SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) May 11, 1998
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NUWAVE Technologies, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 000-28606 22-3387630
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
One Passaic Avenue, Fairfield, New Jersey 07004
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (973) 882-8810
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
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As of May 11, 1998, the registrant entered into a placement agency
agreement (the "Placement Agreement") with Janssen-Meyers Associates, L.P.
("JMA") whereby JMA agreed to act as the registrant's placement agent in a
private placement (the "Offering") to certain "accredited investors," as
defined under Regulation D as promulgated under the Securities Act of 1933,
as amended (the "Act"), of not less than 25 and not more than 70 Units (as
defined below) of the Company, as such maximum number of Units may be
increased by the Chief Executive Officer or Chief Financial Officer of the
Company. Each Unit consists of (i) a number of shares of common stock, par
value $.01 per share (the "Common Stock"), of the registrant determined by
dividing the purchase price per Unit of $100,000 by, for the initial
closing of the Offering, $2.59, and, for each subsequent closing, the
lesser of (x) $3.20 and (y) 80% of the "Average Closing Bid Price" which
shall be the average closing bid price for the Common Stock for the eight
consecutive trading days immediately preceding the date of a closing of the
Offering, and (ii) Class A Redeemable Warrants to purchase seventy-five
percent (75%) of the number of shares of Common Stock of the registrant
determined in (i) above at an exercise price of $3.235. The registrant at
its discretion may reject any subscriptions for Units. See press release
dated May 21, 1998 attached as Exhibit 99.1.
Under the Placement Agreement, the Company agreed to pay to JMA, for
its services as the placement agent of the Units, a commission of 10% of
the gross proceeds from the sale of the Units, as well as a 3%
non-accountable expense allowance and reimbursement for other costs,
including legal expenses related to the Offering, subject to receipt by the
Company of appropriate documentation. The Company also agreed to grant to
JMA warrants (the "Placement Agent Warrants") to purchase 25% of the number
of Units sold in the Offering, exercisable until May 11, 2003, at a price
per Unit equal to the Offering Price per Unit of $100,000.
On May 19, 1998 the initial closing of the Offering took place. The
aggregate subscription amount was $5,070,483.41 resulting in the sale of
50.7 Units. The per share purchase price for the Common Stock was $2.59. A
total of 1,957,727 shares of Common Stock and 1,468,318 Class A Redeemable
Warrants were issued. The net proceeds to the Company (net of payments to
JMA and JMA's counsel) were $4,347,831.57.
On May 21, 1998 the second closing of the Offering took place. The
aggregate subscription amount was $783,713.07 resulting in the sale of
7.837 Units. The per share purchase price for the Common Stock was $3.06. A
total of 256,120 shares of Common Stock and 192,093 Class A Redeemable
Warrants were issued. The net proceeds to the Company (net of payments to
JMA) were $681,831.37.
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On May 27, 1998 the third closing of the Offering took place. The
aggregate subscription amount was $625,900 resulting in the sale of 6.259
Units. The per share purchase price for the Common Stock was $2.903. A
total of 215,613 shares of Common Stock and 161,713 Class A Redeemable
Warrants were issued. The net proceeds to the Company (net of payments to
JMA and JMA's counsel) were $535,896.75.
On June 1, 1998 the fourth closing of the Offering took place. The
aggregate subscription amount was $273,750.00 resulting in the sale of
2.738 Units. The per share purchase price for the Common Stock was $2.61. A
total of 104,890 shares of Common Stock and 78,667 Class A Redeemable
Warrants were issued. The net proceeds to the Company (net of payments to
JMA) were $237,389.50.
On June 4, 1998 the fifth closing of the Offering took place. The
aggregate subscription amount was $201,700.00 resulting in the sale of
2.017 Units. The per share purchase price for the Common Stock was $2.50. A
total of 80,680 shares of Common Stock and 60,510 Class A Redeemable
Warrants were issued. The net proceeds to the Company (net of payments to
JMA) were $175,480.00.
On June 9, 1998 the sixth and final closing of the Offering took
place. The aggregate subscription amount was $325,000 resulting in the sale
of 3.25 Units. The per share purchase price for the Common Stock was $2.55.
A total of 130,000 shares of Common Stock and 97,500 Class A Redeemable
Warrants were issued. The net proceeds to the Company (net of payments to
JMA and JMA's counsel) were $278,474.65.
The aggregate dollar amount of the subscriptions for all six closings
was $7,280,546.48, resulting in the sale of 72.801 units. In the aggregate,
a total of 2,745,030 shares of Common Stock and 2,058,801 Class A
Redeemable Warrants were issued. The aggregate net proceeds to the Company
were $6,256,903.84
The aggregate amount for all six closings the Company paid to JMA,
pursuant to the Placement Agreement, was $728,054.65 as commission and
$218,416.39 as non-accountable expense allowance. In addition, the Company
granted to JMA, in the aggregate, 18.263 Placement Agent Warrants to
purchase 18.263 Units of the Company.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
10.1 Placement Agency Agreement, dated as of May 11, 1998, between
Janssen-Meyers Associates, L.P. and NUWAVE Technologies, Inc.
10.2 Escrow Agreement, dated May 11, 1998, between NUWAVE
Technologies, Inc., Janssen-Meyers Associates, L.P. and Republic
National Bank of New York.
10.3 Warrant Agreement, dated May 15, 1998, between NUWAVE
Technologies, Inc. and American Stock Transfer & Trust Company.
10.4 Form of Warrant Certificate.
10.5 Placement Agent Warrant Agreement, dated May 19, 1998, between
NUWAVE Technologies, Inc. and Janssen-Meyers Associates, L.P.
10.6 Form of Placement Agent Warrant Certificate.
10.7 Form of Subscription Agreement.
99.1 Press Release, dated May 21, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NUWAVE TECHNOLOGIES, INC.
(Registrant)
Date: June 11, 1998 /s/ Jeremiah F. O'Brien
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Jeremiah F. O'Brien
Chief Financial Officer and Secretary
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EXHIBIT INDEX
Exhibit
Number Description
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10.1 Placement Agency Agreement, dated as of May 11, 1998,
between Janssen-Meyers Associates, L.P. and NUWAVE
Technologies, Inc.
10.2 Escrow Agreement, dated May 11, 1998, between NUWAVE
Technologies, Inc., Janssen-Meyers Associates, L.P. and
Republic National Bank of New York.
10.3 Warrant Agreement, dated May 15, 1998, between NUWAVE
Technologies, Inc. and American Stock Transfer & Trust
Company.
10.4 Form of Warrant Certificate.
10.5 Placement Agent Warrant Agreement, dated May 19, 1998,
between NUWAVE Technologies, Inc. and Janssen-Meyers
Associates, L.P.
10.6 Form of Placement Agent Warrant Certificate.
10.7 Form of Subscription Agreement.
99.1 Press Release, dated May 21, 1998.
EXHIBIT 10.1
NUWAVE TECHNOLOGIES, INC.
Private Placement of not less than 25 Units
and not more than 70 Units
PLACEMENT AGENCY AGREEMENT
Dated as of May 11, 1998
Janssen-Meyers Associates, L.P.
17 State Street
New York, New York 10004
Gentlemen:
NUWAVE Technologies, Inc. (the "Company") proposes to offer for sale
(the "Offering") in a private offering pursuant to Section 4(2) of the
Securities Act of 1933, as amended (the "Act"), and/or Rule 506 of Regulation D
promulgated thereunder, an aggregate of not less than 25 and not more than 70
Units ("Units"), each Unit comprised of (i) a number of shares of common stock,
par value $.01 per share ("Common Stock"), of the Company, determined by
dividing the purchase price per Unit of $100,000 (the "Offering Price") by
eighty percent (80%) of the "Initial Average Closing Bid Price" which shall be
the average closing bid price for the Common Stock for the eight (8) consecutive
trading days from and including April 28, 1998 to and including May 7, 1998, for
the initial closing of the Offering; and the lesser of (x) $3.20 and (y) eighty
percent (80%) of the "Average Closing Bid Price" for the Common Stock for the
eight (8) consecutive trading days immediately preceding the date of a closing
(a "Closing Date") of the Offering, for each subsequent closing, and (ii) Class
A Redeemable Warrants (the "Warrants") to purchase seventy-five percent (75%) of
such number of shares of Common Stock of the Company (the "Warrant Shares") as
more particularly described in the Offering Memorandum as defined below. The
Offering shall be made on a "best efforts - all or none" basis as to 25 Units
(the "Minimum Offering") and on a "best efforts" basis as to an additional 45
additional Units (the "Maximum Offering"). Unless the Minimum Offering is sold,
no Units will be sold and all subscriptions will be returned to the subscribers
without interest or deductions. This agreement shall confirm our agreement
concerning Janssen-Meyers Associates, L.P. acting as our exclusive placement
agent (the "Placement Agent") in connection with the sale of the Units.
The Company shall prepare and deliver to the Placement Agent copies
of a Confidential Private Placement Memorandum (the
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"Offering Memorandum"), relating to, among other things, the Company, the Units
and the terms of the sale of the Units. TheOffering Memorandum, including all
exhibits and appendices thereto and documents delivered therewith, are referred
to herein as the "Offering Documents" and shall include any supplements or
amendments in accordance with this Agreement. The Offering Memorandum shall be
in form satisfactory to the Placement Agent.
l. Appointment of Placement Agent.
On the basis of the representations and warranties contained herein,
and subject to the terms and conditions set forth herein, the Company hereby
appoints Janssen-Meyers Associates, L.P. as its Placement Agent and grants to
you the exclusive right to offer, as its agent, the Units pursuant to the terms
of this Agreement. On the basis of such representations and warranties, and
subject to such conditions, you hereby accept such appointment and agree to use
your reasonable best efforts to secure subscriptions to purchase not less than
25 Units and not more than 70 Units.
2. Terms of the Offering.
(a) The Offering shall consist of not less than 25 Units and not
more than 70 Units of the Company at a purchase price equal to $100,000 per
Unit. The Offering shall be made on a "best efforts all or none" basis as to 25
Units and on a "best efforts" basis as to an additional 45 Units. Each Unit
shall consist of (i) a number of shares of Common Stock determined by dividing
the purchase price per Unit of $100,000 by eighty percent (80%) of the "Initial
Average Closing Bid Price" which shall be the average closing bid price for the
Common Stock for the eight (8) consecutive trading days from and including April
28, 1998 to and including May 7, 1998, for the initial closing of the Offering;
and the lesser of (x) $3.20 or (y) eighty percent (80%) of the "Average Closing
Bid Price" for the Common Stock for the eight (8) consecutive trading days
immediately preceding the date of a closing (a "Closing Date") of the Offering
for each subsequent closing; and (ii) Warrants to purchase seventy-five percent
(75%) of such number of shares of Common Stock of the Company. The Common Stock
and the Warrants are being offered as Units and may not be purchased separately.
Unless the Minimum Offering is sold, no Units will be sold and all subscriptions
will be returned to subscribers without interest or deductions. The Company and
the Placement Agent may, in their discretion, accept subscriptions for partial
Units.
(b) Provided that the Company has delivered the Offering Memorandum
to the Placement Agent, the Offering shall commence on or about May 11, 1998 and
shall expire at 5:00 p.m.,
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New York time, on June 7, 1998 and may be extended up to thirty (30) additional
days at the option and discretion of Placement Agent and the Company. Such
period, as same may be so extended, shall hereinafter be referred to as the
"Offering Period."
(c) The Offering shall be made solely to "accredited investors" (as
defined in Rule 501 of Regulation D). Each prospective subscriber (the
"Prospective Investor") who desires to purchase Units shall deliver to the
Placement Agent two copies of a subscription agreement (a "Subscription
Agreement"), in the form annexed to the Offering Memorandum, one copy of the
Confidential Qualified Purchaser Questionnaire (the "Investor Questionnaire"),
and payment of the purchase price for the number of Units such Prospective
Investor desires to purchase. The Placement Agent shall not have any obligation
to independently verify the accuracy or completeness of any information
contained in any Subscription Agreement or the authenticity, sufficiency, or
validity of any check delivered by any Prospective Investor in payment for
Units.
(d) The Placement Agent and the Company shall establish an escrow
account (the "Escrow Account") with Republic National Bank of New York (the
"Escrow Agent"). The Placement Agent shall deliver each check received from a
Prospective Investor to the Escrow Agent for deposit in the Escrow Account and
shall deliver the executed copies of the Subscription Agreement and Investor
Questionnaire received from each Prospective Investor to the Company or its
counsel. The Company shall notify the Placement Agent promptly of the acceptance
or rejection of any subscription.
(e) If subscriptions for the Minimum Offering are not received from
Prospective Investors and accepted by the Company prior to the expiration of the
Offering Period, the Offering shall be canceled, all funds received and held in
the Escrow Account shall be refunded in full without interest or deduction and
this Agreement and the agency created hereby shall be terminated without any
further obligation on the part of either party, except as provided in Sections
11, 12 and 13 hereof.
(f) You may engage other persons selected by you to assist you in
the Offering (each such broker/dealers being hereinafter referred to as a
"Selling Group Member") and you may allow such Selling Group Member such part of
the compensation and payment of expenses payable to you under Section 6 hereof
as you shall determine. Any such Selling Group Member shall be a member firm in
good standing as a broker-dealer under the rules of the National Association of
Securities Dealers ("NASD"). The Company hereby agrees to make such
representations and warranties to, and
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covenants and agreements with, any Selling Group Member (including an agreement
to indemnify such Selling Group Member on terms substantially similar to Section
13 hereof) as provided herein.
3. Right of First Refusal.
In the event that there shall have been an Initial Closing hereunder
prior to the expiration of the Offering Period, the Placement Agent shall
thereafter have an irrevocable right of first refusal until December 31, 2001 to
purchase for its account or to sell for the account of the Company or, a
subsidiary or successor of the Company, any securities of the Company or any
such subsidiary or successor of the Company, any securities of the Company or
any such subsidiary or successor of the Company (except nonconvertible debt
financing furnished by a financial institution), that the Company or any such
subsidiary or successor may seek to sell through an underwriter, placement agent
or broker-dealer whether pursuant to registration under the Act or otherwise.
The Company, any such subsidiary or successor will consult with the Placement
Agent with regard to any such offering and will offer, in writing, the Placement
Agent the opportunity to purchase or sell any such securities on terms not more
favorable to the Company, any such subsidiary or successor than it or they can
secure elsewhere. If the Placement Agent fails to accept such offer within 10
business days after the mailing of a notice containing such offer by registered
mail addressed to the Placement Agent, then the Placement Agent shall have no
further claim or right with respect to the financing proposal contained in such
notice. If, however, the terms of such proposal are subsequently modified in any
material respect, the preferential right referred to herein shall apply to such
modified proposal as if the original proposal had not been made. The Placement
Agent's failure to exercise its preferential right with respect to any
particular proposal shall not affect its preferential rights relative to future
proposals. The Company represents and warrants that there are presently no other
rights of first refusal for future financing now outstanding except for Trinity
Capital Advisors, Inc.'s ("Trinity") right of first refusal. The right contained
in this paragraph 3 is subordinate to the right of Trinity.
4. Interim Closings/Final Closing.
(a) If subscriptions for the Minimum Offering have been received in
escrow and accepted by the Company prior to the expiration of the Offering
Period , a closing under this Agreement (the "Initial Closing") shall be held at
the offices of the Placement Agent, or such other place as the parties may
agree, as soon as practicable (but not later than ten (10)
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business days) following the date upon which the Placement Agent and the Company
confirm in writing to each other that subscriptions for the Minimum Offering
have been accepted or at such other place, time, or date as the Company and you
shall agree upon. The date upon which the Initial Closing is held shall
hereinafter be referred to as the "Initial Closing Date."
(b) At any time prior to the expiration of the Offering Period
following the Initial Closing and after receipt in escrow and acceptance by the
Company of subscriptions for the sale of additional Units in increments of at
least $100,000 of Units ("Interim Closing Amount") up to the Maximum Offering,
one or more closings (each an "Interim Closing") shall take place in the manner
herein set forth with respect to the Initial Closing. In the event that the
Offering Period expires prior to receipt in escrow and acceptance by the Company
of an Interim Closing Amount, a final closing shall be held at such time
regardless of the amount then held in escrow. The final Interim Closing to be
held in accordance herewith shall be deemed the "Final Closing" and the date
thereof shall be the "Final Closing Date". References herein to a "Closing"
shall mean the Initial Closing, any Interim Closing or the Final Closing, as the
context requires, and the date thereof shall be referred to as a "Closing Date."
5. Representations and Warranties of the Placement Agent.
The Placement Agent represents and warrants to the Company as
follows:
(a) The Placement Agent is duly formed and validly existing and in
good standing under the laws of its state of formation.
(b) The Placement Agent is, and at the time of each Closing will be,
a member in good standing of the NASD. No NASD approval of the compensation
which the Placement Agent is to receive with respect to the Offering is
required.
(c) Sales of Units by the Placement Agent will only be made in such
jurisdictions in which the Placement Agent or a Selling Group Member is a
registered broker-dealer or where an applicable exemption from such registration
exists.
(d) Offers and sales of Units by the Placement Agent will be made
only in accordance with this Placement Agency Agreement and in compliance with
the provisions of Rule 506 of Regulation D (to the extent applicable to the
Placement Agent) (it being understood and agreed that the Placement Agent shall
be
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entitled to rely upon the information and statements provided by the Prospective
Investor in the Subscription Agreement and Investor Questionnaires), and the
Placement Agent will furnish to each Prospective Investor a copy of the Offering
Documents prior to accepting any subscription for the Units.
6. Compensation. (a) If subscriptions for the Minimum Offering are
received in escrow prior to the expiration of the Offering Period and accepted
by the Company, you shall be entitled, on each Closing Date, as compensation for
your services as Placement Agent under this Agreement, to selling Commissions
equal to 10% of the gross proceeds received by the Company from the sale of the
Units effected at each Closing and 3% of the gross proceeds from the sale of the
Units effected at each Closing in payment for a non-accountable expense
allowance. Any amounts payable hereunder may be deducted by you out of the funds
received from the sale of the Units and deposited in the Escrow Account, on each
Closing Date. The Company shall also pay the fees of the Placement Agent=s
Counsel, Goldstein & DiGioia, LLP in the amount of $30,000 plus expenses for
long distance telephone, photocopying and mailing and similar expenses.
(b) In addition to the compensation payable to the Placement Agent
set forth in clause (a) above, the Company shall sell to the Placement Agent, at
each Closing, Unit Purchase Warrants ("Placement Agent Warrants") at a price of
$.001 to purchase 25% of the aggregate number of Units sold in the Offering at
an exercise price equal to the Offering Price until May 11, 2003. The Placement
Agent Warrants shall entitle the Placement Agent to purchase the same securities
as contained in the Units. The Placement Agent Warrants shall be subject to
anti-dilution in certain events. The Placement Agent Warrants shall contain
registration rights similar to those provided to Prospective Investors in the
Offering. The Placement Agent Warrants shall contain cashless exercise
provisions and shall not be redeemable.
7. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with, the
Placement Agent that:
(i) Assuming the accuracy of the representations and
warranties of the Prospective Investors set forth in the Subscription Agreements
and the Investor Questionnaires and the representations and warranties of the
Placement Agent set forth herein, the Offering Documents (A) contain, and at all
times during the period from the date hereof to and including each Closing Date,
will contain, all information required to be contained therein, if any, pursuant
to Rules 502
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and 506 of Regulation D and all applicable federal and/or state securities and
"blue sky" laws, and (B) do not, and during the Offering Period will not,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
in light of the circumstances made therein not misleading. Each contract,
agreement, instrument, lease, license, or other document required to be
described in the Offering Documents shall be, and have been, accurately
described therein in all material respects.
(ii) No Offering Documents or information provided by the
Company to Prospective Investors pursuant to Section 8(g) hereof shall contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein in
light of circumstances made therein not misleading.
(iii) The Company has not, directly or indirectly, solicited
any offer to buy or offered to sell any Units or any other securities of the
Company during the twelve-month period ending on the date hereof except as may
be properly described in the Offering Documents or in any filings by the Company
with the Securities and Exchange Commission ("SEC Filings") and has no present
intention to solicit any offer to buy or to offer to sell any Units or any other
securities of the Company other than pursuant to this Agreement or as described
in the Offering Documents or any SEC Filings;
(iv) The Company is, and at all times during the period from
the date hereof to and including each Closing Date will be, a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, with full corporate power and authority, and has obtained all
necessary consents, authorizations, approvals, orders, licenses, certificates,
and permits and declarations of and from, and has made filings with, all
federal, state and local authorities, to own, lease, license, and use its
properties and assets and to conduct its business as presently conducted as
described in the Offering Documents and/or in any such case where the failure to
have any of the foregoing would not have a material adverse effect on the
Company's presently conducted business. As of the date hereof, the Company is,
and at all times during the period from the date hereof to and including each
Closing Date, duly qualified to do business and is in good standing in every
jurisdiction in which its ownership, leasing, licensing, or use of property and
assets or the conduct of its business makes such qualification necessary except
where the failure to be so qualified would not have a material adverse effect on
the Company's business.
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(v) The Company has, as of the date hereof, and shall have at
each Closing (except as effected by the transactions contemplated hereby and/or
disclosed in the Offering Documents or any SEC Filings) an authorized
capitalization consisting of: (i) 2,000,000 shares of Preferred Stock, par value
$.01 per share; and (ii) 20,000,000 shares of Common Stock, par value $.01 per
share, of which 5,613,485 shares are issued and outstanding. Each issued and
outstanding share of Common Stock is duly authorized, validly issued, fully
paid, and non-assessable, without any personal liability attaching to the
ownership thereof solely by being such a holder, and has not been issued and is
not owned or held in violation of any preemptive rights of stockholders. There
is no commitment, plan, or arrangement to issue, and no outstanding option,
warrant, or other right calling for the issuance of, any share of capital stock
of the Company or any security or other instrument which by its terms is
convertible into, exercisable for, or exchangeable for capital stock of the
Company other than as described in the Offering Documents or in any of the
Company's SEC Filings. There is outstanding no security or other instrument
which by its terms is convertible into or exchangeable for any class of capital
stock of the Company, except as may be properly described in the Offering
Documents or in any of the Company's SEC Filings.
(vi) The audited financial statements for the fiscal years
ended December 31, 1996 and 1997 (the "Financial Statements") of the Company
included in the Offering Documents fairly present in accordance with generally
accepted accounting principles the financial position, the results of
operations, and the other information with respect to the Company purported to
be shown therein at the respective dates and for the respective periods to which
they apply. The Financial Statements have been prepared in accordance with
generally accepted accounting principles (except to the extent certain footnote
disclosures regarding any stub period may have been omitted in accordance with
applicable rules of the Securities and Exchange Commission consistently applied
throughout the periods involved), are correct and complete in all material
respects, and are in accordance with the books and records of the Company. There
has at no time been a material adverse change in the financial condition,
results of operations, business, properties, assets, liabilities, or future
prospects of the Company from the latest information set forth in the Offering
Documents, except as may be properly described in the Offering Documents as
having occurred or as may occur. The Company=s current audit firm, Richard A.
Eisner & Company LLP, and the Company's former audit firm, Coopers & Lybrand,
L.L.P., who have certified certain financial statements of the Company and
delivered their report with respect to the audited financial statements included
in the Offering
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Documents, are independent public accountants as required by the Act.
(vii) As of the date hereof, there is no, and as of each
Closing Date there shall not be any, litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or investigation pending,
or to the Company's knowledge threatened, with respect to the Company, or its
respective operations, businesses, properties, or assets, except as properly
described in the Offering Documents or in any SEC Filings or such as
individually or in the aggregate do not now have and may not be reasonably
expected in the future, to have a material adverse effect upon the operations,
business, properties, or assets of the Company. The Company is not now, nor as
of each Closing Date shall be, in violation of, or in default with respect to,
any law, rule, regulation, order, judgment, or decree, except as properly
described in the Offering Documents, or in any SEC Filings or such as
individually or in the aggregate do not have and may not be reasonably expected
in the future to have a material adverse effect upon the operations, business,
properties, or assets of the Company; nor is the Company required to take any
action in order to avoid any such violation or default.
(viii) As of the date hereof, the Company has, and at all
times during the period from the date hereof to and including the Final Closing
Date, shall have, good and marketable title in fee simple absolute to all real
properties owned by (if any) and good title to all other properties and assets
which the Offering Documents indicate are owned by it, free and clear of all
liens other than liens for taxes not yet due and payable, charges, pledges,
mortgages, security interests, and encumbrances, except as may be properly
described in the Offering Documents or in any SEC Filings or such as in the
aggregate do not now have and may not be reasonably expected in the future to
have a material adverse effect (individually or in aggregate) upon the financial
condition, results of operations, business, properties, or assets of the
Company.
(ix) As of the date hereof, the Company is not, and at all
times during the period from the date hereof to and including the Final Closing
Date, shall not be, in violation or breach of, or in default with respect to
complying with any material provision of any material contract, agreement,
instrument, lease, license, or arrangement, other than any such violation or
breach which would not have, individually or in the aggregate, a material
adverse effect on the Company's business, and each such contract, agreement,
instrument, lease, license, and arrangement is in full force and effect and is
the legal, valid, and binding obligation of the parties thereto enforceable
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as to them in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and an implied covenant of good faith and fair dealing. The Company
enjoys peaceful and undisturbed possession under all leases and licenses under
which it is operating as of the date hereof. As of the date hereof, the Company
is not a party to or bound by any contract, agreement, instrument, lease,
license, arrangement, or understanding, or subject to any charter or other
restriction, which has had or may in the future have a material adverse effect
on the financial condition, results of operations, business, properties, assets
or liabilities of the Company. The Company is not in violation or breach of, or
in default with respect to, any term of its Certificate of Incorporation or
By-Laws, each as amended to date.
(x) There is no right under any patent, patent application,
trademark, trademark application, trade name, service mark, copyright,
franchise, or other intangible property or asset (all of the foregoing being
herein called "Intangibles") necessary to the business of the Company as
presently conducted, except as disclosed in the Offering Documents or in any SEC
Filings. To the knowledge of the Company, there is no Intangible of others which
has had or may in the future have a materially adverse effect on the financial
condition, results of operations, business, properties, assets or liabilities of
the Company, except as disclosed in the Offering Documents or in any SEC
Filings.
(xi) To its best knowledge and except as disclosed in the
Offering Documents or in any SEC Filings, the Company has not infringed, is
infringing, or has received notice of infringement with respect to asserted
Intangibles of others. To the best knowledge of the Company and except as
disclosed in the Offering Documents or in any SEC Filings, none of the patents,
patent applications, trademarks, service marks, trade names and copyrights, and
licenses and rights to the foregoing presently owned or held by the Company, if
any, materially infringe upon any like right of any other person or entity. The
Company (i) owns or has the right to use, free and clear of all liens, charges,
claims, encumbrances, pledges, security interests, defects or other restrictions
of any kind whatsoever, sufficient patents, trademarks, service marks, trade
names, copyrights, licenses and right with respect to the foregoing, to conduct
its business as presently conducted except as set forth in the Offering
Documents or in any SEC Filings and (ii) except as set forth in the Offering
Documents or in any SEC Filings, is not obligated or under any liability
whatsoever to make any payments by way of royalties, fees or otherwise to any
owner or
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licensee of, or other claimant to, any patent, trademark, service mark,
trade name, copyright, know-how, technology or other intangible asset, with
respect to the use thereof or in connection with the conduct of its business as
now conducted or otherwise. The Company has direct ownership of title or right
to all its intellectual property (including all United States and foreign patent
applications and patents), other proprietary rights, confidential information
and know-how; owns all the rights to its Intangibles as are currently used in or
have potential for use in its business except as set forth in the Offering
Documents or in any SEC Filings.
(xii) The Company has all requisite corporate power and
authority to execute, deliver, and perform this Agreement and to consummate the
transactions contemplated hereby. All necessary corporate proceedings of the
Company have been duly taken to authorize the execution, delivery, and
performance by the Company of this Agreement, the Warrants and the Placement
Agent Warrants and the consummation of the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by the Company,
and assuming due authorization, execution and delivery by the Placement Agent,
this Agreement will be a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms except as the enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratoriuim or similar laws affecting the enforcement of creditors' rights
generally and an implied covenant of good faith and fair dealing. Each of the
Units has been duly authorized by the Company, and, upon issuance thereof on a
Closing Date, will have been validly executed and delivered by the Company. When
each of the Units has been duly executed and delivered by the Company, each of
the Units will be a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms except as the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and an implied covenant of good faith and fair
dealing. Each of the Placement Agent Warrants has been duly authorized by the
Company, and, upon issuance thereof on a Closing Date, will have been validly
executed and delivered by the Company. When each of the Placement Agent Warrants
has been duly executed and delivered by the Company, each of the Placement Agent
Warrants will be a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms except as the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and an implied covenant of good faith and fair
dealing. Assuming the accuracy of the representations
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and warranties of the Prospective Investors set forth in the Subscription
Agreements and the Investor Questionnaires and the representations and
warranties of the Placement Agent set forth herein, no consent, authorization,
approval, order, license, certificate, or permit of or from, or registration,
qualification, declaration, or filing with, any federal, state, local, foreign,
or other governmental authority or any court or other tribunal is required by
the Company for the execution, delivery, or performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby, except
the filing of a Notice of Sale of Securities on Form D pursuant to Regulation D,
and such consents, authorizations, approvals, registrations, and qualifications
as may be required under all applicable federal and/or securities or "blue sky"
laws in connection with the issuance, sale, and delivery of the certificates
representing the shares of Common Stock and the Warrants comprising the Units
pursuant to this Agreement and/or the Subscription Agreements. No consent of any
party to any material contract, agreement, instrument, lease, license,
arrangement, or understanding to which the Company is a party, or to which any
of its properties or assets are subject, is required for the execution,
delivery, or performance of this Agreement or the Subscription Agreement, and
the consummation of the transactions contemplated hereby and thereby, and such
execution, delivery and performance will not violate, result in a breach of,
conflict with, or (with or without the giving of notice or the passage of time
or both) entitle any party to terminate or call a default under any such
contract, agreement, instrument, lease, license, arrangement, or understanding,
violate or result in a breach of any term of the certificate of incorporation or
by-laws of the Company, or assuming the accuracy of the representations and
warranties of the Prospective Investors set forth in the Subscription Agreements
and Investor Questionnaires and the representations and warranties of the
Placement Agent set forth herein, violate, result in a breach of, or conflict
with any law, rule, regulation, order, judgment, or decree binding on the
Company or to which any of its operations, businesses, properties, or assets are
subject.
(xiii) The Units, Common Stock, Warrants and Placement Agent
Warrants shall conform to all statements relating thereto as contained in the
Offering Documents. The Common Stock and Warrants when issued and delivered to
the Prospective Investor pursuant to the terms of the Subscription Agreement and
this Agreement shall be duly authorized, validly issued, fully paid and
nonassessable, without any personal liability attaching to the ownership thereof
solely by being such holder and shall not have been issued in violation of any
preemptive rights of stockholders.
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(xiv) Except and to the extent described in or referred to in
the Offering Documents or in any SEC Filings: (i) no holders of any securities
of the Company or of any options, warrants or other convertible or exchangeable
securities of the Company have the right to include any securities issued by the
Company on any registration statement to be filed by the Company or to require
the Company to file a registration statement under the Securities Act of 1933,
as amended, and (ii) no person or entity holds any securities of the Company
which contain anti-dilution rights which will be affected by the transactions
contemplated hereby.
(xv) Except in connection with the exercise of outstanding
options and warrants disclosed in the Offering Documents or the SEC Filings,
during the period commencing on the date hereof and ending on the Final Closing
Date, the Company shall not, without prior notice to and consent of the
Placement Agent: (A) issue any securities or incur any liability or obligation,
primary or contingent, for borrowed money; (B) enter into any transaction not in
the ordinary course of business; or (C) declare or pay any dividend on its
capital stock.
(xvi) Neither the Company nor any of its officers, directors,
or affiliates, has engaged or will engage, directly or indirectly, in any act or
activity that may jeopardize the status of the Offering and sale of the Units an
exempt transaction under the Act or under all applicable federal and/or state
securities or "blue sky" laws of any jurisdiction in which the Units may be
offered or sold.
(xvii) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested extensions
thereof (except in any case in which the failure so to file would not have a
material adverse effect on the Company), and has paid all taxes required to be
paid by it and any other assessment, fine or penalty levied against it to the
extent that any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good faith or
as described in or contemplated under the Offering Documents.
(xviii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management=s general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management=s general or specific authorization; and (iv) the
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recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xix) Subsequent to the dates as of which information is given
in the Offering Documents, and except as may otherwise be properly described in
the Offering Documents or in any SEC Filings, (A) the Company has not, except in
the ordinary course of business, incurred any liability or obligation, primary
or contingent, for borrowed money ,(B) there has not been any material change in
the capital stock, short-term debt or long-term debt of the Company, (C) the
Company has not purchased any of its outstanding capital stock nor declared or
paid any dividend or distribution of any kind on its capital stock, (D) the
Company has not sustained any material loss or interference with its businesses
or properties from fire, floor, hurricane, accident or other calamity, whether
or not covered by insurance, or from any labor dispute or any legal or
governmental proceeding, and (E) there has not been any material adverse change
or any development which the Company reasonably believes could result in a
material adverse change in the financial condition, results of operations,
business, properties, assets or liabilities of the Company.
(xx) No labor dispute with the employees of the Company exists
or is threatened or imminent that could result in a material adverse change in
the financial condition, results of operations, business, properties, assets or
liabilities of the Company, except as described in or contemplated under the
Offering Documents.
(xxi) The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which they are engaged; the
Company has not been refused any insurance coverage sought or applied for; and
the Company has no reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from insurers of recognized financial responsibility as may be
necessary to continue its business at a cost that would not materially and
adversely affect the financial condition, results of operations, business,
properties, assets or liabilities of the Company, except as described in or
contemplated by the Offering Documents.
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8. Covenants of the Company.
The Company covenants that it will:
(a) Notify you immediately, and confirm such notice in writing, (i)
when any event shall have occurred during the period commencing on the date
hereof and ending on the Final Closing Date, as a result of which the Offering
Documents would include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (ii) of the receipt of any notification with respect to the
modification, rescission, withdrawal, or suspension of the qualification or
registration of the Units, or of an exemption from such registration or
qualification, in any jurisdiction. The Company will use its best efforts to
prevent the issuance of any such modification, rescission, withdrawal, or
suspension and if you so request, to obtain the lifting thereof as promptly as
possible.
(b) Not make any supplement or amendment to the Offering Documents
unless such supplement or amendment complies with the requirements of the Act
and Regulation D and the applicable federal and/or state securities and "blue
sky" laws and unless you shall have approved of such supplement or amendment in
writing. If, at any time during the period commencing on the date hereof and
ending on the Final Closing Date, any event shall have occurred as a result of
which the Offering Documents contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or if, in the opinion of counsel to
the Company or counsel to the Placement Agent, it is necessary at any time to
supplement or amend the Offering Documents to comply with the Act, Regulation D,
or any applicable securities or "blue sky" laws, the Company will promptly
prepare an appropriate supplement or amendment (in form and substance
satisfactory to you) which will correct such statement or omission or which will
effect such compliance.
(c) Deliver without charge to the Placement Agent such number of
copies of the Offering Documents and any supplement or amendment thereto as may
reasonably be requested by the Placement Agent.
(d) Not, directly or indirectly, solicit any offer to buy from,
or offer to sell to any person any Units or Common Stock or Warrants underlying
the Units, except through the Placement Agent.
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(e) Cooperate with the Placement Agent=s counsel to qualify or
register the Units, Common Stock and Warrants for offering and sale under, or
establish an exemption from such qualification or registration under, the
securities or "blue sky" laws of such jurisdictions as you may reasonably
request; provided, however, that the Company will not be obligated to qualify to
do business as a dealer in securities in any jurisdiction in which it is not so
qualified. The Company will not consummate any sale of Units in any jurisdiction
or in any manner in which such sale may not be lawfully made; in this regard the
Company shall be entitled to rely on the Placement Agent's representations
herein, and the representations of Prospective Investors in the Subscription
Agreements and Purchaser Questionnaires and on the blue sky qualifications
effected by the Placement Agent's counsel.
(f) At all times during the period commencing on the date hereof and
ending on the Final Closing Date, provide to each Prospective Investor or his
Purchaser Representative (as defined in Regulation D), if any, on request, such
information (in addition to that contained in the Offering Documents) concerning
the Offering, the Company and any other relevant matters, as it possesses or can
acquire without unreasonable effort or expense, and to extend to each
Prospective Investor or his Purchaser Representative, if any, the opportunity to
ask questions of, and receive answers from, the Company concerning the terms and
conditions of the Offering and the business of the Company and to obtain any
other additional information, to the extent it possesses the same or can acquire
it without unreasonable effort or expense, as such Prospective Investor or
Purchaser Representative may consider necessary in making an informed investment
decision or in order to verify the accuracy of the information furnished to such
Prospective Investor or Purchaser Representative, as the case may be.
(g) Provide to each Prospective Investor or his Purchaser
Representative any information required to be delivered by Rule 502(b) of
Regulation D.
(h) Disclose to each Prospective Investor, in writing, any material
relationship between such Prospective Investor's Purchaser Representative, if
any, or its affiliates, on the one hand, and the Company or its affiliates, on
the other hand, which, to the knowledge of the Company, then exists or is
understood to be contemplated or has existed at any time during the previous two
years and any compensation received or to be received as a result of such
relationship.
(i) Before accepting any subscription to purchase Units from, or
making any sale to, any Prospective Investor, have
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reasonable grounds to believe and will believe (after making reasonable inquiry
pursuant to the Subscription Agreements and Investor Questionnaires) that (A)
such Prospective Investor meets the suitability requirements for investing in
the Shares set forth in the Offering Documents, and (B) such Prospective
Investor is an accredited investor (as defined in Regulation D).
(j) Notify you promptly of the acceptance or rejection of any
subscription. The Company shall not (i) accept subscriptions from, or make sales
of Units to, any Prospective Investors who are not, to the Company's knowledge,
accredited investors, or (ii) unreasonably reject any subscription for Units.
(k) Cooperate with counsel to the Placement Agent in order to file
five copies of a Notice of Sales of Securities on Form D with the Securities and
Exchange Commission (the "Commission") no later than 15 days after the first
sale of the Units and file a final notice on Form D with the Commission no later
than 30 days after the last sale of Units. The Company shall file promptly such
amendments to such Notice on Form D as shall become necessary and, as requested
by you, shall also comply with any filing requirement imposed by the laws of any
state or jurisdiction in which offers and sales are made.
(l) Not, directly or indirectly, engage in any act or activity which
may jeopardize the status of the Offering and sale of the Units as exempt
transactions under the Act or under the securities or "blue sky" laws of any
jurisdiction in which the Offering maybe made. Without limiting the generality
of the foregoing, and notwithstanding anything contained herein to the contrary,
the Company shall not, directly or indirectly, engage in any offering of
securities which, if integrated with the Offering in the manner prescribed by
Rule 502(a) of Regulation D and applicable releases of the Commission, may
jeopardize the status of the offering and sale of the Units as exempt
transactions under Regulation D.
(m) Apply the net proceeds from the sale of the Units as set forth
in the Offering Memorandum.
(n) Not, during the period commencing on the date hereof and ending
on the Final Closing Date, issue any press release or other communication, or
hold any press conference with respect to the Company, its financial condition,
results of operations, business, properties, assets, or liabilities, or the
Offering, without your prior written consent, which consent shall not be
unreasonably withheld, except as required by applicable securities laws.
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9. Payment of Expenses.
The Company hereby agrees to pay all fees, charges, and expenses
incident to the performance by the Company of its obligations hereunder,
including, without limitation, all fees, charges, and expenses in connection
with: (i) the preparation, printing, filing, distribution, and mailing of the
Offering Documents, and all other documents relating to the Offering, purchase,
sale, and delivery of the Units (and component parts), and any supplements or
amendments thereto, including the cost of all copies thereof; (ii) the
preparation and reproduction of this Agreement, the Common Stock certificates
and the Warrants; (iii) the issuance, sale, transfer, and delivery of the Units,
including any transfer or other taxes payable thereon and the fees of any
transfer agent or registrar; (iv) the registration or qualification of the Units
or the securing of an exemption therefrom under state or foreign "blue sky" or
securities laws, including without limitation, filing fees payable in the
jurisdictions in which such registration or qualification or exemption therefrom
is sought, disbursements in connection therewith, and the fees of counsel for
the Placement Agent in connection therewith in an amount equal to $15,000, of
which $5,000 fees shall be paid within three days of commencement of the
Offering and the remainder shall be paid at the Initial Closing; (v) filing fees
payable to the Commission, if any; and (vi) the retention of the Escrow Agent,
including the fees and expenses of the Escrow Agent for serving as such and the
fees and expenses of its counsel, if any.
10. Conditions of Placement Agent's Obligations.
The obligations of the Placement Agent pursuant to this Agreement shall
be subject, in its discretion, to the continuing accuracy, in all material
respects, of the representations and warranties of the Company contained herein
and in each certificate and document contemplated under this Agreement to be
delivered to the Placement Agent, as of the date hereof and as of each Closing
Date, with respect to the performance by the Company of its obligations
hereunder, and to the following conditions:
(a) At each Closing, the Placement Agent shall have received the
opinion of Dechert Price & Rhoads, counsel for the Company, dated each Closing
Date, addressed to the Placement Agent, and in form and scope satisfactory to
counsel for the Placement Agent in the form of Exhibit A annexed hereto.
In rendering such opinion, counsel for the Company may rely (A) as
to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company;
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and (B) to the extent they deem proper, upon written statements or certificates
of officers of departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company, provided
that copies of any such statements or certificates shall be delivered to counsel
for the Placement Agent.
(b) On or prior to the Initial Closing Date, the Placement Agent
shall have been furnished such information, documents, certificates, and
opinions as it may reasonably require for the purpose of enabling it to review
the matters referred to in Section 7, and in order to evidence the accuracy,
completeness, or satisfaction of any of the representations, warranties,
covenants, agreements, or conditions herein contained, or as it may otherwise
reasonably request.
(c) At each Closing, the Placement Agent shall have received a
certificate of the chief executive officer and of the chief financial officer of
the Company, dated the applicable Closing Date to the effect that, as of the
date of this Agreement and as of the applicable Closing Date the representations
and warranties of the Company contained herein were and are accurate in all
material respects, and that as of the Closing Date the obligations to be
performed by the Company hereunder on or prior thereto have been fully
performed.
(d) All proceedings taken in connection with the issuance, sale, and
delivery of the Units shall be satisfactory in form and substance to you and
your counsel.
(e) There shall not have occurred after the date hereof, at any time
prior to each Closing: (A) any domestic or international event, act, or
occurrence which has materially disrupted, or in your opinion will in the
immediate future materially disrupt the securities markets; (B) a general
suspension of, or a general limitation on prices for, trading in securities on
the Nasdaq SmallCap Market or the over-the-counter market; (C) any banking
moratorium declared by a state or federal authority; (D) any material
interruption in the mail service or other means of communication within the
United States; (E) any material adverse change in the business, properties,
assets, results of operations, or financial condition of the Company; or (F) any
change in the market for securities in general or in political, financial, or
economic conditions which, in your judgment, makes it inadvisable to proceed
with the offering, sale, and delivery of the Units.
Any certificate or other document signed by any officer of the Company
and delivered to you or to your counsel at a Closing shall be deemed a
representation and warranty by the
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Company hereunder as to the statements made therein. If any condition to your
obligations hereunder has not been fulfilled as and when required to be so
fulfilled, you may terminate this Agreement or, if you so elect, in writing
waive any such conditions which have not been fulfilled or extend the time for
their fulfillment. In the event that you elect to terminate this Agreement, you
shall notify the Company of such election in writing. Upon such termination,
neither party shall have any further liability or obligation to the other except
as provided in Section 11 hereof.
11. Termination.
The Placement Agent shall have the right to terminate this Agreement:
(i) if any calamitous domestic or international event or act or occurrence has
materially disrupted, or in the Placement Agent's commercially reasonable
opinion will in the immediate future materially disrupt general securities
markets in the United States; or (ii) if trading on the New York Stock Exchange,
the American Stock Exchange, or in the over-the-counter market shall have been
suspended or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required on the
over-the-counter market by the NASD or by order of the Commission or any other
government authority having jurisdiction; or (iii) if the United States shall
have become involved in a war or major hostilities; or (iv) if a banking
moratorium has been declared by a New York State or federal authority; or (v) if
a moratorium in foreign exchange trading has been declared; or (vi) if the
Company shall have sustained a material loss, whether or not insured, by reason
of fire, flood, accident or other calamity; or (vii) if there shall have been
such material adverse change in the conditions or prospects of the Company; or
(viii) if there shall have been such material adverse change in general
economic, political or financial conditions as in the Placement Agent's judgment
would make it inadvisable or impracticable to proceed with the Offering, sale or
delivery of the Units.
12. Solicitation Prohibition.
The Company agrees that, for a period of three (3) years from the date
hereof, it shall not solicit any offer to buy from or offer to sell to any
person introduced to the Company by the Placement Agent in connection with the
Offering, directly or indirectly, any securities of the Company or of any other
entity, or provide the name of any such person to any other securities broker or
dealer or selling agent. In the event that the Company or any of its affiliates,
directly or indirectly, solicits, offers to buy from or offers to sell to any
such person any such securities, or provides the name of any such person to any
other
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securities broker or dealer or selling agent, and such person purchases such
securities or purchases securities from any other securities broker or dealer or
selling agent, the Company shall pay to the Placement Agent an amount equal to
10% of the aggregate purchase price of the securities so purchased by such
person.
13. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the Placement
Agent, its officers, directors, partners, employees, agents, and counsel, and
each person, if any, who controls the Placement Agent within the meaning of
Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), against any and all loss, liability, claim,
damage, and expense whatsoever (which shall include, for all purposes of this
Section 13, but not be limited to, attorneys' fees and any and all expense
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation) as and when incurred
arising out of, based upon, or in connection with (i) any untrue statement or
alleged untrue statement of a material fact contained in the Offering Documents
or in any document delivered or written statement made pursuant to Section 8(g),
or in any application or other document or communication (it being understood
that neither the Company nor any officer, director or employee shall provide any
information to any Prospective Investor which is not contained in the Offering
Documents) (in this Section 13 collectively called an "application") executed by
or on behalf of the Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to register or qualify
the Units under the "blue sky" or securities laws thereof or in order to secure
an exemption from such registration or qualification or filed with the
Commission; or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company with respect to the
Placement Agent expressly for inclusion in the Offering Documents or in any
application, as the case may be; or (ii) any material breach of any
representation, warranty, covenant, or agreement of the Company contained in
this Agreement. The foregoing agreement to indemnify shall be in addition to any
liability the Company may otherwise have, including liabilities arising under
this Agreement.
If any action is brought against the Placement Agent or any of its
officers, directors, partners, employees,
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agent, or counsel, or any controlling persons of the Placement Agent (an
"indemnified party"), in respect of which indemnify may be sought against the
Company pursuant to the foregoing paragraph, such indemnified party or parties
shall promptly notify the Company (the "indemnifying party") in writing of the
institution of such action (but the failure so to notify shall not relieve the
indemnifying party from any liability it may have other than pursuant to this
Section 13(a) unless, and to the extent the indemnifying party is prejudiced
thereby) and the indemnifying party shall promptly assume the defense of such
action, including the employment of counsel (reasonably satisfactory to such
indemnified party or parties) and payment of expenses. Such indemnified party
shall have the right to employ its own counsel in any such case, but the fees
and expense of such counsel shall be at the expense of such indemnified party
unless the employment of such counsel shall have been authorized in writing by
the indemnifying party in connection with the defense of such action or the
indemnifying party shall not have promptly employed counsel satisfactory to such
indemnified party or parties to have charge of the defense of such action or
such indemnified party or parties shall have reasonably concluded that there may
be one or more legal defenses available to it or them or to other indemnified
parties which are different from or additional to those available to one or more
of the indemnifying parties, in any of which events such fees and expenses of
one such counsel shall be borne by the indemnifying party and the indemnifying
party shall not have the right to direct the defense of such action on behalf of
the indemnified party or parties. Anything in this paragraph to the contrary
notwithstanding, the indemnifying party shall not be liable for any settlement
of any such claim or action effected without its written consent. The Company
agrees promptly to notify the Placement Agent of the commencement of any
litigation or proceedings against the Company or any of its officers or
directors in connection with the sale of the Units, the Offering Documents, or
any application.
