EXHIBIT 10(mm)
WARRANT AGREEMENT (the "Agreement") dated as of ____________,
1997 between Sandbox Entertainment Corporation, a Delaware corporation (the
"Company"), and Wit Capital Corporation and any co-managing underwriter as
described on Schedule 1 hereto (hereinafter referred to as the "Underwriters").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company proposes to issue to the Underwriters
_______ warrants (the "Warrants") to purchase up to an aggregate of ______
shares of Series B Convertible Preferred Stock, par value $0.001 per share (the
"Series B Preferred Stock"), of the Company (the "Warrant Shares"); and
WHEREAS, the Underwriters have agreed, pursuant to the
underwriting agreement (the "Underwriting Agreement") dated ___________, 1997
between the Underwriters and the Company, to act as the underwriters in
connection with the Company's proposed offering (the "Offering") of _______
shares of Series B Preferred Stock (the "Offering Shares") at an initial
offering price of $___ per Share; and
WHEREAS, the Warrants issued pursuant to this Agreement are
being issued by the Company to the Underwriters and/or officers of the
Underwriters, in consideration for, and as part of the Underwriters'
compensation in connection with, the Underwriters acting as the Underwriters
pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment
by the Underwriters or their designees to the Company of ten dollars ($10.00),
the agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Grant.
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The Underwriters, and/or their designees who are officers of
the Underwriters, are hereby granted the right to purchase, at any time on or
after the date hereof until 5:00 P.M., New York time, on ______________, 2002,
which shall be the date five years after the effective date of the registration
statement (the "Effective Date") on Form SB-2 pursuant to which the Offering
Shares shall be registered (the "Warrant Exercise Term"), up to ________ fully
paid and non-assessable Warrant Shares at an initial exercise price (subject to
adjustment as provided in Articles 6 and 8 hereof) of $_____(1) per Warrant
Share upon exercise of the Warrants.
2. Warrant Certificates.
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(1) to be 110% of the initial offering price.
The warrant certificates delivered and to be delivered
pursuant to this Agreement (the "Warrant Certificates") shall be in the form set
forth in Exhibit A attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.
3. Exercise of Warrant.
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3.1. Cash Exercise. The Warrants initially are
exercisable at a price of $[110% of per share offering price] per Warrant Share
purchased, payable in cash or by check to the order of the Company, or any
combination of cash or check, subject to adjustment as provided in Article 8
hereof. Upon surrender of the Warrant Certificate with the annexed Form of
Election to Purchase, duly executed, together with payment of the Exercise Price
(as hereinafter defined) for the Warrant Shares purchased at the Company's
principal offices in Phoenix, Arizona (currently located at 0000 X. Xxxxxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxx), the registered holder of a Warrant Certificate
("Holder" or "Holders") shall be entitled to receive a certificate or
certificates for the Warrant Shares so purchased. The purchase rights
represented by each Warrant Certificate are exercisable at the option of the
Holder hereof, in whole or in part (but not as to fractional Warrant Shares). In
the case of the purchase of less than all the Warrant Shares purchasable under
any Warrant Certificate, the Company shall cancel said Warrant Certificate upon
the surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Warrant Shares purchasable thereunder.
3.2. Cashless Exercise. At any time during the
Warrant Exercise Term, the Holder may, at its option, exchange the Warrants
represented by such Holder's Warrant Certificate, in whole or in part (a
"Warrant Exchange"), into the number of Warrant Shares determined in accordance
with this Section 3.2, by surrendering such Warrant Certificate at the principal
office of the Company or at the office of its transfer agent, accompanied by a
notice stating such Holder's intent to effect such exchange, the number of
Warrant Shares to be exchanged and the date on which the Holder requests that
such Warrant Exchange occur (the "Notice of Exchange"). The Warrant Exchange
shall take place on the date specified in the Notice of Exchange or, if later,
the date the Notice of Exchange is received by the Company (the "Exchange
Date"). Certificates for the Warrant Shares issuable upon such Warrant Exchange
and, if applicable, a new Warrant Certificate of like tenor evidencing the
Warrant Shares which were subject to the surrendered Warrant Certificate and not
included in the Warrant Exchange, shall be issued as of the Exchange Date and
delivered to the Holder within three (3) days following the Exchange Date. In
connection with any Warrant Exchange, the Holder's Warrant Certificate shall
represent the right to subscribe for and acquire the number of Warrant Shares
(rounded to the next highest integer) equal to (A) the number of Warrant Shares
specified by the Holder in its Notice of Exchange (the "Total Share Number")
less (B) the number of Warrant Shares equal to the quotient obtained by dividing
(i) the product of the Total Share Number and the existing Exercise Price (as
hereinafter defined) by (ii) the current Market Price (as hereinafter defined)
of an Offering Share. "Market Price" at any date shall be deemed to be the last
reported sale price, or, in case no such reported sale takes place on such day,
the average of the last reported sale prices for the last three trading days,
the closing bid price as furnished by the National Market System, the closing
bid price as furnished by the National Association of Securities Dealers, Inc.
through NASDAQ or a similar organization if NASDAQ is no longer
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reporting such information; provided, however, that if the Offering Shares are
not traded in such manner that the foregoing prices are available for the period
required, the Market Price shall be the fair market value of the Offering Shares
as determined by a majority of the independent members of the Board of Directors
of the Company, acting in good faith.
4. Issuance of Certificates.
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Upon the exercise of the Warrants, the issuance of
certificates for the Warrant Shares purchased shall be made forthwith (and in
any event within three business days thereafter) without charge to the Holder
thereof including, without limitation, any tax which may be payable in respect
of the issuance thereof, and such certificates shall (subject to the provisions
of Article 5 hereof) be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name other
than that of the Holder and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the
Warrant Shares shall be executed on behalf of the Company by the manual or
facsimile signature of the present or any future Chairman of the Board of
Directors or President or Vice President of the Company under its corporate seal
reproduced thereon, attested to by the manual or facsimile signature of the
present or any future Secretary or Assistant Secretary of the Company. Warrant
Certificates shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.
Upon exercise, in part or in whole, of the Warrants,
certificates representing the Warrant Shares purchased shall bear a legend
substantially similar to the following:
"The securities represented by this
certificate and the other securities issuable upon
conversion thereof have not been registered under the
Securities Act of 1933, as amended (the "Act"), and
may not be offered or sold except (i) pursuant to an
effective registration statement under the Act, (ii)
to the extent applicable, pursuant to Rule 144 under
the Act (or any similar rule under such Act relating
to the disposition of securities), or (iii) upon the
delivery by the holder to the Company of an opinion
of counsel, reasonably satisfactory to counsel to the
Company, stating that an exemption from registration
under such Act is available."
5. Restriction on Exercise and Transfer of Warrants.
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The Holder of a Warrant Certificate, by its acceptance
thereof, covenants and agrees that the Warrants and Warrant Shares are being
acquired as an investment and not with a view to the distribution thereof, and
that the Warrants may not be exercised, sold, transferred,
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assigned, hypothecated or otherwise disposed of, in whole or in part, for the
later of a period of one (1) year from the Effective Date or the "Restricted
Period", as defined in the Certificate of Designation for the Series B Preferred
Stock. Thereafter, the Warrants may be sold, transferred, hypothecated or
otherwise disposed of: (i) to officers of the Underwriters who are also
shareholders of the Underwriters; (ii) by will and pursuant to the laws of
descent and distribution; or (iii) by operation of law.
6. Initial and Adjusted Exercise Price. The Warrant's initial
exercise price per Warrant Share shall be the amount equal to [one hundred ten
percent (110%) of the per share offering price of the Series B Preferred Stock]
(the "Exercise Price"). The adjusted Exercise Price per Warrant Share shall be
the price which shall result from time to time from any and all adjustments of
the initial exercise price in accordance with the provisions of Article 8
thereof. The term "Exercise Price" herein shall mean the initial exercise price
or the adjusted exercise price, depending upon the context.
7. Registration Rights.
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7.1. Registration Under the Securities Act of 1933.
Neither the Warrants nor the Warrant Shares have been registered for purposes of
public distribution under the Securities Act of 1933, as amended (the "Act").
7.2. Registrable Securities. As used herein the term
"Registrable Security" means each of the Warrants, the Warrant Shares, and any
shares of common stock (the "Common Stock") or other securities issued upon
conversion of such Warrant Shares or any stock split or stock dividend in
respect of such Warrant Shares; provided, however, that with respect to any
particular Registrable Security, such security shall cease to be a Registrable
Security when, as of the date of determination, (i) it has been effectively
registered under the Act and disposed of pursuant thereto, (ii) registration
under the Act is no longer required for subsequent public distribution of such
security, or (iii) it has ceased to be outstanding. The term "Registrable
Securities" means any and/or all of the securities falling within the foregoing
definition of a "Registrable Security." In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of "Registrable Security" as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Article 7.
7.3. Piggyback Registration. If, at any time during
the seven years following the Effective Date, the Company proposes to prepare
and file any registration statement covering Common Stock (in any such case,
other than in connection with a merger, acquisition or pursuant to Form S-8 or
successor form) (for purposes of this Article 7, the "Registration Statement"),
it will give written notice of its intention to do so by registered mail
("Notice"), at least thirty (30) business days prior to the filing of each such
Registration Statement, to all holders of Registrable Securities. Upon the
written request of the majority of such holders ("Requesting Holder(s)"), made
within twenty (20) business days after receipt of the Notice, that the Company
include any of the Requesting Holder's Registrable Securities in the proposed
Registration Statement, the Company shall, as to each such Requesting Holder,
use its best efforts to effect the registration under the Act of the Registrable
Securities which it has been so requested to register ("Piggyback
Registration"), at the Company's sole cost and expense and at no cost or expense
to
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the Requesting Holders. Nothing contained in this Agreement shall be construed
as providing the Requesting Holders with the right of demand registration in
respect of the Registrable Securities.
If the managing underwriter for a firm commitment
underwritten registration advises the Company and the Requesting Holder(s) 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 the Requesting Holder(s))
shall be reduced pro rata among the holders of all such Common Stock.
Notwithstanding the provisions of this Section 7.3,
the Company shall have the right at any time after it shall have given written
notice pursuant to this Section 7.3 (irrespective of whether any written request
for inclusion of such securities shall have already been made) to elect not to
file any such proposed Registration Statement, or to withdraw the same after the
filing but prior to the effective date thereof.
7.4. Covenants of the Company With Respect to
Registration. The Company covenants and agrees as follows:
(a) The Company shall furnish to each holder
of Registrable Securities included in any registration under Section
7.3 such number of prospectuses as shall be reasonably requested.
(b) The Company shall pay all costs, fees
and expenses in connection with all Registration Statements filed
pursuant to Section 7.3 hereof (excluding underwriting discounts and
fees, commissions and transfer taxes) including, without limitation,
the reasonable fees and disbursements for one counsel for all
non-Company sellers as a group, the Company's legal and accounting
fees, printing expenses, and blue sky fees and expenses.
(c) The Company will use reasonable efforts
in qualifying or registering the Registrable Securities included in a
Registration Statement, for offering and sale under the securities or
blue sky laws of such states as are requested by the holders of such
securities.
(d) The Company shall indemnify any holder
of the Registrable Securities to be sold pursuant to any Registration
Statement and any Underwriter or person deemed to be an underwriter
under the Act and each person, if any, who controls such holder or
Underwriter or person deemed to be an underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended ("Exchange Act"), against all loss, claim, damage,
expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to
which any of them may become subject under the Act, the Exchange Act
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or otherwise, arising from such registration statement to the same
extent and with the same effect as the provisions pursuant to which the
Company has agreed to indemnify and to provide for just and equitable
contribution to the Underwriters as set forth in Section 8 of the
Underwriting Agreement.
(e) Any holder of Registrable Securities to
be sold pursuant to a registration statement and its successors and
assigns, shall severally, and not jointly, indemnify, the Company, its
officers and directors and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act, against all loss, claim, damage or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may
become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such holder, or its
successors or assigns, for specific inclusion in such Registration
Statement to the same extent and with the same effect as the provisions
pursuant to which the Underwriters have agreed to indemnify and to
provide for just and equitable contribution to the Company as set forth
in Section 8 of the Underwriting Agreement.
(f) Nothing contained in this Agreement
shall be construed as requiring any holder to exercise his Warrants
prior to the initial filing of any registration statement or the
effectiveness thereof.
(g) If the Company shall fail to comply with
the provisions of this Section 7, the Company shall, in addition to any
other equitable or other relief available to the holders of Registrable
Securities, be liable for any or all damages sustained by the holders
of Registrable Securities, requesting registration of their Registrable
Securities.
(h) The Company shall deliver promptly to
each holder in connection with Registrable Securities being registered
pursuant to Section 7.3 hereof and requesting the correspondence and
memoranda described in this Section 7.4(h) copies of correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with
respect to the Registration Statement and permit such holder to do such
investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the Registration Statement as
it deems reasonably necessary to comply with applicable securities
laws. Such investigation shall include access to books, records and
properties and opportunities to discuss the business of the Company
with its officers and independent auditors, all to such reasonable
extent and at such reasonable times and as often as such holder shall
reasonably request.
(j) Upon the written request therefor by
such holder, the Company shall include in the Registration Statement
covering any of the Registrable Securities any other securities of the
Company held by such holder as of the date of filing of such
Registration Statement, including, without limitation, restricted
shares of Common Stock, options, warrants or any other securities
convertible into shares of Common Stock.
7.5. Covenants of Holders of Registrable Securities
(a) Each Holder of Registrable Securities
agrees in connection with any registration of the Company's securities (other
than a registration of securities in a Rule 145 transaction or with respect to
an employee benefit plan) that, upon request of the Company or the underwriters
managing any underwritten offering of the Company's securities, not to sell,
make any short sale of, loan, grant any option for the purchase of, pledge,
hypothecate, or otherwise dispose of any Registrable Securities (other than
those included in the registration) or other capital stock of the Company or
securities exchangeable or convertible into capital stock of the Company without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed 180 days from the date of the final
prospectus used in such registration) as may be requested by the Company or such
managing underwriters, provided, that the officers, directors, and affiliates of
the directors of the Company who own stock of the Company also agree to such
restrictions. For the purposes of this agreement, "affiliate" shall be defined,
with respect to any specified person or entity, as a person or entity that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the person or entity specified.
The certificates for the Warrant Shares shall contain, for so long as such
market standoff provision remains in place, a legend in substantially the
following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER INCLUDING A MARKET STANDOFF
AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL SHAREHOLDER
THAT PROHIBITS SALE OR TRANSFER OF SUCH SHARES FOR A PERIOD OF
UP TO 180 DAYS FOLLOWING THE DATE OF THE FINAL PROSPECTUS FOR
CERTAIN REGISTERED OFFERINGS OF THE ISSUER'S COMMON STOCK. A
COPY OF THE AGREEMENT IS ON FILE WITH THE SECRETARY OF THE
ISSUER.
8. Adjustments of Exercise Price and Number of Securities.
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The following adjustments refer to the Exercise Price and the
number of Warrant Shares purchasable upon exercise of the Warrants.
8.1. Computation of Adjusted Price. In case the
Company shall at any time after the date hereof pay a dividend in shares of
Series B Preferred Stock or make a distribution in shares of Series B Preferred
Stock, then upon such dividend or distribution the Exercise Price in effect
immediately prior to such dividend or distribution shall forthwith be reduced to
a price determined by dividing:
(a) an amount equal to the total number of
shares of Series B Preferred Stock outstanding immediately prior to
such dividend or distribution multiplied by the Exercise Price in
effect immediately prior to such dividend or distribution, by
(b) the total number of shares of Series B
Preferred Stock outstanding immediately after such issuance or sale.
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8.2. Subdivision and Combination. In case the Company
shall at any time subdivide or combine the outstanding shares of Series B
Preferred Stock, the Exercise Price shall forthwith be proportionately decreased
in the case of subdivision or increased in the case of combination.
8.3. Adjustment in Number of Securities. Upon each
adjustment of the Exercise Price pursuant to the provisions of this Article 8,
the number of Warrant Shares issuable upon the exercise of the Warrants shall be
adjusted to the nearest full number by multiplying a number equal to the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of the Warrants immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise Price.
8.4. Reclassification, Consolidation, Merger, etc. In
case of any reclassification or change of the outstanding shares of Series B
Preferred Stock (other than a change in par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), or in
the case of any consolidation of the Company with, or merger of the Company
into, another corporation (other than a consolidation or merger in which the
Company is the surviving corporation and which does not result in any
reclassification or change of the outstanding shares of Series B Preferred
Stock, except a change as a result of a subdivision or combination of such
shares or a change in par value, as aforesaid), or in the case of a sale or
conveyance to another corporation of the property of the Company as an entirety,
the Holders shall thereafter have the right to purchase the kind and number of
shares of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance as if the
Holders were the owners of the Warrant Shares immediately prior to any such
events, at a price equal to the product of (x) the number of shares of Series B
Preferred Stock issuable upon exercise of the Holders' Warrants and (y) the
exercise prices in effect for the Warrants immediately prior to the record date
for such reclassification, change, consolidation, merger, sale or conveyance as
if such Holders had exercised the Warrants
8.5. Adjustments of Conversion Price of the Series B
Preferred Stock and Number of Shares of Common Stock Issuable Upon Exercise of
Warrant Shares. With respect to any Warrant Shares, whether or not the Warrants
have been exercised, the conversion price per share of Common Stock and the
number of shares of Common Stock issuable upon conversion of the Warrant Shares
shall each be automatically adjusted in accordance with Section 5(d) of the
Certificate of Designation for the Series B Preferred Stock, upon the occurrence
of any of the events described therein. Thereafter, until the next such
adjustment or until otherwise adjusted in accordance with this Section 8,
Warrant Shares shall be convertible into Common Stock at such adjusted
conversion price and for such adjusted number of shares of Common Stock.
8.6. Determination of Outstanding Shares of Series B
Preferred Stock and Common Stock. The number of shares of Series B Preferred
Stock and Common Stock at any one time outstanding shall include the aggregate
number of shares issued or issuable upon the exercise of the Warrants and upon
the conversion of the Warrant Shares.
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8.7. Dividends and Other Distributions with Respect
to Outstanding Securities. In the event that the Company shall at any time prior
to the exercise of all Warrants declare a dividend (other than a dividend
consisting solely of shares of Series B Preferred Stock or a cash dividend or
distribution) or otherwise distribute to its shareholders any assets, property,
rights, evidences of indebtedness, securities (other than shares of Series B
Preferred Stock), whether issued by the Company or by another person or entity,
or any other thing of value, the Holders of the unexercised Warrants shall
thereafter be entitled, in addition to the shares of Series B Preferred Stock or
other securities receivable upon the exercise thereof, to receive, upon the
exercise of such Warrants, the same property, assets, rights, evidences of
indebtedness, securities or any other thing of value that they would have been
entitled to receive at the time of such dividend or distribution. At the time of
any such dividend or distribution, the Company shall make appropriate reserves
to ensure the timely performance of the provisions of this Subsection 8.7.
8.8. Subscription Rights for Shares of Series B
Preferred Stock or Other Securities. In the case that the Company or an
affiliate of the Company shall at any time after the date hereof and prior to
the exercise of all the Warrants issue any rights to subscribe for shares of
Series B Preferred Stock or any other securities of the Company or of such
affiliate to all the shareholders of the Company, the Holders of the unexercised
Warrants shall be entitled, in addition to the shares of Series B Preferred
Stock or other securities receivable upon the exercise of the Warrants, to
receive such rights at the time such rights are distributed to the other
shareholders of the Company.
8.9. Automatic Conversion. Upon the occurrence of an
automatic conversion of shares of Series B Preferred Stock into Common Stock
pursuant to Section 5(b) of the Certificate of Designation for the Series B
Preferred Stock, the Warrants then outstanding shall thereafter be exercisable
with respect to the number of shares of Common Stock into which the Series B
Preferred Stock issuable upon exercise of such Warrants shall then be
convertible, and the provisions of this Article 8 shall thereafter apply to the
Common Stock issuable upon exercise of the Warrants.
9. Exchange and Replacement of Warrant Certificates.
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Each Warrant Certificate is exchangeable without expense, upon
the surrender hereof by the registered Holder at the principal executive office
of the Company, for a new Warrant Certificate of like tenor and date
representing in the aggregate the right to purchase the same number of
securities in such denominations as shall be designated by the Holder thereof at
the time of such surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Warrant Certificate, if mutilated, the Company will make and deliver a new
Warrant Certificate of like tenor, in lieu thereof.
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10. Fractional Interests.
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No fractional shares of Series B Preferred Stock shall be
issued upon exercise of the Warrants. In lieu of any fractional shares to which
the Holder would otherwise be entitled, the Corporation shall pay cash equal to
such fraction multiplied by the then fair market value of such fractional shares
as determined by the Board of Directors of the Company.
11. Reservation and Listing of Securities.
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The Company shall at all times reserve and keep available out
of its authorized shares of Series B Preferred Stock, solely for the purpose of
issuance upon the exercise of the Warrants, such number of shares of Series B
Preferred Stock as shall be issuable upon the exercise thereof and such number
of shares of Common Stock issuable upon conversion of such Series B Preferred
Stock. The Company covenants and agrees that, upon exercise of the Warrants and
payment of the Exercise Price therefor, all Warrant Shares issuable upon such
exercise shall be duly and validly issued, fully paid, non-assessable and not
subject to the preemptive rights of any shareholder. The Company further
covenants and agrees that upon conversion of the shares of Series B Preferred
Stock issuable upon exercise of the Warrants, the Common Stock issuable upon
such conversion shall be duly and validly issued, fully paid, non-assessable and
not subject to the preemptive rights of any shareholder.
12. Notices to Warrant Holders.
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Nothing contained in this Agreement shall be construed as
conferring upon the Holder or Holders the right to vote or to consent or to
receive notice as a shareholder in respect of any meetings of shareholders for
the election of directors or any other matter, or as having any rights
whatsoever as a shareholder of the Company. If, however, at any time prior to
the expiration of the Warrants and their exercise, any of the following events
shall occur:
(a) the Company shall take a record of the holders of
its shares of Series B Preferred Stock or Common Stock for the purpose
of entitling them to receive a dividend or distribution payable
otherwise than in cash; or
(b) the Company shall offer to all the holders of its
Series B Preferred Stock or Common Stock any additional shares of
capital stock of the Company or securities convertible into or
exchangeable for shares of capital stock of the Company, or any option,
right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or a
sale of all or substantially all of its property, assets and business
as an entirety shall be proposed; or
(d) reclassification or change of the outstanding
shares of Series B Preferred Stock or Common Stock (other than a change
in par
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value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), consolidation of the Company
with, or merger of the Company into, another corporation (other than a
consolidation or merger in which the Company is the surviving
corporation and which does not result in any reclassification or change
of the outstanding shares of Series B Preferred Stock or Common Stock,
except a change as a result of a subdivision or combination of such
shares or a change in par value, as aforesaid), or a sale or conveyance
to another corporation of the property of the Company as an entirety is
proposed; or
(e) the Company or an affiliate of the Company shall
propose to issue any rights to subscribe for shares of Series B
Preferred Stock or Common Stock or any other securities of the Company
or of such affiliates to all the shareholders of the Company;
then, in any one or more of said events, the Company shall give written notice
to the Holder or Holders of such event at least fifteen (15) days prior to the
date fixed as a record date or the date of closing the transfer books for the
determination of the shareholders entitled to such dividend, distribution,
convertible or exchangeable securities or subscription rights, options or
warrants, or entitled to vote on such proposed dissolution, liquidation, winding
up or sale. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be. Failure to give such notice or any
defect therein shall not affect the validity of any action taken in connection
with the declaration or payment of any such dividend or distribution, or the
issuance of any convertible or exchangeable securities or subscription rights,
options or warrants, or any proposed dissolution, liquidation, winding up or
sale.
13. Notices.
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All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered by facsimile, or e-mail, or mailed by registered or certified mail,
return receipt requested:
(a) If to a registered Holder of the Warrants, to Wit
Capital Corporation, 000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxx Xxxxxxxx (Facsimile: 212-253-4410) (E-mail Address:
xxxxxxxxx@xxxxxxxxxx.xxx); or
(b) If to the Company, to the address of the Company
set forth in the Registration Statement, Attention:_____________ (Fax:
________________) (E-mail Address: __________________).
14. Entire Agreement; Supplements and Amendments.
---------------------------------------------
This Agreement constitutes the sole and entire agreement of
the parties with respect to the subject matter hereof. The Company and the
Underwriters may from time to time supplement or amend this Agreement in order
to cure any ambiguity, to correct or supplement any provision contained herein
which may be defective or inconsistent with any provisions herein, or
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to make any other provisions in regard to matters or questions arising hereunder
which the Company and the Underwriters may deem necessary or desirable.
15. Successors.
-----------
All the covenants and provisions of this Agreement by or for
the benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.
16. Termination.
------------
This Agreement shall terminate at the close of business on
___________, 2002. Notwithstanding the foregoing, this Agreement will terminate
on any earlier date when all Warrants have been exercised and all Registrable
Securities have been resold to the public.
17. Governing Law.
--------------
This Agreement and each Warrant Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of Delaware
and for all purposes shall be construed in accordance with the laws of said
State.
18. Benefits of This Agreement.
---------------------------
Nothing in this Agreement shall be construed to give to any
person or corporation other than the Company, the Underwriters and any other
Holder any legal or equitable right, remedy or claim under this Agreement; and
this Agreement shall be for the sole and exclusive benefit of the Company, the
Underwriters and any other Holder.
19. Counterparts.
-------------
This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and such counterparts shall together constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
[SEAL] SANDBOX ENTERTAINMENT CORPORATION
By:
------------------------------------
Name:
Title:
Attest:
--------------------------
WIT CAPITAL CORPORATION
By:
------------------------------------
Name:
Title:
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