UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)
-----------------------
GT INTERACTIVE SOFTWARE CORP.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
36236E109
(CUSIP Number)
William E. Ford
c/o General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, Connecticut 06830
Tel. No.: (203) 629-8600
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
-----------------------
December 16, 1999
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 1(f) or 1(g), check the following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
36236E109 Page 2 of 15 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. Of Above Persons (entities only)
General Atlantic Partners, LLC
2 Check the Appropriate Box if a Member of a Group (a)[X]
(See Instructions) (b)[ ]
3 SEC Use Only
4 Source of Funds (See Instructions)
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
NUMBER OF -0-
SHARES
BENEFICIALLY OWNED 8 Shared Voting Power
BY EACH REPORTING
PERSON 19,928,525
WITH
9 Sole Dispositive Power
-0-
10 Shared Dispositive Power
19,928,525
11 Aggregate Amount Beneficially Owned by Each Reporting Person
19,928,525
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
13 Percent of Class Represented by Amount in Row (11)
17.2%
14 Type of Reporting Person (See Instructions)
OO
<PAGE>
36236E109 Page 3 of 15 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. Of Above Persons (entities only)
General Atlantic Partners 16, L.P.
2 Check the Appropriate Box if a Member of a Group (a)[X]
(See Instructions) (b)[ ]
3 SEC Use Only
4 Source of Funds (See Instructions)
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
NUMBER OF -0-
SHARES
BENEFICIALLY OWNED 8 Shared Voting Power
BY EACH REPORTING
PERSON 19,928,525
WITH
9 Sole Dispositive Power
-0-
10 Shared Dispositive Power
19,928,525
11 Aggregate Amount Beneficially Owned by Each Reporting Person
19,928,525
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
13 Percent of Class Represented by Amount in Row (11)
17.2%
14 Type of Reporting Person (See Instructions)
PN
<PAGE>
36236E109 Page 4 of 15 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. Of Above Persons (entities only)
General Atlantic Partners 19, L.P.
2 Check the Appropriate Box if a Member of a Group (a)[X]
(See Instructions) (b)[ ]
3 SEC Use Only
4 Source of Funds (See Instructions)
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
NUMBER OF -0-
SHARES
BENEFICIALLY OWNED 8 Shared Voting Power
BY EACH REPORTING
PERSON 19,928,525
WITH
9 Sole Dispositive Power
-0-
10 Shared Dispositive Power
19,928,525
11 Aggregate Amount Beneficially Owned by Each Reporting Person
19,928,525
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
13 Percent of Class Represented by Amount in Row (11)
17.2%
14 Type of Reporting Person (See Instructions)
PN
<PAGE>
36236E109 Page 5 of 15 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. Of Above Persons (entities only)
General Atlantic Partners II, L.P.
2 Check the Appropriate Box if a Member of a Group (a)[X]
(See Instructions) (b)[ ]
3 SEC Use Only
4 Source of Funds (See Instructions)
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
NUMBER OF -0-
SHARES
BENEFICIALLY OWNED 8 Shared Voting Power
BY EACH REPORTING
PERSON 19,928,525
WITH
9 Sole Dispositive Power
-0-
10 Shared Dispositive Power
19,928,525
11 Aggregate Amount Beneficially Owned by Each Reporting Person
19,928,525
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
13 Percent of Class Represented by Amount in Row (11)
17.2%
14 Type of Reporting Person (See Instructions)
PN
<PAGE>
36236E109 Page 6 of 15 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. Of Above Persons (entities only)
General Atlantic Partners 54, L.P.
2 Check the Appropriate Box if a Member of a Group (a)[X]
(See Instructions) (b)[ ]
3 SEC Use Only
4 Source of Funds (See Instructions)
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
NUMBER OF -0-
SHARES
BENEFICIALLY OWNED 8 Shared Voting Power
BY EACH REPORTING
PERSON 19,928,525
WITH
9 Sole Dispositive Power
-0-
10 Shared Dispositive Power
19,928,525
11 Aggregate Amount Beneficially Owned by Each Reporting Person
19,928,525
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
13 Percent of Class Represented by Amount in Row (11)
17.2%
14 Type of Reporting Person (See Instructions)
PN
<PAGE>
36236E109 Page 7 of 15 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. Of Above Persons (entities only)
GAP Coinvestment Partners II, L.P.
2 Check the Appropriate Box if a Member of a Group (a)[X]
(See Instructions) (b)[ ]
3 SEC Use Only
4 Source of Funds (See Instructions)
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
NUMBER OF -0-
SHARES
BENEFICIALLY OWNED 8 Shared Voting Power
BY EACH REPORTING
PERSON 19,928,525
WITH
9 Sole Dispositive Power
-0-
10 Shared Dispositive Power
19,928,525
11 Aggregate Amount Beneficially Owned by Each Reporting Person
19,928,525
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
13 Percent of Class Represented by Amount in Row (11)
17.2%
14 Type of Reporting Person (See Instructions)
PN
<PAGE>
36236E109 Page 8 of 15 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. Of Above Persons (entities only)
GAP Coinvestment Partners, L.P.
2 Check the Appropriate Box if a Member of a Group (a)[X]
(See Instructions) (b)[ ]
3 SEC Use Only
4 Source of Funds (See Instructions)
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
New York
7 Sole Voting Power
NUMBER OF -0-
SHARES
BENEFICIALLY OWNED 8 Shared Voting Power
BY EACH REPORTING
PERSON 19,928,525
WITH
9 Sole Dispositive Power
-0-
10 Shared Dispositive Power
19,928,525
11 Aggregate Amount Beneficially Owned by Each Reporting Person
19,928,525
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
13 Percent of Class Represented by Amount in Row (11)
17.2%
14 Type of Reporting Person (See Instructions)
PN
<PAGE>
36236E109 Page 9 of 15 Pages
AMENDMENT NO. 4 TO SCHEDULE 13D
This Amendment No. 4 ("Amendment No. 4") to Schedule 13D is filed by
the undersigned to amend and supplement the Schedule 13D, dated as of March 4,
1999 (the "Original 13D"), as amended by Amendment No. 1 thereto, dated as of
August 9, 1999 ("Amendment No. 1"), as amended by Amendment No. 2 thereto, dated
as of November 7, 1999 ("Amendment No. 2"), as amended by Amendment No.3
thereto, dated as of December 9, 1999, with respect to the shares of common
stock, par value $.01 per share (the "Common Stock"), of GT Interactive Software
Corp., a Delaware corporation (the "Company"). Capitalized terms used herein and
not otherwise defined shall have the meanings set forth in Amendment No. 2.
Item 3. Source and Amount of Funds or Other Consideration
This Amendment No. 4 is being filed as a result of an exchange between
the Company and each of GAP 54 and GAPCO II of Preferred Stock, subordinated
notes, Warrants and Options of each such entity, all as more fully described in
Item 5(c) below.
Item 5. Interest in Securities of the Issuer.
Item 5 is hereby amended and restated in its entirety as follows:
(a) As of the date hereof, GAP, GAP 16, GAP 19, GAP II and GAPCO each
owns of record no shares of Common Stock, 4,184,545 shares of Common Stock,
2,092,273 shares of Common Stock, 504,000 shares of Common Stock and 647,707
shares of Common Stock, respectively, or 0.0%, 4.1%, 2.1%, 0.5% and 0.6%,
respectively, of the Company's issued and outstanding shares of Common Stock. In
addition, as of the
<PAGE>
36236E109 Page 10 of 15 Pages
date hereof, (i) GAP 54 owns a Senior Subordinated Convertible Note convertible
into 10,203,000 shares of Common Stock or 9.0% of the Company's issued and
outstanding shares of Common Stock and (ii) GAPCO II owns a Senior Subordinated
Convertible Note convertible into 2,297,000 shares of Common Stock or 2.2% of
the Company's issued and outstanding shares of Common Stock.
By virtue of the fact that the GAP Managing Members are also the
general partners authorized and empowered to vote and dispose of the securities
held by GAPCO and GAPCO II, and that GAP is the general partner of GAP 16, GAP
19, GAP II and GAP 54, the Reporting Persons may be deemed to share voting power
and the power to direct the disposition of the shares of Common Stock owned by
each of the Reporting Persons. Accordingly, as of the date hereof, each of the
Reporting Persons may be deemed to own beneficially an aggregate of 19,928,525
shares of Common Stock or 17.2% of the Company's issued and outstanding shares
of Common Stock.
(b) Each of the Reporting Persons has the shared power to direct the
vote and the shared power to direct the disposition of the 19,928,525 shares of
Common Stock that may be deemed to be owned beneficially by each of them.
(c) On December 16, 1999, pursuant to the Securities Exchange
Agreement, dated as of November 15, 1999 (the "Exchange Agreement"), among the
Company, GAP 54 and GAPCO II, which Exchange Agreement is attached as Exhibit 2
to this Amendment No. 4, the Company (i) issued to GAP 54, a Senior Subordinated
Convertible Note (the "GAP 54 Note") with a face value $40,812,000, which note
is convertible at the option of GAP 54 into 10,203,000 shares of Common Stock
(subject to adjustment) and (ii) issued to GAPCO II, a Senior Subordinated
Convertible Note (the
<PAGE>
36236E109 Page 11 of 15 Pages
"GAPCO II Note"), with a face value of $9,188,000, which note is convertible at
the option of GAPCO II into 2,297,000 shares of Common Stock. The GAP 54 Note
was issued in consideration of the surrender to the Company by GAP 54 of its
489,744 shares of Preferred Stock and its subordinated note of the Company with
a face value $16,324,800. The GAPCO II Note was issued in consideration of the
surrender by GAPCO II to the Company of its 110,256 shares of Preferred Stock
and its subordinated note of the Company with a face value of $3,675,200.
