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
May 31, 2000
Constellation 3D, Inc.
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx
President and CEO
Re: Amendment No.5 to Placement Agency Agreement; Amendment No. 3
to Warrant Agreement No. 1 to Warrant Certificate No. SB-2
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, and April 17,
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, as amended on March 23, 2000 and April 17, 2000
(hereinafter the "Warrant Agreement"). Furthermore, the Company has issued
Warrant Certificate No. SB-2 on March 24, 2000 ( "Warrant SB2").
In connection therewith, the parties hereto agree that the Agency
Agreement, Warrant Agreement, and Warrant SB2 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. Paragraph 4(e) of the Agency Agreement is hereby
deleted in its entirety and in its place and stead the following is inserted:
(c) 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 the lower of (A) a 40% discount to the lower
of (x) the average closing bid price of the Common Stock for the 120 day period
prior to the date of the closing of the sale of Securities or (y) the average
closing bid price of the Common Stock for the 7 day period prior to the date of
the closing of the sale of Securities or (B) a 40% discount of the purchase
price of Common Stock or Common Stock equivalents (including without limitation
derivative securities and convertible debt) paid by any investor introduced
directly or indirectly by Sands Brothers in the Company subsequent to the date
hereof, but in no event, whether (A) or (B), less than $5.00 per share (subject
to stock splits, recapitalizations and similar corporate events). 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."
2. 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
the lower of (A) a 40% discount to the lower of (x) the average closing bid
price of the Common Stock for the 120 day period prior to the date of the
closing of the sale of Securities or (y) the average closing bid price of the
Common Stock for the 7 day period prior to the date of the closing of the sale
of Securities or (B) a 40% discount of the purchase price of Common Stock or
Common Stock equivalents (including without limitation derivative securities and
convertible debt) paid by any investor in the Company subsequent to the date
hereof, but in no event, whether (A) or (B), less than $5.00 per share (subject
to stock splits, recapitalilzations and similar corporate events). 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.
3. The first clause of Section 1 of the Warrant Agreement is
hereby deleted in its entirety and in its place and stead the following is
inserted: "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 the later of
December 1, 2004 or the final closing date of the Offering..." Accordingly, each
Warrant Certificate issued pursuant to the Warrant Agreement, as amended
hereunder, after the date hereof shall have a five year term.
4. At the first closing from the date hereof of any investor
introduced directly or indirectly by Sands Brothers, the parties hereto shall
execute an amendment to Warrant SB2 to modify the exercise price thereof to
comport with the formula set forth in Sections 1 and 2 hereof.
5. Anything contained herein to the contrary notwithstanding,
the amendments and modifications contained herein shall not apply with respect
to the Initial Placement Agent Warrants, which remain in full force and effect
in the manner in which such Warrants were initially issued, but shall apply to
previously issued and to be issued Additional Placement Agent Warrants.
6. The parties agree and acknowledge that the Minimum Amount
(as such term is defined in the Agency Agreement) has been reached and closed
upon. Except as set forth herein the Agency Agreement and the Warrant Agreement
(and the Warrants, as modified hereunder, issued pursuant thereto) shall remain
in full force and effect.
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: X. Xxxxxx Name:
Title: Title:
Date: 5/31/2000 Date: 5/31/2000
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