CLIFFORD LIMITED LIABILITY PARTNERSHIP
CHANCE
BROADBAND STUDIOS, INC.
AND
GAMEPLAY.COM PLC
AND
TAKE-TWO INTERACTIVE SOFTWARE, INC.
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AGREEMENT FOR THE SALE AND PURCHASE OF
THE SHARE CAPITAL OF TOGA HOLDINGS B.V.
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CONTENTS
Clause Page
1. Interpretation.......................................................4
2. Sale And Purchase....................................................9
3. Completion...........................................................9
4. Post-Completion Matters.............................................11
5. Seller's Warranties.................................................12
6. Buyer's Warranties..................................................13
7. Remedies/Indemnity..................................................13
8. Limitation Of Liability.............................................15
9. Lock-Up.............................................................19
10. Stand-Still.........................................................22
11. Intellectual Property Rights........................................22
12. Further Undertakings By The Parties.................................22
13. Take-Two Premises...................................................24
14. Key Contracts.......................................................24
15. Confidential Information............................................25
16. Guarantee...........................................................26
17. Costs...............................................................27
18. General.............................................................27
19. Entire Agreement....................................................28
20. Assignment..........................................................28
21. Notices.............................................................28
22. Governing Law And Jurisdiction......................................29
23. Counterparts........................................................30
24. Indemnity For Payments..............................................30
Schedule 1 BUYER'S DETAILS.................................................31
Schedule 2 BUYER'S WARRANTIES..............................................33
Schedule 3 KEY CONTRACTS...................................................35
Schedule 4 WARRANTIES......................................................36
Part A Supplementary Warranties....................................36
Part B Stock Purchase Agreement Warranties.........................38
Schedule 5 INTELLECTUAL PROPERTY.............................................
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Agreed Form Documents
1. Employment contracts
2. Letter of resignation of Gary Dale
3. Notarial Deed
4. Receivables Assignments
5. Online Distribution Agreement
6. Pixel Acquisition Employee Trust Arrangements
7. Warrant Instrument
8. Joint Marketing Agreement
9. Disclosure Schedules
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THIS AGREEMENT is made on 2 October 2000
BETWEEN:
1. BROADBAND STUDIOS, INC., a company incorporated in Delaware, whose
principal place of business is at 575 Broadway, 3rd Floor, New York, NY
10012, United States of America (the "Seller"), a wholly-owned subsidiary
of Take-Two;
2. GAMEPLAY.COM PLC, a company incorporated in England and Wales (registered
no. 3734233), whose registered office is at 8-14 Vine Hill, London EC1R 5DX
(the "Buyer"); and
3. TAKE-TWO INTERACTIVE SOFTWARE, INC. a company incorporated in Delaware,
whose principal place of business is at 575 Broadway, 3rd Floor, New York,
NY 10012, United States of America ("Take-Two").
THE PARTIES AGREE as follows:
1. INTERPRETATION
1.1 In this Agreement, terms defined in section 1 of the Stock Purchase
Agreement and not defined in this Agreement shall have the meaning given in
the Stock Purchase Agreement, unless the context otherwise requires.
1.2 In this Agreement:
"AIM" means the Alternative Investment Market of the London Stock Exchange;
"AIM Rules" means Chapters 16 and 17 of the Rules of the London Stock
Exchange;
"Act" means the Companies Act 1985;
"Business Day" means a day other than a Saturday or Sunday or public
holiday in England and Wales;
"Buyer's Group Undertaking" means the Buyer or an undertaking which is, on
or at any time after the date of this Agreement, a subsidiary undertaking
or parent undertaking of the Buyer or a subsidiary undertaking of a parent
undertaking of the Buyer;
"Buyer's Warranty" means each statement contained in Schedule 2 of this
Agreement;
"Company" means Toga Holdings B.V., a private company with limited
liability (besloten vennootschap met beperkte aansprakelijkheid) formed
under the law of The Netherlands (being registered with the Chamber of
Commerce in Amsterdam under number 33305468), having its registered office
at Drentestraat 20, 1083 HK Amsterdam, The Netherlands;
"Completion" means completion of the sale and purchase of the Shares in
accordance with this Agreement;
"Completion Date" means the date of this Agreement;
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"Confidential Information" means all information which is used in or
otherwise relates to a Group Company's or a Seller's Group Undertaking's
(as the case may be) business, customers or financial or other affairs
including, without limitation, information relating to:
(a) the marketing of goods or services including, without limitation,
customer names and lists and other details of customers, sales
targets, sales statistics, market share statistics, prices, market
research reports and surveys, and advertising or other promotional
materials; or
(b) future projects, business development or planning, commercial
relationships and negotiations;
but does not include information which is made public by, or with the
consent of, a party or which is acquired by a party from a third party not
known to be bound by a confidentiality obligation;
"Consideration Shares" has the meaning set out in clause 2.2.1;
"Disclosure Schedule" means the schedules provided by the Seller to the
Buyer in relation to the Warranties and in the agreed form;
"Founder Shares" means the new ordinary shares of the Buyer to be allotted
and issued in accordance with the Pixel Acquisition Employee Trust
Arrangements and the Founder Subscription;
"Founder Subscription" means the subscription by Ramy Weitz for 1,293,309
new ordinary shares of 0.5p each in the Buyer of even date herewith;
"Group" means the Company and each Subsidiary Undertaking and "Group
Company" means the Company or a Subsidiary Undertaking;
"Intellectual Property" means:
(a) patents, trade marks, service marks, registered designs, applications
and rights to apply for any of those rights, trade, business and
company names, internet domain names and e-mail addresses,
unregistered trade marks and service marks, copyrights, database
rights, knowhow, rights in designs and inventions;
(b) rights under licences, consents, orders, statutes or otherwise in
relation to a right in paragraph (a);
(c) rights of the same or similar effect or nature as or to those in
paragraphs (a) and (b) which now or in the future may subsist; and
(d) the right to sue for past infringements of any of the foregoing
rights;
"Intellectual Property Rights" means all Intellectual Property owned,
exclusively used by a Group Company or required to be used by a Group
Company in its business in the ordinary and usual course (but does not
include Intellectual Property subsisting in any
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game code used or owned by Take-Two, a Seller's Group Undertaking or a
Group Company for testing or other ancillary purposes);
"Intra-Group Guarantees" means guarantees, indemnities,
counter-indemnities, undertakings, bonds, letters of credit and comfort
letters provided by any Group Company or Seller's Group Undertaking (as the
case may be) to any third party, or any like obligations or liabilities of
a Group Company or Seller's Group Undertaking (as the case may be) to any
third party, to the extent that they relate to the indebtedness,
credit-worthiness or financial condition of, or the performance of
obligations or undertakings by, any Seller's Group Undertaking or Group
Company (as the case may be) and "Intra-Group Guarantee" shall be construed
accordingly;
"Joint Marketing Agreement" means the joint marketing agreement between the
Buyer and Take-Two in the agreed form;
"Key Contract" means a contract listed in Schedule 3 to this Agreement;
"London Stock Exchange" means London Stock Exchange plc;
"Online Distribution Agreement" means the online distribution agreement
between the Buyer and Take-Two in the agreed form;
"Pixel" means Pixel Broadband Studios Limited, a corporation under the law
of Israel with number 51-157835-3, having its registered office at 4
Harakhev Street, Tel Aviv, 67771 Israel;
"Pixel Acquisition Employee Trust Arrangements" means the employee trust
arrangements that the Buyer intends to put in place, a summary of which is
in the agreed form;
"Receivables Assignments" means the letters of assignment and novation
between Pixel, the Seller and Simigon Limited and World Imaging, Inc.
