EXHIBIT 10.4
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INTERPLAY ENTERTAINMENT CORP.
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STOCK PURCHASE AGREEMENT
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6,250,000 SHARES OF COMMON STOCK
Dated as of July 20, 1999
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TABLE OF CONTENTS
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Page
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1. Authorization Of Investor Stock........................................... 1
2. Sale And Purchase Of Investor Stock....................................... 1
3. Closing; Termination...................................................... 2
3.1 Closing............................................................. 2
3.2 Termination......................................................... 2
4. Register Of Investor Stock; Restrictions On Transfer Of Securities;
Removal Of Restrictions On Transfer Of Investor Stock............... 2
4.1 Register Of Investor Stock.......................................... 2
4.2 Restrictions On Transfer............................................ 3
4.3 Removal Of Transfer Restrictions.................................... 4
5. Representations And Warranties By The Company............................. 4
5.1 Organization, Standing, Etc......................................... 5
5.2 Qualification....................................................... 5
5.3 Capital Stock....................................................... 5
5.4 Investor Stock...................................................... 6
5.5 Indebtedness For Borrowed Money..................................... 6
5.6 Shareholder List.................................................... 6
5.7 Corporate Acts And Proceedings...................................... 7
5.8 Compliance With Laws And Other Instruments.......................... 7
5.9 Binding Obligations................................................. 7
5.10 Securities Laws.................................................... 7
5.11 No Brokers Or Finders.............................................. 8
5.12 Financial Statements............................................... 8
5.13 Changes............................................................ 8
5.14 Material Agreements Of The Company................................. 9
5.15 Employees.......................................................... 9
5.16 Tax Returns And Audits............................................. 9
5.17 Patents And Other Intangible Assets................................ 10
5.18 Employment Benefit Plans; Erisa.................................... 11
5.19 Title To Property And Encumbrances; Leases......................... 11
5.20 Condition Of Properties............................................ 12
5.21 Insurance Coverage................................................. 12
5.22 Litigation......................................................... 12
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5.23 Registration Rights............................................... 12
5.24 Licenses.......................................................... 12
5.25 Interested Party Transactions..................................... 13
5.26 Minute Books...................................................... 13
5.27 Computer Software................................................. 13
5.28 Interplay Web Site And Systems.................................... 13
5.29 Product Returns................................................... 14
5.30 Disclosure........................................................ 14
6. Representations And Warranties Of Investor............................... 14
6.1 Organization, Standing, Etc........................................ 14
6.2 Corporate Acts And Proceedings..................................... 14
6.3 Compliance With Laws And Other Instruments......................... 14
6.4 Binding Obligations................................................ 14
6.5 No Brokers Or Finders.............................................. 15
7. Conditions Of Parties' Obligations....................................... 15
7.1 Conditions Of Investor's Obligations At The Closing................ 15
(a) No Errors, Etc................................................. 15
(b) Compliance With Agreement...................................... 15
(c) No Default..................................................... 15
(d) Certificate Of Company......................................... 15
(e) Opinion Of The Company's Counsel............................... 15
(f) Qualification Under State Securities Laws...................... 15
(g) Supporting Documents........................................... 15
(h) Proceedings And Documents...................................... 16
(i) Employment Agreements.......................................... 16
(j) Lender's Consent............................................... 16
(k) Waiver Of Existing Rights Agreement............................ 16
(l) Government And Other Consents.................................. 16
(m) Stockholder Agreement.......................................... 16
(n) Exchange Agreement............................................. 17
(o) Termination Of Shareholders' Agreement......................... 17
(p) Operating Plan................................................. 17
(q) Universal Option............................................... 17
7.2 Conditions Of Company's Obligations................................ 17
8. Covenants Of The Company And Fargo....................................... 17
8.1 Maintain Insurance................................................. 17
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8.2 Compliance With Initial Purchase Agreement........................................ 17
8.3 Compliance With Section 7......................................................... 17
8.4 Use Of Proceeds................................................................... 18
8.5 Exclusivity....................................................................... 18
8.6 Restriction On Transfer Of Fargo's Common Stock................................... 18
8.7 Fargo Voting Covenant............................................................. 18
8.8 HSR Filing........................................................................ 18
8.9 Development Of Extended Operating Plan............................................ 18
8.10 Maintenance of Distribution Agreements; Negotiations for
Distribution Agreement............................................................ 19
9. Covenants Of Investor................................................................... 19
9.1 Compliance With Legal Requirements................................................ 19
9.2 Additional Financing.............................................................. 19
9.3 Compliance With Initial Purchase Agreement........................................ 19
9.4 Maintenance of Distribution Arrangements; Negotiations For
Distribution Agreement............................................................ 19
10. Registration Of Investor Stock.......................................................... 20
10.1 Required Registration............................................................ 20
10.2 Registration Procedures.......................................................... 20
10.3 Expenses......................................................................... 21
10.4 Indemnification.................................................................. 22
10.5 Reporting Requirements Under The Exchange Act.................................... 23
10.6 Investor Information............................................................. 24
10.7 Transferability Of Registration Rights........................................... 24
10.8 Suspension Of Registration Obligations In Initial Purchase
Agreement; Reinstatement Of Registration Obligations In
Event Of Termination............................................................. 24
11. Enforcement............................................................................. 24
11.1 Survival Of Representations And Warranties....................................... 24
11.2 Indemnification.................................................................. 24
11.3 Injunctive Relief................................................................ 27
11.4 No Implied Waiver................................................................ 27
12. Rights Of First Refusal................................................................. 27
12.1 Subsequent Offerings............................................................. 27
12.2 Exercise Of Rights............................................................... 27
12.3 Issuance Of Equity Securities To Other Persons................................... 27
12.4 Excluded Securities.............................................................. 28
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12.5 Termination Of Rights.................................................... 28
13. Definitions..................................................................... 28
14. Miscellaneous................................................................... 31
14.1 Waivers And Amendments................................................... 31
14.2 Rights Of Investor....................................................... 32
14.3 Notices.................................................................. 32
14.4 Severability............................................................. 33
14.5 Assignment; Parties In Interest.......................................... 33
14.6 Headings................................................................. 34
14.7 Choice Of Law; Jurisdiction And Venue.................................... 34
14.8 Publicity................................................................ 34
14.9 Counterparts............................................................. 34
14.10 Entire Agreement; Effect On Initial Purchase Agreement................... 34
14.11 Attorneys' Fees.......................................................... 34
14.12 Arbitration.............................................................. 35
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STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT ("Agreement") is entered into as of July 20,
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1999 among INTERPLAY ENTERTAINMENT CORP., a Delaware corporation (the
"Company"), XXXXX INTERACTIVE SA, a French corporation ("Xxxxx" or the
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"Investor"), and to the extent expressly provided herein, XXXXX XXXXX, an
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individual ("Fargo"). Capitalized terms not otherwise defined herein shall have
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the meanings ascribed thereto in Section 13 hereof.
R E C I T A L S
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A. The Company, Investor and Fargo have previously entered into a Stock
Purchase Agreement (the "Stock Purchase Agreement") dated March 18, 1999,
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whereby, among other things, the Company agreed to sell and Investor agreed to
purchase up to Five Million (5,000,000) Shares of the Company's Common Stock (as
defined below), and the parties consummated the purchase and sale contemplated
by the Stock Purchase Agreement.
B. The Stock Purchase Agreement contemplated a merger or other business
combination between the Company and Investor, referred to in the Stock Purchase
Agreement as a "Permitted Transaction." Subsequent to the consummation of the
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Initial Purchase Agreement, the Company and Investor entered into a Letter of
Intent as of May 12, 1999 (the "Letter of Intent") whereby, among other things,
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the Company and Investor entered into a nonbinding expression of intent with
respect to a Permitted Transaction and amended the Stock Purchase Agreement in
certain limited respects. The Stock Purchase Agreement, as amended by the
Letter of Intent, shall be referred to herein from time to time as the "Initial
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Purchase Agreement."
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C. The parties hereby desire to effect a Permitted Transaction, on the
terms and conditions set forth herein.
THE PARTIES hereby agree as follows:
1. Authorization of Investor Stock. The Company has authorized the issue
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and sale of Six Million Two Hundred Fifty Thousand (6,250,000) shares (the
"Investor Stock") of its Common Stock, par value $.001 per share ("Common
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Stock").
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2. Sale and Purchase of Investor Stock. Upon the terms and subject to
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the conditions herein contained, the Company agrees to sell to Investor, and
Investor agrees to purchase from the Company, at the Closing (as hereinafter
defined) on the Closing Date (as hereinafter defined) the Investor Stock at a
price in the aggregate of Twenty-Five Million Dollars ($25,000,000) (the
"Purchase Payment"). The parties acknowledge that Investor has previously paid
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the Company Five Million Dollars (the "Deposit"), in accordance with the Letter
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of Intent, which Deposit the Company shall repay in accordance with the
Convertible Promissory Note dated as of May 12, 1999 (the "Initial Note").
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Simultaneously with the execution of this Agreement, Investor shall make
additional payments to the Company as mutually agreed upon by the Company and
Investor, which amounts the Company shall repay in accordance with the
Convertible Promissory Note dated as of the date hereof (the "Additional Note").
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3. Closing; Termination.
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3.1 Closing. The closing of the sale to and purchase by Investor
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of the Investor Stock (the "Closing") shall occur at the offices of Xxxx,
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Hastings, Xxxxxxxx & Xxxxxx LLP, 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxx-Xxxxx Xxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx, at the hour of 10:00 A.M., Pacific time, on the first
business day after the date upon which all of the conditions to Investor's and
the Company's obligations hereunder have been satisfied (or waived in accordance
with the terms hereof), or at such later time or day as the Investor and the
Company shall agree (the "Closing Date"). At the Closing, the Company shall
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deliver to Investor a certificate evidencing the Investor Stock which shall be
registered in Investor's name, against delivery to the Company of payment by
check or wire transfer in an amount equal to (a) the Purchase Payment less (b)
the Deposit (the Net Purchase Payment"). Simultaneously therewith, each of the
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Initial Note and the Additional Note shall be tendered to the Company by the
Investor in satisfaction of the balance of the Purchase Payment.
3.2 Termination. This Agreement may be terminated at any time
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prior to the Closing Date by written notice from the terminating party,
delivered in accordance with Section 14.3, specifying the reason therefor:
(a) by mutual agreement of the parties hereto;
(b) by Investor if (i) any condition precedent to Closing set
forth in Section 7.1 of this Agreement has not been met on or before September
30, 1999, (ii) the Closing has not occurred on or before September 30, 1999 for
any reason other than (I) a material default by Investor in its obligations
hereunder or (II) failure to consummate the transactions contemplated by the
Exchange Agreement attached hereto as Exhibit E, where such failure is solely
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due to the inability of Investor to issue to Fargo the Exchanged Shares (as
described therein) as of such date, or (iii) the Company has committed any
material breach or default under the terms of this Agreement, which breach or
default is not cured within ten (10) days after Company's receipt of written
notice thereof;
(c) by the Company if (i) any condition precedent to Closing
set forth in Section 7.2 of this Agreement has not been met on or before
September 30, 1999, (ii) the Closing has not occurred on or before September 30,
1999 for any reason other than (I) a material default by the Company in its
obligations hereunder or (II) failure to consummate the transactions
contemplated by the Exchange Agreement attached hereto as Exhibit E, where such
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failure is solely due to the inability of Investor to issue to Fargo the
Exchanged Shares (as described therein) as of such date, or (iii) the Investor
has committed any material breach or default under the terms of this Agreement,
which breach or default is not cured within ten (10) days after Investor's
receipt of written notice thereof.
4. Register of Investor Stock; Restrictions on Transfer of Securities;
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Removal of Restrictions on Transfer of Investor Stock.
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4.1 Register of Investor Stock. The Company or its duly appointed
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agent shall maintain a register for the shares of Investor Stock, in which it
shall register the issue and sale of all such shares. All transfers of the
Investor Stock shall be recorded on the register maintained by the Company or
its agent, and the Company shall be
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entitled to regard the registered holder of the Investor Stock as the actual
holder of the Investor Stock so registered until the Company or its agent is
required to record a transfer of such Investor Stock on its register. Subject to
Section 4.2(c) hereof, the Company or its agent shall be required to record any
such transfer when it receives the shares of Investor Stock to be transferred
duly and properly endorsed by the registered holder thereof or by its attorney
duly authorized in writing.
4.2 Restrictions on Transfer.
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(a) Investor understands and agrees that the shares of
Investor Stock it will be acquiring have not been registered under the
Securities Act, and that accordingly they will not be fully transferable except
as permitted under various exemptions contained in the Securities Act, or upon
satisfaction of the registration and prospectus delivery requirements of the
Securities Act. Investor acknowledges that it must bear the economic risk of its
investment in the Investor Stock for an indefinite period of time (subject,
however, to the Company's obligation to effect the registration of the Investor
Stock under the Securities Act in accordance with this Agreement) since they
have not been registered under the Securities Act and therefore cannot be sold
unless they are subsequently registered or an exemption from registration is
available.
(b) Investor hereby represents and warrants to the Company
that (i) it is acquiring the Investor Stock for investment purposes only, for
its own account, and not as nominee or agent for any other Person, and not with
the view to, or for resale in connection with, any distribution thereof within
the meaning of the Securities Act, and (ii) it is an "accredited investor"
within the meaning of Regulation D of the Commission under the Securities Act.
(c) Investor hereby agrees with the Company as follows:
(i) Subject to Section 4.3 hereof, the certificates
evidencing the Investor Stock it has agreed to purchase, and each certificate
issued in transfer thereof, will bear the following legend:
"The securities evidenced by this certificate have not been registered
under the Securities Act of 1933 and have been taken for investment
purposes only and not with a view to the distribution thereof, and, except
as stated in an agreement between the holder of this certificate, or its
predecessor in interest, and the issuer corporation, such securities may
not be sold or transferred unless there is an effective registration
statement under such Act covering such securities or the issuer corporation
receives an opinion of counsel (which may be counsel for the issuer
corporation) stating that such sale or transfer is exempt from the
registration and prospectus delivery requirements of such Act."
(ii) The certificates representing such Investor Stock,
and each certificate issued in transfer thereof, will also bear any legend
required under any applicable state securities law.
(iii) Absent an effective registration statement under the
Securities Act, covering the disposition of the Investor Stock which Investor
acquires, Investor will not sell, transfer, assign, pledge, hypothecate or
otherwise dispose of any or
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all of the Investor Stock without first providing the Company with an opinion of
counsel (which may be counsel for the Company) to the effect that such sale,
transfer, assignment, pledge, hypothecation or other disposition will be exempt
from the registration and the prospectus delivery requirements of the Securities
Act and the registration or qualification requirements of any applicable state
securities laws, except that no such registration or opinion shall be required
with respect to (A) a transfer not involving a change in beneficial ownership,
(B) a transfer to an Affiliate of Investor, or (C) a sale to be effected in
accordance with Rule 144 of the Commission under the Securities Act (or any
comparable exemption).
(iv) Investor agrees that, if the Investor Stock is issued
in accordance herewith prior to the Final Valuation Date (as defined in Section
13 hereof), neither it nor any of its affiliates will, during the period between
the Closing Date and the Final Valuation Date, (A) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any of the Investor
Stock or (B) enter into any swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership of the
Investor Stock, whether any such transaction described in clause (A) or (B)
above is to be settled by delivery of the Investor Stock, in cash or otherwise.
Investor agrees that the certificates evidencing the Investor Stock, if such
Investor Stock is issued during the period between the Closing Date and the
Final Valuation Date, and each certificate issued in transfer thereof, will bear
the following legend:
"The sale, pledge, hypothecation or transfer of the securities
represented by this certificate is subject to the terms and conditions
(including certain adjustment provisions) of a certain Stock Purchase
Agreement by and between the Corporation and the holder hereof. Copies of
such agreement may be obtained upon written request to the secretary of
the Corporation."
(v) Investor consents to the Company's making a notation
on its records or giving instructions to any transfer agent of the Investor
Stock in order to implement the restrictions on transfer of the Investor Stock
mentioned in this subsection (c).
4.3 Removal of Transfer Restrictions. Any legend endorsed on a
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certificate evidencing shares of Investor Stock pursuant to Section 4.2(c)(i)
hereof and any stop transfer instructions and record notations with respect to
such Investor Stock shall be removed and the Company shall issue a certificate
without such legend to the holder of such Investor Stock (a) if such Investor
Stock is registered under the Securities Act, or (b) if such Investor Stock may
be sold under Rule 144(k) of the Commission under the Securities Act or (c) if
such holder provides the Company with an opinion of counsel (which may be
counsel for the Company) reasonably acceptable to the Company to the effect that
a public sale or transfer of such Investor Stock may be made without
registration under the Securities Act.
5. Representations and Warranties by the Company. In order to induce
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Investor to enter into this Agreement and to purchase the Investor Stock, the
Company hereby covenants with, and represents and warrants to, Investor, as of
the date hereof,
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except as set forth on the Schedule of Exceptions delivered to Investor
concurrently herewith, as follows (unless the context otherwise requires, the
"Company" shall refer to the Company and its Subsidiaries, collectively):
5.1 Organization, Standing, etc. The Company is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite power and authority to carry on its
business, to own and hold its properties and assets, to enter into this
Agreement, to issue the Investor Stock and to carry out the provisions hereof
and thereof. The copies of the Amended and Restated Certificate of
Incorporation and Amended and Restated Bylaws of the Company which have been
delivered to Investor prior to the execution of this Agreement are true and
complete and have not been amended or repealed. Subsidiaries of the Company are
set forth on Schedule 5.1.
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5.2 Qualification. The Company is duly qualified, licensed or
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domesticated as a foreign corporation in good standing in each jurisdiction
wherein the nature of its activities or its properties owned or leased makes
such qualification, licensing or domestication necessary, except where the
failure to be so qualified would not have a Material Adverse Effect on the
Company.
5.3 Capital Stock. The authorized capital stock of the Company
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consists of 50,000,000 shares of Common Stock, and 5,000,000 shares of Preferred
Stock, and the Company has no authority to issue any other capital stock. No
shares of Preferred Stock have been issued prior to the Closing; 22,770,712
shares of Common Stock are issued and outstanding, and such shares are duly
authorized, validly issued, fully paid and nonassessable. Except where the
failure to do so would not result in a Material Adverse Effect on the Company,
the offer, issuance and sale of the shares of Common Stock were (a) registered
or qualified under (or were exempt from the registration and prospectus delivery
requirements of) the Securities Act, (b) registered or qualified (or were exempt
from registration or qualification) under the registration or qualification
requirements of all applicable state securities laws, and (c) accomplished in
conformity with all other federal and applicable state securities laws, rules
and regulations. As of the date hereof, the Company has (A) reserved a total of
154,356 shares of Common Stock for issuance to employees, officers and directors
under a 1991 stock purchase plan, under which options to purchase a total of
154,356 shares have been granted, but neither exercised nor forfeited by the
holder thereof, (B) reserved a total of 353,050 shares of Common Stock for
issuance to employees, officers and directors under a 1994 stock option plan,
under which options to purchase a total of 353,050 shares have been granted, but
neither exercised nor forfeited by the holder thereof, and (C) reserved a total
of 2,353,425 shares of Common Stock for issuance to employees, officers and
directors under a 1997 stock incentive plan, under which options to purchase
1,905,700 shares have been granted, but neither exercised nor forfeited by the
holder thereof, (D) reserved a total of 200,000 shares of Common Stock for
issuance to employees and officers under an Employee Stock Purchase Plan, of
which 56,102 shares have been granted, but neither exercised nor forfeited by
the holder thereof, and (E) reserved a total of 572,874 shares of Common Stock
for issuance upon the exercise of options granted outside the Company's option
plans, of which 572,874 shares have been granted, but neither exercised nor
forfeited by the holder thereof. The Company has reserved a total of 400,000
shares for issuance upon exercise of outstanding warrants issued by the Company.
Under the terms thereof, to the extent that any outstanding award under the 1991
stock purchase plan or 1994 stock option plan expires or terminates prior to
exercise of such award in full, or if shares issued upon exercise are
repurchased by the Company,
the unexercised portion or repurchased shares shall be added to the pool of
shares under the 1997 stock incentive plan and shall thereafter be available for
grant under the terms of such 1997 stock incentive plan. Each of the 1991 stock
purchase plan and 1994 stock option plan has been terminated with respect to
future grants of shares of Common Stock. Except as expressly provided in the
Initial Purchase Agreement and this Agreement, the Company has no outstanding
subscription, option, warrant, call, contract, demand, commitment, convertible
security or other instrument, agreement or arrangement of any character or
nature whatsoever under which the Company is or may be obligated to issue Common
Stock, Preferred Stock or other Equity Security (as hereinafter defined) of any
kind. Neither the offer nor the issuance or sale of the Investor Stock
constitutes or will constitute an event, under any Equity Security or any anti-
dilution or similar provision of any agreement or instrument to which the
Company is a party or by which it is bound or affected, which shall either
increase the number of shares or units of Equity Securities issuable upon
conversion of any securities (whether stock or Indebtedness for Borrowed Money
(as hereinafter defined)) or upon exercise of any warrant or right to subscribe
to or purchase any stock or similar security (including Indebtedness for
Borrowed Money), or decrease the consideration per share or unit of Equity
Security to be received by the Company upon such conversion or exercise.
5.4 Investor Stock. The Investor Stock has been duly authorized
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and validly issued, and upon payment to the Company of the Net Purchase Payment
and cancellation of the Initial Note and the Additional Note at the Closing,
will be fully paid and nonassessable Common Stock, free and clear of all Liens
and restrictions, other than Liens that might have been created by Investor and
restrictions imposed by (i) Section 4.2 hereof, (ii) applicable state securities
laws, (iii) the Securities Act and (iv) the Stockholder Agreement.
5.5 Indebtedness for Borrowed Money. The Company has no
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Indebtedness for Borrowed Money except as disclosed on the Balance Sheet or on
Schedule 5.5 hereto.
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5.6 Shareholder List. Schedule 5.6 hereto contains a true and
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complete list of the names and addresses of all persons or entities known to the
Company, based on Schedules 13D and/or 13G filed by such persons or entities or
otherwise based on the Company's actual knowledge, to be the beneficial holders
of more than five percent (5%) of the outstanding Common Stock and of the
holders of all outstanding options, warrants or other rights to purchase from
the Company more than five percent (5%) of Common Stock. With respect to
holders of more than 5% of Common Stock, Schedule 5.6 contains, to the Company's
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knowledge, a true and complete description of the number of shares held by each
such holder. With respect to each option set forth on such Schedule, Schedule
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5.6 sets forth the date of grant, the number of shares subject thereto, the
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exercise price, vesting schedule and expiration date. With respect to the
warrants set forth on such Schedule, Schedule 5.6 sets forth the date of issue
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of each warrant, the number of shares of Common Stock subject to the warrant,
the exercise price and expiration date. Except as provided on Schedule 5.6, and
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except for the Investor, no holder of Common Stock or any other security of the
Company or any other Person is entitled to any preemptive right, right of first
refusal or similar right from the Company or, to the Company's knowledge, any
Person as a result of the issuance of the Investor Stock or otherwise. Except
as provided on Schedule 5.6, there is no voting trust, agreement or arrangement
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among any of the beneficial holders of Common Stock of the Company affecting the
exercise of the voting rights of such stock.
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5.7 Corporate Acts and Proceedings. All corporate acts and
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proceedings required for the authorization, execution and delivery of this
Agreement, the offer, issuance and delivery of the Investor Stock and the
performance of this Agreement have been lawfully and validly taken or will have
been so taken prior to the Closing.
5.8 Compliance with Laws and Other Instruments. The business and
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operations of the Company have been and are being conducted in accordance with
all applicable federal, state and local laws, rules and regulations, except to
the extent that noncompliance with laws, rules and regulations would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
The execution, delivery and performance by the Company of this Agreement (a)
will not require from the Board or stockholders of the Company any consent or
approval that has not been validly and lawfully obtained, (b) will not require
any authorization, consent, approval, license, exemption of or filing or
registration with any domestic or, to best of the Company's knowledge, foreign,
court or governmental department, commission, board, bureau, agency or
instrumentality of government, except such as shall have been lawfully and
validly obtained prior to the Closing, (c) will not cause the Company to violate
or contravene (i) any provision of law, (ii) any rule or regulation of any
agency or government, domestic or foreign, (iii) any order, writ, judgment,
injunction, decree, determination or award, or (iv) any provision of the Amended
and Restated Certificate of Incorporation or Amended and Restated Bylaws of the
Company, (d) will not violate or be in conflict with, result in a breach of or
constitute (with or without notice or lapse of time or both) a default under,
any indenture, loan or credit agreement, note agreement, deed of trust,
mortgage, security agreement or other agreement, lease or instrument, commitment
or arrangement to which the Company is a party or by which the Company or any of
its properties, assets or rights is bound or affected, which in any such case
would have a Material Adverse Effect on the Company, and (e) will not result in
the creation or imposition of any Lien, other than Liens in favor of the
Investor. The Company is not in violation of, or (with or without notice or
lapse of time or both) in default under, any term or provision of its Amended
and Restated Certificate of Incorporation or Amended and Restated Bylaws or of
any indenture, loan or credit agreement (including any agreement evidencing
Indebtedness for Borrowed Money), note agreement, deed of trust, mortgage,
security agreement or other material agreement, lease or other instrument,
commitment or arrangement to which the Company is a party or by which any of the
Company's properties, assets or rights is bound or affected, which in any such
case would have a Material Adverse Effect on the Company. The Company is not
subject to any restriction of any kind or character which prohibits the Company
from entering into this Agreement or would prevent its performance of or
compliance with all or any part of this Agreement or the consummation of the
transactions contemplated hereby or thereby.
5.9 Binding Obligations. This Agreement constitutes the legal,
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valid and binding obligation of the Company and is enforceable against the
Company in accordance with its terms, except as such enforcement is limited by
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally.
5.10 Securities Laws. Based in part upon the representations of
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Investor in Section 4.2, the offer, issue and sale of the Investor Stock are and
will be exempt from the registration and prospectus delivery requirements of the
Securities Act, and have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws.
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5.11 No Brokers or Finders. No Person has, or as a result of the
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transactions contemplated herein will have, any right or valid claim against the
Company or the Investor for any commission, fee or other compensation as a
finder or broker, or in any similar capacity based upon obligations incurred by
the Company.
5.12 Financial Statements. Included in the Company's Annual Report
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on Form 10-K for the year ended December 31, 1998 is the Company's audited
balance sheet (the "Balance Sheet") as of December 31, 1998 (the "Balance Sheet
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Date"), and the audited statement of operations for the twelve-month period then
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ended. Included in the Company's Registration Statement on Form S-1 effective
June 19, 1998 (the "Form S-1") are the Company's audited balance sheets as of
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April 30, 1996 and 1997, and December 31, 1997, and the audited statements of
operations, cash flow and shareholders' equity for each of the periods then
ended, together with the related opinion thereon of Xxxxxx Xxxxxxxx LLP,
independent certified public accountants. Included in the Company's Report on
10-Q for the quarterly period ended March 31, 1999 (the "Form 10-Q") are the
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Company's unaudited balance sheet as of March 31, 1999 and the unaudited
statement of operations for the three-month period then ended. The foregoing
financial statements (i) are in accordance with the books and records of the
Company, (ii) present fairly in all material respects, taken as a whole, the
financial condition of the Company at the Balance Sheet Date and other dates
therein specified and the results of its operations and cash flow for the
periods therein specified, and (iii) have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
prior accounting periods ("GAAP"). Specifically, but not by way of limitation,
----
the Balance Sheet discloses all of the material debts, liabilities and
obligations of any nature (whether absolute, accrued, contingent or otherwise
and whether due or to become due) of the Company at the Balance Sheet Date which
must be disclosed on a balance sheet in accordance with GAAP.
5.13 Changes. Since the Balance Sheet Date, except as disclosed on
-------
Schedule 5.13 hereto, the Company has not (a) incurred any material debts,
-------------
obligations or liabilities, absolute, accrued, contingent or otherwise, whether
due or to become due in excess of $250,000, except current liabilities incurred
in the usual and ordinary course of business, none of which (individually or in
the aggregate) materially and adversely affects the business, finances,
properties or prospects of the Company, (b) discharged or satisfied any Liens
other than those securing, or paid any obligation or liability other than,
current liabilities shown on the Balance Sheet and current liabilities incurred
since the Balance Sheet Date, in each case in the usual and ordinary course of
business, (c) mortgaged, pledged or subjected to Lien any of its assets,
tangible or intangible, (d) sold, transferred or leased any of its assets of
value exceeding $250,000 except in the usual and ordinary course of business,
(e) canceled or compromised any debt or claim, or waived or released any right,
of value exceeding $250,000, (f) suffered any physical damage, destruction or
loss (whether or not covered by insurance) materially and adversely affecting
the properties, business or prospects of the Company, (g) encountered any labor
difficulties or labor union organizing activities, (h) made or granted any wage
or salary increase to any executive officer other than in the ordinary course of
business or entered into any employment agreement, (i) issued or sold any shares
of capital stock or other securities or granted any options with respect
thereto, (j) modified any Equity Security, except to the extent disclosed on
Schedule 5.6 hereto, (k) declared or paid any dividends on or made any other
------------
distributions with respect to, or purchased or redeemed, any of its outstanding
Equity Securities, (l) suffered or experienced any change in, or condition
affecting, the condition (financial or otherwise) of the Company as a whole
other than
8
changes, events or conditions in the usual and ordinary course of its business,
none of which (either by itself or in conjunction with all such other changes,
events and conditions) has been or could reasonably be expected to be materially
adverse, (m) made any change in the accounting principles, methods or practices
followed by it or depreciation or amortization policies or rates theretofore
adopted, or (n) entered into any agreement, or otherwise obligated itself, to do
any of the foregoing.
5.14 Material Agreements of the Company. Except as expressly set
----------------------------------
forth in this Agreement, the Balance Sheet, as disclosed in the Index (compiled
pursuant to Item 601 of Regulation S-K of the Commission) to the Company's
filings under the Securities Act and the Exchange Act or as disclosed on
Schedule 5.14 hereto, the Company is not a party to any written or oral
-------------
agreement, instrument or arrangement not made in the ordinary course of business
that is material to the Company and is either (a) an agreement with any labor
---
union, (b) an agreement for the purchase of fixed assets or for the purchase of
materials, supplies or equipment over $250,000, (c) an agreement for the
employment of any officer on other than an at-will basis, (d) an indenture, loan
or credit agreement, note agreement, deed of trust, mortgage, security
agreement, promissory note or other agreement or instrument relating to or
evidencing Indebtedness for Borrowed Money in excess of $250,000 or subjecting
any asset or property of the Company to any Lien, (e) a guaranty of any
Indebtedness, (f) a lease or agreement under which the Company is lessee of or
holds or operates any property, real or personal, owned by any other Person
under which payments to such Person exceed $250,000 per annum, (g) a lease or
agreement under which the Company is lessor or permits any Person to hold or
operate any property, real or personal, owned or controlled by the Company
having a value over $250,000 other than in the ordinary course of business, (h)
an agreement granting any preemptive right, right of first refusal or similar
right to any Person, (i) a covenant not to compete or other restriction on its
ability to conduct a business or engage in any other activity, or (j) an
agreement to register securities under the Securities Act. To the Company's
knowledge, all parties having material contractual arrangements with the Company
are in substantial compliance therewith, and none is in default in any material
respect thereunder, except for noncompliance or defaults which will not have a
Material Adverse Effect on the Company.
5.15 Employees. Fargo and Xxxxx Xxxxx (collectively, "Designated
--------- ----------
Key Employees") are in the full-time employ of the Company and/or one or more of
-------------
its Subsidiaries. To the best of the Company's knowledge, no Designated Key
Employee has any plans to terminate his employment with the Company or a
Subsidiary, as the case may be, and the Company has no intention of terminating
the employment of any Designated Key Employee. To the best of the Company's
knowledge, no Designated Key Employee or any other employee of the Company is a
party to or is otherwise bound by any agreement or arrangement (including,
without limitation, any license, covenant, or commitment of any nature), or
subject to any judgment, decree, or order of any court or administrative agency,
(a) that would conflict with such employee's obligation diligently to promote
and further the interests of the Company or (b) that would conflict with the
Company's business as now conducted or as proposed to be conducted. The Company
has complied in all material respects with all laws relating to the employment
of labor, including provisions relating to wages, hours, equal opportunity,
collective bargaining and payment of Social Security and other taxes, and the
Company has encountered no material labor difficulties.
5.16 Tax Returns and Audits. All required federal, state and local
----------------------
tax returns of the Company have been accurately prepared and duly and timely
filed, and
9
all federal, state and local taxes required to be paid with respect to the
periods covered by such returns have been paid. The Company is not delinquent in
the payment of any material tax, assessment or governmental charge. Except as
set forth on Schedule 5.16 hereto, there is not currently pending against the
-------------
Company any tax deficiency proposed or assessed against it and the Company has
not executed any waiver of any statute of limitations on the assessment or
collection of any tax or governmental charge for any tax period for which the
statute of limitations has not expired. Except as set forth on Schedule 5.16
-------------
hereto, none of the Company's federal income tax returns nor any state or
foreign income or franchise tax returns has ever been audited by governmental
authorities in any of the last five (5) tax years. The reserves for taxes,
assessments and governmental charges reflected in the Balance Sheet are and will
be sufficient for the payment of all unpaid taxes, assessments and governmental
charges payable by the Company with respect to the period ended on the Balance
Sheet Date.
5.17 Patents and Other Intangible Assets.
-----------------------------------
(a) Except as disclosed on Schedule 5.17 hereto, the Company
-------------
(i) owns or has the right to use all patents, trademarks, service marks, trade
names, copyrights, licenses and rights with respect to the foregoing, used in or
necessary for the conduct of its business as now conducted and proposed to be
conducted, (ii) to the Company's knowledge, is not infringing upon or otherwise
acting adversely to the right or claimed right of any Person under or with
respect to any patent, trademark, service xxxx, trade name, copyright or license
with respect thereto, where such infringement would have a Material Adverse
Effect on the Company.
(b) The Company owns or has the right to use all product
rights, manufacturing rights, trade secrets, including know-how, negative know-
how, formulas, patterns, compilations, programs, devices, methods, techniques,
processes, inventions, designs, technical data, computer software (in both
source code and object code forms and all documentation therefor), including
without limitation the Operational Software (as hereinafter defined) (all of the
foregoing of which are collectively referred to herein as "intellectual
------------
property") required for or incident to the conduct of the Company's business, as
--------
it is presently conducted, in each case free and clear of any right, Lien or
claim of others, including without limitation former employers of its employees,
except for rights reserved by the licensors of such intellectual property and
rights granted by the Company pursuant to license, publishing and distribution
agreements, and except where such right, lien or claim would not have a Material
Adverse Effect on the Company.
(c) Since its organization, the Company has taken reasonable
security measures to protect the secrecy, confidentiality and value of all
intellectual property and all Inventions (as defined below). Without limiting
the generality of the foregoing, except as set forth on Schedule 5.17, each of
-------------
the Company's present employees has signed an agreement with the Company in the
form provided to Investor, and each of the Company's past employees has signed
an agreement with the Company substantially in the form provided to Investor,
except, in either such case, where the failure to do so would not have a
Material Adverse Effect on the Company. As used herein, "Inventions" means all
----------
inventions, developments and discoveries which during the period of an
employee's or other Person's service to the Company he or she makes or conceives
of, either solely or jointly with others, that relate to any subject matter with
which his or her work for the Company may be concerned, or relate to or are
connected with the business, products, services or projects of the Company, or
relate to
10
the actual or demonstrably anticipated research or development of the Company or
involve the use of the Company's time, material, facilities or trade secret
information.
(d) Except for license, publishing and distribution agreements
with third parties entered into in the ordinary course of business, and except
as disclosed on Schedule 5.17 hereto, the Company has not sold, transferred,
-------------
assigned, licensed or subjected to any Lien, any intellectual property, trade
secret, know-how, invention, design, process, computer software or technical
data, or any interest therein, necessary for the development, manufacture, use,
operation or sale of any product listed on Schedules 5.27(a) and 5.27(b) hereto.
-----------------------------
(e) No director, officer, employee, agent or shareholder of
the Company owns or has any right in the intellectual property of the Company,
or any patents, trademarks, service marks, trade names, copyrights, licenses or
rights with respect to the foregoing, or any inventions, developments or
discoveries used in or necessary for the conduct of the Company's business as
now conducted and as proposed to be conducted, which could reasonably be
expected to have a Material Adverse Effect on the Company.
(f) The Company has not received any communication alleging or
stating that the Company or any of its employees or other agents has violated or
infringed, or by conducting business as proposed, would violate or infringe, any
patent, trademark, service xxxx, trade name, copyright, trade secret,
proprietary right, process or other intellectual property of any other Person,
which could reasonably be expected to have a Material Adverse Effect on the
Company.
5.18 Employment Benefit Plans; ERISA. Except for the Interplay
-------------------------------
Productions 401(k) Profit Sharing Plan (the "Plan"), as described in Schedule
---- --------
5.18, the Company does not maintain or make contributions to any pension, profit
----
sharing or other employee retirement benefit plan. The Plan has been maintained
in compliance with all applicable laws, ordinances, rules, regulations, permits,
orders, writs, judgments, injunctions, decrees, determinations and awards of any
agency, government, or arbitrator. The Company has no material liability with
respect to the Plan or any other such plan (including, without limitation, any
unfunded liability or any accumulated funding deficiency) or any material
liability to the Pension Benefit Guaranty Corporation or under Title IV of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), with
-----
respect to the Plan or any multi-employer pension benefit plan, nor would the
Company have any such liability if the Plan or any multi-employer plan were
terminated or if the Company withdrew, in whole or in part, from the Plan or any
multi-employer plan. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated by this Agreement will
constitute a termination of employment or other event entitling any person to
any additional or other benefits, or that would otherwise modify benefits or the
vesting of benefits, provided under the Plan.
5.19 Title to Property and Encumbrances; Leases. The Company has
------------------------------------------
good and marketable title to all of its properties and assets, including without
limitation the properties and assets reflected in the Balance Sheet and the
properties and assets used in the conduct of its business, except for properties
disposed of in the ordinary course of business since the Balance Sheet Date and
except for properties held under valid and subsisting leases which are in full
force and effect and which are not in default, subject to no Lien, except those
which are shown and described on the Balance Sheet and
11
except for Permitted Liens (as hereinafter defined). All material leases under
which the Company is lessee of any real or personal property are valid,
enforceable and effective in accordance with their terms; there is not under any
such lease any existing or claimed default by the Company or event or condition
which with notice or lapse of time or both would constitute a default by the
Company. Except as disclosed on Schedule 5.19 hereto, no material lease under
-------------
which the Company is lessee of any real property contains any provision which
either (i) treats a sale or transfer of any or all of the outstanding stock of
the Company or a merger of the Company with another Person as an assignment of
the Company's leasehold interest, or (ii) otherwise requires the consent of the
lessor in the event of any such sale, transfer or merger.
5.20 Condition of Properties. All facilities, machinery,
-----------------------
equipment, fixtures, vehicles and other properties owned, leased or used by the
Company with fair market value in excess of $250,000 are in good operating
condition and repair, subject to ordinary wear and tear, and are adequate and
sufficient for the Company's business.
5.21 Insurance Coverage. There is in full force and effect one or
------------------
more policies of insurance issued by insurers of recognized responsibility,
insuring the Company and its properties and business against such losses and
risks, and in such amounts, as are customary in the case of corporations engaged
in the same or similar business and similarly situated. The Company has not
been refused any insurance coverage sought or applied for, and the Company has
no knowledge of any facts that cause it to believe that the Company will be
unable to renew its existing insurance coverage as and when the same shall
expire upon terms at least as favorable as those presently in effect, other than
possible increases in premiums that do not result from any act or omission of
the Company.
5.22 Litigation. Except as disclosed on Schedule 5.22 hereto,
---------- -------------
there is no legal action, suit, arbitration or other legal, administrative or
other governmental investigation, inquiry or proceeding (whether federal, state,
local or foreign) pending or, to the Company's knowledge, threatened against or
affecting (i) the Company or its properties, assets or business (existing or
contemplated), or (ii) any Designated Key Employee, before any court or
governmental department, commission, board, bureau, agency or instrumentality or
any arbitrator, which if adversely determined would have a Material Adverse
Effect on the Company. Except as disclosed on Schedule 5.22 hereto, the Company
-------------
is not aware of any fact which might result in or form the basis for any such
action, suit, arbitration, investigation, inquiry or other proceeding, which if
adversely determined would have a Material Adverse Effect on the Company.
Neither the Company nor, to the best of the Company's knowledge, any of the Key
Employees is in default with respect to any order, writ, judgment, injunction,
decree, determination or award of any court or of any governmental agency or
instrumentality (whether federal, state, local or foreign).
5.23 Registration Rights. Except as set forth on Schedule 5.23,
------------------- -------------
other than under this Agreement and the Initial Purchase Agreement, the Company
has not agreed to register under the Securities Act any of its authorized or
outstanding securities.
5.24 Licenses. The Company possesses from the appropriate agency,
--------
commission, board and governmental body and authority, whether state, local or
federal, all licenses, permits, authorizations, approvals, franchises and rights
which are necessary for the Company to engage in the business currently
conducted by it and
12
proposed to be conducted (except where the failure to so hold would not have a
Material Adverse Effect on the Company), including without limitation the
development, manufacture, use, sale and marketing of its existing and proposed
products and services; and all such certificates, licenses, permits,
authorizations and rights have been lawfully and validly issued and are in full
force and effect.
5.25 Interested Party Transactions. Except as disclosed on
-----------------------------
Schedule 5.25 hereto, no officer, director or 5% shareholder of the Company or
-------------
any Affiliate of any such Person or the Company has, either directly or
indirectly, (a) a material interest in any Person which (i) furnishes or sells
services or products which are furnished or sold or are proposed to be furnished
or sold by the Company, or (ii) purchases from or sells or furnishes to the
Company any goods or services, or (b) a beneficial interest in any transaction,
contract or agreement to which the Company is a party or by which it is bound or
affected.
5.26 Minute Books. The minute books of the Company provided to
------------
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, special counsel for the Investor, contain
all resolutions adopted by directors and stockholders since the incorporation of
the Company and fairly and accurately reflect, in all material respects, all
matters and transactions referred to in such minutes.
5.27 Computer Software.
-----------------
(a) Each of the computer software programs developed by the
Company that are listed on Schedule 5.27(a) hereto (the "Operational Software")
---------------- --------------------
is functional, complete and operational in all material respects in accordance
with its specifications, has been documented in accordance with the Company's
standard practices, and the Company possesses both the source code and object
code versions thereof.
(b) Attached as Schedule 5.27(b) hereto is a true and complete
----------------
list of all computer software games currently in active development by or on
behalf of the Company (the "Developing Software"). Schedule 5.27(b) also sets
------------------- ----------------
forth whether each such game is being internally or externally developed and, if
externally developed, the name of the third party developer.
5.28 Interplay Web Site and Systems.
------------------------------
(a) The Company owns and has the right to communicate and
publish its "Interplay" Internet product offering (the "Web Site") and conduct
--------
business on the World Wide Web at the Internet address "xxxxxxxxx.xxx" and in
connection therewith to use the registered service xxxx and trade name
"Interplay" and in so doing is not acting in conflict with any patent,
trademark, service xxxx, trade name, copyright, trade secret, license or other
proprietary right with respect thereto, except where such conflict would not
have a Material Adverse Effect on the Company.
(b) The Company has not received any communication from any
Person that the Web Site or the conduct of the Company's business is in
violation of any law, rule or regulation or in conflict with any patent,
trademark, service xxxx, trade name, copyright, trade secret, license or other
proprietary right with respect thereto, except where such violation or conflict
would not have a Material Adverse Effect on the Company.
13
5.29 Product Returns. Schedule 5.29 hereto sets forth the
--------------- -------------
Company's experience with respect to the return of any of its products sold or
leased for the three (3) year period ended on December 31, 1998 and for the
three (3) month period ended March 31, 1999.
5.30 Disclosure. To the Company's knowledge, the information
----------
contained in this Agreement, in the Form 10-Q, the Balance Sheet and the Form S-
1, and in any writing furnished pursuant hereto or in connection herewith, taken
as a whole, is true, complete and correct (except that with respect to the Form
10-Q, the Balance Sheet and the Form S-1, the information contained therein
shall be true, complete and correct as of the date thereof), and does not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or herein or necessary to make the statements
therein or herein, in light of the circumstances under which they were made, not
misleading.
6. Representations and Warranties of Investor. In order to induce the
------------------------------------------
Company to enter into this Agreement and to issue the Investor Stock, Investor
hereby covenants with, and represents and warrants to, the Company as follows:
6.1 Organization, Standing, etc Investor is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of France, and
has all requisite corporate power and authority to enter into this Agreement,
and to carry out the provisions hereof and thereof.
6.2 Corporate Acts and Proceedings. All corporate acts and
------------------------------
proceedings required for the authorization, execution and delivery of this
Agreement by Investor, and the performance of this Agreement by Investor, have
been lawfully and validly taken or will have been so taken prior to the Closing.
6.3 Compliance with Laws and Other Instruments. The execution,
------------------------------------------
delivery and performance by Investor of this Agreement (a) will not require from
the board of directors or stockholders of Investor any consent or approval that
has not been validly and lawfully obtained, (b) will not require any
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality of government, except such as shall have
lawfully and validly obtained prior to the Closing, (c) will not cause Investor
to violate or contravene (i) any provision of law, (ii) any rule or regulation
of any agency or government, domestic of foreign, (iii) any order, writ,
judgment, injunction, decree, determination or award binding upon Investor, or
(iv) any provision of the charter documents of Investor, (d) will not violate or
be in conflict with, result in a breach of or constitute (with or without notice
or lapse of time or both) a default under, any indenture, loan or credit
agreement, note agreement, deed of trust, mortgage, security agreement or other
material agreement, lease or instrument, commitment or arrangement to which
Investor is a party or by which Investor or any of its properties, assets or
rights is bound or affected, which in any case would have a Material Adverse
Effect on Investor.
6.4 Binding Obligations. This Agreement constitutes the legal,
-------------------
valid and binding obligations of Investor and is enforceable against Investor in
accordance with its terms, except as such enforcement is limited by bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors' rights
generally.
14
6.5 No Brokers or Finders. No Person has, or as a result of the
---------------------
transactions contemplated herein will have, any right or valid claim against the
Company or Investor for any commission, fee or other compensation as a finder or
broker, or in any similar capacity, except for Concordia Capital Technology
Group, Inc., whose fees will be the responsibility of the Investor.
7. Conditions of Parties' Obligations.
----------------------------------
7.1 Conditions of Investor's Obligations at the Closing. The
---------------------------------------------------
obligation of Investor to purchase and pay for the Investor Stock is subject to
the fulfillment prior to or on the Closing Date of the following conditions, any
of which may be waived in whole or in part by Investor:
(a) No Errors, etc. The representations and warranties of the
--------------
Company under this Agreement shall be deemed to have been made again on the
Closing Date and shall then be true and correct in all material respects (except
to the extent already qualified as to materiality, in which case such
representations and warranties shall then be true and correct in all respects).
(b) Compliance with Agreement. The Company shall have
-------------------------
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it on or before the Closing Date.
(c) No Default. There shall not exist on the Closing Date any
----------
Default (as hereinafter defined) or Event of Default (as hereinafter defined) or
any event or condition which, with the giving of notice or lapse of time or
both, would constitute a Default or Event of Default.
(d) Certificate of Company. The Company shall have delivered
----------------------
to Investor a certificate dated the Closing Date, executed by the Chief
Executive Officer and Chief Financial Officer of the Company, certifying the
satisfaction of the conditions specified in subsections (a), (b) and (c) of this
Section 7.1.
(e) Opinion of the Company's Counsel. The Investor shall have
--------------------------------
received from Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, a professional corporation,
counsel for the Company, a favorable opinion dated the Closing Date
substantially in the form of Exhibit A hereto.
---------
(f) Qualification Under State Securities Laws. All
-----------------------------------------
registrations, qualifications, permits and approvals required under applicable
state securities laws shall have been obtained for the lawful execution,
delivery and performance of this Agreement, including without limitation the
offer, sale, issue and delivery of the Investor Stock.
(g) Supporting Documents. Investor shall have received the
--------------------
following:
(1) Copies of resolutions of the Board, certified by the
Secretary of the Company, authorizing and approving the execution, delivery and
performance of this Agreement, and all other documents and instruments to be
delivered pursuant hereto and thereto, and taking all such other actions as
required by the Delaware General Corporation Law with respect to this Agreement
(including without limitation, if
15
necessary, approval by the stockholders of the Company), and the transactions
contemplated hereby;
(2) A certificate of incumbency executed by the Secretary of
the Company certifying the names, titles and signatures of the officers
authorized to execute the documents referred to in subsection (1) above and
further certifying that the Amended and Restated Certificate of Incorporation
and Amended and Restated Bylaws of the Company delivered to the Investors at the
time of the execution of this Agreement have been validly adopted and have not
been amended or modified; and
(3) Such additional supporting documentation and other
information with respect to the transactions contemplated hereby as Investor or
its special counsel, Paul, Hastings, Xxxxxxxx & Xxxxxx LLP ("Investor Counsel"),
----------------
may reasonably request.
(h) Proceedings and Documents. All corporate and other proceedings
-------------------------
and actions taken in connection with the transactions contemplated hereby and
all certificates, opinions, agreements, instruments and documents mentioned
herein or incident to any such transactions, shall be satisfactory in form and
substance to Investor and to Investor Counsel.
(i) Employment Agreements. The Company shall have entered into a
---------------------
three-year employment agreement with Xxxxx Xxxxx in substantially the form
attached hereto as Exhibit B, and a three-year employment agreement with Herve
---------
Caen in substantially the form attached hereto as Exhibit C.
---------
(j) Lender's Consent. The Company's lenders with respect to any
----------------
Indebtedness for Borrowed Money shall have approved this Agreement and the
transactions contemplated hereby, and shall otherwise provide such assurances to
Investor as Investor may reasonably request with respect to the use of the
proceeds from the sale of the Investor Stock and the continuing availability and
renewal of such lenders' current credit facility to the Company (or the Company
shall have provided such assurances to Investor with respect to a substitute
credit facility).
(k) Waiver of Existing Rights Agreement. If necessary, the requisite
-----------------------------------
percentage of the Holders (as defined therein) party to the Investors' Rights
Agreement dated as of October 10, 1996, by and among the Company and the Holders
(the "Existing Rights Agreement"), shall have waived the application of the
-------------------------
Existing Rights Agreement (including without limitation Section 1.12 thereof) to
the issuance of the Investor Stock and the registration rights granted hereunder
with respect to the Investor Stock.
(l) Government and Other Consents. Any approval, consent or waiting
-----------------------------
period required by any governmental agency or authority, or any other Person,
necessary or material to the consummation of the transactions contemplated
hereby shall have been obtained or expired, as the case may be, including
without limitation any approval from NASDAQ and any applicable waiting period
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
(m) Stockholder Agreement. The Company, Investor and Fargo shall have
---------------------
entered into the Stockholder Agreement substantially in the form of Exhibit D
---------
hereto.
16
(n) Exchange Agreement. Investor and Fargo shall have entered
------------------
into the Exchange Agreement substantially in the form of Exhibit E hereto, and
---------
Fargo shall have delivered the proxy to Investor and the Interplay Shares (each
as defined in the Exchange Agreement) into escrow as contemplated therein.
(o) Termination of Shareholders' Agreement. The Shareholders'
--------------------------------------
Agreement dated March 30, 1994 by and among the Company, Fargo and MCA Inc.
shall have been terminated and be of no further force or effect.
(p) Operating Plan. Xxxxx and Fargo shall have jointly
--------------
developed the Operating Plan for the operation of the Company for the period
beginning the first day of the month following the Closing Date and ending
December 31, 1999.
(q) Universal Option. Universal shall have delivered to
----------------
Investor the shares of Option Stock (as defined therein).
7.2 Conditions of Company's Obligations. The Company's obligation
-----------------------------------
to issue and sell the Investor Stock to Investor on the Closing Date is subject
to the fulfillment prior to or at the Closing Date of the conditions precedent
specified in paragraphs (f), (i), (j), (k), (l), (m), (n), (o) and (q) of
Section 7.1 hereof, to the approval of the Company's stockholders of the
transactions contemplated hereby, and to the accuracy in all material respects
of the representations of Investor in Section 4.2 and Section 6 of this
Agreement.
8. Covenants of the Company and Fargo. The Company agrees that unless
----------------------------------
Investor otherwise agrees in writing, from the date hereof through the later of
the Final Valuation Date (as defined below) or the effective date of
registration statement with respect to the Investor Shares (the "Adjustment
----------
Period"), unless another period is expressly provided for in this Section 8, the
------
Company (and each of its Subsidiaries unless the context otherwise requires)
and, to the extent expressly provided herein, Fargo, will do the following:
8.1 Maintain Insurance. Maintain in full force and effect (a) a
------------------
policy or policies of insurance issued by insurers of recognized responsibility,
insuring it and its properties and business against such losses and risks, and
in such amounts, as are customary in the case of corporations of established
reputation engaged in the same or a similar business and similarly situated, and
(b) the life insurance policy on the life of Fargo, for the benefit of Investor,
in accordance with Section 8.18 of the Initial Purchase Agreement.
8.2 Compliance With Initial Purchase Agreement. Continue to
------------------------------------------
comply with the following covenants and agreements binding upon the Company set
forth in the Initial Purchase Agreement in accordance with their respective
terms: Sections 8.1, 8.3 through 8.9, 8.11, 8.12, 8.15, 8.17 and 9, including
Sections 9.1 through 9.4.
8.3 Compliance with Section 7. Use commercially reasonable
-------------------------
efforts to cause the conditions specified in Section 7.1 hereof to be met by the
Closing Date.
17
8.4 Use of Proceeds. Use the proceeds from the sale of the
---------------
Investor Stock hereunder solely for the purposes set forth on Schedule 8.4
------------
hereto.
8.5 Exclusivity. The Company will not, between the date hereof
-----------
and the earlier of the Closing or the termination of this Agreement (the
"Restricted Period"), directly or indirectly, through any officer, director,
------------------
employee, agent, 5% stockholder, partner or otherwise, (a) solicit or initiate,
or participate in discussions or negotiations with, or encourage the submission
of bids, offers or proposals by (or commence negotiations with or provide any
information to), any Person with respect to an acquisition of the Company, its
business or assets, or any interest therein, other than Investor, or (b) provide
any non-public information concerning the Company, its business or assets, to
any Person, other than Investor, except for product developers, distributors,
publishers and licensees under agreements with the Company entered into in the
ordinary course of business consistent with past practices, except for the
Company's lender. Notwithstanding the foregoing, the Company may entertain a
written unsolicited bid or proposal from, and provide non-public information to,
any party who delivers such a written bid or proposal with respect to an
acquisition of the Company, its business or assets, but only if and so long as
the Board determines in good faith by a majority vote (with the written
concurring and concurrent advice from outside legal counsel) that failing to
entertain such written bid or proposal would constitute a breach of the
fiduciary duties of the Board under applicable law. The Company shall notify
Investor in writing promptly upon receipt of any bids, offers or proposals
received, written or oral. The Company further agrees that it will not engage
any broker, financial advisor or other consultant on a basis which might provide
such broker, financial advisor or consultant with an incentive to initiate or
encourage proposals or offers from other parties with respect to the Company,
its business or assets, or any interest therein. The Company shall not commence
any proceeding to merge, consolidate, liquidate or dissolve the Company or
obligate itself to do so.
8.6 Restriction on Transfer of Fargo's Common Stock. During the
-----------------------------------------------
Restricted Period, Fargo shall not sell, assign, pledge, mortgage or otherwise
dispose of or transfer his Common Stock, or any other securities of the Company,
whether now owned or hereafter acquired, or agree to do any of the foregoing,
except to Investor.
8.7 Fargo Voting Covenant. Fargo hereby agrees, if necessary, to
---------------------
vote his shares of Common Stock in favor of the issuance and sale of the
Investor Stock.
8.8 HSR Filing. From the date hereof through the Closing, to the
----------
extent that Investor is required in connection with the transactions
contemplated hereby, or the transactions contemplated by the Initial Purchase
Agreement or the Universal Agreement, to file a notification and report form in
compliance with the Xxxx-Xxxxx- Xxxxxx Antitrust Improvements Act of 1976, as
amended, or the rules and regulations promulgated thereunder (collectively, the
"HSR Act"), the Company shall agree to fully cooperate with Investor to enable
-------
Investor to promptly make such filing and to respond to any requests for
additional information in connection therewith.
8.9 Development of Extended Operating Plan. The Company and Fargo
--------------------------------------
shall cooperate with Investor, and Investor's officers, employees and
representatives in the development of an extended operating plan for the Company
for the Company's fiscal year ending December 31, 2000 (the "Extended Operating
------------------
Plan").
----
18
8.10 Maintenance of Distribution Arrangements; Negotiations for
----------------------------------------------------------
Distribution Agreement. The Company shall continue to distribute certain of
----------------------
Investor's products to those accounts previously agreed upon by the Company and
Investor on the terms previously agreed upon by the parties. The Company shall
enter into good faith negotiations with Investor involving the grant by Investor
to the Company (or a newly formed entity jointly owned by the Company and
Investor) of exclusive rights to distribute in North America all or a portion of
Investor's products related to console gaming systems, in exchange for
consideration to be mutually agreed upon by the Company and Investor.
9. Covenants of Investor. Investor agrees that, unless the Company
---------------------
otherwise agrees in writing, during the Restricted Period (unless another period
is expressly provided for in this Section 9) Investor will do the following:
9.1 Compliance with Legal Requirements. Comply promptly with all
----------------------------------
legal requirements that applicable law may impose upon it with respect to the
transactions contemplated by this Agreement, and cooperate promptly with, and
furnish information to, the Company in connection with any such requirements
imposed upon Investor in connection therewith or herewith.
9.2 Additional Financing. Use its commercially reasonable efforts
--------------------
to raise additional debt or equity financing in the European capital markets
following the Closing on terms and conditions reasonably acceptable to Investor
(the "Investor Financing"). If Investor can raise such Investor Financing, and
------------------
such Investor Financing is in the form of debt or debt and equity, provide the
Company with an unsecured line of credit (the "Line of Credit") for a term of
--------------
one year in an aggregate principal amount equal to the lesser of (a) thirty
percent (30%) of the Investor Financing or (b) Fifteen Million Dollars
($15,000,000), in either case with an interest rate and other material terms
substantially the same as the Investor Financing. If Investor can raise such
Investor Financing, and such financing is solely in the form of equity, the
interest rate payable and other material terms with respect to such Line of
Credit would have an interest rate and other material terms substantially the
same as the terms of any intercompany indebtedness between Investor and its
subsidiary, Xxxxx Software Corporation, which interest rate shall be the lowest
rate permitted by applicable law. Investor shall, from time to time, execute
and deliver commercially reasonable Subordination agreements with respect to any
senior lender of the Company.
9.3 Compliance With Initial Purchase Agreement. Except as
------------------------------------------
expressly provided otherwise herein, continue to comply with all covenants and
agreements binding upon Investor set forth in the Initial Purchase Agreement.
9.4 Maintenance of Distribution Arrangements; Negotiations for
----------------------------------------------------------
Distribution Agreement. Investor shall continue to permit the Company to
----------------------
distribute certain of Investor's products to those accounts previously agreed
upon by the Company and Investor on the terms previously agreed upon by the
parties. Investor shall enter into good faith negotiations with the Company
involving the grant by Investor to the Company (or a newly formed entity jointly
owned by the Company and Investor) of exclusive rights to distribute in North
America all or a portion of Investor's products related to console gaming
systems, in exchange for consideration to be mutually agreed upon by the Company
and Investor.
19
10. Registration of Investor Stock.
------------------------------
10.1 Required Registration. On the date which is one business day
---------------------
after the Closing Date (the "Registration Date"), the Company shall prepare and
-----------------
file a registration statement under the Securities Act, on a form selected by
the Company, covering all Investor Stock (which registration statement may also
cover all of the shares to be registered under the Initial Purchase Agreement
under the terms and conditions set forth therein ) and shall use its best
efforts to cause such registration statement to become effective as
expeditiously as possible and to remain effective until the earlier to occur of
the date (x) the Investor Stock covered thereby has been sold, or (y) by which
all Investor Stock covered thereby may be sold under Rule 144(k).
Notwithstanding the foregoing, if (i) prior to the Registration Date, the
Company shall become ineligible to use Form S-3 or (ii) prior to such date the
Company enters into an agreement to cause a sale or other disposition of all or
substantially all of the assets or outstanding Common Stock of the Company and
the Investor would be materially prejudiced in such transaction by holding
unregistered Common Stock, then in either of such cases the Company shall
promptly prepare and file such registration statement on Form S-1. Without
limiting the generality of clause (ii) in the preceding sentence, the parties
agree that Investor would be materially prejudiced in such transaction in the
event that it is unable to dispose of the shares of Investor Stock immediately
upon the consummation of such transaction.
10.2 Registration Procedures. When the Company effects the
-----------------------
registration of the Investor Stock under the Securities Act pursuant to Section
10.1 hereof, the Company will, at its expense, as expeditiously as possible:
(a) In accordance with the Securities Act and the rules and
regulations of the Commission, prepare and file with the Commission a
registration statement with respect to such securities and use its best efforts
to cause such registration statement to become and remain effective for the
period described herein, and prepare and file with the Commission such
amendments to such registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration statement
effective for such period and such registration statement and prospectus
accurate and complete for such period; the plan of distribution set forth in
such registration statement or in any amendment or supplement shall be subject
to the approval of Investor;
(b) Furnish to Investor such reasonable number of copies of
the registration statement, preliminary prospectus, final prospectus and such
other documents as Investor may reasonably request in order to facilitate the
public offering of such securities;
(c) Use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as Investor may reasonably request within twenty (20)
days following the original filing of such registration statement, except that
the Company shall not for any purpose be required to execute a general consent
to service of process or to qualify to do business as a foreign corporation in
any jurisdiction where it is not so qualified;
(d) Notify Investor, promptly after it shall receive notice
thereof, of the date and time when such registration statement and each post-
effective amendment thereto has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
20
(e) Notify Investor promptly of any request by the Commission
for the amending or supplementing of such registration statement or prospectus
or for additional information;
(f) Prepare and file with the Commission, promptly upon the
request of Investor, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for Investor, is
required under the Securities Act or the rules and regulations thereunder in
connection with the distribution of the Investor Stock by Investor;
(g) Prepare and promptly file with the Commission, and
promptly notify Investor of the filing of, such amendments or supplements to
such registration statement or prospectus as may be necessary (i) to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event has
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) to revise or amend the plan of
distribution of the Investor Stock, as requested by Investor;
(h) In case Investor is required to deliver a prospectus at a
time when the prospectus then in circulation is not in compliance with the
Securities Act or the rules and regulations of the Commission, prepare promptly
upon request such amendments or supplements to such registration statement and
such prospectus as may be necessary in order for such prospectus to comply with
the requirements of the Securities Act and such rules and regulations; and
(i) Advise Investor, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued.
10.3 Expenses. With respect to any registration effected pursuant
--------
to Section 10.1 hereof, the Company agrees to bear all fees, costs and expenses
of and incidental to such registration and the public offering in connection
therewith; provided, however, that Investor shall bear its pro rata share of any
underwriting discounts or commissions. The fees, costs and expenses of
registration to be borne as provided in this Section 10.3 shall include, without
limitation, all registration, filing and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, fees and disbursements
of counsel for the underwriter or underwriters of such securities (if the
Company and/or selling security holders are otherwise required to bear such fees
and disbursements), all legal fees and disbursements and other expenses of
complying with state securities or blue sky laws of any jurisdictions in which
the securities to be offered are to be registered or qualified, reasonable fees
and disbursements of one firm of counsel for the Investor (not to exceed
$15,000), and the premiums and other costs of policies of insurance against
liability of directors and officers arising out of such public offering.
21
10.4 Indemnification.
---------------
(a) The Company will indemnify and hold harmless Investor and
any underwriter (as defined in the Securities Act) for Investor, and any Person
who controls Investor or such underwriter within the meaning of the Securities
Act, and any officer, director, employee, agent, partner or affiliate of
Investor, from and against, and will reimburse Investor and each such
underwriter, controlling person, officer, director, employee, agent, partner and
affiliate with respect to, any and all claims, actions, demands, losses,
damages, liabilities, costs and expenses to which Investor or any such
underwriter or controlling Person or any such officer, director, employee,
agent, partner or affiliate may become subject under the Securities Act or
otherwise, insofar as such claims, actions, demands, losses, damages,
liabilities, costs or expenses arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Company will not be liable in any such case to the extent that any such
claim, action, demand, loss, damage, liability, cost or expense is caused by an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity in all material respects with information furnished to the
Company by Investor, such underwriter or such controlling person or such
officer, director, employee, agent, partner or affiliate in writing specifically
for use in the preparation thereof.
(b) Investor will indemnify and hold harmless the Company, and
any Person who controls the Company within the meaning of the Securities Act,
from and against, and will reimburse the Company and such controlling Persons
with respect to, any and all losses, damages, liabilities, costs or expenses to
which the Company or such controlling Person may become subject under the
Securities Act or otherwise, insofar as such losses, damages, liabilities, costs
or expenses are caused by any untrue or alleged untrue statement of any material
fact contained in such registration statement, any prospectus contained therein
or any amendment or supplement thereto, or are caused by the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was so made in reliance upon and in conformity in all
material respects with written information furnished by Investor to the Company
in writing specifically for use in the preparation thereof. Notwithstanding the
foregoing, the liability of Investor pursuant to this subsection (b) shall be
limited to an amount equal to the per share sale price (less any brokerage or
underwriting discount and commissions) multiplied by the number of shares of
Investor Stock sold by Investor pursuant to the registration statement which
gives rise to such obligation to indemnify (less the aggregate amount of any
damages which Investor has otherwise been required to pay in respect of such
losses, damages, liabilities, costs or expenses or any substantially similar
losses, damages, liabilities, costs or expenses arising from the sale of such
Investor Stock).
(c) Promptly after receipt by a party indemnified pursuant to
the provisions of paragraph (a) or (b) of this Section 10.4 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of paragraph (a)
or (b), notify the
22
indemnifying party of the commencement thereof; but the omission so to notify
the indemnifying party will not relieve it from any liability which it may have
to an indemnified party otherwise than under this Section 10.4 and shall not
relieve the indemnifying party from liability under this Section 10.4 except to
the extent that such indemnifying party is materially prejudiced by such
omission. In case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party pursuant to the provisions of such paragraph
(a) or (b) for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall be liable to an indemnified
party for any settlement of any action or claim without the consent of the
indemnifying party. No indemnifying party will consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
complete and unconditional release from all liability in respect to such claim
or litigation.
(d) If the indemnification provided for in subsection (a) or
(b) of this Section 10.4 is held by a court of competent jurisdiction to be
unavailable to a party to be indemnified with respect to any claims, actions,
demands, losses, damages, liabilities, costs or expenses referred to therein,
then each indemnifying party under any such subsection, in lieu of indemnifying
such indemnified party thereunder, hereby agrees to contribute to the amount
paid or payable by such indemnified party as a result of such claims, actions,
demands, losses, damages, liabilities, costs or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions which resulted in such claims, actions, demands, losses,
damages, liabilities, costs or expenses, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. Notwithstanding the foregoing, the amount
Investor shall be obligated to contribute pursuant to this subsection (d) shall
be limited to an amount equal to the per share sale price (less any brokerage or
underwriting discount and commissions) multiplied by the number of shares of
Investor Stock sold by Investor pursuant to the registration statement which
gives rise to such obligation to contribute (less the aggregate amount of any
damages which Investor has otherwise been required to pay in respect of such
claim, action, demand, loss, damage, liability, cost or expense or any
substantially similar claim, action, demand, loss, damage, liability, cost or
expense arising from the sale of such Investor Stock). No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution hereunder from any person who
was not guilty of such fraudulent misrepresentation.
10.5 Reporting Requirements Under the Exchange Act. The Company
---------------------------------------------
shall timely file such information, documents and reports as the Commission
23
may require or prescribe under Section 13 or 15(d) of the Exchange Act. The
Company acknowledges and agrees that the purposes of the requirements contained
in this Section 10.5 are (a) to enable Investor to comply with the current
public information requirement contained in paragraph (c) of Rule 144 should
Investor ever wish to dispose of any of the Investor Stock without registration
under the Securities Act in reliance upon Rule 144 (or any other similar
exemptive provision) and (b) to qualify the Company for the use of registration
statements on Form S-3.
10.6 Investor Information. The Company may require Investor to
--------------------
furnish the Company such information with respect to Investor and the
distribution of the Investor Stock as the Company may from time to time
reasonably request in writing as shall be required by law or by the Commission
in connection therewith.
10.7 Transferability of Registration Rights. Notwithstanding
--------------------------------------
anything to the contrary in this Section 10, the rights of the Investor under
this Section 11 shall automatically transfer to any transferee of at least ten
percent (10%) of the Investor Stock in accordance with Section 14.5 hereof.
10.8 Suspension of Registration Obligations in Initial Purchase
---- ----------------------------------------------------------
Agreement; Reinstatement of Registration Obligations in Event of Termination.
----------------------------------------------------------------------------
The Company's obligations set forth in this Section 10 shall be deemed to
relieve the Company of its obligations set forth in Section 11 of the Initial
Purchase Agreement; provided, however, that if this Agreement is terminated
-------- -------
prior to the Closing Date, then the Company's obligations in Section 11 of the
Initial Purchase Agreement shall be reinstated as set forth therein; provided,
--------
further, that upon such reinstatement Section 11.1 of the Initial Purchase
-------
Agreement shall be deemed amended to (a) replace "June 21, 1999" in the first
sentence thereof with the first business day following the date of termination
of this Agreement, and (b) include in the definition of "Registrable Stock" all
shares of Common Stock into which the Initial Note and/or Additional Note have
been converted, if any, in accordance therewith.
11. Enforcement.
-----------
11.1 Survival of Representations and Warranties. The
------------------------------------------
representations, warranties, covenants and agreements of the parties hereto
contained in this Agreement or in any writing delivered pursuant to the
provisions of this Agreement or at the Closing shall survive any examination by
or on behalf of any party hereto and shall survive the Closing and the
consummation of the transactions contemplated hereby until the date which is
twelve (12) months after the Closing Date; provided, however, that each of the
-------- -------
representations and warranties contained in Sections 5.4, 5.7 and 5.9 hereof
shall survive any examination by or on behalf of any party hereto and shall
survive the Closing and the consummation of the transactions contemplated hereby
until the expiration of any applicable statute of limitations with respect to
such representation and warranty.
11.2 Indemnification.
---------------
(a) Subject to Section 11.2(e), the Company hereby covenants
and agrees to defend, indemnify and save and hold harmless Investor, together
with its officers, directors, shareholders, employees, attorneys and
representatives and each Person who controls Investor within the meaning of the
Securities Act, from and against any loss, cost, expense, liability, claim or
legal damages (including, without
24
limitation, reasonable fees and disbursements of counsel and accountants and
other costs and expenses incident to any actual or threatened claim, suit,
action or proceeding (each, an "Action") and all costs of investigation)
------
(collectively, the "Damages") arising out of or resulting from (i) any Default,
-------
or any inaccuracy in or breach of, or failure to perform or observe, any
representation, warranty, covenant or agreement made by the Company or Fargo in
this Agreement or in any writing delivered pursuant to this Agreement or at the
Closing, or (ii) any claims of third parties claiming compensation, commissions
or expenses for services as a broker or finder based upon obligations incurred
by the Company.
(b) In the event that any indemnified party is made a defendant in or
party to any action, suit, proceeding or claim, judicial or administrative,
instituted by any third party for Damages or other relief (any such third party
action, suit, proceeding or claim being referred to as a "Claim"), the
-----
indemnified party (referred to in this clause (b) as the "notifying party")
---------------
shall give notice thereof (a "Notice of Claim") as soon as practicable and in
---------------
any event within thirty (30) days after the notifying party receives notice
thereof. The failure to give such notice shall not affect whether an
indemnifying party is liable for reimbursement unless such failure has resulted
in the loss of substantive rights with respect to the indemnifying party's
ability to defend such Claim, and then only to the extent of such loss. Notice
of the intention so to contest and defend shall be given by the indemnifying
party to the notifying party within twenty (20) business days after the
notifying party's notice of such Claim (but, in all events, at least ten (10)
business days prior to the date that an answer to such Claim is due to be
filed). Such contest and defense shall be conducted by reputable attorneys
employed by the indemnifying party and approved by the indemnified party (which
approval will not be unreasonably withheld). The indemnifying party shall have
the sole right to control the contest and defense of such Claim. The notifying
party shall be entitled, at its own cost and expense (which expense shall not
constitute Damages unless the notifying party reasonably determines that the
indemnifying party because of a conflict of interest, may not adequately
represent, the interests of the indemnified parties, and has provided the
indemnifying party with notice of such determination, and only to the extent
that such expenses are reasonable), to participate in such contest and defense
and to be represented by attorneys of its or their own choosing. The notifying
party will cooperate with the indemnifying party in the conduct of such defense.
Neither the notifying party nor the indemnifying party may concede, settle or
compromise any Claim without the consent of the other party, which consent will
not be unreasonably withheld or delayed in light of all factors of importance to
such party; provided, however, that if the indemnified party shall fail to
consent to the settlement of any Claim where (i) such settlement includes an
unconditional release of all claims against the indemnified party and requires
no payment on the part of the indemnified party to the claimant or any other
party, (ii) such settlement does not require any action on the part of the
indemnified party and does not impose terms restricting or adversely affecting
the indemnified party's activity, and (iii) the claimant has affirmatively
indicated that it will accept such settlement, then the indemnifying party shall
no liability with respect to any payment to be made in respect of such claim in
excess of the proposed settlement amount.
(c) In the event any indemnified party shall have a claim against any
indemnifying party that does not involve a Claim, the indemnified party shall
deliver a notice of such claim with reasonable promptness to the indemnifying
party. The failure to give such notice shall not affect whether an indemnifying
party is liable for reimbursement unless such failure has resulted in the loss
of substantive rights with respect to the indemnifying party's ability to defend
such claim, and then only to the
25
extent of such loss. If the indemnifying party notifies the indemnified party
that it does not dispute the claim described in such notice or fails to notify
the indemnified party within thirty (30) days after delivery of such notice by
the indemnified party whether the indemnifying party disputes the claim
described in such notice, the Damages in the amount specified in the indemnified
party's notice will be conclusively deemed a liability of the indemnifying party
and the indemnifying party shall pay the amount of such Damages to the
indemnified party on demand.
(d) Any claim for indemnity under this Section 11.2 shall be delivered
in writing to the indemnifying party and set forth with reasonable specificity
as to the amount claimed and the underlying facts supporting such claim. The
indemnifying party shall have thirty (30) days to accept or dispute such claim
by written notice to the indemnified party (a "Contest Notice"); provided,
--------------
however, that if, at the time a Notice of Claim is submitted to the indemnifying
party the amount of the Claim in respect thereof has not yet been determined,
such thirty (30) day period shall not commence until a further written notice (a
"Notice of Liability") has been sent or delivered by the indemnified party to
-------------------
the indemnifying party setting forth the amount of the Claim incurred by the
indemnified party that was the subject of the earlier Notice of Claim. Such
Contest Notice shall specify the reasons or bases for the objection of the
Indemnifying Party to the claim, and if the objection relates to the amount of
the Claim asserted, the amount, if any, which the indemnifying party believes is
due the indemnified party. If no such Contest Notice is given with such 30-day
period, the obligation of the indemnifying party to pay to the indemnified party
the amount of the Claim set forth in the Notice of Claim, or subsequent Notice
of Liability, shall be deemed established and accepted by the indemnifying
party. If, on the other hand, the indemnifying party contests a Notice of Claim
or Notice of Liability (as the case may be) within such 30-day period, the
indemnified party and the indemnifying party shall thereafter attempt in good
faith to resolve their dispute by agreement. If the parties are unable to so
resolve their dispute within the immediately succeeding thirty (30) days, such
dispute shall be resolved by binding arbitration in Los Angeles, California, as
provided in Section 14.13 below. The award of the arbitrator shall be final and
binding on the parties and may be enforced in any court of competent
jurisdiction. Upon final determination of the amount of the Claim that is the
subject of an indemnification claim (whether such determination is the result of
the indemnifying party's acceptance of, or failure to contest, a Notice of Claim
or Notice of Liability, or of a resolution of any dispute with respect thereto
by agreement of the parties or binding arbitration), such amount shall be
payable, in cash by the indemnifying party to the indemnified parties who have
been determined to be entitled thereto within fifteen (15) days of such final
determination of the amount of the Claim due by the indemnifying party. Any
amount that becomes due hereunder and is not paid when due shall bear interest
at the maximum legal rate per annum from the date due until paid.
(e) Anything to the contrary notwithstanding, (i) the Investor shall
not be indemnified and held harmless in respect of any Damages unless and until
the aggregate amount of such Damages exceeds $100,000, in which event the
Investor shall be indemnified and held harmless in respect of all Damages
without regard to the foregoing $100,000 limit, and (ii) the liability of the
Company to the Investor shall be limited to an amount equal to the Purchase
Payment.
(f) Investor hereby covenants and agrees to defend, indemnify and save
and hold harmless the Company, together with officers, directors, shareholders,
employees, attorneys and representatives and each Person who controls the
26
Company within the meaning of the Securities Act from and against any Damages
arising out of or resulting from (i) any inaccuracy in breach of, or failure to
perform or observe, any representation, warranty, covenant or agreement made by
Investor in this Agreement or in any writing or other agreement delivered
pursuant hereto, or (ii) any claims of third parties claiming compensation,
commissions or expenses for services as a broker or finder based upon
obligations incurred by Investor.
(g) Except as provided in Section 11.3, the provisions of this
Section 11.2 shall be the exclusive remedy or exclusive means to obtain relief,
as the case may be, of any party in the event of any breach of any
representation, warranty, covenant or agreement contained herein (or in any
certificate or other document delivered pursuant hereto) by another party, or
with respect to any Action or Claim; provided, however, that this subsection (g)
-------- -------
shall not limit any statutory claim, or any claim in tort, which any party may
have against the other party.
11.3 Injunctive Relief. (a) Any party may bring a claim seeking
-----------------
specific performance by way of injunctive relief before a court of competent
jurisdiction to enforce the provisions of this Agreement, (b) any party seeking
to enforce a claim for indemnification may bring any claim of indemnification
which is not resolved within the thirty day period provided in Section 11.2(b)
before a court of competent jurisdiction, and (c) in the event of any breach by
either party of Section 14.9, the other party may seek injunctive relief from a
court of competent jurisdiction to restrain any such breach.
11.4 No Implied Waiver. Except as expressly provided in this
-----------------
Agreement, no course of dealing between the Company and Investor and no delay in
exercising any such right, power or remedy conferred hereby or now or hereafter
existing at law in equity, by statute or otherwise, shall operate as a waiver
of, or otherwise prejudice, any such right, power or remedy.
12. Rights of First Refusal.
-----------------------
12.1 Subsequent Offerings. Investor shall have the right of first
--------------------
refusal to purchase all (or any part of all) Equity Securities that the Company
may, from time to time, propose to sell and issue between the date hereof and
the Closing Date, other than the Equity Securities excluded by Section 12.4
hereof.
12.2 Exercise of Rights. If and each time the Company proposes to
------------------
issue any Equity Securities, it shall give Investor written notice of its
intention, describing the Equity Securities, the price, and the general terms
and conditions upon which the Company proposes to issue the same. Investor
shall have ten (10) days from the giving of such notice to agree to purchase
Equity Securities for the price and upon the terms and conditions specified in
the notice by giving written notice to the Company.
12.3 Issuance of Equity Securities to Other Persons. If Investor
----------------------------------------------
fails to exercise in full the rights of first refusal within such ten (10) day
period by giving the agreement referred to in Section 12.2, the Company shall
have ninety (90) days thereafter to complete the sale of the Equity Securities
in respect of which Investor's rights were not exercised, at a price and upon
general terms and conditions no more favorable to the purchasers thereof than
specified in the Company's notice to the Investors pursuant to Section 12.2
hereof. If the Company has not sold all of such Equity Securities within such
ninety (90) days, the Company shall not thereafter issue or sell any
27
of such Equity Securities, without first offering such securities to Investor in
the manner provided above.
12.4 Excluded Securities. The rights of first refusal established
-------------------
by this Section 12 shall have no application to (a) any shares of Common Stock
issued in accordance with the stock option plans and warrants currently reserved
for issuance to employees, directors and advisors, as described in Sections 5.3
and 5.6, and Schedule 5.6, (b) shares of Common Stock issued as consideration to
------------
third parties for product development services or publishing or distribution
rights, not to exceed 500,000 shares, (c) shares of Common Stock issued in
connection with any stock split, stock dividend or reverse stock split, and (d)
shares of Common Stock issued in connection with acquisitions of other entities
by way of merger, share exchange, sale of assets or otherwise.
12.5 Termination of Rights. The Company's obligations set forth in
this Section 12 shall be deemed to relieve the Company of its obligations set
forth in Section 13 of the Initial Purchase Agreement; provided, however, that
-------- -------
if this Agreement is terminated prior to the Closing Date, then the Company's
obligations in Section 13 of the Initial Purchase Agreement shall be reinstated
as set forth therein.
13. Definitions. Unless the context otherwise requires, the terms
-----------
defined in this Section 13 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms herein defined. All accounting terms defined in this Section
13 and those accounting terms used in this Agreement not defined in this Section
13 shall, except as otherwise provided for herein, be construed in accordance
with those generally accepted accounting principles that the Company is required
to employ by the terms of this Agreement. If and so long as the Company has any
Subsidiary, the accounting terms defined in this Section 13 and those accounting
terms appearing in this Agreement but not defined in this Section 13 shall be
determined on a consolidated basis for the Company and its Subsidiaries, and the
financial statements and other financial information to be furnished by the
Company pursuant to this Agreement shall be consolidated and presented with
consolidating financial statements of the Company and its Subsidiaries.
Capitalized terms not otherwise defined herein shall have their respective
meanings in the Initial Purchase Agreement.
"Action" shall have the meaning assigned to it in Section 11.2(a).
------
"Affiliate" shall have the meaning assigned to it in Rule 405 of the
---------
Commission under the Securities Act.
"Agreement" shall mean this Agreement.
---------
"Balance Sheet" and "Balance Sheet Date" shall have the meanings
------------- ------------------
assigned to these terms in Section 5.12 hereof.
"Board" shall mean the Board of Directors of the Company.
-----
"Claim" shall have the meaning assigned to it in Section 11.2(b).
-----
"Closing" and "Closing Date" shall have the meanings assigned to
------- ------------
these terms in Section 3.1.
28
"Common Stock" shall have the meaning assigned to it in Section 1
------------
hereof.
"Commission" shall mean the Securities and Exchange Commission.
----------
"Damages" shall have the meaning assigned to it in Section 11.2(a).
-------
"Default" shall mean a default or failure in the due observance or
-------
performance of any covenant, condition or agreement on the part of the Company
or any of its Subsidiaries to be observed or performed under the terms of this
Agreement, if such default or failure in performance shall remain unremedied for
ten (10) days.
"Deposit" shall have the meaning assigned to it in Section 2.
-------
"Designated Key Employees" shall have the meaning assigned to it in
------------------------
Section 5.15.
"Designee" shall have the meaning assigned to it in Section 7.6(a).
--------
"Developing Software" shall have the meaning assigned to it in
-------------------
Section 5.27(b).
"Equity Security" shall mean any stock or similar security of the
---------------
Company or any security (whether stock or Indebtedness for Borrowed Money)
convertible or exchangeable, with or without consideration, into or for any
stock or similar security, or any security (whether stock or Indebtedness for
Borrowed Money) carrying any warrant or right to subscribe to or purchase any
stock or similar security, or any such warrant or right.
"Event of Default" shall mean (a) the failure of either the Company or
----------------
any Subsidiary to pay any Indebtedness for Borrowed Money, or any interest or
premium thereon, within ten (10) days after the same shall become due, whether
such Indebtedness shall become due by scheduled maturity, by required
prepayment, by acceleration, by demand or otherwise, (b) an event of default
under any agreement or instrument evidencing or securing or relating to any such
Indebtedness, or (c) the failure of either the Company or any Subsidiary to
perform or observe any material term, covenant, agreement or condition on its
part to be performed or observed under any agreement or instrument evidencing or
securing or relating to any such Indebtedness when such term, covenant or
agreement is required to be performed or observed.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"Final Valuation Date" shall have the meaning assigned to it in the
--------------------
Initial Purchase Agreement.
"Form 10-Q" shall have the meaning assigned to it in Section 5.12.
---------
"Form S-1" shall have the meaning assigned to it in Section 5.12.
--------
"GAAP" shall have the meaning assigned to it in Section 5.12.
----
29
"Indebtedness" shall mean any obligation of the Company or any
------------
Subsidiary which under GAAP is required to be shown on the balance sheet of the
Company or such Subsidiary as a liability. Any obligation secured by a Lien on,
or payable out of the proceeds of production from, property of the Company or
any Subsidiary shall be deemed to be Indebtedness even though such obligation is
not assumed by the Company or Subsidiary.
"Indebtedness for Borrowed Money" shall mean (a) all Indebtedness in
-------------------------------
respect of money borrowed including, without limitation, Indebtedness which
represents the unpaid amount of the purchase price of any property and is
incurred in lieu of borrowing money or using available funds to pay such amounts
and not constituting an account payable or expense accrual incurred or assumed
in the ordinary course of business of the Company or any Subsidiary, (b) all
Indebtedness evidenced by a promissory note, bond or similar written obligation
to pay money, or (c) all such Indebtedness guaranteed by the Company or any
Subsidiary or for which the Company or any Subsidiary is otherwise contingently
liable.
"Initial Purchase Agreement" shall have the meaning assigned to it in
--------------------------
the Recitals.
"Investor Counsel" shall have the meaning assigned to it in Section
----------------
7.1(g)(3).
"Investor Financing" shall have the meaning assigned to it in Section
------------------
9.2.
"Investor Stock" shall have the meaning assigned to it in Section 1.
--------------
"Letter of Intent" shall have the meaning assigned to it in the
----------------
Recitals.
"Lien" shall mean any mortgage, pledge, security interest,
----
encumbrance, lien or charge of any kind, including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof and the filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction and including any lien or charge
arising by statute or other law.
"Line of Credit" shall have the meaning assigned to it in Section
--------------
9.2.
"Material Adverse Effect" on a Person means a material adverse effect,
-----------------------
or any condition, situation or set of circumstances that could reasonably be
expected to have an adverse effect, on such Person and its Subsidiaries, taken
as a whole.
"Note" shall have the meaning assigned to it in Section 3.
----
"Operational Software" shall have the meaning assigned to it in
--------------------
Section 5.27(a).
"Permitted Liens" shall mean (a) Liens for taxes and assessments or
---------------
governmental charges or levies not at the time due or in respect of which the
validity thereof shall currently be contested in good faith by appropriate
proceedings; (b) Liens in respect of pledges or deposits under workers'
compensation laws or similar legislation,
30
carriers', warehousemen's, mechanics', laborers' and materialmen's and similar
Liens, if the obligations secured by such Liens are not then delinquent or are
being contested in good faith by appropriate proceedings; and (c) Liens
incidental to the conduct of the business of the Company or any Subsidiary which
were not incurred in connection with the borrowing of money or the obtaining of
advances or credits and which do not in the aggregate materially detract from
the value of its property or materially impair the use thereof in the operation
of its business.
"Person" shall include any natural person, corporation, trust,
------
association, company, partnership, limited liability company, joint venture and
other entity and any government, governmental agency, instrumentality or
political subdivision.
"Purchase Payment" shall have the meaning assigned to it in Section
----------------
2.
"Restricted Period" shall have the meaning assigned to it in Section
-----------------
8.5.
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Stock Purchase Agreement" shall have the meaning assigned to it in
------------------------
the Recitals.
"Subsidiary" shall mean any corporation, association or other business
----------
entity at least fifty percent (50%) of the outstanding voting stock of which is
at the time owned or controlled directly or indirectly by the Company or by one
or more of such subsidiary entities or both, where "voting stock" means any
shares of stock having general voting power in electing the board of directors
(irrespective of whether or not at the time stock of any other class or classes
has or might have voting power by reason of any contingency).
"Universal Agreement" shall mean the letter agreement dated as of
-------------------
March 18, 1999, by and among the Company, Investor and Universal Studios, Inc.
"Web Site" shall have the meaning assigned to it in Section 5.28(a).
--------
14. Miscellaneous.
-------------
14.1 Waivers and Amendments. With the written consent of Investor,
----------------------
the obligations of the Company and the rights of Investor under this Agreement
may be waived (either generally or in a particular instance, either
retroactively or prospectively and either for a specified period of time or
indefinitely), and with the same consent the Company, when authorized by
resolution of its Board, may enter into a supplementary agreement for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of any supplemental agreement or
modifying in any manner the rights and obligations hereunder of Investor and the
Company. Neither this Agreement, nor any provision hereof, may be amended,
waived, discharged or terminated orally or by course of dealing, but only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, as provided in this Section
14.1. Specifically, but without limiting the generality of the foregoing, the
failure of Investor at any time or times to require performance of any provision
hereof by the Company shall in no manner affect the right of Investor at a later
time to enforce the same. No waiver by any party of the breach of any term or
provision contained in this Agreement, in any one or more
31
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such breach, or a waiver of the breach of any other term or
covenant contained in the Agreement.
14.2 Rights of Investor. Investor shall have the absolute right to
------------------
exercise or refrain from exercising any right or rights which Investor may have
by reason of this Agreement or any Investor Stock, including, without
limitation, the right to consent to the waiver of any obligation of the Company
under this Agreement and to enter into an agreement with the Company for the
purpose of modifying this Agreement or any agreement effecting any such
modification, and Investor shall not incur any liability to any other
shareholder of the Company with respect to exercising or refraining from
exercising any such right or rights.
14.3 Notices. All notices, requests, consents and other
-------
communications required or permitted hereunder shall be in writing (including
telecopy or similar writing) and shall be given,
if to the Company to:
Interplay Entertainment Corp.
00000 Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Mr. Xxxxx Xxxxx, Chairman and
Chief Executive Officer
Telecopier: (000) 000-0000
with a copy to:
X.X. Xxxxxx, Esq.
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, a professional corporation
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
if to Investor to:
Xxxxx Interactive SA
c/x Xxxxx Software Corporation
00000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx Xxxx, Chairman and
Chief Executive Officer
Telecopier: (000) 000-0000
32
with copies to:
Xxxxx Interactive SA
Parc de l'esplanade
00, Xxx Xxxxxx Xxxxx
Xxxxx Xxxxxxxx des Xxxxxx
00000 Xxxxx xxx Xxxxx Xxxxx
Xxxxxx
Telecopier: 011-33-1-60-31-59-60
and
Xxxxxx X. Xxxxxx, Xx., Esq.
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxx Xxxxxx - 00/xx/ Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
if to Fargo to:
Mr. Xxxxx Xxxxx
c/o Interplay Entertainment Corp.
00000 Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
or to such other address or telecopier number as such party may specify for the
purpose by notice to the other party or parties to this Agreement, as the case
may be. Any notice, request, consent or other communication hereunder shall be
deemed to have been given and received on the day on which it is delivered (by
any means including personal delivery, overnight air courier, United States or
French mail) or telecopied (or, if such day is not a business day or if the
notice, request, consent or communication is not telecopied during business
hours of the intended recipient, at the place of receipt, on the next following
business day).
14.4 Severability. Should any one or more of the provisions of
------------
this Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, all other provisions of this
Agreement and of each other agreement entered into pursuant to this Agreement,
shall be given effect separately from the provision or provisions determined to
be illegal or unenforceable and shall not be affected thereby.
14.5 Assignment; Parties in Interest. Neither this Agreement nor
-------------------------------
any interest herein may be assigned by either party hereto without the written
consent of the other parties hereto, except that Investor may assign all of its
rights hereunder to any Subsidiary of Investor. Subject to the foregoing, all
the terms and provisions of this Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors and assigns of
the parties hereto, whether so expressed or not. Subject to the immediately
preceding sentence, this Agreement shall not run to the benefit of or be
enforceable by any Person other than a party to this Agreement and its
successors and assigns.
33
14.6 Headings. The headings of the Sections and paragraphs of this
--------
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
14.7 Choice of Law; Jurisdiction and Venue. The internal
-------------------------------------
substantive laws, and not the laws of conflicts, of the State of California
shall govern the enforceability and validity of this Agreement, the construction
of its terms and the interpretation of the rights and duties of the parties.
The parties hereby consent and agree that the United States District Court for
the Central District of California, or the Superior Court of California for the
County of Orange will have exclusive jurisdiction over any legal action or
proceeding arising out of or relating to this Agreement, and each party consents
to the in personam jurisdiction of such courts for the purpose of any such
-- --------
action or proceeding and agrees that venue is proper in such courts.
14.8 Publicity. Without the prior consent of the other parties, no
---------
party shall, and each party shall cause its directors, officers, employees,
representatives and agents not to, make any public statement or press release
with respect to the transactions contemplated by this Agreement or otherwise
disclose to any Person the existence, terms, content or effect of this
Agreement; provided, however, that if a disclosure is required by law, the party
--------
required to make such disclosure shall be permitted to make such disclosure but
shall use best efforts to consult with the other parties hereto before making
the required disclosure. The foregoing restriction shall not limit the
applicability of the Nondisclosure Agreements between the Company and Investor
dated November 10, 1998, and March 3, 1999, which shall continue in full force
and effect in accordance with their respective terms.
14.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts (including by facsimile) and by different parties hereto in
separate counterparts, with the same effect as if all parties had signed the
same document. All such counterparts shall be deemed an original, shall be
construed together and shall constitute one and the same instrument.
14.10 Entire Agreement; Effect on Initial Purchase Agreement. This
------------------------------------------------------
Agreement, and the Exhibits, Schedules, certificates, and documents referred to
herein, together with the Initial Purchase Agreement, and all exhibits,
schedules, certificates and documents referred to therein, constitute the entire
agreement of the parties hereto with respect to the subject matter hereof, and
supersede all prior understandings (including the Letter of Intent, except and
solely to the extent that such Letter of Intent, by its terms, is binding upon
the parties) with respect to the subject matter hereof, and no representation or
warranty not included herein has been relied upon by any party hereto. Without
limiting the generality of the foregoing, the Initial Purchase Agreement shall
continue in full force and effect in accordance with its terms, as expressly
amended hereby; provided, that in the event of any inconsistency between the
--------
terms of this Agreement and the terms of the Initial Purchase Agreement, the
terms of this Agreement shall control; and provided, further, that upon the
-------- -------
Closing, Section 10.3 of the Initial Purchase Agreement shall be deleted in its
entirety, and shall have no further force or effect.
14.11 Attorneys' Fees. In the event of any dispute, controversy, or
---------------
proceeding between the parties concerning this Agreement or the transactions
contemplated hereby, the prevailing party shall be entitled to receive from the
non-prevailing party its costs and expenses, including attorneys' fees.
34
14.12 Arbitration. Except for actions to obtain injunctions or
-----------
other equitable remedies, all disputes between the parties hereto shall be
determined solely and exclusively by arbitration under, and in accordance with
the rules then in effect of, the American Arbitration Association, or any
successors thereto ("AAA"), in Los Angeles, California, unless the parties
---
otherwise agree in writing. The parties shall, in connection with such
arbitration, in addition to any discovery permitted under AAA rules, be
permitted to conduct discovery in accordance with Section 1283.05 of the
California Code of Civil Procedure, the provisions of which are incorporated
herein by this reference. The parties shall jointly select an arbitrator. In
the event the parties fail to agree upon an arbitrator within ten (10) days,
then each party shall select an arbitrator and such arbitrators shall then
select a third arbitrator to serve as the sole arbitrator; provided, that if
--------
either party, in such event, fails to select an arbitrator within seven (7)
days, such arbitrator shall be selected by the AAA upon application of either
party. Judgment upon the award of the agreed upon arbitrator or the so chosen
third arbitrator, as the case may be, shall be binding and may be entered in any
court of competent jurisdiction.
35
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective duly authorized officers as of the day and year
first above written.
INTERPLAY ENTERTAINMENT CORP., a Delaware
corporation
By: /s/ Xxxxx Xxxxx
------------------------
An Authorized Officer
XXXXX INTERACTIVE SA, a French corporation
By: /s/ Herve Caen
------------------------
An Authorized Officer
/s/ Xxxxx Xxxxx
------------------------
Xxxxx Xxxxx
36
