Exhibit 10(k)
SUNDANCE STOCK PURCHASE AGREEMENT
THIS SUNDANCE STOCK PURCHASE AGREEMENT (the "Agreement") is made as of
the 11th day of November, 1996, by and among SANDBOX ENTERTAINMENT CORPORATION,
a Delaware corporation (the "Company"), which was formerly TRACER DESIGN, INC.,
an Arizona corporation (the "Predecessor"); SUNDANCE VENTURE PARTNERS, L.P., a
Delaware limited partnership ("Sundance"); WASATCH VENTURE CORPORATION
("Wasatch"); NEWTEK VENTURES II, L.P. ("Newtek"); and XXXXX XXXXXXXX
("Xxxxxxxx"); and XXXX X. XXXXXX, XXXXXX X. XXXXXXXXXXX AND XXXXX X. XXXXX
(collectively, the "Founders").
RECITALS
A. On February 13, 1996, the Predecessor entered into that certain
Series A Stock Purchase Agreement (the "Series A Stock Purchase Agreement") with
Wasatch and Newtek (collectively, the "Investors" as that term is defined under
the Series A Stock Purchase Agreement") pursuant to which the Investors agreed
to and did purchase 90,000 shares of Series A Preferred Stock of the
Predecessor, along with warrants for the purchase of 22,500 shares of Series A
Preferred Stock of the Predecessor, for a total purchase price of $450,000.
B. On February 13, 1996, the Predecessor also entered into that certain
Investor Rights Agreement (the "Investor Rights Agreement") with the Investors
in connection with the transactions contemplated by the Series A Stock Purchase
Agreement.
C. On February 13, 1996, the Predecessor also entered into that certain
Co-Sale Agreement (the "Co-Sale Agreement") with the Founders and the Investors
(the Investors are denominated as the "Purchasers" in the Co-Sale Agreement) in
connection with the transactions contemplated by the Series A Stock Purchase
Agreement (the Series A Stock Purchase Agreement, the Co-Sale Agreement and the
Investor Rights Agreement are collectively referred to herein as the
"Agreements"). Capitalized terms used and not otherwise defined in this
Agreement shall have the meanings ascribed to them in the Agreements.
D. Pursuant to that certain Xxxxxxxx Stock Purchase Agreement dated as
of February 28, 1996, Xxxx X. Xxxxxxxx III ("Xxxxxxxx") purchased 5,000 shares
of Series A Preferred Stock of the Predecessor and a Warrant for the purchase of
1,250 shares of Series A Preferred Stock of the Predecessor for a total purchase
price of $25,000 pursuant to the same terms and conditions as the Investors
under the Agreements.
E. Pursuant to an Agreement and Plan of Merger dated as of April 18,
1996 the Company and the Predecessor agreed to merge, with the Company as the
surviving corporation (the "Merger"). The Merger became effective on April 25,
1996, and pursuant thereto, the
Company assumed all assets, obligations, and liabilities of the Predecessor and
each share of Common and Preferred stock of the Predecessor was converted into
five (5) shares of Common or Preferred stock, $.001 par value, of the Company.
F. Pursuant to that certain Wasatch and Newtek Stock Purchase Agreement
dated as of May 6, 1996 (the "Wasatch and Newtek Stock Purchase Agreement"),
Wasatch purchased an additional 375,000 shares of Series A Preferred Stock of
the Company for a total purchase price of $300,000 pursuant to the same terms
and conditions as the Investors under the Agreements. In connection with the
Wasatch and Newtek Stock Purchase Agreement, Wasatch also purchased 87,500
shares of the Company's Series A Stock for a total exercise price of $175
pursuant to Wasatch's warrant dated as of February 13, 1996.
G. Pursuant to the Wasatch and Newtek Stock Purchase Agreement, Newtek
also purchased an additional 250,000 shares of Series A Preferred Stock of the
Company in exchange for a total purchase price of $200,000 pursuant to the same
terms and conditions as the Investors under the Agreements. In connection with
the Wasatch and Newtek Stock Purchase Agreement, Newtek also purchased 5,000
shares of the Predecessor's Series A Stock for a total exercise price of $50
pursuant to Newtek's warrant dated as of February 13, 1996.
H. Sundance wishes to purchase, and the Company is willing to sell to
Sundance, 562,500 shares of the Series A Preferred Stock of the Corporation (the
"Sundance Shares") for a total purchase price of $450,000 ($200,000 to be paid
by Sundance at Closing for the purchase of 250,000 shares and the balance to be
paid by Sundance on or before January 31, 1997 in installments of not less than
$50,000 for the purchase of the balance of the Sundance Shares at a per share
price of $.80).
I. Wasatch wishes to purchase, and the Company is willing to sell to
Wasatch 62,500 shares of the Series A Preferred Stock of the Corporation (the
"Wasatch Shares") for a total purchase price of $50,000.
J. Newtek wishes to purchase, and the Company is willing to sell to
Newtek 62,500 shares of the Series A Preferred Stock of the Corporation (the
"Newtek Shares") for a total purchase price of $50,000.
K. Xxxxx Xxxxxxxx ("Xxxxxxxx") wishes to purchase, and the Company is
willing to sell to Xxxxxxxx 62,500 shares of the Series A Preferred Stock of the
Corporation (the "Xxxxxxxx Shares") for a total purchase price of $50,000.
ACCORDINGLY, for good and valuable consideration, the receipt of which
are acknowledged by the parties, the parties agree as follows:
1. The Company agrees to issue to Sundance 562,500 shares of Series A
Preferred Stock of the Company in exchange for a payment by Sundance to the
Company of $450,000 ($200,000 to be paid by Sundance at Closing for the purchase
of 250,000 shares and the balance to
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be paid by Sundance on or before January 31, 1997 in installments not less than
$50,000 for the purchase of the balance of the Sundance Shares at a per share
price of $.80) pursuant to the same terms and conditions as the Investors under
the Agreements. Further, as of the Closing, Xxxxx X. Xxxxx shall be elected to
serve as a member of the Board of Directors of the Company, to serve until the
next annual meeting of shareholders or until his successor is qualified.
2. The Company agrees to issue to Wasatch 62,500 shares of Series A
Preferred Stock of the Company in exchange for a payment by Wasatch to the
Company of $50,000 pursuant to the same terms and conditions as the Investors
under the Agreements.
3. The Company agrees to issue to Newtek 62,500 shares of Series A
Preferred Stock of the Company in exchange for a payment by Newtek to the
Company of $50,000 pursuant to the same terms and conditions as the Investors
under the Agreements.
4. The Company agrees to issue to Xxxxxxxx 62,500 shares of Series A
Preferred Stock of the Company in exchange for a payment by Xxxxxxxx to the
Company of $50,000 pursuant to the same terms and conditions as the Investors
under the Agreements.
5. With respect to the securities issued under this Agreement (the "New
Securities"), the Company, the Founders, Sundance, Wasatch, Newtek and Xxxxxxxx
agree that Sundance, Wasatch, Newtek and Xxxxxxxx are parties to each of the
Agreements, that Sundance, Wasatch, Newtek and Xxxxxxxx are entitled to all of
the rights and benefits as an Investor or Purchaser under each of the
Agreements, and that Sundance, Wasatch, Newtek and Xxxxxxxx assume all of the
obligations and responsibilities of an Investor or Purchaser under each of the
Agreements.
6. The Company represents and warrants that, except as set forth in the
Schedule of Exceptions and on the amendments thereto, which amendments are
attached to this Agreement as Exhibit A, as of the date of this Agreement each
of the representations and warranties contained in Section 2 of the Series A
Stock Purchase Agreement are not materially inaccurate nor incomplete.
7. Sundance, Wasatch, Newtek and Xxxxxxxx represent warrant, and agree
that, as of the date of this Agreement and the closing described below, each of
the representations, warranties, and agreements contained in Section 3 of the
Series A Stock Purchase Agreement are accurate and complete as to each of them
and shall apply to the purchase by them of the New Securities.
8. This Agreement 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.
9. The closing(s) for the transactions contemplated by this Agreement
shall take place at such times and places as are mutually agreeable to the
Company, Sundance, Wasatch, Newtek
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and Xxxxxxxx. The parties agree that the closing for each of Sundance, Wasatch,
Newtek and Xxxxxxxx may occur at separate times. The Company's obligation to
close is conditioned upon its receipt of a consent and waiver from Xxxxxxxx to
the transactions contemplated hereby in form and substance acceptable to such
Xxxxxxxx and the Company.
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 THE SUNDANCE STOCK PURCHASE AGREEMENT]
THE COMPANY:
SANDBOX ENTERTAINMENT CORPORATION
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Title: President
------------------------------------
SUNDANCE:
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
WASATCH:
WASATCH VENTURE CORPORATION
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
Title: Secretary and Treasurer
------------------------------------
NEWTEK:
NEWTEK VENTURES II, L.P.
By: /s/ Xxxx Xxxx
------------------------------------
Title: General Partner
------------------------------------
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[SIGNATURE PAGE TO THE SUNDANCE STOCK PURCHASE AGREEMENT]
XXXXXXXX:
/s/ Xxxxx Xxxxxxxx
--------------------------------------
Xxxxx Xxxxxxxx
THE FOUNDERS:
/s/ Xxxx X. Xxxxxx
--------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxxxxx
/s/ Xxxxx X. Xxxxx
--------------------------------------
Xxxxx X. Xxxxx
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EXHIBIT A
AMENDMENT TO THE SCHEDULE OF EXCEPTIONS
2.1 The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as currently conducted.
True and accurate copies of the Company's Certificate of Incorporation and
Bylaws, each as amended and in effect at the Closing, have been delivered to
Sundance, Xxxxxxxx, Wasatch and Newtek.
-------------------------------------------------------
2.2 Upon Closing of the transactions contemplated by the Sundance Stock
Purchase Agreement, the following will be the outstanding capitalization of the
Company:
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. 65,767
---------
Total Common: 3,051,907
-----------------
(1) Little has the right to vote 250,000 shares held by Xxxxx and
250,000 shares held by Xxxxxxxxxxx.
B. Series A Preferred Stockholders
----------------------------------
Wasatch Venture Corporation 812,500
Newtek Ventures II, L.P. 375,000
Xxxx X. Xxxxxxxx III 31,250
---------
Total Series A Preferred: 1,218,750
Total Common/Preferred Outstanding: 4,270,657
C. Common Stock Options(2)
--------------------------
Shares Price
------ -----
Name Optioned Per Share Vesting Schedule
---- -------- --------- ----------------
Xxxxxx Xxxxxxx 57,970 $.10 11,590 shares on 8/1/96, 8/1/97 and 8/1/98;
11,600 shares on 8/1/99 and 8/1/00
10,000 $.10 2,000 shares on 10/22/97, 10/22/98,
10/22/99, 10/22/00, and 10/22/01
Xxxx Xxxxxx 86,970 $.10 17,390 shares on 8/1/96, 8/1/97 and 8/1/98;
17,400 shares on 8/1/99 and 8/1/00
10,000 $.10 2,000 shares on 10/22/97, 10/22/98,
10/22/99, 10/22/00, and 10/22/01
Xxxxxx Xxxxxx 115,960 $.10 23,190 shares on 8/1/96, 8/1/97, 8/1/98 and
8/1/99; 23,200 shares on 8/1/00
10,000 $.10 2,000 shares on 10/22/97, 10/22/98,
10/22/99, 10/22/00, and 10/22/01
Xxxx Xxxx 86,970 $.10 17,390 shares on 8/1/96, 8/1/97 and 8/1/98;
17,400 shares on 8/1/99 and 8/1/00
10,000 $.10 2,000 shares on 10/22/97, 10/22/98,
10/22/99, 10/22/00, and 10/22/01
Newtek Ventures II, L.P. 65,768 $.10 10,962 on 9/1/96, 3/1/97, 9/1/97, 3/1/98,
------ 9/1/98 and 10,958 on 3/1/99
Total Common Options: 453,638
D. Common Warrants
------------------
----------------
(2) All of the options listed in this section are pursuant to the 1995
Equity Incentive Plan.
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
Xxxxxxxx Xxxxxx 38,250 $.80 10/25/05
Xxxxxxx and Xxxxx
Xxxxxxxxx 76,500 $.80 10/25/05
Pickwick Group L.L.C. 38,250 $.80 10/25/05
Xxxxxxxx Xxxxxx, M.D. 76,500 $.80 10/25/05
--------
Total Common Warrants 535,500
TOTAL COMMON OPTIONS AND WARRANTS: 989,138
III. RESERVE
Type Number of Shares For What Reserved
---- ---------------- -----------------
Common 603,178 1995 Equity Incentive Plan
Common 535,500 Common Warrants
Common 1,218,750 Series A Preferred Stock
---------
Total Common Reserved: 2,357,428
IV. SUMMARY
Total Common Outstanding 3,051,907
Total Preferred Outstanding 1,218,750
Total Outstanding 4,270,657
Total Warrants/Options Outstanding 989,138
Total Common Outstanding - Fully Diluted(3) 5,259,795
2.25 The Company intends to use the proceeds from the sale of the New
Securities as follows:
----------------
(3) Assumes exercise of all outstanding warrants and options and
conversion of all outstanding preferred.
Purpose Estimated Total
Working Capital (includes equipment,
additional rent, salaries, telecommunications,
payables, travel) $450,000
Advertising and Marketing $150,000
