Exhibit 4(l)
APRIL 1997 AMENDMENT TO LOAN AND WARRANT PURCHASE AGREEMENT
AND TO TERM NOTE
THIS APRIL 1997 AMENDMENT TO LOAN AND WARRANT PURCHASE AGREEMENT AND TO
TERM NOTE (this "Amendment") is made effective as of April 25, 1997, by and
between SANDBOX ENTERTAINMENT CORPORATION, a Delaware corporation ("Sandbox"),
which was formerly TRACER DESIGN, INC., an Arizona corporation (the
"Predecessor"), and ___________________________________, whose address is
_____________________________ ("Purchaser").
RECITALS
A. Pursuant to that certain Loan and Warrant Purchase Agreement dated
as of October 25, 1995 (the "Loan and Warrant Purchase Agreement"), the
Predecessor borrowed $__________ from Purchaser in consideration of the
Predecessor issuing to Purchaser a warrant (the "Initial Warrant") to purchase
________ shares of the Class A Common Stock, $.001 par value of the Predecessor
(the "Initial Warrant Shares") at an exercise price of $_______ per share (after
giving effect to certain subsequent stock splits and anti-dilutive adjustments,
the Initial Warrant is currently a warrant to purchase _____________ shares of
the Common Stock, $.001 par value of Sandbox (the "Common Stock") at an exercise
price of $.80 per share), on the terms and subject to the conditions set forth
in the Loan and Warrant Purchase Agreement.
B. In connection with the Loan and Warrant Purchase Agreement, the
Predecessor also gave Purchaser a Term Note dated as of October 25, 1995 in the
principal amount of $________ (the "Term Note"). Pursuant to its terms, the Term
Note is due and payable in full on October 25, 1996.
C. Pursuant to that certain Amendment to Loan and Warrant Purchase
Agreement and to Term Note dated as of October 25, 1996 (the "Amendment to Loan
and Warrant Purchase Agreement and to Term Note"), Sandbox and Purchaser amended
the Term Note to, among other things, extend the maturity date an additional six
(6) months and lower the interest rate for the extension period. Purchaser
agreed to such amendments to the Term Note in consideration of Sandbox issuing
to Purchaser a new warrant to purchase __________ shares of Common Stock (the
"October 1996 Warrant Shares") at an exercise price of $.80 per share.
D. Sandbox wishes again to amend the Term Note to, among other things,
extend the maturity date an additional six (6) months. Purchaser has agreed to
such amendments to the Term Note in consideration of Sandbox issuing to
Purchaser a new warrant to purchase _______ shares of Common Stock (the "April
1997 Warrant Shares") at an exercise price of $.80 per share, pursuant to a
warrant in the form attached hereto as Exhibit A (the "April 1997 Warrant") on
the terms and subject to the conditions of this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, Sandbox and Purchaser agree as follows:
1. Incorporation by Reference. The terms and conditions of the Loan and
Warrant Purchase Agreement, the Term Note, and the Amendment to Loan and Warrant
Purchase Agreement and to Term Note and the Recitals above are incorporated by
reference. Any capitalized term used herein and not otherwise defined shall have
the meaning ascribed to such term in the Loan and Warrant Purchase Agreement.
2. Issuance, Sale and Delivery of New Warrant. At the New Closing
(defined in Section 3 hereto) Sandbox agrees to issue and deliver to Purchaser
and Purchaser agrees to receive from Sandbox the April 1997 Warrant in
consideration of Purchaser agreeing to the amendments contained herein.
3. Closing. The issuance and delivery of the April 0000 Xxxxxxx shall
take place at the offices of Sandbox as soon as possible on such date and at
such time as is mutually agreed upon by the parties (such transaction being the
"New Closing" and such date and time being the "New Closing Date"). At the New
Closing Sandbox shall issue and deliver to Purchaser the April 0000 Xxxxxxx
registered in the name of Purchaser and the Term Note shall be deemed amended as
of April 25, 1997, as set forth herein.
4. Representations and Warranties of Sandbox. Sandbox makes the same
representations and warranties with respect to the issuance of the April 0000
Xxxxxxx and the April 1997 Warrant Shares as of the New Closing Date that were
made by the Predecessor in Section 3 of the Loan and Warrant Purchase Agreement
with respect to the Initial Warrant and the Initial Warrant Shares, with the
following amendments:
(a) Organization and Standing; Charter and Bylaws. Sandbox is
a corporation duly organized and existing under and by virtue of the
laws of the State of Delaware.
(b) Capitalization. As of April 17, 1997, the authorized
capital stock of Sandbox consists of: 2,000,000 shares of Series A
Preferred Stock, $.001 par value, of which 1,968,750 shares were issued
and outstanding; 10,000,000 shares of Common Stock, $.001 par value, of
which 3,136,429 shares are issued and outstanding. Sandbox is in the
process of negotiating a bridge financing that might close before or
after April 25, 1997 pursuant to which it anticipates issuing
additional shares of Series A Preferred Stock, shares of a new series
of Preferred Stock and/or shares of Common Stock (the "Bridge
Financing"). Sandbox is also in the process of negotiating an equipment
lease that might close before or after April 25, 1997 with Third Coast
Capital, L.L.C., pursuant to which Sandbox might issue warrant(s) for
the purchase of shares of Series A Preferred Stock and/or shares of
Common Stock (the "Equipment Financing"). To facilitate the Bridge
Financing and the Equipment
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Financing, Sandbox will need to amend its Certificate of Incorporation
before or after April 25, 1997 to increase the total number of
authorized shares of Series A Preferred and/or Common Stock and to
possibly create a new class of Preferred Stock.
Prior to the New Closing and with the exception of the Bridge
Financing and the Equipment Financing, Sandbox will have no equity
securities issued or outstanding except those disclosed on Exhibit B
attached hereto, which contains a list of all holders of capital stock
of Sandbox and their respective share holdings. Except as disclosed on
Exhibit B hereto and as contemplated by this Amendment, the Bridge
Financing and the Equipment Financing, there are no outstanding
warrants, options, agreements, convertible securities or other
commitments pursuant to which Sandbox is or may become obligated to
issue any shares of its capital stock or other securities of Sandbox.
Except for certain rights of first offer under that certain Investor
Rights Agreement dated as of February 13, 1996 ("Investor Rights
Agreement") between the Predecessor and certain investors, which have
been waived, and in that certain Amended and Restated Stockholders'
Agreement dated as of July 13, 1995 (the "Stockholders' Agreement") by
and among the Predecessor and the Stockholders party thereto, a copy of
which is attached as Exhibit III to the Note and Warrant Purchase
Agreement, there are, and immediately upon consummation at the New
Closing of the transactions contemplated hereby there will be, no
preemptive or similar rights to purchase or otherwise acquire shares of
capital stock of Sandbox pursuant to any provision of law, the
Certificate of Incorporation or Bylaws of Sandbox, or any agreement to
which Sandbox is a party, or otherwise.
5. Authorization to Close. Sandbox's obligation to issue the April 1997
Warrant is conditioned upon its receipt of a consent and waiver from the
Investors that are parties to the Investors Rights Agreement in form and
substance acceptable to such Investors and Sandbox.
6. Representations and Warranties of Purchaser. Purchaser makes the
same representations and warranties with respect to the issuance of the April
0000 Xxxxxxx and the April 1997 Warrant Shares that were made by Purchaser in
Section 4 of the Loan and Warrant Purchase Agreement with respect to the Initial
Warrant and Initial Warrant Shares. These representations include, without
limitation, Purchaser's promise not to transfer the April 0000 Xxxxxxx or any
interest therein without the prior written consent of Sandbox, and Purchaser's
acknowledgment that in connection with the exercise of the April 1997 Warrant,
any holder will be required as a condition to such exercise to become bound by
and obligated under the Stockholders' Agreement for so long as it shall be in
effect.
7. Amendments to Term Note. At the New Closing, the Term Note shall be
amended as of April 25, 1997 as follows:
(a) Extension of Maturity Date. The Term Note is no longer due
and payable upon demand by Purchaser (the "Holder" as that term is
defined under the
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Term Note); however, Sandbox will pay Purchaser all accrued interest
through April 25, 1997 at the New Closing. The date upon which the
entire indebtedness (principal and interest) evidenced by the Term Note
shall be due and payable in full is extended from April 25, 1997 until
October 25, 1997.
(b) Interest Rate. The interest rate for principal amounts
under the Term Note shall be Ten Percent (10%) beginning as of October
25, 1996.
8. Entire Agreement. This Agreement constitutes the sole and entire
agreement of the parties with respect to the subject matter hereof. This
Agreement may not be amended or modified, and no provisions may be waived,
without the written agreement of Sandbox and Purchaser.
9. Counterparts. This Amendment may be executed in counterparts, each
of which shall be enforceable against the party actually executing the
counterpart, and all of which shall constitute one instrument.
IN WITNESS WHEREOF, Sandbox and the Purchaser have executed this
Agreement as of the day and year first above written.
SANDBOX:
SANDBOX ENTERTAINMENT CORPORATION
By: ___________________________________
Xxxx Xxxxxx
Its President
PURCHASER:
_____________________________________
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EXHIBIT A
FORM OF APRIL 1997 WARRANT
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EXHIBIT B
SANDBOX ENTERTAINMENT CORPORATION
Capitalization Schedule
April 17, 1997
I. AUTHORIZED CAPITALIZATION
Total Common Stock, $.001 par value: 10,000,000
Total Series A Convertible Preferred Stock, $.001 par value: 2,000,000
----------
Total 12,000,000
II. OUTSTANDING
A. Common Stockholders
----------------------
Name Shares
---- ------
Xxxx X. Xxxxxx(1) 1,025,000
Xxxxx X. Xxxxx(1) 737,500
Xxxxxx X. Xxxxxxxxxxx(1) 737,500
Xxxxx Xxxxx 229,590
R. Xxx and Xxxxxxx Xxxxxxxx Kailey 125,015
Xxxxx X. Xxxxxxx 131,535
Newtek Ventures II, L.P. 76,729
Xxxxxx Xxxxxx 25,190
Xxxxxxx X. Xxxxxx 17,390
Xxxxxxx X. Xxxx 17,390
Xxxxxx X. Xxxxxxx, Xx. 13,590
------
Total Common: 3,136,429
B. Series A Preferred Stockholders
----------------------------------
Wasatch Venture Corporation 875,000
Newtek Ventures II, L.P. 437,500
Xxxx X. Xxxxxxxx III 31,250
Xxxxx Xxxxxxxx 62,500
Sundance Venture Partners, L.P. 562,500
-------
Total Series A Preferred: 1,968,750
Total Common/Preferred Outstanding: 5,101,179
---------------
(1) Little has the right to vote 250,000 shares held by Xxxxx and
250,000 shares held by Xxxxxxxxxxx.
C. Common Stock Options(2)
--------------------------
Name Type Shares Optioned Price Per Share Vesting Schedule
---- ---- ------ -------- ----- --------- ----------------
Xxxxxx Xxxxxxx ISO 54,380 $.10 2,000 shares vested 2/28/97 (were
exercised on 4/8/97), 13,590 shares
8/1/97 and 8/1/98; 13,600 shares on
8/1/99 and 8/1/00
Xxxx Xxxxxx ISO 79,580 $.10 2,000 shares vest immediately,
19,390 on 8/1/97 and 8/1/98;
19,400 shares on 8/1/99 and 8/1/00
Xxxxxx Xxxxxx ISO 100,770 $.10 2,000 shares vested 2/28/97 (were
exercised 4/6/97), 25,190 8/1/97,
8/1/98 and 8/1/99; 25,200 shares on
8/1/00
Xxxx Xxxx ISO 79,580 $.10 2,000 shares vest immediately
19,390 shares on 8/1/97 and 8/1/98;
19,400 shares on 8/1/99 and 8/1/00
Newtek Ventures, II, NQSO 54,806 $.10 10,962 shares vested on 9/1/96 (were
L.P. exercised on 12/12/96); 10,962
shares shall vest on 3/1/97 9/1/97,
3/1/98, 9/1/98 and 10,958 on 3/1/99
Xxxxxx Xxxxxx NQSO 6,000 $.10 All vested 2/28/97
Xxxxxxx X. Xxxxxx, Xx. NQSO 6,000 $.10 All vested 2/28/97
Xxxx Xxxxxxx ISO 50,000 $.10 10,000 shares shall vest on 7/9/97,
7/9/98, 7/9/99, 7/9/00 and 7/9/01
Xxxx Xxxxxxxx ISO 45,000 $.10 9,000 shares shall vest on 1/15/98,
1/15/99, 1/15/00, 1/15/01 and
1/15/02
Total Common Options: 476,116
---------------
(2) All of the options listed in this section are pursuant to the 1995
Equity Incentive Plan.
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D. Common Warrants
------------------
Shares Price Expiration
Name Under Warrant Per Share of Warrant
---- ------------- --------- ----------
Pickwick Group L.L.C. 229,500 $.80 9/15/05
Xxxxxx Xxxxxxxx 76,500 $.80 10/25/05
1,250 $.80 10/25/06
Xxxxxxxx Xxxxxx 38,250 $.80 10/25/05
625 $.80 10/25/06
Xxxxxxx and Xxxxx
Xxxxxxxxx 76,500 $.80 10/25/05
1,250 $.80 10/25/06
Pickwick Group L.L.C. 38,250 $.80 10/25/05
625 $.80 10/25/06
Xxxxxxxx Xxxxxx, M.D. 76,500 $.80 10/25/05
1,250 $.80 10/25/06
-------
Total Common Warrants 540,500
TOTAL COMMON OPTIONS AND WARRANTS: 1,016,616
III. RESERVED
Type Number of Shares For What Reserved
---- ---------------- -----------------
Common 603,178 1995 Equity Incentive Plan
Common 540,500 Common Warrants
Common 1,968,750 Series A Preferred Stock
---------
Total Common Reserved: 3,112,428
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IV. SUMMARY
Total Common Outstanding 3,136,429
Total Preferred Outstanding 1,968,750
Total Outstanding 5,105,179
Total Warrants/Options Outstanding 1,016,616
---------
Total Common Outstanding - Fully Diluted(3) 6,121,795
-----------------
(3) Assumes exercise of all outstanding warrants and options and
conversion of all outstanding preferred.
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Schedule to Exhibit 4(l) - Form of April 1997 Amendment to Loan and Warrant
Purchase Agreement.
List of Purchasers:
Xxxxxx Xxxxxxxx
Xxxxxxxx Xxxxxx
Xxxxxxx and Xxxxx Xxxxxxxxx
Pickwick Group LLC
Xxxxxxxx Xxxxxx
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