\nSchedule 1 – Schedule of Purchasers
\nSchedule 2.2(a) – Contingent Reserved Common Shares
\nSchedule 2.2(d) – Stockholders and Option Holders List
\nSchedule 2.3 – Subsidiaries
\nSchedule 2.7 – Litigation
\nSchedule 2.8(a) – Material Intellectual Property
\nSchedule 2.8(b) – Certain IP Agreements
\nSchedule 2.10 – Material Agreements
\nSchedule 2.10(b) – Nonbinding Contracts
\nSchedule 2.11 – Liabilities
\nSchedule 2.13 – Conflicts
\nSchedule 2.17 – Employee Benefit Plans
\nSchedule 2.24 – Financial Statements
\nSchedule 2.25(d) – Changes; Contracts\/Agreements
\nSchedule 2.25(e) – Changes; Compensation\/Agreements with employees,
\n representatives, agents, officers, directors or stockholders
\nSchedule 2.25(i) – Changes; Loans\/Guarantees
\n<\/c><\/s><\/table>\n 3<\/p>\n
SERIES C STOCK PURCHASE AGREEMENT<\/p>\n
THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of May 24,
\n2001, is entered into by and among BAM! Entertainment, Inc., a Delaware
\ncorporation (with its predecessors and successors, the “Company”), and the
\nparties listed on Schedule 1 hereto (each, individually, a “Purchaser” and,
\ncollectively, the “Purchasers”).<\/p>\n
WITNESSETH:<\/p>\n
A. The Company, successor in interest to Bay Area Multimedia, Inc., a
\nCalifornia corporation, was formerly known as Bay Area Multimedia, Inc., a
\nDelaware corporation.<\/p>\n
B. Subject to the terms and conditions set forth herein, the Company
\ndesires to issue and sell to the Purchasers, and the Purchasers severally desire
\nto purchase from the Company, shares of the Company’s Series C Preferred Stock,
\npar value $0.001 per share, for an aggregate purchase price of up to
\n$10,000,000, as partially set forth on Schedule 1 attached hereto.<\/p>\n
C. The Purchasers and the Company desire to set forth their mutual
\nagreements with respect to such purchase and sale and to establish various
\nrights and obligations in connection therewith.<\/p>\n
NOW, THEREFORE, in consideration of the premises and the mutual
\ncovenants contained herein and other good and valuable consideration, the
\nreceipt and sufficiency of which are hereby acknowledged, the parties agree as
\nfollows:<\/p>\n
1. Purchase and Sale of Preferred Stock..<\/p>\n
1.1 Sale and Issuance of Series C Preferred Stock.<\/p>\n
(a) The Company shall adopt and file with the Secretary
\nof State of the State of Delaware on or before the Closing (as defined below)
\nthe Amended and Restated Certificate of Incorporation of the Company in the form
\nattached hereto as Exhibit A (the “Restated Certificate”).<\/p>\n
(b) Subject to the terms and conditions of this
\nAgreement, each Purchaser severally (but not jointly) agrees to purchase at the
\nClosing, and the Company agrees to sell and issue to such Purchaser at the
\nClosing, such number of shares of the Company’s Series C Preferred Stock, par
\nvalue $0.001 per share, as set forth opposite such Purchaser’s name on Schedule
\n1 attached hereto, at a purchase price of $22.553 per share, and for the total
\npurchase price indicated with respect to such Purchaser on Schedule 1,
\nrepresenting an aggregate purchase price of up to $10,000,000 for all
\nPurchasers. The shares of Series C Preferred Stock to be issued to the
\nPurchasers pursuant to this Agreement shall hereinafter be referred to as the
\n“Series C Preferred Stock.”<\/p>\n
1.2 Closing; Delivery. The closing of the purchase and sale of
\nthe Series C Preferred Stock (the “Closing”) shall take place at one or more
\nclosings. All Closings shall be held at the offices of Doty Sundheim & Gilmore,
\n260 Sheridan Avenue, Suite 200, Palo Alto,<\/p>\n
1
\n 4<\/p>\n
California. The first Closing shall occur at 9:00 a.m. Pacific Standard Time on
\nMay 4, 2001, or at such other time and place as the Company and the Purchasers
\nmutually agree upon, orally or in writing (the “Initial Closing” and the
\n“Closing Date”). The subsequent Closings shall occur at such times as approved
\nof by the parties to such Closing. At each Closing, the Company shall deliver to
\neach Purchaser a certificate registered in the name of such Purchaser
\nrepresenting the Series C Preferred Stock being purchased thereby against
\npayment of the purchase price therefor, which shall be payable by check or by
\nwire transfer of immediately available funds to an account designated by the
\nCompany. The Company and each Purchaser shall take such additional actions and
\nexecute and deliver such additional agreements and other instruments and
\ndocuments as may be reasonably necessary or appropriate to effect the
\ntransactions contemplated by this Agreement in accordance with its terms.<\/p>\n
1.3 Use of Proceeds. The Company shall apply the proceeds
\nreceived hereunder from the sale of the Series C Preferred Stock to pay for the
\nreasonable expenses of the Company associated with the issuance of the Series C
\nPreferred Stock, to fund continued product and service development, to fund a
\nbroader market launch of the Company’s services, to build corporate
\ninfrastructure and for general working capital purposes.<\/p>\n
1.4 Reservation of Additional Shares of Series C Preferred
\nStock. As set forth in the Restated Certificate, the Company has reserved a
\ntotal of 443,400 shares of its Series C Preferred Stock, par value $0.001 per
\nshare, for issuance and sale pursuant to this Agreement.<\/p>\n
2. Representations, Warranties and Covenants of the Company. The Company
\nhereby represents and warrants to, and covenants with, each of the Purchasers,
\nas follows:<\/p>\n
2.1 Organization, Good Standing and Qualification. The Company
\nis a corporation duly organized, validly existing and in good standing under the
\nlaws of the State of Delaware and has all requisite corporate power and
\nauthority to carry on its business as now conducted and to execute, deliver and
\nperform this Agreement, the “Co-Sale and Right of First Refusal Agreement” and
\nthe “Registration Rights Agreement” (as defined in Section 2.4 below)
\n(collectively, the “Transaction Agreements”), and to carry out the transactions
\ncontemplated by each of the Transaction Agreements. The Company is duly
\nqualified to transact business and is in good standing in the State of
\nCalifornia and in each other jurisdiction in which the failure to be so
\nqualified would have a material adverse effect on the business (as now
\nconducted), financial or other condition, operating results, assets or
\nproperties of the Company (each such effect, a “Material Adverse Effect”).<\/p>\n
2.2 Capitalization. The authorized capital stock of the Company
\nconsists, or will consist, immediately prior to the Closing, of:<\/p>\n
(a) 10,000,000 shares of common stock, par value $0.001
\nper share (the “Common Stock”), of which 327,385 shares are issued and
\noutstanding. All of the issued and outstanding shares of Common Stock have been
\nduly authorized, are fully-paid and nonassessable and were issued in compliance
\nwith all applicable federal and state securities laws. The Company has reserved
\n976,220 shares of Common Stock for issuance upon conversion of the Series A
\nPreferred Stock (as defined below), 320,000 shares of Common Stock for issuance
\nupon conversion of the Company’s Series B Preferred Stock, par value $0.001 per
\nshare, 443,400<\/p>\n
2
\n 5
\nshares of Common Stock for issuance upon conversion of the Company’s Series C
\nPreferred Stock, par value $0.001 per share, 325,000 shares of Common Stock for
\nissuance pursuant to the exercise of options issued or reserved for issuance
\nunder stock incentive plans currently effective (the “Stock Plan”), 43,500
\nshares of Common Stock for issuance upon exercise of warrants to purchase Common
\nStock issued to PAR Capital (30,000 shares), K&L 2000 LLC (10,000 shares) and
\nMorgan Keegan & Company, Inc. (3,500 shares) (the foregoing warrants being
\ncollectively called the “Warrants”) and shares issuable upon exercise of the
\nWarrants being collectively called the “Warrant Shares”). Except as set forth in
\nSchedule 2.2(a), there are no other Common Shares to be issued (the “Contingent
\nReserved Common Shares”).<\/p>\n
(b) 3,000,000 shares of Preferred Stock with a par value
\nof $0.001 per share (the “Preferred Stock”), of which 976,220 shares have been
\ndesignated as Series A Convertible Preferred Stock (the “Series A Preferred
\nStock”), all of which are issued and outstanding, 320,000 shares have been
\ndesignated as Series B Preferred Stock (the “Series B Preferred Stock”), 294,620
\nof which are issued and outstanding, and 443,400 shares have been designated as
\nSeries C Preferred Stock (the “Series C Preferred Stock”), all of which may be
\nissued and outstanding upon the Closing.<\/p>\n
(c) Except for (A) the conversion privileges of the
\nSeries A Preferred Stock, (B) the conversion privileges of the Series B
\nPreferred Stock, (C) the conversion privileges of the Series C Preferred Stock,
\n(D) currently authorized options to purchase 110,750 shares of Common Stock
\ngranted to employees pursuant to the Stock Plan, (E) the Warrants and the (F)
\nContingent Reserved Common Shares (collectively, the “Common Stock
\nEquivalents”): (i) no subscription right, warrant, option, convertible security
\nor other right or interest (contingent or otherwise) to purchase or acquire any
\nshares of capital stock, of the Company is authorized, issued or outstanding;
\n(ii) the Company does not have any obligation (contingent or otherwise) (a) to
\nissue any subscription right, warrant, option, convertible security or other
\nsuch right or interest or (b) to issue or distribute to holders of any shares of
\nits capital stock any evidences of indebtedness or assets of the Company; and
\n(iii) the Company does not have any obligation (contingent or otherwise) to
\npurchase, redeem or otherwise acquire any shares of its capital stock or any
\ninterest therein or to pay any dividend or make any other distribution in
\nrespect thereof.<\/p>\n
(d) Attached hereto as Schedule 2.2(d) is a true and
\ncomplete list of the stockholders of the Company and all holders of any options
\nor warrants of the Company, showing the number of shares of capital stock,
\noptions or warrants of the Company held by each such person as of the date
\nhereof. Except as provided in Schedule 2.2(a) and Schedule 2.2(d), there are no
\nother holders of any subscription right, option, warrant, convertible security
\nor other right or interest that is convertible into or exercisable for shares of
\ncapital stock of the Company, and there are no statutory or, to the Company’s
\nknowledge, contractual stockholders’ preemptive rights, rights of first refusal
\nor any similar rights relating to the acquisition of the capital stock of the
\nCompany.<\/p>\n
2.3 Subsidiaries. Except as specified in Schedule 2.3, the
\nCompany does not have any subsidiaries or own or control, directly or
\nindirectly, any interest in any other corporation, partnership, limited
\nliability company, joint venture, association, trust, estate, limited liability
\npartnership, joint stock company, unincorporated organization or government or<\/p>\n
3
\n 6<\/p>\n
any agency or political subdivision thereof, or other entity or organization
\n(each of the foregoing, together with any individual, being sometimes referred
\nto herein as a “Person”). Schedule 2.3 sets forth, as of the Initial Closing and
\ngiving effect to the transactions contemplated hereby, a complete and current
\nlist of the outstanding equity interests and the stockholders of the Company’s
\nsubsidiaries.<\/p>\n
2.4 Authorization. All corporate action on the part of the
\nCompany, its directors, officers and stockholders necessary for the
\nauthorization, execution and delivery of this Agreement and the Registration
\nRights Agreement in the form attached hereto as Exhibit B, the performance of
\nall obligations of the Company hereunder and thereunder and the authorization,
\nissuance and delivery of shares of the Series C Preferred Stock pursuant to the
\nterms of this Agreement and the Common Stock issuable upon conversion of the
\nSeries C Preferred Stock has been taken or will be taken prior to the Closing,
\nand the Transaction Agreements, when executed and delivered by the Company,
\nshall constitute valid and legally binding obligations of the Company,
\nenforceable against the Company in accordance with their terms except: (i) as
\nlimited by applicable bankruptcy, insolvency, reorganization, moratorium,
\nfraudulent conveyance, and other laws of general application affecting
\nenforcement of creditors’ rights generally; (ii) as limited by laws or equitable
\nprinciples relating to the availability of specific performance, injunctive
\nrelief, or other equitable remedies; or (iii) to the extent the indemnification
\nprovisions contained in the Registration Rights Agreement may be limited by
\napplicable federal or state securities laws.<\/p>\n
2.5 Compliance with Securities Laws; Valid Issuance of
\nSecurities. The Series C Preferred Stock being issued to the Purchasers
\nhereunder, when issued, sold and delivered in accordance with the terms hereof
\nfor the consideration expressed herein, will be duly and validly issued,
\nfully-paid and nonassessable and free of restrictions on transfer other than
\nrestrictions on transfer under this Agreement and applicable federal and state
\nsecurities laws. Shares of the Common Stock issuable upon conversion of the
\nSeries C Preferred Stock purchased hereunder have been duly and validly reserved
\nfor issuance, and upon issuance in accordance with the terms of the Restated
\nCertificate, shall be duly and validly issued, fully-paid and nonassessable and
\nfree of restrictions on transfer other than restrictions on transfer under this
\nAgreement, the Registration Rights Agreement and applicable federal and state
\nsecurities laws.<\/p>\n
2.6 Governmental Consents. No consent, approval, order or
\nauthorization of, or registration, qualification, designation, declaration or
\nfiling with, any federal, foreign, state or local governmental authority on the
\npart of the Company is required in connection with the consummation of the
\ntransactions contemplated by the Transaction Agreements, except for filings
\npursuant to applicable state securities laws and Regulation D of the Securities
\nAct of 1933, as amended (the “Securities Act”).<\/p>\n
2.7 Litigation. Except as set forth on Schedule 2.7, there is no
\naction, suit, proceeding or investigation pending or, to the best of the
\nCompany’s knowledge, currently overtly threatened against the Company or any of
\nits subsidiaries, nor is the Company aware that there is any basis for the
\nforegoing. The foregoing includes, without limitations, actions, suits,
\nproceedings or investigations pending or threatened involving the prior
\nemployment of any of the Company’s employees, their use in connection with the
\nCompany’s business of any information or techniques allegedly proprietary to any
\nof their former employers, or their<\/p>\n
4
\n 7<\/p>\n
obligations under any agreements with prior employers. The Company is not a
\nparty or expressly subject to the provisions of any order, writ, injunction,
\njudgment or decree of any court, administrative agency, government agency or
\ninstrumentality. There is no action, suit or proceeding by the Company currently
\npending or which the Company intends to initiate.<\/p>\n
2.8 Intellectual Property.<\/p>\n
(a) To the best knowledge of the Company, the Company
\nhas sufficient title and ownership of, or rights by license or other agreement
\nto, all patents, patent applications, trademarks, service marks, trade names,
\ndomain names, URLs, copyrights, trade secrets, software, source codes, object
\ncodes and other intellectual property rights used by the Company in its business
\nor necessary to conduct its business as currently conducted (“Intellectual
\nProperty”). The Company has not received any written communications alleging
\nthat the Company has violated or, by conducting its business as now conducted,
\nwould violate any of the rights in the Intellectual Property of any other
\nPerson. The Company is not aware that any of its employees are obligated under
\nany contract (including licenses, covenants or commitments of any nature) or
\nother agreement, or subject to any judgment, decree or order of any court or
\nadministrative agency, that would interfere with the use of his or her best
\nefforts to promote the interests of the Company or that would conflict with the
\nCompany’s business as currently conducted. The Company has not licensed any of
\nthe Intellectual Property to any other Person, nor does any other Person have an
\noption or any other right to acquire any of the Intellectual Property other than
\nin the ordinary course of business (except for the Intellectual Property that is
\nin the public domain). Schedule 2.8(a) sets forth a list of the Company’s
\nmaterial intellectual property.<\/p>\n
(b) All licenses or agreements listed in Schedule 2.8(b)
\n(the “Certain IP Agreements”) are in full force and effect and to the best
\nknowledge of the Company there is no default by any party thereto. True and
\ncomplete copies of all Certain IP Agreements, and any amendments thereto, have
\nbeen made available to the Purchasers, and to the best knowledge of the Company,
\nthe licensors under the Certain IP Agreements to which the Company is granted
\nrights, to the best of the Company’s knowledge, have all requisite power and
\nauthority to grant the rights purported to be conferred thereby. None of the
\nproducts manufactured and sold, nor any process or know-how used, by the Company
\nunder the Certain IP Agreements infringes or is alleged to infringe any patent,
\ntrademark, service mark, trade name, copyright or other proprietary right or is
\na derivative work based on the work of any other person.<\/p>\n
2.9 Compliance with Other Instruments. The Company is not in
\nviolation or in default of any provisions of (i) its Certificate of
\nIncorporation, as amended, or Bylaws or (ii) any order, writ, injunction,
\njudgment, instrument, decree or contract to which it is a party or by which it
\nis bound or (iii) to the Company’s knowledge, any provision of a federal or
\nstate statute, rule or regulation applicable to the Company, which violations or
\ndefaults would in the case of the items described in clauses (ii) and (iii),
\neither individually or in the aggregate, have a Material Adverse Effect. The
\nexecution, delivery and performance of the Transaction Agreements and the
\nconsummation of the transactions contemplated hereby or thereby do not and will
\nnot, with or without the passage of time and\/or the giving of notice: (a) result
\nin any such violation or conflict with or constitute a default under any such
\nprovision, order, writ, injunction, judgment, instrument, decree or contract or
\nany such statute, rule or regulation; (b)<\/p>\n
5
\n 8<\/p>\n
result in the creation of any lien, security interest, charge or encumbrance
\nupon the capital stock or any assets of the Company; or (c) give any third party
\nthe right to modify, terminate or accelerate any obligation under any such
\nprovision, order, writ, injunction, judgment, instrument, decree or contract.<\/p>\n
2.10 Agreements. Schedule 2.10 sets forth a list of all material
\nagreements, contracts, understandings or commitments, written or oral
\n(collectively, “Material Agreements”), to which the Company is a party or by
\nwhich it is bound. As used herein, Material Agreements shall mean:<\/p>\n
(a) Agreements, contracts, understandings or commitments
\nbetween the Company and any of its subsidiaries, officers, directors or
\naffiliates or any of such officers’, directors’ or affiliates’ immediate family
\nmembers.<\/p>\n
(b) Agreements, contracts, understandings or commitments
\nto which the Company or any of its affiliates is a party or by which it is bound
\nthat involve obligations (contingent or otherwise) of, or payments to, the
\nCompany in excess of, $250,000.<\/p>\n
All of such agreements, contracts understanding or
\ncommitments are valid, binding and in full force and effect with respect to the
\nCompany or any of its subsidiaries, except as set forth on Schedule 2.10(b), and
\nthere has been no material default by the Company under any of the foregoing nor
\nto the Company’s knowledge has there been any material default by any other
\nparty thereto.<\/p>\n
2.11 Absence of Undisclosed Liabilities. Except as set forth on
\nSchedule 2.11, since the Statement Date (as hereafter defined), the Company and
\nany of its subsidiaries has not: (i) declared or paid any dividends, or
\nauthorized or made any distribution upon or with respect to any class or series
\nof the Company’s capital stock; (ii) incurred any indebtedness on behalf of the
\nCompany for money borrowed or incurred any other liabilities in excess of
\n$50,000 individually, or in excess of $100,000 in the aggregate to any one
\ncreditor; (iii) made any loans or advances to any Person in the name of or with
\nrespect to the Company, other than ordinary advances for expenses incurred in
\nthe ordinary course of business consistent with past practices; or (iv) sold,
\nexchanged or otherwise disposed of any of the Company’s assets or rights, other
\nthan in the ordinary course of business consistent with past practices.<\/p>\n
2.12 Disclosure. None of the representations or warranties of
\nthe Company contained in this Agreement, the schedules and exhibits attached
\nhereto, nor any certificate furnished or to be furnished to the Purchasers at
\nClosing (when read together) contains any untrue statement of a material fact or
\nomits to state a material fact necessary to make the statements contained herein
\nor therein not misleading in light of the circumstances under which they were
\nmade.<\/p>\n
2.13 No Conflict of Interest. The Company is not indebted,
\ndirectly or indirectly, to any of its subsidiaries or officers or directors of
\nthe Company or its subsidiaries or, to the knowledge of the Company or its
\nsubsidiaries, such officers’ or directors’ respective spouses or immediate
\nfamily members, for any amount whatsoever. Except as set forth on Schedule 2.13
\nattached hereto, none of the Company’s subsidiaries or officers or directors of
\nthe<\/p>\n
6
\n 9<\/p>\n
Company or its subsidiaries or, to the knowledge of the Company or its
\nsubsidiaries, no member of such officers’ or directors’ immediate families (x)
\nare, directly or indirectly, indebted to the Company or, (y) have any direct or
\nindirect ownership interest in any Person (A) with which the Company is
\naffiliated or (B) with which the Company has a material business relationship,
\nor (C) which competes with the Company; except that for purposes of this clause
\n(y), officers, directors and\/or stockholders of the Company may own stock in
\n(but not exceeding five percent (5%) of the outstanding capital stock of) any
\npublicly traded companies that may compete with the Company. To the best of the
\nCompany’s knowledge, none of the Company’s officers or directors or any members
\nof their immediate families are, directly or indirectly, interested in any
\nmaterial contract of the Company. The Company is not a guarantor or indemnitor
\nof any indebtedness of any other Person.<\/p>\n
2.14 Registration Rights and Voting Rights. Except as
\ncontemplated in the Registration Rights Agreement, there are no agreements,
\nwritten or oral, between the Company and any Person relating to the registration
\nof its capital stock under federal or state securities laws, including piggyback
\nregistration rights. To the knowledge of the Company, no stockholders of the
\nCompany have entered into any agreements with respect to the voting of shares of
\nthe capital stock of the Company.<\/p>\n
2.15 Private Placement. Subject to and in reliance in part on
\nthe truth and accuracy of the Purchasers’ representations set forth in this
\nAgreement, the offer, sale and issuance of the Series C Preferred Stock as
\ncontemplated by this Agreement is exempt from the registration requirements of
\nthe Securities Act and any applicable state securities laws, and neither the
\nCompany nor any authorized agent acting on its behalf will take any action
\nhereafter that would cause the loss of such exemption.<\/p>\n
2.16 Title to Property and Assets. The Company owns its property
\nand assets free and clear of all mortgages, liens, loans and encumbrances,
\nexcept such encumbrances and liens which arise in the ordinary course of
\nbusiness and which do not materially impair the Company’s ownership or use of
\nsuch property or assets. With respect to the property and assets it leases, the
\nCompany is in compliance with such leases and holds a valid leasehold interest
\nfree of any liens, claims or encumbrances.<\/p>\n
2.17 Employee Benefit Plans. Except as specified in Schedule
\n2.17, the Company does not have any employee benefit plan and is not a party to
\nany multiemployer plan as such terms are defined in the Employee Retirement
\nIncome Security Act of 1974, as amended.<\/p>\n
2.18 Tax Returns and Audits. The Company and, to the Company’s
\nknowledge, any of its subsidiaries has accurately prepared and timely filed all
\nmaterial federal, state, foreign, local and other tax returns required by law to
\nbe filed by each of them, has paid or made provision for the payment of all
\ntaxes shown to be due and all additional assessments, and adequate provisions
\nhave been made and are reflected in the Company’s financial statements in all
\nmaterial respects to the extent required by generally accepted accounting
\nprinciples applied on a consistent basis and as in effect in the United States
\n(“GAAP”) for all current taxes and other charges to which the Company or its
\nsubsidiaries is subject and which are not currently due and payable. There are
\nno additional assessments or adjustments pending or, to the knowledge of the
\nCompany, threatened against the Company or its subsidiaries for any period, and
\nto the<\/p>\n
7
\n 10<\/p>\n
Company’s knowledge, there is no basis for any such assessment or adjustment
\nthat would be material.<\/p>\n
2.19 Labor Agreements and Actions. The Company is not bound by
\nor subject to (and none of its assets or properties is bound by or subject to)
\nany written or oral contract, commitment, agreement or arrangement with any
\nlabor union, and no labor union has requested or, to the knowledge of the
\nCompany, has sought to represent any of the employees, representatives or agents
\nof the Company. There is no strike or other labor dispute involving the Company
\npending or, to the knowledge of the Company, threatened, which could have a
\nMaterial Adverse Effect, nor is the Company aware of any labor organization
\nactivity involving the employees, representatives or agents of the Company. The
\nCompany has complied in all material respects with all applicable federal and
\nstate equal employment opportunity laws and regulations and with all other laws
\nand regulations related to employment and labor issues. The Company has not
\nreceived any notice of any plan of any key employee to terminate his or her
\nemployment with the Company.<\/p>\n
2.20 Proprietary Information and Inventions Agreements. Each
\ncurrent employee, consultant and officer of the Company has executed an
\nagreement with the Company regarding confidentiality and proprietary information
\nsubstantially in the form attached as Exhibit C. The Company, after reasonable
\ninvestigation, is not aware that any of its current employees or consultants is
\nin violation thereof, and the Company will use commercially reasonable efforts
\nto prevent any such violation. To the Company’s knowledge, no consultants to or
\nvendors of the Company have had any access to confidential information of the
\nCompany who are not bound by non-disclosure agreements.<\/p>\n
2.21 Permits. The Company has all franchises, permits, licenses
\nand any other governmental authorizations necessary for the conduct of its
\nbusiness as now being conducted, the lack of which could have a Material Adverse
\nEffect. The Company is not in default in any material respect under any of such
\nfranchises, permits, licenses or other authorizations.<\/p>\n
2.22 Corporate Documents. The Restated Certificate and Bylaws of
\nthe Company are in the form provided to each of the Purchasers. As of the
\nClosing, the Bylaws of the Company shall be in the form of the Bylaws attached
\nhereto as Exhibit D. The copy of the minute book of the Company provided to the
\nPurchasers contains minutes of all meetings of directors and stockholders of the
\nCompany and all actions by written consent without a meeting by the directors
\nand stockholders of the Company since the date of the incorporation of the
\nCompany, and reflects all actions by the directors (and any committee of
\ndirectors) and stockholders of the Company with respect to all transactions
\nreferred to in such minutes accurately in all material respects.<\/p>\n
2.23 Real Property Holding Corporation. Neither the Company nor
\nany of its subsidiaries is a United States real property holding corporation
\nwithin the meaning of Internal Revenue Code Section 897(c)(2) and Section
\n1.897-2(c) of the Treasury Regulations promulgated thereunder.<\/p>\n
2.24 Financial Statements. The Company has made available to the
\nPurchasers (i) an audited balance sheet as of June 30, 2000; (ii) an audited
\nincome statement as of June 30,<\/p>\n
8
\n 11<\/p>\n
2000; (iii) an unaudited balance sheet as of March 31, 2001 (the “Statement
\nDate”); and (iv) an unaudited income statement for the three months ended March
\n31, 2001, copies of which are included as Schedule 2.24 (the “Financial
\nStatements”). The Financial Statements have been prepared from the books and
\nrecords of the Company and are complete and correct in all material respects and
\nfairly present the consolidated financial condition and operating results of the
\nCompany as of the Statement Date and for the period presented. Except as set
\nforth in the Financial Statements, the Company does not have any material
\nliabilities, contingent or otherwise, other than (i) liabilities paid or
\nincurred in the ordinary course of business subsequent to the Statement Date,
\nand (ii) obligations under contracts and commitments incurred in the ordinary
\ncourse of business.<\/p>\n
2.25 Changes. Since the Statement Date and except as
\ncontemplated by this Agreement and the exhibits and schedules hereto, there has
\nnot been:<\/p>\n
(a) any change in the assets, liabilities, financial
\ncondition or operating results of the Company from that reflected in the
\nFinancial Statements, except for changes in the ordinary course of business or
\nthat have not resulted in a Material Adverse Effect;<\/p>\n
(b) any damage, destruction or loss to property, whether
\nor not covered by insurance, resulting in a Material Adverse Effect;<\/p>\n
(c) any satisfaction or discharge of any lien, claim or
\nencumbrance or payment of any obligation by the Company except in the ordinary
\ncourse of business or that has not resulted in a Material Adverse Effect;<\/p>\n
(d) any material change to a material contract or
\nagreement by which the Company or any of its assets are bound or subject, except
\nas specified in Schedule 2.25(d);<\/p>\n
(e) any material change in any compensation arrangement
\nor agreement with any employee, representative, agent, officer, director or
\nstockholder of the Company, except as specified in Schedule 2.25(e);<\/p>\n
(f) any resignation or termination of employment of any
\nofficer, director or key employee of the Company and, to the best of the
\nCompany’s knowledge, the Company does not know of any impending resignation or
\ntermination of employment of any such officer, director or key employee;<\/p>\n
(g) receipt of notice that there has been a loss of, or
\nmaterial order cancellation by, any major advertiser or major customer of the
\nCompany other than in the ordinary course of business;<\/p>\n
(h) any mortgage, pledge, transfer of a security
\ninterest in, lien or encumbrance, created by the Company, with respect to any of
\nits capital stock, properties or assets, except liens for taxes not yet due or
\npayable;<\/p>\n
(i) any loans or guarantees made by the Company to or
\nfor the benefit of its employees, representatives, agents, officers or
\ndirectors, or any members of their<\/p>\n
9
\n 12<\/p>\n
immediate families, other than ordinary advances for expenses incurred in the
\nordinary course of business, except as specified in Schedule 2.25(i);<\/p>\n
(j) any declaration, setting aside or payment or other
\ndistribution in respect to any of the Company’s capital stock, or any direct or
\nindirect redemption, purchase, or other acquisition of any of such capital stock
\nby the Company other than the purchase of capital stock of officers, directors
\nor employees who have terminated their relationship with the Company; or<\/p>\n
(k) any arrangement or commitment by the Company to do
\nanything described in this Section 2.25.<\/p>\n
2.26 Environmental and Safety Laws. The Company is not in
\nviolation of any applicable statute, law or regulation relating to the
\nenvironment or occupational health and safety where such violation is likely to
\nresult in a Material Adverse Effect, and no material expenditures are presently
\nrequired by the Company in order to comply with any such applicable statute, law
\nor regulation.<\/p>\n
2.27 FCPA. The Company has complied in all material respects
\nwith the United States Foreign Corrupt Practices Act of 1977, as amended (the
\n“FCPA”), in obtaining any consents, licenses, approvals, authorizations, rights,
\nand privileges in connection with the conduct of its business, and has otherwise
\nconducted its business in all material respects in compliance with the FCPA. The
\nCompany’s internal management and accounting practices and controls are adequate
\nto ensure compliance in all material respects with the FCPA.<\/p>\n
2.28 Projections. Any projections provided to the Purchasers by
\nthe Company were made in good faith and were based upon reasonable assumptions
\nwhen made.<\/p>\n
3. Representations and Warranties of Purchasers. Each Purchaser hereby,
\nseverally and not jointly, represents and warrants to the Company, with respect
\nto itself only, that:<\/p>\n
3.1 Accredited Investor; Authorization. Such Purchaser is an
\n“accredited investor” within the meaning of Rule 501 promulgated under the
\nSecurities Act and has the corporate, partnership or individual, as the case may
\nbe, power and authority to enter into and perform this Agreement and the other
\nTransaction Agreements to which it is a party and to consummate the transactions
\ncontemplated hereby and thereby. This Agreement has been duly authorized,
\nexecuted and delivered by such Purchaser and constitutes the legal, valid and
\nbinding obligation of such Purchaser, enforceable in accordance with its terms
\nexcept: (i) as such enforceability may be limited by applicable bankruptcy,
\ninsolvency, reorganization, moratorium, fraudulent conveyance, and other laws of
\ngeneral application affecting enforcement of creditors’ rights generally; or
\n(ii) as such enforceability may be limited by laws or equitable principles
\nrelating to the availability of specific performance, injunctive relief, or
\nother equitable remedies.<\/p>\n
3.2 No Conflict With Other Agreements. The execution, delivery
\nand performance of the Transaction Agreements to which such Purchaser is a party
\nand the consummation of the transactions contemplated hereby or thereby will
\nnot, with or without the passage of time and\/or the giving of notice, result in
\na violation or default of any provisions of such Purchaser’s charter, bylaws,
\npartnership agreement, certificate of limited partnership,<\/p>\n
10
\n 13<\/p>\n
limited liability company agreement, certificate of formation or other
\norganizational document or of any order, writ, injunction, judgment, instrument,
\ndecree or contract to which it is a party or by which it is bound or, to its
\nknowledge, of any material provision of a federal or state statute, rule or
\nregulation applicable to such Purchaser.<\/p>\n
3.3 Investment Experience. Such Purchaser is a regular purchaser
\nof securities and acknowledges that it is able to fend for itself, can bear the
\neconomic risk of its investment, and has such knowledge and experience in
\nfinancial or business matters that it is capable of evaluating the merits and
\nrisks of the investment in the Company.<\/p>\n
3.4 Distribution. The Series C Preferred Stock (and the Common
\nStock issuable upon conversion thereof) is being acquired for such Purchaser’s
\nown account, and not as nominee or agent, for the present intention of holding
\nsuch securities for purposes of investment and not with a view to or for resale
\nin connection with any distribution thereof. Such Purchaser further represents,
\nseverally and not jointly, that it understand and agrees that, until registered
\nunder the Securities Act or transferred pursuant to the provisions of Rule 144
\nas promulgated by the Securities and Exchange Commission, all certificates
\nevidencing any of the Series C Preferred Stock (and the Common Stock issuable
\nupon conversion thereof), whether upon initial issuance or upon any transfer
\nthereof, shall bear legends, prominently stamped or printed thereon, reading
\nsubstantially as follows:<\/p>\n
(a) Federal Legend. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
\n SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER ANY STATE
\n SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
\n PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
\n EFFECT WITH RESPECT TO THESE SECURITIES UNDER THE ACT OR APPLICABLE
\n STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
\n TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD
\n PURSUANT TO RULE 144 OF THE ACT.<\/p>\n
(b) any legend required by applicable state securities laws.<\/p>\n
The Company need not register a transfer of legended Series C Preferred
\nStock, and may also instruct its transfer agent not to register the transfer of
\nthe Series C Preferred Stock, unless the conditions specified in the foregoing
\nlegends are satisfied.<\/p>\n
3.5 Disclosure of Information. Such Purchaser has received all
\nthe information it considers necessary or appropriate for deciding whether to
\npurchase the Series C Preferred Stock. Such Purchaser further represents that it
\nhas had an opportunity to ask questions and receive answers from the Company
\nregarding the terms and conditions of the offering of the Series C Preferred
\nStock and the business, properties, prospects and financial condition of the
\nCompany. The foregoing, however, does not limit or modify the representations
\nand warranties of the Company in Section 2 of this Agreement or the right of the
\nPurchasers to rely thereon.<\/p>\n
11
\n 14<\/p>\n
3.6 Restricted Securities. Such Purchaser understands that the
\nshares of Series C Preferred Stock it is purchasing are characterized as
\n“restricted securities” under the federal securities laws inasmuch as they are
\nbeing acquired from the Company in a transaction not involving a public offering
\nand that under such laws and applicable regulations such securities may be
\nresold without registration under the Act only in certain limited circumstances.
\nIn this connection, such Purchaser represents that it is familiar with SEC Rule
\n144, as presently in effect, and understands the resale limitations imposed
\nthereby and by the Securities Act of 1933, as amended.<\/p>\n
3.7 Further Representations by Foreign Purchasers. If a
\nPurchaser is not a United States person, such Purchaser hereby represents that
\nhe or she has satisfied himself or herself as to the full observance of the laws
\nof his or her jurisdiction in connection with any invitation to subscribe for
\nshares of Series C Preferred Stock or any use of this Agreement, including (i)
\nthe legal requirements within his jurisdiction for the purchase of shares of
\nSeries C Preferred Stock, (ii) any foreign exchange restrictions applicable to
\nsuch purchase, (iii) any governmental or other consents that may need to be
\nobtained, and (iv) the income tax and other tax consequences, if any, that may
\nbe relevant to the purchase, holding, redemption, sale, or transfer of shares of
\nSeries C Preferred Stock. Such Purchaser’s subscription and payment for, and his
\nor her continued beneficial ownership of shares of Series C Preferred Stock,
\nwill not violate any applicable securities or other laws of his or her
\njurisdiction.<\/p>\n
3.8 Not Formed for Investment. Such Purchaser was not formed for
\nthe purpose of making an investment in the Company.<\/p>\n
4. Conditions of Purchasers’ Obligations at the Closing. The obligations
\nof each Purchaser to the Company under this Agreement are subject to the
\nfulfillment, on or before the Closing, of each of the following conditions,
\nunless otherwise waived in writing by such Purchaser.<\/p>\n
4.1 Representations and Warranties. The representations and
\nwarranties of the Company contained in Section 2 shall be true and correct in
\nall material respects on and as of the Initial Closing.<\/p>\n
4.2 Performance. The Company shall have performed and complied
\nin all material respects with all covenants, agreements, obligations and
\nconditions contained in this Agreement that are required to be performed or
\ncomplied with by the Company on or before the Closing.<\/p>\n
4.3 Compliance Certificate. The President of the Company shall
\ndeliver to each Purchaser at the Closing a certificate certifying that the
\nconditions specified in Sections 4.1 and 4.2 have been fulfilled.<\/p>\n
4.4 Qualifications. All authorizations, approvals or permits, if
\nany, of any governmental authority or regulatory body of the United States or of
\nany state that are required in connection with the lawful issuance and sale of
\nthe Series C Preferred Stock pursuant to this Agreement shall be obtained and
\neffective as of the Closing.<\/p>\n
12
\n 15<\/p>\n
4.5 Opinion of Company Counsel. The Purchasers shall have
\nreceived from Doty Sundheim & Gilmore, counsel for the Company, an opinion,
\ndated as of the Closing, in substantially the form of Exhibit E attached hereto.<\/p>\n
4.6 Supporting Documents. The Purchasers shall have received the
\nfollowing:<\/p>\n
(a) A copy of resolutions of the Board of Directors of
\nthe Company authorizing and approving the Transaction Agreements and copies of
\nresolutions of the Board of Directors and stockholders of the Company
\nauthorizing and approving the adoption of the Restated Certificate that is
\ncontemplated by this Agreement, all such resolutions to be certified by the
\nSecretary of the Company;<\/p>\n
(b) A Certificate of Incumbency executed by the
\nSecretary of the Company certifying the names, titles and signatures of the
\nofficers authorized to execute the Transaction Agreements and further certifying
\nthat the Restated Certificate and Bylaws of the Company delivered to the
\nPurchasers at the time of the execution of this Agreement have been validly
\nadopted and have not been amended or modified except as required by this
\nAgreement; and<\/p>\n
(c) Such additional supporting documentation and other
\ninformation with respect to the transactions contemplated hereby as any
\nPurchaser or its legal counsel may reasonably request.<\/p>\n
4.7 Board of Directors. As of the Initial Closing, the Company’s
\nBoard of Directors shall consist of no more than 8 members. Effective as of the
\ntime of the Initial Closing, by appropriate action of the Board of Directors
\nand\/or the Stockholders of the Company, one person designated by PAR Capital
\nManagement, Inc. (“PAR” and such designee the “PAR Designee”) shall be elected
\nor appointed to the Company’s Board of Directors, if not already on the Board of
\nDirectors. All other members of the Company’s Board of Directors (not to exceed
\n7 in number) shall remain as members of the Board of Directors, subject to the
\nprovisions of the Company’s Restated Certificate and Bylaws as from time to time
\nin effect.<\/p>\n
4.8 Registration Rights Agreement. The Company, each Purchaser
\nthat is a party thereto and the other parties thereto shall have executed and
\ndelivered the Registration Rights Agreement in substantially the form attached
\nhereto as Exhibit B.<\/p>\n
4.9 Restated Certificate. The Company shall have filed the
\nRestated Certificate with the Secretary of State of Delaware on or prior to the
\ndate of the Closing, which shall continue to be in full force and effect as of
\nthe date of the Closing.<\/p>\n
4.10 Employment Agreements. The members of the Company’s senior
\nmanagement shall have entered into a Proprietary Information and Inventions
\nAgreement in the form attached hereto as Exhibit C.<\/p>\n
4.11 Co-Sale and Right of First Refusal Agreement. The Company,
\nRaymond C. Musci, Anthony R. Williams and each Purchaser shall have executed and
\ndelivered the Co-Sale and Right of First Refusal Agreement substantially in the
\nform attached hereto as Exhibit F.<\/p>\n
13
\n 16<\/p>\n
5. Conditions of the Company’s Obligations at the Closing. The
\nobligations of the Company to each Purchaser under this Agreement are subject to
\nthe fulfillment, on or before the Closing, of each of the following conditions,
\nunless otherwise waived by the Company in writing; provided, however, that the
\nnon-fulfillment of a condition by a Purchaser will not relieve the Company of
\nits obligation to each other fulfilling Purchaser.<\/p>\n
5.1 Representations and Warranties. The representations and
\nwarranties of such Purchaser contained in Section 3 shall be true and correct on
\nand as of the date of the Closing with the same effect as though such
\nrepresentations and warranties had been made on and as of the date of Closing.<\/p>\n
5.2 Performance. All covenants, agreements and conditions
\ncontained in this Agreement to be performed by such Purchaser on or prior to the
\nClosing shall have been performed or complied with.<\/p>\n
5.3 Registration Rights Agreement. Such Purchaser shall have
\nexecuted and delivered the Registration Rights Agreement in substantially the
\nform attached hereto as Exhibit B.<\/p>\n
5.4 Payment of Purchase Price. Each Purchaser shall have
\ndelivered the purchase price specified in Section 1.1 of this Agreement.<\/p>\n
5.5 Qualifications. All authorizations, approvals, or permits,
\nif any, of any governmental authority or regulatory body of the United States or
\nof any state that are required in connection with the lawful issuance and sale
\nof the Series C Preferred Stock pursuant to this Agreement shall be obtained and
\neffective as of the Closing.<\/p>\n
6. Post-Closing Covenants. The Company and Purchasers agree as follows
\nwith respect to the period following the Closing.<\/p>\n
6.1 Financial Reporting. The Company shall provide Purchasers
\nwith the following periodic reports: (a) as soon as available, but in any event
\nwithin forty five (45) days after the end of each quarter accounting period in
\neach fiscal year, unaudited statements of income, operations and cash flows of
\nthe Company for such quarterly period and unaudited balance sheets of the
\nCompany as of the end of such quarter period and all such statements shall be
\nprepared in accordance with GAAP (provided, however, that such statements need
\nnot comply with the footnote disclosure requirements of GAAP); and (b) as soon
\nas available, but in any event within ninety (90) days after the end of each
\nfiscal year, audited statements of income, operations, retained earnings and
\ncash flows of the Company for such fiscal year and audited balance sheets of the
\nCompany as of the end of such fiscal year, all prepared in accordance with GAAP,
\nall in reasonable detail and duly certified by the accountants, who shall have
\ngiven the Company an opinion, unqualified as to the scope of the audit,
\nregarding such statements.<\/p>\n
6.2 Participation Rights. Purchasers shall have the right, but
\nnot the obligation, to participate pro rata (on the same terms and at the same
\nprice) in any offering and sale of stock (common or preferred) made by the
\nCompany to any person or entity after the date<\/p>\n
14
\n 17<\/p>\n
of this Agreement (the “Purchaser Participation Right”); provided, however, that
\nthis Section 6.2 shall not apply in the case of the grant of options to
\nofficers, directors and employees pursuant to the terms of the Stock Plan, the
\npurchase of Common Stock upon the exercise of such options or the purchase of
\nWarrant Shares upon the exercise of the Warrants. The Purchaser Participation
\nRight shall expire and terminate upon the successful completion by the Company
\nof a Qualified Public Offering (as defined in Exhibit A) and shall not apply in
\nthe event of a Qualified Public Offering.<\/p>\n
6.3 Compensation Committee. PAR Designee shall be a member of
\nthe Company’s Compensation Committee (the “Compensation Committee”). All
\ncompensation arrangements of the Company’s key employees, officers and directors
\nshall be approved by the Compensation Committee; provided, however, that so long
\nas less than a majority of the Compensation Committee consists of outside
\ndirectors such approval shall require an affirmative vote or consent of the PAR
\nDesignee. For the purpose of this Section 6.3, “outside directors” shall not
\ninclude any director employed by the Company or who holds (individually or
\nthrough an entity or entities) at least 1% of the outstanding capital stock of
\nthe Company.<\/p>\n
7. Miscellaneous.<\/p>\n
7.1 Survival of Warranties. The representations, warranties and
\ncovenants of the Company and the Purchasers contained in or made pursuant to
\nthis Agreement shall survive the execution and delivery of this Agreement and
\neach Closing.<\/p>\n
7.2 Transfer; Successors and Assigns. The terms and conditions
\nof this Agreement shall inure to the benefit of and be binding upon the
\nrespective successors and assigns of the parties.<\/p>\n
7.3 No Third Party Beneficiaries. Nothing express or implied in
\nthis Agreement is intended to confer, nor shall anything herein confer, upon any
\nother than the parties hereto and the respective successors or assigns of such
\nparties, any rights, remedies, obligations or liabilities whatsoever.<\/p>\n
7.4 Governing Law. THE LAWS OF THE STATE OF CALIFORNIA SHALL
\nGOVERN THE INTERPRETATION, VALIDITY AND PERFORMANCE OF THE TERMS OF THIS
\nAGREEMENT REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF
\nCONFLICTS OF LAW.<\/p>\n
7.5 Counterparts. This Agreement may be executed in one or more
\ncounterparts, each of which shall be deemed an original and all of which
\ntogether shall constitute one instrument.<\/p>\n
7.6 Titles and Subtitles. The titles and subtitles used in this
\nAgreement are used for convenience only and are not to be considered in
\nconstruing or interpreting this Agreement.<\/p>\n
7.7 Notices. Any notice required or permitted by this Agreement
\nshall be in writing and shall be deemed given upon delivery, when delivered
\npersonally or by overnight courier or sent by telegram or fax, or forty-eight
\n(48) hours after being deposited in the U.S.<\/p>\n
15
\n 18<\/p>\n
mail, as certified or registered mail, with postage prepaid, addressed to the
\nparty to be notified at such party’s address as set forth below or on Schedule 1
\nhereto, or as subsequently modified by written notice, and:<\/p>\n
(a) if to the Company:<\/p>\n
BAM! Entertainment, Inc.
\n 333 West Santa Clara Street
\n Suite 930
\n San Jose, California 95113
\n Attention: Raymond C. Musci
\n Facsimile: (408) 298-9600<\/p>\n
with a copy to:<\/p>\n
Doty Sundheim & Gilmore
\n 260 Sheridan Avenue
\n Suite 200
\n Palo Alto, California 94306
\n Attention: George M. Sundheim III, Esq.
\n Facsimile: (650) 327-0101<\/p>\n
(b) if to PAR:<\/p>\n
PAR Capital Management, Inc.
\n One Financial Center, Suite 1600
\n Boston, MA 02111
\n Attention: David Tobin
\n Facsimile: (617) 556-8875<\/p>\n
with a copy to:<\/p>\n
Goodwin, Proctor & Hoar, LLP
\n Exchange Place
\n Boston, MA 02109
\n Attention: Jeffrey C. Hadden
\n Facsimile: (617) 523-1231<\/p>\n
(c) To any other Purchaser: The address reflected on the
\nsignature page to this Agreement or at such other address or addresses as shall
\nhave been furnished in writing by such party to the other parties to this
\nAgreement.<\/p>\n
7.8 Finder’s Fee. Each party represents that it neither is nor
\nwill be obligated for any finder’s fee(s) or commission in connection with this
\ntransaction for which any other party hereto could become liable. Each Purchaser
\nagrees to indemnify and to hold harmless the Company from any liability for any
\ncommission or compensation in the nature of any finder’s fee(s) (and the costs
\nand expenses of defending against such liability or asserted liability) for
\nwhich such Purchaser or any of its officers, partners, employees, or
\nrepresentatives is<\/p>\n
16
\n 19<\/p>\n
responsible. The Company has engaged Morgan Keegan as placement agent for the
\nshares of Series C Preferred Stock being sold hereunder and shall be responsible
\nfor the payment of all fees and other amounts payable to Morgan Keegan in
\nconnection therewith. The Company agrees to indemnify and hold harmless each
\nPurchaser from any liability for any commission or compensation in the nature of
\na finder’s fee(s) (and the costs and expenses of defending against such
\nliability or asserted liability) for which the Company or any of its officers,
\nemployees, or representatives is responsible.<\/p>\n
7.9 Expenses. Each party shall bear its own cost and expenses
\nincurred with respect to this Agreement and the documents referred to herein
\nincluding attorney’s fees.<\/p>\n
7.10 Amendments and Waivers. Any term of this Agreement may be
\namended or waived, and this Agreement may be terminated, with the written
\nconsent of the Company and Purchasers representing at least a majority of the
\noutstanding Series C Preferred Stock (or the Common Stock issuable upon
\nconversion thereof) purchased hereunder. Any amendment or waiver effected in
\naccordance with this Section 7.10 shall be binding upon the Purchasers and each
\nholder or transferee of the Series C Preferred Stock (or the Common Stock
\nissuable upon conversion thereof), each future holder of all such securities,
\nand the Company.<\/p>\n
7.11 Severability. If any one or more of the provisions
\ncontained herein, or the application thereof in any circumstance, is held
\ninvalid or unenforceable in any respect for any reason, the validity, legality
\nand enforceability of any such provision in every other respect and of the
\nremaining provisions hereof shall not be in any way impaired or affected, and
\nall such remaining provisions hereof shall be enforceable in accordance with
\ntheir terms.<\/p>\n
7.12 Delays or Omissions. No delay or omission to exercise any
\nright, power or remedy accruing to any holder of any of the Series C Preferred
\nStock (or the Common Stock issuable upon conversion thereof) or to the Company,
\nupon any breach or default of the Company or by any Purchaser under this
\nAgreement, shall impair any such right, power or remedy of any Purchaser or the
\nCompany, as the case may be, nor shall it be construed to be a waiver of any
\nsuch breach or default, or an acquiescence therein, or of or in any similar
\nbreach or default thereafter occurring; nor shall any waiver of any single
\nbreach or default be deemed a waiver of any other breach or default theretofore
\nor thereafter occurring. Any waiver, permit, consent or approval of any kind or
\ncharacter on the part of any Purchaser or the Company, as the case may be, of
\nany breach or default under this Agreement, or any waiver on the part of any
\nPurchaser or the Company, as the case may be, of any provisions or conditions of
\nthis Agreement, must be in writing and shall be effective only to the extent
\nspecifically set forth in such writing. All remedies, either under this
\nAgreement or by law or otherwise afforded to any holder, shall be cumulative and
\nnot alternative.<\/p>\n
17
\n 20
\n 7.13 Entire Agreement. This Agreement, the Registration Rights
\nAgreement and the other documents referred to herein to which any Purchaser is a
\nparty constitute the entire agreement among the parties hereto pertaining to the
\nsubject matter hereof, and this Agreement supersedes all prior agreements and
\nunderstanding among the parties with respect to the subject matter hereof.<\/p>\n
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
\nexecuted and delivered by their respective duly authorized officers or
\nrepresentatives as of the date first written above.<\/p>\n
COMPANY:<\/p>\n
BAM! ENTERTAINMENT, INC.<\/p>\n
By: \/s\/ RAYMOND C. MUSCI
\n —————————————-
\n Raymond C. Musci, President<\/p>\n
By: \/s\/ GEORGE M. SUNDHEIM, III
\n —————————————-
\n George M. Sundheim, III, Secretary<\/p>\n
PURCHASERS:<\/p>\n
PAR CAPITAL MANAGEMENT, INC.<\/p>\n
By: \/s\/ DAVID E. TOBIN
\n —————————————-
\n Name: David E. Tobin
\n Title: Vice President<\/p>\n
MORGAN KEEGAN EARLY STAGE FUND, L.P.<\/p>\n
By: MERCHANT BANKERS, INC. as the general
\n partner of Morgan Keegan Early Stage
\n Fund, L.P.<\/p>\n
By: \/s\/ MINOR PERKINS
\n ————————————
\n Name: Minor Perkins
\n Title: Vice President<\/p>\n
\/s\/ RAYMOND C. MUSCI
\n ——————————————–
\n Raymond C. Musci<\/p>\n
\/s\/ ANTHONY R. WILLIAMS
\n ——————————————–
\n Anthony R. Williams<\/p>\n
\/s\/ ROBERT HOLMES
\n ——————————————–
\n Robert Holmes<\/p>\n
18<\/p>\n
21
\n \/s\/ STEPHEN AMBLER
\n —————————————-
\n Stephen Ambler<\/p>\n
\/s\/ JOSEPH MORICI
\n —————————————-
\n Joseph Morici<\/p>\n
\/s\/ MARK DYNE
\n —————————————-
\n Mark Dyne<\/p>\n
\/s\/ KEVIN BERMEISTER
\n —————————————-
\n Kevin Bermeister<\/p>\n
\/s\/ ANTHONY NEUMANN
\n —————————————-
\n Anthony Neumann<\/p>\n
FIMAS, a Partnership<\/p>\n
By: \/s\/ GEORGE M. SUNDHEIM, III
\n ———————————–
\n Name: George M. Sundheim, III
\n Its: General Partner<\/p>\n
\/s\/ PAMELA COLBURN
\n —————————————-
\n Pamela Colburn<\/p>\n
\/s\/ TERRY PHILLIPS
\n —————————————-
\n Terry Phillips<\/p>\n
\/s\/ DAVID P. CLARK
\n —————————————-
\n David P. Clark<\/p>\n
\/s\/ STEVEN J. MASSARSKY
\n —————————————-
\n Steven J. Massarsky<\/p>\n
K&L 2000 LLC<\/p>\n
By: \/s\/ PAUL W. SWEENEY, JR.
\n ———————————–
\n Name: Paul W. Sweeney, Jr.
\n Title: Admin. Partner — LA<\/p>\n
19
\n 22<\/p>\n
EXHIBIT A<\/p>\n
Form of Second Amended and Restated Certificate of Incorporation<\/p>\n
i
\n 23<\/p>\n
EXHIBIT B<\/p>\n
Registration Rights Agreement<\/p>\n
ii
\n 24<\/p>\n
EXHIBIT C<\/p>\n
Form of Proprietary Information and Inventions Agreement<\/p>\n
iii
\n 25<\/p>\n
EXHIBIT D<\/p>\n
Bylaws of the Company<\/p>\n
iv
\n 26<\/p>\n
EXHIBIT E<\/p>\n
Form of Opinion of Counsel to the Company<\/p>\n
v
\n 27<\/p>\n
EXHIBIT F<\/p>\n
Co-Sale and Right of First Refusal Agreement<\/p>\n
vi
\n 28<\/p>\n
SCHEDULE 1<\/p>\n
Schedule of Purchasers<\/p>\n
\n\n NUMBER OF SHARES OF PURCHASE
\n PURCHASER SERIES C PREFERRED STOCK PRICE
\n ——— ———————— ———-
\n
\nPAR Capital Management, Inc. 88,680 $2,000,000<\/p>\nRaymond C. Musci 13,302 $ 300,000<\/p>\n
Anthony R. Williams 13,302 $ 300,000<\/p>\n
Morgan Keegan Early Stage Fund, L.P. 88,680 $2,000,000<\/p>\n
Robert Holmes 6,651 $ 150,000<\/p>\n
Stephen Ambler 1,109 $ 25,000<\/p>\n
Joseph Morici 887 $ 20,000<\/p>\n
Mark Dyne 4,434 $ 100,000<\/p>\n
Kevin Bermeister 4,434 $ 100,000<\/p>\n
K & L 2000 LLC 1,109 $ 25,000<\/p>\n
Pam Colburn 1,109 $ 25,000<\/p>\n
Anthony Neumann 1,109 $ 25,000<\/p>\n
Terry Phillips 13,302 $ 300,000<\/p>\n
Steve Massarsky 2,217 $ 50,000<\/p>\n
David Clark 4,434 $ 100,000<\/p>\n
FIMAS, L.P., a Partnership 900 $ 20,297.70<\/p>\n
TOTAL 245,659 $5,540,297.70
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
vii
\n 29<\/p>\n
SCHEDULE 2.2(a)<\/p>\n
Contingent Reserved Common Shares<\/p>\n
\n
\nFranchise Films, Inc. 131,625
\nSpyglass Entertainment Group, L.P. 100,000
\n<\/c><\/s><\/table>\n viii
\n 30<\/p>\n
SCHEDULE 2.2(d)<\/p>\n
Stockholders and Option Holders List<\/p>\n
\n
\nCOMMON STOCKHOLDERS<\/p>\nRaymond C. Musci 123,609
\nRobert E. Lloyd 9,750
\nTracy Ann Sebastian 9,750
\nPhilip L. Rosenberg 9,750
\nRobert Holmes 32,224
\nGary Nemetz 9,750
\nD&S Partners, a California General Partnership 9,750
\nAnthony R. Williams 89,897
\nKevin Bermeister 3,656
\nMark Dyne 3,656
\nElie Samaha 7,312
\nFIMAS, L.P., a Partnership 3,656
\nFranchise Films, Inc. 14,625<\/p>\n
PREFERRED SERIES A STOCKHOLDERS<\/p>\n
Raymond C. Musci 482,625
\nAnthony R. Williams 351,000
\nRobert Holmes 87,750
\nKevin Bermeister 10,969
\nMark Dyne 10,969
\nElie Samaha 21,938
\nFIMAS, L.P., a Partnership 10,969<\/p>\n
PREFERRED SERIES B STOCKHOLDERS<\/p>\n
PAR Capital Management, Inc 198,301
\nRaymond C. Musci 28,329
\nAnthony R. Williams 28,329
\nMorgan Keegan Early Stage Fund, L.P. 22,092
\nRobert Holmes, Jr 11,332
\nMorgan Keegan Employee Investment Fund, L.P. 6,237<\/p>\n
OPTION HOLDERS<\/p>\n
Robin Cairns 2,500
\nAaron Endo 7,500
\nLynnie Nojadera 3,500
\nJoe Morici 5,000
\nHideo Oishi 5,000
\n<\/c><\/s><\/table>\n
ix
\n 31<\/p>\n
\n
\nMark Dyne 4,000
\nRobert Holmes 4,000
\nRobert Lloyd 4,000
\nScott Smith 1,250
\nGeorge M. Sundheim, III 4,000
\nSherri Zook 2,500
\nJoe Booth 6,000
\nLisa Cheney Bolcato 4,500
\nPierson Lippard 4,000
\nMatt Wilkinson 4,000
\nSamuel Allen 2,500
\nPete Johnson 2,500
\nKevin Watts 2,500
\nRichard Coles 1,250
\nPaul Hodge 1,250
\nKarl D’Costa 1,250
\nMark Harris 1,250
\nMikel Barron Bilbao 1,250
\nRachel Segens 1,250
\nCharlie Hasdell 1,250
\nJake Noakes 1,250
\nThomas Woodley 1,250
\nDoug Day 1,250
\nMichael Jacobsen 1,250
\nJeff Pena 2,500
\nStephen Ambler 12,750
\nSusan Kramer 2,500
\nDavid Blundell 1,250
\nMatthew Cooling 1,250
\nMarcus Fielding 1,250
\nAnne-Christine Gasc 1,250
\nJames Hawkins 1,250
\nCiaran Rooney 1,250
\nMagnolia Tsele 1,250
\nAndrew Williams 1,250<\/p>\nWARRANT HOLDERS<\/p>\n
PAR Capital 30,000
\nK & L 2000 10,000
\n<\/c><\/s><\/table>\n
x
\n 32<\/p>\n
SCHEDULE 2.3<\/p>\n
Subsidiaries<\/p>\n
BAM Studios (Europe) Ltd.<\/p>\n
2 shares issued to BAM! Entertainment Limited (1 Pound Sterling) per
\nshare<\/p>\n
BAM Entertainment Ltd.<\/p>\n
2 shares issued to BAM! Entertainment, Inc. (1 Pound Sterling) per share<\/p>\n
xi
\n 33<\/p>\n
SCHEDULE 2.7<\/p>\n
Litigation<\/p>\n
In a letter dated May 21, 2001, Nintendo of North America and Spike Co., Ltd.
\nreceived a letter from counsel to World Wrestling Federation Entertainment, Inc.
\n(“WWFE”) claiming a yet to be released game “Fire ProWrestling” (the “Game”)
\nviolated certain WWFE intellectual property rights and demanding that each of
\nthem cease the US distribution of the Game. The Company, which holds the rights
\nto the US version of the Game, believes that the Game slated for sale in North
\nAmerica does not violate WWFE’s rights as the US version does not contain
\nreferences to the characters, moves or wrestling organizations mentioned in the
\nletter.<\/p>\n
xii
\n 34<\/p>\n
SCHEDULE 2.8(a)<\/p>\n
Material Intellectual Property<\/p>\n
Trademark application attached.
\nList of attached agreements.<\/p>\n
xiii
\n 35<\/p>\n
SCHEDULE 2.8(b)<\/p>\n
Certain IP Agreements<\/p>\n
PowerPuff Girls license with Warner Brothers (8\/16\/00 — 8\/16\/03)
\nSports Illustrated, Inc. for Kids with Time (7\/12\/00)
\nFranchise Films Output Agreement (4\/7\/00 — 4\/7\/03)
\nSpyglass Entertainment Group, L.P. Output Agreement (10\/1\/00 — 10\/1\/05)<\/p>\n
xiv
\n 36<\/p>\n
SCHEDULE 2.10<\/p>\n
Agreements<\/p>\n
List of agreements attached.<\/p>\n
xv
\n 37<\/p>\n
SCHEDULE 2.10(b)<\/p>\n
Non-binding Agreements<\/p>\n
See attached list.<\/p>\n
xvi
\n 38<\/p>\n
SCHEDULE 2.11<\/p>\n
Liabilities<\/p>\n
None.<\/p>\n
xvii
\n 39<\/p>\n
SCHEDULE 2.13<\/p>\n
Conflicts<\/p>\n
Directors:<\/p>\n
Mark Dynes: Chairman & CEO of Brilliant Digital Entertainment (BDE –
\nAMEX), beneficial owner of roughly 8% of the common stock outstanding, owns
\nand\/or controls roughly 40% of Infogrames\/OziSoft, a video game distributor in
\nAustralia; also holds approximately 2% of Titus.<\/p>\n
Robert Holmes: GBA, LLC – managing member of investment venture into
\nRipcord, some Southpeak; PCH, LLC – managing member investment venture;
\nEntertainment Brands, Inc. – Director, shareholder; Ripcord Games Director,
\nshareholder (1\/3); Northport Ventures – venture company; Acclaim Entertainment –
\ncontractual representatives and stock; Take Two – stock remaining from early
\nprivate placement; Business Incubation Group no current conflict, (some emulator
\nproposals that involve Raymond C. Musci); iBuyline, Inc. – ESD company sold to
\naggregator; NTN communications – shareholder – mini games and wireless.<\/p>\n
Raymond C. Musci: Director of Brilliant Digital Entertainment.<\/p>\n
xviii
\n 40<\/p>\n
SCHEDULE 2.17<\/p>\n
Employee Benefit Plans<\/p>\n
BAM! 401(k) Plan Summary Plan Description attached.<\/p>\n
U.K. Employees are not entitled to participate in the BAM! 401(K) Plan, but an
\nequivalent European pension plan is planned.<\/p>\n
xix
\n 41<\/p>\n
SCHEDULE 2.24<\/p>\n
Financial Statements<\/p>\n
Financial Statements attached.<\/p>\n
xx
\n 42<\/p>\n
SCHEDULE 2.25(d)<\/p>\n
Changes; Contracts\/Agreements<\/p>\n
First Amendment to Master Purchase Order Assignment Agreement (attached).<\/p>\n
Second Amendment to Master Purchase Order Assignment Agreement (attached).<\/p>\n
Third Amendment to Master Purchase Order Assignment Agreement (attached).<\/p>\n
Warner Bros. License Agreement #12177-PPG (Powerpuff Girls)-Amendment #1
\n(attached).<\/p>\n
xxi
\n 43<\/p>\n
SCHEDULE 2.25(e)<\/p>\n
Changes; Compensation\/Agreements with employees,
\n representatives, agents, officers, directors or stockholders<\/p>\n
Changes to compensation arrangement or agreement with any employee,
\nrepresentative, agents, officer, director or stockholder attached.<\/p>\n
xxii
\n 44<\/p>\n
SCHEDULE 2.25(i)<\/p>\n
Changes; Loans\/Guarantee<\/p>\n
Comerica loan documents attached.<\/p>\n
xxiii<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6843],"corporate_contracts_industries":[9513],"corporate_contracts_types":[9622,9627],"class_list":["post-43599","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-bam-entertainment-inc","corporate_contracts_industries-technology__software","corporate_contracts_types-planning","corporate_contracts_types-planning__purchase"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43599","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43599"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43599"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43599"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43599"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}