THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THE HOLDER HEREOF BY
PURCHASING SUCH SECURITIES AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
COMPANY, (B) PURSUANT TO THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT
PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, OR (C) IF REGISTERED UNDER THE
1933 ACT AND APPLICABLE STATE SECURITIES LAWS. IN ADDITION, A SECURITIES
PURCHASE AGREEMENT DATED AS OF THE DATE HEREOF, A COPY OF WHICH MAY BE OBTAINED
FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL
AGREEMENTS AMONG THE PARTIES, INCLUDING, WITHOUT LIMITATION, PROVISIONS WHICH
(A) LIMIT THE CONVERSION RIGHTS OF THE HOLDER, (B) SPECIFY VOLUNTARY AND
MANDATORY REPAYMENT, PREPAYMENT AND REDEMPTION RIGHTS AND OBLIGATIONS AND (C)
SPECIFY EVENTS OF DEFAULT FOLLOWING WHICH THE REMAINING BALANCE DUE AND OWING
HEREWITH MAY BE ACCELERATED.
No. 1 $2,200,000
TAKE-TWO INTERACTIVE SOFTWARE, INC.
Convertible Note
TAKE-TWO INTERACTIVE SOFTWARE, INC., a Delaware corporation (together with
its successors, the "Company"), for value received hereby promises to pay to:
Infinity Investors Limited
(the "Holder") and registered assigns, the principal sum of Two Million Two
Hundred Thousand Dollars ($2,200,000) on the Maturity Date by wire transfer of
immediately available funds to the Holder in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts, and to pay interest, quarterly in arrears,
on (i) the last day of April, July, September and December of each year until
the Maturity Date, commencing December 31, 1997 (unless such day is not a
Business Day, in which event on the next succeeding Business Day) (each an
"Interest Payment Date"), (ii) the Maturity Date, (iii) each Conversion Date,
and (iv) the date the principal amount of this Convertible Note shall be
declared to be or shall automatically become due and payable, on the principal
sum hereof outstanding in like coin or currency, at the rates per annum set
forth below, from the most recent Interest Payment Date to which interest has
been paid on this Convertible Note, or if no interest has been paid on this
Convertible Note, from the date of this Convertible Note until payment in full
of the principal sum hereof has been made.
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CONVERTIBLE NOTE NO. 1 - Page 1
(Take-Two interactive Software, Inc.)
The interest rate shall be ten percent (10%) per annum (the "Interest
Rate") or, if less, the maximum rate permitted by applicable law. Past due
amounts (including interest, to the extent permitted by law) will also accrue
interest at the Interest Rate plus four percent (4%) per annum or, if less, the
maximum rate permitted by applicable law, and will be payable on demand.
Interest on this Convertible Note will be calculated on the basis of a 360-day
year of twelve 30 day months. All payments of principal and interest hereunder
shall be made for the benefit of the Holder pursuant to the terms of the
Transfer Agent Agreement.
This Convertible Note is one of a duly authorized issuance of up to
$4,200,000 aggregate principal amount of Convertible Notes of the Company (the
"Convertible Note") referred to in that Securities Purchase Agreement dated as
of the date hereof between the Company, Infinity Investors Limited, Infinity
Emerging Opportunities Limited, Glacier Capital Limited and Summit Capital
Limited (as the same may be amended from time to time in accordance with its
terms, the "Agreement"). The Agreement contains certain additional agreements
among the parties with respect to the terms of this Convertible Note, including,
without limitation, provisions which (i) limit the conversion rights of the
Holder, (ii) specify voluntary and mandatory repayment, prepayment and
redemption rights and obligations, and (iii) specify Events of Default following
which the remaining balance due and owing hereunder may be accelerated. All such
provisions are an integral part of this Convertible Note and are incorporated
herein by reference. This Convertible Note is transferable and assignable to one
or more purchasers in accordance with the limitations set forth in the
Agreement.
The Company shall keep through the Transfer Agent a register (the
"Register") in which shall be entered the names and addresses of the registered
holder of this Convertible Note and particulars of this Convertible Note held by
such holder and of all transfers of this Convertible Note. References to the
Holder or "Holders" shall mean the Person listed in the Register as the
registered holder of this Convertible Note. The ownership of this Convertible
Note shall be proven by the Register.
l. Certain Terms Defined. All terms defined in the Agreement and not
otherwise defined herein shall have for purposes hereof the meanings provided
for therein.
2. Covenants. Unless the Majority Holders otherwise consent in writing, the
Company covenants and agrees to observe and perform each of its obligations and
undertakings contained in the Agreement, which obligations and undertakings are
expressly assumed herein by the Company and made for the benefit of the Holders.
