EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
by
and
among
INFOGRAMES, INC.,
SHINY ENTERTAINMENT, INC.,
INTERPLAY ENTERTAINMENT CORP.,
SHINY GROUP, INC.,
and
XXXXX XXXXX
Dated: April 23, 2002
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
ARTICLE 2
PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale of Shares.............................................................. 14
2.2 Purchase Price........................................................................... 14
2.3 The Closing.............................................................................. 16
2.4 Deliveries at the Closing................................................................ 16
2.5 Payments at the Closing.................................................................. 17
2.6 Assumption of Employee Options at the Closing............................................ 19
ARTICLE 3
REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION
3.1 Representations and Warranties of Interplay.............................................. 19
3.2 Representations and Warranties of Buyer.................................................. 21
3.3 Representations and Warranties of Perry.................................................. 22
3.4 Representations and Warranties of Shiny Group............................................ 22
ARTICLE 4
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
4.1 Corporate Status......................................................................... 23
4.2 Power and Authority; Enforceability...................................................... 24
4.3 No Violation............................................................................. 24
4.4 Brokers' Fees............................................................................ 24
4.5 Capitalization........................................................................... 24
4.6 Records.................................................................................. 25
4.7 Acquired Subsidiaries.................................................................... 25
4.8 Financial Statements..................................................................... 25
4.9 Subsequent Events........................................................................ 25
4.10 Liabilities.............................................................................. 25
4.11 Legal Compliance......................................................................... 25
4.12 Tax Matters.............................................................................. 25
4.13 Title to and Condition of Assets; Liens on Assets and Shares............................. 27
4.14 Real Property............................................................................ 27
4.15 Intellectual Property.................................................................... 27
4.16 Contracts................................................................................ 32
4.17 Receivables.............................................................................. 34
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4.18 Powers of Attorney....................................................................... 34
4.19 Insurance................................................................................ 34
4.20 Litigation............................................................................... 35
4.21 Labor; Employees......................................................................... 35
4.22 Employee Benefits........................................................................ 35
4.23 Environmental, Health, and Safety Matters................................................ 37
4.24 Permits.................................................................................. 37
4.25 Certain Business Relationships with the Company.......................................... 38
ARTICLE 5
PRE-CLOSING COVENANTS
5.1 General.................................................................................. 38
5.2 Notices, Releases, Agreements, and Consents.............................................. 38
5.3 Operation of Company's Business.......................................................... 39
5.4 Preservation of Business................................................................. 40
5.5 Full Access and Company Data............................................................. 40
5.6 Exclusivity.............................................................................. 41
5.7 Perry Release............................................................................ 41
5.8 Perry's Shares........................................................................... 41
5.9 Shiny Group's Shares..................................................................... 41
5.10 Operation of Interplay's Business........................................................ 41
5.11 Performance of Transfer Agreements....................................................... 42
5.12 Payment Under New Microsoft Amendment.................................................... 42
5.13 Payment Under Warner Amendment........................................................... 42
5.14 Transition Services Agreement............................................................ 42
ARTICLE 6
POST-CLOSING COVENANTS
6.1 General.................................................................................. 43
6.2 Litigation Support....................................................................... 43
6.3 Insurance................................................................................ 43
6.4 Tax Treatment of Transaction............................................................. 43
6.5 Noncompetition........................................................................... 45
6.6 Nondisclosure of Proprietary Data........................................................ 46
6.7 Continuing Access........................................................................ 46
6.8 Audit Cooperation........................................................................ 46
6.9 Use of Proceeds.......................................................................... 46
6.10 Bioware Payments......................................................................... 47
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ARTICLE 7
CLOSING CONDITIONS
7.1 Conditions Precedent to Obligation of Buyer.............................................. 47
7.2 Conditions Precedent to Obligation of Interplay.......................................... 50
7.3 Conditions Precedent to Obligations of Perry and Shiny Group............................. 51
ARTICLE 8
TERMINATION
8.1 Termination of Agreement................................................................. 51
8.2 Effect of Termination.................................................................... 52
ARTICLE 9
INDEMNIFICATION
9.1 Survival of Representations and Warranties............................................... 52
9.2 Indemnification Provisions for Buyer's Benefit........................................... 53
9.3 Indemnification Provisions for Interplay's Benefit....................................... 54
9.4 Indemnification Provisions for Perry's and Shiny Group's Benefit......................... 54
9.5 Indemnification Claim Procedures......................................................... 54
9.6 Limitations on Indemnification Liability................................................. 55
9.7 Other Indemnification Provisions......................................................... 56
9.8 Certain Tax Matters...................................................................... 56
ARTICLE 10
MISCELLANEOUS
10.1 Entire Agreement......................................................................... 59
10.2 Successors............................................................................... 60
10.3 Assignments.............................................................................. 60
10.4 Notices.................................................................................. 60
10.5 Specific Performance..................................................................... 61
10.6 Submission to Jurisdiction............................................................... 62
10.7 Time..................................................................................... 62
10.8 Counterparts............................................................................. 62
10.9 Headings................................................................................. 62
10.10 Governing Law............................................................................ 62
10.11 Amendments and Waivers................................................................... 62
10.12 Severability............................................................................. 62
10.13 Expenses................................................................................. 62
10.14 Construction............................................................................. 63
10.15 Incorporation of Exhibits, Annexes, and Schedules........................................ 63
10.16 Remedies................................................................................. 63
10.17 Electronic Signatures.................................................................... 63
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ATTACHMENTS
Exhibits
Exhibit A [Intentionally Omitted]
Exhibit B Form of Contract Assignment and Assumption Agreement
Exhibit C Form of Design Services Agreement
Exhibit D Form of IP Assignment
Exhibit E Form of Opinion of Counsel to the Company and Interplay
Exhibit F Form of Opinion of Buyer
Exhibit G Form of Opinion of Parent
Exhibit H Form of Perry Employment Agreement
Exhibit I Form of the Interplay Officer's Certificate
Exhibit J Form of the Interplay Secretary's Certificate
Exhibit K Form of Buyer Officer's Certificate
Exhibit L Form of Buyer Secretary's Certificate
Exhibit M Form of Closing Escrow Agreement
Exhibit N Form of Opinion of Counsel to Buyer
Exhibit O Perry Release
Exhibit P Warner Amendment
Exhibit Q New Microsoft Agreement
Exhibit R Form of Perry Certificate
Exhibit S Form of Interplay Note
Exhibit T Form of Europlay Note
Exhibit U Form of Akin Note
Exhibit V Form of Interplay Guaranty
Exhibit W Form of Europlay Guaranty
Exhibit X Form of Akin Guaranty
Exhibit Y Form of Bioware Guaranty
Exhibit Z Use of Proceeds
Disclosure Letters
Buyer Disclosure Letter
Company Disclosure Letter
Interplay Disclosure Letter
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "AGREEMENT"), dated April 23, 2002,
is by and among (i) Infogrames, Inc., a Delaware corporation ("BUYER"), (ii)
Shiny Entertainment, Inc., a California corporation (the "COMPANY"), (iii) Xxxxx
Xxxxx, an individual ("PERRY"), (iv) Shiny Group, Inc., a California corporation
wholly owned by Perry ("SHINY GROUP"), and (v) Interplay Entertainment Corp., a
Delaware corporation ("INTERPLAY" and, together with the Company, the "COMPANY
PARTIES"). Perry, Shiny Group and Interplay are collectively referred to herein
as "SELLERS."
RECITALS:
A. Sellers collectively own all of the Company's outstanding capital
stock and all outstanding Commitments (as defined) to acquire the Company's
capital stock except for the Employee Options.
B. Buyer desires to purchase from Sellers all of the Company's
outstanding capital stock, and Sellers desire to sell to Buyer all of the
Company's outstanding capital stock, in accordance with this Agreement's terms
and conditions.
C. Buyer, Sellers and the Company (each a "PARTY" and collectively the
"PARTIES") intend for the purchase and sale of the Shares (as defined) to be
treated as a taxable purchase for tax purposes.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants contained herein, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
"ACTION" means any action, appeal, petition, plea, charge, complaint,
claim, suit, demand, litigation, arbitration, mediation, hearing, inquiry,
investigation or similar event, occurrence, or proceeding.
"AFFILIATE" with respect to any specified Person, means a Person that,
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such specified Person. For this
definition, "control" (and its derivatives) means the possession, directly or
indirectly, or as trustee or executor, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting Equity Interests, as trustee or executor, by Contract or credit
arrangements or otherwise.
"AFTER TAX BASIS" means a basis such that any payment (the "Original
Payment") received or deemed to have been received by a Person (the "Recipient")
will be supplemented by a further payment to the recipient so that the sum of
the two payments will equal the Original
Payment, after taking into account (i) all taxes that would result from the
receipt or accrual of such payments, if legally required, and (ii) any reduction
in taxes that would result from the deduction of the expense indemnified
against, if legally permissible; provided that such reduction is actually
realized by the Recipient no later than the end of the Tax period in which the
indemnification payment is received. In the event that a taxing authority will
treat any indemnification payment as not includible in gross income or disallow
any deduction taken into account hereunder, the indemnification will be
recomputed and further payment or refunds made.
"AGREEMENT" is defined in the preamble to this Agreement.
"AKIN" means Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
"AKIN GUARANTY" means the Payment Guaranty of Parent relating to the
Akin Note, in the form of Exhibit X.
"AKIN NOTE" means the Promissory Note of Buyer, in the form of Exhibit
U.
"AKIN RELEASE" means an agreement to be entered into on or before the
Closing among Akin, the Company and Interplay, in form and substance reasonably
satisfactory to Buyer, which agreement will provide that from and after the
Closing Akin will (without any further payment by or obligation of the Company
or Buyer except as expressly contemplated in the Closing Escrow Agreement) waive
any amounts owed to it by the Company and release any security interest that it
may have in any assets, capital stock, rights or property of or related to the
Company.
"ANCILLARY AGREEMENTS" means the Closing Escrow Agreement and the
various agreements required under Sections 7.1, 7.2, 7.3, and/or elsewhere
herein.
"ARCHIVAL ESCROW AGREEMENT" means an escrow agreement to be entered
into among the Company, Interplay and a mutually acceptable escrow agent,
pursuant to the terms of the IP Assignment.
"BALANCE SHEET DATE" is defined in Section 4.8.
"BIOWARE GUARANTY" means the Guaranty by Parent, substantially in the
form of Exhibit Y, and in form and substance reasonably satisfactory to Buyer.
"XXXXX XXXXX RELEASE" means an agreement to be entered into on or
before the Closing among Xxxxx Xxxxx, the Company and Interplay, in form and
substance reasonably satisfactory to Buyer, which agreement will provide that
from and after the Closing Xxxxx Xxxxx will (without any further payment by or
obligation of the Company or Buyer except as expressly contemplated in the
Closing Escrow Agreement) waive any amounts owed to him by the Company or in
connection with the Games or any Intellectual Property and release any security
interest that he may have in any assets, capital stock, rights or property of or
related to the Company.
"BUYER" is defined in the preamble to this Agreement.
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"BUYER DISCLOSURE LETTER" is defined in Section 3.2. The Sections of
the Buyer Disclosure Letter will be numbered to correspond to the applicable
Sections of this Agreement and, together with all matters under such heading,
will be deemed to apply only to that Section.
"BUYER INDEMNIFIED PARTIES" means Interplay and its officers,
directors, managers, employees, agents and representatives.
"BUYER OFFICER'S CERTIFICATE" is defined in Section 2.4.
"BUYER OPINIONS" means the Opinion of Buyer, the Opinion of Counsel to
Buyer and the Opinion of Parent.
"CLOSING" means the consummation of the purchase and sale of the Shares
as contemplated in this Agreement.
"CLOSING BALANCE SHEET" is defined in Section 2.2(b).
"CLOSING DATE" is defined in Section 2.3.
"CLOSING DATE ADJUSTMENT" is defined in Section 2.2(b).
"CLOSING ESCROW AGREEMENT" means the escrow agreement among Buyer,
Sellers, and the escrow agent and other parties named therein, substantially in
the form of Exhibit M, and in form and substance reasonably satisfactory to the
Parties.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMERCIALLY REASONABLE EFFORTS" means efforts that are designed to
enable a Party, directly or indirectly, to satisfy a condition to, or otherwise
assist in the consummation of, the Transactions and that do not require the
performing Party to expend any funds or assume Liabilities other than
expenditures and Liabilities that are customary and reasonable in nature and
amount in the context of the Transactions.
"COMMITMENT" means (a) options, warrants, convertible securities,
exchangeable securities, subscription rights, conversion rights, exchange
rights, or other Contracts that could require a Person to issue any of its
Equity Interests or to sell any Equity Interests it owns in another Person; (b)
any other securities convertible into, exchangeable or exercisable for, or
representing the right to subscribe for any Equity Interest of a Person or owned
by a Person; (c) statutory pre-emptive rights or pre-emptive rights granted
under a Person's Organizational Documents; and (d) stock appreciation rights,
phantom stock, profit participation, or other similar rights with respect to a
Person.
"COMMON EXCHANGE RATIO" means a fraction (i) the numerator of which is
the product of the Purchase Price divided by the total number of Shares and (ii)
the denominator of which is the average of Buyer's stock value over the 15-day
period ending on the third business day prior to the Closing Date.
"COMPANY" is defined in the preamble to this Agreement.
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"COMPANY DISCLOSURE LETTER" is defined in the introduction to ARTICLE
4. The Sections of the Company Disclosure Letter will be numbered to correspond
to the applicable Sections of this Agreement and, together with all matters
under such heading, will be deemed to apply only to that Section.
"COMPANY MATERIAL CONTRACT" is defined in Section 4.16.
"COMPANY PARTIES" is defined in the preamble to this Agreement.
"COMPETITIVE BUSINESS" is defined in Section 6.5(a).
"CONSENT" means any consent, approval, notification, waiver, or other
similar action.
"CONTRACT" means any contract, agreement, arrangement, commitment,
letter of intent, memorandum of understanding, heads of agreement, promise,
obligation, right, instrument, document, or other similar understanding, whether
written or oral.
"CONTRACT ASSIGNMENT AND ASSUMPTION AGREEMENT" means the assignment and
assumption agreement between Interplay and the Company, in the form of Exhibit
B.
"COPYRIGHTS" means all registered and unregistered copyrights to any
original work(s) of authorship relating to the subject matter of this Agreement,
which are fixed in any tangible medium of expression.
"DAMAGES" means all damages, losses, Liabilities, payments, amounts
paid in settlement, obligations, fines, penalties, expenses and other costs
(including reasonable fees and expenses of attorneys, accountants and other
professional advisors).
"DESIGN SERVICES AGREEMENT" means an agreement to be entered into on or
before the Closing between the Company and each of Xxxx Xxxxxxxxx and Xxxxx
Xxxxxxxxx in the form of Exhibit C.
"DISCLOSURE LETTERS" means the Buyer Disclosure Letter, the Company
Disclosure Letter and the Interplay Disclosure Letter.
"ELECTIONS" is defined in Section 6.4(a).
"EMPLOYEE OPTIONS" means the Commitments to certain current employees
of the Company issued pursuant to the Company's 1995 Stock Option Plan listed as
such in Section 4.5 of the Company Disclosure Letter.
"ENCUMBRANCE" means any Order, Security Interest, equitable interest or
restriction of any kind, including any restriction on use, voting, transfer,
receipt of income, or exercise of any other attribute of ownership (specifically
excluding infringement and misappropriation claims relating to Intellectual
Property).
"ENFORCEABLE" with respect to a Contract means that such Contract is
the legal, valid, and binding obligation of the applicable Person, enforceable
against such Person in accordance with
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its terms, except as such enforceability may be subject to the effects of
bankruptcy, insolvency, reorganization, moratorium, or other similar Laws
relating to or affecting the rights of creditors, and general principles of
equity.
"ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS" means all Orders,
Contracts and Laws concerning or relating to public health and safety,
worker/occupational health and safety, and pollution or protection of the
environment, including those relating to the presence, use, manufacturing,
refining, production, generation, handling, transportation, treatment,
recycling, transfer, storage, disposal, distribution, importing, labeling,
testing, processing, discharge, release, threatened release, control, or other
action or failure to act involving cleanup of any hazardous materials,
substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise, or radiation, each as amended and as now in
effect.
"EQUITY INTEREST" means (a) with respect to a corporation, any and all
shares of capital stock and any Commitments with respect thereto, (b) with
respect to a partnership, limited liability company, trust or similar Person,
any and all units, interests or other partnership/limited liability company
interests, and any Commitments with respect thereto, and (c) any other equity
ownership or participation in a Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is or was a member of a group of which the Company is or was
a member and which is or was under common control or treated as a single
employer with the Company within the meaning of Section 414 (b), (c), (m) or (o)
of the Code.
"ESCROWED PURCHASE PRICE" is described in Section 2.5(a).
"EUROPLAY" means Europlay 1, LLC.
"EUROPLAY GUARANTY" means the Payment Guaranty of Parent relating to
the Europlay Note, in the form of Exhibit W.
"EUROPLAY NOTE" means the Promissory Note of Buyer, in the form of
Exhibit T.
"EUROPLAY RELEASE" means an agreement to be entered into on or before
the Closing among Europlay, the Company and Interplay, in form and substance
reasonably satisfactory to Buyer, which agreement will provide that from and
after the Closing Europlay will (without any further payment by or obligation of
the Company or Buyer except as expressly contemplated in the Closing Escrow
Agreement) waive any amounts owed to it by the Company and release any security
interest that it may have in any assets, capital stock, rights or property of or
related to the Company.
"EXPIRATION DATE" means 30 days after the date hereof.
"FINAL ADJUSTMENT" is defined in Section 2.2(c)(iv).
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"FINAL BALANCE SHEET" is defined in Section 2.2(c)(i).
"FINANCIAL STATEMENTS" is defined in Section 4.8.
"GAAP" means United States generally accepted accounting principles, as
in effect from time to time.
"GAMES" means all interactive software and video games developed, being
developed or to be developed by or on behalf of any Company Party (in whatever
stage of completion) and relating to, based upon and/or derived from the Matrix
Pictures.
"GAME SOFTWARE" means any and all Intellectual Property, Software,
Preexisting Code, tools, engines, documentation and/or other programs (i) that
are included in or related to the Games; and (ii) that are licensed to or
developed (in whatever stage of development) by or on behalf of a Company Party.
"GOVERNMENTAL BODY" means any legislature, agency, bureau, branch,
department, division, commission, court, tribunal, magistrate, justice,
multi-national organization, quasi-governmental body, or other similar
recognized organization or body of any federal, state, county, municipal, local,
or foreign government.
"INDEMNIFICATION CLAIM" is defined in Section 9.5.
"INDEMNIFIED PARTIES" means, individually and as a group, the Buyer
Indemnified Parties and the Interplay Indemnified Parties.
"INDEMNIFIED PARTIES THRESHOLD AMOUNT" is defined in Section 9.6(b).
"INDEMNITOR" means any Party having any Liability to any Indemnified
Party under this Agreement.
"INDEPENDENT ACCOUNTANTS" is defined in Section 2.2(c)(iii).
"INTELLECTUAL PROPERTY" means all Copyrights, Marks, Patents, Trade
Secrets, domain names and URL's, all applications thereof, all licenses with
respect thereto and all rights arising thereunder (including the right to xxx
for past infringement).
"INTERPLAY" is defined in the preamble to this Agreement.
"INTERPLAY DISCLOSURE LETTER" is defined in Section 3.1. The Sections
of the Interplay Disclosure Letter will be numbered to correspond to the
applicable Sections of this Agreement and, together with all matters under such
heading, will be deemed to apply only to that Section.
"INTERPLAY GUARANTY" means the Payment Guaranty of Parent relating to
the Interplay Note, in the form of Exhibit V.
"INTERPLAY INDEMNIFIED PARTIES" means Buyer, the Company and each of
their respective officers, directors, managers, employees, agents and
representatives.
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"INTERPLAY MATERIAL CONTRACT" is defined in Section 3.1(g).
"INTERPLAY NOTE" means the Promissory Note of Buyer, in the form of
Exhibit S.
"INTERPLAY OFFICER'S CERTIFICATE" is defined in Section 2.4.
"INTERPLAY'S PRO RATA SHARE" is defined in Section 9.8(a).
"INTERPLAY PURCHASE PRICE" is defined in Section 2.2(a).
"IP ASSIGNMENT" means the assignment agreement between Interplay and
the Company, in the form of Exhibit D.
"LASALLE" means La Salle Business Credit, Inc.
"LASALLE RELEASE" means the Forbearance Agreement entered into as of
March 13, 2002 among LaSalle, Company and Interplay, which provides that from
and after the Closing LaSalle will release (subject to the Fargo Release but
otherwise without any further payment by or obligation of the Company or Buyer)
any security interest that LaSalle may have in any assets, capital stock, rights
or property of or related to the Company. Interplay has delivered a true and
complete copy of the LaSalle Release to Buyer.
"LAW" means any law (statutory, common, or otherwise), constitution,
treaty, convention, ordinance, equitable principle, code, rule, regulation,
executive order, or other similar authority enacted, adopted, promulgated, or
applied by any Governmental Body, each as amended and now in effect.
"LIABILITY" or "LIABLE" means any liability or obligation, whether
known or unknown, asserted or unasserted, absolute or contingent, matured or
unmatured, conditional or unconditional, latent or patent, accrued or unaccrued,
liquidated or unliquidated, or due or to become due.
"LISTED COPYRIGHT" is defined in Section 4.15(c).
"LISTED XXXX" is defined in Section 4.15(b).
"LISTED PATENT" is defined in Section 4.15(a).
"MARKS" means all words, slogans, designs, pictures or any other
symbols used to identify any goods and/or services, including all registered and
unregistered trademarks and service marks anywhere in the world and all
corresponding applications and "intent to use" applications related thereto,
together with the goodwill and the business appurtenant thereto.
"MATERIAL ADVERSE CHANGE (OR EFFECT)" means a change (or effect) in the
condition (financial or otherwise), properties, assets, Liabilities, rights,
obligations, operations, business, or prospects which change (or effect),
individually or in the aggregate, could reasonably be expected to be materially
adverse to such condition, properties, assets, Liabilities, rights, obligations,
operations, business, or prospects, taken as a whole.
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"MATERIAL CONTRACTS" means the Company Material Contracts and the
Interplay Material Contracts.
"MATRIX PICTURES" means the upcoming motion pictures currently titled
"The Matrix Reloaded"(aka "Matrix 2") and/or "The Matrix Revolutions" (aka
"Matrix 3") (and/or any additional derivative production based thereon) and all
elements depicted or included therein or associated therewith.
"MATRIX PROPERTY" means (A) the Messiah Game Property, (B) the Games,
(C) the Game Software, and (D) any and all of the following included in, used in
connection with, related to, derived from or based upon the Games (and/or
primarily in the development thereof, provided that Messiah Game Property, the
Games and the Game Software will, in any event, constitute Matrix Property), the
Game Software and/or the Matrix Pictures: (i) Software, Preexisting Code, tools,
engines, diagrams, models, formulas, data, text, documentation, manuals,
programs, artwork, materials (whether pictorial, graphic, visual, audio,
audiovisual, animated, digital, literary, dramatic, musical or otherwise),
drawings, designs, sketches, images, sounds, illustrations, photographs, printed
materials, scripts, storyboards, film and video materials, information (whether
electronic, digitized or computerized or otherwise), and all other tangible
property; (ii) contract rights, other rights and general intangibles; (iii)
ideas, inventions, discoveries, themes, characters, game play, environments,
backdrops, stories, plots and other elements; (iv) Intellectual Property; and
(v) all other properties and things of value and products and proceeds thereof.
Without limiting the generality of the foregoing definition of "Matrix
Property," the parties further agree that immediately following the Closing and
through the Applicable Term (as defined below), with respect to any items of
Interplay's tangible or intangible property not assigned to the Company pursuant
to the IP Assignment and that (A) is not commercially available (i.e., not "off
the shelf") or for which a reasonable substitute is not so commercially
available (B) has been used by any Company Party in the development of the
Games, and (C) is reasonably requested by the Company to develop and/or exploit
the Games, Interplay will reasonably cooperate with the Company to give it the
ability to use such property (including by affording the Company a continuing
right of access to such property, even if such property is embedded or otherwise
contained in Interplay's "off the shelf" hardware, and, to the maximum extent
permitted by the terms of Interplay's ownership or license thereof, by granting
the Company a non-exclusive, royalty free, worldwide license to use such
property) in the development and exploitation of the Games in all media (whether
now known or hereafter devised). The "Applicable Term" means (x) with respect to
the development of the Games, the entire period of the Company's development of
the Games (including any add-ons, modifications or expansion packs thereto), and
(y) perpetual with respect to the exploitation of the Games.
"MESSIAH GAME PROPERTY" collectively refers to: (i) the character
engine developed for the Messiah video game that incorporates technology claimed
in the Messiah Patents (the "Messiah Engine"); (ii) the character engine derived
from the Messiah Engine developed for the Sacrifice video game (the "Sacrifice
Engine"); and (iii) the Messiah Patents.
"MESSIAH PATENTS" means United States Provisional Patent Application
Serial No. 60/089,944 filed on June 19, 0000, Xxxxxx Xxxxxx Patent Application
Serial No. 213,092 filed on December 15, 1998 and any patent in the United
States making any claim of priority thereto (including United States Patent No.
6,317,125, entitled "Saxs Video Object Generation Engine"),
8
the inventions described and claimed therein, and any divisions, continuations,
continuations-in-part (to the extent that the claims are directed to the subject
matter specifically described therein), patents issuing thereon or reissues
thereof, and any an all foreign patents and patent applications corresponding
thereto.
"MICROSOFT" means Microsoft Corporation.
"NEW MICROSOFT AGREEMENT" means the Agreement for The Matrix for the
Xbox Video Game System dated as of April 19, 2002 between Microsoft and Buyer,
attached as Exhibit Q.
"NONCOMPETITION COVENANTS" is defined in Section 6.5(a).
"NON-MATRIX PROPERTY" means (A) Non-Matrix Games (as defined below) and
(B) all Included Property (as defined below) that satisfies all of the following
criteria: such Included Property (i) is owned by or licensed to a Company Party
prior to the Closing; (ii) is not Matrix Property; and (iii) relates primarily
to the interactive software or video games entitled "Earthworm Xxx", "Earthworm
Xxx 2", "Earthworm Xxx 3D", "MDK", "MDK 2", "Sacrifice", "Messiah", "Wild 9",
"R/C Stuntcopter", "VR Baseball `99", and "Test of the Dragon" (collectively,
the "Non-Matrix Games"). "Included Property" means Intellectual Property,
software, tools, engines, diagrams, models, formulas, data, text, documentation,
manuals, programs, artwork, materials (whether pictorial, graphic, visual,
audio, audiovisual, animated, digital, literary, dramatic, musical or
otherwise), drawings, designs, sketches, images, sounds, illustrations,
photographs, printed materials, scripts, storyboards, film and video materials,
information (whether electronic, digitized or computerized or otherwise), and
all other tangible property, contract rights, other rights and general
intangibles.
"OPINION OF BUYER" means a signed opinion dated the Closing Date, in
the form of Exhibit F, from in-house counsel to Buyer.
"OPINION OF COUNSEL TO BUYER" means a signed opinion dated the Closing
Date, in the form of Exhibit N, from O'Melveny & Xxxxx LLP, outside counsel to
Buyer.
"OPINION OF COUNSEL TO THE COMPANY AND INTERPLAY" means a signed
opinion dated the Closing Date, in the form of Exhibit E, from Akin, outside
counsel to the Company and Interplay.
"OPINION OF PARENT" means a signed opinion dated the Closing Date, in
the form of Exhibit G, from in-house counsel to Parent.
"ORDER" means any order, ruling, decision, verdict, decree, writ,
subpoena, mandate, precept, command, directive, consent, approval, award,
judgment, injunction, or other similar determination or finding by, before, or
under the supervision of any Governmental Body, arbitrator, or mediator.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice of the relevant Person and its
Subsidiaries.
9
"ORGANIZATIONAL DOCUMENTS" means the articles of incorporation,
certificate of incorporation, charter, bylaws, articles of formation,
regulations, operating agreement, certificate of limited partnership,
partnership agreement, and all other similar documents, instruments or
certificates executed, adopted, or filed in connection with the creation,
formation, or organization of a Person, including any amendments thereto.
"PARENT" means Infogrames Entertainment SA, Buyer's parent company.
"PARTIES" is defined in the Recitals to this Agreement.
"PATENTS" means any and all United States patents and patent
applications, the inventions described and claimed therein, and any divisions,
continuations, continuations-in-part (to the extent that the claims are directed
to the subject matter specifically described therein), patents issuing thereon
or reissues thereof, and any and all foreign patents and patent applications
corresponding thereto.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMIT" means any permit, license, certificate, approval, consent,
notice, waiver, franchise, registration, filing, accreditation, or other similar
authorization required by any Law, Governmental Body, or Contract.
"PERRY" is defined in the Preamble to this Agreement.
"PERRY CERTIFICATE" is defined in Section 2.4.
"PERRY EMPLOYMENT AGREEMENT" means the employment Contract between
Buyer and the form of Exhibit H.
"PERRY PURCHASE PRICE" is defined in Section 2.2(a).
"PERRY RELEASE" the Settlement and Release Agreement dated as of the
date hereof, among Perry, Shiny Group, the Company, and Interplay, attached as
Exhibit O.
"PERRY SHARES" is defined in Section 3.3(d).
"PERSON" means any individual, partnership, limited liability company,
corporation, association, joint stock company, trust, entity, joint venture,
labor organization, unincorporated organization, or Governmental Body.
"PLANS" is defined in Section 4.22(a).
"PREEXISTING CODE" means all computer programming source code
incorporated into the Software that (i) was not specifically written or
developed for use in such Software and (ii) is material to the operation of the
Company's business. A complete and accurate list of the Preexisting Code is
included in the Company Disclosure Letter.
"PURCHASE PRICE" is defined in Section 2.2(a).
10
"PURCHASE PRICE ALLOCATION" is defined in Section 6.4(a).
"RECEIVABLES" means all receivables of the Company, including all
Contracts in transit, manufacturers warranty receivables, notes receivable,
accounts receivable, trade account receivables, and insurance proceeds
receivable.
"RECORDS" means all of a Person's books, records, files, documents and
agreements, whether in tangible, electronic or digital media.
"RESTRICTIVE TERM" means a period of the earlier of (i) four years from
the Closing Date and (ii) the later of (A) six months from the initial
commercial release date by Buyer of the video game based on the motion picture
project currently entitled "The Matrix Revolutions" (the "Matrix III Game"), and
(B) the earlier of (1) the date on which Buyer's publishing division makes an
official corporate decision to permanently abandon development of the Matrix III
Game, and (2) the date on which Buyer's license to develop and exploit the
Matrix III Game is terminated.
"SCHEDULES" means the Schedules to this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY INTEREST" means any security interest, deed of trust,
mortgage, pledge, lien, charge, claim, or other similar interest or right,
except for (i) liens for taxes, assessments, governmental charges, or claims
that are being contested in good faith, (ii) statutory liens of landlords and
warehousemen's, carriers', mechanics', suppliers', materialmen's, repairmen's,
or other like liens (including Contractual landlords' liens) arising in the
Ordinary Course of Business; and (iii) liens incurred or deposits made in the
Ordinary Course of Business in connection with workers' compensation,
unemployment insurance and other similar types of social security.
"SELLERS" is defined in the preamble to this Agreement.
"SHARE" means any issued and outstanding share of the Common Stock, no
par value, of the Company, and, as of the Closing Date, includes the Perry
Shares and the Shiny Group Shares.
"SHINY GROUP" is defined in the Preamble to this Agreement.
"SHINY GROUP PURCHASE PRICE" is defined in Section 2.2(a).
"SHINY GROUP SHARES" is defined in Section 3.4(d).
"SOFTWARE" means any and all computer software that has been developed
(or is in the process of being developed) by or on behalf of the Company prior
to the Closing Date, including all underlying programs, source code, object code
and intellectual property rights related thereto or arising therefrom.
11
"SUBSIDIARY" means, with respect to any Person: (a) any corporation of
which more than 50% of the total voting power of all classes of the Equity
Interests entitled (without regard to the occurrence of any contingency) to vote
in the election of directors is owned by such Person directly or through one or
more other Subsidiaries of such Person and (b) any Person other than a
corporation of which at least a majority of the Equity Interest (however
designated) entitled (without regard to the occurrence of any contingency) to
vote in the election of the governing body, partners, managers or others that
will control the management of such entity is owned by such Person directly or
through one or more other Subsidiaries of such Person.
"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs, ad valorem, duties, capital stock, franchise, profits,
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not, and will include any
liability in respect of Taxes as a transferee or under any Tax sharing
agreement, Tax indemnity agreement, or other contract, arrangement, agreement,
understanding or commitment (whether oral or written) and any liability in
respect of Taxes which is payable by operation of law, Treas. Reg. Section
1.1502-6 (or any predecessor or successor thereof or any analogous or similar
provision under state, local or foreign law) or otherwise.
"TAX RETURN" means any report, return, statement, information return or
other information required to be supplied to a Governmental Body in connection
with Taxes (including any attachment thereto or amendment thereof), including
any claim for refund, declaration of any estimated Tax and combined or
consolidated return for any group of entities that includes the Company.
"TERMINATION DATE" means the earlier to occur of (a) the Expiration
Date and (b) the date on which this Agreement is terminated pursuant to Section
8.1 (other than Section 8.1(b)).
"THREATENED" means a demand or statement has been made (orally or in
writing) or a notice has been given (orally or in writing), or any other event
has occurred that would lead a prudent person to conclude that a cause of Action
or other matter is likely to be asserted, commenced, taken, or otherwise
initiated.
"TRADE SECRETS" means all know-how, trade secrets, confidential
information, customer lists, the source code of all Software, technical
information, data, process technology, plans, drawings, and blue prints that
derive value (economic, strategic or otherwise) from not being generally known
to and/or readily ascertainable by other Persons.
"TRANSACTION DOCUMENTS" means this Agreement and the Ancillary
Agreements.
"TRANSACTIONS" means all of the transactions contemplated by this
Agreement, including: (a) the sale of the Shares by Interplay, Shiny Group and
Perry to Buyer and Buyer's delivery of the Purchase Price therefor; (b) the
execution, delivery, and performance of all of the documents, instruments and
agreements to be executed, delivered, and performed in connection herewith;
12
and (c) the performance by Buyer, the Company and Sellers of their respective
covenants and obligations (pre- and post-Closing) under this Agreement.
"TRANSITION SERVICES AGREEMENT" is defined in Section 6.8.
"TREAS. REG." means the proposed, temporary and final regulations
promulgated under the Code.
"VIRGIN DISTRIBUTION AGREEMENT" means that certain International
Distribution Agreement, dated February 10, 1999, between Interplay and Virgin
Interactive Entertainment Limited ("VIRGIN"), as amended.
"VIRGIN RELEASE" means an agreement to be entered into on or before the
Closing among Virgin, the Company and Interplay, in form and substance
reasonably satisfactory to Buyer, which agreement will provide (i) that from and
after the Closing Virgin will have no rights to exploit the Games under the
Virgin Distribution Agreement, (ii) for the release by Virgin of the Company of
all obligations under the Virgin Distribution Agreement, and (iii) for the
release by Virgin of Interplay of all obligations under the Virgin Distribution
Agreement with respect to the Games.
"VIVENDI" means Vivendi Universal Games, Inc. (formerly Vivendi
Universal Interactive Publishing North America, Inc.).
"VIVENDI DISTRIBUTION AGREEMENT" means that certain Distribution
Agreement, dated August 23, 2001, between Interplay and Vivendi, as amended.
"VIVENDI RELEASE" means an agreement to be entered into on or before
the Closing among Vivendi, the Company and Interplay, in form and substance
reasonably satisfactory to Buyer, which agreement will provide (i) that from and
after the Closing Vivendi will have no rights to exploit the Games under the
Vivendi Distribution Agreement, (ii) for the release by Vivendi of the Company
of all obligations under the Vivendi Distribution Agreement, (iii) for the
release by Vivendi of Interplay of all obligations under the Vivendi
Distribution Agreement with respect to the Games, and (iv) for a full release by
Vivendi (without any further payment by or obligation of the Company or Buyer
except as expressly contemplated in the Closing Escrow Agreement) of any
security interest that Vivendi may have in any assets, rights or property of or
related to the Company.
"WARNER" means Warner Bros. Consumer Products.
"WARNER AGREEMENT" means that certain License Agreement (Retail License
Warner Bros. Consumer Products #12420-MATR), dated December 18, 2000, by and
between Warner and Interplay.
"WARNER AMENDMENT" means the letter agreement between Warner Bros.
Consumer Products, Buyer, Interplay and the Company dated as of April 19, 2002,
attached as Exhibit P.
13
"WORKING CAPITAL" means the sum of the Company's current assets minus
total liabilities (inclusive of the amount of any negative cash or bank
overdraft), determined in accordance with GAAP.
"WORKS FOR HIRE" is defined in Section 4.15(i).
ARTICLE 2
PURCHASE AND SALE OF SHARES
2.1 PURCHASE AND SALE OF SHARES. On and subject to the terms and
conditions of this Agreement, Buyer agrees to purchase from Sellers, and each
Seller agrees to sell to Buyer, all of the Shares for the aggregate
consideration specified in Section 2.2 and in the form specified in Sections 2.2
and 2.5.
2.2 PURCHASE PRICE.
(a) AGGREGATE PURCHASE PRICE. The aggregate purchase price for
the Shares is $48,000,000 (the "PURCHASE PRICE"). The Purchase Price
will be allocated between the Sellers as follows: (i) $1,487,995 to
Perry (the "PERRY PURCHASE PRICE"); (ii) $5,762,005 to Shiny Group (the
"SHINY GROUP PURCHASE PRICE"), and (iii) $40,750,000 to Interplay
(subject to adjustment as provided below, the "INTERPLAY PURCHASE
PRICE").
(b) CLOSING DATE ADJUSTMENT. The Interplay Purchase Price will
be subject to adjustment in accordance with the following: at least
five business days before the Closing, Interplay will prepare and
deliver to Buyer a balance sheet of the Company as of the end of the
month preceding the Closing Date, with certain pro-forma accruals
described below (the "CLOSING BALANCE SHEET"). The Closing Balance
Sheet will be prepared in accordance with GAAP, will include proper
accruals (including for all of the Company employees' vacation time and
royalties) and reserves for liabilities and/or expenses incurred as of
the end of the month preceding the Closing Date, and will include an
accrual for the payroll for the Company employees and other monthly
expenses (including rent, utilities and contractors) through the
Closing Date. If the Working Capital reflected on the Closing Balance
Sheet exceeds $0, the Interplay Purchase Price will be increased by the
amount of such excess, and if the Working Capital reflected on the
Closing Balance Sheet is a less than $0, the Interplay Purchase Price
will be reduced by the amount of such deficiency (the amount of such
increase or decrease, as applicable, is the "CLOSING DATE Adjustment").
(c) POST-CLOSING ADJUSTMENT. The Interplay Purchase Price will
be subject to further adjustment after the Closing in accordance with
the following:
(i) Within 45 days after the Closing Date, Buyer will
prepare and deliver to Interplay a balance sheet of the
Company as of the Closing Date (as finally determined pursuant
to paragraph (iii) below, the "FINAL BALANCE SHEET"). The
Final Balance Sheet will be prepared in accordance with GAAP
and reflect actual accruals for each pro forma accrual
referenced in Section 2.2(b) above.
14
(ii) Interplay and its accountants will have the
right to review the work papers of Buyer and its advisors
utilized in preparing the Final Balance Sheet. The Final
Balance Sheet will be binding on Interplay unless Interplay
presents to Buyer within 30 days after its receipt of the
Final Balance Sheet from Buyer written notice of disagreement
specifying in reasonable detail the nature and extent of the
disagreement.
(iii) Buyer and Interplay will attempt in good faith
during the 30 days immediately following Buyer's receipt of
Interplay's timely notice of disagreement to resolve any
disagreement with respect to the Final Balance Sheet. If, at
the conclusion of such 30-day period, Buyer and Interplay have
not resolved their disputes regarding the Final Balance Sheet,
Buyer will refer the items of disagreement for final
determination to Ernst & Young. If such firm notifies Buyer
and/or Interplay that it is unable or unwilling to make such
final determination, or if such firm does not make a
determination within 30 days following the date of the receipt
of Buyer's reference, then within the immediately following 10
days, Buyer and Interplay will mutually designate another
independent accounting firm (the accounting firm making such
determination is referred to herein as the "INDEPENDENT
ACCOUNTANTS"), and will be reasonably available and work
diligently to facilitate such other firm to render a final
determination within the 20-day period immediately following
the referral to the Independent Accountants. The Final Balance
Sheet will be deemed to be binding on Buyer and Interplay upon
(i) Interplay's failure to deliver to Buyer a notice of
disagreement within 30 days of its receipt of the Final
Balance Sheet prepared by Buyer, (ii) resolution of any
disagreement by mutual agreement of the parties after a timely
notice of disagreement has been delivered to Buyer, or (iii)
notification by the Independent Accountants of their final
determination of the items of disagreement submitted to them.
(iv) If the Working Capital reflected on the Final
Balance Sheet, as finally determined, is greater than the
Working Capital reflected on the Closing Balance Sheet, the
Interplay Purchase Price will be increased by such amount, and
if the Working Capital reflected on the Final Balance Sheet,
as finally determined, is less than the Working Capital
reflected on the Closing Balance Sheet, the Interplay Purchase
Price will be reduced by such amount (the "FINAL ADJUSTMENT").
(v) The Independent Accountants, Buyer and Interplay
will enter into such engagement letters as required for the
Independent Accountants to perform under this Agreement. The
fees and disbursements of the Independent Accountants (and of
the initial firm to which Interplay referred the items of
disagreement) will be borne equally, one-half by Buyer and
one-half by Interplay.
(d) ADJUSTMENTS TO INTERPLAY NOTE. Pursuant to Section 2.5(d)
below, Buyer will deliver the Interplay Note at the Closing.
15
(i) If the Final Adjustment is determined prior to
the maturity date or earlier payment in full of the Interplay
Note, the principal amount of the Interplay Note will be
increased or decreased, as applicable, by the amount of the
Final Adjustment. Any such increase or decrease to the
Interplay Note will be made to the final payment due to
Interplay under the payment schedule. In furtherance of the
foregoing, if (x) the principal amount of the Interplay Note
is to be decreased by the Final Adjustment and (y) the amount
of the Final Adjustment is greater than the remaining
principal amount of the Interplay Note, then the principal
amount then remaining will be reduced to zero and Interplay
will pay to Buyer in cash any shortfall in the amount of the
Final Adjustment, within five business days after the final
determination of the Final Balance Sheet, by wire transfer in
immediately available funds.
(ii) If the Final Adjustment is determined after
maturity or earlier payment in full of the Interplay Note,
Buyer will pay to Interplay the amount of the Final Adjustment
(if the Final Adjustment results in an increase to the
Interplay Purchase Price) or Interplay will pay to Buyer the
amount of the Final Adjustment (if the Final Adjustment
results in a decrease to the Interplay Purchase Price), in
either case within five business days after the final
determination of the Final Balance Sheet, by wire transfer in
immediately available funds.
2.3 THE CLOSING. The Closing will take place at the offices of Akin,
Century Tower Plaza, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx, commencing at 9:00 a.m., local time, on the second business day
following the satisfaction or waiver of all conditions to the obligations of the
Parties to consummate the purchase and sale of the Shares (other than conditions
with respect to actions the respective Parties will take at the Closing itself)
or such other date as Buyer and Interplay may mutually determine (the "CLOSING
DATE").
2.4 DELIVERIES AT THE CLOSING. At the Closing:
(a) SELLERS DELIVERIES. Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly
endorsed (or accompanied by duly executed stock powers in
favor of Buyer or its nominee in form acceptable to Buyer);
and
(ii) Sellers' counterpart signatures to each of the
Transaction Documents to which they are a party.
(b) ADDITIONAL INTERPLAY DELIVERIES. Interplay will deliver to
Buyer:
(i) an Officer's certificate, in the form of Exhibit
I, duly executed on the Interplay's behalf, as to the accuracy
of Interplay's representations and warranties pursuant to
Section 7.1(a) and certifying that each of the conditions
specified in Section 7.2 (other than Section 7.2(a) which is
the subject of the Buyer Officer's Certificate) has been
satisfied in all respects (the "INTERPLAY OFFICER'S
CERTIFICATE");
16
(ii) a Secretary's certificate, in the form of
Exhibit J duly executed on Interplay's behalf;
(iii) the resignation, effective as of the Closing,
of the Company's directors and officers;
(iv) the Company's counterpart signatures to each of
the Transaction Documents to which it is a party;
(v) all of the Company's Records (provided that those
Records located at the Company's premises will be deemed
delivered with control of such premises at the Closing); and
(vi) an executed Opinion of Counsel to the Company
and Interplay.
(c) BUYER DELIVERIES. Buyer will deliver to Sellers:
(i) an Officer's certificate, in the form of Exhibit
K, duly executed on Buyer's behalf, as to the accuracy of
Buyer's representations and warranties pursuant to Section
7.2(a) and certifying that each of the conditions specified in
Section 7.1 (other than Section 7.1(a) which is the subject of
the Interplay Officer's Certificate and the Perry Certificate)
has been satisfied in all respects (the "BUYER OFFICER'S
CERTIFICATE");
(ii) a Secretary's certificate, in the form of
Exhibit L, duly executed on Buyer's behalf;
(iii) Buyer's counterpart signatures to each of the
Transaction Documents to which it is a party; and
(iv) executed Buyer Opinions.
(d) PERRY/SHINY GROUP DELIVERIES. Perry and Shiny Group will
deliver to Buyer a certificate, in the form of Exhibit R, duly executed
by Perry in his individual capacity and on Shiny Group's behalf, as to
the accuracy of Perry's and Shiny Group's representations and
warranties pursuant to Section 7.1(a) and certifying that each of the
conditions specified in Section 7.3 (other than Section 7.3(a) which is
the subject of the Buyer Officer's Certificate) has been satisfied in
all respects (the "PERRY CERTIFICATE").
2.5 PAYMENTS AT THE CLOSING. Buyer will deliver the Purchase Price at
the Closing as follows:
(a) ESCROWED PURCHASE PRICE. Buyer will deliver $31,031,986 of
the Purchase Price (the "ESCROWED PURCHASE PRICE") in immediately
available funds by wire transfer to the escrow agent pursuant to the
terms of the Closing Escrow Agreement. A true and complete list, as of
the date hereof, containing the names of each Person entitled to
satisfaction out of the Escrowed Purchase Price and the respective
amounts that will be distributed to each of them is attached as
Schedule B to the Closing Escrow Agreement
17
attached as Exhibit M. The Closing Escrow Agreement will govern the
distributions to each party thereto of the Escrowed Purchase Price and
certain other deliverables will be distributed by the escrow agent
pursuant to the terms of the Closing Escrow Agreement. The Perry
Purchase Price and the Shiny Group Purchase Price will be paid out of
the Escrowed Purchase Price pursuant to the Closing Escrow Agreement.
To the extent any Person receiving funds from the escrow has a
condition other than payment of the amount due in order to release its
deliverable, such Person will deliver a receipt of funds and/or other
written verification reasonably satisfactory to Buyer that states that
all conditions to the effectiveness of its deliverable has been
satisfied.
(b) EUROPLAY NOTE AND EUROPLAY GUARANTY. Buyer will deliver to
Europlay the Europlay Note in the principal amount of $4,327,500 and
the Europlay Guaranty, on behalf of Interplay and in satisfaction of a
portion of the Interplay Purchase Price equal to such principal amount.
(c) AKIN NOTE AND AKIN GUARANTY. Buyer will deliver to Akin
the Akin Note in the principal amount of $1,020,000 and the Akin
Guaranty, on behalf of Interplay and in satisfaction of a portion of
the Interplay Purchase Price equal to such principal amount.
(d) INTERPLAY NOTE AND INTERPLAY GUARANTY. Buyer will deliver
to Interplay the Interplay Note in the principal amount of $10,682,076
plus or minus any difference between the Closing Date Adjustment and
$938,938 (which is the Closing Date Adjustment projected by the Company
on the date hereof), and the Interplay Guaranty, in satisfaction of a
portion of the Interplay Purchase Price equal to such principal amount.
To the extent that Parent makes any payment(s) under the Bioware
Guaranty, in lieu of a claim available to Parent against Interplay as a
guarantor or otherwise, Parent may elect to reduce the principal amount
of the Interplay Note by the amount of such payment(s). If Parent
elects this remedy and the principal amount then remaining on the
Interplay Note is insufficient to fully reimburse Parent for all
amounts paid under the Bioware Guaranty, Interplay will pay to Parent
the amount of such shortfall, within five business days after such
payment is made, by wire transfer in immediately available funds.
18
2.6 ASSUMPTION OF EMPLOYEE OPTIONS AT THE CLOSING. All of the Employee
Options listed in Section 4.5 of the Company Disclosure Letter will be assumed
by Buyer and converted into options to purchase such number of shares of Buyer's
common stock as are equal to the respective numbers of Shares issuable thereon
multiplied by the Common Exchange Ratio, rounded down to the nearest whole
number of shares of Buyer's common stock, at an option price equal to $0.50
divided by the Common Exchange Ratio and upon such other terms and conditions as
are contained in such Employee Options. The options to purchase Buyer's common
stock will be subject to Buyer's policies regarding exercising options and
buying and selling Buyer's stock. Concurrently with the Closing, the Company's
1995 Stock Option Plan will be assumed by Buyer, which will thereupon have
administrative and amendment authority with respect thereto and to the Employee
Options, and the Company will thereupon have no continuing administrative or
amendment authority with respect to such plan or the Employee Options.
After the Closing, Buyer will issue to each holder of an assumed
Employee Option, a notice describing the foregoing assumption of such Employee
Option.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
CONCERNING THE TRANSACTION
3.1 REPRESENTATIONS AND WARRANTIES OF INTERPLAY. Subject to the
exceptions disclosed in writing in the disclosure letter delivered by Interplay
to Buyer on the date hereof (the "INTERPLAY DISCLOSURE LETTER"), Interplay
represents and warrants to Buyer that the statements contained in this Section
3.1 are correct and complete as of the date of this Agreement:
(a) STATUS OF INTERPLAY. Interplay is a corporation duly
organized, validly existing, and in good standing under the Laws of the
State of Delaware. There is no pending or Threatened Action for the
dissolution, liquidation, insolvency, or rehabilitation of Interplay.
(b) POWER AND AUTHORITY; ENFORCEABILITY. Interplay has the
corporate power and corporate authority to execute and deliver each
Transaction Document to which Interplay is a party, and to perform and
consummate the Transactions. Interplay has taken all actions necessary
to authorize the execution and delivery of each Transaction Document to
which it is party, the performance of Interplay's obligations
thereunder, and the consummation of the Transactions. Each Transaction
Document to which Interplay is a party has been duly authorized,
executed, and delivered by, and is Enforceable against Interplay.
(c) NO VIOLATION. The execution and the delivery of the
Transaction Documents to which Interplay is a party and the performance
and consummation of the Transactions by Interplay will not (i) breach
any Law or Order to which Interplay is subject or any provision of its
Organizational Documents, (ii) breach any Contract or Permit to which
Interplay is a party or by which Interplay is bound or to which any of
Interplay's assets is subject, other than any breach that will be cured
on or before the
19
Closing Date or which will not have a Material Adverse Effect on the
Company, or (iii) require any Consent.
(d) NO BROKERS OR FINDERS. No agent, broker, finder, or
investment or commercial banker, or other Person or firm engaged by or
acting on behalf of Sellers or any of their respective Affiliates in
connection with the negotiation, execution or performance of the
Transaction Documents, is or will be entitled to any brokerage or
finder's or similar fee or other commission as a result of this
Agreement or the Transactions except Europlay. Each of Interplay and
Perry (with respect to Perry and Shiny Group) have separate agreements
with Europlay and will have full responsibility for payment of fees and
other performance under the terms of their respective agreements and
neither the Company nor Buyer will have any liability in respect
thereof.
(e) SHARES; INTERPLAY INFORMATION. Interplay holds of record
and owns beneficially 9,300,000 Shares, free and clear of any
Encumbrances (other than any restrictions under the Securities Act and
state securities Laws or Encumbrances that will be removed on or before
the Closing Date). Other than the Perry Release and Contracts that will
be terminated on or before the Closing Date, all of which are listed in
the Interplay Disclosure Letter, Interplay is not a party to any
Contract (i) that could require Interplay to sell, transfer, or
otherwise dispose of any capital stock of the Company (other than this
Agreement), or (ii) with respect to any capital stock of the Company.
At the Closing, the Shares held by Interplay, when combined with the
Perry Shares and the Shiny Group Shares, will represent 100% of the
Shares.
(f) APPROVALS. All requisite approvals for the Transactions
and Transaction Documents, including those from Interplay's board of
directors, have been received or obtained. The approval of Interplay's
stockholders has not been sought and is not required for either the
Transactions or the Transaction Documents.
(g) CONTRACTS. With respect to the Warner Agreement, and each
Contract assigned or to be assigned by Interplay to Shiny pursuant to
the IP Assignment and the Contract Assignment and Assumption Agreement
(each an "INTERPLAY MATERIAL CONTRACT" and collectively the "INTERPLAY
MATERIAL CONTRACTS":
(i) Interplay has delivered to Buyer a correct and
complete copy of each written Contract (as amended and
supplemented to date), together with full, complete and
accurate descriptions of each oral Contract;
(ii) Section 3.1(g)(ii) of the Company Disclosure
Letter lists each third party from whom Consent is required
under each Contract as a result of the Transactions (for
assignment, change of control or otherwise);
(iii) each Contract is Enforceable;
(iv) each Contract will continue to be Enforceable on
the same terms following the consummation of the Transactions;
20
(v) Interplay has duly performed all of its
obligations under each Contract to the extent that such
obligations to perform have accrued, and no breach or default,
alleged breach or default, or event which would (with the
passage of time, notice or both) constitute a breach or
default thereunder by Interplay, or, to the best knowledge of
Interplay, any other party or obligor with respect thereto,
has occurred or as a result of the Transactions will occur;
and
(vi) no party to any such Contract has repudiated any
provision of the Contract.
3.2 REPRESENTATIONS AND WARRANTIES OF BUYER. Subject to the exceptions
disclosed in writing in the disclosure letter delivered by Buyer to the Company
Parties on the date hereof (the "BUYER DISCLOSURE LETTER"), Buyer represents and
warrants to Interplay that the statements contained in this Section 3.2 are
correct and complete as of the date of this Agreement:
(a) ENTITY STATUS. Buyer is an entity duly created, formed or
organized, validly existing and in good standing under the Laws of the
jurisdiction of its creation, formation or organization. There is no
pending or Threatened Action for the dissolution, liquidation,
insolvency, or rehabilitation of Buyer.
(b) POWER AND AUTHORITY; ENFORCEABILITY. Buyer has the
relevant entity power and authority to execute and deliver each
Transaction Document to which it is party, and to perform and
consummate the Transactions. Buyer has taken all action necessary to
authorize the execution and delivery of each Transaction Document to
which it is party, the performance of its obligations thereunder, and
the consummation of the Transactions. Each Transaction Document to
which Buyer is a party has been duly authorized, executed and delivered
by, and is Enforceable against, Buyer.
(c) NO VIOLATION. The execution and delivery of the
Transaction Documents to which Buyer is party by Buyer and the
performance and consummation of the Transactions by Buyer will not (i)
breach any Law or Order to which Buyer is subject or any provision of
its Organizational Documents, (ii) breach any Contract, Order, or
Permit to which Buyer is a party or by which it is bound or to which
any of its assets is subject, or (iii) require any Consent.
(d) NO BROKERS OR FINDERS. No agent, broker, finder, or
investment or commercial banker, or other Person or firm engaged by or
acting on behalf of Buyer or any of its Affiliates in connection with
the negotiation, execution or performance of the Transaction Documents,
is or will be entitled to any brokerage or finder's or similar fee or
other commission as a result of this Agreement or the Transactions.
(e) APPROVALS. All requisite approvals for the Transactions
and the Transaction Documents from Buyer's board of directors and
Parent's board of directors have been received or obtained.
21
3.3 REPRESENTATIONS AND WARRANTIES OF PERRY. Perry represents and
warrants to Buyer that the statements contained in this Section 3.3 are correct
and complete as of the date of this Agreement:
(a) POWER AND AUTHORITY; ENFORCEABILITY. Perry has the power
and authority to execute and deliver each Transaction Document to which
Perry is a party, and to perform and consummate the Transactions. Each
Transaction Document to which Perry is a party has been duly
authorized, executed, and delivered by, and is Enforceable against
Perry.
(b) NO VIOLATION. The execution and the delivery of the
Transaction Documents to which Perry is a party and the performance and
consummation of the Transactions by Perry will not (i) breach any Law
or Order to which Perry is subject, (ii) breach any Contract or Permit
to which Perry is a party or by which Perry is bound or to which any of
Perry's assets is subject, other than any breach that will be cured on
or before the Closing Date or which will not have a Material Adverse
Effect on the Company, or (iii) require any Consent.
(c) NO BROKERS OR FINDERS. No agent, broker, finder, or
investment or commercial banker, or other Person or firm engaged by or
acting on behalf of Sellers or any of their respective Affiliates in
connection with the negotiation, execution or performance of the
Transaction Documents, is or will be entitled to any brokerage or
finder's or similar fee or other commission as a result of this
Agreement or the Transactions except Europlay. Each of Interplay and
Perry (with respect to Perry and Shiny Group) have separate agreements
with Europlay and will have full responsibility for payment of fees and
other performance under the terms of their respective agreements and
neither the Company nor Buyer will have any liability in respect
thereof.
(d) SHARES; PERRY INFORMATION. Immediately prior to the
Closing, Perry will, to his knowledge, hold of record and own
beneficially the Shares issuable under the terms of the Perry Release
(the "PERRY SHARES"), free and clear of any Encumbrances (other than
any restrictions under the Perry Release). Other than the Perry
Release, Perry is not a party to any Contract (i) that could require
Perry to sell, transfer, or otherwise dispose of any capital stock of
the Company (other than this Agreement), or (ii) with respect to any
capital stock of the Company.
3.4 REPRESENTATIONS AND WARRANTIES OF SHINY GROUP. Shiny Group
represents and warrants to Buyer that the statements contained in this Section
3.4 are correct and complete as of the date of this Agreement:
(a) POWER AND AUTHORITY; ENFORCEABILITY. Shiny Group has the
corporate power and corporate authority to execute and deliver each
Transaction Document to which Shiny Group is a party, and to perform
and consummate the Transactions. Shiny Group has taken all actions
necessary to authorize the execution and delivery of each Transaction
Document to which it is party, the performance of Shiny Group's
obligations thereunder, and the consummation of the Transactions. Each
Transaction Document to
22
which Shiny Group is a party has been duly authorized, executed, and
delivered by, and is Enforceable against Shiny Group.
(b) NO VIOLATION. The execution and the delivery of the
Transaction Documents to which Shiny Group is a party and the
performance and consummation of the Transactions by Shiny Group will
not (i) breach any Law or Order to which Shiny Group is subject, (ii)
breach any Contract or Permit to which Shiny Group is a party or by
which Shiny Group is bound or to which any of Shiny Group's assets is
subject, other than any breach that will be cured on or before the
Closing Date or which will not have a Material Adverse Effect on the
Company, or (iii) require any Consent.
(c) NO BROKERS OR FINDERS. No agent, broker, finder, or
investment or commercial banker, or other Person or firm engaged by or
acting on behalf of Sellers or any of their respective Affiliates in
connection with the negotiation, execution or performance of the
Transaction Documents, is or will be entitled to any brokerage or
finder's or similar fee or other commission as a result of this
Agreement or the Transactions except Europlay. Each of Interplay and
Perry (with respect to Perry and Shiny Group) have separate agreements
with Europlay and will have full responsibility for payment of fees and
other performance under the terms of their respective agreements and
neither the Company nor Buyer will have any liability in respect
thereof.
(d) SHARES; SHINY GROUP INFORMATION. Immediately prior to the
Closing, Shiny Group will, to its knowledge, hold of record and own
beneficially the Shares issuable under the terms of the Perry Release
(the "SHINY GROUP SHARES"), free and clear of any Encumbrances (other
than any restrictions under the Perry Release). Other than the Perry
Release, Shiny Group is not a party to any Contract (i) that could
require Shiny Group to sell, transfer, or otherwise dispose of any
capital stock of the Company (other than this Agreement), or (ii) with
respect to any capital stock of the Company.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY
Subject to the exceptions disclosed in writing in the disclosure letter
delivered by the Company Parties to Buyer on the date hereof (the "COMPANY
DISCLOSURE LETTER"), each Company Party, jointly and severally, represents and
warrants to Buyer that the statements contained in this ARTICLE 4 are correct
and complete as of the date of this Agreement:
4.1 CORPORATE STATUS. The Company is a corporation duly organized,
validly existing, and in good standing under the Laws of the State of
California. The Company is duly authorized to conduct its business and is in
good standing under the laws of each jurisdiction where such qualification is
required, except where the failure to so qualify would not have a Material
Adverse Effect on the Company. The Company has the requisite power and authority
necessary to own or lease its properties and to carry on its businesses as
currently conducted. Interplay has delivered to Buyer correct and complete
copies of the Company's Organizational Documents, as amended to date. The
Company is not in breach of any provision of its
23
Organizational Documents. There is no pending or Threatened Action for the
dissolution, liquidation, insolvency, or rehabilitation of the Company.
4.2 POWER AND AUTHORITY; ENFORCEABILITY. The Company has the relevant
corporate power and corporate authority necessary to execute and deliver each
Transaction Document to which it is a party and to perform and consummate the
Transactions. The Company has taken all action necessary to authorize the
execution and delivery of each Transaction Document to which it is a party, the
performance of the Company's obligations thereunder, and the consummation of the
Transactions. Each Transaction Document to which the Company is party has been
duly authorized, executed, and delivered by, and is Enforceable against, the
Company.
4.3 NO VIOLATION. The execution and the delivery of the applicable
Transaction Documents by the Company and the performance of its respective
obligations hereunder and thereunder, and consummation of the Transactions by
the Company will not (i) breach any Law or Order to which the Company is subject
or any provision of the Organizational Documents of the Company, (ii) breach any
Contract, Order, or Permit to which the Company is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Encumbrance upon any of its assets), or (iii) require any Consent.
4.4 BROKERS' FEES. No agent, broker, finder, or investment or
commercial banker, or other Person or firm engaged by or acting on behalf of the
Company in connection with the negotiation, execution or performance of the
Transaction Documents, is or will be entitled to any brokerage or finder's or
similar fee or other commission as a result of this Agreement or the
Transactions except Europlay. Each of Interplay and Perry (with respect to Perry
and Shiny Group) have separate agreements with Europlay and will have full
responsibility for payment of fees and other performance under the terms of
their respective agreements and neither the Company nor Buyer will have any
liability in respect thereof.
4.5 CAPITALIZATION. As of the date hereof, the Company's authorized
Equity Interests consist of 10,000,000 shares of common stock, of which
9,300,000 are Shares and none are held in treasury. As of the Closing Date, the
Company's authorized Equity Interests will consist of 13,000,000 shares of
common stock, of which 10,954,601 will be Shares and none will be held in
treasury. All of the Shares (a) have been, or will be when issued, duly
authorized and are, or will be when issued, validly issued, fully paid, and
nonassessable, (b) were issued, or will be when issued, in compliance with all
applicable state and federal securities Laws, (c) were not, and will not be,
issued in breach of any Commitments, and (d) as of the date hereof are held of
record and owned beneficially by Interplay and as of the Closing Date will be
held of record and owned beneficially by Sellers. The Company Disclosure Letter
lists (v) all Commitments (specifying those which are Employee Options) with
respect to any Equity Interest of the Company, (w) the exercise price of such
Commitments, and (x) the date of grant of such Commitments, (y) the vesting
schedule for such Commitments, and (z) the termination date of such Commitments.
No additional Commitments will arise in connection with the Transactions. There
are no Contracts with respect to the voting or transfer of the Company's Equity
Interests. The Company is not obligated to redeem or otherwise acquire any of
its outstanding Equity Interests.
24
4.6 RECORDS. The Company's minute books and other records made
available to Buyer for review accurately reflect all material actions taken at
all meetings and by written consents in lieu of meetings by the respective
stockholders, boards of directors, and committees of the Company. The copies of
the Company's Organizational Documents that were provided to Buyer are accurate
and complete and reflect all amendments made through the date hereof. The stock
record books of the Company reflect accurately all transactions in the
respective capital stock of all classes.
4.7 ACQUIRED SUBSIDIARIES. The Company owns no Equity Interests in any
Person.
4.8 FINANCIAL STATEMENTS. Set forth on the Company Disclosure Letter
are the unaudited balance sheets and statements of income as of and for the
fiscal years ended December 31, 2000 and December 31, 2001, for the Company
(collectively the "FINANCIAL STATEMENTS"). December 31, 2001 is hereinafter
referred to as the "BALANCE SHEET DATE".
The Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby (except
that the unaudited Financial Statements do not contain footnotes and are subject
to recurring audit adjustments normal in nature and amount), present fairly the
financial condition of the Company as of such dates and the results of
operations of the Company for such periods, and are consistent with the books
and records of the Company. Since the Balance Sheet Date, there has been no
change in any of the significant accounting policies, practices or procedures of
the Company.
4.9 SUBSEQUENT EVENTS. Since the Balance Sheet Date the Company has
operated in the Ordinary Course of Business and, as of the date hereof, there
have been no events, series of events or the lack of occurrence thereof, which,
singularly or in the aggregate, has had or could reasonably be expected to have
a Material Adverse Effect on the Company.
4.10 LIABILITIES. The Company has no Liability that is material, singly
or in the aggregate, except for (a) Liabilities quantified on the face of the
Financial Statements (or in any notes thereto) and not heretofore paid or
discharged, (b) Liabilities that have arisen after the Balance Sheet Date in the
Ordinary Course of Business which, individually or in the aggregate, are not
material and are of the same character and nature as the Liabilities quantified
on the face of the Financial Statements (or in any notes thereto), and (c)
Liabilities of a nature which, in accordance with GAAP, are not required to be
disclosed, reflected or reserved against on a balance sheet of the Company or in
the notes thereto.
4.11 LEGAL COMPLIANCE. The Company and its respective predecessors and
Affiliates have complied in all material respects with all applicable Laws, and
no Action is pending or Threatened against it alleging any failure to so comply.
4.12 TAX MATTERS.
(a) All Tax Returns required to be filed by, on behalf of, or
that include the Company have been timely filed in all jurisdictions in
which such Tax Returns are required to be filed, and all such Tax
Returns were true, correct and complete in all respects; all Taxes
shown on such Tax Returns to be due and payable have been fully and
25
timely paid; and the Company has no liability for Taxes, including
Taxes related to prior periods, other than those set forth on or
adequately reserved for in the Financial Statements or those incurred
since the Balance Sheet Date in the Ordinary Course of Business.
(b) The Company has duly and timely withheld and paid over to
the appropriate Governmental Bodies all Taxes and other amounts
required to be so withheld and paid over for all periods under all
applicable laws in connection with amounts paid or owing to any
employee, independent contractor, subcontractor, lender, stockholder or
other third party.
(c) The Interplay Disclosure Letter lists all income and
franchise Tax Returns and any other material Tax Returns filed by the
Company for all taxable periods ended after December 31, 1997 and all
such Tax Returns that currently are the subject of audit (including any
jurisdictions for which only a written notice of audit has been
received) or as to which there are other pending administrative or
court proceedings with respect to any Taxes for which the Company may
be liable (including severally liable). The Company has made available
to Buyer complete copies of all income and franchise and other material
Tax Returns, and statements of deficiencies assessed against or agreed
to by, the Company or any of its Subsidiaries for all taxable periods
ended after December 31, 1997.
(d) (i) Neither the Company nor any of its Affiliates has
received any notice (written or oral) of any assessment or intent to
make any assessment by any Governmental Body regarding Taxes for which
the Company may have primary or secondary liability that have not been
fully and irrevocably resolved; (ii) there are no pending requests for
rulings from any Governmental Body with respect to Taxes of the
Company; (iii) no claim has been made by a Governmental Body in a
jurisdiction where the Company does not file Tax Returns that the
Company is or may be subject to taxation by that jurisdiction or is
obliged to act as withholding agent under the laws of that
jurisdiction; (iv) no waiver or extension of any statute of limitations
has been given or requested with respect to the Company in connection
with any Tax Returns which would remain effective on the Closing Date.
(e) There are no Liens on any of the assets of the Company or
any of its Subsidiaries that arose in connection with any failure (or
alleged failure) to pay any Tax.
(f) The Company is not a party to or bound by any agreement
providing for the allocation, sharing or indemnification of Taxes, and
there are no powers of attorney currently in effect with respect to any
matter related to Taxes of the Company.
(g) The Company has never been a member of any affiliated
group other than the current group of which Interplay is the common
parent, and the Company will be included in the consolidated federal
income Tax Return to be filed by Interplay for the taxable period of
the Company that includes the Closing Date.
26
(h) The transactions contemplated by this Agreement will not
result in any payment, or the assumption of any obligation to make a
payment, that would constitute an "excess parachute payment" within the
meaning of Section 280G of the Code.
(i) Neither the Company nor any other Person on its behalf (i)
has filed a consent pursuant to Section 341(f) of the Code or agreed to
have Section 341(f)(2) of the Code apply to any disposition of a
"subsection (f) asset" (as such term is defined in Section 341(f)(4) of
the Code) owned by the Company; (ii) has executed or entered into a
closing agreement pursuant to Section 7121 of the Code or any
predecessor provision thereof or any similar provision of state, local
or foreign law or any other agreement relating to Taxes that could
reasonably be expected to have an effect on the Company's liability
for, or reporting of, Taxes in any period after the Closing Date; or
(iii) has agreed to or is required to make any adjustments pursuant to
Section 481(a) of the IRC or any similar provision of state, local or
foreign law.
(j) No indebtedness of the Company or any of its Subsidiaries
is (i) "corporate acquisition indebtedness" within the meaning of Code
Section 279(b), (ii) an "applicable high yield discount obligation"
within the meaning of Code Section 163(i), or (iii) debt on which any
portion of the interest thereon is "disqualified interest" within the
meaning of Code Section 163(f).
4.13 TITLE TO AND CONDITION OF ASSETS; LIENS ON ASSETS AND SHARES. The
Company has good and indefeasible title to, or a valid leasehold interest in,
all buildings, machinery, equipment, and other tangible assets (a) located on
its premises, shown on the Financial Statements, or acquired after the Balance
Sheet Date and (b) necessary for the conduct of its business as currently
conducted, in each case free and clear of all Encumbrances, except for the
properties and assets disposed of in the Ordinary Course of Business since the
Balance Sheet Date and the Encumbrances that will be removed on or before the
Closing Date which are listed on Section 4.13 of the Company Disclosure Letter.
Each such tangible asset is free from material defects, has been maintained in
accordance with normal industry practice, is in good operating condition
(subject to normal wear and tear), and is suitable for the purposes for which it
is currently used. Section 4.13 of the Company Disclosure Letter contains a
complete and accurate list of each and every agreement or security interest
which may allow any creditor of Interplay or the Company to realize upon any of
the Shares or the assets of the Company.
4.14 REAL PROPERTY. The Company does not own and has not owned any real
property. The Company Disclosure Letter contains an accurate and complete list
of all leases and other Contracts and in respect of real property the Company
leases. All of such leases and Contracts included on the Company Disclosure
Letter are Enforceable against the Company to which they apply, and, to the
Company Parties' knowledge, the applicable counter-parties. All such Leases and
Contracts are used and operated in compliance and conformity with all applicable
leases. The Company has not received notice of any violation of any applicable
zoning or building regulation or ordinance relating to the any of such Leases
and Contracts.
4.15 INTELLECTUAL PROPERTY. Subject to obtaining the Consents listed in
Section 4.15 of the Company Disclosure Letter, each item of Matrix Property
owned by or on behalf of or licensed to any Company Party at any time prior to
the Closing will be owned and available
27
for use by the Company immediately following the Closing on substantially the
same terms and conditions as were in effect prior to the Closing (except as
contemplated by the Transaction Documents). The Company Parties hereby represent
and warrant that (i) they have not transferred, licensed, alienated, assigned,
encumbered or otherwise disposed of any Company Party's right, title or interest
in or to any Matrix Property at any time prior to the Closing except as set
forth on the Company Disclosure Letter; and (ii) they have taken all
commercially reasonable steps to maintain and protect each item of Matrix
Property owned by or licensed to any Company Party. Without limiting the
foregoing, the Company Parties make the following additional representations
with respect to the Matrix Property.
(a) PATENTS. The Company Disclosure Letter contains a complete
and accurate list of all Patents within the Matrix Property that are
owned by and/or licensed to any Company Party (each such Patent listed
or required to be listed in the Company Disclosure Letter is a "LISTED
PATENT" and collectively, the "LISTED PATENTS"). No Action has ever
been brought against any Listed Patent and no such Action is either
pending or threatened. The Company Parties have fully complied with any
and all formal legal and/or administrative requirements related to each
Listed Patent (including the payment of all maintenance fees related
thereto) which are due prior to or on the Closing Date. Each Listed
Patent will be owned by or exclusively licensed to the Company as of
the Closing.
(b) TRADEMARKS. The Company Disclosure Letter contains a
complete and accurate list of all Marks within the Matrix Property that
are owned by and/or licensed to any Company Party or that relate to the
operation of the Company's business (each such Xxxx listed or required
to be listed in the Company Disclosure Letter is a "LISTED XXXX" and
collectively, the "LISTED MARKS"). As of the Closing, the Company will
have the exclusive ownership of and right to use the Listed Marks
previously owned by a Company Party and at least a nonexclusive right
to use the Listed Marks licensed to a Company Party, in either case, in
the jurisdictions and for the classes under which the Listed Marks have
been used by or on behalf of the Company and/or Interplay to the
fullest extent permitted under applicable trademark law.
(i) Listed Marks owned by a Company Party. No Action
(including any opposition, invalidation and/or cancellation
proceeding) has ever been brought against any Listed Xxxx
owned by a Company Party and no such Action is either pending
or threatened. The Company Parties have fully complied with
any and all formal legal and/or administrative requirements
related to each Listed Xxxx owned by a Company Party
(including the timely post-registration filing of affidavits
of use and incontestability and renewal applications) which
are due prior to or on the Closing.
(ii) Listed Marks licensed to a Company Party. To
each Company Party's knowledge, (1) no Action (including any
opposition, invalidation and/or cancellation proceeding) has
ever been brought against any Listed Xxxx licensed to a
Company Party and no such Action is either pending or
threatened, (2) the Company Parties have fully complied with
any and all formal legal and/or administrative requirements
related to each Listed Xxxx licensed to a Company
28
Party that may be required of a Company Party under the
relevant license agreements (including the timely
post-registration filing of affidavits of use and
incontestability and renewal applications) which are due prior
to or on the Closing, and (3) no act or omission has occurred
that would affect the validity or enforceability of the Listed
Marks (notwithstanding the foregoing, nothing contained herein
will be construed as creating an obligation under any existing
third party license agreement to investigate any such act or
omission if such an obligation did not previously exist
thereunder).
(c) COPYRIGHTS. The Company Disclosure Letter contains a
complete and accurate list of all registered Copyrights within the
Matrix Property that are owned by and/or licensed to the Company or
Interplay or that relate to the operation of the Company's business
(each such Copyright listed or required to be listed in the Company
Disclosure Letter is a "LISTED COPYRIGHT" and collectively the "LISTED
Copyrights"). As of the Closing, the Company will have the exclusive
ownership of and right to use the Listed Copyrights previously owned by
a Company Party and at least a nonexclusive right (but exclusive as
between Interplay and each Subsidiary on the one hand and the Company
on the other hand) to use the Listed Copyrights licensed to the
Company, subject to the terms of the applicable license. In addition to
the foregoing, as of the Closing the Company will have exclusive rights
(to the fullest extent permitted under applicable law and the Warner
Agreement) to any and all unregistered Copyrights within the Matrix
Property owned by or licensed to any Company Party.
(i) Listed Copyrights owned by a Company Party. The
Company Parties have fully complied with any and all formal
legal requirements which are due as prior to or on the Closing
for maintaining the validity and enforceability of the Listed
Copyrights owned by a Company Party.
(ii) Listed Copyrights licensed to a Company Party.
To each Company Party's knowledge, (1) the Company Parties
have fully complied with any and all formal legal requirements
which are due prior to or on the Closing for maintaining the
validity and enforceability of the Listed Copyrights licensed
to a Company Party (that may be required under the relevant
license agreement), and (2) no act or omission has occurred
that would affect the validity or enforceability of the Listed
Copyrights (notwithstanding the foregoing, nothing contained
herein will be construed as creating an obligation under any
existing third party license agreement to investigate any such
act or omission if such an obligation did not previously exist
thereunder).
(d) THE GAME SOFTWARE. The Company Disclosure Letter contains
a complete and accurate list of all Game Software. Subject to the
provisions of Section 4.15(e) below, the Warner Agreement and the
Warner Amendment, as of the Closing, the Company will: (i) have the
exclusive right to display, perform, copy, modify, create derivative
works, manufacture, distribute, license, use and otherwise exploit all
Game Software in each and every data carrying medium, whether now known
or hereafter devised, that it has created, is presently creating or
otherwise owns or controls the rights to, and (ii) own the source code
included in all Game Software, including the exclusive
29
right to modify, create derivative works, make additions to, use and
otherwise exploit, in any and all languages and by any means or media
now known or hereafter devised, in perpetuity and throughout the
universe, free of any Encumbrances, all such source code, subject in
each case to restrictions as to the content within the Game Software.
In addition, the Company will, subject to the provisions of the Warner
Agreement as amended by the Warner Amendment, have sole ownership of
the URLs xxx.xxxxx.xxx, xxx.xxxxxxxxxxxxxxx.xxx, xxx.xxxxxxxxxx.xxx,
and xxx.xxxxxxxx.xxx (excluding any trademark rights therein unless
expressly provided for herein) and the content and programming scripts
within the website located at the foregoing URLs to the extent related
to the Company's business (but will specifically exclude any content
and programming scripts exclusively related to Interplay's business as
of the Closing) in any and all languages and by any means or media now
known or hereafter devised, in perpetuity and worldwide, free and clear
of any Encumbrances.
(e) THE PREEXISTING CODE. The Company Disclosure Letter
contains a complete and accurate list of the Preexisting Code within
the Game Software (including the title and a brief description
thereof). The list includes the following code and/or software used to
write or otherwise contribute to the development of the Game Software:
(i) code from toolkits; (ii) code written by employees of either of the
Company Parties; and (iii) third-party software. As of the Closing, the
Company will have, at least, the non-exclusive right to use any such
Preexisting Code pursuant to the license terms relating to the use
thereof. To each Company Party's knowledge, there are no third-party
rights to such Preexisting Code that will materially interfere with the
Company's ownership and use of the such Preexisting Code in the same
manner as was used prior to the Closing (subject only to continued
performance by the Company of all obligations under the applicable
license agreements for such Preexisting Code, including payment of the
applicable fees that are completely and accurately listed in the
Company Disclosure Letter).
(f) THE CONTRACTS. Section 4.15(f) of the Company Disclosure
Letter lists each Contract that (A) grants, licenses, encumbers or
otherwise transfers rights to or from any Company Party in connection
with any Matrix Property owned by or licensed to any Company Party
and/or (B) imposes obligations or liabilities on any Company Party in
connection with any Matrix Property owned by or licensed to any Company
Party. The Company Parties have made available to Buyer correct and
complete copies of each such Contract. With respect to each such
Contract, the following are true and correct:
(i) the Contract is Enforceable;
(ii) upon the Closing, the Contract will continue to
be Enforceable on substantially the same terms in effect
immediately prior to the Closing;
(iii) the Company and/or Interplay, as applicable,
have duly performed all of their respective obligations under
each Contract to the extent that such obligations to perform
have accrued as of the Closing, and no breach or default,
alleged breach or default, or event which would (with the
passage of time, notice or both) constitute a breach or
default thereunder by the Company or Interplay, as
30
applicable, or, to the best knowledge of any Company Party,
any other party or obligor with respect thereto, has occurred
or as a result of the Transactions will occur;
(iv) no party to the Contract has repudiated any
provision thereof; and
(v) no Consent is required from any Person as a
result of the Transactions (for assignment, change of control
or otherwise).
(g) ACTIONS, ENCUMBRANCES AND ORDERS. With respect to each
item of Matrix Property owned by or licensed to any Company Party:
(i) as of the Closing, the Company will possess, all
right, title, and interest in and to each such item of Matrix
Property, free and clear of any Encumbrance;
(ii) no such Matrix Property is subject to any
outstanding Order; and
(iii) no Action is pending or Threatened which
challenges the Enforceability, validity, registration, use, or
ownership of any such item of Matrix Property.
(h) INFRINGEMENT. To each Company Party's knowledge: (i) no
Matrix Property owned by or licensed to any Company Party infringes
upon, misappropriates, violates, or otherwise comes into conflict with
any other Person's intellectual property rights; (ii) no other Person
has any intellectual property rights that interfere with the Company's
use of the Matrix Property owned by or licensed to any Company Party;
(iii) the Company will not infringe upon, misappropriate, or otherwise
come into conflict with, any intellectual property rights of any other
Person as a result of the continued operation of its businesses as
currently conducted; and (iv) no other Person has infringed upon,
misappropriated, or otherwise come into conflict with any Matrix
Property owned by or licensed to any Company Party in any material
respect. In addition to the foregoing, no Company Party has ever
received any notice alleging any such interference, infringement,
misappropriation, violation, or conflict (including any claim that the
Company refrain from using any other Person's intellectual property
rights and/or obtain a license thereunder).
(i) WORKS FOR HIRE. All current and former employees and
independent contractors of the Company and/or Interplay have executed
written Contracts with the Company and/or Interplay, as applicable,
assigning to the Company and/or Interplay any and all rights to all
Matrix Property that was devised, developed or designed by such
employee or independent contractor within the scope of their employment
or engagement with the Company and/or Interplay, as applicable and
acknowledging that such Matrix Property constitutes "works made for
hire" for Company and/or Interplay (collectively, the "WORKS FOR
HIRE"). To each Company Party's knowledge, no employee of the Company
or Interplay has entered into any Contract that restricts or limits in
any way the scope or type of work in which the employee may be engaged
or requires the employee to transfer, assign, or disclose information
concerning his or her Work for Hire to any
31
Person other than the Company or Interplay, as applicable. As of the
Closing, the Company will have exclusive ownership of all such Works
for Hire.
(j) CONSENTS, CLEARANCES AND PAYMENTS. The Company Parties
have made or will make prior to or concurrently with the Closing
payment of all amounts accrued, payable and currently due through the
Closing Date in connection with any Consents and/or clearances
necessary for Buyer to exercise its rights in accordance with the terms
of all of the agreements with other Persons relating to the Games
(including the development and exploitation of the Games developed or
owned by or licensed to a Company Party, Game Software and/or Matrix
Property developed or owned by or licensed to a Company Party). The
Company Disclosure Letter provides (x) a detailed accounting of all
amounts paid by or on behalf of the Company Parties in connection with
any Consents and/or clearances hereunder through the Closing Date, and
(y) a complete and accurate list of every Contract entered into by a
Company Party, the express terms of which provide for any royalty or
other payment by the Company after the Closing Date to any employee or
independent contractor (other than salary, wages or unrelated incentive
compensation) and/or other Persons, in connection with the Games, the
Game Software and/or any Matrix Property owned by, transferred or
licensed to any Company Party.
4.16 CONTRACTS.
(a) IDENTIFYING THE COMPANY MATERIAL CONTRACTS. Section 4.16
of the Company Disclosure Letter lists each of the following Contracts
(each a "COMPANY MATERIAL CONTRACT" and collectively the "COMPANY
MATERIAL CONTRACTS") to which the Company is a party or to which the
Company or any of its assets, rights or properties are subject, other
than those Contracts assigned or to be assigned by Shiny to Interplay
pursuant to the IP Assignment and the Contract Assignment and
Assumption Agreement:
(i) any Contract (or group of related Contracts) for
the lease of personal property to or from any Person providing
for lease payments in excess of $25,000 per annum, or for the
lease of real property to or from any Person;
(ii) any Contract concerning a limited liability
company, partnership, joint venture or similar arrangement;
(iii) any Contract (or group of related Contracts)
under which it has created, incurred, assumed, or guaranteed
any Liability for borrowed money or any capitalized lease in
excess of $50,000 individually or $100,000 in the aggregate,
or under which it has imposed or suffered to exist an
Encumbrance on any of its assets;
(iv) any Contract with Interplay or any Affiliates of
Interplay other than the Company;
32
(v) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other
similar Contract for the benefit of its current or former
directors, officers, and employees;
(vi) any collective bargaining Contract;
(vii) any Contract for the employment of any
individual on a full-time, part-time, consulting, or other
basis providing annual compensation or severance benefits in
excess of $50,000;
(viii) any Contract which grants a right to, or
obligation of, or under which it has advanced or loaned any
amount to any of its directors or officers;
(ix) any other Contract (or group of related
Contracts) the performance of which involves receipt or
payment of consideration in excess of $50,000 individually or
$100,000 in the aggregate;
(x) any Contract under which Interplay is a guarantor
or obligor and with respect to which the Company is also an
obligor;
(xi) any Contract which has an unexpired term as of
the Closing Date in excess of one year;
(xii) any Contract which provides for an extension of
credit;
(xiii) any Contract which limits or restricts the
ability of the Company to compete or otherwise to conduct its
business in any manner or place;
(xiv) any Contract which grants a power of attorney,
agency or similar authority to another Person;
(xv) any Contract (i) which, by its terms, requires
the Company to buy or sell goods or services with respect to
which, without reference to matters outside the Company's
control, there would reasonably be expected to be material
losses or costs and expenses materially in excess of expected
receipts (other than as provided for or otherwise reserved
against on the Financial Statements), and (ii) for which
Interplay does not believe the Company has received or will
receive reasonably equivalent value for the consideration paid
by the Company; and
(xvi) any Contract that was not made in the Ordinary
Course of Business.
(b) DELIVERY AND COMPLIANCE. Interplay has delivered to Buyer
a correct and complete copy of each written Contract (as amended and
supplemented to date) listed in the Company Disclosure Letter, together
with full, complete and accurate descriptions of all such oral
Contracts. Section 4.16 of the Company Disclosure Letter sets forth a
complete list of each and every Person from whom Consent is required
under any Company Material Contract as a result of the Transactions
(for change of control or
33
otherwise). With respect to each Company Material Contract, and at the
Closing with respect to each Material Contract:
(i) the Contract is Enforceable;
(ii) the Contract will continue to be Enforceable on
the same terms following the consummation of the Transactions;
(iii) the Company has duly performed all its
obligations under the Contract to the extent that such
obligations to perform have accrued, and no breach or default,
alleged breach or default, or event which would (with the
passage of time, notice or both) constitute a breach or
default thereunder by the Company, or, to the best knowledge
of Interplay, any other party or obligor with respect thereto,
has occurred or as a result of the Transactions will occur;
and
(iv) no party to the Contract has repudiated any
provision of the Contract.
(c) CONTRACTS TO BE ASSIGNED TO INTERPLAY. With respect to
each Contract assigned or to be assigned by Shiny to Interplay pursuant
to the IP Assignment and the Contract Assignment and Assumption
Agreement: (i) Section 4.16 of the Company Disclosure Letter sets forth
a complete list of each and every Person from whom Consent is required
under any such Contract in connection with the assignment thereof to
Interplay; (ii) at the Closing with respect to such Contract, the
Company and/or Interplay, as the case may be, have duly performed all
their respective obligations under the Contract to the extent that such
obligations to perform have accrued, and no breach or default, alleged
breach or default, or event which would (with the passage of time,
notice or both) constitute a breach or default thereunder by the
Company and/or Interplay, as the case may be, or, to the best knowledge
of Interplay, any other party or obligor with respect thereto, has
occurred or as a result of the Transactions (including the assignment
of such Contract to Interplay) will occur.
4.17 RECEIVABLES. All of the Receivables reflected on the Balance
Sheet, and all Receivables arising between the Balance Sheet Date and the date
hereof, represent bona fide transactions, arose from transactions in the
Ordinary Course of Business of the Company, and the goods or services involved
have been sold and delivered to the account obligor, or are in transit, and no
further goods or services are required to be provided in order to complete the
sales. As of Closing, no such Receivable will be pledged or assigned to any
other Person. No defense or set off to any such Receivable has been asserted in
writing by the receivable obligor, or, to the knowledge of the Company or
Interplay, exists. All of the Receivables are reflected properly in its books
and records.
4.18 POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of the Company.
4.19 INSURANCE. The Company is and at all times during the past two
years has been, insured with reputable insurers against all risks normally
insured against by companies engaged in similar businesses. The Company
Disclosure Letter lists as of the Balance Sheet
34
Date all insurance policies and bonds carried by the Company. Such insurance
policies, together will all insurance policies carried by Interplay that cover
the Company or its operations, evidence all of the insurance that the Company is
required to carry pursuant to its Contracts and Law. Neither the Company nor
Interplay is in default under any such policy or bond nor has either received
notice of cancellation of any such policy or bond. Such insurance policies are
currently in full force and effect and will remain in full force and effect
through their current terms.
4.20 LITIGATION. The Company Disclosure Letter sets forth each instance
in which the Company (a) is subject to any outstanding Order or (b) is a party
to, the subject of, or is Threatened to be made a party to or the subject of any
Action. No Action required to be set forth in the Company Disclosure Letter
questions the Enforceability of this Agreement or the Transactions, or could
result in any Material Adverse Change with respect to the Company.
4.21 LABOR; EMPLOYEES. To each Company Party's knowledge, no executive,
key employee, or group of employees has any plans to terminate employment with
the Company. The Company is not a party to or bound by any collective bargaining
Contract, nor has the Company experienced any strikes, grievances, claims of
unfair labor practices, or other collective bargaining disputes. The Company has
not committed any unfair labor practice (as determined under any Law) that could
reasonably be expected to have a Material Adverse Effect on the Company. No
Company Party has any knowledge of any organizational effort currently being
made or Threatened by or on behalf of any labor union with respect to the
Company's employees.
4.22 EMPLOYEE BENEFITS.
(a) EMPLOYEE BENEFIT PLANS AND AGREEMENTS.
(i) Section 4.22 of the Company Disclosure Letter lists all
employee benefit plans and collective bargaining, employment or
severance agreements or other similar arrangements to which the Company
is or ever has been since January 1, 1997 a party or by which it is or
ever has been since January 1, 1997 bound, legally or otherwise (the
"PLANS"), including (a) any profit-sharing, deferred compensation,
bonus, stock option, stock purchase, pension, retainer, consulting,
retirement, severance, welfare or incentive plan, agreement or
arrangement, (b) any plan, agreement or arrangement providing for
"fringe benefits" or perquisites to employees, officers, directors or
agents, including benefits relating to company automobiles, clubs,
vacation, child care, parenting, sabbatical, sick leave, medical,
dental, hospitalization, life insurance and other types of insurance,
(c) any employment agreement, or (d) any other "employee benefit plan"
within the meaning of Section 3(3) of ERISA. In addition, Section 4.22
of the Company Disclosure Letter sets forth a complete list as of March
31, 2002, of past and current employee of the Company and, on a per
employee basis, vacation accrued for and royalties payable to each such
employee. Not later than two business days prior to the Closing Date,
Interplay will deliver an updated version of Section 4.22 of the
Company Disclosure Letter setting forth such information as accrued
through the Closing Date.
35
(ii) The Company has delivered to Buyer true and
complete copies of all documents and summary plan descriptions
with respect to the Plans or summary descriptions of any Plans
not otherwise in writing.
(iii) The Company is in compliance with the
applicable provisions of ERISA, the regulations and published
authorities thereunder, and all other laws applicable with
respect to the Plans. The Company has performed all of its
obligations under the Plans. To the best knowledge of the
Company, there are no legal proceedings (other than routine
claims for benefits) pending or threatened against the Plans
or their assets, or arising out of the Plans and all of the
Plans have been operated in compliance with their terms. To
the best knowledge of the Company, no facts exist which could
give rise to any such legal proceedings.
(iv) Each of the Plans can be terminated by the
Company within a period of 30 days following the Closing Date,
without payment of any additional compensation or amount or
the additional vesting or acceleration of any benefits.
(v) All obligations of the Company under each of the
Plans (x) that are due prior to the Closing Date, have been
paid or will be paid prior to that date, and (y) that have
accrued prior to the Closing Date have been or will be paid or
properly accrued at that time.
(vi) The Company has classified all individuals who
perform services for the Company correctly under the Plans,
ERISA and the Code as common law employees, independent
contractors or leased employees.
(vii) No payment which is due under any of the Plans
or otherwise which is contingent in whole or in part on the
transactions described in this Agreement will be an "excess
parachute payment" within the meaning of Section 280G of the
Code.
(b) QUALIFIED PLANS.
(i) Each Plan which is intended to satisfy the
requirements of Section 401(a) of the Code is qualified in
form and operation under Section 401(a) of the Code and each
trust under each such Plan is exempt from tax under Section
501(a) of the Code. No event has occurred that will or could
give rise to disqualification or loss of tax-exempt status of
any such Plan or trust thereunder under such sections. No
event has occurred that will or could subject any such Plan to
tax under Section 511 of the Code. No prohibited transaction
(within the meaning of Section 4975 of the Code) or
party-in-interest transaction (within the meaning of Section
406 of ERISA) has occurred with respect to any Plan.
(ii) The Company has delivered to Buyer for each
applicable Plan copies of the following documents: (i) the
Form 5500 filed in the most recent plan year, including all
schedules thereto and financial statements with attached
opinions of independent accountants, and (ii) the most recent
determination letter from the Internal Revenue Service. The
financial statements so delivered fairly
36
present the financial condition and the results of operations
of each such Plan as of such dates in accordance with GAAP.
(c) TITLE IV PLANS. No Plan is a "single employer plan" within
the meaning of Section 4001(a)(15) of ERISA or a "multiemployer plan"
within the meaning of Section 3(37) of ERISA. Neither Company, nor any
ERISA Affiliate has ever maintained or had an obligation to contribute
to a "single employer plan" within the meaning of Section 4001(a)(15)
of ERISA or a "multiemployer plan" within the meaning of Section 3(37)
of ERISA.
(d) HEALTH PLANS. All group health plans of the Company and
any ERISA Affiliate have been operated in compliance with the group
health plan continuation coverage requirements of Section 4980B of the
Code. Except as required under Section 4980B of the Code, neither the
Company nor any ERISA Affiliate has any obligation to provide health
benefits to any employee following termination of employment.
(e) FINES AND PENALTIES. There has been no act or omission by
the Company or any ERISA Affiliate that has given rise to or may give
rise to fines, penalties, taxes, or related charges under Section
502(c) or (i) or Section 4071 of ERISA or Chapter 43 of the Code.
4.23 ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS. The Company is
in compliance in all material respects with all Environmental, Health and Safety
Requirements in connection with the ownership, use, maintenance or operation of
its business or assets; (b) each location at which the Company operates its
business is in compliance in all material respects with all Environmental,
Health and Safety Requirements; and (c) there are no pending, or to any Company
Party's knowledge, any Threatened allegations by any Person that the Company's
properties or assets are not, or that its businesses has not been conducted, in
compliance in all material respects with all Environmental, Health and Safety
Requirements.
The Company Disclosure Letter sets forth (i) a description of all
investigations, inquiries or other proceedings now pending or, to the knowledge
of any Company Party, threatened by any Governmental Body with respect to the
Company, or against the Company in connection with the actual or alleged failure
to comply with any requirement of any Law relating to air or water quality,
waste management, hazardous substances, or the protection of health or the
environment; and (ii) a list of all waste disposal, treatment and storage sites
used by the Company, including the address of each such site, a description of
the waste disposed of, treated or stored at each such site, and an estimate of
the amount of each type of waste disposed of, treated or stored at each such
site. No Person or Persons are engaged in handling, transporting or disposing of
waste materials in connection with the Company.
The Company has maintained all documents and records and made all
filings required by applicable Law, relating to air or water quality, waste
management, hazardous substances, or the protection of health or the
environment.
4.24 PERMITS. The Company possesses all Permits required to be
obtained for its businesses and operations, except for those Permits the failure
of which to possess would not
37
have a Material Adverse Effect on the Company. The Company Disclosure Letter
sets forth a list of all such Permits. With respect to each such Permit:
(a) it is valid, subsisting and in full force and effect;
(b) there are no violations of such Permit that would result
in a termination of such Permit;
(c) the Company has not received written notice that such
Permit will not be renewed; and
(d) the Transactions will not adversely affect the validity of
such Permit or cause a cancellation of or otherwise materially and
adversely affect such Permit.
4.25 CERTAIN BUSINESS RELATIONSHIPS WITH THE COMPANY. Neither
Interplay nor its Affiliates has been involved in any business arrangement or
relationship with the Company within the past 12 months. Neither Interplay nor
Interplay's Affiliates own any asset that is used in and material to the
continued operation of the Company's business, except for those assets to be
transferred to the Company in the IP Assignment. As of the Closing, neither
Interplay nor Interplay's Affiliates will own any asset that is used in and
material to the continued operation of the Company's business from and after the
Closing.
ARTICLE 5
PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period between the
execution of this Agreement and the earlier of the Closing and the Termination
Date:
5.1 GENERAL. Each Party will use its reasonable best efforts
or Commercially Reasonable Efforts, as applicable, to take all actions and to do
all things necessary, proper, or advisable to consummate, make effective, and
comply with all of the terms of this Agreement and the Transactions applicable
to it (including satisfaction, but not waiver, of the Closing conditions for
which it is responsible or otherwise in control, as set forth in ARTICLE 7).
5.2 NOTICES, RELEASES, AGREEMENTS, AND CONSENTS.
(a) To the extent not obtained as of the date hereof, each
Company Party will use reasonable best efforts to obtain the Akin
Release, the Xxxxx Xxxxx Release, the LaSalle Release, the New
Microsoft Agreement, the Perry Release, the Virgin Release, the Vivendi
Release, and the Warner Amendment.
(b) Each Company Party will give any notices to third parties,
and will use its Commercially Reasonable Efforts to obtain any third
party Consents listed on the Company Disclosure Letter, or that Buyer
reasonably may otherwise request in connection with the matters
referred to in Sections 3.1(c) and 4.3. Each Company Party will give
any notices to, make any filings with, and use its Commercially
Reasonable Efforts to obtain any Consents of Governmental Authorities,
if any, required or reasonably deemed advisable by Buyer pursuant to
any applicable Law in connection
38
with the Transactions including in connection with the matters referred
to in Sections 3.1(c) and 4.3.
(c) Buyer will give any notices to third parties, and will use
its Commercially Reasonable Efforts to obtain any third party consents
listed on the Buyer Disclosure Letter, or that the Company reasonably
may otherwise request in connection with the matters referred to in
Section 3.2(c). Buyer will give any notices to, make any filings with,
and use its Commercially Reasonable Efforts to obtain any Consents of
Governmental Bodies, if any, required or reasonably deemed advisable by
the Company pursuant to any applicable Law in connection with the
Transactions including in connection with the matters referred to in
Section 3.2(c).
(d) Each Party will cooperate and use its Commercially
Reasonable Efforts to agree jointly on a method to overcome any
objections by any Governmental Body to the Transactions.
5.3 OPERATION OF COMPANY'S BUSINESS. Interplay covenants and
agrees that, except as otherwise contemplated by the Transaction Documents
(including the Perry Release, the IP Assignment and the Contract Assignment and
Assumption Agreement), it will not without the prior consent of Buyer, which
consent will not be unreasonably withheld, cause or permit the Company to:
(a) conduct its business in any manner except in the Ordinary
Course of Business consistent with prudent business custom and
practice; or
(b) except as required by their terms, amend, terminate, fail
to renew or renegotiate any Contract listed in Section 4.16 of the
Company Disclosure Letter or default (or take or omit to take any
action that, with or without the giving of notice or passage of time,
would constitute a default) in any of its obligations under any such
Contract or take any action that would jeopardize the continuance of
its business relationships; or
(c) terminate, amend or fail to renew any existing insurance
coverage; or
(d) terminate or fail to renew or preserve any Permits; or
(e) incur or agree to incur any obligation or liability
(absolute or contingent) that cannot be terminated, without liability
or penalty, by the Company on no more than 60 days notice and that
individually calls for payment by the Company of more than $25,000 in
any specific case or $50,000 in the aggregate; or
(f) make any loan, guaranty or other extension of credit, or
enter into any commitment to make any loan, guaranty or other extension
of credit, to or for the benefit of any director, officer, employee or
stockholder of the Company or of any of their respective Affiliates; or
(g) sell, transfer, mortgage, encumber or otherwise dispose of
any assets or any liabilities other than in the Ordinary Course of
Business of the Company (and in no
39
case will the Company sell, transfer, mortgage, encumber or otherwise
dispose of any Intellectual Property); or
(h) declare, issue, make or pay any dividend or other
distribution of assets, whether consisting of money, other personal
property, real property, Intellectual Property, or other thing of
value, to its shareholders; or
(i) amend its charter documents or bylaws; or
(j) hire any new employee, terminate any employee, or
otherwise change the terms (including compensation) of any employee's
employment; or
(k) make any investment, by purchase, contributions to
capital, property transfers, or otherwise, in any other Person; or
(l) compromise or otherwise settle any claims in excess of
$50,000; or
(m) make or revoke any Tax election, file any amended Tax
Return, make any change in any method or period of accounting or in any
accounting policy, practice or procedure, or take any position on any
Tax Return inconsistent with prior reporting practices; or
(n) issue any Equity Interests of the Company other than (i)
as required by the Perry Release and (ii) upon the exercise or
conversion of outstanding Commitments listed on the Company Disclosure
Letter, or issue any Commitments to purchase Equity Securities of the
Company; or
(o) agree to or make any commitment to take any actions
prohibited by this Section 5.3.
5.4 PRESERVATION OF BUSINESS. Without limiting the covenants
in Section 5.3 above, the Company will use its Commercially Reasonable Efforts
to keep its business, assets and properties substantially intact in accordance
with prudent business custom and practice, including its present operations,
physical facilities, and working conditions, and relationships with lessors,
licensors, suppliers, customers, and employees.
5.5 FULL ACCESS AND COMPANY DATA. The Company will permit
representatives of Buyer (including financing providers) to have full access at
all reasonable times, and in a manner so as not to interfere with the normal
business operations of the Company, to all premises, properties, personnel,
books, records, Contracts, and documents pertaining to the Company and will
furnish copies of all such books, records, Contracts and documents and all
financial, operating and other data, and other information as Buyer may
reasonably request; provided, however, that no investigation pursuant to this
Section 5.5 will affect any representations or warranties made herein or the
conditions to the Parties' obligations to consummate the Transactions. Subject
to retention of those Records that Interplay must retain as contemplated in
Section 6.7, all of the data related to the Company and its businesses,
activities, properties and assets that is on any of Interplay's servers will be
archived onto tape,
40
delivered to the Company and permanently deleted from the Interplay servers. In
addition, Interplay will deliver to Buyer or destroy any paper copies of such
data.
5.6 EXCLUSIVITY. Prior to the Termination Date, neither of the
Company Parties nor any of their Affiliates will, directly or indirectly,
solicit, initiate or participate in any negotiations regarding any disposition
of the Shares, the assets of the Company or any part thereof.
5.7 PERRY RELEASE. Interplay covenants and agrees that it has
and will fully comply with all of the terms of and perform all of its
obligations under the Perry Release.
5.8 PERRY'S SHARES. Perry covenants and agrees that, except as
otherwise contemplated by the Transaction Documents, he will not sell, transfer,
mortgage, encumber or otherwise dispose of any Shares.
5.9 SHINY GROUP'S SHARES. Shiny Group covenants and agrees
that, except as otherwise contemplated by the Transaction Documents, it will not
sell, transfer, mortgage, encumber or otherwise dispose of any Shares.
5.10 OPERATION OF INTERPLAY'S BUSINESS.
Interplay covenants and agrees that, except as otherwise contemplated
by the Transaction Documents, from the date hereof through the date that is 90
days after the Closing Date it will not without the prior consent of Buyer,
which consent will not be unreasonably withheld:
(a) conduct its business in any manner except in the Ordinary
Course of Business consistent with prudent business custom and
practice; or
(b) fail to preserve and maintain its corporate existence; or
(c) fail to conduct all transactions with its officers,
directors and/or Affiliates on terms that are fair and reasonable to
Interplay; or
(d) create new Encumbrances on any of its assets or property,
except as expressly contemplated by the Transaction Documents; or
(e) sell, lease, transfer or otherwise dispose of any assets
or property, except for then-current fair market value; or
(f) declare, issue, make or pay any dividend or other
distribution of assets, to its shareholders, or otherwise acquire or
reacquire for value any of its Equity Interests; or
(g) prepay or otherwise satisfy prior to the scheduled
maturity any debt or obligation, or amend or modify any terms thereof
where such amendment or modification would accelerate payment of any
such amount due, except in settlement of any such amount for less than
the stated amount due provided that such settlement payments are in
accordance with Section 6.9; or
41
(h) agree to or make any commitment to take any actions
prohibited by this Section 5.10.
5.11 PERFORMANCE OF TRANSFER AGREEMENTS. Each of Buyer, the
Company and Interplay covenants and agrees that it has and will fully comply
with all of the terms of and perform all of its obligations under the IP
Assignment Agreement and the Contract Assignment and Assumption Agreement.
5.12 PAYMENT UNDER NEW MICROSOFT AMENDMENT. Buyer covenants
and agrees that at or prior to the Closing it will pay or cause to be paid to
Microsoft the $1,000,000 payment required by Buyer under the New Microsoft
Agreement.
5.13 PAYMENT UNDER WARNER AMENDMENT. Buyer covenants and
agrees that at or prior to the Closing it will pay or cause to be paid to Warner
the $1,000,000 payment required by Buyer under the Warner Amendment.
5.14 TRANSITION SERVICES AGREEMENT. The Parties acknowledge
that as of the Closing Date (i) some of the assets of the Company may be
temporarily located on Interplay's and not the Company's premises, and (ii)
Interplay will own the specific assets being licensed to Shiny under the IP
Assignment. Prior to the Closing, Buyer and Interplay will enter into a
transition services agreement (the "TRANSITION SERVICES AGREEMENT"), which will
ensure that for a period of 90 days from the Closing Interplay provides, in
consideration of the Transactions as part of the Purchase Price and for no extra
consideration whatsoever, the services and equipment necessary for the
uninterrupted development of the Games to the Company and its employees.
Without limiting the foregoing, the Transition Services
Agreement will include provisions stating that Interplay will provide the
following to the Company and its employees, on either the Company's or
Interplay's premises and on a basis consistent with historical practice: (i)
office and technical day to day equipment (including servers, hardware,
software, and modes of communication); (ii) audio files, related equipment and
support requested by Xxxxxxx Xxxxxx, Xxxxx Xxxxx and/or Xxxxxxx Xxxxxx; (iii)
support and maintenance requested for the Company websites, FTP sites and email
system(s); (iv) certain financial, legal and human resources services and
information.
The Transition Services Agreement will also include that
Interplay will (a) be responsible (including financial responsibility for all
cancellation fees, penalties and/or liabilities) for assisting the Company in
transitioning its current Internet Services Provider and Telephone Provider
lines to new MCI/WorldCom lines, (b) assist in the migration of the Company's
websites and FTP servers to Buyer's hosting facility in Seattle, Washington
(including providing data backups of all such websites and FTP servers), (c)
assist in the migration of the Company's email systems (including the
implementation of an extension change to "@xx.xxxxxxxxxx.xxx"), and (d) migrate
all requisite file servers and PDC and BDC domain controllers to new servers
which will be implemented at the Company's premises (including providing recent
backups of all such servers and controllers).
42
ARTICLE 6
POST-CLOSING COVENANTS
The Parties agree as follows with respect to the period following the
Closing:
6.1 GENERAL. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each Party will take such further action (including executing and delivering
such further instruments and documents) as any other Party reasonably may
request, all at the requesting Party's sole cost and expense (unless the
requesting Party is entitled to indemnification therefor under ARTICLE 9).
6.2 LITIGATION SUPPORT. So long as any Party actively is
contesting or defending against any Action in connection with (a) the
Transactions or (b) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the Closing Date involving the Company, each other
Party will cooperate with such Party and such Party's counsel in the contest or
defense, make available their personnel, and provide such testimony and access
to their books and records as will be necessary in connection with the contest
or defense, at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party or one of its Affiliates is entitled
to indemnification therefor under ARTICLE 9).
6.3 INSURANCE. For so long as Interplay has any
indemnification obligation under this Agreement, Interplay will maintain in
effect insurance policies providing coverage at least as comprehensive as those
it currently maintains.
6.4 TAX TREATMENT OF TRANSACTION.
(a) PERRY AND SHINY GROUP SHARES. The Parties acknowledge that
Perry and Shiny Group will take the position that the Transactions
represent substitute consideration with respect to the transactions
referenced in the Perry Release among Perry, Shiny Group, the Company
and Interplay. Further, the Parties agree to take no tax position with
respect to the Transactions inconsistent with the foregoing.
(b) SECTION 338(h)(10) ELECTION.
(i) At Buyer's option, Buyer and Interplay will join
in making a timely election under Section 338(h)(10) of the
Code (the "ELECTIONS") with respect to the purchase and sale
of the Shares hereunder. In connection therewith, Buyer and
Interplay agree to allocate the "aggregate deemed selling
price" and the "adjusted grossed up basis" as described in the
applicable Treasury Regulations among the assets of the
Company in the manner required by Section 338 of the Code and
such Treasury regulations (such allocation hereafter called
the "PURCHASE PRICE ALLOCATION"). Buyer and Interplay will
report, in connection with the determination of income,
franchise or other Taxes measured by or based upon net income,
the transactions being undertaken pursuant to this Agreement
in a manner consistent with the Elections unless required to
do otherwise by Law.
43
(ii) Interplay and Buyer agree to cooperate fully in
order to make the Elections valid. Buyer will be responsible
for the initial preparation of all forms and documents
required in connection with making the Elections, and Buyer
and Interplay will timely execute and file all forms required
to be filed to make the Elections. Interplay will execute such
documents and forms as are required by any Tax Laws to
complete the Elections, and will deliver such documents and
forms to Buyer not later than 45 days after the delivery of
the draft documents to Interplay described in subparagraph
(iv) below or, if later, 10 days after any dispute regarding
such draft documents has been resolved by the parties or the
Independent Accountants, as applicable.
(iii) To the extent permitted by state and local
Laws, at the election of Buyer, the principles and procedures
of this Section 6.4 will also apply with respect to a Section
338(h)(10) election or equivalent or comparable provision
under state or local Law.
(iv) Within 150 days after the Closing Date, Buyer
will provide to Interplay for Interplay's review a draft of
the exhibits proposed to be attached to the Internal Revenue
Service Forms 8023 and a copy of the Internal Revenue Service
Forms 8594 (if required by applicable Law) or other required
forms, if any, related to the Elections and any required
exhibits thereto. Within 30 days after receipt of such draft
documents thereof, Interplay will, in writing, either agree or
state its objections. Interplay and Buyer will negotiate in
good faith to attempt to resolve any objections. If Interplay
and Buyer are unable to resolve differences within 30 days,
then any remaining disputed matters will be finally and
conclusively determined by the Independent Accountants.
Promptly, but not later than 10 days after acceptance of
appointment pursuant to this Section 6.4(b)(iv), the
Independent Accountants will determine (based solely on
presentations by Interplay and Buyer and not by independent
review) only those matters in dispute and will render a
written report as to the disputed matters and the resulting
Purchase Price Allocation, which report will be conclusive and
binding upon the parties. The fees and expenses, if any, of
the Independent Accountants will be paid one-half by Interplay
and one-half by Buyer. Interplay and Buyer will file the Forms
8023 (and any other documents required by Federal, state or
local Law to make the Elections) promptly following the
resolution of any disputes, but in no event later than five
business days before the due date for making the Elections.
Interplay and Buyer agree to follow said Purchase Price
Allocation for purposes of all U.S. federal and, where
applicable, state and local income and franchise Tax Returns,
to the extent said values are relevant for such purposes.
(v) Notwithstanding anything herein to the contrary,
Buyer on the one hand and Interplay on the other hand, will
each bear 50% of the cost of all sales, use, gross receipts,
registration, business and occupation, transfer, stamp duty,
securities transactions, real estate transfer, and similar
Taxes and notarial fees assessed or payable in connection with
the Elections, regardless of whether such Taxes become due or
payable on or after the Closing Date.
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6.5 NONCOMPETITION.
(a) NONCOMPETITION COVENANTS. Perry agrees that for the
Restrictive Term he will not, within the boundaries of the territory
applicable to the business of the Company, without the prior written
consent of the Company which consent may be withheld in the sole and
absolute discretion of the Company, directly or indirectly, including
through Shiny Group, either alone or in association or in connection
with or on behalf of any Person now existing or hereafter created: (i)
be or become engaged in, directly or indirectly, with any Competitive
Business (as defined below) including being or becoming an organizer,
investor, lender, partner, joint venturer, stockholder, officer,
director, employee, manager, independent sales representative,
associate, consultant, agent, supplier, customer, lessor, or lessee of,
to or from any Competitive Business; (ii) give information or financial
assistance to any Competitive Business; or (iii) use or authorize the
use of his name or any part thereof to be used or employed in
connection with any Competitive Business (collectively and severally,
the "NONCOMPETITION COVENANTS"). For the purposes of this Agreement, a
"COMPETITIVE BUSINESS" is the business of the creation, development,
distribution or other exploitation of entertainment interactive
software and/or video games.
(b) ANTISOLICITATION. Perry agrees that for a period of four
years from the Closing Date he will not directly or indirectly solicit
for hire or hire any employee of the Company or any of its present or
future Subsidiaries or Affiliates, or either directly or indirectly,
solicit for hire or hire on behalf of any third party any employee of
the Company or any of its Subsidiaries or Affiliates, without the prior
written consent of the Company.
(c) EXCEPTIONS. Nothing herein will prevent Perry, upon prior
written consent of the Company, such consent which will not be
unreasonably withheld, from serving as a director or trustee of other
corporations or businesses that are not in competition with the
business of the Company or in competition with any present or future
affiliate of the Company. Nothing in this Section 6.5 will prevent
Perry from investing in real estate for his own account or from
becoming a partner or a stockholder in any corporation, partnership or
other venture not in competition with the business of the Company or in
competition with any present or future Affiliate of the Company.
Nothing in this Section 6.5 will prevent Perry from owning a less than
5% interest in any publicly traded company that is a Competitive
Business.
(d) SEPARATE COVENANTS. The Noncompetition Covenants will be
construed to be divided into separate and distinct Noncompetition
Covenants with respect to (i) each jurisdiction of the territory and
(ii) each matter or type of conduct described therein. Each such
divided Noncompetition Covenant will be separate and distinct from all
such other Noncompetition Covenants with respect to the same or any
aspect of the business of the Company.
(e) ACKNOWLEDGEMENTS. Perry acknowledges and agrees that: (i)
the covenants and the restrictions contained in the Noncompetition
Covenants are necessary, fundamental and required for the protection of
the business of the Company; (ii) the
45
Noncompetition Covenants relate to matters that are of a special,
unique and extraordinary value; (iii) a breach of any of the
Noncompetition Covenants will result in irreparable harm and damages
that cannot be adequately compensated by a monetary award, and
accordingly the Company will be entitled to injunctive or other
equitable relief to prevent or redress any such breach; (iv)
immediately prior to the date of this Agreement, Perry was a director
of and a holder of an Equity Interest in the Company and concurrently
herewith is selling all of his equity in the Company pursuant to this
Agreement; (v) in connection with such sale of equity, Buyer has
required and Perry has agreed, as a condition to the purchase by Buyer
of such equity, that Perry enter into these Noncompetition Covenants;
(vi) Perry understands that Buyer would not purchase any of the Shares
or his equity if Perry did not enter into this Agreement and these
Noncompetition Covenants; and (vii) Perry is entering into these
Noncompetition Covenants in connection with the Transactions.
(f) JUDICIAL LIMITATION. Notwithstanding the foregoing
provisions of this Section 6.5, if at any time a court of competent
jurisdiction holds that any portion of any Noncompetition Covenant is
unenforceable by reason of its extending for too great of a period of
time or over too great of a geographical area or by reason of its being
too extensive in any other respect, such Noncompetition Covenant will
be interpreted to extend only over the maximum period of time, maximum
geographical area, or maximum extent in all other respects, as the case
may be, as to which it may be enforceable all as determined by such
court in such action.
6.6 NONDISCLOSURE OF PROPRIETARY DATA. The Parties have
entered into a Mutual Confidentiality Agreement of even date herewith, which
applies to the subject matter of the Transactions.
6.7 CONTINUING ACCESS. Interplay covenants and agrees that it
will, for a period of at least three years after the Closing, maintain all Tax
and financial Records pertaining to the Company and its business, assets and
properties prior to the Closing that must be included within the Records of
Interplay by virtue of the Company having been a subsidiary of Interplay and/or
a member of a reporting group that includes Interplay. After the Closing,
Interplay will provide the Company and Buyer and their respective
representatives, during normal business hours and upon reasonable notice, with
access to such Records and permit such Persons to make and keep electronic or
hard copies thereof. If, at any time, Interplay proposes to dispose of any such
Records, Interplay will first offer to Buyer to deliver the same to Buyer at
Buyer's expense.
6.8 AUDIT COOPERATION. Each of the Company Parties covenants
and agrees that upon the other's reasonable request, it will either provide
audited financial statements for the Company or provide the data, Records and
access (including to Interplay's or the Company's, as applicable, employees and
outside auditors) required to create audited financial statements for the
Company, for the period between January 1, 1999 and the Closing Date.
6.9 USE OF PROCEEDS. Interplay covenants and agrees that it
will expend the Interplay Purchase Price substantially in the manner detailed on
Exhibit Z. Interplay further covenants and agrees that until July 31, 2002 it
will provide to Buyer, every Friday by 5:00 PM
46
Pacific Time, a certificate signed by Interplay's CFO detailing Interplay's
compliance with the payment schedule set forth on Exhibit Z.
6.10 BIOWARE PAYMENTS. Interplay covenants and agrees that it
will execute and deliver an irrevocable instruction from Interplay to Buyer that
directs Buyer to pay the following three payments due to Interplay under the
Interplay Note directly to Bioware Corp.: (i) $593,146 due on June 1, 2002; (ii)
$593,146 due on June 30, 2002; and (iii) $593,146 due on July 31, 2002.
ARTICLE 7
CLOSING CONDITIONS
7.1 CONDITIONS PRECEDENT TO OBLIGATION OF BUYER. Buyer's
obligation to consummate the Transactions contemplated to occur in connection
with the Closing and thereafter is subject to the satisfaction of each condition
precedent listed below.
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty set forth in Sections 3.1, 3.3, 3.4, and
ARTICLE 4 must have been accurate and complete in all material respects
(except with respect to any provisions including the word "material" or
words of similar import, with respect to which such representations and
warranties must have been accurate and complete) as of the date of this
Agreement, and must be accurate and complete in all material respects
(except with respect to any provisions including the word "material" or
words of similar import with respect to which such representations and
warranties must have been accurate and complete) as of the Closing
Date, as if made on the Closing Date (except as expressly provided in a
representation or warranty and except as arising as a direct result of
the implementation of the Transaction Documents in accordance with
their respective terms).
(b) COMPLIANCE WITH OBLIGATIONS. Each Seller and the Company
must have performed and complied with all of its covenants to be
performed or complied with at or prior to Closing (singularly and in
the aggregate) in all material respects.
(c) CLOSING CERTIFICATES. Buyer must have received the
Interplay Officer's Certificate and the Perry Certificate
(d) NO ADVERSE LITIGATION. There must not be pending or
Threatened any Action by or before any Governmental Body, arbitrator,
or mediator which will seek to restrain, prohibit, invalidate, or
collect Damages arising out of the Transactions.
(e) PERMITS AND CONSENTS. The Company Parties must have
obtained all of the Permits, if any, necessary for the Transactions and
all of the Consents (i) required under each Material Contract, (ii)
listed in Section 4.15 of the Company Disclosure Letter and/or (iii)
otherwise necessary for the Transactions.
(f) LIABILITIES. Prior to the Closing, the Company Parties
must have obtained and delivered to Buyer full satisfactions or
releases of all Liabilities due to or from the Company which are due to
be satisfied or released under this Agreement to or on behalf of (i)
any Affiliate of the Company or (ii) Interplay or any Affiliate of
Interplay.
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(g) PERRY EMPLOYMENT AGREEMENT. Perry must have duly executed
and delivered to Buyer the Perry Employment Agreement. Perry hereby
acknowledges that he and his counsel have participated in the
negotiation of, reviewed and approved the Perry Employment Agreement,
and covenants that his signature thereto will be delivered concurrently
with the Closing.
(h) WARNER AMENDMENT. The Warner Amendment must be in full
force and effect as of the Closing.
(i) VIRGIN RELEASE. Interplay must have delivered to Buyer the
Virgin Release, duly executed by Interplay, the Company and Virgin.
(j) VIVENDI RELEASE. Interplay must have delivered to Buyer
the Vivendi Release, duly executed by Interplay, the Company and
Vivendi and all conditions to such release must be satisfied as of the
Closing.
(k) IP ASSIGNMENT. Interplay must have delivered to Buyer the
IP Assignment and all related patent, trademark and short form
copyright assignments, duly executed by Interplay and the Company.
(l) DESIGN SERVICES AGREEMENT. Interplay must have delivered
to Buyer the Design Services Agreement, duly executed by the Company
and each of Xxxx Xxxxxxxxx and Xxxxx Xxxxxxxxx.
(m) NO MATERIAL ADVERSE CHANGE. There must not have been any
Material Adverse Change with respect to the Company since January 22,
2002.
(n) PERRY RELEASE. The Perry Release must be in full force and
effect as of the Closing, and Interplay must also have fully complied
with and performed all of its obligations due prior to or at Closing
under the Perry Release.
(o) NEW MICROSOFT AGREEMENT. The New Microsoft Agreement must
be in full force and effect as of the Closing.
(p) TERMINATION OF PRODUCT AGREEMENT. That certain Product
Agreement between Interplay and the Company, dated July 24, 1995 must
have been terminated with a full release by Interplay of the Company
from any obligations arising thereunder, in form and substance
reasonably satisfactory to Buyer.
(q) LASALLE RELEASE. The LaSalle Release must be in full force
and effect as of the Closing and all conditions to the effectiveness
thereof must be satisfied as of the Closing.
(r) XXXXX XXXXX RELEASE. Interplay must have delivered to
Buyer the Xxxxx Xxxxx Release, duly executed by Xxxxx Xxxxx.
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(s) COMMITMENTS. Interplay must have delivered to Buyer, in
form and substance reasonably satisfactory to Buyer, ratification by
Interplay's board of directors of the Commitments listed in Section 4.5
of the Company Disclosure Letter.
(t) CREDITOR TERMINATION OR RELEASE. Every security interest
or other Encumbrance listed in Section 4.13 of the Company Disclosure
Letter must have been terminated and/or released, in form and substance
satisfactory to Buyer, without any further payment by or obligation of
the Company or Buyer.
(u) RESIGNATION OF BOARD. Each of the Company's directors and
officers must have resigned, in form and substance satisfactory to
Buyer.
(v) OPINION OF COUNSEL. Interplay must have delivered to Buyer
the Opinion of Counsel to the Company and Interplay.
(w) AKIN RELEASE. Interplay must have delivered to Buyer the
Akin Release, duly executed by Interplay, the Company and Akin.
(x) CONTRACT ASSIGNMENT. Interplay must have delivered to
Buyer the Contract Assignment and Assumption Agreement, duly executed
by Interplay and the Company.
(y) EUROPLAY RELEASE. Interplay must have delivered to Buyer
the Europlay Release, duly executed by Interplay, the Company and
Europlay.
(z) TRANSITION SERVICES AGREEMENT. Interplay must have
delivered to Buyer the Transition Services Agreement, duly executed by
Interplay and in form and substance reasonably satisfactory to Buyer.
(aa) INTERCOMPANY ACCOUNT. Interplay must have capitalized all
outstanding payables due from the Company such that, as of the Closing
Date and without payment by the Company, the outstanding payable
balance owing from the Company to Interplay and/or any of Interplay's
Affiliates will be zero.
(bb) ARCHIVAL ESCROW AGREEMENT. Interplay must have delivered
to Buyer the Archival Escrow Agreement, in form and substance
reasonably satisfactory to Buyer, duly executed by Interplay and the
mutually acceptable escrow agent.
(cc) XXXXX INTERACTIVE SA. Interplay must have delivered to
Buyer, in form and substance reasonably satisfactory to Buyer, evidence
that the Technology and Content License Agreement dated as of June 30,
2000 between Xxxxx Interactive SA and Interplay has been amended in
accordance with the terms of Section 2.2.1(1) of the IP Assignment.
49
7.2 CONDITIONS PRECEDENT TO OBLIGATION OF INTERPLAY.
Interplay's obligation to consummate the Transactions contemplated to occur in
connection with the Closing and thereafter is subject to the satisfaction of
each condition precedent listed below.
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty set forth in Section 3.2 must have been
accurate and complete in all material respects (except with respect to
any provisions including the word "material" or words of similar
import, with respect to which such representations and warranties must
have been accurate and complete) as of the date of this Agreement, and
must be accurate and complete in all material respects (except with
respect to any provisions including the word "material" or words of
similar import, with respect to which such representations and
warranties must have been accurate and complete) as of the Closing
Date, as if made on the Closing Date (except as expressly provided in a
representation or warranty and except as arising as a direct result of
the implementation of the Transaction Documents in accordance with
their respective terms).
(b) COMPLIANCE WITH OBLIGATIONS. Buyer must have performed and
complied with all its covenants and obligations required by this
Agreement to be performed or complied with at or prior to Closing
(singularly and in the aggregate) in all material respects.
(c) CLOSING CERTIFICATES. Interplay must have received the
Buyer Officer's Certificate.
(d) NO ORDER OR INJUNCTION. There must not be issued and in
effect any Order restraining or prohibiting the Transactions.
(e) WARNER AMENDMENT. The Warner Amendment must be in full
force and effect as of the Closing.
(f) VIRGIN RELEASE. Virgin must have executed and delivered to
Interplay the Virgin Release.
(g) VIVENDI RELEASE. Vivendi must have executed and delivered
to Interplay the Vivendi Release.
(h) NEW MICROSOFT AGREEMENT. The New Microsoft Agreement must
be in full force and effect as of the Closing.
(i) XXXXX XXXXX RELEASE. Interplay must have received the
Xxxxx Xxxxx Release, duly executed by Xxxxx Xxxxx.
(j) BUYER OPINIONS. Buyer must have delivered to Interplay the
Buyer Opinions.
(k) BUYER NOTES AND PARENT GUARANTIES. Buyer must have
delivered to the respective payees the Interplay Note, the Interplay
Guaranty, the Akin Note, the Akin Guaranty, the Europlay Note, and the
Europlay Guaranty.
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(l) BIOWARE GUARANTY. Parent must have delivered the Bioware
Guaranty to Bioware Corp.
7.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF PERRY AND SHINY
GROUP. Perry's and Shiny Group's respective obligation to consummate the
Transactions contemplated to occur in connection with the Closing and thereafter
are subject to the satisfaction of each condition precedent listed below.
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty set forth in Section 3.2 must have been
accurate and complete in all material respects (except with respect to
any provisions including the word "material" or words of similar
import, with respect to which such representations and warranties must
have been accurate and complete) as of the date of this Agreement, and
must be accurate and complete in all material respects (except with
respect to any provisions including the word "material" or words of
similar import, with respect to which such representations and
warranties must have been accurate and complete) as of the Closing
Date, as if made on the Closing Date (except as expressly provided in a
representation or warranty and except as arising as a direct result of
the implementation of the Transaction Documents in accordance with
their respective terms).
(b) COMPLIANCE WITH OBLIGATIONS. Buyer must have performed and
complied with all its covenants and obligations required by this
Agreement to be performed or complied with at or prior to Closing
(singularly and in the aggregate) in all material respects and
Interplay must have performed and complied with all of its covenants
and obligations relating to Perry and Shiny Group required by this
Agreement, the Perry Release, and the Closing Escrow Agreement to be
performed or complied with at or prior to Closing (singularly and in
the aggregate) in all material respects.
(c) CLOSING CERTIFICATES. Perry and Shiny Group must have
received the Buyer Officer's Certificate.
(d) NO ORDER OR INJUNCTION. There must not be issued and in
effect any Order restraining or prohibiting the Transactions.
(e) PERRY EMPLOYMENT AGREEMENT. Buyer must have delivered to
Perry the Perry Employment Agreement, duly executed by Buyer.
ARTICLE 8
TERMINATION
8.1 TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement as provided below:
(a) Buyer and Interplay may terminate this Agreement as to all
Parties by mutual written consent at any time prior to the Closing;
(b) Buyer, Perry or Interplay may terminate this Agreement
upon delivery of notice if the Closing has not occurred prior to the
Expiration Date, provided that the Party
51
delivering such notice (or in the case of a delivery by Interplay,
Interplay) will not have caused such failure to close;
(c) Buyer may terminate this Agreement by giving written
notice to Interplay at any time prior to the Closing if any Seller or
the Company has breached any representation, warranty, or covenant
contained in this Agreement in any material respect; or
(d) Interplay may terminate this Agreement by giving notice to
Buyer at any time prior to the Closing if Buyer has breached any
representation, warranty, or covenant contained in this Agreement in
any material respect.
(e) Perry and/or Shiny Group may terminate this Agreement by
giving notice to Buyer at any time prior to the Closing if Buyer has
breached any representation, warranty, or covenant contained in this
Agreement in any material respect.
8.2 EFFECT OF TERMINATION.
(a) Except for the obligations under this ARTICLE 8 and
ARTICLE 10, if this Agreement is terminated under Section 8.1, then,
except as provided in this Section 8.2 all further obligations of the
Parties under this Agreement will terminate.
(b) If Buyer, Interplay, Perry or Shiny Group terminates this
Agreement pursuant to Section 8.1(c), 8.1(d), or 8.1(e), as the case
may be, then the rights of the non-breaching Party(ies) to pursue all
legal remedies for Damages such Party(ies) suffer will survive such
termination unimpaired and no election of remedies will have been
deemed to have been made.
(c) If the Agreement is terminated as provided in Section 8.1,
such termination will not modify, release or otherwise effect any
obligations then in force between or among Perry, Shiny Group, and/or
Interplay.
ARTICLE 9
INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) Each representation and warranty contained in Sections
3.1, 3.3, 3.4, and ARTICLE 4 and any certificate related to such
representations and warranties will survive the Closing and continue in
full force and effect for 18 months thereafter, except (i) the
representations and warranties set forth in Sections 3.1(d), 3.3(c),
3.4(c), 4.4 and 4.12, which will survive the Closing and continue in
full force and effect until the applicable statute of limitations
expires (or for 7 years if there is no applicable statute of
limitations) and (ii) the representations and warranties set forth in
Sections 3.1(a), 3.1(b), 3.1(e), 3.3(a), 3.3(d), 3.4(a), 3.4(d), 4.1,
4.2 and 4.5 which will survive the Closing and will continue in full
force and effect forever.
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(b) Each representation and warranty of Buyer contained in
Section 3.2 and any certificate related to such representations and
warranties will survive the Closing and continue in full force and
effect for 18 months thereafter, except (i) the representations and
warranties set forth in Section 3.2(d) which will survive the Closing
and continue in full force and effect until the applicable statute of
limitations expires (or for 7 years if there is no applicable statute
of limitations) and (ii) the representations and warranties set forth
in Sections 3.2(a) and 3.2(b) which will survive the Closing and will
continue in full force and effect forever.
(c) Each other provision in this Agreement or any certificate
or document delivered pursuant hereto will survive for the relevant
statute of limitations period, unless a different period is expressly
contemplated herein or thereby.
9.2 INDEMNIFICATION PROVISIONS FOR BUYER'S BENEFIT.
(a) Interplay will indemnify and hold the Interplay
Indemnified Parties harmless from and pay any and all Damages, directly
or indirectly, resulting from, relating to, arising out of, or
attributable to any one of the following:
(i) Any breach of any representation or warranty any
Company Party has made in this Agreement as if such
representation or warranty was made on and as of the Closing
Date.
(ii) Any breach by any Company Party of any covenant
or obligation of such party in this Agreement, and any breach
by Interplay of any covenant or obligation in the IP
Assignment and/or the Assignment and Assumption Agreement.
(iii) Any Action arising from or related to the
operation and ownership of, or conditions first occurring with
respect to, the Company during any period before and through
the Closing.
(iv) Any Liability of Interplay not assumed by Buyer
or the Company from Interplay on or before the Closing Date,
including every Liability to pay royalties or any other
amounts in connection with any interactive software and/or
video games other than the Games.
(b) Perry and the Shiny Group will jointly and severally
indemnify and hold the Interplay Indemnified Parties harmless from and
pay any and all Damages, directly or indirectly, resulting from,
relating to, arising out of, or attributable to any breach of any
representation or warranty contained in Sections 3.3 and 3.4 as if such
representation or warranty was made on and as of the Closing Date.
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9.3 INDEMNIFICATION PROVISIONS FOR INTERPLAY'S BENEFIT. Buyer
will indemnify and hold the Buyer Indemnified Parties harmless from and pay any
and all Damages, directly or indirectly, resulting from, relating to, arising
out of, or attributable to any of the following:
(a) Any breach of any representation or warranty Buyer has
made in this Agreement as if such representation or warranty was made
on and as of the Closing Date.
(b) Any breach by Buyer of any covenant or obligation of Buyer
in this Agreement, and any breach by the Company of any covenant or
obligation in the IP Assignment and/or the Assignment and Assumption
Agreement.
(c) Any Liability assumed by Buyer or the Company from
Interplay on or before the Closing Date.
(d) Any Liability Interplay may have as a guarantor or obligor
under any Contract entered into on or before the Closing Date with
respect to which the Company is the primary obligor, and is listed as
such in Section 4.16(a)(x) of the Company Disclosure Letter.
(e) Any Action arising from or related to the operation and
ownership of, or conditions first occurring with respect to, the
Company during any period after the Closing, except for any matter for
which Interplay is obligated to indemnify any Interplay Indemnified
Party.
9.4 INDEMNIFICATION PROVISIONS FOR PERRY'S AND SHINY GROUP'S
BENEFIT. Buyer will indemnify and hold Perry and/or Shiny Group harmless from
and pay any and all Damages, directly or indirectly, resulting from, relating
to, arising out of, or attributable to any breach of any representation or
warranty contained in Section 3.2 as if such representation or warranty was made
on and as of the Closing Date.
9.5 INDEMNIFICATION CLAIM PROCEDURES.
(a) If any third party notifies any Indemnified Party with
respect to the commencement of any Action that may give rise to a claim
for indemnification against any Indemnitor under this ARTICLE 9 (an
"INDEMNIFICATION CLAIM"), then the Indemnified Party will promptly give
notice to the Indemnitor. Failure to notify the Indemnitor will not
relieve the Indemnitor of any Liability that it may have to the
Indemnified Party, except to the extent the defense of such Action is
materially and irrevocably prejudiced by the Indemnified Party's
failure to give such notice.
(b) In connection with any Indemnification Claim, (i) the
Indemnified Party may defend with attorneys of its choice against, and
consent to the entry of any Order with respect to, the Indemnification
Claim in any manner it may deem appropriate in its reasonable
discretion, (ii) each Indemnitor will be jointly and severally
obligated to reimburse the Indemnified Party promptly and periodically
for the Damages relating to defending against the Indemnification
Claim, and (iii) each Indemnitor will remain
54
jointly and severally Liable for any Damages the Indemnified Party may
suffer relating to the Indemnification Claim to the fullest extent
provided in this ARTICLE 9.
(c) Each Party hereby consents to the non-exclusive
jurisdiction of any Governmental Body, arbitrator, or mediator in which
an Action is brought against any Indemnified Party for purposes of any
Indemnification Claim that an Indemnified Party may have under this
Agreement with respect to such Action or the matters alleged therein,
and agrees that process may be served on such Party with respect to
such claim anywhere in the world.
9.6 LIMITATIONS ON INDEMNIFICATION LIABILITY. Any claims any
Indemnified Party makes under this ARTICLE 9 will be limited as follows:
(a) CEILING. Each Indemnitor's aggregate Liability for money
Damages under this Agreement related to breaches of the representations
and warranties herein will not exceed an amount equal to 30% of the
Purchase Price; provided that the limitation contemplated hereby will
not be applicable with respect to (i) breaches of Sections 3.1(b),
3.1(e), 3.2(b), 4.2, 4.5, or 4.12, (ii) instances of fraud, willful
misconduct or gross negligence by the applicable Indemnitor and (iii)
matters covered by Sections 9.2(b), 9.4 and/or 9.8.
(b) BASKET. No Indemnitor will have any Liability for money
Damages related to breaches of the representations and warranties in
ARTICLE 3 or ARTICLE 4 unless and until the aggregate Damages claimed
under Section 9.2(a) or 9.3, as applicable, exceed 3% of the Purchase
Price (the "INDEMNIFIED PARTIES THRESHOLD AMOUNT"); provided, however,
that the limitation contemplated hereby will not be applicable with
respect to (i) breaches of Sections 3.1(b), 3.1(e), 3.2(b), 4.2, 4.5,
or 4.12, (ii) instances of fraud, willful misconduct or gross
negligence by the applicable Indemnitor; provided further, that once
such amount exceeds the Indemnified Parties Threshold Amount, the
applicable Indemnified Parties will be entitled to recover all amounts
to which they are entitled in excess of the Indemnified Parties
Threshold Amount and (iii) matters covered by Sections 9.2(b), 9.4
and/or 9.8.
(c) REDUCTION FOR INSURANCE CLAIMS. The amount of Damages
required to be paid for Damages will be reduced to the extent of any
amounts an Indemnified Party actually receives pursuant to the terms of
the insurance policies (if any) covering such Indemnification Claim.
Nothing in this Section 9.6(c) will be deemed to obligate any Person to
pursue any claim against any insurer or third party.
(d) EXCLUSION OF CERTAIN TYPES OF DAMAGES. All indemnification
obligations will be limited to actual Damages and will exclude
incidental, consequential, lost profits, indirect, punitive, or
exemplary Damages.
(e) TAXES. Indemnification provided for in this ARTICLE 9 will
be calculated on an After Tax Basis.
55
9.7 OTHER INDEMNIFICATION PROVISIONS.
(a) Excluding any instances of willful misconduct or gross
negligence by any of the Parties, and where Buyer is entitled to
injunctive relief against any of the Company Parties, if the Closing
occurs the indemnification provisions in this ARTICLE 9 will be the
exclusive remedy with respect to the breach of this Agreement.
(b) Any Liability of the Company to any Interplay Indemnified
Party under this Agreement will terminate for all purposes upon Closing
and have no further force or effect. Although the representations and
warranties made in ARTICLE 4 are made jointly and severally by
Interplay and the Company, Interplay is solely responsible for any and
all indemnification hereunder. Further, Interplay will have no claim
for contribution against the Company. Knowledge of the employees and
management of the Company is not to be imputed Buyer for any purpose,
nor raised by Interplay as a defense to any claim that Buyer may have
under this Agreement.
(c) A claim for any matter not involving a third party may be
asserted by notice to the Party from whom indemnification is sought.
(d) To the extent permitted by Law, any indemnification
payment made hereunder will be treated as an adjustment to the Purchase
Price.
9.8 CERTAIN TAX MATTERS.
(a) INTERPLAY INDEMNITY. Interplay agrees to indemnify,
defend, and hold harmless Buyer and the Company against any Damages
attributable to (i) any Tax payable by or on behalf of Interplay or any
of its Affiliates or the Company for any taxable period ending on or
prior to the Closing Date, (ii) Taxes of any member of a consolidated
or combined tax group of which Interplay or the Company is, or was at
any time, a member, for which the Company is jointly or severally
liable as a result of its inclusion in such group prior to the Closing
Date, (iii) with respect to any Taxes payable by or on behalf of the
Company due for periods beginning before and ending after the Closing
Date (whether or not assessed prior to the Closing Date), the Taxes
allocable to the portion of such period that ends on and includes the
Closing Date ("INTERPLAY'S PRO RATA SHARE"); and (iv) all Taxes
resulting from the Elections, if any, described in Section 6.4(b). For
purposes of calculating Interplay's Pro Rata Share of Taxes described
in Section 9.8(a)(iii), the Closing Date will be treated as the last
day of a taxable period, and the portion of any such Tax that is
allocable to the taxable period that is so deemed to end on the Closing
Date will be: (1) in the case of Taxes that are either (x) based upon
or related to income or receipts, (y) imposed in connection with any
sales or other transfer or assignment of property (real or personal,
tangible or intangible) other than transfers pursuant to this
Agreement, or (z) imposed on a periodic basis and measured by the level
of any item that is required to be determined as of the Closing Date or
that is reasonably determinable as of the Closing Date and such
determination is made by a party in a manner reasonably acceptable to
the Parties, deemed equal to the amount that would be payable if the
period for which such Tax is assessed ended with the Closing Date; and
(2) in the cases of Taxes imposed on a periodic basis and measured by
the level of any item,
56
other than Taxes described in Clause (1) hereof, will be deemed to be
the amount of such Taxes for the entire period (or, in the case of such
taxes determined on an arrears basis, the amount of such Taxes for the
immediately preceding period) multiplied by a fraction the numerator of
which is the number of calendar days in the period ending with the
Closing Date and the denominator of which is the number of calendar
days in the entire period; and (3) exemptions, allowances or deductions
that are calculated on an annual basis such as the deduction for
depreciation, will be apportioned on a daily basis in the same manner
as Taxes under Clause (2) hereof.
Notwithstanding anything in this Section 9.8 or this Agreement
to the contrary, Interplay will have no obligation to indemnify Buyer
or the Company for any Taxes to the extent adequate provision was made
therefor on the Final Balance Sheet.
(b) BUYER INDEMNITY. Buyer agrees to indemnify Interplay
against any Taxes attributable to the operations of the Company for
periods beginning (or that are treated by Section 9.8(a)(iii) as
beginning) after the Closing Date.
(c) RETURNS AND PAYMENTS.
(i) Tax Periods Ending on or Before the Closing Date.
Interplay will prepare or cause to be prepared and file or
cause to be filed, on a timely basis, all Tax Returns required
to be filed by or on behalf of the Company for all periods
ending on or prior to the Closing Date which are filed after
the Closing Date. All Tax Returns which Interplay is required
to cause to be filed in accordance with this Section 9.8 will
be prepared and filed in a manner consistent with past
practice and, on such Tax Returns, no position will be taken,
elections made or method adopted without Buyer's written
consent that is inconsistent with positions taken, elections
made or methods used in preparing and filing similar Tax
Returns in prior periods (including positions, elections or
methods which would have the effect of deferring income to
periods after the Closing Date or accelerating deductions to
periods on or before the Closing Date). Interplay will provide
to Buyer a copy of each such Tax Return at least 30 days prior
to the due date for the filing thereof and will make such
revisions to such Tax Returns as are reasonably requested by
Buyer.
(ii) Tax Periods Beginning Before and Ending After
the Closing Date. Buyer will prepare or cause to be prepared
and file or cause to be filed any Tax Returns of the Company
for Tax periods which begin before the Closing Date and end
after the Closing Date, provided, however, that the
preparation and filing of such Tax Returns will be subject to
the review and approval of Interplay which approval will not
be unreasonably withheld. A copy of each such Tax Return will
be provided to Interplay at least 30 days prior to the due
date for the filing thereof. Interplay will pay to Buyer
within 15 days after the date on which Taxes are paid with
respect to such periods an amount equal to Interplay's Pro
Rata Share of the Taxes payable in respect of such Tax Returns
(as determined pursuant to the last sentence of Section
9.8(a)) to the extent such Taxes are not reflected in the
reserve for Liabilities for Taxes shown on the face of the
Final Balance Sheet. All
57
such Tax Returns, and all determinations necessary to give
effect to the computation of Interplay's Pro Rata Share, will
be prepared or made in a manner consistent with prior practice
of the Company except as otherwise required by applicable Law.
(iii) Good Faith Resolution. Buyer and Interplay
agree to consult and resolve in good faith any issue arising
with respect to the preparation of any Tax Return described in
subparagraphs (i) or (ii) above and mutually to consent to its
filing as soon as possible. In the event the parties are
unable to resolve any dispute they will submit the issue to
the Independent Accountants for final resolution.
(d) TAX ALLOCATION AGREEMENTS. As of the Closing Date, all Tax
allocation agreements and arrangements between Interplay and the
Company will be cancelled and no further payment will be due to any
party pursuant to such agreements or arrangements.
(e) AUDIT MATTERS. Interplay will have the responsibility for,
and the right to control, at Interplay's expense, the audit (and
disposition thereof) of any Tax Return relating to periods actually
ending on or prior to the Closing Date and to participate in and
approve (which approval will not be unreasonably withheld) the
disposition of the audit of any Tax Return relating to periods ending
after the Closing Date if such audit or disposition thereof could give
rise to a claim for indemnification hereunder or might reasonably be
expected to result in an increase in Taxes of Interplay or any
Affiliate in any pre- or post-Closing Date period. Buyer will have the
right, directly or through its designated representatives, to be
present at any hearings or proceedings and to review in advance and
comment upon all submissions made in the course of audits or appeals
thereof to any Governmental Body that are being conducted by Interplay
and which concern specific issues that may reasonably be expected to
affect the Tax Liability of Interplay or the Company. Notwithstanding
anything herein to the contrary, neither Interplay nor any Affiliate of
Interplay will be entitled to settle, either administratively or after
the commencement of litigation, any claim for Taxes which would
materially adversely affect the liability for Taxes of Buyer, the
Company, or any Affiliate thereof for any period after the Closing Date
(including the imposition of income Tax deficiencies, the reduction of
asset basis or cost adjustments, the lengthening of any amortization or
depreciation periods, the denial of amortization or depreciation
deductions, or the reduction of loss or credit carryforwards) without
the prior written consent of Buyer. Such consent will not be
unreasonably withheld, and will not be necessary to the extent that
Interplay has agreed to indemnify Buyer or the Company against the
effects of any such settlement.
(f) TAX COOPERATION. Buyer, the Company and Interplay will
cooperate fully, as and to the extent reasonably requested by the other
Party, in connection with the filing of Tax Returns pursuant to this
Section 9.8, and any audit, litigation or other proceeding with respect
to Taxes. Such cooperation will include the retention and (upon the
other Party's request) the provision of records and information which
are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided hereunder. The Company and Interplay agree (i) to retain all
books
58
and records with respect to Tax matters pertinent to the Company
relating to any taxable period beginning before the Closing Date until
the expiration of the statute of limitations (and, to the extent
notified by Buyer or Interplay, any extensions thereof) of the
respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (ii) to give the
other Party reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other Party so
requests, the Company or Interplay, as the case may be, will allow the
other Party to take possession of such books and records. Buyer and
Interplay further agree, upon request, to use their best efforts to
obtain any certificate or other document from any Governmental Body or
any other Person as may be necessary to mitigate, reduce or eliminate
any Tax that could be imposed (including with respect to the
transactions contemplated hereby).
(g) REFUNDS AND TAX BENEFITS. Any Tax refunds that are
received by Buyer or the Company, and any amounts credited against Tax
to which Buyer or the Company become entitled, that relate to Tax
periods or portions thereof ending on or before the Closing Date will
be for the account of Interplay, and Buyer will pay over to Interplay
any such refund or the amount of any such credit (including interest)
within 15 days after receipt or entitlement thereto. In addition, to
the extent that a claim for refund or a proceeding results in a payment
or credit against Tax by a taxing authority to Buyer or the Company of
any Tax liability accrued on the Final Balance Sheet, Buyer will pay
such amount (including interest) to Interplay within 15 days after
receipt or entitlement thereto. Interplay will not be entitled to any
refund of Taxes pursuant to this paragraph to the extent it was
reflected in the Final Balance Sheet or results from the carryback of a
net operating loss or other tax attribute arising in a taxable period
beginning after the Closing Date. In addition, Interplay will indemnify
and hold harmless the Buyer and the Company against (and the amount of
any refund required to be paid over to Interplay can be reduced by) any
current or future Taxes required to be paid by Buyer or any of its
Affiliates (including the Company) as a result of the receipt or use of
any refund to which Interplay is entitled under this paragraph or any
adjustment, amended reporting position or other event that generates
such refund.
(h) POST-CLOSING ELECTIONS. Buyer will cooperate with
Interplay in causing the Company to make and/or join with Interplay in
making any election by Interplay's consolidated group that does not
adversely affect the Company or Buyer in any taxable period following
the Closing Date.
ARTICLE 10
MISCELLANEOUS
10.1 ENTIRE AGREEMENT. This Agreement, together with the
Exhibits, Schedules and Disclosure Letters hereto and the certificates,
documents, instruments and writings that are delivered pursuant hereto,
constitutes the entire agreement and understanding of the Parties in respect of
its subject matters and supersedes all prior understandings, agreements, or
representations by or among the Parties, written or oral, to the extent they
relate in any way to the subject matter hereof or the Transactions, except for
Perry's Interplay Stock Option
59
Agreement and the Perry Release. Except as expressly contemplated by ARTICLE 9,
there are no third party beneficiaries having rights under or with respect to
this Agreement.
10.2 SUCCESSORS. All of the terms, agreements, covenants,
representations, warranties, and conditions of this Agreement are binding upon,
and inure to the benefit of and are enforceable by, the Parties and their
respective successors.
10.3 ASSIGNMENTS. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties; provided, however, that Buyer may (a) assign any
or all of its rights and interests hereunder to one or more of its Affiliates
and (b) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases Buyer nonetheless will remain
responsible for the performance of all of its obligations hereunder).
Notwithstanding the foregoing, nothing contained herein will be construed as
preventing or otherwise limiting Buyer's ability to transfer, assign, license or
sell any or all of Intellectual Property from and after the Closing.
10.4 NOTICES. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder will be deemed duly given if (and then three
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
IF TO BUYER AND AFTER CLOSING TO THE COMPANY:
Infogrames, Inc.
Attn Xxxxx Xxxxx, Senior Executive Vice President
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel (000) 000-0000
Fax (000) 000-0000
Copy to (which will not constitute notice):
Infogrames, Inc.
Attn Xxxx Xxxxxxxx, General Counsel
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel (000) 000-0000
Fax (000) 000-0000
and
O'Melveny & Xxxxx LLP
Attn Xxxxxx X. Xxxxxxxxx
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Tel (000) 000-0000
Fax (000) 000-0000
60
IF TO INTERPLAY AND BEFORE CLOSING TO THE COMPANY:
Interplay Entertainment Corp.
Attn Herve Caen
00000 Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Tel (000) 000-0000
Fax (000) 000-0000
Copy to (which will not constitute notice):
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
Attn Xxxxxx Xxxxxxxx
Century Tower Plaza, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Tel (000) 000-0000
Fax (000) 000-0000
IF TO PERRY OR TO SHINY GROUP:
Xxxxx Xxxxx
00 Xxxx Xxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Tel (000) 000-0000
Fax (000) 000-0000
Copy to (which will not constitute notice);
Xxxxxx & Pucci LLP
Attn Xxxxxxxxx X. Xxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Tel (000) 000-0000
Fax (000) 000-0000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication will be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.
10.5 SPECIFIC PERFORMANCE. Each Party acknowledges and agrees
that the other Parties would be damaged irreparably if any provision of this
Agreement is not performed
61
in accordance with its specific terms or is otherwise breached. Accordingly,
each Party agrees that the other Parties will be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and its terms and provisions in any Action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, subject to Sections 10.6 and
10.10, in addition to any other remedy to which they may be entitled, at Law or
in equity.
10.6 SUBMISSION TO JURISDICTION. Each Party submits to the
jurisdiction of any state or federal court sitting in Los Angeles County,
California, in any Action arising out of or relating to this Agreement and
agrees that all claims in respect of the Action may be heard and determined in
any such court. Each Party also agrees not to bring any Action arising out of or
relating to this Agreement in any other court. Each Party agrees that a final
judgment in any Action so brought will be conclusive and may be enforced by
Action on the judgment or in any other manner provided at Law or in equity. Each
Party waives any defense of inconvenient forum to the maintenance of any Action
so brought and waives any bond, surety, or other security that might be required
of any other Party with respect thereto.
10.7 TIME. Time is of the essence in the performance of this
Agreement.
10.8 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.
10.9 HEADINGS. The article and section headings contained in
this Agreement are inserted for convenience only and will not affect in any way
the meaning or interpretation of this Agreement.
10.10 GOVERNING LAW. This Agreement and the performance of the
Transactions and obligations of the Parties hereunder will be governed by and
construed in accordance with the laws of the State of California, without giving
effect to any choice of Law principles.
10.11 AMENDMENTS AND WAIVERS. No amendment, modification,
replacement, termination or cancellation of any provision of this Agreement will
be valid, unless the same will be in writing and signed by Buyer and Interplay.
10.12 SEVERABILITY. The provisions of this Agreement will be
deemed severable and the invalidity or unenforceability of any provision will
not affect the validity or enforceability of the other provisions hereof.
10.13 EXPENSES. Except as otherwise expressly provided in this
Agreement, each Party will bear its own costs and expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the Transactions including all fees and expenses of agents, representatives,
financial advisors, legal counsel and accountants. Interplay agrees that the
Company has not borne or will bear any costs and expenses (including any legal
fees and expenses of any Company Party) in connection with this Agreement or any
of the Transactions.
62
10.14 CONSTRUCTION. The Parties have participated jointly in
the negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement will be construed as if drafted
jointly by the Parties and no presumption or burden of proof will arise favoring
or disfavoring any Party because of the authorship of any provision of this
Agreement. Any reference to any federal, state, local, or foreign Law will be
deemed also to refer to Law as amended and all rules and regulations promulgated
thereunder, unless the context requires otherwise. The words "include,"
"includes," and "including" will be deemed to be followed by "without
limitation." Pronouns in masculine, feminine, and neuter genders will be
construed to include any other gender, and words in the singular form will be
construed to include the plural and vice versa, unless the context otherwise
requires. The words "this Agreement," "herein," "hereof," "hereby," "hereunder,"
and words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The Parties intend that each
representation, warranty, and covenant contained herein will have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached will not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
10.15 INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The
Exhibits, Annexes, Schedules, Disclosure Letters and other attachments
identified in this Agreement are incorporated herein by reference and made a
part hereof.
10.16 REMEDIES. Except as expressly provided herein, the
rights, obligations and remedies created by this Agreement are cumulative and in
addition to any other rights, obligations, or remedies otherwise available at
Law or in equity. Except as expressly provided herein, nothing herein will be
considered an election of remedies.
10.17 ELECTRONIC SIGNATURES.
(a) Notwithstanding the Electronic Signatures in Global and
National Commerce Act (15 U.S.C. Sec. 7001 et. seq.), the Uniform
Electronic Transactions Act, or any other Law relating to or enabling
the creation, execution, delivery, or recordation of any Contract or
signature by electronic means, and notwithstanding any course of
conduct engaged in by the Parties, no Party will be deemed to have
executed a Transaction Document or other document contemplated thereby
(including any amendment or other change thereto) unless and until such
Party will have executed such Transaction Document or other document on
paper by a handwritten original signature or any other symbol executed
or adopted by a Party with current intention to authenticate such
Transaction Document or such other document contemplated.
(b) Delivery of a copy of a Transaction Document or such other
document bearing an original signature by facsimile transmission
(whether directly from one facsimile device to another by means of a
dial-up connection or whether mediated by the worldwide web), by
electronic mail in "portable document format" (".pdf") form, or by any
other electronic means intended to preserve the original graphic and
pictorial appearance of a document, will have the same effect as
physical delivery of the paper
63
document bearing the original signature. "Originally signed" or
"original signature" means or refers to a signature that has not been
mechanically or electronically reproduced.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
64
IN WITNESS WHEREOF, the Parties have executed this Agreement on the
date first above written.
INFOGRAMES, INC.
By: /s/ Xxxxx Xxxxx
-----------------------------------
Name: Xxxxx Xxxxx
Title: Senior Executive Vice President
SHINY ENTERTAINMENT, INC.
By: /s/ Xxxx Xxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxx
Title: Chief Financial Officer
INTERPLAY ENTERTAINMENT CORP.
By: /s/ Herve Caen
-----------------------------------
Name: Herve Caen
Title: President & Chief Executive Officer
SHINY GROUP, INC.
By: /s/ Xxxxx Xxxxx
-----------------------------------
Name: Xxxxx Xxxxx
Title: President
/s/ Xxxxx Xxxxx
--------------------------------------------
Xxxxx Xxxxx
S-1
SPOUSAL CONSENT
The undersigned, being the spouse of Xxxxx Xxxxx ("Xxxxx"), who has
signed the foregoing Agreement (in connection with the final settlement of
Perry's and Shiny Group Inc.'s sale of the Company in July 1995 and the related
agreement entered into in February 2001), hereby acknowledges that she has read
and is familiar with the provisions of the Agreement and agrees to be bound
thereby and join therein to the extent, if any, that her agreement and joinder
may be necessary; she hereby further acknowledges and agrees that the shares may
be purchased and sold under the terms of the Agreement; she further acknowledges
and agrees that Perry may join in any future amendment or modification of said
Agreement without any further signature, acknowledgement, agreement, or consent
on her part; and she hereby further acknowledges and agrees that any community
property or other legal interest that she may have or hereafter acquire in the
shares or the proceeds of the transactions will be subject to the provisions of
the Agreement.
The undersigned acknowledges that she had the opportunity to employ
separate counsel in connection with the preparation of this Agreement and
specifically declined to do so.
DATED: April 26, 2002
/s/ Xxxxxx Xxxxx
------------------------------------
Xxxxxx Xxxxx
Spousal Consent
