DATED 30 SEPTEMBER 1999
C.D. VERTE ITALIA SPA
AND
PIETRO GIOVANNI VAGO
AND
MAURIZIO EZIO CURIONI
AND
TAKE-TWO INTERACTIVE SOFTWARE, INC
---------------------------------------------------------------
AGREEMENT
FOR THE SALE AND PURCHASE OF
THE BUSINESS AND ASSETS OF
C.D. VERTE ITALIA SPA
---------------------------------------------------------------
HARBOTTLE & LEWIS
Hanover House
14 Hanover Square
London W1R 0BE
Ref: h154/44890_7
INDEX
1. INTERPRETATION.........................................................1
2. AGREEMENT FOR SALE.....................................................1
3. PURCHASE PRICE.........................................................2
4. COMPLETION.............................................................3
5. THE BUYER'S REMEDIES...................................................5
6. REPRESENTATIONS WARRANTIES AND UNDERTAKINGS............................6
7. LIMITATIONS............................................................8
8. LIABILITIES AND APPORTIONMENTS.........................................8
9. TRADE DEBTS AND TRADE CREDITS.........................................11
10. CONTACTS..............................................................12
11. RESTRICTIONS ON SELLERS...............................................13
12. EFFECT OF COMPLETION..................................................18
13. COSTS, EXPENSES AND INSURANCE.........................................19
14. NOTICES...............................................................19
15. ENTIRE AGREEMENT/VARIATION............................................20
16. COUNTERPARTS..........................................................20
17. ANNOUNCEMENTS.........................................................20
18. GENERAL...............................................................20
19. GOVERNING LAW AND JURISDICTION........................................21
SCHEDULE 1....................................................................23
REPRESENTATION WARRANTIES AND UNDERTAKINGS....................................23
SCHEDULE 2....................................................................42
ACTION PENDING COMPLETION.....................................................42
SCHEDULE 3....................................................................44
INTERPRETATION................................................................44
THIS AGREEMENT is made on 30 September 1999
BETWEEN:
(1) C.D. VERTE ITALIA SPA, an Italian company having its registered office at
Via Campo Dei Fiori 67, 21013 Gallarante, Italy ("THE SELLER");
(2) PIETRO GIOVANNI VAGO of Via Caralloffi, 6, 21100 Varese (VA), Italy
("PGV")
(3) MAURIZIO EZIO CURIONI of Via Canova, 20, 21013, Gallarate (VA) Italy
("MEC"); and (4) TAKE-TWO INTERACTIE SOFTWARE, INC a Delaware company
having its office at 575 Broadway, New York, New York 10012 ("THE BUYER"
which expression shall, where consistent with the context, include its
successors in title and assigns or any subsidiary undertaking which
Take-Two Interactive Software, Inc procures to purchase the Business and
assets of the Seller as provided for in Clause 2.1).
IT IS AGREED as follows:-
1. Interpretation
1.1 In this Agreement and its Schedules the words and expressions defined in
paragraph 1 of Schedule 3 shall, unless inconsistent with the context,
have the meanings set out in such paragraph.
1.2 This Agreement and its Schedules will be construed and interpreted in
accordance with Schedule 3.
1.3 The Schedules form part of this Agreement and will be of full force and
effect as though expressly set out in the body of this Agreement.
1.4 References to any English legal term or concept (including without
limitation any action, remedy, method of judicial procedure, legal
document, statute, court, official or any other legal concept) will in
respect of any jurisdiction other than England be construed as references
to the term or concept which most nearly corresponds to it in that
jurisdiction.
2. Agreement for Sale
2.1 The Seller agrees to sell with full title guarantee and free from any
Encumbrance and the Buyer agrees to buy or to procure that a subsidiary
undertaking of it shall buy, in each case on Completion but with effect
from the Effective Time, the Business and the following assets:-
2.1.1 the benefit (subject to the burden) of the Contracts;
2.1.2 the Fixed Plant;
2.1.3 the Lease;
2.1.4 the Goodwill;
2.1.5 the Intellectual Property Rights;
2.1.6 the Machinery;
2.1.7 the Motor Vehicles;
2.1.8 the Office Equipment;
2.1.9 the Records;
2.1.10 the Stock;
2.1.11 the benefit of any amount to which the Seller is entitled from a
person (including, without limitation, an insurer) in respect of
damage or injury to any of the Assets other than amounts spent
before the Effective Time in repairing the damage or injury; and
2.1.12 all other property and assets owned by the Seller and used in
connection with the Business on the Completion Date (wherever
located).
2.2 The Property is sold subject to the interests of Leaseindustria SPA under
the Lease
3. PURCHASE PRICE
3.1 Subject to the further provisions of this Agreement, the total
consideration for the sale of the Business and Assets (the
"CONSIDERATION") shall be satisfied by the following:-
(i) the payment by the Buyer to the Seller on the date of this Agreement
of US$200,000 in cash;
(ii) the payment by the Buyer to the Seller on 1 December 1999 or within 5
days of the date of Completion (whichever is later) of US$800,000 in
cash;
(iii)the payment by the Buyer to the Seller, within 5 Business Days of the
signature by the Board of Directors of the Buyer (the "BOARD") of the
management accounts of the Buyer for each of the years ending:
(a) 31 December 1999 ("YEAR 1");
(b) 31 December 2000 ("YEAR 2"); and
(c) 31 December 2001 ("YEAR 3")
(the "COMPANY ACCOUNTS") of a percentage (X) of;
for Year 1 US $400,000 in cash;
for Year 2 US $415,000 in cash;
for Year 3 US $430,000 in cash
where X shall be calculated in accordance with Clause 3.3.
3.2 The Buyer shall be entitled to set off, or (pending the determination of
the relevant amount) withhold any amounts payable by it after Completion
to the Seller against (a) the amount of any claims by the Buyer under any
Transaction Document and (b) any other sum due to the Buyer or its
Associates by any Seller party or its Associates.
3.3 For the purposes of Clause 3.1(iii):
(i) in Year 1 X shall equal actual post tax profit for financial year
ended 31 October 2000 in accordance with the Company Accounts for that
year as a percentage of US$572,000 (subject to a maximum of 100%);
(ii) in Year 2 X shall equal actual post tax profit for financial year
ended 31 October 2001 in accordance with the Company Accounts for that
year as a percentage of US$624,000 (subject to a maximum of 100%); and
(iii) in Year 3 X shall actual post tax profit for financial year ended 31
October 2002 in accordance with the Company Accounts for that year as
a percentage of US$676,000 (subject to a maximum of 100%).
4. COMPLETION
4.1 Completion shall take place on 1 November 1999 at the offices of the
Notary Public Lebano, Via Vittor Pisani 9, 2012Y Milan.
4.2 At Completion the Seller shall:
4.2.1 deliver the Italian Transfer Document;
4.2.2 give written confirmation to the Buyer that:
(a) 30 days' notice of the sale of the Business and Assets was
given to any union official to whom notice should have given
pursuant to any Italian legal or regulatory requirements,
and
(b) it has complied with all legal requirements relating to the
transfer of the Employees' employment to the Buyer.
4.2.3 deliver a certificate from the Italian tax authorities confirming
that there is no litigation pending in respect of the Seller or
its Business and Assets;
4.2.4 give the Buyer possession of those Assets which are transferable
by delivery;
4.2.5 give the Buyer (if it requests and in a form reasonably
acceptable to it, including without limitation, full title
guarantee) an executed assignment of, or otherwise vest in the
Buyer, those Assets which are not transferable by delivery;
4.2.6 give the Buyer a release in the agreed form in respect of any
Encumbrance affecting any of the Assets; and
4.2.7 give the Buyer the Records.
4.3 The Buyer is not obliged to complete this Agreement unless:
4.3.1 the Seller complies with all its obligations under Clause 4; and
4.3.2 the purchase of all of the Assets is completed simultaneously
(but if the Buyer exercise its option under Clause 4.4.1,
completion of the purchase of some of the Assets does not affect
the Buyer's rights in connection with the others).
4.4 If Completion does not take place on the date set for Completion in Clause
4.1 because the Seller fails to comply with any of its obligations under
Clause 4, the Buyer may by notice to the Seller:
4.4.1 proceed to Completion to the extent reasonably practicable:
4.4.2 postpone Completion to a date not more than 28 Business Days
after the date set for Completion in Clause 4.1; or
4.4.3 terminate this Agreement.
4.5 If the Buyer postpones Completion to another date in accordance with
Clause 4.4.2, the provisions of this Agreement apply as if that other date
is the date set for Completion in Clause 4.1.
4.6 If the Buyer terminates the Agreement under Clause 4.4.3:-
(i) the Seller Parties shall indemnify the Buyer for each loss, expense or
Liability (and all costs, charges, interest, fines, penalties and
expenses) incidental to or relating to or arising in connection with
any such loss, damage or liability, including without limitation, all
expenses of the investigations and legal fees and expenses on a
solicitor and own client basis (whether or not reasonable,
foreseeable, contemplated or avoidable and whether suffered directly
or indirectly) as a result of or in connection with the Buyer failing
to proceed to Completion in accordance with this Agreement;
(ii) the Seller shall repay US$100,000 (the "Principal Amount") to the
Seller on account of the monies paid to the Buyer pursuant to Clause
3.1(i) together with interest (accruing day to day) on the Principal
Amount at a rate of 4% per annum over the base rate of National
Westminster Bank PLC from the date that payment was made by the Buyer
to the Seller pursuant to Clause
3.1(i) until the date the Seller repays the Principal Amount pursuant
to this clause;
(iii)each party's further rights and obligations cease immediately on
termination, but termination does not affect a party's accrued rights
and obligations at the date of termination.
5. THE BUYER'S REMEDIES
5.1 If, on or before the date set for Completion in Clause 4.1, the Buyer
considers that the Seller is in breach of any provision of this Agreement,
the Buyer may by notice to the Seller elect to proceed to Completion or
terminate the Agreement.
5.2 If the Buyer terminates the Agreement under Clause 5.1:
5.2.1 the Seller shall indemnify the Buyer against all loss, damage or
liability suffered by the Buyer as a result of the Seller's
breach including but not limited to its costs relating to
negotiation, preparation, execution or termination of this
Agreement;
5.2.2 the Seller shall repay the amount paid by the Buyer to the Seller
under Clause 3.1(i) in accordance with the terms of Clause
4.6(ii); and
5.2.3 each party's further rights and obligations cease immediately on
termination but termination does not affect the party's accrued
rights and obligations at the date of termination.
5.3 The Seller shall indemnify the Buyer against:
5.3.1 each loss, liability and cost which the Buyer may incur in
connection with the breach of Clause 6.1 by the Seller; and
5.3.2 each cost which the Buyer may incur whether before or after the
start of an action in connection with:
(a) the settlement of the claim against the Seller in respect of
a breach or an alleged breach of Clause 6.1 for the
enforcement of the settlement; and
(b) legal proceedings against the Seller in respect of a breach
or an alleged breach of Clause 6.1 in which judgement is
given for the Buyer or the enforcement of the judgement.
6. REPRESENTATIONS WARRANTIES AND UNDERTAKINGS
6.1 The Seller Parties jointly and severally represent, warrant and undertake
to the Buyer:-
6.1.1 in the terms of Schedule 1;
6.1.2 that the contents of the Buyer's Report are true, accurate and
complete in all respects and fully, clearly and accurately
divulge every matter to which they relate;
6.1.3 that upon any event occurring or matter arising which results in
any of the Warranties being unfulfilled, untrue, misleading or
inaccurate in any respect at Completion or any breach or
non-fulfilment of any of the undertakings, agreements or
obligations of the Seller Parties or any of them contained in
this Agreement the Seller Parties will as soon as reasonably
practicable thereafter notify the Buyer of the same and give
details of and, where requested, investigate fully all relevant
circumstances.
6.2 The Warranties contained in this Agreement will each remain in full force
and effect beyond and notwithstanding Completion and are each made without
prejudice to any of the others. Subject to Clause 7, no provision of this
Agreement will limit the extent or application of any Warranty and
although those contained in Schedule 1 are given subject to matters fully
and fairly disclosed in the Disclosure Letter no other information
relating to any Group Company of which the Buyer or any of its advisers
has knowledge (actual or constructive) will prejudice any claim made by
the Buyer under any such Warranties or operate to reduce any amounts
recoverable. Each disclosure in the Disclosure Letter shall (if it refers
to any separate document) identify such document with a copy of the
relevant document being attached to the Disclosure Letter; any disclosure
which fails to comply with the foregoing requirement in any respect shall
not be effective and the matters stated therein shall be deemed not to be
disclosed so that the Warranties shall continue to have full effect
without qualification in any respect by such disclosure. Notwithstanding
the above or any other provision of this Agreement:-
6.2.1 the Warranties contained in paragraph 1 and paragraph 6.1.1 of
Schedule 1 shall not be or be capable of being qualified or
discharged by any disclosure made by the Seller Parties, Clause 5
or in any other way; and
6.2.2 the Warranties shall not be or be capable of being qualified or
discharged by the Disclosure Letter, Clause 7 or in any other way
insofar as any Claim arises as a consequence of the fraud or
wilful or negligent misconduct or concealment of the Seller
Parties.
6.3 Subject to the provisions of Clause 7, without restricting the rights of
the Buyer or its ability to claim damages on any basis, the amount of any
Claim may be determined as and be deemed to be and the Seller Parties
shall at all times indemnify and keep fully and effectively indemnified
the Buyer (for itself and at its option on behalf of its officers,
employees, directors, shareholders, advisors and agents (other than the
Seller Parties)) from and in respect of:-
6.3.1 the amount of all loss, damage or Liability (and all costs,
charges, interest, fines, penalties and expenses incidental or
relating to the same (including without limitation all expenses
of investigations and legal fees and expenses on a solicitor and
own client basis) whether reasonable, foreseeable, contemplated
or avoidable and suffered directly or indirectly and/or the
amount of any depletion or diminution in the value of the Assets
or the Business in each case suffered or incurred by the Buyer
directly or indirectly as a result of, in connection with or in
relation to the subject matter of such Claim; or
6.3.2 the amount by which the Business or any Assets or Liabilities of
the Buyer are respectively less or more than they would have been
had the relevant statement in Schedule 1 been true and not
misleading.
6.4 Save as otherwise provided herein and save as regards matters already
disclosed in the Disclosure Letter the rights and remedies of the Buyer in
respect of any breach of the Warranties shall not be affected by
Completion, by any investigation made by it or on its behalf into the
affairs of the Seller or the Business, by its rescinding or failing to
rescind this Agreement or by any other event or matter whatsoever.
6.5 Any liability of a Seller Party to the Buyer under this Agreement
(including its Schedules and documents referred to in this Agreement) may
be released compounded or compromised in whole or in part by the Buyer
without in any way prejudicing or affecting its rights against the other
Sellers Parties.
6.6 If the Business or any of the Assets purchased by the Buyer shall at any
time be sold or transferred the benefit of each of the Warranties may be
assigned to the purchaser or transferee of the Business or those Assets
who shall accordingly be entitled to enforce each of the Warranties
against the Seller Parties as if he were named in this Agreement as the
Buyer.
6.7 The Seller Parties warrant that between the date of this Agreement and
Completion they shall ensure that:
6.7.1 the Seller complies with Schedule 2;
6.7.2 they shall notify the Buyer immediately if they become aware of a
fact or circumstance which constitutes a breach of Clause 6 or
has caused or will cause a Warranty to become untrue, inaccurate,
incomplete or misleading at any time before Completion.
6.8 The Seller Parties will at all times indemnify and hold the Buyer (for
itself and on behalf of its officers, shareholders, directors, employees,
shareholders and advisors and agents (other than the Seller Parties))
fully and effectively indemnified against any claims, actions,
proceedings, demands, judgments, orders or enforcements and all loss,
damage or Liability (and all costs charges interest fines penalties and
expenses incidental or relating to or arising in connection with any such
loss damage or liability, including without limitation, all expenses of
investigations and legal fees and expenses on a solicitor and own-client
basis) whether or not reasonable, foreseeable, contemplated or avoidable
and whether suffered directly or indirectly as a result of or in
connection with the following:-
6.9 The Buyer undertakes to make available (subject to Completion) US$375,000
(the "EMPLOYEE FUND") for distribution to Employees nominated by the
Seller which shall
be distributed by the Buyer by way of bonus. The Employee Fund shall be
reduced by any amount payable by the Buyer (by way of any tax or other
liability or other expenses) in making any payment to Employees pursuant
to this Clause.
7. LIMITATIONS
7.1 The liability of the Seller Parties in respect of any Claim shall be
limited as follows:
7.1.1 no liability shall arise unless the loss thereby sustained
(together with the aggregate amount of losses sustained arising
from previous or concurrent Claims, if any) shall exceed
US$5,000, in which case any and all such sums shall be liable to
be met in full;
7.1.2 no Claim shall be made by the Buyer (other than in respect of (a)
those Warranties in paragraph 1 of Schedule 1 or (b) fraud or
wilful misconduct or concealment), unless written notice
specifying in reasonable detail the grounds on which such Claim
is based (and so far as practicable the amount claimed) has been
given by the Buyer to any of the Seller Parties on or before the
third anniversary of Completion (the "CLAIM DATE"), Any Claim
which has been made or shall be made before the Claim Date shall
(if it has not been previously satisfied, settled or withdrawn)
be deemed to have been withdrawn and shall become fully barred
and unenforceable on the expiry of the period of six months
commencing on the receipt by any Seller Party of notice of the
Claim pursuant to this clause unless proceedings in respect
thereof shall have been commenced against any Seller Party and
for this purpose proceedings shall not be deemed to have been
commenced unless they shall have been issued and served upon any
of the Seller Parties.
8. LIABILITIES AND APPORTIONMENTS
8.1 With effect from Completion, the Seller:
8.1.1 remains responsible for all liabilities incurred by it before the
Effective Time (including, without limitation, the Trade Credits
and all outgoings and expenses owed in connection with the
Business or the Assets before the Effective Time (including,
without limitation, wages, accrued holiday pay, bonuses and other
outgoings in respect of the Employees and rents, rates and
service charges in respect of the Property));
8.1.2 remains responsible for all claims by any person outstanding
against it as at the Effective Time or arising by reason of any
act or omission by it before the Effective Time (including,
without limitation, all claims by any person in connection with
any goods or services supplied by the Seller before the Effective
Time);
8.1.3 shall (except as provided in clause 9.7) promptly pay the
liabilities referred to in clause 8.1.1. and promptly settle the
claims referred to in clause 8.1.2; and
8.1.4 shall indemnify the Buyer against each loss, liability and cost
which the Buyer may incur:
(a) in connection with the ownership or operation of the
Business or the Assets before the Effective Time; or
(b) as a result of the Seller's failure to comply with its
obligations under clause 8.1.1, 8.1.2 or 8.1.3,
including, without limitation, each loss, liability or cost
incurred as a result of defending or settling a claim alleging
such a liability (a "SPECIFIED CLAIM").
8.2 With effect from Completion the Buyer:
8.2.1 is responsible for all liabilities incurred by it in connection
with the Business and the Assets after the Effective Time
(including, without limitation, all outgoings and expenses owed
in connection with the Business or the Assets after the Effective
Time (including, without limitation, wages accrued holiday pay,
bonuses and other outgoings in respect of the Employees and
rents, rates and service charges in respect of the Property));
8.2.2 shall indemnify the Seller against each loss, liability and cost
which the Seller may incur:
(a) in connection with the ownership or operation of the
Business or the Assets after the Effective Time; or
(b) as a result of the Buyer's failure to comply with its
obligations under clause 8.2.1;
including, without limitation, each loss, liability or cost
incurred as a result of defending or settling a claim alleging
such a liability (also a "SPECIFIED CLAIM").
8.3 If a party (the "INDEMNIFIED PARTY") becomes aware of a matter which might
give rise to a Specified Claim:
8.3.1 the Indemnified Party shall notify the other party (the
"INDEMNIFIER") immediately of the matter (stating in reasonable
detail the nature of the matter and, if practicable, the amount
claimed) and consult with the Indemnifier with respect to the
matter; if the matter has become the subject of proceedings the
Indemnified Party shall notify the Indemnifier within sufficient
time to enable the Indemnifier time to contest the proceedings
before final judgment;
8.3.2 the Indemnified Party shall:
(a) take any action and institute any proceedings, and give any
information and assistance, as the Indemnifier or its
insurers may reasonably request to:
(i) dispute, resist, appeal, compromises, defend, remedy or
mitigate the matter; or
(ii) enforce against a person (other than the Indemnifier)
the Indemnified Party's or its insurers' rights in
relation to the matter; and
(b) in connection with proceedings related to the matter (other
than against the Indemnifier) use advisers chosen by the
Indemnifier or its insurers and, if the Indemnifier
requests, allow the Indemnifier or its insurers the
exclusive conduct of the proceedings,
in each case if the Indemnifier indemnifies the Indemnified Party
for all reasonable costs incurred as a result of a request or
choice by the Indemnifier or its insurers;
8.3.3 if the Buyer is the Indemnified Party, clause 8.3.2 does not
apply if the Seller's or its insurers' request or choice would in
the Buyer's reasonable opinion prejudice its relationship with a
customer or supplier of the Business; and
8.3.4 the Indemnified Party may only admit liability in respect of or
settle the matter if it has first obtained the Indemnifier's
written consent (not to be unreasonably withheld or delayed).
8.4 If a payment of outgoings or expenses in respect of the Business or the
Assets for a period covering both before and after the Effective Time
(other than the Seller Prepayments) has been made by:
8.4.1 the Seller, the Buyer shall pay the Seller an amount equal to
that proportion of the payment that relates to the period after
the Effective Time; or
8.4.2 the Buyer, the Seller shall pay the Buyer an amount equal to that
proportion of the payment that relates to the period before the
Effective Time.
8.4.3 If a payment in respect of the Business or the Assets for a
period covering both before and after the Effective time (other
than Customer Prepayments) has been received by:
(a) he Seller, it is entitled to retain the proportion of the
payment that relates to the period before the Effective Time
and shall pay the Buyer an amount equal to the remainder; or
(b) the Buyer, it is entitled to retain the proportion of the
payment that relates to the period after the Effective Time
and shall pay the Seller an amount equal to the remainder.
8.5 A party owing an amount under clause 8.4 or 8.5 shall pay the other party
that amount within 28 days of receipt of an invoice form the other party.
9. TRADE DEBTS AND TRADE CREDITS
9.1 Within 10 days starting on the day of Completion, the Seller shall give
the Buyer written details of
9.1.1 the amount of each Trade Debt, the name and address of the trade
debtor that owes the Trade Debt and the date on which the Trade
Debt became due and payable; and
9.1.2 the amount of each the Trade Credit, the name and address of the
trade creditor that is owed the Trade Credit and the date on
which the Trade Credit is due to be paid.
9.2 During the period starting on the day after Completion and ending on the
day 60 days after that date the Buyer shall make all reasonable efforts to
collect the Trade Debts as the Seller's agent. After that period the Buyer
has no further obligation to the Seller in respect of clause 9.
9.3 During the period specified in clause 9.2, the Seller may only assign to a
person or deal with a Trade Debt or contact a debtor whose debt is
included in the Trade Debts if it has first obtained the Buyer's written
consent.
9.4 The Buyer shall, for the purpose of collecting the Trade Debts, in all
material respects continue the practices and procedures previously used by
the Seller to collect trade debts. The Buyer is not required to take legal
proceedings to recover a Trade Debt nor to apply its own money to settle a
Trade Debt.
