MARKED TO SHOW CHANGES FROM PREVIOUS VERSION
As Filed with the Securities and Exchange Commission on June 17, 1997
REGISTRATION NO. 333-10287
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------------------
CASDIM INTERNATIONAL SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 7379 83-0288100
-------- ---- ----------
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
Yehuda Shimshon, President
CASDIM INTERNATIONAL SYSTEMS, INC.
150 East 58th Street
New York, New York 10155
(212) 829-1700
Fax: (212)829-1705
(Address and telephone number of Registrant's principal
executive offices; Name, address and telephone
number of agent for service)
---------------------
Copies to:
Steven J. Glusband, Esq.
CARTER, LEDYARD & MILBURN
Two Wall Street
New York, New York 10005
(212) 732-3200
Fax: (212) 732-3232
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes
effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box [X].
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering [ ].
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering [X].
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box [ ].
<PAGE>
UNDERTAKING PURSUANT TO RULE 414
This Registration Statement on Form SB-2, Registration No. 333-10287, has been
amended pursuant to Rule 414 of the Securities Act of 1933, as amended. On April
25, 1997, Casdim International Systems, Inc., a Colorado corporation, merged
into its wholly-owned subsidiary incorporated in the State of Delaware, Casdim
Delaware, Inc. (the "Surviving Corporation"), for the purpose of changing Casdim
International Systems, Inc.'s state of incorporation. Immediately prior to the
merger, the Surviving Corporation had only nominal assets or liabilities.
Pursuant to the terms of the merger, which was effected pursuant to Colorado
Statute and Delaware Statute, the Surviving Corporation acquired all of the
assets and assumed all of the liabilities and obligations of Casdim
International Systems, Inc. Additionally, the Surviving Corporation's name was
changed to Casdim International Systems, Inc. The merger was approved at the
Annual Meeting of Shareholders of Casdim International Systems, Inc. on October
16, 1996.
The Surviving Corporation expressly adopts all statements contained in Amendment
No. 1 to the original registration statement on Form SB-2, Registration No.
333-10287, as its own registration statement for all purposes of the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.
----------------------
Pursuant to Rule 416 under the Securities Act of 1933, as amended, this
Registration Statement also covers such additional shares as may become
available pursuant to anti-dilution provisions upon exercise of the warrants.
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION
PROSPECTUS
2,171,002 Shares of Common Stock
CASDIM INTERNATIONAL SYSTEMS, INC.
This Prospectus relates to the resale by certain stockholders of Casdim
International Systems, Inc. (the "Company") of up to 2,171,002 shares of common
stock, of which 1,221,002 shares were issued by the Company in connection with
its May 1996 private placement. An additional 300,000 shares are being sold by
Cedarwood Trading & Investments Ltd., a principal stockholder. The Company will
not receive any proceeds from the sale of any of these 1,521,002 shares of
common stock. The remaining 650,000 shares of common stock are issuable upon
conversion of warrants (the "Warrants") issued to certain financial consultants
to the Company in May 1996. No assurance can be given as to if and when the
Warrants will be exercised. The holders of the 1,691,002 shares of common stock
and the holders of the Warrants are sometimes referred to in the Prospectus as
the "Selling Stockholders." The shares of common stock may be offered from time
to time by the Selling Stockholders in the over-the-counter market, in
negotiated transactions or otherwise, at market prices prevailing at the time of
sale or at negotiated prices.
The Company's common stock, par value $.01 per share (the "Common Stock")
is presently quoted on the Nasdaq Bulletin Board. Because there is no
established trading market, and only a limited number of market makers have
sporadically offered to purchase and sell shares of the Company's Common Stock,
during significant portions of the listed periods, reliable quotations for the
Common Stock have not been available. On June 16, 1997 the closing bid price for
the Common Stock as reported on the Nasdaq Bulletin Board was 1 11/32. See
"Price Range of Common Stock."
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE RISKS ASSOCIATED WITH
INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY, WHICH RISKS ARE
DESCRIBED UNDER THE CAPTION "RISK FACTORS" ON PAGE 6 .
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------
The date of this Prospectus is June __, 1997
<PAGE>
The Company will furnish its stockholders with annual reports containing
financial statements certified by independent public accountants and publish
quarterly reports containing unaudited financial data.
This Prospectus shall not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of these securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create any implication that there has
been no change in the affairs of the Company since the date hereof.
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<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus.
The Company
Casdim International Systems, Inc. and its subsidiaries (collectively
referred to herein as the "Company") is a multimedia and communications company
engaged in the development, marketing, sale and leasing of interactive,
informational and transactional kiosks. The Company is engaged in the
development of interactive televisions, which will be used to provide
interactive programs to link vendors and customers and to supply information and
transactions on demand. Another area of the Company's business is the
development of servers and communications applications for both satellite-based
networks and wide area networks ("WAN"), that will enable vendors to deliver
information services and effect transactions from their place of business.
The Company is a Delaware holding company, originally incorporated under
the laws of Colorado on January 5, 1988 under the name of S.W. Financial
Corporation for the purpose of acquiring an interest in one or more business
opportunities in the field of multimedia, information and communication
technology. In keeping with the stated corporate purpose, the then management of
the Company evaluated several business opportunities and, during the fiscal year
ended December 31, 1995, finalized the Company's first corporate acquisition.
The acquisition was effected by means of an agreement for the exchange of stock
and plan of reorganization dated November 21, 1995, (the "Exchange Agreement"),
by and among the Company, Casdim Interactive Systems USA, Inc. ("Casdim USA"), a
Nevada corporation, and Mr. Yehuda Shimshon. Mr. Shimshon acted on behalf of
himself and Cedarwood Trading & Investment Ltd. ("Cedarwood"), the then sole
shareholders of Casdim USA. Pursuant to the terms of the Exchange Agreement, the
Company acquired all the issued and outstanding shares of Casdim USA in exchange
for 425,000,000 shares of the Company. The Exchange Agreement, which became
effective on December 11, 1995, was approved at a special meeting of the
shareholders of the Company held on October 24, 1995 at which the shareholders
also approved: (i) renaming the Company Casdim International Systems, Inc.; (ii)
the 50:1 stock split of 76,700,000 shares, the then outstanding number of shares
of the Company, into 1,534,000 shares; and (iii) the appointment of Mr. Shimshon
as President and Chairman of the Board.
The Company maintains its principal executive offices at 150 East 58th
Street, New York, New York 10155, and its telephone number is 212-829-1700.
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<PAGE>
The Offering
Common Stock offered.................2,171,002 shares of Common Stock (the
"Shares")(1)
Common Stock to be outstanding
after the Offering................15,334,000 shares (2)
Use of proceeds......................The Company will not receive any
proceeds from the sale of the Shares by the
Selling Stockholders. The net proceeds to
be received by the Company from the
exercise of the Warrants, assuming the
exercise of all such Warrants, are
estimated to be approximately $650,000.
Such proceeds will be used for working
capital.
Nasdaq Bulletin Board Symbol.........CDMI
Risk Factors.........................Prospective investors should carefully
consider the matters set forth herein under
the caption "Risk Factors."
- --------------------
(1) Assumes the sale of 650,000 Shares to be issued upon exercise of the
Warrants.
(2) Does not include 500,000 shares of Common Stock reserved for issuance
pursuant to the Company's 1996 Stock Option Plan, 500,000 shares of Common
Stock issuable upon exercise of options granted to consultants to the
Company, and 200,000 Shares issuable upon exercise of warrants issued in
connection with the Company's May 1997 private placement. See "Description
of Capital Stock."
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<PAGE>
Summary Financial Data
<TABLE>
<CAPTION>
Income Statement Data:
Year Ended December 31, Three Months Ended March 31,
----------------------- ----------------------------
1996 1995 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales............................................. $ 508,713 $2,011,110 $ 6,985 $253,007
Cost of sales..................................... 379,806 468,353 -- 31,785
--------- --------- --------- --------
Gross profit...................................... 128,907 1,542,757 6,985 221,222
------- --------- ------ -------
Selling, general and administrative
expenses...................................... 1,244,144 237,016 485,492 113,989
---------- --------- -------- -------
Income (loss) from operations..................... (1,115,237) 1,305,741 (478,507) 107,233
Other income (expenses):
Interest income............................... 21,309 -- 5,828 --
Dividend income................................ 35,673 -- -- --
Interest expense............................... (109,519) (75,272) (21,676) (18,710)
Investment activity gain (loss)................ -- (93,142) 145,402 --
Gain (loss) from foreign translation........... (51,860) (6,203) -- (18,134)
Income (loss) from operations before taxes........ (1,219,634) 1,131,124 (348,943) (70,389)
Income tax (expenses) benefit..................... -- (440,309) -- $(33,185)
----------- --------- ---------- --------
Net income (loss)................................. $(1,219,634) $ 690,815 $ (348,943) $ 37,204
=========== ========== ========== ========
Net earnings (loss) per share..................... $(.09) $.36 $(.0247) $.01
===== ==== ====== =====
Weighted average number of shares
outstanding.................................... 13,349,000 1,899,000 14,134,001 9,634,000
========== ========= ========== =========
</TABLE>
Balance Sheet Data: December 31, March 31,
1996 1997
---- ----
Working capital........................... $ 898,151 $1,640,649
Total assets.............................. 4,335,191 4,344,346
Total debt ........................ 1,891,920 1,830,028
Stockholders' equity...................... 2,463,221 2,514,318
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RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus.
Business, Market and Shareholder Risks
Limited Operating History. Although the Company was incorporated in 1988,
it did not have any material ongoing operations until it acquired Casdim USA on
December 11, 1995. The Company is currently increasing its presence in the
United States and intends to substantially broaden its global activities. No
assurance can be given that the Company will be able to operate profitably,
especially as it expands its operations. See "Management's Discussion and
Analysis."
Potential Fluctuations in Operating Results; Seasonality. The Company's
operating results are likely to vary significantly in the future, depending on
factors such as the size and timing of significant orders and their fulfillment,
demand for the Company's products, changes in pricing policies by the Company or
its competitors, changes in the level of operating expenses, product life
cycles, personnel changes, changes in the Company's strategy, seasonal trends
and general domestic and international economic and political conditions, among
others. The timing of expansion in the United States and the rate at which
orders are obtained will also cause material fluctuations in the Company's
operating results. The Company's results may also be affected by currency
exchange rate fluctuations and economic conditions in the geographic areas in
which the Company operates. Due to the foregoing factors, revenues and operating
results are difficult to forecast.
The Company's expense levels are based, in significant part, on the
Company's expectations as to future revenues and are therefore relatively fixed
in the short-term. If revenue levels fall below expectations, net income is
likely to be disproportionately adversely affected because a proportionately
smaller amount of the Company's expenses varies with its revenues. During 1996
the Company's operations were negatively impacted as revenues declined and
operating expenses increased. No assurance can be given as to when the Company
will be able to return to profitability. The operating results of the Company
will likely fluctuate on a quarterly basis. Due to all the foregoing factors, in
some future quarter the Company's operating results may be below the
expectations of investors. In such event, the price of the Company's Common
Stock would likely be materially adversely affected. See "Selected Financial
Data" and "Management's Discussion and Analysis."
Absence of Nasdaq Listing. For most of the period since the completion of
its initial public offering on September 27, 1989, an active public trading
market did not develop for the Company's Common Stock. Because there is no
established trading market, and only a limited number of market makers have
sporadically offered to purchase and sell shares of the Company's Common Stock,
during significant portions of the listed periods, reliable quotations for the
Common Stock have not
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been available. Although the Company intends to submit an application for the
Common Stock to be listed on the Nasdaq SmallCap Market ("SCM"), no assurance
can be given that the Common Stock will be accepted for listing. The possible
inclusion of the Common Stock on the Nasdaq system does not provide any
assurance that an active and liquid trading market will develop or be
maintained. See "Price Range of Common Stock."
Application of Penny Stock Rules; No Assurance of Nasdaq SmallCap Market
Listing. The Company's securities are subject to certain penny stock rules
promulgated by the Securities and Exchange Commission (the "Commission"). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document prepared by the Commission that provides information about
penny stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. In addition, the penny
stock rules require that prior to a transaction in a penny stock not otherwise
exempt from such rules, the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for the Company's Common Stock.
The Company intends to apply to list its shares of Common Stock on the
Nasdaq SCM. The Board of Governors of the National Association of Securities
Dealers, Inc. has established new standards for the initial listing and
continued listing of a security on the Nasdaq SCM. The new standards for initial
listing require, among other things, that an issuer have net tangible assets of
$4,000,000; that the minimum bid price for the listed securities be $4.00 per
share; that the minimum market value of the public float (the shares held by
non-insiders) be at least $5,000,000; and that there be at least three market
makers for the issuer's securities. The maintenance standards require, among
other things, that an issuer have tangible assets of at least $2,000,000; that
the minimum bid price for the listed securities be $1.00 per share; that the
minimum market value of the "public float" be at least $1,000,000; and that
there be at least two market makers for the issuer's securities. There can be no
assurance that the Company will be able to satisfy the requirements for
obtaining or maintaining a Nasdaq listing.
Need to Manage a Changing Business. The Company is experiencing a period of
significant growth in the number of its employees, the scope of its operating
and financial systems and geographic areas of its operations. This growth has
resulted in new and increased responsibilities for management personnel and has
placed a significant strain upon the Company's management, operating systems and
financial resources. To accommodate such growth, compete effectively and manage
potential future growth, the Company must continue to implement and improve its
information systems, procedures and controls, and expand, train, motivate and
manage its work force. These demands will require the addition of new management
personnel. The Company's
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future success will depend to a significant extent on the ability of its current
and future management personnel to operate effectively, both independently and
as a group. There can be no assurance that the Company's personnel, operating
systems, procedures and controls will be adequate to support the Company's
future operations. Any failure to implement and improve the Company's
operational, financial and management systems or to expand, train, motivate or
manage employees could have a material adverse effect on the Company's business,
operating results and financial condition. See "--Dependence on Key Personnel,"
"Business--Employees" and "Management."
Risks Associated with Expanding Distribution. To date, the Company has sold
and attempted to lease its kiosks through its in-house sales forces. The
Company's ability to achieve significant revenue growth in the future will
depend in large part on its success in recruiting and training sufficient direct
sales personnel. Although the Company intends to expand its direct sales force,
the Company may experience difficulty in recruiting qualified sales personnel.
There can be no assurance that the Company will be able to successfully expand
its sales force or that such expansion will result in an increase in revenues.
Any failure by the Company to expand its direct sales force would materially
adversely affect the Company's business, operating results and financial
condition. See "--Dependence on Key Personnel," "Business--Sales and Marketing."
Competition. The market for interactive kiosks, customized databases and
network integration is intensely competitive and characterized by rapidly
changing technology, evolving industry standards, frequent new product
introductions and rapidly changing customer requirements. The Company faces
competition from numerous companies, some of which are more established and have
greater financial and other resources than the Company. The Company's current
direct competitors, include among others, Golden Screens in Israel and Factura
Composites, Inc., Quick ATM, 1-Media, Aimtech, EDR Systems, Virtual Shopping
Inc., Rikon, and HSI in the United States.
The Company's competitors may be able to respond more quickly to new or
emerging technologies and changes in customer requirements or devote greater
resources to the development, promotion and sale of their products than the
Company. The Company expects to face additional competition as other established
and emerging companies enter the interactive kiosk development market and new
products and technologies are introduced. Increased competition could result in
fewer customer orders, reduced gross margins and loss of market share, any of
which could materially adversely affect the Company's business, operating
results and financial condition. In addition, current and potential competitors
may make strategic acquisitions or establish cooperative relationships among
themselves or with third parties, thereby increasing the ability of their
products to address the needs of the Company's prospective customers.
Accordingly, it is possible that new competitors or alliances among current and
new competitors may emerge and rapidly gain significant market share. Such
competition could materially adversely affect the Company's ability to sell
additional licenses and maintenance and support renewals on terms favorable to
the Company. Furthermore, competitive pressures could require the Company to
reduce the price of its licenses and related services, which could materially
adversely affect the Company's business, operating results and financial
condition. There can be no assurance that the Company will be able to compete
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successfully against current and future competitors, and the failure to do so
would have a material adverse effect upon the Company's business, operating
results and financial condition. See "Business--Competition."
Rapid Technological Change. The market in which the Company competes is
characterized by rapid technological change. The introduction of products
embodying new technologies and the emergence of new industry standards could
exert price pressures on the Company's products. The Company's future success
will depend upon its ability to address the increasingly sophisticated needs of
its customers by supporting existing and emerging hardware, software, database
and networking platforms and by developing and introducing new and enhanced
products on a timely basis that keep pace with such technological developments
and emerging industry standards and customer requirements. There can be no
assurance that the Company will be successful in developing and marketing new
products, that it will not experience difficulties that could delay or prevent
the successful development, introduction and sale of such enhancements or that
such enhancements will adequately meet the requirements of the marketplace and
achieve any significant degree of market acceptance, thereby materially
affecting the Company's business, operating results and financial condition. See
"Management's Discussion and Analysis" and "Business-- Research and
Development."
Proprietary Rights and Risks of Infringement. The Company is dependent upon
its proprietary network technology and relies primarily on a combination of
confidentiality procedures and contractual provisions to protect its proprietary
rights. The Company also believes that factors such as the technological and
creative skills of its personnel, new product developments, frequent product
enhancements, and reliable product maintenance are essential to establishing and
maintaining a technology leadership position. The Company seeks to protect its
software, documentation and other written materials under trade secret laws,
which afford only limited protection. There can be no assurance that others will
not develop technologies that are similar or superior to the Company's
technology. Despite the Company's efforts to protect its proprietary rights,
unauthorized parties may attempt to copy aspects of the Company's products or to
obtain and use information that the Company regards as proprietary. There can be
no assurance that the Company's means of protecting its proprietary rights in
the United States or abroad will be adequate or that competition will not
independently develop similar technology.
The Company is not aware that it is infringing any proprietary rights of
third parties. There can be no assurance, however, that third parties will not
claim infringement by the Company of their intellectual property rights. In the
event of a successful claim of product infringement against the Company and
failure or inability of the Company to license the infringed or similar
technology, the Company's business, operating results and financial condition
would be materially adversely affected.
The Company relies and intends to rely in the future upon certain software
that it licenses from third parties, including software that is integrated with
the Company's internally developed
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software. There can be no assurance that these third-party software licenses
will continue to be available to the Company on commercially reasonable terms.
The loss of, or inability to maintain, any such software licenses could result
in shipment delays or reductions until equivalent software could be developed,
identified, licensed and integrated which would materially adversely affect the
Company's business, operating results and financial condition.
Risk of Software Defects. Network multimedia products are internally
complex and frequently contain errors or defects, especially when first
introduced or when new versions or enhancements are released. Although the
Company has not experienced material adverse effects resulting from any such
defects or errors to date, there can be no assurance that, despite testing by
the Company and by current and potential customers, defects and errors will not
be found in current versions, new versions or enhancements after commencement of
commercial shipments, resulting in loss of revenues or delays in market
acceptance, which could have a material adverse effect upon the Company's
business, operating results and financial condition. See "Business--Research and
Development."
Dependence on Key Personnel. The Company's success depends to a significant
degree upon the continuing contributions of its key management, sales,
marketing, customer support and product development personnel. The loss of key
management or technical personnel could adversely affect the Company. The
Company believes that its future success will depend in large part upon its
ability to attract and retain highly-skilled managerial, sales, customer support
and product development personnel. The Company has at times experienced and
continues to experience difficulty in recruiting qualified personnel.
Competition for qualified software development, sales and other personnel is
intense, and there can be no assurance that the Company will be successful in
attracting and retaining such personnel. Competitors and others have in the past
and may in the future attempt to recruit the Company's employees. Failure to
attract and retain key personnel could have a material adverse effect on the
Company's business, operating results and financial condition. See
"Business--Research and Development," "--Employees" and "Management."
International Operations. International operations are subject to inherent
risks, including the impact of possible recessionary environments in multiple
foreign markets, costs of localizing products for foreign markets, longer
receivables collection periods and greater difficulty in accounts receivable
collection, unexpected changes in regulatory requirements, difficulties and
costs of staffing and managing foreign operations, reduced protection for
intellectual property rights in some countries, potentially adverse tax
consequences and political and economic instability. There can be no assurance
that the Company will be able to sustain or obtain revenues from international
operations or that the foregoing factors will not have a material adverse effect
on the Company's future revenues and, consequently, its business, operating
results and financial condition.
The revenues of the Company's Israeli subsidiary, Casdim Interactive
Systems Ltd. ("Casdim Israel") are generally denominated in the local Israeli
currency. The Company does not currently engage in any hedging activities. There
can be no assurance that fluctuations in currency
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exchange rates in the future will not have a material adverse impact on the
Company's revenues from international sales and thus impact the Company's
business, operating results and financial condition. See "Management's
Discussion and Analysis" and "Business--Sales and Marketing."
Future Capital Needs. Although the Company recently raised $1.5 million in
a private placement, the Company may require additional capital to satisfy its
capital requirements in the next 12 months. The Company's future capital
requirements will depend on many factors, including continued progress in its
expansion plans and its ability to successfully develop new and enhanced
products. To the extent its existing capital resources are insufficient to fund
the Company's operating and financial requirements, it may be necessary to raise
additional funds through public or private financings. Any equity or debt
financings, if available at all, may cause dilution to the Company's
then-existing stockholders. See "Management's Discussion and Analysis--Liquidity
and Capital Resources."
Concentration of Ownership. Mr. Yehuda Shimshon and Cedarwood Trading &
Investments Ltd. ("Cedarwood"), a company in which Mr. Shimshon has a
controlling interest, beneficially own approximately 53.8% of the Company's
outstanding Common Stock. As a result, Mr. Shimshon is able to exercise control
over most matters requiring stockholder approval, including the election of
directors and approval of significant corporate transactions. Such concentration
of ownership may have the effect of delaying or preventing a change in control
of the Company. See "Principal and Selling Stockholders."
Shares Eligible for Future Sale. Upon consummation of this Offering, the
Company will have 15,334,000 shares of Common Stock outstanding, substantially
all of which, other than the shares of Common Stock held by Mr. Shimshon and
Cedarwood, are freely tradable. Mr. Shimshon and Cedarwood beneficially own in
the aggregate 8,250,000 shares of Common Stock of the Company and may be deemed
"affiliates" of the Company as such term is defined under the Securities Act.
They have agreed not to offer, sell, contract to sell or otherwise dispose of
any shares or any securities convertible into, exercisable or exchangeable for
shares of Common Stock of the Company (other than 300,000 shares of Common Stock
which are being offered hereby), for a period of three years in the case of Mr.
Shimshon, and two years in the case of Cedarwood. No predictions can be made as
to the effect, if any, that market sales of shares of existing stockholders or
the availability for future sale of such shares or shares in this Offering will
have on the market price of the Common Stock prevailing from time to time. The
prevailing market price of the Common Stock after the Offering could be
adversely affected by future sales of substantial amounts of Common Stock by
existing stockholders. See "Principal and Selling Stockholders," "Shares
Eligible for Future Sale" and "Plan of Distribution."
Substantial Number of Shares of Common Stock Reserved for Issuance Upon
Exercise of Outstanding Options and Warrants. The Company has reserved from its
authorized but unissued Common Stock (i) 650,000 shares of Common Stock which
are subject to this Offering and issuable upon exercise of warrants; (ii)
500,000 shares of Common Stock issuable upon exercise of options
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given to consultants to the Company; (iii) 500,000 shares of Common Stock
issuable under the Company's 1996 Stock Option Plan (the "1996 Plan") and (iv)
200,000 shares of Common Stock issuable upon exercise of warrants issued in
connection with the Company's May 1997 private placement. The existence of the
outstanding options and warrants may prove to be a hindrance to future
financings by the Company. In addition, the exercise of any options may dilute
the net tangible book value of the Common Stock.
No Dividends. The Company has never paid a dividend nor does it intend to
make any dividend payments for the foreseeable future. See "Dividend Policy."
Risks Relating to the Company's Operations in Israel
Operations in Israel. Casdim Israel's operations are directly affected by
economic, political and military conditions there. For information with respect
to certain factors concerning the State of Israel, risks related to its economic
and political situation and special programs provided by the State of Israel
relating to research and development, exports and taxation, see "Management's
Discussion and Analysis," "Israeli Taxation" and "Conditions in Israel." The
loss of the various research and development grants and tax benefits afforded to
the Company by the State of Israel would negatively impact its results of
operations in the future.
Some of the Company's officers and employees are currently obligated to
perform annual reserve duty in the Israel Defense Forces and are subject to
being called for active duty at any time upon the outbreak of hostilities. While
the Company has operated effectively under these requirements, no prediction can
be made as to the effect on the Company of any expansion of such obligation. See
"Business -- Employees."
Impact of Inflation and Currency Fluctuations. The dollar cost of the
Company's operations in Israel is influenced by the extent to which any increase
in the rate of inflation in Israel is not offset (or is offset on a lagging
basis) by a devaluation of the NIS in relation to the dollar. During the three
years ended December 31, 1996, the rate of inflation in Israel exceeded the rate
of devaluation of the dollar against the NIS. In 1995 and 1996, the rate of
inflation in Israel was 8.1% and 10.6%, respectively, while the rate of
devaluation was 3.9% and 3.7%, respectively.
12
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares by
the Selling Stockholders. The net proceeds to be received by the Company from
the exercise of the Warrants, assuming the exercise of all such warrants, are
estimated to be approximately $650,000. The proceeds of the exercises, if any,
will be used for working capital.
PRICE RANGE OF COMMON STOCK
Since completion of its public offering on September 27, 1989, a public
trading market has not developed for the Company's common stock, $0.01 par value
(the "Common Stock"). Because there is no established trading market, and only a
limited number of market makers have sporadically offered to purchase and sell
shares of the Company's Common Stock, during significant portions of the listed
periods, reliable quotations for the Common Stock have not been available.
High Low
---- ---
1995
- ----
First Quarter................................... No Bid No Bid
Second Quarter.................................. No Bid No Bid
Third Quarter................................... No Bid No Bid
Fourth Quarter.................................. No Bid No Bid
1996
- ----
First Quarter................................... $1 1/8 $ 7/32
Second Quarter.................................. 5 3/4 1/2
Third Quarter .................................. 5 1/4 2 3/4
Fourth Quarter.................................. 5 1/2 4 1/16
1997
- ----
First Quarter .................................. $3 1/2 $1 1/32
Second Quarter (through June 16, 1997).......... 2 7/16 1 13/32
The Nasdaq Bulletin Board symbol for the Company's Common Stock is CDMI. As
of June 6, 1997, there were approximately 33 holders of record and 300
beneficial owners of the Company's Common Stock.
13
<PAGE>
DIVIDEND POLICY
The Company has not paid any cash dividends on its Common Stock and does
not anticipate paying any cash dividends in the foreseeable future.
CAPITALIZATION
The following table sets forth the short-term debt and capitalization of
the Company at March 31, 1997, without any adjustment to reflect the sale of the
Shares by the Company upon exercise of the Warrants:
March, 31 1997
--------------
Total short-term debt.......................................... $ 804,671
==========
Long-term debt................................................. 1,025,357
---------
Stockholders' equity:
Common Stock, $.01 par value; 30,000,000 shares
authorized; 14,134,000 shares issued and outstanding;
14,784,000 shares issued and outstanding,
as adjusted (1)........................................... 985
Additional paid in capital..................................... 3,545,268
Less treasury stock............................................ (1,425)
Retained earnings.............................................. (1,030,510)
TOTAL STOCKHOLDERS' EQUITY..................................... 2,514,318
------------
TOTAL CAPITALIZATION...........................................$ 4,344,346
============
(1) Does not include 500,000 shares of Common Stock reserved for issuance
pursuant to the Company's 1996 Stock Option Plan, 500,000 shares of Common
Stock issuable upon exercise of options granted to consultants to the
Company, 650,000 shares of Common Stock issuable upon exercise of warrants
issued to certain financial consultants to the Company, 1,200,000 shares of
Common Stock issued in a private placement on May 22, 1997, and 200,000
Shares issuable upon exercise of warrants issued in connection with the
Company's May 1997 private placement.
14
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data for each of the years ended December
31, 1995, and 1996, are derived from the Company's consolidated financial
statements set forth elsewhere in this Prospectus. The Company's financial
statements were examined by Hocker, Lovelett, Hargens & Yennie, P.C. whose
report with respect to such financial statements appears in this Prospectus. The
consolidated balance sheet data at December 31, 1995 and 1996, is derived from
audited consolidated financial statements previously filed with the Commission.
The consolidated statement of operations data for the three-month periods ended
March 31, 1996 and 1997 and the consolidated balance sheet data at March 31,
1997 are derived from unaudited consolidated financial statements which, in the
opinion of the Company, reflect all adjustments necessary for a fair
presentation of the Company's financial position and results of operations for
such periods.
<TABLE>
<CAPTION>
Income Statement Data:
Year Ended December 31, Three Months Ended March 31,
----------------------- ----------------------------
1996 1995 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales............................................... $ 508,713 $ 2,011,110 $ 6,985 $ 253,007
Cost of sales....................................... 379,806 468,353 -- 31,785
--------- --------- ------ --------
Gross profit........................................ 128,907 1,542,757 6,985 221,222
------- --------- ------ -------
Selling, general and administrative expenses........ 1,244,144 237,016 485,492 113,989
----------- --------- ------- ---------
Income (loss) from operations....................... (1,115,237) 1,305,741 (478,507) 107,233
Other income (expenses):
Interest income................................ 21,309 -- 5,828 --
Dividend Income................................ 35,673 -- -- --
Interest expense............................... (109,519) (75,272) (21,676) (18,710)
Investment activity gain (loss)................ -- (93,142) 145,402 --
Gain (loss) from foreign translation........... (51,860) (6,203) -- (18,134)
Income (loss) from operations before taxes.......... (1,219,634) 1,131,124 (348,943) (70,389)
Income tax (expenses)............................... -- (440,309) -- (33,185)
----------- ---------- --------- -------
Net income (loss)................................... $(1,219,634) $ 690,815 $(348,943) $ 37,204
=========== ========= ========= ========
Net earnings (loss) per share....................... $(.09) $.36 $(.0247) $.01
===== ==== ======= =====
Weighted average number of shares
outstanding.................................... 13,349,000 1,899,000 14,134,001 9,634,000
========== ========== ========== =========
</TABLE>
Balance Sheet Data: December 31, March 31,
1996 1997
---- ----
Working capital..................... $ 898,151 $1,640,649
Total assets........................ 4,355,191 4,344,346
Total debt .................. 1,891,920 1,830,028
Stockholders' equity................ 2,463,271 2,514,318
-15-
<PAGE>
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. The discussion and analysis contains trend analysis and
other forward-looking statements. Actual results could differ materially from
those projected in the forward-looking statements as a result of changes in the
economy, changes in the Company's product sales mix and other factors which may
be beyond the Company's control.
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, 1997 Compared to Quarter Ended March 31, 1996.
Kiosk and associated sales by the Company's wholly owned Israeli subsidiary
decreased to $6,985 during the quarter ended March 31, 1997 from $253,007 in the
comparable 1996 quarter. The decrease in sales was principally attributable to
the Company's decision to concentrate its resources on entering the North
American market and the failed efforts of its Israeli subsidiary to lease
kiosks. The Company expects that the revenues of its Israeli subsidiary will
increase in 1997 as a result of its recently acquired right to install
interactive multimedia informational and transactional kiosks at Ben Gurion
Airport and 13 smaller Israeli airports. Additionally, Casdim Israel was granted
exclusive rights by an Israeli insurance company to sell insurance products
through its kiosks at the Ben Gurion Airport. The Company is developing software
to allow Israeli citizens to purchase insurance prior to their departing Israel
for trips abroad.
As a result of the Company's limited sales in the first quarter of 1997, it
did not record any costs of sales as compared to $31,785 in costs in the 1996
first quarter. As a result, the Company's gross profit for 1997 first quarter
was $6,985 compared to $221,222 in the 1996 first quarter. The Company expects
its gross margins to vary in the future depending on the nature and volume of
its revenues.
16
<PAGE>
Selling, general and administrative expenses increased to $485,492 in the
1997 first quarter from $113,989 in the 1996 first quarter, due primarily to the
increased marketing costs associated with the Company's efforts to penetrate the
North American market and costs associated with the maintenance of executive
offices in New York City. The Company anticipates that selling, general and
administrative expenses will continue to increase in 1997 a result of the
planned increases in expenses relating to its Information on Demand System ("IOD
System") and the joint venture with Dick Clark Ventures.
In 1997 the Company capitalized approximately $263,000 of product
development costs, principally relating to the IOD System.
During the 1997 first quarter, the Company had other income of $129,554 as
compared to other expenses of $36,844 in the 1996 first quarter. In the 1997
first quarter, the Company was able to offset its increased interest expenses
with interest and dividend income from the investment of the proceeds of its May
1996 private placement and a $145,402 gain from the sale of marketable
securities. The Company does not expect to invest in marketable securities
during the foreseeable future. The Company expects interest expenses to increase
in 1997.
For the quarter ended March 31, 1997, the Company had a loss from
operations of $348,943 as compared to income from operations of $70,389 for the
1996 comparable quarter. The Company's operating loss in the 1997 first quarter
was due primarily to the increase in the Company's selling, general and
administrative expenses and the decline in sales.
As a result of the foregoing, the Company's net loss was $348,943 or $.0247
per share for the quarter ended March 31, 1997 as compared to net income of
$37,204 or $.01 per share for the quarter ended March 31, 1996.
Years Ended December 31, 1996 and 1995.
Sales decreased to $508,713 during the year ended December 31, 1996 from
$2,011,110 in 1995. The decrease in sales was principally attributable to the
Company's decision to (i) concentrate its resources on entering the North
American market, (ii) its failed efforts to lease kiosks, and (iii) the
determination of one of the Company's major customers to postpone deliveries of
kiosks until its financial condition improves.
Cost of sales decreased to $379,806 in 1996 from $468,353 in 1995,
principally as a result of the Company's lower level of sales. As a result, the
Company's gross profit for 1996 was $128,907 compared to $1,542,757 in 1995. The
Company expects its gross margins to vary in the future depending on the nature
and volume of its revenues.
Selling, general and administrative expenses increased to $1,244,144 in
1996 from $237,016 in 1995, due primarily to the increased marketing costs
associated with the Company's efforts to
17
<PAGE>
penetrate the North American market, costs associated with the establishment of
executive offices in New York City, increased compensation, legal and accounting
costs, and a charge in the second quarter of 1996 of approximately $164,000
arising from the issuance of stock options to the Company's former public
relations firm. The Company anticipates that selling, general and administrative
expenses will continue to increase in 1997 a result of the planned increases in
expenses relating to its IOD System and the joint venture with Dick Clark
Ventures.
In 1996 the Company capitalized approximately $943,000 of product
development costs, principally relating to the IOD System.
During 1996, the Company had other expenses of $104,397 as compared to
other expenses of $174,617 in 1995. In 1995, the Company had a $93,142 loss from
its investment activity, resulting from unsuccessful investments made in 1995
prior to the acquisition of Casdim USA. In 1996, the Company was able to offset
part of the increased foreign currency translation losses and interest expenses
with interest and dividend income from the investment of the proceeds of its May
1996 private placement. The Company expects interest expenses to increase in
1997.
For the year ended December 31, 1996, the Company had a loss from
operations of $1,219,634 as compared to income from operations of $1,131,124 for
1995. The Company's operating loss in 1996 was due primarily to the increase in
the Company's selling, general and administrative expenses and the decline in
sales.
In 1995, the Company's income tax expense was $ 440,309.
As a result of the foregoing, the Company's net loss was $1,219,634 or $.09
per share for 1996 as compared to net income of $690,815 or $.36 per share for
1995.
Liquidity and Capital Resources
At March 31, 1997, the Company had $932,020 in cash and $1,640,649 in
working capital as compared to $915,520 in cash and $898,151 in working capital
at December 31, 1996. The Company's financial position was enhanced in the first
quarter of 1997 as a result of its receipt of $400,000 upon the exercise of
warrants issued in the 1996 private placement. In addition, the Company's
financial position benefitted from the conversion of $1,000,000 of its Israeli
subsidiary's short-term debt into long-term debt. On May 22, 1997, the Company
completed a private placement of 1,200,000 shares of Common Stock and 200,000
warrants, exercisable at $1.00 per share, to three offshore investors and
received $1,500,00 in gross proceeds. The Company has agreed to register the
shares of Common Stock issued in the private placement in a future registration
statement.
Among the factors that will affect the Company's working capital in the
future will be (i) the amount and timing of the expenditures required to
complete the development, installation and testing of the IOD System, and (ii)
the timing of a $500,000 capital contribution which the Company has agreed to
make to the joint venture with Dick Clark Ventures. Another factor which will
affect
18
<PAGE>
working capital is the collectability of a receivable of approximately $300,000
from Kupat Holim Leumit, an Israeli health maintenance organization, which is
over one year old.
Management believes that the Company may require additional financing of
approximately $1.5 million during the next six to eighteen months, mainly to
fund the installation and testing of the IOD System at various Ramada Inn sites.
No assurance can be given that sufficient financing on either an equity or debt
basis will be available to the Company or that it will be available at
advantageous terms. To the extent sufficient financing is not available, the
Company will attempt to stretch out the costs associated with the Ramada project
so that it will be able to continue its operations through 1997.
19
<PAGE>
BUSINESS
The Company is a multimedia and communications company engaged in the
development, marketing, sale and leasing of interactive, informational and
transactional kiosks. The Company is engaged in the development of interactive
televisions, which will be used to provide interactive programs to link vendors
and customers and to supply information and transactions on demand. Another area
of the Company's business is the development of servers and communications
applications for both satellite-based networks and wide area networks ("WAN"),
that will enable vendors to deliver information services and effect transactions
from their place of business.
Recent Developments
In 1996 the Company devoted substantial managerial time and capital
resources to its efforts to enter the North American market. The Company
determined that the best use for its technology in the North American market was
in the context of the lodging industry and in the transmission of electronic
data via satellite.
The Company and Dick Clark International Cable Ventures Ltd. ("Dick Clark
Ventures") have agreed to enter into a joint venture, to be known as Technology
Transfer Corporation, to exploit certain satellite transmission licenses held by
an affiliate of Dick Clark Ventures in Mexico. These licenses, granted by the
Secretaria de Communicaciones y Transports ("SCT") of Mexico, allow for the
installation or utilization of shared teleports, for the bi-directional
transmission of voice, video and data within the footprint of the Mexican
Government's two Solidaridad satellites. The Company has agreed to contribute
$500,000 to the joint venture which will design, install and operate an advanced
communications platform based on the satellite platform. When activated, the
satellite network is intended to provide a variety of electronic services,
currently unavailable on a wide scale in Mexico. Initially, the joint venture
intends to provide electronic transactional services under the trade name
DataMex(TM) which service will include transactional banking via an
interconnected ATM network, point of purchase transactions and international
funds transfers. No assurance can be given that this joint venture will be
successful in developing the network or that it will be able to raise sufficient
capital for the initiation of its proposed business.
On March 26, 1997, the Company and Ramada Franchise Systems, Inc. ("RFS"),
a wholly owned subsidiary of HFS Incorporated, announced their agreement to
enter into "alpha" and beta" testing of Casdim's integrated Information on
Demand System (the "IOD System"). The IOD System incorporates interactive TV,
Internet, video-on-demand, E-mail, and a club member facility. The IOD System is
designed to utilize a WAN to link video and data servers via satellites and/or
cable TV systems. Hotel guests will access their TV through the RFS/Casdim
default channel. Access to various services including E-mail, stock quotes,
sports scores, video-on-demand, airline and car rental reservations and
residential real estate listings will be provided to the hotel guest by the IOD
System. Under the proposed arrangement, Casdim will derive revenues from
advertising, vendor
20
<PAGE>
commissions and user fees. RFS currently has over 120,000 lodging rooms in its
franchise network. The Company and RFS have agreed to enter into an agreement
for full system implementation of the IOD System, pursuant to which RFS will
exclusively recommend the IOD System to all of its franchises, upon the
successful completion of the alpha and beta testing at various Ramada Inn
locations. The testing of the IOD System is scheduled to be completed in March
1998. No assurance can be given that such testing will prove successful, or that
the Company will be able to raise sufficient funds to install its IOD System
within the Ramada Inn franchise system.
The Company recently acquired the right to install interactive multimedia
informational and transactional kiosks at Ben Gurion Airport and 13 smaller
Israeli airports. Additionally, Casdim was granted exclusive rights by an
Israeli insurance company to sell insurance products through its kiosks at the
Ben Gurion Airport. The Company is developing software to allow Israeli citizens
to purchase insurance prior to their departing Israel for trips abroad.
Products
Historically, the Company's main products and services consisted of:
o the sale and lease of multimedia kiosks; and
o the development and sale of databases, kiosk and kiosk home
pages, servers, and communications applications.
Multimedia Kiosks. The Company's kiosks offer a form of interactive
computerization which allows for easy consumer access to products, services, and
information. Consumers are able to access promotional and educational
information as well as purchase goods and services. Each kiosk consists of a
free-standing, electronic, informational and transactional booth combining a
number of computer peripheral technologies which collect and dispense
information and services. The kiosks are designed to be flexible and
user-friendly in order to meet the diverse needs of users, and are usually
placed in a highly visible and active location to provide services and
information to a wide audience. The kiosks include up-to-date technology in PC
hardware, multimedia, LAN, WAN, satellite communication and applications
generators and are comprised of a processor, disk drives, keyboard, video
display, touch screen, magnetic card reader, a scanner, and printer. Depending
on the application, kiosks may or may not be connected to one or more host
systems.
The manufacture and assembly of kiosks entail five distinct steps:
o Manufacturing of the Kiosk Enclosure. The manufacturing process
takes approximately one to two months, depending on whether the order
consists of an existing model or a new design. Although choice of a
suitable enclosure design is usually chosen from one of the Company's
existing standard models, new designs may be manufactured at the customer's
request. The creation of a new enclosure model takes approximately two to
three months during which a prototype is built and tested and an operating
plan is developed. The enclosures are
21
<PAGE>
designed by Zog Ltd., an Israel-based industrial design company, which also
oversees the manufacturing process.
o Purchase of Hardware Components. Most of the hardware used in the
kiosks' operating systems is standard and not customized, which provides
the Company with flexibility when a change of manufacturer is needed or
technical modifications are required. The hardware components include
computers and expansion cards, a touchscreen, magnetic card reader, a
printer and communications equipment. Generally, the Company selects a
hardware supplier after comparing the equipment of three or more suppliers
for quality, reliability and durability, as well as adaptability to the
other components in the system, and the supplier's quality of service,
manufacturer's warranty and selling price.
o Integration and Adaptation of Software, Database and Graphics. This
process includes a system design stage, design of the user-interface and
connection of the application components into one complete system. Such
components can include a logging component to register activities made at
the kiosk stand, and a component for display of advertising during idle
time.
o Testing. The retrieval and content of the of information provided by
the individual system is tested before shipping. Great importance is placed
on building mechanisms that will enable easy updates of content items and
automatic distribution of such information to the kiosks.
o Connection of Kiosk Units. This process entails the preparation of
the required infrastructure for connecting a kiosk to the Company's central
control room. Such connections may be implemented through the use of
standard telephone lines, ISDN lines, local Ethernet network, frame relay
lines, point to point lines, or satellite network. The choice of
communication line depends on the number of sites to be connected, the
number of kiosks on the site, the quantity of information to be relayed,
and the frequency of transactions, and the type of project (i.e. credit
card company, medical data bank, etc.). Gilat - Satellite Communications
provides VSATs and hubs for the kiosks' satellite wide area network.
The sales price of a kiosk in Israel, including both equipment and
technology, ranges from $10,000 to $25,000. As of June 6, 1997, the Company has
sold or installed approximately 80 kiosks.
The Company has targeted a base selling price of approximately $15,000 per
unit in the U.S. as a consequence of the increased level of competition in the
U.S. market. In the U.S., prices may range from $13,000 to $150,000 for a highly
sophisticated kiosk.
In 1996, the Company attempted to emphasize the leasing of kiosks to
shopping malls where they would be placed in strategic locations offering a
diverse network of information and transaction capabilities. In great measure,
the Company was unsuccessful with this marketing approach because it was unable
to obtain long-term exclusive agreements from the shopping malls. Recently, the
Company began to negotiate with several malls in an attempt to obtain long-term
agreements.
22
<PAGE>
No assurance can be given that these negotiations will be successful. The
Company has determined that it will in the future concentrate on the sale of
kiosks and obtaining fees from advertising and coupon distribution from kiosks
installed by the Company in high traffic, public areas.
The Company provides technical support to its customers, at approximately
15% of the total value of the system provided. The Company's information and
control center is located at its head office in Petah Tikva, from which it
monitors all kiosks on the network in real time, allowing for tracking of usage,
up and down time, information received, access time and a multitude of other
functions. This network has been designed to provide flexibility, and the
Company believes it provides an advantage over its competitors' non-networked
kiosks.
Development and Sale of Databases, Kiosk and Internet Home Pages, Servers,
and Communications Applications. The charge for developing a customer's
interactive program ranges from $20,000 to $200,000. Depending on the project,
the Company's experienced staff is able to respond to every customer's needs
concerning data structure by developing, building, maintaining, and connecting
customized databases to the Company's kiosk network.
Sales, Marketing and Distribution
In 1996, the Company expended substantial efforts on its strategy of
entering the North American market and achieved preliminary success by entering
into relationships with RFS for its IOD System and with Dick Clark Ventures for
the transmission of electronic services via satellite. The Company intends to
devote a substantial portion of its resources to the development and
implementation of the technologies for these projects. No assurance can be given
that these projects will be successful or that the Company will be able to raise
sufficient funding for such projects.
With respect to its historical kiosk business, the Company has developed a
multi-dimensional approach to the information services market by targeting the
underutilized "leisure time" market. The "leisure time" market refers to time
spent between the home and the office, where the customer is more predisposed to
shop or require access to services. The Company has approached the market from
two different avenues. First, targeting markets which are currently
underutilized and have not yet been identified as market niches. Secondly, the
Company attempts to turn kiosks located in high traffic public areas into profit
centers. The markets which the Company targets need not be related, different
information channels can co-exist on a single kiosk, and the consumer can then
choose which channel to use.
Research and Development
The Company directs its R&D efforts into the integration between various
products in the areas of multimedia platforms, and the development of software,
video and audio products, and animation software, network technologies (LAN,
WAN), and products involved in the areas of fiber distributed data interface
(FDDI) and asynchronous transfer mode (ATM). This approach results
23
<PAGE>
in relatively low cost R&D and allows the Company to integrate a wide range of
multimedia applications.
Simultaneously with the development of kiosks for ongoing projects, the
Company is in the process of developing sub-systems for general use in various
other applications, including:
o HMTL Kiosk: This type of kiosk is suitable for use when vast
amounts of information must be displayed simultaneously, or when the use
of Hypertext Markup Language is required.
o Mall Kiosk: This type of information kiosk enables shoppers to find
a certain store within a mall either alphabetically or by category. The
system also provides printed directions to store locations.
o Bit Technology: The transfer of existing operating systems to 32 bit
technology.
o Updated Central Control System: For controlling the status of the
kiosks and their informational content, receiving reports from the kiosks,
managing service calls and distribution of updates for software and
day-to-day contents.
o Video Conference and Cartographic Information Display System: This
will provide consumers with the ability to engage in video conferencing.
o Continuous Advertising: This component will display advertisements
on a separate screen will be used solely for this purpose. This system will
include a mechanism for determining the frequency and availability of
advertisements according to the amount for transmission time sold.
No assurance can be given that the Company will be able to successfully
complete the development of its IOD System or the technology for its proposed
venture with Dick Clark Ventures.
Competition
The electronic information distribution market is rapidly evolving and is
competitive. The Company believe that most of its competitors have greater
financial resources and name recognition than the Company. In addition, some of
these competitors, including LodgeNet Entertainment Corp. and Spectravision,
currently offer information products which include some of the services to be
included in the Company's IOD System. Accordingly, these competitors may have an
advantage in competing with the Company since its system is not operational as
yet. In addition, the Company expects to face competition from new entrants into
its markets. Such competition could materially adversely effect the Company's
business, operating results and financial condition. There can be no
24
<PAGE>
assurance that the Company will be able to compete successfully against current
or future competitors.
The Israeli kiosk market is a relatively small one in which the Company
believes it is a leading competitor. The Company's main competitors in Israel
are Golden Screens and Interactive Information Ltd. Golden Screens has been in
operation for approximately six years specializing primarily in the public and
government sectors and does not service private organizations. Its kiosks offer
fewer features and less updated technological and multimedia design than the
Company's product. Golden Screen's kiosks do not operate in "real time," and lag
behind the Company's kiosks in multimedia, computer technology and applications.
Interactive Information Ltd. has been in operation for approximately two years
and, to date, services only the hotel industry.
A number of companies are active in the field of information kiosks in
North America. Management believes that Factura Composites, Inc. is the market
leader in kiosk manufacturing in the United States. Other companies active in
the field include: Quick ATM, 1-Media, Aimtech, EDR Systems, Virtual Shopping
Inc., Rikon Corporation, and HSI. All of these companies have greater financial
resources than the Company. There are also a large number of companies in the
field of touch screens, peripherals and applications software. The Company
believes that its high standard of product and innovative approach to the market
will allow the Company to compete favorably in the U.S. and Israeli markets.
Government Regulation
The Company believes that it is not currently subject to any federal
regulations with respect to the sale of kiosks in the United States; however,
the placement of kiosks may be subject to local zoning and other regulations.
The Company's proposed joint venture with Dick Clark Ventures will be subject to
regulation by the SCT of the Government of Mexico and may be subject to federal
regulations with respect to the transmission of data by satellite into the
United States.
Trademarks and Patents
In January 1995, the Company acquired a pending patent (No. 108935) for its
medical kiosks from CSS Ltd., an affiliated company owned by Mr. Yehuda
Shimshon, for $500,000. This patent is pending both in Israel and the United
States. The Company does not have any registered trademarks.
Employees
At June 6, 1997, the Company and its subsidiaries employed 31 persons, 13
in research and development and technical support, 8 in marketing and sales, and
10 in operations and administration.
25
<PAGE>
Properties
The Company's executive offices are currently located in approximately
3,700 square feet of office space at 150 East 58th Street, New York, New York.
The lease for such facilities has a term of five years and two months, with an
annual rental of approximately $134,000.
The Company's research and development facility is located in the
industrial zone of Petah Tikva, Israel. The premises, which consist of
approximately 7,600 square feet and five parking bays, are shared with CSS Ltd.
The Company utilizes approximately 3,000 square feet to house its
administrative, marketing and technical departments. The lease provides for
monthly rentals of $6,840 per month of which half of such amount is linked to
changes in the Israeli Consumer Price Index ("CPI"). The Company pays its
pro-rata share of the lease costs for the premises. The lease expires on
December 31, 1997 and may be renewed for five additional years.
Legal Proceedings
The Company has been advised that the Securities and Exchange Commission
has entered a formal order of private investigation in connection with the
offer, purchase or sale of securities of the Company. The Company has not been
advised by the Staff of the Commission of the status of the investigation. There
can be no assurance that the Commission will not initiate a proceeding against
the Company and/or certain of its former or present affiliates in connection
with its investigation, which proceeding could adversely affect the Company.
Conditions in Israel
The following information is intended to advise prospective investors of
certain conditions in Israel that could affect the Company.
Political Conditions
Since the establishment of the State of Israel in 1948, a state of
hostility has existed, varying as to degree and intensity, among Israel and
various Arab countries, which has led to a number of armed conflicts in the past
and continues to create security and economic problems for Israel. A peace
agreement was signed between Israel and Egypt in 1979, and limited economic and
full political relations have been established between the two countries. A
peace treaty between Israel and the Hashemite Kingdom of Jordan was signed in
1994, ending the state of war along Israel's longest border, pursuant to which
full political and economic relations were formally established.
Since December 1987, civil unrest has existed in the territories which came
under Israel's control in 1967. In September 1993, Israel entered into a
Declaration of Principles with the Palestine Liberation Organization (the
"PLO"), which sets forth a basic framework for continued negotiations between
Israel and the PLO with respect to ending the state of hostility between such
parties. In
26
<PAGE>
April 1994, negotiations between Israel and the PLO resulted in the signing of
an interim agreement to grant Palestinian Arabs limited autonomy in certain of
the Territories administered by Israel; in September 1995, Israel and the PLO
signed an additional agreement regarding the transfer of civil administration to
the Palestinian Authority in other areas of the Territories and the Israeli Army
has withdrawn from certain of such areas as well. No prediction can be made as
to whether any other written agreements will be entered into between Israel and
its neighboring countries, whether a final resolution of the area's problems
will be achieved, the nature of any such resolution, or whether the civil unrest
in the administered territories will continue and to what extent the unrest will
have an adverse impact on Israel's economic development or on the operations of
the Company in the future.
Most adult male permanent residents of Israel under the age 51 are, unless
exempt, obligated to perform approximately 26 days of military reserve duty
annually. Additionally, all such residents are subject to being called to active
duty at any time under emergency circumstances. The male officers and employees
of the Company are generally currently obligated to perform annual reserve duty.
While the Company and its personnel have operated effectively under these
requirements, no assessments can be made as to the full impact on the Company's
work force or business if conditions should change and no prediction can be made
as to the effect on the Company of any expansion or reduction of these
obligations.
Certain countries and companies participate in a boycott of Israeli
companies and others doing business in Israel or with Israeli companies. The
Company, however, believes that the boycott will not have a material adverse
impact on the Company's business.
On November 4, 1995, Prime Minister Yitzhak Rabin was assassinated. In June
1996, following general elections a new Israeli government was formed, headed by
the newly elected Prime Minister, Benjamin Netanyahu of the Likud Party. In
January 1997, Israel and the Palestinian Authority reached an accord with
respect to the Israeli withdrawal from Hebron. Israel has entered into various
agreements with certain Arab countries and the PLO, and various declarations
have been signed in connection with the efforts to resolve some of the economic
and political problems in the Middle East. Nevertheless, there has recently been
a series of terrorist attacks in Israel. No prediction can be made as to whether
a full resolution of these problems will be achieved or as to the nature of any
such resolution. To date, Israel has not entered into a peace treaty with either
Lebanon or Syria.
27
<PAGE>
Economic Conditions
In 1995, for the sixth consecutive year, the economy of Israel experienced
significant expansion. During calendar years 1990 through 1995, Israel's gross
domestic product increased by 5.0%, 6.2%, 6.7%, 3.4%, 6.5% and 7.06%,
respectively. The Israeli government's monetary policy contributed to relative
price and exchange rate stability during most of these years despite fluctuating
rates of economic growth and a high rate of unemployment.
Israel's economy has been subject to numerous destabilizing factors,
including a period of rampant inflation in the early- to mid-1980s, low foreign
exchange reserves, fluctuations in world commodity prices, military conflicts
and civil unrest. For these and associated reasons, the Israeli Government has
intervened in sectors of the Israeli economy, employing among other means,
fiscal and monetary policies, import duties, foreign currency restrictions and
control of wages, prices and exchange rates, and has frequently reversed or
modified its policies in all these areas. The Company believes that the rate of
inflation in Israel has not had a material effect on its business activities to
date because (i) most of the Company's activities are funded or paid in United
States dollars or NIS indexed to the dollar, and (ii) Israeli inflation,
although still significant, has been relatively stable over the last several
years. The inflation rates for 1995 and 1996 were 8.1% and 8.2%, respectively.
In the event that inflation in Israel were to return to such high levels as
would have a significant negative impact on Israel's economy as a whole, the
Company's results of operations and financial position could be materially
adversely affected.
The defense burden, the absorption of immigrants and the development of the
economy have resulted in high balance of payments deficits in Israel for many
years. The main sources of capital to finance the deficits have been military
and economic aid from the United States (including loan guarantees), reparations
and other remittances to Israeli residents, sales of bonds (primarily in the
United States), intragovernmental, institutional and free market loans and
contributions from the international Jewish community. Although the Company
knows of no planned reductions or delays in such sources of capital, the Israeli
economy could suffer serious adverse consequences if such sources of capital
were to be reduced by material amounts.
Trade Agreements
Israel is a member of the United Nations, the International Monetary Fund,
the International Bank for Reconstruction and Development and the International
Finance Corporation. Israel is a signatory to the General Agreement on Tariffs
and Trade, which provides for reciprocal lowering of trade barriers among its
members.
Israel became associated with the European Union by an agreement concluded
in 1975 which confers certain advantages with respect to Israeli exports to most
of the European countries and obliges Israel to lower its tariffs with respect
to imports from those countries over a number of years.
28
<PAGE>
In September 1992, Israel signed a free trade agreement with the European
Free Trade Association ("EFTA"), the members of which are Austria, Finland,
Iceland, Liechtenstein, Norway, Sweden and Switzerland. The agreement, which
became effective on January 1, 1993, entitles the exporting countries of EFTA
trading with Israel to conditions similar to those that the countries of the
European Union enjoy when trading with the United States.
In 1985, Israel and the United States entered into an agreement to
establish a Free Trade Area, which is intended to ultimately eliminate all
tariff and certain non-tariff trade between the two countries. Under the
Agreement, most products received immediate duty free status in 1985, staged
reductions are taking place on others and reductions on tariffs relative to a
third category may be accelerated prior to 1995, by which all tariffs are to be
eliminated.
Israel is the only country that has free-trade area agreements with the
United States, the European Union and the EFTA states. Additionally, the end of
the Cold War has enabled Israel to establish commercial and trade relations with
a number of other nations, including China, Russia, and the nations of Eastern
Europe, with which Israel had not previously had such relations.
29
<PAGE>
MANAGEMENT
Executive Officers and Directors
The Directors and Executive Officers of the Company are:
Name Age Position
- ---- --- --------
Yehuda Shimshon.......... 44 Chairman of the Board, President and
Chief Executive Officer
Doron Leave.............. 43 Vice President of Operations, Acting
Chief Financial Officer and Director
Ilan Mintz............... 34 Director
Israel Shimshon.......... 67 Director
David Tamir.............. 53 Director
Gary P. Tober............ 47 Secretary
Yehuda Shimshon, 44, Chairman of the Board, President, CEO, and Chief
Financial Officer of the Company since December 1995, began his career in the
Israeli Defense Forces and rose to the rank of Captain. Upon his discharge from
the Israel Defense Forces in 1977, he began a career as a consultant to
organizations active in international trade throughout Europe and Africa. Mr.
Shimshon became active in the field of computer research, developing and writing
programs which led to the establishment by him of Casdim Software Systems Ltd.
in 1986, an Israeli company which develops clinical laboratory management
systems ("CSS Ltd."), and Casdim Interactive Systems Ltd. in 1994, an Israeli
company and wholly-owned subsidiary of the Company which designs and develops
interactive kiosks and customized databases and performs network integration
("Casdim Israel"). Mr. Shimshon has been the Chief Executive Officer of these
companies since their inception.
Doron Leave, 43, a director of the Company since August 1996, has been the
Company's Vice President of Operations since July 1996 and has served as Acting
Chief Financial Officer since May 1997. From September 1990 to July 1996, Mr.
Leave was employed by Bank Hapoalim Ltd., most recently as Branch Manager of its
Allenby, Tel Aviv branch. Mr. Leave holds a degree in Business Administration
from Tel Aviv University.
30
<PAGE>
Ilan Mintz, 34, a director of the Company since December 1995, has been
principally employed in various executive positions with CSS Ltd. Mr. Mintz
began his employment with CSS Ltd., a company wholly owned by Mr. Shimshon, in
1990 as manager of the Customer Support and Training Division. In June 1993 he
became the director of the Marketing Division of CSS Ltd. and has served as
General Manager since January 1995.
Israel Shimshon, 67, a director of the Company since March 1996, has been
principally employed as the managing director of Hagadish Insurance Agency, an
Israeli general insurance agency, since 1953. Israel Shimshon is the father of
Yehuda Shimshon.
David Tamir, 53, a director of the Company since May 1996, is currently
engaged as an independent consultant. From May 1992 to December 1995, Mr. Tamir
was president of Powerspectrum Technology, a majority-owned subsidiary of Geotek
Communications, Inc. ("Geotek"), a wireless communications provider. From
January 1996 to May 1996, Mr. Tamir was employed in Israel by Geotek in a
non-executive position. From 1990 until May 1992, Mr. Tamir served as a
representative of the Israeli Armament Development Authority in Washington, D.C.
Mr. Tamir was initially elected to the Company's Board of Directors as the
designee of the investors in the Company's 1996 Private Placement.
Gary P. Tober, 47, Secretary of the Company since December 1995, has been a
member of the law firm of Lane Powell Spears Lubersky of Seattle for over five
years. Mr. Tober practices in the areas of international business law, taxation,
and international investment law.
The Company's Board of Directors has appointed an audit committee
consisting of Messrs. Ilan Mintz and David Tamir.
All directors of the Company hold office until the next Annual Meeting of
Stockholders and until their successors have been elected and qualified.
Officers serve at the pleasure of the Board of Directors. Mr. Israel Shimshon, a
director of the Company, is the father of Mr. Yehuda Shimshon, the Chairman,
President, and CEO of the Company. All of the executive officers, other than Mr.
Tober, devote their full time to the operations of the Company.
Key Employee
Dr. Adam Livny joined the Company in August 1997 as Director,
Communications Systems. Dr. Livny holds a Ph.D. degree in Electrical Engineering
from Polytechnic University of New York, a M.Sc. degree in Electrical
Engineering from Polytechnic Institute of Brooklyn, and a B.Sc. degree in
Electrical Engineering from the Technion, Israel Institute of Technology. Prior
to joining the Company, he was a senior research engineer for over 25 years with
Rafael, the Israeli governmental authority for warfare systems development.
While affiliated with Rafael, Dr. Livny served as Vice President of Development
of Carcom/Rafael from 1993 to August 1996, where he
31
<PAGE>
was responsible for research and development of mobile satellite communications
systems. He was engaged in the development of many advanced communications
systems while employed by Rafael. During the years 1987 through 1990, Dr. Livny
was on leave from Rafael and served as the Chief Scientist of the Israeli
Ministry of Communications.
Executive Compensation
The following table sets forth information concerning the total
compensation during the last three fiscal years for the Company's executive
officers whose total salary in fiscal 1996 totaled $100,000 or more:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
Securities Underlying
Name and Principal Position Year Salary ($) Options (#)
- --------------------------- ---- ---------- -----------
<S> <C> <C> <C>
Yehuda Shimshon 1996 $240,000 --
President, Chief Executive Officer and 1995 -- --
Chairman of the Board 1994 -- --
</TABLE>
The aggregate value of all other perquisites and other personal benefits
furnished in each of the last three years to each of these executive officers
was less than the greater of $50,000 or 10% of each officer's salary for such
year.
There are currently no employment agreements between the Company and any of
its officers. The Company has not paid any cash remuneration to its outside
directors for their services as Directors in the last three years.
STOCK OPTIONS
The following table provides information concerning stock options held in
1996 by each of the executive officers named above in the Summary Compensation
Table. There were no options granted to any officers in 1996.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Shares
Shares Underlying Unexercised Value of Unexercised in the
Acquired on Value Options at FY-End (#) Money Options at FY-End ($)
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Yehuda Shimshon, President, -- -- -- --
Chief Executive Officer and
Chairman of the Board
</TABLE>
32
<PAGE>
CERTAIN TRANSACTIONS
In October 1995, Casdim Israel entered into an agreement with CSS Ltd., a
company wholly owned by Yehuda Shimshon. Pursuant to this agreement, Casdim
Israel paid CSS Ltd. $700,000 for services and products to be supplied by CSS
Ltd. to the Company. These products and services included: (i) adaptation of the
Scope(TM) LIS system operating in the 140 laboratories of Kupat Holim Klalit
("Kupat Holim") to work with the medical kiosk; (ii) development and
implementation of a central data base for laboratory test results; (iii)
implementation of the "Laboratory Test Results Central Data Base" to work with
the 140 laboratories and 400 clinics of Kupat Holim; and (iv) communication
software and adaptation of various interfaces between CSS Ltd. and Casdim
Israel's products. The agreement also provided that in the event Kupat Holim or
other companies purchased the above-mentioned products from CSS Ltd., the
proceeds, up to the sum of $700,000 would be repaid to Casdim Israel. To date,
CSS Ltd. has paid Casdim Israel $50,000.
Also in October 1995, Casdim Israel loaned CSS Ltd. $300,000 at a rate of
interest linked to the Israeli CPI, which loan was repaid in 1996. In January
1995, Casdim Israel purchased a pending patent from CSS Ltd. relating to the
medical multi-media kiosks for the sum of $500,000.
On November 21, 1995 the Company entered into an agreement with Casdim USA
and Mr. Yehuda Shimshon. Mr. Shimshon acted on behalf of himself and Cedarwood,
the then sole shareholders of Casdim USA. Pursuant to the terms of the Exchange
Agreement, the Company acquired all the issued and outstanding shares of Casdim
USA in exchange for 425,000,000 shares of the Company. The Exchange Agreement,
which became effective on December 11, 1995, was approved at a special meeting
of the shareholders of the Company held on October 24, 1995 at which the
shareholders also approved: (i) renaming the Company Casdim International
Systems, Inc.; (ii) the 50:1 stock split of 76,700,000 shares, the then
outstanding number of shares of the Company, into 1,534,000 shares; (iii) the
relocation of the Company's headquarters from Colorado to Nevada; and (iv) the
appointment of Mr. Shimshon as President and Chairman of the Board. As of
December 31, 1995, the Company had 9,634,000 shares outstanding, of which 44.1%
was owned by Mr. Shimshon and 44.1% was held by Cedarwood, a company in which he
holds a controlling interest. At the time of the exchange, Mr. Shimshon and
Cedarwood were each 50% shareholders of Casdim USA.
Under a public relations retainer agreement with Sunrise Financial Group
Inc. ("Sunrise"), the Company agreed to issue Sunrise options to purchase up to
700,000 shares of its common stock at a price of $1.00 per share as
consideration for its public relations services. Of such options, 460,000
options vested as of April 24, 1996 and options to purchase 10,000 shares of
common stock were to vest monthly for a 24-month period, subject to the
continued provision of services by Sunrise. In March 1997, the public relations
retainer agreement with Sunrise was terminated. Sunrise will retain the option
to purchase up to 300,000 shares of the Company's common stock.
33
<PAGE>
In July 1996 the Company entered into a one year consulting agreement with
WEDA Consultants N.V., a project consulting firm with which David Tamir is
affiliated. Under the terms of the consulting agreement, WEDA received a monthly
retainer of $10,000 and was granted options to purchase 100,000 shares of common
stock, which were to vest ratably over two years, beginning on the first
anniversary of the grant. The agreement was terminated in April 1997.
34
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the aggregate
and percentage ownership of the Company's Common Stock as of June 6, 1997 and
the percentage ownership as adjusted to reflect the sale of the 2,171,002 shares
of Common Stock offered hereby by the Company and the Selling Stockholders
pursuant to this Offering, by (i) each person known by the Company to
beneficially own more than five percent of the Company's Common Stock, (ii) each
of the Company's directors, (iii) each of the executive officers and (iv) all
directors and executive officers as a group.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to Offering After Offering
----------------- Number --------------
Number of % of Shares of Shares Number of % of Shares
Name and Address Shares Outstanding to be Sold Shares Outstanding
---------------- ------ ----------- ---------- ------ -----------
<S> <C> <C> <C> <C> <C>
Yehuda Shimshon(1)............................ 8,250,000(2) 53.8% -- 7,950,000 51.8%
Cedarwood Trading & Investment
Ltd.(1)..................................... 4,000,000 26.1 300,000 3,700,000 24.1%
Doron Leave(1)................................ -- -- -- -- *
Ilan Mintz(1)................................. -- -- -- -- *
Israel Shimshon(1)............................ -- -- -- -- *
David Tamir(1)................................ 29,162 * 29,162 -- *
Gary P. Tober(1).............................. -- -- -- -- *
Frank P. Brosens.............................. 365,000 2.4 365,000 -- *
Nathan Low.................................... 413,334 2.7 413,334 -- *
RBC Inc....................................... 66,668 * 66,668 -- *
Tinicum Investors............................. 365,000 2.4 365,000 -- *
Andrew Hart................................... 11,000 * 11,000 -- *
Pelican Securities & Investments Ltd.......... 100,000(3) * 100,000(3) -- *
Softbreeze Ltd................................ 250,000(3) 1.6 250,000(3) -- *
Montaraz Limited.............................. 250,000(3) 1.6 250,000(3) -- *
Wideglobe Ltd................................. 50,000(3) * 50,000(3) -- *
All Executive Officers and Directors as a
group (4 persons)............................. 8,250,000 53.8% -- 7,950,000 51.8%
______________
* Less than 1%
</TABLE>
(1) The address for Mr. Yehuda Shimshon is 150 East 58th Street, New York, New
York 10155. The address for Cedarwood Trading & Investment Ltd.
("Cedarwood") is c/o Bank of Bermuda, 6 Front Street, Hamilton HM 11,
Bermuda. The address for Messrs. Doron Leave, Ilan Mintz, Israel Shimshon
and David Tamir is 5 Haofan Street, Kiryat-Arie, P.O. Box 3599, Petah
Tikva, Israel 49130. The address for Mr. Tober is 1420 Fifth Avenue, Suite
4100, Seattle, Washington 98701-2338.
(2) Includes 4,000,000 shares held by Cedarwood, in which entity Mr. Yehuda
Shimshon has a controlling beneficial interest. Accordingly, he is deemed
to be the beneficial owner of such shares.
(3) Shares issuable upon exercise of currently exercisable Warrants.
35
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
At June 6, 1997, the Company had 15,334,000 shares of Common Stock
outstanding. Of these shares, approximately 10,000,000 shares of Common Stock
which are not the subject of this Prospectus, are "restricted securities" within
the meaning of Rule 144 under the Securities Act.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned his or her shares for at
least one year, is entitled to sell, within any three-month period, a number of
shares that does not exceed the greater of (i) 1% of the number of then
outstanding shares or (ii) the average weekly trading volume of such shares
during the four calendar weeks preceding each such sale. Sales under Rule 144
are also subject to certain manner-of-sale provisions, filing requirements and
the public availability of certain information about the Company.
No precise predictions can be made of the effect, if any, that market sales
of restricted shares or their eligibility for sale under Rule 144 will have on
the market price prevailing from time to time. Nevertheless, sales of
substantial amounts of the restricted shares on the public market could
adversely affect such market price and could impair the Company's future ability
to raise capital through the sale of equity securities.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 30,000,000 shares
of Common Stock, of which 15,334,000 shares of Common Stock are currently
outstanding as of June 6, 1997. All issued and outstanding shares of Common
Stock of the Company are, and the Shares offered hereby when issued and paid for
will be, validly issued, fully paid and nonassessable. The Shares do not have
preemptive rights and are not convertible or redeemable.
The Company is incorporated in Delaware and its certificate of
incorporation authorizes the issuance of 30,000,000 shares of Common Stock, par
value $.01 per share, with no provision for preferred shares.
Common Stock
The holders of shares of Common Stock have one vote per share. None of the
shares have or will have preemptive or cumulative voting rights, be redeemable,
or be liable for assessments or further calls. None of the shares will have any
conversion rights.
The holders of shares of any class of common stock are entitled to
dividends when and as declared by the Board of Directors from funds legally
available therefor and, upon liquidation, to
36
<PAGE>
share pro rata in any distribution to stockholders. The Company does not
anticipate declaring or paying any cash dividends for the foreseeable future.
See "Dividend Policy."
The shares of Common Stock beneficially owned by Mr. Shimshon and Cedarwood
aggregate approximately 53.8% of the shares of Common Stock currently
outstanding and will amount to 51.8% of the shares of Common Stock to be
outstanding upon completion of the Offering hereby. They will be able to
exercise substantial influence over the election of directors and other issues
which are submitted to the stockholders of the Company. See "Risk
Factors--Control."
Transfer Agent and Registrar
TranSecurities Corporation of Spokane, Washington acts as transfer agent
and registrar for the Common Stock.
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time as market
conditions permit in the over-the-counter market, or otherwise, at prices and
terms then prevailing or at prices related to the then-current market price, or
in negotiated transactions. The Shares offered hereby may be sold without
limitation by one or more of the following methods: (i) a block trade in which a
broker or dealer so engaged will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (ii) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus; (iii)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; (iv) face-to-face transactions between sellers and purchasers
without a broker-dealer or otherwise. In effecting sales, brokers or dealers
engaged by the Selling Stockholders may arrange for other brokers or dealers to
participate. Such brokers or dealers may receive commissions or discounts from
Selling Stockholders in amounts to be negotiated immediately prior to the sale.
Such brokers or dealers and any other participating brokers or dealers may be
deemed to be "underwriters" within the meaning of the Securities Act, in
connection with such sales.
The Selling Stockholders have advised the Company that they will comply
with Rule 10b-6 promulgated under the Exchange Act in connection with all sales
of Shares issuable upon exercise of the Warrants or otherwise offered
hereby.
The Company will pay the expenses of this Offering which expenses are
estimated to be approximately $75,000.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon by Carter, Ledyard & Milburn, New York, New York.
37
<PAGE>
EXPERTS
The financial statements of Casdim International Systems, Inc. at December
31, 1995 and 1996 and for the two years in the period ended December 31, 1996,
appearing in this Prospectus and Registration Statement have been audited by
Hocker, Lovelett, Hargens & Yennie, P.C., independent accountants, as set forth
in their report thereon appearing elsewhere herein and in the Registration
Statement, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company files certain reports and other information with the
Commission. Such reports and other information can be inspected and copied at
the public reference facilities maintained by the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 or at the Regional Offices of the
Commission: Suite 1400, Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a Web site at
http://www.sec.gov. which contains reports, proxy statements and other
information regarding registrants that file electronically with the Commission.
The Company has filed with the Commission in Washington, D.C., a
Registration Statement on Form SB-2 under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Shares offered hereby. For further
information with respect to the Company and the securities offered hereby,
reference is made to the Registration Statement and to the financial statements
and exhibits filed as part thereof. Statements contained in this Prospectus as
to the contents of any contract or other documents are not necessarily complete,
and in each instance reference is made to the copy of such contract or document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference.
38
<PAGE>
INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants............................................... F-2
Consolidated Balance Sheets at December 31, 1996 and 1995....................... F-3
Consolidated Statements of Income for the years ended December 31, 1996 and 1995 F-5
Consolidated Statements of Stockholders' Equity for the years ended December 31,
1996 and 1995................................................................... F-6
Consolidated Statements of Cash Flows for the years ended December 31, 1996 and
1995............................................................................ F-7
Notes to Consolidated Financial Statements...................................... F-9
INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets at March 31, 1997 and December 31, 1996............. F-17
Consolidated Statements of Income for the three months ended
March 31, 1997 and 1996................................................... F-18
Consolidated Statements of Cash Flows for the three months ended
March 31, 1997 and 1996................................................... F-19
Notes to Interim Consolidated Financial Statements.............................. F-20
</TABLE>
F-1
<PAGE>
=========================================
HOCKER, LOVELETT, HARGENS, & YENNIE, P.C.
=========================================
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
CASDIM INTERNATIONAL SYSTEMS, INC.
We have audited the accompanying consolidated balance sheets of CASDIM
INTERNATIONAL SYSTEMS, INC. (a Colorado corporation) and its subsidiaries as of
December 31, 1996 and 1995, and the related consolidated statements of income,
stockholders' equity and cash flows for the years then ended. These consolidated
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and the significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CASDIM INTERNATIONAL
SYSTEMS, INC. and its subsidiaries as of December 31, 1996 and 1995 and the
results of their operations, stockholders' equity and their cash flows for the
years then ended, in conformity with generally accepted accounting principles.
/s/ Hocker, Lovelett, Hargens & Yennie, P.C.
March 21, 1997
Riverton, Wyoming
F-2
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
1996 1995
ASSETS ---- ----
CURRENT ASSETS
Cash and cash equivalents $ 915,527 $ 26
Accounts receivable
Trade 438,807 155,783
Other - Note 2 1,236,667 1,202,505
Investments 173,596 --
------- ------
Total 2,764,597 1,358,314
PROPERTY AND EQUIPMENT - NOTE 3
Property and equipment 225,361 111,727
Less accumulated depreciation (36,435) (20,919)
Net 188,926 90,808
OTHER ASSETS
Patent, net - Note 4 400,000 467,659
Start-up and organization
costs, - net - Note 4 48,304 --
Deposits 10,200 --
Product development costs - Note 6 943,164 --
------- -------
1,401,668 467,659
TOTAL $4,355,191 $1,916,781
========== ==========
See accompanying notes to consolidated financial statements
F-3
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
1996 1995
LIABILITIES AND STOCKHOLDERS' EQUITY ---- ----
CURRENT LIABILITIES
Accounts payable
Trade $ 52,675 $ 38,763
Other - Note 5 469,355 465,417
Current maturities of debt - Note 10 1,344,416 674,702
-- --------- -------
Total 1,866,446 1,178,882
LONG-TERM DEBT
Accrued severance pay, net - Note 7 25,474 12,986
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY -- 72,372
------ ------
TOTAL 1,891,920 1,264,240
STOCKHOLDER'S EQUITY
Common stock, $.00001 par value,
500,000,000 shares authorized
13,634,000 shares issued and
outstanding, 285,000 shares
held in treasury stock 985 945
Additional paid in capital 3,145,268 194,480
Less treasury stock (cost) (1,425) (1,425)
Retained earnings (deficit) (681,557) 458,541
-------- -------
Total 2,463,271 652,541
--------- -------
TOTAL $4,355,191 $1,916,781
========== ==========
See accompanying notes to consolidated financial statements
F-4
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
1996 1995
---- ----
SALES $ 508,713 $2,011,110
COST OF SALES 379,806 468,353
------- -------
GROSS PROFIT 128,907 1,542,757
SALES, ADMINISTRATIVE AND GENERAL EXPENSES 1,244,144 237,016
--------- -------
INCOME (LOSS) FROM OPERATIONS (1,115,237) 1,305,741
OTHER INCOME (EXPENSES)
Interest income 21,309 --
Dividend income 35,673 --
Interest expense (109,519) (75,272)
Investment activity loss -- 93,142
Gain (loss) foreign translation (51,860) (6,203)
------- ------
Total (104,397) (174,617)
-------- --------
INCOME (LOSS) FROM OPERATIONS BEFORE TAXES (1,219,634) 1,131,124
INCOME TAX (EXPENSE) BENEFIT -- (440,309)
------ --------
NET INCOME (LOSS) $(1,219,634) $ 690,815
=========== ==========
NET EARNINGS (LOSS) PER SHARE ON A FULLY
DILUTED BASIS $ (.09) $ .36
=========== ==========
NET EARNINGS (LOSS) PER SHARE $ (.09) $ .36
=========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 13,349,000 1,899,000
========== =========
See accompanying notes to consolidated financial statements
F-5
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID IN TREASURY RETAINED
SHARES STOCK STOCK STOCK EARNINGS TOTAL
------ ----- ----- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance - 12/31/94
as previously reported 1,134,000 $745 $ 94,680 $(1,425) $(152,738) $ (58,738)
Sale of stock 200 99,800 -- -- 100,000
50 : 1 reverse stock
split 8,500,000
Net income 690,815 690,815
Less minority interest (79,596) (79,536)
--------- --- ------- ------ ------- -------
Balance - 12/31/95 9,634,000 945 194,480 (1,425) 458,541 652,541
Contribution of
consolidated
minority interest 79,536 79,536
Sale of stock 4,000,000 40 2,686,725 2,686,765
Warrants exercised 100,000 100,000
Stock options issued 164,063 164,063
Net income (loss) (1,219,634) (1,219,634)
---------- ---- ---------- ------- --------- ----------
Balance - 12/31/96 13,634,000 $985 $3,145,268 $(1,425) $(681,557) $ 2,463,271
========== ==== ========== ======= ========= ===========
</TABLE>
See accompanying notes to consolidated financial statements
F-6
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(1,219,634) $ 690,815
Adjustments to reconcile net income
to net cash provided by operating
activities:
depreciation and amortization 86,383 48,802
Changes in operating assets and
liabilities:
(Increase) Decrease In:
Accounts receivable - trade (283,024) 929,570
Accounts receivable - other (26,998) (899,680)
(Decrease) Increase In:
Accounts payable - trade 13,912 1,524
Accounts payable - other 3,938 414,498
Deposits -- (1,234,516)
--------- ----------
Net cash (used) by
operating activities (1,425,423) (48,987)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (113,634) (51,685)
Purchase of patent -- (500,000)
Purchase of investments (173,596) --
Payment for start-up costs (51,512) --
Payment for product development (943,164) --
Payment of security deposit (10,200) --
------- -------
Net cash used in investing
activities (1,292,106) (551,685)
See accompanying notes to consolidated financial statements
F-7
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
CASH FLOWS FROM FINANCING ACTIVITIES 1996 1995
---- ----
Proceeds from notes payable 669,714 487,790
Severance pay 12,488 3,420
Proceeds from issuance of stock 2,950,828 100,000
--------- -------
Net cash provided by
financing activities 3,633,030 591,210
--------- -------
INCREASE (DECREASE) IN CASH 915,501 (9,462)
CASH
Beginning of year 26 9,488
---- -----
End of year $ 915,527 $ 26
========== =======
Interest paid $109,519
========
Income Taxes Paid --
========
See accompanying notes to consolidated financial statements
F-8
<PAGE>
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. 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 CASDIM INTERACTIVE SYSTEMS USA, INC., which owns
100% of CASDIM INTERACTIVE SYSTEMS, LTD., (ISRAEL) ("CISL"). 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.
b. Foreign operations - CASDIM INTERACTIVE SYSTEMS, LTD., (ISRAEL)
maintains its accounts in nominal New Israeli Shekels ("NIS"). Certain
of the dollar amounts in the financial statements may represent the
dollar equivalent of other currencies, including the New Israeli
Shekel ("NIS"), which may not be exchangeable for dollars.
Transactions and balances denominated in dollars are presented at
their dollar amounts. Non-dollar transactions and balances are
remeasured into dollars in accordance with the principles set forth in
the Statement of Financial Accounting Standards ("FAS") No. 52,
"Foreign Currency Translation," of the Financial Accounting Standards
Board of the United States.
F-9
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Accordingly, items have been remeasured as follows:
Monetary items-at the current exchange rate at each balance sheet
date;
Nonmonetary items-at historical exchange rates;
Income and expense items-at exchange rates current as of the date of
recognition of those items (excluding depreciation and other items
deriving from nonmonetary items);
Exchange gains and losses from aforementioned remeasurement (which are
immaterial for each year) are reflected in the statements of income.
Linkage Basis - Balances which are linked to the Israeli Consumer
Price Index (the "CPI") are presented on the basis of the index at the
balance sheet date, which index is published subsequently. Balances
denominated in, or linked to, currencies other than the dollar are
presented according to the exchange rates prevailing at the balance
sheet date.
The Israeli CPI increase by 10.6% for the year ending December 31,
1996 and 8.15% in the year ending December 31, 1995.
The effects of the inflationary erosion of monetary items and interest
is included in financial income or expenses, as appropriate.
c. 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.
Years
-----
Leasehold improvements 10
Motor vehicles 7
Office furniture and equipment 5-20
(mainly computers and peripheral
equipment)
Leasehold improvements are depreciated using the straightline method
over the period of each lease, not to exceed the estimated useful life
of the improvements.
F-10
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
d. 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.
e. 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 difference from the
valuation method required by generally accepted accounting principles.
f. Comparative Statements - The comparative statements for 1995 have been
restated as if the individual companies had been combined during the
entire periods.
g. 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.
h. Recognition of Income - Income deriving from long term contracts are
recognized upon percentage completion basis. At December 31, 1996 the
Company completed 83% of its $2,074,029 (NIS 6,502,080) contract with
Kupat Holim Leumit. Estimated costs and earnings in excess of billings
at December 31, 1996 amounted to $259,533 (NIS 843,743).
i. 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 Accounting Standards Board
("FASB") (Accounting for Income Taxes). Deferred income taxes are not
material to the financial statements.
j. Net Income per Share - Net income per share is computed on the
weighted shares adjusted for the issuance of shares and consolidation.
F-11
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3. Other Receivables and Prepaid Expenses
1996 1995
---- ----
Prepaid expenses $ 148,323 $ 52,103
Related parties 1,088,344 1,150,402
--------- ---------
$1,236,667 $1,202,505
========== ==========
4. Fixed Assets
Cost 1996 1995
---- ----
Leasehold improvement $ 10,168 $ 2,428
Furniture & equipment 182,719 89,325
Motor vehicles 32,474 19,974
------ ------
225,361 111,727
Accumulated depreciation 36,435 20,919
------ ------
Total $188,926 $ 90,808
========== ========
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. Product Development Costs
Based on the Company's product development process, technological
feasibility is established upon completion of a working model. Costs
incurred by the Company between completion of the working model and the
point at which the product is ready for general release have been
capitalized. Total costs incurred to December 31, 1996 were $943,164.
Capitalized software costs are amortized by the greater of: (I) ratio of
current gross revenues from sales of the software to the total of current
and anticipated future gross revenues from sales of that software or (ii)
the straight-line method over the remaining estimated useful life of the
product (not greater than three years). The Company assesses the
recoverability of this intangible asset by determining whether the
amortization of the asset over its remaining life can be recovered through
undiscounted future operating cash flows from the specific product.
F-12
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7. Accrued Severance Pay
The liability of the Company for severance pay for the employees of its
Israeli subsidiary 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 CISL and have
been entered into by CISL on behalf of its individual employees. The
amounts accumulated with the insurance company are not under CISL's control
or management and are therefore not reflected in the Company's balance
sheet.
8. Capital Stock
On May 3, 1996, the Company completed a private placement of its securities
in which 4,000,000 shares of common stock were issued for $3,000,000,
before expenses of $313,210.
9. Other Payable and Accrued Liabilities
1996 1995
---- ----
Provision for taxes, net $ -- $364,520
Payroll and related amounts 49,751 17,191
Accrued expenses 12,662 8,953
Government authorities 406,942 74,753
------- ------
$469,355 $465,417
======== ========
10. Current Maturities of Debt
1996 1995
---- ----
Note payable bank, due March 31, 1997,
plus accrued interest at 17.5%
collateralized by fixed assets,
securities, notes and negotiable documents $1,344,416 $180,806
Bank overdraft, due December 31, 1996,
plus accrued interest at 20.5% -- 493,896
--------- -------
TOTAL $1,344,416 $674,702
========== ========
F-13
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11. Stock Warrants and Stock Options
Stock Compensation Plan
Under the Company's 1996 Stock Option Plan (the "Plan"), the Company may
grant options for up to 500,000 shares of its common stock to its
employees, directors and consultants. No options have been granted to date.
Under the Plan, the exercise price of incentive stock options ("ISOs")may
not be less than 100% (or 110%, if at the time of grant the optionee owns
more than 10% of the voting stock of the Company) of the fair market value
of the shares of common stock at the date of grant. The purchase price of
each share subject to an option, or any portion thereof, which is not
designated as an IS, may not be less than 75% of the fair market of such
shares on the date of grant. The term of each option under the Plan may be
for a period of up to ten years (five years if the recipient is a 10% or
more shareholder).
Under a public relations retainer agreement (the "Agreement") with Sunrise
Financial Group Inc. ("Sunrise"), the Company agreed to issue Sunrise
options to purchase up to 700,000 shares of its common stock as
consideration for its public relations services. Of such options, 460,000
options vested as of April 24, 1996 and options to purchase 10,000 shares
of common stock vest monthly for a 24-month period, subject to the
continued provision of services by Sunrise. Options to purchase 540,000
shares of common stock had vested as of December 31, 1996. Under the
Agreement, the purchase price of each share subject to an option is $1.00.
The term of these options will expire on April 2001. The Company has
accounted for the fair value of the grant of options to Sunrise in
accordance with FASB Statement 123. The compensation cost that has been
charged against income for the options granted to Sunrise was $164,063.
Under a consulting agreement with WEDA Corporation, N.V. ("WEDA"), the
Company agreed to issue WEDA options to purchase up to 100,000 shares of
common stock at $2.25 per share as partial consideration for its consulting
services. Such options vest monthly over a two-year period and will expire
in June 2001.
Warrants
The Company issued warrants exercisable into 1,150,000 shares of common
stock in connection with its May 1996 private placement. The warrants,
which are exercisable at $1.00 per share, have been included in the
computation of fully diluted earnings per share.
F-14
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12. Taxes on Income
CISL 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 is 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 and the actual tax expense is
virtually identical. Any differences are immaterial to the financial
statements taken as a whole.
CASDIM INTERNATIONAL SYSTEMS, INC. has a net operating loss carryforward in
the amount of $616,312 which will begin to expire in the year 2002.
13. Related Party Transactions
In October, 1995, the Company transferred $1,000,000 (NIS 3,000,000) to
CASDIM SOFTWARE SYSTEMS, LTD., of which US $700,000 served as advance
payment on account of the purchase and adaptation of related software
products for the "MEDICAL MULTIMEDIA KIOSK" which is expected to be sold by
December 31, 1998 to Kupat Holim Klalit, 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.
14. Commitments and Contingent Liabilities
Lease commitment: The Company's Israeli subsidiary leases its premises
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.
15. Subsequent Events
In March 1997, the public relations retainer agreement with Sunrise was
terminated (see note 11). Sunrise will retain the option to purchase up to
300,000 shares of the Company's common stock. The Company has entered into
negotiations with Pelican Investments Ltd. for a similar public relations
agreement, agreeing to issue Pelican Investments Ltd. options to purchase
up to 400,000 shares of the Company's common stock.
F-15
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In March 1997, CISL was informed by Kupat Holim Leumit, of its continued
postponement of payment of a trade account receivable owed to the Company
in the amount of approximately $300,000. The Company is currently
researching all possible remedies to correct the situation.
In March 1997, CISL entered into an agreement with Bank Hapoalim to convert
approximately $1,000,000 of short-term debt into long-term debt.
F-16
<PAGE>
<TABLE>
<CAPTION>
CASDIM INTERNATIONAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1997 1996
(Unaudited) (Audited)
----------- ---------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash .................................................... $ 932,020 $ 915,527
Accounts receivable
Trade - Note 8.................................... 426,062 438,807
Other............................................. 1,087,238 1,236,667
Investments.............................................. - 173,596
--------- ----------
$2,445,320 $2,764,597
PROPERTY AND EQUIPMENT
Property and equipment................................... 259,820 225,361
Less accumulated depreciation............................ (56,943) (36,435)
----------- ----------
202,877 118,926
OTHER ASSETS
Deposits................................................. 55,893 10,200
Start-up and organization costs.......................... 46,700 48,304
Patent, net - Note 3..................................... 387,500 400,000
Product development costs - Note 4....................... 1,206,056 943,164
---------- ----------
Total............................................. $4,344,346 $4,355,191
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
Trade............................................. $ 329,709 $ 52,675
Other............................................. 232,975 469,355
Current maturities of debt............................... 241,987 1,344,416
---------- ----------
804,671 1,866,446
LONG-TERM DEBT
Accrued severance pay - Note 5........................... 25,357 25,474
Long term bank debt - Note 9............................. 1,000,000 -
STOCKHOLDERS' EQUITY - Notes
Common stock, $.01 par value, 500,000,000
shares authorized 14, 134,001 shares issued
and outstanding, 285,000 shares held as
treasury stock...................................... 985 985
Additional paid in capital............................... 3,545,268 3,145,268
Less treasury stock (cost)............................... (1,425) (1,425)
Retained earnings (deficit).............................. (1,030,510) (681,557)
----------- ---------
Total shareholders' equity....................... 2,514,318 2,463,271
----------- -----------
Total liabilities and shareholders' equity.. $ 4,344,346 $ 4,355,191
=========== ===========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-17
<PAGE>
<TABLE>
<CAPTION>
CASDIM INTERNATIONAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
---- ----
<S> <C> <C>
Sales........................................................ $ 6,985 $ 253,007
Cost of sales................................................ - 31,785
--------- --------
Gross profit................................................. 6,985 221,222
Selling, general and administrative expenses................. 485,492 113,989
--------- ---------
Income (loss) from operations................................ (478,507) 107,233
Other income (expense)
Interest income.......................................... 5,828 -
Interest expense......................................... (21,676) (18,710)
Gain (loss) from foreign currency translation........... - (18,134)
Gain from sale of investments............................ 145,402 -
--------- -------
Total............................................. 129,554 (36,844)
Income (loss) from operations before taxes................... (348,943) 70,389
Income tax (expense)......................................... - (33,185)
---------- --------
Net income (loss)............................................ $(348,943) $ 37,204
========== =========
Earnings (loss) per share on common and
common stock equivalents................................. $(.0247) $.01
======= ====
Earnings (loss) per share on a fully diluted basis........... $(.0247) $.01
======= ====
Total average number of shares outstanding................... 14,134,001 9,634,000
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-18
<PAGE>
<TABLE>
<CAPTION>
CASDIM INTERNATIONAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED, MARCH 31, 1997 AND 1996
1997 1996
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................ $(348,953) $ 37,204
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 34,612 28,947
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable - trade....................... 12,745 (208,148)
Accounts receivable - other....................... 149,429 220,744
(Decrease) increase in:
Accounts payable - trade.......................... 277,034 18,900
Accounts payable - other.......................... (236,380) (14,668)
--------- ---------
Net cash provided (used) by
operating activities....................... (111,513) 82,979
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for product development costs.................... (262,892) -
Purchase of property and equipment....................... (34,459) (2,301)
Sale of investments...................................... 173,596 -
Payment of security deposit.............................. (45,693) -
--------- ---------
Net cash used in investing activities...... (169,448) (2,301)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on short term debt............................... (102,429) (78,536)
Severance pay............................................ (117) 2,875
Proceeds from stock warrants exercised................... 400,000 -
-------- --------
Net cash provided (used) by
financing activities....................... 297,454 (75,661)
-------- ---------
INCREASE IN CASH............................................ 16,493 5,017
CASH:
Beginning of period...................................... 915,527 26
-------- ---------
End of period............................................ $932,020 $ 5,043
======== =========
Interest paid......................... $21,676
=======
Income taxes paid..................... $ -
====
</TABLE>
See accompanying notes to consolidated financial statements.
F-19
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying financial information is unaudited, but, in the opinion of
management, reflects all adjustments (which include only normally recurring
adjustments) necessary to present fairly the Company's financial position,
operating results and cash flows for the periods presented. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The financial
information should be read in conjunction with the audited financial
statements and notes thereto for the year ended December 31, 1996 included
in the Company's Annual Report on Form 10-KSB filed with the Securities and
Exchange Commission. The results of operations for the three-month period
ended March 31, 1997 are not necessarily indicative of the results to be
expected for the full year.
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. 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.
b. Foreign operations - CASDIM INTERACTIVE SYSTEMS, LTD., (ISRAEL)
maintains its accounts in nominal New Israeli Shekels ("NIS"). Certain
of the dollar amounts in the financial statements may represent the
dollar equivalent of other currencies, including the New Israeli
Shekel ("NIS"), which may not be exchangeable for dollars.
Transactions and balances denominated in dollars are presented at
their dollar amounts. Non-dollar transactions and balances are
remeasured into dollars in accordance with the principles set forth in
the Statement of Financial Accounting
F-20
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Standards ("FAS") No. 52, "Foreign Currency Translation," of the
Financial Accounting Standards Board of the United States.
Accordingly, certain items relating to the Company's Israel subsidiary
have been remeasured as follows:
Monetary items-at the current exchange rate at each balance sheet
date;
Nonmonetary items-at historical exchange rates;
Income and expense items-at exchange rates current as of the date
of recognition of those items (excluding depreciation and other
items deriving from nonmonetary items);
Exchange gains and losses from aforementioned remeasurement
(which are immaterial for each year) are reflected in the
statements of income.
Linkage Basis - Balances which are linked to the Israeli Consumer
Price Index (the "CPI") are presented on the basis of the index
at the balance sheet date, which index is published subsequently.
Balances denominated in, or linked to, currencies other than the
dollar are presented according to the exchange rates prevailing
at the balance sheet date.
The effects of the inflationary erosion of monetary items and
interest is included in financial income or expenses, as
appropriate.
c. 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.
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.
d. 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
F-21
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
or in banks including time deposits, and any highly liquid debt
instruments purchased with a maturity of three months or less.
e. 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 difference from the
valuation method required by generally accepted accounting principles.
f. 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.
3. 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.
4. Product Development Costs
Based on the Company's product development process, technological
feasibility is established upon completion of a working model. Costs
incurred by the Company between completion of the working model and the
point at which model the product is ready for general release have been
capitalized. Total costs incurred to March 31, 1997 were $1,206,056.
Capitalized software costs are amortized by the greater of: (i) ratio of
current gross revenues from sales of the software to the total of current
anticipated future gross revenue from sales of that software or (ii) the
straight-line method over the remaining estimated useful life of the
product (not greater than three years). The Company assesses the
recoverability of this intangible asset by determining whether the
amortization of the asset over its remaining life can be recovered through
undiscounted future operating cash flows from the specific product.
5. Accrued Severance Pay
The liability of the Company for severance pay for the employees of its
Israeli subsidiary 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
F-22
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
insurance policies. The insurance policies are owned by CISL and have been
entered into by CISL on behalf of its individual employees. The amounts
accumulated with the insurance company are not under CISL's control or
management and are therefore not reflected in the Company's balance sheet.
6. Capital Stock
On May 3, 1996 the Company completed a private placement of its securities
in which 4,000,000 shares of common stock were issued for $3,000,000,
before expenses of $313,210.
7. Stock Warrants and Stock Options
Stock Compensation Plans
Under the Company's 1996 Stock Option Plan (the "Plan"), the Company may
grant options for up to 500,000 shares of its common stock to its
employees, directors and consultants. No options have been granted to date.
Under the Plan, the exercise price of incentive stock options ("ISOs") may
not be less than 100% (or 110%, if at the time of grant the optionee owns
more than 10% of the voting stock of the Company) of the fair market value
of the shares of common stock at the date of grant. The purchase price of
each share subject to an option, or any portion thereof, which is not
designated as an ISO, may not be less than 75% of the fair market of such
shares on the date of grant. The term of each option under the Plan may be
for a period of up to ten years (five years if the recipient is a 10% or
more shareholder).
Under a public relations retainer agreement (the "Agreement") with Sunrise
Financial Group Inc. ("Sunrise"), the Company agreed to issue Sunrise
options to purchase up to 700,000 shares of its common stock as
consideration for its public relations services. Of such options, 460,000
options vested as of April 24, 1996 and options to purchase 10,000 shares
of common stock were to vest monthly for a 24-month period, subject to the
continued provision of services by Sunrise. Options to purchase 540,000
shares of common stock had vested as of December 31, 1996. Under the
Agreement , the purchase price of each share subject to an option is $1.00.
The term of these options will expire on April 2001.
In March 1997, the "Agreement" with Sunrise was terminated. The parties
agreed that Sunrise would retain options to purchase up to 300,000 shares
of the Company's common stock.
In April 1997, the Company entered into an agreement with Pelican
Consultants, Inc. ("Pelican") to provide financial consulting and financial
relations services to the Company. The Company agreed to issue Pelican
options to purchase up to 200,000 shares of the Company's common stock at a
purchase price of $1.00 per share. Of such options, 100,000
F-23
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
options vested as of April 11, 1997 and options to purchase the remaining
shares will vest ratably over the next 12 month period subject to the
continued provision of services by Pelican.
The Company has accounted for the fair value of the grant of options to
Sunrise and Pelican in accordance with FASB Statement 123. The compensation
costs that has been charged against income for the options granted to
Sunrise and to Pelican was $164,063.
Warrants
The Company issued warrants exercisable into 1,150,000 shares of common
stock in connection with its May 1996 private placement. The warrants,
which are exercisable at $1.00 per share, have been included in the
computation of fully diluted earnings per share. As of March 31, 1997,
500,000 warrants have been exercised. There remain 650,000 warrants
available to be exercised.
8. Accounts Receivable
In March 1997, CISL was informed by Kupat Holim Leumit, of its continued
postponement of payment of a trade account receivable owed to the
Company in the amount of approximately $300,000. The Company has also
been informed by Kupat Holim Leumit that a change in senior management
is currently being contemplated.
9. Long Term Debt
On March 3, 1997, CISL converted $1,000,000 of short term debt into long
term debt. The terms of the refinancing call for payments of interest only,
with a balloon payment due in February, 2002.
F-24
<PAGE>
============================================= =================================
No dealer, salesperson or other person
has been authorized to give any information
or to make any representation not contained
in this Prospectus in connection with the 2,171,002 Shares
offer made hereby. If given or made, such
information or representation must not be
relied upon as having been authorized by the Common Stock
Company or the Underwriters. This Prospectus
does not constitute an offer to sell or
solicitation of an offer to purchase by any
person in any jurisdiction in which such an
offer would be unlawful. Neither the delivery
of this Prospectus nor any sale made
hereunder shall under any circumstances
create any implication that the information
contained herein is correct as of any time
subsequent to the date hereof.
-------------------------------
TABLE OF CONTENTS
Page CASDIM INTERNATIONAL
Prospectus Summary.........................3 SYSTEMS, INC.
Risk Factors...............................6
Use of Proceeds...........................13
Price Range of Ordinary Shares............13
Dividend Policy...........................14 _______________
Capitalization............................14
Selected Financial Data...................15 PROSPECTUS
Management's Discussion and Analysis
of Financial Condition and Results _______________
of Operations...........................16
Business..................................20
Management................................30
Certain Transactions......................33
Principal Shareholders....................35
Shares Eligible for Future Sale...........36
Description of Capital Stock..............36
Plan of Distribution......................37
Legal Matters.............................37 June___, 1997
Experts...................................38
Available Information.....................38
Financial Statements.....................F-1
============================================= =================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 27. Exhibits and Financial Statement Schedules.
(a) Exhibits
Exhibit
Number
- ------
*2 Agreement for the Exchange of Stock and Reorganization.
3.1 Articles of Incorporation (Delaware).
3.2 By-laws.
***4.1 Form of Warrant Agreement.
***4.2 Stock Option Agreement with Sunrise Financial Group Inc.
4.3 Stock Option Agreement between the Company and Pelican Consultants
U.S.A., Inc.
4.4 Warrant Agreement dated May 22, 1997 between the Company and Lydford
Ltd.
4.5 Form of Registration Rights Agreement between the Company and Brayford
Ltd., Lydford Ltd. and Stolin Ltd.
5.1 Opinion of Carter, Ledyard & Milburn regarding legality of the
securities being registered.
*10.1 Software Adaptation Services Agreement dated January 10, 1995 between
the Company and CSS Ltd.
10.2 Debt Agreement dated March 3, 1997 between Casdim International
Systems, Ltd. and Bank Hapoalim
*10.3 Patent Assignment Agreement dated January 10, 1995 between the Company
and CSS Ltd.
***10.4 Private Placement Purchase Agreement.
***10.5 Consulting Agreement dated April 24,1996 with Pelican Securities &
Investments Ltd., Softbreeze Ltd., Montaraz Limited, Onvoy Holdings
Ltd. and Wideglobe Ltd.
****21.1 Subsidiaries of the Company.
23.1 Consent of Hocker, Lovelett, Hargens & Yennie, P.C.
23.2 Consent of Carter, Ledyard & Milburn (included in Exhibit 5.1)
****24.1 Powers of Attorney (Contained in the Signature Pages)
- ------------------
* 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.
*** Incorporated by reference to the Company's Report on Form 10-QSB for the
quarter ended September 30, 1996.
**** Previously filed.
II-1
<PAGE>
(b) Financial Statement Schedules
None.
II-2
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this post-effective
amendment to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in New York City, State of New York, on
the 17th day of June, 1997.
Casdim International Systems, Inc.
By: /s/Yehuda Shimshon
----------------------
Yehuda Shimshon,
Chairman of the Board, President
& CEO
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on June 17, 1997
in the capacities indicated:
Name Title
- ---- -----
/s/Yehuda Shimshon
- ------------------
Yehuda Shimshon Chairman of the Board, President and
Chief Executive Officer (Chief
Financial and Accounting Officer)
* Director
- -------------------
Ilan Mintz
* Director
- -------------------
Doron Leave
* Director
- -------------------
Israel Shimshon
* Director
- -------------------
David Tamir
*By: /s/Yehuda Shimshon
- -----------------------
Yehuda Shimshon, Attorney-in-fact
II-3
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description Page No.
- ------ ----------- --------
*2 Agreement for the Exchange of Stock and Reorganization.
3.1 Articles of Incorporation (Delaware).
3.2 By-laws.
***4.1 Form of Warrant Agreement.
***4.2 Stock Option Agreement with Sunrise Financial Group Inc.
4.3 Stock Option Agreement between the Company and Pelican Consultants
U.S.A., Inc.
4.4 Warrant Agreement dated May 22, 1997 between the Company and Lydford
Ltd.
4.5 Form of Registration Rights Agreement between the Company and Brayford
Ltd., Lydford Ltd. and Stolin Ltd.
5.1 Opinion of Carter, Ledyard & Milburn regarding legality of the
securities being registered.
*10.1 Software Adaptation Services Agreement dated January 10, 1995 between
the Company and CSS Ltd.
10.2 Debt Agreement dated March 3, 1997 between Casdim International
Systems, Ltd. and Bank Hapoalim
*10.3 Patent Assignment Agreement dated January 10, 1995 between the Company
and CSS Ltd.
***10.4 Private Placement Purchase Agreement.
***10.5 Consulting Agreement dated April 24,1996 with Pelican Securities &
Investments Ltd., Softbreeze Ltd., Montaraz Limited, Onvoy Holdings
Ltd. and Wideglobe Ltd.
****21.1 Subsidiaries of the Company.
23.1 Consent of Hocker, Lovelett, Hargens & Yennie, P.C.
23.2 Consent of Carter, Ledyard & Milburn (included in Exhibit 5.1)
****24.1 Powers of Attorney (Contained in the Signature Pages)
- ------------------
* 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.
*** Incorporated by reference to the Company's Report on Form 10-QSB for the
quarter ended September 30, 1996.
**** Previously filed.
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF OWNERSHIP,
WHICH MERGES:
"CASDIM INTERNATIONAL SYSTEMS, INC.", A COLORADO CORPORATION,
WITH AND INTO CASDIM DELAWARE, INC. UNDER THE NAME OF "CASDIM INTERNATIONAL
SYSTEMS, INC.", A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE
OF DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE TWENTY-FIFTH DAY OF APRIL,
A.D. 1997, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
-------------------
Edward J. Freel, Secretary of State
2660359 8100M AUTHENTICATION: 8443613
971137542 DATE: 04-30-97
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
of
CASDIM INTERNATIONAL SYSTEMS, INC.
(a Colorado corporation)
into
CASDIM DELAWARE, INC.
(a Delaware corporation)
Under Section 253 of the General Corporation Law
of the State of Delaware
------------------------
It is hereby certified that:
1. Casdim International Systems, Inc. (hereinafter called the
"Corporation") is a corporation of the State of Colorado, the laws of which
permit a Colorado corporation to merge with a corporation of another
jurisdiction.
2. The Corporation, as the owner of all of the outstanding shares of the
common stock, par value $.01 per share, of Casdim Delaware, Inc. (the only
authorized class of the stock of Casdim Delaware, Inc.), hereby merges itself
into Casdim Delaware, Inc., a corporation of the State of Delaware (the
"Surviving Corporation").
3. The following resolutions were adopted on the 6th day of September,
1996, by the Board of Directors of the Corporation to merge the Corporation into
the Surviving Corporation:
RESOLVED, that Casdim International Systems, Inc., a
Colorado corporation (the "Corporation "), be merged into
Casdim Delaware, Inc. (the "Surviving Corporation"), which
thereafter shall possess all the rights, privileges, powers
and franchises of the Corporation, as well of a public as of a
private nature, and shall be subject to all the restrictions,
disabilities and duties of the Corporation, and that the
Surviving Corporation assume all of the debts, duties,
liabilities and obligations of the Corporation, all pursuant
to Sections 253 and 259 of the General Corporation Law of the
State of Delaware and Sections 7-111-104 and 7-111-106 of the
Business Corporation Act of the State of Colorado.
RESOLVED, that upon the effective date of the said
merger, the name of the Surviving Corporation shall be changed
to Casdim International Systems, Inc.
<PAGE>
RESOLVED, that the terms and conditions of the said
merger, are set forth in the annexed Plan of Merger, which is
hereby adopted and approved.
RESOLVED, that the Corporation shall cause to be
executed and filed and/or recorded the documents prescribed by
the laws of the State of Delaware, by the laws of the State of
Colorado, and by laws of any other appropriate jurisdiction,
and will cause to be performed all necessary acts within the
State of Delaware, the State of Colorado and in any other
appropriate jurisdiction.
4. The proposed merger herein certified has been adopted, approved,
certified, executed, and acknowledged by the Corporation in accordance with the
laws under which it is organized.
Executed on April 21, 1997
CASDIM INTERNATIONAL SYSTEMS, INC.
By: /s/Yehuda Shimshon
----------------------
Yehuda Shimshon
Chairman of the Board and President
2
<PAGE>
PLAN OF MERGER
PLAN OF MERGER adopted by Casdim International Systems, Inc., a business
corporation organized under the laws of the State of Colorado, by resolution of
its Board of Directors on August 6, 1996, and adopted by Casdim Delaware, Inc.,
a business corporation organized under the laws of Delaware, by resolution of
its Board of Directors on September 6, 1996. The names of the corporations
planning to merge are Casdim International Systems, Inc., a business corporation
organized under the laws of the State of Colorado ("Casdim Colorado"), and
Casdim Delaware, Inc., a business corporation organized under the laws of
Delaware. The name of the surviving corporation into which Casdim Colorado plans
to merge is Casdim Delaware, Inc.
1. Casdim Colorado and Casdim Delaware, Inc. shall, pursuant to the
provisions of the Colorado Business Corporation Act and pursuant to the laws of
Delaware, the jurisdiction of organization of Casdim Delaware, Inc., be merged
with and into a single corporation, to wit, Casdim Delaware, Inc., which shall
be the surviving corporation at the effective time and date of the merger and
which is sometimes hereinafter referred to as the "surviving corporation," and
which shall continue to exist as said surviving corporation under the name of
Casdim International Systems, Inc. pursuant to the provisions of the laws of
Delaware. The separate existence of Casdim Colorado, which is sometimes
hereinafter referred to as the "non-surviving corporation," shall cease at the
effective time and date of the merger in accordance with the provisions of the
Colorado Business Corporation Act.
2. The certificate of incorporation of the surviving corporation
immediately prior to the merger will continue to be the certificate of
incorporation of said surviving corporation after the merger, and said
certificate of incorporation shall continue in full force and effect until
amended and changed in the manner prescribed by the provisions of the laws of
the jurisdiction of organization of the surviving corporation.
3. The bylaws of the surviving corporation immediately prior to the merger
will continue to be the bylaws of said surviving corporation after the merger,
and will continue in full force and effect until changed, altered, or amended as
therein provided and in the manner prescribed by the provisions of the laws of
the jurisdiction of organization of the surviving corporation.
4. The directors and officers in office of the surviving corporation at the
effective time and date of the merger will continue to be the directors and
officers of the surviving corporation after the merger, all of whom shall hold
their respective offices until the election and qualification of their
respective successors or until their tenure is otherwise terminated in
accordance with the bylaws of the surviving corporation.
5. Each issued share of the non-surviving corporation immediately before
the effective time and date of the merger shall be converted into one share of
the surviving corporation. The issued shares of the surviving corporation shall
not be converted or exchanged in any manner, but each said
<PAGE>
share which is issued at the effective time and date of the merger shall
continue to represent one issued share of the surviving corporation.
6. This Plan of Merger shall be submitted to the shareholders of the
non-surviving corporation in the manner prescribed by the provisions of the
Colorado Business Corporation Act and of the laws of the jurisdiction of
organization of the surviving corporation.
7. In the event that this Plan of Merger shall have been approved by the
shareholders entitled to vote of the non-surviving corporation in the manner
prescribed by the provisions of the Colorado Business Corporation Act and of the
laws of the jurisdiction of organization of the surviving corporation, the
non-surviving corporation and the surviving corporation hereby stipulate that
they will cause to be executed and filed and/or recorded any document or
documents prescribed by the laws of the State of Colorado and by the laws of the
State of Delaware, and that they will cause to be performed all necessary acts
therein and elsewhere to effectuate the merger.
8. The Board of Directors and the proper officers of the non-surviving
corporation and the Board of Directors and the proper officers of the surviving
corporation, respectively, are hereby authorized, empowered, and directed to do
any and all acts and things, and to make, execute, deliver, file, and/or record
any and all instruments, papers, and documents which shall be or become
necessary, proper, or convenient to carry out or put into effect any of the
provisions of this Plan of Merger or of the merger herein provided for.
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "CASDIM DELAWARE, INC.", FILED IN THIS OFFICE ON THE SIXTH DAY
OF SEPTEMBER, A.D. 1996, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
-------------------
Edward J. Freel, Secretary of State
2660359 8100 AUTHENTICATION: 8095406
960258854 DATE: 09-09-96
<PAGE>
CERTIFICATE OF INCORPORATION
OF
CASDIM DELAWARE, INC.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
Section 1. Name. The name of the corporation is Casdim Delaware, Inc. The
corporation is hereinafter referred to as the "Corporation."
Section 2. Registered Office and Agent. The address, including street,
number city and county, of the Corporation's registered office in the State of
Delaware is 1013 Centre Road, City of Wilmington, County of New Castle. The name
of the registered agent of the Corporation in the State of Delaware at such
address is The Prentice-Hall Corporation System, Inc.
Section 3. Purpose. The purpose of the Corporation is to engage in any
lawful act or activity for which a corporation may be organized under the
General Corporation Law of the State of Delaware.
Section 4. Stock. The total number of shares of stock which the Corporation
shall have authority to issue is 30,000,000 shares, consisting of one class of
Common Stock of the par value of $.01 per share.
(a) Voting Power. Each issued and outstanding share of Common Stock of the
Corporation shall at all times entitle the holder of record thereof to one vote
per share on all corporate matters.
(b) Actions Without a Meeting. Any action required or permitted to be taken
at any annual or special meeting of the holders of Common Stock of the
Corporation may be taken without a meeting, without prior notice and without a
vote, if consent in writing, setting forth the action so taken, is signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting
<PAGE>
at which all shares entitled to vote on such action were present and voted.
Prompt notice of the taking of corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented to such action in writing. Effective upon and after the closing of a
Public Offering, corporate action required to be taken at any annual or special
meeting of the holders of Common Stock of the Corporation may not be taken by
written instrument in lieu of such a meeting. Any such attempted corporate
action by written consent of the holders of Common Stock of the Corporation in
lieu of a meeting after the closing of a Public Offering is prohibited and shall
be null and void.
Section 5. Incorporator. The name and mailing address of the incorporator
are as follows:
Name Address
Steven J. Glusband c/o Carter, Ledyard & Milburn
Two Wall Street
New York, New York 10005
Section 6. Perpetual Existence. The Corporation is to have perpetual
existence.
Section 7. Board of Directors. The Corporation shall have a Board of
Directors; each member of the Board to hold office until the annual meeting of
stockholders for the year in which his term expires and until his successor
shall be elected and shall qualify, subject, however, to prior death or
resignation. Any director elected to fill a vacancy not resulting from an
increase in the number of directors shall have the same remaining term as that
of his predecessor. All other provisions concerning the election, term and
proceedings of the directors of the Corporation shall be as set forth from time
to time in the By-Laws of the Corporation.
Section 8. By-Laws. Except as otherwise provided in the By-Laws, the
By-Laws of the Corporation may be made, altered, amended, changed, added to or
repealed by the Board of Directors without the assent or vote of the
stockholders. Elections of directors need not be by ballot unless the By-Laws so
provide.
Section 9. Indemnification. Except in the case of willful misconduct, the
Corporation shall indemnify from and against any and all expenses, liabilities
or other matters, each director, officer, employee and agent (provided that, in
the case of agents, the Corporation shall indemnify only those agents whom the
Board of Directors shall determine, before or after their engagement, shall be
afforded the protection of this indemnification provision) of the Corporation
who is a natural person, such person's heirs, executors and administrators
(whether or not natural persons) and all other natural persons whom the
Corporation is authorized to indemnify under the provisions of the General
Corporation Law of the State of Delaware whom
<PAGE>
the Board of Directors shall determine shall be afforded the protection of this
indemnification provision (including, but not limited to, a person who is or was
serving at the request of the Corporation as a director, officer, partner,
trustee, employee or agent (or in like capacity) of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise),
to the fullest extent permitted by the General Corporation Law of the State of
Delaware, as the same now exists or may hereafter be amended.
Section 10. Limitation of Liability of Directors. To the fullest extent
permitted by the General Corporation Law of the State of Delaware as the same
now exists or may hereafter be amended, a director of the Corporation shall not
be liable to the Corporation or its stockholders or any of them for monetary
damages for breach of fiduciary duty as a director.
Section 11. Amendments. The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation in
the manner now or hereafter provided by law, and all rights conferred herein on
stockholders, directors, and officers are subject to this reserved power;
provided that any amendment, alteration, change, or repeal which reduces or
limits the exculpation or indemnification of the persons referred to herein, or
which adversely affects (from the point of view of the director) any limitation
on the personal liability of a director, shall apply prospectively only and
shall not be given retroactive effect.
THE UNDERSIGNED, being the sole incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, makes this certificate, hereby declaring and certifying that
this is the act and deed of the undersigned and that the facts herein stated are
true, and accordingly has hereunto set his hand on August 9, 1996.
/s/Steven J. Glusband
---------------------
Steven J. Glusband, Incorporator
<PAGE>
AMENDED AND RESTATED
BY-LAWS
OF
CASDIM INTERNATIONAL SYSTEMS, INC.
a Delaware corporation
(the "Company")
<PAGE>
AMENDED AND RESTATED
BY-LAWS
OF
CASDIM INTERNATIONAL SYSTEMS, INC.
a Delaware corporation
(the "Company")
TABLE OF CONTENTS
Page
ARTICLE I. SHAREHOLDERS.......................................................1
Section 1. Annual Meeting...........................................1
Section 2. Special Meetings.........................................1
Section 3. Record Date for Meetings and Other Purposes..............1
Section 4. Notice of Meetings.......................................2
Section 5. Waivers of Notice........................................2
Section 6. List of Shareholders at Meetings.........................2
Section 7. Quorum at Meetings.......................................2
Section 8. Presiding Officer and Secretary..........................3
Section 9. Proxies ................................................3
Section 10. Inspectors of Election....................................3
Section 11. Voting ................................................3
Section 12. Written Consent of Shareholders Without a Meeting.........4
ARTICLE II. BOARD OF DIRECTORS................................................4
Section 1. Number of Directors......................................4
Section 2. Election and Term of Directors...........................4
Section 3. Newly Created Directorships and Vacancies................4
Section 4. Resignations.............................................4
Section 5. Removal of Directors.....................................5
Section 6. Meetings ................................................5
Section 7. Quorum and Voting........................................5
Section 8. Written Consents and Meetings by Telephone...............5
Section 9. Appointment of Executive Committee or Other Committees...5
Section 10. Meetings of Committees....................................6
Section 11. Compensation of Directors.................................6
Section 12. Loans to Directors........................................6
T-1
<PAGE>
Page
Section 13. The "Entire Board"........................................6
ARTICLE III. OFFICERS, AGENTS AND EMPLOYEES...................................6
Section 1. General Provisions.........................................6
Section 2. Powers and Duties of the President.........................7
Section 3. Powers and Duties of Vice Presidents.......................7
Section 4. Powers and Duties of the Secretary.........................7
Section 5. Powers and Duties of the Treasurer.........................8
Section 6. Powers and Duties of Assistant Secretaries.................8
Section 7. Powers and Duties of Assistant Treasurers..................8
Section 8. Other Officers.............................................8
Section 9. Delegation of Duties.......................................8
ARTICLE IV. INDEMNIFICATION OF DIRECTORS AND OFFICERS.........................8
Section 1. Definitions................................................8
Section 2. Indemnification............................................9
Section 3. Reservation of Rights......................................9
Section 4. Determinations.............................................9
Section 5. Business Combinations.....................................10
Section 6. Advances of Expenses......................................10
Section 7. Employee Benefit Plans....................................10
ARTICLE V. SHARES OF THE COMPANY.............................................11
Section 1. Certificates for Shares...................................11
Section 2. Record of Shareholders....................................11
Section 3. Transfers of Shares.......................................11
Section 4. Lost, Stolen or Destroyed Certificates....................11
ARTICLE VI. SEAL.............................................................11
ARTICLE VII. CHECKS, NOTES, DRAFTS, ETC......................................12
ARTICLE VIII. MISCELLANEOUS..................................................12
Section 1. Fiscal Year...............................................12
Section 2. Voting of Shares of Other Corporations....................12
Section 3. General ...............................................12
ARTICLE IX. AMENDMENTS.......................................................12
* * * * *
T-2
<PAGE>
AMENDED AND RESTATED
BY-LAWS
OF
CASDIM INTERNATIONAL SYSTEMS, INC.
(the "Company")
(As adopted by the Board of Directors on September 6, 1996.)
Article I. Shareholders.
Section 1. Annual Meeting. The annual meeting of the shareholders of the
Company for the election of directors and the transaction of such other business
as may properly come before the meeting shall be held not less than 90 nor more
than 120 days after the close of the Company's preceding fiscal year, and at
such place within or without the State of New York as may be fixed by the Board
of Directors.
Section 2. Special Meetings. Except as otherwise provided by law, a special
meeting of the shareholders may be called by the Board of Directors or by the
President, and shall be called by the President or a Vice President or the
Secretary at the written request of a majority of the Board of Directors or at
the written request of the holders of at least ten percent of all outstanding
shares entitled to vote on the action proposed to be taken at such meeting. Any
such call or request shall state the purpose or purposes of the proposed meeting
and the business transacted at such meeting shall be confined to the purpose or
purposes stated in the call. On failure of any officer above specified to call
such special meeting when duly requested, any signer of such request may call
such special meeting. Special meetings shall be held at such place within or
without the State of New York as may be specified in the call thereof.
Section 3. Record Date for Meetings and Other Purposes. For the purpose of
determining the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or to express consent to or dissent
from any proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of any dividend or the allotment of any
rights, or for the purpose of any other action, the Board of Directors may fix,
in advance, a date as the record date for any such determination of
shareholders. Such date shall not be more than 50 nor less than ten days before
the date of such meeting, nor more than 50 days prior to any other action.
If no record date is so fixed by the Board of Directors, (i) the record
date for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is not given by reason
of due waiver thereof, the day on which the meeting is held, and (ii) the record
date for determining shareholders for any other purpose shall be at the close of
business on the day on which the resolution of the Board of Directors relating
thereto is adopted.
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A determination of shareholders of record entitled to notice of or to vote
at any meeting of shareholders, made in accordance with this Section 3, shall
apply to any adjournment thereof, unless the Board of Directors fixes a new
record date under this Section for the adjourned meeting.
Section 4. Notice of Meetings. Whenever shareholders are required or
permitted to take any action at a meeting, written notice shall state the place,
date and hour of the meeting and, unless it is the annual meeting, indicate that
it is being issued by or at the direction of the person or persons calling the
meeting. Notice of a special meeting shall also state the purpose or purposes
for which the meeting is called. If, at any meeting, action is proposed to be
taken which would, if taken, entitle shareholders fulfilling the requirements of
Section 623 of the Business Corporation Law to receive payment for their shares,
the notice of such meeting shall include a statement of that purpose and to that
effect. A copy of the notice of any meeting shall be given, personally or by
mail, not less than ten nor more than 50 days before the date of the meeting, to
each shareholder entitled to vote at such meeting. If mailed, such notice shall
be given by depositing it in the United States mail, with postage thereon
prepaid, directed to the shareholder at such shareholder's address as it appears
on the record of shareholders, or, if such shareholder shall have filed with the
Secretary of the Company a written request that notices to such shareholder be
mailed to some other address, then directed to such shareholder at such other
address.
When a meeting is adjourned to another time or place, it shall not be
necessary to give any notice of the adjourned meeting, if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted on the original date of the meeting.
However, if after the adjournment, the Board of Directors fixes a new record
date for the adjourned meeting, a notice of the adjourned meeting shall be given
to each shareholder of record on the new record date entitled to notice under
this Section 4.
Section 5. Waivers of Notice. Notice of any meeting of shareholders need
not be given to any shareholder who submits a signed waiver of notice, in person
or by proxy, whether before or after the meeting. The attendance of any
shareholder at a meeting, in person or by proxy, without protesting prior to the
conclusion of the meeting the lack of notice of such meeting, shall constitute a
waiver of notice by him.
Section 6. List of Shareholders at Meetings. A list of shareholders as of
the record date, certified by the Secretary, shall be produced at any meeting of
shareholders upon the request thereat or prior thereto of any shareholder. If
the right to vote at any meeting is challenged, the inspectors of election, or
person presiding thereat, shall require such list of shareholders to be produced
as evidence of the right of the persons challenged to vote at such meeting, and
all persons who appear from such list to be shareholders entitled to vote
thereat may vote at such meeting.
Section 7. Quorum at Meetings. Except as otherwise provided by law, the
holders of a majority of the shares entitled to vote thereat shall constitute a
quorum at any meeting
2
<PAGE>
of shareholders for the transaction of any business, but the shareholders
present may adjourn any meeting to another time or place despite the absence of
a quorum. When a quorum is once present to organize a meeting, it shall not be
broken by the subsequent withdrawal of any shareholders.
Section 8. Presiding Officer and Secretary. At any meeting of the
shareholders, if neither the President nor a Vice President nor a person
designated by the Board of Directors to preside at the meeting shall be present,
the shareholders shall appoint a presiding officer for the meeting. If neither
the Secretary nor an Assistant Secretary be present, the appointee of the person
presiding at the meeting shall act as secretary of the meeting.
Section 9. Proxies. Every shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting may authorize
another person or persons to act for such shareholder by proxy. Every proxy
shall be signed by the shareholder or such shareholder's attorney-in-fact. No
proxy shall be valid after the expiration of 11 months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the shareholder executing it, except as otherwise provided by law.
Proxies shall be delivered to the Secretary of the Company or, if inspectors are
appointed to act at a meeting, to the inspectors.
Section 10. Inspectors of Election. The Board of Directors, in advance of
any meeting of shareholders, may appoint one or more inspectors to act at the
meeting or any adjournment thereof. If inspectors are not so appointed, the
person presiding at the meeting may, and on the request of any shareholder
entitled to vote thereat shall, appoint one or more inspectors. In case any
person appointed fails to appear or act, the vacancy may be filled by
appointment made by the Board in advance of the meeting or at the meeting by the
person presiding thereat. Each inspector, before entering upon the discharge of
the duties of inspector, shall take and sign an oath faithfully to execute such
duties at such meeting with strict impartiality and according to the best of
such person's ability.
The inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all shareholders. On request of the person
presiding at the meeting or any shareholder entitled to vote thereat, the
inspectors shall make a report in writing of any challenge, question or matter
determined by them and execute a certificate of any fact found by them.
Section 11. Voting. Whenever directors are to be elected by the
shareholders, they shall be elected by a plurality of the votes cast at a
meeting of shareholders by the holders of shares entitled to vote in the
election. Whenever any corporate action, other than the election of directors,
is to be taken by vote of the shareholders, it shall, except as otherwise
required by law, be authorized by a majority of the votes cast at a meeting of
shareholders by the holders of shares entitled to vote thereon.
3
<PAGE>
Except as otherwise provided by law, every holder of record of shares of
the Company entitled to vote on any matter at any meeting of shareholders shall
be entitled to one vote for every such share standing in such holder's name on
the record of shareholders of the Company on the record date for the
determination of the shareholders entitled to notice of or to vote at the
meeting. Upon the demand of any shareholder, the vote at any election of
directors, or the vote upon any question before a meeting, shall be by ballot;
but otherwise the method of voting shall be discretionary with the person
presiding at the meeting.
Section 12. Written Consent of Shareholders Without a Meeting. Whenever
under any provision of law or of these By-Laws shareholders are required or
permitted to take any action by vote, such action may be taken without a meeting
on written consent, setting forth the action so taken, signed by the holders of
all outstanding shares entitled to vote thereon. The provisions of this Section
12 shall not be construed to alter or modify any provision of law under which
the written consent of the holders of less than all outstanding shares is
sufficient for any corporate action.
Article II. Board of Directors.
Section 1. Number of Directors. The number of directors constituting the
entire Board shall be not less than two. The initial Board shall consist of two
directors. The number of directors may be changed at any time and from time to
time at any meeting of the Board by the vote of a majority of the entire Board
or at any annual or special meeting of the shareholders entitled to vote for the
election of directors, except that no decrease shall shorten the term of any
incumbent director. Unless and until changed in accordance with this Section 1
the number of directors constituting the entire Board shall continue in effect
and no further action shall be required to fix such number at any meeting of the
shareholders for the election of directors.
Section 2. Election and Term of Directors. At each annual meeting of
shareholders, directors shall be elected to hold office until the next annual
meeting. The term of office of each director shall be from the time of such
director's election and qualification until the annual meeting of shareholders
next succeeding such director's election and until such director's successor
shall have been elected and shall have qualified.
Section 3. Newly Created Directorships and Vacancies. Newly created
directorships resulting from an increase in the number of directors and
vacancies occurring in the Board for any reason, including the removal of
directors by the shareholders without cause, may be filled either by vote of the
shareholders at any annual or special meeting of the shareholders or by vote of
a majority of the directors then in office, although less than a quorum exists.
Section 4. Resignations. Any director may resign from office at any time by
delivering a resignation in writing to the Company, and the acceptance of such
resignation, unless required by the terms thereof, shall not be necessary to
make such resignation effective.
4
<PAGE>
Section 5. Removal of Directors. Any or all of the directors may be
removed, for cause or without cause, by vote of the shareholders. Any director
may be removed for cause by action of the Board.
Section 6. Meetings. Meetings of the Board, regular or special, may be held
at any place within or without the State of New York as the Board from time to
time may fix or as shall be specified in the respective notice or waivers of
notice thereof. An annual meeting of the Board for the appointment of officers
shall be held on the day on which the annual meeting of the shareholders shall
have been held, at the same place and as soon after the holding of such meeting
of shareholders as is practicable, and no notice thereof need be given. The
Board may fix times and places for regular meetings of the Board and no notice
of such meetings need be given. Special meetings of the Board shall be held
whenever called by the President or by at least two of the directors at the time
in office. Notice of each such meeting shall be given by the Secretary or by a
person calling the meeting to each director by mailing the same not later than
the second day before the meeting, or personally by telegraphing, cabling or
telephoning the same not later than the day before the meeting. Notice of a
meeting need not be given to any director who submits a signed waiver of notice
whether before or after the meeting, or who attends the meeting without
protesting, prior thereto or at its commencement, the lack of notice to him.
Section 7. Quorum and Voting. A majority of the entire Board shall
constitute a quorum for the transaction of any business. Except as otherwise
provided by law or by these ByLaws, the vote of a majority of the directors
present at a meeting at the time of the vote, if a quorum is present at such
time, shall be the act of the Board, but a majority of the directors present,
whether or not a quorum is present, may adjourn any meeting to another time and
place. No notice of any such adjournment need be given.
Section 8. Written Consents and Meetings by Telephone. Any action required
or permitted to be taken by the Board or any committee thereof may be taken
without a meeting if all members of the Board or the committee consent in
writing to the adoption of a resolution authorizing the action. The resolution
and the written consents thereto by the members of the Board or committee shall
be filed with the minutes of the proceedings of the Board or committee. Any one
or more members of the Board or any committee thereof may participate in a
meeting of such board or committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall constitute
presence in person at a meeting.
Section 9. Appointment of Executive Committee or Other Committees. The
Board of Directors may appoint an Executive Committee or other committees, each
consisting of three or more directors designated by resolution adopted by a
majority of the entire Board, and each of which, to the extent provided in the
resolution or in these By-Laws, shall have such authority and powers as shall be
specified by the Board. The Board may appoint the chairman of each committee who
shall preside at the meetings of such committee and perform such other duties as
may be prescribed by the Board from time to time. Except as otherwise provided
by law or by resolution of the
5
<PAGE>
Board of Directors, the Executive Committee shall have and may exercise all the
authority and powers of the Board.
Section 10. Meetings of Committees. Meetings of each committee may be held
upon call of the chairman of the committee or the President of the Company or
any two members of the committee. A record of the proceedings of each meeting of
a committee shall be kept and shall be submitted at the next regular meeting of
the Board of Directors. A majority of the members of a committee shall
constitute a quorum for the transaction of business, and the vote of a majority
of the members present at the time of the vote, if a quorum is present at such
time, shall be the act of the committee. Notice of the time and place of each
meeting of a committee shall be given to each member thereof in the same manner
as in the case of special meetings of the Board of Directors, and meetings may
be held at any time without notice if all members of the committee are present
or if notice is waived in writing by those not present.
Section 11. Compensation of Directors. Directors may receive compensation
for services to the Company in their capacities as directors or otherwise in
such amounts as may be fixed from time to time by the Board.
Section 12. Loans to Directors. A loan shall not be made by the Company to
any director unless it is authorized by vote of the shareholders. For this
purpose, the shares of the director who would be the borrower shall not be
shares entitled to vote.
Section 13. The "Entire Board". As used in these By-Laws the term "the
entire Board" or "the entire Board of Directors" means the total number of
directors which the Company would have if there were no vacancies.
Article III. Officers, Agents and Employees.
Section 1. General Provisions. The officers of the Company shall be a
President, a Secretary and a Treasurer, and may include one or more Vice
Presidents, one or more Assistant Secretaries and one or more Assistant
Treasurers. The officers shall be appointed by the Board of Directors at the
first meeting of the Board after the annual meeting of the shareholders in each
year. The Board from time to time may appoint such other officers, agents and
employees as it may deem necessary or proper, who shall respectively have such
authority and perform such duties as may from time to time be prescribed by the
Board. All officers shall hold office until the meeting of the Board following
the next annual meeting of the shareholders after their appointment and until
their successors shall have been appointed and shall have qualified. Any two or
more offices, other than the offices of President or Secretary, may be held by
the same person, except that when all of the issued and outstanding stock of the
Company is owned by one person, such person may hold all or any combination of
offices. Any officer, agent or employee of the Company may be removed by the
Board with or without cause. Such removal without cause shall be without
prejudice to such person's contract rights, if any, but the appointment of any
person as an officer, agent or employee
6
<PAGE>
of the Company shall not of itself create contract rights. The compensation of
officers, agents and employees appointed by the Board shall be fixed by the
Board, but this power may be delegated to any officer, agent or employee as to
persons under such person's direction or control. The Board may require any
officer, agent or employee to give security for the faithful performance of such
person's duties.
Section 2. Powers and Duties of the President. The President shall be the
chief executive officer of the Company. The President shall preside at all
meetings of the shareholders and of the Board at which the President is present.
Subject to the control of the Board, the President shall have general charge of
the business and affairs of the Company and shall keep the Board fully advised.
The President shall employ and discharge employees and agents of the Company,
except such as shall be appointed by the Board, and the President may delegate
these powers. The President shall have such powers and perform such duties as
generally pertain to the office of President, as well as such further powers and
duties as may be prescribed by the Board. The President may vote the shares or
other securities of any other domestic or foreign Company of any type or kind
which may at any time be owned by the Company, may execute any shareholder or
other consent in respect thereof and may in the President's discretion delegate
such powers by executing proxies, or otherwise, on behalf of the Company. The
Board, by resolution from time to time, may confer like powers upon any other
person or persons.
Section 3. Powers and Duties of Vice Presidents. Each Vice President shall
have such powers and perform such duties as the Board of Directors or the
President may from time to time prescribe, and shall perform such other duties
as may be prescribed in these By-Laws. In the absence or inability to act of the
President, unless the Board shall otherwise provide, the Vice President who has
served in that capacity for the longest time and who shall be present and able
to act, shall perform all the duties and may exercise any of the powers of the
President, subject to the control of the Board of Directors. The performance of
any such duty by a Vice President shall be conclusive evidence of such person's
power to act.
Section 4. Powers and Duties of the Secretary. The Secretary shall have
charge of the minutes of all proceedings of the shareholders and of the Board of
Directors and shall keep the minutes of all of their meetings at which the
Secretary is present. Except as otherwise provided by these By-Laws, the
Secretary shall attend to the giving of all notices to shareholders and
directors. The Secretary shall have charge of the seal of the Company and shall
attend to its use on all documents the execution of which on behalf of the
Company under its seal is duly authorized. When the seal is used, the Secretary
shall attest the same by the Secretary's signature whenever required. The
Secretary shall have charge of the record of shareholders of the Company, of all
written requests by shareholders that notices be mailed to them at an address
other than their addresses on the record of shareholders, and of such other
books and papers as the Board of Directors may direct. Subject to the control of
the Board of Directors the Secretary shall have all such powers and duties as
generally are incident to the position of Secretary or as may be assigned to the
Secretary from time to time by the President or the Board.
7
<PAGE>
Section 5. Powers and Duties of the Treasurer. The Treasurer shall have the
care and custody of all funds and securities of the Company which may come into
the Treasurer's hands, and as such Treasurer shall endorse the same for deposit
or collection when necessary or proper and deposit the same to the credit of the
Company in such banks or depositaries as the Board of Directors may authorize.
The Treasurer may endorse all commercial documents requiring endorsements for or
on behalf of the Company and may sign all receipts and vouchers for payments
made to the Company. Subject to the control of the Board of Directors, the
Treasurer shall have all such powers and duties as generally are incident to the
position of Treasurer or as may be assigned to the Treasurer from time to time
by the President or by the Board.
Section 6. Powers and Duties of Assistant Secretaries. In the absence or
inability of the Secretary to act, any Assistant Secretary may perform all the
duties and exercise all the powers of the Secretary, subject to the control of
the Board of Directors. The performance of any such duty shall be conclusive
evidence of such person's power to act. An Assistant Secretary shall also
perform such other duties as the Secretary or the Board of Directors may from
time to time assign to such person.
Section 7. Powers and Duties of Assistant Treasurers. In the absence or
inability of the Treasurer to act, an Assistant Treasurer may perform all the
duties and exercise all the powers of the Treasurer, subject to the control of
the Board of Directors. The performance of any such duty shall be conclusive
evidence of such person's power to act. An Assistant Treasurer shall also
perform such other duties as the Treasurer or the Board of Directors may from
time to time assign to such person.
Section 8. Other Officers. Other officers shall perform such duties and
have such powers as may from time to time be assigned to them by the Board of
Directors.
Section 9. Delegation of Duties. In case of the absence of any officer of
the Company, or for any other reason that the Board of Directors may deem
sufficient, the Board may confer for the time being the powers and duties, or
any of them, of such officer upon any other officer or upon any director.
Article IV. Indemnification of Directors and Officers.
Section 1. Definitions. As used herein,
"Action" means any actual or threatened action, suit or other proceeding,
arbitration, investigation, or inquiry that could lead to one or more of the
foregoing, whether civil, criminal, administrative, legislative or
investigative, and includes any appeal or appeals therein or therefrom, and also
includes counterclaims, crossclaims, third party claims and all similar
controversies or matters whatsoever, both permissive and compulsory;
8
<PAGE>
an Action "relates to the Company" if it relates, directly or indirectly,
to the Company or to an Other Entity or two or more Other Entities with which
the Company is affiliated or associated or to which the Company is related,
directly or indirectly;
"Expenses" means all costs and expenses, including but is not limited to
attorneys' and other experts' fees, costs and disbursements and including but
not limited to costs and expenses incurred to enforce the provisions of this
Section 7;
"Indemnified Person" means each Director, Officer, employee and agent of
the Company who is a natural person, such person's heirs, executors and
administrators (whether or not natural persons) and all other natural persons
whom the Company is authorized to indemnify under the provisions of the Business
Corporation Law, including but not limited to a person who is or was serving an
Other Entity or Other Entities in any capacity at the request of the Company;
and
"Other Entity" means another corporation, partnership, joint venture,
trust, employee benefit plan or trust or other enterprise, governmental body or
committee or other entity, and "Other Entities" means two or more of the
foregoing.
Section 2. Indemnification. The Company shall indemnify each Indemnified
Person, to the fullest extent permitted by law, against all Expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
Indemnified Person in connection with any Action relating in any way, directly
or indirectly, to the Company, except that no indemnification shall be made to
or on behalf of or with reference to any Indemnified Person if a judgment or
other final adjudication or determination adverse to such Person establishes (i)
that such Person's acts were committed in bad faith or were the result of active
and deliberate dishonesty and were material to the cause of action so
adjudicated or (ii) that such Person personally gained in fact a material
financial profit or other advantage to which such Person was not legally
entitled, and except that no indemnification shall be made in connection with
the settlement of any Action unless the Company has consented to or does not
object to such settlement. The indemnification provided for herein shall not be
deemed exclusive of any other rights to which a person seeking indemnification
may be entitled and shall continue as to a person who has ceased to be a
Director, Officer, employee or agent and shall inure to the benefit of such
person's heirs, executors and administrators.
Section 3. Reservation of Rights. No provision of these By-Laws is intended
to be construed as limiting, prohibiting, denying or abrogating any of the
general or specific powers or rights conferred under the Business Corporation
Law upon the Company to furnish, or upon any court to award, such
indemnification, or such other indemnification as may otherwise be authorized
pursuant to the Business Corporation Law or any other law, including but not
limited to indemnification of any employees or agents of the Company or of
Another Entity or Other Entities.
Section 4. Determinations. If and to the extent such indemnification shall
require a determination whether or not the relevant person met the applicable
standard of conduct
9
<PAGE>
set forth herein, such determination shall be made
expeditiously at the cost of the Company after a request for the same from the
person seeking indemnification. If indemnification is to be given or an advance
of Expenses is to be made upon a determination by independent legal counsel,
such counsel may be the regular counsel to the Company. In rendering such
opinion, such counsel shall be entitled to rely upon statements of fact
furnished to them by persons reasonably believed by them to be credible, and
such counsel shall have no liability or responsibility for the accuracy of the
facts so relied upon, nor shall such counsel have any liability for the exercise
of their own judgment as to matters of fact or law forming a part of the process
of providing such opinion. The entitlement to fees, costs and disbursements of
counsel engaged to render such opinion shall not be dependent upon whether such
counsel ultimately are able to render the opinion that is the subject of their
engagement.
Section 5. Business Combinations. Unless the Board of Directors shall
determine otherwise with reference to a particular merger or consolidation or
other combination, for purposes of this Article IV references to "the Company"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a merger or
consolidation or other business combination which, if its separate existence had
continued, would have had power and authority to indemnify its directors,
trustees, officers, employees or agents, so that any person who is or was a
director, trustee, officer, employee or agent of such constituent corporation,
or is or was serving at the request of such constituent corporation as a
director, officer, partner, trustee, employee, agent (or in a like capacity) of
another corporation, partnership, joint venture, trust, employee benefit plan or
trust or other enterprise, shall stand in the same position under the provisions
of this Article IV with respect to the resulting or surviving corporation as
such person would have with respect to such constituent corporation if its
separate existence had continued.
Section 6. Advances of Expenses. If a person who may be entitled to
indemnification hereunder shall request that such person's Expenses actually and
reasonably incurred in connection with any Action be paid by the Company in
advance of the final disposition thereof, such request shall not be unreasonably
refused, and a response to such request shall not be unreasonably delayed, by
the Company.
Section 7. Employee Benefit Plans. References herein to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan or trust; and references to "serving at the request of the Company"
shall include any service as a corporate agent which imposes duties on, or
involves services by, the corporate agent with respect to an employee benefit
plan or trust, its participants or beneficiaries. A person who acted in good
faith and in a manner such person reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan or trust shall be
deemed to have acted in a manner not opposed to the best interests of the
Company.
10
<PAGE>
Article V. Shares of the Company.
Section 1. Certificates for Shares. The shares of the Company shall be
represented by certificates in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or a Vice
President and the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer of the Company, shall be sealed with the seal of the Company
or a facsimile thereof, and shall contain such information as is required by law
to be stated thereon. All certificates for shares shall be consecutively
numbered or otherwise identified. All certificates exchanged or surrendered to
the Company for transfer shall be cancelled.
Section 2. Record of Shareholders. The Company shall keep at the office of
the Company in the State of New York a record containing the names and addresses
of all shareholders, the number and class of shares held by each and the dates
when they respectively
became the owners thereof. The Company shall be entitled to treat the persons in
whose names shares stand on the record of shareholders as the owners thereof for
all purposes.
Section 3. Transfers of Shares. Transfers of shares on the record of
shareholders of the Company shall be made only upon surrender to the Company of
the certificate or certificates for such shares, duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of Directors,
in its discretion, may require the owner (or such owner's legal representatives)
of any certificate representing shares of the Company alleged to have been lost,
stolen or destroyed to give the Company a bond in such sum as the Board may
direct, to indemnify the Company against any liability or expense which it may
incur by reason of the original certificate remaining outstanding, as a
condition of the issuance theretofore issued alleged to have been lost, stolen
or destroyed. Proper and legal evidence of such loss, theft or destruction shall
be procured for the Board if required. The Board in its discretion may refuse to
issue such new certificate, save upon the order of a court having jurisdiction
in such matters.
Article VI. Seal.
The seal of the Company shall be circular in form and contain the name of
the Company, the words "Corporate Seal" and "Delaware" and the year the Company
was formed in the center. The Company may use the seal by causing it or a
facsimile to be affixed or impressed or reproduced in any manner.
11
<PAGE>
Article VII. Checks, Notes, Drafts, etc.
Checks, notes, drafts, acceptances, bills of exchange and other orders or
obligations for the payment of money shall be signed by such officer or officers
or person or persons as the Board of Directors shall from time to time
determine.
Article VIII. Miscellaneous.
Section 1. Fiscal Year. The fiscal year of the Company shall be determined
by the Board.
Section 2. Voting of Shares of Other Corporations. The Board of Directors
may authorize any officer, agent or proxy to vote shares of any domestic or
foreign corporation of any type or kind standing in the name of the Company and
to execute written consents respecting the same, but in the absence of such
specific authorization the President or any Vice President of the Company may
vote such shares and may execute proxies and written consents with relation
thereto.
Section 3. General. As used herein, references to the Business Corporation
Law refer to such Law as in effect as of the date hereof and as amended from
time to time, or corresponding provisions of subsequent laws, and references to
"law" or "laws" refer to such laws as in effect as of the date hereof and as
hereafter amended.
Article IX. Amendments.
These By-Laws or any of them may be amended or repealed, and new By-Laws
may be adopted, (i) by vote of the holders of the shares at the time entitled to
vote in the election of directors, at any annual meeting of the shareholders, or
at any special meeting of the shareholders called for that purpose, or (ii) by
the Board of Directors at any meeting of the Board; except that (i) any such
action of the Board of Directors may be amended or repealed by the shareholders
at any annual meeting or any special meeting called for that purpose, (ii) the
Board of Directors shall not have the power to alter or amend or repeal a
specified By-Law if such By-Law is adopted by the shareholders and contains an
express provision that such By-Law may be amended or repealed only by action of
the shareholders and (iii) Article IV hereof may be altered or amended by the
Board of Directors to increase the indemnification of the persons referred to
therein to the extent permitted by law, but such Article may be otherwise
amended or repealed only by action of the shareholders as provided above and, in
that connection, any amendment or repeal which reduces or limits the
indemnification of the persons referred to therein shall apply prospectively
only and shall not be given retroactive effect. If any By-Law regulating an
impending election of directors is adopted, amended or repealed by the Board,
there shall be set forth in the notice of the next meeting of shareholders for
the election of directors the By-Law so adopted, amended or repealed, together
with
12
<PAGE>
a concise statement of the changes made. This Article IX may be amended or
repealed only by action of the shareholders.
* * * * *
13
<PAGE>
CASDIM INTERNATIONAL SYSTEMS, INC.
150 East 58th Street
New York, New York 10155
(212) 829-1700
April 11, 1997
Pelican Consultants U.S.A., Inc.
Re: Financial Consulting Agreement
Gentlemen:
As we discussed, Casdim International Systems, Inc. (the "Company") is
interested in retaining Pelican Consultants U.S.A., Inc. ("Pelican ") as its
consultant on financial matters.
Services
The services Pelican will provide include the following: Pelican shall be
available to consult with the employees of the Company, at times which are
mutually convenient, in all financial matters which the Company may require,
including without limitation, long-term financial planning, management of cash
flows and expenses, identifying additional sources of equity, debt and
government financing from corporations, individuals and government agencies,
identifying and negotiating the terms of such financing transactions, and
identifying and hiring any employees, consultants or professionals that the
Company may require in the financial services area.
As compensation for its services, the Company will pay Pelican the
following fees:
1. The Company will issue to Pelican an option to purchase up to 200,000
shares of the outstanding stock of the Company at $1.00 per share, of
which, options to purchase 100,000 shares will vest immediately and
options to purchase 100,000 shares will vest in twelve (12) monthly
installments over one year (i.e., options to purchase 8,333 shares
will vest each month, except that options to purchase 8,337 shares
will vest on the twelfth installment) beginning on the 30th day after
the execution of this agreement. If the Company terminates the
agreement, other than for cause, all of the options will vest
immediately. If Pelican resigns from its duties, any unvested option
shall terminate immediately on such date.
Option
The Options (to the extent vested) will be exercisable for five years
beginning one month from issuance. During the term of the Options and upon
written demand from Pelican , the Company shall, on one occasion only, promptly
register the common stock underlying the Options at the Company's expense
(excluding Pelican '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
<PAGE>
public sale of its securities (other than a Form S-8, S-4 or comparable
Registration Statement), it will notify Pelican 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, Pelican '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. Cashless
exercises will be permitted.
Mergers, Acquisitions, and Other Ventures
If Pelican shall introduce the Company 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 Pelican 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).
For purposes of this contract, an introduction shall include not only those
persons Pelican may introduce to the Company, but also the persons introduced by
those persons Pelican 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 Pelican
within one year of the introduction.
Expense Reimbursement
In addition to the fees payable hereunder, the Company shall reimburse
Pelican , upon request from time to time, for all reasonable out-of-pocket
expenses incurred by Pelican (including but not limited to travel, secretarial,
and phone expenses) in connection with Pelican 's services pursuant to this
agreement. Individual out-of pocket expenses will not exceed $250.00 without the
consent of the Company.
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.
Indemnification
The Company agrees it will indemnify and hold harmless Pelican , his
employees and agents 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 Pelican '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 Pelican 's
gross negligence or willful misconduct. The Company agrees to notify Pelican
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
Pelican.
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<PAGE>
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 Pelican
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. The Company is looking forward to
working with you in making Casdim International Systems, Inc. highly successful
and prosperous.
Sincerely,
CASDIM INTERNATIONAL SYSTEMS, INC.
By: /s/Yehuda Shimshon
----------------------
Yehuda Shimshon, Chairman
Pelican Consultants U.S.A., Inc.
By: /s/Haim Haruvi
------------------
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<PAGE>
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CASDIM INTERNATIONAL SYSTEMS, INC.
and
LYDFORD LTD.
-----------------
WARRANT AGREEMENT
Dated: May 22, 1997
- --------------------------------------------------------------------------------
<PAGE>
THIS WARRANT AGREEMENT (this "Agreement") dated May 22, 1997 is made and
entered into by and between Casdim International Systems, Inc., a corporation
organized under the laws of the State of Delaware (the "Company"), and Lydford
Ltd.(the "Warrant Holder").
Subject to the terms and conditions hereof, the Company agrees to issue to
the Warrant Holder, warrants as hereinafter described (the "Warrants") to
purchase up to an aggregate of 200,000 shares of the common stock, par value
$.01 per share (the "Common Stock"), of the Company at a price of $.0001 per
Share. As used herein, the terms "Share" or "Shares" shall mean collectively the
Common Stock issuable upon exercise of the Warrants together with any other
securities issuable upon such exercise as provided in Section 8 of this
Agreement. Terms which are capitalized but not defined herein shall have the
same meanings as in the Placement Agreement.
For the purpose of defining the terms and provisions of the Warrants and
the respective rights and obligations thereunder, the Company and the Warrant
Holder, for value received, hereby agree as follows:
Section 1. Transferability and Form of Warrants.
1.1. Registration. The Warrants shall be numbered and shall be registered
on the books of the Company when issued, in accordance with Delaware corporate
practice.
1.2. Transfer. The Warrants shall be transferable only on the books of the
Company maintained at its principal office in New York, New York, or wherever
its principal office may then be located, upon delivery thereof duly endorsed by
the Warrantholder seeking such transfer or by its duly authorized attorney or
representative, accompanied by proper evidence of succession, assignment or
authority to transfer. Upon any registration of transfer, the Company shall
execute and deliver new Warrants to the person entitled thereto.
1.3. Form of Warrants. The form of certificate evidencing the Warrants
shall be substantially as set forth in Exhibit A attached hereto. Certificates
evidencing the Warrants shall be executed on behalf of the Company by its
Chairman or by any Vice President, shall be attested to by its Secretary or any
Assistant Secretary, and shall be dated as of the date of execution thereof.
1.4. Legend on Common Stock. The Warrants and the Shares have not been
registered under the Securities Act of 1933, as amended (the "Act"). Each
certificate for Shares shall bear the following legend unless, at the time of
exercise, such Shares are the subject of a currently effective registration
statement under the Act:
<PAGE>
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 OR
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH
SECURITIES MAY NOT BE SOLD, ASSIGNED, EXCHANGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED IN ANY MANNER EXCEPT IN COMPLIANCE
WITH SECTION 11 OF THE AGREEMENT BY AND BETWEEN THE ISSUER AND
LYDFORD LTD. DATED MAY 22, 1997."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the Act of
the securities represented thereby) shall also bear the above legend unless, in
the opinion of the Company's counsel, the securities represented thereby need no
longer be subject to such restrictions.
Section 2. Exchange of Warrant Certificate. Any Warrant certificate may be
exchanged for another certificate or certificates entitling a Warrantholder to
purchase a like aggregate number of Shares as the certificate or certificates
surrendered then entitles such Warrantholder to purchase. Any Warrantholder
desiring to exchange a Warrant certificate shall make such request in writing
delivered to the Company, and shall surrender, properly endorsed, the
certificate evidencing the Warrant to be so exchanged. Thereupon, the Company
shall execute and deliver to the person entitled thereto a new Warrant
certificate as so requested.
Section 3. Term of Warrants; Exercise of Warrants
(a) Subject to the terms of this Agreement, each Warrantholder shall have
the right, at any time during the period commencing at 9:00 a.m., Eastern Time,
on May 22, 1997 (the "Commencement Date") and ending at 5:00 p.m., Eastern Time,
on May 21, 2002 (the "Termination Date"), to purchase from the Company up to the
number of fully paid and nonassessable Shares which such Warrantholder may at
the time be entitled to purchase pursuant to this Agreement, upon surrender to
the Company at its principal office of the certificates evidencing the Warrants
to be exercised, with the purchase form on the reverse thereof duly completed
and signed, and upon payment to the Company of the Warrant Price (as defined in
and determined in accordance with the provisions of this Section 3 and Sections
7 and 8 hereof) for the number of Shares in respect of which such Warrants are
then exercised, but in no event for fewer than 100 Shares (unless fewer than an
aggregate of 100 Shares are then purchasable under all outstanding Warrants held
of record by a Warrantholder). Payment of the aggregate Warrant Price shall be
made in cash or by certified or cashier's check, in next day funds, or any
combination thereof.
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<PAGE>
(b) Upon surrender of Warrant certificates, payment of the Warrant Price,
the Company shall issue and cause to be delivered with all reasonable dispatch
to or upon the written order of a Warrantholder, and (subject to Section 11
hereof) in such name or names as such Warrantholder may designate, a certificate
or certificates for the number of full Shares so acquired upon the exercise of
the Warrant, together with cash, as provided in Section 9 hereof, in respect of
any fractional Shares otherwise issuable upon such surrender. Such certificate
or certificates shall be deemed to have been issued and any person so designated
to be named therein shall be deemed to have become a holder of record of such
Shares as of the date of surrender of the Warrants being exercised payment of
the Warrant Price notwithstanding that the certificate or certificates
representing such securities shall not actually have been delivered or that the
stock transfer books of the Company shall then be closed. The Warrants shall be
exercisable at the election of a Warrantholder either in full or from time to
time in part and, in the event that a certificate evidencing Warrants is
exercised in respect of fewer than all of the Shares specified therein at any
time prior to the Termination Date, a new certificate evidencing the remaining
portion of the Warrants shall be issued by the Company.
Section 4. Payment of Taxes. The Company will pay all taxes and fees, if
any, attributable to the initial issuance of the Warrants or the issuance of
Shares upon exercise of the Warrants; provided that the Company shall not be
required to pay any tax or fee which may be payable in respect of any secondary
transfer of the Warrants or such Shares.
Section 5. Mutilated or Missing Warrants. In case the certificate or
certificates evidencing any Warrants shall be mutilated, lost, stolen or
destroyed, the Company shall, at the request of the affected Warrantholder,
issue and deliver in exchange and substitution for and upon cancellation of the
mutilated certificate or certificates, or in lieu of and substitution for the
certificate or certificates lost, stolen or destroyed, a new Warrant certificate
or certificates of like tenor and representing an equivalent right or interest,
but only upon receipt of evidence satisfactory to the Company of the loss, theft
or destruction of such Warrant and, if requested, at the cost and expense of the
Warrantholder, a bond of indemnity in form and amount satisfactory to the
Company. Applicants for such substitute Warrants certificate shall also comply
with such other reasonable regulations as the Company may prescribe.
Section 6. Reservation of Common Stock. There has been reserved, and the
Company shall at all times keep reserved so long as any Warrants remain
outstanding, out of its authorized share capital, such number of Common Stock as
shall be subject to purchase under all outstanding Warrants. Every transfer
agent for the Common Stock and other securities of the Company issuable upon the
exercise of Warrants will be irrevocably authorized and directed at all times to
reserve such number of authorized shares of Common Stock and other securities as
shall be requisite for such purpose. The Company will keep a copy of this
Agreement on file with every transfer agent for the Common Stock and other
securities of the Company issuable upon the exercise of the Warrants. The
Company will supply every such transfer agent with duly executed
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<PAGE>
stock and other certificates, as appropriate, for such purpose and will provide
or otherwise make available any cash which may be payable as provided in Section
9 hereof.
Section 7. Warrant Price. "Warrant Price" shall mean the price per Share at
which Shares shall at any time be purchasable upon the exercise of the Warrants.
The initial Warrant Price shall be $1.00, subject to adjustment pursuant to
Section 8 hereof.
Section 8. Adjustment of Number and Kind of Securities. The number and kind
of securities purchasable upon the exercise of the Warrants and the Warrant
Price shall be subject to adjustment from time to time upon the happening of
certain events, as follows:
8.1. Adjustments.
(a) In case the Company shall (i) pay a dividend in Common Stock
or make a distribution in Common Stock, (ii) subdivide its outstanding
Common Stock, (iii) combine its outstanding Common Stock into a
smaller number of shares of Common Stock, or (iv) issue, by
reclassification of its Common Stock, other securities of the Company,
the number of Shares or other securities purchasable upon exercise of
the Warrants immediately prior thereto shall be adjusted so that each
Warrantholder shall be entitled to receive the kind and number of
shares of Common Stock or other securities of the Company which it
would have owned or would have been entitled to receive immediately
after the happening of any of the events described above, had the
Warrants been exercised immediately prior to the happening of such
event or any record date with respect thereto. Any adjustment made
pursuant to this subsection 8.1(a) shall become effective immediately
on the effective date of such event retroactive to the record date, if
any, for such event.
(b) In case the Company shall issue rights, options, warrants or
convertible securities to all or substantially all holders of its
Common Stock without any charge to such holders, entitling them to
subscribe for or purchase shares of Common Stock at a price per share
which, at the record date mentioned below, is lower than the then
effective Warrant Price (calculated pursuant to this Section 8), the
number of Shares thereafter purchasable upon the exercise of each
Warrant shall be determined by multiplying the number of Shares
theretofore purchasable upon exercise of the Warrant by a fraction, of
which the numerator shall be the number of shares of Common Stock
outstanding immediately prior to the issuance of such rights, options,
warrants or convertible securities plus the number of additional
Common Stock offered for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately prior to the issuance of such rights, options, warrants or
convertible securities plus the number of shares which the aggregate
offering price of the total number of shares offered would purchase at
such then effective Warrant Price. Such adjustment shall be made
whenever such rights, options, warrants or convertible securities are
issued, and shall become effective immediately and retroactive to the
record date for the determination of
-4-
<PAGE>
shareholders entitled to receive such rights, options, warrants or
convertible securities, provided no such adjustment shall be made for
rights issued in connection with what is customarily referred to as a
"poison pill" or "shareholder rights plan."
(c) In case the Company shall distribute to all or substantially
all holders of its Common Stock evidences of its indebtedness or
assets (excluding cash dividends or distributions out of earnings) or
rights, options, warrants or convertible securities containing the
right to subscribe for or purchase Shares (excluding those referred to
in subsection 8.1(b) above and rights in connection with a shareholder
rights plan), then in each case the number of Shares thereafter
purchasable upon the exercise of the Warrants shall be determined by
multiplying the number of Shares theretofore purchasable upon exercise
of the Warrants by a fraction, of which the numerator shall be the
then effective Warrant Price as of the date of such distribution
calculated pursuant to this Section 8, and of which the denominator
shall be such then effective Warrant Price on such date minus the then
fair value (determined as provided in subparagraph (f) below) of the
portion of the assets or evidences of indebtedness so distributed or
of such subscription rights, options, warrants or convertible
securities applicable to one share. Such adjustment shall be made
whenever any such distribution is made and shall become effective on
the date of distribution retroactive to the record date for the
determination of shareholders entitled to receive such distribution.
(d) No adjustment in the number of Shares purchasable pursuant to
the Warrants shall be required unless such adjustment would require an
increase or decrease of at least one percent in the number of Shares
then purchasable upon the exercise of the Warrants or, if the Warrants
are not then exercisable, the number of Shares purchasable upon the
exercise of the Warrants on the first date thereafter that the
Warrants become exercisable; provided that any adjustments which by
reason of this subsection 8.1(d) are not required to be made
immediately shall be carried forward and taken into account in any
subsequent adjustment.
(e) Whenever the number of Shares purchasable upon the exercise
of a Warrant is adjusted, as herein provided, the Warrant Price
payable upon exercise of such Warrant shall be adjusted by multiplying
such Warrant Price immediately prior to such adjustment by a fraction,
of which the numerator shall be the number of Shares purchasable upon
the exercise of the Warrant immediately prior to such adjustment, and
of which the denominator shall be the number of Shares so purchasable
upon the exercise of the Warrant immediately thereafter.
(f) Whenever the number of Shares purchasable upon the exercise
of Warrants is adjusted as herein provided, the Company shall cause to
be promptly mailed to the Warrantholders by first class mail, postage
prepaid, notice of such adjustment and a certificate of the chief
financial officer of the Company setting forth the number of Shares
-5-
<PAGE>
purchasable upon the exercise of the Warrants after such adjustment, a
brief statement of the facts requiring such adjustment and the
computation by which such adjustment was made.
(g) For the purpose of this subsection 8.1, the term Common Stock
shall mean (i) the class of Common Stock designated as the Common
Stock of the Company at the date of this Agreement, or (ii) any other
class of shares resulting from successive changes or reclassification
of such Common Stock consisting solely of changes in par value, or
from par value to no par value, or from no par value to par value. In
the event that at any time, as a result of an adjustment made pursuant
to this Section 8, a Warrantholder shall become entitled to purchase
any securities of the Company other than Common Stock, (i) if the
Warrantholders' right to purchase is on any other basis than that
available to all holders of the Common Stock, the Company shall obtain
an opinion of an independent investment banking firm valuing such
other securities and (ii) thereafter the number of such other
securities so purchasable upon exercise of the Warrants shall be
subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in this Section 8.
(h) Upon the expiration of any rights, options, warrants or
conversion privileges, if such shall not have been exercised, the
number of Shares purchasable upon exercise of the Warrants, to the
extent the Warrants have not then been exercised, shall, upon such
expiration, be readjusted and shall thereafter be such as they would
have been had they been originally adjusted (or had the original
adjustment not been required, as the case may be) on the basis of (A)
the fact that the only shares of Common Stock so issued were the
shares of Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants or conversion privileges,
and (B) the fact that such shares of Common Stock, if any, were issued
or sold for the consideration actually received by the Company upon
such exercise plus the consideration, if any, actually received by the
Company for the issuance, sale or grant of all such rights, options,
warrants or conversion privileges whether or not exercised; provided,
however, that no such readjustment shall have the effect of decreasing
the number of Shares purchasable upon exercise of the Warrants by an
amount in excess of the amount of the adjustment initially made in
respect of the issuance, sale or grant of such rights, options,
warrants or conversion privileges.
8.2. No Adjustment for Dividends. Except as provided in subsection 8.1, no
adjustment to the Warrants or any provision or condition thereof in respect of
any dividends or distributions out of earnings shall be made during the term of
the Warrants or upon the exercise of Warrants.
8.3. No Adjustment in Certain Cases. No adjustments to the Warrants or any
provision or condition thereof shall be made pursuant to Section 3 or Section 8
hereof in connection with (i) the issuance of any Securities sold as part of the
Offering pursuant to the Placement Agreement, or the issuance of Common Stock
upon exercise of the Warrants, or (ii) the grant or exercise of
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<PAGE>
the options to purchase Common Stock under the Company's Share Option Plan or
any future option plan for the sole benefit of the Company's employees and
directors.
8.4. Preservation of Purchase Rights upon Reclassification, Consolidation,
etc. In case of any consolidation of the Company with or merger of the Company
into another entity or in case of any sale or conveyance to another entity of
the property, assets or business of the Company as an entirety or substantially
as an entirety, the Company or such successor or purchasing entity, as the case
may be, shall execute with the Warrantholders an agreement that the
Warrantholders shall have the right thereafter, upon exercise of the Warrants
and payment of the Warrant Price in effect immediately prior to such
consolidation, merger or sale, to purchase the kind and amount of shares and
other securities and property which it would have been entitled to receive after
the happening of such consolidation, merger, sale or conveyance had the Warrants
been exercised immediately prior thereto. In the event of a merger described in
Section 368(a)(2)(E) of the Internal Revenue Code of 1986 (or any successor
provision), in which the Company is the surviving corporation, the right to
purchase Shares under the Warrants shall terminate on the date of such merger
and thereupon the Warrants shall become null and void, but only if the
controlling corporation (after such event) shall agree to substitute for the
Warrants its warrants entitling the holder thereof to purchase the kind and
amount of shares and other securities and property which it would have been
entitled to receive had the Warrants been exercised immediately prior to such
merger. Any such agreements referred to in this subsection 8.4 shall provide for
adjustments, which shall be as nearly equivalent as may be practicable to the
adjustments provided for in Section 8 hereof, and shall contain substantially
the same terms, conditions and provisions as are contained herein immediately
prior to such event. The provisions of this subsection 8.4 shall similarly apply
to successive consolidations, mergers, sales or conveyances.
8.5. Nominal Value of Common Stock. Before taking any action which would
cause an adjustment effectively reducing the portion of the Warrant Price
allocable to each Share below the then nominal value per Share issuable upon
exercise of the Warrants, the Company will take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Shares upon exercise of
the Warrants.
8.6. Independent Public Accountants. The Company may retain a firm of
independent public accountants in the United States (which may be any such firm
regularly employed by the Company) to make any computation required under this
Section 8, and a certificate signed by such firm shall be evidence of the
correctness of any computation made under this Section 8.
8.7. Statement on Warrant Certificates. Irrespective of any adjustments in
the number of securities issuable upon exercise of Warrants, Warrant
certificates theretofore or thereafter issued may continue to express the same
number of securities as are stated in the similar Warrant certificates initially
issuable pursuant to this Agreement. However, the Company may, at any time in
its reasonable discretion, make any change in the form of Warrant certificate
that it may deem
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<PAGE>
appropriate and that does not affect the substance thereof; and any Warrant
certificate hereafter issued, whether upon registration of transfer of, or in
exchange or substitution for, an outstanding Warrant certificate, may be in the
form so changed.
Section 9. Fractional Interests; Market Price. The Company shall not be
required to issue fractional Shares upon the exercise of any Warrant. If any
fraction of a Share would, except for the provisions of this Section 9, be
issuable on the exercise of any Warrant (or specified portion thereof), the
Company shall pay an amount in cash equal to the Market Price multiplied by such
fraction. For all purposes of this Agreement, the term Market Price as of any
specified date shall mean (i) if the Common Stock is traded in the United States
over-the-counter market and not on the Nasdaq System or on any United States
national securities exchange, the average of the mean between the bid and asked
prices of the Common Stock on each of the five consecutive trading days
immediately preceding the date in question, as reported by the National
Quotation Bureau Incorporated or an equivalent generally accepted reporting
service, or (ii) if the Common Stock is traded on the Nasdaq System or on one or
more United States national securities exchanges, the average, for the five
consecutive trading days immediately preceding the date in question, of the
daily closing price of the Common Stock on the Nasdaq System or the daily
closing price for consolidated transactions on the principal United States
national securities exchange on which the Common Stock is listed, or (iii) if
the Common Stock is not traded in the United States over-the-counter market, the
Nasdaq System or any United States national securities exchange, the average,
for the five consecutive trading days immediately preceding the date in
question, of the daily closing price of the Common Stock on the principal
non-United States exchange on which the Common Stock is listed. The daily
closing price referred to in clauses (ii) and (iii) above shall be the last
reported sale price on the day in question or, if no reported sale takes place
on such day, the average of the reported closing bid and asked prices.
Section 10. No Rights as Shareholder; Notices to Warrantholders. Nothing
contained in this Agreement or in the Warrants shall be construed as conferring
upon the Warrantholder or any transferee of a Warrant any rights as a
shareholder of the Company, including (without limitation) the right to vote,
receive dividends, consent or receive notices as a shareholder in respect of any
meeting of shareholders for the election of directors of the Company or any
other matter. If, however, at any time prior to the expiration of the Warrants
and prior to their exercise in full, any one or more of the following events
shall occur:
(a) any action which would require an adjustment pursuant to
Section 8.1 or 8.4; or
(b) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation, merger or sale of its
property, assets and business as an entirety or substantially as an
entirety) shall be proposed;
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<PAGE>
then the Company shall give notice in writing of such event to each of the
Warrantholders, as provided in Section 14 hereof, at least 20 days prior to the
date fixed as a record date or the date of closing the transfer books for the
determination of the shareholders entitled to any relevant dividend,
distribution, subscription rights or other rights or for the determination of
shareholders entitled to vote on such proposed dissolution, liquidation or
winding up. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be. Failure to mail or receive such notice
or any defect therein shall not affect the validity of any action taken with
respect thereto.
Section 11. Restrictions on Transfer; Registration Rights.
(a) The Warrant Holder agrees and undertakes that if it proposes to sell or
otherwise transfer any Warrants or Shares and if such Warrants or Shares are not
then registered for resale pursuant to an effective registration statement under
the Act, the Warrantholder proposing to make such transfer shall give written
notice to the Company describing briefly the manner in which any such proposed
transfer is to be made; and no such transfer shall be made unless the Company
shall notify such Warrantholder that in the opinion counsel reasonably
satisfactory to such Warrantholder, registration under the Act is not required
with respect to such transfer.
(b) Within 30 days of the date of this Agreement the Company shall be
obligated to the Warrant Holder to file a Registration Statement under the the
Act covering the Shares issuable upon exercise of the Warrants in conformity
with the provisions of a certain Registration Rights Agreement entered into by
the Warrant Holder and the Company on May 21, 1997.
(c) In connection with any Registration Statement filed pursuant to
paragraph (b) of this Section 11, the Company shall take such action as may be
necessary or appropriate to comply with the securities or blue sky laws of such
states of the United States as shall reasonably be requested by the Warrant
Holder, and shall do any and all other acts which may be necessary or advisable
to permit the proposed sale or other disposition of the Shares in any such
state; provided that in no event shall the Company be obligated in connection
therewith to qualify as a foreign corporation or as a dealer in any jurisdiction
where it is not already so qualified, or to execute a general consent for
service of process in suits other than those arising out of the offer and sale
of the Shares, or to take any action which would subject it to taxation in any
jurisdiction where it is not then so subject.
(d) The Company's obligations under paragraph (b) of this Section 11 with
respect to the Warrant Holder shall be conditioned in each instance upon the
timely receipt by the Company in writing of (i) information from such Warrant
Holder as to the proposed plan of distribution of such Warrant Holder's Shares
to be included in a Registration Statement, (ii) such other information as may
be required by law from such holder, or its underwriter or other agent,
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<PAGE>
for inclusion in such Registration Statement, and (iii) if such holder is not
the Warrant Holder, an agreement to be bound by the provisions of Sections 12
and 13 of this Agreement.
(e) The Warrant Holder will not make any sale of the Shares, pursuant to
the registration statement referred to in this Section 11 without effectively
causing the prospectus delivery requirements under the Securities Act to be
satisfied. The Warrant Holder acknowledges that there may occasionally be times
when the Company must suspend the use of the prospectus forming a part of the
Registration Statement until such time as an amendment to such registration
statement has been field by the Company and declared effective by the Commission
or until the Company has amended or supplemented such prospectus. The Company
will use its best efforts to cause such amended registration statement to be
declared effective and/or to deliver such amended or supplemented prospectus as
soon as possible. The Warrant Holder hereby covenants that it will not sell any
Shares pursuant to said prospectus during the period commencing at the time at
which the Company gives the Warrant Holder notice of the suspension of the use
of said prospectus and ending at the time the Company gives the Warrant Holder
notice that the Warrant Holder may thereafter effect sales pursuant to said
prospectus.
(f) The Company shall pay all fees, disbursements and out-of-pocket
expenses (other than the Warrant Holder's brokerage fees and commissions and
legal fees) payable in connection with (i) any Registration Statement filed
under paragraph 11(b) and (ii) compliance with applicable state securities and
blue sky laws. The Company at its expense will supply the Warrant Holders of
Shares included in a Registration Statement with copies of such Registration
Statement and the prospectus included therein and other related documents and
opinions and no-action letters, in such quantities as may be reasonably
requested by such Warrantholders. In connection with each Registration
Statement, the Company shall furnish to holders of Shares included therein such
opinions of counsel, comfort letters of accountants, certificates and other
documents that are customary in connection with underwritten public offerings
and that are reasonably requested by such Warrantholders.
Section 12. Indemnification.
(a) In the event that any Registration Statement is filed pursuant to
Section 11 hereof, the Company will indemnify and hold harmless the
Warrantholder identified as a selling security holder therein, and each person,
if any, who controls such Warrantholder within the meaning of the Act, against
any and all losses, claims, damages or liabilities, joint or several (including
any reasonable investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they or any of them may become subject under the
Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act") or
other federal or state law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement, any
related preliminary prospectus, final prospectus,
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<PAGE>
or amendment thereof or supplement thereto, or any related blue sky filing, or
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided that the
Company shall not be liable under this section 12(a) in any such case to the
extent that any such losses, claims, damages or liabilities arise solely out of
or are based upon an untrue statement of a material fact contained in, or any
omission of a material fact from, such Registration Statement, preliminary
prospectus, final prospectus or amendment thereof or supplement thereto in
reliance upon, and in conformity with, information furnished in writing to the
Company by such Warrant Holder specifically for use therein. This indemnity will
be in addition to any liability which the Company may otherwise have.
(b) The Warrant Holder will indemnify and hold harmless the Company, each
other person referred to in subparts (1), (2) and (3) of Section 11(a) of the
Act in respect of the Registration Statement, and each person, if any, who
controls the Company or any such person within the meaning of Section 15 of the
Act, against any and all losses, claims, damages or liabilities (including any
reasonable investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Act, the Exchange Act or other federal or state law or regulation, at common
law, or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in such
Registration Statement, any related preliminary prospectus, final prospectus or
amendment thereof or supplement thereto, or any related blue sky filing, or (ii)
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or omission was made
in such Registration Statement, preliminary prospectus, final prospectus or
amendment thereof or supplement thereto in reliance upon, and in conformity
with, information furnished in writing to the Company by such Warrant Holder
specifically for use therein. This indemnity will be in addition to any
liability which the Warrant Holder may otherwise have to the Company.
(c) Any party that proposes to assert the right to be indemnified under
this Section 12 shall, promptly after receipt of notice of the commencement of
any action, suit or proceeding against such party in respect of which a claim is
to be made against an indemnifying party or parties under this Section, notify
each such indemnifying party of the commencement thereof, enclosing a copy of
all papers served. No indemnification provided for in Section 12(a) or 12(b)
shall be available to any party who shall fail to give notice as provided in
this Section 12(c) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was materially prejudiced
by the failure to give such notice, but the omission so to notify such
indemnifying party of any such action, suit or proceeding shall not relieve it
from any liability that it may have to any indemnified party otherwise than
under this Section 12 or Section 13. In case any such action, suit or proceeding
is brought against any
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<PAGE>
indemnified party and it notifies the indemnifying party of the commencement
thereof, such indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof 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 and the
approval by the indemnified party of such counsel (which approval shall not
unreasonably be withheld), the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, except as provided below and
except for the reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The indemnified party
shall have the right to employ its own counsel in any such action, suit or
proceeding but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the employment of counsel by such indemnified
party has been authorized in writing by the indemnifying parties, (ii) the
indemnified party shall have reasonably concluded that there may be differing or
additional defenses available to it and not to one or more of the indemnifying
parties in such action, suit or proceeding (in which case the indemnifying
parties shall not have the right to direct the defense of such action, suit or
proceeding on behalf of the indemnified party), or (iii) the indemnifying
parties shall not have employed counsel to assume the defense of such action
within a reasonable time after notice of the commencement thereof, in each of
which cases the fees and expenses of the indemnified party's counsel shall be at
the expense of the indemnifying parties; however, the indemnifying party shall
not, in connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys for the Warrant Holders and controlling persons, which firm shall be
designated in writing by a majority in interest of such Warrant Holders and
controlling persons (based upon the value of the Shares included in the
Registration Statement). An indemnifying party shall not be liable for any
settlement of any action, suit, proceeding or claim effected without its written
consent.
Section 13. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 12 is due in accordance with its terms but for any reason is held to be
unavailable or insufficient to hold harmless an indemnified party, the Company
(including for this purpose any controlling person of the Company, any director
of the Company and any officer of the Company who signed the Registration
Statement) on the one hand, and the Warrant Holders (including for this purpose
any controlling persons thereof) on the other hand, shall, in lieu of
indemnifying such indemnified party, contribute to the aggregate losses, claims,
damages or liabilities referred to in Section 12 above (including any
investigation, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claims asserted, but after deducting any contribution received by or payable to
the Company from other persons other than the Warrant Holders, such as other
selling securityholders, persons who control the Company within the meaning of
the Act, officers of the Company who signed the Registration Statement, and
directors of the Company), (a) in such proportion as is appropriate to reflect
the
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<PAGE>
relative benefits received by the Company and the Warrant Holders from the
offering or offerings covered by the Registration Statement or, (b) if the
allocation provided by clause (a) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (a) above but also the relative fault of the Company and
the Warrant Holders in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Warrant Holder on the other hand shall be
deemed to be in the same proportion as (x) the total proceeds (if any) received
by the Company from the offering or offerings covered by the Registration
Statement (net of underwriting discounts but before deducting expenses, if
applicable), plus all cash proceeds received by the Company from the exercise of
the Warrants for the Shares of such Warrant Holder included in the Registration
Statement, bear to (y) the total proceeds received by such Warrant Holder from
the sale of Shares included in the Registration Statement. The relative fault of
the Company and the Warrant Holder shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission related to information supplied by the Company or such Warrant
Holder, and their relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Warrant Holder agree that it would not be just and equitable if contribution
pursuant to this Section 13 were determined by pro rata allocation (even if the
Warrant Holders were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this Section 13, in no case
shall the Warrant Holder (except as may be provided by agreement among them) be
liable or responsible for any amount in excess of the proceeds received by such
Warrant Holder from the sale of the Shares included in the Registration
Statement; provided that no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 13, each person, if any, who
controls the Warrant Holder within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act shall have the same rights to contribution as
such Warrant Holder, and each person, if any, who controls the Company within
the meaning of the Section 15 of the Act or Section 20(a) of the Exchange Act,
each director of the Company and each officer of the Company who shall have
signed the Registration Statement, shall have the same rights to contribution as
the Company, subject in each case to clauses (i) and (ii) in the immediately
preceding sentence of this Section 13. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 13, notify such
party or parties from whom contribution may be sought, and the omission so to
notify such party or parties from whom contribution may be sought shall relieve
the party or parties from whom contribution may be sought (if such party was
unaware of such action, suit or proceeding and was materially prejudiced by such
omission) from any liability under this Section 13, but not from any other
obligation it or they may have hereunder or otherwise than under this Section
13. No party shall be liable for contribution with respect to any settlement of
an action, suit, proceeding or claim effected without
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<PAGE>
its written consent. The obligations of the Warrant Holders to contribute
pursuant to this Section 13 are several in proportion to their respective number
of Shares included in the Registration Statement, and not joint.
Section 14. Notices. Any notice pursuant to this Agreement shall be in
writing and shall be deemed to have been duly given (i) if given by facsimile
transmission on the business day on which such transmission is sent and
confirmed, (ii) if given by air courier, two business days following the date it
was sent or (iii) if mailed by certified mail, return receipt requested, ten
business days following the date it was mailed, to the following addresses
(unless another address is herein specified):
(a) If to the Warrant Holder, addressed to: Lydford Ltd., c/o
Gainsford Bell & Co., 111 Arlozorov Street, Tel Aviv Israel with a
copy to Sam Krieger, Esq., Krieger & Prager, 319 5th Avenue, New York,
New York 10016.
(b) If to the Company, addressed to: Casdim International
Systems, Inc., 150 East 58th Street, New York, New York 10155 with a
copy to: Carter, Ledyard & Milburn, 2 Wall Street, New York, New York
10005, Attention: Steven J. Glusband, Esq., Fax (212) 732-3232.
Each party may from time to time change the address or fax number to which
notices to it are to be delivered or mailed hereunder by notice in accordance
herewith to the other party.
Section 15. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company, the Warrant Holder shall bind and inure to
the benefit of their respective successors and assigns.
Section 16. Merger or Consolidation of the Company. The Company shall not
merge or consolidate with or into any other corporation or sell all or
substantially all of its property to another corporation, unless the provisions
of Section 8.4 are complied with.
Section 17. Applicable Law; Submission to Jurisdiction. THIS AGREEMENT
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK
AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF
SAID SATE (WITHOUT REFERENCE TO ITS RULES AS TO CONFLICTS OF LAWS). The Company
hereby agrees to the exclusive jurisdiction of the courts of the State of New
York sitting in the County of New York or the federal courts sitting in the
County of New York in connection with any action arising out of this Agreement.
Section 18. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Warrantholder any legal or
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<PAGE>
equitable right, remedy or claim under this Agreement. This Agreement shall be
for the sole and exclusive benefit of the Company and the Warrant Holders.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the date and year first above written.
Casdim International Systems, Inc.
By: /s/Yehuda Shimshon
----------------------
Name:
Title:
Lydford Ltd.
By: /s/John Gainsford
---------------------
Name: John Gainsford
Director
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<PAGE>
EXHIBIT A
"THE WARRANTS REPRESENTED BY THIS CERTIFICATE, AND THE
SECURITIES ISSUABLE UPON EXERCISE OF SUCH WARRANTS, HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933
OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH
WARRANTS AND SECURITIES MAY NOT BE SOLD, ASSIGNED, EXCHANGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN ANY MANNER EXCEPT IN
COMPLIANCE WITH SECTION 11 OF THE AGREEMENT BY AND BETWEEN THE
ISSUER AND LYDFORD LTD. DATED May 22, 1997."
Warrant Certificate No. 1
Casdim International Systems, Inc.
(ORGANIZED UNDER THE LAWS
OF THE STATE OF DELAWARE)
WARRANTS TO PURCHASE COMMON STOCK
This certifies that, for value received, Lydford Ltd. (the "Warrantholder")
is the registered owner of 200,000 warrants (the "Warrants") to purchase from
Casdim International Systems, Inc. (the "Company"), at any time during the
period commencing at 9:00 a.m., Eastern Time, on May 22, 1997 and ending at 5:00
p.m., Eastern Time, on May 21, 2002, at an initial purchase price per share of
$1.00 (the "Warrant Price"), an aggregate of 200,000 shares of Common Stock of
the Company. The Warrants are subject to, and each Warrantholder, by acceptance
of this certificate, consents to all the terms and provisions of the Warrant
Agreement dated as of May 22, 1997, between the Company and the Warrantholder,
pursuant to which the Warrants evidenced hereby were issued (the "Warrant
Agreement").
The Warrants evidenced hereby may be exercised in whole or in part by
presentation of this Warrant Certificate with the Purchase Form herein duly
executed (with a signature guarantee as provided therein), and simultaneous
payment of the Warrant Price for each Warrant exercised, at the principal office
of the Company. Payment of such price shall be made at the option of each
<PAGE>
Warrantholder in cash or by certified or cashier's check, in next day funds. The
Warrantholder may also receive Common Stock without any cash payment by
presentation of this Warrant Certificate with the Cashless Exercise Form herein
duly executed (with a signature guarantee as provided therein) at the principal
office of the Company.
Upon any partial exercise of the Warrants evidenced hereby, there shall be
signed and issued to the Warrantholder effecting such partial exercise a new
Warrant Certificate in respect of the Common Stock as to which the Warrants
evidenced hereby shall not have been exercised. These Warrants may be exchanged
at the office of the Company by surrender of this Warrant Certificate properly
endorsed for one or more new Warrants of the same aggregate number of shares of
Common Stock as here evidenced by the Warrant or Warrants exchanged. No
fractional shares of Common Stock will be issued upon the exercise of rights to
purchase hereunder, but the Company shall pay the cash value of any fraction
upon the exercise of one or more Warrants. These Warrants are transferable at
the office of the Company in the manner and subject to the limitations set forth
in the Warrant Agreement.
This Warrant Certificate does not entitle any Warrantholder to any of the
rights of a shareholder of the Company.
Casdim International Systems, Inc.
By: /s/Yehuda Shimshon
----------------------
Title: President
Dated: May 22, 1997
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<PAGE>
PURCHASE FORM
Casdim International Systems, Inc.
150 East 58th Street
New York, New York 10155
Pursuant to paragraphs 3(a) and (b) of the Warrant Agreement, the
undersigned hereby irrevocably elects to exercise the right of purchase
represented by this Warrant Certificate for, and to purchase thereunder,
__________ shares of Common Stock ("Common Stock") provided for therein, and
requests that certificates for such Common Stock be issued in the name of:
-----------------------------------
(Please Print or Type Name(s), Address and Taxpayer Identification Number(s))
-----------------------------------
-----------------------------------
-----------------------------------
If this Warrant Certificate is hereby being exercised with respect to fewer than
all the Common Stock specified herein, please issue a new Warrant Certificate
for the unexercised balance of the Warrants, registered in the name of the
undersigned Warrantholder or his assignee as below indicated and delivered to
the address stated below.
Dated: _______________________
Name of Warrantholder(s)
or Assignee(s) (Please Print): __________________________
--------------------------
Address (Please Print): ______________________________________
--------------------------------------------
Signature(s): ____________________________________________
--------------------------------------------
Note: The above signature(s) must correspond exactly with the name(s)
as written upon the face of this Warrant Certificate, without alteration or
enlargement or any change whatever, unless these Warrants have been
assigned.
<PAGE>
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
-----------------------------------
-----------------------------------
-----------------------------------
(Name(s) and Address(es) of Assignee(s) Must be Printed or Typewritten)
the within Warrants, hereby irrevocably constituting and appointing
________________________ the undersigned's attorney-in-fact to transfer said
Warrants on the books of the Company, with full power of substitution.
Dated: __________ ___________________________________
-----------------------------------
Signature(s) of Registered Holder(s)
Note: The above signature(s) must correspond exactly with the name(s)
as written upon the face of this Warrant Certificate, without alteration or
enlargement or any change whatever.
<PAGE>
Form of Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of _______________ (this
"Agreement"), is made by and between CASDIM INTERNATIONAL SYSTEMS, INC., a
Delaware corporation (the "Company"), and the person named on the signature page
hereto (the "Initial Investor").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of the Securities
Purchase Agreement, dated as of ____________________, between the Initial
Investor and the Company (the "Securities Purchase Agreement"), the Company has
agreed to issue and sell to the Initial Investor shares of the common stock,
$.01 par value (the "Common Stock"), of the Company[, and __________warrants to
purchase shares of Common Stock] (collectively "the Shares") upon the terms and
subject to the conditions of such Common Stock; and
WHEREAS, to induce the Initial Investor to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws with respect to the
Conversion Shares;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Initial
Investor hereby agrees as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
(i) "Investor" means the Initial Investor and any transferee or assignee
who agrees to become bound by the provisions of this Agreement in accordance
with Section 9 hereof.
(ii) "Register," "Registered," and "Registration" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the Securities Act and pursuant to Rule 415 under the Securities
Act or any successor rule providing for offering securities on a continuous
basis ("Rule 415"), and the declaration or ordering of effectiveness of
1
<PAGE>
such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(iii) "Registrable Securities" means the Shares.
(iv) "Registration Statement" means a registration statement of the Company
under the Securities Act.
(b) Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Securities Purchase Agreement.
2. Registration.
(a) Mandatory Registration. The Company shall prepare and file with the
SEC, no later than thirty (30) days after the Closing Date, either a
Registration Statement on Form S-3, or such other form as the Company shall be
eligible to utilize, covering shares of Common Stock purchased by the Initial
Investors.
(b) Underwritten Offering. If any offering pursuant to a Registration
Statement pursuant to Section 2(a) hereof involves an underwritten offering, the
Investors acting by majority in interest of the Registrable Securities subject
to such underwritten offering shall have the right to select one legal counsel
to represent their interests, and an investment banker or bankers and manager or
managers to administer the offering, which investment banker or bankers or
manager or managers shall be reasonably satisfactory to the Company. The
Investors who hold the Registrable Securities to be included in such
underwriting shall pay all underwriting discounts and commissions and other fees
and expenses of such investment banker or bankers and manager or managers so
selected in accordance with this Section 2(b) (other than fees and expenses
relating to registration of Registrable Securities under federal or state
securities laws, which are payable by the Company pursuant to Section 5 hereof)
with respect to their Registrable Securities and the fees and expenses of such
legal counsel so selected by the Investors.
(c) Payments by the Company. If the Registration Statement covering the
Registrable Securities required to be filed by the Company pursuant to Section
2(a) hereof is not effective on the the "Initial Date" (as defined below), then
the Company will make payments to the Initial Investor in such amounts and at
such times as shall be determined pursuant to this Section 2(c). The amount to
be paid by the Company to the Initial Investor shall be determined as of each
Computation Date, and such amount shall be equal to two (2%) percent of the
purchase price paid by the Initial Investor for the Common Stock pursuant to the
Securities Purchase Agreement from the Initial Date to the first Computation
Date, and three (2%) percent of the purchase price for any period to each
Computation Date thereafter, to the date the Registration Statement is declared
effective by the SEC (the "Periodic Amount"). The full Periodic Amount shall be
paid by the Company in immediately available funds within three business days
after each Computation Date. Notwithstanding the foregoing, the amounts payable
by the Company pursuant to this provision shall not be payable to the extent any
delay in the effectiveness of the Registration Statement occurs because of an
act of, or a failure to act or to act timely by the Initial Investor or
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<PAGE>
its counsel, or in the event all of the Registrable Securities may be sold
pursuant to Rule 144 or another available exemption under the Act.
As used in this Section 2(c), the following terms shall have the following
meanings:
"Computation Date" means the date which is the earlier of (a) 35 days after
the Company is notified by the SEC that the Registration Statement may be
declared effective or (b) one hundred twenty (120) days after the Closing Date
and, if the Registration Statement required to be filed by the Company pursuant
to Section 2(a) has not theretofore been declared effective by the SEC, each
date which is thirty (30) days after the previous Computation Date until such
Registration Statement is so declared effective.
3. Obligations of the Company. In connection with the registration of the
Registrable Securities, the Company shall do each of the following.
(a) Prepare promptly, and file with the SEC within thirty (30) days of the
Closing Date, a Registration Statement with respect to not less than the number
of Registrable Securities provided in Section 2(a), above, and thereafter use
its best efforts to cause each Registration Statement relating to Registrable
Securities to become effective on the earlier of (i) five business days after
notice from the Securities and Exchange Commission that the Registration
Statement may be declared effective, or (b) ninety (90) days after the Closing
Date (the "Initial Date"), and keep the Registration Statement effective at all
times until the earliest (the "Registration Period") of (i) the date that is two
years after the Closing Date (ii) the date when the Investors may sell all
Registrable Securities under Rule 144 or (iii) the date the Investors no longer
own any of the Registrable Securities, which Registration Statement (including
any amendments or supplements thereto and prospectuses contained therein) shall
not contain any 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,
in light of the circumstances in which they were made, not misleading;
(b) Prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement and the prospectus
used in connection with the Registration Statement as may be necessary to keep
the Registration effective at all times during the Registration Period, and,
during the Registration Period, comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities of the Company
covered by the Registration Statement until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the Registration
Statement;
(c) The Company shall permit a single firm of counsel designated by the
Initial Investors to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their filing with the
SEC, and not file any document in a form to which such counsel reasonably
objects.
(d) Furnish to each Investor whose Registrable Securities are included in
the Registration Statement and its legal counsel identified to the Company, (i)
promptly after the same
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<PAGE>
is prepared and publicly distributed, filed with the SEC, or received by the
Company, one (1) copy of the Registration Statement, each preliminary prospectus
and prospectus, and each amendment or supplement thereto, and (ii) such number
of copies of a prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents, as such Investor
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor;
(e) Use reasonable efforts to (i) register and qualify the Registrable
Securities covered by the Registration Statement under such other securities or
blue sky laws of such jurisdictions as the Investors who hold a majority in
interest of the Registrable Securities being offered reasonably request and in
which significant volumes of shares of Common Stock are traded, (ii) prepare and
file in those jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof at all times during the
Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (A) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (B) subject itself to general taxation in any such jurisdiction,
(C) file a general consent to service of process in any such jurisdiction, (D)
provide any undertakings that cause more than nominal expense or burden to the
Company or (E) make any change in its articles of incorporation or by-laws,
which in each case the Board of Directors of the Company determines to be
contrary to the best interests of the Company and its stockholders;
(f) As promptly as practicable after becoming aware of such event, notify
each Investor of the happening of any event of which the Company has knowledge,
as a result of which the prospectus included in the Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and use its best efforts promptly to prepare a supplement or
amendment to the Registration Statement or other appropriate filing with the SEC
to correct such untrue statement or omission, and deliver a number of copies of
such supplement or amendment to each Investor as such Investor may reasonably
request;
(g) As promptly as practicable after becoming aware of such event, notify
each Investor who holds Registrable Securities being sold (or, in the event of
an underwritten offering, the managing underwriters) of the issuance by the SEC
of a Notice of Effectiveness or any notice of effectiveness or any stop order or
other suspension of the effectiveness of the Registration Statement at the
earliest possible time;
(h) Use its commercially reasonable efforts, if eligible, either to (i)
cause all the Registrable Securities covered by the Registration Statement to be
listed on a national securities exchange and on each additional national
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities
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<PAGE>
is then permitted under the rules of such exchange, or (ii) secure designation
of all the Registrable Securities covered by the Registration Statement as a
National Association of Securities Dealers Automated Quotations System
("NASDAQ") "Small Capitalization" within the meaning of Rule 11Aa2-1 of the SEC
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the quotation of the Registrable Securities on the NASDAQ Small Cap Market.
(i) Provide a transfer agent and registrar, which may be a single entity,
for the Registrable Securities not later than the effective date of the
Registration Statement;
(j) Cooperate with the Investors who hold Registrable Securities being
offered to facilitate the timely preparation and delivery of certificates for
the Registrable Securities to be offered pursuant to the Registration Statement
and enable such certificates for the Registrable Securities to be in such
denominations or amounts as the case may be, as the Investors may reasonably
request and registered in such names as the Investors may request; and, within
three (3) business days after a Registration Statement which includes
Registrable Securities is ordered effective by the SEC, the Company shall
deliver, and shall cause legal counsel selected by the Company to deliver, to
the transfer agent for the Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such Registration Statement) an
appropriate instruction and opinion of such counsel; and
(k) Take all other reasonable actions necessary to expedite and facilitate
disposition by the Investor of the Registrable Securities pursuant to the
Registration Statement.
4. Obligations of the Investors. In connection with the registration of the
Registrable Securities, the Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of the Registrable Securities
held by it, as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least five (5) days prior
to the first anticipated filing date of the Registration Statement, the Company
shall notify each Investor of the information the Company requires from each
such Investor (the "Requested Information") if such Investor elects to have any
of such Investor's Registrable Securities included in the Registration
Statement. If at least two (2) business days prior to the filing date the
Company has not received the Requested Information from an Investor (a
"Non-Responsive Investor"), then the Company may file the Registration Statement
without including Registrable Securities of such Non-Responsive Investor;
(b) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement; and
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<PAGE>
(c) Each Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(e) or 3(f),
above, such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(e) or 3(f) and, if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
5. Expenses of Registration. All reasonable expenses, other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 3, but including,
without limitation, all registration, listing, and qualifications fees, printers
and accounting fees, the fees and disbursements of counsel for the Company and a
fee for a single counsel for the Investor not exceeding $3,500, shall be borne
by the Company.
6. Indemnification. In the event any Registrable Securities are included in
a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemni fy and hold
harmless each Investor who holds such Registrable Securities, the directors, if
any, of such Investor, the officers, if any, of such Investor, each person, if
any, who controls any Investor within the meaning of the Securities Act or the
Exchange Act (each, an "Indemnified Person"), against any losses, claims,
damages, liabilities or expenses (joint or several) incurred (collectively,
"Claims") to which any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations in the
Registration Statement, or any post-effective amendment thereof, or any
prospectus included therein: (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
post-effective amendment thereof or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if used
prior to the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading or (iii) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, any state securities law or any rule or
regulation under the Securities Act, the Exchange Act or any state securities
law (the matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations"). The Company shall reimburse the Investors, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section
6
<PAGE>
6(a) shall not (I) apply to a Claim arising out of or based upon a Violation
which occurs in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Indemnified Person expressly for
use in connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(c) hereof; (II) with respect to
any preliminary prospectus, inure to the benefit of any such person from whom
the person asserting any such Claim purchased the Registrable Securities that
are the subject thereof (or to the benefit of any person controlling such
person) if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected in the prospectus, as then amended or
supplemented, if such prospectus was timely made available by the Company
pursuant to Section 3(b) hereof; (III) be available to the extent such Claim is
based on a failure of the Investor to deliver or cause to be delivered the
prospectus made available by the Company; or (IV) apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. Each
Investor will indemnify the Company and its officers, directors and agents
against any claims arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company, by or on behalf of such Investor, expressly for use in connection with
the preparation of the Registration Statement, subject to such limitations and
conditions as are applicable to the Indemnification provided by the Company to
this Section 6. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 9.
(b) Promptly after receipt by an Indemnified Person under this Section 6 of
notice of the commencement of any action (including any governmental action),
such Indemnified Person shall, if a Claim in respect thereof is to be made
against any indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume control of the defense thereof with counsel mutually satisfactory to
the indemnifying party and the Indemnified Person, as the case may be; provided,
however, that an Indemnified Person shall have the right to retain its own
counsel with the reasonable fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person and the
indemnifying party would be inappropriate due to actual or potential differing
interests between such Indemnified Person and any other party represented by
such counsel in such proceeding. In such event, the Company shall pay for only
one separate legal counsel for the Investors; such legal counsel shall be
selected by the Investors holding a majority in interest of the Registrable
Securities included in the Registration Statement to which the Claim relates.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person under this Section
6, except to the extent that the indemnifying party is prejudiced in its ability
to defend such action. The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
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7. Contribution. To the extent any indemnification by an indemnifying party
is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (a) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6; (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation; and (c)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities.
8. Reports under Exchange Act. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
9. Assignment of the Registration Rights. The rights to have the Company
register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to any transferee of the Registrable
Securities only if: (a) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment, (b) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (i) the name and address of such transferee or assignee and
(ii) the securities with respect to which such registration rights are being
transferred or assigned, (c) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities laws, and
(d) at or before the time the Company received the written notice contemplated
by clause (b) of this sentence the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein. In the event
of any delay in filing or effectiveness of the Registration Statement as a
result of such assignment, the Company shall not be liable for any damages
arising from such delay, or the payments set forth in Section 2(c) hereof.
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10. Amendment of Registration Rights. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investors who hold a majority in interest of
the Registrable Securities. Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the Company.
11. Miscellaneous.
(a) A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
(b) Notices required or permitted to be given hereunder shall be in writing
and shall be deemed to be sufficiently given when personally delivered (by hand,
by courier, by telephone line facsimile transmission, receipt confirmed, or
other means) or sent by certified mail, return receipt requested, properly
addressed and with proper postage pre-paid (i) if to the Company, at 150 East
58th Street, New York, New York 10155, ATT: President, with a copy to Steven
Glausband, Esq., Carter Ledyard & Milburn, 2 Wall Street, New York, New York
10005; (ii) if to the Initial Investor, at the address set forth under its name
in the Securities Purchase Agreement, with a copy to Samuel Krieger, Esq.,
Krieger & Prager, 319 Fifth Avenue, Third Floor, New York, NY 10016 and (iii) if
to any other Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes by
notice given in accordance with this Section 11(b), and shall be effective, when
personally delivered, upon receipt and, when so sent by certified mail, four (4)
calendar days after deposit with the United States Postal Service.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non coveniens, to the bringing of any such
proceeding in such jurisdictions. A facsimile transmission of this signed
Agreement shall be legal and binding on all parties hereto. This Agreement may
be signed in one or more counterparts, each of which shall be deemed an
original. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement. If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This Agreement may
be amended only
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<PAGE>
by an instrument in writing signed by the party to be charged with enforcement.
This Agreement supersedes all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof.
(e) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
(f) Subject to the requirements of Section 9 hereof, this Agree ment shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(h) The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning thereof.
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
CASDIM INTERNATIONAL SYSTEMS, INC.
By:_______________________
Name:
Title:
By:_______________________
Name:
Title:
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<PAGE>
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, N.Y. 10005
-----------
(212) 732-3200
FAX: (212) 732-3232
June 13, 1997
Casdim International Systems, Inc.
150 East 58th Street
New York, NY 10155
Re: Post-Effective Amendment No. 1 to
Registration Statement on Form SB-2
of Casdim International Systems, Inc.
Gentlemen:
We have acted as counsel to Casdim International Systems, Inc. (the
"Registrant") in connection with the above-captioned Post-Effective Amendment to
its Registration Statement, filed with the United States Securities and Exchange
Commission under the Securities Act of 1933, as amended. The Post-Effective
Amendment relates to (i) 1,521,000 shares of Common Stock , $0.01 par value, and
(ii) 650,000 shares of Common Stock, $0.01 par value underlying warrants issued
by the Registrant (the "Warrants") being registered on behalf of certain
shareholders and warrant holders of the Registrant (collectively, the "Selling
Shareholders").
We have examined the originals or copies, certified or otherwise
identified, of the Articles of Incorporation, as amended and restated, Bylaws
and records of relevant corporate proceedings of the Registrant and such other
matters as we have deemed necessary or advisable for the purpose of this
opinion.
<PAGE>
Casdim International Systems, Inc. -2-
On the basis of the foregoing, we are of the opinion that:
1. The 1,521,000 shares of Common Stock to be sold by the Selling
Shareholders have been duly authorized and are validly issued, fully paid and
non-assessable.
2. The 650,000 shares of Common Stock when issued to holders of the
Warrants, upon exercise and payment of the exercise price stated in the
Warrants, will be duly authorized, validly issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the above
Registration Statement and to the reference to our name under the caption "Legal
Matters" in the Prospectus included therein.
Very truly yours,
/s/Carter, Ledyard & Milburn
SJG:asb
<PAGE>
(Translated from Hebrew)
Account No.: 647777
Customer's Name: Casdim Interactive Systems, Ltd.
Address: Ha'offan St., Petah Tikva
Telephone: 9247910
Company No.: 51-1874513
Bank Hapoalim B.M.
Elipaz branch
Date: March 3rd, 1997
Dear Sirs,
Re: Application for Provision of Credit - My Letter of Undertaking (Mem Shin
20(E)) for Credit in Foreign Currency, signed by me on
_______________(date) in your favour.
We hereby request that you provide me in my foreign currency account with you,
no. 647777 (hereinafter: "the Account") with credit in US Dollars (hereinafter
"the currency of Credit") in the amount of 1,000,000 (one million US Dollars)
(hereinafter: "the Credit"). The provision of credit to the account shall be
treated by me as your agreement for the granting of Credit in accordance with
the terms and provisions set forth in the above Letter of Undertaking and the
special conditions set forth below.
1. Date of Provision of Credit ____________________.
2. Purpose of Credit and Instructions for disposal thereof
The purpose of the credit is: For valid and lawful corporate purposes.
3. Terms for Repayment of the Credit
The credit will be repaid in the Currency of the Credit: In 60 monthly
installments, commencing on the 31st of March, 1997 and ending on the 28th of
February, 2002.
Each installment will be in the amount of _____________________*, the first
installment in the amount of _________________________* and the last installment
in the amount of ___________*. The frequency of payment and the amounts thereof
as detailed in Annex A attached hereto.
<PAGE>
4. Interest
4.2 Variable Interest Rate:
The borrower will pay interest to the Bank as calculated by the Bank on the
balance of the principal amount of the Credit outstanding from time to time
as of the Date of Provision of the Credit at a rate (hereinafter called:
"the Interest Rate") which shall be 2% (two percent) per annum in excess of
the London Interbank Offered Rate (as defined below).
For the purpose of determining the Interest Rate from time to time
applicable to the Credit, the following definitions and provisions shall
apply:
"London Interbank Offered Rate" means the rate of interest determined by
the Bank as the rate at which deposits in the currency of the Credit are
offered to the Bank on the Date of Determination (as defined below) in the
London Interbank market for an amount or amounts corresponding to the
respective Interest Period (as defined below).
"Determination Date" means, with reference to any Interest Period (as
defined below), two business days preceding the commencement of the
respective Interest Period (as defined below).
4.3 Interest Payment Dates
Interest (not including Default Interest) shall be paid by the borrower to the
Bank in the Currency of Credit as follows: On the 31st of March, 1997.
4.4 In addition to the interest payable under this Clause there shall be
payable in respect of the Credit additional interest and/or other
payments which is the rate of _____% (__ percent) per annum, which is
the interest at the rate of ___% per annum on an adjusted annual basis
on the date of provision of the credit or at any other rate to be
determined by the bank from time to time (hereinafter: "the Additional
Interest" mentioned in Clause 3(b) of the Letter of Undertaking.
4.5 Any Additional Interest shall be paid in the currency of Credit
concurrently with the payment of interest pursuant to sub clause (4.3)
above.
4.6 The interest and/or Additional Interest shall be computed on the basis
of the actual number of calendar days elapsed divided by 360.
4.7 If any payment due hereunder following the provision of Credit falls
due on a day which is not a business day (as defined below) such
payment shall be made on the next day which is a business day (as
defined below) unless it would thereby be made
<PAGE>
in the next calendar month, in which case such payment will be made on
the immediately preceding business day (as defined below).
4.8 Where any installment of account of the Credit falls due in a calendar
month in which any Interest Period ends, the due date of any said
installment shall, if necessary, be deferred to the last day of said
Interest Period so as to ensure that the due date for payment of
account of the Credit and the due date for payment of interest in any
such case are one and the same.
4.9. For the purposes hereof, "business day" means a day on which banks in
Tel Aviv, London and the country in which the currency of Credit is
legal tender are open to the public and on which transactions in the
currency of Credit may be effected. Where the basket of currencies (as
set forth in the Schedule hereto), is defined as being the currency of
Credit, the term "business day" shall mean a day on which the Bank of
Israel publishes a representative rate for the basket of currencies
(as set forth in the Schedule hereto).
6. The headings are only indicative and are not to be used in construing this
Application for Provision of Credit.
7. The provisions herein contained are in addition to those contained in the
said Letter of Undertaking, but in case of conflict between them,
provisions herein contained shall prevail. Subject thereto, all the terms
defined herein bear the same meaning as in the said Letter of Undertaking.
8. Additions
8.1. Should the currency of Credit be the basket of currencies, each unit
of the basket of currencies (hereinafter: "the Unit") at the date of
this Provision of Credit is composed of the following currencies:
0.6000 US$, 0.4177 German Mark, 0.3394 French Franc, 0.7000 Japanese
Yen.
8.2 The composition of the above mentioned Unit is and will be the
deciding composition for any matter and issue concerning the above
mentioned Provision of Credit and the Letter of Undertaking and any
future change in the composition of the basket of currencies by the
Bank of Israel will not change the above composition of the Unit and
the amounts the borrower owes or will owe the Bank.
8.3 The term "Currency of Credit" in the context of the basket of
currencies means each and every one of the currencies included in each
unit of the above basket of currencies, according to the matter at
hand.
<PAGE>
IN WITNESS WHEREOF I HAVE SIGNED:
Borrowers' Signature:
Guarantor's name, address and telephone number:
Casdim International Systems, Inc. State of Colorado USA,
File #871767990
I hereby declare guarantor no. 1 signed before me.
Approver's name:
Date:
Signature and stamp:
<PAGE>
_________________________________________
HOCKER, LOVELETT, HARGENS, & YENNIE, P.C.
_________________________________________
Certified Public Accountants
CONSENT OF HOCKER, LOVELETT, HARGENS, & YENNIE, P.C.
INDEPENDENT AUDITORS
We consent to the use of our report dated March 21, 1997 in Post-Effective
Amendment No. 1 to the Registration Statement on Form SB-2 of Casdim
International Systems, Inc.
Yours truly,
/s/ Hocker, Lovelett, Hargens, & Yennie, P.C.
Hocker, Lovelett, Hargens, & Yennie, P.C.
Certified Public Accountants
Riverton, Wyoming
June 12, 1997
