Exhibit 4(v)
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 ______________________, 1997
THIS CERTIFIES THAT for value received,
_________________________________, or his/her/its 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.
IPO shall mean a registered offering by the Company on Forms S-1, SB-1, or SB-2
(or successor forms) that results in proceeds to the Company of at least
$3,000,000 (net of offering expenses).
IPO Price shall mean the price per share at which the Company issues shares of
Common Stock in an IPO.
Term of this Warrant shall mean the period beginning on the date of initial
issuance hereof and ending on the third (3rd) anniversary of the Date of Initial
Issuance of this Warrant set forth above.
Warrant Price shall mean Two Dollars ($2.00) per share, subject to adjustment in
accordance with Section 5; provided, that upon and after the thirtieth (30th)
day following the consummation of an IPO, the Warrant Price shall be the IPO
Price if the IPO Price is greater than $2.00 per share.
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
2(c) below) at the date of such calculation, and
WP = the Warrant Price, as adjusted to the date of such
calculation.
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(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 bid and asked prices for
the Common Stock quoted in the Over-The-Counter Market Summary or the last
reported sale price of the Common Stock or the closing price quoted on the
NASDAQ National Market System or on any exchange on which the Common Stock is
listed, whichever is applicable, as published in the appropriate edition of the
Wall Street Journal for the five (5) trading days immediately prior to the date
of exercise of this Warrant; provided, however, that (i) 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 the fair market value of the Common Stock as determined by the Board of
Directors of the Company, acting in good faith, and (2) for the 30 day period
commencing on the consummation of an IPO the Current Market Price shall be the
IPO Price.
(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."
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 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.
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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.
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 Note 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.
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
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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. Warrant Price Adjustment. If an IPO (as defined herein) does not
close within one hundred eighty (180) days of the date of this Warrant, the
Warrant Price definition shall automatically be deleted and replaced with the
following:
Warrant Price shall mean Eighty Cents ($.80) per share,
subject to adjustment in accordance with Section 5.
9. Miscellaneous.
(a) 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 the address set forth on the
signature page of that certain Two Year Note and Warrant Purchase Agreement
between the Holder and Company of even date herewith, 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
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, 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.
(b) Governing Law. This Warrant shall be governed in all
respects by the laws of the State of Arizona as applied to agreements entered
into and performed entirely in the State of Arizona by residents thereof.
(c) Entire Agreement; Amendment. This Warrant constitutes the
sole and entire agreement of the parties with respect to the subject matter
hereof. Neither this Warrant nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed
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by the party against whom enforcement of any such amendment, waiver, discharge
or termination is sought.
(d) Counterparts. This Agreement may be executed in
counterparts, each of which shall be enforceable against the party actually
executing the counterpart, and both of which together shall constitute one
instrument.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly and authorized officer as of the date first written above.
THE COMPANY:
ATTEST: SANDBOX ENTERTAINMENT CORPORATION
By:________________________ By:________________________________
Its Secretary Its President
ACCEPTED:
HOLDER:
---------------------------------
[Name]
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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 ▇▇▇▇▇▇▇ 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(v) - Form Stock Subscription Agreement.
List of Purchasers and Number of Common Shares:
Purchaser Date Number of Shares
--------- ---- ----------------
The Little Family August 5, 1997 25,000
Trust
▇▇▇▇▇ ▇▇▇▇▇ August 12, 1997 20,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, September 25, 1997 5,500
M.D., FAAP, PC
Defined Benefits
Pension
▇▇▇▇▇ and ▇▇▇▇▇ September 25, 1997 2,750
▇▇▇▇▇, CPWROS
▇▇▇▇▇▇ ▇. and September 25, 1997 5,500
▇▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, JTWROS
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, September 25, 1997 2,750
D.D.S., P.C.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ September 25, 1997 5,500
▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇ September 25, 1997 5,500
Crandchildren's Trust
UAD 1/15/90
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ September 25, 1997 11,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ September 25, 1997 2,750
▇▇▇▇▇ and ▇▇▇▇▇ September 25, 1997 5,500
▇▇▇▇▇▇▇▇, JTWROS
Maxim Corporation, September 25, 1997 20,625
Ltd.
Art Beroff September 25, 1997 8,250
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