Exhibit 10.4
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
___________________________
$18,000,000.00 August 23, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED The 3DO Company, a Delaware corporation ("COMPANY"),
promises to pay to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III ("HOLDER"), or its registered
assigns, the principal sum of Eighteen Million Dollars ($18,000,000.00), 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 23, 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 23, 2000 and on each August 23
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) pply 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:____________________________________
Title:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
By:____________________________________
Title:_________________________________
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