AGREEMENT
for the exchange of the whole of the issued share capital of
Combined Distribution (Holdings) Limited for stock in
Activision Inc.
(1) The persons listed in Schedule 1
(2) Activision, Inc.
Dated 23 November 1997
LONDON OFFICE
Xxxxxxxx Xxxxx, 00 Xxx Xxxxxx, Xxxxxx XX0X 0XX
Telephone 0000 000 0000 Facsimile 0171 248 9934
CONTENTS
1. Definitions and interpretation. . . . . . . . . . . . . . . . . . . .1
2. Conditions to Completion. . . . . . . . . . . . . . . . . . . . . . 15
3. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . 18
4. Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5. The Stock and Option Retention. . . . . . . . . . . . . . . . . . . 19
6. Pre-Completion obligations. . . . . . . . . . . . . . . . . . . . . 20
7. Completion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8. Restriction on Sale of the Consideration Stock and Option Stock . . 25
9. Registration of the Consideration Stock and Option Stock. . . . . . 26
10. Release of guarantees. . . . . . . . . . . . . . . . . . . . . . . 28
11. Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12. Warrantors' remedies . . . . . . . . . . . . . . . . . . . . . . . 29
13. Activision's remedies. . . . . . . . . . . . . . . . . . . . . . . 29
14. Limitations on liability . . . . . . . . . . . . . . . . . . . . . 31
15. Conduct of claims. . . . . . . . . . . . . . . . . . . . . . . . . 34
16. Intentionally Deleted. . . . . . . . . . . . . . . . . . . . . . . 35
17. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
18. Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
19. Costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . 38
20. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
21. Governing law and jurisdiction . . . . . . . . . . . . . . . . . . 39
Schedule 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Part I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(Allocation of Consideration Stock). . . . . . . . . . . . . . . . . . . . 41
Schedule 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(The Shareholders) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Schedule 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(Information concerning the Company) . . . . . . . . . . . . . . . . . . . 46
Schedule 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(Information concerning the Subsidiaries). . . . . . . . . . . . . . . . . 49
Schedule 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(Warranties) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
1. CAPACITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
2. OWNERSHIP OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . 54
3. ARRANGEMENTS BETWEEN GROUP COMPANIES AND WARRANTOR. . . . . . . . . 54
4. COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5. SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6. INSOLVENCY OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . 56
7. STATUTORY BOOKS AND DOCUMENTS FILED . . . . . . . . . . . . . . . . 56
8. ACCURACY AND ADEQUACY OF INFORMATION. . . . . . . . . . . . . . . . 57
9. PREPARATION AND CONTENTS OF THE ACCOUNTS. . . . . . . . . . . . . . 57
10. ACCOUNTING RECORDS . . . . . . . . . . . . . . . . . . . . . . . . 59
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11. MANAGEMENT ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . . 59
12. EVENTS SINCE THE ACCOUNTS DATE . . . . . . . . . . . . . . . . . . 59
13. FINANCIAL COMMITMENTS AND BORROWINGS . . . . . . . . . . . . . . . 61
14. WORKING CAPITAL. . . . . . . . . . . . . . . . . . . . . . . . . . 62
15. INSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
16. CONTRACTS AND COMMITMENTS. . . . . . . . . . . . . . . . . . . . . 62
17. TERMS OF TRADE . . . . . . . . . . . . . . . . . . . . . . . . . . 63
18. PRODUCT LIABILITY AND YEAR 2000. . . . . . . . . . . . . . . . . . 63
19. LICENCES AND CONSENTS. . . . . . . . . . . . . . . . . . . . . . . 64
20. TRADING PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . 64
21. COMPETITION AND TRADE REGULATION LAW . . . . . . . . . . . . . . . 64
22. COMPLIANCE WITH LAW. . . . . . . . . . . . . . . . . . . . . . . . 65
23. LITIGATION AND DISPUTES. . . . . . . . . . . . . . . . . . . . . . 66
24. OWNERSHIP AND CONDITION OF ASSETS. . . . . . . . . . . . . . . . . 66
25. STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
26. CHARGES AND ENCUMBRANCES OVER ASSETS . . . . . . . . . . . . . . . 67
27. INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . 67
28. DIRECTORS AND EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . 69
29. INDUSTRIAL RELATIONS . . . . . . . . . . . . . . . . . . . . . . . 71
30. PENSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
31. TITLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
32. ENCUMBRANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
33. PLANNING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 74
34. STATUTORY OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . 75
35. ADVERSE ORDERS . . . . . . . . . . . . . . . . . . . . . . . . . . 75
36. CONDITION OF THE PROPERTIES. . . . . . . . . . . . . . . . . . . . 75
37. LEASEHOLD PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . 76
38. TENANCIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
39. CONTAMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 77
40. OTHER ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . 77
41. EVENTS SINCE THE ACCOUNTS DATE . . . . . . . . . . . . . . . . . . 77
42. LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
43. RECORDS AND COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . 78
44. VAT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
45. BALANCE SHEET VALUES . . . . . . . . . . . . . . . . . . . . . . . 81
46. CLOSE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . 81
47. GROUP TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . 81
48. CAPITAL GAINS. . . . . . . . . . . . . . . . . . . . . . . . . . . 81
49. DEDUCTIBLE EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . 82
50. DIVIDENDS AND DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . 82
51. INHERITANCE TAX AND GIFTS. . . . . . . . . . . . . . . . . . . . . 82
52. ANTI-AVOIDANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 82
53. OVERSEAS MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 83
54. CAPACITY OF ACTIVISION . . . . . . . . . . . . . . . . . . . . . . 83
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55. DUE ORGANISATION OF ACTIVISION . . . . . . . . . . . . . . . . . . 83
56. DUE AUTHORISATION OF CONSIDERATION STOCK . . . . . . . . . . . . . 83
57. SEC DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 83
58. MATERIAL ADVERSE CHANGE. . . . . . . . . . . . . . . . . . . . . . 84
Schedule 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
(Particulars of the Properties). . . . . . . . . . . . . . . . . . . . . . 85
1.Freehold properties. . . . . . . . . . . . . . . . . . . . . . . . . 85
2.Leasehold properties.. . . . . . . . . . . . . . . . . . . . . . . . 85
3.Particulars of the Tenancies.. . . . . . . . . . . . . . . . . . . . 85
Schedule 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Dividend Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
THIS AGREEMENT is made the 24 day of November 1997
BETWEEN:
(1) THE PERSONS whose names and addresses are set out in Part II of
Schedule 1; and
(2) ACTIVISION, INC., a Delaware corporation whose main office is at 0000
Xxxxx Xxxx Xxxxxxxxx, Xxxxx Xxxxxx, XX 00000, XXX ("ACTIVISION")
BACKGROUND:
The Shareholders have agreed with Activision to exchange the Company Shares (as
defined below) for the Consideration Stock (as defined below) on the terms of
this Agreement and Xxxx (as defined below) has agreed with Activision to
terminate the Share Option (as defined below) in exchange for the Xxxx Options
(as defined below).
IT IS AGREED as follows:
1. Definitions and interpretation
1.1 In this Agreement, unless the context otherwise requires, the
following words have the following meanings:
"THE ACCOUNTS" the audited balance sheet as at
the Accounts Date and the audited
profit and loss account for the
fiscal year ended on the Accounts
Date of each Group Company, including
all documents required by law to be
annexed to them and, in the case of
the Company, the audited consolidated
balance sheet as at that date and
the audited consolidated profit and
loss account for that year;
"THE ACCOUNTS DATE" 30 April 1997;
"ACTIVISION WARRANTIES" the representations referred to in
clause 11.2 and set out in Part II
of Schedule 4 and "Activision
Warranty" means any one of them;
"THIS AGREEMENT" this Agreement (including any
schedule or annexure to it and any
document in agreed form);
1
""A" ORDINARY SHARES" 47,059 "A" ordinary shares of 1p
each in the capital of the Company
in issue at the date of this
Agreement and at Completion;
"THE ARTICLES" the Articles of Association of the
Company for the time being;
"THE BOARD" in relation to each Group Company,
its board of directors;
"B" ORDINARY SHARES" 19,608 "B" ordinary shares of 1p
each in the capital of the Company
in issue at the date of this
Agreement and at Completion;
"BUSINESS DAY" a day (other than a Saturday or a
Sunday) on which clearing banks are
open for business in the City of
London;
"CHANGE OF CONTROL" that control of the Company (as
control is defined in S.416 ICTA
1988) is transferred to Activision;
"CLAIM" a claim by Activision against all
or any of the Warrantors in
connection with the Surviving
Shareholders' Warranties;
"CODE" the United States Internal Revenue
Code of 1986, as amended, and the
regulations thereunder;
"THE COMPANY" Combined Distribution (Holdings)
Limited, details of which are set
out in Schedule 2;
"COMPANY SHARES" the Ordinary Shares, "A" Ordinary
Shares, "B" Ordinary Shares,
Convertible Preference Shares,
Redeemable Preference Shares and
Loan Stock in issue at Completion
as set out in Schedule 2;
2
"COMPLETION" the completion of the exchange of
the Company Shares for the
Consideration Stock and the
termination of the Share Option in
exchange for the granting by
Activision of the Xxxx Options under
this Agreement;
"COMPUTER PROGRAMS" all or any part of a set of
instructions whose purpose is to
cause a data processing machine
to perform certain functions or
operations whatever the form of the
program (whether in source code or
in human-readable form, or object
code or machine-readable form, and
whether or not compiled or assembled);
"THE CONSIDERATION" the consideration payable by Activision
to the Shareholders for the Company
Shares and to Xxxx for the Share Option
under clause 4;
"THE CONSIDERATION STOCK" new common stock par value $0.000001 per
share of Activision calculated in
accordance with Clause 4 and as set out
in Schedule 1;
THE "CONTRACTORS" Eidos, Sony, Hasbro, Virgin Interactive,
Ocean, Interplay, Bizarre Love Triangle,
Mindscape, The Mousepad Company and
Soldout Limited;
"CONVERTIBLE PREFERENCE 133,333 convertible preference
SHARES" shares of L1 each in the capital of
the Company in issue at the date of
this Agreement and at Completion;
3
"COPYRIGHT" all copyright arising under English
law (whether under the Copyright
Designs and Patents Xxx 0000 or
otherwise) in all original works,
Computer Programs (in whatever
form), customer lists, databases
and any other work in which
copyright subsists, together with
all copyrights and/or rights of
like nature arising (whether by
operation of law, registration or
otherwise) in any other part of the
world; and the right to apply for
the same and the benefit of any and
all licences in connection with the
foregoing;
"DANGEROUS SUBSTANCE" (whether in the form of a solid,
liquid, gas or vapour) the
generation, transportation,
storage, treatment, use or disposal
of which (whether alone or in
combination with any other
substance) gives rise to a risk of
causing harm to human health,
comfort or safety or harm to any
other living organism or causing
damage to the Environment;
"THE DISCLOSURE LETTER" the letter of the same date as this
Agreement in the agreed form from
the Warrantors or their solicitors
to Activision or its solicitors,
together with all attachments and
which disclose matters that are
exceptions to the Shareholders
Warranties;
"DIVIDENDS" the dividends or interest with
respect to the Company Shares
payable on 30 November 1997 as
detailed in Schedule 6;
4
"DOCUMENTATION" all user manuals and other
materials which accompany any unit
of Software made generally
commercially available and all
other technical, reference and/or
other manuals or documentation,
whether intended for internal or
external use in relation to any
Software;
"EMPLOYEE SHAREHOLDERS" the persons whose names and
addresses are set out in Part IIB
of Schedule 1;
"THE ENVIRONMENT" the environment as defined in
Section 1(2), Environmental
Protection Xxx 0000;
"ENVIRONMENTAL any permit, exemption, filing
CONSENT" requirement, licence or
registration from time to time
necessary or desirable under
Environmental Law;
"ENVIRONMENTAL LAW" any directive, treaty, code of
practice, circular, guidance note
and the like, in each case of any
jurisdiction, in force or enacted
relating or pertaining to the
Environment, any Dangerous
Substance, human health, comfort,
safety or the welfare of any other
living organism;
"ESCROW AGENT" City National Bank, a national bank
organised under the laws of the
United States with offices in
Beverly Hills, California, USA;
"ESCROW AGREEMENT" the agreement in the agreed form
between (1) Activision, (2) the
Warrantors and (3) the Escrow
Agent;
"THE GROUP the Company and any Subsidiary of
COMPANIES" the Company (details of which are
set out in Schedule 3) (together
"THE GROUP") and "GROUP COMPANY"
means any of them;
"GUARANTEE" any guarantee, suretyship,
indemnity, bonding liability or
similar contingent liability;
5
"XXXX" the person whose name and address
is set out in Part IIC of Schedule
1;
"XXXX CONSULTANCY the Agreement made between the
AGREEMENT" Company and Carmel Industrial
Securities Limited dated 28 June
1996;
"THE XXXX OPTION the stock option agreements in the
AGREEMENTS" agreed form between (1) Activision
and (2) Xxxx;
"XXXX OPTIONS" the options created by the Xxxx
Option Agreements;
"ICTA" the Income and Corporation Taxes
Xxx 0000;
"INTELLECTUAL PROPERTY" all Patents, Copyrights, Marks,
Know How and Other IPR's;
"INVESTOR SHAREHOLDER" the person whose name and address
is set out in Part IIA of Schedule
1;
"KNOW-HOW" all rights anywhere in the world in
and to all industrial and
commercial trade secrets and
confidential and secret research,
development, design, inventions,
ideas, information, data, skills,
products, processes, drawings,
logos and specifications;
"LIABILITY TO TAXATION" (i) any liability of a Group
Company to make actual payments of
Taxation regardless of whether such
Taxation is chargeable or
attributable directly or primarily
to a Group Company or to any other
person;
6
(ii) the loss of any Relief which
would (were it not for the loss)
have been available to any Group
Company and which has been treated
as an asset in preparing the
Accounts or taken into account in
computing (and so reducing) any
provision for Taxation (including
deferred taxation) which appears in
the Accounts (or which, but for the
availability or presumed
availability of such Relief prior
to its loss would have appeared in
the Accounts); and
(iii) the setting off against any
liability to Taxation or against
Profits earned, accrued or received
on or before Completion of any
Relief which arises in respect of
any Transaction effected on or
after Completion in circumstances
where, but for the setting off, any
Group Company would have had an
actual liability to Taxation;
"LOAN STOCK" L2,000,000 Secured Subordinated
Loan Stock 1998-2000 of the Company
constituted by a deed dated 28 June
1996 (THE "LOAN STOCK DEED");
"MANAGEMENT ACCOUNTS" the unaudited consolidated
management accounts of the Group
for the period from 1 May 1997 to
the Management Accounts Date
(comprising a consolidated balance
sheet, trading account and profit
and loss account for the Group) and
all notes, reports, statements and
documents annexed or attached
thereto;
"MANAGEMENT ACCOUNTS DATE" 31 October 1997;
7
"MARKS" all trade marks, servicemarks and
logos whether registered in the UK
or unregistered (including
applications for registration
thereof) together with all rights
of like nature arising (whether by
operation of law, registration or
otherwise) out of the same in any
part of the world and the rights to
apply for the same and the benefit
of any and all licences in
connection with the foregoing;
"MODIFICATION" in relation to any Computer Program
and/or Documentation, includes any
translation (whether into another
computer and/or national language),
adaptation, enhancement,
modification, variation, bug-fix
and error correction, howsoever, by
whomsoever and for whomsoever made;
"NASDAQ" The NASDAQ National Market,
maintained by the NASDAQ Stock
Market, Inc.;
"OPTION STOCK" the shares of Activision common
stock issued or issuable on
exercise of the Xxxx Options;
"ORDINARY SHARES" the 100,000 ordinary shares of 1p
each in the capital of the Company
in issue at the date of this
Agreement and at Completion;
8
"OTHER IPR'S" all designs (registered or
unregistered), utility models and
all other intellectual or
industrial property rights
(including without limitation as to
secrecy or confidence) arising
(whether by operation of law,
registration or otherwise) under
English law or in any other part of
the world to the extent that the
same are not otherwise included
within the definitions of
Copyright, Marks, Patents and Know
How and the right to apply for the
same and the benefit of any and all
licences in connection with the
foregoing;
"PATENTS" letters patent and the right to
apply for letters patent in any
part of the world and any similar
rights situated in any country; and
the benefit of any and all licences
in connection with the foregoing;
"THE PENSION SCHEMES" the Company's pension schemes being
The Standard Life Group Personal
Pension Plan implemented on 1 July
1996 and Stanplan A for the Company
commenced on 27 November 1996;
"THE POLICIES" all insurance policies in relation
to which any Group Company has any
interest and "POLICY" means any of
them;
"PROFITS" income, profits and gains, the
value of any supply and any other
consideration, value or receipt
used or charged for Taxation
purposes and references to "PROFITS
EARNED, ACCRUED OR RECEIVED"
include Profits deemed to have been
earned, accrued or received for
Taxation purposes;
9
"THE PROPERTIES" the leasehold properties
particulars of which are set out in
Schedule 5 and "THE PROPERTY" means
any of them;
"REDEEMABLE PREFERENCE 800,000 redeemable preference
SHARES" shares of 10p each in the capital
of the Company in issue at the date
of this Agreement and at
Completion;
"RELEVANT CLAIM OR any claim or surrender to or by any
SURRENDER" Group Company of:
group relief under Chapter IV, Part
X, ICTA;
advance corporation tax under
Section 240, ICTA; or
a tax refund under Xxxxxxx 000,
Xxxxxxx Xxx 0000;
"RELIEF" any loss, relief, allowance,
exemption, set-off, deduction,
credit or right to repayment of
Taxation and references to the
"LOSS OF ANY RELIEF" include the
loss, reduction, counteraction,
disallowance, setting-off against
Profits, crediting against a
liability to make an actual payment
of Taxation or failure to obtain a
Relief and "LOSE" and "LOST" shall
be construed accordingly;
"RESTRICTIVE COVENANT deeds in the agreed form between
DEEDS" Activision (1) and each of the
Employee Shareholders (2)
containing certain restrictive
covenants to be entered into at
Completion;
"SEC" the United States Securities and
Exchange Commission;
"SERVICE AGREEMENTS" agreements in the agreed form
between the Company and each of the
Employee Shareholders to be entered
into at Completion;
10
"SHAREHOLDERS" the Employee Shareholders and the
Investor Shareholder together;
"THE SHARE OPTION" an option to subscribe for 3,030
ordinary shares of 1p each in the
Company granted by the Company to
Xxxx under an agreement dated 28
June 1996;
"SHAREHOLDERS' the representations referred to in
WARRANTIES" clause 11.1(a) and set out in Part
I of Schedule 4, and "SHAREHOLDERS'
WARRANTY" means any one of them;
"SOFTWARE" all or any of the Computer Programs
and Documentation forming part of,
and all or any Modification to:
(a) any computer software made
available and/or licensed by a
Group Company as at or at any time
before today's date whatever
version number or release;
(b) any computer software in the course
(at whatever stage) of development
by a Group Company, including any
recorded idea for a proposed new
computer software product or
solution and any computer software
in the course of planning,
development, trialling or testing
(whether alpha, beta or otherwise)
or evaluation;
(c) any Computer Programs otherwise
developed by a Group Company for
the Group's own business or that of
any third party;
11
(d) any Computer Programs acquired by
the Group for licensing to its
customers;
"SUBSIDIARIES" any subsidiaries within the meaning
of Sections 736 and 736A, Companies
Xxx 0000 and any subsidiary
undertakings within the meaning of
Sections 258 and 259, Companies Xxx
0000 from time to time, details of
which are set out in Schedule 3,
and "SUBSIDIARY" means any of them;
"SURVIVING the representations and warranties
SHAREHOLDERS' referred to in clause 11.1(b) and
WARRANTIES" the following clauses set out in
Part I of Schedule 4, namely 1, 2,
3, 4, 5, 6, 7.4, 8.1, 9, 11, 13.5,
13.6, 23, 24.1, 31.1, 31.2, 31.5,
33.4, 34.1, 37.7, 38.1 and 41 to
53, inclusive and "SURVIVING
SHAREHOLDERS' WARRANTY" means any
one of them;
"TAXATION" all forms of taxation and
statutory, governmental,
supra-governmental, state,
provincial, local governmental or
municipal impositions, duties,
contributions and levies (including
withholdings and deductions),
whether domestic or foreign,
whenever imposed and all penalties,
fines, charges, costs and interest
relating to any such matters and
"TAX" shall be construed
accordingly;
"TAX AUTHORITY" any taxing or other authority, body
or official competent to
administer, impose or collect any
Liability to Taxation;
"TCGA" the Taxation of Chargeable Gains
Xxx 0000;
12
"THE TENANCIES" any tenancies or other occupational
arrangements under which the
Properties are held by third
parties, particulars of which are
set out in Schedule 5;
"TERMINATION DEED" the deed in the agreed form
terminating the Share Option
between the Company (1) and Xxxx
(2);
"TRADING DAY" a day on which stock in Activision
can be traded on NASDAQ;
"TRANSACTION" any transaction, deed, act, event,
omission, payment or receipt of
whatever nature and whether actual
or deemed for Tax purposes;
"UNITED KINGDOM" OR the United Kingdom of Great Britain
"UK" and Northern Ireland;
"UNITED STATES" OR "US" the United States of America;
"VATA" the Value Added Tax Xxx 0000 and
all other statutes, statutory
instruments, regulations and
notices containing provisions
relating to value added tax;
"WARRANTIES" the Shareholders' Warranties and/or
the Activision Warranties;
"WARRANTORS" the Shareholders and Xxxx;
"WARRANTORS ASSOCIATE" each of the Warrantors and any
persons connected with any of them
within the meaning of Section 839,
ICTA;
"YEAR 2000 CONFORMITY" that neither performance nor
functionality is affected by dates
prior to, during and after the Year
2000, in particular:
Rule 1: No value for current date will
cause any interruption in
operation;
13
Rule 2: Date-based functionality must
behave consistently for dates prior
to, during and after Year 2000.
