DiaSys Corporation - Exhibit 10.26




EXHIBIT 10.26



THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD
OR OFFERED FOR SALE UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION IN REASONABLY
ACCEPTABLE FORM AND SCOPE TO THE COMPANY OF COUNSEL REASONABLY SATISFACTORY TO
THE COMPANY THAT REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT REQUIRED
UNDER ANY SUCH LAWS OR THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
THE OFFERING OF THIS WARRANT HAS NOT BEEN REVIEWED OR APPROVED BY THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION, OR BY ANY STATE'S SECURITIES ADMINISTRATOR.
THIS WARRANT IS ALSO SUBJECT TO CERTAIN ADDITIONAL TRANSFER RESTRICTIONS PROVIDED
FOR HEREIN. 








DIASYS CORPORATION 

  

  Common Stock Purchase Warrant 

  

  150,000 Shares 

  

  Void after February 3, 2009







 
	1 	Holder's Right to Purchase. 


 

                      
DIASYS CORPORATION, a Delaware corporation (the "Company"), hereby certifies that
for value received, MORRIS SILVERMAN or his assigns (the "Holder"), is entitled,
subject to the terms and conditions set forth in this Common Stock Purchase Warrant
(the "Warrant"), to purchase from the Company up to one hundred fifty thousand
(150,000) fully paid and non-assessable shares of Common Stock, $.001 par value,
of the Company (the "Common Stock") at a purchase price of Sixty-Six Cents ($.66)
per share, at any time or from time to time before 4:00 p.m., Eastern Time, on
February 3, 2009. This right to purchase shares of Common Stock of the Company
may be exercised in whole or in part and is further subject to the terms and provisions
set forth herein. 



                       This
Warrant is issued as partial consideration for a $100,000 loan from the Holder
to the Company, evidenced by a Promissory Note of the Company made on or about
the date hereof. 

 





                       

	2. 	Exercise of Warrant. 




                      
2.1     Manner of Exercise. To exercise this Warrant
in whole or in part, the Holder shall deliver on any Business Day to the Company
at its principal place of business (a) this Warrant, (b) a written notice in substantially
the form of the Subscription Notice attached hereto, of the Holder's election
to exercise this Warrant, which notice shall specify the number of shares to be
purchased (which shall be a whole number of Shares if for less than all the Shares
then issuable hereunder), and (c) payment of the Exercise Price with respect to
such Shares. Such payment may be made, at the option of the Holder, either (a)
by cash, certified or bank cashier's check or wire transfer in an amount equal
to the product of (i) the Exercise Price times (ii) the number of Warrant Interests
as to which this Warrant is being exercised or (b) by a "cashless exercise" of
this Warrant, in which event the Holder shall receive from the Company the number
of Warrant Interests equal to (i) the number of Warrant Interests as to which
this Warrant is being exercised minus (ii) the number of Warrant Interests having
an aggregate value (determined by reference to the Market Value of shares of Common
Stock on the Business Day immediately prior to the date of such exercise), equal
to the product of (x) the Exercise Price times (y) the number of Warrant Interests
as to which this Warrant is being exercised. As used herein, the term "Market
Value" shall mean the closing price of the Company's Common Stock on the American
Stock Exchange (or such other market on which the Company's shares may hereafter
be traded). 



                      
The Company shall, as promptly as practicable and in any event within seven days
after receipt of such notice and payment, execute and deliver or cause to be executed
and delivered, in accordance with such notice, a certificate or certificates representing
the aggregate number of a share of Common Stock specified in said notice together
with cash in lieu of any fractions of a share of Common Stock as provided in Section
1.3. The certificate or certificates so delivered shall be in such denominations
as may be specified in such notice, and shall be issued in the name of the Holder
or such other name or names as shall be designated in such notice. This Warrant
shall be deemed to have been exercised and such certificate or certificates shall
be deemed to have been issued, and such Holder or any other Person so designated
to be named therein shall be deemed for all purposes to have become a holder of
record of Warrant Shares, as of the date the aforementioned notice and payment
is received by the Company. If this Warrant shall have been exercised only in
part, the Company shall, at the time of delivery of such certificate or certificates,
deliver to the Holder a new Warrant evidencing the right to purchase the remaining
shares of Common Stock called for by this Warrant, which new Warrant shall, in
all other respects be identical with this Warrant, or, at the request of the Holder,
appropriate notation may be made on this Warrant which shall then be returned
to the Holder. The Company shall pay all expenses, stamp, documentary and similar
taxes and other charges payable in connection with the preparation, issuance and
delivery of share certificates and new Warrants under this provision. 



                      
2.2     When Exercise Effective. The exercise of this
Warrant shall be deemed to have been effected immediately prior to the close of
business on the business day on which the 









Company shall have received a completed subscription and payment
has hereinabove provided, and at such time the person in whose name any certificate
for shares of Common Stock shall be issuable upon such exercise, as provided in
Section 3.3, shall be deemed to have become the Holder of record of such Common
Stock. 



                      
2.3     Company to Reaffirm Obligations. The Company
will, at the time of exercise of this Warrant, upon the request of the Holder
hereof, acknowledge in writing its continuing obligation to afford to such Holder
all rights (including, without limitation, any right to registration) pursuant
to which such Holder shall continue to be entitled after such exercise in accordance
with the terms of this Warrant; provided that if the Holder of this Warrant shall
fail to make any such request, such failure shall not affect the continuing obligation
of the Company to afford such rights to such Holder. 



                      
2.4     Shares to Be Fully Paid and Nonassessable.
All shares of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and, if such Common Stock is then quoted
on NASDAQ or listed on any national securities exchange (as defined in the Exchange
Act), such Common Stock shall, to the extent permitted under the applicable rules
of such exchange or NASDAQ), be duly quoted or listed thereon, as the case may
be. 



                      
2.5     No Fractional Shares Required to Be Issued.
The Company shall not be required to issue fractional shares of Common Stock upon
exercise of this Warrant. If any fraction of a share of Common Stock would, but
for this Section 1.3, be issuable upon final exercise of this Warrant, in lieu
of such fractional share of Common Stock, the Company shall pay to the Holder
in cash an amount equal to the same fraction of the Fair Market Value of the Company
per share of Common Stock outstanding on the Business Day immediately prior to
the date of such exercise. 





3.                   Reservation
of Stock, Etc. The Company will at all times reserve and keep available, solely
for issuance and delivery upon the exercise of the Warrant, all shares of Common
Stock issuable upon the exercise of the Warrant, All shares of Common Stock issued
upon the exercise of the Warrant shall be duly authorized, validly issued, fully
paid and non-assessable. 





	4. 	Adjustments 




                        4.1
    Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, Etc. In case the Company, after the date hereof, (a) shall
effect a capital reorganization or reclassification of any or all of its capital
stock, or (b) shall consolidate with or merge into any other organization, company,
corporation, partnership, trust, business organization, individual, or group of
individuals (a "Person") and shall not be the continuing or surviving corporation
of such consolidation or merger, or (c) shall permit any other Person to consolidate
with or merge into the Company, and the Company shall be the continuing or surviving
Person but, in connection 



 







with such consolidation or merger, the Common Stock shall be changed into or exchanged
for stock or the securities or property of any other Person, or (d) shall transfer
all or substantially all of its properties and assets to any other Person; then
proper provision shall be made so that the Holder of this Warrant, upon the exercise
hereof at any time after the consummation of such consolidation, merger, transfer,
reorganization or reclassification, shall be entitled to receive the stock and
other securities and property to which such Holder would have been entitled to,
as if such Holder had so exercised this Warrant immediately prior to the consummation
of any such transaction. 



                       4.2
    Adjustments for Stock Dividends; Combinations.
In the event that the Company, at any time or from time to time hereafter, shall
(i) declare or pay any dividend on its capital stock payable in Common Stock;
(ii) effect a subdivision of its outstanding shares into a greater number of shares
of Common Stock or any equity securities convertible into Common Stock (by reclassification
or otherwise than by payment of a dividend in Common Stock); or (iii) combine
or consolidate its outstanding shares of Common Stock, by reclassification or
otherwise, into a lesser number of shares of Common Stock, then, upon the exercise
hereof, at any time after the occurrence of any event described above, the Holder
shall be entitled to receive the Common Stock to which such Holder would have
been entitled if such Holder had exercised this Warrant immediately prior to the
occurrence of such event. 



  

5.                   No
Impairment. The Company will not, by any means, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant. Without limiting
the foregoing, the Company (a) will not permit the par value, if any, of any shares
of stock receivable upon the exercise of this Warrant to exceed the amount payable
therefore upon such exercise, (b) will take such action as may be necessary in
order that the Company may validly and legally issue fully paid and non-assessable
shares of Common Stock upon the exercise of this Warrant, and (c) will not (i)
transfer all or substantially all of its assets to any other Person, or (ii) consolidate
with or merge into any other Person where the Company is not the surviving Person,
unless the other Person acquiring such properties and assets or surviving after
such consolidation or merger shall expressly assume in writing all the terms of
this Warrant. 



6.                  
Transfer Without Registration. Neither this Warrant nor the shares of Common
Stock issuable hereunder have been registered under the Securities Act of 1933,
as amended (the "1933 Act"), or any state securities laws. Until such time, if
any, as such shares shall have been so registered neither this Warrant nor any
shares of Common Stock issued upon the exercise of this Warrant shall be transferred,
sold or assigned, except upon delivery of (a) an opinion (in form and substance
satisfactory to the Company) of counsel satisfactory to the Company to the effect
that such registration is not required or (b) such information as, in the reasonable
opinion of the Company, is necessary in order to establish that such transfer
may be made without registration. Each certificate for shares of Common Stock
issued upon exercise of this Warrant, unless at the time of exercise such shares
are registered under the 1933 Act, shall bear a legend to such effect. Any certificate
issued at any time in exchange or substitution for any certificate bearing such
legend (except a new certificate issued upon completion of a public offering pursuant
to a registration statement under the 1933 Act) shall also bear such legend unless,
in the opinion of counsel selected by the Holder of such certificate (who may
be an employee of such Holder) and









reasonably acceptable to the Company, the securities represented
thereby need no longer be subject to restrictions on resale under the Securities
Act.



	7. 	Registration. 




                       
7.1     Incidental Registration. If at any time the
Company proposes to register under the 1933 Act (on a form on which inclusion
of the Company's Common Stock owned beneficially by a Shareholder is generally
permissible) any of its securities for sale to the public or pursuant to a request
made hereunder by another Shareholder, the Company will give each Shareholder
at least thirty (30) calendar days prior notice of the proposed filing of such
registration statement and will, if requested by any Shareholder, include in such
registration statement such number of shares of the Company's Common Stock issued
or to be issued hereunder as may be specified in such request; provided, however,
that the Company shall not be required to so include in any such registration
statement any such shares if, and only if, the Company and the underwriters with
respect to such offering determine reasonably and in good faith that such inclusion
of such shares would materially interfere with or adversely affect the offering
by the Company pursuant to such registration statement, Upon the effectiveness
of such registration statement, the Company shall use its best efforts to cause
the same to remain in effect for ninety (90) days or for such longer period as
shall be consistent with the purposes of such registration statement, Any such
Shareholder shall pay all of its expenses reasonably attributable to inclusion
of such shares in such registration statement and reasonably attributable to inclusion
of such shares in connection with all appropriate blue sky or other state securities
law qualifications as provided for below. 



                       7.2
    Blue Sky. In connection with any such offering,
the Company shall use its best efforts to effect all appropriate qualifications
(including qualifications requested by a Shareholder) under applicable blue sky
or other state securities laws and (when requested) appropriate compliance with
exemptive regulations issued under such laws or under any other governmental requirements
or regulation, except to the extent that such qualification or compliance would
cause the Company to become subject to the general jurisdiction of any state or
territory. 



                       7.3
    Indemnification. (a) With respect to the registration
under the 1933 Act of the Company's Common Stock pursuant hereto, the Company
will indemnify and hold harmless each Shareholder and its officers and directors,
each underwriter of the securities sold pursuant to this Section, and each person
controlling each such underwriter from and against any losses (excluding underwriters'
commissions), claims, damages or expenses (including legal or other expenses reasonably
incurred in connection with investigation, settling or defending any such claim,
loss, damage or liability) to which any of them may become subject under the 1933
Act or otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereto) arise out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in any preliminary prospectus,
registration statement or prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the


  









statements therein not misleading, which statement or omission was based on information
furnished to the Company. 



                       (b)
With respect to the registration under the 1933 Act of the Company's Common Stock
pursuant hereto, each Shareholder will indemnify and hold harmless the Company
(or any person controlling the Company) and its officers and directors, each underwriter
of the securities sold pursuant to this Section, and each person controlling each
such underwriter from and against any loss, claim, damage, liability or expense
(including legal or other expenses reasonably incurred in connection with investigation,
settling or defending any such claim, loss, damage or liability), to which any
of them may become subject under the 1933 Act or otherwise, insofar as such loss,
claim, damage, liability or expense (or actions in respect thereto) arises out
of, or is based upon, any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus, registration statement or prospectus
or any amendment or supplement thereto, or arises out of, or is based upon, the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
which statement or omission was made in reliance upon information furnished to
the Company by such Shareholder for inclusion therein. 



                       (c)
Promptly after receipt by an indemnified party under this Section of notice of
the commencement of any action covered thereby, such indemnified party shall notify
the indemnifying party, Whether or not the indemnifying party is a party to such
action, the indemnifying party may, if it chooses, assume the defense of such
action or it may notify the indemnified party that it shall have the right to
choose counsel to represent it, subject to the approval of the indemnifying party,
which approval shall not be unreasonably withheld, The reasonable fees and expenses
of such counsel, as well as all other reasonable expenses incurred by the indemnified
party in connection with the investigation, defense and/or settlement of such
action, shall be paid by the indemnifying party. No settlement of any such action
shall be made without the written consent of the indemnifying party. Notwithstanding
the above, the indemnifying party shall only be obligated to pay the fees and
expenses for one such counsel with respect to each action described in this Section
regardless of the number of parties so indemnified. 



                       7.4
    Termination of Registration Rights. If, pursuant
to Section 7.1 hereof, (i) the Company shall have offered an unconditional (but
for the mutual undertaking contained herein) opportunity, either unilaterally
or upon demand, to register and sell any shares under a registration statement,
and (ii) a Shareholder shall have declined to (x) register such shares, or (y)
having registered, shall fail to sell such shares; then, and only then, such registration
rights, and the Company's obligations hereunder, shall cease as to any and all
shares so covered by such a registration statement. 



8.                  
 Notices of Record Date, Etc. In the event of (a) any taking by
the Company of a record of the Holders of Common Stock for the purpose of determining
who is entitled to receive any dividend or other contribution, or any right to
subscribe for shares of Common Stock or property, or to receive any other right,
or (b) any capital reorganization, reclassification or recapitalization of the
Company, or any transfer of all or substantially all the assets of the Company
to any other 



 







person, or any consolidation or merger involving the Company and
any other person, or (c) any voluntary or involuntary dissolution, liquidation
or winding-up of the Company. The Company will mail to the Holder of the Warrant,
a notice specifying the date or expected date on which any such action is to be
taken with regard to any of the events specified above, Such notice shall be mailed
at least twenty (20) calendar days prior to the date therein specified. 



9.                  
 Transfer of Warrant. Subject to the provisions of Section 7 hereof,
this Warrant may be transferred, sold or assigned, in whole or in part, at any
time. Upon notice of any proposed partial transfer, the Company will execute,
issue and deliver new warrants in the denomination to be transferred and in the
denomination to be retained by Holder (the "Subsequent Warrants"). 



10.                 
Replacement of Warrants. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of the Warrant or
any Subsequent Warrant, and receipt of an indemnity reasonably satisfactory to
the Company, the Company at its expense, will execute and deliver a new Warrant
of like tenor. 



11.                 
Remedies. The Company stipulates that the remedies at law of the Holder
of this Warrant in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement contained herein or
by an injunction against a violation of any of the terms hereof. 



12.                 
Ownership of Warrant. Until this Warrant or any Subsequent Warrant is transferred
on the books of the Company, the Company may treat the person in whose name such
Warrant is issued as the absolute owner hereof for all purposes notwithstanding
any notice to the contrary, except that if and when this Warrant or any Subsequent
Warrant is properly assigned in blank, the Company may (but shall not be obligated
to) treat the bearer hereof as the absolute owner of such Warrant for all purposes,
notwithstanding any notice to the contrary. The Warrant, if properly assigned,
may be exercised by a new Holder without first having a new Warrant issued. 



13.                 
Notices, Etc. All Notices and other communications of the Company to the
Holder of this Warrant shall be mailed by first-class, registered mail, postage
prepaid, at such address as may have been furnished to the Company in writing
by such Holder, or, until an address is so furnished, to and at the address of
the last known Holder of this Warrant. 



 







  14.                  Miscellaneous.
All of the terms and conditions hereof shall be binding upon and inure to the
benefit of any Holder of this Warrant or any Subsequent Warrant. This Warrant
and any term hereof may be changed, waived, discharged or terminated only by an
instrument in writing, signed by the party against which enforcement of such change,
waiver, discharge or termination is sought. This Warrant is being delivered in
the State of Connecticut and shall be construed and enforced in accordance with
and governed by the laws of such State. The headings in this Warrant are for purposed
of reference only and shall not limit or otherwise affect the meaning hereof.




15.                  Expiration.
The right to exercise this Warrant shall expire at 5:00 p.m., Eastern Time, on
February 3, 2009. 





	 	DIASYS CORPORATION 


	 	 	  
	 	 	 
	 	By:	__________________________________
      
	 		Gregory Witchel, Chief Executive Officer
	 	 	 
	 	 	 




 








FORM OF CASH SUBSCRIPTION

  

  [To Be Signed Only Upon Exercise of Warrant]






	To:	DiaSys Corporation 
	 	81 West Main Street 
	 	Waterbury, CT 06702 


 



                      
The undersigned, the Holder of the within Warrant, hereby irrevocable elects to
exercise the purchase right represented by such Warrant for, and to purchase thereunder,
shares of Common Stock of DiaSys Corporation and herewith makes payment of $__________
therefore, and requests that the certificate for such shares be issued in the
name of, and delivered to, _____________________, whose address is ________________________________________________________________.






Dated: 


	 	(Signature must conform in all 

      respects to name of Holder as 

      specified on the face of the Warrant)   
	 	 
	 	 
	 	 
	 	Address 
	 	 ___________________________________ 

      ___________________________________

      ___________________________________ 

      
	 	 
	 	Social Security Number
	 	 
	 	 ____________________________________ 


 



  








FORM OF CASH SUBSCRIPTION

  

  [To Be Signed Only Upon Cashless Exercise of Warrant]






	To:	DiaSys Corporation 
	 	81 West Main Street 
	 	Waterbury, CT 06702 


 



                      
The undersigned, the Holder of the within Warrant, hereby irrevocably elects to
exercise the purchase right represented by such Warrant for, and to purchase thereunder,
_______ shares of Common Stock of DiaSys Corporation by surrendering Warrant shares
in payment of the exercise price of the Warrants and requests that the certificate
for such shares be issued in the name of, and delivered to, _____________________________,
whose address is ____________________________________________________. 






	 	Number of Warrants Exercised 	____________ 
	 		
	 	Market Value of Shares 	____________ 
	 		
	 	Number of Shares Surrendered 	____________ 
	 		
	 	Net Number of Shares to be Received 	____________
	 		


 

Dated: 


	 	(Signature must conform in all 

      respects to name of Holder as 

      specified on the face of the Warrant)  
	 	 
	 	 
	 	 
	 	Address 
	 	 ___________________________________ 

      ___________________________________ 

      ___________________________________ 

      
	 	 
	 	Social Security Number
	 	 
	 	 ____________________________________ 




 










FORM OF ASSIGNMENT

  

  [To Be Signed Only Upon Transfer of Warrant]





 

                      
For value received, the undersigned hereby sells, assigns and transfers unto the
right represented by the within Warrant to purchase shares of Common Stock of
DiaSys Corporation to which the within Warrant relates. 





Dated: 


	 	(Signature must conform in all 

      respects to name of Holder as 

      specified on the face of the Warrant )   
	 	 
	 	 
	 	 
	 	Address 
	 	 ___________________________________ 

      ___________________________________

      ___________________________________ 

      
	 	 






Signed in the presence of: 



____________________________



____________________________