EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT, dated as of May 20, 2003 (the
"Agreement") is entered into by and among The 3DO Company, a Delaware
corporation (the "Company"), and Xxxxxxx X. Xxxxxxx, III (the "Purchaser"). This
Agreement is being made pursuant to Section 10 of the Note and Warrant Purchase
Agreement (the "Note and Warrant Purchase Agreement") dated as of December 27,
2002, as amended, between the Company, The 3DO Company, a California
corporation, and the Purchaser. The parties, intending to be legally bound,
hereby agree as follows:
1. Sale of Common Stock. Subject to the terms and conditions of this
Agreement, Company hereby agrees to sell to the Purchaser and the Purchaser
hereby agrees to purchase from Company the number of shares of Company's Common
Stock set forth opposite the Purchaser's name on Exhibit A (the "Shares"), at
the purchase price listed on Exhibit A. Upon execution of this Agreement (the
"Closing"), (A) the Company shall deliver or cause to be delivered to Purchaser
the following: (i) a certificate evidencing a number of shares of Common Stock
being purchased by Purchaser, registered in the name of Purchaser; (ii) the
Registration Rights Agreement (the "Registration Rights Agreement") in the form
attached hereto as Annex A, duly executed by the Company; and (iii) the Warrant
(the "Warrant"), registered in the name of the Purchaser in the form attached
hereto as Annex B, giving the Purchaser the right to acquire the number of
shares of Common Stock upon the exercise of the Warrant (the "Warrant Shares")
listed on Exhibit A and (B) the Purchaser shall deliver or cause to be delivered
to the Company the following: (i) the purchase price for the Shares and Warrant
being purchased by Purchaser, by delivery of a secured previous note issued
pursuant to the Note and Warrant Purchase Agreement in the principal amount of
$3.0 million dated October 1, 2002 (the "Secured Previous Note") for
cancellation; and (ii) the Registration Rights Agreement duly executed by
Purchaser. Any principal and accrued interest on the Secured Previous Note not
cancelled shall be repaid on the day of the Closing (the "Closing Date").
2. Representations and Warranties of Company. Company hereby represents and
warrants to Purchaser that the statements contained in the following paragraphs
of this Section 2 are all true and correct as of the date of this Agreement and
the Closing Date:
(a) Organization and Standing: Articles and Bylaws. Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted.
(b) Corporate Power. Company has all requisite legal and corporate
power to enter into, execute, deliver and perform this Agreement and the
Registration Rights Agreement. This Agreement and the Registration Rights
Agreement (the "Transaction Documents") have been duly
1
executed by the Company and constitute legal, valid and binding obligations of
Company, enforceable in accordance with their terms, except as the same may be
limited by (i) bankruptcy, insolvency, moratorium, and other laws of general
application affecting the enforcement of creditors' rights and (ii) limitations
on the enforceability of the indemnification provisions of the Registration
Rights Agreement as limited by applicable securities laws.
(c) Authorization.
(i) Corporate Action. All corporate and legal action on the part
of Company, its officers, directors and shareholders necessary for the execution
and delivery of this Agreement, the Registration Rights Agreement, the sale and
issuance of the Shares and Warrant Shares, and the performance of Company's
obligations hereunder have been taken.
(ii) Valid Issuance. The Shares and Warrant Shares, when issued in
compliance with the provisions of this Agreement and the Warrant, will be duly
and validly issued, fully paid and nonassessable, free and clear of all liens
and encumbrances; provided, however, that the Shares, the Warrant and the
Warrant Shares may be subject to restrictions on transfer under state and/or
federal securities laws as set forth herein, and as may be required by future
changes in such laws.
(d) Government Consent, Etc. No consent, approval, order or
authorization of, or designation, registration, declaration or filing with, any
federal, state, local or other governmental authority on the part of Company is
required in connection with the valid execution and delivery of this Agreement,
the Registration Rights Agreement or the offer, sale or issuance of the Shares,
the Warrant and the Warrant Shares other than, if required, filings or
qualifications under the California Corporate Securities Law of 1968, as amended
(the "California Law"), or other applicable blue sky laws, which filings or
qualifications, if required, will be timely filed or obtained by Company. The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated thereby do
not and will not conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement filed (or incorporated
by reference) as an exhibit to the SEC Reports (as defined below).
(e) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Exchange Act of 1934, as
amended ("1934 Act"), including pursuant to Section 13(a) or 15(d) thereof, for
the twelve months preceding the date hereof (the foregoing materials being
collectively referred to herein as the "SEC Reports") on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act of 1933, as amended (the "1933 Act") and the 1934 Act and
the rules and regulations of the Securities and Exchange Commission
("Commission") promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports
2
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved, except as may be otherwise specified in such financial
statements or the notes thereto, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
year-end audit adjustments.
(f) Private Placement. Assuming the accuracy of the Purchaser's
representations and warranties set forth in Section 3, no registration under the
1933 Act is required for the offer, issuance and sale of the Shares, the Warrant
and the Warrant Shares by the Company to the Purchaser as contemplated hereby.
(g) Listing and Maintenance Requirements. The issuance and sale of the
Shares, the Warrant and the Warrant Shares hereunder do not contravene the rules
and regulations of the Nasdaq National Market. The Company is eligible to
utilize Form S-3 to register the resale of the Shares and Warrant Shares by the
Purchasers.
(h) Investment Company. The Company is not, and is not an Affiliate of,
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
3. Representations and Warranties by Purchaser. The Purchaser represents
and warrants to Company that the statements contained in the following
paragraphs of this Section 3 are all true and correct as of the date of this
Agreement and the Closing Date:
(a) Investment Intent: Authority. This Agreement is made with Purchaser
in reliance upon Purchaser's representation to Company, evidenced by Purchaser's
execution of this Agreement, that Purchaser is acquiring the Shares, the Warrant
and the Warrant Shares for investment for Purchaser's own account, not as
nominee or agent, for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the 1933 Act; provided, however, that by making the representations herein,
Purchaser does not agree to hold any of the Shares, the Warrant and the Warrant
Shares for any minimum or other specific term and reserves the right to dispose
of the Shares, the Warrant and the Warrant Shares at any time in accordance with
or pursuant to a registration statement or an exemption under the 1933 Act.
Purchaser has the requisite right, power, authority and capacity to enter into
and perform this Agreement and the Agreement will constitute a valid and binding
obligation upon Purchaser, except as the same may be limited by bankruptcy,
insolvency, moratorium, and other laws of general application affecting the
enforcement of creditors' rights.
(b) Knowledge and Experience. Purchaser (i) has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of Purchaser's prospective investment in the Shares, the
Warrant and the Warrant Shares; (ii) has the ability to bear the economic risks
of Purchaser's prospective investment; (iii) has had all questions which have
been asked by Purchaser satisfactorily answered by Company; and (iv) has not
been offered the Shares, the Warrant and the Warrant Shares by any form of
advertisement, article, notice or other
3
communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any such media. Purchaser represents and warrants that it
is an "accredited investor" within the meaning of Rule 501 of Regulation D of
the Securities Act.
(c) Transfer Restrictions. Purchaser covenants that in no event will it
sell, transfer or otherwise dispose of any of the Shares, the Warrant and the
Warrant Shares other than in conjunction with an effective registration
statement for the Shares under the Securities Act or pursuant to an exemption
therefrom, or in compliance with Rule 144 promulgated under the Securities Act
or to a person related to or an entity affiliated with said Purchaser and other
than in compliance with the applicable securities regulation laws of any state.
4. Registration of the Shares to be Purchased. The Company will file a
registration statement with respect to the Shares and Warrant Shares on or
before twenty (20) days after the Closing Date pursuant to the terms of the
Registration Rights Agreement.
5. Legends. Company will place the following legends on each certificate
representing Shares and Warrant Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR ANY
APPLICABLE STATE SECURITIES LAWS ("BLUE SKY LAWS"). ANY
TRANSFER OF SUCH SECURITIES WILL BE INVALID UNLESS A
REGISTRATION STATEMENT UNDER THE ACT OR AS REQUIRED BY BLUE
SKY LAWS IS IN EFFECT AS TO SUCH TRANSFER OR IN THE OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY SUCH
REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO
COMPLY WITH THE ACT OR BLUE SKY LAWS.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Shares and Warrant Shares
upon which it is stamped, if, unless otherwise required by state securities
laws, (i) such Shares and Warrant Shares are registered for resale under the
1933 Act, (ii) in connection with a sale transaction, such holder provides the
Company with an opinion of counsel, in a generally acceptable form, to the
effect that a public sale, assignment or transfer of the Shares and Warrant
Shares may be made without registration under the 1933 Act, or (iii) such holder
provides the Company with reasonable assurances that the Shares and Warrant
Shares can be sold pursuant to Rule 144 without any restriction as to the number
of securities acquired as of a particular date that can then be immediately
sold. Such Investor acknowledges, covenants and agrees to sell Shares and
Warrant Shares represented by a certificate from which the legend has been
removed only pursuant to (i) a registration statement effective under the 1933
Act or (ii) advice of counsel that such sale is exempt from the registration
requirements of Section 5 of the 1993 Act, including, without limitation, a
transaction pursuant to Rule 144.
6. Indemnification of Purchasers. The Company will indemnify and hold the
Purchaser and its directors, officers, shareholders, partners, employees and
agents (each, a "Purchaser Party") harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and
4
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys' fees and costs of investigation (collectively, "Losses")
that any such Purchaser Party may suffer or incur as a result of or relating to
the failure of the representations and warranties of the Company to be true and
correct.
7. Miscellaneous.
(a) Waivers and Amendments. The provisions of this Agreement may only
be amended or modified in a writing executed by each of Company and Purchaser. A
waiver shall not be effective unless in a writing by the party against whom such
waiver is to be enforced.
(b) Governing Law. This Agreement and all actions arising out of or in
connection with this Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to the conflicts of law
provisions thereof. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE,
AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
(c) Entire Agreement. This Agreement, the Note and Warrant Purchase
Agreement, the Registration Rights Agreement and the Warrant constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.
(d) Survival. The representations, warranties, covenants and agreements
made herein shall survive the execution and delivery of this Agreement.
(e) Expenses. Company shall pay on demand all reasonable fees and
expenses incurred by Purchaser, including reasonable legal fees and expenses in
connection with the preparation, execution and delivery of this Agreement up to
a maximum amount of $5,000.
(f) Notices, etc. Any notice, request or other communication required
or permitted hereunder shall be in writing and shall be deemed to have been duly
given (i) upon receipt if personally delivered, (ii) three (3) days after being
mailed by registered or certified mail, postage prepaid, or (iii) one day after
being sent by recognized overnight courier or by facsimile, if to Purchaser, at
the address and facsimile number listed on Exhibit A, or at such other address
or number as Purchaser shall have furnished to Company in writing, or if to
Company, at 000 Xxxxxxxx Xxx, Xxxxxxx Xxxx, Xxxxxxxxxx 00000 or at such other
address or number as Company shall have furnished to Purchaser in writing.
(g) Validity. If any provision of this Agreement shall be judicially
determined to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
(h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall be deemed to constitute one instrument.
5
(i) Assignment. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the respective successors and assigns of
the parties. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
(j) Remedies. Purchaser and each holder of the Securities shall have
all rights and remedies set forth in the Transaction Documents and all rights
and remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.
6
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date and year first written above.
THE 3DO COMPANY
a Delaware corporation
By: /s/ Xxxxx Xxxx Xxxx
-------------------------------
Name: Xxxxx Xxxx Xxxx
-----------------------------
Title: Secretary
---------------------------
PURCHASER:
Xxxxxxx X. Xxxxxxx, III
-----------------------------------
By: /s/ Xxxxxxx X. Xxxxxxx, III
-------------------------------
7
SCHEDULE OF PURCHASERS
Aggregate Warrant
Investor Address Number of Purchase Price Exercise
Investor's Name and Facsimile Number Number of Shares Warrant Shares ($) Price ($)
--------------- -------------------- ---------------- -------------- --- ---------
Xxxxxxx X. Xxxxxxx, III c/o The 3DO Company 1,764,705 441,176 2,999,998.50 $2.525
000 Xxxxxxxx Xxx
Xxxxxxx Xxxx, XX 00000
(000) 000-0000
8
