SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT, dated as of July 27, 2001 (this
"Agreement"), is entered into by and between 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 a purchase
price of $3.60 per share, for an aggregate purchase price 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 July ___, 2001, 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, and
covenants and agrees with, the Company as follows:
(a) The 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) not a
broker-dealer or an affiliate of a broker-dealer as such terms are defined in
the Securities Exchange Act of 1934.
(b) The 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 the Purchasers
shall be made pursuant to an effective registration statement under the
Securities Act or pursuant to an applicable exemption from such registration.
(d) The 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 the Purchaser's representations and warranties, and the
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) The 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 June 2, 2001 (the
"Quarterly Report") and Annual Report on Form 10-K for the period ended August
31, 2000 (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) The 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).
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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
the Purchaser, enforceable against the 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 100,000,000 shares of Common Stock and 10,000,000 shares of
preferred stock, par value $.02 per share ("Preferred Stock"). As of July 16,
2001, 64,333,912 shares of Common Stock are issued and outstanding and no shares
of Preferred Stock are 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 set forth on Schedule 3(b) and 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, 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
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Company, will not be subject to preemptive rights and will not subject the
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 Securities Exchange Act of 1934, as amended (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,
other than certain hardware and software licenses which the Commission is
considering requesting the Company to file as exhibits. 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 this Agreement and the Registration Rights Agreement and
to issue and deliver the Shares.
(f) TRANSACTION AGREEMENTS. This Agreement and the Registration Rights
Agreement (collectively, the "Primary Documents") and the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Company; this Agreement and the other 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 this Agreement and
the other Primary Document, and the consummation by the Company of the
transactions contemplated by this Agreement and the other Primary Document, does
not (i) result in a violation of the Articles 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). 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
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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 this Agreement and the
other Primary Documents.
(i) SEC DOCUMENTS, FINANCIAL STATEMENTS. Since September 1, 2000, 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"), other than certain hardware and software
licenses which the Commission is considering requesting the Company to file as
exhibits. 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 June 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
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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.
(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
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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.
(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. 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,
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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.
(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 this Agreement, 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.
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 this Agreement and the other 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
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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:
THESE SECURITIES (INCLUDING ANY UNDERLYING 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 all of the net proceeds from
the sale of the
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Shares for the Company's working capital, and the retirement of a portion of the
Company's 10% Convertible Notes due March 2002.
(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 Deadline (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 each Purchaser. Thereafter, for every 30 days that pass without the
Registration Statement being declared effective after the Effectiveness
Deadline, the Company shall pay to each Purchaser an additional amount equal to
one percent (1%) of the purchase price paid for the Shares purchased by each
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 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
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or restricting the transactions contemplated hereby, or requiring any consent or
approval which shall not have been obtained.
(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 Company.
(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 this Agreement
and the other 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 this Agreement and the other 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 he Primary Documents.
11
(g) The Purchasers shall have received a certified copy of the Articles
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,
schedules or exhibits hereto or any instrument, agreement or
certificate entered into or delivered by the Company
12
pursuant to this Agreement.
(B) 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.
(C) 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
13
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.
14
(d) INTERPRETATION. This Agreement and each of 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:
15
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.
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 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: July 27, 2001
COMPANY:
ACCLAIM ENTERTAINMENT, INC.
By:
-------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
PURCHASERS:
[PURCHASER]
By:_______________
Name:
Title:
Address:
EXHIBIT INDEX
EXHIBIT A FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT B FORM OF OPINION OF COUNSEL
SCHEDULE 1