(b) The Placement Agent agrees to indemnify and hold harmless the
Company, its officers, directors, employees, agents, and counsel, and each other
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, to the same extent as the foregoing
indemnity from the Company to the Placement Agent in Section 13(a), with respect
to any and all loss, liability, claim, damage, and expense whatsoever (which
shall include, for all purposes of this Section 13, but not be limited to,
attorneys' fees and any and all expense whatsoever incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any
claim whatsoever and any and all amounts paid in settlement of any claim or
litigation) as and
22
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when incurred arising out of, based upon, or in connection with (i) statements
or omissions, if any, made in the Offering Documents or applications in reliance
upon and in conformity with written information furnished to the Company with
respect to the Placement Agent expressly for inclusion in the Offering Documents
or applications, and (ii) the failure of the Placement Agent to comply with the
provisions of Section 2(c) hereof or with the "blue sky" or securities laws of
the jurisdictions in which the Placement Agent solicits offers to buy or offers
to sell any Units or any breach of any representation, warranty, covenant or
agreement of the Placement Agent contained in this Agreement. The foregoing
agreement to indemnify shall be in addition to any liability the Placement Agent
may otherwise have, including liabilities arising under this Agreement. If any
action shall be brought against the Company or any other person so indemnified
based on the Offering Documents and in respect of which indemnity may be sought
against the Placement Agent pursuant to this Section 13(b), the Placement Agent
shall have the rights and duties given to the indemnifying party, and the
Company and each other person so indemnified shall have the rights and duties
given to the indemnified parties, by the provisions of Section 13(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 13(a) or
13(b) but it is found in a final judicial determination, not subject to further
appeal, that such indemnification may not be enforced in such case, even though
this Agreement expressly provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the Act, the Exchange
Act, or otherwise, then the Company (including for this purpose any contribution
made by or on behalf of any officer, director, employee, agent, or counsel of
the Company, or any controlling person of the Company), on the one hand, and the
Placement Agent (including for this purpose any contribution made by or on
behalf of an indemnified party), on the other hand, shall contribute to the
losses, liabilities, claims, damages, and expenses whatsoever to which any of
them may be subject, in such proportions as are appropriate to reflect the
relative benefits received by the Company, on the one hand, and the Placement
Agent, on the other hand; provided, however, that if applicable law does not
permit such allocation, then other relevant equitable considerations such as the
relative fault of the Company and the Placement Agent in connection with the
facts which resulted in such losses, liabilities, claims, damages, and expenses
shall also be considered. The relative benefits received by the Company, on the
one hand, and the Placement Agent, on the other hand, shall be deemed to be in
the same proportion as (x) the total proceeds from the Offering (net of
23
<PAGE>
compensation payable to the Placement Agent pursuant to Section 6(a) hereof but
before deducting expenses) received by the Company, and (y) the compensation
received by the Placement Agent pursuant to Section 6(a) hereof.
The relative fault, in the case of an untrue statement, alleged untrue
statement, omission, or alleged omission, shall be determined by, among other
things, whether such statement, alleged statement, omission, or alleged omission
relates to information supplied by the Company or by the Placement Agent, and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement, alleged statement, omission, or alleged
omission. The Company and the Placement Agent agree that it would be unjust and
inequitable if the respective obligations of the Company and the Placement Agent
for contribution were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages, and expenses or by any other
method of allocation that does not reflect the equitable considerations referred
to in this Section l3(c). In no case shall the Placement Agent be responsible
for a portion of the contribution obligation in excess of the compensation
received by it pursuant to Section 6(a) hereof. No person guilty of a fraudulent
misrepresentation shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section l3(c),
each person, if any, who controls the Placement Agent within the meaning of
Section l5 of the Act or Section 20(a) of the Exchange Act and each officer,
director, partners, employee, agent, and counsel of the Placement Agent, shall
have the same rights to contribution as the Placement Agent, and each person, if
any, who controls the Company within the meaning of Section l5 of the Act or
Section 20(a) of the Exchange Act and each officer, director, employee, agent,
and counsel of the Company, shall have the same rights to contribution as the
Company, subject in each case to the provisions of this Section l3(c). Anything
in this Section l3(c) to the contrary notwithstanding, no party shall be liable
for contribution with respect to the settlement of any claim or action effected
without its written consent. This Section l3(c) is intended to supersede any
right to contribution under the Act, the Exchange Act, or otherwise.
14. Representations and Agreements to Survive Delivery.
All representations, warranties, covenants, and agreements contained
in this Agreement shall be deemed to be representations, warranties, covenants,
and agreements at the Closing Date and, such representations, warranties,
covenants, and agreements, including the indemnification and contribution
25
<PAGE>
agreements contained in Section 13, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Placement
Agent or any indemnified person, or by or on behalf of the Company or any person
or entity which is entitled to be indemnified under Section l3(b), and shall
survive termination of this Agreement or the issuance, sale, and delivery of the
Units for a period of three years. In addition, notwithstanding any election
hereunder or any termination of this Agreement, and whether or not the terms of
this Agreement are otherwise carried out, the provisions of Sections 12, 13 and
14 shall survive termination of this Agreement and shall not be affected in any
way by such election or termination or failure to carry out the terms of this
Agreement or any part thereof.
15. Notices.
All communications hereunder, except as may be otherwise specifically
provided herein, shall be in writing and, if sent to the Placement Agent, shall
be mailed, delivered, or faxed and confirmed by letter, to Janssen Meyers
Associates L.P. 17 State Street, New York, New York 10004, Attention: Bruce
Meyers, with a copy to Goldstein & DiGioia LLP 369 Lexington Avenue, New York,
New York 10017, Attention: Victor DiGioia, Esq.; or if sent to the Company,
shall be mailed, delivered or faxed and confirmed by letter, to One Passaic
Avenue, Fairfield, New Jersey 07004 Attention: Mr. Jeremiah F. O'Brien, with a
copy to Dechert Price & Rhoads, 30 Rockefeller Plaza, New York, New York 10112
Attn: Fredric J. Klink, Esq. All notices hereunder shall be effective upon
receipt by the party to which it is addressed.
16. Parties.
This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Placement Agent and the Company and the persons and entities
referred to in Section l3 who are entitled to indemnification or contribution,
and their respective successors, legal representatives, and assigns (which shall
not include any purchaser, as such, of Units), and no other person shall have or
be construed to have any legal or equitable right remedy, or claim under or in
respect of or by virtue of this Agreement or any provision herein contained.
17. Governing Law/Construction/Jurisdiction.
(a) This Agreement shall be construed in accordance with the laws of
the State of New York, without giving effect to conflict of laws.
25
<PAGE>
(b) The Company (a) agrees that any legal suit, action or proceeding
arising out of or relating to this Agreement shall be instituted exclusively in
New York State Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York, (b) waives any objection
which the Company may have now or hereafter to the venue of any such suit,
action or proceeding, and (c) irrevocably consents to the jurisdiction of the
New York State Supreme Court, County of New York and the United States District
Court for the Southern District of New York in any such suit, action or
procedure. Each of the Company and the Placement Agent further agrees to accept
and acknowledge service of any and all process which may be served in any suit,
action or proceeding in the New York State Supreme Court for the Southern
District of New York, and agrees that service of process upon the Company mailed
by certified mail to the Company's address shall be deemed in every respect
effective service of process upon the Company in any such suit, action or
proceeding. In the event of litigation between the parties arising hereunder,
the prevailing party shall be entitled to costs and reasonable attorney's fees.
18. Counterparts.
This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which, when taken together, shall constitute
one agreement.
26
<PAGE>
If the foregoing correctly sets forth the understanding between us,
please so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement among us.
Very truly yours,
NUWAVE TECHNOLOGIES, INC.
By: /s/ Jeremiah F. O'Brien
--------------------------
Name: Jeremiah F. O'Brien
Title: Chief Financial
Officer
Accepted as of the date first above written:
JANSSEN/MEYERS ASSOCIATES L.P.
By Meyers-Janssen Securities Corp.
General Partner
By: /s/ Bruce Meyers
------------------------------
Name: Bruce Meyers
Title: General Partner
27
EXHIBIT 10.2
ESCROW AGREEMENT
ESCROW AGREEMENT, dated May 7, 1998, between NUWAVE TECHNOLOGIES, INC.,
a Delaware corporation, with an address at One Passaic Avenue, Fairfield, New
Jersey 07004 (the "Company"), JANSSEN-MEYERS ASSOCIATES, L.P., with an address
at 17 State Street, New York, New York 10004 (the "Placement Agent"), and
REPUBLIC NATIONAL BANK OF NEW YORK, as escrow agent (the "Escrow Agent").
WHEREAS, the Company is offering in a private placement under Section
4(2) of the Securities Act of 1933, as amended, a minimum of 25 units, up to a
maximum of 70 units (the "Units"), each Unit consisting of (i) a number of
shares of common stock, $.01 par value per share (the "Common Stock"),
determined by dividing the purchase price per Unit of $100,000 (the "Offering
Price") by $2.588, for the initial closing of the Offering; and the lesser of
(x) $3.20 and (y) eighty percent (80%) of the "Average Closing Bid Price" which
shall be the average closing bid price for the Common Stock for the eight (8)
consecutive trading days immediately preceding the date of a closing (a "Closing
Date") of the Offering, for each subsequent closing, and (ii) Class A Redeemable
Warrants (the "Warrants") to purchase seventy-five percent (75%) of such number
of shares of Common Stock of the Company (the "Warrant Shares"), to prospective
investors pursuant to the Company's Confidential Private Placement Memorandum,
dated on or about May 7, 1998 (the "Memorandum"), in connection with the
consummation of the Company's private placement (the "Private Placement");
WHEREAS, the Private Placement is being conducted on a "best efforts -
all or none" basis as to the minimum of 25 Units (the "Minimum Offering") and on
a "best efforts" basis as to an additional 45 Units.
WHEREAS, unless the Escrow Agent receives the letter attached hereto as
Exhibit A prior to June 7, 1998, (or July 7, 1998 if the Escrow Agent has been
advised in writing by the Company and the Placement Agent prior to June 7, 1998
that the offering has been extended to July 7, 1998) (the "Offering Period"),
and, for the purpose of the "Initial Closing" (as defined in the Memorandum)
there is a minimum of $2,500,000 in the Escrow Account, or, for purposes of an
"Interim Closing" (as defined in the Memorandum) there is a minimum of $100,000
in the Escrow Account, and, in each case, the subscriptions have been accepted
by the Company, all funds received by the Escrow Agent will be returned, without
interest, to the subscribers.
WHEREAS, the Memorandum provides that all funds received from investors
for subscriptions will be placed into a non-
<PAGE>
interest bearing escrow account with the Escrow Agent (the "Escrow Account")
until such time as the release or return of such funds is required pursuant to
Section 5 hereof; and
WHEREAS, Republic National Bank of New York has consented to act as
escrow agent, subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereby agree as follows:
1. The Company and the Placement Agent hereby appoint Republic National
Bank of New York as escrow agent and Republic National Bank of New York hereby
accepts such appointment in accordance with the terms and conditions herein set
forth
2. The Company and the Placement Agent shall each notify the Escrow
Agent of its acceptance or rejection of subscriptions respecting subscribers.
3. The Company and the Placement Agent shall each deliver to the Escrow
Agent all funds received from subscribers in payment of subscriptions for Units
from time to time as the Company or the Placement Agent receives such
subscriptions together with the name, mailing address and amount received from
each subscriber. The Escrow Agent shall accept all funds received by it from the
Company and/or the Placement Agent (or directly by wire from subscribers),
provided that the Escrow Agent shall not deposit funds received respecting any
subscription for Units which the Company or the Placement Agent has given notice
of its rejection, and the Company and/or Placement Agent shall promptly return
such funds to the subscriber. The Escrow Agent shall promptly deposit all funds
made payable to "Republic National Bank of New York, as Escrow Agent for NUWAVE
Technologies, Inc." for subscriptions for Units into the non-interest bearing
Escrow Account for collection (such funds, when collected, will be and are
hereinafter referred to as the "Proceeds"). The Escrow Agent shall have no duty
to solicit any funds with respect to any subscriber or to determine the
propriety of any Proceeds received by it. The Escrow Agent shall hold the funds
uninvested and Escrow Agent shall deposit the funds in an account to be entitled
"Republic National Bank of New York, as Escrow Agent for NUWAVE Technologies,
Inc." The Escrow Agent shall have no duty to enforce payment of any check
received and if a check is returned to the Escrow Agent unpaid, the sole duty of
the Escrow Agent shall be to forward the check to the Placement Agent.
4. If the Company or the Placement Agent rejects or has rejected the
subscription of any subscriber for which the Escrow Agent has collected Proceeds
and such Proceeds remain in the
2
<PAGE>
Escrow Account, then the Escrow Agent, upon receipt of written instructions from
the Company or the Placement Agent, shall promptly remit the amount of such
subscriber's funds as are held in the Escrow Account without interest to such
subscriber at the address supplied by the Company or Placement Agent.
5. The Proceeds to be held in the Escrow Account shall be subject to,
and distributed in accordance with, the following provisions:
a. If, on or prior to the termination of the Offering Period, the
Escrow Agent has been provided with the letter attached hereto as Exhibit A,
and, for the purpose of the "Initial Closing" (as defined in the Memorandum)
there is a minimum of $2,500,000 in the Escrow Account, or, for purposes of an
"Interim Closing" (as defined in the Memorandum) there is a minimum of $100,000
in the Escrow Account, and, in each case, the subscriptions have been accepted
by the Company, then, on a Closing Date and at the time and place as shall be
stated in the letter, the Escrow Agent shall deliver to the Company and/or the
Placement Agent by wire transfer or other immediately available funds the
principal amount of the Proceeds held in the Escrow Account to the extent
directed in such letter.
b. If the Escrow Agent has received from the Company and the
Placement Agent a letter in the form attached hereto as Exhibit B then the
Escrow Agent shall promptly terminate the Escrow Account and return all Proceeds
held by it to the subscribers in the amounts received by the Escrow Agent from
such persons.
c. In the event the Escrow Agent has not received either Exhibit A
or Exhibit B prior to the termination of the Offering Period, then the Escrow
Account shall be closed and all funds returned to subscribers. All funds
received by the Escrow Agent after the termination of the Offering Period shall
not be collected or deposited by the Escrow Agent, but shall be forwarded
promptly to the subscriber. This Section 5.c shall survive the resignation of
the Escrow Agent or the termination of this Agreement.
d. All funds received by the Escrow Agent on or after a Closing Date
and on or before the termination of the Offering Period (the "Additional
Proceeds") shall be collected and deposited by the Escrow Agent. Thereafter, if
on or before the termination of the Offering Period, the Company and the
Placement Agent shall provide the Escrow Agent with a letter in the form
attached hereto as Exhibit A, setting forth the time and place of the next
Closing Date, and the respective amounts out of the Additional Proceeds to be
paid to the Company and/or the
3
<PAGE>
Placement Agent. At such Closing Date, the Escrow Agent shall deliver to the
Company and/or the Placement Agent such amounts as shall be stated in that
letter.
e. The Escrow Agent shall be entitled to rely upon any notice,
instrument or other writing delivered to it hereunder without being required to
determine the authenticity or the correctness of any fact stated therein or the
propriety or validity or the service thereof. The Escrow Agent may act in
reliance upon any instrument or signature believed by it to be genuine. The
Escrow Agent shall not have any obligation to release any funds against
uncollected checks.
f. The Escrow Agent may act in reliance upon any signature believed
by it to be genuine and Escrow Agent shall have no duty to make inquiry as to
the genuineness of any signatures. The names and true signatures of each
individual authorized to act in behalf of the Company and Placement Agent are
attached hereto as Exhibit C.
g. The Company and the Placement Agent will provide written notice
to the Escrow Agent of any extension of the Offering Period beyond June 7, 1998.
6. a. The Company and the Placement Agent agree to hold the Escrow
Agent harmless and to indemnify the Escrow Agent against any losses,
liabilities, expenses (including attorney's fees and expenses), claims, demands,
suits, actions or damages arising out of or in connection with the performance
of its obligations in accordance with the provisions of this Agreement, except
for gross negligence or willful misconduct of the Escrow Agent. Further, the
Company shall indemnify the Escrow Agent for any loss the Escrow Agent may incur
as a result of releasing Proceeds to the Company or to the subscribers, which
Proceeds were credited to the Escrow Account as a result of a dishonored check.
b. The Escrow Agent's duties are only such as are specifically
provided herein. The Escrow Agent shall have no responsibility hereunder other
than to follow faithfully the instructions herein contained. The Escrow Agent
may consult with counsel and shall be fully protected in any actions taken in
good faith in accordance with such advice. The Escrow Agent shall be fully
protected in acting in accordance with any written instructions given to it
hereunder believed by it to have been executed by the proper parties.
c. The Company agrees to pay the Escrow Agent a fee of $1,500.00 in
advance, as compensation for the ordinary administrative services to be rendered
hereunder and agrees to
4
<PAGE>
pay all reasonable expenses of the Escrow Agent, including fees for refund
checks respecting the Proceeds not in excess of $9.00 per check and its
reasonable attorney's fees and expenses, which it may incur in connection with
the performance of its duties under this Agreement or under the indemnity
provided in Section 5.a. hereof.
d. It is agreed that, should any dispute arise between any of the
parties hereto or should the Escrow Agent be uncertain as to its duties
hereunder with respect to the disposition and/or ownership or right of
possession of the Escrow Account, the Escrow Agent is authorized and directed to
retain in its possession, without liability to anyone, all or any part of the
Escrow Account until directed to dispose of it pursuant to joint written
instruction of the Company and the Placement Agent or by the final order, decree
or judgment of a court or other tribunal of competent jurisdiction in the United
States of America.
e. The Escrow Agent may resign at any time by giving written notice
thereof to the Company, but such resignation shall not become effective until a
successor escrow agent shall have been appointed and shall have accepted such
appointment in writing. If any instrument of acceptance by a successor escrow
agent shall not have been delivered to the Escrow Agent within thirty days after
the giving of such notice of resignation, the resigning Escrow Agent may, at the
expense of the Company, petition any court of competent jurisdiction for the
appointment of a successor escrow agent.
f. The provisions of this Section 6 shall survive the
resignation of the Escrow Agent or the termination of this Agreement.
7. This Agreement shall be construed in accordance with the laws of the
State of New York. Any actions to enforce or interpret this Agreement must be
brought in any federal or state court located in the City of New York. The
parties consent to the exclusive in personam jurisdiction of any court of
competent subject matter jurisdiction located in the City of New York and
consent to service of process by mail in an action commenced in such court. This
Agreement may be executed in several counterparts, each one of which shall
constitute an original, and all collectively shall constitute but one
instrument.
8. Any notice, consent or request to be given in connection with any of
the terms or provisions of this Agreement shall be in writing and shall be sent
by registered mail, postage prepaid, or delivered:
5
<PAGE>
a. if to the Escrow Agent, to:
Republic National Bank of New York
Fifth Avenue at 40th Street
New York, New York 10018
Attention: Arlene Eliades
b. if to the Company to:
NUWAVE Technologies, Inc.
One Passaic Avenue
Fairfield, New Jersey 07004
Attention: Jeremiah F. O'Brien
c. if to the Placement Agent to:
Janssen-Meyers Associates, L.P.
17 State Street - 19th Floor
New York, New York 10004
9. This Agreement shall terminate upon the termination of the Offering
Period, unless previously terminated by fully disbursing the Escrow Account,
except as provided otherwise herein.
IN WITNESS WHEREOF, the parties have duly executed this Escrow
Agreement as of the date first above written.
REPUBLIC NATIONAL BANK NUWAVE TECHNOLOGIES, INC.
OF NEW YORK
By:/s/ Arlene Eliades By:/s/ Jeremiah F. O'Brien
--------------------------- --------------------------------
Name: Arlene Eliades Name: Jeremiah F. O'Brien
Title: First Vice President Title: Chief Financial Officer
JANSSEN-MEYERS ASSOCIATES, L.P.
By: Meyers-Janssen Securities Corp.
General Partner
By: /s/ Bruce Meyers
-------------------------------
Name: Bruce Meyers
Title: General Partner
6
<PAGE>
EXHIBIT A
_________________, 1998
Republic National Bank of New York
Fifth Avenue at 40th Street
New York, New York 10018
Attention: Arlene Eliades
Escrow Agreement dated May 7, 1998 between
NUWAVE Technologies, Inc.
and Republic National Bank of New York
Dear Sirs:
The conditions to the consummation of the Private Placement have been
satisfied due to one of the following events:
_____1. At least 25 Units have been subscribed for and
accepted by the Company and therefore the Initial
Closing will be consummated on ___________, 1998.
OR
_____2. The Initial Closing already took place and at least 5
additional Units ($500,000 of Units), up to the
maximum of 70 Units, have been subscribed for and
accepted by the Company, and therefore an Interim
Closing will be consummated on __________, 1998.
OR
_____3. The Initial Closing already took place and the
Offering Period has expired. Therefore, a Final
Closing will be held on ___________, 1998 for
whatever amount of Units have been subscribed for and
accepted by the Company at the date of the expiration
of the Offering Period.
Please distribute the Escrow Account established under the Escrow
Agreement and pay the Proceeds in the amount of $______ thereof by [wire
transfer][immediately available funds] on the Closing Date as follows:
7
<PAGE>
a.
b.
c.
d.
All terms defined herein shall have the definitions ascribed to them
in the Escrow Agreement referred to above.
Very truly yours,
NUWAVE TECHNOLOGIES, INC.
By:
------------------------------
Name:
Title:
JANSSEN-MEYERS ASSOCIATES, L.P.
By: Meyers Janssen Securities Corp.
General Partner
By:
--------------------------------
8
<PAGE>
EXHIBIT B
_________________, 1998
Republic National Bank of New York
Fifth Avenue at 40th Street
New York, New York 10018
Attention: Arlene Eliades
Escrow Agreement dated May 7, 1998 between
NUWAVE Technologies, Inc.
and Republic National Bank of New York
Dear Sirs:
The conditions to the consummation of the Private Placement have not
been consummated.
Please terminate the Escrow Account established under the Escrow
Agreement and pay the full balance and Proceeds thereof by immediately available
funds to the subscribers in the amounts received from each subscriber. Attached
hereto is a list setting forth the name and address of all subscribers and the
amount to be returned thereto.
All terms defined herein shall have the definitions ascribed to them in
the Escrow Agreement referred to above.
Very truly yours,
NUWAVE TECHNOLOGIES, INC.
By:
--------------------------------
JANSSEN-MEYERS ASSOCIATES, L.P.
By: Meyer Janssen Securities Corp.
General Partner
By:
--------------------------------
9
<PAGE>
EXHIBIT C
The Escrow Agent is authorized to accept instructions signed or
believed by the Escrow Agent to be signed by any one of the following on behalf
of the Company and the Placement Agent.
COMPANY
Name True Signature
Jeremiah F. O'Brien, Vice President ----------------------------
Ed Bohn, Director ----------------------------
PLACEMENT AGENT
Name True Signature
Bruce Meyers ----------------------------
Kenneth Levy ----------------------------
10
EXHIBIT 10.3
WARRANT AGREEMENT
By and Between
NUWAVE TECHNOLOGIES, INC.,
a Delaware corporation
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
Section 1. Appointment of Warrant Agent; Issuance of Warrants....................................................1
Section 2. Form of Warrant.......................................................................................2
Section 3. Countersignature and Registration.....................................................................2
Section 4. Transfers and Exchanges...............................................................................3
Section 5. Exercise of Warrants..................................................................................3
Section 6. Payment of Taxes......................................................................................5
Section 7. Mutilated or Missing Warrants.........................................................................5
Section 8. Reservation of Common Stock...........................................................................5
Section 9. Adjustments of Exercise Price and Number of Securities................................................6
Section 10. Registration..........................................................................................8
Section 11. Indemnification.......................................................................................9
Section 12. Disposition of Proceeds on Exercise of Warrants......................................................12
Section 13. Redemption of Warrants...............................................................................12
Section 14. Merger or Consolidation or Change of Name of Warrant Agent...........................................13
Section 15. Duties of Warrant Agent..............................................................................14
Section 16. Change of Warrant Agent..............................................................................15
Section 17. Legends..............................................................................................16
Section 18. Notices..............................................................................................16
Section 19. Supplements and Amendments...........................................................................17
Section 20. New York Contract....................................................................................17
Section 21. Benefits of this Agreement...........................................................................17
Section 22. Successors...........................................................................................18
</TABLE>
i
<PAGE>
WARRANT AGREEMENT, dated as of May 15, 1998, between NUWAVE
TECHNOLOGIES, INC., a Delaware corporation (the "Company"), and AMERICAN STOCK
TRANSFER & TRUST COMPANY, as warrant agent (the "Warrant Agent").
WHEREAS, the Company proposes to offer for sale in a private offering
(the "Offering") pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the "Act" or the "Securities Act"), and/or Rule 506 of Regulation D
promulgated thereunder, an aggregate of not less than 25 and not more than 70
Units ("Units"), each Unit comprised of (i) a number of shares of common stock,
par value $.01 per share (the "Common Stock"), of the Company determined by
dividing the purchase price per Unit of $100,000 (the "Offering Price") by, for
the initial closing of the Offering, eighty percent (80%) of the "Initial
Average Closing Bid Price" which shall be the average closing bid price for the
Common Stock for the eight (8) consecutive trading days from and including April
28, 1998 to and including May 7, 1998, and for each subsequent closing, the
lesser of (x) $3.20 and (y) eighty percent (80%) of the "Average Closing Bid
Price" which shall be the average closing bid price for the Common Stock for the
eight (8) consecutive trading days immediately preceding the date of a closing
(a "Closing Date") of the Offering, and (ii) Class A Redeemable Warrants (the
"Warrants") to purchase seventy-five percent (75%) of such number of shares of
Common Stock of the Company (the "Warrant Shares"), as more particularly
described in the Confidential Private Placement Memorandum dated May 8, 1998
(the "Offering Memorandum");
WHEREAS, in connection with the Offering, the Company will sell to
Janssen-Meyers Associates, L.P. ("Janssen-Meyers") Unit Purchase Warrants (the
"Placement Agent Warrants") at a price of $.001 to purchase 25% of the aggregate
number of Units sold in the Offering at an exercise price equal to the Offering
Price until May 11, 2003. The Placement Agent Warrants shall entitle
Janssen-Meyers to purchase the same securities as contained in the Units; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, transfer, exchange and exercise of the Warrants.
NOW THEREFORE, the parties hereto agree as follows:
Section 1. Appointment of Warrant Agent; Issuance of Warrants.
--------------------------------------------------
(a) The Company hereby appoints the Warrant Agent to act as
warrant agent for the Company in accordance with the instructions hereinafter
set forth in this Agreement, and the Warrant Agent hereby accepts such
appointment.
(b) At each Closing contemplated in the Offering Memorandum, and
upon exercise of the Placement Agent Warrants as provided therein, appropriate
number of Warrants shall be executed by the Company and delivered to the Warrant
Agent.
<PAGE>
Section 2. Form of Warrant.
---------------
The text of the Warrants and the forms of election to purchase Common
Stock attached to the Warrants shall be substantially as set forth in Exhibit A
attached hereto (the provisions of which are hereby incorporated herein). All of
the certificates for the Warrants may have such letters, numbers or other marks
of identification or designation and such legends, summaries or endorsements
printed, lithographed or engraved thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Warrants may be listed, or to conform to usage. Each Warrant shall initially
entitle the registered holder thereof to purchase one share of Common Stock at a
purchase price equal to the Initial Average Closing Bid Price (as adjusted as
hereinafter provided, the "Exercise Price"), at any time during the period (the
"Exercise Period") commencing on the Final Closing Date (as defined in the
Offering Memorandum) and expiring at 5:00 p.m. Eastern Time on May 11, 2003. The
Exercise Price and the number of shares of Common Stock issuable upon exercise
of the Warrants are subject to adjustment upon the occurrence of certain events,
all as hereinafter provided. The Warrants shall be executed on behalf of the
Company by the manual or facsimile signature of the present or any future
President or Vice President of the Company, and attested to by the manual or
facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company.
Warrants shall be dated as of the date of issuance by the Warrant Agent
either upon initial issuance or upon transfer or exchange.
In the event the aforesaid expiration date of the Warrants falls on a
day that is not a business day, then the Warrants shall expire at 5:00 p.m. New
York time on the next succeeding business day. For purposes hereof, the term
"business day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in New York City, New York, are authorized or
obligated by law to be closed.
Section 3. Countersignature and Registration.
---------------------------------
The Warrant Agent shall maintain books (the "Warrant Register") for the
transfer and registration of the Warrants. Upon the initial issuance of the
Warrants, the Warrant Agent shall issue and register the Warrants in the names
of the respective holders thereof. The Warrants shall be countersigned manually
or by facsimile by the Warrant Agent (or by any successor to the Warrant Agent
then acting as warrant agent under this Agreement) and shall not be valid for
any purpose unless so countersigned. The Warrants may, however, be so
countersigned by the Warrant Agent (or by its successor as Warrant Agent) and be
delivered by the Warrant Agent, notwithstanding that the persons whose manual or
facsimile signatures appear thereon as proper officers of the Company shall have
ceased to be such officers at the time of such countersignature or delivery.
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Section 4. Transfers and Exchanges.
-----------------------
The Warrant Agent shall transfer, from time to time, any outstanding
Warrants upon the books to be maintained by the Warrant Agent for that purpose,
upon surrender thereof for transfer properly endorsed or accompanied by
appropriate instructions for transfer. Upon any such transfer, a new Warrant
shall be issued to the transferee and the surrendered Warrant shall be cancelled
by the Warrant Agent. Warrants so cancelled shall be delivered by the Warrant
Agent to the Company from time to time upon request. Warrants may be exchanged
at the option of the holder thereof, when surrendered at the office of the
Warrant Agent, for another Warrant, or other Warrants of different denominations
of like tenor and representing in the aggregate the right to purchase a like
number of shares of Common Stock. No certificates for Warrants shall be issued
except for (i) Warrants initially issued hereunder in accordance with Section 1
hereof, (ii) Warrants issued upon any transfer or exchange of Warrants, (iii)
Warrants issued in replacement of lost, stolen, destroyed or mutilated
certificates for Warrants pursuant to Section 7 hereof, and (iv) at the option
of the Board of Directors of the Company, Warrants in such form as may be
approved by its Board of Directors, to reflect any adjustment or change in the
Exercise Price or the number of shares of Common Stock purchasable upon exercise
of the Warrants made pursuant to Section 9 hereof. Notwithstanding any of the
foregoing, the Warrant Agent and the Company shall have no obligation to cause
Warrants to be transferred on the Warrant Register to any person if, in the
opinion of counsel to the Company, such transfer does not comply with the
provisions of the Act and the rules and regulations promulgated thereunder.
Section 5. Exercise of Warrants.
--------------------
(a) The Warrant may be exercised, in whole or in part, at any time
and from time to time during the Exercise Period by delivery to the Warrant
Agent of (i) the Warrant; (ii) the Cash Exercise Form attached to the Warrant
duly executed by the registered holder and (iii) the full Exercise Price for
each share of Warrant Shares as to which the Warrant is exercised. The Warrant
also may be exercised, in whole or in part, at any time and from time to time
during the Exercise Period by delivery to the Warrant Agent of (i) the Warrant
and (ii) the Net Exercise Form attached to the Warrant duly executed by the
registered holder, including a calculation of the number of Warrant Shares to be
issued upon such exercise in accordance with the terms hereof (a "Cashless
Exercise"). In the event of a Cashless Exercise, the registered holder shall
surrender the Warrant for that number of Warrant Shares determined by (i)
multiplying the number of Warrant Shares for which the Warrant is being
exercised by the difference (the "Per Share Warrant Value") resulting from
subtracting the Exercise Price from the closing bid price for one share of
Common Stock on the trading day immediately preceding the date of exercise of
the Warrant (the "Bid Price") and (ii) dividing the product by the Bid Price.
Payment of any Exercise Price shall be made in cash or by certified or bank
check payable to the Company.
(b) Subject to Section 6 hereof, upon receipt by the Company of
the Warrant, the Cash Exercise Form or the Net Exercise Form, as the case may
be, and the aggregate Exercise Price for the Warrant Shares, if applicable, the
registered holder shall be
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deemed to be the holder of record of the Warrant Shares issuable upon such
exercise; provided, however, that if the date of such receipt is a date upon
which the transfer books of the Company are closed, the registered holder shall
be deemed to be the record holder on the next succeeding business day on which
such books are open. As soon as practicable after each such exercise of the
Warrant, the Warrant Agent shall issue and cause to be delivered to the
registered holder a certificate or certificates for the Warrant Shares issuable
upon such exercise, registered in the name of the holder or its designee. If the
Warrant should be exercised in part only, the Warrant Agent shall, upon
surrender of the Warrant for cancellation, execute and deliver a new Warrant
evidencing the right of the holder to purchase the remaining unexercised balance
of the Warrant Shares (or portions thereof) subject to purchase thereunder. The
Warrant Agent is hereby irrevocably authorized to countersign and to deliver the
required new Warrants pursuant to the provisions of this Section and the
Company, whenever requested by the Warrant Agent, will supply the Warrant Agent
with Warrants duly executed on behalf of the Company for such purpose. Upon the
exercise of any one or more Warrants, the Warrant Agent shall promptly notify
the Company in writing of such fact and of the number of securities delivered
upon such exercise and, subject to the provisions below, shall cause all
payments of an amount (if any), in cash or by check made payable to the order of
the Company, equal to the aggregate Exercise Price for such Warrants to be
deposited promptly in the Company's bank account. The Company and Warrant Agent
shall determine, in their sole and absolute discretion, whether a Warrant
certificate has been properly completed for exercise by the registered holder
thereof.
(c) The Warrant Agent and the Company shall be entitled to treat
the registered holder of any Warrant on the Warrant Register as the owner in
fact thereof for all purposes and shall not be bound to recognize any equitable
or other claim to or interest in such Warrant on the part of any other person,
and shall not be liable for any registration or transfer of Warrants which are
registered or to be registered in the name of a fiduciary or the nominee of a
fiduciary unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration or transfer, or
with the knowledge of such facts that its participation therein amounts to bad
faith.
(d) Notwithstanding anything to the contrary contained herein, no
Warrant will be exercisable and the Company shall not be obligated to deliver
any securities pursuant to the exercise of any Warrant unless at the time of
exercise (i) the Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement under the Securities Act of 1933, as
amended (the "Act"), covering the securities issuable upon exercise of such
Warrant and such registration statement shall have been declared and shall
remain effective and shall be current, and such shares have been registered or
qualified or be exempt under the securities laws of the state or other
jurisdiction of residence of the holder of such Warrant and the exercise of such
Warrant in any such state or other jurisdiction shall not otherwise be unlawful,
or (ii) the Company has received an opinion of counsel to the registered holder
of such Warrant, which counsel and opinion are reasonably satisfactory to the
Company, that such securities may be issued in the manner contemplated without
an effective registration statement under the Act or applicable state securities
laws.
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Section 6. Payment of Taxes.
-----------------
The issuance of any shares or other securities upon the exercise of the
Warrant, and the delivery of certificates or other instruments representing such
shares or other securities, shall be made without charge to the registered
holder for any tax or other charge in respect of such issuance. The Company
shall not, however, be required to pay any tax which may be payable in respect
of any transfer or delivery of the Warrant to a person other than, or the
issuance and delivery of any certificate in a name other than, that of the
registered holder and the Company shall not be required to issue or deliver any
new Warrant or such certificate unless and until the person or persons
requesting the issue thereof shall have paid to the Company the amount of such
tax or shall have established to the satisfaction of the Company that such tax
has been paid.
Section 7. Mutilated or Missing Warrants.
------------------------------
In case any of the Warrants shall be mutilated, lost, stolen or
destroyed, the Company may, in its discretion, issue and the Warrant Agent shall
countersign and deliver in exchange and substitution for and upon cancellation
of the mutilated Warrant, or in lieu of and in substitution for the Warrant
lost, stolen or destroyed, a new Warrant of like tenor and representing an
equivalent right or interest, but only upon receipt of evidence satisfactory to
the Company and the Warrant Agent of such loss, theft or destruction and, in
case of a lost, stolen or destroyed Warrant, indemnity, if requested, also
satisfactory to them. Applicants for such substitute Warrants shall also comply
with such other reasonable regulations and pay such reasonable charges as the
Company or the Warrant Agent may prescribe.
Section 8. Reservation of Common Stock.
----------------------------
There have been reserved, and the Company shall at all times keep
reserved, out of its authorized shares of Common Stock, a number of shares of
Common Stock sufficient to provide for the exercise of the rights of purchase
represented by the Warrants, and the transfer agent for the shares of Common
Stock and every subsequent transfer agent for any shares of Common Stock
issuable upon the exercise of any of the aforesaid rights of purchase are
irrevocably authorized and directed at all times to reserve such number of
authorized shares of Common Stock as shall be required for such purpose. The
Company agrees that all shares of Common Stock issued upon exercise of the
Warrants shall be, at the time of delivery of the certificates for such shares
against payment of the Exercise Price therefor, if any, validly issued, fully
paid and nonassessable. The Company will keep a copy of this Agreement on file
with the transfer agent for the shares of Common Stock (which may be the Warrant
Agent) and with every subsequent transfer agent for any shares of Common Stock
issuable upon the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is irrevocably authorized to requisition from time
to time from such transfer agent stock certificates required to honor
outstanding Warrants. The Company will supply such transfer agent with duly
executed stock certificates for that purpose. All Warrants surrendered in the
exercise of the rights thereby
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evidenced shall be cancelled by the Warrant Agent and shall thereafter be
delivered to the Company, and such cancelled Warrants shall constitute
sufficient evidence of the number of shares of Common Stock which have been
issued upon the exercise of such Warrants. Promptly after the date of expiration
of the Warrants, the Warrant Agent shall certify to the Company the total
aggregate amount of Warrants then outstanding, and thereafter no shares of
Common Stock shall be subject to reservation in respect of such Warrants which
shall have expired.
Section 9. Adjustments of Exercise Price and Number of Securities.
-------------------------------------------------------
(a) (i) In case the Company shall at any time after the date the
Warrant is first issued (i) declare a dividend on any class of the outstanding
capital stock of the Company (the "Capital Stock") payable in shares of its
Capital Stock, (ii) subdivide any class of the outstanding Capital Stock, or
(iii) combine any class of the outstanding Capital Stock into a smaller number
of shares, but only if such combination is effective after such time as, were an
exercise of the Warrant to take place, in whole or in part, then, in each case,
the Exercise Price, and the number of Warrant Shares issuable upon exercise of
the Warrant, in effect at the time of the record date for such dividend or of
the effective date of such subdivision, or combination, shall be proportionately
adjusted so that the holder after such time shall be entitled to receive the
aggregate number and kind of shares for such consideration which, if such
Warrant had been exercised immediately prior to such time at the then-current
Exercise Price, he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, or combination. Such adjustment
shall be made successively whenever any event listed above shall occur.
(ii) No adjustment in the Exercise Price shall be required if
such adjustment is less than $.05; provided, however, that any adjustments which
by reason of this Section 9(a)(ii) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 9(a) shall be made to the nearest cent or to the nearest
one-thousandth of a share, as the case may be.
(iii) Whenever there shall be an adjustment as provided in
this Section 9(a), the Company shall promptly cause written notice thereof to be
sent by certified mail, postage prepaid, to the Warrant Agent and the holders,
at its address as it shall appear in the Warrant Register, which notice shall be
accompanied by an officer's certificate setting forth the number of Warrant
Shares purchasable upon the exercise of the Warrant and the Exercise Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment and the computation thereof, which officer's certificate shall be
conclusive evidence of the correctness of any such adjustment absent manifest
error.
(iv) The Company shall not be required to issue fractions of
shares of Common Stock of the Company upon the exercise of the Warrant. If any
fraction of a share would be issuable on the exercise of the Warrant (or
specified portions thereof), the
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Company shall purchase such fraction for an amount in cash equal to the same
fraction of the current market price of such share of Common Stock on the date
of exercise of the Warrant.
(b) (i) In case of any consolidation with or merger of the Company
with or into another corporation (other than a merger or consolidation in which
the Company is the surviving or continuing corporation), or in case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, shall (i)
provide the registered holder with an executed agreement stating that the holder
shall have the right thereafter to receive upon exercise of the Warrant solely
the kind and amount of shares of stock and other securities, property, cash, or
any combination thereof receivable upon such consolidation, merger, sale, lease,
or conveyance by a holder of the number of shares of Common Stock for which the
Warrant might have been exercised immediately prior to such consolidation,
merger, sale, lease, or conveyance. Such agreement shall provide for adjustments
which shall be as nearly equivalent as practicable to the adjustments in Section
9(a).
(ii) In case of any reclassification or change of the shares
of Common Stock issuable upon exercise of the Warrant (other than a change in
par value or from no par value to a specified par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation or merger of
another corporation into the Company in which the Company is the continuing
corporation and in which there is a reclassification or change (including a
change to the right to receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par value to a specified par
value, or as a result of a subdivision or combination, but including any change
in the shares into two or more classes or series of shares), the registered
holder shall have the right thereafter to receive upon exercise of the Warrant
solely the kind and amount of shares of stock and other securities, property,
cash, or any combination thereof receivable upon such reclassification, change,
consolidation, or merger by a holder of the number of shares of Common Stock for
which the Warrant might have been exercised immediately prior to such
reclassification, change, consolidation, or merger. Thereafter, appropriate
provision shall be made for adjustments which shall be as nearly equivalent as
practicable to the adjustments in Section 9(a).
(iii) The above provisions of this Section 9(b) shall
similarly apply to successive reclassifications and changes of shares of Common
Stock and to successive consolidations, mergers, sales, leases, or conveyances.
(c) Notwithstanding anything herein to the contrary, no adjustment
of the Exercise Price shall be made:
(i) Upon the issuance or sale of the Placement Agent
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Warrants, the shares of Common Stock or Warrants issuable upon the exercise of
the Placement Agent Warrants or the shares of Common Stock issuable upon
exercise of the Warrants underlying the Placement Agent Warrants; or
(ii) Upon the issuance or sale of (A) the shares of Common
Stock or Warrants issued by the Company in the Offering, or (B) the shares of
Common Stock (or other securities) issuable upon exercise of Warrants; or
(iii) Upon (A) the issuance of options pursuant to the
Company's incentive stock option plan in effect on the date hereof or as
hereafter amended in accordance with the terms thereof or any other employee or
executive stock option plan approved by the stockholders of the Company or the
sale by the Company of any shares of Common Stock pursuant to the exercise of
any such options, or (B) the sale by the Company of any shares of Common Stock
pursuant to the exercise of any options or warrants issued and outstanding on
the date hereof.
(d) In case of the dissolution, liquidation or winding-up of the
Company, all rights under the Warrants and the Placement Agent Warrants shall
terminate on a date fixed by the Company, such date to be no earlier than ten
(10) days prior to the effectiveness of such dissolution, liquidation or
winding-up and not later than five (5) days prior to such effectiveness. Notice
of such termination of purchase rights shall be given to each registered holder
of the Warrants, as the same shall appear on the books of the Company maintained
by the Warrant Agent, by registered mail at least thirty (30) days prior to such
termination date.
Section 10. Registration.
-------------
(a) The Company will use its best efforts to file a registration
statement (the "Registration Statement") under the Act, therein registering the
Warrants and the Warrant Shares (the "Registrable Securities") upon demand,
after six (6) months of the final closing of the Offering (the "Filing Date"),
and use its best efforts to have the Registration Statement declared effective
by the Commission as soon as possible thereafter (the "Effective Date"). In the
event the Registration Statement is not declared effective within 60 days after
a demand for registration, the then number of Warrants shall be increased by two
percent (2%), effective as of the end of such 60 day period and by an additional
two percent (2%) on each one month anniversary thereafter, until such time that
the number of Warrants should equal 120% of the original number of Warrants. The
Company agrees to keep the Registration Statement effective until the expiration
period of the Warrants.
(b) In the event of a registration pursuant to the provisions of this
Section 10, the Company shall use its best efforts to cause the Registrable
Securities so registered to be registered or qualified for sale under the
securities or blue sky laws of such jurisdictions as the holder or such holders
(the "Eligible Holders") may reasonably request; provided, however, that the
Company shall not by reason of this Section 10(b) be required to
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<PAGE>
qualify to do business in any state in which it is not otherwise required to
qualify to do business or to file a general consent to service of process.
(c) The Company shall keep effective any registration or
qualification contemplated by this Section 10 and shall from time to time amend
or supplement each applicable registration statement, preliminary prospectus,
final prospectus, application, document, and communication for such period of
time as shall be required to permit the Eligible Holders to complete the offer
and sale of the Registrable Securities covered thereby.
(d) In the event of a registration pursuant to the provisions of
this Section 10, the Company shall furnish to each Eligible Holder such
reasonable number of copies of the registration statement and of each amendment
and supplement thereto (in each case, including all exhibits), such reasonable
number of copies of each prospectus contained in such registration statement and
each supplement or amendment thereto (including each preliminary prospectus),
all of which shall conform to the requirements of the Act and the rules and
regulations thereunder, and such other documents, as any Eligible Holder may
reasonably request to facilitate the disposition of the Registrable Securities
included in such registration.
(e) In the event of a registration pursuant to the provision of
this Section 10, the Company and each Eligible Holder shall enter into a
cross-indemnity agreement and a contribution agreement, each in customary form,
with each underwriter, if any, and, if requested, enter into an underwriting
agreement containing customary representations, warranties, allocation of
expenses, and customary closing conditions, including, without limitation,
opinions of counsel and accountants' cold comfort letters, with any underwriter
who acquires any Registrable Securities.
(f) The Company agrees that until all the Registrable Securities
have been sold under a registration statement or pursuant to Rule 144 under the
Act, it shall keep current in filing all reports, statements and other materials
required to be filed with the Commission to permit holders of the Registrable
Securities to sell such securities under Rule 144.
Section 11. Indemnification.
---------------
(a) Subject to the conditions set forth below, the Company agrees
to indemnify and hold harmless each Eligible Holder, its officers, directors,
partners, employees, agents, and counsel, and each person, if any, who controls
any such person within the meaning of Section 15 of the Act or Section 20(a) of
the Securities Exchange Act of 1934 (the "Exchange Act"), from and against any
and all loss, liability, charge, claim, damage, and expense whatsoever (which
shall include, for all purposes of this Section 11, without limitation,
reasonable attorneys, fees and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), as and when
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incurred, arising out of, based upon, or in connection with, any breach of any
representation, warranty, covenant, or agreement of the Company contained in any
of the Warrants, any untrue statement or alleged untrue statement of a material
fact contained (i) in any registration statement, preliminary prospectus, or
final prospectus (as from time to time amended and supplemented), or any
amendment or supplement thereto, relating to the sale of any of the Registrable
Securities, or (ii) in any application or other document or communication (in
this Section 11, collectively called an "application") executed by or on behalf
of the Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction in order to register or qualify any of the
Registrable Securities under the securities or blue sky laws thereof or filed
with the commission or any securities exchange; or any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, unless such statement or omission
was made in reliance upon and in conformity with written information furnished
to the Company with respect to such Eligible Holder by or on behalf of such
person expressly for inclusion in any registration statement, preliminary
prospectus, or final prospectus, or any amendment or supplement thereto, or in
any application, as the case may be. Notwithstanding the foregoing, the Company
shall not be responsible for any failure of Janssen-Meyers to file, on behalf of
the Company, Blue Sky applications in jurisdictions where Janssen-Meyers is
offering Units and where such application is required by law. The foregoing
agreement to indemnify shall be in addition to any liability the Company may
otherwise have, including liabilities arising under any of the Warrants.
If any action is brought against any Eligible Holder or any of its
officers, directors, partners, employees, agents, or counsel, or any controlling
persons of such person (an "indemnified party") in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company in writing of the
institution of such action (but the failure to so notify shall not relieve the
Company from any liability under this Section 11(a) unless the Company shall
have been materially prejudiced by such failure or relieve the Company from any
liability other than pursuant to this Section 11(a)) and the Company shall
promptly assume the defense of such action, including the employment of counsel
(reasonably satisfactory to such indemnified party or parties) and payment of
expenses. Such indemnified party or parties shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such action or the Company shall not have
employed counsel reasonably satisfactory to such indemnified party or parties to
have charge of the defense of such action or such indemnified party or parties
shall have reasonably concluded that there may be one or more legal defenses
available to it or them or to other indemnified parties which are different from
or additional to those available to the Company, in any of which events such
fees and expenses shall be borne by the Company and the Company shall not have
the right to direct the defense of such action on behalf of the indemnified
party or parties. Anything in this Section 11 to the contrary notwithstanding,
the Company shall not be liable for any settlement of any such claim or action
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<PAGE>
effected without its written consent, which shall not be unreasonably withheld.
The Company agrees promptly to notify the Eligible Holders of the commencement
of any litigation or proceedings against the Company or any of its officers or
directors in connection with the sale of any Registrable Securities or any
preliminary prospectus, final prospectus, registration statement, or amendment
or supplement thereto, or any application relating to any sale of any
Registrable Securities.
(b) The registered holder of Warrants agrees to indemnify and hold
harmless the Company, each director of the Company, each officer of the Company
who shall have signed any registration statement covering Registrable Securities
held by the holder, each other person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and
its or their respective counsel, to the same extent as the foregoing indemnity
from the Company to the Eligible Holders in Section 11(a), but only with respect
to statements or omissions, if any, made in any registration statement,
preliminary prospectus, or final prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or in any application, in
reliance upon and in conformity with written information furnished to the
Company with respect to the registered holder by or on behalf of the registered
holder expressly for inclusion in any such registration statement, preliminary
prospectus, or final prospectus, or any amendment or supplement thereto, or in
any application, as the case may be. If any action shall be brought against the
Company or any other person so indemnified (an "indemnified party") based on any
such registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, and in respect of which
indemnity may be sought against the registered holder pursuant to this Section
11(b), the registered holder shall have the rights and duties given to the
Company, and the Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the provisions of Section
11(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 11(a) or
11(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Act, the Exchange Act or otherwise, then the
Company, as one entity, and the Eligible Holders of the Registrable Securities
included in such registration in the aggregate, as a second entity, shall
contribute to the losses, liabilities, claims, damages, and expenses whatsoever
to which any of them may be subject, on the basis of relevant equitable
considerations such as the relative fault of the Company and such Eligible
Holders in connection with the facts which resulted in such losses, liabilities,
claims, damages, and expenses. The relative fault, in the case of an untrue
statement, alleged untrue statement, omission, or alleged omission, shall be
determined by, among other things, whether such statement, alleged statement,
omission, or alleged omission relates to information supplied by the Company or
by such Eligible Holders, and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement, alleged
statement, omission, or alleged
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omission. The Company and the Eligible Holders agree that it would be unjust and
inequitable if the respective obligations of the Company and the Eligible
Holders for contribution were determined by pro rata or per capita allocation of
the aggregate losses, liabilities, claims, damages, and expenses (even if the
Eligible Holders and the other indemnified parties were treated as one entity
for such purpose) or by any other method of allocation that does not reflect the
equitable considerations referred to in this Section 11(c). In no case shall any
Eligible Holder be responsible for a portion of the contribution obligation
imposed on all Eligible Holders in excess of its pro rata share based on the
number of shares of Common Stock owned (or which would be owned upon exercise of
all Registrable Securities) by it and included in such registration as compared
to the number of shares of Common Stock owned (or which would be owned upon
exercise of all Registrable Securities) by all Eligible Holders and included in
such registration. No person guilty of a fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who is not guilty of such fraudulent representation. For purposes of
this Section 11(c), each person, if any, who controls any Eligible Holder within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and
each officer, director, partner, employee, agent, and counsel of each such
Eligible Holder or control person shall have the same rights to contribution as
each Eligible Holder or control person and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed any such
registration statement, each director of the Company, and its or their
respective counsel shall have the same rights to contribution as the Company,
subject in each case to the provisions of this Section 11(c). Anything in this
Section 11(c) to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 11(c) is intended to supersede any
right to contribution under the Act, the Exchange Act or otherwise.
Section 12. Disposition of Proceeds on Exercise of Warrants.
-----------------------------------------------
(a) The Warrant Agent shall promptly forward to the Company all
monies received by the Warrant Agent for the purchase of shares of Common Stock
through the exercise of the Warrants.
(b) The Warrant Agent shall keep copies of this Agreement
available for inspection by holders of Warrants during normal business hours.
Section 13. Redemption of Warrants.
----------------------
The Warrants are redeemable by the Company commencing twelve (12)
months after the Effective Date, in whole or in part, on not less than thirty
(30) days' prior written notice at a redemption price of $.01 per Warrant (or
earlier with the prior consent of Janssen-Meyers), provided the average closing
bid quotation of the Common Stock as reported on the Nasdaq SmallCap Market, if
traded thereon, or if not traded thereon, the average closing sale price if
listed on a national securities exchange (or other reporting system that
provides last sale prices),
12
<PAGE>
has been at least 250% of the then current Exercise Price of the Warrants, for a
period of 30 consecutive trading days ending on the day prior to the date on
which the Company gives notice of redemption. Any redemption in part shall be
made pro rata to all Warrant holders. The redemption notice shall be mailed to
the holders of the Warrants at their respective addresses appearing in the
Warrant Register. Any such notice mailed in the manner provided herein shall be
conclusively presumed to have been duly given in accordance with this Agreement
whether or not the registered holder receives such notice. No failure to mail
such notice nor any defect therein or in the mailing thereof shall affect the
validity of the proceedings for such redemption except as to a registered holder
of a Warrant (i) to whom notice was not mailed or (ii) whose notice was
defective. An affidavit of the Warrant Agent or the Secretary or Assistant
Secretary of the Company that notice of redemption has been mailed shall, in the
absence of fraud, be prima facie evidence of the facts stated therein. Holders
of the Warrants will have exercise rights until the close of business on the day
immediately preceding the date fixed for redemption. On and after the date fixed
for redemption, the holder shall have no right with respect to the Warrant
except to receive $.01 per Warrant upon surrender of the Warrant.
Notwithstanding anything to the contrary contained herein, no Warrant
will be redeemable unless at the time of redemption, the Company has filed with
the Commission a registration statement under the Act, covering the Warrant
Shares and such registration statement shall have been declared and shall remain
effective and shall be current, and such Warrant Shares have been registered or
qualified or be exempt under the securities laws of the state or other
jurisdiction of residence of the holder of such Warrant and the redemption of
such Warrant in any such state or other jurisdiction shall not otherwise be
unlawful.
Section 14. Merger or Consolidation or Change of Name of Warrant Agent.
----------------------------------------------------------
Any corporation or company which may succeed to the corporate trust
business of the Warrant Agent by any merger or consolidation or otherwise shall
be the successor to the Warrant Agent hereunder without the execution or filing
of any paper or any further act on the part of any of the parties hereto;
provided, that such corporation would be eligible for appointment as a successor
Warrant Agent under the provisions of Section 16 of this Agreement. In case at
the time such successor to the Warrant Agent shall succeed to the agency created
by this Agreement any of the Warrants shall have been countersigned but not
delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent and deliver such Warrants so
countersigned.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrants shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignature under its prior name
and deliver Warrants so countersigned. In all such cases such Warrants shall
have the full force provided in the Warrants and in this Agreement.
13
<PAGE>
Section 15. Duties of Warrant Agent.
-----------------------
The Warrant Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Warrants, by their acceptance thereof, shall be bound:
(a) The statements of fact and recitals contained herein and in
the Warrants shall be taken as statements of the Company, and the Warrant Agent
assumes no responsibility for the correctness of any of the same except as such
describe the Warrant Agent or action taken or to be taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the Warrants
except as herein expressly provided.
(b) The Warrant Agent shall not be responsible for any failure of
the Company to comply with any of the covenants in this Agreement or in the
Warrants.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any holder of
any Warrant in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility
to the Company or to any holder of any Warrant for any action taken in reliance
on any notice, resolution, waiver, consent, order, certificate or other
instrument believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the execution of
this Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges incurred by the Warrant Agent in the
execution of this Agreement and to indemnify the Warrant Agent and save it
harmless against any and all liabilities, including judgments, costs and
reasonable counsel fees, for anything done or omitted by the Warrant Agent in
the execution of this Agreement except as a result of the Warrant Agent's
negligence, willful misconduct or bad faith.
(f) The Warrant Agent shall be under no obligation to institute
any action, suit or legal proceeding or to take any other action likely to
involve expenses unless the Company or one or more registered holders of
Warrants shall furnish the Warrant Agent with reasonable security and indemnity
for any costs and expenses which may be incurred, but this provision shall not
affect the power of the Warrant Agent to take such action as the Warrant Agent
may consider proper, whether with or without any such security or indemnity. All
rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant
14
<PAGE>
Agent without the possession of any of the Warrants or the production thereof at
any trial or other proceeding.
(g) The Warrant Agent and any stockholder, director, officer,
partner or employee of the Warrant Agent may buy, sell or deal in any of the
Warrants or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to or otherwise act as fully and freely as though it were not the Warrant
Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent and its
duties shall be determined solely by the provisions hereof.
(i) The Warrant Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys, agents or employees, and the Warrant Agent shall not
be answerable or accountable for any such attorneys, agents or employees or for
any loss to the Company resulting from such neglect or misconduct provided
reasonable care had been exercised in the selection and continued employment
thereof.
(j) Any request, direction, election, order or demand of the
Company shall be sufficiently evidenced by an instrument signed in the name of
the Company by its President or a Vice President or its Secretary or an
Assistant Secretary or its Treasurer or an Assistant Treasurer (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Warrant Agent by a
copy thereof certified by the Secretary or an Assistant Secretary of the
Company.
Section 16. Change of Warrant Agent.
-----------------------
The Warrant Agent may resign and be discharged from its duties under
this Agreement by giving to the Company notice in writing, and to the holders of
the Warrants notice by mailing such notice to the holders at their respective
addresses appearing on the Warrant Register, of such resignation, specifying a
date when such resignation shall take effect. The Warrant Agent may be removed
by like notice to the Warrant Agent from the Company and the like mailing of
notice to the holders of the Warrants. If the Warrant Agent shall resign or be
removed or shall otherwise become incapable of action, the Company shall appoint
a successor to the Warrant Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after such removal or after it
has been notified in writing of such resignation or incapacity by the resigning
or incapacitated Warrant Agent or after the Company has received such notice
from a registered holder of a Warrant (who shall, with such notice, submit his
Warrant for inspection by the Company), then the registered holder of any
Warrant may apply to any court of competent jurisdiction for the appointment of
a successor to the Warrant Agent. Any successor Warrant Agent, whether appointed
by the Company or by such a court, shall be a
15
<PAGE>
bank or trust company, in good standing, incorporated under New York or federal
law. After appointment, the successor Warrant Agent shall be vested with the
same powers, rights, duties and responsibility as if it had been originally
named as Warrant Agent without further act or deed and the former Warrant Agent
shall deliver and transfer to the successor Warrant Agent all canceled Warrants,
records and property at the time held by it hereunder, and execute and deliver
any further assurance or conveyance necessary for this purpose. Failure to file
or mail any notice provided for in this Section, however, or any defect therein,
shall not affect the validity of the resignation or removal of the Warrant Agent
or the appointment of the successor Warrant Agent, as the case may be.
Section 17. Legends.
-------
Unless registered pursuant to the provisions of Section 10 hereof, the
Warrant Shares issued upon exercise of the Warrants shall be subject to a stop
transfer order and the certificate or certificates evidencing such Warrant
Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH
SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR
(2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER
OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER
CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS."
In addition, unless registered pursuant to the provisions of Section 10
hereof, any Warrants issued upon transfer or any new Warrants issued shall bear
a similar legend.
Section 18. Notices.
-------
Any notice pursuant to this Agreement to be given by the Warrant Agent
or the registered holder of any Warrant to the Company, shall be sufficiently
given if sent by first-class mail, postage prepaid, addressed (until another is
filed in writing by the Company with the Warrant Agent) as follows:
16
<PAGE>
NUWAVE Technologies, Inc.
One Passaic Avenue
Fairfield, New Jersey 07004
Attention: President
and a copy thereof to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Attention: Fredric J. Klink, Esq.
Any notice pursuant to this Agreement to be given by the Company or the
registered holder of any Warrant to the Warrant Agent shall be sufficiently
given if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing by the Warrant Agent with the Company) as follows:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Attention: Executive Vice President
Section 19. Supplements and Amendments.
--------------------------
The Company and the Warrant Agent may from time to time supplement or
amend this Agreement in order to cure any ambiguity or to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Warrant Agent may deem
necessary or desirable and which shall not be inconsistent with the provisions
of the Warrants and which shall not materially adversely affect the interest of
the holders of Warrants; and in addition the Company and the Warrant Agent may
modify, supplement or alter this Agreement with the consent in writing of the
registered holders of the Warrants representing not less than a majority of the
Warrants then outstanding.
Section 20. New York Contract.
-----------------
This Agreement and each Warrant issued hereunder shall be deemed to be
a contract made under the laws of the State of New York and shall be construed
in accordance with the laws of New York without regard to the conflicts of law
principles thereof.
Section 21. Benefits of this Agreement.
--------------------------
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company, the Warrant Agent and the registered holders
of the Warrants any legal
17
<PAGE>
or equitable right, remedy or claim under this Agreement. This Agreement shall
be for the sole and exclusive benefit of the Company, the Warrant Agent and the
registered holders of the Warrants.
Section 22. Successors.
----------
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrant Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
18
<PAGE>
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
NUWAVE TECHNOLOGIES, INC.
By: /s/ Jeremiah F. O'Brien
--------------------------------
Name: Jeremiah F. O'Brien
Title: Chief Financial Officer
AMERICAN STOCK
TRANSFER & TRUST COMPANY
By: /s/ Isaac J. Kagan
--------------------------------
Name: Isaac J. Kagan
Title: Vice-President
19
<PAGE>
EXHIBIT 10.4
[Form of Warrant Certificate]
No. ____________________________ VOID AFTER MAY 11, 2003
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY
BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN OPINION OF
COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED,
SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES
LAWS.
NUWAVE TECHNOLOGIES, INC.
Class A Redeemable Warrant for the Purchase of Shares of Common Stock,
par value $0.01 per share
CUSIP [ ]
THIS CERTIFIES that, for value received, ________________________, with
an address at _______________________________ (including any registered
assignee, the "Holder"), is entitled to subscribe for and purchase from NUWAVE
Technologies, Inc., a Delaware corporation (the "Company"), upon the terms and
conditions set forth herein and the Warrant Agreement (as hereinafter defined),
at any time and from time to time from the date of the final closing of the
Offering (as defined in the Warrant Agreement) until 5:00 P.M. on May 11, 2003,
New York time (the "Exercise Period"), __________ shares of the Company's common
stock, par value $0.01 per share (the "Common Stock"), at a price per share (the
"Exercise Price") equal to the average closing bid price for the Common Stock
for the eight (8) consecutive trading days from and including April 28, 1998 to
and including May 7, 1998.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement, dated as of May 15, 1998 (the "Warrant
Agreement"), between the Company and American Stock Transfer & Trust Company
(the "Warrant Agent").
<PAGE>
The Warrants may be exercised by the Holder, in whole or in part, at
any time and from time to time during the Exercise Period through a cash or
cashless exercise upon presentation and surrender of this Warrant Certificate,
with the appropriate exercise form attached hereto duly executed, at the
corporate office of the Warrant Agent at 99 Wall Street, New York, New York
10005, and if a cash exercise, accompanied by payment of the full Exercise Price
for the Warrants in lawful money of the United States of America in cash or by
certified or bank check made payable to the Company, as more fully described in
the Warrant Agreement.
In the event of certain contingencies provided for in the Warrant
Agreement, the Exercise Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Holder, but no fractional shares will be issued. In the case of the exercise of
less than all the Warrants represented hereby, the Company shall cancel this
Warrant Certificate upon the surrender hereof and shall execute and deliver a
new Warrant Certificate or Warrant Certificates of like tenor, which the Warrant
Agent shall countersign, for the balance of such Warrants.
The Company shall not be obligated to deliver any securities pursuant
to the exercise of the Warrants represented hereby unless at the time of
exercise (i) the Company has filed with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933, as amended (the "Act"),
covering the securities issuable upon exercise of the Warrants represented
hereby and such registration statement has been declared and shall remain
effective and shall be current, and such securities have been registered or
qualified or be exempt under the securities laws of the state or other
jurisdiction of residence of the Holder and the exercise of the Warrants
represented hereby in any such state or other jurisdiction shall not otherwise
be unlawful, or (ii) the Company has received an opinion of counsel to the
Holder, which counsel and opinion are reasonably satisfactory to the Company,
that such securities may be issued in the manner contemplated without an
effective registration statement under the Act or applicable state securities
laws.
Prior to the exercise of any Warrant represented hereby, the Holder, as
such, shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed by the Company, in whole or in part, at $.01 per Warrant at any time
commencing twelve (12) months after the Effective Date (as defined in the
Warrant Agreement), or earlier with the prior written consent of Janssen-Meyers
Associates, L.P., on not less than 30 days prior written notice to the Holder,
provided the average
2
<PAGE>
closing bid quotation of the Common Stock as reported on the Nasdaq SmallCap
Market, if traded thereon, or, if not traded thereon, the average closing bid
quotation of the Common Stock if listed on a national securities exchange (or
other reporting system that provides last sale prices), has been at least 250%
of the then current Exercise Price of the Warrants, for a period of 30
consecutive trading days ending on the day prior to the date on which the
Company gives notice of redemption. On and after the date fixed for redemption,
the Holder shall have no right with respect to this Warrant except to receive
$.01 per Warrant upon surrender of this Warrant.
Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Holder as the absolute
owner hereof and of each Warrant represented hereby (notwithstanding any
notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary, except as provided in the
Warrant Agreement.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
conflicts of law principles thereof.
This Warrant Certificate is not valid unless countersigned by the
Warrant Agent.
Dated ______________ _____, 1998
NUWAVE TECHNOLOGIES, INC.
By:
--------------------------------
President
Attest:
By:
------------------------------------
Secretary
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent
By:
-------------------------------------
Authorized officer
3
<PAGE>
CASH EXERCISE FORM
The undersigned hereby irrevocably exercises the right to purchase
__________________ shares of Common Stock of NUWAVE Technologies, Inc., a
Delaware corporation, evidenced by the attached Warrant Certificate, and
herewith makes payment of the Exercise Price with respect to such shares in full
in the form of [wire transfer, cash or check] in the amount of $_______, _____
Warrant Shares to be canceled in connection with such exercise, all in
accordance with the conditions and provisions of the Warrant Agreement and the
attached Warrant Certificate.
The undersigned requests that stock certificates for such Warrant
Shares be issued, and a Warrant Certificate representing any unexercised portion
hereof be issued in the name of the registered Holder and delivered to the
undersigned at the address set forth below.
Dated:
------------------------------ -------------------------------------
Signature of Registered Holder
-------------------------------------
Name of Registered Holder (Print)
Address of Registered Holder (Print):
-------------------------------------
-------------------------------------
-------------------------------------
Social Security or Taxpayer
Identification Number
4
<PAGE>
NET EXERCISE FORM
The undersigned hereby irrevocably exercises the right to exchange the
attached Warrant Certificate for a number of shares of Common Stock of NUWAVE
Technologies, Inc., a Delaware corporation, as determined by (i) multiplying the
number of Common Stock for which the Warrants are being exercised by the
difference (the "Per Share Warrant Value") resulting from subtracting the
Exercise Price from the closing bid price for one share of Common Stock on the
trading day next preceding the date of exercise (the "Bid Price") and (ii)
dividing the product by the Bid Price, all as set forth below:
No. of Shares for which this Warrant is exercised:
--------------------
Per Share Warrant Value $
-------------------
Bid Price (as of preceding trading day) $
-------------------
No. of Shares to be sent to Warrant Holder
--------------------
The undersigned requests that stock certificates for such Warrant
Shares be issued and a Warrant Certificate representing any unexercised portion
hereof be issued in the name of the registered Holder and delivered to the
undersigned at the address set forth below.
Dated:
---------------------- -------------------------------------
Signature of Registered Holder
-------------------------------------
Name of Registered Holder (Print)
Address of Registered Holder (Print):
-------------------------------------
-------------------------------------
-------------------------------------
Social Security or Taxpayer
Identification Number
5
<PAGE>
ASSIGNMENT FORM
To be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, ____________________________, hereby sells, assigns and
transfers unto
----------------------------------
----------------------------------
----------------------------------
(please print or type name, social
security number and address)
__________________________________ of the Warrants represented by this Warrant
Certificate, and hereby irrevocably constitutes and appoints
____________________ as its/his/her attorney-in-fact to transfer this Warrant
Certificate on the books of the Company, with full power of substitution in the
premises.
Dated:
---------------------- -------------------------------------
Signature of Registered Holder
-------------------------------------
Name of Registered Holder (Print)
Address of Registered Holder (Print):
- -----------------------------
Signature of Guaranteed
-------------------------------------
-------------------------------------
-------------------------------------
Social Security or Taxpayer
Identification Number
THE SIGNATURE TO THE ASSIGNMENT OR THE EXERCISE FORM MUST CORRESPOND TO THE NAME
AS WRITTEN UPON THE FACE OF THE ATTACHED WARRANT CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST
BE GUARANTEED BY A BANK, BROKER, DEALER, CREDIT UNION, SAVINGS ASSOCIATION OR
OTHER ENTITY WHICH IS A MEMBER IN GOOD STANDING OF THE SECURITIES TRANSFER
AGENTS MEDALLION PROGRAM.
6
EXHIBIT A
[Form of Warrant Certificate]
No. ____________________________ VOID AFTER MAY 11, 2003
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY
BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN OPINION OF
COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED,
SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES
LAWS.
NUWAVE TECHNOLOGIES, INC.
Class A Redeemable Warrant for the Purchase of Shares of Common Stock,
par value $0.01 per share
CUSIP [ ]
THIS CERTIFIES that, for value received, ________________________, with
an address at _______________________________ (including any registered
assignee, the "Holder"), is entitled to subscribe for and purchase from NUWAVE
Technologies, Inc., a Delaware corporation (the "Company"), upon the terms and
conditions set forth herein and the Warrant Agreement (as hereinafter defined),
at any time and from time to time from the date of the final closing of the
Offering (as defined in the Warrant Agreement) until 5:00 P.M. on May 11, 2003,
New York time (the "Exercise Period"), __________ shares of the Company's common
stock, par value $0.01 per share (the "Common Stock"), at a price per share (the
"Exercise Price") equal to the average closing bid price for the Common Stock
for the eight (8) consecutive trading days from and including April 28, 1998 to
and including May 7, 1998.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement, dated as of May 15, 1998 (the "Warrant
Agreement"), between the Company and American Stock Transfer & Trust Company
(the "Warrant Agent").
<PAGE>
The Warrants may be exercised by the Holder, in whole or in part, at
any time and from time to time during the Exercise Period through a cash or
cashless exercise upon presentation and surrender of this Warrant Certificate,
with the appropriate exercise form attached hereto duly executed, at the
corporate office of the Warrant Agent at 99 Wall Street, New York, New York
10005, and if a cash exercise, accompanied by payment of the full Exercise Price
for the Warrants in lawful money of the United States of America in cash or by
certified or bank check made payable to the Company, as more fully described in
the Warrant Agreement.
In the event of certain contingencies provided for in the Warrant
Agreement, the Exercise Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Holder, but no fractional shares will be issued. In the case of the exercise of
less than all the Warrants represented hereby, the Company shall cancel this
Warrant Certificate upon the surrender hereof and shall execute and deliver a
new Warrant Certificate or Warrant Certificates of like tenor, which the Warrant
Agent shall countersign, for the balance of such Warrants.
The Company shall not be obligated to deliver any securities pursuant
to the exercise of the Warrants represented hereby unless at the time of
exercise (i) the Company has filed with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933, as amended (the "Act"),
covering the securities issuable upon exercise of the Warrants represented
hereby and such registration statement has been declared and shall remain
effective and shall be current, and such securities have been registered or
qualified or be exempt under the securities laws of the state or other
jurisdiction of residence of the Holder and the exercise of the Warrants
represented hereby in any such state or other jurisdiction shall not otherwise
be unlawful, or (ii) the Company has received an opinion of counsel to the
Holder, which counsel and opinion are reasonably satisfactory to the Company,
that such securities may be issued in the manner contemplated without an
effective registration statement under the Act or applicable state securities
laws.
Prior to the exercise of any Warrant represented hereby, the Holder, as
such, shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed by the Company, in whole or in part, at $.01 per Warrant at any time
commencing twelve (12) months after the Effective Date (as defined in the
Warrant Agreement), or earlier with the prior written consent of Janssen-Meyers
Associates, L.P., on not less than 30 days prior written notice to the Holder,
provided the average
A-2
<PAGE>
closing bid quotation of the Common Stock as reported on the Nasdaq SmallCap
Market, if traded thereon, or, if not traded thereon, the average closing bid
quotation of the Common Stock if listed on a national securities exchange (or
other reporting system that provides last sale prices), has been at least 250%
of the then current Exercise Price of the Warrants, for a period of 30
consecutive trading days ending on the day prior to the date on which the
Company gives notice of redemption. On and after the date fixed for redemption,
the Holder shall have no right with respect to this Warrant except to receive
$.01 per Warrant upon surrender of this Warrant.
Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Holder as the absolute
owner hereof and of each Warrant represented hereby (notwithstanding any
notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary, except as provided in the
Warrant Agreement.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
conflicts of law principles thereof.
This Warrant Certificate is not valid unless countersigned by the
Warrant Agent.
Dated ______________ _____, 1998
NUWAVE TECHNOLOGIES, INC.
By:
--------------------------------
President
Attest:
By:
------------------------------------
Secretary
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent
By:
-------------------------------------
Authorized officer
A-3
<PAGE>
CASH EXERCISE FORM
The undersigned hereby irrevocably exercises the right to purchase
__________________ shares of Common Stock of NUWAVE Technologies, Inc., a
Delaware corporation, evidenced by the attached Warrant Certificate, and
herewith makes payment of the Exercise Price with respect to such shares in full
in the form of [wire transfer, cash or check] in the amount of $_______, _____
Warrant Shares to be canceled in connection with such exercise, all in
accordance with the conditions and provisions of the Warrant Agreement and the
attached Warrant Certificate.
The undersigned requests that stock certificates for such Warrant
Shares be issued, and a Warrant Certificate representing any unexercised portion
hereof be issued in the name of the registered Holder and delivered to the
undersigned at the address set forth below.
Dated:
------------------------------ -------------------------------------
Signature of Registered Holder
-------------------------------------
Name of Registered Holder (Print)
Address of Registered Holder (Print):
-------------------------------------
-------------------------------------
-------------------------------------
Social Security or Taxpayer
Identification Number
A-4
<PAGE>
NET EXERCISE FORM
The undersigned hereby irrevocably exercises the right to exchange the
attached Warrant Certificate for a number of shares of Common Stock of NUWAVE
Technologies, Inc., a Delaware corporation, as determined by (i) multiplying the
number of Common Stock for which the Warrants are being exercised by the
difference (the "Per Share Warrant Value") resulting from subtracting the
Exercise Price from the closing bid price for one share of Common Stock on the
trading day next preceding the date of exercise (the "Bid Price") and (ii)
dividing the product by the Bid Price, all as set forth below:
No. of Shares for which this Warrant is exercised:
--------------------
Per Share Warrant Value $
-------------------
Bid Price (as of preceding trading day) $
-------------------
No. of Shares to be sent to Warrant Holder
--------------------
The undersigned requests that stock certificates for such Warrant
Shares be issued and a Warrant Certificate representing any unexercised portion
hereof be issued in the name of the registered Holder and delivered to the
undersigned at the address set forth below.
Dated:
---------------------- -------------------------------------
Signature of Registered Holder
-------------------------------------
Name of Registered Holder (Print)
Address of Registered Holder (Print):
-------------------------------------
-------------------------------------
-------------------------------------
Social Security or Taxpayer
Identification Number
A-5
<PAGE>
ASSIGNMENT FORM
To be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, ____________________________, hereby sells, assigns and
transfers unto
----------------------------------
----------------------------------
----------------------------------
(please print or type name, social
security number and address)
__________________________________ of the Warrants represented by this Warrant
Certificate, and hereby irrevocably constitutes and appoints
____________________ as its/his/her attorney-in-fact to transfer this Warrant
Certificate on the books of the Company, with full power of substitution in the
premises.
Dated:
---------------------- -------------------------------------
Signature of Registered Holder
-------------------------------------
Name of Registered Holder (Print)
Address of Registered Holder (Print):
- -----------------------------
Signature of Guaranteed
-------------------------------------
-------------------------------------
-------------------------------------
Social Security or Taxpayer
Identification Number
THE SIGNATURE TO THE ASSIGNMENT OR THE EXERCISE FORM MUST CORRESPOND TO THE NAME
AS WRITTEN UPON THE FACE OF THE ATTACHED WARRANT CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST
BE GUARANTEED BY A BANK, BROKER, DEALER, CREDIT UNION, SAVINGS ASSOCIATION OR
OTHER ENTITY WHICH IS A MEMBER IN GOOD STANDING OF THE SECURITIES TRANSFER
AGENTS MEDALLION PROGRAM.
A-6
EXHIBIT 10.5
- --------------------------------------------------------------------------------
JANSSEN/MEYERS ASSOCIATES, L.P.
AND
NUWAVE TECHNOLOGIES, INC.
------------
PLACEMENT AGENT'S UNIT
PURCHASE WARRANT AGREEMENT
Dated as of May 19, 1998
- --------------------------------------------------------------------------------
<PAGE>
PLACEMENT AGENT'S UNIT PURCHASE WARRANT AGREEMENT dated as of May 19,
1998 between NUWAVE TECHNOLOGIES, INC., a Delaware corporation (the "Company")
and JANSSEN/MEYERS ASSOCIATES, L.P., a Limited Partnership (the "Placement
Agent").
W I T N E S S E T H :
WHEREAS, the Placement Agent has agreed, pursuant to the placement
agency agreement (the "Placement Agency Agreement") effective as of May 11, 1998
between the Placement Agent and the Company, to sell on behalf of the Company in
a private offering ("the "Offering") pursuant to Section 4(2) of the Securities
Act of 1933, as amended (the "Act"), and Regulation D promulgated thereunder, an
aggregate of not less than 25 and not more than 70 Units ("Units"), plus such
number of additional Units to be offered and sold upon the consent of the
Company and the Placement Agent, each Unit comprised of (i) a number of shares
(the "Unit Shares") of common stock, par value $.01 per share ("Common Stock"),
of the Company, determined by dividing the purchase price per Unit of $100,000
(the "Offering Price") by eighty percent (80%) of the "Initial Average Closing
Bid Price" which shall be the average closing bid price for the Common Stock for
the eight (8) consecutive trading days from and including April 28, 1998 to and
including May 7, 1998, for the initial closing of the Offering; and the lesser
of (x) $3.20 and (y) eighty percent (80%) of the "Average Closing Bid Price" for
the
<PAGE>
Common Stock for the eight (8) consecutive trading days immediately
preceding the date of a closing (a "Closing Date") of the Offering, for each
subsequent closing, and (ii) such number (the "Unit Warrants") of Class A
Redeemable Warrants (the "Class A Warrants") to purchase, in the aggregate,
seventy-five percent (75%) of the Unit Shares (the "Unit Warrant Shares") ; and
WHEREAS, the Company proposes to issue to the Placement Agent warrants
("Warrants") to purchase up to an aggregate of such number of Units of the
Company as shall equal twenty-five (25) per cent of the Units sold in the
Offering; and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on each closing date of the Offering (the "Closing Date") by the Company
to the Placement Agent in consideration for, and as part of the compensation in
connection with the Offering;
NOW, THEREFORE, in consideration of the premises, the agreements herein
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Grant. The Holder is hereby granted the right to purchase, at any
time from the date hereof until 5:30 P.M., New York time, until May 11, 2003
(the "Warrant Exercise Term"), up to an aggregate of such number of Units as
shall equal twenty-five (25) percent of the Units sold in the Offering (the
"Warrant Units") at an initial exercise price (subject to adjustment as
2
<PAGE>
provided in Section 8 hereof) of $100,000 per Warrant Unit, subject to the terms
and conditions of this Agreement.
2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A, attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. Exercise of Warrant.
ss.3.1 Exercise Price. The Warrants are initially exercisable at an initial
exercise price of $100,000 per Unit payable by certified or official bank check
in New York Clearing House funds to the order of the Company, subject to
adjustment as provided in Section 8 hereof. Upon surrender of a Warrant
Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price, as adjusted under the terms of this
Agreement for the number of Warrant Units purchased (the "Purchase Price") at
the Company's principal offices (currently located at One Passaic Avenue,
Fairfield, New Jersey 07004), the registered holder of a Warrant Certificate
("Holder" or "Holders") shall be entitled to receive a certificate or
certificates for the Warrant Units so purchased. The purchase rights represented
by each Warrant Certificate are exercisable at the option of the Holder thereof,
in whole or in part. In the case of the purchase of less than all the Warrant
Units
3
<PAGE>
purchasable under any Warrant Certificate, the Company shall cancel said Warrant
Certificate upon the surrender thereof and shall execute and deliver a new
Warrant Certificate of like tenor for the balance of the Warrant Units
purchasable thereunder.
ss.3.2 Cashless Exercise. At any time during the Warrant Exercise Term, the
Holder may, at its option, exchange the Warrants represented by such Holder's
Warrant Certificate, in whole or in part (a "Warrant Exchange"), into the number
of fully paid and non-assessable Warrant Units determined in accordance with
this Section 3.2, by surrendering such Warrant certificate at the principal
office of the Company or at the office of its transfer agent, accompanied by a
notice stating such Holder's intent to effect such exchange, the number of
Warrants (the "Total Unit Number") to be exchanged and the date on which the
Holder requests that such Warrant Exchange occur (the "Notice of Exchange"). The
Warrant Exchange shall take place on the date specified in the Notice of
Exchange, or, if later, the date the Notice of Exchange is received by the
Company (the "Exchange Date"). Certificates for the Warrant Units issuable upon
such Warrant Exchange and, if applicable, a new Warrant Certificate of like
tenor evidencing the balance of the Warrant Units remaining subject to the
Holder's Warrant certificate, shall be issued as of the Exchange Date and
delivered to the Holder within three (3) days following the Exchange Date. In
connection with any Warrant Exchange, the Holder's Warrant certificate shall
represent the
4
<PAGE>
right to subscribe for and acquire (I) the number of Warrant Units (rounded to
the next highest integer) equal to (A) the Total Unit Number less (B) the number
of Warrant Units equal to the quotient obtained by dividing (i) the product of
the Total Unit Number and the then current Exercise Price per Warrant Unit by
(ii) the current Unit Market Price (as hereafter defined).
As used herein, the phrase "Unit Market Price" shall be deemed the "Market
Price", as herein defined, of the Warrant Securities, as defined in Section 5
below. The "Market Price" at any date shall be deemed to be the last reported
sale price, or, in case no such reported sale takes place on such day, the
average of the last reported sale prices for the preceding trading day, in
either case as officially reported by the principal securities exchange on which
the Common Stock and/or the Class A Warrants, as the case may be, is listed or
admitted to trading or as reported in the Nasdaq National Market System, or, if
the Common Stock and/or the Class A Warrants is not listed or admitted to
trading on any national securities exchange or quoted on the Nasdaq National
Market System, the last reported sale price as furnished by the National
Association of Securities Dealers, Inc. through Nasdaq or similar organization
if Nasdaq is no longer reporting such information, or if the Common Stock and/or
the Class A Warrants is not quoted on Nasdaq, as determined in good faith by
resolution of the Board of Directors
5
<PAGE>
of the Company, based on the best information available to it for the day
immediately preceding the Exchange Date.
4. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance of certificates for Warrant Units (including Unit Shares, Unit Warrants
and/or other securities, properties or rights underlying such Warrants), shall
be made forthwith (and in any event within three (3) business days thereafter)
without charge to the Holder thereof including, without limitation, any tax
which may be payable in respect of the issuance thereof, and such certificates
shall (subject to the provisions of Section 5 hereof) be issued in the name of,
or in such names as may be directed by, the Holder thereof; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any such
certificates in a name other than that of the Holder and the Company shall not
be required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
The Warrant Certificates and the certificates representing the Warrant
Units (and/or other securities, property or rights issuable upon the exercise of
the Warrants) shall be executed on behalf of the Company by the manual or
facsimile signature of the then present Chairman or Vice Chairman of the Board
of Directors
6
<PAGE>
or President or Vice President of the Company under its corporate
seal reproduced thereon, attested to by the manual or facsimile signature of the
then present Secretary or Assistant Secretary of the Company. Warrant
Certificates shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.
5. Restriction on Transfer of Warrants.
Upon exercise, in part or in whole, of the Warrants, certificates
representing the Warrant Units, Unit Shares, Unit Warrants and any of the other
securities issuable upon exercise of the Warrants (collectively, the "Warrant
Securities"), shall bear a legend substantially similar to the legend set forth
in Section 7.1.
The Holder of a Warrant Certificate, by its acceptance thereof,
covenants and agrees that the Warrants are being acquired as an investment and
not with a view to the distribution thereof.
6. Exercise Price.
ss.6.1 Initial and Adjusted Exercise Price. Except as otherwise provided in
Section 8 hereof, the initial exercise price of each Warrant shall be $100,000.
The adjusted exercise price shall be the price which shall result from time to
time from any and all adjustments of the initial exercise price in accordance
with the provisions of Section 8 hereof.
7
<PAGE>
ss.6.2 Exercise Price. The term "Exercise Price" as used herein shall mean
the initial exercise price or the adjusted exercise price, depending upon the
context.
7. Registration Rights.
ss.7.1 Registration Under the Securities Act of 1933. The Warrants and the
Warrant Securities have not been registered under the Securities Act of 1933, as
amended (the "Act"). Upon exercise, in part or in whole, of the Warrants,
certificates representing the Warrant Securities shall bear the following
legend:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended ("Act"), and may not be
offered or sold except pursuant to (i) an effective registration statement
under the Act, (ii) to the extent applicable, Rule 144 under the Act (or
any similar rule under such Act relating to the disposition of securities),
or (iii) an opinion of counsel, if such opinion shall be reasonably
satisfactory to counsel to the issuer, that an exemption from registration
under such Act is available.
ss.7.2 Piggyback Registration.
(a) Registrable Securities. As used herein the term "Registrable Security"
means each of the Warrants and the Warrant Securities and any securities issued
upon any stock split or stock dividend in respect of such Warrant Securities;
provided, however, that with respect to any particular Registrable Security,
such security shall cease to be a Registrable Security when, as of the date of
determination; (i) it has been
8
<PAGE>
effectively registered under the Securities Act and disposed of pursuant
thereto; (ii) registration under the Securities Act is no longer required for
subsequent public distribution of such security; or (iii) it has ceased to be
outstanding. The term "Registrable Securities" means any and/or all of the
securities falling within the foregoing definition of a "Registrable Security."
In the event of any merger, reorganization, consolidation, recapitalization or
other change in corporate structure affecting the Common Stock, such adjustment
shall be made in the definition of "Registrable Security" as is appropriate in
order to prevent any dilution or increase of the rights granted pursuant to this
Article 7 as determined in good faith by the Board of Directors;
(b) If, at any time, the Company proposes to register any of its securities
under the Act (other than pursuant to a Form S-8, or successor form, or in
connection with a merger or acquisition pursuant to Form S-4, or successor form)
it will give written notice by registered mail, at least thirty (30) days prior
to the filing of each such registration statement, to each of the Placement
Agent and to all other Holders of the Registrable Securities (as hereinafter
defined). If any of the Placement Agent or other Holders of the Registrable
Securities notifies the Company (a "Requesting Holder") within twenty (20) days
after receipt of the notice of its desire to include any such Registrable
Securities in the proposed registration
9
<PAGE>
statement, the Company shall afford each Requesting Holder the opportunity to
have any such Registrable Securities registered under such registration
statement.
(c) Notwithstanding the provisions of this Section 7.2, the Company shall
have the right at any time after it shall have given written notice pursuant to
this Section 7.2 (irrespective of whether a written request for inclusion of any
such securities shall have been made) to elect not to file any such proposed
registration statement, or to withdraw the same after the filing but prior to
the effective date thereof.
ss.7.3 Demand Registration.
(a) At any time commencing six months after the closing of the Offering,
the Holders representing a "Majority" (as hereinafter defined) of the
Registrable Securities (assuming the exercise of all of the Warrants) shall have
the right (which right is in addition to the registration rights under Section
7.2 hereof), exercisable by written notice to the Company (the "Demand
Registration Request"), to have the Company prepare and file with the
Commission, on one occasion, a registration statement and such other documents,
including a prospectus, as may be necessary in the opinion of both counsel for
the Company and counsel for the Placement Agent and such Holders, in order to
comply with the provisions of the Act, so as to permit a public offering and
sale of their respective Registrable Securities for until such time as (i)
registration under the Securities Act is
10
<PAGE>
no longer required for public distribution of all of the Registrable Securities;
or (ii) all of the Registrable Securities have ceased to be outstanding.
(b) The Company covenants and agrees to give written notice of any Demand
Registration Request to all other registered Holders of Registrable Securities
within ten (10) days from the date of the Company's receipt of any such Demand
Registration Request. Such notice shall state that the holders have the right to
have their Registrable Securities included in such Registration Statement;
provided that they notify the Company in writing within ten (10) business days
after receipt of such notice. After receiving notice from the Company as
provided within Section 7.3(b), holders of Registrable Securities may request
the Company to include their Registrable Securities in the Registration
Statement to be filed pursuant to Section 7.3(a) hereof by notifying the Company
of their decision to have such securities included within ten (10) business days
of their receipt of the Company's notice.
ss.7.4 Covenants of the Company With Respect to Registration. In connection
with any registration under Section 7.2 or 7.3 hereof, the Company covenants and
agrees as follows:
(a) In connection with any registration under Section 7.3 hereof, the
Company shall file a registration statement as expeditiously as possible, but in
any event no later than sixty (60) days following receipt of any demand
therefor, shall use its
11
<PAGE>
best efforts to have any registration statement declared effective at the
earliest possible time, and shall furnish each Holder of Registrable Securities
such number of prospectuses as shall reasonably be requested; provided, however,
that the obligations under this Section 7.4(a) are contingent upon the Holders
of the Registrable Securities otherwise complying with their obligations under
this Agreement.
(b) The Company shall pay all costs (excluding fees and expenses of
Holder(s) counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Sections 7.2 and 7.3(a) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, blue sky fees and expenses.
(c) The Company will take all necessary action which may be required in
qualifying or registering the Registrable Securities included in a registration
statement, for offering and sale under the securities or blue sky laws of such
states as reasonably are requested by the Holder(s), provided that the Company
shall not be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business under the laws of
any such jurisdiction.
(d) The Company shall indemnify any holders of the Registrable Securities
to be sold pursuant to any registration statement and each person, if any, who
controls such holders within the meaning of Section 15 of the Act or Section
20(a) of
12
the Securities Exchange Act of 1934, as amended ("Exchange Act"), against all
loss, claim, damage, expense or liability (including all expenses reasonably
incurred in investigating, preparing or defending against any claim whatsoever)
to which any of them may become subject under the Act, the Exchange Act or
otherwise, arising from such registration statement but only to the same extent
and with the same effect as the provisions pursuant to which the Company has
agreed to indemnify the Placement Agent contained in Section 13 of the Placement
Agency Agreement.
(e) Any Holder of Registrable Securities to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such holders, or their successors or assigns, for
specific inclusion in such registration statement to the same extent and with
the same effect as the provisions contained in Paragraph 13 of the Placement
Agency Agreement pursuant to which the Placement Agent has agreed to indemnify
the Company.
13
<PAGE>
(f) Nothing contained in this Agreement shall be construed as requiring any
holder to exercise its Warrants prior to the initial filing of any registration
statement or the effectiveness thereof.
(g) The Company shall furnish to each Holder participating in the offering
and to each underwriter, if any, a signed counterpart, addressed to such Holder
or underwriter, of (i) an opinion of counsel to the Company, dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, an opinion dated the date of the closing under the
underwriting agreement), and (ii) a "cold comfort" letter dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, a letter dated the date of the closing under the
underwriting agreement) signed by the independent public accountants who have
issued a report on the Company's financial statements included in such
registration statement, in each case covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities.
14
<PAGE>
(i) The Company as soon as practicable, but in any event not later than 45
days after the end of the 12-month period beginning on the day after the end of
the fiscal quarter of the Company during which the effective date of the
Registration Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), shall make generally available
to its security holders, in the manner specified in Rule 158(b) of the Rules and
Regulations, and to the Placement Agent, an earnings statement which will be in
the detail required by, and will otherwise comply with, the provisions of
Section 11(a) of the Act and Rule 158(a) of the Rules and Regulations, which
statement need not be audited unless required by the Act, covering a period of
at least 12 consecutive months after the effective date of the Registration
Statement.
(j) The Company shall deliver promptly to each Holder participating in the
offering requesting the correspondence and memoranda described below and the
managing underwriters copies of all correspondence between the Commission and
the Company, its counsel or auditors and all memoranda relating to discussions
with the Commission or its staff with respect to the registration statement and
permit each Holder and underwriters to do such investigation, upon reasonable
advance notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the National Association
15
<PAGE>
of Securities Dealers, Inc. ("NASD"). Such investigation shall include access to
books, records and properties and opportunities to discuss the business of the
Company with its officers and independent auditors, all to such reasonable
extent and at such reasonable times and as often as any such Holder shall
reasonably request.
(k) The Company shall enter into an underwriting agreement with the
managing underwriters selected for such underwriting by Holders holding a
Majority of the Warrant Securities requested to be included in such
underwriting. Such agreement shall be satisfactory in form and substance to the
Company, each Holder and such managing underwriters, and shall contain such
representations, warranties and covenants by the Company and such other terms as
are customarily contained in agreements of that type used by the managing
underwriter.
The Holders shall be parties to any underwriting agreement relating to an
underwritten sale of their Warrant Securities and may, at their option, require
that any or all the representations, warranties and covenants of the Company to
or for the benefit of such underwriters shall also be made to and for the
benefit of such Holders. Such Holders shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters except as they may relate to such Holders and their intended
methods of distribution.
16
<PAGE>
(1) For purposes of this Agreement, the term "Majority" in reference to the
Holders of Warrants or Warrant Securities, shall mean in excess of fifty percent
(50%) of the then outstanding Warrants or Warrant Securities that (i) are not
held by the Company, an affiliate, officer, creditor, employee or agent thereof
or any of their respective affiliates, members of their family, persons acting
as nominees or in conjunction therewith or (ii) have not been resold to the
public pursuant to a registration statement filed with the Commission under the
Act.
(m) The Company shall use its best efforts not to permit the inclusion of
any securities other than the Warrant Securities to be included in any
registration statement filed pursuant to Section 7.3 hereof, or permit any other
registration statement to be or remain effective during the effectiveness of a
registration statement filed pursuant to Section 7.3 hereof, without the prior
written consent of the Holders of a Majority of the Registrable Securities. In
the event the Company is required to include securities other than the Warrant
Securities in a registration statement filed under Section 7.3, the Holders
shall be entitled to one additional right to demand the preparation and filing
of a registration under Section 7.3.
8. Adjustments to Exercise Price and Number of Securities.
ss.8.1 (a) Computation of Adjusted Exercise Price. Except as herein
provided, in case the Company shall at any time after the date hereof issue or
sell any shares of Common Stock (other than
17
<PAGE>
the issuances or sales referred to in Section 8.7 hereof), including shares held
in the Company's treasury and shares of Common Stock issued upon the exercise of
any options, rights or warrants, to subscribe for shares of Common Stock and
shares of Common Stock issued upon the direct or indirect conversion or exchange
of securities for shares of Common Stock, for a consideration per share less
than both the Exercise Price in effect immediately prior to the issuance or sale
of such shares and the "Market Price" (as defined in Section 3.2 hereof) per
share of Common Stock on the trading date immediately prior to the issuance or
sale of such shares or without consideration, then forthwith upon such issuance
or sale, the Exercise Price shall (until another such issuance or sale) be
reduced to the price (calculated to the nearest full cent) determined by
multiplying the Exercise Price in effect immediately prior to such issuance or
sale by a fraction, the numerator of which shall be the sum of (1) the number of
shares of Common Stock outstanding immediately prior to such issuance or sale
multiplied by the Exercise Price in effect immediately prior to such issuance or
sale plus (2) the consideration received by the Company upon such issuance or
sale, and the denominator of which shall be the product of (x) the total number
of shares outstanding immediately after such issuance or sale, multiplied by (y)
the Exercise Price in effect immediately prior to such issuance or sale;
provided, however, that in no event shall the
18
<PAGE>
Exercise Price be adjusted pursuant to this computation to an amount in excess
of the Exercise Price in effect immediately prior to such computation, except in
the case of a combination of outstanding shares of Common Stock, as provided by
Section 8.3 hereof.
(b) For the purposes of this Section 8 the term Exercise Price shall mean
the Exercise Price per share of Common Stock set forth in Section 6 hereof, as
adjusted from time to time pursuant to the provisions of this Section 8.
For the purposes of any computation to be made in accordance with this
Section 8.1, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock for a
consideration part or all of which shall be cash, the amount of the cash
consideration therefor shall be deemed to be the amount of cash received by the
Company for such shares (or, if shares of Common Stock are offered by the
Company for subscription, the subscription price, or, if either of such
securities shall be sold to underwriters or dealers for public offering without
a subscription offering, the initial public offering price) before deducting
therefrom any compensation paid or discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or others performing similar
services, or any expenses incurred in connection therewith.
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<PAGE>
(ii) In case of the issuance or sale (otherwise than as a dividend or other
distribution on any stock of the Company) of shares of Common Stock for a
consideration part or all of which shall be other than cash, the amount of the
consideration therefor other than cash shall be deemed to be the value of such
consideration as determined in good faith by the Board of Directors of the
Company.
(iii) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of stockholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(iv) The reclassification of securities of the Company other than shares of
Common Stock into securities including shares of Common Stock shall be deemed to
involve the issuance of such shares of Common Stock for a consideration other
than cash immediately prior to the close of business on the date fixed for the
determination of security holders entitled to receive such shares, and the value
of the consideration allocable to such shares of Common Stock shall be
determined as provided in subsection (ii) of this Section 8.1.
(v) The number of shares of Common Stock at any one time outstanding shall
include the aggregate number of shares
20
<PAGE>
issued or issuable (subject to readjustment upon the actual issuance thereof)
upon the exercise of options, rights, warrants and upon the conversion or
exchange of convertible or exchangeable securities.
ss.8.2 Options, Rights, Warrants and Convertible and Exchangeable
Securities. Except as provided herein, in case the Company shall at any time
after the date hereof issue options, rights or warrants to subscribe for shares
of Common Stock, or issue any securities convertible into or exchangeable for
shares of Common Stock: (i) for a consideration per share less than both the (a)
Exercise Price in effect immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, and (b) the
Market Price immediately prior to the issuance of such options, rights or
warrants, or such convertible or exchangeable securities, or (ii) without
consideration, the Exercise Price in effect immediately prior to the issuance of
such options, rights or warrants, or such convertible or exchangeable
securities, as the case may be, shall be reduced to a price determined by making
a computation in accordance with the provisions of Section 8.1 hereof, provided
that:
(a) The aggregate maximum number of shares of Common Stock, as the
case may be, issuable under such options, rights or warrants shall be
deemed to be issued and outstanding at the time such options, rights or
warrants
21
<PAGE>
were issued, and for a consideration equal to the minimum purchase price
per share provided for in such options, rights or warrants at the time of
issuance, plus the consideration (determined in the same manner as
consideration received on the issue or sale of shares in accordance with
the terms of Section 8.1), if any, received by the Company for such
options, rights or warrants and if no minimum price is provided in the
options, rights or warrants, then the consideration shall be equal to zero;
provided, however, that upon the expiration or other termination of the
options, rights or warrants, if any thereof shall not have been exercised,
the number of shares of Common Stock deemed to be issued and outstanding
pursuant to this subsection (a) (and for the purposes of subsection (v) of
Section 8.1 hereof) shall be reduced by such number of shares as to which
options, warrants and/or rights shall have expired or terminated
unexercised, and such number of shares shall no longer be deemed to be
issued and outstanding, and the Exercise Price then in effect shall
forthwith be readjusted and thereafter be the price which it would have
been had adjustment been made on the basis of the issuance only of shares
actually issued or issuable upon the exercise of those options, rights or
warrants as to which the exercise rights shall not have expired or
terminated unexercised.
22
<PAGE>
(b) The aggregate maximum number of shares of Common Stock issuable
upon conversion or exchange of any convertible or exchangeable securities
shall be deemed to be issued and outstanding at the time of issuance of
such securities, and for a consideration equal to the consideration
(determined in the same manner as consideration received on the issue or
sale of shares of Common Stock in accordance with the terms of Section 8.1)
received by the Company for such securities, plus the minimum
consideration, if any, receivable by the Company upon the conversion or
exchange thereof; provided, however, that upon the termination of the right
to convert or exchange such convertible or exchangeable securities (whether
by reason of redemption or otherwise), the number of shares deemed to be
issued and outstanding pursuant to this subsection (b) (and for the purpose
of subsection (v) of Section 8.1 hereof) shall be reduced by such number of
shares as to which the conversion or exchange rights shall have expired or
terminated unexercised, and such number of shares shall no longer be deemed
to be issued and outstanding and the Exercise Price then in effect shall
forthwith be readjusted and thereafter be the price which it would have
been had adjustment been made on the basis of the issuance only of the
shares actually issued or issuable upon the conversion or exchange of those
convertible or
23
<PAGE>
exchangeable securities as to which the conversion or exchange rights shall
not have expired or terminated unexercised. No adjustment will be made
pursuant to this subsection (b) upon the issuance by the Company of any
convertible or exchangeable securities pursuant to the exercise of any
option, right or warrant exercisable therefor, to the extent that
adjustments in respect of such options, rights or warrants were previously
made pursuant to the provisions of subsection (a) of this Section 8.2.
(c) If any change shall occur in the price per share provided for in
any of the options, rights or warrants referred to in subsection (a) of
this Section 8.2, or in the price per share at which the securities
referred to in subsection (b) of this Section 8.2 are convertible or
exchangeable, or if any such options, rights or warrants are exercised at a
price greater than the minimum purchase price provided for in such options,
rights or warrants, or any such securities are converted or exercised for
more than the minimum consideration receivable by the Company upon such
conversion or exchange, such options, rights or warrants or conversion or
exchange rights, as the case may be, shall be deemed to have expired or
terminated on the date when such price change became effective in respect
of shares not theretofore issued pursuant to the exercise or conversion or
exchange thereof, and the Company shall be deemed to have
24
<PAGE>
issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the
conversion or exchange of such convertible or exchangeable securities.
ss.8.3 Subdivision and Combination. In case the Company shall at any time
after the date hereof, subdivide or combine the outstanding shares of Common
Stock, the Exercise Price shall forthwith be proportionately decreased in the
case of subdivision or increased in the case of combination.
ss.8.4 Adjustment in Number of Securities. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 8, the number of
Warrant Securities issuable upon the exercise of each Warrant shall be adjusted
to the nearest full amount by multiplying a number equal to the Exercise Price
in effect immediately prior to such adjustment by the number of Warrant
Securities issuable upon exercise of the Warrants immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise Price.
ss.8.5 Merger or Consolidation. In case of any consolidation of the Company
with, or merger of the Company into, another corporation (other than a
consolidation or merger in which the Company is the surviving corporation and
which does not result in any reclassification or change of the outstanding
shares of Common Stock), the corporation formed by such consolidation or
25
<PAGE>
merger shall execute and deliver to the Holder a supplemental warrant agreement
providing that the Holder of each Warrant then outstanding shall have the right
thereafter (until the expiration of such Warrant) to receive, upon exercise of
such Warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, as if the Holders were
the owners of the Warrant Securities immediately prior to such consolidation or
merger. Such supplemental warrant agreement shall provide for adjustments which
shall be identical to the adjustments provided in Section 8. The above provision
of this subsection shall similarly apply to successive consolidations or
mergers.
ss.8.6 Definition of Common Stock. For the purpose of this Agreement, the
term "Common Stock" shall mean (i) the class of stock designated as Common Stock
in the Certificate of Incorporation of the Company as may be amended as of the
date hereof, or (ii) any other class of stock resulting from successive changes
or reclassifications of such Common Stock, consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value. In
the event that the Company shall after the date hereof issue securities with
greater or superior voting rights than the shares of Common Stock outstanding as
of the date hereof, the Holder, at its option, may receive upon exercise of any
Warrant either shares
26
<PAGE>
of Common Stock or a like number of such securities with greater or superior
voting rights.
ss.8.7 No Adjustment of Exercise Price in Certain Cases. Notwithstanding
anything herein to the contrary, no adjustment of the Exercise Price shall be
made:
(a) Upon the issuance or sale of the Warrant Securities, or the
conversion or exercise of any option, warrant, contractual right or other
convertible security outstanding on the date hereof;
(b) Upon the issuance or sale of (A) the shares of Common Stock or
Class A Warrants issued by the Company in the Offering, or (B) the shares
of Common Stock (or other securities) issuable upon exercise of the Class A
Warrants;
(c) Upon the issuance of options pursuant to any of the Company's
stock option plans in effect on the date hereof or as hereafter amended in
accordance with the terms thereof, or any other employee, executive or
director stock option plans approved by the stockholders of the Company, or
the issuance or sale by the Company of any shares of Common Stock pursuant
to the exercise of any such options;
(d) Upon the issuance or sale of shares of Common Stock pursuant to
the Private Securities Subscription Agreement, dated as of February 6,
1998, between the Company and Profutures Special Equities Fund, L.P.;
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<PAGE>
(e) If the amount of said adjustment shall be less than five cents
($.05) per security, provided, however, that in such case any adjustment
that would otherwise be required then to be made shall be carried forward
and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall
amount to at least five cents ($.05) per security.
ss.8.8 Dividends and Other Distributions. In the event that the Company
shall at any time prior to the exercise or expiration of all Warrants, declare a
dividend (other than a dividend consisting solely of shares of Common Stock) or
otherwise distribute to its stockholders any assets, property, rights, evidences
of indebtedness, securities (other than shares of Common Stock), whether issued
by the Company or by another person or entity, or any other thing of value, the
Holders of the unexercised Warrants shall thereafter be entitled, in addition to
the shares of Common Stock or other securities and property receivable upon the
exercise thereof, to receive, upon the exercise of such Warrants, the same
property, assets, rights, evidences of indebtedness, securities or any other
thing of value that they would have been entitled to receive at the time of such
dividend or distribution as if the Warrants had been exercised immediately prior
to such dividend or distribution. At the time of any such dividend or
distribution, the Company shall make
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<PAGE>
appropriate reserves to ensure the timely performance of the provisions of this
subsection 8.8.
9. Exchange and Replacement of Warrant Certificates. Each Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Securities in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of shares of Common Stock upon the
exercise of the Warrants, nor shall it be required to issue scrip or pay cash in
lieu of fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction
29
<PAGE>
up to the nearest whole number of shares of Common Stock or other securities,
properties or rights.
11. Reservation and Listing of Securities. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Warrants, such number of
shares of Common Stock or other securities, properties or rights as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock and other securities issuable upon such exercise shall be duly
and validly issued, fully paid, non-assessable and not subject to the preemptive
rights of any stockholder. As long as the Warrants shall be outstanding, the
Company shall use its best efforts to cause all shares of Common Stock issuable
upon the exercise of the Warrants to be listed (subject to official notice of
issuance) on all securities exchanges on which the Company's Common Stock may
then be listed and/or quoted.
12. Notices to Warrant Holders. Nothing contained in this Agreement shall
be construed as conferring upon the Holders the right to vote or to consent or
to receive notice as a stockholder in respect of any meetings of stockholders
for the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior
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<PAGE>
to the expiration of the Warrants and their exercise, any of the following
events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on
the books of the Company; or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or any
option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property assets and business as an entirety shall
be proposed; then, in any one or more of said events the Company shall give
a written notice of such event at least fifteen (15) days prior to the date
fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution,
convertible or exchangeable securities or subscription rights, or entitled
to vote on such proposed
31
<PAGE>
dissolution, liquidation, winding up or sale. Such notice shall specify such
record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
13. Notices.
All notices requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made and received when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the address of such
Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 hereof or
to such other address as the Company may designate by notice to the
Holders.
14. Supplements and Amendments. The Company and the Placement Agent may
from time to time supplement or amend this Agreement without the approval of any
Holders of the Warrant and/or Warrant Securities (other than the Placement
Agent) in order to cure any ambiguity, to correct or supplement any
32
<PAGE>
provision contained herein which may be defective or inconsistent with any
provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Placement Agent may deem
necessary or desirable and which the Company and the Placement Agent deem shall
not adversely affect the interests of the Holders of Warrant Certificates.
15. Successors. All the covenants and provisions of this Agreement shall be
binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
16. Termination. This Agreement shall terminate at the close of business on
January 1, 2005. Notwithstanding the foregoing, this Agreement will terminate on
any earlier date when all Warrants have been exercised and all Warrant Shares
have been resold to the public; provided, however, that the indemnification
provisions of Section 7 shall survive such termination until the close of
business on January 1, 2005.
17. Governing Law: Submission to Jurisdiction. This Agreement and each
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
The Company, the Placement Agent and the Holders hereby agree that any
action, proceeding or claim against it arising out of, or relating in any way
to, this Agreement shall be brought and enforced in the courts of the State of
New York or of the United States of America for the Southern District of New
York, and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company, the Placement Agent and the Holders hereby irrevocably
waive any objection to such exclusive jurisdiction or inconvenient forum. Any
such process or summons to be served upon any of the Company, the Placement
Agent and the Holders (at the option of the party bringing such action,
proceeding or claim) may be served by transmitting a copy thereof, by registered
or certified mail, return receipt requested, postage prepaid, addressed to it at
the address set forth in Section 13 hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon the party so served in any
action, proceeding or claim. The Company, the Placement Agent and the Holders
agree that the prevailing party(ies) in any such action or proceeding shall be
entitled to recover from the other party(ies) all of its/their reasonable legal
costs and expenses relating to such action or proceeding and/or incurred in
connection with the preparation therefor.
18. Entire Agreement: Modification. This Agreement (including the Placement
Agency Agreement to the extent portions thereof are referred to herein) contains
the entire understanding
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<PAGE>
between the parties hereto with respect to the subject matter hereof and may not
be modified or amended except by a writing duly signed by the holders of 60% of
the Registrable Securities, the Placement Agent, the Company against whom
enforcement of the modification or amendment is sought.
19. Severability. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or nonenforceability shall not affect
any other provision of this Agreement.
20. Captions. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
21. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Placement Agent and any other registered Holder(s) of the Warrant Certificates
or Warrant Securities any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of the
Company and the Placement Agent and any other Holder(s) of the Warrant
Certificates or Warrant Securities.
22. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
[SEAL] NUWAVE TECHNOLOGIES, INC.
By:/s/ Jeremiah F. O'Brien
--------------------------------
Attest: Name: Jeremiah F. O'Brien
Title: Chief Financial Officer
/s/ Jeremiah F. O'Brien
- --------------------------
Secretary
JANSSEN/MEYERS ASSOCIATES, L.P.
By: /s/ Bruce Meyers
-------------------------------
Name: Bruce Meyers
Title: General Partner
36
<PAGE>
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, May 11, 2003
No. W- _________ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ___________________, or
registered assigns, is the registered holder of ______ Warrants to purchase
initially, at any time from the date hereof until 5:30 p.m. New York time on May
11, 2003 ("Expiration Date"), up to _____ Units of NUWAVE TECHNOLOGIES, INC., a
Delaware corporation (the "Company"), each Unit consisting of _________ shares
of fully-paid and non-assessable shares of common stock, par value $.01 per
share ("Common Stock") of the Company, and ______ Class A Redeemable Warrants of
the Company, at the initial exercise price, subject to adjustment in certain
events (the "Exercise Price"), of $100,000 per Unit upon surrender of this
Warrant Certificate and either (i) payment of the Exercise Price; or (ii)
accompanied by a Notice of Exchange at an office or agency of the Company, but
subject to the conditions set forth herein and in the Placement Agent's Unit
Purchase Warrant Agreement dated as of May 19, 1998 between the Company and
JANSSEN/MEYERS ASSOCIATES, L.P., (the "Warrant Agreement"). Payment of the
Exercise Price shall be made by certified or official bank check in New York
Clearing House funds payable to the order of the Company.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Placement Agent's Warrants evidenced hereby,
unless exercised prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants pursuant to the Warrant Agreement, which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the
1
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Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price and/or number of the Company's securities issuable
thereupon may, subject to certain conditions, be adjusted. In such event, the
Company will, at the request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter or otherwise impair, the rights of the holder as set forth
in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such numbered unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of May , 1998
[SEAL] NUWAVE TECHNOLOGIES, INC.
Attest:
By:__________________________
Name:
Title:
- --------------------------
Secretary
3
<PAGE>
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase __________ shares of Common
Stock and herewith tenders in payment for such securities a certified or
official bank check payable in New York Clearing House Funds to the order of
NUWAVE TECHNOLOGIES, Inc. in the amount of $____________, all in accordance with
the terms hereof. The undersigned requests that a certificate for such
securities be registered in the name of _________________________ whose address
is _______________________________________ that such Certificate be delivered to
__________________________ whose address is ______________________________.
Dated:
Signature _________________________
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
-----------------------------------
Insert Social Security or Other
Identifying Number of Holder)
4
<PAGE>
[FORM OF NOTICE OF EXCHANGE]
The undersigned hereby irrevocably elects to exchange the right,
represented by this Warrant Certificate, to purchase _________ Units of Warrant
Securities effective on ___________ (Date of Exchange ) all in accordance with
the terms hereof. The undersigned requests that a certificate for such
securities be registered in the name of _________________________ whose address
is _____________________________________________ and that such Certificate be
delivered to ___________________________________________ whose address is
_____________________________.
Dated:
Signature _________________________
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
-----------------------------------
Insert Social Security or Other
Identifying Number of Holder)
5
<PAGE>
ASSIGNMENT FORM
The Holder hereby assigns and transfers unto
Name ____________________________________________________________
(Please typewrite or print in block letters)
Address _________________________________________________________
_________________________________________________________
the right to purchase Common Stock of _____________ represented by this Warrant
to the extent of _______________ shares of Common Stock as to which such right
is exercisable and does hereby irrevocably constitute and appoint
________________________________ Attorney, to transfer the same on the books of
_____________ with full power of substitution in the premises.
Date: ___________________, 199_
------------------------------
Name of Registered Holder
------------------------------
Signature
------------------------------
Signature, if held jointly
6
EXHIBIT 10.6
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, May 11, 2003
No. W- _________ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ___________________, or
registered assigns, is the registered holder of ______ Warrants to purchase
initially, at any time from the date hereof until 5:30 p.m. New York time on May
11, 2003 ("Expiration Date"), up to _____ Units of NUWAVE TECHNOLOGIES, INC., a
Delaware corporation (the "Company"), each Unit consisting of _________ shares
of fully-paid and non-assessable shares of common stock, par value $.01 per
share ("Common Stock") of the Company, and ______ Class A Redeemable Warrants of
the Company, at the initial exercise price, subject to adjustment in certain
events (the "Exercise Price"), of $100,000 per Unit upon surrender of this
Warrant Certificate and either (i) payment of the Exercise Price; or (ii)
accompanied by a Notice of Exchange at an office or agency of the Company, but
subject to the conditions set forth herein and in the Placement Agent's Unit
Purchase Warrant Agreement dated as of May 19, 1998 between the Company and
JANSSEN/MEYERS ASSOCIATES, L.P., (the "Warrant Agreement"). Payment of the
Exercise Price shall be made by certified or official bank check in New York
Clearing House funds payable to the order of the Company.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Placement Agent's Warrants evidenced hereby,
unless exercised prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants pursuant to the Warrant Agreement, which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the
1
<PAGE>
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price and/or number of the Company's securities issuable
thereupon may, subject to certain conditions, be adjusted. In such event, the
Company will, at the request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter or otherwise impair, the rights of the holder as set forth
in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such numbered unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of May , 1998
[SEAL] NUWAVE TECHNOLOGIES, INC.
Attest:
By:__________________________
Name:
Title:
- --------------------------
Secretary
3
<PAGE>
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase __________ shares of Common
Stock and herewith tenders in payment for such securities a certified or
official bank check payable in New York Clearing House Funds to the order of
NUWAVE TECHNOLOGIES, Inc. in the amount of $____________, all in accordance with
the terms hereof. The undersigned requests that a certificate for such
securities be registered in the name of _________________________ whose address
is _______________________________________ that such Certificate be delivered to
__________________________ whose address is ______________________________.
Dated:
Signature _________________________
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
-----------------------------------
Insert Social Security or Other
Identifying Number of Holder)
4
<PAGE>
[FORM OF NOTICE OF EXCHANGE]
The undersigned hereby irrevocably elects to exchange the right,
represented by this Warrant Certificate, to purchase _________ Units of Warrant
Securities effective on ___________ (Date of Exchange ) all in accordance with
the terms hereof. The undersigned requests that a certificate for such
securities be registered in the name of _________________________ whose address
is _____________________________________________ and that such Certificate be
delivered to ___________________________________________ whose address is
_____________________________.
Dated:
Signature _________________________
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
-----------------------------------
Insert Social Security or Other
Identifying Number of Holder)
5
<PAGE>
ASSIGNMENT FORM
The Holder hereby assigns and transfers unto
Name ____________________________________________________________
(Please typewrite or print in block letters)
Address _________________________________________________________
_________________________________________________________
the right to purchase Common Stock of _____________ represented by this Warrant
to the extent of _______________ shares of Common Stock as to which such right
is exercisable and does hereby irrevocably constitute and appoint
________________________________ Attorney, to transfer the same on the books of
_____________ with full power of substitution in the premises.
Date: ___________________, 199_
------------------------------
Name of Registered Holder
------------------------------
Signature
------------------------------
Signature, if held jointly
6
EXHIBIT 10.7
SUBSCRIPTION AGREEMENT
NUWAVE Technologies, Inc.
One Passaic Avenue
Fairfield, New Jersey 07004
Ladies and Gentlemen:
1. Subscription.
------------
(a) The undersigned, intending to be legally bound, hereby
irrevocably subscribes to purchase from NUWAVE Technologies, Inc., a Delaware
corporation (the "Company"), the number of units (the "Units") set forth on the
signature page hereof, for a purchase price of $100,000 per Unit (the "Purchase
Price"). Each Unit consists of (i) a number of shares of common stock, par value
$.01 per share (the "Common Stock"), of the Company, determined by dividing the
Purchase Price per Unit of $100,000 by, for the initial closing of the Offering,
eighty percent (80%) of the "Initial Average Closing Bid Price" which shall be
the average closing bid price for the Common Stock for the eight (8) consecutive
trading days from and including April 28, 1998 to and including May 7, 1998, and
for each subsequent closing, the lesser of (x) $3.20 and (y) eighty percent
(80%) of the "Average Closing Bid Price" which shall be the average closing bid
price for the Common Stock for the eight (8) consecutive trading days
immediately preceding the date of a closing of the Offering described below, and
(ii) Class A Redeemable Warrants (the "Warrants") to purchase seventy-five
percent (75%) of such number of shares of Common Stock of the Company (the
"Warrant Shares"). This subscription is submitted to you in accordance with and
subject to the terms and conditions described in this Agreement and the
Confidential Private Placement Memorandum, dated May 8, 1998, as it may be
supplemented and amended (the "Memorandum"), relating to an offering (the
"Offering") of a minimum of 25 Units and a maximum of 70 Units. If the
undersigned is purchasing a fractional Unit, all components of the Unit and the
Purchase Price will be calculated by multiplying the respective numbers for one
full Unit by the fraction to be purchased.
(b) Subscription payments should be made payable to "Republic
National Bank of New York, as Escrow Agent for NUWAVE Technologies, Inc." and
should be delivered, together with two executed and properly completed copies of
this Agreement (along with an executed and properly completed copy of the
appropriate Confidential Purchaser Questionnaire in the form supplied herewith),
to Janssen-Meyers Associates, L.P. ("JMA"), 17 State Street, New York, New York
10004, Attention: Andrea. If the subscription is not accepted in whole or in
part by the Company, the full or ratable amount, as the case may be, of any
subscription payment received will be promptly refunded to the subscriber
without deduction therefrom or interest thereon.
<PAGE>
(c) If this subscription is accepted by the Company, in whole or in
part, and subject to the conditions set forth in Section 2 of this Agreement,
the Company shall deliver to the undersigned the Common Stock and the Warrants
subscribed for hereby, dated the date of closing of the Offering of such Units
(the "Closing") and a fully executed copy of this Agreement.
(d) The Company has engaged JMA to introduce the Company to persons
who may be interested in purchasing Units and to advise the Company in
connection with the structure, terms and conditions of the Offering. As
consideration for its services, JMA will receive (i) a fee of 10% of the
aggregate gross proceeds from the sale of the Units in the Offering, (ii) a 3%
non-accountable expense allowance, (iii) a warrant to purchase a number of Units
equal to 25% of the Units sold in the Offering and (iv) reimbursement of certain
reasonable expenses, subject to receipt by the Company of appropriate
documentation. JMA, its officers, directors, employees, agents, consultants
and/or affiliates may participate in the Offering. JMA did not prepare any of
the information relating to the Company or its operations to be delivered to
prospective investors in connection with the Offering. Prospective investors are
advised to conduct their own review of the business, properties and affairs of
the Company before subscribing to purchase Units.
(e) The undersigned may not withdraw this subscription or any amount
paid pursuant thereto, except as otherwise provided below.
2. Conditions. It is understood and agreed that this subscription is
made, subject to the following terms and conditions:
(a) The Company shall have the right to accept or reject this
subscription in whole or in part. Unless this subscription is accepted in whole
or in part by the Company prior to the expiration of the Offering Period (as
defined in the Memorandum), this subscription shall be deemed rejected in whole.
Subscriptions accepted in whole or in part by the Company shall be irrevocable,
except as otherwise provided by law. Subscriptions need not be accepted in the
order received.
(b) At the date of the Closing, JMA shall have been furnished with
such information, documents, certificates, and opinions as it may reasonably
require to evidence the accuracy, completeness, or satisfaction of the
representations, warranties, covenants, agreements, and conditions herein
contained or as it otherwise may reasonably request.
3. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with the undersigned as follows, in each
case as of the date hereof and in all material respects as of the date of the
Closing except for any changes resulting solely from the Offering:
(a) The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware with full power and authority
to own, lease, license and use its properties and assets and to conduct the
business in which it is engaged as described in the Memorandum. The Company is
duly qualified to transact the business in which
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<PAGE>
it is engaged as described in the Memorandum and is in good standing as a
foreign corporation in every jurisdiction in which its ownership, leasing,
licensing or use of its property or assets or the conduct of its business make
such qualification necessary, except where the failure to be so qualified would
not have a material adverse effect on the Company. The Company has no
subsidiaries.
(b) The authorized capital stock of the Company consists of
2,000,000 shares of preferred stock, par value $.01 per share (the "Preferred
Stock"), and 20,000,000 shares of Common Stock. There are no outstanding shares
of Preferred Stock. Each outstanding share of Common Stock is duly authorized,
validly issued, fully paid and nonassessable.
(c) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement, to issue, sell and
deliver the securities underlying the Units. This Agreement has been duly
authorized by the Company, and when executed and delivered by the Company, will
constitute the legal, valid and binding obligation of the Company, enforceable
as to the Company in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent
conveyance or transfer, moratorium or other laws or court decisions, now or
hereinafter in effect, relating to or affecting the rights of creditors
generally and as may be limited by general principles of equity and the
discretion of the court having jurisdiction in an enforcement action (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
(d) Except for Form D filing with the Securities and Exchange
Commission and required "blue sky" filings, no consent, authorization, approval,
order, license, certificate or permit of or from, or declaration or filing with,
any federal, state, local or other governmental authority or any court or any
other tribunal is required by the Company for the execution, delivery or
performance by the Company of this Agreement or the execution, issuance, sale or
delivery of the Units.
(e) No consent of any party to any material contract, agreement,
instrument, lease, license, arrangement or understanding to which the Company is
a party or to which any of its properties or assets are subject is required for
the execution, delivery or performance by the Company of this Agreement, or the
execution, issuance, sale or delivery of the Units, except that under a letter
agreement, dated January 16, 1998 (the "Letter Agreement"), between Trinity
Capital Advisors, Inc. ("Trinity") and the Company, Trinity has a right of first
refusal with respect to any offerings by the Company of Common Stock or any
other securities convertible into Common Stock pursuant to a discounted
transaction. In accordance with the Letter Agreement, the Company offered
Trinity the right to provide financing to the Company which would be comparable
to the Offering of the Units. Because Trinity's proposal for a $5 million
convertible debt offering was unfavorable to the Company and not comparable to
the Offering, the Company decided to proceed with the Offering of the Units.
(f) The execution, delivery and performance of this Agreement will
not violate, result in a breach of, conflict with (with or without the giving of
notice or the passage of time or both) or entitle any party to terminate or call
a default under, any material contract, agreement, instrument, lease, license,
arrangement or understanding or violate or result in a
3
<PAGE>
breach of any term of the certificate of incorporation or by-laws of, or
conflict with any law, rule, regulation, order, judgment or decree binding upon,
the Company or to which any of its operations, businesses, properties or assets
are subject which individually or in the aggregate do not have a material
adverse effect upon the operations, business, properties or assets of the
Company.
(g) The securities underlying the Units, upon delivery to the
subscriber, will be validly issued, fully paid and nonassessable and will not be
issued in violation of any preemptive or other rights of stockholders known to
the Company except as described in the Memorandum.
4. Representations and Warranties of the Subscriber. The undersigned
hereby represents and warrants to, and agrees with, the Company as follows:
(a) The undersigned is an "accredited investor" as that term is
defined in Rule 501(a) of Regulation D promulgated under the Securities Act of
1933, as amended (the "Act"). Specifically, the undersigned is (check
appropriate items(s)):
___(i) A bank, as defined in Section 3(a)(2) of the Act, or a
savings and loan association or other institution, as defined in Section
3(a)(5)(A) of the Act, whether acting in its individual or fiduciary capacity; a
broker or dealer registered pursuant to Section 15 of the Securities Exchange
Act of 1934, as amended; an insurance company as defined in Section 2(13) of the
Act; an investment company registered under the Investment Company Act of 1940
or a business development company as defined in Section 2(a)(48) of that Act; a
Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958; a plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total assets in
excess of $5,000,000; an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, as amended, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of such Act,
which is either a bank, savings and loan association, insurance company, or
registered investment advisor, or if the employee benefit plan has total assets
in excess of $5,000,000 or, if a self-directed plan, with investment decisions
made solely by persons that are accredited investors;
___(ii) A private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940, as amended;
___(iii) An organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose of acquiring
the securities offered, with total assets in excess in $5,000,000;
___(iv) A director or executive officer of the Company;
4
<PAGE>
___(v) A natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his or her purchase exceeds
$1,000,000;
___(vi) A natural person who had an individual income in excess
of $200,000 in each of the two most recent years or joint income with that
person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current year;
___(vii) A trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii) (i.e., a person who has such knowledge and experience in financial
and business matters that he is capable of evaluating the merits and risks of
the prospective investment); or
___(viii) An entity in which all of the equity owners are
accredited investors. (If this alternative is checked, the undersigned must
identify each equity owner and provide statements signed by each demonstrating
how each is qualified as an accredited investor.)
(b) If a natural person, the undersigned is: a bona fide resident of
the State contained in the address set forth on the signature page of this
Agreement as the undersigned's home address; at least 21 years of age; and
legally competent to execute this Agreement. If an entity, the undersigned is
duly authorized to execute this Agreement and this Agreement constitutes the
legal, valid and binding obligation of the undersigned enforceable against the
undersigned in accordance with its terms.
(c) The undersigned has received, read carefully and is familiar
with this Agreement and the Memorandum. Respecting the Company, the undersigned
is familiar with the Company's business, plans and financial condition, the
terms of the Offering and any other matters relating to the Offering; the
undersigned has received all materials which have been requested by the
undersigned; has had a reasonable opportunity to ask questions of the Company
and its representatives; and the Company has answered all inquiries that the
undersigned or the undersigned's representatives have put to it. The undersigned
has had access to all additional information necessary to verify the accuracy of
the information set forth in this Agreement and the Memorandum and any other
materials furnished herewith or therewith, and has taken all the steps necessary
to evaluate the merits and risks of an investment as proposed hereunder.
(d) The undersigned or the undersigned's purchaser representative
has such knowledge and experience in finance, securities, investments and other
business matters so as to be able to protect the interests of the undersigned in
connection with this transaction, and the undersigned's investment in the
Company hereunder is not material when compared to the undersigned's total
financial capacity.
(e) The undersigned understands the various risks of an investment
in the Company as proposed herein and can afford to bear such risks, including,
without limitation, the risks of losing the entire investment.
5
<PAGE>
(f) The undersigned understands that JMA does not make any
representation or warranty concerning the accuracy or completeness of any
information, relating to the Company or its operations to be delivered to
prospective investors in connection with the Offering.
(g) The undersigned acknowledges that no market for the Units or
Warrants presently exists and none may develop in the future and that the
undersigned may find it impossible to liquidate the investment at a time when it
may be desirable to do so, or at any other time.
(h) The undersigned has been advised by the Company that none of the
Units, nor the Common Stock and the Warrants underlying the Units nor the
Warrant Shares (collectively, the "Securities") have been registered under the
Act, that the Securities will be issued on the basis of the statutory exemption
provided by Section 4(2) of the Act or Regulation D promulgated thereunder, or
both, relating to transactions by an issuer not involving any public offering
and under similar exemptions under certain state securities laws, that this
transaction has not been reviewed by, passed on or submitted to any federal or
state agency or self-regulatory organization where an exemption is being relied
upon, and that the Company's reliance thereon is based in part upon the
representations made by the undersigned in this Agreement. The undersigned
acknowledges that the undersigned is familiar with the nature of the limitations
imposed by the Act and the rules and regulations thereunder on the transfer of
Securities. In particular, the undersigned agrees that no sale, assignment or
transfer of any of the Securities shall be valid or effective, and the Company
shall not be required to give any effect to such a sale, assignment or transfer,
unless (i) the sale, assignment or transfer of such Securities is registered
under the Act, it being understood that the Securities are not currently
registered for sale and that the Company has no obligation or intention to so
register the Securities except as contemplated by the terms of this Agreement
and the Warrants, or (ii) such Securities are sold, assigned or transferred in
accordance with all the requirements and limitations of Rule 144 under the Act,
it being understood that Rule 144 is not available at the present time for the
sale of the Securities, or (iii) such sale, assignment or transfer is otherwise
exempt from registration under the Act. The undersigned further understands that
an opinion of counsel and other documents may be required to transfer the
Securities. The undersigned acknowledges that the Securities shall be subject to
a stop transfer order and the certificate or certificates evidencing any
Securities shall bear the following or a substantially similar legend or such
other legend as may appear on the form of Warrants and such other legends as may
be required by state blue sky laws:
"The securities represented by this certificate have
not been registered under the Securities Act of 1933,
as amended (the "Act"), or any state securities laws
and neither such securities nor any interest therein
may be offered, sold, pledged, assigned or otherwise
transferred unless (1) a registration statement with
respect thereto is effective under the Act and any
applicable state securities laws or (2) the Company
receives an opinion of counsel to the holder of such
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<PAGE>
securities, which counsel and opinion are reasonably
satisfactory to the Company, that such securities may
be offered, sold, pledged, assigned or transferred in
the manner contemplated without an effective
registration statement under the Act or applicable
state securities laws."
(i) The undersigned will acquire the Securities for the
undersigned's own account (or for the joint account of the undersigned and the
undersigned's spouse either in joint tenancy, tenancy by the entirety or tenancy
in common) for investment and not with a view to the sale or distribution
thereof or the granting of any participation therein, and has no present
intention of distributing or selling to others any of such interest or granting
any participation therein.
(j) It never has been represented, guaranteed or warranted by any
broker, the Company, JMA, any of the Company's or JMA's officers, directors,
stockholders, partners, employees or agents, or any other persons, whether
expressly or by implication, that: (i) the Company or the undersigned will
realize any given percentage of profits and/or amount or type of consideration,
profit or loss as a result of the Company's activities or the undersigned's
investment in the Company; or (ii) the past performance or experience of the
management of the Company, or of any other person, will in any way indicate the
predictable results of the ownership of the Securities or of the Company's
activities.
(k) No oral or written representations have been made other than as
stated in the Memorandum and this Agreement, and no oral or written information
furnished to the undersigned or the undersigned's advisor(s) in connection with
the Offering were in any way inconsistent with the information stated in the
Memorandum or this Agreement.
(l) The undersigned is not subscribing for Units as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, or presented at any seminar or meeting, or any solicitation
of a subscription by a person other than a representative of JMA or the Company
with which the undersigned had a pre-existing relationship in connection with
investments in securities generally.
(m) The undersigned is not relying on the Company with respect to
the tax and other economic considerations of an investment.
(n) The undersigned understands that the net proceeds from all
subscriptions paid and accepted pursuant to the Offering (after deduction for
expenses of the Offering, including the fees and expenses payable to JMA) will
be used in all material respects for the purposes set forth in the Memorandum.
(o) Without limiting any of the undersigned's other representations
and warranties hereunder, the undersigned acknowledges that the undersigned has
reviewed and is aware of the risk factors described in the Memorandum.
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<PAGE>
(p) The undersigned acknowledges that the representations,
warranties and agreements made by the undersigned herein shall survive the
execution and delivery of this Agreement and the purchase of the Units.
(q) The undersigned has consulted his own financial, legal and tax
advisors with respect to the economic, legal and tax consequences of an
investment in the Units and has not relied on the Memorandum or the Company, its
officers, directors or professional advisors for advice as to such consequences.
5. Registration Rights.
-------------------
(a) The Company will use its best efforts to file a registration
statement (the "Registration Statement") under the Act registering the shares of
Common Stock, the Warrants and the Warrant Shares underlying the Units
(together, the "Registrable Securities"), upon demand, after six (6) months of
the Final Closing (as defined in the Memorandum) of the Offering (the "Filing
Date"), and use its best efforts to have the Registration Statement declared
effective by the Securities and Exchange Commission (the "Commission") as soon
as possible thereafter (the "Effective Date"). In the event the Registration
Statement is not declared effective within 60 days after a demand for
registration, the then number of Warrants shall be increased by two percent
(2%), effective as of the end of such 60 day period and by an additional two
percent (2%) on each one month anniversary thereafter, until such time that the
number of Warrants should equal 120% of the original number of Warrants. The
Company agrees to keep the Registration Statement effective until the expiration
period of the Warrants.
(b) In the event of a registration pursuant to the provisions of
this Section 5, the Company shall use its best efforts to cause the Registrable
Securities so registered to be registered or qualified for sale under the
securities or blue sky laws of such jurisdictions as the holder or such holders
(the "Eligible Holders") may reasonably request; provided, however, that the
Company shall not by reason of this Section 5(b) be required to qualify to do
business in any state in which it is not otherwise required to qualify to do
business or to file a general consent to service of process.
(c) The Company shall keep effective any registration or
qualification contemplated by this Section 5 and shall from time to time amend
or supplement each applicable registration statement, preliminary prospectus,
final prospectus, application, document, and communication for such period of
time as shall be required to permit the Eligible Holders to complete the offer
and sale of the Registrable Securities covered thereby.
(d) In the event of a registration pursuant to the provisions of
this Section 5, the Company shall furnish to each Eligible Holder such
reasonable number of copies of the registration statement and of each amendment
and supplement thereto (in each case, including all exhibits), such reasonable
number of copies of each prospectus contained in such registration statement and
each supplement or amendment thereto (including each preliminary prospectus),
all of which shall conform to the requirements of the Act and the rules and
8
<PAGE>
regulations thereunder, and such other documents, as any Eligible Holder may
reasonably request to facilitate the disposition of the Registrable Securities
included in such registration.
(e) In the event of a registration pursuant to the provision of this
Section 5, the Company and each Eligible Holder shall enter into a
cross-indemnity agreement and a contribution agreement, each in customary form,
with each underwriter, if any, and, if requested, enter into an underwriting
agreement containing customary representations, warranties, allocation of
expenses, and customary closing conditions, including, without limitation,
opinions of counsel and accountants' cold comfort letters, with any underwriter
who acquires any Registrable Securities.
(f) The Company agrees that until all the Registrable Securities
have been sold under a registration statement or pursuant to Rule 144 under the
Act, it shall keep current in filing all reports, statements and other materials
required to be filed with the Commission to permit holders of the Registrable
Securities to sell such securities under Rule 144.
6. Indemnification. The undersigned acknowledges that the undersigned
understands the meaning and legal consequences of the representations and
warranties contained in Section 4 hereof, and agrees to indemnify and hold
harmless the Company, JMA, its partners, and each incorporator, officer,
director, partner, employee, agent and controlling person of each thereof, past,
present or future, from and against any and all loss, damage or liability due to
or arising out of a breach of any such representation or warranty.
7. Transferability. Neither this Agreement, nor any interest of the
undersigned herein, shall be assignable or transferable by the undersigned in
whole or in part except by operation of law.
8. Miscellaneous.
-------------
(a) This Agreement sets forth the entire understanding of the
parties with respect to the subject matter hereof, supersedes all existing
agreements among them concerning such subject matter, and may be modified only
by a written instrument duly executed by the party to be charged.
(b) Except as otherwise specifically provided herein, any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be mailed by certified mail, return receipt requested, or by
Federal Express, Express Mail or similar overnight delivery or courier service
or delivered (in person or by telecopy, telex or similar telecommunications
equipment) against receipt to the party to whom it is to be given, (i) if to the
Company, at the address set forth on the first page hereof, (ii) if to the
undersigned, at the address set forth on the signature page hereof, or (iii) in
either case, to such other address as the party shall have furnished in writing
in accordance with the provisions of this Section 8(b). Notice to the estate of
any party shall be sufficient if addressed to the party as provided in this
Section 8(b). Any notice or other communication given by certified mail shall be
9
<PAGE>
deemed given at the time of certification thereof, except for a notice changing
a party address which shall be deemed given at the time of receipt thereof. Any
notice given by other means permitted by this Section 8(b) shall be deemed given
at the time of receipt thereof.
(c) This Agreement shall be binding upon and inure to the benefit of
the parties hereto, the successors and assigns of the Company, and the permitted
successors, assigns, heirs and personal representatives of the undersigned
(including permitted transferees of the Securities).
(d) The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
(e) This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(f) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to principles
governing conflicts of law.
(g) This Agreement does not create, and shall not be construed as
creating, any rights enforceable by any person not a party to this Agreement
(except as provided in Sections 6, 8(c) and 8(g)); provided, that JMA shall be
entitled to rely on, and shall be a third party beneficiary of, the
representations, warranties and agreements contained in this Agreement.
(h) The parties hereto irrevocably consent to the jurisdiction of
the courts of the State of New York and of any federal court located in such
State in connection with any action or proceeding arising out of or relating to
this Agreement, any document or instrument delivered pursuant to, in connection
with or simultaneously with this Agreement, or a breach of this Agreement or any
such document or instrument. In any such action or proceeding, each party hereto
waives personal service of any summons, complaint or other process and agrees
that service thereof may be made in accordance with Section 8(b). Within 30 days
after such service, or such other time as may be mutually agreed upon in writing
by the attorneys for the parties to such action or proceeding, the party so
served shall appear or answer such summons, complaint or other process.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year this subscription has been accepted by the Company as set
forth below.
Number of Units Print Name of Subscriber:
Being Purchased:
----------------------------------------------------
By:
- ------------------- -------------------------------------------------
($100,000 per Unit) (Signature of Subscriber or Authorized Signatory)
Social security Number or other Taxpayer
Identification Number:
----------------------------------------------------
Address:
----------------------------------------------------
If the Units will be held as joint tenants, tenants
in common, or community property, please complete
the following:
----------------------------------------------------
Print name of spouse or other co-subscriber
----------------------------------------------------
Signature of spouse or other co-subscriber
----------------------------------------------------
Print manner in which Units will be held
----------------------------------------------------
Social Security Number of spouse or other
co-subscriber
ACCEPTED BY:
NUWAVE Technologies, Inc.
By:
-----------------------
Name:
Title:
Date: , 1998
---------------
Exhibit 99.1
Contact:
NUWAVE Technologies, Inc. Lippert/Heilshorn & Assoc., Inc.
Jerry O'Brien John W. Heilshorn, Jr.
Chief Financial Officer Investor Relations
973-882-8810 212-838-3777
www.nuwav.com [email protected]
-------------
NUWAVE TECHNOLOGIES, INC.
ANNOUNCES FIRST QUARTER RESULTS
AND
PRIVATE EQUITY PLACEMENT
Fairfield, NJ, May 21, 1998 - NUWAVE Technologies, Inc. (NASDAQ: WAVE), a
leading designer, developer, and marketer of state-of-the-art video enhancing
circuits, announced today results of operations for the quarter ended March 31,
1998.
NUWAVE Technologies, Inc., a development stage company, indicated that it had
net losses of $891,948 ($0.16 per share) for the three months ended march 31,
1998 compared to a net loss of $982,551 ($0.18 per share) for the period ended
March 31, 1997.
The Company also announced that it has raised approximately $5.1 million in the
first phase of a private placement of equity. Jannsen/Meyers Associates, L.P.
acted as the placement agent. The $5.1 million represents approximately 51
investment units. Each investment unit was comprised of 38,610 shares of common
stock and 28,958 warrants to purchase shares of common stock at the exercise
price of $3.23 per share until May 11, 2003. The Company will be required to
file a registration statement relating to the resale of the shares of common
stock, the warrants and the shares underlying the warrants, upon demand, after
six months. Pursuant to the Placement Agent Agreement the Company will raise a
maximum of $7,000,000 in this private placement. The Company indicated it
expects to close on the remaining $1.9 million within the next two weeks.
Jerry O'Brien, NUWAVE Technologies chief financial officer, stated "Earlier this
year the Company raised $1 million through ProFutures Special Equities Fund,
L.P. and established a funding vehicle which permits the Company, at its
discretion, under certain conditions, to draw up to an additional $5 million of
equity over the next 23 months. Although the ProFutures financing facility
remains available to the Company, we determined that raising this capital with
Jannsen/Meyers will provide the Company with a stronger balance sheet creating
greater financial flexibility needed to implement its business plans for the
next two years which contemplate the delivery of commercial products to OEM
customers by the end of this calendar
<PAGE>
year, introduction of its consumer retail products in 1999, as well as the
development of its new generation of digital video processors."
Founded in July 1995, NUWAVE Technologies, Inc. is a leading designer,
developer, and marketer of state-of-the-art video enhancing technology, which
dramatically improves video pictures with clearer, sharper details and more
vibrant colors. NUWAVE's proprietary ASIC chip enhances video images at
breakthrough price points and is geared towards all video output products in the
rapidly expanding and converging multibillion-dollar video marketplace. NUWAVE's
technology has begun to achieve recognition by Original Equipment Manufacturer
(OEM) industry leaders as a superior video enhancement technology and one which
could significantly influence the choice consumers make in the selection of
video products.
NUWAVE Technologies, Inc. develops, manufactures and markets products to improve
picture quality in televisions, computer monitors and other display devices by
enhancing and manipulating video signals. NUWAVE is also developing video
production and control products that facilitate the production of sophisticated
videos by professional consumers.
Certain statements in this release are forward-looking statements that involve a
number of risks and uncertainties. Among the important factors that could cause
actual results to differ materially from those indicated by such forward-looking
statements are delays in product development, competitive pressures, general
economic conditions, risks of intellectual property litigation, and the risk
factors detailed from time to time in the Company's annual report on form 10KSB
and other material filed with the Securities and Exchange Commission.
OPERATING RESULTS
Three Months Ended
3/31/98 3/31/97
Net Loss $ 891,948 $ 982,551
========== ==========
Basic and diluted loss per share $ (0.16) $ (0.18)
========== ==========
Weighted average number of
shares outstanding 5,487,026 5,328,111
========== ==========
