Exhibit 10.4
AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT
AMENDMENT NO. 1, dated as of January 31, 1997 (this "Amendment"), to
Registration Rights Agreement, dated as of September 24, 1996, between GRAPHIX
ZONE, INC., a Delaware corporation (the "Company"), and PANGAEA FUND LIMITED, a
British Virgin Islands corporation (the "Initial Investor").
W I T N E S S E T H :
WHEREAS, the Company and the Initial Investor are parties to a
Registration Rights Agreement, dated as of September 24, 1996, (the
"Registration Rights Agreement");
WHEREAS, the Company and the Initial Investor have executed and
delivered a Subscription Agreement, dated as of January 31, 1997 (the
"Additional Subscription Agreement"); and
WHEREAS, the Company and the Initial Investor wish to amend the
Registration Rights Agreement upon the terms and subject to the conditions set
forth herein.
NOW THEREFORE, in consideration of the premises and the covenants
contained in this Amendment and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. AMENDMENTS. (a) The first Recital of the Registration Rights
Agreement is hereby amended to read as follows:
WHEREAS, in connection with the Subscription Agreement, dated as of
September 24, 1996, between the Initial Investor and the Company (the "1996
Subscription Agreement"), the Company has agreed, upon the terms and
subject to the conditions of the 1996 Subscription Agreement, to issue and
sell to the Initial Investor 1,000 shares (the "1996 Preferred Shares") of
Series A Convertible Preferred Stock of the Company as provided in the
Subscription Agreement, and pursuant to the Subscription Agreement, dated
as of January 31, 1997, by and between the Initial Investor and the Company
(the "1997 Subscription Agreement" and, together with the 1996 Subscription
Agreement, collectively the "Subscription Agreement"), the Company has
agreed upon the
terms and subject to the conditions of the 1997 Subscription Agreement, to
issue and sell to the Initial Investor 500 shares (the "1997 Preferred
Shares" and, together with the 1996 Preferred Shares, the "Preferred
Shares") which Preferred Shares are convertible into shares (the
"Conversion Shares") of Common Stock, $.01 par value (the "Common Stock"),
of the Company, and pursuant to the Subscription Agreement the Company has
agreed to issue to the Initial Investor warrants (the "Warrants") to
purchase shares (the "Warrant Shares") of Common Stock; and
(b) Section 1(a) of the Registration Rights Agreement is hereby
amended by deleting clause (iii) thereof in its entirety and by inserting the
following in lieu thereof:
(iii) "Registrable Securities" shall mean the Conversion Shares, the
Warrant Shares and any shares of Common Stock issuable to any Investor as a
dividend on Preferred Shares.
(c) Section 2(a) of the Registration Rights Agreement is hereby
amended by deleting the text thereof in its entirety and inserting in lieu
thereof the following text:
(a) MANDATORY REGISTRATION. The Company shall prepare, and on or
prior to the date which is 15 days after the date of the closing under the
1996 Subscription Agreement (the "1996 Closing Date"), file with the SEC a
Registration Statement on Form S-1 covering at least 592,593 shares of
Common Stock as Registrable Securities, and which Registration Statement
shall state that, in accordance with Rule 416 under the Securities Act,
such Registration Statement also covers such indeterminate number of
additional shares of Common Stock as may become issuable upon conversion of
the Preferred Shares and exercise of the Warrants to prevent dilution
resulting from stock splits, stock dividends or similar transactions or by
reason of changes in the conversion price of the 1996 Preferred Shares and
the exercise price of the Warrants issued pursuant to the 1996 Subscription
Agreement in accordance with the respective terms thereof. The Company
shall prepare, and on or prior to the date which is six (6) days after the
date of the closing under the 1997 Subscription Agreement (the "1997
Closing Date"), file with the SEC a Registration Statement on Form S-3
covering at least 1,142,010 shares of Common
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Stock as Registrable Securities, and which Registration Statement shall
state that, in accordance with Rule 416 under the Securities Act, such
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of the
Preferred Shares and exercise of the Warrants to prevent dilution resulting
from stock splits, stock dividends or similar transactions or by reason of
changes in the conversion price of the 1997 Preferred Shares and the
exercise price of the Warrants issued pursuant to the 1997 Subscription
Agreement in accordance with the respective terms thereof. If at any time
the number of shares of Common Stock included in the Registration Statement
required to be filed as provided in the first two sentences of this Section
2(a) shall be insufficient to cover the number of shares of Common Stock
issuable on conversion in full of the unconverted Preferred Shares and the
unexercised Warrants, then promptly, but in no event later than 15 days
after such insufficiency shall occur, the Company shall file with the SEC
an additional Registration Statement on Form S-3 (which shall not
constitute a post-effective amendment to the Registration Statement
required to be filed pursuant to the first sentence of this Section 2(a))
or other applicable form covering such number of shares of Common Stock as
shall be sufficient to permit such conversion and exercise. For all
purposes of this Agreement (other than Section 2(c) hereof) such additional
Registration Statement shall be deemed to be the Registration Statement
required to be filed by the Company pursuant to Section 2(a) of this
Agreement, and the Company and the Investors shall have the same rights and
obligations (other than Section 2(c) hereof) with respect to such
additional Registration Statement as they shall have with respect to the
initial Registration Statement required to be filed by the Company pursuant
to this Section 2(a).
(d) Section 2(c) of the Registration Rights Agreement is hereby
amended by deleting the first paragraph thereof in its entirety and inserting in
lieu thereof the following text:
(c) PAYMENTS BY THE COMPANY. If the Registration Statement covering
the Registrable Securities which is required to be filed by the Company
pursuant to the first sentence of Section 2(a) hereof is not effective
within 60 days after the Closing Date, then the Company will make
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payments to the Initial Investor in such amounts and at such times as shall
be determined pursuant to this Section 2(c). The amount to be paid by the
Company to the Initial Investor shall be determined as of each Computation
Date, and such amount shall be equal to (1) in the case of the first
Computation Date, two percent (2%), and (2) in the case of the second
Computation Date and each Computation Date thereafter, three percent (3%),
in each case of the aggregate subscription price paid by the Initial
Investor for the 1996 Preferred Shares and the Warrants issued in
connection therewith pursuant to the 1996 Subscription Agreement (together
with interest, if any, thereon as herein provided, each, a "Periodic
Amount"); PROVIDED, HOWEVER, that if any Computation Date is less than 30
days subsequent to another Computation Date, then the Periodic Amount
payable on the later Computation Date shall be pro rated. The Periodic
Amount shall be paid by the Company within five business days after each
Computation Date and shall be payable in cash; PROVIDED, HOWEVER, that the
Company may elect in lieu of payment of any Periodic Amount in cash to
deliver to the Initial Investor shares of Common Stock having an Aggregate
Market Value equal to the amount of the Periodic Amount if, but only if,
such shares are freely tradable by the Initial Investor without any
restriction under the Securities Act or any state securities or "blue sky"
law. Any Periodic Amount not paid when due shall bear interest at the rate
of 12 percent per annum until paid.
As used in this Section 2(c), the following terms shall have the
following meanings:
"Aggregate Market Value" of any shares of Common Stock issued with
respect to any Computation Date means the product obtained by multiplying
(a) such number of shares of Common Stock times (b) the Average Market
Price of the Common Stock for the Measurement Period for such Computation
Date.
"Average Market Price" of any security for any period shall be
computed as the arithmetic average of the closing bid of such security for
each trading day in such period on the principal trading market for such
security, as reported by such market.
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"Computation Date" means (1) the date which is 60 days after the 1996
Closing Date, unless the Registration Statement theretofore has been
declared effective by the SEC, (2) if the Registration Statement has not
theretofore been declared effective by the SEC, each date which is 30 days
after a Computation Date and (3) if the Registration Statement has not been
declared effective by the SEC within 60 days after the 1996 Closing Date,
the date on which the Registration Statement is declared effective by the
SEC.
"Measurement Period" means with respect to any Computation Date, the
period of five consecutive trading days for the Common Stock ending on the
date of issuance and delivery to the Initial Investor of shares of Common
Stock with respect to such Computation Date.
2. EFFECTIVENESS. This Amendment shall become effective on the date
(the "Effective Date") when counterparts hereof shall have been executed and
delivered by the Company and the Initial Investor. From and after the Effective
Date, all references in the Registration Rights Agreement to the Registration
Rights Agreement shall be deemed to be references to such Registration Rights
Agreement as amended hereby.
3. REGISTRATION RIGHTS AGREEMENT. Except as amended by this
Amendment, the Registration Rights Agreement shall remain in effect in
accordance with its terms.
4. MISCELLANEOUS. (a) Capitalized terms used in this Amendment and
defined in the introductory paragraph or recitals of this Amendment shall have
the respective meanings provided therein. Capitalized terms used in this
Amendment and not otherwise defined in this Amendment shall have the respective
meanings provided in the Registration Rights Agreement.
(b) This Amendment shall be construed and interpreted in accordance
with the laws of the State of California.
(c) This Amendment may be executed in any number of counterparts and
by different parties hereto on separate counterparts, each of which counterparts
when so executed and delivered, shall be deemed to be an original and all of
which counterparts, taken together, shall constitute but one and the same
instrument. This Amendment may be executed and delivered by a party by a
telephone line facsimile transmission bearing a
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signature on behalf of such party transmitted by such party to the other party.
(d) Section and paragraph headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
(e) Any provision of this Amendment that is prohibited, unenforceable
or not authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability or
non-authorization without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction.
(f) No amendment or waiver of any provision of this Amendment shall
in any event be effective unless the same shall be in writing and signed by the
party to be charged with enforcement thereof and any such waiver shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of any party to exercise, and no delay in
exercising, any right under this Amendment shall operate as a waiver thereof by
such party. No single or partial exercise of any right under this Amendment
shall preclude any other or further exercise thereof or the exercise of any
other right.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Amendment as of the date first
above written.
GRAPHIX ZONE, INC.
By
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Name:
Title:
PANGAEA FUND LIMITED
By
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Name:
Title:
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