EXHIBIT 10.1
NOTE PURCHASE AGREEMENT
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AGREEMENT, dated as of April 20, 2004, by and between
distinctive
devices, inc., a Delaware corporation (the
"Company"), and twinkle international
fze, an entity formed under the laws of the
United Arab Emirates (the
"Purchaser").
WHEREAS, subject to the terms and conditions herein, the
Company
desires to issue and sell to the Purchaser
an Unsecured Promissory Note in the
principal amount of $4,000,000 (the
"Note"), in the form attached hereto as
Exhibit A, together with warrants (the
"Warrants") to purchase up to 800,000
shares of the Company's Common Stock, $.001
par value (the "Common Stock"),
pursuant to a Warrant Purchase Agreement
(the "Warrant Agreement"), in the form
attached hereto as Exhibit B; and
WHEREAS, the Purchaser desires to purchase the Note and
Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained,
the Company and the Purchaser, hereby
agree as follows:
SECTION 1
PURCHASE, CLOSING
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1.1 Sale and Purchase. Subject to the terms and conditions herein,
and
in reliance upon the representations,
warranties and agreements contained
herein, the Company hereby issues and sells
to the Purchaser, and the Purchaser
hereby purchases from the Company, the Note
and the Warrants (sometimes,
collectively, the "Securities") for
$4,000,000 (the "Purchase Amount") set forth
on the signature page hereto.
1.2 Payment. Upon execution of this Agreement, the Purchaser is
paying
the Purchase Amount to the Company by wire
transfer of immediately available
funds or such other form of payment as
shall be mutually agreed upon by the
Company and the Purchaser, and the Company
is delivering the Note and the
Warrant Agreement to the Purchaser. In
addition, the Company is causing Earl
Anderson, Winfried M. Klimek and Sanjay
Mody, in furtherance of the obligations
of the Company under the Note, to pledge
certain stock option agreements under
which they were granted options to purchase
up to 2,500,000 shares of the
Company's Common Stock, pursuant to a
Pledge Agreement (the "Pledge") in the
form attached hereto as Exhibit C.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company hereby represents and warrants to the Purchaser as
follows:
2.1 Organization,
Qualification. The Company is a corporation duly
organized, validly existing and in good
standing under the laws of the State of
Delaware. The Company is duly qualified or
licensed to do business as a foreign
corporation in good standing in every
jurisdiction where the character of its
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properties, owned or leased, or the nature
of its activities make such
qualification necessary.
2.2 Subsidiaries. The
Company is the direct or indirect beneficial
owner of at least ninety (90%) percent of
all of the issued and outstanding
shares of voting capital stock of the
subsidiaries (the "Subsidiaries") listed
on Exhibit 21 to its Form 10-KSB for the
fiscal year ended December 31, 2003
(the "2003 Form 10-KSB"). Other than the
Subsidiaries listed on such Exhibit 21,
the Company has no subsidiaries and does
not own, of record or beneficially, any
capital stock or equity interest or
investment in any corporation, partnership,
limited liability company, association or
business entity. Each of the
Subsidiaries is a corporation duly
organized, validly existing and in good
standing under the laws of jurisdiction of
its formation.
2.3 Capitalization.
The Company's authorized capital stock, as of
March 31, 2004, consisted of 50,000,000
shares of Common Stock, and 5,000,000
shares of preferred stock, $.001 par value
(the "Preferred Stock"), of which
20,433,902 shares of Common Stock and no
shares of Preferred Stock were issued
and outstanding. The Company has reserved
7,530,550 shares of Common Stock for
issuance upon the exercise of outstanding
options and warrants, including the
shares of Common Stock underlying the
Warrants (the "Warrant Shares"). All of
the issued and outstanding shares of Common
Stock are validly issued, fully paid
and non-assessable. All of the shares of
the Common Stock underlying the
Warrants that would be issued to the
Purchaser pursuant to due exercise of the
Warrant Agreement upon issuance will be
validly issued, fully paid and
non-assessable shares of Common Stock.
Except as disclosed in the 2003 Form
10-KSB, there are no outstanding options,
warrants or other rights of any kind
to acquire any additional shares of capital
stock of the Company or securities
convertible into or exchangeable for, or
which otherwise confer on the holder
thereof any right to acquire, any such
additional shares, nor is the Company
committed to issue any such option,
warrant, right or security.
2.4 Corporate Power.
The Company has all requisite corporate power to
enter into this Agreement and the Warrant
Agreement, issue the Note, grant the
Warrants, and carry out and perform its
obligations under the terms of this
Agreement, the Note and the Warrant
Agreement, and also to own properties owned
by it and to conduct business as being
conducted by it.
2.5 No Restrictive
Agreements. Upon the delivery of the Warrants and
the Warrant Shares in the manner
contemplated thereunder, the Purchaser will
acquire the beneficial and legal, valid and
indefeasible title thereto, free and
clear of all pledges, liens, charges,
claims or options of any kind, except for
restrictions on transfer under federal and
state securities laws. There are no
agreements relating to the voting, purchase
or sale of capital stock between or
among the Company and any of its
stockholders, except as disclosed in the 2003
Form 10-KSB.
2.6 Authorization. All
corporate action on the part of the Company
necessary for the authorization, execution,
delivery and performance by the
Company of this Agreement, the Note and the
Warrant Agreement and for the
authorization, issuance and delivery of the
Note, the Warrants and the Warrant
Shares has been taken. Each of this
Agreement, the Note and the Warrant
Agreement has been duly executed by the
Company and when delivered shall
constitute a valid and binding agreement of
the Company enforceable in
accordance with its respective terms,
except as such enforceability may be
2
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limited by bankruptcy, insolvency or other
similar laws affecting the
enforcement of creditors' rights generally
and general principles of equity.
2.7 Financial
Information. The Company's 2003 Form 10-KSB and its
Current Reports on Form 8-K filed since
October 1, 2003 (collectively, the
"Company's Reports") present fairly the
financial position and results of
operations of the Company at the dates and
for the periods to which they relate
(subject, in the case of the unaudited
financial statements, to normal year-end
adjustments). The audited financial
statements contained in the Company's
Reports have been prepared in accordance
with generally accepted accounting
principles consistently followed throughout
the periods involved (except as may
be otherwise indicated in the notes
thereto).
2.8 Absence of Certain
Changes. At all times since March 31, 2004,
there has not been any event or condition
of any character which has adversely
affected, or may be expected to adversely
affect, the Company's business or
prospects, as a whole, including but not
limited to:
(a) any material adverse change in the condition, assets,
liabilities
(existing or contingent) or business of the
Company from that shown on the
Company's Reports;
(b) any damage, destruction or loss of any of the properties or
assets
of the Company (whether or not covered by
insurance) materially adversely
affecting the business or plans of the
Company;
(c) any declaration, setting aside or payment or other distribution
in
respect of any of the Company's capital
stock, or any direct or indirect
redemption, purchase or other acquisition
of any of such stock by the Company;
(d) any actual or threatened cancellation or adverse modification
of
any contract, licensing agreement,
manufacturing agreement, marketing agreement
or strategic partnering agreement to which
the Company is a party; or
(e) any labor trouble, or any other event or condition of any
character, materially adversely affecting
the business or plans of the Company.
2.9 Taxes. The Company
has filed or will file within the time
prescribed by law (including extensions of
time approved by the appropriate
taxing authority) all tax returns and
reports required to be filed with the
United States Internal Revenue Service and
with the States of Delaware and New
Jerse
