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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 ADJUSTMENT 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.
COMMON STOCK ADJUSTMENT WARRANT
No. AW1
To Receive 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, at the times and subject to the
conditions hereinafter set forth, at any time after the termination of the
Adjustment Period (as defined herein) but prior to 5:00 p.m. New York City time
on August 23, 2005 (the "Termination Date"), to subscribe for and receive from
time to time from CONSTELLATION 3D, INC., a Florida corporation (the "Company"),
all or any portion of an aggregate number of shares of Common Stock of the
Company determined pursuant to Section 3 hereof (the "Adjustment Shares"). The
"Exercise Price" is $0. The number of shares for which the Adjustment Warrant is
exercisable shall be subject to adjustment as provided herein. This Adjustment
Warrant is being issued in connection with the Common Stock Investment Agreement
dated as of August 23, 2000 (the "Purchase Agreement") entered into by the
Company and the Investor. Any capitalized terms used but not defined in this
Adjustment Warrant shall have the meaning specified in the Purchase Agreement.
1. Title of Adjustment Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Adjustment Warrant and all rights
hereunder are transferable, in whole or in respect of the right to receive
any part of the Adjustment Shares, at the office or agency of the Company
by the holder hereof in person or by duly authorized attorney, upon
surrender of this Adjustment 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 from time to time of rights
represented by this Adjustment Warrant, upon exercise of the rights
represented by this Adjustment Warrant, 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 Adjustment Warrant for Adjustment Shares.
(a) Definitions.
Subject to Section 3(e), "Adjustment Period" means the period starting 15
Trading Days after the day on which a registration statement covering the
Initial Shares is first declared effective by the SEC and ending on and
including the 50th consecutive Trading Day thereafter. For the avoidance of
doubt, the Adjustment Period with respect to an Adjustment Warrant issued
in connection with the exercise of an Optional Warrant shall be the same
period in time as the Adjustment Period with respect to the Adjustment
Warrants issued in connection with the sale of the Initial Shares, even if
the Adjustment Period has ended prior to the exercise of such Optional
Warrant.
"Adjusted Share Purchase Price" means 115% of the Share Purchase Price. The
Adjusted Share Purchase Price shall be appropriately adjusted to reflect
stock splits, reverse stock splits, stock dividends, recapitalizations,
etc.
"Average Price" means the average of the 20 lowest daily trades for a share
of Common Stock during the Adjustment Period.
"Effective Registration" shall have the meaning specified in the Purchase
Agreement.
"Principal Market" shall have the meaning specified in the Purchase
Agreement.
(b) The number of Adjustment Shares deliverable will be calculated in
accordance with Section 3(c). No shares will be due pursuant to Section
3(c) unless the Average Price is less than the Adjusted Share Purchase
Price.
(c) Adjustment Share Calculations. Subject to Sections 3(e) and (f), the number
of Adjustment Shares (if any) issuable in respect of the Adjustment Period
shall be calculated immediately following the close of trading of the
Principal Market on the final Trading Day of the Adjustment Period, using
the following formula:
# of Adjustment Shares = ($5,750,000 / Average Price) - # of Initial Shares
The number of Initial Shares used in the above calculation shall be
appropriately adjusted for any stock slit, reverse stock split, stock
dividend, recapitalization, etc. Promptly after performing the calculations
pursuant to Section 3(c), the Company shall deliver its written
calculations to the Investor by facsimile.
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If this Adjustment Warrant was issued to the Investor pursuant to the
exercise of an Optional Warrant, the term "Initial Shares" as used in this
Adjustment Warrant shall be deemed to mean the Optional Warrant Shares
received upon such exercise of such Optional Warrant.
(d) Exercise of Adjustment Warrant. Exercise of the rights represented by this
Adjustment Warrant may be made at any time or times, in whole or in part,
after the termination of the Adjustment Period and prior to 5:00 p.m. New
York City time on the Termination Date, by the surrender on any business
day of this Adjustment Warrant and a Notice of Exercise in the form 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); whereupon the holder of this
Adjustment Warrant shall be entitled to receive a certificate for the
number of Adjustment Shares for which this Adjustment Warrant has been so
exercised. Certificates for Adjustment Shares shall be delivered to the
holder hereof within three (3) Trading Days after the date on which this
Adjustment Warrant shall have been exercised as aforesaid (such event being
a "Fill-Up Closing"). An exercise of this Adjustment Warrant shall be
deemed for all purposes a "cashless" exercise.
(e) Effective Registration During Stock Adjustment Period.
(i) If at any time during the Adjustment Period there shall be
a lack of Effective Registration, the Investor (as to itself only) may at
its option either (x) waive the lack of Effective Registration, in which
case the Adjustment Period will continue uninterrupted with respect to the
Investor in accordance with the other provisions of this Section 3, or (y)
by written notice to the Company (delivered no later than 24 hours after
actually receiving written notification from the Company of such lack of
Effective Registration) elect to suspend such Adjustment Period with
respect to itself only (a "Suspension Notice").
(ii) If the Investor elects pursuant to subsection (i) above
to suspend a particular Adjustment Period and Effective Registration is
subsequently re-established either before or after the scheduled end of the
Adjustment Period, then the Investor may, at its option, elect (x) to treat
the Adjustment Period as tolled for the duration (however long) of the lack
of Effective Registration, such that the first full day of Effective
Registration following delivery of the Suspension Notice shall be treated
as and deemed to be the next day of the tolled Adjustment Period, (y) to
treat the Adjustment Period as having never commenced, such that the first
full day of Effective Registration following delivery of the Suspension
Notice shall be treated as and deemed to be the first day of the Adjustment
Period, or (z) to treat the Adjustment Period as having been extended by
such number of days that is equal to the duration of the lack of Effective
Registration. The Investor shall have two (2) Trading Days after receiving
written notice from the Company of the re-establishment of Effective
Registration to make such election.
(f) Effective Registration as of Fill-Up Closing. If there is not Effective
Registration on the date of a Fill-Up Closing, then the Investor shall have
the option (as to itself only) but not the obligation to receive from the
Company, in lieu of the Adjustment Shares otherwise deliverable, an amount
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in immediately available funds equal to the product of (i) the highest
closing bid price of the Common Stock on the Principal Market from the
final Trading Day of the Adjustment Period through and including the
Trading Day immediately prior to such Fill-Up Closing and (ii) the number
of Adjustment Shares the Company otherwise would be obligated to deliver to
such Investor at such Fill-Up Closing.
(g) Remedies. If the Company fails to deliver the specified number of
Adjustment Shares to the Investor within 10 Trading Days of the time and at
the place specified herein, then the Investor may, without reducing its
other rights at law or in equity, compel the Company to repurchase all or a
part of its Securities (including the number of Adjustment Shares which,
without regard to Effective Registration, should have been delivered by the
Company) at the applicable Premium Redemption Price (as defined and
specified in the Registration Rights Agreement).
(h) Adjustments. The number of Adjustment Shares shall be appropriately
adjusted to reflect any stock split, reverse stock split, stock dividend,
recapitalization or similar event so that the Investor receives the same
economically equivalent value of Adjustment Shares as it would in the
absence of such event.
(i) Short Sales. The Investor agrees that prior to expiration of the Adjustment
Period, it will not engage in short sales of Common Shares with the intent
of lowering the market price of such shares. The fact that the market price
of the Common Shares declines contemporaneously with short sales effected
by the Investor shall not be deemed a presumption that the Investor had the
intent of so lowering the market price.
(j) Miscellaneous. The Adjustment Shares shall upon delivery to the Investor be
fully-paid, nonassessable, shares of Common Stock, free and clear of all
liens and encumbrances and duly eligible for trading on each exchange and
market on which shares of Common Stock are then traded.
4. Non-Certificated Shares, In lieu of delivering physical certificates
representing the Adjustment Shares, provided the Company's transfer agent
is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer ("FAST") program, upon request of the Adjustment
Warrant holder, the Company shall use its best efforts to cause its
transfer agent to electronically transmit the Adjustment Shares to the
Adjustment Warrant holder by crediting the account of the Adjustment
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
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Common Stock are reported, or (z) if the foregoing provisions are
inapplicable, a day on which quotations are reported by National Quotation
Bureau Incorporated.
5. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the issuance of the Adjustment
Shares
6. Charges, Taxes and Expenses. Issuance of certificates for shares of Common
Stock upon the exercise of this Adjustment 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 Adjustment
Warrant or in such name or names as may be directed by the holder of this
Adjustment 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 Adjustment Warrant, this Adjustment 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
Adjustment Warrant certificates or any certificates for the Adjustment
Shares other than the issuance of a Adjustment Warrant certificate to the
Investor in connection with the Investor's surrender of a Adjustment
Warrant certificate upon the exercise of less than all of the Adjustment
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.
7. 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
Adjustment Warrant.
8. No Rights as Shareholder until Exercise. Subject to Section 13 of this
Adjustment 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 Adjustment 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 Adjustment
Warrant shall have been exercised as provided herein. However, at the time
of the exercise of this Adjustment Warrant pursuant to Section 3 hereof,
the Adjustment Shares received 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 Adjustment Warrant shall have been exercised.
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9. Assignment and Transfer of Adjustment Warrant. This Adjustment Warrant may
be assigned in whole or in part by the surrender of this Adjustment 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
Adjustment 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 Adjustment Warrant to the effect that the transaction is
so exempt.
10. Loss, Theft, Destruction or Mutilation of Adjustment Warrant. Upon receipt
by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of any Adjustment Warrant or stock
certificate representing the Adjustment 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 Adjustment Warrant or stock
certificate, if mutilated, the Company will make and deliver a new
Adjustment Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of this Adjustment Warrant or stock certificate.
11. 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.
12. 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
Adjustment Warrant shall have the right thereafter to purchase, by exercise
of this Adjustment Warrant, the kind and amount of cash, 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 Adjustment Warrant
been exercised immediately prior thereto, subject to further adjustment as
provided in Section 13. 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.
13. Adjustment of Number of Adjustment Warrant Shares. The number of and kind
of securities purchasable upon exercise of this Adjustment Warrant 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 Adjustment
Warrant subdivide its outstanding securities as to which purchase rights
under this Adjustment Warrant exist, by split-up, spin-off, or otherwise,
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or combine its outstanding securities as to which purchase rights under
this Adjustment Warrant exist, the number of Adjustment Shares as to which
this Adjustment 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.
(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 Adjustment 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.
(c) Other Distributions. If at any time after the date hereof the Company
distributes to holders of 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 Adjustment Shares for which this
Adjustment Warrant is exercisable shall be increased to equal: (i) the
number of Adjustment Shares for which this Adjustment 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 Adjustment Warrant holder) of any and all such
evidences of indebtedness, shares of capital stock, other securities or
property, so distributed. In lieu of such change to the number of
Adjustment Shares for which this Adjustment Warrant is exercisable, 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 Adjustment Warrant had been exercised in full for Adjustment Shares as
of the record date for such distribution, without regard to the
restrictions contained in Section 14.
For purposes of this Adjustment Warrant, "Fair Market Value" shall equal
the 10 Trading Day 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
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purpose and reasonably acceptable to the 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 Holder.
(d) Merger. 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 Adjustment Warrant to be
performed and observed by the Company.
(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 Adjustment Warrant exist into the same or a different
number of securities of any other class or classes, then the Adjustment
Warrant Holder shall thereafter be entitled to receive upon exercise of
this Adjustment Warrant, during the period specified herein, the number of
shares or other securities or property resulting from such reorganization
or reclassification, which would have been received by the Adjustment
Warrant Holder for the shares of stock subject to this Adjustment Warrant
had this Adjustment Warrant at such time been exercised.
14. 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 Warrants) 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:
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(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 Adjustment 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:
(x) the Restricted Ownership Percentage of the total number of shares of
Common Stock outstanding at the commencement of the Covenant Period,
minus
(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 14 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 14 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.
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15. Miscellaneous.
(a) Choice Of Law; Venue; Jurisdiction. THE PROVISIONS OF THIS ADJUSTMENT
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
ADJUSTMENT WARRANT SHALL BE BINDING UPON ANY SUCCESSORS OR ASSIGNS OF THE
COMPANY. THIS ADJUSTMENT WARRANT WILL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH 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 ADJUSTMENT 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 ADJUSTMENT 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 ADJUSTMENT 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 15(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 Adjustment 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 Adjustment Warrant
and the Company. No waivers of, or exceptions to, any term, condition or
provision of this Adjustment 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.
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(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 Adjustment 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 15(c).
(d) Severability. Whenever possible, each provision of this Adjustment Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Adjustment 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 Adjustment Warrant in such jurisdiction or
affect the validity, legality or enforceability of any provision in any
other jurisdiction, but this Adjustment 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 Adjustment 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 Adjustment Warrant holder against impairment.
Without limiting the generality of the foregoing, the Company (a) will not
increase the par value of any Adjustment 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 Adjustment Shares on the
exercise of this Adjustment Warrant.
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IN WITNESS WHEREOF, the Company has caused this Adjustment Warrant to be
executed by its officers thereunto duly authorized.
Dated: August 23, 2000
CONSTELLATION 3D, INC.
By: /s/ E. Levich
------------------------
Name: Eugene Levich
Title: President
Agreed and Accepted
this 23rd day of August, 2000
HALIFAX FUND, L.P.
By: /s/ Steven W. Weiner
---------------------------------
Name: Steven Weiner
Title: Managing Director
The Palladin Group, L.P.
As Investment Advisor
12
<PAGE>
NOTICE OF EXERCISE
To: CONSTELLATION 3D, INC.
(1) The undersigned hereby elects to receive ________ shares of Common Stock of
CONSTELLATION 3D, INC. pursuant to the terms of the attached Adjustment Warrant
in a "cashless" exercise.
(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 Adjustment Warrant for the unexercised portion of the
attached Adjustment 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 Adjustment Warrant, execute
this form and supply required information.
Do not use this form to exercise the Adjustment Warrant.)
FOR VALUE RECEIVED, the foregoing Adjustment 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 Adjustment 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 Adjustment Warrant.
