<PAGE> 1
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)
Frederic Garnier
Infogrames Entertainment S.A.
82-84, rue du 1er mars 1943
69628 Villeurbanne cedex France
+33 (0) 4 72 65 50 00
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and Communications)
December 3, 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 Sections 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box [ ].
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 (the "Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act.
(Continued on the following pages)
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1) NAME OF REPORTING PERSONS.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Infogrames Entertainment S.A.
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) [X]
(b) [ ]
3) SEC USE ONLY
4) SOURCE OF FUNDS
WC
5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
OR 2(e) [ ]
6) CITIZENSHIP OR PLACE OF ORGANIZATION
France
NUMBER OF 7) SOLE VOTING POWER
SHARES
BENEFICIALLY -0-
OWNED BY
EACH
REPORTING 8) SHARED VOTING POWER
PERSON WITH
approximately 114,108,485
9) SOLE DISPOSITIVE POWER
-0-
10) SHARED DISPOSITIVE POWER
approximately 114,108,485
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
approximately 114,108,485
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 77.9
14) TYPE OF REPORTING PERSON
CO
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1 NAME OF REPORTING PERSONS.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
California U.S. Holdings, Inc.
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) [X]
(b) [ ]
3) SEC USE ONLY
4) SOURCE OF FUNDS
AF
5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
OR 2(e) [ ]
6) CITIZENSHIP OR PLACE OF ORGANIZATION
California
NUMBER OF 7) SOLE VOTING POWER
SHARES
BENEFICIALLY -0-
OWNED BY
EACH
REPORTING 8) SHARED VOTING POWER
PERSON WITH
approximately 114,108,485
9) SOLE DISPOSITIVE POWER
-0-
10) SHARED DISPOSITIVE POWER
approximately 114,108,485
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
approximately 114,108,485
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 77.9
14) TYPE OF REPORTING PERSON
CO
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1 SECURITY AND ISSUER.
This statement relates to the Common Stock, par value $.01 per share
("GTIS Common Stock"), of GT Interactive Software Corp., a Delaware corporation
("GTIS"). The principal executive offices of GTIS are located at 417 Fifth
Avenue, New York, New York 10016.
ITEM 1. IDENTITY AND BACKGROUND.
(a) - (c), (f). This Statement is being filed by Infogrames
Entertainment S.A., a corporation organized under the laws of France
("Infogrames"), and California U.S. Holdings, Inc., a California corporation and
wholly owned subsidiary of Infogrames ("Purchaser" and together with Infogrames,
the "Filing Persons"). The address for Infogrames is 82-84, rue du 1er mars
1943, 69628 Villeurbanne cedex France. The address for Purchaser is 5300 Stevens
Creek Blvd., San Jose, CA 95129. The principal business of Infogrames is the
development and distribution of computer software. The principal business of
Purchaser is the development and distribution of computer software. Attached as
Exhibit 1 is a chart setting forth, with respect to each executive officer and
director of the Filing Persons, his or her name, business address, principal
occupation or employment, the name and principal business of the organization in
which such employment is conducted, and citizenship.
(d) During the last five years, neither Filing Person nor, to the best
knowledge of the Filing Persons, any executive officer or director of either
Filing Person has been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors).
(e) During the last five years, neither Filing Person nor, to the best
knowledge of the Filing Persons, any executive officer or director of either
Filing Person was a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction as a result of which either Filing Person or any
executive officer or director of either Filing Person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Purchaser will be making the purchase using funds loaned to it by
Infogrames, its parent company. Infogrames intends to fund these loans from
working capital.
ITEM 7. PURPOSE OF TRANSACTION.
On November 15, 1999, Purchaser agreed to acquire from GTIS and certain
stockholders of GTIS 63,429,960 shares of GTIS Common Stock, a 5% Convertible
Subordinated Note of GTIS in the principal amount of approximately $60.5 million
principal amount (the "5% Note"), warrants to purchase 4.5 million shares of
GTIS Common Stock and a warrant to purchase 50,000 shares of GTIS Common Stock.
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<PAGE> 5
GTIS Purchase Agreement
On November 15, 1999, Purchaser agreed to acquire from GTIS (a)
28,571,429 shares of GTIS Common Stock for an aggregate purchase price of $50
million and (b) the 5% Note pursuant to that certain Securities Purchase
Agreement, dated as of November 15, 1999, among the Filing Persons and GTIS (the
"GTIS Purchase Agreement"). The 5% Note is due five years after the Closing
(anticipated to be in December 1999) and is convertible into approximately1
32,700,000 shares of GTIS Common Stock at a conversion price of $1.85 per share,
subject to adjustment in certain circumstances. On November 15, 1999, at the
time of the execution of the GTIS Purchase Agreement and in connection with a
$25.0 million Note (the "Short Term Note") evidencing a loan in that amount by
Purchaser to GTIS, Purchaser was issued a warrant to purchase 50,000 shares of
GTIS Common Stock (the "Purchaser Warrant"). The GTIS Purchase Agreement, the
Short Term Note, the Purchaser Warrant and the form of 5% Note are attached
hereto as Exhibits 3, 4, 5 and 6 respectively, and are incorporated herein by
reference.
Pursuant to the GTIS Purchase Agreement, the GTIS Board of Directors
elected Mr. Bruno Bonnell and Mr. Thomas Schmider as directors of GTIS,
effective as of the Closing. In addition, pursuant to the terms of the GTIS
Purchase Agreement, GTIS agreed that its Board of Directors would, at the
request of Infogrames, prior to the Closing elect another director to be
designated by Infogrames effective as of the Closing, provided that the designee
were reasonably acceptable to the GTIS Board of Directors. Infogrames has
designated Mr. Herve Liagre for election as such director. Pursuant to the GTIS
Purchase Agreement, GTIS has agreed to procure the resignation, effective as of
the Closing of all current directors of the GTIS other than Mr. Thomas A.
Heymann and Mr. Steven A. Denning, effective as of the Closing. GTIS also agreed
that, if requested by Infogrames, GTIS would secure the resignations of or
remove, effective as of the Closing, any member of the Board of Directors of any
subsidiary of GTIS. Purchaser has agreed pursuant to the GTIS Purchase Agreement
that following the Closing, it will use its reasonable best efforts to elect
directors in compliance with the Certificate of Incorporation of GTIS and rules
for inclusion of GTIS Common Stock on the Nasdaq National Market.
Pursuant to the GTIS Purchase Agreement, GTIS acknowledged that
Infogrames and its affiliates engage in the same or similar activities or lines
of business as GTIS and have an interest in the same area of business
opportunities. GTIS agreed that Infogrames and its affiliates shall have the
right to (a) engage in the same or similar business activities or lines of
business as GTIS, (b) do business with any client or customer of GTIS and (c)
employ or otherwise engage any officer or other employee of GTIS, and neither
Infogrames nor any affiliate or their respective officers or directors would be
liable to GTIS by reason of any such activities of Infogrames or its affiliates
or of such person's participation therein. Further, the GTIS Purchase Agreement
provides that in the event that (a) Infogrames or any of its affiliates, or (b)
any officer, director or employee of GTIS who is also an officer, director or
employee of Infogrames or any affiliate
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(1) The 5% Note (as defined in the first paragraph of Item 4) will have a
principal amount equal to $60.0 million plus interest accrued to the Closing on
(x) the Short Term Note and (y) the Cayre Notes. Assuming a Closing on December
16, 1999, the 5% Note would have a principal amount of $60,397,442 and would be
convertible into 32,647,266 shares of GTIS Common Stock. Assuming a December 17,
1999 Closing, the 5% Note would have a principal amount of $60,400,839 and would
be convertible into 32,649,102 shares of GTIS Common Stock.
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thereof, acquires knowledge of a potential transaction or matter which may be a
business opportunity for both GTIS and Infogrames or any of its affiliates, such
business opportunity shall belong only to Infogrames and not to GTIS, and any
such officer, director or employee of GTIS shall treat such business opportunity
as belonging only to Infogrames and not GTIS, subject to the following sentence.
In the case of clause (b) Infogrames shall determine in good faith whether,
based on the circumstances under which such person acquired this knowledge, such
business opportunity instead was offered to such person solely in his capacity
as an officer, director or employee of GTIS ("GTIS Capacity"). For purposes of
the foregoing determination, there shall be a presumption that such business
opportunity was offered to such person in his capacity as an officer, director
or employee of Infogrames or any affiliate thereof. In the event Infogrames
determines that it was so offered to such person in his GTIS Capacity, such
business opportunity shall belong only to GTIS and not to Infogrames and such
officer, director or employee shall treat such business opportunity as belonging
only to GTIS and not to Infogrames. With respect to any business opportunity
belonging to Infogrames pursuant to the GTIS Purchase Agreement, Infogrames
shall decide how to allocate and pursue such business opportunity based on its
sole determination of what is in the best interests of Infogrames' stockholders.
Infogrames' good faith determination of the allocation of business opportunities
pursuant to the GTIS Purchase Agreement shall be conclusive and binding for all
purposes.
Pursuant to the Distribution Agreement to be entered into between
Infogrames and GTIS (the "Distribution Agreement"), GTIS will grant Infogrames
the exclusive right (for all countries in the European Union, Australia and New
Zealand (the "Territory")) to publish, manufacture, market, advertise, promote,
publicize, distribute, sell, sublicense or otherwise exploit GTIS products (the
"Products"), subject to agreements that GTIS had in place on November 11, 1999.
GTIS will further agree not to renew agreements with other parties covering the
Territory. The Distribution Agreement will provide for the payment by Infogrames
to GTIS of the purchase price or royalties covering Products subject to the
Distribution Agreement. A copy of the form of Distribution Agreement is attached
as Exhibit 7 hereto and incorporated herein by reference.
The closing of the transactions contemplated by the GTIS Purchase
Agreement (the "Closing") is conditioned upon, among other things, the
consummation of the transactions contemplated by the GAP Purchase Agreement (as
defined below), the GAP Exchange Agreement (as defined below) and the Cayre
Purchase Agreements (as defined below). In addition, the Closing was conditioned
upon expiration or early termination of the waiting period required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. On December 3, 1999, the
Federal Trade Commission issued a letter granting such early termination.
GAP Purchase Agreement
Concurrently with the Closing, Purchaser will acquire from the GAP
Entities (as defined below) outstanding warrants to purchase 4.5 million shares
of GTIS Common Stock for an aggregate purchase price of $950.00 (the "GAP
Warrants"), pursuant to that certain Equity Purchase and Voting Agreement, dated
as of November 15, 1999 (the "GAP Purchase Agreement"), among the Filing Persons
and each of the following: General Atlantic
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Partners 16, L. P., a Delaware limited partnership, General Atlantic Partners
19, L. P., a Delaware limited partnership, General Atlantic Partners II, L. P.,
a Delaware limited partnership, General Atlantic Partners 54, L. P., a Delaware
limited partnership, GAP Coinvestment Partners, L. P., a New York limited
partnership and GAP Coinvestment Partners II, L. P., a Delaware limited
partnership (collectively, the "GAP Entities"). The GAP Purchase Agreement and
form of GAP Warrants are attached hereto as Exhibits 8 and 9, respectively, and
are incorporated herein by reference.
In addition, pursuant to the GAP Purchase Agreement, the GAP Entities
agreed (a) not to sell an aggregate of 7,428,525 shares of GTIS Common Stock and
600,000 shares of Series A Convertible Preferred Stock of GTIS (collectively,
the "GAP Voting Shares") prior to Closing, (b) to vote (or issue a consent in
respect of) the GAP Voting Shares in favor of the transactions contemplated by
the GTIS Purchase Agreement and against any action or agreement that would
reasonably be expected to impede, interfere with, delay or attempt to discourage
such transactions, (c) to grant a proxy to Purchaser to vote the GAP Voting
Shares on those matters contemplated by clause (b) prior to the Closing, and (d)
not to solicit, initiate or knowingly encourage, participate in discussions
regarding or enter into an agreement regarding, certain business combination
transactions.
GAP Exchange Agreement
In addition, pursuant to a securities exchange agreement between the
GAP Entities and GTIS, dated as of November 15, 1999 (the "Exchange Agreement"),
the GAP Entities have agreed to exchange their 600,000 shares of GTIS Series A
Convertible Preferred Stock and their $20.0 million in principal amount of 9%
Subordinated Notes of GTIS, due July 29, 2000, for $50.0 million in principal
amount of Convertible Subordinated Notes due 2004 to be issued by GTIS (the
"Convertible Subordinated Notes"). The Convertible Subordinated Notes are
convertible into GTIS Common Stock at a conversion price of $4.00 per share,
subject to adjustment in certain circumstances. The Exchange Agreement is
attached hereto as Exhibit 10 and is incorporated herein by reference.
Cayre Purchase Agreements
In addition, concurrently with the Closing, Purchaser will acquire from
the Cayre Group (as defined below) 33,558,531 shares of GTIS Common Stock for an
aggregate purchase price of $25.0 million pursuant to those certain Equity
Purchase and Voting Agreements, each dated as of November 15, 1999 (the "Cayre
Purchase Agreements") among the Filing Persons and Joseph Cayre, Kenneth Cayre,
Stanley Cayre and Jack J. Cayre, their children and various associated trusts
(collectively, the "Cayre Group"). The Form of Cayre Purchase Agreements and
schedule of agreements is attached hereto as Exhibits 11A and is incorporated
herein by reference.
In addition, concurrently with the Closing, pursuant to the Note
Purchase Agreement, dated as of November 15, 1999, between certain members of
the Cayre Group and Purchaser (the "Cayre Note Purchase Agreement"), Purchaser
will acquire from the Cayre Group $10.0 million in aggregate principal amount of
9% Subordinated Notes of GTIS, due
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July 29, 2000 (the "Cayre Notes"), for a purchase price equal to such principal
amount plus interest accrued thereon through the Closing. The Cayre Note
Purchase Agreement is attached hereto as Exhibit 11B and is incorporated herein
by reference.
In addition, pursuant to the Cayre Purchase Agreements, the Cayre Group
agreed (1) prior to the Closing (a) not to sell any of their shares of GTIS
Common Stock, (b) to vote (or issue a consent in respect of) their shares of
GTIS Common Stock in favor of the transactions contemplated by the GTIS Purchase
Agreement and against any action or agreement that would reasonably be expected
to impede, interfere with, delay or attempt to discourage such transactions, (c)
to grant a proxy to Purchaser to vote their shares of GTIS Common Stock on those
matters contemplated by clause (b) prior to the Closing, and (d) not to solicit,
initiate or knowingly encourage, participate in discussions regarding or enter
into an agreement regarding, certain business combination transactions and (2)
to grant Infogrames a proxy, exercisable subsequent to the Closing, to vote any
shares of GTIS Common Stock retained by the Cayre Group for the election or
removal of directors in the sole discretion of Infogrames.
The Filing Persons' beneficial ownership of 114,108,485 shares of GTIS
Common Stock represents a majority equity position in GTIS.
The Filing Persons intend to evaluate and consider from time to time
whether to engage in any of the following transactions: (a) to acquire
additional shares of GTIS Common Stock or other securities of GTIS through open
market purchases, privately negotiated transactions, a tender offer, a merger,
reorganization or other business combination transaction, or otherwise or (b) to
acquire a material amount of assets of GTIS. Any of the foregoing could result
(i) in changes in the capitalization or dividend policy of GTIS, (ii) changes in
GTIS' charter or bylaws, (iii) delisting of GTIS Common Stock from the NASDAQ
National Market (or other securities market on which GTIS Common Stock is then
listed or traded), (iv) termination of registration of GTIS Common Stock
pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended,
or (v) other events comparable to those enumerated above. Alternatively, while
it is not the Filing Persons' present intention to dispose of the shares of GTIS
Common Stock beneficially owned by them, the Filing Persons intend to evaluate
and consider from time to time whether to dispose of some or all of such shares,
which disposition could be effected through a privately negotiated transaction
to third parties, through a public offering upon exercise of the registration
rights described in Item 6 below, in a merger or other business combination
transaction involving GTIS, or otherwise. Purchaser has agreed pursuant to the
GTIS Purchase Agreement that following the Closing, it will use its reasonable
best efforts to elect directors in compliance with the Certificate of
Incorporation of GTIS and rules for inclusion of GTIS Common Stock on the Nasdaq
National Market.
ITEM 8. INTEREST IN SECURITIES OF THE ISSUER.
1 Purchaser is the beneficial owner of 114,108,485 shares of GTIS Common Stock,
or 77.9% of the outstanding shares of GTIS Common Stock, which includes
63,429,960 shares of GTIS Common Stock to be acquired by Purchaser pursuant to
the GTIS Purchase Agreement and
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<PAGE> 9
the Cayre Purchase Agreements, 4,500,000 shares of GTIS Common Stock which may
be acquired by Purchaser upon exercise of the GAP Warrants, 50,000 shares of
GTIS Common Stock which may be acquired upon exercise of the Purchaser Warrant
and approximately 32,700,000 shares of GTIS Common Stock which may be acquired
by Purchaser upon conversion of the 5% Note.
Pursuant to the Cayre Purchase Agreements, Infogrames and Purchaser may
be deemed to have beneficial ownership with respect to the 1.3 million shares of
GTIS Common Stock to be retained by the Cayre Group after the Closing. Other
than voting rights conferred by the Cayre Purchase Agreements, Purchaser is not
entitled to any rights as a stockholder with respect to such 1.3 million shares.
As a result of the transactions contemplated by the GAP Purchase
Agreement, Purchaser may be deemed to have beneficial ownership with respect to
the 7,428,525 shares of GTIS Common Stock held by the GAP Entities and the 6.0
million shares of GTIS Common Stock issuable upon conversion of the Series A
Preferred Stock held by the GAP Entities. Other than voting rights conferred by
the GAP Purchase Agreement, Purchaser is not entitled to any rights as a
stockholder with respect to such shares.
Infogrames may be deemed to be the beneficial owner of the
114,108,485shares beneficially owned by Purchaser by virtue of its ownership of
100% of the capital stock of Purchaser.
(b) Other than as set forth in this Schedule 13D, no Filing Person has
entered into any transaction with respect to the GTIS Common Stock.
(c) 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.
(d) Not applicable.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
In addition to the GTIS Purchase Agreement, the GAP Purchase Agreement,
the Distribution Agreement, the GAP Exchange Agreement and the Cayre Purchase
Agreements described above in Item 4, the Filing Persons are parties to a
Registration Rights Agreement, dated November 15, 1999 with GTIS (the
"Registration Rights Agreement") and the Bank Documents set forth below.
The Registration Rights Agreement provides that Purchaser can require
GTIS to register shares of GTIS Common Stock acquired by Purchaser pursuant to
the transactions described in Item 4. Purchaser may require GTIS to effect
registration of all or any portion of such shares pursuant to a "demand"
registration up to three times unless GTIS is eligible to use Form S-3 (or any
successor form) in which case such limit shall not apply. In addition, Purchaser
may not request registration more than one time in any six month period. The
Registration Rights
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Agreement also grants Purchaser certain "piggyback" registration rights.
Purchaser will not have the right to request registration if such registration
is no longer required by the Securities Act of 1933. A copy of the Registration
Rights Agreement is attached hereto as Exhibit 12 and incorporated herein by
this reference.
Bank Documents
The Right of First Offer Agreement, dated as of November 15, 1999,
among Purchaser, First Union National Bank, Fleet Bank, N.A., Bank of America,
N.A., European American Bank, National Bank of Canada and The Bank of Nova
Scotia (the "First Offer Agreement") provides that in the event any of the
parties other than Purchaser (such parties, the "Lenders") proposes to sell
certain warrants (or shares issued upon exercise of such warrants (such shares
and warrants, the "Subject Securities")) acquired by the Lenders pursuant to
that certain Warrant Agreement, dated as of June 29, 1999 among the Lenders and
GTIS, then such person must first offer the Subject Securities to Purchaser. If
Purchaser elects not to purchase the Subject Securities, the Lender may then
sell the Subject Securities to a third party at a price not less than 75% of the
price at which the Subject Securities were offered to Purchaser. A copy of the
First Offer Agreement is attached hereto as Exhibit 13 and incorporated herein
by reference.
The Second Amended and Restated Security Agreement, dated as of
November 15, 1999, among GTIS, Purchaser and the Lenders (the "Security
Agreement") provides for the granting of a security interest in collateral
consisting of substantially all of the assets of GTIS to the Lenders and
Purchaser (as holder of the Short Term Note). The Security Agreement is attached
hereto as Exhibit 14 and incorporated herein by reference.
The Amended and Restated Unconditional Subsidiary Guaranty Agreement,
dated as of November 15, 1999, among certain subsidiaries of GTIS, Purchaser and
First Union National Bank as administrative agent for the benefit of the Lenders
(the "Guaranty Agreement") provides for the payment of certain obligations,
including those obligations to Purchaser pursuant to the Short Term Note, by the
subsidiaries of GTIS in the event of a failure by GTIS to make payments of such
obligations. The Guaranty Agreement is attached hereto as Exhibit 15 and
incorporated herein by reference.
The Second Amended and Restated Pledge Agreement, dated as of
November 15, 1999 among GTIS, certain subsidiaries of GTIS, Purchaser and First
Union National Bank as administrative agent for the benefit of the Lenders (the
"Pledge Agreement") provides for the pledge by GTIS of the stock and/or
partnership/LLC interests owned by GTIS in such subsidiaries for the benefit of,
among other obligations, the Shot Term Note. The Pledge Agreement is attached
hereto as Exhibit 16 and incorporated herein by reference.
ITEM 6. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Chart Regarding Executive Officers and Directors
of Filing Persons
Exhibit 2 Joint Filing Agreement between the Filing Persons
Exhibit 3 Securities Purchase Agreement, dated as of November 15,
1999, among
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GTIS and the Filing Persons
Exhibit 4 Short Term Note of GTIS in the Principal Amount of $25.0
million
Exhibit 5 Warrant to Purchase 50,000 shares of GTIS Common Stock,
issued to Purchaser
Exhibit 6 Form of 5% Subordinated Convertible Note of GTIS
Exhibit 7 Form of Distribution Agreement between Infogrames and GTIS
Exhibit 8 Equity Purchase and Voting Agreement, dated as of November
15, 1999, among the Filing Persons and the GAP Entities
Exhibit 9 Form of GAP Warrant
Exhibit 10 Exchange Agreement, dated as of November 15, 1999, among
GTIS and the GAP Entities
Exhibit 11A Form of Equity Purchase and Voting Agreements, dated as
of November 15, 1999, among the Filing Persons and the
members of the Cayre Group and schedule of agreements
Exhibit 11B Note Purchase Agreement, dated as of November 15, 1999,
between certain members of the Cayre Group and Purchaser
Exhibit 12 Registration Rights Agreement, dated as of November 15,
1999, between Purchaser and GTIS
Exhibit 13 Right of First Offer Agreement, dated as of November 15,
1999, among Purchaser and the Lenders
Exhibit 14 Second Amended and Restated Security Agreement, dated as
of November 15, 1999 among GTIS, Purchaser and the Lenders
Exhibit 15 Amended and Restated Unconditional Subsidiary Guaranty
Agreement, dated as of November 15, 1999 among certain
subsidiaries of GTIS, Purchaser and First Union National
Bank as administrative agent for the benefit of the Lenders.
Exhibit 16 Second Amended and Restated Pledge Agreement, dated as of
November 15, 1999 among GTIS, certain subsidiaries of GTIS,
Purchaser and First Union National Bank as administrative
agent for the benefit of the Lenders.
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After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certify that the information set forth in this
statement is true, complete and correct.
December 13, 1999.
INFOGRAMES ENTERTAINMENT S.A.
By /S/BRUNO BONNELL
------------------------------
Bruno Bonnell
President
CALIFORNIA U.S. HOLDINGS, INC.
By/S/BRUNO BONNELL
------------------------------
Bruno Bonnell
President
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<PAGE> 1
EXHIBIT 1
<TABLE>
<CAPTION>
Director (D)
and/or
Executive
Officer (EO)
of Infogrames Citizenship/ Principal
(I) and/or Jurisdiction of Occupation or
Name Purchaser (P) Organization Employment Principal Business Address
- ---- ------------- ------------ ---------- ------------------ -------
<S> <C> <C> <C> <C> <C>
Bruno Bonnell I (D) (EO) France Chief Executive Development and Infogrames Entertainment S.A.
P (D)(EO) Officer of Distribution of computer 82-84, rue du lers mars 1943
Infogrames software 69628 Villeurbanne cedex
France
Thomas Schmider I (D) (EO) France Managing Development and Infogrames Entertainment S.A.
P (D) (EO) Director of Distribution of computer 82-84, rue du lers mars 1943
Infogrames software 69628 Villeurbanne cedex
France
Christophe Sapet I (D) (EO) France Managing Development and Infogrames Entertainment S.A.
Director of Distribution of computer 82-84, rue du lers mars 1943
Infogrames software 69628 Villeurbanne cedex
France
Eric Mottet I (D) (EO) France Technical Development and Infogrames Entertainment S.A.
Director of Distribution of computer 82-84, rue du lers mars 1943
Infogrames software 69628 Villeurbanne cedex
France
Benoit I (D)(EO) France Sales Manager of Development and Infogrames Entertainment S.A.
Regnault De Infogrames Distribution of computer 82-84, rue du lers mars 1943
Maulmin software 69628 Villeurbanne cedex
France
David Ward I (D)(EO) England UK Director of Development and Infogrames Entertainment S.A.
Infogrames Distribution of computer 82-84, rue du lers mars 1943
software 69628 Villeurbanne cedex
France
Jean Claude I (D) France Director None 39 rue des Lilas
Larue 75019 Paris
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C> <C> <C> <C>
Pierre Sissmann I (D)(EO) France Director Development and Infogrames Entertainment S.A.
(to be appointed Distribution of computer 82-84, rue du lers mars 1943
12/15/99) software 69628 Villeurbanne cedex
France
Societe I (D) France Director Development and SA au capital de 138 450 000 F
Dassault Distribution of computer 9 rond point des Champs
Multimedia software Elysees
75008 Paris
Societe I (D) France Director Natural Gas and Water SA au capital de 170 108 345 F
Financiere et 3 rue Jacques Bingen
Industrielle 75017 Paris
Gaz et Eaux
Yves Legris P (D)(EO) France Director and Development and 5300 Stevens Creek Blvd.
Chief Operating Distribution of computer
Officer software San Jose, CA 95129
</TABLE>
<PAGE> 1
EXHIBIT 2
JOINT FILING AGREEMENT
Each of Infogrames Entertainment S.A., a corporation organized under
the laws of France, and California U.S. Holdings, Inc. a California corporation
(collectively, the "Filing Persons"), hereby agrees to file jointly a Schedule
13D and any amendments thereto relating to the Common Stock, par value $.01 per
share, of GT Interactive Software Corp., a Delaware corporation, as permitted by
Rule 13d-1 of the Securities Exchange Act of 1934, as amended. Each Filing
Person agrees that the information set forth in such Schedule 13D and any
amendments thereto with respect to such person will be true, complete and
correct as of the date of such Schedule 13D or such amendment to the best of its
knowledge and belief after reasonable inquiry. Each Filing Person shall promptly
notify the other if any of the information set forth in such Schedule 13D shall
be or become inaccurate in any material respect or if such Filing Person learns
of information which would require an amendment to such Schedule 13D.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this agreement as of the 13th day of
December, 1999.
INFOGRAMES ENTERTAINMENT S.A.
By /s/ Bruno Bonnell
---------------------------
Bruno Bonnell
President
CALIFORNIA U.S. HOLDINGS, INC.
By /s/ Bruno Bonnell
---------------------------
Bruno Bonnell
President
<PAGE> 1
Exhibit 3
INFOGRAMES ENTERTAINMENT S.A.,
CALIFORNIA U.S. HOLDINGS, INC.
and
GT INTERACTIVE SOFTWARE CORP.
SECURITIES PURCHASE AGREEMENT
Dated as of November 15, 1999
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I PURCHASE AND SALE OF THE SECURITIES ................................. 2
1.1 The Purchase ..................................................... 2
1.2 The Closing ...................................................... 3
1.3 Short-Term Note .................................................. 3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY ...................... 3
2.1 Organization and Good Standing ................................... 3
2.2 Capitalization ................................................... 3
2.3 Subsidiaries ..................................................... 4
2.4 Authorization; Binding Agreement ................................. 5
2.5 Governmental Approvals ........................................... 6
2.6 No Violations .................................................... 6
2.7 Securities Filings ............................................... 7
2.8 Company Financial Statements ..................................... 7
2.9 Absence of Certain Changes or Events ............................. 7
2.10 No Undisclosed Liabilities ....................................... 8
2.11 Compliance with Laws ............................................. 8
2.12 Permits .......................................................... 9
2.13 Litigation ....................................................... 9
2.14 Contracts ........................................................ 9
2.15 Employee Benefit Plans ........................................... 9
2.16 Taxes and Returns ................................................ 11
2.17 Intellectual Property ............................................ 12
2.18 The Shares and the Notes ......................................... 14
2.19 Labor Matters .................................................... 14
2.20 Limitation on Business Conduct ................................... 15
2.21 Property ......................................................... 15
2.22 Environmental Matters ............................................ 16
2.23 Insurance ........................................................ 17
2.24 Interested Party Transactions .................................... 17
2.25 Finders and Investment Bankers ................................... 17
2.26 Fairness Opinion ................................................. 18
2.27 Takeover Statutes ................................................ 18
2.28 Full Disclosure .................................................. 18
2.29 Year 2000 ........................................................ 18
2.30 Director Resignations and Election ............................... 18
2.31 Financial Projections; Liquidity ................................. 18
2.32 Expenses ......................................................... 19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER ............ 19
3.1 Organization and Good Standing ................................... 19
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3.2 Authorization; Binding Agreement ................................. 19
3.3 Governmental Approvals ........................................... 19
3.4 No Violations .................................................... 19
3.5 Disclosure Documents ............................................. 20
3.6 Finders and Investment Bankers ................................... 20
3.7 Financing Arrangements ........................................... 20
3.8 Securities Laws .................................................. 20
3.9 Absence of Liens ................................................. 21
ARTICLE IV ADDITIONAL COVENANTS OF THE COMPANY ................................ 21
4.1 Conduct of Business of the Company and the Company Subsidiaries .. 22
4.2 Notification of Certain Matters .................................. 24
4.3 Access and Information ........................................... 25
4.4 Reasonable Best Efforts .......................................... 25
4.5 Public Announcements ............................................. 25
4.6 Indemnification and Insurance .................................... 25
4.7 SEC and Stockholder Filings ...................................... 27
4.8 Takeover Statutes ................................................ 27
4.9 Directors of Company; Directors of Company Subsidiaries .......... 27
4.10 Antidilution Protection .......................................... 27
4.11 Amendment of Certificate of Incorporation ........................ 27
ARTICLE V ADDITIONAL COVENANTS OF PURCHASER AND PARENT ........................ 28
5.1 Reasonable Best Efforts .......................................... 28
5.2 Public Announcements ............................................. 29
5.3 Compliance ....................................................... 29
5.4 Employment ....................................................... 29
5.5 Guarantee of Parent .............................................. 29
5.6 Director Election ................................................ 29
5.7 Section 14(f) Information ........................................ 29
ARTICLE VI PURCHASE CONDITIONS ................................................ 30
6.1 Conditions to Each Party's Obligation to Effect the Purchase ..... 30
6.2 Conditions to Obligations of Parent and Purchaser ................ 30
6.3 Documents to be Delivered by the Company ......................... 31
6.4 Conditions to Obligations of the Company ......................... 32
6.5 Documents to be Delivered by Purchaser ........................... 32
ARTICLE VII TERMINATION ....................................................... 33
7.1 Termination ...................................................... 33
7.2 Procedure Upon Termination ....................................... 34
7.3 Effect of Termination ............................................ 34
ARTICLE VIII BUSINESS OPPORTUNITIES ........................................... 34
8.1 Competition ...................................................... 34
8.2 Business Opportunities ........................................... 34
8.3 Exclusive European Arrangement ................................... 35
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8.4 Business Synergies ............................................... 35
ARTICLE IX MISCELLANEOUS ...................................................... 35
9.1 Confidentiality .................................................. 35
9.2 Amendment and Modification ....................................... 36
9.3 Waiver of Compliance; Consents ................................... 36
9.4 Survival ......................................................... 36
9.5 Notices .......................................................... 36
9.6 Binding Effect; Assignment ....................................... 37
9.7 Expenses ......................................................... 38
9.8 Governing Law .................................................... 38
9.9 Counterparts ..................................................... 39
9.10 Interpretation ................................................... 39
9.11 Entire Agreement ................................................. 39
9.12 Severability ..................................................... 39
9.13 Specific Performance ............................................. 40
9.14 Third Parties .................................................... 40
9.15 Disclosure Letter ................................................ 40
9.16 Effect of Investigation .......................................... 40
9.17 Material Adverse Effect .......................................... 40
</TABLE>
Exhibit A Form of 5% Subordinated Convertible Notes
Exhibit B Form of Short-Term Secured Note
Exhibit C Form of 0% Senior Subordinated Convertible Notes
Exhibit D Forms of Exchange Agreement
Exhibits E-1 and E-2 Forms of Equity Purchase and Voting Agreements
Exhibit E-3 Form of Note Purchase Agreement
Exhibit F Form of Registration Rights Agreement
Exhibit G Form of Kramer Levin Naftalis & Frankel LLP Opinion
Exhibit H Form of Pillsbury Madison & Sutro LLP Opinion
Exhibit I INTENTIONALLY OMITTED
Exhibit J Form of Amendment to Certificate
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<PAGE> 5
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), made and entered
into as of November 15, 1999, by and among GT Interactive Software Corp., a
Delaware corporation (the "Company"), Infogrames Entertainment S.A., a societe
anonyme organized under the laws of France ("Parent"), and California U.S.
Holdings, Inc., a California corporation and a wholly-owned subsidiary of Parent
("Purchaser").
W I T N E S S E T H:
WHEREAS, the Company wishes to issue, sell and deliver to
Purchaser, and Purchaser wishes to purchase from the Company, 28,571,429 shares
(the "Shares") of common stock, par value $0.01 per share, of the Company (the
"Common Stock") for a purchase price of $50 million and a 5% Subordinated
Convertible Note of the Company in the principal amount equal to the Note
Purchase Price (as hereinafter defined) in the form set forth in Exhibit A
hereto (the "Note"), pursuant to the terms and conditions set forth in this
Agreement (the Shares and the Note are sometimes collectively referred to herein
as the "Securities"); and
WHEREAS, concurrent with the execution and delivery of this
Agreement, the Company will issue, sell and deliver to Purchaser, and Purchaser
will purchase from the Company, a Short-Term Senior Secured Note of the Company
in the principal amount of $25,000,000 in the form set forth in Exhibit B hereto
(the "Short-Term Note"), the outstanding principal and accrued interest of
which, on the Closing Date (as hereinafter defined), shall be applied toward the
payment by Purchaser for the Note; and
WHEREAS, concurrent with the execution and delivery of this
Agreement and in consideration of Purchaser's purchase of the Short-Term Note,
the Company is issuing to Purchaser warrants covering 50,000 shares of the
Company's Common Stock, having an exercise price of $.01 per share, and paying
Purchaser a fee of $100,000; and
WHEREAS, in connection herewith, and as a condition to the
willingness of the Parent and Purchaser to enter into this Agreement, Parent has
required that certain holders of securities of the Company agree, and in order
to induce Parent to enter into the Purchase Agreement, such holders have agreed,
among other things, to exchange securities of the Company held by them for a 0%
Senior Subordinated Convertible Note of the Company in the form of Exhibit C
hereto (the "Senior Note"), pursuant to the terms and conditions set forth in an
agreement in the form of Exhibit D hereto (the "Exchange Agreement"); and
WHEREAS, in connection herewith, and as a condition to the
willingness of the Parent and Purchaser to enter into this Agreement, Parent has
required that certain stockholders (the "Principal Stockholders") of the Company
agree, and in order to induce Parent to enter into the Purchase Agreement, the
Principal Stockholders have agreed, among other things, to enter into equity
purchase and voting agreements in the forms of Exhibits E-1 and E-2 hereto (the
"Selling Stockholder Agreements"); and
WHEREAS, concurrent with the execution and delivery of this
Agreement, Parent has agreed to purchase, and certain Principal Stockholders
have agreed to sell, subordinated
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<PAGE> 6
notes of the Company in the face amount of $10 million, plus accrued interest,
pursuant to the terms and conditions of the Note Purchase Agreement in the form
annexed as Exhibit E-3 (the "Note Purchase Agreement"); and
WHEREAS, the Company and Purchaser have agreed to enter into a
Registration Rights Agreement in the form of Exhibit F hereto (the "Registration
Rights Agreement"); and
WHEREAS, the Board of Directors of the Company has approved
and deemed it advisable for the Company to enter into this Agreement, the
Exchange Agreement, and the Registration Rights Agreement and to issue the
Securities and the Short-Term Note to be issued to Purchaser, the Senior Note to
be issued to certain affiliates of General Atlantic Partners L.P. and the shares
of Common Stock issuable upon conversion of the Notes (the "Conversion Shares")
(all such agreements, Notes and securities are referred to collectively as the
"Transaction Documents") and has determined that the issuance of the Securities
in accordance with the terms of this Agreement, and the issuance of the
Short-Term Note and the Senior Note, are fair to and in the best interests of
the Company and the holders (other than the Principal Stockholders) of the
Common Stock; and
WHEREAS, the Company, Purchaser and Parent desire to make
certain representations, warranties and agreements in connection with, and
establish various conditions precedent to, the transactions contemplated hereby:
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SECURITIES
1.1 The Purchase.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, at the Closing: (i) the Company shall issue, sell and deliver to
Purchaser, and Purchaser shall purchase from the Company, the Shares, and (ii)
the Company shall issue and deliver to Purchaser, and Purchaser shall purchase
from the Company, the Notes (collectively, the "Purchase").
(b) The aggregate purchase price for the Shares (the "Stock
Purchase Price") shall be $50 million and the aggregate purchase price for the
Note (the "Note Purchase Price") shall be the sum of $60 million plus the
interest accrued through Closing on each of the Short-Term Note and the notes to
be purchased pursuant to the Note Purchase Agreement. At the Closing, the
Company shall deliver to Purchaser, registered in its name or the name of its
nominee, the Note and the share certificates evidencing the Shares, registered
in its name or the name of its nominee, each duly executed and dated as of the
Closing Date, against payment of the Stock Purchase Price and the Note Purchase
Price by wire transfer of immediately available funds to the account of the
Company as specified by written notice to Parent at least two business days
prior to the Closing Date. Purchaser shall pay a portion of the Note Purchase
Price by cancellation of the Short-Term Note and the interest then accrued
thereon.
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1.2 The Closing. The closing of the Purchase (the "Closing")
shall take place at 10:00 a.m., New York time, on a date to be specified by the
parties, which in any event shall be no later than the third business day
following the satisfaction (or waiver) of all of the conditions set forth in
Article VI (such date, the "Closing Date"), at the offices of Kramer Levin
Naftalis & Frankel LLP, 919 Third Avenue, New York, New York, unless another
time, date or place is agreed to in writing by the parties hereto. At the
Closing, the opinions, certificates and other documents required by this
Agreement to be delivered (other than those required to be delivered prior to
the Closing) shall be delivered.
1.3 Short-Term Note, etc. Concurrent with the execution and
delivery of this Agreement, the Company is issuing to Purchaser and Purchaser is
purchasing from the Company the Short-Term Note for a purchase price of
$25,000,000, and in consideration of Purchaser's purchase of the Short-Term
Note, the Company is issuing to Purchaser warrants exercisable for 50,000 shares
of Common Stock, exercisable at a price of $.01 per share, and paying to
Purchaser a fee of $100,000. On November 16, 1999, the Company shall deliver to
Purchaser the Short-Term Note and such warrants; and Parent shall cause to be
wire transferred $25.0 million in immediately available funds to the account of
the Company as specified to Parent and the Company shall cause to be wire
transferred $100,000 in immediately available funds to the account of Parent as
specified by Parent to Company.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser
that, except as set forth in the correspondingly numbered Sections of the
letter, dated the date hereof, from the Company to Parent (the "Company
Disclosure Letter"):
2.1 Organization and Good Standing. The Company and each of
the Company Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. The Company and
each of the Company Subsidiaries is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the character of the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not have a
Material Adverse Effect. The Company has previously made available to Parent
accurate and complete copies of the Certificate of Incorporation and Bylaws, as
currently in effect, of the Company and each Company Subsidiary. For purposes of
this Agreement, the term "Company Subsidiary" shall mean any "subsidiary" (as
such term is defined in Rule 1-02 of Regulation S-X of the Securities and
Exchange Commission (the "SEC") of the Company.
2.2 Capitalization. As of November 12, 1999, the authorized
capital stock of the Company consists of (a) 150,000,000 shares of common stock,
par value $.01 per share, of the Company (the "Common Stock") and (b) 5,000,000
shares of preferred stock of the Company, of which 600,000 have been designated
as Series A Convertible Preferred Stock ("Preferred Shares"). As of November 12,
1999, (i) 74,633,940 shares of Common Stock were
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<PAGE> 8
issued and outstanding, (ii) 600,000 Preferred Shares were issued and
outstanding, (iii) no shares of Common Stock or shares of preferred stock of the
Company were issued and held in the treasury of the Company, (iv) no shares of
Common Stock or preferred stock of the Company were held by any Company
Subsidiary, (v) 6,000,000 shares of Common Stock were reserved for future
issuance upon conversion of the outstanding Preferred Shares, (vi) 16,541,727
shares of Common Stock are authorized for issuance under the Company's stock
incentive plans, of which options covering 985,160 shares have been exercised,
and of which options covering 13,566,640 of Common Stock have been granted and
remain outstanding ("Company Options"), and of which 5,565 shares of Common
Stock were issued as restricted stock awards, (vii) 6,356,625 shares of Common
Stock were reserved for future issuance upon exercise of warrants (the "Company
Warrants"), and (viii) 1,000,000 shares of Common Stock are authorized for
issuance under the Company's 1998 Employee Stock Purchase Plan, of which 116,364
shares have been issued. No change in the capitalization of the Company has
occurred between November 12, 1999 and the date hereof, except for the issuance
of Shares upon the exercise or lapse of Company Options and Stock Purchase
Options. No other capital stock of the Company is authorized or issued. All
issued and outstanding shares of the Common Stock and Series A Preferred Stock
are duly authorized, validly issued, fully paid and non-assessable and were
issued free of preemptive rights and in compliance with all applicable Laws.
Except as set forth in Schedule 2.2 of the Company Disclosure Letter or as
otherwise contemplated by this Agreement, as of the date hereof, there are no
outstanding rights, subscriptions, warrants, puts, calls, unsatisfied preemptive
rights, options (except as set forth in Schedule 2.15(h) of the Company
Disclosure Letter) or other agreements to which the Company or any Company
Subsidiary is a party, of any kind relating to any of the outstanding,
authorized but unissued or treasury shares of the capital stock or any other
security of the Company, and there is no authorized or outstanding security of
any kind convertible into or exchangeable for any such capital stock or other
security. Except as disclosed in Schedule 2.2 of the Company Disclosure Letter,
there are no obligations, contingent or other, of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire any shares of Common Stock
or the capital stock of any Company Subsidiary or to provide funds to or make
any investment (in the form of a loan, capital contribution or otherwise) in any
such Company Subsidiary or any other entity. Except as disclosed in Schedule 2.2
of the Company Disclosure Letter, there are no registration rights, and to the
best knowledge of the Company, there are no voting trusts, proxies or other
agreements or understandings with respect to the voting rights of any class of
the Company's capital stock.
2.3 Subsidiaries. Schedule 2.3 of the Company Disclosure
Letter sets forth the name and jurisdiction of incorporation of each Company
Subsidiary, each of which is wholly owned by the Company except for directors'
qualifying shares and except as otherwise indicated in Schedule 2.3 of the
Company Disclosure Letter. All of the capital stock and other interests of the
Company Subsidiaries so held by the Company are owned by it or a Company
Subsidiary as indicated in Schedule 2.3 of the Company Disclosure Letter, free
and clear of any lien, charge, encumbrance, hypothecation, pledge, option,
trust, mortgage or security interest of any kind (collectively, "Liens") with
respect thereto, except pursuant to the Credit Agreement, or as disclosed in
Schedule 2.3 of the Company Disclosure Letter. All of the outstanding shares of
capital stock of each of the Company Subsidiaries directly or indirectly held by
the Company are duly authorized, validly issued, fully paid and non-assessable
and were issued free of preemptive rights and in compliance with all applicable
Laws. No equity securities or other interests of any
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<PAGE> 9
of the Company Subsidiaries are or may become required to be issued or purchased
by reason of any options, warrants, rights to subscribe to, puts, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any capital stock of any Company
Subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any Company Subsidiary is bound to issue additional shares
of its capital stock, or options, warrants or rights to purchase or acquire any
additional shares of its capital stock or securities convertible into or
exchangeable for such shares. Except as set forth in Schedule 2.3 of the Company
Disclosure Letter, the Company does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation, partnership,
joint venture or other business association or entity, with respect to which
interest the Company has invested or is required to invest $20,000 or more or
for which the Company or any Company Subsidiary has liability which is not
limited. Reflections Interactive Limited ("RIL"), a wholly owned subsidiary of
the Company, has the full right and power to obtain, in accordance with the
terms of the Deed of Partnership dated December 4, 1998, between RIL and Martin
Lee Edmondson ("Edmondson"), as amended by the amendment dated September 23,
1999 (the "Deed"), all right, title and interest in the business, property and
assets (the "RIL Partnership Property") of the partnership created under the
Deed (the "RIL/Edmondson Partnership"). Since December 4, 1998, none of RIL,
Edmondson or the RIL/Edmondson Partnership has sold or otherwise transferred any
of the rights or interests in the business, property and assets (other than
sales of products in the normal course of business) owned or held by the
RIL/Edmondson Partnership, directly or indirectly, or created or permitted to
exist any lien on such rights or interests, other than the lien created in
connection with the Credit Agreement. RIL has sent a notice to Edmondson
pursuant to clause 12.5 of the Deed and no action by any of RIL, Edmondson or
any third party, except for the passage of time until November 30, 1999 as
specified therein and except for obtaining the consent of the Landlord with
respect to the assignment to RIL of the lease to Edmondson of certain real
property, is necessary to effect the termination of the RIL/Edmondson
Partnership and to transfer all right, title and interest in the RIL/Partnership
Property to RIL, free of any Lien. Edmondson has no right to receive, either
currently or in the future, any income, capital or other payment from the
Company or any Company Subsidiary (including without limitation RIL) other than
(i) payments that may become due in the future under the terms of the Service
Agreement, annexed to the Escrow Deed, by and among the Company, RIL and
Edmondson, dated December 4, 1998, (ii) the return of his capital account and
his current account pursuant to clause 12.8 of the Deed in an aggregate amount
equal to pound sterling 260,000, (iii) his draw of pound sterling 10,333 for
November 1999, (iv) any payment to be made pursuant to Section 3.7 of the
agreement for the sale and purchase of the share capital and future operation of
Reflections Interactive Limited, dated December 23, 1998 between the Company and
Edmondson (the "RIL Purchase Agreement"), by the Company to Edmondson, or by
Edmondson to the Company, based upon the determination of the net asset value
(as defined in the RIL Purchase Agreement) which net asset value has not been
determined as of the date hereof; provided, however, that in no event will such
payment exceed pound sterling 250,000, and (v) any expenses to be borne by the
Company in accordance with the terms of the Registration Rights Agreement
between the Company and Edmondson dated December 23, 1998.
2.4 Authorization; Binding Agreement. The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation
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of the transactions contemplated hereby and by the Selling Stockholders
Agreements (collectively, the "Transactions") have been duly and validly
authorized (including for purposes of Delaware General Corporation Law (the
"DGCL") Section 203) by the Company's Board of Directors and a majority of its
directors who do not have any financial interest in the Transactions, and no
other corporate proceedings on the part of the Company or any Company Subsidiary
are necessary to authorize the execution and delivery of this Agreement or to
consummate the transactions contemplated hereby, except that the Company's
Certificate of Incorporation shall be amended to increase the number of
authorized shares of Common Stock to permit the reservation of Common Stock
issuable in connection with the transactions contemplated hereby in accordance
with the DGCL. This Agreement has been duly and validly executed and delivered
by the Company and constitutes the legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except to
the extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by principles of
equity regarding the availability of remedies ("Enforceability Exceptions").
2.5 Governmental Approvals. No material consent, approval,
waiver or authorization of, notice to or declaration or filing with
("Governmental Consent") any nation or government, any state or other political
subdivision thereof or any entity, authority or body exercising executive,
legislative, judicial or regulatory functions of or pertaining to government,
including, without limitation, any governmental or regulatory authority, agency,
department, board, commission or instrumentality, any court, or tribunal
("Governmental Authority"), on the part of the Company or any of the Company
Subsidiaries is required in connection with the execution or delivery by the
Company of this Agreement or the consummation by the Company of the transactions
contemplated hereby other than (a) the filing of the Certificate of Amendment to
the Certificate of Incorporation of the Company in the form of Exhibit J hereto
(the "Certificate Amendment") with the Secretary of State of Delaware in
accordance with the DGCL, (b) customary filings with the SEC for transactions of
the type contemplated hereby, (c) filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act"), and filings or consents under any applicable foreign
antitrust requirements, (d) filings pursuant to the rules and regulations of the
Nasdaq National Market ("Nasdaq/NMS") and (e) all filings and mailings required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The
Company has received a written waiver from the Nasdaq/NMS in which Nasdaq/NMS
has granted an exception under NASD Rule 4310(c)(25)(H)(ii) from the requirement
that the Company obtain stockholder approval in connection with the transactions
contemplated hereby.
2.6 No Violations. Except as referred to in Schedule 2.6 of
the Company Disclosure Letter, the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and compliance by the
Company with any of the provisions hereof will not (a) conflict with or result
in any breach of any provision of the Certificate of Incorporation or Bylaws of
the Company or any of the Company Subsidiaries; provided, however, that the
issuance of a portion of the shares issuable upon conversion of the Note and the
Senior Notes will require that the Certificate Amendment have become effective,
(b) require any Consent under or result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation or
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acceleration) under any of the terms, conditions or provisions of, any Company
Material Contract (as hereinafter defined), (c) result in the creation or
imposition of any material Lien upon any of the assets of the Company or any
Company Subsidiary or (d) subject solely to obtaining the Governmental Consents
from Governmental Authorities referred to in Section 2.5 hereof, violate in any
material way any applicable provision of any statute, law, rule or regulation or
any order, decision, injunction, judgment, award or decree ("Law") to which the
Company or any Company Subsidiary or its assets or properties are subject.
2.7 Securities Filings. The Company has made available to
Parent true and complete copies of (a) its Annual Reports on Form 10-K, as
amended, for the three fiscal years ended March 31, 1999, as filed with the SEC
(the "1999 10-K"), (b) its proxy statements relating to all of the meetings of
stockholders (whether annual or special) of the Company since December 13, 1995,
as filed with the SEC, (c) its Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1999 as filed on November 15, 1999 as set forth in
Schedule 2.9(a)(ii) (the "Form 10-Q"), and (d) all other reports, statements and
registration statements and amendments thereto (including, without limitation,
Quarterly Reports on Form 10-Q, as amended, and Current Reports on Form 8-K, as
amended) filed by the Company with the SEC since January 1, 1996 and prior to
the date hereof. The reports and statements set forth in clauses (a) through (c)
above, and those subsequently provided or required to be provided pursuant to
this Section 0, are referred to collectively herein as the "Company Securities
Filings." Except as set forth in Schedule 2.7 of the Company Disclosure Letter,
as of their respective dates, or as of the date of the last amendment thereof,
if amended after filing and prior to the date hereof, each of the Company
Securities Filings was prepared in all material respects in accordance with the
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder (the "Exchange Act"), as the case may be,
and none of the Company Securities Filings contained or, as to the Company
Securities Filings subsequent to the date hereof, will contain, any untrue
statement of a material fact or omitted or, as to the Company Securities Filings
subsequent to the date hereof, will omit, to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
2.8 Company Financial Statements. The audited consolidated
financial statements and unaudited interim financial statements of the Company
included in the Company Securities Filings filed prior to the date hereof (the
"Company Financial Statements") have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and present fairly, in all material
respects, the financial position of the Company and the Company Subsidiaries as
at the dates thereof and the results of their operations and cash flows for the
periods then ended subject, in the case of the unaudited interim financial
statements, to normal year-end audit adjustments, any other adjustments
described therein and the fact that certain information and notes have been
condensed or omitted in accordance with the Exchange Act.
2.9 Absence of Certain Changes or Events.
(a) Except as identified with specificity in (i) Management's
Discussion and Analysis of Financial Condition and Results of Operations in the
Form 10-Q, without reference to (A) the first paragraph thereof, (B) the
subsection titled "--Year 2000 Compliance" or (C) the
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"Factors Affecting Future Performance" incorporated by reference in the Form
10-Q from the Company's Annual Report on Form 10-K, as amended, for the fiscal
year ended March 31, 1999, (ii) the financial statements included in the Form
10-Q attached hereto as Schedule 2.9(a)(i) of the Company Disclosure Letter or
(iii) Schedule 2.9(a)(ii) and Schedule 2.9(a)(ii)(F) of the Company Disclosure
Letter, since June 30, 1999, through the date of this Agreement, there has not
been: (A) any event that has had or would have a Material Adverse Effect; (B)
any declaration, payment or setting aside for payment of any dividend or other
distribution or any redemption or other acquisition (other than pursuant to the
Repurchase Agreement) of any shares of capital stock or securities of the
Company by the Company; (C) any damage or loss involving an amount in excess of
$100,000 to any material asset or property (without reference to Company
Intellectual Property Rights (as hereinafter defined)), whether or not covered
by insurance; (D) any change by the Company in accounting principles or
practices; (E) any material revaluation by the Company of any of its assets,
including writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; or (F) any sale of
property (without reference to Company Intellectual Property Rights) of the
Company or any Company Subsidiary with the value in excess of $100,000, except
for sale of inventory in the ordinary course of business.
(b) Except as disclosed on Schedule 2.9(b) of the Company
Disclosure Letter, neither the Company nor any of the Company Subsidiaries: (i)
has since March 31, 1999, amended any Employee Plan (as hereinafter defined) in
a manner that would reasonably be expected to increase the cost to the Company
or any Company Subsidiary of maintaining such Employee Plan in excess of (A)
$500,000 in the aggregate annually, or (B) $100,000 with respect to officers of
the Company or any Company Subsidiary, except as to benefits they share
generally with all employees of the Company or any Company subsidiary, as
applicable; or (ii) has any announced plan or commitment to create any
additional Employee Plan or to make any modification or change to any existing
Employee Plan that would, in either case, reasonably be expected to materially
increase the benefits payable to employees or former employees of the Company or
any Company Subsidiary.
2.10 No Undisclosed Liabilities. Except as set forth in the
1999 Form 10-K, the Form 10-Q or Schedule 2.10 of the Company Disclosure Letter,
neither the Company nor any Company Subsidiary has any liabilities (absolute,
accrued, contingent or otherwise), except liabilities (a) in the aggregate
adequately provided for in the Company's unaudited balance sheet (including any
related notes thereto) as of September 30, 1999 included in the Form 10-Q or of
the type not required under generally accepted accounting principles to be
reflected as a balance sheet and incurred since September 30, 1999 in the
ordinary course of business, (b) in an aggregate amount of less than $500,000
and not required under generally accepted accounting principles to be reflected
on a balance sheet, (c) disclosed on the Company Disclosure Letter or of a type
described in the representations and warranties of the Company in this Article
II and not required to be disclosed in such Company Disclosure Letter, or (d)
incurred under the terms of this Agreement.
2.11 Compliance with Laws. The business of the Company and
each of the Company Subsidiaries has been operated in material compliance with
all Laws applicable thereto.
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2.12 Permits. Except as set forth in Schedule 2.12 of the
Company Disclosure Letter, (a) the Company and the Company Subsidiaries have all
permits, certificates, licenses, approvals and other authorizations from
Governmental Authorities required in connection with the operation of their
respective businesses (collectively, "Company Permits"), (b) neither the Company
nor any Company Subsidiary is in violation of any Company Permit and (c) no
proceedings are pending or, to the knowledge of the Company, threatened, to
revoke or limit any Company Permit, except, in the case of each of clauses (a),
(b) and (c) above, those the absence or violation of which would not create a
liability or obligation of the Company of more than $100,000.
2.13 Litigation. Except as disclosed in Schedule 2.13 of the
Company Disclosure Letter, there is no suit, action or proceeding ("Litigation")
pending or, to the knowledge of the Company, threatened (and involving an amount
in excess of $100,000) against the Company or any of the Company Subsidiaries,
nor is there any judgment, decree, injunction, rule or order of any Governmental
Authority outstanding against the Company or any Company Subsidiary. Except as
disclosed in Schedule 2.13 of the Company Disclosure Letter, to the best
knowledge of the Company, no investigation or review by any Governmental
Authority is pending or threatened against the Company or any Company
Subsidiary.
2.14 Contracts. Schedule 2.14 of the Company Disclosure Letter
contains a complete list of all loan agreements and financing agreements, all
equipment lease financing agreements and all other contracts and agreements
involving obligations of the Company or any Company Subsidiary in excess of
$100,000, true and complete copies of which have been made available to Parent.
Neither the Company nor any of the Company Subsidiaries is a party or is subject
to any note, bond, mortgage, indenture, contract, lease, license, agreement or
instrument that is required to be described in or filed as an exhibit to any
Company Securities Filing filed prior to the date of this Agreement
(collectively with those agreements listed in Schedule 2.14 of the Company
Disclosure Letter, the "Company Material Contracts") that is not so described in
or filed as required by the Securities Act or the Exchange Act, as the case may
be. Except as disclosed in Schedule 2.14 of the Company Disclosure Letter, all
Company Material Contracts are valid and binding and are in full force and
effect and enforceable against the Company or such Company Subsidiary and, to
the knowledge of the Company, the other parties thereto in accordance with their
respective terms, subject to the Enforceability Exceptions. Except as set forth
in Schedule 2.14 of the Company Disclosure Letter, neither the Company nor any
Company Subsidiary is in material violation or breach of or default under any
such Company Material Contract. To the best knowledge of the Company, no party
(other than the Company or Company Subsidiaries) is in material violation or
breach of or default under any Company Material Contract.
2.15 Employee Benefit Plans.
(a) Schedule 2.15(a) of the Company Disclosure Letter lists
all employee pension benefit plans (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), all employee
welfare benefit plans (as defined in Section 3(1) of ERISA) and all other
employee benefit plans, programs or arrangements, including, without limitation,
any bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar fringe or employee benefit
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<PAGE> 14
plans, programs or arrangements, and any employment, executive compensation or
severance agreements, in any case that are maintained or contributed to by the
Company, any Company Subsidiary or any other entity (whether or not
incorporated) that is a member of a controlled group including the Company or
which is under common control with the Company (an "ERISA Affiliate") within the
meaning of Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986,
as amended, and the regulations thereunder (the "Code") or Section 4001(a)(14)
or (b) of ERISA, for the benefit of any current or former employee of the
Company or any Company Subsidiary ("Employee Plans").
(b) Prior to the date of this Agreement, the Company has
provided, or made available, to Parent or Parent's counsel, to the extent
applicable with respect to any Employee Plan, copies of: (i) each written
Employee Plan document and each related trust agreement, insurance or other
funding contract; (ii) each current summary plan description prepared for such
Employee Plan; (iii) the most recent annual report on Form 5500 filed with the
Department of Labor and the Internal Revenue Service with respect to each
Employee Plan; and (iv) the most recent favorable determination letter issued
for each Employee Plan intended to be a qualified plan under Section 401(a) of
the Code.
(c) None of the Employee Plans provides retiree health or
welfare benefits to any person (other than in accordance with Section 4980B of
the Code or Part 6 of Subtitle B of Title I of ERISA or any other similar
benefits continuation law).
(d) Each Employee Plan has been established and maintained
substantially in accordance with its terms and in substantial compliance with
applicable law (including ERISA and the Code). In addition, to the best
knowledge of the Company, each Employee Plan has been established and maintained
in accordance with its terms and in compliance with applicable Law (including
ERISA and the Code).
