<PAGE>
As filed with the Securities and Exchange Commission on September 2, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
REGISTRATION STATEMENT
ON
FORM S-3
UNDER
THE SECURITIES ACT OF 1933
-------------------------------
YES! ENTERTAINMENT CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 94-3165290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3875 Hopyard Road, Suite 375
Pleasanton, CA 94588
(510) 847-9444
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
-------------------------------
DONALD KINGSBOROUGH
CHIEF EXECUTIVE OFFICER
3875 Hopyard Road, Suite 375
Pleasanton, CA 94588
(510) 847-9444
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-------------------------------
Copies to:
PATRICK A. POHLEN, ESQ.
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
(650) 843-5000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_] _______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================
Title of Securities to be Amount to be Proposed Proposed Amount of
Registered Registered Maximum Maximum Registration
Offering Price Aggregate Fee
Per Share(1) Offering Price(1)
===================================================================================================
<S> <C> <C> <C> <C>
Common Stock, par value 831,000 $3.938 $3,272,478 $991.66
$.001 per share
- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated in accordance with Rule 457(c) solely for the purpose of
calculating the registration fee based upon the average of the high and low
sale prices of the Common Stock as reported on the Nasdaq National Market
on August 29, 1997.
================================================================================
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
PROSPECTUS
YES! ENTERTAINMENT CORPORATION
831,000 shares of Common Stock (par value $.001 per share)
This Prospectus relates to the offer and sale of up to 831,000 shares
of Common Stock (the "Common Stock") of YES! Entertainment Corporation, a
Delaware corporation ("YES!" or the "Company") which may be sold by the
Selling Stockholders identified herein (the "Selling Stockholders"). The
Company will not receive any of the proceeds from the sale of the securities
offered hereby. See "Plan of Distribution"
The Selling Stockholders are identified and certain information with
respect to them is provided under the caption "Selling Stockholders" herein. The
expenses of the registration of the securities offered hereby, including fees of
counsel for the Company, will be paid by the Company. Any underwriting discounts
and selling commissions, and fees of legal counsel, if any, for the Selling
Stockholders, will be borne by the Selling Stockholders.
The Selling Stockholders have advised the Company that they have not
engaged any person as an underwriter or selling agent for any of such shares,
but they may in the future elect to do so, and they will be responsible for
paying such a person or persons customary compensation for so acting. The
Selling Stockholders and any broker executing sell orders on behalf of any
Selling Stockholder may be deemed to be "underwriters" within the meaning of the
Securities Act, in which event commissions received by any such broker may be
deemed to be underwriting commissions under the Securities Act.
The Company's Common Stock is traded on the Nasdaq National Market under
the symbol YESS. On August 29, 1997, the last reported sales price of the
Common Stock as reported on the Nasdaq National Market was $4.00 per share.
-------------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 OF THIS PROSPECTUS.
-------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN SECURITIES OFFERED BY
THIS PROSPECTUS, OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES BY ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IS UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS SHALL NOT,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
-------------------------------
September 2, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Incorporation of Certain Documents by Reference.......................... i
Prospectus Summary....................................................... 1
The Company.............................................................. 1
Risk Factors............................................................. 2
Dividend Policy.......................................................... 6
Selling Stockholders..................................................... 6
Plan of Distribution..................................................... 7
Legal Matters............................................................ 8
Experts.................................................................. 8
Available Information.................................................... 8
</TABLE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions of documents heretofore filed by the
Company with the Securities and Exchange Commission (the "Commission") (File No.
0-25916) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") are incorporated herein by reference: (1) Annual Report on Form 10-K for
the year ended December 31, 1996; (2) Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997; (3) Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997; (4) Proxy Statement for Annual Meeting of Shareholders held
on May 20, 1997; (6) Current Report on Form 8-K filed on February 11, 1997; (7)
Current Report on Form 8-K filed on March 24, 1997; (8) Current Report on Form
8-K filed on August 4, 1997; and (9) the description of the Company's Common
Stock contained in the Company's Registration Statement on Form 8-A filed with
the Commission under the Exchange Act on April 20, 1995, declared effective on
June 7, 1995 and amended by the Company's Registration Statement on Form 8-B
filed on October 31, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such reports and documents. The Company will provide without
charge to each person to whom this Prospectus is delivered, a copy of any and
all of such documents which are incorporated herein by reference (exclusive of
exhibits unless such exhibits are specifically incorporated by reference
herein), upon written request to YES! Entertainment Corporation, 3875 Hopyard
Road, Suite 375, Pleasanton, California 94588, to the attention of the Secretary
(telephone number (510) 847-9444).
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document that also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
i
<PAGE>
PROSPECTUS SUMMARY
YES! and YAK BAK are registered trademarks and YES! GEAR, MEGA, POWER PENZ,
V-LINK, AIR VECTORS, YES! PRE-SCHOOL, YES! GIRL, DISGUSTING DESIGNS, RADICAL AIR
WEAPONS (R.A.W.) and YES! EXTREME are trademarks of YES! Entertainment
Corporation. MRS. FIELDS is a registered trademark of the Mrs. Fields
Development Corporation. BASKIN 31 ROBBINS is a registered trademark of Baskin-
Robbins USA, Incorporated.
THE COMPANY
YES! Entertainment Corporation ("YES!" or the "Company") develops,
manufactures and markets toys and other entertainment products, including a
variety of interactive products. YES! applies innovative technology available
in other industries to design products that are fun for children and build on
their natural creativity. Most of YES!'s products target children between the
ages of two and twelve.
YES! was incorporated in California in September 1992 and began operations
in November 1992. The Company changed its state of incorporation to Delaware in
October 1996.
The Company generated net revenues of $69.7 million, $55.7 million and
$36.4 million in 1996, 1995 and 1994 respectively. The Company incurred
operating losses from its inception through the quarter ended June 30, 1995,
incurred a net loss of approximately $12.6 million in 1996, incurred a net
loss of approximately $5.5 million (a net loss applicable to Common
stockholders of $8.1 million) for the six months ended June 30, 1997, and had
an accumulated deficit of approximately $60.8 million at June 30, 1997.
The Company's executive offices are located at 3875 Hopyard Road, Suite
375, Pleasanton, California 94588 and its telephone number is (510) 847-9444.
1
<PAGE>
RISK FACTORS
The securities offered hereby involve a high degree of risk. Accordingly,
in analyzing an investment in these securities, prospective investors should
carefully consider the following risk factors, along with other information
referred to herein. No investor should participate in this offering unless such
investor can afford the loss of his or her entire investment. Because of the
variety and uncertainty of the factors affecting the Company's operating
results, past financial performance and historic trends may not be a reliable
indicator of future performance. These factors, as well as other factors
affecting the Company's operating performance, and the fact that the Company
participates in a highly dynamic industry, may result in significant volatility
in the Company's common stock price. This prospectus contains or incorporates by
reference certain forward-looking statements based on management's expectations
at the time such statements were made. These statements are subject to risks and
uncertainties, including those enumerated below. Actual results and the timing
of certain events may differ materially from those projected in such forward-
looking statements due to a number of risk factors, including those set forth
below.
Limited Operating History; History of Losses; Accumulated Deficit; Risk to
Profitability. The Company has a short operating history, having commenced
operations in November 1992 and shipped its first product in July 1993. Although
the Company has achieved approximately $210 million in cumulative net sales
through June 30, 1997, the Company incurred substantial operating losses in 1993
and 1994, and again in 1996, and at June 30, 1997 had an accumulated deficit of
approximately $60.8 million. Future profitability and the Company's ability to
obtain future financing on favorable terms is dependent upon the Company's
ability to successfully and timely introduce, finance and manufacture its new
products, successfully market its existing products and collect trade
receivables in a timely manner.
Dependence on 1997 Products; Increase in Fixed Expenses. In 1997, the Company
has introduced and expects to commence sales of a number of new product lines in
new product categories, such as the Baskin-Robbins(R) Ice Cream Maker, Air
Vectors(TM), YES! Extreme(TM), and YES! PreSchool(TM). In addition, the Company
also expects to expand its existing product lines in 1997, particularly its YES!
Gear, Power Penz(TM) and Mrs. Fields(TM) line of products. Manufacturing of
certain of these items in commercial quantities has not commenced or is just
commencing. The Company expects that completing the development and the
manufacture of its 1997 product lines will place great demands on management and
other Company resources. If the Company is not able to complete the development,
tooling, manufacture and successful marketing of its 1997 product lines, the
Company's operating results and financial condition would be materially
adversely affected. In addition, the Company has increased its fixed expenses in
anticipation of the introduction of the Company's 1997 product
lines. In the event expected sales volumes are not achieved, this increase in
fixed expenses could adversely affect the Company's operating results and
financial condition.
Dependence on YES! Gear and Power Penz. The majority of the Company's current
product lines are sold under the YES! Gear and Power Penz brands, which together
accounted for 83% and 58% of the Company's sales in 1996 and 1995, respectively.
The Company expects YES! Gear, and in particular the Yak Bak(R), and the Power
---------
Penz product lines to continue to account for a substantial percentage of the
Company's business. However, there can be no assurance that the Company will be
able to sustain Yak Bak and Power Penz sales at 1996 levels. See Short Product
Cycles. In addition, the Company is aware that a number of toy manufacturers
have attempted to duplicate the Company's success in this area of product by
introducing similar lines of products in 1996 and for 1997. While the Company
believes it will compete favorably with these new products on the basis of
styling, quality, product depth and promotional support, there
2
<PAGE>
can be no assurance that the sale of these competitive products will not impact
the sale of the YES! Gear or Power Penz product lines, particularly on the basis
of price.
Just in Time Inventory; Compressed Sales Cycles. Most of the Company's
significant customers have adopted inventory management systems to track sales
of particular products and rely on reorders being filled rapidly by suppliers,
rather than maintaining large on-hand inventories to meet consumer demand. While
these systems reduce a retailer's investment in inventory, they increase
pressure on suppliers like the Company to fill orders promptly and shift a
significant portion of inventory risk to the supplier, and may limit the
Company's ability to accurately forecast reorders creating potential volatility
in the Company's operating results. The limited inventory carried by the
Company's customers may also reduce or delay consumer sell-through which in turn
could impair the Company's ability to obtain reorders of its product in
quantities necessary to permit the Company to achieve planned sales and income
growth. In addition, the Company may be required to incur substantial additional
expense to fill late reorders in order to ensure the product is available at
retail locations prior to the peak holiday buying season; these may include
drop-shipment expenses and higher advertising allowances which would otherwise
be born by the Company's customers. In the event that anticipated reorders do
not materialize, the Company's operating results will be adversely affected and
the Company may incur increased inventory carrying costs.
Changes in 1997 Product Line. The Company constantly evaluates the toy markets
and its development and manufacturing schedules. As the year progresses, the
Company may elect to reduce the number of products it currently plans on
shipping in 1997 for a variety of reasons, which include but are not limited to
more accurate evaluation of demand, supply and manufacturing difficulties, or
competitive considerations. Similarly, the Company may add products to its 1997
line either by accelerating development schedules or strategic acquisitions of
current product lines. Reducing or adding products from and to the Company's
line may have an impact on the Company's financial performance depending on,
among other things, the price points, advertising and promotional support for
and development, tooling and manufacturing costs of such products, relative to
products they replace or are replaced by, as the case may be, if at all. The
Company has made adjustments to its 1997 product line to date and expects to
make further adjustments as the year progresses.
Sales Concentration Risk. The Company's ten largest customers accounted for
approximately 85%, 87% and 68% of sales for the years ending December 31, 1996,
1995 and 1994, respectively. For the year ended December 31, 1996, the Company's
two largest customers, Toys 'R Us ("TRU") and Wal-Mart Stores Inc. ("Wal-Mart"),
accounted for 21% and 20% of net sales, respectively. For the year ended
December 31, 1995, the same two customers each accounted for approximately 27%
of net sales and for the year ended December 31, 1994, TRU and Wal-Mart
accounted for 14% and 21% of net sales, respectively. While the Company intends
to expand distribution to new accounts, the Company expects to continue to
depend on a relatively small number of customers for a significant percentage of
its sales. Significant reductions in sales to any one or more of the Company's
largest customers would have a material adverse effect on the Company's
operating results. Because orders in the toy industry are generally cancelable
at any time without penalty, there can be no assurance that present or future
customers will not terminate their purchase arrangements with the Company or
significantly change, reduce or delay the amount of products
3
<PAGE>
ordered from the Company. Any such termination of a significant customer
relationship or change, reduction or delay in significant orders could have a
material adverse effect on the Company's operating results.
Price Protection; Stock Balancing; Reliance on Timely Payment. In connection
with the introduction of new products, many companies in the toy industry
discount prices of existing products, provide for certain advertising allowances
and credits or give other sales incentives to their customers, particularly
their most significant customers. In addition, in order to address working
capital requirements, sales of inventory, changes in marketing trends and other
issues, many companies in the toy industry allow retailers to return slow-moving
products for credit, or if the manufacturer lowers the prices of its products,
to provide price adjustments for inventories on hand at the time the price
change occurs. The Company has made such accommodations in the past, and expects
to make accommodations such as stock balancing, returns, other allowances or
price protection adjustments in 1997. Any significant change in such
accommodations by the Company in the future could have a material adverse effect
on the Company's operating results. In addition, in the past certain of the
Company's retail customers have delayed payment beyond the date such payment is
due and have claimed deductions to which, upon investigation, they may not be
entitled or which may be overstated. Delays or unanticipated reductions in
payments from retail customers in the future could materially impact the
Company's anticipated cash flow to the detriment of the Company's business.
Short Product Cycles. Consumer preferences in the toy industry are continuously
changing and are difficult to predict. Few products achieve market acceptance,
and even when they do achieve commercial success, products typically have short
life cycles. There can be no assurance that (i) new products introduced by the
Company will achieve any significant degree of market acceptance, (ii)
acceptance, if achieved, will be sustained for any significant amount of time,
or (iii) such products' life cycles will be sufficient to permit the Company to
recover development, manufacturing, marketing and other costs associated
therewith. In addition, sales of the Company's existing product lines are
expected to decline over time, and may decline faster than expected unless
existing products are enhanced or new product lines are introduced. Failure of
new or existing product lines to achieve or sustain market acceptance can create
excess inventory, reduce average selling prices and/or require that the Company
provide retailers with financial incentives, any one or all of which results
would have a material adverse effect on the Company's operating results and
financial condition.
International Business Risk. The Company principally relies on foreign
distributors to market and sell the Company's products outside the United
States. Although the Company's international sales personnel work closely with
its foreign distributors, the Company cannot directly control such entities'
sales and marketing activities and, accordingly, cannot directly manage the
Company's product sales in foreign markets. In addition, the Company's
international sales may be disrupted by currency fluctuations or other events
beyond the Company's control, including political or regulatory changes.
Competition. The toy industry is highly competitive. Among the Company's
competitors are toy companies, divisions of large diversified companies, and
producers of consumer electronics products, many of which have greater assets
and resources than those of the Company, as well as
4
<PAGE>
smaller domestic and foreign toy and entertainment products manufacturers,
importers and marketers. The Company's principal competitors include Mattel,
Inc., Hasbro, Inc., and, particularly in the Yak Bak and Power Penz categories,
Tiger Electronics, Inc. These competitors may impede the Company's ability to
maintain market share and pricing goals in its existing categories, and may
prevent the Company from successfully launching new products in categories
served by these competitors.
Dependence on Manufacturing Facilities Based in People's Republic of China. The
Company contracts for the manufacture of substantially all of its products with
entities based in Hong Kong whose manufacturing facilities are located in the
People's Republic of China. In June 1997, Hong Kong became a sovereign territory
of the People's Republic of China. While the People's Republic of China has
provided assurances that Hong Kong will be allowed to maintain critical economic
and tax policies, and while the transition to date has not adversely impacted
the Company's business, there can be no assurance that political or social
tensions will not develop in Hong Kong that would disrupt this process. In
addition, recent tensions between the Peoples Republic of China and the Republic
of China (Taiwan), and the United States' involvement therein, and recent debate
regarding the extension of the Peoples Republic of China most favored nation
trading status, could result either in a disruption in manufacturing in the
China mainland or in the imposition of tariffs or duties on Chinese manufactured
goods. Either event would have an adverse impact on the Company's ability to
obtain its products or on the cost of these products, respectively, such that
its operating results and financial condition would be materially adversely
affected.
Dependence on Restrictive Facility. The Company is dependent on the ARM
Agreement with BNY Financial Corporation to meet its financial needs during
1997, due in large part to the seasonality of the Company's business whereby the
Company is required to finance the manufacture of a substantial portion of its
products in the summer and autumn but does not collect on the sale of these
products until the fourth quarter of that year and the first quarter of the
following year. Under the terms of the ARM Agreement, BNY Financial Corporation
has taken a first priority security interest in substantially all of the
Company's assets, including its intellectual property. The ARM Agreement also
contains a number of restrictive covenants, including covenants concerning the
requirement that Donald Kingsborough and Sol Kershner, the Company's Chief
Executive Officer and Chief Financial Officer, respectively, remain active in
the management of the Company. The Company is required to remain in compliance
with certain financial and other covenants under the ARM Agreement with BNY. The
Company was not in compliance with a financial covenant under the ARM Agreement
at March 31 and June 30, 1997 but previously had obtained a waiver which is
valid through December 31, 1997 from BNY with regard to that covenant violation.
In the event the Company falls out of compliance with the ARM Agreement, and BNY
Financial Corporation does not provide financing, the Company would not be able
to finance its operations as contemplated, and its operating results and
financial condition would be materially adversely affected.
Dilution from Convertible Securities; Obligation to Redeem in Cash. Under the
terms of a preferred stock and convertible debenture financing completed in the
first quarter of 1997 and restructured in the second quarter of 1997, certain
investors have the right to convert the securities held by them in the face
amount of approximately $11.7 million, plus dividends and interest accrued, into
Company common stock at a discount to the prevailing market price. The
conversion price at which such securities may be converted into common stock is
at a discount of 11.25% beginning in November 1997 increasing to 18.75% in April
1998 of a weighted average value of the Company's common stock, depending
principally on the date on which such securities are converted. Because the
Company is not permitted by Nasdaq rules to issue in the aggregate more than 20%
of its outstanding common stock as the result of the conversion of the
convertible preferred stock and convertible debentures and the exercise of the
warrants without first obtaining stockholder approval, the Company would be
required to redeem any portion of the securities issued in excess of 20% of its
outstanding common stock in cash.
5
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DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its Common
Stock. The Company intends to reinvest earnings, if any, in the development and
expansion of the Company's business. Any future declaration of cash dividends
will be at the discretion of the Board of Directors and will depend upon the
earnings, capital requirements and financial position of the Company, general
economic conditions and other pertinent factors. In addition, the Loan and
Security Agreement entered into with BNY Financial Corporation limits the
Company's ability to pay dividends without the lender's consent.
SELLING STOCKHOLDERS
The shares of Common Stock offered hereby by the Selling Stockholders were
issued to the Selling Stockholders in exchange for cancellation of trade
indebtness in an aggregate amount equal to $3,228,750.
The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock by the Selling Stockholders as of August
29, 1997, and as adjusted to reflect the sale of the Common Stock offered hereby
by the Selling Stockholders.
<TABLE>
<CAPTION>
SHARES
OWNED AFTER
SHARES BENEFICIALLY NUMBER OF OFFERING(1)(2)
OWNED PRIOR TO SHARES BEING ----------------
SELLING STOCKHOLDER OFFERING OFFERED NUMBER PERCENT
- ----------------------------- ------------------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Hoida International (Hong Kong)
Limited 270,000 270,000 0 *
Machina, Inc. 200,000 200,000 0 *
Harvey Herman Associates, Inc. 187,000 187,000 0 *
Creative Media, LLC 80,000 80,000 0 *
Shoot The Moon Products II, LLC 54,000 54,000 0 *
Klitsner Industrial Design, LLC 40,000 40,000 0 *
</TABLE>
- ---------------
* Less than 1%.
6
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(1) Based on 14,289,533 shares of Common Stock outstanding on August 29, 1997.
(2) Assumes the sale of all shares offered hereby to unaffiliated third
parties.
PLAN OF DISTRIBUTION
Up to 831,000 shares of Common Stock of the Company which may be
offered hereby (the "Shares") may be sold by the Selling Stockholders, or by
pledgees, donees, transferees or other successors in interest, either pursuant
to a Registration Statement of which this Prospectus forms a part or, if
available, under Section 4(1) of the Securities Act of 1933, as amended (the
"Securities Act") or Rule 144 promulgated thereunder.
The Selling Stockholders, directly, through agents designated from time to
time or through broker-dealers or underwriters also to be designated (who may
purchase as principals and resell for their own account), may sell the Shares
from time to time, in or through privately negotiated transactions, or in one or
more transactions, including but not limited to a block trade in which the
broker or dealer so engaged will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction, an exchange distribution in accordance with the rules of such
exchange, or by underwriters acting on behalf of the Selling Stockholders
pursuant to underwriting agreements in customary form or in and a combination of
any such methods of sale, on the Nasdaq National Market, one or more other
exchanges, in the over the counter market or on any other market or stock
exchange on which the Shares may be listed in the future pursuant to and in
accordance with the applicable rules of such market or exchange or otherwise.
The selling price of the Shares may be at market prices prevailing at the time
of sale, at prices relating to such prevailing market prices or at negotiated
prices. From time to time, the Selling Stockholders may engage in short sales,
including short sales against the box, puts and calls and other transactions in
securities of the Company or derivatives thereof, and may sell and deliver the
Shares in connection therewith. In effecting sales, brokers or dealers engaged
by the Selling Stockholder may arrange for other brokers or dealers to
participate. Brokers or dealers may receive commissions or discounts from the
Selling Stockholders or from the purchasers in amounts to be negotiated
immediately prior to the sale.
The Selling Stockholders may also pledge shares as collateral for margin
accounts, and such shares could be resold pursuant to the terms of such
accounts.
Resales or reoffers of the Shares by the Selling Stockholders must be
accompanied by a copy of this Prospectus.
The Selling Stockholders and any agents, broker-dealers or underwriters
that participate in the distribution of the Shares may be deemed to be
underwriters, and any profit on the sale of the Shares by them, and any
discounts, commissions or concessions received by them, may be deemed to be
underwriting commissions or discounts under the Securities Act.
The Company has agreed to use its best efforts to maintain the
effectiveness of the registration of the Shares for a period of three (3) years
after the effective date of this Prospectus or such earlier date when all of the
shares being offered hereunder have been sold or may be sold without volume or
other
7
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restrictions pursuant to Rule 144 or Rule 144A under the Securities Act, as
determined by counsel to the Company pursuant to a written opinion letter.
LEGAL MATTERS
Certain matters with respect to the legality of the issuance of the
Common Stock offered hereby have been passed upon for the Company by Cooley
Godward LLP, Five Palo Alto Square, 3000 El Camino Real, Palo Alto, CA 94306-
2155.
EXPERTS
The consolidated financial statements and schedule of YES! Entertainment
Corporation appearing in YES! Entertainment Corporation's Annual Report (Form
10-K) for the year ended December 31, 1996, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements and schedule are incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1993, as amended (the "Securities
Act"), with respect to the Common Stock offered hereby. This Prospectus does
not contain all of the information set forth in the Registration Statement and
the exhibits and schedules thereto. For further information with respect to the
Company and the Common Stock being offered, reference is hereby made to such
Registration Statement and the exhibits and schedules thereto, which may be
obtained from the Public Reference Section of the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington D.C. 20549, at prescribed rates.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at its principal office referred to above and at the Commission's
regional offices at 13th Floor, Seven World Trade Center, New York, New York
10048 and Northwestern Atrium Center, 500 West Madison, Suite 1400, Chicago,
Illinois 60601-2511. The Commission maintains a World Wide Web site that
contains reports, proxy statements and other information regarding registrants
that file electronically with the Commission. The address of the site is
http://www.sec.gov. The Company's Common Stock is quoted on the Nasdaq National
Market under the symbol YESS. Reports and other information concerning the
Company may be inspected at the National Association of Securities Dealers, Inc.
located at 1735 K Street, N.W., Washington, D.C. 20006.
The Company intends to furnish to its stockholders annual reports
containing financial statements audited and reported on by its independent
public accounting firm and such other periodic reports as the Company may
determine to be appropriate or as may be required by law.
8
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale of Common Stock being registered. All
amounts are estimates except the SEC registration fee and the Nasdaq National
Market listing fee.
<TABLE>
<CAPTION>
Amount
To
Be Paid
-------
<S> <C>
SEC Registration Fee.................. $ 992
Nasdaq National Market listing fee.... 2,000
Edgar Filing Expenses................. 2,000
Legal Fees and Expenses............... 5,000
Accounting Fees....................... 2,500
Transfer Agent and Registrar's Fees... 500
Miscellaneous Expenses................ ---
-------
Total............................ $12,992
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except for
liability (i) for any breach of their duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation, or (iv) for any transaction
from which the director derived an improper personal benefit.
The Company's Bylaws provide that the Company shall indemnify its directors
and officers and may indemnify its employees and other agents to the fullest
extent permitted by law. The Company believes that indemnification under its
Bylaws covers at least negligence and gross negligence on the part of
indemnified parties. The Company's Bylaws also permit the Company to secure
insurance on behalf of any officer, director, employee or other agent for any
liability arising out of his or her actions in such capacity, regardless of
whether the Company would have the power to indemnify him or her against such
liability under the General Corporation Law of Delaware. The Company currently
has secured such insurance on behalf of its officers and directors.
The Company has entered into agreements to indemnify its directors and
officers, in addition to indemnification provided for in the Company's Bylaws.
Subject to certain conditions, these agreements, among other things, indemnify
the Company's directors and officers for certain expenses (including attorney's
fees), judgments, fines and settlement amounts incurred by any such person in
any action or
II-1
<PAGE>
proceeding, including any action by or in the right of the Company, arising out
of such person's services as a director or officer of the Company, any
subsidiary of the Company or any other company or enterprise to which the person
provides services at the request of the Company.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the provisions
referenced in Item 15 of this Registration Statement or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
In addition, the Common Stock Purchase Agreements, filed as Exhibit 4.4
hereto, contains provisions for indemnification by the Selling Stockholders of
the Registrant and its officers, directors, and controlling persons against
certain liabilities under the Securities Act.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
NUMBER
<C> <S>
4.1(1) Form of Registrant's Common Stock Certificate.
4.2 Form of Common Stock Purchase Agreement between the
Registrant and Machina, Inc.
4.3 Form of Common Stock Purchase Agreement between the
Registrant and Shoot The Moon Products II, LLC.
4.4 Form of Common Stock Purchase Agreement between the
Registrant and Harvey Herman Associates, Inc.
4.5 Form of Common Stock Purchase Agreement between the
Registrant and Creative Media, LLC.
4.6 Form of Common Stock Purchase Agreement between the
Registrant and Klitsner Industrial Design, LLC.
4.7 Form of Common Stock Purchase Agreement between the
Registrant and Hoida International (Hong Kong) Limited.
5.1 Opinion of Cooley Godward LLP, regarding the legality of
the securities being issued.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-4).
</TABLE>
- -----------
(1) Incorporated by reference to Exhibit 4.3 filed with the Registrant's
Post-Effective Amendment No. 4 on Form S-3 to Registration Statement
on Form S-1 (File No. 33-91408), which became effective on November
20, 1996.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes, in accordance with the
following sections of Item 512 of Regulation S-K:
(a) (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement;
(i) to include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
(3) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(4) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering;
(b) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and
(c) To deliver or cause to be delivered with the Prospectus, to each person
to whom the Prospectus is sent or given, the latest annual report, to
securityholders that is incorporated by reference in the Prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 and Rule 14c-3
under the Exchange Act; and, where interim financial information required to be
presented by Article 3 of Regulation S-X is not set forth in the Prospectus, to
deliver, or cause to be delivered to each person to whom the Prospectus is sent
or given, the latest quarterly report that is specifically incorporated by
reference in the Prospectus to provide such interim financial information.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Pleasanton, State of California, on September 2,
1997.
YES! ENTERTAINMENT CORPORATION
By: /s/ Donald D. Kingsborough
---------------------------
Donald D. Kingsborough
Chief Executive Officer
POWER OF ATTORNEY
KNOWN ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Donald D. Kingsborough and Sol Kershner
and each of them, jointly and severally, his attorneys-in-fact, each with full
power of substitution, for him in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
on Form S-3, (or any other registration statement for the same offering that is
to be effective upon filing pursuant to Rule 462(b) under the Securities Act),
and to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each said attorneys-in-fact or his substitute or
substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -----------------------------
<S> <C> <C>
/s/ Donald D. Kingsborough Chairman of the Board and Chief Executive September 2, 1997
- ----------------------------- Officer (Principal Executive Officer)
Donald D. Kingsborough
/s/ Sol Kershner Chief Financial Officer (Principal Financial September 2, 1997
- ----------------------------- and Accounting Officer) and Secretary
Sol Kershner
/s/ David C. Costine Director September 2, 1997
- -----------------------------
David C. Costine
/s/ Esmond T. Goei Director September 2, 1997
- -----------------------------
Esmond T. Goei
/s/ Michael J. Marocco Director September 2, 1997
- -----------------------------
Michael J. Marocco
/s/ Anthony J. Miadich Director September 2, 1997
- -----------------------------
Anthony Miadich
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ---------------------------------------------------------------------------
<C> <S>
4.1(1) Form of Registrant's Common Stock Certificate.
4.2 Form of Common Stock Purchase Agreement between the Registrant and
Machina, Inc.
4.3 Form of Common Stock Purchase Agreement between the Registrant and Shoot
The Moon Products II, LLC.
4.4 Form of Common Stock Purchase Agreement between the Registrant and Harvey
Herman Associates, Inc.
4.5 Form of Common Stock Purchase Agreement between the Registrant and
Creative Media, LLC.
4.6 Form of Common Stock Purchase Agreement between the Registrant and
Klitsner Industrial Design, LLC.
4.7 Form of Common Stock Purchase Agreement between the Registrant and
Hoida International (Hong Kong) Limited.
5.1 Opinion of Cooley Godward LLP, regarding legality of the securities being
issued.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-4).
</TABLE>
- -------------
(1) Incorporated by reference to Exhibit 4.3 filed with the Registrant's Post-
Effective Amendment No. 4 on Form S-3 to Registration Statement on Form S-1
(File No. 33-91408), which became effective on November 20, 1996.
<PAGE>
EXHIBIT 4.2
YES! ENTERTAINMENT CORPORATION
COMMON STOCK
PURCHASE AGREEMENT
AUGUST 29, 1997
<PAGE>
NOTICE TO PURCHASERS IN ALL STATES:
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY
ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.
FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR
DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES....................... 1
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES................. 1
2.1 Sale of Shares............................................ 1
SECTION 3. CLOSING AND DELIVERY...................................... 1
3.1 Closing................................................... 1
3.2 Delivery of the Common Stock and Receipt of Cancellation
of Indebtedness at the Closing............................ 2
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.. 2
4.1 Organization and Qualification............................ 2
4.2 Due Execution, Delivery and Performance of the Agreements. 2
4.3 Issuance, Sale and Delivery of the Shares................. 2
4.4 Additional Information.................................... 3
4.5 No Material Change........................................ 3
4.6 SEC Reports............................................... 3
4.7 Listing of Shares......................................... 4
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER 4
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.... 5
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING........ 5
7.1 Receipt of Payment........................................ 5
7.2 Representations and Warranties Correct.................... 5
7.3 Covenants Performed....................................... 5
SECTION 8. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE CLOSING.. 5
8.1 Representations and Warranties Correct.................... 5
8.2 Covenants Performed....................................... 6
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES
ACT....................................................... 6
9.1 Registration Procedures and Expenses...................... 6
.......................................................... 6
9.2 Transfer of Shares After Registration..................... 6
9.3 Indemnification........................................... 7
9.4 Termination of Conditions and Obligations................. 8
9.5 Information Available..................................... 8
9.6 Changes in Purchaser Information.......................... 9
</TABLE>
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
<TABLE>
<S> <C> <C>
SECTION 10. BROKER'S FEE.............................................. 9
SECTION 11. NOTICES................................................... 9
SECTION 12. MISCELLANEOUS............................................. 10
12.1 Waivers and Amendments.................................... 10
12.2 Headings.................................................. 10
12.3 Severability.............................................. 10
12.4 Governing Law............................................. 10
12.5 Counterparts.............................................. 10
12.6 Successors and Assigns.................................... 10
12.7 Entire Agreement.......................................... 10
ATTACHMENTS:
Appendix I - Stock Certificate and Warrant Questionnaire
Appendix II - Registration Statement Questionnaire
Appendix III - Purchaser's Certificate of Subsequent Sale
</TABLE>
ii.
<PAGE>
COMMON STOCK
PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 29th day of August, 1997 by
and among YES! ENTERTAINMENT CORPORATION, a Delaware corporation with its
principal place of business at 3875 Hopyard Road, Suite 375, Pleasanton,
California 94588 (the "Company") and MACHINA, INC. (the "Purchaser").
AGREEMENT
In consideration of the mutual covenants contained in this Agreement, and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Purchaser hereby agree as follows:
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES. Subject to the terms and
conditions of this Agreement, the Company has or before the Closing (as defined
below) will have authorized the sale and issuance of two hundred thousand
(200,000) shares of its Common Stock, par value $0.001 per share (the "Common
Stock").
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES.
2.1 SALE OF SHARES. At the Closing (as defined in Section 3), the Company
will sell to Purchaser, and Purchaser will purchase from the Company, at a
purchase price of three dollars and seventy-five cents ($3.75) per share of
Common Stock, two hundred thousand (200,000) shares of Common Stock. The shares
of Common Stock sold hereunder may be referred to herein as the "Shares."
2.2 SEPARATE AGREEMENT. Concurrently with the execution and delivery of
this Agreement, the Company is entering into other agreements identical with
this Agreement (except as to the identity of the purchaser and the number of
shares of Common Stock to be purchased) with other purchasers. The Company's
agreements with you and with each of such other purchasers are separate
agreements, and the sales of shares of Common Stock to you and to each such
other purchasers are separate sales. The aggregate number of shares of Common
Stock to be issued in this and such other agreements shall not exceed a total of
eight hundred and thirty-one thousand (831,000).
SECTION 3. CLOSING AND DELIVERY.
3.1 CLOSING. The Closing of the purchase and sale of the Shares pursuant
to this Agreement (the "Closing") shall be held on August 29, 1997 at the
offices of Cooley Godward LLP, 5 Palo Alto Square, 3000 El Camino Real, Palo
Alto, California, or on such other date and place as may be agreed to by the
Company and the Purchaser.
1.
<PAGE>
The Company shall give at least three (3) business days prior written
notice to the Purchaser, in a manner provided for in Section 11 hereof, of the
date, time and location of the Closing. At or prior to the Closing, Purchaser
shall execute any related agreements or other documents required to be executed
hereunder, dated as of the date of the Closing (the "Closing Date").
3.2 DELIVERY OF THE COMMON STOCK AND RECEIPT OF CANCELLATION OF
INDEBTEDNESS AT THE CLOSING. At the Closing, the Company shall deliver to
Purchaser stock certificates registered in the name of Purchaser, or in such
nominee name(s) as designated by Purchaser, representing the number of shares of
Common Stock to be purchased by Purchaser at the Closing and the Purchaser shall
deliver confirmation of cancellation of indebtedness in the full amount of the
purchase price for the Shares. The name(s) in which the stock certificates are
to be issued to the Purchaser are set forth in the Stock Certificate
Questionnaire in the form attached hereto as Appendix I, as completed by
Purchaser.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
The Company hereby represents and warrants to, and covenants with, the
Purchaser as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to conduct its
business as it is currently being conducted.
4.2 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The
Company's execution, delivery and performance of this Agreement have been duly
authorized by all requisite corporate action by the Company, and will not
violate any law or the Company's Certificate of Incorporation or Bylaws of the
Company or any provision of any material indenture, mortgage, agreement,
contract or other material instrument to which the Company is a party or by
which the Company or any of its properties or assets is bound as of the date
hereof, or result in a breach of or constitute (upon notice or lapse of time or
both) a default under any such indenture, mortgage, agreement, contract or other
material instrument or result in the creation or imposition of any lien,
security interest, mortgage, pledge, charge or other encumbrance, of any
material nature whatsoever, upon any properties or assets of the Company. Upon
the execution and delivery by the Company, and assuming the valid execution and
delivery of this Agreement by the Purchaser, this Agreement will constitute a
valid and binding obligation of the Company, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of the Company in Section 9.3 hereof may be
legally unenforceable.
4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES. When issued and paid for
in accordance with this Agreement, the Shares will be validly issued and
outstanding, fully paid
2.
<PAGE>
and non-assessable, and will be issued in compliance with all applicable federal
and state securities laws.
4.4 ADDITIONAL INFORMATION. The information contained in the following
documents, which the Company has furnished to the Purchaser, or will furnish if
requested by the Purchaser prior to the Closing, were true and correct in all
material respects as of their respective filing dates:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (without exhibits unless specifically requested);
(b) the Company's Quarterly Reports on Form 10-Q required to be filed
with the SEC for the three-month periods ended March 31, 1997 and June 30, 1997
(without exhibits unless specifically requested);
(c) the Company's Current Reports on Form 8-K filed with the SEC since
December 31, 1996, if any; and
(d) Notice of Annual Meeting and Proxy Statement for the Company's
1997 Annual Meeting of Stockholders.
4.5 NO MATERIAL CHANGE. As of the date hereof, there has been no material
adverse change in the financial condition or results of operations of the
Company since June 30, 1997.
4.6 SEC REPORTS.
(a) The Company has filed with the Securities and Exchange Commission
(the "SEC" or the "Commission") all reports ("SEC Reports") required to be filed
by it under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). All of the SEC Reports filed by the Company comply in all material
respects with the requirements of the Exchange Act. None of the SEC Reports
contains, as of the respective dates thereof, any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. All financial statements contained in
the SEC Reports have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the period indicated
("GAAP"). Each balance sheet presents fairly in accordance with GAAP the
financial position of the Company as of the date of such balance sheet, and each
statement of operations, of stockholders' equity and of cash flows presents
fairly in accordance with GAAP the results of operations, the stockholders'
equity and the cash flows of the Company for the periods then ended.
(b) No event has occurred since June 30, 1997 requiring the filing of
an SEC Report that has not heretofore been filed and furnished to the Purchaser.
3.
<PAGE>
4.7 LISTING OF SHARES. The Company shall, within a reasonable time after
the Closing Date, file with the Nasdaq National Market an additional shares
listing application covering such Shares that shall have not been previously
covered by a Nasdaq additional shares listing. For so long as the Company is
obligated to keep in effect the Registration Statement provided under Section 9
hereof, the Company will use commercially reasonable efforts to maintain the
listing of Shares on the Nasdaq National Market or a national securities
exchange, as defined in the Exchange Act.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser represents and warrants to and covenants with the Company
that:
(a) the Purchaser, taking into account the personnel and resources it
can practically bring to bear on the purchase of the Shares contemplated hereby,
is knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in shares presenting an investment
decision like that involved in the purchase of the Shares, including investments
in securities issued by the Company, and has requested, received, reviewed and
considered, all information the Purchaser deems relevant in making an informed
decision to purchase the Shares.
(b) the Purchaser is acquiring the Shares being acquired by the
Purchaser pursuant to this Agreement in the ordinary course of its business and
for its own account for investment only and with no present intention of
distributing any of such Shares or any arrangement or understanding with any
other persons regarding the distribution of such Shares, except in compliance
with Section 5(c).
(c) the Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act of 1933, as amended (the "Securities Act"), applicable
blue sky laws, and the rules and regulations promulgated thereunder.
(d) the Purchaser has completed or caused to be completed the Stock
Certificate Questionnaire and the Registration Questionnaire, attached hereto as
Appendix I and Appendix II, respectively, for use in preparation of the
Registration Statement to be filed by the Company, and the answers thereto are
true and correct to the best knowledge of the Purchaser as of the date hereof
and will be true and correct as of the effective date of the Registration
Statement (provided that the Purchaser shall be entitled to update such
information by providing notice thereof to the Company prior to the effective
date of such Registration Statement).
(e) the Purchaser has, in connection with its decision to purchase the
Shares, relied with respect to the Company and its affairs solely upon the
information delivered to Purchaser as described in Sections 4.4 and 5(a) above
and the representations and warranties of the Company contained herein.
4.
<PAGE>
(f) the Purchaser is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act.
(g) the Purchaser has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated hereby
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement. Upon the execution and delivery of this
Agreement by the Purchaser, this Agreement shall constitute a valid and binding
obligation of the Purchaser, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification agreements
of the Purchaser in Section 9.3 hereof may be legally unenforceable.
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in the certificates for the Shares shall survive the
execution of this Agreement, the delivery to the Purchaser of the Shares and the
payment therefor.
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING. The
Company's obligation to complete the sale and issuance of the Shares and deliver
shares of Common Stock to the Purchaser shall be subject to the following
conditions to the extent not waived by the Company:
7.1 RECEIPT OF PAYMENT. The Company shall have received payment in the
form of cancellation of indebtedness confirmed by Purchaser, in the full amount
of the purchase price for the Shares.
7.2 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Purchaser in Section 5 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date.
7.3 COVENANTS PERFORMED. All covenants, agreements and conditions
contained herein to be performed by the Purchaser on or prior to the Closing
Date shall have been performed or complied with in all material respects.
SECTION 8. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE CLOSING. The
Purchaser's obligation to accept delivery of and to pay for the Shares shall be
subject to the following conditions to the extent not waived by the Purchaser:
8.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 4 hereof shall be true and correct
when made, and shall be true and correct as of the Closing Date.
5.
<PAGE>
8.2 COVENANTS PERFORMED. All covenants, agreements and conditions
contained herein to be performed by the Company shall have been performed or
complied with in all material respects.
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.
9.1 REGISTRATION PROCEDURES AND EXPENSES. The Company is obligated to do
the following:
(a) As soon as practicable following the Closing Date, the Company
shall prepare and file with the Commission a registration statement in order to
register with the Commission the sale by Purchaser, from time to time, of the
Shares (a "Registration Statement") and shall use commercially reasonable
efforts to have such Registration Statement declared effective. The Company
shall use commercially reasonable efforts to keep such Registration Statement
continuously effective under the Securities Act until the date which is three
years after the date that such Registration Statement is declared effective by
the Commission or such earlier date when all the Shares covered by such
Registration Statement have been sold pursuant to Rule 144 without volume
restrictions as determined by counsel to the Company pursuant to a written
opinion letter addressed to the Purchaser, to such effect.
(b) In order to facilitate the sale or other disposition of all or any
of the shares by the Purchaser, the Company shall furnish to the Purchaser with
respect to the Shares registered under the Registration Statement such number of
copies of prospectuses and preliminary prospectuses as the Purchaser reasonably
requests in conformity with the requirements of the Securities Act.
(c) The Company shall file documents required of the Company for
normal blue sky clearance in states specified in writing by the Purchaser;
provided, however, that the Company shall not be required to qualify to do
business or consent to service of process in any jurisdiction in which it is not
now so qualified or has not so consented.
(d) Other than fees and expenses, if any, of counsel or other advisers
to the Purchaser, which fees and expenses shall be borne by the Purchaser, the
Company shall bear all expenses (exclusive of underwriting discounts and
commissions) in connection with the procedures in paragraphs (a) through (c) of
this Section 9.1.
9.2 TRANSFER OF SHARES AFTER REGISTRATION. The Purchaser agrees that the
Purchaser will not effect any disposition of the Shares that would constitute a
sale within the meaning of the Securities Act, except:
(a) pursuant to the Registration Statement, in which case the
Purchaser shall submit the certificates evidencing the Shares to the transfer
agent accompanied by a separate
6.
<PAGE>
"Purchaser's Certificate" (A) in the form of Appendix III attached hereto, (B)
executed by the Purchaser or by an officer of, or other authorized person
designated by, the Purchaser, and (C) to the effect that (1) the Shares have
been sold in accordance with the Registration Statement and (2) the requirement
of delivering a current prospectus has been satisfied; or
(b) in a transaction exempt from registration under the Securities
Act, in which case the Purchaser shall, prior to effecting such disposition,
submit to the Company an opinion of counsel in form and substance reasonably
satisfactory to the Company to the effect that the proposed transaction is in
compliance with the Securities Act.
9.3 INDEMNIFICATION. As used in this Section 9.3 the following terms
shall have the following respective meanings:
(a) "Selling Stockholder" shall mean the Purchaser and any transferee
of the Purchaser who is entitled to resell Shares pursuant to the Registration
Statement;
(b) "Registration Statement" shall include any final prospectus,
exhibit, supplement or amendment included in or relating to the Registration
Statement referred to in Section 9.1; and
(c) "Untrue Statement" shall include any untrue statement or alleged
untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
The Company agrees to indemnify and hold harmless each Selling Stockholder
from and against any losses, claims, damages or liabilities to which such
Selling Stockholder may become subject (under the Securities Act or otherwise)
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any Untrue
Statement on or after the effective date of the Registration Statement, or arise
out of any failure by the Company to fulfill any undertaking included in the
Registration Statement and the Company will reimburse such Selling Stockholder
for any reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim; provided,
however, that the Company shall not be liable to such Selling Stockholder in any
such case to the extent that such loss, claim, damage or liability arises out
of, or is based upon, an Untrue Statement made in such Registration Statement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Selling Stockholder specifically for use in
preparation of the Registration Statement, or the failure of such Selling
Stockholder to comply with the covenants and agreements contained in Section 9.1
or 9.2 hereof respecting sale of the Shares or any statement or omission in any
Prospectus that is corrected in any subsequent Prospectus that was delivered to
the Selling Stockholder prior to the pertinent sale or sales by the Selling
Stockholder.
7.
<PAGE>
Purchaser agrees to indemnify and hold harmless the Company (and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, each officer of the Company who signs the Registration Statement
and each director of the Company) from and against any losses, claims, damages
or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any failure to
comply with the covenants and agreements contained in Section 9.1 or 9.2 hereof
respecting sale of the Shares, or any Untrue Statement contained in the
Registration Statement on or after the effective date thereof if such Untrue
Statement was made in reliance upon and in conformity with written information
furnished by or on behalf of the Purchaser specifically for use in preparation
of the Registration Statement, and the Purchaser will reimburse the Company (or
such officer, director or controlling person.)
Promptly after receipt by any indemnified person of a notice of a claim or
the beginning of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 9.3, such indemnified
person shall notify the indemnifying person in writing of such claim or of the
commencement of such action, and, subject to the provisions hereinafter stated,
in case any such action shall be brought against an indemnified person and such
indemnifying person shall have been notified thereof, such indemnifying person
shall be entitled to participate therein, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified person of its election to assume the defense thereof, such
indemnifying person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection with the
defense thereof; provided, however, that if there exists or shall exist a
conflict of interest that would make it inappropriate, in the opinion of counsel
to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel at
the expense of such indemnifying person; provided, however, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel for all indemnified parties.
9.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions precedent
imposed by Section 5(c) or this Section 9 upon the transferability of the Shares
shall cease and terminate as to any particular number of the Shares when such
Shares shall have been sold or otherwise disposed of in accordance with the
intended method of disposition set forth in the Registration Statement covering
such Shares or at such time as an opinion of counsel satisfactory to the Company
shall have been rendered to the effect that such conditions are not necessary in
order to comply with the Securities Act.
9.5 INFORMATION AVAILABLE. So long as the Registration Statement is
effective covering the resale of Shares owned by the Purchaser, the Company will
furnish to the Purchaser;
(a) such information as the Company supplies to its stockholders;
8.
<PAGE>
(b) upon the written request of the Purchaser, such reports filed by
the Company pursuant to the Exchange Act not otherwise provided under Section
9.5(a); and
(c) upon the reasonable request of the Purchaser, an adequate number
of copies of the prospectuses to supply to any other party requiring such
prospectuses.
9.6 CHANGES IN PURCHASER INFORMATION. The Purchaser agrees to promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding the Purchaser or the Purchaser's plan of
distribution set forth in such Registration Statement.
SECTION 10. BROKER'S FEE. The Company and the Purchaser hereby
represent that there are no brokers or finders entitled to compensation in
connection with the sale of the shares of Common Stock, and shall indemnify each
other for any such fees for which they are responsible.
SECTION 11. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be sent by confirmed
facsimile or mailed by first-class registered or certified airmail, or
nationally recognized overnight express courier, postage prepaid, and shall be
deemed given when so sent in the case of facsimile transmission, or when so
received in the case of mail or courier, and addressed as follows:
(a) if to the Company, to:
YES! Entertainment Corporation
3875 Hopyard Road
Pleasanton, CA 94588
Attention: Donald Kingsborough, President and CEO
Facsimile: (510) 734-0997
with a copy so mailed to:
Cooley Godward LLP
Five Palo Alto Square, 4th Floor
Palo Alto, California 94306
Attention: Patrick Pohlen, Esq.
Facsimile: (650) 857-0663
or to such other person at such other place as the Company shall
designate to the Purchaser in writing; and
(b) if to the Purchaser, at the address as set forth at the end of
this Agreement, or at such other address or addresses as may have been furnished
to the Company in writing.
9.
<PAGE>
SECTION 12. MISCELLANEOUS.
12.1 WAIVERS AND AMENDMENTS. Neither this Agreement nor any provision
hereof may be changed, waived, discharged, terminated, modified or amended
except upon the written consent of the Company and holders of at least a
majority of the Shares.
12.2 HEADINGS. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
12.3 SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
12.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to contracts
entered into and performed entirely in California by California residents,
without regard to conflicts of law principles.
12.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
12.6 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
12.7 ENTIRE AGREEMENT. This Agreement and other documents delivered
pursuant hereto, including the exhibits, constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
10.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
COMPANY:
YES! ENTERTAINMENT CORPORATION
By: __________________________
Donald Kingsborough
Chief Executive Officer
Address: 3875 Hopyard Road
Pleasanton, CA 94588
Facsimile: (510) 734-0997
PURCHASER:
MACHINA, INC.
By: ______________________________
Name: _______________________
Title: ______________________
Address: _______________________
_______________________
Facsimile: _______________________
COMMON STOCK PURCHASE AGREEMENT
<PAGE>
EXHIBIT 4.3
YES! ENTERTAINMENT CORPORATION
COMMON STOCK
PURCHASE AGREEMENT
AUGUST 29, 1997
<PAGE>
NOTICE TO PURCHASERS IN ALL STATES:
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY
ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.
FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR
DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES....................... 1
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES................. 1
2.1 Sale of Shares............................................ 1
SECTION 3. CLOSING AND DELIVERY...................................... 1
3.1 Closing................................................... 1
3.2 Delivery of the Common Stock and Receipt of Cancellation
of Indebtedness at the Closing............................ 2
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.. 2
4.1 Organization and Qualification............................ 2
4.2 Due Execution, Delivery and Performance of the Agreements. 2
4.3 Issuance, Sale and Delivery of the Shares................. 2
4.4 Additional Information.................................... 3
4.5 No Material Change........................................ 3
4.6 SEC Reports............................................... 3
4.7 Listing of Shares......................................... 4
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER 4
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.... 5
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING........ 5
7.1 Receipt of Payment........................................ 5
7.2 Representations and Warranties Correct.................... 5
7.3 Covenants Performed....................................... 5
SECTION 8. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE CLOSING.. 5
8.1 Representations and Warranties Correct.................... 5
8.2 Covenants Performed....................................... 6
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES
ACT....................................................... 6
9.1 Registration Procedures and Expenses...................... 6
.......................................................... 6
9.2 Transfer of Shares After Registration..................... 6
9.3 Indemnification........................................... 7
9.4 Termination of Conditions and Obligations................. 8
9.5 Information Available..................................... 8
9.6 Changes in Purchaser Information.......................... 9
</TABLE>
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
<TABLE>
<S> <C> <C>
SECTION 10. BROKER'S FEE.............................................. 9
SECTION 11. NOTICES................................................... 9
SECTION 12. MISCELLANEOUS............................................. 10
12.1 Waivers and Amendments.................................... 10
12.2 Headings.................................................. 10
12.3 Severability.............................................. 10
12.4 Governing Law............................................. 10
12.5 Counterparts.............................................. 10
12.6 Successors and Assigns.................................... 10
12.7 Entire Agreement.......................................... 10
ATTACHMENTS:
Appendix I - Stock Certificate and Warrant Questionnaire
Appendix II - Registration Statement Questionnaire
Appendix III - Purchaser's Certificate of Subsequent Sale
</TABLE>
ii.
<PAGE>
COMMON STOCK
PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 29th day of August, 1997 by
and among YES! ENTERTAINMENT CORPORATION, a Delaware corporation with its
principal place of business at 3875 Hopyard Road, Suite 375, Pleasanton,
California 94588 (the "Company") and SHOOT THE MOON PRODUCTS II, LLC (the
"Purchaser").
AGREEMENT
In consideration of the mutual covenants contained in this Agreement, and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Purchaser hereby agree as follows:
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES. Subject to the terms and
conditions of this Agreement, the Company has or before the Closing (as defined
below) will have authorized the sale and issuance of fifty-four thousand
(54,000) shares of its Common Stock, par value $0.001 per share (the "Common
Stock").
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES.
2.1 SALE OF SHARES. At the Closing (as defined in Section 3), the Company
will sell to Purchaser, and Purchaser will purchase from the Company, at a
purchase price of three dollars and seventy-five cents ($3.75) per share of
Common Stock, fifty-four thousand (54,000) shares of Common Stock. The shares
of Common Stock sold hereunder may be referred to herein as the "Shares."
2.2 SEPARATE AGREEMENT. Concurrently with the execution and delivery of
this Agreement, the Company is entering into other agreements identical with
this Agreement (except as to the identity of the purchaser and the number of
shares of Common Stock to be purchased) with other purchasers. The Company's
agreements with you and with each of such other purchasers are separate
agreements, and the sales of shares of Common Stock to you and to each such
other purchasers are separate sales. The aggregate number of shares of Common
Stock to be issued in this and such other agreements shall not exceed a total of
eight hundred and thirty-one thousand (831,000).
SECTION 3. CLOSING AND DELIVERY.
3.1 CLOSING. The Closing of the purchase and sale of the Shares pursuant
to this Agreement (the "Closing") shall be held on August 29, 1997 at the
offices of Cooley Godward LLP, 5 Palo Alto Square, 3000 El Camino Real, Palo
Alto, California, or on such other date and place as may be agreed to by the
Company and the Purchaser.
1.
<PAGE>
The Company shall give at least three (3) business days prior written
notice to the Purchaser, in a manner provided for in Section 11 hereof, of the
date, time and location of the Closing. At or prior to the Closing, Purchaser
shall execute any related agreements or other documents required to be executed
hereunder, dated as of the date of the Closing (the "Closing Date").
3.2 DELIVERY OF THE COMMON STOCK AND RECEIPT OF CANCELLATION OF
INDEBTEDNESS AT THE CLOSING. At the Closing, the Company shall deliver to
Purchaser stock certificates registered in the name of Purchaser, or in such
nominee name(s) as designated by Purchaser, representing the number of shares of
Common Stock to be purchased by Purchaser at the Closing and the Purchaser shall
deliver confirmation of cancellation of indebtedness in the full amount of the
purchase price for the Shares. The name(s) in which the stock certificates are
to be issued to the Purchaser are set forth in the Stock Certificate
Questionnaire in the form attached hereto as Appendix I, as completed by
Purchaser.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
The Company hereby represents and warrants to, and covenants with, the
Purchaser as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to conduct its
business as it is currently being conducted.
4.2 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The
Company's execution, delivery and performance of this Agreement have been duly
authorized by all requisite corporate action by the Company, and will not
violate any law or the Company's Certificate of Incorporation or Bylaws of the
Company or any provision of any material indenture, mortgage, agreement,
contract or other material instrument to which the Company is a party or by
which the Company or any of its properties or assets is bound as of the date
hereof, or result in a breach of or constitute (upon notice or lapse of time or
both) a default under any such indenture, mortgage, agreement, contract or other
material instrument or result in the creation or imposition of any lien,
security interest, mortgage, pledge, charge or other encumbrance, of any
material nature whatsoever, upon any properties or assets of the Company. Upon
the execution and delivery by the Company, and assuming the valid execution and
delivery of this Agreement by the Purchaser, this Agreement will constitute a
valid and binding obligation of the Company, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of the Company in Section 9.3 hereof may be
legally unenforceable.
4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES. When issued and paid for
in accordance with this Agreement, the Shares will be validly issued and
outstanding, fully paid
2.
<PAGE>
and non-assessable, and will be issued in compliance with all applicable federal
and state securities laws.
4.4 ADDITIONAL INFORMATION. The information contained in the following
documents, which the Company has furnished to the Purchaser, or will furnish if
requested by the Purchaser prior to the Closing, were true and correct in all
material respects as of their respective filing dates:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (without exhibits unless specifically requested);
(b) the Company's Quarterly Reports on Form 10-Q required to be filed
with the SEC for the three-month periods ended March 31, 1997 and June 30, 1997
(without exhibits unless specifically requested);
(c) the Company's Current Reports on Form 8-K filed with the SEC since
December 31, 1996, if any; and
(d) Notice of Annual Meeting and Proxy Statement for the Company's
1997 Annual Meeting of Stockholders.
4.5 NO MATERIAL CHANGE. As of the date hereof, there has been no material
adverse change in the financial condition or results of operations of the
Company since June 30, 1997.
4.6 SEC REPORTS.
(a) The Company has filed with the Securities and Exchange Commission
(the "SEC" or the "Commission") all reports ("SEC Reports") required to be filed
by it under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). All of the SEC Reports filed by the Company comply in all material
respects with the requirements of the Exchange Act. None of the SEC Reports
contains, as of the respective dates thereof, any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. All financial statements contained in
the SEC Reports have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the period indicated
("GAAP"). Each balance sheet presents fairly in accordance with GAAP the
financial position of the Company as of the date of such balance sheet, and each
statement of operations, of stockholders' equity and of cash flows presents
fairly in accordance with GAAP the results of operations, the stockholders'
equity and the cash flows of the Company for the periods then ended.
(b) No event has occurred since June 30, 1997 requiring the filing of
an SEC Report that has not heretofore been filed and furnished to the Purchaser.
3.
<PAGE>
4.7 LISTING OF SHARES. The Company shall, within a reasonable time after
the Closing Date, file with the Nasdaq National Market an additional shares
listing application covering such Shares that shall have not been previously
covered by a Nasdaq additional shares listing. For so long as the Company is
obligated to keep in effect the Registration Statement provided under Section 9
hereof, the Company will use commercially reasonable efforts to maintain the
listing of Shares on the Nasdaq National Market or a national securities
exchange, as defined in the Exchange Act.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser represents and warrants to and covenants with the Company
that:
(a) the Purchaser, taking into account the personnel and resources it
can practically bring to bear on the purchase of the Shares contemplated hereby,
is knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in shares presenting an investment
decision like that involved in the purchase of the Shares, including investments
in securities issued by the Company, and has requested, received, reviewed and
considered, all information the Purchaser deems relevant in making an informed
decision to purchase the Shares.
(b) the Purchaser is acquiring the Shares being acquired by the
Purchaser pursuant to this Agreement in the ordinary course of its business and
for its own account for investment only and with no present intention of
distributing any of such Shares or any arrangement or understanding with any
other persons regarding the distribution of such Shares, except in compliance
with Section 5(c).
(c) the Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act of 1933, as amended (the "Securities Act"), applicable
blue sky laws, and the rules and regulations promulgated thereunder.
(d) the Purchaser has completed or caused to be completed the Stock
Certificate Questionnaire and the Registration Questionnaire, attached hereto as
Appendix I and Appendix II, respectively, for use in preparation of the
Registration Statement to be filed by the Company, and the answers thereto are
true and correct to the best knowledge of the Purchaser as of the date hereof
and will be true and correct as of the effective date of the Registration
Statement (provided that the Purchaser shall be entitled to update such
information by providing notice thereof to the Company prior to the effective
date of such Registration Statement).
(e) the Purchaser has, in connection with its decision to purchase the
Shares, relied with respect to the Company and its affairs solely upon the
information delivered to Purchaser as described in Sections 4.4 and 5(a) above
and the representations and warranties of the Company contained herein.
4.
<PAGE>
(f) the Purchaser is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act.
(g) the Purchaser has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated hereby
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement. Upon the execution and delivery of this
Agreement by the Purchaser, this Agreement shall constitute a valid and binding
obligation of the Purchaser, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification agreements
of the Purchaser in Section 9.3 hereof may be legally unenforceable.
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in the certificates for the Shares shall survive the
execution of this Agreement, the delivery to the Purchaser of the Shares and the
payment therefor.
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING. The
Company's obligation to complete the sale and issuance of the Shares and deliver
shares of Common Stock to the Purchaser shall be subject to the following
conditions to the extent not waived by the Company:
7.1 RECEIPT OF PAYMENT. The Company shall have received payment in the
form of cancellation of indebtedness confirmed by Purchaser, in the full amount
of the purchase price for the Shares.
7.2 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Purchaser in Section 5 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date.
7.3 COVENANTS PERFORMED. All covenants, agreements and conditions
contained herein to be performed by the Purchaser on or prior to the Closing
Date shall have been performed or complied with in all material respects.
SECTION 8. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE CLOSING. The
Purchaser's obligation to accept delivery of and to pay for the Shares shall be
subject to the following conditions to the extent not waived by the Purchaser:
8.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 4 hereof shall be true and correct
when made, and shall be true and correct as of the Closing Date.
5.
<PAGE>
8.2 COVENANTS PERFORMED. All covenants, agreements and conditions
contained herein to be performed by the Company shall have been performed or
complied with in all material respects.
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.
9.1 REGISTRATION PROCEDURES AND EXPENSES. The Company is obligated to do
the following:
(a) As soon as practicable following the Closing Date, the Company
shall prepare and file with the Commission a registration statement in order to
register with the Commission the sale by Purchaser, from time to time, of the
Shares (a "Registration Statement") and shall use commercially reasonable
efforts to have such Registration Statement declared effective. The Company
shall use commercially reasonable efforts to keep such Registration Statement
continuously effective under the Securities Act until the date which is three
years after the date that such Registration Statement is declared effective by
the Commission or such earlier date when all the Shares covered by such
Registration Statement have been sold pursuant to Rule 144 without volume
restrictions as determined by counsel to the Company pursuant to a written
opinion letter addressed to the Purchaser, to such effect.
(b) In order to facilitate the sale or other disposition of all or any
of the shares by the Purchaser, the Company shall furnish to the Purchaser with
respect to the Shares registered under the Registration Statement such number of
copies of prospectuses and preliminary prospectuses as the Purchaser reasonably
requests in conformity with the requirements of the Securities Act.
(c) The Company shall file documents required of the Company for
normal blue sky clearance in states specified in writing by the Purchaser;
provided, however, that the Company shall not be required to qualify to do
business or consent to service of process in any jurisdiction in which it is not
now so qualified or has not so consented.
(d) Other than fees and expenses, if any, of counsel or other advisers
to the Purchaser, which fees and expenses shall be borne by the Purchaser, the
Company shall bear all expenses (exclusive of underwriting discounts and
commissions) in connection with the procedures in paragraphs (a) through (c) of
this Section 9.1.
9.2 TRANSFER OF SHARES AFTER REGISTRATION. The Purchaser agrees that the
Purchaser will not effect any disposition of the Shares that would constitute a
sale within the meaning of the Securities Act, except:
(a) pursuant to the Registration Statement, in which case the
Purchaser shall submit the certificates evidencing the Shares to the transfer
agent accompanied by a separate
6.
<PAGE>
"Purchaser's Certificate" (A) in the form of Appendix III attached hereto, (B)
executed by the Purchaser or by an officer of, or other authorized person
designated by, the Purchaser, and (C) to the effect that (1) the Shares have
been sold in accordance with the Registration Statement and (2) the requirement
of delivering a current prospectus has been satisfied; or
(b) in a transaction exempt from registration under the Securities
Act, in which case the Purchaser shall, prior to effecting such disposition,
submit to the Company an opinion of counsel in form and substance reasonably
satisfactory to the Company to the effect that the proposed transaction is in
compliance with the Securities Act.
9.3 INDEMNIFICATION. As used in this Section 9.3 the following terms
shall have the following respective meanings:
(a) "Selling Stockholder" shall mean the Purchaser and any transferee
of the Purchaser who is entitled to resell Shares pursuant to the Registration
Statement;
(b) "Registration Statement" shall include any final prospectus,
exhibit, supplement or amendment included in or relating to the Registration
Statement referred to in Section 9.1; and
(c) "Untrue Statement" shall include any untrue statement or alleged
untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
The Company agrees to indemnify and hold harmless each Selling Stockholder
from and against any losses, claims, damages or liabilities to which such
Selling Stockholder may become subject (under the Securities Act or otherwise)
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any Untrue
Statement on or after the effective date of the Registration Statement, or arise
out of any failure by the Company to fulfill any undertaking included in the
Registration Statement and the Company will reimburse such Selling Stockholder
for any reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim; provided,
however, that the Company shall not be liable to such Selling Stockholder in any
such case to the extent that such loss, claim, damage or liability arises out
of, or is based upon, an Untrue Statement made in such Registration Statement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Selling Stockholder specifically for use in
preparation of the Registration Statement, or the failure of such Selling
Stockholder to comply with the covenants and agreements contained in Section 9.1
or 9.2 hereof respecting sale of the Shares or any statement or omission in any
Prospectus that is corrected in any subsequent Prospectus that was delivered to
the Selling Stockholder prior to the pertinent sale or sales by the Selling
Stockholder.
7.
<PAGE>
Purchaser agrees to indemnify and hold harmless the Company (and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, each officer of the Company who signs the Registration Statement
and each director of the Company) from and against any losses, claims, damages
or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any failure to
comply with the covenants and agreements contained in Section 9.1 or 9.2 hereof
respecting sale of the Shares, or any Untrue Statement contained in the
Registration Statement on or after the effective date thereof if such Untrue
Statement was made in reliance upon and in conformity with written information
furnished by or on behalf of the Purchaser specifically for use in preparation
of the Registration Statement, and the Purchaser will reimburse the Company (or
such officer, director or controlling person.)
Promptly after receipt by any indemnified person of a notice of a claim or
the beginning of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 9.3, such indemnified
person shall notify the indemnifying person in writing of such claim or of the
commencement of such action, and, subject to the provisions hereinafter stated,
in case any such action shall be brought against an indemnified person and such
indemnifying person shall have been notified thereof, such indemnifying person
shall be entitled to participate therein, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified person of its election to assume the defense thereof, such
indemnifying person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection with the
defense thereof; provided, however, that if there exists or shall exist a
conflict of interest that would make it inappropriate, in the opinion of counsel
to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel at
the expense of such indemnifying person; provided, however, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel for all indemnified parties.
9.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions precedent
imposed by Section 5(c) or this Section 9 upon the transferability of the Shares
shall cease and terminate as to any particular number of the Shares when such
Shares shall have been sold or otherwise disposed of in accordance with the
intended method of disposition set forth in the Registration Statement covering
such Shares or at such time as an opinion of counsel satisfactory to the Company
shall have been rendered to the effect that such conditions are not necessary in
order to comply with the Securities Act.
9.5 INFORMATION AVAILABLE. So long as the Registration Statement is
effective covering the resale of Shares owned by the Purchaser, the Company will
furnish to the Purchaser;
(a) such information as the Company supplies to its stockholders;
8.
<PAGE>
(b) upon the written request of the Purchaser, such reports filed by
the Company pursuant to the Exchange Act not otherwise provided under Section
9.5(a); and
(c) upon the reasonable request of the Purchaser, an adequate number
of copies of the prospectuses to supply to any other party requiring such
prospectuses.
9.6 CHANGES IN PURCHASER INFORMATION. The Purchaser agrees to promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding the Purchaser or the Purchaser's plan of
distribution set forth in such Registration Statement.
SECTION 10. BROKER'S FEE. The Company and the Purchaser hereby
represent that there are no brokers or finders entitled to compensation in
connection with the sale of the shares of Common Stock, and shall indemnify each
other for any such fees for which they are responsible.
SECTION 11. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be sent by confirmed
facsimile or mailed by first-class registered or certified airmail, or
nationally recognized overnight express courier, postage prepaid, and shall be
deemed given when so sent in the case of facsimile transmission, or when so
received in the case of mail or courier, and addressed as follows:
(a) if to the Company, to:
YES! Entertainment Corporation
3875 Hopyard Road
Pleasanton, CA 94588
Attention: Donald Kingsborough, President and CEO
Facsimile: (510) 734-0997
with a copy so mailed to:
Cooley Godward LLP
Five Palo Alto Square, 4th Floor
Palo Alto, California 94306
Attention: Patrick Pohlen, Esq.
Facsimile: (650) 857-0663
or to such other person at such other place as the Company shall
designate to the Purchaser in writing; and
(b) if to the Purchaser, at the address as set forth at the end of
this Agreement, or at such other address or addresses as may have been furnished
to the Company in writing.
9.
<PAGE>
SECTION 12. MISCELLANEOUS.
12.1 WAIVERS AND AMENDMENTS. Neither this Agreement nor any provision
hereof may be changed, waived, discharged, terminated, modified or amended
except upon the written consent of the Company and holders of at least a
majority of the Shares.
12.2 HEADINGS. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
12.3 SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
12.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to contracts
entered into and performed entirely in California by California residents,
without regard to conflicts of law principles.
12.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
12.6 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
12.7 ENTIRE AGREEMENT. This Agreement and other documents delivered
pursuant hereto, including the exhibits, constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
10.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
COMPANY:
YES! ENTERTAINMENT CORPORATION
By: ___________________________
Donald Kingsborough
Chief Executive Officer
Address: 3875 Hopyard Road
Pleasanton, CA 94588
Facsimile: (510) 734-0997
PURCHASER:
SHOOT THE MOON PRODUCTS II, LLC
By: ____________________________
Name: _____________________
Title: ____________________
Address: _______________________
_______________________
Facsimile: _____________________
COMMON STOCK PURCHASE AGREEMENT
<PAGE>
APPENDIX II
YES! ENTERTAINMENT CORPORATION
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information:
1. Please state your or your organization's name exactly as it should
appear in the Registration Statement:
2. Please provide the following information, as of ______________, 1997;
(1) (2)
Number of shares, if any, which
will be owned after completion
Number of Shares of sale of Shares
which are being included included in the
in the Registration Statement Registration Statement
- ------------------------------- ----------------------------------
3. Have you or your organization had any position, office or other
material relationship within the past three years with the Company or its
affiliates other than as disclosed in the Proxy Statement in connection with the
Company's 1997 Annual Meeting of Stockholders?
Yes ____ No ____
If yes, please indicate the nature of any such relationships: ____________
_______________________________________________________________________________
Signature: __________________________________
Print Name: _________________________________
Title: ______________________________________
<PAGE>
EXHIBIT 4.4
YES! ENTERTAINMENT CORPORATION
COMMON STOCK
PURCHASE AGREEMENT
AUGUST 29, 1997
<PAGE>
NOTICE TO PURCHASERS IN ALL STATES:
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY
ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.
FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR
DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES....................... 1
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES................. 1
2.1 Sale of Shares............................................ 1
SECTION 3. CLOSING AND DELIVERY...................................... 1
3.1 Closing................................................... 1
3.2 Delivery of the Common Stock and Receipt of Cancellation
of Indebtedness at the Closing............................ 2
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.. 2
4.1 Organization and Qualification............................ 2
4.2 Due Execution, Delivery and Performance of the Agreements. 2
4.3 Issuance, Sale and Delivery of the Shares................. 2
4.4 Additional Information.................................... 3
4.5 No Material Change........................................ 3
4.6 SEC Reports............................................... 3
4.7 Listing of Shares......................................... 4
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER 4
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.... 5
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING........ 5
7.1 Receipt of Payment........................................ 5
7.2 Representations and Warranties Correct.................... 5
7.3 Covenants Performed....................................... 5
SECTION 8. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE CLOSING.. 5
8.1 Representations and Warranties Correct.................... 5
8.2 Covenants Performed....................................... 6
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES
ACT....................................................... 6
9.1 Registration Procedures and Expenses...................... 6
.......................................................... 6
9.2 Transfer of Shares After Registration..................... 6
9.3 Indemnification........................................... 7
9.4 Termination of Conditions and Obligations................. 8
9.5 Information Available..................................... 8
9.6 Changes in Purchaser Information.......................... 9
</TABLE>
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
<TABLE>
<S> <C> <C>
SECTION 10. BROKER'S FEE.............................................. 9
SECTION 11. NOTICES................................................... 9
SECTION 12. MISCELLANEOUS............................................. 10
12.1 Waivers and Amendments.................................... 10
12.2 Headings.................................................. 10
12.3 Severability.............................................. 10
12.4 Governing Law............................................. 10
12.5 Counterparts.............................................. 10
12.6 Successors and Assigns.................................... 10
12.7 Entire Agreement.......................................... 10
ATTACHMENTS:
Appendix I - Stock Certificate and Warrant Questionnaire
Appendix II - Registration Statement Questionnaire
Appendix III - Purchaser's Certificate of Subsequent Sale
</TABLE>
ii.
<PAGE>
COMMON STOCK
PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 29th day of August, 1997 by
and among YES! ENTERTAINMENT CORPORATION, a Delaware corporation with its
principal place of business at 3875 Hopyard Road, Suite 375, Pleasanton,
California 94588 (the "Company") and HARVEY HERMAN ASSOCIATES, INC. (the
"Purchaser").
AGREEMENT
In consideration of the mutual covenants contained in this Agreement, and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Purchaser hereby agree as follows:
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES. Subject to the terms and
conditions of this Agreement, the Company has or before the Closing (as defined
below) will have authorized the sale and issuance of one hundred eighty-seven
thousand (187,000) shares of its Common Stock, par value $0.001 per share (the
"Common Stock").
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES.
2.1 SALE OF SHARES. At the Closing (as defined in Section 3), the Company
will sell to Purchaser, and Purchaser will purchase from the Company, at a
purchase price of three dollars and seventy-five cents ($3.75) per share of
Common Stock, one hundred eighty-seven thousand (187,000) shares of Common
Stock. The shares of Common Stock sold hereunder may be referred to herein as
the "Shares."
2.2 SEPARATE AGREEMENT. Concurrently with the execution and delivery of
this Agreement, the Company is entering into other agreements identical with
this Agreement (except as to the identity of the purchaser and the number of
shares of Common Stock to be purchased) with other purchasers. The Company's
agreements with you and with each of such other purchasers are separate
agreements, and the sales of shares of Common Stock to you and to each such
other purchasers are separate sales. The aggregate number of shares of Common
Stock to be issued in this and such other agreements shall not exceed a total of
eight hundred and thirty-one thousand (831,000).
SECTION 3. CLOSING AND DELIVERY.
3.1 CLOSING. The Closing of the purchase and sale of the Shares pursuant
to this Agreement (the "Closing") shall be held on August 29, 1997 at the
offices of Cooley Godward LLP, 5 Palo Alto Square, 3000 El Camino Real, Palo
Alto, California, or on such other date and place as may be agreed to by the
Company and the Purchaser.
1.
<PAGE>
The Company shall give at least three (3) business days prior written
notice to the Purchaser, in a manner provided for in Section 11 hereof, of the
date, time and location of the Closing. At or prior to the Closing, Purchaser
shall execute any related agreements or other documents required to be executed
hereunder, dated as of the date of the Closing (the "Closing Date").
3.2 DELIVERY OF THE COMMON STOCK AND RECEIPT OF CANCELLATION OF
INDEBTEDNESS AT THE CLOSING. At the Closing, the Company shall deliver to
Purchaser stock certificates registered in the name of Purchaser, or in such
nominee name(s) as designated by Purchaser, representing the number of shares of
Common Stock to be purchased by Purchaser at the Closing and the Purchaser shall
deliver confirmation of cancellation of indebtedness in the full amount of the
purchase price for the Shares. The name(s) in which the stock certificates are
to be issued to the Purchaser are set forth in the Stock Certificate
Questionnaire in the form attached hereto as Appendix I, as completed by
Purchaser.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
The Company hereby represents and warrants to, and covenants with, the
Purchaser as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to conduct its
business as it is currently being conducted.
4.2 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The
Company's execution, delivery and performance of this Agreement have been duly
authorized by all requisite corporate action by the Company, and will not
violate any law or the Company's Certificate of Incorporation or Bylaws of the
Company or any provision of any material indenture, mortgage, agreement,
contract or other material instrument to which the Company is a party or by
which the Company or any of its properties or assets is bound as of the date
hereof, or result in a breach of or constitute (upon notice or lapse of time or
both) a default under any such indenture, mortgage, agreement, contract or other
material instrument or result in the creation or imposition of any lien,
security interest, mortgage, pledge, charge or other encumbrance, of any
material nature whatsoever, upon any properties or assets of the Company. Upon
the execution and delivery by the Company, and assuming the valid execution and
delivery of this Agreement by the Purchaser, this Agreement will constitute a
valid and binding obligation of the Company, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of the Company in Section 9.3 hereof may be
legally unenforceable.
4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES. When issued and paid for
in accordance with this Agreement, the Shares will be validly issued and
outstanding, fully paid
2.
<PAGE>
and non-assessable, and will be issued in compliance with all applicable federal
and state securities laws.
4.4 ADDITIONAL INFORMATION. The information contained in the following
documents, which the Company has furnished to the Purchaser, or will furnish if
requested by the Purchaser prior to the Closing, were true and correct in all
material respects as of their respective filing dates:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (without exhibits unless specifically requested);
(b) the Company's Quarterly Reports on Form 10-Q required to be filed
with the SEC for the three-month periods ended March 31, 1997 and June 30, 1997
(without exhibits unless specifically requested);
(c) the Company's Current Reports on Form 8-K filed with the SEC since
December 31, 1996, if any; and
(d) Notice of Annual Meeting and Proxy Statement for the Company's
1997 Annual Meeting of Stockholders.
4.5 NO MATERIAL CHANGE. As of the date hereof, there has been no material
adverse change in the financial condition or results of operations of the
Company since June 30, 1997.
4.6 SEC REPORTS.
(a) The Company has filed with the Securities and Exchange Commission
(the "SEC" or the "Commission") all reports ("SEC Reports") required to be filed
by it under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). All of the SEC Reports filed by the Company comply in all material
respects with the requirements of the Exchange Act. None of the SEC Reports
contains, as of the respective dates thereof, any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. All financial statements contained in
the SEC Reports have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the period indicated
("GAAP"). Each balance sheet presents fairly in accordance with GAAP the
financial position of the Company as of the date of such balance sheet, and each
statement of operations, of stockholders' equity and of cash flows presents
fairly in accordance with GAAP the results of operations, the stockholders'
equity and the cash flows of the Company for the periods then ended.
(b) No event has occurred since June 30, 1997 requiring the filing of
an SEC Report that has not heretofore been filed and furnished to the Purchaser.
3.
<PAGE>
4.7 LISTING OF SHARES. The Company shall, within a reasonable time after
the Closing Date, file with the Nasdaq National Market an additional shares
listing application covering such Shares that shall have not been previously
covered by a Nasdaq additional shares listing. For so long as the Company is
obligated to keep in effect the Registration Statement provided under Section 9
hereof, the Company will use commercially reasonable efforts to maintain the
listing of Shares on the Nasdaq National Market or a national securities
exchange, as defined in the Exchange Act.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser represents and warrants to and covenants with the Company
that:
(a) the Purchaser, taking into account the personnel and resources it
can practically bring to bear on the purchase of the Shares contemplated hereby,
is knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in shares presenting an investment
decision like that involved in the purchase of the Shares, including investments
in securities issued by the Company, and has requested, received, reviewed and
considered, all information the Purchaser deems relevant in making an informed
decision to purchase the Shares.
(b) the Purchaser is acquiring the Shares being acquired by the
Purchaser pursuant to this Agreement in the ordinary course of its business and
for its own account for investment only and with no present intention of
distributing any of such Shares or any arrangement or understanding with any
other persons regarding the distribution of such Shares, except in compliance
with Section 5(c).
(c) the Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act of 1933, as amended (the "Securities Act"), applicable
blue sky laws, and the rules and regulations promulgated thereunder.
(d) the Purchaser has completed or caused to be completed the Stock
Certificate Questionnaire and the Registration Questionnaire, attached hereto as
Appendix I and Appendix II, respectively, for use in preparation of the
Registration Statement to be filed by the Company, and the answers thereto are
true and correct to the best knowledge of the Purchaser as of the date hereof
and will be true and correct as of the effective date of the Registration
Statement (provided that the Purchaser shall be entitled to update such
information by providing notice thereof to the Company prior to the effective
date of such Registration Statement).
(e) the Purchaser has, in connection with its decision to purchase the
Shares, relied with respect to the Company and its affairs solely upon the
information delivered to Purchaser as described in Sections 4.4 and 5(a) above
and the representations and warranties of the Company contained herein.
4.
<PAGE>
(f) the Purchaser is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act.
(g) the Purchaser has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated hereby
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement. Upon the execution and delivery of this
Agreement by the Purchaser, this Agreement shall constitute a valid and binding
obligation of the Purchaser, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification agreements
of the Purchaser in Section 9.3 hereof may be legally unenforceable.
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in the certificates for the Shares shall survive the
execution of this Agreement, the delivery to the Purchaser of the Shares and the
payment therefor.
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING. The
Company's obligation to complete the sale and issuance of the Shares and deliver
shares of Common Stock to the Purchaser shall be subject to the following
conditions to the extent not waived by the Company:
7.1 RECEIPT OF PAYMENT. The Company shall have received payment in the
form of cancellation of indebtedness confirmed by Purchaser, in the full amount
of the purchase price for the Shares.
7.2 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Purchaser in Section 5 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date.
7.3 COVENANTS PERFORMED. All covenants, agreements and conditions
contained herein to be performed by the Purchaser on or prior to the Closing
Date shall have been performed or complied with in all material respects.
SECTION 8. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE CLOSING. The
Purchaser's obligation to accept delivery of and to pay for the Shares shall be
subject to the following conditions to the extent not waived by the Purchaser:
8.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 4 hereof shall be true and correct
when made, and shall be true and correct as of the Closing Date.
5.
<PAGE>
8.2 COVENANTS PERFORMED. All covenants, agreements and conditions
contained herein to be performed by the Company shall have been performed or
complied with in all material respects.
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.
9.1 REGISTRATION PROCEDURES AND EXPENSES. The Company is obligated to do
the following:
(a) As soon as practicable following the Closing Date, the Company
shall prepare and file with the Commission a registration statement in order to
register with the Commission the sale by Purchaser, from time to time, of the
Shares (a "Registration Statement") and shall use commercially reasonable
efforts to have such Registration Statement declared effective. The Company
shall use commercially reasonable efforts to keep such Registration Statement
continuously effective under the Securities Act until the date which is three
years after the date that such Registration Statement is declared effective by
the Commission or such earlier date when all the Shares covered by such
Registration Statement have been sold pursuant to Rule 144 without volume
restrictions as determined by counsel to the Company pursuant to a written
opinion letter addressed to the Purchaser, to such effect.
(b) In order to facilitate the sale or other disposition of all or any
of the shares by the Purchaser, the Company shall furnish to the Purchaser with
respect to the Shares registered under the Registration Statement such number of
copies of prospectuses and preliminary prospectuses as the Purchaser reasonably
requests in conformity with the requirements of the Securities Act.
(c) The Company shall file documents required of the Company for
normal blue sky clearance in states specified in writing by the Purchaser;
provided, however, that the Company shall not be required to qualify to do
business or consent to service of process in any jurisdiction in which it is not
now so qualified or has not so consented.
(d) Other than fees and expenses, if any, of counsel or other advisers
to the Purchaser, which fees and expenses shall be borne by the Purchaser, the
Company shall bear all expenses (exclusive of underwriting discounts and
commissions) in connection with the procedures in paragraphs (a) through (c) of
this Section 9.1.
9.2 TRANSFER OF SHARES AFTER REGISTRATION. The Purchaser agrees that the
Purchaser will not effect any disposition of the Shares that would constitute a
sale within the meaning of the Securities Act, except:
(a) pursuant to the Registration Statement, in which case the
Purchaser shall submit the certificates evidencing the Shares to the transfer
agent accompanied by a separate
6.
<PAGE>
"Purchaser's Certificate" (A) in the form of Appendix III attached hereto, (B)
executed by the Purchaser or by an officer of, or other authorized person
designated by, the Purchaser, and (C) to the effect that (1) the Shares have
been sold in accordance with the Registration Statement and (2) the requirement
of delivering a current prospectus has been satisfied; or
(b) in a transaction exempt from registration under the Securities
Act, in which case the Purchaser shall, prior to effecting such disposition,
submit to the Company an opinion of counsel in form and substance reasonably
satisfactory to the Company to the effect that the proposed transaction is in
compliance with the Securities Act.
9.3 INDEMNIFICATION. As used in this Section 9.3 the following terms
shall have the following respective meanings:
(a) "Selling Stockholder" shall mean the Purchaser and any transferee
of the Purchaser who is entitled to resell Shares pursuant to the Registration
Statement;
(b) "Registration Statement" shall include any final prospectus,
exhibit, supplement or amendment included in or relating to the Registration
Statement referred to in Section 9.1; and
(c) "Untrue Statement" shall include any untrue statement or alleged
untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
The Company agrees to indemnify and hold harmless each Selling Stockholder
from and against any losses, claims, damages or liabilities to which such
Selling Stockholder may become subject (under the Securities Act or otherwise)
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any Untrue
Statement on or after the effective date of the Registration Statement, or arise
out of any failure by the Company to fulfill any undertaking included in the
Registration Statement and the Company will reimburse such Selling Stockholder
for any reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim; provided,
however, that the Company shall not be liable to such Selling Stockholder in any
such case to the extent that such loss, claim, damage or liability arises out
of, or is based upon, an Untrue Statement made in such Registration Statement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Selling Stockholder specifically for use in
preparation of the Registration Statement, or the failure of such Selling
Stockholder to comply with the covenants and agreements contained in Section 9.1
or 9.2 hereof respecting sale of the Shares or any statement or omission in any
Prospectus that is corrected in any subsequent Prospectus that was delivered to
the Selling Stockholder prior to the pertinent sale or sales by the Selling
Stockholder.
7.
<PAGE>
Purchaser agrees to indemnify and hold harmless the Company (and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, each officer of the Company who signs the Registration Statement
and each director of the Company) from and against any losses, claims, damages
or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any failure to
comply with the covenants and agreements contained in Section 9.1 or 9.2 hereof
respecting sale of the Shares, or any Untrue Statement contained in the
Registration Statement on or after the effective date thereof if such Untrue
Statement was made in reliance upon and in conformity with written information
furnished by or on behalf of the Purchaser specifically for use in preparation
of the Registration Statement, and the Purchaser will reimburse the Company (or
such officer, director or controlling person.)
Promptly after receipt by any indemnified person of a notice of a claim or
the beginning of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 9.3, such indemnified
person shall notify the indemnifying person in writing of such claim or of the
commencement of such action, and, subject to the provisions hereinafter stated,
in case any such action shall be brought against an indemnified person and such
indemnifying person shall have been notified thereof, such indemnifying person
shall be entitled to participate therein, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified person of its election to assume the defense thereof, such
indemnifying person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection with the
defense thereof; provided, however, that if there exists or shall exist a
conflict of interest that would make it inappropriate, in the opinion of counsel
to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel at
the expense of such indemnifying person; provided, however, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel for all indemnified parties.
9.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions precedent
imposed by Section 5(c) or this Section 9 upon the transferability of the Shares
shall cease and terminate as to any particular number of the Shares when such
Shares shall have been sold or otherwise disposed of in accordance with the
intended method of disposition set forth in the Registration Statement covering
such Shares or at such time as an opinion of counsel satisfactory to the Company
shall have been rendered to the effect that such conditions are not necessary in
order to comply with the Securities Act.
9.5 INFORMATION AVAILABLE. So long as the Registration Statement is
effective covering the resale of Shares owned by the Purchaser, the Company will
furnish to the Purchaser;
(a) such information as the Company supplies to its stockholders;
8.
<PAGE>
(b) upon the written request of the Purchaser, such reports filed by
the Company pursuant to the Exchange Act not otherwise provided under Section
9.5(a); and
(c) upon the reasonable request of the Purchaser, an adequate number
of copies of the prospectuses to supply to any other party requiring such
prospectuses.
9.6 CHANGES IN PURCHASER INFORMATION. The Purchaser agrees to promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding the Purchaser or the Purchaser's plan of
distribution set forth in such Registration Statement.
SECTION 10. BROKER'S FEE. The Company and the Purchaser hereby
represent that there are no brokers or finders entitled to compensation in
connection with the sale of the shares of Common Stock, and shall indemnify each
other for any such fees for which they are responsible.
SECTION 11. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be sent by confirmed
facsimile or mailed by first-class registered or certified airmail, or
nationally recognized overnight express courier, postage prepaid, and shall be
deemed given when so sent in the case of facsimile transmission, or when so
received in the case of mail or courier, and addressed as follows:
(a) if to the Company, to:
YES! Entertainment Corporation
3875 Hopyard Road
Pleasanton, CA 94588
Attention: Donald Kingsborough, President and CEO
Facsimile: (510) 734-0997
with a copy so mailed to:
Cooley Godward LLP
Five Palo Alto Square, 4th Floor
Palo Alto, California 94306
Attention: Patrick Pohlen, Esq.
Facsimile: (650) 857-0663
or to such other person at such other place as the Company shall
designate to the Purchaser in writing; and
(b) if to the Purchaser, at the address as set forth at the end of
this Agreement, or at such other address or addresses as may have been furnished
to the Company in writing.
9.
<PAGE>
SECTION 12. MISCELLANEOUS.
12.1 WAIVERS AND AMENDMENTS. Neither this Agreement nor any provision
hereof may be changed, waived, discharged, terminated, modified or amended
except upon the written consent of the Company and holders of at least a
majority of the Shares.
12.2 HEADINGS. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
12.3 SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
12.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to contracts
entered into and performed entirely in California by California residents,
without regard to conflicts of law principles.
12.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
12.6 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
12.7 ENTIRE AGREEMENT. This Agreement and other documents delivered
pursuant hereto, including the exhibits, constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
10.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
COMPANY:
YES! ENTERTAINMENT CORPORATION
By: ___________________________
Donald Kingsborough
Chief Executive Officer
Address: 3875 Hopyard Road
Pleasanton, CA 94588
Facsimile: (510) 734-0997
PURCHASER:
HARVEY HERMAN ASSOCIATES, INC.
By: ___________________________
Name: ____________________
Title: ___________________
Address: ______________________
______________________
Facsimile: ____________________
COMMON STOCK PURCHASE AGREEMENT
<PAGE>
EXHIBIT 4.5
YES! ENTERTAINMENT CORPORATION
COMMON STOCK
PURCHASE AGREEMENT
AUGUST 29, 1997
<PAGE>
NOTICE TO PURCHASERS IN ALL STATES:
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY
ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.
FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR
DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES....................... 1
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES................. 1
2.1 Sale of Shares............................................ 1
SECTION 3. CLOSING AND DELIVERY...................................... 1
3.1 Closing................................................... 1
3.2 Delivery of the Common Stock and Receipt of Cancellation
of Indebtedness at the Closing............................ 2
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.. 2
4.1 Organization and Qualification............................ 2
4.2 Due Execution, Delivery and Performance of the Agreements. 2
4.3 Issuance, Sale and Delivery of the Shares................. 2
4.4 Additional Information.................................... 3
4.5 No Material Change........................................ 3
4.6 SEC Reports............................................... 3
4.7 Listing of Shares......................................... 4
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER 4
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.... 5
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING........ 5
7.1 Receipt of Payment........................................ 5
7.2 Representations and Warranties Correct.................... 5
7.3 Covenants Performed....................................... 5
SECTION 8. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE CLOSING.. 5
8.1 Representations and Warranties Correct.................... 5
8.2 Covenants Performed....................................... 6
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES
ACT....................................................... 6
9.1 Registration Procedures and Expenses...................... 6
.......................................................... 6
9.2 Transfer of Shares After Registration..................... 6
9.3 Indemnification........................................... 7
9.4 Termination of Conditions and Obligations................. 8
9.5 Information Available..................................... 8
9.6 Changes in Purchaser Information.......................... 9
</TABLE>
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
<TABLE>
<S> <C> <C>
SECTION 10. BROKER'S FEE.............................................. 9
SECTION 11. NOTICES................................................... 9
SECTION 12. MISCELLANEOUS............................................. 10
12.1 Waivers and Amendments.................................... 10
12.2 Headings.................................................. 10
12.3 Severability.............................................. 10
12.4 Governing Law............................................. 10
12.5 Counterparts.............................................. 10
12.6 Successors and Assigns.................................... 10
12.7 Entire Agreement.......................................... 10
ATTACHMENTS:
Appendix I - Stock Certificate and Warrant Questionnaire
Appendix II - Registration Statement Questionnaire
Appendix III - Purchaser's Certificate of Subsequent Sale
</TABLE>
ii.
<PAGE>
COMMON STOCK
PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 29th day of August, 1997 by
and among YES! ENTERTAINMENT CORPORATION, a Delaware corporation with its
principal place of business at 3875 Hopyard Road, Suite 375, Pleasanton,
California 94588 (the "Company") and CREATIVE MEDIA, LLC (the "Purchaser").
AGREEMENT
In consideration of the mutual covenants contained in this Agreement, and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Purchaser hereby agree as follows:
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES. Subject to the terms and
conditions of this Agreement, the Company has or before the Closing (as defined
below) will have authorized the sale and issuance of eighty thousand (80,000)
shares of its Common Stock, par value $0.001 per share (the "Common Stock").
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES.
2.1 SALE OF SHARES. At the Closing (as defined in Section 3), the Company
will sell to Purchaser, and Purchaser will purchase from the Company, at a
purchase price of three dollars and seventy-five cents ($3.75) per share of
Common Stock, eighty thousand (80,000) shares of Common Stock. The shares of
Common Stock sold hereunder may be referred to herein as the "Shares."
2.2 SEPARATE AGREEMENT. Concurrently with the execution and delivery of
this Agreement, the Company is entering into other agreements identical with
this Agreement (except as to the identity of the purchaser and the number of
shares of Common Stock to be purchased) with other purchasers. The Company's
agreements with you and with each of such other purchasers are separate
agreements, and the sales of shares of Common Stock to you and to each such
other purchasers are separate sales. The aggregate number of shares of Common
Stock to be issued in this and such other agreements shall not exceed a total of
eight hundred and thirty-one thousand (831,000).
SECTION 3. CLOSING AND DELIVERY.
3.1 CLOSING. The Closing of the purchase and sale of the Shares pursuant
to this Agreement (the "Closing") shall be held on August 29, 1997 at the
offices of Cooley Godward LLP, 5 Palo Alto Square, 3000 El Camino Real, Palo
Alto, California, or on such other date and place as may be agreed to by the
Company and the Purchaser.
1.
<PAGE>
The Company shall give at least three (3) business days prior written
notice to the Purchaser, in a manner provided for in Section 11 hereof, of the
date, time and location of the Closing. At or prior to the Closing, Purchaser
shall execute any related agreements or other documents required to be executed
hereunder, dated as of the date of the Closing (the "Closing Date").
3.2 DELIVERY OF THE COMMON STOCK AND RECEIPT OF CANCELLATION OF
INDEBTEDNESS AT THE CLOSING. At the Closing, the Company shall deliver to
Purchaser stock certificates registered in the name of Purchaser, or in such
nominee name(s) as designated by Purchaser, representing the number of shares of
Common Stock to be purchased by Purchaser at the Closing and the Purchaser shall
deliver confirmation of cancellation of indebtedness in the full amount of the
purchase price for the Shares. The name(s) in which the stock certificates are
to be issued to the Purchaser are set forth in the Stock Certificate
Questionnaire in the form attached hereto as Appendix I, as completed by
Purchaser.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
The Company hereby represents and warrants to, and covenants with, the
Purchaser as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to conduct its
business as it is currently being conducted.
4.2 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The
Company's execution, delivery and performance of this Agreement have been duly
authorized by all requisite corporate action by the Company, and will not
violate any law or the Company's Certificate of Incorporation or Bylaws of the
Company or any provision of any material indenture, mortgage, agreement,
contract or other material instrument to which the Company is a party or by
which the Company or any of its properties or assets is bound as of the date
hereof, or result in a breach of or constitute (upon notice or lapse of time or
both) a default under any such indenture, mortgage, agreement, contract or other
material instrument or result in the creation or imposition of any lien,
security interest, mortgage, pledge, charge or other encumbrance, of any
material nature whatsoever, upon any properties or assets of the Company. Upon
the execution and delivery by the Company, and assuming the valid execution and
delivery of this Agreement by the Purchaser, this Agreement will constitute a
valid and binding obligation of the Company, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of the Company in Section 9.3 hereof may be
legally unenforceable.
4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES. When issued and paid for
in accordance with this Agreement, the Shares will be validly issued and
outstanding, fully paid
2.
<PAGE>
and non-assessable, and will be issued in compliance with all applicable federal
and state securities laws.
4.4 ADDITIONAL INFORMATION. The information contained in the following
documents, which the Company has furnished to the Purchaser, or will furnish if
requested by the Purchaser prior to the Closing, were true and correct in all
material respects as of their respective filing dates:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (without exhibits unless specifically requested);
(b) the Company's Quarterly Reports on Form 10-Q required to be filed
with the SEC for the three-month periods ended March 31, 1997 and June 30, 1997
(without exhibits unless specifically requested);
(c) the Company's Current Reports on Form 8-K filed with the SEC since
December 31, 1996, if any; and
(d) Notice of Annual Meeting and Proxy Statement for the Company's
1997 Annual Meeting of Stockholders.
4.5 NO MATERIAL CHANGE. As of the date hereof, there has been no material
adverse change in the financial condition or results of operations of the
Company since June 30, 1997.
4.6 SEC REPORTS.
(a) The Company has filed with the Securities and Exchange Commission
(the "SEC" or the "Commission") all reports ("SEC Reports") required to be filed
by it under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). All of the SEC Reports filed by the Company comply in all material
respects with the requirements of the Exchange Act. None of the SEC Reports
contains, as of the respective dates thereof, any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. All financial statements contained in
the SEC Reports have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the period indicated
("GAAP"). Each balance sheet presents fairly in accordance with GAAP the
financial position of the Company as of the date of such balance sheet, and each
statement of operations, of stockholders' equity and of cash flows presents
fairly in accordance with GAAP the results of operations, the stockholders'
equity and the cash flows of the Company for the periods then ended.
(b) No event has occurred since June 30, 1997 requiring the filing of
an SEC Report that has not heretofore been filed and furnished to the Purchaser.
3.
<PAGE>
4.7 LISTING OF SHARES. The Company shall, within a reasonable time after
the Closing Date, file with the Nasdaq National Market an additional shares
listing application covering such Shares that shall have not been previously
covered by a Nasdaq additional shares listing. For so long as the Company is
obligated to keep in effect the Registration Statement provided under Section 9
hereof, the Company will use commercially reasonable efforts to maintain the
listing of Shares on the Nasdaq National Market or a national securities
exchange, as defined in the Exchange Act.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser represents and warrants to and covenants with the Company
that:
(a) the Purchaser, taking into account the personnel and resources it
can practically bring to bear on the purchase of the Shares contemplated hereby,
is knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in shares presenting an investment
decision like that involved in the purchase of the Shares, including investments
in securities issued by the Company, and has requested, received, reviewed and
considered, all information the Purchaser deems relevant in making an informed
decision to purchase the Shares.
(b) the Purchaser is acquiring the Shares being acquired by the
Purchaser pursuant to this Agreement in the ordinary course of its business and
for its own account for investment only and with no present intention of
distributing any of such Shares or any arrangement or understanding with any
other persons regarding the distribution of such Shares, except in compliance
with Section 5(c).
(c) the Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act of 1933, as amended (the "Securities Act"), applicable
blue sky laws, and the rules and regulations promulgated thereunder.
(d) the Purchaser has completed or caused to be completed the Stock
Certificate Questionnaire and the Registration Questionnaire, attached hereto as
Appendix I and Appendix II, respectively, for use in preparation of the
Registration Statement to be filed by the Company, and the answers thereto are
true and correct to the best knowledge of the Purchaser as of the date hereof
and will be true and correct as of the effective date of the Registration
Statement (provided that the Purchaser shall be entitled to update such
information by providing notice thereof to the Company prior to the effective
date of such Registration Statement).
(e) the Purchaser has, in connection with its decision to purchase the
Shares, relied with respect to the Company and its affairs solely upon the
information delivered to Purchaser as described in Sections 4.4 and 5(a) above
and the representations and warranties of the Company contained herein.
4.
<PAGE>
(f) the Purchaser is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act.
(g) the Purchaser has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated hereby
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement. Upon the execution and delivery of this
Agreement by the Purchaser, this Agreement shall constitute a valid and binding
obligation of the Purchaser, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification agreements
of the Purchaser in Section 9.3 hereof may be legally unenforceable.
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in the certificates for the Shares shall survive the
execution of this Agreement, the delivery to the Purchaser of the Shares and the
payment therefor.
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING. The
Company's obligation to complete the sale and issuance of the Shares and deliver
shares of Common Stock to the Purchaser shall be subject to the following
conditions to the extent not waived by the Company:
7.1 RECEIPT OF PAYMENT. The Company shall have received payment in the
form of cancellation of indebtedness confirmed by Purchaser, in the full amount
of the purchase price for the Shares.
7.2 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Purchaser in Section 5 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date.
7.3 COVENANTS PERFORMED. All covenants, agreements and conditions
contained herein to be performed by the Purchaser on or prior to the Closing
Date shall have been performed or complied with in all material respects.
SECTION 8. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE CLOSING. The
Purchaser's obligation to accept delivery of and to pay for the Shares shall be
subject to the following conditions to the extent not waived by the Purchaser:
8.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 4 hereof shall be true and correct
when made, and shall be true and correct as of the Closing Date.
5.
<PAGE>
8.2 COVENANTS PERFORMED. All covenants, agreements and conditions
contained herein to be performed by the Company shall have been performed or
complied with in all material respects.
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.
9.1 REGISTRATION PROCEDURES AND EXPENSES. The Company is obligated to do
the following:
(a) As soon as practicable following the Closing Date, the Company
shall prepare and file with the Commission a registration statement in order to
register with the Commission the sale by Purchaser, from time to time, of the
Shares (a "Registration Statement") and shall use commercially reasonable
efforts to have such Registration Statement declared effective. The Company
shall use commercially reasonable efforts to keep such Registration Statement
continuously effective under the Securities Act until the date which is three
years after the date that such Registration Statement is declared effective by
the Commission or such earlier date when all the Shares covered by such
Registration Statement have been sold pursuant to Rule 144 without volume
restrictions as determined by counsel to the Company pursuant to a written
opinion letter addressed to the Purchaser, to such effect.
(b) In order to facilitate the sale or other disposition of all or any
of the shares by the Purchaser, the Company shall furnish to the Purchaser with
respect to the Shares registered under the Registration Statement such number of
copies of prospectuses and preliminary prospectuses as the Purchaser reasonably
requests in conformity with the requirements of the Securities Act.
(c) The Company shall file documents required of the Company for
normal blue sky clearance in states specified in writing by the Purchaser;
provided, however, that the Company shall not be required to qualify to do
business or consent to service of process in any jurisdiction in which it is not
now so qualified or has not so consented.
(d) Other than fees and expenses, if any, of counsel or other advisers
to the Purchaser, which fees and expenses shall be borne by the Purchaser, the
Company shall bear all expenses (exclusive of underwriting discounts and
commissions) in connection with the procedures in paragraphs (a) through (c) of
this Section 9.1.
9.2 TRANSFER OF SHARES AFTER REGISTRATION. The Purchaser agrees that the
Purchaser will not effect any disposition of the Shares that would constitute a
sale within the meaning of the Securities Act, except:
(a) pursuant to the Registration Statement, in which case the
Purchaser shall submit the certificates evidencing the Shares to the transfer
agent accompanied by a separate
6.
<PAGE>
"Purchaser's Certificate" (A) in the form of Appendix III attached hereto, (B)
executed by the Purchaser or by an officer of, or other authorized person
designated by, the Purchaser, and (C) to the effect that (1) the Shares have
been sold in accordance with the Registration Statement and (2) the requirement
of delivering a current prospectus has been satisfied; or
(b) in a transaction exempt from registration under the Securities
Act, in which case the Purchaser shall, prior to effecting such disposition,
submit to the Company an opinion of counsel in form and substance reasonably
satisfactory to the Company to the effect that the proposed transaction is in
compliance with the Securities Act.
9.3 INDEMNIFICATION. As used in this Section 9.3 the following terms
shall have the following respective meanings:
(a) "Selling Stockholder" shall mean the Purchaser and any transferee
of the Purchaser who is entitled to resell Shares pursuant to the Registration
Statement;
(b) "Registration Statement" shall include any final prospectus,
exhibit, supplement or amendment included in or relating to the Registration
Statement referred to in Section 9.1; and
(c) "Untrue Statement" shall include any untrue statement or alleged
untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
The Company agrees to indemnify and hold harmless each Selling Stockholder
from and against any losses, claims, damages or liabilities to which such
Selling Stockholder may become subject (under the Securities Act or otherwise)
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any Untrue
Statement on or after the effective date of the Registration Statement, or arise
out of any failure by the Company to fulfill any undertaking included in the
Registration Statement and the Company will reimburse such Selling Stockholder
for any reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim; provided,
however, that the Company shall not be liable to such Selling Stockholder in any
such case to the extent that such loss, claim, damage or liability arises out
of, or is based upon, an Untrue Statement made in such Registration Statement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Selling Stockholder specifically for use in
preparation of the Registration Statement, or the failure of such Selling
Stockholder to comply with the covenants and agreements contained in Section 9.1
or 9.2 hereof respecting sale of the Shares or any statement or omission in any
Prospectus that is corrected in any subsequent Prospectus that was delivered to
the Selling Stockholder prior to the pertinent sale or sales by the Selling
Stockholder.
7.
<PAGE>
Purchaser agrees to indemnify and hold harmless the Company (and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, each officer of the Company who signs the Registration Statement
and each director of the Company) from and against any losses, claims, damages
or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any failure to
comply with the covenants and agreements contained in Section 9.1 or 9.2 hereof
respecting sale of the Shares, or any Untrue Statement contained in the
Registration Statement on or after the effective date thereof if such Untrue
Statement was made in reliance upon and in conformity with written information
furnished by or on behalf of the Purchaser specifically for use in preparation
of the Registration Statement, and the Purchaser will reimburse the Company (or
such officer, director or controlling person.)
Promptly after receipt by any indemnified person of a notice of a claim or
the beginning of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 9.3, such indemnified
person shall notify the indemnifying person in writing of such claim or of the
commencement of such action, and, subject to the provisions hereinafter stated,
in case any such action shall be brought against an indemnified person and such
indemnifying person shall have been notified thereof, such indemnifying person
shall be entitled to participate therein, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified person of its election to assume the defense thereof, such
indemnifying person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection with the
defense thereof; provided, however, that if there exists or shall exist a
conflict of interest that would make it inappropriate, in the opinion of counsel
to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel at
the expense of such indemnifying person; provided, however, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel for all indemnified parties.
9.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions precedent
imposed by Section 5(c) or this Section 9 upon the transferability of the Shares
shall cease and terminate as to any particular number of the Shares when such
Shares shall have been sold or otherwise disposed of in accordance with the
intended method of disposition set forth in the Registration Statement covering
such Shares or at such time as an opinion of counsel satisfactory to the Company
shall have been rendered to the effect that such conditions are not necessary in
order to comply with the Securities Act.
9.5 INFORMATION AVAILABLE. So long as the Registration Statement is
effective covering the resale of Shares owned by the Purchaser, the Company will
furnish to the Purchaser;
(a) such information as the Company supplies to its stockholders;
8.
<PAGE>
(b) upon the written request of the Purchaser, such reports filed by
the Company pursuant to the Exchange Act not otherwise provided under Section
9.5(a); and
(c) upon the reasonable request of the Purchaser, an adequate number
of copies of the prospectuses to supply to any other party requiring such
prospectuses.
9.6 CHANGES IN PURCHASER INFORMATION. The Purchaser agrees to promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding the Purchaser or the Purchaser's plan of
distribution set forth in such Registration Statement.
SECTION 10. BROKER'S FEE. The Company and the Purchaser hereby
represent that there are no brokers or finders entitled to compensation in
connection with the sale of the shares of Common Stock, and shall indemnify each
other for any such fees for which they are responsible.
SECTION 11. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be sent by confirmed
facsimile or mailed by first-class registered or certified airmail, or
nationally recognized overnight express courier, postage prepaid, and shall be
deemed given when so sent in the case of facsimile transmission, or when so
received in the case of mail or courier, and addressed as follows:
(a) if to the Company, to:
YES! Entertainment Corporation
3875 Hopyard Road
Pleasanton, CA 94588
Attention: Donald Kingsborough, President and CEO
Facsimile: (510) 734-0997
with a copy so mailed to:
Cooley Godward LLP
Five Palo Alto Square, 4th Floor
Palo Alto, California 94306
Attention: Patrick Pohlen, Esq.
Facsimile: (650) 857-0663
or to such other person at such other place as the Company shall
designate to the Purchaser in writing; and
(b) if to the Purchaser, at the address as set forth at the end of
this Agreement, or at such other address or addresses as may have been furnished
to the Company in writing.
9.
<PAGE>
SECTION 12. MISCELLANEOUS.
12.1 WAIVERS AND AMENDMENTS. Neither this Agreement nor any provision
hereof may be changed, waived, discharged, terminated, modified or amended
except upon the written consent of the Company and holders of at least a
majority of the Shares.
12.2 HEADINGS. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
12.3 SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
12.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to contracts
entered into and performed entirely in California by California residents,
without regard to conflicts of law principles.
12.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
12.6 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
12.7 ENTIRE AGREEMENT. This Agreement and other documents delivered
pursuant hereto, including the exhibits, constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
10.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
COMPANY:
YES! ENTERTAINMENT CORPORATION
By: __________________________
Donald Kingsborough
Chief Executive Officer
Address: 3875 Hopyard Road
Pleasanton, CA 94588
Facsimile: (510) 734-0997
PURCHASER:
CREATIVE MEDIA, LLC
By: _____________________________
Name: ______________________
Title: _____________________
Address: ________________________
________________________
Facsimile: ______________________
COMMON STOCK PURCHASE AGREEMENT
<PAGE>
EXHIBIT 4.6
YES! ENTERTAINMENT CORPORATION
COMMON STOCK
PURCHASE AGREEMENT
AUGUST 29, 1997
<PAGE>
NOTICE TO PURCHASERS IN ALL STATES:
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY
ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.
FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR
DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES....................... 1
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES................. 1
2.1 Sale of Shares............................................ 1
SECTION 3. CLOSING AND DELIVERY...................................... 1
3.1 Closing................................................... 1
3.2 Delivery of the Common Stock and Receipt of Cancellation
of Indebtedness at the Closing............................ 2
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.. 2
4.1 Organization and Qualification............................ 2
4.2 Due Execution, Delivery and Performance of the Agreements. 2
4.3 Issuance, Sale and Delivery of the Shares................. 2
4.4 Additional Information.................................... 3
4.5 No Material Change........................................ 3
4.6 SEC Reports............................................... 3
4.7 Listing of Shares......................................... 4
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER 4
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.... 5
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING........ 5
7.1 Receipt of Payment........................................ 5
7.2 Representations and Warranties Correct.................... 5
7.3 Covenants Performed....................................... 5
SECTION 8. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE CLOSING.. 5
8.1 Representations and Warranties Correct.................... 5
8.2 Covenants Performed....................................... 6
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES
ACT....................................................... 6
9.1 Registration Procedures and Expenses...................... 6
.......................................................... 6
9.2 Transfer of Shares After Registration..................... 6
9.3 Indemnification........................................... 7
9.4 Termination of Conditions and Obligations................. 8
9.5 Information Available..................................... 8
9.6 Changes in Purchaser Information.......................... 9
</TABLE>
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
<TABLE>
<S> <C> <C>
SECTION 10. BROKER'S FEE.............................................. 9
SECTION 11. NOTICES................................................... 9
SECTION 12. MISCELLANEOUS............................................. 10
12.1 Waivers and Amendments.................................... 10
12.2 Headings.................................................. 10
12.3 Severability.............................................. 10
12.4 Governing Law............................................. 10
12.5 Counterparts.............................................. 10
12.6 Successors and Assigns.................................... 10
12.7 Entire Agreement.......................................... 10
ATTACHMENTS:
Appendix I - Stock Certificate and Warrant Questionnaire
Appendix II - Registration Statement Questionnaire
Appendix III - Purchaser's Certificate of Subsequent Sale
</TABLE>
ii.
<PAGE>
COMMON STOCK
PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 29th day of August, 1997 by
and among YES! ENTERTAINMENT CORPORATION, a Delaware corporation with its
principal place of business at 3875 Hopyard Road, Suite 375, Pleasanton,
California 94588 (the "Company") and KLITSNER INDUSTRIAL DESIGN, LLC (the
"Purchaser").
AGREEMENT
In consideration of the mutual covenants contained in this Agreement, and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Purchaser hereby agree as follows:
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES. Subject to the terms and
conditions of this Agreement, the Company has or before the Closing (as defined
below) will have authorized the sale and issuance of forty thousand (40,000)
shares of its Common Stock, par value $0.001 per share (the "Common Stock").
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES.
2.1 SALE OF SHARES. At the Closing (as defined in Section 3), the Company
will sell to Purchaser, and Purchaser will purchase from the Company, at a
purchase price of three dollars and seventy-five cents ($3.75) per share of
Common Stock, forty thousand (40,000) shares of Common Stock. The shares of
Common Stock sold hereunder may be referred to herein as the "Shares."
2.2 SEPARATE AGREEMENT. Concurrently with the execution and delivery of
this Agreement, the Company is entering into other agreements identical with
this Agreement (except as to the identity of the purchaser and the number of
shares of Common Stock to be purchased) with other purchasers. The Company's
agreements with you and with each of such other purchasers are separate
agreements, and the sales of shares of Common Stock to you and to each such
other purchasers are separate sales. The aggregate number of shares of Common
Stock to be issued in this and such other agreements shall not exceed a total of
eight hundred and thirty-one thousand (831,000).
SECTION 3. CLOSING AND DELIVERY.
3.1 CLOSING. The Closing of the purchase and sale of the Shares pursuant
to this Agreement (the "Closing") shall be held on August 29, 1997 at the
offices of Cooley Godward LLP, 5 Palo Alto Square, 3000 El Camino Real, Palo
Alto, California, or on such other date and place as may be agreed to by the
Company and the Purchaser.
1.
<PAGE>
The Company shall give at least three (3) business days prior written
notice to the Purchaser, in a manner provided for in Section 11 hereof, of the
date, time and location of the Closing. At or prior to the Closing, Purchaser
shall execute any related agreements or other documents required to be executed
hereunder, dated as of the date of the Closing (the "Closing Date").
3.2 DELIVERY OF THE COMMON STOCK AND RECEIPT OF CANCELLATION OF
INDEBTEDNESS AT THE CLOSING. At the Closing, the Company shall deliver to
Purchaser stock certificates registered in the name of Purchaser, or in such
nominee name(s) as designated by Purchaser, representing the number of shares of
Common Stock to be purchased by Purchaser at the Closing and the Purchaser shall
deliver confirmation of cancellation of indebtedness in the full amount of the
purchase price for the Shares. The name(s) in which the stock certificates are
to be issued to the Purchaser are set forth in the Stock Certificate
Questionnaire in the form attached hereto as Appendix I, as completed by
Purchaser.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
The Company hereby represents and warrants to, and covenants with, the
Purchaser as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to conduct its
business as it is currently being conducted.
4.2 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The
Company's execution, delivery and performance of this Agreement have been duly
authorized by all requisite corporate action by the Company, and will not
violate any law or the Company's Certificate of Incorporation or Bylaws of the
Company or any provision of any material indenture, mortgage, agreement,
contract or other material instrument to which the Company is a party or by
which the Company or any of its properties or assets is bound as of the date
hereof, or result in a breach of or constitute (upon notice or lapse of time or
both) a default under any such indenture, mortgage, agreement, contract or other
material instrument or result in the creation or imposition of any lien,
security interest, mortgage, pledge, charge or other encumbrance, of any
material nature whatsoever, upon any properties or assets of the Company. Upon
the execution and delivery by the Company, and assuming the valid execution and
delivery of this Agreement by the Purchaser, this Agreement will constitute a
valid and binding obligation of the Company, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of the Company in Section 9.3 hereof may be
legally unenforceable.
4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES. When issued and paid for
in accordance with this Agreement, the Shares will be validly issued and
outstanding, fully paid
2.
<PAGE>
and non-assessable, and will be issued in compliance with all applicable federal
and state securities laws.
4.4 ADDITIONAL INFORMATION. The information contained in the following
documents, which the Company has furnished to the Purchaser, or will furnish if
requested by the Purchaser prior to the Closing, were true and correct in all
material respects as of their respective filing dates:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (without exhibits unless specifically requested);
(b) the Company's Quarterly Reports on Form 10-Q required to be filed
with the SEC for the three-month periods ended March 31, 1997 and June 30, 1997
(without exhibits unless specifically requested);
(c) the Company's Current Reports on Form 8-K filed with the SEC since
December 31, 1996, if any; and
(d) Notice of Annual Meeting and Proxy Statement for the Company's
1997 Annual Meeting of Stockholders.
4.5 NO MATERIAL CHANGE. As of the date hereof, there has been no material
adverse change in the financial condition or results of operations of the
Company since June 30, 1997.
4.6 SEC REPORTS.
(a) The Company has filed with the Securities and Exchange Commission
(the "SEC" or the "Commission") all reports ("SEC Reports") required to be filed
by it under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). All of the SEC Reports filed by the Company comply in all material
respects with the requirements of the Exchange Act. None of the SEC Reports
contains, as of the respective dates thereof, any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. All financial statements contained in
the SEC Reports have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the period indicated
("GAAP"). Each balance sheet presents fairly in accordance with GAAP the
financial position of the Company as of the date of such balance sheet, and each
statement of operations, of stockholders' equity and of cash flows presents
fairly in accordance with GAAP the results of operations, the stockholders'
equity and the cash flows of the Company for the periods then ended.
(b) No event has occurred since June 30, 1997 requiring the filing of
an SEC Report that has not heretofore been filed and furnished to the Purchaser.
3.
<PAGE>
4.7 LISTING OF SHARES. The Company shall, within a reasonable time after
the Closing Date, file with the Nasdaq National Market an additional shares
listing application covering such Shares that shall have not been previously
covered by a Nasdaq additional shares listing. For so long as the Company is
obligated to keep in effect the Registration Statement provided under Section 9
hereof, the Company will use commercially reasonable efforts to maintain the
listing of Shares on the Nasdaq National Market or a national securities
exchange, as defined in the Exchange Act.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser represents and warrants to and covenants with the Company
that:
(a) the Purchaser, taking into account the personnel and resources it
can practically bring to bear on the purchase of the Shares contemplated hereby,
is knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in shares presenting an investment
decision like that involved in the purchase of the Shares, including investments
in securities issued by the Company, and has requested, received, reviewed and
considered, all information the Purchaser deems relevant in making an informed
decision to purchase the Shares.
(b) the Purchaser is acquiring the Shares being acquired by the
Purchaser pursuant to this Agreement in the ordinary course of its business and
for its own account for investment only and with no present intention of
distributing any of such Shares or any arrangement or understanding with any
other persons regarding the distribution of such Shares, except in compliance
with Section 5(c).
(c) the Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act of 1933, as amended (the "Securities Act"), applicable
blue sky laws, and the rules and regulations promulgated thereunder.
(d) the Purchaser has completed or caused to be completed the Stock
Certificate Questionnaire and the Registration Questionnaire, attached hereto as
Appendix I and Appendix II, respectively, for use in preparation of the
Registration Statement to be filed by the Company, and the answers thereto are
true and correct to the best knowledge of the Purchaser as of the date hereof
and will be true and correct as of the effective date of the Registration
Statement (provided that the Purchaser shall be entitled to update such
information by providing notice thereof to the Company prior to the effective
date of such Registration Statement).
(e) the Purchaser has, in connection with its decision to purchase the
Shares, relied with respect to the Company and its affairs solely upon the
information delivered to Purchaser as described in Sections 4.4 and 5(a) above
and the representations and warranties of the Company contained herein.
4.
<PAGE>
(f) the Purchaser is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act.
(g) the Purchaser has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated hereby
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement. Upon the execution and delivery of this
Agreement by the Purchaser, this Agreement shall constitute a valid and binding
obligation of the Purchaser, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification agreements
of the Purchaser in Section 9.3 hereof may be legally unenforceable.
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in the certificates for the Shares shall survive the
execution of this Agreement, the delivery to the Purchaser of the Shares and the
payment therefor.
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING. The
Company's obligation to complete the sale and issuance of the Shares and deliver
shares of Common Stock to the Purchaser shall be subject to the following
conditions to the extent not waived by the Company:
7.1 RECEIPT OF PAYMENT. The Company shall have received payment in the
form of cancellation of indebtedness confirmed by Purchaser, in the full amount
of the purchase price for the Shares.
7.2 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Purchaser in Section 5 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date.
7.3 COVENANTS PERFORMED. All covenants, agreements and conditions
contained herein to be performed by the Purchaser on or prior to the Closing
Date shall have been performed or complied with in all material respects.
SECTION 8. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE CLOSING. The
Purchaser's obligation to accept delivery of and to pay for the Shares shall be
subject to the following conditions to the extent not waived by the Purchaser:
8.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 4 hereof shall be true and correct
when made, and shall be true and correct as of the Closing Date.
5.
<PAGE>
8.2 COVENANTS PERFORMED. All covenants, agreements and conditions
contained herein to be performed by the Company shall have been performed or
complied with in all material respects.
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.
9.1 REGISTRATION PROCEDURES AND EXPENSES. The Company is obligated to do
the following:
(a) As soon as practicable following the Closing Date, the Company
shall prepare and file with the Commission a registration statement in order to
register with the Commission the sale by Purchaser, from time to time, of the
Shares (a "Registration Statement") and shall use commercially reasonable
efforts to have such Registration Statement declared effective. The Company
shall use commercially reasonable efforts to keep such Registration Statement
continuously effective under the Securities Act until the date which is three
years after the date that such Registration Statement is declared effective by
the Commission or such earlier date when all the Shares covered by such
Registration Statement have been sold pursuant to Rule 144 without volume
restrictions as determined by counsel to the Company pursuant to a written
opinion letter addressed to the Purchaser, to such effect.
(b) In order to facilitate the sale or other disposition of all or any
of the shares by the Purchaser, the Company shall furnish to the Purchaser with
respect to the Shares registered under the Registration Statement such number of
copies of prospectuses and preliminary prospectuses as the Purchaser reasonably
requests in conformity with the requirements of the Securities Act.
(c) The Company shall file documents required of the Company for
normal blue sky clearance in states specified in writing by the Purchaser;
provided, however, that the Company shall not be required to qualify to do
business or consent to service of process in any jurisdiction in which it is not
now so qualified or has not so consented.
(d) Other than fees and expenses, if any, of counsel or other advisers
to the Purchaser, which fees and expenses shall be borne by the Purchaser, the
Company shall bear all expenses (exclusive of underwriting discounts and
commissions) in connection with the procedures in paragraphs (a) through (c) of
this Section 9.1.
9.2 TRANSFER OF SHARES AFTER REGISTRATION. The Purchaser agrees that the
Purchaser will not effect any disposition of the Shares that would constitute a
sale within the meaning of the Securities Act, except:
(a) pursuant to the Registration Statement, in which case the
Purchaser shall submit the certificates evidencing the Shares to the transfer
agent accompanied by a separate
6.
<PAGE>
"Purchaser's Certificate" (A) in the form of Appendix III attached hereto, (B)
executed by the Purchaser or by an officer of, or other authorized person
designated by, the Purchaser, and (C) to the effect that (1) the Shares have
been sold in accordance with the Registration Statement and (2) the requirement
of delivering a current prospectus has been satisfied; or
(b) in a transaction exempt from registration under the Securities
Act, in which case the Purchaser shall, prior to effecting such disposition,
submit to the Company an opinion of counsel in form and substance reasonably
satisfactory to the Company to the effect that the proposed transaction is in
compliance with the Securities Act.
9.3 INDEMNIFICATION. As used in this Section 9.3 the following terms
shall have the following respective meanings:
(a) "Selling Stockholder" shall mean the Purchaser and any transferee
of the Purchaser who is entitled to resell Shares pursuant to the Registration
Statement;
(b) "Registration Statement" shall include any final prospectus,
exhibit, supplement or amendment included in or relating to the Registration
Statement referred to in Section 9.1; and
(c) "Untrue Statement" shall include any untrue statement or alleged
untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
The Company agrees to indemnify and hold harmless each Selling Stockholder
from and against any losses, claims, damages or liabilities to which such
Selling Stockholder may become subject (under the Securities Act or otherwise)
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any Untrue
Statement on or after the effective date of the Registration Statement, or arise
out of any failure by the Company to fulfill any undertaking included in the
Registration Statement and the Company will reimburse such Selling Stockholder
for any reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim; provided,
however, that the Company shall not be liable to such Selling Stockholder in any
such case to the extent that such loss, claim, damage or liability arises out
of, or is based upon, an Untrue Statement made in such Registration Statement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Selling Stockholder specifically for use in
preparation of the Registration Statement, or the failure of such Selling
Stockholder to comply with the covenants and agreements contained in Section 9.1
or 9.2 hereof respecting sale of the Shares or any statement or omission in any
Prospectus that is corrected in any subsequent Prospectus that was delivered to
the Selling Stockholder prior to the pertinent sale or sales by the Selling
Stockholder.
7.
<PAGE>
Purchaser agrees to indemnify and hold harmless the Company (and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, each officer of the Company who signs the Registration Statement
and each director of the Company) from and against any losses, claims, damages
or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any failure to
comply with the covenants and agreements contained in Section 9.1 or 9.2 hereof
respecting sale of the Shares, or any Untrue Statement contained in the
Registration Statement on or after the effective date thereof if such Untrue
Statement was made in reliance upon and in conformity with written information
furnished by or on behalf of the Purchaser specifically for use in preparation
of the Registration Statement, and the Purchaser will reimburse the Company (or
such officer, director or controlling person.)
Promptly after receipt by any indemnified person of a notice of a claim or
the beginning of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 9.3, such indemnified
person shall notify the indemnifying person in writing of such claim or of the
commencement of such action, and, subject to the provisions hereinafter stated,
in case any such action shall be brought against an indemnified person and such
indemnifying person shall have been notified thereof, such indemnifying person
shall be entitled to participate therein, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified person of its election to assume the defense thereof, such
indemnifying person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection with the
defense thereof; provided, however, that if there exists or shall exist a
conflict of interest that would make it inappropriate, in the opinion of counsel
to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel at
the expense of such indemnifying person; provided, however, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel for all indemnified parties.
9.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions precedent
imposed by Section 5(c) or this Section 9 upon the transferability of the Shares
shall cease and terminate as to any particular number of the Shares when such
Shares shall have been sold or otherwise disposed of in accordance with the
intended method of disposition set forth in the Registration Statement covering
such Shares or at such time as an opinion of counsel satisfactory to the Company
shall have been rendered to the effect that such conditions are not necessary in
order to comply with the Securities Act.
9.5 INFORMATION AVAILABLE. So long as the Registration Statement is
effective covering the resale of Shares owned by the Purchaser, the Company will
furnish to the Purchaser;
(a) such information as the Company supplies to its stockholders;
8.
<PAGE>
(b) upon the written request of the Purchaser, such reports filed by
the Company pursuant to the Exchange Act not otherwise provided under Section
9.5(a); and
(c) upon the reasonable request of the Purchaser, an adequate number
of copies of the prospectuses to supply to any other party requiring such
prospectuses.
9.6 CHANGES IN PURCHASER INFORMATION. The Purchaser agrees to promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding the Purchaser or the Purchaser's plan of
distribution set forth in such Registration Statement.
SECTION 10. BROKER'S FEE. The Company and the Purchaser hereby
represent that there are no brokers or finders entitled to compensation in
connection with the sale of the shares of Common Stock, and shall indemnify each
other for any such fees for which they are responsible.
SECTION 11. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be sent by confirmed
facsimile or mailed by first-class registered or certified airmail, or
nationally recognized overnight express courier, postage prepaid, and shall be
deemed given when so sent in the case of facsimile transmission, or when so
received in the case of mail or courier, and addressed as follows:
(a) if to the Company, to:
YES! Entertainment Corporation
3875 Hopyard Road
Pleasanton, CA 94588
Attention: Donald Kingsborough, President and CEO
Facsimile: (510) 734-0997
with a copy so mailed to:
Cooley Godward LLP
Five Palo Alto Square, 4th Floor
Palo Alto, California 94306
Attention: Patrick Pohlen, Esq.
Facsimile: (650) 857-0663
or to such other person at such other place as the Company shall
designate to the Purchaser in writing; and
(b) if to the Purchaser, at the address as set forth at the end of
this Agreement, or at such other address or addresses as may have been furnished
to the Company in writing.
9.
<PAGE>
SECTION 12. MISCELLANEOUS.
12.1 WAIVERS AND AMENDMENTS. Neither this Agreement nor any provision
hereof may be changed, waived, discharged, terminated, modified or amended
except upon the written consent of the Company and holders of at least a
majority of the Shares.
12.2 HEADINGS. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
12.3 SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
12.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to contracts
entered into and performed entirely in California by California residents,
without regard to conflicts of law principles.
12.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
12.6 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
12.7 ENTIRE AGREEMENT. This Agreement and other documents delivered
pursuant hereto, including the exhibits, constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
10.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
COMPANY:
YES! ENTERTAINMENT CORPORATION
By: __________________________
Donald Kingsborough
Chief Executive Officer
Address: 3875 Hopyard Road
Pleasanton, CA 94588
Facsimile: (510) 734-0997
PURCHASER:
KLITSNER INDUSTRIAL DESIGN, LLC
By: ____________________________
Name: _____________________
Title: ____________________
Address: _______________________
_______________________
Facsimile: _____________________
COMMON STOCK PURCHASE AGREEMENT
<PAGE>
EXHIBIT 4.7
YES! ENTERTAINMENT CORPORATION
COMMON STOCK
PURCHASE AGREEMENT
AUGUST 29, 1997
<PAGE>
NOTICE TO PURCHASERS IN ALL STATES:
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY
ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.
FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR
DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES....................... 1
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES................. 1
2.1 Sale of Shares............................................ 1
SECTION 3. CLOSING AND DELIVERY...................................... 1
3.1 Closing................................................... 1
3.2 Delivery of the Common Stock and Receipt of Cancellation
of Indebtedness at the Closing............................ 2
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.. 2
4.1 Organization and Qualification............................ 2
4.2 Due Execution, Delivery and Performance of the Agreements. 2
4.3 Issuance, Sale and Delivery of the Shares................. 2
4.4 Additional Information.................................... 3
4.5 No Material Change........................................ 3
4.6 SEC Reports............................................... 3
4.7 Listing of Shares......................................... 4
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER 4
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.... 5
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING........ 5
7.1 Receipt of Payment........................................ 5
7.2 Representations and Warranties Correct.................... 5
7.3 Covenants Performed....................................... 5
SECTION 8. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE CLOSING.. 5
8.1 Representations and Warranties Correct.................... 5
8.2 Covenants Performed....................................... 6
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES
ACT....................................................... 6
9.1 Registration Procedures and Expenses...................... 6
.......................................................... 6
9.2 Transfer of Shares After Registration..................... 6
9.3 Indemnification........................................... 7
9.4 Termination of Conditions and Obligations................. 8
9.5 Information Available..................................... 8
9.6 Changes in Purchaser Information.......................... 9
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 10. BROKER'S FEE.............................................. 9
SECTION 11. NOTICES................................................... 9
SECTION 12. MISCELLANEOUS............................................. 10
12.1 Waivers and Amendments.................................... 10
12.2 Headings.................................................. 10
12.3 Severability.............................................. 10
12.4 Governing Law............................................. 10
12.5 Counterparts.............................................. 10
12.6 Successors and Assigns.................................... 10
12.7 Entire Agreement.......................................... 10
ATTACHMENTS:
Appendix I - Stock Certificate and Warrant Questionnaire
Appendix II - Registration Statement Questionnaire
Appendix III - Purchaser's Certificate of Subsequent Sale
</TABLE>
ii
<PAGE>
COMMON STOCK
PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 29th day of August, 1997 by
and among YES! ENTERTAINMENT CORPORATION, a Delaware corporation with its
principal place of business at 3875 Hopyard Road, Suite 375, Pleasanton,
California 94588 (the "Company") and HOIDA INTERNATIONAL (HONG KONG) LIMITED
(the "Purchaser").
AGREEMENT
In consideration of the mutual covenants contained in this Agreement, and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Purchaser hereby agree as follows:
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES. Subject to the terms and
conditions of this Agreement, the Company has or before the Closing (as defined
below) will have authorized the sale and issuance of two hundred and seventy
thousand (270,000) shares of its Common Stock, par value $0.001 per share (the
"Common Stock").
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES.
2.1 SALE OF SHARES. At the Closing (as defined in Section 3), the Company
will sell to Purchaser, and Purchaser will purchase from the Company, at a
purchase price of three dollars and seventy-five cents ($3.75) per share of
Common Stock, two hundred and seventy thousand (270,000) shares of Common Stock.
The shares of Common Stock sold hereunder may be referred to herein as the
"Shares."
2.2 SEPARATE AGREEMENT. Concurrently with the execution and delivery of
this Agreement, the Company is entering into other agreements identical with
this Agreement (except as to the identity of the purchaser and the number of
shares of Common Stock to be purchased) with other purchasers. The Company's
agreements with you and with each of such other purchasers are separate
agreements, and the sales of shares of Common Stock to you and to each such
other purchasers are separate sales. The aggregate number of shares of Common
Stock to be issued in this and such other agreements shall not exceed a total of
eight hundred and thirty-one thousand (831,000).
SECTION 3. CLOSING AND DELIVERY.
3.1 CLOSING. The Closing of the purchase and sale of the Shares pursuant
to this Agreement (the "Closing") shall be held on August 29, 1997 at the
offices of Cooley Godward LLP, 5 Palo Alto Square, 3000 El Camino Real, Palo
Alto, California, or on such other date and place as may be agreed to by the
Company and the Purchaser.
1.
<PAGE>
The Company shall give at least three (3) business days prior written
notice to the Purchaser, in a manner provided for in Section 11 hereof, of the
date, time and location of the Closing. At or prior to the Closing, Purchaser
shall execute any related agreements or other documents required to be executed
hereunder, dated as of the date of the Closing (the "Closing Date").
3.2 DELIVERY OF THE COMMON STOCK AND RECEIPT OF CANCELLATION OF
INDEBTEDNESS AT THE CLOSING. At the Closing, the Company shall deliver to
Purchaser stock certificates registered in the name of Purchaser, or in such
nominee name(s) as designated by Purchaser, representing the number of shares of
Common Stock to be purchased by Purchaser at the Closing and the Purchaser shall
deliver confirmation of cancellation of indebtedness in the full amount of the
purchase price for the Shares. The name(s) in which the stock certificates are
to be issued to the Purchaser are set forth in the Stock Certificate
Questionnaire in the form attached hereto as Appendix I, as completed by
----------
Purchaser.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
The Company hereby represents and warrants to, and covenants with, the
Purchaser as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to conduct its
business as it is currently being conducted.
4.2 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The
Company's execution, delivery and performance of this Agreement have been duly
authorized by all requisite corporate action by the Company, and will not
violate any law or the Company's Certificate of Incorporation or Bylaws of the
Company or any provision of any material indenture, mortgage, agreement,
contract or other material instrument to which the Company is a party or by
which the Company or any of its properties or assets is bound as of the date
hereof, or result in a breach of or constitute (upon notice or lapse of time or
both) a default under any such indenture, mortgage, agreement, contract or other
material instrument or result in the creation or imposition of any lien,
security interest, mortgage, pledge, charge or other encumbrance, of any
material nature whatsoever, upon any properties or assets of the Company. Upon
the execution and delivery by the Company, and assuming the valid execution and
delivery of this Agreement by the Purchaser, this Agreement will constitute a
valid and binding obligation of the Company, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of the Company in Section 9.3 hereof may be
legally unenforceable.
4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES. When issued and paid for
in accordance with this Agreement, the Shares will be validly issued and
outstanding, fully paid
2.
<PAGE>
and non-assessable, and will be issued in compliance with all applicable federal
and state securities laws.
4.4 ADDITIONAL INFORMATION. The information contained in the following
documents, which the Company has furnished to the Purchaser, or will furnish if
requested by the Purchaser prior to the Closing, were true and correct in all
material respects as of their respective filing dates:
(a) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 (without exhibits unless specifically requested);
(b) the Company's Quarterly Reports on Form 10-Q required to be filed
with the SEC for the three-month periods ended March 31, 1997 and June 30, 1997
(without exhibits unless specifically requested);
(c) the Company's Current Reports on Form 8-K filed with the SEC
since December 31, 1996, if any; and
(d) Notice of Annual Meeting and Proxy Statement for the Company's
1997 Annual Meeting of Stockholders.
4.5 NO MATERIAL CHANGE. As of the date hereof, there has been no material
adverse change in the financial condition or results of operations of the
Company since June 30, 1997.
4.6 SEC REPORTS.
(a) The Company has filed with the Securities and Exchange Commission
(the "SEC" or the "Commission") all reports ("SEC Reports") required to be filed
by it under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). All of the SEC Reports filed by the Company comply in all material
respects with the requirements of the Exchange Act. None of the SEC Reports
contains, as of the respective dates thereof, any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. All financial statements contained in
the SEC Reports have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the period indicated
("GAAP"). Each balance sheet presents fairly in accordance with GAAP the
financial position of the Company as of the date of such balance sheet, and each
statement of operations, of stockholders' equity and of cash flows presents
fairly in accordance with GAAP the results of operations, the stockholders'
equity and the cash flows of the Company for the periods then ended.
(b) No event has occurred since June 30, 1997 requiring the filing of
an SEC Report that has not heretofore been filed and furnished to the Purchaser.
3.
<PAGE>
4.7 LISTING OF SHARES. The Company shall, within a reasonable time after
the Closing Date, file with the Nasdaq National Market an additional shares
listing application covering such Shares that shall have not been previously
covered by a Nasdaq additional shares listing. For so long as the Company is
obligated to keep in effect the Registration Statement provided under Section 9
hereof, the Company will use commercially reasonable efforts to maintain the
listing of Shares on the Nasdaq National Market or a national securities
exchange, as defined in the Exchange Act.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser represents and warrants to and covenants with the Company
that:
(a) the Purchaser, taking into account the personnel and resources it
can practically bring to bear on the purchase of the Shares contemplated hereby,
is knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in shares presenting an investment
decision like that involved in the purchase of the Shares, including investments
in securities issued by the Company, and has requested, received, reviewed and
considered, all information the Purchaser deems relevant in making an informed
decision to purchase the Shares.
(b) the Purchaser is acquiring the Shares being acquired by the
Purchaser pursuant to this Agreement in the ordinary course of its business and
for its own account for investment only and with no present intention of
distributing any of such Shares or any arrangement or understanding with any
other persons regarding the distribution of such Shares, except in compliance
with Section 5(c).
(c) the Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act of 1933, as amended (the "Securities Act"), applicable
blue sky laws, and the rules and regulations promulgated thereunder.
(d) the Purchaser has completed or caused to be completed the Stock
Certificate Questionnaire and the Registration Questionnaire, attached hereto as
Appendix I and Appendix II, respectively, for use in preparation of the
- ---------- -----------
Registration Statement to be filed by the Company, and the answers thereto are
true and correct to the best knowledge of the Purchaser as of the date hereof
and will be true and correct as of the effective date of the Registration
Statement (provided that the Purchaser shall be entitled to update such
information by providing notice thereof to the Company prior to the effective
date of such Registration Statement).
(e) the Purchaser has, in connection with its decision to purchase the
Shares, relied with respect to the Company and its affairs solely upon the
information delivered to Purchaser as described in Sections 4.4 and 5(a) above
and the representations and warranties of the Company contained herein.
4.
<PAGE>
(f) the Purchaser is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act.
(g) the Purchaser has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated hereby
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement. Upon the execution and delivery of this
Agreement by the Purchaser, this Agreement shall constitute a valid and binding
obligation of the Purchaser, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification agreements
of the Purchaser in Section 9.3 hereof may be legally unenforceable.
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in the certificates for the Shares shall survive the
execution of this Agreement, the delivery to the Purchaser of the Shares and the
payment therefor.
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING. The
Company's obligation to complete the sale and issuance of the Shares and deliver
shares of Common Stock to the Purchaser shall be subject to the following
conditions to the extent not waived by the Company:
7.1 RECEIPT OF PAYMENT. The Company shall have received payment in the
form of cancellation of indebtedness confirmed by Purchaser, in the full amount
of the purchase price for the Shares.
7.2 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Purchaser in Section 5 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date.
7.3 COVENANTS PERFORMED. All covenants, agreements and conditions
contained herein to be performed by the Purchaser on or prior to the Closing
Date shall have been performed or complied with in all material respects.
SECTION 8. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE CLOSING. The
Purchaser's obligation to accept delivery of and to pay for the Shares shall be
subject to the following conditions to the extent not waived by the Purchaser:
8.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 4 hereof shall be true and correct
when made, and shall be true and correct as of the Closing Date.
5.
<PAGE>
8.2 COVENANTS PERFORMED. All covenants, agreements and conditions
contained herein to be performed by the Company shall have been performed or
complied with in all material respects.
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.
9.1 REGISTRATION PROCEDURES AND EXPENSES. The Company is obligated to do
the following:
(a) As soon as practicable following the Closing Date, the Company
shall prepare and file with the Commission a registration statement in order to
register with the Commission the sale by Purchaser, from time to time, of the
Shares (a "Registration Statement") and shall use commercially reasonable
efforts to have such Registration Statement declared effective. The Company
shall use commercially reasonable efforts to keep such Registration Statement
continuously effective under the Securities Act until the date which is three
years after the date that such Registration Statement is declared effective by
the Commission or such earlier date when all the Shares covered by such
Registration Statement have been sold pursuant to Rule 144 without volume
restrictions as determined by counsel to the Company pursuant to a written
opinion letter addressed to the Purchaser, to such effect.
(b) In order to facilitate the sale or other disposition of all or any
of the shares by the Purchaser, the Company shall furnish to the Purchaser with
respect to the Shares registered under the Registration Statement such number of
copies of prospectuses and preliminary prospectuses as the Purchaser reasonably
requests in conformity with the requirements of the Securities Act.
(c) The Company shall file documents required of the Company for
normal blue sky clearance in states specified in writing by the Purchaser;
provided, however, that the Company shall not be required to qualify to do
business or consent to service of process in any jurisdiction in which it is not
now so qualified or has not so consented.
(d) Other than fees and expenses, if any, of counsel or other advisers
to the Purchaser, which fees and expenses shall be borne by the Purchaser, the
Company shall bear all expenses (exclusive of underwriting discounts and
commissions) in connection with the procedures in paragraphs (a) through (c) of
this Section 9.1.
9.2 TRANSFER OF SHARES AFTER REGISTRATION. The Purchaser agrees that the
Purchaser will not effect any disposition of the Shares that would constitute a
sale within the meaning of the Securities Act, except:
(a) pursuant to the Registration Statement, in which case the
Purchaser shall submit the certificates evidencing the Shares to the transfer
agent accompanied by a separate
6.
<PAGE>
"Purchaser's Certificate" (A) in the form of Appendix III attached hereto, (B)
executed by the Purchaser or by an officer of, or other authorized person
designated by, the Purchaser, and (C) to the effect that (1) the Shares have
been sold in accordance with the Registration Statement and (2) the requirement
of delivering a current prospectus has been satisfied; or
(b) in a transaction exempt from registration under the Securities
Act, in which case the Purchaser shall, prior to effecting such disposition,
submit to the Company an opinion of counsel in form and substance reasonably
satisfactory to the Company to the effect that the proposed transaction is in
compliance with the Securities Act.
9.3 INDEMNIFICATION. As used in this Section 9.3 the following terms
shall have the following respective meanings:
(a) "Selling Stockholder" shall mean the Purchaser and any transferee
of the Purchaser who is entitled to resell Shares pursuant to the Registration
Statement;
(b) "Registration Statement" shall include any final prospectus,
exhibit, supplement or amendment included in or relating to the Registration
Statement referred to in Section 9.1; and
(c) "Untrue Statement" shall include any untrue statement or alleged
untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
The Company agrees to indemnify and hold harmless each Selling Stockholder
from and against any losses, claims, damages or liabilities to which such
Selling Stockholder may become subject (under the Securities Act or otherwise)
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any Untrue
Statement on or after the effective date of the Registration Statement, or arise
out of any failure by the Company to fulfill any undertaking included in the
Registration Statement and the Company will reimburse such Selling Stockholder
for any reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim; provided,
however, that the Company shall not be liable to such Selling Stockholder in any
such case to the extent that such loss, claim, damage or liability arises out
of, or is based upon, an Untrue Statement made in such Registration Statement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Selling Stockholder specifically for use in
preparation of the Registration Statement, or the failure of such Selling
Stockholder to comply with the covenants and agreements contained in Section 9.1
or 9.2 hereof respecting sale of the Shares or any statement or omission in any
Prospectus that is corrected in any subsequent Prospectus that was delivered to
the Selling Stockholder prior to the pertinent sale or sales by the Selling
Stockholder.
7.
<PAGE>
Purchaser agrees to indemnify and hold harmless the Company (and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, each officer of the Company who signs the Registration Statement
and each director of the Company) from and against any losses, claims, damages
or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any failure to
comply with the covenants and agreements contained in Section 9.1 or 9.2 hereof
respecting sale of the Shares, or any Untrue Statement contained in the
Registration Statement on or after the effective date thereof if such Untrue
Statement was made in reliance upon and in conformity with written information
furnished by or on behalf of the Purchaser specifically for use in preparation
of the Registration Statement, and the Purchaser will reimburse the Company (or
such officer, director or controlling person.)
Promptly after receipt by any indemnified person of a notice of a claim or
the beginning of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 9.3, such indemnified
person shall notify the indemnifying person in writing of such claim or of the
commencement of such action, and, subject to the provisions hereinafter stated,
in case any such action shall be brought against an indemnified person and such
indemnifying person shall have been notified thereof, such indemnifying person
shall be entitled to participate therein, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified person of its election to assume the defense thereof, such
indemnifying person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection with the
defense thereof; provided, however, that if there exists or shall exist a
conflict of interest that would make it inappropriate, in the opinion of counsel
to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel at
the expense of such indemnifying person; provided, however, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel for all indemnified parties.
9.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions precedent
imposed by Section 5(c) or this Section 9 upon the transferability of the Shares
shall cease and terminate as to any particular number of the Shares when such
Shares shall have been sold or otherwise disposed of in accordance with the
intended method of disposition set forth in the Registration Statement covering
such Shares or at such time as an opinion of counsel satisfactory to the Company
shall have been rendered to the effect that such conditions are not necessary in
order to comply with the Securities Act.
9.5 INFORMATION AVAILABLE. So long as the Registration Statement is
effective covering the resale of Shares owned by the Purchaser, the Company will
furnish to the Purchaser;
(a) such information as the Company supplies to its stockholders;
8.
<PAGE>
(b) upon the written request of the Purchaser, such reports filed by
the Company pursuant to the Exchange Act not otherwise provided under Section
9.5(a); and
(c) upon the reasonable request of the Purchaser, an adequate number
of copies of the prospectuses to supply to any other party requiring such
prospectuses.
9.6 CHANGES IN PURCHASER INFORMATION. The Purchaser agrees to promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding the Purchaser or the Purchaser's plan of
distribution set forth in such Registration Statement.
SECTION 10. BROKER'S FEE. The Company and the Purchaser hereby
represent that there are no brokers or finders entitled to compensation in
connection with the sale of the shares of Common Stock, and shall indemnify each
other for any such fees for which they are responsible.
SECTION 11. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be sent by confirmed
facsimile or mailed by first-class registered or certified airmail, or
nationally recognized overnight express courier, postage prepaid, and shall be
deemed given when so sent in the case of facsimile transmission, or when so
received in the case of mail or courier, and addressed as follows:
(a) if to the Company, to:
YES! Entertainment Corporation
3875 Hopyard Road
Pleasanton, CA 94588
Attention: Donald Kingsborough, President and CEO
Facsimile: (510) 734-0997
with a copy so mailed to:
Cooley Godward LLP
Five Palo Alto Square, 4th Floor
Palo Alto, California 94306
Attention: Patrick Pohlen, Esq.
Facsimile: (650) 857-0663
or to such other person at such other place as the Company shall
designate to the Purchaser in writing; and
(b) if to the Purchaser, at the address as set forth at the end of
this Agreement, or at such other address or addresses as may have been furnished
to the Company in writing.
9.
<PAGE>
SECTION 12. MISCELLANEOUS.
12.1 WAIVERS AND AMENDMENTS. Neither this Agreement nor any provision
hereof may be changed, waived, discharged, terminated, modified or amended
except upon the written consent of the Company and holders of at least a
majority of the Shares.
12.2 HEADINGS. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
12.3 SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
12.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to contracts
entered into and performed entirely in California by California residents,
without regard to conflicts of law principles.
12.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
12.6 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
12.7 ENTIRE AGREEMENT. This Agreement and other documents delivered
pursuant hereto, including the exhibits, constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
10.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
COMPANY:
YES! ENTERTAINMENT CORPORATION
By:
------------------------------------
Donald Kingsborough
Chief Executive Officer
Address: 3875 Hopyard Road
Pleasanton, CA 94588
Facsimile: (510) 734-0997
PURCHASER:
HOIDA INTERNATIONAL (HONG KONG) LIMITED.
By:
------------------------------------
Name:
-----------------------------
Title:
----------------------------
Address:
----------------------------
----------------------------
Facsimile:
----------------------------
<PAGE>
EXHIBIT 5.1
Cooley Godward LLP
Five Palo Alto Square
Palo Alto, CA 94306-2155
(650) 843-5000
FAX (650) 857-0663
September 2, 1997
YES! Entertainment Corporation
3875 Hopyard Road, Suite 375
Pleasanton, CA 94588
RE: REGISTRATION STATEMENT ON FORM S-3
----------------------------------
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in
connection with the filing by Yes! Entertainment Corporation (the "Company") of
a Registration Statement on Form S-3 (the "Registration Statement") with the
Securities and Exchange Commission covering the offering of 831,000 shares of
Common Stock, par value $.001 per share (the "Securities"), to be sold by
certain stockholders as described in the Registration Statement. The Securities
were issued by the Company pursuant to private placements on August 29, 1997.
In connection with this opinion, we have examined the Registration
Statement, the Company's Certificate of Incorporation and Bylaws, and such other
documents, records, certificates, memoranda and other instruments as we deem
necessary as a basis for this opinion. We have assumed the genuineness and
authenticity of all documents submitted to us as originals, the conformity to
originals of all documents submitted to us as copies thereof, and the due
execution and delivery of all documents where due execution and delivery are a
prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the
opinion that the Securities are validly issued, fully paid, and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Matters" in
the Prospectus included in the Registration Statement.
Very truly yours,
Cooley Godward, LLP
/s/ Cooley Godward, LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of YES! Entertainment
Corporation for the registration of 831,000 shares of its common stock issued
in connection with the cancellation of indebtedness to various vendors, and
to the incorporation by reference therein of our report dated February 26,
1997 except as to note 16, as to which the date is March 18, 1997, with
respect to the consolidated financial statements and schedule of YES!
Entertainment Corporation included in its Annual Report (Form 10-K) for the
year ended December 31, 1996, filed with the Securities and Exchange
Commission.
/s/ ERNST & YOUNG LLP
San Jose, California
____________________
