EXHIBIT 4(CC)
PROMOTIONAL SHARES LOCK-IN AGREEMENT
I. This Promotional Shares Lock-In Agreement ("Agreement"), which was
entered into the 6th day of February, 1998, by and between Sandbox
Entertainment Corporation ("Issuer"), whose principal place of business
is located at 0000 X. Xxxxxxxxx, Xxxxx 000, Xxxxxxx, XX 00000, and
_________, ("Security Holder") witnesses that:
A. The Issuer has filed an application with the Securities
Administrators of those States participating in the
Coordinated Equity Review Program adopted by the North
American Securities Administrators Association, Inc.,
("Administrators") to register certain of its Equity
Securities for sale to public investors who are residents of
those states ("Registration");
B. The Security Holder is the owner of the shares of common stock
or similar securities and/or possesses convertible securities,
warrants, options or rights which may be converted into, or
exercised to purchase shares of common stock or similar
securities of Issuer.
C. As a condition to Registration, the Issuer and Security Holder
("Signatories") agree to be bound by the terms of this
Agreement.
II. THEREFORE, the Security Holder agrees not to sell, pledge, hypothecate,
assign, grant any option for the sale of, or otherwise transfer or
dispose of, whether or not for consideration, directly or indirectly,
except in compliance with this Agreement, ____ PROMOTIONAL SHARES as
defined in the North American Securities Administrators Association
("NASAA") Statement of Policy on Promotional Shares and all
certificates representing stock dividends, stock splits,
recapitalizations, and the like, that are granted to, or received by,
the Security Holder while the PROMOTIONAL SHARES are subject to this
Agreement ("Restricted Securities"):
The Agreement shall be a Class B Agreement as defined in NASAA
Statement of Policy Regarding Promotional Shares, as amended April 27, 1997 and
shall provide that
(i) beginning two years following completion of the offering,
2 1/2% of Promotional Shares may be released from the Agreement each quarter;
and
(ii) on the fourth anniversary of the offering, all remaining
Promotional Shares shall be released from the Agreement.
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III. THEREFORE, the Signatories agree and will cause the following:
A. In the event of a dissolution, liquidation, merger,
consolidation, reorganization, sale or exchange of the
Issuer's assets or securities (including by way of tender
offer), or any other transaction or proceeding with a person
who is not a Promoter, which results in the distribution of
the Issuer's assets or securities ("Distribution"), while this
Agreement remains in effect that the Restricted Securities may
be transferred in connection with such transaction, provided
that the following shall apply:
1. All holders of the Issuer's Series A Preferred Stock
and Series B Preferred Stock (the "Preferred Stock")
will initially share on a pro rata, per share basis
in the Distribution, in proportion to the amount of
cash or other consideration that they paid per share
for their Preferred Stock (provided that the
Administrator has accepted the value of the other
consideration), until the shareholders who purchased
the Issuer's EQUITY SECURITIES pursuant to the public
offering ("Public Shareholders") have received, or
have had irrevocably set aside for them, an amount
that is equal to one hundred percent (100%) of the
public offering's price per share times the number of
shares of EQUITY SECURITIES THAT THEY PURCHASED
PURSUANT TO THE PUBLIC OFFERING AND WHICH THEY STILL
HOLD AT THE TIME OF THE Distribution, adjusted for
stock splits, stock dividends recapitalizations and
the like; and
2. All holders of the Issuer's EQUITY SECURITIES shall
thereafter participate on an equal, per share basis
times the number of shares of EQUITY SECURITIES they
hold at the time of the Distribution, adjusted for
stock splits, stock dividends, recapitalizations and
the like.
3. The Distribution may proceed on lesser or different
terms and conditions than the terms and conditions
stated in paragraphs 1 and 2 above if a majority of
the Preferred Stock that are not held by Security
Holders or their affiliates, vote, or consent by
consent procedure, to approve the lesser terms and
conditions.
B. In the event of a dissolution, liquidation, merger,
consolidation, reorganization, sale or exchange of the
Issuer's assets or securities (including by way of tender
offer), or any other transaction or proceeding with a person
who is a Promoter, which results in a Distribution while this
Agreement remains in effect, the Restricted Securities shall
remain subject to the terms of this Agreement.
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C. Restricted Securities may be transferred by will, the laws of
descent and distribution, the operation of law, or by order of
any court of competent jurisdiction and proper venue.
D. Restricted Securities of a deceased Security Holder may be
hypothecated to pay the expenses of the deceased Security
Holder's estate. The hypothecated Restricted Securities shall
remain subject to the terms of this Agreement. Restricted
Securities may not be pledged to secure any other debt.
E. Restricted Securities may be transferred by gift to the
Security Holder's family members, provided that the Restricted
Securities shall remain subject to the terms of this
Agreement.
F. With the exception of paragraph A.3 above, the Restricted
Securities shall have the same voting rights as similar EQUITY
SECURITIES not subject to the Agreement.
G. A notice shall be placed on the face of each stock certificate
of the Restricted Securities covered by the terms of the
Agreement stating that the transfer of the stock evidenced by
the certificate is restricted in accordance with the
conditions set forth on the reverse side of the certificate;
and
H. A typed legend shall be placed on the reverse side of each
stock certificate of the Restricted Securities representing
stock covered by the Agreement which states that the sale or
transfer of the shares evidenced by the certificate is subject
to certain restrictions until January , 2002 pursuant to an
agreement between the Security Holder (whether beneficial or
of record) and the Issuer, which agreement is on file with the
Issuer and the stock transfer agent from which a copy is
available upon request and without charge.
I. The term of this Agreement shall begin on the date that the
Registration is declared effective by the Administrators
("Effective Date") and shall terminate:
1. January , 2002; or
2. On the date the Registration has been terminated if
no securities were sold pursuant thereto; or
3. If the Registration has been terminated, the date
that checks representing all of the gross proceeds
that were derived therefrom and addressed to the
public investors have been placed in the U.S.
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Postal Service with first class postage affixed; or
4. On the date the securities subject to this Agreement
become "Covered Securities," as defined under the
National Securities Markets Improvement Act of 1996.
J. This Agreement to be modified only with the written approval
of the Administrator.
IV. THEREFORE, the Issuer will cause the following:
A. A manually signed copy of the Agreement signed by the
Signatories to be filed with the Administrators prior to the
Effective Date;
B. Copies of the Agreement and a statement of the per share
initial public offering price to be provided to the Issuer's
stock transfer agent;
C. Appropriate stock transfer orders to be placed with the
Issuer's stock transfer agent against the sale or transfer of
the shares covered by the Agreement prior to its expiration,
except as may otherwise be provided in this Agreement;
D. The above stock restriction legends to be placed on the
periodic statement sent to the registered owner if the
securities subject to this Agreement are uncertificated
securities.
Pursuant to the requirements of this Agreement, the Signatories have entered
into this Agreement, which may be written in multiple counterparts and each of
which shall be considered an original. The Signatories have signed the Agreement
in the capacities, and on the dates, indicated.
IN WITNESS WHEREOF, the Signatories have executed this Agreement.
SANDBOX ENTERTAINMENT CORPORATION
By
------------------------------- ---------------------------------
Signature of Shareholder
Name
-----------------------------
Title
---------------------------- ---------------------------------
Printed Name of Shareholder
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Schedule 4(cc) to the Form of Lock-In Agreement -
List of Security Holders and Dates of Agreements
Security Holder - Shares
--------------- ------
Xxxx Xxxxxx - 170,834
Xxxxx Xxxxx - 122,917
Xxxxxx Xxxxxxxxxxx - 122,917
Xxxxx Xxxxx - 8,423
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