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Exhibit 10.26h
WARRANT AGREEMENT
Dated as of
February 15, 2000
among
INFOGRAMES, INC.
(formerly GT Interactive Software Corp.),
INFOGRAMES ENTERTAINMENT S.A.
and
CALIFORNIA U.S. HOLDINGS, INC.
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WARRANT AGREEMENT, dated as of February 15, 2000 (as amended,
restated, supplemented or otherwise modified from time to time, this
"Agreement"), by and among INFOGRAMES, INC. (formerly GT Interactive Software
Corp.), a Delaware corporation (the "Company"), INFOGRAMES ENTERTAINMENT S.A. a
French societe anonyme ("Infogrames") and CALIFORNIA U.S. HOLDINGS, INC.
("CUSH"), a California corporation and wholly-owned subsidiary of Infogrames.
W I T N E S S E T H :
WHEREAS, pursuant to the terms of the Master Assignment and
Acceptance dated as of February 15, 2000 (the "Assignment and Acceptance"), by
and among (i) the Company, as borrower, (ii) First Union National Bank, Bank of
America, N.A., European American Bank, Fleet Bank, N.A., National Bank of
Canada, The Bank of Nova Scotia (collectively the "Previous Lenders"), and (iii)
Infogrames, as assignee, the Previous Lenders assigned to Infogrames all the
rights and obligations of the Previous Lenders under the Credit Agreement dated
as of September 11, 1998 (as amended, restated, supplemented or otherwise
modified, the "Credit Agreement"), by and among the Company and the Previous
Lenders;
WHEREAS, pursuant to the terms of the Collateral Assignment
Agreement dated as of February 15, 2000 (the "Collateral Assignment Agreement"),
by and among (i) the Company, (ii) First Union National Bank, (as administrative
agent under the Credit Agreement, the "Agent"), and (iii) Infogrames (as
successor agent, the "Successor Agent"), the Agent assigned to the Successor
Agent all of its rights, titles and interests in, to and under (a) a certain
Second Amended and Restated Pledge Agreement, (b) a certain Second Amended and
Restated Security Agreement and (c) a certain Guaranty Agreement, all entered
into in connection with the Credit Agreement;
WHEREAS, in consideration of, among other things, the Previous
Lenders' agreement to execute the Second Amendment, Waiver and Agreement dated
June 29, 1999 (the "Second Amendment") under the Credit Agreement to, among
other things, amend certain provision of the Credit Agreement, the Company
entered into a Warrant Agreement dated as of June 29, 1999 (the "Bank Warrant
Agreement") with the Previous Lenders;
WHEREAS, pursuant to the Bank Warrant Agreement, the Company
issued and delivered to the Previous Lenders, (i) warrants to purchase 375,000
shares of Common Stock, exercisable on and after June 29, 1999, (the "First Set
of Warrants"), (ii) warrants to purchase 250,000 shares of Common Stock,
exercisable on and after October 31, 1999 (the "Second Set of Warrants") and
(iii) warrants to purchase 225,000 shares of Common Stock, that would have been
exercisable on or after February 28, 2000 if certain conditions had been met
(the "Third Set of Warrants");
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WHEREAS, in connection with the Assignment and Acceptance, the
Previous Lenders agreed to return to the Company for cancellation the Third Set
of Warrants, and the Company agreed to enter into this Agreement with Infogrames
and CUSH and to issue and deliver new warrants to CUSH to purchase 225,000
shares of Common Stock upon the terms and conditions set forth herein
(collectively, the "Credit Warrants"); and
WHEREAS, in connection with the issuance of the Credit
Warrants pursuant to this Agreement, the Company has agreed to provide certain
registration rights to CUSH in respect of the shares of Common Stock issuable
upon exercise of the Credit Warrants pursuant to an Amended and Restated
Registration Rights Agreement (as amended, restated, supplemented or otherwise
modified, the "Amended and Restated Registration Rights Agreement"), by and
among the Company and CUSH.
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, the parties hereto hereby agree as follows:
ARTICLE 1.
Defined Terms
SECTION 1.1 Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other
Person which directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such first
Person or any of its Subsidiaries. The term "control" means (a) the power to
vote ten percent (10%) or more of the securities or other equity interests of a
Person having ordinary voting power, or (b) the possession, directly or
indirectly, of any other power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Agent" has the meaning set forth in the Recitals.
"Agreement" has the meaning set forth in the Preamble.
"Amended and Restated Registration Rights Agreement" has the
meaning set forth in the Recitals.
"Assignment and Acceptance" has the meaning set forth in the
Recitals.
"Bank Warrant Agreement" has the meaning set forth in the
Recitals.
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"Board" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board of Directors.
"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.
"Cashless Exercise" has the meaning set forth in Section 3.4.
"Cashless Exercise Ratio" means a fraction, the numerator of
which is the excess of the Current Market Value per share of Common Stock on the
date of exercise over the Exercise Price per share and the denominator of which
is the Current Market Value per share of the Common Stock on the date of
exercise.
"Certificate Register" has the meaning set forth in Section
2.3.
"Collateral Assignment Agreement" has the meaning set forth in
the Recitals.
"Combination" means an event or series of events in which the
Company consolidates with, merges with or into, or sells all or substantially
all its property and assets to, another Person or Persons.
