SHARE EXCHANGE AGREEMENT
between
1. kappaphoenicis Beteiligungs GmbH, a German corporation, with its registered
office in Munich, registered in the Commercial Register of Munich under
number HRB 117436 ("Kappaphoenicis Beteiligungs GmbH")
2. Activision, Inc., a Delaware Corporation with principal offices in Santa
Monica, California, U.S.A. ("Activision, Inc.")
and
3. Xx. Xxxxxx Xxxxxxx, Xxxxxxxxxx 0, X - 00000 Xxxxxxxxxxxxxx, Xxxxxxx
("Xxxxxx Xxxxxxx");
4. Xxx. Xxxxxx Xxxxxxxx, Xxxxxxxxxx 0, X - 00000 Xxxxxxxxxxxxxx, Xxxxxxx
("Xxxxxx Xxxxxxxx");
(Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxxx collectively also the
"NBG-Shareholders")
PREAMBLE
A. NBG EDV Handels und Verlags GmbH
1. The registered share capital of NBG EDV Handels- und Verlags GmbH
("NBG") with its registered office in Burglengenfeld, registered in
the Commercial Register of Xxxxxx under number HRB 1636, amounts to a
nominal value of DM 100,000.00. It is divided into four (4) shares,
all of which have been fully paid in.
NBG was founded by Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxxx on September 2,
1991 by notarial deed of the notary Xxxxxx Xxxxxx, Worth a. d. Donau,
role of deeds no. 0903/1991; each of them subscribed to a share in the
nominal value of DM 25,000.00 each. On June 17, 1996, the share
capital was raised by notarial deed of the notary Xxxxxx Xxxx in
Burglengenfeld, role of deeds
no. 1399/1996, to a nominal value of DM 100,000.00; Xxxxxx Xxxxxxx
and Xxxxxx Xxxxxxxx subscribed to a share in the nominal value of DM
25,000.00 each.
2. All shares in NBG are held as follows:
2.1 Xxxxxx Xxxxxxx holds two shares with a nominal value of DM 25,000.00
each;
2.2 Xxxxxx Xxxxxxxx holds two shares with a nominal value of DM 25,000.00
each.
B. TARGET SOFTWARE VERTRIEBS GMBH
1. The registered share capital of TARGET SOFTWARE VERTRIEBS GMBH
("TARGET") with its registered office in Burglengenfeld, registered in
the Commercial Register of Xxxxxx under number HRB 2278, amounts to a
nominal value of DM 50,000.00. It is divided into two shares, both of
which have been fully paid in.
TARGET was founded by Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxxx on April 16,
1997 by notarial deed of the notary Xxxxxx Xxxx in Burglengenfeld,
role of deeds no. 875/1997; each of them subscribed to a share in the
nominal value of DM 25,000.00 each.
2. All shares in TARGET are held as follows:
2.1 Xxxxxx Xxxxxxx holds one share with a nominal value of DM 25,000.00;
2.2 Xxxxxx Xxxxxxxx holds one share with a nominal value of DM 25,000.00.
Kappaphoenicis Beteiligungs GmbH desires to exchange with the NBG-Shareholders
all their respective shares in NBG and TARGET
(NBG and TARGET collectively also called the "NBG Companies") for shares in
Activision, Inc.
NOW THEREFORE, it is agreed as follows:
ARTICLE 1
TRANSFER OF THE NBG SHARES
1.1 Xxxxxx Xxxxxxx hereby transfers to Kappaphoenicis Beteiligungs GmbH his two
shares in NBG with a nominal value of DM 25,000.00 each as stated in A.2.1
of the preamble together with all ancillary rights, including, without
limitation, the rights to vote such shares and the rights to all profits
the distribution of which is resolved in the future. Kappaphoenicis
Beteiligungs GmbH hereby accepts such transfer.
1.2 Xxxxxx Xxxxxxxx hereby transfers to Kappaphoenicis Beteiligungs GmbH her
two shares in NBG with a nominal value of DM 25,000.00 each as stated in
A.2.2 of the preamble together with all ancillary rights, including,
without limitation, the rights to vote such shares and the rights to all
profits the distribution of which is resolved in the future. Kappaphoenicis
Beteiligungs GmbH hereby accepts such transfer.
ARTICLE 2
TRANSFER OF THE TARGET SHARES
2.1 Xxxxxx Xxxxxxx hereby transfers to Kappaphoenicis Beteiligungs GmbH his
share in TARGET with a nominal value of DM 25,000.00 as stated in B.2.1 of
the preamble together with all ancillary rights, including, without
limitation, the rights to vote such share and the rights to all profits the
distribution of which is resolved in the future.
Kappaphoenicis Beteiligungs GmbH hereby accepts such transfer.
2.2 Xxxxxx Xxxxxxxx hereby transfers to Kappaphoenicis Beteiligungs GmbH her
share in TARGET with a nominal value of DM 25,000.00 as stated in B.2.2 of
the preamble together with all ancillary rights, including, without
limitation, the rights to vote such share and the rights to all profits the
distribution of which is resolved in the future. Kappaphoenicis
Beteiligungs GmbH hereby accepts such transfer.
ARTICLE 3
ACTIVISION SHARES IN EXCHANGE
3.1 In exchange for the transfer of his shares in NBG as stated in A.2.1 of the
preamble, Xxxxxx Xxxxxxx shall receive 130,597 shares in Activision, Inc.
3.2 In exchange for the transfer of her shares in NBG as stated in A.2.2 of the
preamble, Xxxxxx Xxxxxxxx shall receive 130,597 shares in Activision, Inc.
3.3 In exchange for the transfer of his share in TARGET as stated in B.2.1 of
the preamble, Xxxxxx Xxxxxxx shall receive 927 shares in Activision, Inc.
3.4 In exchange for the transfer of her share in TARGET as stated in B.2.2 of
the preamble, Xxxxxx Xxxxxxxx shall receive 927 shares in Activision, Inc.
3.5 The shares in Activision, Inc. to be received by the NBG-Shareholders will
be duly authorized, validly issued, fully paid and non-assessable shares of
Activision, Inc.'s common stock US$ 0.000001 par value per share (the
"Activision Shares") and will be delivered to the NBG-Shareholders free and
clear of any and all liens, hypothecations, encumbrances or restrictions of
any kind other than restrictions on
transfer imposed by United States Federal Securities Laws and regulations
and by other applicable laws and the restrictions set forth in Article 6
of this Agreement (collectively, the "Permitted Restrictions").
3.6 Subject to Section 6.2 below, each of the NBG-Shareholders shall receive
his or her respective number of Activision Shares on the date of this
Agreement. The respective share certificates (other than to be deposited in
escrow under Section 6.2) have been handed over to the NBG-Shareholders.
Activision, Inc. shall hand over on behalf of the NBG-Shareholders the
remaining Activision Shares to the Escrow Agent under the document called
Warranty Escrow Agreement, still to be signed by City National Bank, a copy
of which is attached hereto as EXHIBIT A.
ARTICLE 4
GUARANTEES OF NBG-SHAREHOLDERS
4.1 Guarantees with respect to the NBG shares, the TARGET shares and the
NBG-Shareholders
As an inducement to Kappaphoenicis Beteiligungs GmbH and Activision, Inc.
and recognizing Kappaphoenicis Beteiligungs GmbH's and Activision Inc.'s
reliance thereupon, the NBG-Shareholders, jointly and severally,
guarantee in the form of an independent guarantee ("selbstandiges
Garantieversprechen") to Kappaphoenicis Beteiligungs GmbH and Activision,
Inc., each of them separately, with respect to the shares in the NBG
Companies that as of the date of this Agreement:
(1) each of the NBG-Shareholders has full power and authority to enter
into and perform this Agreement, which constitutes a binding
obligation on him or her in accordance with its terms;
(2) the statements in the preamble of this Agreement are complete and
correct. The respective registered share capital of the NBG Companies
stated in the preamble has been fully paid in; no refunds have been
made (Sec. 30 para. 1 GmbHG, German Act on Limited Liablity
Companies).
There is no liability to affect further contributions ("Nachschusse")
pursuant to Sec. 26 GmbHG (German Act on Limited Liability Companies);
(3) NBG-Shareholders hold each of their shares as stated in
the preamble as sole beneficial owner in their own name
and on their own account and can dispose of them freely
and without consent of any third party. The shares are
free of any encumbrances for the benefits of third
parties or other rights of third parties and there is no
agreement or arrangement to give or create any such
encumbrance or right;
(4) the NBG-Shareholders are entitled to transfer the shares
as stated in the preamble to Kappaphoenicis Beteiligungs
GmbH on the terms of this Agreement without the consent
of any third party;
(5) each of the NBG-Shareholders acknowledges and understands
that he or she is responsible for obtaining independent
legal advice with respect to the Activision Shares and
the restrictions attached to NBG-Shareholders' right to
sell or transfer in any way said Activision Shares; that
such NBG-Shareholder has been given the opportunity to
ask questions of and receive answers from, the officers
of Activision, Inc. concerning Activision, Inc. and its
business and the terms and conditions of the transactions
contemplated by this Agreement; and that in view of
NBG-Shareholders' extensive discussions with
representatives of Activision, Inc. concerning such
transactions, disclosures by Activision, Inc. to
NBG-
Shareholders shall constitute disclosure to each of the
NBG-Shareholders and all NBG-Shareholders for all
purposes, including without limitation for purposes of
with the applicable securities laws regarding disclosure;
(6) the shares transferred by each of the NBG-Shareholders do
not constitute the entire assets of that NBG-Shareholder
within the meaning of Sec. 000 XXX (Xxxxxx Civil Code);
(7) each of the NBG-Shareholders guarantees that he or she is
not an U.S.-citizen or -resident;
(8) none of the NBG Companies or any of the NBG-Shareholders
has taken any action or engaged in any activities that
would preclude Activision, Inc.'s ability to account for
the exchange of shares (the "Exchange") under this
Agreement as a pooling of interests;
(10) each of the NBG-Shareholders has signed and delivered the
document called the Warranty Escrow Agreement, still to
be signed by City National Bank, a copy of which is
attached hereto and incorporated as EXHIBIT A;
(11) Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxxx have executed and
delivered their employment agreements with NBG in the
form and substance as previously discussed with
representatives of Activision, Inc.;
(12) the members of the Supervisory Board, if any, of each of
the NBG Companies resign as of the date of this Agreement;
4.2 Guarantees with Respect to NBG Companies
As an inducement to Kappaphoenicis Beteiligungs GmbH and
Activision, Inc. and recognizing Kappaphoenicis
Beteiligungs GmbH's and Activision, Inc.'s reliance thereupon, the
NBG-Shareholders, jointly and severally, guarantee in the form of
an independent guarantee ("selbstandiges Garantieversprechen") to
Kappaphoenicis Beteiligungs GmbH and Activision, Inc., each of them
separately, with respect to the NBG Companies that as of the date
of this Agreement unless stipulated herein otherwise:
(1) NBG and TARGET are limited liability companies
(Gesellschaften mit beschrakter Haftung), duly organized
under the laws of the Federal Republic of Germany and
validly existing.
The NBG Companies have full corporate power and authority
to own the assets and to carry on the respective business
as now being conducted;
(2) copies of the presently valid Articles of Association of
each of the NBG Companies have been handed over to
Kappaphoenicis Beteiligungs GmbH. There exist no
Shareholders' Resolutions and/or obligations concerning
any amendments of the Articles of Association with the
exception of the Shareholders' Resolution at NBG
concerning its conversion into a stock corporation which
has been handed over to Kappaphoenicis Beteiligungs GmbH;
(2a) in the last twelve (12) months there have been made no
dividend or other payments to the NBG-Shareholders nor do
there exist any shareholders' resolutions regarding any
future dividend or other payments to the NBG-Shareholders;
(3) the copies of the annual accounts as of June 30, 1997 of
each of the NBG Companies (the "Financial Statements"),
which have been handed over to Kappaphoenicis
Beteiligungs GmbH, have been prepared with the care of an
duly acting business man in
accordance with the German principles of accounting and
book-keeping ("GOB") pursuant to Sec. 243 HGB (German
Commercial Code). The Financial Statements fairly present
in all material respects the financial and profit
situation of the NBG Companies at the respective dates of
and for the periods referred to in such Financial
Statements, observing continuity in the accounting and
evaluation methods. The NBG Companies' Financial
Statements were delivered to Kappaphoenicis Beteiligungs
GmbH prior to the execution of this Agreement. The NBG
Companies are in good financial standing;
(4) except as set forth in Schedule 4.2 (4) which is attached
to this Agreement, the NBG Companies have no liabilities
or obligations of any nature (whether fixed or
contingent) as of the date of this Agreement except for
liabilities reflected or reserved against in the
Financial Statements; furthermore, the NBG Companies are
not liable for any indemnity or warranty risks of more
than DM 100,000.00 in total with respect to services
and/or deliveries performed prior to the date of this
Agreement unless sufficient reserves have been created in
respect thereof in the Financial Statements;
(4a) the operating profit (i.e. net revenues minus operating
expenses) for the first quarter of NBG's current fiscal
year, i. e. for the quarter until September 30, 1997,
amounts to a minimum of DM 160,000.00;
(4b) except as set forth in Schedule 4.2 (4b), there exist no
loans to or from the NBG-Shareholders;
(5) the NBG Companies have duly withheld or collected, and to
the extent required, paid to the proper governmental
authority or other person all taxes due as of the date of
this Agreement, including all VAT,
that each of the NBG Companies is legally required to
withhold, collect and pay.
No external tax audit took place yet. There are no
ongoing tax audits of or relating to any of the NBG
Companies. As of September 30, 1997, the financial
reporting has been prepared according to the tax
reporting standards; since that date the company has
filed all necessary tax statements and/or advance
statements and has paid all amounts shown on such
statements and the statements have been prepared in good
faith and reflect all amounts due by their respective
dates;
(6) the business of each of the NBG Companies has been
properly conducted since June 30, 1997 in accordance with
the ordinary course of business. Since then, there has
not been any material adverse change of the business,
operations, properties, prospects, assets or conditions,
financial or otherwise, of each of the NBG Companies, and
no event has occurred or circumstance exists that may
result in such a material adverse change, in particular:
(a) No liabilities of any kind have been created for
which there has not been a reasonable quid pro quo;
in particular, no contracts with danger of losses
other than ordinary commercial losses at the time
the contracts were awarded have been accepted;
(b) No assets have been assigned without reasonable
consideration;
(c) No liabilities have been created which fall outside
the ordinary course of business;
(d) No substantial agreements of each of the NBG
Companies have been concluded, changed or
terminated which fall outside the ordinary course of
business;
(e) There has been no damage or loss which either
individually or cumulatively could have a material
effect on the existence of each of the NBG Companies
or its financial situation;
(f) no hidden distributions of profits have been made.
(7) Each of the NBG Companies has paid, or has made provision
for the payment of, all employee's contributions and
employer's contributions to social insurance and pension,
deferred compensation and other employee benefit payments
required to be made by each of the NBG Companies with
respect to its employees and agents and which are due as
of the date of this Agreement. The consummation of the
transactions contemplated by this Agreement will not
result in the payment, vesting or accelaration of any
benefit available to the employees of each of the NBG
Companies under any pension plan or other employee
benefit plan or under any employment contract or other
arrangements;
(8) Schedule 4.2 (8), which is attached to this Agreement,
contains a complete and correct list of all industrial
property rights (patents, trademarks, corporate and
design patents) and intellectual property rights, which
are owned by each of the NBG Companies. None of the NBG
Companies is in violation of and/or has breached any
licensing agreement with respect to patents, trademarks,
copyrights or other intellectual property. All of the
patents, trademarks, copyrights and other intellectual
property used by each of the NBG Companies in the conduct
of its business are either owned by the respective NBG
company or can be used according to
licensing agreements to which the respective NBG company
is party and which are valid. Except in the sphere of
distribution (which for these purposes means merely
purchasing and reselling of finished goods), for which
Schedule 4.2 (8a) contains a complete list of all known
infringements, and all pending or threatened claims of
infringement, none of the patents, trademarks, copyrights
or other intellectual property rights by each of the NBG
Companies in the conduct of its business infringes on the
intellectual property rights of any third party;
(9) the conduct and operation of each of the NBG Companies'
businesses have been and are in conformity with all
applicable laws and regulations and none of the NBG
Companies has received any notice asserting or suggesting
any failure, or potential failure, to comply with or
confirm to any such laws or regulations;
(10) all assets of each of the NBG Companies which can be
included in the balance sheet are fully owned by the
respective NBG company without being subject to any
charges. None of the NBG Companies is subject to any
restrictions on disposal in relation to these items.
Excepted are reservations of title and other security
rights in accordance with normal business practice.
Schedule 4.2.(10), which is attached to this Agreement,
contains a complete and correct list of all assets which
are subject to reservations of title or other security
rights.
All objects in the asset side of each of the NBG
Companies and used by the respective NBG company in its
business are in an operational state;
(11) each contract, agreement, commitment or understanding to
which an NBG company is a party that is material to the
respective NBG company's business, or that
involves the payment by, or to, the respective NBG
company of more than DM 40,000.00 in any twelve (12)
months period (collectively, the "Material Contracts") is
listed on Schedule 4.2 (11), which is attached to this
Agreement. of the NBG Companies has received notice of
default with respect to and none of the NBG Companies is
in default under any of the Material Contracts. The
contracts with customers of any of the NBG-Companies
contain no unusual obligations for any of the NBG
Companies that could result in a material loss under such
contract;
(12) none of the NBG Companies has entered into any
agreements, undertakings or commitments which would in
any material way prevent or restrict the respective NBG
company's business in continuing or further developing
its business and/or would legally prevent or restrict its
ability to compete with other companies;
(13) unless otherwise listed in Schedule 4.2 (13), which is
attached to this Agreement, no law suits that are or
could be material to an NBG Company or with an amount
claimed of DM 5,000.00 or more, administrative
proceedings or investigations against any of the NBG
Companies and/or the respective representatives and/or
employees of the respective NBG company, the latter two
only with respect to the business of the respective NBG
company, have been initiated, notified or to the best
knowledge of the NBG-Shareholders threatened to any of
the NBG Companies, nor are any material circumstances
known that would make the initiation of any such law
suits, administrative proceedings or investigations
appear likely to occur;
(14) none of the information concerning each of the NBG
Companies, each of the NBG Companies' business or the
NBG-Shareholders that each of the NBG Companies or the
NBG-Shareholders will supply Activision, Inc. for
use in any of Activision, Inc.'s filings under United
States Securities Laws will contain any untrue statement
of a material fact or omit to state a material fact
necessary in order to make the statements made therein,
in light of the circumstances under which they will be
made, not misleading;
(15) Schedule 4.2 (15), which is attached to this Agreement,
contains a complete and accurate list of the following
information for each employee or director of each of the
NBG Companies, including each employee on leave of
absence or layoff status, stating name, job, title,
professional qualifications, permits held, current
compensation paid or payable and any change in
compensation since June 30, 1997, vacation accrued, and
service credited for purposes of eligibility and vesting
under any social insurance or employee benefit plan or
under any employment contracts or other arrangements; the
two standard employment contracts of the NBG Companies
have been handed over to Activision, Inc., and there are
no material variations from these standard forms for any
employee;
(16) none of the NBG Companies has any real property rights or
similar rights;
(17) notwithstanding any other guarantees of NBG-Shareholders,
no guarantee of NBG-Shareholders in this Agreement and no
statement in any Schedule or Exhibit hereto omits to
state a material fact necessary to make the statements
herein or therein, in light of the circumstances in which
they were made, not misleading. None of the
NBG-Shareholders knows of any information, which is, or
which may reasonably be regarded as, material to an
accurate appraisal of the NBG Companies' businesses,
assets, liabilities and affairs of each of the NBG
Companies
and which has not been disclosed in writing to
Kappaphoenicis Beteiligungs GmbH;
(18) with the exception of the two Kreditgarantiegemeinschaft
fur Handel in Bayern GmbH-loans given by Bayerische
Landesanstalt fur Aufbaufinanzierung in the amount of DM
1,000,000.00 and DM 400,000.00, none of the NBG
Companies' contracts with third parties contains any
change of control provisions (Kundigungsrechts oder
auflosende Bedingung bei Wechsel des
Mehrheitsgesellschafters) which could trigger termination
of the respective contract in consequence of the signing
of this Agreement and/or the transactions contemplated by
this Agreement; each of the NBG Companies' contracts with
third parties will stay in force after the date of this
Agreement on identical terms and conditions immediately
subsequent to the date of this Agreement;
(18a) NBG-Shareholders shall use their best efforts to
maintain the existing banking relationships on their
respective current levels;
(19) Schedule 4.2 (19), which is attached to this Agreement,
contains a complete and accurate list of all insurance
contracts of each of the NBG Companies;
(20) Schedule 4.2 (20), which is attached to this Agreement,
contains a complete and correct list of all bank
accounts, brokerage and/or securities accounts and/or
custody accounts, if any, of each of the NBG Companies
and of all persons authorized to sign;
(21) Schedule 4.2 (21), which is attached to this Agreement,
contains a complete and correct list of all powers of
attorney issued by each of the NBG Companies;
(22) if existent, the board of directors of each of the NBG
Companies has approved of the transactions under this
Agreement. All necessary approvals by each of the NBG
Companies and/or the NBG-Shareholders have been obtained;
any rights of first refusal have been waived.
ARTICLE 5
GUARANTEES OF KAPPAPHOENICIS BETEILIGUNGS GMBH AND ACTIVISION, INC.
5.1 Guarantees
As an inducement to the NBG-Shareholders and recognizing the
NBG-Shareholders' reliance thereupon, Kappaphoenicis
Beteiligungs GmbH and Activision, Inc. guarantee in the form
of an independent guarantee ("selbstandiges
Garantieversprechen") to the NBG-Shareholders that:
(1) Activision, Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the State
of Delaware, U.S.A. Activision, Inc. has full corporate
power and authority to own its assets and to carry on its
business as now being conducted;
(2) Kappaphoenicis Beteiligungs GmbH is a corporation duly
organized, validly existing and in good standing under
the laws of Germany;
(3) the copy of the Amended and Restated Certificate of
Incorporation of Activision, Inc. as amended (the
"Certificate of Incorporation") and By-laws of
Activision, Inc. as currently in effect, previously
delivered to the NBG-Shareholders, is complete and
correct;
(4) Kappaphoenicis Beteiligungs GmbH has previously made
available to the NBG-Shareholders (and the NBG-
Shareholders by their execution of this Agreement
acknowledge receipt of) the following documents filed by
Activision, Inc. with the United States Securities and
Exchange Commission: (i) Activision, Inc.'s Annual
Reports on Form 10-K for the fiscal years ended March 31,
1997 and 1996; and (ii) Activision, Inc.'s Quarterly
Reports on Form 10-Q for the fiscal quarters ended June
30, 1997, and September 30, 1997; (the "SEC Documents").
As of their respective dates, none of the SEC Documents
contained any untrue statements of a material fact or
omitted to state a material fact required to be stated in
such documents or necessary to make the statements in
such documents not misleading. As of their respective
dates, the SEC Documents complied as to form in all
material respects with rules and regulations under the
Securities Exchange Act of 1934, as amended;
(5) the execution, delivery and performance of this Agreement
by Kappaphoenicis Beteiligungs GmbH has been authorized
by all necessary corporate action. This Agreement
constitutes the legal, valid and binding obligation of
Kappaphoenicis Beteiligungs GmbH, enforceable against
Kappaphoenicis Beteiligungs GmbH in accordance with its
terms. Kappaphoenicis Beteiligungs GmbH has the absolute
and unrestricted right, power, authority and capacity to
execute and deliver this Agreement and the other
documents to be delivered by Kappaphoenicis Beteiligungs
GmbH hereunder and to perform the obligations under this
Agreement and such other documents;
(6) the authorized capital stock of Activision, Inc. on the
date of this Agreement is as set forth in the Certificate
of Incorporation. The Activision Shares, upon their
delivery to the Shareholders in accordance with the
provisions of this Agreement, will have been
duly authorized, validly issued and fully paid for and
non-assessable;
(7) no guarantee of Kappaphoenicis Beteiligungs GmbH in this
Agreement and no statement by Kappaphoenicis Beteiligungs
GmbH in any Schedule or Exhihit hereto contains or shall
contain an untrue statement of a material fact or omits
to state a material fact necessary to make the statements
herein or therein, in light of the circumstances in which
they were made, not misleading. Kappaphoenicis
Beteiligungs GmbH does not know of any information which
is, or which may reasonably be regarded as, material to
an accurate appraisal of the business, assets,
liabilities and affairs of Kappaphoenicis Beteiligungs
GmbH and Activision, Inc. and which has not been
disclosed to NBG-Shareholders;
(8) Kappaphoenicis Beteiligungs GmbH will use its
commercially reasonable efforts to be substituted as the
guarantor of the NBG Companies' loans listed in Schedule
5.1 (8) or, if the banks do not agree to such
substitution, to indemnify Xxxxxx Xxxxxxx and Xxxxxx
Xxxxxxxx if any of the NBG Companies fails to repay the
respective loans, resulting in a call on Xxxxxx Xxxxxxx'x
and Xxxxxx Xxxxxxxx'x guarantee.
ARTICLE 6
COVENANTS REGARDING ACTIVISION SHARES
6.1 Restrictions on Sale of Activision Shares
The NBG-Shareholders acknowledge and agree that the Activision
Shares will be issued to the NBG-Shareholders without
registration under the Securities Act of 1933, as amended (the
"Securities Act"), based upon the "private offering
exemption", in reliance upon appropriate written
representations from the NBG-Shareholders; further evidenced
by restrictive legends on the certificates representing
Activision Shares and "stop transfer" instructions to
Activision Inc.'s transfer agent. Activision Shares will be
"restricted securities" within the meaning of the Securities
Act and the related rules and regulations. Notwithstanding the
provisions of the Securities Act, the NBG-Shareholders
acknowledge and agree that the NBG-Shareholders shall not
sell, pledge, gift, hypothecate or otherwise transfer or
dispose of any of the Activision Shares until the issuance by
Activision, Inc. of its first earnings press release including
at least thirty (30) days post-transaction combined operations.
6.2 Share Hold Back
In order to insure that the representations, warranties and/or
guarantees made by the NBG-Shareholders under this Agreement
are not breached, and in order to provide a source of
indemnification of Kappaphoenicis Beteiligungs GmbH and/or
Activision, Inc. pursuant to Article 7, each of the
NBG-Shareholders agree that 10 % of the Activision Shares to
be received by them under this Agreement shall be deposited in
an escrow account (the "Escrow Account") pursuant to a
Warranty Escrow Agreement in the form attached hereto as
EXHIBIT A (the "Warranty Escrow Agreement") on the date of
this Agreement to provide a source from which Kappaphoenicis
Beteiligungs GmbH can be reimbursed for any amounts due under
Article 7 below. Such Activision Shares shall be held in the
Escrow Account during such period of time as set forth in the
Warranty Escrow Agreement (the "Hold Period"). Any dividends
and distributions with respect to such Activision Shares while
held in the Escrow Account also shall be retained in the
Escrow Account until the expiration of the Hold Period. Any
offsets or deductions made from Activision Shares held in the
Escrow Account on account of any breach shall be made on the
last business day of the Hold Period, or at such other time as
set forth in the Escrow Agreement, and shall be based upon the
price of US$ 15.5625 per Activision share and an exchange rate
of US Dollars to Deutsche Marks of $ 0.576710/DM 1.00. All
Activision Shares subject to such offset or deduction shall be
canceled by Activision, Inc. and the remaining Activision
Shares, together with any dividends paid or distributions made
with respect to such Activision Shares that have not been
canceled, shall be then delivered to the NBG-Shareholders in
accordance with their respective interests. Notwithstanding
the foregoing, Activision Shares held in the Escrow Account
pursuant to the provisions of this Section 6.2 shall not be
deemed the sole source of recourse by Kappaphoenicis
Beteiligungs GmbH and/or Activision, Inc. for indemnification
under this Agreement and the NBG-Shareholders shall remain at
all times jointly and severally liable in accordance with
Article 7 below.
6.3 Registration of Activision Shares
(1) Registration on Form S-3
Activision, Inc. agrees to use its best efforts to file
with the United States Securities and Exchange Commission
(the "SEC"), within sixty (60) days after the date of
this Agreement, a registration statement on Form S-3, or
on such other form which may be mutually acceptable to
the parties, registering under the Securities Act,
pursuant to Rule 415 under the Securities Act ("Rule
415") (if available), the offer and sale in the future of
up to all of Activision Shares issued by Activision, Inc.
pursuant to this Agreement. Activision, Inc. further
agrees to (a) use its best efforts to cause such
registration statement to be declared effective by the
SEC within a time frame which is as soon as practible
under the circumstances, (b) maintain the effectiveness
of such registration statement or successor registration
statement filed by Activision, Inc. for the purpose
of registering the Activision Shares (such registration
statements being collectively referred to as the
"Registration Statement") until Activision Shares are
eligible to be resold without restriction on disposition
pursuant to the Securities Act and its related rules and
regulations, (c) update the prospectus included in the
Registration Statement (the "Prospectus") from time to
time as may be necessary to assure that the Prospectus
does not make any untrue statement of a material fact or
omit to state a material fact necessary in order to make
the Prospectus not misleading, and (d) provide such
number of copies of the Registration Statement and the
Prospectus (as so updated) to the NBG-Shareholders as
they may reasonably request in order to facilitate the
public sale or other disposition of Activision Shares
covered by such Registration Statement.
(2) Costs and Expenses
Activision, Inc. shall bear the filing and registration
fees and the costs incurred for its legal counsel,
accounting and all other costs and expenses, excluding
costs for legal counsel and accountants for the
NBG-Shareholders, which may be incurred in connection
with the preparation and filing of the Registration
Statement pursuant to Section 6.3 (1). The
NBG-Shareholders shall be responsible for broker's
commissions and underwriters' fees in connection with the
sale of the Activision Shares.
(3) The rights granted in this Section 6.3 are not assignable
to any transferee of Activision Shares acquired by the
NBG-Shareholders under this Agreement.
(4) Cooperation and Indemnification
The NBG-Shareholders, jointly and severally, agree that
they will provide all required cooperation and furnish
all necessary information and enter into such agreements
customarily required of selling stockholders in
connection with the preparation of the Registration
Statement filed under the terms of this Section 6.3 and
the disposition of their Activision Shares pursuant to
such Registration Statement, and the NBG-Shareholders,
jointly and severally, will represent and warrant the
accuracy and completeness of all written information so
furnished for inclusion in the Registration Statement and
agree to indemnify and hold Activision, Inc. and its
directors, officers, shareholders and underwriters
harmless from and against any liability, loss or damage
(including costs and attorneys' fees), incurred by or
sustained by or asserted against any of them arising out
of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in the
information provided by the NBG-Shareholders or based on
any omission (or alleged omission) to state a material
fact required to be stated therein or necessary to make
the statements therein not misleading.
(4b) Activision will indemnify and hold the NBG-Shareholders
harmless from and against any liability, loss or damage
(including costs and attorneys' fees) (collectively
"Damages") incurred by or sustained by or asserted
against any of them arising out of or based on any untrue
statement (or alleged untrue statement) of material fact
contained in the Registration Statement or based on any
omission (or alleged omission) to state a material fact
required to be stated therein or necessary to make the
statements herein not misleading, except to the
extent such Damages arise out of or are based on any
information provided by the NBG-Shareholders.
ARTICLE 7
LIABILITY
7.1 Liability
Unless stipulated otherwise in this Agreement, in the event of
a breach of representations, warranties and/or guarantees
under this Agreement, the breaching party shall put the other
party into the position the party would have been if such
representations, warranties and/or guarantees had not been
breached. If it is not possible to do this within four (4)
weeks after the breaching party has received such request from
the other party, the other party and/or - if the breaching
party are the NBG-Shareholders - also the respective NBG
company can request full pecuniary compensation from the
breaching party, in particular, all claims, demands, losses,
costs, expenses, obligations, liabilities, actions, suits,
damages including without limitation interests and penalties,
counsel fees. Any further statutory remedies, including but
not limited to cancellation of contract (Wandlung, Rucktritt)
and diminuation of the purchase price (Minderung) are excluded
to the extent possible under statutory law. This limitation
shall not be applicable in case of defect of title
(Rechtsmangel) of one or more of the shares in any of the NBG
Companies.
Claims shall be excluded if such claims are not raised until
two (2) years after the date of this Agreement; provided that
in respect of the guarantees regarding taxes the expiry date
shall not be until 6 months after the assessment by the
respective governmental authority has become final and
binding. The respective NBG-Shareholders shall be given the
opportunity at their own cost to take
part in an external tax audit and to file an appeal against
tax demands with which they are charged or to demand the
filing of such an appeal.
The aforementioned expiry dates are deadlines
(Ausschlussfristen) within which the party making a claim must
have sent a written notification of the claims explaining the
grounds herefor in reasonable detail.
7.2 Liability Limitation
No party hereto shall have an obligation toward the others
under representations, warranties and/or guarantees or related
statutory claims unless and until the aggregate amount of such
claims against such party exceeds DM 100,000.00 or the
equivalent in any other currency, and if so, then only the
amount over such DM 100,000.00 shall be payable to the other
party.
None of the NBG-Shareholders shall be liable to Kappaphoenicis
Beteiligungs GmbH and/or Activision, Inc. under any provision
of this Agreement or a related statutory provision for an
amount in excess of DM 5,750,000.00. This limitation is not
applicable in case of liability arising from defects of title
("Rechtsmangel") of the shares in any of the NBG Companies.
ARTICLE 8
NON-COMPETE UNDERTAKING
Except for the present activities (i. e. educational software development) in
the present extent of and in connection with Caps Software Design AG i.G., until
November 26, 1999, NBG-Shareholders shall neither directly nor indirectly
develop, market, sell, purchase or otherwise deal with any such products or
services or become direct or indirect shareholders of
companies that compete with any of the NBG Companies in their present
business (i.e. marketing, sale and distribution of entertainment, educational
and "edutainment" software products) in their present markets (i. e. Germany,
Austria and German-speaking parts of Switzerland). Within this purview and
until November 26, 1999, NBG-Shareholders shall not solicit any employees or
customers of any of the NBG Companies without the prior written consent of
Kappaphoenicis Beteiligungs GmbH.
ARTICLE 9
GUARANTEE BY ACTIVISION, INC.
Activision, Inc. guarantees Kappaphoenicis Beteiligungs GmbH's obligations to
deliver Activision Shares under this Agreement.
Presently Kappaphoenicis Beteiligungs GmbH is a wholly owned indirect
subsidiary of Activision, Inc.
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 The NBG-Shareholders hereby irrevocably, unconditionally and without
time limit guarantee by way of independent guarantee ("selbstandiges
Garantieversprechen") the timely and complete fulfillment of all
obligations of the NBG-Shareholders entered into or resulting from this
Agreement.
10.2 Further Assistance
Each party agrees to make all reasonable efforts to cooperate with the
other in post-closing matters that may arise in regard to taxes and
the like. NBG-Shareholders shall use their best efforts to assist and
to cause the NBG Companies' independent tax advisors to assist
Activision, Inc. in preparation of such audit and Financial Statements
for each of the NBG Companies as are necessary to enable
Activision, Inc. to comply with the accounting and/or reporting
requirements promulgated under the Securities Act and Securities and
Exchange Act of 1934, as amended, in the United States.
10.3 Notices
All notices made pursuant to this Agreement shall be valid only if
made by a person authorized to receive notices as per below by
Kappaphoenicis Beteiligungs GmbH or the NBG-Shareholders, as the case
may be, and sent by registered mail, return receipt requested or
facsimile, to the parties at the addresses set forth below, or as set
forth in any notice of change of address given in writing in the
manner prescribed herein to all other parties.
If to KappaphoenicisActivision GmbH
Beteiligungs GmbH and/or Auf der Haar 47,
Activision, Inc.: X-00000 Xxxxxxxxx,
Germany
Fax: +49 (5241) 48 08 48
with a required copy to: 1. Activision, Inc.
0000 Xxxxx Xxxx Xxxxxxxxx
Xxxxx Xxxxxx, XX 00000 U.S.A
Fax: x0 (000) 000-0000
2. Xxxxxxxx Xxxxxxxxx Xxxxxx
Aronsohn & Xxxxxx LLP
attn.: Xxxxxxx X. Xxxxxxxxx, Esq.
0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, X.X. 00000, XXX
Fax: x0 (000) 000-0000
If to Activision, Inc.: Activision, Inc.
attn.: Senior Vice President,
Business Affairs and
Legal Counsel
0000 Xxxxx Xxxx Xxxxxxxxx
Xxxxx Xxxxxx, XX 00000, X.X.X.
Fax: x0 (000) 000-0000
with a required copy to: Xxxxxxxx Xxxxxxxxx Xxxxxx
Aronsohn & Xxxxxx LLP
attn.: Xxxxxxx X. Xxxxxxxxx, Esq.
0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, X.X. 00000, XXX
Fax: x0 (000) 000-0000
If to Xxxxxx Xxxxxxx: Xxxxxxxxxx 0,
X - 00000 Xxxxxxxxxxxxxx, Xxxxxxx
Fax: +49 (9471) 70 17 77
If to Xxxxxx Xxxxxxxx: Xxxxxxxxxx 0,
X - 00000 Xxxxxxxxxxxxxx, Xxxxxxx
Fax: +49 (9471) 70 17 66
10.4 Choice of Law, Venue
This Agreement shall be governed by and construed in accordance with
the substantive laws of Germany. The exclusive legal venue for all
disputes in connection with this Agreement is Munich, Germany.
10.5 Assignment
This Agreement may not be assigned by any party without the prior
written consent of the other party.
10.6 Waiver
No waiver of any term, provision or condition of this Agreement,
whether by conduct or otherwise, in any one or more instances, shall
be deemed to be or be construed as a further or continuing waiver of
any such term, provision or
condition or as a waiver of any other terms, provisions or conditions
of this Agreement.
10.7 Severability
The invalidity or unenforceability of any provision of this Agreement
in any jurisdiction shall not invalidate or render unenforceable any
other provision herein. Any invalid or unenforceable provision shall
be replaced by such reasonable provision as comes closest to what the
parties wanted or would have wanted to apply in accordance with the
meaning and purpose of this Agreement if they had considered such
invalidity or unenforceability when entering into this transaction.
The same shall apply correspondingly to the filling of any gaps.
10.8 Announcement
Activision, Inc., Kappaphoenicis Beteiligungs GmbH and
NBG-Shareholders shall cooperate in the preparation of any
announcements regarding the transaction contemplated by this
Agreement. Except as required by applicable law (in which case such
announcing party shall prior thereto advise the other party), no party
shall issue any announcement regarding the transactions contemplated
hereby without the prior written consent of the other party, which
consent shall not be unreasonably withheld.
10.9 Entire Agreement
This Agreement (including all attachments, i. e. Exhibits and
Schedules) constitutes the entire understanding between the parties
with respect to the subject matter hereof, supersede all negotiations,
prior discussions and preliminary agreements. Neither party gives any
warranty or accepts any liability in addition to those expressed in
this Agreement. Amendments and additions to this Agreement are
required to be in written form, to the extent no notarial form
is prescribed by statute. The requirement for
written form can be lifted only by written agreement for the parties. The
headings of this Agreement are not a part of this Agreement but are for
convenience purposes only.
10.10 Attachments
All Exhibits and Schedules are essential parts of this document. They
are referred to.
10.11 Costs
Each party to this Agreement shall bear the costs for its legal
counsel, accounting and all other expenses incurred in connection with
this Agreement. Kappaphoenicis Beteiligungs GmbH shall bear the costs
of notarization of this Agreement.
10.12 Copies
Each party shall receive certified copies (1 beglaubigte Abschrift, 1
Ausfertigung) of this deed. One certified copy shall be sent to
Finanzamt - Korperschaftsteuerstelle -.
This document was read aloud including the schedules and exhibits by the
notary. Approved by the parties present and signed by them and the notary.
