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EXHIBIT 10.14
BAM! ENTERTAINMENT, INC.
SERIES C STOCK PURCHASE AGREEMENT
MAY 24, 2001
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EXHIBITS
Exhibit A - Second Amended and Restated Certificate of Incorporation
Exhibit B - Registration Rights Agreement
Exhibit C - Proprietary Information and Inventions Agreement
Exhibit D - Bylaws of the Company
Exhibit E - Opinion of Counsel to the Company
Exhibit F - Co-Sale and Right of First Refusal Agreement
SCHEDULES
Schedule 1 - Schedule of Purchasers
Schedule 2.2(a) - Contingent Reserved Common Shares
Schedule 2.2(d) - Stockholders and Option Holders List
Schedule 2.3 - Subsidiaries
Schedule 2.7 - Litigation
Schedule 2.8(a) - Material Intellectual Property
Schedule 2.8(b) - Certain IP Agreements
Schedule 2.10 - Material Agreements
Schedule 2.10(b) - Nonbinding Contracts
Schedule 2.11 - Liabilities
Schedule 2.13 - Conflicts
Schedule 2.17 - Employee Benefit Plans
Schedule 2.24 - Financial Statements
Schedule 2.25(d) - Changes; Contracts/Agreements
Schedule 2.25(e) - Changes; Compensation/Agreements with employees,
representatives, agents, officers, directors or stockholders
Schedule 2.25(i) - Changes; Loans/Guarantees
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SERIES C STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of May 24,
2001, is entered into by and among BAM! Entertainment, Inc., a Delaware
corporation (with its predecessors and successors, the "Company"), and the
parties listed on Schedule 1 hereto (each, individually, a "Purchaser" and,
collectively, the "Purchasers").
WITNESSETH:
A. The Company, successor in interest to Bay Area Multimedia, Inc., a
California corporation, was formerly known as Bay Area Multimedia, Inc., a
Delaware corporation.
B. Subject to the terms and conditions set forth herein, the Company
desires to issue and sell to the Purchasers, and the Purchasers severally desire
to purchase from the Company, shares of the Company's Series C Preferred Stock,
par value $0.001 per share, for an aggregate purchase price of up to
$10,000,000, as partially set forth on Schedule 1 attached hereto.
C. The Purchasers and the Company desire to set forth their mutual
agreements with respect to such purchase and sale and to establish various
rights and obligations in connection therewith.
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 agree as
follows:
1. Purchase and Sale of Preferred Stock..
1.1 Sale and Issuance of Series C Preferred Stock.
(a) The Company shall adopt and file with the Secretary
of State of the State of Delaware on or before the Closing (as defined below)
the Amended and Restated Certificate of Incorporation of the Company in the form
attached hereto as Exhibit A (the "Restated Certificate").
(b) Subject to the terms and conditions of this
Agreement, each Purchaser severally (but not jointly) agrees to purchase at the
Closing, and the Company agrees to sell and issue to such Purchaser at the
Closing, such number of shares of the Company's Series C Preferred Stock, par
value $0.001 per share, as set forth opposite such Purchaser's name on Schedule
1 attached hereto, at a purchase price of $22.553 per share, and for the total
purchase price indicated with respect to such Purchaser on Schedule 1,
representing an aggregate purchase price of up to $10,000,000 for all
Purchasers. The shares of Series C Preferred Stock to be issued to the
Purchasers pursuant to this Agreement shall hereinafter be referred to as the
"Series C Preferred Stock."
1.2 Closing; Delivery. The closing of the purchase and sale of
the Series C Preferred Stock (the "Closing") shall take place at one or more
closings. All Closings shall be held at the offices of ▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇,
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California. The first Closing shall occur at 9:00 a.m. Pacific Standard Time on
May 4, 2001, or at such other time and place as the Company and the Purchasers
mutually agree upon, orally or in writing (the "Initial Closing" and the
"Closing Date"). The subsequent Closings shall occur at such times as approved
of by the parties to such Closing. At each Closing, the Company shall deliver to
each Purchaser a certificate registered in the name of such Purchaser
representing the Series C Preferred Stock being purchased thereby against
payment of the purchase price therefor, which shall be payable by check or by
wire transfer of immediately available funds to an account designated by the
Company. The Company and each Purchaser shall take such additional actions and
execute and deliver such additional agreements and other instruments and
documents as may be reasonably necessary or appropriate to effect the
transactions contemplated by this Agreement in accordance with its terms.
1.3 Use of Proceeds. The Company shall apply the proceeds
received hereunder from the sale of the Series C Preferred Stock to pay for the
reasonable expenses of the Company associated with the issuance of the Series C
Preferred Stock, to fund continued product and service development, to fund a
broader market launch of the Company's services, to build corporate
infrastructure and for general working capital purposes.
1.4 Reservation of Additional Shares of Series C Preferred
Stock. As set forth in the Restated Certificate, the Company has reserved a
total of 443,400 shares of its Series C Preferred Stock, par value $0.001 per
share, for issuance and sale pursuant to this Agreement.
2. Representations, Warranties and Covenants of the Company. The Company
hereby represents and warrants to, and covenants with, each of the Purchasers,
as follows:
2.1 Organization, Good Standing and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as now conducted and to execute, deliver and
perform this Agreement, the "Co-Sale and Right of First Refusal Agreement" and
the "Registration Rights Agreement" (as defined in Section 2.4 below)
(collectively, the "Transaction Agreements"), and to carry out the transactions
contemplated by each of the Transaction Agreements. The Company is duly
qualified to transact business and is in good standing in the State of
California and in each other jurisdiction in which the failure to be so
qualified would have a material adverse effect on the business (as now
conducted), financial or other condition, operating results, assets or
properties of the Company (each such effect, a "Material Adverse Effect").
2.2 Capitalization. The authorized capital stock of the Company
consists, or will consist, immediately prior to the Closing, of:
(a) 10,000,000 shares of common stock, par value $0.001
per share (the "Common Stock"), of which 327,385 shares are issued and
outstanding. All of the issued and outstanding shares of Common Stock have been
duly authorized, are fully-paid and nonassessable and were issued in compliance
with all applicable federal and state securities laws. The Company has reserved
976,220 shares of Common Stock for issuance upon conversion of the Series A
Preferred Stock (as defined below), 320,000 shares of Common Stock for issuance
upon conversion of the Company's Series B Preferred Stock, par value $0.001 per
share, 443,400
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shares of Common Stock for issuance upon conversion of the Company's Series C
Preferred Stock, par value $0.001 per share, 325,000 shares of Common Stock for
issuance pursuant to the exercise of options issued or reserved for issuance
under stock incentive plans currently effective (the "Stock Plan"), 43,500
shares of Common Stock for issuance upon exercise of warrants to purchase Common
Stock issued to PAR Capital (30,000 shares), K&L 2000 LLC (10,000 shares) and
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc. (3,500 shares) (the foregoing warrants being
collectively called the "Warrants") and shares issuable upon exercise of the
Warrants being collectively called the "Warrant Shares"). Except as set forth in
Schedule 2.2(a), there are no other Common Shares to be issued (the "Contingent
Reserved Common Shares").
(b) 3,000,000 shares of Preferred Stock with a par value
of $0.001 per share (the "Preferred Stock"), of which 976,220 shares have been
designated as Series A Convertible Preferred Stock (the "Series A Preferred
Stock"), all of which are issued and outstanding, 320,000 shares have been
designated as Series B Preferred Stock (the "Series B Preferred Stock"), 294,620
of which are issued and outstanding, and 443,400 shares have been designated as
Series C Preferred Stock (the "Series C Preferred Stock"), all of which may be
issued and outstanding upon the Closing.
(c) Except for (A) the conversion privileges of the
Series A Preferred Stock, (B) the conversion privileges of the Series B
Preferred Stock, (C) the conversion privileges of the Series C Preferred Stock,
(D) currently authorized options to purchase 110,750 shares of Common Stock
granted to employees pursuant to the Stock Plan, (E) the Warrants and the (F)
Contingent Reserved Common Shares (collectively, the "Common Stock
Equivalents"): (i) no subscription right, warrant, option, convertible security
or other right or interest (contingent or otherwise) to purchase or acquire any
shares of capital stock, of the Company is authorized, issued or outstanding;
(ii) the Company does not have any obligation (contingent or otherwise) (a) to
issue any subscription right, warrant, option, convertible security or other
such right or interest or (b) to issue or distribute to holders of any shares of
its capital stock any evidences of indebtedness or assets of the Company; and
(iii) the Company does not have any obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or make any other distribution in
respect thereof.
(d) Attached hereto as Schedule 2.2(d) is a true and
complete list of the stockholders of the Company and all holders of any options
or warrants of the Company, showing the number of shares of capital stock,
options or warrants of the Company held by each such person as of the date
hereof. Except as provided in Schedule 2.2(a) and Schedule 2.2(d), there are no
other holders of any subscription right, option, warrant, convertible security
or other right or interest that is convertible into or exercisable for shares of
capital stock of the Company, and there are no statutory or, to the Company's
knowledge, contractual stockholders' preemptive rights, rights of first refusal
or any similar rights relating to the acquisition of the capital stock of the
Company.
2.3 Subsidiaries. Except as specified in Schedule 2.3, the
Company does not have any subsidiaries or own or control, directly or
indirectly, any interest in any other corporation, partnership, limited
liability company, joint venture, association, trust, estate, limited liability
partnership, joint stock company, unincorporated organization or government or
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any agency or political subdivision thereof, or other entity or organization
(each of the foregoing, together with any individual, being sometimes referred
to herein as a "Person"). Schedule 2.3 sets forth, as of the Initial Closing and
giving effect to the transactions contemplated hereby, a complete and current
list of the outstanding equity interests and the stockholders of the Company's
subsidiaries.
2.4 Authorization. All corporate action on the part of the
Company, its directors, officers and stockholders necessary for the
authorization, execution and delivery of this Agreement and the Registration
Rights Agreement in the form attached hereto as Exhibit B, the performance of
all obligations of the Company hereunder and thereunder and the authorization,
issuance and delivery of shares of the Series C Preferred Stock pursuant to the
terms of this Agreement and the Common Stock issuable upon conversion of the
Series C Preferred Stock has been taken or will be taken prior to the Closing,
and the Transaction Agreements, when executed and delivered by the Company,
shall constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms except: (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other laws of general application affecting
enforcement of creditors' rights generally; (ii) as limited by laws or equitable
principles relating to the availability of specific performance, injunctive
relief, or other equitable remedies; or (iii) to the extent the indemnification
provisions contained in the Registration Rights Agreement may be limited by
applicable federal or state securities laws.
2.5 Compliance with Securities Laws; Valid Issuance of
Securities. The Series C Preferred Stock being issued to the Purchasers
hereunder, when issued, sold and delivered in accordance with the terms hereof
for the consideration expressed herein, will be duly and validly issued,
fully-paid and nonassessable and free of restrictions on transfer other than
restrictions on transfer under this Agreement and applicable federal and state
securities laws. Shares of the Common Stock issuable upon conversion of the
Series C Preferred Stock purchased hereunder have been duly and validly reserved
for issuance, and upon issuance in accordance with the terms of the Restated
Certificate, shall be duly and validly issued, fully-paid and nonassessable and
free of restrictions on transfer other than restrictions on transfer under this
Agreement, the Registration Rights Agreement and applicable federal and state
securities laws.
2.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, foreign, state or local governmental authority on the
part of the Company is required in connection with the consummation of the
transactions contemplated by the Transaction Agreements, except for filings
pursuant to applicable state securities laws and Regulation D of the Securities
Act of 1933, as amended (the "Securities Act").
2.7 Litigation. Except as set forth on Schedule 2.7, there is no
action, suit, proceeding or investigation pending or, to the best of the
Company's knowledge, currently overtly threatened against the Company or any of
its subsidiaries, nor is the Company aware that there is any basis for the
foregoing. The foregoing includes, without limitations, actions, suits,
proceedings or investigations pending or threatened involving the prior
employment of any of the Company's employees, their use in connection with the
Company's business of any information or techniques allegedly proprietary to any
of their former employers, or their
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obligations under any agreements with prior employers. The Company is not a
party or expressly subject to the provisions of any order, writ, injunction,
judgment or decree of any court, administrative agency, government agency or
instrumentality. There is no action, suit or proceeding by the Company currently
pending or which the Company intends to initiate.
2.8 Intellectual Property.
(a) To the best knowledge of the Company, the Company
has sufficient title and ownership of, or rights by license or other agreement
to, all patents, patent applications, trademarks, service marks, trade names,
domain names, URLs, copyrights, trade secrets, software, source codes, object
codes and other intellectual property rights used by the Company in its business
or necessary to conduct its business as currently conducted ("Intellectual
Property"). The Company has not received any written communications alleging
that the Company has violated or, by conducting its business as now conducted,
would violate any of the rights in the Intellectual Property of any other
Person. The Company is not aware that any of its employees are obligated under
any contract (including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his or her best
efforts to promote the interests of the Company or that would conflict with the
Company's business as currently conducted. The Company has not licensed any of
the Intellectual Property to any other Person, nor does any other Person have an
option or any other right to acquire any of the Intellectual Property other than
in the ordinary course of business (except for the Intellectual Property that is
in the public domain). Schedule 2.8(a) sets forth a list of the Company's
material intellectual property.
(b) All licenses or agreements listed in Schedule 2.8(b)
(the "Certain IP Agreements") are in full force and effect and to the best
knowledge of the Company there is no default by any party thereto. True and
complete copies of all Certain IP Agreements, and any amendments thereto, have
been made available to the Purchasers, and to the best knowledge of the Company,
the licensors under the Certain IP Agreements to which the Company is granted
rights, to the best of the Company's knowledge, have all requisite power and
authority to grant the rights purported to be conferred thereby. None of the
products manufactured and sold, nor any process or know-how used, by the Company
under the Certain IP Agreements infringes or is alleged to infringe any patent,
trademark, service ▇▇▇▇, trade name, copyright or other proprietary right or is
a derivative work based on the work of any other person.
2.9 Compliance with Other Instruments. The Company is not in
violation or in default of any provisions of (i) its Certificate of
Incorporation, as amended, or Bylaws or (ii) any order, writ, injunction,
judgment, instrument, decree or contract to which it is a party or by which it
is bound or (iii) to the Company's knowledge, any provision of a federal or
state statute, rule or regulation applicable to the Company, which violations or
defaults would in the case of the items described in clauses (ii) and (iii),
either individually or in the aggregate, have a Material Adverse Effect. The
execution, delivery and performance of the Transaction Agreements and the
consummation of the transactions contemplated hereby or thereby do not and will
not, with or without the passage of time and/or the giving of notice: (a) result
in any such violation or conflict with or constitute a default under any such
provision, order, writ, injunction, judgment, instrument, decree or contract or
any such statute, rule or regulation; (b)
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result in the creation of any lien, security interest, charge or encumbrance
upon the capital stock or any assets of the Company; or (c) give any third party
the right to modify, terminate or accelerate any obligation under any such
provision, order, writ, injunction, judgment, instrument, decree or contract.
2.10 Agreements. Schedule 2.10 sets forth a list of all material
agreements, contracts, understandings or commitments, written or oral
(collectively, "Material Agreements"), to which the Company is a party or by
which it is bound. As used herein, Material Agreements shall mean:
(a) Agreements, contracts, understandings or commitments
between the Company and any of its subsidiaries, officers, directors or
affiliates or any of such officers', directors' or affiliates' immediate family
members.
(b) Agreements, contracts, understandings or commitments
to which the Company or any of its affiliates is a party or by which it is bound
that involve obligations (contingent or otherwise) of, or payments to, the
Company in excess of, $250,000.
All of such agreements, contracts understanding or
commitments are valid, binding and in full force and effect with respect to the
Company or any of its subsidiaries, except as set forth on Schedule 2.10(b), and
there has been no material default by the Company under any of the foregoing nor
to the Company's knowledge has there been any material default by any other
party thereto.
2.11 Absence of Undisclosed Liabilities. Except as set forth on
Schedule 2.11, since the Statement Date (as hereafter defined), the Company and
any of its subsidiaries has not: (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of the Company's capital stock; (ii) incurred any indebtedness on behalf of the
Company for money borrowed or incurred any other liabilities in excess of
$50,000 individually, or in excess of $100,000 in the aggregate to any one
creditor; (iii) made any loans or advances to any Person in the name of or with
respect to the Company, other than ordinary advances for expenses incurred in
the ordinary course of business consistent with past practices; or (iv) sold,
exchanged or otherwise disposed of any of the Company's assets or rights, other
than in the ordinary course of business consistent with past practices.
2.12 Disclosure. None of the representations or warranties of
the Company contained in this Agreement, the schedules and exhibits attached
hereto, nor any certificate furnished or to be furnished to the Purchasers at
Closing (when read together) contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained herein
or therein not misleading in light of the circumstances under which they were
made.
2.13 No Conflict of Interest. The Company is not indebted,
directly or indirectly, to any of its subsidiaries or officers or directors of
the Company or its subsidiaries or, to the knowledge of the Company or its
subsidiaries, such officers' or directors' respective spouses or immediate
family members, for any amount whatsoever. Except as set forth on Schedule 2.13
attached hereto, none of the Company's subsidiaries or officers or directors of
the
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Company or its subsidiaries or, to the knowledge of the Company or its
subsidiaries, no member of such officers' or directors' immediate families (x)
are, directly or indirectly, indebted to the Company or, (y) have any direct or
indirect ownership interest in any Person (A) with which the Company is
affiliated or (B) with which the Company has a material business relationship,
or (C) which competes with the Company; except that for purposes of this clause
(y), officers, directors and/or stockholders of the Company may own stock in
(but not exceeding five percent (5%) of the outstanding capital stock of) any
publicly traded companies that may compete with the Company. To the best of the
Company's knowledge, none of the Company's officers or directors or any members
of their immediate families are, directly or indirectly, interested in any
material contract of the Company. The Company is not a guarantor or indemnitor
of any indebtedness of any other Person.
2.14 Registration Rights and Voting Rights. Except as
contemplated in the Registration Rights Agreement, there are no agreements,
written or oral, between the Company and any Person relating to the registration
of its capital stock under federal or state securities laws, including piggyback
registration rights. To the knowledge of the Company, no stockholders of the
Company have entered into any agreements with respect to the voting of shares of
the capital stock of the Company.
2.15 Private Placement. Subject to and in reliance in part on
the truth and accuracy of the Purchasers' representations set forth in this
Agreement, the offer, sale and issuance of the Series C Preferred Stock as
contemplated by this Agreement is exempt from the registration requirements of
the Securities Act and any applicable state securities laws, and neither the
Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
2.16 Title to Property and Assets. The Company owns its property
and assets free and clear of all mortgages, liens, loans and encumbrances,
except such encumbrances and liens which arise in the ordinary course of
business and which do not materially impair the Company's ownership or use of
such property or assets. With respect to the property and assets it leases, the
Company is in compliance with such leases and holds a valid leasehold interest
free of any liens, claims or encumbrances.
2.17 Employee Benefit Plans. Except as specified in Schedule
2.17, the Company does not have any employee benefit plan and is not a party to
any multiemployer plan as such terms are defined in the Employee Retirement
Income Security Act of 1974, as amended.
2.18 Tax Returns and Audits. The Company and, to the Company's
knowledge, any of its subsidiaries has accurately prepared and timely filed all
material federal, state, foreign, local and other tax returns required by law to
be filed by each of them, has paid or made provision for the payment of all
taxes shown to be due and all additional assessments, and adequate provisions
have been made and are reflected in the Company's financial statements in all
material respects to the extent required by generally accepted accounting
principles applied on a consistent basis and as in effect in the United States
("GAAP") for all current taxes and other charges to which the Company or its
subsidiaries is subject and which are not currently due and payable. There are
no additional assessments or adjustments pending or, to the knowledge of the
Company, threatened against the Company or its subsidiaries for any period, and
to the
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Company's knowledge, there is no basis for any such assessment or adjustment
that would be material.
2.19 Labor Agreements and Actions. The Company is not bound by
or subject to (and none of its assets or properties is bound by or subject to)
any written or oral contract, commitment, agreement or arrangement with any
labor union, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees, representatives or agents
of the Company. There is no strike or other labor dispute involving the Company
pending or, to the knowledge of the Company, threatened, which could have a
Material Adverse Effect, nor is the Company aware of any labor organization
activity involving the employees, representatives or agents of the Company. The
Company has complied in all material respects with all applicable federal and
state equal employment opportunity laws and regulations and with all other laws
and regulations related to employment and labor issues. The Company has not
received any notice of any plan of any key employee to terminate his or her
employment with the Company.
2.20 Proprietary Information and Inventions Agreements. Each
current employee, consultant and officer of the Company has executed an
agreement with the Company regarding confidentiality and proprietary information
substantially in the form attached as Exhibit C. The Company, after reasonable
investigation, is not aware that any of its current employees or consultants is
in violation thereof, and the Company will use commercially reasonable efforts
to prevent any such violation. To the Company's knowledge, no consultants to or
vendors of the Company have had any access to confidential information of the
Company who are not bound by non-disclosure agreements.
2.21 Permits. The Company has all franchises, permits, licenses
and any other governmental authorizations necessary for the conduct of its
business as now being conducted, the lack of which could have a Material Adverse
Effect. The Company is not in default in any material respect under any of such
franchises, permits, licenses or other authorizations.
2.22 Corporate Documents. The Restated Certificate and Bylaws of
the Company are in the form provided to each of the Purchasers. As of the
Closing, the Bylaws of the Company shall be in the form of the Bylaws attached
hereto as Exhibit D. The copy of the minute book of the Company provided to the
Purchasers contains minutes of all meetings of directors and stockholders of the
Company and all actions by written consent without a meeting by the directors
and stockholders of the Company since the date of the incorporation of the
Company, and reflects all actions by the directors (and any committee of
directors) and stockholders of the Company with respect to all transactions
referred to in such minutes accurately in all material respects.
2.23 Real Property Holding Corporation. Neither the Company nor
any of its subsidiaries is a United States real property holding corporation
within the meaning of Internal Revenue Code Section 897(c)(2) and Section
1.897-2(c) of the Treasury Regulations promulgated thereunder.
2.24 Financial Statements. The Company has made available to the
Purchasers (i) an audited balance sheet as of June 30, 2000; (ii) an audited
income statement as of June 30,
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2000; (iii) an unaudited balance sheet as of March 31, 2001 (the "Statement
Date"); and (iv) an unaudited income statement for the three months ended March
31, 2001, copies of which are included as Schedule 2.24 (the "Financial
Statements"). The Financial Statements have been prepared from the books and
records of the Company and are complete and correct in all material respects and
fairly present the consolidated financial condition and operating results of the
Company as of the Statement Date and for the period presented. Except as set
forth in the Financial Statements, the Company does not have any material
liabilities, contingent or otherwise, other than (i) liabilities paid or
incurred in the ordinary course of business subsequent to the Statement Date,
and (ii) obligations under contracts and commitments incurred in the ordinary
course of business.
2.25 Changes. Since the Statement Date and except as
contemplated by this Agreement and the exhibits and schedules hereto, there has
not been:
(a) any change in the assets, liabilities, financial
condition or operating results of the Company from that reflected in the
Financial Statements, except for changes in the ordinary course of business or
that have not resulted in a Material Adverse Effect;
(b) any damage, destruction or loss to property, whether
or not covered by insurance, resulting in a Material Adverse Effect;
(c) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company except in the ordinary
course of business or that has not resulted in a Material Adverse Effect;
(d) any material change to a material contract or
agreement by which the Company or any of its assets are bound or subject, except
as specified in Schedule 2.25(d);
(e) any material change in any compensation arrangement
or agreement with any employee, representative, agent, officer, director or
stockholder of the Company, except as specified in Schedule 2.25(e);
(f) any resignation or termination of employment of any
officer, director or key employee of the Company and, to the best of the
Company's knowledge, the Company does not know of any impending resignation or
termination of employment of any such officer, director or key employee;
(g) receipt of notice that there has been a loss of, or
material order cancellation by, any major advertiser or major customer of the
Company other than in the ordinary course of business;
(h) any mortgage, pledge, transfer of a security
interest in, lien or encumbrance, created by the Company, with respect to any of
its capital stock, properties or assets, except liens for taxes not yet due or
payable;
(i) any loans or guarantees made by the Company to or
for the benefit of its employees, representatives, agents, officers or
directors, or any members of their
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immediate families, other than ordinary advances for expenses incurred in the
ordinary course of business, except as specified in Schedule 2.25(i);
(j) any declaration, setting aside or payment or other
distribution in respect to any of the Company's capital stock, or any direct or
indirect redemption, purchase, or other acquisition of any of such capital stock
by the Company other than the purchase of capital stock of officers, directors
or employees who have terminated their relationship with the Company; or
(k) any arrangement or commitment by the Company to do
anything described in this Section 2.25.
2.26 Environmental and Safety Laws. The Company is not in
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety where such violation is likely to
result in a Material Adverse Effect, and no material expenditures are presently
required by the Company in order to comply with any such applicable statute, law
or regulation.
2.27 FCPA. The Company has complied in all material respects
with the United States Foreign Corrupt Practices Act of 1977, as amended (the
"FCPA"), in obtaining any consents, licenses, approvals, authorizations, rights,
and privileges in connection with the conduct of its business, and has otherwise
conducted its business in all material respects in compliance with the FCPA. The
Company's internal management and accounting practices and controls are adequate
to ensure compliance in all material respects with the FCPA.
2.28 Projections. Any projections provided to the Purchasers by
the Company were made in good faith and were based upon reasonable assumptions
when made.
3. Representations and Warranties of Purchasers. Each Purchaser hereby,
severally and not jointly, represents and warrants to the Company, with respect
to itself only, that:
3.1 Accredited Investor; Authorization. Such Purchaser is an
"accredited investor" within the meaning of Rule 501 promulgated under the
Securities Act and has the corporate, partnership or individual, as the case may
be, power and authority to enter into and perform this Agreement and the other
Transaction Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. This Agreement has been duly authorized,
executed and delivered by such Purchaser and constitutes the legal, valid and
binding obligation of such Purchaser, enforceable in accordance with its terms
except: (i) as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of
general application affecting enforcement of creditors' rights generally; or
(ii) as such enforceability may be limited by laws or equitable principles
relating to the availability of specific performance, injunctive relief, or
other equitable remedies.
3.2 No Conflict With Other Agreements. The execution, delivery
and performance of the Transaction Agreements to which such Purchaser is a party
and the consummation of the transactions contemplated hereby or thereby will
not, with or without the passage of time and/or the giving of notice, result in
a violation or default of any provisions of such Purchaser's charter, bylaws,
partnership agreement, certificate of limited partnership,
10
13
limited liability company agreement, certificate of formation or other
organizational document or of any order, writ, injunction, judgment, instrument,
decree or contract to which it is a party or by which it is bound or, to its
knowledge, of any material provision of a federal or state statute, rule or
regulation applicable to such Purchaser.
3.3 Investment Experience. Such Purchaser is a regular purchaser
of securities and acknowledges that it is able to fend for itself, can bear the
economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Company.
3.4 Distribution. The Series C Preferred Stock (and the Common
Stock issuable upon conversion thereof) is being acquired for such Purchaser's
own account, and not as nominee or agent, for the present intention of holding
such securities for purposes of investment and not with a view to or for resale
in connection with any distribution thereof. Such Purchaser further represents,
severally and not jointly, that it understand and agrees that, until registered
under the Securities Act or transferred pursuant to the provisions of Rule 144
as promulgated by the Securities and Exchange Commission, all certificates
evidencing any of the Series C Preferred Stock (and the Common Stock issuable
upon conversion thereof), whether upon initial issuance or upon any transfer
thereof, shall bear legends, prominently stamped or printed thereon, reading
substantially as follows:
(a) Federal Legend. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THESE SECURITIES UNDER THE ACT OR APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD
PURSUANT TO RULE 144 OF THE ACT.
(b) any legend required by applicable state securities laws.
The Company need not register a transfer of legended Series C Preferred
Stock, and may also instruct its transfer agent not to register the transfer of
the Series C Preferred Stock, unless the conditions specified in the foregoing
legends are satisfied.
3.5 Disclosure of Information. Such Purchaser has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Series C Preferred Stock. Such Purchaser further represents that it
has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Series C Preferred
Stock and the business, properties, prospects and financial condition of the
Company. The foregoing, however, does not limit or modify the representations
and warranties of the Company in Section 2 of this Agreement or the right of the
Purchasers to rely thereon.
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3.6 Restricted Securities. Such Purchaser understands that the
shares of Series C Preferred Stock it is purchasing are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations such securities may be
resold without registration under the Act only in certain limited circumstances.
In this connection, such Purchaser represents that it is familiar with SEC Rule
144, as presently in effect, and understands the resale limitations imposed
thereby and by the Securities Act of 1933, as amended.
3.7 Further Representations by Foreign Purchasers. If a
Purchaser is not a United States person, such Purchaser hereby represents that
he or she has satisfied himself or herself as to the full observance of the laws
of his or her jurisdiction in connection with any invitation to subscribe for
shares of Series C Preferred Stock or any use of this Agreement, including (i)
the legal requirements within his jurisdiction for the purchase of shares of
Series C Preferred Stock, (ii) any foreign exchange restrictions applicable to
such purchase, (iii) any governmental or other consents that may need to be
obtained, and (iv) the income tax and other tax consequences, if any, that may
be relevant to the purchase, holding, redemption, sale, or transfer of shares of
Series C Preferred Stock. Such Purchaser's subscription and payment for, and his
or her continued beneficial ownership of shares of Series C Preferred Stock,
will not violate any applicable securities or other laws of his or her
jurisdiction.
3.8 Not Formed for Investment. Such Purchaser was not formed for
the purpose of making an investment in the Company.
4. Conditions of Purchasers' Obligations at the Closing. The obligations
of each Purchaser to the Company under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived in writing by such Purchaser.
4.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true and correct in
all material respects on and as of the Initial Closing.
4.2 Performance. The Company shall have performed and complied
in all material respects with all covenants, agreements, obligations and
conditions contained in this Agreement that are required to be performed or
complied with by the Company on or before the Closing.
4.3 Compliance Certificate. The President of the Company shall
deliver to each Purchaser at the Closing a certificate certifying that the
conditions specified in Sections 4.1 and 4.2 have been fulfilled.
4.4 Qualifications. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Series C Preferred Stock pursuant to this Agreement shall be obtained and
effective as of the Closing.
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4.5 Opinion of Company Counsel. The Purchasers shall have
received from ▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Company, an opinion,
dated as of the Closing, in substantially the form of Exhibit E attached hereto.
4.6 Supporting Documents. The Purchasers shall have received the
following:
(a) A copy of resolutions of the Board of Directors of
the Company authorizing and approving the Transaction Agreements and copies of
resolutions of the Board of Directors and stockholders of the Company
authorizing and approving the adoption of the Restated Certificate that is
contemplated by this Agreement, all such resolutions to be certified by the
Secretary of the Company;
(b) A Certificate of Incumbency executed by the
Secretary of the Company certifying the names, titles and signatures of the
officers authorized to execute the Transaction Agreements and further certifying
that the Restated Certificate and Bylaws of the Company delivered to the
Purchasers at the time of the execution of this Agreement have been validly
adopted and have not been amended or modified except as required by this
Agreement; and
(c) Such additional supporting documentation and other
information with respect to the transactions contemplated hereby as any
Purchaser or its legal counsel may reasonably request.
4.7 Board of Directors. As of the Initial Closing, the Company's
Board of Directors shall consist of no more than 8 members. Effective as of the
time of the Initial Closing, by appropriate action of the Board of Directors
and/or the Stockholders of the Company, one person designated by PAR Capital
Management, Inc. ("PAR" and such designee the "PAR Designee") shall be elected
or appointed to the Company's Board of Directors, if not already on the Board of
Directors. All other members of the Company's Board of Directors (not to exceed
7 in number) shall remain as members of the Board of Directors, subject to the
provisions of the Company's Restated Certificate and Bylaws as from time to time
in effect.
4.8 Registration Rights Agreement. The Company, each Purchaser
that is a party thereto and the other parties thereto shall have executed and
delivered the Registration Rights Agreement in substantially the form attached
hereto as Exhibit B.
4.9 Restated Certificate. The Company shall have filed the
Restated Certificate with the Secretary of State of Delaware on or prior to the
date of the Closing, which shall continue to be in full force and effect as of
the date of the Closing.
4.10 Employment Agreements. The members of the Company's senior
management shall have entered into a Proprietary Information and Inventions
Agreement in the form attached hereto as Exhibit C.
4.11 Co-Sale and Right of First Refusal Agreement. The Company,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and each Purchaser shall have executed and
delivered the Co-Sale and Right of First Refusal Agreement substantially in the
form attached hereto as Exhibit F.
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5. Conditions of the Company's Obligations at the Closing. The
obligations of the Company to each Purchaser under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived by the Company in writing; provided, however, that the
non-fulfillment of a condition by a Purchaser will not relieve the Company of
its obligation to each other fulfilling Purchaser.
5.1 Representations and Warranties. The representations and
warranties of such Purchaser contained in Section 3 shall be true and correct on
and as of the date of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of Closing.
5.2 Performance. All covenants, agreements and conditions
contained in this Agreement to be performed by such Purchaser on or prior to the
Closing shall have been performed or complied with.
5.3 Registration Rights Agreement. Such Purchaser shall have
executed and delivered the Registration Rights Agreement in substantially the
form attached hereto as Exhibit B.
5.4 Payment of Purchase Price. Each Purchaser shall have
delivered the purchase price specified in Section 1.1 of this Agreement.
5.5 Qualifications. All authorizations, approvals, or permits,
if any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and sale
of the Series C Preferred Stock pursuant to this Agreement shall be obtained and
effective as of the Closing.
6. Post-Closing Covenants. The Company and Purchasers agree as follows
with respect to the period following the Closing.
6.1 Financial Reporting. The Company shall provide Purchasers
with the following periodic reports: (a) as soon as available, but in any event
within forty five (45) days after the end of each quarter accounting period in
each fiscal year, unaudited statements of income, operations and cash flows of
the Company for such quarterly period and unaudited balance sheets of the
Company as of the end of such quarter period and all such statements shall be
prepared in accordance with GAAP (provided, however, that such statements need
not comply with the footnote disclosure requirements of GAAP); and (b) as soon
as available, but in any event within ninety (90) days after the end of each
fiscal year, audited statements of income, operations, retained earnings and
cash flows of the Company for such fiscal year and audited balance sheets of the
Company as of the end of such fiscal year, all prepared in accordance with GAAP,
all in reasonable detail and duly certified by the accountants, who shall have
given the Company an opinion, unqualified as to the scope of the audit,
regarding such statements.
6.2 Participation Rights. Purchasers shall have the right, but
not the obligation, to participate pro rata (on the same terms and at the same
price) in any offering and sale of stock (common or preferred) made by the
Company to any person or entity after the date
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17
of this Agreement (the "Purchaser Participation Right"); provided, however, that
this Section 6.2 shall not apply in the case of the grant of options to
officers, directors and employees pursuant to the terms of the Stock Plan, the
purchase of Common Stock upon the exercise of such options or the purchase of
Warrant Shares upon the exercise of the Warrants. The Purchaser Participation
Right shall expire and terminate upon the successful completion by the Company
of a Qualified Public Offering (as defined in Exhibit A) and shall not apply in
the event of a Qualified Public Offering.
6.3 Compensation Committee. PAR Designee shall be a member of
the Company's Compensation Committee (the "Compensation Committee"). All
compensation arrangements of the Company's key employees, officers and directors
shall be approved by the Compensation Committee; provided, however, that so long
as less than a majority of the Compensation Committee consists of outside
directors such approval shall require an affirmative vote or consent of the PAR
Designee. For the purpose of this Section 6.3, "outside directors" shall not
include any director employed by the Company or who holds (individually or
through an entity or entities) at least 1% of the outstanding capital stock of
the Company.
7. Miscellaneous.
7.1 Survival of Warranties. The representations, warranties and
covenants of the Company and the Purchasers contained in or made pursuant to
this Agreement shall survive the execution and delivery of this Agreement and
each Closing.
7.2 Transfer; Successors and Assigns. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties.
7.3 No Third Party Beneficiaries. Nothing express or implied in
this Agreement is intended to confer, nor shall anything herein confer, upon any
other than the parties hereto and the respective successors or assigns of such
parties, any rights, remedies, obligations or liabilities whatsoever.
7.4 Governing Law. THE LAWS OF THE STATE OF CALIFORNIA SHALL
GOVERN THE INTERPRETATION, VALIDITY AND PERFORMANCE OF THE TERMS OF THIS
AGREEMENT REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF
CONFLICTS OF LAW.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
7.6 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.7 Notices. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed given upon delivery, when delivered
personally or by overnight courier or sent by telegram or fax, or forty-eight
(48) hours after being deposited in the U.S.
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18
mail, as certified or registered mail, with postage prepaid, addressed to the
party to be notified at such party's address as set forth below or on Schedule 1
hereto, or as subsequently modified by written notice, and:
(a) if to the Company:
BAM! Entertainment, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to PAR:
PAR Capital Management, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇, LLP
Exchange Place
Boston, MA 02109
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) To any other Purchaser: The address reflected on the
signature page to this Agreement or at such other address or addresses as shall
have been furnished in writing by such party to the other parties to this
Agreement.
7.8 Finder's Fee. Each party represents that it neither is nor
will be obligated for any finder's fee(s) or commission in connection with this
transaction for which any other party hereto could become liable. Each Purchaser
agrees to indemnify and to hold harmless the Company from any liability for any
commission or compensation in the nature of any finder's fee(s) (and the costs
and expenses of defending against such liability or asserted liability) for
which such Purchaser or any of its officers, partners, employees, or
representatives is
16
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responsible. The Company has engaged ▇▇▇▇▇▇ ▇▇▇▇▇▇ as placement agent for the
shares of Series C Preferred Stock being sold hereunder and shall be responsible
for the payment of all fees and other amounts payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇ in
connection therewith. The Company agrees to indemnify and hold harmless each
Purchaser from any liability for any commission or compensation in the nature of
a finder's fee(s) (and the costs and expenses of defending against such
liability or asserted liability) for which the Company or any of its officers,
employees, or representatives is responsible.
7.9 Expenses. Each party shall bear its own cost and expenses
incurred with respect to this Agreement and the documents referred to herein
including attorney's fees.
7.10 Amendments and Waivers. Any term of this Agreement may be
amended or waived, and this Agreement may be terminated, with the written
consent of the Company and Purchasers representing at least a majority of the
outstanding Series C Preferred Stock (or the Common Stock issuable upon
conversion thereof) purchased hereunder. Any amendment or waiver effected in
accordance with this Section 7.10 shall be binding upon the Purchasers and each
holder or transferee of the Series C Preferred Stock (or the Common Stock
issuable upon conversion thereof), each future holder of all such securities,
and the Company.
7.11 Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired or affected, and
all such remaining provisions hereof shall be enforceable in accordance with
their terms.
7.12 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any holder of any of the Series C Preferred
Stock (or the Common Stock issuable upon conversion thereof) or to the Company,
upon any breach or default of the Company or by any Purchaser under this
Agreement, shall impair any such right, power or remedy of any Purchaser or the
Company, as the case may be, nor shall it be construed to be a waiver of any
such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any Purchaser or the Company, as the case may be, of
any breach or default under this Agreement, or any waiver on the part of any
Purchaser or the Company, as the case may be, of any provisions or conditions of
this Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any holder, shall be cumulative and
not alternative.
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7.13 Entire Agreement. This Agreement, the Registration Rights
Agreement and the other documents referred to herein to which any Purchaser is a
party constitute the entire agreement among the parties hereto pertaining to the
subject matter hereof, and this Agreement supersedes all prior agreements and
understanding among the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective duly authorized officers or
representatives as of the date first written above.
COMPANY:
BAM! ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III, Secretary
PURCHASERS:
PAR CAPITAL MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ ▇▇▇▇▇▇ EARLY STAGE FUND, L.P.
By: MERCHANT BANKERS, INC. as the general
partner of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Early Stage
Fund, L.P.
By: /s/ MINOR ▇▇▇▇▇▇▇
------------------------------------
Name: Minor ▇▇▇▇▇▇▇
Title: Vice President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇
----------------------------------------
▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
FIMAS, a Partnership
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
Its: General Partner
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
K&L 2000 LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Admin. Partner -- LA
19
22
EXHIBIT A
Form of Second Amended and Restated Certificate of Incorporation
i
23
EXHIBIT B
Registration Rights Agreement
ii
24
EXHIBIT C
Form of Proprietary Information and Inventions Agreement
iii
25
EXHIBIT D
Bylaws of the Company
iv
26
EXHIBIT E
Form of Opinion of Counsel to the Company
v
27
EXHIBIT F
Co-Sale and Right of First Refusal Agreement
vi
28
SCHEDULE 1
Schedule of Purchasers
NUMBER OF SHARES OF PURCHASE
PURCHASER SERIES C PREFERRED STOCK PRICE
--------- ------------------------ ----------
PAR Capital Management, Inc. 88,680 $2,000,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 13,302 $ 300,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 13,302 $ 300,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ Early Stage Fund, L.P. 88,680 $2,000,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ 6,651 $ 150,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 1,109 $ 25,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ 887 $ 20,000
▇▇▇▇ ▇▇▇▇ 4,434 $ 100,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 4,434 $ 100,000
K & L 2000 LLC 1,109 $ 25,000
▇▇▇ ▇▇▇▇▇▇▇ 1,109 $ 25,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 1,109 $ 25,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 13,302 $ 300,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 2,217 $ 50,000
▇▇▇▇▇ ▇▇▇▇▇ 4,434 $ 100,000
FIMAS, L.P., a Partnership 900 $ 20,297.70
TOTAL 245,659 $5,540,297.70
vii
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SCHEDULE 2.2(a)
Contingent Reserved Common Shares
Franchise Films, Inc. 131,625
Spyglass Entertainment Group, L.P. 100,000
viii
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SCHEDULE 2.2(d)
Stockholders and Option Holders List
COMMON STOCKHOLDERS
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 123,609
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 9,750
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ 9,750
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 9,750
▇▇▇▇▇▇ ▇▇▇▇▇▇ 32,224
▇▇▇▇ ▇▇▇▇▇▇ 9,750
D&S Partners, a California General Partnership 9,750
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 89,897
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 3,656
▇▇▇▇ ▇▇▇▇ 3,656
▇▇▇▇ ▇▇▇▇▇▇ 7,312
FIMAS, L.P., a Partnership 3,656
Franchise Films, Inc. 14,625
PREFERRED SERIES A STOCKHOLDERS
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 482,625
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 351,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ 87,750
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 10,969
▇▇▇▇ ▇▇▇▇ 10,969
▇▇▇▇ ▇▇▇▇▇▇ 21,938
FIMAS, L.P., a Partnership 10,969
PREFERRED SERIES B STOCKHOLDERS
PAR Capital Management, Inc 198,301
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 28,329
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 28,329
▇▇▇▇▇▇ ▇▇▇▇▇▇ Early Stage Fund, L.P. 22,092
▇▇▇▇▇▇ ▇▇▇▇▇▇, Jr 11,332
▇▇▇▇▇▇ ▇▇▇▇▇▇ Employee Investment Fund, L.P. 6,237
OPTION HOLDERS
▇▇▇▇▇ ▇▇▇▇▇▇ 2,500
▇▇▇▇▇ ▇▇▇▇ 7,500
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 3,500
▇▇▇ ▇▇▇▇▇▇ 5,000
▇▇▇▇▇ ▇▇▇▇▇ 5,000
ix
31
▇▇▇▇ ▇▇▇▇ 4,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ 4,000
▇▇▇▇▇▇ ▇▇▇▇▇ 4,000
▇▇▇▇▇ ▇▇▇▇▇ 1,250
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III 4,000
▇▇▇▇▇▇ ▇▇▇▇ 2,500
▇▇▇ ▇▇▇▇▇ 6,000
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 4,500
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 4,000
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 4,000
▇▇▇▇▇▇ ▇▇▇▇▇ 2,500
▇▇▇▇ ▇▇▇▇▇▇▇ 2,500
▇▇▇▇▇ ▇▇▇▇▇ 2,500
▇▇▇▇▇▇▇ ▇▇▇▇▇ 1,250
▇▇▇▇ ▇▇▇▇▇ 1,250
▇▇▇▇ ▇'▇▇▇▇▇ 1,250
▇▇▇▇ ▇▇▇▇▇▇ 1,250
▇▇▇▇▇ ▇▇▇▇▇▇ Bilbao 1,250
▇▇▇▇▇▇ ▇▇▇▇▇▇ 1,250
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 1,250
▇▇▇▇ ▇▇▇▇▇▇ 1,250
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 1,250
▇▇▇▇ ▇▇▇ 1,250
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,250
▇▇▇▇ ▇▇▇▇ 2,500
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 12,750
▇▇▇▇▇ ▇▇▇▇▇▇ 2,500
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,250
▇▇▇▇▇▇▇ Cooling 1,250
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,250
▇▇▇▇-▇▇▇▇▇▇▇▇▇ Gasc 1,250
▇▇▇▇▇ ▇▇▇▇▇▇▇ 1,250
▇▇▇▇▇▇ ▇▇▇▇▇▇ 1,250
Magnolia Tsele 1,250
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,250
WARRANT HOLDERS
PAR Capital 30,000
K & L 2000 10,000
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32
SCHEDULE 2.3
Subsidiaries
BAM Studios (Europe) Ltd.
2 shares issued to BAM! Entertainment Limited (1 Pound Sterling) per
share
BAM Entertainment Ltd.
2 shares issued to BAM! Entertainment, Inc. (1 Pound Sterling) per share
xi
33
SCHEDULE 2.7
Litigation
In a letter dated May 21, 2001, Nintendo of North America and Spike Co., Ltd.
received a letter from counsel to World Wrestling Federation Entertainment, Inc.
("WWFE") claiming a yet to be released game "Fire ProWrestling" (the "Game")
violated certain WWFE intellectual property rights and demanding that each of
them cease the US distribution of the Game. The Company, which holds the rights
to the US version of the Game, believes that the Game slated for sale in North
America does not violate WWFE's rights as the US version does not contain
references to the characters, moves or wrestling organizations mentioned in the
letter.
xii
34
SCHEDULE 2.8(a)
Material Intellectual Property
Trademark application attached.
List of attached agreements.
xiii
35
SCHEDULE 2.8(b)
Certain IP Agreements
PowerPuff Girls license with Warner Brothers (8/16/00 -- 8/16/03)
Sports Illustrated, Inc. for Kids with Time (7/12/00)
Franchise Films Output Agreement (4/7/00 -- 4/7/03)
Spyglass Entertainment Group, L.P. Output Agreement (10/1/00 -- 10/1/05)
xiv
36
SCHEDULE 2.10
Agreements
List of agreements attached.
xv
37
SCHEDULE 2.10(b)
Non-binding Agreements
See attached list.
xvi
38
SCHEDULE 2.11
Liabilities
None.
xvii
39
SCHEDULE 2.13
Conflicts
Directors:
▇▇▇▇ ▇▇▇▇▇: Chairman & CEO of Brilliant Digital Entertainment (BDE -
AMEX), beneficial owner of roughly 8% of the common stock outstanding, owns
and/or controls roughly 40% of Infogrames/OziSoft, a video game distributor in
Australia; also holds approximately 2% of ▇▇▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇: GBA, LLC - managing member of investment venture into
Ripcord, some Southpeak; PCH, LLC - managing member investment venture;
Entertainment Brands, Inc. - Director, shareholder; Ripcord Games Director,
shareholder (1/3); Northport Ventures - venture company; Acclaim Entertainment -
contractual representatives and stock; Take Two - stock remaining from early
private placement; Business Incubation Group no current conflict, (some emulator
proposals that involve ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇); iBuyline, Inc. - ESD company sold to
aggregator; NTN communications - shareholder - mini games and wireless.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇: Director of Brilliant Digital Entertainment.
xviii
40
SCHEDULE 2.17
Employee Benefit Plans
BAM! 401(k) Plan Summary Plan Description attached.
U.K. Employees are not entitled to participate in the BAM! 401(K) Plan, but an
equivalent European pension plan is planned.
xix
41
SCHEDULE 2.24
Financial Statements
Financial Statements attached.
xx
42
SCHEDULE 2.25(d)
Changes; Contracts/Agreements
First Amendment to Master Purchase Order Assignment Agreement (attached).
Second Amendment to Master Purchase Order Assignment Agreement (attached).
Third Amendment to Master Purchase Order Assignment Agreement (attached).
Warner Bros. License Agreement #12177-PPG (Powerpuff Girls)-Amendment #1
(attached).
xxi
43
SCHEDULE 2.25(e)
Changes; Compensation/Agreements with employees,
representatives, agents, officers, directors or stockholders
Changes to compensation arrangement or agreement with any employee,
representative, agents, officer, director or stockholder attached.
xxii
44
SCHEDULE 2.25(i)
Changes; Loans/Guarantee
Comerica loan documents attached.
xxiii