EXHIBIT 10.3
SECOND AMENDMENT
TO
PREFERRED STOCK PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO PREFERRED STOCK PURCHASE AGREEMENT (the
"Second Amendment") is made and entered into as of the 28th day of October, 1998
between Big Entertainment, Inc. (the "Company") and Auric Partners Limited (the
"Purchaser").
R E C I T A L S:
1. The Company and the Purchaser are parties to a Preferred Stock
Purchase Agreement dated December 20, 1996, as amended by a First Amendment
dated as of February 18, 1998 (together, the "Purchase Agreement"), pursuant to
which the Purchaser acquired and holds 20,000 shares of the Company's 4% $100
Convertible Series C Preferred Stock (the "Preferred Stock").
2. The parties desire to set forth their agreements as to certain
further modifications to the terms of the Purchase Agreement and the Preferred
Stock, all as set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchaser hereby agree as follows:
1. ADJUSTMENT TO CONVERSION PRICE. In consideration of the Purchaser's
agreement to the provisions of this Second Amendment, the Conversion Price of
the Preferred Stock shall be adjusted to $4.00 per share, which is based on the
current market price of the Company's common stock (the "Common Stock"). The
parties hereby agree and acknowledge that the foregoing adjustment in the
Conversion Price is in complete satisfaction of any and all adjustments to the
Conversion Price that may have occurred prior to the date of this Second
Amendment.
2. FUTURE ADJUSTMENTS TO CONVERSION PRICE. Notwithstanding anything in
the Purchase Agreement to the contrary, the parties agree that:
(a) The first paragraph of Section 3(f)(ii)(A) of the Articles of
Amendment to Articles of Incorporation of Big Entertainment, Inc. for
Designation of Preferences, Rights and Limitations of 4% $100 Series C
Convertible Preferred Stock (the "Designation of Preferences") shall be amended
to read as follows:
"(A) In case at any time or from time to time after the Issuance Date,
the Company issues or sells, or is deemed by the express provisions of
this Section 3(f)(ii) to have issued or sold additional shares of
Common Stock, for an Effective Price less than the Current Market Price
in effect on the date of and immediately prior to such issue, then and
in each such case the then-existing Conversion Price for the Series C
Preferred Stock shall be reduced, as of the opening of business on the
date of such issue or sale, to the price determined as follows:"
(b) Section 3(f)(ii)(A)(1) is hereby deleted in its entirety and
Section 3(f)(ii)(A)(2) shall be renumbered accordingly.
(c) Section 3(f)(ii)(D) shall be amended to read as follows:
"(D) Except as expressly provided herein, no adjustment in the
Conversion Price of any share of Series C Preferred Stock shall be made
in respect of the issue of additional shares of Common Stock unless the
consideration per share for such additional shares of Common Stock
issued or deemed to be issued by the Company is less than the Current
Market Price in effect on the date of, and immediately prior to, such
issue."
The remaining provisions of said Section 3(f) shall remain unchanged
and in full force and effect. The parties further agree and intend that Section
3(f) as amended in this Second Amendment shall apply from and after the date of
this Second Amendment.
3. SHARE DIVIDENDS. The Company may, at its sole option, pay dividends
accruing on the Preferred Stock in the form of shares of Common Stock, the
number of such shares so issued being based on the closing price of the Common
Stock on the date immediately preceding the "Dividend Payment Date" (as defined
in Section 2 of the Designation of Preferences of the Preferred Stock);
provided, however, that when issued to the Purchaser, such shares of Common
Stock are registered for resale under a registration statement (the
"Registration Statement") filed pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), that has either been declared effective on or
before the date of such issuance or is reasonably expected to be declared
effective within 75 days of such issuance. In the event that the Registration
Statement is not declared effective within such 75-day period, the Purchaser
shall have the right to return such share dividend to the Company and receive
instead a cash dividend equal to the value of the share dividend when originally
issued.
4. AUTOMATIC CONVERSION OF PREFERRED STOCK. All outstanding shares of
Preferred Stock shall be automatically converted into shares of Common Stock
immediately prior to the closing of the transactions effecting the organization
of Huge Entertainment, Inc. (or any successor, affiliate or transferee thereof),
as the successor in interest, directly or indirectly, to Big Entertainment's
intellectual property business and the initial public offering thereof;
provided, that such automatic conversion shall be effective if and only if such
closing occurs; and, provided further, that any shares received by the Purchaser
upon such closing be issued in a transaction that is registered under the
Securities Act.
5. AMENDMENT OF ARTICLES OF INCORPORATION. The parties agree that an
Articles of Amendment to the Company's Articles of Incorporation effecting the
foregoing modifications to the terms of the Preferred Stock shall be filed with
the Florida Secretary of State as soon as reasonably practicable following the
execution of this Second Amendment.
6. DEFINED TERMS. Unless otherwise defined herein, all capitalized
terms shall have the meanings ascribed to them in the Purchase Agreement
(including Exhibit A thereto).
7. VALIDITY OF PURCHASE AGREEMENT. Except to the extent specifically
amended herein, all of the terms of the Purchase Agreement shall remain
unmodified.
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8. GOVERNING LAW. This Second Amendment shall be enforced, governed and
construed in all respects in accordance with the internal laws, and not the laws
pertaining to conflicts or choice of laws, of the State of Florida.
9. COUNTERPARTS. This Second Amendment may be executed in one or more
counterparts, all of which may be considered one and the same agreement and each
of which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto, through their duly authorized
officers, have executed this Second Amendment as of the date first written
above.
COMPANY:
BIG ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Chairman of
the Board and Chief Executive Officer
PURCHASER:
AURIC PARTNERS LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title:
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