In addition, on December 16, 1999, pursuant to the Equity Purchase and
Voting Agreement, dated as of November 15, 1999 (the "Equity Purchase
Agreement"), among Infogrames Entertainment S.A., California U.S. Holdings,
Inc., GAP 16, GAP 19, GAP II, GAP 54, GAPCO and GAPCO II, which Equity Purchase
Agreement is attached as Exhibit 3 of this Amendment No. 4, in consideration of
$990 (i) GAP 54 transferred to Infogrames its Warrant to purchase 3,673,080
shares of Common Stock and (ii) GAPCO II transferred to Infogrames its Warrant
to purchase 826,920 shares of Common Stock.
In connection with such transfers, GAP 54 and GAPCO II also (i)
relinquished all further rights to receive Additional Warrants, as contemplated
by the Warrant Agreement and (ii) relinquished all Options held by GAP 54 and
GAPCO II as of such date.
(d) No person other than the persons listed is known to have the right
to receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, any securities owned by any member of the group.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings, or Relationships With
Respect to the Securities of the Issuer.
Item 6 is hereby amended and restated in its entirety as follows:
<PAGE>
36236E109 Page 12 of 15 Pages
As noted above, the GAP Managing Members are the partners authorized
and empowered to vote and dispose of the securities held by GAPCO and GAPCO II
and GAP is the partner authorized and empowered to vote and dispose of the
securities held by GAP 16, GAP 19, GAP II and GAP 54. Accordingly, GAP and the
GAP Managing Members may, from time to time, consult among themselves and
coordinate the voting and disposition of the Company's shares of Common Stock
and such other action taken on behalf of the Reporting Persons with respect to
the Company's shares of Common Stock as them deem to be in the collective
interest of the Reporting Persons.
As described in Item 5(c) above, (i) GAP 54 and GAPCO II are parties to
the Exchange Agreement pursuant to which the Company issued to each of GAP 54
and GAPCO II the GAP 54 Note and the GAPCO II Note, respectively and (ii) GAP
16, GAP 19, GAP II, GAP 54, GAPCO and GAPCO II are parties to the Equity
Purchase Agreement pursuant to which GAP 54 and GAPCO II sold to the Company all
of their Warrants.
Item 1. Materials to be Filed as Exhibits.
Exhibit 1: Agreement relating to the filing of joint
acquisition statements as required by Rule
13d-1(k)(1) under the Securities Exchange Act
of 1934, as amended.
Exhibit 2: Exchange Agreement dated as of November 15,
1999, among the Company, GAP 54 and GAPCO II.
Exhibit 3: Equity Purchase and Voting Agreement, dated as
of November 15, 1999, among Infogrames
Entertainment S.A., California Holdings, Inc.,
GAP 16, GAP 19, GAP II, GAP 54, GAPCO and
GAPCO II.
Exhibit 4: Form of GAP 54 Note.
Exhibit 5: Form of GAPCO II Note.
Exhibit 6: Incorporate by reference the power of attorney
for GAP filed as Exhibit 5 to the Original
13D, which provides
<PAGE>
36236E109 Page 13 of 15 Pages
Thomas J. Murphy with the requisite power and
authority to sign this Amendment No. 4 on
behalf of GAP.
Exhibit 7: Incorporate by reference the power of attorney
for GAPCO filed as Exhibit 5 to the Original
13D, which provides Thomas J. Murphy with the
requisite power and authority to sign this
Amendment No. 4 on behalf of GAPCO.
Exhibit 8: Incorporate by reference the power of attorney
for GAPCO II filed as Exhibit 5 to the
Original 13D, which provides Thomas J. Murphy
with the requisite power and authority to sign
this Amendment No. 4 on behalf of GAPCO II.
<PAGE>
36236E109 Page 14 of 15 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment No. 4 is true, complete
and correct.
Dated as of December 23, 1999.
GENERAL ATLANTIC PARTNERS, LLC
By: /s/ Thomas J. Murphy
------------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GENERAL ATLANTIC PARTNERS 16, L.P.
By: General Atlantic Partners, LLC,
Its general partner
By: /s/ Thomas J. Murphy
------------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GENERAL ATLANTIC PARTNERS 19, L.P.
By: General Atlantic Partners, LLC,
Its general partner
By: /s/ Thomas J. Murphy
------------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
<PAGE>
36236E109 Page 15 of 15 Pages
GENERAL ATLANTIC PARTNERS II, L.P.
By: General Atlantic Partners, LLC,
Its general partner
By: /s/ Thomas J. Murphy
------------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GENERAL ATLANTIC PARTNERS 54, L.P.
By: General Atlantic Partners, LLC,
Its general partner
By: /s/ Thomas J. Murphy
------------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GAP COINVESTMENT PARTNERS, L.P.
By: /s/ Thomas J. Murphy
------------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GAP COINVESTMENT PARTNERS II, L.P.
By: /s/ Thomas J. Murphy
------------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
EXHIBIT 1
to SCHEDULE 13D
JOINT ACQUISITION STATEMENT
PURSUANT TO RULE 13D-(k)(1)
The undersigned acknowledge and agree that the foregoing statement on
Schedule 13D is filed on behalf of each of the undersigned and that all
subsequent amendments to this statement on Schedule 13D shall be filed on behalf
of each of the undersigned without the necessity of filing additional joint
acquisition statements. The undersigned acknowledge that each shall be
responsible for the timely filing of such amendments, and for the completeness
and accuracy of the information concerning him, her or it contained herein, but
shall not be responsible for the completeness and accuracy of the information
concerning the other entities or persons, except to the extent that he, she or
it knows or has reason to believe that such information is accurate.
Dated as of December 23, 1999
GENERAL ATLANTIC PARTNERS, LLC
By: /s/ Thomas J. Murphy
------------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GENERAL ATLANTIC PARTNERS 16, L.P.
By: General Atlantic Partners, LLC,
Its general partner
By: /s/ Thomas J. Murphy
------------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
<PAGE>
GENERAL ATLANTIC PARTNERS 19, L.P.
By: General Atlantic Partners, LLC,
Its general partner
By: /s/ Thomas J. Murphy
------------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GENERAL ATLANTIC PARTNERS II, L.P.
By: General Atlantic Partners, LLC,
Its general partner
By: /s/ Thomas J. Murphy
------------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GENERAL ATLANTIC PARTNERS 54, L.P.
By: General Atlantic Partners, LLC,
Its general partner
By: /s/ Thomas J. Murphy
------------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GAP COINVESTMENT PARTNERS, L.P.
By: /s/ Thomas J. Murphy
------------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
GAP COINVESTMENT PARTNERS II, L.P.
By: /s/ Thomas J. Murphy
------------------------
Name: Thomas J. Murphy
Title: Attorney-In-Fact
EXHIBIT 2
to SCHEDULE 13D
SECURITIES EXCHANGE AGREEMENT
SECURITIES EXCHANGE AGREEMENT, dated November 15, 1999 (the
"Agreement"), among GT Interactive Software Corp., a Delaware corporation (the
"Company"), General Atlantic Partners 54, L.P., a Delaware limited partnership
("GAP LP"), and GAP Coinvestment Partners II, L.P., a Delaware limited
partnership ("GAP Coinvestment" and, together with GAP LP, the "Stockholders").
WHEREAS, the Stockholders own (both beneficially and of record) the
number of shares of Series A Convertible Preferred Stock of the Company (the
"Preferred Stock") and the principal amount of the Company's Subordinated Notes
due July 29, 2000 (the "Subordinated Notes," and together with the Preferred
Stock, the "Securities") as set forth on Schedule 1 hereto;
WHEREAS, the Company, Infogrames Entertainment S.A. ("Infogrames") and
California U.S. Holdings, Inc. ("Infogrames US") are entering concurrently into
a Securities Purchase Agreement, dated as of November 15, 1999 (the "Purchase
Agreement"), pursuant to which Infogrames has agreed to make a major capital
investment in the Company; and
WHEREAS, in connection with the Purchase Agreement, and as a condition
to the willingness of Infogrames and Infogrames US to enter into the Purchase
Agreement, the Company has agreed to issue to the Stockholders, and the
Stockholders have agreed to accept, new securities in exchange for the
Securities.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Business Day" means any day other than 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.
"By-laws" means the by-laws of the Company in effect on the
Closing Date, as the same may be amended from time to time.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company, as the same may be amended from time to time.
<PAGE>
"Closing" has the meaning set forth in Section 2.3 of this
Agreement.
"Closing Date" has the meaning set forth in Section 2.3 of
this Agreement.
"Commission" means the Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" means the common stock, par value $.01 per
share, of the Company.
"Company" has the meaning set forth in the recitals to this
Agreement.
"Condition of the Company" means the assets, business,
properties, prospects, operations or financial condition of the Company and its
Subsidiaries, taken as a whole.
"Contractual Obligations" means as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument to
which such Person is a party or by which it or any of its property is bound.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"GAP Coinvestment" has the meaning set forth in the recitals
to this Agreement.
"GAP LLC" means General Atlantic Partners, LLC, a Delaware
limited liability company and the general partner of GAP LP, and any successor
to such entity.
"GAP LP" has the meaning set forth in the recitals to this
Agreement.
"Governmental Authority" means the government of any nation,
state, city, locality or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other) or preference,
priority, right or other security interest or preferential arrangement of any
kind or nature whatsoever (excluding preferred stock and equity related
preferences), including, without limitation, those created by, arising under or
evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease obligation, or any financing lease
having substantially the same economic effect as any of the foregoing.
"Notes" has the meaning set forth in Section 2.1 of this
Agreement,
"Orders" has the meaning set forth in Section 3.2 of this
Agreement.
2
<PAGE>
"Person" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.
"Purchase Agreement" has the meaning set forth in the recitals
to this Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of February 22, 1999 among the Company and the Stockholders.
"Requirements of Law" means, as to any Person, any law,
statute, treaty, rule, regulation, right, privilege, qualification, license or
franchise or determination of an arbitrator or a court or other Governmental
Authority or stock exchange, in each case applicable or binding upon such Person
or any of its property or to which such Person or any of its property is subject
or pertaining to any or all of the transactions contemplated or referred to
herein.
"SEC Documents" means all registration statements, proxy
statements, reports and other documents required to be filed by the Company
under the Securities Act or the Exchange Act and all amendments or supplements
thereto filed by the Company with the Commission since December 31, 1997.
"Securities" has the meaning set forth in the recitals to this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Stockholders" has the meaning set forth in the recitals to
this Agreement.
"Subsidiary" means, as of the relevant date of determination,
with respect to any Person, a corporation or other Person of which 50% or more
of the voting power of the outstanding voting equity securities is held,
directly or indirectly, by such Person. Unless otherwise qualified, or the
context otherwise requires, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Company.
"Transaction Documents" means this Agreement and the Notes.
ARTICLE 2
EXCHANGE OF SECURITIES
2.1 Exchange of Securities. Subject to the terms and conditions herein
set forth, the Company agrees to issue to each of the Stockholders, and each of
the Stockholders agrees that it will acquire from the Company, on the Closing
Date, the aggregate principal amount of senior subordinated convertible notes
set forth opposite such Stockholder's name on Schedule 2.1 hereto (all of such
notes being referred to herein as the "Notes"), in exchange for the Securities,
free and clear of all Liens.
3
<PAGE>
2.2 Notes. The Notes shall be substantially in the form attached hereto
as Exhibit A. 2.3 Closing. Subject to the satisfaction or waiver of the
conditions set forth in Articles 5 and 6 below, the closing of the transactions
contemplated by Section 2.1 (the "Closing") shall take place simultaneously
with, and at the same location as, the closing under the Purchase Agreement (the
"Closing Date"). On the Closing Date, the Company shall deliver to each
Stockholder the Notes being acquired by such Stockholder, against delivery by
such Stockholder to the Company of the certificate or certificates evidencing
the Securities held by such Stockholder, each such certificate being duly
endorsed in blank and accompanied by such stock powers and such other documents
as may reasonably be necessary in the Company's judgment to transfer record
ownership of the Securities.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Stockholders as follows:
3.1 Corporate Existence and Power. Each of the Company and its
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; (b) has all
requisite power and authority to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently, or is proposed to be, engaged, as described in the SEC Documents; (c)
is duly qualified as a foreign corporation, licensed and in good standing under
the laws of each jurisdiction in which its ownership, lease or operation of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified would not have a material adverse effect on
the Condition of the Company; and (d) has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and each of
the other Transaction Documents to which it is a party.
3.2 Authorization; No Contravention. The execution, delivery and performance by
the Company of this Agreement and the Notes and the transactions contemplated
hereby and thereby (a) have been duly authorized by all necessary corporate
action of the Company; (b) do not contravene the terms of the Certificate of
Incorporation or the By-laws, or any certificate of incorporation or by-laws or
other organizational documents of any of its Subsidiaries, except that the
Certificate of Incorporation shall be amended to increase the number of
authorized shares of Common Stock to permit the reservation of Common Stock
issuable upon conversion of the Notes; (c) do not violate, conflict with or
result in any breach or contravention of, or the creation of any Lien under, any
Contractual Obligation of the Company or any of its Subsidiaries, or any
Requirement of Law applicable to the Company or any of its Subsidiaries; and (d)
do not violate any judgment, injunction, writ, award, decree or order of any
nature (collectively, "Orders") of any Governmental Authority against, or
binding upon, the Company or any of its Subsidiaries; except in the case of
clauses (c) and (d) for violations, conflicts, breaches, contraventions or Liens
which would not have a material adverse effect on the Condition of the Company
or the ability of the Company to perform its obligations under this Agreement
and each of the other Transaction Documents.
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3.3 Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption, authorization or other action by, or notice to,
or filing with, any Governmental Authority or any other Person, and no lapse of
a waiting period under a Requirement of Law, other than customary filings with
the Commission for transactions of the type contemplated hereby, filings under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder and the filing of an amendment to
the Certificate of Incorporation with the Secretary of State of the State of
Delaware, is necessary or required in connection with the execution, delivery or
performance by, or enforcement against, the Company of this Agreement and the
Notes or the transactions contemplated hereby and thereby, except where the
failure to obtain an approval, consent, compliance, exemption, authorization or
other action or to make any filing would not have a material adverse effect on
the Condition of the Company or the ability of the Company to perform its
obligations under this Agreement or the Notes.
3.4 Binding Effect. This Agreement has been duly executed and delivered
by the Company, and, assuming the due authorization, execution and delivery by
the Stockholders, constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity). Upon execution and delivery by
the Company of the Notes, the Notes will constitute legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
3.5 Conversion. Subject to Section 7.3 of the Notes, the Company has
reserved an aggregate of 12,500,000 shares of Common Stock for issuance upon
conversion of the Notes. Subject to Section 7.3 of the Notes, the shares of
Common Stock issuable upon conversion of the Notes in accordance with the terms
of the Notes are duly authorized, and when issued to the Stockholders against
payment therefor, will be validly issued, fully paid and non-assessable, and
will be issued pursuant to an exemption from, or in compliance with the
registration and qualification requirements of all applicable federal and state
securities laws.
3.6 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the Company
or any of its Subsidiaries in connection with the transactions contemplated
hereby based on any agreement, arrangement or understanding with the Company or
any of its Subsidiaries or any action taken by any such Person.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Each of the Stockholders hereby represents and warrants (severally as
to itself and not jointly) to the Company as follows:
4.1 Existence and Power. Such Stockholder (a) is a partnership duly
organized and validly existing under the laws of the jurisdiction of its
formation and (b) has the requisite partnership power and authority to execute,
deliver and perform its obligations under this Agreement and each of the other
Transaction Documents to which it is a party.
4.2 Authorization; No Contravention. The execution, delivery and
performance by such Stockholder of this Agreement and the transactions
contemplated hereby (a) have been duly authorized by all necessary partnership
action, (b) do not contravene the terms of such Stockholder's organizational
documents, or any amendment thereof, and (c) do not violate, conflict with or
result in any breach or contravention of or the creation of any Lien under, any
Contractual Obligation of such Stockholder, or any Requirement of Law or Orders
applicable to such Stockholder.
4.3 Title. Such Stockholder is the owner (both beneficially and of
record) of the shares of Preferred Stock and holds the principal amount of the
Subordinated Notes as set forth opposite such Stockholder's name on Schedule 1.
Except to the extent resulting from the Equity Purchase and Voting Agreement
(the "Voting Agreement") among the Stockholders, certain affiliates of the
Stockholders and Infogrames, or for restrictions imposed by applicable
securities laws, such Stockholder owns all of such Securities free and clear of
all Liens. Such Stockholder has sole power of disposition with respect to all of
such Securities. Upon the acquisition of the Securities pursuant to Article 2,
the Company will receive good and valid title to the Securities, free and clear
of all Liens, except for restrictions imposed by the applicable securities laws.
4.4 Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person, and no lapse of
a waiting period under any Requirement of Law, is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, such Stockholder of this Agreement and each of the other Transaction
Documents to which such Stockholder is a party or the transactions contemplated
hereby and thereby.
4.5 Binding Effect. This Agreement has been duly executed and delivered
by such Stockholder and constitutes a legal, valid and binding obligation of
such Stockholder, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability (regardless of whether considered in a
proceeding at law or in equity).
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4.6 Purchase for Own Account. The Notes to be acquired by such
Stockholder pursuant to this Agreement are being or will be acquired for its own
account and with no intention of distributing or reselling such Notes or any
part thereof in any transaction that would be in violation of the securities
laws of the United States of America, or any state, without prejudice, however,
to the rights of such Stockholder at all times to sell or otherwise dispose of
all or any part of such Notes under an effective registration statement under
the Securities Act, or under an exemption from such registration available under
the Securities Act, and subject, nevertheless, to the disposition of such
Stockholder's property being at all times within its control. If such
Stockholder should in the future decide to dispose of any of such Notes, such
Stockholder understands and agrees that it may do so only in compliance with the
Securities Act and applicable state securities laws, as then in effect. Such
Stockholder agrees to the imprinting, so long as required by law, of legends on
certificates representing all of its Notes and shares of Common Stock issuable
upon conversion of its Notes to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE TRANSFERRED
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.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE ENTITLED TO THE
BENEFITS OF A REGISTRATION RIGHTS AGREEMENT AMONG GT INTERACTIVE
SOFTWARE CORP. AND THE ORIGINAL PURCHASERS OF THE NOTES REPRESENTED
HEREBY. TRANSFEREES OF SUCH SECURITIES SHOULD REVIEW SUCH AGREEMENT TO
DETERMINE THEIR RIGHTS.
4.7 Restricted Securities. Such Stockholder understands that the Notes
will not be registered at the time of their issuance under the Securities Act
for the reason that the sale provided for in this Agreement is exempt pursuant
to Section 4(2) of the Securities Act and that the reliance of the Company on
such exemption is predicated in part on such Stockholder's representations set
forth herein.
4.8 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the
Stockholders, in connection with the transactions contemplated hereby based on
any agreement, arrangement or understanding with the Stockholders or any action
taken by the Stockholders.
4.9 Accredited Investors. Such Stockholder is an accredited investor
within the meaning of Rule 501(a) under the Securities Act.
4.10 Transfer. On the date hereof, such Stockholder has no present
intention to transfer such Stockholder's Notes to any Person that is not an
affiliate of such Stockholder.
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ARTICLE 5
CONDITIONS TO THE OBLIGATION
OF THE STOCKHOLDERS TO CLOSE
The obligation of the Stockholders to exchange the Securities for the
Notes at the Closing and to perform any obligations hereunder shall be subject
to the satisfaction as determined by, or waiver by, the Stockholders of the
following conditions on or before the Closing Date.
5.1 Purchase Agreement. The consummation of the transactions
contemplated by the Purchase Agreement shall have occurred at or prior to the
Closing.
5.2 Operation of Law. Consummation by the Company of the acquisition of
the Preferred Stock in exchange for the Notes shall not violate Section 160 of
the General Corporation Law of the State of Delaware.
5.3 Notes. The Company shall be prepared to deliver to the Stockholders
the principal amount of Notes set forth opposite such Stockholder's name on
Schedule 2.1 hereto, registered in the name of such Stockholder, as applicable.
5.4 Subordination. The Stockholders, the Company and Infogrames US
shall have entered into a Subordination Agreement in form and substance
reasonably satisfactory to the Stockholders
5.5 Representations and Warranties. All of the representations and
warranties of the Company contained in Article 3 hereof shall be true and
correct in all material respects on the Closing Date, as if made by the Company
on such date.
ARTICLE 6
CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE
The obligation of the Company to issue the Notes and the obligation of
the Company to perform its other obligations hereunder, shall be subject to the
satisfaction as determined by, or waiver by, the Company of the following
conditions on or before the Closing Date:
6.1 Purchase Agreement. The consummation of the transactions
contemplated by the Purchase Agreement shall have occurred at or prior to the
Closing.
6.2 Operation of Law. Consummation by the Company of the acquisition of
the Preferred Stock in exchange for the Notes shall not violate Section 160 of
the General Corporation Law of the State of Delaware.
6.3 Payment of Purchase Price. Each Stockholder shall be prepared to
deliver the Securities.
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6.4 Representations and Warranties. All of the representations and
warranties of the Stockholders contained in Article 4 hereof shall be true and
correct in all material respects on the Closing Date, as if made by the
Stockholders on such date.
ARTICLE 7
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees with the Stockholders as
follows:
7.1 No Disposition or Encumbrance of Securities. Each Stockholder
hereby covenants and agrees that from the date hereof until the consummation of
the transactions contemplated by the Purchase Agreement, except as contemplated
by this Agreement, such Stockholder shall not, and shall not offer or agree to,
sell, transfer, tender, assign, hypothecate or otherwise dispose of, or create
or permit to exist any Lien with respect to, the Securities, except to the
extent resulting from the Voting Agreement.
7.2 Financial Statements and Other Information. The Company shall
deliver to each Stockholder at any time when the Company is not subject to
Section 13 or 15(d) of the Exchange Act, upon request of such Stockholder,
information of the type that would satisfy the requirements of Rule 144(c)(2)
and Rule 144A(d)(4)(i) (or any similar successor-provisions thereof) under the
Securities Act.
7.3 Reservation of Common Stock. The Company shall at all times reserve
and keep available out of its authorized shares of Common Stock, solely for the
purpose of issue or delivery upon conversion of the Notes, the maximum number of
shares of Common Stock that may be issuable or deliverable upon such conversion;
provided, however, that to the extent the Company, as of the date hereof, has an
insufficient number of authorized shares of Common Stock reserved for issuance
upon conversion of the Notes, the Company shall use commercially reasonable
efforts to take all actions necessary to increase and reserve for issuance such
number of authorized shares of Common Stock as is equal to the maximum number of
shares of Common Stock that may be issuable or deliverable upon conversion of
the Notes, which actions shall include preparing, filing and mailing an
information statement on Schedule 14C under the Securities Exchange Act of 1934
as soon as practicable. The Company shall issue all such shares of Common Stock
in accordance with the terms of the Certificate of Incorporation, as amended,
and otherwise comply with the terms hereof and thereof.
7.4 Registration and Listing. If any shares of Common Stock required to
be reserved for purposes of conversion of the Notes require registration with or
approval of any Governmental Authority under any Federal or state or other
applicable law before such shares of Common Stock may be issued or delivered
upon conversion, the Company will in good faith and as expeditiously as possible
cause such shares of Common Stock to be duly registered or approved, as the case
may be. The Stockholders will cooperate with the Company, as necessary, in
preparing any documents or making any filings in connection with such
registration or approval. So long as the Common Stock is quoted on The Nasdaq
Stock Market, Inc. or listed on any national securities exchange, the Company
will, if permitted by the rules of such system
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or exchange, quote or list and keep quoted or listed on such system or exchange,
upon official notice of issuance, all shares of Common Stock issuable or
deliverable upon conversion or exchange of the Notes.
7.5 Amendment of Warrant Agreement. The Company and the Stockholders
agree that the Warrant Agreement dated as of June 29, 1999 (the "Warrant
Agreement") among the Company and the holders named therein shall be amended as
follows:
(a) Section 4.3 of the Warrant Agreement shall be amended by adding the
following sentence to the end of the first paragraph of such Section
4.3:
Notwithstanding any other provision of this Section
4.3, to the extent any adjustment would arise
pursuant to this Section 4.3 as a result of
consummation of the transactions contemplated by the
Securities Purchase Agreement dated as of November
15, 1999 by and among the Company, Infogrames
Entertainment S.A. and California U.S. Holdings,
Inc., the number of additional shares of Common Stock
purchasable upon exercise of any Warrant due to such
adjustment shall be equal to the product of 1.6610
and the increase in the number of shares of Common
Stock purchasable upon exercise of the Warrants held
by the Administrative Agent and the Lenders issued
pursuant to the Warrant Agreement dated June 29, 1999
among the Company, the Administrative Agent and the
Lenders.
(b) The third sentence of Section 4.4 of the Warrant Agreement shall be
deleted in its entirety and substituting therefor the following:
Notwithstanding any other provision of this Section
4.4, the number of shares of Common Stock purchasable
upon exercise of any Warrant shall not be adjusted
pursuant to this Section 4.4 as a result of the
issuance or sale of Common Stock in connection with:
(a) a bona fide firm commitment underwritten public
offering of Common Stock of the Company, (b) a
transaction to which Section 4.1, 4.2 or 4.3 is
applicable, (c) the exercise of the Warrants, the
exercise of any other warrants issued by the Company
prior to the date of this Agreement or the exercise
of any warrants issued in connection with the Second
Amendment, (d) a private placement of Common Stock of
the Company sold for a cash purchase price not more
than 10% below the Current Market Value of the Common
Stock so sold in such private placement, (e) the
exercise of rights or options issued to the Company's
employees under bona fide employee benefit plans
adopted by the Board and approved by the holders of
Common Stock when required by law, if such Common
Stock would otherwise be covered by this Section 4.4,
and (f) to the extent any adjustment would arise
pursuant to this Section 4.4 as a result of
consummation of the transactions contemplated by the
Securities Purchase Agreement dated as of November
15, 1999 by and among the Company, Infogrames
Entertainment S.A. and California U.S. Holdings,
Inc., the
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number of additional shares of Common Stock
purchasable upon exercise of any Warrant due to such
adjustment shall be equal to the product of 1.6610
and the increase in the number of shares of Common
Stock purchasable upon exercise of the Warrants held
by the Administrative Agent and the Lenders issued
pursuant to the Warrant Agreement dated June 29, 1999
among the Company, the Administrative Agent and the
Lenders.
(c) Except as expressly amended pursuant to this Agreement, the Warrant
Agreement is and shall continue to be in full force and effect in
accordance with its terms.
7.6 Subordination. Each Stockholder agrees that the Short-Term Note (as
defined in the Purchase Agreement) shall be deemed for all purposes of its
respective Subordinated Note to be Senior Debt (as defined in the Subordinated
Note), including without limitation with respect to rights and remedies of the
holders of Senior Debt and the obligations of the Stockholders as they relate to
Senior Debt.
ARTICLE 8
TERMINATION OF AGREEMENT
8.1 Termination. This Agreement may be terminated prior to the Closing
as follows:
(a) at any time on or prior to the Closing Date, by mutual written
consent of the Company and the Stockholders; or
(b) upon the termination of the Purchase Agreement; or
(c) at any time after September 30, 2000, by written notice of either
party.
If this Agreement so terminates, it shall become null and void and have
no further force or effect, except as provided in Section 8.2.
8.2 Survival. If this Agreement is terminated and the transactions
contemplated hereby are not consummated as described above, this Agreement shall
become void and of no further force and effect; except for the provisions of
this Section 8.2; provided, that none of the parties hereto shall have any
liability in respect of a termination of this Agreement pursuant to Section
8.1(a) or Section 8.1(b); and provided, further, that none of the parties hereto
shall have any liability for speculative, indirect, unforeseeable or
consequential damages resulting from any legal action relating to this Agreement
or any termination of this Agreement.
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ARTICLE 9
MISCELLANEOUS
9.1 Survival of Representations and Warranties. The representations and
warranties made herein shall survive the execution and delivery of this
Agreement, notwithstanding any investigation made or information obtained by the
other party but shall terminate at Closing except for those contained in
Sections 3.1, 3.2, 3.3, 3.4, 3.5, 4.1, 4.2, 4.3, 4.4 and 4.5 hereof and this
Section 9.1 which shall survive beyond the Closing.
