EXHIBIT 10.5
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT, dated as of January 31, 1997, by and between
GRAPHIX ZONE, INC., a Delaware corporation (the "Company"), and the undersigned
(the "Investor").
W I T N E S S E T H:
WHEREAS, the Company and the Investor are parties to a Subscription
Agreement, dated as of September 24, 1996 (the "Subscription Agreement"),
pursuant to which the Investor acquired shares of Series A Convertible Preferred
Stock, $.01 par value (the "Series A Preferred Stock"), of the Company and
Common Stock Purchase Warrants (the "Outstanding Warrants") to purchase shares
of Common Stock, $.01 par value, of the Company; and
WHEREAS, the Company and the Investor are parties to a Registration
Rights Agreement, dated as of September 24, 1996, (the "Registration Rights
Agreement"); and
WHEREAS, the Company and the Investor wish to amend the Subscription
Agreement, the Registration Rights Agreement and the terms of the Series A
Preferred Stock;
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. SUBSCRIPTION AGREEMENT. (a) Section 4(i) of the Subscription
Agreement is hereby amended by deleting the existing Section 4(i) in its
entirety and substituting in lieu thereof the following:
(i) CERTAIN FUTURE FINANCINGS. The Company shall not issue any
equity securities or securities convertible into, exchangeable for or
otherwise entitling the holder to acquire, any equity securities of the
Company (the "New Equity Securities") (i) prior to the date which is 120
days after February 1, 1997 without the prior written consent of the Buyer
and (ii) for a period of one year on or after the date which is 120 days
after February 1, 1997, without giving the Buyer the first right to acquire
the New Equity Securities at substantially the same terms at which the New
Equity Securities are to be offered to other investors;
PROVIDED, HOWEVER, that nothing in this paragraph shall prohibit the
Company from issuing securities (x) as part of a transaction involving a
strategic alliance, collaboration, joint venture or partnership arrangement
of the Company, (y) pursuant to compensation plans for employees,
directors, officers, advisers or consultants of the Company or (z) upon
exercise of conversion, exchange, purchase or similar rights issued,
granted or given by the Company and outstanding as of the date of this
Agreement.
(b) The Company and the Investor agree that, by reason of the lapse of
time, the restrictions in Section 4(k) of the Subscription Agreement are no
longer applicable.
(c) On or before the date of closing (the "Closing Date") under the
Subscription Agreement, dated as of the date hereof, between the Company and
Pangaea Fund Limited (the "New Money Subscription Agreement"), the Company shall
enter into an agreement among the Company, U.S. Stock Transfer Corporation, as
transfer agent and registrar for the Common Stock (the "Transfer Agent"), and
the Investor in the form attached hereto as ANNEX I. The Company shall provide
to the Transfer Agent all records and information required by the Transfer Agent
in order to perform its duties with regard to the Series A Preferred Stock and
the Outstanding Warrants. The Company agrees that the surrender to the Transfer
Agent of a completed Form of Subscription in the form attached to the
Outstanding Warrants to the Transfer Agent together with the applicable exercise
price shall be sufficient for exercise of the Outstanding Warrants.
(d) The form of Notice of Conversion referred to in Section 5(b) of
the Subscription Agreement is hereby amended to be the form attached hereto as
ANNEX II.
2. REGISTRATION RIGHTS AGREEMENT. The proviso to the third sentence
of Section 2(c) of Registration Rights Agreement is hereby amended by deleting
the existing proviso to the third sentence of Section 2(c) and substituting in
lieu thereof the following:
; 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 on the date such shares are
delivered to the Initial Investor equal to the amount of the Periodic
Amount
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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.
3. CERTIFICATE OF DESIGNATIONS. The Investor hereby consents to the
amendments of the Certificate of Designations for the Series A Preferred Stock
contained in the Certificate of Amendment in the form attached hereto as ANNEX
III (the "Certificate of Amendment"). Prior to the Closing Date, the Company
shall file the Certificate of Amendment with the Secretary of State of the State
of Delaware and provide evidence of such filing to the Investor.
4. 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 Investor. From and after the Effective Date,
all references in the Subscription Agreement to the Subscription Agreement shall
be deemed to be references to the Subscription Agreement as amended hereby and
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.
5. CONFIRMATION OF AGREEMENTS. Except as amended by this Agreement,
the Subscription Agreement and the Registration Rights Agreement shall remain in
effect in accordance with their respective terms, and except as amended by the
Certificate of Amendment, the Certificate of Designations shall remain in effect
in accordance with its terms.
6. MISCELLANEOUS. (a) Capitalized terms used in this Agreement and
defined in the introductory paragraph or recitals of this Agreement shall have
the respective meanings provided therein. Capitalized terms used in this
Agreement and not otherwise defined in this Agreement shall have the respective
meanings provided in the Subscription Agreement.
(b) This Agreement shall be construed and interpreted in accordance
with the laws of the State of California.
(c) This Agreement 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
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counterparts, taken together, shall constitute but one and the same instrument.
This Agreement may be executed and delivered by a party by a telephone line
facsimile transmission bearing a signature on behalf of such party transmitted
by such party to the other party.
(d) Section and paragraph headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
(e) Any provision of this Agreement 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 Agreement 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 Agreement shall operate as a waiver thereof by
such party. No single or partial exercise of any right under this Agreement
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 Agreement as of the date first
above written.
GRAPHIX ZONE, INC.
By
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Name:
Title:
NAME OF INVESTOR:
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By
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Name:
Title:
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