9.5 If the Buyer receives an amount from a debtor whose debt is included in
the Trade Debts and who is a debtor of the Buyer, the amount shall be
applied to satisfy the outstanding debts which were invoiced first to the
debtor unless the debtor allocates the amount.
9.6 The Buyer may only compromise a Trade Debt or give time or indulgence for
payment of a Trade Debt if it has first obtained the Seller's written
consent (not to be unreasonably withheld or delayed).
9.7 The Buyer shall (as the Seller's agent) apply any money it receives in
respect of the Trade Debts (less any deduction permitted by clause 9.10 or
clause 9.11) to discharge the Trade Credits. The Buyer has an absolute
discretion as to which Trade Credits to discharge and the order in which
Trade Credits are discharged. If when a Trade Credit is due to be paid the
amount of money collected from the Trade Debts (and not previously used to
discharge another Trade Credit) is less than the amount of the Trade
Credit, the Seller shall pay the Buyer the difference between those
amounts immediately after being notified by the Buyer of the difference.
9.8 After all the Trade Credits have been paid, the Buyer shall within 10 days
starting on the last day of each month pay any money it has received
during that month in respect of the Trade Debts (less any deduction
permitted by clause 9.10 into the Seller's bank account.
9.9 Within 10 days starting on the last day of each month, the Buyer shall
give the Seller written details of the amounts received during that month
in respect of the Trade Debts and the amounts applied in payment of Trade
Credits or deducted in accordance with clauses 9.10 and 9.11.
9.10 The Buyer may set off each amount which the Seller is liable to pay the
Buyer in connection with this Agreement against its obligations under
clause 9.7 to discharge the Trade Credits and its obligations under clause
9.8 to pay the Seller the amount of the Trade Debts collected.
10. CONTACTS
10.1 Subject to Clauses 8.1 and 10.3.3, after Completion the Buyer shall:
10.1.1 perform all the Seller's obligations under each Contract in
accordance with the terms of the Contract; and
10.1.2 indemnify the Seller against each loss, liability and cost which
the Seller may incur as a result of the Buyer's performance of
the Seller's obligations under each Contract to the extent that
the loss, liability or cost is attributable to the Buyer's act or
omission after the Completion Date (including, without
limitation, each loss, liability and cost incurred as a result of
defending or settling a claim alleging such a liability).
10.2 The Seller shall indemnify the Buyer against each loss, liability and cost
which the Buyer may incur as a result of the Seller's performance of its
obligations under each Contract to the extent that the loss, liability or
cost is attributable to the Seller's act or omission whether before or
after the Completion Date (including, without limitation, each loss,
liability and cost incurred as a result of defending or settling a claim
alleging such a liability).
10.3 If a Contract cannot be transferred to the Buyer except by an assignment
made with a specified person's consent or by a novation agreement:
10.3.1 this Agreement does not constitute an assignment or an attempted
assignment of the Contract if the assignment or attempted
assignment would constitute a breach of the Contract;
10.3.2 both before and after the Completion Date each party shall make
all reasonable efforts to obtain the person's consent to the
assignment, or achieve the novation, of the Contract;
10.3.3 until the consent is obtained or novation is achieved, the Seller
shall do each act and thing reasonably requested of it by the
Buyer to enable performance
of the Contract and to provide for the Buyer the benefits of the
Contract (including, without limitation, enforcement of a right
of the Seller against another party to the Contract arising out
of its termination by the other party or otherwise); and
10.3.4 if the arrangements in clauses 10.3.2 and 10.3.3 cannot be made
in respect of the Contract:
(a) each party shall make all reasonable efforts to ensure that
the Contract is terminated without liability to either
party; and
(b) neither party has any further obligation to the other
relating to the Contract except that the Seller shall
immediately repay to the Buyer any amount paid by the Buyer
to the Seller in respect of the Contract.
10.4 Clause 10.3 does not affect the Buyer's rights and remedies against the
Seller in respect of a Contract which the Seller has warranted is
assignable, or may be performed by the Buyer instead of the Seller,
without novation agreement.
11. RESTRICTIONS ON SELLERS
11.1 As regards the Service Arrangements proposed to be entered into between
the Buyer and PGV and MEC (the "EXECUTIVE SELLER PARTIES"):
11.1.1 the Executive Seller Parties hereby acknowledge that:
(a) it is a term of this Agreement that the said Service
Arrangements are being entered into for the purpose of
(inter alia) protecting the goodwill of the Business and
Assets; and
(b) accordingly if any Executive Seller Party shall voluntarily
leave the service of the Buyer within 3 years from
Completion or if the Buyer shall be entitled summarily to
determine such Service Arrangement, the Buyer will suffer
loss;
11.1.2 if any Executive Seller Party shall leave the service of the
Buyer prior to the expiry of such 3 year period, such Executive
Seller Party undertakes to repay to the Buyer an amount equal to
one half of US$ (which sum represents the agreed proportion of
the total consideration payable hereunder which is attributable
to the goodwill of the Business) for each complete calendar month
between the date of termination of the Executive Seller Party's
service by the Buyer and the expiry of such 3 year period, such
amount to be payable within one calendar month after the
termination of the Executive Seller Party's employment;
11.1.3 nothing in this Clause shall require the Executive Seller Parties
or any of them to make any payment to the Buyer in circumstances
in which:
(a) the Buyer shall terminate the said Service Arrangement
without good cause; or
(b) the Buyer shall fail to fulfil its obligations under this
Agreement in any material respect; or
(c) the Buyer shall constructively dismiss the Executive Seller
Party without having good cause to do so; or
(d) the Executive Seller Party shall by reason of death, illness
or injury be unable to perform his obligations under the
said Service Arrangement in circumstances which would
entitle the Buyer to terminate the same.
11.2 For the purposes of this Clause the following words and expressions shall
have the following meanings:
"CUSTOMER" any person, firm or company who at any
time during the period of two years
immediately prior to the relevant Event
Date was a customer, client or licensee
of the Seller or any Relevant Associate
being a person, firm or company with
whom the Seller personally dealt on its
own behalf or that of any Relevant
Associate during the said period of two
years or for whose account the Seller
had overall responsibility;
"DISTRIBUTION BUSINESS" the business of the marketing,
purchasing, sale, licensing and
distribution of interactive
entertainment software, peripheral and
hardware products;
"THE EVENT DATES" the Completion Date and/or the
Termination Date;
"KEY PERSON" a person who is or was at any time
whilst the relevant Seller Party was
employed by or a shareholder of the
Seller:
employed or engaged as an employee,
director or consultant of the Seller or
any Relevant Associate; and
a person with whom the relevant Seller
Party personally dealt during his
employment by or the time he held shares
in the Seller; and/or
employed in the capacity of manager,
marketing or licensing executive or
developer
or in a more senior capacity or who is
reasonably likely to be in possession of
any Confidential Information;
"PERIOD" the period commencing on each of the
Event Dates and ending on the date being
five years later and (in the case of the
Termination Date) two years from the
Termination Date, save that the purposes
of clause 11.3.5, such period shall
continue indefinitely;
"PROSPECTIVE CUSTOMER" any person, firm or company who has been
engaged in negotiations with the Seller
or any Relevant Associate with a view to
purchasing or contracting in relation to
services or goods supplied by the Seller
or any Relevant Associate in the period
of 12 months prior to the relevant Event
Date being a person, firm or company
with whom the relevant Seller Party
personally dealt on behalf of the Seller
or any Relevant Associate during the
said period of 12 months or for whose
account the relevant Seller Party had
overall responsibility;
"RELEVANT ASSOCIATE" the Seller and/or an Associate of the
Seller from time to time;
"RESTRICTED BUSINESS" that part or parts of the Distribution
Business which competes or compete or is
or are about to compete with that part
or parts of the business of the Seller
or any Relevant Associate with which the
relevant Seller Party was materially
involved or concerned or for which the
relevant Seller Party was responsible
within a two year period prior to the
relevant Event Date;
"SERVICES AND/OR GOODS" any services and/or goods of a kind
supplied by the Seller or any Relevant
Associate in the period of two years
immediately prior to the relevant Event
Date and with the supply of which the
relevant Seller Party was concerned
during the said two year period;
"SUPPLIER" any person, firm or company who at any
time during the period of two years
immediately prior to the relevant Event
Date was a supplier, licensor developer
of the Seller or any Relevant Associate
being a person, firm or
company with whom the relevant Seller
Party personally dealt on behalf of the
Seller or any Relevant Associate during
the said period of two years or for
whose account the relevant Seller Party
had overall responsibility;
"THE TERMINATION DATE" the date on which the relevant Executive
Seller Party's Service Arrangement with
the Seller or any Relevant Associate
terminates; and
"TERRITORY" Means Italy and the Vatican City.
11.3 Each Seller Party agrees with the Buyer that, without prejudice to any
other duty imposed by law or equity, neither such Seller Party nor any
Associate of such Seller Party will without the prior written consent of
the Buyer (which consent will be withheld only in so far as may be
reasonably necessary to protect the legitimate interests of the Buyer or
the Business) either by himself, his employees or agents or otherwise
howsoever, on his own account or in conjunction with or as principal,
partner, director, employee, consultant or agent or otherwise on behalf of
any other person for the Period, directly or indirectly:
11.3.1 carry on or assist with or be concerned or interested in the
carrying on of a Restricted Business in the Territory;
11.3.2 in competition with that part or parts of the Business with which
the relevant Seller Party was involved, concerned or responsible
within a two year period prior to the relevant Event Date, supply
(or procure or assist the supply of) any Services and Goods to
any Customer or any Prospective Customer;
11.3.3 in competition with that part or parts of the Business with which
the relevant Seller Party was involved, concerned or responsible
within a two year period prior to the relevant Event Date,
canvass or solicit the custom of (or procure or assist the
canvassing or soliciting of the custom of) any Customer or any
Prospective Customer in respect of any Services and/or Goods;
11.3.4 in competition with the Business
(a) offer employment to or employ or offer or conclude contract
for services with, canvass or solicit the employment or
engagement of any Key Person; or
(b) procure or assist any third party so to offer, employ,
engage or solicit any Key Person (whether or not such person
would commit any breach of his contract with the Buyer or
any Relevant Associate) unless such Key Person had ceased to
be employed or engaged by the Buyer or any Relevant
Associate (as the case may be) more than 3 months
previously;
11.3.5 interfere or seek to interfere with the continuance of supplies
to the Buyer or any Relevant Associate by any Supplier or do or
say anything likely or calculated to lead any person, firm or
company to withdraw from or cease to continue offering to the
Buyer or any Relevant Associate any goods, services or rights
enjoyed by it.
11.4 Within 30 days starting on the day of Completion the Seller Parties shall
ensure that the name of the Seller is changed so as not to include the
words "C.D. Verte" or to suggest a connection with the Business. The
Seller Parties acknowledge that reputation and goodwill is attached to the
name "C.D. Verte" and that the Buyer is acquiring all rights in the name
under this Agreement. After Completion the Seller Parties may not,
directly or indirectly, use or authorise, encourage, allow or assist a
person to use, a name or names identical or confusingly similar to "C.D.
Verte" in connection with an activity which competes directly or
indirectly with the Business.
11.5 The Seller Parties shall ensure that each Relevant Associate of them
complies with the last sentence of clause 11.4.
11.6 Each of the Seller Parties agrees with the Buyer that he will not at any
time after either of the Event Dates, whether by himself, his employees or
agents or otherwise howsoever;
11.6.1 in the course of carrying on any trade or business, claim,
represent or otherwise indicate any present association with the
Business or for the purpose of obtaining or retaining any
business or custom claim, represent or otherwise indicate any
past association with the Business;
11.6.2 without the consent of the Buyer use whether on his own behalf or
on behalf of any third party or divulge to any third party any
Confidential Information;
11.6.3 do or say anything with the intention of harming the reputation
of the Buyer or the Business or do anything which could be
anticipated to lead to any person or Undertaking ceasing to do
business with the Buyer;
11.7 Each of the Seller Parties agrees with the Buyer that the restrictive
covenants herein contained are reasonable and necessary for the protection
of the value of the Business and each of the Seller Parties agrees that
having regard to that fact those covenants do not work harshly on him.
11.8 While the restrictions aforesaid are considered by the parties to be
reasonable in all the circumstances, it is agreed that if any such
restrictions taken together shall be adjudged to go beyond what is
reasonable in all the circumstances for the protection of the interests of
the Buyer but would be adjudged reasonable if part or parts of the wording
thereof were deleted or amended or qualified or the periods thereof were
reduced or the range of products or area dealt with were thereby reduced
in scope, then the relevant restriction or restrictions shall apply with
such modification or modifications as may be necessary to make it or them
valid and effective.
11.9 Each of the Seller Parties hereby agrees with the Buyer at the request of
the Buyer to enter into a direct agreement or undertaking with any company
or companies in the Buyer Group whereby he will accept restrictions and
provisions corresponding to the restrictions and provisions herein
contained (or such of them as may be appropriate in the circumstances) in
relation to such products and services and such area and for such period
as such company or companies in the Buyer Group may reasonably require for
the protection of its or their legitimate interests.
11.10 Without prejudice to any other rights or remedies that the Buyer may have,
the Seller Parties acknowledge and agree that damages alone would not be
an adequate remedy for any breach by any Seller Party of the provisions of
this clause and that, accordingly, the Buyer shall be entitled without
proof of special damage to the remedies of injunction, specific
performance and other equitable relief for any threatened or actual breach
of the provisions of this clause by any of the Seller Parties.
11.11 Each of the obligations on the Seller Parties contained in the above
provisions of this Clause constitutes an entirely separate and independent
restriction on the Seller Parties notwithstanding that they may be
contained in the same sub-clause, paragraph, sentence or phrase.
11.12 This Clause shall not preclude the Seller Parties from holding or
acquiring directly or indirectly not more that 1% in nominal value of the
issued shares or other securities of any class of any other company which
are listed or dealt in on any recognised stock exchange and held by way of
bona fide investment only.
12. EFFECT OF COMPLETION
Any provision of this Agreement and any other documents referred to in it
which is capable of being performed after but which has not been performed
at or before Completion and all Warranties and covenants and other
undertakings contained in or entered into pursuant to this agreement shall
remain in full force and effect notwithstanding Completion.
13. COSTS, EXPENSES AND INSURANCE
13.1 All costs and expenses incurred by or on behalf of the parties to this
Agreement in connection with this Agreement or any of the documents to be
executed pursuant to this Agreement will be borne solely by the party who
incurs them:
(i) to the Buyer's Accountants or the Buyer's Solicitors shall be borne
by the buyer; and
(ii) to the Sellers' Accountant or the Sellers' Solicitors shall be borne
by the Seller)
13.2 For 90 days following Completion the Sellers shall take such steps as are
reasonably available to them to maintain in good standing all insurance
policies relating to the Business and Assets, details of which are given
in the Disclosure Letter. The Buyer shall be responsible for making new
insurance arrangements for the Business and
Assets as soon as reasonably practicable after Completion and undertakes
to pay on demand (against evidence thereof) to the Sellers all costs
properly attributable to keeping the said insurance arrangements in force
after Completion.
14. NOTICES
14.1 To be effective all notices consents approvals requests or other
communications relating to this Agreement must be in writing but may be
delivered personally or sent by first class prepaid (airmail if overseas)
recorded delivery post or facsimile (with a confirmation copy sent by
post) to the party to be served at its address as stated in this Agreement
or to that party's facsimile transmission number at that address or as
notified from time to time;
and if to the Buyer to:-
Take Two Interactive Software Europe Limited
Hogarth House
29-31 Sheet Street
Windsor
Berkshire
SL4 1BY
For the attention of: Kelly Sumner (with a copy to the Buyer's Solicitors)
and if to the Sellers Parties to the respective addresses set out at the
beginning of this Agreement.
14.2 A communication will be deemed to have been served as follows:-
14.2.1 if personally delivered or by overnight mail at the time of
delivery;
14.2.2 if posted at the expiration of two days (three days if overseas)
(excluding days which are not Business Days) after the envelope
containing the communication was delivered into the custody of
the postal authorities;
14.2.3 if sent by facsimile at the expiration of one day (excluding a
Business Day) after the facsimile was transmitted.
14.3 In proving service it will be sufficient to prove that the personal
delivery was made or that the envelope containing the communication was
properly addressed as a pre-paid first class (airmail if overseas)
recorded delivery letter or that the facsimile was properly addressed and
sent.
15. ENTIRE AGREEMENT/VARIATION
15.1 This Agreement (together with any Transaction Documents) constitutes the
entire agreement and understanding between the parties and supersedes any
previous agreement, arrangement or understanding between the parties in
relation to the subject matter of this Agreement.
15.2 No variation of this Agreement shall be effective unless made in writing
and signed by or on behalf of each party.
16. COUNTERPARTS
This Agreement may be executed in any number of counterparts all of which
together shall constitute a single instrument.
17. ANNOUNCEMENTS
Unlessspecifically otherwise agreed in writing or required by law, no
public announcement shall be made in respect of the subject matter of this
Agreement and the parties shall co-operate with respect to any such public
announcement.
18. GENERAL
18.1 The termination of this Agreement for whatever cause shall not prejudice
or affect the rights or remedies of either party against the other in
respect of any antecedent breach of this Agreement and shall not prejudice
the rights or remedies of either party in respect of any sums or sum of
money owed or owing from one party to the other.
18.2 No failure or delay by either party in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof nor shall
any single or partial exercise by either party of any right, power or
privilege preclude any further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided
are cumulative and not exclusive of and are without prejudice to any
rights or remedies available under law or otherwise.
18.3 No breach of any provision of this Agreement shall be waived or discharged
except with the express written consent of the parties.
18.4 If any term or provision in this Agreement shall be held to be illegal or
unenforceable, in whole or in part, under any enactment or rule of law,
such term or provision or part shall to that extent be deemed not to form
part of this Agreement but the enforceability of the remainder of this
Agreement shall not be affected. The parties further agree to replace such
void or unenforceable provision of this Agreement with valid and
enforceable provisions that will achieve, to the greatest extent possible,
the economic, business and other purposes of the illegal or unenforceable
term or provision.
18.5 The parties hereby agree to participate fully in and to use their
respective reasonable endeavours to obtain any necessary clearances and
guidance from the European Commission ("THE COMMISSION") and any other
governmental or other authorities having responsibility from time to time
for the control of mergers and other competition law issues to ensure that
the provisions contained in this Agreement are fully effective and binding
against the parties for the duration provided herein.
18.6 Subject to the express provisions of this Agreement, neither party may
assign the benefit of this Agreement in whole or in part without the prior
written consent of the
other Provided That the Buyer may upon giving written notice to the
Sellers, assign the benefit of this Agreement to any Connected Company.
For the purposes of this sub-clause "CONNECTED COMPANY" will mean any
Subsidiary Undertaking, Parent Undertaking or Associate of the Buyer or
any Subsidiary Undertaking of such Parent Undertaking or Associate. If
that assignee (or in the case of a series of assignments the ultimate
assignee) ceases to be a Connected Company, the rights held by the
relevant assignee shall lapse unless they are reassigned within 14 days to
the Buyer or any other person or Undertaking at that time a Connected
Company.
18.7 If the Sellers or the Buyer default in the payment when due of any sum
payable under this Agreement or the Deed (whether determined by agreement
or pursuant to an order of the Court or otherwise) the liability of the
Sellers or the Buyer (as the case may be) shall be increased to include
interest on such sum from the date when such payment was due until the
date of actual payment (as well after as before judgment) at a rate per
annum of 2 per cent above the base rate from time to time of National
Westminster Bank Plc. Such interest shall accrue from day to day.
19. GOVERNING LAW AND JURISDICTION
19.1 This Agreement and the Transaction Documents save as expressly stated
otherwise shall be governed by and construed in accordance with English
law and the parties irrevocably submit to the non-exclusive jurisdiction
of the English courts as regards any claim, dispute or matter ensuing in
relation to this Agreement and the Transaction Documents.
19.2 Each of the Sellers and the Buyer hereby irrevocably designate, appoint
and empower (in the case of the Sellers) the Sellers' Solicitors and (in
the case of the Buyer) the Buyer's Solicitors as its agent to receive for
and on its behalf service of process in any legal action, matter or
proceedings with respect to this Agreement service on whom shall be deemed
completed whether or not received by the Sellers or the Buyer as the case
may be. Each party shall inform the other in writing of any change in the
address of its process agents within 28 days. If such process agents cease
to have an address in England, the relevant party irrevocably agrees to
appoint new process agents acceptable to the other party and deliver to it
within 14 days a copy of a written acceptance of appointment by its new
process agents. Nothing contained in this Agreement shall however affect
the right to serve process in any other manner permitted by law or the
right to bring proceedings in any other jurisdiction for the purposes of
the enforcement or execution of any judgment or other settlement in any
other courts.
IN WITNESS of which this Agreement has been duly executed the day and year first
above written.
SCHEDULE 1
REPRESENTATION WARRANTIES AND UNDERTAKINGS
1. CAPACITY AND AUTHORITY
1.1 Each of the Seller Parties has full power and authority and legal capacity
to enter into and perform this Agreement and/or any other Transaction
Document to which it is a party. This Agreement and the Transaction
Documents constitute or when executed will constitute binding obligations
on each of them enforceable against each in accordance with their terms
and will not give rise to any breach of any agreement or order, judgment
or decree of any court or governmental agency by or to which any Seller
Party is bound.
1.2 The Seller is in all respects duly organised and registered, validly
existing until 31 December 2050 under the laws of Italy and the Seller has
all requisite corporate power to own, lease and operate its assets and to
carry out its business as it is now being conducted, and the said business
has been conducted and is now being conducted in conformity with all
applicable laws.
2. ACCOUNTS AND FINANCE
2.1 The Latest Accounts (including all books and records relevant to them)
were prepared in accordance with [the historical cost convention on the
same basis and adopting] the same accounting principles (whether in
respect of valuation rates of depreciation or otherwise) as the Accounts
for the previous financial year and both they and their preparation accord
with Italian generally accepted accounting principles and all other
applicable statutes and regulations and:-
2.1.1 are true complete and accurate in all respects, set out accurately
and correctly all assets and liabilities (whether actual or
contingent) of the Seller as at the date of the Latest Accounts,
show a true and fair view of the financial position of the Seller at
the date of the Latest Accounts and of the profits and losses of the
Seller for the period ended on the date of the Latest Accounts are
not affected by any extraordinary or exceptional items; and
2.1.2 contain either full provision or full particulars in notes
(conforming with good accountancy practice) in respect of bad and
doubtful debts and all Liabilities of the Seller as at the date of
the Latest Accounts.
2.2 In the Latest Accounts the Seller's assets were not overvalued nor were
its Liabilities undervalued.
2.3 At the date of the Latest Accounts the value attributed to stock did not
exceed the lower of its direct cost or net realisable value, all
slow-moving stock (being stock held
for a period in excess of 6 months) redundant or obsolete stock then owned
by the Seller having been written down to nil.
2.4 The rate of depreciation applied in the Latest Accounts in respect of each
fixed asset has been consistently applied over previous accounting periods
of the Seller consistently applied after the date of this Agreement will
be adequate to write down the value of such asset to its net realisable
value at a time not later than the expiration of its useful working life.
2.5 The turnover, profits and losses of the Seller shown by the Latest
Accounts have not been affected by any unusual, exceptional,
extraordinary, non-recurring or short-term item or by any other matter
which has rendered such turnover, profits or losses unusually or
artificially high or low.
2.6 The Seller has maintained its books and records accurately and in
accordance with generally accepted accounting principles and standards and
such books and records accurately reflect the Seller's current physical
stock debtors and creditors the levels of all of which do not materially
differ from the Seller's customary levels at this stage in its trading
year and are sufficient but not excessive for the normal requirements of
the Business and having regard to current orders and to orders reasonably
anticipated.
2.7 The Seller is in possession of all books, records, papers, deeds and
documents relating to its business, assets and liabilities and does not
have any of its records, systems, controls, data or information recorded,
stored, maintained, operated or otherwise wholly or partly dependent on or
held by any means which (including all means or access thereto and
therefrom) are not under the exclusive ownership and direct control of the
Seller.
2.8 The Seller has no amounts outstanding under all loan, guarantee,
acceptance and other borrowing facilities and arrangements (including,
without limitation, money raised by acceptances or debt factoring) and no
outstanding foreign exchange commitments or exposures. The Seller has not,
and will not by virtue of any aspect of the transaction hereby
contemplated, become bound or liable to be called upon to pay or repay
prematurely any indebtedness or to pay or discharge any obligation under
any guarantee, indemnity, surety, or security arrangement nor has the
Seller failed to pay or repay any indebtedness or to meet any such
obligation in full on the due date.
2.9 No loan made to the Seller is repayable now nor has the Seller received
any notice requiring repayment of any loan or which may result in any
indebtedness becoming due prior to its intended maturity date nor do any
circumstances exist which may result in the service of any such notice.
3. EVENTS SINCE THE LATEST ACCOUNTS
Since the date of the Latest Accounts there has been no adverse or
material change in the prospects or financial or trading position of the
Seller or the nature and scope of the Business or the net realisable value
of its assets or its gross and net profit margins and the Seller has not:-
3.1 entered into or incurred or assumed any contract or Liability of a
material or unusual nature or which is not in the ordinary course of
trading consistent with past practice or pursuant to which the Seller is
required to make a payment in excess of US$5,000 or periodic payments
which involved or may involve total annual expenditure in excess of
US$5,000 per contract or commitment (or series or related associated
contracts and or commitments);
3.2 given any guarantee, indemnity, surety or security;
3.3 lent any amount to any person or entity, other than advances for travel
and expenses which are incurred in the ordinary course of business
consistent with past practice, not material in amount and documented by
receipts for the claimed amounts;
3.4 terminated or amended any agreement, arrangement or understanding or
waived or released any right or claim of material value;
3.5 failed to perform in accordance with their terms all contracts and orders
and (subject to any specific restrictions herein contained) discontinued
obtaining new contracts and orders in the ordinary and proper course of
trading;
3.6 let, licensed, exchanged, sold, assigned or transferred or agreed to do
any of the foregoing or otherwise part with possession or ownership or
created any Security Interest in respect of the whole or any part of its
business or undertaking or the Properties, any Intellectual Property or
other intangible asset or any material part of its assets or any material
asset or (other than in the ordinary course of trading consistent with
past practice) disposed of any of its assets;
3.7 done or omitted to do anything which might jeopardise or diminish any of
the assets, goodwill or customer list of the or the value of the Business;
3.8 entered into any unusual or imprudent foreign exchange commitment or
arrangement or failed to enter into arrangements to hedge any foreign
currency exposures where it would have been prudent to do so;
3.9 declared, set aside, or paid any dividend or made any distribution;
3.10 paid or accrued or become liable to pay any admissions, or accounting,
management and consultancy or other such fees to or entered into any
transaction with or for the benefit of the Sellers or any of their
Associates;
3.11 departed from conducting its business in its ordinary course and in
consultation with the Buyer;
3.12 entered into any transaction with or for the benefit of any of its
directors, the Seller Parties or of any Associate of any of the foregoing;
3.13 failed to keep proper accounting records or make therein true and complete
entries of all its dealings and transactions or changed its accounting
methods;
3.14 entered into any borrowing, factoring or other financing or any lending
commitments being in each case commitments which are outside the ordinary
course of trading and are not material to the financial condition of any
of the Companies;
3.15 failed to pay off creditors on a timely basis;
3.16 paid or made (or made any oral or written commitments or representation to
pay or make) any bonus, increased or special salary, remuneration,
benefits or gratuitous payment to any director, officer, employee or
consultant or entered into or varied the terms of any employment,
consulting agency, agreement for personal services, compensation or
severance agreement or arrangement with any such person, or paid any
severance or termination pay.
3.17 failed to maintain in good working condition and repair, subject only to
ordinary wear and tear or suffered the repossession by the owner under any
hire purchase leasing rental or similar agreement of any of the plant and
machinery fixtures fittings equipment vehicles and other assets
represented in the Latest Accounts or subsequently acquired by the Seller;
3.18 ceased to trade with any substantial or important customer of or supplier
to the Seller or received notice of termination;
3.19 so far as the Sellers are aware, incurred any bad or doubtful debt or
learned of any circumstances making bad or doubtful any previously
incurred debt;
3.20 received any notice of:
(i) any adverse price or other changes in trading terms with any
customer and no such change is to the knowledge of the Seller
intended or likely;
(ii) the termination, or proposed or intended termination, of or changes
or desired changes to the terms of any of the Material Contracts;
3.21 issued or sold any shares of any class or any other of its securities, or
issued or created any warrants, obligations, subscriptions, options,
convertible securities or other commitments to issue shares, or accelerate
the vesting of any outstanding security;
3.22 split or combined the outstanding authorised or issued share capital of
any class or entered into any recapitalisation or agreement affecting the
number or rights of outstanding shares of any class affecting any other of
its securities;
3.23 merged, consolidated or reorganised with, or acquired any entity;
3.24 amended its Memorandum and Articles of Association;
3.25 passed any resolution in general meeting other than resolutions relating
to the routine business of annual general meetings;
3.26 agreed to any assessment by any tax authority;
3.27 changed any insurance coverage or issued any certificates of insurance;
3.28 directly or indirectly redeemed, purchased or otherwise acquired or
committed to acquire any shares or other securities or other ownership
interest of any party; or
3.29 agreed to do, or entered into negotiations with respect to, any of the
things described in the preceding sub-paragraphs.
4. COMMITMENTS
4.1 There is not outstanding any option, right to acquire, right of
pre-emption, Security Interest, deposit by way of security, set off,
counterclaim, or other security, encumbrance or equity on the whole or any
part of the Seller's undertaking goodwill uncalled capital properties or
assets nor is the Seller a party to or subject to any agreement
arrangement or commitment to give or create any such thing.
4.2 The amounts borrowed by the Seller from its bankers do not exceed any of
its overdraft facilities and the total amount borrowed by the Seller (from
whatever source) does not exceed any limitation on its borrowing powers
whether contained in the Articles of Association of the Seller or in any
debenture or loan stock deed or other deed document or agreement executed
by the Seller or on its behalf or to which it is subject.
4.3 The Seller does not have any outstanding capital commitments nor has it
entered into any leasing or hire purchase or similar commitment involving
any asset with a capital value in excess of US$5,000.
4.4 Except as fully provided or reserved for in the Latest Accounts no sum is
owed by the Seller to its auditors solicitors or other professional
advisers.
4.5 The Seller has paid its creditors within the times agreed with them and
there are no debts owing by the Seller which have been due for more than
four weeks.
5. LITIGATION
5.1 The Seller is not in default under any agreement to which it is a party or
in respect of any other obligation binding upon it and it is not engaged
(whether as plaintiff defendant or otherwise) in any litigation (whether
civil or criminal), arbitration, tribunal inquiry or other proceedings or
dispute and none of the foregoing is or are pending or threatened either
by or against the Seller nor are there any facts or circumstances which
may lead to any of the foregoing or to any proceedings against any
director or employee of the Seller in respect of any act or default for
which the Seller might be vicariously liable.
5.2 No governmental or other investigation or inquiry is in progress or
threatened in respect of the Seller or its business and (so far as the
Seller Parties are aware) there are no circumstances likely to lead to any
of the same.
5.3 Details of all claims, complaints or other correspondence which might have
a material effect on the Business have been disclosed to the Buyer and are
referred to in the Buyer's Report.
6. ASSETS
6.1 Ownership of Assets
6.1.1 The Seller is the sole legal and beneficial owner of and has good
and marketable title to the Assets and the Assets comprise all the
assets used in, or used in the carrying on of, the Business
(including, without limitation, all the assets which are accounted
for or referred to in the Latest Accounts) and all the Assets are in
the Seller's possession and under its control.
6.1.2 None of the Assets is subject to and there is no agreement or
commitment to give or create in respect of any of the Assets any
Security Interest.
6.1.3 None of the Assets has been purchased on terms that property does
not pass to the Seller until full payment is made by it to the
supplier.
6.1.4 There has been no exercise purported exercise or claim for any
Security Interest over any of the Assets and there is no dispute
directly or indirectly relating to any of the Assets.
6.2 Assets sufficient for the Business
6.2.1 The Assets comprise all the business of the Business and all assets
used in the Business since 1 January 1999 and which are necessary
for the continuation of the Business as carried on since that date
and as it is expected to be conducted following Completion.
6.2.2 The stock is at its normal level and is sufficient for the normal
requirements of the Business.
6.2.3 The work-in-progress is at its normal level having regard to the
operation of the Business in the ordinary course and current orders
and to orders reasonably anticipated from customers of the Seller.
6.2.4 The Seller Parties do not use, own or have any interest in any of
the Assets.
6.3 Stock
6.3.1 The Stock is of satisfactory quality, in good and marketable
condition, and saleable at normal selling prices in the ordinary
course of business.
6.3.2 None of the Stock is obsolete unusable unmarketable or inappropriate
or of limited value in relation to the Business and the Stock does
not include any stock relating to contracts which have expired or
terminated.
6.3.3 The stocks of raw materials packaging materials and finished goods
included in the Stock are not excessive and are sufficient in
relation to the current trading and normal requirements of the
Business.
6.3.4 There has been no material change in the levels of stocks since the
date of the Latest Accounts.
6.4 Assets: General
6.4.1 There is no property, service or benefit of any description which
was available at the date of the Latest Accounts or has subsequently
become available to the Seller which will not be available to the
Buyer on the same terms after Completion.
6.4.2 All material details of the maintenance and servicing histories and
records of the computer system and software used by the Seller have
been supplied to the Buyer and such computer system and software has
been properly licensed used maintained and serviced in accordance
with the manufacturer's instructions, has not been susceptible to
breakdown malfunction or failure.
6.4.3 All computer software used by the Seller is governed by valid
licence agreements which will continue in full force and effect for
an indefinite period following Completion.
6.4.4 The Seller has in place adequate back up arrangements to ensure
continuance of its business without loss of customers, data and
without additional expense, in the event of computer hardware or
software breakdown, malfunction or in the event of power failure.
6.4.5 All documents which in any way affect the right title or interest of
the Seller in or to any of the Assets and which attract stamp duty
(or would do so if brought into the United Kingdom) or require to be
stamped with a particular stamp denoting that no duty is chargeable
or that the document has been produced to one appropriate authority
have been duly stamped within the requisite period for stamping.
6.5 Outstanding offers
No offer tender or the like relating to the Seller which is capable of
being converted into an obligation of the Seller by an acceptance or other
act of some other person firm or corporation is outstanding and details of
any potential contractual arrangements which are currently being
negotiated or discussed have been disclosed to the Buyer and are referred
to in the Buyer's Report.
6.6 Defective products and service liabilities
The Seller has not manufactured or sold stock which was or is or will
become in any material respect faulty or defective or which did not or
does not comply in any material
respect with any warranties or representations expressly or impliedly made
by the Seller or with all applicable regulations standards and
requirements;
7. INTELLECTUAL PROPERTY RIGHTS
7.1 All Intellectual Property Rights relating to or used in connection with
the Business (the "BUSINESS INTELLECTUAL PROPERTY") are legally and
beneficially owned by the Seller free from any Security Interests.
7.2 All Business Intellectual Property is valid, subsisting and enforceable,
there is in full force and effect any registrations of Intellectual
Property Rights required to enable the Seller to exercise fully such
rights, and, in the case of Business Intellectual Property which is
registered, all renewal fees in respect thereof have been duly paid.
7.3 Nothing has been done by the Seller or by any other person whereby any of
the Business Intellectual Property has ceased or might cease to be valid
and enforceable or whereby any person is or will be able to seek
cancellation, rectification or any similar remedy in relation to any such
rights.
7.4 There have been no material claims, proceedings or actions and there are
no proceedings or actions pending or threatened and to the best of the
knowledge, information and belief of the Seller Parties none will arise,
impugning the title, validity or enforceability of any of the Business
Intellectual Property or claiming any right or interest thereon.
7.5 There have been and there are no infringements of any of the Business
Intellectual Property and none is threatened.
7.6 The Seller is not obliged to grant or enter into any licence, sub-licence,
assignment, consent or any other right in respect of the Business
Intellectual Property. The Intellectual Property Rights not owned by the
Business Seller but used by it in relation to the Business are used under
licences which are currently in force and no claims have been made in
respect of any such use nor are any applications pending which if pursued
or granted might be material in relation to such use.
7.7 The Business and the activities, processes, methods, products or services
now or at any time within the last six years employed in, manufactured by,
used in, dealt in, or supplied by the Seller do not now nor did they at
any time within the last six years infringe any Intellectual Property
Rights of any third party; and will not, to the best of the knowledge,
information and belief of the Seller Parties, give rise to any claim for
infringement, misuse, payment or otherwise.
7.8 The Seller is not, nor has at any time been, in breach of any agreement
relating to the use by the Seller of any Business Intellectual Property
owned by a third party and no other party to any such agreement is, or has
at any time, been in breach thereof.
7.9 All know-how, trade secrets, price or customer or supplier lists,
formulae, confidential information or secret processes relating to or used
in or in connection with the
Business (the "BUSINESS KNOW-HOW") is sufficiently documented to enable
the Buyer to acquire its full benefit.
7.10 The Seller has taken all reasonable steps to preserve the confidentiality
of the Business Know-how and is not obliged to disclose any confidential
Business Know-how to any third party except in the ordinary or usual
course of the business of the Seller and then on condition that the
disclosure is to be treated as being of a confidential nature. The Seller
has not (except in the ordinary and normal course of business) disclosed
or permitted to be disclosed or undertaken or arranged to disclose to any
person other than the Buyer any of the Business Know-how.
7.11 There are no confidentiality or other agreements in favour of the third
parties which restrict the free use or disclosure of Business Know-how by
the Seller.
7.12 After Completion the Buyer will be entitled to use all the Intellectual
Property Rights that were used by the Seller prior to Completion.
7.13 The goods and services supplied in the course of, and the processes
employed in, the business of the Seller are free of inherent defects of
design (whether known or not).
7.14 The Business Intellectual Property and all such licences and agreements
are in full force and effect, no notice having been given on either side
to terminate them, the obligations of all parties having been fully
complied with, and no disputes having arisen or being foreseeable in
respect thereof.
7.15 No current or prior officers, employees, consultants or other personnel
engaged by the Seller claim any ownership interest or interest as licensee
in relation to any Business Intellectual Property.
8. TRADING
8.1 The trade of the Seller comprises exclusively the Business. The Seller has
no obligations or liabilities (actual, accrued or contingent) other than
those directly related to, and incurred in the ordinary course of such
trade.
8.2 A true copy of the standard terms and conditions upon which the Seller
sells and supplies products and after sales services has been disclosed to
the Buyer. Such terms and conditions apply to and govern all agreements or
arrangements for sale and supply to which the Seller is or has offered to
become party. Save as set out in such terms or as implied by law and not
capable of exclusion, neither the Seller nor any other person on its
behalf has given or made expressly or impliedly any guarantee, indemnity,
warranty or representation in respect of any goods sold or services
supplied or agreed to be sold or supplied by the Seller.
8.3 Save as set out in the Buyer's Report not more than 5 per cent of the
Seller's sales since the Date of the Latest Accounts have been made to any
single customer of the Seller (and for the purposes of this paragraph
purchases from and supplies to different entities in the same group of
companies shall be aggregated and treated as purchases from or supplies to
the same person).
8.4 No significant customer of the Seller has in the past twelve months ceased
or indicated an intention to cease to contract with the Seller or to
substantially reduce its business with the Seller.
8.5 The Seller has disclosed details of all arrangements pursuant to which the
Seller makes sales on a "sale-or-return" basis and details of the basis
and frequency of "returns" customarily accepted by the Seller.
8.6 The maximum aggregate invoice value (before VAT or any other similar tax)
of all returns made by customers after the Latest Accounts Date in respect
of sales made by the Seller on or prior to such Date and in respect of
which customers are or will be entitled to credit or reimbursement shall
not exceed the amount to be provided for such returns in the Latest
Accounts.
8.7 To the best of the knowledge and belief of the Seller Parties:-
8.7.1 none of the Seller's present customers or suppliers will within
twelve months from today's date cease to be a customer or supplier
(as the case may be) of the Business or materially reduce his or its
purchases or supplies from or to the Business; and
8.7.2 neither the acquisition of the Business by the Buyer the disposal of
the Business by the Seller nor any change in the officers carrying
out the Business will directly or indirectly cause the Buyer to lose
the benefit of any contract right or privilege which the Business
now enjoys nor will it cause any other officers or any senior
employees to leave or resign.
8.8 The Seller has not received any notice from any supplier of goods or
services informing the Seller that the terms of its supply including (but
without limitation) the period allowed for payment are to be revised.
9. CONTRACTS
9.1 In relation to the Material Contracts:
9.1.1 the same are reduced to writing, in the name of or validly legally
assigned to the Seller, are not unauthorised, invalid or
unenforceable and (where necessary) have been appropriately
registered;
9.1.2 neither the Seller nor (to the best of the Seller Parties' knowledge
information and belief) any third party is in breach of any of the
same;
9.1.3 a list of the same is included in the Disclosure Letter and true and
complete copies of all documents setting out the terms thereof have
been delivered to the Buyer.
9.2 The Material Contracts comprise all the agreements or arrangements entered
into by the Seller which are:
9.2.1 with customers whose purchases from the Seller represent more than 5
per cent of the Seller's aggregate turnover for the financial year
prior to the date of the Latest Accounts;
9.2.2 material in the context of the business of the Seller;
9.2.3 with any Trade Union;
9.2.4 continuing for the future purchase, sale or manufacture of products,
material, supplies, equipment or services requiring payment to or
from the Seller in an amount in excess of US$5,000 per annum which
is not terminable on 30 days' or less notice without cost or other
Liability at or at any time after Completion or in which the Seller
has granted or received manufacturing rights, most favoured nations
pricing provisions or exclusive marketing rights relating to any
product, group of products or territory;
9.2.5 a joint venture which has involved or is reasonably expected to
involve a sharing of profits or losses in excess of US$5,000 per
annum with any other party or consortium or partnership or agency
commission franchise or distributorship;
9.2.6 for the employment of any officer, employee or consultant, severance
agreement, non-competition agreement, non-disclosure agreement,
agreement requiring a change of control or parachute payments, or
any other type of contract or understanding with any officer,
employee or consultant which is not immediately terminable without
cost or other Liability;
9.2.7 a debenture, mortgage, promissory note, loan agreement, guarantee or
other agreement or commitment for the borrowing of money, for a line
of credit or for a leasing transaction of a type required to be
capitalised in accordance with Italian generally accepted accounting
principles;
9.2.8 a lease or other agreement under which the Seller is lessee of or
holds or operates any items of tangible personal property or real
property owned by any third party and under which payments to such
third party exceed US$5,000 per annum;
9.2.9 for the sale of any assets, properties or rights having a value in
excess of US$5,000;
9.2.10limiting or excluding its right to do business or to compete in any
area or in any field or with any person firm or company or
containing a grant to or by the Seller of any sole or exclusive or
limited (whether by reference to territory, product, customer or
supplier, type or otherwise) right;
9.2.11 to govern or exploit the Business Intellectual Property; or
9.2.12between the Seller and any of the Seller Parties or their
Associates.
9.3 The Seller is not a party or subject to or under a Liability in respect of
nor has it undertaken (by assignment or otherwise) or made any offer or
tender to enter into any:-
9.3.1 contract of an onerous or long-term nature or to any contract which
is known to be or which may become unprofitable or which cannot
readily be fulfilled or performed by the Seller on time and without
undue or unusual expenditure of money or effort by the Seller or to
any contract or obligation outside the ordinary course of the
Business;
9.3.2 agreement relating to delivery of products or merchandise other than
in the ordinary course of trading;
9.3.3 guarantee or agreement for indemnity or for suretyship or any bond
or any comfort letter or similar arrangement; or
9.3.4 agreement the terms of which include any provision under which such
agreement may by reason of any change in the registered or
beneficial ownership of the shares in its capital be terminated or
become terminable by any party or be subject to any change in the
terms thereof as at today's date;
9.3.5 agreement for the provision of management or services to the Seller
which is not terminable by the Seller on less than 3 months' notice
without compensation; or
9.3.6 agreement, arrangement or understanding which in any respect is
unusual having regard to the usual practice of the Seller or other
persons carrying on businesses similar to the Business.
9.4 Except for those made in the ordinary course of the Seller's trading no
offer tender or similar thing given or made by the Seller on or before
today's date hereof and still outstanding is capable of giving rise to a
contract merely by a unilateral act of a third party.
10. INSURANCE
10.1 All of the stock assets and undertaking of and in the possession of the
Seller or which are used by the Seller in its business and which are of an
insurable nature are insured for their full replacement values against all
risks including (but without limitation) loss of profit and consequential
loss and all insurance required by statute and such insurance policies as
are normal and proper in relation to the business of the Seller have been
effected and maintained with an insurance office of good standing and
repute authorised to carry on insurance business of the relevant type and
any premiums due in respect of such insurances have been paid.
10.2 All insurances are currently in full force and effect and nothing has been
done or omitted or suffered to be done which may make any policy of
insurance void or voidable. The Buyer's Report sets out details of such
insurance policies including the
effective date and amount of cover and true copies of such policies have
been disclosed to the Buyer. The Seller has complied with all conditions
attached to its insurance policies and there is no claim outstanding
pending or threatened by or against the Seller nor to the best of the
Seller Parties' knowledge and belief are there any circumstances which may
give rise to any claim in respect of product liability or of any accident
or injury (whether to property or to person) which is not fully covered by
insurance.
11. EMPLOYEES, EMPLOYMENT AND LABOUR RELATIONS
11.1 The following details are fully given in the Buyer's Report:
11.1.1 In the case of all employees of the Seller their names jobs and
short details of their terms of employment including years of
continuous service for redundancy purposes.
11.1.2 In the case of officers of the Seller, key personnel and
consultants engaged by the Seller the above details and full
details details of their terms of employment or engagement.
details of any benefit received by any employee otherwise than in cash.
11.2 None of the officers employees or consultants is contemplating leaving the
service of the Seller and none of them are (or so far as the Seller
Parties are aware will become) employees of (or engaged to provide
services to) any Seller Party or any Associate of any Seller Party.
11.3 The Seller has complied with all statutory provisions and Codes of
Practice concerning or affecting employment and working conditions and
there are in existence no circumstances which might give rise to a claim
against the Seller or Buyer under any such legislation.
11.4 The Seller is not liable (otherwise than contingently in respect of
persons currently in its employment to whom no notice of termination of
employment has been given) to make any payment to any person under any of
the statutory provisions referred to in the previous paragraph nor are
there any circumstances which would or might render the Seller liable to
make any such payment.
11.5 Any contract of employment with any officer or employee to which the
Seller is a party can be terminated by the Seller without damages or
compensation (other than that payable by statute) by giving at any time
only the minimum period of notice required by statute applicable to that
contract.
11.6 The Seller is not a party to any bargaining or union membership agreement
with any Trade Union or any other group arrangement which affects the
rights of all or any of its employees nor has any application or claim for
any such agreement or arrangement been made; no Trade Union is recognised
by the Seller for any collective bargaining purposes in respect of any of
its employees.
11.7 The Seller is not engaged in any trade dispute and no strike lock out or
other form of industrial action is pending or threatened by or against the
Seller nor to the best of the knowledge and belief of the Seller Parties
is there anything likely to give rise to a dispute with any employee or
union.
11.8 No increase in the wages or salary or any improvement in the benefits of
any officer employee or consultant of the Seller or any section or class
of employees has been agreed or paid or made since the date of the Latest
Accounts nor has any negotiation for any such increase or improvement or
any demand therefor been entered into or made.
11.9 There is no scheme in operation or arrangement made by or in relation to
the Seller whereunder any person is entitled to commission or remuneration
of any sort calculated by reference to the whole or any part of the
turnover profits sales or any other results of the Seller nor is or at any
time has there been in force any share option share incentive or profit
sharing scheme operated by the Seller or in which any employee of the
Seller participates or participated in respect of his employment with the
Seller .
11.10 The Seller is not liable to pay any industrial training levy.
11.11 There are no retirement benefit schemes in operation by or in relation to
the Seller nor does the Seller contribute to any other scheme which will
provide any of its directors or employees or their respective dependants
with pensions annuities or lump sum payments upon retirement or earlier
death or otherwise and the Seller is not under any obligation (whether
legally binding or otherwise) to make any payment or pay any pension
gratuity superannuation allowance or the like to any of its present or
past officers or employees or their dependants.
12. ACCURACY OF INFORMATION AND DISCLOSURE
12.1 All statements of fact or information set out in the recitals and
schedules to this Agreement and the Buyer's Report are true, complete and
accurate in all respects.
12.2 All statements of fact and information given by the Seller Parties and any
directors, officers, auditors, financial advisers, solicitors or other
officials of the Seller Parties to any of the directors officers or
professional advisers of the Buyer after the Buyer indicated its interest
in acquiring the Seller or its Business were when given and insofar as
they or any of them have not been superseded altered or varied by matters
made known in writing to the Buyer or its professional advisers on or
prior to today's date hereof are now true complete and accurate in all
respects and there is no fact or matter not disclosed in writing to the
Buyer or any of its advisers which renders any such statements or
information untrue or misleading because of any omission or ambiguity or
for any other reason.
12.3 All statements of opinion including (but without prejudice to the
foregoing) all estimates, forecasts and/or projections given to any of the
directors officers or professional advisers of the Buyer were given in
good faith and based on reasonable assumptions and are best estimates of
the likely outcome and to the best of the
knowledge and belief of the Seller Parties and there is no reason why any
such opinion should now be changed.
12.4 There has been disclosed to the Buyer and incorporated in the Buyer's
Report all information and circumstances relating to the Business which is
or could on reasonable inquiry be known to the Seller Parties and which:-
12.4.1 may be material for a buyer of the Business for value to know; or
12.4.2 might adversely affect the present or future value of the Business;
or
12.4.3 might affect the willingness of the Buyer to purchase the Business
or to purchase them for the consideration or upon the terms set out
in this Agreement.
13. SELLERS' OTHER INTERESTS AND ARMS LENGTH DEALINGS
13.1 No contract or arrangement was entered into other than in the usual course
of the Business and by way of bargain at arm's length. 13.2 Save for
ownership of the Seller, neither PGV,. MEC nor any of their respective
Associates has any interest, direct or indirect, in any business which
competes or is likely to compete with the Business;
14. STATUTORY REQUIREMENTS AND GENERAL MATTERS
14.1 The Seller is and has been in connection with the Business in compliance
with all laws, regulations and orders applicable to it, its business and
operations and all of its assets and properties and has obtained and kept
up-to-date all licences and consents needed to own or use its assets or to
enable it to carry on its business properly and in accordance with the
laws of the countries or states where it is or has been engaged in
business and there are not any circumstances which may lead to any loss or
refusal to renew any such licence or consent on terms no less advantageous
than the terms of the licences and consents currently in force.
14.2 Neither the Seller nor any of its officers has committed any criminal
illegal tortious or unlawful act (except traffic offences not being
indictable offences in the case of officers) or committed any breach of
contract or committed or omitted to do any act or thing which could give
rise to the Seller being liable to any fine, penalty, sanction, loss or
similar event.
14.3 The Seller has not had any subsidiary and it does not have nor has it had
any branch or permanent establishment or place of business or any
substantial capital assets outside its country of incorporation nor is it
or has it been:-
14.3.1 a subsidiary of any other company; nor
14.3.2the holder or beneficial owner of 5 per cent or more of any class
of share or other capital of any company or corporation whether
limited or unlimited nor has it agreed to acquire any such interest;
nor
14.3.3 a member of any partnerships unincorporated company or association.
14.4 The Seller has not given any power of attorney or other authority (express
implied or ostensible) which remains outstanding or effective.
14.5 The Seller is not a party or subject to any contract or arrangement which
is invalid or which is voidable or can be rescinded or repudiated by any
party (including the Seller) and the Seller has not received or given
notice of any intention to terminate any agreement or arrangement or
repudiated or disclaimed any transaction.
14.6 The Seller has within the last six years conducted its business and
corporate affairs in all respects in accordance with all relevant laws.
15. COMPETITION
15.1 The Seller is not and has not been a party to and is not and has not been
concerned in any agreement or arrangement:-
15.1.1which has been notified to the Commission of the European
Communities or EFTA Surveillance Authority for an exemption under
Article 81(3) of the Treaty of Rome or Article 53(3) of the
Agreement on the European Economic Area;
15.1.2for which an application has been made to the Commission of the
European Communities or EFTA Surveillance Authority for a negative
clearance under Article 81 or 82 of the Treaty of Rome or Article 53
or 54 of the Agreement on the European Economic Area;
15.1.3 which is prohibited by a competition law in any jurisdiction; or
15.1.4is registerable, unenforceable or void (whether in whole or in
part) or renders it liable to civil, criminal or administrative
proceedings by virtue of any anti-trust or similar legislation in
any jurisdiction.
16. THE PROPERTIES
16.1 The Property comprise all the land and premises occupied or otherwise used
by the Seller in connection with the Business.
16.2 The Property is are used by the Company in connection with the Business
and the terms of the Lease permit such occupation and use.
16.3 The information contained in the Buyer's Report relating to the Property
is true and accurate in all respects and does not omit reference to any
document relevant to the basis upon which the Seller occupies the
Property.
16.4 The Property is free from any mortgage debenture or charge (whether
specific or floating legal or equitable) rent-charge lien or other
encumbrance securing the
repayment of monies or other obligation or liability whether of the Seller
or any other party.
16.5 The Property is not subject to any liability for the payment of any
outgoings of a recurring nature.
16.6 There is no person who is in occupation or who has or claims any rights or
easements of any kind in respect of the Property adversely to the interest
right or title of the Seller.
16.7 There are no disputes relating to the Property.
16.8 The Seller has paid all outgoings (including but not limited to rent and
service charges) relating to the Property it occupies in accordance with
its contractual obligations and is not in breach of any of the terms of
the relevant Lease.
16.9 All licences consents and approvals required from the lessor under the
Lease have been obtained and complied with.
16.10 The Property is not subject to any third party interests including but not
limited to any tenancies (which expression includes subtenancies).
16.11 The Seller has at all times complied with all applicable governing
environmental legislation and there is nothing in on over or under the
Property the presence existence or condition of which constitutes a breach
of such environmental legislation nor is any manufacturing storage
generation servicing treatment disposal or other process carried on at the
Properties in such a way as to amount to a breach of the same.
16.12 The Property is insured for its full reinstatement value against the usual
comprehensive risks (including acts of terrorism) and for not less than
three years' loss of rent and against third party and public liability
claims to an adequate extent and all premiums payable in respect of
insurance policies relating to the Property which have become due have
been duly paid and no circumstances have arisen which would vitiate or
permit the insurers to avoid such policies
16.13 There is no other matter of which any of the Seller Parties are or ought
to be aware on reasonable enquiry and which adversely affects the value of
the Property or casts any doubt on the right or title of the Seller
thereto which should be revealed to the Buyer.
17. TAXES
With respect to the laws and regulations and their interpretation, the
Company has duly kept its fiscal records, has fulfilled its tax and fiscal
obligations and acted in compliance with all national and local tax and
fiscal laws and regulations and, without prejudice to the generality of
the foregoing, in particular:
(a) the Company has correctly, completely and accurately filed all tax
statements and, when acting as a tax representative of a third
party, those of the third parties concerned, and has duly filed the
V.A.T. returns and all relevant tax returns and
other documents or reports in respect of taxes or other fiscal
accomplishments which are required to be filed by the Company
according to the applicable laws and regulations;
(b) the Company has duly carried out the withholdings and paid the
respective amounts according to the applicable laws and regulations;
(c) the Company has paid, within the time and in the manner prescribed
by the applicable laws and regulations, all taxes and other fiscal
obligations which it was required to pay in accordance with such
laws and regulations;
(d) as of the date of this Agreement the Company has no debt with the
tax administrations for which an adequate allocation is not already
provided in the Company records and all the allocations needed to
pay all the sums due by the Company for taxes and other fiscal
obligations which the Company has to pay and for any other deferred
or conditional tax and fiscal obligation appear in the Latest
Accounts and in the Company's records;
(e) there are no tax or other fiscal disputes pending before the
tributary commissions, financial officers, judicial authorities or
any other competent body nor has the Company been notified of any
assessment or dispute for additional taxes or other fiscal
obligations, including, but not limited to, additional taxes or
charges, interest or penalties, nor have any reports or minutes of
fiscal inspections regarding taxes or fiscal accomplishments been
drawn up;
(f) the fiscal credits of the Company posted in the Latest Accounts are
true and existing.
SCHEDULE 2
ACTION PENDING COMPLETION
The Seller shall:
1. operate the Business in the usual way so as to maintain the Business as a
going concern;
2. not acquire or dispose of, or agree to acquire or dispose of, an asset
except in the usual course of the Business or assume or incur, or agree to
assume or incur, a liability, obligation, or expense (actual or
contingent) except in the usual course of the Business;
3. not make, or agree to make, capital expenditure in connection with the
Business exceeding in total (pound)10,000 (or its equivalent at the time)
or incur, or agree to incur, a commitment or commitments involving capital
expenditure exceeding in total (pound)10,000 (or its equivalent at the
time);
4. not create, or agree to create, an Encumbrance over the Property or
another of the Assets or redeem, or agree to redeem, an existing
Encumbrance over the Property or another of the Assets;
5. continue each of the insurance policies (the "POLICIES") relating to the
Business and not do or omit to do anything which would make any of the
Policies void or voidable or might result in an increase in the premium
payable under any of the Policies or prejudice the ability to effect
equivalent insurance in the future;
6. not in connection with the Business or any of the Assets enter into any
long term, onerous or unusual agreement, arrangement or obligation;
7. not amend or terminate an agreement, arrangement or obligation to which it
is a party in connection with the Business or any of the Assets;
8. only employ a person in the Business if it first obtains the Buyer's
written consent (not to be unreasonably withheld or delayed) and only for
the purpose of filling a vacancy which has arisen in the Business before
Completion;
9. not amend the terms of employment or engagement of any of the Employees
(except in the usual course of the Business) or provide, or agree to
provide, a gratuitous payment or benefit to any of the Employees (or any
of their dependants) or terminate the employment or engagement of, any of
the Employees;
10. not give, or agree to give, in connection with the Business, a guarantee,
indemnity or other agreement to secure, or incur financial or other
obligations with respect to, another person's obligations;
11. not start litigation or arbitration proceedings in connection with the
Business or any of the Assets;
12. except in the usual course of the Business, not compromise, settle,
release, discharge or compound litigation or arbitration proceedings or a
liability, claim, action, demand or dispute, or waive a right in relation
to litigation or arbitration proceedings in connection with the Business
or any of the Assets;
13. conduct the Business in all material respects in accordance with all
applicable legal and administrative requirements in any jurisdiction;
14. not enter into an agreement, arrangement or obligation (legally
enforceable or not) affecting the Business or any of the Assets in which a
director or former director of the Seller or a person connected with any
of them is interested;
15. not make a payment out of a bank account except if the payment is in the
usual course of the Business and not make payments in the usual course of
the Business which exceed in total (pound)5,000 (or its equivalent at the
time); and
16. co-operate with the Buyer to:
16.1 ensure the efficient continuation of management of the Business
after Completion; and
16.2 to prepare for the introduction of the Buyer's normal working
procedures in readiness for Completion.
SCHEDULE 3
INTERPRETATION
1. DEFINITIONS
"ACCOUNTS": in relation to any financial year or other specified period of
any company:
(a) the audited balance sheet of the Company (and, where relevant, the
audited consolidated balance sheet of the Company and its Subsidiary
Undertakings as at the Accounts Date in respect of the financial
year; and
(b) the audited profit and loss account of the Company (and, where
relevant, the audited consolidated profit and loss account of the
Company and its Subsidiary Undertakings) in respect of that
financial year,
together with any notes, statements or documents permitted or required by
the Companies Act (or equivalent legislation in the relevant jurisdiction)
to be made thereon or annexed or attached thereto;
"ACCOUNTS DATE": in relation to any financial year of any company, the
last day of that financial year;
"ASSETS": all the property and assets agreed to be sold and purchased
under this Agreement;
"ASSOCIATE":
(a) in respect of an Undertaking ("THE SUBJECT"), any other Undertaking
which is owned or controlled by the Subject or which owns or
controls such Subject or which is owned or controlled by another
Undertaking which owns or controls the Subject; or
(b) in relation to any person, another person which is an "associate" of
the first mentioned company person or body within the meaning of
Section 435 Insolvency Act 1986;
"AUDITORS": the auditors of the Company from time to time;
"BUSINESS": the business of the marketing, sale, licensing and
distribution of interactive entertainment hardware and software products
(including, without limitation, hardware peripherals) operated by the
Seller at the Completion Date under the name C.D. Verte Italia Spa;
"BUSINESS DAY": any day other than a Saturday, a Sunday, or a day on which
banks in London or Italy are authorised by law to close;
"BUYER'S REPORT": the due diligence report dated 28 June 1999 prepared by
Coopers & Lybrand for the Buyer relating to the business of the Seller;
"CLAIM": a claim by the Buyer under the Warranties provided that, for the
purpose of Clauses 8.1.1 and 8.1.2 only Claim shall mean a claim (whether
in contract, tort or otherwise) by the Buyer under or in relation to the
Warranties;
"COMPANIES ACT": the Companies Act 1985 as amended;
"COMPLETION": Completion of the sale and purchase of the Business and the
Assets as provided by Clause 4 of the Agreement;
"COMPLETION DATE": the date of Completion;
"CONFIDENTIAL INFORMATION": trade secrets and information not publicly
known (including but not limited to formulae, processes, methods,
financial data, customer lists, marketing information, knowledge and know
how) in connection with the Company and the customers, suppliers,
licensors and licensees and the operation of the Company and which are for
the time being confidential to Company;
"CONSENTS": means all necessary licences consents authorisations and
registrations required under Environmental Legislation with regard to the
Properties and/or any activities processes and substances from time to
time on the Properties;
"CONTRACTS": means all the contracts to which the Seller is a party and
which relate to the Business and are unperformed (wholly or partly) at the
Completion Date including, without limitation, supply and distribution
agreements, customer and supply contracts, leases, hire and hire purchase
agreements but excluding employment contracts with the Employees,[the
Leases] and agreements relating to borrowing and "Contract" means any one
of the Contracts;
"THE DATE OF THE LATEST ACCOUNTS": 31 December 1998;
"DISCLOSURE LETTER": there is no Disclosure Letter;
"EFFECTIVE TIME": means close of business on the Business Day before the
date of this Agreement;
"EMPLOYEES": the employees employed in the Business at the Completion
Date;
"ENCUMBRANCE": A mortgage, charge, pledge, lien, option, restriction,
right of first refusal, right of pre-emption, third party right or
interest, any other encumbrance or security interest of any kind, or
another type of preferential arrangement (including, without limitation, a
title transfer or retention arrangement) having similar effect;
"EVENT": any payment, transaction, act or omission in connection with the
business of the Seller of whatever nature, whether or not the Seller is a
party thereto and references to an Event occurring on or before a
particular date shall include an Event deemed to occur or be treated or
regarded as occurring on or before that date
provided that any reference to an Event occurring on or before Completion
shall include the combined result of two or more Events the first of which
shall have taken place or the commencement of which shall have occurred on
or before Completion and the second or subsequent of which shall have
taken place after Completion but in such case only to the extent that the
first such Event occurring or commencing prior to Completion is outside
the ordinary course of business of the Seller and the second or successive
Event after Completion is inside the ordinary course of business of the
Seller as carried on at Completion;
"FIXED PLANT": means the fixed plant and machinery, and leasehold
improvements at the Property, owned by the Seller and used in connection
with the Business at the Completion Date;
"GOODWILL": the goodwill of the Business and the Buyer's right to use the
names "C.D. Verte Italia" and to represent itself as operating the
Business in succession to the Seller;
"INTELLECTUAL PROPERTY": all patents, trade marks, registered designs,
applications for any of those rights, trade and business names
unregistered trade marks and service marks, copyrights, know how, rights
in designs and inventions, all rights to bring an action for passing off,
all rights to apply for protection in respect of any of the above rights,
and all other intellectual property rights in any jurisdiction and all
legal rights protecting the confidentiality of any information or
materials;
"INTELLECTUAL PROPERTY RIGHTS": all Intellectual Property owned by the
Seller and used in connection with the Business at the Completion Date;
"ITALIAN TRANSFER DOCUMENT": a document effective under Italian law to
transfer the Business and Assets to the Buyer with effect from the date of
Completion;
"LATEST ACCOUNTS": the Accounts of the Seller in relation to the financial
year ending on 31 December 1998;
"LEASE": the lease of a building located in Gallarate (VA) details of
which are set out in the Buyer's Report;
"LIABILITIES": all liabilities, duties, commitments and obligations of
every description, whether deriving from contract, common law, statute or
otherwise, whether present or future, actual or contingent or ascertained
or unascertained and whether owed or incurred severally or jointly or as a
principal or surety;
"MACHINERY": the leased plant, machinery, equipment and other similar
articles owned by the Seller and used in connection with the Business at
the Completion Date;
"MATERIAL CONTRACTS": the agreements or arrangements which are referred to
in the Buyer's Report;
"MOTOR VEHICLES": The motor vehicles owned by the Seller and used in
connection with the Business at the Completion Date;
"OFFICE EQUIPMENT": the office equipment and furnishings and other similar
articles owned by the Seller and used in connection with the Business at
the Completion Date;
"PERSON": any individual, firm, company or other incorporated or
unincorporated body;
"PROPERTY": the property the subject of the Lease;
"RECORDS": the Seller's books and records relating to the Business
(including, without limitation, all bought and sold ledgers, purchase and
sales day books and purchase and sale invoices;
"SECURITY INTEREST": any interest or equity of any person (including,
without limitation, any right to acquire, option or right of pre-emption)
or any mortgage, charge, pledge, lien or assignment or any other
encumbrance, priority or security interest or arrangement of whatsoever
nature over, affecting or in the relevant property;
"SELLER PARTIES": the Seller, Pietro Giovanni Vago and Maurizio Ezio
Curioni;
"SERVICE ARRANGEMENTS": means any arrangement by which either of the
Executive Seller Parties is engaged to provide his services to the Buyer
whether as a director or as an employee or by means of any other
arrangement;
"STOCK": means the stock of raw materials, partly finished and finished
goods of the Business as at the Completion Date;
"SUBSIDIARY UNDERTAKING": shall be construed in accordance with Section
258 of the Companies Act;
"TRANSACTION DOCUMENT": this Agreement and any other document executed
pursuant to this Agreement;
"UNDERTAKING": a body corporate, partnership or an unincorporated
association situate in any jurisdiction;
"IN WRITING": includes any communication made by letter, cablegram, telex,
facsimile transmission or electronic mail;
"WARRANTIES": the warranties representations and undertakings by the
Sellers set out in Schedule 1 and "WARRANTY" means any of them.
2. INTERPRETATION
Words and expressions which are defined in the Companies Act and used in
this Agreement will unless the context otherwise requires bear the same
meanings as in that Act. In this Agreement:-
2.1 a reference to a statutory provision will be interpreted as a
reference to that provision as amended or re-enacted from time to
time including any statutory instrument order or governmental
regulation from time to time made or issued pursuant to that
provision and including a reference to any past statutory provision
instrument order or regulation which such provision has amended or
from which it derives as from time to time (whether before or after
the date of this Agreement) amended or re-enacted;
2.2 a reference to a recital, clause or schedule is unless otherwise
specified a reference to the recital, clause or schedule of that
number in or to this Agreement; any reference to a sub-clause is
unless otherwise specified a reference to the sub-clause of that
number in the clause in which the reference is made;
2.3 a document referred to as being in "the agreed terms" will be in the
form of a draft document approved by the parties to this Agreement
and for identification purposes signed or initialled by or on behalf
of the parties hereto on or before the date hereof;
2.4 the clause headings are for ease of reference only and do not affect
interpretation;
2.5 the liability of each of the Seller Parties under or in respect of
this Agreement shall be joint and several and every representation,
warranty, covenant, undertaking, guarantee, indemnity and other
obligation of whatever nature of or undertaken or granted by the
Seller Parties shall be construed as a covenant, undertaking,
guarantee, indemnity and other obligation of each of the Sellers and
in this Agreement the expression "the Seller Parties" shall mean
each of the Seller Parties.
2.6 "to the best of the Sellers' knowledge and belief" "so far as the
Sellers are aware" or any similar expression will mean to the best
of any of the Sellers' knowledge and belief having made (or caused
to have been made) all enquiries which a prudent purchaser would
make and having used their best endeavours to ascertain all relevant
information and to ensure that all information given, referred to or
reflected in any relevant warranty or representation is accurate in
all respects. A matter shall be treated as being within the
knowledge, information or belief of the Seller if such matter is
within the knowledge, information or belief of any one or more of
the directors of the Company
2.7 any reference in this Agreement to "the Buyer" shall include its
successors and assigns; and
2.8 a reference to the masculine gender will be deemed to include a
reference to the feminine gender and vice versa; the singular shall
be construed as including the plural and vice versa;
2.9 This Agreement and the Transaction Documents have been negotiated by
the respective parties to this Agreement and their legal advisors
and the language of this Agreement and the Transaction Documents
will not be construed for or against either party.
EXECUTED AS A DEED BY )
For and on behalf of ) ----------------------
C.D. VERTE ITALIA SPA ) Director
in the presence of: )
) ----------------------
) Director/Secretary
EXECUTED AS A DEED BY )
PIETRO GIOVANNI VAGO )
in the presence of: )
EXECUTED AS A DEED BY )
MAURIZIO EZIO CURIONI )
in the presence of: )
EXECUTED AS A DEED )
For and on behalf of ) ----------------------
TAKE- TWO INTERACTIVE ) Director
SOFTWARE,INC )
in the presence of: )
)
) ----------------------
Director/Secretary
)