(e) No Employee Plan is subject to Title IV of ERISA.
(f) With respect to each Employee Plan, all payments due from
Company or any Company Subsidiary to date have been made when due, and all
amounts properly accrued to date or as of the Closing as liabilities of the
Company or any Company Subsidiary that have not been paid have been properly
recorded on the books of the appropriate entity. With respect to each Employee
Plan that is funded wholly or partially through an insurance policy, all
premiums required to have been paid to date under the insurance policy have been
paid and all premiums required to be paid under the insurance policy through the
Closing will have been paid on or before the Closing.
(g) Except as disclosed in Schedule 2.15(g) of the Company
Disclosure Letter, the Company has not received any written notice of, and is
not otherwise aware of, any actions, claims (other than routine claims for
benefits), lawsuits or arbitrations pending or, to the best knowledge of the
Company, threatened with respect to any Employee Benefit Plan (including against
any fiduciary of any Employee Benefit Plan) which, in the aggregate, would have
a Material Adverse Effect. With respect to any Employee Plan, there has been no
prohibited transaction, breach of fiduciary duty or Internal Revenue Service
audit and no such audit is pending.
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<PAGE> 15
(h) Schedule 2.15(h) of the Company Disclosure Letter sets
forth a true and complete list of each person who holds any outstanding option
to purchase shares of capital stock as of the date hereof, together with: (i)
the number of shares of capital stock subject to each such option; (ii) the
exercise price-per-share of such option; (iii) the vesting schedule of such
option; and (iv) a statement of whether each such option is intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code (an
"ISO").
(i) Except as disclosed in Schedule 2.15(i) of the Company
Disclosure Letter, the consummation of the transactions contemplated by this
Agreement will not: (i)(A) result in an increase in the amount of or (B)
accelerate the vesting or timing of payment of, any benefits or compensation
payable in respect of any employee of the Company or any Company Subsidiary;
(ii) cause any payment or other consideration that is owed or may become due to
any director, officer, employee, contractor or agent of the Company to be
nondeductible to the Company or subject to tax under Code Section 280G or 4999;
or (iii) cause or permit the termination of any employment contract or other
arrangement with any director, officer, employee, contractor or agent of the
Company.
(j) Schedule 2.15(j) of the Company Disclosure Letter contains
a list of all existing employment agreements with "change of control" provisions
to which the Company is a party.
2.16 Taxes and Returns.
(a) Except as set forth in Schedule 2.16 of the Company
Disclosure Letter:
(i) the Company and each of the Company Subsidiaries has
timely filed, or caused to be timely filed, all Tax Returns (as
hereinafter defined) required to be filed by it, and all such tax
returns are true, complete and correct in all respects, and has timely
paid, collected or withheld, or caused to be paid, collected or
withheld, all material amounts of Taxes (as hereinafter defined)
required to be paid, collected or withheld, other than such Taxes for
which adequate reserves in the Company Financial Statements have been
established;
(ii) the Company and each of the Company Subsidiaries have
made adequate provision in the Company Financial Statements for all
Taxes payable by the Company or any Company Subsidiary for which no Tax
Return has yet been filed;
(iii) there are no claims or assessments pending against the
Company or any of the Company Subsidiaries for any alleged deficiency
in any Tax, and the Company has not been notified in writing of any
proposed Tax claims or assessments against the Company or any of the
Company Subsidiaries (other than in each case, claims or assessments
for which adequate reserves in the Company Financial Statements have
been established or which are immaterial in amount);
(iv) neither the Company nor any of the Company Subsidiaries
has executed any waivers or extensions of any applicable statute of
limitations to assess any Taxes; and there are no outstanding requests
by the Company or any of
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<PAGE> 16
the Company Subsidiaries for any extension of time within which to file
any material Tax Return or within which to pay any Taxes shown to be
due on any Tax Return;
(v) the statute of limitations period for assessment of
federal income taxes has expired for all taxable years through February
28, 1995;
(vi) to the best knowledge of the Company, (A) there are no
liens for Taxes on the assets of the Company or any of the Company
Subsidiaries except for statutory liens for current Taxes not yet due
and payable and (B) neither the Company nor any Company Subsidiary is
liable for any Tax imposed on any other person, except as the result of
the application of Income Tax Regulations Section 1.1502-6 (and any
comparable provision of any state, local, foreign or provincial
jurisdiction) to the affiliated group of which the Company is the
common parent.
(b) For purposes of this Agreement, the term "Tax" shall mean
any federal, state, local, foreign or provincial income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
alternative or add-on minimum, ad valorem, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty imposed by any
Governmental Authority. The term "Tax Return" shall mean a report, return or
other information (including any attached schedules or any amendments to such
report, return or other information) required to be supplied to or filed with a
governmental entity with respect to any Tax, including an information return,
claim for refund, amended return or declaration or estimated Tax.
(c) Except as set forth in the second and third sentences of
Schedule 2.16 of the Company Disclosure Letter, neither the Company nor any
Company Subsidiary is currently under examination or audit by any Governmental
Authority with respect to any Tax.
2.17 Intellectual Property.
(a) The Company or the Company Subsidiaries own, license or
otherwise possess legally enforceable rights to use, sell and transfer all
material copyrights developed internally by Company or the Company Subsidiaries,
and any applications therefor, and all material trade secrets that are used in
the respective businesses of the Company and the Company Subsidiaries as
currently conducted, except as disclosed on Schedule 2.17(a)(i) of the Company
Disclosure Letter. To the Company's best knowledge, the Company or the Company
Subsidiaries own, license, or otherwise possess legally enforceable rights to
use, sell and transfer all material patents, trademarks, trade names, service
marks and copyrights developed by third parties, and any applications therefor,
technology, know-how, source code, object code, domain names and tangible or
intangible proprietary information or materials that are used in the respective
businesses of the Company and the Company Subsidiaries as currently conducted,
except as disclosed on Schedule 2.17(a)(ii) of the Company Disclosure Letter.
Schedule 2.17(a)(iii) contains a complete list of each patent, trademark,
service mark and copyright, as to which Company or a Company Subsidiary is the
registered owner, of each application for patent, trademark, service mark and
copyright registration filed by or on behalf of
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<PAGE> 17
the Company or a Company Subsidiary, and of each agreement with a third party
involving an amount in excess of $100,000 that grants the Company or a Company
Subsidiary any rights to make, use, sell, modify, create derivative works of,
sublicense or otherwise distribute the intellectual property of a third party,
true and complete documentation of which has been delivered to Parent. For the
purposes of this Agreement, "Company Intellectual Property Rights" means all
patents, trademarks, trade names, service marks, copyrights, and applications
therefor, technology, know-how, trade secrets, source code, object code, domain
names and tangible or intangible proprietary information or materials that are
used in the respective businesses of the Company and the Company Subsidiaries as
currently conducted.
(b) There are no valid grounds for any bona fide claims (i)
that the business of the Company or any of the Company Subsidiaries infringes on
or otherwise violates any copyright of another based on works developed
internally by the Company or a Company Subsidiary or any trade secret of
another; (ii) that the business of the Company or any of the Company
Subsidiaries willfully infringes on or otherwise willfully violates, or, to the
Company's best knowledge, infringes on or otherwise violates, any patent,
trademark or service mark of another; (iii) against the use by the Company or a
Company Subsidiary of any copyrights internally developed by the Company or a
Company Subsidiary or trade secrets used in the business of the Company or a
Company Subsidiary as currently conducted or as proposed to be conducted; (iv)
to the Company's best knowledge, against the use by the Company or any of the
Company Subsidiaries of any trademarks, trade names, patents, technology,
know-how or source code or object code used in the business of the Company or
any of the Company Subsidiaries as currently conducted or as proposed to be
conducted; (v) challenging the ownership, validity or effectiveness of any of
the copyrights in works internally developed by the Company or the Company
Subsidiaries or any applications therefor or of any material trade secret of the
Company or a Company Subsidiary; (vi) to the Company's best knowledge,
challenging the ownership, validity or effectiveness of any of the patents,
registered and material unregistered trademarks, service marks and trade names,
and any applications therefor or of any material trade secret of the Company or
any of the Company Subsidiaries; or (vii) to the Company's best knowledge,
challenging the license or legally enforceable right to use any patents,
trademarks, service marks, trade secrets or copyrights of a third party by the
Company or the Company's Subsidiaries, except, in the case of each of clauses
(i), (ii), (iii), (iv), (v), (vi) and (vii) above, as disclosed on Schedule
2.17(b) of the Company Disclosure Letter.
(c) All material patents, registered trademarks, service
marks, copyrights and material trade secrets owned by the Company and used in
the business of the Company are valid and subsisting. To the Company's best
knowledge, all material patents, registered trademarks, service marks,
copyrights and material trade secrets licensed by the Company and used in the
business of the Company are valid and subsisting. Except as set forth in
Schedule 2.17(c), the rights, title and ownership of the Company Intellectual
Property Rights by Company and Company Subsidiaries herein, are not subject to
any encumbrances, charges, liens, indentures, security interests or claims of
any kind.
(d) Except as set forth (i) in the portions identified with
specificity of the specified Company Securities Filings filed prior to the date
of this Agreement listed on Schedule 2.17(d)(i) of the Company Disclosure Letter
or (ii) on 2.17(d)(ii) of the Company Disclosure Letter, to the Company's best
knowledge, there is no material unauthorized use,
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<PAGE> 18
infringement or misappropriation of any of the Company Intellectual Property
Rights or material trade secret of the Company by any third party, including any
employee or former employee of the Company or any of the Company Subsidiaries.
(e) Except as set forth in Schedule 2.17(e) of the Company
Disclosure Letter, the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not constitute a
breach of any instrument or agreement governing any Company Intellectual
Property Rights or material trade secret; will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination of any Company
Intellectual Property Rights or material trade secret of the Company; nor impair
the right of the Surviving Corporation, after the Closing Date, to use, sell or
license any Company Intellectual Property Rights or material trade secret.
(f) The Company and the Company Subsidiaries have taken
reasonable and practicable steps designed to safeguard and maintain their
proprietary rights in all Company Intellectual Property Rights and the secrecy
and confidentiality of their trade secrets. To the Company's best knowledge, no
current or prior officers, employees or consultants of the Company or the
Company Subsidiaries claim or have a right to claim an ownership interest in any
Company Intellectual Property Rights or trade secret as a result of having been
involved in the development or licensing of such Company Intellectual Property
Rights or trade secret while employed by or consulting to Company.
2.18 The Shares and the Notes.
(a) The Shares have been duly authorized and, when issued and
paid for pursuant to the terms of this Agreement, will be duly and validly
issued, fully paid and nonassessable, and will be free and clear of all Liens
and restrictions, other than restrictions on transfer imposed by the Securities
Act and state securities laws, including without limitation "blue sky" laws; the
Notes have been duly authorized and, when issued and delivered and paid for
pursuant to the terms of this Agreement, will be duly and validly issued and
enforceable in accordance with their terms subject to Enforceability Exceptions;
and, upon authorization of additional shares of Common Stock pursuant to Section
4.11 of this Agreement, the Conversion Shares will have been duly authorized and
reserved for issuance upon conversion of the Note by the Company and, when
issued upon conversion in accordance with the terms of the Note, will have been
duly and validly issued, fully paid and nonassessable and will be free and clear
of all Liens and restrictions other than restrictions imposed by the Securities
Act and state securities laws, including without limitation "blue sky" laws.
(b) Subject to the accuracy of Purchaser's representations
appearing in Section 3.8 hereof, the offer, issue and sale of the Securities and
the Conversion Shares are and will be exempt from the registration and
prospectus delivery requirements of the Securities Act, and have been registered
or qualified (or are exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable state
securities laws.
2.19 Labor Matters. Except as set forth in Schedule 2.19 of
the Company Disclosure Letter, (a) there are no controversies pending or, to the
best knowledge of the Company, threatened, between the Company and any of its
employees, which controversies
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<PAGE> 19
would have a Material Adverse Effect; (b) neither the Company nor any of the
Company Subsidiaries is a party to any material collective bargaining agreement
or other labor union contract applicable to persons employed by the Company or
the Company Subsidiaries, nor, as of the date of this Agreement, does the
Company or any of the Company Subsidiaries know of any activities or proceedings
of any labor union to organize any such employees; (c) neither the Company nor
any of the Company Subsidiaries has any knowledge of any strikes or material
slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to
any employees of the Company or any of the Company Subsidiaries; (d) there are
no material outstanding or, to the best knowledge of the Company, threatened,
lawsuits, claims or charges in any forum with respect to the Company's
compliance with laws regarding antidiscrimination, wrongful termination,
termination in violation of public policy, unpaid overtime, breach of contract
or any other claimed employee rights; and (e) the Company and the Company
Subsidiaries have complied in all material respects with all reporting,
disclosure and other requirements with respect to safety, affirmative action,
drug and alcohol testing, WARN Act and any other applicable labor and employment
laws or regulations.
2.20 Limitation on Business Conduct. Except as set forth in
Schedule 2.20 of the Company Disclosure Letter, neither the Company nor any of
the Company Subsidiaries is a party to, or has any obligation under, any
contract or agreement, written or oral, which contains any covenants currently
or prospectively limiting in any material respect the freedom of the Company or
any of the Company Subsidiaries to engage in any line of business or to compete
with any entity.
2.21 Property. Except as set forth in Schedule 2.21 of the
Company Disclosure Letter, each of the Company and each of the Company
Subsidiaries owns the properties and assets that it purports to own free and
clear of all Liens, except for Liens which arise in the ordinary course of
business and do not materially impair the Company's or the Company Subsidiaries'
ownership or use of such properties or assets, Liens for Taxes not yet due and
Liens securing obligations under that certain credit agreement, dated as of
September 11, 1998, by and among the Company, the lender parties thereto and
First Union National Bank, as Administrative Agent, as such credit agreement has
been amended on April 18, 1999, June 29, 1999 and November 15, 1999 (the "Credit
Agreement"). The Company owns no real property. The Company has made available
to the Purchaser true and complete copies of all of its leases of property. With
respect to the property and assets it leases, the Company, the Company
Subsidiaries, and to the best of the Company's knowledge, each of the other
parties thereto, is in material compliance with such leases, and the Company or
the Company Subsidiaries, as the case may be, hold a valid leasehold interest
free of any Liens, except those referred to above. The rights, properties and
assets presently owned, leased or licensed by the Company and the Company
Subsidiaries include all rights, properties and assets necessary to permit the
Company and the Company Subsidiaries to conduct their business in all material
respects in the same manner as their businesses have been conducted prior to the
date hereof. Neither the Company nor any Company Subsidiary is in material
violation of any zoning, building or safety ordinance, regulation or requirement
or other law or regulation applicable to the operation of owned or leased
properties, nor, as of the date of this Agreement, has the Company or any
Company Subsidiary received any notice of such a violation with which it has not
complied.
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<PAGE> 20
2.22 Environmental Matters.
(a) Except as set forth in Schedule 2.22(a) of the Company
Disclosure Letter, the Company and the Company Subsidiaries are in material
compliance with the Environmental Laws (as hereinafter defined), which
compliance includes the possession by the Company and the Company Subsidiaries
of all material permits and governmental authorizations required under
applicable Environmental Laws, and compliance in all material respects with the
terms and conditions thereof, except in each case where such non-compliance
would not reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any of the Company Subsidiaries has received any written
communication from a Governmental Authority that alleges that the Company or any
of the Company Subsidiaries is not in such material compliance, and there are no
circumstances that may prevent or interfere with such compliance in the future,
except where such non-compliance would not reasonably be expected to have a
Material Adverse Effect.
(b) Except as set forth in Schedule 2.22(b) of the Company
Disclosure Letter, there are no Environmental Claims (as hereinafter defined),
including claims based on "arranger liability," pending or, to the knowledge of
the Company, threatened against the Company or any of the Company Subsidiaries
or against any person or entity whose liability for any Environmental Claim the
Company or any of the Company Subsidiaries has retained or assumed either
contractually or by operation of law, except for such Environmental Claims that
would not reasonably be expected to have a Material Adverse Effect.
(c) Except as set forth in Schedule 2.22(c) of the Company
Disclosure Letter, to the knowledge of the Company and the Company Subsidiaries,
there are no past or present actions, inactions, activities, circumstances,
conditions, events or incidents, including the release, emission, discharge,
presence or disposal of any Material of Environmental Concern (as hereinafter
defined) by the Company and the Company Subsidiaries and, to the knowledge of
the Company and the Company Subsidiaries, by third parties, that would form the
basis of any Environmental Claim against the Company or any of the Company
Subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of the Company Subsidiaries have retained
or assumed either contractually or by operation of law, except for such
Environmental Claims that would not reasonably be expected to have a Material
Adverse Effect.
(d) Except as set forth in Schedule 2.22(d) of the Company
Disclosure Letter, the Company is in compliance in all material respects with
Environmental Laws as they relate to (i) any on-site or off-site locations where
the Company or any of the Company Subsidiaries has stored, disposed or arranged
for the disposal of Materials of Environmental Concern for itself (but not on
behalf of others) or (ii) any underground storage tanks located on property
owned or leased by the Company or any of the Company Subsidiaries. To the
knowledge of Company, there is no asbestos contained in or forming part of any
building, building component, structure or office space owned or leased by the
Company or any of the Company Subsidiaries. To the knowledge of Company, no
polychlorinated biphenyls (PCB's) or PCB-containing items are used or stored at
any property owned or leased by the Company or any of the Company Subsidiaries.
The Company hereby represents that it has occupied properties only for the
purpose of office space or warehousing non-hazardous materials.
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(e) For purposes of this Agreement:
(i) "Environmental Claim" means any written claim,
action, cause of action, investigation or notice by any person
or entity alleging potential liability (including potential
liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages,
personal injuries, or penalties) arising out of, based on or
resulting from (x) the presence, or release into the
environment, of any Material of Environmental Concern at any
location, whether or not owned or operated by the Company or
any of the Company Subsidiaries, or (y) circumstances forming
the basis of any violation, or alleged violation, of any
Environmental Law.
(ii) "Environmental Laws" means all Federal, state,
local and foreign laws or regulations relating to pollution or
protection of human health and the environment (including
ambient air, surface water, ground water, land surface or
sub-surface strata), including laws and regulations relating
to emissions, discharges, releases or threatened releases of
Materials of Environmental Concern, or otherwise relating to
the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of
Environmental Concern.
(iii) "Materials of Environmental Concern" means
chemicals, pollutants, contaminants, hazardous materials,
hazardous substances and hazardous wastes, toxic substances,
petroleum and petroleum products that are regulated under the
Environmental Laws.
2.23 Insurance. The Company maintains insurance that provides
adequate coverage for normal risks incident to the business of the Company and
the Company Subsidiaries and their respective properties and assets and in
character and amount comparable to that carried by persons engaged in similar
businesses, except where the nature of potential liabilities that may reasonably
be expected to arise in the course of the Company's business would, in the
exercise of prudent business judgment, require additional amounts or types of
insurance coverage, in which case the Company maintains such additional
coverage. The insurance polices maintained by the Company are with reputable
insurance carriers, have no premium delinquencies and are in full force and
effect. Copies of all such insurance policies have been made available to
Parent.
2.24 Interested Party Transactions. Except as set forth in the
1999 Form 10-K, or Schedule 2.24 of the Company Disclosure Letter, no event has
occurred that would be required to be reported as a Certain Relationship or
Related Transaction, pursuant to Item 404 of Regulation S-K promulgated by the
SEC.
2.25 Finders and Investment Bankers. Neither the Company nor
any of its officers or directors has employed any broker, finder or financial
advisor or otherwise incurred any liability for any brokerage fees, commissions,
or financial advisors' or finders' fees in connection with the transactions
contemplated hereby, other than pursuant to an agreement with Bear, Stearns &
Co. Inc.
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2.26 Fairness Opinion. The Company's Board of Directors has
received from its financial advisor, Bear, Stearns & Co. Inc., a written opinion
addressed to it relating to the fairness from a financial point of view of the
transaction contemplated hereby. A true and complete copy of such opinion has
been delivered to Parent.
2.27 Takeover Statutes. Assuming Parent and its "associates"
and "affiliates" (as defined in Section 203 of the DGCL) collectively
beneficially "own" (as defined in Section 203 of the DGCL) and have beneficially
"owned" at all times during the three (3) year period prior to the date hereof
less than fifteen percent of the Company Stock outstanding, Section 203 of the
DGCL is, and shall be, inapplicable (a) to the acquisition of the Securities and
(b) to any business combination of the Company with the Parent or any of such
"associates" or "affiliates."
2.28 Full Disclosure. No statement contained in any
certificate or schedule, including, without limitation, the Company Disclosure
Letter, furnished or to be furnished by the Company or the Company Subsidiaries
to Parent or Purchaser in, or pursuant to the provisions of, this Agreement
contains or shall contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in the light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
2.29 Year 2000. Except as set forth in Schedule 2.29 of the
Company Disclosure Letter and as updated in the Form 10-Q, the disclosure under
the heading "Year 2000 Compliance" contained in the Company's annual report on
Form 10-K, as amended, for the period ended March 31, 1999 is accurate and in
compliance with applicable law in all material respects.
2.30 Director Resignations and Election. All of the directors
of the Company other than Thomas A. Heymann and Steven A. Denning will execute
and deliver to the Company irrevocable resignations from the Board of Directors
of the Company on or before November 29, 1999 and effective as of the Closing
("Resignations"), and all of the Resignations will be irrevocably accepted by
the Company, which acceptance may not be rescinded. In addition, the Company's
Board of Directors has elected Bruno Bonnell and Thomas Schmider, as directors
of the Company effective as of the Closing.
2.31 Financial Projections; Liquidity. True and complete
copies of all financial projections provided by the Company to, and all written
communications with, the Company's lenders under the Credit Agreement since
October 1, 1999 (the "Projections") are set forth in Schedule 2.31 of the
Company Disclosure Letter (including, without limitation, the Company's
projected cash flow and the forecasted Borrowing Base under the Credit Agreement
and the computation thereof). The Projections were prepared in good faith based
on reasonable assumptions in light of the then current financial condition and
operations of the Company and set forth the Company's projected cash flow over
the periods set forth therein. Since November 12, 1999 (the "November
Projections"), there has been no change, event or other development that would
cause any material change in the Company's cash flow from that shown in the
November Projections during the periods set forth therein. The cash generated by
the Company's operations plus the $25 million to be loaned by Purchaser to the
Company to be evidenced by the Short-Term Note will be sufficient to permit the
Company to continue its operations in the
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ordinary course and to meet the Company's obligations as they come due until at
least February 28, 2000.
2.32 Expenses. The Company has provided Parent with a good
faith estimate of all costs and expenses paid, payable or to be payable by the
Company in connection with the transactions contemplated by the Transaction
Documents, including, without limitation, any amounts that will come due as a
result of the consummation of the transactions contemplated by the Transaction
Documents.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and
warrant to the Company that:
3.1 Organization and Good Standing. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Purchaser is a wholly-owned
subsidiary of Parent.
3.2 Authorization; Binding Agreement. Parent and Purchaser
have all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the respective
Boards of Directors of Parent and Purchaser, as appropriate, and no other
corporate proceedings on the part of Parent, Purchaser or any other subsidiary
of Parent are necessary to authorize the execution and delivery of this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by each of Parent and Purchaser
and constitutes the legal, valid and binding agreement of Parent and Purchaser,
enforceable against each of Parent and Purchaser in accordance with its terms,
subject to the Enforceability Exceptions.
3.3 Governmental Approvals. No Governmental Consent from or
with any Governmental Authority on the part of Parent or Purchaser is required
in connection with the execution or delivery by Parent and Purchaser of this
Agreement or the consummation by Parent and Purchaser of the transactions
contemplated hereby other than (a) filings with the SEC, (b) filings under the
HSR Act and filings or consents under any applicable foreign antitrust
requirements and (c) filings and mailings under Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder.
3.4 No Violations. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by Parent or Purchaser with any of the provisions hereof will not (a)
conflict with or result in any breach of any provision of the governing
documents of Parent or any subsidiary of Parent, (b) require any Consent under
or result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any of the
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<PAGE> 24
terms, conditions or provisions of, any material note, bond, mortgage,
indenture, contract, lease, license, agreement or instrument to which Parent or
any subsidiary of Parent is a party or by which Parent or any subsidiary of
Parent or any of their respective assets or property is subject, (c) result in
the creation or imposition of any material Lien upon any of the assets of Parent
or any subsidiary of Parent or (d) subject to obtaining the Consents from
Governmental Authorities referred to in Section 3.3 hereof, violate any Law to
which Parent or any subsidiary of Parent or their respective assets or
properties are subject, except in any such case for any such conflicts,
violations, breaches, defaults or other occurrences that would not prevent or
delay consummation of the transactions contemplated hereby, or otherwise
materially and adversely affect the ability of Parent or Purchaser to perform
their respective obligations under this Agreement.
3.5 Disclosure Documents. None of the information supplied by
Parent, Purchaser or their respective officers, directors, representatives,
agents or employees (the "Parent Information") in writing specifically for
inclusion in the Schedule 14F and Schedule 13D filed in connection with this
transaction will, at the time such documents are filed with the SEC or first
mailed to the Company's stockholders, contain any untrue statement of a material
fact, or will omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances in which they were made not
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for such stockholders' meeting which
has become false or misleading.
3.6 Finders and Investment Bankers. Neither Parent, Purchaser
nor any of their respective officers or directors has employed any broker,
finder or financial advisor or otherwise incurred any liability for any
brokerage fees, commissions or financial advisors' or finders' fees in
connection with the transactions contemplated hereby, other than Lazard and
Freres & Co. LLC.
3.7 Financing Arrangements. Parent (including for this purpose
one or more of its wholly owned subsidiaries) has funds available to it
sufficient to enable the Purchaser to purchase the Securities in accordance with
the terms of this Agreement and securities of the Company from the Principal
Stockholders pursuant to the Selling Stockholder Agreements.
3.8 Securities Laws.
(a) The Securities are being acquired by Purchaser for its own
account pursuant to this Agreement and not for any other Person, and for
investment only and with no intention of distributing or reselling such
Securities or any part thereof or any interest therein in any transaction that
would be in violation of the securities laws of the United States of America, or
any state thereof; without prejudice, however, to the rights of Purchaser at all
times to sell or otherwise dispose of all or any part of the Securities under an
effective registration statement or applicable exemption from registration under
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act") and any applicable state
securities law.
(b) Purchaser is an "accredited investor" as that term is
defined in Rule 501 under the Securities Act and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of an investment in the Securities. By
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<PAGE> 25
reason of Purchaser's business or financial experience, it is a sophisticated
investor which has the capacity to protect its interest in connection with the
transactions contemplated under the Transaction Documents and has sufficient
knowledge and experience in financial and business matters to evaluate properly
the merits and risks of the Securities and the related transactions contemplated
by the Transaction Documents.
(c) Purchaser has been provided with copies of the Company
Securities Filings and a copy of the Company Disclosure Letter and has had the
opportunity to request any exhibits filed as part of any such document.
(d) Purchaser hereby acknowledges that the Company has made
available to it the opportunity to ask questions and receive answers from the
Company concerning the terms and conditions under which the Securities will be
issued to it.
(e) Purchaser agrees that, so long as required by law,
certificates evidencing any of the Securities and any securities issued in
exchange for or in respect thereof shall bear a legend substantially to the
following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR UNDER THE SECURITIES OR BLUE SKY LAWS OF ANY
OTHER COUNTRY, STATE OR OTHER JURISDICTION, AND MAY NOT BE OFFERED,
SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, UNITED STATES PERSONS,
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND OTHER APPLICABLE LAWS OR PURSUANT TO AN EXEMPTION FROM SUCH ACT OR
OTHER LAWS."
(f) The foregoing representations in this Section 3.8 are made
for purposes of compliance with the exemptions from registration under the
Securities Act and shall not in any way affect the rights of Parent or Purchaser
in connection with this Agreement, including, without limitation, their ability
to rely on the representations and warranties of the Company set forth in this
Agreement.
3.9 Absence of Liens. Upon surrender of the notes purchased
pursuant to the Note Purchase Agreement by the Purchaser to the Company in
accordance with the terms thereof, the Company will obtain all right, title and
interest in such notes obtained by Purchaser from the transferors thereof,
without any Liens having been imposed by Purchaser or by reason of Purchaser's
ownership of the Note.
ARTICLE IV
ADDITIONAL COVENANTS OF THE COMPANY
The Company covenants and agrees as follows:
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<PAGE> 26
4.1 Conduct of Business of the Company and the Company
Subsidiaries.
(a) Unless Parent shall otherwise consent in writing and
except as expressly contemplated by this Agreement or in the Company Disclosure
Letter, during the period from the date of this Agreement to the Closing,
(i) the Company shall conduct, and it shall cause the
Company Subsidiaries to conduct, its or their businesses in
the ordinary course and consistent with past practice, and the
Company shall, and it shall cause the Company Subsidiaries to,
use its or their reasonable best efforts to preserve
substantially intact its business organization, to keep
available the services of its present officers and employees
and to preserve the present commercial relationships of the
Company and the Company Subsidiaries with persons with whom
the Company or the Company Subsidiaries do significant
business and
(ii) without limiting the generality of the
foregoing, neither the Company nor any of the Company
Subsidiaries will:
(A) amend or propose to amend its
Certificate of Incorporation or Bylaws;
(B) authorize for issuance, issue, grant,
sell, pledge, dispose of or propose to issue, grant,
sell, pledge or dispose of any shares of, or any
options, warrants, commitments, subscriptions or
rights of any kind to acquire or sell any shares of,
the capital stock or other securities of the Company
or any of the Company Subsidiaries, including, but
not limited to, any securities convertible into or
exchangeable for shares of stock of any class of the
Company or any of the Company Subsidiaries, except
for (a) the issuance of shares pursuant to the
exercise of Company Options outstanding on the date
of this Agreement in accordance with their present
terms, (b) the issuance of shares upon the exercise
of Company Warrants outstanding on the date of this
Agreement in accordance with their present terms, and
(c) the issuance of shares upon the conversion of
Preferred Shares outstanding on the date of this
Agreement in accordance with the present terms of the
Preferred Shares;
(C) split, combine or reclassify any shares
of its capital stock or declare, pay or set aside any
dividend or other distribution (whether in cash,
stock or property or any combination thereof) in
respect of its capital stock, other than dividends to
the holders of Preferred Shares in accordance with
the present terms of the Preferred Shares and
dividends or distributions to the Company or a
Company Subsidiary, or directly or indirectly redeem,
purchase or otherwise acquire or offer to acquire any
shares of its capital stock or other securities;
(D) create, incur or assume any indebtedness
for borrowed money or issue any debt securities,
except pursuant to the Credit Agree-
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ment as in effect on the date hereof (except as
provided in clause (2) of paragraph (E) below);
(E) (1) assume, guarantee, endorse (other
than endorsement for collection or deposit in the
ordinary course of business) or otherwise become
liable or responsible (whether directly, indirectly,
contingently or otherwise) for the obligations of any
person (other than the Company or a Company
Subsidiary); (2) make any capital expenditures or
make any advances or capital contributions to, or
investments in, any other person (other than to a
Company Subsidiary); (3) voluntarily incur any
material liability or obligation (absolute, accrued,
contingent or otherwise); or (4) sell, transfer,
mortgage, pledge or otherwise dispose of, or
encumber, or agree to sell, transfer, mortgage,
pledge or otherwise dispose of or encumber, any
assets or properties, real, personal or mixed,
material to the Company and the Company Subsidiaries
taken as a whole other than (x) to secure debt
permitted under paragraph (D) or (y) the sale of
inventory in the ordinary course of business;
(F) increase in any manner the compensation
of any of its officers or employees or enter into,
establish, amend or terminate any employment,
consulting, retention, change in control, collective
bargaining, bonus or other incentive compensation,
profit sharing, health or other welfare, stock option
or other equity, pension, retirement, vacation,
severance, deferred compensation or other
compensation or benefit plan, policy, agreement,
trust, fund or arrangement with, for or in respect
of, any stockholder, officer, director, employee,
consultant or affiliate other than, in any such case
referred to above, as may be required by Law or as
required pursuant to the terms of agreements in
effect on the date of this Agreement and other than
arrangements with new employees (other than employees
who will be officers of the Company) hired in the
ordinary course of business and providing for
compensation and other benefits consistent with those
provided for similarly situated employees of the
Company as of the date hereof;
(G) alter through merger, liquidation,
reorganization, restructuring or in any other fashion
the corporate structure or ownership of any
subsidiary or the Company;
(H) except as may be required as a result of
a change in law or as required by the SEC, and with
prior written notice to Purchaser, change any of the
accounting principles or practices used by it;
(I) make any tax election which is
inconsistent with past practice or settle or
compromise any Tax liability in excess of $75,000;
(J) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise),
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<PAGE> 28
other than the payment, discharge or satisfaction in
the ordinary course of business of liabilities of
less than $25,000 reflected or reserved against in
the financial statements (including the notes
thereto) of the Company, or covered by insurance;
(K) enter into, amend, modify or terminate
any contract, agreement, commitment or other
understanding involving: (1) annual payments, or
property with a value, of (x) $75,000 or more,
($100,000 or more in the case of purchase orders) if
the place of performance is the United States, or (y)
$100,000 or more if the place of performance is
outside the United States, (2) a term of more than
one (1) year or (3) the assignment, transfer, sale or
exclusive license of copyrights, trademarks or other
intellectual property;
(L) incur expenses in connection with the
transactions contemplated by this Agreement in excess
of $4,350,000;
(M) take, or agree in writing or otherwise
to take, any of the foregoing actions or any action
which would make any of the representations or
warranties of the Company contained in this Agreement
untrue or incorrect in any material respect at or
prior to the Closing; and
(N) shall not terminate the Exchange
Agreement between the Company and certain of its
stockholders dated of even date herewith.
(b) The Company shall, and the Company shall cause each of the
Company Subsidiaries to, (i) comply with all Laws applicable to it, to any of
its properties, assets or business or to the consummation of the transactions
contemplated hereby, and to maintain in full force and effect all the Company
Permits necessary for its business, (ii) promptly furnish Parent and Purchaser
with copies of all notices and correspondence or other information to or from
any party in connection with matters relating to the Credit Agreement or the
Exchange Agreement and (iii) send a message by email by the opening of business
on November 16, 1999 to all of their respective employees notifying them of the
provisions of this Section 4.1 and directing them not to take any action in
contravention of this Section 4.1.
4.2 Notification of Certain Matters. The Company shall give
prompt notice to Parent if any of the following occur after the date of this
Agreement: (a) receipt of any notice or other communication in writing from any
third party alleging that the Consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement, provided
that such Consent would have otherwise been required to have been disclosed in
this Agreement; (b) receipt of any material notice or other communication from
any Governmental Authority (including, but not limited to, the National
Association of Securities Dealers ("NASD"), Nasdaq/NMS or any other securities
exchange) in connection with the transactions contemplated by this Agreement;
(c) the occurrence of an event which would be reasonably likely to have a
Material Adverse Effect; or (d) the commencement or threat of any Litigation
involving or affecting the Company or any of the Company Subsidiaries, or any of
their respec-
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<PAGE> 29
tive properties or assets, or, to the Company's knowledge, any employee, agent,
director or officer, in his or her capacity as such, of the Company or any of
the Company Subsidiaries.
4.3 Access and Information. Between the date of this Agreement
and the Closing, and without intending by this Section 4.3 to limit any of the
other obligations of the parties under this Agreement, the Company will give,
and shall direct its accountants and legal counsel to give, Parent and its
authorized representatives (including, without limitation, its financial
advisors, accountants and legal counsel), at reasonable times and without undue
disruption to or interference with the normal conduct of the business and
affairs of the Company, access as reasonably required in connection with the
transactions provided for in this Agreement to all offices and other facilities
and to all contracts, agreements, commitments, books and records of or
pertaining to the Company and the Company Subsidiaries and will furnish Parent
with (a) such financial and operating data and other information with respect to
the business and properties of the Company and the Company Subsidiaries as
Parent may from time to time reasonably request in connection with such
transactions and (b) a copy of each material report, schedule and other document
filed or received by the Company or any of the Company Subsidiaries with or from
the SEC, the NASD or Nasdaq/NMS.
4.4 Reasonable Best Efforts. Subject to the terms and
conditions herein provided, the Company agrees to use reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by the Transaction
Documents, including, but not limited to, (a) obtaining all Consents from
Governmental Authorities and other third parties required for the consummation
of the transactions contemplated by the Transaction Documents thereby and (b)
timely making all necessary filings under the HSR Act. Upon the terms and
subject to the conditions hereof, the Company agrees to use reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary to satisfy the other conditions of the Closing set
forth herein. The Company will not take, nor permit any of its subsidiaries to
take, any action or to enter into any agreement which is inconsistent with the
rights granted to the Purchaser in this Agreement or which may adversely affect
the consummation of the transactions contemplated by the Transaction Documents.
4.5 Public Announcements. So long as this Agreement is in
effect, the Company shall not, and shall use reasonable efforts to cause its
affiliates not to, issue or cause the publication of any press release or any
other announcement with respect to the transactions contemplated hereby without
the consent of Parent (such consent not to be unreasonably withheld or delayed),
except where such release or announcement is required by applicable Law or
pursuant to any applicable listing agreement with, or rules or regulations of,
the NASD or Nasdaq/NMS, in which case the Company, prior to making such
announcement, will consult with Parent regarding the same.
4.6 Indemnification and Insurance.
(a) The Company after the Closing shall indemnify and hold
harmless, to the fullest extent permitted under applicable law, including
without limitation, as provided in the Amended and Restated Certificate of
Incorporation of the Company and the Company's By-
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Laws as in effect on the date hereof, each present and former director or
officer of the Company determined as of the Closing (collectively, the
"Indemnified Parties"), who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding, or was
or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that he or she is or was a director or officer of the Company or of any of
its subsidiaries, or is or was at any time serving, at the request of the
Company, any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise in any capacity, against all expense, liability
and loss (including, but not limited to, attorneys' fees, judgments, fines,
excise taxes or penalties with respect to any employee benefit plan or
otherwise, and amounts paid or to be paid in settlement) incurred or suffered by
such director or officer in connection with such proceeding, arising out of or
pertaining to matters existing or occurring at or prior to the Closing,
including, without limitation, matters arising out of or pertaining to the
transactions contemplated by this Agreement (and the Company shall, as provided
under its Amended and Restated Certificate of Incorporation and By-Laws as in
effect on the date hereof and to the fullest extent permitted under applicable
law, advance expenses as incurred by such Indemnified Party; provided, however,
that if and to the extent that Delaware law so requires the payment of such
expense in advance of the final disposition of a proceeding shall be made only
upon delivery to the Company of an undertaking by such Indemnified Party to
repay all such advances if it shall ultimately be determined that such person is
not entitled to indemnification by the Company). The foregoing shall inure to
the benefit of any Indemnified Party's heirs, executors or administrators, and
shall not be in limitation of any rights to indemnification which an Indemnified
Party may have under applicable law and the Company's Amended and Restated
Certificate of Incorporation prior to the Closing.
(b) Commencing promptly after the date hereof, the Company
shall use its reasonable best efforts to obtain a replacement directors and
officers insurance policy (the "Replacement Policy"), to take effect upon the
earlier of (i) December 13, 1999 or (ii) a change of control as defined in
Section 12.b. of the primary policy in effect as the date hereof (National Union
policy 857-48-92) (the "Replacement Policy Date"), which Replacement Policy
waives any right to termination as a result of a change of control or similar
event arising out of the transactions contemplated by the Transaction Documents,
and provides coverage for one (1) year from the Replacement Policy Date. In
addition, commencing promptly after the date hereof, the Company shall use its
reasonable best efforts to obtain a "tail" directors and officers insurance
policy providing coverage for a period of six years from the Closing Date for
claims based on alleged wrongful acts occurring at or prior to the Closing (the
"Tail Insurance"). It is the parties' intention that there be no gap in the
Company's director and officers insurance coverage.
(c) For a period of six (6) years after the Closing, the
Company will maintain in effect, if available, directors' and officers'
liability insurance covering those Persons who are currently covered by the
Company's directors' and officers' liability insurance policy (a copy of which
has been made available to Parent) on terms (including the amounts of coverage
and the amounts of deductibles, if any) that are no less favorable to the terms
now applicable to them under the Company's current policies; provided, however,
that in no event shall the Company be required to expend in excess of 200% of
the annual premium currently paid by the Company for such coverage; and provided
further, that, if the premium for such coverage exceeds such amount, the Company
shall purchase a policy with the greatest coverage available for such 200%
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<PAGE> 31
of the annual premium. Notwithstanding the foregoing, the Company shall not be
bound by the foregoing obligation for so long as the Tail Insurance continues to
be in full force and effect; provided, however, that the Company in all events
shall be bound by the foregoing for a period of one year after the Replacement
Policy Date.
(d) This Section 4.6 shall survive the consummation of the
transactions contemplated hereby, is intended to benefit the Indemnified
Parties, shall be binding on all successors and assigns of the Company and shall
be enforceable by the Indemnified Parties.
4.7 SEC and Stockholder Filings. The Company shall send to
Parent a copy of all material public reports and materials as and when it sends
the same to its stockholders, the SEC or any state or foreign securities
commission.
4.8 Takeover Statutes. If any "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
enacted under state or federal laws in the United States (each a "Takeover
Statute"), including, without limitation, Section 203 of the DGCL, is or may
become applicable to the transactions contemplated by this Agreement, the
Company will use reasonable best efforts to grant such approvals and take such
actions as are necessary so that the transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise act so as to eliminate or minimize the effects of any Takeover
Statute on any of the transactions contemplated hereby.
4.9 Directors of Company; Directors of Company Subsidiaries.
The Company agrees that its Board of Directors shall, at the request of Parent,
elect prior to Closing one additional director designated by Parent to serve as
a director of the Company effective as of the Closing; provided, however, that
such designee shall be reasonably acceptable to the Board of Directors. If
requested by Parent, the Company will secure the resignations of or remove,
effective as of the Closing, any member of the Board of Directors of any Company
Subsidiary. At Purchaser's request, the Company shall exercise reasonable best
efforts to cause Parent's designees to be elected to the Board of Directors of
the Company Subsidiaries effective as of the Closing Date.
4.10 Antidilution Protection. The Company agrees that if there
are, as of the date hereof, (a) any shares of the Company's Common Stock issued
and outstanding other than the number set forth in Section 2.2 as issued and
outstanding at November 12, 1999 (other than as a result of the exercise or
conversion of Purchase Rights (as defined below)), or (b) any warrants, options,
conversion rights or other rights to acquire shares of the Company's Stock
("Purchase Rights") that have not been included in Schedules 2.15(h) to the
Company Disclosure Letter or as to options reflected as granted and outstanding
in Section 2.2, the Company shall, upon demand by Purchaser, immediately issue
to Purchaser at no cost to Purchaser, the number of shares of the Company's
Common Stock that will maintain the percentage of ownership interest of
Purchaser (on a fully-diluted basis) that Purchaser would have had at the
Closing without giving effect to such undisclosed Purchase Rights.
4.11 Amendment of Certificate of Incorporation. The Company's
Board of Directors has authorized and the Company's stockholders have approved
an increase of the Company's authorized capital stock by increasing its
authorized Common Stock by 150 million
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shares to a total of 300 million shares of Common Stock. The Company agrees to
take all action required to effectuate such increases, including filing the
Certificate Amendment with the appropriate governmental authorities in the State
of Delaware (the effectiveness of any such amendment to be conditioned on the
occurrence of the Closing), and taking all other steps necessary and appropriate
to effectuate such increase. The effectiveness of the Certificate Amendment
shall not be a condition to the Closing.
4.12 Registration and Listing. If any shares of Common Stock
required to be reserved for purposes of conversion of the Note 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. 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 Note.
4.13 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 issuing or delivering upon conversion of the Note, the
maximum number of shares of Common Stock that may be issuable or deliverable
upon such conversion; provided, however, that to the extent the Company, as of
the date hereof, has an insufficient number of authorized shares of Common Stock
reserved for issuance upon conversion of the Note, the Company shall use
commercially reasonable efforts to take all actions necessary to increase and
reserve for issuance such number of authorized shares of Common Stock as is
equal to the maximum number of shares of Common Stock that may be issuable or
deliverable upon conversion of the Note, which actions shall include (a)
obtaining the written consent of a sufficient number of stockholders of the
Company to an amendment to the Certificate of Incorporation and (b) upon receipt
of such written consent, preparing, filing and mailing an information statement
on Schedule 14C under the Exchange Act as soon as practicable thereafter. The
Company shall issue all such shares of Common Stock in accordance with the terms
of the Amended and Restated Certificate of Incorporation, as amended, and
otherwise comply with the terms hereof and thereof.
ARTICLE V
ADDITIONAL COVENANTS OF PURCHASER AND PARENT
Parent and Purchaser covenant and agree as follows:
5.1 Reasonable Best Efforts. Subject to the terms and
conditions herein provided, Parent and Purchaser agree to use reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement,
including, but not limited to, (a) obtaining all Governmental Consents from
Governmental Authorities and other third parties required for the consummation
of the transactions contemplated by this Agreement and (b) timely making all
necessary filings under the HSR Act. Upon the terms and subject to the
conditions hereof, Parent and Purchaser agree to use reasonable best
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efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary to satisfy the other conditions of the Closing set
forth herein. Notwithstanding the foregoing, neither Parent nor any of its
affiliates shall be required to divest or hold separate or otherwise take or
commit to take any action that materially limits its freedom of action with
respect to, or its ability to retain, any of the businesses or assets of Parent
or any of its affiliates.
5.2 Public Announcements. So long as this Agreement is in
effect, Parent and Purchaser shall not, and shall use reasonable efforts to
cause their affiliates not to, issue or cause the publication of any press
release or any other announcement with respect to the transactions contemplated
hereby without the consent of the Company (such consent not to be unreasonably
withheld or delayed), except where such release or announcement is required by
applicable Law or pursuant to any applicable listing agreement with, or rules or
regulations of, any stock exchange on which shares of Parent's capital stock are
listed or the NASD, or other applicable securities exchange, in which case
Parent, prior to making such announcement, will consult with the Company
regarding the same.
5.3 Compliance. In consummating the transactions contemplated
hereby, Parent and Purchaser shall comply, and cause their subsidiaries to
comply or to be in compliance, in all material respects, with all applicable
Laws.
5.4 Employment. As of the Closing Date and thereafter, neither
Purchaser nor Parent shall be under any obligation to continue the employment of
any current or former employee of the Company or the Company Subsidiaries as of
the Closing Date ("Company Employees"). Furthermore, except as may be provided
in an Employee Plan, neither Purchaser nor Parent shall be under any obligation
to continue or maintain any level of compensation or benefits to Company
Employees. Subject to the terms of an Employee Plan, Purchaser and Parent shall
have the right to amend or terminate such Employee Plan and Parent reserves the
right to require that Company terminate prior to the Closing Date any retirement
plan intended to satisfy the requirements of Code Section 401(k).
5.5 Guarantee of Parent. Parent hereby guarantees the payment
by Purchaser of the Stock Purchase Price and the Note Purchase Price, and any
other amounts payable by Purchaser pursuant to this Agreement and will cause
Purchaser to perform all of its other obligations under this Agreement in
accordance with their terms.
5.6 Director Election. After the Closing, Parent agrees that
it will exercise reasonable best efforts to cause the Company's Board of
Directors to elect at least such number of directors as necessary to comply with
the Company's Certificate of Incorporation, as amended, and that at least two
members of the Board of Directors of the Company designated by Parent shall be
independent directors as defined under the rules for inclusion of the Company's
Common Stock on the Nasdaq National Market.
5.7 Section 14(f) Information. Parent will supply the Company
and be solely responsible for any information with respect to itself and its
nominees, officers, directors and affiliates required by Section 14(f) and Rule
14f-1 under the Exchange Act.
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ARTICLE VI
PURCHASE CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the
Purchase. The respective obligations of each party to effect the Purchase and
the other transactions contemplated hereby shall be subject to the satisfaction
or waiver at or prior to the Closing of the following conditions:
(a) No Injunction or Action. No order, statute, rule,
regulation, executive order, stay, decree, judgment or injunction shall have
been enacted, entered, promulgated or enforced by any court or other
Governmental Authority which prohibits or prevents the consummation of the
Purchase which has not been vacated, dismissed or withdrawn prior to the
Closing. The Company and Parent shall use all reasonable efforts to have any of
the foregoing vacated, dismissed or withdrawn by the Closing.
(b) Governmental Approvals. All Governmental Consents of any
Governmental Authority required for the consummation of the Purchase and the
transactions contemplated by this Agreement shall have been obtained.
(c) Exchange Agreement. The transactions contemplated by the
Exchange Agreement shall have closed at or prior to the Closing.
6.2 Conditions to Obligations of Parent and Purchaser. The
obligations of Parent and Purchaser to consummate the Purchase and the other
transactions contemplated by this Agreement are subject to the satisfaction of
each of the following conditions at or prior to the Closing (any or all of which
may be waived by Parent and Purchaser in whole or in part to the extent
permitted by law):
(a) Representations and Warranties. Each of the
representations and warranties of the Company contained in this Agreement shall
be true and correct (without giving effect to any limitation as to
"materiality," "material adverse effect" or similar qualifying language set
forth therein) except to the extent that any breach (either individually or in
the aggregate with all other such breaches) would not have a Material Adverse
Effect on the Company or materially and adversely affect the ability of the
Company to consummate the transactions contemplated by this Agreement.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing.
(c) Certificates. Purchaser shall have received a certificate
(dated the Closing Date and in form and substance reasonably satisfactory to
Parent and Purchaser) signed by the Chief Executive Officer and the Chief
Financial Officer of the Company to the effect set forth in Sections 6.2(a) and
6.2(b).
(d) Opinion of Counsel. Purchaser shall have received the duly
executed opinion of Kramer Levin Naftalis & Frankel LLP, counsel to the Company,
dated the Closing Date, substantially in the form of Exhibit F hereto.
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(e) Litigation. There shall be no pending suit, action or
proceeding by any person against Purchaser, the Company, or any affiliate,
director, officer or employee of any of the foregoing which has a reasonable
likelihood of success (i)(A) in any way seeking to restrict or modify in any
material respect the transactions contemplated hereby, (B) seeking to obtain any
damages against any person as a result of the transactions contemplated hereby
or (C) seeking to impose any financial burden on any of the foregoing persons or
any limitation on the ability of Parent or Purchaser to hold the Securities or
on the business or operations of the Company or any of its subsidiaries, if the
reasonably likely determination of a matter set forth in this clause (i) would
materially reduce the economic or business benefits Parent expects, as of the
date hereof, to realize from the purchase of the Securities, or (ii) in any way
seeking to prohibit the transactions contemplated by the Transaction Documents.
(f) No Material Adverse Effect. No change, development, effect
or circumstance shall have occurred that would have a Material Adverse Effect
with respect to the Company.
(g) Registration Rights Agreement. The Registration Rights
Agreement shall have been duly executed and delivered to Purchaser by the
Company.
(h) Selling Stockholder Agreements. The transactions
contemplated by the Selling Stockholders Agreements shall have closed at or
prior to the Closing.
(i) Replacement Policy. The Replacement Policy shall have been
obtained and shall, upon the Closing, be in full force and effect.
6.3 Documents to be Delivered by the Company. At the Closing,
the Company shall deliver to Purchaser the following:
(a) duly executed certificates representing the Shares, in
form satisfactory to Purchaser;
(b) the duly executed Notes;
(c) the Certificate of Incorporation of the Company, certified
by the Secretary of State of the State of Delaware, and the Bylaws of the
Company and resolutions of the Board of Directors and the stockholders of the
Company approving this Agreement and the transactions contemplated hereby,
certified (in form and substance reasonably satisfactory to Purchaser) by the
Secretary of the Company;
(d) certificates issued by appropriate governmental
authorities evidencing the good standing of the Company in each state where the
Company is doing business, as of a date not more than fourteen (14) days prior
to the Closing Date and where possible a confirming telegram as of the Closing
Date;
(e) the certificate referred to in Section 6.2(c); and
(f) such other documents as Parent or Purchaser shall
reasonably request.
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6.4 Conditions to Obligations of the Company. The obligations
of the Company to consummate the Purchase and the other transactions
contemplated by this Agreement are subject to the satisfaction of the following
conditions (all of which may be waived by the Purchaser in whole or in part to
the extent permitted by law):
(a) Representations and Warranties. Each of the
representations and warranties of the Parent and Purchaser contained in this
Agreement shall be true and correct (without giving effect to any limitation as
to "materiality," "material adverse effect" or similar qualifying language set
forth therein) except to the extent the effect of any breach (either
individually or in the aggregate with all other such breaches) would not have a
Material Adverse Effect on the Parent and Purchaser or materially and adversely
affect the ability of the Parent and Purchaser to consummate the transactions
contemplated by this Agreement.
(b) Performance of Obligations of Parent and Purchaser. Parent
and Purchaser shall have performed in all material respects all obligations
required to be performed by them under this Agreement, Exchange Agreements and
Registration Rights Agreement at or prior to the Closing.
(c) Certificate. The Company shall have received a certificate
signed on behalf of Parent and Purchaser by a duly authorized officer of each to
the effect set forth in Sections 6.4(a) and 6.4(b).
(d) Opinion of Counsel. The Company shall have received the
duly executed opinion of Pillsbury Madison & Sutro LLP, counsel to Parent and
Purchaser dated the Closing Date, substantially in the form of Exhibit G hereto.
(e) Litigation. There shall be no pending suit, action or
proceeding by any person against Purchaser or the Company that has a reasonable
likelihood of imposing material restrictions on the Company's operations and
that would have a Material Adverse Effect on the Company.
(f) No Material Adverse Effect. No change, development, effect
or circumstance shall have occurred that would have a Material Adverse Effect
with respect to Parent.
(g) Replacement Policy. The Replacement Policy shall have been
obtained and shall, upon the Closing, be in full force and effect.
6.5 Documents to be Delivered by Purchaser. At the Closing,
Purchaser shall deliver to the Company the following:
(a) evidence of the wire transfer referred to in Section
1.1(b);
(b) the certificate referred to in Section 6.4(c);
(c) charter and bylaws of Parent and Purchaser;
(d) the notes purchased pursuant to the Note Purchase
Agreement for cancellation; and
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(e) the Short-Term Note for cancellation.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company upon written notice to the
other party:
(i) if any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order
enjoining or otherwise prohibiting the consummation of the
Purchase or the Transactions; or
(ii) if the Purchase shall not have been consummated
on or before February 28, 2000, unless the failure to
consummate the Purchase by such date is the result of a breach
of, or a delay in fulfilling its obligation under, this
Agreement by the party seeking to terminate this Agreement;
provided, however, that if the Purchase shall not have been
consummated by such date because of a failure by a Principal
Stockholder to perform in any material respect any material
obligation under or to comply in any material respect with
Sections 1.1, 4, or 5 of its Selling Stockholder Agreement,
then this Agreement may not be terminated pursuant to this
clause (ii) by the Company prior to June 1, 2000.
(c) by the Company if: (i) as of such time of determination,
any of the representations and warranties of Parent or Purchaser contained in
this Agreement shall not be true and correct (without giving effect to any
limitation as to "materiality," "material adverse effect" or similar qualifying
language set forth therein) except to the extent the effect of such breach
(either individually or in the aggregate with all other such breaches) would not
materially adversely affect the ability of Parent or Purchaser to consummate the
transactions contemplated hereby, or (ii) Parent or Purchaser shall have failed
to perform in any material respect any material obligation or to comply in any
material respect with any material agreement or covenant of Parent or Purchaser
under this Agreement, and, in the case of (i), such untruth or incorrectness is
incapable of being cured or is not cured within fifteen (15) days, and in the
case of (ii), such failure is incapable of being cured or is not cured within
five (5) days, after the giving of written notice by Company to the Parent.
(d) by Parent, if: (i) as of such time of determination, any
of the representations and warranties of the Company contained in this Agreement
shall not be true and correct (without giving effect to any limitation as to
"materiality," "material adverse effect" or similar qualifying language set
forth therein) except to the extent the effect of such breach (either
individually or in the aggregate with all other such breaches) would not have a
Material Adverse Effect on the Company or materially adversely affect the
ability of the Company to consummate the transactions contemplated hereby, or
(ii) (A) the Company shall have failed to perform in any material respect any
material obligation or to comply in any material respect with any material
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agreement or covenant of the Company under this Agreement, or (B) a Principal
Stockholder shall have failed to perform in any material respect any material
obligation or to comply in any material respect with Sections 1.1, 4 or 5 of its
Selling Stockholders Agreement, and, in the case of (i), such untruth or
incorrectness is incapable of being cured or is not cured within fifteen (15)
days, and in the case of (ii), such failure is incapable of being cured or is
not cured within five (5) days, after the giving of written notice by Parent to
the Company and, in the case of (ii)(B), the Principal Stockholders.
7.2 Procedure Upon Termination. In the event of termination by
Parent or the Company, or both, pursuant to Section 7.1 hereof, written notice
thereof shall forthwith be given to the other party and no further action shall
be required of Parent or the Company. If this Agreement is terminated as
provided herein each party shall redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same.
7.3 Effect of Termination. In the event that this Agreement is
validly terminated as provided herein, then each of the parties shall be
relieved of their duties and obligations arising under this Agreement after the
date of such termination and such termination shall be without liability to
Parent, Purchaser or the Company; provided, however, that the obligations of the
parties set forth in Sections 9.1 through 9.14 hereof (and Section 5.5 to the
extent Purchaser remains obligated under such sections) shall survive any such
termination and shall be enforceable hereunder; provided, further, however, that
nothing in this Section 7.3 shall relieve Parent, Purchaser or the Company of
any liability for a breach of this Agreement.
ARTICLE VIII
BUSINESS OPPORTUNITIES
8.1 Competition. The Company acknowledges that Parent and its
affiliates engage in the same or similar activities or lines of business as the
Company and have an interest in the same area of business opportunities. The
Company agrees that Parent and its affiliates shall have the right to (a) engage
in the same or similar business activities or lines of business as the Company,
(b) do business with any client or customer of the Company and (c) employ or
otherwise engage any officer or employee of the Company if (i) prior to
employment by the Company such person was an officer, director or employee of
Parent or an affiliate thereof, or (ii) such employment or engagement by Parent
or its affiliate would not harm the Company in any significant manner, and
neither Parent nor any affiliate thereof, nor any officer or director of Parent
or such affiliate, shall be liable to the Company by reason of any such
activities of Parent or its affiliates or of such person's participation
therein.
8.2 Business Opportunities. In the event that (a) Parent or
any of its affiliates, or (b) any officer, director or employee of the Company
who is also an officer, director or employee of Parent or any affiliate thereof,
acquires knowledge of a potential transaction or matter which may be a business
opportunity for both the Company and Parent or any of its affiliates, such
business opportunity shall belong only to Parent and not to the Company, and any
such officer, director or employee of the Company shall treat such business
opportunity as belonging only to Parent and not to the Company, subject to the
following sentence. In the case of clause (b) of the preceding sentence, Parent
shall determine in good faith whether, based on the circum-
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stances under which such person acquired his knowledge, such business
opportunity instead was offered to such person solely in his capacity as an
officer, director or employee of the Company ("Company Capacity"). For purposes
of the foregoing determination, there shall be a presumption that such business
opportunity was offered to such person in his capacity as an officer, director
or employee of Parent or any affiliate thereof. In the event Parent determines
that it was so offered to such person in his Company Capacity, such business
opportunity shall belong only to the Company and not to Parent and such officer,
director or employee shall treat such business opportunity as belonging only to
the Company and not to Parent. With respect to any business opportunity
belonging to Parent pursuant to this Section 8.2, Parent shall decide how to
allocate and pursue such business opportunity based on its sole determination of
what is in the best interests of Parent's stockholders. Parent's good faith
determination of the allocation of business opportunities pursuant to this
Section shall be conclusive and binding for all purposes.
8.3 Exclusive European Arrangement. Parent and the Company
agree to cooperate in good faith to negotiate promptly after the date hereof for
execution at or prior to Closing a definitive distribution and publishing
agreement (the "Distribution Agreement") reflecting the terms and conditions set
forth on Schedule 8.3.
8.4 Business Synergies. The parties intend to explore the
potential for realization of synergies from business initiatives and
relationships between the Company and Parent's United States operations. In
furtherance of this objective, the Company and Parent shall identify and
evaluate together mutually advantageous business initiatives and relationships,
which could include distribution of product and co-production of titles. The
parties shall use commercially reasonable efforts to implement any such business
initiatives or relationships which the parties mutually decide to pursue.
ARTICLE IX
MISCELLANEOUS
9.1 Confidentiality.
(a) Unless (i) otherwise expressly provided in this Agreement,
(ii) required by applicable Law or any listing agreement with, or the rules and
regulations of, Nasdaq/NMS or any other applicable securities exchange or the
NASD, (iii) necessary to secure any required Consents as to which the other
party has been advised or (iv) consented to in writing by Parent and the
Company, all information (whether oral or written) and documents furnished in
connection herewith together with analyses, compilations, studies or other
documents prepared by such party which contain or otherwise reflect such
information shall be kept strictly confidential by the Company, Parent,
Purchaser and their respective officers, directors, employees and agents. Prior
to any disclosure permitted pursuant to the preceding sentence, the party
intending to make such disclosure shall consult with the other party regarding
the nature and extent of the disclosure. Nothing contained herein shall preclude
disclosures to the extent necessary to comply with accounting, SEC and other
disclosure obligations imposed by applicable Law. In the event the transactions
contemplated by this Agreement are not consummated, each party shall return to
the other any documents furnished by the other and all copies thereof that any
of them may have made and will hold in confidence any information obtained from
the other party except to the extent (A) such party is required to disclose such
information by Law or such disclosure is neces-
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<PAGE> 40
sary or desirable in connection with the pursuit or defense of a claim, (B) such
information was known by such party prior to such disclosure (and provided that,
except with respect to information referred to in the following clause (C), such
party shall have advised the other party of such knowledge upon or promptly
after its receipt of such information) or was thereafter developed or obtained
by such party independent of such disclosure or (C) such information is or
becomes generally available to the public other than by breach of this Section
9.1 (or, to such party's knowledge, breach of a confidentiality agreement with
the other party). Prior to any disclosure of information pursuant to the
exception in clause (A) of the preceding sentence, the party intending to
disclose the same shall so notify the party which provided the same in order
that such party may seek a protective order or other appropriate remedy should
it choose to do so.
(b) Parent and the Company further acknowledge that certain of
the business and activities of each of them is competitive with business and
activities of the other party, and each of them therefore agrees that it will
not seek to obtain any competitive or other business advantage over the other
party as a result of the information or documents so received by it in
connection herewith, each party acknowledging that such use would be unfair and
materially detrimental to the other party, provided that the provisions of this
Section 9.1(b) shall not apply to information referred to in clause (C) of
Section 9.1(a) hereof.
9.2 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by a written agreement among the Company, Parent
and Purchaser.
9.3 Waiver of Compliance; Consents. Any failure of the Company
on the one hand, or Parent and Purchaser on the other hand, to comply with any
obligation, covenant, agreement or condition herein may be waived by Parent on
the one hand, or the Company on the other hand, only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in this
Section 9.3.
9.4 Survival. The respective representations, warranties,
covenants and agreements of the Company and Parent contained herein or in any
certificates or other documents delivered prior to or at the Closing shall
survive the execution and delivery of this Agreement, notwithstanding any
investigation made or information obtained by the other party, but shall
terminate at the Closing, except for those contained in Sections 4.4, 4.6, 4.10,
4.11, 5.1, 5.4, 5.5, 5.6, ARTICLE VIII, and 9.1 through 9.14 of ARTICLE IX
hereof, which shall survive beyond the Closing.
9.5 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, by facsimile, receipt confirmed, or on the next business day when
sent by overnight courier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
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(i) if to the Company, to:
GT Interactive Software Corp.
417 Fifth Avenue
New York, New York 10016
Attention: Thomas Heymann
Telecopy: (212) 679-3424
Confirm: (212) 726-0749
with a copy to:
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Attention: David P. Levin, Esq.
Telecopy: (212) 715-8000
Confirm: (212) 715-9100
(ii) if to Parent or Purchaser, to:
Infogrames Entertainment S.A.
84, rue du 1er Mars 1943
Villeurbanne, 69100
France
Attention: Thomas Schmider
Telecopy: (011 33) 472 655116
Confirm: (011 33) 472 655000
And
Attention: Frederic Garnier
Telecopy: (011 33) 472 655059
Confirm: (011 33) 472 655000
with a copy to:
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, California 94104
Attention: Nathaniel M. Cartmell, Esq.
Ronald E. Bornstein, Esq.
Telecopy: (415) 983-1200
Confirm: (415) 983-1000
9.6 Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or
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obligations hereunder shall be assigned by any of the parties hereto prior to
the Closing without the prior written consent of the Company, in the case of a
proposed assignment by Parent or Purchaser, or by Parent, in the case of a
proposed assignment by the Company, except that Purchaser may assign its rights,
interest and obligations hereunder to any other wholly owned direct or indirect
subsidiary of Parent.
9.7 Expenses.
(a) Except as provided below, all fees and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such fees or expenses, whether or not the
transactions contemplated hereby are consummated.
(b) If Parent terminates this Agreement pursuant to Section
7.1(d) (other than a termination pursuant to 7.1(d)(ii)(B)), then the Company
shall pay, or cause to be paid to Parent, at the time of termination, an amount
equal to Parent's and Purchaser's actual and documented reasonable out-of-pocket
expenses incurred by Parent or Purchaser in connection with this Agreement and
the consummation of the transactions contemplated hereby, including, without
limitation, the reasonable fees and expenses payable to all attorneys and
accountants (and specifically excluding any fees owed to any investment banker
or other financial institution) (the "Parent Expenses"). The Company also agrees
that, in the event of the Closing, it shall pay the Parent Expenses, but not in
excess of $2,000,000. Any payments required to be made pursuant to this Section
9.7 shall be made by wire transfer of same day funds to an account designated by
Parent on the business day next following the date of termination.
(c) If the Company terminates this Agreement pursuant to
Section 7.1(c), then Parent shall pay, or cause to be paid to the Company, at
the time of termination, an amount equal to the Company's actual and documented
reasonable out-of-pocket expenses incurred by the Company in connection with
this Agreement and the consummation of the transactions contemplated hereby,
including, without limitation, the reasonable fees and expenses payable to all
attorneys and accountants (and specifically excluding any fees owed to any
investment banker or other financial institution). Any payments required to be
made pursuant to this Section 9.7 shall be made by wire transfer of same day
funds to an account designated by the Company on the business day next following
the date of termination.
(d) The expenses provided for in this Section 9.7 are not
intended to be exclusive remedies with respect to any liability for a breach of
this Agreement, and no party hereto shall be precluded from seeking damages or
remedies at law or in equity as a result of any such matter.
9.8 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed in Delaware without regard to any
principles of choice of law or conflicts of law of such State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any state or federal court sitting in the State of Delaware. Each
of the parties hereto (a) consents to submit such party to the personal
jurisdiction of the Federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of
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<PAGE> 43
this Agreement or any of the transactions contemplated hereby, (b) agrees that
such party will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, (c) agrees that such
party will not bring any action relating to this Agreement or the transactions
contemplated hereby in any court other than a federal court sitting in the State
of Delaware or a Delaware state court, (d) waives any right to trial by jury
with respect to any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby, and (e) irrevocably
appoints CT Corporation each as its respective agent to receive service of
process in respect of any action, suit or proceeding arising under or relating
to this Agreement or any of the transactions contemplated hereby.
9.9 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.10 Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement. As used in this Agreement, (a) the term
"person" shall mean and include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an association, an
unincorporated organization, a Governmental Authority and any other entity, (b)
unless otherwise specified herein, the term "affiliate," with respect to any
person, shall mean and include any person controlling, controlled by or under
common control with such person and (c) the term "subsidiary" of any specified
person shall mean any corporation fifty percent (50%) or more of the outstanding
voting power of which, or any partnership, joint venture, limited liability
company or other entity fifty percent (50%) or more of the total equity interest
of which, is directly or indirectly owned by such specified person.
9.11 Entire Agreement. This Agreement and the documents or
instruments referred to herein including, but not limited to, the Company
Disclosure Letter referred to herein, which Company Disclosure Letter is
incorporated herein by reference, embody the entire agreement and understanding
of the parties hereto in respect of the subject matter contained herein. There
are no restrictions, promises, representations, warranties, covenants, or
undertakings other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings among the parties
with respect to such subject matter, including, without limitation, the July 27,
1999 letter agreement between the Company and Parent; provided, however, that if
this Agreement is terminated pursuant to Article VII hereof, the portions of
such letter captioned "Disclosure of Evaluation Materials," "Use of Evaluation
Materials," "Compelled Disclosure," (only as to the portions of such letter
surviving pursuant to this Section 9.11) "Legal Remedies," "Return of Documents"
and (if such termination is due to Parent's material breach of this Agreement)
"Non-Solicitation" shall again become effective from the date of such
termination.
9.12 Severability. In case any provision in this Agreement
shall be held invalid, illegal or unenforceable in a jurisdiction, such
provision shall be modified or deleted, as to the jurisdiction involved, only to
the extent necessary to render the same valid, legal and enforceable, and the
validity, legality and enforceability of the remaining provisions hereof shall
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<PAGE> 44
not in any way be affected or impaired thereby nor shall the validity, legality
or enforceability of such provision be affected thereby in any other
jurisdiction.
9.13 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
9.14 Third Parties. Nothing contained in this Agreement or in
any instrument or document executed by any party in connection with the
transactions contemplated hereby shall create any rights in, or be deemed to
have been executed for the benefit of, any person that is not a party hereto or
thereto or a successor or permitted assign of such a party; provided however,
that the parties hereto specifically acknowledge that the provisions of Section
4.6 hereof are intended to be for the benefit of, and shall be enforceable by,
the Indemnified Parties.
9.15 Disclosure Letter. Parent and Purchaser each acknowledge
that the Company Disclosure Letter (a) relates to certain matters concerning the
disclosures required and transactions contemplated by this Agreement, (b) is
qualified in its entirety by reference to specific provisions of this Agreement,
(c) is not intended to constitute and shall not be construed as indicating that
any such matter is required to be disclosed, nor shall such disclosure be
construed as an admission that such information is material with respect to the
Company, except to the extent required by this Agreement.
9.16 Effect of Investigation. The representations, warranties,
covenants and agreements of each party hereto shall remain operative and in full
force and effect regardless of any investigation made (or knowledge acquired) by
or on behalf of any other party hereto, any person controlling any such party,
or any of their officers, directors or affiliates, whether prior to or after the
execution of this Agreement.
9.17 Material Adverse Effect. When used in connection with the
Company or any Company Subsidiary or Parent or any of its subsidiaries, as the
case may be, the term "Material Adverse Effect" means any change, effect or
circumstance that, individually or when taken together with all other such
changes, effects or circumstances that have occurred prior to the date of
determination of the occurrence of the Material Adverse Effect, is or is
reasonably likely to be materially adverse to the business, assets (including
intangible assets), financial condition or results of operations of the Company
and its subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as
a whole, as the case may be; provided, however, that (a) any change, effect or
circumstance relating to conditions affecting the United States economy
generally or the economy of any nation or region in which such entity or any of
its subsidiaries conducts business that is material to the business of such
entity and its subsidiaries, taken as a whole, shall not be taken into account
in determining whether there has been or would be a "Material Adverse Effect" on
or with respect to such entity; (b) any change, effect or circumstance relating
- -to conditions generally affecting the entertainment software industry, and not
affecting such entity in a materially disproportionate manner, shall not be
taken into account in determining whether there has been or would be a "Material
Adverse Effect" on or with respect to such entity; and (c) any change,
circumstance or effect caused by the announcement or pendency of this Agreement,
or the transactions contemplated hereby shall not be taken into account in
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<PAGE> 45
determining whether there has been or would be a "Material Adverse Effect" on or
with respect to such entity unless such change, circumstance or effect has
resulted, or reasonably would be expected to result, in a substantial impairment
to such entity's ability to continue to develop, produce, sell or distribute the
products that are material to such entity's business in substantially the same
manner as it has prior to the date of this Agreement.
[Intentionally left blank.]
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<PAGE> 46
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be signed and delivered by their respective duly
authorized officers as of the date first above written.
INFOGRAMES ENTERTAINMENT S.A.
By
--------------------------------------
Name
------------------------------------
Title
------------------------------------
CALIFORNIA U.S. HOLDINGS, INC.
By
--------------------------------------
Name
------------------------------------
Title
------------------------------------
GT INTERACTIVE SOFTWARE CORP.
By
--------------------------------------
Name
------------------------------------
Title
------------------------------------
-42-
<PAGE> 1
Exhibit 4
NOTE
$25,000,000.00 November 15, 1999
GT INTERACTIVE SOFTWARE CORP., a Delaware corporation (the "Borrower"),
for value received, hereby promises to pay twenty-five million dollars
($25,000,000) plus interest as provided below to the order of CALIFORNIA U.S.
HOLDINGS, INC., a California corporation (the "Lender"), at the office of the
Lender, at 5300 Stevens Creek Boulevard, Suite 500, San Jose, California 95129,
Attention: Chief Operating Officer, on the earliest (the "Maturity Date") of (a)
March 31, 2000, (b) the "Closing Date" as defined in the Securities Purchase
Agreement, dated as of November 15, 1999 (the "Purchase Agreement") among the
Lender, Infogrames Entertainment S.A. and GT Interactive Software Corp. or (c)
the date (the "Acceleration Date") on which the maturity date for payment of
this promissory note (this "Note") is otherwise accelerated pursuant to the
terms hereof.
If the Maturity Date is (a) either March 31, 2000 or the Acceleration
Date, the Borrower shall pay the outstanding principal amount of, and the
accrued interest on, this Note in immediately available funds to an account
designated by the Lender or (b) the Closing Date, the Borrower shall pay the
outstanding principal amount of, and the accrued interest on, this Note by
delivery to the Lender or its designee of a Convertible Subordinated Note,
substantially in the form of Exhibit B to the Purchase Agreement.
At the election of the Borrower, the principal amount of this Note
shall bear interest at the per annum rate of (a) the Base Rate (as defined
herein) plus two and one-half percent (2.5%) or (b) the LIBOR Rate (as defined
herein) plus four percent (4.0%). The Borrower shall select, by written notice
to the Lender, the rate of interest applicable to this Note on the date hereof
and thereafter (i) no later than two Business Days before the last day of an
Interest Period (as defined herein), if this Note shall bear interest at the
LIBOR Rate plus four percent (4.0%) or (ii) at any time if this Note shall bear
interest at the Base Rate plus two and one-half percent (2.5%). If the Borrower
does not specify an interest rate as provided in this paragraph, this Note shall
bear interest at the Base Rate plus two and one-half percent (2.5%).
"Base Rate" means, at any time, the higher of (a) the Prime Rate and
(b) the sum of (i) the Federal Funds Rate plus (ii) 1/2 of 1%; each change in
the Base Rate shall take effect simultaneously with the corresponding change or
changes in the Prime Rate or the Federal Funds Rate.
"Business Day" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in New York, New York, are open for the conduct of their domestic or
international commercial banking business, as applicable and (b) with respect to
all notices and determinations in connection with the LIBOR Rate any day (i)
that is a Business Day described in clause (a) and that is also a day for
trading by and between banks in deposits in U.S. dollars in the London interbank
market and (ii) on
1
<PAGE> 2
which banks are open for the conduct of their domestic and international banking
business in the place where the Lender shall have its chief executive office.
"Dollars" shall mean the lawful currency of the United States of
America.
"Eurodollar Reserve Percentage" means, for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of eurocurrency liabilities or any similar category of liabilities for a
member bank of the Federal Reserve System in New York City.
"Federal Funds Rate" means, the rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) representing the daily effective
federal funds rate as quoted by the First Union National Bank and confirmed in
Federal Reserve Board Statistical Release H.15 (519) or any successor or
substitute publication selected by the First Union National Bank. If, for any
reason, such rate is not available, then "Federal Funds Rate" shall mean a daily
rate which is determined, in the opinion of the Lender, to be the rate at which
federal funds are being offered for sale in the national federal funds market at
9:00 a.m. (New York time). Rates for weekends or holidays shall be the same as
the rate for the most immediate preceding Business Day.
"Guaranty Agreement" means the Amended and Restated Unconditional
Subsidiary Guaranty Agreement, dated as of November 15, 1999, by certain
subsidiaries of the Borrower in favor of First Union National Bank, as
Administrative Agent and the Lender.
"LIBOR" means the rate of interest per annum determined on the basis of
the rate for deposits in Dollars in minimum amounts of at least $25,000,000 for
a period equal to the applicable Interest Period which appears on the Dow Jones
Markets screen 3750 at approximately 11:00 a.m. (London time) two (2) Business
Days prior to the first day of the applicable Interest Period (rounded upward,
if necessary, to the nearest one-hundredth of one percent (1/100%)). If, for any
reason, such rate does not appear on Dow Jones Markets screen 3750, then "LIBOR"
shall be determined by First Union National Bank to be the arithmetic average
(rounded upward, if necessary, to the nearest one-hundredth of one percent
(1/100%)) of the rate per annum at which deposits in Dollars would be offered by
first class banks in the London interbank market to First Union National Bank
(or its correspondent) at approximately 11:00 a.m. (London time) two (2)
Business Days prior to the first day of the applicable Interest Period for a
period equal to such Interest Period and in an amount of $25,000,000. Each
calculation by the First Union National Bank of the LIBOR Rate shall be
conclusive and binding for all purposes, absent manifest error.
"LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the First Union National Bank
pursuant to the following formula:
LIBOR Rate = LIBOR
----------------------------------
1.00-Eurodollar Reserve Percentage
2
<PAGE> 3
"Loan Documents" means this Note and each Security Document.
"Pledge Agreement" means the Second Amended and Restated Pledge
Agreement, dated as of November 15, 1999, by the Borrower and certain
subsidiaries of the Borrower in favor of First Union National Bank, as
Administrative Agent, and the Lender.
"Prime Rate" means, at any time, the rate of interest per annum
publicly announced from time to time by First Union National Bank as its prime
rate. Each change in the Prime Rate shall be effective as of the opening of
business on the day such change in the Prime Rate occurs. The parties hereto
acknowledge that the rate announced publicly by First Union National Bank as its
Prime Rate is an index or base rate and shall not necessarily be its lowest or
best rate charged to its customers or other banks.
"Security Agreement" means the Second Amended and Restated Security
Agreement, dated as of November 15, 1999, by the Borrower, and certain
subsidiaries of the Borrower in favor of First Union National Bank, as
Administrative Agent, and the Lender.
"Security Documents" means each of the Security Agreement, the Pledge
Agreement and the Guaranty Agreement.
Each "Interest Period" shall (a) be one month; (b) commence on the date
designated in the notice from the Borrower to the Lender, which shall be (i) the
date hereof in the case of an election to have this Note bear interest at the
LIBOR Rate plus four percent (4.0%) from the date hereof; (ii) except as
provided in preceding clause (i), the date no earlier than two Business Days
after the date on which notice is given to the Lender; and (iii), in the case of
immediately successive Interest Periods, on the date on which the next preceding
Interest Period expires; (c) if any Interest Period would otherwise expire on a
day that is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, that if any Interest Period would otherwise
expire on a day that is not a Business Day but is a day of the month after which
no further Business Day occurs in such month, such interest Period shall expire
on the next preceding Business Day; (d) any Interest Period that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the relevant calendar month at the
end of such Interest Period; and (e) no Interest Period shall extend beyond the
Maturity Date.
Upon the occurrence and during the continuance of an Event of Default,
(i) the Borrower shall no longer have the option to request that this Note bear
interest at the LIBOR Rate plus four percent (4.0%), (ii) if this Note shall at
such time, as a result of an election by the Borrower prior to that time, bear
interest at the LIBOR Rate plus four percent (4.0%), this Note shall bear
interest at the LIBOR Rate plus six percent (6.0%) until the end of the
applicable Interest Period and thereafter at a rate equal to the Base Rate plus
four and one-half percent (4.5%), and (iii) if this Note shall at such time, as
a result of an election by the Borrower (or the failure by the Borrower to make
an election) prior to that time, bear interest at the Base Rate plus two and
one-
3
<PAGE> 4
half percent (2.5%), this Note shall bear interest at the Base Rate plus four
and one-half percent (4.5%). Interest shall continue to accrue on this Note
after the filing by or against the Borrower of any petition seeking any relief
in bankruptcy or under any act or law pertaining to insolvency or debtor relief,
whether state, federal or foreign.
Interest on this Note shall be payable in arrears on the Maturity Date
and shall be computed on the basis of (a) a 365/366-day year and assessed for
the actual number of days elapsed for the periods during which this Note bears
interest at the Base Rate plus two and one-half percent (2.5%) or four and
one-half percent (4.5%) (as applicable) and (b) a 360-day year and assessed for
the actual number of days elapsed for the periods during which this Note bears
interest at the LIBOR Rate plus four percent (4.0%) or six percent (6.0%) (as
applicable).
In no contingency or event whatsoever shall the aggregate of all
amounts deemed interest under this Note charged or collected exceed the highest
rate permissible under any applicable law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the
event that such a court determines that amounts that the Lender has charged or
received that are deemed to be interest hereunder exceed the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the maximum
rate permitted by applicable law and the Lender shall at the Lender's option (i)
promptly refund to the Borrower any amounts that are deemed to be interest and
received by the Lender in excess of the maximum lawful rate or (ii) shall apply
such excess to the principal balance of this Note. It is the intent hereof that
the Borrower not pay or contract to pay, and that the Lender not receive or
contract to receive, directly or indirectly in any manner whatsoever, any
amounts that are deemed to be interest in excess of that which may be paid by
the Borrower under applicable law.
Any and all payments by the Borrower under this Note shall be made free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholding, and all liabilities with
respect thereto excluding, (i) income and franchise taxes imposed by the
jurisdiction under the laws of which the Lender is organized or is or should be
qualified to do business or any political subdivision thereof and (ii) in the
case of the Lender, income and franchise taxes imposed by the jurisdiction of
such Lender's chief executive office or any political subdivision thereof (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable under
this Note, (A) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this paragraph) the Lender receives an amount
equal to the amount it would have received had no such deductions been made, (B)
the Borrower shall make such deductions, (C) the Borrower shall pay the full
amount deducted to the relevant taxing authority or other authority in
accordance with applicable law, and (D) the Borrower shall deliver to the Lender
evidence of such payment to the relevant taxing authority or other authority.
In addition to the payments made under the preceding paragraph, the
Borrower shall pay any present or future stamp, registration, recordation or
documentary taxes or any other similar fees or charges or excise or property
taxes, levies of the United States or any state or political subdivision thereof
or any applicable foreign jurisdiction which arise from any payment made
4
<PAGE> 5
hereunder or from the execution, delivery or registration of, or otherwise with
respect to the Loan Documents or the perfection of any rights or security
interest in respect thereto (hereinafter referred to as "Other Taxes").
The Borrower shall indemnify the Lender for the full amount of Taxes
and Other Taxes (including, without limitation, any Taxes and Other Taxes
imposed by any jurisdiction on amounts payable under this paragraph and the two
preceding paragraphs and this paragraph) paid by the Lender and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Such indemnification shall be made within thirty (30) days from the
date the Lender makes written demand therefor.
Within thirty (30) days after the date of any payment of Taxes or Other
Taxes, the Borrower shall furnish to the Lender, at its address below, the
original or a certified copy of a receipt evidencing payment thereof or other
evidence of payment satisfactory to the Lender.
The Lender shall deliver to (i) two United States Internal Revenue
Service Forms 4224 or Forms 1001, as applicable (or successor forms) properly
completed and certifying in each case that such Lender is entitled to a complete
exemption from withholding or deduction for or on account of any United States
federal income taxes, and (ii) an Internal Revenue Service Form W-8 or W-9 or
successor applicable form, as the case may be, to establish an exemption from
United States backup withholding taxes. The Lender further agrees to deliver to
the Borrower a Form 1001 or 4224 and Form W-8 or W-9, or successor applicable
forms or manner of certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrower, certifying in the case of a Form 1001 or 4224 that the Lender is
entitled to receive payments under this Note without deduction or withholding of
any United States federal income taxes (unless in any such case an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders such forms inapplicable or the exemption to which such
forms relate unavailable and the Lender notifies the Borrower that it is not
entitled to receive payments without deduction or withholding of United States
federal income taxes) and, in the case of a Form W-8 or W-9, establishing an
exemption from United States backup withholding tax.
Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
the immediately preceding five paragraphs shall survive the payment in full of
this Note.
Each of the following shall constitute an Event of Default, whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment or order of any court
or any order, rule or regulation of any governmental authority or otherwise: (a)
default in payment of principal, interest or other amount under this Note when
and as due (whether at maturity, by reason of acceleration or otherwise); and
(b) an "Event of Default" shall have occurred and be continuing under the Credit
Agreement dated as of September 11, 1998 (as amended by amendments thereto dated
as of April 18,1999,
5
<PAGE> 6
June 29, 1999 and November 15, 1999, the "Credit Agreement") between the
Borrower, the lenders referred therein, NationsBanc Montgomery Securities, LLC,
as syndication agent, Fleet Bank, N.A., as documentation agent, and First Union
National Bank, as administrative agent.
Subject to the terms of the Security Documents, upon the occurrence of
an Event of Default, the Lender may, by notice to the Borrower, declare the
principal of and interest on this Note at the time outstanding, and all other
amounts owed to the Lender under this Note or any of the other Loan Documents to
be forthwith due and payable, whereupon the same shall immediately become due
and payable without presentment, demand, protest or other notice of any kind,
all of which are expressly waived, anything in this Note or the other Loan
Documents to the contrary notwithstanding, and provided, that upon the
occurrence of an Event of Default specified in Section 11.1(j) or (k) of the
Credit Agreement all principal of and interest on this Note at the time
outstanding, and all other amounts owed to the Lender under this Note or any of
the other Loan Documents, shall automatically become due and payable.
Subject to the terms of the Security Documents, the enumeration of the
rights and remedies of the Lender set forth in this Note is not intended to be
exhaustive and the exercise by the Lender of any right or remedy shall not
preclude the exercise of any other rights or remedies, all of which shall be
cumulative, and shall be in addition to any other right or remedy given
hereunder or under the Loan Documents or that may now or hereafter exist in law
or in equity or by suit or otherwise. No delay or failure to take action on the
part of the Lender in exercising any right, power or privilege shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude other or further exercise thereof or the exercise of
any other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between the Borrower, the Lender or its
agents or employees shall be effective to change, modify or discharge any
provision of this Note or any of the other Loan Documents or to constitute a
waiver of any Event of Default.
All notices and communications hereunder shall be in writing, shall be
effective if delivered by hand delivery or sent via telecopy, recognized
overnight courier service or certified mail, return receipt requested, and shall
be presumed to be received by a the Borrower or the Lender, as the case may be,
(a) on the date of delivery if delivered by hand or overnight courier or sent by
telecopy and received before the close of business on a business day at the
place received ("Local Business Day"), (b) on the next Local Business Day if
delivered by hand or overnight courier or sent by telecopy and received after
the close of business on a Local Business Day or on a day that is not a Local
Business Day at the place received and (c) on the seventh Local Business Day
following the date sent by certified mail, return receipt requested.
Notices to any party shall be sent to it at the following addresses, or
any other address as to which all the other parties are notified in writing in
the manner set forth in the immediately preceding paragraph.
If to the Borrower: GT Interactive Software Corp.
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman and Chief Executive Officer
6
<PAGE> 7
Telephone No.: (212) 726-6500
Telecopy No.: (212) 726-6590
With copies to: Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022-3903
Attention: David P. Levin, Esq.
Telephone No.: (212) 715-9217
Telecopy No.: (212) 715-8000
If to the Lender: California U.S. Holdings, Inc.
5300 Stevens Creek Boulevard, Suite 500
San Jose, California 95129
Attention: Chief Operating Officer
Telephone No.: (408) 289-1200
Telecopy No.: (408) 246-0898
With Copies to: Infogrames Entertainment S.A.
84, rue du 1er Mars 1943
Villeurbanne, 69100
France
Attention: Thomas Schmider
Telephone No.: (011 33) 472 655116
Telecopy No.: (011 33) 472 655000
And
Attention: Frederic Garnier
Telephone No.: (011 33) 472 655059
Telecopy No.: (011 33) 472 655000
And
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, California 94104
Attention: Nathaniel M. Cartmell
Ronald E. Bornstein
Telephone: (415) 983-1000
Telecopy: (415) 983-1200
The Borrower will (a) pay all reasonable out-of-pocket expenses of the
Lender in connection with (i) the preparation, execution and delivery of this
Note and each of the other Loan Documents, whenever the same shall be executed
and delivered, including without limitation all reasonable fees and
disbursements of counsel for the Lender and (ii) the preparation, execution and
delivery of any waiver, amendment or consent by the Lender relating
7
<PAGE> 8
to this Note or any other Loan Document, including without limitation reasonable
fees and disbursements of counsel for the Lender, (b) pay all reasonable
out-of-pocket expenses of the Lender actually incurred in connection with the
administration and enforcement of any rights and remedies of the Lender under
the Loan Documents, including consulting with appraisers, accountants,
engineers, attorneys and other persons concerning the nature, scope or value of
any right or remedy of the Lender hereunder or under any other Loan Document or
any factual matters in connection therewith, which expenses shall include
without limitation the reasonable fees and disbursements of such persons, and
(c) defend, indemnify and hold harmless the Lender, and their respective
parents, subsidiaries, affiliates, employees, officers and directors, from and
against any losses, penalties, fines, liabilities, judgments, settlements,
damages, costs and expenses, suffered by any such person in connection with any
claim, investigation, litigation or other proceeding (whether or not the Lender
is a party thereto) and the prosecution and defense thereof, arising out of or
in any way connected with this Note or any other Loan Document, including
without limitation reasonable attorney's and consultant's fees, except to the
extent that any of the foregoing directly result from the gross negligence or
willful misconduct of the party seeking indemnification therefor.
Subject to the terms of the Security Documents, in addition to any
rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon and after the occurrence of any Event of
Default and during the continuance thereof, the Lender and any assignee or
participant of a Lender are hereby authorized by the Borrower at any time or
from time to time, without notice to the Borrower or to any other person, any
such notice being hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, time or demand, including, but
not limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured) and any other indebtedness at any time held or owing by
the Lender, or any such assignee or participant to or for the credit or the
account of the Borrower against and on account of the obligations hereunder and
under the other Loan Documents irrespective of whether or not (a) the Lender
shall have made any demand under this Note or any of the other Loan Documents or
(b) the Lender shall have declared any or all of the obligations hereunder and
under the other Loan Documents to be due and payable and although such
obligations shall be contingent or unmatured.
This Note and the other Loan Documents, unless otherwise expressly set
forth therein, shall be governed by, construed and enforced in accordance with
the laws of the State of New York, without reference to the conflicts or choice
of law principles thereof.
To the extent the Borrower makes a payment or payments to the Lender or
the Lender receives any payment or proceeds of the collateral which payments or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
repaid, the obligations hereunder or under the other Loan Documents or part
thereof intended to be satisfied shall be revived and continued in full force
and effect as if such payment or proceeds had not been received by the Lender.
The Borrower may not assign any of its rights or obligations under this
Note or the Loan
8
<PAGE> 9
Documents. The Lender may, with the consent of the Borrower (so long as no Event
of Default or event, which with the passing of time or giving of notice, or
both, would be an Event of Default has occurred and is continuing), which
consent shall not be unreasonably withheld (provided, that no such consent shall
be required in connection with an assignment to an affiliate of a Lender),
assign all or a portion of its interests, rights and obligations under this
Note.
Any provision of this Note or any other Loan Document which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability
without invalidating the remainder of such provision or the remaining provisions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
This Note is entitled to the benefits of, and is secured and the
exercise of rights and remedies hereunder is limited, to the extent set forth
therein, by the Security Documents.
GT INTERACTIVE SOFTWARE CORP.
By:
Name:
Title:
9
<PAGE> 1
Exhibit 5
THE WARRANTS AND THE COMMON STOCK (THE "SECURITIES") HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION AND SUBJECT TO COMPLIANCE WITH OTHER APPLICABLE LAWS.
THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, UNLESS PREVIOUSLY REGISTERED UNDER
THE SECURITIES ACT, ONLY (A) TO THE COMPANY; (B) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE
144 THEREUNDER (IF AVAILABLE); (C) TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (D) PURSUANT TO AN
OFFSHORE TRANSACTION COMPLYING WITH REGULATION S UNDER THE SECURITIES
ACT; OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
No. __ Certificate for 50,000 Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
GT INTERACTIVE SOFTWARE CORP.
THIS CERTIFIES THAT California U.S. Holdings, Inc., or its
registered assigns, is the registered holder of the number of Warrants set forth
above (the "Warrants"). Each Warrant entitles the holder thereof (the "Holder"),
at its option and subject to the provisions contained herein and in the Warrant
Agreement referred to below, to purchase from GT Interactive Software Corp., a
Delaware corporation (the "Company"), one share of Common Stock, $0.01 par
value, of the Company (the "Common Stock") at the per share exercise price of
$0.01 (the "Exercise Price"), or by Cashless Exercise referred to below. This
Warrant Certificate shall terminate and become void as of the close of business
on November 15, 2004 (the "Expiration Date") or upon the exercise hereof as to
all the shares of Common Stock subject hereto. The number of shares purchasable
upon exercise of the Warrants shall be subject to adjustment from time to time
as set forth in the Warrant Agreement.
This Warrant Certificate is issued under and in accordance
with a Warrant
<PAGE> 2
Agreement dated as of November 15, 1999 (as amended, restated, supplemented or
otherwise modified from time to time, the "Warrant Agreement"), among the
Company and the Holders referred to therein, and is subject to the terms and
provisions contained in the Warrant Agreement. The Warrant Agreement is hereby
incorporated herein by reference and made a part hereof. Reference is hereby
made to the Warrant Agreement for a full statement of the respective rights,
limitations of rights, duties and obligations of the Company and the Holders of
the Warrants. Capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Warrant Agreement.
Subject to the terms of the Warrant Agreement, the Warrants
may be exercised in whole or in part (i) by surrender of this Warrant
Certificate with the form of election to purchase Warrant Shares attached hereto
duly executed and with the simultaneous payment of the Exercise Price in cash
(subject to adjustment) to the Company or (ii) by Cashless Exercise. Payment of
the Exercise Price in cash shall be made in cash or by certified or official
bank check payable to the order of the Company or by wire transfer of funds to
an account designated by the Company for such purpose. Payment by Cashless
Exercise shall be made by the surrender of a Warrant or Warrants represented by
one or more Warrant Certificates and without payment of the Exercise Price in
cash, in exchange for the issuance of such number of shares of Common Stock
equal to the product of (1) the number of shares of Common Stock for which such
Warrant would otherwise then be nominally exercised if payment of the Exercise
Price were being made in cash and (2) the Cashless Exercise Ratio.
The Warrants shall be exercisable from time to time in the
discretion of the Holder on or after November 15, 1999, provided, that in no
event shall the Warrants be exercisable after the Expiration Date.
In the event the Company enters into a Combination, capital
reorganization or reclassification or the spin-off by the Company of another
Person (each, a "Transaction"), each Warrant evidenced by this Warrant
Certificate will be automatically converted into the right to receive (in the
case of a Transaction other than a spin-off) or shall also be exercisable for
(in the case of a Transaction that is a spin-off) the shares of capital stock or
other securities or other property of such surviving entity upon or as the
result of such Transaction that a Holder of such Warrant would have been
entitled to receive had such Warrant been exercised immediately prior to such
Transaction; provided, that in the event that, in connection with such
Transaction, consideration to holders of Common Stock in exchange for their
shares is payable solely in cash or in the event of the dissolution, liquidation
or winding-up of the Company, the Holder hereof will be entitled to receive
distributions on an equal basis with the holders of Common Stock or other
securities issuable upon exercise of the Warrants, as if the Warrants had been
exercised immediately prior to such events, less the Exercise Price.
The Company may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges in connection with the transfer
or exchange of the Warrant Certificates pursuant to Section 2.4 of the Warrant
Agreement but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the Warrant Shares.
<PAGE> 3
Upon any partial exercise of the Warrants, there shall be
issued to the Holder hereof a new Warrant Certificate in respect of the shares
of Common Stock as to which the Warrants shall not have been exercised. This
Warrant Certificate may be exchanged by presenting this Warrant Certificate to
the Company properly endorsed with a request to exchange this Warrant
Certificate for other Warrant Certificates evidencing an equal number of
Warrants. No fractional Warrant Shares will be issued upon the exercise of the
Warrants, but the Company shall pay an amount in cash equal to the Current
Market Value for one Warrant Share on the date the Warrant is exercised,
multiplied by such fraction, computed to the nearest whole cent.
<PAGE> 4
The Warrants do not entitle any holder hereof to any of the rights of a
stockholder of the Company. All shares of Common Stock issuable by the Company
upon the exercise of the Warrants shall, upon such issuance, be duly and validly
issued and fully paid and non-assessable.
GT INTERACTIVE SOFTWARE CORP.
By
-------------------------
Title:
[SEAL]
Attest:
-------------------------
Secretary
DATED:
<PAGE> 1
Exhibit 6
CONVERTIBLE SUBORDINATED NOTE
$[60,500,000.00] New York, New York
_________, 1999
GT INTERACTIVE SOFTWARE CORP., a Delaware corporation (the
"Obligor"), hereby promises to pay to the order of CALIFORNIA U.S. HOLDINGS,
INC., a Delaware corporation (together with any permitted transferee of this
Convertible Subordinated Note, the "Holder"), on ___________, 2004 (the
"Maturity Date"), the principal amount of [SIXTY MILLION FIVE HUNDRED THOUSAND]
DOLLARS ($[60,500,000.00]) in lawful money of the United States of America.
1. Interest. Interest on the outstanding principal amount
hereof shall accrue at a rate per annum equal to 5% and shall be added quarterly
(on the date following three months from the date of this Convertible
Subordinated Note (the "Note") and every three months thereafter) to the
principal amount of this Note.
2. Payments. Notwithstanding anything to the contrary herein,
except pursuant to a conversion set forth in Section 4 hereof, no payment or
prepayment of principal of or interest on this Note may be made or received,
directly or indirectly, prior to the Senior Debt Payment Date. On the Maturity
Date, the Obligor shall make payments of all outstanding principal of and
accrued interest on this Note in immediately available funds to such account of
the Holder as the Holder may designate in writing. If any payment hereunder
becomes due and payable on a day other than a Business Day, the due date thereof
shall be extended to the next succeeding Business Day.
3. Definitions. (a) Terms defined in the Credit Agreement
referred to below are used herein with the meanings set forth in such Credit
Agreement unless otherwise defined herein. As used herein, the following terms
shall have the following meanings:
"Board of Directors" shall mean the Board of Directors of the
Obligor.
"Business Days" shall mean any day except 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.
"Capital Stock" shall mean, 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).
"Credit Agreement" shall mean the Credit Agreement dated as of
September 11, 1998, among the Obligor, the Lenders parties thereto, the
Documentation Agent and Syndication Agent named therein, and First Union
National Bank, as Administrative Agent, as amended, restated, supplemented or
otherwise modified from time to time.
<PAGE> 2
"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 (as defined in Section 4)
during the immediately preceding thirty (30) trading days ending on such date.
"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 Obligor.
"Merger" shall mean a recapitalization, reorganization,
merger, a sale of all or substantially all of the assets of the Obligor or other
business combination transaction after the consummation of which the
stockholders of the Obligor prior to such transaction do not own at least a
majority of the voting power of the surviving Person or the transferee of the
assets of the Obligor, as the case may be.
"Person" shall mean an 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.
"Senior Creditors" shall mean the collective reference to the
Lenders, the Administrative Agent, the Issuing Lender and all other holders of
the Senior Debt.
"Senior Debt" shall mean the obligations of the Obligor and
any Subsidiary in respect of the unpaid principal of and interest on the notes
made by the Obligor in favor of the Senior Creditors in connection with the
Credit Agreement (the "Senior Notes") (including, without limitation, interest
accruing at the then applicable rate provided in the Credit Agreement after the
maturity of the Loans and interest accruing at the then applicable rate provided
in the Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Obligor, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) and all other obligations and liabilities of the
Obligor and any Subsidiary to the Administrative Agent, the Issuing Lender and
the Lenders in respect of the Loans, the Senior Notes, the Letters of Credit,
the L/C Obligations, any Hedging Agreements permitted or required under the
Credit Agreement, the Concentration Account or any cash management arrangements
with any Lender, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may
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<PAGE> 3
arise under, out of, or in connection with, the Credit Agreement, the Senior
Notes, the other Loan Documents, the Letters of Credit, the L/C Obligations, any
Hedging Agreements permitted or required under the Credit Agreement, or any
other document made, delivered or given in connection or therewith, in each case
whether on account of principal, interest, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Administrative Agent, the Issuing Lender or the Lenders that are required
to be paid by the Obligor or any Subsidiary pursuant to the terms of the Credit
Agreement or any other Loan Document).
"Senior Debt Payment Date" shall mean the first Business Day
to occur after the Senior Debt is paid in full.
"Subordinated Debt" shall mean the principal amount of this
Note, together with accrued and unpaid interest thereon and any other amounts of
any kind whatsoever from time to time owing hereunder or in connection
therewith.
"Subsidiary" shall mean as to any Person, any corporation,
partnership, limited liability company or other entity of which more than fifty
percent (50%) of the outstanding capital stock or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other managers of such corporation, partnership, limited liability company or
other entity is at the time, directly or indirectly, owned by or the management
is otherwise controlled by such Person (irrespective of whether, at the time,
capital stock or other ownership interests of any other class or classes of such
corporation, partnership, limited liability company or other entity shall have
or might have voting power by reason of the happening of any contingency).
(b) The expressions "prior payment in full," "paid in full,"
"payment in full" and any other similar terms or phrases when used in this Note
shall mean payment in full in immediately available funds of the Senior Debt (or
cash collateralization in full in the case of any L/C Obligations) and
termination of the Aggregate Commitment.
4. Conversion of the Note.
(a) Subject to and upon compliance with the provisions of this
Section 4, the Holder, at the Holder's option at any time and from time to time
from and after the date hereof so long as this Note is outstanding, may convert
all or any part of the unpaid principal amount of this Note and accrued interest
thereon into shares of the common stock of the Obligor, par value $.01 per share
(the "Common Stock"), at the Conversion Price in effect at the Conversion Date.
Notwithstanding anything to the contrary herein, until the Obligor's certificate
of incorporation has been amended to increase the Obligor's authorized capital
stock, the Holder shall not convert all or any part of this Note into shares of
Common Stock such that the Obligor would have more shares of Common Stock
outstanding or reserved for issuance upon exercise or conversion of its
outstanding convertible securities than are then authorized under its
certificate of incorporation as in effect on the date of such conversion.
(b) In order to exercise the conversion privilege of this
Note, the Holder shall deliver (i) this Note and (ii) written notice in
substantially the form attached to this Note as
-3-
<PAGE> 4
Exhibit 1 to the Obligor during regular business hours at its address set forth
in, or at such other address as the Obligor shall designate in writing in
accordance with, Section 12 hereof. Conversion shall be deemed to have been
effected on the date when such notice is delivered to the Obligor (the
"Conversion Date"). An election to convert this Note in whole or in part shall
be irrevocable once made.
(c) As promptly after the Conversion Date as practicable, the
Obligor shall issue and deliver to the Holder at the address of the Holder set
forth on the Obligor's records, without any charge to the Holder, a certificate
or certificates (issued in the name of the Holder or, subject to compliance with
applicable securities laws, in such other name as the Holder may designate) for
the number of shares of Common Stock of the Obligor issuable upon the conversion
of this Note. In case the Note is surrendered for a partial conversion, the
Obligor will issue to the Holder upon conversion a new Note of like tenor (the
"New Note") in an aggregate principal amount equal to the unconverted portion of
the outstanding principal amount of the surrendered Note, which New Note shall
indicate (I) the interest that had accrued through the date of such issuance on
the converted portion of the outstanding principal amount of the surrendered
Note (excluding any interest which also had been converted) but had not yet been
added pursuant to Section 1 to the principal amount of the surrendered Note, and
(ii) that interest on the outstanding principal amount of such New Note shall
accrue from the most recent quarterly date on which interest was added pursuant
to Section 1 to the principal amount of the surrendered Note. No fractional
shares of Common Stock or scrip representing fractional shares shall be issued
upon the conversion of any amounts outstanding under this Note to Common Stock
pursuant to Section 4(a) hereof. Notwithstanding the provisions of Section 7(a)
hereof, instead of any fractional shares of Common Stock which would otherwise
be issuable upon conversion, the Obligor shall pay to the Holder 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) Upon conversion, the Holder shall be deemed to have become
the stockholder of record on the Conversion Date of the number of shares of
Common Stock issuable upon such conversion. All rights of the Holder to amounts
of principal and accrued interest converted shall cease upon conversion, but all
other rights of the Holder hereunder, including without limitation rights to any
amounts of interest accrued and to any principal not converted and to any
expenses or other amounts owned hereunder, shall be unaffected by such
conversion.
(e) The initial Conversion Price of this Note shall be $1.85
per share of Common Stock and shall be subject to adjustment as follows:
(i) Dividends, Subdivision, Combination or
Reclassification of Common Stock. In the event that the Obligor shall at any
time or from time to time, prior to any conversion of the Note, (v) declare,
make or pay a dividend or make a distribution on the outstanding shares of
Common Stock, payable in Capital Stock of the Obligor, (w) subdivide the
outstanding shares of Common Stock into a large number of shares, (x) combine
the outstanding shares of its Common Stock into a smaller number of shares, (y)
issue any shares of its Capital Stock in a reclassification of the Common Stock
or (z) change the shares of Common Stock
-4-
<PAGE> 5
issuable upon conversion hereunder into the same or any different number of
shares of any class of Capital Stock of the Obligor, whether by
reclassification, exchange, cancellation amendment of the Obligor's certificate
of incorporation or otherwise (other than any such event for which an adjustment
is made pursuant to another clause of this Section 4(e)), then, and in each such
case, the Conversion Price in effect immediately prior to such event shall be
adjusted (and any other appropriate action shall be taken by the Obligor) so
that the Holder, with respect to any amounts outstanding on the Note thereafter
surrendered for conversion, shall be entitled to receive the number of shares of
Common Stock or other securities of the Obligor that the Holder would have owned
or would have been entitled to receive upon or by reason of any of the events
described above, had such amounts been converted immediately prior to the record
date applicable to such event. An adjustment made pursuant to this Section
4(e)(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 Obligor shall
at any time or from time to time prior to conversion of all amounts outstanding
under the Note, distribute to all holders of shares of Common Stock (including
any such distribution made in connection with a merger or consolidation in which
the Obligor is the resulting or surviving Person and the Common Stock is not
changed or exchanged) cash, evidences of indebtedness of the Obligor or another
Person, securities of the Obligor or another Person or other assets (excluding
dividends declared in the ordinary course of business and payable in cash,
dividends payable in shares of Common Stock for which adjustment is made under
another paragraph of this Section 4(e)) or rights or warrants to subscribe for
or purchase securities of the Obligor (excluding those distributions in respect
of which an adjustment in the Conversion Price is made pursuant to another
paragraph of this Section 4(e)), 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 Obligor) by multiplying the Conversion Price in effect
immediately prior to the date of 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. Such adjustment shall be made whenever any such
distribution is made and shall become 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) Effect of Consolidation or Merger. In the case
of any consolidation or merger, directly or indirectly, of the Obligor with or
into another Person (any such event, a "Change of Shares"), the Holder
thereafter shall have the right to convert this Note into the kind and number of
shares of stock and/or other securities, cash or other property receivable upon
such Change of Shares by a holder of the number of shares of Common Stock of the
Obligor into which this Note might have been converted immediately before the
time of determination of the stockholders of the Obligor entitled to receive
such shares of stock and/or other securities or property, and the Conversion
Price shall be adjusted accordingly. The Obligor shall be obligated to retain
and set aside, or otherwise make fair provision for exercise of the right of the
Holder to receive, the shares of stock and/or other securities, cash or other
property provided for in this Section 4(e)(iii). In any such case, appropriate
adjustments shall be made in
-5-
<PAGE> 6
the application of this Section 4(e)(iii) with respect to the Holder after such
merger or consolidation such that the provisions of this Section 4(e)(iii) shall
be applicable after that event in a manner as nearly equivalent as may be
practicable.
(iv) Other Changes. In case the Obligor at any time
or from time to time, prior to the conversion of all amounts outstanding under
the Note, 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 4(e)(i)
through (iii) (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 Holder).
(v) 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
4(e)(v) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment.
(f) Abandonment. If the Obligor 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.
(g) Certificate as to Adjustments. Upon any increase or
decrease in the Conversion Price, the Obligor shall within a reasonable period
(not to exceed 20 days) following the consummation of any of the foregoing
transactions deliver to the Holder a certificate, signed by (i) the President or
a Vice President of the Obligor and (ii) the Chief Financial Officer of the
Obligor, 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.
(h) Notices. In case at any time or from time to time:
(i) the Obligor shall declare a dividend (or any
other distribution) on its shares of Common Stock;
(ii) the Obligor 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;
(iii) there shall be any reorganization or
reclassification of the Common Stock; or
(iv) there shall occur a Merger;
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<PAGE> 7
then the Obligor shall mail to the Holder as promptly as possible but in any
event at least ten (10) days prior to the applicable date hereinafter specified,
a notice in accordance with Section 12 hereof 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 or Merger 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 delivered upon such reorganization,
reclassification or Merger.
(i) Reservation of Common Stock. The Obligor shall at all
times reserve and keep available for issuance upon the conversion of the Note,
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 amounts outstanding
under the Note. Each March 31, June 30, September 30 and December 31, the
Obligor shall reserve additional shares of Common Stock reasonably determined by
the Obligor to be required to cover the conversion of all interest on the Note
(which has accrued on such date) into shares of Common Stock. As soon as
practicable after the date hereof, the Obligor shall take all actions 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 amounts under
the Note.
(j) No Conversion Tax or Charge. The issuance or delivery of
certificates for Common Stock upon the conversion of amounts under the Note
shall be made without charge to the Holder 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 name of, or (subject to
compliance with the applicable provisions of federal and state securities laws)
in such names as may be directed by, the Holder; provided, however, that the
Obligor 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, and the Obligor 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 Obligor the
amount of such tax or shall have established to that reasonable satisfaction of
the Obligor that such tax has been paid.
5. Transfer, Exchange and Replacement of Note. Subject to the
third sentence of this Section 5, this Note shall be transferable in whole or in
part by the Holder. Upon delivery of this Note duly endorsed by, or accompanied
(if required by the Obligor) by proper evidence of succession, assignment or
authority to transfer executed by, the Holder, in each case accompanied by any
necessary transfer tax imposed upon transfer or evidence thereof, the Company
shall execute a new Note to the Person or Persons entitled thereto and such
Person or Persons shall be deemed the Holder hereunder. THIS NOTE MAY NOT BE
SOLD OR TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES LAW IN CONNECTION
WITH SUCH SALE OR TRANSFER OR SUCH SALE OR TRANSFER IS EXEMPT FROM SUCH
REGISTRATION. The Obligor may deem and treat
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<PAGE> 8
the person in whose name this Note is held as the absolute, true and lawful
owner of this Note for all purposes. Upon receipt by the Obligor of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Note, the Obligor shall make and deliver a new Note of like tenor, in lieu
of this Note, if (i) in case of loss, theft or destruction, the Obligor receives
indemnity or security reasonably satisfactory to it, (ii) the Obligor is
reimbursed for all reasonable expenses incidental to such replacement, and (iii)
this Note is surrendered and cancelled, if mutilated.
6. Securities Laws. By his acceptance of this Note, Holder
hereby represents and warrants to the Obligor that it is an "accredited
investor" as that phrase is defined in Rule 501 under the Securities Act of
1933, as amended (the "Act"), and is acquiring this Note for his own account,
for investment, and not with a view to the distribution of this Note or the
Common Stock issuable upon conversion hereof in a manner contrary to the
provisions of the Act or any applicable state securities laws. Holder
understands that the shares issuable upon conversion of this Note have not been
and will not, except to the extent provided herein, be registered under the Act
or any state securities laws, and that neither such shares nor any interest
therein may be transferred or sold unless such registration is then effective or
an exemption from such registration is then available. By conversion of this
Note, Holder acknowledges that the certificates representing such shares will
bear appropriate legends restricting the transferability thereof. The Obligor
shall have the right to an opinion of counsel in connection with any transfer of
this Note or the shares issuable upon conversion hereof.
7. Subordination.
(a) Payment of the Subordinated Debt is and shall be expressly
subordinate and junior in right of payment to the prior payment in full of the
Senior Debt to the extent and in the manner set forth herein, and the
Subordinated Debt is hereby so subordinated as a claim against the Obligor or
any Subsidiary or any of the assets of the Obligor or such Subsidiary, whether
such claim be (i) in the event of any distribution of assets of the Obligor or
such Subsidiary upon any voluntary or involuntary dissolution, winding-up, total
or partial liquidation or reorganization, or bankruptcy, insolvency,
receivership or other statutory or common law proceedings or arrangements
involving the Obligor or such Subsidiary or the readjustment of its liabilities
or any assignment for the benefit of creditors or any marshaling of its assets
or liabilities (collectively, a "Reorganization") or (ii) other than in
connection with a Reorganization.
(b) Except for the conversion of the Note as set forth in
Section 4 hereof and the payments to be made in connection with the Transaction
(as defined in the Third Amendment, Consent, Waiver and Agreement dated the date
hereof (the "Third Amendment")) on the Transaction Closing Date (as defined in
the Third Amendment), all of the Senior Debt shall be paid in full before any
direct or indirect payment or distribution of any kind or character (including,
without limitation, securities that are subordinated in right of payment to the
Senior Debt) is made upon the Subordinated Debt, and in any Reorganization or
other proceedings any payment or distribution of any kind or character, whether
in cash or property or securities, which may be payable or deliverable in
respect of this Subordinated Note and the Subordinated Debt shall be paid or
delivered directly to the Administrative Agent, for payment of the Senior Debt
until the Senior Debt is paid in full. If the Holder does not file a claim or
proof of debt in the
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<PAGE> 9
form required in any Reorganization or other proceedings prior to 20 days before
the expiration of the time to file such claims or proofs, the Administrative
Agent shall have the right to demand, sue for, collect and receive any payments
and distributions in respect of the Subordinated Debt which are required to be
paid or delivered to the Senior Creditors and to take such other action in the
name of the Holder or of the Senior Creditors as the Administrative Agent may
deem reasonably necessary or advisable for the enforcement of the provisions
hereof. The Holder shall execute and deliver such other and further powers of
attorney, assignments, proofs of claim or other instruments, and take such other
actions, as may be reasonably requested by the Administrative Agent in order to
enable the Administrative Agent to accomplish any of the foregoing.
(c) In the event that, notwithstanding the foregoing, any
payment or distribution of the assets of the Obligor or any Subsidiary of any
kind or character, whether in cash, property or securities, and whether prior to
or after the commencement of any Reorganization or other proceedings, shall be
received by the Holder in respect of this Note before all Senior Debt is paid in
full, such payment of distribution shall be held in trust for the Senior
Creditors and shall forthwith be paid over to the Administrative Agent for
application to the payment of the Senior Debt until all Senior Debt shall have
been paid in full.
(d) Except with respect to an Event of Default occurring at
maturity of this Note pursuant to Section 9(a)(i) hereof, the Holder and the
Obligor each agrees that, until the Senior Debt has been paid in full (i) the
Holder will not take, demand, receive or accept, or take any action to
accelerate or collect (and the Obligor shall not make) any cash payment of all
or any part of the Subordinated Debt and (ii) the Holder will not file or join
in any petition or proceeding seeking the bankruptcy or Reorganization of the
Obligor; provided, however, that if any Person (other than the Holder or any
Affiliate of the Holder or any such other holder) files or initiates any
petition or proceeding seeking the foregoing or takes any action to accelerate
or collect any cash payment of all or any part of any debt of the Obligor, then
after the filing of any such petition or the commencement of any such proceeding
the Holder may join in such petition or proceeding or initiate a separate action
to accelerate all or any part of the Subordinated Debt.
(e) The Senior Creditors, or any of them, may, at any time and
from time to time, without the consent of or notice to the Holder, without
incurring any responsibility to the Holder, and without impairing or releasing
any of the rights of any Senior Creditor or any of the obligations of the
Holder: (i) change the amount or terms of, or renew or extend, the Senior Debt
or enter into or amend in any manner any agreement relating to the Senior Debt;
(ii) sell, exchange, release or otherwise deal with any property at any time
pledged or mortgaged to secure the Senior Debt; (iii) release anyone liable in
any manner for the payment or collection of the Senior Debt; and (iv) exercise
or refrain from exercising any rights against the Obligor, any Subsidiary and
any other Person (including the Holder). The Obligor shall provide prompt
written notice to the Holder of the occurrence of any of the foregoing matters.
(f) The Holder hereby waives notice of or proof of reliance by
any Senior Creditor upon the provisions hereof, and the Senior Debt shall
conclusively be deemed to have been created, contracted, incurred or maintained
in reliance upon the provisions hereof.
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<PAGE> 10
(g) The Obligor hereby waives diligence, presentment, demand,
protest and notice of any kind whatsoever. The nonexercise by the Administrative
Agent or any other Senior Creditor of any of its rights hereunder in any
particular instance shall not constitute a waiver thereof in that or any
subsequent instance.
(h) The subordination provisions contained herein are for the
benefit of the Senior Creditors and their respective successors and assigns, and
the rights of any present or future holder of the Senior Debt to enforce the
subordination provisions contained herein, may not be rescinded, cancelled,
modified or impaired in any way without the prior written consent of the
Administrative Agent.
8. Prepayments. Subject to Section 7 hereof and the prior
payment in full of the Senior Debt, the Obligor may only repay this Note prior
to the Maturity Date, in whole or in part, in accordance with Section 4 hereof.
9. Defaults and Remedies. Subject to the subordination
provisions contained in this Note:
(a) Events of Default. An "Event of Default" shall occur if:
(i) the Obligor shall default in the payment of the
principal of this Note, when and as the same shall become due and payable,
whether at maturity or at a date fixed for prepayment or by acceleration or
otherwise; or
(ii) any event or condition shall occur that results
in the right of the holder of the Senior Debt to accelerate the maturity of any
Senior Debt, or of any other indebtedness in a principal amount aggregating
$3,000,000 or more; or
(iii) an involuntary proceeding shall be commenced or
an involuntary petition shall be filed in a court of competent jurisdiction
seeking (x) relief in respect of the Obligor or any Subsidiary, or of a
substantial part of its property or assets, under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other Federal or state
bankruptcy, insolvency, receivership or similar law, (y) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Obligor or any Subsidiary, or for a substantial part of its property or
assets, or (z) the winding up or liquidation of the Obligor or any Subsidiary;
or
(iv) the Obligor or any Subsidiary shall (A)
voluntarily commence any proceeding or file any petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other Federal or state bankruptcy, insolvency, receivership or similar law,
(B) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described in
clause (iv) above, (C) apply for or consent to the appointment of a receiver
trustee, custodian, sequestrator, conservator or similar official for the
Obligor or any Subsidiary, or for a substantial part of its property or assets,
(D) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (E) make a general assignment for the benefit
of creditors, (F) become
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<PAGE> 11
unable, admit in writing its inability or fail generally to pay its debts as
they become due or (G) take any action for the purpose of effecting any of the
foregoing; or
(v) one or more judgments for the payment of money in
an aggregate amount in excess of $3,000,000 (to the extent not covered by
insurance) shall be rendered against the Obligor, any Subsidiary or both and the
same shall remain undischarged for a period of 30 days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of the Obligor or any
Subsidiary to enforce any such judgment; or
(vi) any material uninsured damage to or loss, theft
or destruction of any assets of the Obligor or its Subsidiaries shall occur that
has a material adverse effect on the assets, business or financial condition of
the Obligor.
(b) Acceleration. Subject to Section 7(d) hereof: (i) if an
Event of Default occurs under subsection (a)(iv) or (v) above, then the
outstanding principal of and all interest on this Note shall automatically
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which are expressly waived, (ii) if any other Event
of Default occurs and is continuing, the Holder, by written notice to the
Obligor, may declare the principal of and interest on the Note to be due and
payable immediately, (iii) upon such declaration, such principal and interest
shall become immediately due and payable, and (iv) the Holder of the Note may
rescind an acceleration and its consequences if all existing Events of Default
have been cured or waived, except nonpayment of principal or interest that has
become due solely because of the acceleration, and if the rescission would not
conflict with any judgment or decree.
10. Subrogation. After all amounts payable under or in respect
of the Senior Debt are paid in full, the Holder shall be subrogated to the
rights of holders of the Senior Debt to receive payments or distributions
applicable to the Senior Debt to the extent that distributions otherwise payable
to the Holder have been applied to the payment of the Senior Debt. A
distribution made under this Section 9 to a holder of the Senior Debt which
otherwise would have been made to the Holder is not, as between the Obligor and
the Holder, a payment by the Obligor on the Senior Debt.
11. Notices. All notices and other communications made
pursuant to the provisions of or in connection with this Note shall be in
writing and shall be deemed to have been duly made when delivered personally or
by express mail or courier or when sent by facsimile transmission with
confirmation received (provided a writing evidencing such transmission is mailed
by first class mail, postage prepaid within two (Business Days).
(a) If to the Holder, to c/o Infogrames Entertainment S.A.,
84, rue du 1er Mars 1943, Villeurbanne, 69100, France, or to such other address
as the Holder may give notice of to the Obligor from time to time (with copies
to Pillsbury Madison & Sutro LLP, 50 Freemont Street, San Francisco, California
94104, Attention: Nathaniel M. Cartmell III, Esq. and Ronald E. Bornstein, Esq.,
telecopy: (415) 983-1200).
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(b) If to the Obligor, GT Interactive Software Corp., 417
Fifth avenue, New York, New York 10016, Attention: _________________, telecopy:
(212) 715-_____ (with copies to Kramer Levin Naftalis & Frankel LLP, 919 Third
Avenue, New York, New York 10022, Attention: David P. Levin, Esq., telecopy:
(212) 715-8000), or to such other address as the Obligor may give notice of to
the Holder from time to time.
12. Expenses. The Obligor shall pay all fees and expenses of
the Holder, including the reasonable fees and disbursements of the Holder's
counsel, incurred in connection with any claim, action or proceeding relating to
or arising out of this Note made by any Person (other than the Holder) against
either the Holder or any other Person in which the Holder is subsequently
impleaded or otherwise made a party, and any other claim, action or proceeding
in which the Holder exercises or enforces, or seeks to exercise or enforce, its
legal and equitable rights hereunder; provided, however, that each party hereto
shall pay its own expenses incurred in connection with the negotiation and
execution of this Note.
13. Entire Agreement. Each of the Obligor and the Holder
confirms that this Note constitutes the entire contract among the parties
relating to the subject matter hereof and supersedes any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof.
14. Severability. Any provision of this Note that is
prohibited or unenforceable in a jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
15. Successors and Assigns. All covenants and agreement of the
Obligor and the Holder under this Note shall be binding on the Obligor and the
Holder and their respective successors and assigns. Neither this Note nor any
interest therein shall be transferred or assigned prior to the Senior Debt
Payment Date without the prior written consent of the Administrative Agent;
provided, however, the Holder may transfer or assign all or any part of this
Note at any time to an affiliate of the Holder without such consent.
16. Amendments. No amendment, supplement, waiver or other
modification to this Note shall be effective without the prior written consent
of the Obligor, the Holder and, prior to the Senior Debt Payment Date, the
Administrative Agent.
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<PAGE> 13
17. Governing Law. This Note shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New York
without giving effect to principles regarding conflicts of law.
GT INTERACTIVE SOFTWARE CORP.
By:_____________________________________
Title:
Acknowledged and Agreed:
By:_______________________________
Title:
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<PAGE> 14
EXHIBIT 1
To GT Interactive Software Corp.:
The undersigned owner of this Note hereby irrevocably
exercises the option to convert $__________ principal amount of this Note into
shares of Common Stock of GT Interactive Software Corp. in accordance with the
terms of this Note, and directs that the shares issuable and deliverable upon
the conversion be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto.
Dated: ________________
[HOLDER]
By:___________________________________
Name:
Title:
Fill in for registration of shares of Common Stock if to be issued otherwise
than to the registered holder.
Name:
Address:
Social Security or Taxpayer ID Number:
<PAGE> 1
EXHIBIT 7
DISTRIBUTION AGREEMENT
BETWEEN
INFOGRAMES ENTERTAINMENT S.A.
AND
GT INTERACTIVE SOFTWARE CORP.
This Distribution Agreement (this "Agreement") is entered into by and
between Infogrames Entertainment S.A. and GT Interactive Software Corp. ("GTIS")
as of December __, 1999 (the "Effective Date").
Whereas, GTIS is in the business of publishing and marketing Products
and wishes to license Infogrames to distribute, publish and market Products
owned or controlled by GTIS; and
Whereas, Infogrames wishes to obtain the right to distribute, publish
and market Products owned or controlled by GTIS;
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereby agree as follows:
1. Definitions
(a) "Chargeback" means deductions customers take against an
Infogrames invoice for price protection, promotions or
markdowns.
(b) "Confidential Information" means trade secrets, discoveries,
ideas, concepts, know-how, techniques, designs,
specifications, drawings, diagrams, data, computer programs,
business activities and operations. In order to be considered
"Confidential Information," the information must contain a
legend, such as "Confidential Information," "Confidential" or
"Proprietary," or if orally disclosed, such information shall
be considered and treated as Confidential Information only if
it is clearly identified at the time of disclosure as being
confidential and the disclosing party gives written notice
within 10 days after disclosure specifically reciting the
information orally disclosed and stating that such information
is Confidential Information.
(c) "Costs" means all reasonable costs, employee expenses, cost of
materials, fees or other expenses related to the manufacture,
distribution, publishing and marketing of the Products,
including without limitation, materials, labor, overhead,
shipping, insurance, license fees, transmission and taxes and
duties.
(d) "Master" means a gold master cd-rom which is of sufficient
quality to allow reproduction of the applicable software
product without any material degradation, plus the applicable
user manual.
(e) "Merchandise" means goods and sundries bearing the names,
characters,
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<PAGE> 2
themes or based on the storylines related to any Product.
(f) "Net Revenues" means gross revenues, less any returns,
Chargebacks, discounts, rebates, Costs, commissions, taxes,
duties, insurance and transportation costs.
(g) "Products" means the Products (in any format, e.g. PC,
Macintosh, console, video, online play) to which GTIS has the
right to distribute such Products in the Territory, whether
licensed or owned by GTIS, and any demonstration versions and
derivative works thereof, including without limitation, rights
to merchandising, television, film, music, hint books,
strategy guides, sequels, add-ons and level packs.
(h) "Trademarks" means the trademarks, logos, service marks, trade
names and other proprietary markings owned by or licensed to
GTIS in connection with any Product.
(i) "Territory" means all countries currently comprising the
European Economic Union plus Australia, New Zealand
________________________________.
(j) All capitalized terms not defined herein are as defined in the
Securities Purchase Agreement between the parties dated as of
November 15, 1999.
2. License: GTIS hereby grants to Infogrames the exclusive right to,
directly or indirectly, publish, manufacture, have manufactured,
market, advertise, promote, publicize, distribute, sell, sublicense or
otherwise exploit the Products through all channels of distribution in
the Territory, subject to rights granted in any license agreement dated
prior to November 11, 1999 (the "Pre-existing Agreements"). GTIS shall
not renew the Pre-existing Agreements nor allow the Pre-existing
Agreements to automatically renew.
3. Trademark License: GTIS hereby grants to Infogrames a royalty-free,
non-exclusive, non-transferable license to use GTIS' Trademarks in
connection with the exercise of the license granted to Infogrames
pursuant to Paragraph 2 of this Agreement. GTIS' Trademarks and the
goodwill associated therewith are and remain GTIS' exclusive property.
Infogrames shall acquire no right, title or interest in GTIS'
Trademarks or the goodwill associated therewith, other than the limited
license and right to use GTIS' Trademarks as set forth under this
Agreement. All usage of GTIS' Trademarks by Infogrames shall inure to
GTIS' benefit. Infogrames will use all reasonable efforts to ensure
that all applicable and reasonably necessary Trademarks used for a
Product appear clearly on the packaging and major advertising and
promotional materials for such Product.
4. Termination of License Agreements: Immediately after the Closing, GTIS
agrees to terminate any and all license agreements between GTIS and any
European Company
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<PAGE> 3
Subsidiary as of December 31, 1999.
5. Purchase of Prepackaged Products: If GTIS offers prepackaged Products,
Infogrames shall be entitled to purchase such prepackaged Products from
GTIS at either (a) GTIS' actual cost of manufacture (excluding
overhead), plus 15% or (b) the actual amount paid by GTIS' to the third
party vendor, less any rebates, Chargebacks and credits for returns,
plus 15%. The prepackaged Products will be purchased on a purchase
order basis, under Infogrames standard purchase order terms and
conditions.
6. Return of Prepackaged Products: Infogrames shall be entitled to return
prepackaged Products purchased from GTIS to GTIS for a full refund or
credit, at Infogrames' option.
7. Delivery of Non-Prepackaged Products: GTIS will deliver as soon as
practicable a complete Master of any Product which is licensed to
Infogrames under this Agreement for manufacture by or for Infogrames
pursuant to this Agreement.
8. Royalties on Non-Prepackaged Products: Infogrames will pay to GTIS a
royalty on distribution of Products which are manufactured by or for
Infogrames pursuant to the license granted herein calculated as
follows:
(a) If a third party is entitled to royalties based on Infogrames'
distribution of the specific Product, and the royalty to such
third party is based on a percentage of net revenues or net
sales, then the royalty will be 30% of the Net Revenues
Infogrames actually receives from the distribution of such
Product.
(b) If a third party is entitled to royalties based on Infogrames'
distribution of the specific Product, and the royalty to such
third party is a fixed price, then the royalty will be 130% of
the royalty due to such third party (not including any
advance) actually paid by GTIS to the third party for such
Product. GTIS will inform Infogrames at the time such Product
is delivered to Infogrames of the amount of the royalty due to
such third party in writing.
(c) If the product is internally developed by GTIS then the
royalty will be 30% of the Net Revenues Infogrames actually
receives from the distribution of the Product.
(d) No royalties will be due from Infogrames to GTIS for up to 50
units of each Product, to be used for promotional and
demonstration purposes.
9. Taxes. All amounts due hereunder include any applicable taxes and
duties.
10. Payment Procedures: Infogrames will report to GTIS the amount of
royalties due within 60 days after the end of each calendar quarter,
and each such report will be accompanied by payment of such amount;
provided, however, that Infogrames shall be entitled to credit
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<PAGE> 4
the amounts to be paid by GTIS to any amounts that GTIS owes to
Infogrames under any other agreement or security whatsoever. All
payments will be made in French Francs.
11. Audit: Infogrames will keep accurate records of the basis for the
royalty determination and will make such records available to an
independent certified public accountant mutually agreed upon by the
parties for inspection during normal business hours, provided however
such inspection shall not interfere with Infogrames' normal business
activities. Such accountant shall be under an obligation of
confidentiality to Infogrames, and will only disclose to GTIS whether
or not the royalty reports provided to GTIS by Infogrames were correct,
and if not, the amount by which the royalty reports are incorrect. No
other information will be provided to GTIS. If Infogrames has underpaid
the royalties due, Infogrames will promptly pay the underpaid amount.
If Infogrames has overpaid the royalties due, Infogrames may elect, in
its sole discretion, to either credit such overpayment against
royalties to come due in the future or require GTIS to refund such
overpayment to Infogrames promptly. Inspections shall not occur more
frequently than once annually and shall not cover the same records more
than once.
12. GTIS Warranties and Indemnity: GTIS warrants and represents that any
product provided to Infogrames under this Agreement does not and will
not infringe any third party proprietary right and that GTIS has
sufficient rights to such products to grant Infogrames the licenses
under this Agreement. GTIS warrants and represents that it has the
right to enter into this Agreement and that this Agreement and GTIS'
performance under this Agreement will not conflict or violate any
obligations that GTIS may have under an agreement with any third party.
GTIS will indemnify Infogrames, and its affiliates, officers, directors
and employees, against claims, actions, demands, liabilities, losses,
damages, expenses (including reasonable attorneys' fees and legal
costs) related to alleged or actual infringement of third party
proprietary rights by the Products and to alleged personal injury or
property damage related to the Products. GTIS will indemnify
Infogrames, and its affiliates, officers, directors and employees,
against any claims, liabilities, losses, damages, injuries, costs,
expenses, causes of action, claims, demands, assessments and similar
matters related to any breach of GTIS' warranties.
13. Infogrames Warranties and Indemnity: Infogrames warrants and represents
that it has the full power and authority to enter into this Agreement.
Infogrames will indemnify GTIS, and its affiliates, officers, directors
and employees, against any claims, liabilities, losses, damages,
injuries, costs, expenses, causes of action, claims, demands,
assessments and similar matters related to any breach of Infogrames'
warranties.
14. Conditions on Indemnity Obligations: The indemnity obligations set
forth in this Agreement are conditioned upon the party claiming
indemnification (the "Indemnified Party") promptly notifying the
indemnifying party (the "Indemnifying Party") of the claim, allowing
the Indemnifying Party to control any defense or settlement of such
claim and assisting the Indemnifying Party in the defense or settlement
so long as the Indemnifying Party reimburses the Indemnified Party's
reasonable expenses.
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<PAGE> 5
15. Term: The term of this Agreement will be the later of (a) seven years
or (b) the period of time during which Infogrames and its subsidiaries
hold at least a twenty-five percent in the voting stock of GTIS.
16. Termination: This Agreement may be terminated by Infogrames in its sole
discretion upon sixty days written notice to GTIS. Either party may
terminate this Agreement for a material breach by the other party which
has not been cured within sixty days after the non-breaching party
provided written notice of such breach to the breaching party.
17. Effect of Termination: Upon termination of this Agreement, the licenses
granted hereunder will terminate, provided however, that the licenses
will continue to the extent necessary to allow Infogrames to distribute
its remaining inventory of Products and to fulfill its obligations
under any agreement with a third party. Paragraphs 1, 11, 12, 13, 16 -
28 shall survive termination of this Agreement for any reason.
18. Assignment: Infogrames may assign all or a portion of its rights under
this Agreement to (a) its affiliates or (b) in the event of a change in
control of Infogrames, to third parties. GTIS may not assign this
Agreement to any third party. Subject to the foregoing, the provisions
of this Agreement shall apply to and bind the successors and permitted
assigns of the parties. Any attempted assignment or other transfer of
this Agreement not in compliance with this Paragraph 18 shall be null
and void and shall be deemed to be a material breach of this Agreement
which is not capable of cure.
19. Disposition of European Operations: GTIS agrees that upon execution of
this Agreement, it will take all actions necessary to dispose, as soon
as practicable, of its existing publishing and distribution operations
in the Territory and those of Company Subsidiaries in the Territory.
20. Confidentiality: Each party agrees that it will hold in strict
confidence and not disclose the Confidential Information of the other
party to any third party and to use the Confidential Information of the
other party for no purpose other than the purposes expressly permitted
by this Agreement. Each party shall only permit access to the other
party's Confidential Information to those of its employees having a
need to know and who have signed confidentiality agreements containing
terms at least as restrictive as those contained in this Paragraph 20.
Each party shall maintain the confidentiality and prevent accidental or
other loss or disclosure of any Confidential Information of the other
party with at least the same degree of care as it uses to protect its
own Confidential Information but in no event with less than reasonable
care. A party's obligations of confidentiality under this Agreement
shall not apply to information which such party can document (i) is in
the public domain without the breach of any agreement or fiduciary duty
or the violation of any law, (ii) was known to the party prior to the
time of disclosure without the breach of any agreement or fiduciary
duty or the violation of any law, (iii) is independently developed by
the party prior to receiving such Confidential Information without
reference to any Confidential Information, (iv) is required to be
disclosed pursuant to a judicial order, a requirement of a governmental
agency or by operation of law, provided that such party gives the other
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<PAGE> 6
party written notice of any such requirement immediately after learning
of any such requirement, and takes all reasonable measures to avoid or
limit disclosure under such requirements and to obtain confidential
treatment or a protective order and has allowed such other party to
participate in the proceeding. Upon written request by either party
hereto, the other party shall promptly return all documents and other
tangible materials representing the requesting party's Confidential
Information and all copies thereof.
21. Governing Law: The laws of France shall govern this Agreement, without
regard to conflicts of laws provisions thereof and without regard to
the United Nations Convention on Contracts for the International Sale
of Goods. In any action or proceeding to enforce rights under this
Agreement, the prevailing party shall be entitled to recover costs and
attorneys' fees.
22. Relationship of Parties. The parties hereto expressly understand and
agree that the parties are independent contractors in the performance
of each and every part of this Agreement.
23. Amendment and Waiver. Except as otherwise expressly authorized herein,
any provision of this Agreement may be amended and the observance of
any provision of this Agreement may be waived only with the written
consent of the parties.
24. Headings. Headings and captions are for convenience only and are not to
be used in the interpretation of this Agreement.
25. Notices. All notices, statements, and reports required or permitted by
this Agreement shall be in writing and deemed to have been effectively
given and received; (i) five (5) business days after the date of
mailing if sent by registered or certified mail, postage prepaid, with
return receipt requested; (ii) when transmitted if sent by facsimile,
provided a confirmation of transmission is produced by the sending
machine and a copy of such facsimile is promptly sent by another means
specified in this Paragraph 25; or (iii) when delivered if delivered
personally or sent by express courier service.
Notices shall be addressed as follows:
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<PAGE> 7
<TABLE>
<CAPTION>
If to Infogrames: If to GTIS:
<S> <C>
Infogrames Entertainment S.A. GT Interactive Software Corp.
84, rue du 1er Mars 1943 417 Fifth Avenue
Villeurbanne, 69100 New York, New York 10016
France Attention: Thomas Heymann
Attention: Thomas Schmider Telecopy: (212) 679-3424
Telecopy: (011 33) 472 655116 Confirm: (212) 726-0749
Confirm: (011 33) 472 655000
And with a copy to:
Attention: Frederic Garnier Kramer Levin Naftalis & Frankel LLP
Telecopy: (011 33) 472 655059 919 Third Avenue
Confirm: (011 33) 472 655000 New York, New York 10022
Attention: David P. Levin, Esq.
with a copy to: Telecopy: (212) 715-8000
Confirm: (212) 715-9100
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, California 94104
Attention: Nathaniel M. Cartmell, Esq.
Ronald E. Bornstein, Esq.
Telecopy: (415) 983-1200
Confirm: (415) 983-1000
</TABLE>
26. Entire Agreement. This Agreement supersedes all proposals, oral or
written, all negotiations, conversations, or discussions between or
among parties relating to the subject matter of this Agreement and all
past dealing or industry custom.
27. Severability. If any provision of this Agreement is held to be illegal
or unenforceable, that provision shall be limited or eliminated to the
minimum extent necessary so that this Agreement shall otherwise remain
in full force and effect and enforceable.
28. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Distribution Agreement on the
Effective Date.
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<PAGE> 8
INFOGRAMES ENTERTAINMENT S.A. GT INTERACTIVE SOFTWARE CORP:
By: _____________________________ By: ______________________________
Name: ___________________________ Name: ____________________________
Title: __________________________ Title: ___________________________
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<PAGE> 1
Exhibit 8
EQUITY PURCHASE AND VOTING AGREEMENT
THIS EQUITY PURCHASE AND VOTING AGREEMENT (this "Agreement"), dated as
of November 15, 1999, between Infogrames Entertainment S.A., a societe anonyme
organized under the laws of France ("Parent"), California U.S. Holdings, Inc., a
wholly owned subsidiary of Parent ("Purchaser"), and each of the following:
General Atlantic Partners 16, L. P., a Delaware limited partnership, General
Atlantic Partners 19, L. P., a Delaware limited partnership, General Atlantic
Partners II, L. P., a Delaware limited partnership, General Atlantic Partners
54, L. P., a Delaware limited partnership, GAP Coinvestment Partners, L. P., a
New York limited partnership, and GAP Coinvestment Partners II, L. P., a
Delaware limited partnership (each "Stockholder" and collectively
"Stockholders").
W I T N E S S E T H:
WHEREAS, each Stockholder owns (both beneficially and of record) (i)
the number of shares of common stock, par value $.01 per share ("Common Stock"),
(ii) the number of shares of Series A Convertible Preferred Stock, par value
$.01 per share, ("Preferred Stock"), and (iii) warrants for the purchase of that
number of shares, and at the exercise price per share, of Common Stock
("Warrants"), of GT Interactive Software Corp., a Delaware corporation (the
"Company"), in each case as set forth opposite such Stockholder's name on
Schedule 1 hereto; and
WHEREAS, Parent intends Purchaser to buy from Stockholders, and
Stockholders intend to sell to Purchaser, the Warrants set forth on Schedule 1,
together with any Warrants of the Company hereafter acquired beneficially or of
record by any Stockholder (the "Subject Warrants"); and
WHEREAS, in connection herewith, and as a condition to the willingness
of the Company to approve the transactions described in this Agreement, Parent
and Purchaser are entering concurrently herewith into a Securities Purchase
Agreement with the Company, dated as of November 15, 1999 (the "Purchase
Agreement"), pursuant to which Purchaser has agreed to make a major capital
investment in the Company; and
WHEREAS, as a condition to the willingness of Parent to enter into the
Purchase Agreement, Parent has required that Stockholders agree, and in order to
induce Parent to enter into the Purchase Agreement, Stockholders have agreed,
among other things, (i) to exchange their respective holdings of Preferred Stock
and subordinated debt of the Company for convertible subordinated debt pursuant
to an Exchange Agreement of even date herewith between Stockholders and Company
(the "Exchange Agreement") and (ii) in accordance with the terms of this
Agreement, (a) to appoint Purchaser as Stockholder's proxy to vote the Voting
Shares (as defined herein) and (b), with respect to certain questions put to
stockholders of the Company for a vote, to vote the Voting Shares:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
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<PAGE> 2
1. Purchase and Sale of Subject Warrants.
1.1 Purchase of Warrants. On the terms and subject to the
conditions set forth in this Agreement, Purchaser shall purchase from each
Stockholder, and each Stockholder shall sell and transfer to Purchaser, on the
Closing Date all of such Stockholder's Subject Warrants for the consideration
per underlying share of $0.00022, free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on voting rights, charges and other encumbrances of any nature
whatsoever (collectively, "Liens") except for any Lien imposed by applicable
securities laws, the express terms of the Warrant Agreement (as defined in
Section 2.1 hereof) or the express terms of the Exchange Agreement.
1.2 Conditions to Closing. The obligations of the parties to
consummate the transactions contemplated by Section 1.1 hereof are subject to
the following conditions: (a) any waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") applicable to the
purchase of the Subject Warrants shall have expired or been terminated and any
applicable foreign antitrust requirements shall have been satisfied, (b) there
shall be no preliminary or permanent injunction or other order by any court of
competent jurisdiction restricting, preventing or prohibiting the delivery of
the Subject Warrants and (c) the closings under the Purchase Agreement and the
Exchange Agreement shall have occurred at or prior to the Closing. Parent and
Stockholders each shall promptly after the date hereof make such filings and
provide such information as may be required under the HSR Act or any applicable
foreign antitrust laws with respect to the sale of the Subject Warrants.
1.3 Closing. Subject to the conditions contained in Section
1.2, the closing of the transactions contemplated by Section 1.1 hereof (the
"Closing") shall occur simultaneously with, and at the same location as, the
closing under the Purchase Agreement (the date of the Closing being the "Closing
Date"). Each Stockholder shall deliver to Purchaser at the Closing an instrument
or instruments evidencing such Stockholder's Subject Warrants, each such
instrument being duly endorsed in blank and accompanied by such other documents
as may reasonably be necessary in Purchaser's judgment to transfer record
ownership of such Subject Warrants into Purchaser's name on the warrant transfer
books of the Company.
1.4 Adjustments Upon Changes in Capitalization. In the event
of any change in the number of issued and outstanding shares of capital stock of
the Company by reason of any stock dividend, subdivision, merger,
recapitalization, combination, conversion or exchange of shares, or any other
change in the corporate or capital structure of the Company (including, without
limitation, the declaration or payment of a dividend of cash or securities or
the issuance of any securities not contemplated by the Purchase Agreement) which
would have the effect of diluting or otherwise adversely affecting Parent's or
Purchaser's rights and privileges or prospective rights and privileges under
this Agreement, the number and kind of the Subject Warrants and the
consideration payable in respect of the Subject Warrants shall be appropriately
and equitably adjusted to restore to Parent and Purchaser such respective rights
and privileges.
1.5 Preferred Stock Consent. Stockholder, in its capacity as
the holder of shares of Preferred Stock set forth in Schedule 1 hereto, hereby
consents to the Transactions (as defined in Section 5.1). Without limiting the
generality of the foregoing, Stockholder hereby waives any rights it may have as
a holder of shares of Preferred Stock to the following, as a result of the
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<PAGE> 3
Transactions: (a) to receive dividends on the Preferred Stock; (b) to receive
the Liquidation Preference (as defined in Section 4(a) of the Certificate of
Designation (the "Certification of Designation") of Series A Convertible
Preferred Stock of the Company); and (c) to receive any notices pursuant to
Section 7(j) of the Certificate of Designation or otherwise; provided, however,
that such consent and waiver is conditioned upon the consummation of all of the
Transactions, including the transactions contemplated by the Exchange Agreement.
2. Representations and Warranties of Stockholders. Each Stockholder
hereby represents and warrants, severally with respect to itself/and not
jointly, to Parent and Purchaser the following as of the date hereof and the
Closing:
2.1 Title to the Subject Warrants, etc. Stockholder is the
owner (both beneficially and of record) of the Subject Warrants. Except for (a)
the Subject Warrants, (b) the shares of Common Stock and Preferred Stock set
forth on Schedule 1 hereto (together with any shares of Common Stock or
Preferred Stock hereafter acquired of record or beneficially by Stockholder, the
"Voting Shares") and (c) the securities to be purchased from the Company
pursuant to the Exchange Agreement, Stockholder is not the record or beneficial
owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of, and does not have any other rights of any nature to acquire any
additional shares of, any capital stock of the Company. Except, (i) to the
extent resulting from the Exchange Agreement or (ii) for restrictions imposed by
applicable securities laws or the express terms of the Warrant Agreement, dated
as of June 29, 1999, among the Company and the holders named therein (the
"Warrant Agreement"), Stockholder owns all of its Subject Warrants and the
Voting Shares free and clear of all Liens and, except pursuant to the provisions
of this Agreement, Stockholder has not appointed or granted any proxy, which
appointment or grant is still effective, with respect to any of the Voting
Shares. Stockholder has sole power of disposition with respect to all of its
Subject Warrants and Voting Shares and has sole voting power of the Voting
Shares with respect to the matters set forth in Section 5 hereof. Upon the
purchase of the Subject Warrants pursuant to Section 1, Purchaser will receive
good and valid title to the Subject Warrants, free and clear of all Liens,
except for restrictions imposed by the applicable securities laws.
2.2 Authority Relative to This Agreement. Stockholder has all
necessary power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Stockholder and, assuming the due authorization, execution and delivery by
Parent and Purchaser, constitutes a legal, valid and binding obligation of
Stockholder, enforceable against Stockholder in accordance with its terms,
except that such enforceability (i) may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to the enforcement of
creditors' rights generally and (ii) is subject to general principles of equity.
2.3 Conflict. The execution and delivery of this Agreement by
Stockholder does not, and the performance of this Agreement by Stockholder will
not, (a) except for any filings required under the HSR Act and for requirements
of any applicable foreign antitrust laws or of U.S. federal and state securities
laws, require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority of the United
States or any political subdivision thereof, (b) conflict with or violate the
organizational documents of the Stockholder, or (c) conflict with, violate or
result in any breach of or constitute a default under (or
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<PAGE> 4
an event which with notice or lapse of time or both would become a default
under) any agreement, judgment, injunction, order, law, rule, regulation, decree
or arrangement to which Stockholder is a party or by which Stockholder is bound.
2.4 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on
behalf of Stockholder.
2.5 No Claims. Except as set forth on Schedule 2.5 hereto, as
of the date hereof neither the Company, any subsidiary of the Company, the
partnership between Reflections Interactive Limited and Martin Lee Edmondson
created under the Deed of Partnership dated December 4, 1998, as amended, nor
Oddworld Inhabitants, Inc. has any liabilities (absolute, accrued, contingent or
otherwise) to Stockholder or any affiliate thereof.
3. Representations and Warranties of Parent and Purchaser. Parent and
Purchaser hereby represent and warrant to Stockholder as follows:
3.1 Authority Relative to This Agreement. Each of Parent and
Purchaser has all necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by each of Parent and Purchaser and the consummation by each of Parent and
Purchaser of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and
Purchaser, respectively. This Agreement has been duly and validly executed and
delivered by each of Parent and Purchaser and, assuming the due authorization,
execution and delivery by Stockholder, constitutes a legal, valid and binding
obligation of each of Parent and Purchaser, enforceable against each of Parent
and Purchaser in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and (ii)
is subject to general principles of equity.
3.2 No Conflict. The execution and delivery of this Agreement
by Parent and Purchaser do not, and the performance of this Agreement by Parent
and Purchaser will not, (a) except for any filings required under the HSR Act
and for requirements of any applicable foreign antitrust laws or of federal and
state securities laws, require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority,
domestic or foreign, (b) conflict with or violate the organizational documents
of Parent or Purchaser, (c) conflict with, violate or result in any breach of or
constitute a default under (or an event which with notice or lapse of time or
both would become a default under) any agreement, judgment, injunction, order,
law, rule, regulation, decree or arrangement applicable to Parent or Purchaser
or by which any property or asset of Parent or Purchaser is bound or affected,
other than, in the case of clause (c), any such conflicts, violations, breaches
or defaults that, individually or in the aggregate, would not materially impair
the ability of Parent or Purchaser to perform its obligations hereunder.
3.3 Brokers. Except for Lazard Freres & Co. LLC, whose fees
will be paid by Parent, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or
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<PAGE> 5
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of Parent or Purchaser.
4. Covenants of Stockholder.
4.1 No Disposition or Encumbrance of Subject Warrants or
Voting Shares. Each Stockholder hereby covenants and agrees that from the date
hereof until the delivery by the Company to Purchaser of the Shares (as defined
in the Purchase Agreement) (the "Purchase Agreement Closing"), except as
contemplated by this Agreement, Stockholder shall not, and shall not offer or
agree to, sell, transfer, tender, assign, hypothecate or otherwise dispose of,
or create or permit to exist any Lien with respect to the Subject Warrants or
Voting Shares.
4.2 No Solicitation of Transactions. Each Stockholder shall
not, nor (subject to Section 7.14) shall it permit any of its subsidiaries or
affiliates to, nor shall it authorize or permit any of its officers, directors
or employees or any investment banker, financial advisor, attorney, accountant,
agent or other representative retained by it or any of its subsidiaries or
affiliates to, directly or indirectly, from the date hereof until the Purchase
Agreement Closing, (a) solicit, initiate or knowingly encourage (including by
way of furnishing information) any inquiries or the making of any proposal which
constitutes, or may reasonably be expected to lead to, any Company Takeover
Proposal (as defined below); (b) participate in any discussions or negotiations
regarding any Company Takeover Proposal or (c) enter into any agreement,
understanding or arrangement with respect to the foregoing. For purposes of this
Agreement, the term "Company Takeover Proposal" means any bona fide proposal or
offer, whether in writing or otherwise, from any Person other than Parent,
Purchaser or any affiliates thereof (a "Third Party") to acquire beneficial
ownership (as defined under Rule 13-d of the Exchange Act) of all or a material
portion of the assets of the Company and the Company Subsidiaries taken as a
whole or more than fifty percent (50%) of any class of equity securities of the
Company pursuant to a merger, consolidation or other business combination, sale
of shares of capital stock, sale of assets, tender offer, exchange offer or
similar transaction with respect to either the Company or any of the Company
Subsidiaries, including any single or multi-step transaction or series of
related transactions, which is structured to permit such Third Party to acquire
beneficial ownership of any material portion of the assets of the Company and
its Subsidiaries taken as a whole or more than 50% of such equity interest in
the Company.
4.3 Compliance of Stockholder with this Agreement. Each
Stockholder shall take all actions and forbear from all actions, in each case,
necessary in order that (a) all of such Stockholder's representations and
warranties hereunder are true and correct and (b) such Stockholder fulfills all
of its obligations hereunder.
5. Voting Agreement; Proxy.
5.1 Voting Agreement. Subject to and without limiting the
effect of Section 5.2, each Stockholder hereby agrees that, from the date hereof
until the Purchase Agreement Closing, at any meeting of the stockholders of the
Company, however called, and in any action by written consent of the
stockholders of the Company, Stockholder shall, to the extent applicable, (a)
vote (or execute a consent in respect of) all of the Voting Shares in favor of
any of the transactions or other matters contemplated by the Transaction
Documents (as defined in the Purchase Agreement) (the
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<PAGE> 6
"Transactions"); and (b) vote (or execute a consent in respect of) the Voting
Shares against any action or agreement that would reasonably be expected to
impede, interfere with, delay or attempt to discourage any of the Transactions,
including, but not limited to: (i) any extraordinary corporate transaction
(other than the Transactions), such as a merger, reorganization,
recapitalization or liquidation involving the Company or any of the Company
Subsidiaries (as defined in the Purchase Agreement) or any proposal made in
opposition to or in competition with the Transactions; (ii) a sale or transfer
of a material amount of assets of the Company or any of the Company
Subsidiaries; (iii) any change (other than the Transactions) in the management
or board of directors of the Company, except as otherwise agreed to in writing
by Parent; (iv) any material change (other than the Transactions) in the present
capitalization or dividend policy of the Company; or (v) any other material
change (other than the Transactions) in the corporate structure or business of
the Company or any of the Company Subsidiaries.
5.2 Irrevocable Proxy. Each Stockholder hereby appoints
Purchaser as the attorney and proxy of Stockholder, with full power of
substitution, to vote, and otherwise act (by written consent or otherwise) with
respect to all of the Voting Shares that such Stockholder is entitled to vote at
any meeting of stockholders of the Company (whether annual or special and
whether or not an adjourned or postponed meeting) or consent in lieu of any such
meeting or otherwise, on the matters and in the manner specified in Section 5.1.
THIS PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN INTEREST AND
IS EXECUTED AND INTENDED TO BE IRREVOCABLE IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 212(e) OF THE DELAWARE GENERAL CORPORATION LAW ("DGCL"). Each
Stockholder hereby revokes, effective upon the execution and delivery of the
Purchase Agreement by the parties thereto, all other proxies and powers of
attorney with respect to the Voting Shares to which this proxy and power of
attorney relates that such Stockholder may have heretofore appointed or granted,
and no subsequent proxy or power of attorney (except in furtherance of such
Stockholder's obligations under Section 5.1 hereof) shall be given or written
consent executed (and if given or executed, shall not be effective) by such
Stockholder with respect thereto so long as this Agreement remains in effect.
6. Termination. This Agreement (including any power of attorney and
proxy granted pursuant to Section 5.2 hereof or otherwise) shall terminate
automatically on the earlier of the Purchase Agreement Closing or the
termination of the Purchase Agreement in accordance with the terms and
conditions thereof; provided, however, that the provisions of Sections 4 and 5
shall terminate on September 30, 2000 if this Agreement shall not earlier have
terminated; and provided further, that if any Stockholder fails to comply with
Sections 1 or 5.1, the obligations of such Stockholder under Sections 4 and 5
shall not terminate until the third anniversary of the date of this Agreement.
Any termination of this Agreement, or any provision thereof, shall not relieve
any party hereunder of any liability for a breach of this Agreement.
7. Miscellaneous.
7.1 Expenses. All costs and expenses incurred in connection
with the transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
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7.2 Further Assurances. Each Stockholder, Parent and Purchaser
shall execute and deliver all such further documents and instruments and take
all such further action as may be reasonably necessary in order to consummate
the Transactions.
7.3 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement were
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
7.4 Entire Agreement. This Agreement constitutes the entire
agreement between Parent, Purchaser and Stockholder with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, between Parent, Purchaser and Stockholder with respect to the
subject matter hereof.
7.5 Assignment. This Agreement shall not be assigned by
operation of law or otherwise, except that Parent or Purchaser may assign all or
any of its rights and obligations hereunder to any affiliate of Parent, provided
that no such assignment shall relieve Parent or Purchaser of its obligations
hereunder if such assignee does not perform such obligations.
7.6 Parties in Interest. This Agreement shall be binding upon,
inure solely to the benefit of, and be enforceable by, the parties hereto and
their successors and permitted assigns. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
7.7 Amendment; Waiver. This Agreement may not be amended
except by an instrument in writing signed by all of the parties hereto. Any
party hereto may (a) extend the time for the performance of any obligation or
other act of any other party hereto, (b) waive any condition of its obligations
hereunder or inaccuracy in the representations and warranties of any other party
hereto contained herein or in any document delivered by any other party hereto
pursuant hereto and (c) waive compliance with any agreement by any other party
hereto contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
7.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party.
7.9 Notices. Except as otherwise provided herein, all notices,
requests, claims, demands and other communications hereunder shall be in writing
and shall be given (and shall be deemed to have been duly given upon receipt) by
delivery in person, by cable, facsimile transmission, telegram or telex or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
7.9):
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<PAGE> 8
if to Parent or Purchaser:
Infogrames Entertainment S.A.
84, rue du 1er Mars 1943
Villeurbanne, 69100
France
Attention: Thomas Schmider
Telecopy: (011 33) 472 655116
Confirm: (011 33) 472 655000
and
Attention: Frederic Garnier
Telecopy: (011 33) 472 655059
Confirm: (011 33) 472 655000
with a copy to:
Pillsbury Madison & Sutro LLP
P.O. Box 7880
San Francisco, CA 94120-7880
Telecopy: 415-983-1200
Attention: Nathaniel M. Cartmell III
if to Stockholders:
c/o General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, CT 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, NY 10019-6064
Telecopy: (212) 757-3990
Attention: Matthew Nimetz
7.10 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed in Delaware without regard to any
principles of choice of law or conflicts of law of such State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any state or federal court sitting in Delaware. Each of the
parties hereto (a) consents to submit such party to the personal jurisdiction of
any Federal court located in the State of
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<PAGE> 9
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated hereby, (b) agrees that such
party will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, (c) agrees that such party will not
bring any action relating to this Agreement or the transactions contemplated
hereby in any court other than a Federal court sitting in the state of Delaware
or a Delaware state court and (d) waives any right to trial by jury with respect
to any claim or proceeding related to or arising out of this Agreement or any of
the transactions contemplated hereby.
7.11 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
7.12 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
7.13 Public Announcements. Stockholders will consult with
Parent and use reasonable efforts to agree upon the text of any press release,
before issuing any press release or otherwise making public statements with
respect to the Transactions and shall not issue any such press release or make
any such public statement without Parent's prior consent, which consent shall
not be unreasonably withheld, except as may be required by applicable law
(including requirements of stock exchanges and other similar regulatory bodies).
7.14 Stockholder Representatives. Each Stockholder signs
solely in its capacity as the beneficial owner of, or the general partner of a
partnership or the trustee of a trust which is the beneficial owner of, the
Subject Warrants and nothing contained herein shall limit or affect any actions
taken by any officer, director, partner, affiliate or representative of such
Stockholder who is or becomes an officer or a director of the Company in his or
her capacity as an officer or director of the Company and none of such actions
in such capacity shall be deemed to constitute a breach of this Agreement.
7.15 Legend. Each Stockholder shall promptly after the date
hereof cause to be affixed to all certificates representing the Subject Warrants
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
AN EQUITY PURCHASE AND VOTING AGREEMENT DATED NOVEMBER 15, 1999, AMONG
INFOGRAMES ENTERTAINMENT S.A., CALIFORNIA U.S. HOLDINGS, INC. AND THE
STOCKHOLDERS NAMED THEREIN, WHICH, AMONG OTHER THINGS, RESTRICTS THE
TRANSFER AND VOTING THEREOF."
7.16 Stockholders Consent. The Stockholders hereby consent to
the amendment to the Company's Amended and Restated Certificate of Incorporation
to increase the total number of shares of all classes of stock which the Company
shall have the authority to issue to 305,000,000 and to increase the number of
shares designated Common Stock to 300,000,000 in the form attached as Exhibit J
to the Purchase Agreement.
-9-
<PAGE> 10
[EQUITY PURCHASE AND VOTING RIGHTS AGREEMENT]
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered as of the date first written above.
INFOGRAMES ENTERTAINMENT S.A.
By
---------------------------------------------
CALIFORNIA U.S. HOLDINGS, INC.
By
---------------------------------------------
GENERAL ATLANTIC PARTNERS 16, L.P.
By: General Atlantic Partners, LLC,
its General Partner
By
---------------------------------------------
GENERAL ATLANTIC PARTNERS 19, L.P.
By: General Atlantic Partners, LLC,
its General Partner
By
---------------------------------------------
GENERAL ATLANTIC PARTNERS II, L.P.
By: General Atlantic Partners, LLC,
its General Partner
By
---------------------------------------------
-10-
<PAGE> 11
[EQUITY PURCHASE AND VOTING RIGHTS AGREEMENT]
GENERAL ATLANTIC PARTNERS 54, L.P.
By: General Atlantic Partners, LLC,
its General Partner
By
---------------------------------------------
GAP COINVESTMENT PARTNERS, L.P.
By
---------------------------------------------
GAP COINVESTMENT PARTNERS II, L.P.
By
---------------------------------------------
<PAGE> 12
SCHEDULE 1
<TABLE>
<CAPTION>
STOCKHOLDER COMMON STOCK PREFERRED STOCK(1) WARRANTS
----------- ------------ ------------------ --------
<S> <C> <C> <C>
General Atlantic Partners II, L.P. 504, 000 -- --
General Atlantic Partners 16, L.P. 4,184,545 -- --
General Atlantic Partners 19, L.P. 2,092,273 -- --
GAP Coinvestment Partner, L.P. 647,707 -- --
General Atlantic Partners 54, L.P. -- 4,897,440 3,673,080
GAP Coinvestment Partners II, L.P. -- 1,102,560 826,920
--------- --------- ---------
TOTAL 7,428,525 6,000,000 2,000,000
</TABLE>
- ------------
(1) Expressed in shares of Common Stock on an as-converted basis.
-12-
<PAGE> 13
SCHEDULE 2.5
The Company has the following liabilities to the Stockholders:
(i) to pay the expenses of the Stockholders incurred in connection
with the Transactions;
(ii) liabilities as set forth in the documentation of the
Subordinated Notes held by certain of the Stockholders;
(iii) liabilities as set forth in the Warrant and the Warrant
Agreement; and
(iv) liabilities as set forth in the Certificate of Designations of
the Preferred Stock.
-13-
<PAGE> 1
EXHIBIT 9
EXHIBIT A
TO WARRANT AGREEMENT
[FORM OF FACE OF WARRANT CERTIFICATE]
THE WARRANTS AND THE COMMON STOCK (THE "SECURITIES") HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION AND SUBJECT TO COMPLIANCE WITH OTHER APPLICABLE LAWS.
THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, UNLESS PREVIOUSLY REGISTERED UNDER
THE SECURITIES ACT, ONLY (A) TO THE COMPANY; (B) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE
144 THEREUNDER (IF AVAILABLE); (C) TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (D) PURSUANT TO AN
OFFSHORE TRANSACTION COMPLYING WITH REGULATION S UNDER THE SECURITIES
ACT; OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
No. __ Certificate for ___ Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
GT INTERACTIVE SOFTWARE CORP.
THIS CERTIFIES THAT ____________, or its registered assigns,
is the registered holder of the number of Warrants set forth above (the
"Warrants"). Each Warrant entitles the holder thereof (the "Holder"), at its
option and subject to the provisions contained herein and in the Warrant
Agreement referred to below, to purchase from GT Interactive Software Corp., a
Delaware corporation (the "Company"), one share of Common Stock, $0.01 par
value, of the Company (the "Common Stock") at the per share exercise price of
$0.01 (the "Exercise Price"), or by Cashless Exercise referred to below. This
Warrant Certificate shall terminate and become void as of the close of business
on June 29, 2004 (the "Expiration Date") or upon the exercise hereof as to all
the shares of Common Stock subject hereto. The number of shares purchasable upon
exercise of the Warrants shall be subject to adjustment from time to time as set
forth in the Warrant Agreement.
This Warrant Certificate is issued under and in accordance
with a Warrant Agreement dated as of June 29, 1999 (as amended, restated,
supplemented or otherwise modified from time to time, the "Warrant Agreement"),
among the Company and the Holders referred to therein, and is subject to the
terms and provisions contained in the Warrant Agreement. The Warrant Agreement
is hereby incorporated herein by reference and made a part hereof. Reference is
hereby made to the Warrant Agreement for a full statement of the respective
rights, limitations of rights, duties and obligations of the Company and the
Holders of the Warrants. Capitalized terms used but not defined herein shall
have the meanings ascribed thereto in the Warrant Agreement.
Subject to the terms of the Warrant Agreement, the Warrants
may be exercised in whole or in part (i) by surrender of this Warrant
Certificate with the form of election to purchase Warrant Shares attached hereto
duly executed and with the simultaneous payment of the Exercise Price in cash
(subject to adjustment) to the Company or (ii) by Cashless Exercise. Payment of
the Exercise Price in cash shall be made in cash or by certified or official
bank check payable to the order of the Company or by wire transfer of funds to
an account designated by the Company for
-1-
<PAGE> 2
such purpose. Payment by Cashless Exercise shall be made by the surrender of a
Warrant or Warrants represented by one or more Warrant Certificates and without
payment of the Exercise Price in cash, in exchange for the issuance of such
number of shares of Common Stock equal to the product of (1) the number of
shares of Common Stock for which such Warrant would otherwise then be nominally
exercised if payment of the Exercise Price were being made in cash and (2) the
Cashless Exercise Ratio.
The Warrants shall be exercisable from time to time in the
discretion of the Holder on or after June 29, 1999, provided, that in no event
shall the Warrants be exercisable after the Expiration Date.
Upon the occurrence of each of the events set forth on
Schedule 1 hereto, on the applicable date with respect to such event, the number
of Warrants shall automatically be increased by the number of additional
Warrants set forth opposite such event on Schedule 1.
In the event the Company enters into a Combination, capital
reorganization or reclassification or the spin-off by the Company of another
Person (each, a "Transaction"), each Warrant evidenced by this Warrant
Certificate will be automatically converted into the right to receive (in the
case of a Transaction other than a spin-off) or shall also be exercisable for
(in the case of a Transaction that is a spin-off) the shares of capital stock or
other securities or other property of such surviving entity upon or as the
result of such Transaction that a Holder of such Warrant would have been
entitled to receive had such Warrant been exercised immediately prior to such
Transaction; provided, that in the event that, in connection with such
Transaction, consideration to holders of Common Stock in exchange for their
shares is payable solely in cash or in the event of the dissolution, liquidation
or winding-up of the Company, the Holder hereof will be entitled to receive
distributions on an equal basis with the holders of Common Stock or other
securities issuable upon exercise of the Warrants, as if the Warrants had been
exercised immediately prior to such events, less the Exercise Price.
The Company may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges in connection with the transfer
or exchange of the Warrant Certificates pursuant to Section 2.4 of the Warrant
Agreement but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be
issued to the Holder hereof a new Warrant Certificate in respect of the shares
of Common Stock as to which the Warrants shall not have been exercised. This
Warrant Certificate may be exchanged by presenting this Warrant Certificate to
the Company properly endorsed with a request to exchange this Warrant
Certificate for other Warrant Certificates evidencing an equal number of
Warrants. No fractional Warrant Shares will be issued upon the exercise of the
Warrants, but the Company shall pay an amount in cash equal to the Current
Market Value for one Warrant Share on the date the Warrant is exercised,
multiplied by such fraction, computed to the nearest whole cent.
-2-
<PAGE> 3
The Warrants do not entitle any holder hereof to any of the rights of a
stockholder of the Company. All shares of Common Stock issuable by the Company
upon the exercise of the Warrants shall, upon such issuance, be duly and validly
issued and fully paid and non-assessable.
GT INTERACTIVE SOFTWARE CORP.
By __________________________
Title:
[SEAL]
Attest: ___________________________
Secretary
DATED:
-3-
<PAGE> 4
EXHIBIT B
TO
WARRANT AGREEMENT
FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)
The undersigned hereby irrevocably elects to exercise [ ]
Warrants at an exercise price per Warrant (subject to adjustment) of $.01 to
acquire an equal number of shares of Common Stock of GT Interactive Software
Corp., on the terms and conditions specified in the within Warrant Certificate
and the Warrant Agreement therein referred to, surrenders this Warrant
Certificate and all right, title and interest therein to GT Interactive Software
Corp., and directs that the shares of Common Stock deliverable upon the exercise
of such Warrants be registered or placed in the name and at the address
specified below and delivered thereto.
Date: ________________, ____
__________________________________
(Signature of Owner)
__________________________________
(Street Address)
__________________________________
(City) (State) (Zip Code)
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
-4-
<PAGE> 5
EXHIBIT C
TO
WARRANT AGREEMENT
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock (the "Warrants") of GT
Interactive Software Corp. (the "Company")
This Certificate relates to __________ Warrants held in
definitive form by _______________ (the "Transferor").
The Transferor has requested the Company by written order to
exchange or register the transfer of a Warrant or Warrants. In connection with
such request and in respect of each such Warrant, the Transferor does hereby
certify that the Transferor is familiar with the Warrant Agreement relating to
the above captioned Warrants and that the transfer of this Warrant does not
require registration under the Securities Act of 1933 (the "Securities Act"),
because(1):
- Such Warrant is being acquired for the Transferor's own account
without transfer.
- Such Warrant is being transferred to the Company.
- Such Warrant is being transferred in a transaction meeting the
requirements of Rule 144 under the Securities Act.
- Such Warrant is being transferred to a qualified institutional buyer
(as defined in Rule 144A under the Securities Act), in reliance on Rule 144A.
- Such Warrant is being transferred pursuant to an offshore transaction
in accordance with Rule 904 under the Securities Act.
- Such Warrant is being transferred pursuant to another available
exemption from the registration requirements under the Securities Act.
-5-
<PAGE> 6
The Company is entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
[INSERT NAME OF TRANSFEROR]
By_________________________
Title:
Date:
-6-
<PAGE> 7
Schedule 1
Upon the occurrence of each of the Events set forth below, the Company
shall issue to each Holder on the applicable Trigger Date additional Warrants in
the numbers set forth opposite such Event:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Event Trigger Date Number of Additional
Warrants
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
A Holder makes any Subordinated Loans pursuant to the July 30, 1999 The product of (a)
Commitment Letter. 1,500,000 multiplied by
(b) a fraction, the
numerator of which is the
amount of the Subordinated
Loans made by such Holder
to the Company pursuant to
the Commitment Letter and
the denominator of which
is the aggregate amount of
all Subordinated Loans
made by all Holders
pursuant to the Commitment
Letter, subject to any
agreement among the
Holders.
- ------------------------------------------------------------------------------------------------------------------
The Company has not executed on or prior to October 31, November 1, 1999 The product of (a)
1999 an agreement relating to a recapitalization, 2,500,000 multiplied by
reorganization, merger, sale (including, without (b) a fraction, the
limitation, a sale of all or substantially all of the numerator of which is the
assets of the Company (which shall include a sale of the amount of the Subordinated
Humongous business)) or other business combination Loans made by such Holder
transaction after the consummation of which the to the Company pursuant to
stockholders of the Company prior to such transaction do the Commitment Letter and
not hold at least a majority of the voting power of the the denominator of which
surviving Person (the foregoing, "a Change of Control is the aggregate amount of
Transaction"). all Subordinated Loans
made by all Holders
pursuant to the Commitment
Letter, subject to any
agreement among the
Holders.
- ------------------------------------------------------------------------------------------------------------------
The Company executes on or prior to October 31, 1999 an date of termination of The product of (a)
agreement relating to a Change of Control Transaction (a Sale Agreement 2,500,000 multiplied by
"Sale Agreement"), but such agreement terminates for any (b) a fraction, the
reason after such date. numerator of which is the
amount of the Subordinated
Loans made by such Holder
to the Company pursuant to
the Commitment Letter and
the denominator of which is
the aggregate amount of all
Subordinated Loans made by
all Holders pursuant to the
Commitment Letter, subject
to any agreement among the
Holders.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
-7-
<PAGE> 8
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
The Company has not closed the transactions contemplated February 29, 2000 The product of (a)
by the Sale Agreement on or prior to February 28, 2000 3,000,000 multiplied by
and repaid in full to the Holders the aggregate amount of (b) a fraction, the
the Subordinated Loans made by the Holders pursuant to numerator of which is the
the Commitment Letter. amount of the Subordinated
Loans made by such Holder
to the Company pursuant to
the Commitment Letter and
the denominator of which is
the aggregate amount of all
Subordinated Loans made by
all Holders pursuant to the
Commitment Letter, subject
to any agreement among the
Holders.
- ------------------------------------------------------------------------------------------------------------------
On the last day of each fiscal quarter of the Company, June 30, 2000 and the The product of (a)
commencing with the fiscal quarter ending June 30, 2000 last day of each fiscal 3,000,000 multiplied by
and ending on the date that the Company repays in full quarter thereafter until (b) a fraction, the
the aggregate amount of the Subordinated Loans, if the the date of repayment of numerator of which is the
Company has not repaid in full to the Holders the the Subordinated Loans amount of the Subordinated
aggregate amount of the Subordinated Loans made by the Loans made by such Holder
Holders pursuant to the Commitment Letter during such to the Company pursuant to
quarter. the Commitment Letter and
the denominator of which is
the aggregate amount of all
Subordinated Loans made by
all Holders pursuant to the
Commitment Letter, subject
to any agreement among the
Holders.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
-8-
<PAGE> 1
Exhibit 10
SECURITIES EXCHANGE AGREEMENT
SECURITIES EXCHANGE AGREEMENT, dated November 15, 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 "Stockholders").
WHEREAS, the Stockholders own (both beneficially and of record) the
number of shares of Series A Convertible Preferred Stock of the Company (the
"Preferred Stock") and the principal amount of the Company's Subordinated Notes
due July 29, 2000 (the "Subordinated Notes," and together with the Preferred
Stock, the "Securities") as set forth on Schedule 1 hereto;
WHEREAS, the Company, Infogrames Entertainment S.A. ("Infogrames") and
California U.S. Holdings, Inc. ("Infogrames US") are entering concurrently into
a Securities Purchase Agreement, dated as of November 15, 1999 (the "Purchase
Agreement"), pursuant to which Infogrames has agreed to make a major capital
investment in the Company; and
WHEREAS, in connection with the Purchase Agreement, and as a condition
to the willingness of Infogrames and Infogrames US to enter into the Purchase
Agreement, the Company has agreed to issue to the Stockholders, and the
Stockholders have agreed to accept, new securities in exchange for the
Securities.
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.
"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.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company, as the same may be amended from time to time.
"Closing" has the meaning set forth in Section 2.3 of this
Agreement.
<PAGE> 2
"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" means the common stock, par value $.01 per
share, of the Company.
"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.
"GAP Coinvestment" has the meaning set forth in the recitals
to this Agreement.
"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.
"Notes" has the meaning set forth in Section 2.1 of this
Agreement,
"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,
2
<PAGE> 3
Governmental Authority or other entity of any kind, and shall include any
successor (by merger or otherwise) of such entity.
"Purchase Agreement" has the meaning set forth in the recitals
to this Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of February 22, 1999 among the Company and the Stockholders.
"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 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" has the meaning set forth in the recitals to this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Stockholders" has the meaning set forth in the recitals to
this Agreement.
"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 this Agreement and the Notes.
ARTICLE 2
EXCHANGE OF SECURITIES
2.1 Exchange of Securities. Subject to the terms and conditions herein
set forth, the Company agrees to issue to each of the Stockholders, and each of
the Stockholders agrees that it will acquire from the Company, on the Closing
Date, the aggregate principal amount of senior subordinated convertible notes
set forth opposite such Stockholder's name on Schedule 2.1 hereto (all of such
notes being referred to herein as the "Notes"), in exchange for the Securities,
free and clear of all Liens.
2.2 Notes. The Notes shall be substantially in the form attached hereto
as Exhibit A.
3
<PAGE> 4
2.3 Closing. Subject to the satisfaction or waiver of the conditions
set forth in Articles 5 and 6 below, the closing of the transactions
contemplated by Section 2.1 (the "Closing") shall take place simultaneously
with, and at the same location as, the closing under the Purchase Agreement (the
"Closing Date"). On the Closing Date, the Company shall deliver to each
Stockholder the Notes being acquired by such Stockholder, against delivery by
such Stockholder to the Company of the certificate or certificates evidencing
the Securities held by such Stockholder, each such certificate being duly
endorsed in blank and accompanied by such stock powers and such other documents
as may reasonably be necessary in the Company's judgment to transfer record
ownership of the Securities.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Stockholders 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 the Notes 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 incorporation
or by-laws or other organizational documents of any of its Subsidiaries, except
that the Certificate of Incorporation shall be amended to increase the number of
authorized shares of Common Stock to permit the reservation of Common Stock
issuable upon conversion of the Notes; (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
4
<PAGE> 5
Governmental Authority or any other Person, and no lapse of a waiting period
under a Requirement of Law, other than customary filings with the Commission for
transactions of the type contemplated hereby, filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder and the filing of an amendment to the
Certificate of Incorporation with the Secretary of State of the State of
Delaware, is necessary or required in connection with the execution, delivery or
performance by, or enforcement against, the Company of this Agreement and the
Notes 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 the Notes.
3.4 Binding Effect. This Agreement has been duly executed and delivered
by the Company, and, assuming the due authorization, execution and delivery by
the Stockholders, constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its 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). Upon execution and delivery by
the Company of the Notes, the Notes will constitute 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 Conversion. Subject to Section 7.3 of the Notes, the Company has
reserved an aggregate of 12,500,000 shares of Common Stock for issuance upon
conversion of the Notes. Subject to Section 7.3 of the Notes, the shares of
Common Stock issuable upon conversion of the Notes in accordance with the terms
of the Notes are duly authorized, and when issued to the Stockholders 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.
3.6 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.
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<PAGE> 6
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Each of the Stockholders hereby represents and warrants
(severally as to itself and not jointly) to the Company as follows:
4.1 Existence and Power. Such Stockholder (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 Stockholder of this Agreement and the transactions
contemplated hereby (a) have been duly authorized by all necessary partnership
action, (b) do not contravene the terms of such Stockholder'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 Stockholder, or any Requirement of Law or Orders
applicable to such Stockholder.
4.3 Title. Such Stockholder is the owner (both beneficially
and of record) of the shares of Preferred Stock and holds the principal amount
of the Subordinated Notes as set forth opposite such Stockholder's name on
Schedule 1. Except to the extent resulting from the Equity Purchase and Voting
Agreement (the "Voting Agreement") among the Stockholders, certain affiliates of
the Stockholders and Infogrames, or for restrictions imposed by applicable
securities laws, such Stockholder owns all of such Securities free and clear of
all Liens. Such Stockholder has sole power of disposition with respect to all of
such Securities. Upon the acquisition of the Securities pursuant to Article 2,
the Company will receive good and valid title to the Securities, free and clear
of all Liens, except for restrictions imposed by the applicable securities laws.
4.4 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 any Requirement of Law, is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, such Stockholder of this Agreement and each of the other
Transaction Documents to which such Stockholder is a party or the transactions
contemplated hereby and thereby.
4.5 Binding Effect. This Agreement has been duly executed and
delivered by such Stockholder and constitutes a legal, valid and binding
obligation of such Stockholder, enforceable against it in accordance with its
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 or by
equitable principles relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
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<PAGE> 7
4.6 Purchase for Own Account. The Notes to be acquired by such
Stockholder pursuant to this Agreement are being or will be acquired for its own
account and with no intention of distributing or reselling such Notes 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 Stockholder at all times to sell or otherwise dispose of
all or any part of such Notes 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
Stockholder's property being at all times within its control. If such
Stockholder should in the future decide to dispose of any of such Notes, such
Stockholder 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
Stockholder agrees to the imprinting, so long as required by law, of legends on
certificates representing all of its Notes and shares of Common Stock issuable
upon conversion of its Notes 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 REGISTRATION 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 AGREEMENT AMONG GT INTERACTIVE
SOFTWARE CORP. AND THE ORIGINAL PURCHASERS OF THE NOTES REPRESENTED
HEREBY. TRANSFEREES OF SUCH SECURITIES SHOULD REVIEW SUCH AGREEMENT TO
DETERMINE THEIR RIGHTS.
4.7 Restricted Securities. Such Stockholder understands that
the Notes 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 Stockholder's
representations set forth herein.
4.8 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the
Stockholders, in connection with the transactions contemplated hereby based on
any agreement, arrangement or understanding with the Stockholders or any action
taken by the Stockholders.
4.9 Accredited Investors. Such Stockholder is an accredited
investor within the meaning of Rule 501(a) under the Securities Act.
4.10 Transfer. On the date hereof, such Stockholder has no
present intention to transfer such Stockholder's Notes to any Person that is not
an affiliate of such Stockholder.
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<PAGE> 8
ARTICLE 5
CONDITIONS TO THE OBLIGATION
OF THE STOCKHOLDERS TO CLOSE
The obligation of the Stockholders to exchange the Securities
for the Notes at the Closing and to perform any obligations hereunder shall be
subject to the satisfaction as determined by, or waiver by, the Stockholders of
the following conditions on or before the Closing Date.
5.1 Purchase Agreement. The consummation of the transactions
contemplated by the Purchase Agreement shall have occurred at or prior to the
Closing.
5.2 Operation of Law. Consummation by the Company of the
acquisition of the Preferred Stock in exchange for the Notes shall not violate
Section 160 of the General Corporation Law of the State of Delaware.
5.3 Notes. The Company shall be prepared to deliver to the
Stockholders the principal amount of Notes set forth opposite such Stockholder's
name on Schedule 2.1 hereto, registered in the name of such Stockholder, as
applicable.
5.4 Subordination. The Stockholders, the Company and
Infogrames US shall have entered into a Subordination Agreement in form and
substance reasonably satisfactory to the Stockholders.
5.5 Representations and Warranties. All of the representations
and warranties of the Company contained in Article 3 hereof shall be true and
correct in all material respects on the Closing Date, as if made by the Company
on such date.
ARTICLE 6
CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE
The obligation of the Company to issue the Notes 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 Purchase Agreement. The consummation of the transactions
contemplated by the Purchase Agreement shall have occurred at or prior to the
Closing.
6.2 Operation of Law. Consummation by the Company of the
acquisition of the Preferred Stock in exchange for the Notes shall not violate
Section 160 of the General Corporation Law of the State of Delaware.
6.3 Payment of Purchase Price. Each Stockholder shall be
prepared to deliver the Securities.
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<PAGE> 9
6.4 Representations and Warranties. All of the representations
and warranties of the Stockholders contained in Article 4 hereof shall be true
and correct in all material respects on the Closing Date, as if made by the
Stockholders on such date.
ARTICLE 7
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees with the Stockholders
as follows:
7.1 No Disposition or Encumbrance of Securities. Each
Stockholder hereby covenants and agrees that from the date hereof until the
consummation of the transactions contemplated by the Purchase Agreement, except
as contemplated by this Agreement, such Stockholder shall not, and shall not
offer or agree to, sell, transfer, tender, assign, hypothecate or otherwise
dispose of, or create or permit to exist any Lien with respect to, the
Securities, except to the extent resulting from the Voting Agreement.
7.2 Financial Statements and Other Information. The Company
shall deliver to each Stockholder at any time when the Company is not subject to
Section 13 or 15(d) of the Exchange Act, upon request of such Stockholder,
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.
7.3 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 Notes, the
maximum number of shares of Common Stock that may be issuable or deliverable
upon such conversion; provided, however, that to the extent the Company, as of
the date hereof, has an insufficient number of authorized shares of Common Stock
reserved for issuance upon conversion of the Notes, the Company shall use
commercially reasonable efforts to take all actions necessary to increase and
reserve for issuance such number of authorized shares of Common Stock as is
equal to the maximum number of shares of Common Stock that may be issuable or
deliverable upon conversion of the Notes, which actions shall include preparing,
filing and mailing an information statement on Schedule 14C under the Securities
Exchange Act of 1934 as soon as practicable. The Company shall issue all such
shares of Common Stock in accordance with the terms of the Certificate of
Incorporation, as amended, and otherwise comply with the terms hereof and
thereof.
7.4 Registration and Listing. If any shares of Common Stock
required to be reserved for purposes of conversion of the Notes 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 Stockholders 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
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<PAGE> 10
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 Notes.
7.5 Amendment of Warrant Agreement. The Company and the
Stockholders agree that the Warrant Agreement dated as of June 29, 1999 (the
"Warrant Agreement") among the Company and the holders named therein shall be
amended as follows:
(a) Section 4.3 of the Warrant Agreement shall be amended
by adding the following sentence to the end of the first
paragraph of such Section 4.3:
Notwithstanding any other provision of this Section
4.3, to the extent any adjustment would arise
pursuant to this Section 4.3 as a result of
consummation of the transactions contemplated by the
Securities Purchase Agreement dated as of November
15, 1999 by and among the Company, Infogrames
Entertainment S.A. and California U.S. Holdings,
Inc., the number of additional shares of Common Stock
purchasable upon exercise of any Warrant due to such
adjustment shall be equal to the product of 1.6610
and the increase in the number of shares of Common
Stock purchasable upon exercise of the Warrants held
by the Administrative Agent and the Lenders issued
pursuant to the Warrant Agreement dated June 29, 1999
among the Company, the Administrative Agent and the
Lenders.
(b) The third sentence of Section 4.4 of the Warrant
Agreement shall be deleted in its entirety and substituting
therefor the following:
Notwithstanding any other provision of this Section
4.4, the number of shares of Common Stock purchasable
upon exercise of any Warrant shall not be adjusted
pursuant to this Section 4.4 as a result of the
issuance or sale of Common Stock in connection with:
(a) a bona fide firm commitment underwritten public
offering of Common Stock of the Company, (b) a
transaction to which Section 4.1, 4.2 or 4.3 is
applicable, (c) the exercise of the Warrants, the
exercise of any other warrants issued by the Company
prior to the date of this Agreement or the exercise
of any warrants issued in connection with the Second
Amendment, (d) a private placement of Common Stock of
the Company sold for a cash purchase price not more
than 10% below the Current Market Value of the Common
Stock so sold in such private placement, (e) the
exercise of rights or options issued to the Company's
employees under bona fide employee benefit plans
adopted by the Board and approved by the holders of
Common Stock when required by law, if such Common
Stock would otherwise be covered by this Section 4.4,
and (f) to the extent any adjustment would arise
pursuant to this Section 4.4 as a result of
consummation of the transactions contemplated by the
Securities Purchase Agreement dated as of November
15, 1999 by and among the Company, Infogrames
Entertainment S.A. and California U.S. Holdings,
Inc., the
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<PAGE> 11
number of additional shares of Common Stock
purchasable upon exercise of any Warrant due to such
adjustment shall be equal to the product of 1.6610
and the increase in the number of shares of Common
Stock purchasable upon exercise of the Warrants held
by the Administrative Agent and the Lenders issued
pursuant to the Warrant Agreement dated June 29, 1999
among the Company, the Administrative Agent and the
Lenders.
(c) Except as expressly amended pursuant to this
Agreement, the Warrant Agreement is and shall continue to be
in full force and effect in accordance with its terms.
7.6 Subordination. Each Stockholder agrees that the Short-Term
Note (as defined in the Purchase Agreement) shall be deemed for all purposes of
its respective Subordinated Note to be Senior Debt (as defined in the
Subordinated Note), including without limitation with respect to rights and
remedies of the holders of Senior Debt and the obligations of the Stockholders
as they relate to Senior Debt.
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 Stockholders; or
(b) upon the termination of the Purchase Agreement; or
(c) at any time after September 30, 2000, by written notice
of either party.
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 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 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.
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<PAGE> 12
ARTICLE 9
MISCELLANEOUS
9.1 Survival of Representations and Warranties. The
representations and warranties made herein shall survive the execution and
delivery of this Agreement, notwithstanding any investigation made or
information obtained by the other party but shall terminate at Closing except
for those contained in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 4.1, 4.2, 4.3, 4.4 and
4.5 hereof and this Section 9.1 which shall survive beyond the Closing.
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:
(a) if to the Company, to:
GT Interactive Software Corp.
417 Fifth Avenue
New York, NY 10016
Telecopy: (212)
Attention: Chief Executive Officer
with a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Telecopy: (212) 715-8000
Attention: David P. Levin, Esq.
(b) if to the Stockholders, 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
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<PAGE> 13
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 Stockholders may assign any of its rights, but not its obligations,
under this Agreement to any of its affiliates. The Company may not assign any of
its rights under this Agreement without the written consent of the Stockholders.
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
Stockholders 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 Stockholders 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 Stockholders 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 Stockholders.
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
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<PAGE> 14
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof.
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
Stockholders for their reasonable 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 Stockholder
from disclosing information (a) that is already publicly available; (b) to the
prospective transferee in connection with any contemplated transfer of any of
the Notes; and (c) to its attorneys, accountants, consultants and other advisors
to the extent necessary to obtain their services in connection with such
Stockholder'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 Stockholders 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.
9.13 Registrable Securities. The parties hereby agree and
acknowledge that all of the shares of Common Stock issuable upon conversion of
the Notes constitute "Registrable Securities" within the meaning of the
Registration Rights Agreement.
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<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Exchange 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: Thomas Heymann
Title: Chief Executive Officer
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
15
<PAGE> 16
Schedule 1
Preferred Stock
<TABLE>
<CAPTION>
Stockholder Preferred Stock Subordinated Notes
- ----------- --------------- ------------------
<S> <C> <C>
GAP LP 489,744 $16,324,800
GAP Coinvestment 110,256 $ 3,675,200
------- -----------
Total: 600,000 $20,000,000
</TABLE>
<PAGE> 1
Exhibit 11A
EQUITY PURCHASE AND VOTING AGREEMENT
THIS EQUITY PURCHASE AND VOTING AGREEMENT (this "Agreement"), dated as
of November 15, 1999, between Infogrames Entertainment S.A., a societe anonyme
organized under the laws of France ("Parent"), California U.S. Holdings, Inc.,
a wholly owned subsidiary of Parent ("Purchaser"), and _________________________
("Stockholder").
W I T N E S S E T H:
WHEREAS, Stockholder owns (both beneficially and of record) the number
of shares of common stock, par value $.01 per share ("Common Stock"), of GT
Interactive Software Corp., a Delaware corporation (the "Company"), set forth on
Schedule 1 hereto; and
WHEREAS, Parent intends Purchaser to buy from Stockholder, and
Stockholder intends to sell to Purchaser, the shares of Common Stock owned by
Stockholder, as set forth next to Stockholder's name on Schedule 1, together
with any shares of Common Stock, other securities or other property hereafter
acquired beneficially or of record by Stockholder in respect of such shares of
Common Stock, as provided by Section 1.3 (the "Subject Common Shares"); and
WHEREAS, in connection herewith, and as a condition to the willingness
of the Company to approve the transactions described in this Agreement, Parent
and Purchaser are entering concurrently into a Securities Purchase Agreement
with the Company, dated as of November 15, 1999 (the "Purchase Agreement"),
pursuant to which Purchaser has agreed to make a major capital investment in the
Company; and
WHEREAS, as a condition to the willingness of Parent to enter into the
Purchase Agreement, Parent has required that Stockholder agree, and Stockholder
has agreed, among other things, (i) to appoint Purchaser as Stockholder's proxy
to vote the Subject Common Shares and the Schedule 2 Shares (as hereinafter
defined), (ii) with respect to certain questions put to stockholders of the
Company for a vote, to vote the Subject Common Shares and the Schedule 2 Shares
and (iii) to agree to certain restrictions on post-Closing business activities;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the adequacy of
which is hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Purchase and Sale of Subject Common Shares.
1.1 Purchase of Common Shares. On the terms and subject to the
conditions set forth in this Agreement, Purchaser shall purchase from the
Stockholder, and Stockholder shall sell and transfer to Purchaser, on the
Closing Date all of the Subject Common Shares at an aggregate price of [$____],
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on voting rights, charges and
other encumbrances of any nature whatsoever (collectively, "Liens").
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<PAGE> 2
1.2 Conditions to Closing. The obligations of the parties to
consummate the transactions contemplated by Section 1.1 hereof are subject to
the following conditions: (a) any waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), applicable to
the purchase of the Subject Common Shares shall have expired or been terminated
and any applicable foreign antitrust requirements shall have been satisfied, (b)
there shall be no preliminary or permanent injunction or other order by any
court of competent jurisdiction restricting, preventing or prohibiting the
delivery of the Subject Common Shares and (c) subject to the following sentence,
the closing under the Purchase Agreement shall have occurred at or prior to the
Closing. Parent and Purchaser shall be entitled to waive on behalf of all
parties hereto the conditions contained in (c) of the preceding sentence in the
event that the Company is in breach of its obligations under Article I of the
Purchase Agreement to consummate the Purchase (as defined in the Purchase
Agreement). Parent and Stockholder each shall promptly after the date hereof
make such filings and provide such information as may be required under the HSR
Act or any applicable foreign antitrust laws with respect to the sale of the
Subject Common Shares.
1.3 Closing. Subject to the conditions contained in Section
1.2 and the following sentence, the closing of the transactions contemplated by
Section 1.1 hereof (the "Closing") shall occur simultaneously with, and at the
same location as, the closing under the Purchase Agreement. In the event Parent
and Purchaser waive the conditions described in Section 1.2(c), the Closing
shall occur at 10:00 a.m. on the second business day after all other conditions
contained in Section 1.2 have been satisfied or waived, at the offices of
Pillsbury Madison & Sutro LLP, New York, New York, or such other time or place
as the parties may agree. The date of the Closing being the "Closing Date."
Stockholder shall deliver to Purchaser at the Closing a certificate or
certificates evidencing the Subject Common Shares, each such certificate being
duly endorsed in blank and accompanied by such stock powers and such other
documents as may reasonably be necessary in Purchaser's judgment to transfer
record ownership of the Subject Common Shares into Purchaser's name on the stock
transfer books of the Company.
1.4 Adjustments Upon Changes in Capitalization. In the event
of any change prior to the Closing Date in the outstanding shares of Common
Stock by reason of any stock dividend, subdivision, merger, recapitalization,
combination, conversion or exchange of shares, or any other change in the
corporate or capital structure of the Company (including, without limitation,
the declaration or payment of a dividend of cash or securities or the issuance
of any securities not contemplated by the Purchase Agreement) which would have
the effect of diluting or otherwise adversely affecting Parent's or Purchaser's
rights and privileges or prospective rights and privileges under this Agreement,
the number and kind of shares of Common Stock and the other securities or other
property which Purchaser shall be entitled to purchase hereunder shall be
appropriately and equitably adjusted to restore to Parent and Purchaser such
respective rights and privileges.
2. Representations and Warranties of Stockholder.
Stockholder hereby represents and warrants to Parent and Purchaser the
following as of the date hereof and as of the Closing:
2.1 Title to the Subject Common Shares. Stockholder is the
owner (both beneficially and of record) of the Subject Common Shares. Except for
the Subject Common Shares and the shares of Common Stock owned by Stockholder,
as set forth next to Stockholder's name on
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<PAGE> 3
Schedule 2 ("Schedule 2 Shares"), Stockholder is not the record or beneficial
owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of, and does not have any other rights of any nature to acquire any
additional shares of, any capital stock of the Company (except for any such
beneficial ownership which Stockholder may have of the shares of Common Stock
owned by any other person or entity identified on Schedule 2). Stockholder owns
all of the Subject Common Shares free and clear of all Liens, and, except
pursuant to the provisions of this Agreement, Stockholder has not appointed or
granted any proxy, which appointment or grant is still effective, with respect
to any of the Subject Common Shares or the Schedule 2 Shares. Stockholder has
sole power of disposition with respect to all of the Subject Common Shares and
(as to disposition of voting rights) of all the Schedule 2 Shares and has sole
voting power of the Subject Common Shares and the Schedule 2 Shares with respect
to the matters set forth in Section 5 hereof. Upon the purchase of the Subject
Common Shares pursuant to Section 1, Purchaser will receive valid and marketable
title to the Subject Common Shares, free and clear of all Liens.
2.2 Authority Relative to This Agreement. Stockholder has all
necessary power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Stockholder and, assuming the due authorization, execution and delivery by
Parent and Purchaser, constitutes a legal, valid and binding obligation of
Stockholder, enforceable against Stockholder in accordance with its terms,
except that such enforceability (a) may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to the enforcement of
creditors' rights generally and (b) is subject to general principles of equity.
2.3 Conflict. The execution and delivery of this Agreement by
Stockholder does not, and the performance of this Agreement by Stockholder will
not, (a) except for any filings required under the HSR Act and for requirements
of any applicable foreign antitrust laws or of U.S. federal and state securities
laws, require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority of the United
States or any political subdivision thereof, (b) conflict with or violate the
organizational documents, if any, of the Stockholder, or (c) conflict with,
violate or result in any breach of or constitute a default under (or an event
which with notice or lapse of time or both would become a default under) any
agreement, judgment, injunction, order, law, rule, regulation, decree or
arrangement to which Stockholder is a party or by which Stockholder is bound.
2.4 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on
behalf of Stockholder.
3. Representations and Warranties of Parent and Purchaser. Parent and
Purchaser hereby represent and warrant to Stockholder as follows:
3.1 Authority Relative to This Agreement. Each of Parent and
Purchaser has all necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by each of Parent and Purchaser and the consummation by each of Parent and
Purchaser of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and
Purchaser, respectively. This Agreement has
-3-
<PAGE> 4
been duly and validly executed and delivered by each of Parent and Purchaser
and, assuming the due authorization, execution and delivery by Stockholder,
constitutes a legal, valid and binding obligation of each of Parent and
Purchaser, enforceable against each of Parent and Purchaser in accordance with
its terms, except that such enforceability (a) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to the
enforcement of creditors' rights generally and (b) is subject to general
principles of equity.
3.2 No Conflict. The execution and delivery of this Agreement
by Parent and Purchaser do not, and the performance of this Agreement by Parent
and Purchaser will not, (a) except for any filings required under the HSR Act
and for requirements of any applicable foreign antitrust laws or of federal and
state securities laws, require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority,
domestic or foreign, (b) conflict with or violate the organizational documents
of Parent or Purchaser, (c) conflict with, violate or result in any breach of or
constitute a default under (or an event which with notice or lapse of time or
both would become a default under) any agreement, judgment, injunction, order,
law, rule, regulation, decree or arrangement applicable to Parent or Purchaser
or by which any property or asset of Parent or Purchaser is bound or affected,
other than, in the case of clause (c), any such conflicts, violations, breaches
or defaults that, individually or in the aggregate, would not materially impair
the ability of Parent or Purchaser to perform its obligations hereunder.
3.3 Brokers. Except for Lazard Freres & Co. LLC, whose fees
will be paid by Parent, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Parent or Purchaser.
4. Covenants of Stockholder.
4.1 No Disposition or Encumbrance of Subject Common Shares.
Stockholder hereby covenants and agrees that, except as contemplated by this
Agreement, Stockholder shall not, and shall not offer or agree to, sell,
transfer, tender, assign, hypothecate or otherwise dispose of, or create or
permit to exist any Lien with respect to the Subject Common Shares.
4.2 No Solicitation of Transactions. Until the occurrence of
the Closing under the Purchase Agreement or the termination thereof, Stockholder
shall not, nor shall it permit any of its subsidiaries or affiliates to, nor
shall it authorize or permit any or its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant, agent or other
representative retained by it or any of its subsidiaries or affiliates to,
directly or indirectly, (a) solicit, initiate or knowingly encourage (including
by way of furnishing information) any inquiries or the making of any proposal
which constitutes, or may reasonably be expected to lead to, any Company
Takeover Proposal (as defined below); (b) participate in any discussions or
negotiations regarding any Company Takeover Proposal or (c) or enter into any
agreement, understanding or arrangement with respect to the foregoing. For
purposes of this Agreement, the term "Company Takeover Proposal" means any bona
fide proposal or offer, whether in writing or otherwise, from any Person other
than Parent, Purchaser or any affiliates thereof (a "Third Party") to acquire
beneficial ownership (as defined under Rule 13(d) of the Exchange Act) of all or
a material portion of the assets of the Company and the Company Subsidiaries
taken as a whole or
-4-
<PAGE> 5
more than fifty percent (50%) of any class of equity securities of the Company
pursuant to a merger, consolidation or other business combination, sale of
shares of capital stock, sale of assets, tender offer, exchange offer or similar
transaction with respect to either the Company or any of the Company
Subsidiaries, including any single or multi-step transaction or series of
related transactions, which is structured to permit such Third Party to acquire
beneficial ownership of any material portion of the assets of the Company and
its Subsidiaries taken as a whole or more than fifty percent (50%) of such
equity interest in the Company.
4.3 Compliance of Stockholder with this Agreement. Stockholder
shall take all actions and forbear from all actions, in each case, necessary in
order that (a) all of Stockholder's representations and warranties hereunder are
true and correct and (b) Stockholder fulfills all of its obligations hereunder.
4.4 Additional Shares. In the event that, as of the date
hereof, Stockholder owns, of record and beneficially, shares of Common Stock in
excess of the aggregate number of shares set forth on Schedule 1 and under the
heading "Shares Held of Record and Beneficially" on Schedule 2, then Stockholder
shall transfer to Purchaser at no additional cost the number of shares by which
Stockholder's record and beneficial ownership exceeds such aggregate number,
together with any shares of Common Stock, other securities or other property
hereafter acquired beneficially or of record by Stockholder in respect of such
shares of Common Stock.
5. Voting Agreement; Proxy.
5.1 Pre-Closing Voting Agreement. Subject to and without
limiting the effect of Section 5.2, Stockholder hereby agrees that, from the
date hereof until the Closing, at any meeting of the stockholders of the
Company, however called, and in any action by written consent of the
stockholders of the Company, Stockholder shall, to the extent applicable, (a)
vote (or execute a consent in respect of) all of the Subject Common Shares and
the Schedule 2 Shares in favor of any of the transactions or other matters
contemplated by the Transaction Documents (as defined in the Purchase
Agreement") (the "Transactions"), and (b) vote (or execute a consent in respect
of) the Subject Common Shares and the Schedule 2 Shares against any action or
agreement that would reasonably be expected to impede, interfere with, delay or
attempt to discourage any of the Transactions, including, but not limited to:
(i) any extraordinary corporate transaction (other than the Transactions), such
as a merger, reorganization, recapitalization or liquidation involving the
Company or any of the Company Subsidiaries (as defined in the Purchase
Agreement) or any proposal made in opposition to or in competition with the
Transactions; (ii) a sale or transfer of a material amount of assets of the
Company or any of the Company Subsidiaries; (iii) any change (other than the
Transactions) in the management or board of directors of the Company, except as
otherwise agreed to in writing by Parent; (iv) any material change (other than
the Transactions) in the present capitalization or dividend policy of the
Company; or (v) any other material change (other than the Transactions) in the
corporate structure or business of the Company or any of the Company
Subsidiaries.
5.2 Pre-Closing Irrevocable Proxy. Stockholder hereby appoints
Purchaser as the attorney-in-fact and proxy of Stockholder, with full power of
substitution, to vote, and otherwise act (by written consent or otherwise) with
respect to all of the Subject Common Shares and the Schedule 2 Shares that
Stockholder is entitled to vote at any meeting of stockholders of the
-5-
<PAGE> 6
Company (whether annual or special and whether or not an adjourned or postponed
meeting) or consent in lieu of any such meeting or otherwise, for the period, on
the matters and in the manner specified in Section 5.1. THIS PROXY AND POWER OF
ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN INTEREST AND IS EXECUTED AND
INTENDED TO BE IRREVOCABLE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 212 OF
THE DELAWARE GENERAL CORPORATION LAW ("DGCL"). Stockholder hereby revokes,
effective upon the execution and delivery of this Agreement, all other proxies
and powers of attorney with respect to the Subject Common Shares and the
Schedule 2 Shares to which this proxy and power of attorney relates that
Stockholder may have heretofore appointed or granted, and no subsequent proxy or
power of attorney (except in furtherance of Stockholder's obligations under
Section 5.1 hereof) shall be given, or written consent executed (and, if given
or executed, shall not be effective), by Stockholder with respect thereto so
long as this Agreement remains in effect.
5.3 Post-Closing Irrevocable Proxy. Stockholder hereby
appoints Purchaser as the attorney-in-fact and proxy of Stockholder, with full
power of substitution, effective subject to the Closing and commencing on the
Closing Date and for so long as Parent beneficially owns (as determined for
purposes of Regulation 13D-G under the Exchange Act) at least a majority of
shares of stock of the Company generally entitled to vote in the election of
directors, to vote and otherwise act (by written consent or otherwise) with
respect to any Schedule 2 Shares at the time owned by Stockholder, and any other
shares of the Company at the time owned by Stockholder and received in respect
of Schedule 2 Shares by reason of any stock dividend, subdivision, merger,
recapitalization, confirmation, conversion or exchange of shares, or any other
change in the corporate or capital structure of the Company, for the election or
removal of directors of the Company as Purchaser in its absolute discretion
shall determine to be appropriate. THIS PROXY AND POWER OF ATTORNEY IS
IRREVOCABLE AND COUPLED WITH AN INTEREST AND IS EXECUTED AND INTENDED TO BE
IRREVOCABLE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 212 OF THE DGCL.
Stockholder hereby revokes, effective upon the execution and delivery of this
Agreement, all other proxies and powers of attorney with respect to the Schedule
2 Shares that Stockholder may have heretofore appointed or granted, and no
subsequent conflicting proxy or power of attorney shall be given, or written
consent executed (and, if given or executed, shall not be effective), by
Stockholder with respect thereto during such period. Nothing contained in this
Section 5.3 shall restrict Stockholder's right to transfer the Schedule 2
Shares, and, except in the case of a transfer of the Schedule 2 Shares to an
affiliate of Stockholder, upon transfer the Schedule 2 Shares will be free of
the proxy and power of attorney provided under this Section 5.3.
6. Post-Closing Business Activities. In order to induce Purchaser to
purchase the Subject Common Shares, and to protect the value thereof,
Stockholder agrees as follows:
(a) Stockholder will not, for the period commencing with the
Closing and ending on the first anniversary thereof, own, manage, operate, join,
control, or participate in the ownership, management, operations, or control of
any business that is engaged, directly or indirectly, in (i) the development or
publishing of (A) computer, console or video game software, (B) leisure,
recreational or productivity software, (C) educational or entertainment software
or (D) "hint books" with respect to the foregoing (A), (B) and (C)
(collectively, the "Specified Products") or (ii) the distribution of any
Specified Products (other than Specified Products purchased pursuant to
close-outs or similar sales of excess inventory) developed or published by third
parties, in either case
-6-
<PAGE> 7
within North America, whether as principal, agent, stockholder (other than as a
passive stockholder of a corporation listed on a national securities exchange or
the stock of which is regularly traded in the over-the-counter market, provided
that in the aggregate Stockholder owns less than 5% of the outstanding stock of
such corporation).
(b) Stockholder recognizes and acknowledges that the foregoing
territorial and time period restrictions are reasonable and properly required
for the adequate protection of the Company's business, and that in the event
that any such territorial or time limitation is deemed to be unreasonable or
unenforceable by any court of competent jurisdiction, then Stockholder agrees to
submit to the reduction of either or both of such limitations to such an area or
period as shall be deemed reasonable and enforceable by such court.
(c) In the event Stockholder shall breach the covenants set
forth in this Section 6, the time limitations thereof shall be extended for a
period of time equal to the period of time during which such breach or breaches
shall occur; and, in the event Parent or Purchaser seek relief from such breach
in any court, the covenant shall be extended for a period of time equal to the
pendency of such proceedings, including all appeals.
7. Termination. This Agreement (other than Sections 5.3 and 6, which
shall survive until they expire by their respective terms, but including any
power of attorney and proxy granted pursuant to Section 5.2 hereof) shall
terminate automatically on the termination of the Purchase Agreement in
accordance with the terms and conditions thereof; provided, however, that if
Stockholder fails to comply with Sections 1 or 5.1, the obligations of
Stockholder under Sections 4, 5.1 and 5.2 shall not terminate until the third
anniversary of the date of this Agreement. Any termination of this Agreement, or
any provision thereof, shall not relieve any party hereunder of any liability
for a breach of this Agreement.
8. Miscellaneous.
8.1 Expenses. All costs and expenses incurred in connection
with the transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
8.2 Further Assurances. Stockholder and Parent shall execute
and deliver all such further documents and instruments and take all such further
action as may be reasonably necessary in order to consummate the Transactions.
8.3 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement were
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
8.4 Entire Agreement. This Agreement constitutes the entire
agreement between Parent, Purchaser and Stockholder with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, between Parent, Purchaser and Stockholder with respect to the
subject matter hereof.
8.5 Assignment. This Agreement shall not be assigned by
operation of law or otherwise, except that Parent or Purchaser may assign all or
any of its rights and obligations
-7-
<PAGE> 8
hereunder to any affiliate of Parent, provided that no such assignment shall
relieve Parent or Purchaser of its obligations hereunder if such assignee does
not perform such obligations.
8.6 Parties in Interest. This Agreement shall be binding upon,
inure solely to the benefit of, and be enforceable by, the parties hereto and
their successors and permitted assigns. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
8.7 Amendment; Waiver. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto. Any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any condition of its obligations
hereunder or inaccuracy in the representations and warranties of any other party
hereto contained herein or in any document delivered by any other party hereto
pursuant hereto and (c) waive compliance with any agreement by any other party
hereto contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
8.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party.
8.9 Notices. Except as otherwise provided herein, all notices,
requests, claims, demands and other communications hereunder shall be in writing
and shall be given (and shall be deemed to have been duly given upon receipt) by
delivery in person, by cable, facsimile transmission, telegram or telex or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
8.8):
If to Parent or Purchaser:
Infogrames Entertainment S.A.
84, rue der 1er Mars 1943
Villeurbanne, 69100
France
Attention: Thomas Schmider
Telecopy: (011 33) 472 655116
Confirm: (011 33) 472655000
And
Attention: Frederic Garnier
Telecopy: (011 33) 472 655059
Confirm: (011 33) 472655000
-8-
<PAGE> 9
With a copy to:
Pillsbury Madison & Sutro LLP
P.O. Box 7880
San Francisco, CA 94120-7880
Facsimile: 415-983-1200
Attention: Nathaniel M. Cartmell III
If to Stockholder:
c/o Joseph J. Cayre
16 East 40th Street
New York, New York 10016
Facsimile: 212-679-1458
Confirm: 212-951-3057
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Facsimile: 212-310-8007
Attention: Robert L. Messineo, Esq.
8.10 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed in Delaware without regard to any
principles of choice of law or conflicts of law of such State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any state or Federal court sitting in Delaware. Each of the
parties hereto (a) consents to submit such party to the personal jurisdiction of
any Federal court located in the State of Delaware or any Delaware state court
in the event any dispute arises out of this Agreement or any of the transactions
contemplated hereby, (b) agrees that such party will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, (c) agrees that such party will not bring any action relating to
this Agreement or the transactions contemplated hereby in any court other than a
Federal court sitting in the state of Delaware or a Delaware state court and (d)
waives any right to trial by jury with respect to any claim or proceeding
related to or arising out of this Agreement or any of the transactions
contemplated hereby.
8.11 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
8.12 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
-9-
<PAGE> 10
8.13 Public Announcements. Stockholder will consult with
Parent and use reasonable efforts to agree upon the text of any press release,
before issuing any press release or otherwise making public statements with
respect to the Transactions and shall not issue any such press release or make
any such public statement without Parent's prior consent, which consent shall
not be unreasonably withheld, except as may be required by applicable law
(including requirements of stock exchanges and other similar regulatory bodies).
8.14 Stockholder Representatives. Stockholder signs solely in
its capacity as the owner of, or an officer of a not-for-profit corporation or
the trustee of a trust which is the owner of, the Subject Common Shares and the
Schedule 2 Shares and nothing contained herein shall limit or affect any actions
taken by any such individual who is or becomes an officer or a director of the
Company in his or her capacity as an officer or director of the Company and none
of such actions in such capacity shall be deemed to constitute a breach of this
Agreement.
8.15 Legend Subject Common Shares. Stockholder shall promptly
after the date hereof cause to be affixed to all certificates representing the
Subject Common Shares the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
EQUITY PURCHASE AND VOTING AGREEMENT DATED NOVEMBER 15, 1999, AMONG
INFOGRAMES ENTERTAINMENT S.A., CALIFORNIA U.S. HOLDINGS, INC. AND THE
STOCKHOLDER NAMED THEREIN, WHICH, AMONG OTHER THINGS, RESTRICTS THE
TRANSFER AND VOTING THEREOF."
8.16 Legend Schedule 2 Shares. Stockholder shall promptly
after the date hereof cause to be affixed to all certificates representing the
Schedule 2 Shares the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
EQUITY PURCHASE AND VOTING AGREEMENT DATED NOVEMBER 15, 1999, AMONG
INFOGRAMES ENTERTAINMENT S.A., CALIFORNIA U.S. HOLDINGS, INC. AND THE
STOCKHOLDER NAMED THEREIN, WHICH, AMONG OTHER THINGS, RESTRICTS THE
VOTING THEREOF."
8.17 REPS. Upon the occurrence of the Closing under the
Purchase Agreement, Purchaser shall cause the Company to, and Stockholder shall
cause REPS to, agree with each other that the agreement between the two parties
dated as of May 1, 1999 (the "REPS Contract") will remain in full force and
effect until at least March 31, 2000; provided, however, that Stockholder shall
have no such obligation to cause REPS to extend the term of such agreement
unless (a) the Company at the time when the extension is sought is current in
all payments owed under the agreement is in compliance with all of its other
obligations under the agreement and (b) if at such time Stockholder and its
affiliates control REPS.
8.18 Stockholder Consent. The Stockholder hereby consents to
the amendment to the Company's Amended and Restated Certificate of Incorporation
to increase the total number of
10-A
<PAGE> 11
shares of all classes of stock which the Company shall have the authority to
issue to 305,000,000 and to increase the number of shares designated Common
Stock to 300,000,000 in the form attached as Exhibit J to the Purchase
Agreement.
[Remainder of Page Intentionally Left Blank.]
10-B
<PAGE> 1
Exhibit 11B
NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT (this "Agreement"), dated as of November
15, 1999, between Infogrames Entertainment S.A., a societe anonyme organized
under the laws of France ("Parent"), California U.S. Holdings, Inc., a wholly
owned subsidiary of Parent ("Purchaser"), Joseph J. Cayre, Kenneth Cayre and
Stanley Cayre (collectively, the "Noteholders").
W I T N E S S E T H:
WHEREAS, the Noteholders are the holders of Subordinated Notes (the
"Notes"), each dated July 23, 1999 of GT Interactive Software Corp., a Delaware
corporation (the "Company"), in the face amounts set forth on Schedule 1 hereto;
and
WHEREAS, Parent intends Purchaser to buy from each Noteholder, and each
Noteholder intends to sell to Purchaser, the Note held by each Noteholder, the
face value of which is set forth next to such Noteholders's name on Schedule 1
("Face Value"); and
WHEREAS, Parent and Purchaser are entering concurrently into a
Securities Purchase Agreement with the Company, dated as of November 15, 1999
(the "Purchase Agreement"), pursuant to which Purchaser has agreed to make a
major capital investment in the Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the adequacy of
which is hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Purchase and Sale of Notes.
1.1 Purchase of Notes. On the terms and subject to the
conditions set forth in this Agreement, Purchaser shall purchase from each
Noteholder, and each Noteholder shall sell and transfer to Purchaser, on the
Closing Date (as defined in Section 1.3) the Note held by such Noteholder at a
price equal to its Face Value, together with interest accrued thereon in
accordance with the terms of such Note to the Closing Date, free and clear of
all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, charges and other encumbrances of any nature whatsoever
(collectively, "Liens").
1.2 Conditions to Closing.
(a) The obligations of the parties to consummate the
transactions contemplated by Section 1.1 hereof are subject to the following
conditions: (i) there shall be no preliminary or permanent injunction or other
order by any court of competent jurisdiction restricting, preventing or
prohibiting the delivery of the Notes and (ii) the closing under the Purchase
Agreement shall have occurred at or prior to the Closing (as defined in Section
1.3).
(b) The obligations of Parent and Purchaser to consummate the
transactions contemplated by Section 1.1 hereof are subject to each of the
Noteholders obtaining the written consent of the Administrative Agent (as
defined in the Notes) to such transactions.
<PAGE> 2
SCHEDULE OF EQUITY AGREEMENTS
<TABLE>
<CAPTION>
AMOUNT OF
SHARES
SELLING TO
NAME PURCHASER CONSIDERATION
---- ---------- -------------
<S> <C> <C>
Joe Cayre 5,540,000 $4,141,261
J.T. Foundation 1,759,388 $1,315,178
Jack J. Cayre 2,895,000 $2,164,070
Jack Cayre Foundation 475,085 $355,138
Michael Cayre 1,435,000 $1,072,691
Trina Cayre ITF Steven Cayre 1,555,000 $1,162,394
Trina Cayre ITF Daniel Cayre 1,555,000 $1,162,394
Trina Cayre ITF Grace Cayre 1,555,000 $1,162,394
</TABLE>
<TABLE>
<CAPTION>
AMOUNT OF
SHARES
SELLING TO
NAME PURCHASER CONSIDERATION
---- ---------- -------------
<S> <C> <C>
Stanley Cayre Foundation 633,000 $473,180
Stanley Cayre 3,490,253 $2,523,328
Amin Cayre 1,351,848 $1,010,533
David Cayre 502,158 $375,373
Grace Cayre 679,658 $508,058
Jack S. Cayre 1,359,848 $1,016,514
Robert Cayre 502,158 $375,373
</TABLE>
<TABLE>
<CAPTION>
AMOUNT OF
SHARES
SELLING TO
NAME PURCHASER CONSIDERATION
---- ---------- -------------
<S> <C> <C>
Ken Cayre 1,306,447 $975,848
Jack K. Cayre 2,231,655 $1,668,207
Nathan Cayre 2,231,655 $1,668,207
Michelle Cayre 675,465 $504,924
Raquel Cayre 675,465 $504,924
Grace K. Cayre 675,447 $504,910
Ken & Lillian Cayre Foundation 475,000 $355,072
</TABLE>
<PAGE> 3
1.3 Closing. Subject to the conditions contained in Section 1.2,
the closing of the transactions contemplated by Section 1.1 hereof (the
"Closing") shall occur simultaneously with, and at the same location as, the
closing under the Purchase Agreement (the date of the Closing being the "Closing
Date"). The Noteholders shall deliver to Purchaser at the Closing the Notes,
duly endorsed in blank and accompanied by such other documents as may reasonably
be necessary in Purchaser's judgment to transfer ownership of the Notes to
Purchaser.
2. Representations and Warranties of the Noteholders.
Each of the Noteholders hereby represents and warrants to Parent and
Purchaser the following as of the date hereof and as of the Closing:
2.1 Title to the Notes. Such Noteholder (a) is the owner of the
Note in the Face Value set forth opposite his name on Schedule 1 and (b) owns
such Note free and clear of all Liens. Such Noteholder has sole power of
disposition with respect to the Note set forth opposite his name on Schedule 1.
Upon the purchase of the Notes pursuant to Section 1, Purchaser will receive
valid and marketable title to the Note held by such Noteholder, free and clear
of all Liens.
2.2 Authority Relative to This Agreement. Such Noteholder has
all necessary power and authority to execute and deliver this Agreement, to
perform his obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by such Noteholder and, assuming the due authorization, execution and
delivery by Parent and Purchaser, constitutes a legal, valid and binding
obligation of such Noteholder, enforceable against such Noteholder in accordance
with its terms, except that such enforceability (a) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally and (b) is subject to general
principles of equity.
2.3 Conflict. The execution and delivery of this Agreement by
such Noteholder does not, and the performance of this Agreement by such
Noteholder will not, (a) except for any filings required under the federal and
state securities laws, require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority
of the United States or any political subdivision thereof or (b) conflict with,
violate or result in any breach of or constitute a default under (or an event
which with notice or lapse of time or both would become a default under) any
agreement, judgment, injunction, order, law, rule, regulation, decree or
arrangement to which such Noteholder is a party or by which such Noteholder is
bound.
2.4 Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
the Noteholders.
3. Representations and Warranties of Parent and Purchaser. Parent
and Purchaser hereby represent and warrant to the Noteholders as follows:
3.1 Authority Relative to This Agreement. Each of Parent and
Purchaser has all necessary power and authority to execute and deliver this
Agreement, to perform its obligations
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<PAGE> 4
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by each of Parent and Purchaser and the
consummation by each of Parent and Purchaser of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of Parent and Purchaser, respectively. This Agreement has been duly
and validly executed and delivered by each of Parent and Purchaser and, assuming
the due authorization, execution and delivery by the Noteholders, constitutes a
legal, valid and binding obligation of each of Parent and Purchaser, enforceable
against each of Parent and Purchaser in accordance with its terms, except that
such enforceability (a) may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to the enforcement of creditors' rights
generally and (b) is subject to general principles of equity.
3.2 No Conflict. The execution and delivery of this Agreement by
Parent and Purchaser do not, and the performance of this Agreement by Parent and
Purchaser will not, (a) except for any filings required under the federal and
state securities laws, require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority,
domestic or foreign, (b) conflict with or violate the organizational documents
of Parent or Purchaser, (c) conflict with, violate or result in any breach of or
constitute a default under (or an event which with notice or lapse of time or
both would become a default under) any agreement, judgment, injunction, order,
law, rule, regulation, decree or arrangement applicable to Parent or Purchaser
or by which any property or asset of Parent or Purchaser is bound or affected,
other than, in the case of clause (c), any such conflicts, violations, breaches
or defaults that, individually or in the aggregate, would not materially impair
the ability of Parent or Purchaser to perform its obligations hereunder.
3.3 Brokers. Except for Lazard Freres & Co. LLC, whose fees will
be paid by Parent, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Parent or Purchaser.
4. Covenants of the Noteholders.
4.1 No Disposition or Encumbrance of Notes. Each Noteholder
hereby covenants and agrees that, except as contemplated by this Agreement, such
Noteholder shall not, and shall not offer or agree to, sell, transfer, tender,
assign, hypothecate or otherwise dispose of, or create or permit to exist any
Lien with respect to his Note.
4.2 Compliance of the Noteholders with this Agreement. Each
Noteholder shall take all actions and forbear from all actions, in each case,
necessary in order that (a) such Noteholder's representations and warranties
hereunder are true and correct and (b) such Noteholder fulfills its obligations
hereunder.
5. Termination. This Agreement shall terminate automatically on the
termination of the Purchase Agreement in accordance with the terms and
conditions thereof. Any termination of this Agreement, or any provision thereof,
shall not relieve any party hereunder of any liability for a breach of this
Agreement.
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6. Subordination. Each Noteholder agrees that the Short-Term Note
(as defined in the Purchase Agreement) shall be deemed for all purposes of his
respective Note to be Senior Debt, including without limitation with respect to
the rights and remedies of the holders of Senior Debt and the obligations of the
Noteholder as they relate to Senior Debt.
7. Miscellaneous.
7.1 Expenses. All costs and expenses incurred in connection with
the transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
7.2 Further Assurances. The Noteholders and Parent shall execute
and deliver all such further documents and instruments and take all such further
action as may be reasonably necessary in order to consummate the transactions
contemplated by this Agreement.
7.3 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement were
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
7.4 Entire Agreement. This Agreement constitutes the entire
agreement between Parent, Purchaser and the Noteholders with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
both written and oral, between Parent, Purchaser and the Noteholders with
respect to the subject matter hereof.
7.5 Assignment. This Agreement shall not be assigned by
operation of law or otherwise, except that Parent or Purchaser may assign all or
any of its rights and obligations hereunder to any affiliate of Parent, provided
that no such assignment shall relieve Parent or Purchaser of its obligations
hereunder if such assignee does not perform such obligations.
7.6 Parties in Interest. This Agreement shall be binding upon,
inure solely to the benefit of, and be enforceable by, the parties hereto and
their successors and permitted assigns. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
7.7 Amendment; Waiver. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto. Any party hereto may
(a) extend the time for the performance of any obligation or other act of any
other party hereto, (b) waive any condition of its obligations hereunder or
inaccuracy in the representations and warranties of any other party hereto
contained herein or in any document delivered by any other party hereto pursuant
hereto and (c) waive compliance with any agreement by any other party hereto
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
7.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the
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economic or legal substance of this Agreement is not affected in any manner
materially adverse to any party.
7.9 Notices. Except as otherwise provided herein, all notices,
requests, claims, demands and other communications hereunder shall be in writing
and shall be given (and shall be deemed to have been duly given upon receipt) by
delivery in person, by cable, facsimile transmission, telegram or telex or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
7.9):
if to Parent or Purchaser:
Infogrames Entertainment S.A.
84, rue der 1er Mars 1943
Villeurbanne, 69100
France
Attention: Thomas Schmider
Telecopy: (011 33) 472 655116
Confirm: (011 33) 472655000
and
Attention: Frederic Garnier
Telecopy: (011 33) 472 655059
Confirm: (011 33) 472655000
with a copy to:
Pillsbury Madison & Sutro LLP
P.O. Box 7880
San Francisco, CA 94120-7880
Facsimile: 415-983-1200
Attention: Nathaniel M. Cartmell III, Esq.
if to the Noteholders:
Joseph J. Cayre
16 East 40th Street
New York, NY 10016
Facsimile: 212-679-1458
Confirm: 212-951-3057
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with a copy to:
Weil, Gotschal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Facsimile: 212-310-8007
Attention: Robert L. Messineo, Esq.
7.10 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed in Delaware without regard to any
principles of choice of law or conflicts of law of such State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any state or federal court sitting in Delaware. Each of the
parties hereto (a) consents to submit such party to the personal jurisdiction of
any Federal court located in the State of Delaware or any Delaware state court
in the event any dispute arises out of this Agreement or any of the transactions
contemplated hereby, (b) agrees that such party will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, (c) agrees that such party will not bring any action relating to
this Agreement or the transactions contemplated hereby in any court other than a
Federal court sitting in the state of Delaware or a Delaware state court and (d)
waives any right to trial by jury with respect to any claim or proceeding
related to or arising out of this Agreement or any of the transactions
contemplated hereby.
7.11 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
7.12 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
7.13 Public Announcements. The Noteholders will consult with
Parent and use reasonable efforts to agree upon the text of any press release,
before issuing any press release or otherwise making public statements with
respect to the transactions contemplated by this Agreement and shall not issue
any such press release or make any such public statement without Parent's prior
consent, which consent shall not be unreasonably withheld, except as may be
required by applicable law (including requirements of stock exchanges and other
similar regulatory bodies).
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<PAGE> 8
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be duly executed and delivered as of the date first written above.
INFOGRAMES ENTERTAINMENT S.A.
By _________________________________
CALIFORNIA U.S. HOLDINGS, INC.
By _________________________________
____________________________________
JOSEPH J. CAYRE
____________________________________
KENNETH CAYRE
____________________________________
STANLEY CAYRE
7
<PAGE> 1
Exhibit 12
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of November 15, 1999, by and among GT INTERACTIVE SOFTWARE
CORP., a Delaware corporation (the "Company"), and CALIFORNIA U.S. HOLDINGS,
INC., a Delaware corporation (the "Securityholder").
WHEREAS, pursuant to the terms and conditions of a Securities
Purchase Agreement, dated as of November 15, 1999 (the "Company Purchase
Agreement"), between the Company and the Securityholder, the Company has agreed,
among other things, to issue to the Securityholder an aggregate of 28,571,429
shares of common stock of the Company, par value $0.01 per share ("Common
Stock"), and a 5% Subordinated Convertible Note in the aggregate principal
amount of approximately $60,500,000 (the "Note"), with a conversion price of
$1.85 per share;
WHEREAS, concurrent with the execution and delivery of the
Company Purchase Agreement, the Company will issue to the Securityholder a
Short-Term Senior Secured Note of the Company in the principal amount of
$25,000,000 (the "Short-Term Note");
WHEREAS, concurrent with the execution and delivery of the
Company Purchase Agreement and in consideration of the Securityholder's purchase
of the Short-Term Note, the Company will issue to the Securityholder warrants to
purchase 50,000 shares of Common Stock, having an exercise price of $0.01 per
share (the "Short-Term Note Warrants");
WHEREAS, concurrently therewith, the Securityholder has agreed to
acquire from certain principal stockholders of the Company an aggregate of
approximately 33.4 million shares of Common Stock (the "Cayre Shares") and
warrants to acquire an aggregate of 4,500,000 shares of Common Stock at an
exercise price of $.01 per share (the "GAP Warrants");
WHEREAS, the Company and the Securityholder deem it to be in
their respective best interests to set forth the rights of the Securityholder 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:
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.
<PAGE> 2
"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 Securityholder and any of its 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.
"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.
"Registrable Securities" shall mean (i) the shares of Common
Stock acquired by the Securityholder pursuant to the Company Purchase Agreement
and the Cayre Shares, (ii) any shares of Common Stock issuable upon conversion
of the Note, (iii) any shares of Common Stock issuable upon exercise of the
Short-Term Note Warrants and the GAP Warrants, and (iv) 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.
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"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.
"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 one
demand may be made pursuant to this Section 3(a) during any six month period;
provided, further, that an aggregate of only three demands may be made pursuant
to this Section 3(a), unless the Company is eligible to use Form S-3 (or any
successor
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<PAGE> 4
form) in which case the foregoing limitation shall not apply. 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 its 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 (such date of effectiveness, the "Effective
Time"), 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 clause (3) of the last sentence of
Section 6(b) hereof, on the earlier of (A) one year following 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"), 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
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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.
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
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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 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
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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 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. If the Company shall have given any such
notice during a period when a Demand Registration is in
- 7 -
<PAGE> 8
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.
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
- 8 -
<PAGE> 9
6(b): (1) 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 twenty (120) days in
any consecutive three hundred sixty-five (365) day period; (2) 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 twenty (120)
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 (3) 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 five
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 (including, without limitation, any
fees payable to the NASD or the relevant securities exchange if the Company's
shares are listed on such exchange), 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 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-
- 9 -
<PAGE> 10
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.
(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
- 10 -
<PAGE> 11
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 either of
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.
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
- 11 -
<PAGE> 12
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 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 Pillsbury Madison & Sutro LLP, 50 Freemont Street, San
Francisco, California 94104, Attention: Nathaniel M. Cartmell III, Esq.
and Ronald E. Bornstein, 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.
(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.
- 12 -
<PAGE> 13
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; SERVICE OF PROCESS. Any action
or proceeding arising under or relating to this letter or any of the
transactions contemplated hereby may only be brought in the United States
District Court for the Southern District of New York or the courts of the State
of New York located in the County of New York. Each party hereto submits to
personal jurisdiction of each such court with respect to any action or
proceeding arising under or relating to this Agreement or any of the
transactions contemplated hereby and waives any objection to the laying of venue
in such courts and any claim that any such action or proceeding has been brought
in an inconvenient forum. To the extent permitted by law, any judgment in
respect of a dispute arising under 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. The Securityholder hereby irrevocably appoints
the person listed on the signature page hereof as its agent for service of
process in connection with any action or proceeding arising under or relating to
this Agreement and any of the transactions contemplated hereby. 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.
SECTION 19. ENTIRE AGREEMENT. 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.
- 13 -
<PAGE> 14
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:
CALIFORNIA U.S. HOLDINGS, INC.
By:_________________________________
Name:
Title:
- 14 -
<PAGE> 15
SCHEDULE 1
California U.S. Holdings, Inc.
c/o Infogrames Entertainment S.A.
84, rue du 1er Mars 1943
Villeurbanne, 69100
France
Attention: Thomas Schmider
Telecopy: (011 33) 472 655116
Confirm: (011 33) 472 655000
and
Attention: Frederic Garnier
Telecopy: (011 33) 472 655059
Confirm: (011 33) 472 655000
<PAGE> 1
Exhibit 13
RIGHT OF FIRST OFFER AGREEMENT
THIS RIGHT OF FIRST OFFER AGREEMENT (this "Agreement") is made
and entered into as of this 15th day of November, 1999, by and among the
financial institutions identified on the signature pages hereto (the "Holders")
party to the Warrant Agreement (as defined below) and California U.S. Holdings,
Inc. ("Infogrames"). Capitalized terms used herein and not otherwise defined
shall have their respective meanings set forth in the Warrant Agreement.
WHEREAS, the Holders are party to the Credit Agreement dated
as of September 11, 1998 (as amended, restated, supplemented or otherwise
modified, the "Credit Agreement"), by and among GT Interactive Software Corp.
(the "Company"), the Holders and the Administrative Agent, pursuant to which the
Holders (in their separate capacity as lenders to the Company) agreed to make
certain Extensions of Credit (as defined in the Credit Agreement) to the
Company;
WHEREAS, in connection with the Second Amendment, Waiver and
Agreement dated as of June 29, 1999 under the Credit Agreement, the Company
executed and delivered the Warrant Agreement, dated as of June 29, 1999 (as
amended, restated, supplemented or otherwise modified, the "Warrant Agreement"),
pursuant to which the Company issued to the Holders certain warrants (the
"Warrants") to purchase from the Company shares of common stock of the Company
(the "Warrant Shares") upon the exercise of such Warrants in accordance with the
terms of the Warrant Agreement; and
WHEREAS, the parties hereto have agreed to enter into this
Agreement in order to afford Infogrames certain rights with respect to the
potential sale by a Holder of any Warrants issued to such Holder pursuant to the
Warrant Agreement or any Warrant Shares delivered to such Holder upon the
exercise of any such Warrants in accordance with the terms of the Warrant
Agreement.
NOW THEREFORE, for good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
SECTION 1. RIGHT OF FIRST OFFER.
1.1 Right of First Offer. In the event that a Holder proposes
to initiate a sale of any Warrants issued to such Holder or any Warrant Shares
delivered to such Holder upon the exercise of any Warrants in accordance with
the terms of the Warrant Agreement (in such capacity, a "Selling Holder"), such
Selling Holder shall provide written notice (a "Notice") to Infogrames which
shall offer (an "Offer") to sell such Warrants or Warrant Shares, as the case
may be, to Infogrames at a cash price specified by such Selling Holder (the
"Offering Price") in the Notice. Infogrames shall have the exclusive right to
accept the Offer for a period of five (5) Business Days from the date of such
Notice. Acceptance must be in writing (an "Acceptance") and be received by such
Selling Holder prior to the expiration of such five (5) Business Day period.
Upon receipt by the Selling Holder of an Acceptance, the obligation of
Infogrames to purchase, and the
<PAGE> 2
2
obligation of such Selling Holder to sell, the Warrants or Warrant Shares, as
the case may be, shall be absolute and irrevocable. The cash purchase of the
Warrants or Warrant Shares, as the case may be, subject to any such Notice and
Acceptance, shall be consummated within three (3) Business Days of receipt by
the Selling Holder of an Acceptance pursuant to such documentation as is
customary for such a transaction. If the Selling Holder does not receive an
Acceptance within the five (5) Business Day period after the date of a Notice,
such Selling Holder shall have a period of 180 days from the date of such Notice
to consummate a sale of the Warrants or Warrant Shares, as the case may be, that
were the subject of such Notice, to any third party at a price not less than 75%
of the Offering Price. If the Selling Holder does not consummate a sale in
accordance with the immediately preceding sentence, or if the Selling Holder
determines to sell such Warrants or Warrant Shares, as the case may be, at a
price less than 75% of the Offering Price, such Selling Holder shall first offer
to sell such Warrants or Warrant Shares, as the case may be, to Infogrames as
prescribed above and proceed in accordance with the terms of this Section 1.1.
1.2 Nature of Purchase. Each Holder and Infogrames acknowledge
and agree that all purchases of Warrants or Warrant Shares pursuant to this
Agreement shall be without recourse to the Selling Holder and without
representation or warranty by such Selling Holder, except that such Selling
Holder owns such Warrants or Warrant Shares, as the case may be, free of any
adverse claim or interest.
SECTION 2. MISCELLANEOUS.
2.1 Effectiveness; Termination. This Agreement shall be
effective between Infogrames and each Holder that executes a signature page
hereto. This Agreement shall automatically terminate and be of no further force
or effect if any material Transaction Documentation (as defined in the Credit
Agreement) is terminated.
2.2 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
2.3 Entire Agreement. This Agreement is the entire agreement
among the parties and supercedes any prior or contemporaneous agreements, oral
or written, of the parties hereto concerning its subject matter.
2.4 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing and sent by
telecopy, and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when received by telecopy, addressed as set forth
beneath such parties' signature on the signature pages of this Agreement.
<PAGE> 3
3
2.5 Counterparts. This Agreement may be executed by the
parties hereto on one or more counterparts, and all of such counterparts shall
be deemed to constitute one and the same instrument. This Agreement may be
delivered by facsimile transmission of the relevant signature pages hereof.
2.6 Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York.
2.7 Exhibit. Copies of the Warrants issued to the Holders
pursuant to the Warrant Agreement and that are the subject of this Agreement are
attached hereto as Exhibit A.
<PAGE> 4
4
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their respective duly authorized
officers as of the date first above written.
CALIFORNIA U.S. HOLDINGS, INC.
By:
-------------------------------------------
Name:
Title:
Address for Notices:
5300 Stevens Creek Boulevard
Suite 500
San Jose, CA 95129
Attention: Chief Operating Officer
Telephone: 408-289-1200
Telecopy: 408-246-0898
With a Copy to:
INFOGRAMES ENTERTAINMENT SA
84, rue du ler Mars 1943
Villeurbanne, 69100
France
Attention: Thomas Schmider
Telephone: (011 33) 472 655000
Telecopy: (011 33) 472 655116
<PAGE> 5
BANK OF AMERICA, N.A.
By:_______________________________________________
Name:
Title:
Address for Notices:
TX1-492-66-01
901 Main Street
Dallas, TX 75202
Attention: Jay Wampler
Telephone: 214-209-3711
Telecopy: 214-209-3533
EUROPEAN AMERICAN BANK
By:_______________________________________________
Name:
Title:
Address for Notices:
335 Madison Avenue
New York, NY 10017
Attention: Josephine Savastano
Telephone: 212-503-2513
Telecopy: 212-503-2667
<PAGE> 6
FIRST UNION NATIONAL BANK
By:_____________________________
Name:
Title:
Address for Notices:
301 S. College Street
Charlotte, NC 28288-0737
Attention: John McGowan
Telephone: 704-374-7096
Telecopy: 704-383-6249
FLEET BANK, N.A.
