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Exhibit 14
SECOND AMENDED AND RESTATED SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED SECURITY AGREEMENT (as amended,
restated, supplemented or otherwise modified, this "Agreement"), dated as of
November 15, 1999, by and among GT Interactive Software Corp. (the "Borrower")
and certain of its subsidiaries identified on the signature pages attached
hereto (together with the Borrower and each additional subsidiary who becomes a
party hereto pursuant to a Joinder Agreement, the "Grantors", each individually,
a "Grantor"), First Union National Bank, a national banking association, as
administrative agent (the "Administrative Agent"), for the ratable benefit of
the Administrative Agent and the financial institutions who are or may from time
to time become parties to the Credit Agreement referred to below (the "Lenders")
and California U.S. Holdings, Inc. ("Infogrames U.S."), a wholly-owned
Subsidiary of Infogrames Entertainment, SA, a societe anonyme organized under
the laws of France.
STATEMENT OF PURPOSE
Pursuant to the terms of the Credit Agreement, dated as of
September 11, 1998 (as amended, restated, supplemented or otherwise modified,
the "Credit Agreement"), by and among the Borrower, the Lenders and the
Administrative Agent, the Lenders agreed to make certain Extensions of Credit to
the Borrower as more particularly described therein.
In connection with the execution and delivery of the Credit
Agreement, the Borrower executed and delivered in favor of the Administrative
Agent a Security Agreement, dated as of September 11, 1998 (as amended,
restated, supplemented or otherwise modified prior to June 29, 1999, the
"Existing Security Agreement"), pursuant to which the Borrower granted to the
Administrative Agent, for the ratable benefit of the Lenders and the
Administrative Agent, security interests in the Collateral to secure the
Obligations (as such terms are defined in the Existing Security Agreement).
In connection with the execution and delivery of the Second
Amendment, Waiver and Agreement, dated as of June 29, 1999, under the Credit
Agreement, the Borrower executed and delivered in favor of the Administrative
Agent, for the ratable benefit of the Lenders and the Administrative Agent, an
Amended and Restated Security Agreement, dated as of June 29, 1999 (as
heretofore amended, restated, supplemented or otherwise modified, the "Amended
and Restated Security Agreement"), pursuant to which the Borrower (i) reaffirmed
its previous grant to the Administrative Agent, for the ratable benefit of the
Lenders and the Administrative Agent, of security interests in the Collateral
under, and as defined in, the Existing Security Agreement and (ii) granted to
the Administrative Agent, for the ratable benefit of the Lenders and the
Administrative Agent, security interests in the Collateral to secure the
Obligations (as such terms are defined in the Amended and Restated Security
Agreement).
The Borrower has advised the Administrative Agent and the Lenders
that Infogrames U.S. has agreed to provide a term loan to the Borrower in the
original principal amount of $25,000,000 (the "Infogrames Bridge Loan"), as
evidenced by, and pursuant to the
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provisions of, a term note, dated November 15, 1999 (the "Infogrames Bridge Loan
Note"), by the Borrower in favor of Infogrames U.S. and secured by security
interests in substantially all of the assets of the Borrower and the Guarantors,
which security interests shall be junior and subordinate to the extent set forth
herein to the security interests granted to the Administrative Agent, for the
ratable benefit of the Lenders and the Administrative Agent, in the Existing
Security Agreement, the Amended and Restated Security Agreement and this
Agreement.
In connection with, among other things, the incurrence of the
Infogrames Bridge Loan and the execution and delivery of the Infogrames Bridge
Loan Note, the Borrower, the Lenders and the Administrative Agent have agreed to
execute a Third Amendment, Consent, Waiver and Agreement, dated as of November
15, 1999 (the "Third Amendment"), under the Credit Agreement to, among other
things, amend and waive certain provisions thereof and consent to the incurrence
of the Infogrames Bridge Loan and the grant of the security interests in favor
of Infogrames U.S. as more fully set forth below.
In connection with the transactions contemplated by the Third
Amendment and the Infogrames Bridge Loan Note and as a condition precedent
thereto, the Borrower and Infogrames U.S. have requested that the Amended and
Restated Security Agreement be further amended and restated, and that each
Grantor execute and deliver this Agreement to the Administrative Agent, for the
ratable benefit of the Administrative Agent and the Lenders, and to Infogrames
U.S., and each of the Grantors has agreed to do so pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the foregoing premises and to
induce (i) the Administrative Agent and the Lenders to enter into the Third
Amendment and (ii) Infogrames U.S. to make the Infogrames Bridge Loan, each of
the parties hereto hereby agrees as follows:
SECTION 1. Definitions.
(a) Terms defined in the Credit Agreement and not otherwise
defined herein, when used in this Agreement including its preamble and recitals,
shall have the respective meanings provided for in the Credit Agreement, and the
following terms which are defined in the UCC are used herein as so defined:
Chattel Paper, Documents, Equipment, Instruments and Investment Property. The
following additional terms, when used in this Agreement, shall have the
following meanings:
"Account Debtor" means any Person who is or may become obligated
to any Grantor under, with respect to, or on account of, an Account.
"Accounts" means collectively, all rights to payment for goods
sold or leased or for services rendered or to be rendered, whether or
not earned by performance, and all sums of money or other proceeds due
or becoming due thereon, including, without limitation, "Accounts" as
defined in the UCC, whether secured or unsecured, now existing or
hereafter created, now or hereafter owned or acquired by any Grantor or
in which any Grantor now or hereafter has or acquires any right or
interest.
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"Accounts Aging Report" means an aged trial balance of all
Accounts existing as of a specified date, in a form reasonably
satisfactory to the Administrative Agent and Infogrames U.S., specifying
the names, addresses, face value and dates of invoices of each Account
Debtor obligated on any Accounts so listed.
"Bank Obligations" means the Grantors' obligations under the Loan
Documents in respect of the unpaid principal of and interest on the
Notes (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of
the Loans, the Letters of Credit or the L/C Obligations and interest
accruing at the then applicable rate provided in the Credit Agreement
after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to any
Grantor, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) and all other obligations and
liabilities of the Grantors to the Administrative Agent, the Issuing
Lender and the Lenders in respect of the Loans, the Notes, the Letters
of Credit, the L/C Obligations, any Hedging Agreements permitted or
required under the Credit Agreement, the Concentration Account or any
cash management arrangements with any Lender, whether direct or
indirect, absolute or contingent, due or to become due, or now existing
or hereafter incurred, which may arise under, out of, or in connection
with, the Credit Agreement, the Notes, the Letters of Credit, the L/C
Obligations, any Hedging Agreements permitted or required under the
Credit Agreement, this Agreement, the other Loan Documents or any other
document made, delivered or given in connection herewith in respect of
the Bank Obligations or therewith, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees
and disbursements of counsel to the Administrative Agent, the Issuing
Lender or the Lenders that are required to be paid by any Grantor
pursuant to the terms of the Credit Agreement, this Agreement or any
other Loan Document).
"Bridge Obligations" means the Grantors' obligations under the
Infogrames Bridge Loan Documents in respect of the unpaid principal of
and interest on the Infogrames Bridge Loan Note (including, without
limitation, interest accruing at the then applicable rate provided in
the Infogrames Bridge Loan Note after the maturity of the Infogrames
Bridge Loan and interest accruing at the then applicable rate provided
in the Infogrames Bridge Loan Note after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to any Grantor, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) and
all other obligations and liabilities of the Grantors to Infogrames U.S.
in respect of the Infogrames Bridge Loan or the Infogrames Bridge Loan
Note, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Infogrames Bridge Loan Note or
the other Infogrames Bridge Loan Documents, in each case whether on
account of principal, interest, fees, indemnities, costs, expenses or
otherwise (including, without limitation, (a) the obligations of the
Borrower under the Infogrames Securities Purchase Agreement to pay or
reimburse Infogrames or Infogrames U.S. for costs and expenses
(including without limitation, reasonable fees and disbursements of
counsel to Infogrames or
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Infogrames U.S.) incurred or paid by Infogrames or Infogrames U.S. in
connection with the Infogrames Securities Purchase Agreement and (b) all
reasonable fees and disbursements of counsel to Infogrames U.S. that are
required to be paid by any Grantor pursuant to the terms of the
Infogrames Bridge Loan Note or any other Infogrames Bridge Loan
Document).
"Collateral" shall have the meaning given such term in Section
2(a).
"Collateral Account" means any cash collateral account
established by any of the Grantors with the Administrative Agent, in the
name and under the exclusive dominion and control of the Administrative
Agent, pursuant to Section 6 .
"Contracts" means all contracts and agreements listed on Schedule
1, as the same may be amended, supplemented or otherwise modified from
time to time, including, without limitation, (a) all rights of any
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (b) all rights of any Grantor to damages arising
thereunder and (c) all rights of any Grantor to perform and to exercise
all remedies thereunder, in each case, to the extent the grant by such
Grantor of a security interest pursuant to this Agreement in its right,
title and interest in such contract or agreement is not prohibited
thereby.
"Copyright License" means any written agreement naming any
Grantor as licensor or licensee (including, without limitation, those
listed on Schedule 2) granting any right under any Copyright, including,
without limitation, the grant of rights to manufacture, distribute,
exploit and sell materials derived from any Copyright.
"Copyrights" means (a) all copyrights of any Grantor arising
under the laws of the United States, any other country or any political
subdivision thereof, whether registered or unregistered and whether
published or unpublished (including, without limitation, those listed on
Schedule 2) all registrations and recordings thereof, and all
applications in connection therewith, including, without limitation, all
registrations, recordings and applications in the United States
Copyright Office and (b) the right to obtain all renewals thereof.
"Deposit Accounts" means all "Deposit Accounts" (as defined in
the UCC) established by any Grantor, including, without limitation, the
deposit accounts listed on Schedule 3 hereto and any other deposit
accounts established by any Grantor after the date hereof.
"Event of Default" means an Event of Default under, and as
defined in, the Credit Agreement or the Infogrames Bridge Loan Note.
"Financing Statements" means the Uniform Commercial Code Form
UCC-1 Financing Statements (or, with respect to any Foreign Subsidiary,
any filing required by
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the applicable foreign jurisdiction) executed by the Grantors with
respect to the Collateral and filed or to be filed in the jurisdictions
set forth in the Perfection Certificate.
"General Intangibles" means all "General Intangibles" (as defined
in the UCC) of any Grantor, including, without limitation, all
contracts, agreements, instruments and indentures in any form, and
portions thereof, to which such Grantor is a party or under which such
Grantor has any right, title or interest or to which such Grantor or any
property of such Grantor is subject, as the same may from time to time
be amended, supplemented or otherwise modified, including, without
limitation, (a) all rights of such Grantor to receive moneys due and to
become due to it thereunder or in connection therewith, (b) all rights
of such Grantor to damages arising thereunder and (c) all rights of such
Grantor to perform and to exercise all remedies thereunder, in each case
to the extent the grant by such Grantor of a security interest pursuant
to this Agreement in its right, title and interest in such contract,
agreement, instrument or indenture is not prohibited by such contract,
agreement, instrument or indenture without the consent of any other
party thereto, would not give any other party to such contract,
agreement, instrument or indenture the right to terminate its
obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from
the other parties thereto (it being understood that the foregoing shall
not be deemed to obligate such Grantor to obtain such consents);
provided, that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a security interest
pursuant to this Agreement in any Account or any money or other amounts
due or to become due under any such contract, agreement, instrument or
indenture.
"Infogrames Bridge Loan Documents" means the Infogrames Bridge
Loan Note, the Guaranty Agreement, the Pledge Agreement and this
Agreement.
"Intellectual Property" means all rights, priorities and
privileges of any Grantor relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Copyright Licenses,
the Patents, the Patent Licenses, the Trademarks and the Trademark
Licenses, and all rights to ▇▇▇ at law or in equity for any infringement
or other impairment thereof, including the right to receive all proceeds
and damages therefrom.
"Inventory" means all "Inventory" (as defined in the UCC) of any
Grantor wherever located, including, without limitation, all goods
manufactured or acquired for sale or lease and all raw materials,
work-in-process and finished goods, and all supplies and goods, used or
consumed in the operation of the business of any Grantor, whether now or
hereafter owned or acquired by any Grantor or in which such Grantor now
or hereafter has or acquires any right or interest.
"Obligations" means, collectively, the Bank Obligations and the
Bridge Obligations.
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"Patent License" means all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to
manufacture, use or sell any invention covered in whole or in part by a
Patent (including, without limitation, any of the foregoing referred to
on Schedule 2).
"Patents" means (a) all of any Grantor's letters patent of the
United States, any other country or any political subdivision thereof,
all reissues and extensions thereof and all goodwill associated
therewith (including, without limitation, any of the foregoing referred
to on Schedule 2), (b) all of any Grantor's applications for letters
patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, including, without
limitation, any of the foregoing referred to on Schedule 2 and (c) all
rights to obtain any reissues or extensions of the foregoing.
"Permitted Liens" means all Liens respecting the Collateral
permitted pursuant to Section 10.3 of the Credit Agreement.
"Perfection Certificate" means a certificate substantially in the
form of Exhibit A attached hereto, setting forth the corporate or other
names, chief executive office or principal place of business in each
state and other current locations of each Grantor and such other
information as the Administrative Agent or Infogrames U.S., as the case
may be, deems reasonably necessary for the perfection of the security
interests granted to it hereunder, completed and supplemented with the
schedules and attachments contemplated thereby to the reasonable
satisfaction of the Administrative Agent or Infogrames U.S., as the case
may be, and certified by the Chief Executive Officer, President, any
Executive Vice President, Chief Financial Officer or Treasurer of each
Grantor so authorized to act.
"Proceeds" means all "Proceeds" (as defined in the UCC) of any
Grantor and, in any event, shall include, without limitation, all
dividends or other income from the Investment Property of any Grantor,
collections thereon or distributions or payments with respect thereto.
"Schedule of Inventory" means a schedule of Inventory based upon
each Grantor's most recent physical inventory and its perpetual
inventory records, in a form reasonably satisfactory to the
Administrative Agent and Infogrames U.S.
"Security Interests" means (a) the senior security interests
granted hereby to the Administrative Agent, for the ratable benefit of
the Lenders and the Administrative Agent, in respect of the Collateral
and (b) the junior security interests granted hereby to Infogrames U.S.
in respect of the Collateral.
"Standstill Expiration Date" shall have the meaning assigned
thereto in Section 12.
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"Trademark License" means any agreement, written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark (including, without limitation, any thereof referred to on
Schedule 2).
"Trademarks" means (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos, and other source or business identifiers
of any Grantor, and all goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country or any
political subdivision thereof, or otherwise, and all common-law rights
related thereto (including, without limitation, any of the foregoing
referred to on Schedule 2) and (b) the right to obtain all renewals
thereof.
"UCC" means the Uniform Commercial Code as in effect in the State
of New York; provided that, if by reason of mandatory provisions of law,
the perfection or the effect of perfection or non-perfection of the
Security Interests in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than New York,
"UCC" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
(b) Where the context requires, terms relating to the Collateral
or any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
SECTION 2. The Security Interests.
(a) With respect to each Grantor, all of such Grantor's estate,
right, title and interest in and to all of the following property, whether now
or hereafter owned or acquired by such Grantor or in which such Grantor now has
or hereafter acquires any estate, right, title or interest, and wherever
located, along with any other property of such Grantor which may from time to
time secure the Obligations pursuant to the terms of this Agreement, is
collectively referred to as the "Collateral":
(i) all Accounts;
(ii) all Chattel Paper;
(iii) the Collateral Account, all cash deposited therein from
time to time, the investments made pursuant to Section 6 and other
monies and property of any kind of any Grantor in the possession or
under the control of the Administrative Agent or any Lender;
(iv) all Contracts;
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(v) all Deposit Accounts;
(vi) all Documents;
(vii) all Equipment;
(viii) all General Intangibles;
(ix) all Instruments;
(x) all Intellectual Property;
(xi) all Inventory;
(xii) all Investment Property;
(xiii) all other property not otherwise described above;
(xiv) all books and records pertaining to any of the foregoing;
and
(xv) all products and Proceeds of all or any of the foregoing.
(b) Each Grantor hereby confirms and reaffirms its grant of a
security interest in the Collateral (as defined in the Amended and Restated
Security Agreement) pursuant to the Amended and Restated Security Agreement. In
order to secure the payment when due whether at the stated maturity, by
acceleration or otherwise of the Bank Obligations, each Grantor hereby grants to
the Administrative Agent, for the ratable benefit of the Lenders and the
Administrative Agent, a first priority security interest in the Collateral.
(c) In order to secure the payment when due whether at the stated
maturity, by acceleration or otherwise of the Bridge Obligations, each Grantor
hereby grants to Infogrames U.S. a security interest in the Collateral junior
only to the security interests granted to the Administrative Agent, for the
ratable benefit of the Lenders and the Administrative Agent, and other Permitted
Liens, in each case to the extent provided herein.
(d) As set forth in the separate granting clauses contained in
subsections (b) and (c) above, it is the intent of the Grantors, the
Administrative Agent, the Lenders and Infogrames U.S. that this Agreement shall
create two separate and distinct Liens, a senior Lien in favor of the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, and a separate junior Lien in favor of Infogrames U.S.
(e) The Security Interests are granted as security only and shall
not subject the Administrative Agent, any Lender or Infogrames U.S. to, or
transfer to the Administrative Agent, any Lender or Infogrames U.S., or in any
way affect or modify, any obligation or liability of any Grantor with respect to
any of the Collateral or any transaction in connection therewith.
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SECTION 3. Representations and Warranties. Each Grantor
represents and warrants to the Administrative Agent, each Lender and Infogrames
U.S. as follows:
(a) Such Grantor has the corporate power and authority and the
legal right to execute and deliver, to perform its obligations under, and to
grant the Security Interests in the Collateral owned by it pursuant to, this
Agreement and has taken all necessary corporate action to authorize its
execution, delivery and performance of, and grant of the Security Interests in
the Collateral pursuant to, this Agreement.
(b) This Agreement constitutes a legal, valid and binding
obligation of such Grantor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies.
(c) Such Grantor is the sole owner of, and has valid and legal
title to, all of the Collateral owned by it, free and clear of any Liens, other
than the Security Interests and other Permitted Liens.
(d) Other than financing statements or other similar or
equivalent documents or instruments with respect to the Liens securing the
Obligations and other Permitted Liens, no financing statement, mortgage,
security agreement or similar or equivalent document or instrument covering all
or any part of the Collateral is on file or of record in any jurisdiction. No
Collateral is in the possession of any Person (other than the Grantors)
asserting any claim thereto or security interest therein, except that the
Administrative Agent or its designee may have possession of Collateral as
contemplated hereby and a bailee, warehouseman, agent or processor may have
possession of the Collateral as contemplated by, and so long as such Grantor has
complied with, Section 4(c)(iii) and Section 4(c)(iv).
(e) All of the information set forth in the Perfection
Certificate relating to such Grantor is true and correct in all material
respects as of the date hereof.
(f) Such Grantor has, previously or contemporaneously herewith,
delivered to the Administrative Agent possession of all originals of all
negotiable Instruments constituting Collateral currently owned or held by such
Grantor, if any (duly endorsed in blank, if requested by the Administrative
Agent).
(g) With respect to any Inventory of such Grantor: (i) all such
Inventory is, and shall be at all times, located at places of business of such
Grantor listed in the Perfection Certificate or as to which such Grantor has
complied with the provisions of Section 4(a)(i), except Inventory in transit
from one such location to another such location; (ii) no Inventory is, nor shall
at any time or times be, subject to any Lien whatsoever, except for Liens
securing the Obligations and other Permitted Liens; (iii) no Inventory in
aggregate value exceeding $1,000,000 at any time is, nor shall at any time or
times be, kept, stored or maintained with a bailee, warehouseman, carrier or
similar party (other than a carrier delivering Inventory to a purchaser in the
ordinary course of such Grantor's business) unless the Administrative Agent and
Infogrames U.S. shall
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have received prior written notice of such storage and such Grantor has complied
with the provisions of Section 4(c)(iii); and (iv) no Inventory in aggregate
value exceeding $1,000,000 at any time is, nor shall at any time or times be,
kept, stored or maintained with a consignee unless the Administrative Agent and
Infogrames U.S. shall have received prior written notice of such consignment and
such Grantor has complied with the provisions of Section 4(c)(iii).
(h) The Financing Statements relating to such Grantor are in
appropriate form and when filed in the offices specified in the Perfection
Certificate, the Security Interests will constitute valid and perfected security
interests in all of the Collateral (to the extent that a security interest
therein may be perfected by filing pursuant to the UCC) in favor of the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, prior to all other Liens and rights of others therein including without
limitation, the Liens in favor of Infogrames U.S. hereunder, other than with
respect to Permitted Liens, and in favor of Infogrames U.S., prior to all other
Liens and rights of others therein, other than with respect to Permitted Liens
and the Liens in favor of the Administrative Agent, for the benefit of the
Lenders and the Administrative Agent.
(i) On the date hereof, such Grantor's jurisdiction of
organization and the location of such Grantor's chief executive office or sole
place of business are specified in the Perfection Certificate.
(j) With respect to any Account of such Grantor: (i) no amount
payable to such Grantor under or in connection with such Account is evidenced by
any Instrument or Chattel Paper which has not been delivered to the
Administrative Agent; (ii) none of the obligors on any Account is a Governmental
Authority; and (iii) the amounts represented by such Grantor to the Lenders from
time to time in reports delivered to the Administrative Agent by such Grantor as
owing to such Grantor in respect of the Accounts will at such times be accurate.
