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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 OPTIONAL 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 OPTIONAL WARRANT
No. OW1
To Purchase Optional Units of
CONSTELLATION 3D, INC.
THIS CERTIFIES that, for value received, Koor's Investors (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 31, 2001 (the "Termination Date"), but
not thereafter, to subscribe for and purchase from CONSTELLATION 3D, INC., a
Florida corporation (the "Company"), 98,513 units consisting of one (1) share of
Common Stock of the Company (the "Optional Warrant Shares") and a Common Stock
Adjustment Warrant ("Adjustment Warrant") with respect to such share in the form
attached as Annex B to the Purchase Agreement (as defined below) (together, an
"Optional Unit"). The "Exercise Price" is $10.15313 per Optional Unit. The
Exercise Price and the number of Optional Units for which this Optional Warrant
is exercisable shall be subject to adjustment as provided herein. This Optional
Warrant is being issued in connection with the Common Stock Investment Agreement
dated August 31, 2000 (the "Purchase Agreement") entered into by the Company and
the Investor.
1. Title of Optional Warrant. Prior to the expiration hereof and subject
to compliance with applicable laws, this Optional Warrant and all
rights hereunder are transferable, in whole or in respect of the right
to purchase any part of the 98,513 Optional Units, at the office or
agency of the Company by the holder hereof in person or by duly
authorized attorney, upon surrender of this Optional 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 Optional Warrant, upon exercise of the rights
represented by this Optional 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 Optional Warrant.
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(a) Exercise of the purchase rights represented by this Optional 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 Optional 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 Optional Warrant shall be entitled to
receive a certificate for the number of shares of Common Stock, and an
Adjustment Warrant with respect to such shares, comprising the Optional
Units so purchased. Certificates for Optional Warrant Shares and
Adjustment Warrants comprising Optional Units purchased hereunder shall
be delivered to the holder hereof within three (3) Trading Days after
the date on which this Optional Warrant shall have been exercised as
aforesaid. Payment of the Exercise Price 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 Optional Units being purchased.
In the event that the Optional Warrant is not exercised in full, the
number of Optional Units shall be reduced by the number of such
Optional Units for which this Optional 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 Optional
Warrant holder a new Optional Warrant of like tenor in the name of the
Optional Warrant holder or as the Optional Warrant holder (upon payment
by the Optional Warrant holder of any applicable transfer taxes) may
request, reflecting such adjusted number of Optional Units.
All exercises will be deemed to occur as of the date of the Notice of
Exercise, and certificates for Optional Warrant Shares, and Adjustment
Warrants with respect to such shares, comprising the Optional Units
purchased hereunder shall be delivered to the holder hereof within
three (3) Trading Days after the date on which this Optional Warrant
shall have been exercised as aforesaid. The Optional Warrant holder may
withdraw its Notice of Exercise under Section 3(a) at any time
thereafter if the Company fails to timely deliver the applicable
certificates and Adjustment Warrants to the Optional Warrant holder as
provided in this Agreement.
(b) In lieu of delivering physical certificates representing the Optional
Warrant Shares comprising the Optional Units 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 Optional Warrant holder, the
Company shall use its best efforts to cause its transfer agent to
electronically transmit such Optional Warrant Shares to the Optional
Warrant holder by crediting the account of the Optional 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.
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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 Optional Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates for Optional
Warrant Shares and Adjustment Warrants with respect to such shares,
comprising the Optional Units purchased upon the exercise of this
Optional 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 Optional Warrant or in such name or names as may
be directed by the holder of this Optional 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 Optional
Warrant, this Optional 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 Optional Warrant certificates
or any certificates for the Optional Warrant Shares other than the
issuance of an Optional Warrant certificate to the Investor in
connection with the Investor's surrender of a Optional Warrant
certificate upon the exercise of less than all of the Optional 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.
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 Optional Warrant.
7. No Rights as Shareholder until Exercise. Subject to Section 12 of this
Optional 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
Optional Warrant Shares or any other securities of the Company that may
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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
Optional Warrant shall have been exercised as provided herein. However,
at the time of the exercise of this Optional Warrant pursuant to
Section 3 hereof, the Optional 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 Optional
Warrant shall have been exercised.
8. Assignment and Transfer of Optional Warrant. This Optional Warrant may
be assigned in whole or in part by the surrender of this Optional
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 Optional 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 Optional Warrant to the effect that the transaction is
so exempt.
9. Loss, Theft, Destruction or Mutilation of Optional Warrant. Upon
receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of any Optional Warrant,
Adjustment Warrant or stock certificate representing the Optional
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 Optional Warrant, Adjustment Warrant or stock
certificate, if mutilated, the Company will make and deliver a new
Optional Warrant, Adjustment Warrant or stock certificate of like tenor
and dated as of such cancellation, in lieu of this Optional Warrant,
Adjustment 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.
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 Optional Warrant shall have the right thereafter to
purchase, by exercise of this Optional Warrant and payment of the
aggregate Exercise Price in effect immediately prior to such action,
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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 Optional 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 Optional Units.
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The number of and kind of securities purchasable upon exercise of this
Optional 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
Optional Warrant subdivide its outstanding securities as to which
purchase rights (either directly or indirectly) under this Optional
Warrant exist, by split-up, spin-off, or otherwise, or combine its
outstanding securities as to which purchase rights (either directly or
indirectly) under this Optional Warrant exist, the number of Optional
Units as to which this Optional 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 Optional Units purchasable under this Optional 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
Optional Units for which this Optional 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 Optional Units 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).
(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
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(other than Common Stock), then the number of Optional Units for which
this Optional Warrant is exercisable shall be increased to equal: (i)
the number of Optional Units for which this Optional 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 Optional 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 such
event (ii) multiplied by a fraction, (A) the numerator of which is the
number of Optional Units for which this Optional Warrant is exercisable
immediately before the adjustment, and (B) the denominator of which is
the number of Optional Units for which this Optional Warrant is
exercisable immediately after the adjustment. In lieu of such changes
to the number of Optional Warrant Shares for which this Optional
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
Optional Warrant had been exercised in full for Optional Warrant Shares
as of the record date for such distribution, without regard to the
restrictions contained in Section 16.
For purposes of this Optional 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 purpose and reasonably acceptable to the
Optional 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 Optional 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 Optional
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 (either directly or indirectly) under this Optional
Warrant exist into the same or a different number of securities of any
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other class or classes, then the Optional Warrant holder shall
thereafter be entitled to receive upon exercise of this Optional
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 Optional Warrant holder for the
shares of stock and Adjustment Warrants subject to this Optional
Warrant had this Optional Warrant at such time been exercised.
(f) Exercise Price Adjustment. In the event that the Company issues or
sells any 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 or
rights 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 more
tranches to the same or different purchasers) that, in the aggregate,
have a fair market value of less than $500,000 at the time they are
sold) at an effective exercise price per share ("Effective Price")
which is (A) less than the Exercise Price then in effect, or (B) at a
discount from the Fair Market Value (as described in Section 12(c)
above) of the Common Stock on the Trading Day next preceding such issue
or sale greater than 10%, 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 equal to the lesser of (x) such
Effective Price, and (y) the product of (A) the Exercise Price divided
by .9 and (B) 1.00 minus the discount from Fair Market Value (expressed
as a fraction).
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 Optional Units 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 Optional
Units 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 Optional 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.
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14. Notice of Adjustment. Whenever the number of Optional Units or number
or kind of securities or other property purchasable upon the exercise
of this Optional Warrant or the Exercise Price is adjusted, the Company
shall promptly mail to the holder of this Optional Warrant a notice
setting forth the number of Optional Units (and other securities or
property) purchasable upon the exercise of this Optional Warrant and
the Exercise Price of such Optional Units 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
Optional 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 Optional Warrant Shares upon the
exercise of any purchase rights under this Optional Warrant. The
Company further covenants that its issuance of this Optional 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 Optional Warrant Shares upon the
exercise of the purchase rights under this Optional Warrant. The
Company will take all such reasonable action as may be necessary to
assure that such Optional 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.
16. 9.99% Limitation.
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(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
Optional 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,
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(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 Optional 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
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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.
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17. Compliance with Securities Laws.
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(a) The holder hereof acknowledges that the Optional Warrant Shares and the
Adjustment Warrants acquired upon the exercise of this Optional
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 Optional
Warrant Shares and each Adjustment Warrant 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.
(b) Without limiting the Investor's right to transfer, assign or otherwise
convey the Optional Warrant, Adjustment Warrant or Optional Warrant
Shares in compliance with all applicable securities laws, the Investor,
by acceptance hereof, acknowledges that this Optional Warrant, the
Adjustment Warrant and the Optional 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 such securities except
under circumstances that will not result in a violation of applicable
federal and state securities laws.
(c) Neither this Optional Warrant nor any share of Common Stock or
Adjustment Warrant issued upon exercise of this Optional 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 Optional Warrant, the
Adjustment Warrant and the Optional Warrant Shares involves a high
degree of risk, and the Investor is in a financial position to hold
these securities indefinitely and is able to bear the economic risk and
withstand a complete loss of its investment therein. The Investor is a
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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 Optional Warrant, Adjustment
Warrant and the Optional 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 Optional Warrant is an
"accredited investor", as defined by Regulation D promulgated under the
Act.
18. Miscellaneous.
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(a) Issue Date; Choice Of Law; Venue; Jurisdiction. THE PROVISIONS OF THIS
OPTIONAL 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 OPTIONAL 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 OPTIONAL 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 OPTIONAL 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 OPTIONAL
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.
11
<PAGE>
(b) Modification and Waiver. This Optional 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 Optional Warrant and the Company. No waivers of, or exceptions to,
any term, condition or provision of this Optional 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
Optional 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).
(d) Severability. Whenever possible, each provision of this Optional
Warrant shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Optional
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 Optional Warrant in
such jurisdiction or affect the validity, legality or enforceability of
any provision in any other jurisdiction, but this Optional 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 Optional 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 Optional Warrant holder against
impairment. Without limiting the generality of the foregoing, the
Company (a) will not increase the par value of any Optional 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 Optional Warrant Shares on the exercise of this Optional
Warrant.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Optional Warrant to be
executed by its officers thereunto duly authorized.
Dated: August 31, 2000
CONSTELLATION 3D, INC.
By: /s/ Eugene Levich
-----------------------
Name: Eugene Levich
Title: President
Agreed and Accepted
this 31st day of August, 2000
KOOR'S INVESTORS
By: /s/ Kobi Zecharia
-----------------------
Name: Kobi Zecharia
Title:
13
<PAGE>
NOTICE OF EXERCISE
To: CONSTELLATION 3D, INC.
(1) The undersigned hereby elects to purchase ________ Optional Units consisting
of ______shares of Common Stock of Constellation 3D, Inc., and Adjustment
Warrants with respect to such shares, pursuant to the terms of the attached
Optional Warrant, and tenders herewith payment of the Exercise Price in full,
together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares of
Common Stock and an Adjustment Warrant with respect to such shares in the name
of the undersigned or in such other name as is specified below:
_______________________________
(Name)
_______________________________
_______________________________
(Address)
(3) Please issue a new Optional Warrant for the unexercised portion of the
attached Optional 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 Optional 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 Optional 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 Optional Warrant.
