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Exhibit 6
CONVERTIBLE SUBORDINATED NOTE
$[60,500,000.00] New York, New York
_________, 1999
GT INTERACTIVE SOFTWARE CORP., a Delaware corporation (the
"Obligor"), hereby promises to pay to the order of CALIFORNIA U.S. HOLDINGS,
INC., a Delaware corporation (together with any permitted transferee of this
Convertible Subordinated Note, the "Holder"), on ___________, 2004 (the
"Maturity Date"), the principal amount of [SIXTY MILLION FIVE HUNDRED THOUSAND]
DOLLARS ($[60,500,000.00]) in lawful money of the United States of America.
1. Interest. Interest on the outstanding principal amount
hereof shall accrue at a rate per annum equal to 5% and shall be added quarterly
(on the date following three months from the date of this Convertible
Subordinated Note (the "Note") and every three months thereafter) to the
principal amount of this Note.
2. Payments. Notwithstanding anything to the contrary herein,
except pursuant to a conversion set forth in Section 4 hereof, no payment or
prepayment of principal of or interest on this Note may be made or received,
directly or indirectly, prior to the Senior Debt Payment Date. On the Maturity
Date, the Obligor shall make payments of all outstanding principal of and
accrued interest on this Note in immediately available funds to such account of
the Holder as the Holder may designate in writing. If any payment hereunder
becomes due and payable on a day other than a Business Day, the due date thereof
shall be extended to the next succeeding Business Day.
3. Definitions. (a) Terms defined in the Credit Agreement
referred to below are used herein with the meanings set forth in such Credit
Agreement unless otherwise defined herein. As used herein, the following terms
shall have the following meanings:
"Board of Directors" shall mean the Board of Directors of the
Obligor.
"Business Days" shall mean any day except a Saturday, Sunday,
or other day on which commercial banks in the State of New York are authorized
or required by law or executive order to close.
"Capital Stock" shall mean, with respect to any Person, any
and all shares, interests, participations, rights in, or other equivalents
(however designated and whether voting or non-voting) of, such Person's capital
stock and any and all rights, warrants or options exchangeable for or
convertible into such capital stock (but excluding any debt security whether or
not it is exchangeable for or convertible into such capital stock).
"Credit Agreement" shall mean the Credit Agreement dated as of
September 11, 1998, among the Obligor, the Lenders parties thereto, the
Documentation Agent and Syndication Agent named therein, and First Union
National Bank, as Administrative Agent, as amended, restated, supplemented or
otherwise modified from time to time.
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"Current Market Price" per share shall mean, as of the date of
determination, the average of the daily Market Price under clause (a), (b) or
(c) of the definition thereof of the Common Stock (as defined in Section 4)
during the immediately preceding thirty (30) trading days ending on such date.
"Market Price" shall mean as of the date of determination, (a)
the closing price per share of Common Stock on such date published in The Wall
Street Journal or, if no such closing price on such date is published in The
Wall Street Journal, the average of the closing bid and asked prices on such
date, as officially reported on the principal national securities exchange
(including, without limitation, the Nasdaq Stock Market, Inc.) on which the
Common Stock is then listed or admitted to trading; or (b) if the Common Stock
is not then listed or admitted to trading on any national securities exchange
but is designated as a national market system security by the National
Association of Securities Dealers, Inc., the last trading price of the Common
Stock on such date; or (c) if there shall have been no trading on such date or
if the Common Stock is not so designated, the average of the reported closing
bid and asked prices of the Common Stock on such date as shown by the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotations System and reported by any member firm of the New York Stock Exchange
selected by the Obligor.
"Merger" shall mean a recapitalization, reorganization,
merger, a sale of all or substantially all of the assets of the Obligor or other
business combination transaction after the consummation of which the
stockholders of the Obligor prior to such transaction do not own at least a
majority of the voting power of the surviving Person or the transferee of the
assets of the Obligor, as the case may be.
"Person" shall mean an individual, firm, corporation,
partnership, limited liability company, trust, incorporated or unincorporated
association, joint venture, joint stock company, governmental body or other
entity of any kind.
