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C3D INC.
$500,000
8.0% Series B Convertible Note due October 31, 2001
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PURCHASE AGREEMENT
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Dated as of November 11, 1999
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TABLE OF CONTENTS
Page
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1. AUTHORIZATION OF ISSUE OF THE CONVERTIBLE NOTE...........................................................1
2. PURCHASE AND SALE OF THE CONVERTIBLE NOTE................................................................1
2A. Purchase and Sale...............................................................................1
2B. Registration Rights Agreement...................................................................1
2C. Closing.........................................................................................1
3. CONDITIONS OF CLOSING....................................................................................2
3A. Registration Rights Agreement...................................................................2
3B. Articles of Incorporation and By-laws...........................................................2
3C. Purchase Permitted by Applicable Laws...........................................................2
3D. Compliance with Securities Laws.................................................................2
3E. Proceedings.....................................................................................3
3F. Material Changes................................................................................3
4. AFFIRMATIVE COVENANTS....................................................................................3
4A. Use of Proceeds.................................................................................3
4B. Books and Records; Inspection of Property.......................................................3
4C. Stock to be Reserved............................................................................3
4D. Corporate Existence; Maintenance of Properties..................................................4
4E. Further Assurances..............................................................................4
5. EVENTS OF DEFAULT........................................................................................4
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................................5
6A. Organization Qualification and ▇▇▇▇▇▇▇▇▇........................................................▇
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Related Matters...............................................................5
6C. Offering of the Convertible Note................................................................6
6D. Broker's or Finder's Commissions................................................................6
7. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR...........................................................6
8. CONVERSION OF THE CONVERTIBLE NOTE.......................................................................7
8A. Conversion Price................................................................................7
8B. Fractional Shares; Accrued Interest; Partial Conversion.........................................8
8C. Adjustment of Price and Adjustment of Number of Shares
of Common Stock Issuable upon Conversion........................................................8
8D. Stock to be Reserved............................................................................9
8E. Listing of Common Stock.........................................................................9
8F. Closing of Books................................................................................9
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9. DEFINITIONS.............................................................................................10
10. MISCELLANEOUS...........................................................................................10
10A. Provisions Applicable if the Convertible Note is Sold..........................................10
10B. Restrictive Legends............................................................................11
10C. Persons Deemed Owners..........................................................................11
10D. Successors and Assigns.........................................................................11
10E. Notices........................................................................................11
10F. Descriptive Headings...........................................................................12
10G. Governing Law; Consent to Jurisdiction.........................................................12
10H. Entire Agreement...............................................................................12
10I. Severability...................................................................................12
10J. Amendments.....................................................................................12
10K. Payment Date...................................................................................13
10L. Counterparts...................................................................................13
10M. Delivery by Facsimile..........................................................................13
EXHIBITS
Exhibit A Form of Convertible Note
Exhibit B Form of Registration Rights Agreement
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C3D INC.
PURCHASE AGREEMENT
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Dated as of
November 11, 1999
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To the Investor:
The undersigned, C3D INC., a Florida corporation (the "Company"), and
the investor listed on the signature page hereto (the "Investor"), hereby agree
as follows:
1. AUTHORIZATION OF ISSUE OF THE CONVERTIBLE NOTE.
The Company will authorize the issuance, sale and delivery of
its 8.0% Series B Convertible Note (the "Convertible Note") in the principal
amount of $500,000 and convertible into that number of shares of Common Stock of
the Company, par value $.001 per share (the "Common Stock"), as set forth in
Section 8 hereof, to mature on October 31, 2001 (the "Maturity Date") and to
bear interest on the unpaid balances thereof from the date of the Convertible
Note at the rate of 8.0% per annum payable in arrears in shares of Common Stock
until the principal thereof shall become due and payable. Such Convertible Note
shall be substantially in the form of Exhibit "A" attached hereto.
2. PURCHASE AND SALE OF THE CONVERTIBLE NOTE.
2A. Purchase and Sale. The Company hereby agrees to sell to
the Investor and, subject to the terms and conditions herein set forth, the
Investor agrees to purchase from the Company, the Convertible Note. The purchase
price of the Convertible Note purchased and sold hereunder shall be 100% of the
principal amount thereof.
2B. Registration Rights Agreement. The Convertible Note shall
be issued pursuant to the terms and conditions of that certain Registration
Rights Agreement, of even date herewith, by and between the Company and the
Investor (the "Registration Rights Agreement") under which the Investor has been
granted certain rights with respect to the registration of Common Stock.
2C. Closing. The purchase and delivery of the Convertible Note
shall take place at a closing (the "Closing") at the offices of Blank Rome
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, at 10:00 a.m., local time, on November 11, 1999 (or at
such other time and place or on such other Business Day thereafter as the
parties hereto shall agree) (herein called the "Closing Date"). On the Closing
Date, the Company will deliver the Convertible Note payable to or registered in
the name of the Investor and/or the Investor's nominee or other designee
specified on the signature page hereof, against receipt of the purchase price
therefor by wire transfer to the Company c/o Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP,
Commerce Bank New Jersey, Attention: CBPA, Account Number ▇▇▇▇▇▇▇▇, ABA Routing
Number ▇▇▇▇▇▇▇▇▇. If at the Closing, the Company shall, in breach of this
Agreement, fail to tender to the Investor the Convertible Note or if any of the
conditions specified in Section 3 hereof shall not have been satisfied or waived
by the Investor, the Investor shall, at its election, be relieved of all further
obligations under this Agreement without thereby waiving any other rights it may
have by reason of such failure or such non-fulfillment. Notwithstanding anything
to the contrary, the obligation of the Company to deliver the Convertible Note
to the Investor at the Closing shall be conditioned on the concurrent receipt by
the Company of the purchase price of the Convertible Note from the Investor.
3. CONDITIONS OF CLOSING.
The Investor's obligation to purchase and pay for the
Convertible Note to be purchased by it hereunder is subject to the satisfaction,
on or before the Closing Date, of the following conditions:
3A. Registration Rights Agreement. The Investor shall have
received a fully executed counterpart of the Registration Rights Agreement,
substantially in the form of Exhibit "B" attached hereto, and such Registration
Rights Agreement shall be in full force and effect and no term or condition
thereof shall have been amended, waived or modified.
3B. Articles of Incorporation and By-laws. The Investor shall
have received a certificate, dated the Closing Date, of the Secretary of the
Company attaching (i) true and complete copies of the Articles of Incorporation
of the Company as filed with the appropriate state officials of its jurisdiction
of incorporation with all amendments thereto, (ii) true and complete copies of
the By-laws of the Company in effect as of such date, (iii) certificates of good
standing of the appropriate officials of the jurisdiction of incorporation of
the Company, and (iv) resolutions of the Board of Directors of the Company
authorizing (a) the execution, delivery and performance of this Agreement, (b)
the authorization, issuance and delivery of the Convertible Note and (c) the
reservation for issuance of a sufficient number of shares of Common Stock into
which the Convertible Note may be converted to permit such conversion.
3C. Purchase Permitted by Applicable Laws. The purchase of and
payment for the Convertible Note shall not be prohibited by any applicable law
or governmental regulation (including, without limitation, Regulations G, T and
X of the Board of Governors of the Federal Reserve System) and shall not subject
the Investor to any tax, penalty, liability or other onerous condition under or
pursuant to any applicable law or governmental regulation.
3D. Compliance with Securities Laws. The offering and sale of
the Convertible Note under this Agreement shall have complied with all
applicable requirements of federal and state securities laws.
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3E. Proceedings. All required corporate and other proceedings
taken or required to be taken in connection with the transactions contemplated
hereby and all documents incident thereto shall be reasonably satisfactory in
form and substance to the Investor and its counsel.
3F. Material Changes. Since October 15, 1999, there shall not
have been any changes in the business of the Company which could reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect,
nor shall there have been any development or discovery or any material
contingency or other liability which could have such effect.
4. AFFIRMATIVE COVENANTS.
All covenants contained herein shall be given independent
effect so that if a particular action or condition is not permitted by any such
covenant, the fact that such action or condition would be permitted by an
exception to, or otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Default if such action is taken or condition
exists. The provisions of this Section 4 are for the benefit of the Investor so
long as it holds the Convertible Note and for the benefit of each other
successor holder of the Convertible Note.
4A. Use of Proceeds. The proceeds of the sale of the
Convertible Note shall be used to fund (i) capital expenditures, payroll and
working capital requirements for the completion of prototype development and the
commercial release of the Clear Card and mass storage product(s), (ii) costs
associated with the creation of new facilities in the United States and the
relocation of existing facilities and certain key scientists to the United
States, and (iii) expenditures for maintaining existing patents and for filing
new patent applications.
4B. Books and Records; Inspection of Property. The Company
will keep proper books of record and account in which full, true and correct
entries in conformity in all material respects with GAAP shall be made of all
dealings and transactions in relation to their business and activities. The
Company will, upon reasonable advance notice, permit any Person representing the
holder of the Convertible Note and designated in writing by such holder, at such
holder's expense, to visit and inspect any of the properties of the Company
during normal business hours in a manner which does not unduly interrupt the
normal course of business, to examine the corporate, financial and operating
records of the Company and make copies thereof or extracts therefrom and to
discuss the affairs, finances and accounts of any of such corporations with the
directors, officers and independent accountants of the Company, all at such
reasonable times and as often as the holders may reasonably request.
4C. Stock to be Reserved. The Company covenants that all
shares of Common Stock that may be issued upon conversion of the Convertible
Note will, upon issuance, be validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issuance thereof. The
Company further covenants that during the period within which the Convertible
Note may be converted, the Company will at all times have authorized and
reserved a sufficient number of shares of Common Stock to permit the conversion
of the Convertible Note.
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4D. Corporate Existence; Maintenance of Properties. The
Company (i) will do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence, rights and franchises,
(ii) will cause its properties and the properties to be maintained and kept in
good condition, repair and working order (ordinary wear and tear excepted) and
will cause to be made all necessary repairs, renewals, replacements, betterments
and improvements thereto, and (iii) will qualify and remain qualified to conduct
business in each jurisdiction where the nature of the business of or ownership
of property by the Company may require such qualification and where the failure
to be so qualified would have a Material Adverse Effect.
4E. Further Assurances. The Company shall cooperate with the
Investor and execute such further instruments and documents as the Investor
shall reasonably request to carry out to the satisfaction of the Investor the
transactions contemplated by this Agreement.
5. EVENTS OF DEFAULT.
If any of the following events shall occur and be continuing
for any reason whatsoever (and whether such occurrence shall be voluntary or
involuntary or come about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any
principal or interest of or premiums (if any) on the Convertible Note when the
same shall become due, either by the terms thereof or otherwise as herein
provided and such default shall continue unremedied for ten (10) or more days
after notice by the Investor;
(ii) the Company defaults, in the performance or
observance of any of the agreements contained in Section 4 or in the performance
or observance of any other agreement, term or condition contained herein or in
the Related Agreements and any such default shall not have been remedied within
thirty (30) days (or if such default is not reasonably capable of cure within
thirty (30) days, the Company will have taken steps reasonably calculated to
cure such default within such thirty (30) day period) after such default shall
first become known to any officer of the Company;
(iii) any decree or order for relief in respect of
the Company is entered under any Bankruptcy Law of any jurisdiction; or the
Company petitions or applies to any tribunal for, or consents to, the
appointment of, or taking possession by, a trustee, receiver, custodian,
liquidator or similar official of the Company, of any substantial part of the
assets of the Company, or commences a voluntary case under the Bankruptcy Law of
the United States or any proceedings relating to the Company under the
Bankruptcy Law of any other jurisdiction;
then upon the occurrence and during the continuation of (a) any Event of Default
described in clause (i) above with respect to the Convertible Note, the holder
of the Convertible Note may, by written notice to the Company, declare the
Convertible Note to be, and the same shall thereupon be and become, forthwith
due and payable, together with the interest accrued thereon, without
presentment, further demand, protest or other requirements of any kind, all of
which are hereby expressly waived by the Company; (b) any Event of Default
described in clause (ii) above with respect to the Convertible Note, the holder
of the unpaid principal amount of the Convertible Note may, at its option and in
addition to any right, power or remedy permitted by law or equity, by notice in
writing to the Company, declare the Convertible Note to be, and the same shall
thereupon be and become, forthwith due and payable, together with interest
accrued thereon; and (c) any Event of Default described in clause (iii) above
with respect the Convertible Note, the unpaid principal amount of and accrued
interest on the Convertible Note outstanding shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the
Company.
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6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Investor that:
6A. Organization Qualification and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida and is duly qualified to do business as a foreign
corporation and in good standing in each jurisdiction in which the character of
its properties or the nature of its business makes such qualification necessary,
except where the failure to so qualify would not have a Material Adverse Effect.
The Company has the corporate power to own its properties and to carry on its
business as now being conducted. The Company has all requisite corporate power
and authority to enter into this Agreement, to issue and sell the Convertible
Note hereunder, and to issue the shares of Common Stock upon conversion of the
Convertible Note and has the requisite corporate power and authority to carry
out the transactions contemplated hereby and thereby to be performed by it, and
the execution, delivery and performance hereof and thereof have been duly
authorized by all necessary corporate action. This Agreement constitutes, and
each other agreement or instrument (including the Convertible Note) executed and
delivered by the Company pursuant hereto or thereto or in connection herewith or
therewith will constitute, legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws or by the
application of principles of equity.
6B. Capital Stock and Related Matters. The authorized capital
stock of the Company consists of 50,000,000 shares of Common Stock. As of
November 11, 1999, after giving effect to the completion of the Asset Purchase
Agreement, dated as of September 30, 1999, by and among the Company,
Constellation 3D Technology Limited, a British Virgin Islands corporation, TriD
Store, Inc., a Delaware corporation, and TriD IP S.A., a Luxembourg corporation,
not more than 15,000,000 shares of Common Stock will be issued and outstanding.
Except for (i) the right to acquire Common Stock granted to MBA-on Demand,
L.L.C. pursuant to that certain Engagement Letter dated May 23, 1999, (ii) the
options granted to General Itzhak ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, each directors of
the Company, to purchase 100,000 shares and 75,000 shares, respectively, of
Common Stock (the "Options") pursuant to a resolution of the Compensation
Committee of the Board of Directors dated June 17, 1999, and (iii) the warrants
to purchase 100,000 shares of Common Stock (the "Warrants") granted to Moorwood
Investment Limited, a British Virgin Islands Corporation ("Moorwood") pursuant
to that certain Letter Agreement, of even date herewith, by and between the
Company and Moorwood (the "Letter Agreement"), there are no outstanding
subscriptions, options, warrants, convertible securities in regard to the
authorized but unissued Common Stock. All issued and outstanding shares of
Common Stock shall have been duly and validly issued, fully paid and
nonassessable.
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6C. Offering of the Convertible Note. The offer, sale and
issuance of the Convertible Note pursuant to this Agreement does not require
registration of such security under the Securities Act or registration or
qualification under any applicable state "blue sky" or securities laws (or if so
required, has been so registered or qualified).
6D. Broker's or Finder's Commissions. Except for the fee in
the amount of 20% of all monies raised pursuant to this Agreement to be paid by
the Company to Moorwood pursuant to the Letter Agreement, no broker's or
finder's fee or commission will be payable by the Company with respect to the
issuance and sale of the Convertible Note or the transactions contemplated
hereby.
7. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
The Investor represents and warrants that: (i) it is acquiring
the Convertible Note to be purchased by it hereunder for its own account for the
purpose of investment and not with a view to or for sale in connection with any
distribution thereof; provided, however, that nothing herein contained shall
prevent the Investor, upon written notice to the Company explaining in
reasonable detail the transfer or proposed transfer, from selling or
transferring the Convertible Note in any transaction that, in the opinion of its
special counsel, is exempt from the registration provisions of the Securities
Act; (ii) it has full power and authority to enter into and perform its
obligations under this Agreement and that this Agreement has been duly
authorized, executed and delivered by a Person authorized to do so; (iii) it has
carefully reviewed the representations and warranties concerning the Company,
its business and its personnel; the Company has made available to it any and all
written information which it has requested and has answered to such Investor's
satisfaction all inquiries made by it; (iv) it has adequate net worth and means
of providing for its current needs and personal contingencies to sustain a
complete loss of its investment in the Company; (v) its overall commitment to
investments which are not readily marketable is not disproportionate to its net
worth; (vi) its investment in the Convertible Note will not cause such overall
commitment to become excessive; (vii) it has not relied upon any financial
projections received from the Company in connection with the transactions
contemplated by this Agreement; (viii) it is an Accredited Investor within the
definition set forth in Rule 501(a) promulgated under the Securities Act; (ix)
it is not making this investment as a result of any form of general solicitation
or general advertising; (x) this Agreement constitutes the valid and binding
obligation of the Investor enforceable in accordance with its terms; and (xi)
the execution of and performance of the transactions contemplated by this
Agreement and compliance with its provisions by it will not violate any
provision of law applicable to the Investor and will not conflict with or result
in any breach of any of the terms, conditions or provisions of, or constitute a
default under any agreement or other instrument to which such Investor is a
party or by which he is bound, or any decree, judgment, order, statute, rule or
regulation application to it.
