GIGAMEDIA ASIA PACIFIC LIMITED MANAGEMENT CAPITAL INTERNATIONAL LTD CHINA INTERACTIVE LIMITED AS GUARANTORS AND INDEMNIFIERS IN FAVOUR OF BLIZZARD ENTERTAINMENT INTERNATIONAL AS BENEFICIARY DEED OF GUARANTEE, UNDERTAKING AND INDEMNITY

 

1. DEFINITIONS

 

2. GUARANTEE

 

3. HELLGATE INDEMNITY

 

4. NON-COMPETITION AND OTHER UNDERTAKINGS

 

5. PRESERVATION OF RIGHTS

 

6. REPRESENTATIONS AND WARRANTIES

 

7. PAYMENTS AND INTEREST

 

8. CURRENCY CONVERSION

 

9. CONTINUING SECURITY

 

10. SUSPENSE ACCOUNT

 

11. NOTICES

 

12. SPECIFIC PERFORMANCE

 

13. COSTS AND EXPENSES

 

14. ASSIGNMENTS AND SUCCESSORS

 

15. JOINT AND SEVERAL LIABILITIES

 

16. PARTIAL INVALIDITY

 

17. GOVERNING LAW AND DISPUTE RESOLUTION

 

18. ENTIRE GUARANTEE

 

Schedule 1 COMPETITORS OF BLIZZARD

The Guarantors are shareholders of the Company, which in turn owns 100% of the shares in Monsoon.

Blizzard has agreed to license certain game products to Monsoon in accordance with the terms of the Legacy Distribution Agreement and the SCII Licence and Distribution Agreement and related transaction documents, including the Guaranteed Agreements.

Each of the Guarantors has agreed to provide certain guarantees and to give certain indemnities, undertakings and covenants in favour of Blizzard as set out in this Deed.

In this Deed:

the power (whether directly or indirectly and whether by the ownership of share capital, the possession of voting power, contract or otherwise) to appoint and/or remove all or such of the members of the board or other governing body of a person as are able to cast a majority of the votes capable of being cast by the members of that board or body on all, or substantially all, matters, or otherwise to control or have the power to control the policies and affairs of that person; and/or

the holding and/or possession of the beneficial interest in and/or the ability to exercise the voting rights applicable to shares or other securities in any person (whether directly or by means of holding such interests in one or more other persons) which confer in aggregate on the holders hereof more than fifty per cent (50%) of the total voting rights exercisable at general meetings of that person,

which is Controlled, directly or indirectly, by the first mentioned company, corporation or entity;

more than half the issued share capital, registered capital or equity interest of which is beneficially owned, directly or indirectly, by the first mentioned company, corporation or entity; or

which is a Subsidiary of another Subsidiary of the first mentioned company, corporation or entity;

The headings in this Deed do not affect its interpretation.

In this Deed, a reference to:

a clause, paragraph or schedule, unless specifically provided otherwise, is a reference to a clause or paragraph of, or schedule to, this Deed;

a “person” includes a reference to a corporation, body corporate, association or partnership, individual, and to that person’s legal personal representatives, successors and assigns;

any statutory provision or statute includes all modifications thereto and all re enactments (with or without modification) thereof and all subordinate legislation made thereunder, in each case for the time being in force, except where the context requires otherwise;

the singular includes the plural and vice versa (unless the context requires otherwise);

a company is an “associated company” of another company for the purpose of this Deed if:

one of them has power to vote or otherwise controls no less than 20 per cent of the voting shares of the other company; or

one of them holds, owns or otherwise controls no less than 20 per cent of the issued share capital or registered capital of the other company; or

both are associated companies (as defined in Clause 1.3.5(a) or 1.3.5(b)) of the same company.

words incorporating one gender shall include each gender; and

a reference to a written agreement includes a reference to such agreement as may be amended or supplemented from time to time in accordance with its terms.

The Schedules form part of this Deed and shall have the same force and effect as if set out in the body of this Deed and references to this Deed include the Schedules.

Unless otherwise expressly provided to the contrary in this Deed, a person who is not a party to this Deed has no right under the Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore to enforce or to enjoy the benefit of any term of this Deed.

Unless otherwise defined herein, all capitalized terms shall have the meaning provided for such term in the Licence Agreements.

In consideration of Blizzard entering into the Guaranteed Agreements, each of the Guarantors irrevocably and unconditionally:

guarantees to Blizzard the due and punctual observance by each of Monsoon and the Company of all of its respective financial obligations under or pursuant to the Legacy Distribution Agreement, including but not limited to payment of the Royalties, License Fee and the Legacy Minimum Guarantee for Contract Year 1 under the Legacy Distribution Agreement and establishment of the Letter of Credit (the “Legacy Guaranteed Obligations”), and agrees to pay to Blizzard from time to time on demand by Blizzard under this Deed all sums of money which either Monsoon and/or the Company is at any time liable to pay to Blizzard under or pursuant to the Legacy Distribution Agreement which have become due and payable but have not been paid at the time such demand is made;

undertakes (to the extent practicable) to duly and punctually perform or procure the due and punctual performance of the Legacy Guaranteed Obligations by Monsoon and the Company; and

agrees as a primary obligation to indemnify Blizzard from time to time on demand by Blizzard from and against any Loss incurred or suffered by Blizzard as a result of, arising from or in connection with the failure of either Monsoon and/or the Company to duly and punctually observe their respective Legacy Guaranteed Obligations.

in the case of the SCII Licence and Distribution Agreement:

guarantees to Blizzard the due and punctual observance by each of Monsoon and the Company of all of its respective financial obligations and undertakings under or pursuant to the SCII Licence and Distribution Agreement, including but not limited to payment of the Royalties, License Fee and the SC II Minimum Guarantee for Contract Year 1 under the SCII Licence and Distribution Agreement and establishment of the SCII Letter of Credit (the “SCII Guaranteed Obligations”), and agrees to pay to Blizzard from time to time on demand by Blizzard under this Deed all sums of money which either Monsoon and/or the Company is at any time liable to pay to Blizzard under or pursuant to the SCII Licence and Distribution Agreement which have become due and payable but have not been paid at the time such demand is made;

undertakes (to the extent practicable) to duly and punctually perform or procure the due and punctual performance of the SCII Guaranteed Obligations by Monsoon and the Company; and

agrees as a primary obligation to indemnify Blizzard from time to time on demand by Blizzard from and against any Loss incurred or suffered by Blizzard as a result of, arising from or in connection with of the failure of either Monsoon and/or the Company to duly and punctually observe their respective SCII Guaranteed Obligations.

in the case of the Blizzard Services Agreement:

guarantees to Blizzard the due and punctual observance by each of Monsoon and the Company of all of its respective financial obligations and undertakings under or pursuant to the Blizzard Services Agreement, including but not limited to payment of the Consulting Fee, the ▇▇▇▇▇▇.▇▇▇ Related Consulting Fee MG, the Localization Related Consulting Fee Advance, the Community Management Related Consulting Fee Advance and establishment of the Letter of Credit (in each case as such terms are defined in the Blizzard Services Agreement) (the “Blizzard Services Guaranteed Obligations”), and agrees to pay to Blizzard from time to time on demand by Blizzard under this Deed all sums of money which either Monsoon and/or the Company is at any time liable to pay to Blizzard under or pursuant to the Blizzard Services Agreement which have become due and payable but have not been paid at the time such demand is made;

undertakes (to the extent practicable) to duly and punctually perform or procure the due and punctual performance of the Blizzard Services Guaranteed Obligations by Monsoon and the Company; and

agrees as a primary obligation to indemnify Blizzard from time to time on demand by Blizzard from and against any Loss incurred or suffered by Blizzard as a result of, arising from or in connection with of the failure of either Monsoon and/or the Company to duly and punctually observe their respective Blizzard Services Guaranteed Obligations.

Subject to Clause 3.2, each of the Guarantors shall indemnify Blizzard, and at all times keep Blizzard indemnified, (and at the direction of Blizzard pay such indemnity to the Company (or any other person designated by Blizzard)) immediately on demand by Blizzard, from and against:

any Loss incurred or suffered by the Company and/or Blizzard as a result of, arising from or in connection with a claim by HanbitSoft, Inc., Flagship Studios, Inc. and/or the receiver or liquidator of Flagship Studios, Inc. (or any other person having similar rights, powers or authority) in relation to the Hellgate LDAs; and

without prejudice to the generality of the foregoing, any Loss incurred or suffered by the Company and/or Blizzard as a result of defending or settling such claim or commencing a counterclaim in respect of such claim.

The obligation set out in Clause 3.1 shall terminate upon presentation of a letter agreement, satisfactory to Blizzard, signed by HanbitSoft, Inc., Flagship Studios, Inc. and/or the receiver or liquidator of Flagship Studios, Inc. (or any other person having similar rights, powers or authority in relation to Flagship Studios, Inc.) in relation to the Hellgate LDAs, and acknowledging and undertaking that there are no due and payable financial obligations or liabilities of the Company or its affiliates under the Hellgate LDAs, and that any financial obligations or liabilities of the Company or its affiliates shall only become due and payable upon the commercial release of a new game developed by HanbitSoft Inc. in accordance with a new licence and distribution agreement to be entered into by HanbitSoft Inc. and the Company or its affiliate (if any).

Each of the Guarantors shall not, and each of the Guarantors shall procure that none of its Subsidiaries or Related Parties shall:

at any time during the Licence Term, carry on or be engaged or interested in or assist any person in carrying on any Competing Business (and in the case of Gigamedia only, such obligations shall be limited to the geographical scope of the Territory);

at any time during the Licence Term (and in the case that Blizzard exercises its buy-out right pursuant to the Management Agreement in respect of the shares in Monsoon, for a period of one (1) year after the end of the Licence Term), without the prior written consent of Blizzard, either solely or jointly with or on behalf of any person, directly or indirectly, employ or engage (or solicit or contact with a view to the engagement or employment in a Competing Business) any person who is, or was at any time during the preceding twelve (12) months, employed or engaged by Monsoon or Monsoon’s Subsidiaries, or is or was temporarily transferred from the Company or its Subsidiaries to Monsoon or Monsoon’s Subsidiaries and working substantially full-time on the Monsoon Business at any time during the preceding twelve (12) months.

Each undertaking contained in Clause 4.1 shall be read and construed independently of the other covenants therein contained so that if one or more should be held to be invalid as an unreasonable restraint of trade or for any other reason whatsoever, then the remaining covenants shall be valid to the extent that they are not held to be so invalid.

While the covenants in Clause 4.1 are considered by the Guarantors and Blizzard to be reasonable in all the circumstances, if one or more should be held to be invalid as an unreasonable restraint of trade or for any other reason whatsoever, but would have been valid if part of the wording thereof had been deleted or the period thereof reduced or the range of activities or area dealt with thereby reduced in scope, the said covenants shall apply with such modifications as may be necessary to make them valid and effective.

The obligations of the Guarantors contained in this Deed shall be in addition to and independent of every other security which Blizzard may at any time hold in respect of any of the Company or Monsoon’s obligations under the Guaranteed Agreements.

Neither the obligations of the Guarantors contained in this Deed (whether in relation to the Guaranteed Agreements or the Hellgate Indemnity) nor the rights, powers and remedies conferred in respect of the Guarantors upon Blizzard by this Deed or by law shall be satisfied, prejudiced, discharged, released, impaired, affected, lessened, diminished or otherwise affected by:

the winding-up, dissolution, administration or reorganisation of the Company, Monsoon or any other person or any change in their respective statuses, functions, control or ownership;

any time or other indulgence being granted or agreed to be granted to the Company, Monsoon or any other person in respect of any of their respective obligations under the Guaranteed Agreements (as the case may be) or under any other security;

any amendment, novation, supplement, extension, restatement or replacement of the Guaranteed Agreements or any other document or security including without limitation any amendment to, or any variation, of, any obligation of the Company, Monsoon or any other person under the Guaranteed Agreements or under any other security;

any failure to take, or to fully take, any security contemplated by the Guaranteed Agreements or otherwise agreed to be taken in respect of the Company or Monsoon’s respective financial obligations under the Guaranteed Agreements;

any failure to realise, or to fully realise, the value of, or any release, discharge, exchange or substitution of, any security taken in respect of the Company or Monsoon’s respective financial obligations under the Guaranteed Agreements; or

any other act, event or omission which, but for this Clause 5.2, might operate to discharge, impair or otherwise affect any of the obligations of the Guarantors contained in this Deed or any of the rights, powers or remedies conferred upon Blizzard by the Guaranteed Agreements, this Deed or by law.

Any settlement or discharge given by Blizzard to the Guarantors in respect of the Guarantors’ obligations under this Deed or any other agreement reached between Blizzard and the Guarantors in relation to it shall be, and be deemed always to have been, void if any act on the faith of which Blizzard gave the Guarantors that settlement or discharge or entered into that agreement is subsequently avoided by or in pursuance of any provision of law.

In the event the Company or Monsoon fails to pay any amount due and payable to Blizzard in connection with their respective financial obligations under the Guaranteed Agreements or the Hellgate LDAs, Blizzard shall not be obliged before exercising any of the rights, powers or remedies conferred upon it in respect of the Guarantors by this Deed or by law:

to proceed against or enforce any other rights or security or claim payment from any person;

to take any action or obtain judgment in any court against the Company or Monsoon;

to make or file any claim or proof in a winding-up or dissolution of the Company or Monsoon; or

to enforce or seek to enforce any security taken in respect of any of the financial obligations of the Company or Monsoon under the Guaranteed Agreements or the Hellgate LDAs (as the case may be).

Each of the Guarantors agrees that, so long as the Company or Monsoon is under any actual or contingent obligations under the Guaranteed Agreements or the Hellgate LDAs (as the case may be) or Blizzard has not received payment in full of any financial obligation of the Company or Monsoon under the Guaranteed Agreements or in connection with the Hellgate Indemnity, no Guarantor shall exercise any rights which the Guarantor may at any time have by reason of performance by it of its obligations under this Deed:

to be indemnified by the Company or Monsoon or to receive any collateral from the Company or Monsoon; and/or

to claim any contribution from the Company or Monsoon as guarantor of the Company or Monsoon’s financial obligations under the Guaranteed Agreements or the Hellgate LDAs; and/or

to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of Blizzard under the Guaranteed Agreements or the Hellgate LDAs or of any other security taken pursuant to, or in connection with, the Guaranteed Agreements or the Hellgate LDAs by Blizzard.

The Guarantors’ liabilities contained in this Deed are not affected by the avoidance of an assurance, security or payment or a release, settlement or discharge which is given or made on the faith of an assurance, security or payment, in either case, under an enactment relating to bankruptcy or insolvency.

Each of the Guarantors agrees that that any award rendered against the Company or Monsoon resulting from an arbitration or any another dispute resolution procedure under the Guaranteed Agreements or the Hellgate LDAs (as the case may be) shall be conclusive and binding on the Guarantors for the purposes of determining the Guarantors’ obligations under this Deed to the same extent that such award is binding on the Company or Monsoon (as the case may be).

it is a company duly incorporated and validly existing under the laws of the jurisdiction of its incorporation and has and will have the necessary power to enable it to enter into and perform its obligations under this Deed;

this Deed constitutes its legal, valid and binding obligations, enforceable against it in accordance with its terms;

all necessary authorisations to enable it to enter into this Deed have been obtained and are and will remain in full force and effect;

no security interest exists over all or any of its present or future revenues or assets; and

the execution, delivery and performance of this Deed will not conflict with (a) any agreement binding on it or any of its assets; (b) its constitutive documents; or (c) any applicable law.

The provisions of each Guaranteed Agreement relating to the payments to be made under it (including, without limitation, those regulating what is to happen if either the Company and/or Monsoon is required by law to make a deduction or withholding from any such payment) shall apply mutatis mutandis to payments to be made under this Deed.

If Blizzard makes a demand under this Deed, the Guarantors shall pay interest on each sum demanded (before and after any judgment and to the extent interest at a default rate is not otherwise being paid on such sum(s)) from seven (7) days after the date of demand until the date of payment calculated at a rate per annum equal to the lesser of (i) five one hundredths of one per cent (0.05%) per day, not compounded, or (ii) the maximum amount permitted by Applicable Laws.

Any notice or demand to be made by one person to another in respect of this Deed (a “Notice”) shall be given:

in writing; and

shall be delivered personally or sent by courier by an internationally recognised courier company (e.g. FedEx, DHL) or by fax, to the party due to receive the Notice at its address set out in Clause 11.3 or to such other address, person, or fax number as the party may specify by not less than seven (7) days’ written notice to the other parties before the Notice was dispatched.