9.2 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, telecopier, courier
service or personal delivery:
(a) if to the Company, to:
GT Interactive Software Corp.
417 Fifth Avenue
New York, NY 10016
Telecopy: (212)
Attention: Chief Executive Officer
with a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Telecopy: (212) 715-8000
Attention: David P. Levin, Esq.
(b) if to the Stockholders, to:
c/o General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, Connecticut 06830
Telecopy: (203) 622-8818
Attention: William E. Ford
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopy: (212) 757-3990
Attention: Matthew Nimetz, Esq.
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
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commercial courier service; five (5) Business Days after being deposited in the
mail, postage prepaid, if mailed; and when receipt is mechanically acknowledged,
if telecopied.
9.3 Successors and Assigns; Third Party Beneficiaries. 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, each of
the Stockholders may assign any of its rights, but not its obligations, under
this Agreement to any of its affiliates. The Company may not assign any of its
rights under this Agreement without the written consent of the Stockholders. No
Person other than the parties hereto and their successors and permitted assigns
is intended to be a beneficiary of this Agreement.
9.4 Amendment and Waiver.
(a) No failure or delay on the part of the Company or the Stockholders
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 remedies
provided for herein are cumulative and are not exclusive of any
remedies that may be available to the Company or the Stockholders at
law, in equity or otherwise.
(b) 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 by the Company or the Stockholders from the
terms of any provision of this Agreement, shall be effective only if it
is made or given in writing and signed by the Company and the
Stockholders. Except where notice is specifically required by this
Agreement, no notice to or demand on the Company in any case shall
entitle the Company to any other or further notice or demand in similar
or other circumstances.
9.5 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.
9.6 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
9.7 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 ANY JURISDICTION.
9.8 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
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provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof.
9.9 Entire Agreement. This Agreement, together with the exhibits and
schedules hereto, and the other Transaction 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 and
schedules hereto and the other Transaction Documents, supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
9.10 Fees. Upon the Closing, the Company shall reimburse the
Stockholders for their reasonable fees, disbursements and other charges of
counsel incurred in connection with the transactions contemplated by this
Agreement.
9.11 Publicity. Except as may be required by applicable Requirement of
Law, none of the parties hereto shall issue a publicity release or public
announcement or otherwise make any disclosure concerning this Agreement or the
transactions contemplated hereby, without prior approval by the other parties
hereto (which approval shall not be unreasonably withheld); provided, however,
that nothing in this Agreement shall restrict any Stockholder from disclosing
information (a) that is already publicly available; (b) to the prospective
transferee in connection with any contemplated transfer of any of the Notes; and
(c) to its attorneys, accountants, consultants and other advisors to the extent
necessary to obtain their services in connection with such Stockholder's
investment in the Company. GAP LLC may disclose on its worldwide web page,
www.gapartners.com, the name of the Company, its address, the identity of the
Chief Executive Officer, a description of the Company's business and the
aggregate dollar amount invested by the Stockholders in the Company; provided,
that GAP LLC shall not disclose any information pertaining to the transactions
contemplated under this Agreement or the Transaction Documents at any time prior
to the publication of a press release by the Company. 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.
9.12 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, and otherwise fulfilling, or causing the fulfillment of, the
conditions to Closing set forth in Articles 5 and 6) as may be reasonably
required or desirable to carry out or to perform the provisions of this
Agreement and to consummate and make effective as promptly as possible the
transactions contemplated by this Agreement.
9.13 Registrable Securities. The parties hereby agree and acknowledge
that all of the shares of Common Stock issuable upon conversion of the Notes
constitute "Registrable Securities" within the meaning of the Registration
Rights Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Securities
Exchange Agreement to be executed and delivered by their respective officers
hereunto duly authorized on the date first above written.
GT INTERACTIVE SOFTWARE CORP.
By: /s/ Thomas Heymann
----------------------
Name: Thomas Heymann
Title: Chief Executive Officer
GENERAL ATLANTIC PARTNERS 54, L.P.
By: GENERAL ATLANTIC PARTNERS, LLC,
its General Partner
By: /s/ William E. Ford
-----------------------
Name: William E. Ford
Title: Managing Member
GAP COINVESTMENT PARTNERS II, L.P.
By: /s/ William E. Ford
-----------------------
Name: William E. Ford
Title: General Partner
<PAGE>
Schedule 1
Preferred Stock
---------------
Stockholder Preferred Stock Subordinated Notes
- ----------- --------------- ------------------
GAP LP 489,744 $16,324,800
GAP Coinvestment 110,256 $ 3,675,200
------- -----------
Total: 600,000 $20,000,000
EXHIBIT 3
to SCHEDULE 13D
EQUITY PURCHASE AND VOTING AGREEMENT
THIS EQUITY PURCHASE AND VOTING AGREEMENT (this "Agreement"), dated as
of November 15, 1999, between Infogrames Entertainment S.A., a societe anonyme
organized under the laws of France ("Parent"), California U.S. Holdings, Inc., a
wholly owned subsidiary of Parent ("Purchaser"), and each of the following:
General Atlantic Partners 16, L. P., a Delaware limited partnership, General
Atlantic Partners 19, L. P., a Delaware limited partnership, General Atlantic
Partners II, L. P., a Delaware limited partnership, General Atlantic Partners
54, L. P., a Delaware limited partnership, GAP Coinvestment Partners, L. P., a
New York limited partnership, and GAP Coinvestment Partners II, L. P., a
Delaware limited partnership (each "Stockholder" and collectively
"Stockholders").
W I T N E S S E T H:
WHEREAS, each Stockholder owns (both beneficially and of record) (i)
the number of shares of common stock, par value $.01 per share ("Common Stock"),
(ii) the number of shares of Series A Convertible Preferred Stock, par value
$.01 per share, ("Preferred Stock"), and (iii) warrants for the purchase of that
number of shares, and at the exercise price per share, of Common Stock
("Warrants"), of GT Interactive Software Corp., a Delaware corporation (the
"Company"), in each case as set forth opposite such Stockholder's name on
Schedule 1 hereto; and
WHEREAS, Parent intends Purchaser to buy from Stockholders, and
Stockholders intend to sell to Purchaser, the Warrants set forth on Schedule 1,
together with any Warrants of the Company hereafter acquired beneficially or of
record by any Stockholder (the "Subject Warrants"); and
WHEREAS, in connection herewith, and as a condition to the willingness
of the Company to approve the transactions described in this Agreement, Parent
and Purchaser are entering concurrently herewith into a Securities Purchase
Agreement with the Company, dated as of November 15, 1999 (the "Purchase
Agreement"), pursuant to which Purchaser has agreed to make a major capital
investment in the Company; and
WHEREAS, as a condition to the willingness of Parent to enter into the
Purchase Agreement, Parent has required that Stockholders agree, and in order to
induce Parent to enter into the Purchase Agreement, Stockholders have agreed,
among other things, (i) to exchange their respective holdings of Preferred Stock
and subordinated debt of the Company for convertible subordinated debt pursuant
to an Exchange Agreement of even date herewith between Stockholders and Company
(the "Exchange Agreement") and (ii) in accordance with the terms of this
Agreement, (a) to appoint Purchaser as Stockholder's proxy to vote the Voting
Shares (as defined herein) and (b), with respect to certain questions put to
stockholders of the Company for a vote, to vote the Voting Shares:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
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<PAGE>
1. Purchase and Sale of Subject Warrants.
1.1 Purchase of Warrants. On the terms and subject to the conditions
set forth in this Agreement, Purchaser shall purchase from each Stockholder, and
each Stockholder shall sell and transfer to Purchaser, on the Closing Date all
of such Stockholder's Subject Warrants for the consideration per underlying
share of $0.00022, free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on voting
rights, charges and other encumbrances of any nature whatsoever (collectively,
"Liens") except for any Lien imposed by applicable securities laws, the express
terms of the Warrant Agreement (as defined in Section 2.1 hereof) or the express
terms of the Exchange Agreement.
1.2 Conditions to Closing. The obligations of the parties to consummate
the transactions contemplated by Section 1.1 hereof are subject to the following
conditions: (a) any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") applicable to the purchase
of the Subject Warrants shall have expired or been terminated and any applicable
foreign antitrust requirements shall have been satisfied, (b) there shall be no
preliminary or permanent injunction or other order by any court of competent
jurisdiction restricting, preventing or prohibiting the delivery of the Subject
Warrants and (c) the closings under the Purchase Agreement and the Exchange
Agreement shall have occurred at or prior to the Closing. Parent and
Stockholders each shall promptly after the date hereof make such filings and
provide such information as may be required under the HSR Act or any applicable
foreign antitrust laws with respect to the sale of the Subject Warrants.
1.3 Closing. Subject to the conditions contained in Section 1.2, the
closing of the transactions contemplated by Section 1.1 hereof (the "Closing")
shall occur simultaneously with, and at the same location as, the closing under
the Purchase Agreement (the date of the Closing being the "Closing Date"). Each
Stockholder shall deliver to Purchaser at the Closing an instrument or
instruments evidencing such Stockholder's Subject Warrants, each such instrument
being duly endorsed in blank and accompanied by such other documents as may
reasonably be necessary in Purchaser's judgment to transfer record ownership of
such Subject Warrants into Purchaser's name on the warrant transfer books of the
Company.
1.4 Adjustments Upon Changes in Capitalization. In the event of any
change in the number of issued and outstanding shares of capital stock of the
Company by reason of any stock dividend, subdivision, merger, recapitalization,
combination, conversion or exchange of shares, or any other change in the
corporate or capital structure of the Company (including, without limitation,
the declaration or payment of a dividend of cash or securities or the issuance
of any securities not contemplated by the Purchase Agreement) which would have
the effect of diluting or otherwise adversely affecting Parent's or Purchaser's
rights and privileges or prospective rights and privileges under this Agreement,
the number and kind of the Subject Warrants and the consideration payable in
respect of the Subject Warrants shall be appropriately and equitably adjusted to
restore to Parent and Purchaser such respective rights and privileges.
1.5 Preferred Stock Consent. Stockholder, in its capacity as the holder
of shares of Preferred Stock set forth in Schedule 1 hereto, hereby consents to
the Transactions (as defined in Section 5.1). Without limiting the generality of
the foregoing, Stockholder hereby waives any rights it may have as a holder of
shares of Preferred Stock to the following, as a result of
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<PAGE>
the Transactions: (a) to receive dividends on the Preferred Stock; (b) to
receive the Liquidation Preference (as defined in Section 4(a) of the
Certificate of Designation (the "Certification of Designation") of Series A
Convertible Preferred Stock of the Company); and (c) to receive any notices
pursuant to Section 7(j) of the Certificate of Designation or otherwise;
provided, however, that such consent and waiver is conditioned upon the
consummation of all of the Transactions, including the transactions contemplated
by the Exchange Agreement.
2. Representations and Warranties of Stockholders. Each Stockholder
hereby represents and warrants, severally with respect to itself/and not
jointly, to Parent and Purchaser the following as of the date hereof and the
Closing:
2.1 Title to the Subject Warrants, etc. Stockholder is the owner (both
beneficially and of record) of the Subject Warrants. Except for (a) the Subject
Warrants, (b) the shares of Common Stock and Preferred Stock set forth on
Schedule 1 hereto (together with any shares of Common Stock or Preferred Stock
hereafter acquired of record or beneficially by Stockholder, the "Voting
Shares") and (c) the securities to be purchased from the Company pursuant to the
Exchange Agreement, Stockholder is not the record or beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of,
and does not have any other rights of any nature to acquire any additional
shares of, any capital stock of the Company. Except, (i) to the extent resulting
from the Exchange Agreement or (ii) for restrictions imposed by applicable
securities laws or the express terms of the Warrant Agreement, dated as of June
29, 1999, among the Company and the holders named therein (the "Warrant
Agreement"), Stockholder owns all of its Subject Warrants and the Voting Shares
free and clear of all Liens and, except pursuant to the provisions of this
Agreement, Stockholder has not appointed or granted any proxy, which appointment
or grant is still effective, with respect to any of the Voting Shares.
Stockholder has sole power of disposition with respect to all of its Subject
Warrants and Voting Shares and has sole voting power of the Voting Shares with
respect to the matters set forth in Section 5 hereof. Upon the purchase of the
Subject Warrants pursuant to Section 1, Purchaser will receive good and valid
title to the Subject Warrants, free and clear of all Liens, except for
restrictions imposed by the applicable securities laws.
2.2 Authority Relative to This Agreement. Stockholder has all necessary
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Stockholder
and, assuming the due authorization, execution and delivery by Parent and
Purchaser, constitutes a legal, valid and binding obligation of Stockholder,
enforceable against Stockholder in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity.
2.3 Conflict. The execution and delivery of this Agreement by
Stockholder does not, and the performance of this Agreement by Stockholder will
not, (a) except for any filings required under the HSR Act and for requirements
of any applicable foreign antitrust laws or of U.S. federal and state securities
laws, require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority of the United
States or any political subdivision thereof, (b) conflict with or violate the
organizational documents of the Stockholder, or (c) conflict with, violate or
result in any breach of or constitute a default under (or an event which with
notice or lapse of time or both would become a default under) any agreement,
judgment, injunction, order, law, rule, regulation, decree or arrangement to
which Stockholder is a party or by which Stockholder is bound.
-3-
<PAGE>
2.4 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Stockholder.
2.5 No Claims. Except as set forth on Schedule 2.5 hereto, as of the
date hereof neither the Company, any subsidiary of the Company, the partnership
between Reflections Interactive Limited and Martin Lee Edmondson created under
the Deed of Partnership dated December 4, 1998, as amended, nor Oddworld
Inhabitants, Inc. has any liabilities (absolute, accrued, contingent or
otherwise) to Stockholder or any affiliate thereof.
3. Representations and Warranties of Parent and Purchaser. Parent and
Purchaser hereby represent and warrant to Stockholder as follows:
3.1 Authority Relative to This Agreement. Each of Parent and Purchaser
has all necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by each of
Parent and Purchaser and the consummation by each of Parent and Purchaser of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Parent and Purchaser, respectively.
This Agreement has been duly and validly executed and delivered by each of
Parent and Purchaser and, assuming the due authorization, execution and delivery
by Stockholder, constitutes a legal, valid and binding obligation of each of
Parent and Purchaser, enforceable against each of Parent and Purchaser in
accordance with its terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
3.2 No Conflict. The execution and delivery of this Agreement by Parent
and Purchaser do not, and the performance of this Agreement by Parent and
Purchaser will not, (a) except for any filings required under the HSR Act and
for requirements of any applicable foreign antitrust laws or of federal and
state securities laws, require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority,
domestic or foreign, (b) conflict with or violate the organizational documents
of Parent or Purchaser, (c) conflict with, violate or result in any breach of or
constitute a default under (or an event which with notice or lapse of time or
both would become a default under) any agreement, judgment, injunction, order,
law, rule, regulation, decree or arrangement applicable to Parent or Purchaser
or by which any property or asset of Parent or Purchaser is bound or affected,
other than, in the case of clause (c), any such conflicts, violations, breaches
or defaults that, individually or in the aggregate, would not materially impair
the ability of Parent or Purchaser to perform its obligations hereunder.
3.3 Brokers. Except for Lazard Freres & Co. LLC, whose fees will be
paid by Parent, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Parent or Purchaser.
-4-
<PAGE>
4. Covenants of Stockholder.
4.1 No Disposition or Encumbrance of Subject Warrants or Voting Shares.
Each Stockholder hereby covenants and agrees that from the date hereof until the
delivery by the Company to Purchaser of the Shares (as defined in the Purchase
Agreement) (the "Purchase Agreement Closing"), except as contemplated by this
Agreement, Stockholder shall not, and shall not offer or agree to, sell,
transfer, tender, assign, hypothecate or otherwise dispose of, or create or
permit to exist any Lien with respect to the Subject Warrants or Voting Shares.
4.2 No Solicitation of Transactions. Each Stockholder shall not, nor
(subject to Section 7.14) shall it permit any of its subsidiaries or affiliates
to, nor shall it authorize or permit any of its officers, directors or employees
or any investment banker, financial advisor, attorney, accountant, agent or
other representative retained by it or any of its subsidiaries or affiliates to,
directly or indirectly, from the date hereof until the Purchase Agreement
Closing, (a) solicit, initiate or knowingly encourage (including by way of
furnishing information) any inquiries or the making of any proposal which
constitutes, or may reasonably be expected to lead to, any Company Takeover
Proposal (as defined below); (b) participate in any discussions or negotiations
regarding any Company Takeover Proposal or (c) enter into any agreement,
understanding or arrangement with respect to the foregoing. For purposes of this
Agreement, the term "Company Takeover Proposal" means any bona fide proposal or
offer, whether in writing or otherwise, from any Person other than Parent,
Purchaser or any affiliates thereof (a "Third Party") to acquire beneficial
ownership (as defined under Rule 13-d of the Exchange Act) of all or a material
portion of the assets of the Company and the Company Subsidiaries taken as a
whole or more than fifty percent (50%) of any class of equity securities of the
Company pursuant to a merger, consolidation or other business combination, sale
of shares of capital stock, sale of assets, tender offer, exchange offer or
similar transaction with respect to either the Company or any of the Company
Subsidiaries, including any single or multi-step transaction or series of
related transactions, which is structured to permit such Third Party to acquire
beneficial ownership of any material portion of the assets of the Company and
its Subsidiaries taken as a whole or more than 50% of such equity interest in
the Company.
4.3 Compliance of Stockholder with this Agreement. Each Stockholder
shall take all actions and forbear from all actions, in each case, necessary in
order that (a) all of such Stockholder's representations and warranties
hereunder are true and correct and (b) such Stockholder fulfills all of its
obligations hereunder.
5. Voting Agreement; Proxy.
5.1 Voting Agreement. Subject to and without limiting the effect of Section 5.2,
each Stockholder hereby agrees that, from the date hereof until the Purchase
Agreement Closing, at any meeting of the stockholders of the Company, however
called, and in any action by written consent of the stockholders of the Company,
Stockholder shall, to the extent applicable, (a) vote (or execute a consent in
respect of) all of the Voting Shares in favor of any of the transactions or
other matters contemplated by the Transaction Documents (as defined in the
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<PAGE>
Purchase Agreement) (the "Transactions"); and (b) vote (or execute a consent in
respect of) the Voting Shares against any action or agreement that would
reasonably be expected to impede, interfere with, delay or attempt to discourage
any of the Transactions, including, but not limited to: (i) any extraordinary
corporate transaction (other than the Transactions), such as a merger,
reorganization, recapitalization or liquidation involving the Company or any of
the Company Subsidiaries (as defined in the Purchase Agreement) or any proposal
made in opposition to or in competition with the Transactions; (ii) a sale or
transfer of a material amount of assets of the Company or any of the Company
Subsidiaries; (iii) any change (other than the Transactions) in the management
or board of directors of the Company, except as otherwise agreed to in writing
by Parent; (iv) any material change (other than the Transactions) in the present
capitalization or dividend policy of the Company; or (v) any other material
change (other than the Transactions) in the corporate structure or business of
the Company or any of the Company Subsidiaries.
5.2 Irrevocable Proxy. Each Stockholder hereby appoints Purchaser as
the attorney and proxy of Stockholder, with full power of substitution, to vote,
and otherwise act (by written consent or otherwise) with respect to all of the
Voting Shares that such Stockholder is entitled to vote at any meeting of
stockholders of the Company (whether annual or special and whether or not an
adjourned or postponed meeting) or consent in lieu of any such meeting or
otherwise, on the matters and in the manner specified in Section 5.1. THIS PROXY
AND POWER OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN INTEREST AND IS
EXECUTED AND INTENDED TO BE IRREVOCABLE IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 212(e) OF THE DELAWARE GENERAL CORPORATION LAW ("DGCL"). Each
Stockholder hereby revokes, effective upon the execution and delivery of the
Purchase Agreement by the parties thereto, all other proxies and powers of
attorney with respect to the Voting Shares to which this proxy and power of
attorney relates that such Stockholder may have heretofore appointed or granted,
and no subsequent proxy or power of attorney (except in furtherance of such
Stockholder's obligations under Section 5.1 hereof) shall be given or written
consent executed (and if given or executed, shall not be effective) by such
Stockholder with respect thereto so long as this Agreement remains in effect.
6. Termination. This Agreement (including any power of attorney and
proxy granted pursuant to Section 5.2 hereof or otherwise) shall terminate
automatically on the earlier of the Purchase Agreement Closing or the
termination of the Purchase Agreement in accordance with the terms and
conditions thereof; provided, however, that the provisions of Sections 4 and 5
shall terminate on September 30, 2000 if this Agreement shall not earlier have
terminated; and provided further, that if any Stockholder fails to comply with
Sections 1 or 5.1, the obligations of such Stockholder under Sections 4 and 5
shall not terminate until the third anniversary of the date of this Agreement.
Any termination of this Agreement, or any provision thereof, shall not relieve
any party hereunder of any liability for a breach of this Agreement.
7. Miscellaneous.
7.1 Expenses. All costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
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<PAGE>
7.2 Further Assurances. Each Stockholder, Parent and Purchaser shall
execute and deliver all such further documents and instruments and take all such
further action as may be reasonably necessary in order to consummate the
Transactions.
7.3 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
7.4 Entire Agreement. This Agreement constitutes the entire agreement
between Parent, Purchaser and Stockholder with respect to the subject matter
hereof and supersedes all prior agreements and understandings, both written and
oral, between Parent, Purchaser and Stockholder with respect to the subject
matter hereof.
7.5 Assignment. This Agreement shall not be assigned by operation of
law or otherwise, except that Parent or Purchaser may assign all or any of its
rights and obligations hereunder to any affiliate of Parent, provided that no
such assignment shall relieve Parent or Purchaser of its obligations hereunder
if such assignee does not perform such obligations.
7.6 Parties in Interest. This Agreement shall be binding upon, inure
solely to the benefit of, and be enforceable by, the parties hereto and their
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to or shall confer upon any other person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
7.7 Amendment; Waiver. This Agreement may not be amended except by an
instrument in writing signed by all of the parties hereto. Any party hereto may
(a) extend the time for the performance of any obligation or other act of any
other party hereto, (b) waive any condition of its obligations hereunder or
inaccuracy in the representations and warranties of any other party hereto
contained herein or in any document delivered by any other party hereto pursuant
hereto and (c) waive compliance with any agreement by any other party hereto
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
7.8 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
this Agreement is not affected in any manner materially adverse to any party.
7.9 Notices. Except as otherwise provided herein, all notices,
requests, claims, demands and other communications hereunder shall be in writing
and shall be given (and shall be deemed to have been duly given upon receipt) by
delivery in person, by cable, facsimile transmission, telegram or telex or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
7.9):
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<PAGE>
if to Parent or Purchaser:
Infogrames Entertainment S.A.
84, rue du 1er Mars 1943
Villeurbanne, 69100
France
Attention: Thomas Schmider
Telecopy: (011 33) 472 655116
Confirm: (011 33) 472 655000
and
Attention: Frederic Garnier
Telecopy: (011 33) 472 655059
Confirm: (011 33) 472 655000
with a copy to:
Pillsbury Madison & Sutro LLP
P.O. Box 7880
San Francisco, CA 94120-7880
Telecopy: 415-983-1200
Attention: Nathaniel M. Cartmell III
if to Stockholders:
c/o General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, CT 06830
Telecopy: (203) 622-8818
Attention: William E. Ford
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Telecopy: (212) 757-3990
Attention: Matthew Nimetz
7.10 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to contracts
executed in and to be performed in Delaware without regard to any principles of
choice of law or conflicts of law of such State. All actions and proceedings
arising out of or relating to this Agreement shall be heard and determined in
any state or federal court sitting in Delaware. Each of the parties hereto (a)
consents to submit such party to the personal jurisdiction of any Federal court
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<PAGE>
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (b) agrees that such party will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(c) agrees that such party will not bring any action relating to this Agreement
or the transactions contemplated hereby in any court other than a Federal court
sitting in the state of Delaware or a Delaware state court and (d) waives any
right to trial by jury with respect to any claim or proceeding related to or
arising out of this Agreement or any of the transactions contemplated hereby.
7.11 Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
7.12 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
7.13 Public Announcements. Stockholders will consult with Parent and
use reasonable efforts to agree upon the text of any press release, before
issuing any press release or otherwise making public statements with respect to
the Transactions and shall not issue any such press release or make any such
public statement without Parent's prior consent, which consent shall not be
unreasonably withheld, except as may be required by applicable law (including
requirements of stock exchanges and other similar regulatory bodies).
7.14 Stockholder Representatives. Each Stockholder signs solely in its
capacity as the beneficial owner of, or the general partner of a partnership or
the trustee of a trust which is the beneficial owner of, the Subject Warrants
and nothing contained herein shall limit or affect any actions taken by any
officer, director, partner, affiliate or representative of such Stockholder who
is or becomes an officer or a director of the Company in his or her capacity as
an officer or director of the Company and none of such actions in such capacity
shall be deemed to constitute a breach of this Agreement.
7.15 Legend. Each Stockholder shall promptly after the date hereof
cause to be affixed to all certificates representing the Subject Warrants the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
AN EQUITY PURCHASE AND VOTING AGREEMENT DATED NOVEMBER 15, 1999, AMONG
INFOGRAMES ENTERTAINMENT S.A., CALIFORNIA U.S. HOLDINGS, INC. AND THE
STOCKHOLDERS NAMED THEREIN, WHICH, AMONG OTHER THINGS, RESTRICTS THE
TRANSFER AND VOTING THEREOF."
7.16 Stockholders Consent. The Stockholders hereby consent to the
amendment to the Company's Amended and Restated Certificate of Incorporation to
increase the total number of shares of all classes of stock which the Company
shall have the authority to issue to 305,000,000 and to increase the number of
shares designated Common Stock to 300,000,000 in the form attached as Exhibit J
to the Purchase Agreement.
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<PAGE>
[EQUITY PURCHASE AND VOTING RIGHTS AGREEMENT]
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered as of the date first written above.
INFOGRAMES ENTERTAINMENT S.A.
By: /s/ Bonnell Bruno
---------------------
Name: Bonnell Bruno
CALIFORNIA U.S. HOLDINGS, INC.
By: /s/ Bonnell Bruno
---------------------
Name: Bonnell Bruno
GENERAL ATLANTIC PARTNERS 16, L.P.
By: General Atlantic Partners, LLC,
its General Partner
By: /s/ William E. Ford
-----------------------
Name: William E. Ford
GENERAL ATLANTIC PARTNERS 19, L.P.
By: General Atlantic Partners, LLC,
its General Partner
By: /s/ William E. Ford
-----------------------
Name: William E. Ford
GENERAL ATLANTIC PARTNERS II, L.P.
By: General Atlantic Partners, LLC,
its General Partner
By: /s/ William E. Ford
-----------------------
Name: William E. Ford
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<PAGE>
[EQUITY PURCHASE AND VOTING RIGHTS AGREEMENT]
GENERAL ATLANTIC PARTNERS 54, L.P.
By: General Atlantic Partners, LLC,
its General Partner
By: /s/ William E. Ford
-----------------------
Name: William E. Ford
GAP COINVESTMENT PARTNERS, L.P.
By: /s/ William E. Ford
-----------------------
Name: William E. Ford
GAP COINVESTMENT PARTNERS II, L.P.
By: /s/ William E. Ford
-----------------------
Name: William E. Ford
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<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
- -------------------------------------------- ---------------- ----------------- ------------------
Stockholder Common Stock Preferred Stock 1 Warrants
- -------------------------------------------- ---------------- ----------------- ------------------
<S> <C> <C> <C>
General Atlantic Partners II, L.P. 504,000 --- ---
- -------------------------------------------- ---------------- ----------------- ------------------
General Atlantic Partners 16, L.P. 4,184,545 --- ---
- -------------------------------------------- ---------------- ----------------- ------------------
General Atlantic Partners 19, L.P. 2,092,273 --- ---
- -------------------------------------------- ---------------- ----------------- ------------------
GAP Coinvestment Partner, L.P. 647,707 --- ---
- -------------------------------------------- ---------------- ----------------- ------------------
General Atlantic Partners 54, L.P. --- 4,897,440 3,673,080
- -------------------------------------------- ---------------- ----------------- ------------------
GAP Coinvestment Partners II, L.P. --- 1,102,560 826,920
- -------------------------------------------- ---------------- ----------------- ------------------
- -------------------------------------------- ---------------- ----------------- ------------------
Total 7,428,525 6,000,000 2,000,000
- -------------------------------------------- ---------------- ----------------- ------------------
</TABLE>
- --------
1 Expressed in shares of Common Stock on an as-converted basis.
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<PAGE>
SCHEDULE 2.5
The Company has the following liabilities to the Stockholders:
(i) to pay the expenses of the Stockholders incurred in connection
with the Transactions;
(ii) liabilities as set forth in the documentation of the Subordinated
Notes held by certain of the Stockholders;
(iii) liabilities as set forth in the Warrant and the Warrant
Agreement; and
(iv) liabilities as set forth in the Certificate of Designations of
the Preferred Stock.
EXHIBIT 4
to SCHEDULE 13D
CONVERTIBLE SUBORDINATED NOTE
$40,812,000.00 New York, New York
December 16, 1999
GT INTERACTIVE SOFTWARE CORP., a Delaware corporation (the
"Obligor"), hereby promises to pay to the order of General Atlantic Partners 54,
L.P. (together with any permitted transferee of this Convertible Subordinated
Note, the "Holder"), on December 16, 2004 (the "Maturity Date"), the principal
amount of FORTY MILLION EIGHT HUNDRED TWELVE THOUSAND DOLLARS ($40,812,000.00)
in lawful money of the United States of America.
1. Interest. No interest shall accrue on the outstanding principal
amount hereof.
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 this Convertible Subordinated Note (the "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
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.
<PAGE>
"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 arise under, out
of, or in connection with, the Credit Agreement, the Senior Notes, the other
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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
from time to time owing hereunder.
"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 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 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 13 hereof.
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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. 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 8(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 converted shall cease upon conversion, but all other rights of the
Holder hereunder, including without limitation rights 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 $4.00 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 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
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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 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
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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;
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 13 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
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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. 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. Redemption.
(a) At any time after (i) December 16, 2002, the Obligor shall have
the right, at its option and upon a determination made by a majority of the
members of the Board of Directors who are not affiliates of the Holder (the
"Independent Directors") to redeem the Note, in whole and not in part, for cash,
out of the funds legally available therefor, on not less than fifteen (15)
Business Days' written notice of the date of redemption (the "Optional
Redemption Date") at a price equal to the outstanding principal amount of the
Note, as determined on the Optional Redemption Date.
(b) Notwithstanding Section 5(a) above, at any time within 10 days
after the delivery of such notice from the Obligor that it intends to redeem the
Note pursuant to Section 5(a) hereof, the Holder shall have the right, at its
option, prior to any such redemption to convert all amounts outstanding under
the Note into shares of Common Stock in accordance with the terms set forth in
Section 4(a) hereof.
(c) Written notice of any redemption of the Note pursuant to Section
5(a) shall be delivered by the Obligor in accordance with Section 12 hereof.
6. Transfer, Exchange and Replacement of Note. Subject to the third
sentence of this Section 6, this Note shall be transferable in whole or in part
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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 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.
7. 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.
8. 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. Further, Holder agrees that this Note shall be
subordinated to any and all debt of the Obligor to which the holder of the
Convertible Subordinated Note, originally issued to California U.S. Holdings,
Inc. on December 16, 1999 (the "Infogrames Note"), agrees that the Infogrames
Note shall be subordinated, whether such debt is outstanding on the date hereof
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or otherwise, and which debt for all other purposes hereof shall be deemed to be
included in the definition of Senior Debt.
(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 November 15,
1999 (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 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 10(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.
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(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.
(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.
9. Prepayments. Subject to Section 8 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 Sections 4 and 5 hereof.
10. 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,
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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 (iii)
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 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 8(d) hereof: (i) if an Event of
Default occurs under subsection (a)(iv) or (v) above, then the outstanding
principal of 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 the
Note to be due and payable immediately, (iii) upon such declaration, such
principal 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 that has
become due solely because of the acceleration, and if the rescission would not
conflict with any judgment or decree.
11. 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 11 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.
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<PAGE>
12. 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 General Atlantic Service Corporation, 3
Pickwick Plaza, Greenwich, Connecticut 06830, Attention: William E. Ford,
telecopy: (203) 622-8818, or to such other address as the Holder may give notice
of to the Obligor from time to time (with copies to Paul, Weiss, Rifkind,
Wharton & Garrison, 1285 Avenue of the Americas, New York, New York 10019,
Attention: Mathew Nimetz, Esq., telecopy: (212) 757-3990).
(b) If to the Obligor, GT Interactive Software Corp., 417 Fifth
avenue, New York, New York 10016, Attention: Thomas Heymann, telecopy: (212)
679-3424 (with copies to Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue,
New York, New York 10022, Attention: David P. Levin, Esq., telecopy: (212)
715-8000), or to such other address as the Obligor may give notice of to the
Holder from time to time.
13. 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.
14. 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.
15. 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.
16. 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.
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<PAGE>
17. 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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<PAGE>
18. 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: /s/ John Baker
------------------
Title:
Acknowledged and Agreed:
By: /s/ Steven A. Denning
- -------------------------
Title: A Managing Member
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<PAGE>
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:
EXHIBIT 5
to SCHEDULE 13D
CONVERTIBLE SUBORDINATED NOTE
$9,188,000.00 New York, New York
December 16, 1999
GT INTERACTIVE SOFTWARE CORP., a Delaware corporation (the
"Obligor"), hereby promises to pay to the order of GAP Coinvestment Partners II,
L.P. (together with any permitted transferee of this Convertible Subordinated
Note, the "Holder"), on December 16, 2004 (the "Maturity Date"), the principal
amount of NINE MILLION ONE HUNDRED EIGHTY EIGHT THOUSAND DOLLARS ($9,188,000.00)
in lawful money of the United States of America.
1. Interest. No interest shall accrue on the outstanding principal
amount hereof.
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 this Convertible Subordinated Note (the "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
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.
<PAGE>
"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 arise under, out
of, or in connection with, the Credit Agreement, the Senior Notes, the other
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<PAGE>
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
from time to time owing hereunder.
"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 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 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 13 hereof.
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<PAGE>
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. 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 8(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 converted shall cease upon conversion, but all other rights of the
Holder hereunder, including without limitation rights 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 $4.00 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 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
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<PAGE>
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 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
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<PAGE>
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;
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 13 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
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<PAGE>
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. 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. Redemption.
(a) At any time after (i) December 16, 2002, the Obligor shall have
the right, at its option and upon a determination made by a majority of the
members of the Board of Directors who are not affiliates of the Holder (the
"Independent Directors") to redeem the Note, in whole and not in part, for cash,
out of the funds legally available therefor, on not less than fifteen (15)
Business Days' written notice of the date of redemption (the "Optional
Redemption Date") at a price equal to the outstanding principal amount of the
Note, as determined on the Optional Redemption Date.
(b) Notwithstanding Section 5(a) above, at any time within 10 days
after the delivery of such notice from the Obligor that it intends to redeem the
Note pursuant to Section 5(a) hereof, the Holder shall have the right, at its
option, prior to any such redemption to convert all amounts outstanding under
the Note into shares of Common Stock in accordance with the terms set forth in
Section 4(a) hereof.
(c) Written notice of any redemption of the Note pursuant to Section
5(a) shall be delivered by the Obligor in accordance with Section 12 hereof.
6. Transfer, Exchange and Replacement of Note. Subject to the third
sentence of this Section 6, 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
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<PAGE>
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 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.
7. 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.
8. 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. Further, Holder agrees that this Note shall be
subordinated to any and all debt of the Obligor to which the holder of the
Convertible Subordinated Note, originally issued to California U.S. Holdings,
Inc. on December 16, 1999 (the "Infogrames Note"), agrees that the Infogrames
Note shall be subordinated, whether such debt is outstanding on the date hereof
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or otherwise, and which debt for all other purposes hereof shall be deemed to be
included in the definition of Senior Debt.
(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 November 15,
1999 (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 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 10(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.
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(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.
(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.
9. Prepayments. Subject to Section 8 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 Sections 4 and 5 hereof.
10. 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,
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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 (iii)
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 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 8(d) hereof: (i) if an Event of
Default occurs under subsection (a)(iv) or (v) above, then the outstanding
principal of 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 the
Note to be due and payable immediately, (iii) upon such declaration, such
principal 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 that has
become due solely because of the acceleration, and if the rescission would not
conflict with any judgment or decree.
11. 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 11 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.
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<PAGE>
12. 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 General Atlantic Service Corporation, 3
Pickwick Plaza, Greenwich, Connecticut 06830, Attention: William E. Ford,
telecopy: (203) 622-8818, or to such other address as the Holder may give notice
of to the Obligor from time to time (with copies to Paul, Weiss, Rifkind,
Wharton & Garrison, 1285 Avenue of the Americas, New York, New York 10019,
Attention: Mathew Nimetz, Esq., telecopy: (212) 757-3990).
(b) If to the Obligor, GT Interactive Software Corp., 417 Fifth
avenue, New York, New York 10016, Attention: Thomas Heymann, telecopy: (212)
679-3424 (with copies to Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue,
New York, New York 10022, Attention: David P. Levin, Esq., telecopy: (212)
715-8000), or to such other address as the Obligor may give notice of to the
Holder from time to time.
13. 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.
14. 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.
15. 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.
16. 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.
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17. 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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18. 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: /s/ John Baker
------------------
Title:
Acknowledged and Agreed:
By: /s/ Steven A. Denning
- -------------------------
Title: A General Partner
<PAGE>
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:
