CONSTELLATION 3D, INC.
SECURITIES PURCHASE AGREEMENT
March 23, 2000
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is made as of the 23rd
day of March, by and between Constellation 3D, Inc., a Florida corporation (the
"Company"), and the investors listed on Schedule A hereto, each of which is
herein referred to as an "Investor."
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Issuance and Sale of 10% Subordinated Convertible Debenture.
(a) Subject to the terms and conditions of this Agreement, each
Investor severally and not jointly agrees to purchase at the Closing and the
Company agrees to issue and sell to each Investor at the Closing, that principal
amount of the Company's 10% Subordinated Convertible Debenture ("Debenture" or,
collectively, the "Debentures") at the purchase price set forth opposite each
Investor's name on Schedule A hereto. The Company's sale of the Debentures to
each Investor is a separate sale.
1.2 Closing.
(a) The initial purchase and sale of the Debentures (the "Initial
Closing") shall take place at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ & Ball P.C.,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 9:00 a.m., on March 24, 2000, or
at such other time and place as the Company and the Investors mutually agree
upon orally or in writing. For purposes of this Agreement, the term "Closing,"
unless otherwise indicated, refers to the applicable closing of the Initial
Closing or the Subsequent Closing(s), as the case may be.
(b) At the Closing, the Company shall deliver to each Investor,
as applicable, a certificate representing the aggregate principal amount of the
Debentures to be purchased by such Investor as specified on Schedule A hereto,
against payment of the purchase price therefor, by check or wire transfer
payable to the Company, or cancellation of Company indebtedness.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Investor, except as set forth on a Schedule of
Exceptions to Representations and Warranties attached hereto as Exhibit A (the
Schedule of Exceptions), the following:
2.1 Subsidiaries. The Company does not presently own or control, directly
or indirectly, any interest in any other corporation, association, or other
business entity except as set forth in Exhibit A or as disclosed in the SEC
Reports (as hereinafter defined) (each, a "Subsidiary" and collectively, the
"Subsidiaries"). Unless the context requires otherwise, all references herein to
the "Company" shall refer to the Company and its Subsidiaries. The Company is
not a party to any joint venture, partnership, or similar arrangement.
2.2 Organization, Good Standing, and Qualification. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Florida, and has all requisite corporate power and
authority to carry on its business as now conducted. The Subsidiaries are duly
organized in their respective jurisdictions of organization, validly existing
and in good standing in such respective jurisdictions and each has the power and
authority to carry on its respective business as now conducted. The Company and
the Subsidiaries are duly qualified to transact business and are in good
standing in each jurisdiction in which the failure so to qualify would have a
material adverse effect on the Company's business or properties.
2.3 Capitalization and Voting Rights. The number of authorized, issued and
outstanding capital stock of the Company is set forth in Exhibit A. Except as
disclosed in Exhibit A, no securities of the Company or any Subsidiary are
entitled to preemptive or similar rights, nor is any holder of securities of the
Company or any Subsidiary entitled to preemptive or similar rights arising out
of any agreement or understanding with the Company or any Subsidiary by virtue
of any of the Transaction Documents (defined hereinafter). Except as disclosed
in Exhibit A, there are no outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, except as a result of the purchase and sale of the Securities, or
rights or obligations convertible into or exchangeable for, or giving any Person
(as defined below) any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings, or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional shares of
Common Stock, or securities or rights convertible or exchangeable into shares of
Common Stock. To the knowledge of the Company, except as specifically disclosed
in the SEC Reports (as defined below) or Exhibit A, no Person or group of
related Persons beneficially owns (as determined pursuant to Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), or has the right to acquire by agreement with or by obligation binding
upon the Company, beneficial ownership of in excess of 5% of the Common Stock. A
"Person" means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
2.4 Authorization. All corporate action on the part of the Company, its
officers, directors, and shareholders necessary for the authorization,
execution, and delivery of this Agreement and the Registration Rights Agreement
(the "Transaction Documents"), the performance of all obligations of the Company
hereunder and thereunder and the authorization, issuance (or reservation for
issuance), and delivery of the Debentures being sold hereunder, and the Common
Stock issuable upon conversion of the Debentures, has been taken or will be
taken prior to the Closing, and the Transaction Documents constitute valid and
legally binding obligations of the Company, enforceable in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditorS' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
the Transaction Documents may be limited by applicable federal or state laws.
2.5 Valid Issuance of Debentures and Common Stock.
(a) The Debentures being purchased by the Investors hereunder, when
issued, sold, and delivered in accordance with the terms hereof for the
consideration provided for herein, will be duly and validly issued, and, based
in part upon the representations of the Investors in this Agreement, will be
issued in compliance with all applicable federal and state securities laws. The
Common Stock issuable upon conversion of the Debentures purchased under this
Agreement has been duly and validly reserved for
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issuance and, upon issuance in accordance with the terms of the Debentures,
shall be duly and validly issued, fully paid and nonassessable, and issued in
compliance with all applicable securities laws, as presently in effect, of the
United States and each of the states whose securities laws govern the issuance
of any of the Debentures hereunder.
(b) All outstanding shares of Common Stock of the Company are duly and
validly authorized and issued, fully paid and nonassessable, and were issued in
compliance with all applicable federal and state securities laws.
2.6 Filings, Consents and Approvals. Neither the Company nor any Subsidiary
is required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in connection with
the execution, delivery and performance by the Company of the Agreement and the
Ancillary Agreements, other than (i) the application(s) to the Nasdaq National
Market ("NASDAQ") for the listing of the shares of Common Stock issuable upon
conversion of the Debentures with the NASDAQ (and with any other national
securities exchange of market on which the Common Stock is then listed), (ii)
applicable Blue Sky filings, and (iii) in all other cases where the failure to
obtain such consent, waiver, authorization or order, or to give such notice or
make such filing or registration could not have or result in, individually or in
the aggregate, a material adverse effect on the results or operations of the
Company and its Subsidiaries taken as a whole ("Material Adverse Effect").
2.7 Litigation. There is no action, suit, proceeding, claim or
investigation pending or, to the knowledge of the Company, currently threatened
against the Company which questions the validity of this Agreement or the
Ancillary Agreements, or the right of the Company to enter into any of them, or
to consummate the transactions contemplated hereby or thereby, or which might
result, either individually or in the aggregate, in any material adverse changes
in the assets, condition, affairs, or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company, nor is
the Company aware that there is any basis for the foregoing. The foregoing
includes, without limitation, actions, pending or threatened (or any basis
therefor known to the Company) involving the prior employment of any of the
Company's employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment, or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding, or investigation by the
Company currently pending or which the Company intends to initiate.
2.8 Patents and Trademarks. The Company has sufficient title and ownership
of all patents, trademarks, service marks, trade names, copyrights, trade
secrets, information, inventions, proprietary rights, and processes necessary
for its business as now conducted without any conflict with or infringement of
the rights of others. The Company has not received any communications alleging
that the Company has violated or, by conducting its business would violate any
of the patents, trademarks, service marks, trade names, copyrights, or trade
secrets, or other proprietary rights of any other person or entity. The Company
is not aware that any of its employees, officers, or consultants are obligated
under any contract (including licenses, covenants, or commitments of any nature)
or other agreement, or subject to any judgment, decree, or order of any court or
administrative agency, that would interfere with the use of such employee's,
officer's, or consultant's commercially reasonable efforts to promote the
interests of the
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Company or that would conflict with the Company's business as conducted. Neither
the execution nor delivery of the Transaction Documents, nor the carrying on of
the Company's business by the employees of the Company, nor the conduct of the
Company's business, will, to the Company's knowledge, conflict with or result in
a breach of the terms, conditions, or provisions of, or constitute a default
under, any contract, covenant, or instrument under which any of such employees,
officers or consultants are now obligated.
2.9 Compliance with Other Instruments. The Company is not in violation or
default of any provisions of its Articles of Incorporation or Bylaws or, to its
knowledge, of any instrument, judgment, order, writ, decree, mortgage,
indenture, lease, license or contract to which it is a party or by which it is
bound or, to its knowledge, of any provision of federal, state, or local
statute, rule, or regulation applicable to the Company. The execution, delivery,
and performance of the Transaction Documents and the consummation of the
transactions contemplated thereby will not result in any such violation or be in
conflict with or constitute, with or without the passage of time and giving of
notice, either a default under any such provision, instrument, judgment, order,
writ, decree or contract, or an event which results in the creation of any lien,
charge, or encumbrance upon any assets of the Company or the suspension,
revocation, impairment, forfeiture, or nonrenewal of any material permit,
license, authorization, or approval applicable to the Company, its business or
operations, or any of its assets or properties.
2.10 Agreements.
(a) Except as set forth in the Disclosure Materials (defined
hereinafter), or for agreements explicitly contemplated hereby and by the
Transaction Documents, the Company is a party to no material agreements,
understandings, or proposed transactions.
2.11 Permits. The Company has all material franchises, permits, licenses,
and any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company and
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted. The Company is not
in default in any material respect under any of such franchises, permits,
licenses, or other similar authority.
2.12 Compliance with Laws. The conduct of business by the Company and each
Subsidiary as presently and proposed to be conducted is not subject to
continuing oversight, supervision, regulation or examination by any governmental
official or body of the United States or any other jurisdiction wherein the
Company or any Subsidiary conducts or proposes to conduct such business, except
such regulation as is applicable to commercial enterprises generally. Neither
the Company nor any of the Subsidiaries has received any notice of any violation
of or noncompliance with, any Federal, state, local or foreign laws, ordinances,
regulations and orders (including, without limitation, those relating to
environmental protection, occupational safety and health, Federal securities
laws, equal employment opportunity, consumer protection, credit reporting,
"truth-in-lending", and warranties and trade practices) applicable to its
business or to the business of any Subsidiary, the violation of, or
noncompliance with, which would have a materially adverse effect on either the
Company's business or operations, or that of any Subsidiary, and the Company
knows of no facts or set of circumstances which would give rise to such a
notice.
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2.13 Manufacturing and Marketing Rights. The Company has not granted rights
to manufacture, produce, assemble, license, market, or sell its products to any
other person and is not bound by any agreement that affects the Company's
exclusive right to develop, manufacture, assemble, distribute, market, or sell
its products.
2.14 Disclosure. Neither this Agreement nor the Ancillary Agreements, nor
any other statements or certificates made or delivered in connection herewith or
therewith contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading.
2.15 Registration Rights. Except as disclosed on Exhibit A and as provided
in the Registration Rights Agreement, the Company has not granted or agreed to
grant any registration rights, including piggyback rights, to any person or
entity.
2.16 Title to Property and Assets. The Company owns its property and assets
free and clear of all mortgages, liens, loans, pledges, security interests,
claims, equitable interests, charges, and encumbrances, except such encumbrances
and liens which arise in the ordinary course of business and do not materially
impair the Company's ownership or use of such property or assets. With respect
to the property and assets it leases, the Company is in compliance with such
leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims, or encumbrances.
2.17 Financial Statements. The Company has delivered to each Investor its
audited financial statements (balance sheet and profit and loss statement,
statement of shareholder's equity and statement of cash flows including notes
thereto) at December 31, 1998 and December 31, 1999 and for the fiscal years
then-ended and its unaudited financial statements (balance sheet and profit and
loss statement, statement of shareholder's equity and statement of cash flows
including notes thereto) at February 29, 2000 and for the two month period
then-ended (collectively, the "Financial Statements"). The Financial Statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated and with each
other, except that unaudited Financial Statements may not contain all footnotes
required by generally accepted accounting principles. The Financial Statements
fairly present the financial condition and operating results of the Company as
of the dates, and for the periods, indicated therein, subject in the case of the
unaudited Financial Statements to normal year-end audit adjustments. Except as
set forth in the Financial Statements, the Company has no material liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to December 31, 1999 and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in the
Financial Statements, which, in both cases, individually or in the aggregate are
not material to the financial condition or operating results of the Company.
Except as disclosed in the Financial Statements, the Company is not a guarantor
or indemnitor of any indebtedness of any other person firm, corporation or other
entity, and the Company has not assumed or otherwise become directly or
contingently liable on any indebtedness of any other person.
2.18 Changes. Since December 31, 1999 there has not been any material
adverse change in the business or prospects of the Company and its Subsidiaries
taken as a whole.
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2.19 Employee Benefit Plans. The Company does not have any Employee Benefit
Plan as defined in the Employee Retirement Income Security of 1974.
2.20 Tax Returns, Payments, and Elections. The Company has timely filed all
tax returns and reports as required by law, and all such returns and reports are
true and correct in all material respects. The Company has paid all taxes and
other assessments due, if any, except those contested by it in good faith which
are listed in the Schedule of Exceptions. The provision for taxes of the Company
as shown in the Financial Statements is adequate for taxes due or accrued as of
the date thereof. The Company has not elected pursuant to the Internal Revenue
Code of 1986, as amended ("Code"), to be treated as a Subchapter S corporation
or a collapsible corporation pursuant to Section 341(f) or Section 1362(a) of
the Code.
2.21 Insurance. The Company has in full force and effect fire and casualty
insurance policies, with extended coverage, sufficient in amount (subject to
reasonable deductibles) to allow it to replace any of its properties that might
be damaged or destroyed, and the Company has insurance against other hazards,
risks, and liabilities to persons and property to the extent and in the manner
customary for companies in similar businesses similarly situated.
2.22 Minute Books. The minute books of the Company provided to the
Investors contain a complete summary of all meetings and actions of the
Company's Board of Directors and shareholders since the time of incorporation
and reflect all transactions referred to in such minutes accurately in all
material respects.
2.23 Labor Agreements and Actions. The Company is not aware that any
officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company, nor does the Company have a present
intention to terminate the employment of any of the foregoing. Subject to
general legal principles related to wrongful termination of employees, the
employment of each officer and employee of the Company is terminable at the will
of the Company, with or without cause.
2.24 SEC Reports; Financial Statements. The Company has filed all reports
required to be filed by it under the Exchange Act, including pursuant to Section
13 (a) or 15(d) thereof, for the two years preceding the date hereof (or such
shorter period as the Company was required by law to file such material) (the
foregoing materials being collectively referred to herein as the "SEC Reports"
and, together with the Schedule of Exceptions to this Agreement the "Disclosure
Materials") on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Reports, when filed, 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. All material
agreements to which the Company is a party or to which the property or assets of
the Company are subject have been filed as exhibits to the SEC Reports to the
extent required. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing. Such financial statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved ("GAAP"), except as may be otherwise
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specified in such financial statements or the notes thereto, and fairly present
in all material respects the financial position of the Company and its
consolidated subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments. Except
as set forth on Exhibit A or except as specifically disclosed in the SEC
Reports, since December 31, 1999 (a) there has been no event, occurrence or
development that has had or that could reasonably be expected to have or result
in a Material Adverse Effect, (b) the Company has not incurred any liabilities
(contingent or otherwise) other than (x) liabilities incurred in the ordinary
course of business consistent with past practice and (y) liabilities not
required to be reflected in the Company's financial statements pursuant to GAAP
or required to be disclosed in filings made with the Commission, (c) the Company
has not altered its method of accounting or the identity of its auditors and (d)
the Company has not declared or made any payment or distribution of cash or
other property to its stockholders or officers or directors (other than in
compliance with existing Company stock or stock option plans) with respect to
its capital stock, or purchased, redeemed (or made any agreements to purchase or
redeem) any shares of its capital stock.
3. Representations and Warranties of the Investors. Each Investor hereby
severally and not jointly represents and warrants that:
3.1 Authorization. The Transaction Documents constitute valid and
legally binding obligations of such Investor enforceable in accordance with
their terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
the Investors Rights Agreement may be limited by applicable federal or state
laws.
3.2 Purchase Entirely for Own Account. The Debentures to be purchased
by such Investor and the Common Stock issuable upon conversion thereof
(collectively, the "Securities") will be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and such Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same. Such Investor does not have any contract, undertaking, agreement, or
arrangement with any person to sell, transfer, or grant participation to any
person with respect to any of the Securities. Investor represents that it has
full power and authority to enter into this Agreement.
3.3 Disclosure of Information. Investor acknowledges that it has
received all the information that it has requested relating to the purchase of
the Debentures. Investor further represents that it has had an opportunity to
ask questions and receive answers from the Company regarding the terms and
conditions of the offering of the Debentures. The foregoing, however, does not
limit or modify the representations and warranties of the Company in Section 2
of this Agreement or the right of the Investors to rely thereon.
3.4 Investment Experience. Investor is an investor in securities of
companies in the development stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Debentures. If other than an
individual, Investor also represents it has not been organized for the purpose
of acquiring the Debentures.
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3.5 Accredited Investor. Investor is an "accredited investor" within
the meaning of Rule 501 of Regulation D of the Securities and Exchange
Commission (the "SEC"), as presently in effect.
3.6 Restricted Securities. Investor understands that the Debentures
that it is purchasing are characterized as "restricted securities" under the
federal securities laws inasmuch as they are being acquired from the Company in
a transaction not involving a public offering, and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act of 1933, as amended (the "Act"), only in certain limited
circumstances. In this connection, Investor represents that it is familiar with
SEC Rule 144, as presently in effect, and understands the resale limitations
imposed thereby and by the Act.
3.7 Legends. It is understood that the certificates evidencing the
Debentures (and the Common Stock issuable upon conversion thereof) may bear one
or all of the following legends:
"These securities have not been registered under the Securities Act of
1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with respect
to the securities under such Act or an opinion of counsel reasonably
satisfactory to the Company."
4. Conditions of Investor's Obligations at Closing. The obligations of each
Investor under subsection 1.1(a) of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against any Investor who does not consent
thereto:
4.1 Representations and Warranties. The representations and warranties
of the Company contained in Section 2 hereof shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
4.2 Performance. The Company shall have performed and complied with
all agreements, obligations, and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
4.3 Compliance Certificate. The President of the Company shall deliver
to each Investor at the Closing a certificate certifying that the conditions
specified in Sections 4.1 and 4.2 have been fulfilled and stating that there has
been no adverse change in the business, affairs, prospects, operations,
properties, assets, or condition of the Company since December 31, 1999.
4.4 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investors and their counsel, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request.
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4.5 Opinion of Company Counsel. Each Investor shall have received from
Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, an opinion, dated as of the Closing, in form
attached hereto as Exhibit B.
4.6 Ancillary Agreements. The Company and each Investor shall have
entered into the Registration Rights Agreement dated of even date herewith, a
form of which is attached hereto as Exhibit C (the "Registration Rights
Agreement").
4.7 Good Standing Certificates. The Company and the Subsidiaries shall
have delivered to the Investors, dated as of a date within five business days of
the Closing, certificates issued by the proper authorities in each of their
respective jurisdictions of organization to the effect that each of them is
legally existing and in good standing.
4.8 Secretary's Certificate. The Company shall have delivered to the
Investors a certificate executed by the Secretary of the Company dated as of the
Closing certifying the following matters: (a) the resolutions adopted by the
Company's Board of Directors and shareholders relating to the transactions
contemplated by this Agreement; (b) the Articles of Incorporation and Bylaws of
the Company; and (c) such other matters as special counsel may reasonably
request.
4.9 Debenture. The Company shall have delivered to each Investor a
debenture certificate for aggregate principal amount of Debentures set forth
opposite such Investor's name on Schedule A hereto.
4.10 Sale of Debentures. A minimum aggregate principal amount of
$4,000,000 of Debentures shall be purchased by the Investors for a minimum
aggregate purchase price of $4,000,000.
4.11 Sands Brothers. The Company shall pay Sands Brothers & Co., Ltd.
all commissions, fees and warrants due as set forth in that certain placement
agency agreement dated December 1, 1999, as amended December 22, 1999 and March
7, 2000.
5. Conditions of the Company's Obligations at Closing. The obligations of
the Company to each Investor under this Agreement are subject to the fulfillment
on or before any Closing of each of the following conditions by that Investor:
5.1 Representations and Warranties. The representations and warranties
of each Investor contained in Section 3 shall be true on and as of such Closing
with the same effect as though such representations and warranties had been made
on and as of such Closing.
5.2 Payment of Purchase Price. Each Investor shall have delivered the
purchase price specified in Section 1.2.
5.3 Registration Rights Agreement. The Company and each Investor shall
have entered into the Registration Rights Agreement.
5.4 Sale of Debentures. A minimum aggregate principal amount of
$4,000,000 of Debentures shall be purchased by the Investors for a minimum
aggregate purchase price of $4,000,000.
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6. Miscellaneous.
6.1 Survival of Warranties. The warranties, representations, and
covenants of the Company and Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investors or the Company.
6.2 Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Debentures sold hereunder or any Common Stock issued upon
conversion thereof). Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
6.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of New York as applied to agreements among New York
residents entered into and to be performed entirely within New York. The Company
(1) agrees that any legal suit, action or proceeding arising out of or relating
to this Agreement shall be instituted exclusively in New York State Supreme
Court, County of New York, or in the United States District Court for the
Southern District of New York, (2) waives any objection which the Company may
have now or hereafter to the venue of any such suit, action or proceeding, and
(3) irrevocably consents to the jurisdiction of the New York State Supreme
Court, County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding. The Company further
agrees to accept and acknowledge service of any and all process which may be
served in any such suit, action or proceeding in the New York State Supreme
Court, County of New York, or in the United States District Court for the
Southern District of New York and agrees that service of process upon the
Company mailed by certified mail to the Company's address shall be deemed in
every respect effective service of process upon the Company, in any such suit,
action or proceeding. THE PARTIES HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.
6.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or five (5)
days following deposit with the United States Post Office, by registered or
certified mail, postage prepaid, and addressed to the party to be notified at
the address indicated for such party on the signature page hereof, or at such
other address as such party may designate by ten (10) days' advance written
notice to the other parties.
-10-
6.7 Finder's Fee. Each party represents that it neither is nor will be
obligated for any finders' or brokers' fee or commission in connection with this
transaction, except for commissions, fees and other compensation due to Sands
Brothers & Co., Ltd.
6.8 Expenses. If any action at law or in equity is necessary to
enforce or interpret the terms of the Transaction Documents the prevailing party
shall be entitled to reasonable attorney's fees, costs, and necessary
disbursements in addition to any other relief to which such party may be
entitled.
6.9 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Common Stock issued or issuable upon conversion of the
Debentures sold and issued pursuant to this Agreement. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.
6.10 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
6.11 Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY: Constellation 3D, Inc.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
INVESTORS:
Sands Brothers Venture Capital LLC
By: SB Venture Capital Management LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Manager
SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
SCHEDULE A
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Schedule of Investors -- Initial Closing (March 24, 2000)
Aggregate Total
Principal Amount No. Shares
of Debentures Convertible
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Sands Brothers Venture Capital Associates LLC $4,000,000 226,629
Total $4,000,000
EXHIBIT A
Schedule of Exceptions
The sections referenced herein correspond to the sections of the Agreement.
Unless the context otherwise requires, all capitalized terms used herein shall
have the meanings as set forth in the Agreement.
Section 2.1 Subsidiaries.
In addition to the subsidiaries set forth in the SEC Reports,
the Company owns 100% of Constellation 3D Trust L.L.C., which is inactive.
Section 2.2 Capitalization and Voting Rights.
As of March 24, 2000 (i) there were 46,501,609 shares of
Common Stock issued and outstanding; (ii) the Company has issued no additional
capital stock; (iii) no shareholder is entitled to preemptive or similar
rights; (iv) each of the 8.0% Series B Convertible Note due October 31, 2001
in principal amount of $500,000 (the "Series B Note") and the 8.0% Series C
Convertible Note due October 31, 2001 in principal amount of $1,600,000 (the
"Series C Note") are convertible into shares of Common Stock; (v) General
Itzhak ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ hold options to purchase 100,000 and 75,000
shares of Common Stock, respectively, each at an exercise price of $4.00 per
share; and (vi) Moorwood Investment Limited holds warrants to purchase up to
100,000 shares of Common Stock at an exercise price of $10.00 per share.
Section 2.10 Registration Rights.
The Company has granted registration rights to the holders of
the Series B and Series C Notes and to MBA-on-Demand, L.L.C. (2,500 shares of
Common Stock; piggyback only).
EXHIBIT B
Opinion of Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
EXHIBIT C
Registration Rights Agreement