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EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
March 3, 1998, between General Magic, Inc., a Delaware corporation with offices
at ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company") and each of
the entities listed under "Investors" on the signature page hereto (each an
"Investor" and collectively the "Investors"), each with offices at the address
listed under such Investor's name on Schedule I hereto.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Preferred Stock Investment Agreement,
dated as of the date hereof, by and between the Company and the Investors (the
"Purchase Agreement"), the Company has agreed to sell and issue to the
Investors, and the Investors have agreed to purchase from the Company, an
aggregate of up to 12,000 shares, Liquidation Preference $1,000, of the
Company's 5 1/2% Cumulative Convertible Series B Preferred Stock (the "Preferred
Shares") subject to the terms and conditions set forth therein; provided that
5,000 Preferred Shares will be issued upon the closing provided for in the
Purchase Agreement, 5,000 Preferred Shares will be issuable only upon the terms
specified in Section 3.15 of the Purchase Agreement and 2,000 Preferred Shares
will be issuable only upon the terms specified in Section 3.16 of the Purchase
Agreement; and
WHEREAS, the Purchase Agreement contemplates that the Preferred Shares will
be convertible into shares (the "Common Shares") of common stock, par value
$0.001, of the Company ("Common Stock") pursuant to the terms and conditions set
forth in the Certificate of Designations for the Preferred Shares (the
"Certificate"); and
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investors' agreement to enter into the Purchase Agreement, the Company has
agreed to issue the Warrants and to provide the Investors with certain
registration rights with respect to the Common Shares and Warrant Shares and
certain other rights and remedies with respect to the Preferred Shares as set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in the Purchase Agreement and
this Agreement, the Company and the Investors agree as follows:
1. Certain Definitions. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Purchase Agreement or the
Certificate. As used in this Agreement, the following terms shall have the
following respective meanings:
"Closing" and "Closing Date" shall have the meanings ascribed to such terms
in the Purchase Agreement.
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"Commission" or "SEC" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Holder" and "Holders" shall include an Investor or the Investors,
respectively, and any transferee of the Preferred Shares, Warrants, Common
Shares, Warrant Shares or Registrable Securities which have not been sold to the
public to whom the registration rights conferred by this Agreement have been
transferred in compliance with this Agreement.
The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" shall mean: (i) the Common Shares or other
securities issued or issuable to each Holder or its permitted transferee or
designee upon conversion of the Preferred Shares; (ii) the Warrant Shares or
other securities issued or issuable to each Holder or its permitted transferee
or designee upon exercise of the Warrants; (iii) securities issued or issuable
upon any stock split, stock dividend, recapitalization or similar event with
respect to such Common Shares or Warrant Shares; and (iv) any other security
issued as a dividend or other distribution with respect to, in exchange for or
in replacement of the securities referred to in the preceding clauses.
"Registration Expenses" shall mean all expenses to be incurred by the
Company in connection with each Holder's registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses, reasonable fees and disbursements of counsel to Holders
(using a single counsel selected by a majority in interest of the Holders) for a
"due diligence" examination of the Company and review of the Registration
Statement and related documents, and the expense of any special audits incident
to or required by any such registration (but excluding the compensation of
regular employees of the Company, which shall be paid in any event by the
Company).
"Registration Statement" shall have the meaning set forth in Section 2(a)
herein.
"Regulation D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"Securities Act" or "Act" shall mean the Securities Act of 1933, as
amended.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for Holders not included within "Registration
Expenses".
"Warrants" shall mean the Warrants in form and substance of Exhibit 1.1B to
the Purchase Agreement between the Company and the Investors, dated as of the
date hereof.
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"Warrant Shares" shall mean shares of Common Stock of the Company issuable
upon exercise of the Warrants.
2. Registration Requirements. The Company shall use its best efforts to
effect the registration of the Registrable Securities (including, without
limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act) as would permit or facilitate the sale or distribution of all
the Registrable Securities in the manner (including manner of sale) and in all
states reasonably requested by the Holder. Such best efforts by the Company
shall include the following:
(a) The Company shall, as expeditiously as possible after the Closing
Date:
(i) But in any event within 60 days of the Closing, prepare and
file a registration statement with the Commission pursuant to Rule 415
under the Securities Act on Form S-3 under the Securities Act (or in
the event that the Company is ineligible to use such form, such other
form as the Company is eligible to use under the Securities Act)
covering the Registrable Securities ("Registration Statement"), which
Registration Statement, to the extent allowable under the Securities
Act and the rules promulgated thereunder (including Rule 416), shall
state that such Registration Statement also covers such indeterminate
number of additional shares of Common Stock as may become issuable
upon conversion of the Preferred Shares or exercise of the Warrants.
The number of shares of Common Stock initially included in such
Registration Statement shall be no less than the sum of (A) four times
the sum of the number of Common Shares that are then issuable upon
conversion of the Preferred Shares plus (B) one and one-half times the
number of Warrant Shares issuable upon exercise of the Warrants, in
each case without regard to any limitation on the Investor's ability
to convert the Preferred Shares. Nothing in the preceding sentence
will limit the Company's obligations under Section 3.8 of the Purchase
Agreement. Thereafter the Company shall use its best efforts to cause
such Registration Statement and other filings to be declared effective
as soon as possible, and in any event prior to 90 days following the
Closing Date. Without limiting the foregoing, the Company will
promptly respond to all SEC comments, inquiries and requests, and
shall request acceleration of effectiveness at the earliest possible
date. The Company shall provide the Holders reasonable opportunity to
review any such Registration Statement or amendment or supplement
thereto prior to filing.
(ii) Prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in
connection with such Registration Statement as may be necessary to
comply with the provisions of the Act with respect to the disposition
of all securities covered by such Registration Statement and notify
the Holders of
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the filing and effectiveness of such Registration Statement and any
amendments or supplements.
(iii) Furnish to each Holder such numbers of copies of a current
prospectus conforming with the requirements of the Act, copies of the
Registration Statement, any amendment or supplement thereto and any
documents incorporated by reference therein and such other documents
as such Holder may reasonably require in order to facilitate the
disposition of Registrable Securities owned by such Holder.
(iv) Register and qualify the securities covered by such
Registration Statement under such other securities or "Blue Sky" laws
of such jurisdictions as shall be reasonably requested by each Holder;
provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(v) Notify each Holder immediately of the happening of any event
as a result of which the prospectus (including any supplements thereto
or thereof) included in such Registration Statement, as then in
effect, includes an untrue statement of material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances then existing, and use its best efforts to promptly
update and/or correct such prospectus.
(vi) Notify each Holder immediately of the issuance by the
Commission or any state securities commission or agency of any stop
order suspending the effectiveness of the Registration Statement or
the threat or initiation of any proceedings for that purpose. The
Company shall use its best efforts to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the lifting thereof
at the earliest possible time.
(vii) Permit counsel to each Holder to review the Registration
Statement and all amendments and supplements thereto within a
reasonable period of time (but not less than 5 days) prior to each
filing, and shall not file any document in a form to which such
counsel reasonably objects and will not request acceleration of the
Registration Statement without prior notice to such counsel.
(viii) List the Registrable Securities covered by such
Registration Statement with all securities exchange(s) and/or markets
on which the Common Stock is then listed and prepare and file any
required filings with the National Association of Securities Dealers,
Inc. or any exchange or market where the Common Shares are traded.
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(ix) Take all steps necessary to enable Holders to avail
themselves of the prospectus delivery mechanism set forth in Rule 153
(or successor thereto) under the Act.
(b) Set forth below in this Section 2(b) are (I) events that may arise
that the Investors consider will interfere with the full enjoyment of their
rights under this Agreement, the Purchase Agreement and the Certificate (the
"Interfering Events"), and (II) certain remedies applicable in each of these
events.
Paragraphs (i) through (iv) of this Section 2(b) describe the
Interfering Events, provide a remedy to the Investors if an Interfering Event
occurs and provide that the Investors may require that the Company redeem
outstanding Preferred Shares at a specified price if certain Interfering Events
are not timely cured.
Paragraph (v) provides, inter alia, that if default adjustments
required as the remedy in the case of certain of the Interfering Events are not
provided when due, the Company may be required by the Investors to redeem
outstanding Preferred Shares at a specified price.
Paragraph (vi) provides, inter alia, that the Investors have the
right to specific performance.
The preceding paragraphs in this Section 2(b) are meant to serve
only as an introduction to this Section 2(b), are for convenience only, and are
not to be considered in applying, construing or interpreting this Section 2(b).
(i) Delay in Effectiveness of Registration Statement. In the
event that such Registration Statement has not been declared effective
within 90 days from the Closing Date, then the Company shall provide
to each Holder a default adjustment by immediately and permanently
reducing by one percent (1%) for the first 30-day period or portion
thereof and by one and one-half percent (1.5%) for each subsequent
30-day period or portion thereof, beginning on the 91st day after
Closing, the percentage specified in Section 4(b)(i)(B) of the
Certificate. For example, that percentage would be reduced from 85% to
84% upon the commencement of the first 30-day period, and further
reduced to 82.5% upon the commencement of the next succeeding 30-day
period. If the Registration Statement has not been declared effective
within 120 days after the Closing Date, then each Holder shall have
the right to sell during the 30-day period commencing on the 120th day
after the Closing Date, any or all of its Preferred Shares to the
Company for consideration (the "Mandatory Purchase Price") equal to
130% of the Liquidation Preference of all such Preferred Shares being
sold to the Company, payable in cash. Payment of such cash amount
shall be due and payable from the Company to such Holder within 5
business days of demand therefor. Without limiting the foregoing, if
such cash payment is not made within such 5 business day period, the
Holder may revoke and withdraw its election to cause the
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Company to make such mandatory purchase at any time prior to its
receipt of such cash. Notwithstanding the foregoing, there shall be
excluded (but only to the extent not covered by Section 2(a)(vii))
from the calculation of the number of days that the Registration
Statement has not been declared effective the delays which are solely
attributable to delays in the Investors providing information required
for the Registration Statement.
(ii) No Listing; Premium Price Redemption for Delisting of Class
of Shares.
(A) In the event that the Company fails, refuses or for any
other reason is unable to cause the Registrable Securities covered by
the Registration Statement to be listed with the Nasdaq NMS or one of
the other Approved Markets (as defined in the Purchase Agreement) at
all times during the period ("Listing Period") from the 90th day
following the Closing Date until the Mandatory Conversion Date (as
defined in the Certificate) then the Company shall provide to each
Holder a default adjustment by immediately and permanently reducing by
one percent (1%) for the first 30-day period or portion thereof and by
one and one-half percent (1.5%) upon the commencement of each
subsequent 30-day period or portion hereof, during the Listing Period
from and after such failure, refusal or inability to so list the
Registrable Securities, the percentage specified in Section 4(b)(i)(B)
of the Certificate.
(B) In the event that shares of Common Stock of the Company
are not listed on any of the Approved Markets at all times following
the 90th day after the Closing Date and remain delisted for 5
consecutive days, or if the Registrable Securities are not listed for
5 consecutive days after the 90th day following the Closing, then at
the option of each Holder and to the extent such Holder so elects,
each Holder shall have the right either (I) to sell to the Company the
Preferred Shares held by such Holder, in whole or in part, for the
consideration and on the terms set forth in Section 2(b)(i) above or
at Holder's sole election, (II) to defer the Mandatory Conversion Date
by 1.5 days for each day the Common Stock remains delisted and reduce
by 2% the percentage specified in Section 4(b)(i)(B) of the
Certificate over and beyond all other reductions that would otherwise
be applicable pursuant to this Agreement (e.g., from 85% to 83%,
assuming no other reductions are applicable).
(iii) Blackout Periods. In the event any Holder's ability to sell
Registrable Securities under the Registration Statement is suspended
for more than (i) fifteen (15) consecutive days or (ii) forty-five
(45) days in any calendar year ("Suspension Grace Period"), including
without limitation by reason of a suspension of trading of the Common
Stock on the Nasdaq NMS, any suspension or stop order with respect to
the Registration
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Statement or the fact that an event has occurred as a result of which
the prospectus (including any supplements thereto) included in such
Registration Statement then in effect includes an untrue statement of
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, then the Company shall
provide to each Holder a default adjustment by immediately and
permanently reducing by one percent (1%) upon the commencement of the
first 30-day period or portion thereof and by one and one-half percent
(1.5%) upon the commencement of each subsequent 30-day period or
portion hereof, from and after the expiration of the Suspension Grace
Period, the percentage specified in Section 4(b)(i)(B) of the
Certificate. At any time following the expiration of the Suspension
Grace Period, a Holder shall have the right either (I) to sell to the
Company its Preferred Shares in whole or in part for the consideration
and on the terms set forth in Section 2(b)(i) above or at Holder's
sole election, (II) to defer the Mandatory Conversion Date by 1.5 days
for each day the Common Stock remains delisted and reduce by 2% the
percentage specified in Section 4(b)(i)(B) of the Certificate over and
beyond all other reductions that would otherwise be applicable
pursuant to this Agreement.
(iv) Conversion Deficiency; Mandatory Purchase Price Redemption
for Conversion Deficiency. In the event that the Company does not have
a sufficient number of Common Shares or Warrant Shares available to
satisfy the Company's obligations to any Holder upon receipt of a
Conversion Notice (as defined in the Certificate) or upon exercise of
the Warrant or is otherwise unable or unwilling to issue such Common
Shares or Warrant Shares (including without limitation by reason of
the limit described in Section 10 below)(each, a "Conversion
Deficiency") in accordance with the terms of the Certificate for any
reason after receipt of a Conversion Notice or after exercise of the
Warrant, then:
(A) The Company shall provide to each Holder a default
adjustment by immediately and permanently reducing by one percent (1%)
upon the commencement of the first 30-day period or portion thereof
and one and one-half percent (1.5%), upon the commencement of each
subsequent 30-day period or portion thereof that the Company fails or
refuses to issue Common Shares or Warrant Shares in accordance with
the Certificate or the Warrant, as the case may be, the percentage
specified in Section 4(b)(i)(B) of the Certificate; and
(B) At any time five days after the commencement of the
running of the first 30-day period described above in clause (A) of
this paragraph (iv), at the request of any Holder, the Company
promptly either (I) (1) shall purchase from such Holder, for the
greater of (a) the
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consideration and on the terms set forth in Section 2(b)(i) above, and
(b) the Liquidation Preference for the Preferred Shares being sold to
the Company divided by the then applicable Conversion Price multiplied
by the last sale price of the Common Stock on (i) the date a Holder
exercises its option pursuant to this paragraph or (ii) the Conversion
Date relating to the Conversion Notice which triggered the Conversion
Deficiency, whichever is higher, the outstanding Preferred Shares
equal to such Holder's pro rata share of the "Deficiency", as such
term is defined below, if the failure to issue Common Shares results
from the lack of a sufficient number thereof and (2) shall purchase
all of such Holder's Preferred Shares (or such portion requested by
such Holder) for such consideration and on such terms if the failure
to issue Common Shares results from any other cause or, at Holder's
sole election, (II) shall defer the Mandatory Conversion Date by 1.5
days for each day there exists a Deficiency and reduce by 2% the
percentage specified in Section 4(b(i)(B) of the Certificate over and
beyond all other reductions that would otherwise be applicable
pursuant to this Agreement. The choice of remedies pursuant to the
preceding sentence shall be at the sole election of the Holder. The
"Deficiency" shall be equal to the number of outstanding Preferred
Shares that would not be able to be converted for Common Shares, due
to an insufficient number of Common Shares or Warrant Shares being
available, if all the outstanding Preferred Shares were submitted for
conversion at the Conversion Price set forth in the Certificate as of
the date such Deficiency is determined.
(v) Mandatory Purchase Price for Adjustment Defaults.
(A) The Company acknowledges that any failure, refusal or
inability by the Company to perform the obligations described in the
foregoing paragraphs (i) through (iv) will cause the Holders to suffer
damages in an amount that will be difficult to ascertain, including
without limitation damages resulting from the loss of liquidity in the
Registrable Securities and the additional investment risk in holding
the Registrable Securities. Accordingly, the parties agree, after
consulting with counsel, that it is appropriate to include in this
Agreement the foregoing provisions for default adjustments and
mandatory redemptions in order to compensate the Holders for such
damages. The parties acknowledge and agree that the default
adjustments and mandatory redemptions set forth above represent the
parties' good faith effort to quantify such damages and, as such,
agree that the form and amount of such default adjustments and
mandatory redemptions are reasonable and will not constitute a
penalty.
(B) Only one (1) default adjustment under paragraphs (i)
through (iv) above shall be provided by the Company to the Holder
during concurrent 30-day periods even if more than one Intervening
Event has occurred during that time; except that nothing in this
Section 2(b)(v)(B)
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will preclude a Holder from deferring the Mandatory Conversion Date
and receiving an additional 2% reduction in the percentage specified
in Section 4(b)(i)(B) of the Certificate, together with the otherwise
applicable 1% or 1-1/2% reduction in that same percentage, in the
event the Holder chooses not to require the Company to repurchase such
Holder's Preferred Shares on the terms and for the price specified in
this Agreement.
(C) In the event that the Company fails or refuses to make
any default adjustment when due, at any Holder's request and option,
the Company shall purchase all (or such portion requested by the
Holder) of the Preferred Shares held by such Holder (with such default
adjustments accruing through the date of such purchase being added to
the Mandatory Purchase Price) (for example, if the percentage
specified in Section 4(b)(i)(B) of the Certificate is reduced by 1%,
then the Mandatory Purchase Price will be increased from 130% to 131%
of the Liquidation Preference), within five (5) days of such request,
for the consideration and on the terms set forth in Section 2(b)(i)
above, provided that such Holder may revoke such request, in whole or
in part, at any time prior to receipt of such payment of such purchase
price.
(vi) Cumulative Remedies. The default adjustments and mandatory
purchases provided for above are in addition to and not in lieu or
limitation of any other rights the Holders may have at law, in equity
or under the terms of the Certificate, the Purchase Agreement, the
Warrants or, subject to Section 2(b)(v)(B), this Agreement, including
without limitation the right to specific performance. Each Holder
shall be entitled to specific performance of any and all obligations
of the Company in connection with the registration rights of the
Holders hereunder.
(vii) Remedies for Registrable Securities. In any case in which a
Holder of Preferred Shares has the right to cause the purchase of its
Preferred Shares under this Section 2(b), it shall also have the right
to cause the purchase of the Registrable Securities that it owns as
follows: in the case of Common Shares issued to such Holder pursuant
to conversion of Preferred Shares and Warrant Shares issued to such
Holder pursuant to exercise of Warrants, such shares shall be
purchased at a price per share ("Common Purchase Price") equal to the
quotient obtained by dividing (I) the average of the closing bid and
ask prices of a share of Common Stock on the Approved Market on which
it is traded as of the time such Common Shares or Warrant Shares were
received pursuant to conversion of Preferred Shares, purchase of the
Preferred Shares or exercise of the Warrants, as the case may be, by
(II) 85% (or such lower percentage as results from an increase in the
conversion discount pursuant to the Certificate); provided, however,
that such Holder may revoke such request at any time prior to receipt
of such payment of such redemption price.
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In the case in which a Holder of Preferred Shares would have the
right to receive default adjustments with respect to Preferred Shares
under Section 2(b), it shall also have the right to receive default
payments with respect to Registrable Securities owned by it in an
amount equal to one percent (1%) upon the commencement of the first
30-day period and one and a half percent (1.5%) upon the commencement
of each subsequent 30-day period of the aggregate Common Purchase
Price amount of such Registrable Securities, either (as determined by
the Company) in cash or Common Stock; provided that Common Stock may
only be elected if there is, at such time and at the time such shares
of Common Stock are delivered to the Holders, Effective Registration.
(c) If the Holder(s) intend to distribute the Registrable Securities
by means of an underwriting, the Holder(s) shall so advise the Company. Any such
underwriting may only be administered by nationally or regionally recognized
investment bankers reasonably satisfactory to the Company. The Company shall
only be obligated to permit one underwritten offering, which offering shall be
determined by a majority in interest of the Holders.
(d) The Company shall enter into such customary agreements for
secondary offerings (including a customary underwriting agreement with the
underwriter or underwriters, if any) and take all such other reasonable actions
reasonably requested by the Holders in connection therewith in order to expedite
or facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the Registrable Securities are to be sold in an underwritten offering:
(i) make such representations and warranties to the Holders and
the underwriter or underwriters, if any, in form, substance and scope
as are customarily made by issuers to underwriters in secondary
offerings;
(ii) cause to be delivered to the sellers of Registrable
Securities and the underwriter or underwriters, if any, opinions of
independent counsel to the Company, on and dated as of the effective
day (or in the case of an underwritten offering, dated the date of
delivery of any Registrable Securities sold pursuant thereto) of the
Registration Statement, and within ninety (90) days following the end
of each fiscal year thereafter, which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the Holders
and the underwriter(s), if any, and their counsel and covering,
without limitation, such matters as the due authorization and issuance
of the securities being registered and compliance with securities laws
by the Company in connection with the authorization, issuance and
registration thereof and other matters that are customarily given to
underwriters in underwritten offerings, addressed to the Holders and
each underwriter, if any;
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(iii) cause to be delivered, immediately prior to the
effectiveness of the Registration Statement (and, in the case of an
underwritten offering, at the time of delivery of any Registrable
Securities sold pursuant thereto), and at the beginning of each fiscal
year following a year during which the Company's independent certified
public accountants shall have reviewed any of the Company's books or
records, a "comfort" letter from the Company's independent certified
public accountants addressed to the Holders and each underwriter, if
any, stating that such accountants are independent public accountants
within the meaning of the Securities Act and the applicable published
rules and regulations thereunder, and otherwise in customary form and
covering such financial and accounting matters as are customarily
covered by letters of the independent certified public accountants
delivered in connection with secondary offerings; such accountants
shall have undertaken in each such letter to update the same during
each such fiscal year in which such books or records are being
reviewed so that each such letter shall remain current, correct and
complete throughout such fiscal year; and each such letter and update
thereof, if any, shall be reasonably satisfactory to the Holders;
(iv) if an underwriting agreement is entered into, the same shall
include customary indemnification and contribution provisions to and
from the underwriters and procedures for secondary underwritten
offerings; and
(v) deliver such documents and certificates as may be reasonably
requested by the Holders of the Registrable Securities being sold or
the managing underwriter or underwriters, if any, to evidence
compliance with clause (i) above and with any customary conditions
contained in the underwriting agreement, if any.
(e) The Company shall make available for inspection by the Holders,
representative(s) of all the Holders together, any underwriter participating in
any disposition pursuant to a Registration Statement, and any attorney or
accountant retained by any Holder or underwriter, all financial and other
records customary for purposes of the Holders' due diligence examination of the
Company and review of any Registration Statement, all SEC Documents (as defined
in the Purchase Agreement) filed subsequent to the Closing, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such representative, underwriter, attorney or accountant in connection with such
Registration Statement, provided that such parties agree to keep such
information confidential.
(f) Subject to Section 2(b) above, the Company may suspend the use of
any prospectus used in connection with the Registration Statement only in the
event, and for such period of time as, such a suspension is required by the
rules and regulations of the Commission. The Company will use its best efforts
to cause such suspension to terminate at the earliest possible date.
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(g) The Company shall file a Registration Statement with respect to
any newly authorized and/or reserved shares within five (5) business days of any
stockholders meeting authorizing same and shall use its best efforts to cause
such Registration Statement to become effective within sixty (60) days of such
stockholders meeting. If the Holders become entitled, pursuant to an event
described in clause (iii) of the definition of Registrable Securities, to
receive any securities in respect of Registrable Securities that were already
included in a Registration Statement, subsequent to the date such Registration
Statement is declared effective, and the Company is unable under the securities
laws to add such securities to the then effective Registration Statement, the
Company shall promptly file, in accordance with the procedures set forth herein,
an additional Registration Statement with respect to such newly Registrable
Securities. The Company shall use its best efforts to (i) cause any such
additional Registration Statement, when filed, to become effective under the
Securities Act, and (ii) keep such additional Registration Statement effective
during the period described in Section 5 below and cause such Registration
Statement to become effective within 60 days of that date that the need to file
the Registration Statement arose. All of the registration rights and remedies
under this Agreement shall apply to the registration of such newly reserved
shares and such new Registrable Securities, including without limitation the
provisions providing for default payments and mandatory redemptions contained
herein.
3. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance with registration
pursuant to this Agreement shall be borne by the Company, and all Selling
Expenses of a Holder shall be borne by such Holder.
4. Registration on Form S-3. The Company shall use its best efforts to
remain qualified for registration on Form S-3 or any comparable or successor
form or forms, or in the event that the Company is ineligible to use such form,
such form as the Company is eligible to use under the Securities Act.
5. Registration Period. In the case of the registration effected by the
Company pursuant to this Agreement, the Company will use its best efforts to
keep such registration effective until all the Holders have completed the sales
or distribution described in the Registration Statement relating thereto or, if
earlier, until such Registerable Securities may be sold under Rule 144(k)
(provided that the Company's transfer agent has accepted an instruction from the
Company to such effect).
6. Indemnification.
(a) Company Indemnity. The Company will indemnify each Holder, each
of its officers, directors, agents and partners, and each person controlling
each of the foregoing, within the meaning of Section 15 of the Securities Act
and the rules and regulations thereunder with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls, within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, any
underwriter, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
or any violation by the Company of the Securities Act or any state securities
law or in either case, any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in connection
with any
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such registration, qualification or compliance, and will reimburse each Holder,
each of its officers, directors, agents and partners, and each person
controlling each of the foregoing, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to a Holder to the extent that any such claim, loss, damage, liability
or expense arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by such Holder or the
underwriter (if any) therefor and stated to be specifically for use therein. The
indemnity agreement contained in this Section 6(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent will
not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, severally and not jointly, if
Registrable Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify the
Company, each of its directors, officers, partners, and each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, each
other Holder (if any), and each of their officers, directors and partners, and
each person controlling such other Holder(s) against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statement therein not
misleading in light of the circumstances under which they were made, and will
reimburse the Company and such other Holder(s) and their directors, officers and
partners, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use therein, and provided that the maximum amount
for which such Holder shall be liable under this indemnity shall not exceed the
net proceeds received by such Holder from the sale of the Registrable Securities
pursuant to the registration statement in question. The indemnity agreement
contained in this Section 6(b) shall not apply to amounts paid in settlement of
any such claims, losses, damages or liabilities if such settlement is effected
without the consent of such Holder (which consent shall not be unreasonably
withheld).
(c) Procedure. Each party entitled to indemnification under this
Section 6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at its own expense, and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 6 except to
the extent that the Indemnifying Party is materially and adversely affected by
such failure to provide notice. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any
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judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such non-privileged information regarding itself
or the claim in question as an Indemnifying Party may reasonably request in
writing and as shall be reasonably required in connection with the defense of
such claim and litigation resulting therefrom.
7. Contribution. If the indemnification provided for in Section 6 herein
is unavailable to the Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such 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 as between the Company on the one hand and any Holder on the other,
in such proportion as is appropriate to reflect the relative fault of the
Company and of such Holder in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of any Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Holder.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 6(a) or 6(b) hereof had been
available under the circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Holders or the underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of any Holder, the net proceeds received by such Holder from the sale of
Registrable Securities pursuant to the registration statement in question or
(ii) in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such Holder or
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. 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.
8. Survival. The indemnity and contribution agreements contained in
Sections 6 and 7 and the representations and warranties of the Company referred
to in Section 2(d)(i) shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement or the Purchase Agreement or
any underwriting agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company, and (iii) the consummation
of the sale or successive resales of the Registrable Securities.
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9. Information by Holders. Each Holder shall furnish to the Company such
information regarding such Holder and the distribution and/or sale proposed by
such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement. The intended method or methods of
disposition and/or sale (Plan of Distribution) of such securities as so provided
by such Investor shall be included without alteration in the Registration
Statement covering the Registrable Securities and shall not be changed without
written consent of such Holder.
10. Limit on Stock Issuances. In the event that the Company is unable to
issue (i) any Common Shares upon conversion of Preferred Shares, (ii) any
Warrant Shares upon exercise of the Warrants, due to the rules or regulations of
any market or exchange regulator for the market or exchange on which the Common
Shares or Warrant Shares are then trading, the Company shall, at the request of
any Holder promptly following such determination, promptly purchase such
Preferred Shares of such Holder which cannot be converted or Warrant Shares
which cannot be issued, at a purchase price equal to the Mandatory Purchase
Price.
11. Replacement Certificates. The certificate(s) representing the Common
Shares or Warrant Shares held by any Investor (or then Holder) may be exchanged
by such Investor (or such Holder) at any time and from time to time for
certificates with different denominations representing an equal aggregate number
of Common Shares or Warrant Shares, as reasonably requested by such Investor (or
such Holder) upon surrendering the same. No service charge will be made for such
registration or transfer or exchange.
12. Transfer or Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The rights granted to the Investors by
the Company under this Agreement to cause the Company to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee
or assignee of Preferred Shares, Warrants or Registrable Securities, and all
other rights granted to the Investors by the Company hereunder may be
transferred or assigned to any transferee or assignee of any Preferred Shares,
Warrants or Registrable Securities; provided in each case that the Company must
be given written notice by the such Investor at the time of or within a
reasonable time after said transfer or assignment, stating the name and address
of said transferee or assignee and identifying the securities with respect to
which such registration rights are being transferred or assigned; and provided
further that the transferee or assignee of such rights agrees in writing to be
bound by the registration provisions of this Agreement.
13. Miscellaneous.
(a) Remedies. The Company and the Investors acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which any of
them may be entitled by law or equity.
(b) Jurisdiction. THE COMPANY AND EACH OF THE INVESTORS (I) HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT, THE NEW YORK STATE COURTS AND OTHER COURTS OF THE UNITED STATES SITTING
IN NEW YORK COUNTY, NEW YORK
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FOR THE PURPOSES OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND (II) HEREBY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH SUIT
ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM OR THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS
IMPROPER. THE COMPANY AND EACH OF THE INVESTORS CONSENTS TO PROCESS BEING SERVED
IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF TO SUCH PARTY
AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT
SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR LIMIT ANY RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(c) Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing by facsimile, mail or personal
delivery and shall be effective upon actual receipt of such notice. The
addresses for such communications shall be:
to the Company:
General Magic, Inc.
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
with copies to:
▇▇▇▇, ▇▇▇▇, ▇▇▇▇ & Freidenrich
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
to the Investors:
To each Investor at the address and/or fax number set
forth on Schedule I of this Agreement.
with copies to:
Kleinberg, Kaplan, ▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Any party hereto may from time to time change its address for notices by giving
at least 10 days' written notice of such changed address to the other parties
hereto.
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(d) Indemnity. Each party shall indemnify each other party against
any loss, cost or damages (including reasonable attorney's fees) incurred as a
result of such parties' breach of any representation, warranty, covenant or
agreement in this Agreement.
(e) Waivers. No waiver by any party of any default with respect to
any provision, condition or requirement of this Agreement shall be deemed to be
a continuing waiver in the future or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter. The representations and warranties and the agreements and
covenants of the Company and each Investor contained herein shall survive the
Closing.
(f) Execution in Counterpart. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement, it being understood that all parties need not sign the same
counterpart.
(g) Publicity. The Company agrees that it will not disclose, and will
not include in any public announcement, the name of any Investor without its
consent, unless and until such disclosure is required by law or applicable
regulation, and then only to the extent of such requirement. The Company agrees
to deliver a copy of any public announcement regarding the matters covered by
this Agreement or any agreement or document executed herewith to each Investor
and any public announcement including the name of an Investor to such Investor,
prior to the publication of such announcements.
(h) Entire Agreement; Amendment. This Agreement, together with the
Purchase Agreement, the Certificate and the Warrants and the agreements and
documents contemplated hereby and thereby, contains the entire understanding and
agreement of the parties, and may not be amended, modified or terminated except
by a written agreement signed by the Company plus the Holders of 75% of the
Preferred Shares issued under the Purchase Agreement to that date; provided that
for the purposes of this Section 13(h) the Holders of Common Shares still
entitled to registration rights under this Agreement will be deemed to still be
Holders of that number of Preferred Shares which were converted into such Common
Shares.
(i) Governing Law. This Agreement and the validity and performance of
the terms hereof shall be governed by and construed in accordance with the laws
of the State of New York applicable to contracts executed and to be performed
entirely within such state, except to the extent that the law of the State of
Delaware regulates the Company's issuance of securities.
(j) Severability. The parties acknowledge and agree that the
Investors are not agents, affiliates or partners of each other, that all
representations, warranties, covenants and agreements of the Investors hereunder
are several and not joint, that no Investor shall have any responsibility or
liability for the representations, warrants, agreements, acts or omissions of
any other Investor, and that any rights granted to "Investors" hereunder shall
be enforceable by each Investor hereunder.
(k) Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY
JURY.
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(l) Titles. The titles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
(m) No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
GENERAL MAGIC, INC.
By:
---------------------------------------------------
Name:
Title:
INVESTORS:
HALIFAX FUND, L.P.
By: THE PALLADIN GROUP, L.P.
Attorney-in-fact
By: PALLADIN CAPITAL MANAGEMENT, L.L.C.,
General Partner
By:
-------------------------------------------
Name:
Title:
RGC INTERNATIONAL INVESTORS, LDC
By: ▇▇▇▇ ▇▇▇▇ CAPITAL MANAGEMENT, L.P.,
Investment Manager
By: RGC GENERAL PARTNER CORP., General Partner
By:
---------------------------------------
Name:
Title:
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HERACLES FUND
By: PROMETHEAN INVESTMENT GROUP, L.L.C.,
Its Investment Advisor
By:
-----------------------------------------------
Name:
Title:
THEMIS PARTNERS, L.P.
By: PROMETHEAN INVESTMENT GROUP, L.L.C.,
Its Investment Advisor
By:
-------------------------------------------
Name:
Title:
[SIGNATURE PAGE 2 OF 2 TO GENERAL MAGIC, INC. REGISTRATION RIGHTS AGREEMENT]
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