LOAN AGREEMENT (this "Agreement"), dated as of August 22, 2000, by and among
Constellation 3D Technology Limited, a British Virgin Islands company located at
Road Town, Tortola, British Virgin Islands (the "Lender"), and Constellation 3D,
Inc., a Florida corporation with headquarters located at 000 Xxxx Xxxxxx, Xxxxx
000, Xxx Xxxx, Xxx Xxxx 00000 (the "Borrower").
WHEREAS:
The parties desire that, upon the terms and subject to the conditions
contained herein, the Lender shall open a US$6 million line of credit to
Borrower;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Lender and the
Borrower hereby agree as follows:
1. LOAN.
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a. Credit Line. Upon the terms and conditions set forth herein,
the Lender will open a credit line of up to US$6,000,000.00 (six million) to the
Borrower, from which the Borrower can withdraw within 6 consecutive periods of
30 days each, from the signing of the Agreement, the amount of up to
US$1,000,000 (one million) ("the "Withdrawals") each such period.
b. Interests. The Withdrawals will carry an annual interest of
THREE MONTH LIBOR + 3 %, calculated for each Withdrawal from the day of receipt
of the requested amount by the Borrower. The interest for each Withdrawal shall
be payable in semi-annual installments.
c. Funds Delivery. The Lender will deliver the funds within 6
business days from receiving a written request from the Borrower.
d. Loan Repayment. The Withdrawals will be paid one year from the
day of receipt by the Borrower (the "Due Date"). The Borrower will have the
option to pay all or any part of the Withdrawals outstanding together with any
accrued but unpaid interest (the "Outstanding Amount") at any time before the
Due Date by giving written notice to the Lender. Nevertheless, if the Borrower
receives more than US$5,000,000 (the "Minimum Amount") in debt and/or equity
capital from the day of signature of this Agreement, for each additional amount
received by the Borrower in excess of the Minimum Amount (the "Additional
Proceeds"), 20% of the Additional Proceeds will be used to repay the Outstanding
Amount.
e. Conversion. The Borrower will notify the Lender each time it
intends to repay all or any part of the Outstanding Amount and the Lender will
have 7 business days to notify Borrower whether it wants to receive the money or
convert the amount into shares. The Lender will have the right to convert the
amount into equity at a price per share of 90% of the average closing price of
the Common Stock for the 12 (twelve) trading days prior to the signing of this
Agreement (the "Conversion Price").
f. Warrants. The Lender will receive 20,000 warrants upon signing
the Agreement and an additional 10,000 warrants upon each Withdrawal. The
warrants will be for a period of 3 years from the date of grant to purchase
Borrower's Common Stock at a strike price equal to 100% of the closing price of
the Common Stock at the time of signing the Agreement.
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g. Option to Purchase Shares. Up to one year from the last
Withdrawal (the "Purchase Period"), the Lender will have the right to purchase
additional Common Stock of the Borrower at the Conversion Price for an amount
equal to the Withdrawals, but in any case not less than US$2,000,000. The Common
Stock purchased by the Lender will be included in the first registration of
securities of the Borrower under the Securities Act of 1933 taking place after
the purchase.
h. Mechanics of Purchase of Shares by Lender. To effect a stock
purchase of Shares, the Lender shall deliver a written notice to the Borrower (a
"Purchase Notice") at any time and from time to time (in the Lender's sole
discretion) during the Purchase Period. Each Purchase Notice shall set forth (i)
the aggregate purchase price for the Shares being purchased, and (ii) the number
of Shares being purchased pursuant to such Purchase Notice. The "Purchase Notice
Date" with respect to a Purchase Notice shall be the date on which the Lender
delivers a copy of such Purchase Notice to the Borrower by facsimile
transmission
i. Delivery of Purchased Shares. Subject to the Lender's
compliance with all of the terms and conditions of this Agreement, the Borrower
shall deliver to the Lender the Shares sold to the Lender by the third Trading
Day following delivery of a Purchase Notice, whether by physical delivery of
certificates or by book-entry transfer through DTC for such Shares.
j. Transfer Agent Instructions. The Borrower shall issue
irrevocable instructions to its transfer agent, and any subsequent transfer
agent, to issue certificates, registered in the name of the Lender or its
respective nominee(s), for the Shares in such amounts as specified from time to
time by the Lender to the Borrower upon delivery of a Purchase Notice (the
"Irrevocable Transfer Agent Instructions"). The Borrower warrants that no
instruction relating to the Shares or Warrant Shares other than the Irrevocable
Transfer Agent Instructions referred to in this Section will be given by the
Borrower to its transfer agent and that the Shares shall be freely transferable
on the books and records of the Borrower.
2. COVENANTS.
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a. Further Financing. The Borrower shall not engage in any further
financing in terms that less favorable than the terms of this Agreement except
with the explicit agreement of the Lender; provided, however, that no such
agreement will be required for financing proposed by an industrial/commercial
strategic partner to Borrower or by a first line investment bank. The shares
resulting from this conversion will be included in the first registration of
securities of the Borrower under the Securities Act of 1933, taking place after
the conversion.
b. Use of Proceeds. The Borrower will use the Withdrawals and
proceeds from the sale of the Shares for legally permissible general corporate
and working capital purposes.
c. Corporate Existence. The Borrower will take all steps necessary
to preserve and continue the corporate existence of the Borrower.
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3. CONDITIONS OF THE LENDER TO OPEN THE LINE OF CREDIT.
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The obligation of the Lender hereunder to open the line of credit
to the Borrower is subject to the satisfaction of each of the following
conditions set forth below. These conditions are for the Lender's sole benefit
and may be waived by the Lender at any time in its sole discretion.
a. The Board of Directors of the Borrower shall have adopted
resolutions approving this transaction in a form reasonably acceptable to the
Lender (the "Resolutions") and such Resolutions shall not have been amended or
rescinded.
b. No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.
c. There shall have been no filing of a petition in bankruptcy,
either voluntarily or involuntarily, with respect to the Borrower and there
shall not have been commenced any proceedings under any bankruptcy or insolvency
laws, or any laws relating to the relief of debtors, readjustment of
indebtedness or reorganization of debtors, and there shall have been no calling
of a meeting of creditors of the Borrower or appointment of a committee of
creditors or liquidating agents or offering of a composition or extension to
creditors by, for, with or without the consent or acquiescence of the Borrower.
4. MISCELLANEOUS.
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a. Fees and Expenses. The reasonable legal fees and expenses
arising out of this Agreement will be paid by the Borrower.
b. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments; Waivers. This Agreement
supersedes all other prior oral or written agreements between the Lender and the
Borrower with respect to the matters discussed herein, and this Agreement and
the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and, except as specifically
set forth herein, neither the Borrower nor the Lender makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be amended other than by an instrument in writing signed by
the Borrower and the Lender, and no provision hereof may be waived other than by
an instrument in writing signed by the party against whom enforcement is sought.
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f. Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing, must be delivered by (i) courier, mail or hand
delivery or (ii) facsimile, and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one (1) day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:
If to the Borrower:
Constellation 3D, Inc.
000 Xxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to the Lender:
Constellation 3D Technology Ltd.
000 Xxxx 00xx Xxxxxx, Xxxxx 0-X
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Each party shall provide five (5) days prior written notice to
the other party of any change in address, telephone number or facsimile number.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by a nationally recognized overnight delivery service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.
g. Successors and Assigns. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns. The Borrower shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Lender, including by merger or consolidation. The Lender
may assign some or all of its rights hereunder to an affiliate or associate of
the Lender with the written consent of the Borrower; provided, however, that any
such assignment shall not release the Lender from its obligations hereunder
unless such obligations are assumed by such assignee and the Borrower has
consented to such assignment and assumption.
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h. No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person
i. Publicity. The Borrower and the Lender shall have the right to
approve before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Borrower shall be entitled, without the prior approval of the Lender, to make
any press release or other public disclosure with respect to such transactions
as is required by applicable law and regulations (although the Lender shall be
consulted by the Borrower in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).
j. Further Assurances. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
k. No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
l. Days. Unless the context refers to "trading days" or "business
days", all references herein to "days" shall mean calendar days.
m. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York, without giving effect to
conflict of law principles. Any legal fees arising from any dispute in
connection with this Agreement will be paid by the non-prevailing party.
* * * * *
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed as of the date and year first above written.
BORROWER: LENDER:
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CONSTELLATION 3D, INC. CONSTELLATION 3D TECHNOLOGY LTD.
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxxxx Name: Xxxxxx Xxxxxx
Title: Title:
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