EXHIBIT 10.3
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CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
Between
BIG ENTERTAINMENT, INC.
and
DEEPHAVEN OPPORTUNITY MASTER FUND L.P.
Dated as of November 18, 1998
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CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this "AGREEMENT"),
dated as of November 18, 1998, between Big Entertainment, Inc., a Florida
corporation (the "COMPANY"), and Deephaven Opportunity Master Fund L.P., a
British Virgin Islands limited partnership (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 Series
D-2 Convertible Preferred Stock, par value $.01 per share (the "PREFERRED
STOCK"), which are convertible into shares of the Company's common stock, $.01
par value 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 50 shares of Preferred Stock (the "SHARES") for an
aggregate purchase price of $500,000. The purchase price per Share shall be
$10,000. The closing of the purchase and sale of the Preferred Stock (the
"CLOSING") shall take place at the offices of Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx
& Xxxxxx LLP ("XXXXXXXX XXXXXXXXX"), 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) At the Closing, the parties shall deliver or shall cause
to be delivered to 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-1, 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 issuance thereof to acquire 25,000 shares of Common Stock at an exercise
price per share of $5.175, subject to adjustment (the "FIRST WARRANT"), (3) a
common stock purchase warrant, in the form of EXHIBIT D-2, 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 issuance thereof to acquire 16,667 shares of Common Stock at an exercise
price per share of $6.255, subject to adjustment (the "SECOND WARRANT" and,
together with the First Warrant, the "WARRANTS"), (4) the legal opinion of
Broad & Xxxxxx, outside counsel to the Company, substantially in the form of
EXHIBIT C, and (5) all other documents, instruments and writings required to
have been delivered at or prior to the Closing 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 E, delivered to and
acknowledged by the Company's transfer agent (the "TRANSFER AGENT
INSTRUCTIONS"); and (B) the Purchaser shall deliver (1) $500,000 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 by the Purchaser pursuant to this Agreement, including, without
limitation, an executed Registration Rights Agreement.
1.2 TERMS OF PREFERRED STOCK. The Preferred Stock shall have
the rights preferences and privileges set forth in EXHIBIT A, and shall be
incorporated into the Articles of Amendment ("ARTICLES OF AMENDMENT") which
shall be filed on or prior to the Closing Date by the Company with the
Department of State of Florida, in form and substance mutually agreed to by the
parties.
1.3 CERTAIN DEFINED TERMS. For purposes of this Agreement,
CONVERSION PRICE," "INITIAL CONVERSION DATE," "ORIGINAL ISSUE DATE," "STATED
VALUE" 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 in the United States of America 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 AND WARRANTIES 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 or other entity 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 Articles of Amendment, the Registration
Rights Agreement or the Warrants (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
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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 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, except for any of the Required Approvals (as hereinafter defined). Each
of the Transaction Documents has been duly executed by the Company and, when
delivered 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 articles of incorporation, by-laws 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 statutory 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) or as a result of
the purchase and sale of the Shares and the Warrants and the issuance of
Adjustment Shares (as defined in Section 3.16), if any, there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to 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 the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1997, Quarterly Reports on Form 10-QSB for the
quarters ended March 31, 1998 and June 30, 1998 and Proxy Statement for the July
1998 Annual Meeting of Shareholders (collectively, the "Current SEC Reports") or
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, THE WARRANTS AND THE ADJUSTMENT SHARES.
The Shares and the Warrants are duly authorized, and, when issued and paid for
in accordance with the terms hereof, shall have been duly and validly issued,
and, in the case of the Shares, 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 an adequate reserve of duly
authorized shares of Common Stock, reserved for issuance to the Purchaser and
the holders of the Shares and the Warrants, to enable it to perform its
conversion, exercise and other obligations under this
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Agreement, the Articles of Amendment and the Warrants. Such initial number of
reserved and available shares of Common Stock is not less than the sum of the
number of shares of Common Stock which would be issuable on the Closing Date (i)
upon conversion in full of the Shares and payment of dividends thereunder,
assuming the Shares are outstanding for three years, all dividends for such
three year period is paid in shares of Common Stock and that such conversion
occurred at the lowest possible Conversion Price pursuant to Section 5(c)(i) of
the Articles of Amendment, (ii) upon exercise of the Warrants, assuming the
Warrants are exercised at the lowest possible Exercise Price (as defined in the
Warrants), and (iii) as Adjustment Shares, assuming that the Adjustment Price
(as defined in Section 3.16) is equal to one half of the lowest possible
Conversion Price pursuant to Section 5(c)(i) of the Articles of Amendment (such
number of shares of Common Stock, the "INITIAL MINIMUM"). All such
authorized shares of Common Stock have been duly reserved for issuance to the
Purchaser and the holders of such Shares and Warrants. The Adjustment Shares and
the shares of Common Stock issuable upon conversion of the Shares, as payment of
dividends thereon and upon exercise of the Warrants are collectively referred to
herein as the "UNDERLYING SHARES." The Shares, the Warrants and the Underlying
Shares are, collectively, the "SECURITIES." When issued in accordance with this
Agreement, the Articles of Amendment and the Warrants, in accordance with their
respective terms, the Underlying Shares will be 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 articles 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, reasonably be expected to
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, except for violations which, individually or in the
aggregate, could reasonably be expected to not have or result in a Material
Adverse Effect.
(f) FILINGS, 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 Articles of Amendment
with the Secretary of State of Florida, (ii) the filings required pursuant to
Section 3.12, (iii) the filing of the Underlying Securities Registration
Statement with the Securities and Exchange Commission (the "COMMISSION")
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meeting the requirements set forth in the Registration Rights Agreement and
covering the resale of the Underlying Shares by the Purchaser, (iv) the
application(s) to the Nasdaq Stock Market, Inc for the listing of the Underlying
Shares for trading on the Nasdaq SmallCap Market ("NASDAQ") (and with any
other national securities exchange or market on which the Common Stock is then
listed), (v) applicable Blue Sky filings as required by the Registration Rights
Agreement and, and (vi) 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 reasonably be expected to 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)-(vi) of
this Section are collectively, the "REQUIRED APPROVALS").
(g) LITIGATION; PROCEEDINGS. Except as specifically disclosed in the
SEC Documents, 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, reasonably be expected to 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 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)-(g), 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 that could subject the offering, issuance or
sale of the Securities to the registration requirements of the Securities Act.
(j) SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has filed all
reports required to be filed by it under the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the three years preceding the date hereof
(or such shorter period as the Company was required by law to file such
material) (the foregoing materials being collectively referred to herein as the
"SEC DOCUMENTS" and, together with the Schedules to this Agreement the
"DISCLOSURE MATERIALS") on a timely basis or has received a valid extension of
such time of filing and has filed any such SEC Documents prior to the expiration
of any such extension. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Securities Act
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and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted 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. All material
agreements to which the Company is a party or to which the property or assets of
the Company are subject and which were required to have been filed as exhibits
to the SEC Documents have been so filed. The financial statements of the Company
included in the SEC Documents comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared 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 consolidated 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 except as specifically disclosed in the
Current SEC Reports or as set forth on Schedule 2.1(j), (a) there has been no
event, occurrence or development that has had or 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
or required to be disclosed in filings made with the Commission, (c) the Company
has not altered its method of accounting or the identity of its auditors and (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 or salary paid in accordance
with existing employment agreements or otherwise made in the ordinary course
consistent with prior practice) with respect to its capital stock, or purchased,
redeemed (or made any agreements to purchase or redeem) any shares of its
capital stock. The Company last filed audited financial statements with the
Commission for the year ended December 31, 1997, and has not received any
comments from the Commission in respect thereof.
(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.
(l) CERTAIN FEES. Except for certain fees payable by the Company to
the parties set forth on Schedule 2.1(l), 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.
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(m) SOLICITATION MATERIALS. Neither the Company nor any Person
acting on the Company's behalf has solicited any offer to buy or sell the
Securities by means of any form of general solicitation or advertising.
(n) FORM S-3 ELIGIBILITY. The Company is eligible to register
securities for resale with the Commission under Form S-3 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. Except as set forth on Schedule 2.1(p), no class of
equity securities of the Company is senior to the Shares in right of payment,
whether upon liquidation, dissolution, or otherwise.
(q) LISTING AND MAINTENANCE REQUIREMENTS COMPLIANCE. The Company has
not, in the two years preceding the date hereof, received notice (written or
oral) from the NASDAQ or any other stock exchange, market or trading facility on
which the Common Stock is or has been listed (or on which it has been quoted) to
the effect that the Company is not in compliance with the listing or maintenance
requirements of such exchange or market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such maintenance requirements.
(r) 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 could reasonably
be expected to 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.
(s) 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.
(t) REGULATORY PERMITS. The Company and its 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 SEC Documents, except where the failure to
possess such permits, individually or in the aggregate could reasonably be
expected to 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.
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(u) TITLE. Neither the Company nor any of its Subsidiaries own
any real property. The Company and the Subsidiaries have good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all Liens,
except for liens, claims or encumbrances as do not materially affect the value
of such property and do not interfere with the use made and proposed to be made
of such property by the Company and its Subsidiaries. Any real property and
facilities held under lease by the Company and its Subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and its Subsidiaries.
(v) 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 limited
partnership 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 and
the Registration Rights 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 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, the Warrants and the Adjustment Shares, it was, and at the date hereof
it is, and at each exercise date under the Warrants, it will be, an "accredited
investor" as defined in Rule 501(a) under the Securities Act.
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(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. Neither such inquiries nor any other investigation conducted by or on
behalf of such Purchaser or its representatives or counsel shall modify, amend
or affect such Purchaser's right to rely on the truth, accuracy and completeness
of the Disclosure Materials and the Company's representations and warranties
contained in the Transaction Documents.
(g) GENERAL SOLICITATION. The Purchaser is not purchasing the
Shares as a result of or subsequent to any advertisement, article, notice or
other communication regarding the Shares 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.
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
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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 of such
transferred securities 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 the 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] [EXERCISABLE] 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.
THE PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF THE SHARES OF
PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE ARE SET FORTH IN A
DESIGNATION OF PREFERENCES, RIGHTS AND LIMITATIONS FILED WITH THE FLORIDA
DEPARTMENT OF STATE, A COPY OF WHICH MAY BE OBTAINED FROM THE CORPORATION.
Underlying Shares shall not contain the legend set forth above
nor any other legend if the conversion of Shares, the payment of dividends
thereon, the exercise of Warrants, the issuance of Adjustment Shares or other
issuances of Underlying Shares as contemplated hereby, by the Articles of
Amendment or the Warrants 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 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
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Company's transfer agent on the day that the Underlying Securities
Registration Statement is declared effective by the Commission. The Company
agrees that, in the event any Underlying Shares are issued with a legend in
accordance with this Section 3.1(b), it will provide the Purchaser, upon
request, with a certificate or certificates representing such Underlying Shares,
free from such legend at such time as such legend would not have been required
under this Section 3.1(b) had such issuance occurred on the date of such
request. 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 Adjustment Shares and the Underlying Shares issuable upon
conversion of the Shares and payment of dividends thereon in accordance with the
terms of the Articles of Amendment, and upon exercise of the Warrants in
accordance with their 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
pursuant to Section 3.16 and upon (x) conversion of the Shares and payment of
dividends thereon in accordance with the terms of the Articles of Amendment, and
(y) exercise of the Warrants in accordance with their terms, is unconditional
and absolute, subject to the limitations set forth herein, in the Articles of
Amendment or pursuant to the Warrants, regardless of the effect of any such
dilution.
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 such information as is
required for the Purchaser to sell the Securities under Rule 144 promulgated
under the Securities 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 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.
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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. If on any date the Company would
be precluded from issuing the full number of Underlying Shares as would then be
issuable (a) upon a conversion in full of the then outstanding Shares and as
payment of all accrued and then unpaid dividends thereon in shares of Common
Stock, (b) upon exercise in full of the then unexercised portion of the
Warrants, and (c) as Adjustment Shares, assuming that the applicable Adjustment
Price is one half of the lowest possible Conversion Price pursuant to Section
5(c)(i) of the Articles of Amendment (the "CURRENT REQUIRED MINIMUM"), due to
the unavailability of a sufficient number of authorized but unissued or reserved
shares of Common Stock, then the Board of Directors of the Company shall
promptly (and in any case, subject to clearance of the Company's proxy
materials by the Commission, 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 Articles 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 issuance, conversion, exercise and reservation of
shares obligations as set forth in this Agreement, the Articles of Amendment and
the Warrants (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 Current Required Minimum
(provided that, for purposes of such calculation, the number of Adjustment
Shares to be issued shall equal the greater of the number provided in clause (c)
above in this Section and the number of Adjustment Shares as would be issuable
based upon the formula set forth in Section 3.16 assuming that such issuance
would occur on each determination date), 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
mailing of the proxy materials relating to such meeting) and (c) within five (5)
Business Days of obtaining such stockholder authorization, file an appropriate
amendment to the Company's Articles of Incorporation to evidence such increase.
3.7 LISTING AND RESERVATION OF UNDERLYING SHARES. (a) The Company
shall (i) not later than the fifth Business Day following the Original Issue
Date prepare and file with the NASDAQ (and such other national securities
exchange or market or trading or quotation facility on which the Common Stock is
then listed) an additional shares listing application covering a number of
shares of Common Stock which is not less than the Initial Minimum, (ii) take all
steps necessary to cause such shares to be approved for listing in the NASDAQ
(as well as on any such other national securities exchange or market or trading
or quotation facility on which the Common Stock is then listed) 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.
The parties hereto agree that
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as of the date hereof the Initial Minimum shall be 200,000 shares of Common
Stock, provided however that at any time the Per Share Market Value of the
Common Stock falls below $3.50 per share, then the Company shall take all
necessary actions to immediately list an additional 75,000 Underlying Shares.
(b) The Company shall maintain a reserve of Common Stock for
issuance pursuant to Section 3.16, and upon conversion of the Shares and for
payment of dividends thereupon in shares of Common Stock and upon exercise of
the Warrants in accordance with this Agreement, the Articles of Amendment and
the Warrants, respectively, in such amount as may be required to fulfill its
obligations in full under the Transaction Documents, which reserve shall equal
no less than the Current Required Minimum (provided that, for purposes of such
calculation, the number of Adjustment Shares to be issued shall equal the
greater of the number provided in clause (c) of Section 3.6 and the number of
Adjustment Shares as would be issuable based upon the formula set forth in
Section 3.16 assuming that such issuance would occur on each determination
date).
3.8 CONVERSION AND EXERCISE PROCEDURES. The Transfer Agent
Instructions, Conversion Notice (as defined in EXHIBIT A) and Notice of Exercise
under the Warrants set forth the totality of the procedures with respect to the
conversion of the Shares and exercise of the Warrants, 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 necessary to enable
the Purchaser to convert its Shares and exercise the Warrants as contemplated in
the Articles of Amendment and the Warrants (as applicable).
3.9 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 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 as of the Closing Date. 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 3.9(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 Securities a copy of any written statement in support of or
relating to such claim or notice.
3.10 CONVERSION AND EXERCISE OBLIGATIONS OF THE COMPANY. The Company
shall honor conversions of the Shares and exercises of the Warrants and shall
deliver Underlying Shares in accordance with the respective terms, conditions
and time periods set forth in the Articles of Amendment and the Warrants,
respectively.
3.11 [INTENTIONALLY OMITTED]
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3.12 [INTENTIONALLY OMITTED]
3.13 USE OF PROCEEDS. The Company shall use the net proceeds from
the sale of the Securities hereunder for working capital purposes. 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.
3.14 [INTENTIONALLY OMITTED]
3.15 REIMBURSEMENT. If the Purchaser, other than by reason of its
gross negligence or willful misconduct, 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.
3.16 ISSUANCE OF ADJUSTMENT SHARES. (a) If the average Per Share
Market Value for the ten (10) Trading Days commencing the 150th day after the
Closing Date (the "FIRST ADJUSTMENT PRICE") is less than 116% of the
Conversion Price then in effect (the "FIRST ADJUSTED CONVERSION PRICE"),
then the Company shall, within thirteen (13) Trading Days following such 150th
day, issue to the Purchaser for no additional consideration such number of
shares of Common Stock (the "FIRST ADJUSTMENT SHARES") as equals the
quotient obtained by dividing (i) the product of (A) the First Adjusted
Conversion Price, minus the First Adjustment Price and (B) an amount equal to
(x) the quotient obtained by dividing (1) the lesser of (I) 1/3 of the number of
Shares acquired by the Purchaser on the Closing Date multiplied by the Stated
Value or (II) the aggregate number of Shares held by the Purchaser on the 150th
day after the Closing Date multiplied by the Stated Value (such lesser value
shall be referred to herein as the "FIRST REPRICED SHARE VALUE") by (2) the
Conversion
-14-
Price then in effect, less (y) the number of shares of Common Stock held by the
Purchaser in a short position on the 150th day after the Closing Date and (ii)
the First Adjustment Price.
(b) If the average Per Share Market Value for the ten (10) Trading
Days commencing the 240th day after the Closing Date (the "SECOND ADJUSTMENT
PRICE") is less than 116% of the Conversion Price then i effect (the "SECOND
ADJUSTED CONVERSION PRICE"), then the Company shall, within thirteen (13)
Trading Days following such 240th day, issue to the Purchaser for no additional
consideration such number of shares of Common Stock (the "SECOND ADJUSTMENT
SHARES") as equals the quotient obtained by dividing (i) th product of (A) the
Second Adjusted Conversion Price, minus the Second Adjustment Price and (B) an
amount equal to (x) the quotient obtained by dividing (1) the lesser of (I) 1/3
of the number of Shares acquired by the Purchaser on the Closing Date multiplied
by the Stated Value or (II) the aggregate number of Shares held by the Purchaser
on the 150th day after the Closing Date multiplied by the Stated Value less the
First Repriced Share Value referred to in Section 3.16(a) above (such lesser
value shall be referred to herein as the "SECOND REPRICED SHARE VALUE"),
provided, however that in the event that the Second Repriced Share Value is
greater than the aggregate number of Shares held by the Purchaser on the 240th
day after the Closing Date multiplied by the Stated Value, the Second Repriced
Share Value shall equal the aggregate number of Shares held by the Purchaser on
the 240th day after the Closing Date multiplied by the Stated Value, by (2) the
Conversion Price then in effect, less (y) the number of shares of Common Stock
held by the Purchaser in a short position on the 240th day after the Closing
Date and (ii) the Second Adjustment Price.
(c) If the average Per Share Market Value for the ten (10) Trading
Days commencing the 365th day after the Closing Date (the "THIRD ADJUSTMENT
PRICE," and together with the First Adjustment Price and the Second Adjustment
Price, the "ADJUSTMENT PRICE") is less than 116% of the Conversion Price
then in effect (the "THIRD ADJUSTED CONVERSION PRICE"), then the Company
shall, within thirteen (13) Trading Days following such 365th day, issue to the
Purchaser for no additional consideration such number of shares of Common Stock
(the "THIRD ADJUSTMENT SHARES," and together with the First Adjustment
Shares and the Second Adjustment Shares, the "ADJUSTMENT SHARES") as equals
the quotient obtained by dividing (i) the product of (A) the Third Adjusted
Conversion Price, minus the Third Adjustment Price and (B) an amount equal to
(x) the quotient obtained by dividing (1) the lesser of (I) 1/3 of the number of
Shares acquired by the Purchaser on the Closing Date multiplied by the Stated
Value or (II) the aggregate number of Shares held by the Purchaser on the 240th
day after the Closing Date multiplied by the Stated Value less the Second
Repriced Share Value referred to in Section 3.16(b) above (such lesser value
shall be referred to herein as the "THIRD REPRICED SHARE VALUE"), provided,
however that in the event that the Third Repriced Share Value is greater than
the aggregate number of Shares held by the Purchaser on the 365th day after the
Closing Date multiplied by the Stated Value, the Third Repriced Share Value
shall equal the aggregate number of Shares held by the Purchaser on the 365th
day after the Closing Date multiplied by the Stated Value, by (2) the Conversion
Price then in effect, less (y) the number of shares of Common Stock held by the
Purchaser in a short position on the 365th day after the Closing Date and (ii)
the Third Adjustment Price.
3.17 TRADING RESTRICTIONS. The Purchaser shall not establish a short
position in the Common Stock and the Company shall not purchase any shares of
Common Stock during the ten
-15-
(10) Trading Days in which an Adjustment Price is determined pursuant to Section
3.16. Nothing herein shall preclude the Purchaser from maintaining short
positions in the securities of the Company established prior to or after the
expiration of any such periods.
ARTICLE IV
MISCELLANEOUS
4.1. FEES AND EXPENSES. At the Closing, the Company shall pay
$10,000 to Xxxxxxxx Xxxxxxxxx in connection with the preparation and negotiation
of the Transaction Documents. Other than the amount 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.
4.1. ENTIRE AGREEMENT; AMENDMENTS. The Transaction Documents
together with the Exhibits and Schedules thereto, and the Transfer Agent
Instructions 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.
4.2. 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 with a
receipt of confirmation at the facsimile telephone number specified in this
Section prior to 7:00 p.m. (Minnetonka, Minnesota 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 this
Agreement later than 7:00 p.m. (Minnetonka, Minnesota time) on any date and
earlier than 10:59 p.m. (Minnetonka, Minnesota 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: Big Entertainment, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000 Xxxx
Xxxx Xxxxx, Xxxxxxx, 00000
Facsimile No.: (000) 000-0000
Attn: Chief Executive Officer
-16-
With copies to: Broad and Xxxxxx
000 X. Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
If to the Purchaser: Deephaven Opportunity Master Fund L.P.
c/o Deephaven Capital Management LLC
0000 Xxxxxxx Xxxxxxxxxx
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxxxxxxxx
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
4.3. 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.
4.4. 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.
4.5. 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 (other than to an Affiliate of the
Purchaser) without the consent of the Company, except that the Purchaser may
assign its rights hereunder and under the Transaction Documents without the
consent of the Company as long as such assignee demonstrates to the reasonable
satisfaction of the Company its satisfaction of the representations and
warranties set forth in Section 2.2. This provision shall not limit the
Purchaser's right to transfer securities or transfer or assign rights hereunder
or under the Registration Rights Agreement.
-17-
4.6. NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for
the benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
4.7. 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.
4.8. 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 Adjustment Shares, the Shares
and the Warrants.
4.9. 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.
4.10. 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 or include the name of the Purchaser in any filing with the
Commission, or any regulatory agency, trading facility or stock market without
the prior written consent of the Purchaser, 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 with prior notice of
such disclosure.
-18-
4.11. 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.
4.12. 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.
BIG ENTERTAINMENT, INC.
By: /s/ XXXXXXXX XXXXXXXXXX
-------------------------------
Name: Xxxxxxxx Xxxxxxxxxx
Title: Chief Executive Officer
DEEPHAVEN OPPORTUNITY MASTER FUND L.P.
By: KAE Investment Advisers LLC,
its Managing General Partner
By: /s/
---------------------------------------
Name:
Title:
