WARRANT AGREEMENT
-----------------
This Warrant Agreement ("Agreement"), dated as of August 18, 2000, is
made by and between Constellation 3D, Inc., a Florida corporation ("Company"),
and Blank Rome Xxxxxxx & XxXxxxxx LLP, a limited liability partnership formed
and registered under the laws of the Commonwealth of Pennsylvania ("Grantee").
WHEREAS, in order to reduce, by $50,000 (Fifty Thousand Dollars), its
outstanding legal fees due to Grantee for services rendered to Company by
Grantee, Company desires to afford Grantee the opportunity to purchase shares of
Company's common stock, par value $0.001 per share; and
WHEREAS, Company's Board of Directors has determined that it would be
in the best interests of Company to grant the warrant provided for herein to
Grantee, to reduce the amount of the aforesaid outstanding legal fees.
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.
"Eligible Securities" shall mean all Registrable Securities other than
Excluded Securities.
"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.
"Excluded Securities" shall mean Registrable Securities that are free
of restriction on resale under the Securities Act (by removal of all restrictive
legends, instructions to transfer agent or otherwise) pursuant to Rule 144(k) of
the Securities Act.
"Register," "registered" and "registration" each shall refer to a
registration effected by preparing and filing a registration statement or
statements or similar documents in compliance with the Securities Act and the
declaration or ordering of effectiveness of such registration statement or
document by the Commission.
"Registrable Securities" shall mean (i) the Common Stock issuable upon
exercise of the Warrant granted to Grantee, (ii) any Common Stock of the Company
issued in exchange for or in replacement of such Warrant, or Common Stock issued
upon conversion thereof.
"Requisite Period" shall mean, with respect to a firm commitment
underwritten public offering, the period commencing on the effective date of the
registration statement and ending on the date each underwriter has completed the
distribution of all securities purchased by it and, with respect to any other
registration, the period commencing on the effective date of the registration
statement and ending on the earlier of (i) the date on which the sale of all
Registrable Securities covered thereby is completed and (ii) 180 days after such
effective date.
"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
purchase at any time or from time to time, as a whole or in part, Five Thousand
Five Hundred and Fifty Five (5,555) shares of Stock ("Warrant Shares") on the
terms and conditions set forth in this Agreement.
3. Termination of Warrant. The Warrant shall terminate on July 31, 2005.
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
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).
6. Registration Rights If the Company at any time proposes to register any of
its securities under the Securities Act for sale to the public, whether for its
own account or for the account of other security holders or both (except with
respect to registration statements on Forms X-0, X-0 and any successor forms
thereto as well as registrations that do not permit resales), each such time it
will give written notice to Grantee at least thirty (30) days prior to such
filing. Upon the written request of Grantee received by the Company within
twenty (20) days after the giving of any such notice by the Company to register
any of its Eligible Securities, the Company will cause the Eligible Securities
as to which registration shall have been so requested to be included in the
securities to be covered by the registration statement proposed to be filed by
the Company, all to the extent required to permit the sale or other disposition
by the holder of such Eligible Securities so registered. Notwithstanding the
foregoing, in the event that any registration pursuant to this Section 6 shall
be, in whole or in part, an underwritten public offering of Stock, the number of
Eligible Securities to be included in such an underwriting may be reduced (pro
rata among the requesting holders and Grantee, and its assigns and the other
selling stockholders (based upon the number of Eligible Securities requested to
be registered by them)) if and to the extent that the managing underwriter shall
be of the good faith opinion that such inclusion would adversely affect the
success of such an underwriting, provided, that such number of Eligible
Securities shall not be reduced if any shares of Stock are to be included in
such underwriting for the account of any person other then the Company and its
assigns or requesting holders of Eligible Securities. Notwithstanding the
foregoing provisions, the Company may withdraw any registration statement
referred to in this Section 6 without thereby incurring any liability to the
holders of Eligible Securities.
If and whenever the Company is required by the provisions hereof to effect the
registration of any Registrable Securities under the Securities Act, the Company
will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such securities and use its best efforts to cause such registration
statement to become effective not later than 120 (one hundred and twenty) days
from the date of its filing and to remain effective for the Requisite Period;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the Requisite Period and comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such
registration statement in accordance with the intended method of disposition set
forth in such registration statement for such period;
(c) furnish to Grantee such number of copies of the registration
statement and the prospectus included therein (including each preliminary
prospectus) as Grantee reasonably may request in order to facilitate the
intended disposition of the Registrable Securities covered by such registration
statement;
(d) use its best efforts (i) to register or qualify the Registrable
Securities covered by such registration statement under the securities or "blue
sky" laws of such jurisdictions as the sellers of Registrable Securities or, in
the case of an underwritten public offering, the managing underwriter,
reasonably shall request, (ii) to prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements, and take such
other actions, as may be necessary to maintain such registration and
qualification in effect at all times for the period of distribution contemplated
thereby and (iii) to take such further action as may be necessary or advisable
to enable the disposition of the Registrable Securities in such jurisdictions,
provided, that the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of process in any
such jurisdiction;
(e) use its best efforts to list the Registrable Securities covered by
such registration statement with any securities exchange on which the Common
Stock of the Company is then listed, or, if the Common Stock is not then listed
on a national securities exchange, use its best efforts to facilitate the
reporting of the Common Stock on the Nasdaq National Market or SmallCap Market
or the quotation of the Common Stock using the Over-the-Counter Bulletin Board
quotation service of the National Association of Securities Dealers;
(f) immediately notify Grantee, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event of which the Company has knowledge as a result of which the
prospectus contained in such registration statement, as then in effect, includes
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing and promptly amend or
supplement such registration statement to correct any such untrue statement or
omission;
(g) notify each seller of Registrable Securities of the issuance by the
Commission of any stop order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that purpose and make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible time;
(h) permit Grantee to review the registration statement and all
amendments and supplements thereto for a reasonable period of time prior to
their filing;
(i) if the offering is an underwritten offering, enter into a written
agreement with the managing underwriter selected in the manner herein provided
in such form and containing such provisions as are usual and customary in the
securities business for such an arrangement between such underwriter and
companies of the Company's size and investment stature, including, without
limitation, customary indemnification and contribution provisions;
(j) if the offering is an underwritten offering, at the request of any
seller of Registrable Securities, use its best efforts to furnish to such seller
on the date that Registrable Securities are delivered to the underwriters for
sale pursuant to such registration: (i) if Grantee is not representing the
Company for the purposes of such registration, a copy of an opinion dated such
date of counsel representing the Company for the purposes of such registration,
addressed to the underwriters, stating that such registration statement has
become effective under the Securities Act and that (A) to the best knowledge of
such counsel, no stop order suspending the effectiveness thereof has been issued
and no proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (B) the registration statement, the
related prospectus and each amendment or supplement thereof comply as to form in
all material respects with the requirements of the Securities Act (except that
such counsel need not express any opinion as to financial statements or other
financial or statistical information contained therein) and (C) to such other
effects as reasonably may be requested by counsel for the underwriters; and (ii)
a copy of a letter dated such date from the independent public accountants
retained by the Company, addressed to the underwriters, stating that they are
independent public accountants within the meaning of the Securities Act and
that, in the opinion of such accountants, the financial statements of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereof, comply as to form in all material respects with
the applicable accounting requirements of the Securities Act, and such letter
shall additionally cover such other financial matters (including information as
to the period ending no more than five business days prior to the date of such
letter) with respect to such registration as such underwriters reasonably may
request;
(k) take all actions reasonably necessary to facilitate the timely
preparation and delivery of certificates (not bearing any legend restricting the
sale or transfer of such securities) representing the Registrable Securities to
be sold pursuant to the Registration Statement and to enable such certificates
to be in such denominations and registered in such names as Grantee or any
underwriters may reasonably request; and
(l) take all other reasonable actions necessary to expedite and
facilitate the registration of the Registrable Securities pursuant to the
Registration Statement.
In connection with each registration hereunder, the Grantee will furnish to the
Company in writing such information with respect to itself and the proposed
distribution by it as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws.
7. Expenses. The Company will pay any and all costs and expenses in connection
with any registration statement filed hereunder.
8. Transferability. Subject to compliance with applicable federal and state
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.
The rights to have the Company register Registrable Securities pursuant to this
Agreement may be assigned by Grantee to one or more transferees or assignees of
such securities; provided, that the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned.
9. Change in Number of Shares of Stock. If and to the extent that the number of
issued shares of Stock shall be increased or reduced by change in par value,
split-up, 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.
10. Rights prior to exercise of warrant. Grantee shall have no rights as a
stockholder with respect to the Warrant Shares until payment of the Purchase
Price and delivery to Grantee of such Stock as herein provided.
11. Agreement Binding. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
12. Severability. In case one or more provisions of this Agreement shall be
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.
13. Entire Agreement. This Agreement contains 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
laws of the Commonwealth of Pennsylvania.
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: /s/ Xxxxxx Xxxxxx
---------------------------------
Xxxxxx Xxxxxx,
President and
Chief Executive Officer
BLANK ROME XXXXXXX & XxXXXXXX LLP
By: /s/ Xxxx X. Xxxxxx, Esq.
---------------------------------
Name: Xxxx X. Xxxxxx, Esq.
Title: Partner
