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EXHIBIT 10.15
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as
of May 24, 2001, by and among BAM! Entertainment, Inc., a Delaware corporation
(the "Company"), the persons and entities (the "Holders") identified in the
Holder Schedule attached hereto as Schedule 1 (the "Holder Schedule").
WITNESSETH:
WHEREAS, the Company has entered into that certain Stock Purchase
Agreement, dated as of the date hereof (the "Stock Purchase Agreement"), with
certain entities (the "Investors") pursuant to which the Company has agreed to
issue and sell to such Investors shares of the Company's Series C Preferred
Stock, par value $0.001 per share (the "Series C Preferred Stock"); and
WHEREAS, the Company has agreed to grant certain registration rights
with respect to the shares of the Company's Common Stock (the "Primary Shares")
issuable upon conversion of the Series C Preferred Stock issued to the Investors
pursuant to the Stock Purchase Agreement and upon conversion of the Company's
Series A Convertible Preferred Stock and the Series B Convertible Preferred
Stock issued and outstanding as of the date of this Agreement (the "Series A
Preferred Stock" and the "Series B Preferred Stock" respectively);
WHEREAS, the Company has issued a warrant to purchase 30,000 shares of
Common Stock to Par Capital Management, Inc. (the "Par Warrant") dated December
27, 2000;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
As used herein, the following terms shall have the following respective
meanings:
1.1 "Commission" shall mean the Securities and Exchange Commission, or
any other successor federal agency at the time administering the Securities Act.
1.2 "Common Stock" shall mean the Company's common stock, par value
$0.001 per share.
1.3 "Exchange Act" shall mean the Securities and Exchange Act of 1934,
as amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
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1.4 "Holders" shall mean the persons and entities listed on Schedule 1
and any transferee thereof who holds Registrable Securities, and any other
person or entity that shall have executed this Agreement in accordance with
Article 10 hereof and whose name appears on the Holder Schedule attached hereto
as Schedule 1.
1.5 "Initial Public Offering" means the closing of a firm commitment
underwritten initial public offering, pursuant to an effective registration
statement under the Securities Act, covering the offer and sale by the Company
of Common Stock to the public.
1.6 "Preferred Stock Initiating Holders" shall mean (a) the Holders of
Series C and Series B Preferred Stock representing greater than 50% of the
shares of the Series C and Series B Registrable Securities underlying such
Preferred Stock who comply with the applicable requirements of Article 2 or
Article 4 ("Series B and C Initiating Holders"), or (b) the Holders of Series A
Preferred Stock representing greater than 50% of the shares of the Series A
Registrable Securities underlying such Preferred Stock who comply with the
applicable requirements of Article 2 or Article 4 ("Series A Initiating
Holders").
1.7 The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing with the Commission a registration
statement in compliance with the Securities Act, and the declaration or ordering
by the Commission of the effectiveness of such registration statement.
1.8 "Registrable Securities" means any and all shares of Common Stock:
(i) issued or issuable upon conversion of the Series C Preferred Stock, the
Series B Preferred Stock or the Series A Preferred Stock; (ii) issued or
issuable with respect to the Series C Preferred Stock, the Series B Preferred
Stock or the Series A Preferred Stock upon any stock split, stock dividend,
recapitalization, reclassification, merger, consolidation or other similar
event; (iii) issued or issuable upon exercise of the PAR Warrant; and (iv)
otherwise held or acquired by any of the Holders, excluding in all cases,
however, Registrable Securities sold by a Holder to the public pursuant to a
registered offering or pursuant to Rule 144 promulgated under the Securities
Act.
1.9 "Registration Expenses" shall mean all expenses incurred by the
Company in complying with Articles 2, 3 and 4 hereof, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of legal counsel for the Company, fees and
disbursements of one special legal counsel for the selling Holders, exchange
listing fees, NASD fees, blue sky fees and expenses, and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company, which shall be paid in any
event by the Company).
1.10 "Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
1.11 "Selling Expenses" shall mean all underwriting fees, discounts,
selling commissions and stock transfer taxes applicable to the Registrable
Securities registered by the Holders.
