Exhibit 4(ii)
VOTING AGREEMENT
THIS VOTING AGREEMENT is made as of the 14th day of January, 1998, by
and among Sandbox Entertainment Corporation, a Delaware corporation (the
"Company"), and the holders of shares of the Company's Series A Preferred Stock
(the "Investors") whose signatures appear on this Agreement or any counterpart
hereof, and whose names are listed on Schedule A attached hereto, as such
schedule may be amended from time to time, and the holders of shares of the
Company's Common Stock ("Management") whose signatures appear on this Agreement
or any counterpart hereof, and whose names are listed on Schedule B attached
hereto, as such schedule may be amended from time to time. All references in
this Voting Agreement to numbers of shares of capital stock of the Company
assume the occurrence of the one-for-six reverse stock split described in and
contemplated by Amendment Number 2 to the Registration Statement of the Company
filed with the Securities & Exchange Commission, Reg. No. 333- 36787 (the
"Registration Statement", which term will also include any subsequent amendments
thereto) in connection with the public offering (the "Offering") by the Company
of Series B Preferred Stock.
WHEREAS, the Investors are the beneficial owners of an aggregate of
328,944 shares of the Company's Series A Preferred Stock (the "Series A
Preferred Stock," which shall also include the Common Stock of the Company
issuable upon conversion thereof plus any additional shares of capital stock of
the Company now owned or hereafter acquired by any Investor) and Management are
the beneficial owners of an aggregate of 419,567 shares of the Company's Common
Stock (the "Common Stock");
WHEREAS, simultaneously with its approval of this Voting Agreement, the
Board of Directors of the Company (the "Board") has adopted the amendments (the
"Bylaw Amendments") to the Company's Bylaws set forth in Exhibit 1 attached
hereto, which become effective only upon abandonment of the Offering by the
Company; and
WHEREAS, in order to induce the Company and certain Investors to enter
into and perform that certain NOTE AND WARRANT PURCHASE AGREEMENT of even date
herewith, the parties hereto have indicated their willingness to enter into this
Agreement upon the terms and conditions set forth below;
IT IS HEREBY AGREED AS FOLLOWS:
1. Board Composition and Certain Actions. Management and a
representative of each of the Investors presently fill all seven (7) authorized
seats of the Board. In connection with the Offering, Management and the
Investors desire and agree that two independent members of the Board should be
appointed as soon as is practicable after the closing of the Offering (the
"Closing") or the abandonment of the Offering. In order to accomplish the
foregoing, the parties agree as follows.
a. The following shall occur immediately and automatically upon
completion of the Closing and continue during the term of this
Agreement:
i. Xxxxx Xxxxx and Xxxxxx Xxxxxxxxxxx shall resign from
the Board of Directors and Xxxx X. Xxxxxxxx, III and
Xxxxxx Xxxxx shall be appointed as directors of the
Company to fill these vacancies on an interim basis;
and
ii. The Board shall work diligently and in good faith to
appoint "independent directors" to replace Xx.
Xxxxxxxx and Xx. Xxxxx as soon as is practicable.
Such replacement directors shall be "independent
directors" as contemplated by the Registration
Statement, and shall not be affiliated in any way
with any of the Investors or Management, or any
person or entity affiliated with any of the Investors
or Management.
b. The following shall occur immediately and automatically upon
the abandonment of the Offering and shall continue during the
term of this Agreement:
i. Xxxxx Xxxxx and Xxxxxx Xxxxxxxxxxx shall resign from
the Board of Directors, which shall then consist of
two members of Management, three representatives of
the Investors, and two vacancies; and
ii. The remaining members of the Board shall work
diligently and in good faith to appoint a sixth and
seventh director (the "Sixth Director" and the
"Seventh Director", respectively) as soon as is
practicable. The Sixth Director and Seventh Director
shall be "independent directors" and shall not be
affiliated in any way with any of the Investors or
Management, or any person or entity affiliated with
any of the Investors or Management; and
iii. To the extent they are entitled under the Company's
certificate of incorporation or applicable law, the
Investors and Management agree to vote (whether in
his or its capacity as a stockholder, director,
voting trustee, member of a Board committee or
officer of the Company or otherwise, and including
attendance at meetings in person or by proxy for
purposes of obtaining a quorum and execution of
written consents in person or by proxy for purposes
of obtaining a quorum and execution of written
consents in lieu of meetings) all of the shares of
the Company's voting securities now or hereafter
owned or controlled by them, whether beneficially or
otherwise, so that:
(1) the authorized number of directors
comprising the Board will be established at
seven directors;
(2) the following persons shall be elected to
the Board:
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(a) two nominees of Management,
(b) three nominees of the Investor
group, and
(c) the Sixth Director and the Seventh
Director;
(3) the Bylaw Amendments shall continue in full
force and effect in accordance with their
terms;
(4) the removal from the Board (with or without
cause) of any representative designated
pursuant to Sections 1(b)(iii)(2)(a), (b),
or (c) will be at the written request of the
party(ies) entitled to designate directors
under each such respective provision, but
only upon such written request and under no
other circumstances and under no other
circumstances; and
(5) in the event that any representative
designated pursuant to Sections
1(b)(iii)(2)(a), (b), or (c) for any reason
ceases to serve as a member of the Board
during his or her term of office, the
resulting vacancy on the Board will be
filled by a representative designated by the
party(ies) and in the manner described in
such respective Section.
2. Successors in Interest of the Investors and Management.
a. The provisions of this Agreement shall be binding upon the
successors in interest of the Investors to any of the Series A
Preferred Stock and of Management. The Company shall not
permit the transfer of any Investor's or Management's shares
on its books or issue a new certificate representing any
Series A Preferred Stock or any Common Stock being transferred
by any Investor or Management unless and until the person to
whom such security is to be transferred shall have executed a
counterpart of this Agreement, pursuant to which such person
becomes a party to this Agreement and agrees to be bound by
all the provisions hereof as if such person was an party
hereunder.
b. Each certificate representing any Investor's or Management's
shares shall be endorsed by the Company with a legend
substantially in the following form:
THE SHARES EVIDENCED HEREBY ARE
SUBJECT TO CERTAIN RESTRICTIONS AND
AGREEMENTS AMONG THE REGISTERED
OWNER OF THIS CERTIFICATE, THE
COMPANY AND CERTAIN OTHER
STOCKHOLDERS OF THE COMPANY,
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COPIES OF WHICH ARE AVAILABLE FOR
INSPECTION AT THE OFFICES OF THE
SECRETARY OF THE COMPANY.
3. Covenants of the Company. The Company agrees to take all actions
required to ensure that the rights given to the Investors and Management
hereunder are effective and that the Investors and Management enjoy the benefits
thereof. The Company will not, by any voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be performed hereunder by
the Company, but will at all times in good faith assist in the carrying out of
all of the provisions of this Agreement and in the taking of all such actions as
may be necessary or appropriate in order to protect the rights of the parties
hereunder against impairment, including without limitation calling special
meetings of the Board or the stockholders. The Company further agrees to use its
best efforts to obtain Director and Officer liability insurance for the Company
as soon as reasonably practical. The Company agrees that prior to the Closing or
an abandonment of the Offering by the Company, it will not borrow money or issue
any stock (other than as contemplated in the Offering or disclosed in the
Registration Statement) without approval of a majority in interest of the
holders of Series A Preferred Stock.
4. Termination. This Agreement shall terminate upon the earlier of (i)
appointment of the successor directors to Xx. Xxxxxxxx and Xx. Xxxxx, or (ii)
appointment of the Seventh Director, or (iii) that date when all outstanding
shares of Series A Preferred Stock have been converted to Common Stock of the
Company, or (iv) the written consent of each of the Company, the holders of a
majority of the Series A Preferred Stock voting together as a single class on an
as-converted basis, and the holders of a majority of the shares of Common Stock
held by Management voting together as a single class.
5. Amendments and Waivers. Any term hereof may be amended and the
observance of any term hereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of each of the Company, the holders of a majority of the Series A
Preferred Stock voting together as a single class on an as-converted basis, and
the holders of a majority of the shares of Common Stock held by Management
voting together as a single class. Any amendment or waiver so effected shall be
binding upon the Company, the Investors, Management, and any of their assigns.
6. Stock Splits, Stock Dividends, etc. In the event of any stock split,
stock dividend, recapitalization, reorganization, or the like, any securities
issued with respect to the Series A Preferred Stock of the Common Stock, shall
become, respectively, Series A Preferred Stock of Common Stock for purposes of
this Agreement.
7. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such
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provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
8. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Delaware, without regard to the conflict of laws
provisions thereof.
9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10. Successors and Assigns. Except as otherwise expressly provided in
this Agreement, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
[SIGNATURES APPEAR ON FOLLOWING PAGES]
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[SIGNATURE PAGE TO VOTING AGREEMENT]
THE COMPANY:
------------
SANDBOX ENTERTAINMENT
CORPORATION, a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Xxxx X. Xxxxxx, President
Address: 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
INVESTORS:
----------
WASATCH VENTURE CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------------
Title: Secretary and Treasurer
--------------------------------------
NEWTEK VENTURES II, L.P.
By: /s/ Xxxx Xxxx
-----------------------------------------
Title: General Partner
--------------------------------------
SUNDANCE VENTURE PARTNERS, L.P., a
Delaware limited partnership
By: Xxxxxxxx & Xxxxx Company, a Delaware
corporation
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Xxxxx X. Xxxxx, Vice-President
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[SIGNATURE PAGE TO VOTING AGREEMENT]
MANAGEMENT:
----------
/s/ Xxxx X. Xxxxxx
----------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxxxxx
/s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
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SCHEDULE A
Schedule of Holders of Series A Preferred Stock
----------------------------------------------------------------------
Name of Stockholder Number of Shares of
Series A*
----------------------------------------------------------------------
Newtek Ventures II, L.P.* 89,360
----------------------------------------------------------------------
Sundance Venture Partners, L.P. 93,750
----------------------------------------------------------------------
Wasatch Venture Corporation 145,834
----------------------------------------------------------------------
TOTAL 328,944
----------------------------------------------------------------------
*Number includes 16,443 shares of Common Stock of the Company owned by Newtek
Ventures II, L.P.
SCHEDULE B
Schedule of Management Holders of Common Stock
----------------------------------------------------------------------
Name of Stockholder Number of Shares of
Common Stock*
----------------------------------------------------------------------
Xxxx X. Xxxxxx 170,834
----------------------------------------------------------------------
Xxxxxx X. Xxxxxxxxxxx 122,917
----------------------------------------------------------------------
Xxxxx X. Xxxxx 122,917
----------------------------------------------------------------------
Xxxxxxx X. Xxxxxx 2,899
----------------------------------------------------------------------
TOTAL 419,567
----------------------------------------------------------------------
*Little has the right to vote 41,667 shares held by Xxxxx and 41,667 shares held
by Xxxxxxxxxxx.
EXHIBIT 1
Amendment to Bylaws
Of
Sandbox Entertainment Corporation
1. Article VIII of the Bylaws (the "Bylaws") of Sandbox Entertainment
Corporation (the "Corporation") is hereby amended by inserting the phrase "or in
Article IX of these Bylaws" after the phrase "Except as otherwise provided in
the Certificate of Incorporation" at the beginning of Article VIII. Accordingly,
Article VIII, as amended, shall read in its entirety as follows:
Except as otherwise provided in the Certificate of Incorporation or in Article
IX of these Bylaws, the Bylaws of the Corporation shall be subject to
alteration, amendment, or repeal, and new Bylaws not inconsistent with any
provision of the Certificate of Incorporation or statute, may be made, either by
the affirmative vote of the stockholders entitled to cast a majority of the
number of votes present and entitled to be cast at any annual or special meeting
of the stockholders, a quorum being present, or by the affirmative vote of a
majority of the whole Board, given at any regular or special meeting of the
Board, provided that notice of the proposal so to make, alter, amend, or repeal
such Bylaws be included in the notice of such meeting of the Board or the
stockholders, as the case may be. Bylaws made, altered, or amended by the Board
may be altered, amended or repealed by the affirmative vote of stockholders
entitled to cast a majority of the number of votes present and entitled to be
cast at any annual or special meeting thereof.
2. New Article IX is hereby adopted and shall read in its entirety as follows:
Notwithstanding any other provision of the Bylaws, until appointment of
the Seventh Director (as hereinafter defined), any act, including without
limitation any amendment of this Article IX, which shall receive the affirmative
votes of less than eighty percent (80%) of the whole Board shall not be
authorized or effective. Upon appointment of the Seventh Director, this Article
IX and the amendment to Article VIII adopted simultaneously herewith shall
expire and be of no further force or effect whatsoever. For purposes of this
Article IX, the term "Seventh Director" shall have the same meaning as set forth
in that certain Voting Agreement dated ________, 1998, among the Corporation,
the "Investors" and "Management", as defined therein, a copy of which is
attached hereto as Exhibit A.
Exhibit A to Bylaws Amendment
[attach Voting Agreement]
