EXECUTION COPY
NOTE AND COMMON STOCK PURCHASE AGREEMENT
This Note and Common Stock Purchase Agreement (the "Agreement") is made
this 10th day of April, 2001 (the "Effective Date") by and between Alexandra
Global Investment Fund I, Ltd., a British Virgin Islands international business
company (the "Seller"), and Acclaim Entertainment, Inc., a Delaware corporation
(the "Company").
RECITALS
WHEREAS, the Seller is the legal and beneficial owner and holder of
certain of the Company's note(s) in the aggregate principal amount of $7,200,000
(the "Note"), originally issued as part of the Company's private placement of
$50,000,000 aggregate principal amount of 10% Convertible Subordinated Notes due
in 2002 (the "Issuance");
WHEREAS, both the Issuance and the Note are governed by an Indenture
between the Company and IBJ Xxxxxxxxx Bank & Trust Company (the "Trustee"),
dated as of February 26, 1997 (the "Indenture");
WHEREAS, the Company wishes to purchase the Note from Seller upon the
terms and subject to the conditions of this Agreement, and
WHEREAS, in connection with the Company's purchase of the Note, the
Seller is concurrently purchasing from the Company 1,660,000 shares (the
"Purchased Stock") of the Company's common stock, par value $0.02 per share (the
"Common Stock").
AGREEMENT
The parties hereto hereby agree as follows:
1. PURCHASE AND SALE.
(a) PURCHASE AND SALE OF NOTE. The Seller hereby transfers, assigns and
sells to the Company, and the Company hereby purchases from the Seller, the
Note for an aggregate purchase price of $3,275,000 (plus accrued interest
thereon in the amount of $82,000) (the "Note Price"), as reflected in paragraph
1(e) below.
(b) DELIVERY OF NOTE. The parties acknowledge that the Seller has
instructed Credit Suisse First Boston (Europe) Limited to transfer the Note to
the Trustee, and the Company has in turn instructed the Trustee to cancel the
Note as a result of the transactions contemplated hereby.
(c) PURCHASE AND SALE OF PURCHASED STOCK The Company hereby sells and
delivers to the Seller, and the Seller hereby purchases from the Company, the
Purchased Stock,
at a purchase price of $1.25 per share, or an aggregate purchase price for all
the Purchased Stock of $2,075,000 (the "Stock Price") as reflected in paragraph
1(e) below.
(d) DELIVERY OF PURCHASED STOCK. The Company has delivered to the Seller
share certificate no. 19684 representing the shares of Purchased Stock, and the
Seller hereby acknowledges receipt thereof.
(e) ADDITIONAL DELIVERY. In consideration of the purchase by the Company
of the Note for the Note Price, and the purchase by the Seller of the Purchased
Stock for the Stock Price, the Company hereby pays to Seller $1,282,000 in cash
by wire transfer of immediately available funds to an account designated by
Seller, the receipt of which is hereby acknowledged, representing the
difference between the Note Price and the Stock Price (the "Purchase Price").
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller hereby represents
and warrants to the Company that:
(a) RIGHT, TITLE AND INTEREST TO NOTE. The Seller is the legal and
beneficial owner of the Note and is in valid possession of all right, title and
interest to the Note, and when the Note is delivered to the Company pursuant
hereto, the Company will acquire good and marketable title thereto, free and
clear of all liens, restrictions, claims, charges and encumbrances ("Liens")
and is not subject to any adverse claim.
(b) AUTHORIZATION AND VALIDITY OF AGREEMENT. The Seller has the power and
authority and has taken all necessary actions to execute and deliver this
Agreement, to consummate the transactions contemplated hereby and to take all
other actions required to be taken by it pursuant to the provisions hereof.
This Agreement has been duly executed and delivered by the Seller. This
Agreement is legal, valid and binding upon and enforceable against the Seller
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, moratorium, insolvency, fraudulent conveyance, reorganization, or
other similar laws affecting the enforcement of creditors' rights generally.
