Document:

EMVELCO
      CORPORATION

     

    UNAUDITED
      PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    

    The
      accompanying unaudited pro forma condensed consolidated financial statements
      (the “unaudited pro forma financial statements”) give effect to the disposition
      by Emvelco Corporation (“Emvelco” or the “Company”), formerly Euroweb
      International Corp., of 100% of the interest of Navigator Informatika Rt.
      (“Navigator”) to Marivaux Investment Limited and Fleminghouse Investment Limited
      (collectively, the “Buyers”).

    

    Sale
      of 100% of the interest of Navigator Informatika Rt.

    

    The
      unaudited pro forma financial statements give effect to the sale of 100% of
      the
      Company’s interest in Navigator. The sale was completed on February 16, 2007.
      Navigator was sold for approximately $4,034,191 consisting of $3,200,000 in
      cash
      and 622,531 shares of Emvelco common stock, and excluding estimated transaction
      costs, success fees and guarantee provision of approximately $124,000. The
      622,531 Emvelco shares were valued on $1.34 per share, representing the closing
      price of Emvelco on the Nasdaq Capital Market on February 16, 2007.

     

    Emvelco
      believes that the sale of Navigator meets the criteria for presentation as
      a
      discontinued operation under the provisions of Statement of Financial Accounting
      Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
      Assets." Accordingly, Navigator is presented as a discontinued operation in
      the
      historical consolidated financial statements of Emvelco. The estimated gain
      is
      $964,415 on the sale of Navigator, which is not reflected in the unaudited
      pro
      forma condensed consolidated statements of operations due to the non-recurring
      nature of the gain.

    

    The
      unaudited pro forma condensed consolidated balance sheet gives effect to the
      disposition of Navigator as if it occurred on September 30, 2006. The unaudited
      pro forma condensed consolidated statements of operations are presented for
      the
      nine months ended September 30, 2006 and the year ended December 31, 2005
      reflecting the historical results of operations with pro forma adjustments
      to
      reflect the disposition of Navigator as if the sale was consummated on January
      1, 2005. A pro forma condensed consolidated statement of operations for the
      year
      ended December 31, 2004 is not presented as Navigator was originally acquired
      by
      the Company on October 7, 2005, and therefore was not owned during the year
      ended December 31, 2004. Certain management assumptions and adjustments are
      described in the accompanying notes to the unaudited pro forma condensed
      consolidated financial information.

    

    The
      pro
      forma adjustments described in the accompanying notes are based upon available
      information and certain assumptions that management believes are reasonable.
      The
      unaudited pro forma condensed consolidated financial statements are for
      illustrative purposes only and are not necessarily indicative of the actual
      results of operations or financial position that would have occurred had the
      transactions described above occurred on the dates indicated, nor are they
      necessarily indicative of future operating results. The unaudited pro forma
      financial statements are only a summary and should be read in conjunction with
      the historical consolidated financial statements and related notes of Emvelco,
      in its Form 10-QSB for the quarter ended September 30, 2006 and in its Form
      10-KSB for the year ended December 31, 2005.

    

    All
      pro
      forma amounts are presented in U.S. dollars, the reporting currency of
      Emvelco.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    Emvelco
      Corporation

    Unaudited
      Pro Forma Condensed Consolidated Balance Sheet

    September
      30, 2006

    

    
      	 	 	
              Emvelco
                Historical

            	
               

            	
              Pro
                Forma
                Adjustments

            	
               

            	
              Notes

            	
               

              Pro
                Forma

            	
               

            
	
              ASSETS

            	
               

            	
              (A)

            	
               

            	
              (B)

            	
               

            	
               

            	
               

            	 
	
              Current
                Assets

            	 	 	 	 	 	 	 	 
	
              Cash
                and cash equivalents

            	 	
              $

            	
              9,127,905

            	 	
              $

            	
              3,189,683

            	 	 	
              (1)

            	
              $

            	
              12,317,588

            	 
	
              Restricted
                cash - certificate of deposit

            	 	 	
              4,018,558

            	 	 	
              -

            	 	 	 	 	
              4,018,558

            	 
	
              Trade
                accounts receivable, net 

            	 	 	
              1,063,928

            	 	 	
              (1,063,928

            	
              )

            	 	
              (2)

            	 	
              -

            	 
	
              Prepaid
                and other current assets

            	 	 	
              1,199,855

            	 	 	
              (329,514

            	
              )

            	 	
              (2)

            	 	
              870,341

            	 
	
              Total
                current assets

            	 	 	
              15,410,246

            	 	 	
              1,796,241

            	 	 	
               

            	 	
              17,206,487

            	 
	 	 	 	 	 	 	 	 	 	
               

            	 	 	 
	
              Property
                and equipment, net

            	 	 	
              984,177

            	 	 	
              (984,177

            	
              )

            	 	
              (2)

            	 	
              -

            	 
	
              Construction
                in progress

            	 	 	
              7,486,086

            	 	 	
              -

            	 	 	 	 	
              7,486,086

            	 
	