respectively relating to the debts owed by them to Pixel in the agreed
form;
"Seller's Group Undertaking" means the Seller or an undertaking which is,
on or at any time after the date of this Agreement, a subsidiary
undertaking or parent undertaking of the Seller or a subsidiary undertaking
of a parent undertaking of the Seller;
"Shares" means 40,000 fully-paid ordinary shares of NLG 1 each in the
capital of the Company comprising the whole of the issued and outstanding
share capital of the Company;
"Stock Purchase Agreement" means the stock purchase agreement dated 8 March
2000 between Broadband Solutions, Inc. (formerly called Premier Business
Solutions, Inc.), Toga Holdings B.V., Pixel Broadband Studios Ltd., the
Seller and Take-Two;
"Subsidiary Undertaking" means a company (other than the Company) listed in
the Disclosure Schedule and "Subsidiary Undertakings" means all of them;
"Warrant" means a warrant granted in accordance with the Warrant
Instrument;
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"Warrant Instrument" means the warrant instrument to be entered into at
Completion by the Buyer in the agreed form; and
"Warranty" means each statement contained in Part A of Schedule 4 to this
Agreement and each statement contained in section 4 of the Stock Purchase
Agreement (except sections 3.26.1 and 3.27), the full text of which is
attached in Part B of Schedule 4 to this Agreement, provided that:
(a) references to the "Seller", the "Shareholder" and the "Company" shall
be construed as references to the Seller, the Company and Pixel
respectively (as defined in this Agreement);
(b) references to a "Schedule" shall be construed as references to a
Schedule to this Agreement;
(c) references to "this Agreement" shall be construed as references to
this Agreement;
(d) the words "Ramy Weitz (as his interests relate directly or indirectly
to the Seller, Shareholder or any of the Pixel Companies) the Seller,"
in section 3.1.1 shall be disregarded;
(e) in section 3.1.2 and 3.1.3, references to "the Seller" shall be
ignored and the second sentence of section 3.1.3 (beginning with the
word "Accurate") shall be deleted;
(f) references to the date "January 31, 2000" in sections 3.6.2(ii) and
(iii) shall be construed as references to September 15, 2000;
(g) references to the date "February 29, 2000" in section 3.7.1 and 3.8.1
shall be construed as references to September 15, 2000;
(h) in section 3.7.1, the words from "including" in the third line thereof
up to "aging thereof" shall be deleted;
(i) in section 3.7.2, the words "as of September 15, 2000" be added at the
end of that section;
(j) in section 3.7.3, the words "Except as set forth in schedule 3.11" be
inserted at the beginning of that section and the words "as reflected
in the Schedule or the Latest Balance Sheet" be inserted after the
word "Assets" in the second line thereof;
(k) in section 3.7.4, in the second line before the word "no" the words
"or which have been added since February 29, 2000" be inserted;
(l) in section 3.8.2, the words "Except as set forth on schedule 3.8" be
inserted at the start of that section;
(m) references to the date "December 31, 1999" in section 3.9 shall be
construed as references to September 15, 2000;
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(n) in section 3.11, in the third line, after the words "Financial
Statements", the words ", the Latest Balance Sheet" be added;
(o) references to the date "December 31, 1999" in section 3.17.9 shall
be construed as references to September 15, 2000;
(p) references to the "Closing Date" shall be construed as references
to the Completion Date; and
(q) the whole of section 3.6.2 shall be deleted and replaced with the
following:
Seller has delivered to Buyer the following financial statements
and related notes (the "Financial Statements"): (i) the
consolidating balance sheet of the Pixel Companies as of December
31, 1999 and the statements of earnings, shareholders' equity and
changes in financial position of the Pixel Companies for the
fiscal years ended December 31, 1999, all of which have been
audited by Kessellman & Kessellman copies of which were disclosed
in the draft prospectus of the Seller (pages F33-F37) attached
hereto; (ii) the unaudited consolidating balance sheet of the
Pixel Companies (the "Latest Balance Sheet") as of 15 September,
2000 (the "Latest Balance Sheet Date"); and (iii) the unaudited
consolidating statements of earnings of the Pixel Companies for
the period ended 15 September, 2000,
and "Warranties" means all those statements.
1.3 In this Agreement, a reference to:
1.3.1 a "subsidiary undertaking" or "parent undertaking" is to be
construed in accordance with section 258 of the Act;
1.3.2 an "affiliate" in relation to a party, shall be construed as
reference to a person directly or indirectly controlling,
controlled by, or under common control with that party (and
"control" shall mean the holding of the beneficial interest,
directly or indirectly, in more than 50 per cent. of the voting
rights generally exercisable at general meetings of the relevant
person);
1.3.3 liability under, pursuant to or arising out of (or any analogous
expression) any agreement, contract, deed or other instrument
includes a reference to contingent liability under, pursuant to or
arising out of (or any analogous expression) that agreement,
contract, deed or other instrument;
1.3.4 a document in the "agreed form" is a reference to a document in a
form approved and for the purposes of identification initialled by
or on behalf of each party;
1.3.5 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 (as so modified or re-enacted)
before the date of this Agreement;
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1.3.6 a "person" includes a reference to any individual, firm, company,
corporation or other body corporate, government, state or agency
of a state or any joint venture, association or partnership, works
council or employee representative body (whether or not having
separate legal personality);
1.3.7 an individual includes a reference to that individual's legal
personal representatives, successors and permitted assigns;
1.3.8 a clause, paragraph or schedule, unless the context otherwise
requires, is a reference to a clause or paragraph of, or schedule
to, this Agreement;
1.3.9 "(pound)" is to the lawful currency of the United Kingdom, a
reference to "NLG" is to the lawful currency of the Netherlands
and a reference to "US$" is to the lawful currency of the United
States of America; and
1.3.10 any English legal term for any action, remedy, method of judicial
proceeding, legal document, legal status, court, official or any
legal concept or thing shall in respect of any jurisdiction other
than England be deemed to include what most nearly approximates in
that jurisdiction to the English legal term and to any English
statute shall be construed so as to include equivalent or
analogous laws of any other jurisdiction.
1.4 The headings in this Agreement do not affect its interpretation.
2. SALE AND PURCHASE
2.1 The Seller agrees to sell with full title guarantee and the Buyer agrees
to buy the Shares.
2.2 The total purchase price of the Shares shall consist of:
2.2.1 14,600,044 new ordinary shares of 0.5p each of the Buyer (the
"Consideration Shares"); and
2.2.2 1 million Warrants to subscribe new ordinary shares of the Buyer
granted by the Buyer in favour of the Seller (or to Take-Two, as
the Seller directs), in accordance with the Warrant Instrument.
3. COMPLETION
3.1 Completion shall take place on the Completion Date at the offices of
Clifford Chance LLP, 200 Aldersgate Street, London EC1A 4JJ, except for
the matters referred to in clause 3.3.1, which shall take place on the
Completion Date at the offices of Stibbe Simont Monahan Duhot,
Strawinskylaan 2001, 1077 ZZ AP Amsterdam, The Netherlands.
3.2 At Completion the Seller shall deliver to the Buyer, or as the Buyer
directs:
3.2.1 the share certificates (if in issue) for each of the Subsidiary
Undertakings in the name of a Group Company;
3.2.2 as evidence of the authority of each person executing a document
referred to in this Agreement on the Seller's behalf:
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(a) a copy of the minutes of a duly held meeting of the
directors of the Seller (or a duly constituted committee
thereof) authorising the execution by the Seller of the
document and, where such execution is authorised by a
committee of the board of directors of the Seller, a copy
of the minutes of a duly held meeting of the directors
constituting such committee or, in each case, the relevant
extract thereof; or
(b) a copy of the power of attorney conferring the authority,
in each case certified to be true by a director or the secretary
of the Seller;
3.2.3 each register, minute book and other book required to be kept by
each Group Company under applicable Laws made up to the Completion
Date (except to the extent that such documents are required to
effect the transfer of the Company's shares) and each certificate
of incorporation and certificate of incorporation on change of
name for each Group Company;
3.2.4 resignations in the agreed form from Gary Dale in respect of each
Group Company expressed to take effect from the Completion Date;
3.2.5 a copy of each bank mandate of each Group Company and copies of
statements of each bank account of each Group Company made up to a
date not earlier than two Business Days before the Completion
Date;
3.2.6 evidence in a form satisfactory to the Buyer that debts and
accounts between any Group Company and a Seller's Group
Undertaking have been fully paid;
3.2.7 all documentation relating to the Intellectual Property Rights
including (without limitation) the original registration and
renewal certificate (if any) for each of the Intellectual Property
Rights which are registered or pending as at Completion.
3.2.8 an employment contract for Ramy Weitz in the agreed form duly
executed by Ramy Weitz and Pixel; and
3.2.9 the Receivables Assignments duly executed by the Seller and
Simigon Limited and World Imaging Inc., respectively.
3.3 At Completion:
3.3.1 the Seller, the Buyer and the Company shall execute a notarial
deed of transfer of shares in the agreed form before a civil law
notary of Stibbe Simont Monahan Duhot and the Company shall
register the transfer in its shareholder's register; and
3.3.2 the Buyer and Take-Two shall execute the Online Distribution
Agreement and the Joint Marketing Agreement.
3.4 At Completion:
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3.4.1 the Buyer shall deliver to the Seller as evidence of the authority
of each person executing this Agreement or a document referred to
in this Agreement on the Buyer's behalf:
(a) a copy of an extract of the minutes of a duly held meeting
of the directors of the Buyer authorising the execution by
the Buyer of this Agreement and the allotment of the
Consideration Shares and the Founder Shares; or
(b) a copy of the power of attorney conferring the authority,
in each case certified to be a true copy by a director or the
secretary of the Buyer;
3.4.2 the Buyer shall deliver to the Seller the Warrant Instrument duly
executed by the Buyer;
3.4.3 the Buyer shall allot the Consideration Shares to the Seller (or
to Take-Two, as the Seller directs);
3.4.4 the Buyer shall grant the Warrants, and deliver the Warrant
certificates relating thereto duly executed, to the Seller (or to
Take-Two, as the Seller directs) in accordance with the Warrant
Instrument; and
3.4.5 the Buyer shall deliver a copy of the application for admission to
AIM of the Consideration Shares and the Founder Shares duly
signed.
3.5 The Seller acknowledges and agrees that the allotment of the
Consideration Shares by the Buyer and the delivery of the Warrant
certificates to the Seller (or as it may direct) in accordance with
clauses 3.4.3 and 3.4.4 constitutes a complete discharge of the Buyer's
obligations under those clauses.
4. POST-COMPLETION MATTERS
4.1 The Buyer shall use its best efforts to ensure that the admission of the
Consideration Shares and the Founder Shares to trading on AIM becomes
effective in accordance with paragraph 16.6 of the AIM Rules as soon as
practicable following Completion and confirms that it is not aware of any
reason why the said shares should not be admitted to AIM.
4.2 The Buyer shall deliver the share certificate(s) relating to the
Consideration Shares to the allottee of the Consideration Shares in
accordance with clause 3.4.3 promptly following the admission of the
Consideration Shares becoming effective. The Seller acknowledges and
agrees that the receipt by Take-Two of such share certificates
constitutes a complete discharge of the Buyer's obligation under this
clause.
4.3 The Buyer shall deliver share certificates in respect of the Founder
Shares to be issued pursuant to the Founder Subscription to
and share certificates in respect of the balance to an employee trust to
be set up in accordance with the Pixel Acquisition Employee Trust
Arrangements following its establishment.
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4.4 The parties acknowledge that the Buyer intends to establish an option
scheme in accordance with Israeli law for the benefit of specified
employees of Pixel as at the Completion Date. The option scheme is
intended to be based on the Buyer's existing UK unapproved option scheme
to the extent reasonably possible and taking into account the most
beneficial taxation consequences for those Pixel employees. The parties
agree that should it not be possible to implement such a scheme they will
endeavour to put in place some other tax effective employee incentive
scheme.
4.5 The Buyer undertakes to procure that following Completion each Group
Company shall make, return or file all filings in relation to Pixel's
status as an Approved Enterprise (for the purposes of Israeli tax
matters) which are due to be made, returned or filed prior to the
Completion Date.
5. SELLER'S WARRANTIES
5.1 The Seller represents and warrants to the Buyer in terms of the
Warranties at the date of this Agreement.
5.2 The Warranties are qualified by the facts and circumstances specifically
and fairly disclosed in this Agreement, the Schedules thereto or
disclosed in a document specifically referenced in such Schedules,
provided that any matter disclosed in a Schedule hereto or a document
specifically referenced in such Schedules in relation to a particular
warranty will be deemed specifically disclosed against any of the other
Warranties solely to the extent that it is evident on the face of the
matter or document referenced in such schedule that it would relate to
another warranty. For the purpose of this clause 5.2, "evident" means a
matter fully and fairly disclosed in a Schedule or document.
5.3 No other knowledge relating to a Group Company (actual, constructive or
imputed) prevents or limits a claim made by the Buyer for breach of
clause 5.1.
5.4 The Seller undertakes not to make any claim against a Group Company or a
director, officer or employee of a Group Company which it may have in
respect of a misrepresentation, inaccuracy or omission in or from
information or advice provided by a Group Company or a director, officer
or employee of a Group Company for the purpose of assisting the Seller to
make a representation or give a Warranty. Notwithstanding the foregoing,
neither the Seller nor Take-Two is precluded from making a claim against
any such officer, director or employee if such claim is for a breach of a
representation or warranty in the Stock Purchase Agreement given to the
Seller or Take-Two.
5.5 Each Warranty is to be construed independently and (except where this
Agreement provides otherwise including, without limitation, the
provisions of clause 8) is not limited by a provision of this Agreement
or another Warranty.
5.6 The Buyer acknowledges that it does not rely on and has not been induced
to enter into this Agreement on the basis of any warranties,
representations, covenants, undertakings, indemnities or other statements
whatsoever, other than those expressly set out in this Agreement and the
Schedules thereto and acknowledges that none of the Seller, each
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Group Company or any of their respective agents, officers or employees
have given any such warranties, representations, covenants, undertakings,
indemnities or other statements save for the covenants relating to
competition with Pixel given by certain key employees of Pixel (but for
which the Seller shall have no responsibility).
6. BUYER'S WARRANTIES
6.1 The Buyer represents and warrants to the Seller in terms of the Buyer's
Warranties at the date of this Agreement.
6.2 No knowledge relating to the Buyer (actual, constructive or imputed)
prevents or limits a claim made by the Seller for breach of clause 6.1.
6.3 Each Buyer's Warranty is to be construed independently and (except where
this Agreement provides otherwise) is not limited by a provision of this
Agreement or another Buyer's Warranty.
6.4 The Seller acknowledges that it does not rely on and has not been induced
to enter into this Agreement on the basis of any warranties,
representations, covenants, undertakings, indemnities or other statements
whatsoever, other than those expressly set out in this Agreement and the
Schedules thereto and acknowledges that none of the Buyer, each Buyer's
Group Undertaking or any of their respective agents, officers or
employees have given any such warranties, representations, covenants,
undertakings, indemnities or other statements.
7. REMEDIES/INDEMNITY
7.1 From and after the Completion Date, the Seller shall indemnify and hold
harmless the Buyer and each Buyer's Group Undertaking, and their
respective successors and assigns, and their respective directors,
officer, employees, agents, and representatives, from and against any and
all actions, suits, claims, demands, debts, liabilities, obligations,
losses, damages, costs and expenses, including reasonable solicitor's
fees and court costs, arising out of or caused by, directly or
indirectly, any of the following:
7.1.1 any breach or failure of any warranty or representation made by
the Seller in this Agreement; and
7.1.2 any failure or refusal by the Seller to perform any covenant or
term of this Agreement required to be performed by it.
7.2 From and after the Completion Date, the Buyer shall indemnify and hold
harmless the Seller and each Seller's Group Undertaking, and their
respective successors and assigns, and their respective directors,
officer, employees, agents, and representatives, from and against any and
all actions, suits, claims, demands, debts, liabilities, obligations,
losses, damages, costs and expenses, including reasonable solicitor's
fees and court costs, arising out of or caused by, directly or
indirectly, any of the following:
7.2.1 any breach or failure of any warranty or representation made by
the Buyer in this Agreement; and
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7.2.2 any failure or refusal by the Buyer to perform any covenant or
term if this Agreement required to be performed by it.
7.3 With respect to each event, occurrence or matter (an "Indemnification
Matter") as to which a Person ("Indemnitee") is entitled to
indemnification from the indemnifying Person under clauses 7.1 or 7.2
(each, an "Indemnitor"):
7.3.1 as soon as reasonably possible after the Indemnitee receives
written documents underlying the Indemnification Matter or, if the
Indemnification Matter does not involve a third party action,
suit, claim or demand, promptly after the Indemnitee first has
actual knowledge of the Indemnification Matter, the Indemnitee
shall give notice to the Indemnitor of the nature of the
Indemnification Matter and the amount demanded or claims in
connection therewith ("Indemnification Notice"), together with
copies of any such written documents;
7.3.2 wherever reasonable, the Indemnitee shall not make any admission
of liability, agreement, settlement or compromise or otherwise
take any other action which would or might be prejudicial to the
Indemnitor's position in respect of the Indemnification Matter in
relation thereto without the prior written consent of the
Indemnitor, such consent not to be unreasonably withheld or
delayed;
7.3.3 the Indemnitee shall take any steps which the Indemnitor requests,
at the Indemnitor's cost, it to take to remedy, avert, avoid,
resist, appeal, compromise, defend, mitigate or otherwise deal
with any matter, unless the Indemnitee reasonably considers such
action would be likely to be detrimental to the affairs of any
Buyer's Group Undertaking or Seller's Group Undertaking (as the
case may be), in which case the Indemnitee shall as soon as
reasonably practicable give the Indemnitor its reasons in writing
for not taking such action including the expense of such action,
if relevant, (or for considering such action to be unreasonable)
and the Indemnitor and the Indemnitee shall thereafter discuss the
proposed action in good faith with a view to agreeing action to be
taken to deal with the relevant matter but in the event that a
course of action cannot be agreed upon the decision of the
Indemnitee shall be final, provided always that should the
decision be that of the Indemnitee only, the Indemnitee shall use
its best endeavours to mitigate the loss of the Indemnitor; and
7.3.4 the Indemnitee shall give such information as the Indemnitor or
any of its advisers may reasonably request (at their cost) in
respect of the progress of and developments in all actions or
proceedings which involve any relevant matter or which are
relevant to any liability of the Indemnitor under or arising from
this Agreement.
7.4 All amounts owed by the Indemnitor to the Indemnitee (if any) shall be
paid in full within five (5) Business Days after a final judgement
(without further right of appeal) (the "Relevant Date") determining the
amount owed is rendered, or after a final settlement or agreement as to
the amount owed is executed.
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7.5 The parties acknowledge that the proviso in the last three lines of
clause 7.3.3 is without prejudice to the Seller's obligations to
indemnify the Buyer pursuant to clause 7 provided the Claim has been so
mitigated.
8. LIMITATION OF LIABILITY
8.1 The Indemnitor's liability under clause 7 shall be limited as follows:
8.1.1 no amount shall be payable by the Indemnitor under clause 7 unless
and until the aggregate amount otherwise payable by the Indemnitor
under clause 7 exceeds (pound)100,000, and then only to the extent
any such amounts exceed (pound)100,000;
8.1.2 where the Indemnitor is the Seller, its total liability under
clause 7 shall not exceed US$50 million; and
8.1.3 where the Indemnitor is the Buyer, its total liability under
clause 7 shall not exceed US$50 million, except in relation to the
Buyer's Warranties contained in paragraphs 4 and 6 of Schedule 2,
where its total liability under clause 7 shall not exceed US$16.6
million,
save that if the Buyer is entitled to be indemnified by the Seller under
clause 7.1 for a Claim other than a Third Party Claim, the maximum amount
that the Seller shall be required to pay to the Buyer in relation to any
such Claim shall be the lesser of US$50 million and an amount equal to
the aggregate of:
8.1.4 the net proceeds of sale of any Consideration Shares disposed of
by the Seller (which expression shall, in clauses 8.2 to 8.7, be
construed as a reference to Take-Two if the Consideration Shares
are issued to Take-Two at the Seller's direction pursuant to
clause 3.4.3) before the Relevant Date (which shall be applied
first in satisfaction of such a Claim); and
8.1.5 an amount equal to the net proceeds of the sale of such proportion
of the Consideration Shares (the "Sale Shares") as the quantum of
the outstanding amount of such Claim (following the sale of
Consideration Shares referred to above (if any)) bears to US$50
million, provided that the Sale Shares must be sold in accordance
with clauses 8.2 to 8.4.