"Senior Creditors" shall mean the collective reference to the
Lenders, the Administrative Agent, the Issuing Lender and all other holders of
the Senior Debt.
"Senior Debt" shall mean the obligations of the Obligor and
any Subsidiary in respect of the unpaid principal of and interest on the notes
made by the Obligor in favor of the Senior Creditors in connection with the
Credit Agreement (the "Senior Notes") (including, without limitation, interest
accruing at the then applicable rate provided in the Credit Agreement after the
maturity of the Loans and interest accruing at the then applicable rate provided
in the Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Obligor, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) and all other obligations and liabilities of the
Obligor and any Subsidiary to the Administrative Agent, the Issuing Lender and
the Lenders in respect of the Loans, the Senior Notes, the Letters of Credit,
the L/C Obligations, any Hedging Agreements permitted or required under the
Credit Agreement, the Concentration Account or any cash management arrangements
with any Lender, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may
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arise under, out of, or in connection with, the Credit Agreement, the Senior
Notes, the other Loan Documents, the Letters of Credit, the L/C Obligations, any
Hedging Agreements permitted or required under the Credit Agreement, or any
other document made, delivered or given in connection or therewith, in each case
whether on account of principal, interest, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Administrative Agent, the Issuing Lender or the Lenders that are required
to be paid by the Obligor or any Subsidiary pursuant to the terms of the Credit
Agreement or any other Loan Document).
"Senior Debt Payment Date" shall mean the first Business Day
to occur after the Senior Debt is paid in full.
"Subordinated Debt" shall mean the principal amount of this
Note, together with accrued and unpaid interest thereon and any other amounts of
any kind whatsoever from time to time owing hereunder or in connection
therewith.
"Subsidiary" shall mean as to any Person, any corporation,
partnership, limited liability company or other entity of which more than fifty
percent (50%) of the outstanding capital stock or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other managers of such corporation, partnership, limited liability company or
other entity is at the time, directly or indirectly, owned by or the management
is otherwise controlled by such Person (irrespective of whether, at the time,
capital stock or other ownership interests of any other class or classes of such
corporation, partnership, limited liability company or other entity shall have
or might have voting power by reason of the happening of any contingency).
(b) The expressions "prior payment in full," "paid in full,"
"payment in full" and any other similar terms or phrases when used in this Note
shall mean payment in full in immediately available funds of the Senior Debt (or
cash collateralization in full in the case of any L/C Obligations) and
termination of the Aggregate Commitment.
4. Conversion of the Note.
(a) Subject to and upon compliance with the provisions of this
Section 4, the Holder, at the Holder's option at any time and from time to time
from and after the date hereof so long as this Note is outstanding, may convert
all or any part of the unpaid principal amount of this Note and accrued interest
thereon into shares of the common stock of the Obligor, par value $.01 per share
(the "Common Stock"), at the Conversion Price in effect at the Conversion Date.
Notwithstanding anything to the contrary herein, until the Obligor's certificate
of incorporation has been amended to increase the Obligor's authorized capital
stock, the Holder shall not convert all or any part of this Note into shares of
Common Stock such that the Obligor would have more shares of Common Stock
outstanding or reserved for issuance upon exercise or conversion of its
outstanding convertible securities than are then authorized under its
certificate of incorporation as in effect on the date of such conversion.
(b) In order to exercise the conversion privilege of this
Note, the Holder shall deliver (i) this Note and (ii) written notice in
substantially the form attached to this Note as
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Exhibit 1 to the Obligor during regular business hours at its address set forth
in, or at such other address as the Obligor shall designate in writing in
accordance with, Section 12 hereof. Conversion shall be deemed to have been
effected on the date when such notice is delivered to the Obligor (the
"Conversion Date"). An election to convert this Note in whole or in part shall
be irrevocable once made.
(c) As promptly after the Conversion Date as practicable, the
Obligor shall issue and deliver to the Holder at the address of the Holder set
forth on the Obligor's records, without any charge to the Holder, a certificate
or certificates (issued in the name of the Holder or, subject to compliance with
applicable securities laws, in such other name as the Holder may designate) for
the number of shares of Common Stock of the Obligor issuable upon the conversion
of this Note. In case the Note is surrendered for a partial conversion, the
Obligor will issue to the Holder upon conversion a new Note of like tenor (the
"New Note") in an aggregate principal amount equal to the unconverted portion of
the outstanding principal amount of the surrendered Note, which New Note shall
indicate (I) the interest that had accrued through the date of such issuance on
the converted portion of the outstanding principal amount of the surrendered
Note (excluding any interest which also had been converted) but had not yet been
added pursuant to Section 1 to the principal amount of the surrendered Note, and
(ii) that interest on the outstanding principal amount of such New Note shall
accrue from the most recent quarterly date on which interest was added pursuant
to Section 1 to the principal amount of the surrendered Note. No fractional
shares of Common Stock or scrip representing fractional shares shall be issued
upon the conversion of any amounts outstanding under this Note to Common Stock
pursuant to Section 4(a) hereof. Notwithstanding the provisions of Section 7(a)
hereof, instead of any fractional shares of Common Stock which would otherwise
be issuable upon conversion, the Obligor shall pay to the Holder a cash
adjustment in respect of such fractional shares in an amount equal to the same
fraction of the Market Price of the Common Stock on the date of such conversion.
(d) Upon conversion, the Holder shall be deemed to have become
the stockholder of record on the Conversion Date of the number of shares of
Common Stock issuable upon such conversion. All rights of the Holder to amounts
of principal and accrued interest converted shall cease upon conversion, but all
other rights of the Holder hereunder, including without limitation rights to any
amounts of interest accrued and to any principal not converted and to any
expenses or other amounts owned hereunder, shall be unaffected by such
conversion.
(e) The initial Conversion Price of this Note shall be $1.85
per share of Common Stock and shall be subject to adjustment as follows:
(i) Dividends, Subdivision, Combination or
Reclassification of Common Stock. In the event that the Obligor shall at any
time or from time to time, prior to any conversion of the Note, (v) declare,
make or pay a dividend or make a distribution on the outstanding shares of
Common Stock, payable in Capital Stock of the Obligor, (w) subdivide the
outstanding shares of Common Stock into a large number of shares, (x) combine
the outstanding shares of its Common Stock into a smaller number of shares, (y)
issue any shares of its Capital Stock in a reclassification of the Common Stock
or (z) change the shares of Common Stock
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issuable upon conversion hereunder into the same or any different number of
shares of any class of Capital Stock of the Obligor, whether by
reclassification, exchange, cancellation amendment of the Obligor's certificate
of incorporation or otherwise (other than any such event for which an adjustment
is made pursuant to another clause of this Section 4(e)), then, and in each such
case, the Conversion Price in effect immediately prior to such event shall be
adjusted (and any other appropriate action shall be taken by the Obligor) so
that the Holder, with respect to any amounts outstanding on the Note thereafter
surrendered for conversion, shall be entitled to receive the number of shares of
Common Stock or other securities of the Obligor that the Holder would have owned
or would have been entitled to receive upon or by reason of any of the events
described above, had such amounts been converted immediately prior to the record
date applicable to such event. An adjustment made pursuant to this Section
4(e)(i) shall become effective retroactively to the close of business on the day
upon which such corporate action becomes effective.
(ii) Certain Distributions. In case the Obligor shall
at any time or from time to time prior to conversion of all amounts outstanding
under the Note, distribute to all holders of shares of Common Stock (including
any such distribution made in connection with a merger or consolidation in which
the Obligor is the resulting or surviving Person and the Common Stock is not
changed or exchanged) cash, evidences of indebtedness of the Obligor or another
Person, securities of the Obligor or another Person or other assets (excluding
dividends declared in the ordinary course of business and payable in cash,
dividends payable in shares of Common Stock for which adjustment is made under
another paragraph of this Section 4(e)) or rights or warrants to subscribe for
or purchase securities of the Obligor (excluding those distributions in respect
of which an adjustment in the Conversion Price is made pursuant to another
paragraph of this Section 4(e)), then, and in each such case, the Conversion
Price then in effect shall be adjusted (and any other appropriate actions shall
be taken by the Obligor) by multiplying the Conversion Price in effect
immediately prior to the date of distribution by a fraction (x) the numerator of
which shall be the Current Market Price of the Common Stock immediately prior to
the date of distribution less the then fair market value (as determined in good
faith by the Board of Directors) of the portion of the cash, evidences of
indebtedness, securities or other assets so distributed or of such rights or
warrants applicable to one share of Common Stock and (y) the denominator of
which shall be the Current Market Price of the Common Stock immediately prior to
the date of distribution. Such adjustment shall be made whenever any such
distribution is made and shall become effective retroactively to a date
immediately following the close of business on the record date for the
determination of stockholders entitled to receive such distribution.
