Exhibit 4.4
Execution Copy
OPTION AGREEMENT
OPTION AGREEMENT (this "Agreement"), dated as of November 16, 2001, by
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and between Constellation 3D Technology Limited, a corporation organized under
the laws of the British Virgin Islands (the "Holder") and Constellation 3D,
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Inc., a corporation organized under the laws of the State of Delaware (the
"Corporation").
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BACKGROUND
1. The Holder and the Corporation are parties to that certain Loan
Agreement, of even date herewith (the "Loan Agreement"), pursuant to which the
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Holder has agreed to provide to the Corporation certain advances.
2. The Corporation has agreed to issue to the Holder a promissory
note evidencing $15,000,000 being advanced by the Holder to the Corporation as
of the date hereof pursuant to the Loan Agreement (the "Loan").
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3. To induce the Holder to advance the Loan to the Corporation, the
Corporation has, among other things, agreed to grant the Holder an option to
convert the Loan (plus accrued and unpaid interest thereon) evidenced by the
Note attached as Exhibit A hereto (the "Note") into shares of common stock, par
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value $.00001 per share, of the Corporation ("Common Stock").
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4. Defined terms used herein but not otherwise defined herein shall
have the meanings ascribed to such terms in the Loan Agreement.
TERMS
In consideration of the mutual promises and covenants contained
herein, and intending to be legally bound hereby, the Holder and the Corporation
agree as follows:
Section 1. Optional Conversion of Note.
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(a) Subject to and upon compliance with the terms of this Section 1,
the Holder or its assignee shall have the right, at its option, at any time
after the 45/th/ Business Day after the Closing Date and on or prior to November
18, 2002 (the "Termination Date"), to convert the unpaid principal amount of,
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and the accrued and unpaid interest on (subject to adjustment for withholding as
provided in Section 1(c) below), the Note into fully paid and non-assessable
shares of the Corporation's Common Stock; provided, however, that, for so long
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as the initial Holder shall be the Holder of the Note, the Note may only be
converted on the Termination Date. Such conversion shall be effected at the Note
Conversion Rate (as defined below). The "Note Conversion Rate" shall be equal to
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(x) the sum of the outstanding principal amount of the Note plus accrued and
unpaid interest on the Note, including default interest, if
any (the "Conversion Amount"), divided by (y) $0.646/1/ (the "Note Conversion
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Price"). The Holder may exercise its right to convert the Note in whole but not
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in part.
(b) In order to exercise the conversion right, the Holder shall
surrender the Note during regular business hours at the principal office of the
Corporation, accompanied by written notice to the Corporation at said office
that the Holder elects to convert the Note and shall specify the Conversion
Amount. Such notice shall also state the name or names (with address) in which
the certificate or certificates for shares of Common Stock deliverable upon such
conversion shall be issued. As promptly as practicable after the receipt of such
notice and the surrender of the Note, but subject to Section 3, the Corporation
shall deliver or cause to be delivered to the Holder or its designee or
designees a certificate or certificates for the number of fully paid and
nonassessable shares of Common Stock deliverable upon conversion of the Note
pursuant to the Holder's notice of conversion. Such conversion shall be deemed
to have been effected immediately prior to the close of business on the date on
which such notice shall have been received by the Corporation and the Note shall
have been surrendered (the "Date of Conversion"), and at such time the rights of
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the Holder shall cease with respect to the Conversion Amount converted and the
person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares represented thereby
unless the stock transfer books of the Corporation shall be closed on that date,
in which event such person or persons shall be deemed to have become such holder
or holders of record on the next succeeding day on which such stock transfer
books are open, but in any event such conversion shall be at the Note Conversion
Rate.
(c) The number of shares of Common Stock issuable upon conversion of
the Note in respect of accrued but unpaid interest thereon, including default
interest, if any, shall be calculated net of any amounts required by law to be
withheld at the time of such conversion (the "Withholding Amount"); provided,
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however, that the Withholding Amount shall not exceed 30% of such accrued but
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unpaid interest (or such higher amount required by law). The Corporation shall
satisfy the Withholding Amount, if any, by deducting the number of shares of
Common Stock (valued at the volume-weighted Market Price of such shares of
Common Stock for the ten (10) consecutive trading day period ending one (1)
trading day immediately prior to the Date of Conversion) issuable to the Holder
upon conversion of the Note which are equal to the Withholding Amount; provided,
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however, that, at the option of the Holder, the Withholding Amount may be
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satisfied in whole or in part by a cash payment to be made by the Holder to the
Corporation on the Date of Conversion in lieu of deducting shares of Common
Stock (it being understood that if the Holder elects to satisfy the Withholding
Amount in part, but not in whole, in cash, then the number of shares of Common
Stock to be deducted shall be calculated as provided for in this Section 2(c),
after giving effect to such cash payment). As used herein, the term "Market
Price" means, on any given day, (i) the price of the last trade, as reported on
the Nasdaq National Market, not identified as having been reported late to such
system, or (ii) if the
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/1/ The Note Conversion Price shall be calculated based upon the average
closing-bid price of the Corporation's Common Stock on the Nasdaq
National Market System for the five (5) trading days immediately prior to
the Closing Date.
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Common Stock is so traded, but not so quoted, the average of the last bid and
ask prices, as those prices are reported on the Nasdaq National Market, or (iii)
if the Common Stock is not listed or authorized for trading on the Nasdaq
National Market or any comparable system, the average of the closing bid and
asked prices as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Corporation for that
purpose. If the Common Stock is not listed and traded in a manner that the
quotations referred to above are available for the period required hereunder,
the market price per share of Common Stock shall be deemed to be the fair value
per share of such security as reasonably determined in good faith by the Board
of Directors of the Corporation.
Section 2. Mandatory Conversion of Note. If the Holder shall not exercise
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its right to convert the Note on or before the Termination Date, the Conversion
Amount shall automatically be converted into Common Stock at the Note Conversion
Rate on the first Business Day immediately following the Termination Date,
without any further action by the Holder or the Corporation. As promptly as
practicable thereafter the Corporation shall deliver or cause to be delivered to
the Holder a certificate or certificates for the number of fully paid and
non-assessable shares of Common Stock deliverable upon conversion of the Note
registered in the name of the Holder. As soon as practicable after the
Termination Date, the Holder shall surrender the Note during regular business
hours at the principal office of the Corporation.
Section 3. No Fractional Shares. No fractional shares shall be issued upon
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conversion of the Note, and the number of shares of Common Stock to be issued
shall be rounded upward to the nearest whole share.
Section 4. Adjustments to the Note Conversion Price.
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(a) In the event the Corporation at any time or from time to time
after the date of issuance of the Note fixes a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock then, as of
such record date (or the date of such split or subdivision if no record date is
fixed), the Note Conversion Price shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of the Note shall be
increased in proportion to such increase in the aggregate number of shares
issuable of Common Stock.
(b) For so long as the Note remains unconverted, in the event that
the Corporation shall issue any Additional Stock (as defined below), at a price
per share that is lower at the record date for such issuance than the Market
Price, then the Note Conversion Price in effect immediately prior to each such
issuance (or deemed issuance pursuant to Section 4(f) hereof) shall be adjusted
to a price determined by the following formula: (A + B) / (C + D), where "A"
equals the number of shares of Common Stock outstanding immediately prior to
such issuance or sale multiplied by the then applicable Note Conversion Price,
where "B" equals the consideration, if any, received by the Corporation upon
such issuance or sale, where "C" equals the total number of shares of Common
Stock outstanding prior to issuance of the additional shares and where "D"
equals any additional stock or conversion shares, or any other shares
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reserved for issuance which are associated with such financing, immediately
after such issuance or sale. Such adjustment shall become effective at the close
of business on the record date for the determination of stockholders entitled to
receive such rights, options or warrants. For purposes of the calculation set
forth in this Section 4(b), all shares of Common Stock outstanding and issuable
upon conversion of outstanding Options and Convertible Securities immediately
prior to giving effect to such calculation shall be deemed to be outstanding.
As used herein, "Additional Stock" shall mean any shares of
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Common Stock or shares of Common Stock issuable pursuant to Convertible
Securities issued or Options (or deemed to have been issued pursuant to Section
4(f) hereof) by the Corporation after the date of issuance of the Note, except:
(i) Common Stock issued pursuant to a transaction described in
Section 4(f) hereof;
(ii) Common Stock or options to purchase such Common Stock
issued to officers, employees or directors of, or consultants to, the
Corporation, pursuant to any agreement, plan or arrangement approved by the
Board of Directors of the Corporation; provided, however, that the maximum
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number of shares of Common Stock heretofore or hereafter issued or issuable
pursuant to all such agreements, plans and arrangements shall not exceed an
aggregate (as constituted on the date hereof) of 6,484,948 shares of Common
Stock;
(iii) Common Stock issued or issuable upon conversion of the
Debentures and any warrants of the Corporation outstanding as of the Closing
Date described in the Corporation's Form 10-Q for the period ended September 30,
2001;
(iv) Common Stock issued to the Holder upon conversion of the
Note or otherwise; and
(v) Common Stock issued in connection with an acquisition of
another entity by the Corporation pursuant to an agreement approved by the Board
of Directors.
(c) No adjustment of the Note Conversion Price shall be made in an
amount less than one-half of one cent ($0.005) per share, provided that any
adjustments which are not required to be made by reason of this sentence shall
be carried forward and shall be taken into account in any subsequent adjustment
to the Note Conversion Price. No adjustment of the Note Conversion Price
pursuant to this Section 4(c) shall have the effect of increasing the Note
Conversion Price in effect immediately prior to such adjustment.
(d) In the case of the issuance of securities of the Corporation for
cash, the amount of consideration received by the Corporation for such
securities shall be deemed to be the amount of cash paid therefor before
deducting any discounts, commissions or other expenses allowed, paid or incurred
by the Corporation for any underwriting or otherwise in connection with the
issuance and sale thereof.
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(e) In the case of the issuance of securities of the Corporation for
a consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to have a dollar value equal to the fair market value
of such non-cash consideration, irrespective of any accounting treatment
thereof, as reasonably determined in good faith by a vote of the majority of the
Board of Directors.
(f) In the case of the issuance (whether before, on or after the date
of issuance of the Note) of Options or Convertible Securities, the following
provisions shall apply for all purposes of this Section 4:
(i) With respect to Options to purchase Common Stock, the
aggregate maximum number of shares of Common Stock deliverable upon exercise of
such Options shall be deemed to have been issued at the time such Options were
issued and for a consideration equal to the consideration (determined in the
manner provided in Sections 4(d) and (e) hereof), if any, received by the
Corporation for such Options plus the minimum exercise price provided in such
Options for Common Stock issuable thereunder.
(ii) With respect to Convertible Securities and Options to
purchase Convertible Securities, the aggregate maximum number of shares of
Common Stock deliverable upon the conversion or exchange of any such Convertible
Securities and the aggregate maximum number of shares of Common Stock issuable
upon the exercise of such Options to purchase Convertible Securities and the
subsequent conversion or exchange of such Convertible Securities shall be deemed
to have been issued at the time such Convertible Securities or such Options were
issued and for a consideration equal to the consideration, if any, received by
the Corporation for any such Convertible Securities and Options, plus the
minimum additional consideration, if any, to be received by the Corporation upon
the conversion or exchange of such Convertible Securities or the exercise of
such Options and the conversion or exchange of the Convertible Securities
issuable upon exercise of such Options (the consideration in each case to be
determined in the manner provided in Sections 4(d) and(e) hereof).
(iii) In the event of any change in the number of shares of
Common Stock deliverable, or in the consideration payable to the Corporation,
upon exercise of such Options or upon conversion or exchange of such Convertible
Securities, including, but not limited to, a change resulting from the
anti-dilution provisions thereof, the Note Conversion Price, to the extent in
any way affected by or computed using such Options or Convertible Securities,
shall be recomputed to reflect such change, but no further adjustment shall be
made for the actual issuance of Common Stock or any payment of such
consideration upon the exercise of any such Options or the conversion or
exchange of such Convertible Securities.
(iv) Upon the expiration or termination of any such Options or
any such rights to convert or exchange Convertible Securities, the Note
Conversion Price, to the extent in any way affected by or computed using such
Options or Convertible Securities, shall be recomputed to reflect the issuance
of only the number of shares of Common Stock (and Options and Convertible
Securities which remain in effect) that were actually issued upon the exercise
of such Options or upon the conversion or exchange of such Convertible
Securities.
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(v) The number of shares of Common Stock deemed issued and the
consideration deemed paid therefor pursuant to Sections 4(f)(i) and (ii) hereof
shall be appropriately adjusted to reflect any change, termination or expiration
of the type described in either Sections 4(f)(iii) or (iv) hereof.
(vi) "Convertible Securities" means any indebtedness or shares
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of stock convertible into or exchangeable for Common Stock.
(vii) "Option" means rights, options or warrants to subscribe
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for, purchase or otherwise acquire Common Stock or Convertible Securities.
(g) If at any time or from time to time there shall be a
recapitalization or reclassification of Common Stock, provision shall be made so
that the Holder shall thereafter be entitled to receive, upon conversion of the
Note, the number of shares of stock or other securities or property of the
Corporation or otherwise, receivable upon such recapitalization or
reclassification by a holder of the number of shares of Common Stock into which
the Note could have been converted immediately prior to such recapitalization.
In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 4 with respect to the rights of the Holder after the
recapitalization or reclassification to the end that the provisions of this
Section 4 (including adjustments of the Note Conversion Price then in effect and
the number of shares purchasable upon conversion of the Note) shall be
applicable after that event as nearly equivalent as may be practicable.
(h) In the event the Corporation shall declare a distribution payable
in securities of other persons, evidences of indebtedness issued by the
Corporation or other persons, assets (excluding cash dividends) or options or
rights not referred to in Section 4(f) hereof, then, in each such case for the
purpose of this Section 4(h), the Holder shall be entitled to a proportionate
share of any such distribution as though such the Holder was the holder of the
number of shares of Common Stock into which the Note is convertible as of the
record date fixed for the determination of the holders of shares of Common Stock
entitled to receive such distribution.
(i) Before taking any action which would cause an adjustment reducing
the Note Conversion Price below the then par value, if any, of the shares of
Common Stock issuable upon the conversion of the Note, the Corporation will take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Corporation may validly and legally issue registered, fully paid
and non-assessable shares of the Common Stock at such adjusted Note Conversion
Price.
(j) Upon the occurrence of each adjustment or readjustment of the
Note Conversion Price pursuant to this Section 4, the Corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to the Holder a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based, certified by the
Corporation's President or Chief Financial Officer. The Corporation shall, upon
the written
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request at any time of the Holder, furnish or cause to be furnished to such
Holder a like certificate setting forth (i) such adjustment and readjustment,
(ii) the Note Conversion Price at the time in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversion of the Note.
(k) The Corporation covenants that it will at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
delivery upon conversion of the Note as herein provided such number of shares of
Common Stock as shall then be deliverable upon the conversion of the Conversion
Amount, plus the maximum amount of accrued but unpaid interest, including
default interest, if any, convertible pursuant to the Note. The Corporation
covenants that all the shares of Common Stock which shall be so deliverable upon
conversion of the Note shall be duly and validly issued, fully paid and
non-assessable.
(l) The delivery of certificates for shares of Common Stock upon the
conversion of the Note shall be made without charge to the Holder for any
documentary, stamp or similar issue or transfer tax in respect of the issuance
of such certificates, and such certificates shall be delivered in the name of,
or in such names as may be directed by, the Holder. The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue or transfer and delivery of shares of Common
Stock in a name other than that of the Holder and no such issue or transfer and
delivery shall be made unless and until the person requesting such transfer has
paid to the Corporation the amount of any such tax or has established to the
satisfaction of the Corporation that such tax has been paid.
(m) If the Common Stock of the Corporation ceases to be listed or
authorized to be quoted on any national securities exchange or the public market
for the Common Stock of the Corporation otherwise ceases to exist, the
Corporation shall engage an investment bank, reasonably acceptable to the
Corporation and the Holder, to determine the fair market value price of the
Common Stock, from time to time in connection with the Note.
(n) In the event of any taking by the Corporation of a record of the
holders of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, the Corporation shall mail to the
Holder, at least twenty (20) calendar days prior to the date specified therein,
a notice specifying the date on which any such record is to be taken for the
purpose of such right, and the amount and character of such right.
(o) The Corporation will not, by amendment of its Certificate of
Incorporation or through any reorganization, recapitalization or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the Holder of the Note
against impairment.
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Section 5. Effectiveness of Agreement. This Agreement shall terminate if the
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Loan shall not have been advanced on or prior to the Funding Date.
Section 6. Representations and Warranties of the Corporation. The
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Corporation hereby makes the following representations and warranties to the
Holder as of the date hereof and on the Date of Conversion:
(a) Authorization; Enforcement; Compliance with Other Instruments.
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The Corporation has the requisite corporate power and authority to enter into
and perform its obligations under this Agreement, (ii) the execution and
delivery of this Agreement by the Corporation and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by the
Corporation's Board of Directors and no further consent or authorization is
required by the Corporation, its Board of Directors or its shareholders, (iii)
this Agreement and the have been duly executed and delivered by the Corporation
and (iv) this Agreement and the constitute the valid and binding obligations of
the Corporation enforceable against the Corporation in accordance with their
terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies.
(b) Capitalization. As of October 31, 2001, the authorized capital
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stock of the Corporation consisted of 100,000,000 shares of Common Stock, of
which as of the date thereof, 50,189,824 shares are issued and outstanding,
6,484,948 shares are issuable upon exercise of outstanding stock options,
whether or not currently exercisable, 3,500,943 shares are issuable upon
exercise of outstanding warrants, whether or not currently exercisable, and
2,285,942 shares are issuable upon conversion of convertible loans. Schedule
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6(b) sets forth the aggregate amount of shares of Common Stock issuable after
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giving effect to all anti-dilution and similar provisions contained in any such
warrants, options or convertible loans which are or will be applicable as a
result of the issuance of the Note or the Conversion Shares (as defined below).
Except as set forth in Section 4 of this Agreement or as disclosed on Schedule
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6(b), no warrants, options, convertible loans or other securities of the
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Corporation contain any anti-dilution or similar provisions. All of such
outstanding shares have been, or upon issuance will be, validly issued, fully
paid and nonassessable. As of the date hereof, except as set forth on Schedule
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6(b), (i) no shares of the Corporation's capital stock are subject to preemptive
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rights or any other similar rights or are secured by any liens or encumbrances
against the Corporation or its assets, (ii) there are no outstanding debt
securities, (iii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible, exercisable or exchangeable into, any shares
of capital stock of the Corporation or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Corporation or any of
its Subsidiaries is or may become bound to issue additional shares of capital
stock of the Corporation or any of its Subsidiaries or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible, exercisable or exchangeable
into, any shares of capital stock of the Corporation or any of its Subsidiaries,
(iv) there are no agreements or arrangements
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under which the Corporation or any of its Subsidiaries is obligated to register
the sale of any of their securities under the Securities Act, (v) there are no
outstanding securities of the Corporation or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Corporation or any of
its Subsidiaries is or may become bound to redeem a security of the Corporation
or any of its Subsidiaries, (vi) there are no securities or instruments
containing anti-dilution, most-favored-nation or similar provisions that will be
triggered by the issuance of the Note pursuant to the Loan Agreement or the
issuance of Common Stock upon conversion of the Note (the "Conversion Shares")
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and, (vii) the Corporation does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or agreement. The
Corporation has furnished to the Holder true and correct copies of the
Corporation's Articles of Incorporation, as amended and as in effect on the date
hereof (the "Certificate of Incorporation"), and the Corporation's By-laws, as
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in effect on the date hereof (the "By-laws"), and the terms of all securities
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convertible or exchangeable into or exercisable for Common Stock and the
material rights of the Holder thereof in respect thereto.
(c) No Conflicts. The execution, delivery and performance of this
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Agreement by the Corporation and the consummation by the Corporation of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the Certificate of Incorporation, any Certificate of Designations,
Preferences and Rights of any outstanding series of preferred stock of the
Corporation or the By-laws; (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which the
Corporation or any of its Subsidiaries is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
without limitation United States federal and state securities laws and
regulations and the rules and regulations of the Nasdaq National Market System)
applicable to the Corporation or any of its Subsidiaries or by which any
property or asset of the Corporation or any of its Subsidiaries is bound or
affected. Except as set forth in Schedule 6(c) hereto, neither the Corporation
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nor its Subsidiaries is in violation of any term of, or in default under, (x)
its Certificate of Incorporation, any Certificate of Designations, Preferences
and Rights of any outstanding series of preferred stock or By-laws or their
organizational charter or by-laws, respectively, (y) any material contract,
agreement, mortgage, indebtedness, indenture, instrument, or (z) any judgment,
decree or order or any statute, rule or regulation applicable to the Corporation
or its Subsidiaries, the non-compliance with which (in the case of clause (z)
only) would reasonably be likely to result in a Material Adverse Effect. The
business of the Corporation and its Subsidiaries is not being conducted in
violation of any material law, ordinance or regulation of any governmental
entity. Except as specifically contemplated by this Agreement and as required
under the Securities Act (or applicable "Blue Sky" laws), the Corporation is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under, or contemplated by, this Agreement in accordance with the
terms hereof or thereof. All consents, authorizations, orders, filings and
registrations which the Corporation is
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required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof.
(d) Valid Issuance. When validly converted in accordance with the
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terms of this Agreement, the Conversion Shares will be duly and validly issued,
fully paid, and non-assessable. Neither the sale of the Note nor the issuance of
the Conversion Shares will entitle the holder or holders of outstanding
securities of the Corporation to preemptive or other rights to acquire shares of
Common Stock of the Corporation.
(e) No Integrated Offering. Neither the Corporation, nor any of its
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affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause the transactions
contemplated by the Loan Agreement of this Agreement to be integrated with prior
offerings by the Corporation for purposes of the Securities Act or any
applicable shareholder approval provisions, including, without limitation, under
the rules and regulations of the Nasdaq National Market System, nor will the
Corporation or any of its Subsidiaries take any action or steps that would cause
the transactions contemplated by this Agreement to be integrated with other
offerings.
(f) Application of Takeover Protections. The Corporation and its
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board of directors have taken all necessary action, if any, in order to render
inapplicable any anti-takeover provisions under applicable Delaware law or
contained in the Corporation's Certificate of Incorporation or otherwise which
is or could become applicable to the Holder as a result of the transactions
contemplated by this Agreement.
(g) Rights Plan. Neither the Corporation nor any of its Subsidiaries
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has adopted a shareholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control of
the Corporation. The Corporation confirms that no provision of such a plan will,
under any present or future circumstances, delay, prevent or interfere with the
performance of any of the Corporation's obligations under this Agreement and
such plan will not be "triggered" by such performance.
(h) Registration Rights and Voting. Except as set forth in Schedule
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6(h), the Corporation and its Subsidiaries are not under any obligation and have
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not granted any rights to register under the Securities Act any of its presently
outstanding securities or any of its securities that may subsequently be issued.
To the knowledge of the Corporation and its Subsidiaries, except as set forth in
Schedule 6(h), no stockholder of the Corporation or any of its Subsidiaries has
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entered into any agreement with respect to the voting of the Corporation's
securities.
(i) Representations and Warranties made in Loan Agreement. The
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representations and warranties made by the Corporation in the Loan Agreement are
hereby incorporated by reference herein.
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Section 7. Delivery of Legal Opinion. In connection with the execution of
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this Agreement, the Corporation shall deliver to the Holder and Target Invest
Consulting, LLC ("TIC") an opinion of outside counsel substantially in the form
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of Exhibit B attached hereto.
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Section 8. Miscellaneous Provisions.
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(a) Notices. All notices, requests and demands to or upon the
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respective parties hereto to be effective shall be in writing (including by
facsimile). Unless otherwise expressly provided herein, any such notice, request
or demand shall be deemed to have been duly given or made when delivered by
hand, or three (3) Business Days after being deposited in the mail, postage
prepaid, or, in the case of facsimile notice, when sent, receipt electronically
confirmed, addressed as follows or to such other address as may be hereafter
notified by the respective parties hereto and any future holders of the Note:
The Corporation:
Constellation 3D, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
The Holder:
Constellation 3D Technology Limited
c/o Zysman, Aharoni, ▇▇▇▇▇ and Co.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Israel
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Adv.
Telephone: 972-3-79 55 5552
Facsimile: 972-3-79-55 5550
(b) No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of any party, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
(c) Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the issuance of Common Stock upon the
conversion of the Note.
11
(d) Modifications. No modification or waiver of any provision of this
-------------
Agreement, nor consent to any departure by any party therefrom, shall in any
event be effective unless the same shall be in writing, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.
(e) Assignment; Successors and Assigns. The Holder may without
----------------------------------
notice, transfer or assign this Agreement or any interest herein to any Person,
including, without limitation, to TIC. The Corporation may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Holder. Subject to the preceding sentence, this Agreement
shall be binding upon and inure to the benefit of the Corporation and the
Holder, all future holders of the Note and their respective successors and
assigns.
(f) Entire Agreement. This Agreement, together with the Loan
----------------
Agreement and the Loan Documents, constitutes the entire agreement and
understanding of the parties hereto with respect to the subject matters
contained therein.
(g) Severabilitv. In case any one or more of the provisions contained
------------
in this Agreement is for any reason held to be invalid, illegal or unenforceable
in any respect by a court or other authority of competent jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
hereof. This Agreement will be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. In lieu of each such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
(h) Further Assurances. The Corporation shall take all actions as the
------------------
Holder shall reasonably request to more fully carry out the intentions of this.
(i) Counterparts. This Agreement may be executed by one or both of
------------
the parties to this Agreement on separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
(j) Governing Law. This Agreement and the rights and obligations of
-------------
the parties under this Agreement shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York, without regard
to principles of conflicts of laws.
(k) Specific Performance. The Corporation acknowledges and agrees
--------------------
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the Holder shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which the
Holder may be entitled by law or equity.
12
(l) SUBMISSION TO JURISDICTION; WAIVERS. THE CORPORATION HEREBY
-----------------------------------
IRREVOCABLY AND UNCONDITIONALLY: (A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE
STATE AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK; (B) CONSENTS THAT
ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; (C) AGREES THAT
SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A
COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM
OF MAIL), POSTAGE PREPAID, TO THE CORPORATION AT ITS ADDRESS SET FORTH IN
SECTION 8(a) OR AT SUCH OTHER ADDRESS OF WHICH THE HOLDER SHALL HAVE BEEN
NOTIFIED PURSUANT THERETO; (D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT
TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO ▇▇▇ IN ANY OTHER JURISDICTION; AND (E) WAIVES, TO THE MAXIMUM
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES.
(m) WAIVER OF JURY TRIAL. EACH OF THE CORPORATION AND THE HOLDER HEREBY
--------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
(n) Acknowledgments. The Corporation hereby acknowledges that: (a) it
---------------
has been advised by counsel in the negotiation, execution and delivery of this
Agreement; (b) the Holder has no fiduciary relationship to the Corporation, and
the relationship between the Corporation on one hand, and the Holder, on the
other hand, is solely that of debtor and creditor under the Loan Agreement; and
(c) no joint venture exists among the Corporation and the Holder.
[signature page follows]
13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
CONSTELLATION 3D, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Director
CONSTELLATION 3D TECHNOLOGY LIMITED
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director
14
Exhibit A
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NOTE
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A-1
Exhibit B
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FORM OF LEGAL OPINION
---------------------
B-1