EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
AGREEMENT dated as of November 19, 2002 (the "Agreement") between
Take-Two Interactive Software, Inc., a Delaware corporation ("Take-Two"), Angel
Studios, Inc., a Virginia corporation ("Angel"); and each of Diego Angel, Brad
Hunt, Jill Hunt, Michael Limber, Steve Rotenberg, Harry Benham, as an
individual, and Harry Benham and William A. Johnston, Trustees of the Kern Trust
U/I/D 5/11/65, each a stockholder of Angel (collectively, the "Selling
Stockholders").
W I T N E S S E T H :
WHEREAS, the Selling Stockholders are the owners of all of the issued
and outstanding shares of capital stock of Angel (the "Angel Stock"); and
WHEREAS, Angel is in the business of developing video games for
personal computers, video game consoles and handheld game devices (the
"Business"); and
WHEREAS, Take-Two wishes to purchase all of the Angel Stock from the
Selling Stockholders, upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto do hereby agree as follows:
1. Purchase and Sale of Angel Stock.
Subject to the terms and conditions set forth in this Agreement and in
reliance upon the representations, warranties, covenants and conditions herein
contained, on the Closing Date (as defined in Section 8 hereof) the Selling
Stockholders shall sell, convey, assign, transfer and deliver to Take-Two and
Take-Two shall purchase all of the Angel Stock, free and clear of any and all
liens, adverse claims, security interests, pledges, mortgages, charges and
encumbrances of any nature whatsoever.
2. Purchase Price
2.1. Consideration. The purchase price for the purchase of the Angel
Stock by Take-Two shall be the sum of Thirty Five Million Dollars ($35,000,000)
of which (i) Twenty Eight Million Five Hundred Thousand Dollars ($28,500,000)
(the "Cash Consideration") shall be payable to the Selling Stockholders in cash
or immediately available funds at the Closing (as defined in Section 8 hereof)
and (ii) Six Million Five Hundred Thousand Dollars ($6,500,000) shall be payable
in shares of Take-Two's $.01 par value common stock ("Common Stock") valued at a
price per share equal to the average Per Share Market Value for the five (5)
consecutive Trading Days immediately preceding the Closing, (the "Shares" and
together with the Cash Consideration, collectively referred to herein as the
"Purchase Price"). The Purchase Price shall be distributed among the Selling
Stockholders as set forth on Schedule 2.1 hereof. For purposes hereof, "Trading
Days" means a day on which the Take-Two Common Stock is traded on The Nasdaq
National Market and the "Per Share Market Value" on a particular date means the
closing bid price for the Take-Two Common Stock on such date on The Nasdaq
National Market.
2.2. Payment of Taxes Upon Transfer of Business. The Selling
Stockholders shall be responsible for, and shall pay, any and all sales, use,
purchase, transfer and similar taxes and any and all filing, recording,
registration and similar fees, arising out of the transfer of the Angel Stock.
Take-Two shall be responsible for, and shall pay, any and all sales, use,
purchase, transfer and similar taxes and any and all filing, recording,
registration and similar fees, arising out of the issuance of the Shares.
3. Representations and Warranties as to Angel. Each of the Selling
Stockholders and Angel, jointly and severally, represents and warrants to
Take-Two as follows, provided, however, that (a) to the extent any of the
Selling Stockholders represents and warrants with respect to himself or herself
as an individual hereunder, such representations and warranties shall be made
individually by such Selling Stockholder and not jointly and severally, such
representations and warranties to include, without limitation, those set forth
in Sections 3.3, 3.4(b), 3.5 (second and third sentences only), 3.22 and 3.23;
and (b) any representation made "to the knowledge of Angel" shall be deemed to
refer to the actual knowledge of the officers and directors of Angel and the
actual knowledge of the Selling Stockholders:
3.1. Organization, Standing and Power. Angel is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Virginia, with full corporate power and corporate authority to (a) own, lease
and operate its properties, (b) carry on the Business as currently conducted by
it and (c) execute and deliver, and perform under this Agreement and each other
agreement and instrument to be executed and delivered by it pursuant hereto.
Angel is duly qualified as a foreign corporation to do business and is in good
standing in the State of California. Angel is not required to be qualified in
any other jurisdiction in which the failure to be so qualified would have a
material adverse effect on Angel or the Business. True and complete copies of
the Articles of Incorporation of Angel and all amendments thereof, and of the
By-Laws of Angel, as amended to date, have heretofore been furnished to
Take-Two. Copies of the contents of Angel's minute books have previously been
provided to Take-Two which minute books contain complete and accurate records of
all meetings and other corporate actions of Angel's stockholders and Board of
Directors (including committees of its Board of Directors).
3.2. Capitalization. The authorized capital stock of Angel consists
of: 30,000 shares of common stock, no par value per share, 24,000 of which
shares of Common Stock are issued and outstanding (previously defined as the
"Angel Stock"). All of the Angel Stock has been duly authorized, validly issued,
fully paid and is nonassessable. Schedule 3.2 sets forth a true and complete
list of the holders of all outstanding shares of Angel Stock, and the holders of
all outstanding options and warrants issued by Angel, which shares, options and
warrants are held by them in the amounts set forth on Schedule 3.2. Except as
contemplated by this Agreement and except as set forth on Schedule 3.2, there
are no options, warrants or other rights (including conversion rights),
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of Angel or obligating Angel to issue or sell any
shares of capital stock of or other equity interests in Angel. There is no
personal liability with respect to the capital stock of Angel. Any holders of
preemptive rights with regard to the capital stock of Angel have waived those
rights, or will waive those rights, prior to the Closing. Except as set forth on
Schedule 3.2 and except for the transactions contemplated by this Agreement,
there are no outstanding contractual obligations or other commitments or
arrangements of Angel to (A) repurchase, redeem or otherwise acquire any shares
of Angel Stock (or any interest therein) or (B) to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other entity, or (C) issue or distribute to any person any capital stock of
Angel, or (D) issue or distribute to holders of any of the capital stock of
Angel any evidences of indebtedness or assets of Angel. All of the outstanding
securities of Angel have been issued and sold by Angel in full compliance with
applicable federal and state securities laws.
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3.3. Ownership of Angel Stock. Except as set forth in Schedule 3.3,
the Selling Stockholders have good and marketable title to all of the issued and
outstanding shares of Angel Stock, free and clear of any and all liens, adverse
claims, security interests, pledges, mortgages, charges and encumbrances of any
nature whatsoever, except for any restrictions which may be imposed by state or
federal securities laws (the "Liens"), and on the Closing Date will own all of
such Angel Stock, free and clear of any and all Liens, including, but not
limited to, any claims by any present or former stockholders of Angel.
3.4. Interests in Other Entities.
(a) Schedule 3.4 sets forth a true and complete list of all
direct or indirect subsidiaries of Angel, together with the jurisdiction of
incorporation of each such subsidiary and the percentage of each such
subsidiary's outstanding capital stock owned by Angel or another of Angel's
subsidiaries. Each such subsidiary is a duly organized corporation, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation (as well as all applicable foreign jurisdictions necessary to its
business operations) and has the requisite corporate power and authority and
governmental authority to own, operate or lease the properties that it purports
to own, operate or lease and to carry on its business as it is now being
conducted.
(b) Other than the Angel Stock and except as set forth in
Schedule 3.4, none of the Selling Stockholders (individually or jointly) (i)
own, directly or indirectly, of record or beneficially, any shares of voting
stock or other equity securities of any other corporation engaged in the
Business or any business similar thereto (other than not more than one percent
(1%) of the publicly-traded capital stock of corporations engaged in such
business held solely for investment purposes); (ii) have any ownership interest,
direct or indirect, of record or beneficially, in any unincorporated entity
engaged in the Business or any business similar thereto; and (iii) have any
obligation, direct or indirect, present or contingent, (A) to purchase or
subscribe for any interest in, advance or loan monies to, or in any way make
investments in, any other person or entity engaged in the Business or any
business similar thereto, or (B) to share any profits or capital investments or
both from an entity engaged in the Business or any business similar thereto.
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3.5. Authority. The execution and delivery by Angel of this
Agreement and the Employment Agreements (as defined in Section 6.8), the
performance by Angel of its obligations hereunder and thereunder, and the
consummation of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all necessary corporate action on the part of Angel
(including, but not limited to, the unanimous consents of the Board of Directors
of Angel and of the Selling Stockholders) and Angel has all necessary corporate
power and corporate authority with respect thereto. The Selling Stockholders are
individuals having all necessary capacity, power and authority to execute and
deliver this Agreement and the Employment Agreements (in the cases of Diego
Angel and Michael Limber) and to consummate the transactions contemplated hereby
and thereby. This Agreement is, and when executed and delivered by Angel and the
Selling Stockholders, and the Employment Agreements to be delivered by Messrs.
Angel and Limber pursuant hereto will be, the valid and binding obligations of
Angel and the Selling Stockholders, to the extent they are parties thereto, in
accordance with their respective terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
rights of creditors generally and subject to the rules of law governing (and all
limitations on) specific performance, injunctive relief, and other equitable
remedies.
3.6. Noncontravention. Except as set forth on Schedule 3.6, neither
the execution and delivery by Angel or the Selling Stockholders of this
Agreement or the Employment Agreements, nor the consummation of any of the
transactions contemplated hereby or thereby, nor the performance by either or
any of them of any of their respective obligations hereunder or thereunder, will
(nor with the giving of notice or the lapse of time or both would) (a) conflict
with or result in a breach of any provision of the Articles of Incorporation or
By-Laws of Angel, each as amended to date, or (b) give rise to a material
default, or any right of termination, cancellation or acceleration, or otherwise
be in material conflict with or result in a material loss of contractual
benefits to any of them, under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, agreement or other instrument or
obligation to which either or any of them is a party or by which either or any
of them or any of their respective assets may be bound, or require any consent,
approval or notice under the terms of any such document or instrument, or (c)
violate any order, writ, injunction, decree, law, statute, rule or regulation of
any court or governmental authority which is applicable to either or any of
them, or (d) result in the creation or imposition of any lien, adverse claim,
restriction, charge or encumbrance upon any of the assets of Angel (the
"Assets") or the Angel Stock, or (e) materially interfere with or otherwise
materially adversely affect the ability of Take-Two or Angel to carry on the
Business after the Closing Date on substantially the same basis as is now
conducted by Angel.
3.7. Financial Statements. Angel has heretofore delivered to
Take-Two copies of its unaudited balance sheet (the "Balance Sheet") as of
November 15, 2002 (the "Balance Sheet Date"). The Balance Sheet fairly present
assets and liabilities of Angel on a cash basis as at the Balance Sheet Date.
The books and records of Angel are complete and correct, have been maintained in
accordance with good business practices, and accurately reflect the basis for
the assets and liabilities as set forth in the Balance Sheet.
3.8. Absence of Undisclosed Liabilities. Angel has no liabilities or
obligations of any nature whatsoever, whether accrued, matured, unmatured,
absolute, contingent, direct or indirect or otherwise, which have not been (a)
set forth on the Balance Sheet, or (b) incurred in the ordinary course of
business since the Balance Sheet Date, or (c) in the case of other types of
liabilities and obligations, expressly described in Schedule 3.8, or (d)
incurred, consistent with past practice, in the ordinary course of business of
Angel.
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3.9. Absence of Changes. Since the Balance Sheet Date and except as
set forth on Schedule 3.9, there have not been (a) any adverse change (other
than as is normal in the ordinary course of business) in the condition
(financial or otherwise), assets, liabilities, business, prospects, results of
operations or cash flows of Angel (including, without limitation, any such
adverse change resulting from damage, destruction or other casualty loss,
whether or not covered by insurance), (b) any waivers by Angel of any right, or
cancellation of any debt or claim, of substantial value, (c) any declarations,
set asides or payments of any dividend or other distributions or payments in
respect of the Angel Stock, or (d) any changes in the accounting principles or
methods which are utilized by Angel.
3.10. Litigation. Except as set forth on Schedule 3.10, there are no
claims, suits or actions, or administrative, arbitration or other proceedings or
governmental investigations, pending or, to the knowledge of Angel, threatened,
against or relating to Angel, the transactions contemplated hereby or any of the
Assets. There are no judgments, orders, stipulations, injunctions, decrees or
awards in effect which relate to Angel, this Agreement, the transactions
contemplated hereby, the Business or any of the Assets, the effect of which is
(a) to limit, restrict, regulate, enjoin or prohibit any business practice of
Angel in any area, or the acquisition by Angel of any properties, assets or
businesses, or (b) otherwise adverse to the Business, any of the Assets or Angel
Stock.
3.11. No Violation of Law. Except as set forth in Schedule 3.11,
Angel is not engaging in any activity or omitting to take any action as a result
of which it is in violation of any law, rule, regulation, zoning or other
ordinance, statute, order, injunction or decree, or any other requirement of any
court or governmental or administrative body or agency, applicable to Angel, the
Business or any of the Assets, including but not limited to, those relating to:
occupational safety and health matters; issues of environmental and ecological
protection (e.g., the use, storage, handling, transport or disposal of
pollutants, contaminants or hazardous or toxic materials or wastes, and the
exposure of persons thereto); business practices and operations; labor
practices; employee benefits; and zoning and other land use laws and regulations
which violation would have a material adverse effect on Angel or the Business.
3.12. Properties. All plants, structures and equipment which are
utilized in the Business, or are material to the condition (financial or
otherwise) of Angel are owned or leased by Angel and are in good operating
condition and repair (ordinary wear and tear excepted), and are adequate and
suitable for the purposes for which they are used. Schedule 3.12 sets forth all
(a) real property which is owned, leased (whether as lessor or lessee) or
subject to contract or commitment of purchase or sale or lease (whether as
lessor or lessee) by Angel, or which is subject to a title retention or
conditional sales agreement or other security device, and (b) individual items
of tangible personal property of over $1,000 in book value which are owned,
leased (whether as lessor or lessee) or subject to contract or commitment of
purchase or sale or lease (whether as lessor or lessee) by Angel.
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3.13. Intangibles/Inventions. Schedule 3.13 identifies (by a summary
description) the Intangibles (as defined below), the ownership thereof and, if
applicable, Angel's authority for use of the same, which Schedule is complete
and correct and encompasses: (A) all United States and foreign patents,
trademarks and trade name registrations, trademarks and trade names, brandmarks
and brand name registrations, servicemarks and servicemark registrations,
assumed names and copyrights and copyright registrations, owned in whole or in
part or used by Angel, and all applications therefor (collectively, the
"Marks"), (B) domain names, fictitious and d.b.a. names proprietary 800 and 888
prefix phone numbers, Internet URLs and other similar identifiers and
proprietary rights owned or used by Angel (collectively, the "Proprietary
Identifiers") (C) all inventions, discoveries, improvements, processes,
formulae, technology, know-how, processes and other intellectual property,
proprietary rights and trade secrets relating to the Business (collectively, the
"Inventions") and (D) all licenses and other agreements to which Angel is a
party or otherwise bound which relate to any of the Intangibles or the
Inventions or Angel's use thereof in connection with the Business (collectively,
the "Licenses, and together with the Marks, Proprietary Identifiers and the
Inventions, the "Intangibles"). Except as set forth in Schedule 3.13, no
violations of the terms of any of the aforesaid licenses and/or agreements have
occurred. Except as disclosed on Schedule 3.13, (1) Angel owns or is authorized
to use in connection with the Business all of the Intangibles as set forth in
Schedule 3.13 which will set forth the Intangibles owned by Angel and the
Intangibles licensed by Angel; (2) no proceedings have been instituted, are
pending, or to the knowledge of Angel, are threatened which challenge the rights
of Angel with respect to the Intangibles or its use thereof in connection with
the Business and/or the Assets or the validity thereof and, Angel has no
knowledge of any facts that could form the valid basis for any such proceedings;
(3) neither Angel's ownership of the Intangibles nor its use thereof in
connection with the Business and/or the Assets violates any laws, statutes,
ordinances or regulations, or has at any time infringed upon or violated any
rights of others, or is being infringed by others; (4) none of the Intangibles,
or Angel's use thereof in connection with the Business and/or the Assets is
subject to any outstanding order, decree, judgment, stipulation or any lien,
security interest or other encumbrance; and (5) Angel has not granted any
license to third parties with regard to its Intangibles.
3.14. Systems and Software. Except as set forth on Schedule 3.14,
Angel owns or has the right to use pursuant to lease, license, sublicense,
agreement, or permission all computer hardware, software and information systems
necessary for the operation of the Business (collectively, "Systems"). Each
System owned or used by Angel immediately prior to the Closing Date will be
owned or available for use by Angel on identical terms and conditions
immediately subsequent to the Closing Date. With respect to each System owned by
a third party and used by Angel pursuant to lease, license, sublicense,
agreement or permission, each of which is identified in Schedule 3.14: (a) the
lease, license, sublicense, agreement or permission covering the System is
legal, valid, binding, enforceable, and in full force and effect; (b) the lease,
license, sublicense, agreement or permission will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the Closing Date; (c) to Angel's knowledge, no party to any such lease, license,
sublicense, agreement or permission is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default, and permit termination, modification or acceleration thereunder; (d) to
Angel's knowledge, no party to any such lease, license, sublicense, agreement or
permission has repudiated any provision thereof; (e) Angel has not granted any
sublicense, sublease or similar right with respect to any such lease, license,
sublicense, agreement or permission; (f) to Angel's knowledge, Angel's use and
continued use of such Systems does not and will not interfere with, infringe
upon, misappropriate, or otherwise come into conflict with, any intellectual
property rights of third parties as a result of the continued operation of the
Business.
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3.15. Tax Matters. Angel has filed with the appropriate governmental
agencies all Tax returns and reports required to be filed by it, and has paid in
full or contested in good faith or made adequate provision for the payment of
Taxes (as defined herein) shown to be due or claimed to be due on such Tax
returns and reports. Angel has made estimated Tax payments with respect to its
federal and California estimated taxable income for calendar year 2002 ("2002
Tax Payments") in a manner consistent with past practices and reasonably
believes that its Tax liability for calendar year 2002 (if determined on the
date hereof in accordance with its past practices) would not exceed the amount
of the 2002 Tax Payments. Angel has duly withheld all payroll Taxes, FICA and
other federal, state and local taxes and other items required to be withheld by
it from employer wages, and has duly deposited in trust for, or paid over to,
the proper taxing authorities the same. Angel has not executed or filed with any
taxing authority any agreement currently in effect extending the periods for the
assessment or collection of any Taxes, and is not a party to any pending or, to
the knowledge of Angel, threatened, action or proceeding by any governmental
authority for the assessment or collection of Taxes. Within the past three
years, the United States federal income Tax returns of Angel have not been
examined by the Internal Revenue Service, nor has any state taxing authority
examined any merchandise, personal property, sales or use Tax returns of Angel.
As used herein, the term "Taxes" means all federal, state, county, local and
other taxes and governmental assessments, including but not limited to income
taxes, estimated taxes, withholding taxes, excise taxes, ad valorem taxes,
payroll related taxes (including but not limited to premiums for worker's
compensation insurance and statutory disability insurance), employment taxes,
franchise taxes and import duties, together with any related liabilities,
penalties, fines, additions to tax or interest.
3.16. Banks; Powers of Attorney. Schedule 3.16 is a complete and
correct list showing (a) the names of each bank in which Angel has an account or
safe deposit box and the names of all persons authorized to draw thereon or who
have access thereto, and (b) the names of all persons, if any, holding powers of
attorney from Angel.
3.17. Employee Arrangements. Schedule 3.17 is a complete and correct
list and summary description of all (a) union, collective bargaining,
employment, management, termination and consulting agreements to which Angel is
a party or otherwise bound, and (b) compensation plans and arrangements; bonus
and incentive plans and arrangements; deferred compensation plans and
arrangements; pension and retirement plans and arrangements; profit-sharing and
thrift plans and arrangements; stock purchase and stock option plans and
arrangements; hospitalization and other life, health or disability insurance or
reimbursement programs; holiday, sick leave, severance, vacation, tuition
reimbursement, personal loan and product purchase discount policies and
arrangements; and other plans or arrangements providing for benefits for
employees of Angel. Angel has previously provided a list of all employees of
Angel and all compensation, including bonuses and other incentive compensation,
paid to such employees in the fiscal years ending in 2001 and 2002.
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3.18. ERISA. Angel neither maintains nor is obligated to contribute
to an "employee pension benefit plan", as such term is defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Angel's "welfare benefit plan" as such term is defined in Section 3(1) of ERISA.
3.19. Certain Business Matters. Except as is set forth in Schedule
3.19, (a) Angel is not a party to or bound by any publishing, distributorship,
dealership, sales agency, franchise or similar agreement which relates to the
sale or distribution of any of the products and services of the Business, (b)
there are no pending or, to the knowledge of Angel, threatened labor
negotiations, work stoppages or work slowdowns involving or affecting the
Business, and no union representation questions exist, and there are no
organizing activities, in respect of any of the employees of Angel, (c) the
product and service warranties given by Angel or by which it is bound entail no
greater obligations than are customary in the Business, (d) neither Angel nor
the Selling Stockholders is a party to or bound by any agreement which limits
its or his, as the case may be, freedom to compete in any line of business or
with any person, and (e) Angel is not a party to or bound by any agreement in
which any officer, director or stockholder of Angel (or any affiliate of any
such person) has, or had when made, a direct or indirect material interest.
3.20. Certain Contracts. Schedule 3.20 is a complete and correct
list of all material contracts, commitments, obligations and understandings
which are not set forth in any other Schedule delivered hereunder and to which
Angel is a party or otherwise bound, except for (a) purchase orders from vendors
or customers and (b) each of those which (i) were made in the ordinary course of
business and (ii) either (A) are terminable by Angel (and will be terminable by
Angel) without liability, expense or other obligation on 30 days' notice or
less, or (B) may be anticipated to involve aggregate payments to or by Angel of
$5,000 (or the equivalent) or less calculated over the full term thereof, or (C)
are not otherwise material to the Business. Complete and correct copies of all
contracts, commitments, obligations and undertakings set forth on any of the
Schedules delivered pursuant to this Agreement have been furnished by Angel to
Take-Two (unless otherwise indicated on such schedule). Except as expressly
stated on any of such Schedules, (1) each of the agreements listed on Schedule
3.20 is in full force and effect, no person or entity which is a party thereto
or otherwise bound thereby is in material default thereunder, and no event,
occurrence, condition or act exists which does (or which with the giving of
notice or the lapse of time or both would) give rise to a material default or
right of cancellation, acceleration or loss of contractual benefits thereunder;
(2) to Angel's knowledge, there has been no threatened cancellations thereof and
there are no outstanding disputes thereunder; and (3) each of them is fully
assignable without the consent, approval, order or any waiver by, or any other
action of or with any individual or individuals, without the payment of any
penalty, the incurrence of any additional debt, liability or obligation of any
nature whatsoever or the change of any term. Schedule 3.20 contains a list of
all insurance policies obtained by Angel in connection with the Business.
3.21. Approvals/Consents. Angel currently holds all governmental and
administrative consents, permits, appointments, approvals, licenses,
certificates and franchises which are necessary for the operation of the
Business, all of which are in full force and effect and are transferable
pursuant to the transaction contemplated hereby without the payment of any
penalty or the incurrence of any additional debt, liability or obligation of any
nature whatsoever or the change of any term, except where the failure to have
any such consent, permit, appointment, approval, license, certificate or
franchise would not have a material adverse effect on Angel or the Business.
Schedule 3.21 is a complete and correct list of all such governmental and
administrative consents, permits, appointments, approvals, licenses,
certificates and franchises. No material violations of the terms thereof have
heretofore occurred or are known by the Selling Stockholders to exist as of the
date of this Agreement.
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3.22. Information as to Angel. None of the representations or
warranties made by Angel or the Selling Stockholders in this Agreement is false
or misleading with respect to any material fact, or omits to state any material
fact necessary in order to make the statements therein contained not misleading.
3.23. Investment Intent. Each of the Selling Stockholders represents
and warrants to Take-Two that:
(a) He or she understands that the Shares are "restricted
securities" within the meaning of Rule 144 promulgated under the Securities Act
of 1933, as amended (the "Act") and that the Shares have not been registered
under the Act, and may not be sold, transferred or otherwise disposed of, except
if an effective registration statement is then in effect or pursuant to an
exemption from registration under said Act or any other applicable state
securities laws ("Other Securities Laws"), and that Take-Two is under no
obligation to register the Shares under the Act, and that the Take-Two is not
obligated to take any other action in order to make compliance with an exemption
from the registration provisions of the Act available.
(b) He or she understands that the certificate(s) representing
the Shares will bear a restrictive legend thereon substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY OTHER APPLICABLE SECURITIES LAWS, AND ARE RESTRICTED SECURITIES AS
THAT TERM IS DEFINED UNDER RULE 144 PROMULGATED UNDER THE ACT. THESE
SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED, DISTRIBUTED OR
OTHERWISE DISPOSED OF IN ANY MANNER UNLESS THEY ARE REGISTERED UNDER
THE ACT AND ANY APPLICABLE SECURITIES LAWS, OR UNLESS THE REQUEST FOR
TRANSFER IS ACCOMPANIED BY AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE COMPANY, STATING THAT SUCH TRANSFER IS EXEMPT FROM
REGISTRATION UNDER THE ACT AND ANY OTHER SECURITIES LAWS."
At the time of any intended public sale by a Selling Stockholder (or his
transferee), the legend set forth above shall be removed by Take-Two from any
certificate evidencing the Shares upon delivery to Take-Two of an opinion of
counsel, reasonably satisfactory to Take-Two, that a registration statement
under the 1933 Act is at that time in effect with respect to the legended
security or that such security can be transferred in a public sale without such
a registration statement being in effect and such other documents reasonably
requested by Take-Two.
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(c) He or she understands that Take-Two will direct its
transfer agent for the Take-Two Common Stock to place a stop transfer
instruction against the certificates representing the Shares and will instruct
its transfer agent to refuse to effect any transfer thereof in the absence of a
registration statement declared effective by the United States Securities and
Exchange Commission ("SEC") with respect to the Shares or a favorable opinion of
counsel, satisfactory to Take-Two, that such transfer is exempt from
registration under the Act and Other Securities Laws.
(d) He or she has received copies of the Take-Two Annual
Report on Form 10-K for the year ended October 31, 2001 and all documents that
Take-Two filed with the SEC under Sections 13, 14(a) and 15(d) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), subsequent to the filing of
such Form 10K, including, in each case, the exhibits thereto; and that he or she
has had the opportunity to review public information concerning Take-Two, and
understands such information.
(e) He or she is a sophisticated investor familiar with the
type of risks inherent in the acquisition of securities such as the Shares and
that, by reason of his or her knowledge and experience in financial and business
matters in general, and investments of this type in particular, he or she is
capable of evaluating the merits and risks of an investment in the Shares.
(f) He or she is able to bear the economic risk of an
investment in the Shares, including, without limiting the generality of the
foregoing, the risk of losing part or all of his or her investment in the Shares
and his or her possible inability to sell or transfer the Shares for an
indefinite period of time.
(g) He or she is acquiring the Shares for his or her own
account and for the purpose of investment and not with a view to, or for resale
in connection with, any distribution within the meaning of the Act or any Other
Securities Laws, in violation of the Act.
(h) He or she acknowledges that Take-Two has relied on the
representations contained herein and that the statutory basis for exemption from
the requirements of Section 5 of the Act may not be present if, notwithstanding
such representations, he or she is acquiring the Shares for resale or
distribution upon the occurrence or non-occurrence of some predetermined event.
4. Representations and Warranties as to Take-Two. Take-Two represents
and warrants to Angel and the Selling Stockholders, as follows:
4.1. Authority. The execution and delivery by Take-Two of this
Agreement and of each agreement to be executed and delivered by it pursuant
hereto (collectively, the "Purchase Documents"), the performance by Take-Two of
its obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of Take-Two, and
Take-Two has all necessary corporate power and corporate authority with respect
thereto. This Agreement is, and when executed and delivered by Take-Two each
other Purchase Document will be, the valid and binding obligation of Take-Two in
accordance with the respective terms thereof, except as the same may be limited
by bankruptcy, insolvency, reorganization, moratorium or other laws affecting
the rights of creditors generally and subject to the rules of law governing (and
all limitations on) specific performance, injunctive relief, and other equitable
remedies.
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4.2. Noncontravention. Except as set forth on Schedule 4.2, neither
the execution and delivery by Take-Two of this Agreement or of any other
documents to be executed and delivered by it, nor the consummation of any of the
transactions contemplated hereby or thereby, nor the performance by it of any of
its obligations hereunder or thereunder, will (nor with the giving of notice or
the lapse of time or both would) (a) conflict with or result in a breach of any
provision of the Certificate of Incorporation or By-Laws of Take-Two, as amended
to date, or (b) give rise to a material default, or any right of termination,
cancellation or acceleration, or otherwise be in material conflict with or
result in a material loss of contractual benefits to it, under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation material to Take-Two to which it is
a party or by which it or any of its assets may be bound, or require any
consent, approval or notice under the terms of any such document or instrument,
or (c) violate any order, writ, injunction, decree, law, statute, rule or
regulation of any court or governmental authority which is applicable to it
which violation would have a material adverse effect on Take-Two.
4.3. Issuance of Securities. The Shares to be issued at the Closing
have been duly authorized by all necessary corporate action and, when issued and
paid for in accordance with the terms hereof, shall be validly issued and
outstanding, fully paid and non-assessable, free and clear of all liens,
encumbrances, voting or transfer restrictions, and rights of first refusal of
any kind (except for any restrictions which may be imposed by state or federal
securities laws) and the holders shall be entitled to all rights accorded to
holders of Take-Two Common Stock. Take-Two has complied with all applicable
federal and state securities laws in connection with the issuance of the Shares.
4.4. Regulatory Compliance. Since October 31, 2001, Take-Two has
duly filed on a timely basis all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act, including material filed pursuant to Section
13(a), 14(a) or 15(d) of the Exchange Act ("SEC Reports"). At the time of
filing, the SEC Reports complied in all material respects with the requirements
of the Exchange Act and the rules and regulations of the Commission promulgated
thereunder and other federal, state and local laws, rules and regulations
applicable to such documents and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Take-Two is in
compliance in all material respects with (i) all listing requirements applicable
to companies listed on The Nasdaq National Market and (ii) all requirements of
the Exchange Act and the rules and regulations of the SEC promulgated thereunder
and Take-Two has no reason to believe that it will for any reason cease to be in
compliance in all material respects with such requirements at any time prior to
the Closing.
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4.5. Information as to Take-Two. None of the representations or
warranties made by Take-Two in this Agreement, or contained in any of the
Purchase Documents, to be executed and delivered hereto, is or will be, false or
misleading with respect to any material fact, or omits to state any material
fact necessary in order to make the statements therein contained not misleading.
5. Indemnification.
5.1. Indemnification by the Selling Stockholders. Each of the
Selling Stockholders hereby indemnifies and agrees, jointly and severally, to
defend and hold harmless Take-Two from and against any and all losses,
obligations, deficiencies, liabilities, claims, damages, costs and expenses
(including, without limitation, the amount of any settlement entered into
pursuant hereto, and all reasonable legal fees and other expenses incurred in
connection with the investigation, prosecution or defense of any matter
indemnified pursuant hereto) ("Losses") which Take-Two may sustain, suffer or
incur and which arise out of, are caused by, relate to, or result or occur from
or in connection any misrepresentation by Angel and/or the Selling Stockholders
contained in, or the breach by Angel or the Selling Stockholders of, any
representation, warranty or covenant made by any one or all of them in this
Agreement. The foregoing indemnification shall also apply to direct claims by
Take-Two against Angel or the Selling Stockholders. Notwithstanding the
foregoing, a Selling Stockholder shall not be liable for, nor obligated to
indemnify against hereunder, Losses due to misrepresentations and breaches of
representations, warranties and covenants of another Selling Stockholder with
respect to such other Selling Stockholder nor will William A. Johnston have any
personal liability hereunder.
5.2. Indemnification by Take-Two. Take-Two hereby indemnifies and
agrees to defend and hold harmless each of Angel (before the Closing Date) and
the Selling Stockholders from and against any and all Losses, which it or any of
them may sustain, suffer or incur and which arise out of, are caused by, relate
to, or result or occur from or in connection with any misrepresentation by
Take-Two contained in, or the breach by Take-Two of, any representation,
warranty or covenant made by Take-Two in this Agreement. The foregoing
indemnification shall also apply to direct claims by Angel or the Selling
Stockholders against Take-Two.
5.3. Indemnification Threshold and Limitations. Neither Take-Two, on
the one hand, or any of the Selling Stockholders, on the other hand, shall be
liable to the others under this Section 5 except to the extent that the
aggregate of all Losses incurred by Take-Two, on the one hand, or any or all of
the Selling Stockholders, on the other hand, exceeds One Hundred Fifty Thousand
Dollars ($150,000) and then only to the extent of such excess. With respect to
any Selling Stockholder, (i) the aggregate amount payable by such Selling
Stockholder for all Losses shall not exceed the Purchase Price paid to such
Selling Stockholder as set forth on Schedule 2.1 and (ii) the aggregate amount
payable by such Selling Stockholder with respect to any particular Loss shall
not exceed such Selling Stockholder's Pro Rata Share of such Loss. The Pro Rata
Share of a Selling Stockholder shall be the percentage equal to the Purchase
Price received by such Selling Stockholder as set forth on Schedule 2.1 divided
by Thirty Five Million Dollars ($35,000,000).
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5.4. Third Party Claims. If a claim by a third party is made against
any party or parties hereto and the party or parties against whom said claim is
made intends to seek indemnification with respect thereto under Subsections 5.1
or 5.2, the party or parties seeking such indemnification shall promptly notify
all indemnifying parties, in writing, of such claim; provided, however, that the
failure to give such notice shall not affect the rights of the indemnified party
or parties hereunder except to the extent that such failure materially and
adversely affects the indemnifying party or parties ability to timely defend
such action. The indemnifying party or parties shall have 10 business days after
said notice is given to elect, by written notice given to the indemnified party
or parties, to undertake, conduct and control, through counsel of their own
choosing (subject to the consent of the indemnified party or parties, such
consent not to be unreasonably withheld) and at their sole risk and expense, the
good faith settlement or defense of such claim, and the indemnified party or
parties shall cooperate with the indemnifying parties in connection therewith;
provided: (a) all settlements require the prior reasonable consultation with the
indemnified party and the prior written consent of the indemnified party, which
consent shall not be unreasonably withheld, and (b) the indemnified party or
parties shall be entitled to participate in such settlement or defense through
counsel chosen by the indemnified party or parties, provided that the fees and
expenses of such counsel shall be borne by the indemnified party or parties. So
long as the indemnifying party or parties are contesting any such claim in good
faith, the indemnified party or parties shall not pay or settle any such claim;
provided, however, that notwithstanding the foregoing, the indemnified party or
parties shall have the right to pay or settle any such claim at any time,
provided that in such event they shall waive any right of indemnification
therefor by the indemnifying party or parties. If the indemnifying party or
parties do not make a timely election to undertake the good faith defense or
settlement of the claim as aforesaid, or if the indemnifying parties fail to
proceed with the good faith defense or settlement of the matter after making
such election, then, in either such event, the indemnified party or parties
shall have the right to contest, settle or compromise (provided that all
settlements or compromises require the prior reasonable consultation with the
indemnifying party and the prior written consent of the indemnifying party,
which consent shall not be unreasonably withheld) the claim at their exclusive
discretion, at the risk and expense of the indemnifying parties.
5.5. Assistance. Regardless of which party is controlling the
defense of any claim, each party shall act in good faith and shall provide
reasonable documents and cooperation to the party handling the defense.
6. Covenants.
6.1. Investigation; Confidentiality. (a) Between the date hereof and
the Closing Date, Take-Two may, directly and through its representatives, make
such investigation of Angel and its business and assets as each deems necessary
or advisable, but such investigation shall not affect any of the representations
and warranties contained herein or in any instrument or document delivered
pursuant hereto. In furtherance of the foregoing, Take-Two and their
representatives shall have reasonable access, during normal business hours after
the date hereof, to all properties, books, contracts, commitments and records of
Angel, and Angel shall furnish to Take-Two and its representatives such
financial and operating data and other information as may from time to time be
reasonably requested relating to the transactions contemplated by this
Agreement. Angel and its management, employees, accountants and attorneys shall
cooperate fully with Take-Two and its representatives in connection with such
investigation. Unless otherwise authorized by Angel, Take-Two shall be bound by
the confidentiality obligations referenced in the Letter of Intent dated October
28, 2002, by and among the parties.
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(b) On and after the Closing Date, unless otherwise authorized
by Take-Two or, with respect to Messrs. Angel and Limber, in the course of their
employment with Angel, the Selling Stockholders hereby agree not to, at any
time, directly or indirectly, use, communicate, disclose or disseminate any
Confidential Information. As used in this paragraph 6.1, the term "Confidential
Information" shall mean any and all information (oral and written) relating to
the Business or the Assets, other than such information which can be shown by
the disclosing party to be in the public domain (such information not being
deemed to be in the public domain merely because it is embraced by more general
information which is in the public domain) other than as the result of a breach
of the provisions of this subsection 6.1(b) including, but not limited to,
information relating to: identity and description of goods and services used;
purchasing; costs; pricing; equipment; technology; research; test procedures and
results; customers and prospects; personnel matters, business plans and
projections, customer or visitor data, marketing; and selling and servicing.
6.2. Noncompete Covenant
(a) For good and valuable consideration, the receipt of which
each Selling Stockholder acknowledges, each of the Selling Stockholders hereby
agrees for the Covenant Period applicable to such Selling Stockholder, not to,
directly or indirectly, within any State within the United States or any other
geographic area in which Angel, Take-Two, or any of its subsidiaries then
conducts business, engage or become interested in any business (whether as
owner, manager, operator, licensor, licensee, lender, partner, stockholder,
joint venturer, employee, consultant or otherwise), or render any services to
any business, similar to the Business or which publishes, markets or sells
products similar to products produced by the Business, other than as a holder
for investment purposes only of not more than five percent (5%) of the
publicly-traded capital stock of any corporations engaged in such businesses.
The Covenant Period for Brad Hunt and Steve Rotenberg shall commence on the
Closing Date and continue until the later of one (1) year after the Closing Date
or six (6) months after the termination of full-time employment with Angel.
Take-Two acknowledges that Messrs. Angel, Hunt and Limber are owners of Scenix,
an enterprise involved in technology development for industrial visualization
and manipulation in automotive design, and that Mr. Angel has an interest in an
enterprise developing karaoke products for video game consoles and that such
ownership and incidental activities thereto will not be a violation of the
foregoing covenant by any of those individuals. Each of Messrs. Angel, Hunt and
Limber represent and warrant that none of Angel's Intangibles have been
transferred to either of these entities; he is not and will not serve as an
officer, director, employee or consultant to either entity; and he will not
allow his name to be used in the furtherance of the business of either entity.
(b) Each of the Selling Stockholders agrees that he will not,
for the Covenant Period applicable to such Selling Stockholder, directly or
indirectly, hire, offer to hire, entice away or in any other manner persuade or
attempt to persuade any officer, employee, agent, lessor, lessee, licensor,
licensee, customer, prospective customer or supplier of the Business or
Take-Two's business to discontinue or alter his or its relationship with the
Business or Take-Two's business.
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(c) The parties hereto hereby acknowledge and agree that (i)
Take-Two and Angel would be irreparably injured in the event of a breach by any
of the Selling Stockholders of any of their obligations under this Section 6.2,
(ii) monetary damages would not be an adequate remedy for any such breach, and
(iii) Take-Two and Angel shall be entitled to injunctive relief, in addition to
any other remedy which it may have, in the event of any such breach. In any such
proceeding for such relief, neither Angel nor Take-Two shall be required to post
a bond or any other security or to prove any amount of actual damages.
(d) It is the intent of the parties hereto that the covenants
contained in this Agreement shall be enforced to the fullest extent permissible
under the laws of and public policies of each jurisdiction in which enforcement
is sought (the Selling Stockholders hereby acknowledge that said restrictions
are reasonably necessary for the protection of Take-Two and Angel). Accordingly,
it is hereby agreed that if any one or more of the provisions of Section 6.2
shall be adjudicated to be invalid or unenforceable for any reason whatsoever,
said provision shall be (only with respect to the operation thereof in the
particular jurisdiction in which such adjudication is made) construed by
limiting and reducing it so as to be enforceable to the extent permissible.
(e) The provisions of this Section 6.2 shall be in addition to,
and not in lieu of, any other obligations with respect to the subject matter
hereof, whether arising as a matter of contract, by law or otherwise, including,
but not limited to, any obligations which may be contained in any employment
agreements between Take-Two or Angel and the Selling Stockholders entered into
at or after the Closing.
6.3. Consummation of Transaction. Each of the parties hereto hereby
agrees to use its best efforts to cause all conditions precedent to his or its
obligations (and to the obligations of the other parties hereto to consummate
the transactions contemplated hereby) to be satisfied, including, but not
limited to, using all reasonable efforts to obtain all required (if so required
by this Agreement) consents, waivers, amendments, modifications, approvals,
authorizations, novations and licenses; provided, however, that nothing herein
contained shall be deemed to modify any of the absolute obligations imposed upon
any of the parties hereto under this Agreement or any agreement executed and
delivered pursuant hereto.
6.4. Cooperation/Further Assurances. Each of the parties hereto
hereby agrees (i) to fully cooperate with the other parties hereto in preparing
and filing any notices, applications, reports and other instruments and
documents and (ii) to execute, acknowledge, deliver, file and/or record, or
cause such other parties to the extent permitted by law to execute, acknowledge,
deliver, file and/or record such other documents, which may be required by this
Agreement or which are desirable in the reasonable opinion of any of the parties
hereto, or their respective legal counsel, in respect of, any statute, rule,
regulation or order of any governmental or administrative body in connection
with the transactions contemplated by this Agreement.
6.5. Accuracy of Representations. Each party hereto agrees that
prior to the Closing Date he or it will not enter into any transaction and or
take any action, and will use his or its best efforts to prevent the occurrence
of any event (but excluding events which occur in the ordinary course of
business and events over which such party has no control), which would result in
any of his or its representations, warranties or covenants contained in this
Agreement or in any agreement, document or instrument executed and delivered by
him or it pursuant hereto not to be true and correct, or not to be performed as
contemplated, at and as of the time immediately after the occurrence of such
transaction or event.
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6.6. Conduct of Business; Notification of Certain Matters. Angel
covenants and agrees and the Selling Stockholders covenant and agree to cause
Angel, to conduct the Business during the period from the date hereof to the
Closing Date only in the ordinary course and in a manner consistent with past
practice and in compliance with applicable laws, and Angel and the Selling
Stockholders shall, except as otherwise set forth in Schedule 6.6, use
commercially reasonable efforts to preserve intact its business organizations,
to maintain and preserve the Assets, to keep available the services of the
respective current officers, employees and consultants of Angel and to preserve
the present goodwill of Angel and its relationships with customers, suppliers
and other persons with whom it has business relations. Angel and the Selling
Stockholders, on the one hand, and Take-Two, on the other hand, shall give
prompt notice to one another, of (a) the occurrence, or nonoccurrence, or any
event the occurrence, or nonoccurrence, of which would be likely to cause any
representation of such party contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Closing Date and (b) any
material failure of such party to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by such party hereunder; provided,
however, that the delivery of any notice pursuant to this Subsection 6.6 shall
not limit or otherwise affect the remedies available hereunder to such party.
6.7. Broker. Take-Two on the one hand, and Angel and the Selling
Stockholders on the other hand, represents and warrants to the other that no
broker or finder was engaged or dealt with in connection with any of the
transactions contemplated by this Agreement, and each of the parties shall
indemnify and hold the other harmless from and against any and all claims or
liabilities asserted by or on behalf of any alleged broker or finder for
broker's fees, finder's fees, commissions or like payments.
6.8. Employment Agreements. At the Closing Date, Messrs. Diego
Angel, Michael Limber, Alan Wasserman, David Etherton, Steve Reed, Steven Olds
and Marc Fredrickson shall enter into an employment agreements with Angel in
substantially the forms of Exhibit A hereto (collectively the "Employment
Agreements").
6.9. No Solicitation of Transactions. Prior to the earlier of the
Closing Date or the termination of this Agreement, neither Angel nor the Selling
Stockholders will, directly or indirectly, through any director, officer,
employee, investment banker, financial advisor, attorney, accountant or other
agent or representative of Angel otherwise, solicit, initiate or encourage the
submission of proposals or offers from any person relating to any acquisition or
purchase of all or (other than in the ordinary course of business) any portion
of the Angel Stock, Assets or Business of, or any equity interest in, Angel, or
any business combination with Angel and other than with Take-Two or any
affiliate of Take-Two participate in any negotiations regarding, or furnish to
any other person any information with respect to, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to do or seek any of the foregoing. Angel and the
Selling Stockholders shall immediately cease and cause to be terminated any
existing discussions or negotiations with any parties conducted heretofore with
respect to any of the foregoing (other than in respect of the transaction
contemplated hereby).
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6.10. Regulatory Compliance. To the extent required by The Nasdaq
National Market rules and regulations, Take-Two shall promptly authorize and
list the Shares on Nasdaq. Take-Two shall take all commercially reasonable steps
to comply in all material respects with (i) all listing requirements applicable
to companies listed on The Nasdaq National Market and (ii) all requirements of
the Exchange Act and the rules and regulations of the Commission promulgated
thereunder.
6.11. Tax Matters.
(a) Take-Two shall prepare or cause to be prepared and file or
cause to be filed all Tax returns of Angel for all periods ending on or prior to
the Closing Date which are filed after the Closing Date, and for all tax periods
beginning on or before the Closing Date and ending after the Closing Date
("Straddle Period"), and shall make payment of any Tax due. Take-Two shall allow
Selling Shareholders to review, comment and reasonably approve any such Tax
returns not later than 20 (twenty) days prior to the filing thereof.
(b) Selling Stockholders, Angel and Take-Two shall cooperate
fully, as and to the extent reasonably requested by the other party, in
connection with the filing of Tax returns pursuant to this Section 6.11 and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information that are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
materials provided hereunder.
(c) Selling Stockholders shall have the exclusive authority to
represent Angel before any Taxing authority or any court in any investigation,
audit or other proceeding regarding the Tax consequences of the operations of
Angel for all periods ending on or prior to the Closing Date (or portions
thereof); provided, however, that Angel and its representatives may participate
therein and receive copies of all notices and communications in connection
therewith. The Selling Stockholders shall not enter into any settlement of any
such investigation, audit or other proceeding which could reasonably be expected
to result in any tax, penalty, interest, cost or other liability to Angel or
Take-Two for any period beginning after the Closing Date or the portion of any
Straddle Period that does not include the Closing Date unless such settlement
shall be approved in writing by Take-Two and Angel. Neither Take-Two nor Angel
shall enter into any settlement of any such investigation, or audit or other
proceeding which could reasonably be expected to result in any tax, penalty,
interest, cost or other liability to Selling Stockholders without, in each such
instance, the prior approval in writing of the Selling Stockholders. In
connection with any such investigation or audit, each party shall be responsible
for its own costs and expenses, except to the extent otherwise agreed to in any
written agreement hereafter entered into and signed by the party to be charged
therewith.
(d) The parties acknowledge and agree that the Purchase Price
is being paid solely in exchange for the Angel Stock. None of the parties shall
take any position on any tax return inconsistent with this Section 6.11(d),
unless there has been a final determination (within the meaning of Section 1313
of the Internal Revenue Code or 1985, as amended) to the contrary.
Notwithstanding anything to the contrary herein, except as provided in Section
2.2 hereof, none of the parties hereto makes any representation or warranty with
respect to, and each of the parties hereto expressly disclaims any
responsibility to the others for, any tax consequences arising out of the
purchase and sale of Angel Stock contemplated by this Agreement. The foregoing
shall not adversely affect the enforceability of the covenants contained in
Section 6.2.
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7. Conditions of Closing.
7.1. Conditions to Obligations of Take-Two to Close. The obligations
of Take-Two to consummate the transactions contemplated herein shall be subject
to the fulfillment or waiver at or prior to the Closing Date of the following
conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of each of Angel and the Selling Stockholders
contained in this Agreement shall have been true when made, and, in addition,
shall be true in all material respects on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date.
(b) Performance of Agreements. Each of Angel and the Selling
Stockholders, as the case may be, shall have performed, observed and complied in
all material respects with all of their respective obligations, covenants and
agreements, and shall have satisfied or fulfilled in all material respects
conditions contained in this Agreement and required to be performed, observed or
complied with, or to be satisfied or fulfilled, by Angel or the Selling
Stockholders at or prior to the Closing Date.
(c) Due Diligence. Take-Two being satisfied, in its sole
discretion, with the results of its "due diligence" investigation (as
contemplated in Section 6.1 hereof) of Angel's business, liabilities, properties
and assets are materially consistent with all of the data, statistics, financial
statements, representations, assurances and other information, financial and
otherwise relating to Angel's business liabilities, properties and assets
provided to Take-Two by Angel, either orally or in writing, prior to Closing
Date.
(d) Opinion of Counsel for Angel. Take-Two shall have received
an opinion of Perkins Coie LLP, counsel for Angel dated the Closing Date, in
substantially the form of Exhibit B hereto.
(e) Litigation. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions contemplated
hereby, and no claim, suit, action, inquiry, investigation or proceeding in
which it will be, or it is, sought to restrain, prohibit or change the terms of
or obtain damages or other relief in connection with this Agreement or any of
the transactions contemplated hereby, shall have been instituted or threatened
by any person or entity, and which, in the reasonable judgment of Take-Two
(based on the likelihood of success and material consequences of such claim,
suit, action, inquiry or proceeding), makes it inadvisable to proceed with the
consummation of such transactions.
(f) Consents and Approvals. All consents, waivers, approvals,
licenses and authorizations by third parties and governmental and administrative
authorities (and all amendments or modifications to existing agreements with
third parties) required as a precondition to the performance by Angel and the
Selling Stockholders of their respective obligations hereunder and under any
agreement delivered pursuant hereto shall have been duly obtained and shall be
in full force and effect.
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(g) Date of Consummation. The transactions contemplated herein
shall have been consummated on or prior to November 19, 2002, or such later date
as the parties shall agree by a written instrument signed by all of them (the
"Closing Deadline").
(h) Validity of Transactions. The validity of all transactions
contemplated hereby, as well as the form and substance of all agreements,
instruments, opinions, certificates and other documents delivered by Angel and
the Selling Stockholders pursuant hereto, shall be satisfactory in all material
respects to Take-Two and its counsel.
(i) No Material Adverse Change. Except as otherwise provided by
this Agreement, there shall not have occurred after the date hereof, in the
reasonable judgment of Take-Two, a material adverse change in the financial or
business condition of Angel and its subsidiaries, taken as a whole.
(j) Employment Agreements. Each of Messrs. Angel, Limber,
Wasserman, Etherton, Reed, Olds, and Fredrickson shall have executed the
Employment Agreements.
(k) Closing Certificate. Each of the Selling Stockholders shall
have furnished Take-Two with certificates, all dated the Closing Date, to the
effect that all the representations and warranties of Angel and the Selling
Stockholders are true and complete and all covenants to be performed by Angel or
the Selling Stockholders at or as of the Closing have been performed and
conditions to be satisfied at or as of the Closing have been waived or
satisfied.
(l) Board Authorization. The approval of this Agreement and all
of the transactions contemplated hereby by the Board of Directors of Take-Two.
(m) Each of the directors and officers of Angel shall have
submitted resignations as directors and officers as requested by Take-Two.
7.2. Conditions to Obligations of Angel and the Selling Stockholders
to Close. The obligations of Angel and the Selling Stockholders to consummate
the transactions contemplated herein shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of Take-Two contained in any Purchase Documents
delivered by Take-Two shall have been true when made, and, in addition, shall be
true in all material respects, on and as of the Closing Date with the same force
and effect as though made on and as of the Closing Date.
(b) Performance of Agreements. Take-Two shall have performed,
observed and complied, in all material respects, with all obligations, covenants
and agreements, and shall have satisfied or fulfilled in all material respects
all conditions contained in any Purchase Document and required to be performed,
observed or complied with, or satisfied or fulfilled, by it at or prior to the
Closing Date.
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(c) Consents and Approvals. All consents, waivers, approvals,
licenses and authorizations by third parties and governmental and administrative
authorities (and all amendments and modifications to existing agreements with
third parties) required as a precondition to the performance by Take-Two of its
obligations hereunder and under any agreement delivered pursuant hereto, shall
have been duly obtained and shall be in full force and effect.
(d) Validity of Transactions. The validity of all transactions
contemplated hereby, as well as the form and substance of all agreements,
instruments, opinions, certificates and other documents delivered by Take-Two
pursuant hereto, shall be satisfactory in all material respects to the Selling
Stockholders and its counsel.
(e) Closing Certificate. Take-Two shall have furnished Angel
with certificates executed by its executive officer, dated the Closing Date, to
the effect that all the representations and warranties of Take-Two are true and
complete in all material respects and all covenants to be performed by Take-Two
at or as of the Closing have been performed in all material respects and
conditions to be satisfied at or as of the Closing have been waived or satisfied
in all material respects.
(f) Opinion of Counsel for Take-Two. The Selling Stockholders
shall have received an opinion of Blank Rome Tenzer Greenblatt LLP, counsel for
Take-Two, dated the Closing Date, in substantially the form of Exhibit C hereto.
(g) Litigation. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions contemplated
hereby, and no claim, suit, action, inquiry, investigation or proceeding in
which it will be, or it is, sought to restrain, prohibit or change the terms of
or obtain damages or other relief in connection with this Agreement or any of
the transactions contemplated hereby, shall have been instituted or threatened
by any person or entity, and which, in the reasonable judgment of Angel (based
on the likelihood of success and material consequences of such claim, suit,
action, inquiry or proceeding), makes it inadvisable to proceed with the
consummation of such transactions.
(h) Date of Consummation. The transactions contemplated herein
shall have been consummated on or prior to the Closing Deadline.
(i) No Material Adverse Change. Except as otherwise provided by
this Agreement, there shall not have occurred after the date hereof, in the
reasonable judgment of Angel, a material adverse change in the financial or
business condition of Take-Two and its subsidiaries, taken as a whole.
(j) Employment Agreements. Each of Messrs. Angel, Limber,
Wasserman, Etherton, Reed, Olds, and Fredrickson shall have executed the
Employment Agreements.
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7.3. Termination. Subject to Section 7.4 hereof, this Agreement may
be terminated and the transactions contemplated hereby abandoned at any time
prior to the Closing Date:
(a) By mutual agreement of Angel and Take-Two;
(b) By Angel or Take-Two, if the Closing Date has not occurred
before 11:59 p.m. (Pacific Time) on the Closing Deadline;
(c) By Take-Two, if Take-Two is not in material breach of any
of its representations, warranties, covenants and agreements under this
Agreement and there has been a breach of any representation, warranty, covenant
or agreement contained in this Agreement on the part of Angel or the Selling
Stockholders and (i) Angel and the Selling Stockholders are not using their
reasonable efforts to cure such breach or have not cured such breach, in either
case, within five (5) business days after receipt of notice of such breach by
Angel and the Selling Stockholders (provided, however, that, no cure period
shall be required for a breach which by its nature cannot be cured) and (ii) as
a result of such breach any of the conditions set forth in Section 7.1 would not
then be satisfied;
(d) By Angel and/or the Selling Stockholders, if Angel and the
Selling Stockholders are not in material breach of any of their representations,
warranties, covenants and agreements under this Agreement and there has been a
material breach of any representation, warranty, covenant or agreement contained
in this Agreement on the part of Take-Two and (i) Take-Two is not using its
reasonable efforts to cure such breach or have not cured such breach within five
(5) business days, after receipt of notice of such breach by Take-Two (provided,
however, that no cure period shall be required for a breach which by its nature
cannot be cured), and (ii) as a result of such breach any of the conditions set
forth in Section 7.2 would not then be satisfied; or
7.4. Effect of Termination. In the event that this Agreement is
terminated and the transactions contemplated hereby are abandoned pursuant to
the terms of this Section 7, this Agreement shall, forthwith become null and
void and of no force and effect, except as to Section 10.1 hereof and the
obligations of the parties with respect to the Confidential Information;
provided, however, that nothing herein shall relieve any party from liability
for any breach hereof prior to termination.
8. The Closing. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 7, the closing of the transactions contemplated by this Agreement (the
"Closing") will take place at the offices of Angel as promptly as practicable
(and in any event within two business days) after satisfaction or waiver of the
conditions set forth in Section 7 (such date to be referred to herein as the
"Closing Date"); but in no event later than the Closing Deadline.
8.1. Deliveries by Take-Two at the Closing. At the Closing, Take-Two
shall deliver the following:
(a) the Cash Consideration, by wire transfer of immediately
available funds as specified on Schedule 2.1;
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(b) the Shares as specified in Schedule 2.1;
(c) the Employment Agreements; and
(d) a closing certificate in accordance with Section 7.2(e).
8.2. Deliveries by Angel and/or the Selling Stockholders at the
Closing. At the Closing, Angel and/or the Selling Stockholders, as applicable,
shall deliver to Take-Two, the following:
(a) stock certificates representing the Angel Stock, together
with stock powers duly executed by the Selling Stockholders;
(b) the Employment Agreements;
(c) a copy of the resolutions of the Board of Directors of
Angel, and the written consent of the Selling Stockholders, authorizing Angel to
execute and deliver this Agreement and the Employment Agreements, to perform its
obligations thereunder and to consummate the transaction contemplated in this
Agreement, duly certified by the Secretary or assistant Secretary of Angel; and
(d) a closing certificate in accordance with Section 7.1(k).
8.3. Other Deliveries. In addition, the parties shall execute and
deliver such other documents as may be required by this Agreement and as any of
them or their respective counsel may reasonably require in order to document and
carry out the transactions contemplated by this Agreement.
9. Survival of Representations and Warranties.
Each of the parties hereto hereby agrees that representations and
warranties made by or on behalf of him or it in this Agreement or in any
document or instrument delivered pursuant hereto shall survive the Closing Date
for a period of eighteen (18) months.
10. General Provisions.
10.1. Fees and Expenses. Take-Two shall bear its own expenses, and
Angel shall bear its own expenses and the expenses of the Selling Stockholders,
in connection with the negotiation and preparation of this Agreement and the
consummation and performance of the transactions contemplated hereby.
10.2. Publications. Each of the parties shall consult with each
other prior to issuing any press release or otherwise making any public
statement with respect to the contents of this document or the transactions
contemplated hereby, and none of the parties hereto shall issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or applicable stock exchange or NASDAQ regulations.
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10.3. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the earlier of the date delivered or mailed if delivered
personally, by overnight courier or mailed by express, registered or certified
mail (postage prepaid, return receipt requested) or by facsimile transmittal,
confirmed by express, certified or registered mail, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice, except that notices of changes of address shall be effective
upon receipt):
If to Take-Two: Take-Two Interactive Software, Inc.
622 Broadway
New York, New York 10012
Attn: Ryan Brant, Chairman
with a copy to: Blank Rome Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
Attn: Robert Mittman, Esq.
If to Angel: Angel Studios, Inc.
5966 La Place Court
Carlsbad, California 92008
Attn.: Diego Angel, President
with a copy to: Perkins Coie LLP
1620 26th Street, Sixth Floor
Santa Monica, California 90404
Attn: Donald E. Karl, Esq.
If to the Selling
Stockholders: Diego Angel
7122 Obelisco Court
Carlsbad, California 92009
Brad Hunt
1720 Hygeia Avenue
Encinitas, CA 92024
Jill Hunt
1720 Hygeia Avenue
Encinitas, CA 92024
Michael Limber
6719 Abanto Street
Carlsbad, CA 92009
Steve Rotenberg
7587 Dehesa Court
Carlsbad, CA 92009
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Harry Benham
21 South Loudoun Street
Winchester, VA 22601
Kern Trust U/I/D 5/11/65
21 South Loudoun Street
Winchester, VA 22601
Attn: Harry Benham, Trustee
10.4. Amendment. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
10.5. Waiver. At any time prior to the Closing Date, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
10.6. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the greatest extent possible.
10.7. Entire Agreement. This Agreement (together with the Exhibits
and Schedules annexed hereto and incorporated herewith) and the agreements
referred to herein constitute the entire agreement, and supersede all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and thereof.
10.8. No Assignment. This Agreement shall not be assigned by
operation of law or otherwise, and any assignment shall be null and void.
10.9. Headings. Headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
10.10. Schedules. All references in this Agreement to Schedules
shall mean the schedules identified in this Agreement, which are incorporated
into this Agreement and shall be deemed a part of the representations and
warranties to which they relate.
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10.11. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York without regard to
its choice of law principles. Each of Take-Two, Angel and the Selling
Stockholders hereby irrevocably and unconditionally consents to submit to the
jurisdiction of the courts of the State of New York and of the United States
located in the County of New York, State of New York for any litigation arising
out of or relating to this Agreement and the transactions contemplated hereby
(and agrees not to commence any litigation relating thereto except in such
courts), waives any object to the laying of venue of any such litigation in such
courts and agrees not to plead or claim that such litigation brought in any such
courts has been brought in an inconvenient forum.
10.12. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
[signature page to follow]
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IN WITNESS WHEREOF, each of Take-Two and Angel, by their
respective officers thereunto duly authorized, and the Selling Stockholders,
individually, have caused this Agreement to be executed as of the date first
written above.
Take-Two Interactive Software, Inc.
By: /s/ Barry Rutcofsky
----------------------------------
Name: Barry Rutcofsky
Title: Executive Vice President
Angel Studios, Inc.
By: /s/ Diego Angel
----------------------------------
Name: Diego Angel
Title: President
/s/ Diego Angel
----------------------------------
Diego Angel
/s/ Brad Hunt
----------------------------------
Brad Hunt
/s/ Jill Hunt
----------------------------------
Jill Hunt
/s/ Michael Limber
----------------------------------
Michael Limber
/s/ Steve Rotenberg
----------------------------------
Steve Rotenberg
/s/ Harry Benham
----------------------------------
Harry Benham
/s/ Harry Benham
----------------------------------
Harry Benham, Trustee of the Kern Trust
U/I/D 5/11/65
/s/ William A. Johnston
----------------------------------
William A. Johnston, Trustee of the
Kern Trust U/I/D 5/11/65
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