-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NQjmqeaV+TZEAAUCSiBvTaiQ+uuoxFSkYkcPOx0iOUoSVBbsVEn83SYlIVo6LpKt 9V4bixeuWcApdWEhKBCWWQ== 0000950120-04-000428.txt : 20040618 0000950120-04-000428.hdr.sgml : 20040618 20040618153731 ACCESSION NUMBER: 0000950120-04-000428 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20040618 EFFECTIVENESS DATE: 20040618 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DISTINCTIVE DEVICES INC CENTRAL INDEX KEY: 0000059963 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 131999951 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-116642 FILM NUMBER: 04870839 BUSINESS ADDRESS: STREET 1: ONE BRIDGE PLAZA SUITE 100 CITY: FORT LEE STATE: NJ ZIP: 07024 BUSINESS PHONE: 5612744233 MAIL ADDRESS: STREET 1: ONE BRIDGE PLAZA SUSITE 100 CITY: FORT LEE STATE: NJ ZIP: 07024 FORMER COMPANY: FORMER CONFORMED NAME: LMC DATA INC DATE OF NAME CHANGE: 19761021 S-8 1 ddis8.txt REGISTRATION STATEMENT AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 18, 2004 REGISTRATION NO. 333-[ ] - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 - -------------------------------------------------------------------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 - -------------------------------------------------------------------------------- DISTINCTIVE DEVICES, INC. (Exact name of Registrant as specified in its charter) DELAWARE 13-1999951 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) - -------------------------------------------------------------------------------- ONE BRIDGE PLAZA, SUITE 100 FORT LEE, NEW JERSEY 07024 (Address of Principal Executive Offices including Zip Code) - -------------------------------------------------------------------------------- THE 2002 STOCK OPTION PLAN STOCK OPTION AGREEMENT STOCK OPTION AGREEMENT STOCK OPTION AGREEMENT WARRANT AGREEMENT (Full title of the Plans) - -------------------------------------------------------------------------------- Copy to: SANJAY MODY BRUCE A. RICH, ESQ. CHIEF EXECUTIVE OFFICER AND PRESIDENT THELEN REID & PRIEST LLP ONE BRIDGE PLAZA, SUITE 100 875 THIRD AVENUE FORT LEE, NEW JERSEY 07024 NEW YORK, NY 10022 (201) 363-9922 (212) 603-2000 (Name and address, including zip code, and telephone number, including area code, of agent for service) - --------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE - ---------------------------------------------------------------------------------------------------------------- AMOUNT OF PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF SECURITIES TO BE SHARES TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF REGISTERED REGISTERED (1) PER SHARE PRICE REGISTRATION FEE - ---------------------------------------------------------------------------------------------------------------- Common Stock Issuable under the 2002 Stock Option Plan 2,000,000 $2.45 (2) $4,900,000 (2) $620.83 (2) - ---------------------------------------------------------------------------------------------------------------- Common Stock Issuable on Exercise of Options 2,500,000 $0.70 $1,750,000 $221.72 - ---------------------------------------------------------------------------------------------------------------- Common Stock Issuable on Exercise of Warrant 200,000 $1.65 $330,000 $41.81 - ---------------------------------------------------------------------------------------------------------------- TOTAL 4,700,000 $884.36 - ---------------------------------------------------------------------------------------------------------------- (1) This registration statement shall also cover any additional shares of common stock which become issuable under The 2002 Stock Option Plan, as amended (the "Plan"), by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration which results in an increase in the number of outstanding shares of the Company's Common Stock. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) for the shares underlying the Plan registered hereunder (based on the average of the high ($2.50) and low ($2.40) prices for the Company's Common Stock reported by the over-the-counter bulletin board on June 15, 2004).
Proposed sales to take place as soon after the effective date of the Registration Statement as options or other rights granted under the Plan are exercised. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The following documents, which we previously filed with the Securities and Exchange Commission (the "SEC"), are incorporated by reference in this Registration Statement: (a) Our Annual Report on Form 10-KSB for the year ended December 31, 2003; (b) The Company's Quarterly Report on Form 10-QSB for the three months ended March 31, 2004; and (c) The description of Common Stock contained in our Certificate of Incorporation, as amended (filed as Exhibit 3.1 to our quarterly report for the fiscal quarter ended September 30, 2002). In addition, all documents we filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") after the date of this Registration Statement and prior to the filing of a post-effective amendment that indicates that all securities offered have been sold or that deregisters all securities then remaining unsold, are incorporated by reference in this Registration Statement and are a part hereof from the date of filing such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. A director of the Company shall not be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporations law ("DGCL"), or (iv)for any transaction from which the director derived any improper personal benefit. If the DGCL is hereafter amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Company shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. The Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, or by or in the right of the Company to procure judgment in its favor, by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, manager, employee or agent of another corporation, partnership, joint venture, limited liability company, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, in accordance with and to the full extent permitted by statute. Expenses (including attorneys' fees) incurred in defending any civil, criminal administrative or investigative action, suit or proceeding may be paid by the Company in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of the director, officer, manager, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Company as authorized by this paragraph. The indemnification provided by this paragraph shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under this Certificate of Incorporation, the By-Laws or any agreement or vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, 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 the heirs, executors and administrators of such a person. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. ITEM 8. EXHIBITS. The following is a list of exhibits filed as part of this Registration Statement, which are incorporated herein: --------------------------------------------------------------------------- EXHIBIT NUMBER DOCUMENT --------------------------------------------------------------------------- 5.1* Opinion of Thelen Reid & Priest. --------------------------------------------------------------------------- 10.1 2002 Stock Option Plan (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-QSB for the fiscal quarter ended September 30, 2002, and incorporated herein by reference). --------------------------------------------------------------------------- 10.2 Form of Amended and Restated Option Agreement (filed as Exhibit 10.5 to the Company's Current Report on Form 8-K for an event of April 20, 2004, and incorporated herein by reference). --------------------------------------------------------------------------- 10.3 Stock Option Agreement Between the Registrant and Sanjay Mody (filed as Exhibit 4.5 to the Company's Annual Report on Form 10-KSB for year ended December 31, 2003, and incorporated herein by reference). --------------------------------------------------------------------------- 10.4 Stock Option Agreement Between the Registrant and Winfried Klimek (filed as Exhibit 10.6 to the Company's Current Report on Form 8-K for an event of January 14, 2004, and incorporated herein by reference). --------------------------------------------------------------------------- 10.5 Stock Option Agreement Between the Company and Earl Anderson (filed as Exhibit 4.6 to the Company's Annual Report on Form 10-KSB for year ended December 31, 2003,and incorporated herein by reference). --------------------------------------------------------------------------- 10.6* Warrant Agreement Between the Company and Jack Grubman. --------------------------------------------------------------------------- 23.1* Independent Auditor's Consent from Goldstein Lewin & Co. --------------------------------------------------------------------------- 23.2* Independent Auditor's Consent from M. B. Nayak & Co. --------------------------------------------------------------------------- 24.1 Power of Attorney (included in the signature page of this Registration Statement). --------------------------------------------------------------------------- 99.1* Reoffer Prospectus (In accordance with Part I of Form S-3). --------------------------------------------------------------------------- * Filed herewith. ITEM 9. UNDERTAKINGS. (A) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement; (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; provided, however, that the undertakings set forth in paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (B) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (C) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act, the Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in New York, New York, on this 15th day of June, 2004. DISTINCTIVE DEVICES, INC., /s/ Sanjay Mody ------------------------------ By: Sanjay Mody Title: Chief Executive Officer and President POWER OF ATTORNEY Each person whose signature appears below constitutes and appoints Sanjay Mody his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign any and all amendments (including post-effective amendments) and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. SIGNATURE TITLE DATE /s/ Sanjay Mody - ----------------------------------- Sanjay Mody Director, CEO, CFO, June 15, 2004 President and Treasurer /s/ Alexander Ammosov - ----------------------------------- Alexander Ammosov Director June 15, 2004 /s/ Earl M. Anderson, Jr. - ----------------------------------- Earl M. Anderson, Jr. Director June 15, 2004 /s/ Walter E. Freeman - ----------------------------------- Walter E. Freeman Director June 15, 2004 /s/ Winfried Klimek - ----------------------------------- Winfried Klimek Director June 15, 2004 - ----------------------------------- Shrikant C. Mehta Director June __, 2004 INDEX TO EXHIBITS ---------------------------------------------------------------------------- EXHIBIT NUMBER DOCUMENT ---------------------------------------------------------------------------- 5.1 Opinion of Thelen Reid & Priest. ---------------------------------------------------------------------------- 10.6 Warrant Agreement between the Company and Jack Grubman. ---------------------------------------------------------------------------- 23.1 Independent Auditor's Consent from Goldstein Lewin & Co. ---------------------------------------------------------------------------- 23.2 Independent Auditor's Consent from M. B. Nayak & Co. ---------------------------------------------------------------------------- 99.1 Reoffer Prospectus (In accordance with Part I of Form S-3). ---------------------------------------------------------------------------- EX-5 2 ex5_1.txt EX. 5.1 - OPINION OF THELEN REID & PRIEST LLP EXHIBIT 5.1 THELEN REID & PRIEST LLP Attorneys at Law ------------------------ 875 Third Avenue New York, NY 10022-6225 Tel. 212.603.2000 Fax 212.603.2001 www.thelenreid.com June 15, 2004 The Securities and Exchange Commission 450 Fifth Street, N.W. Washington, DC 20549 Re: DISTINCTIVE DEVICES INC. - REGISTRATION STATEMENT ON FORM S-8 ------------------------------------------------------------- Ladies and Gentlemen: We have acted as counsel to Distinctive Devices, Inc., a Delaware corporation (the "Company"), in connection with a registration statement on Form S-8 covering 4,700,000 shares (the "Shares") of the Company's common stock, $0.001 par value, of Distinctive Devices, Inc., issuable by the Company in connection with (1) its 2002 Stock Option Plan (the "Plan"), (2) a Stock Option Agreement between the Company and Winfried Klimek, dated January 14, 2004 and amended April 20, 2004, (3) a Stock Option Agreement between the Company and Sanjay Mody, dated January 14, 2004 and amended April 20, 2004, (4) a Stock Option Agreement between the Company and Earl Anderson, dated January 14, 2004 and amended April 20, 2004 and (5) a Warrant Agreement between the Company and Jack Grubman, dated February 25, 2004 (collectively the "Executive Option and Warrant Agreements"). In connection with this opinion, we have examined the Registration Statement, the Plan, the Executive Option and Warrant Agreements and the Company's Certificate of Incorporation and By-laws (each as amended to date), copies of the records of corporate proceedings of the Company, and such other documents as we have deemed necessary to enable us to render the opinion hereafter expressed. In our examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals and the conformity with original documents of all documents submitted to us as certified or photostatic copies. As to any facts that we did not independently establish or verify, we have relied without independent investigation upon statements, representations and certificates of officers of the Company. Based upon and subject to the foregoing, we are of the opinion that the Shares, when issued in accordance with the Plan and the Executive Option and Warrant Agreements, will be legally issued, fully paid and non-assessable. EXHIBIT 5.1 This opinion is limited to the federal laws of the United States of America and the General Corporation Law of the State of Delaware and we express no opinion as to the effect of the laws of any other State of the United States or any other jurisdiction. We hereby consent to the use of this opinion as an exhibit to the Registration Statement and the reoffer prospectus included as an exhibit to the Registration Statement. This opinion is limited to laws currently in effect on the date hereof and to the facts as they currently exist. We assume no obligation to revise, supplement or otherwise update this opinion. Very truly yours, /s/ Thelen Reid & Priest LLP THELEN REID & PRIEST LLP EX-10 3 ex10_6.txt EXH. 10.6 - WARRANT AGREEMENT EXHIBIT 10.6 VOID AFTER 5:00 P.M., EASTERN TIME, ON FEBRUARY 24, 2014 DISTINCTIVE DEVICES, INC. WARRANT AGREEMENT ----------------- No. W-04-G1 200,000 Shares DISTINCTIVE DEVICES, INC., a Delaware corporation (the "Company"), hereby certifies that JACK B. GRUBMAN (the "Initial Holder"), is entitled, subject to the terms set forth below, to exercise warrants (the "Warrants") to purchase from the Company up to Two Hundred Thousand (200,000) shares (the "Shares") of the Company's Common Stock at an exercise price of one dollar and sixty-five cents ($1.65) per Share, subject to adjustment from time to time pursuant to Section 3 hereof (the "Exercise Price"). The term "Shares" means, unless the context otherwise requires, shares of the Company's Common Stock, par value $.001 per share, or other securities or property at the time deliverable upon the exercise of the Warrants. The Warrants herein are being issued by the Company as consideration for the services to be provided by the Initial Holder, pursuant to a Consulting Agreement, dated February 25, 2004, between the Company and the Initial Holder. 1.1 Exercise. 1.1 Vesting. (a) General. The Warrants shall vest as to 66,666 Shares (subject to Sections 3 and 5 hereof) on each of December 15, 2004 and December 15, 2005, and as to 66,667 Shares (subject to Sections 3 and 5 hereof) on December 15, 2006. (b) Change of Control. In the event of a change in control of the Company, any Warrants that have not vested pursuant to Subsection (a) above shall vest and shall be immediately exercisable. For purposes of this Agreement, a "change in control" shall mean any of the following events: (a) the Company receives a report on Schedule 13D filed with the Securities and Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") disclosing that any person, group, corporation or other entity is the beneficial owner, directly or indirectly, of twenty percent (20%) or more of the outstanding Common Stock of the Company; (b) any person (as such term is defined in Section 13(d) of the Exchange Act), group, corporation or other entity other than the Company or any subsidiary, purchases shares pursuant to a tender offer or exchange offer to acquire any Common Stock of the Company for cash, securities or any other consideration, provided that after consummation of the offer, the person, group, corporation or other entity in question is the beneficial owner (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of twenty percent (20%) or more of the outstanding Common Stock of the Company (calculated as provided in paragraph (d) of Rule 13d-3 under the Exchange Act in the case of rights to acquire common stock); or (c) the stockholders of the Company approve (i) any consolidation or merger of the Company in which the Company is not the continuing or surviving EXHIBIT 10.6 corporation or pursuant to which shares of Common Stock would be converted into cash, securities or other property, or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company. (c) Termination. In the event that the Consulting Agreement is terminated either by reason of a material breach thereof by the Initial Holder or by the Initial Holder, then all Warrants not vested at the date of such termination shall be terminated. In the event that the Consulting Agreement is terminated other than for the reasons specified in the preceding sentence, the terms and conditions of this Warrant, including the vesting provisions, shall remain in full force and effect. 1.2 Timing of Exercise. The Warrants shall be exercisable in whole or in part, subject to vesting, at any time or from time to time after December 15, 2004 and expiring at 5:00 P.M., New York time, on February 24, 2014 (the "Expiration Date"), subject to earlier termination as provided herein, and may not be exercised thereafter. 1.3 Manner of Exercise. The purchase rights evidenced by this Agreement shall be exercised by the Initial Holder or any person permitted by Section 6.1 herein (collectively, the "Holder"), by surrendering this Agreement, together with the Notice of Exercise in the form of Exhibit A hereto duly executed by the Holder, to the Company at its principal office (or such other office as may be designated by the Company to the Holder), accompanied by payment (by wire transfer or by certified or official bank check) of the Exercise Price. 1.4 Partial Exercise. The Warrants may be exercised for less than the full number of Shares at the time called for hereby, in which case the number of shares of Common Stock receivable upon exercise as a whole, and the sum payable upon the exercise of the Warrants as a whole, shall be proportionately reduced. Upon any such partial exercise, the Company at its expense will forthwith issue to the Holder a new Agreement or Agreements of like tenor calling for the number of shares of Common Stock as to which the Warrants have not been exercised, such Agreement or Agreements to be issued in the name of the Holder. 2. Delivery of Stock Certificates Upon Exercise. As soon as practicable after the exercise of the Warrants, and in any event within five (5) business days thereafter, the Company, at its expense, will cause to be issued in the name of and delivered to the Holder a certificate or certificates for the number of shares of Common Stock to which the Holder shall be entitled upon such exercise. Any shares of Common Stock as to which the Warrants are exercised shall be deemed issued on and as of the date of such exercise, and the Holder shall thereupon be deemed to be the owner of record of such shares. 3. Anti-Dilution Adjustments. 3.1 Change in Capitalization. In case of any stock split, stock dividend or similar transaction which increases or decreases the number of outstanding shares of Common Stock, appropriate adjustment shall be made by the Board of Directors of the Company to the number of Shares which may be purchased upon exercise of the Warrants and to the Exercise Price per Share. 2 EXHIBIT 10.6 3.2 Consolidation, Merger and Sale of Assets. (a) In case of any consolidation of the Company with or a merger of the Company into another corporation or in case of any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety, and upon any such consolidation, merger, sale or conveyance (i) the surviving entity is registered under the Exchange Act and (ii) the consideration to be received by the holders of the Company's Common Stock includes publicly traded equity interests in the surviving entity or its parent corporation, the Company agrees that a condition of such transaction will be that the successor or purchasing corporation, as the case may be, shall assume the obligations of the Company hereunder in writing. In the case of any such consolidation, merger or sale or conveyance, the Holder shall have the right until the Expiration Date upon payment of the Exercise Price in effect immediately prior to such action, to receive the kind and amount of shares and other securities and/or property which he would have owned or have been entitled to receive after the happening of such consolidation, merger, sale or conveyance had these Warrants been exercised immediately prior to such action, subject to adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 3. The provisions of this Section 3.2(a) shall similarly apply to successive consolidations, mergers, sales or conveyances. (b) In case of any consolidation of the Company with or a merger of the Company into another corporation or in case of any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety, and upon any such consolidation, merger, sale or conveyance (i) the surviving entity is not registered under the Exchange Act or (ii) the consideration to be received by the holders of the Company's Common Stock does not include any publicly traded equity interests in the surviving entity or its parent corporation, the Company agrees that a condition of such transaction will be that the Company shall mail to the Holder at the earliest applicable time (and, in any event not less than ten (10) days before any record date for determining the persons entitled to receive the consideration payable in such transaction) written notice of the transaction. Such notice shall also set forth facts as shall indicate the effect of such action (to the extent such effect may be known at the date of such notice) on the Exercise Price of and the kind and amount of the shares of stock and other securities and property deliverable upon exercise of these Warrants. Upon the closing of the transaction referenced in the foregoing notice, the Warrants to the extent then unexercised shall terminate. 3.3 Exchanges and Distributions With Respect to Common Stock. If the Company shall exchange for its Common Stock or distribute with respect to its Common Stock other securities issued by it, the Company shall give notice thereof to the Holder, and the Holder shall have the right thereafter (until the Expiration Date) to exercise the Warrants for the kind and amount of shares of stock and other securities retained or received by a holder of the number of shares of Common Stock of the Company into which the Warrants might have been exercised immediately prior to such exchange or distribution, subject to adjustment as provided hereinabove. 3.4 Officer's Certificate. Whenever the Exercise Price per Share or the number of shares of Common Stock subject to the Warrants is adjusted, the Company shall promptly mail to the Holder a notice of adjustment, which notice shall include a brief statement of the facts requiring the adjustment and the 3 EXHIBIT 10.6 manner of computing it and shall be certified by the Chief Financial Officer of the Company. The determination of the adjustment shall be made by the Company in its sole discretion and shall be final and binding upon the Holder. 4. Shares to Be Fully Paid; Reservation of Capital Stock Issuable Upon Exercise of Warrants. The Company covenants and agrees that any shares issued hereunder will, upon issuance, be fully paid and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof. The Company shall at all times reserve and keep available out of its authorized but unissued capital stock, solely for the issuance and delivery upon the exercise of the Warrants, such number of its duly authorized shares of Common Stock as from time to time shall be issuable upon the exercise of these Warrants. 5. Fractional Shares. The Company shall not issue fractions of shares of Common Stock upon exercise of the Warrants or scrip in lieu thereof. If any fraction of a share of Common Stock would, except for the provisions of this Section 5, be issuable upon exercise of the Warrants, then the number of shares of Common Stock to be issued shall be rounded up or down to the nearest whole share. 6. Transfer Restrictions 6.1 Transfer. Subject to the prior written consent of the Company, a Holder, including the Initial Holder or any subsequent Holder, may transfer this Warrant only to (i) any entity controlled by, controlling or under common control of the Holder, or for which the Holder is acting as the representative, (ii) to one or more shareholders, members, directors, officers or employees of the Holder, if an entity, or (iii) any member of the immediate family (which shall be deemed to include a spouse, parent or child) of an individual Holder or trust for the benefit of any such individual. Prior to any such transfer, the Holder must deliver the Assignment Form in the form of Exhibit B hereto and provide information to the Company, in writing, regarding the proposed transferee sufficient for the Company to determine the eligibility of such transferee under this Section 6 and for such transferee to be entitled to the benefits of Section 7 in accordance with Section 7.10 herein. 6.2 Securities Laws. The Holder of this Warrant, by accepting delivery of the same, hereby: (a) acknowledges that any shares of Common Stock issued pursuant to the exercise of the Warrants may not be registered under the Securities Act of 1933, as amended (the "Securities Act"), at the time issued; (b) agrees that, upon the exercise of the Warrants, if the Shares subject to the exercise are not then covered by an effective Registration Statement (as defined in Section 7.1 herein) filed under the Securities Act, such Shares shall be restricted on resale or other transfer, and he shall make the customary representations and warranties as may be requested by counsel to the Company in order for the Company to properly rely upon Section 4(2) of the Securities Act regarding exemption from registration thereunder, and, in connection with such exemption, that any certificates representing shares of Common Stock issued pursuant to the Warrants would reflect an appropriate legend regarding restrictions upon transferability; and 4 EXHIBIT 10.6 (c) agrees to indemnify the Company, and hold it harmless from and against, any and all losses, expenses (including attorneys' fee), costs and damages arising from or relating to any violation of applicable state securities or "blue sky" laws in connection with the issuance, sale, delivery or exercise of the Warrants and the issuance, sale and delivery of shares of Common Stock upon any exercise of the Warrants. 7. Registration Under the Securities Act of 1933. 7.1 Piggyback Registration. (a) If at any time and from time to time after December 15, 2004 and prior to the Expiration Date, the Company proposes to register shares of its Common Stock under the Securities Act on any form for registration thereunder (the "Registration Statement") for the account of stockholders (other than one relating to (i) a registration of shares of Common Stock underlying a stock option, restricted stock, stock purchase or compensation or incentive plan or of stock issued or issuable pursuant to any such plan, or a dividend investment plan; (ii) a registration of securities proposed to be issued in exchange for securities or assets of, or in connection with a merger or consolidation with, another corporation or other entity; (iii) a registration of securities proposed to be issued in exchange for other securities of the Company; or (iv) a registration of securities proposed to be issued to generate proceeds to be used to repay debt obligations of the Company) in a manner which would permit registration of the Shares for sale to the public under the Securities Act (a "Piggyback Registration"), it will at such time give prompt written notice to the Holder of its intention to do so and of the Holder's rights under this Section 7.1 to register the Holder's Shares (the "Section 7.1 Notice"). The rights described in this Section 7.1 are referred to as "Piggyback Registration Rights". Upon the written request of the Holder to the Company, to be received by the Company within ten (10) days after the giving of any Section 7.1 Notice, setting forth the number of Shares, in no event fewer than Fifty Thousand (50,000), intended to be disposed of by the Holder, and the intended method of disposition thereof, the Company will include in the Registration Statement the Shares, which the Holder has requested to register, to the extent provided in this Section 7. (b) The Company shall be obligated to file and cause the effectiveness of only two (2) Piggyback Registrations. The Shares set forth in the Section 7.1 Notice are referred to for purposes of this Section 7, the "Registrable Shares". The Holder shall not have the right to demand that the Company file a Registration Statement under the Securities Act covering the Holder's Shares. 7.2 Suspension in Filing. (a) If the Company determines, in its good faith reasonable judgment, that it should withdraw any Registration Statement previously filed pursuant to Section 7.1 because the Company is engaged in or in good faith plans to engage in any financing, acquisition or other material transaction which would be adversely affected by the filing or maintenance of a Registration Statement otherwise required to be filed or maintained pursuant to this Section 7, or that the Company is in the possession of material nonpublic information required to be disclosed in such Registration Statement or an amendment or supplement thereto, the disclosure of which in such Registration Statement would be materially disadvantageous to the Company (a "Disadvantageous Condition"), the 5 EXHIBIT 10.6 Company shall be entitled to postpone for the shortest reasonable period of time (but not exceeding 180 days from the date of the determination), the filing of such Registration Statement or, if such Registration Statement has already been filed, may withdraw such Registration Statement and shall promptly give the Holder written notice of such determination, containing a general statement of the reasons for such postponement and an approximation of the anticipated delay. The Company's right to delay a request for registration or to withdraw a Registration Statement pursuant to this Section 7.2 may not be exercised more than once in any twelve (12) month period. (b) If the Company determines to take any action pursuant to Sub-section (a) above after a Registration Statement filed, upon receipt of any notice of suspension, the Holder shall forthwith discontinue use of the prospectus contained in such Registration Statement. In addition, if so directed by the Company, the Holder shall deliver to the Company all copies of the prospectus then covering such Registrable Shares current at the time of receipt of such notice. If no Registration Statement has yet been filed, at the request of the Company the Holder shall return all drafts of the prospectus covering such Registrable Shares. 7.3 Company Covenants. Whenever required under this Section 7 to include Registrable Shares in a Registration Statement, the Company shall, as expeditiously as reasonably possible: (a) Use its commercially reasonable efforts to cause such Registration Statement to become effective and cause such Registration Statement to remain effective until the earlier of the Holder have completed the distribution of all his Registrable Shares described in the Registration Statement or six (6) months from the effective date of the Registration Statement (or such later date as may be appropriate by reason of suspensions of the effectiveness of the Registration Statement as provided hereunder). The Company will also use its commercially reasonable efforts to, during the period that such Registration Statement is required to be maintained hereunder, file such post-effective amendments and supplements thereto as may be required by the Securities Act and the rules and regulations thereunder or otherwise to ensure that the Registration Statement does not contain any untrue statement of material fact or omit to state a fact required to be stated therein or necessary to make the statements contained therein, in light of the circumstances under which they are made, not misleading; provided, however, that if applicable rules under the Securities Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment that (i) includes any prospectus required by Section 10(a)(3) of the Securities Act or (ii) reflects facts or events representing a material or fundamental change in the information set forth in the Registration Statement, the Company may incorporate by reference information required to be included in (i) and (ii) above to the extent such information is contained in periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the Registration Statement. (b) Prepare and file with the SEC such amendments and supplements to such Registration Statement, and the prospectus used in connection with such Registration Statement, as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement. 6 EXHIBIT 10.6 (c) Furnish to the Holder such numbers of copies of a prospectus, including a preliminary prospectus as amended or supplemented from time to time, in conformity with the requirements of the Securities Act, and such other documents as it may reasonably request in order to facilitate the disposition of Registrable Shares owned by the Holder. (d) Use its commercially reasonable efforts to register and qualify the securities covered by such Registration Statement under such other federal or state securities laws of such jurisdictions as shall be reasonably requested by the Holder; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act. (e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. (f) Notify the Holder, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, (i) when the Registration Statement or any post-effective amendment and supplement thereto has become effective; (ii) of the issuance by the SEC of any stop order or the initiation of proceedings for that purpose (in which event the Company shall make every effort to obtain the withdrawal of any order suspending effectiveness of the Registration Statement at the earliest possible time or prevent the entry thereof); of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Shares for sale in any jurisdiction or the initiation of any proceeding for such purpose; and (iv) of the happening of any event as a result of which the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. (g) Cause all Registrable Shares registered thereunder to be listed on each securities exchange or quotation service on which similar securities issued by the Company are then listed or quoted. 7.4 Furnish Information. It shall be a condition precedent to the obligation of the Company to take any action pursuant to this Section 7 with respect to the Registrable Shares that the Holder shall furnish to the Company such information regarding the Holder, the Registrable Shares held by the Holder, the intended method of disposition of such securities and such other information as shall be reasonably required by the Company or any underwriter to effect the registration of the Holder's Registrable Shares. 7.5 Expenses of Registration. The Company shall bear and pay all expenses incurred in connection with any registration, filing or qualification of Registrable Shares with respect to the registrations effected pursuant to Section 7.1 for the Holder, including (without limitation) all registration, filing and qualification fees, printers and accounting fees relating or apportionable thereto, but excluding underwriting discounts and commissions relating to Registrable Shares; provided, however, that the Company shall not bear the cost of any professional fees or costs of accounting, financial or 7 EXHIBIT 10.6 legal advisors to the Holder. Notwithstanding the foregoing, the Holder shall pay all registration expenses that he is required to pay under applicable law. 7.6 Underwriting Requirements. In connection with any offering involving an underwriting of shares of the Company's capital stock, the Company shall not be required under Section 7.1 to include any of the Holder's Registrable Shares in such underwriting unless the Holder accepts the terms of the underwriting as agreed upon between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters), and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company, and the Holder enters into such lock-up agreements as may be required of other selling stockholders in such Registration Statement. If the total amount of securities, including Registrable Shares, requested by stockholders to be included in such offering exceeds the amount of securities to be sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters determine in their sole discretion will not jeopardize the success of the offering (the securities so included to be apportioned pro rata among the selling stockholders according to the total amount of securities entitled to be included therein owned by each selling stockholder or in such other proportions as shall mutually be agreed to by such selling stockholders). 7.7 Delay of Registration. The Holder shall not have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 7. 7.8 Indemnification. In the event that any Registrable Shares are included in a Registration Statement under this Section 7: (a) To the extent permitted by law, the Company will indemnify and hold harmless the Holder, any underwriter (as defined in the Securities Act) for the Holder and each person, if any, who controls the Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, or the Exchange Act, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in such Registration Statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, or any rule or regulation promulgated under the Securities Act, or the Exchange Act, and the Company will pay to the Holder, underwriter or controlling person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this Section 7.8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability, 8 EXHIBIT 10.6 or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by the Holder, underwriter or controlling person. (b) To the extent permitted by law, the Holder will indemnify and hold harmless the Company, its directors, officers, and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act, any underwriter, any other holder selling securities in such Registration Statement and any controlling person of any such underwriter or other holder, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Securities Act, or the Exchange Act, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by the Holder expressly for use in connection with such registration; and the Holder will pay, as incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this Section 7.8(b), in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this Section 7.8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; provided, further, that, in no event shall any indemnity under this Section 7.8(b) exceed the cash value of the gross proceeds from the offering received by the Holder. (c) Promptly after receipt by an indemnified party under this Section 7.8 of notice of the commencement of any action (including any governmental action), such indemnified party shall, if a claim in respect thereof is to be made against any indemnifying party under this Section 7.8, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly notified, to assume the defense thereof with counsel selected by the indemnifying party and approved by the indemnified party (whose approval shall not be unreasonably withheld); provided, however, that an indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 7.8, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 7.8 (d) If the indemnification provided for in this Section 7.8 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage, or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified 9 EXHIBIT 10.6 party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. (e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. (f) The obligations of the Company and the Holder under this Section 7.8 shall survive the completion of any offering of Registrable Shares in a Registration Statement under this Section 7, and otherwise. 7.9 Reports Under Securities Exchange Act of 1934. With a view to making available to the Holder the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit the Holder to sell shares of the Company's Common Stock to the public without registration, the Company agrees to: (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 Exchange Act; and (c) furnish to the Holder, so long as the Holder owns any Registrable Shares, forthwith upon request (i) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (ii) such other information as may be reasonably requested in availing the Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form. 7.10 Permitted Transferees. The rights to cause the Company to register Registrable Shares granted to the Holder by the Company under this Section 7 may be assigned in full by a Holder in connection with a transfer by the Holder of his Registrable Shares if: (a) the Holder gives prior written notice to the Company; (b) such transferee agrees to comply with and be bound by the terms and provisions of this Agreement; (c) such transfer is otherwise in compliance with this Agreement and (d) such transfer is otherwise effected in accordance with applicable securities laws. Except as specifically permitted by this Section 7.10, the rights of the Holder with respect to Registrable Shares as set out herein shall not be transferable to any other person, and any attempted transfer shall cause all rights of the Holder therein to be forfeited. 10 EXHIBIT 10.6 7.11 Termination of Registration Rights. The right of the Holder to request inclusion in any Piggyback Registration pursuant to Section 7.1 shall terminate if all Shares held by the Holder may immediately be sold under Rule 144(k) after the Warrants have been exercised in full. 7.12 Form S-8. In the event that the Holder's Shares are eligible to be registered under the Securities Act under a registration statement on Form S-8 (or any successor form that provides for automatic effectiveness), the Company shall prepare and file a Form S-8 registration statement on or before December 15, 2004 and shall thereafter use its best efforts to maintain the effectiveness thereof until the Holder has sold or otherwise transferred all of his Shares. Provided that the Company complies with its obligations under this Section 7.12, the right of the Holder to request inclusion of his Shares in any Piggyback Registration Statement to Section 7.1 shall terminate. 8. Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of the Warrants and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement, and if requested by the Board of Directors, a bond in an amount reasonably satisfactory to it, or (in the case mutilation) upon surrender and cancellation hereof, the Company will issue in lieu thereof new Warrants of like tenor. 9. Rights as a Warrant Holder. The Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or equity except with respect to certificates representing shares of Common Stock issued upon exercise of the Warrants in accordance with Section 2 hereof. The rights of the Holder are limited to those expressed in this Agreement and are not enforceable against the Company except to the extent set forth herein. Prior to due presentment for transfer of this Agreement, the Company may deem and treat the Holder as the absolute owner of the Warrants for purposes of any exercise hereof and for all other purposes and such right of the Company shall not be affected by any notice to the contrary. 10. Subdivision of Rights. The Warrants (as well as any new warrants issued pursuant to the provisions of this Section) are exchangeable upon the surrender hereof by the Holder at the principal office of the Company for any number of new warrants of like tenor and date representing in the aggregate the right to subscribe for and purchase the number of shares of Common Stock of the Company that may be subscribed for and purchased hereunder. 11. Sending of Notices. All notices and other communications with respect to this Agreement shall be in writing and sent by express mail or courier service or by personal delivery, if to the Holder, to c/o Magee Group, LLC, the Hippodrome Building, 1120 Avenue of the Americas, Suite 4160, New York, NY 10036, and if to the Company, to One Bridge Plaza, Suite 100, Fort Lee, New Jersey 07024, or to such other address as either the Holder or the Company may duly give to the other. 12. Headings. The headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning of the terms hereof. 11 EXHIBIT 10.6 13. Change, Waiver, Discharge or Termination. This Agreement sets forth the entire agreement between the Company and the Holder with respect to the matters herein. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. 14. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to the principles of conflicts of law. DISTINCTIVE DEVICES, INC. By: /s/ Sanjay Mody ------------------------------------ Dated: February 25, 2004 Sanjay Mody, Chief Executive Officer and President 12 EXHIBIT 10.6 EXHIBIT A --------- NOTICE OF EXERCISE ------------------ (To be executed by a Holder desiring to exercise the right to purchase Shares pursuant to a Warrant.) The undersigned Holder of Warrants hereby: (a) Irrevocably elects to exercise the Warrants to the extent of purchasing _______ Shares; (b) Makes payment in full of the aggregate Exercise Price for those Shares in the amount of $___________ by wire transfer or the delivery of certified funds or a bank cashier's check in the amount of $___________; (c) Requests that a certificate for such Shares be issued in the name of the undersigned, or, if the name and address of some other person is specified below, in the name of such other person: _____________________________________________ _____________________________________________ _____________________________________________ (Name and address of person other than the undersigned in whose name Shares are to be registered.) (d) Requests, if the number of Shares purchased are not all the Shares purchasable pursuant to the unexercised portion of the Warrants, that new Warrants of like tenor for the remaining Shares purchasable pursuant to the Agreement be issued and delivered to the undersigned at the address stated below. ______________________ Employer ID Number: Dated:___________________________ By:_______________________________________ Name: Title: (This signature must conform in all respects to the name of the Holder as specified on the face of the Agreement.) Address:______________________________ ______________________________________ Stock Warrant No.: ## 13 EXHIBIT 10.6 EXHIBIT B --------- ASSIGNMENT FORM --------------- FOR VALUE RECEIVED, the undersigned, ________________________________, hereby sells, assigns and transfers unto: Name: ________________________________________________ (Please type or print in block letters.) Address: _____________________________________________ _____________________________________________ the right to purchase ______________ shares (the "Shares") of Distinctive Devices, Inc. (the "Company") pursuant to the terms and conditions of the Warrants held by the undersigned. The undersigned hereby authorizes and directs the Company (i) to issue and deliver to the above-named assignee at the above address new Warrants pursuant to which the rights to purchase being assigned may be exercised, and (ii) if there are rights to purchase Shares remaining pursuant to the undersigned's Warrant after the assignment contemplated herein, to issue and deliver to the undersigned at the address stated below new Warrants evidencing the right to purchase the number of Shares remaining after issuance and delivery of the Warrants to the above-named assignee. Except for the number of Shares purchasable, the new Warrants to be issued and delivered by the Company are to contain the same terms and conditions as the undersigned's Warrants. This Assignment is subject to receipt by the Company of such investment representations by the assignee, as may be reasonably required under the Securities Act of 1933, as amended, and other provisions governing transfer set forth in the Agreement. To complete the assignment contemplated by this Assignment Form, the undersigned hereby irrevocably constitutes and appoints ______________________________ as the undersigned's attorney-in-fact to transfer the Warrants and the rights thereunder on the books of the Company with full power of substitution for these purposes. ______________________ Dated:___________________________ By:_______________________________________ Name: Title: (This signature must conform in all respects to the name of the Holder as specified on the face of the Agreement.) Address:______________________________ ______________________________________ Tax Identification No.:_______________ 14 EX-23 4 ex23_1.txt EX. 23.1 - CONSENT FROM GOLDSTEIN LEWIN & CO. EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated March 25, 2004, relating to the financial statements of Distinctive Devices, Inc., which appears in Distinctive Devices, Inc.'s Annual Report on Form 10-KSB for the year ended December 31, 2003. We also consent to the reference to us under the heading "Experts" in such Prospectus. /s/ Goldstein Lewin & Co. Boca Raton, Florida June 15, 2004 EX-23 5 ex23_2.txt EX. 23.2 - CONSENT FROM M. B. NAYAK & CO. EXHIBIT 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated 8th March 2004, relating to the financial statements of Distinctive Devices (India) Private Limited, an Indian company, which appears in Distinctive Devices, Inc.'s Annual Report on Form 10-KSB for the year ended December 31, 2003. For M. B. Nayak & Co. Chartered Accountants /s/ Mayur Nayak Proprietor Mumbai Dated: 15 June 2004 EX-99 6 ex99_1.txt EX. 99.1 - REOFFER PROSPECTUS EXHIBIT 99.1 REOFFER PROSPECTUS Distinctive Devices, Inc. 4,500,000 Shares of Common Stock This Prospectus relates to up to 2,000,000 shares of the common stock, $0.001 par value, of Distinctive Devices, Inc. (the "Common Stock"), a Delaware corporation (the "Company"), that may be issuable to certain named selling stock holders under awards of options granted under our 2002 Stock Option Plan (the "Plan") and up to 2,500,000 shares of Common Stock underlying non-plan stock option agreements between the Company and Sanjay Mody, Winfried Klimek and Earl Anderson (collectively, the "Executive Option Agreements"). The Selling Stockholders, who are listed in the section of this Prospectus entitled "Selling Stockholders", may offer any or all of the shares owned by him that is/are covered by this Prospectus (the "Shares") for resale from time to time. We will not receive any proceeds from the sale of the Shares. We will pay all of the expenses associated with this Prospectus. The Selling Stockholders will pay the other costs, if any, associated with the sale of the Shares. The Selling Stockholders may sell the Shares through various means, including directly or indirectly to purchasers, in one or more transactions on any stock exchange or stock market on which the Shares are traded at the time of sale, in privately negotiated transactions, or through a combination of these methods. These sales may be at fixed prices, which may change, at market prices available at the time of sale, at prices based on the available market price at the time of sale, or at negotiated prices. If the Shares are sold through underwriters, broker-dealers, or agents, these parties may be compensated for their services in the form of discounts or commissions, which is deemed to be "underwriting compensation". Such underwriting compensation shall be the sole responsibility of the Selling Stockholders. If required, the Selling Stockholders will disclose the names of any underwriter(s), applicable commissions or discounts, and any other required information with respect to any particular sales in an accompanying prospectus supplement. For additional information on the Selling Stockholders' possible methods of sale, you should refer to the section in this Prospectus entitled "Plan of Distribution". Some of the Shares that were issued to the Selling Stockholders are "restricted securities" under the Securities Act of 1933, as amended (the "Securities Act"), before their sale under this Prospectus. We have prepared this Prospectus for the sole purpose of registering the Shares under the Securities Act in order to allow the Selling Stockholders to offer and sell the Shares to the public, subject to any contractual limitations on the Selling Stockholders. Our Common Stock is currently traded on an over-the-counter bulletin board under the symbol DDVS. On June 15, 2004, the closing price for our Common Stock was $2.50. Investing in our Common Stock involves risks that are described in the "Risk Factors" section of this Prospectus included within this filing. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. DISTINCTIVE DEVICES, INC. ONE BRIDGE PLAZA, SUITE 100 FORT LEE, NEW JERSEY 07024 (201) 363-9922 The date of this Prospectus is June 15, 2004. TABLE OF CONTENTS Additional Information........................................................3 Incorporation of Documents by Reference.......................................3 Our Company...................................................................3 Risk Factors..................................................................4 Cautionary Note Regarding Forward-Looking Statements..........................4 Use of Proceeds...............................................................5 Description of Securities.....................................................5 Selling Stockholders..........................................................5 Plan of Distribution..........................................................6 Interests of Named Experts and Counsel........................................7 Legal Matters.................................................................7 Indemnification of Directors and Officers.....................................7 You should rely only on the information contained in this Prospectus. We have not authorized anyone to provide you with any information that is different from the information contained in this Prospectus. The Selling Stockholders are offering to sell, and seeking offers to buy, the Shares only in jurisdictions where such offers and sales are permitted. The information contained in this Prospectus is accurate only as of the date of the front cover of this Prospectus, regardless of the time of the delivery of this Prospectus or of any sale of the Shares. Our business, financial condition, results of operations and prospects may have changed since that date. ADDITIONAL INFORMATION The Company has filed with the Securities and Exchange Commission (the "SEC") a registration statement on Form S-8 relating to the Plan and the Executive Option Agreements, including exhibits, under the Securities Act with respect to the Shares (the "Registration Statement"). This Prospectus does not contain all of the information and exhibits set forth in the Registration Statement. For further information regarding Distinctive Devices, Inc. and the Shares, the Company refers you to the Registration Statement. With respect to each such document filed with the SEC as an exhibit to the Registration Statement, reference is made to the exhibit for a more complete description of the matter involved. The Company is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Company files quarterly and annual reports, proxy statements and other information with the SEC. You may read and copy any document that the Company files, including the Registration Statement and its exhibits, at the public reference facilities of the SEC in Washington, D.C. or online at www.sec.gov. Additionally, ----------- you may request a copy of any such document from the Company directly at the address that appears on the first page of this Reoffer Prospectus. INCORPORATION OF DOCUMENTS BY REFERENCE The following documents, which the Company previously filed with the SEC are incorporated by reference in this Registration Statement: (a) The Company's Annual Report on Form 10-KSB for the year ended December 31, 2003; (b) The Company's Quarterly Report on Form 10-QSB for the three months ended March 31, 2004; and (c) The description of Common Stock contained in our Certificate of Incorporation, as amended (filed as Exhibit 3.1 to our quarterly report for the fiscal quarter ended September 30, 2002). In addition, all documents we filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Registration Statement and prior to the filing of a post-effective amendment that indicates that all securities offered have been sold or that deregisters all securities then remaining unsold, are incorporated by reference in this Registration Statement and are a part hereof from the date of filing such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. THE COMPANY The Company through its subsidiaries, operates in two distinct segments: digital television technologies and telecom access equipment. The Company's newly-acquired wholly-owned subsidiary, galaxis technology ag, a German corporation, is involved in developing, manufacturing and marketing digital television technologies and in distributing digital Set-Top-Boxes on terrestrial, cable, satellite and IP platforms. Convergence GmbH, a subsidiary of galaxis, is a leading provider of Multimedia Home Platforms ("MHP") on Linux platform and develops advanced software applications for chip manufacturers. The Company's subsidiary Realtime Systems Ltd., an Indian corporation, designs, manufactures and sells Multi-Service Access Platforms ("MAP") that provide voice, data and video services over existing copper wire infrastructure for both telecom and cable carriers on networking protocols such as ATM, TCP/IP and other application protocol suites. 3 History During the fiscal year ended December 31, 2003, the operating business of the Company was conducted by two subsidiary corporations located in India, namely, Distinctive Devices (India), PLC, based in Mumbai (Bombay) ("DDI-India") and Realtime Systems Ltd., headquartered in New Delhi ("RTS"). DDI-India was organized in September 2001 and is 98.67% owned by the Company. RTS was acquired in December 2002 and 99.97% of its outstanding common stock is held by DDI-India. The Company's involvement in these Indian operations is attributable to Mr. Mody, a native of India, who became the Company's President and CEO in May 2001. He has been a DDI shareholder and director since March 2000. A third subsidiary, International Gemsource, Inc. ("Gemsource"), was formed in January 2002 for the purpose of trading in gemstones. It had no sales activity during 2003, but plans to be active in 2004. A fourth subsidiary, Webpulse Consulting, Inc. ("Webpulse"), was acquired in October 2001. Initially, Webpulse was a provider of software consulting and website management services; it was inactive during 2003. Both companies are based at the Company's offices in Fort Lee, New Jersey. On January 14, 2004, the Company acquired all of the outstanding capital stock of galaxis technology, ag, of Lubeck, Germany ("Galaxis"), together with its subsidiaries OmniScience Multimedia Lab GmbH ("Omniscience") and Convergence GmbH ("Convergence"), in exchange for 6,400,000 shares of the Company's Common Stock. Additionally, the Company issued 3,000,000 shares of our Common Stock to Galaxis for its use to further collateralize its bank borrowings. Under current accounting rules, the 3,000,000 shares are deemed not to be outstanding for financial statement purposes, inasmuch as they are held by a wholly-owned subsidiary. In November 2002, Distinctive Devices, Inc., a New York corporation ("DDI-NY"), which had formed the Company as a wholly-owned subsidiary, merged itself into the Company for the purpose of changing the state of incorporation to the State of Delaware from the State of New York. Immediately prior to the merger, all of the outstanding shares of DDI-NY Preferred Stock were converted into shares of DDI-NY Common Stock, and DDI-NY effected a one-for-six reverse split of the DDI-NY Common Stock. The merger was then concluded on a share-for-share basis. RISK FACTORS The Company's business, including activities of its recently-acquired subsidiary, Galaxis, could be adversely affected by a number of factors including, among others: limited resources and substantial working capital deficits; technology changes in the industries the Company serves; extremely competitive pricing environments in markets the Company serves; reliance upon suppliers of components and sub-assemblies, several with far eastern factories which could be subject to production interruptions; difficulty in effectively managing disparate production, marketing and administrative functions in Germany, India and the U.S.; currency risks associated with the sale of virtually all of the Company's products and services in either Euros or Indian Rupees; the Company's ability to protect the Company's intellectual property, undetected technical problems in products the Company markets; changes in governmental regulations which affect the Company's products or services; and general economic and market conditions. CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS This Prospectus contains forward-looking statements that the Company believes are within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by such acts. These statements describe the Company's attempt to predict future events, such as its plans for future expansion, its ability to achieve satisfactory operating performance, the viability of its business model, its expansion into other businesses and pursuit of other business opportunities, and the Company's intent to focus its business operations in specific geographic markets. The words "may," "expect," "believe," "plan," "intend," "anticipate," "estimate," "continue," and similar expressions, as well as discussions of the Company's strategy and pending transactions, are 4 intended to identify forward-looking statements. Although the Company believes that these forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will in fact occur and caution that actual results may differ materially from those in the forward-looking statements. The important factors listed in the section entitled "Risk Factors," as well as any cautionary language in this Prospectus, provide examples of risks, uncertainties and events that may cause the Company's actual results to differ materially from the expectations described in any forward-looking statements. You should be aware that the occurrence of the events described in these factors and elsewhere in this Prospectus could have an adverse effect on the Company's business, results of operations or financial condition. You should not unduly rely on these forward-looking statements, which speak only as of the date of this filing. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect events or circumstances occurring after the date of this filing or to reflect the occurrence of unanticipated events. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on the Company's behalf, are expressly qualified in their entirety by the forward-looking statements set forth in this Report. USE OF PROCEEDS The Selling Stockholders will receive all of the proceeds from the resale of the Shares. The Company will not receive any of the proceeds from the resale of the Shares. To the extent the Selling Stockholders exercise the options under their Executive Option Agreements to purchase shares of Common Stock offered hereby, the Company would receive up to $1,750,000 from such exercises, all of which funds will be added to the Company's general working capital and used for general business purposes. DESCRIPTION OF SECURITIES TO BE REGISTERED Each share of common stock, $0.001 par value, of the Company has one vote for election of directors and all other matters submitted to a vote of stockholders. Shares of common stock do not have cumulative voting, preemptive, redemption or conversion rights. SELLING STOCKHOLDERS This Prospectus relates to the Shares. The Selling Stockholders may resell any or all of the Shares they own at any time during which this Prospectus is effective. The table below describes, as of June 15, 2004 (a) the name of each Selling Stockholder and his relationship to the Company during the last three years; (b) the number of shares of Common Stock each Selling Stockholder beneficially owned prior to this offering; (c) the number of Shares which may be offered pursuant to this Prospectus by each Selling Stockholder; and (d) the amount and the percentage of the Company's Common Stock that would be owned by each Selling Stockholder after completion of this offering. The information contained in this table may be amended or supplemented from time to time. 5
Beneficial Ownership after the Offering ------------------------------ Name of Seller Relationship to Number of Shares Shares to be Number of Percentage of Company Beneficially Sold Shares Common Stock Owned Prior to the Offering/1/ Sanjay Mody Chief 2,191,667/2/ 1,000,000/5/ 1,191,667 5.6 Executive Officer and President Winfried Director 312,500/3/ 312,500/5/ 0 * Klimek Earl Anderson Director 426,800/4/ 250,000/5/ 176,800 * * less than 1% (1) The number of shares beneficially owned is determined under rules promulgated by the SEC and includes outstanding shares of common stock and options for common stock that have vested or will vest within 60 days. Beneficial ownership is determined under the rules of the SEC, and generally includes voting or investment power with respect to securities. Except as otherwise indicated above, to the Company's knowledge, the persons and entities named in the Selling Stockholder table have sole voting and sole investment power with respect to all securities which they beneficially own. (2) Includes (i) 1,850,000 shares subject to presently exercisable warrants and options, of which 782,500 shares underlie warrants and options held by his spouse, and (ii) 187,500 shares held directly by his spouse. He disclaims beneficial ownership of shares owned by his spouse. Excludes 100,000 shares subject to options which are not presently exercisable. (3) Does not include 937,500 shares subject to options which are not presently exercisable. (4) Includes 287,500 shares subject to presently exercisable options. Does not include 37,500 shares subject to options which are not presently exercisable. (5) The Shares are subject to a pledge agreement between the Selling Security Holder and Twinkle International FZE, an United Arab Emirates company, dated April 20, 2004 (a copy of the pledge agreement is filed as Exhibit 10.4 to the Current Report of Form 8-K filed on April 29, 2004 for an event that occurred on April 20, 2004, and incorporated herein by reference).
The Company prepared this table based on the information supplied to the Company by the Selling Stockholders named in the table. Information about other Selling Stockholders will be set forth in prospectus supplements or post-effective amendments, if required. The Selling Stockholders listed in the above table may have sold or transferred, in transactions exempt from the registration requirements of the Securities Act, some or all of their Shares since the date on which the information in the above table is presented. Information about the Selling Stockholders may change from 6 time to time. Any changed information with respect to which the Company is given notice will be set forth in prospectus supplements. None of the Selling Stockholders who are affiliates of broker-dealers purchased the securities outside of the ordinary course of business or, at the time of the purchase of the securities, had any agreements or understandings, directly or indirectly, with any person to distribute the securities. Because the Selling Stockholders may offer all or some of their common stock from time to time, we cannot estimate the amount of the common stock that will be held by the Selling Stockholders upon the termination of any particular offering. See the section entitled "Plan of Distribution" for further information. PLAN OF DISTRIBUTION None of the Selling Stockholders has advised the Company of any specific plans for the sale, transfer, gift or other disposition of the Shares offered under this Prospectus. However, if any Shares are sold, the Company expects that the Shares will be sold from time to time primarily through transaction on the over-the-counter bulletin board, although sales also may be made in negotiated transactions or otherwise. Sales prices may or may not be related to prevailing market prices on the over-the-counter bulletin board. The Selling Stockholders may effect these transactions by selling Shares to or through broker-dealers, and such broker-dealers may receive customary brokerage commissions and charges or compensation in the form of discounts, concessions or commissions from such Selling Stockholder or the purchaser of the Shares so sold for whom such broker-dealers may act or to whom they may sell as principal or both (which compensation, as to a particular broker-dealer, may be in excess of customary commissions). Shares covered by this prospectus also may be sold under Rule 144 or another exemption under the Securities Act of 1933, as amended (the "Securities Act"), rather than pursuant to this Prospectus. In connection with the sale of the Shares, the Selling Stockholders and any participating broker or dealer may be deemed to be "underwriters" within the meaning of the Securities Act, and any profits on the sale of Shares or commissions they receive may be deemed to be underwriting discounts and commissions under the Securities Act. There is no assurance that any of the Selling Stockholders will sell any or all of the Shares offered by them hereby. NAMED EXPERTS AND COUNSEL The financial statements as of and for the years ended December 31, 2003 and December 31, 2002, incorporated in this prospectus by reference from our Annual Report on Form 10-KSB for the year ended December 31, 2003, have been audited by Goldstein Lewin & Co., independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The validity of the Shares that may be sold using this Prospectus will be passed upon for the Company by Thelen Reid & Priest LLP. LEGAL MATTERS The Company is involved in litigation which it considers routine and incidental to its business. The Company does not expect the results of these actions to have a material adverse effect on our business, results of operations or financial condition. INDEMNIFICATION OF DIRECTORS AND OFFICERS 7 A director of the Company shall not be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporations law ("DGCL"), or (iv)for any transaction from which the director derived any improper personal benefit. If the DGCL is hereafter amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Company shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. The Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, or by or in the right of the Company to procure judgment in its favor, by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, manager, employee or agent of another corporation, partnership, joint venture, limited liability company, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, in accordance with and to the full extent permitted by statute. Expenses (including attorneys' fees) incurred in defending any civil, criminal administrative or investigative action, suit or proceeding may be paid by the Company in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of the director, officer, manager, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Company as authorized by this paragraph. The indemnification provided by this paragraph shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under this Certificate of Incorporation, the By-Laws or any agreement or vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, 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 the heirs, executors and administrators of such a person. 8 -----END PRIVACY-ENHANCED MESSAGE-----