8.2 If the net proceeds of sale of any Consideration Shares disposed of by
the Seller before the Relevant Date (as defined in clause 7.4) are less
than the amount of the Claim, then the Seller shall deliver the Sale
Shares to the Buyer's stockbroker within 2 Business Days after the
Relevant Date and shall instruct (on delivery of the Sale Shares) the
Buyer's stockbroker to sell the Sale Shares as soon as practicable
provided always that no more than 20 per cent. of the average daily
trading volume of the Buyer's shares for the previous 30 day period are
sold in any one trading day unless the Buyer's stockbroker has previously
obtained the Buyer's written consent to such sale.
8.3 When the net sale proceeds of the Sale Shares equal the outstanding
amount of the Claim, the Buyer's stockbroker shall contact the Seller to
confirm whether it wishes to
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continue selling Sale Shares and shall pay to the Buyer the net sale
proceeds of the sales of Sale Shares up to that date up to the
outstanding amount of the Claim.
8.4 Notwithstanding the provisions of clause 8.3, if the price of a
Consideration Share on the Relevant Date is less than the price of 221.6p
per share, the Seller shall instruct the Buyer's stockbroker to sell all
of the Sale Shares and to pay to the Buyer the net proceeds of sale
thereof.
8.5 Notwithstanding the provisions of clause 8.2, if the price of a
Consideration Share at the Relevant Date is 277p per share, the Seller
only need initially to deliver such number of Sale Shares as is equal to
125 per cent. of the value of the Claim at the share price on the
Relevant Date. For the avoidance of doubt, this shall be without
prejudice to the Seller's obligation to deliver the remainder of the Sale
Shares to the Buyer's stockbroker (with the instructions provided in
clause 8.2) if the net proceeds of the sale of the first tranche (or
tranches) of Sale Shares is not sufficient to satisfy the Claim in full.
8.6 The Seller acknowledges that payments made to the Buyer pursuant to
clauses 8.3 and 8.4 are in accordance with its instructions (which the
Seller acknowledges are irrevocable if a Claim is made) and the Buyer
acknowledges that such payment shall be a complete discharge of the
Seller's obligations to the Buyer in respect of the Claim.
8.7 The Seller may in its absolute discretion elect to continue to sell any
Sale Shares not sold prior to the notification required by clause 8.3
above and agrees that sales of such Sale Shares shall remain subject to
the provisions of clause 9.2.
8.8 The Seller acknowledges and agrees that it shall remain the beneficial
owner of the Sale Shares until sold by the Buyer's stockbroker and that
once the Sale Shares are sold, the net proceeds of such sales shall be
held by the Seller as trustee for the Buyer.
8.9 In clauses 8.1 to 8.8 and 9.11:
8.9.1 a "Claim" is a claim by the Buyer for indemnification from the
Seller in respect of an Indemnification Event arising under clause
7.1;
8.9.2 a "Third Party Claim" means a Claim which arises from, or in
connection with, a person other than a Seller's Group Undertaking
or a Buyer's Group Undertaking; and
8.9.3 "net proceeds of sale" or similar phrase means the proceeds of
sale after reasonable commissions of no more than 1 per cent. of
the value of the Sale Shares sold but excluding any capital or
other taxes arising on such sale. For the purposes of this
definition, "sale" means the disposal, directly or indirectly, of
the Consideration Shares whether by means of the issue of a
security exchangeable or convertible into Consideration Shares
(directly or indirectly) or the entering into of any derivative
contract which has the same economic effect as a disposal or the
transfer of the Consideration Shares whether for other marketable
securities (including shares in Take-Two) or cash or the pledging
of any Consideration Shares where such pledging results in an
increase in the amount available to the Seller or Take Two under
its existing bank facilities
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where such increase is based on the value of the Consideration
Shares so pledged.
8.10 With respect to any Indemnification Matter under clauses 8.1 to 8.9, the
Indemnitor shall have no liability unless the Indemnitee gives an
Indemnification Notice with respect thereto on or before 31 October 2001.
8.11 The limitations in clauses 8.1 to 8.10 shall not apply in the case of any
Indemnification Matter arising from:
8.11.1 a breach by the Seller of a Warranty referred to in section 3.3
(Capital Stock and Ownership) of the Stock Purchase Agreement;
8.11.2 a breach by the Buyer of a Buyer's Warranty set out in paragraphs
2, 3, 5 or 7 of Schedule 2 to this Agreement; or
8.11.3 a breach by the Buyer or the Seller of an obligation pursuant to
clause 3 of this Agreement.
8.12 The limitations in clause 8.10 shall not apply in the case of any
Indemnification Matter arising from a breach by the Seller of a Warranty
referred to in section 3.20 (Tax) or the 7th and 8th sentences of section
3.12 (Real Property) of the Stock Purchase Agreement (commencing with
"The Shareholder..." and ending with "...Real Property"). With respect to
any Indemnification Matter under clause 7.1 or 7.2 arising from such a
breach, the Seller shall have no liability unless the Buyer gives an
Indemnification Notice with respect thereto on or before the date on
which all applicable statutes of limitation for claims in respect of
those matters has expired. 8.13 The limitations in clause 8.10 shall not
apply in the case of any Indemnification Matter arising from a breach by
the Seller of a Warranty referred to in section 3.13 (Software and Other
Intangibles) of the Stock Purchase Agreement. With respect to any
Indemnification Matter under clause 7.1 or 7.2 arising from such a
breach, the Seller shall have no liability unless the Buyer gives an
Indemnification Notice with respect thereto on or before 13 March 2003.
8.14 Nothing in this clause 8 shall have the effect of limiting or restricting
any liability of a party arising as a result of any fraud, wilful
misconduct or wilful concealment or any lack of proper authority or
capacity to execute or perform the matters contemplated by this
Agreement.
8.15 The Indemnitor shall not be liable for an Indemnification Matter if it is
wholly or partly attributable to:
8.15.1 a voluntary act, omission, transaction or arrangement carried out
at the written request of or with the written consent of the
Indemnitee before Completion;
8.15.2 a voluntary act, omission, transaction or arrangement carried out
by the Indemnitee or on its behalf or by persons deriving title
from the Indemnitee on or after Completion which is not in the
ordinary course of business of the Company or pursuant to a
legally binding obligation existing on or prior to
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Completion and which the Indemnitee knew would or would be likely
to give rise to such Indemnification Matter; or
8.15.3 an admission of liability made without the Indemnitor's consent
after the date hereof by the Indemnitee or on behalf or by persons
deriving title from the Indemnitee on or after Completion other
than in compliance with Clause 7.3.2 above.
8.16 The Indemnitor shall not be liable for an Indemnification Matter which
would not have arisen but for any reorganisation or change in ownership
of the Company after Completion or any changes in the accounting basis on
which the Company values its assets or any other change in accounting
policy or practice of the Company after Completion.
8.17 If the Indemnitor pays at any time to the Indemnitee (or, in the case of
the Buyer, the Company) an amount pursuant to an Indemnification Matter
and the Indemnitee (or, in the case of the Buyer, the Company)
subsequently becomes entitled to recover from some other person any sum
in respect of any matter giving rise to such indemnification, the
Indemnitee shall, and shall (or in the case of amounts paid to the
Company, the Buyer shall procure that the Company shall) take all
reasonable steps (having regard, in the case of claims to be made by the
Company, inter alia, to the effect of such action on the goodwill of the
business of the Company) to enforce such recovery, and shall forthwith
upon recovery repay to the Indemnitor so much of the amount paid to the
Indemnitee (or the Company, as the case may be) as does not exceed the
sum recovered from such other person less all costs, charges and expenses
properly incurred by the Indemnitee (or the Company, as the case may be)
in recovering that sum from such other person.
8.18 No liability shall arise in respect of an Indemnification Matter to the
extent that that liability occurs or is increased wholly or partly as a
result of any legislation not in force at the date hereof or which takes
effect retrospectively.
8.19 The Indemnitor shall not be liable in any event in respect of an
Indemnification Matter if such breach or claim would not have occurred or
arisen but for:
8.19.1 any change in the basis of, method of calculation of, or increase
in the rate or rates of taxation or changes in the practice of any
relevant tax authority in any jurisdiction made or coming into
effect after the date hereof but with retrospective effect or the
withdrawal of any extra-statutory concession currently granted by
any relevant tax authority (save for Approved Enterprise Status in
Israel if such withdrawal is a result of the failure of any Group
Company to file or lodge appropriate returns or filings with the
relevant tax authority prior to the Completion Date); or
8.19.2 any assessment of taxation arising as a result of a transaction in
the ordinary course of business of the Company (which expression
should include disposals of any capital assets in the ordinary
course of business) since the Last Balance Sheet Date.
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8.20 If an Indemnification Matter arises by reason of some liability of the
Company which, at the time such breach or claim is notified to the
Indemnitor, is contingent only or otherwise not capable of being
quantified, then the Indemnitor shall not be under any obligation to make
any payment in respect of such breach unless and until such liability
ceases to be contingent or becomes reasonably capable of being
quantified, as the case may be.
8.21 Any payment made by the Indemnitor in respect of an Indemnification
Matter shall be deemed to be a reduction in the total consideration
payable under clause 2.2 of this Agreement.
8.22 If any amount paid or due to the Indemnitee (or, in the case of the
Buyer, the Company) under this clause 8 gives rise to a liability or
increase in liability to make a payment of, or of an amount in respect
of, tax (a "Taxation Liability"), or would (but for the availability of
any loss, allowance, exemption, set-off, deduction, credit or other
relief from or relating to any taxation (a "Relief")) give rise to a
Taxation Liability in the hands of the Indemnitee (or, in the case of the
Buyer, the Company) then the amount so paid or due (the "Net Amount")
shall be increased to an amount (the "Grossed-up Amount") which (after
subtraction of the amount of any Taxation Liability which arises, or
would but for the availability of any Relief arise, in the hands of the
Indemnitee (or, in the case of the Buyer, the Company) with respect to
the Grossed-up Amount) equals the Net Amount.
9. LOCK-UP
9.1 Subject to clause 9.3, the Seller (which expression shall, in this clause
8, be construed as a reference to Take-Two if the Consideration Shares
are issued to Take-Two at the Seller's direction pursuant to clause
3.4.3) shall continuously retain its interest in at least 75 per cent. of
the Consideration Shares for a period of 12 months from the date of this
Agreement and during that period the Seller shall not sell, grant options
over, transfer, pledge or otherwise dispose of any interest in all or any
such Consideration Shares beneficially owned or otherwise held by the
Seller.
9.2 Without prejudice to clause 9.1, the Seller shall not at any time effect
any sale of the Consideration Shares unless:
9.2.1 the Seller first offers the Buyer's stockbroker the opportunity to
sell those Consideration Shares; and
9.2.2 if the Buyer's stockbroker does not accept the offer in clause
9.2.1 within 2 hours of the offer being made, the Seller may
request another stockbroker of its own choosing (provided that
such stockbroker is an internationally recognised investment bank
or a stockbroker of a standing at least equivalent to Peel Hunt
plc) to sell those Consideration Shares in a manner which it
considers (in its reasonable opinion) will be conducive to
maintaining an orderly market in the Buyer's shares.
For the purposes of this clause 9.2, "offer" or "offers" means the
sending of a fax to Tim Cockcroft and Dan Willet of Peel Hunt plc (on fax
number 020 7972 0111) followed by
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a telephone call to either of the above mentioned persons on 020 7418
8929 or 020 7418 8983 or, should Peel Hunt plc no longer be retained as
the Buyer's stockbroker, to the Buyer's stockbroker for the time being,
marked for the attention of the "Head of Stockbroking".
9.3 Notwithstanding clause 9.1, the Seller may at any time transfer up to 3
per cent. of the Consideration Shares (the "ING Barings Shares") to ING
Barings Limited ("ING Barings") provided that ING Barings has agreed in
terms reasonably acceptable to the Buyer to be bound by the provisions of
clause 9.1 as if references to the "Consideration Shares" were references
to the ING Barings Shares and references to "the Seller" were references
to ING Barings.
9.4 In clauses 9.5 to 9.8:
9.4.1 "Placing" means the placing of the Consideration Shares held by
the Seller in conjunction with the admission of the Buyer's shares
to the Official List of the UK Listing authority and the admission
of the Buyer's shares to trading on the London Stock Exchange plc;
and
9.4.2 "Free Shares" means those Consideration Shares not subject to
clauses 9.1 or 9.3 (being, for the avoidance of doubt, the 25% of
the Consideration Shares that Take Two is not required to retain
pursuant to the provisions of this Agreement).
9.5 The Buyer shall notify the Seller in writing as soon as practicable of
its decision to undertake a Placing (a "Placing Notice"). The Placing
Notice shall contain an offer to place 1,543,309 Consideration Shares (or
such greater number as the Buyer's stockbroker deems appropriate and as
specified in the Placing Notice). The Seller shall on or before the date
7 days after receiving the Placing Notice (the "Relevant Date"), notify
the Buyer in writing whether it wishes to accept the offer in the Placing
Notice.
9.6 If the Seller does not accept the offer in the Placing Notice, then it
shall continuously retain its interest in the Free Shares for a period of
3 months from the Relevant Date or, if the Placing is not completed
within 30 days of the Placing Notice, for a period of 30 days after the
Relevant Date, and during either period (as the case may be), the Seller
shall not sell, grant options over, transfer, pledge or otherwise dispose
of any interest in all or any of the Free Shares beneficially owned or
otherwise held by the Seller.
9.7 If the Seller accepts the offer in the Placing Notice and the Placing is
completed within 30 days of such notice, then it shall continuously
retain its interest in those Free Shares not included in the Placing for
a period of 6 months from the Relevant Date or for such shorter period as
the executive management of the Buyer are required to refrain from
selling their shares in the Buyer pursuant to the placing agreement to be
entered into in connection with the Placing, and during either period (as
the case may be), the Seller shall not sell, grant options over,
transfer, pledge or otherwise dispose of any interest in all or any of
the Free Shares not included in the Placing beneficially owned or
otherwise held by the Seller.
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9.8 The Seller acknowledges that nothing in clauses 9.5 to 9.7 obliges the
Buyer to proceed to a Placing and that the Buyer is not liable to the
Seller for any loss, cost or expense incurred by the Seller arising from,
or in connection with, a Placing not occurring, whether the reason for
the Placing not occurring is within or outside the control of the Buyer.
9.9 Clauses 9.1 and 9.2 shall not apply to:
9.9.1 a transfer or transfers of up to 10 per cent. in aggregate of the
Consideration Shares to one or more third parties which are not
affiliates by way of a private, off-market sale, provided that
each such transferee shall have agreed in terms reasonably
acceptable to the Buyer to be bound by the provisions of clause
9.1 as if the transferee was a party to this Agreement; or
9.9.2 any transfer of Consideration Shares to an affiliate of the Seller
or by such affiliate to the Seller or another affiliate of the
Seller provided that, before making such a transfer, the Seller
must satisfy the Buyer that the transferee is an affiliate of the
Seller and the transferee shall have agreed in terms reasonably
acceptable to the Buyer to be bound by the provisions of clause
9.1 as if that affiliate was a party to this Agreement (including
the provisions of clause 9.2).
9.10 If Consideration Shares have been transferred under Clause 9.9.2 (whether
directly or by a series of transfers) by the Seller to its affiliate and
subsequently that affiliate is to cease to be an affiliate of the Seller,
then the Seller shall procure that the affiliate transfers the
Consideration Shares to the Seller (or, at the Seller's option, to
another affiliate of the Seller) before it ceases to be an affiliate.
9.11 The Buyer acknowledges that sales of Consideration Shares pursuant to the
provisions of clause 8 (solely to the extent that such sales are
necessary to satisfy a Claim) shall be ignored for the purposes of
calculating the 75 per cent. of the Consideration Shares to be retained
by the Seller (or Take-Two, as applicable) pursuant to clause 9.1 and the
10 per cent. of the Consideration Shares which the Seller is permitted to
transfer pursuant to clause 9.9.1.
9.12 The Buyer undertakes to notify the Seller as soon as practicable of any
change in the identity of the Buyer's stockbroker, which for the purposes
of this clause 9 shall mean (save where the context otherwise requires)
Peel Hunt plc or the Buyer's principal stockbroker from time to time (as
the case may be).
9.13 The Seller undertakes not to knowingly dispose of the Free Shares to a
single third party (whether directly or indirectly and whether by one
transaction or a series of transactions) without the prior written
consent of the board of the Buyer. For the purposes of this clause 9.13
only, "knowingly" means having made reasonable enquiries.
9.14 Without prejudice to any of clause 9, the Seller shall be permitted to
pledge the Consideration Shares to its existing bank to secure existing
bank facilities provided that such pledge is not used to extend or
increase the credit limit or line available to the Seller under such
facility.
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10. STAND-STILL
The Seller shall not, and shall procure that each Seller's Group
Undertaking shall not, for a period of 2 years from the date of this
Agreement in any manner, directly or indirectly effect or seek, offer or
propose (whether publicly or otherwise) to acquire any further shares (or
other securities) of the Buyer (except as envisaged by this Agreement or
the Warrant Instrument) or make any proposal to change the directors of
the Buyer, except with the consent of the Buyer.
11. INTELLECTUAL PROPERTY RIGHTS
11.1 The Seller shall not, either alone or jointly with, through or as
manager, adviser, consultant or agent for a person, directly or
indirectly use or authorise, encourage or assist any person to use in
connection with a business which competes, directly or indirectly, with a
business of a Group Company as operated at the date of this Agreement,
any of the Intellectual Property Rights owned by a Group Company (in
particular, a name consisting of or including any of the words "Pixel",
"Broadband Studios", "Jive" and "PowerPlay Network").
11.2 The Seller shall ensure that each Seller's Group Undertaking complies
with clause 12.1.
