SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT, dated as of February 12, 2002
(this "Agreement"), is entered into by ACCLAIM ENTERTAINMENT INC., a Delaware
corporation (the "Company"), and those persons named on Schedule 1 hereto
(together, the "Purchasers").
W I T N E S S E T H:
WHEREAS, the Company and the Purchasers are executing and
delivering this Agreement in reliance upon the exemptions from registration
provided by Regulation D ("Regulation D") promulgated by the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), and/or Section 4(2) of the Securities Act;
WHEREAS, the Purchasers wish to purchase, and the Company
wishes to issue and sell, for an aggregate purchase price of $_________ (the
"Purchase Price"), upon the terms and conditions of this Agreement, a total of
_________ shares (the "Shares") of the Company's common stock, par value $.02
per share (the "Common Stock"); and
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO PURCHASE; CLOSING
(a) PURCHASE OF SHARES. Subject to the terms and conditions set forth
herein, the Company hereby agrees to issue and sell to each of the Purchasers,
and each Purchaser hereby agrees to purchase from the Company, such number of
Shares at the Closing (as such term is defined in Section 1(b) hereof) as is
listed opposite the name of such Purchaser on Schedule 1 hereto, at the Purchase
Price, based on a purchase price per share of $___.
(b) CLOSING. The closing (the "Closing") of the purchase and sale of
the Shares will take place at the offices of Rosenman & Colin LLP, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on or about February 13, 2002, or at such other
place and time as mutually agreed by the Purchasers and the Company. The date of
the Closing is referred to herein as a "Closing Date." At the Closing, the
Company will deliver to the Purchasers the applicable Shares purchased as set
forth in Schedule 1, against payment of the Purchase Price by wire transfer of
immediately available funds payable to the Company. The Shares shall be
registered in each Purchaser's name or the name of its nominee(s) in such
denominations as the Purchasers shall request pursuant to instructions delivered
to the Company not less than three business days prior to the Closing Date.
2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION
Each of the Purchasers severally represents and warrants to
the Company as follows:
(a) Such Purchaser is: (i) experienced in making investments of the
kind contemplated by this Agreement; (ii) able, by reason of the business and
financial experience of its management, to protect its own interests in
connection with the transactions contemplated by this Agreement; (iii) able to
afford the entire loss of its investment in the Shares; (iv) an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D; and (v) except
as otherwise indicated on Schedule 2(a), not a broker-dealer or an affiliate of
a broker-dealer as such terms are defined in the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(b) Such Purchaser is acquiring the Shares for its own account for
investment only and not with a present view towards the public sale or
distribution thereof, except pursuant to sales registered under the Securities
Act. The Purchaser has not been organized for the purpose of investing in
securities of the Company, although such investment is consistent with its
purposes.
(c) All subsequent offers and sales of the Shares by such Purchaser
shall be made pursuant to an effective registration statement under the
Securities Act or pursuant to an applicable exemption from such registration.
(d) Such Purchaser understands that the Shares are being offered and
sold to it in reliance upon exemptions from the registration requirements of the
United States federal securities laws, and that the Company is relying upon the
truth and accuracy of such Purchaser's representations and warranties, and such
Purchaser's compliance with its agreements, each as set forth herein, in order
to determine the availability of such exemptions and the eligibility of the
Purchaser to acquire the Shares.
(e) Such Purchaser: (i) has been provided with information with respect
to the business of the Company, including, without limitation, the Company's
Quarterly Report on Form 10-Q for the quarterly period ended December 2, 2001
(the "Quarterly Report") and Annual Report on Form 10-K for the period ended
August 31, 2001 (the "Annual Report"); and (ii) has had access to management of
the Company and the opportunity to ask questions of the management of the
Company.
(f) Such Purchaser has the requisite corporate power and authority to
enter into this Agreement and the registration rights agreement in the form
attached hereto as Exhibit A (the "Registration Rights Agreement") between the
Company and the Purchasers relating to the Registrable Securities (as defined
therein). This Agreement and the Registration Rights Agreement are collectively
referred to as the "Primary Documents."
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(g) This Agreement, the Registration Rights Agreement and the
transactions contemplated hereby and thereby have been duly and validly
authorized by the Purchaser and such agreements, when executed and delivered by
each of the other parties thereto will each be a valid and binding agreement of
such Purchaser, enforceable against such Purchaser in accordance with their
respective terms, except to the extent that enforcement of such agreements may
be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors' rights generally and to general principles of equity.
