March 23, 2000
Constellation 3D, Inc.
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx
President and CEO
Re: Amendment No. 3 to Placement Agency Agreement; Amendment No. 1 to
Warrant Agreement
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Dear Xx. Xxxxxx:
The parties hereto, Constellation 3D, Inc. (f/k/a C3D Inc.), a Florida
corporation (the "Company") and Sands Brothers & Co., Ltd., a Delaware
corporation ("Sands Brothers") have entered into (A) that certain placement
agency agreement (hereinafter the "Agency Agreement") dated as of December 1,
1999, as amended December 22, 1999 and March 7, 2000, and as supplemented by
that certain letter agreement dated February 8, 2000 (hereinafter the "Agency
Agreement") and (B) that certain Warrant Agreement dated as of December 1, 1999
(the "Warrant Agreement") .
In connection therewith, the parties hereto agree that the Agency
Agreement and Warrant Agreement are hereby amended as follows (which, among
other things, gives effect to the 3 for 1 stock split of the Company effectuated
in December 1999):
1. The introductory paragraph of the Agency Agreement is hereby deleted
in its entirety and in its place and stead the following is inserted:
"The undersigned, Constellation 3D, Inc. (f/k/a/ C3D Inc.), a
corporation organized under the laws of the state of Florida (together
with any of its subsidiaries, affiliates,
Constellation 3D, Inc.
March 23, 2000
Page 2
successors or assigns the "Company"), proposes to offer for sale to certain
"accredited investors, through Sands Brothers & Co., Ltd., in accordance with
the terms and conditions specified in the letter agreement dated October 25,
1999 between the parties hereto (the "Letter Agreement"), as exclusive placement
agent ("Sands Brothers" or the "Placement Agent") on a best efforts basis, a
minimum of $4,000,000 (the "Minimum Amount") and a maximum of $120,000,000 (the
"Maximum Amount") of (a) the Company's capital stock (whether Common Stock or
Preferred Stock convertible into Common Stock) (collectively, the "Capital
Stock"), at a price equal to a 30% discount to the average of the bid price for
the 120 day period prior to the Closing (the "Minimum Offering Price") with
respect to the Minimum Amount, and with respect to an amount in excess of the
Minimum Amount and up to the Maximum Amount, at the Minimum Offering Price but
in no event less than $4.00 per share and/or (b) any other similar form of debt
financing transactions (hereinafter, collectively "Other Financing"). The
Capital Stock and Other Financing instruments (the "Securities") to be offered
pursuant to the Offering Documents (as hereinafter defined) and Other Financing
transactions to be consummated are sometimes hereinafter referred to
collectively as the "Financing" or the "Offering."
2. Paragraph 4(e) of the Agency Agreement is hereby deleted in
its entirety and in its place and stead the following is inserted:
"(e) Issuance of Placement Agent Warrants. At each Closing as provided
in paragraph 4(a) above, the Company shall issue to the Placement Agent
or its designee(s), subject to the ratable adjustment of the shares
underlying the Placement Agent Warrants (hereinafter defined) and the
exercise price thereof in the event of any Company dividend, stock
split or reclassification declared after the date hereof, (i) with
respect to the sale of the Minimum Amount, warrants to purchase
1,050,000 shares of the Company's Common Stock ("Initial Placement
Agent Warrants") and (ii) 600,000 warrants for each $1,000,000 of all
Securities sold in the Financing up to an aggregate of $25,000,000
("the Additional Placement Agent Warrants") (collectively referred to
as the "Placement Agent Warrants"). The Initial Placement Agent
Warrants shall be exercisable for five (5) years, commencing upon the
date of their issuance, at a price of $3.67 per share of Common Stock.
The Additional Placement Agent Warrants shall be exercisable for five
(5) years, commencing upon the date of their issuance, at a price equal
to a 40% discount to the average of the bid price of the Common Stock
for the 120 day period prior to any Closing, but in no event less than
of $5.00 per share. The Placement Agent Warrants shall be in the form
attached hereto as Exhibit B, and will be governed by the terms of the
Warrant Agreement attached hereto as Exhibit C. The certificates
representing the Placement Agent Warrants will be in such denominations
and such names as the Placement Agent may request prior to each
closing. The Placement Agent Warrants may not be assigned by Sands
Brothers, except to Sands Brothers' officers, employees or other
designees, without the written consent of the Company. All issuance of
Placement agent warrants will be done in full compliance with
applicable law."
Constellation 3D, Inc.
March 23, 2000
Page 3
3. Paragraph 1 of the Warrant Agreement is hereby deleted in its
entirety and in its place and stead the following is inserted:
1. Grant. The Holder and its designees is hereby granted the right to
purchase, at any time from December 1, 1999, until 5:30 p.m., New York
time, on December 1, 2004, up to an aggregate of 16,050,000 Warrant
Shares (subject to adjustment as provided in Section 8 hereof) at the
initial exercise price per share as provided in Section 6 hereof,
vesting as follows:
(i) 1,050,000 Warrant Shares shall vest upon the sale
of the Minimum Amount (the "Initial Warrant Shares");
(ii) 600,000 Warrant Shares for each $1,000,000 of
all Securities sold in the Financing ("the Additional
Warrant Shares").
4. Paragraph 6.1 of the Warrant Agreement is hereby deleted in its
entirety and in its place and stead the following is inserted:
ss.6.1 Initial and Adjusted Exercise Price. Except as otherwise
provided in Section 8 hereof, the initial exercise price with respect
to the Initial Warrant Shares shall be $3.67 per share of Common Stock,
and the initial exercise price with respect to the Additional Warrant
Shares shall be equal to a 40% discount to the average of the bid price
of the Common Stock for the 120 day period prior to any Closing, but in
no event less than of $5.00 per share of Common Stock. The adjusted
exercise price shall be the price which shall result from time to time
from any and all adjustments of the initial exercise price in
accordance with the provisions of Section 8 hereof.
5. Except as set forth herein, the Agency Agreement and the Warrant
Agreement shall remain in full force and effect.
Constellation 3D, Inc.
March 23, 2000
Page 4
IN WITNESS WHEREOF, the Company and Sands Brothers have caused
this Agreement to be executed by its duly authorized representative.
CONSTELLATION 3D, INC. SANDS BROTHERS & CO., LTD.
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxx Xxxxx
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Name: Xxxxxx Xxxxxx Name: Xxxx Xxxxx
Title: President Title: Managing Director
Date: March 23, 2000 Date: March 23, 2000
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