EXHIBIT 4.10
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REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of , 2004, by and
among BAM! Entertainment, Inc., a corporation organized under the laws of the
State of Delaware (the "COMPANY"), and the undersigned (the "SHAREHOLDERS").
WHEREAS:
A. the Shareholders of VIS have accepted an Offer made by BAM dated 24 March,
2004 hereof (the "OFFER;" capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Offer)
pursuant to which the Company has agreed, upon the terms and subject to
the conditions contained therein to issue to Shareholders of VIS, shares
of the Company's common stock, US $0.001 par value. The Shareholders of
SOE Development Limited ("SOED") have agreed to sell to the Company the
whole of the share capital of SOED pursuant to a Sale and Purchase
Agreement dated 18 March 2004 ("SPA") under which the Company has agreed
upon the terms and subject to the conditions contained in the agreement
for such sale and purchase to issue to the Shareholders of SOED (or as
they may direct) shares of the Company's common stock US $0.001 par value.
In connection with the Offer and the acquisition of SOED, the Company has
agreed, upon the terms and subject to the conditions contained in the
Offer and the SPA, to issue to the Shareholders shares of the Company's
common stock, US $0.001 par value (all of such shares of common stock to
be issued to the Shareholders of VIS and to the Shareholders of SOED (or
as may be directed by the Shareholders of SOED) referred to in this
Agreement as the "COMMON STOCK"). The shares of Common Stock issuable on
Completion under the Offer and the acquisition of SOED are referred to
herein as the "BAM SHARES."
B. In order for the VIS Shareholders to validly accept the Offer and each
Shareholder of SOED to validly complete the sale of their respective
shares in SOED, each individual Shareholder is required to execute and
deliver this Agreement to BAM and the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended,
and the rules and regulations thereunder, or any similar successor statute
(collectively, the "SECURITIES ACT"), and applicable state securities
laws;
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 Company and the
Shareholders, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
(i) "SHAREHOLDERS" means the VIS Shareholders and the SOED Shareholders
and any transferees or assignees who agree to become bound by the
provisions of this Agreement in accordance with Section 9 hereof.
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(ii) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to
Rule 415 under the Securities Act or any successor rule providing
for offering securities on a continuous basis ("RULE 415"), and the
declaration or ordering of effectiveness of such Registration
Statement by the United States Securities and Exchange Commission
(the "SEC").
(iii) "REGISTRABLE SECURITIES" means the aggregate of 9,000,000 BAM Shares
to be issued to the VIS Shareholders pursuant to the Offer and to
the SOED Shareholders pursuant to the agreement to acquire SOED.
(iv) "REGISTRATION STATEMENT" means one or more registration statements
of the Company under the Securities Act registering all of the
Registrable Securities, including the Initial Registration
Statements, any Uncovered Shares Amendments and Uncovered Shares
Registration Statements (each, as defined below).
2. REGISTRATION.
Mandatory Registration. The Company shall file with the United States
Securities and Exchange Commission ("SEC"), on the date which is on or
before the thirtieth (30th) calendar day after the Closing Date (the
"FILING DEADLINE") a Registration Statement on Form S-3 (or, if Form S-3
is not then available, on such form of Registration Statement as is then
available to effect a registration of the Registrable Securities) covering
the resale of all the BAM Shares (the "REGISTRATION STATEMENT"). The
Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided to
the Shareholders and their counsel at least two (2) Business Days prior to
its filing or other submission. If for any reason the staff of the SEC
determines that all or any portion of the Registrable Securities cannot be
included in a Registration Statement (an "SEC DETERMINATION")) and such
Registration Statement declared effective by the SEC does not include all
of the Registrable Securities (any such shares that are not included being
the "UNCOVERED SHARES"), the Company shall prepare and file with the SEC,
as soon as practicable, but in any event prior to the tenth (10th)
Business Day after becoming aware of the existence of any Uncovered Shares
(Such date referred to herein as the "UNCOVERED SHARE FILING DEADLINE"),
either (a) an amendment (the "UNCOVERED SHARES AMENDMENT") to such
Registration Statement effecting a registration of the Uncovered Shares or
(b) a registration statement which registers the Uncovered Shares (the
"UNCOVERED SHARES REGISTRATION STATEMENT"). The Uncovered Shares Amendment
or the Uncovered Shares Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness
thereof) shall be provided to the Shareholders and their counsel at least
concurrently with its filing or other submission. The Company shall use
its best efforts to cause each Registration Statement and each Uncovered
Shares Amendment or Uncovered Shares Registration Statement required to be
filed pursuant to this Section 2 to become effective as soon as
practicable, after the filing thereof
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3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
(a) The Company shall prepare and file with the SEC, on or before the
Filing Deadline or the Uncovered Share Filing Deadline, as
applicable, the applicable Registration Statement required by
Section 2 and shall use its best efforts to cause such Registration
Statement to become effective as soon as practicable after such
filing. The Company shall use its best efforts to keep such
Registration Statement effective pursuant to Rule 415 for a period
of 24 months from the date it became effective (the "REGISTRATION
PERIOD"). In the event that the sale of Registrable Securities by
one or more Shareholders is determined by the SEC to constitute a
primary offering, upon the written request from time to time of any
such Shareholder, the Company shall as promptly as practicable cause
a Registration Statement to be amended and/or one or more additional
Registration Statements (which may be requested on a sequential
basis) to be filed (as specified by the applicable Shareholders) and
to be declared effective; and take all other actions reasonably
requested by such Shareholders to effectuate the offering of
Registrable Securities. If a Registration Statement is not filed on
Form S-3, the Company shall, as soon as it is eligible to do so,
file a post-effective amendment on Form S-3 to the Initial
Registration Statement to the extent permitted by the SEC or, if not
so permitted, file a new Registration Statement on Form S-3 to
permit sales of the Registrable Securities pursuant to Rule 429
under the Securities Act; and the Company shall use its best efforts
to cause such post-effective amendment or Registration Statement to
become effective as soon as possible. Each Registration Statement
(including any amendments or supplements thereto and prospectuses
contained therein and all documents incorporated by reference
therein) filed pursuant to this Agreement (i) shall comply in all
material respects with the requirements of the Securities Act and
the rules and regulations of the SEC promulgated thereunder and (ii)
shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to
make the statements therein not misleading. The financial statements
of the Company included in the Registration Statement or
incorporated by reference therein will comply as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC applicable with respect
thereto. Such financial statements shall be prepared in accordance
with U.S. generally accepted accounting principles, consistently
applied, during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may
not include footnotes or may be condensed or summary statements) and
shall fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to immaterial year-end
adjustments).
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(b) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with
the Registration Statement as may be necessary to keep the
Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of
all Registrable Securities of the Company covered by the
Registration Statement. Notwithstanding any provision in this
Agreement to the contrary, the Company's obligations hereunder to
file a Registration Statement, to have the same declared effective
and to keep a registration statement continuously in effect under
the Securities Act shall be suspended (a "Grace Period") if the
fulfilment of such obligations would require the Company to make a
disclosure that would, in the reasonable judgment of the Company's
Board of Directors and evidenced by a written resolution of the
Company's board of directors delivered to each Shareholder whose
Registrable Securities are included (or are to be included) in such
Registration Statement, have a material adverse effect on the
Company provided, that the Registration Statement shall be suspended
for a total of no more than one period of thirty (30) days during
any twelve (12) month period. The provisions of Section 2(b) hereof
shall not be applicable during and shall be tolled as a result of
any Grace Period.
(c) The Company shall furnish to each Shareholder whose Registrable
Securities are included in the Registration Statement (i) promptly
after the same is prepared and publicly distributed, filed with the
SEC. or received by the Company, one copy of the Registration
Statement and any amendment thereto, each preliminary prospectus and
prospectus and each amendment or supplement thereto free of charge.
In the case of the Registration Statement referred to in Section 2,
the Company shall furnish to each Shareholder which requests (i) a
copy of any request to accelerate the effectiveness of any
Registration Statement or amendment thereto, (ii) on the date of
effectiveness of the Registration Statement or any amendment
thereto, a notice stating that the Registration Statement or
amendment has been declared effective, and (iii) such number of
copies of a prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents as such
Shareholder may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Shareholder
free of charge. In responding to comments from the staff of the SEC,
the Company shall cooperate with any Shareholder that notifies the
Company that it desires to be consulted with respect to such
process. Such cooperation shall solely consist of providing any such
Shareholder with: a reasonable opportunity to comment on the text
and substance of proposed written responses to the extent such
comment relates to such investor or its plan of distribution of the
Registrable Securities. To the extent that issues raised by the
staff of the SEC have an impact primarily on any such investor
rather than the Company, the Company shall give reasonable deference
to such Shareholder's requests with respect to the process and
substance of responses with respect to such issues.
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(d) The Company shall use its best efforts to (i) register and qualify
the Registrable Securities covered by the Registration Statement
under such other securities or "blue sky" laws of such jurisdictions
in the United States as each Shareholder who holds Registrable
Securities being offered reasonably requests, (ii) prepare and file
in those jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications
as may be necessary to maintain the effectiveness thereof during the
Registration Period, (iii) take such other actions as may be
necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take
all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (b) subject itself to general taxation in
any such jurisdiction where it is not already subject, (c) file a
general consent to service of process in any such jurisdiction where
it is not otherwise required to file, (d) provide any undertakings
that cause the Company material expense or burden, or (e) make any
change in its certificate of incorporation or bylaws, which in each
case the Board of Directors of the Company determines to be contrary
to the best interests of the Company and its stockholders.
(e) As promptly as practicable after becoming aware of such event, the
Company shall notify each Shareholder by telephone or facsimile of
the happening of any event, of which the Company has knowledge, as a
result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or if for any other reason it shall be necessary to amend
or supplement the registration statement, and use its best efforts
promptly to prepare a supplement or amendment to the Registration
Statement to correct such untrue statement or omission or effect
such compliance and deliver such number of copies of such supplement
or amendment to each Shareholder as such Shareholder may reasonably
request free of charge.
(f) The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain
the withdrawal of such order at the earliest practicable date
(including in each case by amending or supplementing such
Registration Statement) and to notify each Shareholder who holds
Registrable Securities of the issuance of such order and the
resolution thereof (and if such Registration Statement is
supplemented or amended, deliver such number of copies of such
supplement or amendment to each Shareholder as such Shareholder may
reasonably request).
(g) The Company shall make available for inspection by (i) any
Shareholder whose Registrable Securities are included in a
Registration Statement and (ii) one firm of attorneys and one firm
of
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accountants or other agents retained by the Shareholders
(collectively, the "INSPECTORS") all pertinent financial and other
records, and pertinent corporate documents and properties of the
Company, as shall be reasonably deemed necessary by each Inspector
to enable each Inspector to exercise its due diligence
responsibility, and cause the Company's officers, directors and
employees to supply all information which any Inspector may
reasonably request for purposes of such due diligence.
(h) The Company shall hold in confidence and not make any disclosure of
information concerning an Shareholder provided to the Company unless
(i) disclosure of such information is necessary to comply with
applicable federal or state securities laws, (ii) the disclosure of
such information is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other order from a
court or governmental body of competent jurisdiction, (iv) such
information has been made generally available to the public other
than by disclosure in violation of this Agreement, or (v) such
Shareholder consents to the form and content of any such disclosure.
The Company agrees that it shall, upon learning that disclosure of
such information concerning a Shareholder is sought in or by a court
or governmental body of competent jurisdiction or through other
means, give prompt notice to such Shareholder prior to making such
disclosure, and allow the Shareholder, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a
protective order for, such information.
(i) The Company shall use its best efforts to promptly either (i) secure
the designation and quotation, of all the Registrable Securities
covered by the Registration Statement on The Nasdaq Stock Market and
on each additional securities exchange and inter-dealer quotation
system on which securities of the same class or series issued by the
Company are then listed, if any.
(j) The Company shall provide a transfer agent and registrar, which may
be a single entity, for the Registrable Securities not later than
the effective date of the Registration Statement.
(k) The Company shall cooperate with the Shareholders who hold
Registrable Securities being offered to facilitate the timely
preparation and delivery of certificates (not bearing any
restrictive legends) representing Registrable Securities to be
offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may
be, as the Shareholders may reasonably request and registered in
such names as the Shareholders may request.
(l) At the request of any Shareholder or a group of Shareholders who
holds a majority-in-interest of the Registrable Securities, the
Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with
the Registration Statement each as approved by the Company, which
approval shall not be
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unreasonably withheld or delayed, as may be necessary in order to
change the plan of distribution set forth in such Registration
Statement.
(m) The Company shall comply with applicable federal and state
securities laws and regulations related to a Registration Statement
and offering and sale of securities.
4. OBLIGATIONS OF THE SHAREHOLDERS.
In connection with the registration of the Registrars Securities, the
Shareholders shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Shareholder (or any
damages to such Shareholder) that such Shareholder shall furnish to
the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to
effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the
Company may reasonably request. At least five (5) Business Days
prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Shareholder of any
information the Company requires from each such Shareholder.
(b) Each Shareholder, by such Shareholder's acceptance of the
Registrable Securities, agrees to cooperate with the Company as
reasonably requested by the Company in connection with the
preparation and filing of the Registration Statement hereunder,
unless such Shareholder has notified the Company in writing of such
Shareholder's election to exclude all of such Shareholder's
Registrable Securities from the Registration Statement.
5. EXPENSES OF REGISTRATION.
The Company shall pay (or reimburse the Shareholders for) all fees and
expenses incident to the performance of or compliance with this Agreement
by the Company, including without limitation (a) all registration and
filing fees and expenses, including without limitation those related to
filings with the Commission, any trading market and in connection with
applicable state securities or Blue Sky laws (including Counsel's fees in
connection with any survey of blue sky laws), (b) printing expenses
(including without limitation expenses of printing certificates for
Registrable Securities and of printing prospectuses requested by the
Shareholders), (c) messenger, telephone and delivery expenses, (d) fees
and disbursements of counsel for the Company, (e) fees and expenses of all
other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement, and (f) all listing
fees to be paid by the Company to the trading market.
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6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
(a) To the maximum extent permitted by law, the Company will indemnify,
hold harmless and defend (i) each Shareholder who holds such
Registrable Securities, and (ii) the directors, officers, partners,
members, employees and agents of such Shareholder and each person
who controls any Shareholder within the meaning of Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), if any (each, an "INDEMNIFIED
PERSON"), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions,
proceedings or inquiries by any regulatory or self-regulatory
organization, whether commenced or threatened, in respect thereof,
"CLAIMS") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state therein a
material fact required to be stated or necessary to make the
statements therein not misleading, (ii) any untrue statement or
alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof
or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which
the statements therein were made, not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the
Registrable Securities (the matters in the foregoing clauses (i)
through (iii) being, collectively. "VIOLATIONS"). Subject to the
restrictions set forth in Section 6(c) with respect to the number of
legal counsel, the Company shall reimburse the Shareholders and each
other Indemnified Person, promptly as such expenses are incurred and
are due and payable, for any reasonable legal fees or other
reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything
to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim to
the extent it arises solely out of or based solely upon a Violation
which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person
expressly for use in the Registration Statement or any such
amendment thereof or supplement thereto; (ii) shall not apply to
amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld or delayed; and (iii)
with respect to any prospectus, shall not inure to the benefit of
any Indemnified Person if the untrue statement or omission of
material fact contained in such prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented, if such
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corrected prospectus was timely made available by the Company
pursuant to Section 3(c) hereof in a reasonable quantity, and the
Indemnified Person was promptly advised in writing not to use the
incorrect prospectus prior to the use giving rise to a Violation and
such Indemnified Person, notwithstanding such advice, used it after
receiving such advice. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable
Securities by the Shareholders pursuant to Section 9.
(b) In connection with any Registration Statement in which a Shareholder
is participating, each such Shareholder agrees severally and not
jointly to indemnify, hold harmless and defend, to the same extent
and in the same manner set forth in Section 6(a), the Company, each
of its directors, each of its officers who signs the Registration
Statement, its employees, agents, attorneys and each person, if any,
who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and any other
stockholder selling securities pursuant to the Registration
Statement or any of its directors or officers or any person who
controls such stockholder within the meaning of the Securities Act
or the Exchange Act (collectively and together with an Indemnified
Person, an "INDEMNIFIED PARTY"), against any Claim to which any of
them may become subject, under the Securities Act, the Exchange Act
or otherwise, insofar as such Claim arises solely out of or is based
solely upon any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such
Shareholder relating to such Shareholder expressly for use in
connection with such Registration Statement; and subject to Section
6(c) such Shareholder will reimburse any reasonable legal or other
expenses (promptly as such expenses are incurred and are due and
payable) reasonably incurred by them in connection with
investigating or defending any such Claim; provided, however, that
the indemnity agreement contained in this Section 6(b) shall not
apply to amounts paid in settlement of any Claim if such settlement
is effected or without the prior written consent of such
Shareholder, which consent shall not be unreasonably withheld or
delayed. Notwithstanding anything to the contrary contained herein,
(i) the indemnification agreement contained in this Section 6(b)
with respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission
of material fact by the Shareholder contained in the preliminary
prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented, and the Indemnified Party failed to
utilize such corrected prospectus and (ii) except in the case of
gross negligence or wilful misconduct the liability of each
Shareholder hereunder shall be limited to the proportion of any such
claim which is equal to the proportion that the public offering
price of the shares sold by such Shareholder under such Registration
Statement bears to the total public offering price of all securities
sold thereunder but not in any event to exceed the net proceeds
received by such Shareholder from the sale of Registrable Securities
covered by such Registration Statement after deduction of all
underwriters' discounts and commissions, if any, and all other
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expenses paid by such Shareholder in connection with the
registration in question.
(c) Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is made
against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and
the indemnifying party shall have the right to assume control of the
defence thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified
Party, as the case may be; provided, however, that such indemnifying
party shall not be entitled to assume such defence and an
Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the reasonable fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of
counsel retained by the indemnifying party, the representation by
such counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or potential
conflicts of interest between such Indemnified Person or Indemnified
Party and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of,
any such action include both the Indemnified Person or the
Indemnified Party and the indemnifying party and any such
Indemnified Person or Indemnified Party reasonably determines that
there may be legal defences available to such Indemnified Person or
Indemnified Party which are different from or are in conflict with
those available to such indemnifying party. The indemnifying party
shall pay for only one separate legal counsel (in addition to
necessary local counsel) for all Indemnified Persons or the
Indemnified Parties, as applicable, and such legal counsel shall be
selected by Shareholders holding a majority-in-interest of the
Registrable Securities included in the Registration Statement to
which the Claim relates, if the Shareholders are entitled to
indemnification hereunder, or by the Company, if the Company is
entitled to indemnification hereunder, as applicable. The failure to
deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that
the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the
course of the investigation or defence, as such expense, loss,
damage or liability is incurred and is due and payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (i) no contribution shall be made under circumstances where
the maker would not
PAGE 11
have been liable for indemnification under the fault standards set forth
in Section 6, (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11 (f) of the Securities Act) shall be
entitled to contribution from any other person who was not guilty of such
fraudulent misrepresentation, and (iii) except in the case of gross
negligence or wilful misconduct no Shareholder will require to contribute
any amount which when combined with any amounts payable under section 6
related to such claim, exceeds the net proceeds received by such
Shareholders from the sale of such Registrable Securities offered by it
pursuant to such Registration Statement (after deduction of all
underwriters discounts and commissions, if any, and all other expenses
paid by such Shareholder in connection with the registration in question).
8. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Shareholders the benefits of Rule
144 promulgated under the Securities Act or any other similar rule or
regulation of the SEC that may at any time permit the Shareholders to sell
securities of the Company to the public without registration ("RULE 144"),
the Company agrees to:
(a) file with the SEC in a timely manner and make and keep available all
reports and other documents required of the Company under the
Securities Act and the Exchange Act and the filing and availability
of such reports and other documents as is required for the
applicable provisions of Rule 144; and
(b) furnish to each Shareholder so long as such Shareholder owns
Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably
requested to permit the Shareholders to sell such securities
pursuant to Rule 144 without registration.
Upon request, the Company shall deliver a written statement to holders of
Registrable Securities who so request as to whether it has complied with
the terms of this provision and if not specifics of the same.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights of the Shareholders hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall
be assignable by each Shareholder to any transferee of all or any portion
of the Registrable Securities if: (i) the Shareholder agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company after such assignment, (ii) the
Company is furnished with written notice of (a) the name and address of
such transferee or assignee and (b) the securities with respect to which
such registration rights are being transferred or assigned, (iii)
following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the
Securities Act and applicable state securities laws, (iv) the transferee
or assignee agrees in writing with the Company to be bound by all of the
provisions contained
PAGE 12
herein, and (v) such transfer shall have been made in accordance with the
applicable requirements of the Offer. In addition, and notwithstanding
anything to the contrary contained in this Agreement, the Offer or the
SPA, BAM Shares may be pledged, and all rights of the Shareholders under
this Agreement or any other agreement or document related to the
transaction contemplated hereby may be assigned, without further consent
of the Company, to a bona fide pledgee in connection with an Shareholder's
margin or brokerage accounts.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either
retroactively or prospectively), by Shareholders who hold fifty-one
percent (51%) in interest of the Registrable Securities (with the whole of
the shares of VIS contributing to 50% of such calculation and the whole of
the SOED shares contributing to the other 50% of such calculation pro rata
to the number of B Shares and SOED Shares as appropriate contained within
each such proportion) or, in the case of a waiver, with the written
consent of the party charged with the enforcement of any such provision.
Any amendment or waiver effected in accordance with this Section 10 shall
be binding upon each Shareholder and the Company.
11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or
entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election
received from the registered owner of such Registrable Securities.
(b) Any notices required or permitted to be given under the terms of
this Agreement shall be sent by internationally recognised overnight
delivery service (signature required) or delivered personally or by
courier if mailed, or upon receipt or refusal of receipt, if
delivered personally or by courier in each case addressed to a
party. The addresses for such communications shall be:
If to the Company:
BAM! Entertainment, Inc.
333 West Santa Clara Street, Suite 716
San Jose, CA 95113
Telephone No.: (408) 298-7500
Facsimile No.: (408) 298-9600
Attention: Raymond Musci
Chief Executive Officer
With a copy (for courtesy only) to:
Kirkpatrick & Lockhart LLP
10100 Santa Monica Blvd, 7th Floor
Los Angeles, California 90067
Telephone (310) 552-5000
PAGE 13
Fax (310) 552-5001
Attention: Thomas Poletti, Esq.
If to a Shareholder, at such address as such Shareholder shall have
provided in writing to the Company or such other address as such
Shareholder furnishes by notice given in accordance with this
Section 11(b).
Each party hereto may from time to time change its address or
facsimile number for notices under this Section 11 (b) by giving at
least ten (10) days' prior written notice of such changed address or
facsimile number, in the case of the Shareholders to the Company,
and in the case of the Company to all of the Shareholders.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
(d) Governing Law: Venue; Waiver Of Jury Trail. All questions concerning
the construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed and enforced in
accordance with the laws of the state of New York. The Company and
Shareholders hereby irrevocably submit to the exclusive jurisdiction
of the State and Federal Courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute brought by
the Company or any Purchaser hereunder, in connection herewith or
with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waive, and agree not to assert in
any suit, action or proceeding brought by the Company or any
Shareholder, any claim that it is not personally subject to the
jurisdiction of any such court, or that such suit, action or
proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or internationally recognised overnight
delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law.
The Company and Shareholders hereby waive all rights to a trial by
jury.
(e) This Agreement, the SPA and the Offer (including all schedules and
exhibits thereto) constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof. There
are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This
Agreement, the SPA and the Offer and all documents to be issued or
signed in connection with the SPA and the Offer supersede all prior
agreements and understandings among the parties hereto and thereto
with respect to the subject matter hereof and thereof.
PAGE 14
(f) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
(g) The headings in this Agreement are for convenience of reference only
and shall not form part of or effect the interpretation of this
Agreement.
(h) This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party
and delivered to the other party. This Agreement, once executed by a
party, may be delivered to the other parties hereto by facsimile
transmission of a copy of this Agreement bearing the signature of
the party so delivering this Agreement. In the event any signature
is delivered by facsimile transmission, the party using such means
of delivery shall cause the manually executed signature page(s)
hereof to be physically delivered to the other party within five (5)
days of the execution hereof.
(i) Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
(j) All consents, approvals and other determinations to be made by the
Shareholders pursuant to this Agreement shall be made by the
Shareholders holding more than fifty-one percent (51%) of the
Registrable Securities then held by all Shareholders with the whole
of the B Shares of VIS contributing to such calculation and the
whole of the SOED Shares contributing to the other 50% of such
calculation pro rata to the number of B Shares and SOED Shares as
appropriate contained within each such proportion.
(k) For purposes of this Agreement, the term "Business Day" means any
day other than a Saturday or Sunday or a day on which banking
institutions in the State of New York or California are authorized
or obligated by law, regulation or executive order to close.
(l) If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this
Agreement or the validity or enforceability of this Agreement in any
other jurisdiction.
(m) This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for
the benefit of, nor may any provision hereof be enforced by any
other person.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date first above written.
BAM! ENTERTAINMENT, INC.
PAGE 15
By: /s/ ANTHONY R. WILLIAMS
--------------------------
Name: ANTHONY R. WILLIAMS
------------------------
Its: DIRECTOR
--------------------------
PAGE 16
SIGNATURE OF VIS SHAREHOLDER/SOED SHAREHOLDER
- ---------------------------------------------
PLEASE PRINT YOUR NAME IN THE SPACE ABOVE AND THEN SIGN BELOW, IN THE PRESENCE
OF A WITNESS
Signature by individual(s),
sole or first named
registered shareholder*: witnessed by
............................
Joint holders: Name: Address:
Signature:
2. ........................
2. Name ..................... Address .........................
.......................... Signature........................
3. ........................
3. Name ..................... Address .........................
........................ Signature........................
4. ........................
4. Name ..................... Address .........................
........................ Signature........................
Execution by corporation: ............................. .................................
Name of Director/Authorised Signature
............................ Signatory
Name of Company ............................. .................................
Name of Director/Secretary/ Signature
Authorised Signatory/witness
- ------------------
* You must have your signature witnessed. You should have your signature
witnessed by a person who is over 18 years of age and who is not one of the
joint registered holders (if any). The witness should NOT however be a spouse or
a member of your immediate family. The witness should also print their full name
and home address in the space provided.