(c) NO CONFLICT WITH OTHER INSTRUMENTS. The Seller is not subject to any
agreement, instrument, judgment, order, document or other restriction of any
kind that would prevent the consummation of the transactions contemplated by
this Agreement. The consummation of the transactions hereunder will not cause a
breach or default by the Seller under any such agreement, instrument, judgment,
order, or document to which the Seller is a party.
(d) INVESTMENT REPRESENTATIONS. Subject to the registration provisions set
forth in Section 6 of this Agreement, the Seller understands that the shares of
Purchased Stock (and any other shares of Common Stock acquired hereunder) have
not been registered under the Securities Act of 1933, as amended (the
"Securities Act"). Seller also understands that the shares of Purchased Stock
(and such other shares of Common Stock) are being offered and sold pursuant to
an exemption from registration contained in the Securities Act based in part
upon Seller's representations contained in this Section 2(d). In that regard,
the Seller hereby represents and warrants as follows:
(i) SELLER BEARS ECONOMIC RISK. The Seller has substantial experience
in evaluating and investing in private placement transactions of securities in
companies similar to the Company so that it is capable of evaluating the merits
and risks of its investment in the Company and has the capacity to protect its
own interests. The Seller understands and accepts that it must bear the
economic risk of this investment indefinitely unless the shares of Purchased
Stock (and any other shares of Common Stock acquired hereunder) are registered
pursuant to the Securities Act, or an exemption from registration is available.
Section 6 of this Agreement contains Seller's registration rights for the
Purchased Stock and any other shares of Common Stock issued to Seller pursuant
to this Agreement.
(ii) ACQUISITION FOR OWN ACCOUNT. The Seller is acquiring the shares
of Purchased Stock, and any other shares of Common Stock acquired hereunder,
for the Seller's own account for investment only, and not with a view towards,
or for resale in connection with (except as may be set forth in the "Plan of
Distribution" section contained in the Registration Statement (as hereinafter
defined)), their distribution in any transaction that would be in violation of
the securities laws of the United States of America or any State thereof.
Seller understands that the Purchased Stock (and any other shares of Common
Stock acquired hereunder) have not been approved or disapproved by the
Securities and Exchange Commission (the "Commission"), or any other federal or
state agency, nor has the Commission or any such agency passed upon the
accuracy or adequacy of any of the information provided to the Seller.
(iii) ACCREDITED INVESTOR. The Seller is an "accredited investor"
within the meaning of Regulation D under the Securities Act. The address of
Seller set forth on the signature page hereto is Seller's current address.
(iv) COMPANY INFORMATION. The Seller has had an opportunity to
discuss the Company's business, management and financial affairs with
directors, officers and management of the Company. The Seller has also had the
opportunity to ask questions of and receive answers from, the Company and its
management regarding the terms and conditions of its investment in the shares
of Purchased Stock.
(v) NO ORAL REPRESENTATIONS. In making the Seller's investment in the
Company, no oral representations or warranties have been made to the Seller.
The Seller acknowledges that it has been advised that no person is authorized
to give any information or to make any statement not contained in any of the
written information provided to the Seller by the Company and that any
information or statement not made by such person must not be relied upon as
having been authorized by the Company or any professional advisors or counsel
thereto. The Seller and the Seller's representatives must rely on their own due
diligence of the Company and any other investigations deemed necessary for the
purpose of determining whether to proceed with the investment in the Company.
(vi) PURCHASED STOCK LEGEND. The Seller agrees that the certificates
evidencing the shares of Purchased Stock (and any other shares of Common Stock
acquired hereunder) bear the following legend restricting their transferability
under the Securities Act:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ACQUIRED FOR
INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("ACT"). NO SALE, OFFER TO SELL OR TRANSFER OF THE SHARES
REPRESENTED BY THIS CERTIFICATE SHALL BE MADE IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER
THE ACT, OR AN OPINION OF COUNSEL TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER THE ACT.
(e) PUBLIC REPORTS. Seller has received, read and reviewed the Company's
Annual Report on Form 10-K (for the year ended August 31, 2000) and Quarterly
Report on Form 10-Q (for the quarterly period ended December 2, 2000).
(f) INDEMNIFICATION. The Seller shall indemnify and hold harmless each of
the Company, its directors, officers, persons controlling the Company, any
affiliate of the foregoing or any professional advisors thereto, from and
against any and all loss, damage, liability or expense, including costs and
reasonable attorneys' fees, to which any of them may be put or which they may
incur by reason of or in connection with any misrepresentation made by Seller,
or any breach of any of Seller's warranties in this Agreement; provided,
however, that the total amount payable in indemnity under this Section 2(f)
shall not exceed the Note Price.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents
and warrants to the Seller that:
(a) AUTHORIZATION AND VALIDITY OF AGREEMENT. The Company has the corporate
power and authority and has taken all necessary corporate actions to execute
and deliver this Agreement, to consummate the transactions contemplated hereby
and to take all other actions required to be taken by it pursuant to the
provisions hereof. This Agreement has been duly executed and delivered by the
Company. This Agreement is legal, valid and binding upon and enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by bankruptcy, moratorium, insolvency, fraudulent conveyance,
reorganization, or other similar laws affecting the enforcement of creditors'
rights generally.
(b) NO CONFLICT WITH OTHER INSTRUMENTS. The Company is not subject to any
agreement, instrument, judgment, order, document or other restriction of any
kind that would prevent the consummation of the transactions contemplated by
this Agreement. The consummation of the transactions hereunder will not cause a
breach or default by the Company under any such agreement, instrument,
judgment, order, or document to which the Company is a party.
(c) FULL DISCLOSURE. The Company's Annual Report on Form 10-K (for the
year ended August 31, 2000) and Quarterly Report on Form 10-Q (for the
quarterly period ended December 2, 2000) and all other filings with the
Commission made by the Company from April 1, 2000 to the date of execution of
this Agreement, complied when filed, in all material respects, with all
applicable requirements of the Securities Act and Securities Exchange Act of
1934, as amended ("Exchange Act"), and did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated or
therein necessary to make the statements contained therein not misleading in
light of the circumstances under which they were made.
(d) VALIDITY OF PURCHASED STOCK. Upon issuance of the Purchased Stock (and
any other shares of Common Stock acquired hereunder) and payment for the
Purchased Stock, the shares of Purchased Stock (and any other shares of Common
Stock acquired hereunder) will be duly and validly issued, fully paid and
nonassessable, with no personal liability attaching to the ownership thereof
and free and clear of all Liens imposed by or through the Company. The shares
of Purchased Stock (and any other shares of Common Stock acquired hereunder)
are not subject to any preemptive rights or any options or other rights of
purchase.
4. RELEASE. By the surrender of the Note and acceptance of the Purchase Price
therefor, the parties hereby release each other from any and all obligations
under the Note and the Indenture, financial and otherwise, and relinquishes the
right to any legal claim against the other party in connection with either the
Note or the Indenture; it being understood that this release shall not apply to
any claims of the parties hereto arising out of or relating to this Agreement
or such other documents, agreements and instruments delivered in connection
therewith.
5. CONFIDENTIALITY OF INFORMATION. The Seller agrees to hold and to cause its
representatives and affiliates to hold all information received from or
concerning the Company in connection with the transactions contemplated by this
Agreement in confidence, and not to use or disclose any of such information to
any such third party, except to the extent such information may be made
publicly available by the Company or except for disclosure required by law, or
as requested by the Commission.
6. REGISTRATION RIGHTS.
(a) For purposes of this Section 6, the term "Purchased Stock" shall mean
(i) the shares of Common Stock purchased by Seller pursuant to Section 1(c),
(ii) any shares of Common Stock issued to Seller pursuant to this Section 6(a)
and Section 6(g), and (iii) any securities issued prior to the effectiveness of
the Registration Statement with respect to any share of Common Stock referred
to in (i) and (ii) upon any conversion or exchange thereof, by way of stock
dividend or stock split, in connection with a combination of shares,
recapitalization, reclassification, merger, consolidation or other
reorganization. The Company hereby agrees to prepare and file with the
Commission a registration statement on Form S-3, or any successor similar form
(the "Registration Statement") with respect to the resale of the shares of
Purchased Stock and to use its best efforts to cause the Registration Statement
to be declared effective by the Commission. The parties hereto agree that if
the Registration Statement has not been filed with the Commission by no later
than 14 calendar days after execution of this Agreement (the "Registration
Period"), the Company shall deliver an additional 75,000 shares of Common Stock
to the Seller without any additional consideration therefor and, for each
14-calendar day period thereafter until the Registration Statement has been
filed with the Commission, the Company shall deliver an additional 75,000
shares of Common Stock to the Seller without any additional consideration
therefor. Notwithstanding the foregoing, if the Registration Statement has not
been declared effective by the Commission on or before the 90th calendar day
following the filing of the Registration Statement, the Company shall deliver
250,000 additional shares of Common Stock to the Seller without any additional
consideration therefor.
(b) In connection with the registration of the shares of Purchased Stock
described in section 6(a), the Company agrees that it will:
(i) Prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by the Registration Statement and use its best efforts to
cause such Registration Statement to become and remain effective for the period
of distribution set forth herein.
(ii) Furnish to the Seller such number of copies of the Registration
Statement and each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus (including
each preliminary prospectus and summary prospectus) in conformity with the
requirements of the Securities Act, and such documents, if any, incorporated by
reference in such Registration Statement or prospectus, and such other
documents as the Seller may reasonably request in order to facilitate the
disposition of the shares of Purchased Stock owned by it that are included in
such registration.
(iii) Use its best efforts to register and qualify the securities
covered by the Registration Statement under such other securities or "blue sky"
laws of such jurisdictions as shall be reasonably requested by the Seller, keep
such registration or qualification in effect for so long as the Registration
Statement remains in effect, and do any or all acts and things which may be
reasonably necessary to enable the Seller to consummate the disposition in such
jurisdiction of the shares of Purchased Stock covered by the Registration
Statement; provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business, to subject
itself to taxation, or to file a general consent to service of process in any
such states or jurisdictions.
(iv) Use its best efforts (A) to list all securities covered by such
Registration Statement on any securities exchange on which any of such
securities shall then be listed or (B) in the event such securities shall not be
so listed to have such registrable stock qualified for inclusion on The Nasdaq
Small Cap Market System, if such securities are then so qualified, or to have
such securities qualified for inclusion on The Nasdaq Over-the-Counter Bulletin
Board.
(v) Furnish to the Seller an opinion of counsel representing the
Company for the purposes of such registration, dated the effective date of such
registration, addressed to the Seller, stating that such Registration Statement
shall have become effective under the Securities Act and that (1) to the best
knowledge of such counsel, no stop order suspending the effectiveness thereof
shall have been issued and no proceedings for that purpose shall have been
instituted or shall be pending or contemplated under the Securities Act, and
(2) the Registration Statement, the related prospectus and each amendment or
supplement thereof comply as to form in material respects with the requirements
of the Securities Act (except that such counsel need not express any opinion as
to financial statements or other financial data continued therein).
(vi) For purposes of this Section 6, the period of distribution of
registrable stock under the Registration Statement shall be deemed to extend
until the earlier of the sale of all registrable stock covered thereby or one
(1) year after the effective date thereof, provided, however, that in the case
of any registration of registrable stock on Form S-3 which
shall be intended to be offered on a delayed or continuing basis, such one-year
period shall be extended if necessary, to keep the Registration Statement
effective until such registrable stock shall be sold, provided that Rule 415
under the Securities Act or any successor rule under the Securities Act permits
an offering on a delayed or continued basis.
(vii) Notify the Seller and (if requested by the Seller) confirm such
advice in writing, (A) when or if the prospectus or any prospectus supplement
or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has
become effective, (B) of any request by the Commission for amendments or
supplements to the Registration Statement or the prospectus or for additional
information, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose, (D) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the shares
of Purchased Stock for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and (E) of the happening of any
event as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
(viii) If any fact contemplated by clause (E) of paragraph (vii),
above, shall exist, prepare a supplement or post-effective amendment to the
Registration Statement or the related prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchaser of the shares of the Purchased Stock the prospectus
will not contain an untrue statement of material fact or omit to state any
material fact necessary to make the statements therein not misleading.
