EXCHANGE AGREEMENT
Execution Version
THIS
EXCHANGE AGREEMENT (“Agreement”)
is made and entered into this 7th day of November, 2018, by and
between Bright Mountain Media, Inc., a Florida corporation with its
principal place of business located at 0000 Xxxxxxxx Xxxxxx, Xxxxx
0000, Xxxx Xxxxx, XX 00000 (“Bright
Mountain”), and W. Xxx Xxxxxx, an individual with his
principal place of business located at 0000 Xxxxxxxx Xxxxxx, Xxxxx
0000, Xxxx Xxxxx, XX 00000 (the “Noteholder”).
RECITALS:
WHEREAS, between September 2016 and
August 2017 Bright Mountain has borrowed an aggregate of $2,035,000
from the Noteholder under a series of unsecured convertible
promissory notes, including $1,075,000 principal amount 12%
Convertible Promissory Notes (the “12%
Notes”), $660,000 principal amount 6% Convertible
Promissory Notes (the “6%
Notes”) and $300,000 principal amount 10% Convertible
Promissory Notes (the “10%
Notes”, and collectively with the 12% Notes and the 6%
Notes, the “Convertible
Notes”), all as set forth on Schedule A attached hereto and
incorporated herein by such reference.
WHEREAS, the Noteholder has agreed to
exchange the Convertible Notes for shares of the
Corporation’s preferred stock as hereinafter set
forth.
WHEREAS, the Noteholder is an executive
officer, member of the Board of Directors and principal shareholder
of Bright Mountain.
WHEREAS, Bright Mountain and the
Noteholder desire to memorialize in writing the terms, provisions
and conditions of the foregoing exchange and certain other matters
relating thereto.
AGREEMENT:
NOW, THEREFORE, in consideration of the
mutual promises, covenants, agreements, representations and
warranties set forth hereinafter, $10.00 and other good and
valuable consideration , the receipt, adequacy and sufficiency of
which Bright Mountain and the Noteholder hereby acknowledges and
subject to the terms, provisions and conditions hereof, each of
Bright Mountain and the Noteholder hereby agrees as
follows:
ARTICLE ONE
EXCHANGE OF SECURITIES
Subject
to the terms of this Agreement, the Noteholder hereby exchanges:
(i) the 12% Notes for 2,177,233 shares of Bright Mountain’s
12% Series F-1 Convertible Preferred Stock (the “Series F-1
Preferred Stock”); (ii) the 6% Notes for 1,408,867
shares of Bright Mountains 6% Series F-2 Convertible Preferred
Stock (the “Series F-2
Preferred Stock”); and (iii) the 10% Notes for 757,917
shares of Bright Mountain’s 10% Series F-3 Convertible
Preferred Stock (the “Series F-3
Preferred Stock”). The designations, rights and
preferences for the Series F-1 Preferred Stock, Series F-2
Preferred Stock and Series F-3 Preferred Stock (collectively, the
“Preferred
Shares”) are set forth on Exhibit A attached hereto and
incorporated herein by such reference. Concurrent with the
execution of this Agreement by the parties hereto, the Convertible
Notes shall be deemed satisfied and the Noteholder will have no
further rights under such Convertible Notes. As soon as practicable
after the execution of this Agreement by the parties hereto, the
Noteholder will deliver to Bright Mountain the original Convertible
Notes, marked “paid in
full” and Bright Mountain will deliver the
certificates representing the Preferred Shares to the Noteholder.
The Noteholder shall be deemed to be the record owner of such
shares on the date of this Agreement.
ARTICLE TWO
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
OF THE NOTEHOLDER
The
Noteholder hereby represents, warrants and agrees to and with
Bright Mountain that:
2.1
Ownership of Convertible Notes.
The Noteholder owns the Convertible Notes free and clear of any
mortgages, liens, security interests, claims, charges, pledges,
encumbrances and any restrictions on the transfer thereof of any
nature whatsoever. There are no outstanding subscriptions, rights,
options, warrants or other agreements obligating the Noteholder to
sell or transfer to any third person any of the Convertible
Notes.
2.2
Capacity to Enter into
Agreement. The Noteholder has full right, power and
authority to execute and deliver this Agreement and all other
agreements, documents and instruments to be executed in connection
herewith and perform his or its obligations hereunder and
thereunder. When this Agreement and all other agreements, documents
and instruments to be executed by a Noteholder in connection
herewith are executed by the Noteholder and delivered to Bright
Mountain, this Agreement and such other agreements, documents and
instruments will constitute the valid and binding agreements of the
Noteholder enforceable against the Noteholder in accordance with
their respective terms, except as such enforceability may be
limited by or subject to (a) any bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
creditors' rights generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
2.3
Conflicts. The execution,
delivery, and consummation of the transactions contemplated by this
Agreement will not (a) violate, conflict with or result in the
breach or termination of, or otherwise give any other contracting
party the right to terminate, or constitute a default (by way of
substitution, novation or otherwise) under the terms of, any
contract to which the Noteholder is a party or by which the
Noteholder is bound or by which any of the assets of the Noteholder
is bound or affected, (b) violate any judgment against, or binding
upon, the Noteholder or upon the assets of the Noteholder, or (c)
result in the creation of any lien, charge or encumbrance upon any
assets of the Noteholder pursuant to the terms of any such
contract.
2.4
Consents. No consent from, or
other approval of, any governmental entity or any other person,
which has not been obtained, is necessary in connection with the
execution, delivery, or performance of this Agreement by the
Noteholder.
2.5
Finder's Fees; Certain
Expenses. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by the
Noteholder directly with Bright Mountain and its counsel, without
the intervention of any other person as the result of any act of
any of them, without the intervention of any other person in such
manner as to give rise to any valid claim against any of the
parties hereto for a brokerage commission, finder's fee, or any
similar payment.
2.6
Securities Representations. The
Noteholder is the Chief Executive Officer of Bright Mountain, has
full access to all material information concerning the condition,
properties, operations and prospects of Bright Mountain, and has
such knowledge, skill and experience in business, financial and
investment matters so that he is capable of evaluating the merits
and risks of the transactions contemplated hereby. The Noteholder
(a) has adequate means of providing for contingencies, (b) has no
present or contemplated future need to dispose of all or any of the
Preferred Shares or any underlying securities to satisfy existing
or contemplated undertakings, needs or indebtedness, (c) is capable
of bearing the economic risk of the ownership of the Preferred
Shares for the indefinite future, and (d) has assets or sources of
income which, taken together, are more than sufficient so that he
could bear the loss of the entire value of the Preferred Shares.
The Noteholder is acquiring the Preferred Shares solely for his own
beneficial account, for investment purposes, and not with a view
to, or for resale in connection with, any distribution of the
Preferred Shares or its underlying securities; he understands that
neither the Preferred Shares nor the shares of Bright
Mountain’s common stock issuable upon the conversion of the
Preferred Shares have been registered under the Securities Act of
1933 or any state securities laws and therefore the Preferred
Shares and their underlying securities are “restricted”
under such laws.
ARTICLE THREE
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS
OF BRIGHT MOUNTAIN
Bright
Mountain hereby represents, warrants, and agrees to and with the
Noteholder that:
3.1
Capacity to Enter into
Agreement. Bright Mountain has full right, power and
authority to execute and deliver this Agreement and all other
agreements, documents and instruments to be executed in connection
herewith and perform its obligations hereunder and thereunder. The
execution and delivery by Bright Mountain of this Agreement and all
other agreements, documents and instruments to be executed by
Bright Mountain in connection herewith have been authorized by all
necessary action by Bright Mountain. When this Agreement and all
other agreements, documents and instruments to be executed by
Bright Mountain in connection herewith are executed by Bright
Mountain and delivered to the Noteholder, this Agreement and such
other agreements, documents and instruments will constitute the
valid and binding agreements of Bright Mountain enforceable against
Bright Mountain in accordance with their respective terms, except
as such enforceability may be limited by or subject to (a) any
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3.2
Conflicts. The execution,
delivery, and consummation of the transactions contemplated by this
Agreement will not (a) violate, conflict with or result in the
breach or termination of, or otherwise give any other contracting
party the right to terminate, or constitute a default (by way of
substitution, novation or otherwise) under the terms of, any
contract to which Bright Mountain is a party or by which Bright
Mountain is bound or by which any of the assets of Bright Mountain
is bound or affected, (b) violate any judgment against, or binding
upon, Bright Mountain or upon the assets of Bright Mountain, (c)
result in the creation of any lien, charge or encumbrance upon any
assets of Bright Mountain pursuant to the terms of any such
contract, or (d) violate any provision in the charter documents,
bylaws or any other agreement affecting the governance and control
of Bright Mountain.
3.3
Consents. No consent from, or
other approval of, any governmental entity or any other person,
which has not been obtained, is necessary in connection with the
execution, delivery, or performance of this Agreement by Bright
Mountain.
3.4
Preferred Shares. The Preferred
Shares, when issued pursuant to the terms of this Agreement, will
be fully paid and non-assessable.
ARTICLE FOUR
ADDITIONAL AGREEMENTS
Following the date
hereof, the Noteholder shall execute and deliver such other
documents, and take such other actions, as may be reasonably
requested by Bright Mountain to complete the transactions
contemplated by this Agreement.
ARTICLE FIVE
SURVIVAL
All of
the representations and warranties made by the parties hereto in
this Agreement or pursuant hereto, shall be continuing and shall
survive the closing hereof and the consummation of the transactions
contemplated hereby, notwithstanding any investigation at any time
made by or on behalf of any party hereto.
ARTICLE SIX
MISCELLANEOUS
6.1
Notices. Any notices, requests,
demands, or other communications herein required or permitted to be
given shall be in writing and may be personally served or sent by
United States mail and shall be deemed to have been given if
personally served, when served, or if mailed, when deposited in the
mail and shall be deemed to have been received if personally
served, when served, or if mailed, on the third business day after
deposit in the United States mail with postage pre-paid by
certified or registered mail and properly addressed. As used in
this Agreement, the term “business day” means days
other than Saturdays, Sundays, and holidays recognized by Federal
banks. For purposes of this Agreement, the addresses of the parties
hereto shall be the addresses as set forth on the signature pages
of this Agreement until a party subsequently notifies the other
party in writing of a change of address.
6.2
Counterparts. This Agreement
may be executed in any number of counterparts and each such
counterpart shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one and the same
instrument.
6.3
Amendments and Waivers. This
Agreement may be amended, modified, or superseded only by written
instrument executed by all parties hereto. Any waiver of the terms,
provisions, covenants, representations, warranties, or conditions
hereof shall be made only by a written instrument executed and
delivered by the party waiving compliance. Any waiver granted by a
corporate party hereto shall be effective only if executed and
delivered by the chief executive officer, president, or any vice
president of such party. The failure of any party at any time or
times to require performance of any provision hereof shall in no
manner affect the right to enforce the same. No waiver by any party
of any condition, or of the breach of any term, provision,
covenant, representation, or warranty contained in this Agreement
in one or more instances shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach or a
waiver of any other condition or the breach of any other term,
provision, covenant, representation, or warranty.
6.4
Time of Essence. Time is of the
essence in the performance of this Agreement.
6.5
Captions. The captions
contained in this Agreement are solely for convenient reference and
shall not be deemed to affect the meaning or interpretation of any
Article, Section, or paragraph hereof.
6.6
Entire Agreement. This
Agreement sets forth the entire agreement and understanding of the
parties with respect to the transactions contemplated hereby, and
supersedes all prior agreements, arrangements, and understandings
relating to the subject matter hereof.
6.7
Successors and Assigns. All of
the terms, provisions, covenants, representations, warranties, and
conditions of this Agreement shall be binding upon and shall inure
to the benefit of and be enforceable by the parties hereto and
their respective heirs, legal representatives, assigns, and
successors.
6.8
Knowledge, Gender, and Certain
References. A representation or statement made herein to the
knowledge of any corporate party refers to the knowledge or belief
of the companies' directors, officers, and attorneys, regardless of
whether the knowledge of such person was obtained outside of the
course and scope of his corporate employment or duties, and
regardless of whether any such person's interests are adverse to
such entity in respect of the matters as to which his knowledge is
attributed. Whenever from the context it appears appropriate, each
term stated in either the singular or the plural shall include both
the singular and the plural, and pronouns stated in the masculine
or the neuter gender shall include the masculine, the feminine and
the neuter gender. The terms “hereof,”
“herein,” or “hereunder” shall refer to
this Agreement as a whole and not to any particular Article,
Section, or paragraph hereof.
6.9
Applicable
Law. This Agreement shall be
governed exclusively by its terms and by the laws of the State of
Florida. The parties acknowledge and agree that the
15th
Judicial Circuit in Florida, Palm
Beach County, Florida, shall be the venue and exclusive proper
forum in which to adjudicate any case or controversy arising
either, directly or indirectly, under or in connection with this
Agreement and the parties further agree that, in the event of
litigation arising out of or in connection with this Agreement in
these courts, they will not contest or challenge the jurisdiction
or venue of these courts.
6.10
Costs, Expenses and Fees. Each
party hereto agrees hereby to pay all costs, expenses, and fees
incurred by it in connection with the transactions contemplated
hereby, including, without limitation, all attorneys' and
accountants' fees.
6.11
Role of
Counsel. The Noteholder
acknowledges his understanding that this Agreement was prepared at
the request of Bright Mountain by Xxxxxxxx Law Group LLP, its
counsel, and that such firm did not represent the Noteholder in
conjunction with this Agreement or any of the related transactions.
The Noteholder, as further evidenced by his signature below,
acknowledges that he has had the opportunity to obtain the advice
of independent counsel of his choosing prior to his execution of
this Agreement and that he has availed himself of this opportunity
to the extent he deemed necessary and
advisable.
IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the day and year first above
written.
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Bright Mountain Media, Inc.
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By:
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/s/
Xxxx Xxxxxx
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Xxxx
Xxxxxx, Vice President - Digital
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/s/ W.
Xxx Xxxxxx
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W. Xxx
Xxxxxx
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