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Exhibit 4
NOTE
$25,000,000.00 November 15, 1999
GT INTERACTIVE SOFTWARE CORP., a Delaware corporation (the "Borrower"),
for value received, hereby promises to pay twenty-five million dollars
($25,000,000) plus interest as provided below to the order of CALIFORNIA U.S.
HOLDINGS, INC., a California corporation (the "Lender"), at the office of the
Lender, at 0000 Xxxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxx, Xxxxxxxxxx 00000,
Attention: Chief Operating Officer, on the earliest (the "Maturity Date") of (a)
March 31, 2000, (b) the "Closing Date" as defined in the Securities Purchase
Agreement, dated as of November 15, 1999 (the "Purchase Agreement") among the
Lender, Infogrames Entertainment S.A. and GT Interactive Software Corp. or (c)
the date (the "Acceleration Date") on which the maturity date for payment of
this promissory note (this "Note") is otherwise accelerated pursuant to the
terms hereof.
If the Maturity Date is (a) either March 31, 2000 or the Acceleration
Date, the Borrower shall pay the outstanding principal amount of, and the
accrued interest on, this Note in immediately available funds to an account
designated by the Lender or (b) the Closing Date, the Borrower shall pay the
outstanding principal amount of, and the accrued interest on, this Note by
delivery to the Lender or its designee of a Convertible Subordinated Note,
substantially in the form of Exhibit B to the Purchase Agreement.
At the election of the Borrower, the principal amount of this Note
shall bear interest at the per annum rate of (a) the Base Rate (as defined
herein) plus two and one-half percent (2.5%) or (b) the LIBOR Rate (as defined
herein) plus four percent (4.0%). The Borrower shall select, by written notice
to the Lender, the rate of interest applicable to this Note on the date hereof
and thereafter (i) no later than two Business Days before the last day of an
Interest Period (as defined herein), if this Note shall bear interest at the
LIBOR Rate plus four percent (4.0%) or (ii) at any time if this Note shall bear
interest at the Base Rate plus two and one-half percent (2.5%). If the Borrower
does not specify an interest rate as provided in this paragraph, this Note shall
bear interest at the Base Rate plus two and one-half percent (2.5%).
"Base Rate" means, at any time, the higher of (a) the Prime Rate and
(b) the sum of (i) the Federal Funds Rate plus (ii) 1/2 of 1%; each change in
the Base Rate shall take effect simultaneously with the corresponding change or
changes in the Prime Rate or the Federal Funds Rate.
"Business Day" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in New York, New York, are open for the conduct of their domestic or
international commercial banking business, as applicable and (b) with respect to
all notices and determinations in connection with the LIBOR Rate any day (i)
that is a Business Day described in clause (a) and that is also a day for
trading by and between banks in deposits in U.S. dollars in the London interbank
market and (ii) on
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which banks are open for the conduct of their domestic and international banking
business in the place where the Lender shall have its chief executive office.
"Dollars" shall mean the lawful currency of the United States of
America.
"Eurodollar Reserve Percentage" means, for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of eurocurrency liabilities or any similar category of liabilities for a
member bank of the Federal Reserve System in New York City.
"Federal Funds Rate" means, the rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) representing the daily effective
federal funds rate as quoted by the First Union National Bank and confirmed in
Federal Reserve Board Statistical Release H.15 (519) or any successor or
substitute publication selected by the First Union National Bank. If, for any
reason, such rate is not available, then "Federal Funds Rate" shall mean a daily
rate which is determined, in the opinion of the Lender, to be the rate at which
federal funds are being offered for sale in the national federal funds market at
9:00 a.m. (New York time). Rates for weekends or holidays shall be the same as
the rate for the most immediate preceding Business Day.
"Guaranty Agreement" means the Amended and Restated Unconditional
Subsidiary Guaranty Agreement, dated as of November 15, 1999, by certain
subsidiaries of the Borrower in favor of First Union National Bank, as
Administrative Agent and the Lender.