(ix) Use best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment.
(x) Otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
shareholders, as soon as reasonably practicable, an earnings statement covering
the period of at least 12 months, but not more than 18 months, beginning with
the first month of the first fiscal quarter after the effective date of such
Registration Statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 under the Securities Act.
(xi) Notwithstanding the foregoing, all expenses incurred in
connection with a registration pursuant to this Agreement (excluding
underwriters' and brokers' discounts and commissions), including, without
limitation all federal and state "blue sky" registration and qualification
fees, printers' and accounting fees, and fees and disbursements of counsel for
the Company, shall be borne by the Company.
(c) OBLIGATION OF SELLER TO FURNISH INFORMATION. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Agreement that the Seller shall furnish to the Company in writing such
information regarding itself, the shares of Purchased Stock and Common Stock it
then holds, and the intended method of disposition of
such shares as shall reasonably be required to timely effect the registration of
the shares of Purchased Stock.
(d) DEFERRAL. If the Company shall furnish to the Seller a certificate
signed by the President or Chief Executive Officer of the Company (a "Demand
Deferral Notice") stating that, in the good faith judgment of the Board of
Directors of the Company, and pursuant to a resolution of the Board of
Directors, it would be seriously detrimental to the Company and its
stockholders for such Registration Statement to be filed and it is therefore
essential to defer the filing of such Registration Statement, then the Company
shall have the right to defer such filing for a period of not more than 90
calendar days after the date such Demand Deferral Notice is furnished to the
Seller; provided, however, that (i) the Company may not utilize this right more
than once and (ii) the Demand Deferral Notice shall certify that the Board of
Directors of the Company has discussed the issues involved and resolved to send
the Demand Deferral Notice to Seller. Notwithstanding the foregoing, if such a
Demand Deferral Notice is delivered to Seller, the Company shall continue to be
obligated to deliver such additional shares as described in, and in accordance
with, Section 6(a) above and Section 6(g) below.
(e) DISCONTINUANCE OF A DISPOSITION OF REGISTRABLE SHARES. If any shares
of Purchased Stock are registered for sale under the Securities Act, the Seller
shall cease any distribution of such shares under the Registration Statement
not more than once in any twelve-month period, for up to 90 calendar days each,
upon the request of the Company if: (x) such distribution would require the
public disclosure of material non-public information concerning any transaction
or negotiations involving the Company or any of its affiliates that, in the
good faith judgment of the Company's Board of Directors pursuant to a
resolution of the Board of Directors, would materially interfere with such
transaction or negotiations, (y) such distribution would otherwise require
premature disclosure of information that, in the good faith judgment of the
Company's Board of Directors pursuant to a resolution of the Board of
Directors, would adversely affect or otherwise be detrimental to the Company or
(z) the Company proposes to file a registration statement under the Securities
Act for the offering and sale of securities for its own account in an
underwritten offering and the managing underwriter therefor shall advise the
Company in writing that in its opinion the continued distribution of the
Purchased Stock would adversely affect the success of the offering of the
securities proposed to be registered for the account of the Company. The
Company shall promptly notify the Seller at such time as (i) such transactions
or negotiations have been otherwise publicly disclosed or terminated, (ii) such
non-public information has been publicly disclosed or counsel to the Company
has determined that such disclosure is not required due to subsequent events or
(iii) the completion of such underwritten offering.
(f) "MARKET STAND-OFF" AGREEMENT. If in the opinion (a written copy of
which shall be provided to Seller) of the managing underwriter for an offering
of securities by the Company, market conditions require limitations on the
number of shares being sold by the Company in the public offering requested by
the Company, the Seller agrees that it will refrain from selling or otherwise
transferring or disposing of any shares of Purchased Stock or other shares of
stock of the Company that it then owns (other than to stockholders, or
affiliates of the Seller or to investment advisor to Seller who agree to be
similarly bound) for a period of up to 90 calendar days following the effective
date of the first Registration Statement of the Company filed under the
Securities Act in connection with a public offering of the Common Stock after
the
date of this Agreement (other than a registration on Form S-4 or Form S-8).