(k) With respect to any Contract to which such Grantor is a
party: (i) no consent of any party (other than such Grantor) is required, or
purports to be required, in connection with the execution, delivery and
performance of this Agreement; (ii) each Contract is in full force and effect
and constitutes a valid and legally enforceable obligation of such Grantor and,
to the best of such Grantor's knowledge, the other parties thereto, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing; (iii)
no consent or authorization of, filing with or other act by or in respect of any
Governmental Authority is required in connection with the execution, delivery or
performance of any of the Contracts by such Grantor other than those which have
been duly obtained, made or performed, are in full force and effect and do not
subject the scope of any such Contract to any material adverse limitation,
either specific or general in nature; (iv) neither such Grantor nor, to such
Grantor's knowledge (without independent investigation), any of the other
parties to the Contracts is in default in the performance or observance of any
of the material terms thereof; (v) the right, title and interest of such Grantor
in, to and under the Contracts are not subject to any defenses, offsets,
counterclaims or claims; (vi) if a copy of any such Contract is requested by
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the Administrative Agent or Infogrames U.S., such Contract as delivered to the
Administrative Agent or Infogrames U.S., as the case may be, shall be a complete
and correct copy of such Contract, including all amendments, supplements and
other modifications thereto; (vii) to the best of such Grantor's knowledge, no
amount payable to such Grantor under or in connection with any Contract is
evidenced by any Instrument or Chattel Paper which has not been delivered to the
Administrative Agent; and (viii) none of the parties to any Contract is a
Governmental Authority.
(l) With respect to any Intellectual Property of such Grantor:
(i) to the best of such Grantor's knowledge, on the date hereof, all material
Intellectual Property is valid, subsisting, unexpired and enforceable, has not
been abandoned and does not infringe the intellectual property rights of any
other Person; (ii) except as set forth on Schedule 2, on the date hereof, none
of the material Intellectual Property is the subject of any licensing or
franchise agreement pursuant to which such Grantor is the licensor or
franchisor; (iii) no holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of, or
such Grantor's rights in, any material Intellectual Property in any respect that
could reasonably be expected to have a material adverse effect on the aggregate
value of all of such Grantor's Intellectual Property; and (iv) except as set
forth in Schedule 6.1(u) to the Credit Agreement, no action or proceeding is
pending, or, to the best of such Grantor's knowledge, threatened, on the date
hereof (A) seeking to limit, cancel or question the validity of any material
Intellectual Property or such Grantor's ownership interest therein or (B) which,
if adversely determined, would have a material adverse effect on the aggregate
value of all of such Grantor's Intellectual Property.
SECTION 4. Further Assurances; Covenants.
(a) General.
(i) No Grantor will change the location of its chief executive
office or principal place of business in any state unless such Grantor
shall have given the Administrative Agent and Infogrames U.S. thirty
(30) days prior written notice thereof, executed and delivered to the
Administrative Agent and Infogrames U.S. all financing statements and
financing statement amendments which the Administrative Agent or
Infogrames U.S. may request in connection therewith and, if reasonably
requested by the Administrative Agent or Infogrames U.S., delivered an
opinion of counsel with respect thereto in accordance with Section
4(a)(v).
(ii) No Grantor shall change the locations where it keeps or
holds any Collateral or any records relating thereto from the applicable
location described in the Perfection Certificate unless such Grantor
shall have given the Administrative Agent and Infogrames U.S. thirty
(30) days prior written notice of such change of location, executed and
delivered to the Administrative Agent and Infogrames U.S. all financing
statements and financing statement amendments which the Administrative
Agent or Infogrames U.S. may request in connection therewith and, if
reasonably requested by the Administrative Agent or Infogrames U.S.,
delivered an opinion of counsel with respect thereto in accordance with
Section 4(a)(v); provided, however, that any Grantor may keep Inventory
or
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Equipment at, or in transit to, any location described in the Perfection
Certificate. No Grantor shall in any event change the location of any
Collateral if such change would cause the Security Interests in such
Collateral to lapse or cease to be perfected.
(iii) No Grantor will change its name, identity or corporate or
other structure in any manner unless it shall have given the
Administrative Agent and Infogrames U.S. thirty (30) days prior written
notice thereof, executed and delivered to the Administrative Agent and
Infogrames U.S. all financing statements and financing statement
amendments which the Administrative Agent or Infogrames U.S. may request
in connection therewith, and, if reasonably requested by the
Administrative Agent or Infogrames U.S., delivered an opinion of counsel
with respect thereto in accordance with Section 4(a)(v).
(iv) Each Grantor will maintain the Security Interests in the
Collateral owned by it as perfected Liens with priority (A) in the case
of the Bank Obligations, over all other Liens, including without
limitation, the Liens securing the Bridge Obligations, other than
Permitted Liens, and (B) in the case of Liens securing the Bridge
Obligations, other than the Liens securing the Bank Obligations and
other Permitted Liens. Each Grantor will, from time to time, at its
expense, execute, deliver, file and record any statement, assignment,
instrument, document, agreement or other paper and take any other action
(including, without limitation, any filings of financing or continuation
statements under the UCC) that from time to time may be necessary, or
that the Administrative Agent or Infogrames U.S. may reasonably request,
in order to create, preserve, upgrade in rank (to the extent required
hereby), perfect, confirm or validate the Security Interests or to
enable the Administrative Agent to exercise and enforce any of the
rights, powers and remedies hereunder provided with respect to any of
the Collateral. Prior to the irrevocable payment in full of the
Obligations, to the extent required by the immediately preceding
sentence, each Grantor hereby authorizes the Administrative Agent, upon
the failure of any Grantor to so do within ten (10) Business Days after
receipt of notice in writing from the Administrative Agent, to execute
and file financing statements, financing statement amendments,
continuation statements and any other agreements, instruments, documents
and papers reasonably necessary to perfect the Security Interests in
such Grantor's Collateral without such Grantor's signature appearing
thereon. Each Grantor agrees that, except as otherwise required by law,
a carbon, photographic, photostatic or other reproduction of this
Agreement or of a financing statement is sufficient as a financing
statement. Each Grantor shall pay the reasonable costs of, or incidental
to, any recording or filing of the Financing Statements and any other
financing statements, financing statement amendments, continuation
statements and any other agreements, instruments, documents and papers
reasonably necessary to perfect the Security Interests in such Grantor's
Collateral.
(v) Each Grantor will, promptly upon request, provide to the
Administrative Agent and Infogrames U.S. all information and evidence
the Administrative Agent or Infogrames U.S. may reasonably request
concerning the Collateral, and in particular the Accounts, to enable the
Administrative Agent to enforce the provisions of this Agreement.
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(vi) Prior to each date on which any Grantor proposes to take any
action contemplated by Section 4(a)(i) or Section 4(a)(ii), if
reasonably requested by the Administrative Agent or Infogrames U.S.,
such Grantor shall, at its cost and expense, cause to be delivered to
the Administrative Agent (with a copy for each Lender) or Infogrames
U.S., as the case may be, an opinion of counsel, satisfactory to the
Administrative Agent or Infogrames U.S., as the case may be, to the
effect that all of their respective financing statements and amendments
or supplements thereto, continuation statements and other documents
required to be recorded or filed in order to perfect and protect their
respective Security Interests and the respective priorities thereof
against all creditors of and purchasers from such Grantor have been
filed in each filing office necessary or desirable for such purposes and
that all filing fees and taxes, if any, payable in connection with such
filings have been paid in full.
(vii) After the occurrence and during the continuance of an Event
of Default, from time to time upon request by the Administrative Agent
or Infogrames U.S., each Grantor shall, at its cost and expense, cause
to be delivered to the Administrative Agent (with a copy for each
Lender) or Infogrames U.S., as the case may be, an opinion or opinions
of counsel, reasonably satisfactory to the Administrative Agent or
Infogrames U.S., as the case may be, as to the enforceability of the
Loan Documents, the Infogrames Bridge Loan Documents and the Security
Interests, on the Collateral and other property of the Grantors and such
other matters relating to the transactions contemplated hereby as the
Administrative Agent, the Required Lenders or Infogrames U.S. may
reasonably request.
(viii) Each Grantor will comply in all material respects with all
Applicable Laws applicable to the Collateral or any material part
thereof or to the operation of such Grantor's business.
(ix) Each Grantor will pay when due all material taxes,
assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as
all material claims of any kind (including, without limitation, claims
for labor, materials and supplies) against or with respect to the
Collateral, except that no such charge need be paid if (A) the validity
thereof is being contested in good faith by appropriate proceedings, (B)
such proceedings do not involve any danger of the sale, forfeiture or
loss of, or creation of a Lien on, any of the Collateral or any interest
therein and (C) such charge is adequately reserved against on such
Grantor's books in accordance with GAAP.
(x) The Grantors shall not (A) sell, assign (by operation of law
or otherwise) or otherwise dispose of any of the Collateral, except as
permitted by the Credit Agreement or hereunder or (B) create or suffer
to exist any Lien or other charge or encumbrance upon or with respect to
any of the Collateral to secure indebtedness of any Person or entity
other than the Security Interests and other Permitted Liens.
(b) Accounts, Etc.
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(i) Each Grantor shall use all reasonable efforts to cause to be
collected from its Account Debtors, as and when due, any and all amounts
owing under or on account of each Account (including, without
limitation, Accounts which are delinquent, such Accounts to be collected
in accordance with past practices) and to apply upon receipt thereof all
such amounts as are so collected to the outstanding balance of such
Account. The costs and expenses (including, without limitation,
attorney's fees) of collection of Accounts incurred by such Grantor, the
Administrative Agent or Infogrames U.S. shall be borne by such Grantor.
(ii) Upon the occurrence and during the continuance of an Event
of Default, upon request of the Administrative Agent, each Grantor will
promptly notify (and each Grantor hereby authorizes the Administrative
Agent so to notify) each Account Debtor in respect of any Account that
such Account has been assigned to the Administrative Agent hereunder and
that any payments due or to become due in respect of such Account are to
be made directly to the Administrative Agent or its designee.
(iii) Each Grantor will perform and comply in all material
respects with all of its material obligations in respect of its Accounts
and the exercise by the Administrative Agent, for the benefit of the
Lenders, the Administrative Agent and/or Infogrames U.S., of any of the
rights hereunder shall not release such Grantor from any of its duties
or obligations.
(iv) No Grantor will (A) amend, modify, terminate or waive any
material provision of any agreement giving rise to an Account in any
manner which could reasonably be expected to materially adversely affect
the value of the Collateral, (B) fail to exercise promptly and
diligently each and every material right which it may have under each
agreement giving rise to an Account (other than any right of
termination) which could reasonably be expected to materially adversely
affect the value of the Collateral or (C) fail to deliver to the
Administrative Agent and Infogrames U.S. a copy of each written material
demand, notice or document received by it which could reasonably be
expected to materially adversely affect the value of the Collateral
relating in any way to any material agreement giving rise to an Account.
(v) Other than in the ordinary course of business as generally
conducted by each Grantor, no Grantor will (A) grant any extension of
the time of payment of any of the Accounts with a face amount in excess
of $500,000 or (B) compromise, compound or settle the same for less than
the full amount thereof, release, wholly or partially, any Person liable
for the payment thereof, or allow any credit or discount whatsoever
hereon.
(vi) At the times set forth in Section 7.1(d) of the Credit
Agreement or, after the occurrence and during the continuance of an
Event of Default, from time to time, at the request of the
Administrative Agent, the Required Lenders or Infogrames U.S., the
Grantors shall deliver to the Administrative Agent (with a copy for each
Lender) or to Infogrames U.S., as the case may be, an Accounts Aging
Report. Unless otherwise indicated thereon or in writing by the
Grantors, each Accounts Aging Report delivered by
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the Grantors to the Administrative Agent and to Infogrames U.S. shall
constitute a representation by the Grantors with respect to the Accounts
listed thereon that: (A) such Accounts are genuine, are not evidenced by
a judgment and are evidenced by invoices issued in respect thereof; (B)
such Accounts represent undisputed, bona fide transactions completed in
accordance with the terms and provisions contained in any documents
related thereto or in accordance with past practices; (C) the amounts of
the face value shown, and any invoices and statements delivered to the
Administrative Agent or to Infogrames U.S., as the case may be, with
respect to any Account are owing to the applicable Grantor and are not
contingent for any reason; (D) there are no material setoffs,
counterclaims or disputes existing or asserted with respect to such
Accounts, and such Grantor has not made any agreement with any Account
Debtor thereunder for any deduction therefrom; (E) no Grantor has
knowledge of any facts, events, or occurrences which in any way impair
in any material respect the validity or enforceability of any such
Account or tend to reduce the amount payable thereunder from the amount
of the invoice face value shown on any Accounts Aging Report and on all
contracts, invoices and statements delivered to the Administrative Agent
or to Infogrames U.S., as the case may be, with respect thereto; (F) no
Grantor has knowledge that any Account Debtor under any such Account did
not have the capacity to contract at the time any contract or other
document giving rise to the Account was executed; (G) the goods giving
rise to such Accounts are not, and were not at the time of the sale
thereof, subject to any Lien, except the Security Interests and other
Permitted Liens; (H) no Grantor has knowledge of any fact or
circumstance which would materially impair the validity or
collectability of any such Account; (I) to the applicable Grantor's
knowledge, there are no proceedings or actions which are pending or,
threatened against any Account Debtor under such Accounts which could
result in any material adverse change in such Account Debtor's financial
condition; (J) no security interest in such Accounts has been granted to
any Person other than the Security Interests and other Permitted Liens;
and (K) each invoice or other evidence of payment obligation furnished
to Account Debtors with respect to such Accounts is issued in the
applicable Grantor's corporate name.
(c) Inventory, Equipment, Etc.
(i) At the times set forth in Section 7.1(d) of the Credit
Agreement and, after the occurrence and during the continuance of an
Event of Default, from time to time, at the request of the
Administrative Agent, the Required Lenders or Infogrames U.S., the
Grantors shall deliver to the Administrative Agent (with a copy for each
Lender) or Infogrames U.S., as the case may be, a Schedule of Inventory.
Unless otherwise indicated thereon or in writing by the Grantors, each
Schedule of Inventory delivered by the Grantors to the Administrative
Agent and to Infogrames U.S. shall constitute a representation by each
Grantor with respect to the Inventory listed thereon or referred to
therein that: (A) all such Inventory is located at places of business
listed in the Perfection Certificate or as to which the applicable
Grantor has complied with the provisions of Section 4(a)(i) or on the
premises identified on the then current Schedule of Inventory or is
Inventory in transit from one such location to another such location;
(B) no such Inventory is subject to any Lien whatsoever, except for the
Security Interests and other
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Permitted Liens; (C) no such Inventory in aggregate value exceeding
$1,000,000 at any time is, nor shall at any time or times be, kept,
stored or maintained with a bailee, warehouseman, carrier or similar
party (other than a carrier delivering Inventory to a purchaser in the
ordinary course of such Grantor's business) unless the Administrative
Agent has given its consent and the applicable Grantor has complied with
the provisions of Section 4(c)(iii); and (D) no such Inventory in
aggregate value exceeding $1,000,000 is, nor shall at any time or times
be, kept, stored or maintained with a consignee unless the
Administrative Agent has given its consent and the applicable Grantor
has complied with the provisions of Section 4(c)(iii).
(ii) Each Grantor will cause the Administrative Agent, for the
ratable benefit of the Administrative Agent, the Lenders and Infogrames
U.S., to be named as loss payee on each insurance policy covering risks
relating to any of its Inventory or Equipment, as reasonably requested
by the Administrative Agent. Each Grantor will deliver to the
Administrative Agent or Infogrames U.S., upon request of the
Administrative Agent or Infogrames U.S., as the case may be, copies of
the insurance policies for such insurance. Each such insurance policy
shall provide that all insurance proceeds shall be adjusted with and
payable to the Administrative Agent, and provide that no cancellation or
termination thereof shall be effective until at least thirty (30) days
have elapsed after receipt by the Administrative Agent and Infogrames
U.S. of written notice thereof. The Administrative Agent and Infogrames
U.S. agree that, as long as no Default or Event of Default has occurred
and is continuing, any such net cash proceeds received by it in an
aggregate amount of (i) less than $2,000,000 shall be promptly paid over
to the Grantors and (ii) greater than or equal to $2,000,000 shall be
promptly paid over to the Grantors who hereby agree to use such net cash
proceeds in a diligent manner to replace or restore the damaged property
to which such insurance proceeds relate within three hundred and
sixty-five (365) days of receipt of such proceeds. All such loss
proceeds not so utilized within such three hundred and sixty-five (365)
day period shall be applied to the Obligations in accordance with
Section 2.5(b)(ii) of the Credit Agreement, subject to the provisions of
Section 11. Any surplus shall be paid by the Administrative Agent to
such Grantor or applied as may be otherwise required by law. Any
deficiency thereon shall be paid by such Grantor to the Administrative
Agent, on behalf of the Administrative Agent, the Lenders and Infogrames
U.S. on demand.
(iii) If any Inventory or Equipment exceeding in value $1,000,000
in the aggregate is at any time in the possession or control of any
warehouseman, bailee (other than a carrier transporting Inventory to a
purchaser in the ordinary course of business), or any of any Grantor's
agents or processors, such Grantor shall notify in writing such
warehouseman, bailee, agent or processor of the Security Interests
created hereby, shall obtain such warehouseman's, bailee's, agent's or
processor's agreement in writing to hold all such Inventory or Equipment
for the Administrative Agent's and Infogrames U.S.'s account subject to
the Administrative Agent's instructions, and shall cause such
warehouseman, bailee, agent or processor to issue and deliver to the
Administrative Agent warehouse receipts, bills of lading or any similar
documents relating to such Inventory in
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the Administrative Agent's name and in form and substance reasonably
acceptable to the Administrative Agent.
(iv) If at any time during the term of this Agreement, any
Inventory or Equipment exceeding in value $1,000,000 is placed by any
Grantor on consignment with any consignee, such Grantor shall, prior to
the delivery of any such consigned Inventory or Equipment: (A) provide
the Administrative Agent and Infogrames U.S. with a copy of all
consignment agreements and other instruments and documentation to be
used in connection with such consignment, all of which agreements,
instruments and documentation shall be reasonably acceptable in form and
substance to the Administrative Agent or Infogrames U.S.; (B) prepare,
execute and file appropriate financing statements with respect to any
consigned Inventory or Equipment showing the consignee as debtor, such
Grantor as secured party and each of the Administrative Agent and
Infogrames U.S. as assignee of secured party; (C) prepare, execute and
file appropriate financing statements with respect to any consigned
Inventory or Equipment showing such Grantor as debtor and each of the
Administrative Agent and Infogrames U.S. as secured party; (D) after all
financing statements referred to in clauses (B) and (C) above shall have
been filed, conduct a search of all filings made against the consignee
in all jurisdictions in which the Inventory or Equipment to be consigned
is to be located while on consignment, and deliver to the Administrative
Agent and Infogrames U.S. copies of the results of all such searches;
(E) notify, in writing, all creditors of the consignee which would be
holders of security interests in the Inventory or Equipment to be
consigned that such Grantor expects to deliver certain Inventory to the
consignee, all of which Inventory shall be described in such notice by
item or type; and (F) if reasonably requested by the Administrative
Agent or Infogrames U.S., deliver an opinion of counsel to the effect
that all financing statements and amendments or supplements thereto,
continuation statements and other documents required to be recorded or
filed in order to perfect and protect the Security Interests and
priority thereof against all creditors of and purchasers of such Grantor
and such consignee have been filed in each filing office necessary or
desirable for such purposes and that all filing fees and taxes, if any,
payable in connection with such filings have been paid in full.
(d) Contracts, Etc.
(i) Each Grantor will perform and comply in all material respects
with all its obligations under the Contracts.
(ii) No Grantor will amend, modify, terminate or waive any
provision of any Contract in any manner which could reasonably be
expected to materially adversely affect the value of such Contract,
except for such amendments, modifications, terminations or waivers in
the ordinary course of such Grantor's business.
(iii) Each Grantor will exercise promptly and diligently each and
every material right which it may have under the Contracts (other than
any right of termination).
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(iv) Each Grantor will deliver to the Administrative Agent and
Infogrames U.S. a copy of each material demand, notice or document
received by it relating in any way to any Contract that questions the
validity or enforceability of such Contract.
(e) Intellectual Property, Etc.
(i) Each Grantor (either itself or through licensees) will (A)
continue to use each material Trademark on each and every trademark
class of goods applicable to its current line as reflected in its
current catalogs, brochures and price lists in order to maintain such
Trademark in full force free from any claim of abandonment for non-use,
(B) maintain as in the past the quality of products and services offered
under such Trademark, (C) use such Trademark with the appropriate notice
of registration and all other notices and legends required by applicable
Requirements of Law, (D) not adopt or use any ▇▇▇▇ which is confusingly
similar or a colorable imitation of such Trademark unless the
Administrative Agent, for the ratable benefit of the Lenders and the
Administrative Agent, and Infogrames U.S. shall obtain a perfected
security interest in such ▇▇▇▇ pursuant to this Agreement, and (E) not
(and not permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby such Trademark may become
invalidated or impaired in any way.
(ii) No Grantor (either itself or through licensees) will do any
act, or omit to do any act, whereby any material Patent may become
forfeited, abandoned or dedicated to the public.
(iii) Each Grantor (either itself or through licensees) (A) will
employ each material Copyright and (B) will not (and will not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do
any act whereby any material portion of the Copyrights may become
invalidated or otherwise impaired. No Grantor will (either itself or
through licensees) do any act whereby any material portion of the
Copyrights may fall into the public domain.
(iv) No Grantor (either itself or through licensees) will do any
act that knowingly uses any material Intellectual Property to infringe
the intellectual property rights of any other Person.
(v) Each Grantor will notify the Administrative Agent and
Infogrames U.S. immediately if it knows, or has reason to know, that any
application or registration relating to any material Intellectual
Property may become forfeited, abandoned or dedicated to the public, or
of any material adverse determination or development (including, without
limitation, the institution of, or any such material adverse
determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any
court or tribunal in any country) regarding such Grantor's ownership of,
or the validity of, any material Intellectual Property or such Grantor's
right to register the same or to own and maintain the same.
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(vi) Whenever a Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the
registration of any Intellectual Property with the United States Patent
and Trademark Office, the United States Copyright Office or any similar
office or agency in any other country or any political subdivision
thereof, such Grantor shall report such filing to the Administrative
Agent and Infogrames U.S. within five (5) Business Days after the last
day of the fiscal quarter in which such filing occurs. Upon request of
the Administrative Agent or Infogrames U.S., such Grantor shall execute
and deliver, and have recorded, any and all agreements, instruments,
documents, and papers as the Administrative Agent or Infogrames U.S. may
request to evidence the Security Interests in any Copyright, Patent or
Trademark and the goodwill and General Intangibles of such Grantor
relating thereto or represented thereby.
(vii) Each Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United
States Patent and Trademark Office, the United States Copyright Office
or any similar office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application (and to
obtain the relevant registration) and to maintain each registration of
the material Intellectual Property, including, without limitation,
filing of applications for renewal, affidavits of use and affidavits of
incontestability.
(viii) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, the applicable
Grantor shall (A) take such actions as such Grantor shall reasonably
deem appropriate under the circumstances to protect such Intellectual
Property and (B) if such Intellectual Property is of material economic
value, promptly notify the Administrative Agent and Infogrames U.S.
after it learns thereof and ▇▇▇ for infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to recover any
and all damages for such infringement, misappropriation or dilution.
(f) Indemnification. Each Grantor agrees to pay, and to save each
of the Administrative Agent, the Lenders and Infogrames U.S. harmless from, any
and all liabilities, reasonable costs and expenses (including, without
limitation, reasonable legal fees and expenses) incurred by the Administrative
Agent, any Lender or Infogrames U.S. (i) with respect to, or resulting from, any
and all excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral, (ii) with respect to, or
resulting from, complying with any Applicable Law applicable to any of the
Collateral or (iii) in connection with any of the transactions contemplated by
this Agreement (except to the extent any such liabilities, costs and expenses
result from the gross negligence or willful misconduct of the Administrative
Agent, such Lender or Infogrames U.S., respectively). In any suit, proceeding or
action brought by the Administrative Agent under any Account for any sum owing
thereunder, or to enforce any provisions of any Account, each Grantor will save,
indemnify and keep each of the Administrative Agent, each Lender and Infogrames
U.S. harmless from and against all expense, loss or damage suffered by the
Administrative Agent, any Lender or Infogrames U.S. by reason of any defense,
setoff, counterclaim, recoupment or reduction or liability whatsoever of the
Account Debtor or
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any other obligor thereunder, arising out of a breach by any Grantor of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such Account Debtor or obligor or
its successors from any Grantor (except to the extent any such expense, loss or
damage results from the gross negligence or willful misconduct of the
Administrative Agent, such Lender or Infogrames U.S., respectively). The
obligations of the Grantors under this Section 4(f) shall survive the
termination of the other provisions of this Agreement.
SECTION 5. Reporting and Recordkeeping. Each Grantor respectively
covenants and agrees with the Administrative Agent, the Lenders and Infogrames
U.S. that from and after the date of this Agreement and until the Aggregate
Commitment is terminated and all Obligations have been fully satisfied:
(a) Maintenance of Records Generally. Each Grantor will keep and
maintain at its own cost and expense adequate records of the Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to the Collateral and all other dealings with the
Collateral in accordance with past practices. All Chattel Paper given to such
Grantor with respect to any Accounts will be marked with the following legend:
"This writing and the obligations evidenced or secured hereby are subject to the
security interests of First Union National Bank, as Administrative Agent". For
the Administrative Agent's, the Lenders' and Infogrames U.S.'s further security,
each Grantor agrees that upon the occurrence and during the continuance of any
Event of Default, upon the request of the Administrative Agent, the Required
Lenders or Infogrames U.S., such Grantor shall deliver and turn over any such
books and records directly to the Administrative Agent, Infogrames or their
respective designee. Each Grantor shall permit any representative of the
Administrative Agent to inspect such books and records in accordance with
Section 8.11 of the Credit Agreement and will provide photocopies thereof to the
Administrative Agent upon its reasonable request.
(b) Certain Provisions Regarding Maintenance of Records and
Reporting Re: Accounts.
(i) In the event any amounts due and owing in excess of $500,000
individually or $1,000,000 in the aggregate are in dispute between any
Account Debtor and any Grantor, such Grantor shall provide the
Administrative Agent and Infogrames U.S. with written notice thereof
promptly after such Grantor's learning thereof, explaining the reason
for the dispute, all claims related thereto and the amount in
controversy.
(ii) Each Grantor will promptly notify the Administrative Agent
and Infogrames U.S. in writing if any Account or Accounts, the face
value of which exceeds $500,000 individually or $1,000,000 in the
aggregate, arises or arise out of a contract with the United States of
America, or any department, agency, subdivision or instrumentality
thereof, or of any state (or department, agency, subdivision or
instrumentality thereof) where such state has a state assignment of
claims act or other law comparable to the Federal Assignment of Claims
Act. Each Grantor will take any action required or requested by the
Administrative Agent or Infogrames U.S. or give notice of the Security
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Interest in such Accounts under the provisions of the Federal Assignment
of Claims Act or any comparable law or act enacted by any state or local
Governmental Authority. Any notifications or other documents executed
and delivered to the Administrative Agent and Infogrames U.S. in
connection with the Federal Assignment of Claims Act or any comparable
state law may be promptly filed with the appropriate Governmental
Authority by the Administrative Agent or Infogrames U.S. or held by the
Administrative Agent or Infogrames U.S. until the Administrative Agent,
the Required Lenders or Infogrames U.S. decide in their respective sole
discretion to make any such filing.
(iii) Each Grantor will promptly upon, but in no event later than
ten (10) Business Days after: (A) such Grantor's learning thereof,
inform the Administrative Agent and Infogrames U.S., in writing, of any
material delay in such Grantor's performance of any of its obligations
to any Account Debtor and of any assertion of any claims, offsets or
counterclaims by any Account Debtor and of any allowances, credits
and/or other monies granted by such Grantor to any Account Debtor, in
each case involving amounts in excess of $500,000 for any single Account
or Account Debtor or in excess of $1,000,000 in the aggregate for all
Accounts and Account Debtors; and (B) such Grantor's receipt or learning
thereof, furnish to and inform the Administrative Agent and Infogrames
U.S. of any adverse information that, to the knowledge of such Grantor,
could reasonably be expected to materially adversely affect the
financial condition of any Account Debtor with respect to Accounts
exceeding $500,000 individually or $1,000,000 in the aggregate.
(c) Further Identification of Collateral. Each Grantor will, if
so reasonably requested by the Administrative Agent or Infogrames U.S., furnish
to the Administrative Agent or Infogrames U.S., as the case may be, statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Administrative Agent or
Infogrames U.S. may reasonably request, all in reasonable detail.
(d) Notices. In addition to the notices required by Section 5(b),
each Grantor will advise the Administrative Agent and Infogrames U.S. promptly,
in reasonable detail, (i) of any material Lien or claim made or asserted against
any of the Collateral, (ii) of any material adverse change in the composition of
the Collateral and (iii) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the Collateral or on
the validity, perfection or priority of the Security Interests.
SECTION 6. Collateral Account.
(a) There is hereby established with the Administrative Agent a
Collateral Account in the name and under the exclusive dominion and control of
the Administrative Agent. There shall be deposited from time to time into such
account the cash proceeds of the Collateral required to be delivered to the
Administrative Agent pursuant to Section 6(b) or any other provision of this
Agreement. Any income received by the Administrative Agent with respect to the
balance from time to time on deposit in the Collateral Account, including any
interest or capital gains on investments of amounts on deposit in the Collateral
Account, shall remain, or be deposited, in the Collateral Account together with
any investments from time to time made
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pursuant to Section 6(c), shall vest in the Administrative Agent, shall
constitute part of the Collateral hereunder and shall not constitute payment of
the Obligations until applied thereto as hereinafter provided.
(b) Upon the occurrence and during the continuance of an Event of
Default, if requested by the Administrative Agent, each Grantor shall instruct
all Account Debtors and other Persons obligated in respect of all Accounts to
make all payments in respect of the Accounts either (i) directly to the
Administrative Agent (by instructing that such payments be remitted to a post
office box which shall be in the name and under the exclusive dominion and
control of the Administrative Agent) or (ii) to one or more banks in any state
in the United States (by instructing that such payments be remitted to a post
office box which shall be in the name and under the exclusive dominion and
control of any such bank) under a Lockbox Letter substantially in the form of
Annex I hereto duly executed by each Grantor and any such bank or under other
arrangements, in form and substance reasonably satisfactory to the
Administrative Agent, pursuant to which such Grantor shall have irrevocably
instructed such bank (and such bank shall have agreed) to remit all proceeds of
such payments directly to the Administrative Agent for deposit into the
Collateral Account or as the Administrative Agent may otherwise instruct such
bank, and thereafter if the proceeds of any Collateral shall be received by any
of the Grantors, such Grantor will promptly deposit such proceeds into the
Collateral Account and until so deposited, all such proceeds shall be held in
trust by such Grantor for and as the property of the Administrative Agent, for
the benefit of the Lenders, the Administrative Agent and Infogrames U.S., and
shall not be commingled with any other funds or property of such Grantor. At any
time after the occurrence and during the continuance of an Event of Default, the
Administrative Agent may itself so instruct each Grantor's Account Debtors. All
such payments made to the Administrative Agent shall be deposited in the
Collateral Account.
(c) Amounts on deposit in the Collateral Account shall be
promptly liquidated and applied to the payment of the Obligations in the manner
specified in Section 11.
SECTION 7. General Authority.
(a) Each Grantor hereby irrevocably appoints the Administrative
Agent their true and lawful attorney, with full power of substitution, in the
name of each Grantor, the Administrative Agent, the Lenders, Infogrames U.S. or
otherwise, for the sole use and benefit of the Administrative Agent, the Lenders
and Infogrames U.S., but at the Grantors' expense, to exercise, at any time from
time to time all or any of the following powers:
(i) to file any financing statements, financing statement
amendments, continuation statements and any other agreements,
instruments, documents and papers to evidence the Security Interests in
the Collateral;
(ii) to demand, ▇▇▇ for, collect, receive and give acquittance
for any and all monies due or to become due with respect to any
Collateral or by virtue thereof;
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(iii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect to any Collateral;
(iv) to sell, transfer, assign or otherwise deal in or with the
Collateral and the Proceeds thereof, as fully and effectually as if the
Administrative Agent were the absolute owner thereof;
(v) to do all acts and things which the Administrative Agent
deems necessary to protect, preserve or realize upon the Collateral and
the Security Interests therein and to effect the intent of this
Agreement, all as fully and effectively as if the Administrative Agent
were the absolute owner thereof; and
(vi) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference to the
Collateral;
provided that the Administrative Agent shall not take any of the actions
described in this Section 7(a), except those described in clause (i) above,
unless an Event of Default shall have occurred and be continuing. The
Administrative Agent shall give the Grantors not less than ten (10) Business
Days' prior written notice of the time and place of any sale or other intended
disposition of any of the Collateral, except any Collateral which is perishable
or threatens to decline speedily in value or is of a type customarily sold on a
recognized market. The Grantors agree that any such notice constitutes
"reasonable notification" within the meaning of Section 9-504(3) of the UCC (to
the extent such Section is applicable).
(b) Ratification. The Grantors hereby ratify all that said
attorney shall lawfully do or cause to be done by virtue hereof. The power of
attorney granted pursuant to Section 7(a) is a power coupled with an interest
and shall be irrevocable.
(c) Other Powers. The Grantors also authorize the Administrative
Agent, after the occurrence and during the continuance of an Event of Default,
at any time and from time to time, to execute, in connection with any sale
provided for in Section 8, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
SECTION 8. Remedies Upon Event of Default.
(a) If any Event of Default has occurred and is continuing, the
Administrative Agent may, upon the request of the Required Lenders or Infogrames
U.S., as the case may be, exercise on behalf of the Administrative Agent, the
Lenders and Infogrames U.S. all rights of a secured party under the UCC (whether
or not in effect in the jurisdiction where such rights are exercised) and, in
addition, the Administrative Agent may, upon the request of the Required
Lenders, or Infogrames U.S., as the case may be, (i) withdraw all cash, if any,
in the Collateral Account and investments made with amounts on deposit in the
Collateral Account, and apply such monies, investments and other cash, if any,
then held by it as Collateral as specified in Section 11 and (ii) if there shall
be no such monies, investments or cash or if such monies, investments or cash
shall be insufficient to pay the Obligations then outstanding in full, sell the
Collateral or any
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part thereof at public or private sale, for cash, upon credit or for future
delivery, and at such price or prices as the Administrative Agent may deem
satisfactory. The Administrative Agent, any Lender, Infogrames U.S. or any
Affiliate of any thereof may be the purchaser of any or all of the Collateral so
sold at any public sale (or, if the Collateral is of a type customarily sold in
a recognized market or is of a type which is the subject of widely distributed
standard price quotations or if otherwise permitted under applicable law, at any
private sale) and thereafter hold the same, absolutely, free from any right or
claim of whatsoever kind. Each Grantor will execute and deliver such documents
and take such other action as the Administrative Agent deems reasonably
necessary or advisable in order that any such sale may be made in compliance
with law. Upon any such sale the Administrative Agent shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral so sold
(without warranty). Each purchaser at any such sale shall hold the Collateral so
sold to it absolutely, free from any claim or right of whatsoever kind,
including any equity or right of redemption of any Grantor. To the extent
permitted by law, each Grantor hereby specifically waives all rights of
redemption, stay or appraisal which it has or may have under any law now
existing or hereafter adopted. The notice of such sale shall be given to the
Grantors ten (10) Business Days prior to such sale and (A) in case of a public
sale, state the time and place fixed for such sale, and (B) in the case of a
private sale, state the day after which sale may be consummated. Any such public
sale shall be held at such time or times within ordinary business hours and at
such place or places as the Administrative Agent may fix in the notice of such
sale. At any such sale the Collateral may be sold in one lot as an entirety or
in separate parcels, as the Administrative Agent may determine. The
Administrative Agent shall not be obligated to make any such sale pursuant to
any such notice. The Administrative Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the same may be so adjourned. In case
of any sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by the Administrative Agent
until the selling price is paid by the purchaser thereof, but the Administrative
Agent shall not incur any liability in case of the failure of such purchaser to
take up and pay for the Collateral so sold and, in case of any such failure,
such Collateral may again be sold upon like notice. The Administrative Agent,
instead of exercising the power of sale herein conferred upon it, may proceed by
a suit or suits at law or in equity to foreclose the Security Interests and sell
the Collateral, or any portion thereof, under a judgment or decree of a court or
courts of competent jurisdiction. The Grantors shall remain liable for any
deficiency.
(b) For the purpose of enforcing any and all rights and remedies
under this Agreement, the Administrative Agent may (i) require each Grantor to,
and each Grantor agrees that it will, at its expense and upon the request of the
Administrative Agent, forthwith assemble all or any part of the Collateral as
directed by the Administrative Agent and make it available at a place designated
by the Administrative Agent which is, in the Administrative Agent's opinion,
reasonably convenient to the Administrative Agent and such Grantor, whether at
the premises of such Grantor or otherwise, (ii) to the extent permitted by
applicable law, enter, with or without process of law and without breach of the
peace, any premises where any of the Collateral is or may be located and,
without charge or liability to the Administrative Agent, seize and remove such
Collateral from such premises, (iii) have access to and use such Grantor's books
and records
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relating to the Collateral and (iv) prior to the disposition of the Collateral,
store or transfer such Collateral without charge in or by means of any storage
or transportation facility owned or leased by such Grantor, process, repair or
recondition such Collateral or otherwise prepare it for disposition in any
manner and to the extent the Administrative Agent deems appropriate.
SECTION 9. Limitation on Duty of Administrative Agent in Respect
of Collateral. The Administrative Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the UCC or otherwise, shall be to deal with it in the same
manner as the Administrative Agent deals with similar property for its own
account. None of the Administrative Agent, any Lender, Infogrames U.S. or any of
their respective officers, directors, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Grantor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part thereof.
The powers conferred on the Administrative Agent, the Lenders and Infogrames
U.S. hereunder are solely to protect the Security Interests in the Collateral
and shall not impose any duty upon the Administrative Agent, any Lender or
Infogrames U.S. to exercise any such powers. The Administrative Agent, the
Lenders and Infogrames U.S. shall be accountable only for amounts that they
actually receive as a result of the exercise of such powers, and neither they
nor any of their officers, directors, employees or agents shall be responsible
to any Grantor for any act or failure to act hereunder, except for their own
gross negligence or willful misconduct. The Administrative Agent shall not be
liable or responsible for any loss or damage to any of the Collateral, or for
any diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee or other agent or bailee
selected by the Administrative Agent in good faith.
SECTION 10. Priorities Regarding Collateral. (a) Notwithstanding
any statement or provision to the contrary contained in any Loan Document or any
Infogrames Bridge Loan Document, any failure to file or record any financing
statement or any continuations thereof under the UCC or other law of any
applicable jurisdiction with respect to the Collateral, and irrespective of the
time, place, order or method of attachment or perfection of any Lien granted to
the Administrative Agent, for the ratable benefit of the Lenders and the
Administrative Agent, under this Agreement or any other Loan Document or any
Lien granted to Infogrames U.S. under this Agreement or any other Infogrames
Bridge Loan Document, or the time or order of filing or recording of financing
statements or other notices of Liens granted pursuant hereto or thereto, and
irrespective of anything contained in any filing or agreement to which the
Borrower, any other Grantor, the Administrative Agent, the Lenders or Infogrames
U.S. may now or hereafter be a party, and irrespective of the ordinary rules of
priority under the UCC or under any other law governing the relative priorities
of secured creditors, any Lien in the Collateral granted by the Borrower or any
other Grantor to the Administrative Agent, for the ratable benefit of the
Lenders and the Administrative Agent, pursuant to this Agreement or any other
Loan Document shall at all times (whether before, after or during the pendency
of any bankruptcy, reorganization or other insolvency proceedings) have priority
over and be senior to any Lien in the Collateral granted by the Borrower or any
other Grantor to Infogrames U.S. pursuant to this Agreement or any other
Infogrames Bridge Loan Document.
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(b) Without notice to or further assent by Infogrames U.S. and
without modifying or limiting in any way the subordination of the Liens granted
in the Collateral to Infogrames U.S. to secure the Bridge Obligations to the
Liens granted in the Collateral to the Administrative Agent, for the ratable
benefit of the Lenders and the Administrative Agent, to secure the Bank
Obligations:
(i) any demand for payment of any Bank Obligations made by the
Administrative Agent or the Lenders may be rescinded in whole or in part
by such Lenders, and any Bank Obligations may be continued, and the Bank
Obligations, or the liability of the Borrower or any other Grantor for
any part thereof, or any collateral security or guarantee therefor or
right of offset with respect thereto, or any obligation or liability of
the Borrower or any other Grantor with respect to such Bank Obligations
under the Credit Agreement or any other Loan Document may, from time to
time, in whole or in part, be renewed, extended, modified, accelerated,
compromised, waived, surrendered, or released by the Administrative
Agent, acting at the direction of the Lenders pursuant to the Credit
Agreement; and
(ii) the Credit Agreement and any other Loan Document may be
amended, modified, supplemented or terminated, in whole or in part, in
each case in respect of the Bank Obligations, and any Collateral may be
exchanged, waived, surrendered or released, in each case in respect of
the Bank Obligations.
(c) The terms of this Section 10 and the subordination of the
Liens granted in the Collateral to Infogrames U.S. pursuant to this Agreement to
secure the Bridge Obligations to the Liens granted in the Collateral to the
Administrative Agent, for the ratable benefit of the Lenders and the
Administrative Agent, to secure the Bank Obligations in the manner and to the
extent set forth herein, shall not be affected by any exercise of, or failure to
exercise, any right, power or remedy, or any waiver, consent release, increase,
extension, renewal, modification, delay or non-perfection under or in respect of
the Bank Obligations, this Agreement, the other Loan Documents, the Bridge
Obligations, the other Infogrames Bridge Loan Documents or the Collateral. The
Bank Obligations shall be deemed conclusively to have been created, contracted
or incurred in reliance upon this Agreement, and all dealings among the
Administrative Agent and the Lenders on the one hand, and Infogrames U.S. on the
other hand, shall be deemed to have been consummated in reliance upon this
Agreement.
SECTION 11. Application of Proceeds. In order to implement the
subordination established pursuant to this Agreement of the Liens securing the
Bridge Obligations to the Liens securing the Bank Obligations, and in order to
implement the agreement of the Administrative Agent, on behalf of the Lenders
and the Administrative Agent, and Infogrames U.S. with respect to the
application of the proceeds of the Collateral, the Administrative Agent,
Infogrames U.S. and each Grantor agree that upon the occurrence and during the
continuance of an Event of Default on or after the date of termination of the
Transaction Documentation, any money, property, securities or other
distributions received by any Grantor, the Administrative Agent, any Lender or
Infogrames U.S. from the sale, disposition or other realization upon all or any
part of
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the Collateral shall be delivered to the Administrative Agent in the form
received, duly indorsed to the Administrative Agent, if required, and applied as
follows:
(a) First, to the payment in full of all reasonable costs and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements) paid or incurred by the Administrative Agent, or any
Lender, or paid or incurred by Infogrames U.S. at any time after the
Standstill Expiration Date, in connection with the realization on the
Collateral or the protection of the rights and interests of the
Administrative Agent, the Lenders or Infogrames U.S. therein, as the
case may be;
(b) Second, to the Administrative Agent, for the ratable benefit
of the Lenders and the Administrative Agent, until an aggregate of
$75,000,000 of the Bank Obligations have been paid in full, such amounts
to be applied to the Bank Obligations in accordance with Section 4.5 of
the Credit Agreement;
(c) Third, on a pro rata basis (based upon the then outstanding
aggregate amount of the Bank Obligations and the then outstanding
aggregate amount of the Bridge Obligations other than the Bridge
Obligations referenced in clause (d) below) to the Administrative Agent,
for the ratable benefit of the Lenders and the Administrative Agent
(such amounts to be applied to the Bank Obligations in accordance with
Section 4.5 of the Credit Agreement), and to Infogrames U.S. (for
application to the Bridge Obligations) until all of the Bank Obligations
and all such Bridge Obligations have been paid in full;
(d) Fourth, to Infogrames U.S. all Bridge Obligations
constituting obligations of the Borrower under the Infogrames Securities
Purchase Agreement to pay or reimburse Infogrames or Infogrames U.S. for
costs and expenses (including without limitation, reasonable fees and
disbursements of counsel to Infogrames or Infogrames U.S.) incurred or
paid by Infogrames or Infogrames U.S. in connection with the Infogrames
Securities Purchase Agreement other than any such costs and expenses
relating to the Infogrames Bridge Loan; and
(e) Fifth, after the indefeasible payment in full of the
Obligations, to the Borrower or the applicable Grantor, or its
representative or as a court of competent jurisdiction may direct, any
surplus then remaining.
SECTION 12. Standstill Period in Respect of Bridge Obligations.
(a) Notwithstanding anything to the contrary contained in this Agreement, any
other Loan Document or any other Infogrames Bridge Loan Document, Infogrames
U.S. agrees and acknowledges that prior to the earlier of September 30, 2000 or
the nine (9) month anniversary of the date upon which the Transaction
Documentation is terminated (such earlier date, the "Standstill Expiration
Date"):
(i) other than (A) the right to receive payment in full of the
Bridge Obligations on the Transaction Closing Date and (B) any right to
receive payments on account of the Bridge Obligations in accordance with
Section 11 (and the corresponding provisions of
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the other Loan Documents and Infogrames Bridge Loan Documents),
Infogrames U.S. shall not, nor shall it seek to, exercise or enforce any
right or remedy under this Agreement, any other Infogrames Bridge Loan
Document or applicable law with respect to the Collateral or the Bridge
Obligations, including without limitation, any of the following: (1)
exercise any rights or remedies with respect to any Collateral; or (2)
seek to notify Account Debtors or other obligors of any security
interest in all or any of the Collateral; or (3) institute any action or
proceeding with respect to such rights or remedies with respect to any
Collateral, including without limitation, any action of foreclosure; or
(4) contest, protest or object to any exercise of rights or enforcement
of remedies by the Administrative Agent;
(ii) Infogrames U.S. will not interfere with, seek to enjoin or
invoke or utilize any provision of any document, law or equitable
principle which might prevent, delay or impede the enforcement (in the
discretion of the Administrative Agent, acting at the direction of the
Required Lenders) of the rights of the Administrative Agent under this
Agreement or any other Loan Document or applicable law with respect to
the Collateral, including without limitation, to pursue foreclosure or
to seek to lift the automatic stay in any bankruptcy, reorganization or
other insolvency proceedings involving the Borrower or any other
Grantor;
(iii) the Lenders shall have the sole right to consent to any
proposed sale or other disposition of the Collateral and to release any
or all of the Collateral from any Lien granted herein, whether such sale
or disposition is made by the Borrower or any other Grantor, whether at
private sale or pursuant to foreclosure, bankruptcy or other judicial or
non-judicial proceedings and regardless of whether the proceeds of any
such disposition would be sufficient to pay in full the Bank Obligations
and the Bridge Obligations, and upon any such sale or other disposition,
Infogrames U.S.'s junior Lien on the portion of the Collateral sold or
disposed of shall, subject to clause (i) above, be automatically
extinguished and discharged; and
(iv) in exercising rights and remedies with respect to the
Collateral, the Administrative Agent and the Lenders may enforce the
provisions of this Agreement and exercise remedies hereunder and under
any other Loan Document or applicable law (or refrain from enforcing
such rights and exercising such remedies), all in such order and in such
manner as they may determine in the exercise of their sole discretion,
and such exercise and enforcement of rights and remedies with respect to
the Collateral shall include, without limitation, the rights to collect,
sell, dispose of or otherwise realize upon all or any part of the
Collateral, to incur expenses in connection with such collection, sale,
disposition or other realization and to exercise all the rights and
remedies of a secured lender under the UCC of any applicable
jurisdiction.
(b) On and after the Standstill Expiration Date, the provisions
of Section 12(a) above shall no longer apply and Infogrames U.S. may at any time
after the occurrence and during the continuance of an Event of Default under,
and as defined in, the Infogrames Bridge Loan Documents, but subject to Section
11 with respect to the application of payments and proceeds in
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respect of the Collateral, (a) exercise or enforce any right or remedy under
applicable law in respect of the Bridge Obligations and (b) instruct the
Administrative Agent to immediately commence the exercise of rights and remedies
under this Agreement in respect of the Collateral (and the manner in which to
commence such exercise of rights and remedies) unless the Administrative Agent
has already commenced the exercise thereof, provided that, subject to Infogrames
U.S.'s right to exercise any other rights and remedies under applicable law in
respect of the Bridge Obligations, and subject to Section 11 with respect to the
application of payments and proceeds in respect of the Collateral, the exercise
of rights and remedies with respect to the Collateral shall solely be exercised
by the Administrative Agent (acting at the direction of Infogrames U.S. if such
rights and remedies were not already exercised or being exercised by the
Administrative Agent as of the Standstill Expiration Date).
SECTION 13. Appointment of Administrative Agent as Agent for
Infogrames U.S. In order to further perfect and protect the Liens on the
Collateral granted to Infogrames U.S. pursuant to this Agreement to secure the
Bridge Obligations, Infogrames U.S. hereby authorizes and appoints the
Administrative Agent to hold on Infogrames U.S.'s behalf and as its agent all
Collateral granted hereunder for purposes of possession and control under the
UCC or other applicable law and to act on its behalf as otherwise set forth
herein. The Administrative Agent, for itself and its successors, hereby accepts
such authorization and appointment and Infogrames U.S. hereby releases the
Administrative Agent from any liability whatsoever (other than liability
resulting from the Administrative Agent's willful misconduct or gross
negligence) in connection with such authorization and appointment. This
authorization and appointment are a power coupled with an interest and are
irrevocable. It is understood and agreed that the Administrative Agent may also
hold Collateral for the benefit of the Lenders and the Administrative Agent.
SECTION 14. Termination of Bridge Obligations. Upon payment in
full of the Bridge Obligations on the Transaction Closing Date, all of the Liens
on the Collateral granted by the Borrower and any other Grantor to Infogrames
U.S. pursuant to this Agreement and the other Infogrames Bridge Loan Documents
to secure the Bridge Obligations shall be automatically terminated and released,
Infogrames U.S. shall cease to be a party to this Agreement and Infogrames U.S.
will, at the Administrative Agent's request and at the expense of the Borrower,
execute and deliver to the Administrative Agent such documents as the
Administrative Agent shall reasonably request to evidence the termination and
release of all such Liens on the Collateral.
SECTION 15. Concerning the Administrative Agent. The provisions
of Article XII of the Credit Agreement shall inure to the benefit of the
Administrative Agent in respect of this Agreement and shall be binding upon the
parties to the Credit Agreement in such respect. In furtherance and not in
derogation of the rights, privileges and immunities of the Administrative Agent
therein set forth:
(a) The Administrative Agent is authorized to take all such
action as is provided to be taken by it as Administrative Agent
hereunder and all other action incidental thereto. Subject to the
provisions of Section 12, as to any matters not expressly provided for
herein, the Administrative Agent may request instructions from the
Lenders and from Infogrames U.S. and shall act or refrain from acting in
accordance with written
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instructions from the Required Lenders (or, when expressly required by
this Agreement or the Credit Agreement, all the Lenders) or Infogrames
U.S. or, in the absence of such instructions, in accordance with its
discretion.
(b) The Administrative Agent shall not be responsible for the
existence, genuineness or value of any of the Collateral or for the
validity, perfection, priority or enforceability of the Security
Interests, whether impaired by operation of law or by reason of any
action or omission to act on its part (other than any such action or
inaction constituting gross negligence or willful misconduct). The
Administrative Agent shall have no duty to ascertain or inquire as to
the performance or observance of any of the terms of this Agreement by
any Grantor.
SECTION 16. Appointment of Administrative Agent. At any time or
times, with, so long as no Default or Event of Default has occurred and is
continuing, the consent of the Grantors (which consent shall not be unreasonably
withheld), in order to comply with any legal requirement in any jurisdiction or
in order to effectuate any provision of the Loan Documents, the Administrative
Agent may appoint a bank or trust company or one or more other Persons, either
to act as collateral agent or agents, jointly with the Administrative Agent or
separately, on behalf of the Administrative Agent, the Lenders and Infogrames
U.S. with such power and authority as may be necessary for the effectual
operation of the provisions hereof and specified in the instrument of
appointment (which may, in the discretion of the Administrative Agent, include
provisions for the protection of such collateral agent similar to the provisions
of Section 15).
SECTION 17. Expenses. In the event that the Grantors fail to
comply with the provisions of the Credit Agreement, this Agreement, any other
Loan Document, the Infogrames Bridge Loan Note or any other Infogrames Bridge
Loan Document, such that the value of any Collateral or the validity,
perfection, rank or value of the Security Interests are thereby diminished or
potentially diminished or put at risk, the Administrative Agent if requested by
the Required Lenders may, but shall not be required to, effect such compliance
on behalf of the Grantors, and the Grantors shall reimburse the Administrative
Agent for the reasonable costs thereof on demand. All insurance expenses and all
reasonable expenses of protecting, storing, warehousing, appraising, insuring,
handling, maintaining and shipping the Collateral, any and all excise, stamp,
intangibles, transfer, property, sales, and use taxes imposed by any state,
federal, or local authority or any other Governmental Authority on any of the
Collateral, or in respect of the sale or other disposition thereof, shall be
borne and paid by the Grantors, and if the Grantors fail promptly to pay any
portion thereof when due, the Administrative Agent, any Lender or Infogrames
U.S. may, at its option, but shall not be required to, pay the same and, and in
the case of the Administrative Agent or any Lender, charge the Grantors' account
therefor, and the Grantors agree to reimburse the Administrative Agent, such
Lender or Infogrames U.S. therefor on demand. All sums so paid or incurred by
the Administrative Agent, any Lender or Infogrames U.S. for any of the foregoing
and any and all other sums for which the Grantors may become liable hereunder
and all reasonable costs and expenses (including reasonable attorneys' fees,
legal expenses and court costs) incurred by the Administrative Agent, any Lender
or Infogrames U.S. in enforcing or protecting the Security Interests or any of
their rights or remedies hereunder shall be payable by the Grantors on demand
and shall bear interest (after as well as before judgment)
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until paid at the rate then applicable to Base Rate Loans under the Credit
Agreement or, in the case of Infogrames U.S., the rate applicable to loans
incurring interest based upon the Base Rate under, and as defined in, the
Infogrames Bridge Loan Note, and shall be additional Bank Obligations and Bridge
Obligations, respectively, hereunder.
SECTION 18. Notices. All notices and communications to the
Administrative Agent, a Lender or a Grantor shall be made in accordance with
Section 13.1 of the Credit Agreement and given to the addresses or transmission
numbers for notices set forth in the Credit Agreement, in the case of the
Administrative Agent or a Lender, or under its signature below, in the case of a
Grantor. All notices and communications to Infogrames U.S. shall be made in
accordance with the Infogrames Bridge Loan Note and given to the address or
transmission number for notices set forth therein.
SECTION 19. Release and Termination.
(a) Upon any sale, lease, transfer or other disposition of any
item of Collateral by any Grantor in accordance with the terms of the Loan
Documents (other than sales of Collateral in the ordinary course of business
consistent with past practices), the Administrative Agent and Infogrames U.S.
will, at such Grantor's expense, execute and deliver to such Grantor such
documents as such Grantor shall request to evidence the release of such item of
Collateral from the assignment and security interests granted hereby.
(b) This Agreement shall remain in effect from the date hereof
through and including the date upon which all Obligations shall have been
indefeasibly and irrevocably paid and satisfied in full and the Aggregate
Commitment is terminated and upon such date the Security Interests granted
hereby shall terminate and all rights to the Collateral shall revert to the
Grantors. Upon any such termination, (i) the Administrative Agent and Infogrames
U.S. shall promptly assign, release, transfer and deliver to the Grantors the
Collateral held by it hereunder, all instruments of assignment executed in
connection therewith, together with all monies held by the Administrative Agent,
Infogrames U.S. or any of their respective agents hereunder, free and clear of
the Liens hereof and (ii) the Administrative Agent, the Lenders and Infogrames
U.S. will promptly execute and deliver to the Grantors such documents and
instruments (including but not limited to appropriate UCC termination
statements) as the Grantors shall request to evidence such termination in each
such case at the expense of the Grantors.
SECTION 20. Waivers, Non-Exclusive Remedies. No failure on the
part of the Administrative Agent, any Lender or Infogrames U.S. to exercise, and
no delay in exercising and no course of dealing with respect to, any right under
the Credit Agreement, this Agreement, any other Loan Document, the Infogrames
Bridge Loan Note or any other Infogrames Bridge Loan Document shall operate as a
waiver thereof or hereof; nor shall any single or partial exercise by the
Administrative Agent, any Lender or Infogrames U.S. of any right under the
Credit Agreement, this Agreement, any other Loan Document, the Infogrames Bridge
Loan Note or any other Infogrames Bridge Loan Documents preclude any other or
further exercise thereof, and the exercise of any rights under this Agreement,
the Credit Agreement, the other Loan Documents, the Infogrames Bridge Loan Note
or any other Infogrames Bridge Loan Document are cumulative and are not
exclusive of any other remedies provided by law. This Agreement is (a) a Loan
32
32
Document executed pursuant to the Credit Agreement and (b) an Infogrames Bridge
Loan Document executed pursuant to the Infogrames Bridge Loan Note.
SECTION 21. Successors and Assigns. This Agreement is for the
benefit of the Administrative Agent, the Lenders, and Infogrames U.S. and their
successors and assigns (as permitted by the Credit Agreement and the Infogrames
Bridge Loan Note, as the case may be), and in the event of an assignment of all
or any of the Obligations, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This
Agreement shall be binding on the Grantors and their successors and assigns;
provided, that the Grantors may not assign any of their rights or obligations
hereunder without the prior written consent of the Administrative Agent, the
Lenders and Infogrames U.S..
SECTION 22. Changes in Writing. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by the Grantors, and the Administrative Agent with the
consent of the Required Lenders (or, when expressly required by this Agreement
or the Credit Agreement, all of the Lenders) and, to the extent affecting the
Security Interests in favor of Infogrames U.S., Infogrames U.S.
SECTION 23. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 24. Consent to Jurisdiction. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement, the other Loan Documents, the
other Infogrames Bridge Loan Note and the other Infogrames Bridge Loan
Documents to which it is a party, or for recognition and enforcement of
any judgement in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have
to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Grantor at its address set forth under its signature
below;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to ▇▇▇ in any other jurisdiction; and
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(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
SECTION 25. Waiver of Jury Trial. EACH GRANTOR HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY OTHER INFOGRAMES
BRIDGE LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 26. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Administrative
Agent, the Lenders and Infogrames U.S. in order to carry out the intentions of
the parties hereto as nearly as may be possible; and (b) the invalidity or
unenforceability of any provisions hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.
SECTION 27. Headings. The various headings of this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any provisions hereof.
SECTION 28. Counterparts. This Agreement may be executed by the
parties hereto in several counterparts (including by telecopy), each of which
shall be deemed to be an original and all of which shall constitute together but
one and the same agreement.
[Signature Pages Follow]
34
IN WITNESS WHEREOF, each party hereto has caused this Agreement
to be duly executed and delivered by its duly authorized officer as of the date
first above written.
GT INTERACTIVE SOFTWARE CORP.
By:_____________________________________________
Name:
Title:
Address for notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chairman & CEO
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
HUMONGOUS ENTERTAINMENT, INC.
By:_____________________________________________
Name:
Title:
Address for notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
35
WIZARDWORKS GROUP, INC.
By:_____________________________________________
Name:
Title:
Address for notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
SINGLETRAC ENTERTAINMENT
TECHNOLOGIES, INC.
By:_____________________________________________
Name:
Title:
Address for notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
36
SWAN ACQUISITION CORP.
By:_____________________________________________
Name:
Title:
Address for notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
CANDEL INC.
By:_____________________________________________
Name:
Title:
Address for notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
37
FORMGEN, INC.
By:_____________________________________________
Name:
Title:
Address for notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
GOLD MEDALLION SOFTWARE INC.
By:_____________________________________________
Name:
Title:
Address for notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
38
MEDIATECHNICS, LTD.
By:_____________________________________________
Name:
Title:
Address for notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
LEGEND ENTERTAINMENT COMPANY LLC
By:_____________________________________________
Name:
Title:
Address for notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chairman & CEO of GT Interactive
Software Corp.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
39
FIRST UNION NATIONAL BANK, as
Administrative Agent
By:_____________________________________________
Name:
Title:
40
CALIFORNIA U.S. HOLDINGS, INC.
By:_____________________________________________
Name:
Title:
41
Schedule 1 to Second Amended and
Restated Security Agreement
CONTRACTS
42
Schedule 2 to Second Amended and
Restated Security Agreement
COPYRIGHTS AND COPYRIGHT LICENSES
PATENTS AND PATENT LICENCES
TRADEMARKS AND TRADEMARK LICENSES
43
Schedule 3 to Second Amended and
Restated Security Agreement
DEPOSIT ACCOUNTS
44
Exhibit A to Second Amended and
Restated Security Agreement
FORM OF PERFECTION CERTIFICATE
Reference is made to that certain Second Amended and Restated
Security Agreement dated as of November 15, 1999, by and among GT Interactive
Software Corp. (the "Borrower"), certain of the Borrower's subsidiaries
identified on the signature pages thereto (together with the Borrower and each
additional subsidiary who executes a Joinder Agreement, the "Grantors"), First
Union National Bank, as Administrative Agent (the "Administrative Agent"), for
the ratable benefit of the Administrative Agent and the financial institutions
who are, or may from time to time become, parties to the Credit Agreement
referred to below (collectively, the "Lenders"), and California U.S. Holdings,
Inc. ("Infogrames U.S."), a California corporation and wholly-owned Subsidiary
of Infogrames Entertainment SA, a societe anonyme organized under the laws of
France. Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Credit Agreement dated as of September 11,
1998, by and among the Borrower, the Lenders and the Administrative Agent (as
amended, restated, supplemented or otherwise modified, the "Credit Agreement").
[Grantor] hereby certifies to the Administrative Agent, each
Lender and Infogrames U.S. as follows:
1. Names, etc.
(a) The exact name of [Grantor] as it appears in its Certificate
of Incorporation is as follows:
[Grantor]
(b) [Except as set forth in Schedule 1 attached hereto,]
[Grantor] has not changed its identity or corporate structure in any way within
the past five years.
(c) The following is a list of all other names (including trade
names or similar appellations) used by [Grantor] or any of its divisions or
other business units at any time during the past five years:
[Insert]
(d) The taxpayer identification number of [Grantor] is as
follows:
[Insert]
45
2. Current Locations
(a) The chief executive office of [Grantor] is located at the
following address:
Mailing Address County State
--------------- ------ -----
[Insert]
(b) The following are the only locations at which [Grantor]
maintains any books or records relating to any Accounts:
Mailing Address County State
--------------- ------ -----
[Insert]
(c) The following are all the locations not identified above
where [Grantor] maintains any Inventory or Equipment:
Mailing Address County State
--------------- ------ -----
[Insert]
3. Unusual Transactions. All Accounts have been originated by
[Grantor] and all Inventory has been acquired by [Grantor] in the ordinary
course of business.
4. Reliance. The undersigned acknowledges on behalf of [Grantor]
that the Administrative Agent, the Lenders and Infogrames U.S. are entitled to
rely, and have, in fact, relied on the information contained herein, and any
permitted successor or assign of the Administrative Agent, the Lenders or
Infogrames U.S. is entitled to rely on the information contained herein.
IN WITNESS WHEREOF, the undersigned on behalf of [Grantor] has
executed this Perfection Certificate, this day of November, 1999.
[GRANTOR]
By:_________________________________
Name:
Title:
46
ANNEX I
(to Second Amended and Restated Security Agreement)
[FORM OF LOCKBOX LETTER]
___________, ____
[Name and Address of Lockbox Bank]
Re: [CORPORATION]
Ladies and Gentlemen:
We hereby notify you that effective __________, ____, we have
transferred exclusive ownership and control of our lockbox account(s) no[s].
_______________ (the "Lockbox Account[s]") maintained with you under the terms
of the [Lockbox Agreement] attached hereto as Exhibit A (the "Lockbox
Agreement[s]") to [First Union National Bank], as Administrative Agent (the
"Administrative Agent").
We hereby irrevocably instruct you to make all payments to be
made by you out of or in connection with the Lockbox Account(s) (i) to the
Administrative Agent for credit to account no. ________ maintained by it at its
office at _________________ at or (ii) as you may otherwise be instructed by the
Administrative Agent.
We also hereby notify you that the Administrative Agent shall be
irrevocably entitled to exercise any and all rights in respect of or in
connection with the Lockbox Account(s), including, without limitation, the right
to specify when payments are to be made out of or in connection with the Lockbox
Account(s).
All funds deposited into the Lockbox Account(s) will not be
subject to deduction, set-off, banker's lien or any other right in favor of any
other person than the Administrative Agent, except that you may set-off against
the Lockbox Account(s) the face amount of any check deposited in and credited to
such Lockbox Account(s) which is subsequently returned for any reason. Your
compensation for providing the service contemplated herein shall be mutually
agreed between you and us from time to time and we will continue to pay such
compensation.
A-1
47
Please confirm your acknowledgment of and agreement to the
foregoing instructions by signing in the space provided below
Very truly yours,
By:________________________________
Name:
Title:
Acknowledged and agreed
to as of this ____ day
of ___________, ____.
[LOCKBOX BANK]
By:___________________________
Name:
Title:
A-2