(iii) Effect of Consolidation or Merger. In the case
of any consolidation or merger, directly or indirectly, of the Obligor with or
into another Person (any such event, a "Change of Shares"), the Holder
thereafter shall have the right to convert this Note into the kind and number of
shares of stock and/or other securities, cash or other property receivable upon
such Change of Shares by a holder of the number of shares of Common Stock of the
Obligor into which this Note might have been converted immediately before the
time of determination of the stockholders of the Obligor entitled to receive
such shares of stock and/or other securities or property, and the Conversion
Price shall be adjusted accordingly. The Obligor shall be obligated to retain
and set aside, or otherwise make fair provision for exercise of the right of the
Holder to receive, the shares of stock and/or other securities, cash or other
property provided for in this Section 4(e)(iii). In any such case, appropriate
adjustments shall be made in
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the application of this Section 4(e)(iii) with respect to the Holder after such
merger or consolidation such that the provisions of this Section 4(e)(iii) shall
be applicable after that event in a manner as nearly equivalent as may be
practicable.
(iv) Other Changes. In case the Obligor at any time
or from time to time, prior to the conversion of all amounts outstanding under
the Note, shall take any action affecting its Common Stock similar to or having
an effect similar to any of the actions described in any of Sections 4(e)(i)
through (iii) (but not including any action described in any such Section) and
the Board of Directors in good faith determines that it would be equitable in
the circumstances to adjust the Conversion Price as a result of such action,
then, and in each such case, the Conversion Price shall be adjusted in such
manner and at such time as the Board of Directors in good faith determines would
be equitable in the circumstances (such determination to be evidenced in a
resolution, a certified copy of which shall be mailed to the Holder).
(v) De Minimis Adjustments. Notwithstanding anything
herein to the contrary, no adjustment in the Conversion Price shall be required
unless such adjustment would require a change of at least 1% in the Conversion
Price, provided, however, that any adjustments which by reason of this Section
4(e)(v) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment.
(f) Abandonment. If the Obligor shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend or other distribution, and shall thereafter and before the distribution
to stockholders thereof legally abandon its plan to pay or deliver such dividend
or distribution, then no adjustment in the Conversion Price shall be required by
reason of the taking of such record.
(g) Certificate as to Adjustments. Upon any increase or
decrease in the Conversion Price, the Obligor shall within a reasonable period
(not to exceed 20 days) following the consummation of any of the foregoing
transactions deliver to the Holder a certificate, signed by (i) the President or
a Vice President of the Obligor and (ii) the Chief Financial Officer of the
Obligor, setting forth in reasonable detail the event requiring the adjustment
and the method by which such adjustment was calculated and specifying the
increased or decreased Conversion Price then in effect following such
adjustment.
(h) Notices. In case at any time or from time to time:
(i) the Obligor shall declare a dividend (or any
other distribution) on its shares of Common Stock;
(ii) the Obligor shall authorize the granting to the
holders of its Common Stock of rights or warrants to subscribe for or purchase
any shares of stock of any class or of any other rights or warrants;
(iii) there shall be any reorganization or
reclassification of the Common Stock; or
(iv) there shall occur a Merger;
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then the Obligor shall mail to the Holder as promptly as possible but in any
event at least ten (10) days prior to the applicable date hereinafter specified,
a notice in accordance with Section 12 hereof stating the date on which a record
is to be taken for the purpose of such dividend, distribution or granting of
rights or warrants or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend, distribution
or granting of rights or warrants are to be determined, or the date on which
such reorganization, reclassification or Merger is expected to become effective
and the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their Common Stock for shares of stock or other
securities or property or cash delivered upon such reorganization,
reclassification or Merger.
