Exhibit 4(aa)
AMENDMENT TO BRIDGE NOTE AND
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WARRANT PURCHASE AGREEMENTS
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This AMENDMENT TO BRIDGE NOTE AND WARRANT PURCHASE AGREEMENTS (the
"Amendment") is made by and among SANDBOX ENTERTAINMENT CORPORATION (the
"Company") and each of undersigned investors (the "Bridge Lenders") as of
September 16, 1997.
A. WHEREAS, the Company and each of the Bridge Lenders are parties to
certain Bridge Note and Warrant Purchase Agreements (the "May Bridge Note and
Warrant Purchase Agreements"), each dated May 9, 1997 pursuant to which the
Bridge Lenders loaned the Company the total aggregate principal amount of
$270,000 (collectively, the "May Bridge Loans") in exchange for Convertible
Subordinated Promissory Notes (collectively, the "May Bridge Notes"), each dated
as of May 9, 1997, and Stock Subscription Warrants (collectively, the "May
Bridge Warrants") to purchase a total of 337,500 shares of Series A Preferred
Stock of the Company, each dated as of May 9, 1997. Each of the May Bridge
Warrants were previously amended by certain Amendments to Stock Subscription
Warrants, each dated as of July 25, 1997 (the "Amendments to May Warrants");
B. WHEREAS, the Company and each of the Bridge Lenders are also parties
to certain July Bridge Note and Warrant Purchase Agreements (the "July Bridge
Note and Warrant Purchase Agreements"), each dated July 25, 1997 pursuant to
which the Bridge Lenders loaned the Company the total aggregate principal amount
of $270,000 (collectively, the "July Bridge Loans") in exchange for Convertible
Subordinated Promissory Notes (collectively, the "July Bridge Notes"), each
dated as of July 25, 1997, and Stock Subscription Warrants (collectively, the
"July Bridge Warrants") to purchase a total of 337,500 shares of Series A
Preferred Stock of the Company, each dated as of July 25, 1997;
C. WHEREAS, the Company and each of the Bridge Lenders wish to amend
certain of the documents executed in connection with the May Bridge Loans and
the July Bridge Loans to clarify the effect of a proposed reverse 1-for-2.5
stock split (the "Stock Split") and to make certain other amendments;
NOW, THEREFORE, in consideration of the terms and conditions set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. May Bridge Warrants and July Bridge Warrants. The parties hereby
agree that the definition of New Series Conversion Price in the May Bridge
Warrants (as amended by the Amendments to the May Warrants) and in the July
Bridge Warrants provides that the Bridge Lenders will have the right to exercise
the May Bridge Warrants and the July Bridge Warrants at a post Stock Split
exercise price of $2.00 per share for a thirty (30) day period beginning on the
date an IPO (as that term is defined therein) is consummated.
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2. May Bridge Warrants. Paragraph 9 of the May Bridge Warrants is
deleted and replaced with the following:
9. Conversion upon an Equity Financing. If an Equity Financing
has closed (or, in the case of a registration statement filed on form
SB-2, such registration statement shall have become effective) on or
before November 21, 1997, the following definition shall automatically
change as follows:
a. Warrant Price shall mean the New Series Conversion Price.
3. May Bridge Notes. Section 2 of the May Bridge Notes is deleted and
replaced with the following:
2. Conversion.
2.1 Upon an Equity Financing. If prior to (a) the
closing of an Equity Financing on or before November 4, 1997
or (b) the effectiveness of an Equity Financing pursuant to a
registration statement filed on form SB-2 (which shall be the
effective date of such registration statement) on or before
November 21, 1997: (y) the Company has not paid the entire
unpaid principal amount of this Note and all interest accrued
thereon and (z) a conversion has not occurred pursuant to this
Section 2 with respect to the entire unpaid principal amount
of this Note and all interest accrued thereon, then upon the
closing of the Equity Financing, the entire unpaid principal
amount of this Note shall automatically be converted into
shares of New Series Conversion Stock at the New Series
Conversion Price, and the Company shall pay any accrued, but
unpaid interest. The Company shall provide the Holder with
twenty (20) days prior written notice of the occurrence of an
Equity Financing and the proposed terms thereof (provided,
however that the Holder waives notice of an Equity Financing
if such financing shall be made pursuant to a registration
statement on form SB-2). Noteholder agrees to execute and
deliver to the Company, at the closing of the Equity
Financing, any and all documents with respect to such Equity
Financing required to be signed by investors in such Equity
Financing ("Financing Documents"). Noteholder shall not be
entitled to receive any stock certificate representing shares
of New Series Conversion Stock to be issued upon conversion of
this Note until this Note is surrendered to the Company for
cancellation and all relevant Financing Documents have been
duly executed by Noteholder and delivered to the Company.
2.2 Upon a Sale of the Company, Prepayment or After
November 22, 1997. From and after November 22, 1997,
immediately upon a Sale of the Company, or in the event Maker
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provides Holder with written notification of Maker's intent to
prepay this Note, Holder shall have the option to convert the
unpaid principal amount of this Note into shares of Series A
Conversion Stock at the Series A Conversion Price pursuant to
the form of Notice of Conversion attached hereto as Exhibit I.
Noteholder shall not be entitled to receive any stock
certificate representing such Series A Conversion Stock until
this Note is surrendered to the Company for cancellation.
4. May Bridge Notes and July Bridge Notes. The following new Section 19
is added to each of the May Bridge Notes and the July Bridge Notes:
19. Adjustment of Conversion Price. The Conversion Price shall
be subject to adjustment from time to time as follows:
19.1 If, at any time during the term of this Note,
the number of shares of Series A Preferred Stock (or New
Series Conversion Stock) outstanding is increased by a stock
dividend payable in shares of Series A Preferred Stock (or New
Series Conversion Stock) or by a subdivision or split-up of
shares of Series A Preferred Stock (or New Series Conversion
Stock), then, following the record date fixed for the
determination of Holders of Series A Preferred Stock (or New
Series Conversion Stock) entitled to receive such stock
dividend, subdivision or split-up, the Series A Conversion
Price (or New Series Conversion Price) shall be appropriately
decreased so that the number of shares of Series A Preferred
Stock (or New Series Conversion Stock) issuable upon the
conversion of this Note shall be increased in proportion to
such increase in outstanding shares.
19.2 If, at any time during the term of this Note,
the number of shares of Series A Preferred Stock (or New
Series Conversion Stock) outstanding is decreased by a
combination, or reverse split, of the outstanding shares of
Series A Preferred Stock (or New Series Conversion Stock),
then, following the record date for such combination or
reverse split, the Series A Conversion Price (or New Series
Conversion Price) shall appropriately increase so that the
number of shares of Series A Preferred Stock (or New Series
Conversion Stock) issuable upon the conversion hereof shall be
decreased in proportion to such decrease in outstanding
shares.
5. Reissuance of July Bridge Notes and July Bridge Warrants. The
parties hereby agree that the definition of Series A Conversion Price and
Warrant Price in Section A of Exhibit IV to the July Bridge Note and Warrant
Purchase Agreements shall be read to take into account any stock splits or stock
dividends, including the Stock Split. Therefore, after the Stock Split each of
the prices in Section A of Exhibit IV will increase from $.20 per share to $.50
per share.
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6. Law. This Amendment shall be governed by the law of the State of
Arizona.
7. Counterparts; Effectiveness. This Amendment may be executed in
counterparts, each of which shall be enforceable against the party executing the
counterpart, and all of which shall constitute one instrument. This Amendment
shall be effective against each Bridge Lender upon execution of this Agreement
by such Bridge Lender, regardless of whether any or all of the other Bridge
Lenders shall have executed this Amendment.
IN WITNESS WHEREOF, the parties have executed this Consent and Waiver
as of the 16th day of September, 1997.
[SIGNATURES APPEAR ON FOLLOWING PAGES]
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[SIGNATURE PAGE TO AMENDMENT TO BRIDGE
NOTE AND WARRANT PURCHASE AGREEMENTS]
SANDBOX ENTERTAINMENT CORPORATION
By: /s/ Xxxx X. Xxxxxx
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Title: President
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WASATCH VENTURE CORPORATION
By: /s/ Xxxx X. Xxxxxxx
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Title: Secretary and Treasurer
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NEWTEK VENTURES II, L.P.
By: /s/ Xxxx Xxxx
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Title: G.P.
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SUNDANCE VENTURE PARTNERS, L.P., a
Delaware limited partnership
By: Xxxxxxxx & Xxxxx Company, a Delaware
corporation
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx, Vice-President
/s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx
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