Rule 3: In all interfaces and data storage,
the century in any date must be
specified either explicitly or by
unambiguous algorithms or
inferencing rules;
Rule 4: Year 2000 must be recognised as a
leap year;
(all as defined by the British Standards
Institution in Document DISC PD2000-1).
1.2 In this Agreement, unless the context otherwise requires:
(a) words in the singular include the plural and vice versa and words
in one gender include any other gender;
(b) a reference to a statute or statutory provision includes:
(i) any subordinate legislation (as defined in Section 21(1),
Interpretation Act 1978) made under it;
(ii) any repealed statute or statutory provision which it re-enacts
(with or without modification); and
(iii) any statute or statutory provision which modifies,
consolidates, re-enacts or supersedes it;
(c) a reference to:
(i) any party includes its successors in title and permitted
assigns;
(ii) a "PERSON" includes any individual, firm, body corporate,
association or partnership, government or state(whether or not
having a separate legal personality);
14
(iii) clauses and schedules are to clauses and schedules of this
Agreement and references to sub-clauses and paragraphs are
references to sub-clauses and paragraphs of the clause or
schedule in which they appear;
(iv) any provision of this Agreement is to that provision as
amended in accordance with the terms of this Agreement;
(v) any document being "IN THE AGREED FORM" means in a form which
has been agreed by the parties on or before the date of this
Agreement and for identification purposes signed by them or on
their behalf by their solicitors;
(vi) "INDEMNIFY" and "INDEMNIFYING" any person against any
circumstance include indemnifying and keeping him harmless
from all actions, claims and proceedings from time to time
made against him and all loss or damage and all payments,
costs or expenses made or incurred by that person as a
consequence of or which would not have arisen but for that
circumstance; and
(d) except as set out in sub-clause 1.1, terms defined in the Companies
Xxx 0000 and ICTA have the meanings attributed to them by those Acts.;
(e) "STERLING" and the sign "L" mean pounds sterling in the currency of
the United Kingdom and "US DOLLARS" and the sign "$" mean dollars in
the currency of the United States;
(f) the table of contents and headings are for convenience only and shall
not affect the interpretation of this Agreement;
(g) general words shall not be given a restrictive meaning:
(i) if they are introduced by the word "other" by reason of the
fact that they are preceded by words indicating a particular
class of act, matter or thing; or
(ii) by reason of the fact that they are followed by particular
examples intended to be embraced by those general words;
(h) where any statement is qualified by the expression "SO FAR AS THE
WARRANTORS ARE AWARE" or "TO THE BEST OF THE WARRANTORS' KNOWLEDGE AND
BELIEF" or any similar expression it shall be deemed to include an
additional statement that it has been made after due and careful
enquiry.
2. CONDITIONS TO COMPLETION
15
2.1 Except for the obligations set out in this clause, clause 6
(Pre-Completion obligations) and sub-clause 17.10 (Termination), the
obligations of the Warrantors under this Agreement are in all respects
conditional upon the following:
(a) as at the date of Completion, Activision having performed all
obligations and complied with all terms, conditions and covenants
on its part agreed to be performed under this Agreement on or
prior to the date of the Completion;
(b) the respective representations and warranties of Activision
contained in this Agreement remaining true and correct both as of
the date of this Agreement and as of the date of Completion with
the same effect as though made at such date, except that any
representation or warranty which is permitted to be and has been
made as of and expressly limited to, a specific date shall have
been true and correct on and as of such date;
(c) Activision receiving separately from KPMG Peat Marwick,
independent auditors for Activision, and Xxxxx Xxxxxxxx,
independent auditors of the Group, letters dated the date of
Completion (which may contain customary qualifications and
assumptions) to the effect that KPMG Peat Marwick and Xxxxx
Xxxxxxxx respectively concur with Activision's management's
conclusion that no conditions exist relating to Activision, the
Company or the transactions contemplated by this Agreement that
would preclude Activision from accounting for the share exchange
as a pooling of interests for US accounting purposes under United
States generally accepted accounting principles ("THE POOLING
ARRANGEMENT");
2.2 Except for the obligations set out in this clause, clause 6
(Pre-Completion obligations) and sub-clause 17.10 (Termination), the
obligations of Activision under this Agreement are in all respects
conditional upon the following:
(a) conditional only upon Completion, the Company having duly passed
requisite Board resolutions effecting the approval of all matters
contemplated under this Agreement;
(b) the respective representations and warranties of the Warrantors
contained in this Agreement remaining true and correct and the
information set forth in any Schedule to this Agreement being
true and correct both at the date of this Agreement and at the
date of Completion with the same effect as though made at such
date, except that any representation or warranty or items of
information set forth in a Schedule which is permitted to be and
has been made as of and expressly limited to, a specific date
shall have been true and correct on and as of such date;
(c) as of the date of Completion there being no material adverse
change in the condition of the Group or its business (financial
or otherwise), results of operations, assets, net worth,
prospects, properties or litigation, except that the
16
termination of any of the contracts between a Group Company and any
Contractor by reason solely of the exercise of a right of termination
upon a Change of Control shall not be a material adverse change. Also
for the purpose of this sub-clause, it shall be deemed not to be a
material adverse change in the condition of the Group or its business
(financial or otherwise), results of operations, assets, net worth,
prospects, properties or litigation if a customer or customers
individually or in the aggregate of the Group Companies (other than
the Contractors) indicate that they will no longer transact business
with the Group as a result of the Change of Control unless such
customer or customers individually or in the aggregate have accounted
for 7 1/2 % or more of the Group's turnover in the twelve complete
calendar months immediately preceding the date of this Agreement in
which case there shall be deemed to be a material adverse change;
(d) as of the date of Completion, the Company and the Warrantors having
performed all obligations and complied with all terms, conditions and
covenants on their part agreed to be performed hereunder on or prior
to the date of Completion;
(e) subsequent to the date of this Agreement and prior to Completion, the
Company and the Warrantors not having performed any of the acts
prohibited by clause 6;
(f) Activision having received a written opinion from Xxxxxxxx Xxxxxxxxx
Xxxxxx Aronsohn & Xxxxxx LLP, its counsel, in form and substance
reasonably satisfactory to it, to the effect that the share exchange
will not result in a tax liability to Activision under the Code and
such opinion shall not have been withdrawn; provided, however, that if
such counsel does not render such opinion, this condition shall
nonetheless be deemed to be satisfied with respect to Activision if
the Company's counsel renders such opinion to Activision. Activision,
the Company, and the Warrantors agree to make reasonable
representations as requested by such counsel for the purpose of
rendering such opinion;
(g) Activision receiving separately from KPMG Peat Marwick, independent
auditors for Activision, and Xxxxx Xxxxxxxx, independent auditors of
the Group, letters dated the date of Completion (which may contain
customary qualifications and assumptions) to the effect that KPMG Peat
Marwick and Xxxxx Xxxxxxxx respectively concur with Activision's
management's conclusion that no conditions exist relating to
Activision, the Company or the transactions contemplated by this
Agreement that would preclude Activision from accounting for the share
exchange as a Pooling Arrangement; and
(h) the Bank of Scotland having formally waived any event of default
arising under the terms of its facility agreement dated 28 June 1996
by reason of change of control and having provided letters of non
crystallisation in relation to Group debentures granted to them.
17
2.3
(a) The Warrantors shall (so far as it lies within their powers) use all
reasonable endeavours to procure that the Conditions referred to in
sub-clauses 2.2(a), (b), (c), (d), (e), (g), and (h) are satisfied as
soon as possible and in any event not later than 26 November 1997 (or
such later date as the parties may agree).
(b) Activision shall (so far as it lies within its powers) use all
reasonable endeavours to procure that the Conditions referred to in
sub-clause 2.1(a),(b) and (c) and 2.2 (f) are satisfied as soon as
possible and in any event not later than 26 November 1997 (or such
later date as the parties may agree).
2.4 If any of the Conditions is not satisfied in full by the date specified in
sub-clause 2.3 then (in the case of the Conditions specified in sub-clause
2.1) the Warrantors and (in the case of the Conditions specified in
sub-clauses 2.2) Activision shall be entitled at its (or as the case may
be) their option either (in all cases prior to Completion):
(a) to waive the unsatisfied Condition; or
(b) to extend the period for satisfying the unsatisfied Condition until 1
December 1997; or
(c) to treat this Agreement as terminated:
(i) without prejudice to the fact that in the event of termination by
Activision, Activision reserves any rights it may have against
the Warrantors for breach if the Warrantors have not complied
with their obligations in clause 2.3(a); and
(ii) without prejudice to the fact that in the event of termination by
the Warrantors, the Warrantors reserve any rights they may have
against Activision for breach if Activision has not complied with
its obligations in clause 2.3(b).
PROVIDED THAT the party exercising the rights of termination referred
to in clause 2.4 shall have complied with its own respective
obligations in clause 2.3(a) or 2.3(b) (as the case may be).
3. TRANSFER AND EXCHANGE
3.1 Subject to the terms of this Agreement, the Shareholders shall transfer to
Activision with effect from the date on which this Agreement becomes
unconditional, the Company Shares with:
(a) full title guarantee (but free from all claims, charges, liens and
encumbrances (whether monetary or not)); and
18
(b) all rights attaching to or accruing to them on or after the date on
which this Agreement becomes unconditional (including all dividends
and distributions declared, paid or made after that date save for the
Dividends which will be paid by the Company in the ordinary course).
3.2 Subject to the terms of the Agreement, the Share Option shall be terminated
pursuant to the Termination Deed.
3.3 Each of the Shareholders waives all rights of pre-emption and redemption
over any of the Company Shares conferred on him by the Articles or in any
other way and undertakes to take all steps necessary to waive any rights of
pre-emption and redemption over any of the Company Shares. Each of the
Shareholders also waives any right he may have to receive any 'Approved
Offer' as defined in the Articles.
3.4 Activision shall not be obliged to complete the exchange unless the
transfer and exchange of all the Company Shares are completed
simultaneously.
4. CONSIDERATION
4.1 The Consideration payable to the Shareholders is the issuance by Activision
to the Shareholders of the Consideration Stock, credited as fully paid to
the Shareholders in the manner and proportions as set out in Schedule 1.
4.2 The Consideration payable to Xxxx is the issuance to Xxxx by Activision of
the Xxxx Options.
4.3 The Consideration Stock shall rank in all respects with the common stock
par value $0.000001 per share in the capital of Activision ("COMMON STOCK")
in issue immediately prior to the allotment and issue of the Consideration
Stock.
5. THE STOCK AND OPTION RETENTION
5.1 In order to ensure that the Surviving Shareholders' Warranties made by the
Warrantors under this Agreement (which are surviving Completion) are not
breached, and in order to provide a source of indemnification to Activision
pursuant to any Claims, (a) the Shareholders agree that the certificates
representing 7.5% of the total number of shares of Consideration Stock
issued to the Shareholders pursuant to clause 4 ("THE RETAINED STOCK") and
(b) Xxxx agrees that a Xxxx Option Agreement with respect to 7.5% of the
total number of the Xxxx Options (and the Xxxx Options represented thereby)
(the "RETAINED OPTIONS") shall be deposited with the Escrow Agent in an
escrow account ("THE ESCROW ACCOUNT") pursuant to the Escrow Agreement on
the date of Completion to provide a source from which Activision can be
reimbursed for any Claim. Any Option Stock issued upon exercise of
Retained Options shall be treated in the same manner as Retained Stock.
19
5.2 Such Retained Stock and Retained Options shall be held in the Escrow
Account during such period of time as set forth in the Escrow Agreement
("THE HOLD PERIOD"). Any dividends and distributions with respect to such
Retained Stock and any Option Stock issued upon the exercise of the
Retained Options while held in the Escrow Account shall also be retained in
the Escrow Account until the expiration of the Hold Period. Any offsets or
deductions made from Retained Stock or Retained Options held in the Escrow
Account on account of any breach shall be made on the last business day of
the Hold Period, or at such other time as set forth in the Escrow
Agreement, and shall be based upon a market price per share of
Consideration Stock of $15.5625 and dollar/sterling exchange rate of
$1.6918 per L1 . The value of each Retained Option for these purposes
shall be $15.5525. All Retained Stock and Retained Options subject to such
offset or deduction shall be cancelled by Activision and the remaining
Retained Stock and Retained Options together with any dividends paid or
distributions made with respect to such Retained Stock and Option Stock
issued to Xxxx upon the exercise of Retained Options that have not been
cancelled shall be then delivered to the Shareholders and Xxxx in
accordance with their respective interests.
5.3 The cancellation by Activision of any Retained Stock and Retained Options
contained in the Escrow Account in respect of any Claim shall not prejudice
its right to recover any further sum due to it for that or any other Claim
not satisfied by the Escrow Account.