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8. CONVERSION OF THE CONVERTIBLE NOTE.
8A. Conversion Price. (i) Subject to and upon compliance with
the provisions hereof, the holder of the Convertible Note shall have the right,
at such holder's option, at any time after May 11, 2000 to convert all or any
part of the principal amount of such Convertible Note into Common Stock, subject
to the provisions of subsection 8A(ii) below, at the price of the lesser of (A)
the average Market Price of the Common Stock as posted on the NASD OTC Bulletin
Board over a period of twenty (20) trading days preceding any applicable date of
conversion (the "Conversion Date") less a discount of 20%, or (B) the average
Market Price of the Common Stock as posted on the NASD OTC Bulletin Board over a
period of twenty (20) days preceding any applicable Conversion Date (such price
being referred to herein as the "Initial Conversion Price"), provided that, in
the event of (A) above, no discount shall apply unless such average market price
of the Common Stock is at least $5.00 per share, or, in case an adjustment of
such price has taken place pursuant to the further provisions of this Section 8,
then at the price as last adjusted and in effect at the date such Convertible
Note is surrendered for conversion (such Conversion Price or (if any adjustment
has been made pursuant to this Section 8) such price as last adjusted, as the
case may be, being referred to herein as the "Conversion Price").
(ii) Subject to and upon compliance with the
provisions hereof, the holder of the Convertible Note shall have the right to
convert, to the extent permissible under the Securities Act, (A) 40% of the
aggregate principal amount of the Convertible Note into Registered Securities
(as defined in the Registration Rights Agreement) on or after May 11, 2000, such
percentage increasing by increments of 10% monthly on the eleventh of each month
until November 11, 2000, at which time the holder of Convertible Note shall have
the right to convert all of the principal amount of the Convertible Note into
Registered Securities, or (B) all of the principal amount of the Convertible
Note in the event that the Company enters into a registration rights agreement
with Sands Brothers which contains terms more favorable than those provided
herein; provided, that in the event that the Company fails to register the
necessary shares of Common Stock to comply with the above, but not in the event
that such registration is not permissible under the Securities Act in the
opinion of the Securities and Exchange Commission after best efforts to register
such shares have been made by the Company, the holder of the Convertible Note
shall be entitled to receive the value in cash of an additional two percent (2%)
of the Registered Securities such holder was entitled to receive pursuant to the
terms hereof for the first thirty (30) days and three percent (3%) of such
Registered Securities for each thirty (30) days thereafter until the Company has
fully complied with this Section 8 and the terms and conditions of the
Registration Rights Agreement. For example, assuming a Conversion Price of $16
per share, the Investor would be entitled to receive $4,000 in cash for the
first thirty (30) days after May 11, 2000 calculated as follows: $200,000 (40%
of the Convertible Note) divided by $16 (Conversion Price) equals 12,500 shares,
multiplied by 2% penalty equals 250 additional shares of Registered Securities,
multiplied by $16 equals $4,000. In accordance with the terms of the
Registration Rights Agreement, the Company shall as expeditiously as practicable
after the Closing Date prepare and file with the Securities and Exchange
Commission a registration statement under the Securities Act, as more fully
described in the Registration Rights Agreement.
(iii)In order to exercise such conversion right the
holder shall surrender (in person or by mail) the Convertible Note to the
Company at its office designated in subsection 10E (or such other office or
agency as the Company may designate by notice in writing to the holder of the
Convertible Note), together with a written notice that the holder elects to
convert the Convertible Note, or a specified principal amount thereof, in
accordance with the provisions of this Section 8. Such notice shall also state
the name or names (with addresses) in which the certificate or certificates for
Common Stock shall be issued. To the extent permitted by law, such conversion
shall be deemed to have been effected and the Conversion Price shall be
determined as of the close of business on the date by which the events set forth
in this subsection 8A(iii) have occurred. The Convertible Note surrendered for
conversion shall be accompanied by the necessary instruments of transfer
thereof.
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8B. Fractional Shares; Accrued Interest; Partial Conversion.
No fractional shares shall be issued upon conversion of the Convertible Note. At
the time of the conversion, the Company shall pay in cash all interest accrued
and unpaid on the principal amount of the Convertible Note or specified portion
thereof surrendered for conversion to the date upon which the conversion is
deemed to take place as provided in subsection 8A.
8C. Adjustment of Price and Adjustment of Number of Shares of
Common Stock Issuable upon Conversion.
(i) If the number of shares of Common Stock
outstanding at any time hereafter 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 Conversion Price shall be appropriately decreased so that the number of
shares of Common Stock issuable on conversion of the Convertible Note shall be
increased in proportion to such increase in outstanding shares.
(ii) If at any time hereafter 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
Conversion Price shall be appropriately increased so that the number of shares
of Common Stock issuable on conversion of the Convertible Note shall be
decreased in proportion to such decrease in outstanding shares.
(iii) If at any time hereafter any reorganization,
reclassification of the capital stock of the Corporation (other than a change in
par value or from par value to no par value or from no par value to par value or
as a result of a stock dividend or subdivision, split-up or combination
of-shares), consolidation or merger (including a merger in which the Company is
the surviving entity), then the Convertible Note shall (in lieu of being
convertible for shares of Common Stock) after such reorganization,
reclassification, consolidation or merger be exercisable into the kind and
number of shares of stock or other securities or property (including cash) of
the Company or of the corporation resulting from such consolidation or surviving
such merger to which the holder of the number of shares of Common Stock
deliverable (immediately prior to the time of such reorganization,
reclassification, consolidation or merger) upon conversion of the Convertible
Note would have been entitled upon such reorganization, reclassification,
consolidation or merger. The provisions of this subsection shall similarly apply
to successive reorganizations, reclassifications and other transactions
contemplated above.
(iv) All calculations under this subsection 8D shall
be made to the nearest cent ($.01) or to the nearest one-tenth of a share, as
the case may be.
(v) In any case in which the provisions of this
subsection 8D shall require that an adjustment of the Conversion Price shall
become effective immediately after a record date for an event, the Company may,
until the occurrence of such event, defer issuing to the holder of the
Convertible Note converted after such record date and before the occurrence of
such event the additional shares of capital stock issuable upon such conversion
by reason of the adjustment required by such event over and above the shares of
capital stock issuable upon conversion before giving effect to such adjustment;
provided, however, that the Company shall deliver to such holder a due ▇▇▇▇ or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
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(vi) (a) If any event occurs of the type
contemplated by the provisions of this subsection 8D but not expressly provided
for by such provisions, the Board of Directors of the Company will make
appropriate adjustments to the terms and conditions of the Convertible Note as
may be necessary fully to carry out the adjustments contemplated by this
subsection 8D.
(b) The Company will not, by amendment of
its Articles of Incorporation or Bylaws or through any reorganization, transfer
of assets, reclassification, merger, dissolution, issue or sale of securities or
otherwise, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed by the Company hereunder but will at all times
in good faith assist in the carrying out of all the provisions hereof and in the
taking of all such actions as may be necessary or appropriate in order to
protect the rights of the holder of the Convertible Note against impairment.
8D. Stock to be Reserved. The Company will at all times
reserve, free from any preemptive rights, and keep available out of its
authorized Common Stock, solely for the purpose of issue upon the exercise of
Convertible Note as herein provided, such number of shares of Common Stock as
shall then be issuable upon the conversion of the Convertible Note. The Company
covenants and agrees that all shares of Common Stock which shall be so issuable
will, upon issuance, be duly authorized and issued, fully paid and nonassessable
and, where required pursuant to Subsection 8A(ii), registered under the
Securities Act.
8E. Listing of Common Stock. If any shares of Common Stock
required to be reserved for purposes of conversion of the Convertible Note
hereunder require listing on any securities exchange before such shares may be
issued upon exercise, the Company will cause such Common Stock to be duly listed
on such securities exchange immediately prior to the issuance of such shares.
8F. Closing of Books. The Company will not close its books
against the issuance or transfer of any shares of Common Stock issuable upon
conversion of the Convertible Note.
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9. DEFINITIONS.
For the purpose of this Agreement, and in addition to terms
defined elsewhere in this Agreement, the following terms shall have the
following meanings. In addition, all terms of an accounting character not
specifically defined herein shall have the meanings assigned thereto by
accounting principles generally accepted in the United States of America.
"Bankruptcy Law" shall mean any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law, whether now or hereafter in effect.
"Business Day" shall mean any day which is not a Saturday, Sunday or
day on which banks are authorized by law to close in the State of New York.
"Default" shall mean any of the events specified in Section 5 hereof,
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any of these conditions, event or act has been satisfied.
"Events of Default" shall mean any of the events specified in Section
5, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act.
"Market Price" shall mean the average of the high and low bid prices
for the Common Stock on a given trading day as reported on the NASD OTC Bulletin
Board.
"Material Adverse Effect" shall mean (i) a material adverse effect on
the business, condition (financial or other), assets, properties, rights,
operations or prospects of the Company or (ii) any effect which could materially
adversely affect the ability of the Company to perform its obligations under
this Agreement.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"Related Agreements" shall mean the Letter Agreement, the Warrants, the
Convertible Note and the Registration Rights Agreement.
"Securities Act" shall mean the United States Securities Act of 1933,
as amended.
10. MISCELLANEOUS.
10A. Provisions Applicable if the Convertible Note is Sold.
The parties acknowledge that, subject to compliance with applicable securities
laws, the Investor shall be free to transfer the Convertible Note without
restriction. In the event that the Investor should sell or otherwise transfer
the Convertible Note or any part thereof to any Person other than the Company,
and such holder shall have designated in writing the address to which
communications with respect to the Convertible Note shall be mailed, all
notices, certificates, requests, statements and other documents required to be
delivered to the Investor by any provision hereof by reason of the holding of
the transferred Convertible Note shall also be delivered to such holder at such
address.
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10B. Restrictive Legends. The Convertible Note shall bear the
following (or substantially equivalent) legend on the face or reverse side
thereof:
"THE CONVERTIBLE NOTE REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAWS, AND THIS CONVERTIBLE NOTE MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT AND SUCH LAWS AND THE RESPECTIVE
RULES AND REGULATIONS THEREUNDER."
In addition, the shares of Common Stock issuable upon conversion of the
Convertible Note shall bear at the time of issuance a legend in substantially
the form set forth above and any legend required by the state securities or
"Blue Sky" laws of any state in which a registered holder thereof is resident,
unless such shares have been registered under the Securities Act.
10C. Persons Deemed Owners. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name the
Convertible Note is registered as the owner and holder of such Convertible Note
for the purpose of receiving payment of principal of (and premium, if any) and
interest on such security and for all other purposes whatsoever, whether or not
such Convertible Note shall be overdue, and the Company shall not be affected by
notice to the contrary.
10D. Successors and Assigns. Except as otherwise provided
herein, all covenants and agreements in this Agreement contained by or on behalf
of the parties hereto shall bind and inure to the benefit of the respective
successors, transferees and assigns of the parties hereto whether so expressed
or not.
10E. Notices. All communications provided for hereunder shall
be sent by first class mail, overnight courier or by fax with hard copy by first
class mail or overnight courier and, if to the Investor, addressed to it c/o
Moorwood Investment Limited, Bison Court, P.O. Box 8460, Road Town, Tortola,
British Virgin Islands, telecopy number (▇▇▇) ▇▇▇-▇▇▇▇, with a copy (which shall
not constitute notice) to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, McGuire, Woods, Battle & ▇▇▇▇▇▇,
LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, telecopy
number (▇▇▇) ▇▇▇-▇▇▇▇; if to the Company, addressed to it at ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, telecopy number (▇▇▇) ▇▇▇-▇▇▇▇, with
a copy (which shall not constitute notice) to ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire, at Blank
Rome Comisky & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
telecopy number (▇▇▇) ▇▇▇-▇▇▇▇; or to such other address with respect to any
party as such party shall notify the other in writing; provided, however, that
any such communication to the Company may also, at the option of the Investor,
be either delivered to the Company at its address set forth above or to any
executive officer of the Company.
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10F. Descriptive Headings. The descriptive headings of the
several Sections and subsections of this Agreement are inserted for convenience
only and do not constitute a part of this Agreement.
10G. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS
BEING DELIVERED AND IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE
PARTIES SHALL BE GOVERNED BY, THE LAW OF SUCH STATE WITHOUT GIVING EFFECT TO THE
CHOICE OF LAW OR CONFLICTS OF LAW PRINCIPLES THEREOF. THIS AGREEMENT IS
EFFECTIVE ONLY WHEN DELIVERED AND ENTERED INTO BY THE INVESTOR IN THE STATE OF
NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY
AT ITS ADDRESS SET FORTH IN SUBSECTION 10E, SUCH SERVICE TO BECOME EFFECTIVE
THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE INVESTOR OR ANY HOLDER OF A SECURITY TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
10H. Entire Agreement This Agreement and the other writings
referred to herein or delivered pursuant hereto contain the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior and contemporaneous arrangements or understandings with respect thereto.
10I. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10J. Amendments. This Agreement may not be changed orally, but
only by an agreement in writing signed by the party against whom enforcement of
any waiver, change, modification or discharge is sought.
10K. Payment Date. Notwithstanding any provision of this
Agreement to the contrary, any payment on account of principal of (and premium,
if any) or interest on the Convertible Note which is due on a date which is not
a Business Day shall be paid on the next succeeding Business Day, and the amount
of interest included in any such payment shall be computed to the date on which
such payment is actually made.
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10L. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
10M. Delivery by Facsimile. This Agreement, the Related
Agreements, and each other agreement or instrument entered into in connection
herewith or therewith or contemplated hereby or thereby, and any amendments
hereto or thereto, to the extent signed and delivered by means of a facsimile
machine, shall be treated in all manner and respects as an original agreement or
instrument and shall be considered to have the same binding legal effect as if
it were the original signed version thereof delivered in person. At the request
of any party hereto or to any such agreement or instrument, each other party
hereto or thereto shall reexecute original forms thereof and deliver them to all
other parties. No party hereto or to any such agreement or instrument shall
raise the use of a facsimile machine to deliver a signature or the fact that any
signature or agreement or instrument was transmitted or communicated through the
use of a facsimile machine as a defense to the formation or enforceability of a
contract and each such party forever waives any such defense.
10O. Dispute Resolution. All claims, demands, disputes,
controversies, differences, or misunderstandings between the parties arising out
of, by virtue of, or in connection with, this Agreement shall first be
negotiated, in good faith, by the parties, and, if an acceptable resolution does
not result, shall then be submitted to, determined and finally settled by
arbitration before the International Chamber of Commerce (the "ICC"), in
accordance with the provisions of this Section 10O. The parties agree that the
rules of the ICC then obtaining for commercial arbitration shall govern any
arbitration under this Agreement, except that to the extent there is any
conflict between this Section 10O and such rules, this Section shall govern. The
panel shall be composed of three (3) arbitrators, with one (1) arbitrator being
appointed by each party. The two arbitrators so appointed shall appoint the
third. In the event that the arbitrators can not, after good faith discussions,
agree upon a third arbitrator, the third arbitrator shall be appointed by the
ICC. The decision and award of a majority of the arbitrators shall be the
decision and award of the panel. Such decision and award shall be final and
binding by the parties. All hearings and proceedings in the arbitration shall
take place in New York City, New York and shall be governed by the substantive
law of the State of New York. This agreement to arbitrate may be specifically
enforced by any party. At any time before a decision of the arbitration panel
has been rendered, the parties may resolve the matter before the panel by
settlement. Each party shall bear the fees of such party's witnesses and such
party's own counsel. The other fees and expenses of the arbitration shall be
borne in accordance with the arbitration award. In the absence of any award or
designation within the award, such costs and fees shall be borne equally by the
parties.
* * *
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers hereunto duly authorized as
of the date first above written.
C3D INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
President and Chief Executive Officer
WILBRO NOMINEES LIMITED
By: /s/
-------------------------------------
Name:
Title: Secretary
[SIGNATURE PAGE TO SERIES B CONVERTIBLE NOTE PURCHASE AGREEMENT
DATED NOVEMBER 11, 1999]
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