Exhibit 10.6
ANNEX I
TO
ESCROW AGREEMENT
THE SECURITIES OF GRAPHIX ZONE, INC. IN CONNECTION WITH THE OFFER AND SALE OF
WHICH THIS DOCUMENT IS BEING DELIVERED HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), AND MAY NOT BE
OFFERED OR SOLD IN THE UNITED STATES OR TO "U.S. PERSONS," AS DEFINED IN
REGULATION S UNDER THE 1933 ACT (OTHER THAN DISTRIBUTORS, AS DEFINED IN SAID
REGULATION S), UNLESS THE SHARES ARE REGISTERED UNDER THE 1933 ACT, OR AN
EXEMPTION FROM SAID REGISTRATION REQUIREMENT OF THE 1933 ACT IS AVAILABLE.
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT, dated as of the date of acceptance set forth
below, by and between GRAPHIX ZONE, INC., a Delaware corporation, with
headquarters located at 00 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000
(the "Company"), and the undersigned (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing this Agreement in
reliance upon one or more exemptions from securities registration under the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, contemporaneously with the execution of this Agreement, the
Company and the Buyer have executed and delivered an Escrow Agreement, dated the
date hereof (the "Escrow Agreement"), by and among the Company, the Buyer and
the Law Offices of Xxxxx X Xxxxx (the "Escrow Agent"); and
WHEREAS, once this Agreement is released from escrow to the Buyer as
provided herein, the Company and the Buyer wish to exchange, upon the terms and
subject to the conditions of this Agreement, (1) outstanding shares (the "Series
A Preferred Shares") of Series A Convertible Preferred Stock, $.01 par value
(the "Series A Preferred Stock"), held by Buyer for newly issued shares of non-
voting, convertible preferred stock of the Company which will be convertible
into shares of Common Stock, $.01 par value (the "Common Stock"), of the Company
and (2) outstanding
Common Stock Purchase Warrants of the Company held by the Buyer for newly issued
warrants to purchase shares of Common Stock, subject to acceptance of this
Agreement by the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO EXCHANGE.
(a) EXCHANGE. The Company and the Buyer hereby agree to exchange on
the Closing Date (as defined herein) (1) a number of shares (the "Series B
Preferred Shares") of Series B Convertible Preferred Stock, $.01 par value (the
"Series B Preferred Stock"), of the Company equal to the number of Series A
Preferred Shares held by the Buyer on the Closing Date for the number of Series
A Preferred Shares held by the Buyer on the Closing Date and (2) to exchange the
number of warrants to purchase shares of Common Stock (the "New Warrants") equal
to the number of outstanding Common Stock Purchase Warrants (the "Outstanding
Warrants") held by the Buyer on the Closing Date for the number of Outstanding
Warrants held by the Buyer on the Closing Date. The Series B Preferred Shares
shall have the rights, designations and terms as set forth in the form of
Certificate of Designations attached as ANNEX II to the Escrow Agreement (the
"Certificate of Designations"), and the Buyer hereby agrees that certificates
for a number of Series B Preferred Shares equal to one third of the total number
of Preferred Shares shall bear each of the three legends set forth in Section
9(a)(ii) of the terms of the Preferred Stock in the Certificate of Designations.
The New Warrants shall be in the form attached as ANNEX III to the Escrow
Agreement. The shares of Common Stock issuable upon conversion of the Series B
Preferred Shares are referred to herein as the "Conversion Shares." The shares
of Common Stock issuable upon exercise of the New Warrants are referred to
herein as the "Warrant Shares." The Conversion Shares and the Warrant Shares
are referred to herein collectively as the "Common Shares." The Common Shares
and the Series B Preferred Shares are referred to herein collectively as the
"Shares." The Shares and the New Warrants are referred to herein collectively
as the "Securities."
(b) CLOSING. The exchange of Series B Preferred Shares for Series A
Preferred Shares and New Warrants for
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Outstanding Warrants shall occur at a closing (the "Closing") to be held on the
date which is four New York Stock Exchange trading days after the date on which
the Company shall have accepted this Agreement and returned a signed counterpart
of this Agreement to the Buyer. The closing shall occur on the Closing Date at
the offices of the Escrow Agent. After the Closing, all funds shall continue to
be held under the Joint Escrow Instructions, dated as of October 31, 1996, by
and among the Company, the Buyer and Law Offices of Xxxxx X Xxxxx, as Escrow
Agent.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.
The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:
(a) The Buyer is purchasing the Series B Preferred Shares and the New
Warrants for its own account for investment only and not with a view towards the
public sale or distribution thereof;
(b) The Buyer is an "accredited investor" as that term is defined in
Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3);
(c) All subsequent offers and sales of the Securities by the Buyer
shall be made pursuant to registration of the Securities being offered and sold
under the 1933 Act or pursuant to an exemption from registration;
(d) The Buyer understands that the Series B Preferred Shares and New
Warrants are being offered and sold, and the Common Shares are being offered, to
it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying
upon the truth and accuracy of, and the Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Buyer set forth herein and in the Prospective Purchaser Questionnaire, a
true and accurate copy of which has been delivered by the Buyer to the Company
(the "Questionnaire"), in order to determine the availability of such exemptions
and the eligibility of the Buyer to acquire the Series B Preferred Shares and
the New Warrants and to receive an offer of the Common Shares;
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(e) The Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Series B Preferred Shares and
the New Warrants and the offer of the Common Shares which have been requested by
the Buyer. The Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries. Without limiting the generality of
the foregoing, the Buyer has had the opportunity to obtain and to review the
following documents of the Company: (1) Registration Statement on Form S-4
(Registration No. 333-02642) filed with the Securities and Exchange Commission
(the "SEC") on March 25, 1996, (2) Annual Report on Form 10-K for the fiscal
year ended June 30, 1996 (the "1996 Form 10-K"), (3) Quarterly Report on Form
10-Q for the fiscal quarter ended September 30, 1996 (the "September Form 10-
Q"), (4) the Company's Current Report on Form 8-K, dated July 15, 1996, (5) the
Company's definitive Proxy Statement for its 1996 Annual Meeting of
Stockholders, and (6) all other reports filed by the Company with the SEC
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), subsequent to the date of this Agreement and prior to
the Closing Date, in each case as filed with the SEC. The Buyer understands
that its investment in the Securities involves a high degree of risk;
(f) The Buyer understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Shares;
(g) (1) The Buyer is not organized under the laws of any
jurisdiction within the United States, its territories or possessions, and was
not formed for the purpose of investing in Regulation S securities and is not a
"U.S. person" as that term is defined in Regulation S;
(2) At the time the buy order for the Series B Preferred Shares and
the New Warrants was originated, the Buyer was outside the United States, its
territories and possessions;
(3) No offer to purchase the Securities was made by the Buyer in the
United States, its territories or possessions;
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(4) The Buyer is purchasing the Series B Preferred Shares and the New
Warrants and will acquire the Common Shares for its own account and not as part
of any plan or scheme to evade the registration requirements of the 1933 Act;
(5) All subsequent offers and sales of the Securities by the Buyer
shall be made in compliance with Regulation S pursuant to registration of the
Securities under the 1933 Act or pursuant to an exemption from registration; in
any case, the Securities will not be resold to a U.S. person (as defined in Rule
902 of Regulation S) or within the United States, its territories or
possessions, until after the end of the applicable restricted period determined
in accordance with Regulation S which ends on the date which is 40 days after
the Closing Date;
(6) If the Buyer is a "distributor" (as defined in Regulation S) or a
"dealer" (as defined in the 1933 Act), the Buyer will comply with the
requirements of Rule 903(c)(2) of Regulation S, including, without limitation,
the requirements for the content of confirmation of any sale of the Securities;
and
(7) The Buyer has not entered into any prearranged transaction with
any person in the United States for the sale or other transfer of the
Securities; and
(h) This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Buyer and is a valid and binding agreement of the
Buyer enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally.
3. COMPANY REPRESENTATIONS, WARRANTIES, ETC.
The Company represents and warrants to, and covenants and agrees with,
the Buyer that:
(a) CONCERNING THE SECURITIES. The Securities have been duly
authorized and the Series B Preferred Shares, when issued in exchange for the
Series A Preferred Shares in accordance with this Agreement, and the Common
Shares, when issued upon conversion of the Series B Preferred Shares or exercise
of the New Warrants, as the case may be, will be duly and validly issued, fully
paid and non-assessable and will not
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subject the holder thereof to personal liability by reason of being such holder.
There are no preemptive rights of any stockholder of the Company, as such, to
acquire any of the Securities. The Common Stock is listed for trading on the
Nasdaq SmallCap Market ("Nasdaq") and (1) the Company and the Common Stock meet
the criteria for continued listing and trading on Nasdaq; (2) the Company has
not been notified since January 1, 1995 by the National Association of
Securities Dealers, Inc. ("NASD") of any failure or potential failure to meet
the criteria for continued listing and trading on Nasdaq (except for the notices
dated February 22, 1995, March 16, 1995 and April 13, 1995 regarding a potential
failure that has been rectified by the Company, and the notice dated October 24,
1996 and December 3, 1996, regarding the tardiness of the 1996 Form 10-K and the
September Form 10-Q, copies of which have been furnished to the Buyer by the
Company prior to the execution and delivery of this Agreement by the Buyer) and
(3) no suspension of trading in the Common Stock is in effect.
(b) EXCHANGE AGREEMENT; REGISTRATION RIGHTS AGREEMENT; WARRANTS.
This Agreement, the Registration Rights Agreement, the form of which is attached
as ANNEX IV to the Escrow Agreement (the "Registration Rights Agreement") and
the New Warrants, have been duly and validly authorized by the Company, this
Agreement has been duly executed and delivered on behalf of the Company and this
Agreement is and the Registration Rights Agreement and the Warrants, when
executed and delivered by the Company, will be, valid and binding agreements of
the Company enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally.
(c) NON-CONTRAVENTION. The execution and delivery of this Agreement,
the Registration Rights Agreement and the Warrants by the Company and the
consummation by the Company of the issuance of the Series B Preferred Shares and
the New Warrants and the other transactions contemplated by this Agreement, the
Registration Rights Agreement and the terms of the Series B Preferred Stock and
the New Warrants do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under, the
certificate of incorporation or by-laws of the Company, or any indenture,
mortgage, deed of trust or other material agreement or instrument to which the
Company is a party or by which it or any
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of its properties or assets are bound, or any applicable law, rule or regulation
or any applicable decree, judgment or order of any court, United States federal
or state regulatory body, administrative agency or other governmental body
having jurisdiction over the Company or any of its properties or assets.
(d) APPROVALS. No authorization, approval or consent of or filing
with any court, governmental body, regulatory agency, self-regulatory
organization, or stock exchange or market or the stockholders of the Company is
required to be obtained by the Company for the issuance and sale of the
Securities as contemplated by this Agreement, the Series B Preferred Stock and
the Warrants, other than (1) listing of the Common Shares on Nasdaq, (2) the
filing of a Form D relating to the Series B Preferred Shares and the Warrants
and (3) the requirements of any applicable blue sky laws.
(e) SEC REPORTING STATUS AND FILINGS. The Company has filed with the
SEC all reports and other information required to be filed under Sections 13(a),
14 and 15(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), except that the Company did not timely file with the SEC the 1996 Form
10-K or the September Form 10-Q. Since June 30, 1996, the Company has not filed
any reports or other information with the SEC pursuant to Sections 13(a), 14 and
15(d) of the 1934 Act other than the reports and other information identified in
Section 2(e) hereof.
(f) INFORMATION PROVIDED. The information provided by or on behalf
of the Company to the Buyer in connection with the transactions contemplated by
this Agreement, including, without limitation, the information referred to in
Section 2(e) of this Agreement, does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading.
(g) ABSENCE OF CERTAIN CHANGES. Since June 30, 1996, there has been
no material adverse change and no material adverse development in the business,
properties, operations, condition (financial or other), results of operations or
prospects of the Company, except as disclosed in the documents referred to in
Section 2(e) hereof and except that the Company may report a loss for the
quarter ended December 31, 1996, after reporting operating profits in the
quarters ended June 30, 1996 and September 30, 1996.
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(h) ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or body pending
or, to the knowledge of the Company or any of its subsidiaries, threatened
against or affecting the Company or any of its subsidiaries, wherein an
unfavorable decision, ruling or finding would have a material adverse effect on
the properties, business, condition (financial or other), results of operations
or prospects of the Company and its subsidiaries taken as a whole or the
transactions contemplated by this Agreement or any of the documents contemplated
hereby or which would adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations under, this
Agreement or any of such other documents.
(i) EXCHANGES OF STOCK AND WARRANTS. The Company has not and will
not pay any commission or other remuneration for soliciting exchanges of Series
A Preferred Shares for Series B Preferred Shares or Outstanding Warrants for New
Warrants.
(j) CERTAIN SECURITIES LAW MATTERS. The Company is a "reporting
issuer" as defined in Rule 902 of Regulation S; and the offering by the Company
of the Securities has been and will be made in a manner to comply with
Regulation S.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
(a) TRANSFER RESTRICTIONS. (1) The Buyer and the Company acknowledge
and agree that (A) the Series B Preferred Shares and the New Warrants have not
been and are not being registered under the provisions of the 1933 Act and may
not be transferred unless (i) subsequently registered thereunder or (ii) the
Buyer shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that the
Series B Preferred Shares or the New Warrants to be sold or transferred may be
sold or transferred pursuant to an exemption from such registration; (B) any
sale of the Series B Preferred Shares or the New Warrants made in reliance on
Rule 144 promulgated under the 1933 Act may be made only in accordance with the
terms of said Rule and further, if said Rule is not applicable, any such resale
of Series B Preferred Shares or New Warrants under circumstances in which the
seller, or the person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under
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the 1933 Act or the rules and regulations of the SEC thereunder; and (C) neither
the Company nor any other person is under any obligation to register the Series
B Preferred Shares or the New Warrants under the 1933 Act or to comply with the
terms and conditions of any exemption thereunder (other than pursuant to Section
4(d) hereof and Regulation S under the 0000 Xxx) with respect to the sale or
other transfer of the Series B Preferred Shares and the New Warrants.
(2) The Buyer and the Company acknowledge and agree that (A) the
Common Shares have not been registered under the provisions of the 1933 Act and
may not be transferred unless (i) subsequently registered thereunder or (ii)
sold pursuant to an exemption from registration thereunder. The Company agrees
that on or after the date which is 41 days after an Escrow Exchange Release
Event, by reason of Regulation S under the 1933 Act the transfer of the Common
Shares will be exempt from registration under the 1933 Act. The Company
represents and warrants to the Buyer that, on or before the Closing Date, the
Company shall furnish to its transfer agent for the Common Stock (the "Transfer
Agent") such instructions and opinions of counsel as may be required by the
Transfer Agent in order to permit the transfer of the Common Shares without
registration under the 1933 Act as permitted by Regulation S thereunder.
Notwithstanding the eligibility of the Common Shares for transfer without
registration under the 1933 Act from and after the date which is 41 days after
the Closing Date, the Buyer agrees that, so long as the Company shall have
complied in all material respects with its obligations under this Agreement and
the Registration Rights Agreement, the Buyer shall not convert any Series B
Preferred Shares until the earlier of (A) the date the Registration Statement
required to be filed by the Company pursuant to Section 2(a) of the Registration
Rights Agreement is first declared effective by the SEC and (B) the date which
is 41 days after the Closing Date.
(b) RESTRICTIVE LEGEND. The Buyer acknowledges and agrees that the
certificates for the Series B Preferred Shares and the New Warrants may bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for the Series B
Preferred Shares and the New Warrants):
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended.
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The securities have been acquired for investment and may not be sold,
transferred or assigned in the absence of an effective registration
statement for the securities under the Securities Act of 1933, as amended,
or an opinion of counsel that registration is not required under said Act.
(c) FORM D. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to the
Buyer promptly after such filing. The Buyer agrees to cooperate with the
Company in connection with such filing and, upon request of the Company, to
provide all information relating to the Buyer reasonably required for such
filing.
(d) REPORTING STATUS. So long as the Buyer beneficially owns any of
the Series B Preferred Shares, the New Warrants or the Common Shares, the
Company shall file all reports required to be filed with the SEC pursuant to
Section 13 or 15(d) of the 1934 Act and the Company shall not terminate its
status as an issuer required to file reports under the 1934 Act even if the 1934
Act or the rules and regulations thereunder would permit such termination.
(e) USE OF PROCEEDS. The Company will use the proceeds from the
exercise of the New Warrants for the Company's internal working capital purposes
and not for the purpose of any investment in or loan to any other corporation,
partnership, enterprise or other person.
5. TRANSFER AGENT INSTRUCTIONS; CONVERSION PROCEDURE.
(a) TRANSFER AGENT INSTRUCTIONS. Promptly following the delivery by
the Buyer of the certificates for the Series A Preferred Shares to the Escrow
Agent in accordance with Section 1(c) hereof, and prior to the Closing Date, the
Company will irrevocably instruct its Transfer Agent to issue certificates for
Common Shares from time to time upon conversion of Series B Preferred Shares and
exercise of New Warrants in such amounts as specified from time to time to the
Transfer Agent in the conversion certificates surrendered in connection with
such conversions and referred to in Section 5(b) of this Agreement or required
by the Certificate of Designations or in the subscription forms attached to the
New Warrants, as the case may be. The certificates for such Common Shares shall
not bear any restrictive legend. The Company warrants that no instruction
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other than such instructions referred to in this Section 5 and stop transfer
instructions to give effect to Section 4(a)(1) hereof with respect to the Series
B Preferred Shares and the New Warrants will be given by the Company to the
Transfer Agent and that the Common Shares shall otherwise be freely transferable
on the books and records of the Company as and to the extent provided in this
Agreement. Nothing in this Section 5(a) shall affect in any way the Buyer's
obligations and agreement to comply with all applicable securities laws upon
resale of the Common Shares and to comply with the terms and conditions of the
Certificate of Designations. If the Buyer provides the Company with an opinion
of counsel reasonably satisfactory in form, scope and substance to the Company
that registration of a resale by the Buyer of any of the Series B Preferred
Shares or New Warrants in accordance with clause (A)(ii) of Section 4(a)(1) of
this Agreement is not required under the 1933 Act, the Company shall permit the
transfer of such Series B Preferred Shares or New Warrants, as the case may be.
The provisions of Section 3(n) of the Registration Rights Agreement shall be in
addition to this Section 5(a).
(b) CONVERSION PROCEDURE. In connection with the exercise of
conversion rights relating to the Series B Preferred Shares, if the Common
Shares issuable upon conversion of the Series B Preferred Shares have not been
registered for resale under the 1933 Act prior to such conversion, the Buyer or
any subsequent holder of the Series B Preferred Shares shall, in addition to any
other requirement imposed by the terms of the Series B Preferred Shares as set
forth in the Certificate of Designations, complete, sign and furnish to the
Escrow Agent, with a copy to the Company, a conversion certificate in the form
attached hereto as SCHEDULE 1.
6. GOVERNING LAW; MISCELLANEOUS.
(a) This Agreement shall be governed by and interpreted in accordance
with the laws of the State of California.
(b) This Agreement may be executed in counterparts and by the parties
hereto on separate counterparts, all of which together shall constitute one and
the same instrument. A facsimile transmission of this Agreement bearing a
signature on behalf of a party hereto shall be legal and binding on such party.
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(c) The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement.
(d) If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
(e) No failure or delay by any party in exercising any right or
remedy under this Agreement or otherwise, and no course of dealing between the
parties, shall operate as a waiver thereof or amendment of this Agreement, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or exercise of any other right or
power.
(f) Neither this Agreement nor any term thereof (including this
paragraph) may be amended, changed, waived, discharged or terminated unless such
amendment, change, waiver, discharge or termination is in writing signed by the
party to be charged with enforcement. The execution, delivery and performance
of, and closing under, this Agreement, shall not constitute a waiver by the
Buyer of any breach by the Company of, or of any rights of the Buyer under, the
Existing Subscription Agreement or the Registration Rights Agreement, dated as
of October 31, 1996, by and between the Company and the Buyer.
(g) Any notices required or permitted to be given under the terms of
this Agreement shall be sent by mail or delivered personally (which shall
include telephone line facsimile transmission) or by courier and shall be
effective five days after being placed in the mail, if mailed, or upon receipt,
if delivered personally or by courier, in each case addressed to a party at such
party's address shown in the introductory paragraph or on the signature page of
this Agreement (facsimile number 000-000-0000, in the case of the Company, and
as set forth on the signature page hereof, in the case of the Buyer) or such
other address as a party shall have provided by notice to the other party in
accordance with this provision. The Buyer hereby designates as its address and
telephone line facsimile transmission number for any notice required or
permitted to be
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given to the Buyer pursuant to the Certificate of Designations or the
Registration Rights Agreement the address and telephone line facsimile
transmission number set forth on the signature page hereof, until the Buyer
shall by notice to the Company designate another address or telephone line
facsimile transmission number for such purpose.
(h) The Buyer shall have the right to assign its rights and
obligations under this Agreement with respect to the exchange of all or any
portion of the Series A Preferred Shares and the Outstanding Warrants to another
investment fund, provided such assignee, by written instrument duly executed by
such assignee, assumes all obligations of the Buyer hereunder with respect to
the exchange of the portion of the Series A Preferred Shares and the Outstanding
Warrants so assigned and makes the same representations and warranties with
respect thereto as the Buyer makes in this Agreement, whereupon the Buyer shall
be relieved of any further obligations, responsibilities and liabilities with
respect to the exchange of all or the portion of the Series A Preferred Shares
and the Outstanding Warrants the obligation for the purchase of which has been
so assigned. In the case of any such assignment, the Company shall agree in
writing with such assignee to make available to such assignee the benefits of
the Registration Rights Agreement with respect to the Common Shares issuable on
conversion of the Series B Preferred Shares and exercise of the New Warrants
with respect to which the exchange under this Agreement has been so assigned.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer
or one of its officers thereunto duly authorized as of the date set forth below.
NUMBER OF SERIES A PREFERRED SHARES: _________
NUMBER OF SERIES B PREFERRED SHARES: _________
NUMBER OF OUTSTANDING WARRANTS: _________
NUMBER OF NEW WARRANTS: _________
NAME OF BUYER:
SIGNATURE ____________________________
Title: _______________________________
Date: _______________________________
Address: ____________________________
______________________________________
______________________________________
______________________________________
Facsimile Number: _________________________
This Agreement has been accepted as of the date set forth below.
GRAPHIX ZONE, INC.
By: ________________________
Title: _____________________
Date: _____________________
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