"Common Stock" means the common stock, $0.01 par value, of the
Company together with any other equity securities that may be issued by the
Company in substitution therefor.
"Company" has the meaning set forth in the Preamble.
"Credit Agreement" has the meaning set forth in the Recitals.
"Credit Warrants" has the meaning set forth in the Recitals.
"Current Market Value" has the meaning set forth in Section
4.8.
"CUSH" has the meaning set forth in the Preamble.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exercise Price" has the meaning set forth in Section 3.1.
"Expiration Date" means February 15, 2005.
"Fair Value" has the meaning set forth in Section 4.2.
"First Set of Warrants" has the meaning set forth in the
Recitals.
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"Governmental Authority" means any nation, province, state or
political subdivision thereof, and any government or any Person exercising
executive, legislative, 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.
"Holder" means CUSH or any person to whom CUSH transfers a
Credit Warrant pursuant to the terms and conditions hereof.
"Officer" means any of the following: the chief executive
officer, chief operating officer, chief financial officer or vice president of
the Company.
"Person" means an individual, corporation, limited liability
company, partnership, association, trust, business trust, joint venture, joint
stock company, pool, syndicate, sole proprietorship, unincorporated
organization, Governmental Authority or any other form of entity or group
thereof.
"Previous Lenders" has the meaning set forth in the Recitals.
"Required Holders" has the meaning set forth in Section 5.5.
"Rule 144" means Rule 144 promulgated under the Securities
Act, as such Rule may be amended from time to time, or any successor rule or
regulation hereinafter adopted by the SEC.
"SEC" means the Securities and Exchange Commission (or any
successor thereto).
"Second Amendment" has the meaning set forth in the Recitals.
"Second Set of Warrants" has the meaning set forth in the
Recitals.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means 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).
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"Successor Agent" has the meaning set forth in the Recitals.
"Third Set of Warrants" has the meaning set forth in the
Recitals.
"Transfer Agent" has the meaning set forth in Section 3.5.
"Transfer Restricted Securities" means the Credit Warrants and
the Warrant Shares issued to Holder upon exercise of the Credit Warrants,
whether or not such exercise has been effected. Each such security shall cease
to be a Transfer Restricted Security when the legend set forth in Section 2.5
is, or may be, removed pursuant to Section 2.4(b)(v).
"Voting Stock" of a corporation means all classes of capital
stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Warrant Certificate" means the certificate evidencing the
Credit Warrants to be delivered pursuant to this Agreement, substantially in the
form of Exhibit A hereto.
"Warrant Shares" means the shares of Common Stock to be issued
and received, or issued and received, as the case may be, upon exercise of the
Credit Warrants.
SECTION 1.2 Rules of Construction. Unless the text otherwise
requires.
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the
meaning assigned to it in accordance with U.S. generally accepted accounting
principles as in effect from time to time;
(c) "or" is not exclusive;
(d) "including" means including, without limitation;
and
(e) words in the singular include the plural and
words in the plural include the singular.
ARTICLE 2.
Warrant Certificates
SECTION 2.1 Issuance and Dating. The Credit Warrants initially
shall be issued as of the date of this Agreement. The Company, Infogrames and
CUSH hereby agree that the Credit Warrants initially shall be issued in the name
of CUSH and that the provisions of Section 2.4 shall not apply to such issuance.
The Credit Warrants shall be evidenced by a Warrant Certificate substantially in
the form of Exhibit A, which is hereby
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incorporated in and expressly made a part of this Agreement. The Warrant
Certificate may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company) and shall bear the legend required by Section 2.5. Each Credit
Warrant shall be dated the date of its execution by the Company. The terms of
the Credit Warrants set forth in Exhibit A are part of the terms of this
Agreement.
SECTION 2.2 Execution. (a) With respect to the Credit Warrants
to be issued pursuant to this Agreement, one or more Warrant Certificates
representing the Credit Warrants shall be executed on behalf of the Company by
manual or facsimile signature by one Officer and attested by its Secretary or an
Assistant Secretary under its corporate seal which may be impressed, affixed,
imprinted or reproduced on such Warrant Certificate or may be in facsimile form.
(b) Upon written order from any Holder, the Company shall
execute and deliver to such Holder Warrant Certificates registered in the name
or names and for such number of Credit Warrants as shall be specified by such
Holder in such order in exchange for Warrant Certificate(s) then held by such
Holder for a like number of Credit Warrants.
SECTION 2.3 Certificate Register. The Company shall keep a
register ("Certificate Register") of the Warrant Certificates and of their
transfer and exchange. The Certificate Register shall show the names and
addresses of the respective Holders and the date and number of Credit Warrants
evidenced on the face of each of the Warrant Certificates.
SECTION 2.4 Transfer and Exchange. (a) When Credit Warrants
are presented to the Company with a request to register the transfer of such
Credit Warrants or to exchange such Credit Warrants for an equal number of
Credit Warrants of other authorized denominations, the Company shall register
the transfer or make the exchange as requested; provided, however, that the
Warrant Certificates representing such Credit Warrants surrendered for transfer
or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company, duly
executed by the Holder thereof or the attorney of such Holder duly authorized in
writing; and
(ii) in the case of Credit Warrants that are Transfer
Restricted Securities, shall be accompanied by the following additional
information and documents:
(A) a certificate from such Holder in substantially
the form of Exhibit C hereto certifying that:
(1) such securities are being
delivered for registration in the name of such Holder
without transfer;
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(2) such securities are being
transferred to the Company;
(3) such securities are being
transferred pursuant to an effective registration
statement under the Securities Act; or
(4) such securities are being
transferred (w) to a "qualified institutional buyer"
("QIB") as defined in Rule 144A under the Securities
Act pursuant to such Rule 144A, if available, (x) in
an offshore transaction in accordance with Rule 904
under the Securities Act, (y) in a transaction
meeting the requirements of Rule 144 under the
Securities Act or (z) pursuant to another available
exemption from the registration requirements of the
Securities Act; and
(B) in the case of any transfer described under
clause (a)(ii)(A)(4)(x), (y) or (z) of this Section 2.4,
evidence reasonably satisfactory to the Company (which may
include an opinion of counsel) as to compliance with the
restrictions set forth in the legend in Section 2.5.
(b) (i) To permit registrations of transfers and exchanges,
the Company shall execute Warrant Certificates as required pursuant to the
provisions of this Section 2.4.
(ii) All Warrant Certificates issued upon any
registration of transfer or exchange of Credit Warrants shall be the valid
obligations of the Company, entitled to the same benefits under this Agreement,
as the Warrant Certificates surrendered upon such registration of transfer or
exchange.
(iii) Prior to due presentment for registration of
transfer of any Credit Warrant, the Company may deem and treat the Person in
whose name any Credit Warrant is registered as the absolute owner of such Credit
Warrant and the Company shall not be affected by notice to the contrary.
(iv) No service charge shall be made to a Holder for
any registration of transfer or exchange upon surrender of any Warrant
Certificate. However, the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Warrant Certificates.
(v) Upon any sale or transfer of Credit Warrants
pursuant to an effective registration statement under the Securities Act,
pursuant to Rule 144(k) under the Securities Act or pursuant to an opinion of
counsel reasonably satisfactory to the Company that no legend is required, the
Company shall permit the Holder thereof to exchange such Credit Warrants for
Credit Warrants represented by Warrant Certificates
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that do not bear the legend set forth in Section 2.5 and rescind any restriction
on the transfer of such Credit Warrants.
SECTION 2.5 Legends. Except for Warrant Certificates delivered
pursuant to Section 2.4(b)(v) of this Agreement, each Warrant Certificate
evidencing the Credit Warrants (and all Warrant Certificates issued in exchange
therefor or substitution thereof) and each certificate representing the Warrant
Shares (unless such Warrant Shares are not Transfer Restricted Securities) shall
bear a legend in substantially the following form (with any appropriate
modification for the Warrant Shares):
"THE WARRANTS AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE
WARRANTS (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT, OR IN A TRANSACTION
WHICH IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES 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 RULE
904 OF REGULATION S UNDER THE SECURITIES ACT; OR (E) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT."
SECTION 2.6 Replacement Certificates. If a mutilated Warrant
Certificate is surrendered to the Company or if the Holder of a Warrant
Certificate claims that the Warrant Certificate has been lost, destroyed or
wrongfully taken, the Company shall issue a replacement Warrant Certificate if
the requirements of Section 8-405 of the Uniform Commercial Code as in effect in
the State of New York are met. If required by the Company, such Holder shall
furnish an indemnity sufficient in the reasonable judgment of the Company to
protect the Company from any loss which it may suffer if a Warrant Certificate
is replaced. The Company may charge the Holder for its reasonable expenses in
replacing a Warrant Certificate. Every replacement Warrant Certificate is an
additional obligation of the Company.
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SECTION 2.7 Cancellation. (a) In the event the Company shall
purchase or otherwise acquire Credit Warrants, the Warrant Certificates in
respect thereof shall thereupon be delivered to the Company for cancellation.
(b) The Company shall cancel and destroy all Warrant
Certificates surrendered for transfer, exchange, replacement, exercise or
cancellation. The Company may not issue new Warrant Certificates to replace
Warrant Certificates to the extent they evidence Credit Warrants which have been
exercised or Credit Warrants which the Company has purchased or otherwise
acquired.
ARTICLE 3.
Exercise Terms
SECTION 3.1 Exercise Price. Each Credit Warrant shall entitle
the Holder thereof to purchase one share of Common Stock for a per share
exercise price of $0.01 (the "Exercise Price").
SECTION 3.2 Limitations on Exercise. Each Credit Warrant may
be exercised at any time in the discretion of the Holder thereof, provided, that
no Credit Warrant shall be exercisable prior to February 28, 2000 and after the
Expiration Date.
SECTION 3.3 Expiration. A Credit Warrant shall terminate and
become void as of the earlier of (a) the close of business on the Expiration
Date and (b) the time and date such Credit Warrant is exercised. The Credit
Warrants shall terminate and become void after the Expiration Date.
SECTION 3.4 Manner of Exercise. Credit Warrants may be
exercised upon (a) surrender to the Company of the Warrant Certificates,
together with the form of election to purchase Common Stock attached as Exhibit
B hereto duly filled in and signed by the Holder thereof and (b) payment to the
Company of the Exercise Price for the number of Warrant Shares in respect of
which such Credit Warrant is then exercised. Such payment shall be made (i) 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 or (ii) by the surrender (which surrender shall be evidenced by
cancellation of the number of Credit Warrants represented by any Warrant
Certificate presented in connection with a Cashless Exercise) of a Credit
Warrant or Credit Warrants (represented by one or more relevant Warrant
Certificates), and without the 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 Credit
Warrant would otherwise then be nominally exercised if payment of the Exercise
Price as of the date of exercise were being made in cash and (2) the Cashless
Exercise Ratio. An exercise of a Credit Warrant in accordance with clause (ii)
of the immediately preceding sentence is herein called a "Cashless Exercise".
All provisions of
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this Agreement shall be applicable with respect to an exercise of Warrant
Certificates pursuant to a Cashless Exercise for less than the full number of
Credit Warrants represented thereby. Subject to Section 3.2, the rights
represented by the Credit Warrants shall be exercisable at the election of the
Holder thereof either in full at any time or from time to time in part and in
the event that a Warrant Certificate is surrendered for exercise in respect of
less than all the Warrant Shares purchasable on such exercise at any time prior
to the Expiration Date a new Warrant Certificate exercisable for the remaining
Warrant Shares will be issued. The Company shall execute and deliver to the
Holder the required new Warrant Certificate.
SECTION 3.5 Issuance of Warrant Shares. Subject to Section
2.6, upon the surrender of Warrant Certificates and payment of the per share
Exercise Price, as set forth in Section 3.4, the Company shall issue (and, if
applicable, cause any transfer agent for the Common Stock (the "Transfer Agent")
to countersign) and deliver to or upon the written order of the Holder and in
such name or names as the Holder may designate, a certificate or certificates
for the number of full Warrant Shares so purchased upon the exercise of such
Credit Warrants or other securities or property to which it is entitled,
registered or otherwise to the Person or Persons entitled to receive the same,
together with cash as provided in Section 3.6 in respect of any fractional
Warrant Shares otherwise issuable upon such exercise. Such certificate or
certificates shall be deemed to have been issued and any Person so designated to
be named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrant Certificates and
payment of the per share Exercise Price as set forth in Section 3.4.
SECTION 3.6 Fractional Warrant Shares. The Company shall not
be required to issue fractional Warrant Shares on the exercise of Credit
Warrants. If more than one Credit Warrant shall be exercised in full at the same
time by the same Holder, the number of full Warrant Shares which shall be
issuable upon such exercise shall be computed on the basis of the aggregate
number of Warrant Shares purchasable pursuant thereto. If any fraction of a
Warrant Share would, except for the provisions of this Section 3.6, be issuable
on the exercise of any Credit Warrant (or specified portion thereof), the
Company shall pay an amount in cash equal to the Current Market Value for one
Warrant Share on the Business Day immediately preceding the date the Credit
Warrant is exercised, multiplied by such fraction, computed to the nearest whole
cent.
SECTION 3.7 Reservation of Warrant Shares. The Company shall
at all times keep reserved out of its authorized shares of Common Stock a number
of shares of Common Stock sufficient to provide for the exercise of all
outstanding Credit Warrants. Any registrar for the Common Stock shall at all
times until the Expiration Date, or the time at which all Credit Warrants have
been exercised or cancelled, reserve such number of authorized shares as shall
be required for such purpose. The Company will keep a copy of this Agreement on
file with any Transfer Agent. All Warrant Shares which may be issued upon
exercise of Credit Warrants shall, upon issue, be fully paid, nonassessable,
free of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issue thereof. The Company will supply any
Transfer Agent with duly
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executed stock certificates for such purpose and will itself provide or
otherwise make available any cash which may be payable as provided in Section
3.6. The Company will furnish to any Transfer Agent a copy of all notices of
adjustments and certificates related thereto transmitted to each Holder.
SECTION 3.8 Compliance with Law. If any shares of Common Stock
required to be reserved for purposes of exercise of Credit Warrants require,
under any other Federal or state law or applicable governing rule or regulation
of any national securities exchange, registration with or approval of any
Governmental Authority, or listing on any such national securities exchange
before such shares may be issued upon exercise, the Company will cause such
shares to be duly registered or approved by such Governmental Authority or
listed on the relevant national securities exchange; provided that the Company
shall not have any obligation to register the Warrant Shares under the
Securities Act except pursuant to the Amended and Restated Registration Rights
Agreement.
SECTION 3.9 Registration Rights. Each Holder of the Credit
Warrants and the Warrant Shares shall be entitled to the registration rights in
respect of the Warrant Shares set forth in the Amended and Restated Registration
Rights Agreement.
ARTICLE 4.
Antidilution Provisions
SECTION 4.1 Changes in Common Stock. In the event that at any
time or from time to time after the date hereof the Company shall (a) pay a
dividend or make a distribution on its Common Stock in shares of its Common
Stock or other shares of capital stock, (b) subdivide its outstanding shares of
Common Stock into a larger number of shares of Common Stock, (c) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock or (d) increase or decrease the number of shares of Common Stock
outstanding by reclassification of its Common Stock, then the number of shares
of Common Stock purchasable upon exercise of each Credit Warrant immediately
after the happening of such event shall be adjusted so that, after giving affect
to such adjustment, the Holder of each Credit Warrant shall be entitled to
receive the number of shares of Common Stock upon exercise that such holder
would have owned or have been entitled to receive had such Credit Warrants been
exercised immediately prior to the happening of the events described above (or,
in the case of a dividend or distribution of Common Stock, immediately prior to
the record date therefor). An adjustment made pursuant to this Section 4.1 shall
become effective immediately after the effective date, retroactive to the record
date therefor in the case of a dividend or distribution in shares of Common
Stock, and shall become effective immediately after the effective date in the
case of a subdivision, combination or reclassification.
SECTION 4.2 Cash Dividends and Other Distributions. In the
event that at any time or from time to time after the date hereof the Company
shall distribute to
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holders of Common Stock (a) any dividend or other distribution of cash,
evidences of its indebtedness, shares of its capital stock or any other
properties or securities or (b) any options, warrants or other rights to
subscribe for or purchase any of the foregoing (other than, in each case set
forth in (a) and (b), (i) any dividend or distribution described in Section 4.1
or (ii) any rights, options, warrants or securities described in Section 4.3)
then the number of shares of Common Stock thereafter purchasable upon the
exercise of each Credit Warrant shall be increased to a number determined by
multiplying the number of shares of Common Stock purchasable upon the exercise
of such Credit Warrant immediately prior to the record date for any such
dividend or distribution by a fraction, the numerator of which shall be the
Current Market Value per share of Common Stock on the record date for such
distribution, and the denominator of which shall be such Current Market Value
per share of Common Stock less the sum of (x) any cash distributed per share of
Common Stock and (y) the fair value (the "Fair Value") (as determined in good
faith by the Board, whose determination shall be evidenced by a Board resolution
delivered to each Holder) of the portion, if any, of the distribution applicable
to one share of Common Stock consisting of evidences of indebtedness, shares of
stock, securities, other property, warrants, options or subscription of purchase
rights (notwithstanding the foregoing, if the Fair Value per share of Common
Stock in the above formula equals or exceeds the Current Market Value per share
of Common Stock in the above formula, then the Current Market Value per share of
Common Stock shall be equal to the Fair Value per share of the Common Stock on
the record date as determined in good faith by the Board and described in a
Board resolution delivered to each Holder). Such adjustments shall be made
whenever any distribution is made and shall become effective as of the date of
distribution, retroactive to the record date for any such distribution;
provided, however, that the Company is not required to make an adjustment
pursuant to this Section 4.2 if at the time of such distribution the Company
makes the same distribution to Holders of Credit Warrants as it makes to holders
of Common Stock pro rata based on the number of shares of Common Stock for which
such Credit Warrants are exercisable (whether or not currently exercisable).
SECTION 4.3 Rights Issue. In the event that at any time or
from time to time after the date hereof the Company shall issue, sell,
distribute or otherwise grant any rights to subscribe for or to purchase, or any
options or warrants for the purchase of, or any securities convertible or
exchangeable into, Common Stock, entitling such holders to subscribe for or
purchase shares of Common Stock or stock or securities convertible into Common
Stock, whether or not immediately exercisable, convertible or exchangeable, as
the case may be, and the price per share of Common Stock issuable upon exercise,
conversion or exchange thereof is lower at the record date for such issuance
than the then Current Market Value per share of Common Stock, then the number of
shares of Common Stock thereafter purchasable upon the exercise of each Credit
Warrant shall be increased to a number determined by multiplying the number of
shares of Common Stock purchasable upon the exercise of such Credit Warrant
immediately prior to the date of issuance of such rights, options, warrants or
securities by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding on the date of issuance of such rights, options,
warrants or securities plus the number of additional
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shares of Common Stock offered for subscription or purchase or into or for which
such securities are convertible or exchangeable, and the denominator of which
shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights, options, warrants or securities plus the total number
of shares of Common Stock which could be purchased at the Current Market Value
with the aggregate consideration received through issuance of such rights,
warrants, options, or convertible securities. Such adjustment shall be made
whenever such rights, options or warrants are issued and shall become effective
retroactively immediately after the record date for the determination of
stockholders entitled to receive such rights, options, warrants or securities.
Notwithstanding any other provision of this Section 4.3, the number of shares of
Common Stock purchasable upon exercise of any Credit Warrant shall not be
adjusted pursuant to this Section 4.3 in connection with the issuance or grant
of Common Stock upon the exercise of rights or options to the Company's
employees under bona fide employee benefit plans adopted prior to the date of
this Agreement by the Board and approved by the holders of Common Stock when
required by law, if the number of shares of Common Stock underlying such rights
and options do not exceed 5% of the Common Stock outstanding on the date of this
Agreement.
If the Company at any time shall issue two or more securities
as a unit and one or more of such securities shall be rights, options or
warrants for or securities convertible or exchangeable into, Common Stock
subject to this Section 4.3, the consideration allocated to each such security
shall be determined in good faith by the Board.
SECTION 4.4 Issuance of Additional Shares of Common Stock. In
the event that at any time or from time to time after the date hereof the
Company shall issue or sell any additional shares of Common Stock for
consideration in an amount per additional share of Common Stock less than the
Current Market Value, then the number of shares of Common Stock thereafter
purchasable upon the exercise of each Credit Warrant shall be increased to a
number determined by multiplying the number of shares of Common Stock
purchasable upon the exercise of each Credit Warrant immediately prior to such
issue or sale by a fraction the numerator of which shall be the number of shares
of Common Stock outstanding immediately after such issue or sale, and the
denominator of which shall be the sum of (i) the number of shares of Common
Stock outstanding immediately prior to such issue or sale, and (ii) the number
of shares of Common Stock which could be purchased at the Current Market Value
with the aggregate consideration received from the issuance or sale of the
additional shares of Common Stock. For the purposes of this Section 4.4, the
date as of which the Current Market Value per share of Common Stock shall be
computed shall be the earlier of (x) the date on which the Company shall enter
into a firm contract for the issuance of such additional shares of Common Stock
or (y) the date of actual issuance of such additional shares of Common Stock.
Notwithstanding any other provision of this Section 4.4, the number of shares of
Common Stock purchasable upon exercise of any Credit 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
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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 Credit 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 Shareholder Subordinated
Debt (as defined in the Credit Agreement), (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 and
(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.
SECTION 4.5 Combination; Liquidation. (a) Except as provided
in Section 4.5(b), in the event of any Combination, each Holder shall have the
right to receive upon exercise of its Credit Warrants such number of shares of
capital stock or other securities or property which such Holder would have been
entitled to receive upon or as a result of such Combination had such Credit
Warrants been exercised immediately prior to such event.
(b) In the event of (i) a Combination where consideration to
holders of Common Stock in exchange for their shares is payable solely in cash,
or (ii) the dissolution, liquidation or winding-up of the Company, then each
Holder of the Credit Warrants will be entitled to receive distributions on an
equal basis with the holders of Common Stock or other securities issuable upon
exercise of its Credit Warrants, as if such Credit Warrants had been exercised
immediately prior to such event, less the Exercise Price. In case of any
Combination described in this Section 4.5(b), the surviving or acquiring Person
and, in the event of any dissolution, liquidation or winding-up of the Company,
the Company, shall make payment to each Holder by delivering a check in such
amount as is appropriate (or, in the case of consideration other than cash, such
other consideration as is appropriate) to such Person or Persons as it may be
directed in writing by such Holder surrendering such Credit Warrants.
SECTION 4.6 Tender Offers: Exchange Offers. In the event that
the Company or any subsidiary of the Company shall purchase shares of Common
Stock pursuant to a tender offer or an exchange offer for a price per share of
Common Stock that is greater than the then Current Market Value per share of
Common Stock in effect at the end of the trading day immediately following the
day on which such tender offer or exchange offer expires, then the number of
shares of Common Stock thereafter purchasable upon the exercise of each Credit
Warrant shall be increased to a number determined by multiplying the number of
shares of Common Stock purchasable upon the exercise of such Credit Warrant
immediately prior to such purchase by a fraction the numerator of which shall be
the sum of (x) the fair market value of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender offer or exchange offer) of all shares of Common Stock validly
tendered or exchanged and not withdrawn as of the expiration time of such tender
offer or exchange offer (the "Purchased Shares") and (y) the product of the
number
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of shares of Common Stock outstanding (less the Purchased Shares) at the
expiration time of such offer or exchange offer and the first reported sales
price of the Common Stock on the trading day immediately following the day on
which such tender offer or exchange offer expires and the denominator of which
shall be the number of shares of Common Stock outstanding (including any
Purchased Shares) at the expiration time of such tender offer or exchange offer
multiplied by the first reported sales price of the Common Stock on the trading
day immediately following the day on which such tender offer or exchange offer
expires, such increase to become effective immediately prior to the opening of
business on the day immediately following the day on which such tender offer or
exchange offer expires.
SECTION 4.7 Other Events. If any event occurs as to which the
foregoing provisions of this Article 4 are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board, fairly
and adequately protect the purchase rights of the Credit Warrants in accordance
with the essential intent and principles of such provisions, then such Board
shall make such adjustments in the application of such provisions, in accordance
with such essential intent and principles, as shall be reasonably necessary, in
the good faith opinion of such Board, to protect such purchase rights as
aforesaid, but in no event shall any such adjustment have the effect of
decreasing the number of shares of Common Stock subject to purchase upon
exercise of this Credit Warrant.
SECTION 4.8 Current Market Value. For the purpose of any
computation of Current Market Value under this Article 4 and Section 3.6, the
"Current Market Value" per share of Common Stock at any date shall be (a) for
purposes of Section 3.6, the closing price on the Business Day immediately prior
to the date of the exercise of the applicable Credit Warrant pursuant to Article
3 and (b) in all other cases, the average of the daily closing prices for the 20
consecutive trading days ending on the last full trading day on the exchange or
market specified in the second succeeding sentence prior to such date. The
closing price for any day shall be the last reported sale price regular way or,
in case no such reported sale takes place on such day, the average of the
closing bid and asked prices regular way for such day, in each case (1) on the
principal national securities exchange on which the shares of Common Stock are
listed or to which such shares are admitted to trading or (2) if the Common
Stock is not listed or admitted to trading on a national securities exchange, in
the over-the-counter market as reported by the Nasdaq National Market or any
comparable system or (3) if the Common Stock is not listed on the Nasdaq
National Market or a comparable system, as furnished by two members of the NASD
selected from time to time in good faith by the Board for that purpose. In the
absence of all of the foregoing, or if for any other reason the Current Market
Value per share cannot be determined pursuant to the foregoing provisions of
this Section 4.8, the Current Market Value per share shall be the (x) the fair
market value thereof determined in good faith in the most recently completed
arm's-length transaction between the Company and a person other than an
Affiliate of the Company and the closing of which occurs on such date or shall
have occurred within the three months preceding such date or (y) if no
transaction shall have occurred on such date or within
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such three-month period, the fair market value thereof as determined by an
investment bank of nationally recognized standing selected by the Company and
acceptable to the Required Holders. The Company shall pay the fees and expenses
of any investment bank involved in the determination of Current Market Value.
