Sample Business Contracts

Intercreditor Agreement - The 3DO Co., William M. Hawkins III and IIG Capital LLC

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     This   INTERCREDITOR   AGREEMENT,   dated  as  of  March  19,   2003  (this
"Agreement"),  is among William M. Hawkins, III (the "Subordinating  Creditor"),
The 3DO Company, a California  corporation (the "Debtor"),  and IIG Capital LLC,
as agent for the IIG Trade Opportunities Fund, N.V. (the "Senior Creditor").


     A The Senior  Creditor  has or expects  to acquire a security  interest  in
assets of the  Debtor  in which  the  Subordinating  Creditor  has an  interest,
including but not limited to the Senior Creditor Collateral.

     B The Debtor and  Subordinating  Creditor are parties to the  Subordinating
Creditor  Agreements.  The Creditors are executing  this  Agreement to set forth
their lien priorities with respect to the Senior Creditor Collateral.

     NOW,  THEREFORE,  in  consideration  of the  premises,  and intending to be
legally bound hereby, the Creditors hereby agree as follows:


     1.  Definitions.  The following  terms used herein shall have the following
meaning.  All  capitalized  terms not herein  defined shall have the meaning set
forth in the Uniform Commercial Code:

         1.1. "Bankruptcy Code" - Title 11 of the United States Code.

         1.2. "Chosen State" - New York.

         1.3. "Creditors" -The Subordinating Creditor and the Senior Creditor.

         1.4. "Debtor" - See preamble.

         1.5.  "Interest  Payments"  -  Regularly  scheduled  interest  payments
pursuant to the Subordinating Creditor Agreements.

         1.6. "Party" - Each of the Subordinating  Creditor, the Debtor, and the
Senior Creditor.

         1.7. "Permitted Payments" - (i) Interest Payments,  and (ii) $5,000,000
of the Subordinating Creditor Obligations.

         1.8.  "Secondary  Collateral"  -  Collateral  of a  Creditor  holding a
security interest which is inferior to the priority of the other Creditor.

         1.9. "Senior Creditor" - See preamble.

                                   Page 1 of 7

         1.10.  "Senior  Creditor  Collateral" - All Debtor's present and future
Accounts, Instruments, Documents, Chattel Paper, General Intangibles, Inventory,
Equipment,  Letter of Credit Rights, and Investment  Property and the direct and
indirect proceeds thereof.

         1.11. "Senior Creditor  Obligations" - Obligations of the Debtor to the
Senior Creditor secured by the Senior Creditor Collateral.

         1.12. "Subordinating Creditor" - See Preamble.

         1.13.  "Subordinating  Creditor  Agreements"  - The  Note  and  Warrant
Purchase  Agreement,  dated December 27, 2002,  between Debtor and Subordinating
Creditor, and related documents thereto.

         1.14.  "Subordinating  Creditor Obligations" - Indebtedness owed by the
Debtor to the Subordinating Creditor secured by Senior Creditor Collateral.

     2.  Priority.  Notwithstanding  the terms or provisions of any agreement or
arrangement  which either  Creditor may now or hereafter have with the Debtor or
any rule of law, and irrespective of the time, order, or method of attachment or
perfection of any security  interest or the  recordation  or other filing in any
public record of any financing  statement,  any security interests in the Senior
Creditor Collateral held by the Senior Creditor,  whether or not perfected,  are
and shall remain senior to any lien now or hereafter  held by the  Subordinating
Creditor and, any present and future guaranties  relating to the Senior Creditor

     3. Permitted Payments.

         3.1.  Notwithstanding anything to the contrary contained herein, Debtor
may make and  Subordinating  Creditor may retain Permitted  Payments;  provided,
that with respect to any Permitted  Payments  other than  Interest  Payments (a)
Subordinating  Creditor  shall  provide  Senior  Creditor  with 30 days' written
notice prior to such  payment,  and (b) such notice is not given prior to May 1,

         3.2. Any payments received by Subordinating  Creditor on account of the
Subordinating Creditor Obligations, other than Permitted Payments, shall be held
by Subordinating Creditor in trust for the benefit of Senior Creditor, and shall
be  delivered  to  Senior  Creditor  in  kind,   immediately   upon  receipt  by
Subordinating Creditor to be held by Senior Creditor as cash collateral securing
the Senior Creditor Obligations.

         3.3.  Subordinating  Creditor  may request  and receive  payment of the
remaining  Subordinating  Creditor Obligations with the prior written consent of
Senior Creditor, which consent shall not be unreasonably withheld or delayed, so
long as such repayment does not cause Subordinating Creditor (as Chief Executive
Officer  and  director)  to breach  his  fiduciary  duties to the Debtor and its

         3.4. The provision set forth in Section 3.1 above permitting  Permitted
Payments  shall  terminate  and be of no  further  force  and  effect  upon  the
occurrence  and during the  continuance  of a default in the  performance of the
Senior Creditor Obligations.

                                  Page 2 of 7


     4. Enforcement of Security Interest.

         4.1. The Subordinating  Creditor shall have no right to take any action
with  respect  to  the  Senior  Creditor  Collateral,  whether  by  judicial  or
non-judicial  foreclosure,  notification to the Debtor's  account  debtors,  the
seeking of the appointment of a receiver for any portion of the Debtor's assets,
setoff, or otherwise,  unless and until the Senior Creditor has received payment
of all Senior Creditor Obligations in immediately available funds.

         4.2. If the  Subordinating  Creditor,  in contravention of the terms of
this Agreement,  shall commence,  prosecute, or participate in any suit, action,
or proceeding  against the Debtor or initiate any foreclosure sale or proceeding
or any  other  action  to  enforce  its  lien  on any  of  the  Senior  Creditor
Collateral,  then the Debtor may  interpose  as a defense or plead the making of
this Agreement, and the Senior Creditor may intervene and interpose such defense
or plea in its name or in the name of the Debtor. If the Subordinating Creditor,
in  contravention  of the terms of this Agreement,  shall attempt to enforce any
remedies  prohibited by this  Agreement,  then the Senior Creditor or the Debtor
may, by virtue of this Agreement,  restrain the enforcement  thereof in the name
of the Senior Creditor or in the name of the Debtor.

     5. Proceeds of Collateral.

         5.1.  Any proceeds of  Secondary  Collateral,  or proceeds of proceeds,
received by a Creditor shall be,  immediately upon discovery,  paid to the other

         5.2.  Any such sums not paid when due shall accrue a late charge at the
rate of 24% per annum.

     6.  Subordinating  Creditor  Covenants and  Warranties.  The  Subordinating
Creditor warrants covenants and represents that it:

         6.1. Is the owner of the Subordinating  Creditor Obligations,  free and
clear of the claims of any other entity;

         6.2. Is the secured party named in each financing  statement  listed on
the attached Exhibit entitled "Subordinating Creditor Financing Statements".

         6.3. Will indemnify  Senior  Creditor and hold it harmless  against any
direct or indirect loss (including attorneys fees and expenses) arising from the
assertion  by any  holder of the  Subordinating  Creditor  Obligations  that the
provisions of this Agreement do not bind such holder.

         6.4.  Will, at the request of Senior  Creditor in  connection  with the
proper  enforcement  of its  security  interest,  promptly  release any lien and
security  interest it has on any Senior  Creditor  Collateral to facilitate  its
transfer or sale so long as the proceeds  thereof are applied against the Senior
Creditor Obligations and any excess is paid to the Subordinating  Creditor to be
applied against the Subordinating Creditor Obligations.

                                  Page 3 of 7


         6.5. Waives any rights it may have to claim that the  enforceability of
this  Agreement  may  be  affected  by  any  subsequent  modification,  release,
extension,  or other  change,  material  or  otherwise,  in the Senior  Creditor
Obligations or the Senior Creditor Collateral.

         6.6. Will  reasonably  cooperate with Senior  Creditor in notifying the
Debtor's  Account  Debtors  that  proceeds of Accounts  should be paid to Senior
Creditor and not to Subordinating Creditor.

     7. Remedy for Breach.

         Any  breach  hereof  is  likely  to  cause  irreparable  damage  to the
aggrieved party. Therefore,  the relief to which such party shall be entitled in
such event shall include,  but not be limited to: (a) a mandatory injunction for
specific  performance,  (b) judicial relief to prevent a violation of any of the
provisions of this Agreement,  (c) damages, and (d) any other relief to which it
may be entitled at law or in equity.

     8. Amendment of Subordinating Creditor Agreements.

         8.1. This Agreement  shall be deemed an amendment to the  Subordinating
Creditor  Agreements,  which cannot be further  amended to adversely  affect the
rights of Senior Creditor hereunder.

         8.2.  The  signature of Senior  Creditor  shall not be required for any
further amendment of the Subordinating Creditor Agreements.

     9. Effect of  Bankruptcy.  This  Agreement  shall  remain in full force and
effect  notwithstanding  the filing of a petition  for relief by or against  the
Debtor under the Bankruptcy Code and shall apply with full force and effect with
respect  to  all  Senior  Creditor   Collateral  acquired  by  the  Debtor,  and
obligations incurred by the Debtor to the Subordinating Creditor,  subsequent to
the date of any such petition.