6. PRE-COMPLETION OBLIGATIONS
6.1 The Warrantors shall procure that, between the date of this Agreement and
Completion, each Group Company shall carry on its respective businesses in
the ordinary course and shall not without the consent of Activision do
anything which is not of a routine or unimportant nature or which may
jeopardise the Pooling Arrangement. In particular, and without limitation,
the Warrantors will procure that the Group will not (save in each case with
the prior written consent of Activision):
(a) lend any moneys outside the ordinary course of business;
(b) lend any moneys to any shareholder, director or employee;
(c) borrow any moneys except in relation to the operation of bank
overdrafts within existing limits as required in the ordinary course
of business;
(d) give or allow to exist any further debenture, mortgage, charge or
other encumbrance over any of its assets or undertaking save for a
charge over debts owed by CentreSoft Limited to PDQ Distribution
Limited to be granted by PDQ Distribution Limited to Eidos plc;
(e) enter into any capital expenditure commitments, hire purchase,
leasing, rental or conditional sale agreements or arrangements save
for those entered into in the ordinary course of business;
20
(f) enter into any agreement which is outside the ordinary course of its
business or which is onerous or long term;
(g) declare, make or pay any dividend or other distribution or allot,
issue, grant any options over, redeem, purchase, consolidate, convert,
sub-divide or reduce any share or loan capital or issue any share
warranties or securities convertible into shares;
(h) sell, transfer or otherwise dispose of the whole or any part of its
business, undertakings or assets otherwise than current assets in the
ordinary course of its business or fixed assets not exceeding L25,000
in value in the aggregate;
(i) give any financial or other guarantees, securities or indemnities for
any purpose other than in the ordinary course of business save for the
guarantee to be granted by CentreSoft Limited. to Eidos plc in respect
of the obligations owed by PDQ Distribution Limited to Eidos plc under
the Distribution Agreement dated 28 June 1996;
(j) save for routine debt collection matters commence any litigation or
compromise or settle any claim, dispute or other matter in which it is
involved;
(k) redeem any of the Company Shares or any indebtedness to any Warrantor;
(l) attempt to do any of the matters set out in paragraphs (a) to (k);
6.2 In addition, the Warrantors shall procure that during the period set out in
sub-clause 6.1 and save as expressly contemplated by this Agreement:
(a) no additional director is appointed to the Board of any Group Company;
(b) no resolution is passed by the shareholders of any Group Company;
(c) no change in the terms and conditions of employment of any employee of
any Group Company is made;
(d) no act is performed or omission allowed, either by themselves or by
any Group Company, which would result in any of the Shareholders
Warranties being breached or becoming misleading at any time up to and
including Completion;
(e) each Group Company maintains valid insurance in respect of its
property, assets and business;
(f) each Group Company pays its creditors in the ordinary course of its
business or within the normal terms of payment of such creditors.
7. COMPLETION
21
7.1 Completion shall take place at the offices of Xxxxxxx Xxxxxx on 26 November
1997 (or on such other date, time and place as the parties may agree but,
in any event, no later than 1 December 1997).
7.2 On Completion:
(a) the Warrantors shall deliver to Activision:
(i) stock transfer forms, duly completed and executed by the
registered holders, in favour of Activision (or as it may
direct) in respect of the Company Shares together with
the relevant share and stock certificates;
(ii) letters of non-crystallisation dated not earlier than the
second business day immediately preceding Completion from
the holders of all outstanding floating charges given by
any Group Company including without limit those given to
Bank of Scotland plc;
(iii) A Deed of Release executed by Close Investment Management
Limited on behalf of Close Investment 1994 Fund in relation
to the security granted to the Investor Shareholder by any
Group Company in support of the Loan Stock Deed or any other
matter together with the original copies of such security
documentation;
(iv) evidence to the satisfaction of Activision that:
(aa) the Termination Deed has been executed by Xxxx and the
Company;
(bb) the shareholders and subscription agreement dated 28
June 1996 between the Shareholders has been
terminated without residual liability of any party
to it;
(cc) Bank of Scotland has waived any event of default arising
under the terms of its facility agreement dated
28 June 1996 by reason of change of control;
(dd) the Xxxx Consultancy Agreement has been terminated by an
agreement in the agreed form;
(v) irrevocable powers of attorney in favour of Activision in
the agreed form executed by each of the registered holders
of the Company Shares or any shares of the Subsidiaries
which are not registered in the name of a Group Company to
enable Activision (pending registration of transfers of
the Shares) to exercise all voting and other rights
attaching to the shares and to appoint proxies for this
purpose;
22
(vi) the certificate of incorporation, any certificates of
incorporation on change of name or re-registration, the
statutory books written up to date, share certificate
books, minute books, and the common seal of each Group
Company;
(vii) all title deeds relating to the Properties including all
documents relating to the Tenancies and, where the
Properties are charged, Forms 53 or receipted legal charges
as appropriate;
(viii) all other papers and documents relating to each Group
Company which are in the possession of or under the control
of the Investor Shareholder or Xxxx delivered at the
Company's premises;
(ix) letters of resignation in the agreed form from Xxxx and
Xxxx Xxxxxx as directors of the Company;
(x) letters of resignation from the auditors of each Group
Company (save Electric Dreams Limited) containing the
statement specified in Section 394(1), Companies Xxx 0000;
(xi) an investment letter from each Warrantor in the agreed form;
(xii) a certificate in the agreed form dated as of the date of
Completion executed by each of the Warrantors certifying
that the representations and warranties of the Warrantors
set out in this Agreement were true and correct as at the
date of the execution of this Agreement and are true and
correct on and as of the date at the Completion as if made
on and as of such date, and that since the Accounts Date
there has been no material adverse change (within the
meaning of such phrase contained in sub-clause 2.2(c)) in
the financial condition, business or operations of the
Company;
(xiii) a copy of the Escrow Agreement duly executed together with
stock powers for Retained Stock;
(xiv) copies of the Accounts and the Management Accounts;
(xv) an opinion from the Warrantors' legal counsel in the
agreed form relating to, inter alia, the good standing of
the Company and other matters reasonably requested by
Activision;
(xvi) the Xxxx Option Agreements duly executed by Xxxx;
(xvii) duly executed Restrictive Covenant Deeds by all Employee
Shareholders.
23
(b) The Shareholders shall repay all moneys (if any) then owing by them to
any Group Company whether due and payable or not.
(c) The Employee Shareholders shall enter into the Service Agreements.
(d) The Warrantors shall procure that a board meeting of the Company is
held at which it is resolved to approve the stock transfers referred
to in Clause 7.2 (a)(i) and (subject to them being stamped) registered
in the books of the Company.
(e) The Warrantors shall procure that such further board meetings of each
Group Company (save for Electric Dreams Limited) are held at which:
(i) the persons nominated by Activision are appointed as
directors of each Group Company;
(ii) the accounting reference date of each Group Company is
changed to 31 March;
(iii) Xxxxx Xxxxxxxx resign from their office as auditors to each
Group Company and KPMG Peat Marwick are appointed in their
place;
(iv) the execution and completion of the other documents to be
entered into by each Group Company under this Agreement is
approved; and
(f) The Warrantors shall produce the Accounts certified by Xxxxx Xxxxxxxx
in a form suitable for filing with the SEC on Form 8-K.
(g) When the Warrantors have complied with the provisions of sub-clauses
(a)-(f) inclusive, Activision shall:
(i) subject to (ii) below procure the allotment and issue of
the Consideration Stock to the Shareholders in proportions
set out in Schedule 1;
(ii) deliver certificates in respect of the Retained Stock to
the Escrow Agent to be held in the Escrow Account;
(iii) enter into the Xxxx Option Agreements;
(iv) deliver the Xxxx Option Agreement representing the
Retained Options to the Escrow Agent;
(v) enter into the Escrow Agreement;
(vi) enter into the Restrictive Covenant Deeds; and
24
(vii) deliver a copy of a resolution adopted by the board of
Activision approving the transactions contemplated by this
Agreement, certified by the company Secretary.
7.3 If any of the requirements of sub-clause 7.2 are not complied with on the
date set for Completion under sub-clause 7.1, Activision (in the case of
the requirements of sub-clauses 7.2 (a) - (f) inclusive) or the Warrantors
(in the case of the requirements of sub-clause 7.2(g)) may:
(a) defer Completion to a date not later than 1 December 1997 or such
later date as the parties may agree (in which case the provisions of
this sub-clause shall also apply to Completion as so deferred); or
(b) proceed to Completion so far as practicable but without prejudice to
any other rights which it or they may have under this Agreement or any
appropriate law; or
(c) treat this Agreement as terminated without prejudice to the fact that
the terminating party reserves any rights it or they may have to claim
damages against the non-terminating party for breach by such
non-terminating party for not complying with its or their respective
obligations under sub-clause 7.2.
save that if Activision terminates the Agreement by reason only of the
Warrantors failing to comply with clause 7.2(f) Activision shall have no
claim for damages against the Warrantors.
8. RESTRICTION ON SALE OF THE CONSIDERATION STOCK AND OPTION STOCK
8.1 The Warrantors acknowledge and agree that the Consideration Stock and the
Option Stock will be issued to the Warrantors without registration under
the United States Securities Act of 1933, as amended (the "SECURITIES
ACT"), based upon the "private offering exemption", in reliance upon
appropriate written representations from the Warrantors (as set forth in
their respective Investment Letters in the agreed form), further evidenced
by the restrictive wording on the certificates representing Consideration
Stock and Option Stock and "stop transfer" instructions to Activision's
transfer agent. The Consideration Stock and Option Stock will constitute
"restricted securities" within the meaning of the Securities Act and
related rules and regulations. Notwithstanding the provisions of the
Securities Act, the Warrantors acknowledge and agree that the Warrantors
shall not have the right to sell, pledge, gift, hypothecate or otherwise
dispose of the Consideration Stock and Option Stock until the issuance by
Activision of its first earnings press release containing thirty (30) days
of combined operations of Activision and the Group.
25
8.2 Activision shall upon declaration of effectiveness of the Registration
Statement (as defined in sub-clause 9.1(c) of this Agreement) procure that
its corporate legal counsel issue an opinion and instructions to
Activision's transfer agent to register for transfer, free of restrictive
legends, certificates representing the Consideration Stock and Option Stock
upon sale or transfer thereof by the Warrantors pursuant to the
Registration Statement and compliance by the selling Warrantors with the
prospectus delivery requirements of the Securities Act and certification to
the transfer agent of such compliance.
9. REGISTRATION OF THE CONSIDERATION STOCK AND OPTION STOCK
9.1 Activision acknowledges that the Warrantors are likely to seek to sell some
or all of their Consideration Stock or Option Stock at the earliest time
permitted. Activision therefore undertakes to use its best endeavours to
file with the SEC:-
(a) notification of the acquisition of the Company on Form 8-K on or
before 5 December 1997;
(b) financial statements for Form 8-K (including the Company's audited
financial statements for the last fiscal year and the Company's
unaudited financial statements for the quarters ended 31 October 1997)
prior to 29 December 1997;
(c) a registration statement on Form S-3 ("THE REGISTRATION STATEMENT") or
on such other available form which may be mutually acceptable to the
parties as soon as reasonably practicable after Completion and in any
case prior to the later of (i) 5 January 1998, or (ii) five business
days after the filing referred to in 9.1(b) above, registering under
the Securities Act, pursuant to Rule 415 under the Securities Act, if
available, for the offer and sale in the future of up to all of the
Consideration Stock and Option Stock issued by Activision pursuant to
this Agreement and the Xxxx Option Agreements.
9.2 Activision agrees:-
(a) to use its best endeavours to release its earnings report for the
quarter ended 31 December 1997 (provided that the Company closes its
books for the quarter ended 31 December 1997 by 10 January 1998) prior
to the later of (i )23 January 1998 and (ii) thirteen days after the
Company closes its books for the quarter ended 31 December 1997;
(b) to use its commercially reasonable efforts to cause the Registration
Statement to be declared effective by the SEC within a time frame
which is as soon as practicable in the circumstances;
(c) to maintain the effectiveness of the Registration Statement or
successor registration statement filed by Activision for the purpose
of registering the Consideration Stock and Option Stock until the
Consideration Stock and Option
26
Stock is eligible to be resold without restrictions on disposition
pursuant to the Securities Act and its related rules and regulations;
(d) update the prospectus included in the Registration Statement ("THE
PROSPECTUS") from time to time as may be necessary to ensure that the
Prospectus does not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
Prospectus not misleading and to ensure that the Prospectus is current
and can at all times be used during the 20 trading days following the
first day the Warrantors are able to sell the Consideration Stock and
Option Stock to the public in the United States pursuant to this
Agreement; and
(e) provide such number of copies of the Registration Statement and the
Prospectus (as so updated) to the Warrantors as they may reasonably
request in order to facilitate the public sale or other disposition of
the Consideration Stock and Option Stock covered by such Registration
Statement.
9.3 Activision shall bear the costs incurred for its legal counsel, accounting
and all other costs and expenses, excluding costs for legal counsel for the
Warrantors which may be incurred in connection with the preparation and
filing of the Registration Statement pursuant to this clause 9. The
Warrantors shall be responsible for all costs associated with selling or
disposing of the Consideration Stock and Option Stock (including brokers'
commissions and underwriting fees) and all fees and expenses for their
counsel, accountants and other advisors.
9.4 The rights in this clause 9 are not assignable to any transferee of
Consideration Stock or Option Stock acquired by the Warrantors in
connection with this Agreement.
9.5 The Warrantors severally agree that they will provide all required
co-operation and furnish all necessary information and enter into such
agreements customarily required of selling stockholders in connection with
the preparation of the Registration Statement filed under the terms of
sub-clause 9.1 and the Warrantors, severally, will represent and warrant
the accuracy and completeness of all written information so furnished by
them for inclusion in the Registration Statement and will indemnify and
hold Activision, and its directors, officers, shareholders, controlling
persons (within the meaning of the Securities Act) and underwriters
harmless from and against any liability, loss, damage or expense (including
costs and attorney's fees), incurred by or sustained by, or asserted
against any of them, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in the information
provided by the Warrantors or based on any omission (or alleged omission)
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
9.6 Activision will indemnify and hold the Warrantors (and their controlling
persons, if any, within the meaning of the Securities Act) harmless from
and against any liability, loss, damage or expense (including costs and
attorney's fees), incurred or sustained by, or asserted against, any of
them ("DAMAGES") arising out of or based on any untrue
27
statement (or alleged untrue statement) of a material fact in the
Registration Statement, or based on any omission (or alleged omission) to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading, other than in respect of any such
Damages arising out of any written information furnished by the
Warrantors pursuant to clause 9.5 for inclusion in the Registration
Statement.
9.7 In the event it is determined by a Court of competent jurisdiction that
Activision has breached Clause 9.1(c) or 9.2(a), the parties agree that
the Court may consider (but shall not be bound to consider), in assessing
damages, if any, any reduction in market value of the Consideration Stock
and Option Stock from the date the Warrantors should have been able to
sell the Consideration Stock and Option Stock had Activision not breached
such clause or clauses and the date on which the Warrantors were actually
able to sell the Consideration Stock and Option Stock. The parties
confirm that Activision shall be liable for damages for breach of
covenant only if the breach is proved and only to the extent awarded by
the Court. The parties also agree that a reduction in market value is
appropriately measured by reference to changes in the market price of
Activision stock and changes in the $/L exchange rate.
10. RELEASE OF GUARANTEES
The Warrantors shall on Completion procure the release of a Group Company
from any Guarantee given by such Group Company in respect of any
obligations of any Warrantor or Warrantor Associate and shall indemnify
Activision against all liability arising after Completion in respect of
it.
11. WARRANTIES
11.1 SHAREHOLDERS' WARRANTIES
(a) The Warrantors severally represent and warrant to Activision that
each of the Shareholders Warranties to be given by them
respectively is true and accurate in all respects and not
misleading at the date of this Agreement and will continue to be
true and accurate in all respects and not misleading up to and
including Completion.
(b) The Warrantors severally represent and warrant to Activision that
each of the Surviving Shareholders Warranties to be given by them
is true and accurate in all respects and not misleading at the
date of this Agreement and will continue to be true and accurate
in all respects and not misleading up to and including
Completion.
(c) The Warrantors acknowledge that they give the Shareholders
Warranties and Surviving Shareholders' Warranties with the
intention of inducing Activision to enter into this Agreement and
that Activision does so in reliance upon the Shareholder
Warranties.
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(d) Each of the Shareholder Warranties and Surviving
Shareholders'Warranties is a separate and independent warranty
and shall not be limited by reference to any other warranty or
anything in this Agreement.
11.2 ACTIVISION WARRANTIES
(a) Activision represents and warrants to the Warrantors that each of
the Activision Warranties to be given by it is true and accurate
in all respects and not misleading at the date of this Agreement
and will continue to be true and accurate in all respects and not
misleading up to and including Completion.
(b) Activision acknowledges that it gives the Activision Warranties
with the intention of inducing the Warrantors to enter into this
Agreement and that the Warrantors do so in reliance on the
Activision Warranties.
(c) Each of the Activision Warranties is a separate and independent
warranty and shall not be limited by reference to any other
Activision Warranty or anything in this Agreement.
12. WARRANTORS' REMEDIES
12.1 Activision undertakes to disclose in writing to the Warrantors anything
which is or may constitute a claim by the Warrantors against Activision
under the Activision Warranties directly after it comes to the notice of
it either before, at the time of, or after Completion.
12.2 If between the date of this Agreement and Completion the Warrantors
become aware that there has been a material breach of the Activision
Warranties or any other term of the Agreement by Activision, the
Warrantors shall be entitled to rescind this Agreement by notice in
writing to Activision.
13. ACTIVISION'S REMEDIES
13.1 Each of the Warrantors undertakes to disclose in writing to Activision
anything which is or may constitute a Claim or which is or may be
inconsistent with the contents of the Disclosure Letter directly after it
comes to the notice of any of them either before, at the time of, or
after Completion.
13.2 If, between the date of this Agreement and Completion, Activision becomes
aware that there has been any material breach of the Shareholders
Warranties or any other term of this Agreement Activision shall be
entitled to rescind this Agreement by notice in writing to the
Warrantors. The rescission of this Agreement by Activision pursuant to
Clause 13.2 for breach of any Shareholders' Warranty (other than a
Surviving Shareholders' Warranty) shall be Activision's sole and
exclusive remedy for any material breach of that Warranty.
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13.3 The rights and remedies of Activision in respect of any breach of the
Surviving Shareholders Warranties shall not be affected by Completion or
by any investigation made, or which could have been made, by it or on its
behalf into the affairs of any Group Company save as disclosed in the
Disclosure Letter.
13.4 If, in respect of or in connection with any Claim, any amount payable to
Activision by the Warrantors is subject to Taxation, the amount to be
paid to Activision by the Warrantors shall be such as to ensure that the
net amount received by Activision is equal to the full amount which would
be payable to Activision had the amount not been subject to Taxation due
credit being given to the Warrantors for any associated tax credit.
13.5 If any Claim is made then:
(a) Activision shall make and pursue such Claim against all and not
some of the Warrantors; and
(b) no Warrantor shall make any claim against any Group Company or
any director or employee of any Group Company on whom he may have
relied before agreeing to any terms of this Agreement or
authorising any statement in the Disclosure Letter.
This sub-clause shall not preclude any Warrantor from claiming against
any other Warrantor under any right of contribution or indemnity to which
he may be entitled.
13.6 If the Warrantors commit a breach of any Surviving Shareholders' Warranty
and:
(a) the value of any Group Company is less than it would have been at
Completion in the absence of the breach; or
(b) the value of the Company's shares or of any Group Company's
assets is less than it would have been at Completion in the
absence of the breach; or
(c) any Group Company has incurred or will in future incur any
liability which it would not have incurred, or which exceeds the
liability it would have incurred, had matters been as warranted;
or
(d) any Group Company suffers or incurs any loss, costs or expenses
(including legal costs) which it would not have suffered/incurred
in the absence of a breach of warranty and/or had matters been as
warranted;
then, without prejudice to any other rights and remedies to which
Activision may be entitled, the Warrantors shall, on demand being made by
Activision, pay to Activision by way of damages an amount equal to the
said diminution in value or liability or excess liability and the said
loss, costs or expenses.
13.7 The Warrantors shall indemnify Activision against all costs (including
legal costs on an indemnity basis as defined in Order 62 of the Rules of
the Supreme Court), expenses or
30
other liabilities which Activision may reasonably incur either before or
after the commencement of any action in connection with:
(a) the settlement of any Claim;
(b) any legal proceedings in respect of any Claim in which judgement
is given for Activision; or
(c) the enforcement of any such settlement or judgement.
13.8 Any amount paid by the Shareholders to Activision in respect of any of
the provisions of this Agreement shall be treated by the Warrantors as
paid to Activision by way of pro rata reduction in the Consideration.
14. LIMITATIONS ON LIABILITY
14.1 The Warrantors shall not be liable in respect of any Claim under the
Surviving Shareholders Warranties to the extent that the matter or
matters giving rise to such Claim are fairly disclosed in the Disclosure
Letter.
14.2 The aggregate maximum liability of the Warrantors in respect of a Claim
or Claims under the Surviving Shareholders Warranties or a claim under
Clause 13.1 shall in no event exceed L2,680,000 (inclusive of any
liability of the Warrantors to contribute to Activision's costs of
pursuing such Claim or Claims or claim under Clause 13.1) and the
aggregate maximum liability of each Warrantor in respect of a Claim or
Claims or claim under Clause 13.1 shall not exceed his Relevant
Percentage (as defined below) of L2,680,000.
14.3 For the purposes of clauses 14.2 the expression "his Relevant Percentage"
shall mean in relation to each Warrantor the percentage set against his
name in Part III of Schedule 1;
14.4 The Warrantors shall not be liable in respect of any Claim where the
amount of such Claim does not exceed L15,000.
14.5 The Warrantors shall not be liable in respect of Claims made by
Activision unless and until the aggregate cumulative liability of the
Warrantors in respect of such Claims (including for these purposes Claims
in respect of which the Warrantors do not have any liability pursuant to
the provisions of clause 14.4) exceeds L175,000 in which event the
Warrantors shall be liable for the entire amount of such liability
excluding for these purposes Claims in respect of which the Warrantors do
not have any liability pursuant to the provisions of clause 14.4.
14.6 The Warrantors shall not be liable in respect of any Claim unless it
shall have been made before the expiry of one year from Completion.
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14.7 No Claim shall be deemed to have been made unless notice of such Claim
was made in writing to the Warrantors specifying in reasonable detail
the event of default to which the Claim relates and the nature of the
breach and the amount claimed (to the extent ascertainable by
Activision).
14.8 Any Claim in respect of which notice shall have been given in accordance
with clause 14.7 shall be deemed to have been irrevocably withdrawn and
lapsed (not having been previously satisfied, settled or withdrawn) if
proceedings in respect of such Claim have not been issued and served on
the Shareholders not later than the expiry of the period of 12 months
after the date of such notice.
14.9 Where Activision and/or any Group Company is or is likely to be entitled
to recover from some other person any sum in respect of any matter
giving rise to a Claim then Activision shall procure that reasonable
steps are taken to enforce such recovery (subject to Clause 15) and if
any sum is so recovered then either the amount payable by the Warrantors
in respect of that Claim shall be reduced by an amount equal to the sum
so recovered (less the reasonable costs and expenses of recovering it)
or (if any amount shall already have been paid by any of the Warrantors
in respect of that Claim) there shall be repaid to the Warrantors an
amount equal to the amount so recovered (less the reasonable costs and
expenses of its recovery) or (if less) the amount of such payment.
14.10 Without prejudice to the generality of clause 14.9 above the provisions
of clause 14.9 shall apply where any Group Company is entitled to
recover from its insurers any sum in respect of any matter giving rise
to a Claim.
14.11 The Shareholders shall have no liability (or such liability shall be
reduced) in respect of any Claim:-
(a) if and to the extent that provision or reserve for or in respect
of the liability or other matter giving rise to such Claim has
been made in the Accounts or in the Management Accounts;
(b) if and to the extent any liability of any Group Company included
in the Accounts has been discharged or satisfied below the amount
attributed to it or included in respect of it in the Accounts or
in the Management Accounts;
(c) if and to the extent any contingency or other matters provided
against it in the Accounts or in the Management Accounts has in
the event been over-provided for less the extent to which any
contingency or other matters have been under-provided for;
(d) if and to the extent such Claim occurs or is increased as a
result of any change in legislation after the date of this
Agreement (or any legislation not in force at the date of this
Agreement) which takes effect retrospectively or the withdrawal
after
32
the date of this Agreement of any published concession or
published general practice previously made by the Inland Revenue
or other taxing authority;
(e) if and to the extent that such Claim occurs or is increased as a
result of any increase in the rate of Taxation in force at the
date of this Agreement;
(f) if and to the extent that any Claim occurs as a result of or is
otherwise attributable to Activision or any Group Company
disclaiming any part of the benefit of capital or other
allowances against Taxation claimed or proposed to be claimed on
or before the date of this Agreement;
(g) if and to the extent that such Claim is attributable to any
voluntary act or omission of or transaction or arrangement
carried out by Activision or any Group Company after the
Completion Date otherwise than in the ordinary course of business
which act, omission, transaction or arrangement Activision was
aware from the Disclosure Letter would otherwise give rise to a
Claim;
(h) if and to the extent that such Claim would not have arisen or
would have been reduced or eliminated but for the failure or
omission on the part of Activision or any Group Company to make
any claim, election, surrender or disclaimer or give notice or
consent to any other thing under the provisions of any enactment
or regulation relating to Taxation after Completion the making
giving or doing of which was taken into account in computing the
provision for taxation in the Accounts;
(i) if and to the extent that such Claim relates to a liability for
Taxation which would not have arisen but for any winding up or
cessation after Completion of any trade or business carried on by
any Group Company;
(j) if and to the extent that such Claim would not have arisen but
for a change of accounting policy or practice of any Group
Company after Completion other than to bring such company into
line with UK generally accepted accounting principles;;
(k) if and to the extent that such Claim relates to a liability for
Taxation for which any Group Company is or may become liable
wholly or primarily as a result of transactions in the ordinary
course of business after the Accounts Date;
(l) if and to the extent that such Claim would not have arisen but
for the termination of the Share Option pursuant to this
Agreement or for the payment of L500,000 to EIDOS plc as a result
of the transactions contemplated by this Agreement.
14.12 The amount of any Claim shall take into account the amount of any relief
from Taxation arising by virtue of the loss or damage in respect of
which the Claim was made.
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14.13 Nothing in this clause shall derogate from Activision's obligation to
mitigate any loss which it suffers in consequence of a Claim.
14.14 If in respect of any Claim the liability of the Warrantors is contingent
only, then the Warrantors shall not be under any obligation to make any
payment to Activision until such time as the contingent liability ceases
to be contingent and becomes actual provided that the provisions of
clause 14.8 shall not apply to such claim whilst such liability remains
contingent.
15. CONDUCT OF CLAIMS
15.1 Activision shall notify the Warrantors as soon as reasonably practicable
in writing of:
(a) any claim made against it or a Group Company by a third party
which may give rise to a Claim; and
(b) any claim which it is aware any Group Company is entitled to
bring against a third party which claim is based on circumstances
which may give rise to a Claim.
each of the above being hereinafter called a "THIRD PARTY CLAIM".
15.2
(a) In respect of a Third Party Claim or Third Party Claims which the
Purchaser, acting reasonably, believes individually or in the
aggregate with all other Third Party Claims may exceed
L2,680,000, the Purchaser shall consult with a representative
appointed by the Investor Shareholder and with Xxxxxxx Xxxxxx
acting together on behalf of the Warrantors in connection with
such Third Party Claim but such consultation shall be
non-binding. Subject to its obligation to consult, Activision
shall have control of the conduct, negotiation, settlement and
litigation of such Third Party Claims.
(b) In connection with a Third Party Claim or Third Party Claims
which Activision, acting reasonably, believes individually or in
the aggregate with all other Third Party Claims may be for less
than L2,680,000 Activision shall procure that the conduct,
negotiation, settlement or litigation of the claim by or against
such third party is, so far as is reasonably practicable, carried
out in accordance with the wishes of a representative appointed
by the Investor Shareholder and of Xxxxxxx Xxxxxx acting together
on behalf of the Warrantors and at their cost subject to their
giving timely instructions to Activision and providing reasonable
security for any costs and expenses which might be incurred by
Activision or a Group Company.
15.3 Activision shall not be liable for any delay in giving any notice under
sub-clause 15.1 unless the Warrantors have been materially prejudiced by
such delay, in which case in assessing damages in respect of any Claim
credit shall be given to the Warrantors in
34
respect of any damages which would not have arisen pursuant to such
Claim but for such delay.
15.4 Activision shall provide and shall procure that each Group Company
provides to the Warrantors and the Warrantors professional advisers
reasonable access to premises and personnel and to any relevant assets,
documents and records within their power, possession or control for the
purpose of investigating any Claim and enabling the Warrantors to take
the action referred to in sub-clause 15.2 and shall allow the Warrantors
and their advisers to take copies of any relevant documents or records
at their expense.
16. [INTENTIONALLY DELETED]
17. GENERAL
17.1 ENTIRE AGREEMENT AND CONFLICTS
This Agreement sets out the entire agreement and understanding between
the parties in respect of the subject matter of this Agreement.
17.2 ASSIGNMENT
(a) This Agreement shall be binding upon and enure for the benefit of
the successors in title of the parties but, except as set out in
sub-clause (b), shall not be assignable by any party without the
prior written consent of the other.
(b) Activision may assign the benefit of this Agreement (including,
without limitation, the Warranties) to any subsidiary of
Activision.
17.3 VARIATION
No purported variation of this Agreement shall be effective unless it is
in writing and signed by or on behalf of each of the parties.
17.4 EFFECT OF COMPLETION
Except to the extent already performed, all the provisions of this
Agreement shall, so far as they are capable of being performed or
observed, continue in full force and effect notwithstanding Completion.
17.5 INVALIDITY
To the extent that any provision of this Agreement is found by any court
or competent authority to be invalid, unlawful or unenforceable in any
jurisdiction, that provision shall be deemed not to be a part of this
Agreement, it shall not affect the enforceability of the
35
remainder of this Agreement nor shall it affect the validity, lawfulness
or enforceability of that provision in any other jurisdiction.
17.6 RELEASES AND WAIVERS
(a) The rights, powers and remedies conferred on Activision by this
Agreement and remedies available to it are cumulative and are
additional to any right, power or remedy which it may have under
general law or otherwise.
(b) Activision may, in whole or in part, release, compound,
compromise, waive or postpone, in its absolute discretion, any
liability owed to it or right granted to it in this Agreement by
any other party or parties without in any way prejudicing or
affecting its rights in respect of that or any other liability or
right not so released, compounded, compromised, waived or
postponed.
(c) No single or partial exercise, or failure or delay in exercising
any right, power or remedy by Activision shall constitute a
waiver by it of, or impair or preclude any further exercise of,
that or any right, power or remedy arising under this Agreement
or otherwise.
17.7 FURTHER ASSURANCE
After Completion, each party shall execute such documents and take such
steps as the other party may reasonably require to fulfil the provisions
of and to give to each party the full benefit of this Agreement.
17.8 COUNTERPARTS
(a) This Agreement may be executed in any number of counterparts and
by the parties on separate counterparts, but shall not be
effective until each party has executed at least one counterpart.
(b) Each counterpart, when executed, shall be an original of this
Agreement and all counterparts shall together constitute one
instrument.
17.9 RESTRICTIVE TRADE PRACTICES ACTS 1976 AND 1977
No provision of this Agreement, or of any agreement or arrangement of
which it forms part, which is subject to registration under the
Restrictive Trade Practices Acts 1976 and 1977 shall take effect until
the day after the date on which particulars of this Agreement, and/or
any agreement or arrangement of which it forms part, have been supplied
to the Director-General of Fair Trading in accordance with those Acts
and the parties agree to use their respective reasonable endeavours to
furnish such particulars by the first business day following Completion
of this Agreement.
17.10 TERMINATION
36
Without prejudice to any remedy available to any party arising out of
any outstanding breach of this Agreement on the part of any other party
(including for the avoidance of doubt and without limitation the rights
contained in sub-clauses 2.4 and 7.3(c)), if this Agreement is
terminated in accordance with its terms by reason of a breach by one of
the parties of clause 2.3, the following shall occur:
(a) (if the Agreement is properly terminated by Activision) the
Warrantors shall indemnify Activision for all costs, charges and
expenses incurred by it in connection with the negotiation,
preparations and determination or rescission of this Agreement
and all matters which this Agreement contemplates and (except as
referred to in sub-clause (b)) all obligations of Activision
under this Agreement shall cease and (if the Agreement is
properly terminated by the Warrantors) Activision shall indemnify
the Warrantors for all costs, charges and expenses incurred by
them in connection with the negotiation, preparations and
determination or rescission of this Agreement and all matters
which this Agreement contemplates and (except as referred to in
sub-clause (b)) all obligations of the Shareholders under this
Agreement shall cease;
(b) the provisions contained in clauses 1, 2, 7, 17.10, 17.11, 17.12,
18, 19, 20 and 21 shall continue to apply.
17.11 CONFIDENTIALITY
(a) Except as referred to in sub-clause (b), each party shall treat
as strictly confidential all information received or obtained as
a result of entering into or performing this Agreement which
relates to the provisions or subject matter of this Agreement, to
any other party or the negotiations relating to this Agreement.
(b) Any party may disclose information which would otherwise be
confidential if and to the extent:
(i) it is required to do so by law or any securities exchange
or regulatory or governmental body to which it is subject
wherever situated;
(ii) it considers it necessary to disclose the information to
its professional advisers, auditors and bankers provided
that it does so on a confidential basis;
(iii) the information has come into the public domain through
no fault of that party; or
(iv) each party to whom it relates has given its consent in
writing.
17.12 DEFAULT INTEREST
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If any party defaults in the payment when due of any sum payable under
this Agreement (whether payable by agreement or by an order of a court
or otherwise), the liability of that party shall be increased to include
interest on that sum from the date when such payment was due until the
date of actual payment at a rate per annum of 4 per cent. above the base
rate from time to time of National Westminster Bank Plc. Such interest
shall accrue from day to day and shall be compounded annually.
18. ANNOUNCEMENTS
18.1 Except as referred to in sub-clauses 18.2 and 18.3, no announcement
concerning the terms of this Agreement shall be made by or on behalf of
any of the parties without the prior written consent of a representative
of the Investor Shareholder and Xxxxxxx Xxxxxx, acting together on
behalf of the Warrantors, and Activision, such consent not to be
unreasonably withheld or delayed.
18.2 Any announcement or circular required to be made or issued by any party
by law or under the regulations of the SEC may be made or issued by that
party without consent if it has first sought consent and given the other
parties a reasonable opportunity to comment on the subject matter and
form of the announcement or circular (given the time scale within which
it is required to be released or despatched).
18.3 The parties acknowledge and consent to Activision issuing a press
release in a form reasonably approved by the Shareholders in relation to
the transaction contemplated by this Agreement promptly after the
execution of this Agreement.
19. COSTS AND EXPENSES
19.1 Except as set out in sub-clause 19.2 and sub-clause 17.10 (Termination)
each party shall bear its own costs and expenses incurred in the
preparation, execution and implementation of this Agreement provided
that Activision shall pay the costs of the Warrantors' legal and
accountancy advisors up to a maximum of L197,796.
19.2 Activision shall pay all UK stamp duty applicable to any document to
which it is a party executed pursuant to this Agreement.
20. NOTICES
20.1 Any notice to a party under this Agreement shall be in writing signed by
or on behalf of the party giving it and shall, unless delivered to a
party personally, be left at, or sent by prepaid first class post (by
airmail if outside the UK), prepaid recorded delivery or facsimile to
the address of the parties as set out on page 1 of this Agreement in the
case of Activision, in Schedule 1, in the case of the Warrantors to
their home addresses set out in Schedule 1. A party may notify the
other parties of change of address of such party for the purposes of
this clause, in which case such revised address shall thereafter be the
address for notice of such party.
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20.2 Except as referred to in sub-clauses 20.3 and 20.4, a notice shall be
deemed to have been served:
(a) at the time of delivery if delivered personally;
(i) 48 hours after posting in the case of an address in the
United Kingdom and 120 hours after posting for any other
address;
(ii) 2 hours after transmission if served by facsimile on a
business day prior to 3pm in the recipient country or in
any other case at 10 am in the recipient country on the
business day after the date of despatch.
20.3 If the deemed time of service is not during normal business hours in the
country of receipt, the notice shall be deemed served at or, in the case
of faxes two hours after the opening of business on the next business
day of that country.
20.4 The deemed service provisions set out in sub-clause 20.2 do not apply
to:
(a) a notice served by post, if there is a national or local
suspension, curtailment or disruption of postal services which
affects the collection of the notice or is such that the notice
cannot reasonably be expected to be delivered within 48 hours or
120 hours (as appropriate) after posting; and
(b) a notice served by facsimile, if, before the time at which the
notice would otherwise be deemed to have been served, the
receiving party informs the sending party that the notice has
been received in a form which is unclear in any material respect,
and, if it informs the sending party by telephone, it also
despatches a confirmatory facsimile within two hours.
20.5 In proving service it will be sufficient to prove:
(a) in the case of personal service, that it was handed to the party
or delivered to or left in an appropriate place for receipt of
letters at its address;
(b) in the case of a letter sent by post, that the letter was
properly addressed, stamped and posted;
(c) in the case of facsimile, that it was properly addressed and
despatched to the number of the party.
20.6 A party shall not attempt to prevent or delay the service on it of a
notice connected with this Agreement.
21. Governing law and jurisdiction
21.1 This Agreement shall be governed by and construed in accordance with
English law.
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21.2 Each of the parties irrevocably submits for all purposes in connection
with this Agreement to the exclusive jurisdiction of the courts of
England.
THIS AGREEMENT has been signed on the date appearing at the head of page 1.
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SCHEDULE 1
PART I
ALLOCATION OF CONSIDERATION STOCK
The allocation of the Consideration Stock and Xxxx Options among the Warrantors
pursuant to clause 4.1 of this Agreement shall be made in the following manner:
1. ALLOCATION OF CONSIDERATION STOCK ON ACCOUNT OF LOAN STOCK
217,405 shares of Consideration Stock shall be issued to the Investor
Shareholder in consideration of the Loan Stock.
2. ALLOCATION OF CONSIDERATION STOCK ON ACCOUNT OF REDEEMABLE PREFERENCE
SHARES
86,962 shares of Consideration Stock shall be issued to the Investor
Shareholder in consideration of the Redeemable Preference Shares.
3. ALLOCATION OF CONSIDERATION STOCK ON ACCOUNT OF CONVERTIBLE PREFERENCE
SHARES
14,494 shares of Consideration Stock shall be issued to the Investor
Shareholder in consideration of the Convertible Preference Shares.
4. ALLOCATION OF CONSIDERATION STOCK ON ACCOUNT OF REDEEMABLE "B" ORDINARY
SHARES (REQUIRED TO BE REDEEMED)
1,976 of Consideration Stock shall be issued to the Investor Shareholder
in consideration of the 18,182 of "B" Ordinary Shares required to be
redeemed in accordance with Article 3(c)(ii) of the Articles
5. ALLOCATION OF CONSIDERATION STOCK ON ACCOUNT OF ORDINARY SHARES, "A"
ORDINARY SHARES AND "B" ORDINARY SHARES (NOT REQUIRED TO BE REDEEMED)
Consideration Stock shall be issued as follows on account of the Company
shares:
NAME COMPANY SHARES CONSIDERATION STOCK
Investor Shareholder 1,426 "B" Ordinary 805,293
- and -
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47,059 "A" Ordinary
Xxxxxx Xxxxxxx Xxxxxxxxxx 24,000 Ordinary 398,619
Xxxxx Xxxx 10,000 Ordinary 166,091
Xxxx Xxxxxxxxxxx Xxxxxxx 6,000 Ordinary 99,655
Xxxxxx Xxxxx Xxxxx 24,000 Ordinary 398,619
Xxxxxxx Xxxxxx Xxxxxx 24,000 Ordinary 398,619
Xxxxx Xxxxxx Swindells 6,000 Ordinary 99,655
Xxxxxx Xxxxxx Varnish 6,000 Ordinary 99,655
6. TREATMENT OF SHARE OPTION
Activision shall issue to Xxxx under the Xxxx Options options to
purchase an aggregate of 50,325 shares of Consideration Stock.
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SCHEDULE 1
PART II
(The Shareholders)
A. THE INVESTOR SHAREHOLDER
NAME ADDRESS NO. OF COMPANY AMOUNT OF
SHARES AT CONSIDERATION
EXCHANGE AND STOCK
COMPLETION
Close Securities 00 Xxxxx Xx. Helen's, 47,059 'A' 1,126,130
Limited Xxxxxx XX0X 0XX Ordinary
Shares
133,333
Convertible
Preference
Shares
800,000
Redeemable
Preference
Shares
L2,000,000
Loan Stock
19,608 "B"
Ordinary
Shares
B. THE EMPLOYEE SHAREHOLDERS
Xxxxxx Xxxxxxx 0 Xxxxxx Xxxx, Xxxxxx 24,000 398,619
Xxxxxxxxxx Xxxxx, Xxxxxxxx X00 Xxxxxxxx
0XX Shares
43
Xxxxx Xxxx 1 Teasal Close, 10,000 166,091
Xxxxxxxx Xxxx, Xxxxx Xxxxxxxx
XX00 0XX Shares
Xxxx Xxxxxxxxxx 5 The Sycamores, Xxxxx 6,000 99,655
Xxxxxxx Close, Walsall Road, Ordinary
Xxxxxx Coldfield B74 Shares
4QL
Xxxxxx Xxxxx Xxxxx 00 Xxxxxxxx Xxxxx, 24,000 398,619
Xxxx Xxxx, Xxxxxx Xxxxxxxx
Xxxxxxxxx X00 0XX Shares
Xxxxxxx Xxxxxx Xxxxxx 000 Xxxxxxx Xxxx, 24,000 398,619
Knowle, Solihill X00 Xxxxxxxx
0XX Shares
Xxxxx Xxxxxx Swindells Amberley, Back Lane, 6,000 99,655
Shustoke, Near Ordinary
Xxxxxxxxx, Xxxx Xxxxxx
Xxxxxxxx X00 0XX
Xxxxxx Xxxxxx Varnish Xxxxxxx House, 6,000 00,000
Xxxxxx Xxxx, Xxxxxxxx
Bitteswell, Shares
Xxxxxxxxxxxxxx XX00
0XX
X. Xxxx
Simon Xxxxxxx Xxxx 0 Xxxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxx,
X00 0XX
44
SCHEDULE 1
PART III
(RELEVANT PERCENTAGES)
NAME RELEVANT PERCENTAGE
Investor Shareholder 39.69%
Xxxxxx Xxxxxxx Xxxxxxxxxx 14.049%
Xxxxx Xxxx 5.854%
Xxxx Xxxxxxxxxxx Xxxxxxx 3.512%
Xxxxxx Xxxxx Xxxxx 14.049%
Xxxxxxx Xxxxxx Xxxxxx 14.049%
Xxxxx Xxxxxx Swidells 3.512%
Xxxxxx Xxxxxx Varnish 3.512%
Simon Xxxxxxx Xxxx 1.773%
TOTAL 100%
45
SCHEDULE 2
(Information concerning the Company)
REGISTERED NUMBER 3136477
DATE OF INCORPORATION 11 December 1995
ADDRESS OF REGISTERED OFFICE Xxxx 0/0 Xxxxxxx Xxx Xxxxxxx
Xxxxxxxxxx X0 0XX
CLASS OF COMPANY Private limited
AUTHORISED SHARE CAPITAL L215,029.97 divided into:
100,000 ordinary shares of 1p each
47,059 "A" ordinary shares of 1p
each
19,608 "B" ordinary shares of 1p
each
133,333 convertible preference
shares of L1 each
800,000 redeemable preference
shares of 10p each
ISSUED SHARE CAPITAL
100,000 ordinary shares of 1p each
47,059 "A" ordinary shares of 1p
each
133,333 convertible preference
shares of L1 each
800,000 redeemable preference
shares of 10p each
19,608 "B" ordinary shares of 1p
each
46
LOAN CAPITAL L2,000,000 15% secured
subordinated loan stock
47
DIRECTORS
FULL NAME USUAL RESIDENTIAL ADDRESS NATIONALITY
Xxxxxx Xxxxx Xxxxx See Schedule 1 British
Simon Xxxxxxx Xxxx See Schedule 1 British
Xxxx Xxxx Xxxxxx 00 Xxxxxxxxx Xxxx, Xxxxxx, Xxxxxxx
X0 0XX
Xxxxxxx Xxxxxx Xxxxxx See Schedule 1 British
Xxxxxx Xxxxxxx Xxxxxxxxxx See Schedule 1 British
SECRETARY
FULL NAME USUAL RESIDENTIAL ADDRESS
Xxx Xxxxxx Xxxx-Xxxx Farm Manager's Xxxxxxx, Xxxxxx Xxxx, Xxxxxxx
Xxxxxxx, Xxxxxxxxxxx XX0 0XX
ACCOUNTING REFERENCE DATE 30 April
TAX RESIDENCE UK
48
SCHEDULE 3
(Information concerning the Subsidiaries)
CENTRESOFT LIMITED
REGISTERED NUMBER 1673860
DATE OF INCORPORATION 26 October 1982
ADDRESS OF REGISTERED OFFICE As the Company
CLASS OF COMPANY Private limited
AUTHORISED SHARE CAPITAL L50,000 divided into:
50,000 ordinary shares of L1 each
ISSUED SHARE CAPITAL L17,862 divided into:
17,862 ordinary shares of L1 each
LOAN CAPITAL None
MEMBERS
FULL NAME REGISTERED ADDRESS NUMBER OF SHARES HELD
Combined See Schedule 2 17,861
Distribution
Holdings Limited
DIRECTORS
FULL NAME USUAL RESIDENTIAL ADDRESS NATIONALITY
Xxxxxx Xxxxx Xxxxx See Schedule 1 British
Xxxxx Xxxx See Schedule 1 British
49
Xxxxxxx Xxxxxx Xxxxxx See Schedule 1 British
Xxxxx Xxxxxx Swindells See Schedule 1 British
Xxxxxx Xxxxxx Varnish See Schedule 1 British
Xxxxxx Xxxxxxx See Schedule 1 British
Xxxxxxxxxx
SECRETARY
FULL NAME USUAL RESIDENTIAL ADDRESS
Xxxxxx Xxxxx Xxxxx See Schedule 1
TAX RESIDENCE UK
PDQ DISTRIBUTION LIMITED
REGISTERED NUMBER 2105582
DATE OF INCORPORATION 3 March 1987
ADDRESS OF REGISTERED OFFICE As the Company
CLASS OF COMPANY Private Limited
AUTHORISED SHARE CAPITAL L100 divided into:
100 ordinary shares of L1 each
ISSUED SHARE CAPITAL L100 divided into:
100 ordinary shares of L1 each
50
LOAN CAPITAL None
51
MEMBERS
FULL NAME REGISTERED ADDRESS NUMBER OF SHARES
HELD
Centresoft Limited As the Company 100
DIRECTORS
FULL NAME USUAL RESIDENTIAL ADDRESS NATIONALITY
Xxxxxx Xxxxx Xxxxx As Schedule 1 British
Xxxx Xxxxxxxxxxx Xxxxxxx As Schedule 1 British
Xxxxxxx Xxxxxx Xxxxxx As Schedule 1 British
Xxxxxx Xxxxxx Varnish As Schedule 1 British
Xxxxxx Xxxxxxx Xxxxxxxxxx As Schedule 1 British
SECRETARY
FULL NAME USUAL RESIDENTIAL ADDRESS
Xxxxxx Xxxxx Xxxxx As Schedule 1
ACCOUNTING REFERENCE DATE 30 April
TAX RESIDENCE UK
ELECTRIC DREAMS LIMITED
REGISTERED NUMBER 1903909
DATE OF INCORPORATION 10 April 1985
52
ADDRESS OF REGISTERED OFFICE As the Company
CLASS OF COMPANY Private Limited
AUTHORISED SHARE CAPITAL L100 divided into:
100 ordinary shares of L1 each
ISSUED SHARE CAPITAL L100 divided into:
100 ordinary shares of L1 each
LOAN CAPITAL None
MEMBERS
FULL NAME REGISTERED ADDRESS NUMBER OF SHARES
HELD
Centresoft Limited As the Company 100
DIRECTORS
FULL NAME USUAL RESIDENTIAL ADDRESS NATIONALITY
Xxxxxx Xxxxx Xxxxx As Schedule 1 British
Xxxxxxx Xxxxxx Xxxxxx As Schedule 1 British
Xxxxxx Xxxxxxx Xxxxxxxxxx As Schedule 1 British
SECRETARY
FULL NAME USUAL RESIDENTIAL ADDRESS
Xxxxxx Xxxxx Xxxxx As Schedule 1
ACCOUNTING REFERENCE DATE 30 April
TAX RESIDENCE UK
53
Schedule 4
(Warranties)
PART I
IN THIS SCHEDULE, WHERE THE CONTEXT PERMITS, THE EXPRESSION "THE COMPANY" MEANS
EACH GROUP COMPANY.
THE WARRANTORS
1. CAPACITY
1.1 Each Warrantor has the requisite power and authority to enter into and
perform this Agreement and the execution of this Agreement by each
Warrantor shall not breach any applicable laws or any contracts or
arrangements to which they are a party.
1.2 No Warrantor is bankrupt, has proposed a voluntary arrangement or has
made or proposed any arrangement or composition with his creditors or
any class of his creditors.
1.3 This Agreement constitutes and imposes valid legal and binding
obligations on each Warrantor fully enforceable in accordance with its
terms.
2. OWNERSHIP OF SHARES
Each Warrantor owns the Company Shares as set out in Part II of
Schedule 1 with full title guarantee free from all charges and other
encumbrances (whether monetary or not).
3. ARRANGEMENTS BETWEEN GROUP COMPANIES AND WARRANTOR ASSOCIATES
There are no contracts, arrangements or liabilities, actual or
contingent, outstanding or remaining in whole or in part to be
performed between any Group Company and any Warrantor Associate.
54
SHARE CAPITAL
4. COMPANY
4.1 The Company Shares constitute the entire issued and allotted share
capital of the Company and are fully paid or credited as fully paid.
4.2 Apart from this Agreement, there is no agreement, arrangement or
commitment outstanding which calls for the allotment, issue or
transfer of, or accords to any person the right to call for the
allotment, issue or transfer of, any share or loan capital of the
Company.
4.3 None of the Company Shares was, or represents assets which were, the
subject of a transfer at an undervalue, within the meaning of Sections
238 or 339, Insolvency Xxx 0000, within the past 5 years.
4.4 The Company has not at any time:
(a) reduced its share capital;
(b) redeemed any share capital;
(c) purchased any of its shares; or
(d) forfeited any of its shares.
5. SUBSIDIARIES
5.1 Schedule 3 lists all the Subsidiaries of the Company and the holders
of the entire issued and allotted share capital of the Subsidiaries.
5.2 The Company does not have, and has never had, a participating interest
(as defined in Section 260, Companies Act 1985) in any undertaking
which is not a Subsidiary nor has it agreed to acquire such an
interest.
5.3 No Group Company holds or is liable on any share or relevant security
which is not fully paid up or which carries any liability.
5.4 Apart from this Agreement, there is no agreement, arrangement or
commitment outstanding which calls for the allotment, issue or
transfer of, or accords to any person the right to call for the
allotment, issue or transfer of, any share or loan capital of any
Subsidiary.
5.5 None of the shares in the capital of any Subsidiary was, or represents
assets which were, the subject of a transfer at an undervalue, within
the meaning of Sections 238 or 339, Insolvency Xxx 0000, within the
past 5 years.
55
CORPORATE MATTERS
6. INSOLVENCY OF THE GROUP
6.1 No order has been made, no resolution has been passed, no petition
presented, no meeting convened for the winding up of any Group Company
or for a provisional liquidator to be appointed in respect of any
Group Company and no Group Company has been a party to any transaction
which could be avoided in a winding up.
6.2 No administration order has been made and no petition for one has been
presented in respect of any Group Company.
6.3 No receiver or administrative receiver has been appointed in respect
of any Group Company or any of its assets.
6.4 No Group Company is insolvent, has failed or is unable to pay, or has
no reasonable prospect of being able to pay, any of its debts as they
fall due, as those expressions are defined in Xxxxxxx 000, Xxxxxxxxxx
Xxx 0000.
6.5 No voluntary arrangement has been proposed under Xxxxxxx 0, Xxxxxxxxxx
Xxx 0000 in respect of any Group Company and no Group Company has made
or proposed any arrangement or composition with its creditors or any
class of them.
6.6 No distress, execution or other process has been levied on any Group
Company's assets or action taken to repossess goods in the possession
of any Group Company.
6.7 No unsatisfied judgement is outstanding against any Group Company and
no demand has been served on any Group Company under Section
123(1)(a), Insolvency Xxx 0000.
6.8 No event analogous to any referred to in sub-paragraphs 6.1 to 6.7 has
occurred anywhere in the world.
7. STATUTORY BOOKS AND DOCUMENTS FILED
7.1 The statutory books, including all registers and minute books, of each
Group Company have been properly kept and contain an accurate and
complete record of the matters with which those books should deal.
7.2 All documents which should have been delivered by any Group Company to
the Registrar of Companies are complete and accurate and have been
properly so delivered.
7.3 The copy of the memorandum and articles of association of each Group
Company contained in the Disclosure Letter has embodied in it or
annexed to it a copy of each
56
resolution as referred to in Section 380, Companies Xxx 0000, and is
accurate and complete in all respects.
7.4 Since the Accounts Date the members of any Group Company in general
meeting, or of any class of them, have not passed any resolution other
than resolutions relating to the ordinary business of annual general
meetings.
INFORMATION
8. ACCURACY AND ADEQUACY OF INFORMATION
8.1 The information contained in Schedules 1 to 3 (except Part 1 of
Schedule 1) to this Agreement is accurate and complete.
8.2 The information contained in the Disclosure Letter and all written
information supplied to Activision or its advisers by or on behalf of
the Warrantors or any of their advisers or by any Group Company is
complete and accurate and is not misleading because of any omission or
ambiguity or for any other reason and where the information is
expressed as an opinion, it is truly and honestly held and not given
casually, recklessly or without due regard for its accuracy.
8.3 There is no fact or circumstance relating to the business and affairs
of any Group Company which, if disclosed to Activision or any of its
advisers, might reasonably be expected to influence the decision of
Activision to purchase the Company Shares on the terms contained in
this Agreement and which has not been so disclosed.
ACCOUNTS
9. PREPARATION AND CONTENTS OF THE ACCOUNTS
9.1 The Accounts were prepared in accordance with the requirements of all
relevant statutes and generally accepted United Kingdom accounting
practices including, without limitation, all applicable Financial
Reporting Standards issued by the Accounting Standards Board,
Statements of Standard Accounting Practice issued by the Institute of
Chartered Accountants of England and Wales and Statements from the
Urgent Issues Task Force current at the Accounts Date and, where the
accounting practice used to prepare the Accounts differs from those
applicable in previous financial periods, the effect of any such
difference is disclosed in the Disclosure Letter.
9.2 Without prejudice to the generality of sub-paragraph 9.1:
(a) the Accounts:
(i) give a true and fair view of the state of affairs of
each Group Company at the Accounts Date and the profits
or losses of each Group Company for the financial
period ending on that date;
57
(ii) contain full provision or reserve for all liabilities
and for all capital and revenue commitments of each
Group Company as at the Accounts Date;
(iii) disclose all the assets of each Group Company as at the
Accounts Date and none of the values placed in the
Accounts on any of those assets was in excess of its
market value at the Accounts Date;
(iv) make full provision for bad and doubtful debts;
(v) do not include any figure which is referable to the
value of an intangible asset; and
(vi) make full provision for depreciation of the fixed
assets of each Group Company having regard to their
original cost and life.
(b) in the Accounts:
(i) in valuing work-in-progress no value was attributed in
respect of eventual profits and adequate provision was
made for such losses as were at the time of signature
of the Accounts by directors of each Group Company
reasonably foreseeable as arising or likely to arise;
and
(ii) slow-moving stock was written down appropriately,
redundant, obsolete, obsolescent or defective stock was
wholly written off and the value attributed to any
other stock did not exceed the lower of cost (on a
first in first out basis) and net realisable value (or
replacement value) at the Accounts Date.
9.3 The profits and losses of each Group Company shown in the Accounts
were not, save as disclosed in the Accounts or in any note
accompanying them, to any material extent affected by any
extraordinary, exceptional, unusual or non-recurring income, capital
gain or expenditure or by any other factor known to the Warrantors
rendering any such profit or loss for such period exceptionally high
or low.
9.4 The audited profit and loss accounts and audited balance sheets of
each Group Company contained in the Accounts were prepared on a
consistent basis with each other.
9.5 The Accounts and the Management Accounts contain and reflect adequate
reserves for all liabilities or obligations of the Group of any
nature, whether absolute, contingent or otherwise, and for all
reasonably anticipated losses and costs in excess of expected
receipts, on a basis consistent with past practice and experience.
The Group does not now nor will it prior to the date of Completion,
have any liabilities or obligations not fully and properly reflected
or reserved against in the Accounts and the Management Accounts except
liabilities and obligations incurred by the Group in the ordinary
course
58
of business since the Management Accounts Date, none of which is
individually or in the aggregate material in amount.
9.6 Neither the Company nor any of its Subsidiaries is directly or
indirectly liable upon or with respect to (by discount, repurchase
agreement or otherwise), or obligated in any way to provide funds in
respect of or to guarantee or assume any debt, obligation or dividend
of any company, association, partnership, individual or other entity
other than the Company (and its Subsidiaries).
10. ACCOUNTING RECORDS
10.1 The accounting records of each Group Company comply with the
requirements of Sections 221 and 222, Companies Xxx 0000, do not
contain or reflect any material inaccuracy or discrepancy and present
and reflect in accordance with generally accepted accounting
principles and standards the financial position of and all
transactions entered into by the relevant Group Company or to which it
has been a party.
10.2 All relevant financial books and records of each Group Company are in
its possession or otherwise under its direct control.
10.3 Where any of the records of any Group Company are kept on computer,
that Group Company:
(a) is the owner of all hardware and all software necessary to enable
it to use the records as they have been used in its business to
the date of this Agreement and to Completion;
(b) does not share any hardware or software relating to the records
with any person; and
(c) maintains adequate back up records and support in the event of
any fault or failure of such computer hardware and software.
11. MANAGEMENT ACCOUNTS
The Management Accounts have been carefully prepared on a basis
consistent with the Accounts, fairly reflect the trading position of
each Group Company as at their date and for the period to which they
relate and are not affected by any extraordinary, exceptional, unusual
or non-recurring income, capital gain or expenditure or by any other
factor known by the Warrantors rendering profits or losses for the
period covered exceptionally high or low.
12. EVENTS SINCE THE ACCOUNTS DATE
59
12.1 Since the Accounts Date there has been no material change in:
(a) the financial or trading position or prospects of any Group
Company;
(b) the value or state of assets or amount or nature of liabilities
as compared with the position disclosed in the Accounts; or
(c) in the turnover, direct or indirect expenses or the margin of
profitability of any Group Company as compared with the position
disclosed for the equivalent period of the last financial year.
12.2 Each Group Company has since the Accounts Date carried on its business
in the ordinary course and without interruption, so as to maintain it
as a going concern and paid its creditors in the ordinary course and
within the credit periods agreed with such creditors.
12.3 Since the Accounts Date no supplier of any Group Company has ceased or
restricted supplies or threatened so to do, there has been no loss or
material curtailment of the business transacted by any Group Company
with any customer which at any time in the preceding financial year
represented 5 per cent or more of the turnover of that Group Company
and the Warrantors are not aware of any circumstances likely to give
rise to any of the above.
12.4 Since the Accounts Date no Group Company has:
(a) incurred or committed to incur:
(i) material (and for the purposes of this sub-clause material
shall mean a sum in excess of L20,000) capital expenditure;
or
(ii) any liability whether actual or contingent except for full
value or in the ordinary course of business;
(b) acquired or agreed to acquire:
(i) any asset for a consideration higher than its market value
at the time of acquisition or otherwise than in the ordinary
course of business; or
(ii) any business or substantial part of it or any share or
shares in a body corporate;
(c) disposed of or agreed to dispose of, any of the assets of any
Group Company, except in the ordinary course of business and for
full value;
(d) repaid wholly or in part any loan except upon the due date or
dates for repayment;
60
(e) issued or allotted share or loan capital, increased its
authorised share capital, purchased or redeemed any shares,
reduced or re-organised its share capital or agreed to do so; or
(f) declared or paid any distribution of profit.
12.5 None of the debts included in the Accounts or any of the debts
subsequently arising have been the subject of factoring by any Group
Company and the Warrantors are not aware of any circumstances which
could result in any presently outstanding debt in excess of L1,000 not
being paid in full.
FINANCIAL
13. FINANCIAL COMMITMENTS AND BORROWINGS
13.1 Complete and accurate details of all overdraft, loan and other
financial facilities available to the Group Companies and the amounts
outstanding under them at the close of business on the day preceding
the date of this Agreement are set out in the Disclosure Letter and
none of the Warrantors or any Group Company has done anything, or
omitted to do anything, as a result of which the continuance of any of
those facilities might be affected or prejudiced.
13.2 No Group Company is a party to, or has agreed to enter into, any
lending, or purported lending, agreement or arrangement (other than
agreements to give credit in the ordinary course of its business).
13.3 No Group Company is exceeding any borrowing limit imposed upon it by
its bankers, other lenders, its articles of association or otherwise
nor has any Group Company entered into any commitment or arrangement
which might lead it so to do.
13.4 No overdraft or other financial facilities available to any Group
Company are dependent upon the guarantee of or security provided by
any other person.
13.5 No event has occurred or been alleged which is or, with the passing of
any time or the giving of any notice, certificate, declaration or
demand, would become an event of default under, or breach of, any of
the terms of any loan capital, borrowing, debenture or financial
facility of any Group Company or which would entitle any person to
call for repayment prior to normal maturity.
13.6 No Group Company is, or has agreed to become, bound by any guarantee,
indemnity, surety or similar commitment.
13.7 No Group Company has any credit cards in issue in its own name or that
of any officer or employee of any Group Company or any person
connected with any officer or employee.
61
13.8 No Group Company has received any grants, allowances, loans or
financial aid of any kind from any government departmental or other
board, body, agency or authority which may become liable to be
refunded or repaid in whole or in part.
13.9 No Group Company has engaged in financing of a type which is not
required, or has not been, shown or reflected in the Accounts.
14. WORKING CAPITAL
Having regard to existing bank and other facilities available to it,
each Group Company has sufficient working capital for the purposes of
continuing to carry on its business, in its present form and at its
present level of turnover, for the period of 12 months after
Completion.
15. INSURANCES
15.1 Each Group Company maintains, and at all material times has
maintained, adequate insurance cover against all risks normally
insured against by companies carrying on a similar business, for the
full replacement or reinstatement value of its business and assets,
and in particular has maintained product liability, professional
indemnity insurance and all insurance required by statute and insured
against loss of profits for a period of not less than 6 months and
full details of the insurance policies are set out in the Disclosure
Letter.
15.2 The Policies are valid and enforceable and all premiums due have been
paid. There are no outstanding claims or circumstances likely to give
rise to a claim under the Policies or which would be required to be
notified to the insurers and nothing has been done or omitted to be
done which has made or could make any Policy void or voidable or as a
result of which the renewal of any Policy might be refused or the
premiums due in respect of them may be liable to be increased.
15.3 There are no claims outstanding or threatened, or so far as the
Warrantors are aware, pending, against any Group Company which are not
fully covered by insurance.
TRADING AND CONTRACTS
16. CONTRACTS AND COMMITMENTS
16.1 Complete and accurate details of the contracts of the Company
(including the Contracts) are set out in the Disclosure Letter (save
where any contract has an annual turnover or expenditure less than
L300,000 for the previous financial year of the Group).
16.2 No Group Company is a party to any agreement, arrangement or
commitment which:
(a) has or is expected to have material consequences in terms of
expenditure or revenue;
62
(b) relates to matters outside the ordinary business of that Group
Company or was not entered into on arms' length terms;
(c) constitutes a commercial transaction or arrangement which
deviates from the usual pattern for that Group Company;
(d) can be terminated in the event of any change in the underlying
ownership or control of that Group Company or would be materially
affected by such change;
(e) cannot readily be fulfilled or performed by it on time; or
(f) cannot be terminated, without giving rise to any liabilities on
any Group Company, by that Group Company giving 3 months' notice
or less.
16.3 No Group Company:
(a) has outstanding any bid, tender, sale or service proposal which
is material in relation to its business or which, if accepted,
would be likely to result in a loss;
(b) or WarrantorWarrantor is aware of any actual, potential or
alleged breach, invalidity, grounds for termination, grounds for
rescission, grounds for avoidance or grounds for repudiation of,
any contract to which any Group Company is a party; or
(c) has granted any power of attorney or other such authority
(whether express or implied) which is still outstanding.
16.4 All contracts of the Group are valid and binding and enforceable in
accordance with their terms. No Group Company is in breach or default
of any of its contracts.
16.5 No Group Company is in breach or default of any of the terms of the
contract between Eidos plc and the Company, dated 28 June 1996, for
the acquisition of Centresoft Limited ("THE EIDOS CONTRACTand no Group
Company has made, or has become entitled to make any claim under or in
respect of the Eidos Contract (or the Taxation Deed executed pursuant
thereto) whether under the warranties, the Taxation Deed or otherwise.
17. TERMS OF TRADE
No Group Company has given any guarantee or warranty (other than any
implied by law) or made any representation in respect of any product
or services sold or supplied by it nor has it accepted any liability
to service, maintain, repair or otherwise do or refrain from doing
anything in relation to such goods or services after they have been
sold or supplied by it except for those contained in its standard
conditions of trading, complete and accurate copies of which are
contained in the Disclosure Letter.
18. PRODUCT LIABILITY AND YEAR 2000
63
18.1 No Group Company has manufactured, sold or provided any product or
service which does not in every respect comply with all applicable
laws, regulations or standards or which is defective or dangerous or
not in accordance with any representation or warranty, express or
implied, given in respect of it.
18.2 The products, systems and services used by the Company for its own
internal purposes which are dependant in any way on automatic
instructions or any computer hardware or software meet Year 2000
conformity.
18.3 The products, systems and services used by the Company for its own
internal purposes will not be affected, in terms of performance or
functionality, by the use of dates before, during and after the Year
2000.
19. LICENCES AND CONSENTS
19.1 Complete and accurate details of all licences, consents, permissions,
authorisations and approvals required by each Group Company for the
carrying on of its business are contained in the Disclosure Letter and
all of them have been obtained by that Group Company and are in full
force and effect.
19.2 All reports, returns and information required by law or as a condition
of any licence, consent, permission, authorisation or approval to be
made or given to any person or authority in connection with the
business of any Group Company have been made or given to the
appropriate person or authority and there are no circumstances which
indicate that any licence, consent, permission, authorisation or
approval might not be renewed in whole or in part or is likely to be
revoked, suspended or cancelled or which may confer a right of
revocation, suspension or cancellation.
20. TRADING PARTNERS
20.1 No Group Company acts or carries on business in partnership with any
other person or is a member of any corporate or unincorporated body,
undertaking or association.
20.2 No Group Company is a party to any joint venture agreement or
arrangement or any agreement or arrangement under which it is to
participate with any other person in any business.
20.3 No Group Company is a party to any agency, distributorship, licence or
management agreement or is a party to any contract or arrangement
which restricts its freedom to carry on its business in such manner as
it may think fit in any part of the world.
20.4 No Group Company has any branch, agency, place of business or
establishment outside the United Kingdom.
21. COMPETITION AND TRADE REGULATION LAW
64
21.1 No Group Company is or has been a party to, or is or has been
concerned in any agreement or arrangement, or is conducting or has
conducted itself, whether by omission or otherwise, in a manner which:
(a) contravenes, is invalidated in whole or in part by or has been,
or should have been, registered under the Restrictive Trade
Practices Acts 1976 and 1977;
(b) contravenes the provisions of the Resale Prices Xxx 0000, the
Trade Description Acts 1968 and 1972, the Fair Trading Act 1973
or any secondary legislation made under either of those Acts;
(c) infringes Article 85 or 86 of the Treaty of Rome or any
regulation or directive made under it or any other anti-trust or
similar legislation in any jurisdiction in which any Group
Company has assets or carries on or intends to carry on business
or where its activities may have any effect.
21.2 No Group Company has:
(a) given an undertaking to, or is subject to, any order of or
investigation by, or has received any request for information
from;
(b) received, nor so far as the Warrantors are aware, is it likely to
receive any process, notice or communication, formal or informal
by or on behalf of;
(c) been or is a party to, or is or has been concerned in, any
agreement or arrangement in respect of which an application for
negative clearance and/or exemption has been made to
the Office of Fair Trading, the Monopolies and Mergers Commission, the
Secretary of State, the European Commission or any other governmental
or other authority, department, board, body or agency of any country
having jurisdiction in anti-trust or similar matters in relation to
its business.
22. COMPLIANCE WITH LAW
22.1 No Group Company has committed or is liable for, and no claim has been
or, so far as the Warrantors are aware, will be made that any Group
Company has committed or is liable for, any criminal, illegal,
unlawful or unauthorised act or breach of any obligation or duty
whether imposed by or pursuant to statute, contract or otherwise.
22.2 No Group Company has received notification that any investigation or
inquiry is being, or has been, conducted by, or received any request
for information from any governmental or other authority, department,
board, body or agency in respect of the affairs of any Group Company
and, so far as the Warrantors are aware, there are no circumstances
which would give rise to such investigation, inquiry or request.
65
22.3 None of the activities, contracts or rights of any Group Company is
ultra xxxxx, unauthorised, invalid or unenforceable or in breach of
any contract or covenant and all documents in the enforcement of which
any Group Company may be interested are valid.
23. LITIGATION AND DISPUTES
23.1 Except for actions to recover any debt incurred in the ordinary course
of the business owed to any Group Company where each individual debt
and its costs outstanding amounts to less than L50,000:
(a) no Group Company nor any person for whose acts a Group Company
may be liable is engaged in any litigation, arbitration,
administrative or criminal proceedings, whether as plaintiff,
defendant or otherwise;
(b) no litigation, arbitration, administrative or criminal
proceedings by or against any Group Company or any person for
whose acts a Group Company may be liable are threatened or
expected and, as far as the Warrantors are aware, none are
pending;
(c) there are no facts or circumstances likely to give rise to any
litigation, arbitration, administrative or criminal proceedings
against any Group Company or any person for whose acts a Group
Company may be liable.
23.2 No Group Company is subject to any order or judgement given by any
court or governmental or other authority, department, board, body or
agency or has not been a party to any undertaking or assurance given
to any court or governmental or other authority, department, board,
body or agency which is still in force, nor are there any facts or
circumstances likely to give rise to any Group Company becoming
subject to such an order or judgement or to be a party to any such
undertaking or assurance.
ASSETS
24. OWNERSHIP AND CONDITION OF ASSETS
24.1 Each of the assets included in the Accounts or acquired by any Group
Company since the Accounts Date (other than the Properties and current
assets subsequently disposed of or realised in the ordinary course of
business) is owned both legally and beneficially by a Group Company
free from any third party rights and, if capable of possession, is in
the possession of that Group Company.
24.2 Each item of plant and machinery, vehicle and office equipment used by
each Group Company is:
(a) in good repair and condition, regularly maintained and certified
safe and without risk to health when used;
66
(b) capable and will remain capable of doing the work for which it
was designed or purchased until the time when (on the basis of
depreciation adopted in the Accounts) it will have been written
down to a nil value;
(c) not surplus to requirements; and
(d) not expected to require replacement or additions within 6 months
of Completion.
24.3 No Group Company has acquired, or agreed to acquire, any asset on
terms that title to that asset does not pass until full payment is
made or all indebtedness incurred in connection with the acquisition
is discharged.
24.4 The assets owned by each Group Company, together with all assets held
under hire purchase, lease or rental agreements which are contained in
the Disclosure Letter, comprise all assets necessary for the
continuation of the business of each Group Company as it is currently
carried on.
25. STOCK
No part of the stocks of materials of any Group Company is redundant,
obsolete, obsolescent or defective.
26. CHARGES AND ENCUMBRANCES OVER ASSETS
26.1 No option, right to acquire, mortgage, charge, pledge, lien (other
than a lien arising by operation of law in the ordinary course of
trading) or other form of security or encumbrance or equity on, over
or affecting the shares or the whole or any part of the undertaking or
assets of any Group Company, including any investment in any other
Group Company, is outstanding and, apart from this Agreement, there is
no agreement or commitment to give or create any of them and no claim
has been made by any person to be entitled to any of them.
26.2 No floating charge created by a Group Company has crystallised and
there are no circumstances likely to cause such a floating charge to
crystallise.
26.3 No Group Company has received notice from any person intimating that
it will enforce any security which it may hold over the assets of any
Group Company, and there are no circumstances likely to give rise to
such a notice.
26.4 All charges in favour of a Group Company have, if required, been
registered in accordance with the provisions of the Companies Xxx
0000, Part XII.
27. INTELLECTUAL PROPERTY
27.1 Complete and accurate details of all Intellectual Property and copies
of all licences and other agreements relating to it are contained in
the Disclosure Letter.
67
27.2 The Company is the sole legal and beneficial owner of the Intellectual
Property used in connection with its business (including but not
limited to the Software) and has absolute unencumbered title to such
Intellectual Property and such Intellectual Property is not subject to
any outstanding rights of any third party of any nature whatsoever or
to any option or agreement for licence or purchase in favour of any
person nor do any circumstances exist whereby any person may claim
entitlement to such Intellectual Property in competition with the
Company and without prejudice to the generality of the foregoing no
employee of the Group is entitled to any award or compensation in
respect thereof whether under the Patents Xxx 0000 or otherwise.
27.3 All Marks and Patents (if any) used by the Group in the course of its
business are registered in the name of the relevant Group Company as
proprietor.
27.4 As regards all Marks owned by the Group the Group has paid all renewal
and other fees or expenses which may be necessary to ensure the
continuance in force of the registrations of the said Marks.
27.5 All Know-How used by the Group in connection with its business is its
sole property and each Group Company has neither disclosed to nor
licensed any third party to use such Know-How.
27.6 None of the operations of the Group infringe any industrial property
rights or intellectual property rights of any third party and the
Group is not liable to make any payment of any royalty or fee in
respect of the same.
27.7 Each Group Company does not use on its letterheads, business cards,
circulars, advertisements, brochures, sales literature or vehicles or
otherwise carry on business under a name other than its corporate
name.
27.8 None of the Intellectual Property used by the Group in its business
has been assigned or is being used, claimed, opposed or attacked by
any person nor are the relevant Group Company's rights thereto being
infringed.
27.9 The Group has not entered into any agreement which restricts the
disclosure or use by the Group of any Know-how or technical
information or other Intellectual Property and there has not been any
infringement by any third party of any of the rights in confidential
information or other Intellectual Property held by the Group.
27.10 Each Group Company is the beneficial owner of all Intellectual
Property in the Software.
27.11 The Intellectual Property in the Software is free from encumbrances
and /or any third party interests.
27.12 The Group has quiet enjoyment of all Intellectual Property in the
Software at the date hereof.
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27.13 No part of any of the Intellectual Property in any of the Software has
except in the ordinary course of business been licensed, transferred,
assigned, charged or otherwise encumbered or dealt with.
27.14 There is no third party Software licensed to the Group which the
Company needs for its business.
27.15 No part of any of the Software is manufactured, supplied or licensed
by any Group Company under any licence, consent or permission from any
third party.
27.16 In respect of any part of any Software written, developed or
originated by an employee or director of a Group Company:
(a) all such Software was written, developed or originated by such
employee in the course of his employment by such Group Company;
and
(b) the contract of employment between the relevant Group Company and
such employee provides for the Group Company to own all rights in
and to such Software; and
(c) if sub-paragraphs 27.16(a) and (b) do not both apply, such
employee has expressly assigned as beneficial owner to the
relevant Group Company all Intellectual Property in and to such
Software.
27.17 The Group is in possession of all source code to the Software
including without limitation to the generality of the foregoing,
source-code listings, flow-charts and all accompanying documentation.
EMPLOYMENT
28. DIRECTORS AND EMPLOYEES
28.1 Complete and accurate details of the terms and conditions of
employment of all employees of each Group Company, including the date
of commencement of their continuous period of employment, salary,
position, notice period, non-cash benefits, age and any arrangements
or assurances (whether or not legally binding) in relation to their
employment, are contained in the Disclosure Letter and no employee is
engaged on a form of employment contract copies of which have not been
previously supplied to Activision or its advisors.
28.2 Each Group Company has maintained up-to-date, adequate and suitable
records regarding the service and terms and conditions of employment
of each of its employees.
28.3 Save as disclosed in the Disclosure Letter no Group Company is a party
to any consultancy agreement, any agreement for management services or
any contract of
69
services with any director and any such agreement or contract does not
constitute a contract of employment.
28.4 Since the Accounts Date there has been:
(a) no material alteration in the terms of employment or any material
change in the number of employees employed by any Group Company;
or
(b) no material increase in any fees, remuneration or benefits paid
or payable to any officer or employee of any Group Company, nor
are any negotiations for any such increase current or likely to
take place in the next 6 months.
28.5 No officer or employee of any Group Company is remunerated on a
profit-sharing, bonus or commission basis.
28.6 Other than salary for the current month and accrued holiday pay, no
amount is owing to any present or former officer or employee of any
Group Company.
28.7 There is no share option or share incentive scheme in operation by or
in relation to any Group Company for any of its officers or employees
nor is the introduction of such a scheme been proposed.
28.8 Each Group Company has at all relevant times complied with all its
obligations under statute and otherwise concerning the health and
safety at work of its employees and there are no claims capable of
arising or pending or threatened by any employee or third party in
respect of any accident or injury which are not fully covered by
insurance.
28.9 Save as provided for or taken into account in the Accounts:
(a) no claim or liability to make any payment of any kind to any
person who is or has been an officer or employee has been
received or incurred by any Group Company whether under the
Employment Rights Xxx 0000, Sex Discrimination Xxx 0000, the Race
Relations Xxx 0000 and the Disability Discrimination Act 1995 or
otherwise; and
(b) no gratuitous payment of a material amount has been made or
promised by any Group Company in connection with the actual or
proposed termination or suspension of employment or variation of
any contract of employment of any present or former officer or
employee.
28.10 No officer or employee of any Group Company has given notice or is
under notice of dismissal nor are there any service contracts between
any Group Company and its officers or employees which cannot be
terminated by the relevant Group Company by 12 weeks notice or less
without giving rise to a claim for damages or compensation (other than
a statutory redundancy payment).
70
28.11 No Group Company has:
(a) any actual, pending or threatened claims against it by any
current or former employee;
(b) any employees who are on long term sick leave or in receipt of
PHI payments; or
(c) any employee under warning under the terms of the relevant Group
Company's disciplining procedure.
28.12 No Group Company has:
(a) entered into any arrangement involving the acquisition of
non-cash assets from or disposal to;
(b) granted any loan or quasi-loan to or entered into any guarantee
or credit transaction with; or
(c) provided any security in connection with any loan, quasi-loan or
credit transaction to or with or entered into any other
transaction with
any director or person connected with a director within the meaning of
the Companies Xxx 0000.
28.13 Any redundancy payments made by a Group Company have been calculated
and paid in accordance with statutory requirements and no external
redundancy payments have been made by any Group Company.
28.14 Each Group Company has abided at all times with the terms of any
practice guides, employment procedural documents and any other
employment manuals produced by the Group.
29. INDUSTRIAL RELATIONS
29.1 No Group Company is a party to any contract, agreement or arrangement
with any trade union or other body or organisation representing any of
its employees.
29.2 Each Group Company has in relation to its employees and former
employees complied with all conditions of service, customs and
practices and, where relevant, all collective agreements and
recognition agreements for the time being.
29.3 Within the last 12 months, no Group Company has:
(a) given notice of any redundancies to the Secretary of State,
started consultations with any appropriate representatives or
failed to comply with any obligation under the provisions of
Chapter II Trade Union and Labour Relations (consolidation) Xxx
0000; or
71
(b) been a party to any relevant transfer as defined in the Transfer
of Undertakings (Protection of Employment) Regulations 1981 or
has failed to comply with any duty to inform and consult any
appropriate representative under the Regulations.
29.4 No dispute has arisen between any Group Company and a material number
or category of its employees nor are there any present circumstances
known to the Warrantors which are likely to give rise to any such
dispute.
29.5 No training schemes, arrangements or proposals exist nor have there
been any such schemes, arrangements or proposals in the past in
respect of which a levy may become payable by any Group Company under
the Industrial Training Xxx 0000.
30. PENSIONS
30.1 No Group Company has any plans, schemes or arrangements in relation to
death, disability or retirement of any of its employees.
30.2 In relation to each plan, scheme or arrangement disclosed under
paragraph 30.1 in the Disclosure Letter:
(a) complete and accurate details:
(i) of it (including, where appropriate, copies of all trust
deeds and rules together with copies of all amending deeds
and resolutions and the latest actuarial reports); and
(ii) of the basis on which the relevant Group Company makes, or
is liable to make, contributions to it
are contained in the Disclosure Letter.
(b) all contributions which are payable by any Group Company in
respect of it and all contributions due from the employees of the
relevant Group Company as members of it have been duly made and
the relevant Group Company has fulfilled all its obligations
under it;
(c) it has been administered in accordance with the preservation
requirements within the meaning of Xxxxxxx 00, Xxxxxxx Xxxxxxx
Xxx 0000, the equal access requirements of Xxxxxxx 000, Xxxxxxx
Xxxxxxx Xxx 0000, the contracting-out requirements of Part III,
Xxxxxxx Xxxxxxx Xxx 0000 and all relevant requirements of the
Pensions Xxx 0000 and in accordance with the trusts, powers and
provisions of such plans, schemes or arrangements;
(d) no undertakings or assurances have been given to any employee of
any Group Company as to the continuance, introduction, increase
or improvement of any pension rights or entitlements which any
Group Company and/or Activision
72
would be required to implement in accordance with good industrial
relations' practice and whether or not there is any legal
obligation so to do;
(e) no power to augment benefits has been exercised;
(f) no discretion has been exercised to admit to membership a present
or former director or employee who would not otherwise be
eligible for admission to membership;
(g) no discretion has been exercised to provide in respect of a
member a benefit which would not otherwise be provided;
(h) all benefits (other than a refund of contributions with interest
where appropriate) payable on the death of a member while in
service, or during a period of sickness or disability of a
member, are fully insured under a policy effected with an
insurance company to which the Insurance Companies Xxx 0000
applies and the Warrantors are not aware of any circumstances in
which such insurance would be invalidated;
(i) all liabilities or benefits accrued in respect of service
completed at Completion are secured on an ongoing basis taking
account of future increases in salary to normal retirement date
and increases in pensions on the basis of realistic actuarial and
financial assumptions and the obligations imposed on it as a
result of Xxxxxx -v- Guardian Royal Exchange; and
(j) it is an exempt approved scheme and/or retirement annuity
approved, or capable of being approved, under the Taxes Act and
the Warrantors are not aware of any reasons why any such approval
could be withdrawn.
30.3 No death, disability or retirement gratuity is currently being paid or
has been promised nor will pending Completion be paid or promised by
any Group Company to or in respect of any officer or employee of any
Group Company.
PROPERTIES
31. TITLE
31.1 The Properties comprise all the properties presently owned, occupied,
held, controlled or otherwise used by any Group Company and a Group
Company is in actual and exclusive occupation and is the legal and
beneficial owner of each Property.
31.2 The relevant Group Company's Leasehold title to each of the Properties
is good and marketable (subject to prevailing market conditions).
31.3 Each Property is occupied or otherwise used by a Group Company by
right of ownership or under the Leases, the terms of which permit its
occupation or use as tenant and not
73
under any provision allowing the parting of or sharing of possession
with group or associated companies and there are no outstanding
circumstances which would restrict the continued possession and
enjoyment of any Property or any part of it.
31.4 All deeds and documents necessary to prove title to each Property are
in the possession and control of the Group Companies and consist of
original deeds and documents or properly examined abstracts.
31.5 No person is in adverse possession of any Property or has acquired or
is acquiring any rights or overriding interests (as defined by Section
70, Land Registration Act 1925) adversely affecting any Property.
31.6 No Group Company has had occasion to make any claim or complaint in
relation to any neighbouring property or its use or occupation and
there are no disputes, claims, actions, demands or complaints in
respect of any Property which are ongoing nor are any disputes,
claims, actions, demands or complaints anticipated and no notices
materially affecting any Property have been given or received and not
complied with.
ENCUMBRANCES
32.1 No Property is subject to any outgoings other than business rates,
water rates and insurance premiums and, in the case of leasehold
properties, rent, insurance rent and service charges.
32.2 No Property is subject to any restrictive covenant, reservation,
stipulation, easement, profits a prendre, wayleave, licence, grant,
restriction, overriding interest, agreement for sale, estate contract,
option, right of pre-emption or other similar agreement or right
vested in third parties.
32.3 So far as the Warrantors are aware there are no matters capable of
registration against any Property as a Land Charge, caution,
inhibition, notice or restriction.
32.4 Where sub-paragraphs 32.1 to 32.3 inclusive have been disclosed
against in the Disclosure Letter, the obligations and liabilities
imposed and arising under the disclosed matter have been fully
observed and performed and any payments in respect of it which are due
and payable have been duly paid.
33. PLANNING MATTERS
33.1 No notices have been received with regard to breaches of Planning
Permissions which have not been complied with.
33.2 So far as the Warrantors are aware all necessary planning permissions
have been obtained for each Property.
74
33.3 Building regulation consents have been obtained with respect to all
alterations and improvements to the Properties.
33.4 In respect of each Property, the Group Companies have complied in all
respects with:
(a) planning permissions, orders and regulations issued under the
Planning Acts, the London Building Acts and building regulation
consents and by-laws for the time being in force;
(b) all agreements under Section 52, Town and Country Xxxxxxxx Xxx
0000 and planning obligations under Xxxxxxx 000, Xxxx xxx Xxxxxxx
Xxxxxxxx Xxx 0000; and
(c) all agreements made under Sections 00 xxx 000, Xxxxxxxx Xxx 0000,
Section 33, Local Government (Miscellaneous Provisions) Xxx 0000,
Xxxxxxx 00, Xxxxxx Xxxxxx Xxx 0000 and Xxxxxxx 000, Xxxxx
Xxxxxxxx Xxx 0000.
33.5 So far as the Warrantors are aware all claims and liabilities under
the Planning Acts or any other legislation have been discharged and no
claim or liability, actual or contingent, is outstanding.
34. STATUTORY OBLIGATIONS
34.1 So far as the Warrantors are aware each Group Company has complied
with all applicable statutory and by-law requirements with respect to
the Properties, and in particular with the requirements as to fire
precautions under the Fire Precautions Xxx 0000 and under the Public
Health Acts, the Offices, Shops and Railway Premises Xxx 0000, the
Health and Safety at Work Xxx 0000, the Xxxxxxxxx Xxx 0000 and the
Shops Acts 1950 to 1956.
34.2 No licences are required in relation to any of the Properties under
the Licensing Xxx 0000.
35. ADVERSE ORDERS
35.1 So far as the Warrantors are aware there are no compulsory purchase
notices, orders or resolutions affecting any of the Properties and
there are no circumstances likely to lead to any being made.
35.2 The Warrantors have not received any closing, demolition or clearance
orders, enforcement notices or stop notices affecting the Properties.
36. CONDITION OF THE PROPERTIES
36.1 Each Property enjoys the mains services of water, drainage,
electricity and gas.
36.2 No Property is located in an area or subject to circumstances which
makes it susceptible to subsidence or flooding.
75
37. LEASEHOLD PROPERTIES
37.1 Each Lease is valid and in full force and there are no circumstances
which would entitle any landlord or other person to exercise any power
of entry or take possession of the Properties.
37.2 Each Group Company has paid the rent and observed and performed the
covenants on the part of the tenant and the conditions contained in
any Lease to which it is a party.
37.3 All licences, consents and approvals required from the landlords and
any superior landlords for the grant of the Leases and during the
continuance of the Leases have been obtained and any covenants on the
part of the tenant contained in those licences, consents and approvals
have been duly performed and observed.
37.4 There are no rent reviews outstanding or in progress under any Lease.
37.5 In the case of a lease granted for more than 21 years, the lease is
registered at HM Land Registry with absolute title.
37.6 No Group Company has in the past been the tenant of or guarantor of
any leasehold premises not listed in Schedule 5 in respect of which
any obligations or liabilities could still accrue to that Group
Company.
37.7 Where any property is occupied by a Group Company under an underlease
then:
(a) there are no covenants contained in any superior lease which
would affect the use and enjoyment by a Group Company of such
premises;
(b) the grant of any underlease to a Group Company was strictly in
accordance with the provisions of any superior lease; and
(c) the Warrantors will disclose details of the Intermediary Lease if
they receive or are notified of them.
38. TENANCIES
38.1 The Properties are not held subject to, and with the benefit of, any
tenancy other than the Tenancies.
38.2 Complete and accurate details of:
(a) the rent and any rent reviews and, with respect to rent reviews,
the date for giving notice of exercise of the reviews and the
operative review date;
(b) the term and any rights to break or renew the term;
76
(c) the obligations of the landlord and tenant in respect of
outgoings, repairs, user, insurance services and service charge;
(d) any options, pre-emption or first refusal rights;
(e) the user required or permitted under the terms of the Tenancies;
(f) any entitlement of a tenant of the whole or any part of the
Properties to compensation on quitting the premises let to him in
respect of disturbance and improvements or otherwise; and
in relation to each Tenancy are contained in the Disclosure Letter.
38.3 The Warrantors are not aware of any material or persistent breaches by
a tenant of any of the Properties.
ENVIRONMENT
39. CONTAMINATION
39.1 So far as the Warrantors are aware the Property is not entered in any
register introduced under the Environment Xxx 0000 or otherwise as
land which may be contaminated or which may have been put to a
contaminative use.
40. OTHER ENVIRONMENTAL MATTERS
40.1 No Group Company has received any notification under Environmental law
from a Government appoint environmental agency concerning its use
and/or occupation of the Property.
40.2 No Group Company has been threatened with any investigation or enquiry
by any organisation, or received any complaint, in connection with the
Environment.
40.3 Copies of any reports relating to the Environment commissioned by the
Group are enclosed in the Disclosure Letter.
TAXATION
41. EVENTS SINCE THE ACCOUNTS DATE
(a) Since the Accounts Date:
(i) there has been no disposal by any Group Company of any asset
or supply of any service or business facility of any kind,
including a loan of money or the letting, hiring or
licensing of any property whether tangible or intangible, in
circumstances where the consideration actually received or
77
receivable for such disposal or supply was less than the
consideration which could be deemed to have been received
for Tax purposes;
(ii) no event has occurred which will give rise to a Liability to
Taxation on any Group Company, calculated by reference to
deemed, as opposed to actual Profits or which will result in
any Group Company becoming liable to pay or bear a Liability
to Taxation directly or primarily chargeable against or
attributable to another person, firm or company other than
another Group Company;
(b) no disposal has taken place or other event occurred which will,
or may have, the effect of crystallising a Liability to Taxation
which would have been included in the provision for deferred
Taxation contained in the Accounts if such disposal or other
event had been planned or predicted at the Accounts Date;
(c) no Group Company has made any payment, or incurred any obligation
to make a payment, which will not be deductible in computing
trading profits for the purposes of Tax, or be deductible as a
management expense of an investment company;
(d) no Group Company has been a party to any transaction for which
any Tax clearance provided for by statute has been, or could have
been, obtained;
(e) no Group Company has paid, or become liable to pay, any interest
or penalty in connection with any Tax, has otherwise paid any Tax
after its due date for payment, or owes any Tax the due date for
payment of which has passed or will arise in the next 30 days;
and
(f) no accounting period of any Group Company has ended (within the
meaning of Section 12, ICTA).
42. LIABILITY
42.1 Other than Taxation provided for in the Accounts or in respect of a
liability Taxation occurring prior to 29 June 1996 or on Profits
attributable to transactions in the ordinary course of trading since
the Accounts Date, no Group Company is accountable or liable for any
form of Taxation.
42.2 All documents which are required to be stamped or on which any form of
Taxation is due and which are in the possession of any Group Company,
or by virtue of which any Group Company has any right, have been duly
and sufficiently stamped or the Taxation on such documents has been
paid.
43. RECORDS AND COMPLIANCE
78
43.1 Since 28 June 1996 each Group Company has duly complied with all
requirements imposed on it by any statute, law, regulation or similar
provision, providing for, imposing or relating to Taxation and in
particular:
(a) since 28 June 1996 each Group Company has punctually paid all
Taxation for which it is liable and made all withholdings and
deductions in respect, or on account, of any Taxation from any
payments made by it which it is obliged or entitled to make and
has accounted punctually and in full to the appropriate Tax
Authority for all amounts so withheld or deducted;
(b) since 28 June 1996 each Group Company has properly prepared and
punctually submitted all notices and returns required for Tax
purposes and provided complete and accurate information to any
Tax Authority and all such returns and information remain
complete and accurate;
(c) since 28 June 1996 each Group Company has kept and maintained
complete and accurate accounting records, invoices and other
documents appropriate or requisite for Tax purposes and has
sufficient records relating to past events to calculate its
liability to Taxation or the relief from Taxation which would
arise on any disposal or on the realisation of any assets owned
at Completion;
(d) since 28 June 1996 there are no disputes, unsettled or
outstanding assessments or appeals in respect of Taxation and no
Group Company has since 28 June 1996 been subject to any back
duty enquiry or other dispute with any Tax Authority and there
are no circumstances which may give rise to such an enquiry or
dispute;
(e) no Group Company has since 28 June 1996 been liable or will
become liable to pay any interest, penalty, fine or sum of a
similar nature in respect of Taxation nor, in relation to value
added tax, has received any penalty liability notice, surcharge
liability notice or other written notice or warning under the
VATA;
(f) since 28 June 1996 each Group Company has duly submitted all
claims and disclaimers which have been assumed to have been made
for the purposes of the Accounts.
43.2 The draft computations of the liability to corporation tax of each
Group Company for the period of twelve months to 31 March 1997 and the
period of one month to 30 April 1997 ("the Draft Computations") are
appended to the Disclosure Letter. The Draft Computations are so far
as the Warrantors are aware complete and accurate in all material
respects and there are no facts, matter or circumstances known to the
Warrantors which may give rise to any enquiry or dispute with the
Inland Revenue and which would result in a material increase in the
taxation provision of any Group Company for the accounting period
ended on the Accounts Date if the Draft Computations are submitted to
the Inland Revenue in their present form.
79
43.3 No Group Company has since 28 June 1996 received any audit, visit or
inspection from any Tax Authority and no such audit, visit or
inspection is imminent or has been requested.
43.4 The amount of Tax chargeable on each Group Company or subject to
withholding or deduction by that Group Company during any accounting
period ending since 28 June 1996 has not to any material extent
depended on any concession, agreement, dispensation or other formal or
informal arrangement with any Tax Authority.
43.5 No Group Company is liable in respect of the period after 28 June 1996
to be assessed to Tax as agent for, or on account of, or otherwise on
behalf of, any other person.
43.6 No Group Company has since 28 June 1996 made any claim or application
to pay any Tax by instalments or to defer the payment of any Tax.
44. VAT
44.1 Each Group Company:
(a) is registered for the purpose of, and has since 28 June 1996
complied in all respects with, the VATA and is not subject to any
conditions imposed or agreed with H M Customs & Excise; and
(b) is not, and has not since 28 June 1996 been a member of a group
for value added tax purposes under Section 43, VATA.
44.2 No Group Company has been since 28 June 1996 subject to The Value
Added Tax (Payments on Account) Order 1992.
44.3 No Group Company is, or has since 28 June 1996 been, an agent or
representative for, or otherwise liable to account for, value added
tax for or on account of any other person pursuant to Sections 47 or
48, VATA.
44.4 All supplies made by each Group Company are taxable supplies, and all
input tax for which any Group Company has claimed credit since 28 June
1996 has been paid by that Group Company, in respect of supplies made
to it relating to goods or services used or to be used for the purpose
of that Group Company's business.
44.5 No Group Company has since 28 June 1996 been required to give security
under paragraph 4, Schedule 11, VATA.
44.6 No Group Company has made since 28 June 1996 , nor will prior to
completion make, any election to waive exemption under paragraph 2,
Schedule 10, VATA.
44.7 No Group Company has acquired any assets to which the provisions of
Part XV, Value Added Tax Regulations 1995 (the Capital Goods Scheme)
may apply.
80
45. BALANCE SHEET VALUES
45.1 No Liability to Taxation will arise or be incurred on a disposal by
any Group Company of any of its assets for:
(a) in the case of each asset owned at the Accounts Date, a
consideration equal to the value attributed to that asset in
preparing the Accounts; or
(b) in the case of each asset acquired since the Accounts Date, a
consideration equal to the consideration given for the
acquisition.
46. CLOSE COMPANY
46.1 No Group Company is, nor has it at any time since 28 June 1996
either a close company within the meaning of Section 414, ICTA or a
close investment holding company for the purposes of Section 13A,
ICTA.
46.2 No Group Company has at any time since 28 June 1996 :
(a) made any loan, advance or payment or given any consideration or
effected any transaction falling within Sections 419 to 422
(inclusive), ICTA;
(b) made a transfer of value which is or may be liable to Tax under
the provisions of Section 94, Inheritance Tax Xxx 0000, or
(c) made a transfer falling within the provisions of Xxxxxxx 000,
XXXX.
47. GROUP TRANSACTIONS
47.1 Since 28 June 1996 no Group Company has acquired any asset from any
other company which was at the time of acquisition, and which has
since the time of acquisition ceased to be a member of the same group
of companies as that Group Company.
47.2 Since 28 June 1996 no Relevant Claim or Surrender has been claimed by
any Group Company or taken into account in preparing the provision for
Taxation in the Accounts (or in audited accounts for prior years)
which could or might be effectively withdrawn, postponed, restricted
or otherwise lost or not available and no Group Company is required to
pay any sum in respect of any Relevant Claim or Surrender other than
such sum as may be provided in the Accounts.
47.3 Since 28 June 1996 all Relevant Claims and Surrenders made by each
Group Company were valid and have been or will be allowed by way of
relief from Taxation.
48. CAPITAL GAINS
No Group Company has at any time since 28 June 1996:
81
(a) made any claim under Sections 152 to 158 (inclusive), TCGA; or
(b) acquired or disposed of any asset, or entered into any
transaction whatsoever otherwise than by way of bargain at arms
length.
49. DEDUCTIBLE EXPENSES
No Group Company is under any obligation to make any payment which, or
to provide a benefit the cost of which, will be prevented from being
deductible for Tax purposes, whether as a deduction in computing the
profits of a trade or as an expense of management or as a charge on
income.
50. DIVIDENDS AND DISTRIBUTIONS
50.1 No Group Company has at any time since 28 June 1996 made any
distribution within the meaning of Sections 209 to 211 (inclusive) and
Section 418, ICTA except in respect of any dividends disclosed in the
Accounts.
50.2 Save as provided in the Accounts, no Group Company is liable to make
any payment of advance corporation tax or an amount equivalent to
advance corporation tax.
50.3 Except as expressly contemplated by this Agreement no Group Company
has since 28 June 1996 purchased, repaid or redeemed or agreed to
purchase, repay or redeem its share capital, or capitalised or agreed
to capitalise in the form of redeemable shares or debentures any
profits or reserves, or otherwise issued any share capital or other
security as paid up otherwise than by the receipt of new consideration
within the meaning of Section 254, ICTA.
50.4 No Group Company has at any time since 28 June 1996 been a party to or
otherwise involved in any transaction to which Sections 213 to 218
(inclusive), ICTA applied.
51. INHERITANCE TAX AND GIFTS
51.1 No circumstances exist under which any power within Section 212,
Inheritance Tax Act 1984 could be exercised in relation to, and there
is no Inland Revenue charge (within the meaning of Section 237,
Inheritance Tax Act 1984) attaching to, any shares or securities in or
over any assets of any Group Company.
51.2 No Group Company is liable and there are no circumstances in existence
since 28 June 1996 as a result of which it may become liable to be
assessed to Tax as donor or donee of any gift or transfer or
transferee of value.
52. ANTI-AVOIDANCE
Since 28 June 1996, no Group Company has entered into, or been party
to, any scheme or arrangement designed partly or wholly for the
purpose of avoiding or deferring Taxation,
82
such that a Liability to Taxation may arise after Completion as a
result of or in consequence of such a scheme or arrangement.
53. OVERSEAS MATTERS
53.1 Each Group Company has at all times since 28 June 1996 been resident
for Tax purposes in the United Kingdom, which is the only country
whose Tax Authorities seek to charge tax on the worldwide income,
profits or gains of such company and no Group Company has during the
past 6 years paid Tax and is not liable to pay Tax on its income,
profits or gains to any Tax Authority in any other country.
53.2 No Group Company has since 28 June 1996 carried out any transaction
which is or was unlawful under Section 765, ICTA.
PART II
ACTIVISION WARRANTIES
54. Activision is a corporation duly formed, validly existing and in good
standing under the laws of its state of incorporation, with all
necessary corporate power and authority under applicable laws to
execute this Agreement and to consummate the transactions contemplated
by this Agreement.
55. The execution of this Agreement and the performance by Activision of
its obligations under this Agreement have been duly authorised by all
necessary corporate action.
56. The Consideration Stock, upon its delivery to the Warrantors in
accordance with the provisions of this Agreement, will have been duly
and validly authorised, issued and delivered by Activision and the
Consideration Stock will be fully paid for and non-assessable.
57. Activision has previously made available to the Warrantors, and the
Warrantors by their execution of this Agreement acknowledge receipt
of, the following documents filed by Activision with the SEC:
(a) Activision's Annual Report on Form 10-K for the fiscal years
ended 31 March 1997 and 1996;
(b) Activision's Quarterly Report on Form 10-Q for the fiscal quarter
ended 30 September 1997; and
(c) Activision's Proxy Statement dated 29 July 1997 with respect to
the annual meeting of Stockholders held on 24 September 1997
("THE SEC DOCUMENTS"). As of their respective dates, none of the
SEC Documents contained any untrue
83
statement of a material fact or omitted to state a material fact
required to be stated in such documents or necessary to make the
statements in such documents not misleading. As of their
respective dates, the SEC Documents complied in all material
respects with the rules and regulations under the Securities
Acts.
58. Since 30 September 1997 there has been no material adverse change in
the financial or trading position or property of Activision PROVIDED
THAT Activision gives no warranty in relation to movements in its
stock price on NASDAQ as a result of unusual market conditions nor as
a result of the announcement of the transactions contemplated by this
Agreement.
84
SCHEDULE 5
(Particulars of the Properties)
LEASEHOLD PROPERTIES
1. Xxxx 0, Xxxxxxx Xxx, Xxxxxx, Xxxxxxxxxx held under a lease dated 21 May
1986 made between Xxxxxxx Estates Ltd (1) and CentreSoft Ltd (2) for a term
of 25 years as is registered at HM Land Registry under title number
WM 383599.
2. Xxxx 0, Xxxxxxx Xxx, Xxxxxx, Xxxxxxxxxx held under a lease dated 21 May
1986 made between Xxxxxxx Estates Ltd (1) and CentreSoft Limited (2) for a
term of 25 years from 21 May 1986 as is registered at HM Land Registry
under title number WM 383598.
3. Xxxx 0, Xxxxxxx Xxx, Xxxxxx, Xxxxxxxxxx held under a lease dated 12 July
1990 made between Xxxxxxx Estates Ltd (1) and CentreSoft Limited (2) for a
term commencing on 25 March 1990 and expiring on 20 May 2011 as is
registered at HM Land Registry under title number WM 510986.
4. Xxxx 0, Xxxxxxx Xxx, Xxxxxx, Xxxxxxxxxx held under a lease dated 6 August
1987 made between Xxxxxxx Estates Ltd (1) and The Timken Company (2) for a
term of 25 years from 1 June 1987 as is registered at HM Land Registry
under title number WM 412447.
5. 000 Xxxxxxxx Xxx, Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx held under a lease dated
7 February 1997 made between Xxxxxxx Estates Ltd (1) and PDQ Distribution
Ltd (2) for a term of 2 years from 7 February 1997.
6. 000x Xxxxxxxx Xxx, Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx held under a lease
dated 29 September 1997 made between Xxxxxxx Estates Ltd (1) and PDQ
Distribution Ltd (2) for a term commencing on 29 September 1997 and
expiring on 6 February 1999.
The Underleases
1. Underlease of the ground and first floors of Xxxxx 0 xxx 0 Xxxxxxx Xxx, as
aforesaid dated 28 June 1996 made between CentreSoft Ltd (1) and Eidos
Interactive Ltd (2) for a term of 2 years from 28 June 1996.
85
SCHEDULE 6
(DIVIDEND PAYMENT)
LOAN INTEREST AND DIVIDENDS PAYABLE TO CLOSE SECURITIES LIMITED:- 1 DECEMBER 1997
AMOUNT LOAN DESCRIPTION PERIOD RATE GROSS INCOME ACT NET
NOTES/SHARES TAX PAYMENT
L L
L L
L2,000,000.00 15% Secured Subordinated 3 months 15% 75,000.00 15,000.00 0.00 60,000.00
Loan Notes 1998-2000
800,000 Redeemable Preference 3 months 12p p.s. 30,000.00 0.00 6,000.00 24,000.00
Shares of 10p
133,333 Convertible Preference 3 months 12p p.s. 5,000.00 0.00 1,000.00 4,000.00
Shares of L1
47,059 "A" Ordinary Shares of 1p 3 months 10p p.s. 1,470.58 0.00 294.12 1,176.46
19,608 "B" Ordinary Shares of 1p 3 months 10p p.s. 612.75 0.00 122.55 490.20
112,083.33 15,000.00 7,416.67 89,666.66
---------- --------- -------- ---------
---------- --------- -------- ---------
86
SIGNED by SIMON XXXXXXX XXXX )
in the presence of: )
SIGNATURE OF WITNESS:
NAME:
ADDRESS:
OCCUPATION:
SIGNED by XXXXX XXXX )
in the presence of: )
SIGNATURE OF WITNESS:
NAME:
ADDRESS:
OCCUPATION:
SIGNED by XXXX XXXXXXXXXXX )
XXXXXXX in the presence of: )
SIGNATURE OF WITNESS:
NAME:
ADDRESS:
OCCUPATION:
SIGNED by XXXXXX XXXXX XXXXX )
in the presence of: )
SIGNATURE OF WITNESS:
NAME:
ADDRESS:
OCCUPATION:
SIGNED by Xxxxxx Xxxxxxx )
Waterhouse in the presence of: )
SIGNATURE OF WITNESS:
NAME:
ADDRESS:
OCCUPATION:
SIGNED by XXXXXXX XXXXXX XXXXXX )
in the presence of: )
SIGNATURE OF WITNESS:
NAME:
ADDRESS:
OCCUPATION:
SIGNED by XXXXX XXXXXX SWINDELLS )
in the presence of: )
SIGNATURE OF WITNESS:
NAME:
ADDRESS:
OCCUPATION:
SIGNED by XXXXXX XXXXXX VARNISH )
in the presence of: )
SIGNATURE OF WITNESS:
NAME:
ADDRESS:
OCCUPATION:
SIGNED by - )
for and on behalf of )
ACTIVISION, INC., )
in the presence of: )
SIGNATURE OF WITNESS:
NAME:
ADDRESS:
OCCUPATION:
