Exhibit 4(dd)
NOTE AND WARRANT PURCHASE AGREEMENT
THIS NOTE AND WARRANT PURCHASE AGREEMENT (this "Agreement") is made
effective as of January 14, 1998 by and between Sandbox Entertainment
Corporation, a Delaware corporation ("Sandbox"), and____________________________
("Purchaser"), whose address is__________________________________________
PREMISES: Sandbox desires to borrow $_____________ (the "Loan") from
Purchaser, and Purchaser is willing to make such Loan to Sandbox in
consideration of Sandbox issuing to Purchaser a Subordinated Promissory Note
evidencing the Loan in the form attached hereto as Exhibit I (the "Note") and a
warrant (the "Warrant"), a form of which is attached to this Agreement as
Exhibit II , to purchase the number of shares of the Common Stock, $.001 par
value, of Sandbox determined pursuant to this Agreement (the "Warrant Shares"),
on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, Sandbox and Purchaser agree as follows:
1. Issuance, Sale and Delivery of the Note and the Warrant. At the
Closing (defined in Section 2) Sandbox agrees to issue and deliver to Purchaser
and Purchaser agrees to receive from Sandbox the Note in consideration of
Purchaser making the Loan to Sandbox. Also in consideration of the Loan, Sandbox
will deliver to the Purchaser the Warrant, registered in the name of Purchaser,
within five (5) days after the effective date of the Registration Statement of
the Company on Form SB-2 initially filed with the Securities and Exchange
Commission on September 30, 1997, File No. 333-36787 (the "IPO"). The number of
Warrant Shares (as defined in the Warrant) shall be the number of shares of
Common Stock determined, after any stock split or reclassification effectuated
in connection with the IPO, by dividing the amount of the Loan set forth above
by eighty-five percent (85%) of the price per share at which Sandbox issues
shares of Series B Preferred Stock in the IPO. Prior to delivery of the Warrant
to Purchaser, Sandbox shall insert the number of Warrant Shares determined
pursuant to the preceding sentence.
2. Closing. The issuance and delivery of the Note to be delivered later
shall take place at the offices of Sandbox on January 14, 1998 at 10 a.m. local
time, or at such other location, date and time as may be agreed upon between
Purchaser and Sandbox (such transaction being the "Closing" and such date and
time being the "Closing Date"). At the Closing Sandbox shall issue and deliver
to Purchaser the Note. In exchange for such delivery, Purchaser shall deliver
its check payable to the order of "Sandbox Entertainment Corporation" in the
amount of the Loan, or a wire transfer of such amount, as agreed by the parties.
3. Representations and Warranties of Sandbox . Sandbox represents and
warrants to Purchaser as follows:
(a) Organization and Standing; Charter and Bylaws. Sandbox has
requisite corporate power and authority to own its property and to carry on its
business as presently conducted or as proposed to be conducted. Sandbox has all
requisite legal and corporate power to sell and issue the Note, Warrant and the
Warrant Shares to Purchaser and in all other respects to carry out and perform
its obligations under this Agreement.
(b) Authorization. All corporate action on the part of Sandbox
necessary for the authorization, execution, and delivery of this Agreement, and
performance of all of Sandbox's obligations hereunder, including issuance and
delivery of the Note, the Warrant and the Warrant Shares, shall have been taken
prior to the Closing.
(c) Corporate Law Status. When the Note, Warrant, and the
Warrant Shares have been issued, delivered and paid for in accordance with this
Agreement, the Note, and the Warrant, they will be validly issued, fully paid
and non-assessable and will be free and clear of all liens, charges,
restrictions, claims and encumbrances imposed by or through any act or omission
on the part of Sandbox. With the exception of the rights of first offer held by
the holders of the Series A Preferred Stock of Sandbox pursuant to Section 2.1
of that certain Investor Rights Agreement (the "Investor Rights Agreement")
dated as of February 13, 1996 among Sandbox and certain Investors (as defined
therein), for which the Company is seeking appropriate consents and waivers, the
issuance, sale or delivery of the Note, the Warrant and the Warrant Shares are
not subject to any preemptive right of stockholders of Sandbox or to any right
of first refusal or other right in favor of any person that has not been waived
in writing.
(d) Validity. This Agreement has been duly executed and
delivered by Sandbox and constitutes the legal, valid and binding obligation of
Sandbox, enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditor's rights generally, and
except as enforceability may be subject to general principles of equity, whether
applied in a court of equity or at law or by an arbitration panel.
4. Representations and Warranties of Purchaser. Purchaser represents
and warrants to Sandbox, and where so stated, promises as follows:
(a) Unregistered Securities. Purchaser understands that the
Note, the Warrant and the Warrant Shares (the "Securities") have not been
registered under the Securities Act of 1933 (the "Securities Act") or any state
securities laws (collectively, "Securities Laws") in reliance upon an exemption
from registration accorded for nonpublic offerings. Purchaser further recognizes
that the Securities may not be sold unless they and the transaction in which
they are to be sold has been registered under the Securities Laws or an
exemption from registration is available for such sale. Purchaser accepts that
the Securities will each bear a legend to that effect. Further, Purchaser
recognizes that Sandbox has made no representations as to registration of the
Securities under the Securities Laws.
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(b) Investment Intent. Purchaser is acquiring the Securities
for its own account for investment and not with a view to resale or
distribution. The Purchaser promises that it will not sell, hypothecate,
transfer or otherwise dispose of the Securities, or attempt so to do, unless
they have been registered, to the extent applicable, under the Securities Laws
or, in the opinion of counsel reasonably acceptable to Sandbox and its counsel,
an exemption from registration is available.
(c) Negotiation; Access to Information. The terms of
Purchaser's purchase of the Securities were established by negotiations between
Purchaser and Sandbox 's representative, and in connection therewith, Purchaser
was given access to the relevant information it requested concerning Sandbox 's
condition and operations, and the opportunity to ask questions of and receive
answers from Sandbox 's representatives. Purchaser is knowledgeable and
experienced in financial and business matters and, on the basis of the
information it received concerning Sandbox 's condition and operations,
Purchaser is in a position to make an informed investment decision concerning
its investment in the Securities and the risks attending such investment.
Further, in light of its financial position, Purchaser is able to bear the
economic risks of investment in the Securities.
(d) Accredited Investor. Purchaser acknowledges that he/she/it
is an "accredited investor" as defined in Rule 501 of Regulation D as
promulgated by the Securities and Exchange Commission under the Securities Act,
and shall submit to Sandbox such further assurances of such status as may be
reasonably requested by Sandbox.
(e) Legends; Stop Transfer Orders. Purchaser hereby consents
and agrees that Sandbox may imprint on any certificate evidencing the Securities
an appropriate legend or notification to the effect that such shares are not
freely transferable and may be transferred only in compliance with applicable
securities laws. Purchaser further consents and agrees that Sandbox may give
appropriate "stop order" instructions in this regard to any transfer agent for
the Securities.
(f) Compliance; Indemnity. Purchaser hereby expressly promises
not to offer for sale or sell any of the Securities, or any interest therein,
except in compliance with the Securities Act and other applicable securities
laws and regulations, including those of the State of Arizona. Purchaser hereby
promises to indemnify Sandbox , together with its officers and directors,
against any and all liabilities, losses, damages and expenses (including
reasonable attorney fees) arising (directly or indirectly) from or in connection
with Purchaser's disposition of any of the Securities, or any interest therein,
in violation of (or allegedly in violation of) applicable securities laws or
regulations, including all such expenses incurred in connection with the defense
against any such claim.
(g) Delivery of Investment Letter upon Exercise of Warrant. At
the request of Sandbox, Purchaser shall deliver upon exercise of the Warrant an
investment letter in form and substance substantially to the effect of Sections
4(a)-(f) above.
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5. Conditions to the Obligations of Purchaser. The obligation of
Purchaser to make the Loan and receive the Note and the Warrant on the Closing
Date is, at Purchaser's sole option, subject to satisfaction on or before the
Closing Date of the following conditions:
(a) Representations and Warranties to Be True. The
representations and warranties contained in Section 3 shall be true, complete
and correct on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date.
(b) Performance. Sandbox shall have performed and complied
with all agreements contained herein and required to be performed or complied
with by it prior to or at the Closing Date.
(c) Proceedings. All corporate and other proceedings to be
taken by Sandbox in connection with the transactions contemplated hereby and all
documents incident thereto shall be satisfactory in form and substance to
Purchaser and its counsel.
6. Conditions to the Obligations of Sandbox. The obligation of Sandbox
to issue the Note and the Warrant on the Closing Date is subject to satisfaction
on or before the Closing Date of the following condition:
(a) Consents and Waivers Received. Sandbox shall have obtained
all necessary consents and waivers from the Investors (as that term is defined
in the Investor Rights Agreement) pursuant to Section 2.1 of the Investor Rights
Agreement in connection with the issuance of the Note and the Warrant, including
but not limited to a consent to the treatment of the Warrant Shares as "Shares"
under the Investor Rights Agreement and a waiver of the rights of first offer
under the Investor Rights Agreement by the Investors in connection with the
issuance of the Note and Warrant.
7. Miscellaneous.
(a) Survival. All covenants, representations and warranties
made herein shall survive the Closing.
(b) Governing Law. This Agreement 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) Notices. Any notice or other document required or
permitted to be given or delivered to Purchaser shall be delivered at, or sent
by certified or registered mail to, Purchaser at the address written on the
first page of this Agreement, or to such other address as shall have been
furnished to Sandbox in writing by Purchaser. Any notice or other document
required or permitted to be given or delivered to Sandbox shall be delivered at
or sent by registered or
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certified mail to, Sandbox at 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, XX
00000, or to such other address as shall have been furnished in writing to
Purchaser by Sandbox. 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.
(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.
(e) Entire Agreement; Amendment. This Agreement constitutes
the sole and entire agreement of the parties with respect to the subject matter
hereof. Neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination
is sought.
(f) Investor Legal Fees. Sandbox agrees to pay the reasonable
legal fees of Purchaser in connection with this Agreement in an aggregate amount
not to exceed $1,000 for all Purchasers entering into Note and Warrant Purchase
Agreements in substantially the same form as this Agreement.
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: _______________________________
Title: _______________________________
PURCHASER:
______________________________________
By: __________________________________
By:_______________________________
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EXHIBIT I
SUBORDINATED PROMISSORY NOTE
EXHIBIT II
WARRANT
Schedule 4(dd) to the Form of Note and Warrant Purchase Agreement dated January
14, 1998 -
List of Purchasers and Amounts of Loans.
Purchaser and Address Amount of Loan
Sundance Venture Partners, L.P. $57,692.30
000 Xxxx Xxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Newtek Ventures II, L.P. $34,615.40
000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Wasatch Venture Corporation $57,692.30
c/o Zions First National Bank
Investment Division, Venture Capital Dept.
0 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
