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FINDER'S AGREEMENT
This Finder's Agreement (this "Agreement") is made as of July 13, 2000, between
Constellation 3D, Inc., a Florida Corporation (the "Company"), and The Shemano
Group, Inc., a California corporation (the "Finder"). The Finder and the Company
agree:
1. Engagement of Finder: The Company hereby engages the Finder,
and the Finder hereby accepts such engagement, to act as the
Company's as a non-exclusive finder with respect to sales by
the Company in a private placement transaction (the
"Offering") of up to $10 million aggregate principal amount of
Equity, Equity-Related or Debt Securities (the "Securities")
of the Company to the investors.
2. Offering Procedures: The Finder will introduce the Company to
investors set forth in Exhibit A (Offerees) who the Finder
represents are "accredited investors," as that term is defined
in Rule 501 of Regulation D promulgated under the Securities
Act of 1933, as amended (the "1933 Act"), with whom the Finder
has a pre-existing substantive relationship.
3. Finder's Compensation: In consideration for the services
rendered by the Finder hereunder, the Company shall pay to the
Finder, or cause the Finder to be paid, compensation as
provided in this section at the Closing.
Cash and Company's Stock Compensation: In consideration for
the services rendered by the Finder hereunder, the Company
shall pay to the Finder, or cause the Finder to be paid,
compensation equal to five percent (5%) of the gross offering
funds received in the Offering(s) from the sale(s) of
securities to the Offeree(s). The compensation to be conveyed
to the Finder will be in the form of cash. The cash
compensation is due and payable upon the Company's receipt of
funds. The company shall pay the Shemano Group 400,000
warrants at the same strike price as that of the investor. The
amount of warrants is based on a fund raising of $10,000,000
and will be adjusted proportionally if the amount is less, or
more up to the amount of $15,000,000. For amounts above
$15,000,000 the parties will agree on the number of warrants.
In the event the warrants reset for the investor, the warrants
will reset for the Shemano Group as well.
4. Certain Matters Relating to Finder's Duties:
(a) The Finder's responsibilities shall be limited to
introducing potential investors to the Company, and the
Finder shall not have authority to offer or sell the
Securities to any potential investor. The Finder shall
have no responsibility to participate or assist in any
negotiations between any potential investor and the
Company. The Finder will have no responsibility to act,
and the parties contemplate that the Finder will not act,
as a broker or dealer with respect to the offer or sale of
the Securities. Further, the finder shall have no
responsibility for fulfilling any SEC reporting or filing
requirements as relates to the Company.
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(b) The Finder will review with the Company a list in the form
of Exhibit A of the identities and states of residence of
all Offerees before introducing such Offerees to the
Company. The Finder shall not present the Offering nor the
Private Placement Memorandum to any potential Offeree
until such person has been reviewed by the Corporation and
approved as set out above.
(c) The Finder agrees to introduce the Company to Offerees
only in states in which the Finder has been advised by the
Company that offers and sales of Securities can be legally
made by the Company.
(d) The Finder shall perform its duties under this Agreement
in a manner consistent with the instructions of the
Company. Such performance shall include, if needed, the
delivery to each Offeree a current copy of the Private
Placement Memorandum, Subscription Agreement and any
Offering Questionnaire and/or similar documents prepared
by the Finder and the Company, as such documents may be
amended from time to time by the Company and delivered to
the Finder. The Finder shall consecutively number each
copy of the Private Placement Memorandum (which will
include the first letter of the Finder's name or other
identifying mark sufficient to designate an Offeree
introduced by the Finder); keep a log of when and to whom
each copy of the Private Placement Memorandum is given,
with the Private Placement Memorandum numbers; maintain a
copy of any written information the Finder obtains
regarding the suitability of each Offeree; and only use
the Private Placement Memorandum in introducing Offerees
to the Company. The Finder shall provide this log and all
such written information to the Company at any time and
promptly upon request of the Company at the termination of
this Agreement.
(e) The Finder shall not engage in any form of general
solicitation or advertising in performing its duties under
this Agreement. This prohibition includes, but is not
limited to, any mass mailing, any advertisement, article
or notice published in any magazine, newspaper or
newsletter and any seminar or meeting where the attendees
have been invited by any mass mailing, general
solicitation or advertising. The Finder shall not
introduce the Company to any investor that is not listed
in Exhibit A and with whom the Finder does not have a
pre-existing substantive relationship, and the Finder
shall not hold any seminar or meeting where any attendee
does not have a pre-existing relationship with the Finder.
The Finder shall not mention the Company, the Offering or
any information about its Securities under this Agreement
in any public medium, including any newspaper, on radio or
television or otherwise.
(f) Investors may be added to Exhibit A upon mutual consent of
the Company and Finder provided that the Finder shall, on
the basis of its prior relationship with the potential
Offeree, reasonably determine and believe that the
potential Offeree is sufficiently sophisticated and
knowledgeable in business and financial matters that the
potential Offeree is capable of evaluating the merits and
risks of an investment in the Securities.
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(g) The Finder is and will hereafter act as an independent
contractor and not as an employee of the Company and
nothing in this Agreement shall be interpreted or
construed to create any employment, partnership, joint
venture, or other relationship between the Finder and the
Company. The Finder will not hold itself out as having,
and will not state to any person that the Finder has, any
relationship with the Company other than as an independent
contractor. The Finder shall have no right or power to
find or create any liability or obligation for or in the
name of the Company or to sign any documents on behalf of
the Company.
5. Termination of Agreement. Either party may terminate this
Agreement by notifying the other party in writing upon a
material breach by that other party, unless such breach is
curable and is in fact cured within 15 days after such notice.
This Agreement will terminate upon completion or termination
of the Offering. The Company may terminate this Agreement
following ninety (90) days after the date hereof upon written
notice. Notwithstanding the foregoing, all provisions of this
Agreement other than section 1, 2 and 4 shall survive the
termination of this Agreement with respect to Offerees who the
Finder introduces to the Company prior to any termination with
respect to the Offering. The Finder shall be entitled to
compensation under section 3 based on investments made by such
Offerees prior to the termination of this Agreement or at any
time within one year thereafter.
6. Indemnification. The Company shall indemnify and defend the
Finder and the Finder's affiliates, directors, officers,
employees, agents, consultants, attorneys, accountants and
other representatives (each an "Indemnified Person" in this
subsection (a)) and shall hold each Indemnified Person
harmless, to the fullest extent permitted by law, from and
against any and all claims, liabilities, losses, damages and
expenses (including reasonable attorney's fees and costs), as
they are incurred, in connection with the Offering, resulting
from the Company's negligence, bad faith or willful misconduct
in connection with the Offering, any violation by the Company
(not caused by the Finder) of Federal or state securities laws
in connection with the Offering, or any breach by the Company
of this Agreement. In case any litigation or proceeding shall
be brought against any Indemnified Person under this section,
the Company shall be entitled to assume the defense of such
litigation or proceeding with counsel of the Company's choice
at its expense (in which case the Company shall not be
responsible for the fees and expenses of any separate counsel
retained by such
Indemnified Person, except in the limited circumstances
described below in this section); provided, however, that such
counsel shall be reasonably satisfactory to the Indemnified
Person. Notwithstanding the Company's election to assume the
defense of such litigation or proceeding (a) such Indemnified
Person shall have the right to employ separate counsel and to
participate in the defense of such litigation or proceeding,
and (b) the Company shall bear the reasonable fees, costs and
expenses of separate counsel if (but only if) the use of
counsel selected by the Company to represent such Indemnified
Person would present such counsel with a conflict of interest
under applicable laws or rules of professional conduct.
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7. Confidentiality of Offeree Information. The Company
acknowledges that the identity of the Offerees, and all
confidential information about Offerees received by the
Company from an Offeree or the Finder, is confidential
information of the Finder and may not be shared with any other
person without the consent of the Finder.
8. Notices. Any notice, consent, authorization or other
communication to be given hereunder shall be in writing and
shall be deemed duly given and received when delivered
personally, when transmitted by fax, three days after being
mailed by first class mail, or one day after being sent by a
nationally recognized overnight delivery service, charges and
postage prepaid, properly addressed to the party to receive
such notice, at the following address or fax number for such
party (or at such other address or fax number as shall
hereafter be specified by such party by like notice):
(a) If to the Company, to:
Leonardo Berezowsky
Chief Financial Officer
Constellation 3D, Inc.
230 Park Ave., Suite 453
New York, NY 10169
Telephone Number: (212) 983-1107
Fax Number: (212) 983-1108
E-mail: [email protected]
(b) If to the Finder, to:
Mr. Gary J. Shemano
The Shemano Group, Inc.
601 California Street, Suite 1850
San Francisco, Calif. 94108
Telephone Number: (415) 274-3200
Fax Number: (415) 274-3238
E-mail: [email protected]
9. Company to Control Transactions. The prices, terms and
conditions under which the Company shall offer or sell any
Securities shall be determined by the Company in its sole
discretion. The Company shall have the authority to control
all discussions and negotiations regarding any proposed or
actual offering or sale of Securities. Nothing in this
Agreement shall obligate the Company to actually offer or sell
any Securities or consummate any transaction. The Company may
terminate any negotiations or discussions at any time and
reserves the right not to proceed with any offering or sale of
Securities. Compensation pursuant to this Agreement shall only
be paid to the Finder in the event of an actual Closing of the
Offering to an Offeree introduced by Finder.
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10. Confidentiality of Company Information. The Finder, and its
officers, directors, employees and agents shall maintain in
strict confidence and not copy, disclose or transfer to any
other party (1) all confidential business and financial
information regarding the Company and its affiliates,
including without limitation, projections, business plans,
marketing plans, product development plans, pricing, costs,
customer, vendor and supplier lists and identification,
channels of distribution, and terms of identification of
proposed or actual contracts and (2) all confidential
technology of the Company. In furtherance of the foregoing,
the Finder agrees that it shall not transfer, transmit,
distribute, download or communicate, in any electronic,
digitized or other form or media, any of the confidential
technology of the Company. The foregoing is not intended to
preclude the Finder from utilizing, subject to the terms and
conditions of this Agreement, the Private Placement Memorandum
and/or other documents prepared or approved by the Company for
use in the Offering.
All communications regarding any possible transactions,
requests for due diligence or other information, requests for
facility tours, product demonstrations or management meetings,
will be submitted or directed to Leonard Berezowsky, CFO, and
the Finder shall not contact any employees, customers,
suppliers or contractors of the Company or its affiliates
without express permission. Nothing in this Agreement shall
constitute a grant of authority to the Finder or any
representatives thereof to remove, examine or copy any
particular document or types of information regarding the
Company, and the Company shall retain control over the
particular documents or items to be provided, examined or
copied. If the Offering is not consummated, or if at any time
the Company so requests, the Finder and its representatives
will return to the Company all copies of information regarding
the Company in their possession.
The provisions of this Section shall survive any termination
of this Agreement.
11. Press Releases, Etc. The Company shall control all press
releases or announcements to the public, the media or the
industry regarding any offering, placement, transaction or
business relationship involving the Company or its affiliates.
Except for communication to Offerees in furtherance of this
Agreement and the provision of the Private Placement
Memorandum, the Finder will not disclose the fact that
discussions or negotiations are taking place concerning a
possible transaction involving the Company, or the status or
terms and conditions thereof.
12. Due Diligence: Neither the Company, nor any of its directors,
officers or shareholders, should, in any way rely on the
Finder to perform any due diligence with respect to the
Company. It is expressly understood and agreed that to the
extent due diligence is conducted, it will be conducted by the
investors.
13. Expenses, Etc. The compensation described in Section 3 of this
Agreement shall be the Finder's sole compensation for all of
its services and efforts to the Company and its affiliates, in
connection with any offering or placement of Securities. The
Finder shall pay all of its own costs and expenses in carrying
out its activities hereunder. The Finder shall be exclusively
responsible for any compensation, fees, commissions or
payments of its employees, agents representatives, co-finders
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or other persons or entities utilized by it in connection with
its activities on behalf of the Company, and the Finder will
indemnify and hold harmless the Company and its affiliates
from the claims of any such persons or entities.
14. Compliance with Laws. The Finder represents and warrants that
it is a registered broker/dealer with the SEC, NASD and the
State of California and has and shall maintain such
registrations as well as all other necessary licenses and
permits to conduct its activities under this Agreement, which
it shall conduct in compliance with applicable federal and
state laws relating to a private placement under Regulation D
of the 1933 Act. The Finder represents that it is not a party
to any other agreement which would conflict with or interfere
with the terms and conditions of this Agreement.
15. Assignment Prohibited. No assignment of this Agreement shall
be made without the prior written consent of the other party.
16. Amendments. Neither party may amend this Agreement or rescind
any of its existing provisions without the prior written
consent of the other party.
17. Governing Law. This Agreement shall be deemed to have been
made in the State of California and shall be construed, and
the rights and liabilities determined, in accordance with the
law of the State of California, without regard to the
conflicts of laws rules of such jurisdiction.
18. Waiver. Neither Finder's nor the Company's failure to insist
at any time upon strict compliance with this Agreement or any
of its terms nor any continued course of such conduct on their
part shall constitute or be considered a waiver by Finder or
the Company of any of their respective rights or privileges
under this Agreement.
19. Severability. If any provision herein is or should become
inconsistent with any present or future law, rule or
regulation of any sovereign government or regulatory body
having jurisdiction over the subject matter of this Agreement,
such provision shall be deemed to be rescinded or modified in
accordance with such law, rule or regulation. In all other
respects, this Agreement shall continue to remain in full
force and effect.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and
will become effective and binding upon the parties at such
time as all of the signatories hereto have signed a
counterpart of this Agreement. All counterparts so executed
shall constitute one Agreement binding on all of the parties
hereto, notwithstanding that all of the parties are not
signatory to the same counterpart. Each of the parties hereto
shall sign a sufficient number of counterparts so that each
party will receive a fully executed original of this
Agreement.
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21. Entire Agreement. This Agreement and all other agreements and
documents referred herein constitutes the entire agreement
between the Company and the Finder. No other agreements,
covenants, representations or warranties, express or implied,
oral or written, have been made by any party hereto to any
other party concerning the subject matter hereof. All prior
and contemporaneous conversations, negotiations, possible and
alleged agreements, representations, covenants and warranties
concerning the subject matter hereof are merged herein. This
is an integrated Agreement.
22. Arbitration. The parties agree that this Agreement and all
controversies which may arise between the Finder and the
Company, whether occurring prior, on or subsequent to the date
of this Agreement, will be determined by arbitration. The
parties understand that:
(1) Arbitration is final and binding on the parties.
(2) The parties are waiving their right to seek remedies in
court, including the right to a jury trial.
(3) Pre-arbitration discovery is generally more limited than
and different from court proceedings.
(4) The arbitrators' award is not required to include factual
findings or legal reasoning and any party's right to
appeal or to seek modification or rulings by the
arbitrators is strictly limited.
(5) The panel of arbitrators will typically include a minority
of arbitrators who were or are affiliated with the
securities industry.
The parties agree that any arbitration under this Agreement will be
held at the facilities of and before an Arbitration Panel appointed by the
National Association of Securities Dealers, Inc. ("NASD"), or if the NASD
refuses to accept jurisdiction, then before JAMS/ENDISPUTE in San Francisco,
California. The award of the arbitrators, or of the majority of them, will be
final, and judgments upon the award may be entered in any court, state or
federal, having jurisdiction. The parties hereby submit themselves and their
personal representatives to the jurisdiction of any state or federal court for
the purpose of such arbitration and entering such judgment.
Any forbearance to enforce an agreement to arbitrate will not
constitute a waiver of any rights under this Agreement except to the extent
stated herein.
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THIS AGREEMENT IS GOVERNED BY A PRE-DISPUTE ARBITRATION CLAUSE
CONTAINED IN PARAGRAPH 22 OF THIS AGREEMENT
The Shemano Group, Inc. (the "Finder")
By: /s/ Gary J. Shemano
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Gary J. Shemano
Title: President
Constellation 3D, Inc. (the "Company")
By: /s/ Leonardo Berezowsky
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Leonardo Berezowsky
Title: Chief Financial Officer
Exhibit A
To be provided.
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