Exhibit 4.6
CUSTODIAL AND SECURITY AGREEMENT
THIS CUSTODIAL AND SECURITY AGREEMENT (this "Agreement") is made as of May
24, 2004, by and among BAM! Entertainment, Inc., a Delaware corporation with an
address at 333 West Santa Clara Street, Suite 716, San Jose, California 95113
(the "Company"), the purchasers signatory hereto (each individually, a
"Purchaser," and collectively, the "Purchasers"), and Feldman Weinstein LLP, as
custodial agent for the Purchasers, with an address at 420 Lexington Avenue,
Suite 2620, New York, New York 10170 (the "Custodian"). Capitalized terms used
but not defined herein shall have the meanings set forth in the Securities
Purchase Agreement referred to in the first recital.
W I T N E S S E T H:
WHEREAS, the Company and each Purchaser has entered into the Securities
Purchase Agreement of even date herewith (the "Purchase Agreement"), pursuant to
which the Purchasers are purchasing the Company's 2% Secured Convertible
Debentures due 30 months after their date of issuance (collectively, the
"Debentures") and Warrants; and
WHEREAS, in order to induce the Purchasers to enter into the Purchase
Agreement and to purchase the Debentures, and as a condition precedent thereto,
the Company has agreed to secure the payment and performance of its obligations
under the Purchase Agreement, the Debentures, this Agreement and the other
Transaction Documents by granting to the Purchasers a first priority security
interest in the net cash proceeds from the sale of the Debentures; and
WHEREAS, the Company and the Purchasers have requested that the Custodian
hold the net cash proceeds from the sale of the Debentures for the benefit of
the Purchasers, as secured parties, in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Closing.
(a) Upon the Custodian's receipt from the Purchasers of, in the
aggregate, $4,985,000 (the "Secured Proceeds") into its master escrow
account (representing gross proceeds of $5 million minus the sum of
$15,000 offset by Vertical Ventures, LLC pursuant to Section 5.1 of the
Purchase Agreement), together with each Purchaser's executed counterparts
of this Agreement, the Purchase Agreement and the Registration Rights
Agreement, the Custodian shall telephonically advise the Company, or the
Company's designated attorney or agent, of its receipt of such funds and
such documents.
(b) Wire transfers to the Custodian shall be made as follows:
STERLING NATIONAL BANK
622 3RD AVENUE
NEW YORK, NY 10017
Account Name: Feldman Weinstein LLP
ABA ROUTING NO: 026007773
ACCT NO: 0814180101
Remark: BFUNC/[FUND NAME]
(c) The Company, upon receipt of the telephonic notice described
in Section 1(a) above, shall deliver to the Custodian the certificates
representing the Debentures and the Warrants to be issued to each
Purchaser at the Closing together with:
(i) a counterpart of the Registration Rights Agreement, duly
executed by the Company;
(ii) the executed legal opinion of Company Counsel;
(iii) a counterpart of the Purchase Agreement, duly executed
by the Company; and
(iv) a counterpart of this Agreement, duly executed by the
Company.
(d) In the event that the foregoing items have not been delivered
to the Custodian by the Company within five (5) Trading Days after the
Custodian has received all of the Subscription Amounts (net of permitted
deductions pursuant to the Purchase Agreement), then each Purchaser shall
have an independent and separate right to demand and receive the return of
its Subscription Amount.
(e) Once the Custodian receives all of the items required to be
delivered hereunder, it shall, if possible, transfer the Secured Proceeds
into a separate interest bearing escrow account of the Custodian (the
"Escrow Account"). Thereafter, the Escrow Account shall be maintained by
the Custodian in accordance with the terms of this Agreement and shall, if
possible, be invested in an interest-bearing government securities or
commercial money market fund made available by the Custodian's bank. The
Custodian, by its execution and delivery of this Agreement, hereby agrees
to accept receipt of the Secured Proceeds and to hold such proceeds for
the benefit of the Purchasers, as secured parties.
(f) Within five (5) Trading Days after transferring the Secured
Proceeds into the Escrow Account, the Custodian shall then arrange to have
originals or counterpart originals of the Purchase Agreement, the
Warrants, the Debentures, the Registration Rights Agreement, this
Agreement and the opinion of counsel delivered to the appropriate parties.
(g) The Custodian shall hold the Secured Proceeds in the Escrow
Account, for the benefit of each Purchaser, and not release such proceeds
except as provided herein. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO
THE CONTRARY, AS TO ANY PURCHASER, THE CUSTODIAN SHALL ONLY
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RELEASE FUNDS TO THE COMPANY OR A PURCHASER UNDER THIS AGREEMENT TO THE
EXTENT ALL SUCH RELEASES ON ACCOUNT OF SUCH PURCHASER, IN THE AGGREGATE,
DO NOT EXCEED 99.7% OF THE ORIGINAL PRINCIPAL AMOUNT OF DEBENTURES
PURCHASED BY SUCH PURCHASER PURSUANT TO THE PURCHASE AGREEMENT.
2. Release of Secured Proceeds upon Conversion of Debentures. Upon the
conversion by a Purchaser of all or part of the principal amount of the
Debenture(s) held by such Purchaser (the "Converted Principal Amount"), such
Purchaser and the Company shall promptly thereafter execute a joint certificate
to the Custodian certifying that such Converted Principal Amount has been
converted by the Purchaser (a "Conversion Certificate"). Promptly after its
receipt of a Conversion Certificate, the Custodian shall release out of the
Secured Proceeds, subject to the limitation set forth in Section 1(g), to the
account specified in the written instructions of the Company, an amount equal to
the Converted Principal Amount.
3. Release of Secured Proceeds upon Redemption.
(a) At any time after the occurrence of a Holder Redemption Right
(as defined in Section 5(c) of the Debenture), any Purchaser may, at its
option, deliver a certificate to the Custodian and the Company specifying
the nature of the Holder Redemption Right. If, within ten days after its
receipt of such certificate, the Custodian shall not have received written
notice from the Company that it disputes the occurrence of such Holder
Redemption Right, then the Custodian shall release out of the Secured
Proceeds, subject to the limitation set forth in Section 1(g), to such
Purchaser an amount equal to the principal amount of Debentures being
redeemed by such Purchaser. In the event that the Company does deliver a
timely notice to the Custodian and the Purchaser that it disputes such
determination, then such dispute shall be resolved between the Company and
the Purchaser by arbitration conducted as follows: the arbitration shall
be conducted in New York, New York, before an arbitration panel of three
arbitrators, one of whom shall be selected by the Purchaser, one of whom
shall be selected by the Company, with the remaining arbitrator to be
agreed upon by the first two. The arbitration shall be conducted in
accordance with the commercial arbitration rules of the American
Arbitration Association then in effect. Any arbitration decision or award
shall be final and conclusive as to the parties to this Agreement and
their successors and assigns; judgment upon such decision or award may be
entered in any competent court. In the event that the arbitration shall be
decided in favor of the applicable Purchaser, then upon delivery of a
written copy of such decision by the Purchaser to the Custodian, the
Custodian shall promptly release such Secured Proceeds to the Purchaser.
The prevailing party in such hearing shall be reimbursed by the other
party for its attorneys' fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such arbitration
proceeding but shall not be paid out of the Secured Proceeds.
(b) At any time after the occurrence of an Required Redemption
Notice Date (as defined in Section 5(a) of the Debenture), the Company
shall deliver a copy of the Required Redemption Notice to the Custodian.
If, by the Option Redemption Date (as defined in Section 5(a) of the
Debenture), the Custodian shall not have received written notice from a
Purchaser named in the Required Redemption Notice that it disputes such
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Required Redemption or, pursuant to the Debenture, elects on to receive
said redemption, then the Custodian shall release out of the Secured
Proceeds, subject to the limitation set forth in Section 1(g), to each
non-objecting Purchaser named in the Required Redemption Notice who has
not previously converted the Debentures an amount equal to the principal
amount of Debentures being redeemed by the Company. In the event that a
Purchaser does deliver a timely notice to the Custodian and the Company
that it disputes such Option Redemption, then such dispute shall be
resolved between the Company and the Purchaser by arbitration as conducted
as provided in the preceding paragraph. The prevailing party in such
hearing shall be reimbursed by the other party for its attorneys' fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such arbitration proceeding but shall not be paid out of
the Secured Proceeds.
4. Release of Secured Proceeds upon Consent of a Purchaser. Upon
receipt by the Company of written consent of a Purchaser to release any portion
of the Secured Proceeds, the Company and such Purchaser shall execute and
deliver to the Custodian a joint certificate (each, a "Consent Certificate")
certifying that consent to release such Secured Proceeds has been obtained,
which Consent Certificate shall include the amount of the Secured Proceeds to be
released, subject to the limitation set forth in Section 1(g), representations
from such Purchaser as to the outstanding principal amount of the Debentures
held by it at the time such consent was obtained and a representation by the
Company's chief financial officer as to the aggregate principal amount of the
Debentures outstanding at the time consent was obtained. Upon receipt of the
Consent Certificate, the Custodian shall release, subject to the limitation set
forth in Section 1(g), to the account of the Company designated in the Consent
Certificate, such portion of the Secured Proceeds specified in the Consent
Certificate.
5. Release of Secured Proceeds upon Maturity or Event of Default.
(a) If, on the maturity date of the Debentures, any Debentures
shall remain unpaid, then upon receipt by the Custodian of a written
notice from a Purchaser holding such Debentures certifying that such
Debentures remain unpaid, the Custodian shall release out of the Secured
Proceeds to the Purchaser, subject to the limitation set forth in Section
1(g), an amount equal to the principal amount of Debentures then held by
such Purchaser, and such Secured Proceeds shall be applied to reduce
amounts due and owing to such Purchaser with respect to the Debentures and
the Purchase Agreement as follows: first, to the payment of fees and
expenses; second, to interest payable in cash with respect to the
Debentures; and third, to the outstanding principal under the Debentures.
(b) At any time after the occurrence of an Event of Default (as
defined in the Debentures), any Purchaser may, at its option, deliver a
certificate to the Custodian and the Company specifying the nature of the
Event of Default. If, within ten days after its receipt of such
certificate, the Custodian shall not have received written notice from the
Company that it disputes the occurrence of such Event of Default, then the
Custodian shall release out of the Secured Proceeds, subject to the
limitation set forth in Section 1(g), to such Purchaser an amount equal to
the principal amount of Debentures then held by such Purchaser. In the
event that the Company does deliver a timely notice to the Custodian and
the Purchaser that it disputes such determination, then such dispute shall
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be resolved between the Company and the Purchaser by arbitration conducted
as follows: the arbitration shall be conducted in New York, New York,
before an arbitration panel of three arbitrators, one of whom shall be
selected by the Purchaser, one of whom shall be selected by the Company,
with the remaining arbitrator to be agreed upon by the first two. The
arbitration shall be conducted in accordance with the commercial
arbitration rules of the American Arbitration Association then in effect.
Any arbitration decision or award shall be final and conclusive as to the
parties to this Agreement and their successors and assigns; judgment upon
such decision or award may be entered in any competent court. In the event
that the arbitration shall be decided in favor of the applicable
Purchaser, then upon delivery of a written copy of such decision by the
Purchaser to the Custodian, the Custodian shall promptly release such
Secured Proceeds to the Purchaser. The prevailing party in such hearing
shall be reimbursed by the other party for its attorneys' fees and other
costs and expenses incurred with the investigation, preparation and
prosecution of such arbitration proceeding but shall not be paid out of
the Secured Proceeds.
6. Security Agreement.
(a) Grant. The Company hereby unconditionally and irrevocably
grants to the Purchasers, to secure the payment and performance in full
when due of all of the Obligations (as said term is defined below), a
continuing first priority security interest in, and so pledges and assigns
to the Purchasers all of, the Secured Proceeds and any interest that
accrues thereon ("Collateral"). "Obligations" means all present and future
indebtedness, obligations, covenants, duties and liabilities of any kind
or nature of the Company to the Purchasers (or any of them) under this
Agreement, the Debentures and the other Transaction Documents, in each
case whether now or hereafter existing, voluntary or involuntary, direct
or indirect, absolute or contingent, liquidated or unliquidated, whether
or not jointly owed with others. Without limiting the generality of the
foregoing, this Agreement secures the payment of all amounts that
constitute part of the Obligations and would be owed by the Company to the
Purchasers under the Transaction Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Company or any of the
Company's Subsidiaries.
(b) Further Assurances. The Company agrees that at any time and
from time to time, at the expense of the Company, the Company shall
promptly execute and deliver all further instruments, documents and/or
other agreements and take all further action, including any UCC or other
filings, that may be necessary or desirable, or that the Purchasers may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable any Purchaser to
exercise and enforce its rights and remedies hereunder with respect to any
of the Collateral.
(c) Rights and Remedies. At any time after the occurrence of an
Event of Default or Holder Redemption Right, and without any other notice
to or demand upon the Company, the Purchasers shall have, in any
jurisdiction in which enforcement hereof is sought, in addition to all
other rights and remedies, the rights and remedies of a secured party
under the Uniform Commercial Code in effect from time to time in the State
of
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New York (the "UCC") and any additional rights and remedies which may be
provided to a secured party in any applicable jurisdiction.
(d) Power of Attorney. The Company hereby irrevocably constitutes
and appoints the Purchasers, and each of them, and any officer, partner,
member or agent thereof, with full power of substitution, as its true and
lawful attorneys-in-fact with full irrevocable power and authority in the
name, place and stead of the Company or in their own names, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments
that may be necessary or useful to accomplish the purposes of this
Agreement and, without limiting the generality of the foregoing, hereby
gives said attorneys the power and right, on behalf of the Company,
without notice to or assent by the Company, at any time after the
occurrence of an Event of Default or Holder Redemption Right, to make any
agreement with respect to or otherwise transfer any of the Collateral in
such manner as is consistent with the UCC and as fully and completely as
though the Purchasers were the absolute owners thereof for all purposes,
and to do, at the Company's expense, at any time or from time to time, all
acts and things which the Purchasers deem necessary or useful to protect,
preserve or realize upon the Collateral and the security interest of the
Purchasers therein, in order to effect the intent of this Agreement, all
at least as fully and effectively as the Company might do.
(e) Representations, Warranties and Covenants. The Company hereby
represents and warrants to, and covenants and agrees with, the Purchasers
as of the date hereof as follows: (i) The Company's exact legal name is
that indicated in the Perfection Certificate annexed to this Agreement
(the "Perfection Certificate"); (ii) the Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware; (iii) the Perfection Certificate accurately sets forth
the Company's organizational identification number or accurately states
that the Company has none; (iv) the Perfection Certificate accurately sets
forth the Company's place of business or, if more than one, its chief
executive office, as well as the Company's mailing address, if different;
(v) the Collateral is free and clear of any right or claim or any person
or any adverse lien, security interest or other encumbrance, except for
the security interest created by this Agreement; (vi) all other
information set forth on the Perfection Certificate pertaining to the
Company and the Collateral is accurate and complete; (vii) the Company
will not change its name, its place of business or, if more than one,
chief executive office, or its mailing address or organizational
identification number if it has one, without in each case providing at
least 15 days prior written notice to the Purchasers; (viii) the Company
will not change its type of organization, jurisdiction of organization or
other legal structure, without in each case providing at least 15 days
prior written notice to the Purchasers of such change; (ix) the Company
shall take no action to, directly or indirectly, enter into, create,
incur, assume, pledge, mortgage or suffer to exist any Lien, security
interest or other encumbrance on or with respect to any of the Collateral,
and the Company shall defend the same against all claims and demands of
all Persons at any time claiming the same or any interests therein adverse
to the Purchasers.
(f) Marshalling. All rights and remedies of the Purchasers
hereunder and in respect of the Collateral and other assurances of payment
shall be cumulative and in
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addition to all other rights and remedies, however existing or arising. To
the extent that it lawfully may, the Company hereby agrees that it will
not invoke any law relating to the marshalling of assets which might cause
a delay in or impede the enforcement of the rights and remedies of the
Purchasers under this Agreement, the Debentures, the other Transaction
Documents or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by
which any of the Obligations is secured or payment thereof is otherwise
assured, and to the extent that it lawfully may, the Company hereby
irrevocably waives the benefits of all such laws.
(g) No Waiver, etc. The Purchasers shall not be deemed to have
waived any of their rights or remedies in respect of the Obligations or
the Collateral unless such waiver shall be in writing and signed by the
Purchasers. No delay or omission on the part of the Purchasers in
exercising any right or remedy shall operate as a waiver of such right or
remedy or any other right or remedy. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right or remedy on any
future occasion. All rights and remedies of the Purchasers with respect to
the Obligations or the Collateral, whether evidenced hereby or by any
other document or instrument, shall be cumulative and may be exercised
singularly, alternatively, successively or concurrently at such time or at
such times as the Purchasers deem expedient.
(h) Certain Defined Terms. Terms used in this Section 6 but not
otherwise defined in this Agreement that are defined in the UCC shall have
the respective meanings given such terms therein; provided, however, that
if a term is defined in Article 9 of the UCC differently than in another
Article of the UCC, then such term shall have the meaning specified in
Article 9.
7. Condition to Custodian's Duties. The acceptance by the Custodian of
its duties as such under this Agreement is subject to the following terms and
conditions, which all of the parties to this Agreement hereby agree shall govern
and control with respect to the rights, duties, liabilities and immunities of
the Custodian:
(a) The Custodian is not a party to, nor is it bound by, any other
agreement by which the other parties hereto may be bound (whether or not
it has knowledge of such), other than as expressly herein set forth.
(b) The Custodian shall be protected in acting upon any written
notice, request, waiver, consent, receipt or other document which the
Custodian, in good faith, believes to be genuine and what it purports to
be. No waiver or any breach of any covenant or provision herein contained
shall be deemed a waiver of any preceding or succeeding breach thereof, or
of any other covenant or provision herein contained. No extension of time
for performance of any obligation or act shall be deemed an extension of
the time for performance of any other obligation or act. If the Custodian
reasonably requires other or further instruments in connection with this
Agreement or obligations in respect hereto, the necessary parties hereto
shall join in furnishing such instruments.
(c) The Custodian shall be indemnified and held harmless by the
Company and the Purchasers, jointly and severally, from and against any
and all loss, expense, fees
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(including attorneys' fees) and damages that may be incurred by the
Custodian as a result of its agreeing to act in such capacity and its
performance of this Agreement. The Custodian shall not be obligated to any
party for any error in judgment or for any act done or steps taken or
omitted by it in good faith, or for any mistake of fact or law, or for
anything which it may do or refrain from doing in connection therewith,
except as a result of its own gross negligence or willful misconduct. This
indemnity includes the costs of enforcing the indemnification (including
attorneys' fees).
(d) The Custodian may consult with or retain legal counsel in
connection with any dispute or question as to the construction of any of
the provisions hereof or with regard to its duties and shall be held
harmless and protected by the Company and the Purchasers in acting in good
faith in accordance with the instructions of such counsel. Such counsel's
fees and expenses shall be paid as set forth in Section 7(f) hereof. The
Custodian may represent itself at its usual rates.
(e) The Custodian shall not be responsible or liable for the
default or misconduct of its agents, attorneys or employees, if they are
selected with reasonable care.
(f) The Company will pay the Custodian's fees (at the Custodian's
customary hourly rate for legal services) and out-of-pocket disbursements
for time spent in performing its duties under this Agreement, and if any
of Custodian's invoices are not paid in full within 30 days, the Custodian
is directed to pay itself directly from the Escrow Account; provided that
if fees are taken directly from the Escrow Account by the Custodian, the
Purchasers shall have no claim against the Custodian for such funds but
shall have a claim against the Company for reimbursement. The Company
shall promptly replenish any funds that are disbursed to the Custodian
from the Escrow Account.
(g) No modification of this Agreement shall, without the consent
of the Custodian and all other parties hereto, modify the provisions of
this Agreement relating to the duties, obligations or rights of the
Custodian. This Agreement is the final expression of, and contains the
entire agreement between, the parties with respect to the subject matter
hereof and supersedes all prior understandings with respect thereto.
8. Conflict with Respect to Collateral.
(a) In the event that the Custodian at any time receives or
becomes aware of conflicting demands or claims with respect to the
Collateral, this Agreement or its duties hereunder, the Custodian shall
have the right to discontinue and refrain from any and all activities on
its part under this Agreement or in connection herewith until such
conflict is resolved to its satisfaction.
(b) The Custodian shall have the further right to commence or
defend any action or proceedings for the determination of such conflict.
The Company and the Purchasers jointly and severally agree to pay all
costs, damages, judgments and expenses, including reasonable attorneys'
fees, suffered or incurred by the Custodian in connection
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with or arising out of this Agreement and the transactions described
herein in the event of bona fide conflicting claims or demands, including,
but without limiting the generality of the foregoing, a suit in
interpleader brought by the Custodian. In the event that the Custodian
files a suit in interpleader, it shall thereupon be fully released and
discharged from all further obligations to perform any and all duties or
obligations imposed upon it by this Agreement (except it may not release
the Collateral except as designated by the court).
9. ACKNOWLEDGEMENT. ALL PARTIES HERETO AGREE THAT THE CUSTODIAN IS
COUNSEL FOR VERTICAL VENTURES, LLC ("VERTICAL") AND SHALL BE ENTITLED TO
REPRESENT VERTICAL WITH RESPECT TO THE PURCHASE AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREUNDER; AND THE COMPANY AND EACH OTHER PURCHASER HEREBY WAIVES
ANY RIGHT OR CLAIM TO OBJECT TO SUCH LEGAL REPRESENTATION BY CUSTODIAN OF
VERTICAL IN CONNECTION WITH THIS TRANSACTION.
10. Resignation of Custodian. The Custodian may at any time resign
hereunder by giving written notice of its resignation to the Company and the
Purchasers, at least ten (10) days prior to the date specified for such
resignation to take effect, and upon the effective date of such resignation, all
property then held by the Custodian hereunder shall be delivered by it to such
Person as may be designated by the Company and the Purchasers, in writing,
whereupon all the Custodian's obligations hereunder shall cease and terminate.
If no such Person shall have been designated by such date, all obligations of
the Custodian hereunder shall, nevertheless, cease and terminate. The
Custodian's sole responsibility thereafter shall be to keep safely all property
then held by it and to deliver the same to a Person designated by the parties
hereto or in accordance with the directions of a final order or judgment of a
court of competent jurisdiction, or to file a suit in interpleader as provided
in Section 8 above.
11. Interest on Secured Proceeds. On a quarterly basis, the Custodian
shall release any accrued interest to the Purchasers pro-rata in proportion to
the principal amount of Debentures then held by each Purchaser as represented to
the Custodian by the Company and the Purchasers in writing. Any such payments
shall reduce the interest payments owed to the Purchasers by the Company. The
Custodian shall owe no duty and have no obligation whatsoever to the Company or
the Purchasers to obtain or maintain any level of interest on the Secured
Proceeds.
12. Successors and Assigns. The Purchasers may assign their rights
hereunder in connection with the transfer of Debentures. The Company may not
assign its rights under this Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
administrators, successors and permitted assigns.
13. Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AND THE
PARTIES AGREE AND CONSENT TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE
COURTS LOCATED IN NEW YORK COUNTY, NEW YORK IN ANY ACTION OR PROCEEDING
HEREUNDER, AND TO SERVICE OF PROCESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED
(WHICH SHALL CONSTITUTE "PERSONAL SERVICE"). THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
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LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT.
14. Amendment. No provision of this Agreement may be amended or waived
without the prior written consent of the Company and all the Purchasers;
provided, however, that any provision relating to the duties, obligations and
rights of the Custodian shall in addition require the approval of the Custodian,
as provided in Section 7(g) above.
15. Notices. All notices or other communications between the parties
contemplated under, or relating to, this Agreement shall be in writing, shall be
signed by each person giving such notice or communication, and shall be
delivered by hand, reputable overnight courier or by certified mail, return
receipt requested, to the parties at their respective addresses set forth above
or to such other address as to which the sending party has received written
notice in accordance with this Section 15.
***********************
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
COMPANY:
BAM! ENTERTAINMENT, INC.
By: /s/ Raymond Musci
--------------------------------
Name: Raymond Musci
Title: Chief Executive Officer
CUSTODIAN:
FELDMAN WEINSTEIN LLP
By: /s/ Illegible
--------------------------------
Name: Illegible
Title: Authorized Signatory
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[PURCHASER'S SIGNATURE PAGE TO CUSTODIAL AND SECURITY AGREEMENT]
OMICRON MASTER TRUST
By: Omicron Capital L.P. as advisor
By: Omicron Capital Inc., its general partner
By: /s/ Bruce Bernstein
-------------------------------------
Name: Bruce Bernstein
Title: Managing Partner
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[PURCHASER'S SIGNATURE PAGE TO CUSTODIAL AND SECURITY AGREEMENT]
Name of Investing Entity: Vertical Ventures, LLC
Signature of Authorized
Signatory of Investing Entity: /s/ Joshua Silverman
--------------------
Name of Authorized Signatory: Joshua Silverman
Title of Authorized Signatory: Partner
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[PURCHASER'S SIGNATURE PAGE TO CUSTODIAL AND SECURITY AGREEMENT]
Name of Investing Entity: Cranshire Capital, L.P.
Signature of Authorized
Signatory of Investing Entity: /s/ Mitchell P. Kopin
---------------------
Name of Authorized Signatory: Mitchell P. Kopin
Title of Authorized Signatory: President - Downsview Capital
The General Partner
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[PURCHASER'S SIGNATURE PAGE TO CUSTODIAL AND SECURITY AGREEMENT]
Name of Investing Entity: Iroquois Capital LP
Signature of Authorized
Signatory of Investing Entity: /s/ Joshua Silverman
--------------------
Name of Authorized Signatory: Joshua Silverman
Title of Authorized Signatory: Partner
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PERFECTION CERTIFICATE
[Delivered Pursuant to Section 6 of Custodial and Security Agreement]
The undersigned, the Chief Executive Officer of BAM! ENTERTAINMENT, INC.,
a Delaware corporation ("Debtor"), hereby certifies, with reference to the
Custodial and Security Agreement dated as of May __, 2004 between Debtor and the
"Purchasers" party thereto (collectively, the "Secured Party"), to the secured
Party as follows (terms defined in such Custodial and Security Agreement having
the same meanings herein as specified therein):
1. NAME. The exact legal name of Debtor as that name appears on its
Certificate of Incorporation is as follows: BAM! ENTERTAINMENT, INC.
2. OTHER IDENTIFYING FACTORS.
(a) The following is a mailing address for Debtor:
(b) If different from its indicated mailing address, Debtor's
place of business or, if more than one, its chief executive office, is located
at the following address:
ADDRESS COUNTY STATE
NONE
(c) The following is the type of organization of Debtor:
CORPORATION
(d) The following is the jurisdiction of Debtor's organization:
(e) The following is Debtor's state-issued organizational
identification number [STATE "NONE" IF THE STATE DOES NOT ISSUE SUCH A NUMBER]:
[BAM! ENTERTAINMENT, INC.: 84-1209978]
3. OTHER NAMES, ETC.
(a) The following is a list of all other names (including trade
names or similar appellations) used by Debtor, or any other business or
organization to which Debtor became the successor by merger, consolidation,
acquisition, change in form, nature or jurisdiction of organization or
otherwise, now or at any time during the past five years:
BAM! ENTERTAINMENT, INC. =
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(b) Attached hereto as SCHEDULE 3 is the information required in
Section 2 above for any other business or organization to which Debtor became
the successor by merger, consolidation, acquisition of assets, change in form,
nature or jurisdiction of organization or otherwise, now or at any time during
the past five years.
4. OTHER CURRENT LOCATIONS.
(a) The following are all other locations in the United States of
America in which Debtor maintains any books or records relating to any of the
Collateral consisting of accounts or general intangibles:
ADDRESS COUNTY STATE
NONE
(b) The following are all other places of business of Debtor in
the United States of America:
(c)
ADDRESS COUNTY STATE
NONE
IN WITNESS WHEREOF, this Certificate has been duly executed on
May 24, 2004.
BAM! ENTERTAINMENT, INC.
By: /s/ Raymond Musci
---------------------
Name: Raymond Musci
Title: Chief Executive Officer
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