EXHIBIT 10.2
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
SOLD, OFFERED FOR SALE OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN
ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS
IS AVAILABLE WITH RESPECT THERETO.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK OF
THE 3DO COMPANY
Issue Date: May 20, 2003
Warrant No. CW-31 441,176 Shares of Common Stock
1. Issuance. This Warrant is issued to Xxxxxxx X. Xxxxxxx, III (the
"Holder"), by The 3DO Company, a Delaware corporation (hereinafter with its
successors called the "Company") pursuant to the Securities Purchase Agreement
of even date herewith (the "Purchase Agreement"). Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to them in the
Purchase Agreement.
2. Purchase Price; Number of Shares. Subject to the exercise restriction
provided for in Section 6 hereof, this Warrant certifies that, for value
received, the Holder of this Warrant is entitled upon surrender of this Warrant
with the subscription form annexed hereto as Appendix 1 duly executed, at the
principal office of the Company, to purchase from the Company 441,176 fully paid
and nonassessable shares of Common Stock of the Company (the "Common Stock") at
a price per share (the "Purchase Price") of $2.525, subject to adjustment
pursuant to Sections 8 and 9 below.
3. Payment of Purchase Price. Subject to Section 4, the Purchase Price may
be paid (i) in cash or by certified check or wire transfer, (ii) by the
cancellation, surrender or forgiveness by the Holder to the Company of any
promissory notes or other obligations issued by the Company, with all such notes
and obligations so surrendered being credited against the Purchase Price in an
amount equal to the principal amount thereof plus accrued interest to the date
of surrender, or (iii) by any combination of the foregoing.
4. Net Issue Election. Notwithstanding any provisions herein to the
contrary, the Holder may elect to receive, without the payment by the Holder of
any additional consideration, shares of Common Stock equal to the value (as
determined below) of this Warrant by the surrender of this Warrant to the
Company, with the net issue election notice set forth in Appendix 1 annexed
hereto duly executed, at the principal office of the Company. Thereupon, the
Company shall issue to the
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Holder such number of fully paid and nonassessable shares of Common Stock as is
computed using the following formula:
X = Y(A-B)
-----
A
where: X = the number of shares of Common Stock to be issued
to the Holder pursuant to this Section 4.
Y = the number of shares of Common Stock covered by
this Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being exercised at the
time the net issue election is made pursuant to this Section
4.
A = the fair market value of one share of Common
Stock, determined as follows: (i) if at such time the Common
Stock is listed on a national securities exchange or on the
over-the-counter market, then the closing price of the Common
Stock on the business day immediately prior to the date of
exercise or, if no sale of the Common Stock was made on such
day, the first business day immediately preceding such day
upon which a sale was made, or (ii) if at such time the Common
Stock is not listed on a national securities exchange or on
the over-the-counter market, then as determined in good faith
by the Board and agreed to by Holder at the time the net issue
election is made pursuant to this Section 4.
B = the Purchase Price in effect under this Warrant
at the time the net issue election is made pursuant to this
Section 4.
5. Fractional Shares. No fractional shares shall be issued upon exercise of
this Warrant. The Company shall, in lieu of issuing any fractional share, pay
the holder entitled to such fraction a sum in cash equal to such fraction
multiplied by the then effective Purchase Price.
6. Exercise.
(a) Expiration Date. Holder's rights under this Warrant expire at 5:00
p.m. Pacific Time on the fourth anniversary of the date of this Warrant (the
"Expiration Date") and shall be void thereafter. At the Expiration Date, the
portion of this Warrant not exercised prior thereto shall be and become void and
of no value, provided, that if the closing sales price of the Common Stock on
the date of expiration of this Warrant is greater than 102% of the Purchase
Price on the date of expiration, then this Warrant shall be deemed to have been
exercised in full (to the extent not previously exercised) on a "cashless
exercise" basis. The Company may not call or redeem all or any portion of this
Warrant without the prior written consent of the Holder.
(b) Delivery. To effect conversions hereunder, the Holder shall not be
required to physically surrender this Warrant unless the aggregate shares
represented by this Warrant are being exercised. Upon delivery of the Form of
Election to Purchase to the Company (with the attached Shares Exercise Log) at
its address for notice set forth herein and upon payment of the Purchase Price
multiplied by the number of shares of Common Stock that the Holder intends to
purchase
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hereunder, the Company shall promptly (but in no event later than three business
days after the date of exercise) issue and deliver to the Holder, a certificate
for the shares of Common Stock issuable upon such exercise, which, unless
otherwise required by the Purchase Agreement, shall be free of restrictive
legends. The Company shall, upon request of the Holder and subsequent to the
date on which a registration statement covering the resale of the shares of
Common Stock has been declared effective by the Securities and Exchange
Commission, deliver shares of Common Stock electronically through the Depository
Trust Corporation or another established clearing corporation performing similar
functions, if available, provided, that, the Company may, but will not be
required to change its transfer agent if its current transfer agent cannot
deliver such shares electronically through the Depository Trust Corporation.
(c) Limitation on Exercise. This Warrant may not be exercised for a
period of one hundred eighty (180) days after the Issue Date.
(d) Failure to Deliver. If by the third business day after a exercise
of the warrant, the Company fails to deliver the required number of shares of
Common Stock in the manner required pursuant to Section 6(b), and if after such
third business day and prior to the receipt of such shares, the Holder purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the shares of Common Stock issuable
upon exercise of the Warrant ("Warrant Share") which the Holder anticipated
receiving upon such exercise (a "Buy In"), then the Company shall (1) pay in
cash to the Holder the amount by which (x) the Holder's total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (A) the number of
Warrant Shares that the Company was required to deliver to the Holder in
connection with the exercise at issue by (B) the closing bid price of the Common
Stock at the time of the obligation giving rise to such purchase obligation and
(2) at the option of the Holder, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise was not honored or
deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and delivery
obligations hereunder. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy In.
(e) Remedies. The Company's obligations to issue and deliver Warrant
Shares in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
Warrant Shares. Nothing herein shall limit a Holder's right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company's failure to timely deliver certificates representing
shares of Common Stock upon exercise of the Warrant as required pursuant to the
terms hereof.
7. Reserved Shares; Valid Issuance. The Company covenants that it will at
all times from and after the date hereof reserve and keep available such number
of its authorized shares of Common
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Stock of the Company, free from all preemptive or similar rights therein, as
will be sufficient to permit the exercise of this Warrant in full. If at any
time between the date hereof and the Expiration Date, the number of authorized
but unissued shares of Common Stock shall not be sufficient to permit exercise
of this Warrant, the Company will take such corporate action as may be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes. The Company further covenants
that such shares as may be issued pursuant to such exercise will, upon issuance,
be duly and validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issuance thereof.
8. Stock Splits and Dividends. If after the date hereof the Company shall
subdivide the Common Stock, by stock split or otherwise, or combine the Common
Stock, or issue additional shares of Common Stock in payment of a stock dividend
on the Common Stock, the number of shares of Common Stock issuable on the
exercise of this Warrant shall forthwith be proportionately increased in the
case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination, and the Purchase Price shall forthwith be proportionately
decreased in the case of a subdivision or stock dividend, or proportionately
increased in the case of a combination.
9. Mergers and Reclassifications. If after the date hereof the Company
shall enter into any Reorganization (as hereinafter defined), then, as a
condition of such Reorganization, lawful provisions shall be made, and duly
executed documents evidencing the same from the Company or its successor shall
be delivered to the Holder, so that the Holder shall thereafter have the right
to purchase, at a total price not to exceed that payable upon the exercise of
this Warrant in full, the kind and amount of shares of stock and other
securities and property receivable upon such Reorganization by a holder of the
number of shares of Common Stock which might have been purchased by the Holder
immediately prior to such Reorganization, and in any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
to the end that the provisions hereof (including without limitation, provisions
for the adjustment of the Purchase Price and the number of shares issuable
hereunder) shall thereafter be applicable in relation to any shares of stock or
other securities and property thereafter deliverable upon exercise hereof. For
the purposes of this Section 9, the term "Reorganization" shall include without
limitation any reclassification, capital reorganization or change of the Common
Stock (other than as a result of a subdivision, combination or stock dividend
provided for in Section 8 hereof), or any consolidation of the Company with, or
merger of the Company into, another corporation or other business organization
(other than a merger in which the Company is the surviving corporation and which
does not result in any reclassification or change of the outstanding Common
Stock), or any sale or conveyance to another corporation or other business
organization of all or substantially all of the assets of the Company.
10. No Voting or Dividend Rights. Nothing contained in this Warrant shall
be construed as conferring upon the Holder hereof the right to vote or to
consent or to receive notice as a shareholder of the Company or any other
matters or any rights whatsoever as a shareholder of the Company prior to the
exercise of the Holder's rights to purchase shares of Common Stock as provided
for herein. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised.
11. Amendment. The terms of this Warrant may be amended, modified or waived
only with the written consent of the Holder.
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12. 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 Holder, at c/o
Company at 000 Xxxxxxxx Xxx, Xxxxxxx Xxxx, Xxxxxxxxxx 00000, or at such other
address or number as Holder 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 Holder in writing.
13. Descriptive Headings and Governing Law. The descriptive headings of the
several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant and all actions
arising out of or in connection with this Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflicts of law provisions of the State of Delaware.
14. Successors and Assigns. Holder may not sell, transfer or otherwise
dispose of the Securities except in accordance with the restrictions set out in
the Purchase Agreement. The rights and obligations of Company and Holder shall
be binding upon and benefit the successors, assigns, heirs, administrators and
transferees of the parties.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer.
Dated: May 20, 2003 The 3DO Company
/s/ Xxxxx Xxxx Xxxx
--------------------------------
Name: Xxxxx Xxxx Xxxx
--------------------------
Title: Executive Vice President
-------------------------
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FORM OF ELECTION TO PURCHASE
Date: _____________
The 3DO Company
000 Xxxxxxxx Xxx
Xxxxxxx Xxxx, XX 00000
Ladies and Gentlemen:
The undersigned hereby elects:
____ to exercise the warrant issued to it by The 3DO Company (the
"Company") and dated May 20, 2003 (the "Warrant") and to purchase
____________ shares of the Common Stock of the Company (the "Shares")
purchasable thereunder at a purchase price of _______________ ($____)
per Share (the "Purchase Price") pursuant to the terms of the Warrant
and the undersigned delivers the Purchase Price herewith in full in
cash or by certified check or wire transfer or as otherwise permitted
pursuant to Section 3 of the Warrant.
____ to purchase _______ shares of the Common Stock of the Company
pursuant to the terms of the net exercise provisions set forth in
Section 4 of the Warrant.
By its delivery of this Form of Election To Purchase, the undersigned
represents and warrants to the Company that in giving effect to the exercise
evidenced hereby the Holder will not beneficially own in excess of the number of
shares of Common Stock (determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934) permitted to be owned under Section 11 of this
Warrant to which this notice relates.
The certificate(s) for such shares shall be issued in the name of the
undersigned or as otherwise indicated below:
Very truly yours,
Xxxxxxx X. Xxxxxxx, III
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Exercise Log
----------------------------- ---------------------------- ---------------------------- ----------------------------
Date Number of Warrant Shares Number of Warrant Shares Number of Warrant Shares
Available to be Exercised Exercised Remaining to be Exercised
----------------------------- ---------------------------- ---------------------------- ----------------------------
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