3. Payment and Prepayment of Principal of Convertible Note. Subject to
Section 3.2 of the Agreement, the Company shall repay the remaining unpaid
balance of this Convertible Note at the Formula Price on the Maturity Date. The
Company may, and shall be obligated to, prepay all or a portion of this
Convertible Note at either the Par Value Redemption Price or Formula Price, as
applicable, on the terms and conditions specified in the Agreement.
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CONVERTIBLE NOTE NO. 1 - Page 2
(Take-Two interactive Software, Inc.)
4.1 Conversion of Convertible Note. The Holder shall have the right, at its
option, at any time, and from time to time, after (i) the occurrence of an Event
of Default or (ii) February 28, 1998, whichever shall occur earlier, to convert
the principal amount of this Convertible Note, or any portion of such principal
amount that is $1,000 or an integral multiple thereof, into that number of fully
paid and nonassessable shares of Common Stock (as such shares shall then be
constituted) obtained by dividing the aggregate principal amount of this
Convertible Note or portion thereof subject to conversion by the applicable
Conversion Price. The Holder is not entitled to any rights of a holder of Common
Stock until such holder has converted its Convertible Note to Common Stock and
only to the extent such Convertible Note is deemed to have been converted to
Common Stock under Section 4.2 below. Notwithstanding the foregoing, the
conversion rights of the Holder set forth herein shall be limited to the extent
set forth in the Agreement.
4.2 When Conversion Effective. The conversion of this Convertible Note
shall be deemed to have been effected at 8:00 a.m. on the Business Day (the
"Conversion Date") on which the Holder of this Convertible Note shall have
delivered, prior to 4:00 p.m., Dallas, Texas time, to the Transfer Agent, with a
copy to the Company (including delivery via facsimile), a written notice of
conversion substantially in the form annexed to the Agreement (each a "Notice of
Conversion"). At such time the Person or Persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
thereof.
4.3 Delivery of Stock Certificates. etc. As soon as practicable after
conversion of this Convertible Note, in whole or in part, the Company at its
expense (including the payment by it of any applicable issue taxes) will cause
to be issued in the name of and delivered to the holder hereof or as such holder
(upon payment by such holder of any applicable transfer taxes) may direct, a
certificate or certificates for the number of duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock to which such holder shall
be entitled upon such conversion plus, in lieu of any fractional share to which
such holder would otherwise be entitled, cash in an amount equal to the same
fraction of the Closing Bid Price per share on the Business Day next preceding
the Conversion Date.
5. Modification of Convertible Note. This Convertible Note may be modified
without prior notice to any Holder but with the written consent of the Majority
Holders and the Company. However, without the consent of each Holder affected,
an amendment, supplement or waiver may not (1) reduce the principal amount of
Convertible Notes whose Holders must consent to an amendment, supplement or
waiver, (2) reduce the rate or extend the time for payment of interest on any
Convertible Note, (3) reduce the principal amount of or extend the fixed
maturity of any Convertible Note or alter the redemption or conversion
provisions with respect thereto or (4) make any Convertible Note payable in
money or property other than as stated in the Convertible Note.
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CONVERTIBLE NOTE NO. 1 - Page 3
(Take-Two interactive Software, Inc.)
6. Miscellaneous. This Convertible Note shall be deemed to be a contract
made under the laws of the State of New York, and for all purposes shall be
governed by and construed in accordance with the laws of said State. The parties
hereto, including all guarantors or endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Convertible Note,
except as specifically provided herein, and assent to extensions of the time of
payment, or forbearance or other indulgence without notice. The Company hereby
submits to the [non-exclusive] jurisdiction of the United States District Court
for the Northern District of Texas and of any Texas state court sitting in
Dallas, Texas for purposes of all legal proceedings arising out of or relating
to this Convertible Note. The Company irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum. The Company hereby irrevocably waives any and all right to trial by jury
in any legal proceeding arising out of or relating to this Convertible Note.
The Holder of this Convertible Note by acceptance of this Convertible Note
agrees to be bound by the provisions of this Convertible Note which are
expressly binding on such Holder.
[Signature Page Follows]
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CONVERTIBLE NOTE NO. 1 - Page 4
(Take-Two interactive Software, Inc.)
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: October 14, 1997
TAKE-TWO INTERACTIVE SOFTWARE,
INC.
By: /s/ Xxxx Xxxxx
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Name: Xxxx Xxxxx
------------------------------
Title: CEO
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CONVERTIBLE NOTE NO. 1 - Page 5
(Take-Two interactive Software, Inc.)
