Document:

Exhibit 10.14

 

SECURITIES PURCHASE AGREEMENT

By and Among 

IGN Entertainment, Inc.,

The Investors 

and

The Management Stockholders

as defined herein

Dated as of March 3, 2004

 

 

IGN Entertainment, Inc.

 

SECURITIES PURCHASE AGREEMENT

 

March 3, 2004

 

TABLE OF CONTENTS

 

	
  SECTION I
  - PURCHASE AND SALE OF SHARES

  	
   

  
	
  1.1.

  	
  Purchase and Sale
  of Shares; Closing

  	
   

  
	
  1.2.

  	
  Use of
  Proceeds

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY

  	
   

  
	
  2.1.

  	
  Organization and
  Corporate Power

  	
   

  
	
  2.2.

  	
  Authorization and
  Non-Contravention

  	
   

  
	
  2.3.

  	
  Other Transaction Documents

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION III - REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
  AND MANAGEMENT STOCKHOLDERS

  	
   

  
	
  3.1.

  	
  Authorization

  	
   

  
	
  3.2.

  	
  Purchase Entirely for
  Own Account

  	
   

  
	
  3.3.

  	
  Disclosure of Information

  	
   

  
	
  3.4.

  	
  Investment Experience

  	
   

  
	
  3.5.

  	
  Accredited Investor

  	
   

  
	
  3.6.

  	
  Restricted Securities

  	
   

  
	
  3.7.

  	
  Authority and
  Non-Contravention

  	
   

  
	
  3.8.

  	
  Investment Banking;
  Brokerage Fees

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION IV - CONDITIONS TO CLOSING

  	
   

  
	
  4.1.

  	
  Effectiveness of Shares
  Terms

  	
   

  
	
  4.2.

  	
  Delivery of Documents

  	
   

  
	
  4.3.

  	
  Merger
  Agreement

  	
   

  
	
  4.4.

  	
  No Actions or Proceedings

  	
   

  
	
  4.5.

  	
  Approvals and Consents

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION V
  - MISCELLANEOUS

  	
   

  
	
  5.1.

  	
  Survival of
  Representations and Warranties

  	
   

  
	
  5.2.

  	
  Entire
  Agreement

  	
   

  
	
  5.3.

  	
  Amendments Waivers and
  Consents

  	
   

  
	
  5.4.

  	
  Notices
  and Demands

  	
   

  
	
  5.5.

  	
  Severability

  	
   

  
	
  5.6.

  	
  Expenses

  	
   

  
	
  5.7.

  	
  Counterparts

  	
   

  
	
  5.8.

  	
  Effect of Headings;
  Construction

  	
   

  

 

 

	
  5.9.

  	
  Governing
  Law

  	
   

  
	
  5.10.

  	
  Dispute
  Resolution.

  	
   

  

 

EXHIBITS

 

	
  Exhibit A

  	
  Form of Certificate of Incorporation

  
	
  Exhibit B

  	
  Form of Stockholders Agreement

  
	
  Exhibit C

  	
  Form of Registration Rights Agreement

  
	
   

  	
   

  
	
  Schedule A

  	
  List of Investors and Management
  Stockholders

  
	
  Schedule B

  	
  Wire Transfer Instructions

  

 

ii

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT is made as of March 3, 2004, by and
among IGN Entertainment, Inc., a Delaware corporation (the “Company”), each of
the persons listed on Schedule A hereto as an Investor
(collectively, the “Investors,” and each individually, an “Investor”), and each
of the persons listed on Schedule A hereto as a Management
Stockholder (collectively, the “Management Stockholders,” and each
individually, a “Management Stockholder”).

 

WHEREAS, the Company, IGN Acquisition, Inc., a California corporation (“IGN”),
and GameSpy Industries, Inc., a California corporation (“GameSpy”), are parties
to an Agreement and Plan of Merger dated as of December 3, 2003 (the
“Merger Agreement”) pursuant to which GameSpy and IGN will merge with GameSpy
surviving as a wholly-owned subsidiary of the Company (the “Merger”);

 

WHEREAS, the Company has agreed to sell, and each Investor and Management
Stockholder has agreed to purchase (a) that number of shares (the “Common
Shares”) of the Company’s Common Stock, par value $.01 per share (the “Common
Stock”) set forth on Schedule A attached hereto and (b) that number
of shares (the “Preferred Shares” and together with the Common Shares, the
“Shares”) of the Company’s Series A Redeemable Preferred Stock, par value $.01
per share (the “Series A Preferred Stock”) set forth on Schedule A
attached hereto; and

 

WHEREAS, it is the intention of the parties that the purchase and sale of the
Shares occur simultaneously in one integrated transaction immediately prior to
the consummation of the Merger.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:

 

SECTION I - PURCHASE AND SALE OF SHARES

 

1.1.                           
Purchase and Sale of Shares;
Closing.

 

(a)                                 
Subject
to the terms and conditions of this Agreement and in reliance on the
representations, warranties and covenants herein set forth, the Company shall
issue and sell to each of the Investors and the Management Stockholders, and
the Investors and the Management Stockholders severally agree to purchase from
the Company, the respective number of shares of Series A Preferred Stock set
forth opposite the name of such Investor or Management Stockholder, as
applicable, on Schedule A hereto representing an aggregate of
4,999,392 shares of Series A Preferred Stock, with a purchase price of $1.00,
per share, for an aggregate purchase price of $4,999,392.  The Series A
Preferred Stock shall have the rights, preferences and other terms set forth in
the Amended and Restated Certificate of Incorporation of the Company (the
“Certificate”) attached as Exhibit A hereto.

 

 

(b)                                
Subject
to the terms and conditions of this Agreement and in reliance on the
representations, warranties and covenants herein set forth, the Company shall
issue and sell to each of the Investors and the Management Stockholders, and
each Investor and Management Stockholder severally agrees to purchase from the
Company, the respective number of shares of Common Stock set forth opposite the
name of such Investor or Management Stockholder, as applicable, on Schedule A
hereto representing an aggregate of 60,831 shares of Common Stock, with a price
per share of $.01 per share, for an aggregate purchase price of $608.31. 
The Common Stock shall have the rights, preferences and other terms set forth
in the Certificate.

 

(c)                                 
Subject
to the satisfaction or waiver of the conditions set forth herein, the purchase
of the Shares shall be made at a closing (the “Closing”) to be held on the date
that is no later than two (2) business days following the satisfaction or
waiver of the conditions to closing set forth in Section IV hereof or at
such other time as agreed upon by the parties hereto.  At the Closing, the
Company will deliver to each Investor or Management Stockholder, as applicable,
one or more certificates representing the Shares purchased by such Investor or
Management Stockholder, as applicable, as set forth on Schedule A
hereto against payment of the purchase price relating thereto to the Company by
wire transfer payable in immediately available funds in accordance with the
wire transfer instructions set forth on Schedule B, or by certified
or bank check made payable to the Company.

 

1.2.                           
Use of Proceeds.  The Company shall use the proceeds received upon the sale of
the Shares to consummate the Merger and for general working capital purposes.

 

SECTION II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

In
order to induce the Investors and Management Stockholders to enter into this
Agreement and consummate the transactions contemplated hereby, the Company
hereby makes to the Investors and Management Stockholders the following
representations and warranties.

 

2.1.                           
Organization and Corporate
Power.  The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.  The Company has all requisite corporate power and authority to
own its properties, to carry on its business as presently conducted, to enter
into and perform this Agreement and the agreements, documents and instruments
contemplated hereby (together, the “Transaction Documents”) to which it is a
party and to carry out the transactions contemplated hereby and thereby. 
The Company is duly licensed or qualified to do business as a foreign
corporation in each jurisdiction wherein the character of its property, or the
nature of the activities presently conducted by it, makes such qualification
necessary, except where the failure to be so licensed or qualified would not
have, or be reasonably likely to have, a material adverse effect on the assets,
liabilities, condition (financial or other), business, results of operations or
prospects of the Company (a “Material Adverse Effect”). The Company is not in
violation of any term or provision of its Certificate or by-laws (the
“By-laws”), each as in effect as of this date.

 

2

 

2.2.                           
Authorization and
Non-Contravention.  The Transaction Documents are valid
and binding obligations of the Company, enforceable in accordance with their
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws, from time to time in
effect, which affect enforcement of creditors’ rights generally.  The
execution, delivery and performance of the Transaction Documents, and the
issuance, sale and delivery of the Shares in accordance with this Agreement
have been duly authorized by all necessary corporate or other action of the
Company and its stockholders.  The execution, delivery and performance of
the Transaction Documents, including, without limitation, the sale and delivery
of the Shares in accordance with this Agreement and the performance of any
transactions contemplated by the Transaction Documents will not (i) violate,
conflict with or result in a default (whether after the giving of notice, lapse
of time or both) under any contract or obligation to which the Company is a
party or by which it or its assets are bound, or any provision of the
Certificate or By-Laws, or cause the creation of any lien or encumbrance upon
any of the assets of the Company, except for those which would not have, or be
reasonably likely to have, a Material Adverse Effect; (ii) violate, conflict
with or result in a default (whether after the giving of notice, lapse of time
or both) under, any provision of any law, regulation or rule, or any order of,
or any restriction imposed by any court or other governmental agency applicable
to the Company, except for those which would not have, or be reasonably likely
to have, a Material Adverse Effect; (iii) require from the Company any notice
to, declaration or filing with, or consent or approval of any governmental
authority or other third party other than pursuant to federal or state
securities or blue sky laws; or (iv) accelerate any obligation under, or give
rise to a right of termination of, any agreement, permit, license or
authorization to which the Company is a party or by which it is bound.

 

2.3.                           
Other Transaction Documents.  Each of the representations and
warranties contained in Article IV of that certain Note Purchase
Agreement, dated as of the date hereof, by and among the Company, the purchase
named therein and U.S. Bank National Association, as Collateral Agent, is true
and correct in all respects and is incorporated herein by reference as if fully
set forth herein.

 

SECTION III - REPRESENTATIONS AND WARRANTIES OF THE INVESTORS AND
MANAGEMENT STOCKHOLDERS

 

Each
Investor (which for purposes of this Section III only shall include the
Management Stockholders), severally and not jointly, hereby represents,
warrants and covenants that (other than Section 3.5 with respect to the
Management Stockholders):

 

3.1.                           
Authorization.  Such Investor has full power and authority to enter into each
of the Transaction Documents, and each such agreement constitutes its valid and
legally binding obligation, enforceable in accordance with its terms.

 

3.2.                           
Purchase Entirely for Own
Account.  This Agreement is made with such
Investor in reliance upon such Investor’s representation to the Company, which
by such Investor’s execution of this Agreement such Investor hereby confirms,
that the Shares to be received by such Investor will be acquired for investment
for such Investor’s own account (or the

 

3

 

account of their respective
affiliates), not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of any applicable law, and that
such Investor has no present intention of selling, granting any participation
in or otherwise distributing the same to any other person.  By executing
this Agreement, such Investor further represents that such Investor does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person or to any third person,
with respect to any of the Securities.

 

3.3.                           
Disclosure of Information.  Such Investor represents that it has
had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Shares and the
business, properties, prospects and financial condition of the Company.
 The foregoing, however, does not limit or modify the representations and
warranties of the Company in Section 2 of this Agreement or the right of
the Investors to rely thereon.

 

3.4.                           
Investment Experience.  Such Investor is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the
Shares.  If other than an individual, such Investor also represents
it has not been organized for the purpose of acquiring the Shares.

 

3.5.                           
Accredited Investor.  Such Investor is an “accredited
investor” within the meaning of SEC Rule 501 of Regulation D, as presently in
effect.

 

3.6.                           
Restricted Securities.  Such Investor understands that the
Shares it is purchasing are characterized as “restricted securities” under the
federal securities laws inasmuch as they are being acquired from the Company in
a transaction not involving a public offering and that under such laws and
applicable regulations such Shares may be resold without registration under the
Act only in certain limited circumstances.  In the absence of any effective
registration statement covering the Shares or an available exemption from
registration under the Act, the Shares must be held indefinitely.  In this
connection, such Investor represents that it is familiar with Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act, including without limitation the Rule 144 condition that current
information about the Company be available to the public.  Such
information is not now available and the Company has no present plans to make
such information available.

 

3.7.                           
Authority and
Non-Contravention.  The Transaction Documents are valid
and binding obligations of the Investors, enforceable in accordance with their
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws, from time to time in
effect, which affect enforcement of creditors’ rights generally.  The
execution, delivery and performance of the Transaction Documents have been duly
authorized by all necessary corporate or other action of such Investor. 
The execution, delivery and performance of this Agreement and the performance
of any transactions contemplated by the Transaction Documents will not (i)
violate, conflict with or result in a default (whether after the giving of
notice, lapse of time or both) under any material contract or

 

4

 

obligation to which such
Investor is a party or by which their or its assets are bound, or any provision
of such Investors’ organizational documents, or cause the creation of any
encumbrance upon any of the material assets of such Investors; (ii) violate,
conflict with or result in a default (whether after the giving of notice, lapse
of time or both) under, any provision of any law, regulation or rule, or any
order of, or any restriction imposed by any court or other governmental agency
applicable to the Investors; (iii) require from such Investor any notice to,
declaration or filing with, or consent or approval of any governmental
authority or other third party other than pursuant to federal or state
securities or blue sky laws; or (iv) accelerate any obligation under, or give
rise to a right of termination of, any agreement, permit, license or
authorization to which such Investor is a party or by which it is bound.

 

3.8.                           
Investment Banking;
Brokerage Fees.  No Investor has incurred or taken any
action so that the Company is liable for or become liable for any investment
banking fees, brokerage commissions, broker’s or finder’s fees or similar
compensation (exclusive of professional fees to lawyers and accountants) in
connection with the transactions contemplated by this Agreement.

 

SECTION IV - CONDITIONS TO CLOSING

 

The
obligations of each of the Investors and Management Stockholders to purchase
and pay for their pro rata portion of the Shares shall be subject to the
fulfillment to the Investors’ and Management Stockholders’ reasonable
satisfaction or waiver on or before the Closing of the following conditions:

 

4.1.                           
Effectiveness of Shares
Terms.  The terms of the Shares as set forth
in Exhibit A hereto shall have become effective by the filing of the
Certificate with the Secretary of State of the State of Delaware.

 

4.2.                           
Delivery of Documents. The Company shall have executed and/or
delivered to the Investors and Management Stockholders (or shall have caused to
be executed and delivered to the Investors by the appropriate persons) the
following:

 

(a)                                 
Certificates
representing the Shares;

 

(b)                                
Copies
of resolutions of the Board of Directors and, as applicable, the stockholders
of the Company authorizing the execution and delivery of the Transaction
Documents, as certified by the Company’s Secretary;

 

(c)                                 
A
copy of the Certificate certified as of a recent date by the Secretary of State
of the State of Delaware;

 

(d)                                
A
copy of the By-Laws of the Company certified by the Company’s Secretary;

 

5

 

(e)                                 
Certificates
issued by the Secretary of State of the State of Delaware and such states in
which the Company is qualified as a foreign corporation, certifying that the
Company is in good standing in their respective states; and

 

(f)                                   
The
Stockholders Agreement in the form attached hereto as Exhibit B.

 

(g)                                
Registration
Rights Agreement in the form attached hereto as Exhibit C.

 

(h)                                
Such
other supporting documents and certificates as the Investors may reasonably
request.

 

4.3.                           
Merger Agreement.  The transactions contemplated by the Merger Agreement shall
have been consummated or shall consummate concurrently with the Closing
hereunder.

 

4.4.                           
No Actions or Proceedings. No action or proceeding by or before any
court, administrative body or governmental agency shall have been instituted or
threatened which seeks to enjoin, restrain or prohibit, or might result in
damages in respect of, this Agreement or the complete consummation of the
transactions contemplated by this Agreement, and which would in the reasonable
judgment of the Investors make it inadvisable to consummate such
transactions.  No law or regulation shall be in effect and no court order
shall have been entered in any action or proceeding instituted by any party
which enjoins, restrains or prohibits this Agreement or the complete
consummation of the transactions contemplated by this Agreement.

 

4.5.                           
Approvals and Consents. The Company shall have made all filings
with and notifications of governmental authorities, regulatory agencies and
other entities required to be made by them in connection with the execution and
delivery of this Agreement and the performance by them of the transactions
contemplated hereby, and the Investors shall have received copies of all
required authorizations, waivers, consents and permits to permit the
consummation of the transactions contemplated by this Agreement, in form and
substance reasonably satisfactory to the Investors, from all third parties.

 

SECTION V - MISCELLANEOUS

 

5.1.                           
Survival of Representations
and Warranties. 
The representations, warranties, covenants and agreements made herein or in any
certificates or documents executed in connection herewith shall survive the
execution and delivery hereof and the Closing contemplated hereby and shall
bind the successors and assigns of the relevant party, whether so expressed or
not, and all such covenants, agreements, representations and warranties shall
inure to the benefit of the successors and assigns of the parties hereto and to
transferees of the Shares, whether so expressed or not.

 

5.2.                           
Entire Agreement.  The Transaction Documents constitute the full and entire
understanding and agreement among the parties hereto with respect to the
subject matters hereof

 

6

 

and thereof, and any and all
other written or oral agreements existing prior to or contemporaneously
herewith are expressly superseded and canceled.

 

5.3.                           
Amendments Waivers and
Consents.  For the purposes of this Agreement
and all agreements, documents and instruments executed pursuant hereto, except
as otherwise specifically set forth herein or therein, no course of dealing
between the Company on the one hand and any Investor on the other and no delay
on the part of any party hereto in exercising any rights hereunder or
thereunder shall operate as a waiver of the rights hereof and thereof. 
Any term or provision hereof may be amended, terminated or waived (either
generally or in a particular instance and either retroactively or
prospectively) with the written consent of the Company and the holders of a
majority interest of the voting power of the Shares.  Any amendment or
waiver effected in accordance with this Section 5.3 shall be binding upon
each holder of Shares purchased under this Agreement at the time outstanding
each future holder of all such securities and the Company.

 

5.4.                           
Notices and Demands.  All notices, requests, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if faxed (with transmission acknowledgment received), delivered
personally or mailed by certified or registered mail (return receipt requested)
as follows:

 

	
  To
  the Company:

  	
  c/o
  Great Hill Partners, L.P.

  
	
   

  	
  1
  Liberty Square

  
	
   

  	
  Boston,
  MA 02109

  
	
   

  	
  Fax:
  (617) 790-9401

  
	
   

  	
  Attn:
  Christopher S. Gaffney

  
	
   

  	
   

  
	
  With
  a copy to:

  	
  Goodwin
  Procter LLP

  
	
   

  	
  Exchange
  Place

  
	
   

  	
  Boston,
  MA 02109

  
	
   

  	
  Attn:
   David F. Dietz, P.C.

  
	
   

  	
  Facsimile
  Number (617) 523-1231

  
	
   

  	
   

  
	
  To
  the Management

  Stockholders:

  	
  At
  the addresses listed in the signature pages hereto

  
	
   

  	
   

  
	
  With
  a copy to:

  	
   

  

 

or to such other address or
fax number of which any party may notify the other parties as provided
above.  Notices shall be effective as of the date of such delivery,
mailing or fax.

 

5.5.                           
Severability.  Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be deemed prohibited or invalid
under such applicable law, such provision shall be ineffective to the extent of
such prohibition or invalidity, and such

 

7

 

prohibition or invalidity
shall not invalidate the remainder of such provision or the other provisions of
this Agreement.

 

5.6.                           
Expenses.  The
Company agrees to pay all reasonable fees and disbursements of counsel to the
Investors in connection with the negotiation, preparation and consummation of
the Transaction Documents, and any subsequent amendment, waiver, consent or
enforcement thereof.

 

5.7.                           
Counterparts.  This Agreement and any Exhibit or Schedule hereto may be
executed in multiple counterparts, each of which shall constitute an original
but all of which shall constitute but one and the same instrument.  One or
more counterparts of this Agreement or any Exhibit or Schedule hereto may
be delivered via telecopier, with the intention that they shall have the same
effect as an original counterpart hereof.

 

5.8.                           
Effect of Headings;
Construction.  The descriptive headings in this
Agreement have been inserted for convenience only and shall not be deemed to
limit or otherwise affect the construction of any provision thereof or
hereof.  The parties have participated jointly in the negotiation and
drafting of the Transaction Documents with counsel sophisticated in investment
transactions.  In the event an ambiguity or question of intent or
interpretation arises, this Agreement and the agreements, documents and
instruments executed and delivered in connection herewith shall be construed as
if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement and the agreements, documents and instruments
executed and delivered in connection herewith.

 

5.9.                           
Governing Law.  This Agreement shall be deemed a contract made under the laws
of the State of Delaware and all disputes, claims or controversies arising out
of this Agreement, or the negotiation, validity or performance hereof or the
transactions contemplated herein, shall be construed under and governed by the
laws of such state, without giving effect to its conflicts of laws principles.

 

5.10.                    
Dispute Resolution.

 

(a)                                 
All
disputes, claims, or controversies arising out of or relating to this
Agreement, or any other agreement executed and delivered pursuant to this Agreement,
or the negotiation, validity or performance hereof and thereof or the
transactions contemplated hereby and thereby, that are not resolved by mutual
agreement shall be resolved solely and exclusively by binding arbitration to be
conducted before J.A.M.S./Endispute, Inc. or its successor.  The parties
understand and agree that this arbitration provision shall apply equally to
claims of fraud or fraud in the inducement.  The arbitration shall be held
in Delaware before a single arbitrator and shall be conducted in accordance
with the rules and regulations promulgated by J.A.M.S./Endispute, Inc. unless
specifically modified herein.

 

The
parties covenant and agree that the arbitration shall commence within one
hundred twenty (120) days of the date on which a written demand for arbitration
is filed by any party

 

8

 

hereto.  In connection
with the arbitration proceeding, the arbitrator shall have the power to order
the production of documents by each party and any third-party witnesses. 
In addition, each party may take up to three depositions as of right, and the
arbitrator may in his or her discretion allow additional depositions upon good
cause shown by the moving party.  However, the arbitrator shall not have
the power to order the answering of interrogatories or the response to requests
for admission.  In connection with any arbitration, each party shall
provide to the other, no later than fourteen (14) business days before the date
of the arbitration, the identity of all persons that may testify at the
arbitration, a copy of all documents that may be introduced at the arbitration
or considered or used by a party’s witness or expert, and a summary of the
expert’s opinions and the basis for said opinions.  The arbitrator’s
decision and award shall be made and delivered within sixty (60) days of the
conclusion of the arbitration.  The arbitrator’s decision shall set forth
a reasoned basis for any award of damages or finding of liability.  The
arbitrator shall not have power to award damages in excess of actual
compensatory damages and shall not multiply actual damages or award punitive
damages or any other damages that are specifically excluded under this
Agreement, and each party hereby irrevocably waives any claim to such damages.

 

The
parties covenant and agree that they will participate in the arbitration in
good faith and that they will share equally its costs, except as otherwise
provided herein.  Any party
unsuccessfully refusing to comply with an order of the arbitrators shall be
liable for costs and expenses, including attorneys’ fees, incurred by the other
party in enforcing the award.  This Section 5.10 applies equally to
requests for temporary, preliminary or permanent injunctive relief, except that
in the case of temporary or preliminary injunctive relief any party may proceed
in court without prior arbitration for the limited purpose of avoiding
immediate and irreparable harm.  The provisions of this Section 5.10
shall be enforceable in any court of competent jurisdiction.

 

Subject
to the second sentence of the immediately preceding paragraph, the parties
shall bear their own attorneys’ fees, costs and expenses in connection with the
arbitration.  The parties will share equally in the fees and expenses
charged by J.A.M.S.

 

(b)                                
Each
of the parties hereto irrevocably and unconditionally consents to the exclusive
jurisdiction of J.A.M.S./Endispute, Inc. to resolve all disputes, claims or
controversies arising out of or relating to this Agreement or any other
agreement executed and delivered pursuant to this Agreement or the negotiation,
validity or performance hereof and thereof or the transactions contemplated
hereby and thereby and further consents to the jurisdiction of the courts of
Delaware for the purposes of enforcing the arbitration provisions of
Section 5.10(a) of this Agreement.  Each party further irrevocably
waives any objection to proceeding before J.A.M.S./Endispute, Inc. based upon
lack of personal jurisdiction or to the laying of venue and further irrevocably
and unconditionally waives and agrees not to make a claim in any court that
arbitration before J.A.M.S./Endispute, Inc. has been brought in an inconvenient
forum.  Each of the parties hereto hereby consents to service of process
by registered mail at the address to which notices are to be given.  Each
of the parties hereto agrees that its or his submission to jurisdiction and its
or his consent to service of process by mail is made for the express benefit of
the other parties hereto.

 

9

 

[SIGNATURE PAGES FOLLOW NEXT]

 

10

 

IN WITNESS WHEREOF, the undersigned have executed this Securities Purchase Agreement as
of the day and year first above written.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  IGN
  ENTERTAINMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  MARK A. JUNG

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark
  A. Jung

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

[Signature Page to Purchase Agreement]

 

 

	
   

  	
  INVESTORS:

  
	
   

  	
   

  
	
   

  	
  GREAT
  HILL EQUITY PARTNERS II

  LIMITED PARTNERSHIP,

  
	
   

  	
   

  
	
   

  	
  By: 
  Great Hill Partners GP II, LLC, its

  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  CHRIS GAFFNEY

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  c/o
  Great Hill Partners, L.P.

  
	
   

  	
  1
  Liberty Square

  
	
   

  	
  Boston,
  MA 02109

  
	
   

  	
  Fax:
  (617) 790-9401

  
	
   

  	
  Attn:
  Christopher S. Gaffney

  
	
   

  	
   

  
	
   

  	
  GREAT
  HILL AFFILIATE PARTNERS II

  LIMITED PARTNERSHIP,

  
	
   

  	
   

  
	
   

  	
  By: 
  Great Hill Partners GP II, LLC, its

  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  CHRIS GAFFNEY

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  c/o
  Great Hill Partners, L.P.

  
	
   

  	
  1
  Liberty Square

  
	
   

  	
  Boston,
  MA 02109

  
	
   

  	
  Fax:
  (617) 790-9401

  
	
   

  	
  Attn:
  Christopher S. Gaffney

  

 

 

	
   

  	
  LIBERTY MUTUAL INSURANCE

  
	
   

  	
   

  	
  COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  RONALD D. ULICH

  	
   

  
	
   

  	
   

  	
  Name:    
  Ronald D. Ulich

  
	
   

  	
   

  	
  Title:      
  Vice President

  

 

 

	
   

  	
  /s/
  CHRISTOPHER ANDERSON

  	
   

  
	
   

  	
  Christopher
  Anderson

  

 

 

	
   

  	
  MANAGEMENT STOCKHOLDERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  MARK JUNG

  	
   

  
	
   

  	
  Mark
  Jung

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

	
   

  	
  /s/
  KENNETH H. KELLER

  	
   

  
	
   

  	
  Kenneth
  Keller

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  3386
  Royal Meadow Ln

  	
   

  
	
   

  	
  San
  Jose, CA 95135

  	
   

  
	
   

  	
   

  	
   

  

 

 

EXHIBIT A

 

FORM OF CERTIFICATE OF INCORPORATION

 

 

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

IGN ENTERTAINMENT, INC.

a Delaware corporation

 

(Pursuant to Sections 228, 242 and 245 of the

General Corporation Law of the State of Delaware)

 

IGN
Entertainment, Inc. (the “Corporation”), a corporation organized and existing
under the General Corporation Law of the State of Delaware (the “GCL”),

 

DOES
HEREBY CERTIFY:

 

FIRST:  The name of the Corporation is IGN
Entertainment, Inc.  The original Certificate of Incorporation of the
Corporation was filed with the Secretary of State of Delaware on January 6,
1999 under the name “Affiliation, Inc.”.

 

SECOND:  The Amended and Restated Certificate
of Incorporation of the Corporation (the “Amended and Restated Certificate of
Incorporation”) in the form attached hereto as Exhibit A has been duly
adopted in accordance with the provisions of Sections 228, 242 and 245 of the
GCL by the directors and stockholders of the Corporation.

 

THIRD:  The Amended and Restated Certificate
of Incorporation so adopted reads in full as set forth in Exhibit A attached
hereto and is incorporated herein by this reference.

 

IN
WITNESS WHEREOF, the Corporation has caused this Amended and Restated
Certificate of Incorporation to be signed by an authorized officer of this
Corporation this 3rd day of March, 2004.

 

 

	
   

  	
  IGN
  ENTERTAINMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Mark
  A. Jung

  
	
   

  	
   

  	
  President

  

 

 

AMENDED AND RESTATED

 

CERTIFICATE OF INCORPORATION

 

OF

 

IGN ENTERTAINMENT, INC.

 

 

ARTICLE I

 

The
name of the Corporation is IGN Entertainment, Inc.

 

ARTICLE II

 

The
address of the Corporation’s registered office in the State of Delaware is 1209
Orange Street in the City of Wilmington, County of New Castle.  The name
of its registered agent at such address is The Corporation Trust Company.

 

ARTICLE III

 

The
purpose of the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.

 

ARTICLE IV

 

The
total number of shares of capital stock which the Corporation shall have
authority to issue is 41,400,000, consisting of (a) 40,000,000 shares of
preferred stock, par value $0.01 per share, of which (i) 39,922,957 shares
shall be designated Series A Redeemable Preferred Stock, par value $0.01 per
share (the “Series A Redeemable Preferred Stock”), (ii) 56,298 shares
shall be designated Series B Participating Preferred Stock, par value $0.01 per
share (the “Series B Preferred Stock” and, together with the Series A
Redeemable Preferred Stock, the “Designated Preferred Stock”) and (iii)
20,745 shares shall be undesignated preferred stock, par value $.01 per share
(the “Undesignated Preferred Stock” and, together with the Designated
Preferred Stock, the “Preferred Stock”) and (b) 1,400,000 shares which
shall be designated Common Stock, par value $.01 per share (the “Common
Stock”).

 

 

The
voting powers, designations, preferences, powers and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions of each class of capital stock of the Corporation, shall be as
provided in this Article IV.

 

A.            PREFERRED
STOCK

 

1.            
Certain Definitions.  In addition to terms defined elsewhere
herein, the following terms shall have the following respective meanings for
purposes of this Amended and Restated Certificate of Incorporation:

 

“Additional Series A Purchase
Agreement” means that certain Securities Purchase Agreement, dated as of March 3,
2004 between the Corporation and the purchasers of the Series A Preferred Stock
and Common Stock party thereto, as amended, restated or supplemented from time
to time.

 

“Aggregate Series B Preferred
Participation Amount” means (a) the Series B Preferred Participation
Percentage multiplied by (b) the aggregate amounts to be paid to the
holders of Series A Redeemable Preferred Stock pursuant to
Section A.3(a)(ii)(A) divided by (c) the difference obtained by
subtracting one (1.00) minus the Series B Preferred Participation
Percentage (the intent being that the Aggregate Series B Preferred
Participation Amount shall equal the Series B Preferred Participation
Percentage multiplied by all amounts paid or distributed to the Designated
Preferred Stock pursuant to Section A.3(a)(ii)). 

 

“BACI Series B IRR”
means the internal rate of return with respect to the investment by Banc of
America Capital Investors, L.P. (“BACI”) in Series B Preferred Stock, which
shall be computed by determining the rate which, if used to discount the
following cash payments, would cause the net present value of such payments to
equal zero as of March 3, 2004:

 

(a)         
cash payments made by
BACI to the Corporation to purchase the Series B Preferred Stock pursuant to
the Series B Purchase Agreement; minus

 

(b)        
the following cash
payments received by BACI on or prior to the date of determination of the BACI
Series B IRR, in each case discounted from the respective date of actual
receipt of such payment by BACI:

 

(i)                                    
as a distribution,
dividend, redemption or other payment from the Corporation in respect of the
Series B Preferred Stock or the Common Stock issued upon conversion thereof,
but excluding any such distributions in respect of Common Stock otherwise
acquired by BACI;

 

(ii)                                 
as payment of the
commitment fees to BACI in connection with the issuance of the Series B
Preferred Stock (but excluding any such fees

 

 

2

 

paid in respect of any debt
or other securities purchased by BACI); and

 

(iii)                              
from any sale by BACI to
any person or entity (including the Corporation) of the Series B Preferred
Stock or the Common Stock issued upon conversion thereof (but excluding any
such payments in respect of Common Stock otherwise acquired by BACI).

 

“Great Hill” means
Great Hill Equity Partners II L.P.

 

“Series A Preferred
Participation Percentage” means ninety and one-half percent (90.5%); provided,
that upon any redemption of any share of Series A Preferred Stock in which a
proportionate amount is not paid to the holders of Series B Preferred Stock
pursuant to Section A.5, then the Series A Preferred Participation
Percentage shall be reduced to a percentage equal to the product of (a) the
Series A Preferred Participation Percentage in effect immediately prior to such
reduction multiplied by (b) a fraction, the numerator of which is
the number of shares of Series A Redeemable Preferred Stock outstanding
immediately after such redemption and the denominator of which is the
number of shares of Series A Redeemable Preferred Stock outstanding immediately
prior to such redemption.

 

“Series B Default” means (a)
an Event of Default as set forth in Sections 12.01(a), (c), (d), (e), (f), (h),
(i), (j) or (l) of the Series B Purchase Agreement, (b) any failure to make any
payment or distribution on the Series B Preferred Stock as required by
Section A.4 or A.5 hereof and (c) any failure by the Corporation to
observe or comply with the covenants set forth in Section A.7(b) hereof.

 

“Series B Premium Amount”
means, as of the date of any distribution upon or redemption of the Series B
Preferred Stock, an amount equal to (a) the sum of the Series B Original Issue
Price plus the average of the accrued and unpaid dividends on the Series
B Preferred Stock as of the close of business on each day during the 30-day
period immediately prior to the date of such distribution or redemption multiplied
by (b) the following applicable percentage (the “Series B Premium
Percentage”), determined as of the date of such distribution or redemption,
based on the applicable BACI Series B IRR:

 

(A)                             
If the date of such
distribution or redemption occurs on or prior to March 3, 2005, the Series
B Premium Percentage shall be:

 

	
  BACI
  Series B IRR

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than or equal to
  37.5%

  	
   

  	
  5.0

  	
  %

  
	
  More than 37.5%

  	
   

  	
  2.5

  	
  %

  

 

(B)                               
If the date of such
distribution or redemption occurs after March 3, 2005 and on or prior to
March 3, 2006, the Series B Premium Percentage shall be:

 

 

3

 

	
  BACI
  Series B IRR

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Less
  than or equal to 37.5%

  	
   

  	
  4.0

  	
  %

  
	
  More
  than 37.5%

  	
   

  	
  2.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

(C)                               
If the date of such
distribution or redemption occurs after March 3, 2006 and on or prior to
March 3, 2007, the Series B Premium Percentage shall be:

 

	
  BACI
  Series B IRR

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Less
  than or equal to 37.5%

  	
   

  	
  3.0

  	
  %

  
	
  More
  than 37.5%

  	
   

  	
  1.5

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

(D)                              
If the date of such
distribution or redemption occurs after March 3, 2007 and on or prior to
March 3, 2008, the Series B Premium Percentage shall be:

 

	
  BACI
  Series B IRR

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less
  than or equal to 33.5%

  	
   

  	
  2.0

  	
  %

  
	
  More
  than 33.5%

  	
   

  	
  1.0

  	
  %

  

 

(E)                                
If the date of such
distribution or redemption occurs after March 3, 2008 and on or prior to
March 3, 2009, the Series B Premium Percentage shall be:

 

	
  BACI
  Series B IRR

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less
  than or equal to 30.0%

  	
   

  	
  1.0

  	
  %

  
	
  More
  than 30.0%

  	
   

  	
  0.5

  	
  %

  

 

(F)                                
If the date of such
distribution or redemption occurs after March 3, 2009, the Series B
Premium Percentage shall be zero (0.0%);

 

provided, that, to the extent payment of all or any
portion of a Series B Premium Amount would result in the Corporation achieving
a higher BACI Series B IRR threshold set forth above, resulting in a reduction
or elimination of the Series B Premium Amount to be paid (the “Reduced
Premium”) as set forth above, the Series B Premium Amount which shall be
paid in connection with such distribution shall be equal to the sum of (I) the
Reduced Premium and (II) that portion of the Series B Premium Amount otherwise
payable hereunder that would result in achievement of such BACI Series B IRR
threshold level.

 

 “Series B Preferred
Participation Percentage” means one hundred percent (100%) minus the
Series A Preferred Participation Percentage (i.e.,
nine and one-half percent

 

 

4

 

(9.5%) as of the date of filing hereof until such time, if
any, as the Series A Preferred Participation Percentage is reduced in
accordance with the definition thereof).

 

“Series B Purchase Agreement”
means the Securities Purchase Agreement, dated as of March 3, 2004 between
the Corporation and the purchasers of the Series B Preferred Stock party
thereto, as amended, restated or supplemented from time to time.

 

“Stockholders Agreement”
means the Amended and Restated Stockholders Agreement, dated as of
March 3, 2004 among the Corporation, the Management Stockholders and the
Investors (each as defined therein), as amended, restated or supplemented from
time to time.

 

2.            
Dividends; Certain Distributions.

 

(a)          
Series B Preferred Stock.  The holders of outstanding shares of
Series B Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors, and at the other times set forth herein, in each
case out of funds legally available therefor, prior to the payment of any
dividends on the Series A Redeemable Preferred Stock, Common Stock or any other
class or series of capital stock ranking with respect to the payment of
dividends junior to the Series B Preferred Stock, dividends at the rate of
thirteen and one-half percent (13.5%) per annum (the “Series B Coupon Rate”)
on the Original Issue Price (as defined below) of Series B Preferred Stock from
the date of original issuance of such share, which dividends shall be
cumulative and accrue daily in arrears and be compounded quarterly, whether or
not such dividends are declared by the Board of Directors. Upon the occurrence
of any Series B Default, then, in addition to any rights or remedies provided
herein or at law or in equity to the holders of the Series B Preferred Stock,
the Series B Coupon Rate with respect to dividends accruing from and after the
date of such Default and during the continuance thereof shall be increased to
an annual rate of fifteen and one-half percent (15.5%), compounded quarterly as
set forth above.

 

(b)          
Designated Preferred Stock.  Subject to Sections 2(a) and 7(b), the
holders of outstanding shares of Series A Redeemable Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available therefor, prior to the payment of any dividends on the
Common Stock or any other class or series of capital stock ranking with respect
to the payment of dividends junior to the Series A Redeemable Preferred Stock,
dividends at the rate of six per cent (6%) of the per share purchase price of
One Dollar ($1.00) per annum per share of Series A Redeemable Preferred Stock
(as adjusted for subsequent stock dividends, stock splits, combinations,
recapitalizations or the like with respect to such share) from the date of
original issuance of such share, which dividends shall be cumulative and accrue
daily in arrears and be compounded annually, whether or not such dividends are
declared by the Board of Directors; provided, that upon payment of any
dividend in respect of any share of Series A Redeemable Preferred Stock, the
Corporation shall simultaneously pay to the holders of Series B Preferred Stock
a dividend in an amount equal to the Series B Preferred Participation
Percentage of the aggregate amount so paid in respect of the Series A
Redeemable Preferred Stock.

 

 

5

 

(c)          
Participation in Distributions on Common Stock.  Whenever the
Corporation shall either declare or pay any dividend on or make any
distribution with respect to Common Stock, holders of Series B Preferred Stock
shall be entitled to receive such dividends or distributions pro rata on the
basis of the number of shares of Common Stock into which the Series B Preferred
Stock could then be converted.

 

3.            
Liquidation; Merger, etc.

 

(a)          
Liquidation Preference.

 

(i)           
Series B Preferred Stock.  Upon any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary (a “Liquidation
Event”), each holder of outstanding shares of Series B Preferred Stock
shall be entitled to be paid in cash, before any amount shall be paid or
distributed to the holders of Series A Redeemable Preferred Stock, Common Stock
or any other class or series of capital stock ranking on liquidation junior to
the Series B Preferred Stock, an amount per share equal to the sum (such
sum, the “Series B Senior Liquidation Preference Amount”) of the
following:  (A) $177.6262 (as such amount is adjusted appropriately for
stock splits, stock dividends, recapitalizations and the like with respect to
the Series B Preferred Stock, the “Series B Original Issue Price”), plus
(B) an amount equal to all accumulated but unpaid dividends on such share
of Series B Preferred Stock; plus (C) the applicable Series B Premium
Amount, if any.  If the amounts available for distribution by the Corporation
to holders of Series B Preferred Stock upon a Liquidation Event are not
sufficient to pay the aggregate Series B Senior Liquidation Preference Amount,
then the entire assets and funds of the Corporation legally available for
distribution shall be distributed among the holders of the Series B Preferred
Stock in proportion to the Series B Senior Liquidation Preference Amount each
such holder is otherwise entitled to receive pursuant to this
Section A.3(a)(i).

 

(ii)          
Series A Redeemable Preferred Stock.  Upon any Liquidation Event,
each holder of outstanding shares of Series B Preferred Stock and Series A
Redeemable Preferred Stock shall be entitled on a pari passu basis to be paid in cash, before any amount shall
be paid or distributed to the holders of Common Stock or any other class or
series of capital stock ranking on liquidation junior to the Series A
Redeemable Preferred Stock, the following respective amounts (collectively, the
“Series A/B Liquidation Preference Amount”):

 

(A)         
With respect to each share of Series A Redeemable Preferred Stock, an amount
equal to (I) One Dollar ($1.00), plus (II) an amount equal to all
accumulated but unpaid dividends on such share of Series A Redeemable Preferred
Stock (such amount to be adjusted appropriately for stock splits, stock
dividends, recapitalizations and the like with respect to the Series A
Redeemable Preferred Stock) (the “Series A Redeemable Liquidation Preference
Amount”); and

 

(B)          
With respect to each share of Series B Preferred Stock, an amount equal to the
Aggregate Series B Preferred Participation Amount divided by the number of
then-outstanding shares of Series B Preferred Stock.

 

 

6

 

If the amounts available for distribution by the
Corporation to holders of Series A Redeemable Preferred Stock upon a
Liquidation Event are not sufficient to pay the aggregate Series A/B
Liquidation Preference Amount, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed among the
holders of the Designated Preferred Stock on a pari
passu basis in proportion to the Series A/B Liquidation Preference
Amount each such holder is otherwise entitled to receive pursuant to this
Section A.3(a)(ii).

 

(b)          
Remaining Assets.  In connection with a Liquidation Event, after
the prior payment in full of the aggregate Series B Senior Liquidation
Preference Amount, the Series A/B Liquidation Preference Amount and,
thereafter, any amount payable upon a Liquidation Event to the holders of any
other class or series of capital stock ranking on liquidation senior to the
Common Stock, the remaining assets and funds of the Corporation available for
distribution to its stockholders, if any, shall be distributed ratably to the
holders of the Common Stock and the holders of Series B Preferred Stock, as a
single class, in proportion to the respective number of shares of Common Stock
actually held by them and the respective number of shares of Common Stock (including
any fractional shares) into which the shares of Series B Preferred Stock could
be converted as of the date of the Liquidation Event.

 

(c)          
Amount Payable in Mergers, etc. Each of the holders of not less than a
majority of the outstanding shares of Series A Redeemable Preferred Stock (the
“Series A Required Holders”) and the holders of not less than a majority
of the outstanding shares of Series B Preferred Stock (the “Series B
Required Holders”) may elect to have treated, as to the series which shall
have so elected, as a Liquidation Event: (i) any merger or consolidation of the Corporation into or
with another corporation (except one in which the holders of capital stock of
the Corporation immediately prior to such merger or consolidation continue to
hold, in substantially the same relative proportions, at least a majority of
the economic interests and voting power of the capital stock of the surviving
corporation), (ii) any sale, lease or transfer of all or substantially all of
the assets of the Corporation, or (iii) any other transaction pursuant to or as
a result of which a single person (or group of affiliated persons) other than
Great Hill (together with its affiliates) acquires
or holds capital stock of the Corporation representing a majority of votes
entitled to be cast in any election of directors of the Corporation (a “Change
of Control Transaction”). In addition, the Series B Required Holders may
also elect to have treated as a Change of Control Transaction and thus as a
Liquidation Event any “Change of Control” (as defined in the Series B Purchase
Agreement).  If such election is made, all consideration payable to the
stockholders of the Corporation in connection with any such merger,
consolidation, or Change of Control Transaction, or all consideration payable
to the Corporation and distributable to its stockholders, together with all
other available assets of the Corporation (net of obligations owed by the
Corporation that are senior to any outstanding Designated Preferred Stock), in
connection with any such asset sale, shall be paid by the purchaser to the
holders of, or distributed by the Corporation in redemption (out of funds
legally available therefor) of, such series of capital stock of the Corporation
in accordance with the preferences and priorities set forth in
Section A.3(a) and Section A.3(b), above, with such preferences and
priorities specifically intended to be applicable in any such merger,
consolidation, asset sale, or Change of Control Transaction as if such transaction
were a Liquidation Event (including, with respect to the Series B Preferred
Stock, payment of the Aggregate Series B Preferred Participation Amount and all
amounts that would be payable under Section A.3(b), irrespective of
whether the Series A

 

 

7

 

Preferred
Stock has so elected).  In furtherance of the foregoing, the Corporation
shall take such actions as are necessary to give effect to the provisions of
this Section A.3(c), including without limitation, (i) in the case of
a merger, consolidation or Change of Control Transaction, causing the
definitive agreement relating to such merger, consolidation or Change of
Control Transaction to provide for a rate at which the shares of capital stock
of the Corporation are converted into or exchanged for cash, new securities or
other property which gives effect to the preferences and priorities of the
capital stock of the Corporation as set forth in Section A.3(a) and
Section A.3(b) above, or (ii) in the case of an asset sale, (A)
paying in full the Series B Senior Liquidation Preference Amount, (B)
thereafter paying in full the Series A/B Liquidation Preference Amount and (C)
thereafter distributing any remaining amounts pursuant to Section A.3(a),
in each case to the extent of available funds and on the terms provided
herein.  The Corporation shall promptly provide to the holders of shares
of Designated Preferred Stock such information concerning the terms of such
merger, consolidation, asset sale, or Change of Control Transaction and the
value of the assets of the Corporation as may reasonably be requested by any
holder of Designated Preferred Stock.  The amount deemed distributed to
the holders of shares of capital stock of the Corporation upon any such transaction
shall be the cash or the value of the property, rights or securities
distributed to such holders by the Corporation or the acquiring person, firm or
other entity.  Any election pursuant to this Section A.3(c) by a
Series A Required Holders or the Series B Required Holders shall be made by
written notice to the Corporation at least five (5) days prior to the closing
of the relevant transaction.  Upon any such election, all holders of
Designated Preferred Stock, shall be deemed to have made such election and such
election shall bind all such holders.

 

(d)          
Valuation of Securities or Other Non-Cash Consideration.  For
purposes of valuing any securities or other noncash consideration to be
delivered to the holders of the Designated Preferred Stock in connection with
any transaction to which Section A.3(c) is applicable, the following shall
apply:

 

(i)           
If any such securities are traded on a nationally recognized securities
exchange or inter-dealer quotation system, the value shall be deemed to be the
average of the closing prices of such securities on such exchange or system
over the 30-day period ending three (3) business days prior to the closing;

 

(ii)          
If any such securities are traded over-the-counter, the value shall be deemed
to be the average of the closing bid prices of such securities over the 30-day
period ending three (3) business days prior to the closing; and

 

(iii)         
If there is no active public market for such securities or other noncash
consideration, the value shall be the fair market value thereof, as mutually
determined in good faith by the Corporation, the Series B Required Holders and
the Series A Required Holders; provided, that if the Corporation and
such holders are unable to reach agreement, then by independent appraisal by a
mutually agreed to investment banker, the fees of which shall be paid by the
Corporation.

 

4.            
Mandatory and Optional Distributions in Respect of Series B Preferred Stock.

 

(a)          
Mandatory Distributions.  The Series B Required Holders may elect
to require the Corporation to make a mandatory payment in cash in an amount
equal to all but not less than all of the Series B Senior Liquidation
Preference (A) on or at any time after March 3, 

 

 

8

 

2010 (the
“Series B Maturity Date”), or (B) upon the closing of the
Corporation’s initial public offering of common equity securities pursuant to
an effective registration statement under the Securities Act of 1933, as amended
(an “IPO”).  In such event, the Corporation shall pay in cash, out
of funds legally available therefor, the Series B Senior Liquidation
Preference Amount to the holders of Series B Preferred Stock on the Series B
Mandatory Distribution Date set forth below.  Any election by the Series B
Required Holders pursuant to this Section A.4(a) shall be made by written
notice to the Corporation and the other holders of Series B Preferred Stock at
least fifteen (15) days prior to the date elected by the Series B Required
Holders for such payment (the “Series B Mandatory Distribution Date”). 
Upon such election, all holders of Series B Preferred Stock shall be deemed to
have elected to receive payment of their pro rata portion of the Series B
Senior Liquidation Preference Amount pursuant to this Section A.4(a) and
such election shall bind all holders of Series B Preferred Stock.

 

(b)          
Optional Prepayments of Series B Senior Liquidation Preference Amount. 
At any time after repayment in full of the senior subordinated notes issued
pursuant to the Series B Purchase Agreement (the “BACI Notes”), the
Corporation shall be entitled at its option to distribute cash in full in an
amount equal to all, but not less than all (except in connection with a
Liquidation Event in which the proceeds available for distribution are
insufficient therefor), of the Series B Senior Liquidation Preference Amount as
of the date of such payment, upon the delivery by the Corporation of not less
than five (5) business days’ advance written notice of the Corporation’s desire
to make such payment.

 

(c)          
Insufficient Funds. If the funds of the Corporation legally available to
distribute to holders of the Series B Preferred Stock on the Series B Mandatory
Distribution Date, are insufficient to pay in full in cash the Series B Senior
Liquidation Preference Amount on such date, the Corporation shall take any
action necessary or appropriate, to the extent reasonably within its control,
to remove promptly any impediments to its ability to make such distribution in
full, and, in any event, shall use any funds that are legally available to pay
the maximum possible amount to the holders of Series B Preferred Stock in
proportion to the portion of the Series B Senior Liquidation Preference Amount
each such holder is then entitled to receive in full.  At any time
thereafter when additional funds of the Corporation are legally available to
distribute to holders of capital stock of the Corporation, the Corporation
shall immediately use such funds to distribute to the holders of Series B
Preferred Stock the balance of the Series B Senior Liquidation Preference
Amount to the full extent of such available funds.

 

(d)          
No Dividends After Distribution in Full.  Upon payment in full of
the Series B Senior Liquidation Preference Amount, no further dividends shall
accrue pursuant to Section A.2(a) in respect of the Series B Preferred
Stock; provided, that (i) so long as any share of Series B Preferred
Stock remains outstanding, the holder thereof shall remain entitled to
participate in dividends and distributions made in respect of (A) the Series A
Redeemable Preferred Stock as set forth in Section A.2(b) and (B) the
Common Stock as set forth in Section A.2(c) and (ii) in the event that any
portion of the Series B Senior Liquidation Preference Amount remains unpaid,
such shares of Series B Preferred Stock shall continue to be entitled to
dividends thereon as provided in Section A.2(a) until the date on which
the Corporation actually pays the Series B Senior Liquidation Preference Amount
in full.

 

 

9

 

5.            
Redemption.  The Designated Preferred Stock shall be entitled to
the redemption rights set forth in this Section A.5.

 

(a)          
Redemption at Option of the Series A Required Holders.  The Series
A Required Holders may elect to have all (but not less than all) of the
outstanding shares of Designated Preferred Stock redeemed (A) on or at any time
after March 3, 2011 (the “Series A Redeemable Maturity Date”) or
(B) upon the closing of the Corporation’s IPO.  In such event, the
Corporation shall redeem all (but not less than all) of the outstanding shares
of Designated Preferred Stock in cash, out of funds legally available therefor,
at the Series A Redeemable Redemption Price or the Series B Redemption
Price, each as specified in Section A.5(b).  Any election by the
Series A Required Holders pursuant to this Section A.5(a) shall be made by
written notice to the Corporation and the other holders of Designated Preferred
Stock at least fifteen (15) days prior to the date elected by the Series A
Required Holders for redemption (the “Series A Redeemable Redemption
Date”).  Upon such election, all holders of Designated Preferred Stock
shall be deemed to have elected to have their shares of Designated Preferred
Stock redeemed pursuant to this Section A.5(a) and such election shall
bind all holders of Designated Preferred Stock.

 

(b)          
Redemption Price.  The price for each share of Designated Preferred
Stock redeemed pursuant to this Section A.5 shall be as follows:

 

(i)           
With respect to each share of Series A Redeemable Preferred Stock, an amount of
cash equal to the Series A Redeemable Liquidation Preference Amount as of such
date (such amount to be adjusted appropriately for stock splits, stock
dividends, combinations, recapitalizations (the “Series A Redeemable
Redemption Price”)); and

 

(ii)          
With respect to each share of Series B Preferred Stock, (A) payment of an
amount of cash equal to the Aggregate Series B Senior Participation Amount as
of such date divided by the number of then-outstanding shares of Series B
Preferred Stock and (B) issuance by the Corporation of that number of shares of
fully-paid and non-assessable Common Stock into which the Series B Preferred
Stock could then be converted pursuant to Section A.6 (the “Series B
Redemption Price”).

 

The aggregate Series A Redeemable Redemption Price and the
cash component of the Series B Redemption Price shall be payable, out of funds
legally available therefor, in cash in immediately available funds to the
respective holders of the Designated Redeemable Preferred Stock on the
Designated Preferred Redemption Date.

 

(c)          
Redemption of Series B Preferred Stock at the Option of the Corporation. 
At any time after repayment in full of the BACI Notes and after or concurrently
with the payment in full of the Series B Senior Liquidation Preference Amount,
the Corporation may voluntarily redeem, all, but not less than all of the
Series B Preferred Stock at the Series B Redemption Price by payment in cash in
full of the cash component thereof and concurrent issuance of the Common Stock
component thereof; provided, that if such redemption is effected without
concurrent redemption of the outstanding shares of Series A Redeemable
Preferred Stock, (i) the Corporation shall have obtained the consent thereto of
Series A Required Holders and (ii) the Series B Preferred Participation Amount
shall be calculated based on the aggregate Series A Redeemable Preferred Stock
Liquidation Preference Amount as of the date of such redemption. Upon the
delivery by the Corporation of written notice to the holders of Series B

 

 

10

 

Preferred
Stock stating the Corporation’s desire to redeem the Series B Preferred Stock
pursuant to this Section A.4(c), each holder of Series B Preferred Stock
shall be required to tender for redemption all of the Series B Preferred Stock
held by each such holder.  Each holder shall deliver certificates for the
shares of Series B Preferred Stock to be redeemed by the Corporation (or such
affidavits, indemnity and undertakings as would be necessary to replace any
such certificate claimed to have been lost, stolen or destroyed) at the closing
therefor held within ten (10) business days after the date of the Corporation’s
written notice, against (i) payment of the cash component of Series B
Redemption Price therefor made in cash or other immediately available funds and
(ii) delivery of a certificate for the fully-paid and non-assessable shares of
Common Stock representing the Common Stock component of such Series B
Redemption Price.

 

(d)          
Insufficient Funds. If the funds of the Corporation legally available to
redeem shares of Designated Preferred Stock on the Designated Preferred
Redemption Date, are insufficient to redeem the total number of such shares
required to be redeemed on such date, the Corporation shall take any action
necessary or appropriate, to the extent reasonably within its control, to
remove promptly any impediments to its ability to redeem the total number of
shares of Designated Preferred Stock required to be so redeemed, and, in any
event, shall use any funds that are legally available to redeem on a pari passu basis the maximum possible
number of such shares from the holders of such shares to be redeemed in
proportion to the respective cash redemption prices that otherwise would have
been paid if all such shares had been redeemed in full.  At any time
thereafter when additional funds of the Corporation are legally available to
redeem such shares of Designated Preferred Stock, the Corporation shall
immediately use such funds to redeem the balance of the shares which the
Corporation has become obligated to redeem on the Designated Preferred
Redemption Date, (but which it has not redeemed), at the respective Series A
Redeemable Redemption Price or Series B Preferred Redemption Price.

 

(e)          
Dividends After Redemption Date.  In the event that shares of
Designated Preferred Stock, required to be redeemed are not redeemed and
continue to be outstanding, such shares shall continue to be entitled to
dividends thereon as provided in Section A.2 until the date on which the
Corporation actually redeems such shares.

 

(f)           
Surrender of Certificates.  Each holder of shares of Designated
Preferred Stock to be redeemed shall surrender the certificate or certificates
representing such shares to the Corporation, duly assigned or endorsed for
transfer to the Corporation (or accompanied by duly executed stock powers
relating thereto), or, in the event the certificate or certificates are lost,
stolen or missing, shall deliver an affidavit of loss, at the principal
executive office of the Corporation or such other place as the Corporation may
from time to time designate by notice to the holders of Designated Preferred
Stock, and each surrendered certificate shall be canceled and retired against
(i) payment of the cash component of redemption price therefor made in cash or
other immediately available funds and (ii) with respect to holders of the
Series B Preferred Stock, delivery of a certificate for the fully-paid and
non-assessable shares of Common Stock representing the Common Stock component
of the Series B Redemption Price; provided, however, that if the
Corporation has insufficient funds legally available to redeem all shares of
Designated Preferred Stock, required to be redeemed, each holder shall, in
addition to receiving the payment of the portion of the aggregate redemption
price that the Corporation is not legally prohibited from paying to such holder
by certified check or wire transfer, receive a new stock certificate for those
shares of Designated Preferred Stock not so redeemed.

 

 

11

 

6.            
Conversion of Series B Preferred Stock.  The holders of the Series
B Preferred Stock shall have conversion rights as follows:

 

(a)          
Right to Convert.  Each share of Series B Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share at the office of the Corporation or any transfer agent
for the Series B Preferred Stock, into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing the Series B Original Issue
Price by the Conversion Price then in effect.  The initial “Conversion
Price” for the Series B Preferred Stock shall be equal to the Series B Original
Issue Price and shall be subject to adjustment as hereinafter set forth.

 

 (b)         
Automatic Conversion of Series B Preferred Stock.  Each share of
Series B Preferred Stock shall automatically be converted into one or more
share(s) of Common Stock based upon the then-effective Conversion Price upon
the final, indefeasible payment in full of the Series B Senior Liquidation
Preference Amount and the Series B Preferred Participation Amount.

 

(c)          
Mechanics of Conversion.  Before any holder of Series B Preferred Stock
shall be entitled to convert the same into full shares of Common Stock, such
holder shall surrender the certificate or certificates therefor, duly endorsed,
at the office of the Corporation or of any transfer agent for the Series B
Preferred Stock and shall give written notice to the Corporation at such office
that such holder elects to convert the same.  In the event of an automatic
conversion, the outstanding shares of Series B Preferred Stock shall be
converted automatically without any further action by the holders of Series B
Preferred Stock and whether or not the certificates representing such shares
are surrendered to the Corporation or its transfer agent. The Corporation shall
not be obligated to issue certificates evidencing Common Stock issuable upon
automatic conversion unless and until the certificates representing the Series
B Preferred Stock are surrendered to the Corporation or its transfer
agent.  No fractional shares of Common Stock shall be issued upon
conversion of the Series B Preferred Stock.

 

The
Corporation shall, as soon as practicable after surrender of the certificates
for the Series B Preferred Stock, issue and deliver at the office of the
Corporation to such holder of Series B Preferred Stock (i) a certificate or
certificates for the number of shares of Common Stock to which such holder
shall be entitled as aforesaid and, if applicable, (ii) cash or a check payable
to the holder equal to any cash amounts payable as the result of a conversion
into fractional shares of Common Stock.  Such conversion shall be deemed
to have been made at the time of surrender of the Series B Preferred Stock to
be converted or, in the case of an automatic conversion, as provided in
Section A.6(b), and the person or persons entitled to receive the Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such Common Stock at such time.

 

(d)          
Treatment of Fractional Shares.  All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share
of Series B Preferred Stock by a holder thereof shall be aggregated for
purposes of determining whether the conversion would result in the issuance of
any fractional share.  If, after such aggregation, the conversion would
result in the issuance of a fractional share of Common Stock, the Corporation
shall, in lieu of issuing any fractional shares to which the holder would
otherwise be entitled, pay cash equal

 

 

12

 

to the fair market value of
such fractional share on the date of conversion, as determined in good faith by
the Board of Directors.

 

(e)          
Adjustments to Conversion Price.

 

(i)           
Special Definitions.  For purposes of this Section A.6(e), the
following definitions shall apply:

 

(A)         
“Additional Common Shares” means all Common Stock issued (or, pursuant
to Section A.6(e)(iii), deemed to be issued) by the Corporation after the
Series B Original Issue Date, other than Common Stock issued or issuable at any
time:

 

(1)          
upon conversion of the Series B Preferred Stock;

 

(2)          
upon exercise of any Employee Option;

 

(3)          
upon exercise of any Warrant;

 

(4)          
as a dividend or distribution on the Series B Preferred Stock; and

 

(5)          
by way of dividend or other distribution on Common Stock excluded from the
definition of Additional Common Shares by the foregoing clauses.

 

(B)          
“Convertible Securities” means any evidence of indebtedness, shares or
other securities convertible into or exchangeable for Common Stock, whether at
any time or upon the occurrence of a stated event or otherwise, other than the
Series B Preferred Stock and the Warrants.

 

(C)          
“Employee Options” means the Options issued at any time pursuant to any
stock option plan of the Corporation approved by its Board of Directors.

 

(D)         
“Fully-Diluted Basis” means with respect to the Common Stock, as of a
particular time and without duplication, the total outstanding shares of Common
Stock as of such time, determined by treating all outstanding Options as having
been exercised and by treating all Convertible Securities (including
Convertible Securities issuable upon exercise of an Option) as having been so
converted; provided, that if at any time of determination, the event
giving rise to any adjustment hereunder would trigger any anti-dilution rights
of such Options or Convertible Securities or otherwise increase the number of
shares of Common Stock subject to such Options or into which such Convertible
Securities are convertible or exchangeable, the number of shares of Common
Stock deemed to be outstanding immediately after such issuance shall include
also such increase in

 

 

13

 

the number of shares of
Common Stock subject to such Options or into which such Convertible Securities
are convertible or exchangeable.

 

(E)          
“Options” means rights, options or warrants to subscribe for, purchase
or otherwise acquire either Common Stock or Convertible Securities.

 

(F)          
“Series B Original Issue Date” means March 3, 2004.

 

(G)          
“Trigger Price” means, with respect to any issuance or deemed issuance
of Additional Shares of Common Stock, the Fair Market Value Per Share (as
defined in the Series B Purchase Agreement) of Common Stock.

 

(H)         
“Warrants” means the Common Stock Purchase Warrants issued pursuant to
the Warrant Agreement dated as of the Series B Original Issue Date between BACI
and the Corporation, as amended, supplemented or restated from time to time.

 

(ii)          
Adjustments for Subdivisions or Combinations of Common Stock.  In
the event that at any time or from time to time the Corporation shall:

 

(A)         
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend payable in, or other distribution of, Common Stock
(a “Stock Dividend”),

 

(B)          
subdivide its outstanding shares of Common Stock into a larger number of shares
of Common Stock, including without limitation by means of a stock split (a
“Stock Subdivision”), or

 

(C)          
combine its outstanding shares of Common Stock into a smaller number of shares
of Common Stock (a “Stock Combination”),

 

then the Conversion Price in
effect immediately prior thereto shall, concurrently with the effectiveness of
such event, be (1) proportionately decreased in the case of a Stock Dividend or
Stock Subdivision and (2) proportionately increased in the case of a Stock
Combination; provided, that:

 

(I)           
In the event the Corporation shall declare or pay, without consideration, any
dividend on the Common Stock payable in any right to acquire Common Stock for
no consideration, then the Corporation shall be deemed to have made a Stock
Dividend in an amount of shares equal to the maximum number of shares issuable
upon exercise of such rights to acquire Common Stock; and

 

(II)          
A reclassification of the Common Stock into shares of Common Stock and shares
of any other class of stock shall be deemed a

 

 

14

 

distribution by the
Corporation to the holders of its Common Stock of such shares of such other
class of stock for purposes of Section A.2(c) above and, if the outstanding
shares of Common Stock shall be changed into a larger or smaller number of
shares of Common Stock as a part of such reclassification, such event shall be
deemed a Stock Subdivision or Stock Combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of
Section A.6.(e)(ii) hereof.

 

(iii)         
Adjustment of Conversion Price Upon Issuance of Additional Common Shares. 
In the event the Corporation, at any time after the Series B Original Issue
Date, shall issue Additional Common Shares (including Additional Common Shares
deemed to be issued pursuant to Section A.6(e)(iv)) without consideration
or for a consideration per share less than the then-effective Trigger Price,
then and in each such event, the Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest $0.001)
determined by multiplying the Conversion Price by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding on a Fully
Diluted Basis immediately prior to such issuance plus the number of
shares of Common Stock which the aggregate consideration received by the
Corporation for the total number of Additional Common Shares so issued would
purchase at the then-effective Trigger Price and the denominator of
which shall be the sum of the number of shares of Common Stock outstanding on a
Fully-Diluted Basis immediately prior to such issuance plus the number
of such Additional Common Shares so issued; provided, that if the event
giving rise to such adjustment would trigger any anti-dilution rights of any
Options or Convertible Securities or otherwise increase the number of shares of
Common Stock subject to any Options or into which any Convertible Securities
are convertible or exchangeable, the number of shares of Common Stock deemed to
be outstanding immediately after such issuance shall include also such increase
in the number of shares of Common Stock subject to such Options or into which
such Convertible Securities are convertible or exchangeable.

 

(iv)         
Deemed Issue of Additional Common Shares.  In the event the
Corporation, at any time or from time to time after the Series B Original Issue
Date, shall issue any Options or Convertible Securities, then the maximum
number of shares of Common Stock (as set forth in the instrument relating
thereto without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in
the case of Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be Additional
Common Shares issued as of the time of such issue or, in case such a record
date shall have been fixed, as of the close of business on such record date; provided,
that in any such case in which Additional Common Shares are deemed to be
issued:

 

(A)         
no further adjustment in the Conversion Price shall be made upon the subsequent
issue of Convertible Securities or shares of Common Stock upon the exercise of
such Options or conversion or exchange of such Convertible Securities;

 

 

15

 

(B)          
if such Options or Convertible Securities by their terms provide, with the
passage of time or otherwise, for any increase or decrease in the consideration
payable to the Corporation, or in the number of shares of Common Stock issuable
upon the exercise, conversion or exchange thereof, the Conversion Price
computed upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities;

 

(C)          
upon the expiration of any such Options or any rights of conversion or exchange
under such Convertible Securities which shall not have been exercised, the
Conversion Price computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be recomputed as if:

 

(I)           
in the case of Convertible Securities or Options for Common Stock, the only
Additional Common Shares issued, if any, were shares of Common Stock actually
issued upon the exercise of such Options or the conversion or exchange of such
Convertible Securities and the consideration received therefor was the
consideration actually received by the Corporation for the issue of all such
Options, whether or not exercised, plus the consideration actually received by
the Corporation upon such exercise, or for the issue of all such Convertible
Securities which were actually converted or exchanged, plus the additional
consideration, if any, actually received by the Corporation upon such
conversion or exchange; and

 

(II)          
in the case of Options for Convertible Securities, the only Convertible Securities
issued, if any, were Convertible Securities actually issued upon the exercise
of such Options, and the consideration received by the Corporation for the
Additional Common Shares deemed to have been issued was the consideration
actually received by the Corporation for the issue of all such Options, whether
or not exercised, plus the consideration actually received by the Corporation
upon the issue of the Convertible Securities with respect to which such Options
were actually exercised;

 

(D)         
no readjustment pursuant to clause (B) or (C) above shall have the effect of
increasing the Conversion Price to an amount which exceeds the lower of (I) the
Conversion Price on the original adjustment date, or (II) the Conversion Price
that would have resulted from any issuance of Additional Common Shares between
the original adjustment date and such readjustment for which no adjustment was
made; and

 

 

16

 

(E)          
in the case of any Options which expire by their terms not more than 60 days
after the date of issue thereof, no adjustment of the Conversion Price shall be
made until the expiration or exercise of all such Options, unless the closing
of an IPO or Liquidity Event occurs during such interim period.

 

(v)          
Determination of Consideration.  For purposes of this
Section A.6(e), the consideration received by the Corporation for the
issue of any Additional Common Shares shall be computed as follows:

 

(A)         
Cash and Property.  Such consideration shall:

 

(1)          
insofar as it consists of cash, be computed at the aggregate amount of cash
received by the Corporation;

 

(2)          
insofar as it consists of securities, be computed as set forth in
Section A.3(d) above;

 

(3)          
insofar as it consists of property other than cash or securities, be computed
at the fair market value thereof at the time of such issue, as determined in
good faith by the Board of Directors; and

 

(4)          
in the event Additional Common Shares are issued together with other shares or
securities or other assets of the Corporation for consideration so received, be
computed as provided in clauses (1) through (3) above, as determined in good
faith by the Board of Directors.

 

(B)          
Options and Convertible Securities.  The consideration per share
received by the Corporation for Additional Common Shares deemed to have been
issued pursuant to Section A.6(e)(iv)(A), relating to Options and
Convertible Securities, shall be determined by dividing:

 

(1)          
the total amount, if any, received or receivable by the Corporation as
consideration for the issue of such Options or Convertible Securities, plus the
minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such consideration) payable to the Corporation
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities, or in the case of Options for Convertible Securities,
the exercise of such Options for Convertible Securities and the conversion or
exchange of such Convertible Securities, by

 

(2)          
the maximum number of shares of Common Stock (as set forth in the instruments
relating thereto, without regard to any provision contained therein or a
subsequent adjustment of such number)

 

 

17

 

issuable upon the exercise
of such Options or the conversion or exchange of such Convertible Securities.

 

(vi)         
Adjustments for Other Distributions.  In the event the Corporation
at any time or from time to time makes, or fixes a record date for, a
determination of holders of Common Stock entitled to receive any distribution
payable in securities or other property of the Corporation other than Common
Stock and other than as otherwise adjusted in this Section A.6, then and
in each such event, provision shall be made so that the holders of Series B
Preferred Stock shall receive upon conversion thereof, in addition to the
number of shares of Common Stock receivable thereupon, the amount of securities
and other property of the Corporation which they would have received had their
shares of Series B Preferred Stock been converted into Common Stock on the date
of such event and had they thereafter, during the period from the date of such
event to and including the date of conversion, retained such securities and
other property receivable by them as aforesaid during such period, subject to
all other adjustments called for during such period under this Section A.6
with respect to the rights of the holders of the Series B Preferred Stock.

 

(vii)        
Adjustments for Reclassification, Exchange and Substitution.  If
the Common Stock issuable upon conversion of the Series B Preferred Stock shall
be changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclassification, merger,
share exchange or otherwise (other than a Stock Subdivision or Stock
Combination provided for above), the Conversion Price then in effect shall,
concurrently with the effectiveness of such reorganization, reclassification,
merger, share exchange or other transaction, be appropriately and equitably
adjusted such that the Series B Preferred Stock shall be convertible into, in
lieu of the number of shares of Common Stock which the holders would otherwise
have been entitled to receive, that number of shares of such other class or
classes of stock equivalent to the number of shares of Common Stock that would
have been subject to receipt by the holders upon conversion of the Series B
Preferred Stock immediately before such change.

 

(f)           
No Impairment of Series B Preferred Stock.  In case at any time or
from time to time the Corporation shall take any action affecting its Common
Stock, other than an action described above in this Section A.6, then,
unless in the opinion of the Board of Directors of the Corporation such action
will not have a material adverse effect upon the rights of the holders of
Series B Preferred Stock (taking into consideration, if necessary, any prior
actions which the Board of Directors deemed not to materially adversely affect
the rights of the holders), the Conversion Price shall be adjusted in such
manner and at such time as the Board of Directors of the Corporation may in
good faith determine to be equitable in the circumstances.  The
Corporation shall not, by amendment of its Articles of Incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities, recapitalization or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation but shall at all times in
good faith assist in the carrying out of all the provisions of this
Section A.6

 

 

18

 

and in the taking of all
such action as may be necessary or appropriate in order to protect the
conversion rights of the holders of the Series B Preferred Stock against
impairment.

 

(g)          
Certificate as to Adjustments.  Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this
Section A.6, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
each holder of shares of Series B Preferred Stock a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based.  The Corporation shall, upon the
written request at any time of any holder of Series B Preferred Stock, furnish
or cause to be furnished to such holder a like certificate setting forth (i)
such adjustments and readjustments, (ii) the Conversion Price at the time in
effect and (iii) the number of shares of Common Stock and the amount, if any,
of other property which at the time would be received upon the conversion of
shares of Series B Preferred Stock, as applicable.

 

(h)          
Notices of Record Date.  In the event that the Corporation shall
propose at any time:

 

(i)           
to declare any dividend or distribution upon its Common Stock, whether or not a
regular cash dividend or a dividend payable in shares of capital stock and
whether or not out of earnings or earned surplus;

 

(ii)          
to offer for subscription pro rata to the holders of any class or series
of its stock any additional shares of stock of any class or series, or any
other rights;

 

(iii)         
to effect any reclassification or recapitalization of its outstanding Common
Stock involving a change in the Common Stock; or

 

(iv)         
to merge or consolidate with or into any other corporation, or sell, lease or
convey all or substantially all of its property or business, or to liquidate,
dissolve or wind up or enter into any share exchange; then, in connection with
each such event, the Corporation shall send to the holders of the Series B
Preferred Stock:

 

(A)         
at least twenty (20) days’ prior written notice of the date on which a record
shall be taken for such dividend, distribution or subscription rights (and
specifying the date on which the holders of Common Stock shall be entitled
thereto) or for determining rights to vote in respect of the matters referred
to in clauses (iii) and (iv) above; and

 

(B)          
in the case of matters referred to in clauses (iii) and (iv) above, in the
event a record date is taken with respect to any such matter, at least twenty
(20) days’ prior written notice of such record date or, if no such record date
is taken, at least twenty (20) days’ prior written notice of the date when such
matters shall take place (and specifying the date on which the holders of Common
Stock shall be entitled to exchange their shares of Common Stock for securities
or other property deliverable upon the occurrence of such event).

 

 

19

 

Each
such written notice shall be delivered personally or sent by commercial
overnight courier service, telecopy or first class mail, postage prepaid,
addressed to the holders of the Series B Preferred Stock at the address for
each holder as shown on the books of the Corporation.  Each such notice shall
be deemed to be duly given: when delivered by hand, if personally delivered;
when delivered by courier, if delivered by commercial overnight courier
service; and five (5) business days after being deposited in the mail, postage
prepaid, if mailed.

 

(i)           
Issue Taxes.  The Corporation shall pay any and all issue and other
taxes that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of Series B Preferred Stock pursuant hereto; provided,
that the Corporation shall not be obligated to pay any transfer taxes resulting
from any transfer requested by any holder in connection with any such
conversion.

 

7.            
Voting; Covenants.

 

(a)          
Series A Redeemable Preferred Stock.  Except as otherwise required under
applicable law or as set forth in this Section A.7, the holders of
Series A Redeemable Preferred Stock, in their capacity as such, shall not be
entitled or permitted to vote on any matter required or permitted to be voted
upon by the stockholders of the Corporation.  Notwithstanding the
foregoing, the Corporation shall not, without first having provided written
notice of such proposed action to each holder of outstanding shares of Series A
Redeemable Preferred Stock and having obtained the affirmative vote or written
consent of the Series A Required Holders:

 

(i)           
declare or pay any dividends on, or make any distributions of cash, property or
securities of the Corporation in respect of, or apply any of its assets to the
redemption, retirement, purchase or other acquisition of, the Common Stock or
any other class or series of capital stock ranking with respect to dividends
and upon liquidation and redemption junior to the Series A Redeemable
Preferred Stock (the “Series A Junior Stock”), directly or indirectly,
through subsidiaries or otherwise, except for (A) the redemption or repurchase
of any Options or shares of Common Stock (the “Excluded Shares”); provided,
that the aggregate price paid for all such repurchased or redeemed Excluded
Shares may not exceed $750,000 in the aggregate or $250,000 in the aggregate in
any twelve-month period, pursuant to the terms of any agreements entered into
between the Corporation and any holders of such Excluded Shares which have been
approved by the Corporation’s Board of Directors; and (B) stock splits or stock
dividends on the Common Stock payable solely in additional shares of Common
Stock;

 

(ii)          
amend or alter the designations, preferences, powers and/or the relative,
participating, optional or other special rights, or the restrictions provided
for the benefit of, the Series A Redeemable Preferred Stock;

 

(iii)         
increase the number of authorized shares of Series A Preferred Stock or issue
any share of Series A Preferred Stock; or

 

(iv)         
authorize, issue or agree to issue, or reclassify any shares of other class or
series of capital stock ranking with respect to dividends and upon liquidation
and redemption junior to the Series A Junior Stock into, any shares or any
security

 

 

20

 

convertible into or exercisable for any shares having any
preference or priority as to dividends, any other distributions, payments or
assets or upon redemption, liquidation, winding up or dissolution superior to
or on a parity with any such preference or priority of the Series A Preferred
Stock.

 

(b)          
Series B Preferred Stock.  Except as otherwise required under
applicable law or as set forth in this Section A.7, the holders of
Series B Preferred Stock, in their capacity as such, shall not be entitled or
permitted to vote on any matter required or permitted to be voted upon by the
stockholders of the Corporation. The holder of each share of Series B Preferred
Stock issued and outstanding shall be entitled to the number of votes as is
equal to the number of shares of Common Stock into which such holder’s shares
of Series B Preferred Stock, respectively, could then be converted at the
record date for determination of stockholders entitled to vote for any given
vote, or, if no such record date is established, at the date such vote is taken
or any written consent of stockholders is solicited, and shall have voting
rights and powers equal to the voting rights and powers of the Common Stock,
such votes to be counted together with all other shares of stock of the
Corporation having general voting power and not separately as a class. In
addition to the foregoing, the Corporation shall not, without first having
provided written notice of such proposed action to each holder of outstanding
shares of Series B Preferred Stock and having obtained the affirmative vote or
written consent of the Series B Required Holders:

 

(i)           
amend this Amended and Restated Certificate of Incorporation in any manner having
an adverse effect on the holders of outstanding shares of Series B Preferred
Stock, or alter or change the preferences, rights, privileges or powers of, or
the restrictions provided for the benefit of, the Series B Preferred Stock (by
recapitalization, merger, consolidation or otherwise);

 

(ii)          
increase the number of authorized shares of Series B Preferred Stock or issue
any share of Series B Preferred Stock or authorize, issue or agree to issue any
class or series of capital stock ranking with respect to dividends and upon
liquidation and redemption pari passu
with the Series B Preferred Stock;

 

(iii)         
authorize, issue or agree to issue, or reclassify any shares of other class or
series of capital stock ranking with respect to dividends and upon liquidation
and redemption junior to the Series B Preferred Stock (the “Series B
Junior Stock”) into, any shares or any security convertible into or
exercisable for any shares having any preference or priority as to dividends,
any other distributions, payments or assets or upon redemption, liquidation,
winding up or dissolution superior to or on a parity with any such preference
or priority of the Series B Preferred Stock or issue or agree to issue any
Series B Junior Stock (other than the Series A Preferred Stock and Common Stock
issuable pursuant to the Additional Share Purchase as defined in the Additional
Series A Purchase Agreement and as in effect on the date hereof);

 

(iv)         
prior to the payment in full in cash of the Series B Senior Liquidation
Preference Amount:

 

(A)         
redeem, repurchase or otherwise acquire for value (or pay into or set aside for
a sinking fund for such purpose) any Series B Junior Stock except for

 

 

21

 

(I) redemptions of the
Series A Redeemable Preferred Stock in which the Series B Preferred Stock
participates in accordance with Section A.5, above; and (II) the
redemption or repurchase of any Excluded Shares; provided, that the
aggregate price paid for all such repurchased or redeemed Excluded Shares may
not exceed $750,000 in the aggregate or $250,000 in the aggregate in any
twelve-month period, pursuant to the terms of any agreements entered into
between the Corporation and any holders of such Excluded Shares which have been
approved by the Corporation’s Board of Directors;

 

(B)          
make, authorize or approve any dividend or distribution upon or with respect to
any Series B Junior Stock, other than stock splits or stock dividends on the
Common Stock payable solely in additional shares of Common Stock; or

 

(C)          
redeem, repurchase or otherwise acquire for value (or pay into or set aside for
a sinking fund for such purpose) any Series A Junior Stock from Great Hill or
any of its affiliates;

 

(v)          
effect, permit or suffer to occur any Change of Control Transaction, unless the
holders of the Series B Preferred Stock receive a cash amount equal to the
Series B Senior Liquidation Preference Amount;

 

(vi)         
take, permit or suffer to occur any action prohibited by Article IX of the
Series B Purchase Agreement (except Section 9.17 thereof) unless duly
approved as set forth therein; or

 

(vii)        
issue or agree to issue, any Employee Options to Great Hill, its principals or
any other affiliate of Great Hill.

 

(c)          
Series B Board Rights.  Following the occurrence of a Series B
Board Trigger Event (as defined below), the Required Series B Holders shall,
upon written notice to the Corporation, be entitled (i) to appoint two (2)
members of the Board of Directors, (ii) to remove from the Board any director
elected under the immediately preceding clause (i), and (iii) to elect each
successor to any such director removed in accordance with the immediately
preceding clause (ii) or who otherwise vacates such office. A “Series B
Board Trigger Event” shall mean (A) an Event of Default (as defined in the
Series B Purchase Agreement) arising out of Section 9.17 of the Series B
Purchase Agreement which remains in existence for two consecutive fiscal
quarters (i.e., the initial
fiscal quarter giving rise to such Event of Default and the next immediately
succeeding fiscal quarter); or (B) any Event of Default as set forth in
Sections 12.01(a), (c), (d), (e), (f), (h), (i), (j) or (l) of the Series B
Purchase Agreement, which continues uncured for more than 30 days.

 

(d)          
Preservation of Rights.  Further, the Corporation shall not, by
amendment, alteration or repeal of Article IV, Section A of this
Amended and Restated Certificate of Incorporation (whether by merger,
consolidation, operation of law, or otherwise) or through any Liquidation Event
or any reorganization, recapitalization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, agreement or any other
voluntary action, avoid or

 

 

22

 

seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation and shall at all times in good faith assist in the carrying out of
all the provisions of Article IV, Section A of this Amended and
Restated Certificate of Incorporation and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holders
of each series of Designated Preferred Stock under Article IV,
Section A of this Amended and Restated Certificate of Incorporation
against impairment.  Any successor to the Corporation shall agree in
writing, as a condition to such succession, to carry out and observe the
obligations of the Corporation hereunder with respect to each series of
Designated Preferred Stock.

 

8.            
Notice.

 

(a)          
Liquidation Events, Etc.  In the event (i) the Corporation
establishes a record date to determine the holders of any class of securities
who are entitled to receive any dividend or other distribution or who are
entitled to vote at a meeting (or by written consent) in connection with any of
the transactions identified in clause (ii) hereof, or (ii) any Liquidation
Event, event deemed a Liquidation Event pursuant to Section A.3(c) hereof,
or initial public offering becomes reasonably likely to occur, the Corporation
shall mail or cause to be mailed by first class mail (postage prepaid) to each
holder of Designated Preferred Stock at least ten (10) business days prior to
such record date specified therein or the expected effective date of any such
transaction, whichever is earlier, a notice specifying (A) the date of such
record date for the purpose of such dividend or distribution or meeting or
consent and a description of such dividend or distribution or the action to be
taken at such meeting or by such consent, (B) the date on which any such
Liquidation Event, event deemed a Liquidation Event pursuant to Section A.5(c)
hereof, or public offering is expected to become effective, and (C) the date on
which the books of the Corporation shall close or a record shall be taken with
respect to any such event.  Such notice shall be accompanied by a
certificate prepared by the chief financial officer of the Corporation
describing in detail (1) the facts of such transaction, (2) the amount per
share of Designated Preferred Stock and Common Stock that each holder of
Designated Preferred Stock, would receive pursuant to the applicable provisions
of this Amended and Restated Certificate of Incorporation, if any, and (3) the
facts upon which such amounts were determined.

 

(b)          
Waiver of Notice.  The Series A Required Holders or the Series B
Required Holders respectively may, at any time upon written notice to the
Corporation, waive any notice provisions specified herein for the benefit of
the holders of such series of Designated Preferred Stock, and any such waiver
shall be binding upon all holders of Series Redeemable Preferred Stock or
Series B Preferred Stock, respectively.

 

(c)          
Other Waivers.  The Series A Required Holders or the Series B
Required Holders respectively may, at any time upon written notice to the
Corporation, waive compliance by the Corporation with any term or provision
herein for the benefit of the holders of such series of Designated Preferred
Stock and, provided that any such waiver does not affect any holder of
outstanding shares of such series, in a manner materially different than any other
holder of such series, and any such waiver shall be binding upon all holders of
all holders of Series Redeemable Preferred Stock or Series B Preferred Stock,
respectively, and their respective transferees.

 

 

23

 

(d)          
General.  In the event that the Corporation provides any notice,
report or statement to any holder of Common Stock, the Corporation shall at the
same time provide a copy of any such notice, report or statement to each holder
of outstanding shares of Designated Redeemable Preferred Stock.

 

9.            
No Reissuance of Designated Preferred Stock.  No share or shares of
Preferred Stock acquired by the Corporation by reason of redemption or
otherwise shall be reissued, and all such shares shall be canceled, retired and
eliminated from the shares which the Corporation shall be authorized to issue.

 

10.          
Contractual Rights of Holders.  The various provisions set forth
herein for the benefit of the holders of the Designated Preferred Stock shall
be deemed contract rights enforceable by them, including, without limitation,
by one or more actions for specific performance.

 

B.           
UNDESIGNATED PREFERRED STOCK

 

Undesignated
Preferred Stock may be issued from time to time in one or more series, each of
such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided.  Any shares
of Undesignated Preferred Stock that may be redeemed, purchased or otherwise
acquired by the Corporation may be reissued except as otherwise provided by law
or this Amended and Restated Certificate of Incorporation.  Different
series of Undesignated Preferred Stock shall not be construed to constitute
different classes of shares for the purposes of voting by classes unless
expressly provided.

 

Subject
to any limitation in such authority contained in this Amended and Restated
Certificate of Incorporation or any written agreement to which the Corporation
is a party, as the same may be amended and/or amended and restated from time to
time, authority is hereby expressly granted to the Board of Directors from time
to time to issue the Undesignated Preferred Stock in one or more series, and in
connection with the creation of any such series, by resolution or resolutions
providing for the issue of the shares thereof, to determine and fix such voting
powers, whether full, limited, or none, and such designations, preferences and
relative participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, including, without limitation thereof,
dividend rights, conversion rights, redemption privileges and liquidation
preferences, as shall be stated and expressed in such resolutions, all to the
full extent now or hereafter permitted by the General Corporation Law of
Delaware and the terms of this Amended and Restated Certificate of
Incorporation, as the same may be amended and/or amended and restated from time
to time.  Without limiting the generality of the foregoing, the
resolutions providing for the issuance of, and the terms of, any series of
Undesignated Preferred Stock may provide that such series shall be superior or
rank equally or be junior to the Preferred Stock of any other series, other
than either series of Designated Preferred Stock, to the extent permitted by
law and the terms of this Amended and Restated Certificate of Incorporation, as
the same may be amended and/or amended and restated from time to time. 
Except as otherwise specifically provided in this Amended and Restated
Certificate of Incorporation or any written agreement to which the Corporation
is a party, as the any of the foregoing may be amended and/or amended and
restated from time to time, no vote of the holders of the Preferred

 

 

24

 

Stock or Common Stock shall
be required for the issuance of any shares of any series of the Undesignated
Preferred Stock authorized by and complying with the conditions of the Amended
and Restated Certificate of Incorporation, as the same may be amended and/or
amended and restated from time to time, the right to have such vote being
expressly waived by all present and future holders of the capital stock of the
Corporation.

 

C.           
COMMON STOCK

 

1.            
Voting.

 

(a)          
Election of Directors.  The holders of Common Stock shall be
entitled to elect all of the Directors of the Corporation other than those directors
that, under this Amended and Restated Certificate of Incorporation, as the same
may be amended and/or amended and restated from time to time, are to be
specifically designated or elected by the holders of any particular class or
series of capital stock of the Corporation.  Such Director(s) shall be
elected by a plurality vote, with the elected candidates being the candidates
receiving the greatest number of affirmative votes (with each holder entitled
to cast one vote for or against each candidate with respect to each share held
by such holder), with votes cast against such candidates and votes withheld
having no legal effect. The election of such Directors shall occur at the
annual meeting of holders of capital stock or at any special meeting called and
held in accordance with the by-laws of the Corporation, or by consent in lieu
thereof in accordance with this Amended Restated Certificate of Incorporation,
as the same may be amended and/or amended and restated from time to time, the
by-laws of the Corporation and applicable law.

 

(b)          
Voting Generally.  Except as otherwise expressly provided herein or
required by law, each holder of outstanding shares of Common Stock shall be
entitled to one (1) vote in respect of each share of Common Stock held thereby
of record on the books of the Corporation for the election of directors and on
all matters submitted to a vote of stockholders of the Corporation.

 

2.            
Dividends.  Subject to the payment in full of all preferential
dividends to which the holders of the Designated Preferred Stock or any other
class or series of capital stock ranking with respect to the payment of
dividends senior to the Common Stock are entitled hereunder, the holders of
Common Stock shall be entitled to receive dividends out of funds legally
available therefor at such times and in such amounts as the Board of Directors
may determine in its sole discretion and subject to the provisions of
Section A.2(c) above.

 

3.            
Liquidation.  Upon any Liquidation Event, including any event
deemed to be a Liquidation Event pursuant to Section A.3(c) above, after
the payment or provision for payment of all debts and liabilities of the
Corporation and all preferential amounts to which the holders of the Designated
Preferred Stock and any other class or series of capital stock ranking on
liquidation senior to the Common Stock are entitled with respect to the
distribution of assets in liquidation, the remaining assets and funds of the
Corporation available for distribution to its stockholders, if any, shall be
distributed ratably to the holders of the Common Stock and the holders of
Series B Preferred Stock, as a single class, in proportion to the respective
number of shares of Common Stock actually held by them and the respective
number of shares of Common

 

 

25

 

Stock (including any fractional
shares) into which the shares of Series B Preferred Stock could be converted as
of the date of the Liquidation Event, as set forth in Section A.3.

 

D.           
LIMITATIONS ON PAYMENT

 

Notwithstanding
anything to the contrary contained herein, no payment or distribution shall be
made in respect of any share of the Corporation’s capital stock and the
Corporation shall not be obligated to take any action hereunder, if such
payment or distribution would result in a default or event of default pursuant
to the terms of any agreement, document or instrument governing the BACI Notes,
the Corporation’s Senior Secured Notes due March 31, 2009 (the “Senior
Secured Notes”) or any Permitted Refinancing Debt issued in exchange for or
used to renew, refund, refinance, replace or discharge the Senior Secured Notes
as defined in and incurred in accordance with the terms of the Series B
Purchase Agreement.

 

ARTICLE V

 

In
furtherance of and not in limitation of powers conferred by statute, it is
further provided:

 

1.            
Election of Directors need not be by written ballot unless the by-laws of the
Corporation so provide.

 

2.            
Except as otherwise specifically provided in this Amended and Restated
Certificate of Incorporation, as the same may be amended and/or amended and
restated from time to time, the Board of Directors is expressly authorized to
adopt, amend or repeal the by-laws of the Corporation to the extent specified
therein.

 

ARTICLE VI

 

Meetings
of stockholders may be held within or without the State of Delaware, as the
by-laws may provide.

 

ARTICLE VII

 

To
the extent permitted by law, the books of the Corporation may be kept outside
the State of Delaware at such place or places as may be designated in the
by-laws of the Corporation or from time to time by its Board of Directors.

 

ARTICLE VIII

 

1.            
Exculpation.  A Director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach
of his or her fiduciary duty as a Director of the Corporation, except for
liability (a) for any breach of the Director’s duty of loyalty to the
Corporation or its stockholders, (b) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(c) under Section 174 of the

 

 

26

 

Delaware General Corporation
Law, or (d) for any transaction from which the Director derived an
improper personal benefit.  If the Delaware General Corporation Law is
amended after the effective date of this Amended and Restated Certificate of
Incorporation to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a Director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law.

 

2.            
Right to Indemnification.  Each person who was or is made a party
or is threatened to be made a party to or is otherwise involved (including
involvement as a witness) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a “proceeding”), by reason of the
fact that he or she is or was a Director or officer of the Corporation or,
while a Director or officer of the Corporation, is or was serving at the
request of the Corporation as a Director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan (an “indemnitee”),
whether the basis of such proceeding is alleged action in an official capacity
as a Director or officer or in any other capacity while serving as a Director
or officer, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than permitted prior thereto), against all
expense, liability and loss (including attorneys’ fees, judgments, fines,
excise taxes or penalties and amounts paid in settlement) reasonably incurred
or suffered by such indemnitee in connection therewith and such indemnification
shall continue as to an indemnitee who has ceased to be a Director, officer,
employee or agent and shall inure to the benefit of the indemnitee’s heirs,
executors and administrators; provided, however, that, except as provided in
Section 3 of this ARTICLE VIII with respect to proceedings to enforce
rights to indemnification, the Corporation shall indemnify any such indemnitee
in connection with a proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation.  The right to indemnification conferred in
this Section 2 of this ARTICLE VIII shall be a contract right and
shall include the obligation of the Corporation to pay the expenses incurred in
defending any such proceeding in advance of its final disposition (an “advance
of expenses”); provided, however, that, if and to the extent that the Delaware
General Corporation Law requires, an advance of expenses incurred by an
indemnitee in his or her capacity as a Director or officer (and not in any
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (an
“undertaking”), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (a “final adjudication”) that such
indemnitee is not entitled to be indemnified for such expenses under this
Section 2 or otherwise.  The Corporation may, by action of its Board
of Directors, provide indemnification to employees and agents of the
Corporation with the same or lesser scope and effect as the foregoing
indemnification of Directors and officers.

 

2.            
Procedure for Indemnification.  Any indemnification of a Director
or officer of the Corporation or advance of expenses under Section 2 of
this ARTICLE VIII shall be made promptly, and in any event within
forty-five days (or, in the case of an advance of expenses, twenty days), upon
the written request of the Director or officer.  If a determination by the

 

 

27

 

Corporation that the Director or
officer is entitled to indemnification pursuant to this ARTICLE VIII is
required, and the Corporation fails to respond within sixty days to a written
request for indemnity, the Corporation shall be deemed to have approved the
request.  If the Corporation denies a written request for indemnification
or advance of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within forty-five days (or, in the case of an advance
of expenses, twenty days), the right to indemnification or advances as granted
by this ARTICLE VIII shall be enforceable by the Director or officer in
any court of competent jurisdiction.  Such person’s costs and expenses
incurred in connection with successfully establishing his or her right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the Corporation.  It shall be a defense to any such action
(other than an action brought to enforce a claim for the advance of expenses
where the undertaking required pursuant to Section 2 of this
ARTICLE VIII, if any, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Delaware General Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of such defense shall be on the
Corporation.  Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action
or create a presumption that the claimant has not met the applicable standard
of conduct.  The procedure for indemnification of other employees and
agents for whom indemnification is provided pursuant to Section 2 of this
ARTICLE VIII shall be the same procedure set forth in this Section 3
for Directors or officers, unless otherwise set forth in the action of the
Board of Directors providing indemnification for such employee or agent.

 

3.            
Insurance.  The Corporation may purchase and maintain insurance on
its own behalf and on behalf of any person who is or was a Director, officer,
employee or agent of the Corporation or was serving at the request of the
Corporation as a Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss asserted against him or her and incurred by him or her in any
such capacity, whether or not the Corporation would have the power to indemnify
such person against such expenses, liability or loss under the Delaware General
Corporation Law.

 

4.            
Reliance.  Persons who after the date of the adoption of this
provision become or remain Directors or officers of the Corporation or who,
while a Director or officer of the Corporation, become or remain a Director,
officer, employee or agent of a subsidiary, shall be conclusively presumed to
have relied on the rights to indemnity, advance of expenses and other rights
contained in this ARTICLE VIII in entering into or continuing such
service.  The rights to indemnification and to the advance of expenses
conferred in this ARTICLE VIII shall apply to claims made against an
indemnitee arising out of acts or omissions which occurred or occur both prior
and subsequent to the adoption hereof.

 

5.            
Non-Exclusivity of Rights.  The rights to indemnification and to
the advance of expenses conferred in this ARTICLE VIII shall not be
exclusive of any other right which any

 

 

28

 

person may have or hereafter
acquire under this Restated Certificate or under any statute, by-law,
agreement, vote of stockholders or disinterested Directors or otherwise.

 

6.            
Merger or Consolidation.  For purposes of this ARTICLE VIII,
references to the “Corporation” shall include, in addition to the resulting
Corporation, any constituent Corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
Directors, officers and employees or agents, so that any person who is or was a
Director, officer, employee or agent of such constituent Corporation, or is or
was serving at the request of such constituent Corporation as a Director,
officer, employee or agent of another Corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this
ARTICLE VIII with respect to the resulting or surviving Corporation as he
or she would have with respect to such constituent Corporation if its separate
existence had continued.

 

7.            
Modifications.  Any repeal or modification of this
Article VIII by the stockholders of the Corporation or by an amendment to
the Delaware General Corporation Law shall not adversely affect any right or
protection existing at the time of such repeal or modification with respect to
any acts or omissions occurring either before or after such repeal or
modification, of a person serving as a Director prior to or at the time of such
repeal or modification.

 

ARTICLE IX

 

Subject to the limitations
provided herein, the Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Amended and Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.

 

 

29

 

 

EXHIBIT B

 

 

FORM OF STOCKHOLDERS AGREEMENT

 

 

[See Exhibit 4.02 to this Form S-1]

 

 

 

 

 

EXHIBIT C

 

 

FORM OF REGISTRATION RIGHTS AGREEMENT

 

 

[See Exhibit 4.03 to this Form S-1]

 

 

 

 

Schedule A

 

List of Investors and Management Stockholders

 

[List of Investors and
Principal Stockholders has been omitted. A copy of this schedule will be
furnished supplementally to the Commission upon request.]

 

 

 

Schedule B

 

Wire Transfer Instructions

 

[Wire Transfer Instructions
has been omitted. A copy of this schedule will be furnished supplementally to
the Commission upon request.]Exhibit 10.15

 

 

 

SECURITIES
PURCHASE AGREEMENT

 

 

among

 

IGN ENTERTAINMENT,
INC.,

 

as Issuer,

 

THE GUARANTORS
DESIGNATED HEREIN,

 

as Guarantors,

 

and

 

BANC OF AMERICA
CAPITAL INVESTORS, L.P.,

 

and

 

THE OTHER
PURCHASERS DESIGNATED HEREIN,

 

as Purchasers

 

 

 

Dated as of
March 3, 2004

 

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I 
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01

  	
  Definitions

  	
   

  
	
  SECTION 1.02

  	
  Accounting Terms; Financial
  Statements

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II 
  PURCHASE AND SALE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01

  	
  Purchase and Sale of the Purchased
  Securities

  	
   

  
	
  SECTION 2.02

  	
  Closing

  	
   

  
	
  SECTION 2.03

  	
  Original Issue Discount

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III 
  CONDITIONS TO THE OBLIGATION OF THE PURCHASER TO CLOSE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01

  	
  Representations and Warranties

  	
   

  
	
  SECTION 3.02

  	
  Compliance with this Agreement

  	
   

  
	
  SECTION 3.03

  	
  No Material Adverse Change

  	
   

  
	
  SECTION 3.04

  	
  No Adverse
  Proceedings

  	
   

  
	
  SECTION 3.05

  	
  Transaction
  Documents

  	
   

  
	
  SECTION 3.06

  	
  Payment of Fees and Expenses

  	
   

  
	
  SECTION 3.07

  	
  The Merger

  	
   

  
	
  SECTION 3.08

  	
  Senior Note Purchase Agreement

  	
   

  
	
  SECTION 3.09

  	
  Financial Statements

  	
   

  
	
  SECTION 3.10

  	
  Officer’s
  Certificate

  	
   

  
	
  SECTION 3.11

  	
  Secretary’s Certificates

  	
   

  
	
  SECTION 3.12

  	
  Statement of Sources and Uses

  	
   

  
	
  SECTION 3.13

  	
  Purchase Permitted by Applicable Laws

  	
   

  
	
  SECTION 3.14

  	
  Consents and
  Approvals

  	
   

  
	
  SECTION 3.15

  	
  Legal Opinion

  	
   

  
	
  SECTION 3.16

  	
  Disbursement Instructions

  	
   

  
	
  SECTION 3.17

  	
  Other Assurances

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV 
  CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01

  	
  Representations and Warranties

  	
   

  
	
  SECTION 4.02

  	
  Compliance with this Agreement

  	
   

  
	
  SECTION 4.03

  	
  Payment of Purchase Price

  	
   

  
	
  SECTION 4.04

  	
  Issuance Permitted by Requirements of
  Laws

  	
   

  
	
  SECTION 4.05

  	
  Consents and
  Approvals

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V 
  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01

  	
  Corporate Existence and Power

  	
   

  
	
  SECTION 5.02

  	
  Binding Effect

  	
   

  
	
  SECTION 5.03

  	
  Capitalization

  	
   

  
	
  SECTION 5.04

  	
  Private Offering

  	
   

  

 

i

 

	
  SECTION 5.05

  	
  Broker’s,
  Finder’s or Similar Fees

  	
   

  
	
  SECTION 5.07

  	
  Representations in Other Transaction
  Documents

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI 
  REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01

  	
  Authorization; No Contravention

  	
   

  
	
  SECTION 6.02

  	
  Binding Effect

  	
   

  
	
  SECTION 6.03

  	
  Accredited Investor; Purchase for Own
  Account

  	
   

  
	
  SECTION 6.04

  	
  Broker’s,
  Finder’s or Similar Fees

  	
   

  
	
  SECTION 6.05

  	
  Governmental Authorization; Third
  Party Consent

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII 
  FINANCIAL INFORMATION AND NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.01

  	
  Delivery of Financial and Other
  Statements and Reports

  	
   

  
	
  SECTION 7.03

  	
  Accountant Letters

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII 
  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.01

  	
  Payment of Notes

  	
   

  
	
  SECTION 8.02

  	
  Notice of Defaults

  	
   

  
	
  SECTION 8.03

  	
  Taxes

  	
   

  
	
  SECTION 8.04

  	
  Insurance

  	
   

  
	
  SECTION 8.05

  	
  Corporate Existence

  	
   

  
	
  SECTION 8.06

  	
  Books and Records

  	
   

  
	
  SECTION 8.08

  	
  Compliance with Laws

  	
   

  
	
  SECTION 8.09

  	
  Issuance of Additional Note
  Guaranties

  	
   

  
	
  SECTION 8.10

  	
  Use of Proceeds

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX 
  NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01

  	
  Incurrence of Indebtedness and
  Issuance of Preferred Stock

  	
   

  
	
  SECTION 9.02

  	
  No Layering

  	
   

  
	
  SECTION 9.03

  	
  Restrictions on
  Liens

  	
   

  
	
  SECTION 9.04

  	
  Limitation on Restricted Payments

  	
   

  
	
  SECTION 9.05

  	
  No Amendment of Transaction Documents

  	
   

  
	
  SECTION 9.06

  	
  Asset Sales; Casualty Proceeds

  	
   

  
	
  SECTION 9.07

  	
  Limitation on Sale and Leaseback
  Transactions

  	
   

  
	
  SECTION 9.08

  	
  Limitation on Issuances and Sales of
  Capital Stock of Wholly Owned Subsidiaries

  	
   

  
	
  SECTION 9.09

  	
  Business Activities

  	
   

  
	
  SECTION 9.10

  	
  Stay, Extension and Usury Laws

  	
   

  
	
  SECTION 9.11

  	
  Investment Company Act; United States
  Real Property Holding Corporation

  	
   

  
	
  SECTION 9.12

  	
  No Merger, etc

  	
   

  
	
  SECTION 9.13

  	
  Limitation on Transactions With
  Affiliates

  	
   

  
	
  SECTION 9.14

  	
  Limitation on Dividends and Other
  Payment Restrictions Affecting Subsidiaries

  	
   

  
	
  SECTION 9.15

  	
  Payments for Consent

  	
   

  
	
  SECTION 9.16

  	
  Employee Plans

  	
   

  
	
  SECTION 9.17

  	
  Financial Covenants

  	
   

  

 

ii

 

	
  ARTICLE X 
  REDEMPTION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.01

  	
  Redemption of Notes

  	
   

  
	
  SECTION 10.02

  	
  Redemption of Warrants

  	
   

  
	
  SECTION 10.03

  	
  Manner of Redemption

  	
   

  
	
  SECTION 10.04

  	
  Legally Available Funds

  	
   

  
	
  SECTION 10.05

  	
  Notation of Partial Payments

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI 
  SUBORDINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.01

  	
  Definitions

  	
   

  
	
  SECTION 11.02

  	
  Subordination

  	
   

  
	
  SECTION 11.03

  	
  Subordination Upon Distribution of
  Assets

  	
   

  
	
  SECTION 11.04

  	
  Prohibitions and Limitations on
  Payment

  	
   

  
	
  SECTION 11.06

  	
  Payments and Distributions Received

  	
   

  
	
  SECTION 11.07

  	
  Subrogation

  	
   

  
	
  SECTION 11.08

  	
  Relative Rights

  	
   

  
	
  SECTION 11.09

  	
  Certain Restrictions

  	
   

  
	
  SECTION 11.10

  	
  Subordination Not Impaired; Benefit
  of Subordination

  	
   

  
	
  SECTION 11.11

  	
  Transfers

  	
   

  
	
  SECTION 11.12

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII 
  EVENTS OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.01

  	
  Events of Default

  	
   

  
	
  SECTION 12.02

  	
  Acceleration

  	
   

  
	
  SECTION 12.03

  	
  Set-Off.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  NOTE
  GUARANTEES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 13.01

  	
  Guarantee

  	
   

  
	
  SECTION 13.02

  	
  Operation of Guarantee

  	
   

  
	
  SECTION 13.03

  	
  Obligations of each Guarantor
  Absolute and Unconditional

  	
   

  
	
  SECTION 13.04

  	
  Waiver of Notice, etc

  	
   

  
	
  SECTION 13.05

  	
  Subordination of Guarantee

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV 
  INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 14.01

  	
  Indemnification

  	
   

  
	
  SECTION 14.02

  	
  Notification

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV 
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 15.01

  	
  Survival

  	
   

  
	
  SECTION 15.02

  	
  Notices

  	
   

  
	
  SECTION 15.03

  	
  Successors
  and Assigns

  	
   

  
	
  SECTION 15.04

  	
  Remedies Cumulative

  	
   

  
	
  SECTION 15.05

  	
  Amendments
  or Consents

  	
   

  
	
  SECTION 15.06

  	
  Counterparts

  	
   

  
	
  SECTION 15.07

  	
  Headings

  	
   

  

 

iii

 

	
  SECTION 15.08

  	
  GOVERNING LAW

  	
   

  
	
  SECTION 15.09

  	
  Jurisdiction

  	
   

  
	
  SECTION 15.10

  	
  Severability

  	
   

  
	
  SECTION 15.11

  	
  Rules of
  Construction

  	
   

  
	
  SECTION 15.12

  	
  Entire Agreement

  	
   

  
	
  SECTION 15.13

  	
  Certain Expenses

  	
   

  
	
  SECTION 15.14

  	
  Publicity

  	
   

  
	
  SECTION 15.15

  	
  Further Assurances

  	
   

  

 

INDEX OF EXHIBITS
AND SCHEDULES

 

	
  Exhibit

  	
   

  	
  Description

  
	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  Form of Senior
  Subordinated Note

  

 

iv

 

SECURITIES
PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE
AGREEMENT is dated as of March 3, 2004, among IGN ENTERTAINMENT, INC., a
Delaware corporation (the “Company”), GameSpy Industries, Inc., a California
corporation (“GameSpy”), the other guarantors designated on the signature pages
hereto (together with GameSpy, the “Guarantors”), BANC OF AMERICA CAPITAL
INVESTORS, L.P., a Delaware limited partnership (“BACI”) and the other
purchasers who are or may become a party hereto (together with BACI, the
“Purchasers”).

 

Statement of
Purpose

 

Pursuant to an Agreement
and Plan of Merger, dated as of December 3, 2003, by and among the
Company, GameSpy, IGN Acquisition Corp., a California corporation (“Merger
Subsidiary”), and certain shareholders of GameSpy, Merger Subsidiary, a
wholly-owned subsidiary of the Company, will merge with and into GameSpy (the
“Merger”).  In order to obtain a portion of the financing necessary to
consummate the Merger, the Company proposes to issue to the Purchasers (a)
Senior Subordinated Notes in the aggregate principal amount of $20,000,000 and
warrants to purchase 56,298 shares of its Common Stock for a combined aggregate
purchase price of $20,000,000 and (b) 56,298 shares of its Series B Participating
Preferred Stock for a purchase price of $10,000,000, in each case as more
particularly described herein.

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01                    Definitions.  In addition to
the terms defined in Section 11.01, as used in this Agreement, and unless
the context requires a different meaning, the following terms have the meanings
indicated:

 

“Acquired Indebtedness”
means, with respect to any specified Person:

 

(a)                                  Indebtedness of any other Person existing
at the time such other Person is merged with or into or became a Subsidiary of
such specified Person, whether or not such Indebtedness is incurred in
connection with, or in contemplation of, such other Person merging with or
into, or becoming a Subsidiary of, such specified Person; and

 

(b)                                 Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.

 

 

“Affiliate” means,
with respect to any specified Person, any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person; provided, that beneficial ownership of 10% or
more of the voting securities of a Person shall be deemed to be control; provided,
further, that in no event shall BACI (or any Affiliate of BACI) be
deemed to be an Affiliate of the Company.  For the purposes of this
definition, “control” (including, with correlative meanings, the terms
“controlled by” and “under common control with”), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether in the capacity of officer or director of such Person, through the
ownership of voting securities, by agreement or otherwise.

 

“Affiliate Transaction”
shall have the meaning assigned thereto in Section 9.13.

 

“Agreement” means
this Securities Purchase Agreement, as amended or supplemented from time to
time.

 

“Asset Sales”
means: (a) the sale, lease, conveyance or other disposition of any assets or
rights; provided, that the sale, lease, conveyance or other disposition
of all or substantially all of the assets of the Company and its Subsidiaries
taken as a whole will be governed by the provisions of Section 9.12 and
not by the provisions of Section 9.06; and (b) the issuance of Equity
Interests by any of the Company’s Subsidiaries or the sale of Equity Interests
in any of its Subsidiaries.  Notwithstanding the preceding, none of the
following items will be deemed to be an Asset Sale:

 

(i)                                     any single transaction or series of
related transactions that involves assets having a fair market value of less
than $100,000;

 

(ii)                                  a transfer of assets between or among the
Company and its Wholly Owned Subsidiaries;

 

(iii)                               a sale or lease of products, services or
accounts receivable in the ordinary course of business and any sale or other
disposition of damaged, worn-out or obsolete assets in the ordinary course of
business;

 

(iv)                              an issuance of Equity Interests by a
Subsidiary to the Company or to another Wholly Owned Subsidiary;

 

(v)                                 a Restricted Payment that does not
violate Section 9.04 or a Permitted Investment; and

 

(vi)                              the sale or other disposition of Cash
Equivalents.

 

“Attributable Debt”
in respect of a sale and leaseback transaction means, at the time of
determination, the present value of the obligation of the lessee for net rental
payments during the remaining term of the lease included in such sale and
leaseback transaction including any period

 

2

 

for which such lease has been extended or may, at the
option of the lessor, be extended.  Such present value shall be calculated
using a discount rate equal to the rate of interest implicit in such
transaction, determined in accordance with GAAP.

 

“BACI Note and Warrant
IRR” means the internal rate of return with respect to the investment by
BACI in the Notes and Warrants, which shall be computed by determining the rate
which, if used to discount the following payments, would cause the net present
value of such payments to equal zero as of the Closing Date:

 

(a)                                  cash payments made by BACI to the Company
to purchase the Notes and Warrants; minus

 

(b)                                 the following cash payments received by
BACI on or prior to the date of determination of the BACI Note and Warrant IRR,
in each case discounted from the respective date of actual receipt of such
payment by BACI:

 

(i)                                     as a distribution from the Company in
respect of the Notes or the Common Stock issued upon exercise of the Warrants
(but excluding any such distributions in respect of other Capital Stock or
Common Stock otherwise acquired by BACI);

 

(ii)                                  as payment of the commitment fees to BACI
in connection with the issuance of the Notes (but excluding any such fees paid
in respect of any other securities purchased by BACI); and

 

(iii)                               from any sale by BACI to any Person
(including the Company) of the Notes or the Common Stock issued upon exercise
of the Warrants (but excluding any such payments in respect of other Capital
Stock or Common Stock otherwise acquired by BACI).

 

“Beneficial Owner”
has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the
Exchange Act, except that in calculating the beneficial ownership of any
particular “person” (as that term is used in Section 13(d)(3) of the
Exchange Act), such “person” will be deemed to have beneficial ownership of all
securities that such “person” has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition.  The terms
“Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.

 

“Board” means the
Board of Directors of the Company.

 

“Business Day”
means any day that is not a Legal Holiday.

 

“Capital Lease”
means any lease of any property which would in accordance with GAAP be required
to be classified and accounted for as a capital lease on the balance sheet of
the lessee.

 

“Capital Stock”
means, with respect to any Person, any and all shares, interests,
participations, rights in or other equivalents of such Person’s capital stock,
partnership interests,

 

3

 

membership interests or other equivalent equity
interests and any rights, warrants or options exchangeable for or convertible
into such capital stock or other equity interests, including without
limitation, all common stock and preferred stock.

 

“Capitalized Lease
Obligations” means, with respect to any Person for any period, any
obligation of such person to pay rent or other amounts under a Capital Lease;
the amount of such obligation shall be the capitalized amount thereof
determined in accordance with GAAP.

 

“Cash Equivalents”
means: (a) marketable direct obligations issued or unconditionally Guaranteed
by the United States Government or issued by any agency thereof and backed by
the full faith and credit of the United States, in each case maturing within
one year from the date of acquisition thereof; (b) marketable direct
obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof
maturing within six months from the date of acquisition thereof and, at the
time of acquisition, having the highest ratings obtainable from Standard &
Poor’s Corporation, Moody’s Investors Service, Inc. or another nationally
recognized rating agency; (c) commercial paper maturing no more than one year
from the date of issuance thereof and, at the time of issuance, having at least
A-1 ratings from Standard & Poor’s Corporation, and P-1 ratings for Moody’s
Investors Service, Inc. or equivalent ratings from another nationally
recognized rating agency; (d) certificates of deposit or bankers’ acceptances
maturing within one year from the date of acquisition thereof issued by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia having combined capital and surplus
of not less than $100.0 million and having a rating of at least Aa from Moody’s
Investors Service, Inc. or a rating of at least AA from Standard and Poor’s
Corporation; and (e) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (a) through (d)
of this definition.

 

“Casualty Proceeds”
means any net insurance proceeds or other awards payable in connection with the
loss, destruction or condemnation of any assets of the Company or any of its
Subsidiaries (net of any costs incurred in connection with the adjustment or
settlement thereof).

 

“Certificate of
Incorporation”
means the Amended and Restated Certificate of Incorporation of the Company as
in effect on the date hereof.

 

“Change of Control”
means the occurrence of any of the following:

 

(a)                                  the direct or indirect sale, lease, transfer,
conveyance or other disposition (other than by way of merger or consolidation),
in one or a series of related transactions, of all or substantially all of the
properties or assets of the Company and its Subsidiaries taken as a whole to
any “person” (as that term is used in Section 13(d) of the Exchange Act);

 

(b)                                 the adoption of a plan relating to the
liquidation or dissolution of the Company;

 

(c)                                  the consummation of the first transaction
(including any merger or consolidation) the result of which is that any
“person” (as defined above), other than Great Hill

 

4

 

or any of its Affiliates, becomes the Beneficial
Owner, directly or indirectly, of more of the Voting Stock of the Company
(measured by voting power rather than number of shares) than is at the time
Beneficially Owned by Great Hill and its Affiliates;

 

(d)                                 the Company consolidates with, or merges
with or into, any Person, or any Person consolidates with, or merges with or
into, the Company, in any such event pursuant to a transaction in which any of
the outstanding Voting Stock of the Company or such other Person is converted
into or exchanged for cash, securities or other property, other than any such
transaction where the Voting Stock of the Company outstanding immediately prior
to such transaction is converted into or exchanged for Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person constituting a
majority of the outstanding shares of such Voting Stock of such surviving or
transferee Person (immediately after giving effect to such issuance); or

 

(e)                                  (i) Great Hill, Affiliates of Great Hill,
Liberty Mutual Insurance Company and BACI collectively shall cease to own and
control a majority of the Voting Stock of the Company (measured by voting power
rather than number of shares);

 

provided, that in no event shall Liberty Mutual Insurance
Company or any of its Affiliates be deemed to be an Affiliate of Great Hill for
purposes of this definition.

 

“Closing” has the
meaning assigned thereto in Section 2.02.

 

“Closing Date” has
the meaning assigned thereto in Section 2.02.

 

“Code” means the
Internal Revenue Code of 1986, as amended, or any successor statute thereto.

 

“Commission” means
the Securities and Exchange Commission or any similar agency then having
jurisdiction to enforce the Securities Act.

 

“Common Stock”
means Common Stock of the Company, $.01 par value, as described in the Company
Charter Documents.

 

“Commonly Controlled
Entity” means an entity, whether or not incorporated, which is under common
control with the Company within the meaning of Section 4001(a)(14) of
ERISA or is part of a group which includes the Company and which is treated as
a single employer under Section 414(b), (c), (m) or (o) of the Code.

 

“Company Charter
Documents” means the Certificate of Incorporation and bylaws of the
Company, each as in effect on the date hereof, and as amended or supplemented
from time to time in accordance with the provisions hereof and thereof.

 

5

 

“Consolidated Capital
Expenditures” of any Person means, for any period, the aggregate gross
increase during that period, in the property, plant or equipment reflected in
the consolidated balance sheet of such Person and its consolidated
Subsidiaries, in conformity with GAAP, but excluding:

 

(a)                                  expenditures made in connection with the
replacement, substitution or restoration of assets (including any expenditures
made pursuant to Section 6.6(b) of the Senior Note Purchase Agreement),

 

(i)                                     to the extent financed from Casualty
Proceeds received on account of the loss, destruction or condemnation of the
assets being replaced or restored; and

 

(ii)                                  to the extent such expenditure is
attributable to a credit granted by the seller of property, plant or equipment
purchased with the trade-in of existing property, plant or equipment;

 

(b)                                 the purchase price paid in connection
with the acquisition of any other Person (including through the purchase of all
of the Capital Stock of such Person or through merger or consolidation) to the
extent allocable to property, plant and equipment of such Person or its
Subsidiaries.

 

“Consolidated EBITDA”
means, with respect to any specified Person for any period, the Consolidated
Net Income of such Person for such period plus, without duplication,

 

(a)                                  the Consolidated Interest Expense of such
Person and its Subsidiaries for such period, to the extent that such
Consolidated Interest Expense was deducted in computing such Consolidated Net
Income; plus

 

(b)                                 provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was deducted in computing such Consolidated Net
Income; plus

 

(c)                                  depreciation, amortization (including
amortization of intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) and other non-cash expenses (excluding any
such non-cash expense to the extent that it represents an accrual of or reserve
for cash expenses in any future period or amortization of a prepaid cash
expense that was paid in a prior period) of such Person and its Subsidiaries
for such period to the extent that such depreciation, amortization and other
non-cash expenses were deducted in computing such Consolidated Net Income; minus

 

(d)                                 non-cash items increasing such
Consolidated Net Income for such period, other than the accrual of revenue in
the ordinary course of business,

 

6

 

in each case, on a consolidated basis and determined
in accordance with GAAP; provided, that the following amounts shall be
added to Consolidated EBITDA (without duplication of amounts added pursuant to
any other provision of this definition of “Consolidated EBITDA”): for the four
consecutive financial quarters ended June 30, 2004 and September 30,
2004 up to $1,563,554 and $760,301, respectively, of one time charges incurred
during 2003 in connection with the Company’s reporting obligations under the Exchange
Act in each case, to the extent deducted in computing Consolidated Net Income
for such period.

 

“Consolidated Interest
Expense” means, with respect to any specified Person for any period, the
sum, without duplication, of:

 

(a)                                  the consolidated interest expense of such
Person and its Subsidiaries for such period, whether paid or accrued, including
amortization of debt issuance costs, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers’
acceptance financings, and net of the effect of all payments made or received
pursuant to Hedging Obligations in respect of interest rates (but excluding
amortization of original issue discount); plus

 

(b)                                 the consolidated interest expense of such
Person and its Subsidiaries that was capitalized during such period; plus

 

(c)                                  any interest paid during such period on
Indebtedness of another Person that is guaranteed by such Person or one of its
Subsidiaries or secured by a Lien on assets of such Person or one of its
Subsidiaries, whether or not such Guarantee or Lien is called upon; plus

 

(d)                                  the product of (i) all dividends paid and
whether or not in cash, on any series of preferred stock of such Person or any
of its Subsidiaries, other than dividends on Equity Interests payable solely in
Equity Interests of the Company (other than Disqualified Stock) or to the Company
or a Subsidiary of the Company, times (ii) a fraction, the numerator of which
is one and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of such Person, expressed as a
decimal, in each case, determined on a consolidated basis in accordance with
GAAP.

 

“Consolidated Net
Income” means, with respect to any specified Person for any period, the
aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; provided,
that:

 

(a)                                  the Net Income (but not loss) of any
Person that is not a Subsidiary or that is accounted for by the equity method
of accounting will be included only to the extent of the amount of dividends or
similar distributions paid in cash to the specified Person or a Wholly-Owned
Subsidiary of the Person; and

 

7

 

(b)                                 the Net Income of any Subsidiary will be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that has not
been obtained) or, directly or indirectly, by operation of the terms of its charter
or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders.

 

“Continuing Directors”
means, as of any date of determination, any member of the Board who (a) was a
member of the Board on the date of this Agreement or (b) was nominated for
election or elected to the Board with the approval of a majority of the
Continuing Directors who were member of the Board at the time of such
nomination or election.

 

“Default” means
any event which is, or after notice or passage of time would be, an Event of
Default.

 

“Disqualified Stock”
means any Capital Stock that, by its terms (or by the terms of any security
into which it is convertible, or for which it is exchangeable, in each case, at
the option of the holder of the Capital Stock), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder of the
Capital Stock, in whole or in part, on or prior to the date that is 91 days
after the date on which the Senior Secured Notes mature.

 

“Domestic Subsidiary”
means any Subsidiary of the Company organized under the laws of any
jurisdiction within the United States of America.

 

“Elective Redemption
Event” has the meaning assigned thereto in Section 10.02(a).

 

“Employee Pension Plan”
means any “employee pension benefit plan” as defined in Section 3(2) of
ERISA and which is maintained by the Company or any of its Subsidiaries and is
qualified under Section 401 of the Code.

 

“Equity Incentive Plan”
means the 2003 Stock Option and Grant Plan of the Company, as amended or
supplemented from time to time.

 

“Equity Interests”
means the Capital Stock but excluding any debt security which is convertible
into, or exchangeable for, Capital Stock.

 

“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended.

 

“Event of Default”
shall have the meaning assigned thereto in Section 12.01.

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended, from time to time, and
any successor statute or law thereto.

 

8

 

“Existing Debt”
means Indebtedness of the Company outstanding on the date hereof in an
aggregate principal amount not to exceed $171,000, all as set forth on Schedule 9.01.

 

“Fair Market Value Per
Share” means, as of the date for which determination is required,
(a) the fair market value of the Fully Diluted Common Stock based upon an
arm’s length sale of the Company on such date (including its ownership interest
in all Persons) as an entirety, such sale being between a willing buyer and a
willing seller, without regard to any discount for lack of marketability,
disparate voting rights or minority ownership, and divided  by
(b) the aggregate number of shares of Fully Diluted Common Stock. 
The Fair Market Value Per Share shall be determined initially by the Board
within ten (10) Business Days of any event for which such determination is
required and such determination (including the basis therefor) shall be
promptly provided to each Holder of Warrants, which determination shall be
binding on the parties hereto unless the Majority Exercising Holders object
thereto in writing within ten (10) Business Days of receipt.  In the event
the Company and the Majority Exercising Holders cannot agree on the Fair Market
Value Per Share within ten (10) Business Days of the date of the objection or
for any determination, the Fair Market Value Per Share shall be determined by a
disinterested appraiser (which may be a national or regional investment bank or
national accounting firm) mutually selected by the Board and the Majority
Exercising Holders, the fees and expenses of which shall be paid by the
Company.  Any selection of a disinterested appraiser shall be made in good
faith within seven (7) Business Days after the end of the last ten (10)
Business Day period referred to above and any determination of Fair Market
Value Per Share by a disinterested appraiser shall be made within thirty (30)
days of the date of selection.

 

“Fully Diluted”
means, with respect to the Common Stock, as of a particular time the total
outstanding shares of Common Stock as of such time, determined by treating all
outstanding options (irrespective of whether then vested), warrants and other
rights for the purchase or other acquisition of Common Stock as having been
exercised and by treating all outstanding Capital Stock securities convertible
into Common Stock as having been so converted.

 

“Funded Indebtedness”
of any Person means, without duplication, all Indebtedness of such Person
described in clauses (a), (b), (d) and (e) of the definition of “Indebtedness”
(other than intercompany Indebtedness).

 

“Funded Indebtedness
Leverage Ratio” shall have the meaning assigned thereto in
Section 9.17(c).

 

“GAAP” means
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
have been approved by a significant segment of the accounting profession, which
are in effect from time to time.

 

“GameSpy” has the
meaning assigned thereto in the introductory paragraph.

 

9

 

“Governmental
Authority” means any nation or government, any, state or other political
subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

 

“Great Hill” means
Great Hill Equity Partners II L.P. and its Affiliated investment funds.

 

“Guarantee and
Collateral Agreement” has the meaning assigned thereto in the Senior Note
Purchase Agreement.

 

“Guaranteed
Obligations” has the meaning assigned thereto in Section 13.01.

 

“Guarantor” means
each Guarantor listed on the signature pages hereto and any other Subsidiary of
the Company that executes a Note Guarantee in accordance with the provisions of
this Agreement, and their respective successors and assigns.

 

“Guarantee” means,
with respect to any Person, a guaranty other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.

 

“Hedging Obligations”
means, with respect to any specified Person, the obligations of such Person
under (a) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and (b) other agreements or arrangements
designed to protect such Person against fluctuations in interest rates.

 

“Holder” means any
holder of the Purchased Securities.

 

“Indebtedness”
means, as applied to any specified Person, any indebtedness of such Person,
whether or not contingent: (a) in respect of borrowed money; (b) evidenced by
bonds, note debentures or similar instruments or letters of credit (or
reimbursement obligations in respect thereof); (c) in respect of bankers
acceptances; (d) representing Capital Lease Obligations; (e) representing the
balance deferred and unpaid of the purchase price of any property or services
due more than six months after such property is acquired or such services are
completed, except (i) any such balance that constitutes an accrued expense or
trade payable not overdue by more than 90 days incurred in the ordinary course
of such Person’s business, (ii) any such balance due that is being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted and for which adequate reserves or other appropriate provisions have
been made in accordance with GAAP, and (iii) any such obligation incurred under
ERISA; or (f) representing any Hedging Obligations; if and to the extant any of
the preceding items (other than letters of credit or Hedging Obligations) would
appear as a liability upon a balance sheet of the specified Person prepared in
accordance with GAAP.  In addition, the term “Indebtedness” includes all
indebtedness of others secured by a Lien on any asset of the specified Person
(whether or not such debt is assumed by the specified Person) and, to the
extent not otherwise included, the Guarantee by the specified Person of any
debt of any other Person.  The amount of any Indebtedness outstanding as
of any date will be the principal amount of the Indebtedness (including all amounts
capitalized to principal and all other payments in kind),

 

10

 

together with any interest on the Indebtedness that is
more than 30 days past due, in the case of any other Indebtedness.

 

“Initial Public Offering”
means the initial public offering of Capital Stock of the Company registered
under the Securities Act.

 

“Investment Documents”
means this Agreement, the Notes, the Company Charter Documents, the
Stockholders Agreement, the Registration Rights Agreement, the Warrant
Agreement, the Warrants, the exhibits and schedules attached hereto and thereto
and each other document delivered or executed in connection with the
transactions contemplated hereby.

 

“Investments”
means, with respect to any Person, all direct or indirect investments by such
Person in other Persons (including Affiliates) in the forms of loans (including
Guarantees or other obligations), advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities, together with all items
that are or would be classified as investments on a balance sheet prepared in accordance
with GAAP.  If the Company or any of its Subsidiaries sells or otherwise
disposes of any Equity Interests of any direct or indirect Subsidiary of the
Company such that, after giving effect to any such sale or disposition, such
Person is no longer a Subsidiary of the Company, the Company will be deemed to
have made an Investment on the date of any such sale or disposition equal to
the fair market value of the Company’s Investments in such Subsidiary that were
not sold or disposed of in an amount determined as provided in the final
paragraph of Section 9.04.  The acquisition by the Company or any of
its Subsidiaries of a Person that holds an Investment in a third Person will be
deemed to be an Investment by the Company or such Subsidiary in such third
Person in an amount equal to the fair market value of the Investments held by
the acquired Person in such third Person in an amount determined as provided in
the final paragraph of Section 9.04.

 

“Junior Debt”
shall have the meaning assigned thereto in Section 9.04(c).

 

“Legal Holiday”
means a Saturday, Sunday or day on which banks and trust companies in the
principal place of business of the Company, in New York or in North Carolina
are not required to be open.

 

“Legally Available
Funds” means, with respect to any redemption pursuant to Article X,
the amount of funds of the Company legally available for such redemption as
required under Section 160 of the General Corporation Laws of the State of
Delaware, as amended, or any comparable provision of any succeeding law.

 

“Lien” means any
material mortgage, pledge, lien, encumbrance, charge or adverse claim affecting
title or resulting in a charge against real or personal property, or security
interest of any kind (including, without limitation, any lien in favor of the
PBGC or any Plan under ERISA or the Code or any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell and any filing of or agreement to give any

 

11

 

financing statement under the Uniform Commercial Code
(or equivalent statutes) of any jurisdiction).

 

“Majority Exercising
Holders” shall have the meaning assigned thereto in Section 10.04(b).

 

“Material Adverse
Effect” means:

 

(a)                                  any material adverse effect on the
business results of operations, cash flows, properties, assets, liabilities or
condition (financial or otherwise) of the Company and GameSpy and their
respective Subsidiaries taken as a whole;

 

(b)                                 any material adverse effect on the
ability of the Company, GameSpy or any Guarantor, as applicable, to fulfill
their respective obligations under the Transaction Documents or any document
contemplated hereby or thereby; or

 

(c)                                  any material adverse effect on the ability
of the Holders or to enforce in any material respect their rights purported to
be granted hereunder or under any of the other Investment Documents.

 

“Merger” has the
meaning assigned thereto in the Statement of Purpose.

 

“Merger Agreement”
means the Agreement and Plan of Merger, dated as of December 3, 2003, by
and among, the Company, Merger Subsidiary, GameSpy, and certain shareholders of
GameSpy.

 

“Merger Documents”
means the Merger Agreement and all other agreements and documents executed in
connection with the Merger.

 

“Merger Subsidiary”
has the meaning assigned thereto in the Statement of Purpose.

 

“Multiemployer Plan”
means a Plan which is a multiemployer plan as defined in
Section 4001(a)(3) or 3(37)(A) of ERISA which covers any of the employees
of the Company or any Commonly Controlled Entity.

 

“Net Asset Sale
Proceeds” means, with respect to any sale or other disposition of any
assets or stock:

 

(a)                                  cash (freely convertible into United
States dollars) received by the Company or any of its Subsidiaries from such
sale or other disposition, after:

 

(i)                                     provision for all income or other taxes
measured by or resulting from such sale or other disposition,

 

(ii)                                  payment of all brokerage commissions and
other fees and expenses related to such sale or other disposition, and

 

12

 

(iii)                               deduction of appropriate amounts as a
reserve, in accordance with GAAP, against any liabilities associated with such
assets or stock and retained by the Company or any of its Subsidiaries after
such sale or other disposition thereof, including, without limitation, pension
and other post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with
the sale or other disposition of such assets or stock; and

 

(b)                                 any non-cash consideration received by
the Company or any of its Subsidiaries from such sale or other disposition upon
the liquidation or conversion of such non-cash consideration into cash.

 

“Net Income”
means, with respect to any specified Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect
of preferred stock dividends, excluding, however,

 

(a)                                  any gain or loss, together with any
related provision for taxes on such gain or loss, realized in connection with:
(i) any Asset Sale; or (ii) the disposition of any securities by such Person or
any of its Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Subsidiaries;

 

(b)                                 any extraordinary gain or loss, together
with any related provision for taxes on such extraordinary gain or loss; and

 

(c)                                  the cumulative effect of a change in
accounting principles.

 

“Notes” means the
Company’s 12% Senior Subordinated Promissory Notes, substantially in the Form
of Exhibit A hereto.

 

“Note Guarantee”
means a guaranty by a Guarantor pursuant to Article XIII hereof.

 

“Note Premium Amount”
shall have the meaning assigned thereto in Section 10.01.

 

“Note Premium Percentage”
has the meaning assigned thereto in Section 10.01(c).

 

“Officers’ Certificate”
means a certificate signed by any two officers, one of whom must be the
chairman of the board, the president, the treasurer or a vice president of the
Company.

 

“PBGC” means the
Pension Benefit Guaranty Corporation or any Person succeeding to the functions
thereof.

 

“Permits” means
any permit, approval, authorization, license, variance, or permission required
from a Governmental Authority or other Person under an applicable Requirement
of Law.

 

“Permitted Business”
means the business engaged in by the Company and its Subsidiaries on the
Closing Date and similar or related businesses.

 

13

 

“Permitted Debt”
has the meaning assigned thereto in Section 9.01.

 

“Permitted Investment”
means:

 

(a)                                  any Investment in the Company or in a
Wholly Owned Subsidiary of the Company;

 

(b)                                 any Investment in Cash Equivalents;

 

(c)                                  any Investment by the Company or any of
its Subsidiaries in a Person that is engaged in a Permitted Business after
September 30, 2004, if as a result of such Investment:

 

(i)                                     such Person becomes a Wholly Owned
Domestic Subsidiary of the Company; or

 

(ii)                                  such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly Owned Domestic
Subsidiary of the Company; provided, that:

 

(A)                              the aggregate amount of such Investments
does not exceed $10,000,000;

 

(B)                                the aggregate amount of all such
Investments does not exceed $5,000,000 million in any fiscal year;

 

(C)                                so long as any Note remains outstanding,
then on a pro forma basis, giving effect to such Investment as if it were made
on the first day of the four consecutive completed fiscal quarters of the
Company ended immediately preceding such Investment, the Funded Indebtedness
Leverage Ratio for the Company is less than the applicable amount set forth in
Section 9.17(c) as of the end of the fiscal quarter immediately preceding
the date of the closing of such transaction, unless otherwise approved by the
Required Noteholders; and

 

(D)                               so long as any Series B Preferred Stock
remains outstanding, then on a pro forma basis, giving effect to such
Investment as if it were made on the first day of the four consecutive
completed fiscal quarters of the Company ended immediately preceding such
Investment, the Preferred Leverage Ratio for the Company is less than the
applicable amount set forth in Section 9.17(d) as of the end of the fiscal
quarter immediately preceding the date of the

 

14

 

closing of such transaction, unless otherwise approved
by the Required Series B Holders;

 

(d)                                 any Investment made as a result of the
receipt of non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with Section 9.06;

 

(e)                                  any acquisition of assets that constitute
Collateral (as defined in the Senior Note Purchase Agreement) solely in
exchange for the issuance of Capital Stock (other than Disqualified Stock) of
the Company;

 

(f)                                    any Investments received in compromise of
obligations of such Persons incurred in the ordinary course of trade creditors
or customers that were incurred in the ordinary course of business, including
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of any trade creditor or customer;

 

(g)                                 Hedging Obligations otherwise permitted
to be incurred pursuant to this Agreement;

 

(h)                                 Investments of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time such Person merges or consolidates with the Company or
any of its Subsidiaries, in either case in compliance with this Agreement; provided,
that such Investments were not made by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Subsidiary of the
Company or such merger or consolidation;

 

(i)                                     Investments made by the Company or any
Subsidiary in connection with purchase price adjustments, contingent purchase
price payments or other earn-out payments required in connection with
Investments otherwise permitted under this Agreement;

 

(j)                                     negotiable instruments held for deposit
or collection in the ordinary course of business;

 

(k)                                  prepaid expenses and workers
compensation, utility, and similar deposits in the ordinary course of business;
and

 

(l)                                     intercompany loans that constitute
Permitted Debt.

 

“Permitted Liens”
means, with respect to any Person:

 

(a)                                  Liens arising under an agreement,
document or instrument entered into in connection with the incurrence of
Indebtedness permitted under Sections 9.01(c) and 9.01(d);

 

15

 

(b)                                 pledges or deposits by such Person under
workmen’s compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders, contracts
(other than for the payment of Indebtedness) or leases to which such Person is
a party, or deposits to secure public or statutory, contractual or warranty
obligations of such Person or deposits of cash or United States Government
bonds to secure surety or appeal bonds to which such Person is a party, or
deposits as security for contested taxes or import duties or for the payment of
rent;

 

(c)                                  Liens imposed by law, such as carriers,
warehousemen’s and mechanics’ Liens or Liens arising out of judgments or awards
against such Person with respect to which such Person shall then be prosecuting
appeal or other proceedings for review;

 

(d)                                 Liens securing the payment of taxes,
assessments and governmental charges or levies which are not yet subject to
penalties for non-payment or which are being contested in good faith and by
appropriate proceedings;

 

(e)                                  Liens in favor of issuers of surety bonds
or letters of credit issued pursuant to the request of and for the account of
such Person in the ordinary course of its business;

 

(f)                                    minor survey exceptions, minor
encumbrances, easements or reservations of, or rights of others for, rights of
way, sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning of other restrictions as to the use of real properties or
Liens incidental to the conduct of the business of such Person or to the
ownership of its properties which were not incurred in connection with
Indebtedness or other extensions of credit and which do not in the aggregate
materially adversely affect the value of said properties or materially impair
their use in the operation of the business of such Person;

 

(g)                                 judgment Liens not giving rise to an
Event of Default;

 

(h)                                 Liens arising from filing Uniform
Commercial Code financing statements regarding leases and contractual
landlord’s Liens not securing Indebtedness;

 

(i)                                     Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; and

 

(j)                                     Liens listed on Schedule 1.01.

 

“Permitted Refinancing
Debt” means any Indebtedness of the Company or any of its Subsidiaries
issued in exchange for, or the net proceeds of which are used to renew, refund,
refinance, replace, defease or discharge other Indebtedness of the Company or
any of its Subsidiaries (other than intercompany Indebtedness); provided,
that:

 

16

 

(a)                                  the principal amount (or accreted value,
if applicable) of such Permitted Refinancing Debt does not exceed:

 

(i)                                     if the Indebtedness renewed, refunded,
refinanced, replaced, defeased or discharged is the Senior Secured Notes or
Permitted Refinancing Debt thereof (the “Refinanced Senior Debt”),
$37,500,000 (subject to clause (e) below) minus the amount of any
Refinanced Senior Debt (plus all accrued interest thereon) that remains
outstanding thereafter; provided, that any proceeds from such Permitted
Refinancing Debt that are in excess of the amount of Refinanced Senior Debt are
used for Permitted Investments or other purposes approved by the Required
Noteholders, or if no Notes are outstanding, by the Required Series B Holders;

 

(ii)                                  with respect to all Indebtedness other
than Refinanced Senior Debt, the principal amount (or accreted value, if
applicable) of such Indebtedness being renewed, refunded, refinanced, replaced,
defeased or discharged (plus all accrued interest on such Indebtedness and the
amount of all fees and expenses, including premiums, incurred in connection
therewith);

 

(b)                                 with respect to Refinanced Senior Debt,
such Permitted Refinancing Debt complies with Section 9.05(c), and with
respect to all other Indebtedness, such Permitted Refinancing Debt has a final
maturity date not later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being renewed, refunded, refinanced, replaced,
defeased or discharged;

 

(c)                                  if the Indebtedness being renewed,
refunded, refinanced, replaced, defeased or discharged is subordinated in right
of payment to the Notes, such Permitted Refinancing Debt has a final maturity
date later than the final maturity date of, and is subordinated in right of
payment to, the Notes on terms at least as favorable to the holders of Notes as
those contained in the documentation governing the Indebtedness being renewed,
refunded, refinanced, replaced, defeased or discharged;

 

(d)                                 such Indebtedness is incurred either by
the Company or by the Subsidiary who is the obligor on the Indebtedness being
renewed, refunded, refinanced, replaced, defeased or discharged; and

 

(e)                                  after giving effect to the incurrence of
such Indebtedness, the Company would be in compliance on a pro-forma basis with
the covenants in Section 9.17.

 

“Person” means any
individual, partnership, joint venture, firm, corporation, limited liability
company, association, trust or other enterprise (whether or not incorporated)
or any Governmental Authority.

 

17

 

“Plan” means, at a
particular time, any employee benefit plan as defined in Section 3(3) of
ERISA and in respect of which the Company or any Commonly Controlled Entity is
(or, if such plan were terminated at such time, would, under Section 4069
of ERISA, be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Preemptive Rights”
means any preemptive or other similar rights (whether created by contract or
any Requirement of Law applicable at any time to the Company or any of its
Subsidiaries).

 

“Preferred Leverage
Ratio” shall have the meaning assigned thereto in Section 9.17(d).

 

“Prepayment Date”
has the meaning assigned thereto in Section 10.01(b).

 

“Property” means
any right or interest in or to property of any kind whatsoever, whether real,
personal or mixed and whether tangible or intangible, including without
limitation, Capital Stock.

 

“Purchased Equity
Securities” means the Series B Preferred Stock and the Warrants.

 

“Purchased Securities”
means the Notes and the Purchased Equity Securities.

 

“Reduced Premium”
shall have the meaning assigned thereto in Section 10.01.

 

“Registration Rights
Agreement” means the Amended and Restated Registration Rights Agreement,
dated the date hereof, among the Company and the others party thereto.

 

“Regulation S-X”
means Regulation S-X under the Securities Act.

 

“Reorganization”
means, with respect to any Multiemployer Plan, the condition that such plan is
in reorganization within the meaning of Section 4241 of ERISA.

 

“Required Noteholders”
means, collectively, the Holders of a majority of (a) the outstanding principal
balance of the Notes, if any, or (b) if no Notes are outstanding, the Warrant
Shares.

 

“Required Series B
Holders” means the Holders of a majority of the outstanding shares of
Series B Preferred Stock.

 

“Requirements of Law”
means, as to any Person, the charter and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject including, without
limitation, the Securities Act, the Securities Exchange Act, Regulations U and
X, ERISA, the Fair Labor Standards Act, the Worker Adjustment and Retraining
Notification Act, Americans with Disabilities Act of 1990, the Social

 

18

 

Security Act, including Environmental Laws (including,
without limitation, those applicable to the disposal of medical waste).

 

“Reportable Event”
means any of the events set forth in Section 4043(c) of ERISA.

 

“Restricted Investment”
means any Investment that is not a Permitted Investment.

 

“Restricted Payments”
has the meaning assigned thereto in Section 9.04.

 

“Securities Act”
means the Securities Act of 1933, as amended, and the rules and regulations of
the Commission thereunder.

 

“Senior Note Documents”
means the Senior Note Purchase Agreement and each other loan or credit document
(including any agreements creating or purporting to create a Lien securing
obligations under the Senior Note Purchase Agreement), as defined and referred
to in the Senior Note Purchase Agreement, as amended or supplemented from time
to time.

 

“Senior Note Purchase
Agreement” means the Purchase Agreement, dated as of the date hereof,
between the Company, GoldenTree Asset Management, L.P. and the other parties
thereto.

 

“Senior Secured Notes”
means the Senior Secured Notes, due March 31, 2009, issued pursuant to the
Senior Note Purchase Agreement.

 

“Series A Preferred
Stock” means the Series A Redeemable Preferred Stock of the Company, par
value $0.01 per share.

 

“Series A Preferred
Stock Purchase Agreement” means the Series A Preferred Stock Purchase
Agreement, dated the date hereof, among the Company and the purchasers party
thereto.

 

“Series B Preferred
Stock” means the Series B Participating Preferred Stock of the Company, par
value $0.01 per share.

 

“Single Employer Plan”
means any Plan which is a single employer plan as defined in
Section 4001(a)(15) of ERISA and which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.

 

“Significant
Subsidiary” means, with respect to any Person, any Subsidiary of such
Person that satisfies the criteria for a “significant subsidiary” set forth in
Rule 1.02(w) of Regulation S-X under the Securities Act.

 

“Stockholders
Agreement” means the Amended and Restated Stockholders Agreement, dated as
of the date hereof, among the Company, BACI and the other stockholders of the
Company party thereto, as amended or supplemented from time to time.

 

“Subsidiary”
means, with respect to any Person, any corporation, association or other
business entity of which securities or other ownership interests representing
more than 50% of

 

19

 

the ordinary voting power are, at the time as of which
any determination is being made, owned or controlled by that Person or one or
more subsidiaries of that Person or by that Person and one or more subsidiaries
of that Person.  For purposes of the representations and warranties set
forth in Article V, GameSpy and each of its Subsidiaries shall be deemed
to be Subsidiaries of the Company as of the date hereof and as of the Closing
Date.

 

“Test Period”
means the four consecutive completed fiscal quarters of the Company ending on
the applicable date of measurement, including periods prior to the Closing
Date; provided, that (a) for periods prior to the Closing Date the
financial results of the Company and GameSpy shall be measured on a combined
basis and (b) for purposes of calculating Consolidated Interest Expense of the
Company for any four consecutive completed fiscal quarters ending on or before
March 31, 2005, Consolidated Interest Expense of the Company for the
period from April 1, 2004 to the date of measurement shall be annualized.

 

“Transaction Documents”
means, collectively, the Investment Documents, the Merger Documents, the Series
A Preferred Stock Purchase Agreement and the Senior Note Documents.

 

“Two Cents” means
Two Cents, Inc., a New Jersey corporation and wholly owned Subsidiary of the
Company.

 

“Voting Stock” of
any Person as of any date means the Capital Stock of such Person that is at the
time entitled to vote in the election of the board of directors of such Person.

 

“Warrants” means
the Common Stock Purchase Warrant to purchase 56,298 shares of Common Stock of
the Company and any Warrant issued in replacement or substitution thereof.

 

“Warrant Shares”
means all shares of Common Stock issued or issuable upon exercise of the
Warrant.

 

“Warrant Agreement”
means the Warrant Agreement, dated the date hereof, between the Company and
BACI, as amended or supplemented from time to time.

 

“Weighted Average Life
to Maturity” means, when applied to any Indebtedness at any date, the
number of years obtained by dividing: (a) the sum of the products obtained by
multiplying (i) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect of the Indebtedness, by (ii) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment; by (b) the then outstanding principal amount of
such Indebtedness.

 

“Wholly-Owned
Subsidiary” of any specified Person means a Subsidiary of such Person all
of the outstanding Capital Stock or other ownership interests of which (other
than directors’ qualifying shares) will at the time be owned by such Person or
one or more Wholly Owned Subsidiaries of such Person.

 

“Withdrawal Liability”
means any withdrawal liability as defined in Section 4201 of ERISA.

 

20

 

SECTION 1.02                    Accounting Terms; Financial Statements.  All accounting terms used herein
not expressly defined in this Agreement shall have the respective meanings
given to them in accordance with sound accounting practice.  The term
“sound accounting practice” means such accounting practice as, in the opinion of
the independent certified public accountants regularly retained by the Company,
conforms at the time to GAAP applied on a consistent basis except for changes
with which such accountants concur.  If any changes in accounting
principles are hereafter occasioned by promulgation of rules, regulations,
pronouncements or opinions of or are otherwise required by, the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions), and any
of such changes results in a change in the method of calculation of, or affects
the results of such calculation of, any of the financial covenants, standards
or terms found herein, then the parties hereto agree to enter into and
diligently pursue negotiations in order to amend such financial covenants,
standards or terms so as to reflect fairly and equitably such changes, with the
desired result that the criteria for evaluating the Company’s financial
condition and results of operations of the Company shall be the same after such
changes as if such changes had not been made; provided, that prior to
any such amendments, compliance with the financial covenants contained herein
shall continue to be determined in accordance with GAAP as in effect prior to
such change.

 

ARTICLE II

 

PURCHASE
AND SALE

 

SECTION 2.01                    Purchase and Sale of the Purchased
Securities. 
Subject to the terms and conditions set forth in this Agreement, and in
reliance upon the representations and warranties set forth below, the Company
agrees that it will issue to each Purchaser, and each Purchaser agrees to
acquire from the Company, on the Closing Date, the Purchased Securities set
forth opposite such Purchaser’s name on Schedule 2.01 hereto. 
The aggregate, combined purchase price of the Notes and Warrants shall be
$20,000,000, and the aggregate purchase price for the Series B Preferred Stock
shall be $10,000,000.  The respective purchase prices shall be allocated
as set forth on Schedule 2.01 hereto and the Purchasers shall make such
purchase price payment by wire transfer of immediately available funds to an
account designated in writing by the Company.

 

SECTION 2.02                    Closing.  Subject to the
terms and conditions of this Agreement, the issuance and purchase of the
Purchased Securities shall take place at the closing (the “Closing”) to be held
at the offices of Goodwin Procter, Boston, Massachusetts, at 10:00 a.m., on the
date hereof or at such other time and place as the parties hereto may agree in
writing (the “Closing Date”).  At the Closing, the Company shall deliver
to the Purchasers the Purchased Securities against delivery to the Company by
the Purchasers of the purchase price therefor by wire transfer of immediately
available funds.

 

SECTION 2.03                    Original Issue Discount. The Company and the
Purchasers acknowledge that under the regulations of the United States
Department of Treasury, the issuance of the Notes and the Warrants to the
Purchasers for an aggregate, combined purchase price will result in the
creation of “original issue discount” on the Notes equal to the value of the

 

21

 

Warrants.  After taking into account all relevant
factors (including the fact that no public market for the Common Stock
currently exists, the general condition of the financial markets at this time,
the liquidation preferences of senior securities of the Company, the exercise
price for shares of Common Stock issuable upon exercise of the Warrants, the
nature of the rights provided for in the Warrants and all other matters
concerning the transactions contemplated by this Agreement), the Company and
each Purchaser agree that the aggregate original issue discount on the Note (i.e., the value of the Warrants) is
$564.  Neither the Company nor any Purchaser will take any position for
United States federal income tax purposes that is inconsistent with the
provisions of this Section 2.03.  The parties acknowledge that this
amount will be within the range to cause the original issue discount on the
Notes to be “de minimis” within
the meaning of Code section 305(c)(1).

 

ARTICLE III

 

CONDITIONS
TO THE OBLIGATION

OF THE PURCHASER TO CLOSE

 

The obligation of the
Purchasers to purchase the Purchased Securities, to pay the purchase price
therefor at the Closing and to perform any obligations hereunder shall be
subject to the satisfaction as determined by the Purchasers of the following
conditions on or before the Closing Date:

 

SECTION 3.01                    Representations and Warranties.  The
representations and warranties of the Company contained in Article V
hereof shall be true and correct in all material respects on and as of the
Closing Date as if made on and as of such date.

 

SECTION 3.02                    Compliance with this Agreement.  The Company
shall have performed and complied with all of the agreements and conditions set
forth herein that are required to be performed or complied with by the Company
on or before the Closing Date.

 

SECTION 3.03                    No Material Adverse Change.  Since
December 31, 2003 no event, occurrence, condition, change, development or
effect shall exist or shall have occurred or come to exist after the date of
this Agreement that, individually or in the aggregate, has had or resulted in,
or could reasonably be expected to become or result in, a Material Adverse Effect.

 

SECTION 3.04                    No Adverse Proceedings.  No action,
suit or proceeding before any Governmental Authority shall have been commenced,
no investigation by any Governmental Authority shall have been commenced, and
no action, suit or proceeding by any Governmental Authority shall have been
threatened against any of the parties to this Agreement, or any of the
principals, officers, directors, partners or stockholders of any of them, or
any of their assets seeking to restrain, prevent or challenge the transactions
contemplated hereby or questioning the validity or legality of any of such
transactions or seeking damages in connection with any of such transactions.

 

SECTION 3.05                    Transaction Documents.  The Purchasers
shall have received true, complete and correct copies of the Transaction
Documents and such other documents as it may

 

22

 

reasonably request in connection
with or relating to the sale of the Purchased Securities and the transactions
contemplated hereby, all in form and substance satisfactory to the Purchasers.

 

SECTION 3.06                    Payment of Fees and Expenses.  The Purchasers
shall have received by wire transfer of immediately available funds payment of
all fees and expenses to be paid by the Company pursuant to Section 15.13.

 

SECTION 3.07                    The Merger.  The Merger
shall be consummated concurrently with the Closing on the terms and conditions
contemplated by the Merger Documents, and all conditions precedent to such
consummation shall have been satisfied or, with the Purchasers’ consent,
waived.

 

SECTION 3.08                    Senior Note Purchase Agreement.  As of, or
immediately prior to the Closing Date, the Company shall have received
$21,825,000 of aggregate cash proceeds from the sale of the Senior Secured
Notes on the terms and conditions set forth in the Senior Note Purchase
Agreement.

 

SECTION 3.09                    Financial Statements. The Company shall
have delivered to each Purchaser (a) audited financial statements for the
Company and GameSpy for fiscal year 2003, and (b) internal consolidated
financial statements of the Company and GameSpy for (i) each fiscal quarter
occurring in fiscal year 2001, and (ii) each month since January 1, 2002,
and each such internal financial statement must be satisfactory to each of the
Purchasers.  The Company shall have delivered to each Purchaser (x) a pro
forma consolidated balance sheet of the Company and its Subsidiaries as of
January 31, 2004, prepared in accordance with Regulation S-X, that gives
pro forma effect to the Merger and the transactions contemplated by this
Agreement and the Senior Note Purchase Agreement as if they had occurred on
such date, and (y) a pro forma consolidated income statement and pro forma
consolidated statement of cash flows of the Company and its Subsidiaries for the
twelve months ending January 31, 2004, prepared in accordance with
Regulation S-X, that gives pro forma effect to the Merger and the transactions
contemplated by this Agreement and the Senior Note Purchase Agreement as if
they had occurred on February 1, 2003.

 

SECTION 3.10                    Officer’s Certificate.  The Purchasers
shall have received a certificate dated as of the Closing Date from the chief
executive officer and chief financial or equivalent officer of the Company, in
form and substance satisfactory to the Purchasers, to the effect that (a) all
representations and warranties of the Company contained in this Agreement are
true, correct and complete in all material respects, (b) the Company is not in
violation of any of the covenants contained in this Agreement, and (c) all
conditions precedent to the Closing of this Agreement to be performed by the
Company have been duly performed in all material respects.

 

SECTION 3.11                    Secretary’s Certificates.  The Purchasers
shall have received a certificate from the Company dated the Closing Date and
signed by the Secretary of the Company and GameSpy, respectively, certifying
(a) that the attached copies of the Company Charter Documents or certificate of
incorporation and bylaws of GameSpy, as applicable, and resolutions approving
this Agreement and the transactions contemplated hereby, are all true, complete
and correct and remain unamended and in full force and effect, (b) as to the
incumbency and specimen

 

23

 

signature of each officer of the
Company or GameSpy, as applicable, executing this Agreement and any other
document delivered in connection herewith on behalf of the Company or GameSpy,
as applicable, and (c) as to the good standing of the Company in Delaware and GameSpy
in its jurisdiction or incorporation and in each other state in which the
Company or GameSpy, as applicable, is transacting business except where the
failure to be in good standing would not have a Material Adverse Effect.

 

SECTION 3.12                    Statement of Sources and Uses.  The Purchasers
shall have received a detailed statement of the sources and uses of funds from
(a) the sale of the Purchased Securities pursuant to this Agreement, (b) the
sale of Senior Secured Notes pursuant to the Senior Note Purchase Agreement,
(c) the sale of Series A Preferred Stock pursuant to the Series A Preferred
Stock Purchase Agreement and (d) the other transactions being undertaken by the
Company concurrently herewith including the Merger.

 

SECTION 3.13                    Purchase Permitted by Applicable
Laws.  The acquisition of and payment for the Purchased Securities to
be acquired by the Purchasers hereunder and the consummation of the
transactions contemplated hereby (a) shall not be prohibited by any Requirement
of Law and (b) shall not subject the Purchasers to any penalty or, in their
reasonable judgment, other onerous condition under or pursuant to any
Requirement of Law.

 

SECTION 3.14                    Consents and Approvals.  All consents,
exemptions, authorizations or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons in respect of all Requirements of
Law and with respect to contractual obligations of the Company required in
connection with the execution, delivery or performance by the Company or
enforcement against the Company of this Agreement and the other Transaction
Documents shall have been obtained and be in full force and effect, and the
Purchasers shall have been furnished with appropriate evidence thereof, and all
waiting periods shall have lapsed without extension or the imposition of any
conditions or restrictions.

 

SECTION 3.15                    Legal Opinion.  The Purchasers
shall have received the legal opinion of Goodwin Procter LLP, counsel for the
Company and Merger Subsidiary in form and substance reasonably satisfactory to
the Purchasers.

 

SECTION 3.16                    Disbursement Instructions.  The Purchasers
shall have received written instructions from the Company to the Purchasers
directing the payment of the purchase price to be paid on the Closing Date.

 

SECTION 3.17                    Other Assurances.  The Company
shall have delivered to the Purchasers such other and further certificates,
assurances and documents as the Purchasers or their respective counsel may have
reasonably requested in order to evidence the accuracy of the representations
and warranties thereof, the performance of the covenants and agreements to be
performed at or prior to the Closing thereby, and the fulfillment of the
conditions to the Purchasers’ obligations.

 

24

 

ARTICLE IV

 

CONDITIONS
TO THE OBLIGATION

OF THE COMPANY TO CLOSE

 

The obligations of the
Company to issue and sell to the Purchasers the Purchased Securities and to
perform its other obligations hereunder shall be subject to the satisfaction as
determined by the Company of the following conditions on or before the Closing
Date:

 

SECTION 4.01                    Representations and Warranties.  The
representations and warranties of the Purchasers contained in Article VI
shall be true and correct in all material respects on and as of the Closing
Date as if made on and as of such date.

 

SECTION 4.02                    Compliance with this Agreement.  The Purchasers
shall have performed and complied with all of its agreements and conditions set
forth or contemplated herein that are required to be performed or complied with
by the Purchasers on or before the Closing Date.

 

SECTION 4.03                    Payment of Purchase Price.  The Company
shall have received via wire transfer of immediately available funds, the
purchase price for the Purchased Securities.

 

SECTION 4.04                    Issuance Permitted by Requirements
of Laws.  The issuance of the Purchased Securities to be issued by the
Company hereunder and the consummation of the transactions contemplated hereby
shall not be prohibited by any Requirement of Law.

 

SECTION 4.05                    Consents and Approvals.  All consents,
exemptions, authorizations or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons in respect of all Requirements of
Law and contractual obligations of the Purchasers required in connection with
the execution, delivery or performance by the Purchasers or enforcement against
the Purchasers of this Agreement shall have been obtained and be in full force
and effect, and the Company shall have been furnished with appropriate evidence
thereof, and all waiting periods shall have lapsed without extension or the
imposition of any conditions or restrictions.

 

ARTICLE V

 

REPRESENTATIONS
AND

WARRANTIES OF THE COMPANY

 

The Company hereby
represents and warrants to the Purchasers on behalf of itself and each of its
Subsidiaries, as of the Closing Date and before and after giving effect to the
other transactions contemplated by this Agreement and the other Transaction
Documents, as follows:

 

SECTION 5.01                    Corporate Existence and Power.  Each of the
Company and the Guarantors has all requisite corporate power and authority to
enter into and perform all of its obligations under the Investment Documents to
which it is a party and to carry out the transactions contemplated hereby and
thereby.

 

25

 

SECTION 5.02                    Binding Effect.  Each of the
Investment Documents and the Merger Documents to which the Company and any
Guarantor is a party is a valid and legally binding obligation of the Company
or such Guarantor, enforceable against it in accordance with its terms, except
for (a) the effect thereon of bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting the rights of
creditors generally and (b) limitations imposed by federal or state law or
equitable principles upon the specific enforceability of any of the remedies,
covenants or other provisions thereof and upon the availability of injunctive
relief or other equitable remedies.

 

SECTION 5.03                    Capitalization.

 

(a)                                  Prior to the Closing.  Prior to the closing of the
transactions contemplated hereby, the authorized capital stock of the Company
consists solely of:

 

(i) 1,500,000 shares of Common Stock, of which
(A) 1,000,000 shares are issued and outstanding and (B) 25,200 shares are
reserved for issuance pursuant to the Equity Incentive Plan; and

 

(ii) 70,500,000 shares of Preferred Stock, of
which (A) 70,273,074 shares are designated Series A Redeemable Preferred Stock,
34,923,565 of which are issued and outstanding and (B) 226,926 shares are
undesignated preferred stock.

 

(b)                                 Subsequent to the Closing.  Immediately after the closing of
the transactions contemplated hereby, the authorized capital stock of the
Company shall consist solely of:

 

(i)                                     1,400,000 shares of Common Stock, of
which (A) 1,035,631 shares will be issued and outstanding, owned of record by
the Persons in the respective amounts set forth on Schedule 5.03(b),
(B) 56,298 shares of which are reserved for issuance upon conversion of the
Series B Preferred Stock, (C) 56,298 shares of which are reserved for issuance
upon exercise of the Warrant, and (D) 37,000 shares of which are reserved for
issuance pursuant to the Equity Incentive Plan; and

 

(ii)                                  40,000,000 shares of Preferred Stock, of
which (A) 39,922,957 shares will be designated as Series A Preferred Stock, all
of which are issued and outstanding, owned of record by the Persons in the
respective amounts set forth on Schedule 5.03(b), (B) 56,298 shares
are designated as Series B Preferred Stock, all of which are issued and
outstanding, owned of record by the Persons in the respective amounts set forth
on Schedule 5.03(b), and (C) 20,745 shares shall be undesignated
preferred stock, none of which are outstanding.

 

All such shares have been
duly authorized and validly issued, are fully paid and nonassessable. 
None of such shares are subject to call or have been issued in violation of, or
are subject to, any Preemptive Rights.

 

(c)                                  Subsidiaries.  Schedule 5.03(c) sets
forth a complete listing of each Subsidiary of the Company, including all of
the Capital Stock of each such Subsidiary and the respective owners
thereof.  All such shares of Capital Stock of each of such Subsidiaries
(i) have been duly authorized

 

26

 

and validly issued, are fully paid and nonassessable
and are not subject to call and (ii) have not been issued in violation of, and
are not subject to, any Preemptive Rights which have not been duly waived.

 

(d)                                 No Warrants, Options, etc.  Except as set forth on Schedule 5.03(d)
hereto, (i) there are no outstanding subscriptions, warrants, options, calls,
commitments or other rights or agreements to which the Company or any other
Person is bound or entitled to the benefit of relating to the issuance, sale,
redemption, transfer or voting of any Capital Stock of the Company, (ii) no
shares of Capital Stock of the Company are reserved for any purpose and (iii)
no Person has any right or entitlement to any equity securities of the Company
(including as the result of any Preemptive Rights).

 

SECTION 5.04                    Private Offering.         Assuming the accuracy of the representations of the
Purchasers in Article VI, the sale of the Purchased Securities pursuant to
this Agreement is exempt from the registration and prospectus delivery
requirements of the Securities Act.  In the case of each offer or sale of
the Purchased Securities, no form of general solicitation or general
advertising was used by the Company or its representatives, including advertisements,
articles, notices or other communications published in any newspaper, magazine
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or
general advertising.  The Purchasers are the only purchasers of the
Purchased Securities.  No similar securities have been issued and sold by
the Company within the six-month period immediately prior to the date hereof in
such a manner as to bring the issuance and sale of the Purchased Securities to
any Purchaser hereunder within the provisions of Section 5 of the
Securities Act.  The Company agrees that neither it, nor anyone acting on
behalf of it, will offer or sell the Purchased Securities, or any similar
securities, in the future if such offer or sale might bring the issuance and
sale of the Purchased Securities to any Purchaser hereunder within the
provisions of Section 5 of the Securities Act.

 

SECTION 5.05                    Broker’s, Finder’s or Similar Fees. Except as disclosed
on Schedule 5.05, neither the Company nor any of its Subsidiaries
has dealt with any broker, finder, commission agent or other Person in
connection with the sale of the Purchased Securities and the transactions
contemplated by this Agreement and neither the Company nor GameSpy is under an
obligation to pay any broker’s or finder’s fee or commission or similar payment
in connection with such transactions.  The Company hereby agrees to
indemnify and hold the Holders harmless from and against any and all actions,
suits, claims, costs, expenses, losses, liabilities and/or obligations in
connection with or relating to any broker’s or finder’s fees or commission or
similar payment in connection with such transactions.

 

SECTION 5.06                    Disclosure.  None of the Investment Documents, any document
attached hereto or thereto or contemplated hereby or thereby, or furnished by
or on behalf of the Company to any Purchaser in connection with the negotiation
and sale of the Purchased Securities, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.  There is no fact known to the
Company that has not been disclosed to each Purchaser that would, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  In addition, to the best knowledge of the Company, there
is not currently any statute, regulation, rule or requirement that would have,

 

27

 

either individually or in the aggregate, a Material
Adverse Effect on the ability of the Company and its Subsidiaries to conduct
their respective businesses as currently conducted.

 

SECTION 5.07                    Representations in Other
Transaction Documents.  All of the representations and warranties of
the Company set forth in Article IV of the Senior Note Purchase Agreement
and Article II of the Series A Preferred Stock Purchase Agreement are true
and correct in all respects as of the Closing Date and are incorporated herein
by reference as if fully set forth herein. All representations made by the
Company and Merger Subsidiary and, to the knowledge of the Company, all
representations made by GameSpy and any other party in the Merger Documents
were and are true, correct and complete in all material respects as of the date
hereof and the date made or deemed made thereunder.

 

ARTICLE VI

 

REPRESENTATIONS
AND

WARRANTIES OF THE PURCHASER

 

Each Purchaser, severally
and not jointly, hereby represents and warrants as to itself, and not as to any
other Purchaser, as follows:

 

SECTION 6.01                    Authorization; No Contravention.  The execution,
delivery and performance by such Purchaser of this Agreement (a) is within such
Purchaser’s power and authority and has been duly authorized by all necessary
action, (b) does not contravene the terms of such Purchaser’s organizational
documents or any amendment thereof if such Purchaser is not a natural person
and (c) will not violate, conflict with or result in any breach or
contravention of any contractual obligation of such Purchaser, or any
Requirement of Law directly relating to such Purchaser.

 

SECTION 6.02                    Binding Effect.  This Agreement
has been duly executed and delivered by such Purchaser, and this Agreement
constitutes the legal, valid and binding obligation of such Purchaser
enforceable against it in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting the
enforcement of creditors’ rights generally or by general equitable principles
relating to enforceability.

 

SECTION 6.03                    Accredited Investor; Purchase for
Own Account.  Such Purchaser is an “accredited investor” within
the meaning of Regulation D under the Securities Act.  The Purchased
Securities are being or will be acquired for its own account and with no
intention of distributing or reselling such securities or any part thereof in
any transaction that would be in violation of the Securities Act or the
securities laws of any state, without prejudice, however, to the rights of such
Purchaser at all times to sell or otherwise dispose of all or any part of the
Purchased Securities under an effective registration statement under the
Securities Act, or under an exemption from such registration available under
the Securities Act. Such Purchaser agrees to the imprinting, so long as
required by law, of a legend on the Notes to the following effect:

 

28

 

“THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND SUCH LAWS.”

 

SECTION 6.04                    Broker’s, Finder’s or Similar Fees.  There are no
brokerage commissions, finder’s fees or similar fees or commissions payable in
connection with the transactions contemplated hereby, or by any other
Investment Document to which such Purchaser is a party, based on any agreement,
arrangement or understanding with such Purchaser or any action taken by such
Purchaser.

 

SECTION 6.05                    Governmental Authorization; Third
Party Consent.  Except as contemplated by the Investment Documents
and except to the extent previously and duly obtained or made and in full force
and effect, no approval, consent, compliance, exemption, authorization or other
action by, or notice to, or filing with, any Governmental Authority or any
other Person in respect of any Requirement of Law, and no lapse of a waiting
period under a Requirement of Law, is necessary or required in connection with
the execution, delivery or performance by such Purchaser or enforcement against
such Purchaser of this Agreement or the transactions contemplated hereby.

 

ARTICLE VII

 

FINANCIAL
INFORMATION AND NOTICES

 

SECTION 7.01                    Delivery of Financial and Other
Statements and Reports. The Company will deliver to each Holder the
following:

 

(a)                                  Monthly Financial Statements.  As soon as available, but in any
event not later than 30 days after the last day of each month (except for the
last month of each fiscal quarter), a consolidated balance sheet of the Company
and its Subsidiaries as of the end of such month and related consolidated
statements of operations and cash flows, of the Company and its Subsidiaries
for such month and for the portion of the fiscal year through the end of such
month, together with related consolidating statements for such periods
(provided that such consolidating statements are being prepared for the
Company’s management or other creditors), all in reasonable detail and prepared
in accordance with GAAP consistently applied, and accompanied by a comparison
of current month and year-to-date results as reported in such consolidated
statements to (A) results for the corresponding periods of the prior
fiscal year and (B) results projected for such periods in the budget and
business plans delivered to Holders pursuant to Section 7.01(d) at the
commencement of the then current fiscal year;

 

(b)                                 Quarterly Financial Statements.  As soon as available, but in any
event not later than 45 days after the last day of each fiscal quarter (except
for the last fiscal quarter of each

 

29

 

fiscal year), a consolidated balance sheet of the
Company and its Subsidiaries as of the end of such quarter and related
consolidated statements of operations, stockholders’ equity and cash flows, of
the Company and its Subsidiaries for such quarter and for the portion of the
fiscal year through the end of such quarter, together with related
consolidating statements for such periods (provided that such consolidating
statements are being prepared for the Company’s management or other creditors),
all in reasonable detail and prepared in accordance with GAAP consistently
applied, and accompanied by a comparison of current quarter and year-to-date
results as reported in such consolidated statements to (A) results for the
corresponding periods of the prior fiscal year and (B) results projected for
such periods in the budget and business plans delivered to Holders pursuant to
Section 7.01(d) at the commencement of the then current fiscal year;

 

(c)                                  Annual Financial Statements.  As soon as available, but in any
event not later than 90 days after the close of each fiscal year, an audited consolidated
balance sheet of the Company and its Subsidiaries as of the close of such
fiscal year, and related audited consolidated statements of operations, cash
flows and changes in stockholder’s equity of the Company and its Subsidiaries
for such fiscal year, reported on (without any material qualification arising
from the scope of the audit or with respect to the continuance of the Company
and its Subsidiaries as going concerns) by a nationally recognized firm of
independent certified public accountants and prepared in accordance with GAAP
consistently applied;

 

(d)                                 Budgets.  As soon as available, but in any event not
later than 60 days after the first day of each fiscal year, a reasonably
detailed consolidated monthly budget for the Company and its Subsidiaries for
the immediately forthcoming fiscal year, which plan shall have been approved by
the Board;

 

(e)                                  Auditor Reports.  Promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of all
material reports submitted to the Company by independent certified public
accountants in connection with each annual, interim or special audit of the
financial statements of the Company and its Subsidiaries made by such
accountants, including any comment letter submitted by such accountants to
management in connection with their annual audit;

 

(f)                                    Information Provided to Other
Securityholders. 
Concurrently with the provision of the same to or by the holders of Senior
Secured Notes, Series A Preferred Stock or Common Stock, copies of any
financial or other report or notice delivered to, or received from, any such
holders in each case as a class; and

 

(g)                                 Other Information.  On an as requested basis, any
other information reasonably requested by any Holder.

 

SECTION 7.02                    Compliance Certificates.  The Company will deliver to each
Holder, together with the financial statements under Section 7.01(b), within 45 days after the end of each
fiscal quarter, an Officers’ Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal
quarter has been made under the supervision of the signing officers with a view
to determining whether the Company has kept, observed, performed and fulfilled
its obligations under this Agreement, and further stating, as to

 

30

 

each such Officer signing such certificate, that to
the best of his or her knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Agreement and is not in
Default in the performance or observance of any of the terms, provisions and
conditions of this Agreement (or, if a Default or Event of Default has
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge and what action the Company is taking or proposes to take
with respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of, or interest and premium, if any, on the Notes is prohibited or if
such event has occurred, a description of the event and what action the Company
is taking or proposes to take with respect thereto.

 

SECTION 7.03                    Accountant Letters.  So long as not
contrary to the then current recommendations of the American Institute of
Certified Public Accountants, the year-end financial statements delivered
pursuant to Section 7.01(c) will be accompanied by a written statement of
the Company’s independent public accountants (who shall be a firm of
established national reputation or otherwise approved by the Required
Noteholders) that in making the examination necessary for certification of such
financial statements, nothing has come to their attention that would cause them
to believe that any Default or Event of Default has occurred or, if any such
Default or Event of Default has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be
liable directly or indirectly to any Person for any failure to obtain knowledge
of any such Default or Event of Default.  The Required Noteholders hereby
approve Burr, Pilger & Mayer as the independent public accountants of the
Company for purposes of delivering the first report to be delivered pursuant to
this Section 7.03.

 

ARTICLE VIII

 

AFFIRMATIVE
COVENANTS

 

Until such time as there
are no Purchased Securities outstanding, the Company hereby covenants and
agrees with each Holder as follows:

 

SECTION 8.01                    Payment of Notes.  The Company
will pay or cause to be paid the principal of, premium, if any, and interest on
the Notes on the dates and in the manner provided in this Agreement and the
Notes.

 

SECTION 8.02                    Notice of Defaults.  So long as any
of the Notes are outstanding, the Company will deliver to each Holder,
forthwith upon any officer becoming aware of any Default or Event of Default,
an Officers’ Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.

 

SECTION 8.03                    Taxes.  The Company
will timely pay, and will cause each of its Subsidiaries to timely pay, all
material taxes, assessments, and governmental levies except such as are
contested in good faith and by appropriate proceedings or where the failure to
effect such payment is not adverse in any material respect to the Holders of
the Notes.

 

31

 

SECTION 8.04                    Insurance.  The Company
will maintain liability, casualty, business continuity and other insurance with
a reputable insurer or insurers in such amounts and against such risks as is
carried by responsible companies engaged in similar businesses and owning
similar assets.

 

SECTION 8.05                    Corporate Existence.  The Company
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate or other entity
existence of each of its Subsidiaries in accordance with the respective
organizational documents of each of them and the corporate or other entity
rights (charter and statutory), licenses and franchises of the Company and its
Subsidiaries; provided, however, that with respect to any
Subsidiary of the Company, the Company will not be required to preserve any
such right, license or franchise, or corporate or other entity existence, if
the board of directors of the Company determines that the preservation thereof
is no longer desirable in the conduct of the business of the Company and its
Subsidiaries taken as a whole and that the loss thereof is not adverse in any
material respect to any Holder.

 

SECTION 8.06                    Books and Records.  The Company
will, and will cause each of its Subsidiaries to, keep proper books of record
and account, in which full and materially correct entries shall be made in accordance
with GAAP of all financial transactions and the assets and business of Company
and each of its Subsidiaries.

 

SECTION 8.07                    Reservation of Shares.  At all times that the Warrant is
outstanding, the Company shall reserve and keep available out of its authorized
Capital Stock, solely for the purpose of issuance or delivery upon exercise of
the Warrant and conversion of the Series B Preferred Stock, the maximum number
of shares of Capital Stock that may be issuable or deliverable upon such
exercise and conversion.

 

SECTION 8.08                    Compliance with Laws.  The Company
will, and will cause each of its Subsidiaries to, comply with all statutes,
ordinances, governmental rules and regulations, judgments, orders and decrees
to which any of them is subject, and obtain and keep in effect all licenses,
permits (including Environmental Permits), franchises and other governmental
authorizations necessary to the ownership or operation of their respective
properties or the conduct of their respective businesses, except to the extent
that the failure to so comply or obtain and keep in effect would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

SECTION 8.09                    Issuance of Additional Note
Guaranties.  So long as any Notes are outstanding, if, after the
date of this Agreement, the Company or any of its Subsidiaries acquires or
creates another Domestic Subsidiary or any other Subsidiary that becomes a
party to the Guarantee and Collateral Agreement or otherwise Guarantees any
Senior Claim, then such newly acquired or created Subsidiary will promptly
become a Guarantor of the Notes pursuant to a supplement to this Agreement and
the Company will cause its counsel to deliver an opinion of counsel as to the
enforceability of such supplement to this Agreement in form and substance
reasonably satisfactory to the Required Noteholders within 10 Business Days of
the date on which it was acquired or created.

 

32

 

SECTION 8.10                    Use of Proceeds.  The Company
will apply the proceeds from the sale of the Purchased Securities, the Senior
Secured Notes and the Series A Preferred Stock in accordance with, and at the
times specified by, the statement of sources and uses delivered pursuant to Section 3.12.

 

SECTION 8.11                    Two Cents Post-Closing Matters.  No later than thirty (30) days
following the date of this Agreement, the Company shall either (a) consummate
the dissolution of Two Cents pursuant to the applicable laws of the State of
New Jersey or (b) cause Two Cents to deliver (i) a duly executed supplement to
this Agreement pursuant to which Two Cents shall become a Guarantor of the
Notes, (ii) a Secretary’s Certificate in substantially the form of the
Secretary’s Certificate delivered pursuant to Section 3.11, and (iii) an
opinion of counsel covering the matters set forth in the opinions delivered
pursuant to Section 3.15.

 

ARTICLE IX

 

NEGATIVE
COVENANTS

 

Until such time as there
are no Notes and Series B Preferred Stock outstanding or until such other time
specified below, the Company hereby covenants and agrees with each Holder as
follows

 

SECTION 9.01                    Incurrence of Indebtedness and
Issuance of Preferred Stock.  The Company will not, and
will not permit any of its Subsidiaries to, directly or indirectly, create,
incur, issue, assume, Guarantee or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to (collectively, “incur”) any
Indebtedness (including Acquired Debt), and the Company will not issue any Disqualified
Stock and will not permit any of its Subsidiaries to issue any shares of
preferred stock.  The provisions of Section 9.01 hereof will not
prohibit the incurrence of, or prohibit the Company and its Subsidiaries from
remaining liable with respect to, any of the following items of Indebtedness
(collectively, “Permitted Debt”):

 

(a)                                  Existing Debt, excluding the Notes and
the Senior Secured Notes;

 

(b)                                 the incurrence by the Company of
Indebtedness represented by the Notes to be issued on the date of this
Agreement;

 

(c)                                  the incurrence by the Company of
Indebtedness represented by the Senior Secured Notes issued on the date of this
Agreement pursuant to the Senior Note Purchase Agreement;

 

(d)                                 the incurrence by the Company of
Permitted Refinancing Debt in exchange for, or the net proceeds of which are
used to refund, refinance or replace Indebtedness that is described in
Sections 9.01(c) and (d);

 

(e)                                  the incurrence by the Company or any of
its Subsidiaries of intercompany Indebtedness owed to the Company or any of its
Wholly Owned Subsidiaries; provided, that:

 

33

 

(i)                                     if the Company or any Guarantor is the
obligor on such Indebtedness, such Indebtedness must be unsecured and expressly
subordinated to the prior payment in full in cash of all obligations with
respect to the Notes, in the case of the Company, or the Note Guarantee, in the
case of a Guarantor;

 

(ii)                                  in each case where the Company or any
Guarantor is the creditor, such Indebtedness is in compliance with
Section 6.1(b)(v)(B) of the Senior Note Purchase Agreement;

 

(iii)                               the following will be deemed, in each
case, to constitute an incurrence of Indebtedness by the Company or one of its
Subsidiaries, as the case may be, that was not permitted by this
Section 9.01(e):

 

(A)                              any subsequent issuance or transfer of
Equity Interests that result in any Indebtedness originally incurred pursuant
to this Section 9.01(e) being held by a Person other than the Company or a
Subsidiary thereof, and

 

(B)                                any sale or other transfer of any
Indebtedness originally incurred pursuant to this Section 9.01(e) to a
Person that is not either the Company or a Wholly Owned Subsidiary thereof,

 

(f)                                    the issuance by any of the Company’s
Subsidiaries to the Company or to any of its Wholly Owned Subsidiaries of
shares of preferred stock; provided, that the following will be deemed,
in each case, to constitute an issuance of preferred stock by such Subsidiary
that was not permitted by this Section 9.01(f):

 

(i)                                     any subsequent issuance or transfer of
Equity Interests that results in any preferred stock originally issued pursuant
to this Section 9.01(f) being held by a Person other than the Company or a
Wholly Owned Subsidiary of the Company; and

 

(ii)                                  any sale or transfer of any preferred
stock originally issued pursuant to this Section 9.01(f) to a Person that
is not either the Company or a Wholly-Owned Subsidiary of the Company;

 

(g)                                 the incurrence by the Company or any of
its Subsidiaries of Hedging Obligations in the ordinary course of business;

 

(h)                                 the Guarantee by the Company or any of
its Subsidiaries of Indebtedness of the Company or a Subsidiary of the Company
that was permitted to be incurred by another provision of this
Section 9.01; provided, that if the Indebtedness being guaranteed
is subordinated to or pari passu with the Notes, then the Guarantee shall be
subordinated or pari passu, as applicable, to the same extent as the
Indebtedness guaranteed;

 

(i)                                     the incurrence by the Company or any of
its Subsidiaries of Indebtedness in respect of workers’ compensation claims,
self-insurance obligations, bankers’ acceptances, performance and surety bonds
in the ordinary course of business;

 

34

 

(j)                                     the incurrence by the Company of
Indebtedness represented by the Series A Preferred Stock and Series B Preferred
Stock outstanding or issued on the Closing Date; and

 

(k)                                  the incurrence by the Company or any of
its Subsidiaries of Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
drawn against insufficient funds, so long as such Indebtedness is covered
within five Business Days.

 

The accrual of interest,
the accretion or amortization of original issue discount on any Indebtedness,
the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms, and the payment of dividends on Disqualified
Stock in the form of additional shares of the same class of Disqualified Stock
shall not be deemed to be an incurrence of Indebtedness or an issuance of
Disqualified Stock for purposes of this Section 9.01.

 

SECTION 9.02                    No Layering.  The Company
will not incur, and will not permit any Guarantor to incur, any Indebtedness
(including Permitted Debt) that is contractually subordinated in right of
payment to any other Indebtedness of the Company or such Guarantor unless such
Indebtedness is also contractually subordinated in right of payment to the
Notes and the applicable Note Guarantee on substantially identical terms; provided,
that no Indebtedness of the Company shall be deemed to be contractually
subordinated in right of payment to any other Indebtedness solely by virtue of
being unsecured or by virtue of being secured on a first or junior Lien basis.

 

SECTION 9.03                    Restrictions on Liens.  The Company
will not, and will not permit any of its Subsidiaries to, directly or
indirectly create, incur, assume or suffer to exist any Lien of any kind
securing Indebtedness, Attributable Debt, or trade payables on any asset now
owned or hereafter acquired, except Permitted Liens.

 

SECTION 9.04                    Limitation on Restricted Payments.  So long as any
Note is outstanding, the Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly:

 

(a)                                  declare or pay any dividend or make any
other payment or distribution on account of the Company’s or any of its
Subsidiaries’ Equity Interests (including any payment in connection with any
merger or consolidation involving the Company or any of its Subsidiaries) or to
the direct or indirect holders of the Company’s or any of its Subsidiaries’
Equity Interests in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
the Company or to the Company or a Subsidiary of the Company);

 

(b)                                 purchase, redeem or otherwise acquire or
retire for value (including in connection with any merger or consolidation
involving the Company or any of its Subsidiaries) any Equity Interests of the
Company or any direct or indirect parent of the Company;

 

35

 

(c)                                  make any payment (whether or not in cash)
on or with respect to, or purchase, redeem, defease or otherwise acquire or retire
for value any Indebtedness that is pari passu with or subordinated to the Notes
or any of the Note Guarantees (collectively “Junior Debt”); or

 

(d)                                 make any Restricted Investment (all such
payments and other actions set forth in these clauses (a) through (d) above
being collectively referred to as “Restricted Payments”);

 

provided, that so long as no Default has occurred
and is continuing or would be caused thereby, the foregoing provisions will not
prohibit:

 

(i)                                     the payment of any dividend (or, in the
case of any partnership or limited liability company, any similar distribution)
by a Subsidiary of the Company to the holders of its Equity Interests on a pro
rata basis;

 

(ii)                                  the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or
any Subsidiary of the Company held by any current or former officer, director
or employee of the Company or any of its Subsidiaries pursuant to any equity
subscription agreement, stock option agreement, shareholders’ agreement or
similar agreement; provided, that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests may not exceed
$750,000; provided, further that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests may not exceed
$250,000 in any twelve-month period; and

 

(iii)                               the repurchase of Equity Interests deemed
to occur upon the exercise of stock options to the extent such Equity Interests
represents a portion of the exercise price of those stock options.

 

The amount of all Restricted Payments (other than
cash) shall be the fair market value on the date of the Restricted Payment of
the asset(s) or securities proposed to be transferred or issued to or by the
Company or such Subsidiary, as the case may be, pursuant to the Restricted
Payment.  The fair market value of any assets or securities that are
required to be valued by this shall be determined by the Board whose resolution
with respect thereto shall be conclusive.

 

SECTION 9.05                    No Amendment of Transaction
Documents.  So long as any Note is outstanding, then without
the consent of the Required Noteholders the Company will not amend, modify or
alter, or take any action that could cause to be amended, modified or altered,
the terms of any Senior Debt Document, the Series A Preferred Stock Purchase
Agreement, the Company Charter Documents, any share of Series A Preferred
Stock, or any share of Series B Preferred Stock in any way to:

 

(a)                                  alter the terms of any of the Company’s
Equity Interests, if, pursuant to the terms of the Company’s Equity Interests,
as altered, the Company or any of its Subsidiaries could be required to take an
action, whether upon the occurrence of an event, delivery of notice, on any
date, or otherwise, that would, directly or indirectly, result in a Default or
Event of Default or entitle the holder or holders of any Indebtedness of the
Company or any of its Subsidiaries (with or without the giving of notice or
lapse of time) to accelerate the maturity of such Indebtedness;

 

36

 

(b)                                 increase the rate of interest on any
Senior Secured Notes or any Permitted Refinancing Indebtedness to be more than
the lesser of (i) LIBOR (as defined in the Senior Note Purchase Agreement) plus
950 basis points or (ii) 300 basis points above the interest rate in effect
immediately prior to such financing change (as defined below);

 

(c)                                  extend the final maturity date of any
Senior Secured Note or any Permitted Refinancing Indebtedness to be later than
December 31, 2009 or shorten the Weighted Average Life to Maturity of any
Senior Secured Note or any Permitted Refinancing Indebtedness by more than 25%;

 

(d)                                 amend the provisions of Sections 6.4 and
6.5 of the Senior Note Purchase Agreement (or any successor provisions) in a
manner more restrictive upon or adverse to the interests of the Company or the
Holders; or

 

(e)                                  effect any amendment, restatement,
refinancing, refunding, replacement, or other modification of any Senior Debt
Document (a “financing change”) that imposes covenants or events of default
upon the Company and its Subsidiaries which (i) are more restrictive than the
covenants contained in the Debt Documents prior to such financing change and
(ii) are of the nature set forth in this Agreement, unless the Company and the
Required Noteholders shall, within 10 Business Days after such financing
change, execute and deliver an amendment to this Agreement for the purpose of
effecting a change similar and in proportion to the changes to the Senior Debt
Documents; provided, that (A) upon any failure of the Company or the
Required Noteholders to do so, this Agreement shall be deemed automatically
amended to effect such similar and proportionate amendment; and (B) after any
such financing change and corresponding amendment hereto occurs, if a
subsequent financing change is effected with respect to any Senior Debt
Document that makes any such covenant or event of default less restrictive,
then the foregoing provisions shall apply to amend this Agreement in a similar
and proportionately less restrictive manner; provided, further,
that the Required Noteholders shall not be required to agree to any amendment
(and no amendment shall be automatically made) which would have the effect of
making the covenant or Event of Default in this Agreement less restrictive upon
the Company and its Subsidiaries than those in effect on the date hereof.

 

SECTION 9.06                    Asset Sales.   The
Company will not, and will not permit any of its Subsidiaries to, consummate
any other Asset Sale unless:

 

(a)                                  the Company (or the Subsidiary, as the
case may be) receives consideration at the time of such Asset Sale at least
equal to the fair market value of the assets or Equity Interests issued or sold
or otherwise disposed of;

 

(b)                                 the fair market value is determined by
the Board and evidenced by a resolution of the Board set forth in an Officers’
Certificate delivered to the Holders; and

 

(c)                                  at least 80% of the consideration
therefor received by the Company or such Subsidiary is in the form of
cash.  For purposes of this provision, any securities, notes or other
obligations received by the Company or any such Subsidiary from such transferee
that are

 

37

 

substantially contemporaneously (subject to ordinary
settlement periods) converted by the Company or such Subsidiary into cash (to
the extent of the cash received in that conversion) shall be deemed to be cash.

 

SECTION 9.07                    Limitation on Sale and Leaseback
Transactions.  The Company will not, and will not permit any of
its Subsidiaries to, enter into any sale and leaseback transaction.

 

SECTION 9.08                    Limitation on Issuances and Sales
of Capital Stock of Wholly Owned Subsidiaries.  The Company will not, and
will not permit any of its Subsidiaries to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock in any Wholly Owned Subsidiary of the
Company to any Person (other than the Company or a Wholly Owned Subsidiary of
the Company), unless:

 

(a)                                  such transfer, conveyance, sale, lease or
other disposition is of all the Capital Stock in such Wholly Owned Subsidiary;
and

 

(b)                                 the Net Proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance with
Section 9.06.

 

In addition, the Company will not permit any Wholly
Owned Subsidiary of the Company to issue any of its Capital Stock (other than,
if necessary, shares of its Equity Interests constituting directors’ qualifying
shares) to any Person other than to the Company or a Wholly Owned Subsidiary of
the Company.

 

SECTION 9.09                    Business Activities.  The Company
will not, and will not permit any of its Subsidiaries to, engage in any
business other than Permitted Businesses, except to such extent as would not be
material to the Company and its Subsidiaries taken as a whole.

 

SECTION 9.10                    Stay, Extension and Usury Laws.  The Company
and each of the Guarantors covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Agreement or the Notes; and the Company
and each of the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it will not, by resort to any such law, hinder, delay or impede the execution
of any power herein granted to the Holders, but will suffer and permit the
execution of every such power as though no such law has been enacted.

 

SECTION 9.11                    Investment Company Act; United
States Real Property Holding Corporation.  The Company will not, and
will not permit any of its Subsidiaries to, become an investment company
subject to registration under the Investment Company Act of 1940, as
amended.  Neither the Company nor any of its Subsidiaries will become a
United States real property holding corporation as defined in Section 897(c)(2)
of the Code.

 

38

 

SECTION 9.12                    No Merger, etc.  The Company
shall not, directly or indirectly, consolidate or merge with or into another
Person (whether or not the Company is the surviving corporation), or sell,
assign, transfer, convey or otherwise dispose of all or substantially all of
the properties or assets of the Company and its Subsidiaries taken as a whole,
in one or more related transactions, to another Person; unless:

 

(a)                                  either:

 

(i)                                     the Company is the surviving corporation;
or

 

(ii)                                  the Person formed by or surviving any
such consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, conveyance or other disposition has been made is a
corporation organized or existing under the laws of the United States, any
state of the United States or the District of Columbia;

 

(b)                                 the Person formed by or surviving any
such consolidation or merger (if other than the Company) or the Person to which
such sale, assignment, transfer, conveyance or other disposition has been made
assumes all the obligations of the Company under the Notes, this Agreement and
the other Investment Documents pursuant to agreements reasonably satisfactory
to the Holders;

 

(c)                                  immediately after such transaction, no
Default or Event of Default exists; and

 

(d)                                 the Funded Indebtedness Leverage
Ratio and Preferred Leverage Ratio of (i) the Company, (ii) the Person formed
by or surviving any such consolidation or merger (if other than the Company),
or (iii) to which such sale, assignment, transfer, conveyance or other
disposition has been made, as applicable, for its most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such transaction is consummated would
have been no more than 80% of the permitted level therefor for such period
under Sections 9.17(c) or (b), determined on a pro forma basis (in accordance
with the accounting requirements of Rule 11-02 of Regulation S-X), as if such
transaction (including any related incurrence of Indebtedness) had occurred at
the beginning of such four-quarter period.

 

In addition, the Company
will not, directly or indirectly, lease all or substantially all of its
properties or assets, in one or more related transactions, to any other
Person.  This Section 9.12 will not apply to:

 

(A)                              a merger of the Company with an Affiliate
solely for the purpose of reincorporating the Company in another jurisdiction;
and

 

(B)                                any sale, transfer, assignment,
conveyance, lease or other disposition of assets between or among the Company
and its Subsidiaries.

 

Upon any consolidation or
merger, or any sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the assets of the Company in a
transaction that is

 

39

 

subject to, and that complies with the provisions of,
this Section 9.12, the successor corporation formed by such consolidation
or into or with which the Company is merged or to which such sale, assignment,
transfer, lease, conveyance or other disposition is made shall succeed to, and
be substituted for (so that from and after the date of such consolidation,
merger, sale, lease, conveyance or other disposition, the provisions of this
Agreement referring to the “Company” shall refer instead to the successor
corporation and not to the Company), and may exercise every right and power of
the Company under this Agreement with the same effect as if such successor
Person had been named as the Company herein; provided, however,
that the predecessor Company shall not be relieved from the obligation to pay
the principal of and interest on the Notes except in the case of a sale of all
of the Company’s assets in a transaction that is subject to, and that complies
with the provisions of, Section 9.12.

 

SECTION 9.13                    Limitation on Transactions With
Affiliates.

 

(a)                                  The Company will not, and will not permit
any of its Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate of the Company (each an “Affiliate Transaction”),
unless:

 

(i)                                     such Affiliate Transaction is on terms
that are no less favorable to the Company or the relevant Subsidiary than those
that would have been obtained in a comparable transaction by the Company or
such Subsidiary with an unrelated Person; and

 

(ii)                                  the Company delivers to the Holders:

 

(A)                              with respect to any Affiliate Transaction
or series of related Affiliate Transactions involving aggregate consideration
in excess of $500,000, a resolution of the Board set forth in an Officers’
Certificate certifying that such Affiliate Transaction complies with clause (i)
of this Section 9.13(a) and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board; and

 

(B)                                with respect to any Affiliate Transaction
or series of related Affiliate Transactions involving aggregate consideration
in excess of $1,000,000, an opinion as to the fairness to the Company or such
Subsidiary of such Affiliate Transaction from a financial point of view issued
by an accounting, appraisal or investment banking firm of national standing.

 

(b)                                 The following items will not be deemed to
be Affiliate Transactions and, therefore, will not be subject to the provisions
of Section 9.13(a):

 

(i)                                     any employment agreement, employee
benefit plan, officer and director indemnification agreement or any similar
arrangement entered into by the Company or any of its Subsidiaries in the
ordinary course of business;

 

40

 

(ii)                                  transactions between or among the Company
and/or its Subsidiaries;

 

(iii)                               transactions with a Person that is an
Affiliate of the Company solely because the Company owns, directly or through a
Subsidiary, an Equity Interest in such Person;

 

(iv)                              payment of reasonable directors’ fees to
Persons who are not otherwise Affiliates of the Company;

 

(v)                                 any issuance of Equity Interests (other
than Disqualified Stock) of the Company to Affiliates of the Company;

 

(vi)                              the payment to Great Hill on the Closing
Date of a consulting fee, which shall be no more than $1,225,000; and

 

(vii)                           Restricted Payments (other than Permitted
Investments) that do not violate Section 9.04.

 

SECTION 9.14                    Limitation on Dividends and Other
Payment Restrictions Affecting Subsidiaries.

 

(a)                                  The Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create or permit to exist
or become effective any consensual encumbrance or restriction on the ability of
any Subsidiary to:

 

(i)                                     pay dividends or make any other
distributions on its Capital Stock to the Company or any of its Subsidiaries or
with respect to any other interest or participation in, or measured by, its
profits, or pay any indebtedness owed to the Company or any of its
Subsidiaries;

 

(ii)                                  make loans or advances to the Company or
any of its Subsidiaries; or

 

(iii)                               transfer any of its properties or assets
to the Company or any of its Subsidiaries.

 

(b)                                 The restrictions in Section 9.14(a)
will not apply to encumbrances or restrictions existing under or by reason of:

 

(i)                                     Existing Debt as in effect on the date of
this Agreement and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof, provided
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are no more restrictive,
taken as a whole, with respect to such dividend and other payment restrictions
than those contained in such Existing Debt, as in effect on the date of this
Agreement;

 

41

 

(ii)                                  this Agreement, the Notes and the Note
Guarantees;

 

(iii)                               applicable law, rule, regulation or
order;

 

(iv)                              customary non-assignment provisions in
contracts and licenses entered into in the ordinary course of business;

 

(v)                                 any agreement for the sale or other
disposition of a Subsidiary that restricts distributions by that Subsidiary
pending the sale or other disposition;

 

(vi)                              Permitted Refinancing Debt; provided,
that the restrictions contained in the agreements governing such Permitted
Refinancing Debt are not materially more restrictive, taken as a whole, than
those contained in the agreements governing the Indebtedness being refinanced;

 

(vii)                           Liens permitted to be incurred under the
provisions of Section 9.03 that limit the right of the debtor to dispose
of the assets subject to such Liens;

 

(viii)                        provisions limiting the disposition or
distribution of assets or property in joint venture agreements, asset sale
agreements, sale-leaseback agreements, stock sale agreements and other similar
agreements entered into with the approval of the Board, which limitation is
applicable only to the assets that are the subject of such agreements; and

 

(ix)                                restrictions on cash or other deposits or
net worth imposed by customers under contracts entered into in the ordinary
course of business.

 

SECTION 9.15                    Payments for Consent.  The Company
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, pay or cause to be paid any consideration to or for the benefit of
any Holder of Notes for or as an inducement to any consent, waiver or amendment
of any of the terms or provisions of this Agreement or the Notes unless such
consideration is paid to all Holders of the Notes.

 

SECTION 9.16                    Employee Plans.  Except as
would not reasonably be expected to result in a Material Adverse Effect, either
individually or in the aggregate, the Company will not, and will not permit any
of its Subsidiaries to:

 

(a)                                  terminate any Employee Pension Plan
subject to Title IV of ERISA;

 

(b)                                 make a complete or partial withdrawal
(within the meaning of Section 4201 of ERISA) from any Multiemployer Plan;

 

(c)                                  (i) adopt, establish, maintain or enter
into any obligation to contribute to any new Plan or Multiemployer Plan, (ii)
modify any existing Plan so as to increase its obligations thereunder, or (iii)
increase a contribution obligation to any Multiemployer Plan;

 

42

 

(d)                                 engage in any “prohibited transaction”
(as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan for which a statutory or class exemption is not available or
a private exemption has not previously been obtained from the Department of
Labor;

 

(e)                                  incur any “accumulated funding
deficiency” (as defined in Section 302 of ERISA), whether or not waived,
with respect to any Plan; or

 

(f)                                    incur a Reportable Event with respect to,
or commence a proceeding to have a trustee appointed, or have a trustee
appointed, to administer or to terminate, any Single Employer Plan.

 

This Section 9.16 shall not be deemed to prohibit
the Company from modifying a medical, dental or other “employee welfare benefit
plan” (as defined in Section 3(1) of ERISA) in the ordinary course of
business.

 

SECTION 9.17                    Financial Covenants.

 

(a)                                  Minimum EBITDA to Consolidated Interest
Expense. 
Until such time as there are no Notes or shares of Series B Preferred Stock
outstanding, the Company will not permit the ratio of (a) its Consolidated
EBITDA for the Test Period ending on each date listed below to (b) its
Consolidated Interest Expense for the Test Period ending on each date listed
below to be less than the ratio set forth below:

 

 

	
  Test
  Period

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

  
	
  June 30, 2004

  	
   

  	
  1.00:1.00

  
	
  September 30, 2004

  	
   

  	
  1.25:1.00

  
	
  December 31, 2004

  	
   

  	
  1.75:1.00

  
	
  March 31, 2005

  	
   

  	
  2.00:1.00

  
	
  June 30, 2005

  	
   

  	
  2.00:1.00

  
	
  September 30, 2005

  	
   

  	
  2.25:1.00

  
	
  December 31, 2005

  	
   

  	
  2.50:1.00

  
	
  March 31, 2006

  	
   

  	
  2.50:1.00

  
	
  June 30, 2006

  	
   

  	
  2.50:1.00

  
	
  September 30, 2006

  	
   

  	
  2.50:1.00

  
	
  December 31, 2006

  	
   

  	
  2.50:1.00

  
	
  March 31, 2007

  	
   

  	
  2.50:1.00

  
	
  June 30, 2007

  	
   

  	
  2.50:1.00

  
	
  September 30, 2007

  	
   

  	
  2.50:1.00

  
	
  December 31, 2007

  	
   

  	
  2.50:1.00

  
	
  March 31, 2008

  	
   

  	
  2.50:1.00

  
	
  June 30, 2008

  	
   

  	
  2.50:1.00

  
	
  September 30, 2008

  	
   

  	
  2.50:1.00

  
	
  December 31, 2008

  	
   

  	
  2.50:1.00

  
	
  March 31, 2009 and
  the last day of any fiscal quarter thereafter

  	
   

  	
  2.50:1.00

  

 

43

 

 

(b)                                 Limitation on Capital Expenditures.  Until such time as there are no
Notes and no shares of Series B Preferred Stock outstanding, the Company will
not, and will not permit its Subsidiaries to, make Consolidated Capital
Expenditures for any purpose, in excess of the amounts set forth below for the
Test Period ending on the date set forth below:

 

	
  Date

  	
   

  	
  Capital

  Expenditures

  	
   

  
	
   

  	
   

  	
  ($ thousands)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2004

  	
   

  	
  2,750

  	
   

  
	
  December 31, 2005

  	
   

  	
  2,750

  	
   

  
	
  December 31, 2006

  	
   

  	
  2,850

  	
   

  
	
  December 31, 2007

  	
   

  	
  3,000

  	
   

  
	
  December 31, 2008

  	
   

  	
  3,150

  	
   

  
	
  December 31, 2009

  	
   

  	
  3,150

  	
   

  

 

In addition, the amount
of Consolidated Capital Expenditures permitted by this Section 9.17(b) for
any fiscal year shall be increased by an amount equal to the excess of (i) the
permitted Consolidated Capital Expenditures for the immediately preceding
fiscal year (without giving effect to this sentence) over (ii) the amount of
Consolidated Capital Expenditures permitted by the applicable clause actually
made in such immediately preceding fiscal year; provided, the aggregate amount
of such excess does not exceed $250,000 in any fiscal year; provided
further, that any amount that is carried forward to any subsequent fiscal
year which is not so expended shall not be available for any further subsequent
fiscal year and the amount of Consolidated Capital Expenditures made in any
fiscal year shall first be applied against the permitted amount set forth on
the schedule above and thereafter applied to the amount available from the
prior year.

 

(c)                                  Funded Indebtedness Leverage Ratio.  Until such
time as there are no Notes outstanding, the Company will not permit the ratio
(the “Funded Indebtedness Leverage Ratio”) of (i) Funded Indebtedness of
Company and its Subsidiaries on each date listed below to (ii) Consolidated
EBITDA of the Company for the Test Period ending on each date listed below to
be more than the ratio set forth below:

 

	
  Test
  Period

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

  
	
  June 30, 2004

  	
   

  	
  9.25:1.00

  
	
  September 30, 2004

  	
   

  	
  7.00:1.00

  
	
  December 31, 2004

  	
   

  	
  5.00:1.00

  
	
  March 31, 2005

  	
   

  	
  4.75:1.00

  
	
  June 30, 2005

  	
   

  	
  4.50:1.00

  

 

44

 

	
  Test
  Period

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

  
	
  September 30, 2005

  	
   

  	
  4.50:1.00

  
	
  December 31, 2005

  	
   

  	
  4.00:1.00

  
	
  March 31, 2006

  	
   

  	
  4.00:1.00

  
	
  June 30, 2006

  	
   

  	
  4.00:1.00

  
	
  September 30, 2006

  	
   

  	
  4.00:1.00

  
	
  December 31, 2006

  	
   

  	
  3.75:1.00

  
	
  March 31, 2007

  	
   

  	
  3.75:1.00

  
	
  June 30, 2007

  	
   

  	
  3.75:1.00

  
	
  September 30, 2007

  	
   

  	
  3.75:1.00

  
	
  December 31, 2007

  	
   

  	
  3.75:1.00

  
	
  March 31, 2008

  	
   

  	
  3.75:1.00

  
	
  June 30, 2008

  	
   

  	
  3.75:1.00

  
	
  September 30, 2008

  	
   

  	
  3.75:1.00

  
	
  December 31, 2008

  	
   

  	
  3.75:1.00

  
	
  March 31, 2009 and
  the last day of each fiscal quarter thereafter

  	
   

  	
  3.75:1.00

  

 

(d)                                 Preferred Leverage
Ratio.  Until such time as there are no shares of Series B Preferred
Stock outstanding, the Company will not permit the ratio (the “Preferred Leverage
Ratio”) of (i) Funded Indebtedness of Company and its Subsidiaries plus
the Series B Senior Liquidation Preference Amount (as defined in the
Certificate of Incorporation), excluding any Series B Premium Amount (as
defined in the Certificate of Incorporation) then payable to (ii) Consolidated
EBITDA of the Company for the Test Period ending on each date listed below to
be more than the ratio set forth below:

 

	
  Test
  Period

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

  
	
  June 30, 2004

  	
   

  	
  11.00:1.00

  
	
  September 30, 2004

  	
   

  	
  8.25:1.00

  
	
  December 31, 2004

  	
   

  	
  6.00:1.00

  
	
  March 31, 2005

  	
   

  	
  5.50:1.00

  
	
  June 30, 2005

  	
   

  	
  5.25:1.00

  
	
  September 30, 2005

  	
   

  	
  5.25:1.00

  
	
  December 31, 2005

  	
   

  	
  4.75:1.00

  
	
  March 31, 2006

  	
   

  	
  4.75:1.00

  
	
  June 30, 2006

  	
   

  	
  4.50:1.00

  
	
  September 30, 2006

  	
   

  	
  4.50:1.00

  
	
  December 31, 2006

  	
   

  	
  4.25:1.00

  
	
  March 31, 2007

  	
   

  	
  4.25:1.00

  
	
  June 30, 2007

  	
   

  	
  4.25:1.00

  
	
  September 30, 2007

  	
   

  	
  4.25:1.00

  
	
  December 31, 2007

  	
   

  	
  4.25:1.00

  
	
  March 31, 2008

  	
   

  	
  4.25:1.00

  
	
  June 30, 2008

  	
   

  	
  4.25:1.00

  

 

45

 

	
  Test
  Period

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

  
	
  September 30, 2008

  	
   

  	
  4.25:1.00

  
	
  December 31, 2008

  	
   

  	
  4.25:1.00

  
	
  March 31, 2009 and
  the last day of each fiscal quarter thereafter

  	
   

  	
  4.25:1.00

  

 

ARTICLE X

 

REDEMPTION

 

SECTION 10.01              Redemption of Notes.

 

(a)                                  Note Maturity Date.  On March 3, 2010 (the “Note
Maturity Date”), the Company shall redeem each outstanding Note, by payment in
full of the entire outstanding principal balance thereof, together with all
unpaid interest accrued thereon to such date.

 

(b)                                 Optional Prepayment.  Subject to the terms of
Article XI, the Company also shall have the right, at its sole option and
election, at any time or from time to time prior to the Note Maturity Date to
prepay the Notes, in whole or in part, on not less than ten (10) Business Days’
notice of the date of prepayment (any such date, a “Prepayment Date”) by
payment of an amount equal to: (i) the unpaid principal balance thereof (or of
the portion thereof being redeemed) plus (ii) all unpaid interest
accrued thereon through the date of redemption plus (iii) a premium (the
“Note Premium Amount”) in an amount equal to a percentage (the “Note Premium
Percentage”) multiplied by the sum of the principal amount being prepaid plus
all accrued interest thereon.  The Note Premium Percentage shall be
determined in accordance with the following schedule based on the
applicable BACI Note and Warrant IRR:

 

(A)                              If the date of such prepayment occurs on
or prior to March 3, 2005, the Note Premium Percentage shall be:

 

	
  BACI
  Note and Warrant IRR

  	
   

  	
  Premium
  Percentage

  
	
  Less than or equal to
  30%

  	
   

  	
  5.0%

  
	
  More than 30%

  	
   

  	
  2.5%

  

 

(B)                                If the date of such prepayment occurs
after March 3, 2005 and on or prior to March 3, 2006, the Note
Premium Percentage shall be:

 

	
  BACI
  Note and Warrant IRR

  	
   

  	
  Premium
  Percentage

  
	
  Less than or equal to
  30%

  	
   

  	
  4.0%

  
	
  More than 30%

  	
   

  	
  2.0%

  

 

(C)                                If the date of such prepayment occurs
after March 3, 2006 and on or prior to March 3, 2007, the Note
Premium Percentage shall be:

 

46

 

	
  BACI
  Note and Warrant IRR

  	
   

  	
  Premium
  Percentage

  
	
  Less than or equal to
  30%

  	
   

  	
  3.0%

  
	
  More than 30%

  	
   

  	
  1.5%

  

 

(D)                               If the date of such prepayment occurs
after March 3, 2007 and on or prior to March 3, 2008, the Note
Premium Percentage shall be:

 

	
  BACI
  Note and Warrant IRR

  	
   

  	
  Premium
  Percentage

  
	
  Less than or equal to
  27.5%

  	
   

  	
  2.0%

  
	
  More than 27.5%

  	
   

  	
  1.0%

  

 

(E)                                 If the date of such prepayment occurs
after March 3, 2008 and on or prior to March 3, 2009, the Note
Premium Percentage shall be:

 

	
  BACI
  Note and Warrant IRR

  	
   

  	
  Premium
  Percentage

  
	
  Less than or equal to
  25%

  	
   

  	
  1.0%

  
	
  More than 25%

  	
   

  	
  0.5%

  

 

(F)                                 If the date of such prepayment occurs
after March 3, 2009, the Note Premium Percentage shall be zero (0.0%);

 

provided, that, to the extent payment of all or
any portion of a Note Premium Amount would result in the Company achieving a
higher BACI Note and Warrant IRR threshold set forth above, resulting in a
reduction or elimination of the Note Premium Amount to be paid (the “Reduced
Premium”) as set forth above, the Note Premium Amount which shall be paid in
connection with such distribution shall be equal to the sum of (I) the Reduced
Premium and (II) that portion of the Note Premium Amount otherwise payable
hereunder that would result in achievement of such BACI Note and Warrant IRR
threshold level.

 

If the Company elects to
prepay less than all of the Notes pursuant to this Section 10.01(c), then
the amount of the Notes to be so prepaid shall be allocated among the Notes, on
a pro rata basis in accordance with the respective principal balances of the
Notes.

 

(c)                                  Acceleration.  In addition, the Notes shall be
subject to acceleration upon an Event of Default as set forth in
Section 12.02, below.

 

SECTION 10.02              Redemption of Warrants.

 

(a)                                  Redemption at the Election of the Holders.  Each Holder of any Warrants may
elect to sell to the Company and the Company shall be required to purchase, out
of funds legally available therefor, all or any part of its Warrants at the
applicable Redemption Price, by giving the Company written notice thereof
pursuant to Section 10.03(a) upon the occurrence of any Change of Control;
provided, that such redemption is either (i) not prohibited by the
Senior Note Purchase Agreement or (ii) is in respect of a Change of Control
which the Required Senior Holders have approved or with respect to which such
holders have waived their rights to accelerate the Senior Claims.

 

47

 

(b)                                 Redemption Price.  The purchase price for the
Warrants to be redeemed pursuant to Section 10.02(a) shall be (i) the Fair
Market Value Per Share, less the exercise price payable per share of Common
Stock issuable upon exercise thereof, multiplied by (ii) the aggregate
number of shares of Common Stock issuable upon exercise thereof.

 

(c)                                  Redemption Mechanics.  Immediately upon the occurrence
of a Change of Control, written notice of occurrence of such Change of Control
(an “Elective Redemption Notice”) shall be delivered by the Company in person,
mailed by certified or registered mail, return receipt requested, mailed by
overnight mail or sent by telecopier to each Holder of any Warrant, such notice
to be addressed to each such Holder at its address as shown by the records of
the Company. The Company may also give such Elective Redemption Notice in the same
manner prior to the occurrence of the Change of Control, which notice shall
specify the Change of Control and the date it is expected to occur.  Each
Holder that wishes to exercise such Holder’s right to elective redemption shall
do so by delivering written notice thereof to the Company at any time after the
earlier to occur of a Change of Control or the date of such Holder’s receipt of
an Elective Redemption Notice.  The redemption date for the elective
redemption of Warrants of any Holder (“Elective Redemption Date”) shall be the
tenth (10th) Business Day after such Holder so exercises such Holder’s right to
elective redemption.

 

SECTION 10.03              Manner of Redemption.

 

(a)                                  Redemption Notices.   Written notice of any
prepayment pursuant to Section 10.01(b) shall be delivered by the Company
in person, mailed by certified or registered mail, return receipt requested,
mailed by overnight mail or sent by telecopier, to each Holder of a Note, such
notice to be addressed to each such Holder at its address as shown by the
records of the Company.

 

(b)                                 Designation of Funds.  On each Prepayment Date and
each Elective Redemption Date (each, a “Redemption Date”),  the Company
shall set aside in trust for the benefit of the Holders of the Notes and/or
Warrants to be redeemed the funds necessary for such redemption, which funds
shall be used to pay the applicable amount to be repaid with respect to the
Notes and the applicable Redemption Price to be paid for the Warrants
(together; the “Redemption Payment”), upon the surrender of the related Notes
or certificates representing such Warrants to the Company for such redemption
(or such affidavits, indemnity and undertakings as would be necessary to
replace any Note or certificate claimed to have been lost, stolen or destroyed).

 

(c)                                  Termination of Rights.   Unless the Company
defaults in payment of the Redemption Payment for any Note or Warrant to be
redeemed pursuant hereto, (i) such Note or Warrant tendered shall no longer be
deemed outstanding, (ii) the rights to receive interest or dividends thereon,
as the case may be, shall cease to accrue and (iii) all rights of the Holders
thereof shall cease (other than the right to receive payment in full of the
Redemption Payment, in each case from and after the applicable Redemption
Date).

 

(d)                                 Reinstatement; Continuation of Rights
upon Default.   If
the Company shall default in the payment of any portion of the Redemption
Payment, then, in addition to any other

 

48

 

rights and remedies of the Holders of the affected
Notes and Warrants which may be available herein or at law or in equity, the
Notes and Warrants that were to be redeemed by such portion shall be deemed to
have continued to be outstanding, interest and dividends shall have continued
to accrue thereon (as the case may be), and such Holders shall have all of the
rights of a Holder thereof, until such time as such default shall no longer be
continuing.

 

SECTION 10.04              Legally Available Funds.

 

(a)                                  Remedial Action.  Upon receipt of an Elective
Redemption Notice, if the Company believes that at the time of the Elective
Redemption Date, the Company would not have sufficient Legally Available Funds
to redeem the Warrants to be redeemed under this Article X, then the Company
shall promptly use all reasonable efforts to cause such Legally Available Funds
to become available in any manner permitted or contemplated by the General
Corporation Law of the State of Delaware, as amended, or any comparable
provision of any succeeding law.  If, notwithstanding the Company’s
reasonable efforts pursuant hereto, the Company is unable to fulfill such
obligation to redeem the Warrants under this Article X because of
insufficient Legally Available Funds, the Company shall give prompt written
notice thereof to each Holder thereof specifying in reasonable detail the
nature thereof and the extent, if any, to which the Company would be able to
fulfill its obligations under this Article X.

 

(b)                                 Holder Options.  Upon receipt of notice from the
Company as provided in Section 10.04(a) or
upon the Company’s failure to pay the Redemption Price for any reason, each
Holder may elect pursuant to written notice given thereby to the Company to (i)
maintain the exercise of its elective redemption rights pursuant to the
Elective Redemption Notice and to defer the Elective Redemption Date with
respect to the Warrants until any of the first five (5) Business Days after
there are sufficient Legally Available Funds to effect such redemption; provided,
that, as and to the extent that there are sufficient Legally Available Funds to
effect such redemption, the Company shall promptly make partial payments of the
Redemption Price to the Holders of Warrants to be redeemed, in which case there
shall be a series of redemptions, each of which shall take place not more than
five (5) Business Days after there are sufficient Legally Available Funds to
effect such redemption to an extent that would permit such partial payments of
the Redemption Price in increments of not less than Twenty-Five Thousand
Dollars ($25,000) (“Partially Available Funds”); provided, further,
that the Holders of a majority of the Warrants to be redeemed, (the “Majority
Exercising Holders”), in their sole and absolute discretion, provided that it
would not cause a Senior Debt Default, may require the Company to issue a
promissory note, in form and substance reasonably satisfactory to the Majority
Exercising Holders, to the order of the Holders of Warrants to be redeemed,
payable on demand at an interest rate equal to the prime rate of leading money
center banks as quoted in The Wall Street Journal plus five hundred
basis points (5.00%) compounded quarterly, to the extent that payment in such
form rather than in cash would not result in insufficient Legally Available
Funds or (ii) the exercise of the elective redemption rights pursuant to
Section 10.02(a) shall be rescinded in whole or in part at the option of
the Majority Exercising Holders (with the result that the Majority Exercising
Holders may require the Company to redeem the Warrants at any time thereafter).

 

SECTION 10.05              Notation of Partial Payments.  Upon any partial redemption or
prepayment of any Note, such Note, at the option of the Holder, shall be either
(a) surrendered to the

 

49

 

Company in exchange for a new Note in a principal
amount equal to the principal amount remaining unpaid on the Note surrendered
and otherwise having the same terms and provisions as the Note surrendered or
(b) made available to the Company at its office herein provided for notation
thereon of the portion of the principal so redeemed.

 

ARTICLE XI

 

SUBORDINATION

 

SECTION 11.01              Definitions.  As used in
this Article XI, the following terms shall have the following meanings:

 

“Bankruptcy Code”
means Title 11 of the United States Code.

 

“Bankruptcy,
Insolvency or Liquidation Proceeding” means (a) any case commenced by or
against the Company or any of its Subsidiaries under any chapter of the
Bankruptcy Code, any other proceeding for the reorganization, recapitalization
or adjustment or marshalling of the assets or liabilities of the Company or any
of its Subsidiaries, any receivership or assignment for the benefit of
creditors relating to the Company or any of its Subsidiaries or any similar
case or proceeding relative to the Company or any of its Subsidiaries or the
creditors of any of them, as such, in each case whether or not voluntary, or
(b) any liquidation, dissolution, marshalling of assets or liabilities or other
winding up of or relating to the Company or any of its Subsidiaries, in each
case whether or not voluntary and whether or not involving bankruptcy or
insolvency.

 

“Blockage Notice”
means a notice stating that a Senior Default has occurred and is continuing and
generally describing the nature of such Senior Default given to the Company and
either BACI or the Required Noteholders by the Senior Agent or the Required
Senior Holders.

 

“Blockage Period”
means the period commencing upon receipt of such Blockage Notice by BACI or the
Required Noteholders and ending on the date one hundred seventy-nine (179) days
thereafter; provided, that (i) no Blockage Notice may be given by reason
of the continuance of any Senior Default which existed at the time of the
giving of a prior Blockage Notice unless such Senior Default shall have been
cured for a period of not less than sixty (60) days, (ii) no more than two
Blockage Notices may be given in any 360 day period and (iii) no Blockage
Period or Periods may extend for more than 179 days in any consecutive 360-day
period.

 

“Claim” is used as
defined in the Bankruptcy Code, whether or not, in the context in which it
appears, a case under the Bankruptcy Code is pending.

 

“Discharge of the
Senior Note Financing” means that all Senior Secured Notes issued under the
Senior Note Purchase Agreement have been paid in full in cash and all other
indebtedness and obligations for principal, interest, premium, fees, taxes,
expense reimbursements, indemnities and other amounts outstanding under the
Senior Note Documents and all other Senior Claims at any time outstanding under
or in respect of the Senior Note Documents (except indemnification obligations
which are then contingent and as to which no payment is then due and no claim
or demand has then been made) have been paid in full and in cash.

 

50

 

“Post-Petition
Interest” means any Claim for interest on any Senior Claim accrued or
computed for or as to any period of time at any time after the commencement of
any Bankruptcy, Insolvency or Liquidation Proceeding at the rate (including any
applicable post-default rate) set forth in or applicable under any instrument
or agreement evidencing or governing any Senior Claim, or for fees, expense
reimbursements, indemnification or other similar obligations accrued or
determined for or as to any such period of time in accordance with the
provisions of such instrument or agreement, whether or not such Claim is
allowed, allowable or enforceable in such Bankruptcy, Insolvency or Liquidation
Proceeding and even if such Claim is not allowed or enforced therein.

 

“Remedy Standstill
Period” means the period commencing on the date a notice of intention to
exercise remedies on account of the occurrence of an Event of Default shall
have been given by the Required Noteholders to the Company and the Senior Agent
and the Remedy Standstill Period shall continue until the one hundred twentieth
(120th) day after the date of such notice; provided, that that any
Remedy Standstill Period shall expire immediately and, subject to the
provisions of Sections 11.03 and 11.04 hereof, the holders of Subordinated
Claims shall be entitled to exercise all rights and remedies under
Section 12.02 hereof and otherwise available at law or in equity in the
event (a) any holders of a Senior Claim shall have caused such Senior Claim to
become due prior to its stated maturity, (b) an Event of Default pursuant to
Section 12.01(h) or (i) shall have occurred and be continuing, or (c) any
holder of a Senior Claim commences any action to foreclose upon, attach, seize,
take control of or otherwise exercise remedies under any Senior Debt Document
or any security therefor on or with respect to a material portion of the assets
of the Company.

 

“Required Senior
Holders” means, at any time as to any act relating to any Senior Debt
Document then in effect, such number of the holders of Senior Claims for loans
and other extensions of credit or indebtedness outstanding or committed under
such Senior Debt Document as may, under the terms of such Senior Debt Document,
have the power to bind all such holders in respect of such act.

 

“Senior Agent”
means the Collateral Agent (as defined in the Senior Note Purchase Agreement),
until Discharge of the Senior Note Financing, and thereafter means any holder
of a Senior Claim acting as agent under any Senior Debt Document or, if there
is no agent so acting, the Required Senior Holders under such Senior Debt
Document.

 

“Senior Claims”
means (a) all present and future Claims against the Company or any of its
Subsidiaries on account or in respect of the principal of and interest and
premium (if any) on any and all notes, loans and other extensions of credit or
indebtedness at any time incurred under any Senior Debt Document, including any
Guarantee thereof, (b) all present and future Claims at any time arising or
secured, or purported to be secured, under any Senior Debt Document, and (c)
all present and future Claims arising therefrom or related thereto, in each
case whether now outstanding or at any time hereafter arising, and specifically
includes (without limitation) all Claims for fees, taxes, expense
reimbursements, indemnities and other amounts payable by the Company or any of
its Subsidiaries under the Senior Debt Documents and all Post-Petition Interest
in any Bankruptcy, Insolvency or Liquidation Proceeding; provided, that
in no event shall the principal amount of Senior Claims exceed the Senior Debt
Cap.

 

51

 

“Senior Claim
Collateral” means any and all of the property of every type and
description, whether real, personal or mixed and whether tangible or
intangible, now owned or hereafter acquired by the Company or any of its
Subsidiaries, upon which any security interest or lien is granted, or purported
to be granted, as security for any Senior Claim.

 

“Senior Covenant
Default” means any event that does or, with the giving of any notice would
constitute an Event of Default under (and as defined in) any Senior Debt Document
(other than a Senior Payment Default) which continues uncured for the period of
grace, if any, with respect thereto.

 

“Senior Debt Cap”
means $37,500,000.

 

“Senior Debt Document”
means (a) so long as any Senior Secured Note is outstanding, the Senior Note
Purchase Agreement, and (b) thereafter, each agreement, document and instrument
governing, securing or relating to Permitted Refinancing Debt incurred pursuant
to Section 9.01(c) or 9.01(d) for the purpose of repaying, retiring,
refinancing or replacing a Senior Debt Document.

 

“Senior Default”
means a Senior Payment Default or a Senior Covenant Default.

 

“Senior Payment
Default” means any default in the payment of any Senior Claim whether upon
the scheduled maturity thereof, upon acceleration or otherwise which, in each
case, continues uncured for the period of grace, if any, with respect thereto.

 

“Subordinated Claims”
means (a) all present and future Claims against the Company or any of its
Subsidiaries on account or in respect of the principal of and interest and
premium (if any) on the Notes, including each Note Guarantee and any other
Guarantee thereof, and (b) any and all Claims in any manner based thereon,
arising therefrom or related thereto, in each case whether now outstanding or
at any time hereafter arising and whether based on contract or quasi-contract
or founded in tort or arising by law or otherwise, and specifically includes
(without limitation) all Claims against the Company or any of its Subsidiaries
for fees, taxes, expense reimbursements, indemnities and other amounts,
obligations or liabilities relating to the Notes.

 

SECTION 11.02              Subordination.  The Company,
for itself and its successors and assigns, covenants and agrees, and each
holder of a Subordinated Claim on behalf of all present and future holders of
Subordinated Claims, by its acceptance thereof, shall be deemed to have agreed,
that the payment from whatever source of Subordinated Claims are and shall be
subordinated and junior in right of payment, to the extent and in the manner
set forth in this Article XI, to the prior payment in full in cash of all
Senior Claims of the Company, and that each holder of any such Senior Claim,
with respect to the Senior Claims now existing or hereafter arising, shall be
deemed to have acquired such Senior Claim in reliance upon the covenants and
provisions contained in this Article XI.

 

SECTION 11.03              Subordination Upon Distribution of Assets.  In any
Bankruptcy, Insolvency or Liquidation Proceeding:

 

52

 

(a)                                  All Senior Claims (including all
Post-Petition Interest) shall be paid in full in cash before any Holder or any
other holder of any Subordinated Claim shall be entitled to receive any payment
or distribution of any kind or character, whether in cash, property, securities
or otherwise, on account or in respect of any Subordinated Claim in such
Bankruptcy, Insolvency or Liquidation Proceeding.

 

(b)                                 The holders of Senior Claims shall be
entitled to receive each payment and distribution of any kind or character,
whether in cash, property, securities or otherwise (including any such payment
or distribution which may become payable or deliverable by reason of any other
Claim being subordinated to any Subordinated Claim), that may become payable or
deliverable on account or in respect of any Subordinated Claim, for application
to the payment of Senior Claims of such holders (including all Post-Petition
Interest) if made in cash and otherwise to be held as collateral security for
the payment in cash of all Senior Claims of such holders (including all
Post-Petition Interest), until all holders of Senior Claims have received
payment in full in cash of all Senior Claims (including all Post-Petition
Interest).  All such payments and distributions shall be delivered by the
debtor, trustee, receiver, disbursing agent or other person making such payment
or distribution in such Bankruptcy, Insolvency or Liquidation Proceeding
directly to the Senior Agent for the benefit of such holders of Senior Claims.

 

(c)                                  No discharge of the liability of the
debtor in such Bankruptcy, Insolvency or Liquidation Proceeding shall, as
against the holders of Subordinated Claims, constitute payment of the Senior
Claims or shall in any respect affect or impair the right of the holders of
Senior Claims to receive each payment or distribution on account or in respect
of Subordinated Claims and to apply such payment or distribution to pay the
Senior Claims (including all Post-Petition Interest accrued or incurred through
the date on which cash proceeds have been received by the holders of Senior
Claims in an amount sufficient to pay all Senior Claims in full in cash), if
received in cash, or to hold such payment or distribution as collateral
security until cash proceeds have been received and applied to the payment of
Senior Claims in an amount sufficient to pay, in full and in cash, all Senior
Claims (including all Post-Petition Interest accrued or incurred through the
date on which cash proceeds in such amount are received).

 

(d)                                 If the aggregate outstanding principal
amount of Senior Claims (not counting Senior Claims for interest, premium,
fees, taxes, expense reimbursements, indemnities or other amounts not
constituting the principal of credit extended to or for the benefit of the
Company or any of its Subsidiaries) exceeds the Senior Debt Cap, then the
provisions of this Section 11.03 shall be enforceable only as to (i) a
principal amount of Senior Claims equal to the Senior Debt Cap plus (ii) all
Senior Claims (without limitation as to amount and including all Post-Petition
Interest) for interest thereon and for fees, taxes, expense reimbursements,
indemnities and other amounts with respect to such permitted principal amount.

 

(e)                                  No holder of Subordinated Claims shall,
in such Bankruptcy, Insolvency or Liquidation Proceeding, (i) assert, or
request relief predicated on the assertion that, or join with or support any
creditor or the debtor or any trustee or representative in asserting or
requesting relief predicated on the assertion that, any of the Senior Claims is
not enforceable, should be equitably subordinated, is subject to avoidance on
any ground or is not secured by lawfully

 

53

 

granted, continuously perfected and nonavoidable
security interests in the Senior Claim Collateral, (ii) oppose or otherwise
contest, or join with or support any creditor or the debtor or any trustee or
representative in opposing or otherwise contesting, any consensual use of cash
collateral or any sale or other transfer of any or all of the Senior Claim
Collateral or any other property of the estate that is proposed or supported by
the Required Senior Holders or (iii) oppose or otherwise contest, or join with
or support any creditor or the debtor or any trustee or representative in
opposing or otherwise contesting, any request by any holder of a Senior Claim
for relief from any automatic stay or from any other form of order or restraint
for the purpose of permitting such holder of a Senior Claim or its agent to
foreclose upon or otherwise enforce any or all of its security interests and
liens upon any Senior Claim Collateral.

 

(f)                                    If, while any Senior Claim is
outstanding, any Bankruptcy, Insolvency or Liquidation Proceeding occurs, each
holder of a Subordinated Claim shall duly and promptly take such action as any
holder of the Senior Claims may reasonably request to collect any payment with
respect to the Subordinated Obligations for the account of the holders of the
Senior Claims and to file appropriate claims or proofs of claim in respect of
the Subordinated Claims and to execute and deliver on demand such powers of
attorney, proofs of claim, assignments of claim or other instruments as may be
required to enforce any and all claims on or with respect to the Subordinated
Obligations. If any holder of Subordinated Claims does not file any such claim
or proof of claim promptly upon the request of the Senior Agent or any holder
of a Senior Claim, then the Required Senior Holders, and each of their
respective agents, is hereby irrevocably authorized and empowered (but shall
not be obligated), as attorney-in-fact for such holder of Subordinated Claims
with full power of substitution to file such claim or proof thereof in the name
of such holder.

 

(g)                                 For purposes of this Article XI, the
words “cash, property or securities or otherwise” (or words of similar effect)
shall not be deemed to include securities of the Company or any other Person
provided for by a plan of reorganization or readjustment which are
subordinated, to at least the same extent as the Subordinated Obligations, to
the payment of all Senior Claims then outstanding.

 

SECTION 11.04              Prohibitions and Limitations on Payment.

 

(a)                                  Subject to Section 11.03 hereof,
upon receipt by the Company of a Blockage Notice (as defined below) in respect
of any Senior Payment Default and unless and until (i) such Senior Payment
Default shall have been cured or (ii) effectively waived in writing by the
holders of the Senior Claims, no direct or indirect payment (in cash, property,
securities or by set-off or otherwise) shall be made of or on account of the
Subordinated Claims or in respect of any redemption, retirement, purchase or
other acquisition of the Subordinated Claims and no holder of a Subordinated
Claim shall accept (in cash, property, securities or by setoff or otherwise)
from the Company any payment of or on account of the Subordinated Claims. 
Upon the earlier of the dates described in clauses (i) and (ii) above, the
Company shall, subject to Section 11.03 hereof, promptly pay to the
Holders of Notes all sums then due and payable under the Subordinated Claims.

 

(b)                                 Subject to Section 11.03 hereof,
upon receipt by the Company of a Blockage Notice in respect of any Senior
Covenant Default and unless and until the earlier of (i) such Senior

 

54

 

Covenant Default shall have been cured or effectively
waived in writing by the holders of the Senior Claims and (ii) the expiration
of the applicable Blockage Period, no direct or indirect payment (in cash,
property, securities or by set-off or otherwise) shall be made of or on account
of the Subordinated Claims or in respect of any redemption, retirement,
purchase and no holder of a Subordinated Claims shall accept (in cash,
property, securities or by setoff or otherwise) from the Company any payment of
or on account of the Subordinated Claims.  Upon the earlier of the dates
described in clause (i) and (ii) above, the Company shall, subject to Section 11.03
hereof, promptly pay to the Holders of Notes sums then due and payable under
the Subordinated Claims.

 

(c)                                  Upon receipt by the Company of a Blockage
Notice, the Company shall promptly, but in any event with five (5) Business
Days of receipt, deliver the same to each Holder.

 

SECTION 11.05              Limitation on Remedies.  So long as any Senior Claim
remains outstanding, upon the occurrence of an Event of Default, no holder of
Subordinated Claims will (a) demand, accelerate, bring suit to collect or
otherwise exercise or enforce any right or remedy in respect of any
Subordinated Claim or commence or prosecute any action or proceeding thereon,
(b) commence any Bankruptcy, Insolvency or Liquidation Proceeding or join with
any creditor in commencing any Bankruptcy, Insolvency or Liquidation
Proceeding, or appear in any Bankruptcy, Insolvency or Liquidation Proceeding
commenced by any other creditor in support of the commencement or continuation
thereof, except (in each case) upon the prior written consent of the Required
Senior Holders, or (c) otherwise exercise or enforce any right or remedy in
respect of any Subordinated Claim, including any right or remedy that otherwise
might be available to it in any Bankruptcy, Insolvency or Liquidation
Proceeding, until the expiration of the Remedy Standstill Period with respect
to such Event of Default; provided, that nothing in this Agreement shall
limit the rights of any Holder set forth in the Section A.7(c) of
Article Four of the Certificate of Incorporation or the rights of any
Holder to seek specific performance or other equitable remedies that do not
involve monetary damages or other payments by the Company or any of its
Subsidiaries upon a breach of the Stockholders Agreement, the Warrant or the
Certificate of Incorporation.

 

SECTION 11.06              Payments and Distributions Received. If and in each
instance that, notwithstanding the provisions of this Article XI, any
holder of a Subordinated Claim receives any payment or distribution of any kind
or character, whether in cash, property, securities or otherwise (including any
such payment or distribution which may become payable or deliverable by reason
of any other Claim being subordinated to any Subordinated Claim) in
contravention of the terms of this Article XI, on account or in respect of
any Subordinated Claim at any time when any Senior Claim remains outstanding,
then and in each such event:

 

(a)                                  Such holder shall forthwith pay over,
transfer and deliver such payment or distribution to the Senior Agent, for the
benefit of the holders of Senior Claims, for application to the payment of such
Senior Claims if such payment or distribution was made in cash or to be held as
collateral security for the payment in cash of such Senior Claims (including
all Post-Petition Interest but excluding indemnification obligations which are
then contingent and as to which no payment is then due and no claim or demand
has then been made), if such payment or distribution was not made in cash,
whether or not any Bankruptcy, Insolvency or Liquidation Proceeding is then
pending, until all Senior Claims (including all Post-Petition Interest except

 

55

 

indemnification obligations which are then contingent
and as to which no payment is then due and no claim or demand has then been
made) have been paid in full in cash; and

 

(b)                                 Such holder shall, and hereby agrees to,
hold in trust for the Senior Agent, for the benefit of the holders of Senior
Claims, in the identical form received (except for any necessary endorsement to
the Senior Agent), all payments and distributions required to be paid over,
transferred and delivered pursuant to this Section 11.06.

 

SECTION 11.07              Subrogation.  After all
Senior Claims (including all Post-Petition Interest but excluding indemnification
obligations which are then contingent and as to which no payment is then due
and no claim or demand has then been made) have been paid in full in cash, the
holders of Subordinated Claims shall be subrogated to the rights of the holders
of such Senior Claims to receive payments or distributions applicable to the
Senior Claims to the extent that distributions otherwise payable to the holders
of Subordinated Claims in respect of Subordinated Claims have been applied to
the payment of the Senior Claims, as follows:

 

(a)                                  No holder of any Senior Claim makes any
representation or warranty, or shall otherwise have any responsibility, as to
whether any such right of subrogation is accorded or available to any holder of
any Subordinated Claim or is enforceable by any holder of any Subordinated
Claim in any particular circumstance.

 

(b)                                 No holder of any Senior Claim shall have
any duty to any holder of any Subordinated Claim to ensure, perfect, protect,
enforce or maintain any right of subrogation that might otherwise be accorded
or available to or enforceable by any holder of any Subordinated Claim. 
The subordination provided herein and the rights of the holders of Senior
Claims hereunder shall remain fully enforceable on the terms set forth herein,
regardless of any act, omission or circumstance (whether or not attributable to
any holder of any Senior Claim) which does or might in any manner or in any
respect destroy, limit, reduce, affect or impair any right of subrogation
otherwise accorded or available to or enforceable by any holder of any
Subordinated Claim.  Each holder of any Senior Claim shall remain free to
take or fail to take any and all actions in respect of any Senior Claim or any
person or entity liable therefor or any collateral security therefor (including
each and all of the acts, omissions and matters described in
Section 11.10), without exonerating any holder of a Subordinated Claim,
even if any right of subrogation is destroyed, limited, reduced, affected or
impaired thereby.

 

(c)                                  The subordination provided herein and the
rights of the holders of Senior Claims hereunder shall be fully enforceable as
to all Senior Claims which are not allowed, allowable or enforceable in such
Bankruptcy, Insolvency or Liquidation Proceeding (including all Post-Petition
Interest but excluding indemnification obligations which are then contingent
and as to which no payment is then due and no claim or demand has then been
made), even if and even though no right of subrogation is available in respect
of such Senior Claims.

 

(d)                                 For purposes of enforcing any right of
subrogation on the terms set forth in this Section 11.07, no payment or
distribution on account of any Subordinated Claim applied to the payment of a
Senior Claim shall, as between the Company and the holder of such Subordinated
Claim and to the extent of the payment or distribution so applied, discharge
the liability of the

 

56

 

Company for the payment of such Senior Claim and, to
this end, the Company shall remain obligated to pay such Senior Claim in full
despite any such application.

 

SECTION 11.08              Relative Rights.  This
Article XI defines the relative rights of the holders of Subordinated
Claims and the holders of the Senior Claims.  Nothing in this
Article XI shall (a) impair, as between the Company and the Holders, the
obligations of the Company, which are absolute and unconditional, to pay
principal of and interest (including default interest) and premium on the
Subordinated Claims in accordance with their terms, (b) affect the relative
rights of the holders of Subordinated Claims and creditors of the Company other
than holders of the Senior Claims, or (c) prevent the holder of Subordinated
Claim from exercising their available remedies upon a default or Event of
Default, subject to the terms of this Article XI.

 

SECTION 11.09              Certain Restrictions.

 

(a)                                  No Liens.  The Company will not grant or permit to exist,
and no holder of Subordinated Claims will demand, accept, take, seize or
retain, any Lien upon any property now owned or hereafter acquired by the
Company or any Subsidiary as security for any Subordinated Claim.

 

(b)                                 Limitations on Senior Claims.  No holder of any Subordinated
Claim will accept or retain the benefit of any agreement, including any
amendment to this Agreement, in any respect restricting the right of the
Company or any Subsidiary to (i) repay any Senior Claims or (ii) sell, transfer
or otherwise dispose of any or all of the stock or any or all of the assets of
any one or more of the Subsidiaries of the Company or any assets of the
Company, including dispositions by merger or consolidation to the extent such
sale, transfer or other disposition does not constitute a Change of Control, in
each case except for the limitations expressly set forth herein as of the date
hereof.

 

SECTION 11.10              Subordination Not Impaired; Benefit of
Subordination. 
No right of any present or future holder of any Subordinated Claim to enforce
subordination as provided in this Agreement shall at any time in any way be
prejudiced, affected or impaired by any lawful act or failure to act on the
part of any holder of Senior Claims.  Without limitation of the foregoing:

 

(a)                                  Each holder of any Senior Claim may at
any time and from time to time, without the consent of or notice to any holder
of Subordinated Claims, without incurring any responsibility or liability to
any holder of Subordinated Claims and without in any manner prejudicing,
affecting or impairing the subordination provided herein or the obligations of
the holders of Subordinated Claims under this Agreement, subject to the
limitations set forth in Sections 9.01 and 9.05 and subject to limiting the
principal amount of Senior Claims to the Senior Debt Cap:

 

(i)                                     Make loans and advances to the Company or
any of its Subsidiaries or issue, guaranty, or otherwise extend credit to the
Company or any of its Subsidiaries, whether pursuant to a commitment or as a
discretionary advance and whether or not any default or event of default or
failure of condition is then continuing;

 

57

 

(ii)                                  Change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, compromise,
accelerate, extend or refinance, any Senior Claim or any agreement, Guaranty,
Lien or obligation of the Company or any of its Subsidiaries or any other
person or entity in any manner related thereto, or otherwise amend, supplement
or change in any manner any Senior Claim or any such agreement, Guaranty, Lien
or obligation;

 

(iii)                               Reduce the amount of any Senior Claim or
release or discharge any Senior Claim or any Guarantee thereof or any agreement
or obligation of the Company or any of its Subsidiaries or any other Person
with respect thereto;

 

(iv)                              Take or fail to take any collateral
security for any Senior Claim or take or fail to take any action which may be
necessary or appropriate to ensure that any Lien upon any property securing any
Senior Claim is duly enforceable or perfected or entitled to priority as against
any other Lien or to ensure that any proceeds of any property subject to any
Lien are applied to the payment of any Senior Claim;

 

(v)                                 Release, discharge or permit the lapse of
any or all Liens upon any property at any time securing any Senior Claim;

 

(vi)                              Exercise or enforce, in any manner, order
or sequence, or fail to exercise or enforce, any right or remedy against the
Company or any of its Subsidiaries or any collateral security or any other
Person or property in respect of any Senior Claim or any Lien securing any
Senior Claim or any right under this Agreement, and apply any payment or
proceeds of collateral in any order of application; or

 

(vii)                           Sell, exchange, release, foreclose upon
or otherwise deal with any property that may at any time be subject to any Lien
securing any Senior Claim.

 

(b)                                 No exercise, delay in exercising or
failure to exercise any right arising under this Agreement, no act or omission
of any holder of Senior Claims in respect of the Company or any of its
Subsidiaries or any other person or entity or any collateral security for any
Senior Claim or any right arising under this Agreement, no change, impairment,
or suspension of any right or remedy of any holder of any Senior Claim, and no
other act, failure to act, circumstance, occurrence or event which, but for
this provision, would or could act as a release or exoneration of the
obligations of the holders of Subordinated Claims hereunder shall in any way
affect, decrease, diminish or impair any of the obligations of any holder of
Subordinated Claims under this Agreement or give any holder of Subordinated
Claims or any other person or entity any recourse or defense against any holder
of Senior Claims in respect of any right arising under this Agreement.

 

SECTION 11.11              Transfers.  Until all of
the Senior Claims have been paid in full in cash:

 

58

 

(a)                                  The Company and each holder of
Subordinated Claims shall cause following legend shall at all times to remain
placed conspicuously upon the face and signatures pages of each Note and each
other instrument evidencing any Subordinated Claim:

 

“The indebtedness and all obligations evidenced or
represented hereby, and certain other Subordinated Claims, are subordinated and
junior in right of payment to Senior Claims, as defined in and on the terms set
forth in a Securities Purchase Agreement, dated March 3, 2004, executed
and delivered for the benefit of the holders of such Senior Claims by the maker
hereof and certain Purchasers signatory thereto.”

 

Neither the Company nor any of its Subsidiaries shall
issue any promissory note in substitution, replacement or exchange for any Note
or any such other instrument, and (notwithstanding any contrary agreement
enforceable by any holder of Subordinated Claims) neither the Company nor any
of its Subsidiaries shall be obligated to issue any such promissory note or
other instrument, not having such legend likewise placed thereon.

 

(b)                                 No holder of a Subordinated Claim shall
hereafter sell, assign, transfer or pledge any Note unless the transferee
thereof expressly agrees in writing to hold such Note subject to the terms of
this Article XI.

 

SECTION 11.12              Miscellaneous.

 

(a)                                  If any payment or other transfer at any
time applied to the payment or satisfaction of any Senior Claim is thereafter
rescinded, recovered, set aside, avoided or required to be returned, then such
Senior Claim and all rights of the holder of such Senior Claim to enforce
subordination as set forth herein shall be automatically and unconditionally
reinstated, as fully as if such payment or transfer had never been made.

 

(b)                                 The Company and each holder of a
Subordinated Claim acknowledge and agree that an action for money damages is
not an adequate remedy for enforcement of this Article XI and,
accordingly, agree that each and all of the obligations arising hereunder may,
at the option of the Senior Agent or the Required Senior Holders, be enforced
by an action for specific performance or other lawful specific or injunctive
relief. The provisions of this Article XI are for the direct and legally
enforceable benefit of the Senior Agent, each present and future holder of any
Senior Claim.

 

(c)                                  All rights, powers and authorities herein
granted to any Senior Agent, holder of a Senior Claim, or to the Required
Senior Holders, are coupled with an interest and are irrevocable until all
outstanding Senior Claims have been paid in full in cash.  Such rights,
powers and authorities may be freely exercised by each Senior Agent or a holder
of a Senior Claim, or by the Required Senior Holders, as applicable, or not
exercised by any of them, in each instance as each of them may see fit given
its own individual interest as a holder of Senior Claims, without any duty of
care, duty of loyalty or other duty whatsoever to any holder of Subordinated
Claims.

 

59

 

ARTICLE XII

 

EVENTS
OF DEFAULT

 

SECTION 12.01              Events of Default An “Event of Default”
shall occur hereunder if:

 

(a)                                  any failure to pay the principal of or
interest or premium on any of the Notes when due, whether upon demand or
otherwise within two (2) Business Days after the date due;

 

(b)                                 Any representation, warranty or statement
made or deemed made by the Company or its respective Subsidiaries herein or in
any other Investment Document or in any statement or certificate delivered or
required to be delivered pursuant hereto or thereto shall prove to be untrue in
any material respect on the date as of which made or deemed made;

 

(c)                                  the Company or its Subsidiaries shall
fail to comply with any term, covenant or agreement contained in
Section 8.09 or in Article IX of this Agreement, Section 7.2 of
the Stockholders Agreement or Section A.7(c) of Article Four of the Certificate
of Incorporation; provided, that a breach of Section 9.17(c) shall
not be an Event of Default with respect to the Series B Preferred Stock and the
holders of Series B Preferred Stock, in their capacity as such, shall have no
rights or remedies relating to any such breach;

 

(d)                                 the Company or its Subsidiaries shall
default in the due performance or observance by it of any other term, covenant
or agreement contained in this Agreement or any Investment Document (other than
those referred to in Section12.01(a), 12.01(b) or 12.01(c)) and such default
shall continue unremedied for a period of thirty (30) days after the date of
such default;

 

(e)                                  A default occurs under any mortgage,
indenture or instrument under which there may be issued or by which there may
be secured or evidenced any Indebtedness for money borrowed by the Company or
any of its Subsidiaries (or the payment of which is Guaranteed by the Company
or any of its Subsidiaries), whether such Indebtedness or Guarantee now exists,
or is created after the date of this Agreement, if that default:

 

(i)                                     is caused by a failure to pay principal
of, or interest or premium, if any, on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on the date of
such default, which default has not been waived by the holders of such
Indebtedness (a “Payment Default”);

 

(ii)                                  results in the acceleration of such
Indebtedness prior to its express maturity; or

 

(iii)                               with respect to all Indebtedness other
than the Senior Debt, entitles the holder or holders thereof (with or without
the giving of notice or lapse of time) to accelerate the maturity of such
Indebtedness,

 

60

 

and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
(A) under which there has been a Payment Default, (B) the maturity of which has
been so accelerated, or (C) the maturity of which, the holder or holders are
entitled to accelerate, aggregates $1,000,000 or more;

 

(f)                                    any Indebtedness described in
Section 12.01(e) or any Senior Debt shall be declared to be due and
payable, or required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof;

 

(g)                                 a final judgment or final judgments for
the payment of money are entered by a court or courts of competent jurisdiction
against the Company or any of its Subsidiaries, which judgment or judgments are
not paid, discharged or stayed for a period of 60 days; provided, that
the aggregate of all such undischarged judgments (exclusive of any applicable
insurance coverage) exceeds $1,000,000;

 

(h)                                 the Company or any of its Significant
Subsidiaries: (i) commences a voluntary case; (ii) consents to the entry of an
order for relief against it in an involuntary case; (iii) consents to the
appointment of a custodian of it or for all or substantially all of its
property; (iv) makes a general assignment for the benefit of its creditors; or
(v) generally is not paying its debts as they become due;

 

(i)                                     a court of competent jurisdiction enters
an order or decree under any bankruptcy law that: (i) is for relief against the
Company or any of its Significant Subsidiaries; (ii) appoints a custodian of
the Company or any of its Significant Subsidiaries or for all or substantially
all of the property of the Company or any of its Subsidiaries; or (iii) orders
the liquidation of the Company or any of its Significant Subsidiaries; and the
order or decree remains unstayed and in effect for 60 consecutive days;

 

(j)                                     the Company repudiates any of its
material obligations under this Agreement or the Notes or this Agreement or the
Notes are held to be unenforceable against the Company in any material respect
for any reason;

 

(k)                                  any Note Guarantee is held in any
judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Guarantor, or any Person acting on
behalf of any Guarantor, shall deny or disaffirm its obligations under its Note
Guarantee;

 

(l)                                     a Change of Control or an Initial Public
Offering shall occur; or

 

(m)                               the Company or any Commonly Controlled
Entity shall incur any liability in connection with the insolvency or
Reorganization of a Multiemployer Plan.

 

SECTION 12.02              Acceleration.  If an Event of
Default occurs under Section 12.01(h) or (i), then the outstanding
principal of and accrued but unpaid interest and Premium Percentage on the
Notes shall automatically become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which are expressly
waived.  If any other Event of Default

 

61

 

occurs and is continuing, the Required Noteholders, by
written notice to the Company, may (subject to Section 11.05 hereof)
declare the principal of and accrued but unpaid interest and Premium Percentage
on the Notes to be due and payable immediately.  Upon any such declaration
of acceleration, such principal, interest and premium shall become immediately
due and payable and subject to Section 11.05 hereof, each Holder shall be
entitled to exercise all of its rights and remedies hereunder, under its Note
in addition to all other remedies existing under the Certificate of
Incorporation, any other agreement between the Holder and the Company
(including the Stockholders Agreement), at law or in equity.

 

SECTION 12.03              Set-Off.  Upon the
occurrence of an Event of Default, in addition to all other rights and remedies
that may then be available to any Holder, each Holder is hereby authorized at
any time and from time to time, without notice to the Company (any such notice
being expressly waived by the Company), subject to Article XI hereof, to
set off and apply any and all indebtedness at any time owing by such Holder to
or for the credit or the account of the Company against all amounts which may
be owed to such Holder by the Company in connection with this Agreement or any
Notes.  If any Holder shall obtain from the Company payment of any
principal of or interest or premium on any Note or payment of any other amount
under this Agreement or any Note held by it or any other Investment Document
through the exercise of any right of set-off, and, as a result of such payment,
such Holder shall have received a greater percentage of the principal, interest
or other amounts then due hereunder by the Company to such Holder than the
percentage received by any other Holders, it shall promptly make such
adjustments with such other Holders from time to time as shall be equitable, to
the end that all the Holders shall share the benefit of such excess payment
(net of any expenses which may be incurred by such Holder in obtaining or
preserving such excess payment) pro rata in accordance with the unpaid
principal and/or interest or premium on the Notes or other amounts (as the case
may be) owing to each of the Holders.  To such end all the Holders shall
make appropriate adjustments among themselves if such payment is rescinded or
must otherwise be restored.  Any Holder taking action under this
Section shall promptly provide notice to the Company of any such action
taken; provided, that the failure of such Holder to provide such notice
shall not prejudice its rights hereunder.

 

ARTICLE XIII

 

NOTE GUARANTEES

 

SECTION 13.01              Guarantee.  Each Guarantor
hereby absolutely and unconditionally guarantees to each Holder of Notes, its
successors and assigns, the due and punctual payment of all liabilities and the
performance of all obligations of the Company under this Agreement and the
Notes, whether primary or secondary (whether by way of endorsement or
otherwise), whether now existing or hereafter arising, whether or not from time
to time reduced or extinguished (except by payment thereof) or hereafter
increased or incurred, whether or not recovery may be or hereafter may become
barred by any statute of limitations, whether enforceable or unenforceable as
against the Company, whether or not discharged, stayed or otherwise affected by
any bankruptcy, insolvency or other similar law or proceeding, whether arising
out of contracts, torts or otherwise, whether created directly with such Holder
of Notes or acquired by such Holder through assignment, endorsement or
otherwise, whether matured or unmatured, whether absolute or contingent,
whether joint or several, as and when the same become due and payable (whether
at maturity or earlier, by

 

62

 

reason of acceleration, mandatory
prepayment or otherwise), in accordance with the terms of this Agreement and the
Notes, including all renewals, extensions or modifications of the Notes (all of
the foregoing being hereinafter collectively referred to as the “Guaranteed
Obligations”).

 

SECTION 13.02              Operation of Guarantee.  This is a
guaranty of payment and not of collection, and each Guarantor expressly waives
any right to require that any action be brought against the Company or any
other guarantor of the Guaranteed Obligations or with respect to any security
therefor.  Upon the occurrence of an Event of Default, each Guarantor,
upon demand by the Required Holders, shall promptly and fully pay to the Holder
of Notes the Guaranteed Obligations due and payable to such Holders.  All
payments by each Guarantor shall be made in any coin or currency of the United
States of America which on the respective dates of payment thereof is legal
tender for the payment of public and private debts and which is immediately
available to the Holders of Notes in Charlotte, North Carolina (or such other
place as any such Holder may designate in writing).

 

SECTION 13.03              Obligations of each Guarantor Absolute and
Unconditional.  The obligations of each Guarantor hereunder shall
be absolute and unconditional, shall remain in full force and effect until all
of the Guaranteed Obligations shall have been fully and indefeasibly paid and
performed and shall not be impaired, modified, released or limited by any
occurrence or condition whatsoever (other than full, final and indefeasible
payment and performance of all of the Guaranteed Obligations), including
without limitation (to the extent permitted by applicable law) (a) any
compromise, settlement, release, waiver, renewal, extension, indulgence or
modification of or change in any of the Guaranteed Obligations, (b) any
impairment, modification, release or limitation of the liability of the
Company, or any security for the Guaranteed Obligations, or any remedy for the
enforcement thereof, resulting from the operation of, or the taking, or failure
to take, by any Holder of Notes of any action under, any present or future
provision of the U.S. Bankruptcy Code, as amended, or other statute or
from the decision of any court, (c) the assertion or exercise by any
Holder of Notes of any other rights or remedies with respect to the Guaranteed
Obligations or its delay in or failure to assert or exercise any such rights or
remedies, (d) the assignment or mortgaging or the purported assignment or
mortgaging of any property as security for the Guaranteed Obligations, or the
release of any such security, (e) any limitation of the liability of the
Company for the payment or performance of the Guaranteed Obligations imposed by
applicable law, (f) the extension or acceleration of the time for payment
or performance of any of the Guaranteed Obligations or the renewal of any of
the Guaranteed Obligations, (g) the modification or amendment (whether
material or otherwise), or the waiver of or consent to noncompliance with, any
provision of this Agreement or of the Notes, (h) the voluntary or
involuntary liquidation, dissolution, sale or other disposition of all or
substantially all of the assets of the Company or the marshalling of the assets
of the Company, or the receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of, or other similar proceeding affecting the Company, each Guarantor, any
other guarantor of the Guaranteed Obligations, or any of their Affiliates, or
any of their assets, or the disaffirmance of this Guarantee in any such proceeding,
(i) the taking of security, or the release, substitution, replacement,
termination, transfer, subordination, abandonment of or failure to perfect an
interest in any security for the Guaranteed Obligations or any other guaranty
thereof, (j) the acceptance by any Holder of Notes of any partial payment
on the Guaranteed Obligations or any payment or performance which is
defeasible, void or voidable, as a preference or otherwise, (k) the
unenforceability, invalidity or

 

63

 

voidability of the Notes, (l) the application of
any and all payments or recoveries from the Company or any other guarantor,
maker or endorser of the Guaranteed Obligations, or the application of any and
all security or collateral and direction of the order or manner of sale
thereof, as any Holder of Notes may determine in its sole discretion,
(m) the addition, release or substitution of any one or more guarantors,
(n) the absence of any attempt to collect the Guaranteed Obligations from the
Company or any other guarantor or other action to enforce the same, or (o) to
the extent permitted by applicable law, any other occurrence, event or
circumstance which might, but for this provision, constitute a legal or
equitable discharge or defense of a guarantor or surety.

 

SECTION 13.04              Waiver of Notice, etc.  each Guarantor
unconditionally waives to the fullest extent permitted by applicable law: 
(a) notice of any of the matters referred to in Section 13.03 hereof,
(b) except as contemplated by Section 13.02, any demand, proof or
notice of nonpayment of the principal of or interest on the Notes or of any
other default in the due and timely payment and performance of any of the
Guaranteed Obligations, (c) presentment for payment, notice of dishonor,
protest and notice of protest, (d) all other notices to which each
Guarantor would otherwise be entitled, except as expressly provided herein,
(e) the benefits of all provisions of law for a stay or delay of execution
or any other remedy against each Guarantor until a proceeding be commenced or a
judgment be obtained against the Company and be returned unsatisfied, (f) any
requirements of diligence or promptness on the part of any Holder of Notes, (g)
any right to require any Holder of Notes to proceed first against any security
for the Guaranteed Obligations, (h) the benefit of any statute of limitations
affecting the Guaranteed Obligations and (i) all other rights and defenses
of a guarantor or surety.

 

SECTION 13.05              Subordination of Guarantee.  The obligations
of each Guarantor pursuant to this Article XIII are expressly subordinate
and subject in right of payment to the prior payment in full in cash of all
obligations arising under the Senior Note Purchase Agreement guaranteed by
Guarantor, to the same extent and in the same manner as the primary obligations
arising hereunder are subordinated to the obligations arising under the Senior
Note Purchase Agreement as provided in Article XI.

 

ARTICLE XIV

 

INDEMNIFICATION

 

SECTION 14.01              Indemnification.  In addition to
all other sums due hereunder or provided for in this Agreement, the Company
shall indemnify and hold harmless the Purchasers and their respective
Affiliates and their respective officers, directors, agents, employees,
subsidiaries, partners and controlling persons (each, an “Indemnified Party”)
to the fullest extent permitted by law, from and against any and all losses,
claims, damages, expenses (including reasonable fees, disbursements and other
charges of counsel) or other liabilities (collectively, “Losses”) resulting
from or arising out of any breach of any representation or warranty, covenant
or agreement of the Company, any Investment Document, or any legal,
administrative or other actions (including actions brought by the Company or any
equity holders of the Company or derivative actions brought by any Person
claiming through or in the Company’s name), proceedings or investigations
(whether formal or informal), based upon, relating to or arising out of any
Investment Document or the transactions contemplated hereby and thereby, or any
Indemnified Party’s role therein or in the

 

64

 

transactions contemplated thereby; provided
that the Company shall not be liable under this Section 14.01 to an
Indemnified Party:  (a) for any amount paid in settlement of claims
without the Company’s prior written consent, (b) to the extent that it is
judicially determined that such Losses resulted primarily from the willful
misconduct or gross negligence of such Indemnified Party or (c) to the extent
that it is determined that such Losses resulted primarily from the material
breach by such Indemnified Party of any representation, warranty, covenant or
other agreement of such Indemnified Party contained herein or in the Company
Charter Documents; and provided, further, that if and to the
extent that such indemnification is unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of such
Losses which shall be permissible under applicable laws.  In connection
with the obligation of the Company to indemnify for expenses as set forth
above, the Company shall, upon presentation of appropriate invoices containing
reasonable detail, reimburse each Indemnified Party for all such expenses
(including reasonable fees, disbursements and other charges of counsel) as they
are incurred by such Indemnified Party; provided, that if an Indemnified
Party is reimbursed hereunder for any expenses, such reimbursement of expenses
shall be refunded to the extent it is judicially determined that the Losses in
question resulted primarily from (i) the willful misconduct or gross negligence
of such Indemnified Party or (ii) the material breach by such Indemnified Party
of any representation, warranty, covenant or other agreement of such
Indemnified Party contained in any Investment Document.

 

SECTION 14.02              Notification.  Each
Indemnified Party under this Article XIV will, promptly after the receipt
of notice of the commencement of any action, investigation, claim or other
proceeding against such Indemnified Party in respect of which indemnity may be
sought from the Company under this Article XIV, notify the Company in
writing of the commencement thereof.  The omission of any Indemnified Party
so to notify the Company of any such action shall not relieve the Company from
any liability which it may have to such Indemnified Party (a) other than
pursuant to this Article XIV or (b) under this Article XIV unless,
and only to the extent that, such omission results in the Company’s forfeiture
of substantive rights or defenses or the Company is otherwise irrevocably
prejudiced in defending such proceeding.  In case any such action, claim
or other proceeding shall be brought against any Indemnified Party and it shall
notify the Company of the commencement thereof, the Company shall be entitled
to assume the defense thereof at its own expense, with counsel reasonably
satisfactory to the Indemnified Party. Notwithstanding the Company’s election
to appoint counsel to represent the Indemnified Parties in an action, each
Indemnified Party shall have the right to employ separate counsel (including
local counsel), and the Indemnifying Parties shall bear the reasonable fees,
costs and expenses of such separate counsel (and local counsel) if (i) the use
of counsel chosen by the Company to represent the Indemnified Parties would
present such counsel with a conflict of interest, (ii) the defendants in any
such action include both an Indemnified Party and the Company and any such
Indemnified Party shall have reasonably concluded that there may be legal
defenses available to it and/or other Indemnified Parties which are different
from or additional to those available to the Company, (iii) the Company shall
not have employed counsel satisfactory to such Indemnified Party to represent
such Indemnified Party within a reasonable time after notice of the institution
of such action or (iv) the Company shall have authorized the Indemnified Party
to employ separate counsel at the expense of the indemnifying party.  The
Company agrees that it will not, without the prior written consent of the
Purchasers, settle, compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding relating to the matters

 

65

 

contemplated hereby (if any Indemnified Party is a
party thereto or has been actually threatened to be made a party thereto)
unless such settlement, compromise or consent includes an unconditional release
of the Purchasers and each other Indemnified Party from all liability arising
or that may arise out of such claim, action or proceeding. The Company shall
not be liable for any settlement of any claim, action or proceeding effected
against an Indemnified Party without the prior written consent of the
Company.  The rights accorded to Indemnified Parties hereunder shall be in
addition to any rights that any Indemnified Party may have at common law, by
separate agreement or otherwise.

 

ARTICLE XV

 

MISCELLANEOUS

 

SECTION 15.01              Survival.  All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement, any investigation by or on behalf of the
Purchasers, acceptance of the Purchased Securities and payment therefor,
exercise of the Warrant, and termination of this Agreement.

 

SECTION 15.02              Notices. All notices, demands
and other communications provided for or permitted hereunder shall be made in
writing and shall be by registered or certified first-class mail, return
receipt requested, telecopy, overnight courier service or personal delivery:

 

(a)                                  if to the Company:

 

8000 Marina Boulevard

2nd Floor

Brisbane, CA  94005

Attention:  Chief Executive Officer

Telephone No.:  415-508-2077

Telecopier No.:  415-508-2777

 

with copies to:

 

Great Hill Partners GP II, LLC.

One Liberty Square

Boston, MA  02109

Attention:  Michael A. Kumin

Telephone No.:  617-790-9435

Telecopier No.:  617-790-9416

 

and

 

66

 

Goodwin Procter LLP

Exchange Place

Boston, MA  02109

Attention:  David F. Dietz, P.C.

Telephone No.:  617-570-1511

Telecopier No.:  617-523-1231

 

(b)                                 if to BACI:

 

Bank of America Capital Investors

Bank of America Corporate Center

100 North Tryon Street, 25th Floor

Charlotte, NC  28255

Attention:                 Robert Sheridan, III

Craig A. Elson

Telephone No.: 704-386-1324

Telecopier No.: 704-386-6432

 

With copies to:

 

Kennedy Covington Lobdell & Hickman, L.L.P.

Hearst Tower

214 N. Tryon Street, 47th Floor

Charlotte, NC 28205

Attention:                 T. Richard Giovannelli

Telephone No.: 704-331-7484

Telecopier No.: 704-353-3184

 

All such notices and
communications shall be deemed to have been duly given:  when delivered by
hand, if personally delivered; when delivered by courier, if delivered by
commercial overnight courier service; five (5) Business Days after being
deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied.

 

SECTION 15.03              Successors and Assigns.  This Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of the parties hereto.  Subject to applicable securities laws, the
Holders may transfer the Purchased Securities and assign any of their rights
under this Agreement to any such transferee.  The Company may not assign
any of its rights under this Agreement without the prior written consent of the
Required Noteholders and the Required Series B Holders.  Except as
provided in Articles XI and XIV, no Person other than the parties hereto and
their successors and permitted assigns is intended to be a beneficiary of any
of the Investment Documents.

 

SECTION 15.04              Remedies Cumulative.  No failure or delay on the
part of the Company or any Holder in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.  The

 

67

 

remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or any Holder at law, in equity or otherwise.

 

SECTION 15.05              Amendments or Consents.  Any amendment,
supplement or modification of or to any provision of this Agreement, any waiver
of any provision of this Agreement, and any consent to any departure of the
Company from the terms of any provision of this Agreement (collectively,
“Modifications”), shall be effective (a) only if it is made or given in writing
and signed by the Company and the Required Noteholders and the Required Series
B Holders; provided, that the consent of the Required Series B Holders
shall not be required for any such Modification to the provisions of Sections
2.03, 9.19(c) or Articles XI or XIII; provided, further, that any
Modification that would make any covenant in Section 9.17(a), 9.17(b) or
9.17(c) more restrictive that the corresponding covenant, if any, in the Senior
Debt Documents and any Modification to the terms of Article XI and
Section 13.05 shall require the written consent of the Required Senior
Holders, and (b) only in the specific instance and for the specific purpose for
which made or given.  Any amendment of this Agreement not made pursuant to
the terms hereof shall be void ab initio.

 

SECTION 15.06              Counterparts.  This Agreement
may be executed in any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.

 

SECTION 15.07              Headings.  The headings
in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.

 

SECTION 15.08              GOVERNING LAW.  THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.

 

SECTION 15.09              Jurisdiction.  Each party to
this Agreement hereby irrevocably agrees that any legal action or proceeding
arising out of or relating to this Agreement or any agreements or transactions
contemplated hereby may be brought in the courts of the State of North Carolina
or the State of North Carolina or of the United States of America for the
Western District of North Carolina and hereby expressly submits (on a
non-exclusive basis) to the personal jurisdiction and venue of such courts for
the purposes thereof and expressly waives any claim of improper venue and any claim
that such courts are an inconvenient forum.  Each party hereby irrevocably
consents to the service of process of any of the aforementioned courts in any
such suit, action or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to the address set forth in
Section 15.02, such service to become effective 10 days after such
mailing.

 

SECTION 15.10              Severability.  If any one or
more of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions hereof shall not be in any
way impaired, unless the provisions held

 

68

 

invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions hereof.

 

SECTION 15.11              Rules of Construction.  Unless the context
otherwise requires, “or” is not exclusive, and references to sections or
subsections refer to sections or subsections of this Agreement.  All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require.

 

SECTION 15.12              Entire Agreement.  This
Agreement, together with the exhibits and schedules hereto and the other
Investment Documents, is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein and therein.  There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein or
therein.  This Agreement, together with the exhibits hereto, and the other
Investment Documents supersede all prior agreements and understandings between
the parties with respect to such subject matter.

 

SECTION 15.13              Certain Expenses.  The Company
agrees to pay or reimburse (a) BACI for all reasonable out-of-pocket costs and
expenses (including, without limitation, reasonable attorneys’ fees and
expenses) in connection with (i) the negotiation, preparation, execution and
delivery of this Agreement and the Investment Documents and the consummation of
the transactions contemplated thereby and (ii) any amendment, modification or
waiver of any of the terms of this Agreement or the Investment Documents; (b)
the Holders for all costs and expenses of the Holders (including, without
limitation, reasonable attorney’s fees and expenses) in connection with any
default hereunder and any enforcement proceedings resulting therefrom; and (c)
and the Holders for transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or the Investment Documents or any other document
referred to herein or therein.

 

SECTION 15.14              Publicity.  Except as may
be required by applicable law, none of the parties hereto shall issue a publicity
release or announcement or otherwise make any public disclosure concerning this
Agreement or the transactions contemplated hereby, without prior approval by
the other parties hereto (which approval will not be unreasonably
withheld).  If any announcement is required by law to be made by any party
hereto, prior to making such announcement such party will deliver a draft of
such announcement to the other parties and shall give the other parties an
opportunity to comment thereon.

 

SECTION 15.15              Further Assurances.  Each of the
parties shall execute such documents and perform such further acts (including,
without limitation, obtaining any consents, exemptions, authorizations, or
other actions by, or giving any notices to, or making any filings with, any
Governmental Authority or any other Person) as may be reasonably required or
desirable to carry out or to perform the provisions of this Agreement.

 

69

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed and delivered by their
respective officers hereunto duly authorized as of the date first above
written.

 

 

	
   

  	
  IGN ENTERTAINMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MARK JUNG

  
	
   

  	
   

  	
  Name:  Mark Jung

  
	
   

  	
   

  	
  Title:  President

  

 

70

 

	
   

  	
  GAMESPY INDUSTRIES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MARK JUNG

  
	
   

  	
   

  	
  Name:  Mark Jung

  
	
   

  	
   

  	
  Title:  President

  

 

71

 

	
   

  	
  TWO CENTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MARK JUNG

  
	
   

  	
   

  	
  Name:  Mark Jung

  
	
   

  	
   

  	
  Title:  President

  

 

72

 

	
   

  	
  BANC OF AMERICA CAPITAL
  INVESTORS, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  BANC OF AMERICA CAPITAL
  MANAGEMENT, L.P.,

  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BACM I GP, LLC, its
  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/ C.A. ELSON

  
	
   

  	
   

  	
  Name:  Craig A.
  Elson

  
	
   

  	
   

  	
  Title:  Authorized
  Signatory

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

73

 

EXHIBIT
A

 

FORM
OF SENIOR SUBORDINATED NOTE

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE.  NO
TRANSFER, SALE OR OTHER DISPOSITION OF THIS NOTE MAY BE MADE UNLESS A
REGISTRATION STATEMENT WITH RESPECT TO THIS NOTE HAS BECOME EFFECTIVE UNDER
SUCH ACT, AND SUCH REGISTRATION OR QUALIFICATION AS MAY BE NECESSARY UNDER THE
SECURITIES LAWS OF ANY STATE HAS BECOME EFFECTIVE, OR UNLESS SUCH REGISTRATION
IS NOT REQUIRED.

 

THE INDEBTEDNESS AND ALL OBLIGATIONS EVIDENCED OR
REPRESENTED HEREBY, AND CERTAIN OTHER SUBORDINATED CLAIMS, ARE SUBORDINATED AND
JUNIOR IN RIGHT OF PAYMENT TO SENIOR CLAIMS, AS DEFINED IN AND ON THE TERMS SET
FORTH IN A SECURITIES PURCHASE AGREEMENT, DATED MARCH 3, 2004, EXECUTED
AND DELIVERED FOR THE BENEFIT OF THE HOLDERS OF SUCH SENIOR CLAIMS BY THE MAKER
HEREOF AND CERTAIN PURCHASERS SIGNATORY THERETO.

 

IGN
ENTERTAINMENT, INC.

 

12%
SENIOR SUBORDINATED NOTE

DUE MARCH 3, 2010

 

	
  Charlotte, North
  Carolina

  	
   

  	
  March 3,
  2004

  

 

FOR VALUE RECEIVED, the
undersigned IGN ENTERTAINMENT, INC., a Delaware corporation (the “Company”),
hereby promises to pay BANC OF AMERICA CAPITAL INVESTORS, L.P., a Delaware
limited partnership (the “Purchaser”), or its registered assigns, the principal
amount of Twenty Million Dollars ($20,000,000) in full on March 3, 2010
with interest (computed on the basis of a 360-day year consisting of twelve
30-day months) (i) on the unpaid balance thereof at the rate of 12% per
annum compounded quarterly from the date hereof, payable upon redemption and
quarterly on the last day of March, June, September and December of
each year; provided, that if the last day of any such month is not a
Business Day, then on the next succeeding Business Day (each, a “Payment
Date”), commencing March 31, 2004 until the principal hereof shall have
become due and payable. and (ii) upon and during the occurrence of any
Default or Event of Default (as defined in the Purchase Agreement), payable as
aforesaid on any amount then in default (or, at the option of the registered
holder, on demand) at the rate of 14% per annum.

 

This subordinated
promissory note (the “Note”) is issued pursuant to the Purchase Agreement and
is entitled to the benefits thereof and is subordinated in right of payment.
and collection to the payment of the Senior Debt to the extent and in the manner
set forth in Article XI of the Purchase Agreement.

 

This Note is a Note and,
as provided and subject to the restrictions contained in the Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed by
the registered holder hereof or such holder’s attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee.  The Company shall maintain a
register in

 

1

 

its principal offices for the purpose of registering
this Note and any transfer or partial transfer thereof, which register shall
reflect and identify, at all times, the ownership of record of any interest in
the Note.  Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.  Reference is
hereby made to the Purchase Agreement for a description of certain restrictions
on the transfer of or sale of a participation interest in this Note.

 

THIS NOTE IS INTENDED TO
BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF SUCH STATE.

 

The Company may redeem
this Note in whole or in part in accordance with the terms and provisions of
the Purchase Agreement.  The maturity hereof may be accelerated upon an
Event of Default (as defined in the Purchase Agreement), all as provided in the
Purchase Agreement, to which reference is made for the terms and conditions of
such circumstances and provisions.  In the event this Note is not paid
when due, the Company will pay, in addition to principal and interest, all
costs of collection, including reasonable attorneys’ fees, and the holder
hereof shall be entitled to all the rights and remedies set forth in the
Purchase Agreement and the Investment Documents (as defined in the Purchase
Agreement) and as otherwise available at law or in equity.

 

Except as expressly
provided herein or in the Purchase Agreement, the undersigned hereby waives
presentment, demand, protest and all other notices of any kind.

 

2

 

IN WITNESS WHEREOF, this
Note is executed on the date first above written.

 

	
   

  	
  IGN ENTERTAINMENT, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

3

 

Disclosure
Schedules

 

[Disclosure Schedules have been omitted. A copy of
these schedules will be furnished supplementally to the Commission upon
request.]  

 

 

 

Amendment No. 1 to
Securities Purchase Agreement

 

 

 

AMENDMENT
NO. 1 TO SECURITIES PURCHASE AGREEMENT

 

This AMENDMENT NO. 1 (“Amendment”) is made
as of July 9, 2004 by and among IGN Entertainment, Inc., a Delaware
corporation (the “Company”),
those entities listed on the signature pages hereto under the heading
“Guarantors” (the “Guarantors”),
Banc of America Capital Investors, L.P., a Delaware limited partnership (“BACI”) as the sole
“Holder” under that certain Securities Purchase Agreement dated as of
March 3, 2004, by and among the Company, the Guarantors and BACI (the “Securities Purchase Agreement”). 
All capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Securities Purchase Agreement.

 

WHEREAS, the Company, the
Guarantors and BACI entered into the Securities Purchase Agreement;

 

WHEREAS, pursuant to
Section 15.05 of the Securities Purchase Agreement, the Company and BACI
desire to make certain amendments to the Securities Purchase Agreement
as set forth below and the Guarantors desire to acknowledge such
amendments;

 

WHEREAS, the holders of
Senior Secured Notes have agreed to amend the Senior Note Purchase Agreement
pursuant to that certain Amendment and Waiver No. 1 to Note Purchase Agreement
attached hereto as Exhibit A;

 

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

SECTION 1.  AMENDMENTS TO
THE SECURITIES PURCHASE AGREEMENT

 

1.1   Section 9.01
is amended by deleting the word “and” at the end of Section 9.01(j),
deleting the “.” at the end of Section 9.01(k) and replacing it with “;
and” and inserting the following immediately thereafter:

 

“(1)                            Indebtedness incurred pursuant to the
Rotten Tomatoes Merger Agreement; provided, that the aggregate amount of
such Indebtedness does not exceed $6,500,000 plus up to $100,000 of working
capital adjustments made pursuant to Section 1.11 of the Rotten Tomatoes
Merger Agreement.”

 

1.2   Section 9.05
is amended and restated in its entirety as follows:

 

“No Amendment of Transaction Documents.

 

So long as, any Note is outstanding, without the
consent of the Required Noteholders, the Company will not amend, waive, modify
or alter, or take any action that could cause to be amended, waived, modified
or altered, the terms of

 

1

 

any Senior Debt Document, the Series A Preferred Stock
Purchase Agreement, the Company’s Charter Documents, any Senior Subordinated Note,
any share of Series A Preferred Stock, any share of Series B Preferred Stock,
or any Rotten Tomatoes Merger Document, in any way to:

 

(a)                                  alter the terms of any of the Company’s
Equity Securities, if, pursuant to the terms of the Company’s Equity Securities,
as altered, the Company or any of its Subsidiaries could be required to take an
action, whether upon the occurrence of an event, delivery of notice, on any
date, or otherwise, that would, directly or indirectly, result in a Default or
Event of Default or entitle the holder or holders of any Indebtedness of the
Company or any of its Subsidiaries (with or without the giving of notice or
lapse of time) to accelerate the maturity of such Indebtedness;

 

(b)                                 increase the rate of interest on any
Senior Secured Notes or any Permitted Refinancing Indebtedness to be more than
the lesser of (i) LIBOR (as defined in the Senior Note Purchase Agreement) plus
950 basis points or (ii) 300 basis points above the interest rate in effect
immediately prior to such financing change (as defined below);

 

(c)                                  extend the final maturity date of any
Senior Secured Note or any Permitted Refinancing Indebtedness to be later than
December 31, 2009 or shorten the Weighted Average Life to Maturity of any
Senior Secured Note or any Permitted Refinancing Indebtedness by more than 25%;

 

(d)                                 amend the provisions of Sections 6.4 and
6.5 of the Senior Note Purchase Agreement (or any successor provisions) in a
manner more restrictive upon or adverse to the interests of the Company or the
Holders;

 

(e)                                  effect any amendment, restatement,
refinancing, refunding, replacement, or other modification of any Senior Debt
Document (a “financing change”) that imposes covenants or events of default
upon the Company and its Subsidiaries which (i) are more restrictive than the
covenants contained in the Debt Documents prior to such financing change and
(ii) are of the nature set forth in this Agreement, unless the Company and the
Required Noteholders shall, within 10 Business Days after such financing
change, execute and deliver an amendment to this Agreement for the purpose of
effecting a change similar and in proportion to the changes to the Senior Debt
Documents; provided, that (A) upon any failure of the Company or the
Required Noteholders to do so, this Agreement shall be deemed automatically
amended to effect such similar and proportionate amendment; and (B) after any
such financing change and corresponding amendment hereto occurs, if a
subsequent financing change is effected with respect to any Senior Debt
Document that makes any such covenant or event of default less restrictive,
then the foregoing provisions shall apply to amend this Agreement in a similar
and proportionately less restrictive manner; provided, further,
that the Required Noteholders shall not be required to agree to any amendment
(and no amendment shall be automatically made) which would have the effect of
making the covenant or Event of Default in this Agreement less restrictive upon
the Company and its Subsidiaries than those in effect on the date hereof; or

 

2

 

(f)                                    waive, amend, restate, or modify a Rotten
Tomatoes Merger Document to the extent that such waiver, amendment, restatement
or modification would either (i) waive, amend, restate or modify a Rotten
Tomatoes Merger Document in any material way, or (ii) waive, amend, restate or
modify any term relating to a payment due to any Shareholder (as defined in the
Rotten Tomatoes Merger Agreement).”

 

1.3   Section 9.17(c)
is amended and restated in its entirety as follows:

 

“Funded Indebtedness
Leverage Ratio.

 

Until such time as there
are no Notes outstanding, the Company will not permit the ratio (the “Funded Indebtedness Leverage Ratio”)
of (i) Funded Indebtedness of Company and its Subsidiaries on each date listed
below to (ii) Consolidated EBITDA of the Company for the Test Period
ending on each date listed below to be more than the ratio set forth below:

 

	
  Test
  Period

  	
   

  	
  Ratio

  	
   

  
	
  June 30, 2004

  	
   

  	
  9.25:1.00

  	
   

  
	
  September 30, 2004

  	
   

  	
  7.25:1.00

  	
   

  
	
  December 31, 2004

  	
   

  	
  5.50:1.00

  	
   

  
	
  March 31, 2005

  	
   

  	
  5.00:1.00

  	
   

  
	
  June 30, 2005

  	
   

  	
  4.75:1.00

  	
   

  
	
  September 30, 2005

  	
   

  	
  4.50:1.00

  	
   

  
	
  December 31, 2005

  	
   

  	
  4.00:1.00

  	
   

  
	
  March 31, 2006

  	
   

  	
  4.00:1.00

  	
   

  
	
  June 30, 2006

  	
   

  	
  4.00:1.00

  	
   

  
	
  September 30, 2006

  	
   

  	
  4.00:1.00

  	
   

  
	
  December 31, 2006

  	
   

  	
  3.75:1.00

  	
   

  
	
  March 31, 2007

  	
   

  	
  3.75:1.00

  	
   

  
	
  June 30, 2007

  	
   

  	
  3.75:1.00

  	
   

  
	
  September 30, 2007

  	
   

  	
  3.75:1.00

  	
   

  
	
  December 31, 2007

  	
   

  	
  3.75:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  3.75:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  3.75:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  3.75:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  3.75:1.00

  	
   

  
	
  March 31, 2009 and the last day of each fiscal
  quarter thereafter

  	
   

  	
  3.75:1.00”

  	
   

  

 

1.4   Section 9.17(d)
is amended and restated in its entirety as follows:  ”Preferred
Leverage Ratio                 Until such time as there are no shares of Series B
Preferred Stock outstanding, the Company will not permit the ratio (the
“Preferred Leverage Ratio”) of (i) Funded Indebtedness of Company and its
Subsidiaries plus the Series B Senior Liquidation Preference Amount (as defined
in the Certificate of Incorporation), excluding any Series B Premium Amount (as
defined in the Certificate of Incorporation) then payable to
(ii) Consolidated EBITDA of the Company for the Test Period ending on each
date listed below to be more than the ratio set forth below:

 

	
  Test
  Period

  	
   

  	
  Ratio

  	
   

  
	
  June 30, 2004

  	
   

  	
  11.00:1.00

  	
   

  
	
  September 30, 2004

  	
   

  	
  8.75:1.00

  	
   

  
	
  December 31, 2004

  	
   

  	
  6.75:1.00

  	
   

  
	
  March 31, 2005

  	
   

  	
  6.00:1.00

  	
   

  
	
  June 30, 2005

  	
   

  	
  5.75:1.00

  	
   

  
	
  September 30, 2005

  	
   

  	
  5.25:1.00

  	
   

  
	
  December 31, 2005

  	
   

  	
  4.75:1.00

  	
   

  
	
  March 31, 2006

  	
   

  	
  4.75:1.00

  	
   

  
	
  June 30, 2006

  	
   

  	
  4.50:1.00

  	
   

  
	
  September 30, 2006

  	
   

  	
  4.50:1.00

  	
   

  
	
  December 31, 2006

  	
   

  	
  4.25:1.00

  	
   

  
	
  March 31, 2007

  	
   

  	
  4.25:1.00

  	
   

  
	
  June 30, 2007

  	
   

  	
  4.25:1.00

  	
   

  
	
  September 30, 2007

  	
   

  	
  4.25:1.00

  	
   

  
	
  December 31, 2007

  	
   

  	
  4.25:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  4.25:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  4.25:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  4.25:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  4.25:1.00

  	
   

  
	
  March 31, 2009 and the last day of each fiscal
  quarter thereafter

  	
   

  	
  4.25:1.00”

  	
   

  

 

3

 

1.5   Section 12.01
is amended by deleting the word “or” at the end of Section 12.02(1),
deleting the “.” at the end of Section 12.01(m) and replacing it with “;”
and inserting the following immediately thereafter:

 

“(n) All or any portion of the Merger Consideration
(as defined in the Rotten Tomatoes Merger Agreement) is not paid when due
(without giving effect to any grace periods) pursuant to the terms of the
Rotten Tomatoes Merger Agreement, or any event occurs or circumstance exists
that entitles any Person (including the Shareholders Representative (as defined
in the Rotten Tomatoes Merger Agreement)) to accelerate the payment of all or
any portion of the Merger Consideration; or

 

(o) The Company or any of its Subsidiaries shall be
obligated to make any payment or shall have made any payment pursuant to the
terms of the Rotten Tomatoes Merger Agreement, if (a) after giving pro forma
effect to such payment as if such payment were made on the last day of the most
recently ended fiscal quarter, the Company is or would be in violation of any
provision of Section 9.17 hereof or (b) immediately prior to making such
payment the Company fails to deliver to the Required Noteholders an Officer’s
Certificate certifying that the officers executing such certificate have no
reason to believe, and do not believe, that the Company will be in violation of
any provision of Article 9.17 on the last day of the fiscal quarter in
which such payment is made after giving effect to such payment.”

 

1.6   The
definition of “Permitted Investments” contained in Article I is amended by
amending and restating clause (c) in its entirety as follows:

 

“(c)                            any Investment by the Company or any of
its Subsidiaries in a Person that is engaged in a Permitted Business after
June 30, 2004, if as a result of such Investment:

 

4

 

(i)                                     such Person becomes a Wholly Owned
Domestic Subsidiary of the Company; or

 

(ii)                                  such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly Owned Domestic
Subsidiary of the Company; provided, that:

 

(A)                              the aggregate amount of such Investments,
exclusive of Investments made pursuant to clause (m) of this definition, does
not exceed $10,000,000;

 

(B)                                the aggregate amount of all such
Investments, exclusive of Investments made pursuant to clause (m) of this
definition, does not exceed $5,000,000 million in any fiscal year;

 

(C)                                if such Investment is made on or before
December 31, 2004, after giving effect to such Investment the Company owns
cash and Cash Equivalents, in each case that are not subject to any
restrictions other than those imposed pursuant to the Senior Note Documents, of
at least $4,500,000;

 

(D)                               so long as any Note remains outstanding,
then on a pro forma basis, giving effect to such Investment as if it were made
on the first day of the four consecutive completed fiscal quarters of the
Company ended immediately preceding such Investment, the Funded Indebtedness
Leverage Ratio for the Company is less than the applicable amount set forth in
Section 9.17(c) as of the end of the fiscal quarter immediately preceding
the date of the closing of such transaction, unless otherwise approved by the
Required Noteholders; and

 

(E)                                 so long as any Series B Preferred Stock
remains outstanding, then on a pro forma basis, giving effect to such
Investment as if it were made on the first day of the four consecutive
completed fiscal quarters of the Company ended immediately preceding such
Investment, the Preferred Leverage Ratio for the Company is less than the
applicable amount set forth in Section 9.17(d) as of the end of the fiscal
quarter immediately preceding the date of the closing of such transaction,
unless otherwise approved by the Required Series B Holders.

 

1.7   The
definition of “Permitted Investments” contained in Article I is further
amended by deleting the “and” at the end of clause (k), deleting the “.” at the
end of clause (1) and replacing it with “; and” and inserting the following
immediately thereafter:

 

5

 

“(m) Investments made pursuant to the Rotten Tomatoes
Merger Agreement; provided, that the aggregate amount of such
Investments does not exceed $9,300,000 plus up to $100,000 of working capital
adjustments made pursuant to Section 1.11 of the Rotten Tomatoes
Merger Agreement.”

 

1.8   Article I
is amended by deleting the definition of “Consolidated Capital Expenditures”
and replacing it with the following:

 

“Consolidated Capital Expenditures” of any
Person means, for any period, (a) the aggregate gross increase during that
period, in the property, plant or equipment as reflected in the consolidated
balance sheet of such Person and its consolidated Subsidiaries, in conformity
with GAAP, and (b) the fair market value of all Intellectual Property purchased
or otherwise acquired (whether by license, distribution agreement, reseller
agreement, security agreement, assignment or other conveyance or option for the
foregoing), other than in-bound “shrink wrap” end-user licenses, in each case
(a) and (b), excluding,

 

(i)                                      expenditures made in connection with the
replacement, substitution or restoration of assets (including any expenditures
made pursuant to Section 6.6(b) of the Senior Note Purchase
Agreement),

 

(A)                               to the extent financed from Casualty
Proceeds received on account of the loss, destruction or condemnation of the
assets being replaced or restored; and

 

(B)                                 to the extent such expenditure is
attributable to a credit granted by the seller of property, plant or equipment
purchased with the trade-in of existing property, plant or equipment;

 

(ii)                                   the purchase price paid in connection
with the acquisition of any other Person (including through the purchase of all
of the Capital Stock of such Person or through merger or consolidation) to the
extent such amount is an Investment and allocable to the property, plant and
equipment or the Intellectual Property of such Person or its Subsidiaries.”

 

1.9   Article I
is further amended by deleting the definition of “Consolidated EBITDA” and
replacing it with the following:

 

“Consolidated EBITDA” means, with respect to
any specified Person for any period, the Consolidated Net Income of such Person
for such period plus, without duplication,

 

(a)                                  the Consolidated Interest Expense of such
Person and its Subsidiaries for such period, to the extent that such
Consolidated Interest Expense was deducted in computing such Consolidated
Net Income; plus

 

(b)                                 provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was deducted in computing such Consolidated Net
Income; plus

 

6

 

(c)                                  depreciation, amortization (including
amortization of intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) and other non-cash expenses (excluding any
such non-cash expense to the extent that it represents an accrual of or reserve
for cash expenses in any future period or amortization of a prepaid cash
expense that was paid in a prior period) of such Person and its Subsidiaries
for such period to the extent that such depreciation, amortization and other non-cash
expenses were deducted in computing such Consolidated Net Income; minus

 

(d)                                 non-cash items increasing such
Consolidated Net Income for such period, other than the accrual of revenue in
the ordinary course of business,

 

in each case, on a consolidated basis and determined
in accordance with GAAP; provided, that

 

(i)                                     the following amounts shall be added to
Consolidated EBITDA (without duplication of amounts added pursuant to any other
provisions of this definition of “Consolidated EBTTDA”): for the four
consecutive financial quarters ended June 30, 2004, September 30,
2004 up to $1,563,554.00 and $760,301.00, respectively, of one time charges
incurred during 2003 in connection with the Company’s reporting obligations
under the Exchange Act in each case, to the extent deducted in computing
Consolidated Net Income for such period; and

 

(ii)                                  for the four consecutive fiscal quarters
ended on the dates set forth below, Consolidated EBITDA shall exclude (without
duplication of amounts excluded pursuant to any other provision of this
definition of “Consolidated EBITDA”) up to that amount of one time charges (or
benefits) opposite such date; provided, that such one time charges (or
benefits) are described as set forth under the heading “Description”; and, provided,
further, that such charges (or benefits) were incurred during the four
fiscal quarters immediately preceding such date:

 

	
  Date

  	
   

  	
  Purpose

  	
   

  	
  Amount

  	
   

  
	
  June 30, 2004

  	
   

  	
  Transaction Costs

  	
   

  	
  $

  	
  379,998

  	
   

  
	
  June 30, 2004

  	
   

  	
  Restructuring Charges

  	
   

  	
  $

  	
  (36,572

  	
  )

  
	
  June 30, 2004

  	
   

  	
  Deferred Revenue
  Write-Off

  	
   

  	
  $

  	
  1,486,924

  	
   

  
	
  June 30, 2004

  	
   

  	
  Re-audit Expense

  	
   

  	
  $

  	
  265,000

  	
   

  
	
  September 30, 2004

  	
   

  	
  Transaction Costs

  	
   

  	
  $

  	
  379,998

  	
   

  
	
  September 30, 2004

  	
   

  	
  Restructuring Charges

  	
   

  	
  $

  	
  (36,572

  	
  )

  
	
  September 30, 2004

  	
   

  	
  Deferred Revenue
  Write-Off

  	
   

  	
  $

  	
  2,254,328

  	
   

  
	
  September 30, 2004

  	
   

  	
  Re-audit Expense

  	
   

  	
  $

  	
  265,000

  	
   

  
	
  December 31, 2004

  	
   

  	
  Transaction Costs

  	
   

  	
  $

  	
  379,998

  	
   

  
	
  December 31, 2004

  	
   

  	
  Restructuring Charges

  	
   

  	
  $

  	
  (36,572

  	
  )

  
	
  December 31, 2004

  	
   

  	
  Deferred Revenue
  Write-Off

  	
   

  	
  $

  	
  2,561,707

  	
   

  
	
  December 31, 2004

  	
   

  	
  Re-audit Expense

  	
   

  	
  $

  	
  265,000

  	
   

  
	
  March 31, 2005

  	
   

  	
  Deferred Revenue
  Write-Off

  	
   

  	
  $

  	
  2,185,712

  	
   

  
	
  March 31, 2005

  	
   

  	
  Re-audit Expense

  	
   

  	
  $

  	
  265,000

  	
   

  
	
  June 30, 2005

  	
   

  	
  Deferred Revenue
  Write-Off

  	
   

  	
  $

  	
  1,135,053

  	
   

  
	
  September 30, 2005

  	
   

  	
  Deferred Revenue
  Write-Off

  	
   

  	
  $

  	
  367,649

  	
   

  
	
  December 31, 2005

  	
   

  	
  Deferred Revenue
  Write-Off

  	
   

  	
  $

  	
  60,270”

  	
   

  

 

7

 

1.10   Article I
is further amended by inserting the following defined terms in appropriate
alphabetical order in such Article:

 

“Deferred Revenue Write-Off” means the charges
to the Company’s Consolidated Net Income incurred as a result of a write-off of
GameSpy’s deferred revenue; provided, that such write-off was required under
GAAP as a result of the GameSpy Acquisition.

 

“Intellectual Property” shall mean any or all
of the following and all rights in, arising out of, or associated therewith:
(a) all United States, international and foreign patents and applications
therefor and all reissues, divisions, divisionals, renewals, extensions,
provisionals, continuations and continuations-in-part thereof, and all patents,
applications, documents and filings claiming priority to or serving as a basis
for priority thereof; (b) all inventions (whether or not patentable), invention
disclosures, improvements, trade secrets, proprietary information, know how,
computer software programs (in both source code and object code form),
technology, technical data and customer lists, tangible or intangible
proprietary information, and all documentation relating to any of the
foregoing; (c) all copyrights, copyrights registrations and applications
therefor, and all other rights corresponding thereto throughout the world; (d)
all industrial designs and any registrations and applications therefor
throughout the world; (e) all trade names, logos, common law trademarks
and service marks, trademark and service mark registrations and applications
therefor throughout the world; (f) all proprietary databases and data
collections and all rights therein throughout the world; (g) all moral and
economic rights of authors and inventors, however denominated, throughout the
world; (h) all Web addresses, sites and domain names and numbers; (i) goodwill
and remedies against infringement thereof and rights of protection of an
interest therein under the laws of all jurisdictions; or (j) any similar
or equivalent rights to any of the foregoing anywhere in the world.

 

“Re-Audit Expense” means the amount by which
(a) the costs associated with KPMG (i) re-auditing the 2001, 2002 and 2003
financial statements, books and records of the Company, (ii) re-auditing
the 2002 and 2003 financial statements, books and records of GameSpy, and
(iii) issuing an opinion on such re-audited financial statements, books
and records, exceeds (b) the $85,0000 incurred by GameSpy and the Company in
connection with the audit of their 2003 financial statements.

 

“Restructuring Costs” means the amount by which
(a) the restructuring costs the Company projected would be incurred in connection
with the GameSpy Acquisition (as set forth in the Projections), exceeds (b) the
$517,064 of actual restructuring costs incurred in connection with the GameSpy
Acquisition.

 

“Rotten Tomatoes Merger Agreement” means the
Agreement and Plan of Merger entered into as of June 24, 2004, by and
among the Company, IGN Entertainment Acquisition Corp., a California
corporation, IncFusion Corporation d.b.a. Rotten Tomatoes, a California
corporation, Patrick Lee, Stephen Wang and

 

8

 

Senh Duong, and Patrick Lee, as the Shareholders’
Representative, as executed on the June 24, 2004.

 

“Rotten Tomatoes Merger Documents” means the
Rotten Tomatoes Merger Agreement and each certificate, document, agreement or
instrument delivered pursuant thereto or in connection therewith.

 

“Transaction Costs” means the amount by which
(a) the professional fees actually incurred by the Company as of
July 1, 2004 in connection with the GameSpy Acquisition, exceeds (b) the
$150,000 of professional fees the Company projected would be incurred in
connection with the GameSpy Acquisition (as set forth in the Projections).

 

SECTION 2. 
CONDITIONS PRECEDENT

 

The effectiveness of the
amendments to the Securities Purchase Agreement contemplated by Section 1
hereof is subject to the receipt by BACI of the following:

 

(a)                                   counterparts hereof duly executed by the
Company and the Guarantors;

 

(b)                                  an amendment to the Senior Note Purchase
Agreement in the form of Exhibit A hereto, duly executed by the holders
of the requisite principal amount of Senior Secured Notes (the “Senior Amendment”);

 

(c)                                   the Rotten Tomatoes Merger Agreement and
each document delivered pursuant thereto, duly executed by each party thereto;
and

 

(d)                                  all costs, fees and expenses payable to
BACI by the Company pursuant to Section 15.13 of the Securities Purchase
Agreement, including without limitation the reasonable fees and disbursements
of Kennedy Covington Lobdell & Hickman, L.L.P.

 

SECTION 3. 
COUNTERPARTS

 

This Amendment may be
executed in any number of counterparts, and all such counterparts taken
together shall be deemed to constitute one and the same instrument. Signature
pages may be detached from counterpart documents and reassembled to form
duplicate executed originals.

 

SECTION 4. 
RATIFICATION OF AGREEMENT

 

4.1    To
induce BACI to enter into this Amendment, the Company and the Guarantors
jointly and severally represent and warrant that after giving effect to this
Amendment no violation of the terms of the Securities Purchase Agreement or any
Investment Documents exist and all representations and warranties contained in
the Securities Purchase Agreement and the Senior Amendment are true, correct
and complete in all material respects on and as of the date hereof except to
the extent such representations and warranties specifically relate to an
earlier date in which case they were true, correct and complete in all material
respects on and as of such earlier date.

 

9

 

4.2    Except
as expressly set forth in this Amendment, the terms, provisions and conditions
of the Securities Purchase Agreement and the other Investment Documents are
unchanged, and said agreements, as amended, shall remain in full force and
effect and are hereby confirmed and ratified.

 

SECTION 5. 
GOVERNING LAW; JURISDICTION; VENUE.

 

THIS AMENDMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK).

 

Each party to this
Amendment hereby irrevocably agrees that any legal action or proceeding arising
out of or relating to this Agreement or any agreements or transactions
contemplated hereby may be brought in the courts of the State of North Carolina
or the State of North Carolina or of the United States of America for the Western
District of North Carolina and hereby expressly submits (on a non-exclusive
basis) to the personal jurisdiction and venue of such courts for the purposes
thereof and expressly waives any claim of improper venue and any claim that
such courts are an inconvenient forum. Each party hereby irrevocably consents
to the service of process of any of the aforementioned courts in any such suit,
action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to the address set forth in Section 15.02
of the Securities Purchase Agreement, such service to become effective 10 days
after such mailing.

 

SECTION 6. 
ACKNOWLEDGMENT AND CONSENT BY THE GUARANTORS

 

Each Guarantor hereby
acknowledges that it has read this Amendment and consents to the terms hereof
and further confirms and agrees that, notwithstanding the effectiveness of this
Amendment, its obligations under the Securities Purchase Agreement shall not be
impaired or affected and such obligations are, and shall continue to be, in
full force and effect and are hereby confirmed and ratified in all respects.

 

[SIGNATURE
PAGES FOLLOW]

 

10

 

IN WITNESS WHEREOF, each
of the parties hereto has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  IGN ENTERTAINMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MICHAEL SHERIDAN

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:  CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  GAMESPY INDUSTRIES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MARK JUNG

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TWO CENTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SEAN DEORSEY

  	
   

  
	
   

  	
   

  	
  Name:  Sean Deorsey

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANC OF AMERICA CAPITAL
  INVESTORS, L.P.

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  BANC Of AMERICA CAPITAL

  
	
   

  	
   

  	
  MANAGEMENT, L.P., its
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BACM I GP, LLC, its
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert H. Sheridan
  III

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

11

 

Amendment No. 2
to Securities Purchase Agreement

 

 

AMENDMENT NO. 2 TO SECURITIES PURCHASE AGREEMENT

 

This AMENDMENT
NO. 2 (“Amendment”)
is made as of February 4, 2005 by and among IGN Entertainment, Inc.,
a Delaware corporation (the “Company”), those entities listed on the signature pages hereto
under the heading “Guarantors” (the “Guarantors”), Banc of America Capital
Investors, L.P., a Delaware limited partnership (“BACI”), as the sole “Holder” under that
certain Securities Purchase Agreement dated as of March 3, 2004, by and
among the Company, the Guarantors and BACI, as amended by that certain
Amendment No. 1 to Securities Purchase Agreement dated as of July 9,
2004 (the “Securities
Purchase Agreement”).  All
capitalized terms used herein and not otherwise defined shall have the meanings
assigned to such terms in the Securities Purchase Agreement.

 

WHEREAS, the
Company and BACI desire to make certain amendments to the Securities Purchase
Agreement, pursuant to Section 15.05 of the Securities Purchase Agreement,
as set forth below, and the Guarantors desire to acknowledge such amendments;
and

 

WHEREAS, the
holders of Senior Secured Notes have agreed to amend the Senior Note Purchase
Agreement pursuant to that certain Amendment No. 2 to Note Purchase Agreement
attached hereto as Exhibit A (the “Senior Amendment”).

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

 

SECTION 1.                                               AMENDMENTS
TO THE NOTE PURCHASE AGREEMENT

 

1.1.          Clause (m) of the definition of “Permitted
Investments” contained in Section 1.01 is amended and restated in its
entirety as follows:

 

“(m)        Investments made pursuant to an
Acquisition Document; provided
that the aggregate amount of such Investments does not exceed the Subsequent
Investment Cap applicable to such Acquisition Document.”

 

1.2.          Section 1.01 is further amended
by inserting the following defined terms in appropriate alphabetical order in
such Article:

 

““3D Gamers Agreement”
means the Asset Purchase Agreement dated as of February 4, 2005 by and
among 3D GAMERS, LLC, a California limited liability company, the Company,
Piotr Kapiszewski, Frans P. DeVries, and John Van Essen.

 

““3D Gamers Acquisition Document”
means the 3D Gamers Agreement and each certificate, document, agreement or
instrument delivered pursuant thereto or in connection therewith.

 

2

 

““Acquisition Consideration”
means the “Merger Consideration” (as defined in the Rotten Tomatoes Merger
Agreement) and the “Purchase Price” (as defined in the 3D Gamers Agreement).

 

““Acquisition Document”
means each 3D Gamers Acquisition Document and each Rotten Tomatoes Merger
Document.

 

““Subsequent Acquisition Indebtedness
Cap” means, with respect to the Rotten Tomatoes Merger
Agreement, $6,500,000 plus up to $100,000 of working capital adjustments made
pursuant to Section 1.11 of the Rotten Tomatoes Merger Agreement, and with
respect to the 3D Gamers Agreement, $800,000.

 

““Subsequent Investment Cap”
means, with respect to the Rotten Tomatoes Merger Agreement, $9,300,000 plus up
to $100,000 of working capital adjustments made pursuant to Section 1.11
of the Rotten Tomatoes Merger Agreement, and with respect to the 3D Gamers
Agreement, $2,000,000.”

 

1.3.          Section 9.01(l) is amended and
restated in its entirety as follows:

 

“(l)          Indebtedness incurred pursuant to an
Acquisition Document; provided
that the aggregate amount of such Indebtedness does not exceed the Subsequent
Acquisition Indebtedness Cap applicable to such Acquisition Document.”

 

1.4.          The first paragraph of Section 9.05
is amended and restated in its entirety as follows:

 

“No Amendment of Transaction
Documents.

 

So long as, any Note is
outstanding, without the consent of the Required Noteholders, the Company will
not amend, waive, modify or alter, or take any action that could cause to be
amended, waived, modified or altered, the terms of any Senior Debt Document,
the Series A Preferred Stock Purchase Agreement, the Company’s Charter
Documents, any Senior Subordinated Note, any share of Series A Preferred
Stock, any share of Series B Preferred Stock, any Acquisition Document, in
any way to:”

 

1.5.          Section 9.05(f) is amended
and restated in its entirety as follows:

 

“(f)          waive, amend, restate, or modify an Acquisition Document to
the extent that such waiver, amendment, restatement or modification would
either (i) waive, amend, restate or modify Acquisition Document in any
material way, or (ii) waive, amend, restate or modify any term relating to
a payment due to any Person.”

 

1.6.          Sections 12.01(n) and 12.01(o) are
amended and restated in its entirety as follows:

 

3

 

“(n)         All or any portion of any Acquisition Consideration is not
paid when due (without giving effect to any grace periods) pursuant to the
terms of an Acquisition Document, or any event occurs or circumstance exists
that entitles any Person to accelerate the payment of all or any portion of any
Acquisition Consideration; or

 

(o)           The Company or any of its Subsidiaries shall be obligated
to make any payment or shall have made any payment pursuant to the terms of an
Acquisition Document, if (i) after giving pro forma effect to such payment
as if such payment were made on the last day of the most recently ended fiscal
quarter, the Company is or would be in violation of any provision of Section 9.17
hereof or (ii) immediately prior to making such payment the Company fails
to deliver to the Required Noteholders an Officer’s Certificate certifying that
the officers executing such certificate have no reason to believe, and do not
believe, that the Company will be in violation of any provision of Article 9.17
on the last day of the fiscal quarter in which such payment is made after giving
effect to such payment.”

 

SECTION 2.                                               CONDITIONS
PRECEDENT

 

The
effectiveness of the amendments to the Securities Purchase Agreement
contemplated by Section 1 hereof is subject to the receipt by BACI of the
following:

 

(a)           counterparts
hereof duly executed by the Company and the Guarantors;

 

(b)           the
Senior Amendment, duly executed by the holders of the requisite principal
amount of Senior Secured Notes;

 

(c)           the
3D Gamers Agreement and each document delivered pursuant thereto, duly executed
by each party thereto; and

 

(d)           all
costs, fees and expenses payable to BACI by the Company pursuant to Section 15.13
of the Securities Purchase Agreement, including without limitation the
reasonable fees and disbursements of Kennedy Covington Lobdell &
Hickman, L.L.P.

 

SECTION 3.                                               COUNTERPARTS

 

This Amendment
may be executed in any number of counterparts, and all such counterparts taken
together shall be deemed to constitute one and the same instrument.  Signature pages may be detached from
counterpart documents and reassembled to form duplicate executed originals.

 

SECTION 4.                                               RATIFICATION
OF AGREEMENT

 

4.1.          To induce BACI to enter into this
Amendment, the Company and the Guarantors jointly and severally represent and
warrant that after giving effect to this Amendment

 

4

 

no violation of the terms of the Securities Purchase Agreement or any
Investment Documents exist and all representations and warranties contained in
the Securities Purchase Agreement and the Senior Amendment are true, correct
and complete in all material respects on and as of the date hereof except to
the extent such representations and warranties specifically relate to an
earlier date in which case they were true, correct and complete in all material
respects on and as of such earlier date.

 

4.2.          Except as expressly set forth in this
Amendment and as amended on July 9, 2004, the terms, provisions and
conditions of the Securities Purchase Agreement and the other Investment
Documents are unchanged, and said agreements, as amended, shall remain in full
force and effect and are hereby confirmed and ratified.

 

SECTION 5.                                               GOVERNING
LAW; JURISDICTION; VENUE.

 

THIS AMENDMENT
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK).

 

Each party to
this Amendment hereby irrevocably agrees that any legal action or proceeding
arising out of or relating to this Amendment or any agreements or transactions
contemplated hereby may be brought in the courts of the State of North Carolina
or of the United States of America for the Western District of North Carolina
and hereby expressly submits (on a non-exclusive basis) to the personal
jurisdiction and venue of such courts for the purpose thereof and expressly
waives any claim of improper venue and any claim that such courts are an inconvenient
forum.  Each party hereby irrevocably
consents to the service of process of any of the aforementioned courts in any
such suit, action or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to the address set forth in Section 15.02
of the Securities Purchase Agreement, such service to become effective 10 days
after such mailing.

 

SECTION 6.                                               ACKNOWLEDGMENT
AND CONSENT BY THE GUARANTORS

 

Each Guarantor
hereby acknowledges that it has read this Amendment and consents to the terms
hereof and further confirms and agrees that, notwithstanding the effectiveness
of this Amendment, its obligations under the Securities Purchase Agreement
shall not be impaired or affected and such obligations are, and shall continue
to be, in full force and effect and are hereby confirmed and ratified in all respects.

 

[SIGNATURE PAGES FOLLOW]

 

5

 

IN WITNESS
WHEREOF, each of the parties hereto has caused a counterpart of this Amendment
to be duly executed and delivered as of the date first above written.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
  IGN ENTERTAINMENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Jung

  
	
   

  	
   

  	
  Name: Mark Jung

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
  GAMESPY INDUSTRIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Jung

  
	
   

  	
   

  	
  Name: Mark Jung

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TWO CENTS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Jung

  
	
   

  	
   

  	
  Name: Mark Jung

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  BANC OF AMERICA CAPITAL INVESTORS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BANC OF AMERICA CAPITAL

  
	
   

  	
   

  	
  MANAGEMENT, L.P., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BACM I GP, LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert H. Sheridan III

  
	
   

  	
   

  	
  Name: Robert Sheridan

  
	
   

  	
   

  	
  Title: Partner

  

 

 

Exhibit A

Senior Amendment

 

[See Amendment No. 2 to Note Purchase Agreement in Exhibit 10.16 to
this Form S-1.]

 

 

Amendment
and Waiver No. 3 to Securities Purchase Agreement 

 

 

AMENDMENT AND WAIVER NO. 3 TO SECURITIES PURCHASE AGREEMENT

 

This AMENDMENT
AND WAIVER NO. 3 (“Amendment”)
is made as of March 31, 2005 by and among IGN Entertainment, Inc., a
Delaware corporation (the “Company”),
those entities listed on the signature pages hereto under the heading
“Guarantors” (the “Guarantors”),
Banc of America Capital Investors, L.P., a Delaware limited partnership (“BACI”) as the sole
“Holder” under that certain Securities Purchase Agreement dated as of
March 3, 2004, by and among the Company, the Guarantors and BACI, as
amended by that certain Amendment No. 1 to Securities Purchase Agreement
dated as of July 9, 2004 and that certain Amendment No. 2 to
Securities Purchase Agreement dated February 4, 2005 (the “Securities Purchase Agreement”).  All capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the
Securities Purchase Agreement.

 

WHEREAS, the
Company and BACI desire to make certain amendments to the Securities Purchase
Agreement, pursuant to Section 15.05 of the Securities Purchase Agreement,
as set forth below, and the Guarantors desire to acknowledge such amendments;

 

WHEREAS, the
holders of Senior Secured Notes have agreed to amend the Senior Note Purchase
Agreement pursuant to that certain Amendment No. 3 to Note Purchase
Agreement attached hereto as Exhibit A (the “Senior Amendment”);

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

 

SECTION 1.                AMENDMENTS
TO THE SECURITIES PURCHASE AGREEMENT

 

1.1.          Section 7.01(c) of
the Securities Purchase Agreement is amended and restated in its entirety as
follows:

 

“(c)         Annual
Financial Statements.  As soon as
available, but in any event not later than 90 days after the close of each
fiscal year (or, with respect to the close of fiscal year 2004, not later than
April 30, 2005), an audited consolidated balance sheet of the Company and
its Subsidiaries as of the close of such fiscal year, and related audited
consolidated statements of operations, cash flows and changes in stockholder’s
equity of the Company and its Subsidiaries for such fiscal year, reported on
(without any material qualification arising from the scope of the audit or with
respect to the continuance of the Company and its Subsidiaries as going
concerns) by a nationally recognized firm of in-dependent certified public
accountants and prepared in accordance with GAAP consistently applied;”

 

2

 

SECTION 2.                CONDITIONS
PRECEDENT

 

The
effectiveness of the amendments to the Securities Purchase Agreement
contemplated by Section 1 hereof is subject to the receipt by BACI of the
following:

 

(a)           counterparts
hereof duly executed by the Company and the Guarantors;

 

(b)           the
Senior Amendment, duly executed by the holders of the requisite principal
amount of Senior Secured Notes; and

 

(c)           all
costs, fees and expenses payable to BACI by the Company pursuant to
Section 15.13 of the Securities Purchase Agreement, including without
limitation the reasonable fees and disbursements of Kennedy Covington
Lobdell & Hickman, L.L.P. (“KCLH”), which shall be paid by the Company
directly to KCLH on the date hereof by wire transfer of immediately available
funds to an account designated in writing by KCLH.

 

SECTION 3.                COUNTERPARTS

 

This Amendment
may be executed in any number of counterparts, and all such counterparts taken
together shall be deemed to constitute one and the same instrument.  Signature pages may be detached from
counterpart documents and reassembled to form duplicate executed originals.

 

SECTION 4.                RATIFICATION
OF AGREEMENT

 

4.1.          To
induce BACI to enter into this Amendment, the Company and the Guarantors
jointly and severally represent and warrant that after giving effect to this
Amendment no violation of the terms of the Securities Purchase Agreement or any
Investment Documents exist and all representations and warranties contained in
the Securities Purchase Agreement and the Senior Amendment are true, correct
and complete in all material respects on and as of the date hereof except to
the extent such representations and warranties specifically relate to an
earlier date in which case they were true, correct and complete in all material
respects on and as of such earlier date.

 

4.2.          Except
as expressly set forth in this Amendment, the terms, provisions and conditions
of the Securities Purchase Agreement and the other Investment Documents are unchanged,
and said agreements, as amended, shall remain in full force and effect and are
hereby confirmed and ratified.

 

SECTION 5.                GOVERNING
LAW; JURISDICTION; VENUE.

 

THIS AMENDMENT
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK (WITHOUT

 

3

 

GIVING EFFECT TO ANY CHOICE OR CONFLICT OF
LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK).

 

Each party to
this Amendment hereby irrevocably agrees that any legal action or proceeding
arising out of or relating to this Amendment or any agreements or transactions
contemplated hereby may be brought in the courts of the State of North Carolina
or of the United States of America for the Western District of North Carolina
and hereby expressly submits (on a non-exclusive basis) to the personal
jurisdiction and venue of such courts for the purpose thereof and expressly
waives any claim of improper venue and any claim that such courts are an inconvenient
forum.  Each party hereby irrevocably
consents to the service of process of any of the aforementioned courts in any
such suit, action or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to the address set forth in
Section 15.02 of the Securities Purchase Agreement, such service to become
effective 10 days after such mailing.

 

SECTION 6.                ACKNOWLEDGMENT
AND CONSENT BY THE GUARANTORS

 

Each Guarantor
hereby acknowledges that it has read this Amendment and consents to the terms
hereof and further confirms and agrees that, notwithstanding the effectiveness
of this Amendment, its obligations under the Securities Purchase Agreement
shall not be impaired or affected and such obligations are, and shall continue
to be, in full force and effect and are hereby confirmed and ratified in all respects.

 

[SIGNATURE PAGES FOLLOW]

 

4

 

IN WITNESS
WHEREOF, each of the parties hereto has caused a counterpart of this Amendment
to be duly executed and delivered as of the date first above written.

 

	
   

  	
  COMPANY:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  IGN ENTERTAINMENT, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Jung

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GUARANTORS:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GAMESPY INDUSTRIES, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Jung

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TWO CENTS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Jung

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BANC OF AMERICA CAPITAL INVESTORS, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BANC OF AMERICA CAPITAL

  	
   

  
	
   

  	
   

  	
  MANAGEMENT, L.P., its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BACM I GP, LLC, its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Craig A. Elson

  
	
   

  	
   

  	
  Name: Craig A. Elson

  	
   

  
	
   

  	
   

  	
  Title:
  Authorized Signatory

  	
   

  

 

 

Exhibit A

Senior Amendment

 

[See Amendment and Waiver No. 3 to Note Purchase Agreement in Exhibit
10.16 to this Form S-1.]

 

 

Amendment
and Waiver No. 4 to Securities Purchase Agreement 

 

 

AMENDMENT AND WAIVER NO. 4 TO SECURITIES PURCHASE AGREEMENT

 

This AMENDMENT AND WAIVER
NO. 4 (“Amendment”)
is made as of May 27, 2005 by and among IGN Entertainment, Inc., a
Delaware corporation (the “Company”),
those entities listed on the signature pages hereto under the heading “Guarantors”
(the “Guarantors”),
Banc of America Capital Investors, L.P., a Delaware limited partnership (“BACI”) as the sole “Holder”
under that certain Securities Purchase Agreement dated as of March 3,
2004, by and among the Company, the Guarantors and BACI, as amended by that
certain Amendment No. 1 to Securities Purchase Agreement dated as of July 9,
2004, that certain Amendment No. 2 to Securities Purchase Agreement dated February 4,
2005 and that certain Amendment and Waiver No. 3 to Securities Purchase
Agreement dated March 31, 2005 (the “Securities Purchase Agreement”).  All capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the
Securities Purchase Agreement.

 

WHEREAS, the Company desires
to acquire all of the outstanding stock
of AskMen.com Solutions Canada, Inc. for approximately $13,500,000 in cash
(the “Acquisition”);

 

WHEREAS, in order to fund
the Acquisition, the Company desires to issue certain notes in exchange for approximately $13,500,000 in cash (the “Financing”);

 

WHEREAS, in order to
accommodate the Acquisition and the Financing and to make certain other
necessary amendments, the Company and BACI desire to make certain amendments to
the Securities Purchase Agreement, pursuant to Section 15.05 of the
Securities Purchase Agreement, as set forth below, and the Guarantors desire to
acknowledge such amendments;

 

WHEREAS,
pursuant to Section 15.05 of the Securities Purchase Agreement, the
Company, and the Majority Holders desire to waive certain provisions of the
Securities Purchase Agreement as set forth below and the Guarantors desire to
acknowledge such waivers;

 

WHEREAS, the holders of
Senior Secured Notes have agreed to amend the Senior Note Purchase Agreement
pursuant to that certain Amendment No. 4 to Note Purchase Agreement
attached hereto as Exhibit A (the “Senior Amendment”);

 

NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

SECTION 1.                WAIVER

 

BACI hereby waives any and
all of its rights and remedies it may have, including those pursuant to
Articles XI and XII of the Securities Purchase Agreement and Section 10.01(c) of
the Securities Purchase Agreement, arising directly from the Defaults and
Events of Default described on Exhibit B hereto and hereby waives
any rights to notice required in the Securities Purchase Agreement with respect
to such Defaults and Events of Default.

 

SECTION 2.                AMENDMENTS TO THE SECURITIES PURCHASE
AGREEMENT

 

2.1.          Section 1.01 is amended by inserting the
following defined terms in appropriate alphabetical order in such Article:

 

2

 

““AskMen Agreement” means the Share
Transfer Agreement dated as of May 27, 2005 by and among the Company, 4293746 CANADA Inc.,
Venture Link Limited, 4205235 Canada Inc., 4205219 Canada Inc., 4205227
Canada Inc., and New Freedom Corporation.”

 

““AskMen Collateral Agreement” means the
Guarantee and Collateral Agreement dated as of May 27, 2005 by and among the
Company and certain of its subsidiaries in favor of US Bank National Association,
and each certificate, document, agreement or instrument delivered pursuant
thereto or in connection therewith, as such may be amended, supplemented or
otherwise modified from time to time in accordance with its terms and the terms
hereof.”

 

““AskMen Credit Agreement” means the
Credit Agreement by and among the Company, the Lenders (as defined therein) and
the US Bank National Association dated as of May 27, 2005, and each
certificate, document, agreement or instrument delivered pursuant thereto or in
connection therewith, as such may be amended, supplemented or otherwise
modified from time to time in accordance with its terms and the terms hereof.”

 

““AskMen Note Documents” means the AskMen
Credit Agreement and the AskMen Collateral Agreement.”

 

““AskMen Merger Documents” means the
AskMen Agreement and each certificate, document, agreement or instrument
delivered pursuant thereto or in connection therewith.”“

 

““Team Xbox Agreement” means the Asset
Purchase Agreement dated October 20, 2003 by and between Team Xbox LLC and
the Company.”“

 

2.2.          Section 1.01 is further amended by
amending and restating the following defined terms in such Section:

 

““Acquisition
Consideration” means the “Merger Consideration” (as defined in the
Rotten Tomatoes Merger Document), and the “Purchase Price” (as defined in the
3D Gamers Agreement and the AskMen Agreement, as appropriate).”

 

““Acquisition
Documents” means each 3D Gamers Merger Document, each Rotten
Tomatoes Merger Document and each AskMen Merger Document.”

 

“Existing Debt” means Indebtedness of the Company outstanding on
the date hereof in an aggregate principal amount not to exceed $350,000
pursuant to the Team Xbox Agreement.”

 

““Subsequent
Investment Cap” means, with respect to the Rotten Tomatoes Merger
Agreement, $9,300,000 plus up to $100,000 of working capital adjustments made
pursuant to Section 1.11 of the Rotten Tomatoes Merger Agreement, with
respect to the 3D Gamers Agreement, $2,000,000, and with respect to the AskMen
Agreement, $13,500,000.”“

 

2.3.          Section 1.01 is further amended by
adding the following row in the proper chronological order in the table
following clause (ii) of the definition of “Consolidated EBITDA”:

 

	
  December 31, 2004

  	
  Initial Public Offering Expense

  	
  $

  	
  2,961,000

  

 

2.4.          Section 1.01 is further amended by
deleting the “.” at end of clause (j) of the definition of “Permitted Liens”
and replacing it with “; and” and inserting the following immediately
thereafter:

 

3

 

“(k)         Liens
on assets owned by the Company or any of its Subsidiaries securing Obligations
under the AskMen Note Documents.”

 

“(l)          Liens
in favor of Silicon Valley Bank or replacement arrangements for the same
purpose arising in connection with two blocked accounts with the bank to secure
certain obligations as set forth below:

 

	
  Account Number

  	
   

  	
  Purpose

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8800052253

  	
   

  	
  Short Term
  Investment Blocked Account in which Company has on deposit $712,000 to secure
  repayment obligation which would arise from draws made under a letter of
  credit in favor landlord of Company’s leasehold at 475 Park Avenue South,
  Cohen Brothers LLC, as security for performance of the lease.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8800054423

  	
   

  	
  Merchant CD
  Account Blocked Account in which Company has on deposit $125,000, to provide
  security for repayment of sums which may become due to Silicon Valley Bank in
  connection with Company’s merchant banking accounts (for the acceptance of
  credit card payments).”

  	
   

  

 

2.5.          Section 7.01(c) of the Securities
Purchase Agreement is amended and restated in its entirety as follows:

 

“(c)         Annual Financial Statements.  As
soon as available, but in any event not later than 90 days after the close of
each fiscal year (or, with respect to the close of fiscal year 2004, not later
than June 7, 2005), an audited consolidated balance sheet of the Company
and its Subsidiaries as of the close of such fiscal year, and related audited
consolidated statements of operations, cash flows and changes in stockholder’s
equity of the Company and its Subsidiaries for such fiscal year, reported on
(without any material qualification arising from the scope of the audit or with
respect to the continuance of the Company and its Subsidiaries as going
concerns) by a nationally recognized firm of independent certified public
accountants and prepared in accordance with GAAP consistently applied;”

 

2.6.          Section 9.01 is amended by deleting the “and”
at the end of Section 9.01(k), deleting the “.” at the end of Section 9.01(l)
and replacing it with “; and”, and inserting the following immediately
thereafter:

 

“(m)        the incurrence by the Company of Indebtedness
pursuant to the AskMen Credit Agreement; provided that the aggregate principal
amount of such Indebtedness does not exceed $13,500,000.”

 

2.7.          Section 9.17(b) is amended by
deleting the values set forth opposite each date on the table and replacing it
with “5,000”.

 

2.8.          Section 9.17(c) is amended and
restated in its entirety as follows:

 

“Funded Indebtedness
Leverage Ratio.

 

Until such time as there are
no Notes outstanding, the Company will not permit the ratio (the “Funded
Indebtedness Leverage Ratio”) of (i) Funded Indebtedness of
Company and its Subsidiaries

 

4

 

on each date listed below to (ii) Consolidated
EBITDA of the Company for the Test Period ending on each date listed below
to be more than the ratio set forth below:

 

	
  Test Period

  	
   

  	
  Ratio

  	
   

  
	
  June 30, 2005

  	
   

  	
  5.25:1.00

  	
   

  
	
  September 30, 2005

  	
   

  	
  5.00:1.00

  	
   

  
	
  December 31, 2005

  	
   

  	
  4.50:1.00

  	
   

  
	
  March 31, 2006

  	
   

  	
  4.25:1.00

  	
   

  
	
  June 30, 2006

  	
   

  	
  4.00:1.00

  	
   

  
	
  September 30, 2006

  	
   

  	
  4.00:1.00

  	
   

  
	
  December 31, 2006

  	
   

  	
  3.75:1.00

  	
   

  
	
  March 31, 2007

  	
   

  	
  3.75:1.00

  	
   

  
	
  June 30, 2007

  	
   

  	
  3.75:1.00

  	
   

  
	
  September 30, 2007

  	
   

  	
  3.75:1.00

  	
   

  
	
  December 31, 2007

  	
   

  	
  3.75:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  3.75:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  3.75:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  3.75:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  3.75:1.00

  	
   

  
	
  March 31, 2009 and the last day of
  each fiscal quarter thereafter

  	
   

  	
  3.75:1.00

  	
  ”

  

 

2.9.          Section 9.17(d) is amended and
restated in its entirety as follows:

 

“Preferred Leverage Ratio.

 

Until such time as there are
no shares of Series B Preferred Stock outstanding, the Company will not
permit the ratio (the “Preferred Leverage Ratio”) of (i) Funded Indebtedness
of Company and its Subsidiaries plus the Series B Senior Liquidation
Preference Amount (as defined in the Certificate of Incorporation), excluding
any Series B Premium Amount (as defined in the Certificate of Incorporation)
then payable to (ii) Consolidated EBITDA of the Company for the Test
Period ending on each date listed below to be more than the ratio set forth
below:

 

	
  Test Period

  	
   

  	
  Ratio

  	
   

  
	
  June 30, 2005

  	
   

  	
  6.25:1.00

  	
   

  
	
  September 30, 2005

  	
   

  	
  6.00:1.00

  	
   

  
	
  December 31, 2005

  	
   

  	
  5.50:1.00

  	
   

  
	
  March 31, 2006

  	
   

  	
  5.25:1.00

  	
   

  
	
  June 30, 2006

  	
   

  	
  4.75:1.00

  	
   

  
	
  September 30, 2006

  	
   

  	
  4.50:1.00

  	
   

  
	
  December 31, 2006

  	
   

  	
  4.25:1.00

  	
   

  
	
  March 31, 2007

  	
   

  	
  4.25:1.00

  	
   

  
	
  June 30, 2007

  	
   

  	
  4.25:1.00

  	
   

  
	
  September 30, 2007

  	
   

  	
  4.25:1.00

  	
   

  
	
  December 31, 2007

  	
   

  	
  4.25:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  4.25:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  4.25:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  4.25:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  4.25:1.00

  	
   

  
	
  March 31, 2009 and the last day of
  each fiscal quarter thereafter

  	
   

  	
  4.25:1.00

  	
  ”

  

 

5

 

2.10.        Section 11.01 is further amended by
amending and restating the following defined term in such Section:

 

“Senior Debt Cap” means $51,000,000.”

 

SECTION 3.                ADDITIONAL GUARANTOR

 

3.1.          IncFusion
Corporation d.b.a. Rotten Tomatoes (“Rotten Tomatoes”)
hereby agrees, effective as of July 13, 2004, to become a party to the
Securities Purchase Agreement as a Guarantor.

 

3.2.          Each
of the undersigned hereby agrees for all purposes of the Securities Purchase
Agreement, including Article XIII therein, Rotten Tomatoes shall be
included within the term “Guarantor” (as defined in the Securities Purchase
Agreement).

 

SECTION 4.                CONDITIONS PRECEDENT

 

The effectiveness of the
waiver to the Securities Purchase Agreement contemplated by Section 1
hereof and the amendments to the Securities Purchase Agreement contemplated by Section 2
hereof are subject to the receipt by BACI of the following:

 

(a)           counterparts hereof duly executed by the Company and the Guarantors;

 

(b)           the Senior Amendment, duly executed by the holders of the requisite
principal amount of Senior Secured Notes; and

 

(c)           all costs, fees and expenses payable to BACI by the Company pursuant to
Section 15.13 of the Securities Purchase Agreement, including without
limitation the reasonable fees and disbursements of Kennedy Covington Lobdell &
Hickman, L.L.P.

 

SECTION 5.                COUNTERPARTS

 

This Amendment may be
executed in any number of counterparts, and all such counterparts taken
together shall be deemed to constitute one and the same instrument.  Signature pages may be detached from
counterpart documents and reassembled to form duplicate executed originals.

 

SECTION 6.                RATIFICATION OF AGREEMENT

 

6.1.          To induce BACI to enter into this Amendment,
the Company and the Guarantors jointly and severally represent and warrant that
after giving effect to this Amendment no violation of the terms of the
Securities Purchase Agreement or any Investment Documents exists and all
representations and warranties contained in Sections 5.01, 5.02, 5.04 and 5.05
of the Securities Purchase Agreement and in the Senior Amendment are true,
correct and complete in all material respects on and as of the date hereof except
to the extent such representations and warranties specifically relate to an
earlier date in which case they were true, correct and complete in all material
respects on and as of such earlier date.

 

6

 

6.2.          Except as expressly set forth in this
Amendment, the terms, provisions and conditions of the Securities Purchase
Agreement and the other Investment Documents are unchanged, and said
agreements, as amended, shall remain in full force and effect and are hereby
confirmed and ratified.

 

SECTION 7.                GOVERNING LAW; JURISDICTION; VENUE.

 

THIS AMENDMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE THAT WOULD
CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
NEW YORK).

 

Each party to this Amendment
hereby irrevocably agrees that any legal action or proceeding arising out of or
relating to this Amendment or any agreements or transactions contemplated
hereby may be brought in the courts of the State of North Carolina or of the
United States of America for the Western District of North Carolina and hereby
expressly submits (on a non-exclusive basis) to the personal jurisdiction and
venue of such courts for the purpose thereof and expressly waives any claim of
improper venue and any claim that such courts are an inconvenient forum.  Each party hereby irrevocably consents to the
service of process of any of the aforementioned courts in any such suit, action
or proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the address set forth in Section 15.02 of the Securities
Purchase Agreement, such service to become effective 10 days after such
mailing.

 

SECTION 8.                ACKNOWLEDGMENT AND CONSENT BY THE GUARANTORS

 

Each Guarantor hereby
acknowledges that it has read this Amendment and consents to the terms hereof
and further confirms and agrees that, notwithstanding the effectiveness of this
Amendment, its obligations under the Securities Purchase Agreement shall not be
impaired or affected and such obligations are, and shall continue to be, in
full force and effect and are hereby confirmed and ratified in all respects.

 

[SIGNATURE PAGES FOLLOW]

 

7

 

IN WITNESS WHEREOF, each of
the parties hereto has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.

 

	
   

  	
  COMPANY:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  IGN
  ENTERTAINMENT, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mark Jung

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GUARANTORS:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GAMESPY
  INDUSTRIES, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mark Jung

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TWO
  CENTS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mark Jung

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INCFUSION
  CORPORATION

  D.B.A. ROTTEN TOMATOES

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mark Jung

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [SIGNATURE PAGE TO AMENDMENT
  AND WAIVER NO. 4 TO SECURITIES PURCHASE AGREEMENT]

  

 

 

	
   

  	
  HOLDER:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BANC
  OF AMERICA CAPITAL INVESTORS, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BANC
  OF AMERICA CAPITAL

  MANAGEMENT, L.P., its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BACM
  I GP, LLC, its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Craig A. Elson

  
	
   

  	
   

  	
  Name:
  Craig A. Elson

  	
   

  
	
   

  	
   

  	
  Title:
  Authorized Signatory

  	
   

  

 

[SIGNATURE
PAGE TO AMENDMENT AND WAIVER NO. 4 TO SECURITIES PURCHASE AGREEMENT]

 

 

Exhibit A

Senior Amendment

 

[See
Amendment and Waiver No. 4 to Note Purchase Agreement in Exhibit 10.16 to this
Form S-1.]

 

 

Exhibit B

Existing Defaults

 

[Exhibit B has been
omitted. A copy of this exhibit will be furnished supplementally to the
Commission upon request.]

 

 

Amendment No. 5
to Securities Purchase Agreement 

 

 

AMENDMENT NO. 5 TO SECURITIES PURCHASE AGREEMENT

 

This AMENDMENT NO. 5 (“Amendment”) is made
as of June 7, 2005 by and among IGN Entertainment, Inc., a Delaware
corporation (the “Company”),
those entities listed on the signature pages hereto under the heading “Guarantors”
(the “Guarantors”),
Banc of America Capital Investors, L.P., a Delaware limited partnership (“BACI”) as the sole “Holder”
under that certain Securities Purchase Agreement dated as of March 3,
2004, by and among the Company, the Guarantors and BACI, as amended by that
certain Amendment No. 1 to Securities Purchase Agreement dated as of July 9,
2004, that certain Amendment No. 2 to Securities Purchase Agreement dated February 4,
2005, that certain Amendment and Waiver No. 3 to Securities Purchase
Agreement dated March 31, 2005, and that certain Amendment and Waiver No. 4
to Securities Purchase Agreement dated May 27, 2005 (the “Securities Purchase Agreement”).  All capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the
Securities Purchase Agreement.

 

WHEREAS, pursuant to Section 15.05
of the Securities Purchase Agreement, the Company and BACI desire to make
certain amendments to the Securities Purchase Agreement, as set forth below,
and the Guarantors desire to acknowledge such amendments;

 

WHEREAS, the holders of
Senior Secured Notes have agreed to amend the Senior Note Purchase Agreement
pursuant to that certain Amendment and Waiver No. 5 to Note Purchase
Agreement attached hereto as Exhibit A (the “Senior Amendment”);

 

WHEREAS, the Majority
Lenders (as defined in the Credit Agreement) have agreed to amend the Credit
Agreement pursuant to that certain Amendment and Waiver No. 1 to Credit
Agreement attached hereto as Exhibit B (the “Credit
Amendment”);

 

NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

SECTION 1.                AMENDMENTS TO THE SECURITIES
PURCHASE AGREEMENT

 

1.1.          Section 9.17(a) is amended and restated in its
entirety as follows:

 

“Minimum EBITDA to
Consolidated Interest Expense.

 

Until such time as there are
no Notes or shares of Series B Preferred Stock outstanding, the Company
will not permit the ratio of (a) its Consolidated EBITDA for the Test
Period ending on each date listed below to (b) its Consolidated Interest
Expense for the Test Period ending on each date listed below to be less than
the ratio set forth below:

 

	
  Test Period

  	
   

  	
  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 30, 2005

  	
   

  	
  1.50:1.00

  	
   

  
	
  September 30, 2005

  	
   

  	
  1.50:1.00

  	
   

  
	
  December 31, 2005

  	
   

  	
  1.75:1.00

  	
   

  
	
  March 31, 2006

  	
   

  	
  1.75:1.00

  	
   

  
	
  June 30, 2006

  	
   

  	
  1.75:1.00

  	
   

  

 

2

 

	
  Test Period

  	
   

  	
  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 30, 2006

  	
   

  	
  1.85:1.00

  	
   

  
	
  December 31, 2006

  	
   

  	
  2.00:1.00

  	
   

  
	
  March 31, 2007

  	
   

  	
  2.25:1.00

  	
   

  
	
  June 30, 2007

  	
   

  	
  2.25:1.00

  	
   

  
	
  September 30, 2007

  	
   

  	
  2.25:1.00

  	
   

  
	
  December 31, 2007

  	
   

  	
  2.25:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  2.25:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  2.25:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  2.25:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  2.25:1.00

  	
   

  
	
  March 31, 2009 and the last day of any
  fiscal quarter thereafter

  	
   

  	
  2.25:1.00

  	
   

  

 

1.2.          Section 9.17(c) is amended and restated in its
entirety as follows:

 

“Funded Indebtedness
Leverage Ratio.

 

Until such time as there are
no Notes outstanding, the Company will not permit the ratio (the “Funded
Indebtedness Leverage Ratio”) of (i) Funded Indebtedness of
Company and its Subsidiaries on each date listed below to (ii) Consolidated
EBITDA of the Company for the Test Period ending on each date listed below
to be more than the ratio set forth below:

 

	
  Test Period

  	
   

  	
  Ratio

  	
   

  
	
  June 30, 2005

  	
   

  	
  5.25:1.00

  	
   

  
	
  September 30, 2005

  	
   

  	
  4.75:1.00

  	
   

  
	
  December 31, 2005

  	
   

  	
  4.15:1.00

  	
   

  
	
  March 31, 2006

  	
   

  	
  4.00:1.00

  	
   

  
	
  June 30, 2006

  	
   

  	
  3.75:1.00

  	
   

  
	
  September 30, 2006

  	
   

  	
  3.75:1.00

  	
   

  
	
  December 31, 2006

  	
   

  	
  3.50:1.00

  	
   

  
	
  March 31, 2007

  	
   

  	
  3.50:1.00

  	
   

  
	
  June 30, 2007

  	
   

  	
  3.50:1.00

  	
   

  
	
  September 30, 2007

  	
   

  	
  3.50:1.00

  	
   

  
	
  December 31, 2007

  	
   

  	
  3.50:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  3.50:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  3.50:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  3.50:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  3.50:1.00

  	
   

  
	
  March 31, 2009 and the last day of
  each fiscal quarter thereafter

  	
   

  	
  3.50:1.00

  	
  ”

  

 

3

 

1.3.          Section 9.17(d) is amended and restated in its
entirety as follows:

 

“Preferred Leverage Ratio.

 

Until such time as there are
no shares of Series B Preferred Stock outstanding, the Company will not
permit the ratio (the “Preferred Leverage Ratio”) of (i) Funded Indebtedness
of Company and its Subsidiaries plus the Series B Senior Liquidation
Preference Amount (as defined in the Certificate of Incorporation), excluding
any Series B Premium Amount (as defined in the Certificate of Incorporation)
then payable to (ii) Consolidated EBITDA of the Company for the Test
Period ending on each date listed below to be more than the ratio set forth
below:

 

	
  Test Period

  	
   

  	
  Ratio

  	
   

  
	
  June 30, 2005

  	
   

  	
  6.00:1.00

  	
   

  
	
  September 30, 2005

  	
   

  	
  5.75:1.00

  	
   

  
	
  December 31, 2005

  	
   

  	
  5.25:1.00

  	
   

  
	
  March 31, 2006

  	
   

  	
  5.00:1.00

  	
   

  
	
  June 30, 2006

  	
   

  	
  4.50:1.00

  	
   

  
	
  September 30, 2006

  	
   

  	
  4.00:1.00

  	
   

  
	
  December 31, 2006

  	
   

  	
  4.00:1.00

  	
   

  
	
  March 31, 2007

  	
   

  	
  4.00:1.00

  	
   

  
	
  June 30, 2007

  	
   

  	
  4.00:1.00

  	
   

  
	
  September 30, 2007

  	
   

  	
  4.00:1.00

  	
   

  
	
  December 31, 2007

  	
   

  	
  4.00:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  4.00:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  4.00:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  4.00:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  4.00:1.00

  	
   

  
	
  March 31, 2009 and the last day of
  each fiscal quarter thereafter

  	
   

  	
  4.00:1.00

  	
  ”

  

 

SECTION 2.                CONDITIONS PRECEDENT

 

The effectiveness of the
amendments to the Securities Purchase Agreement contemplated by Section 1
hereof are subject to the receipt by BACI of the following:

 

(a)           counterparts hereof
duly executed by the Company and the Guarantors;

 

(b)           the Senior
Amendment, duly executed by the holders of the requisite principal amount of
Senior Secured Notes;

 

(c)           the Credit Amendment
duly executed by the Majority Lenders (as defined therein) and each Agent (as
defined therein); and

 

(d)           all costs, fees and
expenses payable to BACI by the Company pursuant to Section 15.13 of the
Securities Purchase Agreement, including without limitation the reasonable fees
and disbursements of Kennedy Covington Lobdell & Hickman, L.L.P.

 

SECTION 3.                COUNTERPARTS

 

This Amendment may be
executed in any number of counterparts, and all such counterparts taken
together shall be deemed to constitute one and the same instrument.  Signature pages may be detached from
counterpart documents and reassembled to form duplicate executed originals.

 

4

 

SECTION 4.                RATIFICATION OF AGREEMENT

 

4.1.          To induce BACI to enter into this Amendment, the Company
and the Guarantors jointly and severally represent and warrant that after
giving effect to this Amendment no violation of the terms of the Securities
Purchase Agreement or any Investment Documents exists and all representations
and warranties contained in Sections 5.01, 5.02, 5.04 and 5.05 of the
Securities Purchase Agreement and in the Senior Amendment are true, correct and
complete in all material respects on and as of the date hereof except to the
extent such representations and warranties specifically relate to an earlier
date in which case they were true, correct and complete in all material respects
on and as of such earlier date.

 

4.2.          Except as expressly set forth in this Amendment, the terms,
provisions and conditions of the Securities Purchase Agreement and the other
Investment Documents are unchanged, and said agreements, as amended, shall
remain in full force and effect and are hereby confirmed and ratified.

 

SECTION 5.                GOVERNING LAW; JURISDICTION;
VENUE.

 

THIS AMENDMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK).

 

Each party to this Amendment
hereby irrevocably agrees that any legal action or proceeding arising out of or
relating to this Amendment or any agreements or transactions contemplated
hereby may be brought in the courts of the State of North Carolina or of the
United States of America for the Western District of North Carolina and hereby
expressly submits (on a non-exclusive basis) to the personal jurisdiction and
venue of such courts for the purpose thereof and expressly waives any claim of
improper venue and any claim that such courts are an inconvenient forum.  Each party hereby irrevocably consents to the
service of process of any of the aforementioned courts in any such suit, action
or proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the address set forth in Section 15.02 of the Securities
Purchase Agreement, such service to become effective 10 days after such
mailing.

 

SECTION 6.                ACKNOWLEDGMENT AND CONSENT BY THE
GUARANTORS

 

Each Guarantor hereby
acknowledges that it has read this Amendment and consents to the terms hereof
and further confirms and agrees that, notwithstanding the effectiveness of this
Amendment, its obligations under the Securities Purchase Agreement shall not be
impaired or affected and such obligations are, and shall continue to be, in
full force and effect and are hereby confirmed and ratified in all respects.

 

[SIGNATURE PAGES FOLLOW]

 

5

 

IN WITNESS WHEREOF, each of
the parties hereto has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.

 

	
   

  	
  COMPANY:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  IGN
  ENTERTAINMENT, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mark Jung

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GUARANTORS:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GAMESPY
  INDUSTRIES, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mark Jung

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TWO
  CENTS INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mark Jung

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INCFUSION
  CORPORATION

  D.B.A. ROTTEN TOMATOES

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mark Jung

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [SIGNATURE PAGE TO AMENDMENT
  NO. 5 TO SECURITIES PURCHASE AGREEMENT]

  

 

 

	
   

  	
  HOLDER:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BANC
  OF AMERICA CAPITAL INVESTORS, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BANC
  OF AMERICA CAPITAL

  MANAGEMENT, L.P., its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BACM
  I GP, LLC, its general partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert H. Sheridan III

  
	
   

  	
   

  	
  Name:
  Robert H. Sheridan III

  	
   

  
	
   

  	
   

  	
  Title:
  Managing Director

  	
   

  

 

[SIGNATURE
PAGE TO AMENDMENT NO. 5 TO SECURITIES PURCHASE AGREEMENT]

 

 

Exhibit A

Senior Amendment

 

[See
Amendment and Waiver No. 5 to Note Purchase Agreement in Exhibit 10.16 to this
Form S-1.]

 

 

Exhibit B

Credit Amendment

 

[See
Amendment and Waiver No. 1 to Credit Agreement in Exhibit 10.17 to this Form
S-1.]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00087-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00087-of-00352.parquet"}]]