By:_______________________________
Name
Title:
Address for Notices:
777 Main Street
Mail Code: CTM0H21A
Hartford, CT 06115
Attention: Edward Walsh
Telephone: 860-986-3784
Telecopy: 860-986-2435
<PAGE> 7
NATIONAL BANK OF CANADA
By:_______________________________________________
Name:
Title:
By:_______________________________________________
Name:
Title:
Address for Notices:
Post Office Plaza
50 Division Street, Suite 201
Sommerville, NJ 08876
Attention: Karen Grexa
Telephone: 908-252-3765
Telecopy: 908-575-0777
THE BANK OF NOVA SCOTIA
By:_______________________________________________
Name:
Title:
Address for Notices:
One Liberty Plaza
New York, NY 10006
Attention: David Schwartzbard
Telephone: 212-225-5221
Telecopy: 212-225-5090
<PAGE> 8
EXHIBIT A
Warrants
<PAGE> 1
Exhibit 14
SECOND AMENDED AND RESTATED SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED SECURITY AGREEMENT (as amended,
restated, supplemented or otherwise modified, this "Agreement"), dated as of
November 15, 1999, by and among GT Interactive Software Corp. (the "Borrower")
and certain of its subsidiaries identified on the signature pages attached
hereto (together with the Borrower and each additional subsidiary who becomes a
party hereto pursuant to a Joinder Agreement, the "Grantors", each individually,
a "Grantor"), First Union National Bank, a national banking association, as
administrative agent (the "Administrative Agent"), for the ratable benefit of
the Administrative Agent and the financial institutions who are or may from time
to time become parties to the Credit Agreement referred to below (the "Lenders")
and California U.S. Holdings, Inc. ("Infogrames U.S."), a wholly-owned
Subsidiary of Infogrames Entertainment, SA, a societe anonyme organized under
the laws of France.
STATEMENT OF PURPOSE
Pursuant to the terms of the Credit Agreement, dated as of
September 11, 1998 (as amended, restated, supplemented or otherwise modified,
the "Credit Agreement"), by and among the Borrower, the Lenders and the
Administrative Agent, the Lenders agreed to make certain Extensions of Credit to
the Borrower as more particularly described therein.
In connection with the execution and delivery of the Credit
Agreement, the Borrower executed and delivered in favor of the Administrative
Agent a Security Agreement, dated as of September 11, 1998 (as amended,
restated, supplemented or otherwise modified prior to June 29, 1999, the
"Existing Security Agreement"), pursuant to which the Borrower granted to the
Administrative Agent, for the ratable benefit of the Lenders and the
Administrative Agent, security interests in the Collateral to secure the
Obligations (as such terms are defined in the Existing Security Agreement).
In connection with the execution and delivery of the Second
Amendment, Waiver and Agreement, dated as of June 29, 1999, under the Credit
Agreement, the Borrower executed and delivered in favor of the Administrative
Agent, for the ratable benefit of the Lenders and the Administrative Agent, an
Amended and Restated Security Agreement, dated as of June 29, 1999 (as
heretofore amended, restated, supplemented or otherwise modified, the "Amended
and Restated Security Agreement"), pursuant to which the Borrower (i) reaffirmed
its previous grant to the Administrative Agent, for the ratable benefit of the
Lenders and the Administrative Agent, of security interests in the Collateral
under, and as defined in, the Existing Security Agreement and (ii) granted to
the Administrative Agent, for the ratable benefit of the Lenders and the
Administrative Agent, security interests in the Collateral to secure the
Obligations (as such terms are defined in the Amended and Restated Security
Agreement).
The Borrower has advised the Administrative Agent and the Lenders
that Infogrames U.S. has agreed to provide a term loan to the Borrower in the
original principal amount of $25,000,000 (the "Infogrames Bridge Loan"), as
evidenced by, and pursuant to the
<PAGE> 2
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provisions of, a term note, dated November 15, 1999 (the "Infogrames Bridge Loan
Note"), by the Borrower in favor of Infogrames U.S. and secured by security
interests in substantially all of the assets of the Borrower and the Guarantors,
which security interests shall be junior and subordinate to the extent set forth
herein to the security interests granted to the Administrative Agent, for the
ratable benefit of the Lenders and the Administrative Agent, in the Existing
Security Agreement, the Amended and Restated Security Agreement and this
Agreement.
In connection with, among other things, the incurrence of the
Infogrames Bridge Loan and the execution and delivery of the Infogrames Bridge
Loan Note, the Borrower, the Lenders and the Administrative Agent have agreed to
execute a Third Amendment, Consent, Waiver and Agreement, dated as of November
15, 1999 (the "Third Amendment"), under the Credit Agreement to, among other
things, amend and waive certain provisions thereof and consent to the incurrence
of the Infogrames Bridge Loan and the grant of the security interests in favor
of Infogrames U.S. as more fully set forth below.
In connection with the transactions contemplated by the Third
Amendment and the Infogrames Bridge Loan Note and as a condition precedent
thereto, the Borrower and Infogrames U.S. have requested that the Amended and
Restated Security Agreement be further amended and restated, and that each
Grantor execute and deliver this Agreement to the Administrative Agent, for the
ratable benefit of the Administrative Agent and the Lenders, and to Infogrames
U.S., and each of the Grantors has agreed to do so pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the foregoing premises and to
induce (i) the Administrative Agent and the Lenders to enter into the Third
Amendment and (ii) Infogrames U.S. to make the Infogrames Bridge Loan, each of
the parties hereto hereby agrees as follows:
SECTION 1. Definitions.
(a) Terms defined in the Credit Agreement and not otherwise
defined herein, when used in this Agreement including its preamble and recitals,
shall have the respective meanings provided for in the Credit Agreement, and the
following terms which are defined in the UCC are used herein as so defined:
Chattel Paper, Documents, Equipment, Instruments and Investment Property. The
following additional terms, when used in this Agreement, shall have the
following meanings:
"Account Debtor" means any Person who is or may become obligated
to any Grantor under, with respect to, or on account of, an Account.
"Accounts" means collectively, all rights to payment for goods
sold or leased or for services rendered or to be rendered, whether or
not earned by performance, and all sums of money or other proceeds due
or becoming due thereon, including, without limitation, "Accounts" as
defined in the UCC, whether secured or unsecured, now existing or
hereafter created, now or hereafter owned or acquired by any Grantor or
in which any Grantor now or hereafter has or acquires any right or
interest.
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"Accounts Aging Report" means an aged trial balance of all
Accounts existing as of a specified date, in a form reasonably
satisfactory to the Administrative Agent and Infogrames U.S., specifying
the names, addresses, face value and dates of invoices of each Account
Debtor obligated on any Accounts so listed.
"Bank Obligations" means the Grantors' obligations under the Loan
Documents in respect of the unpaid principal of and interest on the
Notes (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of
the Loans, the Letters of Credit or the L/C Obligations and interest
accruing at the then applicable rate provided in the Credit Agreement
after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to any
Grantor, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) and all other obligations and
liabilities of the Grantors to the Administrative Agent, the Issuing
Lender and the Lenders in respect of the Loans, the Notes, the Letters
of Credit, the L/C Obligations, any Hedging Agreements permitted or
required under the Credit Agreement, the Concentration Account or any
cash management arrangements with any Lender, whether direct or
indirect, absolute or contingent, due or to become due, or now existing
or hereafter incurred, which may arise under, out of, or in connection
with, the Credit Agreement, the Notes, the Letters of Credit, the L/C
Obligations, any Hedging Agreements permitted or required under the
Credit Agreement, this Agreement, the other Loan Documents or any other
document made, delivered or given in connection herewith in respect of
the Bank Obligations or therewith, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees
and disbursements of counsel to the Administrative Agent, the Issuing
Lender or the Lenders that are required to be paid by any Grantor
pursuant to the terms of the Credit Agreement, this Agreement or any
other Loan Document).
"Bridge Obligations" means the Grantors' obligations under the
Infogrames Bridge Loan Documents in respect of the unpaid principal of
and interest on the Infogrames Bridge Loan Note (including, without
limitation, interest accruing at the then applicable rate provided in
the Infogrames Bridge Loan Note after the maturity of the Infogrames
Bridge Loan and interest accruing at the then applicable rate provided
in the Infogrames Bridge Loan Note after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to any Grantor, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) and
all other obligations and liabilities of the Grantors to Infogrames U.S.
in respect of the Infogrames Bridge Loan or the Infogrames Bridge Loan
Note, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Infogrames Bridge Loan Note or
the other Infogrames Bridge Loan Documents, in each case whether on
account of principal, interest, fees, indemnities, costs, expenses or
otherwise (including, without limitation, (a) the obligations of the
Borrower under the Infogrames Securities Purchase Agreement to pay or
reimburse Infogrames or Infogrames U.S. for costs and expenses
(including without limitation, reasonable fees and disbursements of
counsel to Infogrames or
<PAGE> 4
4
Infogrames U.S.) incurred or paid by Infogrames or Infogrames U.S. in
connection with the Infogrames Securities Purchase Agreement and (b) all
reasonable fees and disbursements of counsel to Infogrames U.S. that are
required to be paid by any Grantor pursuant to the terms of the
Infogrames Bridge Loan Note or any other Infogrames Bridge Loan
Document).
"Collateral" shall have the meaning given such term in Section
2(a).
"Collateral Account" means any cash collateral account
established by any of the Grantors with the Administrative Agent, in the
name and under the exclusive dominion and control of the Administrative
Agent, pursuant to Section 6 .
"Contracts" means all contracts and agreements listed on Schedule
1, as the same may be amended, supplemented or otherwise modified from
time to time, including, without limitation, (a) all rights of any
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (b) all rights of any Grantor to damages arising
thereunder and (c) all rights of any Grantor to perform and to exercise
all remedies thereunder, in each case, to the extent the grant by such
Grantor of a security interest pursuant to this Agreement in its right,
title and interest in such contract or agreement is not prohibited
thereby.
"Copyright License" means any written agreement naming any
Grantor as licensor or licensee (including, without limitation, those
listed on Schedule 2) granting any right under any Copyright, including,
without limitation, the grant of rights to manufacture, distribute,
exploit and sell materials derived from any Copyright.
"Copyrights" means (a) all copyrights of any Grantor arising
under the laws of the United States, any other country or any political
subdivision thereof, whether registered or unregistered and whether
published or unpublished (including, without limitation, those listed on
Schedule 2) all registrations and recordings thereof, and all
applications in connection therewith, including, without limitation, all
registrations, recordings and applications in the United States
Copyright Office and (b) the right to obtain all renewals thereof.
"Deposit Accounts" means all "Deposit Accounts" (as defined in
the UCC) established by any Grantor, including, without limitation, the
deposit accounts listed on Schedule 3 hereto and any other deposit
accounts established by any Grantor after the date hereof.
"Event of Default" means an Event of Default under, and as
defined in, the Credit Agreement or the Infogrames Bridge Loan Note.
"Financing Statements" means the Uniform Commercial Code Form
UCC-1 Financing Statements (or, with respect to any Foreign Subsidiary,
any filing required by
<PAGE> 5
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the applicable foreign jurisdiction) executed by the Grantors with
respect to the Collateral and filed or to be filed in the jurisdictions
set forth in the Perfection Certificate.
"General Intangibles" means all "General Intangibles" (as defined
in the UCC) of any Grantor, including, without limitation, all
contracts, agreements, instruments and indentures in any form, and
portions thereof, to which such Grantor is a party or under which such
Grantor has any right, title or interest or to which such Grantor or any
property of such Grantor is subject, as the same may from time to time
be amended, supplemented or otherwise modified, including, without
limitation, (a) all rights of such Grantor to receive moneys due and to
become due to it thereunder or in connection therewith, (b) all rights
of such Grantor to damages arising thereunder and (c) all rights of such
Grantor to perform and to exercise all remedies thereunder, in each case
to the extent the grant by such Grantor of a security interest pursuant
to this Agreement in its right, title and interest in such contract,
agreement, instrument or indenture is not prohibited by such contract,
agreement, instrument or indenture without the consent of any other
party thereto, would not give any other party to such contract,
agreement, instrument or indenture the right to terminate its
obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from
the other parties thereto (it being understood that the foregoing shall
not be deemed to obligate such Grantor to obtain such consents);
provided, that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a security interest
pursuant to this Agreement in any Account or any money or other amounts
due or to become due under any such contract, agreement, instrument or
indenture.
"Infogrames Bridge Loan Documents" means the Infogrames Bridge
Loan Note, the Guaranty Agreement, the Pledge Agreement and this
Agreement.
"Intellectual Property" means all rights, priorities and
privileges of any Grantor relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Copyright Licenses,
the Patents, the Patent Licenses, the Trademarks and the Trademark
Licenses, and all rights to sue at law or in equity for any infringement
or other impairment thereof, including the right to receive all proceeds
and damages therefrom.
"Inventory" means all "Inventory" (as defined in the UCC) of any
Grantor wherever located, including, without limitation, all goods
manufactured or acquired for sale or lease and all raw materials,
work-in-process and finished goods, and all supplies and goods, used or
consumed in the operation of the business of any Grantor, whether now or
hereafter owned or acquired by any Grantor or in which such Grantor now
or hereafter has or acquires any right or interest.
"Obligations" means, collectively, the Bank Obligations and the
Bridge Obligations.
<PAGE> 6
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"Patent License" means all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to
manufacture, use or sell any invention covered in whole or in part by a
Patent (including, without limitation, any of the foregoing referred to
on Schedule 2).
"Patents" means (a) all of any Grantor's letters patent of the
United States, any other country or any political subdivision thereof,
all reissues and extensions thereof and all goodwill associated
therewith (including, without limitation, any of the foregoing referred
to on Schedule 2), (b) all of any Grantor's applications for letters
patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, including, without
limitation, any of the foregoing referred to on Schedule 2 and (c) all
rights to obtain any reissues or extensions of the foregoing.
"Permitted Liens" means all Liens respecting the Collateral
permitted pursuant to Section 10.3 of the Credit Agreement.
"Perfection Certificate" means a certificate substantially in the
form of Exhibit A attached hereto, setting forth the corporate or other
names, chief executive office or principal place of business in each
state and other current locations of each Grantor and such other
information as the Administrative Agent or Infogrames U.S., as the case
may be, deems reasonably necessary for the perfection of the security
interests granted to it hereunder, completed and supplemented with the
schedules and attachments contemplated thereby to the reasonable
satisfaction of the Administrative Agent or Infogrames U.S., as the case
may be, and certified by the Chief Executive Officer, President, any
Executive Vice President, Chief Financial Officer or Treasurer of each
Grantor so authorized to act.
"Proceeds" means all "Proceeds" (as defined in the UCC) of any
Grantor and, in any event, shall include, without limitation, all
dividends or other income from the Investment Property of any Grantor,
collections thereon or distributions or payments with respect thereto.
"Schedule of Inventory" means a schedule of Inventory based upon
each Grantor's most recent physical inventory and its perpetual
inventory records, in a form reasonably satisfactory to the
Administrative Agent and Infogrames U.S.
"Security Interests" means (a) the senior security interests
granted hereby to the Administrative Agent, for the ratable benefit of
the Lenders and the Administrative Agent, in respect of the Collateral
and (b) the junior security interests granted hereby to Infogrames U.S.
in respect of the Collateral.
"Standstill Expiration Date" shall have the meaning assigned
thereto in Section 12.
<PAGE> 7
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"Trademark License" means any agreement, written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark (including, without limitation, any thereof referred to on
Schedule 2).
"Trademarks" means (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos, and other source or business identifiers
of any Grantor, and all goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country or any
political subdivision thereof, or otherwise, and all common-law rights
related thereto (including, without limitation, any of the foregoing
referred to on Schedule 2) and (b) the right to obtain all renewals
thereof.
"UCC" means the Uniform Commercial Code as in effect in the State
of New York; provided that, if by reason of mandatory provisions of law,
the perfection or the effect of perfection or non-perfection of the
Security Interests in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than New York,
"UCC" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
(b) Where the context requires, terms relating to the Collateral
or any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
SECTION 2. The Security Interests.
(a) With respect to each Grantor, all of such Grantor's estate,
right, title and interest in and to all of the following property, whether now
or hereafter owned or acquired by such Grantor or in which such Grantor now has
or hereafter acquires any estate, right, title or interest, and wherever
located, along with any other property of such Grantor which may from time to
time secure the Obligations pursuant to the terms of this Agreement, is
collectively referred to as the "Collateral":
(i) all Accounts;
(ii) all Chattel Paper;
(iii) the Collateral Account, all cash deposited therein from
time to time, the investments made pursuant to Section 6 and other
monies and property of any kind of any Grantor in the possession or
under the control of the Administrative Agent or any Lender;
(iv) all Contracts;
<PAGE> 8
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(v) all Deposit Accounts;
(vi) all Documents;
(vii) all Equipment;
(viii) all General Intangibles;
(ix) all Instruments;
(x) all Intellectual Property;
(xi) all Inventory;
(xii) all Investment Property;
(xiii) all other property not otherwise described above;
(xiv) all books and records pertaining to any of the foregoing;
and
(xv) all products and Proceeds of all or any of the foregoing.
(b) Each Grantor hereby confirms and reaffirms its grant of a
security interest in the Collateral (as defined in the Amended and Restated
Security Agreement) pursuant to the Amended and Restated Security Agreement. In
order to secure the payment when due whether at the stated maturity, by
acceleration or otherwise of the Bank Obligations, each Grantor hereby grants to
the Administrative Agent, for the ratable benefit of the Lenders and the
Administrative Agent, a first priority security interest in the Collateral.
(c) In order to secure the payment when due whether at the stated
maturity, by acceleration or otherwise of the Bridge Obligations, each Grantor
hereby grants to Infogrames U.S. a security interest in the Collateral junior
only to the security interests granted to the Administrative Agent, for the
ratable benefit of the Lenders and the Administrative Agent, and other Permitted
Liens, in each case to the extent provided herein.
(d) As set forth in the separate granting clauses contained in
subsections (b) and (c) above, it is the intent of the Grantors, the
Administrative Agent, the Lenders and Infogrames U.S. that this Agreement shall
create two separate and distinct Liens, a senior Lien in favor of the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, and a separate junior Lien in favor of Infogrames U.S.
(e) The Security Interests are granted as security only and shall
not subject the Administrative Agent, any Lender or Infogrames U.S. to, or
transfer to the Administrative Agent, any Lender or Infogrames U.S., or in any
way affect or modify, any obligation or liability of any Grantor with respect to
any of the Collateral or any transaction in connection therewith.
<PAGE> 9
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SECTION 3. Representations and Warranties. Each Grantor
represents and warrants to the Administrative Agent, each Lender and Infogrames
U.S. as follows:
(a) Such Grantor has the corporate power and authority and the
legal right to execute and deliver, to perform its obligations under, and to
grant the Security Interests in the Collateral owned by it pursuant to, this
Agreement and has taken all necessary corporate action to authorize its
execution, delivery and performance of, and grant of the Security Interests in
the Collateral pursuant to, this Agreement.
(b) This Agreement constitutes a legal, valid and binding
obligation of such Grantor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies.
(c) Such Grantor is the sole owner of, and has valid and legal
title to, all of the Collateral owned by it, free and clear of any Liens, other
than the Security Interests and other Permitted Liens.
(d) Other than financing statements or other similar or
equivalent documents or instruments with respect to the Liens securing the
Obligations and other Permitted Liens, no financing statement, mortgage,
security agreement or similar or equivalent document or instrument covering all
or any part of the Collateral is on file or of record in any jurisdiction. No
Collateral is in the possession of any Person (other than the Grantors)
asserting any claim thereto or security interest therein, except that the
Administrative Agent or its designee may have possession of Collateral as
contemplated hereby and a bailee, warehouseman, agent or processor may have
possession of the Collateral as contemplated by, and so long as such Grantor has
complied with, Section 4(c)(iii) and Section 4(c)(iv).
(e) All of the information set forth in the Perfection
Certificate relating to such Grantor is true and correct in all material
respects as of the date hereof.
(f) Such Grantor has, previously or contemporaneously herewith,
delivered to the Administrative Agent possession of all originals of all
negotiable Instruments constituting Collateral currently owned or held by such
Grantor, if any (duly endorsed in blank, if requested by the Administrative
Agent).
(g) With respect to any Inventory of such Grantor: (i) all such
Inventory is, and shall be at all times, located at places of business of such
Grantor listed in the Perfection Certificate or as to which such Grantor has
complied with the provisions of Section 4(a)(i), except Inventory in transit
from one such location to another such location; (ii) no Inventory is, nor shall
at any time or times be, subject to any Lien whatsoever, except for Liens
securing the Obligations and other Permitted Liens; (iii) no Inventory in
aggregate value exceeding $1,000,000 at any time is, nor shall at any time or
times be, kept, stored or maintained with a bailee, warehouseman, carrier or
similar party (other than a carrier delivering Inventory to a purchaser in the
ordinary course of such Grantor's business) unless the Administrative Agent and
Infogrames U.S. shall
<PAGE> 10
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have received prior written notice of such storage and such Grantor has complied
with the provisions of Section 4(c)(iii); and (iv) no Inventory in aggregate
value exceeding $1,000,000 at any time is, nor shall at any time or times be,
kept, stored or maintained with a consignee unless the Administrative Agent and
Infogrames U.S. shall have received prior written notice of such consignment and
such Grantor has complied with the provisions of Section 4(c)(iii).
(h) The Financing Statements relating to such Grantor are in
appropriate form and when filed in the offices specified in the Perfection
Certificate, the Security Interests will constitute valid and perfected security
interests in all of the Collateral (to the extent that a security interest
therein may be perfected by filing pursuant to the UCC) in favor of the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, prior to all other Liens and rights of others therein including without
limitation, the Liens in favor of Infogrames U.S. hereunder, other than with
respect to Permitted Liens, and in favor of Infogrames U.S., prior to all other
Liens and rights of others therein, other than with respect to Permitted Liens
and the Liens in favor of the Administrative Agent, for the benefit of the
Lenders and the Administrative Agent.
(i) On the date hereof, such Grantor's jurisdiction of
organization and the location of such Grantor's chief executive office or sole
place of business are specified in the Perfection Certificate.
(j) With respect to any Account of such Grantor: (i) no amount
payable to such Grantor under or in connection with such Account is evidenced by
any Instrument or Chattel Paper which has not been delivered to the
Administrative Agent; (ii) none of the obligors on any Account is a Governmental
Authority; and (iii) the amounts represented by such Grantor to the Lenders from
time to time in reports delivered to the Administrative Agent by such Grantor as
owing to such Grantor in respect of the Accounts will at such times be accurate.
(k) With respect to any Contract to which such Grantor is a
party: (i) no consent of any party (other than such Grantor) is required, or
purports to be required, in connection with the execution, delivery and
performance of this Agreement; (ii) each Contract is in full force and effect
and constitutes a valid and legally enforceable obligation of such Grantor and,
to the best of such Grantor's knowledge, the other parties thereto, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing; (iii)
no consent or authorization of, filing with or other act by or in respect of any
Governmental Authority is required in connection with the execution, delivery or
performance of any of the Contracts by such Grantor other than those which have
been duly obtained, made or performed, are in full force and effect and do not
subject the scope of any such Contract to any material adverse limitation,
either specific or general in nature; (iv) neither such Grantor nor, to such
Grantor's knowledge (without independent investigation), any of the other
parties to the Contracts is in default in the performance or observance of any
of the material terms thereof; (v) the right, title and interest of such Grantor
in, to and under the Contracts are not subject to any defenses, offsets,
counterclaims or claims; (vi) if a copy of any such Contract is requested by
<PAGE> 11
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the Administrative Agent or Infogrames U.S., such Contract as delivered to the
Administrative Agent or Infogrames U.S., as the case may be, shall be a complete
and correct copy of such Contract, including all amendments, supplements and
other modifications thereto; (vii) to the best of such Grantor's knowledge, no
amount payable to such Grantor under or in connection with any Contract is
evidenced by any Instrument or Chattel Paper which has not been delivered to the
Administrative Agent; and (viii) none of the parties to any Contract is a
Governmental Authority.
(l) With respect to any Intellectual Property of such Grantor:
(i) to the best of such Grantor's knowledge, on the date hereof, all material
Intellectual Property is valid, subsisting, unexpired and enforceable, has not
been abandoned and does not infringe the intellectual property rights of any
other Person; (ii) except as set forth on Schedule 2, on the date hereof, none
of the material Intellectual Property is the subject of any licensing or
franchise agreement pursuant to which such Grantor is the licensor or
franchisor; (iii) no holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of, or
such Grantor's rights in, any material Intellectual Property in any respect that
could reasonably be expected to have a material adverse effect on the aggregate
value of all of such Grantor's Intellectual Property; and (iv) except as set
forth in Schedule 6.1(u) to the Credit Agreement, no action or proceeding is
pending, or, to the best of such Grantor's knowledge, threatened, on the date
hereof (A) seeking to limit, cancel or question the validity of any material
Intellectual Property or such Grantor's ownership interest therein or (B) which,
if adversely determined, would have a material adverse effect on the aggregate
value of all of such Grantor's Intellectual Property.
SECTION 4. Further Assurances; Covenants.
(a) General.
(i) No Grantor will change the location of its chief executive
office or principal place of business in any state unless such Grantor
shall have given the Administrative Agent and Infogrames U.S. thirty
(30) days prior written notice thereof, executed and delivered to the
Administrative Agent and Infogrames U.S. all financing statements and
financing statement amendments which the Administrative Agent or
Infogrames U.S. may request in connection therewith and, if reasonably
requested by the Administrative Agent or Infogrames U.S., delivered an
opinion of counsel with respect thereto in accordance with Section
4(a)(v).
(ii) No Grantor shall change the locations where it keeps or
holds any Collateral or any records relating thereto from the applicable
location described in the Perfection Certificate unless such Grantor
shall have given the Administrative Agent and Infogrames U.S. thirty
(30) days prior written notice of such change of location, executed and
delivered to the Administrative Agent and Infogrames U.S. all financing
statements and financing statement amendments which the Administrative
Agent or Infogrames U.S. may request in connection therewith and, if
reasonably requested by the Administrative Agent or Infogrames U.S.,
delivered an opinion of counsel with respect thereto in accordance with
Section 4(a)(v); provided, however, that any Grantor may keep Inventory
or
<PAGE> 12
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Equipment at, or in transit to, any location described in the Perfection
Certificate. No Grantor shall in any event change the location of any
Collateral if such change would cause the Security Interests in such
Collateral to lapse or cease to be perfected.
(iii) No Grantor will change its name, identity or corporate or
other structure in any manner unless it shall have given the
Administrative Agent and Infogrames U.S. thirty (30) days prior written
notice thereof, executed and delivered to the Administrative Agent and
Infogrames U.S. all financing statements and financing statement
amendments which the Administrative Agent or Infogrames U.S. may request
in connection therewith, and, if reasonably requested by the
Administrative Agent or Infogrames U.S., delivered an opinion of counsel
with respect thereto in accordance with Section 4(a)(v).
(iv) Each Grantor will maintain the Security Interests in the
Collateral owned by it as perfected Liens with priority (A) in the case
of the Bank Obligations, over all other Liens, including without
limitation, the Liens securing the Bridge Obligations, other than
Permitted Liens, and (B) in the case of Liens securing the Bridge
Obligations, other than the Liens securing the Bank Obligations and
other Permitted Liens. Each Grantor will, from time to time, at its
expense, execute, deliver, file and record any statement, assignment,
instrument, document, agreement or other paper and take any other action
(including, without limitation, any filings of financing or continuation
statements under the UCC) that from time to time may be necessary, or
that the Administrative Agent or Infogrames U.S. may reasonably request,
in order to create, preserve, upgrade in rank (to the extent required
hereby), perfect, confirm or validate the Security Interests or to
enable the Administrative Agent to exercise and enforce any of the
rights, powers and remedies hereunder provided with respect to any of
the Collateral. Prior to the irrevocable payment in full of the
Obligations, to the extent required by the immediately preceding
sentence, each Grantor hereby authorizes the Administrative Agent, upon
the failure of any Grantor to so do within ten (10) Business Days after
receipt of notice in writing from the Administrative Agent, to execute
and file financing statements, financing statement amendments,
continuation statements and any other agreements, instruments, documents
and papers reasonably necessary to perfect the Security Interests in
such Grantor's Collateral without such Grantor's signature appearing
thereon. Each Grantor agrees that, except as otherwise required by law,
a carbon, photographic, photostatic or other reproduction of this
Agreement or of a financing statement is sufficient as a financing
statement. Each Grantor shall pay the reasonable costs of, or incidental
to, any recording or filing of the Financing Statements and any other
financing statements, financing statement amendments, continuation
statements and any other agreements, instruments, documents and papers
reasonably necessary to perfect the Security Interests in such Grantor's
Collateral.
(v) Each Grantor will, promptly upon request, provide to the
Administrative Agent and Infogrames U.S. all information and evidence
the Administrative Agent or Infogrames U.S. may reasonably request
concerning the Collateral, and in particular the Accounts, to enable the
Administrative Agent to enforce the provisions of this Agreement.
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(vi) Prior to each date on which any Grantor proposes to take any
action contemplated by Section 4(a)(i) or Section 4(a)(ii), if
reasonably requested by the Administrative Agent or Infogrames U.S.,
such Grantor shall, at its cost and expense, cause to be delivered to
the Administrative Agent (with a copy for each Lender) or Infogrames
U.S., as the case may be, an opinion of counsel, satisfactory to the
Administrative Agent or Infogrames U.S., as the case may be, to the
effect that all of their respective financing statements and amendments
or supplements thereto, continuation statements and other documents
required to be recorded or filed in order to perfect and protect their
respective Security Interests and the respective priorities thereof
against all creditors of and purchasers from such Grantor have been
filed in each filing office necessary or desirable for such purposes and
that all filing fees and taxes, if any, payable in connection with such
filings have been paid in full.
(vii) After the occurrence and during the continuance of an Event
of Default, from time to time upon request by the Administrative Agent
or Infogrames U.S., each Grantor shall, at its cost and expense, cause
to be delivered to the Administrative Agent (with a copy for each
Lender) or Infogrames U.S., as the case may be, an opinion or opinions
of counsel, reasonably satisfactory to the Administrative Agent or
Infogrames U.S., as the case may be, as to the enforceability of the
Loan Documents, the Infogrames Bridge Loan Documents and the Security
Interests, on the Collateral and other property of the Grantors and such
other matters relating to the transactions contemplated hereby as the
Administrative Agent, the Required Lenders or Infogrames U.S. may
reasonably request.
(viii) Each Grantor will comply in all material respects with all
Applicable Laws applicable to the Collateral or any material part
thereof or to the operation of such Grantor's business.
(ix) Each Grantor will pay when due all material taxes,
assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as
all material claims of any kind (including, without limitation, claims
for labor, materials and supplies) against or with respect to the
Collateral, except that no such charge need be paid if (A) the validity
thereof is being contested in good faith by appropriate proceedings, (B)
such proceedings do not involve any danger of the sale, forfeiture or
loss of, or creation of a Lien on, any of the Collateral or any interest
therein and (C) such charge is adequately reserved against on such
Grantor's books in accordance with GAAP.
(x) The Grantors shall not (A) sell, assign (by operation of law
or otherwise) or otherwise dispose of any of the Collateral, except as
permitted by the Credit Agreement or hereunder or (B) create or suffer
to exist any Lien or other charge or encumbrance upon or with respect to
any of the Collateral to secure indebtedness of any Person or entity
other than the Security Interests and other Permitted Liens.
(b) Accounts, Etc.
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(i) Each Grantor shall use all reasonable efforts to cause to be
collected from its Account Debtors, as and when due, any and all amounts
owing under or on account of each Account (including, without
limitation, Accounts which are delinquent, such Accounts to be collected
in accordance with past practices) and to apply upon receipt thereof all
such amounts as are so collected to the outstanding balance of such
Account. The costs and expenses (including, without limitation,
attorney's fees) of collection of Accounts incurred by such Grantor, the
Administrative Agent or Infogrames U.S. shall be borne by such Grantor.
(ii) Upon the occurrence and during the continuance of an Event
of Default, upon request of the Administrative Agent, each Grantor will
promptly notify (and each Grantor hereby authorizes the Administrative
Agent so to notify) each Account Debtor in respect of any Account that
such Account has been assigned to the Administrative Agent hereunder and
that any payments due or to become due in respect of such Account are to
be made directly to the Administrative Agent or its designee.
(iii) Each Grantor will perform and comply in all material
respects with all of its material obligations in respect of its Accounts
and the exercise by the Administrative Agent, for the benefit of the
Lenders, the Administrative Agent and/or Infogrames U.S., of any of the
rights hereunder shall not release such Grantor from any of its duties
or obligations.
(iv) No Grantor will (A) amend, modify, terminate or waive any
material provision of any agreement giving rise to an Account in any
manner which could reasonably be expected to materially adversely affect
the value of the Collateral, (B) fail to exercise promptly and
diligently each and every material right which it may have under each
agreement giving rise to an Account (other than any right of
termination) which could reasonably be expected to materially adversely
affect the value of the Collateral or (C) fail to deliver to the
Administrative Agent and Infogrames U.S. a copy of each written material
demand, notice or document received by it which could reasonably be
expected to materially adversely affect the value of the Collateral
relating in any way to any material agreement giving rise to an Account.
(v) Other than in the ordinary course of business as generally
conducted by each Grantor, no Grantor will (A) grant any extension of
the time of payment of any of the Accounts with a face amount in excess
of $500,000 or (B) compromise, compound or settle the same for less than
the full amount thereof, release, wholly or partially, any Person liable
for the payment thereof, or allow any credit or discount whatsoever
hereon.
(vi) At the times set forth in Section 7.1(d) of the Credit
Agreement or, after the occurrence and during the continuance of an
Event of Default, from time to time, at the request of the
Administrative Agent, the Required Lenders or Infogrames U.S., the
Grantors shall deliver to the Administrative Agent (with a copy for each
Lender) or to Infogrames U.S., as the case may be, an Accounts Aging
Report. Unless otherwise indicated thereon or in writing by the
Grantors, each Accounts Aging Report delivered by
<PAGE> 15
15
the Grantors to the Administrative Agent and to Infogrames U.S. shall
constitute a representation by the Grantors with respect to the Accounts
listed thereon that: (A) such Accounts are genuine, are not evidenced by
a judgment and are evidenced by invoices issued in respect thereof; (B)
such Accounts represent undisputed, bona fide transactions completed in
accordance with the terms and provisions contained in any documents
related thereto or in accordance with past practices; (C) the amounts of
the face value shown, and any invoices and statements delivered to the
Administrative Agent or to Infogrames U.S., as the case may be, with
respect to any Account are owing to the applicable Grantor and are not
contingent for any reason; (D) there are no material setoffs,
counterclaims or disputes existing or asserted with respect to such
Accounts, and such Grantor has not made any agreement with any Account
Debtor thereunder for any deduction therefrom; (E) no Grantor has
knowledge of any facts, events, or occurrences which in any way impair
in any material respect the validity or enforceability of any such
Account or tend to reduce the amount payable thereunder from the amount
of the invoice face value shown on any Accounts Aging Report and on all
contracts, invoices and statements delivered to the Administrative Agent
or to Infogrames U.S., as the case may be, with respect thereto; (F) no
Grantor has knowledge that any Account Debtor under any such Account did
not have the capacity to contract at the time any contract or other
document giving rise to the Account was executed; (G) the goods giving
rise to such Accounts are not, and were not at the time of the sale
thereof, subject to any Lien, except the Security Interests and other
Permitted Liens; (H) no Grantor has knowledge of any fact or
circumstance which would materially impair the validity or
collectability of any such Account; (I) to the applicable Grantor's
knowledge, there are no proceedings or actions which are pending or,
threatened against any Account Debtor under such Accounts which could
result in any material adverse change in such Account Debtor's financial
condition; (J) no security interest in such Accounts has been granted to
any Person other than the Security Interests and other Permitted Liens;
and (K) each invoice or other evidence of payment obligation furnished
to Account Debtors with respect to such Accounts is issued in the
applicable Grantor's corporate name.
(c) Inventory, Equipment, Etc.
(i) At the times set forth in Section 7.1(d) of the Credit
Agreement and, after the occurrence and during the continuance of an
Event of Default, from time to time, at the request of the
Administrative Agent, the Required Lenders or Infogrames U.S., the
Grantors shall deliver to the Administrative Agent (with a copy for each
Lender) or Infogrames U.S., as the case may be, a Schedule of Inventory.
Unless otherwise indicated thereon or in writing by the Grantors, each
Schedule of Inventory delivered by the Grantors to the Administrative
Agent and to Infogrames U.S. shall constitute a representation by each
Grantor with respect to the Inventory listed thereon or referred to
therein that: (A) all such Inventory is located at places of business
listed in the Perfection Certificate or as to which the applicable
Grantor has complied with the provisions of Section 4(a)(i) or on the
premises identified on the then current Schedule of Inventory or is
Inventory in transit from one such location to another such location;
(B) no such Inventory is subject to any Lien whatsoever, except for the
Security Interests and other
<PAGE> 16
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Permitted Liens; (C) no such Inventory in aggregate value exceeding
$1,000,000 at any time is, nor shall at any time or times be, kept,
stored or maintained with a bailee, warehouseman, carrier or similar
party (other than a carrier delivering Inventory to a purchaser in the
ordinary course of such Grantor's business) unless the Administrative
Agent has given its consent and the applicable Grantor has complied with
the provisions of Section 4(c)(iii); and (D) no such Inventory in
aggregate value exceeding $1,000,000 is, nor shall at any time or times
be, kept, stored or maintained with a consignee unless the
Administrative Agent has given its consent and the applicable Grantor
has complied with the provisions of Section 4(c)(iii).
(ii) Each Grantor will cause the Administrative Agent, for the
ratable benefit of the Administrative Agent, the Lenders and Infogrames
U.S., to be named as loss payee on each insurance policy covering risks
relating to any of its Inventory or Equipment, as reasonably requested
by the Administrative Agent. Each Grantor will deliver to the
Administrative Agent or Infogrames U.S., upon request of the
Administrative Agent or Infogrames U.S., as the case may be, copies of
the insurance policies for such insurance. Each such insurance policy
shall provide that all insurance proceeds shall be adjusted with and
payable to the Administrative Agent, and provide that no cancellation or
termination thereof shall be effective until at least thirty (30) days
have elapsed after receipt by the Administrative Agent and Infogrames
U.S. of written notice thereof. The Administrative Agent and Infogrames
U.S. agree that, as long as no Default or Event of Default has occurred
and is continuing, any such net cash proceeds received by it in an
aggregate amount of (i) less than $2,000,000 shall be promptly paid over
to the Grantors and (ii) greater than or equal to $2,000,000 shall be
promptly paid over to the Grantors who hereby agree to use such net cash
proceeds in a diligent manner to replace or restore the damaged property
to which such insurance proceeds relate within three hundred and
sixty-five (365) days of receipt of such proceeds. All such loss
proceeds not so utilized within such three hundred and sixty-five (365)
day period shall be applied to the Obligations in accordance with
Section 2.5(b)(ii) of the Credit Agreement, subject to the provisions of
Section 11. Any surplus shall be paid by the Administrative Agent to
such Grantor or applied as may be otherwise required by law. Any
deficiency thereon shall be paid by such Grantor to the Administrative
Agent, on behalf of the Administrative Agent, the Lenders and Infogrames
U.S. on demand.
(iii) If any Inventory or Equipment exceeding in value $1,000,000
in the aggregate is at any time in the possession or control of any
warehouseman, bailee (other than a carrier transporting Inventory to a
purchaser in the ordinary course of business), or any of any Grantor's
agents or processors, such Grantor shall notify in writing such
warehouseman, bailee, agent or processor of the Security Interests
created hereby, shall obtain such warehouseman's, bailee's, agent's or
processor's agreement in writing to hold all such Inventory or Equipment
for the Administrative Agent's and Infogrames U.S.'s account subject to
the Administrative Agent's instructions, and shall cause such
warehouseman, bailee, agent or processor to issue and deliver to the
Administrative Agent warehouse receipts, bills of lading or any similar
documents relating to such Inventory in
<PAGE> 17
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the Administrative Agent's name and in form and substance reasonably
acceptable to the Administrative Agent.
(iv) If at any time during the term of this Agreement, any
Inventory or Equipment exceeding in value $1,000,000 is placed by any
Grantor on consignment with any consignee, such Grantor shall, prior to
the delivery of any such consigned Inventory or Equipment: (A) provide
the Administrative Agent and Infogrames U.S. with a copy of all
consignment agreements and other instruments and documentation to be
used in connection with such consignment, all of which agreements,
instruments and documentation shall be reasonably acceptable in form and
substance to the Administrative Agent or Infogrames U.S.; (B) prepare,
execute and file appropriate financing statements with respect to any
consigned Inventory or Equipment showing the consignee as debtor, such
Grantor as secured party and each of the Administrative Agent and
Infogrames U.S. as assignee of secured party; (C) prepare, execute and
file appropriate financing statements with respect to any consigned
Inventory or Equipment showing such Grantor as debtor and each of the
Administrative Agent and Infogrames U.S. as secured party; (D) after all
financing statements referred to in clauses (B) and (C) above shall have
been filed, conduct a search of all filings made against the consignee
in all jurisdictions in which the Inventory or Equipment to be consigned
is to be located while on consignment, and deliver to the Administrative
Agent and Infogrames U.S. copies of the results of all such searches;
(E) notify, in writing, all creditors of the consignee which would be
holders of security interests in the Inventory or Equipment to be
consigned that such Grantor expects to deliver certain Inventory to the
consignee, all of which Inventory shall be described in such notice by
item or type; and (F) if reasonably requested by the Administrative
Agent or Infogrames U.S., deliver an opinion of counsel to the effect
that all financing statements and amendments or supplements thereto,
continuation statements and other documents required to be recorded or
filed in order to perfect and protect the Security Interests and
priority thereof against all creditors of and purchasers of such Grantor
and such consignee have been filed in each filing office necessary or
desirable for such purposes and that all filing fees and taxes, if any,
payable in connection with such filings have been paid in full.
(d) Contracts, Etc.
(i) Each Grantor will perform and comply in all material respects
with all its obligations under the Contracts.
(ii) No Grantor will amend, modify, terminate or waive any
provision of any Contract in any manner which could reasonably be
expected to materially adversely affect the value of such Contract,
except for such amendments, modifications, terminations or waivers in
the ordinary course of such Grantor's business.
(iii) Each Grantor will exercise promptly and diligently each and
every material right which it may have under the Contracts (other than
any right of termination).
<PAGE> 18
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(iv) Each Grantor will deliver to the Administrative Agent and
Infogrames U.S. a copy of each material demand, notice or document
received by it relating in any way to any Contract that questions the
validity or enforceability of such Contract.
(e) Intellectual Property, Etc.
(i) Each Grantor (either itself or through licensees) will (A)
continue to use each material Trademark on each and every trademark
class of goods applicable to its current line as reflected in its
current catalogs, brochures and price lists in order to maintain such
Trademark in full force free from any claim of abandonment for non-use,
(B) maintain as in the past the quality of products and services offered
under such Trademark, (C) use such Trademark with the appropriate notice
of registration and all other notices and legends required by applicable
Requirements of Law, (D) not adopt or use any mark which is confusingly
similar or a colorable imitation of such Trademark unless the
Administrative Agent, for the ratable benefit of the Lenders and the
Administrative Agent, and Infogrames U.S. shall obtain a perfected
security interest in such mark pursuant to this Agreement, and (E) not
(and not permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby such Trademark may become
invalidated or impaired in any way.
(ii) No Grantor (either itself or through licensees) will do any
act, or omit to do any act, whereby any material Patent may become
forfeited, abandoned or dedicated to the public.
(iii) Each Grantor (either itself or through licensees) (A) will
employ each material Copyright and (B) will not (and will not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do
any act whereby any material portion of the Copyrights may become
invalidated or otherwise impaired. No Grantor will (either itself or
through licensees) do any act whereby any material portion of the
Copyrights may fall into the public domain.
(iv) No Grantor (either itself or through licensees) will do any
act that knowingly uses any material Intellectual Property to infringe
the intellectual property rights of any other Person.
(v) Each Grantor will notify the Administrative Agent and
Infogrames U.S. immediately if it knows, or has reason to know, that any
application or registration relating to any material Intellectual
Property may become forfeited, abandoned or dedicated to the public, or
of any material adverse determination or development (including, without
limitation, the institution of, or any such material adverse
determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any
court or tribunal in any country) regarding such Grantor's ownership of,
or the validity of, any material Intellectual Property or such Grantor's
right to register the same or to own and maintain the same.
<PAGE> 19
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(vi) Whenever a Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the
registration of any Intellectual Property with the United States Patent
and Trademark Office, the United States Copyright Office or any similar
office or agency in any other country or any political subdivision
thereof, such Grantor shall report such filing to the Administrative
Agent and Infogrames U.S. within five (5) Business Days after the last
day of the fiscal quarter in which such filing occurs. Upon request of
the Administrative Agent or Infogrames U.S., such Grantor shall execute
and deliver, and have recorded, any and all agreements, instruments,
documents, and papers as the Administrative Agent or Infogrames U.S. may
request to evidence the Security Interests in any Copyright, Patent or
Trademark and the goodwill and General Intangibles of such Grantor
relating thereto or represented thereby.
(vii) Each Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United
States Patent and Trademark Office, the United States Copyright Office
or any similar office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application (and to
obtain the relevant registration) and to maintain each registration of
the material Intellectual Property, including, without limitation,
filing of applications for renewal, affidavits of use and affidavits of
incontestability.
(viii) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, the applicable
Grantor shall (A) take such actions as such Grantor shall reasonably
deem appropriate under the circumstances to protect such Intellectual
Property and (B) if such Intellectual Property is of material economic
value, promptly notify the Administrative Agent and Infogrames U.S.
after it learns thereof and sue for infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to recover any
and all damages for such infringement, misappropriation or dilution.
(f) Indemnification. Each Grantor agrees to pay, and to save each
of the Administrative Agent, the Lenders and Infogrames U.S. harmless from, any
and all liabilities, reasonable costs and expenses (including, without
limitation, reasonable legal fees and expenses) incurred by the Administrative
Agent, any Lender or Infogrames U.S. (i) with respect to, or resulting from, any
and all excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral, (ii) with respect to, or
resulting from, complying with any Applicable Law applicable to any of the
Collateral or (iii) in connection with any of the transactions contemplated by
this Agreement (except to the extent any such liabilities, costs and expenses
result from the gross negligence or willful misconduct of the Administrative
Agent, such Lender or Infogrames U.S., respectively). In any suit, proceeding or
action brought by the Administrative Agent under any Account for any sum owing
thereunder, or to enforce any provisions of any Account, each Grantor will save,
indemnify and keep each of the Administrative Agent, each Lender and Infogrames
U.S. harmless from and against all expense, loss or damage suffered by the
Administrative Agent, any Lender or Infogrames U.S. by reason of any defense,
setoff, counterclaim, recoupment or reduction or liability whatsoever of the
Account Debtor or
<PAGE> 20
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any other obligor thereunder, arising out of a breach by any Grantor of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such Account Debtor or obligor or
its successors from any Grantor (except to the extent any such expense, loss or
damage results from the gross negligence or willful misconduct of the
Administrative Agent, such Lender or Infogrames U.S., respectively). The
obligations of the Grantors under this Section 4(f) shall survive the
termination of the other provisions of this Agreement.
SECTION 5. Reporting and Recordkeeping. Each Grantor respectively
covenants and agrees with the Administrative Agent, the Lenders and Infogrames
U.S. that from and after the date of this Agreement and until the Aggregate
Commitment is terminated and all Obligations have been fully satisfied:
(a) Maintenance of Records Generally. Each Grantor will keep and
maintain at its own cost and expense adequate records of the Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to the Collateral and all other dealings with the
Collateral in accordance with past practices. All Chattel Paper given to such
Grantor with respect to any Accounts will be marked with the following legend:
"This writing and the obligations evidenced or secured hereby are subject to the
security interests of First Union National Bank, as Administrative Agent". For
the Administrative Agent's, the Lenders' and Infogrames U.S.'s further security,
each Grantor agrees that upon the occurrence and during the continuance of any
Event of Default, upon the request of the Administrative Agent, the Required
Lenders or Infogrames U.S., such Grantor shall deliver and turn over any such
books and records directly to the Administrative Agent, Infogrames or their
respective designee. Each Grantor shall permit any representative of the
Administrative Agent to inspect such books and records in accordance with
Section 8.11 of the Credit Agreement and will provide photocopies thereof to the
Administrative Agent upon its reasonable request.
(b) Certain Provisions Regarding Maintenance of Records and
Reporting Re: Accounts.
(i) In the event any amounts due and owing in excess of $500,000
individually or $1,000,000 in the aggregate are in dispute between any
Account Debtor and any Grantor, such Grantor shall provide the
Administrative Agent and Infogrames U.S. with written notice thereof
promptly after such Grantor's learning thereof, explaining the reason
for the dispute, all claims related thereto and the amount in
controversy.
(ii) Each Grantor will promptly notify the Administrative Agent
and Infogrames U.S. in writing if any Account or Accounts, the face
value of which exceeds $500,000 individually or $1,000,000 in the
aggregate, arises or arise out of a contract with the United States of
America, or any department, agency, subdivision or instrumentality
thereof, or of any state (or department, agency, subdivision or
instrumentality thereof) where such state has a state assignment of
claims act or other law comparable to the Federal Assignment of Claims
Act. Each Grantor will take any action required or requested by the
Administrative Agent or Infogrames U.S. or give notice of the Security
<PAGE> 21
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Interest in such Accounts under the provisions of the Federal Assignment
of Claims Act or any comparable law or act enacted by any state or local
Governmental Authority. Any notifications or other documents executed
and delivered to the Administrative Agent and Infogrames U.S. in
connection with the Federal Assignment of Claims Act or any comparable
state law may be promptly filed with the appropriate Governmental
Authority by the Administrative Agent or Infogrames U.S. or held by the
Administrative Agent or Infogrames U.S. until the Administrative Agent,
the Required Lenders or Infogrames U.S. decide in their respective sole
discretion to make any such filing.
(iii) Each Grantor will promptly upon, but in no event later than
ten (10) Business Days after: (A) such Grantor's learning thereof,
inform the Administrative Agent and Infogrames U.S., in writing, of any
material delay in such Grantor's performance of any of its obligations
to any Account Debtor and of any assertion of any claims, offsets or
counterclaims by any Account Debtor and of any allowances, credits
and/or other monies granted by such Grantor to any Account Debtor, in
each case involving amounts in excess of $500,000 for any single Account
or Account Debtor or in excess of $1,000,000 in the aggregate for all
Accounts and Account Debtors; and (B) such Grantor's receipt or learning
thereof, furnish to and inform the Administrative Agent and Infogrames
U.S. of any adverse information that, to the knowledge of such Grantor,
could reasonably be expected to materially adversely affect the
financial condition of any Account Debtor with respect to Accounts
exceeding $500,000 individually or $1,000,000 in the aggregate.
(c) Further Identification of Collateral. Each Grantor will, if
so reasonably requested by the Administrative Agent or Infogrames U.S., furnish
to the Administrative Agent or Infogrames U.S., as the case may be, statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Administrative Agent or
Infogrames U.S. may reasonably request, all in reasonable detail.
(d) Notices. In addition to the notices required by Section 5(b),
each Grantor will advise the Administrative Agent and Infogrames U.S. promptly,
in reasonable detail, (i) of any material Lien or claim made or asserted against
any of the Collateral, (ii) of any material adverse change in the composition of
the Collateral and (iii) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the Collateral or on
the validity, perfection or priority of the Security Interests.
SECTION 6. Collateral Account.
(a) There is hereby established with the Administrative Agent a
Collateral Account in the name and under the exclusive dominion and control of
the Administrative Agent. There shall be deposited from time to time into such
account the cash proceeds of the Collateral required to be delivered to the
Administrative Agent pursuant to Section 6(b) or any other provision of this
Agreement. Any income received by the Administrative Agent with respect to the
balance from time to time on deposit in the Collateral Account, including any
interest or capital gains on investments of amounts on deposit in the Collateral
Account, shall remain, or be deposited, in the Collateral Account together with
any investments from time to time made
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pursuant to Section 6(c), shall vest in the Administrative Agent, shall
constitute part of the Collateral hereunder and shall not constitute payment of
the Obligations until applied thereto as hereinafter provided.
(b) Upon the occurrence and during the continuance of an Event of
Default, if requested by the Administrative Agent, each Grantor shall instruct
all Account Debtors and other Persons obligated in respect of all Accounts to
make all payments in respect of the Accounts either (i) directly to the
Administrative Agent (by instructing that such payments be remitted to a post
office box which shall be in the name and under the exclusive dominion and
control of the Administrative Agent) or (ii) to one or more banks in any state
in the United States (by instructing that such payments be remitted to a post
office box which shall be in the name and under the exclusive dominion and
control of any such bank) under a Lockbox Letter substantially in the form of
Annex I hereto duly executed by each Grantor and any such bank or under other
arrangements, in form and substance reasonably satisfactory to the
Administrative Agent, pursuant to which such Grantor shall have irrevocably
instructed such bank (and such bank shall have agreed) to remit all proceeds of
such payments directly to the Administrative Agent for deposit into the
Collateral Account or as the Administrative Agent may otherwise instruct such
bank, and thereafter if the proceeds of any Collateral shall be received by any
of the Grantors, such Grantor will promptly deposit such proceeds into the
Collateral Account and until so deposited, all such proceeds shall be held in
trust by such Grantor for and as the property of the Administrative Agent, for
the benefit of the Lenders, the Administrative Agent and Infogrames U.S., and
shall not be commingled with any other funds or property of such Grantor. At any
time after the occurrence and during the continuance of an Event of Default, the
Administrative Agent may itself so instruct each Grantor's Account Debtors. All
such payments made to the Administrative Agent shall be deposited in the
Collateral Account.
(c) Amounts on deposit in the Collateral Account shall be
promptly liquidated and applied to the payment of the Obligations in the manner
specified in Section 11.
SECTION 7. General Authority.
(a) Each Grantor hereby irrevocably appoints the Administrative
Agent their true and lawful attorney, with full power of substitution, in the
name of each Grantor, the Administrative Agent, the Lenders, Infogrames U.S. or
otherwise, for the sole use and benefit of the Administrative Agent, the Lenders
and Infogrames U.S., but at the Grantors' expense, to exercise, at any time from
time to time all or any of the following powers:
(i) to file any financing statements, financing statement
amendments, continuation statements and any other agreements,
instruments, documents and papers to evidence the Security Interests in
the Collateral;
(ii) to demand, sue for, collect, receive and give acquittance
for any and all monies due or to become due with respect to any
Collateral or by virtue thereof;
<PAGE> 23
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(iii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect to any Collateral;
(iv) to sell, transfer, assign or otherwise deal in or with the
Collateral and the Proceeds thereof, as fully and effectually as if the
Administrative Agent were the absolute owner thereof;
(v) to do all acts and things which the Administrative Agent
deems necessary to protect, preserve or realize upon the Collateral and
the Security Interests therein and to effect the intent of this
Agreement, all as fully and effectively as if the Administrative Agent
were the absolute owner thereof; and
(vi) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference to the
Collateral;
provided that the Administrative Agent shall not take any of the actions
described in this Section 7(a), except those described in clause (i) above,
unless an Event of Default shall have occurred and be continuing. The
Administrative Agent shall give the Grantors not less than ten (10) Business
Days' prior written notice of the time and place of any sale or other intended
disposition of any of the Collateral, except any Collateral which is perishable
or threatens to decline speedily in value or is of a type customarily sold on a
recognized market. The Grantors agree that any such notice constitutes
"reasonable notification" within the meaning of Section 9-504(3) of the UCC (to
the extent such Section is applicable).
(b) Ratification. The Grantors hereby ratify all that said
attorney shall lawfully do or cause to be done by virtue hereof. The power of
attorney granted pursuant to Section 7(a) is a power coupled with an interest
and shall be irrevocable.
(c) Other Powers. The Grantors also authorize the Administrative
Agent, after the occurrence and during the continuance of an Event of Default,
at any time and from time to time, to execute, in connection with any sale
provided for in Section 8, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
SECTION 8. Remedies Upon Event of Default.
(a) If any Event of Default has occurred and is continuing, the
Administrative Agent may, upon the request of the Required Lenders or Infogrames
U.S., as the case may be, exercise on behalf of the Administrative Agent, the
Lenders and Infogrames U.S. all rights of a secured party under the UCC (whether
or not in effect in the jurisdiction where such rights are exercised) and, in
addition, the Administrative Agent may, upon the request of the Required
Lenders, or Infogrames U.S., as the case may be, (i) withdraw all cash, if any,
in the Collateral Account and investments made with amounts on deposit in the
Collateral Account, and apply such monies, investments and other cash, if any,
then held by it as Collateral as specified in Section 11 and (ii) if there shall
be no such monies, investments or cash or if such monies, investments or cash
shall be insufficient to pay the Obligations then outstanding in full, sell the
Collateral or any
<PAGE> 24
24
part thereof at public or private sale, for cash, upon credit or for future
delivery, and at such price or prices as the Administrative Agent may deem
satisfactory. The Administrative Agent, any Lender, Infogrames U.S. or any
Affiliate of any thereof may be the purchaser of any or all of the Collateral so
sold at any public sale (or, if the Collateral is of a type customarily sold in
a recognized market or is of a type which is the subject of widely distributed
standard price quotations or if otherwise permitted under applicable law, at any
private sale) and thereafter hold the same, absolutely, free from any right or
claim of whatsoever kind. Each Grantor will execute and deliver such documents
and take such other action as the Administrative Agent deems reasonably
necessary or advisable in order that any such sale may be made in compliance
with law. Upon any such sale the Administrative Agent shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral so sold
(without warranty). Each purchaser at any such sale shall hold the Collateral so
sold to it absolutely, free from any claim or right of whatsoever kind,
including any equity or right of redemption of any Grantor. To the extent
permitted by law, each Grantor hereby specifically waives all rights of
redemption, stay or appraisal which it has or may have under any law now
existing or hereafter adopted. The notice of such sale shall be given to the
Grantors ten (10) Business Days prior to such sale and (A) in case of a public
sale, state the time and place fixed for such sale, and (B) in the case of a
private sale, state the day after which sale may be consummated. Any such public
sale shall be held at such time or times within ordinary business hours and at
such place or places as the Administrative Agent may fix in the notice of such
sale. At any such sale the Collateral may be sold in one lot as an entirety or
in separate parcels, as the Administrative Agent may determine. The
Administrative Agent shall not be obligated to make any such sale pursuant to
any such notice. The Administrative Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the same may be so adjourned. In case
of any sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by the Administrative Agent
until the selling price is paid by the purchaser thereof, but the Administrative
Agent shall not incur any liability in case of the failure of such purchaser to
take up and pay for the Collateral so sold and, in case of any such failure,
such Collateral may again be sold upon like notice. The Administrative Agent,
instead of exercising the power of sale herein conferred upon it, may proceed by
a suit or suits at law or in equity to foreclose the Security Interests and sell
the Collateral, or any portion thereof, under a judgment or decree of a court or
courts of competent jurisdiction. The Grantors shall remain liable for any
deficiency.
(b) For the purpose of enforcing any and all rights and remedies
under this Agreement, the Administrative Agent may (i) require each Grantor to,
and each Grantor agrees that it will, at its expense and upon the request of the
Administrative Agent, forthwith assemble all or any part of the Collateral as
directed by the Administrative Agent and make it available at a place designated
by the Administrative Agent which is, in the Administrative Agent's opinion,
reasonably convenient to the Administrative Agent and such Grantor, whether at
the premises of such Grantor or otherwise, (ii) to the extent permitted by
applicable law, enter, with or without process of law and without breach of the
peace, any premises where any of the Collateral is or may be located and,
without charge or liability to the Administrative Agent, seize and remove such
Collateral from such premises, (iii) have access to and use such Grantor's books
and records
<PAGE> 25
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relating to the Collateral and (iv) prior to the disposition of the Collateral,
store or transfer such Collateral without charge in or by means of any storage
or transportation facility owned or leased by such Grantor, process, repair or
recondition such Collateral or otherwise prepare it for disposition in any
manner and to the extent the Administrative Agent deems appropriate.
SECTION 9. Limitation on Duty of Administrative Agent in Respect
of Collateral. The Administrative Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the UCC or otherwise, shall be to deal with it in the same
manner as the Administrative Agent deals with similar property for its own
account. None of the Administrative Agent, any Lender, Infogrames U.S. or any of
their respective officers, directors, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Grantor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part thereof.
The powers conferred on the Administrative Agent, the Lenders and Infogrames
U.S. hereunder are solely to protect the Security Interests in the Collateral
and shall not impose any duty upon the Administrative Agent, any Lender or
Infogrames U.S. to exercise any such powers. The Administrative Agent, the
Lenders and Infogrames U.S. shall be accountable only for amounts that they
actually receive as a result of the exercise of such powers, and neither they
nor any of their officers, directors, employees or agents shall be responsible
to any Grantor for any act or failure to act hereunder, except for their own
gross negligence or willful misconduct. The Administrative Agent shall not be
liable or responsible for any loss or damage to any of the Collateral, or for
any diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee or other agent or bailee
selected by the Administrative Agent in good faith.
SECTION 10. Priorities Regarding Collateral. (a) Notwithstanding
any statement or provision to the contrary contained in any Loan Document or any
Infogrames Bridge Loan Document, any failure to file or record any financing
statement or any continuations thereof under the UCC or other law of any
applicable jurisdiction with respect to the Collateral, and irrespective of the
time, place, order or method of attachment or perfection of any Lien granted to
the Administrative Agent, for the ratable benefit of the Lenders and the
Administrative Agent, under this Agreement or any other Loan Document or any
Lien granted to Infogrames U.S. under this Agreement or any other Infogrames
Bridge Loan Document, or the time or order of filing or recording of financing
statements or other notices of Liens granted pursuant hereto or thereto, and
irrespective of anything contained in any filing or agreement to which the
Borrower, any other Grantor, the Administrative Agent, the Lenders or Infogrames
U.S. may now or hereafter be a party, and irrespective of the ordinary rules of
priority under the UCC or under any other law governing the relative priorities
of secured creditors, any Lien in the Collateral granted by the Borrower or any
other Grantor to the Administrative Agent, for the ratable benefit of the
Lenders and the Administrative Agent, pursuant to this Agreement or any other
Loan Document shall at all times (whether before, after or during the pendency
of any bankruptcy, reorganization or other insolvency proceedings) have priority
over and be senior to any Lien in the Collateral granted by the Borrower or any
other Grantor to Infogrames U.S. pursuant to this Agreement or any other
Infogrames Bridge Loan Document.
<PAGE> 26
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(b) Without notice to or further assent by Infogrames U.S. and
without modifying or limiting in any way the subordination of the Liens granted
in the Collateral to Infogrames U.S. to secure the Bridge Obligations to the
Liens granted in the Collateral to the Administrative Agent, for the ratable
benefit of the Lenders and the Administrative Agent, to secure the Bank
Obligations:
(i) any demand for payment of any Bank Obligations made by the
Administrative Agent or the Lenders may be rescinded in whole or in part
by such Lenders, and any Bank Obligations may be continued, and the Bank
Obligations, or the liability of the Borrower or any other Grantor for
any part thereof, or any collateral security or guarantee therefor or
right of offset with respect thereto, or any obligation or liability of
the Borrower or any other Grantor with respect to such Bank Obligations
under the Credit Agreement or any other Loan Document may, from time to
time, in whole or in part, be renewed, extended, modified, accelerated,
compromised, waived, surrendered, or released by the Administrative
Agent, acting at the direction of the Lenders pursuant to the Credit
Agreement; and
(ii) the Credit Agreement and any other Loan Document may be
amended, modified, supplemented or terminated, in whole or in part, in
each case in respect of the Bank Obligations, and any Collateral may be
exchanged, waived, surrendered or released, in each case in respect of
the Bank Obligations.
(c) The terms of this Section 10 and the subordination of the
Liens granted in the Collateral to Infogrames U.S. pursuant to this Agreement to
secure the Bridge Obligations to the Liens granted in the Collateral to the
Administrative Agent, for the ratable benefit of the Lenders and the
Administrative Agent, to secure the Bank Obligations in the manner and to the
extent set forth herein, shall not be affected by any exercise of, or failure to
exercise, any right, power or remedy, or any waiver, consent release, increase,
extension, renewal, modification, delay or non-perfection under or in respect of
the Bank Obligations, this Agreement, the other Loan Documents, the Bridge
Obligations, the other Infogrames Bridge Loan Documents or the Collateral. The
Bank Obligations shall be deemed conclusively to have been created, contracted
or incurred in reliance upon this Agreement, and all dealings among the
Administrative Agent and the Lenders on the one hand, and Infogrames U.S. on the
other hand, shall be deemed to have been consummated in reliance upon this
Agreement.
SECTION 11. Application of Proceeds. In order to implement the
subordination established pursuant to this Agreement of the Liens securing the
Bridge Obligations to the Liens securing the Bank Obligations, and in order to
implement the agreement of the Administrative Agent, on behalf of the Lenders
and the Administrative Agent, and Infogrames U.S. with respect to the
application of the proceeds of the Collateral, the Administrative Agent,
Infogrames U.S. and each Grantor agree that upon the occurrence and during the
continuance of an Event of Default on or after the date of termination of the
Transaction Documentation, any money, property, securities or other
distributions received by any Grantor, the Administrative Agent, any Lender or
Infogrames U.S. from the sale, disposition or other realization upon all or any
part of
<PAGE> 27
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the Collateral shall be delivered to the Administrative Agent in the form
received, duly indorsed to the Administrative Agent, if required, and applied as
follows:
(a) First, to the payment in full of all reasonable costs and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements) paid or incurred by the Administrative Agent, or any
Lender, or paid or incurred by Infogrames U.S. at any time after the
Standstill Expiration Date, in connection with the realization on the
Collateral or the protection of the rights and interests of the
Administrative Agent, the Lenders or Infogrames U.S. therein, as the
case may be;
(b) Second, to the Administrative Agent, for the ratable benefit
of the Lenders and the Administrative Agent, until an aggregate of
$75,000,000 of the Bank Obligations have been paid in full, such amounts
to be applied to the Bank Obligations in accordance with Section 4.5 of
the Credit Agreement;
(c) Third, on a pro rata basis (based upon the then outstanding
aggregate amount of the Bank Obligations and the then outstanding
aggregate amount of the Bridge Obligations other than the Bridge
Obligations referenced in clause (d) below) to the Administrative Agent,
for the ratable benefit of the Lenders and the Administrative Agent
(such amounts to be applied to the Bank Obligations in accordance with
Section 4.5 of the Credit Agreement), and to Infogrames U.S. (for
application to the Bridge Obligations) until all of the Bank Obligations
and all such Bridge Obligations have been paid in full;
(d) Fourth, to Infogrames U.S. all Bridge Obligations
constituting obligations of the Borrower under the Infogrames Securities
Purchase Agreement to pay or reimburse Infogrames or Infogrames U.S. for
costs and expenses (including without limitation, reasonable fees and
disbursements of counsel to Infogrames or Infogrames U.S.) incurred or
paid by Infogrames or Infogrames U.S. in connection with the Infogrames
Securities Purchase Agreement other than any such costs and expenses
relating to the Infogrames Bridge Loan; and
(e) Fifth, after the indefeasible payment in full of the
Obligations, to the Borrower or the applicable Grantor, or its
representative or as a court of competent jurisdiction may direct, any
surplus then remaining.
SECTION 12. Standstill Period in Respect of Bridge Obligations.
(a) Notwithstanding anything to the contrary contained in this Agreement, any
other Loan Document or any other Infogrames Bridge Loan Document, Infogrames
U.S. agrees and acknowledges that prior to the earlier of September 30, 2000 or
the nine (9) month anniversary of the date upon which the Transaction
Documentation is terminated (such earlier date, the "Standstill Expiration
Date"):
(i) other than (A) the right to receive payment in full of the
Bridge Obligations on the Transaction Closing Date and (B) any right to
receive payments on account of the Bridge Obligations in accordance with
Section 11 (and the corresponding provisions of
<PAGE> 28
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the other Loan Documents and Infogrames Bridge Loan Documents),
Infogrames U.S. shall not, nor shall it seek to, exercise or enforce any
right or remedy under this Agreement, any other Infogrames Bridge Loan
Document or applicable law with respect to the Collateral or the Bridge
Obligations, including without limitation, any of the following: (1)
exercise any rights or remedies with respect to any Collateral; or (2)
seek to notify Account Debtors or other obligors of any security
interest in all or any of the Collateral; or (3) institute any action or
proceeding with respect to such rights or remedies with respect to any
Collateral, including without limitation, any action of foreclosure; or
(4) contest, protest or object to any exercise of rights or enforcement
of remedies by the Administrative Agent;
(ii) Infogrames U.S. will not interfere with, seek to enjoin or
invoke or utilize any provision of any document, law or equitable
principle which might prevent, delay or impede the enforcement (in the
discretion of the Administrative Agent, acting at the direction of the
Required Lenders) of the rights of the Administrative Agent under this
Agreement or any other Loan Document or applicable law with respect to
the Collateral, including without limitation, to pursue foreclosure or
to seek to lift the automatic stay in any bankruptcy, reorganization or
other insolvency proceedings involving the Borrower or any other
Grantor;
(iii) the Lenders shall have the sole right to consent to any
proposed sale or other disposition of the Collateral and to release any
or all of the Collateral from any Lien granted herein, whether such sale
or disposition is made by the Borrower or any other Grantor, whether at
private sale or pursuant to foreclosure, bankruptcy or other judicial or
non-judicial proceedings and regardless of whether the proceeds of any
such disposition would be sufficient to pay in full the Bank Obligations
and the Bridge Obligations, and upon any such sale or other disposition,
Infogrames U.S.'s junior Lien on the portion of the Collateral sold or
disposed of shall, subject to clause (i) above, be automatically
extinguished and discharged; and
(iv) in exercising rights and remedies with respect to the
Collateral, the Administrative Agent and the Lenders may enforce the
provisions of this Agreement and exercise remedies hereunder and under
any other Loan Document or applicable law (or refrain from enforcing
such rights and exercising such remedies), all in such order and in such
manner as they may determine in the exercise of their sole discretion,
and such exercise and enforcement of rights and remedies with respect to
the Collateral shall include, without limitation, the rights to collect,
sell, dispose of or otherwise realize upon all or any part of the
Collateral, to incur expenses in connection with such collection, sale,
disposition or other realization and to exercise all the rights and
remedies of a secured lender under the UCC of any applicable
jurisdiction.
(b) On and after the Standstill Expiration Date, the provisions
of Section 12(a) above shall no longer apply and Infogrames U.S. may at any time
after the occurrence and during the continuance of an Event of Default under,
and as defined in, the Infogrames Bridge Loan Documents, but subject to Section
11 with respect to the application of payments and proceeds in
<PAGE> 29
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respect of the Collateral, (a) exercise or enforce any right or remedy under
applicable law in respect of the Bridge Obligations and (b) instruct the
Administrative Agent to immediately commence the exercise of rights and remedies
under this Agreement in respect of the Collateral (and the manner in which to
commence such exercise of rights and remedies) unless the Administrative Agent
has already commenced the exercise thereof, provided that, subject to Infogrames
U.S.'s right to exercise any other rights and remedies under applicable law in
respect of the Bridge Obligations, and subject to Section 11 with respect to the
application of payments and proceeds in respect of the Collateral, the exercise
of rights and remedies with respect to the Collateral shall solely be exercised
by the Administrative Agent (acting at the direction of Infogrames U.S. if such
rights and remedies were not already exercised or being exercised by the
Administrative Agent as of the Standstill Expiration Date).
SECTION 13. Appointment of Administrative Agent as Agent for
Infogrames U.S. In order to further perfect and protect the Liens on the
Collateral granted to Infogrames U.S. pursuant to this Agreement to secure the
Bridge Obligations, Infogrames U.S. hereby authorizes and appoints the
Administrative Agent to hold on Infogrames U.S.'s behalf and as its agent all
Collateral granted hereunder for purposes of possession and control under the
UCC or other applicable law and to act on its behalf as otherwise set forth
herein. The Administrative Agent, for itself and its successors, hereby accepts
such authorization and appointment and Infogrames U.S. hereby releases the
Administrative Agent from any liability whatsoever (other than liability
resulting from the Administrative Agent's willful misconduct or gross
negligence) in connection with such authorization and appointment. This
authorization and appointment are a power coupled with an interest and are
irrevocable. It is understood and agreed that the Administrative Agent may also
hold Collateral for the benefit of the Lenders and the Administrative Agent.
SECTION 14. Termination of Bridge Obligations. Upon payment in
full of the Bridge Obligations on the Transaction Closing Date, all of the Liens
on the Collateral granted by the Borrower and any other Grantor to Infogrames
U.S. pursuant to this Agreement and the other Infogrames Bridge Loan Documents
to secure the Bridge Obligations shall be automatically terminated and released,
Infogrames U.S. shall cease to be a party to this Agreement and Infogrames U.S.
will, at the Administrative Agent's request and at the expense of the Borrower,
execute and deliver to the Administrative Agent such documents as the
Administrative Agent shall reasonably request to evidence the termination and
release of all such Liens on the Collateral.
SECTION 15. Concerning the Administrative Agent. The provisions
of Article XII of the Credit Agreement shall inure to the benefit of the
Administrative Agent in respect of this Agreement and shall be binding upon the
parties to the Credit Agreement in such respect. In furtherance and not in
derogation of the rights, privileges and immunities of the Administrative Agent
therein set forth:
(a) The Administrative Agent is authorized to take all such
action as is provided to be taken by it as Administrative Agent
hereunder and all other action incidental thereto. Subject to the
provisions of Section 12, as to any matters not expressly provided for
herein, the Administrative Agent may request instructions from the
Lenders and from Infogrames U.S. and shall act or refrain from acting in
accordance with written
<PAGE> 30
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instructions from the Required Lenders (or, when expressly required by
this Agreement or the Credit Agreement, all the Lenders) or Infogrames
U.S. or, in the absence of such instructions, in accordance with its
discretion.
(b) The Administrative Agent shall not be responsible for the
existence, genuineness or value of any of the Collateral or for the
validity, perfection, priority or enforceability of the Security
Interests, whether impaired by operation of law or by reason of any
action or omission to act on its part (other than any such action or
inaction constituting gross negligence or willful misconduct). The
Administrative Agent shall have no duty to ascertain or inquire as to
the performance or observance of any of the terms of this Agreement by
any Grantor.
SECTION 16. Appointment of Administrative Agent. At any time or
times, with, so long as no Default or Event of Default has occurred and is
continuing, the consent of the Grantors (which consent shall not be unreasonably
withheld), in order to comply with any legal requirement in any jurisdiction or
in order to effectuate any provision of the Loan Documents, the Administrative
Agent may appoint a bank or trust company or one or more other Persons, either
to act as collateral agent or agents, jointly with the Administrative Agent or
separately, on behalf of the Administrative Agent, the Lenders and Infogrames
U.S. with such power and authority as may be necessary for the effectual
operation of the provisions hereof and specified in the instrument of
appointment (which may, in the discretion of the Administrative Agent, include
provisions for the protection of such collateral agent similar to the provisions
of Section 15).
SECTION 17. Expenses. In the event that the Grantors fail to
comply with the provisions of the Credit Agreement, this Agreement, any other
Loan Document, the Infogrames Bridge Loan Note or any other Infogrames Bridge
Loan Document, such that the value of any Collateral or the validity,
perfection, rank or value of the Security Interests are thereby diminished or
potentially diminished or put at risk, the Administrative Agent if requested by
the Required Lenders may, but shall not be required to, effect such compliance
on behalf of the Grantors, and the Grantors shall reimburse the Administrative
Agent for the reasonable costs thereof on demand. All insurance expenses and all
reasonable expenses of protecting, storing, warehousing, appraising, insuring,
handling, maintaining and shipping the Collateral, any and all excise, stamp,
intangibles, transfer, property, sales, and use taxes imposed by any state,
federal, or local authority or any other Governmental Authority on any of the
Collateral, or in respect of the sale or other disposition thereof, shall be
borne and paid by the Grantors, and if the Grantors fail promptly to pay any
portion thereof when due, the Administrative Agent, any Lender or Infogrames
U.S. may, at its option, but shall not be required to, pay the same and, and in
the case of the Administrative Agent or any Lender, charge the Grantors' account
therefor, and the Grantors agree to reimburse the Administrative Agent, such
Lender or Infogrames U.S. therefor on demand. All sums so paid or incurred by
the Administrative Agent, any Lender or Infogrames U.S. for any of the foregoing
and any and all other sums for which the Grantors may become liable hereunder
and all reasonable costs and expenses (including reasonable attorneys' fees,
legal expenses and court costs) incurred by the Administrative Agent, any Lender
or Infogrames U.S. in enforcing or protecting the Security Interests or any of
their rights or remedies hereunder shall be payable by the Grantors on demand
and shall bear interest (after as well as before judgment)
<PAGE> 31
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until paid at the rate then applicable to Base Rate Loans under the Credit
Agreement or, in the case of Infogrames U.S., the rate applicable to loans
incurring interest based upon the Base Rate under, and as defined in, the
Infogrames Bridge Loan Note, and shall be additional Bank Obligations and Bridge
Obligations, respectively, hereunder.
SECTION 18. Notices. All notices and communications to the
Administrative Agent, a Lender or a Grantor shall be made in accordance with
Section 13.1 of the Credit Agreement and given to the addresses or transmission
numbers for notices set forth in the Credit Agreement, in the case of the
Administrative Agent or a Lender, or under its signature below, in the case of a
Grantor. All notices and communications to Infogrames U.S. shall be made in
accordance with the Infogrames Bridge Loan Note and given to the address or
transmission number for notices set forth therein.
SECTION 19. Release and Termination.
(a) Upon any sale, lease, transfer or other disposition of any
item of Collateral by any Grantor in accordance with the terms of the Loan
Documents (other than sales of Collateral in the ordinary course of business
consistent with past practices), the Administrative Agent and Infogrames U.S.
will, at such Grantor's expense, execute and deliver to such Grantor such
documents as such Grantor shall request to evidence the release of such item of
Collateral from the assignment and security interests granted hereby.
(b) This Agreement shall remain in effect from the date hereof
through and including the date upon which all Obligations shall have been
indefeasibly and irrevocably paid and satisfied in full and the Aggregate
Commitment is terminated and upon such date the Security Interests granted
hereby shall terminate and all rights to the Collateral shall revert to the
Grantors. Upon any such termination, (i) the Administrative Agent and Infogrames
U.S. shall promptly assign, release, transfer and deliver to the Grantors the
Collateral held by it hereunder, all instruments of assignment executed in
connection therewith, together with all monies held by the Administrative Agent,
Infogrames U.S. or any of their respective agents hereunder, free and clear of
the Liens hereof and (ii) the Administrative Agent, the Lenders and Infogrames
U.S. will promptly execute and deliver to the Grantors such documents and
instruments (including but not limited to appropriate UCC termination
statements) as the Grantors shall request to evidence such termination in each
such case at the expense of the Grantors.
SECTION 20. Waivers, Non-Exclusive Remedies. No failure on the
part of the Administrative Agent, any Lender or Infogrames U.S. to exercise, and
no delay in exercising and no course of dealing with respect to, any right under
the Credit Agreement, this Agreement, any other Loan Document, the Infogrames
Bridge Loan Note or any other Infogrames Bridge Loan Document shall operate as a
waiver thereof or hereof; nor shall any single or partial exercise by the
Administrative Agent, any Lender or Infogrames U.S. of any right under the
Credit Agreement, this Agreement, any other Loan Document, the Infogrames Bridge
Loan Note or any other Infogrames Bridge Loan Documents preclude any other or
further exercise thereof, and the exercise of any rights under this Agreement,
the Credit Agreement, the other Loan Documents, the Infogrames Bridge Loan Note
or any other Infogrames Bridge Loan Document are cumulative and are not
exclusive of any other remedies provided by law. This Agreement is (a) a Loan
<PAGE> 32
32
Document executed pursuant to the Credit Agreement and (b) an Infogrames Bridge
Loan Document executed pursuant to the Infogrames Bridge Loan Note.
SECTION 21. Successors and Assigns. This Agreement is for the
benefit of the Administrative Agent, the Lenders, and Infogrames U.S. and their
successors and assigns (as permitted by the Credit Agreement and the Infogrames
Bridge Loan Note, as the case may be), and in the event of an assignment of all
or any of the Obligations, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This
Agreement shall be binding on the Grantors and their successors and assigns;
provided, that the Grantors may not assign any of their rights or obligations
hereunder without the prior written consent of the Administrative Agent, the
Lenders and Infogrames U.S..
SECTION 22. Changes in Writing. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by the Grantors, and the Administrative Agent with the
consent of the Required Lenders (or, when expressly required by this Agreement
or the Credit Agreement, all of the Lenders) and, to the extent affecting the
Security Interests in favor of Infogrames U.S., Infogrames U.S.
SECTION 23. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 24. Consent to Jurisdiction. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement, the other Loan Documents, the
other Infogrames Bridge Loan Note and the other Infogrames Bridge Loan
Documents to which it is a party, or for recognition and enforcement of
any judgement in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have
to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Grantor at its address set forth under its signature
below;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
<PAGE> 33
33
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
SECTION 25. Waiver of Jury Trial. EACH GRANTOR HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY OTHER INFOGRAMES
BRIDGE LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 26. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Administrative
Agent, the Lenders and Infogrames U.S. in order to carry out the intentions of
the parties hereto as nearly as may be possible; and (b) the invalidity or
unenforceability of any provisions hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.
SECTION 27. Headings. The various headings of this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any provisions hereof.
SECTION 28. Counterparts. This Agreement may be executed by the
parties hereto in several counterparts (including by telecopy), each of which
shall be deemed to be an original and all of which shall constitute together but
one and the same agreement.
[Signature Pages Follow]
<PAGE> 34
IN WITNESS WHEREOF, each party hereto has caused this Agreement
to be duly executed and delivered by its duly authorized officer as of the date
first above written.
GT INTERACTIVE SOFTWARE CORP.
By:_____________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO
Telephone: 212-726-6500
Telecopy: 212-726-6590
HUMONGOUS ENTERTAINMENT, INC.
By:_____________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
<PAGE> 35
WIZARDWORKS GROUP, INC.
By:_____________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
SINGLETRAC ENTERTAINMENT
TECHNOLOGIES, INC.
By:_____________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
<PAGE> 36
SWAN ACQUISITION CORP.
By:_____________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
CANDEL INC.
By:_____________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
<PAGE> 37
FORMGEN, INC.
By:_____________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
GOLD MEDALLION SOFTWARE INC.
By:_____________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
<PAGE> 38
MEDIATECHNICS, LTD.
By:_____________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
LEGEND ENTERTAINMENT COMPANY LLC
By:_____________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
<PAGE> 39
FIRST UNION NATIONAL BANK, as
Administrative Agent
By:_____________________________________________
Name:
Title:
<PAGE> 40
CALIFORNIA U.S. HOLDINGS, INC.
By:_____________________________________________
Name:
Title:
<PAGE> 41
Schedule 1 to Second Amended and
Restated Security Agreement
CONTRACTS
<PAGE> 42
Schedule 2 to Second Amended and
Restated Security Agreement
COPYRIGHTS AND COPYRIGHT LICENSES
PATENTS AND PATENT LICENCES
TRADEMARKS AND TRADEMARK LICENSES
<PAGE> 43
Schedule 3 to Second Amended and
Restated Security Agreement
DEPOSIT ACCOUNTS
<PAGE> 44
Exhibit A to Second Amended and
Restated Security Agreement
FORM OF PERFECTION CERTIFICATE
Reference is made to that certain Second Amended and Restated
Security Agreement dated as of November 15, 1999, by and among GT Interactive
Software Corp. (the "Borrower"), certain of the Borrower's subsidiaries
identified on the signature pages thereto (together with the Borrower and each
additional subsidiary who executes a Joinder Agreement, the "Grantors"), First
Union National Bank, as Administrative Agent (the "Administrative Agent"), for
the ratable benefit of the Administrative Agent and the financial institutions
who are, or may from time to time become, parties to the Credit Agreement
referred to below (collectively, the "Lenders"), and California U.S. Holdings,
Inc. ("Infogrames U.S."), a California corporation and wholly-owned Subsidiary
of Infogrames Entertainment SA, a societe anonyme organized under the laws of
France. Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Credit Agreement dated as of September 11,
1998, by and among the Borrower, the Lenders and the Administrative Agent (as
amended, restated, supplemented or otherwise modified, the "Credit Agreement").
[Grantor] hereby certifies to the Administrative Agent, each
Lender and Infogrames U.S. as follows:
1. Names, etc.
(a) The exact name of [Grantor] as it appears in its Certificate
of Incorporation is as follows:
[Grantor]
(b) [Except as set forth in Schedule 1 attached hereto,]
[Grantor] has not changed its identity or corporate structure in any way within
the past five years.
(c) The following is a list of all other names (including trade
names or similar appellations) used by [Grantor] or any of its divisions or
other business units at any time during the past five years:
[Insert]
(d) The taxpayer identification number of [Grantor] is as
follows:
[Insert]
<PAGE> 45
2. Current Locations
(a) The chief executive office of [Grantor] is located at the
following address:
<TABLE>
<CAPTION>
Mailing Address County State
- --------------- ------ -----
<S> <C> <C>
[Insert]
</TABLE>
(b) The following are the only locations at which [Grantor]
maintains any books or records relating to any Accounts:
<TABLE>
<CAPTION>
Mailing Address County State
- --------------- ------ -----
<S> <C> <C>
[Insert]
</TABLE>
(c) The following are all the locations not identified above
where [Grantor] maintains any Inventory or Equipment:
<TABLE>
<CAPTION>
Mailing Address County State
- --------------- ------ -----
<S> <C> <C>
[Insert]
</TABLE>
3. Unusual Transactions. All Accounts have been originated by
[Grantor] and all Inventory has been acquired by [Grantor] in the ordinary
course of business.
4. Reliance. The undersigned acknowledges on behalf of [Grantor]
that the Administrative Agent, the Lenders and Infogrames U.S. are entitled to
rely, and have, in fact, relied on the information contained herein, and any
permitted successor or assign of the Administrative Agent, the Lenders or
Infogrames U.S. is entitled to rely on the information contained herein.
IN WITNESS WHEREOF, the undersigned on behalf of [Grantor] has
executed this Perfection Certificate, this day of November, 1999.
[GRANTOR]
By:_________________________________
Name:
Title:
<PAGE> 46
ANNEX I
(to Second Amended and Restated Security Agreement)
[FORM OF LOCKBOX LETTER]
___________, ____
[Name and Address of Lockbox Bank]
Re: [CORPORATION]
Ladies and Gentlemen:
We hereby notify you that effective __________, ____, we have
transferred exclusive ownership and control of our lockbox account(s) no[s].
_______________ (the "Lockbox Account[s]") maintained with you under the terms
of the [Lockbox Agreement] attached hereto as Exhibit A (the "Lockbox
Agreement[s]") to [First Union National Bank], as Administrative Agent (the
"Administrative Agent").
We hereby irrevocably instruct you to make all payments to be
made by you out of or in connection with the Lockbox Account(s) (i) to the
Administrative Agent for credit to account no. ________ maintained by it at its
office at _________________ at or (ii) as you may otherwise be instructed by the
Administrative Agent.
We also hereby notify you that the Administrative Agent shall be
irrevocably entitled to exercise any and all rights in respect of or in
connection with the Lockbox Account(s), including, without limitation, the right
to specify when payments are to be made out of or in connection with the Lockbox
Account(s).
All funds deposited into the Lockbox Account(s) will not be
subject to deduction, set-off, banker's lien or any other right in favor of any
other person than the Administrative Agent, except that you may set-off against
the Lockbox Account(s) the face amount of any check deposited in and credited to
such Lockbox Account(s) which is subsequently returned for any reason. Your
compensation for providing the service contemplated herein shall be mutually
agreed between you and us from time to time and we will continue to pay such
compensation.
A-1
<PAGE> 47
Please confirm your acknowledgment of and agreement to the
foregoing instructions by signing in the space provided below
Very truly yours,
By:________________________________
Name:
Title:
Acknowledged and agreed
to as of this ____ day
of ___________, ____.
[LOCKBOX BANK]
By:___________________________
Name:
Title:
A-2
<PAGE> 1
Exhibit 15
AMENDED AND RESTATED UNCONDITIONAL
SUBSIDIARY GUARANTY AGREEMENT
THIS AMENDED AND RESTATED UNCONDITIONAL SUBSIDIARY GUARANTY
AGREEMENT (as amended, restated, supplemented or otherwise modified, this
"Guaranty"), dated as of November 15, 1999, is made by the subsidiaries of GT
Interactive Software Corp. (the "Borrower") identified on the signature pages
attached hereto (together with each additional subsidiary who becomes party
hereto pursuant to a Joinder Agreement, the "Guarantors", each individually, a
"Guarantor"), in favor of First Union National Bank, a national banking
association, as administrative agent (the "Administrative Agent"), for the
ratable benefit of the Administrative Agent and the financial institutions who
are or may from time to time become parties to the Credit Agreement referred to
below (the "Lenders"), and California U.S. Holdings, Inc. ("Infogrames U.S.") a
wholly-owned Subsidiary of Infogrames Entertainment, SA, a societe anonyme
organized under the laws of France.
STATEMENT OF PURPOSE
Pursuant to the terms of the Credit Agreement, dated as of
September 11, 1998 (as amended, restated, supplemented or otherwise modified,
the "Credit Agreement"), by and among the Borrower, the Lenders and the
Administrative Agent, the Lenders agreed to make certain Extensions of Credit to
the Borrower as more particularly described therein.
In connection with the execution and delivery of the Second
Amendment, Waiver and Agreement, dated as of June 29, 1999, under the Credit
Agreement, the Guarantors executed and delivered in favor of the Administrative
Agent, for the benefit of the Lenders and the Administrative Agent, an
Unconditional Subsidiary Guaranty Agreement, dated as of June 29, 1999 (as
heretofore amended, restated, supplemented or otherwise modified, the "Existing
Guaranty Agreement"), pursuant to which the Guarantors guaranteed the
Obligations (as defined in the Existing Guaranty Agreement) of the Borrower
under the Credit Agreement and the other Loan Documents.
The Borrower has advised the Administrative Agent and the
Lenders that Infogrames U.S. has agreed to provide a term loan to the Borrower
in the original principal amount of $25,000,000 (the "Infogrames Bridge Loan"),
as evidenced by, and pursuant to the provisions of, a term note, dated November
15, 1999 (the "Infogrames Bridge Loan Note"), by the Borrower in favor of
Infogrames U.S., to be guaranteed by the Guarantors and secured by security
interests in substantially all of the assets of the Borrower and the Guarantors,
which security interests shall be junior and subordinate to the security
interests granted in the Collateral (as defined in the Security Agreement and
the Pledge Agreement) to the Administrative Agent, for the ratable benefit of
the Lenders and the Administrative Agent.
In connection with, among other things, the incurrence of the
Infogrames Bridge Loan and the execution and delivery of the Infogrames Bridge
Loan Note, the Borrower, the Lenders and the Administrative Agent have agreed to
execute a Third Amendment, Consent, Waiver and Agreement, dated as of November
15, 1999 (the "Third Amendment"), under the
<PAGE> 2
2
Credit Agreement to, among other things, amend and waive certain provisions
thereof and consent to the incurrence of the Infogrames Bridge Loan and the
grant of the security interests in favor of Infogrames U.S. as set forth above.
The Borrower and each of the Guarantors are members of an
affiliated group of corporations and are engaged in related businesses. The
proceeds of the Loans and the Infogrames Bridge Loan will be used in part to
make valuable transfers to each Guarantor and will inure, directly or
indirectly, to the benefit of each of the Guarantors.
In connection with the transactions contemplated by the Third
Amendment and the Infogrames Bridge Loan Note and as a condition precedent
thereto, the Borrower and Infogrames U.S. have requested that the Existing
Guaranty Agreement be amended and restated and that each Guarantor execute and
deliver this Guaranty to the Administrative Agent, for the ratable benefit of
the Administrative Agent and the Lenders, and to Infogrames U.S., and each of
the Guarantors has agreed to do so pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the foregoing premises,
and to induce (i) the Administrative Agent and the Lenders to enter into the
Third Amendment and (ii) Infogrames U.S. to make the Infogrames Bridge Loan,
each of the parties hereto hereby agrees as follows:
SECTION 1. Definitions. Unless otherwise defined herein, terms
which are defined in the Credit Agreement and used herein are so used as so
defined, and the following term shall have the following meaning:
"Bank Obligations" means the Borrower's obligations under the
Loan Documents in respect of the unpaid principal of and interest on
the Notes (including, without limitation, interest accruing at the then
applicable rates provided in the Credit Agreement after the maturity of
the Loans and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) and all other
obligations and liabilities of the Borrower to the Administrative
Agent, the Issuing Lender and the Lenders in respect of the Loans, the
Notes, the Letters of Credit, the L/C Obligations, any Hedging
Agreements permitted or required under the Credit Agreement, the
Concentration Account or any cash management arrangements with any
Lender, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Credit Agreement, the Notes,
the other Loan Documents, the Letters of Credit, the L/C Obligations,
any Hedging Agreements permitted or required under the Credit
Agreement, or any other document made, delivered or given in connection
herewith in respect of the Bank Obligations or therewith, in each case
whether on account of principal, interest, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent, the Issuing
Lender or the Lenders that are required to be paid by the Borrower
pursuant to the terms of the Credit Agreement or any other Loan
Document).
<PAGE> 3
3
"Borrower Obligations" means, collectively the Bank
Obligations and the Bridge Obligations.
"Bridge Obligations" means the Borrower's obligations under
the Infogrames Bridge Loan Documents in respect of the unpaid principal
of and interest on the Infogrames Bridge Loan Note (including, without
limitation, interest accruing at the then applicable rate provided in
the Infogrames Bridge Loan Note after the maturity of the Infogrames
Bridge Loan and interest accruing at the then applicable rate provided
in the Infogrames Bridge Loan Note after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
and all other obligations and liabilities of the Borrower to Infogrames
U.S. in respect of the Infogrames Bridge Loan or the Infogrames Bridge
Loan Note, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Infogrames Bridge Loan Note
or the other Infogrames Bridge Loan Documents, in each case whether on
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without
limitation, (a) the obligations of the Borrower under the Infogrames
Securities Purchase Agreement to pay or reimburse Infogrames or
Infogrames U.S. for costs and expenses (including without limitation,
reasonable fees and disbursements of counsel to Infogrames or
Infogrames U.S.) incurred or paid by Infogrames or Infogrames U.S. in
connection with the Infogrames Securities Purchase Agreement and (b)
all reasonable fees and disbursements of counsel to Infogrames U.S.
that are required to be paid by the Borrower pursuant to the terms of
the Infogrames Bridge Loan Note or any other Infogrames Bridge Loan
Document).
"Event of Default" means an Event of Default under, and as
defined in, the Credit Agreement or the Infogrames Bridge Loan Note.
"Infogrames Bridge Loan Documents" means the Infogrames Bridge
Loan Note, the Pledge Agreement, the Security Agreement and this
Guaranty.
"Standstill Expiration Date" shall have the meaning assigned
thereto in Section 16.
SECTION 2. Guaranty of Obligations of Borrower. Each Guarantor
hereby, jointly and severally with the other Guarantors, unconditionally
guarantees to the Administrative Agent, for the ratable benefit of the
Administrative Agent and the Lenders, and to Infogrames U.S. and their
respective permitted successors, endorsees, transferees and assigns, the prompt
payment of all Borrower Obligations when due, whether primary or secondary
(whether by way of endorsement or otherwise), whether now existing or hereafter
arising, whether or not from time to time reduced or extinguished (except by
payment thereof) or hereafter increased or incurred, whether enforceable or
unenforceable as against the Borrower, whether or not discharged, stayed or
otherwise affected by any bankruptcy, insolvency or other similar law or
proceeding, whether created directly with Infogrames U.S., the Administrative
Agent or any Lender or acquired by Infogrames U.S., the Administrative Agent or
any Lender through assignment or endorsement, whether matured or unmatured,
whether joint or several, as and when the same become due and payable (whether
at maturity or earlier, by reason of acceleration,
<PAGE> 4
4
mandatory repayment or otherwise), in accordance with the terms of any such
instruments evidencing any such obligations, including all renewals, extensions
or modifications thereof (all Borrower Obligations, including all of the
foregoing, being hereinafter collectively referred to as the "Guaranteed
Obligations"); provided, that notwithstanding anything to the contrary contained
herein, it is the intention of each Guarantor, the Lenders and Infogrames U.S.
that in any proceeding involving the bankruptcy, reorganization, arrangement,
adjustment of debts, relief of debtors, dissolution or insolvency or any similar
proceeding with respect to any Guarantor or its assets, the amount of such
Guarantor's obligations with respect to the Guaranteed Obligations shall be in,
but not in excess of, the maximum amount thereof not subject to avoidance or
recovery by operation of applicable law governing bankruptcy, reorganization,
arrangement, adjustment of debts, relief of debtors, dissolution, insolvency,
fraudulent transfers or conveyances or other similar laws (including, without
limitation, 11 U.S.C. Section 547, Section 548, Section 550 and other
"avoidance" provisions of Title 11 of the United States Code) applicable in any
such proceeding to such Guarantor and this Guaranty (collectively, "Applicable
Insolvency Laws"). To that end, but only in the event and to the extent that
such Guarantor's obligations with respect to the Guaranteed Obligations or any
payment made pursuant to the Guaranteed Obligations would, but for the operation
of the foregoing proviso, be subject to avoidance or recovery in any such
proceeding under Applicable Insolvency Laws, the amount of such Guarantor's
obligations with respect to the Guaranteed Obligations shall be limited to the
largest amount which, after giving effect thereto, would not, under Applicable
Insolvency Laws, render such Guarantor's obligations with respect to such
Guaranteed Obligations unenforceable or avoidable or otherwise subject to
recovery under Applicable Insolvency Laws. To the extent any payment actually
made pursuant to the Guaranteed Obligations exceeds the limitation of the
foregoing proviso and is otherwise subject to avoidance and recovery in any such
proceeding under Applicable Insolvency Laws, the amount subject to avoidance
shall in all events be limited to the amount by which such actual payment
exceeds such limitation and the Guaranteed Obligations as limited by the
foregoing proviso shall in all events remain in full force and effect and be
fully enforceable against such Guarantor. The foregoing proviso is intended
solely to preserve the rights of the Administrative Agent, the Lenders and
Infogrames U.S. hereunder against such Guarantor in such proceeding to the
maximum extent permitted by Applicable Insolvency Laws, and the foregoing
proviso does not constitute nor shall it be construed as an acknowledgment that
such Guarantor, any other Loan Party, or any other guarantor or any other Person
has or shall have any right or claim under Applicable Insolvency Laws in such
proceeding.
SECTION 3. Nature of Guaranty. Each Guarantor agrees that this
Guaranty is a continuing, unconditional guaranty of payment and performance and
not of collection, and that its obligations under this Guaranty shall be
primary, absolute and unconditional, irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability or
any future amendment of, or change in, the Credit Agreement, any other
Loan Document, the Infogrames Bridge Loan Note, any other Infogrames
Bridge Loan Document or any other agreement, document or instrument to
which the Borrower or any Subsidiary thereof is or may become a party;
(b) the absence of any action to enforce this Guaranty, the
Credit Agreement, any other Loan Document, the Infogrames Bridge Loan
Note, any other Infogrames Bridge
<PAGE> 5
5
Loan Document or the waiver or consent by the Administrative Agent, any
Lender or Infogrames U.S. with respect to any of the provisions of this
Guaranty, the Credit Agreement, any other Loan Document, the Infogrames
Bridge Loan Note or any other Infogrames Bridge Loan Document, as
applicable;
(c) the existence, value or condition of, or failure to
perfect any Lien against, any security for or other guaranty of the
Guaranteed Obligations or any action, or the absence of any action, by
the Administrative Agent, any Lender or Infogrames U.S. in respect of
such security or guaranty (including, without limitation, the release
of any such security or guaranty); or
(d) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or
guarantor;
it being agreed by each Guarantor that, subject to the proviso in Section 2
hereof, its obligations under this Guaranty shall not be discharged until the
final indefeasible payment and performance, in full, of the Guaranteed
Obligations owing hereunder and the termination of the Aggregate Commitment. To
the extent permitted by law, each Guarantor expressly waives all rights it may
now or in the future have under any statute, or at law or in equity, or
otherwise, to compel the Administrative Agent, any Lender or Infogrames U.S. to
proceed in respect of the Guaranteed Obligations against the Borrower or any
other party or against any security for or other guaranty of the payment and
performance of the Guaranteed Obligations before proceeding against, or as a
condition to proceeding against, such Guarantor. To the extent permitted by law,
each Guarantor further expressly waives and agrees not to assert or take
advantage of any defense based upon the failure of the Administrative Agent, any
Lender or Infogrames U.S. to commence an action in respect of the Guaranteed
Obligations against the Borrower, such Guarantor, any other guarantor or any
other party or any security for the payment and performance of the Guaranteed
Obligations. Each Guarantor agrees that any notice or directive given at any
time to the Administrative Agent, any Lender or Infogrames U.S. which is
inconsistent with the waivers in the preceding two sentences shall be null and
void and may be ignored by the Administrative Agent, such Lender or Infogrames
U.S., and, in addition, may not be pleaded or introduced as evidence in any
litigation relating to this Guaranty for the reason that such pleading or
introduction would be at variance with the written terms of this Guaranty,
unless the Administrative Agent, and the Required Lenders (in the case of
Guaranteed Obligations in respect of the Bank Obligations) and Infogrames U.S.
(in the case of Guaranteed Obligations in respect of the Bridge Obligations)
have specifically agreed otherwise in writing. The foregoing waivers are of the
essence of the transactions contemplated by the Loan Documents and the
Infogrames Bridge Loan Documents and, but for this Guaranty and such waivers,
the Administrative Agent and the Lenders would decline to enter into the Loan
Documents and Infogrames U.S. would decline to enter into the Infogrames Bridge
Loan Documents.
SECTION 4. Demand by the Administrative Agent or Infogrames
U.S. In addition to the terms set forth in Section 3, and in no manner imposing
any limitation on such terms, if all or any portion of the then outstanding
Guaranteed Obligations under the Loan Documents or the Infogrames Bridge Loan
Documents become, or are declared to be immediately, due and payable in
accordance therewith, then the Guarantors shall, upon demand in writing therefor
by the Administrative Agent (in the case of Guaranteed Obligations in respect of
<PAGE> 6
6
the Bank Obligations) or, subject to Section 15, Infogrames U.S. (in the
case of Guaranteed Obligations in respect of the Bridge Obligations), to the
Guarantors pay, the outstanding Guaranteed Obligations then due and payable (or
declared due and payable) in accordance therewith. Payment by the Guarantors
shall be made to the Administrative Agent, to be credited and applied upon the
Guaranteed Obligations in accordance with Section 14, in immediately available
funds to an account designated by the Administrative Agent or at the address
referenced herein for the giving of notice to the Administrative Agent or at any
other address that may be specified in writing from time to time by the
Administrative Agent.
SECTION 5. Waivers. In addition to the waivers contained in
Section 3, each Guarantor, to the extent permitted by law, waives and agrees
that it shall not at any time insist upon, plead or in any manner whatever claim
or take the benefit or advantage of, any appraisal, valuation, stay, extension,
marshalling of assets or redemption laws, or exemption, whether now or at any
time hereafter in force, which may delay, prevent or otherwise affect the
performance by such Guarantor of its obligations under, or the enforcement by
the Administrative Agent, the Lenders or Infogrames U.S. of, this Guaranty. Each
Guarantor further hereby waives, to the extent permitted by Applicable Law,
diligence, presentment, demand, protest and notice (except as specifically
required herein) of whatever kind or nature with respect to any of the
Guaranteed Obligations and waives, to the extent permitted by Applicable Law,
the benefit of all provisions of law which are or might be in conflict with the
terms of this Guaranty. Each Guarantor represents, warrants and agrees that its
obligations under this Guaranty are not and shall not be subject to any
counterclaims, offsets or defenses of any kind against the Administrative Agent,
the Lenders, Infogrames U.S. (subject to Section 15) or the Borrower whether now
existing or which may arise in the future.
SECTION 6. Benefits of Guaranty. The provisions of this
Guaranty are for the benefit of the Administrative Agent, the Lenders and
Infogrames U.S. and their respective permitted successors, transferees,
endorsees and assigns, and nothing herein contained shall impair, as between the
Borrower, the Administrative Agent, the Lenders and Infogrames U.S., the
obligations of the Borrower under the Loan Documents or the Infogrames Bridge
Loan Documents, as applicable. In the event all or any part of the Guaranteed
Obligations are transferred, endorsed or assigned by the Administrative Agent or
any Lender (in the case of Guaranteed Obligations in respect of the Bank
Obligations) or Infogrames U.S. (in the case of Guaranteed Obligations in
respect of the Bridge Obligations) to any Person or Persons as permitted under
the Loan Documents or the Infogrames Bridge Loan Documents, as applicable, any
reference to an "Administrative Agent" or "Lender" or to "Infogrames U.S."
herein shall be deemed to refer equally to such Person or Persons.
SECTION 7. Modification of Loan Documents etc. If the
Administrative Agent, the Lenders or Infogrames U.S. shall at any time or from
time to time, with or without the consent of, or notice to, the Guarantors:
(a) change or extend the manner, place or terms of payment of,
or renew or alter all or any portion of, the Guaranteed Obligations, as
applicable;
(b) take any action under or in respect of the Loan Documents
or the Infogrames Bridge Loan Documents, as applicable, in the exercise
of any remedy, power or privilege
<PAGE> 7
7
contained therein or available to it at law, in equity or otherwise, or
waive or refrain from exercising any such remedies, powers or
privileges;
(c) amend or modify, in any manner whatsoever, the Loan
Documents or the Infogrames Bridge Loan Documents, as applicable;
(d) extend or waive the time for performance by any Guarantor,
any other guarantor, the Borrower or any other Person of, or compliance
with, any term, covenant or agreement on its part to be performed or
observed under a Loan Document or a Infogrames Bridge Loan Document, as
applicable or waive such performance or compliance or consent to a
failure of, or departure from, such performance or compliance;
(e) take and hold security or collateral for the payment of
the Guaranteed Obligations, as applicable, or sell, exchange, release,
dispose of, or otherwise deal with, any property pledged, mortgaged or
conveyed, or in which the Administrative Agent, the Lenders or
Infogrames U.S. have been granted a Lien, to secure any Debt of any
Guarantor, any other guarantor or the Borrower to the Administrative
Agent, the Lenders or Infogrames U.S.;
(f) release anyone who may be liable in any manner for the
payment of any amounts owed by any Guarantor, any other guarantor or
the Borrower to the Administrative Agent, any Lender or Infogrames
U.S.;
(g) modify or terminate the terms of any intercreditor or
subordination agreement pursuant to which claims of other creditors of
any Guarantor, any other guarantor or the Borrower are subordinated to
the claims of the Administrative Agent, any Lender or Infogrames U.S.;
or
(h) apply any sums by whomever paid or however realized to any
Guaranteed Obligations owing by any Guarantor, any other guarantor or
the Borrower to the Administrative Agent, any Lender or Infogrames
U.S., as applicable, in such manner as the Administrative Agent, any
Lender or Infogrames U.S. shall determine in its reasonable discretion;
then none of the Administrative Agent, any Lender or Infogrames U.S. shall incur
any liability to any Guarantor as a result thereof, and no such action shall
impair or release the obligations of any Guarantor under this Guaranty.
SECTION 8. Reinstatement. Each Guarantor agrees that, if any
payment made by the Borrower or any other Person and applied to the Borrower
Obligations is at any time annulled, set aside, rescinded, invalidated, declared
to be fraudulent or preferential or otherwise required to be refunded or repaid
or the proceeds of any collateral are required to be refunded by the
Administrative Agent, any Lender or Infogrames U.S. to the Borrower, its estate,
trustee, receiver or any other party, including, without limitation, any
Guarantor, under any Applicable Law or equitable cause, then, to the extent of
such payment or repayment, each Guarantor's liability hereunder (and any Liens
securing such liability) shall be and remain in full force and effect, as fully
as if such payment had never been made, and, if prior thereto, this Guaranty
shall
<PAGE> 8
8
have been canceled or surrendered (and if any Liens securing such Guarantor's
liability hereunder shall have been released or terminated by virtue of such
cancellation or surrender), this Guaranty (and such Liens) shall be reinstated
in full force and effect, and such prior cancellation or surrender shall not
diminish, release, discharge, impair or otherwise affect the obligations of such
Guarantor (and such Liens) in respect of the amount of such payment.
SECTION 9. Representations and Warranties. To induce the
Administrative Agent and the Lenders to make Extensions of Credit and to enter
into the Third Amendment, and to induce Infogrames U.S. to extend credit
pursuant to the Infogrames Bridge Loan Note, each Guarantor hereby represents
and warrants to the Administrative Agent, the Lenders and Infogrames U.S. that:
(a) such Guarantor is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to execute,
deliver and perform this Guaranty and has taken all necessary corporate
action to authorize its execution, delivery and performance of this
Guaranty;
(b) this Guaranty constitutes the legal, valid and binding
obligation of such Guarantor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable
remedies;
(c) the execution, delivery and performance of this Guaranty
will not violate any material provision of any Applicable Law relating
to the Guarantor or any provision of any Material Contract to which
such Guarantor is a party, the violation of which could reasonably be
expected to have a Material Adverse Effect, and will not result in the
creation or imposition of any Lien upon or with respect to any property
or revenues of such Guarantor;
(d) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or Governmental Authority and no
consent of any other Person (including, without limitation, any
stockholder or creditor of such Guarantor), is required in connection
with the execution, delivery, performance, validity or enforceability
of this Guaranty except where its failure to obtain or make such
consent, authorization or filing would not be expected to have a
Material Adverse Effect;
(e) no actions, suits or proceedings before any arbitrator or
Governmental Authority are pending or, to the knowledge of such
Guarantor, threatened by or against such Guarantor or against any of
its properties in each case with respect to this Guaranty or any of the
transactions contemplated hereby;
(f) such Guarantor has good and valid title to the real
property owned by it and a valid leasehold interest in the real
property leased by it, and has good and valid title to all of its
personal property sufficient to carry on its business as currently
conducted free of any and all Liens of any type whatsoever, except
those permitted by Section 10.3 of the Credit Agreement; and
<PAGE> 9
9
(g) as of the date hereof, such Guarantor (i) has capital
sufficient to carry on its business as currently conducted and is able
to pay its debts as they mature and become due, and (ii) owns property
having a value, both at fair valuation and at present fair saleable
value greater than the amount required to pay its probable liabilities
(including contingencies).
SECTION 10. Covenants. Each Guarantor hereby covenants and
agrees with the Administrative Agent, the Lenders and Infogrames U.S. that until
payment in full of the Borrower Obligations and termination of the Aggregate
Commitment, each Guarantor shall not take, and shall refrain from taking, any
action that would result in a violation of any of the covenants contained in
Articles VIII, IX and X of the Credit Agreement.
SECTION 11. Remedies. Upon the occurrence and during the
continuance of any Event of Default (a) with the consent of the Required
Lenders, the Administrative Agent may, or upon the request of the Required
Lenders, the Administrative Agent shall and (b) Infogrames U.S. may, subject to
Section 15, enforce against the Guarantors their respective obligations and
liabilities hereunder and exercise such other rights and remedies as may be
available to the Administrative Agent or Infogrames U.S. hereunder, under the
Loan Documents or the Infogrames Bridge Loan Documents, as applicable, or
Applicable Law.
SECTION 12. Right of Set Off. Each Guarantor hereby
irrevocably authorizes the Administrative Agent, each Lender and, subject to
Section 15, Infogrames U.S. at any time and from time to time without notice to
such Guarantor or any other Guarantor, any such notice being expressly waived by
each Guarantor, upon the occurrence and continuance of an Event of Default, to
set off and appropriate and apply any and all deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Administrative Agent, such Lender or Infogrames U.S. to or for the
credit or the account of such Guarantor, or any part thereof in such amounts as
the Administrative Agent, such Lender or Infogrames U.S., as the case may be,
may elect, against or on account of the obligations and liabilities of such
Guarantor to the Administrative Agent, the Lenders or Infogrames U.S. hereunder
and claims of every nature and description of the Administrative Agent, the
Lenders and Infogrames U.S. against such Guarantor, in any currency, whether
arising hereunder, under the Credit Agreement, any other Loan Document, the
Infogrames Bridge Loan Note or any other Infogrames Bridge Loan Document, as the
Administrative Agent, any such Lender or Infogrames U.S., as the case may be,
may elect, whether or not the Administrative Agent, such Lender or Infogrames
U.S., as the case may be, has made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. The
Administrative Agent, each Lender and Infogrames U.S. shall notify such
Guarantor promptly of any such set-off and the application made by the
Administrative Agent, such Lender or Infogrames U.S., as the case may be, of the
proceeds thereof; provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Administrative
Agent, each Lender and Infogrames U.S. under this Section 12 are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which the Administrative Agent, such Lender or Infogrames U.S. may
have. The
<PAGE> 10
10
proceeds of any such exercise of any such right of set off shall be turned over
to the Administrative Agent to be applied to the Guaranteed Obligations pursuant
to Section 14.
SECTION 13. No Subrogation. Notwithstanding any payment or
payments by any of the Guarantors hereunder, or any set off or application of
funds of any of the Guarantors, by the Administrative Agent, any Lender or
Infogrames U.S., or the receipt of any amounts by the Administrative Agent, any
Lender or Infogrames U.S. with respect to any of the Guaranteed Obligations,
none of the Guarantors shall be entitled to be subrogated to any of the rights
the Administrative Agent, any Lender or Infogrames U.S. against the Borrower or
the other Guarantors or against any collateral security held by the
Administrative Agent, any Lender or Infogrames U.S. for the payment of the
Guaranteed Obligations nor shall any of the Guarantors seek any reimbursement
from the Borrower or any of the other Guarantors in respect of payments made by
such Guarantor in connection with the Guaranteed Obligations, until all amounts
owing to the Administrative Agent, the Lenders and Infogrames U.S. on account of
the Guaranteed Obligations are paid in full and the Aggregate Commitment is
terminated. If any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Guaranteed Obligations shall not
have been paid in full, such amount shall be held by such Guarantor in trust for
the Administrative Agent, the Lenders and Infogrames U.S., segregated from other
funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be
turned over to the Administrative Agent in the exact form received by such
Guarantor (duly endorsed by such Guarantor to the Administrative Agent, if
required) to be applied against the Guaranteed Obligations, whether matured or
unmatured, in accordance with Section 14.
SECTION 14. Application of Payments. In order to implement the
agreement of the Administrative Agent, on behalf of the Lenders and the
Administrative Agent, and Infogrames U.S. with respect to the application of any
payments under this Guaranty on account of the Guaranteed Obligations, any
payments received shall be delivered to the Administrative Agent in the form
received, duly indorsed to the Administrative Agent, if required, and applied as
follows:
(a) First, to the payment in full of all reasonable costs and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements) paid or incurred by the Administrative Agent or any
Lender, or paid or incurred by Infogrames U.S. at any time after the
Standstill Expiration Date, in connection with the collection of
payments under this Guaranty or the protection of the rights and
interests of the Administrative Agent, the Lenders or Infogrames U.S.
hereunder, as the case may be;
(b) Second, to the Administrative Agent, for the ratable
benefit of the Lenders and the Administrative Agent, until an aggregate
of $75,000,000 of the Bank Obligations have been paid in full, such
amounts to be applied to the Bank Obligations in accordance with
Section 4.5 of the Credit Agreement;
(c) Third, on a pro rata basis (based upon the then
outstanding aggregate amount of the Bank Obligations and the then
outstanding aggregate amount of the Bridge Obligations other than the
Bridge Obligations referenced in clause (d) below) to the
Administrative Agent, for the ratable benefit of the Lenders and the
Administrative Agent (such amounts to be applied to the Bank
Obligations in accordance with Section 4.5 of the
<PAGE> 11
11
Credit Agreement), and to Infogrames U.S. (for application to the
Bridge Obligations) until all of the Bank Obligations and all such
Bridge Obligations have been paid in full;
(d) Fourth, to Infogrames U.S., all Bridge Obligations
constituting obligations of the Borrower under the Infogrames
Securities Purchase Agreement to pay or reimburse Infogrames or
Infogrames U.S. for costs and expenses (including without limitation,
reasonable fees and disbursements of counsel to Infogrames or
Infogrames U.S.) incurred or paid by Infogrames or Infogrames U.S. in
connection with the Infogrames Securities Purchase Agreement other than
any such costs and expenses relating to the Infogrames Bridge Loan; and
(e) Fifth, after the indefeasible payment in full of the
Obligations, to the Borrower or the applicable Guarantor, or its
representative or as a court of competent jurisdiction may direct, any
surplus then remaining.
SECTION 15. Priorities Regarding Guaranteed Obligations. (a)
Without notice to or further assent by Infogrames U.S. and without modifying or
limiting in any way the application of any payments under this Guaranty on
account of the Guaranteed Obligations in accordance with Section 14:
(i) any demand for payment of any Bank Obligations made by the
Administrative Agent or the Lenders may be rescinded in whole or in
part by such Lenders, and any Bank Obligations may be continued, and
the Bank Obligations, or the liability of the Borrower or any other
Grantor for any part thereof, or any collateral security or guarantee
therefor or right of offset with respect thereto, or any obligation or
liability of the Borrower or any other Grantor with respect to such
Bank Obligations under the Credit Agreement or any other Loan Document
may, from time to time, in whole or in part, be renewed, extended,
modified, accelerated, compromised, waived, surrendered, or released by
the Administrative Agent, acting at the direction of the Lenders
pursuant to the Credit Agreement; and
(ii) the Credit Agreement and any other Loan Document may be
amended, modified, supplemented or terminated, in whole or in part, in
each case in respect of the Bank Obligations, and any Collateral may be
exchanged, waived, surrendered or released, in each case in respect of
the Bank Obligations.
(b) The terms of this Section 15 and the application of any
payments under this Guaranty on account of the Guaranteed Obligations in
accordance with Section 14 shall not be affected by any exercise of, or failure
to exercise, any right, power or remedy, or any waiver, consent release,
increase, extension, renewal, modification, delay or non-perfection under or in
respect of the Bank Obligations, this Guaranty, the other Loan Documents, the
Bridge Obligations or the other Infogrames Bridge Loan Documents. The Bank
Obligations shall be deemed conclusively to have been created, contracted or
incurred in reliance upon this Guaranty, and all dealings among the
Administrative Agent and the Lenders on the one hand, and Infogrames U.S. on the
other hand, shall be deemed to have been consummated in reliance upon this
Guaranty.
<PAGE> 12
12
SECTION 16. Standstill Period in Respect of Bridge
Obligations. (a) Notwithstanding anything to the contrary contained in this
Guaranty, any other Loan Document or any other Infogrames Bridge Loan Document,
Infogrames U.S. agrees and acknowledges that prior to the earlier of September
30, 2000 or the nine (9) month anniversary of the date upon which the
Transaction Documentation is terminated (such earlier date, the "Standstill
Expiration Date"):
(i) other than (A) the right to receive payment in full of the
Bridge Obligations on the Transaction Closing Date and (B) any right to
receive payments on account of the Bridge Obligations in accordance
with Section 14 (and the corresponding provisions of the other Loan
Documents and Infogrames Bridge Loan Documents), Infogrames U.S. shall
not, nor shall it seek to make demand or otherwise, exercise or enforce
any right or remedy under this Guaranty, any other Infogrames Bridge
Loan Document or applicable law with respect to the Bridge Obligations,
including without limitation, to institute any action or proceeding
with respect to such rights or remedies or to contest, protest or
object to any exercise of rights or enforcement of remedies by the
Administrative Agent;
(ii) Infogrames U.S. will not interfere with, seek to enjoin
or invoke or utilize any provision of any document, law or equitable
principle which might prevent, delay or impede the enforcement (in the
discretion of the Administrative Agent, acting at the direction of the
Required Lenders) of the rights of the Administrative Agent under this
Guaranty or any other Loan Document or applicable law;
(iii) in exercising rights and remedies under this Guaranty,
the Administrative Agent and the Lenders may enforce the provisions of
this Guaranty and exercise remedies hereunder and under any other Loan
Document or applicable law (or refrain from enforcing such rights and
exercising such remedies), all in such order and in such manner as they
may determine in the exercise of their sole discretion, and such
exercise and enforcement of rights and remedies shall include incurring
expenses in connection with such exercise of rights and remedies.