In the absence of evidence of earlier receipt, a Notice shall be deemed to have been duly given if:

delivered personally, when left at the address referred to in Clause 11.1.2;

sent by courier, two (2) Business Days after posting it;

sent by fax, when confirmation of its transmission has been recorded on the sender’s fax machine,

The address referred to in Clause 11.1.2 is:

in the case of the Guarantors:

Gigamedia Asia Pacific Limited
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇/▇, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Fax No: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
For the attention of: Chief Executive Officer

Management Capital International Ltd
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇-▇▇, Red Dot Traffic
Singapore 069120Fax No: ▇▇▇-▇▇▇▇-▇▇▇▇
For the attention of: ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇

China Interactive Limited
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇-▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇

Fax No: ▇▇▇-▇▇▇▇-▇▇▇▇
For the attention of: ▇▇ ▇▇▇▇▇▇ ▇▇▇

in the case of Blizzard:

Blizzard Entertainment International, a division of Coöperatie Activision

Blizzard International U.A.
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Fax: ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
Attention: Chief Executive Officer

With a copy to:

Blizzard Entertainment, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: Chief Operating Officer

This Deed is governed by, and shall be construed in accordance with, the laws of Singapore.

Any dispute, controversy or claim arising out of or in connection with this Deed (a “Dispute”), including any question regarding its existence, validity, interpretation, breach or termination, shall be referred to and finally resolved by arbitration in Singapore in accordance with the Arbitration Rules of the Singapore International Arbitration Centre for the time being in force, which rules are deemed to be incorporated by reference in this clause. The seat of arbitration shall be Singapore. The language of the arbitration proceedings shall be English. Any award of the Tribunal shall be final and binding on the parties from the day it is made. The parties undertake to carry out the award without delay.

The arbitral tribunal (“Tribunal”) shall consist of three (3) arbitrators. The Guarantors shall jointly appoint one (1) arbitrator and Blizzard shall appoint one (1) arbitrator. The third arbitrator is to be jointly appointed by the first two (2) arbitrators and will act as the Chairman of the Tribunal. The Chairman shall not be a citizen of the United States of America or Singapore. The seat of arbitration shall be Singapore. The language of the arbitration proceedings shall be English. Any award of the Tribunal shall be final and binding on the parties from the day it is made. The parties undertake to carry out the award without delay.

The Guarantors agree that the documents which start any proceedings relating to a Dispute (the “Proceedings”) and any other documents required to be served in relation to those Proceedings may be served (in the case of MCIL and CIL) on their legal advisers at the date of this Deed and (in the case of Gigamedia) on Tricor Singapore Pte. Ltd. at ▇ ▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇-▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (Tel: ▇▇▇ ▇▇▇▇ ▇▇▇▇; Fax: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ) for the attention of Ms. Lotus ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇, on their behalf and irrevocably appoints the same as their agents to accept service of Proceedings (the “Process Agent”). These documents may, however, be served in any other manner allowed by law. This clause applies to all Proceedings wherever started. If for any reason the Process Agent of a Guarantor ceases to be able to act as such, the Guarantor shall immediately inform each other party of this, and undertake to appoint a substitute Process Agent, and to deliver to each other party a copy of the substitute Process Agent’s acceptance of that appointment, within thirty (30) days of the original Process Agent ceasing to act as such.

 

The COMMON SEAL of

GIGAMEDIA ASIA PACIFIC LIMITED

was hereunto affixed in the presence of:

 

Director/Authorised Signatory

 

 

Director/Secretary/Authorised Signatory

 

The COMMON SEAL of

MANAGEMENT CAPITAL INTERNATIONAL LTD

was hereunto affixed in the presence of:

 

 

 

 

The COMMON SEAL of

CHINA INTERACTIVE LIMITED

was hereunto affixed in the presence of:

 

Director/Authorised Signatory

 

 

Director/Secretary/Authorised Signatory

SIGNED, SEALED and DELIVERED

as a DEED by:

for and on behalf of:

BLIZZARD ENTERTAINMENT INTERNATIONAL

a division of Coöperatie Activision

Blizzard International U.A.

in the presence of: