Exhibit 4(k)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1993, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.
STOCK SUBSCRIPTION WARRANT
to Purchase ____________Shares of the
Common Stock, $.001 Par Value, of
SANDBOX ENTERTAINMENT CORPORATION,
a Delaware corporation (the "Company")
DATE OF INITIAL ISSUANCE: As of October 25, 1996
THIS CERTIFIES THAT for value received, _________________________ , or
his registered assigns (hereinafter called the "Holder") is entitled to purchase
from the Company, at any time during the Term of this Warrant,
______________________________ (______) shares of common stock, $.001 par value,
of the Company (the "Common Stock"), at the Warrant Price, payable in lawful
money of the United States of America, to be paid upon the exercise of this
Warrant. The exercise of this Warrant shall be subject to the provisions,
limitations and restrictions herein contained and may be exercised in whole or
in part.
1. Definitions. For all purposes of this Warrant, the following terms
shall have the meanings indicated:
Common Stock shall mean and include the Company's authorized Common Stock, $.001
par value as constituted at the date of this Warrant, and shall also include any
capital stock of any class or series of the Company now or hereafter authorized
that is not limited to a fixed sum or percentage of par value or of the purchase
price of such stock in respect of the rights of the holders thereof to
participate in dividends and/or in the distribution of assets upon the voluntary
or involuntary liquidation, dissolution or winding up of the Company.
Term of this Warrant shall mean the period beginning on the date of initial
issuance hereof and ending on October 25, 2006.
Warrant Price shall mean Eighty Cents ($.80) per share, subject to adjustment in
accordance with Section 5 and Section 10.
Warrant Shares shall mean the shares of Common Stock purchased or purchasable by
the Holder of this Warrant upon exercise hereof.
2. Exercise of Warrant. The Warrant shall be exercised, if at all, only
as follows:
(a) To exercise this Warrant in whole or in part, the Holder
shall deliver to the Company at its principal office, at any time and from time
to time during the Term of this Warrant: (i) the notice of exercise in the form
attached hereto as Exhibit A, (ii) cash, certified or official bank check
payable to the order of the Company, wire transfer of funds to the Company's
account, or the surrender of evidence of any indebtedness of the Company to the
Holder (or any combination of the foregoing) in the amount of the Warrant Price
for each share being purchased, and (iii) this Warrant.
(b) Notwithstanding any contrary provisions in this Warrant,
if the Current Market Price (as defined in Section 2(c) below) exceeds the
Warrant Price at the date of calculation, instead of exercising this Warrant as
described in Section 2(a) above, the Holder may elect to receive Warrant Shares
equal to the value of this Warrant (or the portion thereof being exercised), by
delivering to the Company at its principal office, at any time and from time to
time during the Term of this Warrant: (i) the notice of exercise in the form
attached hereto as Exhibit A, and (ii) this Warrant, in which event the Company
shall issue to the Holder a number of Warrant Shares calculated using the
following formula:
CS = WCS x (CMP-WP)
-------------------
CMP,
where CS = the number of Warrant Shares to be issued to the
Holder,
WCS = the number of Warrant Shares purchasable under the
Warrant, or if only a portion of the Warrant is
being exercised, the portion of the Warrant being
exercised at the date of such calculation,
CMP = the Current Market Price (as defined in Section
5(c) below) at the date of such calculation, and
WP = the Warrant Price, as adjusted to the date of such
calculation.
(c) For the purpose of any calculation made pursuant to this
Section 2, the "Current Market Price" at any date of one share of Common Stock
shall be deemed to be the average of the daily closing prices for the 30
consecutive business days ending no more than 15 business days before such date
(as adjusted for any stock dividend, split, combination or reclassification that
took effect during such 30 business day period). The closing price for each day
shall be the last reported sales price regular way or, if no such reported sales
took place on such day, the average of the last reported bid and asked prices
regular way, in either case on the principal national securities exchange on
which the Common Stock is listed or admitted to trading (or if the Common Stock
is not at the time listed or admitted for trading on any such exchange, then
such price as shall be equal to the average of the last reported bid and asked
prices, as reported by the National Association of Securities Dealers Automated
Quotations System
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("NASDAQ") on such day, or if, on any such date, the security shall not be
quoted on the NASDAQ, then such price shall be equal to the average of the last
reported bid and asked prices on such day as reported by The National Quotations
Bureau Incorporated or any similar reputable quotation and reporting service, if
such quotation is not reported by The National Quotation Bureau Incorporated);
provided, however, that if the Common Stock is not traded in such manner that
the quotations referred to in this Section 2(c) are available for the period
required hereunder, the Current Market Price shall be determined by the Board of
Directors of the Company, acting in good faith.
(d) Each certificate for Warrant Shares shall bear the
following legend (and any additional legend required by (i) any applicable state
securities laws, and (ii) any securities exchange upon which such Warrant Shares
may, at the time of such exercise be listed) on the face thereof, unless at the
time of exercise, such Warrant Shares shall be registered under the Securities
Act of 1933, as amended (the "Securities Act");
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR ANY EXEMPTION THEREFROM UNDER SAID
ACT AND APPLICABLE STATE SECURITIES LAWS."
In addition, for so long as that certain Xxxxxxx and Restated
Stockholders' Agreement dated as of July 13, 1995, by and between the Company,
and certain shareholders of the Company (the "Stockholders' Agreement") remains
in effect, each certificate for Warrant Shares shall bear the following legend:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS' AGREEMENT TO WHICH THE CORPORATION IS A PARTY, AND NONE
OF SUCH SHARES, OR ANY INTEREST THEREIN, SHALL BE TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT AS PROVIDED IN SUCH
AGREEMENT. A COPY OF THE STOCKHOLDERS' AGREEMENT IS ON FILE IN THE
OFFICE OF THE CORPORATION AND WILL BE MADE AVAILABLE FOR INSPECTION TO
ANY PROPERLY INTERESTED PERSON WITHOUT CHARGE WITHIN FIVE (5) WORKING
DAYS AFTER THE CORPORATION'S RECEIPT OF A WRITTEN REQUEST."
3. Covenants As to Common Stock. The Company covenants and agrees that:
(i) all shares of Common Stock that may be issued upon the exercise of this
Warrant will, upon issuance, be validly issued, fully paid and nonassessable,
and free from all taxes, liens and charges with respect to the issue thereof;
(ii) it will pay when due and payable any and all federal and state taxes (other
than federal or state income taxes, if any, which shall remain Holder's
responsibility) that may be payable in respect of the issue of this Warrant or
any Common Stock or the Warrant
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Shares; (iii) it will at all times have authorized and reserved, free from
preemptive rights, a sufficient number shares of Common Stock to provide for the
exercise of the rights represented by this Warrant; (iv) if any shares of
capital stock to be reserved for the purpose of the issuance of shares upon the
exercise of this Warrant require registration with or approval of any
governmental authority under any federal or state law before such shares may be
validly issued or delivered upon exercise, then the Company shall in good faith
and as expeditiously as possible endeavor to secure such registration or
approval, as the case may be; and (v) if and so long as the Common Stock
issuable upon the exercise of this Warrant is listed on any national securities
exchange, the Company, will, if permitted by the rules of such exchange, list
and keep listed on such exchange, upon official notice of issuance, all shares
of such Common Stock issuable upon exercise of this Warrant.
4. Adjustment of Number of Shares. Upon each adjustment of the Warrant
Price as provided in Section 5 below, the Holder shall thereafter be entitled to
purchase, at the Warrant Price resulting from such adjustment, the number of
shares (calculated to the nearest 1/10th of a share) obtained by multiplying the
Warrant Price in effect immediately before such adjustment by the number of
shares purchasable pursuant hereto immediately before such adjustment, and
dividing the product thereof by the Warrant Price resulting from such
adjustment.
5. Adjustment of Warrant Price. The Warrant Price shall be subject to
adjustment from time to time as follows:
(a) If, at any time during the term of this Warrant, the
number of shares of Common Stock outstanding is increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split-up of shares of
Common Stock, then, following the record date fixed for the determination of
Holders of Common Stock entitled to receive such stock dividend, subdivision or
split-up, the Warrant Price shall be appropriately decreased so that the number
of shares of Common Stock issuable upon the exercise of this Warrant shall be
increased in proportion to such increase in outstanding shares.
(b) If, at any time during the term of this Warrant, the
number of shares of Common Stock outstanding is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date for such
combination, the Warrant Price shall appropriately increase so that the number
of shares of Common Stock issuable upon the exercise hereof shall be decreased
in proportion to such decrease in outstanding shares.
(c) All calculations under this Section 5 shall be made to the
nearest cent or to the nearest 1/10th of a share, as the case may be.
(d) If the Company proposes to take any action of the types
described in Section 5(a) or (b), the Company shall forward at the same time and
in the same manner, to the Holder of this Warrant, such notice, if any, that the
Company shall give to the Holders of capital stock of the Company.
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6. Transfers. The Company may deem and treat the person in whose name
this Warrant is registered as the Holder and owner hereof. Notwithstanding the
foregoing, the Warrant and all rights hereunder are not transferable in whole or
in part without the prior written consent of the Company and compliance with
that certain Loan and Warrant Purchase Agreement of even date herewith between
the Company and Holder, and any attempted transfer without such consent and such
compliance shall be void. Transferability of the Warrant Shares is limited as
set forth in this Warrant and in the Stockholders' Agreement.
7. Mergers, Consolidations, Sales. In the case of any proposed
consolidation or merger of the Company with another entity, or the proposed sale
of all or substantially all of its assets to another person or entity, or any
proposed reorganization or reclassification of the capital stock of the Company,
then, as a condition of any such consolidation, merger, sale, reorganization or
reclassification, lawful and adequate provision shall be made pursuant to which
the Holder of this Warrant shall thereafter have the right to receive upon the
basis and upon the terms and conditions specified herein, in lieu of the shares
of Common Stock of the Company immediately purchasable hereunder, such shares of
stock, securities or assets as may, by virtue of such consolidation, merger,
sale, reorganization or reclassification, be issued or payable with respect to
or in exchange for the number of shares of such Common Stock purchasable
hereunder immediately before such consolidation, merger, sale reorganization or
reclassification. The Company shall forward at the same time and in the same
manner, to the Holder of this Warrant, such notice, if any, that the Company
shall give to the Holders of capital stock of the Company with respect to any
proposed transaction described above or any distribution of assets of the
Company in dissolution or liquidation, or any extraordinary dividend or other
distribution on its Common Stock except out of earned surplus or by way of a
stock dividend payable in shares of its Common Stock. This Warrant shall be
binding upon any corporation or other person or entity succeeding to the Company
by merger, consolidation or acquisition of all or substantially all of the
Company's assets.
8. Registration Rights; Lockup Letter.
(a) If at any time prior to the expiration date of this
Warrant, the Company proposes to register any of its securities under the
Securities Act, whether or not for sale for its own account, on a form and in a
manner which would permit registration of shares of common stock for sale to the
public under the Securities Act, it will each such time give prompt written
notice to the Holder of its intention to do so, describing such securities and
specifying the form and manner and the other relevant facts involved in such
proposed registration, and upon the written request of the Holder delivered to
the Company within 30 days after the giving of any such notice (which request
shall specify the shares of Common Stock intended to be disposed of by the
Holder and the intended method of disposition thereof), the Company will take
every reasonable effort to effect the registration under the Securities Act,
subject to Sections 8(b) and (c) below, of all shares of Common Stock which the
Company has been so requested to register by the Holder to the extent requisite
to permit the disposition (in accordance with the intended methods thereof as
aforesaid) of the shares of Common Stock so to be registered, provided that:
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(i) if, at any time after giving such written notice of its
intention to register any of its securities and prior to the effective
date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to
register such securities, the Company may, at its election, give
written notice of such determination to the Holder and thereupon shall
be relieved of its obligation to register any shares of Common Stock in
connection with such registration;
(ii) the Company shall not be obligated to effect any
registration of shares of Common Stock under this Section incidental to
the registration of any of its securities in connection with mergers,
acquisitions, exchange offers, dividend reinvestment plans, employee
stock ownership plans or stock option plans, thrift plans, pension
plans or other employee benefit plans; and
(iii) the Company shall not be obligated to effect any
registration of shares of Common Stock to the extent such shares are
validly excluded from an underwritten distribution pursuant to Section
8(b) below.
(b) If the managing underwriter for a firm commitment
underwritten registration advises the Company and the Holder of Common Stock
that, in the underwriter's opinion, the total amount of securities proposed to
be sold in such registration exceeds the amount of securities that can be sold
in such an offering without negatively affecting the offering or its price, then
the number of outstanding shares of Common Stock proposed to be included in such
offering by persons other than the Company and/or a stockholder exercising
so-called "demand" registration rights (but including Holder) shall be reduced
pro rata among the holders of all such Common Stock. Expenses of all
registrations (excluding underwriting discounts and fees, commissions and
transfer taxes) shall be paid by the Company, including the reasonable fees and
disbursements for one counsel for all non-Company sellers as a group.
(c) It shall be a condition precedent to the obligation of the
Company to take any action pursuant to this Section 8 in respect of the Warrant
Shares which are to be registered at the request of Holder that Holder shall
furnish to the Company such information regarding the Common Stock held by
Holder and the intended method of disposition thereof as the Company shall
reasonably request and as shall be required in connection with the action to be
taken by the Company.
(d) The Company shall not, without the Holder's written
consent, and the written consent of any Warrant Shares issued and outstanding,
enter into any agreement with any holder or prospective holder of any securities
of the Company that purports to grant "piggy back" registration rights unless
such rights are consistent with and expressly made subject to the rights and
priorities set forth in this Section 8.
(e) The Company will indemnify and hold harmless each Holder,
each of its managers, members, officers, directors, partners and agents, with
respect to each registration, qualification and compliance effected pursuant to
this Section 8 pursuant to an indemnity
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agreement or agreements in customary form. Holder will indemnify and hold
harmless the Company (and the underwriters if requested) and their control
persons with respect to any information provided by Holder for inclusion in a
registration statement, pursuant to an indemnity agreement or agreements in
customary form.
(f) Xxxxxx agrees to execute and deliver to the underwriters
in connection with any Company-initiated firm commitment underwritten offering
and registration a "lock-up" letter requested, if at all, by such underwriters,
regarding limitations on the transfer by Holder of Common Stock for a period
after effectiveness of such registration provided such "lock-up" letter is on
the same terms and conditions as are requested by the underwriters from all
other selling shareholders.
9. Notices. Any notice or other document required or permitted to be
given or delivered to the Holder shall be delivered at, or sent by certified or
registered mail to, the Holder at _____________________________________________,
or to such other address as shall have been furnished to the Company in writing
by the Holder. Any notice or other document required or permitted to be given or
delivered to the Company shall be delivered at or sent by registered or
certified mail to, the Company at 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
XX 00000, or to such other address as shall have been furnished in writing to
the Holder by the Company. Any notice so addressed and mailed by registered or
certified mail shall be deemed to be given when so mailed. Any notice so
addressed and otherwise delivered shall be deemed to be given when actually
received by the addressee.
10. Special Protections. Notwithstanding any other provisions of this
Warrant, Holder shall be entitled to receive, with respect to the Warrant
Shares, any dilution protections or registration rights that are more favorable
than are set forth herein to the extent that such protections or rights are
granted by the Company during the term of this Warrant to or for the benefit of
any of Xxxx Xxxxxx, Xxxxx Xxxxx or Xxxxxx Xxxxxxxxxxx (or any person or entity,
other than the Company, controlled by, controlling, or under common control with
any of the foregoing persons or entities) with respect to Common Stock held by
any of the foregoing persons or entities.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly and authorized officer as of this 25th day of October, 1996.
THE COMPANY:
ATTEST: SANDBOX ENTERTAINMENT CORPORATION
By: ________________________ By: ____________________________
Its Secretary Its President
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FORM OF NOTICE OF EXERCISE
[To be signed only upon exercise of the Warrant]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THE WITHIN WARRANT
1. The undersigned hereby exercises the right to purchase ___ shares of
Common Stock that the undersigned is entitled to purchase by the terms of the
within Warrant according to the conditions thereof, and herewith makes payment
of the Warrant Price of such shares in full. All shares to be issued pursuant
hereto shall be issued in the name of and the initial address of such person to
be entered on the books of the Company shall be:
_______________________________________________________________________________.
The shares are to be issued in certificates of the following denominations:
_______________________________________________________________________________.
2. The undersigned hereby represents that the shares of the Company's
Common Stock to be delivered to it pursuant to the above-mentioned exercise of
the Warrant are being acquired by the undersigned as an investment and not with
a view to, or for sale in connection with, the distribution of any such shares.
The undersigned agrees to indemnify the Company and its subsidiaries, together
with their officers and directors, for any liabilities, losses, damages and
expenses (including reasonable attorney fees) arising from or in connection with
any disposition of the shares hereby being acquired, or any interest therein, in
violation of applicable securities laws or regulations. The undersigned further
represents that the undersigned has been given access to all information
requested by the undersigned to allow the undersigned to make a decision as to
the advisability of an investment in the Company's stock and the value of such
stock, and that undersigned has the skill and experience necessary to make such
decision. The undersigned also hereby agrees to be bound by, and to assume the
obligations of a Stockholder under, that certain Xxxxxxx and Restated
Stockholders' Agreement dated as of July 13, 1995, by and among the Company and
the Stockholders party thereto, as the same may be amended from time to time.
[This paragraph 2 is not applicable if the Common Stock being acquired has been
registered under the Securities Act of 1933, as amended.]
___________________________________
[Type Name of Holder]
By: ____________________________
Title: ____________________________
Date: ____________________________
Schedule to Exhibit 4(k) - Form of Stock Subscription Warrant, dated October 25,
1996.
List of Warrant Holders:
October 25, 1996 Sandbox Warrants
Holder Additional Sandbox Warrants
------ ---------------------------
Xxxxxxxx Xxxxxx 250
Xxxxxx Xxxxxxxx 500
Pickwick Group, L.L.C. 250
Xxxxxxx and Xxxxx Xxxxxxxxx 500
Xxxxxxxx Xxxxxx 500
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