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
ARTICLE 7
CLOSING CONDITIONS
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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
Page 4
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"),
Page 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.
Page 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).
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"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.
Page 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;
Page 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.
Page 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.
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(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.
Page 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");
Page 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
Page 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.
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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
Page 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;
Page 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.
Page 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
Page 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
Page 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.
Page 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
Page 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.
Page 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
Page 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
Page 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
Page 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
Page 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
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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;
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(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
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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
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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.
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(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
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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
Page 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
Page 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
Page 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,
Page 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
Page 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).
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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.
Page 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
Page 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
Page 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.
Page 47
(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.
Page 48
(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.
Page 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.
Page 50
(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
Page 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.
Page 52
(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
Page 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.
Page 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,
Page 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
Page 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
Page 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
Page 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
Page 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
Page 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.
Page 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
Page 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]
Page 64
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date
first above written. 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: Chief Executive Officer
SHINY GROUP, INC.
By: /S/ XXXXX XXXXX
-------------------------------
Name: Xxxxx Xxxxx
Title: President
/S/ XXXXX XXXXX
------------------------------------
Xxxxx Xxxxx
Page 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 23, 2002
/S/ XXXXXX XXXXX
--------------------------
Xxxxxx Xxxxx
Spousal Consent
LIST OF ATTACHMENTS TO THE STOCK PURCHASE AGREEMENT:
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
All of the schedules, exhibits and other attachments have been omitted
pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby agrees to
furnish supplementally a copy of any omitted attachment to the Securities and
Exchange Commission upon request.
