SANDS BROTHERS & CO., LTD.
INVESTMENT BANKERS
MEMBER NYSE
00 XXXX XXXXXX, XXX XXXX, X.X. 10016
(000) 000-0000 Toll Free (000) 000-0000 Fax (000) 000-0000
August 3, 2000
Constellation 3D, Inc.
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx
President and CEO
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, March 7, 2000, March 23, 2000, April 17,
2000, May 31, 2000, June 28, 2000 and July 13, 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
as amended on March 23, 2000, April 17, 2000, May 31, 2000, June 28, 2000 and
July 13, 2000 (the "Warrant Agreement"). Capitalized terms used herein not
otherwise defined shall have the meanings ascribed to them in the Agency
Agreement.
In connection therewith, the parties hereto agree as follows:
Constellation 3D, Inc.
August 3, 2000
Page 2
1. In connection with any financing by Protocol, Hartford
Financial Group, Inc., and/or their respective affiliates, related parties and
financing sources (collectively the "Sands Group"), or any financing by any
other party introduced directly or indirectly by Sands Brothers on terms at
least as favorable as those that were proposed by Protocol and/or Hartford
Financial Group, Inc., should such funding be consummated by no later than 90
days from the date hereof and provided that the Hartford Financial Group, Inc.
financing is consummated by August 11, 2000 (which, for the purposes of this
letter shall include financing source(s) having good and immediately available
funds for the Company, but the Company not accepting such financing), then Sands
Brothers shall be entitled to receive Warrants on the following basis: on the
first $25 million of financing, Sands Brothers shall receive 300,000 Warrants
for each $1 million of financing; and on a further $50 million of financing,
Sands Brothers shall receive 150,000 Warrants for each $1 million of financing.
The exercise price of such Warrants shall be $10.34 per share; provided,
however, in the event that at least $75 million of financing is available from
financing sources having good and immediately available funds for the Company,
then the exercise price on all of such Warrants shall be reduced to $8.25 per
share. Anything contained in the Warrant Agreement to the contrary
notwithstanding, the first 2.4 million of such Warrants shall contain "cashless"
exercise provisions, but any Warrants issued in addition to such first 2.4
million Warrants shall not contain "cashless" exercise provisions. Furthermore,
after the issuance of 12.6 million Warrants hereto, the parties hereto agree to
the cancellation of the Sands Brothers Warrant Certificate No. SB-2 for 2.4
million Warrants dated December 1, 1999, on a pro-rata basis up to an aggregate
of 15 million Warrants to be issued hereto. In addition, the Warrants issued
pursuant to Certificate No. SB-2 shall be amended to not have "cashless"
exercise provisions on a pro-rata basis upon issuance of the first 2.4 million
Warrants issued pursuant to this letter agreement.
2. Except as set forth herein, the Agency Agreement and the
Warrant Agreement, each as amended, shall remain in full force and effect.
Constellation 3D, Inc.
August 3, 2000
Page 3
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/ X. Xxxxxx By: /s/ Xxxx Xxxxx
--------------------------- -------------------------------
Name: Name:
Title: Title:
