SECURITIES EXCHANGE AND COMMISSION
Washington, D. C. 20549
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FORM 8-K
CURRENT REPORT
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Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported): September 2, 1998
YES! Entertainment Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-25916 94-3165290
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(State of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
3875 Hopyard Road, Suite 375, Pleasanton, California 94588
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(Address of principal executive offices) (Zip Code)
(925) 847-9444
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(Registrant's telephone number, including area code)
Item 5. Other Events.
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On September 2, 1998, the Registrant entered into a Securities Exchange
Agreement (the "Exchange Agreement") with certain of the Registrant's
institutional investors (the "Investors") superseding an agreement entered
into on July 25, 1997 (the "July Agreement") pursuant to which the Registrant
had issued convertible subordinated debentures (the "July Debentures") and
convertible preferred stock (the "July Shares"). The Registrant and
the Investors agreed to supersede the July Agreement by entering into the
Exchange Agreement and issuing new convertible subordinated debentures (the
"Debentures") and convertible preferred stock ("Preferred Stock") in exchange
for the Investors' remaining July Debentures and July Shares.
The Exchange Agreement provides that the Investors will not convert the
Debentures or Preferred Stock, or sell any shares of Preferred Stock, Common
Stock or Debentures (subject to certain limited exceptions), in each case
until the earlier of February 21, 1999 or the occurrence of an Event of Default
(as defined in the Agreement). In addition, certain conversion and sale
restrictions applicable to the July Shares and July Debentures do not apply to
the Preferred Stock and the Debentures. The Exchange Agreement also requires
the Registrant to call a meeting of the stockholders of the Registrant to (i)
approve the issuance of all of the shares of Common Stock upon conversion of
the Preferred Stock and Debentures (conversion is currently limited due to
certain Nasdaq requirements which will no longer apply if such stockholder
approval is obtained), and (ii) to increase the number of shares of Common
Stock authorized for issuance. Failure of the Company to obtain such
stockholder approval will constitute an Event of Default. The holders of the
Preferred Stock are also entitled to elect two members to the Registrant's
board of directors.
These and other terms of the transactions referred to above are set forth
in the Debentures, the Certificate of Designation relating to the Preferred
Stock, and the Exchange Agreement, which are attached hereto as Exhibits 4.1,
4.2, and 4.3, respectively, and are incorporated by reference herein. The
information set forth in the Registrant's Press Release dated September 3,
1998 relating to the above transactions is filed as Exhibit 99.1 hereto and is
also incorporated by reference herein.
Item 7. Exhibits
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4.1 Form of 5% Convertible Debenture due April 30, 2002.
4.2 Amended Certificate of Designation of Series C Preferred Shares.
4.3 Securities Exchange Agreement dated September 2, 1998.
99.1 Press release dated September 3, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
YES! ENTERTAINMENT CORPORATION
Dated: September 15, 1998 By: /s/ Mark Shepherd
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Mark Shepherd
President and Chief Executive Officer
INDEX TO EXHIBITS
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Page number in
sequentially
numbered version
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4.1 Form of 5% Convertible Debenture due April 30, 2002. 5
4.2 Amended Certificate of Designation of Series C 23
Preferred Shares.
4.3 Securities Exchange Agreement dated September 2, 1998. 41
99.1 Press Release dated, September 3, 1998 63