(i) Reservation of Common Stock. The Obligor shall at all
times reserve and keep available for issuance upon the conversion of the Note,
such number of its authorized but unissued shares of Common Stock as will from
time to time be sufficient to permit the conversion of all amounts outstanding
under the Note. Each March 31, June 30, September 30 and December 31, the
Obligor shall reserve additional shares of Common Stock reasonably determined by
the Obligor to be required to cover the conversion of all interest on the Note
(which has accrued on such date) into shares of Common Stock. As soon as
practicable after the date hereof, the Obligor shall take all actions necessary
to increase the authorized number of shares of Common Stock if at any time there
shall be insufficient authorized but unissued shares of Common Stock to permit
such reservation or to permit the conversion of all outstanding amounts under
the Note.
(j) No Conversion Tax or Charge. The issuance or delivery of
certificates for Common Stock upon the conversion of amounts under the Note
shall be made without charge to the Holder for such certificates or for any
documentary stamp, or similar issue or transfer tax in respect of the issuance
or delivery of such certificates or the securities represented thereby, and such
certificates shall be issued or delivered in the name of, or (subject to
compliance with the applicable provisions of federal and state securities laws)
in such names as may be directed by, the Holder; provided, however, that the
Obligor shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificate in a
name other than that of the Holder, and the Obligor shall not be required to
issue or deliver such certificate unless or until the Person or Persons
requesting the issuance or delivery thereof shall have paid to the Obligor the
amount of such tax or shall have established to that reasonable satisfaction of
the Obligor that such tax has been paid.
5. Transfer, Exchange and Replacement of Note. Subject to the
third sentence of this Section 5, this Note shall be transferable in whole or in
part by the Holder. Upon delivery of this Note duly endorsed by, or accompanied
(if required by the Obligor) by proper evidence of succession, assignment or
authority to transfer executed by, the Holder, in each case accompanied by any
necessary transfer tax imposed upon transfer or evidence thereof, the Company
shall execute a new Note to the Person or Persons entitled thereto and such
Person or Persons shall be deemed the Holder hereunder. THIS NOTE MAY NOT BE
SOLD OR TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES LAW IN CONNECTION
WITH SUCH SALE OR TRANSFER OR SUCH SALE OR TRANSFER IS EXEMPT FROM SUCH
REGISTRATION. The Obligor may deem and treat
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the person in whose name this Note is held as the absolute, true and lawful
owner of this Note for all purposes. Upon receipt by the Obligor of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Note, the Obligor shall make and deliver a new Note of like tenor, in lieu
of this Note, if (i) in case of loss, theft or destruction, the Obligor receives
indemnity or security reasonably satisfactory to it, (ii) the Obligor is
reimbursed for all reasonable expenses incidental to such replacement, and (iii)
this Note is surrendered and cancelled, if mutilated.
6. Securities Laws. By his acceptance of this Note, Holder
hereby represents and warrants to the Obligor that it is an "accredited
investor" as that phrase is defined in Rule 501 under the Securities Act of
1933, as amended (the "Act"), and is acquiring this Note for his own account,
for investment, and not with a view to the distribution of this Note or the
Common Stock issuable upon conversion hereof in a manner contrary to the
provisions of the Act or any applicable state securities laws. Holder
understands that the shares issuable upon conversion of this Note have not been
and will not, except to the extent provided herein, be registered under the Act
or any state securities laws, and that neither such shares nor any interest
therein may be transferred or sold unless such registration is then effective or
an exemption from such registration is then available. By conversion of this
Note, Holder acknowledges that the certificates representing such shares will
bear appropriate legends restricting the transferability thereof. The Obligor
shall have the right to an opinion of counsel in connection with any transfer of
this Note or the shares issuable upon conversion hereof.
7. Subordination.
(a) Payment of the Subordinated Debt is and shall be expressly
subordinate and junior in right of payment to the prior payment in full of the
Senior Debt to the extent and in the manner set forth herein, and the
Subordinated Debt is hereby so subordinated as a claim against the Obligor or
any Subsidiary or any of the assets of the Obligor or such Subsidiary, whether
such claim be (i) in the event of any distribution of assets of the Obligor or
such Subsidiary upon any voluntary or involuntary dissolution, winding-up, total
or partial liquidation or reorganization, or bankruptcy, insolvency,
receivership or other statutory or common law proceedings or arrangements
involving the Obligor or such Subsidiary or the readjustment of its liabilities
or any assignment for the benefit of creditors or any marshaling of its assets
or liabilities (collectively, a "Reorganization") or (ii) other than in
connection with a Reorganization.
(b) Except for the conversion of the Note as set forth in
Section 4 hereof and the payments to be made in connection with the Transaction
(as defined in the Third Amendment, Consent, Waiver and Agreement dated the date
hereof (the "Third Amendment")) on the Transaction Closing Date (as defined in
the Third Amendment), all of the Senior Debt shall be paid in full before any
direct or indirect payment or distribution of any kind or character (including,
without limitation, securities that are subordinated in right of payment to the
Senior Debt) is made upon the Subordinated Debt, and in any Reorganization or
other proceedings any payment or distribution of any kind or character, whether
in cash or property or securities, which may be payable or deliverable in
respect of this Subordinated Note and the Subordinated Debt shall be paid or
delivered directly to the Administrative Agent, for payment of the Senior Debt
until the Senior Debt is paid in full. If the Holder does not file a claim or
proof of debt in the
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form required in any Reorganization or other proceedings prior to 20 days before
the expiration of the time to file such claims or proofs, the Administrative
Agent shall have the right to demand, sue for, collect and receive any payments
and distributions in respect of the Subordinated Debt which are required to be
paid or delivered to the Senior Creditors and to take such other action in the
name of the Holder or of the Senior Creditors as the Administrative Agent may
deem reasonably necessary or advisable for the enforcement of the provisions
hereof. The Holder shall execute and deliver such other and further powers of
attorney, assignments, proofs of claim or other instruments, and take such other
actions, as may be reasonably requested by the Administrative Agent in order to
enable the Administrative Agent to accomplish any of the foregoing.
(c) In the event that, notwithstanding the foregoing, any
payment or distribution of the assets of the Obligor or any Subsidiary of any
kind or character, whether in cash, property or securities, and whether prior to
or after the commencement of any Reorganization or other proceedings, shall be
received by the Holder in respect of this Note before all Senior Debt is paid in
full, such payment of distribution shall be held in trust for the Senior
Creditors and shall forthwith be paid over to the Administrative Agent for
application to the payment of the Senior Debt until all Senior Debt shall have
been paid in full.
(d) Except with respect to an Event of Default occurring at
maturity of this Note pursuant to Section 9(a)(i) hereof, the Holder and the
Obligor each agrees that, until the Senior Debt has been paid in full (i) the
Holder will not take, demand, receive or accept, or take any action to
accelerate or collect (and the Obligor shall not make) any cash payment of all
or any part of the Subordinated Debt and (ii) the Holder will not file or join
in any petition or proceeding seeking the bankruptcy or Reorganization of the
Obligor; provided, however, that if any Person (other than the Holder or any
Affiliate of the Holder or any such other holder) files or initiates any
petition or proceeding seeking the foregoing or takes any action to accelerate
or collect any cash payment of all or any part of any debt of the Obligor, then
after the filing of any such petition or the commencement of any such proceeding
the Holder may join in such petition or proceeding or initiate a separate action
to accelerate all or any part of the Subordinated Debt.
(e) The Senior Creditors, or any of them, may, at any time and
from time to time, without the consent of or notice to the Holder, without
incurring any responsibility to the Holder, and without impairing or releasing
any of the rights of any Senior Creditor or any of the obligations of the
Holder: (i) change the amount or terms of, or renew or extend, the Senior Debt
or enter into or amend in any manner any agreement relating to the Senior Debt;
(ii) sell, exchange, release or otherwise deal with any property at any time
pledged or mortgaged to secure the Senior Debt; (iii) release anyone liable in
any manner for the payment or collection of the Senior Debt; and (iv) exercise
or refrain from exercising any rights against the Obligor, any Subsidiary and
any other Person (including the Holder). The Obligor shall provide prompt
written notice to the Holder of the occurrence of any of the foregoing matters.
(f) The Holder hereby waives notice of or proof of reliance by
any Senior Creditor upon the provisions hereof, and the Senior Debt shall
conclusively be deemed to have been created, contracted, incurred or maintained
in reliance upon the provisions hereof.
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(g) The Obligor hereby waives diligence, presentment, demand,
protest and notice of any kind whatsoever. The nonexercise by the Administrative
Agent or any other Senior Creditor of any of its rights hereunder in any
particular instance shall not constitute a waiver thereof in that or any
subsequent instance.
(h) The subordination provisions contained herein are for the
benefit of the Senior Creditors and their respective successors and assigns, and
the rights of any present or future holder of the Senior Debt to enforce the
subordination provisions contained herein, may not be rescinded, cancelled,
modified or impaired in any way without the prior written consent of the
Administrative Agent.
8. Prepayments. Subject to Section 7 hereof and the prior
payment in full of the Senior Debt, the Obligor may only repay this Note prior
to the Maturity Date, in whole or in part, in accordance with Section 4 hereof.
9. Defaults and Remedies. Subject to the subordination
provisions contained in this Note:
(a) Events of Default. An "Event of Default" shall occur if:
(i) the Obligor shall default in the payment of the
principal of this Note, when and as the same shall become due and payable,
whether at maturity or at a date fixed for prepayment or by acceleration or
otherwise; or
(ii) any event or condition shall occur that results
in the right of the holder of the Senior Debt to accelerate the maturity of any
Senior Debt, or of any other indebtedness in a principal amount aggregating
$3,000,000 or more; or
(iii) an involuntary proceeding shall be commenced or
an involuntary petition shall be filed in a court of competent jurisdiction
seeking (x) relief in respect of the Obligor or any Subsidiary, or of a
substantial part of its property or assets, under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other Federal or state
bankruptcy, insolvency, receivership or similar law, (y) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Obligor or any Subsidiary, or for a substantial part of its property or
assets, or (z) the winding up or liquidation of the Obligor or any Subsidiary;
or
(iv) the Obligor or any Subsidiary shall (A)
voluntarily commence any proceeding or file any petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other Federal or state bankruptcy, insolvency, receivership or similar law,
(B) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described in
clause (iv) above, (C) apply for or consent to the appointment of a receiver
trustee, custodian, sequestrator, conservator or similar official for the
Obligor or any Subsidiary, or for a substantial part of its property or assets,
(D) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (E) make a general assignment for the benefit
of creditors, (F) become
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unable, admit in writing its inability or fail generally to pay its debts as
they become due or (G) take any action for the purpose of effecting any of the
foregoing; or
(v) one or more judgments for the payment of money in
an aggregate amount in excess of $3,000,000 (to the extent not covered by
insurance) shall be rendered against the Obligor, any Subsidiary or both and the
same shall remain undischarged for a period of 30 days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of the Obligor or any
Subsidiary to enforce any such judgment; or
(vi) any material uninsured damage to or loss, theft
or destruction of any assets of the Obligor or its Subsidiaries shall occur that
has a material adverse effect on the assets, business or financial condition of
the Obligor.
(b) Acceleration. Subject to Section 7(d) hereof: (i) if an
Event of Default occurs under subsection (a)(iv) or (v) above, then the
outstanding principal of and all interest on this Note shall automatically
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which are expressly waived, (ii) if any other Event
of Default occurs and is continuing, the Holder, by written notice to the
Obligor, may declare the principal of and interest on the Note to be due and
payable immediately, (iii) upon such declaration, such principal and interest
shall become immediately due and payable, and (iv) the Holder of the Note may
rescind an acceleration and its consequences if all existing Events of Default
have been cured or waived, except nonpayment of principal or interest that has
become due solely because of the acceleration, and if the rescission would not
conflict with any judgment or decree.
10. Subrogation. After all amounts payable under or in respect
of the Senior Debt are paid in full, the Holder shall be subrogated to the
rights of holders of the Senior Debt to receive payments or distributions
applicable to the Senior Debt to the extent that distributions otherwise payable
to the Holder have been applied to the payment of the Senior Debt. A
distribution made under this Section 9 to a holder of the Senior Debt which
otherwise would have been made to the Holder is not, as between the Obligor and
the Holder, a payment by the Obligor on the Senior Debt.
11. Notices. All notices and other communications made
pursuant to the provisions of or in connection with this Note shall be in
writing and shall be deemed to have been duly made when delivered personally or
by express mail or courier or when sent by facsimile transmission with
confirmation received (provided a writing evidencing such transmission is mailed
by first class mail, postage prepaid within two (Business Days).
(a) If to the Holder, to c/o Infogrames Entertainment S.A.,
00, xxx xx 0xx Xxxx 0000, Xxxxxxxxxxxx, 00000, Xxxxxx, or to such other address
as the Holder may give notice of to the Obligor from time to time (with copies
to Pillsbury Madison & Sutro LLP, 00 Xxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx
00000, Attention: Xxxxxxxxx X. Xxxxxxxx XXX, Esq. and Xxxxxx X. Xxxxxxxxx, Esq.,
telecopy: (000) 000-0000).
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12
(b) If to the Obligor, GT Interactive Software Corp., 000
Xxxxx xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: _________________, telecopy:
(212) 715-_____ (with copies to Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxx, Esq., telecopy:
(000) 000-0000), or to such other address as the Obligor may give notice of to
the Holder from time to time.
12. Expenses. The Obligor shall pay all fees and expenses of
the Holder, including the reasonable fees and disbursements of the Holder's
counsel, incurred in connection with any claim, action or proceeding relating to
or arising out of this Note made by any Person (other than the Holder) against
either the Holder or any other Person in which the Holder is subsequently
impleaded or otherwise made a party, and any other claim, action or proceeding
in which the Holder exercises or enforces, or seeks to exercise or enforce, its
legal and equitable rights hereunder; provided, however, that each party hereto
shall pay its own expenses incurred in connection with the negotiation and
execution of this Note.
13. Entire Agreement. Each of the Obligor and the Holder
confirms that this Note constitutes the entire contract among the parties
relating to the subject matter hereof and supersedes any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof.
14. Severability. Any provision of this Note that is
prohibited or unenforceable in a jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
15. Successors and Assigns. All covenants and agreement of the
Obligor and the Holder under this Note shall be binding on the Obligor and the
Holder and their respective successors and assigns. Neither this Note nor any
interest therein shall be transferred or assigned prior to the Senior Debt
Payment Date without the prior written consent of the Administrative Agent;
provided, however, the Holder may transfer or assign all or any part of this
Note at any time to an affiliate of the Holder without such consent.
16. Amendments. No amendment, supplement, waiver or other
modification to this Note shall be effective without the prior written consent
of the Obligor, the Holder and, prior to the Senior Debt Payment Date, the
Administrative Agent.
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17. Governing Law. This Note shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New York
without giving effect to principles regarding conflicts of law.
GT INTERACTIVE SOFTWARE CORP.
By:_____________________________________
Title:
Acknowledged and Agreed:
By:_______________________________
Title:
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EXHIBIT 1
To GT Interactive Software Corp.:
The undersigned owner of this Note hereby irrevocably
exercises the option to convert $__________ principal amount of this Note into
shares of Common Stock of GT Interactive Software Corp. in accordance with the
terms of this Note, and directs that the shares issuable and deliverable upon
the conversion be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto.
Dated: ________________
[HOLDER]
By:___________________________________
Name:
Title:
Fill in for registration of shares of Common Stock if to be issued otherwise
than to the registered holder.
Name:
Address:
Social Security or Taxpayer ID Number:
