UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
-----------------------
GT INTERACTIVE SOFTWARE CORP.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
36236E109
(CUSIP Number)
William E. Ford
c/o General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, Connecticut 06830
Tel. No.: (203) 629-8600
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
-----------------------
February 23, 1999
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 1(f) or 1(g), check the following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
36236E109 Page 2 of 18 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
General Atlantic Partners, LLC
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [X]
(B) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING
PERSON 13,428,525
WITH
9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
13,428,525
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,428,525
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17%
14 TYPE OF REPORTING PERSON
OO
<PAGE>
36236E109 Page 3 of 18 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
General Atlantic Partners 16, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [X]
(B) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING
PERSON 13,428,525
WITH
9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
13,428,525
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,428,525
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17%
14 TYPE OF REPORTING PERSON
OO
<PAGE>
36236E109 Page 4 of 18 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
General Atlantic Partners 19, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [X]
(B) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING
PERSON 13,428,525
WITH
9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
13,428,525
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,428,525
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17%
14 TYPE OF REPORTING PERSON
OO
<PAGE>
36236E109 Page 5 of 18 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
General Atlantic Partners II, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [X]
(B) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING
PERSON 13,428,525
WITH
9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
13,428,525
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,428,525
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17%
14 TYPE OF REPORTING PERSON
OO
<PAGE>
36236E109 Page 6 of 18 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
General Atlantic Partners 54, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [X]
(B) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING
PERSON 13,428,525
WITH
9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
13,428,525
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,428,525
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17%
14 TYPE OF REPORTING PERSON
OO
<PAGE>
36236E109 Page 7 of 18 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GAP Coinvestment Partners II, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [X]
(B) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING
PERSON 13,428,525
WITH
9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
13,428,525
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,428,525
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
36236E109 Page 8 of 18 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GAP Coinvestment Partners, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [X]
(B) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING
PERSON 13,428,525
WITH
9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
13,428,525
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,428,525
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
36236E109 Page 9 of 18 Pages
Item 1. Security and Issuer.
The title of the class of equity securities of GT Interactive Software
Corp., a Delaware corporation (the "Company"), to which this statement relates
is the Company's Common Stock, par value $.01 per share (the "Common Stock").
The address of the principal executive offices of the Company is 16 East 45th
Street, New York, New York 10016.
Item 2. Identity and Background.
This statement is being filed by a group, as defined in Rule 13d-5 of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended. The members of the group are General Atlantic Partners, LLC, a Delaware
limited liability company ("GAP"), General Atlantic Partners 16, L.P., a
Delaware limited partnership ("GAP 16"), General Atlantic Partners 19, L.P., a
Delaware limited partnership ("GAP 19"), General Atlantic Partners II, L.P., a
Delaware limited partnership ("GAP II"), General Atlantic Partners 54, L.P., a
Delaware limited partnership ("GAP 54"), GAP Coinvestment Partners II, L.P., a
Delaware limited partnership ("GAPCO II"), and GAP Coinvestment Partners, L.P.,
a New York limited partnership ("GAPCO" and, collectively with GAP, GAP 16, GAP
19, GAP II, GAP 54 and GAPCO II, the "Reporting Persons"), all of which are
located at 3 Pickwick Plaza, Greenwich, Connecticut 06830. Each of the Reporting
Persons is engaged in acquiring, holding and disposing of interests in various
companies for investment purposes. The general partner of GAP 16, GAP 19, GAP II
and GAP 54 is GAP. The managing members of GAP are Steven A. Denning, Peter L.
Bloom, David C. Hodgson, J. Michael Cline, William O. Grabe, William E. Ford and
Franchon M. Smithson
<PAGE>
36236E109 Page 10 of 18 Pages
(collectively, the "GAP Managing Members"). Steven A. Denning and William E.
Ford are also both directors of the Company. The GAP Managing Members are also
the general partners of GAPCO and GAPCO II. The business address of each of the
GAP Managing Members is 3 Pickwick Plaza, Greenwich, Connecticut 06830, and the
present principal occupation or employment of each of the GAP Managing Members
is as a managing member of GAP. Each of the GAP Managing Members is a citizen of
the United States.
None of the Reporting Persons and none of the above individuals has,
during the last five years, been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
which resulted in such Reporting Person or individual being subject to a
judgment, decree or final order finding any violation of federal or state
securities laws or enjoining future violations of, or prohibiting or mandating
activities subject to, such laws.
Item 3. Source and Amount of Funds or Other Consideration.
This statement is being filed as a result of recent purchases of shares
of convertible Series A Preferred Stock of the Company (the "Preferred Stock"),
as described in Item 5(c), which were acquired for consideration which did not
exceed $30,000,000 in the aggregate and the source of which was contributions
from the partners of GAPCO II and GAP 54.
Item 4. Purpose of Transaction.
The Reporting Persons acquired the shares of Common Stock and Preferred
Stock, as the case may be, for investment purposes. From time to time the
Reporting Persons may acquire additional shares of Common Stock, convert shares
of
<PAGE>
36236E109 Page 11 of 18 Pages
Preferred Stock into shares of Common Stock, or dispose of some or all of the
shares of Common Stock owned by them. None of the Reporting Persons has any
other plans which relate to or would result in any of the items listed in
paragraphs (a) through (j) of Item 4.
Item 5. Interest in Securities of the Issuer.
(a) As of the date hereof, GAP, GAP 16, GAP 19, GAP II and GAPCO each
owns of record no shares of Common Stock, 4,184,545 shares of Common Stock,
2,092,373 shares of Common Stock, 504,000 shares of Common Stock and 647,707
shares of Common Stock, respectively, or 0%, 5.3%, 2.7%, 0.6% and 0.8%,
respectively, of the Company's issued and outstanding shares of Common Stock. As
of the date hereof, GAP 54 and GAPCO II each owns shares of Preferred Stock
convertible into 4,897,440 shares of Common Stock and 1,102,560 shares of Common
Stock, respectively, or 6.2% and 1.4%, respectively, of the Company's issued and
outstanding shares of Common Stock.
By virtue of the fact that the GAP Managing Members are also the
general partners authorized and empowered to vote and dispose of the securities
held by GAPCO and GAPCO II, and that GAP is the general partner of GAP 16, GAP
19, GAP II and GAP 54, the Reporting Persons may be deemed to share voting power
and the power to direct the disposition of the shares of Common Stock owned by
each of the Reporting Persons. Accordingly, as of February 23, 1999, each of the
Reporting Persons may be deemed to own beneficially an aggregate of 13,428,525
shares of Common Stock or 17% of the Company's issued and outstanding shares of
Common Stock.
(b) Each of the Reporting Persons has the shared power to direct the
vote and the shared power to direct the disposition of the 13,428,525 shares of
Common Stock that may be deemed to be owned beneficially by each of them.
<PAGE>
36236E109 Page 12 of 18 Pages
(c) On February 23, 1999, GAP 54 and GAPCO II acquired 600,000 shares
of Preferred Stock pursuant to a private stock purchase agreement entered into
with the Company. Each share of Preferred Stock is convertible at any time into
10 shares of Common Stock.
(d) No person other than the persons listed is known to have the right
to receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, any securities owned by any member of the group.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or Relationship with Respect
to the Securities of the Issuer.
As noted above, the GAP Managing Members are the partners authorized
and empowered to vote and dispose of the securities held by GAPCO and GAPCO II,
and GAP is the partner authorized and empowered to vote the dispose of the
securities held by GAP 16, GAP 19, GAP II and GAP 54. Accordingly, GAP and any
of the GAP Managing Members may, from time, consult among themselves and
coordinate the voting and disposition of the Company's shares of Common Stock,
the conversion of the Company's shares of Preferred Stock and such other action
taken on behalf of the Reporting Persons with respect to the Company's shares of
Common Stock or Preferred Stock as they deem to be in the collective interest of
the Reporting Persons.
Item 7. Materials to be Filed as Exhibits.
Exhibit 1: Agreement relating to the filing of joint acquisition
statements as required by Rule 13d-1(f)(1) under the
Securities Exchange Act of 1934, as amended.
<PAGE>
36236E109 Page 13 of 18 Pages
Exhibit 2: Registration Rights Agreement, dated February 23, 1999,
among the Company and the Reporting Persons (except GAP).
Exhibit 3: Certificate of Powers and Designations, dated February 23,
1999.
Exhibit 4: Stock Purchase Agreement, dated February 8, 1999.
Exhibit 5: Powers of Attorney related to GAP, GAPCO and GAPCO II.
<PAGE>
36236E109 Page 14 of 18 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated as of March 4, 1999.
GENERAL ATLANTIC PARTNERS, LLC
By: /s/ Thomas J. Murphy
--------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GENERAL ATLANTIC PARTNERS 16, L.P.
By: General Atlantic Partners, LLC,
Its general partner
By: /s/ Thomas J. Murphy
--------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GENERAL ATLANTIC PARTNERS 19, L.P.
By: General Atlantic Partners, LLC,
Its general partner
By: /s/ Thomas J. Murphy
--------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
<PAGE>
36236E109 Page 15 of 18 Pages
GENERAL ATLANTIC PARTNERS II, L.P.
By: General Atlantic Partners, LLC,
Its general partner
By: /s/ Thomas J. Murphy
--------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GENERAL ATLANTIC PARTNERS 54, L.P.
By: General Atlantic Partners, LLC,
Its general partner
By: /s/ Thomas J. Murphy
--------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GAP COINVESTMENT PARTNERS, L.P.
By: /s/ Thomas J. Murphy
--------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GAP COINVESTMENT PARTNERS II, L.P.
By: /s/ Thomas J. Murphy
--------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
36236E109 Page 16 of 18 Pages
EXHIBIT 1
to SCHEDULE 13D
JOINT ACQUISITION STATEMENT
PURSUANT TO RULE 13D-(f)(1)
The undersigned acknowledge and agree that the foregoing statement on
Schedule 13D is filed on behalf of each of the undersigned and that all
subsequent amendments to this statement on Schedule 13D shall be filed on behalf
of each of the undersigned without the necessity of filing additional joint
acquisition statements. The undersigned acknowledge that each shall be
responsible for the timely filing of such amendments, and for the completeness
and accuracy of the information concerning him, her or it contained herein, but
shall not be responsible for the completeness and accuracy of the information
concerning the other entities or persons, except to the extent that he, she or
it knows or has reason to believe that such information is accurate.
Dated as of March 4, 1999.
GENERAL ATLANTIC PARTNERS, LLC
By: /s/ Thomas J. Murphy
--------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GENERAL ATLANTIC PARTNERS 16, L.P.
By: General Atlantic Partners, LLC,
Its general partner
By: /s/ Thomas J. Murphy
--------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
<PAGE>
36236E109 Page 17 of 18 Pages
GENERAL ATLANTIC PARTNERS 19, L.P.
By: General Atlantic Partners, LLC,
Its general partner
By: /s/ Thomas J. Murphy
--------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GENERAL ATLANTIC PARTNERS II, L.P.
By: General Atlantic Partners, LLC,
Its general partner
By: /s/ Thomas J. Murphy
--------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GENERAL ATLANTIC PARTNERS 54, L.P.
By: General Atlantic Partners, LLC,
Its general partner
By: /s/ Thomas J. Murphy
--------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GAP COINVESTMENT PARTNERS, L.P.
By: /s/ Thomas J. Murphy
--------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
<PAGE>
36236E109 Page 18 of 18 Pages
GAP COINVESTMENT PARTNERS II, L.P.
By: /s/ Thomas J. Murphy
--------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
This REGISTRATION RIGHTS AGREEMENT is made and entered into as of
February 23, 1999, by and among GT INTERACTIVE SOFTWARE CORP., a Delaware
corporation (the "Company"), and the persons and entities listed on Schedule 1
attached hereto (the "Securityholders").
WHEREAS, the Company, General Atlantic Partners 16, L.P. ("GAP LP"),
GAP Coinvestment Partners, L.P. ("GAP Coinvestment"), General Atlantic Partners
II, L.P. ("GAP II"), and the stockholders named therein are party to the
Stockholders Agreement, dated February 28, 1995 (the "Stockholders Agreement");
WHEREAS, the Company, General Atlantic Partners 19, L.P. ("GAP 19") and
GAP Coinvestment are party to a Stock Purchase Agreement dated June 30, 1995
pursuant to which the Company granted GAP 19 and GAP Coinvestment certain rights
under the Stockholders Agreement;
WHEREAS, prior to the transactions contemplated by the Purchase
Agreement (as defined below), the Securityholders beneficially own an aggregate
of 7,428,525 shares of common stock of the Company, par value $0.01 per share
("Common Stock").
WHEREAS, pursuant to the terms and conditions of that certain Stock
Purchase Agreement, dated February 8, 1999 (the "Purchase Agreement"), among the
Company, General Atlantic Partners 54, L.P. ("GAP 54") and GAP Coinvestment
Partners II, L.P. ("GAP Coinvestment II"), the Company on the date hereof has,
among other things, issued to GAP 54 and GAP Coinvestment II an aggregate of
600,000 shares of the Series A Convertible Preferred Stock of the Company, par
value $0.01 per share (the "Series A Preferred Stock");
WHEREAS, by their terms each share of Series A Preferred Stock is
convertible into ten shares of Common Stock, subject to adjustment, following
the closing of the Purchase Agreement;
WHEREAS, as of the closing under the Purchase Agreement, each of the
Securityholders owns shares of Common Stock and/or shares of Series A Preferred
Stock in the respective amounts indicated on Schedule 1 attached hereto;
WHEREAS, the Company and the Securityholders deem it to be in their
respective best interests to amend and restate in their entirety the
registration rights provisions of the Stockholders Agreement and to set forth
the rights of the Securityholders in connection with public offerings and sales
of the Registrable Securities (as defined below).
NOW, THEREFORE, in consideration of the premises and mutual covenants
and obligations hereinafter set forth, and for other good and valuable
consideration, the sufficiency and adequacy of which are hereby acknowledged,
and intending to be legally bound hereby, the parties hereto agree as follows:
<PAGE>
Section 1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Business Day" shall mean any Monday, Tuesday, Wednesday, Thursday or
Friday that is not a day on which banking institutions in New York City are
authorized by law, regulation or executive order to close.
"Common Stock" shall mean the common stock, par value $0.01 per share,
of the Company.
"Delay Notice" shall have the meaning set forth in Section 6(b) hereof.
"Demand Participation Notice" shall have the meaning set forth in
Section 3(a) hereof.
"Demand Registration" shall have the meaning set forth in Section 3(a)
hereof.
"Demand Registration Notice" shall have the meaning set forth in
Section 3(a) hereof.
"Holder" shall mean the Securityholders and any of their transferees
that owns Registrable Securities. For purposes of this Agreement, the Company
may deem the registered holder of a Registrable Security as the Holder thereof.
"Material Development Condition" shall have the meaning set forth in
Section 6(b) hereof.
"Other Registration Statement" shall have the definition set forth in
Section 5(b) hereof.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by a prospectus supplement with respect to
the terms of the offering of any portion of the Registrable Securities covered
by such Registration Statement and by all other amendments and supplements to
the prospectus, including post-effective amendments and all materials
incorporated by reference in such prospectus.
"Purchase Agreement" shall mean that certain Stock Purchase Agreement,
dated February 8, 1999, by and among the Company, GAP 54 and GAP Coinvestment
II.
"Registrable Securities" shall mean (i) the shares of Common Stock
owned by the Securityholders on the date hereof or acquired by any
Securityholders after the date hereof, (ii) any shares of Common Stock issuable
upon conversion of the Series A Preferred
2
<PAGE>
Stock, and (iii) any other securities issued or issuable as a result of or in
connection with any stock dividend, stock split or reverse stock split,
combination, recapitalization, reclassification, merger or consolidation,
exchange or distribution in respect of such Common Stock.
"Registration Expenses" shall have the definition set forth in Section
7 hereof.
"Registration Period" shall have the definition set forth in Section
3(b) hereof.
"Registration Statement" shall mean any registration statement which
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus included therein, all amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits and all materials incorporated by reference in such registration
statement.
"Requesting Securityholder" shall have the meaning set forth in Section
4 hereof.
"Restricted Securities" shall have the meaning set forth in Section 2
hereof.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"Rule 415" shall mean Rule 415 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"Rule 903" shall mean Rule 903 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"Rule 904" shall mean Rule 904 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"SEC" shall mean the United States Securities and Exchange Commission,
or any other federal agency at the time administering the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended (or
any similar successor federal statute), and the rules and regulations
thereunder, as the same are in effect from time to time.
"Series A Preferred Stock" shall mean the Series A Convertible
Preferred Stock, par value $0.01 per share, of the Company.
3
<PAGE>
"Underwritten Offering" shall mean a registered offering in which
securities of the Company are sold to an underwriter for reoffering to the
public.
Section 2. Securities Subject to this Agreement. The securities
entitled to the benefits of this Agreement are the Registrable Securities but,
with respect to any particular Registrable Security, only so long as such
security continues to be a Restricted Security. A Registrable Security that has
ceased to be a Registrable Security cannot thereafter become a Registrable
Security. As used herein, a "Restricted Security" is a Registrable Security
which has not been effectively registered under the Securities Act and
distributed in accordance with an effective Registration Statement and which has
not been sold by a Holder pursuant to Rule 144 (except pursuant to a transfer to
any affiliate of such Holder), Rule 903 or Rule 904, unless, in the case of a
Registrable Security distributed pursuant to Rule 903 or 904, any applicable
restricted period has not expired or the SEC or its staff has taken the position
in a published release, ruling or no-action letter that securities distributed
under Rule 903 or 904 are ineligible for resale in the United States under
Section 4(1) of the Securities Act notwithstanding expiration of the applicable
restricted period.
Section 3. Demand Registration.
(a) Demand. At any time during the term of this Agreement, a Holder or
Holders may request the Company, in writing (a "Demand Registration Notice"), to
effect the registration of all or such portion of the Registrable Securities as
such Holder or Holders shall specify; provided, that only two demands may be
made pursuant to this Section 3(a). Upon receipt of any such Demand Registration
Notice, the Company shall promptly give written notice of such proposed
registration to all other Holders. Such Holders shall have the right, by giving
written notice (the "Demand Participation Notice") to the Company within fifteen
(15) days after the Company provides its notice, to elect to have included in
such registration such number of their Registrable Securities as such Holders
may request in such Demand Participation Notice. A Holder or Holders may, at any
time up to five (5) Business Days before the filing date of the applicable
Registration Statement relating to the Demand Registration, request that his or
her Registrable Securities not be included therein by providing a written notice
to that effect to the Company.
Upon receipt of a Demand Registration Notice, the Company shall use its
commercially reasonable efforts to file, as expeditiously as possible, but in
any event no later than forty-five (45) days after such Demand Registration
Notice, a Registration Statement on Form S-3 (or any successor form), or any
other form available to the Company under the Securities Act, covering all
Registrable Securities which the Company has been so requested to register (the
"Demand Registration").
(b) Effectiveness of Registration Statement. Subject to the provisions
of Sections 6(b) and (c) hereof, the Company agrees to use its commercially
reasonable efforts to (i) cause the Registration Statement(s) relating to the
Demand Registration described in Section 3(a) to become effective as promptly as
practicable, and (ii) thereafter keep each such Registration Statement effective
continuously for the period (the "Registration Period") ending, subject to the
second sentence of Section 5(b) hereof and clauses (3) and (4) of the
4
<PAGE>
last sentence of Section 6(b) hereof, on the earlier of (A) the first
anniversary of the Effective Time, and (B) the date on which all Registrable
Securities covered by each such Registration Statement have been sold and the
distribution contemplated thereby has been completed.
(c) Inclusion of Other Securities. Any other holder of the Company's
securities who has registration rights may include its securities in the Demand
Registration effected pursuant to this Section 3.
Section 4. Piggyback Registration. If, during the term of this
Agreement, the Company at any time proposes to file a registration statement
with respect to any class of equity securities, whether (i) for its own account
(other than in connection with the Registration Statement contemplated by
Section 3 or a registration statement on Form S-4 or S-8 (or any successor or
substantially similar form), and other than in connection with (A) an employee
stock option, stock purchase or compensation plan or of securities issued or
issuable pursuant to any such plan, or (B) a dividend reinvestment plan) or (ii)
for the account of a holder of securities of the Company pursuant to demand
registration rights granted by the Company (a "Requesting Securityholder"),
other than for the registration of securities for sale on a continuous or
delayed basis pursuant to Rule 415, then the Company shall in each case give
written notice of such proposed filing to all Holders of Registrable Securities
at least fifteen (15) days before the anticipated filing date of any such
registration statement by the Company, and such notice shall offer to all
Holders the opportunity to have any or all of the Registrable Securities held by
such Holders included in such registration statement. Each Holder of Registrable
Securities desiring to have its Registrable Securities registered under this
Section 4 shall so advise the Company in writing within ten (10) days after the
date of receipt of such notice (which request shall set forth the amount of
Registrable Securities for which registration is requested), and the Company
shall use its commercially reasonable efforts to include in such registration
statement all such Registrable Securities so requested to be included therein.
Notwithstanding the foregoing, if the managing underwriter or underwriters of
any such proposed public offering advises the Company that the total amount of
securities which the Holders of Registrable Securities, the Company and any
other Persons intended to be included in such proposed public offering is
sufficiently large to adversely affect the success of such proposed public
offering, then the amount of securities to be offered for the accounts of
Holders of Registrable Securities shall be reduced pro rata, based upon the
aggregate number of securities to be offered for the accounts of all of the
Holders of Registrable Securities and all other holders (except the Company and
the Requesting Securityholder) of securities intended to be included in such
offering and the number of securities to be offered for the account of each such
Holder, to the extent necessary to reduce the total amount of securities to be
included in such proposed public offering to the amount recommended by such
managing underwriter or underwriters before the securities offered by the
Company or any Requesting Securityholder are so reduced. Anything to the
contrary in this Agreement notwithstanding, the Company may withdraw or postpone
a registration statement referred to in this Section 4 at any time before it
becomes effective or withdraw, postpone or terminate the offering after it
becomes effective without obligation to the Holder or Holders of the Registrable
Securities; provided that the Company's obligations pursuant to Section
5(a)(ii), 7 and 8 shall remain effective.
5
<PAGE>
Section 5. Registration Procedures.
(a) General. In connection with the Company's registration obligations
pursuant to Section 3 and, to the extent applicable, Section 4 hereof, the
Company will:
(i) prepare and file with the SEC a new Registration Statement
or such amendments and post-effective amendments to an existing
Registration Statement as may be necessary to keep such Registration
Statement effective for the time periods set forth in Section 3(b),
provided that no Registration Statement shall be required to remain in
effect after all Registrable Securities covered by such Registration
Statement have been sold and distributed as contemplated by such
Registration Statement, and, provided, further, that as soon as
practicable, but in no event later than five (5) Business Days before
filing such Registration Statement, any related Prospectus or any
amendment or supplement thereto, other than any amendment or supplement
made solely as a result of incorporation by reference of documents
filed with the SEC subsequent to the filing of such Registration
Statement, the Company shall furnish to the Holders of the Registrable
Securities covered by such Registration Statement and the underwriters,
if any, copies of all such documents proposed to be filed, which
documents shall be subject to the review of such Holders and
underwriters;
(ii) notify the selling Holders of Registrable Securities and
the managing underwriters, if any, promptly (1) when a new Registration
Statement, Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to any new Registration
Statement or post-effective amendment, when it has become effective,
(2) of any request by the SEC for amendments or supplements to any
Registration Statement or Prospectus or for additional information, (3)
of the issuance by the SEC of any comments with respect to any filing,
(4) of any stop order suspending the effectiveness of any Registration
Statement or the initiation of any proceedings for that purpose, (5) of
any suspension of the qualification of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose and (6) if there is a misstatement or
omission of a material fact in any Registration Statement, Prospectus
or any document incorporated therein by reference or if any event
occurs which requires the making of any changes in any Registration
Statement, Prospectus or any document incorporated therein by reference
in order to make the statements therein (in the case of any Prospectus,
in the light of the circumstances under which they were made) not
misleading;
(iii) if reasonably requested by the managing underwriter or
underwriters or a Holder of Registrable Securities being sold in
connection with an Underwritten Offering, promptly incorporate in a
Prospectus supplement or post-effective amendment such information as
the managing underwriters and the Holders of a majority of the
Registrable Securities being sold in such Underwritten Offering agree
should be included therein relating to the sale of the Registrable
Securities, including, without limitation, information with respect to
the aggregate number of shares of Registrable Securities being sold to
such underwriters, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the
6
<PAGE>
Underwritten Offering of the Registrable Securities to be sold in such
offering; and promptly make all required filings of such Prospectus
supplement or post-effective amendment;
(iv) furnish to each selling Holder of Registrable Securities
and each managing underwriter, if any, without charge, as many
conformed copies as may reasonably be requested of the then effective
Registration Statement and any post-effective amendments thereto,
including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those
incorporated by reference);
(v) deliver to each selling Holder of Registrable Securities
and the underwriters, if any, without charge, as many copies of the
then effective Prospectus (including each prospectus subject to
completion) and any amendments or supplements thereto as such Persons
may reasonably request;
(vi) use commercially reasonable efforts to register or
qualify or cooperate with the selling Holders of Registrable
Securities, the underwriters, if any, and their respective counsel in
connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or "blue sky" laws
of such jurisdictions as any selling Holder of Registrable Securities
or underwriter reasonably requests in writing; provided, however, that
the Company will not be required to (1) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify, but
for this paragraph (vi), (2) subject itself to general taxation in any
such jurisdiction or (3) file a general consent to service of process
in any such jurisdiction;
(vii) cooperate with the selling Holders of Registrable
Securities and the managing underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive
legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters
may request at least two (2) Business Days prior to any sale of
Registrable Securities to the underwriters;
(viii) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange (or
quotation system operated by a national securities association) on
which identical securities issued by the Company are then listed if
requested by the Holders of a majority of the Registrable Securities
covered by such Registration Statement or the managing underwriters, if
any, and enter into customary agreements including, if necessary, a
listing application and indemnification agreement in customary form,
and provide a transfer agent for such Registrable Securities no later
than the effective date of such Registration Statement;
(ix) otherwise use its commercially reasonable efforts to
comply in all material respects with all applicable rules and
regulations of the SEC relating to such registration and the
distribution of the securities being offered and make
7
<PAGE>
generally available to its securities holders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act;
(x) cooperate and assist in any filings required to be made
with the National Association of Securities Dealers, Inc.; and
(xi) subject to the proviso in paragraph (vi) above, cause the
Registrable Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof
or the underwriters, if any, to consummate the disposition of such
Registrable Securities (other than as may be required by the
governmental agencies or authorities of any foreign jurisdiction and
other than as may be required by a law applicable to a selling Holder
by reason of its own activities or business other than the sale of
Registrable Securities).
As a condition precedent to the participation in any registration
hereunder, the Company may require each seller of Registrable Securities as to
which any such registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such securities as the
Company may from time to time reasonably request to comply with the applicable
provisions of the Securities Act.
(b) Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(a)(ii)(4), (5) or (6)
hereof, such Holder will forthwith discontinue disposition of Registrable
Securities pursuant to the then current Prospectus until (1) such Holder is
advised in writing by the Company that a new Registration Statement covering the
offer of Registrable Securities has become effective under the Securities Act or
(2) such Holder receives copies of any required supplemented or amended
Prospectus, or until such Holder is advised in writing by the Company that the
use of the Prospectus may be resumed; provided, however, that such Holder shall
not be required to discontinue disposition of Registrable Securities pursuant to
this Section 5(b) if any other registration statement of the Company is then in
effect under the Securities Act (the "Other Registration Statement") and the
Company has a contractual right to cause selling stockholders to discontinue
disposition of securities pursuant thereto and fails to do so, unless the
Company gives such notice pursuant to clause (6) of Section 5(a)(ii) hereof as a
result of a misstatement, omission or event that is applicable to the
Registration Statement and is not applicable to the Other Registration
Statement. If the Company shall have given any such notice during a period when
a Demand Registration is in effect, the Company shall extend the period during
which such Registration Statement shall be maintained effective pursuant to this
Agreement by the number of days during which any such disposition of Registrable
Securities is discontinued pursuant to this Section 5(b). If so directed by the
Company, on the happening of such event, the Holder will deliver to the Company
(at the Company's expense) all copies, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice.
8
<PAGE>
Section 6. Holdback Agreements.
(a) Hold-Back Election. In the case of the registration of any
underwritten primary offering initiated by the Company (other than any
registration by the Company on Form S-4 or Form S-8 (or any successor or
substantially similar form), and other than in connection with (A) an employee
stock option, stock purchase or compensation plan or of securities issued or
issuable pursuant to any such plan, or (B) a dividend reinvestment plan) or any
underwritten secondary offering initiated at the request of a holder of
securities of the Company pursuant to registration rights granted by the
Company, each Holder agrees that if he or it is (x) then a 5% or greater
stockholder, a director or an officer of the Company and (y) reasonably
requested to do so by the managing underwriter or the underwriters, then such
Holder shall not effect any public sale or distribution of securities of the
Company, except as part of such underwritten registration, during the period
beginning twenty-five (25) days prior to the closing date of such underwritten
offering and ending ninety (90) days after such closing date (or such longer
period as may be reasonably requested by the managing underwriter or
underwriters).
(b) Material Development Condition. With respect to any Registration
Statement filed or to be filed pursuant to Section 3, if the Company determines
that, in its good faith judgment, (i) it would (because of the existence of, or
in reasonable anticipation of, any acquisition or corporate reorganization or
other transaction, financing activity, stock repurchase or other development
involving the Company or any subsidiary, or the unavailability for reasons
substantially beyond the Company's control of any required financial statements,
or any other event or condition of similar significance to the Company or any
subsidiary for purposes of disclosure to the stockholders or potential investors
of the Company) be materially disadvantageous (a "Material Development
Condition") to the Company or any subsidiary or its stockholders for such a
Material Development Condition to be publicly disclosed, and (ii) the Company
reasonably believes it would be required under the Securities Act to disclose
such Material Development Condition in such Registration Statement, then the
Company shall, notwithstanding any other provisions of this Agreement, be
entitled, upon the giving of a written notice that a Material Development
Condition has occurred (a "Delay Notice") from an officer of the Company to any
Holder of Registrable Securities included or to be included in such Registration
Statement, (i) to cause sales of Registrable Securities by such Holder pursuant
to such Registration Statement to cease, (ii) to cause such Registration
Statement to be withdrawn and the effectiveness of such Registration Statement
terminated, or (iii) in the event no such Registration Statement has yet been
filed or declared effective, to delay filing or effectiveness of any such
Registration Statement until, in the good faith judgment of the Company, such
Material Development Condition shall be disclosed or no longer exists (notice of
which the Company shall promptly deliver to any Holder of Registrable Securities
with respect to which any such Registration Statement has been filed).
Notwithstanding the foregoing provisions of this Section 6(b): (1) the Company
shall not be entitled to cause sales of Registrable Securities to cease or to
delay any registration of Registrable Securities required pursuant to Section 3
by reason of any existing or anticipated Material Development Condition if at
the time any Other Registration Statement of the Company is then in effect and
the Company has a contractual right to cause selling stockholders to cease sales
pursuant thereto or to withdraw the effectiveness of the
9
<PAGE>
Other Registration Statement and fails to do so, unless either such right arises
out of a misstatement, omission or event that is applicable only to the
Registration Statement and not to the Other Registration Statement; (2) in no
event may such cessation or delay (i) be, for each such Registration Statement,
for a period of more than ninety (90) consecutive days from the giving of its
Delay Notice to a Holder or Holders with respect to such Material Development
Condition, as above provided, or (ii) for each such Registration Statement,
exceed in the aggregate one hundred fifty (150) days in any consecutive three
hundred sixty-five (365) day period; (3) in the event a Registration Statement
is filed and subsequently withdrawn by reason of any existing or anticipated
Material Development Condition as hereinbefore provided, the Company shall cause
a new Registration Statement covering the Registrable Securities to be filed
with the SEC as soon as practicable after such Material Development Condition
expires or, if sooner, as soon as practicable after the expiration of the
earlier of such ninety (90) day or one hundred fifty (150) day period, and the
Registration Period for such new Registration Statement shall be the greater of
thirty (30) days or the number of days that remained in such Registration Period
with respect to the withdrawn Registration Statement at the time it was
withdrawn; and (4) in the event the Company elects not to withdraw or terminate
the effectiveness of any such Registration Statement but to cause a Holder or
Holders to refrain from selling Registrable Securities for any period during the
Registration Period, the Registration Period with respect to such Holders shall
be extended by the number of days during the Registration Period that such
Holders are required to refrain from selling Registrable Securities.
(c) Limitation on Demand and Piggyback Registration Rights. Anything to
the contrary contained in this Agreement notwithstanding, when (i) in the
opinion of counsel for the Company (which counsel shall be experienced in
securities law matters), registration of the Registrable Securities is not
required by the Securities Act and other applicable securities laws in
connection with a proposed sale of such Registrable Securities and (ii) the
amount of Registrable Securities held by such Holders does not exceed one
percent of the outstanding shares of Common Stock, on a fully diluted basis, the
Holders shall have no rights pursuant to Sections 3 and 4 hereof to request a
Demand Registration or a piggyback registration in connection with such proposed
sale and the Company shall promptly provide to the transfer agent and the
Holders' broker in connection with any sale transaction an opinion to the effect
set forth above, reasonably sufficient in form and substance to permit the
transfer agent to issue stock certificates for such Registrable Securities
without any legend restricting transfer thereof.
Section 7. Registration Expenses. All expenses incident to the
Company's performance of or compliance with this Agreement, including without
limitation all registration and filing fees, fees and expenses of compliance
with securities or "blue sky" laws (including reasonable fees and disbursements
of counsel in connection with "blue sky" qualifications or registrations (or the
obtaining of exemptions therefrom) of the Registrable Securities), printing
expenses (including expenses of printing Prospectuses), messenger and delivery
expenses, internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
fees and disbursements of its counsel and its independent certified public
accountants, securities acts liability insurance (if the Company elects to
obtain such insurance), fees and expenses of any special
10
<PAGE>
experts retained by the Company in connection with any registration hereunder
and fees and expenses of other Persons retained by the Company (all such
expenses being referred to as "Registration Expenses"), shall be borne by the
Company; provided, that Registration Expenses shall not include any fees and
expenses of counsel for the Holders, out-of-pocket expenses incurred by the
Holders and underwriting discounts, commissions or fees attributable to the sale
of the Registrable Securities.
Section 8. Indemnification.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless, to the full extent permitted by law, but without duplication,
each Holder of Registrable Securities, and each Person who controls such Holder
(within the meaning of the Securities Act), against all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation and
reasonable legal fees and expenses) resulting from any untrue statement of a
material fact in, or any omission of a material fact required to be stated in,
any Registration Statement or Prospectus or necessary to make the statements
therein (in the case of a Prospectus in light of the circumstances under which
they were made) not misleading, except insofar as the same are caused by or
contained in any information furnished in writing to the Company by any Holder
or any underwriters expressly for use therein. The Company will also indemnify
underwriters participating in the distribution, their officers, directors,
employees, partners and agents, and each Person who controls such underwriters
(within the meaning of the Securities Act), to the same extent as provided above
with respect to the indemnification of the Holders of Registrable Securities, if
so requested.
(b) Indemnification by Holders of Registrable Securities. In connection
with any Registration Statement in which a Holder of Registrable Securities is
participating, each such Holder will furnish to the Company in writing such
information and affidavits relating to such Holder as the Company reasonably
requests for use in connection with any such Registration Statement or
Prospectus and agrees to indemnify and hold harmless, to the full extent
permitted by law, but without duplication, the Company, its officers, directors,
stockholders, employees, advisors and agents, and each Person who controls the
Company (within the meaning of the Securities Act), against all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation
and reasonable legal fees and expenses) resulting from any untrue statement of
material fact in, or any omission of a material fact required to be stated in,
the Registration Statement or Prospectus or necessary to make the statements
therein (in the case of a Prospectus in light of the circumstances under which
they were made) not misleading, to the extent, but only to the extent, that such
untrue statement or omission is contained in any information or affidavit
relating to such Holder so furnished in writing by such Holder to the Company
specifically for inclusion therein. The Company and the other Persons described
above shall be entitled to receive indemnities from underwriters participating
in the distribution, to the same extent as provided above with respect to
information so furnished in writing by such Persons specifically for inclusion
in any Prospectus or Registration Statement. In no event shall any participating
Holder have an obligation to indemnify any Person pursuant to this Section 8(b)
for any amount in excess of the net proceeds received by such Holder from the
Registrable Securities offered and sold by such Holder pursuant to such
Registration Statement.
11
<PAGE>
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel of such
indemnifying party's choice and reasonably satisfactory to the indemnified
party; provided, however, that the failure to notify the indemnifying party
shall not relieve the indemnifying party of any liability that it may have to
the indemnified party hereunder, except to the extent that the indemnifying
party forfeits substantive rights or defenses by reason of such failure;
provided, further, that any Person entitled to indemnification hereunder shall
have the right to employ separate counsel and to participate in (but not
control) the defense of such claim, but the fees and expenses of such counsel
shall be at the expense of such indemnified Person unless (A) the indemnifying
party shall have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to the indemnified party in a timely manner or (B) in
the reasonable judgment of any such Person, based upon a written opinion of its
counsel, a conflict of interest may exist between such Person and the
indemnifying party with respect to such claims (in which case, if the Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such Person). The indemnifying party will not be subject to any liability for
any settlement made without its consent. No indemnified party will be required
to consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation. An indemnifying party who is not entitled to, or elects not
to, assume the defense of the claim will not be obligated to pay the fees and
expenses of more than one counsel (except one (1) local counsel if required in a
specific instance) for all parties indemnified by such indemnifying party with
respect to such claim.
(d) Contribution. If for any reason the indemnification provided for in
Section 8(a) or Section 8(b) is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by Section 8(a) and Section
8(b), then the indemnifying party shall contribute to the amount paid or payable
by the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect not only the relative benefits
received by the indemnifying party and the indemnified party, but also the
relative fault of the indemnifying party and the indemnified party, as well as
any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement or the omission or alleged omission relates to information
supplied by the indemnifying party or parties on the one hand, or the
indemnified party or parties on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentations. In no event shall any participating Holder be
required to contribute any amount in excess of the net proceeds received by such
Holder from the Registrable Securities offered and sold by such Holder pursuant
to such Registration Statement.
12
<PAGE>
Section 9. Participation in Underwritten Registrations. No Person may
participate in any Underwritten Offering hereunder unless such Person (i) agrees
to sell such Person's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements. Nothing in this Section 9
shall be construed to create any additional rights regarding the registration of
Registrable Securities in any Person otherwise than as set forth herein.
Section 10. Amendments and Waivers. The provisions of this Agreement,
including the provisions of this Section 10, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of a majority of the Registrable Securities then outstanding. Whenever the
consent or approval of Holders of a specified number of Registrable Securities
is required hereunder, Registrable Securities held by the Company or any of its
controlled affiliates (other than Holders of Registrable Securities if such
subsequent Holders are deemed to be affiliates solely by reason of their
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
number.
Section 11. Term of Agreement. This Agreement may be terminated at any
time by a written instrument signed by Holders of all of the Registrable
Securities then outstanding. Unless sooner terminated in accordance with the
preceding sentence, this Agreement shall terminate in its entirety on such date
as there shall be no Registrable Securities outstanding; provided that any
shares of Common Stock previously subject to this Agreement shall not be
Registrable Securities following the sale of such shares in an offering
registered pursuant to this Agreement.
Section 12. Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or air-courier guaranteeing overnight delivery:
(a) If to a Holder of Registrable Securities, at the most
current address given by such Holder to the Company, in accordance with
the provisions of this Section 12, which address initially is, with
respect to each Holder, listed on Schedule 1 attached hereto, with a
copy to Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the
Americas, New York, New York 10019-6064, attention: Matthew Nimetz,
Esq.
(b) If to the Company, initially at 417 Fifth Avenue, New
York, New York 10016, attention: Director of Legal Services; telecopier
no. (212) 679- 6850; confirm no. (212) 726-6504, and thereafter at such
other address as may be designated from time to time by notice given in
accordance with the provisions of this Section 12, with a copy to
Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, New
York 10022, attention: David P. Levin, Esq.
13
<PAGE>
(c) All such notices and other communications shall be deemed
to have been delivered and received (i) in the case of personal
delivery, telecopier or telegram, on the date of such delivery, (ii) in
the case of air courier, on the Business Day after the date when sent
and (iii) in the case of mailing, on the third Business Day following
such mailing.
Section 13. Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
Section 14. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
Section 15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE PRINCIPLES OF THE CONFLICT OF LAWS THEREOF.
Section 16. Jurisdiction; Forum. Each party hereto consents and submits
to the jurisdiction of any state court sitting in the County of New York or
federal court sitting in the Southern District of the State of New York in
connection with any dispute arising out of or relating to this Agreement. Each
party hereto waives any objection to the laying of venue in such courts and any
claim that any such action has been brought in an inconvenient forum. To the
extent permitted by law, any judgment in respect of a dispute arising out of or
relating to this Agreement may be enforced in any other jurisdiction within or
outside the United States by suit on the judgment, a certified copy of such
judgment being conclusive evidence of the fact and amount of such judgment. Each
party hereto agrees that personal service of process may be effected by any of
the means specified in Section 12 hereof, addressed to such party. The foregoing
shall not limit the rights of any party to serve process in any other manner
permitted by law.
Section 17. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
Section 18. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto, including without limitation and without the need for an express
assignment to, any subsequent Holder of the Registrable Securities.
14
<PAGE>
Section 19. Entire Agreement. (a) This Agreement is intended by the
parties as a final expression of their agreement and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(b) This Agreement supersedes the registration rights provisions of
Section 9 of the Stockholders Agreement. By executing this Agreement, the
Securityholders agree that the Stockholders Agreement is null and void and they
no longer have any rights, obligations or remedies thereunder.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first written above.
GT INTERACTIVE SOFTWARE CORP.
By:__________________________
Name:
Title:
GENERAL ATLANTIC PARTNERS 16, L.P.
By: General Atlantic Partners, LLC, its
General Partner
By:__________________________
Name:
Title:
GENERAL ATLANTIC PARTNERS II, L.P.
By: General Atlantic Partners, LLC, its
General Partner
By:__________________________
Name:
Title:
GENERAL ATLANTIC PARTNERS 54, L.P.
By: General Atlantic Partners, LLC, its
General Partner
By:__________________________
Name:
Title:
16
<PAGE>
GENERAL ATLANTIC PARTNERS 19, L.P.
By: General Atlantic Partners, LLC, its
General Partner
By:__________________________
Name:
Title:
GAP COINVESTMENT PARTNERS, L.P.
By:__________________________
Name:
Title:
GAP COINVESTMENT PARTNERS II, L.P.
By:__________________________
Name:
Title:
17
GT INTERACTIVE SOFTWARE CORP.
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
SERIES A CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.01 PER SHARE
Pursuant to Section 151 of the Delaware General Corporation Law
The undersigned, David Chemerow, President of GT INTERACTIVE SOFTWARE
CORP., a Delaware corporation (the "Corporation"), DOES HEREBY CERTIFY that the
following resolution, creating a series of Six Hundred Thousand (600,000) shares
of Preferred Stock was duly adopted by unanimous written consent of the Board of
Directors, on February 23, 1999.
WHEREAS, the Board of Directors is authorized, within the limitations
and restrictions stated in the Certificate of Incorporation of the Corporation,
to provide by resolution or resolutions for the issuance of shares of Preferred
Stock, par value $.01 per share, of the Corporation, in one or more classes or
series with such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions as shall be stated and
expressed in the resolution or resolutions providing for the issuance thereof
adopted by the Board of Directors, and as are not stated and expressed in the
Certificate of Incorporation, or any amendment thereto, including (but without
limiting the generality of the foregoing) such provisions as may be desired
concerning voting, redemption, dividends, dissolution or the distribution of
assets and such other subjects or matters as may be fixed by resolution or
resolutions of the Board of Directors under the General Corporation Law of the
State of Delaware; and
WHEREAS, it is the desire of the Board of Directors, pursuant to its
authority as aforesaid, to authorize and fix the terms of a series of Preferred
Stock and the number of shares constituting such series.
NOW, THEREFORE, BE IT RESOLVED:
1. Designation and Number of Shares. There shall be hereby created and
established a series of Preferred Stock designated as "Series A Convertible
Preferred Stock" (the "Series A Preferred Stock"). The authorized number of
shares of Series A Preferred Stock shall be 600,000. Capitalized terms
<PAGE>
2
used herein and not otherwise defined shall have the meanings set forth in
Section 10 below.
2. Rank. The Series A Preferred Stock shall with respect to
distributions of assets and rights upon the occurrence of a Liquidation rank
senior to (i) all classes of common stock of the Corporation (including, without
limitation, the issued and outstanding shares of Common Stock, par value $.01
per share, of the Corporation (the "Common Stock")); and (ii) each other class
or series of Capital Stock of the Corporation hereafter created which does not
expressly rank pari passu with or senior to the Series A Preferred Stock
(collectively with the Common Stock, the "Junior Stock").
3. Dividends.
(a) The holders of shares of Series A Preferred Stock shall be
entitled to receive, out of funds legally available therefor, cumulative
dividends at an annual rate equal to 8% of the Liquidation Preference only,
which shall accrue annually from the date of issuance thereof, whether or not
declared. All accrued and unpaid dividends shall, to the extent funds are
legally available therefor, be mandatorily paid immediately upon the earliest to
occur of (i) a Liquidation, (ii) an optional conversion of shares of Series A
Preferred Stock pursuant to Section 7(a) below, (iii) a mandatory conversion of
shares of Series A Preferred Stock pursuant to Section 7(b) below, (iv) the
redemption of all issued and outstanding shares of Series A Preferred Stock
pursuant to Section 5 below and (v) a Merger or a sale of all or substantially
all of the assets of the Corporation (the "Dividend Payment Date"). On the
Dividend Payment Date, all accrued dividends shall be paid (pro rated to such
Dividend Payment Date), (x) in the case of a Liquidation, a sale of all or
substantially all of the assets of the Corporation, a cash Merger or a
redemption pursuant to Section 5 below, in cash, and (y) in the case of a
conversion of shares of Series A Preferred Stock pursuant to Section 7(a) or (b)
below or a non-cash Merger, in shares of Common Stock. If dividends are to be
paid in shares of Common Stock pursuant to the preceding sentence, the value of
such shares shall be equal to (A) in the case of an optional conversion of
Series A Preferred Stock pursuant to Section 7(a) hereof, the Current Market
Price of the Common Stock on the date on which notice of such optional
conversion is delivered to the Corporation, (B) in the case of a mandatory
conversion of shares of Series A Preferred Stock pursuant to Section 7(b)
hereof, the Current Market Price of the Common Stock on the date on which notice
of such mandatory conversion is delivered to the holders of Series A Preferred
Stock and (c) in the case of a non-cash Merger, the Current Market Price of the
Common Stock on the date on which notice of such Merger is delivered to the
holders of Common Stock.
(b) If the Corporation declares and pays on the Common Stock
an in-kind dividend or distribution of the assets, shares of common stock or
other securities of any Person in a spin-off of such Person, then the holders of
shares of Series A Preferred Stock shall be entitled to share in such dividend
or distribution
<PAGE>
3
on a pro rata basis, as if their shares of Series A Preferred Stock (excluding
any accrued and unpaid dividends) had been converted into shares of Common Stock
pursuant to Section 7(a) immediately prior to the record date for determining
the stockholders of the Corporation eligible to receive such dividend or
distribution.
4. Liquidation Preference.
(a) Upon the occurrence of a Liquidation, the holders of
shares of Series A Preferred Stock shall be entitled to be paid for each share
of Series A Preferred Stock held thereby, out of the assets of the Corporation
legally available for distribution to its stockholders, an amount in cash equal
to (i) $50.00 (the "Liquidation Preference") plus (ii) all accrued and unpaid
dividends thereon to the date fixed for such Liquidation, before any payment or
distribution is made to any Junior Stock less (iii) the fair market value of any
assets or securities distributed pursuant to Section 3(b), as determined on the
date of any such Liquidation by (A) in the case of any securities so distributed
that are publicly traded, the Market Price or (B) in all other cases, a
valuation conducted by a nationally recognized investment bank, reasonably
satisfactory to the Company and the holders of a majority of Series A Preferred
Stock. If the assets of the Corporation available for distribution to the
holders of Series A Preferred Stock and any stock which is ranked pari passu
with the Series A Preferred Stock ("Parity Stock") shall be insufficient to
permit payment in full to such holders of the sums which such holders are
entitled to receive in such case, then all of the assets available for
distribution to holders of the Series A Preferred Stock and any Parity Stock
shall be distributed among and paid to such holders ratably in proportion to the
amounts that would be payable to such holders if such assets were sufficient to
permit payment in full.
(b) After the holders of all shares of Series A Preferred
Stock shall have been paid in full the amounts to which they are entitled in
Section 4(a), the shares of Series A Preferred Stock shall not be entitled to
any further participation in any distribution of assets of the Corporation and
the remaining assets of the Corporation shall be distributed to the holders of
Junior Stock.
(c) Written notice of a Liquidation stating a payment or
payments and the place where such payment or payments shall be payable, shall be
delivered in person, mailed by certified mail, return receipt requested, mailed
by overnight mail or sent by telecopier, not less than ten (10) days prior to
the earliest payment date stated therein, to the holders of record of the Series
A Preferred Stock, such notice to be addressed to each such holder at its
address as shown by the records of the Corporation.
5. Redemption.
(a) At any time after February __, 2003, the Corporation shall
have the right, at its option, to redeem for cash, out of the funds legally
available therefor, all of the issued and outstanding shares of Series A
Preferred Stock
<PAGE>
4
on not less than fifteen (15) Business Days' written notice of the date of
redemption (the "Optional Redemption Date") at a price per share (the "Optional
Redemption Price") equal to (i) the Liquidation Preference plus (ii) all accrued
and unpaid dividends thereon, whether or not declared or payable, less (iii) the
fair market value of any assets or securities distributed pursuant to Section
3(b), as determined on the Optional Redemption Date by (A) in the case of any
securities so distributed that are publicly traded, the Market Price or (B) all
other cases, a valuation conducted by a nationally recognized investment bank,
reasonably satisfactory to the Company and the holders of a majority of Series A
Preferred Stock, to the Optional Redemption Date, in immediately available
funds.
(b) Notwithstanding Section 5(a) above, at any time within 10
days after the delivery of such notice from the Corporation that it intends to
redeem the Series A Preferred Stock pursuant to Section 5(a) hereof, each holder
of shares of Series A Preferred Stock shall have the right, at its option, prior
to any such redemption to convert all of its shares of Series A Preferred Stock,
together with all accrued and unpaid dividends thereon, into shares of Common
Stock in accordance with the terms set forth in Sections 3 and 7(a) hereof.
(c) Written notice of any redemption of shares of Series A
Preferred Stock pursuant to Section 5(a) shall be delivered by the Corporation
in person, mailed by certified or registered mail, return receipt requested,
mailed by overnight mail or sent by telecopier, to the holders of record of the
Series A Preferred Stock, such notice to be addressed to each such holder at its
address as shown by the records of the Corporation. In order to facilitate the
redemption of shares of Series A Preferred Stock, the Board of Directors may fix
a record date for the determination of shares of Series A Preferred Stock to be
redeemed.
6. Voting Rights; Election of Directors.
(a) Subject to subsection (b) below, each outstanding share of
Series A Preferred Stock shall entitle the holder thereof to vote, in person or
by proxy, at a special or annual meeting of stockholders, on all matters
entitled to be voted on by holders of Common Stock voting together as a single
class with the Common Stock (and all other classes and series of stock of the
Corporation entitled to vote thereon with the Common Stock, if any). With
respect to any such vote, each share of Series A Preferred Stock shall entitle
the holder thereof to cast that number of votes per share as is equal to the
number of votes that such holder would be entitled to cast had such holder
converted its shares of Series A Preferred Stock (excluding any accrued and
unpaid dividends) into shares of Common Stock pursuant to Section 7(a) on the
record date for determining the stockholders of the Corporation eligible to vote
on any such matters.
(b) The holders of each share of Series A Preferred Stock
shall not be entitled to vote as a separate class on any matter, including any
Merger or sale of all or substantially all of the assets of the Corporation;
provided, however,
<PAGE>
5
that notwithstanding the foregoing, the holders of the Series A Preferred Stock
shall be entitled to vote together as a separate class with respect to (i) any
amendment to the terms or conditions of the Series A Preferred Stock set forth
in the Certificate of Designations or (ii) any issuance or proposed issuance by
the Corporation of any Capital Stock of the Corporation that would rank senior
to the Series A Preferred Stock upon a Liquidation.
7. Conversion.
(a) Optional Conversion. Any holder of Series A Preferred
Stock shall have the right, at its option, at any time and from time to time, to
convert, subject to the terms and provisions of this Section 7, any or all of
such holder's shares of Series A Preferred Stock into such number of fully paid
and non-assessable shares of Common Stock as is equal to the product of the
number of shares of Preferred Stock being so converted multiplied by the
quotient of (i) the Liquidation Preference divided by (ii) the conversion price
of $5.00 per share, subject to adjustment as provided in Section 7(f) (such
price, the "Conversion Price"), then in effect. Such conversion shall be
exercised by the surrender of certificate(s) representing the shares of Series A
Preferred Stock to be converted to the Corporation at any time during usual
business hours at its principal place of business to be maintained by it (or
such other office or agency of the Corporation as the Corporation may designate
by notice in writing to the holders of Series A Preferred Stock), accompanied by
written notice that the holder elects to convert such shares of Series A
Preferred Stock and specifying the name or names (with address) in which a
certificate or certificates for shares of Common Stock are to be issued and (if
so required by the Corporation) by a written instrument or instruments of
transfer in form reasonably satisfactory to the Corporation duly executed by the
holder or its duly authorized legal representative and transfer tax stamps or
funds therefor, if required pursuant to Section 7(l). All certificates
representing shares of Series A Preferred Stock surrendered for conversion shall
be delivered to the Corporation for cancellation and canceled by it.
(b) Mandatory Conversion. If at any time after the date hereof
the Current Market Price of the Common Stock is greater than $15.00 per share
(as appropriately adjusted to reflect any event described in Section 7(f)(i),
(ii) or (iii)) the Corporation shall have the right, at its option, to cause the
mandatory conversion of all (but not less than all) of the issued and
outstanding shares of Series A Preferred Stock into shares of Common Stock in
accordance with Section 7(a) above, on not less than 10 days' written notice of
the date of such mandatory conversion. Not later than 60 days following a date
on which the Current Market Price of the Common Stock exceeds $15.00 per share
(as appropriately adjusted to reflect any event described in Section 7(f)(i),
(ii) or (iii)), written notice of such mandatory conversion of the shares of
Series A Preferred Stock shall be delivered by the Corporation in person, mailed
by certified or registered mail, return receipt requested, mailed by overnight
mail or sent by telecopier to the holders of record of all of the outstanding
shares of Series A Preferred Stock, with such notice to be
<PAGE>
6
addressed to each such holder at its address as shown by the records of the
Corporation. Such mandatory conversion shall be effective upon the close of
business on the date of such mandatory conversion set forth in the written
notice.
(c) No fractional shares of Common Stock or scrip representing
fractional shares shall be issued upon the conversion of shares of Series A
Preferred Stock pursuant to Section 7(a) or (b) hereof. Instead of any
fractional shares of Common Stock which would otherwise be issuable upon
conversion of shares of Series A Preferred Stock, the Corporation shall pay to
the holder of the shares of Series A Preferred Stock that were converted a cash
adjustment in respect of such fractional shares in an amount equal to the same
fraction of the Market Price of the Common Stock on the date of such conversion.
(d) As promptly as practicable after the surrender of
certificate(s) representing any shares of Series A Preferred Stock with respect
to which there has been an optional conversion pursuant to Section 7(a) or a
mandatory conversion pursuant to Section 7(b), the Corporation shall deliver to
the holder of such shares so surrendered certificate(s) representing the number
of fully paid and nonassessable shares of Common Stock into which such shares of
Series A Preferred Stock have been converted in accordance with the provisions
of this Section 7 and a check or cash in respect of any fractional share arising
upon conversion. At the time of the surrender of such certificate(s), the Person
in whose name any certificate(s) for shares of Common Stock shall be issuable
upon such conversion shall be deemed to be the holder of record of such shares
of Common Stock on such date, notwithstanding that the share register of the
Corporation shall then be closed or that the certificates representing such
Common Stock shall not then be actually delivered to such Person. In case any
certificate shall be surrendered for partial conversion pursuant to Section 7(a)
hereof, the Company shall issue and deliver to the holder of the certificate so
surrendered a new certificate or certificates in an aggregate share amount equal
to the unconverted portion of the surrendered certificate.
(e) When shares of Series A Preferred Stock are converted
pursuant to this Section 7, all dividends payable in accordance with Section 3
above on the shares of Series A Preferred Stock so converted shall be
immediately due and payable in accordance with Section 3 above and shall
accompany the shares of Common Stock issued upon such conversion.
(f) Anti-dilution Adjustments. The Conversion Price, and the
number and type of securities to be received upon conversion of the Series A
Preferred Stock, shall be subject to adjustment as follows:
(i) Dividend, Subdivision, Combination or
Reclassification of Common Stock. In the event that the Corporation shall at any
time or from time to time, prior to any optional or mandatory conversion of the
Series A Preferred Stock, (w) pay a dividend or make a distribution (other than
a dividend or distribution paid or made to holders of shares of Series A
Preferred
<PAGE>
7
Stock, or in which holders of such shares participate, in the manner provided in
Section 3) on the outstanding shares of Common Stock payable in Capital Stock,
(x) subdivide the outstanding shares of Common Stock into a larger number of
shares, (y) combine the outstanding shares of Common Stock into a smaller number
of shares or (z) issue any shares of its Capital Stock in a reclassification of
the Common Stock (other than any such event for which an adjustment is made
pursuant to another clause of this Section 7(f)), then, and in each such case,
the Conversion Price in effect immediately prior to such event shall be adjusted
(and any other appropriate actions shall be taken by the Corporation) so that
the holder of any share of Series A Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common Stock or
other securities of the Corporation that such holder would have owned or would
have been entitled to receive upon or by reason of any of the events described
above, had such share of Series A Preferred Stock been converted immediately
prior to the record date applicable to such event. An adjustment made pursuant
to this Section 7(f)(i) shall become effective retroactively to the close of
business on the day upon which such corporate action becomes effective.
(ii) Certain Distributions. In case the Corporation
shall at any time or from time to time prior to conversion of the Series A
Preferred Stock, distribute to all holders of shares of Common Stock (including
any such distribution made in connection with a merger or consolidation in which
the Corporation is the resulting or surviving Person and the Common Stock is not
changed or exchanged) cash, evidences of indebtedness of the Corporation or
another Person, securities of the Corporation or another Person or other assets
(excluding dividends or distributions (including any spin-off) paid or made to
holders of shares of Series A Preferred Stock, or in which holders of such
shares participate, in the manner provided in Section 3, dividends declared in
the ordinary course of business and payable in cash and dividends payable in
shares of Common Stock for which adjustment is made under another paragraph of
this Section 7(f)) or rights or warrants to subscribe for or purchase securities
of the Corporation (excluding those distributions in respect of which an
adjustment in the Conversion Price is made pursuant to another paragraph of this
Section 7(f)), then, and in each such case, the Conversion Price then in effect
shall be adjusted (and any other appropriate actions shall be taken by the
Corporation) by multiplying the Conversion Price in effect immediately prior to
the date of such distribution by a fraction (x) the numerator of which shall be
the Current Market Price of the Common Stock immediately prior to the date of
distribution less the then fair market value (as determined in good faith by the
Board of Directors) of the portion of the cash, evidences of indebtedness,
securities or other assets so distributed or of such rights or warrants
applicable to one share of Common Stock and (y) the denominator of which shall
be the Current Market Price of the Common Stock immediately prior to the date of
distribution; provided, however, that no adjustment shall be made with respect
to any distribution of rights or warrants to subscribe for or purchase
securities of the Corporation if the holder of shares of Series A Preferred
Stock would otherwise be entitled to receive such rights or warrants upon
conversion at any time of shares of Series A Preferred Stock into Common Stock.
Such adjustment shall be made whenever any such distribution is made and shall
become
<PAGE>
8
effective retroactively to a date immediately following the close of business on
the record date for the determination of stockholders entitled to receive such
distribution.
(iii) Other Changes. In case the Corporation at any
time or from time to time, prior to the conversion of the Series A Preferred
Stock, shall take any action affecting its Common Stock similar to or having an
effect similar to any of the actions described in any of Sections 7(f)(i)
through (ii) or Section 7(i) (but not including any action described in any such
Section) and the Board of Directors in good faith determines that it would be
equitable in the circumstances to adjust the Conversion Price as a result of
such action, then, and in each such case, the Conversion Price shall be adjusted
in such manner and at such time as the Board of Directors in good faith
determines would be equitable in the circumstances (such determination to be
evidenced in a resolution, a certified copy of which shall be mailed to the
holders of the shares of Series A Preferred Stock).
(iv) De Minimis Adjustments. Notwithstanding anything
herein to the contrary, no adjustment in the Conversion Price shall be required
unless such adjustment would require a change of at least 1% in the Conversion
Price, provided, however, that any adjustments which by reason of this Section
7(f)(iv) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment.
(g) Abandonment. If the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend or other distribution, and shall thereafter and before the distribution
to stockholders thereof legally abandon its plan to pay or deliver such dividend
or distribution, then no adjustment in the Conversion Price shall be required by
reason of the taking of such record.
(h) Certificate as to Adjustments. Upon any increase or
decrease in the Conversion Price, the Corporation shall within a reasonable
period (not to exceed 20 days) following the consummation of any of the
foregoing transactions deliver to each registered holder of Series A Preferred
Stock a certificate, signed by (i) the President or a Vice President of the
Corporation and (ii) the Chief Financial Officer of the Corporation, setting
forth in reasonable detail the event requiring the adjustment and the method by
which such adjustment was calculated and specifying the increased or decreased
Conversion Price then in effect following such adjustment.
(i) Reorganization, Reclassification. In the event of any
capital reorganization or reclassification or other change of outstanding shares
of Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value), each share of Series A Preferred
Stock shall be convertible into the kind and amount of shares of stock or other
securities, property or cash receivable upon such reorganization or
reclassification by a holder of the number of shares of Common Stock into which
such share of Series A Preferred
<PAGE>
9
Stock could have been converted immediately prior to such reorganization or
reclassification, and provision shall be made therefor in the agreement, if any,
relating to such reorganization or reclassification. In the event of any Merger
or sale of substantially all of the assets of the Corporation each share of
Series A Preferred Stock shall, at (but not before) the effective time of such
Merger or sale, be automatically converted into the kind and amount of shares or
stock or other securities, property or cash receivable upon such Merger or sale
by a holder of the number of shares of Common Stock into which such share of
Series A Preferred Stock could have been converted immediately prior to the
effective time of such Merger or sale, and provision shall be made therefor in
the agreement, if any, relating to such Merger or sale.
(j) Notices. In case at any time or from time to time:
(w) the Corporation shall declare a dividend (or any
other distribution) on its shares of Common Stock;
(x) the Corporation shall authorize the granting to
the holders of its Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or of any other rights or warrants;
(y) there shall be any reorganization or
reclassification of the Common Stock; or
(z) there shall occur a Merger or a sale of all or
substantially all of the assets of the Corporation;
then the Corporation shall mail to each holder of shares of Series A Preferred
Stock at such holder's address as it appears on the transfer books of the
Corporation, as promptly as possible but in any event at least ten (10) days
prior to the applicable date hereinafter specified, a notice stating the date on
which a record is to be taken for the purpose of such dividend, distribution or
granting of rights or warrants or, if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such dividend,
distribution or granting of rights or warrants are to be determined, or the date
on which such reorganization, reclassification, Merger or sale is expected to
become effective and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their Common Stock for shares of
stock or other securities or property or cash deliverable upon such
reorganization, reclassification, Merger or sale.
(k) Reservation of Common Stock. The Corporation shall at all
times reserve and keep available for issuance upon the conversion of the Series
A Preferred Stock, such number of its authorized but unissued shares of Common
Stock as will from time to time be sufficient to permit the conversion of all
outstanding shares of Series A Preferred Stock. Each June 30th and December
31st, the Corporation shall reserve additional shares of Common Stock reasonably
determined by the Corporation to
<PAGE>
10
be required to cover the conversion of all dividends (which have accrued to such
date) into shares of Common Stock in accordance with Section 3 hereof. The
Corporation shall take all action necessary to increase the authorized number of
shares of Common Stock if at any time there shall be insufficient authorized but
unissued shares of Common Stock to permit such reservation or to permit the
conversion of all outstanding shares (and accrued dividends) of Series A
Preferred Stock.
(l) No Conversion Tax or Charge. The issuance or delivery of
certificates for Common Stock upon the conversion of shares of Series A
Preferred Stock shall be made without charge to the converting holder of shares
of Series A Preferred Stock for such certificates or for any documentary stamp,
or similar issue or transfer tax in respect of the issuance or delivery of such
certificates or the securities represented thereby, and such certificates shall
be issued or delivered in the respective names of, or (subject to compliance
with the applicable provisions of federal and state securities laws) in such
names as may be directed by, the holders of the shares of Series A Preferred
Stock converted; provided, however, that the Corporation shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name other than that of the
holder of the shares of Series A Preferred Stock converted, and the Corporation
shall not be required to issue or deliver such certificate unless or until the
Person or Persons requesting the issuance or delivery thereof shall have paid to
the Corporation the amount of such tax or shall have established to the
reasonable satisfaction of the Corporation that such tax has been paid.
8. Business Day. If any payment shall be required by the terms hereof
to be made on a day that is not a Business Day, such payment shall be made on
the immediately succeeding Business Day.
9. Definitions. As used in this Certificate of Designation, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Board of Directors" means the Board of Directors of the Corporation.
"Business Day" means any day except a Saturday, a Sunday, or other day
on which commercial banks in the State of New York are authorized or required by
law or executive order to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting or non-voting) of, such Person's capital stock and any and
all rights, warrants or options exchangeable for or convertible into such
capital stock (but excluding any debt security whether or not it is exchangeable
for or convertible into such capital stock).
"Common Stock" shall have the meaning ascribed to it in Section 2
hereof.
<PAGE>
11
"Conversion Price" shall have the meaning ascribed to it in Section
7(a) hereof.
"Corporation" shall have the meaning ascribed to it in the first
paragraph of this Certificate of Designation.
"Current Market Price" per share shall mean, as of the date of
determination, the average of the daily Market Price under clause (a), (b) or
(c) of the definition thereof of the Common Stock during the immediately
preceding thirty (30) trading days ending on such date.
"Dividend Payment Date" shall have the meaning ascribed to it in
Section 3 hereof.
"Junior Stock" shall have the meaning ascribed to it in Section 2
hereof.
"Liquidation" shall mean the voluntary or involuntary liquidation under
applicable bankruptcy or reorganization legislation, or the dissolution or
winding up of the Corporation.
"Liquidation Preference" shall have the meaning ascribed to it in
Section 4(a) hereof.
"Market Price" shall mean, as of the date of determination, (a) the
closing price per share of Common Stock on such date published in The Wall
Street Journal or, if no such closing price on such date is published in The
Wall Street Journal, the average of the closing bid and asked prices on such
date, as officially reported on the principal national securities exchange
(including, without limitation, The Nasdaq Stock Market, Inc.) on which the
Common Stock is then listed or admitted to trading; or (b) if the Common Stock
is not then listed or admitted to trading on any national securities exchange
but is designated as a national market system security by the National
Association of Securities Dealers, Inc., the last trading price of the Common
Stock on such date; or (c) if there shall have been no trading on such date or
if the Common Stock is not so designated, the average of the reported closing
bid and asked prices of the Common Stock on such date as shown by the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotations System and reported by any member firm of the New York Stock Exchange
selected by the Corporation.
"Merger" shall mean (x) the merger or consolidation or other similar
business combination of the corporation into or with one or more Persons or (y)
the merger or consolidation or other similar business combination of one or more
Persons into or with the Corporation, if, in the case of (x) or (y), the
stockholders of the Corporation prior to such merger or consolidation do not
retain at least a majority of the voting power of the surviving Person.
<PAGE>
12
"Optional Redemption Date" shall have the meaning ascribed to it in
Section 5(a) hereof.
"Optional Redemption Price" shall have the meaning ascribed to it in
Section 5(a) hereof.
"Parity Stock" shall have the meaning ascribed to it in Section 4(a)
hereof.
"Person" means any individual, firm, corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, governmental body or other entity of any kind.
"Series A Preferred Stock" shall have the meaning ascribed to it in
Section 1 hereof.
IN WITNESS WHEREOF, the undersigned has executed and subscribed this
certificate this __ day of February, 1999.
GT INTERACTIVE SOFTWARE CORP.
By:_________________________
President
================================================================================
STOCK PURCHASE AGREEMENT
among
GT INTERACTIVE SOFTWARE CORP.,
GENERAL ATLANTIC PARTNERS 54, L.P.
and
GAP COINVESTMENT PARTNERS II, L.P.
------------------------------
Dated: February 8, 1999
------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS...........................................................1
1.1 Definitions..................................................1
ARTICLE 2
PURCHASE AND SALE OF
PREFERRED STOCK.......................................................4
2.1 Purchase and Sale of Preferred Stock.........................4
2.2 Certificate of Designations..................................5
2.3 Closing......................................................5
2.4 Fairness Opinion.............................................5
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................5
3.1 Corporate Existence and Power................................5
3.2 Authorization; No Contravention..............................5
3.3 Governmental Authorization; Third Party Consents.............6
3.4 Binding Effect...............................................6
3.5 Litigation...................................................6
3.6 Capitalization...............................................7
3.7 Contractual Obligations......................................7
3.8 Financial Statements.........................................7
3.9 SEC Documents................................................8
3.10 Private Offering.............................................9
3.11 Broker's, Finder's or Similar Fees...........................9
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS......................9
4.1 Existence and Power..........................................9
4.2 Authorization; No Contravention..............................9
4.3 Governmental Authorization; Third Party Consents.............9
4.4 Binding Effect..............................................10
4.5 Purchase for Own Account....................................10
4.6 Restricted Securities.......................................11
4.7 Broker's, Finder's or Similar Fees..........................11
4.8 Accredited Investors........................................11
i
<PAGE>
Page
----
ARTICLE 5
CONDITIONS TO THE OBLIGATION OF
THE PURCHASERS TO CLOSE..............................................11
5.1 Secretary's Certificate.....................................11
5.2 Filing of Certificate of Designations.......................12
5.3 Registration Rights Agreement...............................12
5.4 Opinion of Counsel..........................................12
5.5 Purchased Shares............................................12
5.6 Chief Executive Officer.....................................12
5.7 Representations and Warranties..............................12
5.8 No Material Judgment or Order...............................12
ARTICLE 6
CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE.................13
6.1 Registration Rights Agreement...............................13
6.2 Payment of Purchase Price...................................13
6.3 Chief Executive Officer. ..................................13
6.4 No Material Judgment or Order...............................13
ARTICLE 7
AFFIRMATIVE COVENANTS................................................13
7.1 Financial Statements and Other Information..................13
7.2 Reservation of Common Stock.................................14
7.3 Registration and Listing....................................14
ARTICLE 8
TERMINATION OF AGREEMENT.............................................14
8.1 Termination.................................................14
8.2 Survival....................................................15
ARTICLE 9
MISCELLANEOUS........................................................15
9.1 Survival of Representations and Warranties..................15
9.2 Notices.....................................................15
9.3 Successors and Assigns; Third Party Beneficiaries...........16
9.4 Amendment and Waiver........................................17
9.5 Counterparts................................................17
9.6 Headings....................................................17
ii
<PAGE>
Page
----
9.7 GOVERNING LAW...............................................17
9.8 Severability................................................17
9.9 Entire Agreement............................................18
9.10 Fees........................................................18
9.11 Publicity...................................................18
9.12 Further Assurances..........................................18
EXHIBITS
A Form of Certificate of Designations
B Form of Registration Rights Agreement
Schedules
2.1 Purchased Shares and Purchase Price
3.5 Litigation
3.7 Contractual Obligations
iii
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated February 8, 1999 (the "Agreement"),
among GT Interactive Software Corp., a Delaware corporation (the "Company"),
General Atlantic Partners 54, L.P., a Delaware limited partnership ("GAP LP"),
and GAP Coinvestment Partners II, L.P., a Delaware limited partnership ("GAP
Coinvestment" and, together with GAP LP, the "Purchasers").
WHEREAS, upon the terms and conditions set forth in this Agreement, the
Company proposes to issue and sell to (a) GAP LP at a purchase price per share
of $50.00, for an aggregate purchase price of $24,487,200, an aggregate of
489,744 shares of Series A Convertible Preferred Stock, par value $.01 per
share, of the Company (the "Preferred Stock") and (b) GAP Coinvestment at a
purchase price per share of $50.00, for an aggregate purchase price of
$5,512,800, an aggregate of 110,256 shares of Preferred Stock; and
WHEREAS, each share of Preferred Stock is convertible (subject to
adjustment) into ten shares of Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Audited Financial Statements" has the meaning set forth in Section 3.8
hereof.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in the State of New York are authorized or required by
law or executive order to close.
"By-laws" means the by-laws of the Company in effect on the Closing
Date, as the same may be amended from time to time.
<PAGE>
2
"Certificate of Designations" means the Certificate of Designations
with respect to the Preferred Stock adopted by the Board of Directors and filed
with the Secretary of State of the State of Delaware on or before the Closing
Date substantially in the form attached hereto as Exhibit A.
"Certificate of Incorporation" means the Certificate of Incorporation
of the Company, as the same may be amended from time to time.
"Claims" has the meaning set forth in Section 3.5 of this Agreement.
"Closing" has the meaning set forth in Section 2.3 of this Agreement.
"Closing Date" has the meaning set forth in Section 2.3 of this
Agreement.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" has the meaning set forth in the recitals to this
Agreement.
"Company" has the meaning set forth in the recitals to this Agreement.
"Condition of the Company" means the assets, business, properties,
prospects, operations or financial condition of the Company and its
Subsidiaries, taken as a whole.
"Contractual Obligations" means as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument to which such Person is a
party or by which it or any of its property is bound.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"Financial Statements" has the meaning set forth in Section 3.8 of this
Agreement.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States.
"GAP Coinvestment" has the meaning set forth in the recitals to this
Agreement.
<PAGE>
3
"GAP LLC" means General Atlantic Partners, LLC, a Delaware limited
liability company and the general partner of GAP LP, and any successor to such
entity.
"GAP LP" has the meaning set forth in the recitals to this Agreement.
"Governmental Authority" means the government of any nation, state,
city, locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences),
including, without limitation, those created by, arising under or evidenced by
any conditional sale or other title retention agreement, the interest of a
lessor under a capital lease obligation, or any financing lease having
substantially the same economic effect as any of the foregoing.
"Orders" has the meaning set forth in Section 3.2 of this Agreement.
"Person" means any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, Governmental Authority or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.
"Preferred Stock" has the meaning set forth in the recitals to this
Agreement.
"Purchased Shares" has the meaning set forth in Section 2.1 of this
Agreement.
"Purchasers" has the meaning set forth in the recitals to this
Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement
substantially in the form attached hereto as Exhibit B.
"Requirements of Law" means, as to any Person, any law, statute,
treaty, rule, regulation, right, privilege, qualification, license or franchise
or determination of an arbitrator or a court or other Governmental Authority or
stock exchange, in each case applicable or binding upon such Person or any of
its property
<PAGE>
4
or to which such Person or any of its property is subject or pertaining to any
or all of the transactions contemplated or referred to herein.
"SEC Documents" means all registration statements, proxy statements,
reports and other documents required to be filed by the Company under the
Securities Act or the Exchange Act and all amendments or supplements thereto
filed by the Company with the Commission since December 31, 1997.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Stock Equivalents" means any security or obligation which is by its
terms convertible into or exchangeable for shares of common stock or other
capital stock or securities of the Company, and any option, warrant or other
subscription or purchase right with respect to common stock or such other
capital stock or securities.
"Subsidiary" means, as of the relevant date of determination, with
respect to any Person, a corporation or other Person of which 50% or more of the
voting power of the outstanding voting equity securities is held, directly or
indirectly, by such Person. Unless otherwise qualified, or the context otherwise
requires, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Company.
"Transaction Documents" means collectively, this Agreement, the
Certificate of Designations and the Registration Rights Agreement.
"Unaudited Financial Statements" has the meaning set forth in Section
3.8 hereof.
ARTICLE 2
PURCHASE AND SALE OF
PREFERRED STOCK
2.1 Purchase and Sale of Preferred Stock. Subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to each of the
Purchasers, and each of the Purchasers agrees that it will purchase from the
Company, on the Closing Date, the aggregate number of shares of Preferred Stock
set forth opposite such Purchaser's name on Schedule 2.1 hereto, for the
aggregate purchase price set forth opposite such Purchaser's name on Schedule
2.1 hereto (all of the shares of Preferred Stock being purchased by the
Purchasers listed on Schedule 2.1 being referred to herein as the "Purchased
Shares").
<PAGE>
5
2.2 Certificate of Designations. The Purchased Shares shall have the
preferences and rights set forth in the Certificate of Designations.
2.3 Closing. Subject to the satisfaction or waiver of the conditions
set forth in Articles 5 and 6 below, the closing of the sale and purchase of the
Purchased Shares (the "Closing") shall take place at the offices of Paul, Weiss,
Rifkind, Wharton & Garrison, at 10:00 a.m., local time, on the first Business
Day, which shall not be earlier than 8 days after February 9, 1999, on which the
conditions set forth in Articles 5 and 6 below are satisfied or waived, or at
such other time, place and date that the Company and the Purchasers may agree in
writing (the "Closing Date"). On the Closing Date, the Company shall deliver to
each Purchaser a stock certificate representing the Purchased Shares being
purchased by such Purchaser, against delivery by such Purchaser to the Company
of the aggregate purchase price therefor by wire transfer of immediately
available funds.
2.4 Fairness Opinion. The Company has received a fairness opinion from
Bear Stearns & Co. with respect to the transactions contemplated by this
Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as follows:
3.1 Corporate Existence and Power. Each of the Company and its
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; (b) has all
requisite power and authority to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently, or is proposed to be, engaged, as described in the SEC Documents; (c)
is duly qualified as a foreign corporation, licensed and in good standing under
the laws of each jurisdiction in which its ownership, lease or operation of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified would not have a material adverse effect on
the Condition of the Company; and (d) has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and each of
the other Transaction Documents to which it is a party.
3.2 Authorization; No Contravention. The execution, delivery and
performance by the Company of this Agreement and each of the other Transaction
Documents and the transactions contemplated hereby and thereby (a) have been
duly authorized by all necessary corporate action of the Company; (b) do not
contravene the terms of the Certificate of Incorporation or the By-laws, or any
certificate of
<PAGE>
6
incorporation or by-laws or other organizational documents of any of its
Subsidiaries; (c) do not violate, conflict with or result in any breach or
contravention of, or the creation of any Lien under, any Contractual Obligation
of the Company or any of its Subsidiaries, or any Requirement of Law applicable
to the Company or any of its Subsidiaries; and (d) do not violate any judgment,
injunction, writ, award, decree or order of any nature (collectively, "Orders")
of any Governmental Authority against, or binding upon, the Company or any of
its Subsidiaries; except in the case of clauses (c) and (d) for violations,
conflicts, breaches, contraventions or Liens which would not have a material
adverse effect on the Condition of the Company or the ability of the Company to
perform its obligations under this Agreement and each of the other Transaction
Documents.
3.3 Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption, authorization or other action by, or notice to,
or filing with, any Governmental Authority or any other Person, and no lapse of
a waiting period under a Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the sale, issuance and delivery of the Purchased Shares) by, or
enforcement against, the Company of this Agreement and the other Transaction
Documents or the transactions contemplated hereby and thereby, except where the
failure to obtain an approval, consent, compliance, exemption, authorization or
other action or to make any filing would not have a material adverse effect on
the Condition of the Company or the ability of the Company to perform its
obligations under this Agreement or any of the other Transaction Documents.
3.4 Binding Effect. This Agreement and each of the other Transaction
Documents have been duly executed and delivered by the Company, and constitute
the legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity relating to enforceability
(regardless of whether considered in a proceeding at law or in equity).
3.5 Litigation. Except as set forth in any SEC Documents or on Schedule
3.5, there are no actions, suits, proceedings, claims, complaints, disputes,
arbitrations or investigations (collectively, "Claims") pending or, to the
knowledge of the Company, threatened, at law, in equity, in arbitration or
before any Governmental Authority against the Company or any of its
Subsidiaries, which, if adversely determined, would have a material adverse
effect on the Condition of the Company. No Order has been issued by any court or
other Governmental Authority against the Company or any of its Subsidiaries
purporting to enjoin or restrain the execution, delivery or performance of this
Agreement or any of the other Transaction Documents.
<PAGE>
7
3.6 Capitalization. On the Closing Date, after giving effect to the
transactions contemplated by this Agreement, the authorized capital stock of the
Company shall consist of (i) 150,000,000 shares of Common Stock, of which
72,775,868 shares are issued and outstanding as of the close of business on
February 5, 1999, and (ii) 5,000,000 shares of preferred stock, par value $.01
per share, of which 600,000 shares have been designated as Preferred Stock, all
of which are outstanding and issued to the Purchasers. The Company has reserved
an aggregate of 6,000,000 shares of Common Stock for issuance upon conversion of
the Purchased Shares. Except for the options and other stock purchase rights
authorized for issuance pursuant to the Company's two stock option plans which
began in 1995 and in 1997, respectively (as described in the SEC Documents), and
except for the issued and outstanding warrants to purchase an aggregate of
1,231,625 Common Shares, there are no options, warrants, conversion privileges,
subscription or purchase rights or other rights currently outstanding to
purchase or otherwise acquire (i) any authorized but unissued, unauthorized or
treasury shares of the Company's capital stock, (ii) any Stock Equivalents or
(iii) other securities of the Company. The Purchased Shares and the shares of
Common Stock issuable upon conversion of the Purchased Shares in accordance with
the Certificate of Designations are duly authorized, and when issued to the
Purchasers against payment therefor, will be validly issued, fully paid and
non-assessable, and will be issued pursuant to an exemption from, or in
compliance with the registration and qualification requirements of all
applicable federal and state securities laws. The issued and outstanding shares
of Common Stock are all duly authorized, validly issued, fully paid and
non-assessable.
3.7 Contractual Obligations. Neither the Company nor any of its
Subsidiaries has received notice of, or is in default under, or with respect to,
any Contractual Obligation which could have a material adverse effect on the
Condition of the Company or the ability of the Company to perform its
obligations under this Agreement and each of the other Transaction Documents.
Except as set forth on Schedule 3.7, all of the Contractual Obligations of the
Company or any of its Subsidiaries that are currently in effect and required to
be described in the SEC Documents or to be filed as exhibits thereto are valid,
subsisting, in full force and effect and binding upon the Company or the
applicable Subsidiary, as the case may be, and, to the knowledge of the Company,
the other parties thereto, in accordance with their terms.
3.8 Financial Statements. The audited consolidated financial statements
of the Company and its Subsidiaries (balance sheet and statements of operations,
cash flow and stockholders' equity, together with the notes thereto) for the
fiscal year ended December 31, 1997 (as such financial statements appear in (i)
the Company's Form 10-K for the fiscal year ended December 31, 1997, which was
filed with the Commission on March 31, 1998, as amended by the Company's on Form
10-K/A, which was filed with the Commission on April 30, 1998, and (ii) the
<PAGE>
8
Company's Transitional Report on Form 10-K, which was filed with the Commission
on June 29, 1998, the "Audited Financial Statements"), and the unaudited
consolidated financial statements (balance sheet and statements of operations)
of the Company and its Subsidiaries (balance sheet and statement of operations)
for the nine months ended and as at September 30, 1998 (as such financial
statements appear in the Company's Form 10-Q for the fiscal quarter ended
September 30, 1998, which was filed with the Commission on November 16, 1998,
the "Unaudited Financial Statements" and, together with the Audited Financial
Statements, the "Financial Statements") have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods indicated and with
each other, except as may be indicated therein or in the notes thereto (and
except that the Unaudited Financial Statements does not contain full footnotes
or typical year-end adjustments). The Financial Statements fairly present the
consolidated financial condition, operating results and cash flows of the
Company as of the respective dates and for the respective periods indicated in
accordance with GAAP, subject, in the case of the Unaudited Financial
Statements, to normal year-end adjustments.
3.9 SEC Documents.
(a) The Company has (i) filed all SEC Documents required to be
filed by it since December 31, 1997 under the Securities Act or the Exchange
Act, and all amendments thereto and (ii) made available to the Purchasers true
and complete copies of (A) the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, as filed with the Commission on March 31,
1998, as amended by the Company's on Form 10-K/A, which was filed with the
Commission on April 30, 1998, (B) the Company's Transitional Report on Form
10-K, which was filed with the Commission on June 29, 1998, (C) the Company's
Quarterly Reports on Form 10-Q for each of the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998, each as filed with the Commission, (D) its
Current Reports on Form 8-K filed with the Commission since December 31, 1997,
as amended, (E) its proxy or information sheets relating to meetings of, or
actions without a meeting by, the stockholders of the Company held since
December 31, 1997 and (F) all other SEC Documents.
(b) As of its filing date, each SEC Document (including all
exhibits and schedules thereto and documents incorporated by reference therein),
in each case as amended, (i) complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and (ii) did
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
<PAGE>
9
3.10 Private Offering. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer or sale of the Purchased Shares. No registration of the Purchased
Shares, pursuant to the provisions of the Securities Act or any state securities
or "blue sky" laws, will be required by the offer, sale or issuance of the
Purchased Shares. The Company agrees that neither it, nor anyone acting on its
behalf, shall offer to sell the Purchased Shares, or any other securities of the
Company so as to require the registration of the Purchased Shares, pursuant to
the provisions of the Securities Act or any state securities or "blue sky" laws,
unless such Purchased Shares, or other securities are so registered.
3.11 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the Company
or any of its Subsidiaries in connection with the transactions contemplated
hereby based on any agreement, arrangement or understanding with the Company or
any of its Subsidiaries or any action taken by any such Person.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASERS
Each of the Purchasers hereby represents and warrants (severally as to
itself and not jointly) to the Company as follows:
4.1 Existence and Power. Such Purchaser (a) is a partnership duly
organized and validly existing under the laws of the jurisdiction of its
formation and (b) has the requisite partnership power and authority to execute,
deliver and perform its obligations under this Agreement and each of the other
Transaction Documents to which it is a party.
4.2 Authorization; No Contravention. The execution, delivery and
performance by such Purchaser of this Agreement and each of the other
Transaction Documents to which it is a party and the transactions contemplated
hereby and thereby (a) have been duly authorized by all necessary partnership
action, (b) do not contravene the terms of such Purchaser's organizational
documents, or any amendment thereof, and (c) do not violate, conflict with or
result in any breach or contravention of or the creation of any Lien under, any
Contractual Obligation of such Purchaser, or any Requirement of Law or Orders
applicable to such Purchaser.
4.3 Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person, and no lapse of
a
<PAGE>
10
waiting period under any Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the purchase of the Purchased Shares) by, or enforcement against,
such Purchaser of this Agreement and each of the other Transaction Documents to
which such Purchaser is a party or the transactions contemplated hereby and
thereby.
4.4 Binding Effect. This Agreement and each of the other Transaction
Documents to which such Purchaser is a party have been duly executed and
delivered by such Purchaser and constitute the legal, valid and binding
obligations of such Purchaser, enforceable against it in accordance with their
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforce ment of creditors' rights generally or by
equitable principles relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
4.5 Purchase for Own Account. The Purchased Shares to be acquired by
such Purchaser pursuant to this Agreement are being or will be acquired for its
own account and with no intention of distributing or reselling such Purchased
Shares or any part thereof in any transaction that would be in violation of the
securities laws of the United States of America, or any state, without
prejudice, however, to the rights of such Purchaser at all times to sell or
otherwise dispose of all or any part of such Purchased Shares under an effective
registration statement under the Securities Act, or under an exemption from such
registration available under the Securities Act, and subject, nevertheless, to
the disposition of such Purchaser's property being at all times within its
control. If such Purchaser should in the future decide to dispose of any of such
Purchased Shares, such Purchaser understands and agrees that it may do so only
in compliance with the Securities Act and applicable state securities laws, as
then in effect. Such Purchaser agrees to the imprinting, so long as required by
law, of legends on certificates representing all of its Purchased Shares and
shares of Common Stock issuable upon conversion of its Purchased Shares to the
following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGIS TRATION STATEMENT UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE ENTITLED TO THE
BENEFITS OF A REGISTRATION RIGHTS
<PAGE>
11
AGREEMENT AMONG GT INTERACTIVE SOFTWARE CORP. AND THE ORIGINAL
PURCHASERS OF THE PREFERRED STOCK REPRESENTED HEREBY. TRANSFEREES OF
SUCH SECURITIES SHOULD REVIEW SUCH AGREEMENT TO DETERMINE THEIR RIGHTS.
4.6 Restricted Securities. Such Purchaser understands that the
Purchased Shares will not be registered at the time of their issuance under the
Securities Act for the reason that the sale provided for in this Agreement is
exempt pursuant to Section 4(2) of the Securities Act and that the reliance of
the Company on such exemption is predicated in part on such Purchaser's
representations set forth herein.
4.7 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the
Purchasers, in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with the Purchasers or any action taken
by the Purchasers.
4.8 Accredited Investors. Such Purchaser is an accredited investor
within the meaning of Rule 501(a) under the Securities Act.
4.9 Transfer. On the date hereof, such Purchaser has no present
intention to transfer such Purchaser's Purchased Shares to any Person that is
not an affiliate of such Purchaser.
ARTICLE 5
CONDITIONS TO THE OBLIGATION OF
THE PURCHASERS TO CLOSE
The obligation of the Purchasers to purchase the Purchased Shares, to
pay the purchase price therefor at the Closing and to perform any obligations
hereunder shall be subject to the satisfaction as determined by, or waiver by,
the Purchasers of the following conditions on or before the Closing Date.
5.1 Secretary's Certificate. The Purchasers shall have received a
certificate from the Company, in form and substance satisfactory to the
Purchasers, dated the Closing Date and signed by the Secretary or an Assistant
Secretary of the Company, certifying that the attached copies of the Certificate
of Incorporation, the By-laws, the Certificate of Designations and resolutions
of the Board of Directors approving this Agreement and each of the other
Transaction Documents to which the
<PAGE>
12
Company is a party and the transactions contemplated hereby and thereby, are all
true, complete and correct and remain unamended and in full force and effect.
5.2 Filing of Certificate of Designations. The Certificate of
Designations shall have been duly filed by the Company with the Secretary of
State of the State of Delaware in accordance with the General Corporation Law of
the State of Delaware.
5.3 Registration Rights Agreement. The Company shall have duly executed
and delivered the Registration Rights Agreement, substantially in the form as
attached hereto as Exhibit B.
5.4 Opinion of Counsel. The Purchasers shall have received an opinion
of Kramer Levin Naftalis & Frankel, counsel to the Company and the Subsidiary,
dated the Closing Date, relating to the transactions contemplated by or referred
to herein, reasonably satisfactory to the Purchasers.
5.5 Purchased Shares. The Company shall be prepared to deliver to the
Purchasers certificates in definitive form representing the number of Purchased
Shares set forth opposite such Purchaser's name on Schedule 2.1 hereto,
registered in the name of such Purchaser, as applicable.
5.6 Chief Executive Officer. The Company shall have entered into an
employment contract with Thomas Heymann appointing him Chief Executive Officer
of the Company pursuant to an executed employment agreement between the Company
and Heymann and the Company shall have publicly announced such employment
contract.
5.7 Representations and Warranties. All of the representations and
warranties of the Company contained in Article 3 hereof shall be true and
correct on the Closing Date, as if made by the Company on such date.
5.8 No Material Judgment or Order. There shall not be on the Closing
Date any Order of a court of competent jurisdiction or any ruling of any
Governmental Authority or any condition imposed under any Requirement of Law
which would, in the reasonable judgment of the Company, prohibit or restrict the
sale of the Purchased Shares or the consummation of the transactions
contemplated by this Agreement.
<PAGE>
13
ARTICLE 6
CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE
The obligation of the Company to issue and sell the Purchased Shares
and the obligation of the Company to perform its other obligations hereunder,
shall be subject to the satisfaction as determined by, or waiver by, the Company
of the following conditions on or before the Closing Date:
6.1 Registration Rights Agreement. The Purchasers shall have duly
executed and delivered the Registration Rights Agreement, substantially in the
form attached hereto as Exhibit B.
6.2 Payment of Purchase Price. Each Purchaser shall be prepared to pay
the aggregate purchase price for the Purchased Shares to be purchased by such
Purchaser.
6.3 Chief Executive Officer. The Company shall have entered into an
employment contract with Thomas Heymann appointing him Chief Executive Officer
of the Company pursuant to an executed employment agreement between the Company
and Heymann.
6.4 No Material Judgment or Order. There shall not be on the Closing
Date any Order of a court of competent jurisdiction or any ruling of any
Governmental Authority or any condition imposed under any Requirement of Law
which would, in the reasonable judgment of the Purchasers, prohibit or restrict
the purchase of the Purchased Shares or the consummation of the transactions
contemplated by this Agreement.
ARTICLE 7
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees with the Purchasers as follows:
7.1 Financial Statements and Other Information. The Company shall
deliver to each Purchaser at any time when the Company is not subject to Section
13 or 15(d) of the Exchange Act, upon request of such Purchaser, information of
the type that would satisfy the requirements of Rule 144(c)(2) and Rule
144A(d)(4)(i) (or any similar successor-provisions thereof) under the Securities
Act.
<PAGE>
14
7.2 Reservation of Common Stock. The Company shall at all times reserve
and keep available out of its authorized shares of Common Stock, solely for the
purpose of issue or delivery upon conversion of the Purchased Shares as provided
in the Certificate of Incorporation, the maximum number of shares of Common
Stock that may be issuable or deliverable upon such conversion. The Company
shall issue such shares of Common Stock in accordance with the terms of the
Certificate of Incorporation and otherwise comply with the terms hereof and
thereof.
7.3 Registration and Listing. If any shares of Common Stock required to
be reserved for purposes of conversion of the Purchased Shares as provided in
the Certificate of Designations require registration with or approval of any
Governmental Authority under any Federal or state or other applicable law before
such shares of Common Stock may be issued or delivered upon conversion, the
Company will in good faith and as expeditiously as possible cause such shares of
Common Stock to be duly registered or approved, as the case may be. The
Purchasers will cooperate with the Company, as necessary, in preparing any
documents or making any filings in connection with such registration or
approval. So long as the Common Stock is quoted on The Nasdaq Stock Market, Inc.
or listed on any national securities exchange, the Company will, if permitted by
the rules of such system or exchange, quote or list and keep quoted or listed on
such system or exchange, upon official notice of issuance, all shares of Common
Stock issuable or deliverable upon conversion or exchange of the Purchased
Shares.
ARTICLE 8
TERMINATION OF AGREEMENT
8.1 Termination. This Agreement may be terminated prior to the Closing
as follows:
(a) at any time on or prior to the Closing Date, by mutual
written consent of the Company and the Purchasers;
(b) at the election of the Company or the Purchasers by
written notice to the other parties hereto after 5:00 p.m., New York time, on
March 1, 1999, if the Closing shall not have occurred, unless such date is
extended by the mutual written consent of the Company and the Purchasers;
provided, however, that the right to terminate this Agreement under this Section
8.1(b) shall not be available to any party whose breach of any representation,
warranty, covenant or agreement under this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before such date;
<PAGE>
15
(c) at the election of the Company, if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of any Purchaser contained in this Agreement, which breach has not been
cured within five (5) Business Days of notice to the Purchasers of such breach;
or
(d) at the election of the Purchasers, if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of the Company contained in this Agreement, which breach has not been cured
within five (5) Business Days notice to the Company of such breach.
If this Agreement so terminates, it shall become null and void and have
no further force or effect, except as provided in Section 8.2.
8.2 Survival. If this Agreement is terminated and the transactions
contemplated hereby are not consummated as described above, this Agreement shall
become void and of no further force and effect; except for the provisions of
this Section 8.2; provided, that (a) none of the parties hereto shall have any
liability in respect of a termination of this Agreement pursuant to Section
8.1(a) or Section 8.1(b) and (b) nothing shall relieve any party from any
liability for actual damages resulting from a termination of this Agreement
pursuant to Section 8.1(c) or 8.1(d); and provided, further, that none of the
parties hereto shall have any liability for speculative, indirect, unforeseeable
or consequential damages resulting from any legal action relating to this
Agreement or any termination of this Agreement.
ARTICLE 9
MISCELLANEOUS
9.1 Survival of Representations and Warranties. The representations and
warranties made in Sections 3.1, 3.2, 3.3, 3.4, 3.6 and 3.10 shall survive until
2 years from the Closing Date. All other representations and warranties made
herein shall survive until 30 days after receipt by the Purchasers of the
audited financial statements for the Company's fiscal year ending March 31,
1999.
9.2 Notices. All notices, demands and other communications provided for
or permitted hereunder shall be made in writing and shall be by registered or
certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
<PAGE>
16
(a) if to the Company, to:
GT Interactive Software Corp.
16 East 40th Street
New York, NY 10016
Telecopy: (212) 679-6850
Attention: Chief Executive Officer
with a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
47th Floor
New York, New York 10022
Telecopy: (212) 715-8000
Attention: David P. Levin, Esq.
(b) if to the Purchasers, to:
c/o General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, Connecticut 06830
Telecopy: (203) 622-8818
Attention: William E. Ford
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopy: (212) 757-3990
Attention: Matthew Nimetz, Esq.
All such notices and communications shall be deemed to have been duly
given when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial courier service; five (5) Business Days
after being deposited in the mail, postage prepaid, if mailed; and when receipt
is mechanically acknowledged, if telecopied.
9.3 Successors and Assigns; Third Party Beneficiaries. This Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of the parties hereto. Subject to applicable securities laws, each of
the Purchasers may assign any of its rights under any of the Transaction
Documents to any of its affiliates. The Company may not assign any of its rights
under this
<PAGE>
17
Agreement without the written consent of the Purchasers. No Person other than
the parties hereto and their successors and permitted assigns is intended to be
a beneficiary of this Agreement.
9.4 Amendment and Waiver.
(a) No failure or delay on the part of the Company or the
Purchasers in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or the Purchasers at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company or the Purchasers from the terms of
any provision of this Agreement, shall be effective only if it is made or given
in writing and signed by the Company and the Purchasers. Except where notice is
specifically required by this Agreement, no notice to or demand on the Company
in any case shall entitle the Company to any other or further notice or demand
in similar or other circumstances.
9.5 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
9.6 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
9.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF ANY JURISDICTION.
9.8 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
<PAGE>
18
9.9 Entire Agreement. This Agreement, together with the exhibits and
schedules hereto, and the other Transaction Documents, is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement, together with the exhibits and
schedules hereto and the other Transaction Documents, supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
9.10 Fees. Upon the Closing, the Company shall reimburse the Purchasers
for their fees, disbursements and other charges of counsel incurred in
connection with the transactions contemplated by this Agreement.
9.11 Publicity. Except as may be required by applicable Requirement of
Law, none of the parties hereto shall issue a publicity release or public
announcement or otherwise make any disclosure concerning this Agreement or the
transactions contemplated hereby, without prior approval by the other parties
hereto (which approval shall not be unreasonably withheld); provided, however,
that nothing in this Agreement shall restrict any Purchaser from disclosing
information (a) that is already publicly available; (b) to the prospective
transferee in connection with any contemplated transfer of any of the Purchased
Shares; and (c) to its attorneys, accountants, consultants and other advisors to
the extent necessary to obtain their services in connection with such
Purchaser's investment in the Company. GAP LLC may disclose on its worldwide web
page, www.gapartners.com, the name of the Company, its address, the identity of
the Chief Executive Officer, a description of the Company's business and the
aggregate dollar amount invested by the Purchasers in the Company; provided,
that GAP LLC shall not disclose any information pertaining to the transactions
contemplated under this Agreement or the Transaction Documents at any time prior
to the publication of a press release by the Company. If any announcement is
required by law to be made by any party hereto, prior to making such
announcement such party will deliver a draft of such announcement to the other
parties and shall give the other parties an opportunity to comment thereon.
9.12 Further Assurances. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person, and otherwise fulfilling, or causing the fulfillment of, the
conditions to Closing set forth in Articles 5 and 6) as may be reasonably
required or desirable to carry out or to perform the provisions of this
Agreement and to consummate and make effective as promptly as possible the
transactions contemplated by this Agreement.
<PAGE>
19
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be executed and delivered by their respective officers hereunto
duly authorized on the date first above written.
GT INTERACTIVE SOFTWARE CORP.
By:_________________________
Name: Joseph J. Cayre
Title: Chairman Emeritus
GENERAL ATLANTIC PARTNERS 54, L.P.
By: GENERAL ATLANTIC PARTNERS, LLC,
its General Partner
By:_________________________
Name: William E. Ford
Title: Managing Member
GAP COINVESTMENT PARTNERS II, L.P.
By:_________________________
Name: William E. Ford
Title: General Partner
<PAGE>
Schedule 2.1
------------
Purchased Shares and Purchase Price
-----------------------------------
Purchase Price for
Purchaser Purchased Shares Purchased Shares
--------- ---------------- ----------------
GAP LP 489,744 $24,487,200
GAP Coinvestment 110,256 $ 5,512,800
Total: 600,000 $30,000,000
EXECUTION COPY
GENERAL ATLANTIC PARTNERS, LLC
3 Pickwick Plaza
Greenwich, CT 06830
December 31, 1998
POWER OF ATTORNEY
-----------------
The undersigned, General Atlantic Partners, LLC, a Delaware limited
liability company, with its principal office at 3 Pickwick Plaza, Greenwich,
Connecticut, United States of America (the "Limited Liability Company"), by its
Managing Member, Steven A. Denning, a U.S. citizen, of full legal age, domiciled
at 16 Khakum Drive, Greenwich, CT 06831, hereby constitutes and appoints Thomas
J. Murphy, a U.S. citizen, of full legal age, domiciled at 169 E. 90th Street,
Apt. 5, New York, NY 10128, its true and lawful attorney-in-fact and agent, in
any and all capacities, to execute and deliver any and all documents and
instruments and to make any governmental filings on behalf of the Limited
Liability Company as fully to all intents and purposes as a Managing Member
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact may lawfully do or cause to be done. This power of attorney
shall expire on December 31, 1999.
GENERAL ATLANTIC PARTNERS, LLC
By: /s/ Steven A. Denning
---------------------
Steven A. Denning
Managing Member
STATE OF )
: ss.
COUNTY OF )
On the 31st day of December 1998, before me personally came Steven A.
Denning, to me known, and known to me to be the individual described in, and who
executed the foregoing document, and he acknowledged to me that he executed the
same.
/s/ Sheila Hughes Notary Public
- -----------------
<PAGE>
EXECUTION COPY
GAP COINVESTMENT PARTNERS, L.P.
3 Pickwick Plaza
Greenwich, CT 06830
December 31, 1998
POWER OF ATTORNEY
-----------------
The undersigned, GAP Coinvestment Partners, L.P., a New York limited
partnership, with its principal office at 3 Pickwick Plaza, Greenwich,
Connecticut, United States of America (the "Partnership"), by its Managing
General Partner, Steven A. Denning, a U.S. citizen, of full legal age, domiciled
at 16 Khakum Drive, Greenwich, CT 06831, hereby constitutes and appoints Thomas
J. Murphy, a U.S. citizen, of full legal age, domiciled at 169 E. 90th Street,
Apt. 5, New York, NY 10128, its true and lawful attorney-in-fact and agent, in
any and all capacities, to execute and deliver any and all documents and
instruments and to make any governmental filings on behalf of the Partnership as
fully to all intents and purposes as a General Partner might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact may
lawfully do or cause to be done. This power of attorney shall expire on December
31, 1999.
GAP COINVESTMENT PARTNERS, L.P.
By: /s/ Steven A. Denning
---------------------
Steven A. Denning
Managing Member
STATE OF )
: ss.
COUNTY OF )
On the 31st day of December 1998, before me personally came Steven A.
Denning, to me known, and known to me to be the individual described in, and who
executed the foregoing document, and he acknowledged to me that he executed the
same.
/s/ Sheila Hughes Notary Public
- -----------------
<PAGE>
EXECUTION COPY
GAP COINVESTMENT PARTNERS II, L.P.
3 Pickwick Plaza
Greenwich, CT 06830
December 31, 1998
POWER OF ATTORNEY
-----------------
The undersigned, GAP Coinvestment Partners II, L.P., a Delaware limited
partnership, with its principal office at 3 Pickwick Plaza, Greenwich,
Connecticut, United States of America (the "Partnership"), by its Managing
General Partner, Steven A. Denning, a U.S. citizen, of full legal age, domiciled
at 16 Khakum Drive, Greenwich, CT 06831, hereby constitutes and appoints Thomas
J. Murphy, a U.S. citizen, of full legal age, domiciled at 169 E. 90th Street,
Apt. 5, New York, NY 10128, its true and lawful attorney-in-fact and agent, in
any and all capacities, to execute and deliver any and all documents and
instruments and to make any governmental filings on behalf of the Partnership as
fully to all intents and purposes as a General Partner might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact may
lawfully do or cause to be done. This power of attorney shall expire on December
31, 1999.
GAP COINVESTMENT PARTNERS II, L.P.
By: /s/ Steven A. Denning
---------------------
Steven A. Denning
Managing Member
STATE OF )
: ss.
COUNTY OF )
On the 31st day of December 1998, before me personally came Steven A.
Denning, to me known, and known to me to be the individual described in, and who
executed the foregoing document, and he acknowledged to me that he executed the
same.
/s/ Sheila Hughes Notary Public
- -----------------
