U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
__X__ Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 1996.
_____ Transition report under Section 13 or 15(d) of the Exchange Act for the
transition period from _____ to _____
Commission file number: 33-27742
CASDIM INTERNATIONAL SYSTEMS, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 83-0288100
(State of Incorporation) (I.R.S. Employer Identification No.)
5 Haofan Street, Kiryat-Arie
P.O. Box 3599, Petah Tikva, Israel 49130
(Address of Principal Executive Offices)
972-3-924-7910
(Issuer's Telephone Number, Including Area Code)
---------------------------------------
(Former Name, Former Address and Former
Fiscal Year, if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes _X_ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
As of March 31, 1996, the Issuer had 9,634,000 shares of Common Stock, par value
$0.00001, outstanding.
Transitional Small Business Disclosure Format (check one): Yes ___ No _X_
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CASDIM INTERNATIONAL SYSTEMS, INC.
INDEX
Page
Part I - Financial Information:
Report on Independent Cerfitied Public Accountants................3
Consolidated Balance Sheets at March 31, 1996 and 1995............4
Consolidated Statements of Income for the periods
ended March 31, 1996 and 1995............................5
Consolidated Statements of Cash Flows for the periods
ended March 31, 1996 and 1995............................6
Notes to Financial Statements..................................7-11
Management's Discussion and Analysis of Financial
Condition and Results of Operations.....................12
Part II - Other Information:
Item 5. Other Information.......................................15
Item 6. Exhibits and Reports on Form 8-K........................16
Signatures................................................................17
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HOCKER, LOVELETT, HARGENS & YENNIE, P.C.
Certified Public Accountants
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors CASDIM INTERNATIONAL SYSTEMS, INC.
Riverton, WY 82501
We have compiled the accompanying consolidated balance sheets of CASDIM
INTERNATIONAL SYSTEMS, INC. (a corporation) and its subsidiaries as of March 31,
1996 and 1995, and the related consolidated statements of income, stockholders'
equity and cash flows for the three months then ended, in accordance with
Statements on Standards for accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not epxress
an opinion or any other form of assurance on them.
The balance sheet for the year ended December 31, 1995 was audited by us and we
expressed an unqualified opinion on it in our report dated April 8, 1996, but we
have not performed any auditing procedures since that date.
/s/ Hocker, Lovelett, Hargens & Yennie, P.C.
May 14, 1996
Riverton, Wyoming
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Casdim International Systems, Inc.
Condensed Balance Sheets
March 31, 1996 and 1995
(Unaudited) (Audited)
1996 1995
ASSETS
CURRENT ASSETS
Cash $ 5,043 $ 26
Accounts receivable
Trade 363,931 155,783
Other - Note 2 981,761 1,202,505
--------- ----------
Total 1,350,735 1,358,315
PROPERTY AND EQUIPMENT - NOTE 3
Property and equipment 114,028 111,727
Less accumulated depreciation (19,707) (20,919)
---------- ----------
Net 94,321 90,808
OTHER ASSETS 437,500 467,659
--------- ----------
Patent, net - Note 4
TOTAL $1,882,556 $1,916,781
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable
Trade $ 57,663 $ 38,763
Other - Note 5 450,749 465,417
Deposit -- --
Current maturities
of debt - Note 6 596,166 674,702
---------- ----------
Total 1,104,578 1,178,882
LONG-TERM DEBT
Accrued severance pay,
net - Note 7 15,861 12,986
MINORITY INTEREST IN
CONSOLIDATED SUBSIDIARY -- 72,372
------------ ----------
TOTAL 1,120,439 1,264,240
STOCKHOLDERS' EQUITY
Common stock, $0.00001 par value,
500,000,000 shares authorized
and 9,634,000 shares issued and
outstanding 285,000 shares
held in treasury stock 945 945
Additional paid in capital 194,480 194,480
Less treasury stock (cost) (1,425) (1,425)
Retained earnings (deficit) 568,117 458,541
---------- ----------
Total 762,117 652,541
---------- ----------
TOTAL $ 1,882,556 $1,916,781
=========== ==========
See accountants' compilation report and accompanying notes to consolidated
financial statements.
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Casdim International Systems, Inc.
Consolidated Statements of Income
For the Three Months Ended March 31, 1996 and 1995
(unaudited) (unaudited)
1996 1995
SALES $ 253,007 $ 116,228
COST OF SALES 31,785 29,868
------------ ----------
GROSS PROFIT 221,222 86,360
SALES, ADMINISTRATIVE AND EXPENSES 133,989 135,629
------------ -----------
INCOME (LOSS) FROM OPERATIONS 107,233 (49,269)
OTHER INCOME (EXPENSES)
Interest expense (18,710) (20,489)
Gain (loss) foreign translation (18,134) 3,076
------------ ------------
Total (36,844) (17,413)
------------ ------------
INCOME (LOSS) FROM OPERATIONS BEFORE
TAXES 70,389 (66,682)
INCOME TAX (EXPENSES) BENEFIT (33,185) (24,117)
------------ -----------
NET INCOME (LOSS) $ 37,204 $ (42,565)
=========== ============
NET EARNINGS (LOSS) PER SHARE $ .01 $ (.03)
=========== =============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 9,634,000 1,134,00
See accountants' compilation report and accompanying notes to consolidated
financial statements.
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Casdim International Systems, Inc.
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1996 And 1995
(unaudited) (unaudited)
1996 1995
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $ 37,204 $(42,565)
Adjustments to reconcile net income
to net cash provided by operating
activities:
depreciation and amortization 28,947 15,761
Changes in operating assets and liabilities:
(Increase) Decrease In:
Accounts receivable - trade (208,148) 105,292
Accounts receivable - other 220,744 76,701
(Decrease) Increase In:
Accounts receivable - trade 18,900 11,649
Accounts receivable - other (14,668) 364,941
Deposits -- --
---------- ----------
Net cash provided by operating activities 82,979 531,779
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment (2,301) (9,721)
Purchase of patent - (500,000)
------------ -----------
Net cash used in investing activities (2,301) (509,721)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable (78,536) (31,410)
Severance pay 2,875 1,029
Proceeds from issuance of stock - -
---------- ----------
Net cash (used) by financing activities (75,661) 30,381
---------- ----------
NET INCREASE (DECREASE) IN CASH 5,017 (8,323)
CASH
Beginning of period 26 9,488
---------- ----------
End of period $ 5,043 $ 1,165
========== ===========
See accountants' compilation report and accompanying notes to consolidated
financial statements.
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Casdim International Systems, Inc.
Notes to the Consolidated Financial Statements
1. General
The Company designs and develops interactive kiosks and performs
network integration.
2. Summary of Significant Accounting Policies:
This summary of significant accounting policies of CASDIM INTERNATIONAL
SYSTEMS, INC. (the "Company") and its subsidiaries, CASDIM INTERACTIVE
SYSTEMS, USA, INC. and CASDIM INTERACTIVE SYSTEMS, LTD., (ISRAEL), is
presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of
the Company's management, which is responsible for their integrity and
objectivity.
a. Accounting principles - The Company's financial statements are
prepared in accordance with generally accepted accounting
principles ("GAAP") in Israel and the United States. As
applicable to these financial statements, such accounting
principles are in all material respects substantially
identical.
b. Name change -- Effective December 11, 1995, S.W. Financial
Corp.'s name was changed to CASDIM INTERNATIONAL SYSTEMS, INC.
c. Principles of consolidation - In 1995, CASDIM INTERNATIONAL
SYSTEMS, INC. issued 8,500,000 shares of stock after a 50:1
reverse stock split to acquire 100% of the voting and equity
shares of CASDIM INTERACTIVE SYSTEMS, USA, INC., which owns
100% of the voting and equity shares of CASDIM INTERACTIVE
SYSTEMS, LTD., (ISRAEL). The business combination has been
accounted for using the pooling method of accounting. The
consolidated financial statements include the accounts of the
Company and its subsidiaries.
d. Rates of exchange - Assets and liabilities, in or linked to,
foreign currency are included on the basis of the
representative rate prevailing at the balance sheet date.
Representative exchange rates between the NIS and the U.S.
dollar at March 31, 1996 and 1995 were NIS 3.111 = US $1.00,
NIS 2.968 = US $1.00, respectively.
f. Fixed Assets - Fixed assets are stated at cost. Depreciation
has been calculated by the straight-line method over the
estimated useful lives of the assets.
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Years
Leasehold improvements 10
Motor Vehicles 7
Office furniture and
equipment (mainly computers
and peripheral equipment) 5-20
Leasehold improvements are depreciated using the straight-line
method over the period of each lease, not to exceed the
estimated useful life of the improvements.
g. Cash and Cash Equivalents - For purposes of the statement of
cash flows, the Company considers cash and cash equivalents to
consist of all cash, either on hand or in banks including time
deposits, and any highly liquid debt instruments purchased
with a maturity of three months or less.
h. Bad Debts - Uncollectible accounts receivables are charged
directly against earnings when they are determined to be
uncollectible. Use of this method does not result in a
material differences from the valuation method required by
generally accepted accounting principles.
i. Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could
differ from those estimates.
j. Comparative Statements - The comparative statements at March
31, 1996 and 1995 have been restated as if the individual
companies had been combined during the entire periods.
k. Recognition of Income - Income deriving from long term
contracts is recognized upon percentage completion basis. At
March 31, 1996, the Company completed 83% of its $2,074,029
(NIS 6,502,080) contract with Kupat Holim Leumit. Estimated
costs amount to $743,762 (NIS 2,331,695).
l. Deferred income taxes - Deferred income taxes are provided for
temporary differences between the assets and liabilities, as
measured in the financial statements, and for tax purposes at
the tax rate expected to be in force when these differences
reverse, in accordance with Statement No. 109 of the Financial
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Accounting Standards Board ("FASB") (Accounting for Income
Taxes). Deferred income taxes are not material to the
financial statements.
m. Net Income per Share - Net income per share is computed on the
weighted shares adjusted for the issuance of shares and
consolidation.
3. Other Receivables and Prepaid Expenses as of March 31,
1996 1995
---- ----
Employees $ $
Deferred taxes -- --
Prepaid expenses 126,902 226,124
Related parties 854,859 --
Income tax withheld -- --
------------- ----------
$981,761 $226,124
============= ==========
4. Fixed Assets as of March 31, 1996 1995
---- ----
Cost $ 2,160 $ 2,160
Leasehold improvement 92,684 66,184
Furniture & equipment 19,184 1,419
------------- -------
Motor Vehicles 114,028 69,763
Accumulated depreciation
Leasehold improvement 342 180
Furniture & equipment 16,621 7,397
Motor vehicles 2,744 142
------------- -------
19,707 7,719
------------- -------
$94,321 $62,044
============= =======
5. Patent
In January 1995, the Company acquired a pending patent No. 108935 from
CASDIM SOFTWARE SYSTEMS, LTD. for the sum of $500,000.
The patent is being depreciated using the straight-line method over the
period of ten years.
6. Other Payable and Accrued Liabilities as March 31,
1996 1995
---- ----
Related Parties $ -- $367,243
Provision for taxes, net 396,644 --
Payroll and related amounts 9,102 8,838
Accrued expenses 30,870 18,750
Government authorities 14,133 21,029
------------- -------
450,749 415,860
============= =======
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7. Current Maturities of Debt as of March 31,
1996 1995
---- ----
Note payable ban, due March 31,
1996, plus accrued interest
at 17.5% collateralized by
fixed assets, securities,
notes and negotiable documents $180,806 $ --
Short-Term Bank credit, due
December 31, 1996, plus
accrued interest at 20.5% 415,360 155,502
------------- -------
TOTAL $596,166 $155,502
============= ========
8. Accrued Severance Pay
The liability of the Company for severance pay is calculated on the
basis of the latest salary paid to its employees and the length of time
they have worked for the Company. Pursuant to Israeli law, the
liability is covered by a provision in the Company's balance sheet and
amounts deposited with the severance pay funds and insurance policies.
The insurance policies are owned by the Company and have been entered
by the Company on behalf of individual employees. The amounts
accumulated with the insurance company are not under the Company's
control or management and are therefore not reflected in the Company's
balance sheet. The amounts deposited with the severance pay funds are
available for withdrawal in accordance with provisions of the Severance
Pay Law, 1963. The Company has no other liability for pension expenses.
9. Minority Interest
The minority interest in CASDIM INTERACTIVE SYSTEMS, LTD., (ISRAEL) has
been relinquished by the minority shareholder under Israeli law which
is held as deferred shares. The interim consolidated financial
statements have been adjusted to reflect this change.
10. Taxes on Income
CASDIM INTERACTIVE SYSTEMS, LTD., (ISRAEL), is subject to the income
tax law (inflationary adjustments) pursuant to which its results of
operations for tax purposes are measured in real terms in accordance
with the Israeli CPI. Under the Income Tax Law (Adjustments for
Inflation 1985), income for tax purposes i measured in terms of
earnings in NIS and adjusted for changes in the CPI. The theoretical
tax expense, assuming all income was taxed at the regular rate
applicable to an Israeli corporation
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and the actual tax expense is virtually identical. Any differences are
immaterial to the financial statements taken as a whole.
11. Related Party Transactions
In October 1995, the Company transferred $1,000,000 or (NIS 3,000,000)
to CASDIM SOFTWARE SYSTEMS, LTD., of which US $700,000 served as
advanced payment on account of the purchase and adaptation of related
software products for the "MEDICAL MULTIMEDIA KIOSK" which is expected
to be sold in 1996 to Kupat Holim Leumit, the largest H.M.O. in Israel
and US $300,000 was a short-term loan. The principal amount of the loan
is linked to the Israeli CPI. The Company also acquired a patent from
the related party. See details at Note 5.
12. Commitments and Contingent Liabilities
Lease commitment: The Company's premises are leased under a rental
agreement which expires on December 31, 1997. The annual rental under
the lease is Adjusted NIS 225,720 (US $72,000). The rent is linked to
the US dollar.
13. Unlinked Monetary Balance as of March 31,
1996 1995
---- ----
Current assets:
Cash $ 141 $ 42
Trade receivables 10,190 35,380
Other receivables 27,489 8,163
------- -------
$37,820 $43,585
======= =======
Current liabilities
Trade payables $ 1,615 $ 1,765
Other payables 12,621 15,013
Deposits -- 44,566
Short-term bank debts 16,693 5,614
------- -------
$30,929 $66,958
======= =======
The above amounts reflect the exposure of the Company to the effects of
inflation at each balance sheet date.
14. Subsequent Events
On May 3, 1996, the Company completed a private placement of its
securities in which 4,000,000 shares of common stock were issued.
The offering raised $3,000,000 in capital contributions, before
expenses estimated at $300,000.
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Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
operating results during the periods included in the accompanying condensed
financial statements.
Background
In November 1995, the Company issued 8,500,000 shares of common stock
after giving effect to a 50:1 reverse stock split, to acquire 100% of Casdim
Interactive Systems USA, Inc. ("Casdim USA"), the owner of 100% of the voting
and equity shares of Casdim Interactive Systems, Ltd. ("Casdim Israel"). Prior
to the acquisition of Casdim USA, the Company did not have any significant
operations. The business combination has been accounted for using the pooling
method of accounting.
Upon the completion of the exchange of shares, the Company changed its
name from S.W. Financial Corp. to Casdim International Systems, Inc.
Results of Operations
Quarter Ended March 31, 1996 Compared with Quarter Ended March 31, 1995
Product sales increased to $253,007 during the first quarter of 1996
from $116,228 during the comparable period in 1995. The increase in sales was
principally attributable to the initiation of deliveries of the Company's
kiosks. The Company expects to place greater emphasis in the future on the
leasing of kiosks which will provide the Company with a continuing stream of
income. As a result, the Company's revenues in 1996 may fluctuate. Overall
sales in 1996 are expected to increase as a result of the Company's continued
penetration of the Israeli market and the anticipated entry into the U.S. market
later in 1996. No assurance can be given that the Company will succeed in
its efforts in penetrating the U.S. market or obtaining leases.
Cost of sales increased slightly to $31,785 in the 1996 period from
$29,868 in 1995. As a result of the Company's increased revenues, its gross
profit margin was 87.4% for the quarter ending March 31, 1996, as compared to
74.3% for the comparable period in 1995. The Company expects its gross margins
to vary in the future depending on the nature of its revenues and changes in
product and customer mix.
Selling, general and administrative expenses decreased 15.9% in 1996
to $113,989 from $135,629 in 1995 due primarily to timing differences. The
Company believes that selling, general and administrative expenses will increase
in 1996 as a result of the planned increase in
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marketing and sales efforts for the Company's products and the costs associated
with it being a publicly traded company.
For the period ended March 31, 1996, the Company had income from
operations of $107,233 as compared to a loss of $49,269 for the comparable
period in 1995. The operating loss in the 1995 period was due primarily to the
Company's limited sales to that date.
During the period ended March 31, 1996, the Company had interest
expenses of $18,710 as compared to $20,489 in the 1995 period. The Company
expects interest expenses to continue to decline in 1996 as a result of its
recently completed private placement of securities. However, if the Company's
operations increase significantly, it may be required to seek additional debt
financing, which will result in increased interest expense.
In the 1996 period, the Company incurred a loss from foreign
translation of $18,134 compared to a gain of $3,076 in the 1995 period.
As a result of the foregoing, the Company had income before taxes of
$70,389 and net income of $37,204 or $.01 per share for the quarter ending March
31, 1996 as compared to a loss before taxes of $66,682 and a net loss of $42,565
or $.03 per share for the comparable period in 1995.
Liquidity and Capital Resources
At March 31, 1996, the Company had working capital of $246,157 as
compared to $179,432 at March 31, 1995. The Company's liquidity improved in
1996, principally as a result of its continued profitability.
One of the factors that will affect the Company's working capital is
the payment cycle on its sales. As the Company's sales increase, its accounts
receivable are likely to increase proportionally. The Company has benefited from
deposits made by customers with respect to contracts. The Company may not be
able to obtain such terms in the future, especially if the Company's revenues
become more dependent on leasing.
In 1995, the Company obtained a $500,000 line of credit facility from
Bank Hapoalim. The line of credit bears interest at 20.5%. At March 31, 1996,
the Company had approximately $84,500, which its has subsequently repaid,
available under the credit line. In addition, on March 31, 1996, the Company had
$180,806 outstanding under a note due to Bank Hapoalim bearing interest at
17.5%. The Company paid such note in 1996 and anticipates that it will further
reduce its borrowings during the year.
In May 1996, the Company completed a private placement of 4,000,000
shares of its common stock at a purchase price of $0.75 per share. The net
proceeds from the sale of the
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shares, which are estimated to be $2,700,000, will be used for working capital
and to repay existing debt. See "OTHER INFORMATION."
Managements believes that the Company's cash requirements for the
foreseeable future will be satisfied by cash flow from operations, existing
cash, and if needed, short-term borrowing. The Company has no significant
financial commitments outstanding.
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PART II - OTHER INFORMATION
CASDIM INTERNATIONAL SYSTEMS, INC.
Item 5. Other Information.
------------------
On May 3, 1996, the Company completed a private placement of 4,000,000
shares of its common stock at a purchase price of $0.75 per share. The net
proceeds from the sale of the shares, which are estimated at $2,700,000, will be
used for working capital and to repay existing debt.
In connection with the private placement, the Company entered into a
public relations retainer agreement and a consulting agreement which
collectively required the issuance of five-year options and warrants to purchase
1,850,000 shares of common stock of the Company at an exercise price of $1.00
per share. The net proceeds to be received by the Company for the exercise of
the options and warrants, if any, will be used for working capital.
On May 2, 1996, the Company's Chairman and Chief Executive Officer,
Mr. Yehuda Shimshon, caused his 10% ownership in the outstanding shares of
Casdim Israel to be converted into deferred shares. Under Israeli law, a holder
of deferred shares is not entitled to any rights other than to receive the par
value of such shares on dissolution. As a result, the Company is now the
effective owner of 100% of the equity of Casdim Israel.
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
*3.1 Certificate of Incorporation as amended through December 6,
1995.
3.2 Amendment to the Certificate of Incorporation dated May 1,
1996.
**3.3 By-laws.
4.1 Form of Warrant Agreement.
4.2 Stock Option Agreement with Sunrise Financial Group Inc.
10.1. Private Placement Purchase Agreement.
10.2 Public Relations Retainer Agreement dated April 26, 1996 with
Sunrise Financial Group Inc.
10.3 Consulting Agreement dated April 24, 1996 with Pelican
Securities & Investments Ltd., Softbreeze Ltd., Montaraz
Limited, Onvoy Holdings Ltd., and Wideglobe Ltd.
(b) Reports on Form 8-K filed during the last quarter of the period covered
by this report:
The Company's Report on Form 8-K dated March 28, 1996 is hereby
incorporated by reference.
_________________________
* Incorporated by reference to the Company's Report on Form 10-KSB for the
year Ended December 31, 1995.
** Incorporated by reference to the Company's Report on Form 10-K for the year
ended December 31, 1994.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CASDIM INTERNATIONAL SYSTEMS, INC.
/s/ Yehuda Shimshon
---------------------------------------------
Yehuda Shimshon
Chairman of the Board, President & CEO
Date: May 15, 1996
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Exhibit 3.2
<PAGE>
Mail to: Secretary of State For office use only
Corporations Section
1560 Broadway, Suite 200 FILED COPY
Denver, CO 80202
(303) 894-2251
Fax (303) 894-2242
MUST BE TYPED
FILING FEE: $25.00
MUST SUBMIT TWO COPIES
Please include a typed ARTICLES OF AMENDMENT 961059363 M $25.00
self-addressed envelope TO THE Secretary of State
ARTICLES OF INCORPORATION 05-01-96 11:34
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is Casdim International Systems, Inc.
SECOND: The following amendment to the Articles of Incorporation was adopted on
November 28, 1995, as prescribed by the Colorado Business Corporation Act, in
the manner marked with an X below:
No shares have been issued or Directors Elected - Action by
Incorporators.
No shares have been issued but Directors Elected - Action by Directors.
Such amendment was adopted by the board of directors where shares have
been issued and shareholder action was not required.
X Such amendment was adopted by a vote of the shareholders. The number of
shares voted for the amendment was sufficient for approval.
THIRD: If changing corporate name, the new name of the corporation is
FOURTH: The manner, if not set forth in such amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the amendment
shall be effected, is as follows: Pursuant to a 1:50 reverse split of the
corporation's issued and outstanding shares of common stock ($0.00001 par value)
1,534,000 shares are being issued in exchange for 76,700,000 shares which were
issued and outstanding prior to the reverse split. Neither the par value of the
common stock nor the number of authorized shares of common stock (500,000,000)
are affected by the reverse split.
If these amendments are to have delayed effective date, please
list that date: __________
(Not to exceed ninety (90) days from the date of filing)
Casdim International Systems, Inc.
By: Yehuda Shimshon
Signature /s/ Yehuda Shimshon
--------------------
Title: President, Chairman & CEO
Revised 7/95
<PAGE>
Exhibit 4.1
<PAGE>
CASDIM INTERNATIONAL SYSTEMS INC.
WARRANT CERTIFICATE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR QUALIFICATION OR AN EXEMPTION THEREFROM UNDER
THE SECURITIES ACT, AND ANY SUCH STATE LAWS WHICH MAY BE APPLICABLE AND ARE
TRANSFERABLE ONLY UPON THE CONDITIONS SPECIFIED IN THIS WARRANT CERTIFICATE.
Certificate for ________________ Warrants March , 1996
Void after 5:00 p.m. Eastern Standard Time on _______________ .
Casdim International Systems Inc., a Colorado corporation, hereby
certifies that, for value received, , or registered assigns, is the registered
owner of the number of Warrants set forth above (the "Warrants"). Each Warrant
entitles the Holder to purchase one share, as adjusted from time to time as
provided herein, of the shares of the Company, par value .01 per share (the
"Common Stock"; each such share being a "Warrant Share" and all such shares
being the "Warrant Shares") at the exercise price of $1.00 per share (as
adjusted from time to time as provided herein, the "Exercise Price") commencing
on the date hereof (the "Exercise Date") and expiring on or before 5:00 p.m.
Eastern Standard Time on (the "Expiration Date"), all subject to the following
terms and conditions:
Section 1. Registration. The Company shall register each Warrant, upon
records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record holder of such Warrant from time to time.
The Company may deem and treat the registered holder of each Warrant as the
absolute owner thereof for the purpose of any exercise thereof or any
distribution to the holder thereof, and for all other purposes. The Company
shall not at any time close the Warrant Register so as to result in preventing
or delaying the exercise or transfer of the Warrants.
Section 2. Registration of Transfers; Issuance of New Warrant Certificates.
2.1 Registration of Transfers. The Company shall register the transfer
of any Warrants in the Warrant Register, so long as either a registration
statement under the Securities Act is effective with respect thereto or such
transaction is exempt from registration, upon surrender of this Warrant
Certificate, with the Form of Assignment attached hereto as Annex A duly filled
in and executed, to the Company at the office of the Company specified in or
pursuant to Section 3.2(a). Upon any such registration of transfer, a new
Warrant Certificate, in substantially the form of this Warrant Certificate,
evidencing the Warrants so transferred shall be issued to the
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transferee and a new Warrant Certificate, in similar form, evidencing the
remaining Warrants not so transferred, if any, shall be issued to the then
registered holder thereof.
2.2 Issuance of New Warrant Certificates. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant Certificate and (i) in the case of any such loss,
theft or destruction upon delivery of indemnity reasonably satisfactory to the
Company in form and amount and (ii) in the case of any such mutilation, upon
surrender of this Warrant Certificate for cancellation at the office of the
Company at which the Warrant Register is kept, the Company, at its expense, will
execute and deliver, in lieu thereof, a new Warrant Certificate representing the
right to purchase at the Exercise Price then in effect a like aggregate number
of Warrant Shares. The signed statement of the registered holder thereof
certifying as to the occurrence of any loss, theft, destruction or mutilation of
this Warrant shall constitute evidence satisfactory to the Company for the
purpose of this section and no indemnity shall be required as a condition to the
execution and delivery by the Company of a new Warrant Certificate in lieu of
this Warrant Certificate other than the registered holder's unsecured written
agreement to indemnify the Company.
Section 3. Exercise of Warrant; Issuance of Exercise Shares.
3.1 Exercise of Warrant. Subject to the provisions of this Warrant
Certificate, including adjustments to the number of Warrant Shares issuable on
the exercise of each Warrant and to the Exercise Price pursuant to Section 6,
the holder of each Warrant shall have the right, commencing on the Exercise Date
until on or prior to the Expiration Date, to purchase from the Company, and the
Company shall be obligated to issue and sell to such holder of a Warrant, at the
Exercise Price one fully paid Warrant Share. The Warrant and all rights
hereunder shall expire on the Expiration Date and shall be wholly null and void
to the extent the Warrants are not exercised before it expires.
3.2 Issuance of Warrant Shares.
(a) Subject to Sections 4 and 8, upon (i) surrender of this
Warrant Certificate, with the Form of Election to Purchase attached hereto as
Annex B duly filled in and executed, to the Company at the office of its
registered agent in the United States, [State Agent and Transfer Syndicate,
Inc., 3276 Kitchen Drive, Carson City, Nevada 89701, Attention: ,] or at such
other address as the Company may specify in writing to the then registered
holder of the Warrants, and (ii) payment of the Exercise Price multiplied by the
number of Warrant Shares then issuable upon exercise of the Warrants being
exercised in lawful money of the United States of America, all as specified by
the holder of this Warrant Certificate in the Form of Election to Purchase, the
Company shall within three business days from the date such Form of Election to
Purchase is received by the Company, promptly issue and cause to be delivered to
or upon the written order of the registered holder of such Warrants, and in such
name or names as such registered holder may designate, a certificate for the
Warrant Shares issued upon such exercise of such Warrants. Any person so
designated to be named therein shall be deemed
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to have become the holder of record of such Warrant Shares as of the Date of
Exercise of such Warrants.
The "Date of Exercise" of any Warrant means the date on which
the Company shall have received (i) this Warrant Certificate, with the Form of
Election to Purchase appropriately filled in and executed, and (ii) payment of
the Exercise Price for such Warrant.
(b) The Warrants evidenced by this Warrant Certificate shall
be exercisable either as an entirety or, from time to time, for part only of the
number of Warrants evidenced hereby. If fewer than all of the Warrants evidenced
by this Warrant Certificate are exercised at any time, the Company shall issue,
at its expense, a new Warrant Certificate, in substantially the form of this
Warrant Certificate, for the remaining number of Warrants evidenced by this
Warrant Certificate.
Section 4. Payment of Taxes. The Company will pay all securities
transfer taxes and other similar governmental charges (excluding taxes or
charges based on income or capital gains) that may be imposed on the Company, or
with respect to the Warrant or the Warrant Shares, provided, however, that the
Company shall not be required to pay any tax or other charge imposed in respect
of the transfer of Warrants, or the issuance or delivery of certificates of
Warrant Shares or other securities in respect of the Warrant Shares upon the
exercise of Warrants, to a person or entity other than a then existing
registered holder of Warrants or an Affiliate of such registered holder. An
"Affiliate" of any person or entity means any other person or entity directly or
indirectly controlling, controlled by or under direct or indirect common control
with such person or entity.
Section 5. Reservation and Issuance of Warrant Shares.
5.1 Reservation of Warrant Shares. The Company agrees and covenants
that at all times prior to the Expiration Date it will have authorized, and hold
in reserve and keep available, free from preemptive rights, for the purpose of
enabling it to satisfy any obligation to issue Warrant Shares upon the exercise
of the Warrants, the number of Warrant Shares deliverable upon full exercise of
the Warrants.
5.2 Issuance of Warrant Shares. The Company agrees and covenants that
all Warrant Shares issuable upon issuance in accordance with the terms of this
Warrant Certificate will be duly authorized, validly issued, fully paid and
non-assessable and free and clear of all taxes or other governmental charges
with respect to the issuance thereof and from all liens, charges and security
interests created by the Company.
Section 6. Adjustments of Exercise Price and Number of Warrant Shares.
The Exercise Price and the number of Warrant Shares issuable upon the exercise
of each Warrant shall be subject to adjustment from time to time as hereinafter
provided. Upon each adjustment of such Exercise Price pursuant to subsection
6.1, 6.2, 6.3, 6.4 or 6.5, each Warrant shall thereafter entitle the holder
thereof to purchase, at the Exercise Price resulting from such adjustment, the
number
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of Warrant Shares obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares issuable
upon exercise of such Warrant immediately prior to such adjustment and dividing
the product thereof by the Exercise Price resulting from such adjustment.
6.1 Adjustment of Price Upon Issuance of Common Stock. If at any time
after the date hereof the Company shall issue or issues any warrants exercisable
for a consideration per share less than One Dollar ($1.00) (the "Base Price")
then, forthwith upon such issue or sale, the Exercise Price shall be reduced to
the lower of the prices (calculated to the nearest cent) determined as follows:
(i) by dividing (A) an amount equal to the sum of (1)
the number of shares of Common Stock outstanding immediately
prior to such issue or sale multiplied by the then existing
Exercise Price, and (2) the consideration, if any, received by
the Company upon such issue or sale, by (B) the total number
of shares of Common Stock outstanding immediately after such
issue or sale; and
(ii) by multiplying the Exercise Price in effect
immediately prior to the time of such issue or sale by a
fraction, the numerator of which shall be the sum of (A) the
number of shares of Common Stock outstanding immediately prior
to such issue or sale multiplied by the Base Price plus (B)
the consideration received by the Company upon such issue or
sale, and the denominator of which shall be (x) the total
number of shares of Common Stock outstand ing immediately
after such issue or sale, multiplied by (y) the Base Price.
No adjustment of any Exercise Price, however, shall be made in an amount less
than $0.05 per share, but any such lesser adjustment shall be carried forward
and shall be made at the time of, and together with, the next subsequent
adjustment which together with any adjustments so carried forward shall amount
to $0.05 per share or more.
6.2 Other Adjustment Events and Provisions. For the purposes of this
Section 6, the following clauses shall also be applicable:
6.2.1 Issuance of Rights, Warrants or Options. In case at any time the
Company shall grant, issue or sell (whether directly or by assumption in a
merger or otherwise) any rights or warrants (other than the Warrants) to
subscribe for or to purchase, or any options for the purchase of, Common Stock
or any stock or securities convertible into or exchangeable for Common Stock
(such convertible or exchangeable stock or securities being herein called
"Convertible Securities") whether or not such rights, warrants or options, or
the right to convert or exchange any such Convertible Securities, are
immediately exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such rights, warrants or options, or
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upon conversion or exchange of such Convertible Securities (determined as
provided below) shall be less than the Base Price, then the total maximum number
of shares of Common Stock issuable upon the exercise of such rights, warrants or
options or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such rights, warrants or
options shall (as of the date of granting of such rights, warrants or options)
be deemed to be outstanding and to have been issued for such price per share.
Except as provided in subsection 6.2.3, no further adjustments of any Exercise
Price shall be made upon the actual issue of such Common Stock or of such
Convertible Securities upon exercise of such rights or warrants or options or
upon the actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities. For the purposes of this subsection 6.2.1, the price per
share for which Common Stock is issuable upon the exercise of any such rights or
warrants or options or upon conversion or exchange of any such Convertible
Securities shall be determined by dividing (A) the total amount, if any,
received or receivable by the Company as consideration for the granting of such
rights or warrants or options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all such rights or
warrants or options, plus, in the case of such rights or warrants or options
which 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 (B) the
total maximum number of shares of Common Stock issuable upon the exercise of
such rights or warrants or options or upon the conversion or exchange of all
such Convertible Securities issuable upon the exercise of such rights or
warrants or options.
6.2.2 Issuance of Convertible Securities. In case the Company shall
issue (whether directly or by assumption in a merger or otherwise) or sell any
Convertible Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which Common
Stock is issuable upon conversion or exchange of such Convertible Securities
(determined as provided below) shall be less than the Base Price, then the total
maximum 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, provided that (A) except as provided subsection 6.2.3,
no further adjustments of any Exercise Price shall be made upon the actual issue
of such Common Stock upon conversion or exchange of such Convertible Securities,
and (B) if any such issue or sale of such Convertible Securities is made upon
exercise of any rights or warrants to subscribe for or to purchase or any option
to purchase any such Convertible Securities for which adjustments of any
Exercise Price have been or are to be made pursuant to other provisions of this
subsection 6.2.2, no further adjustment of any Exercise Price shall be made by
reason of such issue or sale. For the purposes of this 6.2.2, the price per
share for which Common Stock is issuable upon conversion or exchange of
Convertible Securities shall be 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 maximum number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities.
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6.2.3 Change in Option Price or Conversion Rate. If the purchase price
provided for in any rights or warrants or options referred to in subsection
6.2.1 above, or the additional consideration, if any, payable upon the
conversion or exchange of Convertible Securities referred to in subsections
6.2.1 or 6.2.2 above, or the rate at which any Convertible Securities referred
to in subsections 6.2.1 or 6.2.2 above are convertible into or exchangeable for
Common Stock, shall change (other than under or by reason of provisions designed
to protect against dilution), then the Exercise Price in effect at the time of
such event shall forthwith be readjusted to the Exercise Price which would have
been in effect at such time had such rights, warrants, options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold. If the purchase price provided for in any
such right, warrant or option referred to in subsection 6.2.1 above or the rate
at which any Convertible Securities referred to in subsections 6.2.1 or 6.2.2
above are convertible into or exchangeable for Common Stock shall change at any
time under or by reason of provisions with respect thereto designed to protect
against dilution, then in case of the delivery of Common Stock upon the exercise
of any such right or warrant or option or upon conversion or exchange of any
such Convertible Security, the Exercise Price then in effect hereunder shall
forthwith be adjusted upon the issuance of the shares of Common Stock delivered
as aforesaid, but only if as a result of such adjustment the Exercise Price then
in effect hereunder is thereby decreased.
6.2.4 Stock Dividends. In case the Company shall declare a dividend or
make any other distribution upon any stock of the Company payable in Common
Stock or Convertible Securities, any Common Stock or Convertible Securities, as
the case may be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration.
6.2.5 Consideration for Stock. In case any shares of Common Stock or
Convertible Securities or any rights or warrants or options to purchase any such
Common Stock or Convertible Securities shall be issued or sold:
(A) for cash, the consideration received therefor
shall be deemed to be the amount received by the Company
therefor, without deducting therefrom any expenses incurred or
any underwriting commissions or concessions paid or allowed by
the Company in connection therewith;
(B) for a consideration other than cash, the amount
of the consideration other than cash received by the Company
shall be deemed to be the fair value of such consideration, as
determined, in good faith and in the exercise of reasonable
business judgment, by the Board of Directors of the Company,
without deducting therefrom of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the
Company in connection therewith; or
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(C) in connection with any merger or consolidation in
which the Company is the surviving corporation (other than any
consolidation or merger in which the previously outstanding
shares of Common Stock of the Company shall be changed into or
exchanged for the stock or other securities of another
corporation), the amount of consideration therefor shall be
deemed to be the fair value, as determined, in good faith and
in the exercise of reasonable business judgment, by the Board
of Directors of the Company, of such portion of the assets and
business of the non-surviving corporation as such board may
determine to be attributable to such shares of Common Stock,
Convertible Securities, rights or warrants or options, as the
case may be.
In the event of any consolidation or merger of the Company in which the Company
is not the surviving corporation or in which the previously outstanding shares
of Common Stock of the Company shall be changed into or exchanged for the stock
or other securities of another corporation, the Company shall be deemed to have
issued a number of shares of its Common Stock for stock or securities or other
property of the other corporation computed on the basis of the actual exchange
ratio on which the transaction was predicated and for a consideration equal to
the fair market value on the date of such transaction of all such stock or
securities or other property of the other corporation, and if any such
calculation results in adjustment of the Exercise Price, the determination of
the number of shares of Common Stock issuable upon exercise of the Warrants
immediately prior to such merger, consolidation or sale, for purposes of Section
6.5, shall be made after giving effect to such adjustment of the Exercise Price.
In the event of any sale of all or substantially all of the assets of the
Company for stock or other securities or property of any corporation, there
shall thereafter be deliverable upon the exercise of this Warrant or any portion
thereof (in lieu of the Warrant Shares theretofore deliverable) the kind and
amount of shares of stock or other securities or property (including, without
limitation, cash) which the holder of the number of Warrant Shares would
otherwise have been entitled to upon the exercise of this Warrant or any portion
thereof.
6.2.6 Record Date. In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock or in Convertible
Securities, or (B) 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.
6.2.7 Treasury Shares. The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or for the account
of the Company, and the disposition of any such shares shall be considered an
issue or sale of Common Stock for the purposes of subsection 6.2.
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6.2.8 [Intentionally Omitted.]
6.2.9 [Intentionally Omitted.]
6.2.10 Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Company shall not be required to make any adjustment of any
Exercise Price in case of the issuance of shares of Common Stock upon the
exercise of options or rights granted or provided or to be granted or provided
under the Company's Employee Stock Option Plans and any employee benefit plans
hereafter adopted by the Company.
6.3 Certain Special Dividends. In case the Company shall declare a
dividend or make any other distribution (other than a distribution referred to
in Section 6.2) upon the Common Stock (other than cash dividends payable out of
current earnings for the immediately preceding four fiscal quarters, determined
in accordance with generally accepted accounting principles), then in each case
the holder of this Warrant Certificate, upon the exercise of each Warrant at any
time thereafter, shall be entitled to receive, in addition to the Warrant
Shares, (i) the dividend or other distribution to which such holder would have
been entitled as a holder of Common Stock if such holder had exercised its
Warrants immediately prior to the record date for such distribution and (ii) any
income earned on the dividend or other distribution distributed from the
distribution date to the Exercise Date, less the Exercise Price then in effect.
At the time of any such distribution, the Company shall (y) if permitted by
applicable law, distribute to such holder the dividend or other distribution to
which it would be entitled upon exercise or (z) hold such dividend or other
distribution in trust for the registered holder of the Warrant Shares if in the
opinion of counsel for the Company the Company is prohibited by applicable laws
from distributing such dividend or other distribution to such holders of the
Warrant Shares.
6.4 Subdivision or Combination of Stock. In case the Company shall at
any time subdivide the outstanding shares of Common Stock into a greater number
of shares, the Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced, and conversely, in case the outstanding shares
of Common Stock shall be combined into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination shall be proportionately
increased.
6.5 Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc. In case the Company (i) consolidates with or merges into
any other corporation and is not the continuing or surviving corporation of such
consolidation or merger, or (ii) permits any other corporation to consolidate
with or merge into the Company and the Company is the continuing or surviving
corporation but, in connection with such consolidation or merger, the Common
Stock is changed into or exchanged for stock or other securities of any other
corporation or cash or any other assets, or (iii) transfers all or substantially
all of its properties and assets to any other corporation, or (iv) effects a
capital reorganization or reclassification of the capital stock of the Company
in such a way that holders of Common Stock shall be entitled to receive stock,
securities, cash or assets with respect to or in exchange for Common Stock,
then, and in each such case, proper provision shall be made so that, upon the
basis and upon the terms
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and in the manner provided in this subsection 6.5, the holder of this Warrant
Certificate, upon the exercise of each Warrant at any time after the
consummation of such consolidation, merger, transfer, reorganization or
reclassification, shall be entitled to receive (at the aggregate Exercise Price
in effect for all shares of Common Stock issuable upon such exercise immediately
prior to such consummation as adjusted to the time of such transaction), in lieu
of shares of Common Stock issuable upon such exercise prior to such
consummation, the stock and other securities, cash and assets to which such
holder would have been entitled upon such consummation if such holder had so
exercised such Warrant immediately prior thereto (subject to adjustments
subsequent to such corporate action as nearly equivalent as possible to the
adjustments provided for in this Section 6).
6.6 Notice of Adjustment. Whenever the number of shares of Common Stock
or other stock or property issuable upon the exercise of each Warrant or the
Exercise Price is adjusted, then and in each such case the Company shall
promptly deliver a notice to the registered holder of the Warrants, which notice
shall state the Exercise Price resulting from such adjustment and/or the
increase or decrease, if any, in the number of shares of Common Stock or other
stock or property issuable upon the exercise of each Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
6.7 Other Notices. In case at any time:
(i) the Company shall declare any cash dividend on
its Common Stock;
(ii) the Company shall pay any dividend payable in
stock upon its Common Stock or make any distribution (other
than regular cash dividends) to the holders of its Common
Stock;
(iii) the Company shall offer for subscription pro
rata to the holders of its Common Stock any additional shares
of stock of any class or other rights;
(iv) the Company shall authorize the distribution to
all holders of its Common Stock of evidences of its
indebtedness or assets (other than cash dividends or cash
distributions payable out of current earnings or dividends
payable in Common Stock);
(v) there shall be any capital reorganization, or
reclassifica tion of the capital stock of the Company, or
consolidation or merger of the Company with another
corporation (other than a subsidiary of the Company in which
the Company is the surviving or continuing corporation and no
change occurs in the Company's Common Stock), or sale of all
or substantially all of its assets to, another corporation;
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(vi) there shall be a voluntary or involuntary
dissolution, liquidation, bankruptcy, assignment for the
benefit of creditors, or winding up of the Company; or
(vii) the Company proposes to take any other action
or an event occurs which would require an adjustment pursuant
to subsection 6.8;
then, in any one or more of said cases, the Company shall give written notice,
addressed to the holder of this Warrant Certificate at the address of such
holder as shown on the books of the Company, of (A) the date on which the books
of the Company shall close or a record shall be taken for such dividend,
distribution or subscription rights, or (B) the date (or, if not then known, a
reasonable approximation thereof by the Company) on which such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
bankruptcy, assignment for the benefit of creditors, winding up or other action,
as the case may be, shall take place. Such notice shall also specify (or, if not
then known, reasonably approximate) the date as of which the holders of Common
Stock of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, bankruptcy, assignment
for the benefit of creditors, winding up, or other action, as the case may be.
Such written notice shall be given at least 20 days prior to the action in
question and not less than 20 days prior to the record date or the date on which
the Company's transfer books are closed in respect thereto.
6.8 Certain Events. If any event occurs as to which in the reasonable
opinion of the registered holder of this Warrant Certificate the other
provisions of this Section 6 are not strictly applicable but the lack of any
adjustment would not in its opinion fairly protect the purchase rights of the
holder of this Warrant Certificate in accordance with the basic intent and
principles of such provisions, or if strictly applicable would not fairly
protect the purchase rights of the holder of this Warrant Certificate in
accordance with the basic intent and principles of such provisions, then the
Company shall appoint a firm of independent certified public accountants of
recognized national standing, which shall give their opinion upon the
adjustment, if any, on a basis consistent with the basic intent and principles
established in the other provisions of this Section 6, necessary to preserve,
without dilution, the exercise rights of the registered holder of this Warrant
Certificate. Upon receipt of such opinion, the Company shall forthwith make the
adjustments described therein.
Section 7. No Stock Ownership Rights. No holder of this Warrant
Certificate, as such, shall be entitled to vote or be deemed the holder of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained herein be
construed to confer upon the holder of this Warrant Certificate, as such, the
rights of a stockholder of the Company or the right to vote for the election of
directors of upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, to exercise any
preemptive right, to receive notice of meetings
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or other actions affecting stockholders (except as provided herein), or to
receive dividends or subscription rights or otherwise, until the Date of
Exercise of Warrants shall have occurred.
Section 8. Registration of Warrant Shares.
(a) Neither the Warrants nor the Warrant Shares have been
registered under the Securities Act (such Act, or any similar Federal
statute then in effect, being the "Securities Act").
(b) The holder of this Warrant Certificate, by acceptance
hereof, represents that it is acquiring the Warrants to be issued to it
for its own account and not with a view to the distribution thereof,
and agrees not to sell, transfer, pledge or hypothecate any Warrants or
any Warrant Shares unless a registration statement is effective for
such Warrants or Warrant Shares under the Securities Act or in the
opinion of such holder's counsel (a copy of which opinion shall be
delivered to the Company) such transaction is exempt from the
registration requirements of the Securities Act; provided that Warrants
and Warrant Shares issued to such holder may be transferred to any
Affiliate of such holder, without any such registration or opinion,
subject to the foregoing restriction on any further sale, transfer,
pledge or hypothecation by such Affiliate.
(c) The Company will use its best efforts to comply with (i)
the reporting requirements of Section 13 and 15(d) of the Securities
Exchange Act of 1934 (whether or not the Company is required to do so
pursuant to such Sections) and (ii) all other reporting requirements of
the Securities and Exchange Commission (such Commission or any
successor to any or all of its functions being the "Commission") from
time to time in effect and relating to the availability of an exemption
from the Securities Act for sale of restricted securities (including,
without limitation, Rule 144 promulgated by the Commission under the
Securities Act). The Company also will cooperate with the holder of
this Warrant Certificate and with each holder of any Warrant Shares in
supplying such information as may be necessary for any such holder to
complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the availability
of an exemption from the Securities Act for the sale of restricted
securities.
Section 9. Registration Rights. The Company agrees at its sole expense
to (i) file, within 120 days from the date of execution hereof, the requisite
registration statement under the Securities Act with the Securities and Exchange
Commission with respect to the resale of the Warrant Shares, and use its best
efforts to cause such registration statement to become effective within 90 days
after the date of filing; (ii) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of nine months and to comply with
the provisions of the Securities Act with respect to
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the disposition of all securities covered by such registration statement until
such time; (iii) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission, including the
rules and regulations relating to filings under the Securities Exchange Act of
1934; and (iv) to procure the listing of the Warrant Shares when issued in the
Nasdaq National Market.
9.1 Registration Procedures. In connection with any registration
pursuant to this Section 9, the Company will:
(a) prepare and (within 60 days after the end of the period
within which requests for registration may be given to the Company or
in any event as soon thereafter as possible) file with the Commission
the requisite registration statement to effect such registration and
use its best efforts to cause such registration statement to become
effective, provided, however, that the Company may discontinue any
registration of its securities which are not Warrant Shares at any time
prior to the effective date of the registration statement relating
thereto;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have
been disposed of in accordance with the intended methods of disposition
by the seller or sellers thereof set forth in such registration
statement, provided that if less than all the Warrant Shares are
withdrawn from registration after the expiration of such period, the
shares to be so withdrawn shall be allocated pro rata among the holders
thereof on the basis of the respective numbers of Warrant Shares held
by them included in such registration;
(c) furnish to each seller of Warrant Shares covered by such
registration statement such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents,
as such seller may reasonably request;
(d) use its best efforts to register or qualify all Warrant
Shares and other securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions as
each seller thereof shall reasonably request, to keep such registration
or qualification in effect for so long as such registration statement
remains in effect, and take any other action which may be reasonably
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<PAGE>
necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the securities owned by such
seller;
(e) use its best efforts to cause all Warrant Shares covered
by such registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the disposition of
such Warrant Shares;
(f) furnish to each seller of Warrant Shares a signed
counterpart, addressed to such seller (and the underwriters, if any),
an opinion of counsel for the Company, dated the effective date of such
registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing under the
underwriting agreement), reasonably satisfactory in form and substance
to such seller; and
(g) notify each seller of Warrant Shares covered by such
registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, 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 any material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made, and at the request of any such seller promptly prepare and
furnish to such seller a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or
omit 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 under which they were made;
(h) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first full calendar month
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act, and not file any amendment or supplement to such
registration statement or prospectus to which any such seller shall
have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the
requirements of the Securities Act or of the rules or regulations
thereunder, having been furnished with a copy thereof at least five
business days prior to the filing thereof;
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<PAGE>
(i) provide a transfer agent and registrar for all Warrant
Shares covered by such registration statement not later than the
effective date of such registration statement; and
(j) use its best efforts to list all Common Stock covered by
such registration statement on any securities exchange on which any of
the Common Stock is then listed.
The Company may require each seller of Warrant Shares as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request in writing.
Each holder of Warrant Shares agrees by acquisition of such Warrant Shares that
upon receipt of any notice from the Company of the happening of any event of the
kind described in clause (g) of this subsection 9.1, such holder will forthwith
discontinue such holder's disposition of Warrant Shares pursuant to the
registration statement relating to such Warrant Shares until such holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
clause (g) of this subsection 9.4, and, if so directed by the Company, will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such holder's possession of the prospectus
relating to such Warrant Shares current at the time of receipt of such notice.
In the event the Company shall give any such notice, the period referred to in
clause (b) of this subsection 9.4 shall be extended by a number of days equal to
the number of days during the period from and including the giving of notice
pursuant to clause (g) of this subsection 9.4 to and including the date when
each seller of any Warrant Shares covered by such registration statement shall
have received the copies of the supplemented or amended prospectus contemplated
by clause (g) of this subsection 9.1.
9.2 Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act,
the Company will give the holders of Warrant Shares registered under such
registration statement, their underwriters, if any, and their respective counsel
and accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
9.3 Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act,
the Company will, and hereby does, indemnify and hold harmless the
seller of any Warrant Shares covered by such registration statement,
its directors and officers, each other Person who
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participates as an underwriter in the offering or sale of such
securities and each other person or entity, if any, who controls such
seller or any such underwriter within the meaning of the Securities Act
against any losses, claims, damages or liabilities, joint or several,
to which such seller or any such director or officer or underwriter or
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration
statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto,
or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and the Company will reimburse such seller and
each such director, officer, underwriter and controlling person for any
legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, liability, action
or proceeding; provided that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage, liability
(or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement or
omission of alleged omission made in such registration statement, any
such preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company through an instrument duly
executed by such seller specifically stating that it is for use in the
preparation thereof, and, provided further that the Company shall not
be liable to any person or entity who participates as an underwriter,
in the offering or sale of Warrant Shares or any other Person, if any,
who controls such underwriter within the meaning of the Securities Act,
in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense
arises out of such person's or entity's failure to send or give a copy
of the final prospectus to the person or entity asserting an untrue
statement or alleged untrue statement or omission or alleged omission
at or prior to the written confirmation of the sale of Warrant Shares
to such person or entity if such statement or omission was corrected in
such final prospectus. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such
seller or any such director, officer, underwriter or controlling person
and shall survive the transfer of such securities by such seller.
(b) Indemnification by the Sellers. The Company may require,
as a condition to including any Warrant Shares in any registration
statement filed pursuant to this Section 9, that the Company shall have
received an undertaking satisfactory to it from the prospective seller
of such securities, to indemnify and hold harmless (in the same manner
and to the same extent as set forth in clause (a) of this subsection
9.3) the Company, each director of the Company, each officer
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<PAGE>
of the Company and each other person, if any, who controls the Company
within the meaning of the Securities Act, with respect to any statement
or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company through an instrument duly
executed by such seller specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of such
securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding clauses of
this subsection 9.3, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, promptly give
written notice to the indemnifying party, provided that the failure of
any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
clauses of this subsection 9.3, except to the extent that the
indemnifying party is actually prejudiced by such failure to give
notice. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgement a
conflict of interest between such indemnified and indemnifying parties
may exist in respect of such claim, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that
it may wish, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for
any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall consent to entry of any
judgment or enter into any settlement without the consent of the
indemnified party which does not include as a unconditional term
thereof the giving by the claimant or plaintiff to such indemnified
party of a release from all liability in respect to such claim or
litigation.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding clauses of this subsection 9.3 (with
appropriate modifications) shall be given by the Company and each
seller of Warrant Shares with respect to any required registration or
other qualification of securities under any Federal or state law or
regulation of governmental authority other than the Securities Act.
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<PAGE>
(e) Indemnification Payments. The indemnification required by
this subsection 9.3 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when
bills are received or expense, loss, damage or liability is incurred.
9.4 Registration Expenses.
(a) All fees, disbursements and expenses (collectively, the
"Registration Expenses") incurred by the Company in connection with any
registration pursuant to Section 9, and all reasonable fees and
disbursements of one counsel for the holders of Warrants or Warrant
Shares, shall be borne by the Company, including, without limitation,
all registration and filing fees, all costs of preparation and printing
(in such quantities as the holders of Warrants or Warrant Shares, or
the underwriters, may reasonably request) of any registration statement
and related prospectus and any amendments or supplements thereto, all
fees and disbursements of counsel for the Company, the expenses of
complying with applicable securities or blue sky laws, and all costs in
connection with the preparation and delivery of such legal opinions,
auditors' comfort letters or other closing documents as the holders of
Warrants or Warrant Shares, or as the underwriters shall reasonably
request, provided however that the holders of the Warrants or Warrants
Shares shall bear any costs in connection with any registration
pursuant to subsection 9.1 pro rata according to the number of Warrant
Shares being registered by each such holder or in such other manner as
such holders may agree.
(b) All underwriting commissions allocable to the Warrant
Shares in connection with a registration pursuant to this Section 9
shall be allocated among the holders of Warrant Shares pro rata
according to the number of Warrant Shares being registered by each such
holder or in such other manner as such holders may agree.
Section 10. Notices. All notices required or permitted to be given
hereunder shall be in writing and shall be deemed to have been (a) when
received, if delivered in person; (b) when sent, if sent by telecopier and
confirmed within forty-eight (48) hours by letter mailed or delivered to the
party to be notified at its address set forth herein; or (c) five (5) business
days following the mailing thereof if mailed by certified first class mail,
postage prepaid, return receipt requested, in any such case as follows:
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<PAGE>
If to the Company, to:
[Casdim International Systems Inc.
3361 Westwind Road
Las Vegas, NV 89102
Telecopier: (702) 873-2109]
with a copy to:
Carter, Ledyard & Milburn
2 Wall Street
New York, New York 10005-2072
Attention: Steven J. Glusband, Esq.
Telecopier: (212) 732-3232
If to the registered holder, to:
with a copy to:
or to such address as any party shall notify the other in writing pursuant to
this Section 10.
Section 11. Survival of Rights and Duties. This Warrant Certificate has
no force and effect and does not create any rights or duties on either the
Company or the holder of the Warrant Certificate until the Exercise Date. This
Warrant Certificate shall terminate and be of no further force and effect on the
earlier of (i) 5:00 p.m. Eastern Standard Time, on the Expiration Date or (ii)
the date on which all of the Warrants have been exercised, except that the
provisions of Sections 4, 5.2 and 9 shall continue in full force and effect
after such termination date.
Section 12. Successors and Assigns. This Warrant Certificate shall be
binding upon and inure to the benefit of the Company, its successors and
assigns, and the registered holder or holders from time to time of the Warrants
and Warrant Shares.
Section 13. Severability. If for any reason any provision, paragraph or
term of this Warrant Certificate is held to be invalid or unenforceable, all
other valid provisions herein shall remain in full force and effect and all
terms, provisions and paragraphs of this Warrant Certificate shall be deemed to
be severable.
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<PAGE>
Section 14. Governing Law. This Warrant Certificate shall be governed
by and construed in accordance with the laws of the State of New York without
regard to its conflict of laws provisions.
Section 15. Headings. Paragraph and subparagraph headings used herein
are included for convenience of reference only shall not affect the construction
of this Warrant Certificate nor constitute a part of this Warrant Certificate
for any other purpose.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed as of the date and year first above written.
CASDIM INTERNATIONAL SYSTEMS INC.
By:____________________________
Yehuda Shimshom
Chairman, President & CEO
ATTEST:
By:_____________________________
Gary Tober
Secretary
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<PAGE>
Annex A
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, ________________ hereby sells, assigns and
transfers to each assignee set forth below all of the rights of the undersigned
in and to the number of Warrants (as defined in and evidenced by the foregoing
Warrant Certificate) set opposite the name of such assignee below and in and to
the foregoing Warrant Certificate with respect to said Warrants and the shares
of Common Stock issuable upon exercise of said Warrants:
Name of Assignee Address Number of Warrants
---------------- ------- ------------------
If the total of said Warrants shall not be all the Warrants evidenced
by the foregoing Warrant Certificate, the undersigned requests that a new
Warrant Certificate evidencing the Warrants not so assigned be issued in the
name of and delivered to the undersigned.
Name of
Holder (Print): ______________________
Dated: _____________, 19__ (By:)_______________________________
(Title:)
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<PAGE>
Annex B
FORM OF ELECTION TO PURCHASE
(To Be Executed by the Holder if the Holder Desires to Exercise Warrants
Evidenced by the Foregoing Warrant Certificate)
To: Casdim International Systems Inc.
The undersigned hereby irrevocably elects to exercise ______________
Warrants evidenced by the foregoing Warrant Certificate for, and to purchase
thereunder, ____________ full shares of Common Stock issuable upon exercise of
said Warrants and delivery of $____________ (in cash as provided for in the
foregoing Warrant Certificate) and any applicable taxes payable by the
undersigned pursuant to such Warrant Certificate.
The undersigned requests that certificates for such shares be issued
in the name of
--------------------------------------------------------------------------------
Please Insert Social Security or Tax Identification Number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
If said number of Warrants shall not be all the Warrants evidenced by
the foregoing Warrant Certificate, the undersigned requests that a new Warrant
Certificate evidencing the Warrants not so exercised be issued in the name of
and delivered to
--------------------------------------------------------------------------------
(Please print name and address)
Dated: _______________, 19__
Name of Holder (Print): _______________________________________________________
(By:)_____________________________________________
(Title:)__________________________________________
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<PAGE>
Exhibit 4.2
<PAGE>
STOCK OPTION AGREEMENT
Agreement entered into as of this 26th day of April, 1996 by and
between Casdim International Systems Inc. (the "Company"), a corporation
organized under the laws of Colorado, with principal executive offices at 5
Haofan Street, Kiryat-Arie, P.O. Box 3599, Petah Tikva, Israel 49130, and
Sunrise Financial Group, Inc. ("Sunrise").
1. Introductory. The Company desires to grant Sunrise a stock option to
acquire shares of common stock of the Company, par value $0.00001 per share (the
"Shares"), in partial consideration of its services to be rendered under a
public relations retainer agreement with the Company dated April 24, 1996, (the
"Public Relations Agreement").
2. Grant of Option. The Company hereby irrevocably grants to Sunrise a
stock option (the "Option") to purchase all or any part of an aggregate of seven
hundred thousand (700,000) Shares on the terms and conditions hereinafter set
forth.
3. Purchase Price. The purchase price ("Purchase Price") for the
Shares covered by the Option shall be $1.00 per Share.
4. Vesting of Options and Period of Exercise. The Option will vest as
follows: (i) options to purchase 460,000 Shares shall vest upon the effective
date of this Agreement; and (ii) options to purchase 240,000 Shares shall vest
ratably over 24 months (i.e., 10,000 Shares per month), beginning after the
first month of the effective date of this Agreement. The Option with respect to
vested Shares shall be exercisable beginning April 26, 1997.
5. Term of Options; Exercisability.
(a) Term. Each Option shall expire on April 26, 2001 (the "Expiration
Date").
(b) Exercisability.
(i) Except as otherwise provided in this Section 5, if Sunrise
at any time hereafter terminates the Public Relations Agreement and
ceases to provide services to the Company thereunder or if the Company
terminates the Public Relations Agreement for cause, any Options
granted to Sunrise which have not vested shall terminate immediately on
such date.
(ii) If the Company terminates the Public Relations Agreement
for any reason other than for cause, any Options granted to Sunrise
hereunder, shall vest immediately on such date.
6. Manner of Exercise of Option. To the extent that the right to
exercise the Option has accrued and is in effect, the Option may be exercised in
full or in part by giving written notice to the Company stating the number of
Shares exercised and accompanied by payment in full for such Shares. Payment
shall be made wholly in cash. Upon such exercise, delivery of a certificate for
paid-up, non-assessable
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<PAGE>
Shares shall be made at the principal office of the Company to the person
exercising the Option, not more than five (5) business days from the date of
receipt of the notice by the Company.
7. Non-Transferability. The right of Sunrise to exercise the Option
shall not be assignable or transferable by Sunrise, other than to affiliates of
Sunrise and members of the families of the executive officers of Sunrise,
without the approval and written consent of the Company. The Option shall be
null and void and without effect upon the bankruptcy of the holder or upon any
attempted assignment or transfer, except as hereinabove provided, including
without limitation any purported assignment, whether voluntary or by operation
of law, pledge, hypothecation or other disposition contrary to the provisions
hereof, or levy of execution, attachment, divorce, trustee process or similar
process, whether legal or equitable, upon the Option.
8. Representation Letter and Investment Legend. In the event that for
any reason the Shares to be issued upon exercise of the Option shall not be
effectively registered under the Securities Act of 1933, as amended, upon any
date on which the Option is exercised in whole or in part, the holder of the
Option shall give a written representation to the Company in the form attached
hereto as Exhibit 1 and the Company shall place an "investment legend," as
described in Exhibit 1, upon any certificate for the Shares issued by reason of
such exercise. The Company shall be under no obligation to qualify Shares or to
cause a registration statement or a post-effective amendment to any registration
statement to be prepared for the purpose of covering the issue of Shares, except
as provided herein.
9. Adjustments on Changes in Capitalization. Adjustments or Changes in
Capitalization and the like shall be made in accordance with Section 11 of this
Agreement.
10. No Special Employment Rights. Nothing contained in this Agreement
shall be construed or deemed under any circumstances to bind the Company to
continue to utilize the service of Sunrise for the period within which this
Option may be exercised.
11. Recapitalizations, Reorganizations and the Like.
(a) In the event that the outstanding shares of the Company
are changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another corporation by reason
of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares, or dividends
payable in capital stock, appropriate adjustment shall be made in the
number and kind of shares as to which options may be granted under this
Agreement and as to which outstanding options or portions thereof then
unexercised shall be exercisable, to the end that the proportionate
interest of the optionee shall be maintained as before the occurrence
of such event; such adjustment in outstanding options shall be made
without change in the total price applicable to the unexercised portion
of such options and with a corresponding adjustment in the option price
per Share.
(b) In addition, unless otherwise determined by the Board of
Directors of the Company in its sole discretion, in the case of any (i)
sale or conveyance to another
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<PAGE>
entity of all or substantially all of the property and assets of the
Company or (ii) Change in Control (as hereinafter defined) of the
Company, the purchaser(s) of the Company's assets or stock may, in its
discretion, deliver to the optionee the same kind of consideration that
is delivered to the shareholders of the Company as a result of such
sale, conveyance or Change in Control, which consideration shall be
equal in value to the value of those shares of stock or other
securities the optionee would have received had the option been
exercised (to the extent then exercisable) and no disposition of the
shares acquired upon such exercise been made prior to such sale,
conveyance or Change in Control, less the option price therefor. Upon
receipt of such consideration by Sunrise, its option shall immediately
terminate and be of no further force and effect. The value of the stock
or other securities Sunrise would have received if the option had been
exercised shall be determined in good faith by the Board of Directors
of the Company. The Board of Directors shall also have the power and
right, but not the obligation, to accelerate the exercisability of any
options, notwithstanding any limitations in this Agreement upon such a
sale, conveyance or Change in Control. A "Change in Control" shall be
deemed to have occurred if any person, or any two or more persons
acting as a group, and all affiliates of such person or persons, who
prior to such time owned less than fifty percent (50%) of the then
outstanding Ordinary Shares of the Company, shall acquire such
additional hares of the Company's Ordinary Shares in one or more
transactions, or series of transactions, such that following such
transaction or transactions, such person or group and affiliates
beneficially own more than fifty percent (50%) of the Company's
Ordinary Shares outstanding.
(c) Upon dissolution or liquidation of the Company, all
options granted under this Agreement shall terminate, but Sunrise shall
have the right, immediately prior to such dissolution or liquidation,
to exercise this option to the extent then exercisable.
(d) No fraction of a share shall be purchasable or deliverable
upon the exercise of any option, but in the event any adjustment
hereunder of the number of Shares covered by the option shall cause
such number to include a fraction of a Share, such fraction shall be
adjusted to the nearest smaller whole number of Shares.
12. Representations of the Parties.
(a) The holder of this Option, by acceptance hereof, acknowledges that
neither the Options nor the Shares have been registered under the Securities Act
of 1933, as amended (such Act, or any similar Federal statute then in effect,
being the "Securities Act"), and represents that it is acquiring the Options to
be issued to it for its own account and not with a view to the distribution
thereof, and agrees not to sell, transfer, pledge or hypothecate any Options or
any Shares unless a registration statement is effective for the Shares under the
Securities Act or in the opinion of such holder's counsel (a copy of which
opinion shall be delivered to the Company) such transaction is exempt from the
registration requirements of the Securities Act; provided that Options and
Shares issued to such holder may be transferred to any Affiliate of such holder,
without any such registration or opinion, subject to the foregoing restriction
on any further sale, transfer, pledge or hypothecation by such Affiliate.
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<PAGE>
(b) The Company will use its best efforts to comply with (i) the
reporting requirements of Section 13 and 15(d) of the Securities Exchange Act of
1934 (whether or not the Company is required to do so pursuant to such Sections)
and (ii) all other reporting requirements of the Securities and Exchange
Commission (such Commission or any successor to any or all of its functions
being the "Commission") from time to time in effect and relating to the
availability of an exemption from the Securities Act for sale of restricted
securities (including, without limitation, Rule 144 promulgated by the
Commission under the Securities Act). The Company also will cooperate with the
holder of this Option and with each holder of any Shares in supplying such
information as may be necessary for any such holder to complete and file any
information reporting forms presently or hereafter required by the Commission as
a condition to the availability of an exemption from the Securities Act for the
sale of restricted securities.
(c) The Company will use its best efforts to file a registration
statement relating to the Shares on Form S-8 under the Securities Act within 90
days of the date of this Agreement. To the extent the Company does not file such
a registration statement it will provide the holders of the Options with the
rights provided for in Section 13.
(d) The Company shall at all times during the term of the Option
reserve and keep available such number of shares as will be sufficient to
satisfy the requirements of the Option. Sunrise shall not have any of the rights
of a stockholder of the Company in respect of the Shares until one or more
certificates for such Shares shall be delivered to the holder upon the due
exercise of the Option.
13. "Piggyback" Registration Rights. Whenever the Company proposes to
file under the Securities Act a registration statement relating to any of its
shares or any other equity securities (other than a registration statement
required to be filed in respect of employee benefit plans of the Company on Form
S-8 or any similar form from time to time in effect or pursuant to this Section,
the Company shall, at least 30 days prior to such filing, give effective written
notice of such proposed filing to the registered holder of this Option. Upon
receipt by the Company, not more than 20 days after such effective notice, of a
written request or written requests from one or more of such holders for
registration of Shares, the Company shall use its best efforts to (A) include in
such registration statement or in a separate registration statement concurrently
filed, and cause such registration statement to become effective with respect to
the Shares as to which such holder or holders request registration and (B), if
such proposed registration is in connection with an underwritten offering of
Ordinary Shares, upon request of such holder or holders cause the managing
underwriter therefor to include in such offering the Shares as to which such
holder or holders request such inclusion, on terms and conditions comparable to
those of the securities offered on behalf of the Company, provided that if, at
any time after giving written notice of its intention to register any securities
and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to each holder of Shares
and, thereupon, (1) in the case of a determination not to register, shall be
relieved of its obligation to register any Shares in connection with such
registration (but not from its obligation to pay the expenses in connection
therewith), without prejudice, however, to the rights of any holder or holders
of Shares entitled to do so to request that such registration be effected as a
registration hereunder in the case of delay in registering, shall be
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<PAGE>
permitted to delay registering any Shares for the same period as the delay in
registering such other securities.
14. Registration Procedures. In connection with any registration
pursuant to Sections 12(c) or 13 herein, the Company will:
(a) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have
been disposed of in accordance with the intended methods of disposition
by the seller or sellers thereof set forth in such registration
statement; provided that if less than all the Shares are withdrawn from
registration after the expiration of such period, the shares to be so
withdrawn shall be allocated pro rata among the holders thereof on the
basis of the respective numbers of Shares held by them included in such
registration;
(b) furnish to each seller of Shares covered by such
registration statement such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents,
as such seller may reasonably request;
(c) use its best efforts to register or qualify all Shares and
other securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as each seller
thereof shall reasonably request, to keep such registration or
qualification in effect for so long as such registration statement
remains in effect, and take any other action which may be reasonably
necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the securities owned by such
seller;
(d) notify each seller of Shares covered by such registration
statement, at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, 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 any material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made, and at the
request of any such seller promptly prepare and furnish to such seller
a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to
the purchasers of such securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein
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<PAGE>
or necessary to make the statements therein not misleading in the light
of the circumstances under which they were made; and
(e) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first full calendar month
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act, and not file any amendment or supplement to such
registration statement or prospectus to which any such seller shall
have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the
requirements of the Securities Act or of the rules or regulations
thereunder, having been furnished with a copy thereof at least five
business days prior to the filing thereof.
The Company may require each seller of Shares as to which any registration is
being effected to furnish the Company such information regarding such seller and
the distribution of such securities as the Company may from time to time
reasonably request in writing.
Each holder of Shares agrees by acquisition of such Shares that upon receipt of
any notice from the Company of the happening of any event of the kind described
in clause (d) of this Section, such holder will forthwith discontinue such
holder's disposition of Shares pursuant to the registration statement relating
to such Shares until such holder's receipt of the copies of the supplemented or
amended prospectus contemplated by clause (d) of this Section, and, if so
directed by the Company, will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies, then in such holder's possession
of the prospectus relating to such Shares current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period referred
to in clause (a) of this Section shall be extended by a number of days equal to
the number of days during the period from and including the giving of notice
pursuant to clause (d) to and including the date when each seller of any Shares
covered by such registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by clause (d) of this Section.
15. Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act,
the Company will give the holders of Shares registered under such registration
statement, their underwriters, if any, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
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<PAGE>
16. Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act,
the Company will, and hereby does, indemnify and hold harmless the
seller of any Shares covered by such registration statement, its
directors and officers, each other Person who participates as an
underwriter in the offering or sale of such securities and each other
person or entity, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act against any
losses, claims, damages or liabilities, joint or several, to which such
seller or any such director or officer or underwriter or controlling
person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act,
any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and the Company will reimburse such seller and each such
director, officer, underwriter and controlling person for any legal or
any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission
of alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with written
information furnished to the Company through an instrument duly
executed by such seller specifically stating that it is for use in the
preparation thereof, and, provided further that the Company shall not
be liable to any person or entity who participates as an underwriter,
in the offering or sale of Shares or any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, in
any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense
arises out of such person's or entity's failure to send or give a copy
of the final prospectus to the person or entity asserting an untrue
statement or alleged untrue statement or omission or alleged omission
at or prior to the written confirmation of the sale of Shares to such
person or entity if such statement or omission was corrected in such
final prospectus. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or
any such director, officer, underwriter or controlling person and shall
survive the transfer of such securities by such seller.
(b) Indemnification by the Sellers. The Company may require,
as a condition to including any Shares in any registration statement
filed pursuant to this Option
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<PAGE>
Agreement, that the Company shall have received an undertaking
satisfactory to it from the prospective seller of such securities, to
indemnify and hold harmless (in the same manner and to the same extent
as set forth in clause (a) of this subsection) the Company, each
director of the Company, each officer of the Company and each other
person, if any, who controls the Company within the meaning of the
Securities Act, with respect to any statement or alleged statement in
or omission or alleged omission from such registration statement, any
preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by such seller
specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect regardless of any investigation made by
or on behalf of the Company or any such director, officer or
controlling person and shall survive the transfer of such securities by
such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding clauses of
this subsection, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, promptly give
written notice to the indemnifying party, provided that the failure of
any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
clauses of this subsection, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. In case
any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgement a conflict of interest between
such indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying
party similarly notified to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified party, and after notice
from the indemnify ing party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses
subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying
party shall consent to entry of any judgment or enter into any
settlement without the consent of the indemnified party which does not
include as a unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding clauses of this subsection (with appropriate
modifications) shall be given by the Company and each seller of Shares
with respect to any required registration
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<PAGE>
or other qualification of securities under any Federal or state law or
regulation of governmental authority other than the Securities Act.
17. Registration Expenses. All fees, disbursements and expenses
(collectively, the "Registration Expenses") incurred by the Company in
connection with any piggyback registration pursuant to Section 13, shall be
borne by the Company, including, without limitation, all registration and filing
fees, all costs of preparation and printing (in such quantities as the holders
of Shares, or the underwriters, may reasonably request) of any registration
statement and related prospectus and any amendments or supplements thereto, all
fees and disbursements of counsel for the Company, the expenses of complying
with applicable securities or blue sky laws, and all costs in connection with
the preparation and delivery of such legal opinions, auditors' comfort letters
or other closing documents as the holders of Shares, or as the underwriters
shall reasonably request. All underwriting commissions allocable to the Shares
in connection with a registration pursuant to Section 13 shall be allocated
among the holders of Shares pro rata according to the number of Shares being
registered by each such holder or in such other manner as such holders may
agree.
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<PAGE>
18. Notices. All notices required or permitted to be given hereunder
shall be in writing and shall be deemed to have been (a) when received, if
delivered in person; (b) when sent, if sent by telecopier and confirmed within
forty-eight (48) hours by letter mailed or delivered to the party to be notified
at its address set forth herein; or (c) five (5) business days following the
mailing thereof if mailed by certified first class mail, postage prepaid, return
receipt requested, in any such case as follows:
If to the Company, to:
Casdim International Systems Inc.
Group, 5 Haofan Street,
Kiryat-Arie, P.O. Box 3599,
Petah Tikva, Israel 49130
Telecopier: 011-972-3-921-0463
Attention: Mr. Yehuda Shimshon, President
with a copy to:
Carter, Ledyard & Milburn
2 Wall Street
New York, New York 10005-2072
Attention: Steven J. Glusband, Esq.
Telecopier: (212) 732-3232
If to Sunrise, to:
Sunrise Financial Group, Inc.
919 Third Avenue, 19th Floor
New York, New York 10022
Attention: Nathan A. Low, President
Telecopier: (212) 421-5944
19. Survival of Rights and Duties. This Agreement shall terminate and
be of no further force and effect on the earlier of (i) 5:00 p.m. Eastern
Standard Time, on the Expiration Date or (ii) the date on which all of the
Shares have been exercised, except that the provisions of Section 6 and 13 shall
continue in full force and effect after such termination date.
20. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Company, its successors and assigns, and the
registered holder or holders from time to time of the Options and Shares.
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<PAGE>
21. Severability. If for any reason any provision, paragraph or term of
this Agreement is held to be invalid or unenforceable, all other valid
provisions herein shall remain in full force and effect and all terms,
provisions and paragraphs of this Agreement shall be deemed to be severable.
22. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to its conflict
of laws provisions.
23. Headings. Paragraph and subparagraph headings used herein are
included for convenience of reference only shall not affect the construction of
this Agreement nor constitute a part of this Agreement for any other purpose.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date and year first above written.
CASDIM INTERNATIONAL SYSTEMS, INC.
By:____________________________
SUNRISE FINANCIAL GROUP, INC.
By:____________________________
Nathan A Low, President
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EXHIBIT 1
TO STOCK OPTION AGREEMENT
Gentlemen:
In connection with the exercise by me as to shares of common stock, par
value $0.00001 per share, of Casdim International Systems Inc., (the "Company"),
under the stock option agreement dated April 24, 1996, granted to me, I hereby
acknowledge that I have been informed as follows:
1. The shares of the Company to be issued to me pursuant to
the exercise of said option have not been registered under the
Securities Act of 1933, as amended (the "Act"), and accordingly, must
be held indefinitely unless such shares are subsequently registered
under the Act, or an exemption from such registration is available.
2. Routine sales of securities made in reliance on Rule 144
under the Act can be made only after the holding period and in limited
amounts in accordance with the terms and conditions provided by that
Rule, and in any sale to which that rule is not applicable,
registration or compliance with some other exemption under the Act will
be required.
3. The Company is under no obligation to me to register the
shares or to comply with any such exemptions under the Act, except as
provided on the aforesaid option agreement.
4. The availability of Rule 144 is dependent upon adequate
current public information with respect to the Company being available
and, at the time that I may desire to make a sale pursuant to the Rule,
the Company may neither wish nor be able to comply with such
requirement.
In consideration of the issuance of certificates for the
shares to me, I hereby represent and warrant that I am acquiring such shares for
my own account for investment, and that I will not sell, pledge or transfer such
shares in the absence of an effective registration statement covering the same,
except as permitted by the provisions of Rule 144, if applicable, or some other
applicable exemption under the Act. In view of this representation and warranty,
I agree that there may be affixed to the certificates for the shares to be
issued to me, and to all certificates issued hereafter representing such shares
(until in the opinion of counsel, which opinion must be reasonably satisfactory
in form and substance to counsel for the Company, it is no longer necessary or
required) a legend as follows:
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"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and were acquired by the
registered holder pursuant to a representation and warranty that such
holder was acquiring such shares for his own account and for
investment, with no intention to transfer or dispose of the same, in
violation of the registration requirements of that Act. These shares
may not be sold, pledged or transferred in the absence of an effective
registration statement under the Securities Act of 1933, as amended, or
an opinion of counsel, which opinion is reasonably satisfactory to
counsel to the Company, to the effect that registration is not required
under said Act."
I further agree that the Company may place a stop order with its
Transfer Agent, prohibiting the transfer of such shares, so long as the legend
remains on the certificates representing the shares.
Very truly yours,
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<PAGE>
Exhibit 10.1
<PAGE>
Appendix 1
to Private Placement Memorandum
CASDIM INTERNATIONAL SYSTEMS INC.
PRIVATE PLACEMENT PURCHASE AGREEMENT
April 24, 1996
TO: The Purchasers Listed
On Schedule 1 Hereto
Ladies and Gentlemen:
1. Introductory. Casdim International Systems Inc., a corporation
organized under the laws of Colorado (the "Company"), proposes to issue and sell
to the purchasers listed on Schedule 1 hereto (each a "Purchaser" and
collectively the "Purchasers"), 4,000,000 Shares of the Company, par value
$0.00001 each (the "Shares"), at a price of $0.75 per Share.
The Shares will be offered and sold to the Purchasers without
registration under the United States Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon certain exemptions therefrom. The total
purchase price for the Shares offered hereby is $3,000,000, payable in full on
May 3, 1996 (the "Closing Date") by wire transfer payable in accordance with the
wire instructions annexed hereto as Schedule 2.
The Closing of the purchase and sale of the Shares contemplated by this
Agreement shall take place at 10:00 a.m. on May 3, 1996 at the offices of
Carter, Ledyard & Milburn, located at 2 Wall Street, New York, New York.
2. Purchase and Delivery of the Shares. On the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, the Company hereby agrees to sell to the Purchasers and each
Purchaser agrees to purchase from the Company, the principal amount of Shares
set forth opposite the name of such Purchaser on Schedule 1 hereto, for the
purchase price set forth opposite the name of such Purchaser on Schedule 1
hereto. The Company shall deliver the Shares in the name of such Purchaser. The
representations, warranties, covenants and agreements of each Purchaser
contained herein or in any documents delivered pursuant hereto are made
severally and not jointly. No Purchaser shall be liable for the breach of any
representation, warranty, covenant or agreement, of another Purchaser. The
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Shares, when issued, shall have endorsed thereon a restrictive legend
substantially in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED OR QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR QUALIFICATION OR AN EXEMPTION
THEREFROM UNDER THE SECURITIES ACT, AND ANY SUCH STATE LAWS
WHICH MAY BE APPLICA BLE AND ARE TRANSFERABLE ONLY UPON THE
CONDI TIONS SPECIFIED IN THIS SHARE CERTIFICATE.
The Purchasers of such restricted Shares may, upon the effectiveness of a
registration statement covering such Shares, exchange the legended Shares for
unlegended securities.
3. Restrictions on Transfer; Warranties of Purchasers.
(a) Each Purchaser acknowledges that the Shares will not be
registered under the Securities Act and that the Shares obtained by
such Purchaser are being sold pursuant to the exemption from the
registration requirements of the Securities Act provided by Section
4(2) thereof. Each Purchaser represents, warrants and agrees that it
has not offered, and will not offer or sell the Shares purchased from
the Company hereunder, by means of any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.
(b) Each Purchaser represents and warrants that it is an
Accredited Investor, as such term is defined under Regulation D under
the Securities Act, and confirms that it is not acquiring the Shares
with a view to any distribution thereof in a transaction that would
violate the Securities Act or the securities laws of any State of the
United States or any other applicable jurisdiction.
(c) Each Purchaser individually represents and warrants as
follows:
(i) Such Purchaser has received copies of, and is
familiar with, information concerning the Company which such
Purchaser has deemed necessary to make an informed decision to
purchase the Shares. Such Purchaser has reviewed the
disclosures relating to and consulted his own independent
advisers or otherwise has satisfied himself concerning the
investment in the Shares.
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<PAGE>
(ii) Such Purchaser acknowledges that he has had
access to such financial and other information and has been
afforded the opportunity to ask questions and receive
satisfactory answers from representatives of the Company
regarding the Company, and the terms and conditions relating
to investment in the Company, and all such questions have been
answered to his full satisfaction.
(iii) Such Purchaser has the knowledge and experience
in financial and business matters to be capable of evaluating
the merits and risks of an investment in the Shares and is
able to bear the economic risk of the investment with
particular reference to the fact that the Shares will be
"restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act and may not be transferred except as
set forth herein. Such Purchaser is acquiring the Shares for
investment and not with a view to, or for resale in connection
with, any distribution or other disposition of the Shares
within the meaning of the Securities Act. There is no
contract, undertaking, arrangement, or agreement with any
person to sell or transfer or to have any person sell all or
any portion of such Purchaser's Shares.
(iv) Such Purchaser is not purchasing the Shares (1)
as a result of or subsequent to becoming aware of any
advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or
broadcast over television or radio; or (2) as a result of or
subsequent to attendance at a seminar or meeting called by any
of the means set forth in (1); or (3) as a result of or
subsequent to any solicitation by a person not previously
known to him in connection with investments in securities
generally.
4. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Purchasers that as of the date
hereof and as of the Closing Date:
(a) The Company has been duly incorporated and is a validly
existing company, in good standing or the equivalent under the laws of
Colorado and has the corporate power and authority to conduct its
business.
(b) The Company is not in violation of its Articles of
Incorporation, Bylaws or other constituent documents or in default in
the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of
trust or other material instrument or agreement to which it is a party
or by which it or its property may be bound; and neither the
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<PAGE>
execution nor the delivery by the Company, or the performance by the
Company of its obligations under this Agreement will, conflict with or
result in the breach or violation of any of the terms or provisions of,
or constitute a default or result in the creation or imposition of any
lien or charge on any assets or properties of the Company under any
material indenture, mortgage, deed of trust or other material agreement
or instrument to which the Company is a party or by which it is bound,
or any statute, decree, judgment, order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company or its properties.
(c) The authorized capital stock of the Company, as of
December 31, 1995, consists of 100,000,000 shares of Preferred Stock,
none of which have been issued, and 500,000,000 Shares of Common Stock,
par value $0.00001 each, of which 9,634,000 Shares are issued and
outstanding. As of the date hereof, and before giving effect to this
transaction, the Company had no options, warrants and other rights
outstanding to purchase, receive or obligate the Company to issue
Shares.
(d) The execution and the delivery by the Company of this
Agreement and the consummation of the transactions herein contemplated
(including the issuance of the Shares), do not and will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default or result in the creation or
imposition of any lien or charge under (a) any indenture, mortgage,
deed of trust, loan agreement or any material agreement to which the
Company is a party or by which it is bound, or (b) the Company's
Articles of Incorporation, By-laws or other constituent documents.
(e) Assuming with respect to a Purchaser that this Agreement
has been duly authorized, executed and delivered by such party, the
Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, fraudulent
transfer, reorganization and similar laws of general applicability
relating to or affecting creditors' rights and to general equitable
principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
(f) The Shares offered hereby have been duly authorized and,
when executed, delivered, and paid for by the Purchasers in accordance
with the terms of this Agreement, will be duly executed, authenticated,
issued and delivered by the Company, and will constitute valid and
legally binding obligations of the Company, enforceable in accordance
with their terms, subject, as to enforcement, to bankruptcy,
insolvency, fraudulent transfer, reorganization and similar laws of
general applicability relating to or affecting creditors' rights and to
general
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<PAGE>
equitable principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
(g) Upon consummation of the transaction contemplated hereby,
the Purchasers will own the Shares free and clear of all liens, claims,
charges and other encumbrances, and the delivery of the Shares to the
Purchasers pursuant to this Agreement will transfer legal and valid
title thereto, free and clear of all liens, claims, charges and other
encumbrances.
(h) There is no action, suit or proceeding before or by, any
court or govern mental agency or body, domestic or foreign, now pending
or to the knowledge of the Company, threatened, against or affecting
the Company or any of its prop erties, which might result in any
material adverse change in the condition (financial or otherwise) or in
the earnings, business affairs or business prospects of the Company
considered as one enterprise, or which might materially and adversely
affect the properties or assets thereof.
(i) The financial statements of the Company included in the
Company's last report on Form 10-K and all reports on Form 10-Q since
such report, all of which have been provided to the Purchasers, present
fairly the financial position and results of operations of the Company
at the respective dates or for the respect ive periods to which they
apply; such financial statements have been prepared in conformity with
accounting principles generally accepted in the United States applied
on a consistent basis throughout the respective periods involved.
(j) None of the Company's filings with the Securities and
Exchange Commission (the "Commission"), since January 1, 1995, contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statement
therein, in light of the circumstances under which they were made, not
misleading.
(k) No consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required for the
performance by the Company of its obligations under this Agreement, or
otherwise in connection with the issuance or sale of the Shares.
(l) No fees, other than (i) a $75,000 fee payable to Pelican
Securities & Investments Ltd. ("Pelican"), an Israeli company; and (ii)
the issuance of five-year warrants to purchase 1,150,000 shares of
Common Stock of the Company, at an exercise price of $1.00 per share,
to Pelican and other certain offshore companies in connection with
financial consulting services rendered in connection with this private
placement, are payable to any agent, broker or investment banker with
respect to the issuance and sale of the Shares.
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(m) Casdim Israel has been duly incorporated and is a validly
existing company, in good standing or the equivalent under the laws of
Israel, and has the corporate power and authority to conduct its
business.
(n) The execution and the delivery by the Company, of this
Agreement, the Shares, and the consummation of the transactions herein
or therein contemplated (including the issuance of the Shares) do not
and will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default or result in the
creation or imposition of any lien or charge under (a) Casdim Israel's
Articles and Memorandum of Association, (b) any Israeli statute, rule
or regulation, or (c) any decree, judgment or order, specifically
binding upon Casdim Israel or the Company, known to the best of such
counsel's knowledge, of any Israeli court or governmental agency or
body having jurisdiction over the Company or its properties.
(o) No consent, approval, authorization or order of, or filing
with, any Israeli court or governmental agency or body is required for
the performance by the Company of its obligations under this Agreement
which has not been obtained or made.
5. Conditions to Closing. The obligation of any Purchaser to purchase
and pay for the Shares will be subject, in the discretion of such Purchaser, to
the accuracy of the represent ations and warranties on the part of the Company
herein, to the accuracy of the statements of the authorized representatives of
the Company (which term shall mean a director, officer or another person who is
authorized to do so on behalf of the Company) made in any certificates pursuant
to the provisions hereof, to the performance by the Company of its obligations
hereunder, and to the following conditions precedent set forth below. At the
Closing and against payment of the purchase price, the Purchasers shall receive:
(a) An opinion letter of Avi Mayer - Anat Green, Israeli
counsel for the Company, dated the Closing Date, stating that the
Company's subsidiary and primary asset, Casdim Interactive Systems
Ltd., an Israeli company ("Casdim Israel"):
(i) has been duly incorporated and is a validly
existing company, in good standing or the equivalent under the
laws of Israel, and has the corporate power and authority to
conduct its business.
(ii) the execution and the delivery by the Company, of
this Agreement, the Shares, and the consummation of the
transactions herein or therein contemplated (including the
issuance of the Shares) do not and will not conflict with or
result in a breach or violation
-6-
<PAGE>
of any of the terms or provisions of, or constitute a default
or result in the creation or imposition of any lien or charge
under (a) Casdim Israel's Articles and Memorandum of
Association, (b) any Israeli statute, rule or regulation, or
(c) any decree, judgment or order, specifically binding upon
Casdim Israel or the Company, known to the best of such
counsel's knowledge, of any Israeli court or governmental
agency or body having jurisdiction over the Company or its
properties; and
(iii) No consent, approval, authorization or order of,
or filing with, any Israeli court or governmental agency or
body is required for the performance by the Company of its
obligations under this Agreement which has not been obtained
or made.
(b) A letter, in the form of Schedule 3 annexed hereto, from
Mr. Yehuda Shimshon in which he represents and agrees that:
(i) he will not sell, lend, transfer, pledge or
hypothecate his shares of the Company, for a period of three
years from the date of the Closing Date, without the written
consent of Sunrise Securities Corp. ("Sunrise"), the duly
appointed representative of the Purchasers for this purpose,
and will deposit all such shares, except for those referred to
in subparagraph 5(f) herein, with Gary Tober, Esq. (the
"Escrow Agent") within 30 days from the Closing Date. Any
permitted sale of such shares referred to in this paragraph
shall be effected through Sunrise, acting as broker/dealer, at
a commission rate of $0.05 per share.
(ii) he will vote his shares in favor of a resolution
to cancel the 100,000,000 shares of the Company currently
authorized to be issued as Preferred Stock, and the adoption
of the resulting amended Articles of Incorporation;
(iii) he will vote his shares in favor of the
Representative's election as a director of the Company for the
two year period from the date hereof, and so long as the
Purchasers maintain continued and uninterrupted ownership, as
a group, of at least 2,000,000 of the issued and outstanding
shares of the Company; and
(iv) he will vote his shares, for a period of two
years from the Closing Date, against any resolution to approve
and authorize any new class of shares of the Company; provided
that, upon the
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<PAGE>
concurrence of the Purchasers, Mr. Shimshon may vote his shares
in favor of such resolution.
(c) A letter from Cedarwood Trading & Investment Ltd.
("Cedarwood"), a controlling shareholder of the Company, in which
Cedarwood represents that it will not sell, lend, transfer, pledge or
hypothecate its shares of the Company, for a period of two years from
the date of the Closing Date, without the written consent of Sunrise,
the duly appointed representative of the Purchasers for this purpose,
and will deposit all such shares with the Escrow Agent within 30 days
from the Closing Date. Any permitted sale of such shares referred to in
this paragraph shall be effected through Sunrise, acting as
broker/dealer, at a commission rate of $0.05 per share.
(d) A opinion letter of Colorado Counsel, in a form reasonably
acceptable to Sunrise, with respect to matters covered by Sections
4(a)-(k) herein.
(e) Evidence that Mr. Yehuda Shimshon's shares of Casdim
Israel have been deferred, as of the Closing Date.
(f) Evidence that Mr. Shimshon shall have placed 500,000 of
his shares of Common Stock of the Company in escrow with the Escrow
Agent to guarantee the performance of Casdim Software System Ltd.
required under such company's October 1995 agreement with Casdim
Israel. Such shares shall remain in escrow until performance of the
obligations under such agreement is complete.
(g) Evidence that the Company shall have entered into a public
relations agreement with Sunrise Financial Group Inc., which shall
provide for the issuance to Sunrise Financial Group Inc., on the
Closing Date, of five-year warrants or options to purchase 700,000
shares of Common Stock of the Company, at an exercise price of $1.00
per share, in exchange for services rendered under such agreement.
6. Post-Closing Covenants of the Company. The Company hereby covenants
to effect the following corporate actions as soon as practicable after the
Closing Date:
(a) To propose, at the first annual meeting of shareholders
held after the Closing Date, the cancellation of the 100,000,000 shares
of the Company currently authorized to be issued as Preferred Stock,
and the adoption of the resulting amended Articles of Incorporation.
(b) The Board of Directors of the Company shall convene a
meeting, within seven business days from the Closing Date, at which the
following actions shall be taken:
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<PAGE>
(i) Mr. David Tamir, the duly appointed representative
of the Purchasers or his duly appointed successor (the
"Representative"), shall be elected to serve as a director of
the Company for a period of one year, in accordance with the
By-laws of the Company; and
(ii) the Board of Directors shall appoint an Audit
Committee, which shall consist of no less than two members,
one of whom shall be the Representative, to review and approve
any transactions, in excess of $60,000, with affiliated
parties or entities of the Company. All such transactions must
be approved by the Representative.
(c) Each of the Boards of Directors of Casdim Interactive
Systems USA, Inc. ("Casdim USA") and Casdim Israel, subsidiaries of the
Company, shall convene a meeting, within seven business days from the
Closing Date, at which the Representative shall be elected to serve as
a director of Casdim USA and Casdim Israel in accordance with the
respective company's By-laws.
(d) Each of the Boards of Directors of the Company, Casdim
USA, and Casdim Israel shall continue to nominate the Representative to
serve as director of the respective company for at least a second term
and shall continue to nominate him as a director thereafter so long as
the Purchasers, as a group, shall continue to own on an uninterrupted
basis, at least 2,000,000 of the issued and outstanding shares of the
Company.
(e) A Chief Financial Officer of the Company, Casdim USA, and
Casdim Israel shall be elected, after consultation with the
Representative, to serve at the discretion of the respective Board of
Directors. All expenses of the Company in excess of $25,000 incurred
prior to the appointment of the aforesaid Chief Financial Officer shall
be reported in writing to the Board of Directors of the relevant
company.
(f) The Company will not, for a period of two years from the
Closing Date, issue any additional shares of Common Stock without the
written consent of Sunrise, the duly appointed representative of the
Purchasers for this purpose; provided that, the Company may issue, at
its discretion, up to 500,000 shares of Common Stock reserved for
issuance under an eligible, qualified employee benefit plan, and
1,850,000 shares of Common Stock reserved for issuance upon the
exercise of warrants issued in connection with this private placement.
(g) The Company will establish, within sixty days after the
Closing Date, an employee stock option plan.
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<PAGE>
(h) All proceeds received by the Company in connection with
this private placement, shall be used to carry on the operation of the
Company in the ordinary course of business.
(i) The Company shall appoint an auditor, acceptable to
Sunrise, to audit the Company's financial statements for the fiscal
year ended December 31, 1996.
7. Registration. The Company agrees, at its sole expense, to:
(a) prepare and (within 60 days after the end of the period
within which requests for registration may be given to the Company or
in any event as soon thereafter as possible) file with the Commission
the requisite registration statement to effect such registration and
use its best efforts to cause such registration statement to become
effective, provided, however, that the Company may discontinue any
registration of its securities which are not Shares at any time prior
to the effective date of the registration statement relating thereto;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have
been disposed of in accordance with the intended methods of disposition
by the seller or sellers thereof set forth in such registration
statement;
(c) furnish to each seller of Shares covered by such
registration statement such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents,
as such seller may reasonably request;
(d) use its best efforts to register or qualify all Shares and
other securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as each seller
thereof shall reasonably request, to keep such registration or
qualification in effect prepare and file such amendments and
supplements to such registration statement, and the prospectus used in
connection therewith, as may be necessary to keep such registration
statement effective for a period of two years, (except that if Rule
144(d)(1) under the Securities Act shall be amended to reduce the
holding period required thereunder, the Company's
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<PAGE>
obligation to keep such registration statement current shall be reduced
to eighteen months);
(e) use its best efforts to cause all Shares covered by such
registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of such Shares;
(f) furnish to each seller of Shares a signed counterpart,
addressed to such seller (and the underwriters, if any), of:
(i) an opinion of counsel for the Company, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement),
reasonably satisfactory in form and substance to such seller,
and
(ii) a "comfort" letter, dated the effective date of
such registration statement (and, if such registration
includes an underwritten public offering, dated the date of
the closing under the underwriting agreement), signed by the
independent public accountants who have certified the
Company's financial statements included in such registration
statement, covering substantially the same matters with
respect to such registration statement (and the prospectus
included therein) and, in the case of the accountants' letter,
with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions
of issuer's counsel and in accountants' letters delivered to
the underwriters in accordance with public offerings of
securities and, in the case of the accountants' letter, such
other financial matters, such as seller (or the underwriters,
if any) may reasonably request;
(g) notify each seller of Shares covered by such registration
statement, at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, 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 any material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made, and at the
request of any such seller promptly prepare and furnish to such seller
a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to
the purchasers of such securities, such prospectus shall not include an
untrue statement of a material fact or omit to state
-11-
<PAGE>
a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
under which they were made;
(h) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first full calendar month
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act, and not file any amendment or supplement to such
registration statement or prospectus to which any such seller shall
have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the
requirements of the Securities Act or of the rules or regulations
thereunder, having been furnished with a copy thereof at least five
business days prior to the filing thereof;
(i) provide a transfer agent and registrar for all Shares
covered by such registration statement not later than the effective
date of such registration statement; and
(j) to use its best efforts to procure the listing of the
Company's Common Stock and the Shares on the Nasdaq Small Cap stock
market.
The Company may require each seller of Shares as to which any registration is
being effected to furnish the Company such information regarding such seller and
the distribution of such securities as the Company may from time to time
reasonably request in writing.
Each holder of Shares agrees by acquisition of such Shares that upon receipt of
any notice from the Company of the happening of any event of the kind described
in clause (g) of this Section, such holder will forthwith discontinue such
holder's disposition of Shares pursuant to the registration statement relating
to such Shares until such holder's receipt of the copies of the supplemented or
amended prospectus contemplated by clause (g) of this Section, and, if so
directed by the Company, will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies, then in such holder's possession
of the prospectus relating to such Shares current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period referred
to in clause (b) of this Section shall be extended by a number of days equal to
the number of days during the period from and including the giving of notice
pursuant to clause (g) of this Section to and including the date when each
seller of any Shares covered by such registration statement shall have received
the copies of the supplemented or amended prospectus contemplated by clause (g)
of this Section.
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<PAGE>
8. Expenses. The Company will pay or cause to be paid, when due, the
following: (i) fees and expenses of compliance with blue-sky laws in such States
as Purchasers may reasonably request, if any (ii) the cost of preparing and
delivering registered Shares to the Purchasers; and (iii) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section 8. It is understood,
however, that, except as provided in this Section 8, each Purchaser will pay all
its own costs and expenses relating to the negotiation and execution of this
Agreement by it and the purchase by it of the Shares, including the fees of its
counsel.
9. (a) Indemnification by the Company. In the event of any registration
of any securities of the Company under the Securities Act, the Company will, and
hereby does, indemnify and hold harmless the seller of any Shares covered by
such registration statement, its directors and officers, each other Person who
participates as an underwriter in the offering or sale of such securities and
each other person or entity, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which such seller or any such
director or officer or underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse such seller and each such director, officer, underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission of alleged
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company through an
instrument duly executed by such seller specifically stating that it is for use
in the preparation thereof, and, provided further that the Company shall not be
liable to any person or entity who participates as an underwriter, in the
offering or sale of Shares or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such person's or entity's failure to
send or give a copy of the final prospectus to the person or entity asserting an
untrue statement or alleged untrue statement or omission or alleged omission at
or prior to the written confirmation of the sale of Shares to such person or
entity if such statement or omission was corrected in such final prospectus.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any such director,
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<PAGE>
officer, underwriter or controlling person and shall survive the transfer of
such securities by such seller.
(b) Indemnification by the Purchasers. The Company may
require, as a condition to including any Shares in any registration
statement filed pursuant to Section 7, that the Company shall have
received an undertaking satisfactory to it from the prospective seller
of such securities, to indemnify and hold harmless (in the same manner
and to the same extent as set forth in clause (a) of this Section) the
Company, each director of the Company, each officer of the Company and
each other person, if any, who controls the Company within the meaning
of the Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto,
if such statement or alleged statement or omission or alleged omission
was made in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by such
seller specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect regardless of any investigation made by
or on behalf of the Company or any such director, officer or
controlling person and shall survive the transfer of such securities by
such seller.
(c) Notices of Claims. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding clauses of
this Section, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, promptly give
written notice to the indemnifying party, provided that the failure of
any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
clauses of this Section, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. In case
any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgement a conflict of interest between
such indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying
party similarly notified to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses
subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying
party shall consent to entry of any judgment or enter into any
settlement without the consent of the indemnified party
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<PAGE>
which does not include as a unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding clauses of this Section(with appropriate
modifications) shall be given by the Company and each seller of Shares
with respect to any required registration or other qualification of
securities under any Federal or state law or regulation of governmental
authority other than the Securities Act.
(e) Indemnification Payments. The indemnification required by
this Section shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills
are received or expense, loss, damage or liability is incurred.
(f) The Company agrees to indemnify and hold harmless each
Purchaser from and against any liability, damage, cost or expense
including reasonable attorney's fees incurred as a result of breach by
the Company of any representation, warranty, agreement or covenant of
the Company hereunder.
10. Notices. All communications hereunder will be in writing, and, if
sent to a Purchaser, will be delivered to such Purchaser at the address set
forth in Schedule 1 hereto, with a copy to Squadron, Ellenoff, Plesent,
Sheinfeld & Sorkin, 551 Fifth Avenue, New York, N.Y. 10176, Attention: Kenneth
Koch, Esq.; and if sent to the Company, to c/o Casdim Group, 5 Haofan Street,
Kiryat-Arie, P.O. Box 3599, Petah Tikva, Israel 49130, with a copy to Carter,
Ledyard & Milburn, 2 Wall Street, New York, New York 10005, telefax number (212)
732-3232, Attention: Steven J. Glusband. Notice shall be effective upon
delivery.
11. Submission to Jurisdiction and Waiver of Inconvenient Forum. The
Company expressly accepts the jurisdiction of the courts of the United States
Federal District for the Southern District of New York in respect of any suit,
proceeding or other action which relates to or arises out of this Agreement and,
without limiting other methods of obtaining jurisdiction, expressly submits to
exclusive personal jurisdiction of any such court in respect of any such suit,
proceeding or other action. The Company further agrees that service of process
upon its authorized agent or successor (and written notice of said service to
the Company, given as provided in Section 10 above) shall be deemed in every
respect personal service of process upon the Company in any such suit,
proceeding or other action. The Company hereby irrevocably waives any objection
that it may have or hereafter have to the laying of venue of any such action or
proceeding in the United States Federal District Court for the Southern District
of New York, and including (without limitation) any claim that such action or
proceeding in such court has been brought in an inconvenient forum. Nothing
contained in this Agreement shall affect or limit the right of the Purchasers to
serve any process or notice of motion or other application in any other manner
permitted by law or limit or affect the right of the Purchaser to bring any
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<PAGE>
action or proceeding against the Company or any of its property in the courts of
any other jurisdiction. The Company hereby agrees to the exclusive jurisdiction
of the United States Federal District Court of the Southern District of New York
in connection with any action brought by it relating to this Agreement.
12. Successors and Assigns. This Agreement will inure to the benefit
of, and be binding upon, the parties hereto, their respective successors and
assigns, and the officers and directors and each person who controls the parties
hereto within the meaning of the Securities Act, and no other person will have
any right or obligation hereunder. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person, firm or
corporation any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provi sions herein contained. This Agreement is not
assignable by the Purchaser without the prior written consent of the Company.
13. Counterparts; Governing Law. This Agreement may be executed in
counterparts all of which, taken together, shall constitute a single agreement
between the parties to such coun terparts. This Agreement shall be governed by,
and construed in accordance with, the laws of the state of New York without
giving effect to conflict of laws principles.
14. Termination. The obligations of any Purchaser under this Agreement
may be terminated for any reason at any time prior to the delivery and payment
of the Securities on the date hereof upon written notice of such termination to
the Company, if prior to such time (i) there shall have occurred either of (A)
the closing of the New York Stock Exchange or American Stock Exchange, or (B) a
general suspension or material limitation of trading on either such Exchange or
the general establishment of minimum prices by either such Exchange or by the
Commission or (C) the declaration of a bank moratorium by authorities of the
United States or State of New York, or (D) the declaration by the United States
of national emergency or war; (ii) there shall have been any development
involving a prospective change (whether financial or otherwise) in or affecting
the financial position, shareholders' equity or results of operations of the
Company, which such Purchaser in its reasonable judgment considers material and
adverse and which are not disclosed in the package of materials provided by the
Company to the Purchaser; or (iii) any of the conditions to the Closing have not
been performed by the Company. In the event of any such termination, the Company
shall have no liability to the terminating Purchaser.
15. Amendments; Waivers. This Agreement may not be amended, modified or
supplemented and no waivers of or consents to departures from the provisions
hereof may be given unless consented to in writing by the Company and the
Purchasers.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us two counterparts hereof, and upon
acceptance hereof by you it will become a binding agreement between the Company
and the Purchasers in accordance with its terms.
Very truly yours,
CASDIM INTERNATIONAL SYSTEMS INC.
By:_________________________________________
Name: Yehuda Shimshon
Title: Chairman, President & CEO
The foregoing Purchase Agreement is hereby confirmed and accepted as of the date
first above written.
By:_______________________________
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SCHEDULE 1
Name and address
of Purchaser Number of Shares Purchase Price
------------ ---------------- --------------
Derek Caldwell 50,000 $ 37,500.00
c/o Sunrise Securities Corp.
135 East 57th Street, 11th Floor
New York, N.Y 10022
Frank K. Brosens 400,000 $ 300,000.00
10 Bedford Center Road
Bedford Falls, New York 10507
European Venture Corp. 533,333 $ 399,999.75
P.O. Box 47 Roadtown
Tortola, British Virgin Islands
Kempton Investments Ltd. 533,333 $ 399,999.75
Attention: Chaim Furro
1183 Finch Avenue West
Suite 609
North York, Ontario
Canada M3J2G2
Karle Ltd. 533,333 $ 399,999.75
Attention: Mnuchem Eijan
83 Dana Cresent
Thornhill, Ontario
Canada L453H9
Lotmar Ltd. 533,333 $ 399,999.75
P.O. Box 316 Jardin House
One Wesley Street
St. Helier, Jersey
Channel Islands
Nathan Low 413,334 $ 310,000.50
c/o Sunrise Financial Group, Inc.
135 East 57th Street, 11th Floor
New York, N.Y 10022
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Name and address
of Purchaser Number of Shares Purchase Price
------------ ---------------- --------------
M.H. Meyerson & Co. 200,000 $ 150,000.00
Jeff Meyerson
30 Montgomery Street
Jersey City, New Jersey 07302
Pharos Fund Limited 266,666 $ 199,999.50
c/o Olympia Capital International Inc.
Philip C. Pedro
Williams House, 20 Reid Street
Hamilton HM 11, Bermuda
RBC Inc. 66,668 $ 50,001.00
c/o Aggi Solomon
P.O. Box 662
Citco Building
Road Town, Wickhams Cay
Tortola, British Virgin Islands
Tinicum Investors 400,000 $ 300,000.00
990 Stewart Avenue
Garden City, New York 11530
Andrew Hart 40,000 $ 30,000.00
19 Fox Ridge Road
Roslyn, New York 11576
Alan Swerdloff 13,334 $ 10,000.50
c/o Sunrise Securities Corp.
135 East 57th Street, 11th Floor
New York, New York 10022
Dwight Miller 16,666 $ 12,499.50
c/o Sunrise Securities Corp.
135 East 57th Street, 11th Floor
New York, New York 10022
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SCHEDULE 2
The Purchase Price payable hereunder shall be payable by wire transfer
as follows:
Chase Manhattan Bank
410 Park Avenue
New York, N.Y.
ABA 021-0000-21
For the account of:
Casdim International Systems, Inc.
Account #035-1353-800
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SCHEDULE 3
CASDIM INTERNATIONAL SYSTEMS, INC.
The undersigned Yehuda Shimshon, a principal shareholder of Casdim
International Systems, Inc. (the "Company"), hereby represents, in connection
with the Private Placement Purchase Agreement of even date herewith (the
"Agreement"), to which the Company is a party, that:
(i) he will not sell, lend, transfer, pledge or hypothecate
his shares of the Company, for a period of three years from the date of
the Closing Date, without the written consent of Sunrise, the duly
appointed representative of the Purchasers for this purpose. Any
permitted sale of such shares referred to in this paragraph shall be
effected through Sunrise, acting as broker/dealer, at a commission rate
of $0.05 per shares.;
(ii) he will vote his shares in favor of a resolution to
cancel the 100,000,000 shares of the Company currently authorized to be
issued as Preferred Stock, and the adoption of the resulting amended
Articles of Incorporation;
(iii) he will vote his shares in favor of the Representative's
election as a director of the Company for the two year period from the
date hereof, and so long as the Purchasers maintain continued and
uninterrupted ownership, as a group, of at least 2,000,000 of the
issued and outstanding shares of the Company;
(iv) he will vote his shares, for a period of two years from
the Closing Date, against any resolution to approve and authorize any
new class of shares of the Company; provided that, upon the concurrence
of the Purchasers, Mr. Shimshon, may vote his shares in favor of such
resolution; and
(v) he will deposit, within 30 days from the Closing Date, all
his shares of the Company with the Escrow Agent pursuant to Section
5(b)(i) and 5(f) of the Agreement.
Capitalized terms used herein and not defined shall have the same
meaning given to them in the Private Placement Purchase Agreement of even date
herewith to which the Company is a party.
Date: April , 1996 ---------------------------
Yehuda Shimshon
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Exhibit 10.2
<PAGE>
SUNRISE FINANCIAL GROUP, INC.
135 East 57th Street, 11th Floor
New York, New York 10022
(212) 421-1616
April 24, 1996
Mr. Yehuda Shimshon
Casdim International Systems, Inc.
Re: Public Relations Retainer Agreement
Gentlemen:
As we discussed, Casdim International Systems, Inc. (the "Company") is
interested in retaining Sunrise Financial Group, Inc. ("Sunrise") as its
consultant for financial public relations.
Services
The services Sunrise will provide include the following: preparing a
fact sheet on the Company (for which you will pay an approved sum in advance, as
well as approve the artwork and layout); performance of public relations and
corporate communications projects as are mutually agreed on; planning meetings
with institutional investors, research analysts and retail brokers; preparing
and disseminating press releases; handling all inquires about the Company;
maintaining a mailing list of all those interested in Company's literature;
seeking additional market makers for the Company's securities; and handling
financial media relations.
As compensation for its services, the Company will pay Sunrise the
following fees:
1. The Company will irrevocably issue to Sunrise an option to
purchase up to 460,000 shares of the outstanding stock of the
Company at $1.00 per share.
2. The Company will issue to Sunrise an option to purchase up to
240,000 shares (together with the options to purchase 460,000
shares, the "Options") of the outstanding stock of the Company
at $ 1.00 per share, which will vest ratably 10,000 per month
over 24 months. If the Company terminates Sunrise, other than
for cause, the options will vest immediately. If Sunrise
resigns, the unvested portion can be cancelled a the Company's
option.
Option
The Options (to the extent vested) will be exercisable for five years
beginning one year from issuance. During the term of the Options and upon
written demand from Sunrise, the Company shall, on one occasion only, promptly
register the common stock underlying the Options at the Company's expense
(excluding Sunrise's counsel's fees and any underwriting or selling
commissions). The Company further agrees that during the term of the Options, if
the Company intends to file a Registration Statement for the public sale of its
securities (other than a Form S-8, S-4 or comparable Registration Statement), it
will notify Sunrise
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and if so requested will include in that Registration Statement the common stock
underlying the Options, at the Company's expense (excluding prorated SEC
registration fees, Sunrise's counsel's fees and any underwriting or selling
commissions). The number of shares and exercise price per share subject to the
Options shall be adjusted in the case of any dividend, stock split or other
recapitalization or reorganization so that the option shall not be diminished or
diluted. The Options may be assigned to the executive officers of Sunrise.
Cashless exercises will be permitted.
Mergers, Acquisitions, and Other Ventures
If Sunrise shall introduce you to any company which may acquire the
Company or its business or be acquired by the Company or engage in any other
business combination with the Company, the Company shall pay Sunrise a fee equal
to 2% of the value of all consideration paid by the acquiror. This fee shall be
payable immediately upon the Company's receiving its payment(s).
The Company acknowledges that Sunrise was instrumental in introducing
the Company to HFS with respect to kiosks for hotels, Century 21, etc., and
agrees that it will not consummate a transaction with HFS without previously
entering into a compensation arrangement with Sunrise, which arrangement shall
be satisfactory to Sunrise in its sole opinion. The parties agree to use their
best efforts to negotiate a commercially reasonable agreement under the
circumstances.
For purposes of this contract, an introduction shall include not only
those persons Sunrise may introduce to the Company, but also the persons
introduced by those persons Sunrise introduced to the Company, i.e. one
generation. Furthermore, fees under this section shall be payable for any
transaction consummated between the Company and those introduced to the Company
by Sunrise within one year of the introduction.
Expense Reimbursement
In addition to the fees payable hereunder, the Company shall reimburse
Sunrise, upon request from time to time, for all reasonable out-of-pocket
expenses incurred by Sunrise (including but not limited to printing and graphic
design, travel, postage, copying, secretarial, and phone expenses) in connection
with Sunrise's services pursuant to this agreement. Individual out-of pocket
expenses will not exceed $250.00 without the consent of the Company. The Company
will prepay $2,500 to Sunrise which Sunrise will draw against for expenses. The
Company will replenish this account monthly to the $2,500 level. Upon expiration
of this agreement, any balance in this expense account will be returned to the
Company less any fees outstanding.
Term
This agreement shall be for a term of at least one year. Thereafter,
either party may terminate this agreement at any time upon thirty (30) days'
prior written notice, without liability or continuing obligation to the other
party, except that termination shall not affect (a) the reimbursement and
indemnification provisions contained in this agreement, nor (b) the Company's
obligation for the fees called for above.
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Indemnification
The Company agrees it will indemnify and hold harmless Sunrise, its
officers, directors, employees, agents and controlling persons from and against
any and all losses, claims, damages, liabilities and expenses, joint or several
(including all reasonable fees and expenses of counsel) arising out of Sunrise's
services pursuant to this agreement. However, the Company will not be liable
under this paragraph to the extent that any loss, claim, damage, liability or
expense is found in a final judgment by a court of competent jurisdiction to
have resulted from Sunrise's gross negligence or willful misconduct. The Company
agrees to notify Sunrise promptly of the assertion against it or any other
person of any claim or the commencement of any action or proceeding relating to
any matter which involved Sunrise.
Miscellaneous
The benefits of this agreement shall inure to the respective successors
and assigns of the parties, and the obligations and liabilities assumed in this
agreement by the parties shall be binding upon their respective successors and
assigns.
The validity and interpretation of this agreement shall be governed by
the laws of the State of New York as applied to agreements made and to be fully
performed therein. The parties agree that neither shall commence any litigation
against the other arising out of this Agreement or its termination except in a
court located in the City of New York. Each party consents to the in person
jurisdiction over it by such a court and consents to the service of process of
such a court on it by mail.
All costs of enforcing any debt or obligation of the Company to Sunrise
which arises under this Agreement, including all attorneys fees and expenses,
shall be paid by the Company.
If the foregoing correctly sets forth our agreement, please sign, date
and return to us the enclosed copy of this letter, whereupon this letter shall
constitute a binding agreement between us. Sunrise is looking forward to working
with you in making Casdim International Systems, Inc. highly successful and
prosperous.
Sincerely,
SUNRISE FINANCIAL GROUP, INC.
By:_____________________________
Nathan A. Low, President
Confirmed and Agreed to this
___ day of ___,1996
Casdim International Systems, Inc.
By:____________________________
Yehuda Shimshon, Chairman
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<PAGE>
Exhibit 10.3
<PAGE>
CONSULTING AGREEMENT
--------------------
AGREEMENT dated as of April 24, 1996 by and among Casdim International
Systems, Inc., a Colorado corporation (the "Company"), and Pelican Securities &
Investments Ltd., an Israeli company, Softbreeze Ltd., a Canadian company,
Montaraz Limited, a Channel Islands company, Onvoy Holdings Ltd., a company
organized in the British Virgin Islands, and Wideglobe Ltd., an Irish company,
(each a "Consultant" and collectively the "Consultants").
WHEREAS, the Company wishes to retain the Consultants to provide the
Company and its affiliates with certain advisory and financial consulting
services in connection with the Company's 1996 private placement of up to
4,000,000 shares of its common stock (the "Private Placement"); and
WHEREAS, the Consultants are willing to provide such advisory and
financial consulting services for the Company and its affiliates;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, and on the terms and conditions set forth below,
the parties hereby agree as follows:
1. Engagement. The Company hereby retains the Consultants, and the
Consultant hereby agree to provide the services required hereunder in connection
with the Private Placement.
2. Extent of Services. Each Consultant agrees to perform such services
to the best of its ability and in a diligent and conscientious manner and to
devote appropriate time, energies and skill to those duties called for hereunder
during the term of this Agreement and, in connection with the performance of
such duties, to act in a manner consistent with the primary objective of
maximizing the profitability of the Company and its affiliates. Each
Consultant's duties hereunder will not require full-time work, but each
Consultant agrees to devote such time as is reasonably required to fulfill its
duties hereunder.
3. Term. The engagement of the Consultants hereunder by the Company
shall commence as of the date hereof, and shall continue until the Closing Date,
as such term is defined in the Private Placement Purchase Agreement, a copy of
which is annexed hereto as Schedule 2.
4. Compensation. As compensation for the services granted herein and
for performance rendered by the Consultants of all their duties and obligations
hereunder, the Company shall (i) pay to Pelican Securities & Investments Ltd., a
fee of $75,000, payable within three business days from the Closing Date: and
(ii) issue to the Consultants, on the Closing Date, five-year warrants to
purchase a total of 1,150,000 shares of Common Stock of the Company at an
exercise price of $1.00. Such warrants shall be issued in the denominations set
forth opposite the name of each Consultant on Schedule 1 hereto.
5. Confidential Information. Each Consultant, its subsidiaries and
affiliates, shall not, at any time during or following expiration or termination
of their engagement hereunder, directly or indirectly disclose or furnish to any
person not entitled to receive the same for the immediate benefit
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<PAGE>
of the Company or its affiliates any trade secrets or confidential information
including, without limitation, information as to the business methods,
operations and affairs of the Company or its affiliates, the names, addresses or
requirements of any of its customers and suppliers, or the credit and other
terms extended by and to the Company or its subsidiaries.
6. Covenants. Each Consultant hereby covenants to (a) faithfully and
diligently do and perform the acts and duties required in connection with its
engagement hereunder, and (b) not engage in any activity which is or may be
contrary to the welfare, interest or benefit of the business now or hereafter
conducted by the Company and its affiliates.
7. Binding Effect. This Agreement will inure to the benefit of and
shall be binding upon the parties hereto and the Company's successors or assigns
(whether resulting from any reorganization, consolidation or merger of the
Company or any assignment to a business to which all or substantially all of the
assets of the Company are sold), each Consultant's successors and permitted
assigns and legal representatives.
8. Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the subject matter hereof,
supersedes all prior agreements and understandings with respect thereto and
cannot be modified, amended, waived or terminated, in whole or in part, except
in writing signed by the party to be charged.
9. Construction. While the parties hereto believe that the terms hereof
are fair, reasonable and enforceable in all respects, it is agreed that any
provision of this Agreement which is held to be prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
10. Miscellaneous. This Agreement may not be assigned by any of the
Consultants without the prior written consent of the Company.
11. Counterparts. This Agreement may be executed in various
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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12. Governing Law. This Agreement shall be shall be governed by and
construed in accordance with the laws of the State of Israel.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of April 24, 1996.
Pelican Securities & Investments Ltd. Casdim International Systems Inc.
------------------------------------ ------------------------------------
By: By: Yehuda Shimshon, President & CEO
Softbreeze Ltd.
------------------------------------
By:
Montaraz Limited
------------------------------------
By: John H. Perkins
Onvoy Holdings Limited
------------------------------------
By: John H. Perkins
Wideglobe Limited
------------------------------------
By: Peter Biberstein
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<PAGE>
Schedule 1
Name and Address Number of Warrants
Pelican Securities & Investments Ltd. 100,000
[Address]
Softbreeze Ltd. 250,000
827 Montgomery Street
Brooklyn, New York 11213
Montaraz Limited 350,000
P.O. Box 316 Jardine House
One Wesley Street
St. Helier, Jersey
Channel Islands
Onvoy Holdings Ltd. 400,000
P.O. Box 316 Jardine House
One Wesley Street
St. Helier, Jersey
Channel Islands
Wideglobe Ltd. 50,000
c/o Gestinor Services AG
10 General Wille-Strasse
Zurich, Switzerland
CH-8027
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<PAGE>
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