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Exhibit 10.11
BAM! ENTERTAINMENT, INC.
SERIES B STOCK PURCHASE AGREEMENT
DECEMBER 28, 2000
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EXHIBITS
Exhibit A - 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 - 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 B STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of December
28, 2000, 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 and 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 B Preferred Stock,
par value $0.001 per share, for an aggregate purchase price of up to $5,648,000,
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 B 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 B 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 $17.65 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 $5,648,000 for all Purchasers. The shares of Series B Preferred
Stock to be issued to the Purchasers pursuant to this Agreement shall
hereinafter be referred to as the "Series B Preferred Stock."
1.2 Closing; Delivery. The closing of the purchase and sale of the
Series B Preferred Stock (the "Closing") shall take place at one or more
closings. All Closings shall be held at the offices of Doty Sundheim & Gilmore,
260 Sheridan Avenue, Suite 200, Palo Alto,
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California. The first Closing shall occur at 9:00 a.m. Pacific Standard Time on
December 28, 2000 or at such other time and place as the Company and the
Purchasers mutually agree upon, orally or in writing (the "Initial Closing", on
such date, 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 B Preferred Stock being purchased thereby
against payment of the purchase price therefor, which shall be payable by
certified check or by wire transfer of immediately available funds to an account
designated by the Company, as specified in Schedule 1 hereto. 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 B Preferred Stock to pay for the
reasonable expenses of the Company associated with the issuance of the Series B
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 working capital purposes.
1.4 Reservation of Additional Shares of Series B Preferred Stock. As
set forth in the Restated Certificate, the Company has reserved a total of
320,000 shares of its Series B 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 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 312,760 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
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upon conversion of the Company's Series B Preferred Stock, par value $0.001 per
share, 150,000 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") and 30,000 shares of Common Stock for issuance upon
exercise of warrants to purchase Common Stock issued to PAR Capital, (30,000
shares) (the "PAR Warrant") and Morgan Keegan & Company, Inc. (the "Placement
Agent") (0 shares) (the foregoing warrants including the PAR Warrant 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, and 320,000 shares have been
designated as Series B Preferred Stock, all of which will 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) currently authorized options to purchase 81,750 shares of Common Stock
granted to employees pursuant to the Stock Plan, (D) the Warrants and the (E)
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) to issue
any (a) 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), Schedule 2.2(d), and identified in
Section 2.2(a), 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 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
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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 "Registration Rights Agreement"),
the performance of all obligations of the Company hereunder and thereunder and
the authorization, issuance and delivery of shares of the Series B Preferred
Stock pursuant to the terms of this Agreement and the Common Stock issuable upon
conversion of the Series B 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 B 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 B 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 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
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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
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 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 mark, 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) of 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 of any provision of 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) 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
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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 any member of 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 Company or its subsidiaries, or to the knowledge of the Company
or its subsidiaries any member of such officers' or directors' immediate
families (x) are, directly or
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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 B 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. Each of 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 Company's knowledge, there is no basis for any such
assessment or adjustment that would be material.
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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 books 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 its
subsidiary 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, 2000; (iii) an unaudited balance sheet as of
September 30, 2000 (the "Statement Date"); and (iv) an unaudited income
statement for the three months ended September 30, 2000, copies of which are
included as Schedule 2.24 (the "Financial Statements"). The Financial Statements
have been
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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 immediate families, other than ordinary advances for expenses
incurred in the ordinary course of business, except as specified in Schedule
2.25(i);
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(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 with 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. The 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
accordance 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, limited liability
company agreement, certificate of formation or other organizational document or
10
13
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 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 B 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 B 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 B Preferred
Stock, and may also instruct its transfer agent not to register the transfer of
the Series B 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 B 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 B 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.
3.6 Restricted Securities. Such Purchaser understands that the
shares of Series B Preferred Stock it is purchasing are characterized as
"restricted securities" under the federal
11
14
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
B Preferred Stock or any use of this Agreement, including (i) the legal
requirements within his jurisdiction for the purchase of shares of Series B
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 B
Preferred Stock. Such Purchaser's subscription and payment for, and his or her
continued beneficial ownership of shares of Series B 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 B Preferred Stock pursuant to this Agreement shall be obtained and
effective as of the Closing.
12
15
4.5 Opinion of Company Counsel. The Purchasers shall have received
from Doty Sundheim & Gilmore, 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. All other members of the
Company's Board of Directors (not to exceed 8 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,
Raymond C. Musci, Anthony Williams 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.
13
16
4.12 PAR Warrant. The Company shall have validly issued the PAR
Warrant.
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 B 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 generally accepted accounting principles ("GAAP")
(provided, however, that such statements need not comply with the footnote
disclosure requirements of GAAP); (b) as soon as available, but in any event
within forty-five (45) days after the end of each quarterly 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 quarterly 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 (c) 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
14
17
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 of this Agreement (the "Purchaser
Participation Right"); provided, however, that this Section 6.3 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 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 arrangement 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 hold (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.
15
18
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. 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.
333 West Santa Clara Street
Suite 930
San Jose, California 95113
Attention: Raymond C. Musci
Facsimile: (408) 298-9600
with a copy to:
Doty Sundheim & Gilmore
260 Sheridan Avenue
Suite 200
Palo Alto, California 94306
Attention: George M. Sundheim III, Esq.
Facsimile: (650) 327-0101
(b) if to PAR:
PAR Capital Management, Inc.
One Financial Center, Suite 1600
Boston, MA 02111
Attention: David Tobin
Facsimile: (617) 556-8875
with a copy to:
Goodwin, Proctor & Hoar, LLP
Exchange Place
Boston, MA 02109
Attention: Jeffrey C. Hadden
Facsimile: (617) 523-1231
(c) To any other Purchaser: The address reflected on the
signature page to this Agreement or, in any such case, at such other address or
addresses as shall have been furnished in writing by such party to the other
parties to this Agreement.
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19
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 responsible. The Company has engaged Morgan Keegan as
placement agent for the shares of Series B Preferred Stock being sold hereunder
and shall be responsible for the payment of all fees and other amounts payable
to Morgan Keegan 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 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 B 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 B 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 B 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/ RAYMOND C. MUSCI
-------------------------------------
Raymond C. Musci, President
By: /s/ GEORGE M. SUNDHEIM, III
-------------------------------------
George M. Sundheim, III, Secretary
PURCHASERS:
PAR CAPITAL MANAGEMENT, INC.
By: /s/ DAVID E. TOBIN
-------------------------------------
Name: David E. Tobin
Title: Analyst
MORGAN KEEGAN EARLY STAGE FUND, L.P.
By: MERCHANT BANKERS, INC. as the general
partner of Morgan Keegan Early Stage
Fund, L.P.
By: /s/ K. JENKINS
----------------------------------
Name: K. Jenkins
Title: M.D.
/s/ RAYMOND C. MUSCI
-------------------------------
Raymond C. Musci
/s/ ANTHONY WILLIAMS
-------------------------------
Anthony Williams
/s/ ROBERT HOLMES
-------------------------------
Robert Holmes
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21
EXHIBIT A
Form of Amended and Restated Certificate of Incorporation
i
22
EXHIBIT B
Registration Rights Agreement
ii
23
EXHIBIT C
Form of Proprietary Information and Inventions Agreement
iii
24
EXHIBIT D
Bylaws of the Company
iv
25
EXHIBIT E
Form of Opinion of Counsel to the Company
v
26
EXHIBIT F
Co-Sale and Right of First Refusal Agreement
vi
27
SCHEDULE 1
Schedule of Purchasers
- ----------------------------------------------------------------------------------------------------
NUMBER OF SHARES OF PURCHASE
PURCHASER SERIES B PREFERRED STOCK PRICE
- ----------------------------------------------------------------------------------------------------
PAR Capital Management, Inc. 198,301 $3,500,012.70
- ----------------------------------------------------------------------------------------------------
Raymond C. Musci 28,329 $500,006.85
- ----------------------------------------------------------------------------------------------------
Anthony Williams 28,329 $500,006.85
- ----------------------------------------------------------------------------------------------------
Morgan Keegan Early Stage Fund, L.P. 28,329 $500,006.85
- ----------------------------------------------------------------------------------------------------
Robert Holmes 11,332 $200,009.80
- ----------------------------------------------------------------------------------------------------
TOTALS 294,620 5,200,043.05
vii
28
SCHEDULE 2.2(a)
Contingent Reserved Common Shares
Franchise Films, Inc. 173,520
Spyglass Entertainment Group, L.P. 100,000
viii
29
SCHEDULE 2.2(d)
Stockholders and Option Holders List
COMMON STOCKHOLDERS
Raymond C. Musci 123,609
Robert E. Lloyd 9,750
Tracy Ann Sebastian 9,750
Philip L. Rosenberg 9,750
Robert Holmes 32,224
Gary Nemetz 9,750
D&S Partners, a California General Partnership 9,750
Anthony Williams 89,897
Kevin Bermeister 3,656
Mark Dyne 3,656
Elie Samaha 7,312
FIMAS, L.P., a Partnership 3,656
Spyglass Entertainment Group, L.P. 50,000
PREFERRED SERIES A STOCKHOLDERS
Raymond C. Musci 482,625
Anthony Williams 351,000
Robert Holmes 87,750
Kevin Bermeister 10,969
Mark Dyne 10,969
Elie Samaha 21,938
FIMAS, L.P., a Partnership 10,969
OPTION HOLDERS
Robin Cairns 2,500
Aaron Endo 7,500
Lynnie Nojadera 3,500
Joe Morici 5,000
Hideo Oishi 5,000
Mark Dyne 4,000
Robert Holmes 4,000
Robert Lloyd 4,000
Scott Smith 1,250
George M. Sundheim, III 4,000
Sherri Zook 2,500
Joe Booth 6,000
Lisa Cheney Bolcato 4,500
Pierson Lippard 4,000
ix
30
Matt Wilkinson 4,000
Samuel Allen 2,500
Pete Johnson 2,500
Kevin Watts 2,500
Richard Coles 1,250
Paul Hodge 1,250
Karl D'Costa 1,250
Mark Harris 1,250
Mikel Barron Bilbao 1,250
Rachel Segens 1,250
Charlie Hasdell 1,250
Jake Noakes 1,250
Thomas Woodley 1,250
Doug Day 1,250
x
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SCHEDULE 2.3
Subsidiaries
BAM Studios (Europe) Ltd.
2 shares issued to BAM! Entertainment Limited (Pound Sterling1 per
share)
BAM Entertainment Ltd.
2 shares issued to BAM! Entertainment, Inc. (Pound Sterling1 per share)
xi
32
SCHEDULE 2.7
Litigation
None.
xii
33
SCHEDULE 2.8(a)
Material Intellectual Property
Trademark application attached.
List of attached agreements.
xiii
34
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
35
SCHEDULE 2.10
Agreements
List of agreements attached.
xv
36
SCHEDULE 2.10(b)
Non-binding Agreements
See attached list.
xvi
37
SCHEDULE 2.11
Liabilities
None.
xvii
38
SCHEDULE 2.13
Conflicts
Directors:
Mark Dynes: 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 Titus.
Robert Lloyd: Board member of Rare Co., Ltd (a UK software developer,
principally owned by Nintendo Co., Ltd.; Board member of Retro, Inc.(a developer
based in Austin, Texas) working for Nintendo; and consults extensively for
Nintendo of America, Inc.
Robert Holmes: 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 Raymond C. Musci); iBuyline, Inc. - ESD company
sold to aggregator; NTN communications - shareholder - mini games and wireless.
Raymond C. Musci: Director of Brilliant Digital Entertainment.
Raymond C. Musci and Anthony Williams each have $500,000 in individual
accounts at Comerica Bank which funds are retained by Comerica Bank as security
for a loan made by Comerica Bank to the Company. At the Closing, such funds will
be irreversably transferred to a Company account at Comerica Bank. Such transfer
of funds will constitute the consideration for the shares purchased by Raymond
C. Musci and Anthony Williams.
xviii
39
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
40
SCHEDULE 2.24
Financial Statements
Financial Statements attached.
xx
41
SCHEDULE 2.25(d)
Changes; Contracts/Agreements
First Amendment to Master Purchase Order Assignment Agreement and Warner Bros.
License Agreement #12177-PPG (Powerpuff Girls)-Amendment #1 attached.
xxi
42
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
43
SCHEDULE 2.25(i)
Changes; Loans/Guarantee
Comerica loan documents attached.
xxiii