Exhibit 4.9
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of November
19, 2001 is made by and between Constellation 3D, Inc., a Delaware corporation
(the "Company") and Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP (the "Investor").
RECITALS:
A. The Company and the Investor desire to settle the entire outstanding and
unpaid balance due and owing the Investor as of the date of this Agreement in
the amount of $500,000 for legal services rendered by the Investor to the
Company (the "Fee").
B. In settlement of the Fee, the Investor desires to receive and the
Company desires to deliver, upon the terms and conditions stated in this
Agreement a Warrant (in the form of Exhibit A attached hereto) (the "Warrant")
to purchase 717,525 shares (such amount has been determined by dividing the Fee
by the five day volume weighted average price per share), of the Company's
common stock, par value $0.00001 (the "Common Stock").
In consideration of the premises and the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Investor hereby agree as follows:
ARTICLE I.
PURCHASE AND SALE OF SECURITIES
1.1 Delivery of the WarrantAt Delivery (as defined below), subject to the
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terms of this Agreement and the satisfaction or waiver of the conditions set
forth in Article VII, the Company shall issue and deliver to the Investor, and
the Investor shall receive from the Company in consideration for the settlement
of the Fee (subject to the Company's compliance with the terms hereof), the
Warrant to purchase 717,525 shares of the Common Stock (the "Shares").
1.2 PaymentThe Investor shall consider the Fee paid in full upon delivery
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by the Company to the Investor of the Warrant and compliance by the Company with
the terms contained herein (including all terms contained in Article V), and the
Company shall deliver the Warrant against written confirmation (the
"Confirmation") from the Investor that the Investor shall release the Fee and
consider it paid in full upon delivery of the Warrant and compliance with this
Agreement by the Company.
1.3 Delivery DateSubject to the satisfaction or waiver of the conditions
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set forth in Article VII hereof, the Company shall deliver the Warrant (the
"Delivery") no later than five business days after the Registration Statement is
declared effective by the SEC (the "Delivery Date"). The Delivery shall take
place at the offices of the Investor listed in Section 10.6. On the Delivery
Date, after receipt of Confirmation, the Company shall deliver the Warrant to
the Investor registered in the name of the Investor. In the event that the
Delivery Date has not occurred prior to April 30, 2002 (other than due to the
breach by the Investor), the Investor shall have the right to terminate this
Agreement and the Fee shall be due and owing.
ARTICLE II.
INVESTOR'S REPRESENTATIONS AND WARRANTIES
The Investor represents and warrants to the Company that:
2.1 Investment PurposeThe Investor is purchasing the Warrant and, if
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exercised, the Shares issuable upon exercise of the Warrant (collectively, the
"Securities") for its own account and not with a present view toward the public
sale or distribution thereof, except pursuant to sales registered or exempted
from registration under the Securities Act of 1933, as amended (the "Securities
Act"); provided, however, that by making the representation herein, the Investor
does not agree to hold any of the Securities for any minimum or other specific
term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the Securities Act; provided, further that the Investor does agree to sell not
more than 15,000 Shares during any one trading day.
2.2 Accredited Investor StatusThe Investor is an "accredited investor" as
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defined in Rule 501(a) of Regulation D and was not formed for the specific
purpose of acquiring the Securities.
2.3 Reliance on Exemptions. The Investor understands that the Securities
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are being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Investor's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Investor set forth herein in order to determine the
availability of such exemptions and the eligibility of the Investor to acquire
the Securities.
2.4 Information. The Investor has been furnished with all materials
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relating to the business, finances and operations of the Company, and materials
relating to the offer and sale of the Securities, that have been requested by
the Investor. The Investor has been afforded the opportunity to ask questions of
the Company. Neither such inquiries nor any other due diligence investigation
conducted by the Investor modifies, amends or affects the Investor's right to
rely on the Company's representations and warranties contained in Article III
below. The Investor acknowledges and understands that its investment in the
Securities involves a significant degree of risk.
2.5 Governmental Review. The Investor understands that no United States
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federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities or an
investment therein.
2.6 Transfer or Resale. The Investor understands that:
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(a) except as provided in Article V, the Securities have not been and
are not required to be registered under the Securities Act or any applicable
state securities laws and consequently, the Investor may have to bear the risk
of owning the Securities for an indefinite period of time because the Securities
may not be transferred unless: (i) the resale of the Securities is registered
pursuant to an effective registration statement under the Securities Act; (ii)
the Investor has delivered to the Company an opinion of counsel (in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that the Securities to be sold or transferred may be
sold or transferred pursuant to an exemption from such registration; (iii) the
Securities are sold or transferred pursuant to Rule 144 under the Securities
Act; or (iv) the Securities are sold or transferred to an affiliate (as defined
in Rule 144) of the Investor pursuant to an exemption from registration under
the Securities Act;
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(b) any sale of the Securities made in reliance on Rule 144 may be made
only in accordance with the terms of Rule 144 and, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the
Securities and Exchange Commission (the "SEC") thereunder; and
(c) except as set forth in Article V, neither the Company nor any other
person is under any obligation to register the Securities under the Securities
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder.
2.7 Legends. The Investor understands that until such time as (a) the
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Shares may be sold by the Investor under Rule 144(k) or (b) the resale of the
Shares has been registered under the Securities Act as contemplated by Article
V, the certificates representing the Shares shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for such Shares):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
The legend set forth above shall be removed and the Company shall issue a
certificate without the legend to Investor, in accordance with the terms of
Article V hereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and covenants to the Investor that:
3.1 Organization and Qualification. The Company is duly incorporated
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validly existing and in good standing under the laws of the State of Delaware,
with full power and authority (corporate and other) to own, lease, use and
operate its properties and to carry on its business as and where now owned,
leased, used, operated and conducted. The Company is duly qualified to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted by it makes such qualification necessary and to the
Company's knowledge, no proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification.
3.2 Authorization; Enforcement. (a) The Company has all requisite corporate
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power and authority to enter into and to perform its obligations under this
Agreement and the Warrant, to consummate the transactions contemplated hereby
and thereby and to issue the Securities in accordance with the terms hereof and
thereof, (b) the execution, delivery and performance of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby
(including without limitation the issuance of the Securities) have been duly
authorized by the Company's Board of Directors, and no further consent or
authorization of the Company, its Board of Directors, or its shareholders is
required, (c) this Agreement has been, and when issued the Warrant shall be,
duly executed by the
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Company, and (d) this Agreement constitutes, and when issued the Warrant shall
constitute, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with their terms, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, or moratorium or similar laws
affecting the rights of creditors generally and the application of general
principles of equity.
3.3 Capitalization. The authorized capital stock of the Company consists of
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100,000,000 shares of Common Stock, of which 50,189,824 shares were issued and
outstanding as of November 1, 2001. All of the outstanding shares of capital
stock are duly authorized, validly issued, fully paid and nonassessable and have
been issued in compliance with all federal and state securities laws. No shares
of capital stock of the Company are subject to preemptive rights or any other
similar rights of the shareholders of the Company or any liens or encumbrances
imposed through the actions or failure to act of the Company. There are no
stockholder agreements, voting agreements or other similar agreements with
respect to the Common Stock to which the Company is a party.
3.4 Issuance of SharesThe Warrant and the Shares are duly authorized and,
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upon issuance in accordance with the terms of this Agreement and the Warrant,
the Shares will be validly issued, fully paid and nonassessable, free from all
taxes, liens, claims, encumbrances and charges with respect to the issue
thereof, will not be subject to preemptive rights or other similar rights of
shareholders of the Company, and will not impose personal liability on the
holders thereof. No further approval or authority of the shareholders or the
Board of Directors of the Company is required for the issuance and sale of the
Securities to be sold by the Company as contemplated in this Agreement. Subject
to the accuracy of the Investor's representations and warranties in Article II
of this Agreement, the offer, sale, and issuance of the Securities in conformity
with the terms of this Agreement constitute transactions exempt from the
registration requirements of Section 5 of the Securities Act and from the
registration or qualification requirements of the laws of any applicable state
or United States jurisdiction. The Shares issuable upon exercise of the Warrant
have been reserved for issuance pursuant to the Warrant.
3.5 No Conflicts; No Violation.
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(a) The execution and delivery of this Agreement, the performance of
this Agreement and the consummation by the Company of the transactions
contemplated hereby (including, without limitation, the issuance of the
Securities), will not (i) conflict with or result in a violation of any
provision of its Certificate of Incorporation, as amended, or By-laws, as
amended, or (ii) violate or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which with notice or lapse of
time or both could become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture, patent, patent license, or instrument to which the Company is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including U.S. federal and state securities laws and
regulations and regulations of any self-regulatory organizations to which the
Company or its securities are subject) applicable to the Company or by which any
property or asset of the Company is bound or affected.
(b) The Company is not in violation of its Certificate of Incorporation,
as amended, or By-laws, as amended, and the Company is not in default (and no
event has occurred which with notice or lapse of time or both could put the
Company in default) under any agreement, indenture or instrument to which the
Company is a party or by which any property or assets of the Company are bound
or affected.
(c) The Company is not conducting its business in violation of any law,
ordinance or regulation of any governmental entity.
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(d) Except as specifically contemplated by this Agreement and as
required under the Securities Act and any applicable state securities laws or
any listing agreement with any securities exchange or automated quotation
system, the Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement in accordance
with the terms hereof, or to issue and sell the Securities in accordance with
the terms hereof. In the case of the issuance and sale of the Securities, all
consents authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof.
3.6 SEC Documents, Financial Statements. The Company has delivered to the
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Investor or the Investor has had access to, true and complete copies of all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") (all of the foregoing filed prior to
the date hereof and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein, being
hereinafter referred to as the "SEC Documents"). As of their respective dates,
the SEC Documents complied with the requirements of the Exchange Act or the
Securities Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the consolidated financial statements of the Company included
in the SEC Documents complied as to form with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with U.S. generally
accepted accounting principles, consistently applied, during the periods
involved (except (a) as may be otherwise indicated in such financial statements
or the notes thereto, or (b) in the case of unaudited interim consolidated
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present the consolidated financial position of
the Company as of the dates thereof and the consolidated results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set forth
in the financial statements included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than (x) liabilities incurred in the
ordinary course of business subsequent to the date of such financial statements,
(y) liabilities of the type not required under generally accepted accounting
principles to be reflected in such financial statements, and (z) obligations
under contracts and commitments not required under generally accepted accounting
principles to be reflected in such financial statements.
3.7 Absence of Certain Changes. Since September 30, 2001, there has not
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been (a) any material adverse change in or affecting the condition, financial or
otherwise, or in the earnings or assets of the Company, whether or not arising
in the ordinary course of business, (b) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company, or (c) any loss or
damage (whether or not insured) to the physical property or assets of the
Company.
3.8 Absence of Litigation. There is no action, suit, claim, proceeding,
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inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its officers or
directors, except as disclosed in the SEC Documents. The Company is not in
default with respect to any judgment, order or decree of any court or
governmental agency or instrumentality.
3.9 NASDAQ Compliance. The Company's Common Stock is registered pursuant to
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Section 12(g) of the Exchange Act and is listed on The Nasdaq National Market
("Nasdaq"), and the Company
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has taken no action designed to terminate the registration of the Common Stock
under the Exchange Act or delisting the Common Stock from Nasdaq. The Company is
not aware of, and has not received any notice of, any efforts or actions to
terminate the registration of the Common Stock under the Exchange Act or delist
the Common Stock from Nasdaq. The Company shall use its commercially reasonable
efforts to comply with all requirements of the National Association of
Securities Dealers, Inc. with respect to the issuance of the Warrant and the
Shares and the listing of the Shares on Nasdaq at all times during the period
beginning on the date hereof and ending two years from the date of effectiveness
of the Registration Statement (as defined in Section 5.1).
3.10 No Manipulation of Stock The Company has not taken and shall not, in
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violation of applicable law, take any action outside the ordinary course of
business that is designed to, or that might reasonably be expected to, cause or
result in unlawful manipulation of the price of the Common Stock to facilitate
the sale or resale of the Shares.
3.11 Transfer TaxesOn the Delivery Date, all stock transfer or other taxes
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(other than income taxes) which are required to be paid in connection with the
sale and transfer to the Investor of the Securities will be, or will have been,
fully paid or provided for by the Company.
3.12 No Integrated Offering. All offers and sales of capital stock of the
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Company before Delivery Date were at all relevant times duly registered under or
exempt from the registration requirements of the Securities Act and were duly
registered or subject to an available exemption from the registration
requirements of the applicable state securities or Blue Sky laws. Neither the
Company, nor any of its affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales in any security or
solicited any offers to buy any security under circumstances that would require
registration under the Securities Act of the issuance of the Securities to the
Investor. The issuance of the Securities to the Investor will not be integrated
with any other issuance of the Company's securities (past, current or future)
for purposes of the Securities Act or any applicable rules of Nasdaq.
3.13 No Brokers. The Company has taken no action which would give rise to
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any claim by any person for brokerage commissions, finder's fees or similar
payments relating to this Agreement or the transactions contemplated hereby.
3.14 Investment Company Status. The Company is not and on consummation of
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the transaction contemplated hereby the Company will not be an "investment
company," a company controlled by an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company" as such terms are defined in the Investment Company Act of 1940, as
amended.
3.15 Offering Materials. Other than the SEC Documents and except as
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provided herein, the Company has not distributed and shall not distribute prior
to the Delivery Date any offering material in connection with the offering and
sale of the Securities. The Company has not taken in the past nor shall it
hereafter take any action to sell, offer for sale or solicit offers to buy any
securities of the Company which would bring the offer, issuance or sale of the
Securities, as contemplated by this Agreement, within the provisions of Section
5 of the Securities Act, unless such offer, issuance or sale was or shall be
within the exemptions of Section 4 of the Securities Act.
ARTICLE IV.
COVENANTS
4.1 Best Efforts. The Company shall use all commercially reasonable efforts
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to satisfy in a timely fashion each of the conditions to be satisfied by it
under Article VII of this Agreement.
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4.2 Form D. If necessary the Company shall file on a timely basis a Notice
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of Sale of Securities on Form D with respect to the Securities, as required
under Regulation D of the Securities Act, and shall provide a copy thereof to
the Investor promptly after such filing.
4.3 Securities Laws Compliance. From and after the Delivery, the Company
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and the Investor shall each comply with all applicable laws related to any
registration statement relating to the sale of the Securities and to the
offering and sale of securities and with all applicable rules and regulations of
governmental authorities in connection therewith (including, without limitation,
the Securities Act, the Exchange Act and the rules and regulations promulgated
by the SEC).
4.4 Reporting Status. The Company's Common Stock is registered under
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Section 12 of the Exchange Act. The Company shall file with the SEC a Current
Report on Form 8-K disclosing this Agreement and the transactions contemplated
hereby within 10 business days after the date hereof.
4.5 Financial Information. From and after the Delivery Date, the Company
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agrees to send to the Investor those reports that it generally sends to holders
of its Common Stock, until the Investor transfers, assigns or sells all of its
Shares.
4.6 No Integration. The Company shall not make any offers or sales of any
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security (other than the Securities) under circumstances that would cause the
offering of the Securities to be integrated with any other offering of
securities by the Company.
4.7 Short Sales. The Investor covenants that the Investor will not (a) sell
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Common Stock other than what Investor has accumulated under the terms of this
Agreement or such Common Stock as has been accumulated by the Investor in
connection with owning the Securities under the terms of this Agreement or
pursuant to the exercise of warrants previously granted, or (b) sell any
options, warrants (other than warrants previously granted), or other securities
or instruments which are convertible into or exercisable for Common Stock or
which derive their value from the market price of the Common Stock, or any
Common Stock acquired upon conversion or exercise of any such options, warrants
(other than warrants previously granted), or other securities or instruments,
unless any such action as set forth in (a) and (b) is agreed to by the Company.
ARTICLE V.
REGISTRATION OF THE SECURITIES
5.1 Registration ProceduresThe Company shall:
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(a) Subject to receipt of necessary information from the Investor,
prepare and file with the SEC, not later than 30 days after the date hereof, a
registration statement on such form as the Company may use to effect the
registration of the Shares, subject to the consent of the Investor (the
"Registration Statement") to enable the resale of the Shares by the Investor
from time to time through the automated quotation system of the Nasdaq Stock
Market (or the facilities of any national securities exchange on which the
Company's Common Stock is then traded) or in privately-negotiated transactions.
(b) Use its commercially reasonable efforts, subject to receipt of
necessary information from the Investor, to cause the Registration Statement to
be declared effective by the SEC as soon as practicable after filing. The
Company's commercially reasonable efforts shall include, but not be limited to,
promptly responding to all comments received from the staff of the SEC. If the
Company receives notification from the SEC that the Registration Statement shall
receive no action or review from the SEC, then the Company shall, subject to its
rights under Section 5.3 cause the Registration Statement to become effective as
soon as practicable days after such SEC notification.
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(c) Use its commercially reasonable efforts to prepare and file with the
SEC (i) such amendments and supplements to the Registration Statement, (ii) any
prospectus used in connection with the Registration Statement and (iii) any
documents required by the SEC, the Securities Act and the Exchange Act, each as
may be necessary to keep the Registration Statement current and continuously
effective as a "shelf" registration statement for a period not exceeding the
earliest of (x) the date on which the Investor may sell all Shares then held by
the Investor, without registration and without regard to any volume limitations
by reason of Rule 144(k) of the Securities Act or (y) such time as all Shares
held by the Investor have been sold pursuant to a Registration Statement (the
"Registration Period").
(d) Furnish to the Investor whose Shares are included in a Registration
Statement, (i) promptly after each document is prepared and publicly
distributed, filed with the SEC or received by the Company, one copy of any
Registration Statement filed pursuant to this Agreement and any amendments
thereto, each final prospectus and each amendment or supplement thereto; and
each letter written by or on behalf of the Company to the SEC and any portions
relevant to the Investor contained in any item of correspondence from the SEC or
the staff of the SEC, in each case relating to such Registration Statement
(other than any portion of any item thereof which contains information for which
the Company has sought confidential treatment), and (ii) such number of copies
of the Registration Statement and prospectuses in conformity with the
requirements of the Securities Act and such other documents as the Investor may
reasonably request, in order to facilitate the public sale or other disposition
of all or any of the Shares by the Investor, provided, however, that the
obligation of the Company to deliver copies of prospectuses or preliminary
prospectuses to the Investor shall be subject to the receipt by the Company of
reasonable assurances from the Investor that the Investor shall comply with the
applicable provisions of the Securities Act and of such other securities or Blue
Sky laws as may be applicable in connection with any use of such prospectuses or
preliminary prospectuses. The Company shall immediately notify by facsimile the
Investor whose Shares are included in any Registration Statement of the
effectiveness of the Registration Statement and any post-effective amendment.
(e) Use its commercially reasonable efforts to (i) register and qualify
the Shares covered by a Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as the Investor who holds (or has the right
to hold) Shares being offered reasonably requests, (ii) prepare and file in
those jurisdictions any amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain their effectiveness during the Registration Period, (iii) take any
other actions necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take any other
actions reasonably necessary or advisable to qualify the Shares for sale in such
jurisdictions. Notwithstanding the foregoing, the Company is not required, in
connection with such obligations, to (A) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 5.1, (B) subject itself to general taxation in any such jurisdiction,
(C) file a general consent to service of process in any such jurisdiction, (D)
provide any undertakings that cause material expense or burden to the Company,
or (E) make any change in its certificate of Incorporation or By-laws, which in
each case the Board of Directors of the Company determines to be contrary to the
best interests of the Company and its shareholders.
(f) During the period when copies of the prospectus are required to be
delivered under the Securities Act or the Exchange Act, file all documents
required to be filed with the SEC pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act and the rules
and regulations promulgated thereunder.
(g) Advise the Investor, promptly after it shall receive notice or
obtain knowledge of the issuance of any stop order by the SEC delaying or
suspending the effectiveness of the Registration Statement or of the initiation
of any proceeding for that purpose; and it shall promptly use its
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commercially reasonable efforts to prevent the issuance of any stop order or
to obtain its withdrawal at the earliest possible moment if such stop order
should be issued.
It shall be a condition precedent to the obligations of the Company to take
any action pursuant to this Section 5.1 that the Investor shall furnish to the
Company such information regarding itself, the Shares to be sold by the
Investor, and the intended method of disposition of such Shares as shall be
required to effect the registration of the Shares.
5.2 Fee Reinstatement. Should the Company fail to comply with the terms of
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Article V, the Investor shall have the right to declare the Fee to again be
outstanding, due and owing in the amount of $500,000 and the Securities shall be
returned to the Company.
5.3 Transfer of Shares After Registration; Suspension. The Investor agrees
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that it shall not effect any disposition of the Shares except as contemplated in
the Registration Statement referred to in Section 5.1 or as otherwise permitted
by law, and that it shall promptly notify the Company of any changes in the
information set forth in the Registration Statement regarding the Investor or
its plan of distribution.
(a) The Company agrees that any Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) filed by
the Company covering the Shares shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading. Except in the event that subsection (c) below
applies, the Company shall as soon as is practicable: (i) notify the Investor
and prepare and file from time to time with the SEC a post-effective amendment
to the Registration Statement or a supplement to the related prospectus or a
supplement or amendment to any document incorporated therein by reference or
file any other required document so that such Registration Statement shall not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and so that, as thereafter delivered to the Investor of the Shares
being sold thereunder, such prospectus shall not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; (ii) provide the Investor copies of any
documents filed pursuant to Section 5.3(b)(i); and (iii) inform the Investor
that the Company has complied with its obligations in Section 5.3(b)(i) (or
that, if the Company has filed a post-effective amendment to the Registration
Statement which has not yet been declared effective, the Company shall notify
the Investor to that effect, shall use its commercially reasonable efforts to
secure the effectiveness of such post-effective amendment as promptly as
possible and shall promptly notify the Investor pursuant to when the amendment
has become effective).
(b) In the event: (i) of any request by the SEC or any other federal or
state governmental authority during the period of effectiveness of the
Registration Statement for amendments or supplements to a Registration Statement
or a related prospectus or for additional information; (ii) of the issuance by
the SEC or any other federal or state governmental authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose; (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Shares for sale in any jurisdiction or the
initiation of any proceeding for such purpose; or (iv) of any event or
circumstance which necessitates the making of any changes in the Registration
Statement or prospectus, or any document incorporated or deemed to be
incorporated therein by reference, so that, in the case of the Registration
Statement, it shall not contain any untrue statement of a material fact or any
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and that in the case of the
prospectus, it shall
9
not contain any untrue statement of a material fact or any omission to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; then the Company shall deliver a certificate in writing to
the Investor (the "Suspension Notice") to the effect of the foregoing and, upon
receipt of such Suspension Notice, the Investor shall refrain from selling any
Shares pursuant to the Registration Statement (a "Suspension") until the
Investor's receipt of copies of a supplemented or amended prospectus prepared
and filed by the Company, or until it is advised in writing by the Company that
the current prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in any such prospectus. In the event of any Suspension, the Company shall use
its commercially reasonable efforts to cause the use of the prospectus so
suspended to be resumed as soon as practicable, shall prepare a supplement or
amendment to the Registration Statement to correct such untrue statement or
omission, and shall deliver a number of copies of such supplement or amendment
to the Investor as the Investor may reasonably request. In addition to and
without limiting any other remedies (including, without limitation, at law or at
equity) available to the Investor, the Investor shall be entitled to specific
performance in the event that the Company fails to comply with the provisions of
this Section 5.3(b). Subject to the Company's rights under this Section 5.3(b),
the Company shall use its commercially reasonable efforts to prevent the
issuance of any stop order or other suspension of effectiveness of the
Registration Statement and, if such an order is issued, shall use its
commercially reasonable efforts to obtain the withdrawal of such order at the
earliest possible time and to notify the Investor that holds the Shares being
sold of the issuance of such order and the resolution thereof. If the use of the
Registration Statement is suspended by the Company, the Company shall promptly
give notice of the suspension to the Investor and shall promptly notify the
Investor as soon as the use of the Registration Statement may be resumed.
(c) Provided that a Suspension is not then in effect, the Investor may
sell the Shares (subject to the 15,000 Shares per trading day limitation set
forth in Section 2.1 above), under the Registration Statement, provided that it
arranges for delivery of a current prospectus to the transferee of such Shares.
Upon receipt of a request therefore, the Company has agreed to provide an
adequate number of current prospectuses to the Investor and to supply copies to
any other parties requiring such prospectuses.
5.4 Listing. On or before the Registration Statement is first declared
-------
effective by the SEC, the Company shall use its commercially reasonable efforts
to secure the listing of the Shares upon each national securities exchange or
automated quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and, so long as any Investor
owns any of the Shares, shall use its commercially reasonable efforts to
maintain such listing of the Shares. The Company shall use its commercially
reasonable efforts to obtain and so long as any Investor owns any of the Shares,
maintain the listing and trading of its Common Stock on Nasdaq, or the American
Stock Exchange or the New York Stock Exchange, and shall use its commercially
reasonable efforts to comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the National
Association of Securities Dealers, Inc. and such exchanges, as applicable.
5.5 Review by the Investor. The Company shall permit the Investor to review
----------------------
the Registration Statement and all amendments and supplements thereto (as well
as all requests for acceleration or effectiveness thereof) for two business days
prior to their filing with the SEC, and shall not file any document in a form to
which such counsel reasonably objects, unless otherwise required by law in the
opinion of the Company's counsel. The sections of any such Registration
Statement, including information with respect to the Investor, the Investor's
beneficial ownership of the Shares or the Investor's intended method of
disposition of the Shares, must conform to the information provided to the
Company by the Investor.
10
5.6 Expenses. Subject to the limitations contained herein, the Company
--------
shall pay the following expenses incident to the registration of the Shares
under this Article V: (a) registration, filing and NASD fees, all fees and
expenses of complying with state securities or Blue Sky laws, (b) the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any "cold comfort" letters required by or
incident to such performance and compliance, and (c) premiums and other costs of
policies of insurance purchased by the Company at its option against liabilities
arising out of the public offering of such Shares.
5.7 Indemnification.
---------------
(a) The Company will indemnify and hold harmless the Investor against
any losses, claims, damages, awards, judgments or liabilities, to which such
Investor may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, or the
Prospectus, in the form first filed with the SEC pursuant to Rule 424(b) of the
Rules and Regulations, or filed as part of the Registration Statement at the
time of effectiveness if no Rule 424(b) filing is required (the "Prospectus"),
or any amendment or supplement thereto or any amendment thereto, or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Investor for any legal or other expenses reasonably incurred
by the Investor in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement or any such amendment in reliance upon and in conformity with written
information furnished to the Company by the Investor expressly for use therein.
(b) The Investor will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof), arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus, or any amendment
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement or the Prospectus or
any such amendment in reliance upon and in conformity with written information
furnished to the Company by the Investor expressly for use therein; and will
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such action or claim
as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the
11
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim),
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 5.7 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof), in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Investor on
the other from the offering of the Shares. If, however, the allocation provided
by the immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under subsection (c)
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Investor on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company on the one hand and the Investor on the other shall be deemed to be in
the same proportion as the amount of the Fee divided by the proceeds received by
the Investor from the sale of the Shares bears to the proceeds received by the
Investor from the sale of the Shares less the Fee divided by the proceeds
received from the amount of Shares sold. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
the Investor on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Investor agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this subsection. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof), referred to above in
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act),
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The obligations of the Company under this Section 5.7 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each partner, officer, employee or agent
of the Investor and any other person, if any, who controls the Investor within
the meaning of the Securities Act; and the obligations of the Investor under
this Section 5.7 shall be in addition to any liability which the Investor may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company within the meaning of the Securities Act.
12
(f) The respective indemnities, agreements, representations,
warranties and other statements of the Company and the Investor, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof), made by or on behalf
of the Investor or any controlling person of the Investor, or the Company, or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Shares and shall be in addition to any other
rights or remedies of the Investor.
(g) In no event shall the Investor's liability under this Section 5.7
exceed the lesser of (i) the Fee or (ii) the net proceeds received by the
Investor from the sale of the Shares.
5.8 Information Available. So long as the Registration Statement is
---------------------
effective covering the resale of the Shares owned by the Investor, the Company
shall furnish to the Investor, upon the reasonable request of the Investor, an
adequate number of copies of the Prospectuses to supply to any other party
requiring such Prospectuses; and the Company, upon the reasonable request of the
Investor, shall meet with the Investor or a representative thereof at the
company's headquarters to discuss all information relevant for disclosure in the
Registration Statement covering the Shares and shall otherwise cooperate with
any Investor conducting an investigation for the purpose of reducing or
eliminating the Investor's exposure to liability under the Securities Act,
including the reasonable production of information at the Company's
headquarters; provided, that the Company shall not be required to disclose any
confidential information to or meet at its headquarters with any Investor until
and unless the Investor shall have entered into a confidentiality agreement with
the Company in form and substance reasonably satisfactory to the Company with
respect thereto.
5.9 Rule 144 Information. In order to make available to the Investor the
--------------------
benefits of Rule 144 or any similar rule or regulation of the SEC that may at
any time permit the Investor to sell the Shares to the public without
registration, the Company shall use its commercially reasonable efforts to:
(a) file with the SEC in a timely manner, and make and keep available,
all reports and other documents required of the Company under the Securities Act
and the Exchange Act so long as the Company remains subject to such requirements
(it being understood that nothing herein limits the Company's obligations under
Section 5.5 of this Agreement) and the filing and availability of such reports
and other documents is required for the applicable provisions of Rule 144; and
(b) furnish to the Investor, so long as the Investor holds the Shares,
promptly upon the Investor's request, (i) a written statement by the Company
that it has complied with the reporting requirements of Rule 144, the Securities
Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents filed by the Company
with the SEC and (iii) such other information as may be reasonably requested to
permit the Investor to sell such Shares pursuant to Rule 144 without
registration.
5.10 Assignment of Registration Rights. The rights of the Investor
---------------------------------
hereunder, including the right to have the Company register the Shares pursuant
to this Agreement, shall be automatically assigned by the Investor to
transferees or assignees of all or any portion of such Shares, but only if (a)
the Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (b) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of the
name and address of such transferee or assignee and the Shares with respect to
which such registration rights are being transferred or assigned, (c) after such
transfer or assignment, the further disposition of such Shares by the transferee
or assignee is restricted under the Securities Act and applicable state
securities laws, (d) at or before the time the Company received the written
notice contemplated by clause (b) of this sentence, the
13
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein (including the 15000 Shares per trading day
limitation set forth in Section 2.1 above and the items set forth in Section 4.7
above and Section 7.4 below), and (e) the transferee is an "accredited investor"
as that term is defined in Rule 501 of Regulation D.
ARTICLE VI.
TRANSFER AGENT INSTRUCTIONS; REMOVAL OF LEGENDS
6.1 Issuance of Shares. Upon exercise of the Warrant, the Company shall
------------------
instruct its transfer agent to issue certificates, registered in the name of the
Investor or its nominee, for the Shares so exercised. The Company shall not give
to its transfer agent any instruction other than as described in this Article VI
and stop-transfer instructions to give effect to Section 2.7 hereof (prior to
registration of the Shares under the Securities Act). Nothing in this Section
shall affect in any way the Investor's obligations and agreement set forth in
Sections 2.6 and 2.7 hereof to resell the Shares pursuant to an effective
registration statement or in compliance with an exemption from the registration
requirement of applicable securities laws.
6.2 Unrestricted Shares. If, unless otherwise required by applicable state
-------------------
securities laws, (a) Shares represented by a certificate have been registered
under an effective registration statement filed under the Securities Act, (b) a
holder of the Securities provides the Company and the Transfer Agent with an
opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions, to the effect that a public sale or transfer
of such Securities may be made without registration under the Securities Act and
such sale either has occurred or may occur without restriction on the manner of
such sale or transfer, (c) such holder provides the Company and the Transfer
Agent with reasonable assurances that such Securities can be sold under Rule
144, or (d) such Securities can be sold without restriction as to the number of
the Securities sold under Rule 144(k), the Company shall permit the transfer of
such Securities, and the Transfer Agent shall issue one or more certificates,
free from any restrictive legend, in such name and in such denominations as
specified by such holder. In the event that the restrictive legend is removed
from any of the certificates for such Shares and thereafter the effectiveness of
a registration statement covering such Shares is suspended or terminated or the
Company determines that a supplement or amendment thereto is required by
applicable securities laws, then upon a reasonable advance notice to the
Investor the Company may require that the restrictive legend be placed on any
certificates for such Shares that cannot be sold pursuant to an effective
registration statement or under Rule 144, and the Investor shall cooperate in
the replacement of such legend. Such legend shall thereafter be removed when
such Shares may again be sold pursuant to an effective registration statement or
Rule 144.
ARTICLE VII.
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The obligation of the Company to deliver the Warrant to the Investor at
Delivery is subject to the satisfaction by the Investor, on or before the
Delivery Date, of the following conditions. These conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion:
7.1 The Investor shall have delivered the Confirmation to the Company in
accordance with Section 1.2.
7.2 The representations and warranties of the Investor shall be true and
correct in all material respects as of the Delivery Date as though made on such
date (except for representations and warranties that speak as of a specific
date, which representations and warranties must be correct as of such date), and
14
the Investor shall have performed and complied in all material respects with the
covenants and conditions required by this Agreement to be performed or complied
with by the Investor at or prior to the Delivery.
7.3 No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
7.4 The Investor shall confirm that at no time, prior to the date of this
Agreement, has the Investor (a) owned or been the beneficial owner of any
Shares, securities exercisable into Shares or any derivatives thereof, or made
any trades or caused the making of any trades with respect to any Shares or
securities exercisable into Shares or any derivatives thereof other than with
respect to warrants owned as of the date hereof or (b) changed or attempted to
alter or affect the market price of the Company's Common Stock.
ARTICLE VIII.
CONDITIONS TO THE INVESTOR'S OBLIGATION TO PURCHASE
The obligation of the Investor hereunder to deliver the Confirmation at the
Delivery is subject to the satisfaction, on or before the Delivery Date, of the
following conditions. These conditions are for the Investor's benefit and may be
waived by the Investor at any time in its sole discretion:
8.1 The Company shall have delivered to the Investor the Warrant duly
executed.
8.2 The representations and warranties of the Company shall be true and
correct as of the Delivery Date as though made on such date (except for
representations and warranties that speak as of a specific date, which
representations and warranties must be true and correct as of such date) and the
Company must have performed and complied in all respects with the covenants and
conditions required by this Agreement to be performed or complied with by the
Company at or prior to the Delivery.
8.3 No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated, endorsed or
threatened by or in any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over the
matters contemplated hereby which prohibits or seeks to prohibit the
consummation of any of the transactions contemplated by this Agreement.
8.4 Trading and listing of the Common Stock on Nasdaq shall not have been
suspended or limited by the SEC or Nasdaq.
8.5 The Registration Statement shall have been declared effective by the
SEC and no stop order suspending the effectiveness of the Registration Statement
shall have been issued or proceeding therefore initiated or threatened by the
SEC.
ARTICLE IX.
GOVERNING LAW; MISCELLANEOUS
9.1 Governing Law, Jurisdiction. This Agreement shall be governed by and
---------------------------
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of laws. The parties hereto hereby submit to the
exclusive jurisdiction of the United States federal and state courts located in
the State of New York with respect to any dispute arising under this Agreement,
the agreements entered into in connection herewith or the transactions
contemplated hereby.
15
9.2 Counterparts; Signatures by Facsimile. This Agreement may be executed
-------------------------------------
in two or more counterparts, all of which are considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other parties. This Agreement, once executed by a
party, may be delivered to the other parties hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the party so delivering this
Agreement. In the event any signature is delivered by facsimile transmission,
the party using such means of delivery shall cause the manually executed pages
to be physically delivered to the other parties within five business days of the
execution hereof.
9.3 Headings. The headings of this Agreement are for convenience of
--------
reference only, are not part of this Agreement and do not affect its
interpretation.
9.4 Severability. If any provision of this Agreement is invalid or
------------
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed modified in order to conform with such statute or rule of law.
Any provision hereof that may prove invalid or unenforceable under any law shall
not affect the validity or enforceability of any other provision hereof.
9.5 Entire Agreement: Amendments. This Agreement (including all schedules
----------------------------
and exhibits hereto) constitutes the entire agreement among the parties hereto,
with respect to the subject matter hereof, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein.
This Agreement supersedes all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof. No provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.
9.6 Notices. Any notices required or permitted to be given under the terms
-------
of this Agreement must be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five (5) days
after being placed in the mail, if mailed by regular U.S. mail, or upon receipt,
if delivered personally, by courier (including a recognized overnight delivery
service) or by facsimile, in each case addressed to a party. The addresses for
such communications are:
If to the Company: Constellation 3D, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Investor: Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Each party shall provide written notice to the other party of any change in
its address.
9.7 Successors and Assigns. This Agreement is binding upon and inures to
----------------------
the benefit of the parties and their successors and assigns. The Company shall
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Investor, and the Investor may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Company
16
except as provided in Section 5.10 or in the next sentence. Notwithstanding the
foregoing, the Investor may assign all or part of its rights and obligations
hereunder to any of its "affiliates," as that term is defined under the
Securities Act, without the consent of the Company so long as the affiliate is
an "accredited investor" (within the meaning of Regulation D under the
Securities Act) and agrees in writing to be bound by this Agreement.
9.8 Third-Party Beneficiaries. This Agreement is intended for the benefit
-------------------------
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.
9.9 Survival. The representations and warranties of the Company and the
--------
agreements and covenants set forth herein shall survive the Delivery hereunder
and remain in full force and effect regardless of any investigations heretofore
or hereafter made by or on behalf of either of the parties hereto for the period
time commencing on the date hereof and ending on the third anniversary of the
Delivery Date. The Company makes no representations or warranties in any oral or
written information provided to Investor, other than the representations and
warranties included herein.
9.10 Further Assurances. Each party shall do and perform, or cause to be
------------------
done and performed, all such further acts and things, and shall execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
9.11 No Strict Construction. The language used in this Agreement is deemed
----------------------
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction shall be applied against any party.
9.12 Equitable Relief. Each party acknowledges that a breach by it of its
----------------
obligations hereunder will cause irreparable harm to the other parties by
vitiating the intent and purposes of the transactions contemplated hereby.
Accordingly, each party acknowledges that the remedy at law for a breach of its
obligations hereunder will be inadequate and agrees, in the event of a breach,
actual or threatened, by such party of the provisions of this Agreement, that
the other party shall be entitled, in addition to all other available remedies,
to temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.
17
IN WITNESS WHEREOF, the parties hereto have made and entered into this
Agreement the day and year first above written.
CONSTELLATION 3D, INC.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director of Legal Affairs
BLANK ROME ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, as Investor
By /s/ ▇▇▇▇ ▇▇▇▇▇
--------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Co Chairman
18
Exhibit A
WARRANT
-------
This Warrant ("Agreement" or "Warrant"), dated as of ______________, is
made by and between Constellation 3D, Inc., a Delaware corporation
("Company"), and Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, a limited liability
partnership formed and registered under the laws of the Commonwealth of
Pennsylvania ("Grantee").
WHEREAS, Company and Purchaser have entered into a Securities Purchase
Agreement dated November 19, 2001 ("Securities Purchase Agreement") providing
for the purchase by Grantee of a warrant to purchase 717,525 shares of Company's
common stock, par value $0.001 per share;
NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein, and intending to be legally bound, the parties hereto agree as
follows:
1. Certain Definitions.
-------------------
"Commission" shall mean the U.S. Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock, par value $.001 per share, of
the Company, as constituted as of the date of this Agreement.
"Exchange Act" shall mean the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
"Securities Act" shall mean the U.S. Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the applicable time.
2. Grant of Warrant. Grantee is hereby granted a warrant (the "Warrant") to
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purchase at any time or from time to time, as a whole or in part, Seven Hundred
and Seventeen Thousand, Five Hundred and Twenty Five (717,525) shares of Stock
("Warrant Shares") on the terms and conditions set forth in this Agreement.
3. Termination of Warrant. The Warrant shall terminate on the tenth anniversary
----------------------
of the date hereof.
4. Purchase Price. The purchase price of the Warrant Shares shall be $0.001 (One
--------------
Tenth of One Cent) per share ("Purchase Price").
5. Methods of Exercise. Grantee may exercise the Warrant by written notice to
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the Company stating (i) that the Warrant is being exercised and (ii) the number
of Warrant Shares desired to be purchased, accompanied or followed by cash, wire
transfer or check in an amount equal to the aggregate Purchase Price of the
Warrant Shares being purchased (i.e., the number of Warrant Shares exercised
multiplied by the Purchase Price). The Grantee may also exercise this Warrant
pursuant to a "cashless exercise" arrangement, whereby the Company shall issue
to the Grantee the number of shares of Common Stock determined as follows:
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X = Y [(A - B)/A]
where:
X = the number of Shares of Common Stock to be issued to the Grantee.
Y = the number of shares of Common Stock with respect to which this Warrant is
being exercised.
A = the average of the closing bid and asked prices of the Common Stock for the
five trading days immediately prior to (but not including) the date of exercise
as set forth in the notice of exercise.
B = the Purchase Price.
In the event of a discrepancy in the number of shares to be issued pursuant
to a "cashless exercise" as determined by Grantee and the Company, Company shall
notify Grantee promptly and the two parties shall endeavor in good faith to
resolve the discrepancy as soon as is practicable.
If this Warrant shall have been exercised only in part, at the time of
delivery of the share certificate or certificates, the Company shall deliver to
Grantee a new Warrant evidencing the rights to purchase the remaining shares of
Common Stock called for by this Warrant, which new Warrant shall in all other
respects be identical to this Warrant or, at the election of the Company, an
appropriate notation shall be made on this Warrant, which shall then be returned
to Grantee
6. Reservation of Shares; Shares to Be Fully Paid and Nonassessable. During the
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term of this Warrant, the Company will reserve a sufficient number of shares of
authorized and unissued Common Stock to provide for the issuance of Common
Stock. All shares of Common Stock issued upon the exercise of this Warrant shall
be validly issued, fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issue thereof (other than transfer taxes).
7. Transferability. Subject to compliance with applicable federal and state
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securities laws, this Stock Warrant Agreement may be transferred by the Grantee
with respect to any or all of the Warrant Shares purchasable hereunder. Upon
surrender of this Stock Warrant Agreement to the Company, together with the
assignment hereof properly endorsed, for transfer of this Stock Warrant
Agreement as an entirety by the Grantee, the Company shall issue a new Stock
Warrant Agreement of the same denomination to the assignee. Upon surrender of
this Stock Warrant Agreement to the Company, together with the assignment hereof
properly endorsed, by the Grantee for transfer with respect to a portion of the
Warrant Shares purchasable hereunder, the Company shall issue a new Stock
Warrant Agreement to the assignee, in such denomination as shall be requested by
the Grantee hereof, and shall issue to such Grantee a new Stock Warrant
Agreement covering the number of Warrant Shares in respect of which this Stock
Warrant Agreement shall not have been transferred.
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8. Change in Number of Shares of Stock. If and to the extent that the number of
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issued shares of Stock shall be increased or reduced by a change in par value,
stock split, reclassification, reorganization, merger, distribution of a
dividend payable in stock, or the like, the number of shares of Stock subject to
warrant and the Purchase Price shall be proportionately adjusted in good faith
by the Company's Board of Directors.
9. Rights prior to exercise of warrant. Grantee shall have no rights as a
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stockholder with respect to the Warrant Shares until payment of the Purchase
Price and delivery to Grantee of such Stock as herein provided.
10. Agreement Binding. This Agreement shall inure to the benefit of and be
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binding upon the parties hereto and their respective successors and assigns.
11. Severability. In case one or more provisions of this Agreement shall be
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found to be invalid, illegal, or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be in any way affected or impaired thereby.
12. Entire Agreement. This Agreement and the Securities Purchase Agreement
----------------
contain the entire understanding and agreement between the parties hereto,
relating to the subject matter hereof, and cannot be amended, modified or
supplemented in any respect, except by subsequent written agreement entered into
by both parties.
14. Governing Law. This Agreement shall be construed under and governed by the
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laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the first date set forth above.
CONSTELLATION 3D, INC.
By: __________________________
Name:
Title:
BLANK ROME ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
By: __________________________
Name:
Title:
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