SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT dated as of the 8th day of February 1999 by
and among T2 DEVELOPER, INC., a Delaware corporation ("Buyer") and wholly-owned
subsidiary of TAKE-TWO INTERACTIVE SOFTWARE, INC., a Delaware corporation
("T2"); GATHERING OF DEVELOPERS I, LTD., a Texas limited partnership (the
"Partnership"); and GATHERING OF DEVELOPERS, INC., a Texas corporation
("Gathering").
WITNESSETH:
WHEREAS, the Partnership was duly organized in January 1998 pursuant to an
Agreement of Limited Partnership dated January 29, 1998 (the "Partnership
Agreement") to engage in the business of developing, publishing and marketing
interactive software games (the "Business"); and
WHEREAS, Gathering is the sole general partner of the Partnership
(hereinafter referred to as the "General Partner"); and
WHEREAS, Xxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxx (the "Shareholders") own all
of the issued and outstanding capital stock of the General Partner; and
WHEREAS, the limited partners of the Partnership as of the date hereof set
forth on Exhibit A (individually, a "Limited Partner" and collectively, the
"Limited Partners") are the owners of all of the issued and outstanding limited
partnership interests of the Partnership (the "Limited Partnership Interests");
and
WHEREAS, simultaneously with the execution of this Agreement, the General
Partner and each of the Limited Partners desire to amend and restate the
Partnership Agreement (the "Amended and Restated Partnership Agreement") to
among other things (i) admit Buyer as a special Limited Partner (hereinafter
sometimes referred to as the "Class A Limited Partner"); (ii) issue a Class A
Limited Partnership Interest (the "Class A Interest") representing a fixed,
non-dilutable (except in accordance with the terms of the Partnership Agreement)
19.9% economic limited partner interest of the Partnership; and (iii)
reclassify: (a) the Limited Partners as Class B Limited Partners (hereinafter
referred to as the "Class B Limited Partners") and (b) the Limited Partnership
Interests currently held by the Class B Limited Partners as Class B Limited
Partnership Interests (hereinafter referred to as the "Class B Interests"). The
Class A Interests and the Class B Interests are sometimes collectively referred
to herein as the "Partnership Interests." A copy of the Amended and Restated
Partnership Agreement attached hereto as Exhibit B and incorporated by reference
herein is made an integral part hereof; and
WHEREAS, in connection with the transactions contemplated by this
Agreement, the Partnership and T2 desire to amend the terms of the Software
Distribution Agreement (the "Distribution Agreement") dated as of May 27, 1998,
by and between the Partnership and T2 and the Heads of Agreement ("Heads of
Agreement"), dated as of April 6, 1998, by and among the Partnership, T2,
Terminal Reality, Inc., Apogee Software, Inc., PopTop Software, Inc. and
Take-Two Interactive Software Europe, Ltd. (collectively, the "Distribution
Agreements") in the form and substance attached hereto as Exhibit C which is
incorporated by reference herein and made an integral part hereof (the "Amended
Distribution Agreement").
NOW, THEREFORE, in consideration of and in reliance upon the covenants,
conditions, representations and warranties herein contained, the parties hereto
hereby agree as follows:
1. Preamble. It is expressly agreed by the parties that the preamble is an
integral part of this agreement and its terms are incorporated herein.
2. Purchase and Sale of Class A Interests. Subject to the terms and
conditions set forth in this Agreement and in reliance upon the representations,
warranties, covenants and conditions herein contained, on the Closing Date (as
defined in Section 7 hereof) the Partnership shall issue, sell, convey, assign,
transfer and deliver to Buyer the Class A Interest, free and clear of any and
all Liens (as defined in subparagraph 8.5 hereof) and Buyer shall be admitted as
a Class A Limited Partner in accordance with the terms of the Amended and
Restated Partnership Agreement.
3. Purchase Price. In consideration for the issuance of the Class A
Interest, T2 shall cause the Class A Limited Partner to make an aggregate
capital contribution of $4 million to the Partnership (the "Capital
Contribution") in accordance with Section 4 hereof.
4. Payment of Purchase Price. Subject to the terms and conditions of the
Amended and Restated Partnership Agreement and Amended Distribution Agreement,
the Capital Contribution shall be made as follows: One installment of $667,000
to be paid in cash on the Closing Date and thereafter in 5 equal monthly
installments of $667,000 to be paid on the first day of each month, commencing
on March 1, 1999. The Class A Limited Partner's obligation to make the Capital
Contribution is subject to the Partnership complying with the material
provisions of the Amended Distribution Agreements. In the event there is a
default with respect to such material obligations and such default is not cured
within 60 days of written notice from T2 to Gathering, the Class A Limited
Partner may elect, at its option, to discontinue payment of the Capital
Contribution hereunder, at which time the Capital Contribution shall be deemed
paid to the extent of the damage directly caused by such default by the
Partnership subject to the limitations contained in the Amended Distribution
Agreement. In the event that the Class A Limited Partner fails to make all or
any part of any payment of the Capital Contribution when due hereunder and if
such default occurs and remains uncured for a period of 45 days after such
payment is due (each such event, a "Payment Default"), then, the General Partner
at its sole election and as its exclusive remedy with respect to a default in
the payment of the Capital Contribution, may either (i) decrease pro rata the
Class A Limited Partner's Class A Interest to be equivalent in proportion and
value with the portion of the Capital Contribution paid prior to
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the date of such uncured default and no more Capital Contribution shall be due
hereunder, or (ii) the Class A Limited Partner shall immediately become a Class
B Limited Partner of the Partnership and the remaining balance of the Capital
Contribution shall be immediately due and payable.
5. Director Designees. For a period of five years following the date
hereof, the General Partner will, upon the written request of the Class A
Limited Partner, elect two designees of the Class A Limited Partner to the
General Partner's Board of Directors (the "Board"), and compensate and reimburse
such director designees in the same manner as it compensates and reimburses
directors of the General Partner. The General Partner will deliver to the Class
A Limited Partner, on the Closing Date, the agreements of the Shareholders to
vote their shares for the election of the designees.
6. Further Assurances. Each of the Class A Limited Partner and T2, on the
one hand, and the General Partner and the Partnership, on the other hand, hereby
agree that it shall from time to time after the Closing Date, at its sole cost
and expense, take any and all actions, and execute, acknowledge, deliver, file
and/or record any and all documents and instruments, as any other party may
reasonably request in order to more fully perfect the rights which are intended
to be granted hereunder. The Partnership and the General Partner hereby agree
not to (without the written consent of T2) assign, transfer or otherwise pledge,
encumber or place a lien against, or intentionally breach the terms of, the
Partnership's Publishing and Development Agreements with the Class B Limited
Partners.
7. Closing. The closing of the transactions provided for herein (the
"Closing") shall take place on February 8th, 1999, at the offices of Xxxxxx
Xxxxxxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, or at such other
place, time and date and in such manner as may hereafter be mutually agreed upon
by the parties (such time and date of Closing being hereinafter called the
"Closing Date"). At the Closing: (i) each of the Partnership and the General
Partner shall deliver (a) the Amended and Restated Partnership Agreement, (b)
the Amended Distribution Agreement, (c) certificates representing the Class A
Interest issued in the name of the Class A Limited Partner, (d) the agreement of
the Shareholders set forth in Section 5, and (e) an opinion of Xxxxxxxx &
Knight, P.C., counsel for the Partnership, dated the Closing Date, in the form
attached hereto as Exhibit D; and (ii) each of T2 and the Class A Limited
Partner shall deliver (a) the Amended Distribution Agreement, (b) the Amended
and Restated Partnership Agreement, (c) an opinion of Xxxxxx Xxxxxxxxxx LLP,
counsel for each of T2 and the Class A Limited Partner, dated the Closing Date,
in the form attached hereto as Exhibit E; and (d) the initial payment of the
purchase price for the Class A Interest of $666,667 in immediately available
funds.
8. Representations and Warranties as to the Partnership. The General
Partner hereby represents and warrants to the Class A Limited Partner as
follows:
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8.1. Organization, Standing and Power.
The Partnership is a limited partnership duly formed, validly existing and
in good standing under the laws of the State of Texas, with full partnership
power and authority to own, lease and operate its properties and to carry on its
business as presently conducted by it. There are no states or jurisdictions in
which the character and location of any of the properties owned or leased by the
Partnership, or the conduct of its business, makes it necessary for it to
qualify to do business as a foreign limited partnership except where the failure
to do so would not have a material adverse effect on the Partnership. The
General Partner is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas. The Partnership Agreement and all
amendments thereof, have been furnished to the Class A Limited Partner and are
true, complete and correct.
8.2. Capitalization.
(a) All issued Class B Interests have been duly and validly issued and,
subject to applicable law, are fully paid and nonassessable. Except as set forth
in Schedule 8.2, there are no outstanding options, warrants, rights, puts,
calls, commitments, conversion rights, plans or other agreements of any
character to which the Partnership or the General Partner is a party or
otherwise bound which provide for the acquisition, disposition or issuance of
any Class B Interests, or authorized and unissued partnership interests of the
Partnership. Except as provided under applicable law, there is no personal
liability, and there are no preemptive or similar rights, attached to the Class
B Interests. Set forth on Schedule A, is a complete and correct list of the
names, addresses and record ownership of all of the partners of the Partnership.
The Partnership has no knowledge that any of the Class B Interests have been
assigned or transferred other than the proposed transfer involving Strategic
Marketing Partners to an affiliate thereof.
(b) The Class A Interest is duly and validly issued and, subject to
applicable law and the terms of this Agreement and the Amended and Restated
Partnership Agreement, fully paid and nonassessable. Except as set forth on
Schedule 8.2 there are no outstanding options, warrants, rights, puts, calls,
commitments, conversion rights, plans or other agreements of any character to
which the Partnership or the General Partner is a party or otherwise bound which
provide for the acquisition, disposition or issuance of any Class A Interest.
Except as provided under applicable law, there is no personal liability, and
there are no preemptive or similar rights, attached to the Class A Interest. The
Class A Interest will be issued free and clear of any and all Liens (as defined
below).
8.3. Interests in Other Entities.
Other than the publishing agreements of the Partnership and as set forth on
Schedule 8.3, neither the Partnership nor the General Partner (A) owns, directly
or indirectly, of record or beneficially, any shares of voting stock or other
equity securities of any corporation, (B) has any ownership interest, direct or
indirect, of record or beneficially, in any unincorporated entity, or (C) have
any obligation, direct or indirect, present or contingent, (1) to purchase or
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subscribe for any interest in, advance or loan monies to, or in any way make
investments in, any person or entity, or (2) to share any profits or capital
investments or both.
8.4. Authority.
The execution and delivery by each of the Partnership and the General
Partner of this Agreement, the Amended Distribution Agreement and the Amended
and Restated Partnership Agreement and of all of the other agreements to be
executed and delivered by it pursuant hereto, the performance by it of its
obligations hereunder and thereunder, and the consummation by it of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary action on the part of the Partnership and the
General Partner, and each of the Partnership and the General Partner has all
necessary power with respect thereto. This Agreement is, and when executed and
delivered by the Partnership and the General Partner and each of the other
agreements to be delivered by any or all of them pursuant hereto will be, the
valid and binding obligations of the Partnership and the General Partner in
accordance with its terms.
8.5. Noncontravention.
Except as set forth on Schedule 8.5, neither the execution and delivery by
each of the Partnership and the General Partner of this Agreement, the Amended
Distribution Agreement, the Amended and Restated Partnership Agreement or of any
agreement to be executed and delivered by it pursuant hereto, nor the
consummation of any of the transactions contemplated hereby or thereby, nor the
performance by each of the Partnership and the General Partner of any of its
obligations hereunder or thereunder, will (nor with the giving of notice or the
lapse of time or both would) (A) give rise to a default, or any right of
termination, cancellation or acceleration, or otherwise be in conflict with or
result in a loss of contractual benefits to the Partnership, under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which it is a party or by which
the Partnership or the General Partner or any of the assets of the Partnership
(the "Partnership Assets") may be bound, or require any consent, approval or
notice under the terms of any such document or instrument, or (B) violate any
order, writ, injunction, decree, law, statute, rule or regulation of any court
or governmental or administrative authority which is applicable to the
Partnership, the General Partner or any of the Partnership Assets where such
violation would have a material adverse effect on the Partnership or the General
Partner, or (C) result in the creation or imposition of any lien, security
interest, pledge, mortgage, easement, leasehold, assessment, covenant,
restriction, reservation, conditional sales, prior assignment, or other
encumbrance of any nature whatsoever other than those created by T2 or its
affiliate ("Liens") upon any material Partnership Assets, or (D) materially
interfere with or otherwise materially adversely affect the operation of the
Business after the Closing Date.
8.6. Financial Statements.
The financial statements of the Partnership (the "Partnership Financial
Statements") are attached hereto as Exhibit F. The Partnership Financial
Statements consist of the unaudited balance sheets at December 31, 1998, and the
related statements of income for the twelve months
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then ended (collectively, the "Partnership Financial Statements"). The
Partnership Financial Statements present fairly the financial position of the
Partnership as at the dates thereof and the results of operations for the
periods indicated in all material respects. The books and records of the
Partnership are complete and correct, have been maintained in accordance with
good business practices, and accurately reflect the basis for the financial
condition, results of operations of the Partnership as set forth in the
Partnership Financial Statements.
8.7. Absence of Undisclosed Liabilities.
The Partnership has no material liabilities or obligations of any nature
whatsoever, whether accrued, absolute, contingent or otherwise, which have not
been (i) accrued in the December 31, 1998 balance sheet of the Partnership in
the case of liabilities and obligations of a type customarily reflected on a
partnership balance sheet, or (ii) described in any of the Schedules delivered
pursuant hereto or omitted from said Schedules in accordance with the terms of
this Agreement, in the case of other types of contingent and other liabilities
and obligations, or (iii) incurred, consistent with past practice, in the
ordinary course of business since November 30, 1998, where applicable.
8.8. Litigation.
Other than as set forth in Schedule 8.8 there are no claims, suits,
actions, arbitration, investigations, inquiries or other proceeding before any
governmental agency, court or tribunal, domestic or foreign, or before any
private arbitration tribunal, pending or, to the best knowledge of the
Partnership, threatened, against or relating to the Partnership, the Business or
any of the Partnership Assets; nor to the best knowledge of the Partnership, is
there any basis for any such claim, suit, action, arbitration, investigation,
inquiry or other proceeding. Except for the settlement agreement between the
Partnership, T2 and The 3DO Company, there are no judgments, orders,
stipulations, injunctions, decrees or awards in effect in any proceeding
involving the Partnership as a party, the effect of which is (A) to limit,
restrict, regulate, enjoin or prohibit any business practice in any area, or the
acquisition of any properties, assets or businesses, or (B) otherwise materially
adverse to the Business or any of the Partnership Assets.
8.9. No Violation of Law.
To the best knowledge of the Partnership, the Partnership has not engaged
or is not engaging in any activity or omitting to take any action as a result of
which (A) it is in violation of any law, rule, regulation, zoning or other
ordinance, statute, order, injunction or decree, or any other requirement of any
court or governmental or administrative body or agency, applicable to the
Partnership, including, but not limited to, those relating to: occupational
safety and health; environmental and ecological protection (e.g., the use,
storage, handling, transport or disposal of pollutants, contaminants pesticides
or hazardous or toxic materials or wastes, and the exposure of persons thereto);
business practices and operations; labor practices; employee benefits; and
zoning and other land use, and (B) the Partnership, the Business and/or any of
the Partnership Assets have been or may be materially adversely affected.
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8.10. Intellectual Property.
Schedule 8.10 is a complete and correct list of all (A) United States and
foreign patents, trademark and trade name registrations, trademarks and trade
names, brandmarks and brand name registrations, servicemarks and servicemark
registrations, assumed names and copyrights and copyright registrations, owned
in whole or in part by the Partnership, and all applications therefor, (B)
inventions, discoveries, improvements, processes, formulae, proprietary rights
and trade secrets relating to the Business which have been so identified by the
Partnership in the normal conduct of its business, and (C) licenses and other
agreements to which the Partnership is a party or otherwise bound which relate
to any of the foregoing. Except as expressly set forth in said Schedule 8.10,
(A) the Partnership owns or has the right to use all of the foregoing ; (B) no
proceedings have been instituted, are pending or are threatened, which challenge
the rights of the Partnership in respect thereto or the validity thereof and, to
the best knowledge of the Partnership, there is no valid basis for any such
proceedings; (C) none of the aforesaid violates any laws, statutes, ordinances
or regulations, or has at any time infringed upon or violated any rights of
others, or is being infringed by others; and (D) none of the aforesaid is
subject to any outstanding order, decree, judgment, stipulation or charge. To
the best knowledge of the Partnership, all of the labelling and packaging for
the Partnership's products have complied with all applicable federal, state and
local laws in all material respects.
8.11. Tax Matters.
The Partnership has filed with the appropriate governmental agencies all
tax and informational returns and reports required to be filed by it prior to
the Closing, and has paid in full or made adequate provision for the payment of,
all taxes, interest, penalties, assessments and deficiencies shown to be due or
claimed to be due on such tax returns and reports.
8.12. Insurance.
Attached hereto as Schedule 8.12 is a complete and correct list of all
policies of insurance relating to any of the Partnership's assets or the
Business in which the Partnership is an insured party, beneficiary or loss
payable payee. Such policies are in full force and effect, all premiums due and
payable with respect thereto have been paid, and no notice of cancellation or
termination has been received by the Partnership with respect to any such
policy. The Partnership has not sustained any material loss or interference with
its business from fire, storm, explosion, flood or other casualty, whether or
not covered by insurance, or from any labor dispute or court of governmental
action, order or decree.
8.13. Certain Contracts.
Schedule 8.13 is a complete and correct list of all material contracts,
commitments, indentures, mortgages, obligations, agreements and understandings
to which the Partnership is a party or otherwise bound (including all of the
Partnership's Publishing Agreements and Development Agreements with the Class B
Limited Partners); for purposes of this Section 8.13, the term "material" means
contracts providing for payments to or by the Partnership to or by third
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parties in an amount greater than $100,000, a complete list and copies thereof,
if requested, of which have been furnished to Buyer. Except as set forth on
Schedule 8.13, all material contracts, commitments, indentures, mortgages,
obligations, agreements and undertakings set forth on any of the Schedules
delivered pursuant to this Agreement (A) are in full force and effect, no person
or entity which is a party thereto or otherwise bound thereby is in default
thereunder, and, no event, occurrence, condition or act exists which does (or
which with the giving of notice or the lapse of time or both would) give rise to
a default or right of cancellation, acceleration or loss of material contractual
benefits thereunder; and (B) there has been no threatened cancellations thereof,
and there are no outstanding disputes thereunder. To the best knowledge of the
Partnership, none of the material provisions of such contracts, instruments or
agreements violates any existing applicable law, rule, regulation, judgment,
order or decree of any governmental agency or court having jurisdiction over the
Partnership, the Business or the Partnership Assets.
8.14. Information as to the Partnership.
None of the representations or warranties, as qualified therein, made by
the General Partner or the Partnership in this Agreement or in any agreement
executed and delivered by it pursuant hereto are false or misleading with
respect to any material fact, or omit to state any material fact necessary in
order to make the statements therein contained not misleading.
9. Representations and Warranties as to the Class A Limited Partner.
Each of T2 and the Class A Limited Partner jointly and severally represents
and warrants to the Partnership and the General Partner as follows:
9.1. Organization, Standing and Power.
The Class A Limited Partner is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and to
carry on its business as presently conducted by it.
9.2. Authority.
The execution and delivery by each of T2 and the Class A Limited Partner of
this Agreement, the Amended and Restated Partnership Agreement, and of each
agreement to be executed and delivered by it pursuant hereto, the compliance by
each of T2 and the Class A Limited Partner with the provisions hereof and
thereof, and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate action
on the part of each of T2 and the Class A Limited Partner, and each of T2 and
the Class A Limited Partner has all necessary corporate power with respect
thereto. Each of this Agreement, the Amended and Restated Partnership Agreement,
and each other agreement to be executed and delivered by it pursuant hereto will
be, is, and when executed and delivered by each of T2 and the Class A Limited
Partner, will be the valid and binding obligation of each of T2 and the Class A
Limited Partner in accordance with its terms. Neither the execution and delivery
by T2 and the Class A Limited Partner of this Agreement, the Amended and
Restated Partnership
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Agreement or of any of the aforementioned other agreements, nor the consummation
of the transactions contemplated hereby or thereby, nor the compliance by T2 and
the Class A Limited Partner with the provisions hereof and thereof, will (nor
with the giving of notice or the lapse of time or both, would) conflict with or
result in a violation of any provision of the Certificate of Incorporation or
By-laws of either T2 or the Class A Limited Partner, or in the breach of any
material agreement to which either T2 or the Class A Limited Partner is a party
or otherwise bound.
10. Investment Intent.
Each of T2 and the Class A Limited Partner hereby jointly and severally
represents and warrants to Gathering and the Partnership that each of T2 and the
Class A Limited Partner is (i) an "accredited investor" who has had the
opportunity to ask questions concerning the partnership and is purchasing the
Class A Interest for investment purposes only and not with a view toward the
distribution thereof; and (ii) an expert in the industry and business of the
Partnership and understands the risks associated therewith and has entered into
this Agreement based upon such expertise and the representations and warranties
contained herein. The certificate representing the Class A Interest shall bear a
legend substantially similar to the following:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act"),
and may not be offered or sold except (i) pursuant to an effective
registration statement under the Act; (ii) pursuant to an
exemption provided for under the Act; or (iii) upon the delivery
by the holder to the Partnership of an opinion of counsel,
reasonably satisfactory to counsel for the Partnership, stating
that an exemption from registration under such Act is available."
T2 and the Class A Limited Partner, by acceptance of the Class A Interest,
covenants and agrees that the Class A Interest is being acquired as an
investment and not with a view to the distribution thereof and the Class A
Interest may not be transferred unless such securities are either registered
under the Act and any applicable state securities law or an exemption from such
registration is available. T2 and the Class A Limited Partner agree to execute
any documents which may be reasonably required by counsel to the Partnership to
comply with the provisions of the Act and applicable state securities laws.
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11. Indemnification.
11.1. Indemnification by the General Partner and the Partnership.
The General Partner and the Partnership hereby, jointly and severally,
indemnify and hold the Class A Limited Partner and T2 and each of their
respective officers, directors, agents, stockholders and controlling persons
harmless from and against any and all losses, obligations, deficiencies,
liabilities, claims, damages, costs and expenses (including, without limitation,
the amount of any settlement entered into pursuant hereto, and all reasonable
legal and other expenses incurred in connection with the investigation,
prosecution or defense of any matter indemnified pursuant hereto) which any of
them may sustain, suffer or incur and which arise out of, are caused by, relate
to, or result or occur from or in connection with the breach by the Partnership
and the General Partner of any representation, warranty or covenant made by it
in this Agreement or in any agreement or instrument executed and delivered
pursuant hereto.
11.2. Indemnification by Class A Limited Partner and T2.
Each of T2 and the Class A Limited Partner hereby, jointly and severally,
indemnifies and holds the General Partner and the Partnership and each of their
respective officers, directors, agents, partners, employees and controlling
persons harmless from and against any and all losses, obligations, deficiencies,
liabilities, claims, damages, costs and expenses (including, without limitation,
the amount of any settlement entered into pursuant hereto, and all reasonable
legal and other expenses incurred in connection with the investigation,
prosecution or defense of any matter indemnified pursuant hereto), which any of
them may sustain, suffer or incur and which arise out of, are caused by, relate
to, or result or occur from or in connection with the breach by T2 or the Class
A Limited Partner of any representation, warranty or covenant made by it in this
Agreement or in any agreement or instrument executed and delivered pursuant
hereto.
11.3. Third Party Claims.
If a claim by a third party is made against any party or parties hereto and
the party or parties against whom said claim is made intends to seek
indemnification with respect thereto under this Section 11, the party or parties
seeking such indemnification shall promptly notify the indemnifying party or
parties, in writing, of such claim; provided, however, that the failure to give
such notice shall not affect the rights of the indemnified party or parties
hereunder unless such failure materially and adversely affects the indemnifying
party or parties. The indemnifying party or parties shall have twenty (20) days
after said notice is given to elect, by written notice given to the indemnified
party or parties, to undertake, conduct and control, through counsel of their
own choosing (subject to the consent of the indemnified party or parties, such
consent not to be unreasonably withheld) and at their sole risk and expense, the
good faith settlement or defense of such claim, and the indemnified party or
parties shall cooperate with the indemnifying parties in connection therewith;
provided: (i) in the case of the General Partner as the indemnifying parties,
they shall not thereby permit to exist any lien, encumbrance or other adverse
charge upon any of the Partnership's Assets, Buyer or the Business, and (ii) the
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indemnified parties shall be entitled to participate in such settlement or
defense through counsel chosen by the indemnified parties, provided that the
fees and expenses of such counsel shall be borne by the indemnified parties. So
long as the indemnifying parties are contesting any such claim in good faith,
the indemnified parties shall not pay or settle any such claim; provided,
however, that notwithstanding the foregoing, the indemnified parties shall have
the right to pay or settle any such claim at any time, provided that in such
event they shall waive any right of indemnification therefor by the indemnifying
parties. If the indemnifying parties do not make a timely election to undertake
the good faith defense or settlement of the claim as aforesaid, or if the
indemnifying parties fail to proceed with the good faith defense or settlement
of the matter after making such election, then, in either such event, the
indemnified parties shall have the right to contest, settle or compromise the
claim at their exclusive discretion, at the risk and expense of the indemnifying
parties to the full extent set forth in subparagraph 11.1 or 11.2 hereof, as the
case may be.
12. Miscellaneous Provisions.
12.1. Survival of Representations and Warranties.
Each of the parties hereto agrees that all representations and warranties
made by or on behalf of it in this Agreement, or in any document or instrument
delivered pursuant hereto shall survive the Closing Date for a period of two
years, and thereafter expire and thereafter no party hereto or any shareholder,
director, officer, employee, or affiliate of such party shall be under any
liability with respect to any such representation or warranty; provided,
however, that with respect to any claim for a breach of any representation or
warranty made before the expiration of such two year period, such representation
or warranty shall be deemed to survive and the breaching party shall continue to
have liability thereunder in accordance with the terms of this Agreement.
12.2. Expenses.
Except as otherwise provided in this Agreement, each of the parties hereto
shall pay his or its own costs and expenses in connection with this Agreement
and the transactions contemplated hereby.
12.3. Brokers.
Each of T2 and Buyer, on the one hand, and the Partnership and Gathering,
on the other jointly and severally represents and warrants to the other that no
broker or finder (other than Concordia Capital/Frost Xxxxxx, Xxxxx Capital
Europe, Xxxxxx Xxxxx and Xxxxxx Xxxxxxxx/Argus Capital, the fees of which are
the responsibility of the Partnership) was engaged or dealt with in connection
with any of the transactions contemplated by this Agreement, and each of the
parties shall indemnify and hold the other harmless from and against any and all
claims or liabilities asserted by or on behalf of any alleged broker or finder
for broker's fees, finder's fees, commissions or like payments.
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12.4. Tax Advisors.
Each of T2 and Buyer, on the one hand, and the Partnership and Gathering on
the other hand, jointly and severally, represent and warrant to the other
parties hereto that it has consulted with its respective tax advisors with
respect to the transactions contemplated in this Agreement.
12.5. Execution in Counterparts.
This Agreement may be executed in one or more counterparts by mail, courier
or facsimile, and by the different parties hereto in separate counterparts, each
of which shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement, and shall become effective when one or
more counterparts has been signed by each of the parties hereto and delivered to
each of the other parties hereto.
12.6. Notices.
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given or made as of the earlier
of the date delivered or mailed if delivered personally by overnight courier or
mailed by express, registered or certified mail, (postage prepaid, return
receipt requested), or by facsimile transmittal, confirmed by express, certified
or registered mail, as follows:
If to T2 or Buyer, to: Take-Two Interactive Software, Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx
Attn: Xxxx Xxxxx
Copy to: Xxxxxx Xxxxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
If to the Partnership
or the General Partner: Gathering of Developers, Inc.
0000 Xxxxxxxxx
Xxxxxx, Xxxxx 00000
Attn: General Partner
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Copy to: Xxxxxxxx & Xxxxxx, P.C.
0000 Xxxxxxx Xxxxxx, Xxx. 0000
Xxxxxx, Xxxxx 00000
Attn: X. Xxxx Xxxxxx, III, Esq.
or to such other address as any party shall have designated by like notice to
the other parties hereto (except that a notice of change of address shall only
be effective upon receipt).
12.7. Governing Law.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York without regard to its choice
of law principles, with a forum and venue of New York County, New York.
12.8. Amendment.
This Agreement may only be amended by a written instrument executed by each
of the parties hereto.
12.9. Entire Agreement.
This Agreement (together with the other agreements and documents being
delivered pursuant to or in connection with this Agreement) constitutes the
entire agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.
12.10. Assignment.
Neither this Agreement nor any rights, interests or obligations hereunder
may be assigned (by operation of law or otherwise) by any party hereto without
the prior written consent of all of the parties hereto.
12.11. Binding Effect; Benefits.
This Agreement shall inure to the benefit of, and shall be binding upon,
the parties hereto and their respective heirs, legal representatives, successors
and permitted assigns. Nothing herein contained, express or implied, is intended
to confer upon any person other than the parties hereto and their respective
heirs, legal representatives, successors and permitted assigns, any rights or
remedies under or by reason of this Agreement.
12.12. Waiver, etc.
The failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver of
any such provision, nor to in any way affect the validity of this Agreement or
any provision hereof or the right of any
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of the parties hereto to thereafter enforce each and every provision of this
Agreement. No waiver of any breach of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought; and
no waiver of any such breach shall be construed or deemed to be a waiver of any
other or subsequent breach.
12.13. Severability.
Any provision of this Agreement which is held by a court of competent
jurisdiction to be prohibited or unenforceable in any jurisdiction(s) shall be,
as to such jurisdiction(s), ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
12.14. Announcements.
Each of the parties shall hereto consult with each other prior to the
issuance of any press release or otherwise divulging the existence of this
Agreement, its contents, or the transactions contemplated hereby, and none of
the parties hereto shall issue any such press release or make any such statement
prior to such consultation, except as may be required by applicable law or the
applicable rules or regulations of NASDAQ or any other stock exchange.
12.15. Schedules.
The Schedules delivered pursuant to this Agreement are an integral part
hereof. Each such Schedule shall be in writing and shall indicate the
subparagraph pursuant to which it is being delivered.
12.16. Tax Matters.
The parties agree to allocate the taxable income, gain, loss, deductions
and credits of the Partnership for the 1999 taxable year between the existing
Partners (consisting of the Class B Limited Partners and the General Partner)
and Buyer on a pro rata basis, based on the ratio of (a) number of days in the
year after Buyer became a Partner in the Partnership, over (b) the total number
of days in the taxable year.
[Signature page to follow.]
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the date first above written.
T2 DEVELOPER, INC.
By: /s/ Xxxx Xxxxx
----------------------------------------
Xxxx Xxxxx, Chief Executive Officer
TAKE-TWO INTERACTIVE SOFTWARE, INC.
By: /s/ Xxxx Xxxxx
----------------------------------------
Xxxx Xxxxx, Chief Executive Officer
GATHERING OF DEVELOPERS I, LTD.
By: Gathering of Developers, Inc. (a Texas
corporation)
its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
Chief Executive Officer
GATHERING OF DEVELOPERS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
Chief Executive Officer
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