<PAGE>
SCHEDULE 14A
(Rule 14a-101)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to ss.240.14a-12
CONSTELLATION 3D, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[GRAPHIC OMITTED]
Dear Shareholder:
You are cordially invited to attend the 2001 Annual Meeting of
Shareholders (the "Annual Meeting") of Constellation 3D, Inc., a Florida
corporation ("C3D"), which will be held on January 30, 2001, at 10:00 a.m. (U.S.
Eastern Standard Time) at the offices of Blank Rome Comisky & McCauley LLP on
the 10th Floor at One Logan Square, Philadelphia, Pennsylvania, USA.
The official notice of the Annual Meeting together with a proxy
statement, a form of proxy and C3D's annual report are enclosed. Please give
this information your careful attention. At the Annual Meeting, shareholders of
C3D are being asked to: (i) elect directors of C3D; (ii) approve the
reincorporation of C3D into Delaware through the Agreement and Plan of Merger
between C3D and Constellation 3D, Inc., a Delaware corporation, (iii) approve
amendments to the 1999 Stock Option Plan of C3D; and (iv) ratify the appointment
of BDO Seidman, LLP, as the independent auditors of C3D.
Whether or not you expect to attend the Annual Meeting in person, it is
important that your shares be voted at the meeting. I urge you to specify your
choices by marking the enclosed proxy and returning it promptly.
Sincerely,
Michael L. Goldberg
Secretary of Constellation 3D, Inc.
Date: January 5, 2001.
<PAGE>
CONSTELLATION 3D, INC.
230 Park Avenue, Suite 453
New York, NY 10169
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 30, 2001
TO OUR SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Shareholders
(the "Annual Meeting") of Constellation 3D, Inc., a Florida corporation ("C3D"),
will be held on January 30, 2001, at 10:00 a.m. (U.S. Eastern Standard Time) at
the offices of Blank Rome Comisky & McCauley LLP on the 10th Floor at One Logan
Square, Philadelphia, Pennsylvania, USA, for the purpose of considering and
acting upon the following matters:
(1) election of directors of C3D;
(2) approval of the reincorporation of C3D into Delaware through the
Agreement and Plan of Merger between C3D and Constellation 3D,
Inc., a Delaware corporation;
(3) approval of amendments to the 1999 Stock Option Plan of C3D; and
(4) ratification of the appointment of BDO Seidman, LLP, as the
independent auditors of C3D.
The Board of Directors of C3D is not aware of any other business to
come before the Annual Meeting. The Board of Directors has fixed January 2, 2001
as the record date for the determination of shareholders entitled to vote at the
Annual Meeting. Only shareholders of record at the close of business on that
date will be entitled to notice of, and to vote at the Annual Meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED
TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY. A SELF-ADDRESSED ENVELOPE
IS ENCLOSED FOR YOUR CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES. YOU MAY ALSO FAX YOUR PROXY CARD TO THE COMPANY AT (212) 983-1108,
ATTENTION: MICHAEL L. GOLDBERG, SECRETARY.
By Order of the Board of Directors
Michael L. Goldberg,
Secretary of Constellation 3D, Inc.
Date: January 5, 2001.
<PAGE>
CONSTELLATION 3D, INC.
230 Park Avenue, Suite 453
New York, NY 10169
PROXY STATEMENT
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Constellation 3D, Inc., a Florida corporation ("C3D" or the
"Company"), for use at the 2001 Annual Meeting of Shareholders (the "Annual
Meeting") to be held on January 30, 2001 at 10:00 a.m. (U.S. Eastern Standard
Time) at the offices of Blank Rome Comisky & McCauley LLP on the 10th Floor at
One Logan Square, Philadelphia, Pennsylvania, USA and at any postponement or
adjournment thereof. The approximate date on which this proxy statement and the
accompanying form of proxy will be first sent or given to shareholders entitled
to vote at the Annual Meeting is January 12, 2001.
Sending in a signed proxy will not affect a shareholder's right to
attend the Annual Meeting and vote in person since the proxy is revocable. Any
shareholder giving a proxy has the power to revoke it by, among other methods,
delivering a later dated proxy or giving written notice of such revocation to
the Secretary of C3D at any time before the proxy is exercised. Attendance at
the Annual Meeting will not, however, in and of itself constitute the revocation
of a proxy.
The expense of the proxy solicitation will be borne by C3D. In addition
to solicitation by mail, proxies may be solicited in person or by telephone,
facsimile, telegraph, teletype or electronic mail by directors, officers or
employees of C3D without additional compensation.
The form of proxy is enclosed. If properly executed and received in
time for voting, and not revoked, the enclosed proxy will be voted as indicated
in accordance with the instructions thereon. If no directions to the contrary
are indicated, the persons named in the enclosed proxy will vote all shares of
the Company's common stock (the "Common Stock") "for" the election of the
nominees for director named in Proposal One (election of directors to serve on
C3D's Board) and "for" the approval of Proposals Two (approval of the Agreement
and Plan of Merger), Three (approval of amendments to 1999 Stock Option Plan),
and Four (ratification of appointment of BDO Seidman, LLP, as independent
auditors of the Company). No other business is expected to come before the
Annual Meeting, but should any other matter requiring a vote of shareholders
properly arise, it is the intention of the persons named in the enclosed form of
proxy to vote such proxy in accordance with their best judgment on such matter.
Only shareholders of record at the close of business on January 2, 2001
(the "Record Date") are entitled to notice of, and to vote at, the Annual
Meeting. On the Record Date, 43,692,775 shares of the Company's Common Stock
were outstanding. Each shareholder of Common Stock on the Record Date is
entitled to one vote for each share of Common Stock, which is registered in his
or her name on the books of the Company on the Record Date.
The presence, either in person or by proxy, of the holders of shares of
the Common Stock entitled to one-third of the votes at the Annual Meeting will
constitute a quorum. Proposals One, Two, Three and Four may only be adopted by
the approval of holders of not less than 50.01% of the outstanding votes of
shareholders.
Abstentions and broker non-votes are counted for purposes of
determining whether a quorum is present for the transaction of business at the
Annual Meeting. Abstentions are counted as negative votes in tabulations of the
votes cast on proposals presented to shareholders, whereas broker non-votes have
no effect on the outcome of voting.
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MATTERS TO BE CONSIDERED AT ANNUAL MEETING
PROPOSAL ONE
ELECTION OF DIRECTORS
Information About Nominees for Election as Directors
The Board of Directors has designated the following persons to be
nominees for election as directors at the Annual Meeting:
1. Eugene Levich;
2. Michael Goldberg;
3. Lev Zaidenberg;
4. Stuart Garawitz;
5. Val Mandel;
6. Joseph Shefet; and
7. Leonardo Berezowsky.
Unless otherwise indicated, the persons named in the enclosed form of
proxy will vote "for" the election of each nominee named above (each a "Nominee"
and collectively "Nominees"). Each Nominee has consented to serve as a director
if elected. C3D has no reason to believe that any of the Nominees will be
disqualified or unable to serve if elected. It is not expected that any of the
Nominees will be unable to serve, but, in the event that any Nominee should be
unable to serve, the shares represented by the enclosed proxy card will be voted
"for" a substitute candidate selected by the Board of Directors. The
above-stated Nominees, if elected, will hold office until the next annual
meeting of shareholders and until their successors are elected and qualified.
<TABLE>
<CAPTION>
Directors
Name Age Position
---- --- --------
<S> <C> <C>
Professor Eugene Levich................ 52 Chairman of the Board of Directors, President,
and Chief Executive Officer
Michael Goldberg....................... 51 Member of the Board of Directors, Secretary,
Director of Legal Affairs, and Chief Operating
Officer (interim)
Lev Zaidenberg......................... 46 Member of the Board of Directors, Director of
Business Development
Stuart Garawitz........................ 45 Member of the Board of Directors
Val Mandel............................. 47 Member of the Board of Directors
Joseph Shefet.......................... 58 Member of the Board of Directors
Leonardo Berezowsky................ 43 Senior Vice President of Finance and Chief
Financial Officer, Member of the Board of
Directors
</TABLE>
The terms of all directors expire at this Annual Meeting at which
shareholders will elect directors.
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None of C3D's directors or executive officers is a party to any
arrangement or understanding with any other person with respect to nomination as
a director. There is no relationship by blood, marriage or adoption, not more
remote than first cousin, between any of the Company's directors or executive
officers.
Information concerning each director's business history and experience
is set forth below:
Professor Eugene Levich
Professor Eugene Levich serves as the President, Chief Executive
Officer and Chairman of the Company's Board of Directors. C3D appointed him
President and Chief Executive Officer effective April 19, 1999. He became a
member of the Board of Directors effective April 19, 1999, and Chairman of the
Board of Directors effective August 22, 2000. Professor Levich received a M.Sc.
in Physics from Moscow University in 1968 and a Ph.D. in Theoretical Physics
from the Landau Institute in 1970. He has served in varying academic capacities
at a range of research institutions, including Harvard University, as Visiting
Fellow; Oxford University, as Senior Visiting Fellow at the Department of
Theoretical Physics at Magdalene College three times; City University of New
York, as Professor at the Faculties of Physics and Engineering; the Weizman
Institute of Sciences, as Associate Professor at the Department of Nuclear
Physics; and Tel-Aviv University Faculty of Engineering, as Visiting Professor.
From 1996 until 1998, Professor Levich worked as President of Memde Ltd.
Professor Levich has authored over 28 patents and has published over 90 papers
in the fields of astrophysics, plasma turbulence and chaos, nonlinear phenomena
in optics and turbulence in fluids. His most recent scientific contribution in
the field of turbulence control was in cooperation with Professor D. ter Haar,
Professor Emeritus of Oxford University, entitled "The Origin of Coherence in
Turbulence."
Professor Levich has been the President of Constellation Group
Investments, Inc. since its inception. Constellation Group Investments, Inc.
indirectly may control the voting and disposition of 67.7% of C3D's Common
Stock. It is a holding company for high-tech enterprises.
Since 1999, Professor Levich serves as the Chief Executive Officer of
Constellation 3D Technology Limited, the beneficial owner of 67.7% of C3D's
Common Stock.
Professor Levich is the Operating Manager, President, Treasurer, and
Secretary of TriDStore IP, L.L.C., one of C3D's wholly owned subsidiaries.
Professor Levich has served as the Operating Manager, the Treasurer and
Secretary of TriDStore IP, L.L.C. since May 14, 1999. Professor Levich has been
the President of TriDStore IP, L.L.C. since October 16, 1998.
Professor Levich also serves as the Chief Executive Officer of C-TriD
Israel Ltd., one of C3D's wholly owned subsidiaries. Professor Levich has been
the Chief Executive Officer of C-TriD Israel Ltd. since April 1, 1999.
Professor Levich serves as the President and Secretary of TriD SV,
Inc., one of C3D's wholly owned subsidiaries. Professor Levich has been the
President and the Secretary of TriD SV, Inc. since August 11, 1998.
Professor Levich has been a Manager of Constellation 3D Trust LLC, one
of C3D's wholly owned subsidiaries, since February 10, 2000.
Michael Goldberg
Michael Goldberg serves as the Secretary, Director of Legal Affairs,
interim Chief Operating Officer and member of the Board of Directors of C3D. He
became the Secretary effective August 9, 1999, the Director of Legal Affairs
effective March 8, 1999 and the interim Chief Operating Officer effective
February 3, 2000. He became a member of the Board of Directors effective April
19, 1999. Mr. Goldberg graduated as Asper Fellow from the University of Maryland
Law School in 1974. Since 1990, he has been serving as Chairman and Chief
Executive Officer of Rx Medical Services Corp., a medical company that manages
and owns a small rural hospital and some outpatient surgery centers. On average,
Mr. Goldberg spends no less than thirty-five (35) hours per week devoted
exclusively to C3D's affairs.
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Mr. Goldberg has been a Manager of Constellation 3D Trust LLC, one of
C3D's wholly owned subsidiaries, since March 2, 2000.
Lev Zaidenberg
Lev Zaidenberg serves as a member of the Company's Board of Directors
and the Company's Director of Business Development. He became a member of the
Board of Directors effective April 19, 1999. Mr. Zaidenberg became C3D's
Director of Business Development effective September __, 2000. Mr. Zaidenberg
received a B.Sc. in Applied Mathematics and a M.Sc. in Information Systems and
Business Administration from Tel-Aviv University. From 1988 to 1994, he was a
partner and executive at DCL Systems Engineering Ltd., responsible for the
development of computer products for molecular modeling and financial trading.
Since 1984, he has served as a consultant to the Israeli Defense Forces in
computer auditing and security. From January 1996 until August 2000, Mr.
Zaidenberg was the Chief Executive Officer and President of Mutek Solutions
Ltd., a software company with headquarters in Israel and subsidiaries in the
United States and Germany. Mr. Zaidenberg is presently Chairman of the Board of
Mutek Solutions Ltd. and of Visson Enterprises Ltd., a company dealing with
displays.
Since its inception, Mr. Zaidenberg has been the President of United
European Enterprises Ltd., which indirectly has been able to control the voting
and disposition of 67.7% of C3D's Common Stock. United European Enterprises Ltd.
is a holding company. Mr. Zaidenberg has been a director of Constellation 3D
Technology Limited, the beneficial owner of 67.7% of C3D's Common Stock since
its inception.
Mr. Zaidenberg has been the Treasurer of TriD SV, Inc., one of C3D's
wholly owned subsidiaries, since August 11, 1998.
Stuart Garawitz
Stuart Garawitz is a member of the Company's Board of Directors. He
became a member effective May 26, 2000. Mr. Garawitz graduated from Penn State
University in 1977 with a B.S. degree in business with majors in finance and
marketing. From 1992 until 1996, Mr. Garawitz was the managing director of
Laidlaw Equities, a New York Stock Exchange Member Firm. From 1996 until 1998,
Mr. Garawitz worked at Robb, Peck, McCooey as a managing director. From 1998
until December 1999, Mr. Garawitz worked at Oppenheimer & Co., a brokerage firm,
as an executive director of the Private Client Division. Since January 2000, Mr.
Garawitz has been a partner at M.S. Farrell & Co., an investment banking and
money management firm.
Val Mandel
Val Mandel is a member of the Company's Board of Directors. He became a
member effective May 26, 2000. Mr. Mandel received a B.S. in Engineering from
the Moscow Civil Engineering College in 1975 and a J.D. degree from the Rutgers
University School of Law in 1986. Mr. Mandel was a partner at Hellring Lindeman
Goldstein & Siegal, a New Jersey law firm, from 1994 until 1997. Since October
1997, Mr. Mandel has been practicing law in his own law firm -- Val Mandel, P.C.
Joseph Shefet
Joseph Shefet is a member of the Company's Board of Directors. He
became a member of the Board of Directors effective May 26, 2000. Mr. Shefet
received a B.S. in Law in 1966 and a Master's Degree in Business Administration
in 1968 from the Hebrew University in Jerusalem. Mr. Shefet is a Certified
Public Accountant in Israel and an attorney who is a member of the American Bar
Association and the Israeli Bar Association. Since 1976, Mr. Shefet has been a
senior partner in Shaham-Shefet, a law firm specializing in international
taxation.
Leonardo Berezowsky
Leonardo Berezowsky serves as C3D's Senior Vice President of Finance,
Chief Financial Officer, and a member of the Board of Directors. He became
Senior Vice President of Finance and Chief Financial Officer
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effective November 5, 1999. He became a member of the Board of Directors
effective December 28, 2000. Mr. Berezowsky received a B.A. in Economics in
1980, a B.A. in Computer Sciences in 1981, and an M.A. in Economics in 1982 from
the Hebrew University in Jerusalem. From 1987 to 1994, he worked as Chief
Financial Officer of Somelcs, a company engaged in research and development in
the energy field. In 1995 he served as Chief Operating Officer of C.
Multiprocessing Technologies Ltd., a software development company. From 1996
until June 2000, he served as Chief Operating Officer of Mutek Solutions Ltd., a
software company with headquarters in Israel and subsidiaries in the United
States and Germany, and as director of Mutek Solutions Inc., a company related
to Mutek Solutions Ltd. Starting July 2000, Mr. Berezowsky has devoted his time
exclusively to C3D's affairs.
Mr. Berezowsky has been the Chief Operating Officer of Constellation
Group Investments, Inc., the beneficial owner of 67.7% of C3D's Common Stock,
since its inception.
Mr. Berezowsky has served as the Chief Operating Officer of C-TriD
Israel Ltd., one of C3D's wholly owned subsidiaries, since 1999.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
ELECTION OF THE FOLLOWING NOMINEES:
1. Eugene Levich;
2. Michael Goldberg;
3. Lev Zaidenberg;
4. Stuart Garawitz;
5. Val Mandel;
6. Joseph Shefet; and
7. Leonardo Berezowsky.
UNLESS AUTHORITY TO DO SO IS WITHHELD, THE PERSONS NAMED IN EACH PROXY WILL VOTE
THE SHARES REPRESENTED THEREBY "FOR" THE ELECTION OF THE ABOVE-STATED NOMINEES.
Board Meetings and Committees
The Board of Directors held 22 meetings in 2000. The Board of
Directors has a Compensation Committee and an Audit Committee. In 2000, the
Compensation Committee had 2 meetings, and the Audit Committee had 1 meeting. In
2000, Val Mandel, Joseph Shefet, and Stuart Garawitz attended less than 75% of
the aggregate of the total number of meetings of the Board of Directors and all
committees of which they are members (held during the period for which they were
directors).
Compensation Committee
The Compensation Committee consists of two directors: Michael Goldberg
and Lev Zaidenberg, who were elected effective June 17, 1999 and reelected
effective [June ___, 2000]. The Compensation Committee (1) reviews and
recommends each year to the Board of Directors the form and amount of
compensation to be received by executive officers of C3D and the amount and
number of stock options to be granted under C3D's 1999 Stock Option Plan; (2)
initiates, at its discretion, investigations within the parameters of the
foregoing responsibilities and for that purpose retains outside legal counsel,
or any other such experts as it shall deem appropriate; and (3) reports to the
entire Board of Directors at such time as the Compensation Committee determines,
but not less than once each year. Each member of the Compensation Committee must
be nominated by a Board member and elected by a majority of the Board of
Directors. Each member of the Compensation Committee serves for a term of one
year and until the member's successor has been duly elected and qualified,
except in the event of any early resignation or removal.
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Compensation Committee Interlocks and Insider Participation
The Company's Compensation Committee consists of Michael Goldberg and
Lev Zaidenberg. Michael Goldberg and Lev Zaidenberg became members effective
June 17, 1999. Michael Goldberg has been the Company's Secretary since August 9,
1999, the Company's Director of Legal Affairs since March 8, 1999, and the
Company's Chief Operating Officer (interim) since February 3, 2000. Mr.
Zaidenberg has been the Treasurer of TriD SV, Inc., one of C3D's wholly owned
subsidiaries, since August 11, 1998 and the Director of Business Development of
the Company since September ___, 2000.
Compensation Committee Report on the Compensation of Executive Officers
of the Company in 2000
The Compensation Committee of the Board of Directors (the "Committee"),
consisting of Michael Goldberg and Lev Zaidenberg, makes decisions regarding the
aggregate compensation of the Company's executive officers in the form of base
salaries and stock option awards. This report discusses the Company's
compensation policies and compensation paid to the Company's executive officers
in 2000.
Overview of the Company's Compensation Policies
The compensation policies implemented by the Committee support the
Company's overall objective of enhancing value for its shareholders. The
Company's compensation policies are designed to align executive compensation
with the Company's long-term business objectives and performance. Such policies
should enable the Company to attract, retain and motivate executive officers
whose leadership and contributions are critical to the Company's long-term
success. In furtherance of these objectives, the Company's compensation program
for executive officers in 2000 includes the following elements:
o the payment of base salaries that are competitive with base
salaries paid by similarly sized United States research and
development companies for comparable executive positions; and
o the grant of stock-based compensation that provides long-term
incentive to executive officers and aligns their interests with
the shareholders' interests.
The Committee considered and determined each of the above-stated
elements separately and collectively to ensure that the Company appropriately
compensates the executive officers in accordance with its basic compensation
principles. The Committee discussed the above-stated elements of compensation
for the executive officers, excluding the compensation of the Chief Executive
Officer, with the Chief Executive Officer and the Company's management team.
The Committee based the compensation of its executive officers,
including the President who is also the Chief Executive Officer of the Company,
Chief Financial Officer who is also the Company's Senior Vice President of
Finance, Chief Operating Officer, and Director of Business Development on an
equitable basis taking into consideration each individual's expertise,
background, degree of responsibility and contribution to the achievement of the
Company's overall objectives. There are no written contracts between the Company
and the executive officers mentioned above in connection with their employment
and compensation by the Company.
Base Salary
In determining the base salary, the Committee considered each executive
officer's value to the Company, his experience in the industry and performance
with the Company. The Committee also considered the base salary levels in effect
for comparable executive positions at similarly sized United States research and
development companies. Based upon its review of these factors, the Committee
decided to keep each executive officer's base salary the same as the one
established in June 1999.
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Stock Options
The Committee administers the Company's 1999 Stock Option Plan. The
Committee believes that the executive officers should have an opportunity to own
common stock of the Company to align their interests with those of the Company's
shareholders. Stock options provide this opportunity and also add an additional
long-term incentive to executive officers to further the Company's growth,
development and financial success.
In 2000, the Committee granted options under the 1999 Stock Option Plan
to certain key employees, directors, and important consultants of the Company
and its subsidiaries to purchase 4,261,550 shares of its common stock, of which
840,000 options were granted to executive officers mentioned in this Report. In
making these grants, the Committee considered the number of options remaining
available for grants under the 1999 Stock Option Plan and the performance of the
executive officers to whom the options were granted. All of the options granted
in 2000 were at an exercise price that was equal to the last sales price of the
Company's common stock on the date of grant. The vesting period of options
granted in 2000 ranges from immediate vesting to three months or a year after
the date of the grant. On December 28, 2000, the Board of Directors approved the
stock options granted by the Committee in 2000.
Date: December 28, 2000
The Compensation Committee:
Michael Goldberg
Lev Zaidenberg
Audit Committee
The Audit Committee currently consists of three directors, all of whom
are independent pursuant to the rules of the National Association of Securities
Dealers' listing standards. From June 17, 1999 until May 26, 2000, when they
resigned, Lev Zaidenberg and Michael Goldberg served as the members of the Audit
Committee. Stuart Garawitz, Val Mandel, and Joseph Shefet were elected to the
Audit Committee effective May 26, 2000. Mr. Shefet is the Chairman of the Audit
Committee. The responsibilities of the Audit Committee are as follows:
o Ensure its receipt from the outside auditor of a formal
written statement, delineating all relationships between the
outside auditor and the Company consistent with the
Independence Standards Board Standard 1.
o Actively engage in a dialogue with the outside auditor with
respect to any disclosed relationships or services that may
impact the objectivity and independence of the outside auditor
and be responsible for taking, or recommending that the Board
of Directors take, appropriate action to oversee the
independence of the outside auditor.
o In view of the outside auditor's ultimate accountability to
the Board and the Audit Committee, as representatives of the
shareholders, the Audit Committee, acting together with the
Board, has the ultimate authority and responsibility to
select, evaluate, and, where appropriate, replace the outside
auditor (or nominate an outside auditor for shareholder
approval in any proxy statement).
o Review with the outside auditor, the Company's internal
auditor (if any), and financial and accounting personnel, the
adequacy and effectiveness of the accounting and financial
controls of the Company, and elicit any recommendations for
the improvement of such internal control procedures or
particular areas where new or more detailed controls or
procedures are desirable.
o Consider, in consultation with the outside auditor and management
of the Company, the audit scope and procedures.
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o Review the financial statements contained in the annual report
to shareholders with management and the outside auditor to
determine that the outside auditor is satisfied with the
disclosure and content of the financial statements to be
presented to the shareholders.
o Meet with the internal auditor (if any), outside auditor or
the management privately to discuss any matters that the Audit
Committee, the internal auditor (if any), the outside auditor
or the management believe should be discussed privately with
the Audit Committee.
o Review and reassess the adequacy of the Audit Committee's charter
annually.
o Make such other recommendations to the Board on such matters,
within the scope of its functions, as may come to its
attention and which in its discretion warrant consideration by
the Board.
Each member of the Audit Committee serves for a term of one year and
until the member's successor has been duly elected and qualified, except in the
event of any early resignation or removal.
On May 26, 2000, the Audit Committee adopted the Audit Committee
Charter, a copy of which is attached as Appendix A.
Audit Committee Report
In December 2000, the Audit Committee of Constellation 3D, Inc. (the
"Company") met with management to review and discuss the audited financial
statements. The Audit Committee also conducted discussions with its independent
auditors, BDO Seidman, LLP, regarding the matters required by the Statement on
Auditing Standards No. 61. As required by Independence Standards Board Standard
No. 1, "Independence Discussions with Audit Committees," the Audit Committee has
discussed with and received the required written disclosures and confirming
letter from BDO Seidman, LLP regarding its independence and has discussed with
BDO Seidman, LLP its independence. Based upon the review and discussions
referred to above, the Audit Committee recommended to the Board of Directors
that the December 31, 1999 and June 30, 2000 audited financial statements be
included in the Company's Annual Report in connection with the Company's 2001
Annual Meeting of Shareholders.
This Audit Committee Report shall not be deemed incorporated by
reference in any document previously or subsequently filed with the Securities
and Exchange Commission that incorporates by reference all or any portion of the
proxy statement, in connection with the Annual Meeting, except to the extent
that the Company specifically requests that this Report be specifically
incorporated by reference.
Date: December ___, 2000.
The Audit Committee:
Joseph Shefet
Stuart Garawitz
Val Mandel
Director Compensation
C3D HAS ADJUSTED THE AMOUNTS OF THE SHARES OR OPTIONS ISSUED OR GRANTED
PRIOR TO JANUARY 18, 2000 AND MENTIONED IN THIS DISCUSSION OF DIRECTOR
COMPENSATION DUE TO THE THREE-FOR-ONE FORWARD SPLIT OF ITS COMMON STOCK THAT
TOOK EFFECT JANUARY 18, 2000.
For past services by Itzhak Yaakov, a former director of C3D, starting
July 1999, Yaakov Consultants, of which Itzhak Yaakov is the sole owner,
received a monthly fee of $5,000 until C3D received an investment of $2 million,
and thereafter, $10,000 per month. There is no written contract for this
compensation. In addition, for past services as a director, on March 8, 1999,
the Company's Board authorized the grant of 150,000 shares of Common Stock
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<PAGE>
and 300,000 options to purchase Common Stock at an exercise price of $1.33 per
share for an exercise period of five (5) years to Itzhak Yaakov. The Company
issued such 150,000 shares on December 7, 1999 and granted such 300,000 options
on December 27, 1999. On May 15, 2000, C3D granted to Itzhak Yaakov, an option
to purchase 90,000 shares of the Company's Common Stock at an exercise price of
$10.69 per share. The option vested immediately after the date of the grant.
Itzhak Yaakov resigned from the Board of Directors effective August 22, 2000.
For past services as a director, on March 8, 1999, the Board authorized
the grant of 150,000 shares of Common Stock and 225,000 options to purchase
Common Stock at an exercise price of $1.33 per share for an exercise period of
five (5) years to Michael Goldberg. The issuance of the 150,000 shares occurred
on December 7, 1999, and the grant of options occurred on December 27, 1999.
Options granted to Eugene Levich, Michael Goldberg, Lev Zaidenberg, and
Leonardo Berezowsky on May 15, 2000 are described in the Individual Option
Grants Table below.
On November 9, 2000, C3D granted options to purchase 5,000 shares of
the Common Stock at an exercise price of $1 per share to each of the following
directors: Val Mandel, Joseph Shefet, and Stuart Garawitz. These options were
not granted under the 1999 Stock Option Plan. These stock options vest on May
26, 2001 and expire on May 26, 2006.
<TABLE>
<CAPTION>
Executive Officers
Name Age Position
---- --- --------
<S> <C> <C>
Vladimir Schwartz.......................... 48 Chief Technical Officer (interim)
Ronen Yaffe................................ 30 Treasurer
</TABLE>
Information concerning the business history and experience of V.
Schwartz, and R. Yaffe is set forth below:
Vladimir Schwartz
Vladimir Schwartz serves as the Company's Chief Technical Officer
(interim). He became Chief Technical Officer (interim) effective July 6, 2000.
Mr. Schwartz received a M.Sc. in Mechanical Engineering from the Odessa College
of Marine Engineering in the Ukraine. From 1993 until April 2000, Mr. Schwartz
served as Engineer of Reflekt Technology, Inc., a Massachusetts company engaged
in the design and manufacturing of optical disc replication equipment. Mr.
Schwartz serves as the President of Reflekt Technology, Inc. Since April 2000,
Mr. Schwartz has been President and Chief Executive Officer of FMD&E, Inc., one
of C3D's wholly owned subsidiaries.
Ronen Yaffe
Ronen Yaffe serves as the Company's Treasurer. He became Treasurer
effective November 5, 1999. From 1994 to 1998, he was a Manager for Deloitte
Touche Tohmatsu International Israel Ltd., where he oversaw the audit of Israeli
high-tech public and private companies and advised such companies regarding
Enterprise Resource Providers. He also led the process of integrating Deloitte
Touche's accounting software into Deloitte Touche's Israeli operations. In
August 1996, he graduated from The School of Business Administration at the
College of Management located in Tel Aviv, Israel. In 1998, he became a
Certified Public Accountant. Since June 1998, Mr. Yaffe has been the Chief
Financial Officer and Vice President of C-TriD Israel Ltd., one of C3D's wholly
owned subsidiaries.
Executive Compensation
Except for Eugene Levich, Leonardo Berezowsky, Michael Goldberg, and
Lev Zaidenberg, none of C3D's executive officers had, as one of C3D's executive
officers, a total annual salary and bonus exceeding $100,000 for
9
<PAGE>
fiscal year 2000. There is no additional individual who would have been one of
C3D's other most highly compensated executive officers had he served as one of
C3D's executive officers through the end of fiscal year 2000.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
--------------------------------------- -------------
Securities
Underlying
Name and Fiscal Other Annual Stocks Option
Principal Position Year Salary Bonus Compensation Grants
------------------ ------ ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Professor Eugene Levich,
Chief Executive Officer and 2000 $180,000 450,000
President
1999 $105,000
1998 $ 65,000 $20,000(1)
(approx.) (approx.)
Leonardo Berezowsky
Senior Vice President of Finance 2000 $120,000 150,000
and Chief Financial Officer
1999 $[ ]
1998 $[ ]
Michael Goldberg
Chief Operating Officer 2000 $120,000 150,000
(Interim)
1999 $[ ] 150,000 225,000
shares of
1998 $[ ] C3D's Common
Stock
Lev Zaidenberg 2000 $120,000 90,000
Director of Business Development
1999 $[ ]
1998 $[ ]
</TABLE>
------------------
(1) Until the end of 1998, neither Constellation 3D Technology Limited,
Constellation 3D Holdings Limited nor C3D directly compensated
Professor Levich for his position as an officer. However, in 1998 and
1997, Constellation 3D Holdings Limited paid management fees to
Constellation Memory Division ("CMD"), a Nevis company, which
transferred, among other amounts, approximately $85,000 to Memde Israel
Ltd. ("Memde"), an Israeli company related to CMD. This $85,000 was
paid by Memde as compensation, including non-salary and non-bonus
compensation, to Professor Levich, who was then a principal and the
president of Memde.
10
<PAGE>
Stock Option Tables
The following table sets forth certain information regarding options
granted during 2000 for each of the executive officers named in the Summary
Compensation Table.
Individual Option Grants In 2000*
<TABLE>
<CAPTION>
Number of % of Total Black-
Securities Options Scholes
Underlying Granted to Grant Date
Options Employees in Exercise Expiration Present
Name Granted Fiscal Year Price Date Value(1)
------------------------------ ---------- ------------ -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Eugene Levich................. 450,000 9.7% $ 10.69 May 15, 2005 $3,306,000
Leonardo Berezowsky........... 150,000 3.2% $ 10.69 May 15, 2005 1,081,000
Michael Goldberg.............. 150,000 3.2% $ 10.69 May 15, 2005 1,102,000
Lev Zaidenberg................ 90,000 1.9% $ 10.69 May 15, 2005 658,000
</TABLE>
-----------------------------------------
*Through December 12, 2000.
(1) In accordance with SEC rules, the Black-Scholes option pricing model
was chosen to estimate the grant date present value of the options set
forth in this table. C3D's use of this model should not be construed
as an endorsement of its accuracy at valuing options. All stock option
valuation models, including the Black-Scholes model, require a
prediction about future movement of the stock price. The assumptions
used in the model were expected volatility of 80%, risk-free rates of
return of 6.73%, dividend yield of 0%, and weighted average expected
life of 4.80 years. The real value of the options in this table
depends upon the actual performance of C3D's Common Stock during the
applicable period.
The following table sets forth certain information regarding individual
exercises of stock options during 2000 by each of the executive officers named
in the Summary Compensation Table.
Aggregated Stock Option Exercises In 2000*
and Year-End Stock Option Values
<TABLE>
<CAPTION>
Number of Securities
Shares Underlying Unexercised Stock Value of Unexercised in the
Acquired on Value Options at Money Stock Options
Name Exercise Realized Year-End 2000 at Year-End 2000
---------------------------- ----------- -------- ---------------------------- ----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Eugene Levich............... - - 450,000 - $3,306,000 -
Leonardo Berezowsky......... - - 150,000 - 1,081,000 -
Michael Goldberg............ - - 375,000 - 4,563,000 -
Lev Zaidenberg.............. - - 90,000 - 658,000 -
</TABLE>
----------------------------------------
*Through December 12, 2000.
11
<PAGE>
Compensation Arrangements
On July 15, 1999, Ronen Yaffe, the Company's Treasurer, entered into an
employment contract with C-TriD Israel Ltd. The contract is still effective.
Pursuant to the contract, as orally amended, for services as the Chief Financial
Officer of C-TriD Israel Ltd., C-TriD Israel Ltd. will pay Mr. Yaffe 29,244 New
Israeli Shekels (approximately U.S. $7,235 based on an October 5, 2000 interbank
exchange rate of approximately 4.042 New Israeli Shekels per U.S. Dollar,
without fees or surcharges) per month. In 1999, Mr. Yaffe received a bonus of
$5,000 through C-TriD Israel Ltd. In addition, C-TriD will pay a bonus to Mr.
Yaffe if C-TriD Israel Ltd. distributes a bonus to its employees, as determined
by the Board of Directors of C-TriD Israel Ltd. and dependent on Mr. Yaffe's
performance and the financial results of C-TriD Israel Ltd. and stock options in
C-TriD Israel Ltd. if C-TriD Israel Ltd. adopts a stock option plan for its
employees.
On June 17, 1999, the Company's Compensation Committee set certain
compensations which, on May 11, 2000, it decided to continue. There are no
written contracts for such compensations. Professor Eugene Levich, the Company's
President, Chief Executive Officer, and Chairman of the Board of Directors, is
to receive $15,000 per month as of June 1, 1999. Leonardo Berezowsky, the
Company's Senior Vice President of Finance, Chief Financial Officer and member
of the Board of Directors, is to receive $10,000 per month, $5,000 monthly as of
June 1, 1999, and $5,000 to accrue monthly until the next significant financing
following May 11, 2000. Michael Goldberg, the Company's Secretary, Director of
Legal Affairs, interim Chief Operating Officer and member of the Board of
Directors, is to receive $10,000 per month, $5,000 monthly as of June 1, 1999,
and $5,000 to accrue monthly until the next significant financing following May
11, 2000. In his capacity as Director of Business Development, Lev Zaidenberg,
who is also a member of the Company's Board of Directors, is to receive $10,000
per month, $5,000 monthly as of June 1, 1999, and $5,000 to accrue monthly until
the next significant financing following May 11, 2000.
Beneficial Ownership
The following table sets forth the beneficial ownership of the Common
Stock as of December 12, 2000 by each person known by the Company to own
beneficially more than five percent (5%) of the issued and outstanding Common
Stock, each of the Company's directors and executive officers, and the directors
and executive officers as a group. For purposes of this proxy statement, a
beneficial owner of shares of the Company's Common Stock includes any person
who, directly or indirectly, has or shares voting power which includes the power
to vote, or to direct the voting of, such shares of C3D's Common Stock and/or
investment power which includes the power to dispose, or to direct the
disposition of, such shares of C3D's Common Stock. The percentage of beneficial
ownership, as provided in the table below, was calculated on the basis of the
total of 42,957,026 shares of Common Stock issued and outstanding as of December
12, 2000, i.e., excluding 500,000 shares held by Constellation 3D Trust LLC
since Constellation 3D Trust LLC is C3D's wholly-owned subsidiary.
<TABLE>
<CAPTION>
Name and Address of Number of Shares
Beneficial Owner Beneficially Owned Percent
-------------------------------------------------------- ------------------ ------------
<S> <C> <C>
Constellation 3D Technology Limited 29,089,283(2) 67.7%
235 West 76th Street, Suit 8D
New York, New York 10023
Rapids Trust Limited 29,089,283(2) 67.7%
56 Mazah Street
Tel Aviv, Israel 55905
United European Enterprises Ltd. 29,089,283(2) 67.7%
56 Mazah Street
Tel Aviv, Israel 55905
Constellation Group Investments Inc. 29,089,283(2) 67.7%
c/o Euro-American Trust and Management Services
Limited
P.O. Box 3161
Road Town, Tortola, British Virgin Islands
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Number of Shares
Beneficial Owner Beneficially Owned Percent
-------------------------------------------------------- ------------------ ------------
<S> <C> <C>
Markus Banzer 29,089,283(2) 67.7%
Gr. Bongert 9
Triesen, Liechtenstein
Hubert Buchel 29,089,283(2) 67.7%
Salums 63
Gamprin, Liechtenstein
Criterion Treuunternehmen reg. 29,089,283(2) 67.7%
Austr. 49
Vaduz, Liechtenstein
Sands Brothers & Co. Ltd. 3,676,629(3) 7.9%
90 Park Avenue
New York, NY 10016
Professor Eugene Levich(1) 29,540,083(4) 68%
Lev Zaidenberg(1) 29,179,883(5) 67.8%
Leonardo Berezowsky(1) 29,240,033(6) 67.8%
Michael Goldberg (1) 518,300(7) 1.2%
Ronen Yaffe (1) 230,000(8) *
Vladimir Schwartz (1) 150,000(9) *
Val Mandel(1) 45(10) *
All directors and executive officers as a group 30,679,778(11) 69.1%
</TABLE>
-------------------------------------
*Beneficial ownership of less than 1%.
(1) The business address of such person or entity is 230 Park
Avenue, Suite 453, New York, New York 10169.
(2) Constellation 3D Technology Limited, a British Virgin Islands
company, directly owns 29,089,283 shares of C3D's Common
Stock. United European Enterprises Ltd., a Nevis company, owns
approximately 55.5% of the voting shares of Constellation 3D
Technology Limited and, through its instructions to Rapids
Trusts Limited, an Israeli trust, thereby controls how
Constellation 3D Technology Limited votes and invests its
29,089,283 shares of C3D's Common Stock. Constellation Group
Investments Inc., a British Virgin Islands Company, directly
owns approximately 54.9% of the voting shares of United
European Enterprises and thereby indirectly controls how
Constellation 3D Technology Limited votes and invests its
29,089,283 shares of C3D's Common Stock. Markus Banzer, Hubert
Buchel and Criterion Treuunternehmen reg., as the sole three
trustees of the Alex-L Foundation, the Lion & Heart Foundation
13
<PAGE>
and Lediligi, three Liechtenstein trusts, have, through those
trusts, complete ownership of all of the voting shares of
Constellation Group Investments Inc. and thereby indirectly
control how Constellation 3D Technology Limited votes and
invests its 29,089,283 shares of C3D's Common Stock. No
individual, trust or business entity controls the three
trustees. Upon the death or disability of a trustee, the
remaining trustee(s) choose his or her replacement. Upon the
death or disability of all trustees before any living and able
replacement is chosen, a court of Liechtenstein chooses their
replacements.
(3) 3,676,629 shares represent (a) 3,450,000 shares of Common
Stock issuable upon the exercise of warrants which are
exercisable by Sands Brothers & Co. Ltd. within 60 days of
December 12, 2000 if the agreements governing such warrants,
as amended, are enforceable by their terms and are not
renegotiated by C3D and (b) 226,629 shares of Common Stock
which may be acquired by Sands Brothers Venture Capital
Associates LLC, of which Sands Brothers & Co Ltd. is member
manager, within 60 days of December 12, 2000 upon conversion
of debenture in the principal amount of $4,000,000 (Four
Million Dollars). C3D believes that the agreements governing
said warrants are no longer enforceable, because Sands
Brothers & Co. Ltd. failed to satisfy its obligation to raise
$7.5 million in financing for C3D within 150 days of the
Commencement Date as defined in the Placement Agency
Agreement. C3D intends to renegotiate the agreements governing
said warrants with Sands Brothers & Co. Ltd.
(4) Professor Levich is the Chairman of the Company's Board of
Directors, the Company's Chief Executive Officer and President
and a director and/or executive officer of Constellation 3D
Technology Limited, United European Enterprises Ltd. and/or
Constellation Group Investments Inc. Certain members of
Professor Levich's family are among the beneficiaries of the
Alex-L Foundation. See footnote (2). 29,540,083 shares
represent 29,089,283 shares owned by Constellation 3D
Technology Limited, 800 shares owned by Professor Levich, and
450,000 shares of Common Stock issuable upon the exercise of
options, which are exercisable within 60 days of December 12,
2000.
(5) Mr. Zaidenberg is the Company's director, Director of Business
Development, and a director and/or executive officer of
Constellation 3D Technology Limited, United European
Enterprises Ltd. and/or Constellation Group Investments Inc.
Certain members of Mr. Zaidenberg's family are among the
beneficiaries of the Lion & Heart Foundation. See footnote
(2). 29,179,883 shares represent 29,089,283 shares owned by
Constellation 3D Technology Limited, 600 shares owned by Mr.
Zaidenberg, and 90,000 shares of Common Stock issuable upon
the exercise of options, which are exercisable within 60 days
of December 12, 2000.
(6) Mr. Berezowsky is the Company's Senior Vice President of
Finance, Chief Financial Officer, member of the Board of
Directors, and an executive officer of Constellation Group
Investments Inc. Mr. Berezowsky and certain members of his
family are among the beneficiaries of the Lediligi Foundation.
See footnote (2). 29,240,033 shares represent 29,089,283
shares owned by Constellation 3D Technology Limited, 750
shares owned by Mr. Berezowsky, and 150,000 shares of Common
Stock issuable upon the exercise of options, which are
exercisable within 60 days of December 12, 2000.
(7) Mr. Goldberg is the Company's Secretary, Director of Legal
Affairs, interim Chief Operating Officer, and member of the
Company's Board of Directors. 518,300 shares represent 143,300
shares of Common Stock issued and outstanding and 375,000
shares of Common Stock issuable upon exercise of options,
which are exercisable within 60 days of December 12, 2000.
(8) Mr. Yaffe is the Company's Treasurer. 230,000 shares represent
230,000 shares of Common Stock issuable upon exercise of
options, which are exercisable within 60 days of December 12,
2000.
14
<PAGE>
(9) Mr. Schwartz is the Company's interim Chief Technical Officer.
150,000 shares represent 150,000 shares of Common Stock
issuable upon exercise of options, which are exercisable
within 60 days of December 12, 2000.
(10) Val Mandel's wife owns 45 shares of Common Stock.
(11) 30,679,778 shares include (a) 145,450 shares of Common Stock
owned by Messrs. Levich, Zaidenberg, Berezowsky, and Goldberg
in total, (b) 1,445,000 shares of Common Stock issuable upon
the exercise by Messrs. Levich, Zaidenberg, Berezowsky,
Goldberg, Yaffe, and Schwartz of options which are exercisable
within 60 days of December 12, 2000, (c) 45 shares owned by
Val Mandel's wife, and (d) 29,089,283 shares of Common Stock
over which Constellation 3D Technology Limited, United
European Enterprises, Constellation Group Investments Inc.,
and the trustees of certain trusts have direct or indirect
voting and/or investment power. See footnote (2).
Change of Control of C3D
On October 1, 1999, C3D purchased certain assets of Constellation 3D
Technology Limited ("Constellation Tech") for total consideration of 29,250,000
shares of Common Stock and C3D's assumption of certain liabilities and
obligations of Constellation Tech (the "Acquisition").
In the Acquisition, C3D acquired the following assets:
o Constellation Tech's then sole existing membership interest in
TriDStore IP, L.L.C.;
o all of the issued and outstanding ordinary shares of TriD Store
Vostok;
o 99 ordinary shares of the 100 ordinary shares then allotted of C-TriD
Israel Ltd.; and
o all of the issued and outstanding shares of common stock of TriD SV,
Inc.
TriDStore IP, L.L.C. is a Delaware limited liability company formed on
February 2, 1998, formerly known as OMD Devices, L.L.C., until March 9, 1999.
TriDStore IP, L.L.C. owns a substantial majority of the material intellectual
property owned by the Company, which consists mostly of patent registrations and
applications.
TriD Store Vostok is a Russian company formed on January 15, 1999. The
Company conducts its Russian operations through TriD Store Vostok.
C-TriD Israel Ltd. is an Israeli company formed on December 2, 1996.
C3D is the record owner of 99 of 100 allotted ordinary shares but is the
beneficiary of all 100 allotted ordinary shares, one of which is held in trust
for C3D by Rapids Trusts Ltd., an Israeli trust. The Company conducts its
Israeli operations through C-TriD Israel Ltd.
TriD SV, Inc. is a Delaware corporation formed on August 10, 1998. As
of March 21, 2000, TriD SV, Inc. has had no operations.
C3D does not know of any arrangements, including any pledge by any
person of securities of C3D, the operation of which may at a subsequent date
result in a change in control of C3D.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16 of the Securities Exchange Act of 1934, as amended, requires
that the officers and directors of C3D, as well as persons who own more than 10%
of a class of equity securities of C3D, file reports of their ownership of such
securities, as well as monthly statements of changes in such ownership, with C3D
and the Securities and Exchange Commission. Based upon representations received
by C3D from its current officers and directors and the reports filed with C3D
during 2000, the Company believes that all such filings required during 2000
15
<PAGE>
were made on a timely basis, except that Constellation 3D Trust LLC filed one
late Form 4 in connection with the issuance of 5,000,000 (Five Million) shares
of Common Stock by C3D.
Certain Transactions
On February 8, 2000, C3D formed Constellation 3D Trust LLC, a Delaware
limited liability company that it wholly owns. C3D then issued 10,500,000 shares
of Common Stock to Constellation 3D Trust LLC as a capital contribution and
later cancelled all but 500,000 of the shares. Constellation 3D Trust LLC
intends to use the 500,000 shares to raise debt or equity capital and contribute
the proceeds thereof to C3D, which proceeds will be used for general corporate
purposes. There is no assurance that the issuance of the shares will result in
the raising of any debt or equity capital.
On August 22, 2000, C3D granted to both Vladimir Schwartz, the
Company's interim Chief Technical Officer and Reflekt Technology, Inc., a
Massachusetts corporation ("Reflekt") of which Mr. Schwartz is President, sole
director and sole shareholder, a warrant to purchase 10,000 shares of C3D's
Common Stock at an exercise price of $11.25 per share in exchange for certain
patents owned in whole or in part by Mr. Schwartz or Reflekt. Mr. Schwartz or
Reflekt may exercise the warrant after August 21, 2001. The last sales price of
C3D's Common Stock was $11.25 per share on August 22, 2000.
On the same day, C3D also granted to Mr. Schwartz options to purchase
390,000 shares of C3D's Common Stock at the same exercise price. Mr. Schwartz
may exercise an option to purchase 150,000 shares at any time. Mr. Schwartz may
exercise an option to purchase the remaining 240,000 shares after August 21,
2001.
On August 23, 2000, C3D received a $6,000,000 line of credit from
Constellation 3D Technology Limited, a beneficial owner of 67.7% of C3D's
Common Stock. On August 28, 2000, C3D borrowed $1,000,000 under the line of
credit. In connection with this credit line, Constellation 3D Technology Limited
received a three-year warrant to purchase 20,000 shares of Common Stock upon
signing the Loan Agreement and a three year warrant to purchase 10,000 shares of
Common Stock upon the first withdrawal from the credit line. The purchase price
of these warrants is equal to 100% of the closing price of Common Stock on
August 23, 2000.
16
<PAGE>
Performance Graph
Comparison of 13 Month Cumulative Total Return*
Among Constellation 3D, Inc.,
the NASDAQ Stock Market (U.S.) Index and a Peer Group
The graph below shows a comparison of the cumulative return to the
shareholders of C3D with the cumulative return of the NASDAQ Stock Market Index
and of the peer group for the period starting in October 1999 and ending in
October 2000. The comparison period starts in October 1999, instead of the
fiscal year ended December 31, 1998, because on October 1, 1999, C3D purchased
certain assets of Constellation 3D Technology Limited and became the current
research and development company known as C3D on that date. The peer group used
in the comparison was chosen from companies whose operations fall under the
Standard Industrial Classification Code 3572 (computer storage devices).
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Cumulative Total Return
------------------------------------------------------------------------------------------------------------------------------------
10/1/99 10/99 11/99 12/99 1/00 2/00 3/00 4/00 5/00 6/00 7/00 8/00 9/00 10/00
------- ----- ----- ----- ---- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Constellation 3D,
Inc................. 100.00 106.59 201.20 402.40 423.99 790.50 589.28 309.01 219.18 260.51 235.35 183.25 159.01 150.91
NASDAQ Stock Market
(U.S.).............. 100.00 108.37 121.54 148.27 142.80 169.93 166.42 139.97 123.09 144.69 136.85 153.02 133.17 122.72
Peer Group.......... 100.00 99.62 114.93 147.25 141.72 159.39 172.18 183.89 157.94 201.98 218.71 252.38 257.69 233.43
</TABLE>
The graph assumes that $100 was invested on October 1, 1999 in C3D's
Common Stock, in the NASDAQ Stock Market Index, and in the peer group. The graph
also assumes that all dividends were reinvested. C3D did not declare or pay any
dividends on its Common Stock. Shareholder returns over the period shown in the
graph should not be considered indicative of future shareholder returns.
Price Range of Common Stock
C3D's Common Stock is traded on the NASDAQ National Market under the
ticker symbol "CDDD."
17
<PAGE>
On December 17, 1999, C3D's Board of Directors approved a three-for-one
forward split of the Common Stock for the shareholders of record on December 16,
1999. The adjustment of the price per share of the Common Stock that resulted
from the forward split took effect on January 18, 2000 and before trading of the
Common Stock began on January 18, 2000. ALL OF THE HIGH AND LOW BIDS REPORTED IN
THE CHART IMMEDIATELY BELOW HAVE BEEN ADJUSTED TO GIVE RETROACTIVE EFFECT TO THE
CHANGE IN THE PRICE PER SHARE OF THE COMMON STOCK RESULTING FROM THAT STOCK
SPLIT.
Time Period High Bid Low Bid
------------------------------------- -------- -------
Fiscal Year Ending 2000:
First Quarter........................ $ 63.625 $ 19.33
Second Quarter....................... $ 43.50 $ 9.875
Third Quarter........................ $ 20.1875 $ 9.75
Fourth Quarter*...................... $ 14.3125 $ 5.00
Fiscal Year Ending 1999:
Fourth Quarter....................... $ 32.63 $ 5.35
Third Quarter........................ $ 7.92 $ 3.33
Second Quarter....................... $ 4.04 $ 0.58
First Quarter........................ -- --
-------------------------------
*For the period October 1, 2000 through and including December 12,
2000.
On December 12, 2000, the highest bid was $6.4062 and the lowest bid
was $5.875.
As of December 12, 2000, there were approximately 109 shareholders of
record of the Common Stock, excluding Constellation 3D Trust LLC, one of C3D's
wholly owned subsidiaries.
Dividend Policy
C3D has never paid any cash dividends to any of its shareholders
because C3D has lacked earnings to pay such dividends, and C3D has no intention
to pay cash dividends in the foreseeable future.
Quantitative and Qualitative Disclosures About Market Risk
The Company believes that it does not have any material exposure to
interest or commodity risks. The Company does not own any derivative
instruments, does not engage in any hedging transactions but does have
outstanding long-term debt with fixed interest rates. The Company is exposed to
economic and political changes in international markets where the Company
competes, such as inflation rates, recession, foreign ownership restrictions,
domestic and foreign government spending, budgetary and trade policies and other
external factors over which the Company has no control.
The Company expects that, like many companies, it may be exposed to
some degree of market risk, particularly for its Ukrainian, Israeli and Russian
operations. The Company cannot provide any assurance that future developments in
each respective country will not generally have an adverse effect on the
financial condition of the Company. The Company does not anticipate that it will
enter into derivative transactions (e.g., foreign currency forward or option
contracts) to hedge against known or forecasted market changes.
The Company believes that it does face political risk based on having
operations in the Ukraine, Israel and Russia. These countries do face political
instability that could have a material adverse effect on the Company's
operations. However, the Company believes that this is unlikely to occur. The
Company does not possess "political risk" or other similar insurance to protect
it against business interruption losses caused by political acts.
