Registration Rights Agreement - The 3DO Co. and William M. Hawkins III
TABLE OF CONTENTS
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SECTION 1 REGISTRATION RIGHTS; RESTRICTIONS ON TRANSFERABILITY................1
1.1 Certain Definitions.........................................1
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1.2 Restrictions................................................2
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1.3 Restrictive Legend..........................................2
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1.4 Notice of Proposed Transfers................................3
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1.5 Company Registration........................................4
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1.6 Expenses of Registration....................................5
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1.7 Nasdaq National Market Listing..............................5
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1.8 Indemnification.............................................5
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1.9 Information by Holder.......................................7
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1.10 Rule 144 Reporting..........................................7
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1.11 Transfer of Registration Rights.............................7
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1.12 Termination of Rights.......................................8
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1.13 Market Stand-off Agreement..................................8
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SECTION 2 MISCELLANEOUS.......................................................8
2.1 Successors and Assigns......................................8
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2.2 Third Parties...............................................8
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2.3 Governing Law...............................................9
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2.4 Counterparts................................................9
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2.5 Notices.....................................................9
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2.6 Severability................................................9
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2.7 Amendment and Waiver........................................9
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2.8 Delays or Omissions.........................................9
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2.9 Attorneys' Fees............................................10
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2.10 Headings...................................................10
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2.11 Entire Agreement...........................................10
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2.12 Further Assurances.........................................10
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as
of the 9th day of October, 2001 by The 3DO Company, a Delaware corporation (the
"Company"), and William M. Hawkins, III (the "Investor").
RECITALS
WHEREAS, the Company desires the Investor to purchase shares of the
Company's Common Stock pursuant to that certain Stock Purchase Agreement of even
date herewith;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
SECTION 1
REGISTRATION RIGHTS;
RESTRICTIONS ON TRANSFERABILITY
1.1 Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Holder" shall mean any person entering into this Agreement with the
Company or holding Registrable Securities to whom the rights under this
Agreement have been transferred in accordance with Section 1.11 hereof.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" means the Shares; provided, however, that the
Shares shall only be treated as Registrable Securities if and so long as they
have not been (x) sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction, or (y) sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act so that all transfer restrictions and restrictive legends
with respect thereto are removed upon the consummation of such sale.
"Registration Expenses" shall mean all reasonable expenses incurred by
the Company in complying with Sections 1.5 hereof, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue
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sky fees and expenses, the expense of any special audits incident to or required
by any such registration (but excluding the compensation of regular employees of
the Company which shall be paid in any event by the Company) and all reasonable
fees and disbursements of one special counsel for all of the Holders who elect
to include their Registrable Securities in any such registration up to a maximum
of $10,000.
"Restricted Securities" shall mean the Shares required to bear the
legend set forth in Section 1.3 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar or successor federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and all fees and disbursements of special counsel for the Holders
(as limited by Section 1.6).
"Shares" shall mean the shares of Common Stock of the Company (x)
purchased by the Investor pursuant to the Stock Purchase Agreement of even date
herewith and (y) issued or issuable upon exercise of the Warrant.
"Warrant" shall mean the warrant issued pursuant to the Stock Purchase
Agreement of even date herewith to purchase up to 1,179,903 shares of the Common
Stock of the Company.
1.2 Restrictions. The Shares shall not be sold, assigned, transferred
or pledged except upon the conditions specified in this Agreement, which
conditions are intended to ensure compliance with the provisions of the
Securities Act. The Investor will cause any proposed purchaser, assignee,
transferee or pledgee of the Shares to agree to take and hold such securities
subject to the provisions and upon the conditions specified in this Agreement.
1.3 Restrictive Legend. Each certificate representing the Shares and
any other securities issued in respect of the Shares upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event, shall
(unless otherwise permitted by the provisions of Section 1.4 below) be stamped
or otherwise imprinted with a legend in substantially the following form (in
addition to any legend required under applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE
SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SAID ACT."
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"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AGREEMENTS
BETWEEN THE COMPANY AND THE ORIGINAL STOCKHOLDER, COPIES OF
WHICH ARE ON FILE WITH THE SECRETARY OF THE COMPANY."
Each Holder consents to the Company making a notation on its records
and giving instructions to any transfer agent of the Restricted Securities in
order to implement the restrictions on transfer established in this Section 1.
1.4 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 1. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied at such holder's expense by either (a) an unqualified written
opinion of legal counsel who shall, and whose legal opinion shall be, reasonably
satisfactory to the Company, addressed to the Company, to the effect that the
proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (b) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, or (c) any other evidence reasonably
satisfactory to counsel to the Company, whereupon the holder of such Restricted
Securities shall be entitled to transfer such Restricted Securities in
accordance with the terms of the notice delivered by the holder to the Company.
The Company will not require such a legal opinion or "no action" letter (x) in
any transaction in compliance with Rule 144, (y) in any transaction in which a
Holder which is a corporation distributes Restricted Securities solely to its
majority owned subsidiaries or affiliates for no consideration, or (z) in any
transaction in which a Holder which is a partnership distributes Restricted
Securities solely to partners thereof for no consideration; provided that each
transferee agrees in writing to be subject to the terms of this Section 1. Each
certificate evidencing the Restricted Securities transferred as above provided
shall bear, except if such transfer is made pursuant to Rule 144, the
appropriate restrictive legends set forth in this Section 1, except that such
certificate shall not bear such restrictive legend if, in the opinion of counsel
for such holder and the Company, such legend is not required in order to
establish compliance with any provisions of the Securities Act or this
Agreement.
1.5 Company Registration.
(a) Notice of Registration. If at any time or from time to
time, the Company shall determine to register any of its securities, either for
its own account or the account of a security holder other than (i) a
registration relating solely to employee benefit plans, or (ii) a registration
relating solely to a merger, acquisition or exchange, or (iii) a registration
relating to convertible debt transaction, the Company will:
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(i) promptly give to the Holders written notice
thereof; and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests made within twenty (20) days after receipt of such written notice
from the Company by any Holder.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.5(a)(i). In such event, the right of any Holder to
registration pursuant to Section 1.5 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company (or by the
holders who have demanded such registration, as the case may be).
Notwithstanding any other provision of this Section 1.5, if the managing
underwriter determines in its sole discretion that marketing factors require a
limitation of the number of shares to be underwritten, the managing underwriter
may limit the number of Registrable Securities to be included in the
registration and underwriting, on a pro rata basis based on the total number of
securities (including, without limitation, Registrable Securities owned by each
participating Holder) entitled to be included in such registration; but in no
event shall the amount of securities of the participating Holders included in
the offering be reduced below 25% of the total amount of securities included in
such offering. To facilitate the allocation of shares in accordance with the
above provisions, the Company or the underwriters may round the number of shares
allocated to any Holder or other holder to the nearest 100 shares. If any Holder
or other holder disapproves of the terms of any such underwriting, he or she may
elect to withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration, and shall not be transferred in a public
distribution prior to ninety (90) days after the date of the final prospectus
included in the registration statement relating thereto.
(c) Right to Terminate Registration. The Company shall have
the right to terminate or withdraw any registration initiated by it under this
Section 1.5 prior to the effectiveness of such registration, whether or not any
Holder has elected to include securities in such registration.
1.6 Expenses of Registration. All Registration Expenses incurred in
connection with registrations pursuant to Section 1.5 (other than expenses in
excess of $10,000 of any special audit required in connection with a
registration pursuant to Section 1.5, which shall be borne by the Holders of
Registrable Securities pro rata on the basis of the number of shares to be
registered) shall be borne by the Company. Unless otherwise stated, all Selling
Expenses relating to securities registered on behalf of the Holders shall be
borne by the Holders of the registered securities included in such registration
pro rata on the basis of the number of shares so registered.
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1.7 Nasdaq National Market Listing. Upon a registration initiated by
the Company under Section 1.5 being declared effective by the Commission, the
Company shall cause immediately thereafter all such Registrable Securities
registered thereunder to be listed on the Nasdaq National Market.
1.8 Indemnification.
(a) The Company will indemnify each Holder, with respect to
which registration, qualification or compliance has been effected pursuant to
this Section 1, against all expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act, the Securities Exchange Act of
1934, as amended (the "Exchange Act") or any state securities laws applicable to
the Company in connection with any such registration, qualification or
compliance, and the Company will reimburse each such Holder for any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action, as
such expenses are incurred, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, and will reimburse the Company, such
directors, officers, persons, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, as such expenses
are incurred, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged omission)
is made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by an instrument duly executed by such Holder and stated to be
specifically for use therein; provided however that in no event shall any
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indemnity under this Section 1.8(b) exceed the net proceeds from the offering
received by such Holder.
(c) If the indemnification provided for in this Section 1.8 is
held by a court of competent jurisdiction to be unavailable to a party entitled
to indemnification under this Section 1.8 (the "Indemnified Party") with respect
to any loss, liability, claim, damage or expense referred to herein, then the
party required to provide indemnification (the "Indemnifying Party"), in lieu of
indemnifying such Indemnified Party hereunder, instead shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
liability, claim, damage or expense in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one hand and of the
Indemnified Party on the other in connection with the statements or omissions
that resulted in such loss, liability, claim, damage or expense, as well as any
other relevant equitable considerations. The relative fault of the Indemnifying
Party and of the Indemnified Party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(d) Each Indemnified Party shall give notice to the
Indemnifying Party promptly after such Indemnified Party has actual knowledge of
any claim as to which indemnity may be sought, and shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall conduct
the defense of such claim or litigation, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld), and the Indemnified
Party may participate in such defense at such party's expense; provided,
however, that an Indemnified Party (together with all other Indemnified Parties
which may be represented without conflict by one counsel) shall have the right
to retain its own separate counsel with the reasonable fees and expenses to be
paid by the Indemnifying Party if the Indemnified Party reasonably determines
that representation of such Indemnified Party would be appropriate due to actual
or potential differing interests between such Indemnified Party and any other
party represented by such counsel in such proceeding. The failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 1 unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation.
1.9 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
reasonably request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Section 1.
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1.10 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to use its commercially reasonable efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date that the Company becomes subject to the reporting
requirements of the Exchange Act;
(b) File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); and
(c) So long as a Holder owns any Restricted Securities, to
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144 and of the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company and other
information in the possession of or reasonably obtainable by the Company as a
Holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing a Holder to sell any such securities without
registration.
1.11 Transfer of Registration Rights. The rights in connection with the
Company's registration of securities granted to Holders under Section 1.5 may
only be assigned to (i) an affiliate or wholly owned subsidiary of the Holder;
(ii) an acquiror of at least 100,000 Registrable Securities; or (iii) an
acquiror of all of the Holder's Shares; provided that written notice of such
assignment is given to the Company and such assignee agrees to be bound by the
provisions of this Section 1.
1.12 Termination of Rights. The rights of any particular Holder under
Section 1 shall terminate on the earlier of the first anniversary of the date of
this Agreement and the date when the Holder can sell all of its Registrable
Securities pursuant to Rule 144 or similar or successor Rule in any single
90-day period.
1.13 Market Stand-off Agreement. Each Holder agrees in connection with
an underwritten public offering of the Company's securities where Holder's
Registrable Securities are registered (other than a registration of securities
in a Rule 145 transaction or with respect to an employee benefit plan) that,
upon request of the Company or the underwriters managing any underwritten
offering of the Company's securities, not to sell, make any short sale of, loan,
grant any option for the purchase of, pledge, hypothecate, limit such Holder's
market risk regarding or otherwise directly or indirectly dispose of any
Registrable Securities (other than those included in the registration) or other
capital stock of the Company or securities exchangeable or convertible into
capital stock of the Company without the prior written consent of the Company or
such underwriters, as the case may be, for such period of time (not to exceed
ninety (90) days from the date of the final prospectus used in such
registration) as may be requested by the Company or such managing underwriters,
and to enter into a lock-up agreement in customary form with such underwriters
providing for restrictions
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approved by the Company's board of directors provided that all officers and
directors of the Company are bound by and have entered into similar agreements.
SECTION 2
MISCELLANEOUS
2.1 Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors, assigns, heirs, executors and
administrators and permitted transferees of the parties hereto.
2.2 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
2.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Delaware as applied to agreements entered into
and performed in the State of Delaware solely by residents thereof without
reference to principles of conflicts of laws or choice of laws.
2.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.5 Notices. Any notice required or permitted by this Agreement shall
be in writing and shall be deemed effectively given the earlier of (i) when
received, (ii) when delivered personally, (iii) one (1) business day after being
delivered by facsimile (with receipt of appropriate confirmation), (iv) one (1)
business day after being deposited with an overnight courier service or (v) four
(4) days after being deposited in the U.S. mail, First Class with postage
prepaid, and addressed to the parties at the addresses provided to the Company
(which the Company agrees to disclose to the other parties upon request) or such
other address as a party may request by notifying the other in writing.
2.6 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
2.7 Amendment and Waiver. Any provision of this Agreement may be
amended with the written consent of the Company and the Holders of at least a
majority of the outstanding shares of the Registrable Securities.
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2.8 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing.
2.9 Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
2.10 Headings. The headings and captions used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which are incorporated herein by this reference.
2.11 Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties with respect to the subject matter
hereof and supersedes all prior negotiations, correspondence, agreements,
understandings, duties or obligations among the parties with respect to the
subject matter hereof.
2.12 Further Assurances. From and after the date of this Agreement,
upon the request of a party, the other parties shall execute and deliver such
instruments, documents or other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY
THE 3DO COMPANY
By:
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James Cook
Executive Vice President, General Counsel and Secretary
[Investor Rights Agreement Signature Page]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
INVESTOR:
WILLIAM M. HAWKINS, III
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[Investor Rights Agreement Signature Page]