WARRANT AGREEMENT
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CASDIM INTERNATIONAL SYSTEMS INC.
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THIS WARRANT AGREEMENT (this "Agreement") dated as of December 23, 1997 is
made by and between Casdim International Systems Inc., a corporation organized
under the laws of the State of Delaware (the "Company"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the
"Warrantholder").
Subject to the terms and conditions hereof, the Company agrees to issue to
the Warrantholder, pursuant to a letter agreement by and between the Company and
the Warrantholder dated as of December 23, 1997 (the "Agreement"), warrants as
hereinafter described (the "Warrants") to purchase up to an aggregate of 50,000
shares of the common stock of the Company, par value $.01 per share (the "Common
Stock"), at a Warrant Price of $0.50 per share of Common Stock, subject to
adjustment pursuant to Section 7 hereof. As used herein (i) the terms "Share" or
"Shares" shall mean collectively the Common Stock issuable upon exercise of the
Warrants together with any other securities issuable upon such exercise as
provided in Section 7 of this Agreement; (ii) the term "Warrants" shall include
any and all warrants outstanding pursuant to this Agreement, including those
evidenced by a certificate or certificates issued upon division, exchange or
substitution pursuant to this Agreement; and (iii) the term "Warrant Price"
shall mean the price per share of Common Stock at which the Common Stock shall
at any time be purchasable upon exercise of the Warrants. In addition to the
adjustments provided in Section 7 hereof, any fixed dollar per share amounts
referenced in this Agreement shall be appropriately adjusted for any stock
splits, subdivisions, stock dividends or stock distributions, combinations,
reclassifications or consolidations or other changes to the Company's capital
structure.
For the purpose of defining the terms and provisions of the Warrants and
the respective rights and obligations thereunder, the Company and the
Warrantholder, for value received, hereby agree as follows:
Section 1. Transferability and Form of Warrants.
1.1. Registration. The Warrants shall be numbered and shall be registered
on the books of the Company when issued, in accordance with Delaware corporate
practice.
1.2. Transfer. The Warrants shall be transferable only on the books of the
Company maintained at its principal office in New York, New York or wherever its
principal office may then be located, upon delivery thereof duly endorsed by the
Warrantholder seeking such transfer or by its duly authorized attorney or
representative, accompanied by proper evidence of succession, assignment or
authority to transfer. Upon any registration of transfer, the Company shall
execute and deliver new Warrants to the person entitled thereto.
1.3. Form of Warrants. The form of certificate evidencing the Warrants
shall be substantially as set forth in Exhibit 1 attached hereto. Certificates
evidencing the Warrants shall be executed on behalf of the Company by its
President or by any Vice President, shall be attested to by its Secretary or any
Assistant Secretary, and shall be dated as of the date of execution thereof.
1.4. Legend on Warrants and Shares. The Warrants, and the Shares issuable
upon the exercise thereof, have not been registered under the Securities Act of
1933, as amended (the "Securities Act"). Each certificate for the Warrants shall
bear the following legend:
"THE WARRANTS REPRESENTED BY THIS CERTIFICATE, AND THE COMMON
STOCK ISSUABLE UPON EXERCISE OF SUCH WARRANTS, HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 OR
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH
WARRANTS MAY NOT BE SOLD, AS SIGNED, EXCHANGED OR OTHERWISE
TRANSFERRED IN ANY MANNER AND SUCH COMMON STOCK MAY NOT BE
OFFERED FOR SALE, SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
And each certificate for the Shares shall bear the following legend:
"THE COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 OR
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND MAY
NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
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Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the
Securities Act of the securities represented thereby) shall also bear a like
legend unless, in the opinion of the Company's counsel, the securities
represented thereby need no longer be subject to such restrictions.
Section 2. Exchange of Warrant Certificate. Any Warrant certificate may be
exchanged for another certificate or certificates entitling a Warrantholder to
purchase a like aggregate number of Shares as the certificate or certificates
surrendered then entitles such Warrantholder to purchase. Any Warrantholder
desiring to exchange a Warrant certificate shall make such request in writing
delivered to the Company, and shall surrender, properly endorsed, the
certificate evidencing the Warrant to be so exchanged. Thereupon, the Company
shall execute and deliver to the person entitled thereto a new Warrant
certificate as so requested.
Section 3. Term of Warrants; Exercise of Warrants; Market Price
(a) Subject to the terms of this Agreement, each Warrantholder shall have
the right, at any time during the period commencing at 9:00 a.m., Eastern Time,
on December 24, 1997 (the "Commencement Date") and ending at 5:00 p.m., Eastern
Time, on December 23, 1999 (the "Termination Date"), to purchase from the
Company up to the number of fully paid and nonassessable Shares which such
Warrantholder may at the time be entitled to purchase pursuant to this
Agreement, upon surrender to the Company at its principal office of the
certificates evidencing the Warrants to be exercised, with the purchase form
duly completed and signed, and upon payment to the Company of the Warrant Price
(as determined in accordance with the provisions of Section 7 hereof) for the
number of Shares in respect of which such Warrants are then exercised, but in no
event for fewer than 100 Shares (unless fewer than an aggregate of 100 Shares
are then purchasable under all outstanding Warrants held of record by a
Warrantholder). The Termination Date shall be extended for such number of days
as (i) the Shares are not covered by and may not be sold pursuant to an
effective registration statement under the Securities Act for any reason
whatsoever (including, without limitation, any stop order or suspension), (ii)
the Common Stock is not listed and trading on any national exchange or on the
Nasdaq Stock Market, or is not traded on the Nasdaq OTC Bulletin Board, or (iii)
the Shares are not listed on the principal exchange on which the Common Stock is
listed or the Nasdaq Stock Market, if the Common Stock is listed thereon, or are
not eligible for trading on the Nasdaq OTC Bulletin Board, and for a period of
30 days thereafter. Payment of the aggregate Warrant Price shall be made in cash
or by certified or cashier's check or any combination thereof.
(b) Upon surrender of Warrant certificates and payment of the Warrant
Price, the Company shall issue and cause to be delivered with all reasonable
dispatch to or upon the written order of a Warrantholder, and (subject to
Section 11 hereof) in such name or names as such Warrantholder may designate, a
certificate or certificates for the number of full Shares so
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acquired upon the exercise of the Warrant, together with cash, as provided in
Section 9 hereof, in respect of any fractional Shares otherwise issuable upon
such surrender. Such certificate or certificates shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a holder of record of such Shares as of the date of surrender of the
Warrants being exercised and payment of the Warrant Price notwithstanding that
the certificate or certificates representing such securities shall not actually
have been delivered or that the stock transfer books of the Company shall then
be closed. The Warrants shall be exercisable at the election of a Warrantholder
either in full or from time to time in part and, in the event that a certificate
evidencing Warrants is exercised in respect of fewer than all of the Shares
specified therein at any time prior to the Termination Date, a new certificate
evidencing the remaining portion of the Warrants shall be issued by the Company.
(c) For all purposes of this Agreement, the term "Market Price" as of any
specified date shall mean: (i) if the Common Stock is listed or admitted for
trading on one or more United States national securities exchanges, the average
daily closing price for the last five trading days for the Common Stock on such
exchanges as may be designated by the Board of Directors of the Company (the
"Board") as the principal exchange in the United States on which the Common
Stock is listed; (ii) if the Common Stock is not listed or admitted for trading
on any United States national securities exchange, the average daily closing bid
price for the last five trading days for the Common Stock on the Nasdaq National
or SmallCap Market ("Nasdaq"); or (iii) if the Common Stock is not listed or
admitted for trading on a United States national securities exchange or on
Nasdaq, the average closing bid price for the last five trading days of the
Common Stock on the Nasdaq OTC Bulletin Board as reported by the National
Quotation Bureau Inc. In the event that it is impracticable for the Board to
establish the Market Price of the Common Stock pursuant to this Section 3 on any
specified date, the "Market Price" shall be determined in good faith by the
Board, such determination to be conclusive.
Section 4. Payment of Taxes. The Company will pay all taxes and fees, if
any, attributable to the initial issuance of the Warrants or the issuance of the
Shares upon exercise of the Warrants, except that the Company shall not be
required to pay any tax or fee which may be payable in respect of any secondary
transfer of the Warrants or such Shares.
Section 5. Mutilated or Missing Warrants. In case the certificate or
certificates evidencing any Warrants shall be mutilated, lost, stolen or
destroyed, the Company shall, at the request of the affected Warrantholder,
issue and deliver in exchange and substitution for and upon cancellation of the
mutilated certificate or certificates, or in lieu of and substitution for the
certificate or certificates lost, stolen or destroyed, a new Warrant certificate
or certificates of like tenor and representing an equivalent right or interest,
but only upon receipt of evidence satisfactory to the Company of the loss, theft
or destruction of such Warrant and, if requested, at the cost and expense of the
Warrantholder, a bond of indemnity in form and amount
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satisfactory to the Company. Applicants for such substitute Warrant certificates
shall also comply with such other reasonable regulations as the Company may
prescribe.
Section 6. Reservation of Shares. There has been reserved, and the Company
shall at all times keep reserved so long as any Warrants remain outstanding, out
of its authorized share capital, such number of shares of Common Stock as shall
be subject to purchase under all outstanding Warrants. Every transfer agent for
the Common Stock and other securities of the Company issuable upon the exercise
of Warrants will be irrevocably authorized and directed at all times to reserve
such number of authorized shares of Common Stock and other securities as shall
be requisite for such purpose. The Company will supply every such transfer agent
with duly executed stock and other certificates, as appropriate, for such
purpose and will provide or otherwise make available any cash which may be
payable as provided in Section 9 hereof.
Section 7. Adjustment of Number and Kind of Securities. The Warrant Price
and the number and kind of securities purchasable upon the exercise of the
Warrants shall be subject to adjustment from time to time upon the happening of
certain events, as follows:
7.1. Adjustments.
(a) In case the Company shall (i) pay a dividend in Common Stock or
make a distribution in Common Stock, (ii) subdivide its outstanding Common
Stock, (iii) combine its outstanding Common Stock into a smaller number of
shares of Common Stock, or (iv) issue, by reclassification of its Common
Stock, other securities of the Company, the number of shares of Common
Stock or other securities purchasable upon exercise of the Warrants
immediately prior thereto shall be adjusted so that each Warrantholder
shall be entitled to receive the kind and number of shares of Common Stock
or other securities of the Company which it would have owned or would have
been entitled to receive immediately after the happening of any of the
events described above, had the Warrants been exercised immediately prior
to the happening of such event or any Record Date (as defined below) with
respect thereto. For purposes hereof, "Record Date" shall mean the date of
closing the transfer books of the Company for the determination of the
shareholders entitled to any relevant dividend, distribution, subscription
rights or other rights or for the determination of shareholders entitled to
vote on any proposed merger, dissolution, liquidation or winding up of the
Company. Any adjustment made pursuant to this subsection 7.1(a) shall
become effective immediately on the effective date of such event
retroactive to the Record Date, if any, for such event.
(b) In the event the Company shall issue or sell any shares of Common
Stock for a consideration per share less than the Warrant Price in effect
immediately prior to such issue or sale, then the Warrant Price in effect
immediately prior to such issue or sale,
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shall be reduced to such lesser price calculated to the nearest cent) as
shall be determined prior thereto by a fraction, the numerator of which
shall be the sum of (i) the number of shares of Common Stock outstanding
immediately prior to the issuance or sale of such additional shares and
(ii) the number of shares of Common Stock which the aggregate consideration
received for the issuance or sale of such additional shares would purchase
at the Warrant Price then in effect, and the denominator of which shall be
the number of shares of Common Stock outstanding immediately after the
issuance or sale of such additional shares.
(c) For the purpose of subsection 7.1(b), the following subparagraphs
(i) to (iii), inclusive, shall be applicable:
(i) If at any time the Company shall issue or sell any rights to
subscribe for, or any rights or options to purchase, Common Stock or
any stock or other securities convertible into or exchangeable for
Common Stock (such convertible or exchangeable stock or securities
being hereinafter called "Convertible Securities"), whether or not
such rights or options or the right to convert or exchange any such
Convertible Securities shall be immediately exercisable, and the price
per share for which Common Stock shall be issuable upon the exercise
of such rights or options or upon conversion or exchange of such
Convertible Securities (determined by dividing (1) the total amount,
if any, received or receivable by the Company as consideration for the
granting of such rights or options, plus the minimum aggregate amount
of additional consideration payable to the Company upon the exercise
of such rights or options, plus, in the case of any such rights or
options which shall relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion
or exchange thereof, by (2) the total number of shares of Common Stock
issuable upon the exercise of such rights or options or upon the
conversion or exchange of all such Convertible Securities issuable
upon the exercise of such rights or options) shall be less than the
Warrant Price in effect immediately prior to the time of the issue or
sale of such rights or options, then the total number of shares of
Common Stock issuable upon the exercise of such rights or options or
upon conversion or exchange of the total amount of such Convertible
Securities issuable upon the exercise of such rights or options shall
(as of the date of granting of such rights or options) be deemed to be
outstanding and to have been issued for such price per share, and
except as provided in Section 7.1(i) below, no further adjustments of
the Warrant Price shall be made upon the actual issue of such Common
Stock or of such Convertible Securities, upon the exercise of such
rights or options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
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(ii) If at any time the Company shall issue or sell any
Convertible Securities, whether or not the rights to exchange or
convert thereunder shall be immediately exercisable, and the price per
share for which Common Stock shall be issuable upon such conversion or
exchange (determined by dividing (1) the total amount received or
receivable by the Company as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (2) the total number of shares of
Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Warrant Price in effect
immediately prior to the time of such issue or sale, then the total
number of shares of Common Stock issuable upon conversion or exchange
of all such Convertible Securities shall (as of the date of the issue
or sale of such Convertible Securities) be deemed to be outstanding
and to have been issued for such price per share, and, except as
provided in Section 7.1(i) below, no further adjustments of the
Warrant Price shall be made upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities. In
addition, if any issue or sale of such Convertible Securities shall be
made upon exercise of any rights to subscribe for or to purchase or
any option to purchase any such Convertible Securities for which
adjustments of the Warrant Price shall have been or shall be made
pursuant to other provisions of this subsection 7.1(c), no further
adjustment of the Warrant Price shall be made by reason of such issue
or sale.
(iii) If at any time the Company shall set a Record Date for the
purpose of entitling holders of Common Stock (1) to receive a dividend
or other distribution payable in Common Stock or in Convertible
Securities, or (2) to subscribe for or purchase Common Stock or
Convertible Securities, then such Record Date shall be deemed to be
the date of the issue or sale of the shares of Common Stock deemed to
have been issued or sold upon the declaration of such dividend or the
making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
(d) In case the Company shall distribute to all or substantially all
holders of its Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions out of earnings) or rights,
options, warrants or convertible securities containing the right to
subscribe for or purchase shares of Common Stock (excluding those referred
to in subsection 7.1(b) above and rights in connection with a shareholder
rights plan), then in each case the number of Shares thereafter purchasable
upon the exercise of the Warrants shall be determined by multiplying the
number of Shares theretofore purchasable upon exercise of the Warrants by a
fraction, of which the numerator shall be the then effective Warrant Price
as of the date of such distribution
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calculated pursuant to this Section 7, and of which the denominator shall
be such then effective Warrant Price on such date minus the then Fair Value
(determined as provided below) of the portion of the assets or evidences of
indebtedness so distributed or of such subscription rights, options,
warrants or convertible securities applicable to one share. Such adjustment
shall be made whenever any such distribution is made and shall become
effective on the date of distribution retroactive to the Record Date for
the determination of shareholders entitled to receive such distribution.
For all purposes of this Agreement, "Fair Value" shall be determined
in good faith by the Board, such determination to be conclusive.
(e) No adjustment in the number of Shares purchasable pursuant to the
Warrants shall be required unless such adjustment would require an increase
or decrease of at least one percent in the number of Shares then
purchasable upon the exercise of the Warrants; provided that any
adjustments which by reason of this subsection 7.1(e) are not required to
be made immediately shall be carried forward and taken into account in any
subsequent adjustment.
(f) Whenever the number of Shares purchasable upon the exercise of a
Warrant is adjusted, as herein provided, the Warrant Price payable upon
exercise of such Warrant shall be adjusted by multiplying such Warrant
Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Shares purchasable upon the exercise of
the Warrant immediately prior to such adjustment, and of which the
denominator shall be the number of Shares so purchasable upon the exercise
of the Warrant immediately thereafter. In addition, whenever the Warrant
Price shall be adjusted, the number of Shares purchasable upon exercise
hereof simultaneously shall be adjusted by multiplying the number of Shares
issuable immediately prior to such adjustment by the Warrant Price in
effect immediately prior to such adjustment and dividing the product so
obtained by the Warrant Price, as adjusted.
(g) Whenever the number of Shares purchasable upon the exercise of
Warrants, and/or the Warrant Price, are adjusted as herein provided, the
Company shall cause to be promptly mailed to the Warrantholders by first
class mail, postage prepaid, notice of such adjustment and a statement of
the chief accounting officer of the Company setting forth the number of
Shares purchasable upon the exercise of the Warrants and the Warrant Price
after such adjustment, a brief statement of the facts requiring such
adjustment, and the computation by which such adjustment was made.
(h) For the purpose of this subsection 7.1, the term Common Stock
shall mean (i) the class of Common Stock designated as the Common Stock of
the Company at the date of this Agreement, or (ii) any other class of
shares resulting from successive changes
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or reclassification of the Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par
value. In the event that at any time, as a result of an adjustment made
pursuant to this Section 7, a Warrantholder shall become entitled to
purchase any securities of the Company other than Common Stock, (i) if the
Warrantholders' right to purchase is on any other basis than that available
to all holders of the Common Stock, the Board shall determine the Fair
Value of such other securities and (ii) thereafter the number of such other
securities so purchasable upon exercise of the Warrants shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Common Stock contained
in this Section 7.
(i) Upon the expiration of any rights, options, warrants or conversion
privileges, if such shall not have been exercised, the number of Shares
purchasable upon exercise of the Warrants, to the extent the Warrants have
not then been exercised, shall, upon such expiration, be readjusted and
shall thereafter be such as they would have been had they been originally
adjusted (or had the original adjustment not been required, as the case may
be) on the basis of (A) the fact that the only shares of Common Stock so
issued were the shares of Common Stock, if any, actually issued or sold
upon the exercise of such rights, options, warrants or conversion
privileges, and (B) the fact that such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon
such exercise plus the consideration, if any, actually received by the
Company for the issuance, sale or grant of all such rights, options,
warrants or conversion privileges whether or not exercised; provided,
however, that no such readjustment shall have the effect of decreasing the
number of Shares purchasable upon exercise of the Warrants by an amount in
excess of the amount of the adjustment initially made in respect of the
issuance, sale or grant of such rights, options, warrants or conversion
privileges.
7.2. No Adjustment for Dividends. Except as provided in subsection 7.1, no
adjustment to the Warrants or any provision or condition thereof in respect of
any dividends or distributions out of earnings of the Company shall be made
during the term of the Warrants or upon the exercise of Warrants.
7.3 No Adjustment in Certain Cases. No adjustment shall be made pursuant to
Section 7 hereof in connection with the grant or exercise of options to purchase
Common Stock under any of the Company's employee benefit plans existing as of
the date hereof or of the exercise of any outstanding warrants.
7.4. Preservation of Purchase Rights upon Reclassification, Consolidation,
etc. In case of any consolidation of the Company with or merger of the Company
into another entity or in case of any sale or conveyance to another entity of
the property, assets or business of the Company as an entirety or substantially
as an entirety, the Company or such successor or
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purchasing entity, as the case may be, shall execute with the Warrantholders an
agreement that the Warrantholders shall have the right thereafter, upon exercise
of the Warrants and payment of the Warrant Price in effect immediately prior to
such consolidation, merger or sale, to purchase the kind and amount of shares
and other securities and property which it would have been entitled to receive
after the happening of such consolidation, merger, sale or conveyance had the
Warrants been exercised immediately prior thereto. In the event of a merger
described in Section 368(a)(2)(E) of the Internal Revenue Code of 1986 (or any
successor provision), in which the Company is the surviving corporation, the
right to purchase Shares under the Warrants shall terminate on the date of such
merger and thereupon the Warrants shall become null and void, but only if the
controlling corporation (after such event) shall agree to substitute for the
Warrants its warrants entitling the holder thereof to purchase the kind and
amount of shares and other securities and property which it would have been
entitled to receive had the Warrants been exercised immediately prior to such
merger. Any such agreements referred to in this subsection 7.4 shall provide for
adjustments, which shall be as nearly equivalent as may be practicable to the
adjustments provided for in Section 7 hereof, and shall contain substantially
the same terms, conditions and provisions as are contained herein immediately
prior to such event. The provisions of this subsection 7.4 shall similarly apply
to successive consolidations, mergers, sales or conveyances.
7.5. Nominal Value of Common Stock. Before taking any action which would
cause an adjustment effectively reducing the portion of the Warrant Price
allocable to each share of Common Stock below the then nominal value per share
of Common Stock issuable upon exercise of the Warrants, the Company will take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully-paid and
nonassessable Shares upon exercise of the Warrants.
7.6. Independent Public Accountants. The Company may retain a firm of
independent public accountants in the United States (which may be any such firm
regularly employed by the Company) to make any computation required under this
Section 7, and a certificate signed by such firm shall be evidence of the
correctness of any computation made under this Section 7.
7.7. Statement on Warrant Certificates. Irrespective of any adjustments in
the number of securities issuable upon exercise of the Warrants, Warrant
certificates theretofore or thereafter issued may continue to express the same
number of securities as are stated in the similar Warrant certificates initially
issuable pursuant to this Agreement. However, the Company may, at any time in
its reasonable discretion, make any change in the form of the Warrant
certificate that it may deem appropriate and that does not affect the substance
thereof; and any Warrant certificate hereafter issued, whether upon registration
of transfer of, or in exchange or substitution for, an outstanding Warrant
certificate, may be in the form so changed.
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Section 8. Fractional Interests. The Company shall not be required to issue
fractional Shares upon the exercise of any Warrant. If any fraction of a Share
would, except for the provisions of this Section 8 be issuable on the exercise
of any Warrant (or specified portion thereof), the Company shall pay an amount
in cash equal to the Market Price (of the Common Stock for the 20 consecutive
trading days immediately preceding the date the certificates evidencing the
Warrants to be exercised are received by the Company at its principal office)
multiplied by such fraction.
Section 9. No Rights as Shareholder; Notices to Warrantholders. Nothing
contained in this Agreement or in the Warrants shall be construed as conferring
upon the Warrantholder or any transferee of any rights as a shareholder of the
Company, including (without limitation) the right to vote, receive dividends,
consent or receive notices as a shareholder in respect of any meeting of
shareholders for the election of directors of the Company or any other matter.
If, however, at any time prior to the expiration of the Warrants and prior to
their exercise in full, any one or more of the following events shall occur:
(a) any action which would require an adjustment pursuant to Section
7.1 or 7.4; or
(b) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger or sale of its property,
assets and business as an entirety or substantially as an entirety) shall
be proposed;
then the Company shall give notice in writing of such event to each of the
Warrantholders, as provided in Section 12 hereof, at least 20 days prior to the
date fixed as the Record Date. Such notice shall specify such Record Date.
Failure to mail or receive such notice or any defect therein shall not affect
the validity of any action taken with respect thereto.
Section 10. Restrictions on Transfer. The Warrantholder agrees and
undertakes that if the Warrantholder proposes to sell or otherwise transfer any
Warrants or Shares issuable upon exercise thereof, and if such Shares are not
then registered for resale pursuant to an effective registration statement under
the Securities Act, the Warrantholder proposing to make such transfer shall give
written notice to the Company describing briefly the manner in which any such
proposed transfer is to be made and no such transfer shall be made unless the
Company shall have received an opinion of counsel for the Warrantholder
reasonably acceptable to the Company, that registration under the Securities Act
is not required with respect to such transfer.
Section 11. Registration Rights.
11.1 Registration Statement. The Company shall:
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(a) promptly, prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Registration
Statement") covering the resale of the Shares issuable upon exercise of the
Warrants by the Warrantholder from time to time on the Nasdaq OTC Bulletin
Board, or on such securities market or system on which the Common Stock
shall then be publicly traded, or in privately negotiated transactions;
(b) use its best efforts, subject to receipt of necessary information
from the Warrantholder, to cause the Registration Statement to become
effective as soon as possible thereafter;
(c) prepare and file with the Commission such supplements and
amendments to the Registration Statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions of
the Securities Act until the later of such time as all of the Shares have
been sold pursuant thereto or, by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect, such Shares are no
longer required to be registered for the unrestricted sale thereof by the
Warrantholder;
(d) furnish to the Warrantholder such number of copies of prospectuses
and preliminary prospectuses in conformity with the requirements of the
Securities Act and such other documents as the Warrantholder may reasonably
request, in order to facilitate the public sale or other disposition of all
or any of the Shares held by the Warrantholder, provided, however, that the
obligation of the Company to deliver copies of prospectuses or preliminary
prospectuses to the Warrantholder shall be subject to the receipt by the
Company of reasonable assurances from the Warrantholder that the
Warrantholder will comply with the applicable provisions of the Securities
Act and of such other securities or blue sky laws as may be applicable in
connection with any use of such prospectuses or preliminary prospectuses;
(e) file documents required of the Company for normal blue sky
clearance in all states, provided, however, that the Company shall not be
required to qualify to do business or consent to service of process in any
jurisdiction in which it is not now so qualified or has not so consented;
(f) bear all expenses in connection with the procedures in paragraphs
(a) through (e) of this Section 11.1, other than brokerage commissions or
placement agent fees and fees and expenses, if any, of counsel or other
advisers to the Warrantholder with respect to the registration and resale
of the Shares; and
(g) use its best efforts to have the Registration Statement (or any
supplement or amendment to the Registration Statement, if applicable)
declared effective by the
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Commission as soon as practicable after the filing thereof, but in no event
later than March 30 1998.
11.2 Limitations on Transfer. The Warrantholder agrees that it will not
effect any disposition of the Shares that would constitute a sale within the
meaning of the Securities Act except as contemplated in the Registration
Statements referred to in Section 11.1 or pursuant to an available exemption
from registration under the Securities Act and applicable state securities laws,
and further that as a condition to inclusion of the Shares in the Registration
Statement the Warrantholder agrees to provide to the Company such information as
it may reasonably request in order to include such Shares in such Registration
Statement.
11.3 Prospectus Delivery Requirements. The Warrantholder agrees not to make
any sale of the Shares, pursuant to the Registration Statement referred to in
Section 11.1 without effectively causing the prospectus delivery requirements
under the Securities Act to be satisfied. The Warrantholder acknowledges that
there may occasionally be times when the Company must suspend the use of the
prospectus forming a part of the Registration Statement until such time as an
amendment to such Registration Statement has been filed by the Company and
declared effective by the Commission or until the Company has amended or
supplemented such prospectus. In the event that the Registration Statement has
been suspended, the Company shall provide written notice of such suspension to
the selling shareholders listed in the Registration Statement. In the event that
such Registration Statement is no longer subject to such suspension, the Company
shall provide written notice to such selling Shareholders that such Selling
Shareholder may thereafter effect sales pursuant to said Registration Statement.
11.4 Indemnification and Contribution.
(a) For the purpose of this Section 11.4:
(i) the term "Selling Shareholder" shall mean any person or entity
selling Common Stock pursuant to the Registration Statement, and any
affiliate thereof;
(ii) the term "Registration Statement" shall include any preliminary
prospectus, final prospectus, exhibit, supplement or amendment
included in or relating to the Registration Statement; and
(iii) the term "untrue statement" shall mean any untrue statement or
alleged untrue statement of a material fact in the Registration
Statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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(b) The Company agrees to indemnify and hold harmless each Selling
Shareholder from and against any losses, claims, damages or liabilities to
which such Selling Shareholder may become subject (under the Securities Act
or otherwise) insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of, or are based upon,
any untrue statement, or arise out of any failure by the Company to fulfill
any undertaking included herein or in the Registration Statement, and the
Company promptly will reimburse such Selling Shareholder for any legal or
other expenses reasonably incurred in investigating, defending or preparing
to defend any such action, proceeding or claim; provided, however, that the
Company shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of, or is based upon, an untrue
statement made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Selling Shareholder
specifically for use in preparation of the Registration Statement, or the
failure of such Selling Shareholder to comply with the covenants and
agreements contained herein; provided further, that the indemnification
contained in this Section 11.4 with respect to any prospectus after it has
been amended or supplemented, shall not inure to the benefit of any Selling
Shareholder (or any person controlling such Selling Shareholder) from whom
the person asserting such loss, claim, damage, or liability shall have
purchased Common Stock, that are the subject thereof if, after copies
thereof have been delivered by the Company to such Selling Shareholder,
such Selling Shareholder shall have failed to send or give a copy of the
prospectus as then amended or supplemented, as the case may be, to such
person at or prior to the confirmation of such sale of such Common Stock,
to such person, and, if such loss, claim, damage or liability would not
have arisen but for the failure of such Selling Shareholder to deliver the
same.
(c) The Warrantholder agrees to indemnify and hold harmless the
Company (and each other person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, each officer of the Company
who signs the Registration Statement and each director of the Company) from
and against any losses, claims, damages or liabilities to which the Company
(or any such officer, director or controlling person) may become subject
(under the Securities Act or otherwise), insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise
out of, or are based upon, any failure of the Warrantholder to comply with
its covenants and agreements contained herein, or any untrue statement if
such untrue statement was made in reliance upon and in conformity with
written information furnished by or on behalf of the Warrantholder
specifically for use in preparation of the Registration Statement, and the
Warrantholder promptly will reimburse the Company (or such officer,
director or controlling person), as the case may be, for any legal or other
expenses reasonably incurred in investigating, defending or preparing to
defend any such action, proceeding or claim.
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(d) Promptly after receipt by any indemnified person of a notice of a
claim or the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to this Section 11.4, such
indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, and, subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person and such indemnifying person shall have been notified
thereof, such indemnifying person shall be entitled to participate therein,
and, to the extent it shall wish, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified person. After notice
from the indemnifying person to such indemnified person of its election to
assume the defense thereof, such indemnifying person shall not be liable to
such indemnified person for any legal expenses subsequently incurred by
such indemnified person in connection with the defense thereof. In the
event that the indemnifying party shall have assume the defense of such
action, such indemnifying party shall not enter into any compromise or
settlement without the indemnified party's prior written consent, which
consent shall not be unreasonably withheld, delayed or denied.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section
11.4 is due in accordance with its terms but for any reason is held to be
unavailable or insufficient to hold harmless an indemnified party, the
Company on the one hand and the Warrantholder on the other hand shall, in
lieu of indemnifying such indemnified party, contribute to the aggregate
losses, claims, damages or liabilities referred to in this Section 11.4
(including costs of any investigation and legal and other expenses
reasonably incurred in connection therewith, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted), in
such proportions as is appropriate to reflect the relative benefits
received by the Company and the Warrantholder from any offering of Common
Stock and the relative fault of the Company and the Warrantholder in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company and the
Warrantholder shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
omission related to information supplied by the Company (including for this
purpose information supplied by any officer, director, employee or agent of
the Company) or to written information furnished to the Company by or on
behalf of the Warrantholder specifically for use in the preparation of the
Registration Statement or any amendment thereof or supplement thereto, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
Notwithstanding the provisions of this Section 11.4 in no case shall the
Warrantholder be liable or responsible for any amount in excess of the
proceeds received by the Warrantholder from the sale of the Registerable
Shares included in the Registration Statement, provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act)
15
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 11.4, each
person, if any, who controls the Warrantholder within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act") shall have the same
rights to contribution as the Warrantholder, and each person, if any, who
controls the Company within the meaning of the Section 15 of the Securities
Act or Section 20(a) of the Exchange Act, each director of the Company and
each officer of the Company who shall have signed the Registration
Statement shall have the same rights to contribution as the Company,
subject to the immediately preceding sentence of this Section 11.4. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party
or parties under this Section 11.4, notify such party or parties from whom
contribution may be sought, and the omission so to notify such party or
parties from whom contribution may be sought shall relieve the party or
parties from whom contribution may be sought (if such party was unaware of
such action, suit, or proceeding and was materially prejudiced by such
omission) from any liability under this Section 11.4, but not from any
other obligation it or they may have hereunder or other than under this
Section 11.4. No party shall be liable for contribution with respect to the
settlement of any action, suit, proceeding or claim effected without its
written consent. The obligations of the Warrantholder to contribute
pursuant to this Section 11.4 are several in proportion to its respective
number of Registerable Shares included in the Registration Statement and
not joint.
11.5 Elimination of Transfer Restrictions. The limitations imposed by
Section 11.2 upon the transferability of the Shares shall cease and terminate as
to any particular Shares when such Shares shall have been effectively registered
under the Securities Act and sold or otherwise disposed of in accordance with
the intended method of disposition set forth in the Registration Statement or at
such time as an opinion of counsel of the Warrantholder satisfactory to the
Company shall have been rendered to the effect that such restrictions are not
necessary in order to comply with the Securities Act.
11.6 Furnishing of Information. The Company shall:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 promulgated under the Securities Act
("Rule 144");
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act; and
(c) furnish to the Warrantholder, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting
requirements of the Securities Act
16
and the Exchange Act, (ii) a copy of the most recent annual or periodic
report of the Company and such other reports and documents so filed by the
Company and (iii) such other information as may be reasonably requested to
permit the Warrantholder to sell such securities pursuant to Rule 144
without registration.
Section 12. Notices. Any notice pursuant to this Agreement shall be in
writing and shall be deemed to have been duly given (i) if given by facsimile
transmission on the business day on which such transmission is sent and
confirmed, (ii) if given by air courier, two business days following the date it
was sent or (iii) if mailed by certified mail, return receipt requested, ten
business days following the date it was mailed, to the following addresses
(unless another address is herein specified):
If to the Warrantholder:
To the address of the Warrantholder as shown on the books of the Company.
If to the Company, addressed to:
Casdim International Systems Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile#: (▇▇▇) ▇▇▇-▇▇▇▇
Each party may from time to time change the address or fax number to which
notices to it are to be delivered or mailed hereunder by notice in accordance
herewith to the other party.
Section 13. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company and the Warrantholder shall bind and inure
to the benefit of their respective successors and assigns.
Section 14. Applicable Law. This Agreement shall be deemed to be a contract
made under the laws of the state of New York and for all purposes shall be
construed in accordance with the internal laws of said sate (without reference
to its rules as to conflicts of laws).
Section 15. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Warrantholder any legal or equitable right, remedy or claim under this
Agreement. This Agreement shall be for the sole and exclusive benefit of the
Company and the Warrantholder.
17
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the date and year first above written.
CASDIM INTERNATIONAL SYSTEMS INC.
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
[FORM OF WARRANT CERTIFICATE]
EXHIBIT 1
"THE WARRANTS REPRESENTED BY THIS CERTIFICATE, AND THE COMMON
STOCK ISSUABLE UPON EXERCISE OF SUCH WARRANTS, HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 OR
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH
WARRANTS MAY NOT BE SOLD, ASSIGNED, EXCHANGED OR OTHERWISE
TRANSFERRED IN ANY MANNER AND SUCH COMMON STOCK MAY NOT BE
OFFERED FOR SALE, SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
Warrant Certificate No. 01
CASDIM INTERNATIONAL SYSTEMS INC.
(ORGANIZED UNDER THE LAWS
OF THE STATE OF DELAWARE)
WARRANTS TO PURCHASE COMMON STOCK
This certifies that, for value received, ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the
"Warrantholder") is the registered owner of 50,000 warrants (the "Warrants") to
purchase from Casdim International Systems Inc. (the "Company"), at any time
prior to 5:00 p.m., Eastern Time, on December 23, 1999 (the "Termination Date"),
one share of common stock of the Company, par value $0.01 per share (the "Common
Stock") at an initial purchase price of U.S. $0.50 per share of Common Stock
(the "Warrant Price"). The Warrants are subject to, and each Warrantholder, by
acceptance of this certificate, consents to, all the terms and provisions of,
the Warrant Agreement dated as of December 23, 1997, by and between the Company
and the Warrantholder, pursuant to which the Warrants were issued (the "Warrant
Agreement"). Any capitalized terms used herein and not defined herein shall have
the
meanings assigned to such terms in the Warrant Agreement. The Termination Date
may be extended for a further period as provided in Section 3 of the Warrant
Agreement.
The Warrants evidenced hereby may be exercised in whole or in part by
presentation of this Warrant Certificate with the Purchase Form herein duly
executed, and simultaneous payment of the Warrant Price for each Warrant
exercised, at the principal office of the Company. Payment of such price shall
be made at the option of each Warrantholder in cash or by certified or cashier's
check.
Upon any partial exercise of the Warrants evidenced hereby, there shall be
signed and issued to the Warrantholder effecting such partial exercise a new
Warrant Certificate in respect of the Common Stock as to which the Warrants
evidenced hereby shall not have been exercised. These Warrants may be exchanged
at the office of the Company by surrender of this Warrant Certificate properly
endorsed for one or more new Warrants of the same aggregate number of shares of
Common Stock as here evidenced by the Warrant or Warrants exchanged. No
fractional shares of Common Stock will be issued upon the exercise of rights to
purchase hereunder, but the Company shall pay the cash value of any fraction
upon the exercise of one or more Warrants. These Warrants are transferable at
the office of the Company in the manner and subject to the limitations set forth
in the Warrant Agreement.
This Warrant Certificate does not entitle any Warrantholder to any of the
rights of a shareholder of the Company.
[This space intentionally left blank.]
2
CASDIM INTERNATIONAL SYSTEMS INC.
By:
------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
ATTEST:
By: ____________________________
Dated: December 23, 1997
3
PURCHASE FORM
Casdim International Systems Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Pursuant to Section 3 of the Warrant Agreement, the undersigned hereby
irrevocably elects to exercise the right of purchase represented by this Warrant
Certificate for, and to purchase thereunder, __________ shares of Common Stock
provided for therein, and requests that certificates for such Common Stock be
issued in the name of:
-----------------------------------
(Please Print or Type Name(s), Address and Taxpayer Identification Number(s))
-----------------------------------
-----------------------------------
-----------------------------------
If this Warrant Certificate is hereby being exercised with respect to fewer than
all the shares of Common Stock specified herein, please issue a new Warrant
Certificate for the unexercised balance of the Warrants, registered in the name
of the undersigned Warrantholder or his assignee as below indicated and
delivered to the address stated below.
Dated: _______________________
Name of Warrantholder(s)
or Assignee(s) (Please Print): _____________________________
-----------------------------
Address (Please Print): ______________________________________
--------------------------------------------
Signature(s): ____________________________________________
--------------------------------------------
Note: The above signature(s) must correspond exactly with the
name(s) as written upon the face of this Warrant Certificate, without
alteration or enlargement or any change whatever, unless these Warrants
have been assigned.
1
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
-----------------------------------
-----------------------------------
-----------------------------------
(Name(s) and Address(es) of Assignee(s) Must be Printed or Typewritten)
the within Warrants, hereby irrevocably constituting and appointing
________________________ the undersigned's attorney-in-fact to transfer said
Warrants on the books of the Company, with full power of substitution.
Dated: __________ ___________________________________
-----------------------------------
Signature(s) of Registered Holder(s)
Note: The above signature(s) must correspond exactly with the
name(s) as written upon the face of this Warrant Certificate, without
alteration or enlargement or any change whatever.
2