Exhibit 10.131
Securities Purchase Agreement
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of acceptance set
forth below, is entered into by and between PLAY CO. TOYS & ENTERTAINMENT CORP.,
a Delaware corporation, with headquarters located at 000 Xxxxxxxxx Xxxxx, Xxx
Xxxxxx, Xxxxxxxxxx 00000 (the "Company"), and each entity named on a signature
page hereto (each, a "Buyer," collectively, the "Buyers"), each agreement with a
Buyer being deemed a separate and independent agreement between the Company and
such Buyer, except that each Buyer acknowledges and consents to the rights
granted to each other Buyer under such agreement and the Transaction Agreements,
as defined below.
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration afforded, inter alia, by Rule 506 under Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "1933 Act"), and/or
Section 4(2) of the 1933 Act; and
WHEREAS, the Buyer acknowledges that it is an "accredited investor" as such
term is defined under Rule 501 of Regulation D as promulgated under the 1933
Act; and
WHEREAS, the Buyer wishes to purchase, upon the terms and subject to
the conditions of this Agreement, 750,000 shares of the Company's Series F
Preferred Stock, par value $.01 per share (the "Series F Stock"), at a purchase
price of $1.00 per share, with the rights and preferences described herein and
as provided for in the Amendment to the Company's Certificate of Incorporation
as annexed hereto; and
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. Purchase. The Buyers agree to purchase from the Company 750,000 shares
of the Series F Stock at a purchase price of $1.00 per share for total proceeds
of $750,000 (the "Purchase Price"). Unless all 750,000 shares are purchased and
paid for by the Buyers, no shares shall be sold.
b. Certain Definitions. As used herein, each of the following terms has the
meaning set forth below, unless the context otherwise requires:
(i) "Converted Shares" or "Shares" means the shares of Common Stock
issuable upon conversion of the Series F Stock, including shares issued as
dividends thereon.
(ii) "Securities" means the Series F Stock and the shares of Common Stock
underlying the Series F Stock, including the shares issuable as dividends
thereon.
(iii) "Closing Date" means the date of the closing of the purchase and sale
of the Series F Stock, as provided herein, but which date shall not be later
then 3 days from the date of this Agreement.
(iv) "Effective Date" means the effective date of the Registration
Statement registering the resale of the Securities.
(v) "Certificates" means one or more certificates representing the 750,000
shares of Series F Stock being purchased hereunder by the Buyers, each
certificate duly executed on behalf of the Company and issued in the name of
each Buyer.
(vi) "Person" means any living person or any entity, such as, but not
necessarily limited to, a corporation, partnership, or trust.
(vii) "Affiliate" means, with respect to a specific Person referred to in
the relevant provision, another Person who or which controls or is controlled by
or is under common control with such specified Person.
(viii) "Transaction Agreements" means this Agreement and the Certificate of
Amendment of the Certificate of Incorporation.
c. Form of Payment; Delivery of Certificates.
(i) The Buyers shall pay the Purchase Price for the Series F Stock by
delivering immediately available good funds in United States Dollars to the
escrow agent (the "Escrow Agent") identified in the Joint Escrow Instructions
attached hereto as Annex II (the "Joint Escrow Instructions") on or before the
Closing Date.
(ii) On or before the Closing , the Company shall deliver the Certificates
to the Escrow Agent.
(iii) By signing this Agreement, each Buyer and the Company, subject to
acceptance by the Escrow Agent, agree to all of the terms and conditions of, and
become a party to, the Joint Escrow Instructions, all of the provisions of which
are incorporated herein by reference as if set forth in full herein.
d. Method of Payment. Unless otherwise agreed to by the Escrow Agent,
payment into escrow of the Purchase Price shall be made by wire transfer of
funds to:
Bank of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA# 000000000
For credit to the account of Xxxxxxx & Xxxxxx, Esqs.
Attorney Trust Account (the "Escrow Account")
Account No.: [To be provided by Xxxxxxx & Prager]
Re: Play Co. Toys Transaction
Time is of the essence with respect to such payment, and failure by the
Buyers to fund the Escrow Account shall allow the Company to cancel this
Agreement.
e. Escrow Property. The Purchase Price and the Certificates delivered to
the Escrow Agent as contemplated by Sections 1(c) and (d) hereof are referred to
as the "Escrow Property."
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION. Each Buyer represents and warrants to, and covenants
and agrees with, the Company as follows:
a. Without limiting the Buyer's right to sell the Common Stock pursuant to
the Registration Statement, the Buyer is purchasing the Series F Stock and will
be acquiring the Securities for its own account for investment only and not with
a view towards the public sale or distribution thereof and not with a view to or
for sale in connection with any distribution thereof.
b. The Buyer is (i) an "accredited investor" as that term is defined in
Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3), (ii) experienced in making investments of the kind described in
this Agreement and the related documents, and (iii) able, by reason of the
business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way by
the Company or any of its affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement and
the related documents, and (iv) able to afford the entire loss of its investment
in the Securities.
c. All subsequent offers and sales of the Series F Stock and the Shares by
the Buyer shall be made pursuant to registration of the Shares under the 1933
Act or pursuant to an exemption from registration. Buyer acknowledges that a
standard restrictive legend shall be affixed to the Certificates.
d. The Buyer understands that the shares of Series F Stock are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Buyer's compliance
with, the representations, warranties, agreements, acknowledgments, and
understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Series F Stock.
e. The Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances, and operations of the Company and
materials relating to the offer and sale of the Series F Stock and the offer of
the Shares which have been requested by the Buyer. The Buyer and its advisors,
if any, have been afforded the opportunity to ask questions of the Company and
have received complete and satisfactory answers to any such inquiries. In
addition, Buyer has reviewed in detail the Company's reports and other
information documents as filed with the Securities and Exchange Commission
within the last year and has had an opportunity to discuss same with the
Company. In addition, the Buyer has had an opportunity to obtain information
regarding the industry in which the Company operates and has had an opportunity
to evaluate the Company's potential success in such industry.
f. The Buyer is a resident of the state as listed below and is a United
States citizen or if a corporation, limited partnership, partnership, limited
liability company, or other entity, than the Buyer is a resident of the state of
such company's formation or principal place of business, as listed below and is
a citizen of the United States.
g. The Buyer understands that its investment in the Securities involves a
high degree of risk and that there can be no assurance that a liquid market will
develop or that if it does, it will be maintained for any period of time.
h. The Buyer understands that no United States federal or state agency or
any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities. The Buyer's overall commitment
to investments that are not readily marketable is not, and his acquisition of
the Securities will not cause such overall commitment to become,
disproportionate to his or her net worth.
i. This Agreement has been duly and validly authorized, executed, and
delivered on behalf of the Buyer and is a valid and binding agreement of the
Buyer enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium, and
other similar laws affecting the enforcement of creditors' rights generally.
j. Except as specifically set forth herein, no representation or warranty
is made by the Company to induce the Buyer to make this investment, and any
representation or warranty not made herein is specifically disclaimed.
k. The Buyer is not purchasing the Series F Stock 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, any seminar or meeting, or any solicitation of a
subscription by a person not previously known to the Buyer in connection with
investments in securities generally.
l. The Buyer agrees to indemnify and hold harmless the Company and its
officers, directors, and affiliates and each other person, if any, who controls
the Company, within the meaning of Section 15 of the 1933 Act, against any and
all loss, liability, claim, damage, and all expenses reasonably incurred in
investigating, preparing, or defending against any litigation commenced or
threatened or any claim whatsoever arising out of or based upon any false
representation or warranty, breach, or failure by the Buyer to comply with any
covenant or agreement made by the Buyer herein or in any other document
furnished by the Buyer to any of the foregoing in connection with this
transaction.
In the event of a registration of any of the Securities under the 1933 Act
pursuant to the terms of this Agreement, Buyer will indemnify and hold harmless
the Company, each person, if any, who controls the Company within the meaning of
the 1933 Act, each officer of the Company who signs the Registration Statement
(as defined below), each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the 1933 Act, against
all losses, claims, damages, or liabilities, joint or several, to which the
Company or such officer, director, underwriter, or controlling person may become
subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement under which such Shares were registered
for resale under the 1933 Act pursuant to the terms of this Agreement, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading and will reimburse the
Company and each such officer, director, underwriter, and controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action,
provided, however, that such seller will be liable hereunder in any such case if
and only to the extent that any such loss, claim, damage, or liability arises
out of or is based upon an untrue statement or omission made in reliance upon
and in conformity with information pertaining to such seller, furnished in
writing to the Company by such seller specifically for use in such Registration
Statement or prospectus and provided, further, that the liability of each seller
hereunder shall be limited to the proceeds received by such seller from the sale
of Shares covered by such Registration Statement.
3. COMPANY REPRESENTATIONS, ETC. The Company represents and warrants to the
Buyer:
a. Concerning the Series F Stock and the Shares. The Series F Stock has
been duly authorized and, when issued, will be duly and validly issued, fully
paid, and non-assessable. There are no preemptive rights of any stockholder of
the Company, as such, to acquire the Series F Stock or the Shares, and the
Company has not sold and will not sell Series F Stock without the prior consent
of Buyers until 90 days after the Effective Date.
b. Reporting Company Status. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware
and has the requisite corporate power to own its properties and to carry on its
business as now being conducted. The Company is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction where the
nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a material adverse effect on the business, operations,
or condition (financial or otherwise) or results of operation of the Company and
its subsidiaries taken as a whole. The Company has registered its Common Stock
pursuant to Section 12 of the 1934 Act, and the Common Stock is quoted on the
OTC Bulletin Board. The Company has received no notice, either oral or written,
with respect to the continued eligibility of the Common Stock for such listing,
and the Company has maintained all requirements for the continuation of such
listing.
c. Authorized Shares. As of the date hereof, the authorized capital stock
of the Company consists of: (i) 160,000,000 shares of Common Stock, $.01 par
value per share, of which 5,509,197 are issued and outstanding and (ii)
25,000,000 shares of Series E Preferred Stock of which 5,883,903 shares are
issued and outstanding and (iii) 5,500,000 shares of Series F Preferred Stock of
which no shares are issued and outstanding. All issued and outstanding shares of
Common Stock have been duly authorized and validly issued and are fully paid and
nonassessable. The Company has sufficient authorized and unissued shares of
Common Stock as may be necessary to effect the issuance of the Shares. The
Shares have been duly authorized and, when issued upon conversion of, or as
dividends on, the Series F Stock in accordance with its terms, will be duly and
validly issued, fully paid, and non-assessable and will not subject the holder
thereof to personal liability by reason of being such holder.
d. Securities Purchase Agreement and Series F Stock. This Agreement and the
transactions contemplated thereby, have been duly and validly authorized by the
Company. This Agreement has been duly executed and delivered by the Company, and
this Agreement is, and the Series F Stock, when executed and delivered by the
Company, will be, valid and binding agreements of the Company enforceable in
accordance with their respective terms, subject as to enforceability to general
principles of equity and to bankruptcy, insolvency, moratorium, and other
similar laws affecting the enforcement of creditors' rights generally.
e. Non-contravention. The execution and delivery of this Agreement by the
Company, the issuance of the Securities, and the consummation by the Company of
the other transactions contemplated by this Agreement and the Series F Stock do
not and will not conflict with or result in a breach by the Company of any of
the terms or provisions of, or constitute a default under (i) the articles of
incorporation or by-laws of the Company, each as currently in effect, (ii) any
indenture, mortgage, deed of trust, or other material agreement or instrument to
which the Company is a party or by which it or any of its properties or assets
are bound, including any listing agreement for the Common Stock except as herein
set forth, or (iii) to its knowledge, any existing applicable law, rule, or
regulation or any applicable decree, judgment, or order of any court, United
States federal or state regulatory body, administrative agency, or other
governmental body having jurisdiction over the Company, which would have a
material affect on the Company's properties or assets.
f. Approvals. No authorization, approval, or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the stockholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to the Buyer as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained.
g. SEC Filings. Since January 1, 1998, none of the Company's SEC Documents,
as amended, contained, at the time they were filed, any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements made therein in light of the
circumstances under which they were made, not misleading. The Company has since
April 1, 1998 timely filed all requisite forms, reports, and exhibits thereto
with the SEC.
h. Absence of Litigation. Except as set forth in the Company's SEC
documents, there is no action, suit, proceeding, inquiry, or investigation
before or by any court or public board or body pending or, to the knowledge of
the Company, threatened against or affecting the Company, wherein an unfavorable
decision, ruling, or finding would have a material adverse effect on the
properties, business or financial condition, or results of operation of the
Company and its subsidiaries taken as a whole or the transactions contemplated
by any of the Transaction Agreements or which would adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under any of the Transaction Agreements.
k. Absence of Events of Default. Except as set forth in Section 3(e)
hereof, no Event of Default (or its equivalent term), as defined in the
respective agreement to which the Company is a party, and no event which, with
the giving of notice or the passage of time or both, would become an Event of
Default (or its equivalent term) (as so defined in such agreement), has occurred
and is continuing, which would have a material adverse effect on the business,
operations or condition (financial or otherwise), or results of operations of
the Company and its subsidiaries taken as a whole.
l. No Undisclosed Liabilities or Events. The Company has no liabilities or
obligations other than those disclosed in the Company's SEC documents or those
incurred in the ordinary course of the Company's business since March 31, 1998
m. No Default. The Company is not in default in the performance or
observance of any material obligation, agreement, covenant, or condition
contained in any material indenture, mortgage, deed of trust, or other material
instrument or agreement to which it is a party or by which it or its property is
bound.
n. Dilution. The Company's executive officers and directors have studied
and fully understand the nature of the shares of Series F Stock being sold
hereby and recognize that they have a dilutive effect. The board of directors of
the Company has concluded, in its good faith business judgment, that such
issuance is in the best interests of the Company. The Company specifically
acknowledges that its obligation to issue the Shares upon conversion of the
Series F Stock is binding upon the Company and enforceable regardless of the
dilution such issuance will have on the ownership interests of other
shareholders of the Company.
o. No Integrated Offering. The Company has not made any offers or sales of
any security or solicited any offers to buy any security under circumstances
that would eliminate the availability of the exemption from registration under
Rule 506 of Regulation D in connection with the offer and sale of the Securities
contemplated hereby.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Buyer acknowledges that (1) the Series F
Stock has not been, and is not being, registered under the provisions of the
1933 Act, and, except as provided in the registration rights granted herein, the
Shares have not been and are not being registered under the 1933 Act and may not
be transferred unless (A) subsequently registered thereunder or (B) the Buyer
shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope, and substance to the Company's counsel, to the
effect that the Securities to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration; (2) any sale of the Securities
made in reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and. further, if said Rule is not
applicable, any resale of such Securities under circumstances in which the
seller or the person through whom the sale is made may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other person is under any
obligation to register the Securities (other than pursuant to the registration
rights specified herein) under the 1933 Act or to comply with the terms and
conditions of any exemption thereunder.
b. Restrictive Legend. The Buyer acknowledges and agrees that the Series F
Stock and, until such time as the Common Stock has been registered under the
1933 Act as contemplated by the registration rights specified herein and sold in
accordance with an effective Registration Statement, certificates and other
instruments representing any of the Securities shall bear a restrictive legend
in substantially the following form (and a stop-transfer order may be placed
against transfer of any such Securities):
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR
OTHER EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
Registration Rights.
(i) Within 60 days following the Closing Date (the "Filing Date"), the
Company will file a registration statement on Form SB-2, or such other form as
is available if Form SB-2 is unavailable, with the SEC to register for resale
under the 1933 Act all of the shares of Common Stock underlying the Series F
Stock being subscribed for by the Buyers, the 350,000 shares of Common Stock
underlying certain Warrants being issued to the Placement Agent, and no other
Securities.
(ii) In the event the Registration Statement is not filed by the Filing
Date or declared effective within 150 days after the Filing Date, the Company
shall pay the undersigned an amount equal to 1% of the stated value of $1 per
share for each share of Series F Stock held by the Buyer for the initial month
and 2% per month for each month thereafter that the Registration Statement is
not effective. The payment required hereunder will be paid to the undersigned in
cash. No payment shall be required under this paragraph if the sole cause of the
delay in filing the Registration Statement is the Buyer's failure to comply with
its obligations under subparagraph (c)(iii)(b) hereof.
(iii) Registration Procedures.
(a) All expenses incurred by the Company in connection with the
registration under subsection (i) above including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of the
Company's counsel and independent public accountants for the Company, fees and
expenses (including counsel fees) incurred in connection with complying with
state securities or "blue sky" laws, fees of the National Association of
Securities Dealers, Inc., and fees of transfer agents and registrars shall be
borne by the Company. In connection with the registration under subsection (i)
above, the Company shall (1) use all reasonable efforts to cause the
Registration Statement to promptly become effective and to remain effective for
a period not to exceed ninety days after exercise of the warrants; (2) use all
reasonable efforts to register and qualify the shares covered by the
Registration Statement under such applicable state securities laws as the
undersigned shall request to enable the public sale or other disposition in such
jurisdictions of such shares; and (3) take such other actions as are reasonable
to comply with the requirements of the 1933 Act and the 1934 Act, and the
regulations thereunder.
(b) In connection with each registration hereunder, the sellers of Shares
will furnish to the Company, in writing, such information with respect to
themselves and the proposed distribution by them and execute such documents
regarding the sale of the Shares as reasonably shall be necessary in order to
assure compliance with federal and applicable state securities laws. In
addition, the Company shall permit the Buyers the right to review the "Selling
Securityholders" front cover and "Plan of Distribution" sections of the
Registration Statement prior to filing it for approval. The Buyers must approve
these sections prior to the Company filing the Registration Statement with the
SEC. No penalty as described in subparagraph (c)(ii) above shall be applied
where the delay in filing is due to the Buyer's failure to give its reasonable
consent in a timely manner.
(iv) Availability of Rule 144. The Company covenants that it will use all
reasonable efforts to file the reports required to be filed by the Company under
the 1933 Act and the 1934 Act so as to enable the undersigned to sell the Shares
pursuant to Rule 144 under the 1933 Act. In connection with any sale by any
holder of any Shares pursuant to Rule 144 under the 1933 Act, the Company shall
cooperate with the undersigned to facilitate the timely preparation and delivery
after such sale of Share certificates not bearing any restrictive legend
required by the 1933 Act.
(v) Indemnification. In the event of a registration of any of the Shares
under the 1933 Act pursuant to this Agreement, the Company will indemnify and
hold harmless each Buyer, and the directors, officers, partners, members,
employees, and agents of each such seller, each underwriter of such Shares
thereunder, and each other person, if any, who controls such sellers or
underwriters within the meaning of the 1933 Act, against any losses, claims,
damages, or liabilities, joint or several, to which such sellers, underwriters,
or controlling persons may become subject under the 1933 Act or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) (a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which such Shares was registered under the 1933 Act pursuant to Sections 4
or 5, any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, (b) arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (c) arise
out of any violation or alleged violation by the Company of any rule or
regulation promulgated under the 1933 Act or any applicable states securities
law in connection with any such registration and will reimburse each such
seller, each such underwriter, and each such controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action, provided, however,
that the Company will not be liable to any seller in any such case if and to the
extent that any such loss, claim, damage, or liability arises out of or is based
upon an untrue statement or omission so made in conformity with information
furnished by any such seller in writing specifically for use in such
Registration Statement or prospectus or any amendment or supplement thereof.
d. Filings. The Company undertakes and agrees to make all necessary filings
in connection with the sale of the Securities to the Buyer under any United
States laws and regulations applicable to the Company, or by any domestic
securities exchange or trading market and to provide a copy thereof to the Buyer
promptly after such filing.
e. Reporting Status. So long as the Buyer beneficially owns any of the
Securities, the Company shall file all reports required to be filed with the SEC
pursuant to Sections 13 or 15(d) of the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would permit such
termination. The Company will take all reasonable action under its control to
obtain and to continue the listing and trading of its Common Stock on the OTC
Bulletin Board and will comply in all material respects with the Company's
reporting, filing, and other obligations under the by-laws or rules of the
National Association of Securities Dealers, Inc. ("NASD").
f. Use of Proceeds. The Company will use the proceeds from the sale of the
Series F Stock (excluding amounts paid by the Company for legal fees, finder's
fees, and escrow fees in connection with the sale of the Series F Stock) for
internal general working capital purposes, and, unless specifically consented to
in advance in each instance by the Buyer, the Company shall not, directly or
indirectly, use such proceeds for any loan to or investment in any other
corporation, partnership enterprise, or other person or for the repayment of any
outstanding loan by the Company to any other party.
g. Available Shares. The Company shall have at all times authorized and
reserved for issuance, free from preemptive rights, shares of Common Stock
sufficient to yield one hundred percent (100%) of the number of shares of Common
Stock issuable at conversion as may be required to satisfy the conversion rights
of the Buyer pursuant to the terms and conditions of the Series F Stock which
have been not yet been converted (including the shares of Common Stock which may
issued as dividends on such Series F Stock).
h. Indemnification. The Company agrees to indemnify and hold harmless the
Buyer, the officers, directors and affiliates of the Buyer, and each other
person, if any, who controls the Buyer, within the meaning of Section 15 of the
1933 Act, against any and all loss, liability, claim, damage, and all expenses
reasonably incurred in investigating, preparing, or defending against any
litigation commenced or threatened or any claim whatsoever arising out of or
based upon any false representation or warranty or breach or failure by the
Company to comply with any covenant or agreement made by the Company herein or
in any other document furnished by the Company to any of the foregoing in
connection with this transaction.
i. Certain Agreements. (i) The Company covenants and agrees that it will
not, without the prior written consent of the Buyer, enter into any subsequent
or further offer or sale of Common Stock or securities convertible into Common
Stock (collectively, "New Common Stock") with any third party pursuant to a
transaction which in any manner permits the registration of the New Common Stock
on any date before the 90th day after the Effective Date of the Registration
Statement registering the Securities herein for resale.
5. TRANSFER AGENT INSTRUCTIONS.
a. Promptly following the delivery by the Buyer of the Purchase Price for
the Series F Stock in accordance with Section 1(c) hereof, the Company will
irrevocably instruct its transfer agent to issue Common Stock from time to time
upon conversion of the Series F Stock in such amounts as specified from time to
time by the Company to the transfer agent, bearing the restrictive legend
specified in Section 4(b) of this Agreement prior to registration of the Shares
under the 1933 Act, registered in the name of the Buyer or its nominee and in
such denominations to be specified by the Buyer in connection with each
conversion of the Series F Stock. The Company warrants that, with respect to the
Buyer's Securities, no instruction other than such instructions referred to in
this Section 5 and stop transfer instructions to give effect to Section 4(a)
hereof prior to registration and sale of the Shares under the 1933 Act will be
given by the Company to the transfer agent and that the Shares shall otherwise
be freely transferable on the books and records of the Company as and to the
extent provided in this Agreement and applicable law. Nothing in this Section
shall affect in any way the Buyer's obligations and agreement to comply with all
applicable securities laws upon resale of the Securities. If the Buyer provides
the Company with an opinion of counsel, reasonably satisfactory to the Company,
that registration of a resale by the Buyer of any of the Securities in
accordance with clause (1)(B) of Section 4(a) of this Agreement is not required
under the 1933 Act, the Company shall (except as provided in clause (2) of
Section 4(a) of this Agreement) permit the transfer of the Securities and, in
the case of the Converted Shares, promptly instruct the Company's transfer agent
to issue one or more certificates for Common Stock without legend in such name
and in such denominations as specified by the Buyer.
b. (i) The Company will permit the Buyer to exercise its right to convert
the Series F Stock by delivering an executed and completed Notice of Conversion
to the Company with the original Series F Stock certificate.
(ii) The term "Conversion Date" means, with respect to any conversion
elected by the holder of the Series F Stock, the date that the Company received
the documents referenced in (b)(i) above. In order to determine the date, the
Buyer shall deliver the request via recognized express or overnight courier, to
avoid delays, the Conversion Date being the date delivery is made. The
Conversion Date for any mandatory conversion provided in the Certificate of
Amendment of Certificate of Incorporation shall be the date such mandatory
conversion is effective, without the requirement for a Notice of Conversion to
be issued by the Buyer. The Conversion Date shall be no later than two years
from the issuance of the Series F Stock, at which time, if not converted
earlier, the Series F Stock shall automatically convert into the Shares.
(iii) The Company will transmit the certificates representing the Converted
Shares issuable upon conversion of any Series F Stock (together, unless
otherwise instructed by the Buyer, with Series F Stock not being so converted)
to the Buyer at the address specified in the Notice of Conversion (which may be
the Buyer's address for notices as contemplated by Section 11 hereof or a
different address) via recognized express or overnight courier, by electronic
transfer or otherwise, within five (5) business days, or such date as is
practicable (such fifth business day the "Delivery Date") after the Conversion
Date.
c. The Company understands that a delay in the issuance of the Shares upon
the Buyer's request for conversion of the Series F Stock could result in
economic loss to the Buyer. The Company agrees to provide the Shares issuable
upon conversion of any shares of Series F Stock within 10 days after the
Conversion Date. If the Company fails to issue the Shares, then the Buyer shall
have the right to 1% per week, or any part thereof, until received, as a penalty
for the potential loss to Buyer.
d. The Company will authorize its transfer agent to give information
relating to the Company directly to the Buyer or the Buyer's representatives
upon the request of the Buyer or any such representative. The Company will
provide the Buyer with a copy of the authorization so given to the transfer
agent.
6. CLOSING DATE.
a. The Closing Date shall occur on the date which is the first NYSE trading
day after each of the conditions contemplated by Sections 7 and 8 hereof shall
have been either satisfied or waived by the party in whose favor such conditions
run.
b. The closing of the purchase and issuance of Series F Stock shall occur
on the Closing Date at the offices of the Escrow Agent and shall take place no
later than 3:00 P.M., New York time, on such day or such other time as is
mutually agreed upon by the Company and the Buyer.
c. Notwithstanding anything to the contrary contained herein, the Escrow
Agent will be authorized to release the Escrow Funds to the Company and to
others and to release the other Escrow Property on the Closing Date upon
satisfaction of the conditions set forth in Sections 7 and 8 hereof and as
provided in the Joint Escrow Instructions.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The Buyer understands
that the Company's obligation to sell the Series F Stock to the Buyer pursuant
to this Agreement on the Closing Date is conditioned upon:
a. The execution and delivery of this Agreement by the Buyer;
b. Delivery by the Buyers to the Escrow Agent of good funds as payment in
full of an amount equal to the Purchase Price for the Series F Stock in
accordance with this Agreement;
c. The accuracy on such Closing Date of the representations and warranties
of the Buyer contained in this Agreement, each as if made on such date, and the
performance by the Buyer on or before such date of all covenants and agreements
of the Buyer required to be performed on or before such date; and
d. There shall not be in effect any law, rule or regulation prohibiting or
restricting the transactions contemplated hereby, or requiring any consent or
approval which shall not have been obtained.
8. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE. The Company
understands that the Buyer's obligation to purchase the Series F Stock on the
Closing Date is conditioned upon:
a. The execution and delivery of this Agreement by the Company;
b. Filing by the Company of the Certificate of Amendment of the Certificate
of Incorporation;
c. Delivery by the Company to the Escrow Agent of the relevant Certificates
in accordance with this Agreement;
d. The accuracy in all material respects on such Closing Date of the
representations and warranties of the Company contained in this Agreement. each
as if made on such date, and the performance by the Company on or before such
date of all covenants and agreements of the Company required to be performed on
or before such date;
e. On such Closing Date, the Buyer shall have received an opinion of
counsel for the Company, dated such Closing Date, in form, scope and substance
reasonably satisfactory to the Buyer, substantially to the effect set forth in
Annex III attached hereto;
f. There shall not be in effect any law, rule, or regulation prohibiting or
restricting the transactions contemplated hereby or requiring any consent or
approval which shall not have been obtained; and
g. From and after the date hereof to and including such Closing Date, the
trading of the Common Stock shall not have been suspended by the SEC or the
NASD.
9. GOVERNING LAW: MISCELLANEOUS.
a. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York for contracts to be wholly performed in such
state and without giving effect to the principles thereof regarding the conflict
of laws. Each of the parties consents to the jurisdiction of the federal courts
whose districts encompass any part of the City of New York or the state courts
of the State of New York sitting in the City of New York in connection with any
dispute arising under this Agreement and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non
conveniens, to the bringing of any such proceeding in such jurisdictions. To the
extent determined by such court, the Company shall reimburse the Buyer for any
reasonable legal fees and disbursements incurred by the Buyer in enforcement of
or protection of any of its rights under any of the Transaction Agreements.
b. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
c. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
d. All pronouns and any variations thereof refer to the masculine, feminine
or neuter, singular or plural, as the context may require.
e. A facsimile transmission of this signed Agreement shall be legal and
binding on all parties hereto.
f. This Agreement may be signed in one or more counterparts, each of which
shall be deemed an original.
g. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
h. If any provision of this Agreement shall be invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
i. This Agreement may be amended only by an instrument in writing signed by
the party to be charged with enforcement thereof.
j. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
10. NOTICES. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of
(a) the date delivered, if delivered by personal delivery as against
written receipt therefor or by confirmed facsimile transmission,
(b) the seventh business day after deposit, postage prepaid, in the United
States Postal Service by registered or certified mail, or
(c) the third business day after mailing by international express courier,
with delivery costs and fees prepaid,
in each case, addressed to each of the other parties thereunto entitled at
the following addresses (or at such other addresses as such party may designate
by ten (10) days' advance written notice similarly given to each of the other
parties hereto):
COMPANY: PLAY CO. TOYS & ENTERTAINMENT CORP.
000 Xxxxxxxxx Xxxxx
Xxx Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxx, CFO
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Millennium Ventures Law Group
000 Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attn: Xxxxx Xxxxx Xxxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
BUYER: At the address set forth on the signature page of this Agreement.
with a copy to:
Xxxxxxx & Prager, Esqs.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
ESCROW AGENT: Xxxxxxx & Prager, Esqs.
000 Xxxxx Xxxxxx
Attn: Xxxxxx Xxxxxxx, Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's and the
Buyer's representations and warranties herein shall survive the execution and
delivery of this Agreement and the delivery of the Certificates and the payment
of the Purchase Price, and shall inure to the benefit of the Buyer and the
Company and their respective successors and assigns.
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer by
one of its officers thereunto duly authorized as of the date set forth below.
NO. OF SHARES OF SERIES F STOCK 130,000
PURCHASE PRICE OF SERIES F STOCK: $130,000
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this 26th day of May 1999.
BUYER: XXXXX XXXXXXXXX
Xxxxx Xxxxxxxxx, an individual Social Security Number
Subscriber's Telecopier No.
Address of Subscriber
Place of Citizenship
As of the date set forth below, the undersigned hereby accepts this
Agreement and represents that the foregoing statements are true and correct and
that it has caused this Securities Purchase Agreement to be duly executed on its
behalf.
PLAY CO. TOYS & ENTERTAINMENT CORP.
By: Xxxxx Xxxxxx
Title: Chief Financial Officer and Secretary
Date: May 26,1999
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer by
one of its officers thereunto duly authorized as of the date set forth below.
NO. OF SHARES OF SERIES F STOCK 50,000
PURCHASE PRICE OF SERIES F STOCK: $50,000
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this 26th day of May 1999.
BUYER: XXXX XXXXXXXXX
Xxxx Xxxxxxxxx, an individual Social Security Number
Subscriber's Telecopier No.
Address of Subscriber
Place of Citizenship
As of the date set forth below, the undersigned hereby accepts this
Agreement and represents that the foregoing statements are true and correct and
that it has caused this Securities Purchase Agreement to be duly executed on its
behalf.
PLAY CO. TOYS & ENTERTAINMENT CORP.
By: Xxxxx Xxxxxx
Title: Chief Financial Officer and Secretary
Date: May 26,1999
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer by
one of its officers thereunto duly authorized as of the date set forth below.
NO. OF SHARES OF SERIES F STOCK 155,000
PURCHASE PRICE OF SERIES F STOCK: $155,000
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this 26th day of May 1999.
BUYER: XXXXXXX XXXXXXXXX
Xxxxxxx Libenthal, an individual Social Security Number
Subscriber's Telecopier No.
Address of Subscriber
Place of Citizenship
As of the date set forth below, the undersigned hereby accepts this
Agreement and represents that the foregoing statements are true and correct and
that it has caused this Securities Purchase Agreement to be duly executed on its
behalf.
PLAY CO. TOYS & ENTERTAINMENT CORP.
By: Xxxxx Xxxxxx
Title: Chief Financial Officer and Secretary
Date: May 26,1999
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer by
one of its officers thereunto duly authorized as of the date set forth below.
NO. OF SHARES OF SERIES F STOCK 15,000
PURCHASE PRICE OF SERIES F STOCK: $15,000
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this 26th day of May 1999.
BUYER: XXXXXX XXXXXXX
Xxxxxx Xxxxxxx, an individual Social Security Number
Subscriber's Telecopier No.
Address of Subscriber
Place of Citizenship
As of the date set forth below, the undersigned hereby accepts this
Agreement and represents that the foregoing statements are true and correct and
that it has caused this Securities Purchase Agreement to be duly executed on its
behalf.
PLAY CO. TOYS & ENTERTAINMENT CORP.
By: Xxxxx Xxxxxx
Title: Chief Financial Officer and Secretary
Date: May 26,1999
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer by
one of its officers thereunto duly authorized as of the date set forth below.
NO. OF SHARES OF SERIES F STOCK 100,000
PURCHASE PRICE OF SERIES F STOCK: $100,000
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this 26th day of May 1999.
BUYER: BIRDIE CAPITAL CORP.
(Signature of Authorized Person)
By: Employer Identification Number
Title:
Subscriber's Telecopier No.
Address of Subscriber
Jurisdiction of Incorporation or Organization
As of the date set forth below, the undersigned hereby accepts this
Agreement and represents that the foregoing statements are true and correct and
that it has caused this Securities Purchase Agreement to be duly executed on its
behalf.
PLAY CO. TOYS & ENTERTAINMENT CORP.
By: Xxxxx Xxxxxx
Title: Chief Financial Officer and Secretary
Date: May 26,1999
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer by
one of its officers thereunto duly authorized as of the date set forth below.
NO. OF SHARES OF SERIES F STOCK 100,000
PURCHASE PRICE OF SERIES F STOCK: $100,000
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this 26th day of May 1999.
BUYER: HARBOURCREEK INVESTMENTS, LTD.
(Signature of Authorized Person)
By: Employer Identification Number
Title:
Subscriber's Telecopier No.
Address of Subscriber
Jurisdiction of Incorporation or Organization
As of the date set forth below, the undersigned hereby accepts this
Agreement and represents that the foregoing statements are true and correct and
that it has caused this Securities Purchase Agreement to be duly executed on its
behalf.
PLAY CO. TOYS & ENTERTAINMENT CORP.
By: Xxxxx Xxxxxx
Title: Chief Financial Officer and Secretary
Date: May 26,1999
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer by
one of its officers thereunto duly authorized as of the date set forth below.
NO. OF SHARES OF SERIES F STOCK 200,000
PURCHASE PRICE OF SERIES F STOCK: $200,000
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this 26th day of May 1999.
BUYER: VELENTIA PROPERTIES, INC.
(Signature of Authorized Person)
By: Employer Identification Number
Title:
Subscriber's Telecopier No.
Address of Subscriber
Jurisdiction of Incorporation or Organization
As of the date set forth below, the undersigned hereby accepts this
Agreement and represents that the foregoing statements are true and correct and
that it has caused this Securities Purchase Agreement to be duly executed on its
behalf.
PLAY CO. TOYS & ENTERTAINMENT CORP.
By: Xxxxx Xxxxxx
Title: Chief Financial Officer and Secretary
Date: May 26,1999
ANNEX I
TO
SECURITIES PURCHASE AGREEMENT
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
PLAY CO. TOYS & ENTERTAINMENT CORP.
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
Mail Filing Receipt to:
Millennium Ventures Law Group
000 Xxxxxx Xxxxx, Xxxxx 0
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
PLAY CO. TOYS & ENTERTAINMENT CORP.
The undersigned, for the purpose of amending the Certificate of
Incorporation of Play Co. Toys & Entertainment Corp., do hereby certify and set
forth:
FIRST: The name of the Corporation is: of Play Co. Toys & Entertainment
Corp.
SECOND: The Certificate of Incorporation was filed by the Department of
State on the 15th day of June, 1994.
THIRD: The amendment to the Certificate of Incorporation of the Corporation
effected by this Certificate of Amendment is to amend the provisions of "Article
Fourth, Subarticle (C)" to amend certain rights and preferences of the Series F
Preferred Stock so that, as amended, said Subarticle shall read as follows:
"C. Series F Preferred Stock.
(i) Designation. The designation of this series of Preferred Stock, par
value $0.01 per share, shall be the "Series F Preferred Stock." The number of
shares of Series F Preferred Stock authorized hereby shall be 5,500,000 shares.
(ii) Rank. The Series F Preferred Stock shall, with respect to rights on
liquidation, winding up, and dissolution, rank (a) junior to any other Senior
Securities established by the Board of Directors, including the Series E
Preferred Stock, and, if required by Section (vii), approved by the affirmative
vote of the holders of a majority of the shares of the Series F Preferred Stock,
the terms of which shall specifically provide that such series shall rank prior
to the Series F Preferred Stock; (b) on a parity with any other Parity
Securities established by the Board of Directors, the terms of which shall
specifically provide that such series shall rank on a parity with the Series F
Preferred Stock; and (c) prior to any other Junior Securities of the
Corporation.
(iii) Dividends.
(a) The holders of the shares of the Series F Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors, out of
funds legally available for the payment of dividends, cumulative dividends at
$0.08 per share. Cumulative dividends are payable upon the earlier of redemption
or conversion of the shares (the "Series F Dividend Payment Dates"), in
preference to dividends on the Junior Securities. Such dividend shall be paid to
the holder of record by the close of business on the date thirty business days
after the Series F Dividend Payment Dates, which dividend may be paid in cash or
in kind, in shares of Series F Preferred Stock, at the discretion of the
Corporation. If paid in kind, the number of shares issuable shall be rounded to
the nearest share, there being no obligation of the Company to make any cash
payments. Each of such dividends shall be fully cumulative and shall accrue
(whether or not declared), without interest, from the date such dividends are
payable as herein provided.
(b) If at any time the Corporation shall have failed to pay full dividends
which have accrued (whether or not declared) on any Senior Securities, no
dividend shall be declared by the Board of Directors or paid or set apart for
payment by the Corporation on the shares of the Series F Preferred Stock or any
other Parity Securities unless, prior to or concurrently with such declaration,
payment, or setting apart for payment, all accrued and unpaid dividends on all
outstanding shares of Senior Securities shall have been or are declared and paid
or set apart for payment, without interest. No dividends shall be declared or
paid or set apart for payment on any Parity or Junior securities for any period
unless full cumulative dividends have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for such
payment on the Series F Preferred Stock for all dividend payment periods
terminating on or prior to the date of payment of such full cumulative
dividends. If any dividends are not paid in full, as aforesaid, upon the shares
of the Series F Preferred Stock and any other Parity Securities, the Corporation
distribute the dividend pro rata so that the amount of dividends declared per
share on the Series F Preferred Stock and such other Parity Securities shall in
all cases bear to each other the same ratio that accrued dividends per share on
the Series F Preferred Stock and such other Parity securities bear to each
other. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series F Preferred Stock or
any other Parity Securities which may be in arrears.
(c) Holders of the shares of the Series F Preferred Stock shall be entitled
to receive the dividends provided for in paragraph (iii)(a) hereof in preference
to and in priority over any dividends of other Parity Securities and any other
Junior Securities.
(d) Subject to the foregoing provisions of this Section (iii) the Board of
Directors may declare, and the Corporation may pay or set apart for payment
dividends and other distributions on any of the Junior Securities and may
purchase or otherwise redeem any of the Junior Securities or any warrants,
rights, or options exercisable for or convertible into any of the Junior
Securities, and the holders of shares of the Series F Preferred Stock shall not
be entitled to share therein.
(iv) Liquidation Preference.
(a) In the event of any voluntary or involuntary liquidation, dissolution,
or winding up of the affairs of the Corporation, the holders of the shares of
Series F Preferred Stock then outstanding shall be entitled to be paid out of
the assets of the Corporation available for distribution to its stockholders an
amount in cash equal to $0.50 per share for each share outstanding, before any
payment shall be made or any assets distributed to the holders of any of the
Junior Securities, provided, however, that the holders of the outstanding shares
of the Series F Preferred Stock shall not be entitled to receive such
liquidation payment until the liquidation payments on all outstanding shares of
Senior Securities, including the Series E Preferred Stock, shall have been paid
in full. If the assets of the Corporation are not sufficient to pay in full the
liquidation payments payable to the holders of the outstanding shares of the
Series F Preferred Stock or any other Parity Securities, then the holders of all
such shares shall share ratably in such distribution of assets in accordance
with the amount which would be payable on such distribution if the amounts to
which the holders of the outstanding shares of Series F Preferred Stock and the
holders of outstanding shares of such other Parity Securities were paid in full.
(b) For the purposes of this Article FOURTH, neither the voluntary sale,
conveyance, lease, exchange, nor transfer (for cash, shares of stock,
securities, or their consideration) of all or substantially all of the property
or assets of the Corporation or the consolidation or merger of the Corporation
with one or more other corporations shall be deemed to be a liquidation,
dissolution, or winding up, voluntary or involuntary, unless such voluntary
sale, conveyance, lease, exchange, or transfer shall be in connection with a
dissolution or winding up of the business of the Corporation.
(v) Redemption. The shares of Series B Preferred Stock are not redeemable
by the Corporation.
(vi) Conversion.
(a) Subject to, and upon compliance with, the provisions of this Section
(vi), the holder of a share of Series F Preferred Stock so designated shall have
the right, at such holder's option, to convert such share into two fully paid
and non-assessable shares of Common Stock of the Corporation, at any time
commencing on the date the registration statement registering the Series F
Preferred Stock and Common Stock underlying same is declared effective by the
Securities and Exchange Commission.
(b) (1) In order to exercise the conversion privilege, the holders of each
share of Series F Preferred Stock to be converted shall surrender the
certificates representing such shares at the office of the transfer agent for
the Series F Preferred Stock, appointed for such purpose by the Corporation,
with the Notice of Election to Convert on the back of said certificate completed
and signed. Unless the shares of Common Stock issuable on conversion are to be
issued in the same name in which such share of Series F Preferred Stock is
registered, each share surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the holder of such holder's duly authorized attorney and an amount sufficient
to pay any transfer or similar tax.
(2) As promptly as practicable after the surrender of the certificates for
shares of Series F Preferred Stock as aforesaid, the Corporation shall issue and
shall deliver at such office to such holder, or on his written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such shares in accordance with the provisions of
this Section (vi).
(3) Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which the certificates for shares of
Series F Preferred Stock shall have been surrendered and such notice shall have
been received by the Corporation as aforesaid, and the person or persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become the holder
or holders of record of the shares represented thereby at such time on such
date, unless the stock transfer books of the Corporation shall be closed on that
date, in which event such person or persons shall be deemed to have become such
holder or holders of record at the close of business on the next succeeding day
on which such stock transfer books are open and such notice is received by the
Corporation. All shares of Common Stock delivered upon conversion of the Series
F Preferred Stock will upon delivery be duly and validly issued and fully paid
and non-assessable, free of all liens and charges and not subject to any
preemptive rights.
(c) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, for the purposes of effecting conversions of the Series F
Preferred Stock, the full number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of Series F Preferred Stock not theretofore
converted. For purposes of this subsection (d), the number of shares of Common
Stock which shall be deliverable upon the conversion of all outstanding shares
of Series F Preferred Stock shall be computed as if at the time of computation
all such outstanding shares were held by a single holder.
(d) Upon the occurrence of an Event of Conversion (as defined below), each
share of Series F Preferred Stock then outstanding shall, by virtue of, and
simultaneously with, the occurrence of the Event of Conversion and without any
action on the part of the holder thereof, be automatically converted into two
validly issued, fully paid, and nonassessable Common Shares. The term "Event of
Conversion" shall mean the earlier of two years from issuance of the Series F
Preferred Stock or the occurrence of the closing price per share for the
Corporation's common stock having been at least $5.00 for a consecutive 30 day
period.
(vii) Voting Rights. The holders of record of shares of the Series F
Preferred Stock shall not be entitled to any voting rights except as hereinafter
provided in this Section (vii)(a) or as otherwise provided by law.
(a) So long as any shares of the Series F Preferred Stock are outstanding,
the Corporation will not, without the affirmative vote or consent of the holders
of at least a majority of the outstanding shares of the Series F Preferred
Stock, voting as a class, vote to amend the Corporation's Certificate of
Incorporation to (i) increase or decrease the aggregate number of authorized
shares of the Series F Preferred Stock; (ii) increase or decrease the par value
of the Series F Preferred Stock; or (iii) alter the preferences, powers, or
rights of the Series F Preferred Stock so as to affect them adversely.
(b) In exercising the voting rights set forth in this Section (vii), each
share of Series F Preferred Stock shall have one vote per share.
FIFTH: The amendment to the Articles of Incorporation of the Corporation
set forth above was adopted by unanimous consent of the Corporation's board of
directors dated as of May 18, 1999.
IN WITNESS WHEREOF, the undersigned President and Secretary of this
Corporation have executed this Certificate of Amendment on this 18th day of May,
1999.
PLAY CO. TOYS & ENTERTAINMENT CORP.
By:
Xxxxxxx Xxxxx, President
By:
Xxxxx Xxxxxx, Secretary
ANNEX II
TO
SECURITIES PURCHASE AGREEMENT
JOINT ESCROW INSTRUCTIONS
Dated as of the date of the
Securities Purchase Agreement to
Which These Joint Escrow
Instructions Are Attached
Xxxxxxx & Xxxxxx, Esqs.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Dear Xx. Xxxxxxx:
As escrow agent for both Play Co. Toys & Entertainment Corp., a Delaware
corporation (the "Company"), and the one or more Buyers (each, a "Buyer") of
Series F Convertible Preferred Stock (the "Series F Stock") of the Company, who
is/are named in the Securities Purchase Agreement (the "Agreement") between the
Company and the Buyers to which a copy of these Joint Escrow Instructions is
attached as Annex II, you (hereafter, the "Escrow Agent") are hereby authorized
and directed to hold the documents and funds together with any interest thereon
(the "Escrow Funds") delivered to the Escrow Agent pursuant to the terms of the
Agreement in accordance with the following instructions. All capitalized terms
used herein and not otherwise defined herein shall have the respective meanings
provided in the Agreement.
1. The Escrow Agent shall, as promptly as feasible, notify the Company of
receipt of the Purchase Price for the Series F Stock from or on behalf of the
Buyer, including $155,000 which is payable by check to the Company, and notify
the Buyer (or such agent as the Buyer may designate in writing) of receipt of
the relevant Certificates. As promptly as feasible upon receipt of notice
(whether oral or in written form) from the Company and the Buyer that the
respective conditions precedent to the purchase and sale have been satisfied
(which notice shall not be unreasonably withheld), the Escrow Agent shall, after
reduction by the amounts referred to in the next succeeding sentence of this
paragraph, release the relevant Escrow Funds to or upon the order of the Company
and shall release the relevant Certificates to the Buyers, except that the
Escrow Agent shall release the Certificate to the Buyer who paid the Purchase
Price via check only after notification by the Company that the funds
represented thereby have cleared the bank. After receipt of such notice, an
amount equal to (i) ten percent (10%) of the Purchase Price of the Series F
Stock as the aggregate cash fees and non-accountable expense allowance and
350,000 options to purchase common stock at an exercise price of $3.00 per share
for four years due to Xxxx Xxxx XxXxxxx (the "Placement Agent") shall be
released to or upon the order of the Placement Agent, (ii) one percent (1%) of
the Purchase Price of the Series F Stock in legal and escrow fees to the Escrow
Agent (the "Escrow Agent Fees") shall be released to or upon the order of the
Escrow Agent, and (iii) Ten Thousand ($10,000) Dollars in legal fees shall be
released to Millennium Ventures Law Group, counsel for the Company, via wire
transmission pursuant to instructions under separate cover. If the relevant
Certificates are not deposited with the Escrow Agent (or the Escrow Agent's
designee) within ten (10) days after receipt by the Company of notice of receipt
by the Escrow Agent of the Purchase Price funds from the Buyer for the relevant
Series F Stock, the Escrow Agent shall notify the Buyer, and the Buyer shall be
entitled to cancel the purchase and demand repayment of the funds. If the
Purchase Price funds are not deposited with the Escrow Agent in accordance with
the Agreement, the Escrow Agent shall notify the Company, and the Company shall
be entitled to cancel the Agreement and demand return of such Certificates.
If the Company or the Buyer notifies the Escrow Agent on or before the
Closing Date that the conditions precedent to the obligations of the Company or
the Buyer, as the case may be, under the Agreement with respect to the purchase
and sale of Series F Stock to be effected were not satisfied or waived, then the
Escrow Agent shall return the Escrow Funds to the Buyer, without interest or
deduction and shall return the Certificates to the Company. Prior to return of
any Escrow Funds to the Buyer, the Buyer shall furnish such tax reporting or
other information as shall be appropriate for the Escrow Agent to comply with
applicable United States laws. The Escrow Agent shall deposit all Escrow Funds
received hereunder in the Escrow Agent's attorney trust account at The Bank of
New York, located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, except for $155,000
which shall be paid by delivery to the Company of a check on the account of Xx.
Xxxxxxx Libenthal, made payable to the Company.
2. The Escrow Agent's duties hereunder may not be altered, amended,
modified, or revoked, except by a writing signed by the Company, the Buyer, and
the Escrow Agent.
3. The Escrow Agent shall be obligated only for the performance of such
duties as are specifically set forth herein and may rely and shall be protected
in relying or refraining from acting on any instrument reasonably believed by
the Escrow Agent to be genuine and to have been signed or presented by the
proper party or parties. The Escrow Agent shall not be personally liable for any
act the Escrow Agent may do or omit to do hereunder as the Escrow Agent while
acting in good faith, and any act done or omitted by the Escrow Agent pursuant
to the advice of the Escrow Agent's attorneys-at-law shall be conclusive
evidence of such good faith.
4. The Escrow Agent is hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments, or decrees of
any court. In case the Escrow Agent obeys or complies with any such order,
judgment, or decree, the Escrow Agent shall not be liable to any of the parties
hereto or to any other person, firm, or corporation by reason of such decree
being subsequently reversed, modified, annulled, set aside, vacated, or found to
have been entered without jurisdiction. In the event that the Escrow Agent shall
be uncertain as to its duties or rights hereunder or shall receive instructions
with respect to the Escrowed Certificates or the Escrow Funds which, in its sole
determination, are in conflict either with other instructions received by it or
with any provision of this Agreement, the Escrow Agent, at its sole option, may
deposit the Escrow Funds and Certificates (and any other amounts that thereafter
become part of the Escrow Funds) with the registry of a court of competent
jurisdiction in a proceeding to which all parties in interest are joined. Upon
the deposit by the Escrow Agent of the Escrow Funds with the registry of any
court, the Escrow Agent shall be relieved of all further obligations and
released from all liability hereunder.
5. The Escrow Agent shall not be liable in any respect on account of the
identity, authorities, or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.
6. The Escrow Agent has acted as legal counsel for the Buyer and the
Placement Agent and may continue to act as legal counsel for such parties, from
time to time, notwithstanding its duties as the Escrow Agent hereunder. The
Company consents to the Escrow Agent acting in such capacity as legal counsel
for the Buyer and waives any claim that such representation represents a
conflict of interest on the part of the Escrow Agent. The Company understands
that the Buyer and the Escrow Agent are relying explicitly on the foregoing
provision in entering into these Joint Escrow Instructions.
7. The Escrow Agent's responsibilities as escrow agent hereunder shall
terminate if the Escrow Agent shall resign by written notice to the Company and
the Buyer. In the event of any such resignation, the Buyer and the Company shall
appoint a successor Escrow Agent.
8. If the Escrow Agent reasonably requires other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
9. The Company and the Buyer agree jointly and severally to indemnify and
hold harmless the Escrow Agent from any and all claims, liabilities, costs, or
expenses in any way arising from or relating to the duties or performance of the
Escrow Agent hereunder other than any such claim, liability, cost, or expense to
the extent the same shall (a) have been tax obligations in connection with the
Escrow Agent's fee hereunder, or (b) have been determined by the final,
unappealable judgment of a court of competent jurisdiction to have resulted from
the gross negligence or willful misconduct of the Escrow Agent, or (c) be a
liability, or arise from a liability, to either the Company or the Buyer.
11. Any notice required or permitted hereunder shall be given in the manner
provided in the Section headed "NOTICES" in the Agreement, the terms of which
are incorporated herein by reference.
12. By signing these Joint Escrow Instructions, the Escrow Agent becomes a
party hereto only for the purpose of these Joint Escrow Instructions; the Escrow
Agent does not become a party to the Agreement. The Company and the Buyer have
become parties hereto by their execution and delivery of the Agreement, as
provided therein.
13. This instrument shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns and shall
be governed by the laws of the State of New York without giving effect to
principles governing the conflicts of laws. A facsimile transmission of these
instructions signed by the Escrow Agent shall be legal and binding on all
parties hereto.
14. The rights and obligations of any party hereto are not assignable
without the written consent of the other parties hereto. These Joint Escrow
Instructions constitute the entire agreement amongst the parties with respect to
the subject matter hereof.
15. The Company agrees that the Placement Agent is a third party
beneficiary of the provisions of clause (i) in Section 1 hereof and that such
clause cannot be amended or revoked without the prior written consent of the
Placement Agent.
ACCEPTED BY:
ESCROW AGENT:
XXXXXXX & XXXXXX
By:
Date:
PLACEMENT AGENT:
XXXX XXXX XXXXXXX
By:
Date:
THE COMPANY
PLAY CO. TOYS & ENTERTAINMENT CORP.
By:
Date:
ANNEX III
TO
SECURITIES PURCHASE AGREEMENT
MILLENNIUM VENTURES LAW GROUP
Attorneys at Law
000 Xxxxxx Xxxxx, Xxxxx 0
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (fax)
May 27, 1999
Purchasers of Play Co. Toys & Entertainment Corp. Series F Preferred Stock
c/o Krieger & Prager
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Play Co. Toys & Entertainment Corp.
Ladies and Gentlemen:
We have acted as counsel to Play Co. Toys & Entertainment Corp., a
corporation incorporated under the laws of the State of Delaware (the
"Company"), in connection with the proposed issuance and sale of 750,000 shares
of the Company's Series F Preferred Stock (the "Securities") pursuant to the
Securities Purchase Agreement, dated May 26, 1999 (the "Purchase Agreement")
between the Company and the annexed listed of purchasers (the "Buyers"),
including all Exhibits and Appendices annexed thereto - and all Agreements and
instruments executed and delivered as contemplated thereby (collectively, the
"Agreements").
In accordance with paragraph 8(e) of the Purchase Agreement, and upon the
instructions of your office, this opinion is delivered to you and is intended
for your use only and, as such, may be relied upon by you only, solely with
regard to the issuance of your opinion as referenced herein.
In rendering these opinions we have also reviewed the Resolution of the
Board of Directors of the Company relating to the Agreements and the Company's
Officers' Certificate as to the accuracy of certain representations all dated on
or about May 26, 1999.
In rendering the opinions herein, we have assumed and have relied upon (i)
the genuineness of all signatures on the Agreements reviewed by us; (ii) the
conformity to the originals of all such Agreements submitted to us as copies;
(iii) with respect to the Agreements, that said Buyers have the requisite power
and authority to enter into and perform all obligations under same; (iv) that
the Agreements accurately describe and contain the mutual understanding of the
parties; (v) that there are no oral or written statements or agreements that
modify, amend, or vary or purport to modify, amend, or vary any of the terms of
the Agreements; and (vi) that the Agreements are construed in accordance with
the laws of the State of California.
Furthermore, we have assumed the assumptions set forth in ss.4 of the Legal
Opinion Accord (the "Accord") of the ABA Section of Business Law (1991).
Based upon the foregoing, and having regard for such legal
considerations as we deem relevant, we are of the opinion as follows:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and is duly
qualified to do business in the State of California.
2. The authorized capital stock of the Company consists of (i) 160,000,000
shares of Common Stock, par value $0.01 per share (the "Common Stock"); (ii)
25,000,000 shares of Series E Preferred Stock, par value $0.01 per share; and
(iii) 5,500,000 shares of Series F Preferred Stock, par value $0.01 per share.
3. The Common Stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
Company has been a reporting company under the Exchange Act for a period of at
least twelve months preceding the date hereof.
4. When duly countersigned by the Company's transfer agent and registrar
and delivered to you or upon your order against payment of the agreed
consideration therefor in accordance with the provisions of the Agreements, the
Securities and any Common Stock to be issued upon the conversion thereof, as
described in the Agreements represented thereby, will be duly authorized and
validly issued, fully paid and nonassessable.
5. The Company has the requisite corporate power and authority to enter
into the Agreements and to sell and deliver the Securities and the Common Stock
to be issued upon the conversion of the Securities as described in the
Agreements; each of the Agreements has been duly and validly authorized by all
necessary corporate action by the Company; to our knowledge, no approval of any
governmental or other body is required for the execution and delivery of each of
the Agreements by the Company or the consummation of the transactions
contemplated thereby. Each of the Agreements has been duly and validly executed
and delivered by and on behalf of the Company and is a valid and binding
agreement of the Company, enforceable in accordance with its terms, except as
enforceability may be limited by general equitable principles, bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium, or other laws
affecting creditors' rights generally and except as to compliance with federal,
state, and foreign securities laws, as to which no opinion is expressed.
6. To our knowledge, after due inquiry, the execution, delivery, and
performance of the Agreements by the Company and the performance of its
obligations thereunder do not and will not constitute a breach or violation of
any of the terms and provisions of or constitute a default under or conflict
with or violate any provision of (i) the Company's Certificate of Incorporation
or By-Laws, each as currently in effect, (ii) any indenture, mortgage, deed of
trust, agreement, or other instrument to which the Company is a party or by
which it or any of its property is bound, (iii) any applicable statute or
regulation, or (iv) any judgment, decree, or order of any court or governmental
body having jurisdiction over the Company or any of its property.
The opinions set forth above are subject to the following qualifications
and limitations:
(a) The enforceability of the Agreements and the rights or remedies set
forth therein are subject to or limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium, or other similar laws relating to or
affecting the rights of creditors generally;
(b) The enforceability of the Agreements is subject to specific enforcement
of particular provisions of the Agreements and general principles of equity;
(c) The enforceability of the Agreements is further subject to the
qualification that certain waivers, procedures, remedies, and other provisions
of the Agreements may be unenforceable under or may be limited by the law.
provided however, that the foregoing does not substantially prevent the
practical realization of the benefits intended by the Agreements; and
(d) Millennium Ventures Law Group expresses no opinion as to compliance
with any laws, rules, or regulations relating to antifraud matters, securities
or the sale or issuance thereof, or antitrust or anti-competitive matters. This
opinion is expressed only with respect to the laws of the State of Delaware
General Corporation Law. Millennium Ventures Law Group expresses no opinion to
the extent that the law of any jurisdiction other than that identified above is
applicable to the subject matter hereof.
The opinions expressed in this letter are based upon the law in effect on
the date hereof, and we assume no obligation to revise or supplement this
opinion should such law be changed by legislative action, judicial decision, or
otherwise.
This opinion is being furnished to you solely for your benefit and only
with respect to the transaction recited herein. Accordingly, it may not be
relied upon by, quoted in any manner to, or delivered to any person or entity
without, in each instance, our prior written consent.
The opinions expressed above are subject to the effects of laws which may
limit the recovery of damages to the extent a court finds them to constitute a
penalty or be unreasonable under the circumstances. Furthermore, the opinions
expressed above are subject to the qualifications that certain remedies,
waivers, and other provisions contained in the Agreements may not be
enforceable.
The opinions set forth herein are limited to those expressly stated, and no
other legal opinion or opinions should be implied.
This opinion is given as of the date hereinabove stated and imposes no
obligation upon Millennium Ventures Law Group to update the opinion. Millennium
Ventures Law Group specifically disclaims any undertaking or obligation to
advise the addressee or its counsel or any other person of any facts or
circumstances that may hereafter be brought to its attention or any change in
any laws that may hereafter occur which may alter or affect the opinions
expressed herein.
Very truly yours,
Millennium Ventures Law Group
By: Xxxxx Xxxxx Xxxxxxxxx