"LIBOR" means the rate of interest per annum determined on the basis of
the rate for deposits in Dollars in minimum amounts of at least $25,000,000 for
a period equal to the applicable Interest Period which appears on the Dow Xxxxx
Markets screen 3750 at approximately 11:00 a.m. (London time) two (2) Business
Days prior to the first day of the applicable Interest Period (rounded upward,
if necessary, to the nearest one-hundredth of one percent (1/100%)). If, for any
reason, such rate does not appear on Dow Xxxxx Markets screen 3750, then "LIBOR"
shall be determined by First Union National Bank to be the arithmetic average
(rounded upward, if necessary, to the nearest one-hundredth of one percent
(1/100%)) of the rate per annum at which deposits in Dollars would be offered by
first class banks in the London interbank market to First Union National Bank
(or its correspondent) at approximately 11:00 a.m. (London time) two (2)
Business Days prior to the first day of the applicable Interest Period for a
period equal to such Interest Period and in an amount of $25,000,000. Each
calculation by the First Union National Bank of the LIBOR Rate shall be
conclusive and binding for all purposes, absent manifest error.
"LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the First Union National Bank
pursuant to the following formula:
LIBOR Rate = LIBOR
----------------------------------
1.00-Eurodollar Reserve Percentage
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"Loan Documents" means this Note and each Security Document.
"Pledge Agreement" means the Second Amended and Restated Pledge
Agreement, dated as of November 15, 1999, by the Borrower and certain
subsidiaries of the Borrower in favor of First Union National Bank, as
Administrative Agent, and the Lender.
"Prime Rate" means, at any time, the rate of interest per annum
publicly announced from time to time by First Union National Bank as its prime
rate. Each change in the Prime Rate shall be effective as of the opening of
business on the day such change in the Prime Rate occurs. The parties hereto
acknowledge that the rate announced publicly by First Union National Bank as its
Prime Rate is an index or base rate and shall not necessarily be its lowest or
best rate charged to its customers or other banks.
"Security Agreement" means the Second Amended and Restated Security
Agreement, dated as of November 15, 1999, by the Borrower, and certain
subsidiaries of the Borrower in favor of First Union National Bank, as
Administrative Agent, and the Lender.
"Security Documents" means each of the Security Agreement, the Pledge
Agreement and the Guaranty Agreement.
Each "Interest Period" shall (a) be one month; (b) commence on the date
designated in the notice from the Borrower to the Lender, which shall be (i) the
date hereof in the case of an election to have this Note bear interest at the
LIBOR Rate plus four percent (4.0%) from the date hereof; (ii) except as
provided in preceding clause (i), the date no earlier than two Business Days
after the date on which notice is given to the Lender; and (iii), in the case of
immediately successive Interest Periods, on the date on which the next preceding
Interest Period expires; (c) if any Interest Period would otherwise expire on a
day that is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, that if any Interest Period would otherwise
expire on a day that is not a Business Day but is a day of the month after which
no further Business Day occurs in such month, such interest Period shall expire
on the next preceding Business Day; (d) any Interest Period that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the relevant calendar month at the
end of such Interest Period; and (e) no Interest Period shall extend beyond the
Maturity Date.
Upon the occurrence and during the continuance of an Event of Default,
(i) the Borrower shall no longer have the option to request that this Note bear
interest at the LIBOR Rate plus four percent (4.0%), (ii) if this Note shall at
such time, as a result of an election by the Borrower prior to that time, bear
interest at the LIBOR Rate plus four percent (4.0%), this Note shall bear
interest at the LIBOR Rate plus six percent (6.0%) until the end of the
applicable Interest Period and thereafter at a rate equal to the Base Rate plus
four and one-half percent (4.5%), and (iii) if this Note shall at such time, as
a result of an election by the Borrower (or the failure by the Borrower to make
an election) prior to that time, bear interest at the Base Rate plus two and
one-
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half percent (2.5%), this Note shall bear interest at the Base Rate plus four
and one-half percent (4.5%). Interest shall continue to accrue on this Note
after the filing by or against the Borrower of any petition seeking any relief
in bankruptcy or under any act or law pertaining to insolvency or debtor relief,
whether state, federal or foreign.
Interest on this Note shall be payable in arrears on the Maturity Date
and shall be computed on the basis of (a) a 365/366-day year and assessed for
the actual number of days elapsed for the periods during which this Note bears
interest at the Base Rate plus two and one-half percent (2.5%) or four and
one-half percent (4.5%) (as applicable) and (b) a 360-day year and assessed for
the actual number of days elapsed for the periods during which this Note bears
interest at the LIBOR Rate plus four percent (4.0%) or six percent (6.0%) (as
applicable).
In no contingency or event whatsoever shall the aggregate of all
amounts deemed interest under this Note charged or collected exceed the highest
rate permissible under any applicable law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the
event that such a court determines that amounts that the Lender has charged or
received that are deemed to be interest hereunder exceed the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the maximum
rate permitted by applicable law and the Lender shall at the Lender's option (i)
promptly refund to the Borrower any amounts that are deemed to be interest and
received by the Lender in excess of the maximum lawful rate or (ii) shall apply
such excess to the principal balance of this Note. It is the intent hereof that
the Borrower not pay or contract to pay, and that the Lender not receive or
contract to receive, directly or indirectly in any manner whatsoever, any
amounts that are deemed to be interest in excess of that which may be paid by
the Borrower under applicable law.
Any and all payments by the Borrower under this Note shall be made free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholding, and all liabilities with
respect thereto excluding, (i) income and franchise taxes imposed by the
jurisdiction under the laws of which the Lender is organized or is or should be
qualified to do business or any political subdivision thereof and (ii) in the
case of the Lender, income and franchise taxes imposed by the jurisdiction of
such Xxxxxx's chief executive office or any political subdivision thereof (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable under
this Note, (A) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this paragraph) the Lender receives an amount
equal to the amount it would have received had no such deductions been made, (B)
the Borrower shall make such deductions, (C) the Borrower shall pay the full
amount deducted to the relevant taxing authority or other authority in
accordance with applicable law, and (D) the Borrower shall deliver to the Lender
evidence of such payment to the relevant taxing authority or other authority.
In addition to the payments made under the preceding paragraph, the
Borrower shall pay any present or future stamp, registration, recordation or
documentary taxes or any other similar fees or charges or excise or property
taxes, levies of the United States or any state or political subdivision thereof
or any applicable foreign jurisdiction which arise from any payment made
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hereunder or from the execution, delivery or registration of, or otherwise with
respect to the Loan Documents or the perfection of any rights or security
interest in respect thereto (hereinafter referred to as "Other Taxes").
The Borrower shall indemnify the Lender for the full amount of Taxes
and Other Taxes (including, without limitation, any Taxes and Other Taxes
imposed by any jurisdiction on amounts payable under this paragraph and the two
preceding paragraphs and this paragraph) paid by the Lender and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Such indemnification shall be made within thirty (30) days from the
date the Lender makes written demand therefor.
Within thirty (30) days after the date of any payment of Taxes or Other
Taxes, the Borrower shall furnish to the Lender, at its address below, the
original or a certified copy of a receipt evidencing payment thereof or other
evidence of payment satisfactory to the Lender.
The Lender shall deliver to (i) two United States Internal Revenue
Service Forms 4224 or Forms 1001, as applicable (or successor forms) properly
completed and certifying in each case that such Lender is entitled to a complete
exemption from withholding or deduction for or on account of any United States
federal income taxes, and (ii) an Internal Revenue Service Form W-8 or W-9 or
successor applicable form, as the case may be, to establish an exemption from
United States backup withholding taxes. The Lender further agrees to deliver to
the Borrower a Form 1001 or 4224 and Form W-8 or W-9, or successor applicable
forms or manner of certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrower, certifying in the case of a Form 1001 or 4224 that the Lender is
entitled to receive payments under this Note without deduction or withholding of
any United States federal income taxes (unless in any such case an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders such forms inapplicable or the exemption to which such
forms relate unavailable and the Lender notifies the Borrower that it is not
entitled to receive payments without deduction or withholding of United States
federal income taxes) and, in the case of a Form W-8 or W-9, establishing an
exemption from United States backup withholding tax.
Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
the immediately preceding five paragraphs shall survive the payment in full of
this Note.
Each of the following shall constitute an Event of Default, whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment or order of any court
or any order, rule or regulation of any governmental authority or otherwise: (a)
default in payment of principal, interest or other amount under this Note when
and as due (whether at maturity, by reason of acceleration or otherwise); and
(b) an "Event of Default" shall have occurred and be continuing under the Credit
Agreement dated as of September 11, 1998 (as amended by amendments thereto dated
as of April 18,1999,
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June 29, 1999 and November 15, 1999, the "Credit Agreement") between the
Borrower, the lenders referred therein, NationsBanc Xxxxxxxxxx Securities, LLC,
as syndication agent, Fleet Bank, N.A., as documentation agent, and First Union
National Bank, as administrative agent.
Subject to the terms of the Security Documents, upon the occurrence of
an Event of Default, the Lender may, by notice to the Borrower, declare the
principal of and interest on this Note at the time outstanding, and all other
amounts owed to the Lender under this Note or any of the other Loan Documents to
be forthwith due and payable, whereupon the same shall immediately become due
and payable without presentment, demand, protest or other notice of any kind,
all of which are expressly waived, anything in this Note or the other Loan
Documents to the contrary notwithstanding, and provided, that upon the
occurrence of an Event of Default specified in Section 11.1(j) or (k) of the
Credit Agreement all principal of and interest on this Note at the time
outstanding, and all other amounts owed to the Lender under this Note or any of
the other Loan Documents, shall automatically become due and payable.
Subject to the terms of the Security Documents, the enumeration of the
rights and remedies of the Lender set forth in this Note is not intended to be
exhaustive and the exercise by the Lender of any right or remedy shall not
preclude the exercise of any other rights or remedies, all of which shall be
cumulative, and shall be in addition to any other right or remedy given
hereunder or under the Loan Documents or that may now or hereafter exist in law
or in equity or by suit or otherwise. No delay or failure to take action on the
part of the Lender in exercising any right, power or privilege shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude other or further exercise thereof or the exercise of
any other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between the Borrower, the Lender or its
agents or employees shall be effective to change, modify or discharge any
provision of this Note or any of the other Loan Documents or to constitute a
waiver of any Event of Default.
All notices and communications hereunder shall be in writing, shall be
effective if delivered by hand delivery or sent via telecopy, recognized
overnight courier service or certified mail, return receipt requested, and shall
be presumed to be received by a the Borrower or the Lender, as the case may be,
(a) on the date of delivery if delivered by hand or overnight courier or sent by
telecopy and received before the close of business on a business day at the
place received ("Local Business Day"), (b) on the next Local Business Day if
delivered by hand or overnight courier or sent by telecopy and received after
the close of business on a Local Business Day or on a day that is not a Local
Business Day at the place received and (c) on the seventh Local Business Day
following the date sent by certified mail, return receipt requested.
Notices to any party shall be sent to it at the following addresses, or
any other address as to which all the other parties are notified in writing in
the manner set forth in the immediately preceding paragraph.
If to the Borrower: GT Interactive Software Corp.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chairman and Chief Executive Officer
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Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
With copies to: Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to the Lender: California U.S. Holdings, Inc.
0000 Xxxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Operating Officer
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
With Copies to: Infogrames Entertainment S.A.
00, xxx xx 0xx Xxxx 0000
Xxxxxxxxxxxx, 00000
Xxxxxx
Attention: Xxxxxx Xxxxxxxx
Telephone No.: (000 00) 000 000000
Telecopy No.: (000 00) 000 000000
And
Attention: Xxxxxxxx Xxxxxxx
Telephone No.: (000 00) 000 000000
Telecopy No.: (000 00) 000 000000
And
Pillsbury Madison & Sutro LLP
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
The Borrower will (a) pay all reasonable out-of-pocket expenses of the
Lender in connection with (i) the preparation, execution and delivery of this
Note and each of the other Loan Documents, whenever the same shall be executed
and delivered, including without limitation all reasonable fees and
disbursements of counsel for the Lender and (ii) the preparation, execution and
delivery of any waiver, amendment or consent by the Lender relating
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to this Note or any other Loan Document, including without limitation reasonable
fees and disbursements of counsel for the Lender, (b) pay all reasonable
out-of-pocket expenses of the Lender actually incurred in connection with the
administration and enforcement of any rights and remedies of the Lender under
the Loan Documents, including consulting with appraisers, accountants,
engineers, attorneys and other persons concerning the nature, scope or value of
any right or remedy of the Lender hereunder or under any other Loan Document or
any factual matters in connection therewith, which expenses shall include
without limitation the reasonable fees and disbursements of such persons, and
(c) defend, indemnify and hold harmless the Lender, and their respective
parents, subsidiaries, affiliates, employees, officers and directors, from and
against any losses, penalties, fines, liabilities, judgments, settlements,
damages, costs and expenses, suffered by any such person in connection with any
claim, investigation, litigation or other proceeding (whether or not the Lender
is a party thereto) and the prosecution and defense thereof, arising out of or
in any way connected with this Note or any other Loan Document, including
without limitation reasonable attorney's and consultant's fees, except to the
extent that any of the foregoing directly result from the gross negligence or
willful misconduct of the party seeking indemnification therefor.
Subject to the terms of the Security Documents, in addition to any
rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon and after the occurrence of any Event of
Default and during the continuance thereof, the Lender and any assignee or
participant of a Lender are hereby authorized by the Borrower at any time or
from time to time, without notice to the Borrower or to any other person, any
such notice being hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, time or demand, including, but
not limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured) and any other indebtedness at any time held or owing by
the Lender, or any such assignee or participant to or for the credit or the
account of the Borrower against and on account of the obligations hereunder and
under the other Loan Documents irrespective of whether or not (a) the Lender
shall have made any demand under this Note or any of the other Loan Documents or
(b) the Lender shall have declared any or all of the obligations hereunder and
under the other Loan Documents to be due and payable and although such
obligations shall be contingent or unmatured.
This Note and the other Loan Documents, unless otherwise expressly set
forth therein, shall be governed by, construed and enforced in accordance with
the laws of the State of New York, without reference to the conflicts or choice
of law principles thereof.
To the extent the Borrower makes a payment or payments to the Lender or
the Lender receives any payment or proceeds of the collateral which payments or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
repaid, the obligations hereunder or under the other Loan Documents or part
thereof intended to be satisfied shall be revived and continued in full force
and effect as if such payment or proceeds had not been received by the Lender.
The Borrower may not assign any of its rights or obligations under this
Note or the Loan
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Documents. The Lender may, with the consent of the Borrower (so long as no Event
of Default or event, which with the passing of time or giving of notice, or
both, would be an Event of Default has occurred and is continuing), which
consent shall not be unreasonably withheld (provided, that no such consent shall
be required in connection with an assignment to an affiliate of a Lender),
assign all or a portion of its interests, rights and obligations under this
Note.
Any provision of this Note or any other Loan Document which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability
without invalidating the remainder of such provision or the remaining provisions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
This Note is entitled to the benefits of, and is secured and the
exercise of rights and remedies hereunder is limited, to the extent set forth
therein, by the Security Documents.
GT INTERACTIVE SOFTWARE CORP.
By:
Name:
Title:
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