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1.12 "Series A Preferred Stockholder" shall mean any Holder or Holders
of the Company's Series A Convertible Preferred Stock, par value $0.001 per
share.
1.13 "Series A Registrable Securities" means any and all shares of
Common Stock: (i) issued or issuable upon conversion of the Series A Preferred
Stock; or (ii) issued or issuable with respect to the Series A Preferred Stock
upon any stock split, stock dividend, recapitalization, reclassification,
merger, consolidation or other similar event.
1.14 "Series B Preferred Stockholder" shall mean any Holder or Holders
of the Company's Series B Preferred Stock, par value $0.001 per share.
1.15 "Series B Registrable Securities" means any and all shares of
Common Stock: (i) issued or issuable upon conversion of the Series B Preferred
Stock; or (ii) issued or issuable with respect to the Series B Preferred Stock
upon any stock split, stock dividend, recapitalization, reclassification,
merger, consolidation or other similar event.
1.16 "Series C Preferred Stockholder" shall mean any Holder or Holders
of the Company's Series C Preferred Stock, par value $0.001 per share.
1.17 "Series C Registrable Securities" means any and all shares of
Common Stock: (i) issued or issuable upon conversion of the Series C Preferred
Stock; or (ii) issued or issuable with respect to the Series C Preferred Stock
upon any stock split, stock dividend, recapitalization, reclassification,
merger, consolidation or other similar event.
ARTICLE 2
REQUESTED REGISTRATION
2.1 Request for Registration. Beginning on the date which is 180 days
following the consummation of an Initial Public Offering, Preferred Stock
Initiating Holders may, subject to Sections 2.1(b) and 2.2, request registration
in accordance with this Article 2. In the event the Company shall receive from
the Preferred Stock Initiating Holders a written request that the Company effect
any registration, qualification or compliance with respect to Registrable
Securities, the Company will:
(a) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(b) use its best efforts to effect such registration,
qualification or compliance as soon as practicable (including, without
limitation, undertaking to file post-effective amendments, appropriate
qualifications under applicable blue sky or other state securities laws, and
appropriate compliance with applicable regulations issued under the Securities
Act, and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the
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Company within 15 days after the receipt of the written notice from the Company
described in Section 2.1(a).
(c) The Company shall file a registration statement covering the
Registrable Securities so requested to be registered as soon as practicable
after receipt of the request of the Preferred Stock Initiating Holders;
provided, however, that if the Company shall furnish to such Holders a
certificate signed by the President or Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be detrimental to the Company and its stockholders for such
registration statement to be filed, the Company shall have the right to defer
such filing for a period of not more than 120 days after receipt of the request
of the Initiating Holders; provided, further, that the Company shall not be
permitted to exercise such deferral right under this Section 2.1(c) or Section
4.1(b) hereof more than twice in any 365-day period.
2.2 Maximum Number of Demand Registrations. The Company is obligated to
effect two (2) demand registrations initiated by the Series B and C Initiating
Holders, and one (1) demand registration initiated by the Series A Initiating
Holders pursuant to Section 2.
2.3 Underwriting.
(a) The distribution of the Registrable Securities covered by
the request of the Preferred Initiating Holders shall be effected by means of
the method of distribution selected by the Holders holding a majority of the
Registrable Securities covered by such registration. If such distribution is
effected by means of an underwriting, the right of any Holder to registration
pursuant to this Article 2 shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of such Holder's Registrable Securities
in the underwriting (unless otherwise agreed by the Preferred Stock Initiating
Holders) to the extent provided herein.
(b) If such distribution is effected by means of an
underwriting, the Company (together with all Holders proposing to distribute
their securities through such underwriting) shall enter into an underwriting
agreement in customary form with a managing underwriter of nationally recognized
standing selected for such underwriting by the Holders holding a majority of the
Registrable Securities covered by such registration and approved by the Company,
which approval shall not be unreasonably withheld. Notwithstanding any other
provision of this Article 2, if the managing underwriter advises the Preferred
Stock Initiating Holders in writing that market factors require a limitation of
the number of shares to be underwritten, then the underwriters may exclude
shares requested to be included in such registration. The number of shares of
Registrable Securities to be included in the registration and underwriting shall
be allocated first amongst (i) the Holders who have requested registration of
Registrable Securities plus (ii) those joining the request pursuant to Section
2.1(b) in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holders at the time of filing the
registration statement and then amongst any Holders exercising their rights
under Article 3 hereof with respect thereto in proportion, as nearly as
practicable, to the respective amount of Registrable Securities held by such
holders at the time of the filing of the registration statement. No Registrable
Securities excluded from the underwriting by reason of the managing
underwriter's market limitation shall be included in such registration.
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(c) If any Holder disapproves of the terms of the underwriting,
such person may elect to withdraw therefrom by written notice to the Company,
the managing underwriter and the Preferred Stock Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration; provided, however, that if by the withdrawal of
such Registrable Securities a greater number of Registrable Securities held by
other Holders may be included in such registration (up to the maximum of any
limitation imposed by the underwriters), then the Company shall offer to all
Holders who have included Registrable Securities in the registration the right
to include additional Registrable Securities in the same proportion used in
determining the underwriter limitation in this Section 2.3.
2.4 Inclusion of Shares by Company. If the distribution of Registrable
Securities is being effected by means of an underwriting and if the managing
underwriter has not limited the number of Registrable Securities to be
underwritten, the Company may include securities for its own account or for the
account of others in such registration if the managing underwriter so agrees.
The inclusion of such shares shall be on the same terms as the registration of
shares held by the Preferred Stock Initiating Holders. In the event that the
underwriters exclude some of the securities to be registered, the securities to
be sold for the account of the Company and any other holders shall be excluded
in their entirety prior to the exclusion of any Registrable Securities.
ARTICLE 3
COMPANY REGISTRATION
3.1 Notice of Registration to Holders. If at any time or from time to
time the Company shall determine to register any of its securities, either for
its own account or the account of a security holder or holders, including,
without limitation, pursuant to Article 2 or Article 4 hereof, other than (i) a
registration relating solely to employee benefit plans on Form S-8 (or any
successor form) or (ii) a registration relating solely to a Commission Rule 145
transaction on Form S-4 (or any successor form), the Company will:
(a) promptly give to each Holder written notice thereof, and
(b) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within 30 days after receipt of such written notice from the
Company described in Section 3.1(a), by any Holder or Holders.
3.2 Underwriting.
(a) If the registration of which the Company gives notice is for
a registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
3.1(a). In such event, the right of any Holder to registration pursuant to this
Article 3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such
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underwriting shall (together with the Company) enter into an underwriting
agreement in customary form with the managing underwriter selected for such
underwriting by the Company.
(b) Notwithstanding any other provision of this Article 3, if
the managing underwriter determines that market factors require a limitation of
the number of shares to be underwritten, the underwriter may exclude some or all
Registrable Securities from such registration and underwriting. The Company
shall so advise all Holders of Registrable Securities, and the number of shares
of Common Stock to be included in such registration shall be allocated as
follows: first, for the account of the Company, all shares of Common Stock
proposed to be sold by the Company; second, for the account of the Holders
participating in such registration, in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities held by all such Holders of
Registrable Securities; third, for the account of any other stockholders of the
Company not holding Registrable Securities participating in such registration,
the number of shares of Common Stock requested to be included in the
registration. No Registrable Securities excluded from the underwriting by reason
of the underwriters' market limitation shall be included in such registration.
(c) The Company shall so advise all Holders and the other
holders distributing their securities through such underwriting of any such
limitation, and the number of shares of Registrable Securities held by Holders
that may be included in the registration. If any Holder disapproves of the terms
of any such underwriting, such Holder may elect to withdraw therefrom by written
notice to the Company and the managing underwriter. Any securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
(d) The Company shall have the right to terminate or withdraw
any registration initiated by it under this Article 3 prior to the effectiveness
of such registration, whether or not a Holder has elected to include Registrable
Securities in such registration.
ARTICLE 4
REGISTRATION ON FORM S-3
4.1 Request for Registration.
(a) In addition to the rights set forth in Articles 2 and 3
hereof, if Preferred Stock Initiating Holders (as defined for this Article
below) request that the Company file a registration statement on Form S-3 (or
any successor to Form S-3) for a public offering of shares of Registrable
Securities having an aggregate offering price of at least $3,000,000 (based on
the then current market price) and the Company is a registrant entitled to use
Form S-3 (or any successor form to Form S-3) to register such shares for such an
offering, the Company shall use its best efforts to cause such shares to be
registered for the offering as soon as practicable on Form S-3 (or any such
successor form to Form S-3). For purposes of this Article only, the term
"Preferred Stock Initiating Holders" shall mean (a) the Holders of Series C
Preferred Stock representing greater than 50% of the shares of the Series C
Registrable Securities underlying such Preferred Stock who comply with the
applicable requirements of this Article ("Series C Initiating Holders"), (b) the
Holders of Series B Preferred Stock representing greater than 50% of
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the Shares of the Series B Preferred Stock who comply with the applicable
requirements of this Article ("Series B Initiating Holders") or (c) the Holders
of Series A Preferred Stock representing greater than 50% of the shares of the
Series A Registrable Securities underlying such Preferred Stock who comply with
the applicable requirements of this Article ("Series A Initiating Holders").
(b) The Company shall file a registration statement on Form S-3
covering the Registrable Securities so requested to be registered as soon as
practicable after receipt of the request of the Holders; provided, however, that
if the Company shall furnish to such Holders a certificate signed by the
President or Chief Executive Officer of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be detrimental
to the Company and its stockholders for such registration statement to be filed
on or before the date filing would be required, and it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer such filing for a period of not more than 120 days after receipt
of the request of the Holders; provided, further, that the Company shall not be
permitted to exercise such deferral right under this Section 4.1(b) or Section
2.1(c) hereof more than twice in any 365 day period.
(c) The Company is obligated to effect one (1) registration
initiated by the Series C Initiating Holders, one (1) registration initiated by
the Series B Initiating Holders, and one (1) registration initiated by the
Series A Initiating Holders during any twelve-month period pursuant to this
Section 4.1.
4.2 Underwriting.
(a) The distribution of the Registrable Securities covered by
the registration on Form S-3 shall be effected by means of the method of
distribution selected by the Holders holding a majority of the Registrable
Securities covered by such registration. If such distribution is effected by
means of an underwriting, the right of any Holder to registration pursuant to
this Article 4 shall be conditioned upon such Holder's participation in such
underwriting, if any, and the inclusion of such Holder's Registrable Securities
in such underwriting.
(b) If the distribution of the Registrable Securities pursuant
to this Section 4.2 is effected by means of an underwriting, the Company
(together with all Holders proposing to distribute their securities through such
underwriting) shall enter into an underwriting agreement in customary form with
a managing underwriter of nationally recognized standing selected for such
underwriting by a majority in interest of the Holders requesting registration on
Form S-3 and approved by the Company, which approval shall not be unreasonably
withheld. Notwithstanding any other provision of this Article 4, if the managing
underwriter advises the Holders in writing that market factors require a
limitation of the number of shares to be underwritten, then the underwriters may
exclude some or all of the shares requested to be included in such registration,
and the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all Holders thereof in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders at the time of filing the registration
statement. No Registrable Securities excluded
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from the underwriting by reason of the managing underwriter's marketing
limitation shall be included in such registration.
(c) If the distribution of the Registrable Securities pursuant
to this Section 4.2 is effected by means of an underwriting and if any Holder of
Registrable Securities disapproves of the terms of the underwriting, such person
may elect to withdraw therefrom by written notice to the Company, the managing
underwriter and the Holders. The Registrable Securities and/or other securities
so withdrawn shall also be withdrawn from registration; provided, however, that
if by the withdrawal of such Registrable Securities a greater number of
Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters),
then the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional Registrable
Securities in the same proportion used in determining the underwriter limitation
in this Section 4.2.
4.3 Inclusion of Shares by Company. If the distribution of the
Registrable Securities pursuant to this Article 4 is effected by means of an
underwriting and if the managing underwriter has not limited the number of
Registrable Securities to be underwritten, the Company may include securities
for its own account or for the account of others in such registration if the
managing underwriter so agrees and if the number of Registrable Securities held
by Holders requesting registration on Form S-3 which would otherwise have been
included in such registration and underwriting will not thereby be limited. The
inclusion of such shares shall be on the same terms as the registration of
shares held by the Holders requesting such registration. In the event that the
underwriters exclude some of the securities to be registered on Form S-3, the
securities to be sold for the account of the Company and any other holders shall
be excluded in their entirety prior to the exclusion of any Registrable
Securities.
ARTICLE 5
EXPENSES OF REGISTRATION
All Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Article 2, Article 3 and Article 4
hereof shall be borne by the Company. All Selling Expenses relating to
Registrable Securities registered pursuant to Article 2, Article 3 and Article 4
hereof shall be borne by the Holders of such Registrable Securities pro rata on
the basis of the number of shares so registered.
ARTICLE 6
REGISTRATION PROCEDURE
6.1 Registration Procedures. If and whenever the Company is required by
the provisions of this Agreement to use its best efforts to promptly effect the
registration of any of its securities under the Securities Act, the Company
will:
(a) use its best efforts diligently to prepare and file with the
Commission a registration statement on the appropriate form under the Securities
Act with respect to such
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securities, which form shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the Commission to be filed therewith, and use its best efforts to
cause such registration statement to become and remain effective until
completion of the proposed offering;
(b) use its best efforts to diligently prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective until the Holder or Holders have completed the
distribution described in such registration statement and to comply with the
provisions of the Securities Act with respect to the sale or other disposition
of all securities covered by such registration statement whenever the seller or
sellers of such securities shall desire to sell or otherwise dispose of the
same, but only to the extent provided in this Agreement;
(c) furnish to each selling holder and the underwriters, if any,
such number of copies of such registration statement, any amendments thereto,
any documents incorporated by reference therein, the prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as such selling holder may reasonably request in
order to facilitate the public sale or other disposition of the securities owned
by such selling holder;
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such other securities or state blue
sky laws of such jurisdictions as each selling holder shall request, and do any
and all other acts and things which may be necessary under such securities or
blue sky laws to enable such selling holder to consummate the public sale or
other disposition in such jurisdictions of the securities owned by such selling
holder, except that the Company shall not for any such purpose be required to
qualify to do business as a foreign corporation in any jurisdiction wherein it
is not so qualified;
(e) within a reasonable time before each filing of the
registration statement or prospectus or amendments or supplements thereto with
the Commission, furnish to counsel selected by the holders of Registrable
Securities copies of such documents proposed to be filed, which documents shall
be subject to the approval of such counsel;
(f) immediately notify each selling holder of Registrable
Securities, such selling holder's counsel and any underwriter and (if requested
by any such Person) confirm such notice in writing, of the happening of any
event which makes any statement made in the registration statement or related
prospectus untrue or which requires the making of any changes in such
registration statement or prospectus so that they will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein in the light of the
circumstances under which they were made not misleading; and, as promptly as
practicable thereafter, prepare and file with the Commission and furnish a
supplement or amendment to such prospectus so that, as thereafter deliverable to
the purchasers of such Registrable Securities, such prospectus will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
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(g) use its best efforts to prevent the issuance of any order
suspending the effectiveness of a registration statement, and if one is issued
use its best efforts to obtain the withdrawal of any order suspending the
effectiveness of a registration statement at the earliest possible moment;
(h) if requested by the managing underwriter or underwriters (if
any), any selling holder, or such selling holder's counsel, promptly incorporate
in a prospectus supplement or post-effective amendment such information as such
Person requests to be included therein, including, without limitation, with
respect to the securities being sold by such selling holder to such underwriter
or underwriters, the purchase price being paid therefor by such underwriter or
underwriters and with respect to any other terms of an underwritten offering of
the securities to be sold in such offering, and promptly make all required
filings of such prospectus supplement or post-effective amendment;
(i) make available to each selling holder, any underwriter
participating in any disposition pursuant to a registration statement, and any
attorney, accountant or other agent or representative retained by any such
selling holder or underwriter (collectively, the "Inspectors"), all financial
and other records, pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably necessary to enable them
to exercise their due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information requested by any
such Inspector in connection with such registration statement;
(j) enter into any reasonable underwriting agreement required by
the proposed underwriter(s) for the selling holders, if any, and use its best
efforts to facilitate the public offering of the securities;
(k) furnish to each prospective selling holder a signed
counterpart, addressed to the prospective selling holder, of (A) an opinion of
counsel for the Company, dated the effective date of the registration statement,
and (B) a "comfort" letter signed by the independent public accountants who have
certified the Company's financial statements included in the registration
statement, covering substantially the same matters with respect to the
registration statement (and the prospectus included therein) and (in the case of
the accountants' letter) with respect to events subsequent to the date of the
financial statements, as are customarily covered (at the time of such
registration) in opinions of the Company's counsel and in accountants' letters
delivered to the underwriters in underwritten public offerings of securities;
(l) cause the securities covered by such registration statement
to be listed on the securities exchange or quoted on the quotation system on
which the Common Stock of the Company is then listed or quoted (or if the Common
Stock is not yet listed or quoted, then on such exchange or quotation system as
the selling holders of Registrable Securities and the Company shall determine);
(m) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and make generally available to its
security holders, in each case
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as soon as practicable, but not later than 30 days after the close of the period
covered thereby, an earnings statement of the Company which will satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any comparable successor provisions);
(n) otherwise cooperate with the underwriter(s), the Commission
and other regulatory agencies and take all actions and execute and deliver or
cause to be executed and delivered all documents necessary to effect the
registration of any securities under this Agreement; and
(o) during the period when the prospectus is required to be
delivered under the Securities Act, promptly file all documents required to be
filed with the Commission pursuant to Sections 13(a), 13(c), 14, or 15(d) of the
Exchange Act.
ARTICLE 7
INDEMNIFICATION
7.1 The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling any such persons within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, or any amendment or supplement thereof, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein, a material fact required to be stated therein or
necessary to make the statements therein, not misleading, or any violation by
the Company of any rule or regulation promulgated under the Securities Act or
any state securities laws applicable to the Company and relating to action or
inaction by the Company in connection with any such registration, qualification
or compliance, and will reimburse each such Holder, each of its officers and
directors and partners and each person controlling any such persons, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by such Holder or underwriter and expressly intended
for use in such registration statement, prospectus, or any amendment or
supplement thereof.
7.2 Each Holder will, if Registrable Securities held by such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such
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Holder, each of its officers, directors, partners, and each person controlling
such Holder within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, or any amendment or supplement thereto,
incident to any such registration, qualification or compliance or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company, such Holders, such directors, officers, partners,
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, or amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such Holder and expressly
intended for use in such registration statement, prospectus, or any amendment or
supplement thereof; provided, however, that the obligations of each Holder
hereunder shall be limited to an amount equal to the proceeds to such Holder of
Registrable Securities sold as contemplated herein.
7.3 Each party entitled to indemnification under this Section 7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld). The Indemnified Party may participate in such defense at such party's
expense; provided, however, that the Indemnifying Party shall bear the expense
of such defense of the Indemnified Party if representation of both parties by
the same counsel would be inappropriate due to actual or potential conflicts of
interest. The failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this
Agreement, unless such failure is prejudicial to the ability of the Indemnifying
Party to defend the action. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation, and no Indemnified Party shall, except with the consent of
each Indemnifying Party, consent to any judgement or enter into any settlement
with respect to any claim for which it is seeking indemnification hereunder.
7.4 THE INDEMNIFICATION PROVISIONS PROVIDED FOR IN THIS AGREEMENT HAVE
BEEN EXPRESSLY NEGOTIATED IN EVERY DETAIL, ARE INTENDED TO BE GIVEN FULL AND
LITERAL EFFECT, AND SHALL BE APPLICABLE WHETHER OR NOT THE LIABILITIES,
OBLIGATIONS, CLAIMS, JUDGMENTS, LOSSES, COSTS, EXPENSES OR DAMAGES IN QUESTION
ARISE OR AROSE SOLELY OR IN PART FROM THE ACTIVE, PASSIVE OR
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CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF ANY INDEMNIFIED
PARTY. THE PARTIES HERETO ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE
"EXPRESS NEGLIGENCE RULE" AND CONSTITUTES CONSPICUOUS NOTICE. NOTHING IN THIS
CONSPICUOUS NOTICE IS INTENDED TO PROVIDE OR ALTER THE RIGHTS AND OBLIGATIONS OF
THE PARTIES, ALL OF WHICH ARE SPECIFIED ELSEWHERE IN THIS AGREEMENT.
ARTICLE 8
RULE 144 REPORTING
With a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit the sale of
securities of the Company to the public without registration, after such time as
a public market exists for the Common Stock of the Company, the Company agrees
to:
8.1 Make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date of the first registration under the Securities Act filed by
the Company for an offering of its securities to the general public; and
8.2 Use commercially reasonable efforts to then file with the Commission
in a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act (at any time after it has become subject
to such reporting requirements); and
8.3 So long as a Holder owns any Registrable Securities, furnish to the
Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 (at any time after
ninety (90) days following the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company as a Holder may reasonably request in availing itself of any rule
or regulation of the Commission allowing a Holder to sell any such securities
without registration.
ARTICLE 9
TRANSFER OF REGISTRATION RIGHTS
The rights to cause the Company to register Registrable Securities
granted Holders under Articles 2, 3 and 4 hereof may be assigned in connection
with any transfer or assignment of at least 50,000 shares of the Holder's
Registrable Securities. All transferees and assignees of the rights to cause the
Company to register Registrable Securities granted Holders under Articles 2, 3
and 4 hereof, as a condition to the transfer of such rights, shall agree in
writing to be bound by the agreements set forth herein.
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ARTICLE 10
LIMITATIONS ON REGISTRATION RIGHTS
GRANTED TO OTHER SECURITIES
The parties hereto agree that additional holders may, with the consent
of the Company, the holders of a majority of the Registrable Securities then
outstanding, the holders of a majority of the Series C Preferred Stock then
outstanding, the holders of a majority of the Series B Preferred Stock then
outstanding and the holders of a majority of the Series A Preferred Stock then
outstanding, be added as parties to this Agreement with respect to any or all
securities of the Company held by them; provided, however, that from and after
the date of this Agreement, the Company shall not without the prior written
consent of the holders of a majority of the Registrable Securities then
outstanding and the holders of a majority of the Series C Preferred Stock then
outstanding, enter into any agreement with any holder or prospective holder of
any securities of the Company providing for the grant to such holder of
registration rights superior to, or pari passu with, those granted herein. Any
additional parties shall execute a counterpart of this Agreement, and upon
execution by such additional parties and by the Company, shall be considered
Holders for purposes of this Agreement, and shall be added to the Schedule of
Registration Rights Holders.
ARTICLE 11
PRIOR AGREEMENT
The Investor Rights Agreement entered into by the Company and the
persons and entities listed therein dated December 28, 2000 is hereby
terminated.
ARTICLE 12
MISCELLANEOUS
12.1 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.
12.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
12.3 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof.
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12.4 Termination. In addition, the right of any Holder to request
registration or inclusion in any registration shall not be exercisable by a
Holder during any period in which after the closing of the Initial Public
Offering of Common Stock of the Company, all shares of Registrable Securities
held or entitled to be held upon conversion by such Holder may be sold under
Rule 144 under the Securities Act within any 90-day period.
12.5 Notices. All notices, requests, consents, and other communications
hereunder shall be in writing and shall be deemed effectively given and received
when delivered in person or by national overnight courier service or by
certified or registered mail, return receipt requested, or by telecopier,
addressed as follows:
(a) if to the Company:
BAM! Entertainment, Inc.
333 West Santa Clara Avenue
Suite 95113
San Jose, CA
Attention: Ray Musci
Facsimile: (408) 298-9600
with a copy to:
Doty Sundheim and Gilmore
Attention: George M. Sundheim, III
Facsimile: (650) 327-0100
(b) To any Holder: The address reflected in Schedule 1 hereto,
as applicable, or such other address or addresses as shall have been furnished
in writing by such party to the Company and to the other parties to this
Agreement.
12.6 Severability. The invalidity, illegality or unenforceability of one
or more of the provisions of this Agreement in any jurisdiction shall not affect
the validity, legality or enforceability of the remainder of this Agreement in
such jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
12.7 Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
12.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
constitute one instrument.
12.9 "Market Stand-Off" Agreement. Each Holder agrees, if requested by
the Company and underwriter of Common Stock of the Company in connection with
the Company's Initial Public Offering, not to sell or otherwise transfer or
dispose of any Common Stock of the Company held by such Holder (other than to
donees, partners or affiliates of the Holder who agree to be similarly bound)
during the one hundred eighty (180) day period following the
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effective date of a registration statement of the Company filed under the
Securities Act without the prior consent of such underwriter; provided, however,
that this Section 12.9 shall only apply to the Holders if all executive officers
and directors of the Company then holding Common Stock of the Company (or
options to acquire Common Stock) and all persons owning more than one percent
(1%) of Common Stock of the Company shall also have agreed to enter into similar
agreements. Such agreement shall be in writing in a form reasonably satisfactory
to the Company and such underwriter. The Company may impose stop-transfer
instructions with respect to the shares (or securities) subject to the foregoing
restriction until the end of such one hundred eighty (180) day period.
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: Vice President
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/ Minor Perkins
------------------------------------
Name: Minor Perkins
Title: Vice President
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/s/ RAYMOND C. MUSCI
------------------------------------
Raymond C. Musci
/s/ ANTHONY R. WILLIAMS
------------------------------------
Anthony R. Williams
/s/ ROBERT HOLMES, JR.
------------------------------------
Robert Holmes, Jr.
/s/ STEPHEN AMBLER
------------------------------------
Stephen Ambler
/s/ JOSEPH MORICI
------------------------------------
Joseph Morici
/s/ MARK DYNE
------------------------------------
Mark Dyne
/s/ KEVIN BERMEISTER
------------------------------------
Kevin Bermeister
FIMAS, a Partnership
By: /s/ GEORGE M. SUNDHEIM, III
---------------------------------
Name: George M. Sundheim, III
Title: General Partner
/s/ ANTHONY NEUMANN
------------------------------------
Anthony Neumann
/s/ PAMELA COLBURN
------------------------------------
Pamela Colburn
/s/ TERRY PHILLIPS
------------------------------------
Terry Phillips
/s/ STEVEN J. MASSARSKY
------------------------------------
Steven J. Massarsky
/s/ DAVID P. CLARK
------------------------------------
David P. Clark
K&L 2000 LLC
By: /s/ PAUL W. SWEENEY, JR.
---------------------------------
Name: Paul W. Sweeney, Jr.
Title: Admin. Partner -- LA
OTHER PREFERRED HOLDERS:
/s/ ELIE SAMAHA
------------------------------------
Elie Samaha
FIMAS, L.P.
By: /s/ GEORGE M. SUNDHEIM, III
---------------------------------
Name: George M. Sundheim, III
Title: General Partner
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Schedule 1
Series A Preferred Stockholders:
Name Number of Shares
---- ----------------
Raymond C. Musci 482,625
Anthony R. 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
Series B Preferred Stockholders:
Name Number of Shares
---- ----------------
PAR Capital Management, Inc. 198, 301
Raymond C. Musci 28,329
Anthony R. Williams 28,329
Morgan Keegan Early Stage Fund, L.P. 22,092
Robert Holmes 11,332
Morgan Keegan Employee Investment Fund, L.P. 6,237
Series C Preferred Stockholders:
Name Number of Shares
---- ----------------
PAR Capital Management, Inc. 88,680
Raymond C. Musci 13,302
Anthony R. Williams 13,302
Morgan Keegan Early Stage Fund, L.P. 88,680
Robert Holmes 6,651
Stephen Ambler 1,109
Joseph Morici 887
Mark Dyne 4,434
Kevin Bermeister 4,434
K&L 2000 LLC 1,109
Pam Colburn 1,109
Anthony Neumann 1,109
Terry Phillips 13,302
Steve Massarasky 2,217
David Clark 4,434
FIMAS, L.P., a Partnership 900
i