11.3 Within 1 week after Completion, the Seller shall change its name to a
name not consisting of, or including, the words "Broadband Studios" or
which is intended, or is likely to be confused with, those words and from
that date the Seller acknowledges that the provisions of clause 12.1
shall apply to the name "Broadband Studios".
11.4 From the Completion Date the Seller grants to the Buyer the non-exclusive
right and licence throughout the world to use the words "Broadband
Studios" and shall take all action reasonably requested by the Buyer (at
the Buyer's cost) to secure to the Buyer all of the Intellectual Property
consisting in the words "Broadband Studios", including, without
limitation, the transfer of any registered trade marks.
11.5 The Seller shall transfer, assign and/or otherwise pass on all rights in
the Intellectual Property owned by the Seller at the date of this
Agreement but which constitutes Intellectual Property Rights (including,
without limitation, the Intellectual Property specified in Schedule 5)
within 10 Business Days of the Completion Date and at its own cost.
12. FURTHER UNDERTAKINGS BY THE PARTIES
12.1 The Seller undertakes to the Buyer (for itself and as agent and trustee
for each Group Company) that it will not do any of the following things:
12.1.1 for a period of 3 years starting on the date of this Agreement, do
or say anything which is harmful to a Group Company's goodwill (as
subsisting at the date of this Agreement) or which may lead a
person who has dealt with a Group Company at any time during the
twelve months prior to the date of this Agreement to cease to deal
with a Group Company on substantially equivalent terms to those
previously offered or at all; or
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12.1.2 for a period of 2 years starting on the date of this Agreement,
engage, employ, solicit or contact with a view to his engagement
or employment by another person, a director, officer, employee or
manager of a Group Company or a person who was a director,
officer, employee or manager of a Group Company at any time during
the twelve months prior to the date of this Agreement, in either
case where the person in question either has Confidential
Information or would be in a position to exploit a Group Company's
trade connections save that this clause 12.1.2 shall not apply to
the extent any person responds to a general advertisement (other
than a general advertisement made only in, or principally targeted
at, Israel or Israeli persons)
12.2 The Seller shall ensure that each Seller's Group Undertaking complies
with clause 12.1.
12.3 The Buyer undertakes to the Seller (for itself and as agent and trustee
for each Seller's Group Undertaking) that it will not do any of the
following things:
12.3.1 for a period of 3 years starting on the date of this Agreement, do
or say anything which is harmful to a Seller's Group Undertaking's
goodwill (as subsisting at the date of this Agreement) or which
may lead a person who has dealt with a Seller's Group Undertaking
at any time during the twelve months prior to the date of this
Agreement to cease to deal with a Seller's Group Undertaking on
substantially equivalent terms to those previously offered or at
all; or
12.3.2 for a period of 2 years starting on the date of this Agreement,
engage, employ, solicit or contact with a view to his engagement
or employment by another person, a director, officer, employee or
manager of a Seller's Group Undertaking or a person who was a
director, officer, employee or manager of a Seller's Group
Undertaking at any time during the twelve months prior to the date
of this Agreement, in either case where the person in question
either has Confidential Information or would be in a position to
exploit a Seller's Group Undertaking's trade connections, save
that this clause 12.3.2 shall not apply to the extent that any
such person responds to a general advertisement.
12.4 The Buyer shall ensure that each Buyer's Group Undertaking complies with
clause 12.3.
12.5 Each undertaking in clauses 12.1 to 12.4 constitutes an entirely
independent undertaking and if one or more of the undertakings is held to
be against the public interest or unlawful or in any way an unreasonable
restraint of trade the remaining undertaking shall continue to bind in
accordance with its terms.
12.6 At or as soon as practicable following Completion, all Intra-Group
Guarantees shall be released and discharged in full. To the extent that
any Intra-Group Guarantee is not released and discharged at Completion,
each Seller's Group Undertaking or Group Company (as the case may be)
that obtains the benefit of such Intra-Group Guarantee shall indemnify
and hold harmless each Group Company or Seller's Group Undertaking (as
the case may be) in respect of all losses, liabilities, damages, costs
and expenses which such member may incur as a result of such Intra-Group
Guarantee not having been so released and discharged at Completion.
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12.7 Each party shall, on receiving the other party's reasonable request (at
its cost) do and execute, or arrange to be done and executed, each act,
document and thing necessary to implement this Agreement.
12.8 The Seller shall, at the reasonable request of the Buyer (at its cost),
give to the Buyer all information it possesses or to which it has access
relating to a Group Company's business and allow the Buyer to copy any
document containing that information.
13. TAKE-TWO PREMISES
13.1 The Seller and the Buyer shall (to the extent within their respective
power to do so) procure that Mike Suarez agrees (in a form reasonably
acceptable to the Buyer and the Seller) to grant to each of the Buyer and
the Seller a licence for the Buyer (or any Group Company) and,
separately, the Seller (or any Seller's Group Undertaking) to occupy and
use facilities at 2nd Floor, 2 Saint George Alley, San Francisco,
California (the "Premises") until 31 January 2003 (or such shorter term
as agreed by the parties) to allow the Premises to continue being used
for their current purposes on the terms set out in clause 13.2 below.
13.2 The Buyer and the Seller agree that the amount each shall offer to Mike
Suarez for its respective licence will be based on a proportion of the
rent and general costs referable to the proportionate square footage of
the Premises occupied by the Buyer (or any Group Company) or the Seller
(or any Seller's Group Undertaking) (as the case may be) (including for
this purpose common parts in the occupiable square footage of the
Premises) unless it is agreed by the Buyer and the Seller, acting in good
faith and reasonably, that it would be more equitable if the amount each
offered to Mike Suarez was based on a per capita basis.
14. KEY CONTRACTS
14.1 The Seller hereby assigns and transfers all of its right, title and
interest under each Key Contract to the Buyer.
14.2 If a Key Contract cannot be transferred to the Buyer except by an
assignment made with a specified person's consent or by a novation
agreement:
14.2.1 this Agreement does not constitute an assignment or an attempted
assignment of the Key Contract if the assignment or attempted
assignment would constitute a breach of the Key Contract;
14.2.2 from the Completion Date, the Buyer shall, and shall procure that
each Group Company shall, use its reasonable endeavours to obtain
the person's consent to the assignment, or achieve the novation,
of the Key Contract and the Seller shall provide such reasonable
assistance as is necessary to obtain such consent or novation; and
14.2.3 unless and until consent is obtained or the Key Contract is
novated, the Buyer shall for its own benefit and to the extent
that the Key Contract permits, perform as agent for the Seller
(but at the Buyer's expense) all the obligations of the Seller
arising after the Completion Date and shall indemnify the Seller
against
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all costs, proceedings, claims, demands and expenses incurred by
the Seller as a result of any act, neglect, default or omission on
the part of the Buyer to perform or comply with any such
obligation of the Seller which is not performed or complied with
after the Completion Date.
15. CONFIDENTIAL INFORMATION
15.1 The Seller undertakes to the Buyer, for itself and as agent and trustee
for each Group Company, that after Completion the Seller shall:
15.1.1 not use or disclose to any person Confidential Information it has
or acquires;
15.1.2 make every effort to prevent the use or disclosure of Confidential
Information; and
15.1.3 ensure that each Seller's Group Undertaking complies with clauses
15.1.1 and 15.1.2
15.2 Clause 15.1 does not apply to disclosure of Confidential Information:
15.2.1 to a director, officer or employee of the Buyer or of a Group
Company whose function requires him to have the Confidential
Information;
15.2.2 required to be disclosed by law, by a rule of a stock exchange on
which the Seller's shares are listed or traded or by a
governmental authority or other authority with relevant powers to
which the Seller is subject or submits, whether or not the
requirement has the force of law provided that the disclosure
shall be made after consultation with the Buyer of a nature and
scope reasonable in the circumstances and after taking into
account the Buyer's reasonable requirements as to its timing,
content and manner of making or despatch; or
15.2.3 to an adviser for the purpose of advising the Seller in connection
with the transactions contemplated by this Agreement provided that
such disclosure is essential for these purposes and is on the
basis that clause 15.1 applies to the disclosure by the adviser.
15.3 The Buyer undertakes to the Seller, for itself and as agent and trustee
for each Seller's Group Undertaking, that after Completion the Buyer
shall:
15.3.1 not use or disclose to any person any Confidential Information it
has or acquires;
15.3.2 make every effort to prevent the use or disclosure of Confidential
Information; and
15.3.3 ensure that each Buyer's Group Undertaking complies with clauses
15.3.1 and 15.3.2.
For the avoidance of doubt, the parties acknowledge that Confidential
Information for the purposes of this clause 15.3 means solely
Confidential Information relating to the Seller or Take Two.
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15.4 Clause 15.3 does not apply to disclosure of Confidential Information:
15.4.1 to a director, officer or employee of a Seller's Group Undertaking
whose function requires him to have the Confidential Information;
15.4.2 required to be disclosed by law, by a rule of a stock exchange on
which the Buyer's shares are listed or traded or by a governmental
authority or other authority with relevant powers to which the
Buyer is subject or submits, whether or not the requirement has
the force of law provided that the disclosure shall be made after
consultation with the Seller of a nature and scope reasonable in
the circumstances and after taking into account the Seller's
reasonable requirements as to its timing, content and manner of
making or despatch; or
15.4.3 to an adviser for the purpose of advising the Buyer in connection
with the transactions contemplated by this Agreement provided that
such disclosure is essential for these purposes and is on the
basis that clause 15.3 applies to the disclosure by the adviser.
16. GUARANTEE
16.1 Take-Two irrevocably and unconditionally guarantees to the Buyer the due
and punctual performance of each obligation of the Seller contained in
this Agreement. Take-Two shall pay to the Buyer from time to time on
demand any sum of money which the Seller is at any time liable to pay to
the Buyer under or pursuant to this Agreement and which has not been paid
at the time the demand is made. Take-Two's obligations under this clause
are primary obligations and not those of a mere surety. If an obligation
of the Seller is void, voidable or unenforceable for any reason,
Take-Two's obligations under this clause are unaffected and Take-Two
shall perform the Seller's obligations as if it were primarily liable for
the performance.
16.2 Take-Two's obligations under clause 16.1 are continuing obligations and
are not satisfied, discharged or affected by an intermediate payment or
settlement of account by, or a change in the constitution or control of,
or the insolvency of, or bankruptcy, winding up or analogous proceedings
relating to, the Seller.
16.3 Take-Two's liability under clause 16.1 is not affected by an arrangement
which the Buyer may make with the Seller or with another person which
(but for clause 16.3) might operate to diminish or discharge the
liability of or otherwise provide a defence to a surety.
16.4 Without affecting the generality of clause 16.3, the Buyer may at any
time it thinks fit and without reference to Take-Two:
16.4.1 grant a time for payment or grant another indulgence or agree to
an amendment, variation, waiver or release in respect of an
obligation of the Seller under this Agreement;
16.4.2 give up, deal with, vary, exchange or abstain from perfecting or
enforcing other securities or guarantees held by the Buyer;
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16.4.3 discharge a party to other securities or guarantees held by the
Buyer and realise all or any of those securities or guarantees;
and
16.4.4 compound with, accept compositions from and make other
arrangements with the Seller or a person or persons liable on
other securities or guarantees held or to be held by the Buyer.
16.5 So long as the Seller is under an actual or contingent obligation under
this Agreement Take-Two shall not exercise a right which it may at any
time have by reason of the performance of its obligations under clause
16.1 to be indemnified by the Seller, to claim a contribution from
another surety of the Seller's obligations or to take the benefit (wholly
or partly and by way of subrogation or otherwise) of any of the Buyer's
rights under this Agreement or of any other security taken by the Buyer
in connection with this Agreement.
16.6 Take-Two's liability under clause 16.1 is not affected by the avoidance
of any assurance, security or payment or a release, settlement or
discharge which is given or made on the faith of an assurance, security
or payment, in either case, under an enactment relating to bankruptcy or
insolvency.
17. COSTS
Except where this Agreement provides otherwise, each party shall pay its
own costs relating to the negotiation, preparation, execution and
performance by it of this Agreement and of each document referred to in
it.
18. GENERAL
18.1 A variation of this Agreement is valid only if it is in writing and
signed by or on behalf of each party.
18.2 The failure to exercise or delay in exercising a right or remedy provided
by this Agreement or by law does not impair or constitute a waiver of the
right or remedy or an impairment of or a waiver of other rights or
remedies. No single or partial exercise of a right or remedy provided by
this Agreement or by law prevents further exercise of the right or remedy
or the exercise of another right or remedy.
18.3 The Buyer's rights and remedies contained in this Agreement are
cumulative and not exclusive of rights or remedies provided by law.
18.4 Except to the extent that they have been performed and except where this
Agreement provides otherwise, the obligations contained in this Agreement
remain in force after Completion.
18.5 If a party fails to pay a sum due from it under this Agreement on the due
date of payment in accordance with the provisions of this Agreement, that
party shall pay interest on the overdue sum from the due date of payment
until the date on which its obligation to pay the sum us discharged at a
minimum rate of 2 per cent. above LIBOR per annum (whether before or
after judgment). Interest accrues and is payable from day to day.
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18.6 A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) Act 1999 to enforce any term of this
Agreement, but this does not affect any right or remedy of a third party
which exists or is available apart from that Act.
19. ENTIRE AGREEMENT
This Agreement and each document referred to in it constitute the entire
agreement and supersede any previous agreements between the parties
relating to the subject matter of this Agreement.
20. ASSIGNMENT
20.1 The Buyer may, upon giving written notice to the Seller, assign and
transfer any of its rights under this Agreement in whole or in part and
without restriction to a subsidiary of the Buyer in which the Buyer holds
the beneficial interest to not less than 90 per cent. of the voting
rights exercisable in a general meeting of that subsidiary (a "subsidiary
assignee").
20.2 If that subsidiary assignee is subsequently to cease to be a subsidiary
assignee of the Buyer, then the Buyer shall procure that the subsidiary
assignee assigns those rights to the Buyer (or, at the Buyer's option, to
another subsidiary assignee of the Buyer) before it ceases to be a
subsidiary assignee.
21. NOTICES
21.1 A notice or other communication under or in connection with this
Agreement (a "Notice") shall be in writing and delivered personally or
sent by first class post (and air mail if overseas) or by fax to the
party due to receive the Notice to the address set out in clause 21.3 or
to another address, person, or fax number specified by that party by not
less than 7 days' written notice to the other party received before the
Notice was despatched.
21.2 Unless there is evidence that it was received earlier, a Notice is deemed
given if:
21.2.1 delivered personally, when left at the address referred to in
clause 21.1;
21.2.2 sent by mail, except air mail, two Business Days after posting it;
21.2.3 sent by recognised international courier, two Business Days after
posting it;
21.2.4 sent by air mail, six Business Days after posting it; and
21.2.5 sent by fax, when confirmation of its transmission has been
recorded by the sender's fax machine.
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21.3 The addresses referred to in clause 21.1 are:
Name of party Address Facsimile No. Marked for the
attention of
The Seller 575 Broadway, New +1 212 334 6638 General Counsel
York, NY 10012
Take-Two 575 Broadway, New +1 212 334 6638 General Counsel
York, NY 10012
The Buyer 8-14 Vine Hill, +44 20 7959 8449 Company Secretary
London EC1R 5DX
21.4 The address for:
21.4.1 the Seller's and Take-Two's agent for service referred to in
clause 22.3 is Harbottle & Lewis, Hanover House, 14 Hanover
Square, London W1R OBE, England, Attention: the Managing Partner;
and
21.4.2 the Buyer's agent for service referred to in clause 22.3 is
Clifford Chance Rogers & Wells LLP, 200 Park Avenue, New York, NY
10166-1053 United States of America, Attention: the Managing
Partner of the New York Office,
or (in each case) such other address notified in writing not less than 5
Business Days before receipt of documents referred to in clause 22.3.
22. GOVERNING LAW AND JURISDICTION
22.1 This Agreement is governed by English law.
22.2 The courts of England shall have non-exclusive jurisdiction to settle any
dispute arising from or connected with this Agreement (a "Dispute").
22.3 The parties agree that the documents which start any proceedings relating
to a Dispute ("Proceedings") and any other documents required to be
served in relation to those Proceedings may be served on:
22.3.1 the Seller or Take-Two by being served on Harbottle & Lewis,
English solicitors to the Seller and Take-Two with a copy to the
Seller or Take-Two (as the case may be); and
22.3.2 on the Buyer by being served on Clifford Chance Rogers & Wells,
LLP, U.S. solicitors to the Buyer with a copy to the Buyer,
as agent for service of such process in accordance with clause 21. These
documents may, however, be served in any other manner allowed by law.
This clause applies to all Proceedings wherever started.
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23. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which when executed and delivered is an original and all of which
together evidence the same agreement.
24. INDEMNITY FOR PAYMENTS
The Seller undertakes to indemnify and hold harmless the Buyer and each
Buyer's Group Undertaking from and against any and all actions, suits,
claims, demands, debts, liabilities, obligations, losses, damages, costs
and expenses (including legal fees) arising out of payments made by the
Seller to Ramy Weitz in connection with the transactions referred to in
paragraph 8 of Schedule 4. Any indemnification pursuant to this clause
shall be excluded from the provisions of clause 8.1.1 and no de minimis
shall apply in relation thereto.
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SCHEDULE 1
BUYER'S DETAILS
Registered Number: 3734233
Registered Office: 8-14 Vine Hill, London EC1R 5DX
Authorised share capital: (pound)800,000 divided into 160,000,000
Ordinary Shares of 0.5p each
Total issued share capital: 69,465,542 ordinary shares
Directors' authority to allot: (pound)103,600.08 pursuant to prior
Acquisition Agreements
(pound)114,775 on any other terms
Share capital under option: 5,521,330 Ordinary Shares (as at
31/8/2000)
Share capital required to satisfy Dixons: up to 8,885,948 Ordinary Shares
warrants and deferred consideration:
Computec Media AG: 2,423,278 Ordinary
Shares
Centromail: up to(pound)2 million worth
of shares
Internet Digital Media Ltd: up
to(pound)1,350,000 worth of shares
Interactive Commercial Enterprise: up
to(pound)2,000,000 worth of shares
Joysoft GmbH: up to DM1,000,000 worth of
shares
The Nordic Games Group: up to
SEK16,500,000 worth of shares
Gameplay may also, at its option, issue
up to (pound)7,000,000 worth of shares
to Dixons at (pound)2.17 per share to
fund expansion of new retail stores.
<TABLE>
<S> <C> <C>
Directors: Dylan Wilk James George Glicker
Neville David Buch John Paul Swingewood
Theodor Robert Bechman Mark Jonathan Bernstein
Paul Burden Mark Douglas Ashley Strachan
Ian Livingston
</TABLE>
Accounting Reference Date: 31/07
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Auditors: BDO Stoy Hayward, Chartered Accountants
and Registered Auditors, London
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SCHEDULE 2
BUYER'S WARRANTIES
1. Interpretation
In this Schedule:
"Accounts" means the Buyer's individual accounts (as that term is used in
section 226 of the Act) for the financial year ended on the Last
Accounting Date and contained in the Prospectus of the Company dated 26
July 1999; and
"Last Accounting Date" means 17 June 1999.
2. Organisation
The Buyer is a corporation duly organised, validly existing and in good
standing under the Laws of its jurisdiction of incorporation. The Buyer
possesses the full corporate power and authority to own its Assets,
conduct its business as and where such business is presently conducted,
and enter into this Agreement and each other agreement or document
contemplated by this Agreement.
3. Agreement
The Buyer's execution, delivery and performance of this Agreement, and
its consummation of the transactions contemplated by this Agreement:
(a) have been duly authorised by all necessary corporate actions by
its board of directors and shareholders;
(b) do not constitute a violation of or default under its memorandum
or articles of association;
(c) do not constitute a default or breach (immediately or after the
giving of notice, passage of time or both) under any Contract to
which the Buyer is a party or by which the Buyer is bound;
(d) do not constitute a violation of any Law or Judgment that is
applicable to it or to its business or Assets, or to the
transactions contemplated by this Agreement; and
(e) do not require the Consent of any Person.
This Agreement constitutes the valid and legally binding agreement of the
Buyer, enforceable against it in accordance with its terms.
4. Accounts
The Accounts have been prepared and audited on a proper and consistent
basis in accordance with the law and applicable standards, principles and
practices generally accepted in the United Kingdom. The Accounts show a
true and fair view of the assets, liabilities and state of affairs of the
Company as at the Last Accounting Date and of the
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profits and losses of the Company for the financial year ended on the
Last Accounting Date.
5. Company Details
The information regarding the Buyer set out in Schedule 1 is true and
correct.
6. Filings
Since 26 July 1999, Buyer has filed all forms, reports, statements and
other documents ("Filings") required to be filed with the Companies
Announcements Office of the London Stock Exchange. The Filings did not,
as of the date they were filed, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not materially
misleading. "Material" and "materially" mean material in the context of
the Buyer's Group.
7. Shares and Warrants
The Consideration Shares, Founder Shares and the shares issued pursuant
to the Warrants will, when issued, be duly authorised and validly issued
and fully paid, will be delivered hereunder free and clear of any liens,
adverse claims, security interests, pledges, mortgages, charges will rank
pari passu with all other ordinary shares of the Company and assuming
that the representations and warranties of Seller contained herein are
true and correct, will be issued in compliance with all applicable Laws.
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SCHEDULE 3
KEY CONTRACTS
1. Joint Marketing and Joint Product Agreement dated 18 May 2000 between
Broadband Studios, Inc. and NDS Limited.
2. Letter of intent dated 9 May 2000 from Microsoft Corporation to Take Two
Interactive Software, Inc regarding Powerplay Network games.
3. Memorandum of Understanding dated 31 May 2000 between Broadband Studios,
Inc. and OpenTV, Inc.
4. Non-disclosure Agreement dated 6 June 2000 between Liberate Technologies
and Broadband Studios Inc.
5. Non-disclosure Agreement between Power TV Inc and Broadband Studios Inc.
(undated)
6. Non-disclosure Agreement dated June 2000 between Lodgenet Entertainment
Corporation and Broadband Studios Inc (relating to Pixel Broadband
Studios Inc).
7. Non-disclosure Agreement dated 2 June 2000 between Akanai Technologies,
Inc and Broadband Studios Inc.
8. Agreement dated 8 June 2000 between Ananey Interactive and Broadband
Studios, Inc.
9. Memorandum of Understanding dated 5 June 2000 between Broadband Studios,
Inc. and Hed Artsi.
10. Memorandum of Understanding dated 25 August 2000 between Broadband
Studios, Inc. and Digital Illusions CEAB.
11. ATVEF Adopters Agreement dated 13 June 2000 between ATVEF Licencing LLC
and Broadband Studios, Inc.
12. License and Distribution Agreement dated 6 June 2000 between Microsoft
Corporation and Broadband Studios, Inc.
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SCHEDULE 4
WARRANTIES
Part (A)
Supplementary Warranties
1. The Seller, or Take-Two (if the Consideration Shares are allotted to
Take-Two, at the Seller's request) is acquiring the Consideration Shares
for investment purposes for its own account and not with a view to any
resale, distribution or other disposition thereof.
2. Take-Two has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of an
investment in the Consideration Shares and has concluded on the basis of
information available to it that it is able to bear the risks associated
with such investment. Take-Two has the ability to bear the economic risk of
its investment in the Consideration Shares, has adequate means of providing
for its current and contingent needs, has no need for liquidity with
respect to its investment in the Consideration Shares, and is able to
sustain a complete loss of its investment in the Shares.
3. Take-Two is an "institutional accredited investor" satisfying the
requirements of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
1933 Act and is acquiring the Shares for its own account.
4. Take-Two acknowledges that:
4.1 it has received an Investor Information Pack, which contains only copies of
such reports and filings which the Buyer has made publicly available, and
which have been announced in accordance with the requirements of the London
Stock Exchange since 26 July 1999; and
4.2 the Buyer has not registered the Consideration Shares or any other of its
securities under the U.S. Securities Act of 1933, as amended (the "1933
Act"), and is not subject to the reporting requirements under the U.S.
Securities Exchange Act of 1934, as amended (the "1934 Act") accordingly,
the information contained in the Investor Information Pack may differ from
the information that would be required to be filed with the U.S. Securities
and Exchange Commission if the Buyer were subject to the requirements of
the 1933 Act or the 1934 Act.
5. Take-Two acknowledges that the Consideration Shares have not been and will
not be registered under the 1933 Act, and undertakes that if it decides to
offer, sell, pledge or otherwise transfer any of the Consideration Shares,
such Consideration Shares may be offered, sold, pledged or otherwise
transferred only:
5.1 outside the United States in accordance with Rule 903 or 904 of Regulation
S under the 1933 Act;
5.2 within the United States in accordance with the exemption from registration
under the 1933 Act provided by Rule 144 thereunder, if available, and in
compliance with any applicable state securities laws; or
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5.3 in a transaction that does not require registration under the 1933 Act, in
accordance with applicable state securities laws and in relation to which
Take-Two has furnished to the Buyer an opinion to such effect from counsel
of recognised standing in form and substance satisfactory to the Buyer
prior to such offer, sale, pledge or transfer.
6. Take-Two acknowledges that each certificate representing Consideration
Shares originally issued to a U.S. person, a person in the United States or
a person for the account or benefit of a U.S. person or a person in the
United States, as well as all certificates issued in exchange for or in
substitution of the foregoing securities, shall bear the following legend
until such time as the same is no longer required under the 1933 Act or
applicable state securities laws:
"THE SHARES OF THE COMPANY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THE HOLDER
HEREOF, BY PURCHASING SUCH SHARES, AGREES FOR THE BENEFIT OF THE COMPANY
THAT SUCH SHARES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY (A) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 903 OR RULE 904
OF REGULATION S UNDER THE 1933 ACT, (B) WITHIN THE UNITED STATES IN
ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT PROVIDED
BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE
STATE SECURITIES LAWS, OR (C) IN A TRANSACTION THAT DOES NOT REQUIRE
REGISTRATION UNDER THE 1933 ACT, IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AND IN RELATION TO WHICH TAKE-TWO HAS FURNISHED TO THE
COMPANY AN OPINION TO SUCH EFFECT FROM COUNSEL OF RECOGNISED STANDING IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY PRIOR TO SUCH
OFFER, SALE, PLEDGE OR TRANSFER."
7. Except as specified in the Disclosure Schedule, there are no other
contracts to which the Seller is a party which are required for a Group
Company's business as it is carried on as at the date of this Agreement.
8. Except as specified in the Disclosure Schedule, neither the Seller nor any
Group Company owes any amount to a present or former director, officer or
employee of the Seller or any Group Company (as the case may be) except
payments to be made to Ramy Weitz and Mike Suarez.
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Part B
Stock Purchase Agreement Warranties
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SCHEDULE 5
INTELLECTUAL PROPERTY
1. Trademark Application dated 21 March 2000 for "Jive" (serial no.
78/000210).
2. Trademark Application dated 21 March 2000 for "Powerplay Network" (serial
no. 78/000211).
3. Trademark Application dated 21 March 2000 for "Broadband Studios" (serial
no. 78/000212).
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EXECUTED by the parties:
Signed for )
and on behalf of )
BROADBAND STUDIOS, INC., )
Signed for )
and on behalf of )
GAMEPLAY.COM PLC )
Signed for )
and on behalf of )
TAKE-TWO INTERACTIVE )
SOFTWARE, INC. )
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