3. REPRESENTATIONS OF THE COMPANY
The Company represents and warrants to each of the Purchasers
that:
(a) ORGANIZATION. The Company is a corporation duly organized and
validly existing under the laws of the State of Delaware. Each of the Company's
subsidiaries is a corporation duly organized and validly existing under the laws
of its respective jurisdiction of incorporation. Each of the Company and its
subsidiaries is duly qualified as a foreign corporation in all jurisdictions in
which the failure to so qualify would have a Material Adverse Effect on the
Company (as hereinafter defined). Schedule 3(a) lists all subsidiaries of the
Company and, except as noted therein, all of the outstanding capital stock of
all such subsidiaries is owned of record and beneficially by the Company. The
Company and its subsidiaries have all requisite corporate power and authority,
and hold all licenses, permits and other required authorizations from
governmental authorities, necessary to conduct their business as it is now being
conducted or proposed to be conducted and to own or lease their properties and
assets as they are now owned or held under lease.
(b) CAPITALIZATION. On the date hereof, the authorized capital of the
Company consists of 200,000,000 shares of Common Stock and 10,000,000 shares of
preferred stock, par value $.02 per share ("Preferred Stock"). As of January 11,
2002, 79,494,461 shares of Common Stock were issued and outstanding and no
shares of Preferred Stock were issued or outstanding. Schedule 3(b) sets forth
all of the options, warrants and convertible securities of the Company, and any
other rights to acquire securities of the Company (collectively, the "Derivative
Securities") which are outstanding on the date hereof, including in each case:
(i) the name and class of such Derivative Securities; and (ii) the number of
shares of Common Stock into which such Derivative Securities are convertible as
of the date hereof. All outstanding securities of the Company are validly
issued, fully paid and nonassessable. No stockholder of the Company is entitled
to any preemptive rights with respect to the purchase of or sale of any
securities by the Company. Except as contemplated herein, none of the shares of
capital stock of the Company is reserved for any purpose, and the Company is
neither subject to any obligation (contingent or otherwise), nor has any option,
to repurchase or otherwise acquire or retire any shares of its capital stock.
(c) CONCERNING THE SHARES. The Shares are duly authorized and, when
issued, will be duly and validly issued, fully paid and non-assessable, will be
free and clear of any liens imposed by or through the Company, will not be
subject to preemptive rights and will not subject the
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holder thereof to personal liability by reason of being such a holder. There are
currently no preemptive rights of any stockholder of the Company to acquire the
Shares.
(d) REPORTING COMPANY STATUS. The Common Stock is registered under
Section 12 of the Exchange Act. The Company files reports with the Commission
pursuant to Section 12 and/or 15(d) of the Exchange Act. To the knowledge of the
Company, the Company has duly filed all materials and documents required to be
filed pursuant to all reporting obligations under either Section 13(a) or 15(d)
of the Exchange Act. The Common Stock is listed and traded on The Nasdaq
SmallCap Stock Market ("Nasdaq") and the Company is not aware of any pending or
contemplated action or proceeding of any kind to suspend the trading of the
Common Stock.
(e) LEGALITY. The Company has the requisite corporate power and
authority to enter into each of the Primary Documents and to issue and deliver
the Shares.
(f) TRANSACTION AGREEMENTS. The Primary Documents and the transactions
contemplated thereby have been duly and validly authorized by the Company; the
Primary Documents have been duly executed and delivered by the Company and are
each the legal, valid and binding agreement of the Company, enforceable in
accordance with their respective terms, except to the extent that enforcement of
each agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to creditors' rights generally and to general principles of
equity.
(g) NON-CONTRAVENTION. The execution and delivery of the Primary
Documents, and the consummation by the Company of the transactions contemplated
thereby, does not (i) result in a violation of the Certificate of Incorporation
or By-laws of the Company or its subsidiaries, or (ii) constitute a default
under (or an event which with notice or lapse of time or both could become a
default) or give to others any rights of termination, amendment or cancellation
of, any material agreement, indenture or instrument to which the Company or any
of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (foreign or domestic and including federal
and state securities laws and regulations) applicable to the Company or any of
its subsidiaries or by which any material property or asset of the Company or
any of its subsidiaries is bound or affected other than any of the foregoing
which would not have a Material Adverse Effect (as hereinafter defined). Except
as set forth in Schedule 3(g), neither the filing of the registration statement
required to be filed by the Company pursuant to the Registration Rights
Agreement nor the offering or sale of the Shares as contemplated by this
Agreement gives rise to any rights, other than those which have been waived or
satisfied on or prior to the date hereof, for or relating to the registration of
any shares of the Common Stock.
