Exhibit 10.2
THIS NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY
APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
THIS NOTE AND THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A
LOCK-UP AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL HOLDER OF THIS
NOTE THAT PROHIBITS SALE OR TRANSFER OF THIS NOTE OR THE SECURITIES
REPRESENTED HEREBY FOR A PERIOD OF TWO YEARS FROM THE ISSUE DATE OF
THIS NOTE. THIS AGREEMENT IS BINDING UPON TRANSFEREES. A COPY OF THIS
AGREEMENT IS ON FILE WITH THE SECRETARY OF THE COMPANY.
THE 3DO COMPANY
CONVERTIBLE PROMISSORY NOTE
$2,000,000.00 August 16, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED The 3DO Company, a Delaware corporation ("COMPANY"),
promises to pay to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III ("HOLDER"), or its registered
assigns, the principal sum of Two Million Dollars ($2,000,000.00), or such
lesser amount as shall equal the outstanding principal amount hereof and any
unpaid accrued interest hereon, as set forth below, shall be due and payable on
the earlier to occur of (i) August 16, 2003, or (ii) when declared due and
payable by Holder upon the occurrence of an Event of Default (as defined below).
This Note is issued pursuant to the Convertible Note and Warrant Purchase
Agreement of even date herewith, as amended, modified or supplemented (the
"PURCHASE AGREEMENT") between Company and Holder. The holder of this Note is
subject to certain restrictions set forth in the Purchase Agreement and shall be
entitled to certain rights and privileges set forth in the Purchase Agreement.
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Purchase Agreement.
The following is a statement of the rights of Holder and the conditions
to which this Note is subject, and to which Holder, by the acceptance of this
Note, agrees:
1. INTEREST. Commencing on August 16, 2000 and on each August 16
thereafter until all outstanding principal and interest on this Note shall have
been paid in full, Company shall pay interest at the rate of ten and one quarter
percent (10.25%) per annum on the principal of this Note
outstanding during the period beginning on the date of issuance of this Note and
ending on the date that the principal amount of this Note becomes due and
payable.
2. CONVERSION.
(a) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ CLEARANCE. Under Section 2 of the Purchase
Agreement, Company and Holder have agreed to file with the United States Federal
Trade Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice (the "DOJ") pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR ACT") all requisite documents and
notifications in order to provide for the conversion of this Note into shares of
Company's Common Stock. Upon the earlier of one business day after (i) the date
all required clearances or pre-termination notices under the HSR Act have been
received from the FTC and the DOJ (or all applicable waiting periods have
expired) or (ii) the date Holder and Company are no longer required by law to
make filings under the HSR to convert this Note into capital stock, the entire
principal amount of this Note together with all accrued interest shall
automatically convert into fully-paid and non-assessable shares of Company's
Common Stock. The number of shares of Common Stock to be issued upon conversion
shall be equal to the quotient obtained by dividing (i) the entire outstanding
principal amount of this Note at the date of conversion by (ii) $6.9375 (as
adjusted for any future stock splits, stock dividends, recapitalizations or the
like after August 16, 2000), provided that no fractional shares shall be issued.
In the event that the required clearances from the FTC and the DOJ are not
obtained, this Note shall not be convertible into Common Stock.
(b) MECHANICS AND EFFECT OF CONVERSION. No fractional shares of
Company's capital stock will be issued upon conversion of this Note. In lieu of
any fractional share to which Holder would otherwise be entitled, Company will
pay to Holder in cash the amount of the unconverted principal and interest
balance of this Note that would otherwise be converted into such fractional
share. Upon conversion of this Note pursuant to this Section 2, Holder shall
surrender this Note, duly endorsed, at the principal offices of Company or any
transfer agent of Company. At its expense, Company will, as soon as practicable
thereafter, issue and deliver to such Holder, at such principal office, a
certificate or certificates for the number of shares to which such Holder is
entitled upon such conversion, together with any other securities and property
to which Holder is entitled upon such conversion under the terms of this Note,
including a check payable to Holder for any cash amounts payable as described
herein. Upon conversion of this Note, Company will be forever released from all
of its obligations and liabilities under this Note with regard to that portion
of the principal amount and accrued interest being converted including without
limitation the obligation to pay such portion of the principal amount and
accrued interest.
3. PREPAYMENT. This Note may be prepaid in whole or in part at any time
by Company without the prior written consent of Holder. Any such prepayment will
be applied first to the payment of expenses due under this Note, second to
interest accrued on this Note and third, if the amount of prepayment exceeds the
amount of all such expenses and accrued interest, to the payment of principal of
this Note.
4. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "EVENT OF DEFAULT" under this Note:
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(a) FAILURE TO PAY. Company shall fail to pay (i) when due any
principal payment on the due date hereunder or (ii) any interest or other
payment required under the terms of this Note on the date due and such payment
shall not have been made within fifteen (15) days of Company's receipt of
Holder's written notice to Company of such failure to pay; or
(b) VOLUNTARY BANKRUPTCY OR INSOLVENCY PROCEEDINGS. Company shall
(i) apply for or consent to the appointment of a receiver, trustee, liquidator
or custodian of itself or of all or a substantial part of its property, (ii) be
unable, or admit in writing its inability, to pay its debts generally as they
mature, (iii) make a general assignment for the benefit of its or any of its
creditors, (iv) be dissolved or liquidated in full or in part, (v) become
insolvent (as such term may be defined or interpreted under any applicable
statute), (vi) commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or consent to any such relief or to the appointment of or taking possession of
its property by any official in an involuntary case or other proceeding
commenced against it, or (vii) take any action for the purpose of effecting any
of the foregoing;
(c) INVOLUNTARY BANKRUPTCY OR INSOLVENCY PROCEEDINGS. Proceedings
for the appointment of a receiver, trustee, liquidator or custodian of Company
or of all or a substantial part of the property thereof, or an involuntary case
or other proceedings seeking liquidation, reorganization or other relief with
respect to Company or the debts thereof under any bankruptcy, insolvency or
other similar law or hereafter in effect shall be commenced and an order for
relief entered or such proceeding shall not be dismissed or discharged within
thirty (30) days of commencement.
5. RIGHTS OF HOLDER UPON DEFAULT. Upon the occurrence or existence of
any Event of Default and at any time thereafter during the continuance of such
Event of Default, Holder may declare all outstanding obligations payable by
Company hereunder to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived. In addition to the foregoing remedies, upon the occurrence or existence
of any Event of Default, Holder may exercise any other right, power or remedy
granted to it or otherwise permitted to it by law, either by suit in equity or
by action at law, or both.
6. LEGENDS. As promptly as practicable after conversion of this Note,
Company shall issue and deliver to Holder a certificate for the number of full
shares of Common Stock issuable upon such conversion. Company will place on each
certificate the following legends:
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
SATISFACTORY TO THE COMPANY SUCH REGISTRATION IS UNNECESSARY IN
ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT OR BLUE SKY LAWS.
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A LOCK-UP AGREEMENT BETWEEN THE COMPANY AND THE
ORIGINAL SHAREHOLDER THAT PROHIBITS SALE OR TRANSFER OF SUCH
SHARES FOR A PERIOD OF UP TO TWO YEARS FOLLOWING THE DATE ON
WHICH THE NOTE, PURSUANT TO WHICH THESE SHARES WERE CONVERTED,
WAS ISSUED. THIS AGREEMENT IS BINDING UPON TRANSFEREES. A COPY OF
THE AGREEMENT IS ON FILE WITH THE SECRETARY OF THE COMPANY.
7. SUBORDINATION. The indebtedness evidenced by this Note is hereby
expressly subordinated in right of payment to any present and future
indebtedness of Company to banks, equipment lessors and other financial
institutions.
8. 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 of this
Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
9. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing
contained in this Note 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 shall be payable or accrued in
respect of this Note or the interest represented hereby or the shares
purchasable hereunder until, and only to the extent that, the conversion rights
of this Note shall have been exercised.
10. WAIVER AND AMENDMENT. Any provision of this Note may be amended,
waived or modified upon the written consent of Company and Holder.
11. NOTICES. 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 ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other
address or number as Holder shall have furnished to Company in writing, or if to
Company, at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other
address or number as Company shall have furnished to Holder in writing.
12. PAYMENT. Payment shall be made in lawful tender of the United
States.
13. GOVERNING LAW. The descriptive headings of the several sections and
paragraphs of this Note are inserted for convenience only and do not constitute
a part of this Note. This Note and all actions arising out of or in connection
with this Note shall be governed by and construed in
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accordance with the laws of the State of California, without regard to the
conflicts of law provisions of the State of California, or of any other state.
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IN WITNESS WHEREOF, Company has caused this Note to be issued as of the
date first written above.
THE 3DO COMPANY
a Delaware corporation
By:
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Title:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
By:
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Title:
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