In order to enforce the foregoing covenant, the Company shall have the right to
place restrictive legends on the certificates representing the shares of
Purchased Stock and to impose stop transfer instructions with respect to the
shares of Purchased Stock until the end of such period.
(g) ADDITIONAL AGREEMENT. In the event the Closing Sale Price of the
Common Stock is less than $0.90 per share (the "Trigger Price"), the Company
shall deliver to the Seller such number of shares of Common Stock equal to the
product of (i) the Trigger Price less the Closing Sale Price, and (ii)
1,660,000, divided by the Closing Sale Price; provided, however, that the
Company shall not be required to deliver to the Seller in excess of 1,328,000
shares of Common Stock. Such shares shall be delivered to the Seller within ten
business days following the Statement Effective Date. For purposes hereof, the
"Closing Sale Price" shall mean the average closing sale price of a share of
Common Stock for the 20 trading days prior to the third business day before the
date the SEC declares the Registration Statement effective (the "Statement
Effective Date").
7. INDEMNIFICATION. In connection with the Registration Statement described in
section 6 above, or any Registration Statement prepared in connection with this
Agreement:
(a) BY THE COMPANY. To the extent permitted by law, the Company will
indemnify and hold harmless the Seller, its investment advisor, any underwriter
(as defined in the Securities Act), and all of their respective officers,
managers, members, directors, shareholders, agents, employees or other control
persons ("Related Persons") against any actions, costs, losses, claims, damages
or liabilities ("Claims or Damages"), insofar as such Claims or Damages (or
actions in respect thereto) arise out of or are based upon the following
actions by the Company or its Related Persons: (i) any untrue statement or
alleged untrue statement of a material fact contained in a Registration
Statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto; (ii) 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; or (iii) any violation
or alleged violation by any party or its agents of the Securities Act, the
Exchange Act, any federal or state securities law, or any rule or regulation
promulgated under any of the foregoing in connection with the offering covered
by such Registration Statement (collectively, "Violations"). The Company will
reimburse the Seller and each of its Related Persons for any legal or other
expenses they or any of them may incur in connection with investigating or
defending any such Claims or Damages; provided, however, that the indemnity
agreement contained in this Section 7(a) shall not apply to amounts paid in
settlement of any such Claims or Damages if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld or
delayed), nor shall the Company be liable in any such case for any such Claims
or Damages to the extent that they arise out of or are based upon a Violation
that occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by the Seller
or any of its Related Persons.
(b) BY SELLER. To the extent permitted by law, the Seller will indemnify
and hold harmless the Company, any underwriter (as defined in the Securities
Act), and all of their respective Related Persons, against any Claims or
Damages they or any of them may incur insofar as such Claims or Damages (or
actions in respect thereto) arise out of or are based upon
any Violation of or by the Seller or its Related Persons, in each case to the
extent (and only to the extent) that such Violation occurs in connection with
written information furnished by the Seller expressly for use in connection with
a registration; and the Seller will reimburse any legal or other expenses
reasonably incurred by the Company, any underwriter and any of their respective
Related Persons, in connection with investigating or defending any Claim or
Damage; provided, however, that the indemnity agreement contained in this
subsection 7(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Seller, which consent shall not be unreasonably withheld or
delayed; and provided further, that the total amounts payable in indemnity by
the Seller under this Section 7(b) in respect of any Violation shall not exceed
he net proceeds received by the Seller in the registered offering out of which
such Violation arises.
(c) CONTRIBUTION. If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under Section 7(a) or Section 7(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any Claims or Damages referred to therein, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such Claims or
Damages in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and of the Seller on the other in connection with
the statements or omissions which resulted in such Claims or Damages, as well
as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of the Seller on the other 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 Company or by the Seller
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid
or payable by a party as a result of the Claims or Damages referred to above
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
The Company and the Seller agree that it would not be just and equitable
if contribution pursuant to this Section 7(c) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 7(c), the Seller
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Purchased Stock sold by the Seller and distributed
to the public exceeds the amount of any damages which the Seller has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No Person (as defined in Section 2 of the
Securities Act) guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
(d) NOTICE. Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 7,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to
assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to retain its
own counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflict of
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, to the extent that it is materially prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 7, but such a failure will not relieve it
of any liability that it might have to any indemnified party otherwise than
under this Section 7.
(e) DEFECT ELIMINATED IN FINAL PROSPECTUS OR SUPPLEMENT OR POST-EFFECTIVE
AMENDMENT. The foregoing indemnity agreements of the Company and the Seller are
subject to the condition that, insofar as they relate to any Violation made (x)
in a preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the Commission at the time the Registration Statement
in question becomes effective or in the amended prospectus filed with the
Commission pursuant to Commission Rule 424(b) (the "Final Prospectus") or (y)
in the Final Prospectus but eliminated or remedied in a supplement or
post-effective amendment contemplated by Section 6(viii) hereof, as applicable,
such indemnity agreement shall not inure to the benefit of any person if a copy
of the Final Prospectus or such supplement or post-effective amendment, as
applicable, was furnished to the indemnified party and was not furnished to the
person asserting the loss, liability, claim or damage at or prior to the time
such action is required by the Securities Act.
8. SURVIVAL. The obligations of the Company and the Seller under Sections 6 and
7 shall survive the completion of any resale of Purchased Stock by the Seller
in a Registration Statement. The representations and warranties of the parties
under Sections 2 and 3 (except for the representation in Section 3(d) which
shall survive indefinitely) hereof, respectively, shall survive for a period of
one year from the date hereof.
9. MISCELLANEOUS.
(a) This Agreement shall bind the parties, their respective heirs,
administrators, executors, successors and assigns.
(b) Each party hereto will, upon request, execute and deliver any
additional documents deemed by the other party to be necessary or desirable to
complete the transactions contemplated hereby.
(c) All prior or contemporaneous agreements, contracts, promises,
representations and statements, if any, between the parties hereto pertaining
to the transactions contemplated hereby, are merged into this Agreement. This
Agreement sets forth the entire understanding between the parties, and there
are no terms, conditions, representations, warranties or covenants other than
those contained herein.
(d) Any notice required or permitted by this Agreement shall be in writing
and shall be deemed sufficient upon receipt, when delivered personally or by
courier, overnight
delivery service or confirmed facsimile, or 48 hours after being deposited in
the U.S. mail as certified or registered mail with postage prepaid, if such
notice is addressed to the party to be notified at such party's address or
acsimile number as set forth on the signature page hereto or as subsequently
modified by written notice.
(e) This Agreement, and any provision hereof, may not be amended,
modified, released or discharged, in whole or in part, except by a writing
signed by the parties hereto.
(f) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute
one instrument.
(g) The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting
this Agreement.
(h) This Agreement shall be governed by the laws of the State of New York,
without regard to its principles of conflict of laws.
(i) Except as otherwise provided in Section 6, the Seller will bear all
costs, fees and expenses incurred by it in connection with the negotiation,
documentation, and/or enforcement of its rights under this Agreement and any
related matters or documents.
[Signature Page Follows]
The parties have executed this Note and Common Stock Purchase Agreement
as of the date first written above.
COMPANY:
ACCLAIM ENTERTAINMENT, INC.
By:
---------------------------------------------
Name:
Title:
Address: Xxx Xxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
Facsimile No.:
SELLER:
Alexandra Global Investment Fund I, Ltd.
By:
---------------------------------------------
Name:
Title:
Address: Citco Building
Wickhams Cay
X.X. Xxx 000, Xxxx Xxxx,
Xxxxxxx, Xxxxxxx Xxxxxx Xxxxxxx
Facsimile No.: (000-0) 000-0000
