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CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
Between
PLANET ENTERTAINMENT CORPORATION
and
JNC OPPORTUNITY FUND LTD.
Dated as of May 3l, 1998
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CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this "AGREEMENT"),
dated as of May 31, 1998, between Planet Entertainment Corporation, A Florida
corporation (the "COMPANY"), and JNC Opportunity Fund Ltd., a Cayman Islands
corporation (the "PURCHASER").
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchaser and the
Purchaser desires to purchase from the Company, shares of the Company's 7%
Series A Convertible Preferred Stock, par value $.0001 per share (the "PREFERRED
STOCK"), which is convertible into shares of the Company's common stock, par
value $.00l per share (the "COMMON STOCK").
IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy are
hereby acknowledged, the Company and Purchaser agree as follows:
ARTICLE I
PURCHASE AND SALE OF PREFERRED STOCK
1.1 THE CLOSING.
(a) THE CLOSING. (i) Subject to the terms and conditions set
forth in this Agreement, the Company shall issue and sell to the Purchaser and
the Purchaser shall purchase 500 shares of Preferred Stock (the "Shares") for an
aggregate purchase price of $5,000,000. The closing of the purchase and sale of
the Shares (the "CLOSING") shall take place at the offices of Xxxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxx & Xxxxxx LLP (the "ESCROW AGENT"), 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, immediately following the execution hereof or such
later date as the parties shall agree. The date of the Closing is hereinafter
referred to as the "CLOSING DATE."
(ii) Prior to the Closing, the parties shall deliver or
shall cause to be delivered to the Escrow Agent such items as are required to be
delivered by them in accordance with and subject to the terms and conditions of
the Escrow Agreement, dated as of the date hereof, by and among the Company, the
Purchaser and the Escrow Agent, in the form of EXHIBIT E (the "ESCROW
AGREEMENT"), including the following: (A) the Company shall deliver (1) stock
certificates representing the Shares, registered in the name of the Purchaser,
(2) a common stock purchase warrant, in the form of EXHIBIT D, registered in the
name of the Purchaser, pursuant to which the Purchaser shall have the right at
any time and from time to time thereafter through the fifth anniversary date of
the Original Issue Date to acquire 75,000 shares of Common Stock (the
"Warrant"), (3) the legal opinion of Xxxxxxxx, Xxxxx & XxXxxxxx, outside counsel
to the Company, substantially in the form of EXHIBIT C, and (4) all other
documents, instruments and writings required to have been delivered at or prior
to the Closing Date by the Company pursuant to this Agreement, including an
executed Registration Rights Agreement, dated the date hereof, between the
Company and the Purchaser, in the form of EXHIBIT B (the "REGISTRATION RIGHTS
AGREEMENT"), and the Irrevocable Transfer Agent Instructions, in the form of
EXHIBIT F, delivered to and acknowledged by the Company's transfer agent (the
"TRANSFER AGENT INSTRUCTIONS"); and (B) the Purchaser shall deliver (1)
$5,000,000 in United States dollars in immediately available funds by wire
transfer to an
account designated in writing by the Company for such purpose, and (2) all
documents, instruments and writings required to have been delivered at or prior
to the Closing Date by the Purchaser pursuant to this Agreement, including an
executed Registration Rights Agreement; and (C) each party hereto shall deliver
all other executed instruments, agreements and certificates as are required to
be delivered hereunder by or on their behalf at the Closing.
1.2 FORM OF PREFERRED STOCK. The Preferred Stock shall have
the rights preferences and privileges set forth in EXHIBIT A, and shall be
incorporated into a Certificate of Designation ("CERTIFICATE OF DESIGNATION"),
in form and substance approved by the Purchaser.
For purposes of this Agreement, "CONVERSION PRICE," "ORIGINAL
ISSUE DATE," "CONVERSION DATE" and "TRADING DAY" shall have the meanings set
forth in Exhibit A; "BUSINESS DAY" shall mean any day except Saturday, Sunday
and any day which shall be a federal legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS. WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company hereby makes the following representations and warranties to the
Purchaser:
(a) ORGANIZATION AND QUALIFICATION. The Company is a
corporation, duly incorporated, validly existing and in good standing under the
laws of the State of Florida, with the requisite corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted. The Company has no subsidiaries other than as set forth in
SCHEDULE 2.1 (a) (collectively the "SUBSIDIARIES"). Each of the Subsidiaries is
an entity, duly incorporated or otherwise organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the full power and authority to own and use
its properties and assets and to carry on its business as currently conducted.
Each of the Company and the Subsidiaries is duly qualified to do business and is
in good standing as a foreign corporation in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, (x)
adversely affect the legality, validity or enforceability of the Securities (as
defined below) or any of this Agreement, the Certificate of Designation, the
Registration Rights Agreement, the Warrant or the Escrow Agreement
(collectively, the "TRANSACTION DOCUMENTS"), (y) have or result in a material
adverse effect on the results of operations, assets, prospects, or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole,
or (z) adversely impair the Company's ability to perform fully on a timely basis
its obligations under any of the Transaction Documents (any of (x), (y) or (z),
a "MATERIAL ADVERSE EFFECT").
(b) AUTHORIZATION; ENFORCEMENT. The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents, and otherwise to
carry out its obligations thereunder. The execution and
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delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company. Each of the Transaction Documents has been
duly executed by the Company and, when delivered (or filed, as the case may be)
in accordance with the terms hereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms. Neither the Company nor any Subsidiary is in violation of any of the
provisions of its respective certificate of incorporation, bylaws or other
charter documents.
(c) CAPITALIZATION. The number of authorized, issued and
outstanding capital stock of the Company is set forth in SCHEDULE 2.1(c). No
shares of Common Stock are entitled to preemptive or similar rights, nor is any
holder of the Common Stock entitled to preemptive or similar rights arising out
of any agreement or understanding with the Company by virtue of any of the
Transaction Documents. Except as disclosed in SCHEDULE 2.1(c), there are no
outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or, except as a result of
the purchase and sale of the Shares and the Warrant, securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock. To
the knowledge of the Company, except as specifically disclosed in SCHEDULE
2.1(c), no Person or group of related Persons beneficially owns (as determined
pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT")) or has the right to acquire by agreement with or
by obligation binding upon the Company beneficial ownership of in excess of 5%
of the Common Stock. A "PERSON" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or subdivision
thereof) or other entity of any kind.
(d) ISSUANCE OF THE SHARES AND THE WARRANT. The Shares and
the Warrant are duly authorized, and, when issued and paid for in accordance
with the terms hereof, shall have been validly issued, fully paid and
nonassessable, free and clear of all liens, encumbrances and rights of first
refusal of any kind (collectively, "Liens"). The Company has on the date hereof
and will, at all times while the Shares and the Warrant are outstanding,
maintain an adequate reserve of duly authorized shares of Common Stock, reserved
for issuance to the holders of the Shares, to enable it to perform its
conversion, exercise and other obligations under this Agreement, the Certificate
of Designation and the Warrant. Such number of reserved and available shares of
Common Stock is not less than the sum of (i) 200% of the number of shares of
Common Stock which would be issuable upon conversion in full of the Shares,
assuming such conversion occurred on the Original Issue Date or the Filing Date
(as defined in the Registration Rights Agreement), whichever yields a lower
Conversion Price, (ii) the number of shares of Common Stock issuable upon
exercise of the Warrant, and (iii) the number of shares Common Stock which would
be issuable upon payment of dividends on the Shares, assuming each Share is
outstanding for two years and all dividends are paid in shares of Common Stock.
The shares of Common Stock issuable upon conversion of the Shares, as payment of
dividends thereon and upon exercise of the Warrant are collectively referred to
herein as the "UNDERLYING SHARES." The Shares, the Warrant and the Underlying
Shares are, collectively,
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the "SECURITIES." When issued in accordance with the Certificate of Designation
and the Warrant, in accordance with their respective terms, the Underlying
Shares shall have been duly authorized, validly issued, fully paid and
nonassessable, free and clear of all Liens.
(e) NO CONFLICTS. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of its certificate of incorporation, bylaws or other
charter documents (each as amended through the date hereof), or (ii) subject to
obtaining the Required Approvals (as defined below), conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, indenture or instrument (evidencing
a Company debt or otherwise) to which the Company or any Subsidiary is a party
or by which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including Federal and state
securities laws and regulations), or by which any property or asset of the
Company is bound or affected, except in the case of each of clauses (ii) and
(iii), as could not, individually or in the aggregate, have or result in a
Material Adverse Effect. The business of the Company is not being conducted in
violation of any law, ordinance or regulation of any governmental authority, for
violations which, individually or in the aggregate, could not have or result in
a Material Adverse Effect.
(f) CONSENTS AND APPROVALS. Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
Federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filing of the Certificate of
Designation with the Secretary of State of Florida, (ii) the filing of the
Underlying Securities Registration Statement with the Securities and Exchange
Commission (the "COMMISSION") pursuant to the Registration Rights Agreement,
(iii) the filing of a Form D with the Commission, (iv) the filing of a Form 10
with the Commission in accordance with Section 3.16, and (v) in all other cases
where the failure to obtain such consent, waiver, authorization or order, or to
give such notice or make such filing or registration could not have or result
in, individually or in the aggregate, a Material Adverse Effect (the consents,
waivers, authorizations, orders, notices and filings referred to in (i)-(v) of
this Section are, collectively, the "REQUIRED APPROVALS").
(g) LITIGATION: PROCEEDINGS. There is no action, suit,
notice of violation, proceeding or investigation pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective properties before or by any court,
governmental or administrative agency or regulatory authority (Federal, state,
county, local or foreign) which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
Securities or (ii) could, individually or in the aggregate, have or result in a
Material Adverse Effect.
(h) NO DEFAULT OR VIOLATION. Neither the Company nor any
Subsidiary (i) is in default under or in violation of (and no event has occurred
which has not been waived which, with
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notice or lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound, (ii) is in violation of
any order of any court, arbitrator or governmental body, or (iii) is in
violation of any statute, rule or regulation of any governmental authority,
except as could not individually or in the aggregate, have or result in a
Material Adverse Effect.
(i) PRIVATE OFFERING. Assuming the accuracy of the
representations and warranties of the Purchaser set forth in Sections
2.2(b)-(h), the offer, issuance and sale of the Securities to the Purchaser as
contemplated hereby are exempt from the registration requirements of the
Securities Act of 1933, as amended (the "SECURITIES ACT"). Neither the Company
nor any Person acting on its behalf has taken any action could subject the
offering, issuance or sale of the Securities to the registration requirements of
the Securities Act.
(j) FINANCIAL STATEMENTS; CERTAIN CHANGES. The Company has
provided to the Purchaser true and complete copies of the Audited Consolidated
Financial Statements of the Company and its Subsidiaries (including the
Consolidated Balance Sheet dated December 31, 1996, Consolidated Statement of
Operations for the Period May 17, 1996 (Inception) to December 31, 1996,
Consolidated Statement of Changes in Stockholders' Equity for the Period May 17,
1996 (Inception) to December 31, 1996, and Consolidated Statement of Cash Flows
for the Period May 17, 1996 (Inception) to December 31, 1996) and the Notes
thereto and the Unaudited Consolidated Financial Statements of the Company and
its Subsidiaries (including the Consolidated Balance Sheet dated December 31,
1997 and the Consolidated Statement of Operations, Consolidated Statement of
Changes in Stockholders' Equity, and Consolidated Statement of Cash Flows, in
each case for the year ended December 31, 1997) and the Notes thereto
(collectively, the "FINANCIAL STATEMENTS" and, together with the Schedules to
this Agreement the "DISCLOSURE MATERIALS"). As of their respective dates, the
Financial Statements did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Financial Statements were prepared by the
Company in accordance with generally accepted accounting principles applied on a
consistent basis ("GAAP") during the periods involved, except as may be
otherwise specified in such Financial Statements or the notes thereto, and
fairly present in all material respects the financial position of the Company
and its Subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments. Since
December 31, 1997, (a) there has been no event, occurrence or development that
could have or result in a Material Adverse Effect, (b) the Company has not
incurred any liabilities (contingent or otherwise) other than (x) liabilities
incurred in the ordinary course of business consistent with past practice and
(y) liabilities not required to be reflected in the Company's financial
statements pursuant to GAAP, (c) the Company has not altered its method of
accounting or the identity of its auditors, (d) the Company has not declared or
made any payment or distribution of cash or other property to its stockholders
or officers or directors (other than in compliance with existing Company stock
option plans) with respect to its capital stock, or purchased, redeemed (or made
any agreements to purchase or redeem) any shares of its capital stock and (e)
other than as disclosed in the Financial Statements and as required by this
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Agreement, the Company has not entered into any agreement or other commitment to
issue its securities.
(k) INVESTMENT COMPANY. The Company is not, and is not an
Affiliate (as defined in Rule 405 under the Securities Act) of, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(1) CERTAIN FEES. Except for certain fees payable by the
Company to CDC Consulting, Inc., no fees or commissions will be payable by the
Company to any broker, financial advisor or consultant, finder, placement agent,
investment banker, or bank with respect to the transactions contemplated by this
Agreement. The Purchaser shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other Persons for fees of a
type contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement. The Company shall indemnify and
hold harmless the Purchaser, its employees, officers, directors, agents, and
partners, and their respective Affiliates, from and against all claims, losses,
damages, costs (including the costs of preparation and attorney's fees) and
expenses suffered in respect of any such claimed or existing fees, as such fees
and expenses are incurred.
(m) SOLICITATION MATERIALS. Neither the Company nor any
Person acting on the Company's behalf has (i) distributed any offering materials
in connection with the offering and sale of the Securities, or (ii) solicited
any offer to buy or sell the Securities by means of any form of general
solicitation or advertising.
(n) FORM SB-2 ELIGIBILITY. The Company is eligible to
register securities for resale with the Commission under Form SB-2 promulgated
under the Securities Act.
(o) EXCLUSIVITY. The Company shall not issue and sell the
Shares to any Person other than the Purchaser other than with the specific prior
written consent of the Purchaser.
(p) SENIORITY. No class of equity securities of the Company
is senior to the Shares in right of payment, whether upon liquidation or
dissolution, or otherwise.
(q) PATENTS AND TRADEMARKS. The Company has, or has rights
to use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and rights (collectively, the
"INTELLECTUAL PROPERTY RIGHTS") which are necessary or material for use in
connection with its business, and which the failure to so have would have a
Material Adverse Effect. To the best knowledge of the Company, all such
Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights.
(r) REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION. Except as
set forth on SCHEDULE 6(b) to the Registration Rights Agreement, (i) the Company
has not granted or agreed to grant to any Person any rights (including
"piggy-back" registration rights) to have any securities of the Company
registered with the Commission or any other governmental authority which has not
been satisfied and (ii) no Person, has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents.
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(s) REGULATORY PERMITS. The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
Federal, state or foreign regulatory authorities necessary to conduct their
respective businesses as described in the Financial Statements, except where the
failure to possess such permits could not, individually or in the aggregate,
have or result in a Material Adverse Effect ("MATERIAL PERMITS"), and neither
the Company nor any such Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
(t) TAXES. The Company has prepared and duly and timely
filed (taking into account all extensions of due dates) all tax returns and
reports required to be filed by it prior to the date hereof; and has paid all
applicable taxes, interest, penalties and assessments due with respect thereto,
including, without limitation, payroll taxes, property taxes, income taxes,
estimated taxes, excise taxes, sales taxes, franchise taxes and personal
property taxes, except where the failure to so file or pay, individually or in
the aggregate, could not have or result in a Material Adverse Effect. The
Company has not executed or revoked any request for waiver or extension of the
time to assess any tax the time for assessment of which has not expired. There
are no audits pending (and to the Company's knowledge, none are proposed) of the
Company's federal, state or local income tax returns, federal excise tax returns
or franchise or other tax liabilities by any taxing authority.
(u) DISCLOSURE. The Company confirms that it has not
provided the Purchaser or its agents or counsel with any information that
constitutes or might constitute material non-public information. The Company
understands and confirms that the Purchaser shall be relying on the foregoing
representations in effecting transactions in securities of the Company. All
disclosure provided to the Purchaser regarding the Company, its business and the
transactions contemplated hereby, including the Schedules to this Agreement,
furnished by or on behalf of the Company are true and correct and do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
2.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby represents and warrants to the Company as follows:
(a) ORGANIZATION: AUTHORITY. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with the requisite corporate power and
authority, to enter into and to consummate the transactions contemplated by the
Transaction Documents and otherwise to carry out its obligations thereunder. The
purchase by the Purchaser of the Securities hereunder has been duly authorized
by all necessary action on the part of the Purchaser. Each of this Agreement,
the Registration Rights Agreement and the Escrow Agreement has been duly
executed and delivered by the Purchaser and constitutes the valid and legally
binding obligation of the Purchaser, enforceable against it in accordance with
its terms.
(b) INVESTMENT INTENT. The Purchaser is acquiring the
Securities for its own account for investment purposes only and not with a view
to or for distributing or reselling such Securities or any part thereof or
interest therein, without prejudice, however, to the Purchaser's right, subject
to the provisions of this Agreement and the Registration Rights Agreement, at
all times to
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sell or otherwise dispose of all or any part of such Securities pursuant to an
effective registration statement under the Securities Act and in compliance with
applicable state securities laws or under an exemption from such registration.
(c) PURCHASER STATUS. At the time the Purchaser was offered
the Shares and the Warrant, it was, and at the date hereof it is, and at each
exercise date under the Warrant, it will be, an "accredited investor" as defined
in Rule 501(a) under the Securities Act.
(d) EXPERIENCE OF THE PURCHASER. The Purchaser, either alone
or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.
(e) ABILITY OF THE PURCHASER TO BEAR RISK OF INVESTMENT. The
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.
(f) ACCESS TO INFORMATION. The Purchaser acknowledges
receipt of the Disclosure Materials and further acknowledges that it has
reviewed the Disclosure Materials and has been afforded (i) the opportunity to
ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information which the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment and to verify the
accuracy and completeness of the information contained in the Disclosure
Materials.
(g) GENERAL SOLICITATION. The Purchaser is not purchasing
the Shares as a result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar.
(h) RELIANCE. The Purchaser understands and acknowledges
that (i) the Securities are being offered and sold to it without registration
under the Securities Act in a private placement that is exempt from the
registration provisions of the Securities Act and (ii) the availability of such
exemption, depends in part on, and the Company will rely upon the accuracy and
truthfulness of, the foregoing representations and the Purchaser hereby consents
to such reliance.
The Company acknowledges and agrees that the Purchaser makes
no representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
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ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 TRANSFER RESTRICTIONS. (a) Securities may only be disposed of
pursuant to an effective registration statement under the Securities Act, to the
Company or pursuant to an available exemption from or in a transaction not
subject to the registration requirements of the Securities Act. In connection
with any transfer of Securities other than pursuant to an effective registration
statement or to the Company, except as otherwise set forth herein, the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration under the Securities Act. Notwithstanding
the foregoing, the Company hereby consents to and agrees to register on the
books of the Company and with any transfer agent for the securities of the
Company any transfer of Securities by the Purchaser to an Affiliate of the
Purchaser or to a fund under common management with the Purchaser, and any
transfer among any such Affiliates or funds, provided that transferee certifies
to the Company that it is an "accredited investor" as defined in Rule 501(a)
under the Securities Act and that it is acquiring the Securities solely for
investment purposes. Any such transferee shall agree in writing to be bound by
the terms of this Agreement and shall have the rights of a Purchaser under this
Agreement and the Registration Rights Agreement.
(b) The Purchaser agrees to the imprinting, so long as is
required by this Section 3.1(b), of the following legend on the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS.
[FOR SHARES ONLY] THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON CONVERSION SET FORTH IN A
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT, DATED AS OF MAY 31,
1998, BETWEEN PLANET ENTERTAINMENT CORPORATION (THE "COMPANY") AND THE
ORIGINAL HOLDER HEREOF. A COPY OF THAT AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY.
Underlying Shares shall not contain the legend set forth above
nor any other legend if the conversion of Shares, the payment of dividends
thereon, and exercise of the Warrant or other issuances of Underlying Shares as
contemplated hereby, by the Certificate of Designation or the Warrant occurs at
any time while an Underlying Securities Registration Statement is effective
under the Securities Act or, in the event there is not an effective Underlying
Securities Registration
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Statement at such time, if in the opinion of counsel to the Company such legend
is not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the staff of the
Commission). The Company shall cause its counsel to issue the legal opinion
included in the Transfer Agent Instructions to the Company's transfer agent on
the day that the Underlying Securities Registration Statement is declared
effective by the Commission. The Company agrees that it will provide the
Purchaser, upon request, with a certificate or certificates representing
Underlying Shares, free from such legend at such time as such legend is no
longer required hereunder. The Company may not make any notation on its records
or give instructions to any transfer agent of the Company which enlarge the
restrictions of transfer set forth in this Section.
3.2 ACKNOWLEDGMENT OF DILUTION. The Company acknowledges that the
issuance of the Underlying Shares upon (i) conversion of the Shares and payment
of dividends thereon in accordance with the terms of the Certificate of
Designation, and (ii) exercise of the Warrant in accordance with its terms, may
result in dilution of the outstanding shares of Common Stock, which dilution may
be substantial under certain market conditions. The Company further acknowledges
that its obligation to issue Underlying Shares upon (x) conversion of the Shares
and payment of dividends thereon in accordance with the terms of the Certificate
of Designation, and (y) exercise of the Warrant in accordance with its terms, is
unconditional and absolute, subject to the limitations set forth herein in the
Certificate of Designation or pursuant to the Warrant, regardless of the effect
of any such dilution. The parties understand that the Company's obligation to
issue Underlying Shares does not arise except upon conversions of Shares and as
payment of dividends thereon in shares of Common Stock (in accordance with the
Certificate of Designation) and upon exercises of the Warrant (in accordance
with the terms thereof).
3.3 FURNISHING OF INFORMATION. As long as the Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13(a) or 15(d) of the Exchange Act. As long as the Purchaser owns Securities, if
the Company is not required to file reports pursuant to such sections, it will
prepare and furnish to the Purchaser and make publicly available in accordance
with Rule 144(c) promulgated under the Securities Act annual and quarterly
financial statements, together with a discussion and analysis of such financial
statements in form and substance substantially similar to those that would
otherwise be required to be included in reports required by Section 13(a) or
15(d) of the Exchange Act, as well as any other information required thereby, in
the time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, all to the
extent required from time to time to enable such Person to sell Underlying
Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 promulgated under the Securities Act,
including the legal opinion referenced above in this Section. Upon the request
of any such Person, the Company shall deliver to such Person a written
certification of a duly authorized officer as to whether it has complied with
such requirements.
3.4 BLUE SKY LAWS. In accordance with the Registration Rights
Agreement, the Company shall qualify or exempt the issuance and sale of the
Underlying Shares under the securities or Blue Sky laws of such jurisdictions as
the Purchaser may reasonably request and shall continue such
-10-
qualification or exemption at all times until the Purchaser notifies the Company
in writing that it no longer owns Securities; PROVIDED, HOWEVER, that neither
the Company nor its Subsidiaries shall be required in connection therewith to
qualify as a foreign corporation where they are not now so qualified or to take
any action that would subject the Company to general service of process in any
such jurisdiction where it is not then subject.
3.5 INTEGRATION. The Company shall not, and shall use its best
efforts to ensure that, no Affiliate shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchaser.
3.6 INCREASE IN AUTHORIZED SHARES. At such times as the Company
would be, if a notice of conversion or exercise (as the case may be) were to be
delivered on such date, precluded from (a) issuing 200% of the number of
Underlying Shares as would then be issuable upon a conversion in full of the
Shares and as payment of any accrued and unpaid dividends in respect thereof in
shares of Common Stock or (b) honoring the exercise in full of the Warrant, in
either case, due to the unavailability of a sufficient number of shares of
authorized but unissued or reserved Common Stock, the Board of Directors of the
Company shall promptly (and in any case, within 30 Business Days from such date)
prepare and mail to the stockholders of the Company proxy materials requesting
authorization to amend the Company's Certificate of Incorporation to increase
the number of shares of Common Stock which the Company is authorized to issue to
at least such number of shares as reasonably requested by the Purchaser in order
to provide for such number of authorized and unissued shares of Common Stock to
enable the Company to comply with its conversion exercise and reservation of
shares obligations as set forth in this Agreement, the Certificate of
Designation and the Warrant (the sum of (x) the number of shares of Common Stock
then authorized, (y) the number of shares of Common Stock then outstanding plus
all shares of Common Stock issuable upon exercise of all outstanding options,
warrants and convertible instruments, and (z) the sum of (i) 200% of the number
of Underlying Shares as are then issuable upon a conversion in full of all
Shares and as payment of dividends thereon, and (ii) the number of Underlying
Shares as are issuable upon exercise in full of the Warrant, shall be a
reasonable number). In connection therewith, the Board of Directors shall (a)
adopt proper resolutions authorizing such increase, (b) recommend to and
otherwise use its best efforts to promptly and duly obtain stockholder approval
to carry out such resolutions (and hold a special meeting of the stockholders no
later than the 60th day after delivery of the proxy materials relating to such
meeting) and (c) within 5 Business Days of obtaining such stockholder
authorization, file an appropriate amendment to the Company's Certificate of
Incorporation to evidence such increase.
3.7 RESERVATION AND LISTING OF UNDERLYING SHARES. (a) The Company
shall maintain a reserve of Common Stock for issuance upon conversion of the
Shares (and for payment of dividends thereon in shares of Common Stock) and
exercise of the Warrant in such amount as may be required to perform its
obligations in full under the Transaction Documents, which reserve shall include
a number of shares of Common Stock equal to no less than (i) 200% of the number
of shares of Common Stock as would be issuable upon conversion in full of the
Shares and upon payment of dividends thereon, and (ii) the number of shares of
Common Stock issuable upon exercise of the Warrant.
-11-
(b) The Company shall (i) not later than the Tenth (10th) day
following the date, if any, on which the shares of Common Stock become listed
for trading on any of the New York Stock Exchange, American Stock Exchange,
Nasdaq National Market or Nasdaq SmallCap Market (each a "SUBSEQUENT MARKET"),
prepare and file with any such Subsequent Market an additional shares listing
application covering a number of shares of Common Stock which is at least equal
to the number of shares required to be reserved pursuant to Section 2.1(d), (ii)
take all steps necessary to cause the such shares to be approved for listing on
such Subsequent Market as soon as possible thereafter, and (iii) provide to the
Purchaser evidence of such listing, and the Company shall maintain the listing
of its Common Stock thereon. If the number of Underlying Shares as are issuable
upon conversion in full of the number of Shares then outstanding, as payment of
dividends thereon and exercise of the Warrant exceeds 85% of the number of
Underlying Shares previously listed on account thereof with such Subsequent
Market, the Company shall take the necessary actions to immediately list a
number of Underlying Shares as equals (i) 200% of the number of Underlying
Shares then issuable upon conversion in full of the Shares and upon payment of
dividends thereon, and (ii) the number of Underlying Shares issuable upon
exercise of the Warrant.
3.8 PURCHASER OWNERSHIP OF COMMON STOCK. The Purchaser agrees not
to convert Shares or exercise the Warrant to the extent such conversion or
exercise would result in the Purchaser beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act and the rules thereunder) in
excess of 4.999% of the shares of Common Stock then issued and outstanding,
including shares issuable upon conversion of the Shares and exercise of the
Warrant held by such Purchaser after application of this Section. To the extent
that the limitation contained in this Section applies, the determination of
whether Shares are convertible or the Warrant is exercisable (in relation to
other securities owned by a Purchaser) and of which Shares are convertible shall
be in the sole discretion of the Purchaser, and the submission of Shares for
conversion or the Warrant for exercise shall be deemed to be such Purchaser's
determination of whether such Shares are convertible or the Warrant is
exercisable (in relation to other securities owned by a Purchaser) and of which
portion of such Shares or portion of the Warrant are convertible or exercisable
(as the case may be), in each case subject to such aggregate percentage
limitation, and the Company shall have no obligation to verify or confirm the
accuracy of such determination. Nothing contained herein shall be deemed to
restrict the right of the Purchaser to convert Shares or exercise the Warrant at
such time as such conversion will not violate the provisions of this Section.
The provisions of this Section will not apply to any conversion pursuant to
Section 5(a)(ii) of the Certificate of Designation, and may be waived by the
Purchaser upon not less than 75 days prior notice to the Company, and the
provisions of this Section shall continue to apply until such 75th day (or
later, if stated in the notice of waiver).
3.9 CONVERSION PROCEDURES. The Transfer Agent Instructions and
Conversion Notice (as defined in EXHIBIT A) and Notice of Exercise under the
Warrant set forth the totality of the procedures with respect to the conversion
of the Shares and exercise of the Warrant, including the form of legal opinion,
if necessary, that shall be rendered to the Company's transfer agent and such
other information and instructions as may be reasonably necessary to enable the
Purchaser to convert its Shares and exercise the Warrant as contemplated in the
Certificate of Designation and the Warrant (as applicable).
3.10 NOTICE OF BREACHES. (a) Each of the Company and the Purchaser
shall give prompt written notice to the other of any breach by it of any
representation, warranty or other agreement
-12-
contained in any Transaction Document, as well as any events or occurrences
arising after the date hereof which would reasonably be likely to cause any
representation or warranty or other agreement of such party, as the case may be,
contained therein to be incorrect or breached. However, no disclosure by either
party pursuant to this Section shall be deemed to cure any breach of any
representation, warranty or other agreement contained in any Transaction
Document.
(b) Notwithstanding the generality of Section 3.10(a), the
Company shall promptly notify the Purchaser of any notice or claim (written or
oral) that it receives from any lender of the Company to the effect that the
consummation of the transactions contemplated by the Transaction Documents
violates or would violate any written agreement or understanding between such
lender and the Company, and the Company shall promptly furnish by facsimile to
the holders of the Shares a copy of any written statement in support of or
relating to such claim or notice.
3.11 CONVERSION AND EXERCISE OBLIGATIONS OF THE COMPANY. The
Company shall honor conversions of the Shares and exercises of the Warrant and
shall deliver Underlying Shares in accordance with the respective terms,
conditions and time periods set forth in the respective Certificate of
Designation and the Warrant.
3.12 RIGHT OF FIRST REFUSAL. SUBSEQUENT REGISTRATIONS. (a) The
Company shall not, directly or indirectly, without the prior written consent of
Encore Capital Management, L.L.C. ("Encore"), offer, sell, grant any option to
purchase, or otherwise dispose of (or announce any offer, sale, grant or any
option to purchase or other disposition) any of its or its Affiliates' equity or
equity-equivalent securities in a transaction intended to be exempt or not
subject to registration under the Securities Act (a "SUBSEQUENT PLACEMENT") for
a period of 180 days after the Closing Date, except (i) the granting of options
or warrants to employees, officers and directors, and the issuance of shares
upon exercise of options granted, under any stock option plan heretofore or
hereinafter duly adopted by the Company, (ii) shares issued upon exercise of any
currently outstanding warrants and upon conversion of any currently outstanding
convertible securities of the Company, in each case disclosed in SCHEDULE
2.1(c), and (iii) shares of Common Stock issued upon conversion of Preferred
Stock and as payment of dividends thereon and upon exercise of the Warrant in
accordance with the Certificate of Designation or the Warrant, unless (A) the
Company delivers to Encore a written notice (the "SUBSEQUENT PLACEMENT NOTICE")
of its intention effect such Subsequent Placement, which Subsequent Placement
Notice shall describe in reasonable detail the proposed terms of such Subsequent
Placement, the amount of proceeds intended to be raised thereunder, the Person
with whom such Subsequent Placement shall be affected, and attached to which
shall be a term sheet or similar document relating thereto and (B) Encore shall
not have notified the Company by 5:00 p.m. (New York City time) on the tenth
(10th) Business Day after its receipt of the Subsequent Placement Notice of its
willingness to cause the Purchaser to provide (or to cause its sole designee to
provide), subject to completion of mutually acceptable documentation, financing
to the Company on substantially the terms set forth in the Subsequent Placement
Notice. If Encore shall fail to notify the Company of its intention to enter
into such negotiations within such time period, the Company may effect the
Subsequent Placement substantially upon the terms and to the Persons (or
Affiliates of such Persons) set forth in the Subsequent Placement Notice;
PROVIDED that the Company shall provide Encore with a second Subsequent
Placement Notice, and Encore shall again have the right of first refusal set
forth above in this paragraph (a), if the Subsequent Placement subject to the
initial Subsequent Placement Notice shall not have been consummated for any
reason on the terms set forth
-13-
in such Subsequent Placement Notice within thirty (30) Business Days after the
date of the initial Subsequent Placement Notice with the Person (or an Affiliate
of such Person) identified in the Subsequent Placement Notice.
(b) Except for (x) Underlying Shares, (y) other "Registrable
Securities" (as such term is defined in the Registration Rights Agreement) to be
registered in accordance with the Registration Rights Agreement, and (z) Common
Stock to be registered for resale in connection with financings permitted
pursuant to paragraph (a)(i) and (ii) of Section 3.12(a), the Company shall not,
without the prior written consent of the Purchaser (i) issue or sell any of its
or any of its Affiliates' equity or equity-equivalent securities pursuant to
Regulation S promulgated under the Securities Act, or (ii) register for resale
any securities of the Company for a period of not less than 90 Trading Days
after the date that the Underlying Securities Registration Statement is declared
effective by the Commission. Any days that a Purchaser is unable to sell
Underlying Securities under the Underlying Securities Registration Statement
shall be added to such 90 Trading Day period for the purposes of (i) and (ii)
above.
3.13 CERTAIN SECURITIES LAWS DISCLOSURES; PUBLICITY. The Company
shall: (i) issue a press release acceptable to the Purchaser disclosing the
transactions contemplated hereby on the Closing Date, (ii) file with the
Commission a Report on Form 8-K disclosing the transactions contemplated hereby
within ten (10) Business Days after the Closing Date, and (iii) timely file with
the Commission a Form D promulgated under the Securities Act as required under
Regulation D promulgated under the Securities Act and provide a copy thereof to
the Purchaser promptly after the filing thereof. The Company shall, no less than
two (2) Business Days prior to the filing of any disclosure required by clauses
(ii) and (iii) above, provide a copy thereof to Encore. No such filing or
disclosure may be made that mentions the Purchaser or Encore by name without the
prior consent of Encore.
3.14 USE OF PROCEEDS. The Company may only use the net proceeds
from the sale of the Securities hereunder for working capital purposes, to fund
acquisitions and to repay any portion of Company, debt not to exceed $100,000,
that is or was incurred (and is being repaid) in the ordinary course of
business, without prior consent of the Purchaser, and the Company shall not use
any proceeds from the sale of the Securities hereunder to pay any indebtedness
owed to the principals, officers and directors of the Company. Pending
application of the proceeds of this placement in the manner permitted hereby,
the Company will invest such proceeds in interest bearing accounts and/or
short-term, investment grade interest bearing securities.
3.15 TRANSFER OF INTELLECTUAL PROPERTY RIGHTS. Except in connection
with the sale of all or substantially all of the assets of the Company, the
Company shall not transfer, sell or otherwise dispose of any Intellectual
Property Rights, or allow any of the Intellectual Property Rights to become
subject to any Liens, or fail to renew such Intellectual Property Rights (if
renewable and it would otherwise lapse if not renewed), without the prior
written consent of the Purchaser.
3.16 FILING OF FORM 10. The Company shall prepare and file with the
Commission a registration statement for the Common Stock pursuant to Section
12(g) of the Exchange Act on Form 10 as soon as possible, and in any event
within fifteen (15) days, after the Closing Date, and shall use its best efforts
to cause such Form 10 to be declared effective as promptly as possible
thereafter.
-14-
3.17 REIMBURSEMENT. If the Purchaser, other than by reason of its
gross negligence, willful misconduct or fraud, becomes involved in any capacity
in any action, proceeding or investigation brought by or against any Person,
including stockholders of the Company, in connection with or as a result of the
consummation of the transactions contemplated by Transaction Documents, the
Company will reimburse the Purchaser for its reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith, as such expenses are incurred. In addition, other than with respect
to any matter in which the Purchaser is a named party, the Company will pay the
Purchaser the charges, as reasonably determined by the Purchaser, for the time
of any officers or employees of the Purchaser devoted to appearing and preparing
to appear as witnesses, assisting in preparation for hearings, trials or
pretrial matters, or otherwise with respect to inquiries, hearings, trials, and
other proceedings relating to the subject matter of this Agreement. The
reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any Affiliates of the Purchaser who are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may
be, of the Purchaser and any such Affiliate, and shall be binding upon and inure
to the benefit of any successors, assigns, heirs and personal representatives of
the Company, the Purchaser and any such Affiliate and any such Person. The
Company also agrees that neither the Purchaser nor any such Affiliates,
partners, directors, agents, employees or controlling persons shall have any
liability to the Company or any person asserting claims on behalf of or in right
of the Company in connection with or as a result of the consummation of the
Transaction Documents except to the extent that any losses, claims, damages,
liabilities or expenses incurred by the Company result from the gross negligence
or willful misconduct of the Purchaser or entity in connection with the
transactions contemplated by this Agreement.
ARTICLE IV
MISCELLANEOUS
4.1 FEES AND EXPENSES. At the Closing the Company shall (i) pay
$15,000 to Escrow Agent in connection with the preparation and negotiation of
the Transaction Documents, and (ii) pay to $10,000 to Encore for its due
diligence expenses and disbursements in connection with the transactions
contemplated hereby. Other than the amounts contemplated in the immediately
preceding sentence, and except as otherwise set forth in the Registration Rights
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all stamp and other taxes
and duties levied in connection with the issuance of the Securities.
4.2 ENTIRE AGREEMENT. This Agreement, together with the Exhibits
and Schedules hereto, the Registration Rights Agreement, the Certificate of
Designation, the Warrant and the Escrow Agreement contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.
-15-
4.3 NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 8:00 p.m. (New
York City time) on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in the Purchase Agreement later than
8:00 p.m. New York City time) on any date and earlier than 11:59 p.m. (New York
City time) on such date, (iii) the Business Day following the date of mailing,
if sent by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as follows:
If to the Company: Planet Entertainment Corporation
000 Xxxxxxx 00
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Secretary
With copies to: Xxxxxxxx, Xxxxx & XxXxxxxx
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx Xxxxxxxx
If to the Purchaser: JNC Opportunity Fund Ltd.
c/o Olympia Capital (Cayman) Ltd.
Xxxxxxxx House, 00 Xxxx Xxxxxx
Xxxxxxxx XX 00, Xxxxxxx
Xxxxxxxxx No.: (000) 000-0000
Attn: Director
With copies to: Encore Capital Management, L.L.C.
00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Managing Member
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxx
-16-
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
4.4 AMENDMENTS; WAIVERS. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and the Purchaser; or, in the case of a waiver,
by the party against whom enforcement of any such waiver is sought. No waiver 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 either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
4.5 HEADINGS. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
4.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Purchaser. Except as set
forth in Section 3.1(a), the Purchaser may not assign this Agreement or any of
the rights or obligations hereunder without the consent of the Company. This
provision shall not limit the Purchaser's right to transfer securities or
transfer or assign rights hereunder or under the Registration Rights Agreement.
4.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for
the benefit of the parties hereto and their respective successors and permitted
assigns and, other with respect to Encore who is an intended beneficiary of, and
entitled to enforce, Sections 3.12, 4.1 and 4.11, is not for the benefit of; nor
may any provision hereof be enforced by, any other Person.
4.8 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York without regard to the principles of conflicts of law thereof. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of the any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and 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 contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.
4.9 SURVIVAL. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the delivery and
conversion or exercise (as the case may be) of the Shares and the Warrant.
-17-
4.10 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
4.11 PUBLICITY. The Company and the Purchaser shall consult with
each other in issuing any press releases or otherwise making public statements
or filings and other communications with the Commission or any regulatory agency
or stock market or trading facility with respect to the transactions
contemplated hereby and neither party shall issue any such press release or
otherwise make any such public statement, filings or other communications
without the prior written consent of the other, which consent shall not be
unreasonably withheld or delayed, except that no prior consent shall be required
if such disclosure is required by law, in which such case the disclosing party
shall provide the other party with prior notice of such public statement, filing
or other communication. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of the Purchaser or Encore, or include the name of
the Purchaser or Encore in any filing with the Commission, or any regulatory
agency, trading facility or stock market without the prior written consent of
Encore, except to the extent such disclosure (but not any disclosure as to the
controlling Persons thereof) is required by law, in which case the Company shall
provide the Purchaser and Encore with prior notice of such disclosure.
4.12 SEVERABILITY. In case any one or more of the provisions of
this Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Agreement shall
not in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
4.13 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchaser
will be entitled to specific performance of the obligations of the Company under
the Transaction Documents. Each of the Company and the Purchaser agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of its obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Convertible
Preferred Stock Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated above.
PLANET ENTERTAINMENT CORPORATION
By: /s/ XXXXXX XXXXXXX
------------------
Name: Xxxxxx Xxxxxxx
Title: President
JNC OPPORTUNITY FUND LTD.
By: /s/ XXXXXX X. XXXXX
-------------------
Name: Xxxxxx X. Xxxxx
Title: Director
SCHEDULE 2.1(a)
PLANET ENTERTAINMENT CORP.
Subsidiaries
May31, 1998
Higher Ground Records
Maestro Holding Corporation
Planet Studios Inc.
SCHEDULE 2.1(c)
PLANET ENTERTAINMENT CORP.
CAPITALIZATION TABLE
May 31, 1998
I. Common Stock
Authorized 50,000,000 shares
Outstanding 12, 081,055 shares
Reserved for Employee Stock Option Plan 1,000,000 shares
Warrants to purchase 3,160,000 shares issued 1/29/97
Exercise price - $2
Expiration date - January 28, 2007
II. Preferred Stock
Authorized 10,000,000 shares
Outstanding None
Principal Shareholders
----------------------
Name (1) Number Of Shares
-------- ----------------
Xxxxxxx Xxxxxx 2,314,000 (2)
Xxxxxx Xxxxxxx 2,127,000 (2)
Xxxx Xxxxxx 2,366,000 (2)
Briolette Investments 1,100,000
Xxxxxxx Xxxxxxxxx 400,000 (2)
J.Xxxxxxx Xxxxxxxxxx 806,000
Upbeat Records 694.000
---------
9,807,000
=========
1. Includes both record and/or beneficial ownership of the above shares.
2. In addition, an aggregate of 316,000 warrants to purchase 3,160,000
shares, exercisable at $2.00 per share, expiring January 28, 2007, were
issued to the officers as follows:
Xxxxxxx Xxxxxx 100,000 warrants
Xxxx Xxxxxx 100,000 warrants
Xxxxxxx Xxxxxxxxx 75,000 warrants
Xxxxxx Xxxxxxx 41,000 warrants
EXHIBIT B
See tab 3 herein.
EXHIBIT C
See tab 4 herein.
EXHIBIT D
See tab 6 herein.
EXHIBIT E
See tab 8 herein.
EXHIBIT F
Planet Entertainment Corporation
000 Xxxxxxx 00
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
Olde Monmouth Stock Transfer
00 Xxxxxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxxxx, XX 00000
May 31, 1998
RE: TRANSFER AGENT INSTRUCTIONS
Ladies and Gentlemen:
Reference is made to that certain Convertible Preferred Stock Purchase
Agreement (the "Purchase Agreement") between Planet Entertainment Corporation
(the "Company"), and the buyer named therein (the "Holder") pursuant to which
the Company is issuing to the Holder shares of its 7% Series A Convertible
Preferred Stock, par value $.0001 per share (the "Preferred Shares"), and a
common stock purchase warrant (the "Warrant") which shall be convertible and
exercisable, respectively, into shares of the Company's common stock, $.0001 par
value per share (the "Common Stock'). The shares of Common Stock issuable upon
conversion of the Preferred Shares, payment of dividends thereon and exercise of
the Warrant are collectively referred to herein as "Underlying Shares."
This letter shall serve as our irrevocable authorization and direction
to you (provided that you are the transfer agent of the Company at such time) to
issue shares of Common Stock upon conversion of the Preferred Shares, payment of
dividends thereon or exercise of the Warrant, from time to time, upon surrender
to you of (i) a properly completed and duly executed Conversion Notice, in the
form attached hereto as Exhibit I or Exercise Notice, in the form attached
hereto as Exhibit II, and (ii) certificates representing Preferred Shares being
converted or the Warrant being exercised (or an indemnification undertaking with
respect to such share certificates in the case of their loss, theft or
destruction).
So long as you have previously received (x) an opinion of the Company's
outside counsel substantially in the form of Exhibit III attached hereto (which
the Company shall direct be delivered to you by such outside counsel upon the
effectiveness of the registration statement covering Underlying Shares) stating
that a registration statement covering resales of Underlying Shares has been
declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and that Underlying Shares may be issued or
resold without any restrictive legend (the "Opinion"), and (y) a copy of such
registration statement, certificates representing Underlying Shares shall not
bear any legend restricting transfer of Underlying Shares thereby and should not
be subject to any stop-transfer restriction. Provided, however, that if you
have not previously received (i) a copy of the Opinion, and (ii) a copy of such
registration statement, then the certificates for Underlying Shares shall bear
the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.
Please be advised that the Holder has relied upon this letter as an
inducement to enter into the Purchase Agreement and, accordingly, the Holder is
a third party beneficiary to these instructions.
Please execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions. Should you have any
questions concerning this matter, please contact me at [ ].
Very truly yours,
By:
---------------------
Name:
---------------------
Title:
---------------------
ACKNOWLEDGED AND AGREED:
OLDE MONMOUTH STOCK TRANSFER CO., INC.
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By: /s/ XXXX X XXXXXXX
---------------------------------
Name: XXXX X XXXXXXX
---------------------------------
Title: PRESIDENT
---------------------------------
OLDE MONMOUTH STOCK TRANSFER
00 XXXXXXXX XXXX XXXXX 000
XXXXXXXX XXXXXXXXX XX 00000
/s/ XXXX X XXXXXXX
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