              Long
                term loan

            	 	 	
              4,399,270

            	 	 	
              -

            	 	 	
               

            	 	
              4,399,270

            	 
	
              Intangibles
                - customer contracts, net

            	 	 	
              2,089,831

            	 	 	
              (2,089,831

            	
              )

            	 	
              (2)

            	 	
              -

            	 
	
              Goodwill

            	 	 	
              865,640

            	 	 	
              (865,640

            	
              )

            	 	
              (2)

            	 	
              -

            	 
	
              Total
                assets

            	 	
              $

            	
              31,235,250

            	 	
              $

            	
              (2,143,407

            	
              )

            	 	
               

            	
              $

            	
              29,091,843

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              LIABILITIES
                AND STOCKHOLDERS’ EQUITY

            	 	 	 	 	 	 	 	 	
               

            	 	 	 
	
              Current
                Liabilities

            	 	 	 	 	 	 	 	 	
               

            	 	 	 
	
              Trade
                accounts payable 

            	 	
              $

            	
              1,097,097

            	 	
              $

            	
              (659,122

            	
              )

            	 	
              (2)

            	
              $

            	
              437,975

            	 
	
              Current
                portion of bank loan and overdraft

            	 	 	
              646,167

            	 	 	
              (646,167

            	
              )

            	 	
              (2)

            	 	
              -

            	 
	
              Current
                portion of other real estate related loans

            	 	 	
              15,405

            	 	 	
              -

            	 	 	
               

            	 	
              15,405

            	 
	
              Other
                current liabilities

            	 	 	
              1,112,458

            	 	 	(293,873	) 	 	
              (2)

            	 	
              942,585

            	 
	
            	
            	 	
            	
            	
            	
              124,000

            	 	 	
              (3)

            	 	
            	 
	
              Accrued
                expenses

            	 	 	
              606,017

            	 	 	
              (365,268

            	
              )

            	 	
              (2)

            	 	
              240,749

            	 
	
              Total
                current liabilities

            	 	 	
              3,477,144

            	 	 	
              (1,840,430

            	
              )

            	 	
               

            	 	
              1,636,714

            	 
	 	 	 	 	 	 	 	 	 	
               

            	 	 	 
	
              Deferred
                tax liability

            	 	 	
              334,373

            	 	 	
              (334,373

            	
              )

            	 	
              (2)

            	 	
              -

            	 
	
              Bank
                loan

            	 	 	
              266,524

            	 	 	
              (266,524

            	
              )

            	 	
              (2)

            	 	
              -

            	 
	
              Other
                real estate related loans

            	 	 	
              4,966,635

            	 	 	
              -

            	 	 	
               

            	 	
              4,966,635

            	 
	
              Total
                liabilities

            	 	 	
              9,044,676

            	 	 	
              (2,441,327

            	
              )

            	 	
               

            	 	
              6,603,349

            	 
	 	 	 	 	 	 	 	 	 	
               

            	 	 	 
	
              Stockholders’
                Equity

            	 	 	 	 	 	 	 	 	
               

            	 	 	 
	
              Common
                stock, $.001 par value - Authorized 35,000,000 shares; Issued and
                outstanding 5,561,780 shares

            	 	 	
              
              

              25,026

            	 	 	
              
              

              (623

            	
              
              

              )

            	 	
              
              

              (4)

            	 	
              
              

              24,403

            	 
	
              Additional
                paid-in capital

            	 	 	
              52,304,577

            	 	 	
              -

            	 	 	
               

            	 	
              52,304,577

            	 
	
              Accumulated
                deficit

            	 	 	
              (29,456,946

            	
              )

            	 	
              1,140,415

            	 	 	
              (5)

            	 	
              (28,316,531

            	
              )

            
	
              Accumulated
                other comprehensive income

            	 	 	
              8,304

            	 	 	
              (8,304

            	
              )

            	 	
              (6)

            	 	
              -

            	 
	
              Treasury
                stock 

            	 	 	
              (690,387

            	
              )

            	 	
              (833,568

            	
              )

            	 	
              (4)

            	 	
              (1,523,955

            	
              )

            
	
              Total
                stockholders’ equity

            	 	 	
              22,190,574

            	 	 	
              297,920

            	 	 	
               

            	 	
              22,488,494

            	 
	 	 	 	 	 	 	 	 	 	
               

            	 	 	 
	
              Total
                liabilities and stockholders’ equity

            	 	
              $

            	
              31,235,250

            	 	
              $

            	
              (2,143,407

            	
              )

            	 	
               

            	
              $

            	
              29,091,843

            	 

    

    

    See
      notes
      to unaudited pro forma condensed consolidated balance sheet

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    NOTES
      TO
      UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    

    
      	(A)    
               	
              Reflects
                the historical condensed consolidated balance sheet of Emvelco as
                of
                September 30, 2006, included in the Form 10-QSB of Emvelco for the
                quarter
                ended September 30, 2006.

            

    

    

    
      	(B)    
                	
              Pro
                forma adjustments related to the sale of Navigator on the basis described
                in the introduction to these unaudited pro forma financial
                statements:

            

    

     

    
      	1)  	
              Represents
                the cash proceeds received upon the sale of Navigator of $ 3,200,000
                and
                the elimination of $ 10,317 of cash of
                Navigator

            

    

     

    
      	2)  	
              Adjustment
                to eliminate assets sold and liabilities transferred upon the sale
                of
                Navigator

            

    

     

    
      	3)  	
              Adjustment
                to reflect the estimated direct transaction costs to be paid in connection
                with the sale

            

    

     

    
      	4)  	
              Represents
                the share portion of the purchase price received upon the sale of
                Navigator 

            

    

     

    
      	5)  	
              Adjustment
                to reflect the pro forma gain on the sale of Navigator, after estimated
                direct transaction costs, success fees and guarantee provision. No
                tax
                liability is expected to arise as a result of the sale. Because the
                estimated pro forma gain assumes the sale was consummated on September
                30,
                2006, the pro forma gain will ultimately differ from the actual gain
                that
                will occur at the closing date of
                sale.

            

    

     

    
      	6)  	
              Adjustment
                to eliminate accumulated other comprehensive income attributable
                to
                Navigator

            

    

    
      	 	 

    

    
      	 	
              No
                adjustments have been made to reflect any income tax effect of the
                pro
                forma adjustments since Emvelco has significant net operating loss
                carryforwards and, therefore, does not expect to have taxable income
                in
                the foreseeable future.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Emvelco
      Corporation 

    Unaudited
      Pro Forma Condensed Consolidated Statement of 

    Operations
      for the Nine Months Ended September 30, 2006

     

    
      	 	 	 	
              Emvelco

              Historical

            	
               

            	
               

            	
              Pro
                Forma

              Adjustments

            	
               

            	
               

            	
              Notes

            	
               

            	
              Pro
                Forma

            	 
	 	 	 	
              (A)

            	 	 	
              (B)

            	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Revenues

            	 	
              $

            	
              4,764,201

            	 	
              $

            	
              (4,759,067

            	
              )

            	 	
              (1)

            	
              $

            	
              5,134

            	 
	
              Cost
                of revenues (exclusive
                of depreciation and amortization shown separately below)

            	 	 	
              
              

              
              

              1,447,486

            	 	 	
              
              

              
              

              (1,447,486

            	
              
              

              
              

              )

            	 	
              
              

              
              

              (1)

            	 	
              
              

              
              

              -

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Operating
                expenses 

            	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Compensation
                and related costs 

            	 	 	
              2,348,019

            	 	 	
              (1,762,274

            	
              )

            	 	
              (2)

            	 	
              585,745

            	 
	
              Severance
                to officer

            	 	 	
              750,000

            	 	 	
              -

            	 	 	 	 	
              750,000

            	 
	
              Consulting,
                professional and directors fees 

            	 	 	
              1,579,592

            	 	 	
              (630,651

            	
              )

            	 	
              (3)

            	 	
              948,941

            	 
	
              Other
                selling, general and administrative expenses

            	 	 	
              1,118,020

            	 	 	
              (554,459

            	
              )

            	 	
              (4)

            	 	
              563,561

            	 
	
              Goodwill
                impairment

            	 	 	
              7,285,032

            	 	 	
              (7,285,032

            	
              )

            	 	
              (5)

            	 	
              -

            	 
	
              Depreciation
                and amortization 

            	 	 	
              1,370,140

            	 	 	
              (1,369,046

            	
              )

            	 	
              (6)

            	 	
              1,094

            	 
	
              Total
                operating expenses

            	 	 	
              14,450,803

            	 	 	
              (11,601,462

            	
              )

            	 	 	 	
              2,849,341

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Operating
                loss

            	 	 	
              (11,134,088

            	
              )

            	 	
              8,289,881

            	 	 	 	 	
              (2,844,207

            	
              )

            
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Interest
                income

            	 	 	
              336,556
                

            	 	 	
              -

            	 	 	 	 	
              336,556

            	 
	
              Interest
                expense 

            	 	 	
              (74,737

            	
              )

            	 	
              74,737

            	 	 	
              (7)

            	 	
              -

            	 
	
               

            	 	 	 	 	 	 	 	 	 	 	 	 
	
              Loss
                from continuing operations before income taxes

            	 	 	
              
              

              (10,872,269

            	
              
              

              )

            	 	
              
              

              8,364,618

            	 	 	 	 	
              
              

              (2,507,651

            	
              
              

              )

            
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Income
                tax expense - current

            	 	 	
              (49,343

            	
              )

            	 	
              49,343

            	 	 	
              (8)

            	 	
              -

            	 
	
              Income
                tax expense-deferred

            	 	 	
              166,795

            	 	 	
              (166,795

            	
              )

            	 	
              (8)

            	 	
              -
                

            	 
	
              Income
                tax expense 

            	 	 	
              117,452

            	 	 	
              (117,452

            	
              )

            	 	 	 	
              -

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Loss
                from continuing operations 

            	 	
              $

            	
              (10,754,817

            	
              )

            	
              $

            	
              8,247,166

            	 	 	 	
              $

            	
              (2,507,651

            	
              )

            
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Loss
                per share from continuing operations,

              basic
                and diluted

            	 	 	
              (1.85

            	
              )

            	 	 	 	 	 	 	
              (0.48

            	
              )

            
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Weighted
                average number of shares outstanding, basic and
                diluted

            	 	 	
              5,806,854

            	 	 	 	 	 	 	 	
              5,184,323

            	 

    

    

    See
      notes
      to unaudited pro forma condensed consolidated statement of
      operations

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    NOTES
      TO
      UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    

    

    
      	
              (A)

            	
              Reflects
                the statements of operations of the Company for the nine months ended
                September 30, 2006 included in the Company’s Quarterly Report on Form
                10-QSB for the quarter ended September 30, 2006.
                

            

    

    

    
      	
              (B)

            	
              Pro
                forma adjustments to record the disposal of Navigator as if it had
                occurred on January 1, 2005 for purposes of presenting the pro forma
                statements of operations:

            

    

    

    
      	
              1)

            	
                

            	
              Adjustment
                to eliminate the revenues and costs of goods sold of Navigator
                .

            
	 	 	 
	
              2)

            	 	
              Adjustment
                to eliminate the salary and related costs of Navigator.

            
	 	 	 
	
              3)

            	
                

            	
              Adjustment
                to eliminate the consulting, professional and directors’ fees of
                Navigator.

            
	
               

            	 	 
	
              4)

            	
                

            	
              Adjustment
                to eliminate the selling, general and administrative costs of
                Navigator.

            
	
               

            	 	 
	
              5)

            	
                

            	
              Adjustment
                to eliminate the goodwill impairment charge of Navigator
                

            
	 	 	 
	
              6)

            	
                

            	
              Adjustment
                to eliminate the amortization and depreciation charge of
                Navigator.

            
	
               

            	 	 
	
              7)

            	
                

            	
              Adjustment
                to eliminate the interest expenses of Navigator.

            
	 	 	 
	
              8)

            	
                

            	
              Adjustment
                to eliminate the income tax of Navigator. 

            
	 	 	 
	 	 	 

    

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Emvelco
      Corporation 

    Unaudited
      Pro Forma Condensed Consolidated Statement of 

    Operations
      for the Year Ended December 31, 2005

    

     

    
      	 	 	 	
              Emvelco

              Historical

            	
               

            	
               

            	
              Pro
                Forma

              Adjustments

            	
               

            	
               

            	
              Notes

            	
               

            	
              Pro
                Forma

            	 
	 	 	 	
              (A)

            	
               

            	
               

            	
              (B)

            	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Revenues

            	 	
              $

            	
              1,964,998

            	 	
              $

            	
              (1,964,998

            	
              )

            	 	
              (1)

            	
              $

            	
              -

            	 
	
              Cost
                of revenues (exclusive
                of depreciation and amortization shown separately below)

            	 	 	
              
              

              
              

              511,658

            	 	 	
              
              

              
              

              (511,658

            	
              
              

              
              

              )

            	 	
              
              

              
              

              (1)

            	 	
              
              

              
              

              -

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Operating
                expenses 

            	 	 	 	 	 	 	 	 	
               

            	 	 	 
	 	 	 	 	 	 	 	 	 	
               

            	 	 	 
	
              Compensation
                and related costs 

            	 	 	
              1,054,342

            	 	 	
              (494,503

            	
              )

            	 	
              (2)

            	 	
              559,839

            	 
	
              Consulting,
                professional and directors fees 

            	 	 	
              1,396,096

            	 	 	
              (385,442

            	
              )

            	 	
              (3)

            	 	
              1,010,654

            	 
	
              Other
                selling, general and administrative expenses

            	 	 	
              703,770

            	 	 	
              (400,797

            	
              )

            	 	
              (4)

            	 	
              302,973

            	 
	
              Depreciation
                and amortization 

            	 	 	
              509,478

            	 	 	
              (509,478

            	
              )

            	 	
              (5)

            	 	
              -

            	 
	
              Total
                operating expenses

            	 	 	
              3,663,686

            	 	 	
              1,790,220

            	 	 	
               

            	 	
              1,873,466

            	 
	 	 	 	 	 	 	 	 	 	
               

            	 	 	 
	
              Operating
                loss

            	 	 	
              (2,210,346

            	
              )

            	 	
              336,880

            	 	 	 	 	
              (1,873,466

            	
              )

            
	 	 	 	 	 	 	 	 	 	
               

            	 	 	 
	
              Interest
                income

            	 	 	
              2,512
                

            	 	 	
              (2,512

            	
              )

            	 	
              (6)

            	 	
              -

            	 
	
              Interest
                expense 

            	 	 	
              (38,240

            	
              )

            	 	
              38,240

            	 	 	
              (6)

            	 	
              -

            	 
	
              Other
                income (expenses)

            	 	 	
              170,000
                

            	 	 	
              -

            	 	 	
               

            	 	
              170,000

            	 
	
               

            	 	 	 	 	 	 	 	 	
               

            	 	 	 
	
              Loss
                from continuing operations before income taxes

            	 	 	
              
              

              (2,076,074

            	
              
              

              )

            	 	
              
              

              372,608

            	 	 	
               

            	 	
              
              

              (1,703,466

            	
              
              

              )

            
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Income
                tax expense - current

            	 	 	
              -

            	 	 	
              -

            	 	 	
               

            	 	
              -

            	 
	
              Income
                tax expense-deferred

            	 	 	
              57,908

            	 	 	
              (57,908

            	
              )

            	 	
              (7)

            	 	
              -

            	 
	
              Income
                tax expense 

            	 	 	
              57,908

            	 	 	
              (57,908

            	
              )

            	 	 	 	
              -

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Loss
                from continuing operations 

            	 	
              $

            	
              (2,018,166

            	
              )

            	
              $

            	
              314,700

            	 	 	 	
              $

            	
              (1,703,466

            	
              )

            
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Loss
                per share from continuing operations,

              basic
                and diluted

            	 	 	
              (0.37

            	
              )

            	 	 	 	 	 	 	
              (0.35

            	
              )

            
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Weighted
                average number of shares outstanding, basic and
                diluted

            	 	 	
              5,445,363

            	 	 	 	 	 	 	 	
              4,822,832

            	 

    

    

    See
      notes
      to unaudited pro forma condensed consolidated statement of
      operations

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    NOTES
      TO
      UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    

    

    
      	
              (A)

            	
              Reflects
                the statements of operations of the Company for the years ended December
                31, 2005 included in the Company’s Annual Report on Form 10-KSB for the
                year ended December 31, 2005. 

            

    

    

    
      	
              (B)

            	
              Pro
                forma adjustments to record the disposal of Navigator as if it had
                occurred on January 1, 2005 for purposes of presenting the pro forma
                statements of operations:

            

    

    

    
      	
              1)

            	
                

            	
              Adjustment
                to eliminate the revenues and costs of goods sold of Navigator for
                the
                period from October 7, 2005 (date of acquisition) to December 31,
                2005.
                

            
	 	 	 
	
               2)

            	 	
              Adjustment
                to eliminate the salary and related costs of Navigator for the period
                from
                October 7, 2005 (date of acquisition) to December 31, 2005.
                

            
	 	 	 
	
              3)

            	
                

            	
              Adjustment
                to eliminate the consulting, professional and directors’ fees of Navigator
                for the period from October 7, 2005 (date of acquisition) to December
                31,
                2005.

            
	
               

            	 	 
	
              4)

            	
                

            	
              Adjustment
                to eliminate the selling, general and administrative costs of Navigator
                for the period from October 7, 2005 (date of acquisition) to December
                31,
                2005.

            
	
               

            	 	 
	
              5)

            	
                

            	
              Adjustment
                to eliminate the amortization and depreciation charge of Navigator
                for the
                period from October 7, 2005 (date of acquisition) to December 31,
                2005.

            
	
               

            	 	 
	
              6)

            	
                

            	
              Adjustment
                to eliminate the interest income and expenses of Navigator for the
                period
                from October 7, 2005 (date of acquisition) to December 31,
                2005.

            
	 	 	 
	
              7)

            	
                

            	
              Adjustment
                to eliminate the income tax of Navigator for the period from October
                7,
                2005 (date of acquisition) to December 31, 2005.Unassociated Document

    
      AGREEMENT

       

      

       

      This
        Agreement (“Agreement”) is made and entered into as of this 21st day of
        February, 2007, by and between, Robert Flug, Oliver R. Grace, Jr., Todd Emmel,
        Steven Tisch, and Mark Lewis (collectively referred to herein as the
“Independent Directors” and individually referred to herein as “Independent
        Director”) for themselves, their heirs, executors, administrators, successors,
        assigns, agents, affiliates, partners, employees, advisors, and consultants;
        and
        Take-Two Interactive Software, Inc. (“Take-Two”) through its Board of Directors
        upon recommendation by the Special Litigation Committee of Take-Two (“Special
        Litigation Committee”), as set forth below. The parties to this Agreement are
        referred to individually as a “Party” and collectively as the
“Parties.”

       

      The
        Board
        of Directors initiated a voluntary investigation of Take-Two’s historical stock
        option granting practices. This investigation was delegated to the Special
        Litigation Committee, consisting of independent members of the Board (including
        none of the five Independent Directors who are each a Party to this agreement).
        In order to facilitate its investigation, the Special Litigation Committee
        retained Kasowitz, Benson, Torres & Friedman LLP (“the Kasowitz Firm”) as
        its counsel, and the Kasowitz Firm retained BDO Seidman, LLP as independent
        accounting advisors.

       

      In
        connection with this investigation, the Special Litigation Committee, and
        the
        Kasowitz Firm, conducted a thorough and independent analysis. The Special
        Litigation Committee determined that certain stock options issued by the
        Company
        were improperly dated without the Independent Directors’ knowledge. The Special
        Litigation Committee therefore proposed that, with respect to such options
        that
        were exercised by the Independent Directors, the Independent Directors remit
        to
        the Company after-tax gains that they realized as a result of the improper
        grant
        date, and that unexercised options be re-priced as set forth in Exhibit A
        hereto.

       

      The
        Parties have decided to enter into this Agreement in order to effectuate
        this
        proposal, which the Parties believe to be in the best interests of the
        shareholders of Take-Two. In making this Agreement, the parties are aware
        of
        pending derivative litigations, including those captioned St.
        Clair Shore Gen. Employees Ret. Sys.
        v.
Eibeler,
        No.
        06-cv-0688 (S.D.N.Y. Oct. 4, 2006); and In
        re
        Take-Two Interactive Software, Inc. Derivative Litig.,
        Lead
        Case No. 06-cv-05279 (S.D.N.Y. Nov. 27, 2006).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      1.  Consideration
        Paid by Robert Flug.
        Robert
        Flug agrees to remit a total amount equivalent to $244,100.66, using the
        valuation method described in Section 7, through the cancellation of the
        following Take-Two stock options:

       

      
        	
                Original
                  Grant Date

              	 	
                Number
                  of 

                Options
                  Cancelled*

              	 	
                Black-Scholes
                  

                Value
                  per Option*

              	 	
                Value

              	 
	
                2/22/02

              	 	 	
                19,500

              	 	
                $

              	
                6.53

              	 	
                $

              	
                127,335.00

              	 
	
                8/5/02

              	 	 	
                19,500

              	 	
                $

              	
                4.80

              	 	
                $

              	
                93,600.00

              	 
	
                9/17/02

              	 	 	
                4,579

              	 	
                $

              	
                5.06

              	 	
                $

              	
                23,169.74

              	 

      

      *post-split

       

      2.  Consideration
        Paid by Oliver Grace.
        Oliver
        R. Grace, Jr. agrees to remit a total amount equivalent to $83,504.05, using
        the
        valuation method described in Section 7, through the cancellation of the
        following Take-Two stock options:

       

      
        	
                Original
                  Grant Date

              	 	
                Number
                  of 

                Options
                  Cancelled*

              	 	
                Black-Scholes
                  

                Value
                  per Option*

              	 	
                Value

              	 
	
                2/22/02

              	 	 	
                12,788

              	 	
                $

              	
                6.53

              	 	
                $

              	
                83,505.64

              	 

      

      *post-split

       

      3.  Consideration
        Paid by Todd Emmel.
        Todd
        Emmel agrees to remit a total amount equivalent to $59,532.34, using the
        valuation method described in Section 7, through the cancellation of the
        following Take-Two stock options:

       

      
        	
                Original
                  Grant Date

              	 	
                Number
                  of 

                Options
                  Cancelled*

              	 	
                Black-Scholes
                  

                Value
                  per Option*

              	 	
                Value

              	 
	
                2/22/02

              	 	 	
                7,341

              	 	
                $

              	
                8.11

              	 	
                $

              	
                59,535.51

              	 

      

      *post-split

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      4.  Consideration
        Paid by Steven Tisch.
        Steven
        Tisch agrees to remit a total amount equivalent to $10,620.00, using the
        valuation method described in Section 7, through the cancellation of the
        following Take-Two stock options:

       

      
        	
                Original
                  Grant Date

              	 	
                Number
                  of 

                Options
                  Cancelled*

              	 	
                Black-Scholes
                  

                Value
                  per Option*

              	 	
                Value

              	 
	
                4/29/02

              	 	 	
                2,027

              	 	
                $

              	
                5.24

              	 	
                $

              	
                10,621.48

              	 

      

      *post-split

       

      5.  Consideration
        Paid by Mark Lewis.
        Mark
        Lewis agrees to remit a total amount of $141,260.30, using the valuation
        method
        described in Section 7, through the cancellation of the following Take-Two
        stock
        options:

       

      
        	
                Original
                  Grant Date

              	 	
                Number
                  of 

                Options
                  Cancelled*

              	 	
                Black-Scholes
                  

                Value
                  per Option*

              	 	
                Value

              	 
	
                2/22/02

              	 	 	
                15,000

              	 	
                $

              	
                6.53

              	 	
                $

              	
                97,950.00

              	 
	
                1/30/03

              	 	 	
                6,919

              	 	
                $

              	
                6.26

              	 	
                $

              	
                43,312.94

              	 

      

      *post-split

       

      6.  Re-Pricing
        Stock Options.
        All
        stock option grants to the Independent Directors listed in the chart annexed
        as
        Exhibit A are re-priced as set forth therein. The Parties agree to execute
        any
        and all documents necessary to effectuate this re-pricing, and no signature
        will
        be unreasonably withheld.

       

      7.  Valuation
        of Consideration.
        The
        Parties agree that the valuation of any stock options cancelled hereunder
        shall
        be the Black-Scholes value calculated using the closing price of Take-Two
        common
        stock on February 16, 2007. 

       

      8.  Further
        Agreement.
        Other
        than those matters described in Sections 1 through 7 and Exhibit A hereto,
        the
        Special Litigation Committee and Take-Two agree that they will not seek any
        further cancellation of options, restricted stock or payments of cash from
        the
        Independent Directors arising from the Independent Directors’ receipt of
        Take-Two stock options with improper grant dates. The Special Litigation
        Committee and Take-Two further agree to recommend and support this Agreement
        in
        any action, litigation, judicial or administrative proceeding, whether
        derivative or direct, as full and fair compensation to Take-Two. In the event
        that there is a fairness hearing concerning a settlement in any derivative
        litigation concerning historical stock option granting practices at Take-Two,
        it
        is the present intention of the Parties to submit this Agreement to the Court
        for its approval.

       

      9.  No
        Admission of Wrongdoing.
        It is
        expressly understood that acceptance and execution of this Agreement by the
        Parties and all negotiations, documents, statements and proceedings in
        connection herewith, (a) shall not be construed as, or deemed to be, an
        admission or concession on the part of any party; and (b) shall not be offered
        or received in evidence in any action or proceeding in any court or other
        tribunal or offered, used or deemed in any way as an admission, concession
        or
        evidence of any liability, fault, wrongdoing or misconduct of any nature,
        or
        weakness or lack of merit of any claim or defense by any of the Parties,
        provided,
        however, that nothing herein shall prevent any of the Parties from using
        this
        Agreement, or any document or instrument delivered hereunder:

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      (a)  to
        effectuate the Agreement contemplated herein;

       

      (b)  to
        obtain
        Court approval of any settlements of any action to which the Independent
        Directors are a party, if necessary;

       

      (c)  to
        enforce the terms of this Agreement.

       

      10.  Entire
        Agreement.
        Except
        for writings or provisions incorporated herein by reference, this Agreement
        constitutes the final and entire agreement among the Parties with respect
        to the
        subject matter hereof. It is intended to supersede and replace any and all
        prior
        or contemporaneous discussions, negotiations, or agreements, written or oral,
        with respect to the subject matter hereof. No other representations, covenants,
        undertakings, or other prior or contemporaneous agreements, oral or written,
        respecting such matters, that are not specifically incorporated herein, shall
        be
        deemed in any way to exist or bind the parties.

       

      11.  Choice
        of Law.
        This
        Agreement shall be governed by and construed in accordance with the laws
        of the
        State of New York. The parties to the Action consent to the jurisdiction
        of the
        State and Federal Courts located in Manhattan for all purposes related to
        the
        Agreement.

       

      12.  Severability.
        Should
        any portion, provision, or part of this Agreement be held, determined, or
        adjudged by a court of competent jurisdiction to be unenforceable, invalid,
        or
        void for any reason, each such portion, provision, or part shall be severed
        from
        the remaining portions, provisions, or parts of the Agreement, and shall
        not
        affect the validity or enforceability of such remaining portions, provisions,
        or
        parts.

       

      13.  Amendment.
        This
        Agreement may be modified or amended only by an agreement in writing executed
        by
        or on behalf of each of the Parties.

       

      14.  Interpretation
        and Construction.
        The
        Agreement shall not be construed presumptively against any of the Parties
        and no
        single Party will be deemed the drafter of this Agreement. In particular,
        but
        without limitation, with respect to this Agreement, the Parties hereby waive
        the
        benefit of any statutory, case law, or other rule providing in cases of
        uncertainty or ambiguity that language of a contract should be interpreted
        most
        strongly against the party who caused the uncertainty or ambiguity to exist.
        The
        Agreement shall be construed as if all Parties jointly prepared the Agreement,
        and any uncertainty or ambiguity shall not be interpreted against any one
        Party.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      15.  Notice.
        Where
        this Agreement requires that notice or any other communication or document
        be
        provided, it shall be provided by hand-delivery or overnight delivery as
        follows: if to any or all of the Independent Directors, to Gandolfo V. DiBlasi,
        Esq., Sullivan & Cromwell LLP, 125 Broad Street, New York, NY 10006; if to
        Take-Two or the Special Litigation Committee, to Robert J. Mittman, Blank
        Rome
        LLP, The Chrysler Building, 405 Lexington Avenue, New York, NY 10174-0208;
        or to
        such other person or address as a party may specify in a notice given
        hereunder.

       

      16.  Counterparts.
        This
        Agreement may be executed in one or more counterparts, all of which taken
        together shall constitute but one and the same instrument.

       

      17.  Escrow.
        The
        signature pages of the Independent Directors shall be held in escrow by counsel
        for the Independent Directors. This escrow shall have no effect on the valuation
        date described in Section 7, but the terms of this Agreement will not become
        binding on the Parties until this Agreement is approved by Take-Two and the
        signature pages are released from escrow by counsel to the Independent
        Directors.

       

      18.  THE
        UNDERSIGNED STATE THAT THEY HAVE CAREFULLY READ OR BEEN ADVISED OF THE WITHIN
        AND FOREGOING “AGREEMENT,” AND KNOW AND UNDERSTAND THE CONTENTS THEREOF AND THAT
        THEY EXECUTE THE SAME OF THEIR OWN FREE AND INFORMED ACT AND DEED. The Parties
        have had the opportunity to be advised by and consult with their attorneys
        prior
        to signing this Agreement.

       

      

       

      [REMAINDER
        OF PAGE INTENTIONALLY BLANK]

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the Parties have executed this Agreement with the intention
        of
        being legally bound by it.

       

      Dated:  February
        21, 2007

       

      
        	
                /s/
                  Robert Flug

              	 	 
	
                
                  
Robert
                  Flug

              	 	
                 

                Take-Two
                  Interactive Software, Inc.

              
	
                Date:
                  February 16, 2007

              	 	
                Date:
                  February 21, 2007

              
	
                 

              	 	 
	
                 

              	 	 
	
                /s/
                  Oliver R. Grace, Jr.

              	 	/s/ Paul
                Eibeler
	
                
                  
Oliver
                  R. Grace, Jr.

              	 	
                
                  
By:
                  Paul Eibeler, President

              
	
                Date:
                  February 16, 2007 

              	 	 
	 	 	 
	 	 	 
	
                /s/
                  Steven Tisch

              	 	 
	
                
                  
Steven
                  Tisch

              	 	 
	
                Date:
                  February 16, 2007

              	 	 
	 	 	 
	
                 

              	 	 
	
                /s/
                  Todd Emmel

              	 	 
	
                
                  
Todd
                  Emmel

              	 	 
	
                Date:
                  February 16, 2007

              	 	 
	 	 	 
	 	 	 
	
                /s/
                  Mark Lewis

              	 	 
	
                
                  
Mark
                  Lewis

              	 	 
	
                Date:
                  February 16, 2007

              	 	 

      

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      Exhibit
        A

      
        

        
          	
                  Option
                    Holder

                	 	
                  Original
                    

                  Grant
                    Date

                	 	
                  Number
                    of Options Originally Granted*

                	 	
                  Original
                    

                  Exercise
                    Price*

                	 	
                  Number
                    of Options 

                  Still
                    Outstanding 

                  and
                    which will be 

                  Re-priced*

                	 	
                  New
                    

                  Exercise
                    Price*

                	 
	
                  Robert
                    Flug

                	 	 	
                  9/17/02

                	 	 	
                  22,500

                	 	
                  $

                	
                  17.33

                	 	 	
                  17,921

                	 	
                  $

                	
                  17.33

                	†
	
                  Robert
                    Flug

                	 	 	
                  1/30/03

                	 	 	
                  19,500

                	 	
                  $

                	
                  13.67

                	 	 	
                  19,500

                	 	
                  $

                	
                  16.83

                	 
	
                  Oliver
                    R. Grace, Jr.

                	 	 	
                  2/22/02

                	 	 	
                  19,500

                	 	
                  $

                	
                  10.17

                	 	 	
                  6,712

                	 	
                  $

                	
                  13.70

                	 
	
                  Oliver
                    R. Grace, Jr.

                	 	 	
                  8/5/02

                	 	 	
                  19,500

                	 	
                  $

                	
                  13.01

                	 	 	
                  19,500

                	 	
                  $

                	
                  17.17

                	 
	
                  Oliver
                    R. Grace, Jr.

                	 	 	
                  1/30/2003

                	 	 	
                  19,500

                	 	
                  $

                	
                  13.67

                	 	 	
                  19,500

                	 	
                  $

                	
                  16.83

                	 
	
                  Todd
                    Emmel

                	 	 	
                  2/22/02

                	 	 	
                  37,500

                	 	
                  $

                	
                  10.17

                	 	 	
                  13,659

                	 	
                  $

                	
                  12.12

                	 
	
                  Todd
                    Emmel

                	 	 	
                  8/5/02

                	 	 	
                  18,750

                	 	
                  $

                	
                  13.01

                	 	 	
                  10,500

                	 	
                  $

                	
                  17.85

                	 
	
                  Todd
                    Emmel

                	 	 	
                  1/30/03

                	 	 	
                  19,500

                	 	
                  $

                	
                  13.67

                	 	 	
                  10,920

                	 	
                  $

                	
                  16.83

                	 
	
                  Steven
                    Tisch

                	 	 	
                  4/29/02

                	 	 	
                  37,500

                	 	
                  $

                	
                  15.39

                	 	 	
                  25,473

                	 	
                  $

                	
                  15.39

                	‡
	
                  Mark
                    Lewis

                	 	 	
                  1/30/03

                	 	 	
                  15,000

                	 	
                  $

                	
                  13.67

                	 	 	
                  8,081

                	 	
                  $

                	
                  16.83

                	 

        

         

        *post-split

      

      

        

      

      
        
          
            	†	
                    Because
                      the new exercise price would be $17.17, these options have
                      not been
                      re-priced.

                  

          

        

        
          
            	
                    ‡

                  	
                    Because
                      the new exercise price would be $15.35, these options have
                      not been
                      re-priced.

                  

          

        

      

    

     

     

    
      
        
        

      

      
        7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}]]