(b) On and after the Standstill Expiration Date the provisions
of Section 16(a) above shall no longer apply and Infogrames U.S. may at any time
after the occurrence and during the continuance of an Event of Default under the
Infogrames Bridge Loan Documents, but subject to Section 14 with respect to the
application of payments in respect of the Guaranteed Obligations, exercise or
enforce any right or remedy under applicable law in respect of the Bridge
Obligations.
SECTION 17. Termination of Bridge Obligations. Upon payment in
full of the Bridge Obligations on the Transaction Closing Date, the Guaranteed
Obligations in respect of the Bridge Obligations shall be automatically
terminated and released, Infogrames U.S. shall cease to be a party to this
Guaranty and Infogrames U.S. will, at the Administrative Agent's request and at
the expense of the Borrower, execute and deliver to the Administrative Agent
such documents as the Administrative Agent shall reasonably request to evidence
such termination and release.
SECTION 18. Expenses. All reasonable costs and expenses
(including reasonable attorneys' fees, legal expenses and court costs) incurred
by the Administrative Agent, any Lender
<PAGE> 13
13
or Infogrames U.S. in enforcing or protecting their rights or remedies hereunder
shall be payable by the Guarantors on demand and shall bear interest (after as
well as before judgment) until paid at the rate then applicable to Base Rate
Loans (as defined in the Credit Agreement) and shall be additional Guaranteed
Obligations hereunder.
SECTION 19. Notices. All notices and communications to the
Administrative Agent, a Lender or a Guarantor shall be made in accordance with
Section 13.1 of the Credit Agreement and given to the addresses or transmission
numbers for notices set forth in the Credit Agreement, in the case of the
Administrative Agent or a Lender, or under its signature below, in the case of a
Guarantor. All notices and communications to Infogrames U.S. shall be made in
accordance with the Infogrames Bridge Loan Note and given to the address or
transmission number for notices set forth therein
SECTION 20. Successors and Assigns. This Guaranty is for the
benefit of the Administrative Agent, the Lenders and Infogrames U.S. and their
permitted successors and assigns, and in the event of an assignment of all or
any of the Guaranteed Obligations, the rights hereunder, to the extent
applicable to the indebtedness so assigned, may be transferred with such
indebtedness. This Guaranty shall be binding on each Guarantor and its
successors and assigns; provided that no Guarantor may assign any of its rights
or obligations hereunder without the prior written consent of the Administrative
Agent, the Lenders and Infogrames U.S..
SECTION 21. Amendments, Waivers and Consents. No term,
covenant, agreement or condition of this Guaranty may be amended or waived, nor
may any consent be given, except in the manner set forth in Section 13.11 of the
Credit Agreement, except that any such amendment, waiver or consent affecting
the Guaranteed Obligations in respect of the Bridge Obligations may not be made
without the consent of Infogrames U.S.
SECTION 22. Powers Coupled with an Interest. All
authorizations and agencies herein contained with respect to the Guaranteed
Obligations are irrevocable and powers coupled with an interest.
SECTION 23. Governing Law. THIS GUARANTY SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 24. Consent to Jurisdiction. Each Guarantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Guaranty, the other Loan Documents and the
other Infogrames Bridge Loan Documents to which it is a party, or for
recognition and enforcement of any judgement in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New
York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or
<PAGE> 14
14
proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Guarantor at its address set forth under its signature
below;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
SECTION 25. Waiver of Jury Trial. EACH OF THE GUARANTORS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR ANY OTHER
INFOGRAMES BRIDGE LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 26. Severability. If any provision hereof is invalid
and unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (a) the other provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor of the
Administrative Agent, the Lenders and Infogrames U.S. in order to carry out the
intentions of the parties hereto as nearly as may be possible; and (b) the
invalidity or unenforceability of any provisions hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any other
jurisdiction.
SECTION 27. Headings. The various headings of this Guaranty
are inserted for convenience only and shall not affect the meaning or
interpretation of this Guaranty or any provisions hereof.
SECTION 28. Counterparts. This Guaranty may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
agreement.
[Signature Pages Follow]
<PAGE> 15
IN WITNESS WHEREOF, each of the Guarantors has caused this
Guaranty to be duly executed and delivered by its duly authorized officer as of
the date first above written.
HUMONGOUS ENTERTAINMENT, INC.
By:________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
WIZARDWORKS GROUP, INC.
By:________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
<PAGE> 16
SINGLETRAC ENTERTAINMENT TECHNOLOGIES, INC.
By:________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
SWAN ACQUISITION CORP.
By:________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
<PAGE> 17
CANDEL INC.
By:________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
FORMGEN, INC.
By:________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
<PAGE> 18
GOLD MEDALLION SOFTWARE INC.
By:________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
MEDIATECHNICS, LTD.
By:________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
<PAGE> 19
LEGEND ENTERTAINMENT COMPANY LLC
By:________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
<PAGE> 20
FIRST UNION NATIONAL BANK,
as Administrative Agent
By:____________________________________
Name:
Title:
CALIFORNIA U.S. HOLDINGS, INC.
By:_____________________________________
Name:
Title:
<PAGE> 1
Exhibit 16
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT
THIS SECOND AMENDED AND RESTATED PLEDGE AGREEMENT (as amended,
restated, supplemented, or otherwise modified, this "Pledge Agreement"), dated
as of November 15, 1999, is made by GT Interactive Software Corp. (the
"Borrower") and certain of its subsidiaries identified on the signature pages
attached hereto (together with the Borrower and each additional subsidiary who
becomes party hereto pursuant to a Joinder Agreement, the "Pledgors", each
individually, a "Pledgor") in favor of First Union National Bank, a national
banking association, as administrative agent (the "Administrative Agent"), for
the ratable benefit of the Administrative Agent and the financial institutions
who are or may from time to time become parties to the Credit Agreement referred
to below (the "Lenders") and California U.S. Holdings, Inc. ("Infogrames U.S."),
a wholly-owned Subsidiary of Infogrames Entertainment, SA, a societe anonyme
organized under the laws of France.
STATEMENT OF PURPOSE
Pursuant to the terms of the Credit Agreement, dated as of
September 11, 1998 (as amended, restated, supplemented or otherwise modified,
the "Credit Agreement"), by and among the Borrower, the Lenders and the
Administrative Agent, the Lenders agreed to make certain Extensions of Credit to
the Borrower as more particularly described therein.
In connection with the execution and delivery of the Credit
Agreement, the Borrower executed and delivered in favor of the Administrative
Agent a Pledge Agreement, dated as of September 11, 1998 (as amended, restated,
supplemented or otherwise modified prior to June 29, 1999, the "Existing Pledge
Agreement"), pursuant to which the Borrower pledged to the Administrative Agent,
for the ratable benefit of the Lenders and the Administrative Agent, security
interests in the Collateral to secure the Obligations (as such terms are defined
in the Existing Pledge Agreement).
In connection with the execution and delivery of the Second
Amendment, Waiver and Agreement, dated as of June 29, 1999, under the Credit
Agreement, the Borrower executed and delivered in favor of the Administrative
Agent, for the ratable benefit of the Lenders and the Administrative Agent, an
Amended and Restated Pledge Agreement, dated as of June 29, 1999 (as heretofore
amended, restated, supplemented or otherwise modified, the "Amended and Restated
Pledge Agreement"), pursuant to which the Borrower (i) reaffirmed its previous
grant to the Administrative Agent, for the ratable benefit of the Lenders and
the Administrative Agent, of security interests in the Collateral under, and as
defined in, the Existing Pledge Agreement and (ii) granted to the Administrative
Agent, for the ratable benefit of the Lenders and the Administrative Agent,
security interests in the Collateral to secure the Obligations (as such terms
are defined in the Amended and Restated Pledge Agreement).
The Borrower has advised the Administrative Agent and the
Lenders that Infogrames U.S. has agreed to provide a term loan to the Borrower
in the original principal
<PAGE> 2
2
amount of $25,000,000 (the "Infogrames Bridge Loan"), as evidenced by, and
pursuant to the provisions of, a term note, dated November 15, 1999 (the
"Infogrames Bridge Loan Note"), by the Borrower in favor of Infogrames U.S. and
secured by security interests in substantially all of the assets of the Borrower
and the Guarantors, which security interests shall be junior and subordinate to
the extent set forth herein to the security interests granted to the
Administrative Agent, for the ratable benefit of the Lenders and the
Administrative Agent, in the Existing Pledge Agreement, the Amended and Restated
Pledge Agreement and this Pledge Agreement.
In connection with, among other things, the incurrence of the
Infogrames Bridge Loan and the execution and delivery of the Infogrames Bridge
Loan Note, the Borrower, the Lenders and the Administrative Agent have agreed to
execute a Third Amendment, Consent, Waiver and Agreement, dated as of November
15, 1999 (the "Third Amendment"), under the Credit Agreement to, among other
things, amend and waive certain provisions thereof and consent to the incurrence
of the Infogrames Bridge Loan and the grant of the security interests in favor
of Infogrames U.S. as more fully set forth below.
The Pledgors are the record and beneficial owner of (i) the
shares of Pledged Stock (as hereinafter defined) issued by certain corporations
as specified on Schedule I attached hereto and incorporated herein by reference
(collectively, the "Issuers") and (ii) the Partnership/LLC Interests (as
hereinafter defined) in the partnerships and limited liability companies listed
on Schedule I hereto (collectively, the "Partnerships/LLCs").
In connection with the transactions contemplated by the Third
Amendment and the Infogrames Bridge Loan Note and as a condition precedent
thereto, the Borrower and Infogrames U.S. have requested that the Amended and
Restated Pledge Agreement be further amended and restated, and that each Pledgor
execute and deliver this Pledge Agreement together with, the Pledged Stock, to
the extent not previously delivered to the Administrative Agent, and the
Partnership/LLC Interests to the Administrative Agent, for the ratable benefit
of the Administrative Agent, the Lenders, and Infogrames U.S., and each of the
Pledgors has agreed to do so pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the foregoing premises and
to induce (i) the Administrative Agent and the Lenders to enter into the Third
Amendment and (ii) Infogrames U.S. to make the Infogrames Bridge Loan, each of
the parties hereto hereby agrees as follows:
1. Defined Terms . Unless otherwise defined herein, terms
which are defined in the Credit Agreement and used herein are used as so
defined, and the following terms shall have the following meanings:
"Bank Obligations" means the Pledgors' obligations under the
Loan Documents in respect of the unpaid principal of and interest on
the Notes (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of
the Loans and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding,
relating to any Pledgor, whether or not
<PAGE> 3
3
a claim for post-filing or post-petition interest is allowed in such
proceeding) and all other obligations and liabilities of the Pledgors
to the Administrative Agent, the Issuing Lender and the Lenders in
respect of the Loans, the Notes, the Letters of Credit, the L/C
Obligations, any Hedging Agreements permitted or required under the
Credit Agreement, the Concentration Account or any cash management
arrangements with any Lender, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the
Credit Agreement, the Notes, the Letters of Credit, the L/C
Obligations, any Hedging Agreements permitted or required under the
Credit Agreement, this Pledge Agreement, the other Loan Documents or
any other document made, delivered or given in connection herewith in
respect of the Bank Obligations or therewith, in each case whether on
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the
Administrative Agent, the Issuing Lender or the Lenders that are
required to be paid by any Pledgor pursuant to the terms of the Credit
Agreement, this Pledge Agreement or any other Loan Document).
"Bridge Obligations" means the Pledgors' obligations under the
Infogrames Bridge Loan Documents in respect of the unpaid principal of
and interest on the Infogrames Bridge Loan Note (including, without
limitation, interest accruing at the then applicable rate provided in
the Infogrames Bridge Loan Note after the maturity of the Infogrames
Bridge Loan and interest accruing at the then applicable rate provided
in the Infogrames Bridge Loan Note after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to any Pledgor, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
and all other obligations and liabilities of the Pledgors to Infogrames
U.S. in respect of the Infogrames Bridge Loan or the Infogrames Bridge
Loan Note, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Infogrames Bridge Loan Note
or the other Infogrames Bridge Loan Documents, in each case whether on
account of principal, interest, fees, indemnities, costs, expenses or
otherwise (including, without limitation, (a) the obligations of the
Borrower under the Infogrames Securities Purchase Agreement to pay or
reimburse Infogrames or Infogrames U.S. for costs and expenses
(including without limitation, reasonable fees and disbursements of
counsel to Infogrames or Infogrames U.S.) incurred or paid by
Infogrames or Infogrames U.S. in connection with the Infogrames
Securities Purchase Agreement and (b) all reasonable fees and
disbursements of counsel to Infogrames U.S. that are required to be
paid by any Pledgor pursuant to the terms of the Infogrames Bridge Loan
Note or any other Infogrames Bridge Loan Document).
"Code" means the Uniform Commercial Code as in effect in the
State of New York; provided that if by reason of mandatory provisions
of law, the perfection or the effect of perfection or non-perfection of
the security interests in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than New York,
"Code" means the Uniform Commercial Code as in effect in such other
jurisdiction for
<PAGE> 4
4
purposes of the provisions hereof relating to such perfection or
effect of perfection or non-perfection.
"Collateral" means, with respect to each Pledgor, the Stock
Collateral and the Partnership/LLC Collateral.
"Event of Default" means an Event of Default under, and as
defined in, the Credit Agreement or the Infogrames Bridge Loan Note.
"Infogrames Bridge Loan Documents" means the Infogrames Bridge
Loan Note, the Guaranty Agreement, the Security Agreement and this
Pledge Agreement.
"Obligations" means, collectively, the Bank Obligations and
the Bridge Obligations.
"Partnership/LLC Collateral" means, with respect to each
Pledgor, all of the Partnership/LLC Interests of such Pledgor in the
Partnerships/LLCs and all Proceeds therefrom.
"Partnership/LLC Interests" means, with respect to each
Pledgor, the entire partnership or membership interest of such Pledgor
in each Partnership/LLC listed under such Pledgor's name on Schedule I
hereto, including, without limitation, such Pledgor's capital account,
such Pledgor's interest as a partner or member in the net cash flow,
net profit and net loss, and items of income, gain, loss, deduction and
credit of the Partnerships/LLCs, such Pledgor's interest in all
distributions made or to be made by the Partnerships/LLCs to such
Pledgor and all of the other economic rights, titles and interests of
such Pledgor as a partner or member of the Partnerships/LLCs, whether
set forth in the partnership agreement or membership agreement of the
Partnerships/LLCs, by separate agreement or otherwise.
"Permitted Liens" means all Liens respecting the Collateral
permitted pursuant to Section 10.3 of the Credit Agreement.
"Pledged Stock" means, with respect to each Pledgor, the
shares of capital stock of each Issuer listed under such Pledgor's name
on Schedule I hereto, together with all stock certificates, options or
rights of any nature whatsoever that may be issued or granted by any
Issuer to such Pledgor while this Pledge Agreement is in effect.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-306(1) of the Code on the date hereof and, in any event,
shall include, without limitation, all dividends or other income from
the Pledged Stock and the Partnership/LLC Interests, collections
thereon, proceeds of sale thereof or distributions with respect
thereto.
"Standstill Expiration Date" shall have the meaning assigned
thereto in Paragraph 16.
<PAGE> 5
5
"Stock Collateral" means, with respect to each Pledgor, the
Pledged Stock owned by such Pledgor and all Proceeds therefrom.
2. Pledge and Grant of Security Interest.
(a) Each Pledgor hereby delivers to the Administrative Agent,
for the benefit of the Administrative Agent, the Lenders and Infogrames
U.S., all of the Pledged Stock of such Pledgor, to the extent not
previously delivered to the Administrative Agent.
(b) Each Pledgor hereby confirms and reaffirms its grant of a
security interest in the Collateral (as defined in the Amended and
Restated Pledge Agreement) pursuant to the Amended and Restated Pledge
Agreement. In order to secure the payment when due whether at the
stated maturity, by acceleration or otherwise of the Bank Obligations,
each Pledgor hereby grants to the Administrative Agent, for the ratable
benefit of the Lenders and the Administrative Agent, a first priority
security interest in the Pledged Stock listed under such Pledgor's name
on Schedule I and all of such Pledgor's other Collateral.
(c) In order to secure the payment when due whether at the
stated maturity, by acceleration or otherwise of the Bridge
Obligations, each Pledgor hereby grants to Infogrames U.S. a security
interest in the Pledged Stock listed under such Pledgor's name on
Schedule I and all of such Pledgor's other Collateral junior only to
the security interests granted to the Administrative Agent, for the
ratable benefit of the Lenders and the Administrative Agent, and other
Permitted Liens, in each case to the extent provided herein.
(d) As set forth in the separate granting clauses contained in
subsections (b) and (c) above, it is the intent of the Pledgor, the
Administrative Agent, the Lenders and Infogrames U.S. that this Pledge
Agreement shall create two separate and distinct Liens, a senior Lien
in favor of the Administrative Agent, for the benefit of the Lenders
and the Administrative Agent, and a separate junior Lien in favor of
Infogrames U.S.
3. Stock Powers; Register of Pledge. Concurrently with the
delivery to the Administrative Agent of each certificate representing one or
more shares of Pledged Stock (with respect to each Domestic Subsidiary, and,
where applicable, with respect to each Foreign Subsidiary), each Pledgor shall
have delivered, or to the extent not previously delivered to the Administrative
Agent shall deliver, an undated stock power covering such certificate, duly
executed in blank by such Pledgor with, if the Administrative Agent so requests,
signature guaranteed.
4. Pledgor Remains Liable. Anything herein to the contrary
notwithstanding, (a) none of each Pledgor shall remain liable to perform all of
its duties and obligations as a partner or member of the Partnerships/LLCs to
the same extent as if this Pledge Agreement had not been executed, (b) the
exercise by the Administrative Agent or, of any of the rights hereunder shall
not release any Pledgor from any of its duties or obligations as a partner or
member of the Partnerships/LLCs and (c) none of the Administrative Agent, any
Lender or Infogrames U.S. shall
<PAGE> 6
6
have any obligation or liability as a partner or member of the Partnerships/LLCs
by reason of this Pledge Agreement.
5. Representations and Warranties. Each Pledgor hereby represents and
warrants to the Administrative Agent, each Lender and Infogrames U.S. that:
(a) such Pledgor is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to execute and
deliver, to perform its obligations under, and to grant the Lien on its
Collateral pursuant to, this Pledge Agreement and has taken all necessary
corporate action to authorize its execution, delivery and performance of,
and grant of the Lien on its Collateral pursuant to, this Pledge Agreement;
(b) this Pledge Agreement constitutes a legal, valid and binding
obligation of such Pledgor enforceable against such Pledgor in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by the availability of
equitable remedies;
(c) the execution, delivery and performance by such Pledgor of this
Pledge Agreement will not violate any provision of any (i) Applicable Law
relating to such Pledgor or (ii) material contractual obligation of the
Pledgor, the violation of which could reasonably be expected to have a
Material Adverse Effect, and will not result in the creation or imposition
of any Lien on any of the properties or the revenues of such Pledgor
pursuant to any Applicable Law or such contractual obligation, except as
contemplated hereby and by the Credit Agreement;
(d) no consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or Governmental Authority and no consent of any
other Person (including, without limitation, any stockholder or creditor of
such Pledgor or any Issuer or any general or limited partner or member of
any Partnership/LLC), is required in connection with the execution,
delivery or performance by, or validity or enforceability against, such
Pledgor of this Pledge Agreement, except (i) as may be required in
connection with the disposition of the Pledged Stock and the
Partnership/LLC Interests by laws affecting the offering and sale of
securities generally and (ii) filings under the Code;
(e) no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of
such Pledgor, threatened by or against such Pledgor or against any of its
properties or revenues, in each case with respect to this Pledge Agreement
or any of the transactions contemplated hereby;
(f) the shares of Pledged Stock listed under such Pledgor's name on
Schedule I constitute all of the issued and outstanding shares of all
classes of the capital stock of each Issuer that is a Domestic Subsidiary
and constitute sixty-five percent (65%) of all of the issued and
outstanding shares of all classes of capital stock of each Issuer that is a
Foreign Subsidiary, in each case owned by such Pledgor, and Schedule I
accurately reflects such
<PAGE> 7
7
Pledgor's Partnership/LLC Interest in each of the Partnerships/LLCs listed
under such Pledgor's name on Schedule I and the Partnership/LLC Interests
pledged by such Pledgor constitute all of the outstanding ownership
interests in which such Pledgor has any right, title or interest in each
Partnership/LLC which is a Domestic Subsidiary and constitutes sixty-five
percent (65%) of the outstanding ownership interests in which such Pledgor
has any right, title and interest in each Partnership/LLC which is a
Foreign Subsidiary;
(g) the shares of Pledged Stock listed under such Pledgor's name on
Schedule I have been duly and validly issued and are fully paid and
nonassessable and all of the Partnership/LLC Interests listed under such
Pledgor's name on Schedule I have been duly and validly issued;
(h) such Pledgor is the record and beneficial owner of, and has good
and marketable title to the Pledged Stock and Partnership/LLC Interests
listed under such Pledgor's name on Schedule I, free of any and all Liens
or options in favor of, or claims of, any other Person, except the Liens
created by this Pledge Agreement or Permitted Liens;
(i) the jurisdiction in which such Pledgor is located for purposes of
Section 9-103 and Section 9-401 of the Code is listed opposite such
Pledgor's name on Schedule II hereto;
(j) upon delivery to the Administrative Agent of the stock
certificates evidencing such Pledgor's Pledged Stock and the filing of
appropriate financing statements (or, with respect to any Foreign
Subsidiary, any filing required by the applicable foreign jurisdiction) in
the jurisdictions listed opposite such Pledgor's name on Schedule II, the
Liens granted by such Pledgor pursuant to this Pledge Agreement will
constitute valid, perfected first priority Liens in respect of the Bank
Obligations and Liens in respect of the Bridge Obligations, which are
junior only to the security interests in respect of the Bank Obligations
and the Permitted Liens, on the Collateral, enforceable as such against all
creditors of such Pledgor and any Persons purporting to purchase any of
such Collateral from such Pledgor; and
(k) such Pledgor has delivered to the Administrative Agent true and
complete copies of the partnership agreements and operating agreements, as
applicable, for each of the Partnerships/LLCs listed under such Pledgor's
name on Schedule I, which partnership agreements and operating agreements
are currently in full force and effect and have not been amended or
modified except as disclosed to the Administrative Agent in writing.
6. Certain Covenants. Each Pledgor hereby covenants and agrees with
the Administrative Agent, the Lenders and Infogrames U.S., that, from and after
the date of this Pledge Agreement until the Obligations are paid in full and the
Aggregate Commitment is terminated:
(a) As a partner or member in the Partnerships/LLCs listed under such
Pledgor's name on Schedule I, it will abide by, perform and discharge each
and every material
<PAGE> 8
8
obligation, covenant and agreement to be abided by, performed or discharged
by such Pledgor as and when required under the terms of the partnership
agreements and operating agreements, as applicable, of such
Partnerships/LLCs, at no cost or expense to the Administrative Agent, the
Lenders or Infogrames U.S.
(b) If such Pledgor shall, as a result of its ownership of the
Collateral, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate representing a
stock dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection
with any reorganization), option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any of the
Collateral, or otherwise in respect thereof, such Pledgor shall accept the
same as the agent of the Administrative Agent and Infogrames U.S., hold the
same in trust for the Administrative Agent and Infogrames U.S. and deliver
the same forthwith to the Administrative Agent in the exact form received,
duly indorsed by such Pledgor to the Administrative Agent, if required,
together with an undated stock power covering such certificate duly
executed in blank by such Pledgor and with, if the Administrative Agent so
requests, signature guaranteed, to be held by the Administrative Agent,
subject to the terms hereof, as additional collateral security for the
Obligations; provided, that at no time shall the Pledged Stock or
Partnership/LLC Interests of any Issuer or Partnership/LLC that is a
Foreign Subsidiary exceed sixty-five percent (65%) of the issued and
outstanding shares of all classes of capital stock of such Subsidiary or
Partnership/LLC Interests of such Subsidiary owned by such Pledgor. In
addition, any sums paid to such Pledgor upon or in respect of such
Collateral upon the liquidation or dissolution of any Issuer or
Partnership/LLC shall be held by the Administrative Agent as additional
collateral security for the Obligations.
(c) Without the prior written consent of the Administrative
Agent, such Pledgor will not (i) vote to enable, or take any other action
to permit, any Issuer or Partnership/LLC listed under such Pledgor's name
on Schedule I to issue any stock, partnership interests, limited liability
company interests or other equity securities of any nature or to issue any
other securities convertible into or granting the right to purchase or
exchange for any stock, partnership interests, limited liability company
interests or other equity securities of any nature of such Issuer or
Partnership/LLC, (ii) except as expressly provided to the contrary herein,
consent to any modification, extension or alteration of the material terms
of any partnership agreement or operating agreement of any such
Partnerships/LLCs, (iii) accept a surrender of any partnership agreement or
operating agreement of any such Partnerships/LLCs or waive any material
breach of or default under any partnership agreement or operating agreement
of any such Partnerships/LLCs by any other party thereto, (iv) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option
with respect to the Collateral, except as permitted by the Loan Documents
or the Infogrames Bridge Loan Documents, or (v) create, incur or permit to
exist any Lien on or option in favor of, or any claim of any Person with
respect to, any of the Collateral, or any interest therein, except for the
Liens provided for by this Pledge Agreement or Permitted Liens. Such
Pledgor will defend the right, title and interest of the Administrative
Agent and Infogrames U.S. in and to the Collateral against the claims and
demands of all Persons whomsoever.
<PAGE> 9
9
(d) At any time and from time to time, upon the written request
of the Administrative Agent, and at the sole expense of such Pledgor,
such Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the
Administrative Agent may reasonably request for the purposes of
obtaining or preserving the full benefits of this Pledge Agreement and
of the rights and powers herein granted. If any amount payable under or
in connection with any of the Collateral shall be or become evidenced by
any promissory note, other instrument or chattel paper, such note,
instrument or chattel paper shall be immediately delivered to the
Administrative Agent, duly endorsed in a manner reasonably satisfactory
to the Administrative Agent, to be held as Collateral pursuant to this
Pledge Agreement.
(e) Such Pledgor agrees to pay when due, and to save each of the
Administrative Agent, the Lenders and Infogrames U.S. harmless from, any
and all liabilities with respect to, or resulting from any delay in
paying (except due to any delay caused by the gross negligence or
willful misconduct of the Administrative Agent, any such Lender or
Infogrames U.S., respectively), any and all applicable stamp, excise,
sales or other similar taxes which may be payable or determined to be
payable with respect to the Collateral or in connection with any of the
transactions contemplated by this Pledge Agreement.
(f) On or prior to the formation or acquisition of any Subsidiary
by such Pledgor, such Pledgor agrees to execute the Joinder Agreement,
attached to the Credit Agreement (which among other things, supplements
this Pledge Agreement), and such other documents and instruments as
required pursuant to Section 8.12 of the Credit Agreement.
7. Cash Dividends and Distributions; Voting Rights. Unless an
Event of Default shall have occurred and be continuing and the Administrative
Agent shall have given notice to the Pledgors of the Administrative Agent's
intent to exercise its rights pursuant to Paragraph 8 below, the Pledgor shall
be permitted to receive all cash dividends and shareholder, partnership and
membership distributions paid in accordance with the terms of the Credit
Agreement and the Infogrames Bridge Loan Note in respect of the Collateral and
to exercise all voting and corporate, partnership or membership rights, as
applicable, with respect to the Collateral; provided, that no vote shall be cast
or corporate, partnership or membership right exercised or other action taken
which, in the Administrative Agent's reasonable judgment, would impair the
Collateral or which would be inconsistent with or result in any violation of any
provision of the Credit Agreement, the Notes, any other Loan Document, the
Infogrames Bridge Loan Note, any other Infogrames Bridge Loan Document or this
Pledge Agreement. The Administrative Agent shall execute and deliver all proxies
and other instruments as any Pledgor may reasonably request from time to time
for the purpose of enabling such Pledgor to exercise the voting and other rights
that it is entitled to exercise and to receive the dividends and distributions
that it is authorized to receive and retain pursuant to this Paragraph 7, in
each case at the sole cost and expense of such Pledgor.
8. Rights of the Administrative Agent.
(a) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such
rights to the Pledgors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends paid in
<PAGE> 10
10
respect of the Pledged Stock or partnership and membership distributions
in respect of the Partnership/LLC Interests and make application thereof
to the Obligations in accordance with Paragraph 15 hereof and (ii) all
shares of the Pledged Stock and the Partnership/LLC Interests
represented by instruments shall be registered in the name of the
Administrative Agent or its nominee, and the Administrative Agent or its
nominee may thereafter exercise (A) all voting, corporate, partnership,
membership and other rights pertaining to such Collateral at any meeting
of shareholders, partners or members of the applicable entity or
otherwise and (B) any and all rights of conversion, exchange,
subscription and any other rights, privileges or options pertaining to
such Collateral as if it were the absolute owner thereof (including,
without limitation, the right to exchange at its discretion any and all
of the Collateral upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure
of the applicable entity, or upon the exercise by the relevant Pledgor
or the Administrative Agent of any right, privilege or option pertaining
to such Collateral, and in connection therewith, the right to deposit
and deliver any and all of the Collateral with any committee,
depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as it may determine), all without liability
except to account for property actually received by it, but the
Administrative Agent shall have no duty to any Pledgor to exercise any
such right, privilege or option and shall not be responsible for any
failure to do so or delay in so doing.
(b) The rights of the Administrative Agent, the Lenders and
Infogrames U.S. hereunder shall not be conditioned or contingent upon
the pursuit by the Administrative Agent, any Lender or Infogrames U.S.
of any right or remedy against any Pledgor or against any other Person
which may be or become liable in respect of all or any part of the
Obligations, or against any collateral security therefor, guarantee
thereof or right of offset with respect thereto. None of the
Administrative Agent, any Lender or Infogrames U.S. shall be liable for
any failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so, nor shall the Administrative
Agent be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Pledgor or any other Person or to
take any other action whatsoever with regard to the Collateral or any
part thereof.
9. Remedies.
(a) If an Event of Default shall occur and be continuing, the
Administrative Agent may, upon the request of the Required Lenders or
Infogrames U.S., as the case may be, exercise, on behalf of itself, the
Lenders and Infogrames U.S. all rights and remedies granted in this
Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, and in addition thereto, all
rights and remedies of a secured party under the Code. Without limiting
the generality of the foregoing with regard to the scope of the
Administrative Agent's remedies, the Administrative Agent without demand
of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by Applicable Law
referred to below) to or upon any Pledgor, any Issuer, any
Partnership/LLC or any other Person (all and each of which demands,
defenses, advertisements and notices are hereby waived), may in such
<PAGE> 11
11
circumstances forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, assign,
give option or options to purchase or otherwise dispose of and deliver
the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales,
in the over-the-counter market, at any exchange, broker's board or
office of the Administrative Agent, any Lender or Infogrames U.S. or
elsewhere upon such terms and conditions as it may deem advisable and at
such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Administrative
Agent, any Lender, Infogrames U.S. or any Affiliate of any thereof shall
have the right upon any such public sale or sales, and, to the extent
permitted by Applicable Law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in any Pledgor, which right or equity is
hereby waived or released. The Administrative Agent shall apply any
Proceeds from time to time held by it and the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred in
respect thereof or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent, the Lenders and Infogrames U.S. hereunder,
including, without limitation, reasonable attorneys' fees and
disbursements of counsel thereto, to the payment in whole or in part of
the Obligations then outstanding, in accordance with Paragraph 15
hereof, and only after such application and after the payment by the
Administrative Agent of any other amount required by any provision of
Applicable Law, including, without limitation, Section 9-504(1)(c) of
the Code, need the Administrative Agent account for the surplus, if any,
to the relevant Pledgor. To the extent permitted by Applicable Law, the
Pledgors waive all claims, damages and demands they may acquire against
the Administrative Agent, any Lender or Infogrames U.S. arising out of
the exercise by them of any rights hereunder. Written notice of a
proposed sale or other disposition of Collateral shall be given to the
appropriate Pledgors at least ten (10) Business Days before such sale or
other disposition and shall be deemed reasonable and proper if so given.
To the extent permitted by applicable law, the Pledgors further waive
and agree not to assert any rights or privileges which they may acquire
under Section 9-112 of the Code. Nothing in this Paragraph 9 or
otherwise in this Pledge Agreement shall be construed to require the
Administrative Agent to give any notice of an action not otherwise
required by Applicable Law and the express provisions of this Pledge
Agreement, the Credit Agreement, any other Loan Document, the Infogrames
Bridge Loan Note or any other Infogrames Bridge Loan Document.
(b) Effective upon the occurrence and during the continuance of
an Event of Default, each Pledgor hereby constitutes and appoints the
Administrative Agent as its true and lawful attorney-in-fact, with full
power of substitution and full power to do any and all things which the
Administrative Agent deems advisable or necessary to be done hereunder
as fully and effectively as such Pledgor might or could do but for this
appointment and hereby ratifies all that said attorney-in-fact shall
lawfully do or cause to be done by virtue hereof. Neither the
Administrative Agent nor any of its agents shall be liable for any acts
or omissions or for any error in judgment or mistake of fact or law in
its capacity as such attorney-in-fact, except due to its gross
negligence or willful misconduct. This power of
<PAGE> 12
12
attorney is coupled with an interest and shall be irrevocable so long as
any Obligations shall remain outstanding or the Aggregate Commitment
shall remain in effect.
10. Indemnity and Expenses. Each Pledgor hereby, jointly and
severally, agrees to pay to the Administrative Agent or Infogrames U.S., as the
case may be, upon demand, the amount of any and all reasonable out-of-pocket
expenses, including the reasonable fees and expenses of its counsel and of any
experts and agents, which the Administrative Agent or Infogrames U.S., as the
case may be may incur in connection with (i) the administration of this Pledge
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon the Collateral, (iii) the exercise or enforcement of
any of the rights of the Administrative Agent, the Lenders and Infogrames U.S.
hereunder or (iv) the failure by any Pledgor to perform or observe any of the
provisions hereof.
11. Registration Rights: Private Sales.
(a) If the Administrative Agent shall determine to exercise its
right to sell any or all of the Pledged Stock pursuant to Paragraph 8,
and if in the opinion of the Administrative Agent or Infogrames U.S. it
is necessary or advisable to have the Pledged Stock, or that portion
thereof to be sold, registered under the provisions of the Securities
Act of 1933, as amended (the "Securities Act"), each relevant Pledgor
will use its best efforts to cause the applicable Issuer to (i) execute
and deliver, and cause the directors and officers of the applicable
Issuer to execute and deliver, all such instruments and documents, and
do or cause to be done all such other acts as may be, in the reasonable
opinion of the Administrative Agent or Infogrames U.S., necessary or
advisable to register the Pledged Stock, or that portion thereof to be
sold, under the provisions of the Securities Act, (ii) to use its best
efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date
of the first public offering of the Pledged Stock, or that portion
thereof to be sold, or until all such Pledged Stock is sold and (iii) to
make all amendments thereto and/or to the related prospectus which, in
the reasonable opinion of the Administrative Agent or Infogrames U.S.,
are necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto. Each Pledgor agrees to use its
best efforts to cause the applicable Issuer to comply with the
provisions of the securities or "Blue Sky" laws of any and all
jurisdictions which the Administrative Agent or Infogrames U.S. shall
designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which
will satisfy the provisions of Section 11(a) of the Securities Act.
(b) Each Pledgor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Stock, by
reason of certain prohibitions contained in the Securities Act and
applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of
purchasers which will be obliged to agree, among other things, to
acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. Each Pledgor
acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such
<PAGE> 13
13
circumstances, agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner. The Administrative Agent
shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the applicable Issuer to
register such securities for public sale under the Securities Act, or
under applicable state securities laws, even if the applicable Issuer
would agree to do so.
(c) Each Pledgor further agrees to use its best efforts to do or
cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Collateral pursuant to this
Paragraph 11 valid and binding and in compliance with any and all other
Applicable Laws. Each Pledgor further agrees that a breach of any of the
covenants contained in this Paragraph 11 will cause irreparable injury
to the Administrative Agent, the Lenders and Infogrames U.S. not
compensable in damages, that the Administrative Agent, the Lenders and
Infogrames U.S. have no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this
Paragraph 11 shall be specifically enforceable against such Pledgor, and
such Pledgor hereby waives and agrees not to assert any defenses against
an action for specific performance of such covenants except for a
defense that no Event of Default has occurred and is continuing.
12. Amendments, etc. With Respect to the Obligations. Each
Pledgor shall remain obligated hereunder, and the Collateral shall remain
subject to the Liens granted hereby, notwithstanding that, without any
reservation of rights against such Pledgor, and without notice to or further
assent by such Pledgor, any demand for payment of any of the Obligations made by
the Administrative Agent, any Lender or Infogrames U.S., as the case may be, may
be rescinded by the Administrative Agent, such Lender or Infogrames U.S., as the
case may be, and any of the Obligations continued, and the Obligations, or the
liability of such Pledgor or any other Person upon or for any part thereof, or
any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered, or released by
the Administrative Agent, any Lender or Infogrames U.S., as the case may be, and
the Credit Agreement, the Notes, any other Loan Documents and any other
documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or part, as the Lenders (or the
Required Lenders, as the case may be), or, with respect to the Infogrames Bridge
Loan Note and Infogrames Bridge Loan Documents, as Infogrames U.S., may deem
advisable from time to time, and any guarantee, right of offset or other
collateral security at any time held by the Administrative Agent, any Lender or
Infogrames U.S. for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released. None of the Administrative Agent, any Lender or
Infogrames U.S. shall have any obligation to protect, secure, perfect or insure
any other Lien at any time held by it as security for their respective
Obligations or any property subject thereto. Each Pledgor waives any and all
notice of the creation, renewal, extension or accrual of any of the Obligations
and notice of or proof of reliance by the Administrative Agent, any Lender or
Infogrames U.S. upon this Pledge Agreement; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred in
reliance upon this Pledge Agreement; and all dealings between any Pledgor, on
the one hand, and the Administrative Agent, the Lenders and Infogrames U.S., on
the other, shall likewise be conclusively presumed to have been had or
consummated in reliance upon this Pledge Agreement. To the extent permitted by
<PAGE> 14
14
Applicable Law, each Pledgor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon such Pledgor with respect
to the Obligations.
13. No Subrogation. Notwithstanding any payment or payments made
by any Pledgor hereunder, or any setoff or application of funds of any Pledgor
by the Administrative Agent, or the receipt of any amounts by the Administrative
Agent with respect to any of the Collateral, no Pledgor shall be entitled to be
subrogated to any of the rights of the Administrative Agent against any
guarantor or against any other collateral security held by the Administrative
Agent for the payment of the Obligations, nor shall any Pledgor seek any
reimbursement from any guarantor in respect of payments made by any Pledgor in
connection with the Collateral, or amounts realized by the Administrative Agent
in connection with the Collateral, until all amounts owing to the Administrative
Agent, the Lenders and Infogrames U.S. on account of the Obligations are paid in
full and the Credit Agreement and the Infogrames Bridge Loan Note are
terminated. If any amount shall be paid to a Pledgor on account of such
subrogation rights at any time when all of the Obligations shall not have been
paid in full, such amount shall be held by such Pledgor in trust for the
Administrative Agent and Infogrames U.S., segregated from other funds of such
Pledgor, and shall, forthwith upon receipt by such Pledgor, be turned over to
the Administrative Agent in the exact form received by such Pledgor (duly
endorsed by such Pledgor, if required) to be applied against the Obligations,
whether matured or unmatured, in accordance with Paragraph 14 hereof.
14. Priorities Regarding Collateral. (a) Notwithstanding any
statement or provision to the contrary contained in any Loan Document or any
Infogrames Bridge Loan Document, any failure to file or record any financing
statement or any continuations thereof under the Code or other law of any
applicable jurisdiction with respect to the Collateral, and irrespective of the
time, place, order or method of attachment or perfection of any Lien granted to
the Administrative Agent, for the ratable benefit of the Lenders and the
Administrative Agent, under this Pledge Agreement or any other Loan Document or
any Lien granted to Infogrames U.S. under this Pledge Agreement or any other
Infogrames Bridge Loan Document, or the time or order of filing or recording of
financing statements or other notices of Liens granted pursuant hereto or
thereto, and irrespective of anything contained in any filing or agreement to
which the Borrower, any other Pledgor, the Administrative Agent, the Lenders or
Infogrames U.S. may now or hereafter be a party, and irrespective of the
ordinary rules of priority under the Code or under any other law governing the
relative priorities of secured creditors, any Lien in the Collateral granted by
the Borrower or any other Pledgor to the Administrative Agent, for the ratable
benefit of the Lenders and the Administrative Agent, pursuant to this Pledge
Agreement or any other Loan Document shall at all times (whether before, after
or during the pendency of any bankruptcy, reorganization or other insolvency
proceedings) have priority over and be senior to any Lien in the Collateral
granted by the Borrower or any other Pledgor to Infogrames U.S. pursuant to this
Pledge Agreement or any other Infogrames Bridge Loan Document.
(b) Without notice to or further assent by Infogrames U.S. and
without modifying or limiting in any way the subordination of the Liens granted
in the Collateral to Infogrames U.S. to secure the Bridge Obligations to the
Liens granted in the Collateral to the Administrative Agent, for the ratable
benefit of the Lenders and the Administrative Agent, to secure the Bank
Obligations:
<PAGE> 15
15
(i) any demand for payment of any Bank Obligations made by the
Administrative Agent or the Lenders may be rescinded in whole or in part
by such Lenders, and any Bank Obligations may be continued, and the Bank
Obligations, or the liability of the Borrower or any other Pledgor for
any part thereof, or any collateral security or guarantee therefor or
right of offset with respect thereto, or any obligation or liability of
the Borrower or any other Pledgor with respect to such Bank Obligations
under the Credit Agreement or any other Loan Document may, from time to
time, in whole or in part, be renewed, extended, modified, accelerated,
compromised, waived, surrendered, or released by the Administrative
Agent, acting at the direction of the Lenders pursuant to the Credit
Agreement; and
(ii) the Credit Agreement and any other Loan Document may be
amended, modified, supplemented or terminated, in whole or in part, in
each case in respect of the Bank Obligations, and any Collateral may be
exchanged, waived, surrendered or released, in each case in respect of
the Bank Obligations.
(c) The terms of this Paragraph 14 and the subordination of the
Liens granted in the Collateral to Infogrames U.S. pursuant to this Pledge
Agreement to secure the Bridge Obligations to the Liens granted in the
Collateral to the Administrative Agent, for the ratable benefit of the Lenders
and the Administrative Agent, to secure the Bank Obligations in the manner and
to the extent set forth herein, shall not be affected by any exercise of, or
failure to exercise, any right, power or remedy, or any waiver, consent release,
increase, extension, renewal, modification, delay or non-perfection under or in
respect of the Bank Obligations, this Pledge Agreement, the other Loan
Documents, the Bridge Obligations, the other Infogrames Bridge Loan Documents or
the Collateral. The Bank Obligations shall be deemed conclusively to have been
created, contracted or incurred in reliance upon this Pledge Agreement, and all
dealings among the Administrative Agent and the Lenders on the one hand, and
Infogrames U.S. on the other hand, shall be deemed to have been consummated in
reliance upon this Pledge Agreement.
15. Application of Proceeds. In order to implement the
subordination established pursuant to this Pledge Agreement of the Liens
securing the Bridge Obligations to the Liens securing the Bank Obligations, and
in order to implement the agreement of the Administrative Agent, on behalf of
the Lenders and the Administrative Agent, and Infogrames U.S. with respect to
the application of the proceeds of the Collateral, the Administrative Agent,
Infogrames U.S. and each Pledgor agree that upon the occurrence and during the
continuance of an Event of Default on or after the date of termination of the
Transaction Documentation, any money, property, securities or other
distributions received by any Pledgor, the Administrative Agent, any Lender or
Infogrames U.S. from the sale, disposition or other realization upon all or any
part of the Collateral shall be delivered to the Administrative Agent in the
form received, duly indorsed to the Administrative Agent, if required, and
applied as follows:
(a) First, to the payment in full of all reasonable costs and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements) paid or incurred by the Administrative Agent, or any
Lender, or paid or incurred by Infogrames U.S. at any time after the
Standstill Expiration Date, in connection with the realization on the
Collateral or
<PAGE> 16
16
the protection of the rights and interests of the Administrative Agent,
the Lenders or Infogrames U.S. therein, as the case may be;
(b) Second, to the Administrative Agent, for the ratable benefit
of the Lenders and the Administrative Agent, until an aggregate of
$75,000,000 of the Bank Obligations have been paid in full, such amounts
to be applied to the Bank Obligations in accordance with Section 4.5 of
the Credit Agreement;
(c) Third, on a pro rata basis (based upon the then outstanding
aggregate amount of the Bank Obligations and the then outstanding
aggregate amount of the Bridge Obligations other than the Bridge
Obligations referenced in clause (d) below) to the Administrative Agent,
for the ratable benefit of the Lenders and the Administrative Agent
(such amounts to be applied to the Bank Obligations in accordance with
Section 4.5 of the Credit Agreement), and to Infogrames U.S. (for
application to the Bridge Obligations) until all of the Bank Obligations
and all such Bridge Obligations have been paid in full;
(d) Fourth, to Infogrames U.S., all Bridge Obligations
constituting obligations of the Borrower under the Infogrames Securities
Purchase Agreement to pay or reimburse Infogrames or Infogrames U.S. for
costs and expenses (including without limitation, reasonable fees and
disbursements of counsel to Infogrames or Infogrames U.S.) incurred or
paid by Infogrames or Infogrames U.S. in connection with the Infogrames
Securities Purchase Agreement other than any such costs and expenses
relating to the Infogrames Bridge Loan; and
(e) Fifth, after the indefeasible payment in full of the
Obligations, to the Borrower or the applicable Pledgor, or its
representative or as a court of competent jurisdiction may direct, any
surplus then remaining.
16. Standstill Period in Respect of Bridge Obligations. (a)
Notwithstanding anything to the contrary contained in this Pledge Agreement, any
other Loan Document or any other Infogrames Bridge Loan Document, Infogrames
U.S. agrees and acknowledges that prior to the earlier of September 30, 2000 or
the nine (9) month anniversary of the date upon which the Transaction
Documentation is terminated (such earlier date, the "Standstill Expiration
Date"):
(i) other than (A) the right to receive payment in full of
the Bridge Obligations on the Transaction Closing Date and (B) any right
to receive payments on account of the Bridge Obligations in accordance
with Paragraph 15 (and the corresponding provisions of the other Loan
Documents and Infogrames Bridge Loan Documents), Infogrames U.S. shall
not, nor shall it seek to, exercise or enforce any right or remedy under
this Pledge Agreement, any other Infogrames Bridge Loan Document or
applicable law with respect to the Collateral or the Bridge Obligations,
including without limitation, any of the following: (1) exercise any
rights or remedies with respect to any Collateral; or (2) seek to notify
obligors of any security interest in all or any of the Collateral; or
(3) institute any action or proceeding with respect to such rights or
remedies with respect to any Collateral, including without limitation,
any action of
<PAGE> 17
17
foreclosure; or (4) contest, protest or object to any exercise of rights
or enforcement of remedies by the Administrative Agent;
(ii) Infogrames U.S. will not interfere with, seek to enjoin
or invoke or utilize any provision of any document, law or equitable
principle which might prevent, delay or impede the enforcement (in the
discretion of the Administrative Agent, acting at the direction of the
Required Lenders) of the rights of the Administrative Agent under this
Pledge Agreement or any other Loan Document or applicable law with
respect to the Collateral, including without limitation, to pursue
foreclosure or to seek to lift the automatic stay in any bankruptcy,
reorganization or other insolvency proceedings involving the Borrower or
any other Pledgor;
(iii) the Lenders shall have the sole right to consent to any
proposed sale or other disposition of the Collateral and to release any
or all of the Collateral from any Lien granted herein, whether such sale
or disposition is made by the Borrower or any other Pledgor, whether at
private sale or pursuant to foreclosure, bankruptcy or other judicial or
non-judicial proceedings and regardless of whether the proceeds of any
such disposition would be sufficient to pay in full the Bank Obligations
and the Bridge Obligations, and upon any such sale or other disposition,
Infogrames U.S.'s junior Lien on the portion of the Collateral sold or
disposed of shall, subject to clause (i) above, be automatically
extinguished and discharged; and
(iv) in exercising rights and remedies with respect to the
Collateral, the Administrative Agent and the Lenders may enforce the
provisions of this Pledge Agreement and exercise remedies hereunder and
under any other Loan Document or applicable law (or refrain from
enforcing such rights and exercising such remedies), all in such order
and in such manner as they may determine in the exercise of their sole
discretion, and such exercise and enforcement of rights and remedies
with respect to the Collateral shall include, without limitation, the
rights to collect, sell, dispose of or otherwise realize upon all or any
part of the Collateral, to incur expenses in connection with such
collection, sale, disposition or other realization and to exercise all
the rights and remedies of a secured lender under the Code of any
applicable jurisdiction.
(b) On and after the Standstill Expiration Date, the provisions of
Paragraph 16(a) above shall no longer apply and Infogrames U.S. may at any time
after the occurrence and during the continuance of an Event of Default under the
Infogrames Bridge Loan Documents, but subject to Paragraph 15 with respect to
the application of payments and proceeds in respect of the Collateral, (a)
exercise or enforce any right or remedy under applicable law in respect of the
Bridge Obligations and (b) instruct the Administrative Agent to immediately
commence the exercise of rights and remedies under this Pledge Agreement in
respect of the Collateral (and the manner in which to commence such exercise of
rights and remedies) unless the Administrative Agent has already commenced the
exercise thereof, provided that, subject to Infogrames U.S.'s right to exercise
any other rights and remedies under applicable law in respect of the Bridge
Obligations, and subject to Paragraph 15 with respect to the application of
payments and proceeds in respect of the Collateral, the exercise of rights and
remedies with respect to the Collateral shall be exercised solely by the
Administrative Agent (acting at the direction of Infogrames U.S. if such
<PAGE> 18
18
rights and remedies were not already exercised or being exercised by the
Administrative Agent as of the Standstill Expiration Date).
17. Appointment of Administrative Agent as Agent for Infogrames
U.S. In order to further perfect and protect the Liens on the Collateral granted
to Infogrames U.S. pursuant to this Pledge Agreement to secure the Bridge
Obligations, Infogrames U.S. hereby authorizes and appoints the Administrative
Agent to hold on Infogrames U.S.'s behalf and as its agent all Collateral
granted hereunder for purposes of possession and control under the Code or other
applicable law and to act on its behalf as otherwise set forth herein. The
Administrative Agent, for itself and its successors, hereby accepts such
authorization and appointment and Infogrames U.S. hereby releases the
Administrative Agent from any liability whatsoever (other than liability
resulting from the Administrative Agent's willful misconduct or gross
negligence) in connection with such authorization and appointment. This
authorization and appointment are a power coupled with an interest and are
irrevocable. It is understood and agreed that the Administrative Agent may also
hold Collateral for the benefit of the Lenders and the Administrative Agent.
18. Termination of Bridge Obligations. Upon payment in full of
the Bridge Obligations on the Transaction Closing Date, all of the Liens on the
Collateral granted by the Borrower and any other Pledgor to Infogrames U.S.
pursuant to this Pledge Agreement and the other Infogrames Bridge Loan Documents
to secure the Bridge Obligations shall be automatically terminated and released,
Infogrames U.S. shall cease to be a party to this Pledge Agreement and
Infogrames U.S. will, at the Administrative Agent's request and at the expense
of the Borrower, execute and deliver to the Administrative Agent such documents
as the Administrative Agent shall reasonably request to evidence the termination
and release of all such Liens on the Collateral.
19. Limitation on Duties Regarding Collateral. The Administrative
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar securities and property for its own
account. None of the Administrative Agent, any Lender, Infogrames U.S. or any of
their respective directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Pledgor or otherwise.
20. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral constitute irrevocable
powers coupled with an interest.
21. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
22. Paragraph Headings. The paragraph headings used in this
Pledge Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
<PAGE> 19
19
23. No Waiver; Cumulative Remedies. None the Administrative
Agent, any Lender, or Infogrames U.S. shall by any act (except by a written
instrument pursuant to Paragraph 24) be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of the Administrative Agent, any Lender
or Infogrames U.S., any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Administrative Agent,
any Lender or Infogrames U.S. of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the
Administrative Agent, such Lender or Infogrames U.S. would otherwise have on any
future occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
24. Waivers and Amendments; Successors and Assigns. None of the
terms or provisions of this Pledge Agreement may be amended, supplemented or
otherwise modified except by a written instrument executed by the Pledgors and
the Administrative Agent and, to the extent affecting the security interests in
favor of Infogrames U.S., Infogrames U.S.; provided that any consent by the
Administrative Agent to any waiver, amendment, supplement or modification hereto
shall be subject to approval thereof by the Lenders or Required Lenders, as
applicable, in accordance with Section 13.11 of the Credit Agreement. This
Pledge Agreement shall be binding upon the successors and assigns of the
Pledgors and shall inure to the benefit of the Administrative Agent, the
Lenders, Infogrames U.S. and their respective permitted successors and assigns.
25. Notices. All notices and communications to the Administrative
Agent, a Lender or a Pledgor shall be made in accordance with Section 13.1 of
the Credit Agreement and given to the addresses or transmission numbers for
notices set forth in the Credit Agreement, in the case of the Administrative
Agent or a Lender, or under its signature below, in the case of a Pledgor. All
notices and communications to Infogrames U.S. shall be made in accordance with
the Infogrames Bridge Loan Note and given to the address or transmission number
for notices set forth therein.
26. Control Agreement; Acknowledgment by Issuers and
Partnership/LLC.
(a) Each Pledgor hereby authorizes and instructs each applicable
Issuer and Partnership/LLC to comply, and each Issuer and
Partnership/LLC hereby agrees to so comply, with any instruction
received thereby from the Administrative Agent in accordance with the
terms of this Pledge Agreement with respect to the Collateral, without
any consent or further instructions from such Pledgor (or other
registered owner), and such Pledgor agrees that such Issuer and
Partnership/LLC shall be fully protected in so complying. Each
Partnership/LLC agrees that its agreement set forth in the preceding
sentence shall be sufficient to create in favor of the Administrative
Agent, for the benefit of the Lenders, the Administrative Agent and
Infogrames U.S. "control" of the Partnership/LLC Interests within the
meaning of such term under Section 8-106(c) of the
<PAGE> 20
20
Code. Notwithstanding the foregoing, nothing in this Pledge Agreement is
intended or shall be construed to mean or imply that the Partnership/LLC
Interests constitute "securities" within the meaning of such term under
Section 8-102(a)(15) of the Code or otherwise to limit or modify the
application of Section 8-103(c) of the Code. Rather, the Administrative
Agent and Infogrames U.S. have requested that this provision be included
in this Pledge Agreement solely out of an abundance of caution in the
event the Partnership/LLC Interests are, nevertheless, deemed to
constitute "securities" under the Code.
(b) Each Issuer and Partnership/LLC acknowledges receipt of a
copy of this Pledge Agreement and agrees to be bound thereby and to
comply with the terms thereof insofar as such terms are applicable to
it. Each Issuer and Partnership/LLC agrees to notify the Administrative
Agent and Infogrames U.S. promptly in writing of the occurrence of any
of the events described in Paragraph 6(c). Each Issuer and
Partnership/LLC further agrees that the terms of Paragraph 11 shall
apply to it with respect to all actions that may be required of it under
or pursuant to or arising out of Paragraph 9.
27. Authority of Administrative Agent. Each Pledgor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Pledge Agreement with respect to any action taken by the Administrative Agent or
the exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Pledge Agreement shall, as between the
Administrative Agent and the Lenders, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, and as between the Administrative Agent and Infogrames U.S. be governed by
Paragraph 17 herein, but, as between the Administrative Agent and such Pledgor,
the Administrative Agent shall be conclusively presumed to be acting as agent
for itself, the Lenders and Infogrames U.S., with full and valid authority so to
act or refrain from acting, and neither such Pledgor nor any Issuer or
Partnership/LLC shall be under any obligation, or entitlement, to make any
inquiry respecting such authority.
28. Governing Law. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
29. Consent to Jurisdiction. Each Pledgor hereby irrevocably and
unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Pledge Agreement, the other Loan Documents
and the other Infogrames Bridge Loan Documents to which it is a party,
or for recognition and enforcement of any judgement in respect thereof,
to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;
<PAGE> 21
21
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have
to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Pledgor at its address set forth under its signature
below;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
30. Waiver of Jury Trial. EACH PLEDGOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS PLEDGE AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY OTHER INFOGRAMES BRIDGE
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
31. Entire Agreement. This Pledge Agreement, together with the
other Loan Documents and the other Infogrames Bridge Loan Documents, constitutes
the entire agreement with respect to the subject matter hereof and supersedes
all prior agreements with respect to the subject matter hereof.
32. Release and Termination.
(a) Upon any sale, lease, transfer or other disposition of any
item of Collateral permitted in accordance with the terms of the Loan
Documents, the Administrative Agent and Infogrames U.S. will, at the
relevant Pledgor's expense, execute and deliver to such Pledgor such
documents as such Pledgor shall reasonably request to evidence the
release of such item of Collateral from the assignment and security
interest granted hereby.
(b) This Pledge Agreement shall remain in effect from the date
hereof through and including the date upon which all Obligations shall
have been indefeasibly and irrevocably paid and satisfied in full and
the Aggregate Commitment is terminated and upon such date the security
interest granted hereby shall terminate and all rights to the Collateral
shall revert to the Pledgors. Upon any such termination, (i) the
Administrative Agent and Infogrames U.S. shall promptly assign, release,
transfer and deliver to the appropriate Pledgors the Collateral pledged
hereunder, all instruments of assignment executed in connection
therewith, and all stock certificates or other certificates or
instruments held by the Administrative Agent or Infogrames U.S. in
connection therewith, together with all
<PAGE> 22
22
monies held by the Administrative Agent, Infogrames U.S. or any of their
respective agents hereunder, free and clear of the Liens hereof and (ii)
the Administrative Agent, the Lenders and Infogrames U.S. will promptly
execute and deliver to the appropriate Pledgors such documents and
instruments (including but not limited to appropriate UCC termination
statements) as such Pledgors shall reasonably request to evidence such
termination in each such case at the cost and expense of such Pledgors.
[Signature Pages Follow]
<PAGE> 23
IN WITNESS WHEREOF, each Pledgor has caused this Pledge Agreement to be
duly executed and delivered by its duly authorized officer as of the date first
above written.
GT INTERACTIVE SOFTWARE CORP.
By: _______________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO
Telephone: 212-726-6500
Telecopy: 212-726-6590
HUMONGOUS ENTERTAINMENT, INC.
By: _______________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
WIZARDWORKS GROUP, INC.
By: _______________________________________________
Name:
Title:
<PAGE> 24
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
SINGLETRAC ENTERTAINMENT TECHNOLOGIES, INC.
By: _______________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
SWAN ACQUISITION CORP.
By: _______________________________________________
Name:
Title:
<PAGE> 25
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
CANDEL INC.
By:________________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
FORMGEN, INC.
By: _______________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
<PAGE> 26
GOLD MEDALLION SOFTWARE INC.
By: _______________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
MEDIATECHNICS LTD.
By: _______________________________________________
Name:
Title:
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
LEGEND ENTERTAINMENT COMPANY LLC
By: _______________________________________________
Name:
Title:
<PAGE> 27
Address for notices:
417 Fifth Avenue, 8th Floor
New York, New York 10016
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: 212-726-6500
Telecopy: 212-726-6590
FIRST UNION NATIONAL BANK,
as Administrative Agent
By: _______________________________________________
Name:
Title:
CALIFORNIA U.S. HOLDINGS, INC.
By:_____________________________________
Name:
Title:
<PAGE> 28
Schedule I to Second Amended and
Restated Pledge Agreement
Pledged Stock and Partnership/LLC Interests
[TO BE COMPLETED]
<PAGE> 29
Schedule II to Second Amended and
Restated Pledge Agreement
Locations
[ TO BE COMPLETED]