(h) APPROVALS. Except as set forth on Schedule 3(h), no authorization,
approval or consent of any court, governmental body, regulatory agency,
self-regulatory organization, stock exchange or market or the stockholders of
the Company is required to be obtained by the Company for the entry into or the
performance of the Primary Documents.
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(i) SEC DOCUMENTS, FINANCIAL STATEMENTS. Since September 1, 2001, the
Company has filed all reports, schedules, forms and statements required to be
filed by it with the Commission pursuant to the reporting requirements of the
Exchange Act (the "SEC Documents"). As of their respective dates, none of the
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in the
SEC Documents were prepared in accordance with U.S. generally accepted
accounting principles, consistently applied, during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they
may not include footnotes or may be condensed or summary statements) and fairly
present in all material respects the consolidated financial position of the
Company and its consolidated subsidiaries and results of their operations and
cash flows for the periods covered thereby (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
(j) UNDISCLOSED LIABILITIES. The Company has no material obligation or
liability (whether accrued, absolute, contingent, unliquidated, or otherwise,
whether due or to become due) arising out of transactions entered into at or
prior to the Closing of this Agreement, or any action or inaction at or prior to
the Closing of this Agreement, or any state of facts existing at or prior to the
Closing of this Agreement, except (a) liabilities reflected on the latest
balance sheet included in the SEC Documents (the "Company Balance Sheet"), (b)
liabilities incurred in the ordinary course of business since the date of the
Company Balance Sheet (none of which is a liability for breach of contract,
breach of warranty, torts, infringements, claims or lawsuits) and (c)
liabilities or obligations disclosed on Schedule 3(j) hereto.
(k) ABSENCE OF CERTAIN CHANGES. Except as disclosed in the SEC
Documents, since December 2, 2001, there has been no material adverse change nor
any material adverse development in the business, properties, operations,
financial condition, outstanding securities, employee relations, customer
relations or results of operations of the Company or its subsidiaries, taken as
a whole (each, a "Material Adverse Effect").
(l) TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. The Company and its
subsidiaries have good and marketable title to all of their material properties
and assets, both real and personal, and have good title to all their leasehold
interests, in each case subject only to (x) mortgages, pledges, liens, security
interests, conditional sale agreements, encumbrances or charges created in the
ordinary course of business and (y) the lien of the Company's lending
institution.
(m) PROPRIETARY RIGHTS. The Company and its subsidiaries have
sufficient title and ownership of all trademarks, service marks, trade names,
internet domain names, copyrights, trade secrets, information, proprietary
rights and processes necessary for the conduct of their business as now
conducted and as proposed to be conducted, and, to the knowledge of the Company,
such business does not conflict with or constitute an infringement on the rights
of others.
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(n) GOVERNMENTAL PERMITS. The Company and its subsidiaries have all
governmental franchises, permits, licenses and any similar governmental
authority necessary for the conduct of their business as now conducted, the lack
of which could result in a Material Adverse Effect. The Company and its
subsidiaries are not in default in any respect under any of such governmental
franchises, permits, licenses or similar authority.
(o) ABSENCE OF LITIGATION. Except as disclosed in the SEC Documents or
on Schedule 3(o), there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board or body pending or, to the knowledge of the
Company or any of its subsidiaries, threatened against or affecting the Company
or any of its subsidiaries, in which an unfavorable decision, ruling or finding
could have a Material Adverse Effect or adversely affect the transactions
contemplated by the Primary Documents or the validity or enforceability of, or
the authority or ability of the Company to perform its obligations under, the
Primary Documents.
(p) EMPLOYMENT MATTERS. The Company and its subsidiaries are in
material compliance with all federal, state, local and foreign laws and
regulations respecting employment and employment practices, terms and conditions
of employment and wages and hours. There are no pending investigations involving
the Company or any of its subsidiaries by the U.S. Department of Labor or any
other governmental agency responsible for the enforcement of such federal,
state, local or foreign laws and regulations. There is no unfair labor practice
charge or complaint against the Company or any of its subsidiaries pending
before the National Labor Relations Board or any strike, picketing, boycott,
dispute, slowdown or stoppage pending or threatened against or involving the
Company or any of its subsidiaries. No representation question exists respecting
the employees of the Company or any of its subsidiaries and no collective
bargaining agreement or modification thereof is currently being negotiated by
the Company or any of its subsidiaries. No grievance or arbitration proceeding
is pending under any expired or existing collective bargaining agreements of the
Company or any of its subsidiaries. No material labor dispute with the employees
of the Company or any of its subsidiaries exists or, to the knowledge of the
Company, is imminent.
