Exhibit 10.35
REGISTRATION RIGHTS AGREEMENT
AGREEMENT dated as of February12, 1999 (the "Effective Date")
by and between Interactive Magic, Inc., a North Carolina corporation
("Purchaser"), and Xxxxxx X. Xxxxx, IFM Venture Group and Xxxxx X. Xxxxxx
(collectively, the "Holders").
WHEREAS, in connection with an Agreement and Plan of Merger,
dated as of January 25, 1999, among MPG-Net, Inc., a Delaware corporation
("MPGN""), Purchaser, iMagicOnline Corporation ("I-Magic"), Xxx Xxxxxxxxx,
Multiplayer Games Network, Inc., Tantalus, Inc. and Xxxx X. Xxxxxxxxx (the
"Merger Agreement"), the Holders are acquiring on the date hereof, shares of
Common Stock of Purchaser, par value $.10 per share (the "Common Stock") set
forth opposite their names on Schedule A (the "Equity Securities");
The Holders and Purchaser wish to establish certain rights and
obligations with respect to the Holders' Equity Securities.
It is therefore agreed as follows:
1. DEFINITIONS. In this Agreement, the following terms shall
have the meaning specified, unless the context otherwise requires:
1.1 "Affiliate" of an entity means any person or
entity who or which, directly or indirectly, controls, is under common control
with or is controlled by that entity. For the purposes of this definition,
"control," as used with respect to any entity, shall mean the beneficial
ownership, directly or indirectly, of a majority of the voting securities of
that entity.
1.2 "Convertible Securities" means any evidence of
indebtedness, debt securities, shares of stock (other than Common Stock) or
other securities directly or indirectly convertible into or exchangeable for
Common Stock, including options and warrants.
1.3 "Exchange Act" means the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder, or
any successor act, all as the same shall be in effect at the time.
1.4 "Merger Documents" means the Merger Agreement and
all exhibits thereto.
1.5 "Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
1.6 "Registrable Securities" means the Equity
Securities, Common Stock or Common Stock issued or issuable upon exercise or
conversion of Convertible Securities.
1.7 "Registration Expenses" means all expenses
incident to Purchaser's performance of or compliance with SECTION 4, including,
without limitation, all registration and filing fees, all fees and expenses of
complying with securities or blue sky laws (including reasonable fees and
disbursement of counsel in connection with blue sky qualifications of the
Registrable Securities), rating agency fees, all printing expenses, messenger
and delivery expenses, internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the fees and expenses incurred in connection with the
listing of the securities, the fees and disbursements of counsel for Purchaser
and of its independent public accountants, including the expenses of any special
audits required by or incident to such performance and compliance, but excluding
any fees and expenses of counsel for Holders of Registrable Securities or any
underwriting discounts and commissions applicable to the Registrable Securities.
1.8 "SEC" means the Securities and Exchange
Commission.
1.9 "Securities Act" means the Securities Act of
1933, as amended and the rules and regulations promulgated thereunder, or any
successor act, all as the same shall be in effect at the time.
2. REPRESENTATIONS AND WARRANTIES OF THE HOLDERS. Each Holder
severally represents and warrants to Purchaser as follows:
2.1 Such Holder is acquiring the Equity Securities
for his or its own account and not on behalf of any other Person, and not with a
view to resale or distribution in whole or in part in a manner that would
violate the Securities Act.
2.2 Such Holder understands that the Equity
Securities have not been registered under the Securities Act and will be
"restricted securities" within the meaning of the regulations under the
Securities Act, and by reason of the foregoing the Equity Securities may not be
resold in the absence of an effective registration statement under, or
applicable exemption from, the Securities Act, and that a restrictive legend
will be affixed to the Equity Securities upon issuance to such Holder.
2.3 Such Holder has full knowledge of the operations
of MPGN, Purchaser, I-Magic and the transactions contemplated by the Merger
Documents. Each of the Holders has received and reviewed a copy of the Merger
Documents. Each of the Holders through its representatives has had an
opportunity to ask questions and receive answers concerning Purchaser, I-Magic,
MPGN and the transactions contemplated by the Merger Documents and to obtain any
additional information such Holder has requested in order to verify the accuracy
of the information contained in the Merger Documents. Such Holder has relied
solely on the representations and warranties contained in the Merger Documents
and its own knowledge about Purchaser, I-Magic and MPGN in making its decision
to acquire the Equity Securities.
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3. CERTIFICATES LEGENDED. Until the expiration of all
applicable transfer restrictions established by this Agreement, each certificate
representing any Equity Securities subject to any such restriction shall bear
the following legend conspicuously:
TRANSFER OF THE SHARES EVIDENCED BY THIS CERTIFICATE IS
SUBJECT TO A REGISTRATION RIGHTS AGREEMENT, DATED AS OF [the
date of this agreement], BETWEEN PURCHASER AND THE ORIGINAL
HOLDER HEREOF. A COPY OF SAID AGREEMENT IS ON FILE IN THE
OFFICE OF PURCHASER, AND A COPY THEREOF WILL BE MAILED TO THE
HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT OF A WRITTEN REQUEST
THEREFOR.
4. REGISTRATION RIGHTS.
4.1 PIGGY-BACK AND INCIDENTAL REGISTRATION.
4.1.1 Subject to the provisions of SECTIONS
4.1.3, 4.1.4 AND 4.3 hereof, for a two year period commencing at any time after
the Effective Date, if Purchaser proposes to register any Registrable Securities
under the Securities Act, whether or not for sale for its own account or for the
account of any security holder (other than securities to be issued pursuant to
an employee compensation program or securities issued in a merger, acquisition
or similar transaction) in a manner and on a form which would permit
registration of Equity Securities for sale to the public under the Securities
Act, it shall each such time give written notice to the Holders of its intention
to do so and, upon the written request of any such Holder made within ten (10)
business days after the receipt of any such notice (which request shall specify
the Equity Securities intended to be disposed of by such Holder), Purchaser will
use its best efforts to effect the registration under the Securities Act of all
Equity Securities which Purchaser has been so requested to register by any
Holder, subject to limitations on such inclusion contained in contracts existing
prior to the date of this Agreement, to the extent requisite to permit the
disposition of the Equity Securities so to be registered; PROVIDED that if, at
any time after giving written notice of its intention to register any
Registrable Securities and prior to the effective date of the registration
statement filed in connection with such registration, Purchaser shall determine
for any reason not to register such Registrable Securities, Purchaser may, at
its election, give written notice of such determination to the Holders and,
thereupon, shall be relieved of its obligation to register any Equity Securities
in connection with such registration.
4.1.2 Purchaser will pay all Registration
Expenses in connection with any registration of Equity Securities pursuant to
this SECTION 4.1, except that the Holders or other holders shall bear the fees
of their own counsel and any underwritten discounts or commissions applicable to
any of the Equity Securities sold by them.
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4.1.3 The obligation of Purchaser pursuant
to this SECTION 4.1 shall be limited to two registration statements and shall
not apply to any Equity Securities that at such time are eligible for immediate
resale under Rule 144 during any three month period.
4.1.4 Purchaser shall not be obligated to
notify the Holders or include any of their Equity Securities pursuant to this
SECTION 4.1 in any registration statement contemplated by the Registration
Rights Agreement entered into between RGC International Investors LDC and
Purchaser.
4.2 REGISTRATION PROCEDURES. If and whenever
Purchaser is required by the provisions of SECTION 4.1 to effect the
registration of Equity Securities under the Securities Act, Purchaser will,
subject to the provisions of SECTION 4.3:
4.2.1 prepare and file with the SEC a
registration statement with respect to such Equity Securities, and use
reasonable efforts to cause such registration statement to become and remain
effective for such period as may be reasonably necessary to effect the sale of
such Equity Securities, not to exceed the period expiring on the earlier of (i)
the sale of all the Equity Securities, or (ii) the date on which the Equity
Securities become eligible for resale under Rule 144 during any three month
period;
4.2.2 prepare and file with the SEC such
amendments to such registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration statement
effective for such period as may be reasonably necessary to effect the sale of
such Equity Securities, not to exceed the period expiring on the earlier of (i)
the sale of all the Equity Securities, or (ii) the date on which the Equity
Securities become eligible for resale under Rule 144 during any three month
period;
4.2.3 furnish to the Holders participating
in such registration, if any, such reasonable number of copies of the
registration statement, preliminary prospectus, final prospectus and such other
documents as the Holders may reasonably request in order to facilitate the
public offering of the Equity Securities;
4.2.4 use reasonable efforts to register or
qualify the Equity Securities covered by such registration statement under such
state securities or blue sky laws of such jurisdictions as the Holders, if any,
participating in such registration may reasonably request in writing within five
(5) days following the original filing of such registration statement, except
that Purchaser shall not for any purpose be required to qualify to do business
as a foreign corporation or execute a general consent to service of process in
any jurisdiction wherein it is not so qualified;
4.2.5 notify the Holders, if any,
participating in such registration after Purchaser shall receive notice thereof,
of the time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed;
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4.2.6 for a period expiring on the earlier
of (i) the sale of all the Equity Securities, or (ii) the date on which the
Equity Securities become eligible for resale under Rule 144(k), prepare and file
with the SEC and notify the Holders, if any, participating in such registration
of the filing of such amendment or supplement to such registration statement or
prospectus as may be necessary to correct any statements or omissions if, at the
time when a prospectus relating to such securities is required to be delivered
under the Securities Act, any event shall have occurred as the result of which
any such prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances in which they
were made, not misleading;
4.2.7 advise the Holders, if any,
participating in such registration after Purchaser shall receive notice thereof,
of the issuance of any stop order by the SEC suspending the effectiveness of
such registration statement and use reasonable efforts to obtain its withdrawal;
4.2.8 use reasonable efforts to list such
securities on each securities exchange on which the Common Stock are then
listed, if such securities are not already so listed and if such listing is then
permitted under the rules of such exchange.
4.3 UNDERWRITTEN OFFERINGS IN CONNECTION WITH
"PIGGY-BACK" AND INCIDENTAL REGISTRATIONS. Subject to SECTION 4.1, if at any
time (i) Purchaser proposes to register any Registrable Securities under the
Securities Act for sale for its own account or for the account of any security
holder and such Registrable Securities are to be distributed by or through one
or more underwriters, and (ii) Purchaser agrees to include in such registration
among those to be distributed by such underwriters the Equity Securities
requested to be included by the Holders pursuant to the terms of SECTION 4.1
herein (subject to any contracts existing between Purchaser and other security
holders prior to the date of this Agreement limiting such inclusion), then the
holders of Equity Securities to be distributed by such underwriters shall be
parties to the underwriting agreement between Purchaser and such underwriters,
such agreement to contain such representations and warranties by Purchaser and
the Holders, and such other terms and provisions as are customarily contained in
agreements of this type, including, without limitation, indemnities and rights
to contribution to the effect and to the extent provided in SECTION 5. Purchaser
may also require that the Equity Securities requested for inclusion pursuant to
this SECTION 4.3 be included in the offering on the same financial terms as the
securities otherwise being sold through the underwriters. If in the good faith
judgment of the managing underwriter of such underwritten public offering, the
inclusion of any or all of the Equity Securities requested for inclusion
pursuant to SECTION 4.1 together with any other Registrable Securities which
have similar piggyback registration rights (such securities and the Registrable
Securities being collectively referred to as the "Requested Stock") would
jeopardize the success of the offering, the number of shares of Requested Stock
otherwise to be included in the underwritten public offering may be reduced pro
rata (by number of shares of Common Stock (on an as-converted basis, if
applicable, solely for purposes of determining participation rights)) among the
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holders thereof requesting such registration or excluded in their entirety if so
required by such managing underwriter.
4.4 PREPARATION; REASONABLE INVESTIGATION. In
connection with the preparation and filing of each registration statement
registering Equity Securities under the Securities Act, Purchaser will give the
Holders of such Equity Securities so registered and their underwriters, if any,
and their respective counsel and accountants, the opportunity to participate in
the preparation of such registration statement, each prospectus included therein
or filed with the SEC, and each amendment thereof or supplement thereto, and
will give each of them such reasonable access to its books and records and such
opportunities to discuss the business of Purchaser with its officers and the
independent public accountants who have certified its financial statements as
shall be reasonably necessary, in the opinion of counsel to Purchaser, to
conduct a reasonable investigation within the meaning of the Securities Act.
Each Holder of such Equity Securities shall furnish to Purchaser such
information regarding such Holder and the distribution proposed by such Holder
as Purchaser may request and as shall be required in connection with any
registration referred to in this SECTION 4.
4.5 HOLDBACK AGREEMENT. Each Holder agrees that if
requested in writing by the managing underwriter(s) of any underwritten public
offering of Purchaser's securities, such Holder shall not effect any sale or
distribution of any securities of Purchaser, including a private sale or a sale
pursuant to Rule 144 or 144A (or any similar provision then in force) under the
Securities Act, during the 30-day period prior to, and during the 180-day period
(or such other period as may be requested by the managing underwriter of such
underwritten offering) beginning on the effective date of such registration
statement, except as part of such underwritten offering or as otherwise
permitted by the managing underwriters.
5. INDEMNIFICATION AND CONTRIBUTION.
5.1 INDEMNIFICATION.
5.1.1 Purchaser will indemnify and hold
harmless each Holder whose Equity Securities are included in a registration
statement pursuant to the provisions of SECTION 4 hereof, from and against, any
and all loss, damage, liability, cost and expense, including reasonable
attorney's fees and expenses, to which such Holder may become subject under the
Securities Act or otherwise, insofar as such losses, damages, liabilities, costs
or expenses are caused by any untrue statement or alleged untrue statement of
any material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the 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; PROVIDED,
HOWEVER, that Purchaser will not be liable in any such case to the extent that
any such loss, damage, liability, cost or expenses arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in reliance upon information furnished by or on behalf of such
Holder for use in the preparation thereof.
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5.1.2 Each Holder whose Equity Securities
are included in a registration pursuant to the provisions of SECTION 5 hereof
will indemnify and hold harmless Purchaser, its directors and officers, any
controlling Person and any underwriter from and against, and will reimburse
Purchaser, its directors and officers, any controlling Person and any
underwriter with respect to, any and all loss, damage, liability, cost or
expense to which Purchaser or any controlling Person and/or any underwriter may
become subject under the Securities Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses are caused by any untrue statement or
alleged untrue statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment or supplement
thereto, or arise out of or are based upon the 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, in each case to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission was so made in reliance upon
information furnished by or on behalf of such Holder for use in the preparation
thereof.
5.1.3 Promptly after receipt by an
indemnified party pursuant to the provisions of SECTION 5.1.1 OR 5.1.2 of notice
of the commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of SECTION 5.1.1
OR 5.1.2, promptly notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party unless such failure to
give notice shall materially prejudice the indemnifying party in the defense of
such claim. In case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party,
PROVIDED, HOWEVER, if the defendants in any action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or in addition to those available
to the indemnified party, or if there is a conflict of interest which would
prevent counsel for the indemnifying party from also representing the
indemnified party, the indemnified party or parties have the right to select one
separate counsel to participate in the defense of such action on behalf of such
indemnified party or parties at the expense of the indemnifying party unless in
the reasonable judgment of the indemnified parties a conflict of interest may
exist among such indemnified parties, in which event the indemnified parties
shall be obligated to pay the fees and expenses of such additional counsel. An
indemnified party may retain its own counsel in any such action and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of the indemnified party if the indemnifying party has assumed the
defense of the action with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party pursuant to the provisions of said SECTION
5.1.1 OR
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5.1.2 for any legal or other expense subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation.
5.2 CONTRIBUTION.
5.2.1 If the indemnification provided for in
SECTION 5.1.3 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages or liabilities referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities in such proportion as
is appropriate to reflect the relative fault of such indemnifying party and
indemnified parties in connection with the actions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
parties shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, such
statement or omission has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses, claims,
damages and liabilities referred to above shall be deemed to include, subject to
the limitations set forth in SECTION 5.1.3, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
5.2.2 The parties hereto agree that it would
not be just and equitable if contribution pursuant to this SECTION 5.2.2 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in SECTION
5.2.1. No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
5.2.3 If indemnification is available under
SECTION 5.1.3 the indemnifying parties shall indemnify each indemnified party to
the full extent provided in SECTIONS 5.1.1 AND 5.1.2 without regard to the
relative fault of said indemnifying party or indemnified party or any other
equitable consideration provided for in this SECTION 5.2.3.
6. MISCELLANEOUS.
6.1 GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware applicable
to agreements made and to be performed in Delaware.
6.2 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of Purchaser, each Holder and their
respective successors and assigns.
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6.3 NOTICES. Any notice or other communication under
this Agreement shall be considered given and received when (i) delivered
personally in writing, (ii) received by registered mail, return receipt
requested or (iii) sent by facsimile, with a copy confirmed by registered mail,
return receipt requested, by the parties at the following addresses and
telecopier numbers (or at such other addresses and telecopier numbers as a party
may specify by notice to the others):
If to Purchaser:
Interactive Magic, Inc.
000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: President
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
If to the Holders:
(At the addresses listed on Schedule A)
with a copy to:
6.4 WAIVER. Purchaser shall have the right to waive
any of its rights or any obligations owing to it hereunder without the consent
of the other parties to this Agreement.
6.5 TITLES AND SUBTITLES. The titles of the Articles
and Sections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
6.6 COUNTERPARTS; FACSIMILE. This Agreement may be
executed in one or more counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same instrument. This Agreement may be executed by facsimile, which
shall be deemed an original.
6.7 FURTHER ASSURANCES. Each of Purchaser and the
Holders agree to take such actions and execute such documents as is necessary to
carry out the intents and purposes of this Agreement and the transactions
contemplated hereby.
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6.8 COMPLETE AGREEMENT; MODIFICATION AND TERMINATION.
This Agreement contains a complete statement of all the arrangements among the
parties with respect to its subject matter, supersedes all existing agreements
among them concerning that subject matter and cannot be changed or terminated
except in writing signed by all of the parties.
INTERACTIVE MAGIC, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------
Name: Xxxxxxx Xxxxxx
Title: Chief Financial Officer
HOLDERS:
IFM VENTURE GROUP
By: /s/ Xxxxx Xxxxxxxxx
----------------------------
Name: Xxxxx Xxxxxxxxx
Title: Partner
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxx
----------------------------
Xxxxxx X. Xxxxx
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SCHEDULE A
Name and Address Number of Equity Securities
---------------- ---------------------------
IFM Venture Group 18,000 shares of
Common Stock
Xxxxx Xxxxxx 9,000 shares of
Common Stock
Xxxxxx X. Xxxxx 18,000 shares of
Common Stock
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