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EXECUTION COPY
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") OR OTHERWISE. THIS WARRANT SHALL NOT
CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE
SECURITIES ARE "RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS
PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
AMENDED AND RESTATED
COMMON STOCK PURCHASE WARRANT
No. W2
To Purchase Shares of $.001 Par Value Common Stock of
CONSTELLATION 3D, INC.
THIS CERTIFIES that, for value received, Halifax Fund, L.P. (the
"Investor") is entitled, upon the terms and subject to the conditions
hereinafter set forth, at any time on or after the date hereof and on or prior
to 5:00 p.m. New York City Time on August 23, 2005 (the "Termination Date"), but
not thereafter, to subscribe for and purchase from CONSTELLATION 3D, INC., a
Florida corporation (the "Company"), 393,968 shares of Common Stock of the
Company (the "Warrant Shares"). The "Exercise Price" is $14.6656. The Exercise
Price and the number of shares for which the Warrant is exercisable shall be
subject to adjustment as provided herein. This Warrant is being issued in
connection with the Common Stock Investment Agreement dated August 23, 2000 (the
"Agreement") entered into by the Company and the Investor, as amended on
September 19, 2000.
1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder
are transferable, in whole or in respect of the right to purchase any
part of the 393,968 Warrant Shares, at the office or agency of the
Company by the holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant together with (a) the Assignment Form
annexed hereto properly endorsed, and (b) any other documentation
reasonably necessary to satisfy the Company that such transfer is in
compliance with all applicable securities laws.
2. Authorization of Shares. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights
represented by this Warrant will, upon exercise of the rights
represented by this Warrant and payment of the Exercise Price as set
forth herein will be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue or otherwise specified
herein).
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3. Exercise of Warrant.
(a) Exercise of the purchase rights represented by this Warrant may be made
at any time or times, in whole or in part before 5:00 p.m. New York
City time on the Termination Date, by the surrender on any business day
of this Warrant and the Notice of Exercise annexed hereto duly
completed and executed, at the principal office of the Company (or such
other office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such holder
appearing on the books of the Company), and upon payment of the full
Exercise Price of the shares thereby purchased; whereupon the holder of
this Warrant shall be entitled to receive a certificate for the number
of shares of Common Stock so purchased. Certificates for shares
purchased hereunder shall be delivered to the holder hereof within
three (3) Trading Days after the date on which this Warrant shall have
been exercised as aforesaid. Payment of the Exercise Price of the
shares shall be by certified check or cashier's check or by wire
transfer (of same day funds) to an account designated by the Company in
an amount equal to the Exercise Price multiplied by the number of
shares being purchased.
(b) Alternatively, and only in the event the Warrant Shares are not subject
to Effective Registration, the Warrant holder may exercise this
Warrant, in whole or in part in a "cashless" or "net-issue" exercise by
delivering to the offices of the Company or any transfer agent for the
Common Stock this Warrant, together with a Notice of Exercise
specifying the number of Warrant Shares to be delivered to such Warrant
holder ("Deliverable Shares") and the number of Warrant Shares with
respect to which this Warrant is being surrendered in payment of the
aggregate Exercise Price for the Deliverable Shares ("Surrendered
Shares").
The number of Deliverable Shares shall be calculated as follows:
<TABLE>
<CAPTION>
<S> <C>
# of Deliverable Shares = # of Surrendered Shares x Fair Market Value of Common Stock less Exercise Price
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Fair Market Value of Common Stock
</TABLE>
"Fair Market Value" shall have the meaning specified in Section 12(c).
In the event that the Warrant is not exercised in full, the number of
Warrant Shares shall be reduced by the number of such Warrant Shares
for which this Warrant is exercised and/or surrendered, and the
Company, at its expense, shall within three (3) Trading Days issue and
deliver to or upon the order of the Warrant holder a new Warrant of
like tenor in the name of the Warrant holder or as the Warrant holder
(upon payment by the Warrant holder of any applicable transfer taxes)
may request, reflecting such adjusted Warrant Shares.
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All exercises will be deemed to occur as of the date of the Notice of
Exercise, and certificates for shares of Common Stock purchased
hereunder shall be delivered to the holder hereof within three (3)
Trading Days after the date on which this Warrant shall have been
exercised as aforesaid. The Warrant holder may withdraw its Notice of
Exercise under Section 3(a) or 3(b) at any time thereafter if the
Company fails to timely deliver the applicable certificates to the
Warrant holder as provided in this Agreement.
(c) In lieu of delivering physical certificates representing the Common
Stock issuable upon exercise, provided the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer ("FAST") program, upon request of the Warrant
Holder, the Company shall use its best efforts to cause its transfer
agent to electronically transmit the Common Stock issuable upon
exercise to the Warrant holder by crediting the account of Warrant
holder's prime broker with DTC through its Deposit Withdrawal Agent
Commission ("DWAC") system. The time periods for delivery described in
the immediately preceding paragraph shall apply to the electronic
transmittals described herein.
The term "Trading Day" means (x) if the Common Stock is listed on the
New York Stock Exchange or the American Stock Exchange, a day on which
there is trading on such stock exchange, or (y) if the Common Stock is
not listed on either of such stock exchanges but sale prices of the
Common Stock are reported on an automated quotation system, a day on
which trading is reported on the principal automated quotation system
on which sales of the Common Stock are reported, or (z) if the
foregoing provisions are inapplicable, a day on which quotations are
reported by National Quotation Bureau Incorporated.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of
this Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without
charge to the holder hereof for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all
of which taxes and expenses shall be paid by the Company, and such
certificates shall be issued in the name of the holder of this Warrant
or in such name or names as may be directed by the holder of this
Warrant; provided, however, that in the event certificates for shares
of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof; and provided further, that the Company
shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issuance of any Warrant
certificates or any certificates for the Warrant Shares other than the
issuance of a Warrant Certificate to the Investor in connection with
the Investor's surrender of a Warrant Certificate upon the exercise of
less than all of the Warrants evidenced thereby, and the Company shall
not be required to issue or deliver such certificates unless or until
the person or persons requesting the issuance thereof shall have paid
to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
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6. Closing of Books. The Company will at no time close its shareholder
books or records in any manner which interferes with the timely
exercise of this Warrant.
7. No Rights as Shareholder until Exercise. Subject to Section 12 of this
Warrant and the provisions of any other written agreement between the
Company and the Investor, the Investor shall not be entitled to vote or
receive dividends or be deemed the holder of Warrant Shares or any
other securities of the Company that may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Investor, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification
of stock, change of par value, or change of stock to no par value,
consolidation, merger, conveyance or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise
until the Warrant shall have been exercised as provided herein.
However, at the time of the exercise of this Warrant pursuant to
Section 3 hereof, the Warrant Shares so purchased hereunder shall be
deemed to be issued to such holder as the record owner of such shares
as of the close of business on the date on which this Warrant shall
have been exercised.
8. Assignment and Transfer of Warrant. This Warrant may be assigned in
whole or in part by the surrender of this Warrant and the Assignment
Form annexed hereto duly executed at the office of the Company (or such
other office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such holder
appearing on the books of the Company); provided, however, that this
Warrant may not be resold or otherwise transferred except (i) in a
transaction registered under the Securities Act of 1933, as amended
(the "Act"), or (ii) in a transaction pursuant to an exemption, if
available, from registration under the Act and whereby, if requested by
the Company, an opinion of counsel reasonably satisfactory to the
Company is obtained by the holder of this Warrant to the effect that
the transaction is so exempt.
9. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any Warrant or stock certificate
representing the Warrant Shares, and in case of loss, theft or
destruction, of indemnity reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental
thereto. Upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Company will make and deliver a new
Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of this Warrant or stock certificate.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action
may be taken or such right may be exercised on the next succeeding day
not a legal holiday.
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11. Effect of Certain Events. If at any time after the date hereof there
shall be a merger or consolidation of the Company with or into, or a
transfer of all or substantially all of the assets of the Company to,
another entity (collectively, a "Sale or Merger Transaction"), the
holder of this Warrant shall have the right thereafter to purchase, by
exercise of this Warrant and payment of the aggregate Exercise Price in
effect immediately prior to such action, the kind and amount of shares
and other securities and property which it would have owned or have
been entitled to receive after the happening of such transaction had
this Warrant been exercised immediately prior thereto, subject to
further adjustment as provided in Section 12. Notwithstanding the
above, a Sale or Merger Transaction shall not be deemed to occur in the
event the Company is the acquiring entity in connection with an
acquisition by the Company.
12. Adjustments of Exercise Price and Number of Warrant Shares.
The number of and kind of securities purchasable upon exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time
to time as follows:
(a) Subdivisions, Combinations and other Issuances. If the Company shall at
any time after the date hereof but prior to the expiration of this
Warrant subdivide its outstanding securities as to which purchase
rights under this Warrant exist, by split-up, spin-off, or otherwise,
or combine its outstanding securities as to which purchase rights under
this Warrant exist, the number of Warrant Shares as to which this
Warrant is exercisable as of the date of such subdivision, split-up,
spin-off or combination shall forthwith be proportionately increased in
the case of a subdivision, or proportionately decreased in the case of
a combination. Appropriate proportional adjustments (decrease in the
case of subdivision, increase in the case of combination) shall also be
made to the Exercise Price payable per share, so that the aggregate
Exercise Price payable for the total number of Warrant Shares
purchasable under this Warrant as of such date shall remain the same as
it would have been before such subdivision or combination.
(b) Stock Dividend. If at any time after the date hereof the Company
declares a dividend or other distribution on Common Stock payable in
Common Stock or other securities or rights convertible into Common
Stock ("Common Stock Equivalents") without payment of any consideration
by holders of Common Stock for the additional shares of Common Stock or
the Common Stock Equivalents (including the additional shares of Common
Stock issuable upon exercise or conversion thereof), then the number of
shares of Common Stock for which this Warrant may be exercised shall be
increased as of the record date (or the date of such dividend
distribution if no record date is set) for determining which holders of
Common Stock shall be entitled to receive such dividends, in proportion
to the increase in the number of outstanding shares (and shares of
Common Stock issuable upon conversion of all such securities
convertible into Common Stock) of Common Stock as a result of such
dividend, and the Exercise Price shall be proportionately reduced so
that the aggregate Exercise Price for all the Warrant Shares issuable
hereunder immediately after the record date (or on the date of such
distribution, if applicable), for such dividend shall equal the
aggregate Exercise Price so payable immediately before such record date
(or on the date of such distribution, if applicable).
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(c) Other Distributions. If at any time after the date hereof the Company
distributes to holders of its Common Stock, other than as part of its
dissolution, liquidation or the winding up of its affairs, any shares
of its capital stock, any evidence of indebtedness or any of its assets
(other than Common Stock), then the number of Warrant Shares for which
this Warrant is exercisable shall be increased to equal: (i) the number
of Warrant Shares for which this Warrant is exercisable immediately
prior to such event, (ii) multiplied by a fraction, (A) the numerator
of which shall be the Fair Market Value (as defined below) per share of
Common Stock on the record date for the dividend or distribution, and
(B) the denominator of which shall be the Fair Market Value price per
share of Common Stock on the record date for the dividend or
distribution minus the amount allocable to one share of Common Stock of
the value (as jointly determined in good faith by the Board of
Directors of the Company and the Warrant holder) of any and all such
evidences of indebtedness, shares of capital stock, other securities or
property, so distributed. Additionally, the Exercise Price shall be
reduced to equal: (i) the Exercise Price in effect immediately before
the occurrence of any event (ii) multiplied by a fraction, (A) the
numerator of which is the number of Warrant Shares for which this
Warrant is exercisable immediately before the adjustment, and (B) the
denominator of which is the number of Warrant Shares for which this
Warrant is exercisable immediately after the adjustment. In lieu of
such changes to the number of Warrant Shares for which this Warrant is
exercisable and the Exercise Price, the Investor (as to itself only)
may elect, in its sole discretion, to participate in such distribution
and receive the shares of capital stock, evidence of indebtedness or
other assets on an "as exercised" basis as if the Warrant had been
exercised in full for Warrant Shares as of the record date for such
distribution, without regard to the restrictions contained in Section
16.
For purposes of this Warrant, "Fair Market Value" shall equal the
average closing trading price of the Common Stock on the Principal
Market for the 10 Trading Days preceding the date of determination or,
if the Common Stock is not listed or admitted to trading on any
Principal Market, the average of the closing bid and asked prices on
the over-the-counter market as furnished by any New York Stock Exchange
member firm reasonably selected from time to time by the Company for
that purpose and reasonably acceptable to the Warrant holder, or, if
the Common Stock is not listed or admitted to trading on the Principal
Market or traded over-the-counter and the average price cannot be
determined as contemplated above, the Fair Market Value of the Common
Stock shall be as reasonably determined in good faith by the Company's
Board of Directors with the concurrence of the Warrant holder.
(d) Merger, etc. The Company will not merge or consolidate with or into any
other corporation, or sell or otherwise transfer its property, assets
and business substantially as an entirety to another corporation,
unless the corporation resulting from such merger or consolidation (if
not the Company), or such transferee corporation, as the case may be,
shall expressly assume in writing the due and punctual performance and
observance of each and every covenant and condition of this Warrant to
be performed and observed by the Company.
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(e) Reclassification, etc. If at any time after the date hereof there shall
be a reorganization or reclassification of the securities as to which
purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, then the Warrant
holder shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the
Exercise Price then in effect, the number of shares or other securities
or property resulting from such reorganization or reclassification,
which would have been received by the Warrant holder for the shares of
stock subject to this Warrant had this Warrant at such time been
exercised.
(f) Exercise Price Adjustment. In the event that the Company issues or
sells any shares of Common Stock or securities which are convertible
into or exchangeable for its Common Stock or any convertible
securities, or any warrants or other rights to subscribe for or to
purchase or any options for the purchase of its Common Stock or any
such convertible securities (other than (A) shares or options issued or
which may be issued pursuant to (i) the Company's current or future
employee or director option plans or shares issued upon exercise of
options, warrants, rights or convertible notes or debentures
outstanding on the date of the Agreement and listed in the Company's
most recent periodic report filed under the Exchange Act, (ii)
arrangements with the Investor, or (iii) acquisitions of other entities
by the Company, or (B) sales of Common Stock (in one or more tranches
to the same or different purchasers) with a fair market value, in the
aggregate, of less than $500,000 at the time they are sold) at an
effective exercise price per share ("Effective Price") which is less
than the Exercise Price then in effect, then the Exercise Price in
effect immediately prior to such issue or sale shall be reduced
effective concurrently with such issue or sale to an amount determined
by multiplying the Exercise Price then in effect by a fraction, (x) the
numerator of which shall be the sum of (1) the number of shares of
Common Stock outstanding immediately prior to such issue or sale, plus
(2) the number of shares of Common Stock which the aggregate
consideration received by the Company for such additional shares would
purchase at the greater of such Fair Market Value or Exercise Price
then in effect; and (y) the denominator of which shall be the number of
shares of Common Stock of the Company outstanding immediately after
such issue or sale.
For the purposes of the foregoing adjustment, in the case of the
issuance of any convertible securities, warrants, options or other
rights to subscribe for or to purchase or exchange for, shares of
Common Stock ("Convertible Securities"), the maximum number of shares
of Common Stock issuable upon exercise, exchange or conversion of such
Convertible Securities shall be deemed to be outstanding, provided that
no further adjustment shall be made upon the actual issuance of Common
Stock upon exercise, exchange or conversion of such Convertible
Securities.
The number of shares which may be purchased hereunder shall be
increased proportionately to any reduction in Exercise Price pursuant
to this paragraph 12(f), so that after such adjustments the aggregate
Exercise Price payable hereunder for the increased number of shares
shall be the same as the aggregate Exercise Price in effect just prior
to such adjustments.
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In the event of any such issuance for a consideration which is less
than such fair market value and also less than the Exercise Price then
in effect, than there shall be only one such adjustment by reason of
such issuance, such adjustment to be that which results in the greatest
reduction of the Exercise Price computed as aforesaid.
(g) For the purposes of the foregoing adjustment, in the case of the
issuance of any convertible securities, warrants, options or other
rights to subscribe for or to purchase or exchange for, shares of
Common Stock ("Convertible Securities"), the maximum number of shares
of Common Stock issuable upon exercise, exchange or conversion of such
Convertible Securities shall be deemed to be outstanding, provided that
no further adjustment shall be made upon the actual issuance of Common
Stock upon exercise, exchange or conversion of such Convertible
Securities.
The number of shares which may be purchased hereunder shall be
increased proportionately to any reduction in Exercise Price pursuant
to this paragraph 12(f), so that after such adjustments the aggregate
Exercise Price payable hereunder for the increased number of shares
shall be the same as the aggregate Exercise Price in effect just prior
to such adjustments.
13. Voluntary Adjustment by the Company. The Company may at its option, at
any time during the term of this Warrant, reduce but not increase the
then current Exercise Price to any amount and for any period of time
deemed appropriate by the Board of Directors of the Company.
14. Notice of Adjustment. Whenever the number of Warrant Shares or number
or kind of securities or other property purchasable upon the exercise
of this Warrant or the Exercise Price is adjusted, the Company shall
promptly mail to the holder of this Warrant a notice setting forth the
number of Warrant Shares (and other securities or property) purchasable
upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.
15. Authorized Shares. The Company covenants that during the period the
Warrant is outstanding and exercisable, it will reserve from its
authorized and unissued Common Stock a sufficient number of shares to
provide for the issuance of the Warrant Shares upon the exercise of any
purchase rights under this Warrant. The Company further covenants that
its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates
to execute and issue the necessary certificates for the Warrant Shares
upon the exercise of the purchase rights under this Warrant. The
Company will take all such reasonable action as may be necessary to
assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any
requirements of any domestic securities exchange or market upon which
the Common Stock may be listed.
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16. 9.99% Limitation.
(a) Notwithstanding anything to the contrary contained herein, the number
of shares of Common Stock that may be acquired by the holder upon
exercise pursuant to the terms hereof shall not exceed a number that,
when added to the total number of shares of Common Stock deemed
beneficially owned by such holder (other than by virtue of the
ownership of securities or rights to acquire securities (including the
Warrant) that have limitations on the holder's right to convert,
exercise or purchase similar to the limitation set forth herein),
together with all shares of Common Stock deemed beneficially owned
(other than by virtue of the ownership of securities or rights to
acquire securities that have limitations on the right to convert,
exercise or purchase similar to the limitation set forth herein) by the
holder's "affiliates" (as defined Rule 144 of the Act) ("Aggregation
Parties") that would be aggregated for purposes of determining whether
a group under Section 13(d) of the Securities Exchange Act of 1934, as
amended, exists, would exceed 9.99% of the total issued and outstanding
shares of the Company's Common Stock (the "Restricted Ownership
Percentage"). Each holder shall have the right (w) at any time and from
time to time to reduce its Restricted Ownership Percentage immediately
upon notice to the Company and (x) at any time and from time to time,
to increase its Restricted Ownership Percentage immediately in the
event of the announcement as pending or planned of an event of:
(i) any consolidation or merger of the Company with or into any
other corporation or other entity or person (whether or not
the Company is the surviving corporation), or any other
corporate reorganization or transaction or series of related
transactions in which in excess of 50% of the Company's voting
power is transferred through a merger, consolidation, tender
offer or similar transaction,
(ii) any person (as defined in Section 13(d) of the Exchange Act),
together with its affiliates and associates (as such terms are
defined in Rule 405 under the 1933 Act), beneficially owns or
is deemed to beneficially own (as described in Rule 13d-3
under the Exchange Act without regard to the 60-day exercise
period) in excess of 50% of the Company's voting power,
(iii) there is a replacement of more than one-half of the members of
the Company's Board of Directors which is not approved by
those individuals who are members of the Company's Board of
Directors on the date thereof, in one or a series of related
transactions, or
(iv) a sale or transfer of all or substantially all of the assets
of the Company, determined on a consolidated basis.
(b) The holder covenants at all times on each day (each such day being
referred to as a "Covenant Day") as follows: During the balance of such
Covenant Day and the succeeding sixty-one (61) days (the balance of
such Covenant Day and the succeeding 61 days being referred to as the
"Covenant Period") such holder will not acquire shares of Common Stock
pursuant to any right (including the exercise of the Warrant) existing
at the commencement of the Covenant Period to the extent the number of
shares so acquired by such holder and its Aggregation Parties (ignoring
all dispositions) would exceed:
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(x) the Restricted Ownership Percentage of the total number of
shares of Common Stock outstanding at the commencement of the
Covenant Period,
minus
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(y) the number of shares of Common Stock owned by such holder and
its Aggregation Parties at the commencement
of the Covenant Period.
A new and independent covenant will be deemed to be given by
the holder as of each moment of each Covenant Day. No covenant will
terminate, diminish or modify any other covenant. The holder agrees to
comply with each such covenant. This Section 16 controls in the case of
any conflict with any other provision of the Transaction Documents.
The Company's obligation to issue shares of Common Stock which
would exceed such limits referred to in this Section 16 shall be
suspended to the extent necessary until such time, if any, as shares of
Common Stock may be issued in compliance with such restrictions.
17. Compliance with Securities Laws.
(a) The holder hereof acknowledges that the Warrant Shares acquired upon
the exercise of this Warrant, if not registered (or if no exemption
from registration exists), will have restrictions upon resale imposed
by state and federal securities laws. Each certificate representing the
Warrant Shares issued to the holder upon exercise (if not registered or
if no exemption from registration exists) will bear the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED, TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS,
BASED ON AN OPINION LETTER OF COUNSEL SATISFACTORY TO THE COMPANY OR A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
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(b) Without limiting the Investor's right to transfer, assign or otherwise
convey the Warrant or Warrant Shares in compliance with all applicable
securities laws, the Investor, by acceptance hereof, acknowledges that
this Warrant and the Warrant Shares to be issued upon exercise hereof
are being acquired solely for the Investor's own account and not as a
nominee for any other party, and that the Investor will not offer, sell
or otherwise dispose of this Warrant or any Warrant Shares to be issued
upon exercise hereof except under circumstances that will not result in
a violation of applicable federal and state securities laws.
(c) Neither this Warrant nor any share of Common Stock issued upon exercise
of this Warrant may be offered for sale or sold, or otherwise
transferred or sold in any transaction which would constitute a sale
thereof within the meaning of the Act, unless (i) such security has
been registered for sale under the Act and registered or qualified
under applicable state securities laws relating to the offer an sale of
securities, or (ii) exemptions from the registration requirements of
the Act and the registration or qualification requirements of all such
state securities laws are available and the Company shall have received
an opinion of counsel that the proposed sale or other disposition of
such securities may be effected without registration under the Act,
such counsel and such opinion to be satisfactory to the Company.
(d) The Investor recognizes that investing in the Warrant and the Warrant
Shares involves a high degree of risk, and the Investor is in a
financial position to hold the Warrant and the Warrant Shares
indefinitely and is able to bear the economic risk and withstand a
complete loss of its investment in the Warrant and the Warrant Shares.
The Investor is a sophisticated investor and is capable of evaluating
the merits and risks of investing in the Company. The Investor has had
an opportunity to discuss the Company's business, management and
financial affairs with the Company's management, has been given full
and complete access to information concerning the Company, and has
utilized such access to its satisfaction for the purpose of obtaining
information or verifying information and have had the opportunity to
inspect the Company's operation. The Investor has had the opportunity
to ask questions of, and receive answers from, the management of the
Company (and any person acting on its behalf) concerning the Warrant
and the Warrant Shares and the agreements and transactions contemplated
hereby, and to obtain any additional information as the Investor may
have requested in making its investment decision. The initial Investor
in this Warrant is an "accredited investor", as defined by Regulation D
promulgated under the Act.
18. Miscellaneous.
(a) Issue Date; Choice Of Law; Venue; Jurisdiction. THE PROVISIONS OF THIS
WARRANT SHALL BE CONSTRUED AND SHALL BE GIVEN EFFECT IN ALL RESPECTS AS
IF IT HAD BEEN ISSUED AND DELIVERED BY THE COMPANY ON THE DATE HEREOF.
THIS WARRANT SHALL BE BINDING UPON ANY SUCCESSORS OR ASSIGNS OF THE
COMPANY. THIS WARRANT WILL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
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AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT FOR MATTERS
ARISING UNDER THE ACT, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF
LAW. EACH OF THE PARTIES CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE
U.S. DISTRICT COURT SITTING IN THE STATE OF CITY OF NEW YORK IN THE
STATE OF NEW YORK IN CONNECTION WITH ANY DISPUTE ARISING UNDER THIS
WARRANT AND HEREBY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY
OBJECTION, INCLUDING ANY OBJECTION BASED ON FORUM NON CONVENIENS, TO
THE BRINGING OF ANY SUCH PROCEEDING IN SUCH JURISDICTION. EACH PARTY
HEREBY AGREES THAT IF THE OTHER PARTY TO THIS WARRANT OBTAINS A
JUDGMENT AGAINST IT IN SUCH A PROCEEDING, THE PARTY WHICH OBTAINED SUCH
JUDGMENT MAY ENFORCE SAME BY SUMMARY JUDGMENT IN THE COURTS OF ANY
COUNTRY HAVING JURISDICTION OVER THE PARTY AGAINST WHOM SUCH JUDGMENT
WAS OBTAINED, AND EACH PARTY HEREBY WAIVES ANY DEFENSES AVAILABLE TO IT
UNDER LOCAL LAW AND AGREES TO THE ENFORCEMENT OF SUCH A JUDGMENT. EACH
PARTY TO THIS WARRANT IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN
ANY SUCH PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS IN
ACCORDANCE WITH SECTION 18(C). NOTHING HEREIN SHALL AFFECT THE RIGHT OF
ANY PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. EACH
PARTY WAIVES ITS RIGHT TO A TRIAL BY JURY.
(b) Modification and Waiver. This Warrant and any provisions hereof may be
changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is
sought. Any amendment effected in accordance with this paragraph shall
be binding upon the investor, each future holder of this Warrant and
the Company. No waivers of, or exceptions to, any term, condition or
provision of this Warrant, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any
such term, condition or provision.
(c) Notices. Any notice, request or other document required or permitted to
be given or delivered to the Investor or future holders hereof or the
Company shall be personally delivered or shall be sent by certified or
registered mail, postage prepaid, to the Investor or each such holder
at its address as shown on the books of the Company or to the Company
at the address set forth in the Agreement. All notices under this
Warrant shall be deemed to have been given when received.
A party may from time to time change the address to which notices to it
are to be delivered or mailed hereunder by notice in accordance with
the provisions of this Section 18(c).
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(d) Severability. Whenever possible, each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant is held to be
invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect the validity, legality or
enforceability of any other provision of this Warrant in such
jurisdiction or affect the validity, legality or enforceability of any
provision in any other jurisdiction, but this Warrant shall be
reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained
herein.
(e) No Impairment. The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times
in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order
to protect the rights of the Warrant holder against impairment. Without
limiting the generality of the foregoing, the Company (a) will not
increase the par value of any Warrant Shares above the amount payable
therefor on such exercise, and (b) will take all such action as may be
reasonably necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares
on the exercise of this Warrant.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized.
Dated: September 19, 2000
CONSTELLATION 3D, INC.
By: /s/ Eugene Levich
----------------------------------
Name: Eugene Levich
Title: President
Agreed and Accepted
this 19th day of September, 2000
HALIFAX FUND, L.P.
By: /s/ Robert L. Chender
------------------------
Name:
Title:
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<PAGE>
NOTICE OF EXERCISE
To: CONSTELLATION 3D, INC.
(1) The undersigned hereby elects:
(A) to purchase ________ shares of Common Stock of Constellation 3D,
Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment
of the Exercise Price in full, together with all applicable transfer taxes, if
any.
(B) in a "cashless" or "net-issue exercise" for, and to purchase
thereunder, ______ shares of Common Stock, and herewith makes payment therefor
with _______ Surrendered Shares.
(2) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
-------------------------------
(Name)
-------------------------------
-------------------------------
(Address)
(3) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:
Other Name:
-------------------
-----------------------------------
(Name)
-------------------- -----------------------------------
(Date) (Signature)
-----------------------------------
(Address)
<PAGE>
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant of Constellation 3D, Inc. and
all rights evidenced thereby are hereby assigned to
whose address is
-----------------------------------------------
.
---------------------------------------------------------------
---------------------------------------------------------------
Dated: ,
--------------------
Holder's Signature:
---------------------------------
Holder's Address:
-----------------------------------
-----------------------------------
Signature Guaranteed:
--------------------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