(q) ERISA MATTERS. Neither the Company nor any ERISA Affiliate of the
Company (as defined below) maintains, administers, contributes to or is
obligated to contribute to any employee pension benefit plan (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), including, without limitation, any multiemployer plan as defined in
Section 3(37) of ERISA; employee welfare benefit plan (as defined in Section
3(1) of ERISA); or bonus, deferred compensation, stock purchase, stock option,
severance plan, salary continuation, vacation, sick leave, fringe benefit,
incentive, insurance, welfare or similar arrangement with respect to any
employees of the Company or any of its subsidiaries. For these purposes, "ERISA
Affiliate" means all members of a controlled group of corporations and all
trades and businesses (whether or not incorporated) under common control and all
other entities which, together with the Company, are treated as a single
employer under any or all of section 414(b), (c), (m) or (o) of the Internal
Revenue Code of 1986, as amended (the "Code") on either the date of this
Agreement or the Closing Date.
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(r) INSURANCE. The Company and its subsidiaries maintain property and
casualty, general liability, personal injury and other similar types of
insurance that are reasonably adequate, consistent with industry standards and
their historical claims experience. The Company and its subsidiaries have not
received notice from, and have no knowledge of any threat by, any insurer (that
has issued any insurance policy to the Company or its subsidiaries) that such
insurer intends to deny coverage under or cancel, discontinue or not renew any
insurance policy covering the Company or any of its subsidiaries presently in
force.
(s) TAXES. All applicable U.S. federal, state and local income and
franchise tax returns ("Tax Returns") required to be filed by the Company and
each of its subsidiaries have been prepared and filed in compliance with all
applicable laws and were true, correct and complete in all material respects
when filed, or if not yet filed have been granted extensions of the filing dates
which extensions have not expired, and all taxes, assessments, fees and other
governmental charges upon the Company, its subsidiaries, or upon any of their
respective properties, income or franchises, required to be paid by the Company
or its subsidiaries to be due and payable have been paid, or adequate reserves
therefor have been set up if any of such taxes are being contested in good
faith; or if any of such Tax Returns have not been filed or if any such taxes
have not been paid or so reserved for, the failure to so file or to pay would
not in the aggregate have a Material Adverse Effect. All amounts required to be
withheld by the Company or any of its subsidiaries from employees for income,
social security and other payroll taxes have been collected and withheld and
have either been paid to the appropriate agency, set aside in accounts for such
purpose or accrued and reserved upon the books and records of the Company or the
appropriate subsidiary. Except as set forth on Schedule 3(s), there were no tax
liens on any of the Company's or its subsidiaries' assets that arose in
connection with the failure, or alleged failure, to pay any taxes except for
liens for taxes not yet due and payable. No taxing authority is asserting or
threatening to assert against the Company or any of its subsidiaries any
deficiency or claim for additional taxes and no Tax Return of Company or any of
its subsidiaries is currently under audit by any tax authority. The provision
for taxes on the Company Balance Sheet adequately reflects all tax liabilities
in accordance with U.S. generally accepted accounting principles.
(t) COMPLIANCE WITH LAW. To the best of their knowledge, the Company
and its subsidiaries have complied in all material respects with all applicable
statutes and regulations of the United States and of all states, municipalities
and applicable agencies and foreign jurisdictions or bodies in respect of the
conduct of its business and operations, and the failure, if any, by the Company
or its subsidiaries to have fully complied with any such statute or regulation
has not and will not result in a Material Adverse Effect.
(u) INVESTMENT COMPANY ACT. The Company and its subsidiaries are not
conducting, and will not conduct, their business in a manner which would cause
any of them to become an "investment company," as defined in Section 3(a) of the
Investment Company Act of 1940, as amended.
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(v) BROKERAGE FEES. Except as set forth on Schedule 3(v), the Company
and its subsidiaries have not incurred any liability for any consulting fees or
agent's commissions in connection with the offer and sale of the Shares and the
transactions contemplated by this Agreement.
(w) PRIVATE OFFERING. Subject to the accuracy of the Purchasers'
representations and warranties set forth in Section 2 hereof, the offer, sale
and issuance of the Shares, as contemplated by this Agreement, are exempt from
the registration requirements of the Securities Act. Prior to the effectiveness
of the registration statement contemplated by the Registration Rights Agreement,
the Company agrees that neither the Company nor anyone acting on its behalf will
offer any of the Shares, or any similar securities, for issuance or sale, or
solicit any offer to acquire any of the same from anyone so as to render the
issuance and sale of such securities subject to the registration requirements of
the Securities Act. The Company has not offered or sold the Shares by any form
of general solicitation or general advertising, as such terms are used in Rule
502(c) under the Securities Act.
(x) FULL DISCLOSURE. Neither the Primary Documents nor any of the
schedules, exhibits, written statements, documents or certificates prepared or
supplied by the Company with respect to the transactions contemplated hereby
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which made. Except as disclosed in the SEC
Documents and except for matters affecting the industry of the Company as a
whole, there exists no fact or circumstance which, to the knowledge of the
Company upon due inquiry, could reasonably be anticipated to have a Material
Adverse Effect or could adversely affect the ability of the Company to perform
its obligations set forth in the Primary Documents.
(y) S-3 ELIGIBILITY. The Company is eligible to register the resale of
the Shares by the Purchasers under Form S-3 promulgated under the Securities
Act.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS
(a) TRANSFER RESTRICTIONS. Each of the Purchasers acknowledges that,
except as provided in the Registration Rights Agreement, (i) none of the Shares
have been, or are being, registered under the Securities Act, and such
securities may not be transferred unless (A) subsequently registered thereunder
or (B) they are transferred pursuant to an exemption from such registration; and
(ii) any sale of the Shares made in reliance upon Rule 144 under the Securities
Act may be made only in accordance with the terms of said Rule. The provisions
of Section 4(a) and 4(b) hereof, together with the rights and obligations of the
Purchasers under the Primary Documents, shall be binding upon any subsequent
transferees of the Shares.
(b) RESTRICTIVE LEGEND. Each of the Purchasers acknowledges and agrees
that, until such time as the Shares shall have been registered under the
Securities Act or such Purchaser demonstrates to the reasonable satisfaction of
the Company that such registration shall no longer be required, such Shares
shall bear a restrictive legend in substantially the following form:
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION SHALL NO LONGER BE REQUIRED.
(c) FILINGS. The Company undertakes and agrees that it will make all
required filings in connection with the sale of the Shares to the Purchasers as
required by United States laws and regulations, or by any domestic securities
exchange or trading market, and if applicable, the filing of a notice on Form D
(at such time and in such manner as required by the Rules and Regulations of the
Commission), and to provide copies thereof to the Purchasers promptly after such
filing or filings.
(d) NASDAQ LISTING. The Company shall use its best efforts to promptly
secure the listing of the Shares upon each national securities exchange or
automated quotation system, if any, upon which the Common Stock is then listed.
The Company further agrees and covenants that it will not seek to have the
trading of its Common Stock on Nasdaq suspended or terminated, will use its best
efforts to maintain its eligibility for trading on Nasdaq and, if such trading
of its Common Stock is suspended or terminated, will use its best efforts to
requalify its Common Stock or otherwise cause such trading to resume.
(e) REPORTING STATUS. The Company shall timely file all reports
required to be filed with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act and shall not terminate its status as an issuer required to file
reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would permit such termination.
(f) STATE SECURITIES FILINGS. The Company shall from time to time
promptly take such action as either the Purchasers or any of their
representatives, if applicable, may request to qualify the Shares for offering
and sale under the securities laws (other than United States federal securities
laws) of the jurisdictions in the United States as shall be so identified to the
Company, and to comply with such laws so as to permit the continuance of sales
therein, except that the Company shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this subsection (f) be
obligated to be so qualified, or to subject itself to taxation in any such
jurisdiction, or to consent to general service of process in any such
jurisdiction.
(g) USE OF PROCEEDS. The Company will use the net proceeds from the
sale of the Shares for the Company's working capital, the acquisition of
products and product licensing, possible strategic acquisitions and may use a
portion of the proceeds to retire a portion of the Company's 10% Convertible
Notes due March 2002 and other liabilities.
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(h) REGISTRATION RIGHTS. The Company acknowledges that in order to
induce the Purchasers to enter into this Agreement, it has provided them with
certain registration rights under the Securities Act as set forth in the
Registration Rights Agreement. In this regard, the Company has agreed that if
the Registration Statement (as defined in the Registration Rights Agreement) is
not declared effective by the Effectiveness Date (as defined in the Registration
Rights Agreement), the Company shall pay to each Purchaser an amount equal to
one percent (1%) of the purchase price paid for the Shares purchased by such
Purchaser. Thereafter, for every 30 days that pass without the Registration
Statement being declared effective after the Effectiveness Date, the Company
shall pay to such Purchaser an additional amount equal to one percent (1%) of
the purchase price paid for the Shares purchased by such Purchaser.
5. TRANSFER AGENT INSTRUCTIONS
The Company warrants that no instruction, other than the
instructions referred to in this Section 5, prior to the registration and sale
under the Securities Act of the Common Stock will be given by the Company to its
transfer agent in respect of the Shares and that the Shares shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement, the Registration Rights Agreement and applicable
law. Nothing in this Section shall affect in any way the Purchasers' obligations
and agreement to comply with all applicable securities laws upon resale of the
Shares. If a Purchaser provides the Company with an opinion of counsel
reasonably satisfactory to the Company that registration of a resale by the
Purchaser of any of the Shares in accordance with Section 4(a) of this Agreement
is not required under the Securities Act, the Company shall permit the transfer
of the Shares and promptly instruct the Company's transfer agent to issue one or
more certificates for Common Stock without legend in such names and in such
denominations as specified by the Purchaser.
6. CONDITIONS TO THE COMPANY'S OBLIGATION
TO ISSUE THE SHARES
Each Purchaser understands that the Company's obligation to
issue the Shares on the Closing Date to the Purchasers pursuant to this
Agreement is conditioned upon the satisfaction or waiver by the Company of each
of the following conditions:
(a) The accuracy on the Closing Date of the representations and
warranties of the Purchasers contained in this Agreement as if made on the
Closing Date and the performance by the Purchasers on or before the Closing Date
of all covenants and agreements of the Purchasers required to be performed on or
before the Closing Date.
(b) The absence or inapplicability of any and all laws, rules or
regulations prohibiting or restricting the transactions contemplated hereby, or
requiring any consent or approval which shall not have been obtained.
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(c) The Purchasers shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Company.
(d) The Purchasers shall have delivered the full Purchase Price in
accordance with Section 1(a) above.
7. CONDITIONS TO THE PURCHASERS' OBLIGATION TO
PURCHASE THE SHARES
The Company understands that the Purchasers' obligation to
purchase the Shares on the Closing Date is conditioned upon the satisfaction or
waiver by the Purchasers of each of the following conditions:
(a) The accuracy on the Closing Date of the representations and
warranties of the Company contained in this Agreement as if made on the Closing
Date, and the performance by the Company on or before the Closing Date of all
covenants and agreements of the Company required to be performed on or before
the Closing Date.
(b) The Company shall have executed this Agreement and the Registration
Rights Agreement and delivered same to the Purchasers.
(c) On the Closing Date, the Purchasers shall have received an opinion
of counsel for the Company, dated the Closing Date, in the form attached as
Exhibit B hereto.
(d) On the Closing Date, the Purchasers shall have received a
certificate executed by the President or the Chief Executive Officer of the
Company and by the Chief Financial Officer of the Company, stating that all of
the representations and warranties of the Company set forth in the Primary
Documents are accurate as of the Closing Date and that the Company has performed
all of its covenants and agreements required to be performed under the Primary
Documents on or before the Closing Date.
(e) The Purchasers shall have received an incumbency certificate, dated
the Closing Date, for the officers of the Company executing this Agreement, and
any other documents or instruments delivered in connection with this Agreement
at the Closing.
(f) The Purchasers shall have received a certificate of the Secretary
or Assistant Secretary of the Company, dated the Closing Date, as to the
continued and valid existence of the Company, certifying the attached copy of
the By-laws of the Company, the authorization of the execution, delivery and
performance of the Primary Documents, and the resolutions adopted by the Board
of Directors of the Company authorizing the actions to be taken by the Company
contemplated by the Primary Documents.
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(g) The Purchasers shall have received a certified copy of the
Certificate of Incorporation of the Company as filed with the Secretary of State
of the State of Delaware and any amendments thereto through the Closing Date.
(h) The Purchasers shall have received from the Company such other
certificates and documents as they or their representatives, if applicable,
shall reasonably request, and all proceedings taken by the Company in connection
with the Primary Documents contemplated by this Agreement and the other Primary
Documents and all documents and papers relating to such Primary Documents shall
be satisfactory to the Purchasers.
(i) No injunction, order, investigation, claim, action or proceeding
before any court or governmental body shall be pending or threatened wherein an
unfavorable judgment, decree or order would restrain, impair or prevent the
carrying out of this Agreement or any of the transactions contemplated hereby,
declare unlawful the transactions contemplated by this Agreement or cause any
such transaction to be rescinded.
(j) The Company shall have obtained in writing or made all consents,
waivers, approvals, orders, permits, licenses and authorizations of, any
registrations, declarations, notices to and filings and applications with, any
governmental authority or any other person or entity (including, without
limitation, securityholders and creditors of the Company) required to be
obtained or made in order to enable the Company to observe and comply with all
its obligations under this Agreement and to consummate the transactions
contemplated hereby.
8. INDEMNIFICATION
(a) Indemnification of Purchasers by the Company.
The Company hereby agrees to indemnify and hold harmless each
of the Purchasers, their affiliates and their respective officers, managers,
members, directors, partners, shareholders, employees and members (collectively,
the "Buyer Indemnitees"), from and against any and all losses, claims, damages,
judgments, penalties, liabilities and deficiencies (collectively, "Losses"), and
agrees to reimburse the Buyer Indemnitees for all out-of-pocket expenses
(including the fees and expenses of legal counsel), in each case promptly as
incurred by the Buyer Indemnitees and to the extent arising out of or in
connection with:
(i) any misrepresentation, omission of fact or breach of
any of the Company's representations, warranties or
covenants contained in this Agreement, the annexes,
schedules or exhibits hereto or any instrument,
agreement or certificate entered into or delivered by
the Company pursuant to this Agreement; or
(ii) any failure by the Company to perform any of its
covenants, agreements, undertakings or obligations
set forth in this Agreement, the annexes,
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schedules or exhibits hereto or any instrument,
agreement or certificate entered into or delivered by
the Company pursuant to this Agreement.
(c) Indemnification of the Company by Purchasers.
Each of the Purchasers hereby severally agrees to indemnify
and hold harmless the Company, its affiliates and their respective officers,
directors, partners and members (collectively, the "Company Indemnitees"), from
and against any and all Losses, and agrees to reimburse the Company Indemnitees
for all out-of-pocket expenses (including the fees and expenses of legal
counsel), to the extent arising out of or in connection with any breach of any
of such Purchaser's representations, warranties or covenants contained in this
Agreement, the annexes, schedules or exhibits hereto or any instrument,
agreement or certificate entered into or delivered by such Purchaser pursuant to
this Agreement; provided, however, that the total amount payable in respect
thereto by each Purchaser under this Section 8(b) shall not exceed the purchase
price paid by such Purchaser.
(d) Third Party Claims.
Promptly after receipt by either party hereto seeking
indemnification pursuant to this Section 8 (an "Indemnified Party") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party against whom indemnification pursuant to this
Section 8 is being sought (the "Indemnifying Party") of the commencement
thereof; but the omission to so notify the Indemnifying Party shall not relieve
it from any liability that it otherwise may have to the Indemnified Party,
except to the extent that the Indemnifying Party is materially prejudiced and
forfeits substantive rights and defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying Party and the
Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay such fees,
out-of-pocket costs and expenses, (y) the Indemnified Party and the Indemnifying
Party reasonably shall have concluded that representation of the Indemnified
Party by the Indemnifying Party by the same legal counsel would not be
appropriate due to actual or, as reasonably determined by legal counsel to the
Indemnified Party, potentially differing interests between such parties in the
conduct of the defense of such Claim, or if there may be legal defenses
available to the Indemnified Party that are in addition to or disparate from
those available to the Indemnifying Party, or (z) the Indemnifying Party shall
have failed to employ legal counsel reasonably satisfactory to the Indemnified
Party within a reasonable period of time after notice of the commencement of
such Claim. If the Indemnified Party employs separate legal counsel in
circumstances other than as described in clauses (x), (y) or (z) above, the
fees, costs and expenses of such legal counsel shall be borne exclusively by the
Indemnified Party. Except as provided above, the Indemnifying
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Party shall not, in connection with any Claim in the same jurisdiction, be
liable for the fees and expenses of more than one firm of legal counsel for the
Indemnified Party (together with appropriate local counsel). The Indemnifying
Party shall not, without the prior written consent of the Indemnified Party
(which consent shall not unreasonably be withheld) settle or compromise any
Claim or consent to the entry of any judgment that does not include an
unconditional release of the Indemnified Party from all liabilities with respect
to such Claim or judgment.
9. EXPENSES
The Company covenants and agrees with the Purchasers that the
Company shall pay or cause to be paid the following: (i) all expenses in
connection with registration or qualification of the Shares for offering and
sale under federal securities laws, and state securities laws as provided in
Section 4(f) hereof; and (ii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section, including the fees and disbursements of the
Company's counsel, accountants and other professional advisors, if any.
10. SURVIVAL
The agreements, covenants, representations and warranties of
the Company and the Purchasers, including indemnification obligations under
Section 8, shall survive the execution and delivery of this Agreement and the
delivery of the Shares hereunder until the Company has satisfied in full its
obligations under the terms of the Registration Rights Agreement.
11. MISCELLANEOUS
(a) GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and interpreted in accordance with the internal laws of the State of New York.
Each of the parties submits to the jurisdiction of the federal courts whose
districts encompass any part of the City of New York or the state courts of the
State of New York sitting in the City of New York in connection with any dispute
arising under this Agreement or any of the transactions contemplated hereby, and
hereby waives, to the maximum extent permitted by law, any objection, including
any objections based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions.
(b) COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be deemed an original.
(c) HEADINGS. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of, this
Agreement.
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(d) INTERPRETATION. The Primary Documents have been entered into freely
by each of the parties, following consultation with their respective counsel,
and shall be interpreted fairly in accordance with its respective terms, without
any construction in favor of or against either party.
(e) SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or unenforceability of this Agreement in any other jurisdiction.
(f) SUCCESSORS. This Agreement shall inure to the benefit of, and be
binding upon the successors and assigns of each of the parties hereto.
(g) AMENDMENTS. This Agreement may be amended only by an instrument in
writing signed by the party to be charged with enforcement.
(h) MERGER. This Agreement, together with the other Primary Documents,
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.
(i) EQUITABLE RELIEF. The Company and the Purchasers each recognize
that in the event that any party fails to perform, observe, or discharge any or
all of its obligations under this Agreement or the other Primary Documents, any
remedy at law may prove to be inadequate relief to the aggrieved party. The
Company and the Purchasers therefore agree that an aggrieved party under this
Agreement or the other Primary Documents, if such party so requests, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages.
(j) NOTICES. Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be effective upon
personal delivery, via facsimile (upon receipt of confirmation of error-free
transmission) or two business days following deposit of such notice with an
internationally recognized courier service, with postage prepaid and addressed
to each of the other parties thereunto entitled at the following addresses, or
at such other addresses as a party may designate by five days advance written
notice to each of the other parties hereto.
COMPANY: Acclaim Entertainment, Inc.
Xxx Xxxxxxx Xxxxx
Xxxx Xxxx, Xxx Xxxx 00000
ATTENTION: Xxxxxx Xxxxxxx
Chief Financial Officer
Tel.: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
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Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
ATTENTION: Xxxx X. Xxxxxx, Esq.
Tel.: (000) 000-0000
Fax: (000) 000-0000
PURCHASERS: At the addresses set forth on the signature pages hereto.
(k) PURCHASER'S OBLIGATIONS. The obligations of each Purchaser
hereunder is several and not joint with the obligations of any other Purchaser
hereunder, and no Purchaser shall be responsible in any way for the performance
of the obligations of any other Purchaser hereunder. Nothing contained herein or
in any other agreement or document delivered at the Closing, and no action taken
by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert with respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser shall be entitled to protect and enforce its
rights, including without limitation the rights arising out of this Agreement,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.
12. NON-DISCLOSURE.
The Purchasers acknowledge that the Company is a
publicly-listed company and, as such, is subject to strict regulation governing
the disclosure of information relating to corporate transactions. Except as
required by law, without the prior written consent of the Company, the
Purchasers will not directly or indirectly, make any public comment, statement
or communication to any individual or entity with respect to, or otherwise
disclose the existence of discussions regarding a possible transaction between
the parties or any of the terms, conditions, or other aspects of this Agreement
until such time as the transaction is completed, or any confidential information
provided by the Company to the Purchasers. Further, the Purchasers acknowledge
that they may not trade in the securities of the Company when they are in
possession of material, non-public information and that they agree that they
will not do so. The Purchasers will not use any confidential information
provided by Company to the Purchasers for any purpose other than evaluating an
investment by the Purchasers in the Shares. Confidential Information shall
include all non-public information provided by the Company to the Purchasers,
but shall not include information that (a) is now or subsequently becomes
generally available to the public through no wrongful act or omission of the
Purchasers, (b) the Purchasers can demonstrate to have had rightfully in their
possession prior to disclosure to the Purchasers by the Company, and (c) the
Purchasers rightfully obtain from a third party who has the right to transfer or
disclose it. If the Purchasers are required by law to make any such disclosure,
they shall first
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provide to the Company the content of the proposed disclosure, the reasons that
such disclosure is required by law, and the time and place that the disclosure
will be made.
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IN WITNESS WHEREOF, this Share Purchase Agreement has been
duly executed by each of the undersigned.
Dated:
COMPANY:
ACCLAIM ENTERTAINMENT, INC.
By: ___________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
and Chief Financial Officer
PURCHASER:
By: ___________________________________
Name:
Title:
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PURCHASER:
By: ___________________________________
Name:
Title:
19
PURCHASER:
By: ___________________________________
Name:
Title:
20