18
<PAGE>
PROPOSAL TWO
APPROVAL OF AGREEMENT AND PLAN OF MERGER
On December 28, 2000, the Board of Directors adopted an Agreement and
Plan of Merger, subject to the approval by the shareholders, providing for the
merger (the "Merger") of the Company into Constellation 3D, Inc., a Delaware
corporation (the "Delaware Corporation") in order to reincorporate the Company
under the laws of the State of Delaware (the "Reincorporation"). The Delaware
Corporation was incorporated on January ___, 2001; it is a wholly owned
subsidiary of the Company. The Company was incorporated under the laws of the
State of Florida in 1995. The Company is engaged in a research and development
program to launch the mass-market production of a technology called Fluorescent
Memory Technology. The Delaware Corporation has not engaged in any business.
The Board of Directors of the Company believes that Delaware corporate
law will better serve the shareholders' interests and provide the Company with
advantages not available under Florida corporate law. Therefore, the Board of
Directors recommends that the shareholders approve the form of the Agreement and
Plan of Merger (the "Merger Agreement") that appears as Appendix B to this proxy
statement to effect the Reincorporation of the Company in Delaware. If holders
of 50.01% of the outstanding votes of shareholders of the Company approve the
Merger Agreement, the Board of Directors intend to merge the Company into the
Delaware Corporation.
The principal executive office of the Company and of the Delaware
Corporation is located at 230 Park Avenue, Suite 453, New York, NY 10169, and
the telephone number of the executive office is (212) 983-1107.
Reasons for Engaging into Merger
For many years, Delaware has encouraged incorporation in that state by
adopting modern, comprehensive and flexible corporate laws, and it periodically
updates and revises them to meet changing business needs. The Delaware General
Corporation Law (the "DGCL") is considered a sophisticated statute, highly
conducive to business. That is why many corporations choose Delaware initially
as their place of incorporation, and why many others have reincorporated in
Delaware by means of transactions like the one now proposed. Because of
Delaware's policy of encouraging incorporation and its preeminence as the most
popular state of incorporation for major corporations, the courts of Delaware
have developed considerable expertise in dealing with corporate issues. As a
result, Delaware's case law interpreting its corporate laws is more developed
than that of any other state. This gives Delaware corporate law an extra measure
of predictability that is useful and often crucial in our precedent-based
judicial system.
For the board of directors and the management of a Delaware
corporation, these features of Delaware law allow greater certainty in managing
the corporation. The state's court system also provides for relatively prompt
resolution of most corporate disputes. For example, Delaware has a specialized
Court of Chancery that hears cases involving corporate law. The Court of
Chancery has no jurisdiction over most other kinds of cases, and therefore its
dockets are not as backlogged as those of courts in many other states. In
addition, the Supreme Court of Delaware hears and decides important corporate
appeals rapidly.
The Board of Directors considered the predictability and flexibility of
Delaware law and the efficiency of its judicial process when it approved the
present proposal. The Board of Directors also recognized the possibility that
choosing to be governed by the corporate law of Delaware, as so many other
corporations have done, may further enhance the reputation of the Company.
Summary of Merger Terms
The following is the summary of certain material terms of the proposed
Merger (the pronouns "we," "us," and "our" used in this summary refer to the
Company, and pronouns "you," and "your" refer to the shareholders of the
Company):
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o the Delaware Corporation will be the surviving corporation in the
Merger;
o the Certificate of Incorporation and Bylaws of the Delaware
Corporation immediately before the Merger will govern your rights as
shareholders after the Merger (the Certificate of Incorporation and
the Bylaws of the Delaware Corporation are attached to this proxy
statement as Appendix C and Appendix D, respectively.);
o we, as an entity, will cease to exist after the Merger;
o our Articles of Incorporation and Bylaws will no longer govern your
rights as shareholders;
o the Certificate of Incorporation and the Bylaws of the Delaware
Corporation differ from our Articles of Incorporation and Bylaws.
The Section "Material Changes in Charter and Bylaws of Delaware
Corporation from Charter and Bylaws of Company" below discusses the
differences between these corporate documents;
o after the Merger, each outstanding share of our Common Stock will
automatically convert into one share of the common stock of the
Delaware Corporation. The Section "Conversion of Company's Common
Stock into Common Stock of Delaware Corporation" below discusses the
terms of such conversion;
o each stock option that would be, or later becomes, exercisable for
the shares of our Common Stock will automatically be, or later
become, exercisable for the same number of shares of the common
stock of the Delaware Corporation on the same terms and conditions;
o under Florida law, you will not have the right to dissent from the
Merger;
o the effective date of the Merger will be the date when the necessary
documents in connection with the Merger have been filed in both
Florida and Delaware; and
o neither we nor you will recognize any gain or loss by reason of the
Merger. The Section "Federal Income Tax Consequences of Merger"
below summarizes the tax implications of the Merger.
Conversion of Company's Common Stock into Common Stock of Delaware
Corporation
Reincorporation in Delaware will not change the business plan,
management, assets, liabilities, net worth, capitalization or employee benefit
plans of the Company. Each outstanding share of the Company's Common Stock will
automatically become one share of the common stock of the Delaware Corporation.
Furthermore, each stock option that would be, or later becomes, exercisable for
the shares of the Common Stock will automatically be, or later become,
exercisable for the same number of shares of the common stock of the Delaware
Corporation on the same terms and conditions. The Delaware Corporation will not
issue any shares of stock in connection with the Reincorporation, other than the
shares into which the outstanding shares of the Company will convert. As soon as
the Reincorporation becomes effective, the holders of the Company's shares will
become holders of the shares of the Delaware Corporation.
Shares of the Company will automatically convert into shares of the
Delaware Corporation, on the following terms:
o the conversion will be on a one-for-one basis;
o each share of the Common Stock of the Company which is outstanding
on the effective date of the Merger will become one share of the
common stock of the Delaware Corporation, par value $.00001 per
share; and
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o each share of the Common Stock held in treasury of the Company will
become a share held in the treasury of the Delaware Corporation.
THIS MEANS THAT, BEGINNING ON THE EFFECTIVE DATE, EACH STOCK
CERTIFICATE OF THE COMPANY WHICH WAS OUTSTANDING JUST BEFORE THE REINCORPORATION
WILL AUTOMATICALLY REPRESENT THE SAME NUMBER OF SHARES OF THE DELAWARE
CORPORATON.
Shareholders whose shares of the Company were freely tradable before
the Reincorporation will own shares of the Delaware Corporation that are freely
tradable after the Reincorporation. Similarly, any shareholders holding
securities with transfer restrictions before the Reincorporation will hold
shares of the Delaware Corporation which have the same transfer restrictions
after the Reincorporation. For the purposes of computing the holding period
under Rule 144 of the Securities Act of 1933, as amended, those who hold the
Delaware Corporation's stock certificates will be deemed to have acquired their
shares on the date they originally acquired their shares in the Company.
After the Reincorporation, the Delaware Corporation will be a publicly
held company, with its Common Stock traded on the NASDAQ National Market. The
Delaware Corporation will also file with the SEC and provide to its stockholders
the same types of information that the Company has previously filed and
provided.
The Board of Directors of the Company will have the right to abandon
the Merger Agreement and take no further action towards reincorporating the
Company in Delaware at any time before the Reincorporation becomes effective,
even after shareholder approval of this Proposal Two, if for any reason the
Board of Directors determines that it is not advisable to proceed with the
Reincorporation.
UNDER FLORIDA LAW, IF A COMPANY'S COMMON STOCK IS TRADED ON THE NASDAQ
NATIONAL MARKET, THE SHAREHOLDERS OF THAT COMPANY DO NOT HAVE THE RIGHT TO
DISSENT FROM A MERGER. C3D'S COMMON STOCK IS TRADED ON THE NASDAQ NATIONAL
MARKET, AND THEREFORE THE SHAREHOLDERS WILL NOT HAVE ANY RIGHT OF DISSENT.
Federal Income Tax Consequences of Merger
The following is a brief summary of the principal federal income tax
consequences of the Reincorporation under current law to holders of the Common
Stock. This summary is for general information only. It does not address
potential legislative changes that may affect these consequences, and it does
not address any state, local or foreign tax consequences of the Reincorporation.
The Company has not obtained, and does not intend to obtain, a ruling from the
Internal Revenue Service to the effect that the Reincorporation is nontaxable.
Neither the Company nor its shareholders will recognize any gain or
loss by reason of the Reincorporation. The tax basis of the shares of the
Delaware Corporation common stock received by a shareholder of the Company
through the Reincorporation will be the same as the tax basis of the Common
Stock of the Company prior to the Reincorporation. A shareholder of the Company
who holds the stock as a capital asset should include the period he or she has
held the Common Stock in determining the holding period for his or her shares of
the Delaware Corporation.
SHAREHOLDERS SHOULD CONSULT THEIR PERSONAL TAX ADVISORS TO DISCUSS
THEIR OWN TAX SITUATIONS AND ANY POTENTIAL CHANGES IN FEDERAL, STATE AND LOCAL
LAWS AND OTHER APPLICABLE TAX MATTERS RELATING TO THE REINCORPORATION.
No federal or state regulatory requirements must be complied with or
approval must be obtained in connection with the Merger, besides filing of the
Certificate of Ownership and Merger with the proper officials of the State of
Delaware and the Articles of Merger with the proper officials of the State of
Florida upon the shareholder approval of the Merger.
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Comparison of Florida and Delaware Corporate Laws
If this Proposal Two is approved by the holders of 50.01% of the
outstanding votes of shareholders, and if the Company reincorporates in Delaware
as described above, then the shareholders of the Company will become
shareholders of the Delaware Corporation. There are differences between the
Florida Business Corporation Act, as amended from time to time, ("FBCA") and the
DGCL, as amended from time to time, that will affect the rights of the Company's
shareholders in certain respects. Some of these differences define particular
provisions a corporation may choose to put into its articles or certificate of
incorporation, commonly called the "charter," and other differences that may not
affect the Company in a material way.
The following is a summary of certain similarities or significant
differences in the rights of shareholders of the Company under the FBCA and of
shareholders of the Delaware Corporation under the DGCL. Although the FBCA uses
the term "shareholders" and the DGCL uses the term "stockholders" to describe
holders of a corporation's stock, this proxy statement uses the term
"shareholders" when referring to holders of stock of both the Company and the
Delaware Corporation. This summary does not purport to be a complete discussion
of, and is qualified in its entirety by reference to, the FBCA and the DGCL.
Amendment of Charter
--------------------
Both the FBCA and the DGCL allow a board of directors to recommend a
charter amendment for approval by shareholders, and a majority of the shares
entitled to vote at a shareholders' meeting are normally enough to approve that
amendment. However, both bodies of law require that a majority of the holders of
any particular class of stock must approve the amendment if it would have an
adverse effect on the holders of that class. In addition, both bodies of law
allow a corporation to require a vote larger than a majority on special types of
issues.
Amendment of Bylaws
-------------------
Under the FBCA, a board of directors may amend or repeal the Bylaws or
adopt new Bylaws. Under the DGCL, however, the Board of Directors may amend,
adopt or repeal Bylaws only if this power has been conferred upon the Board by
the charter. Additionally, both the FBCA and the DGCL allow shareholders to
further amend or repeal the Bylaws adopted or amended by the board of directors.
Special Meetings of Shareholders
--------------------------------
Under both the FBCA and the DGCL, the board of directors or anyone
authorized in the charter or bylaws may call a special meeting of shareholders.
The FBCA further provides that holders of not less than 10% of all the votes
entitled to be cast on any issue proposed to be considered at the meeting,
unless a greater percentage not to exceed 50% is required by the articles of
incorporation, may call a special meeting of shareholders.
Corporate Action Without Shareholders' Meeting
----------------------------------------------
Both the DGCL and the FBCA permit shareholder action by the written
consent of at least the minimum number of votes that would be necessary to take
such action at a shareholders' meeting unless the charter forbids it.
Inspection of Shareholders List
-------------------------------
The FBCA requires five days' written notice from a shareholder of
record to inspect the list of record shareholders for a proper purpose. Under
the DGCL, any shareholder may inspect the shareholders list for any purpose
reasonably related to the person's interest as a shareholder. In addition, for
at least ten days prior to each shareholders' meeting Delaware and Florida
corporations must make available for examination a list of shareholders entitled
to vote at the meeting.
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Vote Required for Certain Transactions
--------------------------------------
Unless the FBCA, the charter, or the board of directors requires a
greater vote, authorization or approval of a merger, consolidation or sale of
substantially all of the assets requires that the action must be passed by a
majority of all votes entitled to be cast on the proposed action. Under the
DGCL, holders of a majority of the outstanding stock entitled to vote on such
transactions have the power to approve a merger, consolidation or sale of all or
substantially all the assets without a special provision in the charter, unless
the charter provides otherwise. Furthermore, in the case of a merger under the
DGCL, shareholders of the surviving corporation do not have to approve the
merger at all, unless the charter provides otherwise, if these three conditions
are met:
o No amendment of the surviving corporation's charter is made by the
merger agreement;
o Each share of the surviving corporation's stock outstanding or in
the treasury immediately prior to the effective date of the merger
is to be an identical outstanding or treasury share of the surviving
corporation after the effective date; and
o Either no shares of common stock of the surviving corporation and no
shares, securities or obligations convertible into such stock are to
be issued or delivered under the plan of merger, or the authorized
unissued shares or the treasury shares of common stock of the
surviving corporation to be issued or delivered under the plan of
merger plus those initially issuable upon conversion of any other
shares, securities or obligations to be issued or delivered under
such plan do not exceed 20% of the shares of common stock of such
constituent corporation outstanding immediately prior to the
effective date of the merger.
Special vote requirements may apply to certain business combinations
with interested shareholders. See the discussion below under the heading
"Affiliated Transactions with Interested Shareholders."
Classification of Directors
---------------------------
Both the FBCA and the DGCL permit "classified" boards of directors. A
classified board is composed of directors who have staggered terms that do not
all expire at the same time. The FBCA generally permits three classes, but under
certain circumstances up to four classes are allowed. The DGCL permits as many
as three.
Number of Directors
-------------------
Under the FBCA, the number of directors may be one or more, as
specified in or fixed in accordance with a corporation's charter or bylaws. The
number of directors may be increased or decreased by amendment of, or in the
manner provided by, a corporation's charter or bylaws. Under the DGCL, a
corporation shall have at least one director and there is no statutory upper
limit on the number of directors. The specific number may be fixed in the bylaws
or the charter, but if fixed in the charter, it may be changed only by amendment
of the charter. However, if the charter is silent as to the number of directors,
the board of directors may fix or change the authorized number of directors
pursuant to a provision of the bylaws.
Removal of Directors
--------------------
Under the FBCA, directors may be removed by the shareholders with or
without cause unless the corporate charter provides otherwise. If cumulative
voting is authorized, a director may not be removed if the number of votes
sufficient to elect the director under cumulative voting is voted against
removal. Under the DGCL, directors may be removed with or without cause by the
holders of a majority of the shares. Unless the charter provides otherwise, in
the case of a classified board, directors may only be removed for cause. If
cumulative voting is authorized and if less than the entire board is to be
removed, no director may be removed without cause if the votes cast against such
director's removal would be sufficient to elect such director if then
cumulatively voted at an election of the entire board of directors, or, if there
are classes of directors, at an election of the class of directors of which such
director is a part.
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Limitation of Directors' Liability
----------------------------------
Both states permit the limitation of a director's personal liability
while acting in his or her official capacity. Under the FBCA, a director is not
liable to the corporation or to any other person for monetary damages unless the
director breached or failed to perform his or her duties as a director and the
director's breach or failure constitutes (i) a violation of the criminal law,
(ii) a transaction from which the director derived an improper personal benefit,
either directly or indirectly, (iii) conscious disregard for the best interests
of the corporation, or willful misconduct, (iv) recklessness or an act or
omission which was committed in bad faith or with malicious purpose or in a
manner exhibiting wanton and willful disregard for human rights, safety, or
property. The DGCL, on the other hand, requires a charter provision in order to
limit a director's liability for breach of his or her fiduciary duty to the
corporation.
In some cases, directors may be liable despite these limitations. Under
the FBCA, for example, a director is not immune from liability if he or she
violates applicable statutes which expressly make directors liable. The DGCL
forbids any limitation of liability if the director breached his or her duty of
loyalty to the corporation or its shareholders, or if he or she failed to act in
good faith, received an improper personal benefit from the corporation, or
authorized a dividend or stock purchase or redemption that was forbidden by the
DGCL.
Indemnification of Directors and Officers, and Insurance
--------------------------------------------------------
With some variations, both the FBCA and the DGCL allow a corporation to
"indemnify," that is, to make whole, any person who is or was a director,
officer, employee or agent of the corporation if that person is held liable for
something he or she did or failed to do in an official capacity. Besides
covering court judgments, out-of-court settlements, fines and penalties, both
laws also allow the corporation to advance certain expenses the person will
incur or to reimburse the person's expenses after he or she incurs them, even if
liability is not actually proven. The right to indemnification under both laws
does not normally exclude other rights of recovery the indemnified person may
have.
Additionally, both the FBCA and the DGCL permit a corporation to
purchase insurance for its directors, officers, employees and agents against
some or all of the costs of such indemnification or against liabilities arising
from actions and omissions of the insured person, even though the corporation
may not have the power to indemnify the person against such liabilities.
If this proposed Merger is approved by the Company's shareholders, the
indemnification provisions of the FBCA, and not the DGCL, will apply to acts and
omissions that occurred before the effective date of the Reincorporation.
Loans and Guarantees of Obligations for Directors
-------------------------------------------------
Under the FBCA and the DGCL, a board of directors may authorize loans
or guarantees of indebtedness to employees and officers, including any employee
or officer who is a director, whenever, in the judgment of such board of
directors, such loan or guarantee may reasonably be expected to benefit the
corporation.
Issuance of Rights and Options to Directors, Officers and Employees
-------------------------------------------------------------------
Neither the FBCA nor the DGCL, requires shareholder approval of
issuances of stock rights or stock options, respectively, as well as plans to
issue rights or options, to directors, officers or employees.
Consideration for Shares
------------------------
Under the FBCA and DGCL a corporation may receive tangible or
intangible property or benefit to the corporation, including cash, promissory
notes, and services as payment in full or in part for issued shares. Under the
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FBCA and the DGCL, a purchaser of shares need not pay the price thereof prior to
the issuance of the shares if the corporation receives a binding obligation of
the purchaser to pay the balance of the purchase price.
Dividends on Stock
------------------
Subject to its charter provisions, a corporation may generally pay
dividends, redeem shares of its stock or make other distributions to
shareholders if the corporation is solvent and would not become insolvent
because of the dividend, redemption or distribution. The assets applied to such
a distribution may not be greater than the corporation's "surplus." The FBCA
defines surplus as the excess of total assets over total liabilities plus the
amount that would be needed, if the corporation were to be dissolved at the time
of the distribution, to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those receiving the
distribution. The DGCL defines surplus as the excess of net assets (i.e., the
amount by which total assets exceed total liabilities) over capital, and allows
the board to adjust capital (for shares with par value, the capital need only
equal the aggregate par value of such shares). If there is no surplus, the DGCL
allows the corporation to apply net profits from the current or preceding fiscal
year, or both, unless the corporation's capital is less than the aggregate
amount of capital represented by issued and outstanding stock of all classes
having a preference on any distribution of assets.
Dissenters' or Appraisal Rights
-------------------------------
Generally, "dissenters' rights" or "appraisal rights" entitle
dissenting shareholders to receive the fair value of their shares in the merger
or consolidation of a corporation or in the sale of all or substantially all of
its assets. The FBCA also extends dissenters' rights to an exchange of a
corporation's shares, the approval of a control-share acquisition, and certain
amendments of the corporation's articles of incorporation.
The FBCA provides that dissenting shareholders normally have no
dissenters' rights in connection with a merger, share exchange or sale or
exchange of the corporation's property if their shares are registered on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the NASD, or held of record by not fewer
than 2,000 shareholders. Dissenters' rights under the FBCA allow any shareholder
of a company, with various exceptions, to receive fair value for his or her
shares in connection with the transactions listed in the prior paragraph upon
which the shareholder is entitled to vote. When dissenters' rights are
available, the shareholder must deliver to the corporation before the vote is
taken on the matter creating dissenters' rights, written notice of the
shareholder's intent to demand payment for his or her shares and follow other
required procedures.
The DGCL, does not provide for appraisal rights if the corporation's
shares are listed on a national securities exchange, designated as a national
market system security on an interdealer quotation system by the NASD, or held
by more than 2,000 shareholders of record, or if the corporation is the
surviving corporation in a merger which does not require the approval of the
surviving corporation's shareholders. However, regardless of listing on an
exchange, a dissenting shareholder affected by an agreement of merger or a
consolidation has appraisal rights under the DGCL if the transaction requires
him or her to exchange shares for anything of value other than one or more of
the following:
o Shares of stock of the corporation surviving or resulting from such
merger or consolidation.
o Shares of another corporation which will be listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the NASD, or held by
more than 2,000 shareholders of record.
o Cash in lieu of fractional shares of the surviving corporation or
another corporation.
Affiliated Transactions with Interested Shareholders
----------------------------------------------------
Provisions in both the FBCA and the DGCL may help to prevent or delay
changes of corporate control. In particular, both the FBCA and the DGCL restrict
or prohibit an interested shareholder from entering into certain
25
<PAGE>
types of "affiliated transactions" or "business combinations" unless the board
of directors approves the transaction in advance.
Under Section 607.0901 of the FBCA, an interested shareholder is
generally prohibited from entering into certain types of affiliated transactions
with a company, unless two-thirds of the disinterested shareholders approved the
affiliated transaction. An "interested shareholder" under the FBCA is generally
a beneficial owner of more than 10% of the corporation's outstanding voting
stock. However, the term "interested shareholder" does not include the
corporation or any of its subsidiaries. The 2/3 voting requirement on affiliated
transactions does not apply where (i) the affiliated transaction has been
approved by a majority of the disinterested directors, (ii) the corporation has
not had more than 300 shareholders of record at any time during the 3 years
preceding the announcement date, (iii) the interested shareholder has been the
beneficial owner of at least 80% of the corporation's outstanding voting shares
for at least five years preceding the announcement date, (iv) the interested
shareholder is the beneficial owner of at least 90% of the outstanding voting
shares of the corporation, exclusive of shares acquired directly from the
corporation in a transaction not approved by a majority of disinterested
directors, or (v) the corporation is an investment company under the Investment
Company Act of 1940. Affiliated transactions are also permitted when certain
statutory "fair price" requirements are met.
Affiliated transactions under the FBCA include (i) mergers and
consolidations between a corporation or its subsidiary and an interested
shareholder, (ii) sales, leases, mortgages or other dispositions to an
interested shareholder of assets with an aggregate market value which either (1)
equals 5% or more of the corporation's consolidated assets or outstanding stock,
or (2) represents 5% or more of the consolidated earning power or net income of
the corporation, (iii) issues and transfers of stock with an aggregate market
value of at least 5% in relation to the outstanding stock of the corporation,
(iv) liquidation or dissolution of the corporation proposed by or pursuant to an
agreement with an interested shareholder, (v) reclassification of securities or
recapitalization of the corporation that would increase the stock ownership of
an interested shareholder by more than 5%, and (vi) the receipt by an interested
shareholder of benefit from loans, guarantees, pledges or other financial
assistance or tax benefits provided by the corporation.
A corporation may choose not to be subject to Section 607.0901 of the
FBCA by means of an election-out provision in its original charter.
Additionally, the corporation may amend its corporate charter or bylaws to opt
out of Section 607.0901, however, this amendment shall not be effective for
eighteen months. The Company has no such election-out provision and is presently
subject to Section 607.0901 of the FBCA.
Section 203 of the DGCL generally prohibits an interested shareholder
from entering into certain types of business combinations with a Delaware
corporation for three years after becoming an interested shareholder. An
"interested shareholder" under the DGCL is any person, other than the
corporation and its majority-owned subsidiaries, who owns 15% or more of the
outstanding voting stock of the corporation, or who is an affiliate or associate
of the corporation and owned at least 15% of the outstanding voting stock of the
corporation within the preceding three years. The covered business combinations
include:
o Mergers or consolidations of the corporation or its subsidiaries
with an interested shareholder.
o Sales leases, exchanges or other dispositions to or with an
interested shareholder of assets of the corporation having aggregate
market value of 10% or more of the aggregate market value of all
assets of the corporation; or the aggregate market value of all the
outstanding stock of the corporation.
o Issuances or transfers by the corporation of its stock to the
interested shareholder under certain circumstances.
o Any other transaction, with certain exceptions, that increases the
proportionate share of the stock owned by the interested
shareholder.
o Receipt by the interested shareholder of the benefit of loans,
advances, guarantees, pledges or other financial benefits provided
by the corporation.
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A Delaware corporation may choose not to be subject to Section 203 by
including in its original corporate charter a provision that expressly elects
not to be governed by this section. Nevertheless, Section 203 does not apply
under certain circumstances, including without limitation the following cases:
o The corporation does not have a class of voting stock that is listed
on a national securities exchange, authorized for quotation on The
NASDAQ Stock Market, or held of record by more than 2,000
shareholders, unless any of these conditions result from an action
taken by an interested shareholder or from a transaction in which a
person becomes an interested shareholder.
o If, before the shareholder becomes an interested shareholder, the
board of directors approves the business combination or the
transaction that results in the shareholder becoming an interested
shareholder.
o If, after the transaction that results in the shareholder becoming
an interested shareholder, the interested shareholder owns at least
85% of the voting stock of the corporation outstanding at the time
the transaction commences, subject to technical calculation rules.
o If, on or after the time the business combination is approved by the
board of directors and authorized at the meetings of shareholders by
the vote of at least 66 2/3% of the outstanding voting stock which
is not owned by the interested shareholder.
Material Changes in Charter and Bylaws of Delaware Corporation from
Charter and Bylaws of Company
The Certificate of Incorporation and Bylaws of the Delaware Corporation
will be in effect and will govern the rights of shareholders in the event this
proposed Merger is approved and takes place. These corporate documents for the
Delaware Corporation differ from the Articles of Incorporation and Bylaws of the
Company.
The Certificate of Incorporation includes certain sections that are not
part of the current Articles of Incorporation of the Company. These new
provisions may in certain circumstances be interpreted or referred to as
anti-takeover provisions because they may make it more difficult to obtain
control of a company without the cooperation of its Board of Directors. The
provisions included into the Certificate of Incorporation are neither the result
of any specific efforts by any third party to take over the Delaware Corporation
nor the willingness of the Company to have anti-takeover provisions. The
over-all effect of such provisions may eventually be to render it more difficult
and to discourage a potential merger, tender offer or other offer for the
Delaware Corporation's securities, a proxy contest, or the removal of its
incumbent directors and management.
The above-mentioned effect of anti-takeover provisions in the
Certificate of Incorporation may complement and reinforce the eventual
anti-takeover effect of the increase in the authorized common stock of the
Company from 50 million to 100 million shares adopted at the last Annual Meeting
of Shareholders of C3D on December 27, 1999, which has been incorporated into
the Certificate of Incorporation.
Set forth below is a summary of new provisions in the Certificate of
Incorporation, some of which may be deemed anti-takeover provisions, as well as
of certain other material differences between the charter and bylaws of the
Company and those of the Delaware Corporation.
Authorized Capital Stock
------------------------
The Articles of Incorporation of the Company authorize the Company to
issue 100 million shares of Common Stock, $.001 par value per share, and 10
million shares of Preferred Stock, no par value per share. The Certificate of
Incorporation of the Delaware Corporation states that the Delaware Corporation
will have authority to issue 100 million shares of Common Stock, $.00001 par
value per share.
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Stockholders' Right to Call Special Meeting
-------------------------------------------
The Certificate of Incorporation includes a provision allowing the
stockholders to call a special meeting of stockholders when holders of at least
25% of all the votes entitled to be cast on any issue to be considered at the
proposed special meeting demand such special meeting of stockholders.
The deemed anti-takeover result of this provision is that it becomes
more difficult for the holders of less than 25% of the Delaware Corporation's
stock to call a special meeting of stockholders for the approval of a takeover
transaction. In the absence of a takeover situation, this proposal prevents
stockholders of less than 25% of the stock, without consolidating with other
stockholders, from holding a special meeting to discuss some urgent issues in
connection with the Delaware Corporation.
Stockholders' Action by Unanimous Consent
-----------------------------------------
According to the Certificate of Incorporation, stockholders may take an
action without an annual or special meeting only by unanimous written consent of
stockholders. The current Articles of Incorporation of the Company do not
contain a provision regarding the stockholders' action by consent. However, the
current Bylaws of the Company state that any action that can be taken at a
meeting of shareholders may be taken without such meeting if written consents
were signed by holders having not less than the minimum number of votes that
would be necessary to take action at a meeting. Therefore, under the current
Bylaws, the shareholders can take an action by less than a unanimous consent.
This provision makes it more difficult for the stockholders to take
action without a meeting by requiring their unanimous consent to such action.
However, this provision may be to the advantage of minority stockholders by
preventing principal stockholders from taking actions without the consent of
such minority stockholders, especially in takeover situations.
Section 203 "Business Combination with Interested Stockholders"
---------------------------------------------------------------
The Certificate of Incorporation states that the Company elects not to
be governed by Section 203 of the DGCL. Section 203 is described above in the
Section "Comparison of Florida and Delaware Corporate Laws." This provision
facilitates transactions of the Delaware Corporation with its interested
stockholders and, by implication, may discourage hostile takeovers of the
Delaware Corporation.
Personal Liability and Indemnification of Directors and Officers
----------------------------------------------------------------
The Certificate of Incorporation, as well as the current Articles of
Incorporation, contain provisions limiting the personal liability of directors
to the Company and its stockholders to the fullest extent permitted by the
respective corporate law. However, the current Articles of Incorporation also
include a provision regarding the limitation of the personal liability of
officers. The Certificate of Incorporation only addresses the limitations on the
director's liability.
The Bylaws of the Delaware Corporation specify that the directors and
officers shall be indemnified to the fullest extent permitted under the DGCL and
allow the Delaware Corporation to indemnify in situations not covered by the
Bylaws, to the extent such indemnification is not prohibited by the DGCL. The
current Articles of Incorporation contain a provision regarding the
indemnification of officers and directors of the Company.
Size of Board of Directors and Board Committees
-----------------------------------------------
The current Articles of Incorporation provide that the Company should
have at least one director. The Certificate of Incorporation of the Delaware
Corporation does not specify the number of directors, but its Bylaws state that
the Board of Directors will consist of not less than one and no more than 11
directors. The current Bylaws permit the Board of Directors to establish an
executive committee as well as other committees of the Board of
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Directors. The Bylaws of the Delaware Corporation specifically authorize the
Board to establish the Executive, Compensation, and Audit Committees and
describe the operation and composition of such committees.
Technical Changes
-----------------
In addition to the changes described above, certain technical and less
important changes have been made in the Delaware Corporation's Certificate of
Incorporation and Bylaws from the Company's Articles of Incorporation and
Bylaws. Such technical changes include, but are not limited to: designation of a
registered office and registered agent in the State of Delaware; designation of
the incorporator of the Delaware Corporation, changing references to applicable
law from Florida to Delaware, and so forth.
This summary does not purport to fully and completely describe all
differences between the charter and bylaws of the Company and those of the
Delaware Corporation. The shareholders are urged to review the Certificate of
Incorporation and the Bylaws of the Delaware Corporation attached to this proxy
statement as Appendix C and Appendix D, respectively. Copies of the Articles of
Incorporation and the Bylaws of the Company are available for inspection at the
principal office of the Company and copies will be sent to shareholders of the
Company upon written request.
THE BOARD OF DIRECTORS UNANIMOUSLY DEEM PROPOSAL TWO TO BE IN THE BEST
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE "FOR" THE
APPROVAL THEREOF. UNLESS AUTHORITY TO DO SO IS WITHHELD, THE PERSONS NAMED IN
EACH PROXY WILL VOTE THE SHARES REPRESENTED THEREBY "FOR" THE APPROVAL OF THE
AGREEMENT AND PLAN OF MERGER TO EFFECT THE REINCORPORATION IN DELAWARE.
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PROPOSAL THREE
APPROVAL OF AMENDMENTS TO 1999 STOCK OPTION PLAN
General Information about 1999 Stock Option Plan
The shareholders of the Company approved the 1999 Stock Option Plan
(the "Plan") at the Annual Meeting of Shareholders that was held on December 27,
1999. The Plan is attached to the proxy statement as Appendix E. The purpose of
the Plan is to provide additional incentive to officers, other key employees,
directors of, and important consultants to the Company and each present or
future parent or subsidiary corporation, by encouraging them to invest in shares
of the Company's Common Stock, and thereby acquire a proprietary interest in the
Company and an increased personal interest in the Company's continued success
and progress.
All officers, key employees, directors of and important consultants to
the Company and any present or future parent or subsidiary corporation are
eligible to receive options under the Plan. The individuals who would, in fact,
receive options under the Plan may be selected by the Company's Compensation
Committee or the Company's Board of Directors, as specified in the Plan.
Currently after taking into account a stock split, the Company is authorized to
issue a maximum of 4,617,540 shares of Common Stock under the Plan.
In the event of any change in the outstanding shares of the Common
Stock of the Company by reason of stock dividend, stock split, combination of
shares, recapitalization, merger, consolidation, transfer of assets,
reorganization, or what the Company's Board of Directors or Compensation
Committee deems to be similar circumstances, the aggregate number and kind of
shares which may be issued under the Plan will be appropriately adjusted in a
manner determined in the sole discretion of the Board of Directors or
Compensation Committee of the Company. Reacquired shares of the Company's Common
Stock, as well as unissued shares, may be used for the purpose of the Plan.
Common Stock of the Company subject to options which have terminated
unexercised, either in whole or in part, will be available for future options
granted.
Currently, the option price for options issued under the Plan must be
equal at least to the fair market value of the Company's Common Stock on the
date of the grant of the options. The "fair market value" is a defined term in
the Plan, which means, among other things, the last reported sale price of a
share of C3D's Common Stock on the NASDAQ National Market System. Incentive
Stock Options will not be exercisable after the expiration of 10 years from the
date such options are granted.
The last sales price of the Common Stock traded on the NASDAQ National
Market on December 12, 2000 was $5.9375.
Option Grants under Plan
The following table lists certain persons and groups to whom the
Company granted options under the Plan from adoption through December 12, 2000.
Number of
Name and Position Options
----------------- ---------
Eugene Levich, Chief Executive Officer and
Director Nominee................................ 450,000
All Executive Officers as a Group: Messrs.
Levich, Goldberg, Berezowsky, Lev Zaidenberg,
Schwartz, and Yaffe............................. 1,460,000
Directors Who Are Not Executive Officers as a
Group, including Itzhak Yaakov (former director) 90,000
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Number of
Name and Position Options
----------------- ---------
Michael Goldberg, Director Nominee.............. 150,000
Lev Zaidenberg, Director Nominee................ 90,000
Leonardo Berezowsky, Director Nominee...... 150,000
All Employees and Important
Consultants as a Group.......................... 4,171,550
Each Other Person Who Received 5% or
more of Options under the Plan:
Sergei Magnitzky.......................... 540,000
Jacob Malkin.............................. 525,000
Tax Consequences Related to Non-Qualified Stock Options
The grant of a non-qualified stock option (the "NQSO") is not a taxable
event to the recipient unless the option itself is publicly-traded on an
established securities market.
Upon the exercise of the NQSO, the option holder/service provider will
be treated as having received compensation income (taxable at ordinary income
tax rates) equal to the excess of the fair market value of the stock received
upon exercise of the option over the exercise price of the option (hereinafter
referred to as the "Spread"). The corporation is generally entitled to a
corresponding tax deduction equal to the Spread. The holder takes an initial tax
basis equal to the fair market value of the stock received on the date of
exercise. To the extent that the holder subsequently sells the stock, the holder
will generally recognize capital gain or loss (which will be long-term capital
gain or loss if the stock is held for more than a year at the time of
disposition) in connection with such sale equal to the difference between the
amount realized on the sale and the holder's tax basis in the stock sold.
Alternatively, if the stock is subject to a substantial risk of
forfeiture (such as vesting requirements) at the time of exercise, no
compensation income will generally be realized by the holder at that time. In
that case, the holder will not recognize compensation income until the tax year
in which the forfeiture restrictions lapse (i.e., when the stock becomes
vested); at which time the holder will recognize compensation income based on
the excess of the fair market value of such stock at the time of vesting over
the holder's exercise price for the shares. Moreover, the corporation will
generally be entitled to a corresponding tax deduction at the time of vesting
equal to the amount includable by the option holder/service provider in income.
The holder's holding period for the stock will begin on the vesting date.
There is a mechanism, however, pursuant to which a holder may elect to
pay tax based on the value of the stock at the time of exercise notwithstanding
that the stock may be subject to a risk of forfeiture at that time.
Specifically, the holder may make an election under Section 83(b) of the
Internal Revenue Code of 1986, as amended (the "Code") to be taxed at the time
of exercise as if the vesting restrictions did not exist. A Section 83(b)
election must be made by the holder within 30 days after the restricted stock is
transferred to such holder. This election is generally strategically effective
to minimize tax if there is little or no Spread at the time of exercise, but it
is anticipated that the stock subject to the option is likely to appreciate
significantly prior to the time that the vesting restrictions would otherwise
lapse. In the event of a Section 83(b) election, the issuing corporation is
generally entitled to a tax deduction equal to the Spread on the date of
exercise. Moreover, the holding period of the stock in the hands of the holder
would begin on the date that the option is exercised, and the subsequent
satisfaction of the vesting requirements with respect to this stock will not be
a taxable event. The holder will generally recognize long-term capital gain
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(rather than compensation income taxable at ordinary income rates) or loss to
the extent that the stock is held for more than one year after the exercise date
at the time of the disposition. If the stock with respect to which a Section
83(b) election has been made is forfeited prior to vesting, the holder will
generally be entitled to a capital loss solely to the extent of the exercise
price paid by the holder.
Tax Consequences Related to Statutory Incentive Stock Options
The grant of a statutory incentive stock option (the "ISO") is
generally not a taxable event to the recipient.
Unlike a NQSO, the exercise of an ISO is generally not a taxable event
to an ISO holder. However, the Spread at the time of exercise is treated as an
item of tax preference for purposes of the "alternative minimum tax" ("AMT").
Consequently, if the option holder's tax liability as computed for AMT purposes
(at tax rates 26-28%) exceeds the tax which would otherwise be payable for
regular income tax purposes, the exercise of the option may cause the holder to
be required to pay AMT. In general, this payment of AMT creates an AMT credit
which generally may be utilized in future tax years to offset taxable income
generated from the subsequent sale of the stock subject to the option; and
thereby generally causes a timing difference with respect to the payment of a
portion of the tax.
If the holder of the ISO does not sell the stock with respect to which
the ISO was exercised until after the period which ends two years after the date
of grant of the option and one year after the exercise of the option, the holder
will generally be entitled to long-term capital gain treatment based on the
difference between the amount realized by the holder and its tax basis in the
stock sold. In that case, the corporation will not be entitled to any tax
deductions with respect to the Spread.
Conversely, if the holder sells the stock prior to the close of the two
year period after such ISO was granted or prior to the close of the one year
period after exercise, the transaction will be treated as a disqualified
disposition and the holder will be required to recognize compensation income at
that time equal to the lesser of: (a) the Spread at the time of exercise or (b)
the excess of the fair market value of the stock at the time of the disposition
over the exercise price of the stock. The corporation will generally be entitled
to a corresponding tax deduction with respect to the amount treated as
compensation income to the holder.
Proposed Amendments
On September 19, 2000 and December 28, 2000, the Company's Board of
Directors amended the Plan (1) to permit the granting of other share-based
awards under the Plan, (2) to make the tax laws of Israel applicable to its
Israeli employees receiving options and awards, (3) to increase the aggregate
number of shares of Common Stock available for issuance upon exercise of options
and awards granted under the Plan, by 2,382,460 to 7,000,000, (4) to clarify the
authority of the Compensation Committee to amend the terms, including without
limitation exercise price, of options previously granted under the Plan, (5) to
authorize the Compensation Committee to grant options with an exercise price at
either fair market value or less than fair market value on the date of the grant
of the option, but not less than 20% below the fair market value of the
Company's Common Stock on the date of the grant, and (6) to authorize the Board
of Directors to amend, suspend or terminate the Plan, provided, however, that
such action will not adversely affect options granted under the Plan prior to
the date on which such amendment, suspension or termination occurs, unless
otherwise agreed to by the Company and the grantee of the options. The 2000
Amendments to the Plan (the "Amendments") are attached to this proxy statement
as Appendix F.
The Board of Directors believes that the Plan is an important factor in
retaining and attracting the highest caliber of directors, officers, employees
and others who may provide services to the Company. The Board further believes
that the number of shares available for issuance under the Plan should be
increased to ensure that sufficient shares are available for the granting of
options and awards to achieve the purposes of the Plan. In addition, the Board
of Directors adopted all the Amendments in order to afford the Compensation
Committee more flexibility in adapting the Plan as necessary to carry out its
purposes of increasing the stakes of participants in the Company's success and
progress and facilitating the Company's ability to recruit, reward and retain
directors, officers, employees and consultants of outstanding ability and
experience. However, shareholders should bear in mind that stock options
inherently provide option holders with the ability, in the event that the market
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price of the Common Stock is higher than or rises above the exercise price of
the options, to acquire shares of Common Stock at prices that are dilutive to
the equity interests and voting power of existing shareholders.
All capitalized terms used in the description of the Amendments below
and not defined herein have the same meanings as in the Amendments. The
Amendments introduce 102 Stock Options, 3(9) Stock Options and Other Share-Based
Awards, as options and awards available under the Plan.
A "102 Stock Option" is an option which satisfies all of the
requirements of Section 102 of the Israeli Income Tax Ordinance (New Version)
1961, as amended, and any regulations, rules, orders or procedures promulgated
thereunder (collectively, the "Ordinance"). A "3(9) Stock Option" is an option
which satisfies all of the requirements of Section 3(9) of the Ordinance.
"Other Share-Based Awards" are awards under the Plan pursuant to which
Common Stock (which may, but need not, be shares of restricted stock) are or may
in the future be acquired, or awards denominated in stock units, including units
valued on the basis of measures other than market value. The Compensation
Committee may also grant stock appreciation rights without the grant of an
accompanying option, which rights permit the grantees to receive, at the time of
any exercise of such rights, cash equal to the amount by which the Fair Market
Value of all Common Stock in respect to which the right was granted exceeds the
exercise price thereof. Such Other Share-Based Awards may be granted alone, in
addition to, or in tandem with any award of any type granted under the Plan and
must be consistent with the purposes of the Plan.
According to the Amendments, all tax consequences under any applicable
law which may arise from the grant of any options, restricted stock or shares,
or in the case of an option, from its exercise, from the sale or disposition of
the shares or restricted stock or from any other act of the grantee in
connection with the foregoing shall be borne solely by the grantee, and the
grantee shall indemnify the Company, and the trustee, and shall hold them
harmless against and from any liability for any such tax or penalty, interest or
indexation.
Under the Plan, as amended, C3D may grant options with an exercise
price at less than fair market value on the date of grant of the option (but not
less than 20% below the fair market value of the Company's Common Stock on the
date of the grant) or may amend an exercise price of a previously granted option
to less than the fair market value on the original date of grant of the option.
For accounting purposes both such events will result in a charge to compensation
expense over the vesting period of such options.
Tax Consequences of Certain Proposed Amendments
Section 162(m) of the Code generally limits the deductibility of
certain compensation paid to the Company's five highest compensated employees
(as determined for federal income tax purposes) to $1 million on an annual basis
(the "$1 Million Limitation"). Exceptions are made for certain "performance
based compensation" ("Performance Based Compensation") that, among other items,
is granted pursuant to a plan ("Plan") which: (i) is approved by the Company's
shareholders and (ii) which states the maximum number of shares which may be
issued under the Plan.
To the extent that the Company amends its Plan to allow for grants of
stock options at exercise prices below the fair market value of the Company's
Common Stock with respect to which the options are granted, such options will
not qualify as Performance Based Compensation that may avoid the $1 Million
Limitation. In addition, any such amended options will not qualify as incentive
stock options for federal income tax purposes.
The Company may also amend its outstanding stock options in order to
re-price options granted under its Plan to reflect changes in the fair market
value of the Company's Common Stock. In that case, the re-priced options will be
treated as new option grants, and both the canceled options and the repriced
options (which are treated for these purposes as having replaced the canceled
options) will count against the maximum number of shares which may be issued
under the Company's Plan (as stated in the Plan) for purposes of the $1 Million
Limitation.
The foregoing summary of changes to the Plan does not fully and
completely describe the Amendments. The shareholders are urged to review the
Amendments provided in Appendix F to this proxy statement.
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THE BOARD OF DIRECTORS DEEMS PROPOSAL THREE TO BE IN THE BEST INTERESTS
OF THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE "FOR" THE APPROVAL
THEREOF. UNLESS AUTHORITY TO DO SO IS WITHHELD, THE PERSONS NAMED IN EACH PROXY
WILL VOTE THE SHARES REPRESENTED THEREBY "FOR" THE APPROVAL OF THE AMENDMENTS TO
THE 1999 STOCK OPTION PLAN.
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PROPOSAL FOUR
RATIFICATION OF APPOINTMENT OF BDO SEIDMAN, LLP
AS INDEPENDENT AUDITORS OF THE COMPANY
The Board of Directors has appointed BDO Seidman, LLP as the Company's
principal accountant and independent auditors for 2001. Although not required,
the Board requests that the shareholders ratify this appointment.
Representatives of BDO Seidman, LLP are expected to attend the Annual
Meeting. Therefore, representatives of BDO Seidman, LLP will be available to
make a statement and to respond to questions at the Annual Meeting.
Barry L. Friedman, P.C., Certified Public Accountant, resigned as the
Company's auditor effective October 19, 1999 due to the Company's need to begin
filing financial reports pursuant to the Exchange Act in order to continue the
quotation of the Company's Common Stock on the NASD's Over-the-Counter Bulletin
Board. Barry L. Friedman, P.C. served as the Company's auditor prior to its
reverse acquisition with Constellation 3D Technology Limited on October 1, 1999.
C3D engaged BDO International as the Company's principal auditor and the
principal auditor of the Company's subsidiaries in October, 1999. BDO
International served as the Company's principal auditor and the Company's
subsidiaries' principal auditor in 1999. BDO Seidman, LLP, a member firm of BDO
International, served as the Company's principal accountant and auditor in 2000.
Mr. Friedman's report on the financial statements for either of the
past two years did not contain an adverse opinion or a disclaimer of opinion and
was not qualified or modified as to uncertainty, audit scope, or accounting
principles. The Company's Board of Directors ratified Mr. Friedman's resignation
and the appointment of BDO International and BDO Seidman, LLP as the Company's
auditors on September 19, 2000.
During C3D's two most recent fiscal years and the subsequent interim
period preceding the resignation of Mr. Friedman, there were no disagreements
with Mr. Friedman on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, as well as no reportable
events as described in the rules of the Securities and Exchange Commission.
THE BOARD OF DIRECTORS DEEMS PROPOSAL FOUR TO BE IN THE BEST INTEREST
OF THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL
THEREOF. UNLESS AUTHORITY TO DO SO IS WITHHELD, THE PERSONS NAMED IN EACH PROXY
WILL VOTE THE SHARES REPRESENTED THEREBY "FOR" THE RATIFICATION OF THE
APPOINTMENT OF BDO SEIDMAN, LLP AS INDEPENDENT AUDITORS OF THE COMPANY.
OTHER MATTERS
The Board of Directors and management of the Company know of no other
matters to be brought before the Annual Meeting other than as stated in this
proxy statement. However, if any other matters properly are presented to the
shareholders for action at the Annual Meeting and any adjournments or
postponements thereof, it is the intention of the proxy holders named in the
enclosed proxy to vote in their discretion on all matters on which the shares
represented by such proxy are entitled to vote.
SHAREHOLDER PROPOSALS
Any proposal which a shareholder may desire to include in the Company's
proxy statement and form of proxy for the Annual Meeting of the Company's
Shareholders to be held in 2002 must be received in writing by the Secretary of
the Company at the Company's principal executive offices at 230 Park Avenue,
Suite 453, New York, NY 10169 not later than September 14, 2001.
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If a shareholder who intends to present a proposal at the 2002 Annual
Meeting of Shareholders does not notify the Company of the proposal on or before
November 28, 2001, then management proxies will use their discretionary voting
authority to vote on the proposal when the proposal is raised at the 2002 Annual
Meeting, even though there is no discussion of the proposal in the related proxy
statement.
ANNUAL REPORT TO SHAREHOLDERS
EACH PERSON SOLICITED UNDER THIS PROXY STATEMENT CAN OBTAIN A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WITHOUT CHARGE, EXCEPT FOR
THE EXHIBITS TO THE REPORT, BY SENDING A WRITTEN REQUEST TO CONSTELLATION 3D,
INC., 230 PARK AVENUE, SUITE 453, NEW YORK, NY 10169, ATTN: MICHAEL GOLDBERG,
SECRETARY.
By Order of the Board of Directors
Eugene Levich
Chairman of the Board
Date: January 5, 2001.
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APPENDIX A
AUDIT COMMITTEE CHARTER
Composition
There shall be a committee of the board of directors (the "Board") of
Constellation 3D, Inc. (the "Corporation") to be known as the "Audit Committee,"
which shall have at least three (3) members, comprised solely of independent
directors, as such term is defined in Rule 4200(a)(15) of the National
Association of Securities Dealers' ("NASD") listing standards, subject to the
exception in Rule 4310(c)(26)(B)(ii) of the NASD listing standards.
Each member of the Audit Committee shall be able to read and understand
fundamental financial statements, including the Corporation's balance sheet,
income statement and cash flow statement or will become able to do so within a
reasonable period of time after his or her appointment to the Audit Committee.
In addition, at least one member of the Audit Committee shall have past
employment experience in finance or accounting, requisite professional
certification in accounting or any other comparable experience or background
which results in the individual's financial sophistication, including being or
having been a chief executive officer, chief financial officer or other senior
officer with financial oversight responsibilities.
The Board shall elect or appoint a chairman of the Audit Committee who
will have authority to act on behalf of the Audit Committee between meetings.
Responsibilities
The responsibilities of the Audit Committee are as follows:
o Ensure its receipt from the outside auditor of a formal
written statement, delineating all relationships between the
outside auditor and the Corporation consistent with the
Independence Standards Board Standard 1.
o Actively engage in a dialogue with the outside auditor with
respect to any disclosed relationships or services that may
impact the objectivity and independence of the outside auditor
and be responsible for taking, or recommending that the board
of directors take, appropriate action to oversee the
independence of the outside auditor.
o In view of the outside auditor's ultimate accountability to
the Board and the Audit Committee, as representatives of the
shareholders, the Audit Committee, acting together with the
Board, has the ultimate authority and responsibility to
select, evaluate, and, where appropriate, replace the outside
auditor (or nominate an outside auditor for shareholder
approval in any proxy statement).
o Review with the outside auditor, the Corporation's internal
auditor (if any), and financial and accounting personnel, the
adequacy and effectiveness of the accounting and financial
controls of the Corporation, and elicit any recommendations
for the improvement of such internal control procedures or
particular areas where new or more detailed controls or
procedures are desirable.
o Consider, in consultation with the outside auditor and management
of the Corporation, the audit scope and procedures.
o Review the financial statements contained in the annual report
to shareholders with management and the outside auditor to
determine that the outside auditor is satisfied with the
disclosure and content of the financial statements to be
presented to the shareholders.
o Meet with the internal auditor (if any), outside auditor or
the management privately to discuss any matters that the Audit
Committee, the internal auditor (if any), the outside auditor
or the management believe should be discussed privately with
the Audit Committee.
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o Review and reassess the adequacy of the Audit Committee's charter
annually.
o Make such other recommendations to the Board on such matters,
within the scope of its functions, as may come to its
attention and which in its discretion warrant consideration by
the Board.
Limitations
The Audit Committee is responsible for the duties set forth in this charter but
is not responsible for either the preparation of the financial statements or the
auditing of the financial statements. Management has the responsibility for
preparing the financial statements and implementing internal controls and the
independent accountants have the responsibility for auditing the financial
statements and monitoring the effectiveness of the internal controls. The review
of the financial statements by the Audit Committee is not of the same quality as
the audit performed by the independent accountants. In carrying out its
responsibilities, the Audit Committee believes its policies and procedures
should remain flexible in order to best react to a changing environment.
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APPENDIX B
AGREEMENT AND PLAN OF MERGER
PARTIES: Constellation 3D, Inc.
a Delaware corporation ("Constellation")
230 Park Avenue
Suite 453
New York, NY 10169
Constellation 3D, Inc.
a Florida corporation ("C3D")
230 Park Avenue
Suite 453
New York, NY 10169
DATE: January ___, 2001.
BACKGROUND: Constellation is a wholly-owned subsidiary of C3D. Constellation and
C3D intend to enter into this Agreement and Plan of Merger (the "Plan")
providing for the merger of C3D into Constellation (the "Merger").
NOW THEREFORE, in consideration of the mutual agreements contained herein and
subject to the satisfaction of the terms and conditions set forth herein, the
parties hereto, intending to be legally bound, agree as follows:
1. Merger. C3D shall be merged into Constellation, a wholly-owned
subsidiary of C3D, in accordance with the provisions of this Plan and in
compliance with the Florida Business Corporation Act, as amended, ("FBCA") and
the Delaware General Corporation Law, as amended, ("DGCL" and, collectively, the
"Corporation Laws"), and the Merger shall have the effect provided for in the
Corporation Laws. Constellation shall be the surviving corporation of the Merger
(the "Surviving Corporation") and shall exist and be governed by the laws of the
State of Delaware. The corporate existence and identity of Constellation, with
its purposes and powers, shall continue unaffected and unimpaired by the Merger.
On the Effective Date of the Merger, as defined below, Constellation shall
succeed to and be fully vested with the corporate existence and identity of C3D,
and the separate corporate existence and identity of C3D shall cease.
2. Name. The name of the Surviving Corporation is Constellation 3D,
Inc.
3. Charter. Immediately after the Merger, the Certificate of
Incorporation of the Surviving Corporation shall be that of Constellation
immediately before the Merger.
4. Bylaws. Immediately after the Merger, the Bylaws of the Surviving
Corporation shall be those of Constellation immediately before the Merger.
5. Directors and Officers. The members of the Board of Directors and
the officers of the Surviving Corporation on the Effective Date shall continue
in office until the expiration of their respective terms of office and until
their successors have been elected and qualified.
6. Conversion of C3D Stock into Constellation Stock. On the Effective
Date, each share of the common stock of C3D, par value $.001 per share, issued
and outstanding immediately before the Effective Date ("C3D Stock") shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be automatically converted into and become one share of common stock, par value
$.00001 per share, of the Surviving Corporation ("Constellation Stock").
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7. Stock Options. C3D's 1999 Stock Option Plan, as amended (the "Stock
Plan"), and all options to acquire shares of C3D Stock that are issued and
outstanding under the Stock Plan or otherwise immediately before the Effective
Date shall continue in effect, as an option plan of Constellation and as options
issued by Constellation, respectively, in accordance with the terms and
conditions by which they were governed immediately before the Effective Date. No
"additional benefits" within the meaning of Section 424(a)(2) of the Internal
Revenue Code of 1986, as amended, shall be accorded to C3D's option holders
pursuant to the assumption of their options by Constellation.
8. C3D Stock held by C3D. On the Effective Date, each share of C3D
Stock that is held by C3D as treasury shares immediately before the Effective
Date shall, by virtue of the Merger and without any action on the part of the
holder thereof, be automatically converted into and become a share held in
treasury of the Surviving Corporation.
9. Stock Certificates. On and after the Effective Date, all of the
outstanding certificates which prior to that time represented shares of C3D
Stock shall be deemed for all purposes to evidence ownership of and to represent
the shares of the Constellation Stock into which the shares of C3D represented
by such certificates have been converted as herein provided. The registered
owner on the books and records of the Surviving Corporation or its transfer
agent of any such outstanding stock certificate shall, until such certificate
shall have been surrendered for transfer or conversion or otherwise accounted
for to the Surviving Corporation or its transfer agent, have and be entitled to
exercise any voting and other rights with respect to and to receive any dividend
and other distributions upon the shares of the Surviving Corporation evidenced
by such outstanding certificate as above provided. On request, the Surviving
Corporation will issue new certificates to anyone who holds stock certificates
of C3D. Any request for new certificates will be subject to normal stock
transfer requirements including proper endorsement, signature guarantee, if
required, and payment of applicable taxes.
10. Employee Benefit Plans. On the Effective Date, the Surviving
Corporation shall assume all obligations of C3D under any and all employee
benefit plans in effect as of such date with respect to which employee rights or
accrued benefits are outstanding as of such date. On the Effective Date, the
Surviving Corporation shall adopt and continue in effect all such employee
benefit plans upon the same terms and conditions as were in effect immediately
prior to the Merger.
11. Succession. On the Effective Date, the Surviving Corporation shall
succeed to all of the rights, privileges, debts, liabilities, powers and
property of C3D in the manner of and as more fully set forth in Section 259 of
the DGCL.
12. Abandonment. Notwithstanding the approval of this Plan by the
shareholders of C3D or by the sole stockholder of Constellation, if such
approval is necessary, at any time before the Effective Date, (a) this Plan may
be terminated and the Merger may be abandoned by the Board of Directors of
either C3D or Constellation or both, or (b) the consummation of the Merger may
be deferred for a reasonable period of time if, in the opinion of the Boards of
Directors of C3D and Constellation, such action would be in the best interests
of such corporations. In the event of termination of this Plan, this Plan shall
become void and of no effect and there shall be no liability on the part of
either corporation or their respective Boards of Directors or stockholders with
respect thereto, except that C3D shall pay all expenses incurred in connection
with the Merger or in respect of this Plan or relating thereto.
13. Amendment. This Plan may be amended by the Boards of Directors of
C3D and Constellation at any time prior to the Effective Date, provided that an
amendment made subsequent to the approval of this Plan by either the
shareholders of C3D or the sole stockholder of Constellation, if such approval
is necessary, shall not (1) alter or change the amount or kind of shares,
securities, cash, property or rights to be received in exchange for or on
conversion of all or any of the shares of any class or series thereof of such
corporation, (2) alter or change any term of the Certificate of Incorporation of
the Surviving Corporation to be effected by the Merger or (3) alter or change
any of the terms and conditions of this Plan if such alteration or change would
adversely affect the holders of any class or series of the stock of such
corporation.
14. Dissenters' Rights. Under Section 607.1302 of the FBCA, the
shareholders of C3D shall not have the right to dissent from the Merger as C3D
Stock is traded on the NASDAQ National Market.
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15. Effective Date. As used in this Plan, the "Effective Date" shall
mean the date upon which this Plan, the Certificate of Ownership and Merger,
pursuant to the requirements of DGCL and the Articles of Merger, pursuant to the
requirements of FBCA, have been duly signed by an authorized officer of each
constituent corporation, and the Certificate of Ownership and Merger and the
Articles of Merger were filed with the proper officials of the States of
Delaware and Florida respectively.
16. Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended. The parties to this Plan hereby adopt
this Plan as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
17. Entire Understanding. This Plan states the entire understanding
among the parties hereto with respect to the subject matter hereof and
supersedes all prior oral and written communications and agreements, and all
contemporaneous oral communications and agreements, with respect to the subject
matter hereof. No amendment or modification of this Plan, and no waiver of any
provision of this Plan, shall be effective unless in writing and signed by the
party against whom enforcement is sought.
18. Parties in Interest. This Plan shall bind, benefit and be
enforceable by and against the parties hereto and their respective successors
and assigns. No party hereto shall in any manner assign any of its rights or
obligations under this Plan without the express prior written consent of the
other party. Nothing in this Plan is intended to confer, or shall be deemed to
confer, any rights or remedies upon any persons other than the parties hereto
and their respective shareholders and directors.
19. Severability. If any provision of this Plan is construed to be
invalid, illegal or unenforceable, then the remaining provisions hereof shall
not be affected thereby and shall be enforceable without regard thereto.
20. Counterparts. This Plan may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original
hereof, and it shall not be necessary in making proof of this Plan to produce or
account for more than one counterpart hereof.
21. Section Headings. Section headings in this Plan are for convenience
of reference only, do not constitute a part of this Plan, and shall not affect
its interpretation.
22. References. All words used in this Plan shall be construed to be of
such number and gender as the context requires or permits.
23. Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to the
conflict of law principles.
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IN TESTIMONY THEREOF, each undersigned corporation has caused this
Agreement and Plan of Merger to be signed by its duly authorized officer as of
the date first stated above.
CONSTELLATION 3D, INC.,
a Florida corporation
By:
-------------------------------------
Name:
Title:
Attest:
---------------------------------
Name:
Title:
CONSTELLATION 3D, INC.,
a Delaware corporation
By:
-------------------------------------
Name:
Title:
Attest:
---------------------------------
Name:
Title:
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APPENDIX C
CERTIFICATE OF INCORPORATION
OF
CONSTELLATION 3D, INC.
FIRST: The name of the corporation is CONSTELLATION 3D, INC. (the
"Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 15 East North Street, Dover, Delaware 19901, Kent County.
The name of the Corporation's registered agent at such address is Incorporating
Services, Ltd.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law, as amended, including without limitation, research and
development and related activities.
FOURTH: The total number of shares which the Corporation shall have
authority to issue is 100 million shares of Common Stock, $.00001 par value per
share. Each holder of record of Common Stock shall have the right to one vote
for each share of Common Stock registered in his name on the books of the
Corporation. Such holder of record shall have the right to vote in the election
of directors of the Corporation.
FIFTH: The name of the incorporator is Michael L. Goldberg. The mailing
address of the incorporator is 230 Park Avenue, Suite 453, New York, New York
10169.
SIXTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by the laws of the State of Delaware. All
rights and powers conferred herein on the stockholders, directors and officers
are subject to this reserved power.
SEVENTH: The Board of Directors of the Corporation is hereby expressly
authorized and empowered to adopt, amend or repeal the Bylaws of the
Corporation, except as such power may be restricted or limited by the Delaware
General Corporation Law, as amended.
EIGHTH: The election of directors need not be by written ballot unless
the Bylaws of the Corporation so provide.
NINTH: The entire Board of Directors or any individual director may be
removed from office without cause by the holders of a majority of the shares
then entitled to vote at an election of directors.
TENTH: The stockholders of the Corporation shall be entitled to call a
special meeting of the stockholders of the Corporation if the holders of at
least 25% of all the votes entitled to be cast on any issue to be considered at
the proposed special meeting sign, date and deliver to the Corporation's
secretary one or more written demands for the special meeting describing the
purpose or purposes for which it is to be held.
ELEVENTH: The Corporation's stockholders may take an action without an
annual or special meeting of stockholders only by unanimous written consent.
TWELFTH: The Corporation hereby elects not to be governed by Section
203 of the Delaware General Corporation Law, as amended.
THIRTEENTH: No director shall be personally liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision shall not eliminate or limit the
liability of a director: (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders; (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(iii) under Section
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174 of the Delaware General Corporation Law, as amended; or (iv) for any
transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this Section Thirteenth of the Certificate of
Incorporation shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to the effective date of such
amendment or repeal.
FOURTEENTH: Whenever a compromise or arrangement is proposed between
the Corporation and its creditors or any class of them or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation under
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, or of the stockholders or class of stockholders of the
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three fourths in value of the
creditors or class of creditors, or of the stockholders or class of stockholders
of the Corporation, as the case may be, agree to any compromise or arrangement
and to any reorganization of the Corporation as consequence of such compromise
or arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
FIFTEENTH: In the event that all, some or any part of any provision
contained in this Certificate of Incorporation shall be found by any court of
competent jurisdiction to be illegal, invalid or unenforceable (as against
public policy or otherwise), such provision shall be enforced to the fullest
extent permitted by law and shall be construed as if it had been narrowed only
to the extent necessary so as not to be invalid, illegal or unenforceable; the
validity, legality and enforceability of the remaining provisions of this
Certificate of Incorporation shall continue in full force and effect and shall
not be affected or impaired by such illegality, invalidity or unenforceability
of any other provision (or any part or parts thereof) of this Certificate of
Incorporation.
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IN WITNESS WHEREOF, I, the undersigned, being the incorporator, for the
purpose of forming a corporation under the laws of the State of Delaware do
make, file and record this Certificate of Incorporation, and do certify that the
facts herein stated are true to my knowledge, and I have accordingly hereunto
set my hand this ___ day of December 2000.
By:
--------------------------------------
Name: Michael L. Goldberg
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APPENDIX D
BYLAWS
OF
CONSTELLATION 3D, INC.
These Bylaws are adopted by Constellation 3D, Inc. (the "Corporation")
and are supplemental to the Delaware General Corporation Law,
as amended from time to time
ARTICLE I. OFFICES
-------
Section 101. Registered Office. The registered office of the
Corporation in the State of Incorporation shall be located at such place within
the State of Delaware as the Board of Directors may from time to time determine.
Section 102. Offices. The principal office of the Corporation and any
other offices of the Corporation shall be located at such places, within and
without the State of Delaware, as the Board of Directors may from time to time
determine or as the business of the Corporation may require.
ARTICLE II. STOCKHOLDERS
------------
Section 201. Place of Stockholders' Meetings. All meetings of the
stockholders shall be held at such place or places, within or without the State
of Delaware, as determined by the Board of Directors from time to time. The
Board of Directors may, in its sole discretion, determine that the stockholders'
meeting can be held also by means of remote communication, as authorized by the
Delaware General Corporation Law, as amended.
Section 202. Annual Stockholders' Meeting. The annual meeting of the
stockholders for the election of directors and the transaction of such other
business as may properly come before such meeting shall be held at such time as
determined by the Board of Directors. Any business which is a proper subject for
stockholder action may be transacted at the annual meeting.
Section 203. Special Meetings of Stockholders. Special meetings of the
stockholders may be called at any time by the Board of Directors, the Chairman
of the Board or the Chief Executive Officer, as well as by the stockholders of
the Corporation in the manner provided in its Certificate of Incorporation.
Section 204. Conduct of Stockholders' Meetings. The Chairman of the
Board shall preside at all stockholders' meetings. In the absence of the
Chairman of the Board, the Chief Executive Officer shall preside or, in his or
her absence, any officer designated by the Board of Directors shall preside. The
officer presiding over the stockholders' meeting may establish such rules and
regulations for the conduct of the meeting as he or she may deem to be
reasonably necessary or desirable for the orderly and expeditious conduct of the
meeting.
ARTICLE III. DIRECTORS.
---------
Section 301. Management by Board of Directors. The business and affairs
of the Corporation shall be managed by its Board of Directors, except as may be
otherwise provided by the Delaware General Corporation Law, as amended, or the
Certificate of Incorporation of the Corporation.
Section 302. Number and Term of Directors. The Board of Directors shall
consist of not less than one (1) director and no more than eleven (11)
directors. The number of directors to be elected, subject to the foregoing
limits, shall be determined from time to time by the Board of Directors. The
directors shall be elected by the stockholders at the annual meeting of the
stockholders or by unanimous written consent of the stockholders in lieu of the
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annual meeting to serve until the next annual meeting. Each director shall serve
until his or her successor shall have been elected and shall qualify, even
though his or her term of office as herein provided has otherwise expired,
except in the event of his or her earlier resignation or removal.
Section 303. Resignations of Directors. Any director may resign at any
time. Such resignation shall be in writing or by electronic transmission, but
the acceptance thereof shall not be necessary to make it effective.
Section 304. Compensation of Directors. The Board of Directors shall
have the authority to fix the compensation of the directors of the Corporation.
Section 305. Regular Meetings. The directors elected upon the
incorporation of the Corporation shall hold their first meeting to organize the
Corporation, elect officers and transact any other business which may properly
come before the meeting. Regular meetings of the Board of Directors shall be
held on such day, at such hour, and at such place, consistent with applicable
law, as the Board shall from time to time designate. Notice of regular meetings
of the Board of Directors need not be given. A regular organization meeting of
the Board of Directors shall be held immediately after each annual meeting of
the stockholders or unanimous written consent of the stockholders in lieu of
such meeting.
Section 306. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board or the Chief Executive
Officer and shall be called whenever a majority of the members of the Board so
request in writing or by electronic transmission. A special meeting of the Board
of Directors shall be deemed to be any meeting other than the regular meeting of
the Board of Directors. Notice of the time and place of every special meeting,
which need not specify the business to be transacted thereat and which may be
either oral or written, shall be given by the Secretary to each member of the
Board at least twenty-four hours before the time of such meeting.
Section 307. Absentee Participation in Meetings. Any director may
participate in a meeting of the Board of Directors or a meeting of the committee
established by the Board of Directors by means of conference telephone or other
communications equipment, by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
section shall constitute presence in person at the meeting.
Section 308. Unanimous Written Consent. Any action required or
permitted to be taken at a meeting of the Board of Directors or any committee
thereof may be taken without a meeting if all members of the Board of Directors
or the committee, as the case may be, consent thereto in writing or by
electronic transmission, and such consent is filed with the minutes of the Board
of Directors or the committee. Such filing shall be in the paper form as
provided in Section 309 of these Bylaws.
Section 309. Reports and Records. The reports of officers and
committees and the records of the proceedings and actions of all committees
shall be filed with the Secretary of the Corporation and presented to the Board
of Directors, if practicable, at its next regular meeting. The Board of
Directors shall keep complete records of its proceedings and actions in a minute
book kept for that purpose. When a director shall request it, the vote of each
director upon a particular question shall be recorded in the minutes.
Section 310. Committees. The following committees of the Board of
Directors may be established by the Board of Directors in addition to any other
committee the Board of Directors may in its discretion establish: (a) Executive
Committee; (b) Audit Committee; and (c) Compensation Committee.
Section 311. Executive Committee. The Executive Committee shall consist
of at least two (2) directors. Meetings of the Committee may be called at any
time by the Chairman of the Executive Committee and shall be called whenever two
or more members of the Committee so request in writing. To the extent not
prohibited by applicable law, the Executive Committee shall have and exercise
the authority of the Board of Directors in the management of the business of the
Corporation, except as otherwise provided in the resolution of the Board of
Directors establishing the Executive Committee.
Section 312. Audit Committee. The Audit Committee shall consist of at
least three (3) directors, all of which shall be independent. For the purposes
of this section, an "independent director" shall have the meaning set forth in
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Rule 4200(a)(14) of the National Association of Securities Dealers' ("NASD")
listing standards, subject to the exception in Rule 4310(c)(26)(B)(ii) of the
NASD listing standards. Meetings of the Audit Committee may be called at any
time by the Chairman of the Audit Committee and shall be called whenever two or
more members of the Committee so request in writing. The authority, powers and
responsibilities of the Audit Committee shall be provided in the Audit Committee
Charter.
Section 313. Compensation Committee. The Compensation Committee shall
consist of at least two (2) directors and if at least a majority of the
Committee does not consist of non-employee directors, all grants of stock
options by the Committee shall be subject to approval by the Board of Directors.
Meetings of the Committee may be called at any time by the Chairman of the
Committee and shall be called whenever two or more members of the Committee so
request in writing. The Committee shall review compensation of executive
officers and make recommendations to the Board of Directors regarding executive
compensation and shall have such other duties as the Board of Directors
prescribes. For purposes of this section, a "non-employee director" shall have
the meaning set forth in Rule 16b-3(b)(3) under the U.S. Securities Exchange Act
of 1934, as amended, or any future corresponding rule.
Section 314. Appointment of Committee Members. The Board of Directors
may appoint or may establish a method of appointing the members of the
Executive, Audit and Compensation Committees and of any other committee
established by the Board of Directors, and the Chairman of each such committee,
to serve until the next annual meeting of stockholders or the stockholders'
action by unanimous written consent, in lieu of the meeting.
Section 315. Organization and Proceedings. Each committee of the Board
of Directors shall effect its own organization by the appointment of a Secretary
and such other officers, except the Chairman, as it may deem necessary. The
Secretary of the Executive, Audit and Compensation Committees and of any other
committee need not be the Secretary of the Corporation. A record of the
proceedings of all committees shall be kept by the Secretary of such committee
and filed and presented as provided in Section 309 of these Bylaws.
Section 316. Chairman of the Board. The directors may choose a Chairman
of the Board of Directors who shall be a member of the Board of Directors and
shall preside at the meetings of the Board and perform such other duties as may
be prescribed by the Board of Directors.
ARTICLE IV. OFFICERS.
--------
Section 401. Officers. The officers of the Corporation shall be a Chief
Executive Officer, a President, a Secretary, a Treasurer, and such other
officers and assistant officers as the Board of Directors may from time to time
deem advisable. Except for the Chief Executive Officer, President, Secretary and
Treasurer, the Board may refrain from filling any of the said offices at any
time and from time to time. The same individual may hold any two or more
offices. The Chief Executive Officer, the President, the Secretary, the
Treasurer, and any other officers of the Corporation shall be elected by the
Board of Directors at the time and in the manner as the Board of Directors from
time to time shall determine. Each officer shall hold office until such
officer's successor is elected or appointed and qualified or until such
officer's earlier resignation or removal. Any officer may be removed at any
time, with or without cause.
Section 402. Chief Executive Officer. The Chief Executive Officer shall
have general supervision of all the business of the Corporation; he or she shall
prescribe the duties of the other officers and employees and see to the proper
performance thereof. The Chief Executive Officer shall be responsible for having
all orders and resolutions of the Board of Directors and of the committees of
the Board of Directors carried into effect. As authorized by the Board of
Directors, the Chief Executive Officer shall execute on behalf of the
Corporation and may affix or cause to be affixed a seal to all authorized
documents and instruments requiring such execution, except to the extent that
signing and execution thereof shall have been delegated to some other officer or
agent of the Corporation by the Board of Directors or by the Chief Executive
Officer. The Chief Executive Officer shall perform such other duties as are
incident to his or her office or prescribed by the Board of Directors. The Chief
Executive Officer shall be a member of the Board of Directors. In the absence or
disability of the Chairman of the Board or his or her refusal to act, the Chief
Executive Officer shall preside at meetings of the Board.
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Section 403. President. The President shall perform such duties as are
incidental to his or her office or prescribed by the Board of Directors or the
Chief Executive Officer. In the event of the absence of disability of the Chief
Executive Officer or his or her refusal to act, the President shall perform the
duties and have the powers and authorities of the Chief Executive Officer. The
President shall execute on behalf of the Corporation and may affix or cause to
be affixed a seal to all authorized documents and instruments requiring such
execution, except to the extent that signing and execution thereof shall have
been delegated to some other officer or agent of the Corporation by the Board of
Directors or by the Chief Executive Officer.
Section 404. Secretary. The Secretary shall act under the supervision
of the Chief Executive Officer and the President or such other officer as the
Chief Executive Officer or the President may designate. Unless a designation to
the contrary is made at a meeting, the Secretary shall attend all meetings of
the Board of Directors and all meetings of the stockholders and record all of
the proceedings of such meetings in a book to be kept for that purpose, and
shall perform like duties for the standing committees when required by these
Bylaws or otherwise. The Secretary shall keep a seal of the Corporation, and,
when authorized by the Board of Directors, the Chief Executive Officer, or the
President cause the seal to be affixed to any documents and instruments
requiring it. The Secretary shall perform such other duties as may be prescribed
by the Board of Directors, the Chief Executive Officer, the President, or such
other supervising officer as the Chief Executive Officer or the President may
designate.
Section 405. Treasurer. The Treasurer shall act under the supervision
of the Chief Executive Officer and the President, or such other officer as the
Chief Executive Officer or the President may designate. The Treasurer shall have
such duties as may be prescribed by the Board of Directors, the Chief Executive
Officer, the President or such other supervising officer as the Chief Executive
Officer or the President may designate.
Section 406. Assistant Officers. Unless otherwise provided by the Board
of Directors, each assistant officer shall perform such duties as shall be
prescribed by the Board of Directors, the Chief Executive Officer, the
President, or the officer to whom he or she is an assistant. In the event of the
absence or disability of an officer or his or her refusal to act, his or her
assistant officers shall, in the order of their rank, and within the same rank
in the order of their seniority, have the powers and authorities of such
officer.
Section 407. Compensation. Unless otherwise provided by the Board of
Directors or the Compensation Committee, the salaries and compensation of all
officers and assistant officers, except the Chief Executive Officer, shall be
fixed by or in the manner designated by the Chief Executive Officer.
Section 408. General Powers. The officers are authorized to do and
perform such corporate acts as are necessary in the carrying on of the business
of the Corporation, subject always to the directions of the Board of Directors.
ARTICLE V. INDEMNIFICATION.
---------------
Section 501. Mandatory Indemnification. The Corporation shall, to the
fullest extent not prohibited by Section 145 of the Delaware General Corporation
Law, as amended from time to time, or other applicable law, indemnify its
directors and officers who were or are a party or are threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (whether or not such
action, suit or proceeding arises or arose by or in the right of the Corporation
or other entity) by reason of the fact that such director or officer is or was a
director or officer of the Corporation or is or was serving at the request of
the Corporation as a director, officer, employee, general partner, agent or
fiduciary of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including, but not limited to, reasonable
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such director or officer in connection with such action,
suit or proceeding, except as otherwise provided in Section 503 hereof. Persons
who were directors or officers of the Corporation prior to the date this Section
is approved by the Corporation, but who do not hold such office on or after such
date, shall not be covered by this Section 501. A director or officer of the
Corporation entitled to indemnification under this Section 501 is hereafter
called a "person covered by Section 501 hereof".
Section 502. Expenses. To the fullest extent not prohibited by Section
145 of the Delaware General Corporation Law, as amended from time to time, or
other applicable law, expenses incurred by a person covered by Section 501
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hereof in defending a threatened, pending or completed civil or criminal,
administrative or investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such person to
repay such amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation, except as otherwise provided in
Section 503.
Section 503. Exceptions. No indemnification under Section 501 or
advancement or reimbursement of expenses under Section 502 shall be provided to
a person covered by Section 501 hereof: (a) if a final unappealable judgment or
award establishes that such director or officer engaged in intentional
misconduct or a transaction from which the director or officer derived an
improper personal benefit; (b) for expenses or liabilities of any type
whatsoever (including, but not limited to, judgments, fines, and amounts paid in
settlement) which have been paid directly to, or for the benefit of, such person
by an insurance carrier under a policy of officers' and directors' liability
insurance whose premiums are paid for by the Corporation or by an individual or
entity other than such director or officer; (c) for amounts paid in settlement
of any threatened, pending or completed action, suit or proceeding without the
written consent of the Corporation, which written consent shall not be
unreasonably withheld; and (d) to the extent such indemnification, advancement
or reimbursement of expenses would be prohibited by Section 145 of the Delaware
General Corporation Law, as amended from time to time, or other applicable law.
To the fullest extent not prohibited by Section 145 of the Delaware General
Corporation Law, as amended from time to time, or other applicable law, the
Board of Directors of the Corporation is hereby authorized, at any time by
resolution, to add to the above list of exceptions from the right of
indemnification under Section 501 or advancement or reimbursement of expenses
under Section 502, but any such additional exception shall not apply with
respect to any event, act or omission which occurred prior to the date that the
Board of Directors in fact adopts such resolution. Any such additional exception
may, at any time after its adoption, be amended, supplemented, waived or
terminated by further resolution of the Board of Directors of the Corporation if
and to the fullest extent not prohibited by Section 145 of the Delaware General
Corporation Law, as amended from time to time, and other applicable law.
Section 504. Continuation of Rights. To the fullest extent not
prohibited by Section 145 of the Delaware General Corporation Law, as amended
from time to time, or other applicable law, the indemnification and advancement
or reimbursement of expenses provided by, or granted pursuant to, this Article V
shall continue as to a person who has ceased to be a director or officer of the
Corporation, and shall inure to the benefit of the heirs, executors and
administrators of such person.
Section 505. General Provisions.
(a) The term "to the fullest extent not prohibited", as used
in this Article V, shall mean the maximum not prohibited. The term "applicable
law", as used in this Article V, shall mean public policy, common law or
statute. Any person covered by Section 501 hereof may, to the fullest extent not
prohibited by Section 145 of the Delaware General Corporate Law, as amended from
time to time, or other applicable law, elect to have the right to
indemnification or to advancement or reimbursement of expenses, interpreted, at
such person's option: (i) on the basis of the applicable law on the date this
Section was approved by the stockholders; or (ii) on the basis of the applicable
law in effect at the time of the occurrence of the event, act or omission giving
rise to the action, suit or proceeding, or (iii) on the basis of the applicable
law in effect at the time indemnification is sought.
(b) To the fullest extent not prohibited by Section 145 of the
Delaware General Corporation Law, as amended from time to time, or other
applicable law, the right of a person covered by Section 501 hereof to be
indemnified or to receive an advancement or reimbursement of expenses pursuant
to Section 502 (i) may be enforced as a contract right pursuant to which the
person entitled thereto may bring suit as if the provisions hereof were set
forth in a separate written contract between the Corporation and such person;
(ii) is intended to be retroactive and shall be available with respect to
events, acts or omissions occurring prior to the adoption hereof; and (iii)
shall continue to exist after the rescission or restrictive modification (as
determined by such person) of any provision of this Article V with respect to
events, acts and omissions occurring before such rescission or restrictive
modification is adopted.
(c) To the fullest extent not prohibited by Section 145 of the
Delaware General Corporation Law, as amended from time to time, or other
applicable law, if a request for indemnification or for the advancement or
reimbursement of expenses pursuant hereto is not paid in full by the Corporation
within thirty (30) days after a written claim has been received by the
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Corporation together with all supporting information reasonably requested by the
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim (plus interest at the
prime rate announced from time to time by the lending bank selected by the
claimant) and, if successful in whole or in part, the claimant shall be entitled
also to be paid the expenses (including, but not limited to, attorneys' and
investigation fees and costs) of prosecuting such claim. Neither the failure of
the Corporation (including its Board of Directors or independent legal counsel)
to have made a determination prior to the commencement of such action that
indemnification of or the advancement or reimbursement of expenses to the
claimant is proper in the circumstances, nor an actual determination by the
Corporation (including its Board of Directors or independent legal counsel) that
the claimant is not entitled to indemnification or to the reimbursement or
advancement of expenses, shall be a defense to the action or create a
presumption that the claimant is not so entitled.
(d) The indemnification and advancement or reimbursement of
expenses provided by, or granted pursuant to, this Article V shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement or reimbursement of expenses may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise.
(e) Nothing contained in this Article V shall be construed to
limit the rights and powers the Corporation possesses under Section 145 of the
Delaware General Corporation Law, as amended from time to time, or otherwise,
including, but not limited to, the powers to purchase and maintain insurance,
create funds to secure or insure its indemnification obligations, and any other
rights or powers the Corporation may otherwise have under applicable law.
(f) To the fullest extent not prohibited by Section 145 of the
Delaware General Corporation Law, as amended from time to time, or other
applicable law, the provisions of this Article V may, at any time (and whether
before or after there is any basis for a claim for indemnification or for the
advancement or reimbursement of expenses pursuant hereto), be amended,
supplemented, waived, or terminated, in whole or in part, with respect to any
person covered by Section 501 hereof by a written agreement signed by the
Corporation and such person.
(g) To the fullest extent not prohibited by Section 145 of the
Delaware General Corporation Law, as amended from time to time or other
applicable law, the Corporation shall have the right to appoint the attorney for
a person covered by Section 501 hereof, provided such appointment is not
unreasonable under the circumstances.
Section 506. Optional Indemnification. The Corporation may, to the
fullest extent not prohibited by Section 145 of the Delaware General Corporation
Law, as amended from time to time, or other applicable law, indemnify, and
advance or reimburse expenses for, persons in all situations other than those
covered by this Article V.
ARTICLE VI. SHARES OF CAPITAL STOCK.
-----------------------
Section 601. Authority to Sign Stock Certificate. Every stock
certificate of the Corporation shall be signed by the Chairman of the Board of
Directors or the President and by the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary of the Corporation. Any or all the
signatures on the stock certificate may be manual or in facsimile.
Section 602. Lost or Destroyed Stock Certificates. Any person claiming
a stock certificate to be lost, destroyed or wrongfully taken shall receive a
replacement certificate if such stockholder: (a) requests such replacement
certificate before the Corporation has notice that the shares have been acquired
by a bona fide purchaser; (b) files with the Corporation an indemnity bond
deemed sufficient by the Board of Directors; and (c) satisfies any other
reasonable requirements fixed by the Board of Directors.
ARTICLE VII. GENERAL.
-------
Section 701. Fiscal Year. The fiscal year of the Corporation, unless
otherwise determined by the Board of Directors, shall be the year, or part of
it, ending on December 31 of each calendar year.
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Section 702. Emergency Bylaws. In the event of any emergency resulting
from a substantial attack on the United States or Israel, a nuclear disaster or
another catastrophe, as a result of which a quorum of directors cannot be
readily convened for action, and during the continuance of such emergency, the
following Bylaw provisions shall be in effect, notwithstanding any other
provisions of these Bylaws:
(a) A meeting of the Board of Directors or of any committee
thereof may be called by any officer or director upon a five hour's notice to
all persons entitled to notice whom it is feasible to notify;
(b) The director or directors in attendance at the meeting of
the Board of Directors or of any committee thereof shall constitute a quorum;
and
(c) These Bylaws may be amended or repealed, in whole or in
part, by a majority vote of the directors attending any meeting of the Board of
Directors during such emergency, provided that such amendment or repeal (i)
shall be required for the normal functioning of the Corporation, (ii) shall not
affect the rights of the stockholders, and (iii) shall only be effective for the
duration of such emergency.
Section 703. Severability. If any provision of these Bylaws is illegal
or unenforceable as such, such illegality or unenforceability shall not affect
any other provision of these Bylaws and such other provisions shall continue in
full force and effect.
Section 704. Headings. Article and Section headings and the ordering of
paragraphs are for convenience of reference only and shall not be construed to
alter, amend or otherwise affect the meaning, intent or effect of the provisions
of these Bylaws.
ARTICLE VIII. AMENDMENTS.
----------
Section 801. Amendment or Repeal of Bylaws. These Bylaws may be amended
or repealed, in whole or in part, in the manner provided in the Corporation's
Certificate of Incorporation and in the Delaware General Corporation Law, as
amended.
Section 802. Recording Amendments. The text of all amendments to these
Bylaws shall be attached hereto, and a notation of the date of its adoption and
a notation of whether it was adopted by the directors or the stockholders shall
be made herein.
These Bylaws have been adopted and approved by the Board of Directors
of the Corporation on January __, 2001 and by the stockholders of the
Corporation on January __, 2001.
---------------------------------
Name:
Title:
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APPENDIX E
CONSTELLATION 3D, INC.
1999 STOCK OPTION PLAN
(Approved as of December 27, 1999)
1. Purpose of Plan
The purpose of this 1999 Stock Option Plan (the "Plan") is to
provide additional incentive to officers, other key employees, and directors of,
and important consultants to, CONSTELLATION 3D, INC., a Florida corporation (the
"Company"), and each present or future parent or subsidiary corporation, by
encouraging them to invest in shares of the Company's common stock, par value
$.001 per share (the "Common Stock"), and thereby acquire a proprietary interest
in the Company and an increased personal interest in the Company's continued
success and progress.
2. Aggregate Number of Shares
1,539,180 (One Million Five Hundred Thirty Nine Thousand One
Hundred and Eighty) shares of the Company's Common Stock shall be the aggregate
number of shares which may be issued under this Plan. Notwithstanding the
foregoing, in the event of any change in the outstanding shares of the Common
Stock of the Company by reason of a stock dividend, stock split, combination of
shares, recapitalization, merger, consolidation, transfer of assets,
reorganization, conversion or what the Committee (defined in Section 4(a)),
deems in its sole discretion to be similar circumstances, the aggregate number
and kind of shares which may be issued under this Plan shall be appropriately
adjusted in a manner determined in the sole discretion of the Committee.
Reacquired shares of the Company's Common Stock, as well as unissued shares, may
be used for the purpose of this Plan. Common Stock of the Company subject to
options which have terminated unexercised, either in whole or in part, shall be
available for future options granted under this Plan.
3. Class of Persons Eligible to Receive Options
All officers and key employees of the Company and of any
present or future Company parent or subsidiary corporation are eligible to
receive an option or options under this Plan. All directors of, and important
consultants to, the Company and of any present or future Company parent or
subsidiary corporation are also eligible to receive an option or options under
this Plan. The individuals who shall, in fact, receive an option or options
shall be selected by the Committee, in its sole discretion, except as otherwise
specified in Section 4 hereof.
4. Administration of Plan
(a) Prior to the registration of the Company's Common Stock
under Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), this Plan shall be administered by the Company's Board of
Directors and, after such registration, by a Compensation Committee appointed by
the Company's Board of Directors. The Committee shall consist of a minimum of
two members of the Board of Directors, each of whom shall be a "Non-Employee
Director" within the meaning of Rule 16b-3(b)(3) under the Exchange Act or any
future corresponding rule, except that the failure of the Committee for any
reason to be composed solely of Non-Employee Directors shall not prevent an
option from being considered granted under this Plan. The term "Committee," as
used herein, shall refer to either the Company's Board of Directors or such
Compensation Committee, depending upon who is administering the Plan. The
Committee shall, in addition to its other authority and subject to the
provisions of this Plan, determine which individuals shall in fact be granted an
option or options, whether the option shall be an Incentive Stock Option or a
Non-Qualified Stock Option (as such terms are defined in Section 5(a)), the
number of shares to be subject to each of the options, the time or times at
which the options shall be granted, the rate of option exercisability, and,
subject to Section 5 hereof, the price at which each of the options is
exercisable and the duration of the option.
(b) The Committee shall adopt such rules for the conduct of
its business and administration of this Plan as it considers desirable. A
majority of the members of the Committee shall constitute a quorum for all
purposes. The vote or written consent of a majority of the members of the
Committee on a particular matter shall constitute the act of the Committee on
<PAGE>
such matter. The Committee shall have the right to construe the Plan and the
options issued pursuant to it, to correct defects and omissions and to reconcile
inconsistencies to the extent necessary to effectuate the Plan and the options
issued pursuant to it, and such action shall be final, binding and conclusive
upon all parties concerned. No member of the Committee or the Board of Directors
shall be liable for any act or omission (whether or not negligent) taken or
omitted in good faith, or for the exercise of an authority or discretion granted
in connection with the Plan to a Committee or the Board of Directors, or for the
acts or omissions of any other members of a Committee or the Board of Directors.
Subject to the numerical limitations on Committee membership set forth in
Section 4(a) hereof, the Board of Directors may at any time appoint additional
members of the Committee and may at any time remove any member of the Committee
with or without cause. Vacancies in the Committee, however caused, may be filled
by the Board of Directors, if it so desires.
5. Incentive Stock Options and Non-Qualified Stock Options
(a) Options issued pursuant to this Plan may be either
Incentive Stock Options granted pursuant to Section 5(b) hereof or Non-Qualified
Stock Options granted pursuant to Section 5(c) hereof, as determined by the
Committee. An "Incentive Stock Option" is an option which satisfies all of the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code") and the regulations thereunder, and a "Non-Qualified Stock Option"
is an option which either does not satisfy all of those requirements or the
terms of the option provide that it will not be treated as an Incentive Stock
Option. The Committee may grant both an Incentive Stock Option and a
Non-Qualified Stock Option to the same person, or more than one of each type of
option to the same person. The option price for options issued under this Plan
shall be equal at least to the fair market value (as defined below) of the
Company's Common Stock on the date of the grant of the option. The fair market
value of the Company's Common Stock on any particular date shall mean the last
reported sale price of a share of the Company's Common Stock on any stock
exchange on which such stock is then listed or admitted to trading, or on the
NASDAQ National Market System or the NASDAQ SmallCap Market, on such date, or if
no sale took place on such day, the last such date on which a sale took place,
or if the Common Stock is not then quoted on the NASDAQ National Market System
or the NASDAQ SmallCap Market, or listed or admitted to trading on any stock
exchange, the average of the bid and asked prices in the over-the-counter market
on such date, or if none of the foregoing, a price determined in good faith by
the Committee to equal the fair market value per share of the Common Stock.
(b) Subject to the authority of the Committee set forth in
Section 4(a) hereof, Incentive Stock Options issued pursuant to this Plan shall
be issued substantially in the form set forth in Appendix I hereof, which form
is hereby incorporated by reference and made a part hereof, and shall contain
substantially the terms and conditions set forth therein. Incentive Stock
Options shall not be exercisable after the expiration of ten years from the date
such options are granted, unless terminated earlier under the terms of the
option, except that options granted to individuals described in Section
422(b)(6) of the Code shall conform to the provisions of Section 422(c)(5) of
the Code. At the time of the grant of an Incentive Stock Option hereunder, the
Committee may, in its discretion, amend or supplement any of the option terms
contained in Appendix I for any particular optionee, provided that the option as
amended or supplemented satisfies the requirements of Section 422 of the Code
and the regulations thereunder. Each of the options granted pursuant to this
Section 5(b) is intended, if possible, to be an "Incentive Stock Option" as that
term is defined in Section 422 of the Code and the regulations thereunder. In
the event this Plan or any option granted pursuant to this Section 5(b) is in
any way inconsistent with the applicable legal requirements of the Code or the
regulations thereunder for an Incentive Stock Option, this Plan and such option
shall be deemed automatically amended as of the date hereof to conform to such
legal requirements, if such conformity may be achieved by amendment.
(c) Subject to the authority of the Committee set forth in
Section 4(a) hereof, Non-Qualified Stock Options issued to officers and other
key employees pursuant to this Plan shall be issued substantially in the form
set forth in Appendix II hereof, which form is hereby incorporated by reference
and made a part hereof, and shall contain substantially the terms and conditions
set forth therein. Subject to the authority of the Committee set forth in
Section 4(a) hereof, Non-Qualified Stock Options issued to directors and
important consultants pursuant to this Plan shall be issued substantially in the
form set forth in Appendix III hereof, which form is hereby incorporated by
reference and made a part hereof, and shall contain substantially the terms and
conditions set forth therein. Non-Qualified Stock Options shall expire ten years
after the date they are granted, unless terminated earlier under the option
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terms. At the time of granting a Non-Qualified Stock Option hereunder, the
Committee may, in its discretion, amend or supplement any of the option terms
contained in Appendix II or Appendix III for any particular optionee.
(d) Neither the Company nor any of its current or future
parent, subsidiaries or affiliates, nor their officers, directors, shareholders,
stock option plan committees, employees or agents shall have any liability to
any optionee in the event (i) an option granted pursuant to Section 5(b) hereof
does not qualify as an "Incentive Stock Option" as that term is used in Section
422 of the Code and the regulations thereunder; (ii) any optionee does not
obtain the tax treatment pertaining to an Incentive Stock Option; or (iii) any
option granted pursuant to Section 5(c) hereof is an "Incentive Stock Option."
6. Amendment, Supplement, Suspension and Termination
Options shall not be granted pursuant to this Plan after the
expiration of ten years from the date the Plan is adopted by the Board of
Directors of the Company. The Board of Directors reserves the right at any time,
and from time to time, to amend or supplement this Plan in any way (including,
without limitation, the power to amend this Plan in a tax-advantaged fashion for
the benefit of the Company's employees who are subject to the tax laws of other
countries), or to suspend or terminate it, effective as of such date, which date
may be either before or after the taking of such action, as may be specified by
the Board of Directors; provided, however, that such action shall not affect
options granted under the Plan prior to the actual date on which such action
occurred. If an amendment or supplement of this Plan is required by the Code or
the regulations thereunder to be approved by the shareholders of the Company in
order to permit the granting of "Incentive Stock Options" (as that term is
defined in Section 422 of the Code and regulations thereunder) pursuant to the
amended or supplemented Plan, such amendment or supplement shall also be
approved by the shareholders of the Company in such manner as is prescribed by
the Code and the regulations thereunder. If the Board of Directors voluntarily
submits a proposed amendment, supplement, suspension or termination for
shareholder approval, such submission shall not require any future amendments,
supplements, suspensions or terminations (whether or not relating to the same
provision or subject matter) to be similarly submitted for shareholder approval.
7. Effectiveness of Plan
This Plan shall become effective on the date of its adoption
by the Company's Board of Directors, subject however to approval by the holders
of the Company's Common Stock in the manner as prescribed in the Code and the
regulations thereunder. Options may be granted under this Plan prior to
obtaining shareholder approval, provided such options shall not be exercisable
until shareholder approval is obtained.
8. General Conditions
(a) Nothing contained in this Plan or any option granted
pursuant to this Plan shall confer upon any employee the right to continue in
the employ of the Company or any affiliated or subsidiary corporation or
interfere in any way with the rights of the Company or any affiliated or
subsidiary corporation to terminate his employment in any way.
(b) Nothing contained in this Plan or any option granted
pursuant to this Plan shall confer upon any director or consultant the right to
continue as a director of, or consultant to, the Company or any affiliated or
subsidiary corporation or interfere in any way with the rights of the Company or
any affiliated or subsidiary corporation, or their respective shareholders, to
terminate the directorship of any such director or the consultancy relationship
of any such consultant.
(c) Corporate action constituting an offer of stock for sale
to any person under the terms of the options to be granted hereunder shall be
deemed complete as of the date when the Committee authorizes the grant of the
option to the such person, regardless of when the option is actually delivered
to such person or acknowledged or agreed to by him.
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(d) The terms "parent corporation" and "subsidiary
corporation" as used throughout this Plan, and the options granted pursuant to
this Plan, shall (except as otherwise provided in the option form) have the
meaning that is ascribed to that term when contained in Section 422(b) of the
Code and the regulations thereunder, and the Company shall be deemed to be the
grantor corporation for purposes of applying such meaning.
(e) References in this Plan to the Code shall be deemed to
also refer to the corresponding provisions of any future United States revenue
law.
(f) The use of the masculine pronoun shall include the
feminine gender whenever appropriate.
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APPENDIX I
INCENTIVE STOCK OPTION
To:
------------------------------------------------
Name
-----------------------------------------------------
-----------------------------------------------------
Address
Date of Grant:
-------------------------------------
You are hereby granted an option, effective as of the date hereof, to
purchase __________ shares of common stock, par value $.001 per share (the
"Common Stock"), of CONSTELLATION 3D, INC., a Florida corporation (the
"Company"), at a price of $_______ per share pursuant to the Company's 1999
Stock Option Plan (the "Plan").
Your option may first be exercised on and after one year from the date
of grant, but not before that time. On and after one year and prior to two years
from the date of grant, your option may be exercised for up to ___________% of
the total number of shares subject to the option minus the number of shares
previously purchased by exercise of the option (as adjusted for any change in
the outstanding shares of the Common Stock of the Company by reason of a stock
dividend, stock split, combination of shares, recapitalization, merger,
consolidation, transfer of assets, reorganization, conversion or what the
Committee deems in its sole discretion to be similar circumstances). Each
succeeding year thereafter, your option may be exercised for up to an additional
_________% of the total number of shares subject to the option minus the number
of shares previously purchased by exercise of the option (as adjusted for any
change in the outstanding shares of the Common Stock of the Company by reason of
a stock dividend, stock split, combination of shares, recapitalization, merger,
consolidation, transfer of assets, reorganization, conversion or what the
Committee deems in its sole discretion to be similar circumstances). Thus, this
option is fully exercisable on and after _________ years after the date of grant
(five years in the case of individuals described in Section 422(b)(6) of the
Code), except if terminated earlier as provided herein.
In addition to the restrictions on exercise described above, for any
calendar year, any options granted under this Plan shall become exercisable
solely to the extent that, with respect to any options which would otherwise
become exercisable in such calendar year for the first time, the aggregate fair
market value of the stock with respect to which the options first become
exercisable did not have an aggregate fair market value (as determined for
federal income tax purposes) on the date upon which the options were granted in
excess of $100,000. Any options which would be exercisable but for the
limitation described in the immediately preceding sentence (the "$100,000
Limitation") shall become exercisable in the following calendar year subject to:
(i) the $100,000 Limitation (as determined for such following fiscal year), and
(ii) the limitations otherwise described above.
No fractional shares shall be issued or delivered. This option shall
terminate and is not exercisable after ten years from the date of its grant (the
"Scheduled Termination Date"), except if terminated earlier as hereafter
provided.
In the event of a "Change of Control" (as defined below) of the
Company, your option may, from and after the date of the Change of Control, and
notwithstanding the immediately preceding paragraph, be exercised for up to 100%
of the total number of shares then subject to the option minus the number of
shares previously purchased upon exercise of the option (as adjusted for stock
dividends, stock splits, combinations of shares and what the Committee deems in
its sole discretion) and your vesting date may accelerate accordingly. A "Change
of Control" shall be deemed to have occurred upon the happening of any of the
following events:
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1. A change within a twelve-month period in a majority of the members
of the board of directors of the Company;
2. A change within a twelve-month period in the holders of more than
50% of the outstanding voting stock of the Company; or
3. Any other event deemed to constitute a "Change of Control" by the
Committee.
In the event of a sale or a proposed sale of the majority of the stock
or assets of the Company or a proposed Change of Control, the Committee shall
have the right to terminate this option upon thirty (30) days prior written
notice to you, notwithstanding anything to the contrary contained in this
option. In that case, the holders of vested options shall have the right to
exercise such options prior to the close of the thirty (30)-day period.
You may exercise your option by giving written notice to the Secretary
of the Company on forms supplied by the Company at its then principal executive
office, accompanied by payment of the option price for the total number of
shares you specify that you wish to purchase. The payment may be in any of the
following forms: (a) cash, which may be evidenced by a check and includes cash
received from a stock brokerage firm in a so-called "cashless exercise;" (b)
(unless prohibited by the Committee) certificates representing shares of Common
Stock of the Company, which will be valued by the Secretary of the Company at
the fair market value per share of the Company's Common Stock (as determined in
accordance with the Plan) on the date of delivery of such certificates to the
Company, accompanied by an assignment of the stock to the Company; or (c)
(unless prohibited by the Committee) any combination of cash and Common Stock of
the Company valued as provided in clause (b). Any assignment of stock shall be
in a form and substance satisfactory to the Secretary of the Company, including
guarantees of signature(s) and payment of all transfer taxes if the Secretary
deems such guarantees necessary or desirable.
Your option will, to the extent not previously exercised by you,
terminate thirty (30) days after the date on which your employment by the
Company or a Company subsidiary corporation is terminated (whether such
termination be voluntary or involuntary) other than by reason of disability as
defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations thereunder, or death, in which case your
option will terminate one year from the date of termination of employment due to
disability or death (but in no event later than the Scheduled Termination Date).
After the date your employment is terminated, as aforesaid, you may exercise
this option only for the number of shares which you had a right to purchase and
did not purchase on the date your employment terminated. If you are employed by
a Company subsidiary corporation, your employment shall be deemed to have
terminated on the date your employer ceases to be a Company subsidiary
corporation, unless you are on that date transferred to the Company or another
Company subsidiary corporation. Your employment shall not be deemed to have
terminated if you are transferred from the Company to a Company subsidiary
corporation, or vice versa, or from one Company subsidiary corporation to
another Company subsidiary corporation.
If you die while employed by the Company or a Company subsidiary
corporation, your executor or administrator, as the case may be, may, at any
time within one year after the date of your death (but in no event later than
the Scheduled Termination Date), exercise the option as to any shares which you
had a right to purchase and did not purchase during your lifetime. If your
employment with the Company or a Company parent or subsidiary corporation is
terminated by reason of your becoming disabled (within the meaning of Section
22(e)(3) of the Code and the regulations thereunder), you or your legal guardian
or custodian may at any time within one year after the date of such termination
(but in no event later than the Scheduled Termination Date), exercise the option
as to any shares which you had a right to purchase and did not purchase prior to
such termination. Your executor, administrator, guardian or custodian must
present proof of his authority satisfactory to the Company prior to being
allowed to exercise this option.
Notwithstanding any other provision of the Option, the Committee shall
have the right to cancel this Option without notice if your employment is
terminated for: (i) criminal conduct; or (ii) willful misconduct or gross
negligence materially detrimental to the Company.
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In the event of any change in the outstanding shares of the Common
Stock of the Company by reason of a stock dividend, stock split, combination of
shares, recapitalization, merger, consolidation, transfer of assets,
reorganization, conversion or what the Committee deems in its sole discretion to
be similar circumstances, the number and kind of shares subject to this option
and the option price of such shares shall be appropriately adjusted in a manner
to be determined in the sole discretion of the Committee.
This option is not transferable otherwise than by will or the laws of
descent and distribution, and is exercisable during your lifetime only by you,
including, for this purpose, your legal guardian or custodian in the event of
disability. Until the option price has been paid in full pursuant to due
exercise of this option and the purchased shares are delivered to you, you do
not have any rights as a shareholder of the Company. The Company reserves the
right not to deliver to you the shares purchased by virtue of the exercise of
this option during any period of time in which the Company deems, in its sole
discretion, that such delivery would violate a federal, state, local or
securities exchange rule, regulation or law.
Notwithstanding anything to the contrary contained herein, this option
is not exercisable until all the following events occur and during the following
periods of time:
(a) Until the Plan pursuant to which this option is granted is approved
by the shareholders of the Company in the manner prescribed by the Code and the
regulations thereunder;
(b) Until this option and the optioned shares are approved and/or
registered with such federal, state and local regulatory bodies or agencies and
securities exchanges as the Company may deem necessary or desirable; or
(c) During any period of time in which the Company deems that the
exercisability of this option, the offer to sell the shares optioned hereunder,
or the sale thereof, may violate a federal, state, local or securities exchange
rule, regulation or law, or may cause the Company to be legally obligated to
issue or sell more shares than the Company is legally entitled to issue or sell.
(d) Until you have paid or made suitable arrangements to pay (which may
include payment through the surrender of Common Stock, unless prohibited by the
Committee) (i) all federal, state and local income tax withholding required to
be withheld by the Company in connection with the option exercise and (ii) your
portion of other federal, state and local payroll and other taxes due in
connection with the option exercise.
(e) Until the Company has completed a public offering of its Common
Stock registered under the Securities Act of 1933, as amended, or has registered
any of its Common Stock under the Securities Exchange Act of 1934, as amended.
The following two paragraphs shall be applicable if, on the date of
exercise of this option, the Common Stock to be purchased pursuant to such
exercise has not been registered under the Securities Act of 1933, as amended,
and under applicable state securities laws, and shall continue to be applicable
for so long as such registration has not occurred:
(a) The optionee hereby agrees, warrants and represents that he will
acquire the Common Stock to be issued hereunder for his own account for
investment purposes only, and not with a view to, or in connection with, any
resale or other distribution of any of such shares, except as hereafter
permitted. The optionee further agrees that he will not at any time make any
offer, sale, transfer, pledge or other disposition of such Common Stock to be
issued hereunder without an effective registration statement under the
Securities Act of 1933, as amended, and under any applicable state securities
laws or an opinion of counsel acceptable to the Company to the effect that the
proposed transaction will be exempt from such registration. The optionee shall
execute such instruments, representations, acknowledgments and agreements as the
Company may, in its sole discretion, deem advisable to avoid any violation of
federal, state, local or securities exchange rule, regulation or law.
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<PAGE>
(b) The certificates for Common Stock to be issued to the optionee
hereunder shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under
applicable state securities laws. The shares have been acquired for
investment and may not be offered, sold, transferred, pledged or
otherwise disposed of without an effective registration statement under
the Securities Act of 1933, as amended, and under any applicable state
securities laws or an opinion of counsel acceptable to the Company that
the proposed transaction will be exempt from such registration."
The foregoing legend shall be removed upon registration of the legended shares
under the Securities Act of 1933, as amended, and under any applicable state
laws or upon receipt of any opinion of counsel acceptable to the Company that
said registration is no longer required.
The sole purpose of the agreements, warranties, representations and
legend set forth in the two immediately preceding paragraphs is to prevent
violations of the Securities Act of 1933, as amended, and any applicable state
securities laws.
It is the intention of the Company and you that this option shall, if
possible, be an "Incentive Stock Option" as that term is used in Section 422 of
the Code and the regulations there-under. In the event this option is in any way
inconsistent with the legal requirements of the Code or the regulations
thereunder for an "Incentive Stock Option," this option shall be deemed
automatically amended as of the date hereof to conform to such legal
requirements, if such conformity may be achieved by amendment.
Nothing herein shall modify your status as an at-will employee of the
Company, if applicable. Further, nothing herein guarantees you employment for
any specified period of time. This means that either you or the Company may
terminate your employment at any time for any reason, or no reason. You
recognize that, for instance, you may terminate your employment or the Company
may terminate your employment prior to the date on which your option becomes
vested.
Any dispute or disagreement between you and the Company with respect to
any portion of this option or its validity, construction, meaning, performance
or your rights hereunder shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association or its
successor, as amended from time to time. However, prior to submission to
arbitration you will attempt to resolve any disputes or disagreements with the
Company over this option amicably and informally, in good faith, for a period
not to exceed two weeks. Thereafter, the dispute or disagreement will be
submitted to arbitration. At any time prior to a decision from the arbitrator(s)
being rendered, you and the Company may resolve the dispute by settlement. You
and the Company shall equally share the costs charged by the American
Arbitration Association or its successor, but you and the Company shall
otherwise be solely responsible for your own respective counsel fees and
expenses. The decision of the arbitrator(s) shall be made in writing, setting
forth the award, the reasons for the decision and award and shall be binding and
conclusive on you and the Company. Further, neither you nor the Company shall
appeal any such award. Judgment of a court of competent jurisdiction may be
entered upon the award and may be enforced as such in accordance with the
provisions of the award.
This option shall be subject to the terms of the Plan in effect on the
date this option is granted, which terms are hereby incorporated herein by
reference and made a part hereof. In the event of any conflict between the terms
of this option and the terms of the Plan in effect on the date of this option,
the terms of the Plan shall govern. This option constitutes the entire
understanding between the Company and you with respect to the subject matter
hereof and no amendment, supplement or waiver of this option, in whole or in
part, shall be binding upon the Company unless in writing and signed by the
President of the Company. This option and the performances of the parties
hereunder shall be construed in accordance with and governed by the laws of the
State of Florida.
4
<PAGE>
Please sign the copy of this option and return it to the Company's
Secretary, thereby indicating your understanding of and agreement with its terms
and conditions.
CONSTELLATION 3D, INC.
By:
-------------------------------------
Name:
Title:
I hereby acknowledge receipt of a copy of the foregoing stock option
and of the Plan as of the date of grant set forth above, hereby acknowledge that
this stock option grant discharges any promise (either verbal or written) of the
Company made on or prior to the date of grant to give me a stock option, and,
having read it, hereby signify my understanding of, and my agreement with, its
terms and conditions. In consideration of the grant, I hereby release any claim
I may have against the Company with respect to any promise of a stock option
grant or other equity interest in the Company.
------------------------------------- ---------------------------------------
(Date) (Signature)
5
<PAGE>
APPENDIX II
NON-QUALIFIED STOCK OPTION
FOR OFFICERS AND OTHER KEY EMPLOYEES
To:
------------------------------------------------
Name
-----------------------------------------------------
-----------------------------------------------------
Address
Date of Grant:
-------------------------------------
You are hereby granted an option, effective as of the date hereof, to
purchase __________ shares of common stock, par value $.001 per share (the
"Common Stock"), of CONSTELLATION 3D, INC., a Florida corporation (the
"Company"), at a price of $_______ per share pursuant to the Company's 1999
Stock Option Plan (the "Plan").
Your option may first be exercised on and after one year from the date
of grant, but not before that time. On and after one year and prior to two years
from the date of grant, your option may be exercised for up to __________% of
the total number of shares subject to the option minus the number of shares
previously purchased by exercise of the option (as adjusted for any change in
the outstanding shares of the Common Stock of the Company by reason of a stock
dividend, stock split, combination of shares, recapitalization, merger,
consolidation, transfer of assets, reorganization, conversion or what the
Committee deems in its sole discretion to be similar circumstances). Each
succeeding year thereafter, your option may be exercised for up to an additional
___________% of the total number of shares subject to the option minus the
number of shares previously purchased by exercise of the option (as adjusted for
any change in the outstanding shares of the Common Stock of the Company by
reason of a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, transfer of assets, reorganization,
conversion or what the Committee deems in its sole discretion to be similar
circumstances). Thus, this option is fully exercisable on and after ___________
years after the date of grant, except if terminated earlier as provided herein.
No fractional shares shall be issued or delivered. This option shall
terminate and is not exercisable after ten years from the date of its grant (the
"Scheduled Termination Date"), except if terminated earlier as hereafter
provided.
In the event of a "Change of Control" (as defined below) of the
Company, your option may, from and after the date of the Change of Control, and
notwithstanding the immediately preceding paragraph, be exercised for up to 100%
of the total number of shares then subject to the option minus the number of
shares previously purchased upon exercise of the option (as adjusted for stock
dividends, stock splits, combinations of shares and what the Committee deems in
its sole discretion) and your vesting date may accelerate accordingly; provided,
however, that as set below, you may be required to exercise your option on
thirty (30) days notice from the Committee. A "Change of Control" shall be
deemed to have occurred upon the happening of any of the following events:
1. A change within a twelve-month period in a majority of the members
of the board of directors of the Company;
2. A change within a twelve-month period in the holders of more than
50% of the outstanding voting stock of the Company; or
3. Any other event deemed to constitute a "Change of Control" by the
Committee.
1
<PAGE>
In the event of a sale or a proposed sale of the majority of the stock
or assets of the Company or a proposed Change of Control, the Committee shall
have the right to terminate this option upon thirty (30) days prior written
notice to you, notwithstanding anything to the contrary contained in this
option. In that case, the holders of vested options shall have the right to
exercise such options prior to the close of the thirty (30)-day period.
You may exercise your option by giving written notice to the Secretary
of the Company on forms supplied by the Company at its then principal executive
office, accompanied by payment of the option price for the total number of
shares you specify that you wish to purchase. The payment may be in any of the
following forms: (a) cash, which may be evidenced by a check and includes cash
received from a stock brokerage firm in a so-called "cashless exercise;" (b)
(unless prohibited by the Committee) certificates representing shares of Common
Stock of the Company, which will be valued by the Secretary of the Company at
the fair market value per share of the Company's Common Stock (as determined in
accordance with the Plan) on the date of delivery of such certificates to the
Company, accompanied by an assignment of the stock to the Company; or (c)
(unless prohibited by the Committee) any combination of cash and Common Stock of
the Company valued as provided in clause (b). Any assignment of stock shall be
in a form and substance satisfactory to the Secretary of the Company, including
guarantees of signature(s) and payment of all transfer taxes if the Secretary
deems such guarantees necessary or desirable.
Your option will, to the extent not previously exercised by you,
terminate thirty (30) days after the date on which your employment by the
Company or a Company subsidiary corporation is terminated (whether such
termination be voluntary or involuntary) other than by reason of disability as
defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations thereunder, or death, in which case your
option will terminate one year from the date of termination of employment due to
disability or death (but in no event later than the Scheduled Termination Date).
After the date your employment is terminated, as aforesaid, you may exercise
this option only for the number of shares which you had a right to purchase and
did not purchase on the date your employment terminated. If you are employed by
a Company subsidiary corporation, your employment shall be deemed to have
terminated on the date your employer ceases to be a Company subsidiary
corporation, unless you are on that date transferred to the Company or another
Company subsidiary corporation. Your employment shall not be deemed to have
terminated if you are transferred from the Company to a Company subsidiary
corporation, or vice versa, or from one Company subsidiary corporation to
another Company subsidiary corporation.
If you die while employed by the Company or a Company subsidiary
corporation, your executor or administrator, as the case may be, may, at any
time within one year after the date of your death (but in no event later than
the Scheduled Termination Date), exercise the option as to any shares which you
had a right to purchase and did not purchase during your lifetime. If your
employment with the Company or a Company parent or subsidiary corporation is
terminated by reason of your becoming disabled (within the meaning of Section
22(e)(3) of the Code and the regulations thereunder), you or your legal guardian
or custodian may at any time within one year after the date of such termination
(but in no event later than the Scheduled Termination Date), exercise the option
as to any shares which you had a right to purchase and did not purchase prior to
such termination. Your executor, administrator, guardian or custodian must
present proof of his authority satisfactory to the Company prior to being
allowed to exercise this option.
Notwithstanding any other provision of the Option, the Committee shall
have the right to cancel this Option without notice if your employment is
terminated for: (i) criminal conduct; or (ii) willful misconduct or gross
negligence materially detrimental to the Company.
In the event of any change in the outstanding shares of the Common
Stock of the Company by reason of a stock dividend, stock split, combination of
shares, recapitalization, merger, consolidation, transfer of assets,
reorganization, conversion or what the Committee deems in its sole discretion to
be similar circumstances, the number and kind of shares subject to this option
and the option price of such shares shall be appropriately adjusted in a manner
to be determined in the sole discretion of the Committee.
2
<PAGE>
This option is not transferable otherwise than by will or the laws of
descent and distribution, and is exercisable during your lifetime only by you,
including, for this purpose, your legal guardian or custodian in the event of
disability. Until the option price has been paid in full pursuant to due
exercise of this option and the purchased shares are delivered to you, you do
not have any rights as a shareholder of the Company. The Company reserves the
right not to deliver to you the shares purchased by virtue of the exercise of
this option during any period of time in which the Company deems, in its sole
discretion, that such delivery would violate a federal, state, local or
securities exchange rule, regulation or law.
Notwithstanding anything to the contrary contained herein, this option
is not exercisable until all the following events occur and during the following
periods of time:
(a) Until the Plan pursuant to which this option is granted is approved
by the shareholders of the Company in the manner prescribed by the Code and the
regulations thereunder;
(b) Until this option and the optioned shares are approved and/or
registered with such federal, state and local regulatory bodies or agencies and
securities exchanges as the Company may deem necessary or desirable; or
(c) During any period of time in which the Company deems that the
exercisability of this option, the offer to sell the shares optioned hereunder,
or the sale thereof, may violate a federal, state, local or securities exchange
rule, regulation or law, or may cause the Company to be legally obligated to
issue or sell more shares than the Company is legally entitled to issue or sell.
(d) Until you have paid or made suitable arrangements to pay (which may
include payment through the surrender of Common Stock, unless prohibited by the
Committee) (i) all federal, state and local income tax withholding required to
be withheld by the Company in connection with the option exercise and (ii) your
portion of other federal, state and local payroll and other taxes due in
connection with the option exercise.
(e) Until the Company has completed a public offering of its Common
Stock registered under the Securities Act of 1933, as amended, or has registered
any of its Common Stock under the Securities Exchange Act of 1934, as amended.
The following two paragraphs shall be applicable if, on the date of
exercise of this option, the Common Stock to be purchased pursuant to such
exercise has not been registered under the Securities Act of 1933, as amended,
and under applicable state securities laws, and shall continue to be applicable
for so long as such registration has not occurred:
(a) The optionee hereby agrees, warrants and represents that he will
acquire the Common Stock to be issued hereunder for his own account for
investment purposes only, and not with a view to, or in connection with, any
resale or other distribution of any of such shares, except as hereafter
permitted. The optionee further agrees that he will not at any time make any
offer, sale, transfer, pledge or other disposition of such Common Stock to be
issued hereunder without an effective registration statement under the
Securities Act of 1933, as amended, and under any applicable state securities
laws or an opinion of counsel acceptable to the Company to the effect that the
proposed transaction will be exempt from such registration. The optionee shall
execute such instruments, representations, acknowledgments and agreements as the
Company may, in its sole discretion, deem advisable to avoid any violation of
federal, state, local or securities exchange rule, regulation or law.
(b) The certificates for Common Stock to be issued to the optionee
hereunder shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under
applicable state securities laws. The shares have been acquired for
investment and may not be offered, sold, transferred, pledged or
otherwise disposed of without an effective registration statement under
the Securities Act
3
<PAGE>
of 1933, as amended, and under any applicable state securities laws
or an opinion of counsel acceptable to the Company that the proposed
transaction will be exempt from such registration."
The foregoing legend shall be removed upon registration of the legended shares
under the Securities Act of 1933, as amended, and under any applicable state
laws or upon receipt of any opinion of counsel acceptable to the Company that
said registration is no longer required.
The sole purpose of the agreements, warranties, representations and
legend set forth in the two immediately preceding paragraphs is to prevent
violations of the Securities Act of 1933, as amended, and any applicable state
securities laws.
It is the intention of the Company and you that this option shall not
be an "Incentive Stock Option" as that term is used in Section 422 of the Code
and the regulations thereunder.
Nothing herein shall modify your status as an at-will employee of the
Company, if applicable. Further, nothing herein guarantees you employment for
any specified period of time. This means that either you or the Company may
terminate your employment at any time for any reason, or no reason. You
recognize that, for instance, you may terminate your employment or the Company
may terminate your employment prior to the date on which your option becomes
vested.
Any dispute or disagreement between you and the Company with respect to
any portion of this option or its validity, construction, meaning, performance
or your rights hereunder shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association or its
successor, as amended from time to time. However, prior to submission to
arbitration you will attempt to resolve any disputes or disagreements with the
Company over this option amicably and informally, in good faith, for a period
not to exceed two weeks. Thereafter, the dispute or disagreement will be
submitted to arbitration. At any time prior to a decision from the arbitrator(s)
being rendered, you and the Company may resolve the dispute by settlement. You
and the Company shall equally share the costs charged by the American
Arbitration Association or its successor, but you and the Company shall
otherwise be solely responsible for your own respective counsel fees and
expenses. The decision of the arbitrator(s) shall be made in writing, setting
forth the award, the reasons for the decision and award and shall be binding and
conclusive on you and the Company. Further, neither you nor the Company shall
appeal any such award. Judgment of a court of competent jurisdiction may be
entered upon the award and may be enforced as such in accordance with the
provisions of the award.
This option shall be subject to the terms of the Plan in effect on the
date this option is granted, which terms are hereby incorporated herein by
reference and made a part hereof. In the event of any conflict between the terms
of this option and the terms of the Plan in effect on the date of this option,
the terms of the Plan shall govern. This option constitutes the entire
understanding between the Company and you with respect to the subject matter
hereof and no amendment, supplement or waiver of this option, in whole or in
part, shall be binding upon the Company unless in writing and signed by the
President of the Company. This option and the performances of the parties
hereunder shall be construed in accordance with and governed by the laws of the
State of Florida.
Please sign the copy of this option and return it to the Company's
Secretary, thereby indicating your understanding of and agreement with its terms
and conditions.
CONSTELLATION 3D, INC.
By:
--------------------------------------
Name:
Title:
4
<PAGE>
I hereby acknowledge receipt of a copy of the foregoing stock option
and of the Plan as of the date of grant set forth above, hereby acknowledge that
this stock option grant discharges any promise (either verbal or written) of the
Company made on or prior to the date of grant to give me a stock option, and,
having read it, hereby signify my understanding of, and my agreement with, its
terms and conditions. In consideration of the grant, I hereby release any claim
I may have against the Company with respect to any promise of a stock option
grant or other equity interest in the Company.
--------------------------------- ---------------------------------------
(Date) (Signature)
5
<PAGE>
APPENDIX III
NON-QUALIFIED STOCK OPTION FOR DIRECTORS
AND IMPORTANT CONSULTANTS
To:
------------------------------------------------
Name
-----------------------------------------------------
-----------------------------------------------------
Address
Date of Grant:
-------------------------------------
You are hereby granted an option, effective as of the date hereof, to
purchase __________ shares of common stock, par value $.001 per share ("Common
Stock"), of CONSTELLATION 3D, INC., a Florida corporation (the "Company"), at a
price of $_______ per share pursuant to the Company's 1999 Stock Option Plan
(the "Plan").
Your option may first be exercised on and after one year from the date
of grant, but not before that time. On and after one year and prior to two years
from the date of grant, your option may be exercised for up to ____% of the
total number of shares subject to the option minus the number of shares
previously purchased by exercise of the option (as adjusted for any change in
the outstanding shares of the Common Stock of the Company by reason of a stock
dividend, stock split, combination of shares, recapitalization, merger,
consolidation, transfer of assets, reorganization, conversion or what the
Committee deems in its sole discretion to be similar circumstances). Each
succeeding year thereafter, your option may be exercised for up to an additional
___% of the total number of shares subject to the option minus the number of
shares previously purchased by exercise of the option (as adjusted for any
change in the outstanding shares of the Common Stock of the Company by reason of
a stock dividend, stock split, combination of shares, recapitalization, merger,
consolidation, transfer of assets, reorganization, conversion or what the
Committee deems in its sole discretion to be similar circumstances). Thus, this
option is fully exercisable on and after ________ years after the date of grant,
except if terminated earlier as provided herein.
No fractional shares shall be issued or delivered. This option shall
terminate and is not exercisable after ten years from the date of its grant (the
"Scheduled Termination Date"), except if terminated earlier as hereafter
provided.
In the event of a "Change of Control" (as defined below) of the
Company, your option may, from and after the date of the Change of Control, and
notwithstanding the immediately preceding paragraph, be exercised for up to 100%
of the total number of shares then subject to the option minus the number of
shares previously purchased upon exercise of the option (as adjusted for stock
dividends, stock splits, combinations of shares and what the Committee deems in
its sole discretion) and your vesting date may accelerate accordingly. A "Change
of Control" shall be deemed to have occurred upon the happening of any of the
following events:
1. A change within a twelve-month period in a majority of the members
of the board of directors of the Company;
2. A change within a twelve-month period in the holders of more than
50% of the outstanding voting stock of the Company; or
3. Any other event deemed to constitute a "Change of Control" by the
Committee.
1
<PAGE>
In the event of a sale or a proposed sale of the majority of the stock
or assets of the Company or a proposed Change of Control, the Committee shall
have the right to terminate this option upon thirty (30) days prior written
notice to you, notwithstanding anything to the contrary contained in this
option. In that case, the holders of vested options shall have the right to
exercise such options prior to the close of the thirty (30)-day period.
You may exercise your option by giving written notice to the Secretary
of the Company on forms supplied by the Company at its then principal executive
office, accompanied by payment of the option price for the total number of
shares you specify that you wish to purchase. The payment may be in any of the
following forms: (a) cash, which may be evidenced by a check and includes cash
received from a stock brokerage firm in a so-called "cashless exercise;" (b)
(unless prohibited by the Committee) certificates representing shares of Common
Stock of the Company, which will be valued by the Secretary of the Company at
the fair market value per share of the Company's Common Stock (as determined in
accordance with the Plan) on the date of delivery of such certificates to the
Company, accompanied by an assignment of the stock to the Company; or (c)
(unless prohibited by the Committee) any combination of cash and Common Stock of
the Company valued as provided in clause (b). Any assignment of stock shall be
in a form and substance satisfactory to the Secretary of the Company, including
guarantees of signature(s) and payment of all transfer taxes if the Secretary
deems such guarantees necessary or desirable.
Your option will, to the extent not previously exercised by you,
terminate thirty (30) days after the date on which you cease for any reason to
be a director of, or consultant to, the Company or a subsidiary corporation
(whether by death, disability, resignation, removal, failure to be reappointed,
reelected or otherwise, or the expiration of any consulting arrangement, and
regardless of whether the failure to continue as a director or consultant was
for cause or without cause or otherwise), but in no event later than ten years
from the date this option is granted. After the date you cease to be a director
or consultant, you may exercise this option only for the number of shares which
you had a right to purchase and did not purchase on the date you ceased to be a
director or consultant. If you are a director of a subsidiary corporation, your
directorship shall be deemed to have terminated on the date such company ceases
to be a subsidiary corporation, unless you are also a director of the Company or
another subsidiary corporation, or on that date became a director of the Company
or another subsidiary corporation. Your directorship or consultancy shall not be
deemed to have terminated if you cease being a director of, or consultant to,
the Company or a subsidiary corporation but are or concurrently therewith become
(a) a director of, or consultant to, the Company or another subsidiary
corporation or (b) an employee of the Company or a subsidiary corporation.
Notwithstanding any other provision of the Option, the Committee shall
have the right to cancel this Option without notice if your directorship or
consultancy is terminated for: (i) criminal conduct; or (ii) willful misconduct
or gross negligence materially detrimental to the Company.
In the event of any change in the outstanding shares of the Common
Stock of the Company by reason of a stock dividend, stock split, combination of
shares, recapitalization, merger, consolidation, transfer of assets,
reorganization, conversion or what the Committee deems in its sole discretion to
be similar circumstances, the number and kind of shares subject to this option
and the option price of such shares shall be appropriately adjusted in a manner
to be determined in the sole discretion of the Committee.
This option is not transferable otherwise than by will or the laws of
descent and distribution, and is exercisable during your lifetime only by you,
including, for this purpose, your legal guardian or custodian in the event of
disability. Until the option price has been paid in full pursuant to due
exercise of this option and the purchased shares are delivered to you, you do
not have any rights as a shareholder of the Company. The Company reserves the
right not to deliver to you the shares purchased by virtue of the exercise of
this option during any period of time in which the Company deems, in its sole
discretion, that such delivery would violate a federal, state, local or
securities exchange rule, regulation or law.
Notwithstanding anything to the contrary contained herein, this option
is not exercisable until all the following events occur and during the following
periods of time:
2
<PAGE>
(a) Until the Plan pursuant to which this option is granted is approved
by the shareholders of the Company in the manner prescribed by the Code and the
regulations thereunder;
(b) Until this option and the optioned shares are approved and/or
registered with such federal, state and local regulatory bodies or agencies and
securities exchanges as the Company may deem necessary or desirable; or
(c) During any period of time in which the Company deems that the
exercisability of this option, the offer to sell the shares optioned hereunder,
or the sale thereof, may violate a federal, state, local or securities exchange
rule, regulation or law, or may cause the Company to be legally obligated to
issue or sell more shares than the Company is legally entitled to issue or sell.
(d) Until you have paid or made suitable arrangements to pay (which may
include payment through the surrender of Common Stock, unless prohibited by the
Committee) (i) all federal, state and local income tax withholding required to
be withheld by the Company in connection with the option exercise and (ii) your
portion of other federal, state and local payroll and other taxes due in
connection with the option exercise.
(e) Until the Company has completed a public offering of its Common
Stock registered under the Securities Act of 1933, as amended, or has registered
any of its Common Stock under the Securities Exchange Act of 1934, as amended.
The following two paragraphs shall be applicable if, on the date of
exercise of this option, the Common Stock to be purchased pursuant to such
exercise has not been registered under the Securities Act of 1933, as amended,
and under applicable state securities laws, and shall continue to be applicable
for so long as such registration has not occurred:
(a) The optionee hereby agrees, warrants and represents that he will
acquire the Common Stock to be issued hereunder for his own account for
investment purposes only, and not with a view to, or in connection with, any
resale or other distribution of any of such shares, except as hereafter
permitted. The optionee further agrees that he will not at any time make any
offer, sale, transfer, pledge or other disposition of such Common Stock to be
issued hereunder without an effective registration statement under the
Securities Act of 1933, as amended, and under any applicable state securities
laws or an opinion of counsel acceptable to the Company to the effect that the
proposed transaction will be exempt from such registration. The optionee shall
execute such instruments, representations, acknowledgments and agreements as the
Company may, in its sole discretion, deem advisable to avoid any violation of
federal, state, local or securities exchange rule, regulation or law.
(b) The certificates for Common Stock to be issued to the optionee
hereunder shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under
applicable state securities laws. The shares have been acquired for
investment and may not be offered, sold, transferred, pledged or
otherwise disposed of without an effective registration statement under
the Securities Act of 1933, as amended, and under any applicable state
securities laws or an opinion of counsel acceptable to the Company that
the proposed transaction will be exempt from such registration."
The foregoing legend shall be removed upon registration of the legended shares
under the Securities Act of 1933, as amended, and under any applicable state
laws or upon receipt of any opinion of counsel acceptable to the Company that
said registration is no longer required.
3
<PAGE>
The sole purpose of the agreements, warranties, representations and
legend set forth in the two immediately preceding paragraphs is to prevent
violations of the Securities Act of 1933, as amended, and any applicable state
securities laws.
It is the intention of the Company and you that this option shall not
be an "Incentive Stock Option" as that term is used in Section 422 of the Code
and the regulations thereunder.
Any dispute or disagreement between you and the Company with respect to
any portion of this option or its validity, construction, meaning, performance
or your rights hereunder shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association or its
successor, as amended from time to time. However, prior to submission to
arbitration you will attempt to resolve any disputes or disagreements with the
Company over this option amicably and informally, in good faith, for a period
not to exceed two weeks. Thereafter, the dispute or disagreement will be
submitted to arbitration. At any time prior to a decision from the arbitrator(s)
being rendered, you and the Company may resolve the dispute by settlement. You
and the Company shall equally share the costs charged by the American
Arbitration Association or its successor, but you and the Company shall
otherwise be solely responsible for your own respective counsel fees and
expenses. The decision of the arbitrator(s) shall be made in writing, setting
forth the award, the reasons for the decision and award and shall be binding and
conclusive on you and the Company. Further, neither you nor the Company shall
appeal any such award. Judgment of a court of competent jurisdiction may be
entered upon the award and may be enforced as such in accordance with the
provisions of the award.
This option shall be subject to the terms of the Plan in effect on the
date this option is granted, which terms are hereby incorporated herein by
reference and made a part hereof. In the event of any conflict between the terms
of this option and the terms of the Plan in effect on the date of this option,
the terms of the Plan shall govern. This option constitutes the entire
understanding between the Company and you with respect to the subject matter
hereof and no amendment, supplement or waiver of this option, in whole or in
part, shall be binding upon the Company unless in writing and signed by the
President of the Company. This option and the performances of the parties
hereunder shall be construed in accordance with and governed by the laws of the
State of Florida.
Please sign the copy of this option and return it to the Company's
Secretary, thereby indicating your understanding of and agreement with its terms
and conditions.
CONSTELLATION 3D, INC.
By:
------------------------------
Name:
Title:
I hereby acknowledge receipt of a copy of the foregoing stock option
and of the Plan as of the date of grant set forth above, hereby acknowledge that
this stock option grant discharges any promise (either verbal or written) of the
Company made on or prior to the date of grant to give me a stock option, and,
having read it, hereby signify my understanding of, and my agreement with, its
terms and conditions. In consideration of the grant, I hereby release any claim
I may have against the Company with respect to any promise of a stock option
grant or other equity interest in the Company.
------------------------- -------------------------------
(Date) (Signature)
4
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APPENDIX F
CONSTELLATION 3D, INC.
2000 AMENDMENTS TO THE 1999 STOCK OPTION PLAN
The 1999 Stock Option Plan (the "Plan") is amended as follows:
1. Section 2 of the Plan is hereby deleted in its entirety and
shall read as follows:
"2. Aggregate Number of Shares.
7,000,000 (Seven Million) shares of the Company's
Common Stock shall be the aggregate number of shares which may
be issued under this Plan. Notwithstanding the foregoing, in
the event of any change in the outstanding shares of the
Common Stock of the Company by reason of a stock dividend,
stock split, combination of shares, recapitalization, merger,
consolidation, transfer of assets, reorganization, conversion
or what the Committee (defined in Section 4(a)), deems in its
sole discretion to be similar circumstances, the aggregate
number and kind of shares which may be issued under this Plan
shall be appropriately adjusted in a manner determined in the
sole discretion of the Committee. Reacquired shares of the
Company's Common Stock, as well as unissued shares, may be
used for the purpose of this Plan. Common Stock of the Company
subject to options which have terminated unexercised, either
in whole or in part, shall be available for future options
granted under this Plan."
2. Section 4 of the Plan is hereby deleted in its entirety and
shall read as follows:
"4. Administration of Plan
(a) Prior to the registration of the Company's Common
Stock under Section 12 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), this Plan
shall be administered by the Company's Board of
Directors and, after such registration, by a
Compensation Committee appointed by the Company's
Board of Directors. The Committee shall consist of a
minimum of two members of the Board of Directors, each
of whom shall be a "Non-Employee Director" within the
meaning of Rule 16b-3(b)(3) under the Exchange Act or
any future corresponding rule, except that the failure
of the Committee for any reason to be composed solely
of Non-Employee Directors shall not prevent an option
from being considered granted under this Plan. The
term "Committee", as used herein, shall refer to
either the Company's Board of Directors or such
Compensation Committee, depending upon who is
administering the Plan. The Committee shall, in
addition to its other authority and subject to the
provisions of this Plan, determine which individuals
shall in fact be granted an option or options, whether
the option shall be an Incentive Stock Option, a
Non-Qualified Stock Option, Other Share-Based Awards,
a 102 Stock Option, or a 3(9) Stock Option (as such
terms are defined in Section 5 (a)), the number of
shares to be subject to each of the options, the time
or times at which the options shall be granted, the
rate of option excercisability, and subject to Section
5 hereof the price at which each of the options is
excercisable and the duration of the option. The
Committee shall also have the authority to amend the
terms, including without limitation exercise price, of
options granted previously under this Plan.
(b) The Committee shall adopt such rules for the conduct
of its business and administration of this Plan as
considers it desirable. A majority of the members of
the Committee shall constitute a quorum for all
purposes. The vote or written consent of a majority of
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<PAGE>
the members of the Committee on a particular matter
shall constitute the act of the Committee on such
matter. Apart from issuance under the relevant tax
regimes of the State of Israel and the United States
of America, the Plan contemplates issuances to
grantees ("Grantees") in other jurisdictions with
respect to which the Committee is empowered to make
the requisite adjustments in the Plan and set forth
the relevant conditions in the Company's agreement
with the Grantees in order to comply with the
requirements of the tax regimes in said jurisdictions.
To the extent any provision herein conflicts with the
conditions of any relevant tax law or regulation which
are relied upon for tax relief in respect of a
particular Option or Share granted to a Grantee, the
provisions of said law or regulation shall prevail
over those of the Plan, and the Committee is empowered
hereunder to interpret and enforce the said prevailing
provisions. The Committee shall have the right to
construe the Plan and the options issued pursuant to
it, to correct defects and omissions and to reconcile
inconsistencies to the extent necessary to effectuate
the Plan and the options issued pursuant to it, and
such action shall be final, binding and conclusive
upon all parties concerned. No member of the Committee
or the Board of Directors shall be liable for any act
or omission (whether or not negligent) taken or
omitted in good faith, or for the exercise of an
authority or discretion granted in connection with the
Plan to a Committee or for the Board of Directors, or
for the acts or omissions of any other members of a
Committee or Board of Directors. Subject to the
numerical limitations on Committee membership set
forth in Section 4(a) hereof, the Board of Directors
may at any time appoint additional members of the
Committee and may at any time remove any member of the
Committee with or without cause. Vacancies in the
Committee, however caused, may be filled by the Board
of Directors, if it so desires."
3. Section 5(a) of the Plan is hereby deleted in its entirety
and shall read as follows:
"5. Incentive Stock Options, Non-Qualified Stock Options, 102
Stock Options, 3(9) Stock Options and Other Share-Based Awards
(a) Options issued pursuant to this Plan may be either
Incentive Stock Options granted pursuant to Section
5(b) hereof, Non-Qualified Stock Options granted
pursuant to Section 5(c) hereof, Other Share-Based
Awards, 102 Stock Options, or 3(9) Stock Options, as
determined by the Committee. An "Incentive Stock
Option" is an option which satisfies all of the
requirements of Section 422 of the Internal Revenue
code of 1986, as amended (the "Code") and the
regulations thereunder. A "Non-Qualified Stock Option"
is an option which either does not satisfy all the
requirements of Section 422 of the Code, or the terms
of the option provide that it will not be treated as
an Incentive Stock Option. "Other Share-Based Awards"
are awards under the Plan pursuant to which Common
Stock (which may, but need not, be shares of
restricted stock) are or may in the future be
acquired, or awards denominated in stock units,
including units valued on the basis of measures other
than market value. The Committee may also grant stock
appreciation rights without the grant of an
accompanying option, which rights shall permit the
Grantees to receive, at the time of any exercise of
such rights, cash equal to the amount by which the
Fair Market Value of all Common Stock in respect to
which the right was granted exceeds the exercise price
thereof. Such Other Stock-Based Awards may be granted
alone, in addition to, or in tandem with any award of
any type granted under the plan and must be consistent
with the purposes of the Plan. With respect to Other
Share-Based Awards, if the Committee requires as a
condition of exercise of an Option the release of
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<PAGE>
Common Stock by the trustee or the expiration of the
restricted period (each a "Tax Event"), each Grantee
shall agree that, no later than the date of the Tax
Event, he will pay to the Company or make arrangements
satisfactory to the Committee and the trustee (if
applicable) regarding payment of any applicable taxes
of any kind required by law to be withheld or paid
upon the Tax Event. To the extent approved by the
Committee and permitted by law, a withholding
obligation may be satisfied by the withholding or
delivery of Common Stock. A "102 Stock Option" is an
option which satisfies all of the requirements of
Section 102 of the Israeli Income Tax Ordinance (New
Version) 1961, as amended (the "Ordinance") and any
regulations, rules, orders or procedures promulgated
thereunder. A "3(9) Stock Option": is an option which
satisfies all of the requirements of Section 3(9) of
the Ordinance. To the extent required by the Ordinance
or the Income Tax Commissioner of the State of Israel,
the 102 Stock Options and 3(9) Stock Options, which
shall be granted pursuant to the Plan, shall be issued
to a Trustee nominated by the Committee in accordance
with the provisions of the Ordinances. With respect to
the 102 Stock Options only, the options and shares
issued upon the exercise of said option shall be held
for the benefit of the Grantee for a period of not
less than twenty-four (24) months from the date of
grant (or such other period of time as may be required
by the Ordinance).
The Committee may grant one or more types of options
and Other Share-Based Awards to the same person. The
option price for options issued under this Plan shall
be either equal to the fair market value (as defined
below) of the Company's Common Stock on the date of
the grant of the option or less than the fair market
value as determined by the Committee, but not more
than 20% below the fair market value of the Company's
Common Stock. The fair market value of the Company's
Common Stock on any particular date shall mean the
last reported sale price of a share of the Company's
Common Stock on any stock exchange on which such stock
is then listed or admitted to trading, or on the
NASDAQ National Market System or the NASDAQ SmallCap
Market, on such date, or if no sale took place on such
day, the last such date on which a sale took place, or
if the Common Stock is not then quoted on the NASDAQ
National Market System or the NASDAQ SmallCap Market,
or listed or admitted to trading on any stock
exchange, the average of the bid and asked prices in
the over-the-counter market on such date, or if none
of the foregoing, a price determined in good faith by
the Committee to equal the fair market value per share
of the Common Stock."
4. Section 5(d) is hereby deleted in its entirety and shall
read as follows:
"(d) Neither the Company nor any of its current or future
parent, subsidiaries or affiliates, nor their
officers, directors, shareholders, stock option plan
committees, employees or agents shall have any
liability to any optionee in the event (i) an option
granted pursuant to Section 5(b) hereof does not
qualify as an "Incentive Stock Option" as that term is
used in Section 422 of the Code and the regulations
thereunder; (ii) any optionee does not obtain the tax
treatment pertaining to an Incentive Stock Option;
(iii) any option granted pursuant to Section 5(c)
hereof is an "Incentive Stock Option," (iv) an award
granted pursuant to Section 5(a) hereof does not
qualify as a "102 Stock Option," a "3(9) Stock
Option," or as the "Other Share-Based Award," or (v)
any optionee does not obtain the tax treatment
pertaining to a 102 Stock Option or 3(9) Stock
Option."
7
<PAGE>
5. A paragraph (e) will be added to Section 5 of the Plan as
follows:
(e) ALL TAX CONSEQUENCES UNDER ANY APPLICABLE LAW WHICH
MAY ARISE FROM THE GRANT OF ANY OPTIONS, RESTRICTED
STOCK OR SHARES, OR IN THE CASE OF AN OPTION, FROM ITS
EXERCISE, FROM THE SALE OR DISPOSITION OF THE SHARES
OR RESTRICTED STOCK OR FROM ANY OTHER ACT OF THE
GRANTEE IN CONNECTION WITH THE FOREGOING SHALL BE
BORNE SOLELY BY THE GRANTEE, AND THE GRANTEE SHALL
INDEMNIFY THE COMPANY, AND THE TRUSTEE, AND SHALL HOLD
THEM HARMLESS AGAINST AND FROM ANY LIABILITY FOR ANY
SUCH TAX OR PENALTY, INTEREST OR INDEXATION THEREON OR
THEREUPON.
6. Section 6 is hereby deleted in its entirety and shall read
as follows:
"6. Amendment, Supplement, Suspension and Termination
Options shall not be granted pursuant to this Plan after
the expiration of ten years from the date the Plan is adopted
by the Board of Directors of the Company. The Board of
Directors reserves the right at any time, and from time to
time, to amend or supplement this Plan in any way (including,
without limitation, the power to amend this Plan in a
tax-advantaged fashion for the benefit of the Company's
employees who are subject to the tax laws of other countries),
or to suspend or terminate it, effective as of such date,
which date may be either before or after the taking of such
action, as may be specified by the Board of Directors;
provided, however, that such action shall not adversely affect
options granted under the Plan prior to the actual date on
which such action occurred, unless otherwise agreed to by the
Company and the Grantee. If an amendment or supplement of this
Plan is required by the Code or the regulations thereunder to
be approved by the shareholders of the Company in order to
permit the granting of "Incentive Stock Options" (as that term
is defined in Section 422 of the Code and regulations
thereunder) pursuant to the amended or supplemented Plan, such
amendment or supplement shall also be approved by the
shareholders of the Company in such manner as is prescribed by
the Code and the regulations thereunder. If the Board of
Directors voluntarily submits a proposed amendment,
supplement, suspension or termination for shareholder
approval, such submission shall not require any future
amendments, supplements, suspensions or terminations (whether
or not relating to the same provision or subject matter) to be
similarly submitted for shareholder approval."
7. An Appendix IV "3(9) Stock Option for Officers and Other
Key Employees" shall be inserted to the Plan and is hereby incorporated as
Exhibit A.
8
<PAGE>
EXHIBIT "A"
APPENDIX IV
3(9) STOCK OPTION
FOR OFFICERS AND OTHER KEY EMPLOYEE
To:
______________________________________________________________
Name
______________________________________________________________
______________________________________________________________
Address
Date of Grant: ________________________________________________________
You are hereby granted an option, effective as of the date hereof, to
purchase ____ shares of common stock, par value $.001 per share (the "Common
Stock"), of CONSTELLATION 3D, INC., a Florida corporation (the "Company"), at a
price of $____ per share pursuant to the Company's 1999 Stock Option Plan (the
"Plan").
Your option may first be exercised on and after one year from the date
of grant, but not before that time. On and after one year and prior to two years
from the date of grant, your option may be exercised for up to ______% of the
total number of shares subject to the option minus the number of shares
previously purchased by the exercise of the option (as adjusted for any change
in the outstanding shares of the Common Stock of the Company by reason of a
stock dividend, stock split, combination of shares, recapitalization, merger,
consolidation, transfer of assets, reorganization, conversion or what the
committee deems in its sole discretion to be similar circumstances). Each
succeeding year thereafter, your option may be exercised for up to an additional
____% of the total number of shares subject to the option minus the number of
shares previously purchased by exercise of the option (as adjusted for any
change in the outstanding shares of the Common Stock of the Company by reason of
a stock dividend, stock split, combination of shares, recapitalization, merger,
consolidation, transfer of assets, reorganization, conversion or what the
Committee deems in its sole discretion to be similar circumstances). Thus, this
option is fully exercisable on and after ____ years after the date of grant,
except if terminated earlier as provided herein.
No fractional shares shall be issued or delivered. This option shall
terminate and is not exercisable after ten years from the date of its grant (the
"Scheduled Termination Date"), except if terminated earlier as hereafter
provided.
In the event of a "Change of Control" (as defined below) of the
Company, your option may, from and after the date of the Change of Control, and
notwithstanding the immediately preceding paragraph, be exercised for up to 100%
of the total number of shares then subject to the option minus the number of
shares previously purchased upon exercise of the option (as adjusted for stock
dividends, stock splits, combinations of shares and what the Committee deems in
its sole discretion) and your vesting date may accelerate accordingly; provided,
however, that as set below, you may be required to exercise your option on
thirty (30) days notice from the Committee. A "Change of Control" shall be
deemed to have occurred upon the happening of any of the following events.
1. A change within a twelve-month period in a majority of the members
of the board of directors of the Company.
2. A change within a twelve-month period in the holder of more than 50%
of the outstanding voting stock of the Company; or
3. Any other event deemed to constitute a "Change of Control" by the
Committee.
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<PAGE>
In the event of a sale or a proposed sale of the majority of the stock
or assets of the Company or a proposed Change of Control, the Committee shall
have the right to terminate this option upon thirty (30) days prior written
notice to you, notwithstanding anything to the contrary contained in this
option. In that case, the holders of vested options shall have the right to
exercise such options prior to the close of the thirty (30)-day period.
You may exercise your option by giving written notice to the Secretary
of the Company on forms supplied by the Company at its then principal executive
office, accompanied by payment of the option price for the total number of
shares you specify that you wish to purchase. The payment may be in any of the
following forms: (a) cash, which may be evidenced by a check and includes cash
received from a stock brokerage firm in a so-called "cashless exercise"; (b)
(unless prohibited by the "Committee") certificates representing shares of
Common Stock of the Company, which will be valued by the Secretary of the
Company at the fair market value per share of the Company's Common Stock (as
determined in accordance with the Plan) on the date of delivery of such
certificates to the Company, accompanied by an assignment of the stock to the
Company; or (c) (unless prohibited by the Committee) any combination of cash and
Common Stock of the Company valued as provided in clause (b). Any assignment of
stock shall be in a form and substance satisfactory to the Secretary of the
company, including guarantees of signature(s) and payment of all transfer taxes
if the Secretary deems such guarantees necessary or desirable.
Your option will, to the extent not previously exercised by you,
terminate thirty (30) days after the date on which your employment by the
Company or a Company subsidiary corporation is terminated (whether such
termination be voluntary or involuntary) other than by reason of disability as
defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations thereunder, or death, in which case your
option will terminate one year from the date of termination of employment due to
disability or death (but in no event later than the Scheduled Termination Date).
After the date your employment is terminated, as aforesaid, you may exercise
this option only for the number of shares which you had a right to purchase and
did not purchase on the date your employment terminated. If you are employed by
a Company subsidiary corporation, your employment shall be deemed to have
terminated on the date your employer ceases to be a Company subsidiary
corporation, unless you are on that date transferred to the Company or another
Company subsidiary corporation. Your employment shall not be deemed to have
terminated if you are transferred from the Company to a Company subsidiary
corporation, or vice versa, or from one Company subsidiary corporation to
another Company subsidiary corporation.
If you die while employed by the Company or a Company subsidiary
corporation, your executor or administrator, as the case may be, may, at any
time within one year after the date of your death (but in no event later than
the Scheduled Termination Date), exercise the Option as to any shares which you
had a right to purchase and did not purchase during your lifetime. If your
employment with the Company or a Company parent or subsidiary corporation is
terminated by reason of your becoming disabled (within the meaning of section
22(e)(3) of the Code and the regulations thereunder), you or your legal guardian
or custodian may at any time within one year after the date of such termination
(but in no event later than the Scheduled Termination Date), exercise the option
as to any shares which you had a right to purchase and did not purchase prior to
such termination. Your executor, administrator, guardian, or custodian must
present proof of his authority satisfactory to the Company prior to being
allowed to exercise this option.
Notwithstanding any other provision of the Option, the Committee shall
have the right to cancel this Option without notice if your employment is
terminated for: (i) criminal conduct; or (ii) willful misconduct or gross
negligence materially detrimental to the Company.
In the event of any change in the outstanding shares of the Common
Stock of the Company by reason of a stock dividend, stock split, combination of
shares, recapitalization, merger, consolidation, transfer of assets,
reorganization, conversion or what the Committee deems in its sole discretion to
be similar circumstances, the number and kind of shares subject to this option
and the option price of such shares shall be appropriately adjusted in a manner
to be determined in the sole discretion of the Committee.
2
<PAGE>
This option is not transferable otherwise than by will or the laws of
descent and distribution, and is exercisable during your life only by you,
including, for this purpose, your legal guardian or custodian in the event of
disability; until the option price has been paid in full pursuant to due
exercise of this option and the purchased shares are delivered to you, you do
not have any rights as a shareholder of the Company. The Company reserves the
right not to deliver to you the shares purchased by virtue of the exercise of
this option during any period of time in which the Company deems, in its sole
discretion, that such delivery would violate a federal, state, local or
securities rule, regulation or law.
Notwithstanding anything to the contrary contained herein, this option
is not exercisable until all the following events occur and during the following
periods of time:
(a) Until the Plan pursuant to which this option is granted is approved
by the shareholders of the Company in the manner prescribed by the Code and the
regulations thereunder,
(b) Until this option and the optioned shares are approved and/or
registered with such federal , state and local regulatory bodies or agencies and
securities exchanges as the Company may deem necessary or desirable, or
(c) During any period of time in which the Company deems that the
exercisability of this option, the offer to sell the shares optioned hereunder,
or the sale thereof, may violate a federal, State, local or securities exchange
rule, regulation or law, or may cause the Company to be legally obligated to
issue or sell more shares than the Company to be legally entitled to issue or
sell.
(d) Until you have paid or made suitable arrangements to pay (which may
include payment through the surrender of Common Stock, unless prohibited by the
Committee) (i) all federal, state and local income tax withholding required to
be withheld by the Company in connection with the option exercise and (ii) your
portion of other federal, state and local payroll and other taxes due in
connection with the option exercise.
(e) Until the Company has completed a public offering of its Common
Stock registered under the Securities Act of 1933, as amended, or has registered
any of its Common Stock under the Securities Exchange Act of 1934, as amended.
According to section 3(9) of the Israeli Income Tax Ordinance (New Version) 1961
as amended the following apply:
Non trade stock options, granted to employees, officers, other key
employees and important consultants, do not create tax consequences on
the day granted. Exercising the option will create tax consequences
even without selling the share.
The following two paragraphs shall be applicable if, on the date of the
exercise of this option, the Common Stock to be purchased pursuant to such
exercise has not been registered under the Securities Act of 1933, as amended,
and under applicable state securities laws, and shall continue to be applicable
for so long as such registration has not occurred:
(a) The optionee hereby agrees, warrants and represents that he will
acquire the Common Stock to be issued hereunder for his own account for
investment purposes only, and not with a view to, or in connection with, any
resale or other distribution of any of such shares, except as hereafter
permitted. The optionee further agrees that he will not at any time make any
offer, sale, transfer, pledge or other disposition of such Common Stock to be
issued hereunder without an effective registration statement under the
Securities Act of 1933, as amended, and under any applicable state securities
laws or an opinion of counsel acceptable to the Company to the effect that the
proposed transaction will be exempt from such registration. The optionee shall
execute such instruments, representations, acknowledgements and agreements as
the Company may, in its sole discretion, deem advisable to avoid any violation
of federal, state, local or securities exchange rule, regulations or law.
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<PAGE>
(b) The certificates for the Common Stock to be issued to the optionee
hereunder shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under
applicable state securities laws. The shares have been acquired for
investment and may not be offered, sold, transferred, pledged or
otherwise disposed of without an effective registration statement
under the Securities of Act of 1933, as amended, and under any
applicable state securities laws or an opinion of counsel
acceptable to the Company, that the proposed transaction will be
exempt from such registration."
The foregoing legend shall be removed upon registration of the legended shares
under the Securities Act of 1933, as amended, and under any applicable state
laws or upon the receipt of any opinion of counsel acceptable to the Company
that said registration is no longer required.
The sole purpose of the agreements, warranties, representations and
legends set forth in the two immediately preceding paragraphs is to prevent
violations of the Securities Act of 1933, as amended, and any applicable state
securities laws.
It is the intention of the Company and you that this option shall not
be an "Incentive Stock Option" as that term is used in Section 422 of the Code
and the regulations thereunder.
Nothing herein shall modify your status as an at-will employee of the
Company, if applicable. Further, nothing herein guarantees you employment for
any specified period of time. This means that either you or the Company may
terminate your employment at any time for any reason, or no reason. You
recognize that, for instance, you may terminate your employment or the Company
may terminate your employment prior to the date on which your option becomes
vested.
Any dispute or disagreement between you and the Company with respect to
any portion of this option or its validity, construction, meaning, performance
or your rights hereunder shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association or its
successor, as amended from time to time. However, prior to submission to
arbitration you will attempt to resolve any disputes or disagreements with the
Company or over this option amicably and informally, in good faith, for a period
not to exceed two weeks. Thereafter, the dispute or disagreement will be
submitted to arbitration. At any time prior to a decision from the arbitrator(s)
being rendered, you and the Company may resolve the dispute by settlement. You
and the Company shall equally share the costs charged by the American
Arbitration Association or its successor, but you and the Company shall
otherwise be solely responsible for your own respective counsel fees and
expenses. The decision of the arbitrator(s) shall be made in writing, setting
forth the award, the reasons for the decision and award and shall be binding and
conclusive on you and the Company. Further, neither you nor the Company shall
appeal any such award. Judgment of a court of competent jurisdiction may be
entered upon the award and may be enforced as such in accordance with the
provisions of the award.
This option shall be subject to the terms of the Plan in effect on the
date this option is granted, which terms are hereby incorporated herein by
reference and made a part hereof. In the event of any conflict between the terms
of this option and the terms of the Plan in effect on the date of this option,
the terms of the Plan shall govern. This option constitutes the entire
understanding between the Company and you with respect to the subject matter
hereof and no amendment, supplement or waiver of this option, in whole part,
shall be binding upon the Company unless in writing and signed by the President
of the Company. This option and the performances of the parties hereunder shall
be construed in accordance with and governed by the laws of the State of
Florida.
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<PAGE>
Please sign the copy of this option and return it to the Company's
Secretary, thereby indicating your understanding of and agreement with its terms
and conditions.
CONSTELLATION 3D, INC.
By: ____________________________
Name: ______________________
Title: _____________________
I hereby acknowledge receipt of a copy of the foregoing stock option
and of the Plan as of the date of grant set forth above, hereby acknowledge that
this stock option grant discharges any promise (either verbal or written) of the
Company made on or prior to the date of grant to give me a stock option, and,
having read it, hereby signify my understanding of, and my agreement with, its
terms and conditions. In consideration of the grant, I hereby release any claim
I may have against the Company with respect to any promise of a stock option
grant or other equity interest in the Company.
_______________________________ _________________________________
(Date) (Signature)
5
<PAGE>
CONSTELLATION 3D, INC.
Proxy
This proxy is solicited by the Board of Directors of Constellation 3D,
Inc. ("C3D") for the 2001 Annual Meeting of Shareholders ("Annual Meeting"), to
be held on January 30, 2001.
The undersigned holder of common stock of C3D hereby appoints Eugene
Levich and Michael Goldberg and each of them, as attorney and proxy, with full
power of substitution, to vote on behalf of the undersigned at the Annual
Meeting to be held at 10:00 a.m., U.S. Eastern Standard Time, on January 30,
2001, at the offices of Blank Rome Comisky & McCauley LLP on the 10th Floor, at
One Logan Square, Philadelphia, Pennsylvania, USA, and at all adjournments
and/or postponements thereof, according to the number of shares which the
undersigned would be entitled to vote if then personally present, and in his
discretion upon such other business as may come before the Annual Meeting.
Shares will be voted as instructed, but if no instruction is given,
shares will be voted "For" all the nominees for director named in the Proxy
Statement in connection with the Annual Meeting (including all Appendices
thereto, hereinafter collectively known as the "Proxy Statement"), "For" each
other proposal described in the Proxy Statement and with discretionary authority
on such other matters as may come before the Annual Meeting.
The undersigned acknowledges receipt of this proxy with a copy of the
Proxy Statement and the Annual Report.
1. Election of the following directors to serve on C3D's board
until their successors are duly elected.
[ ] FOR all nominees listed below
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
Nominees: Eugene Levich, Lev Zaidenberg, Michael Goldberg, Stuart
Garawitz, Val Mandel, Joseph Shefet, and Leonardo Berezowsky.
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
_______________________________________________________________________
2. Approval of the reincorporation of C3D into Delaware thorough
the Agreement and Plan of Merger between C3D and Constellation
3D, Inc., a Delaware corporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of the amendments to the 1999 Stock Option Plan of
C3D.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Ratification of the appointment of BDO Seidman, LLP, as the
independent auditors of C3D.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In his discretion, upon such other matters as may properly
come before the Annual Meeting.
Votes must be indicated [X] or [*] in black or blue ink. Please
sign and return this proxy promptly in the enclosed postage paid envelope.
Note: Please sign exactly as name(s) appears hereon.
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Executors, administrators, trustees, etc. should give full title as such.
DATE: _________________________
SIGNATURE: __________________________________
Name:
Title:
2