     10. No Duty to Provide Financial  Accommodations.  Nothing contained herein
or in any prior agreement or understanding shall be deemed to create any duty on
the  part  of  either   party  to  extend  or  continue   to  extend   financial
accommodations to the Debtor.

     11. Waiver of Marshaling. The Subordinating Creditor irrevocably waives any
right to compel the Senior Creditor to marshal assets of the Debtor.

     12. Cross Default.  Notwithstanding  anything to the contrary  contained in
any  agreement  between  Debtor  and Senior  Creditor,  default by Debtor in the
performance of its obligations to the Subordinating  Creditor shall constitute a
default by Debtor in the performance of the Senior Creditor Obligations.

     13.  Choice  of  Law.  This  Agreement  and all  transactions  contemplated
hereunder  and/or  evidenced  hereby shall be governed by,  construed under, and
enforced in accordance with the internal laws of the Chosen State.

                                  Page 4 of 7


     14.  Amendment and Waiver.  Only a writing signed by all parties hereto may
amend this  Agreement.  No failure or delay in  exercising  any right  hereunder
shall impair any such right that Senior  Creditor may have, nor shall any waiver
by  Senior  Creditor  hereunder  be  deemed a waiver  of any  default  or breach
subsequently  occurring.  Senior  Creditor's  rights  and  remedies  herein  are
cumulative  and not  exclusive  of each other or of any rights or remedies  that
Senior Creditor would otherwise have.

     15. Construction. This Agreement and all agreements relating to the subject
matter hereof is the product of  negotiation  and  preparation by and among each
party and its respective attorneys.

     16. Benefits Of This Agreement. This Agreement is solely for the benefit of
and shall bind the Creditors and their respective  successors and assigns and no
other entity shall have any right, benefit, priority, or interest hereunder.

     17. Term. This Agreement shall continue only so long as the Senior Creditor
and  Subordinating  Creditor each hold a security interest in any portion of the
Senior Creditor Collateral.

     18.  Enforcement.  In the event that any party finds it necessary to retain
counsel in connection with the  interpretation,  defense, or enforcement of this
Agreement, the prevailing party shall recover its reasonable attorney's fees and
expenses from the unsuccessful  party. It shall be presumed (subject to rebuttal
only by the introduction of competent  evidence to the contrary) that the amount
recoverable is the amount billed to the prevailing party by its counsel and that
such amount will be  reasonable  if based on the  billing  rates  charged to the
prevailing party by its counsel in similar matters.

     19.   Counterparts.   This  Agreement  may  be  signed  in  any  number  of
counterparts, each of which shall be an original, with the same effect as if all
signatures were upon the same instrument. Delivery of an executed counterpart of
the signature page to this Agreement by facsimile shall be effective as delivery
of a manually executed  counterpart of this Agreement,  and any party delivering
such  an  executed  counterpart  of the  signature  page to  this  Agreement  by
facsimile to any other party shall  thereafter also promptly  deliver a manually
executed  counterpart of this  Agreement to such other party,  provided that the
failure to  deliver  such  manually  executed  counterpart  shall not affect the
validity, enforceability, or binding effect of this Agreement.

     20.  Notice.  All notices  required to be given to either  party  hereunder
shall be deemed  given upon the first to occur of: (a) three (3)  business  days
after deposit thereof,  with postage prepaid,  in a receptacle under the control
of the United  States  Postal  Service;  (b) the first  business  day  following
transmittal  by  facsimile or e-mail to the party to whom notice is being given;
or (c) actual receipt by the party to whom notice is being given, or an employee
or agent of thereof.

                                  Page 5 of 7


                             Subordinating Creditor

Address:          200 Cardinal Way
                  Redwood City CA 94063
Attention:        William M. Hawkins
Fax number:       650-385-3183


Address:          200 Cardinal Way
                  Redwood City CA 94063
Attention:        William M. Hawkins
Fax number:       650-385-3177

                                 Senior Creditor

Address:          17 State Street
                  New York NY 10004
Attention:        Mr. Mark Kurtz
Fax number:       212-785-0026

     IN WITNESS  WHEREOF,  the parties  have caused  this  Agreement  to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.

Subordinating Creditor:          /s/ William M. Hawkins, III
                                 William M. Hawkins, III, individually

Debtor:                          The 3DO Company

                                 By:      /s/ William M. Hawkins, III
                                 Name:    William M. Hawkins, III
                                 Title:   Chief Executive Officer

Senior Creditor:                 IIG Capital LLC, as agent for the
                                  IIG Trade Opportunities Fund, N.V.

                                 By:      /s/ Martin Silver
                                 Name:     Martin Silver
                                 Title:   Managing Partner

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