(TELEWEST LOGO)
Exhibit 10.6
5 May 2004 Telewest Communications plc
160 Great Portland Street
London W1 W 5QA
Telephone 020 7299 5000
Fax 020 7299 6000
www.te1ewest.co.uk
BAM! Entertainment Inc
333 West Santa Clara Street
Suite 716
San Jose
California
95113
Dear Sirs
VIS ITV LIMITED REPAYMENT OF LOAN AND SUBSCRIPTION FOR SHARES OF BAM!
ENTERTAINMENT INC. ("BAM!")
1. INTRODUCTION
1.1 BAM! made an offer (the "OFFER") on 24 March 2004 to the shareholders of
Vis Entertainment Limited ("VIS ENTERTAINMENT") to acquire the entire
issued share capital of Vis Entertainment.
1.2 We are writing in connection with the proposed repayment to us of part of
the debt owed to us by Vis iTV Limited ("VIS ITV"), which is a private
limited company owned as to 50% by Flextech Television Limited ("FTL") and
as to 50% by Vis Entertainment. It is further proposed that FTL or another
member of the group of companies owned by Telewest Communications plc
("THE TELEWEST GROUP") will then subscribe for shares in BAM! at the lower
of (1) the closing price of the BAM! Shares on the NASDAQ Stock Market
(or, if the BAM! Shares cease trading on the NASDAQ Stock Market, such
other national securities trading market in which primary trading of the
BAM! Shares occurs) on the date of completion of the Offer and (2) the
average of the closing price of the BAM! Shares on each of the five
trading days immediately preceding completion of the Offer (the "BAM!
SUBSCRIPTION PRICE ").
1.3 The current amount owed by Vis iTV to members of The Telewest Group is
6726,496.14 (the "TELEWEST TRADING BALANCE"). The current amount owed by
Vis iTV to Vis Entertainment is 6285,873.43 (the "VIS ENTERTAINMENT
TRADING BALANCE"). It has been agreed that BAM! will advance to Vis iTV
and Vis iTV will pay to FTL such money as is necessary to reduce the
Telewest Trading Balance to a level equal to the aggregate of the Vis
Telelwest Communications pic
Export House
Cawsey Way
Woking
Surrey GU21 5QX
Reg in England No 2983307
Entertainment Trading Balance and the amount so advanced. The amount of
such advance will therefore be &220,3 11.36 (the "PAYMENT AMOUNT").
1.4 The matters to be carried out pursuant to this Letter Agreement are in
place of the previous oral agreement between us and Vis Entertainment
Limited relating to the equalisation of amounts owed by Vis iTV to each of
Vis Entertainment Limited and The Telewest Group that was agreed at the
time of entering into the transactions with SOE Development Limited on 10
October 2003
1.5 BAM! and FTL intend that the provisions of this Letter Agreement will be
binding upon them upon receipt by FTL (including receipt of a facsimile
copy) of a duplicate of this Letter Agreement duly signed on behalf of
BAM!.
2. CONDITIONS
2.1 The obligations of BAM! and FTL set out in paragraphs 3 and 4 of this
letter shall be conditional upon the Offer becoming unconditional in all
respects (the "CONDITION").
3. REPAYMENT OF DEBT BY VIS ITV
3.1 BAM! shall, as soon as practicable following satisfaction of the Condition
and in any event within 30 days of the Offer becoming unconditional in all
respects, advance to Vis iTV by way of loan an amount equal to the Payment
Amount and shall procure to the extent that it is able that Vis iTV shall
pay to FTL an amount equal to the Payment Amount in settlement of part of
the Telewest Trading Balance.
4. SUBSCRIPTION FOR BAM! SHARES
4.1 In consideration of and following the fulfilment of the obligations
undertaken by BAM! in paragraph 3.1 above and following satisfaction of
the Condition, FTL shall procure that a member of The Telewest Group shall
subscribe an amount equal to the Payment Amount for shares in BAM! at the
BAM! Subscription Price.
4.2 The shares in BAM! shall be of the same class and have the same
registration rights as the consideration shares issued by BAM! in
connection with the Offer.
5. COMPLETION
5.1 BAM! and FTL shall use all reasonable endeavours to procure that the
matters referred to in paragraphs 3 and 4 above shall be completed as soon
as practicable following satisfaction of the Condition and in any event
within 30 days of such satisfaction. Completion of the matters in
paragraph 4 above shall take place immediately following and shall be a
condition subsequent to completion of the matters referred to in paragraph
3 above.
6. GENERAL
6.1 This Letter Agreement constitutes the whole agreement between BAM! and FTL
to its subject matter.
6.2 No variation of this Letter Agreement shall be effective unless made in
writing and signed by each of BAM! and FTL.
6.3 BAM! and FTL do not intend that any term of this Letter Agreement shall be
enforceable solely by virtue of the Contracts (Rights of Third Parties)
Act 1999 by any person who is not a party to this Letter Agreement.
6.4 Nothing in this Letter Agreement is intended to give rise to any
obligation of BAM!, Vis iTV, Vis Entertainment or FTL to make any further
payment or do any further thing that is not expressly set out herein.
6.5 This Letter Agreement is not intended as a waiver or variation of any
right or power existing pursuant to any existing arrangement between Vis
iTV, Vis Entertainment and/or FTL, all of which shall remain in full force
and effect.
6.6 BAM! and FTL each undertake to each other to do such further things and to
sign and execute such further deeds, agreements and instruments as may be
necessary to give effect to this Letter Agreement.
6.7 BAM! and FTL hereby acknowledge that this Letter Agreement has been
entered into without either of them having full opportunity to consider
all tax and accounting issues relating to the arrangements set out herein.
Accordingly, each of BAM! and FTL agree to co-operate in good faith in
considering any restructuring of the arrangements set out herein which may
be necessary to achieve the intended commercial effect with more
advantageous tax or accounting treatment. BAM! and FTL acknowledge that
where appropriate payments referred to in this Letter Agreement shall be
netted off against each other rather than requiring that cash be paid.
7. COSTS AND EXPENSES
Except as otherwise stated in this Letter Agreement, each of BAM! and FTL
shall pay its own costs and expenses in relation to the negotiation,
preparation, execution and carrying into effect of this Letter Agreement
and all documents ancillary to it.
8. GOVERNING LAW AND JURISDICTION
This Letter Agreement shall be governed by and construed in accordance
with English law and BAM! and FTL hereby irrevocably submit to the non-
exclusive jurisdiction of the English Courts as regards any claim or
matter arising in relation to this Letter Agreement.
Please acknowledge your acceptance of and agreement to the terms of this Letter
Agreement by signing and returning the attached duplicate.
Yours faithfully
(ILLEGIBLE SIGNATURE)
FLEXTECH TELEVISION LIMITED
We hereby acknowledge our acceptance and agreement of the terms of this Letter
Agreement
/s/ STEPHEN AMBLER
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For and on behalf of BAM! Entertainment Inc.