Buyer relating to the business of the Seller;
"CLAIM": a claim by the Buyer under the Warranties provided that, for the
purpose of Clauses 8.1.1 and 8.1.2 only Claim shall mean a claim (whether
in contract, tort or otherwise) by the Buyer under or in relation to the
Warranties;
"COMPANIES ACT": the Companies Act 1985 as amended;
"COMPLETION": Completion of the sale and purchase of the Business and the
Assets as provided by Clause 4 of the Agreement;
"COMPLETION DATE": the date of Completion;
"CONFIDENTIAL INFORMATION": trade secrets and information not publicly
known (including but not limited to formulae, processes, methods,
financial data, customer lists, marketing information, knowledge and know
how) in connection with the Company and the customers, suppliers,
licensors and licensees and the operation of the Company and which are for
the time being confidential to Company;
"CONSENTS": means all necessary licences consents authorisations and
registrations required under Environmental Legislation with regard to the
Properties and/or any activities processes and substances from time to
time on the Properties;
"CONTRACTS": means all the contracts to which the Seller is a party and
which relate to the Business and are unperformed (wholly or partly) at the
Completion Date including, without limitation, supply and distribution
agreements, customer and supply contracts, leases, hire and hire purchase
agreements but excluding employment contracts with the Employees,[the
Leases] and agreements relating to borrowing and "Contract" means any one
of the Contracts;
"THE DATE OF THE LATEST ACCOUNTS": 31 December 1998;
"DISCLOSURE LETTER": there is no Disclosure Letter;
"EFFECTIVE TIME": means close of business on the Business Day before the
date of this Agreement;
"EMPLOYEES": the employees employed in the Business at the Completion
Date;
"ENCUMBRANCE": A mortgage, charge, pledge, lien, option, restriction,
right of first refusal, right of pre-emption, third party right or
interest, any other encumbrance or security interest of any kind, or
another type of preferential arrangement (including, without limitation, a
title transfer or retention arrangement) having similar effect;
"EVENT": any payment, transaction, act or omission in connection with the
business of the Seller of whatever nature, whether or not the Seller is a
party thereto and references to an Event occurring on or before a
particular date shall include an Event deemed to occur or be treated or
regarded as occurring on or before that date
<PAGE>
provided that any reference to an Event occurring on or before Completion
shall include the combined result of two or more Events the first of which
shall have taken place or the commencement of which shall have occurred on
or before Completion and the second or subsequent of which shall have
taken place after Completion but in such case only to the extent that the
first such Event occurring or commencing prior to Completion is outside
the ordinary course of business of the Seller and the second or successive
Event after Completion is inside the ordinary course of business of the
Seller as carried on at Completion;
"FIXED PLANT": means the fixed plant and machinery, and leasehold
improvements at the Property, owned by the Seller and used in connection
with the Business at the Completion Date;
"GOODWILL": the goodwill of the Business and the Buyer's right to use the
names "C.D. Verte Italia" and to represent itself as operating the
Business in succession to the Seller;
"INTELLECTUAL PROPERTY": all patents, trade marks, registered designs,
applications for any of those rights, trade and business names
unregistered trade marks and service marks, copyrights, know how, rights
in designs and inventions, all rights to bring an action for passing off,
all rights to apply for protection in respect of any of the above rights,
and all other intellectual property rights in any jurisdiction and all
legal rights protecting the confidentiality of any information or
materials;
"INTELLECTUAL PROPERTY RIGHTS": all Intellectual Property owned by the
Seller and used in connection with the Business at the Completion Date;
"ITALIAN TRANSFER DOCUMENT": a document effective under Italian law to
transfer the Business and Assets to the Buyer with effect from the date of
Completion;
"LATEST ACCOUNTS": the Accounts of the Seller in relation to the financial
year ending on 31 December 1998;
"LEASE": the lease of a building located in Gallarate (VA) details of
which are set out in the Buyer's Report;
"LIABILITIES": all liabilities, duties, commitments and obligations of
every description, whether deriving from contract, common law, statute or
otherwise, whether present or future, actual or contingent or ascertained
or unascertained and whether owed or incurred severally or jointly or as a
principal or surety;
"MACHINERY": the leased plant, machinery, equipment and other similar
articles owned by the Seller and used in connection with the Business at
the Completion Date;
"MATERIAL CONTRACTS": the agreements or arrangements which are referred to
in the Buyer's Report;
"MOTOR VEHICLES": The motor vehicles owned by the Seller and used in
connection with the Business at the Completion Date;
<PAGE>
"OFFICE EQUIPMENT": the office equipment and furnishings and other similar
articles owned by the Seller and used in connection with the Business at
the Completion Date;
"PERSON": any individual, firm, company or other incorporated or
unincorporated body;
"PROPERTY": the property the subject of the Lease;
"RECORDS": the Seller's books and records relating to the Business
(including, without limitation, all bought and sold ledgers, purchase and
sales day books and purchase and sale invoices;
"SECURITY INTEREST": any interest or equity of any person (including,
without limitation, any right to acquire, option or right of pre-emption)
or any mortgage, charge, pledge, lien or assignment or any other
encumbrance, priority or security interest or arrangement of whatsoever
nature over, affecting or in the relevant property;
"SELLER PARTIES": the Seller, Pietro Giovanni Vago and Maurizio Ezio
Curioni;
"SERVICE ARRANGEMENTS": means any arrangement by which either of the
Executive Seller Parties is engaged to provide his services to the Buyer
whether as a director or as an employee or by means of any other
arrangement;
"STOCK": means the stock of raw materials, partly finished and finished
goods of the Business as at the Completion Date;
"SUBSIDIARY UNDERTAKING": shall be construed in accordance with Section
258 of the Companies Act;
"TRANSACTION DOCUMENT": this Agreement and any other document executed
pursuant to this Agreement;
"UNDERTAKING": a body corporate, partnership or an unincorporated
association situate in any jurisdiction;
"IN WRITING": includes any communication made by letter, cablegram, telex,
facsimile transmission or electronic mail;
"WARRANTIES": the warranties representations and undertakings by the
Sellers set out in Schedule 1 and "WARRANTY" means any of them.
<PAGE>
2. INTERPRETATION
Words and expressions which are defined in the Companies Act and used in
this Agreement will unless the context otherwise requires bear the same
meanings as in that Act. In this Agreement:-
2.1 a reference to a statutory provision will be interpreted as a
reference to that provision as amended or re-enacted from time to
time including any statutory instrument order or governmental
regulation from time to time made or issued pursuant to that
provision and including a reference to any past statutory provision
instrument order or regulation which such provision has amended or
from which it derives as from time to time (whether before or after
the date of this Agreement) amended or re-enacted;
2.2 a reference to a recital, clause or schedule is unless otherwise
specified a reference to the recital, clause or schedule of that
number in or to this Agreement; any reference to a sub-clause is
unless otherwise specified a reference to the sub-clause of that
number in the clause in which the reference is made;
2.3 a document referred to as being in "the agreed terms" will be in the
form of a draft document approved by the parties to this Agreement
and for identification purposes signed or initialled by or on behalf
of the parties hereto on or before the date hereof;
2.4 the clause headings are for ease of reference only and do not affect
interpretation;
2.5 the liability of each of the Seller Parties under or in respect of
this Agreement shall be joint and several and every representation,
warranty, covenant, undertaking, guarantee, indemnity and other
obligation of whatever nature of or undertaken or granted by the
Seller Parties shall be construed as a covenant, undertaking,
guarantee, indemnity and other obligation of each of the Sellers and
in this Agreement the expression "the Seller Parties" shall mean
each of the Seller Parties.
2.6 "to the best of the Sellers' knowledge and belief" "so far as the
Sellers are aware" or any similar expression will mean to the best
of any of the Sellers' knowledge and belief having made (or caused
to have been made) all enquiries which a prudent purchaser would
make and having used their best endeavours to ascertain all relevant
information and to ensure that all information given, referred to or
reflected in any relevant warranty or representation is accurate in
all respects. A matter shall be treated as being within the
knowledge, information or belief of the Seller if such matter is
within the knowledge, information or belief of any one or more of
the directors of the Company
2.7 any reference in this Agreement to "the Buyer" shall include its
successors and assigns; and
<PAGE>
2.8 a reference to the masculine gender will be deemed to include a
reference to the feminine gender and vice versa; the singular shall
be construed as including the plural and vice versa;
2.9 This Agreement and the Transaction Documents have been negotiated by
the respective parties to this Agreement and their legal advisors
and the language of this Agreement and the Transaction Documents
will not be construed for or against either party.
EXECUTED AS A DEED BY )
For and on behalf of ) ----------------------
C.D. VERTE ITALIA SPA ) Director
in the presence of: )
) ----------------------
) Director/Secretary
EXECUTED AS A DEED BY )
PIETRO GIOVANNI VAGO )
in the presence of: )
EXECUTED AS A DEED BY )
MAURIZIO EZIO CURIONI )
in the presence of: )
EXECUTED AS A DEED )
For and on behalf of ) ----------------------
TAKE- TWO INTERACTIVE ) Director
SOFTWARE,INC )
in the presence of: )
)
) ----------------------
Director/Secretary
)
