Securities Purchase Agreement - The 3DO Co., Triage Capital Management LP, OTA LLC, Triage Offshore Fund Ltd.
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT, dated as of February 21, 2003 (this
"Agreement") is entered into by and among The 3DO Company, a Delaware
corporation (the "Company"), and the purchasers listed in Exhibit A hereto (each
a "Purchaser" and collectively the "Purchasers"). The parties, intending to be
legally bound, hereby agree as follows:
1. Sale of Common Stock. Subject to the terms and conditions of this
Agreement, Company hereby agrees to sell to each Purchaser and each Purchaser
hereby severally agree to purchase from Company the number of shares of
Company's Common Stock set forth opposite such Purchaser's name on Exhibit A
(the "Shares"), at the purchase price listed on Exhibit A. Upon the execution of
this Agreement (the "First Closing"), (A) the Company shall deliver or cause to
be delivered to each Purchaser the following: (i) this Agreement duly executed
by the Company; (ii) a certificate evidencing a number of shares of Common Stock
being purchased by such Purchaser, registered in the name of such Purchaser;
(iii) the Registration Rights Agreement duly executed by the Company and (iv)
and Warrant (the "Warrant"), registered in the name of the Purchaser in the form
attached hereto as Annex A, giving the Purchaser the right to acquire the number
of shares of Common Stock upon the exercise of the Warrant (the "Warrant
Shares") listed on Exhibit A and (B) each Purchaser shall deliver or cause to be
delivered to the Company the following: (i) this Agreement duly executed by such
Purchaser; (ii) the purchase prices for the Shares being purchased by such
Purchaser, by check, wire transfer, or any combination thereof, payable to
Company, and (iii) the Registration Rights Agreement duly executed by such
Purchaser.
2. Additional Closings. The Company may sell Common Stock and Warrants at
an additional closing or closings on or before 20 days after the First Closing
(the "Additional Closing(s)"), subject to the same procedures as provided in
Section 1. The purchase price for the Shares and the exercise price for the
Warrant may be the same or different from the First Closing. Upon delivery of an
executed counterpart of this Agreement and the Registration Rights Agreement
(and an updated Exhibit A), the purchasers in such Additional Closing(s) shall
become parties to the Registration Rights Agreement without further action by
the Purchasers and the Company.
3. Representations and Warranties of Company. Company hereby represents and
warrants to each Purchaser in the First Closing that the statements contained in
the following paragraphs of this Section 3 are all true and correct as of the
date of this Agreement and the Closing Date, and to each Purchaser in an
Additional Closing that the statements contained in the following paragraphs of
this Section 3 are all true and correct as of the date of the Additional
Closing:
(a) Organization and Standing: Articles and Bylaws. Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted.
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(b) Corporate Power. Company has all requisite legal and corporate
power to enter into, execute, deliver and perform this Agreement and the
Registration Rights Agreement (the "Registration Rights Agreement") of even date
herewith between Company and Purchaser. This Agreement and the Registration
Rights Agreement (the "Transaction Documents") have been duly executed by the
Company and constitute the legal, valid and binding obligations of Company,
enforceable in accordance with their terms, except as the same may be limited by
(i) bankruptcy, insolvency, moratorium, and other laws of general application
affecting the enforcement of creditors' rights and (ii) limitations on the
enforceability of the indemnification provisions of the Registration Rights
Agreement as limited by applicable securities laws.
(c) Authorization.
(i) Corporate Action. All corporate and legal action on the
part of Company, its officers, directors and shareholders necessary for the
execution and delivery of this Agreement, the Registration Rights Agreement, the
sale and issuance of the Shares and Warrant Shares, and the performance of
Company's obligations hereunder have been taken.
(ii) Valid Issuance. The Shares and Warrant Shares, when
issued in compliance with the provisions of this Agreement and the Warrant, will
be duly and validly issued, fully paid and nonassessable, free and clear of all
liens and encumbrances; provided, however, that the Shares, the Warrants and the
Warrant Shares may be subject to restrictions on transfer under state and/or
federal securities laws as set forth herein, and as may be required by future
changes in such laws.
(d) Government Consent, Etc. No consent, approval, order or
authorization of, or designation, registration, declaration or filing with, any
federal, state, local or other governmental authority on the part of Company is
required in connection with the valid execution and delivery of this Agreement,
the Registration Rights Agreement or the offer, sale or issuance of the Shares,
the Warrants and the Warrant Shares other than, if required, filings or
qualifications under the California Corporate Securities Law of 1968, as amended
(the "California Law"), or other applicable blue sky laws, which filings or
qualifications, if required, will be timely filed or obtained by Company. The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated thereby do
not and will not conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement filed (or incorporated
by reference) as an exhibit to the SEC Reports (as defined below).
(e) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Exchange Act of 1934, as
amended ("1934 Act"), including pursuant to Section 13(a) or 15(d) thereof, for
the twelve months preceding the date hereof (the foregoing materials being
collectively referred to herein as the "SEC Reports") on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act of 1933, as amended (the "1933 Act") and the 1934 Act and
the rules and regulations of the Securities and Exchange Commission
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("Commission") promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved, except as may be otherwise specified in such financial
statements or the notes thereto, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
year-end audit adjustments.
(f) Private Placement. Assuming the accuracy of the Purchasers
representations and warranties set forth in Section 4, no registration under the
1933 Act is required for the offer, issuance and sale of the Shares, the
Warrants and the Warrant Shares by the Company to the Purchasers as contemplated
hereby.
(g) Listing and Maintenance Requirements. The issuance and sale of the
Shares, the Warrants and the Warrant Shares hereunder, when taken together with
any Shares, Warrants and Warrant Shares that may be issued at Additional
Closings do not contravene the rules and regulations of the Nasdaq National
Market and no approval of the stockholders of the Company is required for the
Company to issue and deliver to the Purchasers the Shares, the Warrants and the
Warrant Shares including all Shares and Warrants issued and Warrant Shares
issuable as of the Closing and each Additional Closing. The Company is eligible
to utilize Form S-3 to register the resale of the Shares and Warrant Shares by
the Purchasers.
(h) Investment Company. The Company is not, and is not an Affiliate of,
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(i) Disclosure. The Company confirms that neither it nor any other
person acting on its behalf has provided any of the Purchasers or their agents
or counsel with any information that constitutes or might constitute material,
non-public information. The Company understands and confirms that the Purchasers
will rely on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Purchasers regarding
the Company, its business and the transactions contemplated hereby furnished by
or, to the Company's knowledge, on behalf of the Company are true and correct
and do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
4. Representations and Warranties by Purchaser. Each Purchaser, severally
and not jointly, represents and warrants to Company as of the Closing Date (or
Additional Closing Date, as applicable) as follows:
(a) Investment Intent: Authority. This Agreement is made with Purchaser
in reliance upon Purchaser's representation to Company, evidenced by Purchaser's
execution of this
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Agreement, that Purchaser is acquiring the Shares, the Warrants and the Warrant
Shares for investment for Purchaser's own account, not as nominee or agent, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the 1933 Act;
provided, however, that by making the representations herein, Purchaser does not
agree to hold any of the Shares, the Warrants and the Warrant Shares for any
minimum or other specific term and reserves the right to dispose of the Shares,
the Warrants and the Warrant Shares at any time in accordance with or pursuant
to a registration statement or an exemption under the 1933 Act. Purchaser has
the requisite right, power, authority and capacity to enter into and perform
this Agreement and the Agreement will constitute a valid and binding obligation
upon Purchaser, except as the same may be limited by bankruptcy, insolvency,
moratorium, and other laws of general application affecting the enforcement of
creditors' rights.
(b) Knowledge and Experience. Purchaser (i) has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of Purchaser's prospective investment in the Shares, the
Warrants and the Warrant Shares; (ii) has the ability to bear the economic risks
of Purchaser's prospective investment; (iii) has had all questions which have
been asked by Purchaser satisfactorily answered by Company; and (iv) has not
been offered the Shares, the Warrants and the Warrant Shares by any form of
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any such media.
Purchaser represents and warrants that it is an "accredited investor" within the
meaning of Rule 501 of Regulation D of the Securities Act.
(c) Transfer Restrictions. Purchaser covenants that in no event will it
sell, transfer or otherwise dispose of any of the Shares, the Warrants and the
Warrant Shares other than in conjunction with an effective registration
statement for the Shares under the Securities Act or pursuant to an exemption
therefrom, or in compliance with Rule 144 promulgated under the Securities Act
or to a person related to or an entity affiliated with said Purchaser and other
than in compliance with the applicable securities regulation laws of any state.
5. Registration of the Shares to be Purchased. The Company will file a
registration statement with respect to the Shares and Warrant Shares on or
before twenty (20) days after the Closing Date pursuant to the terms of the
Registration Rights Agreement.
6. Legends. Company will place the following legends on each certificate
representing Shares and Warrant Shares:
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 REASONABLY 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 legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Shares and Warrant Shares
upon which it is stamped, if, unless otherwise required by state securities
laws, (i) such Shares and Warrant Shares are registered for resale under the
1933 Act, (ii) in connection with a sale transaction, such holder provides the
Company with an opinion of counsel, in a generally acceptable form, to the
effect that a public sale, assignment or transfer of the Shares and Warrant
Shares may be made without registration under the 1933 Act, or (iii) such holder
provides the Company with reasonable assurances that the Shares and Warrant
Shares can be sold pursuant to Rule 144 without any restriction as to the number
of securities acquired as of a particular date that can then be immediately
sold. Such Investor acknowledges, covenants and agrees to sell Shares and
Warrant Shares represented by a certificate from which the legend has been
removed only pursuant to (i) a registration statement effective under the 1933
Act or (ii) advice of counsel that such sale is exempt from the registration
requirements of Section 5 of the 1993 Act, including, without limitation, a
transaction pursuant to Rule 144.
7. Indemnification of Purchasers. The Company will indemnify and hold the
Purchasers and their directors, officers, shareholders, partners, employees and
agents (each, a "Purchaser Party") harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys' fees and costs of investigation (collectively, "Losses") that any
such Purchaser Party may suffer or incur as a result of or relating to the
failure of the representations and warranties of the Company to be true and
correct.
8. Non-Public Information. The Company covenants and agrees that neither
it nor any other Person acting on its behalf will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes
material non-public information. The Company understands and confirms that each
Purchaser shall be relying on the foregoing representations in effecting
transactions in securities of the Company.
9. Miscellaneous.
(a) Waivers and Amendments. The provisions of this Agreement may only
be amended or modified in a writing executed by each of Company and Purchaser. A
waiver shall not be effective unless in a writing by the party against whom such
waiver is to be enforced.
(b) Governing Law. This Agreement and all actions arising out of or in
connection with this Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to the conflicts of law
provisions thereof. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE,
AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
(c) Entire Agreement. This Agreement, the Registration Rights Agreement
and the Warrants constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
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(d) Survival. The representations, warranties, covenants and agreements
made herein shall survive the execution and delivery of this Agreement.
(e) Expenses. Company shall pay on demand all reasonable fees and
expenses incurred by Purchaser, including reasonable legal fees and expenses in
connection with the preparation, execution and delivery of this Agreement up to
a maximum amount of $5,000.
(f) 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 Purchaser, at
the address and facsimile number listed on Exhibit A, or at such other address
or number as Purchaser shall have furnished to Company in writing, or if to
Company, at 200 Cardinal Way, Redwood City, California 94063 or at such other
address or number as Company shall have furnished to Purchaser in writing.
(g) Validity. If any provision of this Agreement shall be judicially
determined to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
(h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall be deemed to
constitute one instrument.
(i) Assignment. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the respective successors and assigns of
the parties. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
(j) Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.
(k) Remedies. Each Investor and each holder of the Securities shall
have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any
other agreement or contract and all of the rights which such
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holders have under any law. Any person having any rights under any provision of
this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights granted by law.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
date and year first written above.
THE 3DO COMPANY
a Delaware corporation
By: /S/ James Alan Cook
--------------------------------
Name: James Alan Cook
-----------------------------
Title: Executive Vice President
----------------------------
PURCHASER:
/s/ Triage Capital Management, LP
/s/ OTA LLC
/s/ Triage Offshore Fund, LTD.
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EXHIBIT A
SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>
Aggregate Warrant
Investor Address Number of Purchase Price Exercise
Investor's Name and Facsimile Number Number of Shares Warrant Shares ($) Price ($)
--------------- -------------------- ---------------- -------------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Triage Capital 401 City Ave 117,647 29,411 200,000.00 2.525
Management, LP Suite 526
Bala Cynwyd, PA 19004
Fax: (610) 668-1919
OTA LLC 1 Manhattanville Road
Purchase, NY 10577 58,823 14,705 100,000.00 2.525
(Fax) 914 694 6342
c/o IFA
Triage Offshore Fund, 48 Parla-Villa Rd. 117,647 29,411 200,000.00 2.525
LTD. Suite 464
Hamilton, HM11
Bermuda
Fax: (610) 668-1919
TOTAL 294,117 73,527 500,000.00
</TABLE>