SECTION 4.9 Superseding Adjustment. Upon the expiration of any
rights, options, warrants or conversion or exchange privileges which resulted in
the adjustments pursuant to this Article 4, if any thereof shall not have been
exercised, the number of Warrant Shares purchasable upon the exercise of each
Credit Warrant shall be readjusted as if (a) the only shares of Common Stock
issuable upon exercise of such rights, options, warrants, conversion or exchange
privileges were the shares of Common Stock, if any, actually issued upon the
exercise of such rights, options, warrants or conversion or exchange privileges
and (b) shares of Common Stock actually issued, if any, were issuable for the
consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale or grant of all such rights, options, warrants or conversion or
exchange privileges whether or not exercised; provided, however, that no such
readjustment shall (except by reason of an intervening adjustment under Section
4.1) have the effect of decreasing the number of Warrant Shares purchasable upon
the exercise of each Credit Warrant by an amount in excess of the amount of the
adjustment initially made in respect of the issuance, sale or grant of such
rights, options, warrants or conversion or exchange privileges.
SECTION 4.10 Minimum Adjustment. The adjustments required by
the preceding Sections of this Article 4 shall be made whenever and as often as
any specified event requiring an adjustment shall occur, except that no
adjustment of the number of shares of Common Stock purchasable upon exercise of
Credit Warrants that would otherwise be required shall be made (except in the
case of a subdivision or combination of shares of Common Stock, as provided for
in Section 4.1) unless and until such adjustment either by itself or with other
adjustments not previously made increases or decreases by at least 1% the number
of shares of Common Stock purchasable upon exercise of Credit Warrants
immediately prior to the making of such adjustment. Any adjustment representing
a change of less than such minimum amount shall be carried forward and made as
soon as such adjustment, together with other adjustments required by this
Article 4 and not previously made, would result in a minimum adjustment. For the
purpose of any adjustment, any specified event shall be deemed to have occurred
at the close of business on the date of its occurrence. In computing adjustments
under this Article 4, fractional interests in Common Stock shall be taken into
account to the nearest one-hundredth of a share.
SECTION 4.11 Notice of Adjustment. Whenever the number of
shares of Common Stock and other property, if any, purchasable upon exercise of
Credit Warrants is adjusted, as herein provided, the Company shall deliver to
each Holder a certificate of a firm of independent accountants (who may be the
regular accountants employed by the Company) setting forth, in reasonable
detail, the event requiring the
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adjustment and the method by which such adjustment was calculated (including a
description of the basis on which the Board determined the fair market value of
any evidences of indebtedness, other securities or property or warrants or other
subscription or purchase rights), and specifying the number of shares of Common
Stock purchasable upon exercise of Credit Warrants after giving effect to such
adjustment.
SECTION 4.12 Notice of Certain Transactions. In the event that
the Company shall propose (a) to pay any dividend payable in securities of any
class to the holders of its Common Stock or to make any other distribution to
the holders of its Common Stock, (b) to offer the holders of its Common Stock
rights to subscribe for or to purchase any securities convertible into shares of
Common Stock or shares of Common Stock or shares of stock of any class or any
other securities, rights or options, (c) to effect any reclassification of its
Common Stock, capital reorganization or Combination or (d) to effect the
voluntary or involuntary dissolution, liquidation or winding-up of the Company,
or in the event of a tender offer or exchange offer described in Section 4.6,
the Company shall within five Business Days send to each Holder a notice, which
shall specify the record date for the purposes of such dividend, distribution or
rights, or the date such issuance or event is to take place and the date of
participation therein by the holders of Common Stock, if any such date is to be
fixed, and shall briefly indicate the effect of such action on the Common Stock
and on the number and kind of any other shares of stock and on other property,
if any, and the number of shares of Common Stock and other property, if any,
purchasable upon exercise of each Credit Warrant after giving effect to any
adjustment which will be required as a result of such action. Such notice shall
be given by the Company as promptly as possible and, in the case of any action
covered by clause (a) or (b) above, at least ten days prior to the record date
for determining holders of the Common Stock for purposes of such action and, in
the case of any other such action, at least 15 Business Days prior to the date
of the taking of such proposed action or the date of participation therein by
the holders of Common Stock, whichever shall be the earlier.
SECTION 4.13 Adjustment to Warrant Certificate. The form of
Warrant Certificate need not be changed because of any adjustment made pursuant
to this Article 4, and Warrant Certificates issued after such adjustment may
state the same number of shares of Common Stock as are stated in any Warrant
Certificates issued prior to the adjustment. The Company, however, may at any
time in its sole discretion make any change in the form of Warrant Certificate
that it may deem appropriate to give effect to such adjustments and that does
not affect the substance of the Warrant Certificate, and any Warrant Certificate
thereafter issued, whether in exchange or substitution for an outstanding
Warrant Certificate or otherwise, may be in the form as so changed.
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ARTICLE 5.
Miscellaneous
SECTION 5.1 Representations and Warranties. The Company hereby
represents and warrants to each Holder that (a) the Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, (b) the Company has the corporate power and authority to
execute and deliver this Warrant Agreement and the Warrant Certificates, to
issue Credit Warrants and Warrant Shares and to perform its obligations under
this Warrant Agreement and the Warrant Certificates, (c) the execution, delivery
and performance by the Company of this Warrant Agreement and the Warrant
Certificates, the issuance of the Credit Warrants and the issuance of the
Warrant Shares upon exercise of the Credit Warrants have been duly authorized by
all necessary corporate action and do not and will not violate, or result in a
breach of, or constitute a default under, or require any consent under, or
result in the creation of any lien upon the Company's assets pursuant to, any
law, rule, regulation or contractual obligation binding upon the Company, (d)
this Warrant Agreement has been duly executed and delivered by the Company and
constitutes a legal, valid, binding and enforceable obligation of the Company,
(e) when the Credit Warrants and Warrant Certificates have been issued by the
Company as contemplated hereby, such Credit Warrants and Warrant Certificates
will constitute legal, valid, binding and enforceable obligations of the Company
and (f) the Warrant Shares, when issued by the Company upon exercise of the
related Credit Warrants in accordance with the terms hereof, will be duly
authorized, validly issued, fully paid and nonassessable shares of the Common
Stock of the Company with no personal liability attaching to the ownership
thereof.
SECTION 5.2 Reports; Rule 144A. (a) The Company shall provide
the Holder with such financial statements and reports as are distributed to
holders of Common Stock generally.
(b) The Company hereby agrees to make available upon request,
for so long as any Credit Warrants or Warrant Shares remain outstanding and
during any period in which the Company is not subject to Section 13 or 15(d) of
the Exchange Act, to any Holder or beneficial owner of Credit Warrants or
Warrant Shares in connection with any sale thereof and any prospective purchaser
thereof from such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Securities Act in order to permit resales pursuant to Rule
144A.
SECTION 5.3 Persons Benefitting. Nothing in this Agreement is
intended or shall be construed to confer upon any Person other than the Company
and any Holder any right, remedy or claim under or by reason of this agreement
or any part hereof.
SECTION 5 4 Rights of Holders. Except as otherwise
specifically required herein, holders of unexercised Credit Warrants are not
entitled (a) to receive
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dividends or other distributions, (b) to receive notice of or vote at any
meeting of the stockholders, (c) to consent to any action of the stockholders,
(d) to receive notice of any other proceedings of the Company or (e) to exercise
any other rights as stockholders of the Company.
SECTION 5.5 Amendment. Any amendment or supplement to this
Agreement (including any Exhibit hereto) shall require the written consent of
the Holders of a majority of the outstanding Credit Warrants (the "Required
Holders"). The consent of each Holder directly affected shall be required for
any amendment pursuant to which the exercisability of any Credit Warrant would
be delayed, the Exercise Price would be increased or the number of Warrant
Shares purchasable upon exercise of Credit Warrants would be decreased (other
than pursuant to adjustments provided herein).
SECTION 5.6 Notices.
(a) All notices and communications hereunder shall be in
writing. Any notice 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 party hereto (i) on the
date of delivery if delivered by hand or sent by telecopy, (ii) on the next
Business Day if sent by recognized overnight courier service and (iii) on the
third Business Day following the date sent by certified mail, return receipt
requested.
(b) Notices to any party shall be sent to it at the following
addresses, or any other address as to which the Company or the Holder, as the
case may be, are notified in writing.
If to the Company: Infogrames, Inc.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Director of Legal Services
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
With a copy to: Xxxxxxxxxx & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to any Holder: To the Address set forth in the
Certificate Register
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SECTION 5.7 GOVERNING LAW. THIS AGREEMENT AND THE WARRANT
CERTIFICATES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT
AND THE WARRANT CERTIFICATES 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.
SECTION 5.8 Successors. All agreements of the Company in this
Agreement and the Warrant Certificates shall bind its successors.
SECTION 5.9 Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 5.10 Headings. The headings of the Articles and
Sections of this Agreement have been inserted for convenience of reference only,
are not intended to be considered a part hereof and shall not modify or restrict
any of the terms or provisions hereof.
SECTION 5.11 Severability. The provisions of this Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
SECTION 5.12 Prior Agreements. This Agreement supercedes any
and all agreements, whether oral or written, among the parties hereto related to
the issuance by the Company to Infogrames or CUSH of warrants to acquire Common
Stock in connection with the execution and performance of the Assignment and
Acceptance. All such agreements are hereby terminated and shall be of no further
force and effect. Any warrant certificates issued in connection with such prior
agreement are hereby cancelled without further action on the part of Infogrames,
CUSH or the Company.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
INFOGRAMES, INC.
By: /s/ Xxxxx. X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: CFO
INFOGRAMES ENTERTAINMENT S.A.
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Title: CEO
CALIFORNIA U.S. HOLDINGS, INC.
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxx
Title: CFO
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