EXHIBIT 10.3
VOID AFTER 5:00 P.M., EASTERN TIME,
ON APRIL 20, 2009
DISTINCTIVE DEVICES, INC.
WARRANT PURCHASE AGREEMENT
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800,000 Shares
DISTINCTIVE DEVICES, INC., a Delaware corporation (the "Company"),
hereby certifies that TWINKLE INTERNATIONAL FZE, an entity formed under the laws
of the United Arab Emirates (the "Initial Holder"), is entitled, subject to the
terms set forth below, has been granted warrants (the "Warrants") to purchase
from the Company Eight Hundred Thousand (800,000) shares (the "Shares") of fully
paid and non-assessable Common Stock at an exercise price of One Dollar ($1.00)
per Share, subject to adjustment from time to time pursuant to Section 3 hereof
(the "Exercise Price").
The term "Shares" means, unless the context otherwise requires, shares
of the Company's Common Stock, par value $.001 per share, or other securities or
property at the time deliverable upon the exercise of the Warrants.
The Warrants are being granted by the Company as additional
consideration for the purchase by the Initial Holder from the Company of an
Unsecured Promissory Note, dated April 20, 2004, (the "Note"), in the initial
principal amount of $4,000,000, pursuant to a Note Purchase Agreement, dated
April 20, 2004 between the Initial Holder and the Company.
1 Exercise.
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1.1 Timing of Exercise. The Warrants shall be exercisable in whole or
in part from time to time commencing as of April 20, 2004 (the "Commencement
Date"), and expiring at 5:00 P.M., New York time, on April 20, 2009 (the
"Expiration Date"), subject to earlier termination as provided herein, and may
not be exercised thereafter.
1.2 Manner of Exercise. The purchase rights evidenced by this Warrant
Agreement shall be exercised by the Initial Holder or any person permitted by
Section 6.1 herein (collectively, "the Holder"), by surrendering this Warrant
Agreement, with the Notice of Exercise in the form of Exhibit A hereto duly
executed by the Holder, to the Company at its principal office (or such other
office as may be designated by the Company to the Holder), accompanied by
payment (in cash, by wire transfer or by certified or official bank check or by
reduction in outstanding principal amount of the Note) of the Exercise Price.
1.3 Partial Exercise. This Warrant Agreement may be exercised for less
than the full number of shares of Common Stock at the time called for hereby.
Upon any such partial exercise, the Company at its expense will forthwith issue
to the Holder a new Warrant Agreement of like tenor calling for the number of
shares of Common Stock as to which rights have not been exercised, such Warrant
Agreement to be issued in the name of the Holder.
2. Delivery of Stock Certificates Upon Exercise. As soon as practicable
after the exercise of the Warrants, and in any event within ten (10) business
days thereafter, the Company, at its expense, will cause to be issued in the
name of and delivered to the Holder a certificate or certificates for the number
of fully paid and non-assessable shares of Common Stock to which the Holder
shall be entitled upon such exercise. Any shares of Common Stock as to which the
Warrants are exercised shall be deemed issued on and as of the date of such
exercise, and the Holder shall thereupon be deemed to be the owner of record of
such shares.
3. Anti-Dilution Adjustments.
3.1 Change in Capitalization. In case of any stock split, stock
dividend or similar transaction which increases or decreases the number of
outstanding shares of Common Stock, appropriate adjustment shall be made by the
Board of Directors of the Company to the number of Shares or the Exercise Price
per Share, or both, which may be purchased under this Warrant Agreement.
3.2 Consolidation, Merger and Sale of Assets.
(a) In case of any consolidation of the Company with or a merger of
the Company into another corporation or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, upon any such consolidation, merger, sale or
conveyance (i) the surviving entity is a publicly traded company and (ii) the
consideration to be received by the holders of the Company's Common Stock
includes publicly traded equity interests in the surviving entity or its parent
corporation, the Company agrees that a condition of such transaction will be
that the successor or purchasing corporation, as the case may be, shall assume
the obligations of the Company hereunder in writing. In the case of any such
consolidation, merger or sale or conveyance, the Holder shall have the right
until the Expiration Date upon payment of the Exercise Price in effect
immediately prior to such action, to receive the kind and amount of shares and
other securities and/or property which it would have owned or have been entitled
to receive after the happening of such consolidation, merger, sale or conveyance
had the Warrants been exercised immediately prior to such action, subject to
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 3. The provisions of this Section
3.2(a) shall similarly apply to successive consolidations, mergers, sales or
conveyances.
(b) In case of any consolidation of the Company with or a merger of
the Company into another corporation or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, upon any such consolidation, merger, sale or
conveyance (i) the surviving entity is a non-publicly traded company or (ii) the
consideration to be received by the holders of the Company's Common Stock does
not include any publicly traded equity interests in the surviving entity or its
parent corporation, the Company agrees that a condition of such transaction will
be that the Company shall mail to the Holder at the earliest applicable time
(and, in any event not less than ten (10) days before any record date for
determining the persons entitled to receive the consideration payable in such
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transaction) written notice of the transaction. Such notice shall also set forth
facts as shall indicate the effect of such action (to the extent such effect may
be known at the date of such notice) on the Exercise Price of and the kind and
amount of the shares of stock and other securities and property deliverable upon
exercise of the Warrants. Upon the closing of the transaction referenced in the
foregoing notice, this Warrant Agreement to the extent then unexercised shall
terminate.
3.3 Exchanges and Distributions With Respect to Common Stock. If the
Company shall exchange for its Common Stock or distribute with respect to its
Common Stock other securities issued by it, the Company shall give notice
thereof to the Holder, and the Holder shall have the right thereafter (until the
expiration of this Warrant) to exercise the Warrants for the kind and amount of
shares of stock and other securities retained or received by a holder of the
number of shares of Common Stock of the Company into which the Warrants might
have been exercised immediately prior to such exchange or distribution, subject
to adjustment as provided hereinabove.
3.4 Officer's Certificate. Whenever the Exercise Price per Share or the
number of shares of Common Stock subject to this Warrant Agreement is adjusted,
the Company shall promptly mail to the Holder of this Warrant Agreement a notice
of adjustment, which notice shall include a brief statement of the facts
requiring the adjustment and the manner of computing it and shall be certified
by the chief financial officer of the Company. The determination of the
adjustment shall be made by the Company in its sole discretion and shall be
final and binding upon the Holder.
4. Shares to Be Fully Paid; Reservation of Capital Stock Issuable Upon
Exercise of Warrants. The Company covenants and agrees that any shares issued
hereunder will, upon issuance, be fully paid and non-assessable and free from
all taxes, liens and charges with respect to the issuance thereof. The Company
shall at all times reserve and keep available out of its authorized but unissued
capital stock, solely for the issuance and delivery upon the exercise of the
Warrant Agreement, such number of its duly authorized shares of Common Stock as
from time to time shall be issuable upon the exercise of the Warrants.
5. Fractional Shares. The Company shall not issue fractions of shares
of Common Stock upon exercise of this Warrant Agreement or scrip in lieu
thereof. If any fraction of a share of Common Stock would, except for the
provisions of this Section 5, be issuable upon exercise of the Warrants, then
the number of shares of Common Stock to be issued shall be rounded up or down to
the nearest whole share.
6. Transfer Restrictions
6.1 Transfer. A Holder, including the Initial Holder or any subsequent
Holder, may transfer this Warrant Agreement only to (i) any other Holder of
Warrants that were part of the Initial Warrants, (ii) any entity controlled by,
controlling or under common control of the Holder, or for which the Holder is
acting as the representative, (iii) to one or more shareholders, directors,
officers or employees of the Holder or (iv) any member of the immediate family
(which shall be deemed to include a spouse, parent, or child) of an individual
Holder or trust for the benefit of any such individual. Prior to any such
transfer, the Holder must deliver the Assignment Form in the form of Exhibit B
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hereto and provide information to the Company, in writing, regarding the
proposed transferee sufficient for the Company to determine the eligibility of
such transferee under this Section 6 and for such transferee to be entitled to
the benefits of Section 7 in accordance with Section 7.11 herein.
6.2 Securities Laws. The Holder of this Warrant Agreement, by accepting
delivery of the same, hereby:
(a) acknowledges that any shares of Common Stock issued pursuant to
the exercise of the Warrants may not be registered under the Securities Act of
1933, as amended (the "Securities Act"), at the time issued;
(b) agrees that, upon the exercise of the Warrants, if the Shares
subject to the exercise are not then covered by an effective Registration
Statement filed under the Securities Act, it shall make the customary
representations and warranties as may be requested by counsel to the Company in
order for the Company to properly rely upon Section 4(2) of the Securities Act
regarding exemption from registration thereunder, and, in connection with such
exemption, that any certificates representing shares of Common Stock issued upon
exercise of the Warrants would reflect an appropriate legend regarding
restrictions upon transferability; and
(c) agrees to indemnify the Company, and hold it harmless from and
against, any and all losses, expenses (including attorneys' fee), costs and
damages arising from or relating to any violation of applicable state securities
or "blue sky" laws in connection with the issuance, sale, delivery or exercise
of the Warrants and the issuance, sale and delivery of shares of Common Stock
upon any exercise of the Warrants.
7. Registration Under the Securities Act of 1933.
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7.1 Piggyback Registration. If at any time and from time to time after
the Commencement Date and prior to the Expiration Date, the Company proposes to
register shares of its Common Stock under the Securities Act on any form for
registration thereunder (the "Registration Statement") for the account of
stockholders (other than one relating to (i) a registration of shares of Common
Stock underlying a stock option, restricted stock, stock purchase or
compensation or incentive plan or of stock issued or issuable pursuant to any
such plan, or a dividend investment plan; (ii) a registration of securities
proposed to be issued in exchange for securities or assets of, or in connection
with a merger or consolidation with, another corporation or other entity; or
(iii) a registration of securities proposed to be issued in exchange for other
securities of the Company) in a manner which would permit registration of the
Shares for sale to the public under the Securities Act (a "Piggyback
Registration"), it will at such time give prompt written notice to the Holder of
its intention to do so and of the Holder's rights under this Section 7.1 (the
"Section 7.1 Notice"). The rights are referred to in this Section 7.1 are
"Piggyback Registration Rights". Upon the written request of the Holder to the
Company, to be received by the Company within ten (10) days after the giving of
any Section 7.1 Notice, setting forth the number of Shares intended to be
disposed of by the Holder and the intended method of disposition thereof, the
Company will include in the Registration Statement the Shares which the Holder
has requested to register, to the extent provided in this Section 7. The Company
shall be obligated to file and cause the effectiveness of only two (2) Piggyback
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Registrations. (The Shares set forth in the Section 7.1 Notice or the Section
7.2 Demand being for purposes of this Section 7, the "Registrable Shares".)
7.2 Demand Registration.
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(a) If at any time and from time to time after the Commencement
Date and prior to the Expiration Date, the Holder desires to effect the
registration under the Securities Act of its Shares, the Holder may make a
written request that the Company effect such registration (a "Demand
Registration"); provided that such registration covers at least 51% of the
Shares initially issuable upon exercise in full of the Warrants issued with the
Note, (the "Section 7.2 Demand"). The Section 7.2 Demand shall specify the
number of Registrable Shares proposed to be sold and will also specify the
intended method of disposition thereof. The Company will use its commercially
reasonable efforts to file, within sixty (60) days of its receipt of such
Demand, the registration under the Securities Act of the Registrable Shares
which the Company has been so requested to register by the Holder.
(b) Notwithstanding Section 7.2(a), the Company shall not be
obligated to file a Registration Statement relating to a registration request
pursuant to this Section 7.2 at any time during the period commencing upon the
filing of another Registration Statement filed by the Company (other than a
Registration Statement on Form S-4 or Form S-8 or any successor or similar form)
and ending upon the earlier of the withdrawal of such Registration Statement or
six months after the effective date thereof. The Company shall be obligated to
file and cause the effectiveness of only one (1) Demand Registration.
7.3 Suspension in Filing.
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(a) If the Company determines, in its good faith reasonable
judgment, that it Company should not file any Demand Registration otherwise
required to be filed pursuant to Section 7.2(a) or should withdraw any
previously filed Registration Statement filed pursuant to Section 7.1 or 7.2
because the Company is engaged in or in good faith plans to engage in any
financing, acquisition or other material transaction which would be adversely
affected by the filing or maintenance of a Registration Statement otherwise
required to be filed or maintained pursuant to this Section 7, or that the
Company is in the possession of material nonpublic information required to be
disclosed in such Registration Statement or an amendment or supplement thereto,
the disclosure of which in such Registration Statement would be materially
disadvantageous to the Company (a "Disadvantageous Condition"), the Company
shall be entitled to postpone for the shortest reasonable period of time (but
not exceeding 180 days from the date of the determination), the filing of such
Registration Statement or, if such Registration Statement has already been
filed, may withdraw such Registration Statement and shall promptly give the
Holder written notice of such determination, containing a general statement of
the reasons for such postponement and an approximation of the anticipated delay.
If the Company shall so postpone the filing or effect the withdrawal of the
Registration Statement, the Holder shall have the right to withdraw the Section
7.2 Demand within thirty (30) days after receipt of the notice of postponement.
The Company's right to delay a request for registration or to withdraw a
Registration Statement pursuant to this Section 7.3 may not be exercised more
than once in any twelve (12) month period.
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(b) If the Company determines to take any action pursuant to
Sub-section (a) above after a Registration Statement is filed, upon receipt of
any notice of suspension, the Holder shall forthwith discontinue use of the
prospectus contained in such Registration Statement. In addition, if so directed
by the Company, the Holder shall deliver to the Company all copies of the
prospectus then covering such Registrable Shares current at the time of receipt
of such notice. If no Registration Statement has yet been filed, at the request
of the Company the Holder shall return all drafts of the prospectus covering
such Registrable Shares.
(c) If any Disadvantageous Condition shall cease to exist, the
Company shall promptly notify the Holder to such effect. If any Demand
Registration shall have been withdrawn, the Company shall, if requested by the
Holder, at such time as it is possible or, if earlier, at the end of the 180-day
period following such withdrawal, file a new Registration Statement covering the
Registrable Shares that were covered by such withdrawn Registration Statement,
and the effectiveness of such Registration Statement shall be maintained for
such time as may be necessary so that the period of effectiveness of such new
Registration Statement, when aggregated with the period during which such
withdrawn Registration Statement was effective, if any, shall be such time as
may be otherwise required by this Agreement.
7.4 Company Covenants. Whenever required under this Section 7 to
include Registrable Shares in a Registration Statement, the Company shall, as
expeditiously as reasonably possible:
(a) Use its commercially reasonable efforts to cause such
Registration Statement to become effective and cause such Registration Statement
to remain effective until the earlier of the Holder have completed the
distribution of all its Registrable Shares described in the Registration
Statement or six (6) months from the effective date of the Registration
Statement (or such later date by reason of suspensions the effectiveness as
provided hereunder). The Company will also use its commercially reasonable
efforts to, during the period that such Registration Statement is required to be
maintained hereunder, file such post-effective amendments and supplements
thereto as may be required by the Securities Act and the rules and regulations
thereunder or otherwise to ensure that the Registration Statement does not
contain any untrue statement of material fact or omit to state a fact required
to be stated therein or necessary to make the statements contained therein, in
light of the circumstances under which they are made, not misleading; provided,
however, that if applicable rules under the Securities Act governing the
obligation to file a post-effective amendment permits, in lieu of filing a
post-effective amendment that (i) includes any prospectus required by Section
10(a)(3) of the Securities Act or (ii) reflects facts or events representing a
material or fundamental change in the information set forth in the Registration
Statement, the Company may incorporate by reference information required to be
included in (i) and (ii) above to the extent such information is contained in
periodic reports filed pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") in the Registration Statement.
(b) Prepare and file with the SEC such amendments and supplements
to such Registration Statement, and the prospectus used in connection with such
Registration Statement, as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement.
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(c) Furnish to the Holder such numbers of copies of a prospectus,
including a preliminary prospectus as amended or supplemented from time to time,
in conformity with the requirements of the Securities Act, and such other
documents as it may reasonably request in order to facilitate the disposition of
Registrable Shares owned by the Holder.
(d) Use its commercially reasonable efforts to register and qualify
the securities covered by such Registration Statement under such other federal
or state securities laws of such jurisdictions as shall be reasonably requested
by the Holders; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering.
(f) Notify the Holder, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, (i) when the
Registration Statement or any post-effective amendment and supplement thereto
has become effective; (ii) of the issuance by the SEC of any stop order or the
initiation of proceedings for that purpose (in which event the Company shall
make every effort to obtain the withdrawal of any order suspending effectiveness
of the Registration Statement. at the earliest possible time or prevent the
entry thereof); of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation of any proceeding for such purpose; and (iv)
of the happening of any event as a result of which the prospectus included in
such Registration Statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing.
(g) Cause all such Registrable Securities registered hereunder to
be listed on each securities exchange or quotation service on which similar
securities issued by the Company are then listed or quoted.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
7.5 Furnish Information. It shall be a condition precedent to the
obligation of the Company to take any action pursuant to this Section 7 with
respect to the Registrable Shares that the Holder shall furnish to the Company
such information regarding the Holder, the Registrable Shares held by the
Holder, the intended method of disposition of such securities and such other
information as shall be reasonably required by the Company or any underwriter to
effect the registration of the Holder's Registrable Shares.
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7.6 Expenses of Company Registration. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Shares with respect to the registrations effected
pursuant to Section 7.1 or 7.2 for the Holder, including (without limitation)
all registration, filing, and qualification fees, printers and accounting fees
relating or apportionable thereto, but excluding underwriting discounts and
commissions relating to Registrable Shares; provided, however, that the Company
shall not bear the cost of any professional fees or costs of accounting,
financial or legal advisors to the Holder. Notwithstanding the foregoing, the
Holder shall pay all registration expenses that it is required to pay under
applicable law.
7.7 Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 7.1 or 7.2 to include any of the Holder's
Registrable Shares in such underwriting unless the Holder accepts the terms of
the underwriting as agreed upon between the Company and the underwriters
selected by it (or by other persons entitled to select the underwriters), and
then only in such quantity as the underwriters determine in their sole
discretion will not jeopardize the success of the offering by the Company, and
the Holder enters into such lock-up agreements as may be required of other
selling stockholders in such Registration Statement. If the total amount of
securities, including Registrable Shares, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders). For purposes of the preceding parenthetical
concerning apportionment, for any selling stockholder who is a holder of
Registrable Securities and is a partnership or corporation, the partners,
retired partners and stockholders of such holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "selling
stockholder", and any pro-rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder", as defined in this sentence.
7.8 Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 7.
7.9 Indemnification. In the event that any Registrable Shares are
included in a Registration Statement under this
Section 7.
(a) To the extent permitted by law, the Company will indemnify and
hold harmless the Holder, any underwriter (as defined in the Securities Act) for
the Holder and each person, if any, who controls the Holder or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
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become subject under the Securities Act, or the Exchange Act, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such Registration Statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, or any rule or
regulation promulgated under the Securities Act, or the Exchange Act, and the
Company will pay to the Holder, underwriter or controlling person, as incurred,
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 7.9(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company or the Placement Agent be liable in any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by the Holder, underwriter or controlling person.
(b) To the extent permitted by law, the Holder will indemnify and
hold harmless the Company, its directors, officers, and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act, any underwriter, any other holder selling securities in such Registration
Statement and any controlling person of any such underwriter or other holder,
against any losses, claims, damages, or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the Securities Act, or
the Exchange Act, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by the Holder
expressly for use in connection with such registration; and the Holder will pay,
as incurred, any legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this Section 7.9(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 7.9(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided, further,
that, in no event shall any indemnity under this Section 7.9(b) exceed the cash
value of the gross proceeds from the offering received by the Holder.
(c) Promptly after receipt by an indemnified party under this
Section 7.9 of notice of the commencement of any action (including any
governmental action), such indemnified party shall, if a claim in respect
thereof is to be made against any indemnifying party under this Section 7.9,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly notified, to assume the defense thereof with counsel selected by
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the indemnifying party and approved by the indemnified party (whose approval
shall not be unreasonably withheld); provided, however, that an indemnified
party (together with all other indemnified parties which may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
7.9, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 7.9.
(d) If the indemnification provided for in this Section 7.9 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the alleged
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and the Holder under this
Section 7.9 shall survive the completion of any offering of Registrable Shares
in a Registration Statement under this Section 7, and otherwise.
7.10 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holder the benefits of Rule 144 and any other rule or
regulation of the SEC that may at any time permit the Holder to sell shares of
the Company's Common Stock to the public without registration, the Company
agrees to use its best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
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(c) furnish to the Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company, and (ii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
7.11 Permitted Transferees. The rights to cause the Company to register
Registrable Shares granted to the Holder by the Company under this Section 7 may
be assigned in full by a Holder in connection with a transfer by the Holder of
its Registrable Securities if: (a) the Holder gives prior written notice to the
Company; (b) such transferee agrees to comply with and be bound by the terms and
provisions of this Agreement; (c) such transfer is otherwise in compliance with
this Agreement and (d) such transfer is otherwise effected in accordance with
applicable securities laws. Except as specifically permitted by this Section
7.11, the rights of a Holder with respect to Registrable Shares as set out
herein shall not be transferable to any other person, and any attempted transfer
shall cause all rights of the Holder therein to be forfeited.
7.12 Termination of Registration Rights. The right of the Holder to
request or demand inclusion in any registration pursuant to Section 7.1 and
Section 7.2 shall terminate if all Shares held by the Holder may immediately be
sold under Rule 144(k) after if the Warrants have then been exercised in full.
8. Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant Agreement and (in the case of loss, theft or destruction) upon
delivery of an indemnity agreement, and if requested by the Board of Directors,
a bond in an amount reasonably satisfactory to it, or (in the case mutilation)
upon surrender and cancellation hereof, the Company will issue in lieu thereof a
new Warrant Agreement of like tenor.
9. Rights as a Warrant Holder. The Holder shall not, by virtue hereof,
be entitled to any rights of a stockholder in the Company, either at law or
equity except with respect to certificates representing shares of Common Stock
issued upon exercise of the Warrants. The rights of the Holder are limited to
those expressed in this Warrant Agreement and are not enforceable against the
Company except to the extent set forth herein. Prior to due presentment for
transfer of this Warrant Agreement, the Company may deem and treat the Holder as
the absolute owner of this Warrant Agreement for purposes of any exercise hereof
and for all other purposes and such right of the Company shall not be affected
by any notice to the contrary.
10. Subdivision of Rights. This Warrant Agreement (as well as any new
warrant agreement issued pursuant to the provisions of this Section) is
exchangeable upon the surrender hereof by the Holder at the principal office of
the Company for any number of new warrants of like tenor and date representing
in the aggregate the right to subscribe for and purchase the number of shares of
Common Stock of the Company that may be subscribed for and purchased hereunder.
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11. Sending of Notices. All notices and other communications with
respect to this Warrant Agreement shall be in writing and sent by express mail
or courier service or by personal delivery, if to the Holder, to the address set
forth at the end of this Warrant, and if to the Company, to ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, or to such other address as either party
hereto may duly give to the other.
12. Headings. The headings in this Warrant Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning of the
terms hereof.
13. Change, Waiver, Discharge or Termination. This Warrant Agreement
sets forth the entire agreement between the Company and the Holder with respect
to the matters herein. Neither this Warrant Agreement nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
14. Governing Law. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without giving effect to the
principles of conflicts of law.
DISTINCTIVE DEVICES, INC.
By: ___________________________________
Dated: April 20, 2004 ▇▇▇▇▇▇ ▇▇▇▇,
Chief Executive Officer, President
and Chief Financial Officer
Agreed to:
April 20, 2004
TWINKLE INTERNATIONAL FZE
By:______________________________
Name:
Title:
Twinkle International FZE
▇-▇-▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇
Attn: ____________________
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EXHIBIT A
---------
NOTICE OF EXERCISE
------------------
(To be executed by a Holder desiring to exercise the right to purchase Shares
pursuant to Warrants.)
The undersigned Holder of Warrants hereby:
(a) Irrevocably elects to exercise the Warrant to the extent of purchasing
_______ Shares;
(b) Makes payment in full of the aggregate Exercise Price for those Shares in
the amount of $___________ by wire transfer or the delivery of certified funds
or a bank cashier's check in the amount of $___________;
(c) Requests that a certificate for such Shares be issued in the name of the
undersigned, or, if the name and address of some other person is specified
below, in the name of such other person:
___________________________________________________
___________________________________________________
___________________________________________________
(Name and address of person other than the undersigned
in whose name Shares are to be registered.)
(d) Requests, if the number of Shares purchased are not all the Shares
purchasable pursuant to the unexercised portion of the Warrants, that a new
Warrant Agreement of like tenor for the remaining Shares purchasable pursuant to
the Warrants be issued and delivered to the undersigned at the address stated
below.
_________________________________
Employer ID Number:
Dated:___________________________ By:______________________________
Name:
Title:
(This signature must conform in all respects to the name of the Holder as
specified on the face of the Warrant Agreement.)
Address:___________________________________
___________________________________________
Stock Warrant No.: ##
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EXHIBIT B
---------
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED, the undersigned,
________________________________, hereby sells, assigns and transfers unto:
Name: ________________________________________________
(Please type or print in block letters.)
Address: _____________________________________________
_______________________________________________________
the right to purchase ______________ shares (the "Shares") of Distinctive
Devices, Inc. (the "Company") pursuant to the terms and conditions of the
Warrant Agreement held by the undersigned. The undersigned hereby authorizes and
directs the Company (i) to issue and deliver to the above-named assignee at the
above address a new Warrant Agreement pursuant to which the rights to purchase
being assigned may be exercised, and (ii) if there are rights to purchase Shares
remaining pursuant to the undersigned's Warrant Agreement after the assignment
contemplated herein, to issue and deliver to the undersigned at the address
stated below a new Warrant Agreement evidencing the right to purchase the number
of Shares remaining after issuance and delivery of the Warrant Agreement to the
above-named assignee. Except for the number of Shares purchasable, the new
Warrant Agreement to be issued and delivered by the Company is to contain the
same terms and conditions as the undersigned's Warrant Agreement. This
Assignment is subject to receipt by the Company of such investment
representations by the assignee, as may be reasonably required under the
Securities Act of 1933, as amended and other provisions governing transfer set
forth in the Warrant Agreement. To complete the assignment contemplated by this
Assignment Form, the undersigned hereby irrevocably constitutes and appoints
______________________________ as the undersigned's attorney-in-fact to transfer
the Warrant Agreement and the rights thereunder on the books of the Company with
full power of substitution for these purposes.
______________________________
Dated:___________________________ By:_______________________________________
Name:
Title:
(This signature must conform in all respects to the name of the Holder as
specified on the face of the Warrant Agreement.)
Address:___________________________________
___________________________________________
Tax Identification No.:____________________
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