As filed with the Securities and Exchange Commission on August 11, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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NUWAVE TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 22-3387630
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
ONE PASSAIC AVENUE, FAIRFIELD, NEW JERSEY 07004 (973) 882-8810
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
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Mr. Gerald Zarin
Chairman of the Board of Directors, President and Chief Executive Officer
One Passaic Avenue, Fairfield, New Jersey 07004
(973) 882-8810
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
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Copies To:
Fredric Klink, Esq.
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
(212) 698-3500
Approximate date of commencement of proposed sale to the public: From time
to time after the Registration Statement becomes effective as determined by
market conditions and the needs of each of the Selling Stockholders and the
Consultant.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] --------------.
If this form is a post-effective amendment filed pursuant to Rule 462 (c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ------------.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================
Proposed Proposed
Maximum Maximum Amount of
Title of Shares Amount to Offering Price Aggregate Registration
to be Registered be Registered(1) Per Share Offering Price Fee(2)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 100,000 shares $ 2.9375 (2) $ 293,750.00 $ 81.67
- --------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value,
issuable upon the exercise of an 50,000 shares $ 2.9375 (2) $ 146,875.00 $ 40.84
outstanding option (3)
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Registration Fee $122.51
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</TABLE>
(1) Includes the registration for resale of the following: (i) 100,000 shares
of Common Stock currently issued to the Selling Stockholders; and (ii)
50,000 shares of Common Stock issuable upon exercise of currently
outstanding options issued to the Selling Stockholders pursuant to the
Settlement Agreement.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act of 1933,
as amended, based on the average of the high and low prices of the Common
Stock on the Nasdaq SmallCap Market on August 5, 1999.
(3) Issuable upon exercise of outstanding options to buy Common Stock.
----------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8 (A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8 (A), MAY DETERMINE.
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<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 11, 1999
PROSPECTUS
NUWAVE TECHNOLOGIES, INC.
150,000 SHARES
OF
COMMON STOCK
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SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 5.
---------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation the contrary is a
criminal offense.
---------------------
This Prospectus may be used only in connection with the resale, from time
to time, of up to 150,000 shares of common stock of NUWAVE Technologies, Inc.
for the account of the Selling Stockholders identified below.
All of the Shares covered hereby are to be sold by the Selling Stockholders
and includes the following:
(1) 100,000 shares of Common Stock currently issued to the Selling
Stockholders; and
(2) 50,000 shares of Common Stock issuable upon exercise of currently
outstanding options issued to the Selling Stockholders.
Each of the Selling Stockholders may sell the Shares from time to time at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. We will not receive any
proceeds from the sale of the Shares by any of the Selling Stockholders. We have
agreed to bear all of the expenses in connection with the registration of the
Shares.
The Common Stock of NUWAVE is traded on the Nasdaq SmallCap Market under
the symbol "WAVE." On August 5, 1999, the closing price for the Common Stock of
the Company on the Nasdaq SmallCap Market was $2.9375 per share.
---------------------
The date of this Prospectus is August 11, 1999
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<PAGE>
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and in accordance therewith file reports and other
information with the Securities and Exchange Commission (the "Commission"). You
may read and copy such reports and other information at the following locations:
o the Commission's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549;
o the Commission's regional office at 7 World Trade Center, New York, New
York 10048;
o the Commission's regional office at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and
o the offices of the Nasdaq SmallCap Market at 1735 K Street, N.W.,
Washington, D.C. 20006.
The Commission also maintains a Web site at http://www.sec.gov that
contains reports and other information regarding registrants that file
electronically with the Commission.
We have filed with the Commission a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the Shares of Common Stock
that are being offered. This Prospectus does not contain all information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. You may obtain a
copy of the Registration Statement, including the exhibits and schedules
thereto, from the locations described above.
REPORTS TO SECURITY HOLDERS
We furnish our stockholders with annual reports containing audited
financial statements. In addition, we are required to file periodic reports on
Forms 8-K, 10-QSB and 10-KSB with the Commission and to make such reports
available to our stockholders.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows us to "incorporate by reference" the information that
we file with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be part of this prospectus, and later information that we file
with the Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act, until the Selling Stockholders and the Consultant sell all the shares:
1. Our Annual Report on Form 10-KSB for the fiscal year ended December 31,
1998 filed with the Commission on March 31, 1999, and amendment thereto
filed with the Commission on April 15, 1999.
2. Our Annual Report on Form 10-KSB for the fiscal year ended December 31,
1997 filed with the Commission on March 25, 1998, and amendments thereto
filed with the Commission on April 2, 1998, April 9, 1998 and April 14,
1998;
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3. Our Annual Report on Form 10-KSB for the fiscal year ended December 31,
1996 filed with the Commission on March 31, 1997; and
4. Our Quarterly Reports on Form 10-QSB for the quarter ended March 31, 1999
filed with the Commission on April 29, 1999.
We will provide you, free of charge, upon your written or oral request, a
copy of any or all of the documents incorporated by reference herein (other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference into such documents). You should direct requests for such copies, if
by mail, to Jeremiah F. O'Brien, Chief Financial Officer, NUWAVE Technologies,
Inc., One Passaic Avenue, Fairfield, New Jersey 07004, or, if by telephone, to
(973) 882-8810.
PROSPECTUS SUPPLEMENTS
Pursuant to the Settlement Agreement the Selling Stockholders acquired
100,000 shares of Common Stock and 50,000 shares of Common Stock issuable upon
exercise of outstanding options issued pursuant to such Agreement (collectively,
the "Shares").
THE COMPANY
We are a development stage enterprise organized in July 1995. Our mission
is to identify and commercialize high volume, proprietary technologies suited
for high-volume, high-growth markets and, in turn achieve attractive long-term
growth for the Company. The first technology that we are commercializing is in
the field of video-enhancement. In this regard, we are developing patented
video-enhancement technology, designed to significantly enhance video output
devices with clearer, sharper details and more vibrant colors when viewed on the
display screen. We intend to manufacture and market products which use this
technology to improve picture quality in set-top boxes, televisions, VCR's,
DVD's, camcorders, video and pictures on the Internet and P.C.'s, and other
video devices. The television, telecommunications, computer and Internet markets
are all converging and, in the process, redefining the way their constituencies
interact. Video display is the common denominator of that interaction, and we
believe the products we have developed and are developing will allow us to
participate in the growth opportunities created by this convergence. To date, we
have developed, among others, the following products and technology:
o the "NUWAVE Video Processor" technology which significantly enhances
video images;
o the "NUWAVE Video Processor" line of products (i.e., ASIC chip for the
original equipment manufacturer market, the NVP 2.2 in the stand alone unit
and PC board version for the professional video market and the consumer
video retail version);
o a software product we call "Softsets" which provides end users and
manufacturers who use the NUWAVE Video Processor in their products with an
option to manipulate the attributes of video images to their own tastes or
standards;
o new circuitry to allow certain of our products to be produced as chips;
o "iMAGENU", a software product which allows a user to clean and enhance
pictures and video (including streaming video) on the home PC while surfing
the Internet or off line using any picture or video program.
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We recently produced our first NUWAVE Video Processor ASIC chips for
testing and final evaluation purposes and are working with our design house and
foundry to complete this process. After final evaluation of these chips, we will
launch a full scale sales program aimed at obtaining orders initially from those
customers who have already evaluated our technology and wish to test these chips
in their products.
We are concentrating our activities on completion of the testing and
evaluation of the first ASIC chips and on the continued development and
marketing of our Softsets and NUWAVE Video Processor products) as well as final
product development and market introduction of the iMAGENU software product
line. We are currently conducting investigation and research and development
activities with respect to additional new technologies/products to address the
digital, PC and Internet markets. These activities may give rise to additional
products that may be commercialized by us. We believe this focused product
strategy will provide NUWAVE with an expanded technology base and diversify the
product line and services we can offer potential customers and allow us to take
full advantage of the significant video growth opportunity presented by the
converging PC, Internet, television, HDTV and telecommunication markets.
We believe that the capacity of our existing data processing and management
information systems is sufficient to allow us to expand our business without
significant additional capital expenditures. We have also consulted with our
software vendor about the year 2000 and data processing changes that will need
to be done. We have been assured that our software will be capable of handling
process dates beyond the year 2000 by the end of 1998.
Our principal offices are located at One Passaic Avenue, Fairfield, New
Jersey 07004 and our telephone number is (973) 882-8810.
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RISK FACTORS
The securities offered under this Prospectus involve a high degree of risk.
You should carefully consider the risk factors set forth below, as well as the
other information appearing in this Prospectus, before purchasing any of our
securities.
Development Stage Enterprise; Absence of Operating History
We are a development stage enterprise. We have had only a limited operating
history and have sold only a limited quantity of our products to date (primarily
for demonstration purposes). Since our inception in July 1995, we have been
engaged primarily in:
o raising funds;
o recruiting management and technical personnel, including members of our
Advanced Engineering Group;
o directing and supervising our Advanced Engineering Group in the continuing
development of the NUWAVE Video Processor and the Softsets; and
o pre-marketing activities.
More recently, we produced our first NUWAVE Video Processor in an
application specific integrated chip (ASIC) format. After final evaluation of
these chips, we will launch a full scale sales program aimed at obtaining orders
initially from those customers who have already evaluated our technology and
wish to test these chips in their products.
Our prospects must be considered in light of the risks associated with the
establishment of a new business in the evolving electronic video industry. In
our case this is particularly so, as further risks will be encountered in our
shift from the development to the commercialization of new products based on
innovative technology. There can be no assurance that we will be able to
generate revenues or achieve profitable operations.
Limited Revenues; Accumulated Deficit; Anticipated Future Losses
To date, we have received only limited revenue from the sale of our
products (primarily from sales made for demonstration purposes). We do not
anticipate significant operating revenue until such time, if ever, as our
relevant technology and one or more of our products is completely developed,
able to be manufactured in commercial quantities and available for commercial
delivery upon receipt of orders from prospective customers. There can be no
assurance that our technology and products, if developed and manufactured, will
be able to compete successfully in the marketplace and/or generate significant
revenue. We anticipate incurring significant costs in connection with the
development of our technologies and proposed products and there is no assurance
that we will achieve sufficient revenues to offset anticipated operating costs.
As of March 31, 1999, we had an accumulated deficit of $13,976,047. Although we
anticipate deriving some revenue from the sale of our NUWAVE Video Processor and
related products and our Softsets within the next 12 months, we can give no
assurance that these products will be successfully marketed or even completely
developed and tested for commercial use during such period. We anticipate that
we will continue to incur substantial losses for at least the next 12 months.
Included in such former and future losses are research and development expenses,
marketing costs, manufacture and assembly, and general and administrative
expenses. We anticipate that we will continue to have high levels of operating
expenses and will be required to make significant expenditures in connection
with our continued research
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and development activities. We anticipate that our losses will continue until
such time, if ever, as we are able to generate sufficient revenues to support
our operations.
Significant Capital Requirements; Dependence on Available Cash; Need for
Additional Financing
Our capital requirements in connection with our development activities have
been and will continue to be significant. We have been dependent upon the
proceeds of sales of our securities to private investors to fund our initial
development activities. Since our initial public offering in July 1996, we have
raised capital by making the following sale of our securities to private
investors:
o On February 11, 1998, we received net proceeds of approximately $859,347
from the sale of 253,485 shares of our Common Stock to Profutures Special
Equities Fund, L.P. ("Profutures") pursuant to a Securities Subscription
Agreement dated as of February 6, 1998 (the "Investment Agreement"); and
o Between May 19, 1998 and June 9, 1998, we received net proceeds of
approximately $5,990,924from the sale of 2,742,904 shares of our Common
Stock and 2,057,207 Class A Redeemable Warrants to certain accredited
investors.
In addition, under the Investment Agreement, we have the right, subject to
certain conditions, to draw up to $5,000,000 in cash by selling shares of Common
Stock to ProFutures. We have this right until April 15, 2000, and such shares
are to be sold at a price equal to eighty-eight percent (88%) of the Market
Price (as defined in the Investment Agreement) of the Common Stock on the
relevant draw down date. There is no assurance, however, that the conditions to
the right to draw will be satisfied. We have the sole discretion, subject to
certain conditions, as to when and in what amount such draws will be made.
However, we are required to draw a minimum of $1,000,000 in cash in exchange for
shares of Common Stock prior to April 15, 2000. A registration statement on Form
S-3 covering the resale of all of the Common Stock issued and issuable to
ProFutures under the Investment Agreement became effective on April 15, 1998.
We anticipate, based on our current proposed plans and assumptions relating
to our operations, that we have sufficient cash to satisfy all of our estimated
cash requirements for the next 12 months. In the event of unanticipated
expenses, delays or other problems, we might be required to either utilize the
equity financing available under the Investment Agreement or to seek additional
funding elsewhere. Also, if we receive a larger than anticipated number of
initial purchase orders upon introduction of the Softsets or the NuWave Video
Processor products, we may require additional capital. We cannot be sure that we
will be able to obtain such additional capital on commercially reasonable terms
or at all. An inability to obtain additional financing, when needed, would have
a material adverse effect on us, and possibly require us to curtail or cease
operations. To the extent that any future financing involves the sale of our
equity securities, our existing stockholders could be substantially diluted.
New Concept; Uncertainty of Market Acceptance; Lack of Marketing Experience
We develop technology and products utilizing new concepts and designs in
video imagery and processing. Our prospects for success will depend on our
ability to successfully sell our products to key manufacturers and distributors
who may be inhibited from doing business with us because of their commitment to
their own technologies and products. As a result, demand and market acceptance
for our technology and products are subject to a high level of uncertainty. We
currently have limited financial, personnel and other resources to undertake the
extensive marketing activities that will be necessary to market our technology
and products once their development is completed. We cannot be sure that any of
our potential customers will enter into any arrangements with us. Further, there
is no assurance that our marketing efforts will be successful.
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Dependence on Third-Party Design Changes
Commercialization of the NUWAVE Video Processor and sale to manufacturers
of the relevant video equipment will require such manufacturers to adopt new
circuit configurations to accommodate the relevant chip in their products. We
anticipate that manufacturers wishing to use the NUWAVE Video Processor will
make such modifications because of the benefits derived from the improved
performance of their products and the relative simplicity of such modifications.
However, there is no assurance that such modifications will be made. Also, the
cost of such modifications may inhibit or prevent their adoption. Our ability to
sell and/or license our products would be adversely affected if designers and
manufacturers fail to make such modifications.
License
General
In July 1995, we entered into the following agreements with Rave
Engineering Corporation ("Rave"): (1) Exclusive Worldwide License Agreement,
dated July 21, 1995 (the "License Agreement") and (2) Development Agreement,
dated July 21, 1995 (the "Development Agreement"), which expired on October 1,
1998. Pursuant to the License Agreement, Rave licensed to us a substantial
portion of the technology from which our Initial Products were derived. See "The
Company" for a definition of Initial Products.
In July 1996, on behalf of Rave, we filed a patent application on a video
clarity circuit which Rave provided to us under the License Agreement ("Rave
Clarity Circuit"). Of the products and technology which Rave provided to us
under the License Agreement, we had identified the Rave Clarity Circuit as the
most likely candidate for immediate commercial exploitation. Although Rave
claimed proprietary rights to the Rave Clarity Circuit, in January 1998, we
received a rejection of our patent application from the patent examiner's
office. We modified the claims in the application and resubmitted the
application twice. Both times it was rejected on the grounds that the Rave
Clarity Circuit was identical to a previously patented circuit. In August 1998,
we acquired exclusive rights to such previously patented circuit. As a result,
we have decided not to proceed with further prosecution of the patent
application on the Rave Clarity Circuit.
On November 13, 1998, pursuant to the provisions of the License Agreement
and the Development Agreement, we commenced an arbitration proceeding under the
American Arbitration Association Rules of Patent Arbitration against Rave and
Randy Burnworth.
Rave filed an amended counterclaim against the Company in the Arbitration,
alleging breaches of the License Agreement and Development Agreement, trade
libel, tortious interference and conspiracy, and seeking a declaration that Rave
is entitled to the return and exclusive use of its own technology. Rave claimed
that it was entitled to $65,000 per month for the life of any patents on
products it developed for the Company (approximately 15 more years), as well as
damages in excess of $4 million on the various claims.
Pursuant to a Settlement Agreement and Release (the "Settlement
Agreement"), dated as of May 28, 1999, between and among the Company, Rave and
Burnworth, the Arbitration was resolved and the License Agreement was
terminated. As a result of the Settlement Agreement, the Company continues to
maintain exclusive worldwide license rights to make, market and license its
video enhancement technology free of any claims of ownership or inventorship by
Rave; in return, Rave and certain individuals associated with Rave received from
the Company $175,000 in cash as well as 100,000 shares of the Company's Common
Stock and options to purchase 50,000 shares of the Company's Common Stock.
Uncertainty of Product and Technology Development; Need for Product Testing;
Technological Factors
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Development of our products are subject to all of the risks inherent in the
development of new technology and products including the following risks:
o unanticipated delays;
o expenses;
o technical problems or difficulties; and
o possible insufficiency of funding to complete development.
There is no assurance as to when, or whether, we can successfully complete
such developments. Further, there is no assurance that we can develop products
in commercially salable form within our projected development schedule. If we
are unable to complete our development activities for our proposed products, we
would have to complete development through third parties. We believe that we
have sufficient resources to complete development of our products. However,
there is no assurance that we will be able to complete such development in a
timely manner, or at all. There is also no assurance that we can enter into
economically reasonable arrangements for the completion of such products by
third parties.
In connection with the development of commercially salable prototypes, we
must successfully complete a testing program for our products before marketing
them. Unforeseen technical problems arising out of such testing could
significantly and adversely affect our ability to manufacture a commercially
acceptable version. In addition, our success will depend upon our technology and
proposed products meeting acceptable cost and performance criteria and upon
their timely introduction into the marketplace. There can be no assurance that
our technology and proposed products will satisfactorily perform the functions
for which they are designed, that they will meet applicable price or performance
objectives or that unanticipated technical or other problems will not occur.
Should any such problems arise, the result would be increased costs and/or
material delays in the development of our proposed products.
Dependence on Third-Party Development and Manufacturing
We do not plan to directly manufacture any of our products. We intend
to contract with third parties to manufacture our proposed NUWAVE Video
Processor and Softsets, and related retail products. We may also license to
third parties the rights to manufacture our proposed products, either through
direct licensing, original equipment manufacturer arrangements or otherwise.
We will be dependent on third parties to manufacture our application
specific integrated circuit ("ASIC")-based NUWAVE Video Processor and related
products as well as future products we may choose to commercialize. Although we
have entered into an agreement with a potential manufacturer of our NUWAVE Video
Processor ASIC chip, there can be no assurance that such manufacturer will
dedicate sufficient production capacity to satisfy our requirements within
scheduled delivery times, or at all. Failure or delay by our suppliers in
fulfilling our anticipated needs would have an adverse effect on our ability to
develop and market our products. In addition, we will be dependent on third
party vendors for many of the components necessary for the final assembly of our
products. We may have difficulty in obtaining contractual agreements with
suppliers of such materials due to, among other things, possible material
shortages or possible lack of adequate purchasing power. While our management
believes that these components are available from multiple sources, it is
anticipated that we will obtain certain of them from a single source, or limited
number of sources, of supply. In the event that certain of such suppliers are
unable or unwilling to provide us with such components on commercially
reasonable terms, or at all, delays in securing alternative sources of supply
would result and could have a material adverse effect on our operations.
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Competition
Intense competition exists in the markets that we intend to enter. Further,
with respect to the market for video editing, video production and video
processing products, significant price erosion over the life of a product
exists. Our products will directly compete with those of numerous
well-established companies, such as the following companies, which design,
manufacture and/or market video technology and other products:
o Sony Electronics, Inc.;
o Panasonic Division of Matsushita Electric Industrial Co.;
o Motorola, Inc.;
o Mitsubishi International Corp.; and
o Phillips Electronics, NV.
All of the above companies have substantially greater financial, technical,
personnel and other resources than we do. Further, each has established a
reputation for success in the development, licensing, sale and service of its
products and technology. In addition, certain of these competitors dominate
their industries and have the necessary financial resources to enable them to
withstand substantial price competition or downturns in the market for video
products.
Rapid Changes to Industry Standards; Product Obsolescence
Rapid changes characterize the markets for our technology and products.
Further, evolving industry standards often result in product obsolescence or
short product life cycles. Certain companies may be developing technologies or
products which may be functionally similar, or superior, to some or all of our
proposed products. As a result, our ability to compete will depend on our
ability to, among other things:
o complete development and introduce to the marketplace in a timely and
cost-competitive manner our proposed products and technology;
o continually enhance and improve our proposed products and technology;
o adapt our proposed products to be compatible with specific products
manufactured by others; and
o successfully develop and market new products and technology.
There is no assurance that we will be able to compete successfully or that
our competitors will not develop technologies or products that render our
products and technology obsolete or less marketable. Further, there is no
assurance that we will be able to successfully enhance our proposed products or
technology or adapt them satisfactorily.
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Enforceability of Patents and Similar Rights; Possible Issuance of Patents to
Competitors; Trade Secrets
To the extent practicable, we have filed and intend to file U.S. patents
and/or copyright applications for certain of our proposed products and
technology. We have also filed and intend to file corresponding applications in
key industrial countries worldwide.
Under the License Agreement, we have exclusive license rights to all
patents and copyrights obtained or to be obtained for the products and
technology licensed under the License Agreement. For a discussion relating to
the License Agreement and the exclusivity provisions thereunder, see "Risk
Factors--License." In April 1996, we filed two patent applications on behalf of
Rave for its Randall connector system. We received one patent in November 1997
and the second one in January 1998.
In April 1998, we filed three patent applications for certain of our
independently developed products: one for our NUWAVE Video Processor and two for
our Softsets. Although we believe that each of these applications contains
patentable claims, there is no assurance that we will receive any patents. Also,
even if granted, there is no assurance that any patent will afford us with
commercially significant protection of our technology or that we will have
adequate resources to enforce our patents.
We also intend to license and/or sell our technology and products in
foreign markets. As such, we intend to seek foreign patent protection. The
patent laws of other countries may differ significantly from those of the United
States as to the patentability of our products and technology. Moreover, the
degree of protection afforded by foreign patents may be different from that in
the United States. Patent applications in the United States are maintained in
secrecy until patents issue and publication of discoveries in scientific or
patent literature tends to lag behind actual discoveries by several months. As a
result, we cannot be certain that we will be the first creator of inventions
covered by any patent applications we make or the first to file patent
applications on such inventions.
We believe that the products we intend to market and sell do not infringe
the patents or other proprietary rights of third parties. Further, we are not
aware of any patents held by our competitors that will prevent, limit or
otherwise interfere with our ability to make and sell our products. However, it
is possible that competitors may have applied for, or may in the future apply
for and obtain, patents which have an adverse impact on our ability to make and
sell our products. In addition, because we are a relatively new company in the
development stage, claims that our products infringe on the proprietary rights
of others are more likely to be asserted after commencement of commercial sales
of our products. There is no assurance that competitors will not infringe our
patents. Defense and prosecution of patent suits, even if successful, are both
costly and time consuming. An adverse outcome in the defense of a patent suit
could subject us to significant liabilities to third parties, require disputed
rights to be licensed from third parties or require us to cease selling our
products.
We also rely on unpatented proprietary technology. There is no assurance
that others may not independently develop the same or similar technology or
otherwise obtain access to our unpatented technology. To protect our trade
secrets and other proprietary information, we require employees, advisors and
collaborators to enter into confidentiality agreements. We could be adversely
effected in the event that these agreements fail to provide meaningful
protection for our trade secrets, know-how or other proprietary information.
10
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No Dividends
We have not paid any cash dividends to date. Payment of dividends on our
Common Stock is within the discretion of the Board of Directors and will depend
upon our earnings, our capital requirements and financial condition, and other
relevant factors. We do not intend to declare any dividends on our Common Stock
in the foreseeable future. Instead, we plan to retain any earnings we receive
for development of our business operations.
Limitation on Tax Loss Carryforwards
As of December 31, 1998, we had available unused net operating loss
carryforwards ("NOLs") aggregating approximately $8,778,000 to offset future
taxable income. The unused NOLs expire in various years from 2010 to 2018. Under
Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"),
utilization of prior NOLs is limited after an ownership change. We may be
subject to limitations on the use of our NOLs as provided under Section 382.
Accordingly, there can be no assurance that a significant amount of our existing
NOLs will be available to us. In the event that we achieve profitability, as to
which there can be no assurance, such limitation would have the effect of
increasing our tax liability and reducing our net income and available cash
resources in the future.
Limitation on Liability of Directors and Officers
Our Certificate of Incorporation provides that:
o we will indemnify any of our directors, officers, employees or agents
against actions, suits or proceedings relating to our company; and
o subject to certain limitations, a director shall not be personally liable
for monetary damages for breach of his fiduciary duty.
In addition, we have entered into an indemnification agreement with each of
our directors. Such indemnification agreement provides that a director is
entitled to indemnification to the fullest extent permitted by law.
Reliance Upon Key Personnel
Our operations depend largely on the continued employment of Mr. Gerald
Zarin, our Chairman of the Board, President and Chief Executive Officer. If Mr.
Zarin or other members of management or key personnel resign or otherwise leave
us, our business and financial condition could be materially adversely affected.
General
You should not consider past financial performance as an indicator of
future performance. You should not use historical trends to anticipate future
results. You should be aware that the trading price of our Common Stock may be
subject to wide fluctuations in response to quarter-to-quarter variations in
operating results, general conditions in the computer, video and
telecommunications industries, changes in earnings estimates, recommendations by
analysts and other events.
11
<PAGE>
USE OF PROCEEDS
The Selling Stockholders will receive all of the proceeds from the sale of
the securities offered hereby. We will not receive any proceeds from the sale of
such securities.
DETERMINATION OF OFFERING PRICE
This Prospectus may be used from time to time by the Selling Stockholders
to offer the Shares registered hereby for resale. The offering price of such
Shares of Common Stock will be determined by such Selling Stockholder and may be
based on market prices prevailing at the time of resale, at prices relating to
such prevailing market prices, or at negotiated prices.
12
<PAGE>
SELLING STOCKHOLDERS*
The following table sets forth certain information regarding beneficial
ownership of certain of the Company's securities (the "Securities") as of August
5, 1999. The Securities are being registered to permit public secondary trading
of such Securities, and the selling stockholders of the Company (the "Selling
Stockholders") may offer the Securities for resale from time to time. See "Plan
of Distribution." Upon completion of the offering and assuming the sale by a
Selling Stockholders of all of its Securities available for sale under this
Prospectus, such Selling Stockholders shall not own more than 1% of such
outstanding Securities of the Company.
SECURITIES HELD BY THE SELLING STOCKHOLDERS
BEFORE THE OFFERING AFTER THE OFFERING
------------------- ------------------
NAME OF NUMBER OF NUMBER OF
BENEFICIAL SHARES OF SHARES OF
OWNER COMMON STOCK (1)(2) COMMON STOCK (3)
Randy Burnworth 50,000 -0-
Rave Engineering Corp. 62,500 -0-
William C. Meier, Trustee 37,500 -0-
(1) Includes shares of Common Stock beneficially owned by the Selling
Stockholders and shares of Common Stock issuable upon exercise of options
issued pursuant to the Settlement Agreement.
(2) All Securities listed in this table will be offered unless otherwise
indicated.
(3) Assumes the sale the Selling Stockholders of all of the Securities
available for sale under this Prospectus.
The Securities offered hereby by the Selling Stockholders have been
acquired pursuant to the Settlement Agreement. In accordance with the Settlement
Agreement, the Company agreed to register the Securities for resale by the
Selling Stockholders to permit such resales from time to time in the market or
in privately-negotiated transactions.
The Company has agreed to bear certain expenses (other than broker
discounts and commissions, if any) in connection with the registration of the
Securities.
- --------
* Information concerning the Selling Stockholders may change from time to
time; any changes of which the Company is advised will be set forth in a
Prospectus Supplement to the extent required.
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<PAGE>
PLAN OF DISTRIBUTION
All or a portion of the Securities offered hereby by the Selling
Stockholders may be delivered and/or sold in transactions from time to time on
the over-the-counter market, on the Nasdaq SmallCap Market, in negotiated
transactions, or a combination of such methods of sale, at market prices
prevailing at the time, at prices related to such prevailing prices or at
negotiated prices. The Selling Stockholders may effect such transactions by
selling to or through one or more broker-dealers, and such broker-dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Selling Stockholders. The Selling Stockholders and any
broker-dealers that participate in the distribution may under certain
circumstances be deemed to be "underwriters" within the meaning of the
Securities Act, and any commissions received by such broker-dealers and any
profits realized on the resale of Securities by them may be deemed to be
underwriting discounts and commissions under the Securities Act.
Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholders (and, if they act as agent for the
purchaser of such Securities, from such purchaser). Broker-dealers may agree
with the Selling Stockholders to sell a specified number of Securities at a
stipulated price per share, and, to the extent such a broker-dealer is unable to
do so acting as agent for the Selling Stockholders, to purchase as principal any
unsold Securities at the price required to fulfill the broker-dealer commitment
to the Selling Stockholders. Broker-dealers who acquire Securities as principal
may thereafter resell such Securities from time to time in transactions (which
may involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
Securities commissions computed as described above. To the extent required under
the Securities Act, a supplemental prospectus will be filed, disclosing (a) the
name of any such broker-dealers; (b) the number of Securities involved; (c) the
price at which such Securities are to be sold; (d) the commissions paid or
discounts or concessions allowed to such broker-dealers, where applicable; (e)
that such broker-dealers did not conduct any investigation to verify the
information set out or incorporated by reference in this Prospectus, as
supplemented; and (f) other facts material to the transaction.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale of Securities may not simultaneously
engage in market making activities with respect to the Securities of the Company
for a period of two business days prior to the commencement of such
distribution. In addition and without limiting the foregoing, the Selling
Stockholders will be subject to applicable provisions of the Exchange Act, and
the rules and regulations thereunder, including, without limitation, Regulation
M, which provisions may limit the timing of purchases and sales of the
Securities by the Selling Stockholders.
The Selling Stockholders will pay all commissions and certain other
expenses associated with the sale of the Securities by them. The Securities
offered hereby are being registered pursuant to contractual obligations of the
Company, and the Company has paid the expenses of the preparation of this
Prospectus.
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby has been passed
upon for the Company by Dechert Price & Rhoads, New York, New York.
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EXPERTS
The balance sheet of the Company as of December 31, 1998, and the related
statements of operations, stockholders' equity and cash flows for each of the
years in the two year period ended December 31, 1998, and the amounts for such
year included in the cumulative amounts for the period from July 17, 1995
(inception) to December 31, 1998, incorporated by reference in this Prospectus
and in the related Registration Statement, have been audited by Richard A.
Eisner & Company, LLP ("Eisner"), independent accountants, as stated in their
report appearing in the Company's annual report on Form 10KSB, and are included
in reliance on the report of such firm given on their authority as experts in
accounting and auditing.
The statements of operations, stockholders' equity and cash flows of the
Company for the period from July 17, 1995 (inception) to December 31, 1996,
included in the cumulative amounts for the period from July 17, 1995 (inception)
to December 31, 1998, and the related statement of Stockholders Equity for the
period from July 17, 1995 (inception) to December 31, 1995 and for the year
ended December 31, 1996, have been incorporated by reference in this Prospectus
and in the related Registration Statement, in reliance on the report of
PricewaterhouseCoopers, LLP ("Coopers"), independent accountants, given on the
authority of such firm as experts in accounting and auditing.
CHANGES IN INDEPENDENT PUBLIC ACCOUNTANTS
On February 11, 1998, Coopers, the independent accounting firm that audited
the financial statements of the Company during fiscal year 1996, was dismissed
by the Company. Coopers' report on the Company's financial statements for the
period from July 17, 1995 (inception) to December 31, 1995 and for the year
ended December 31, 1996 did not contain an adverse opinion or a disclaimer of
opinion, and was neither qualified nor modified as to uncertainty, audit scope
or accounting principles. In addition, during the Company's two most recent
fiscal years and any subsequent interim period preceding such dismissal, there
were no disagreements with Coopers on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure, which
disagreement(s), if not resolved to the satisfaction of Coopers, would have
caused it to make reference to the subject matter of the disagreement(s) in
connection with its report.
Effective February 11, 1998, the Company has engaged Eisner as its new
independent accountants beginning in 1997. The decision to change accountants
was approved by the Board of Directors of the Company at a meeting of the Board
of Directors of the Company on February 4, 1998.
TRANSFER AGENT
The Transfer Agent and Registrar for the Common Stock is American Stock
Transfer & Trust Company, 40 Wall street, New York, New York 10005.
15
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth various costs and expenses of the Company in
connection with the sale and distribution of the Shares being registered. All of
the amounts shown are estimates except for the Securities and Exchange
Commission Registration Fee.
Securities and Exchange Commission Registration Fee $ 122.51
Legal Fees and Expenses $ 3000.00
Accounting Fees and Expenses $ 1000.00
Other Expenses $ 100.00
-----------
Total Expenses $ 4222.51
Item 15. Indemnification of Directors and Officers.
Section 145(a) of the General Corporation Law of the State of Delaware (the
"Delaware Code") grants corporations the power to indemnify any person who was
or is a party to any action, suit or proceeding by reason of the fact that the
person was or is a director or officer against expenses, judgments, fines and
settlement amounts actually and reasonably incurred by the person in connection
with such action, suit or proceeding. The indemnification is contingent on the
fact that the person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.
Section 145(b) of the Delaware Code grants corporations the power to
indemnify any person who was or is a party to any action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of the
fact that the person was or is a director or officer against expenses actually
and reasonably incurred by the person in connection with the defense or
settlement of such action or suit. The person must meet the same applicable
standard of conduct as in Section 145(a), except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation.
Section 102(b)(7) of the Delaware Code permits a corporation to include in
its certificate of incorporation a provision eliminating or limiting the
personal liability of a director to the corporation or its stockholders for
monetary damages arising out of a breach of his fiduciary duty as a director.
Such provision shall not eliminate or limit the liability of a director with
respect to any of the following: (i) breach of the director's duty of loyalty to
the corporation or its stockholders; (ii) acts or omissions not made in good
faith or which involve intentional misconduct or a knowing violation of law;
(iii) liability for unlawful dividends paid or an unlawful stock purchase or
redemption pursuant to Section 174 of the Delaware Code; or (iv) transactions
from which the director derived an improper personal benefit.
Article Seventh of the Company's Certificate of Incorporation provides that
"the Corporation shall, to the fullest extent permitted by the provisions of
ss.145 of the General Corporation Law of the State of Delaware, as the same may
be amended and supplemented, indemnify any and all persons whom it shall
16
<PAGE>
have the power to indemnify under said section from and against any and all of
the expenses, liabilities, or other matters referred to, in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrators of such a person."
Item 16. Exhibits
4.1 Form of Common Stock Certificate (incorporated by reference to Exhibit
4.1 to the Company's Amendment No. 2 to Registration Statement on Form
SB-2 filed with the Commission on July 3, 1996).*
5.1 Opinion of counsel to the Company concerning the legality of the
securities being offered.**
10.1 Settlement Agreement, dated as of May 28, 1999, between and among
NUWAVE Technologies, Inc., Rave Engineering Corporation, and Randy
Burnworth.**
10.2 Form of Option, dated May 28, 1999, issued by NUWAVE Technologies,
Inc. to Rave Engineering Corporation and certain individuals
associated with Rave.**
23.1 Consent of PricewaterhouseCoopers, L.L.P.**
23.2 Consent of Richard A. Eisner & Company, LLP**
24.1 Special Power of Attorney for Lyle Gramley.**
24.2 Special Power of Attorney for Joseph A. Sarubbi.**
24.1 Special Power of Attorney for Edward Bohn.**
99.1 Press Release, dated June 17, 1999.**
- -----------------------
* The exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such exhibits is a reference
to the copy of the exhibit heretofore filed with the Commission, to which
there have been no amendments or changes.
** Filed with this Registration Statement.
Item 17. Undertakings
(a) The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
17
<PAGE>
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and
(iii)to include any material information with respect to the plan of
distribution not previously disclosed in this Registration
Statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Company pursuant to the provisions described under Item 15 above, or
otherwise, the Company has been advised that in the opinion of the
Commission, such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action,
suit or proceeding) is asserted against the Company by such director,
officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Fairfield, New Jersey on August 11, 1999.
NUWAVE TECHNOLOGIES, INC.
By: /s / GERALD ZARIN
---------------------------------
GERALD ZARIN
PRESIDENT, CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURE TITLE(S) DATE
- --------- -------- ----
/s/ GERALD ZARIN PRESIDENT, CHAIRMAN OF AUGUST 11, 1999
- --------------------------------- THE BOARD, CHIEF EXECUTIVE
GERALD ZARIN OFFICER (PRINCIPAL
EXECUTIVE OFFICER)
/s/ JEREMIAH F. O'BRIEN CHIEF FINANCIAL OFFICER AUGUST 11, 1999
- --------------------------------- AND SECRETARY (PRINCIPAL
JEREMIAH F. O'BRIEN FINANCIAL OFFICER AND
PRINCIPAL ACCOUNTING
OFFICER)
* DIRECTOR AUGUST 11, 1999
- ---------------------------------
LYLE GRAMLEY
* DIRECTOR AUGUST 11, 1999
- ---------------------------------
ED BOHN
* DIRECTOR AUGUST 11, 1999
- ---------------------------------
JOSEPH A. SARUBBI
*By: /s / JEREMIAH F. O'BRIEN
------------------------------
JEREMIAH F. O'BRIEN
ATTORNEY-IN-FACT
19
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EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
4.1 Form of Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to the Company's Amendment No. 2 to Registration
Statement on Form SB-2 filed with the Commission on July 3,
1996).*
5.1 Opinion of counsel to the Company concerning the legality of
the securities being offered.**
10.1 Settlement Agreement, dated as of May 28, 1999, between and
among NUWAVE Technologies, Inc., Rave Engineering Corporation,
and Randy Burnworth.**
10.2 Form of Option, dated May 28, 1999, issued by NUWAVE
Technologies, Inc. to Rave Engineering Corporation and certain
individuals associated with Rave.**
23.1 Consent of PricewaterhouseCoopers, L.L.P.**
23.2 Consent of Richard A. Eisner & Company, LLP**
24.1 Special Power of Attorney for Lyle Gramley.**
24.2 Special Power of Attorney for Joseph A. Sarubbi.**
24.1 Special Power of Attorney for Edward Bohn.**
99.1 Press Release, dated June 17, 1999.**
- -----------------------
* The exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such exhibits is a reference
to the copy of the exhibit heretofore filed with the Commission, to which
there have been no amendments or changes.
** Filed with this Registration Statement.
20
<PAGE>
EXHIBIT 5.1
August 6, 1999
NUWAVE Technologies, Inc.
One Passaic Avenue
Fairfield, New Jersey 07004
Re: Registration Statement on Form S-3
Dear Sirs:
We have acted as counsel to NUWAVE Technologies, Inc., a Delaware
corporation (the "Company"), in connection with the filing with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Act"), of a Registration Statement on Form S-3 (the "Registration Statement"),
relating to the proposed sale by certain stockholders of the Company (the
"Selling Stockholders") of:
(a) 100,000 shares of common stock, par value $0.01 per share ("Common Stock"),
of the Company issued to certain Selling Stockholders in connection with
the Settlement Agreement, dated as of May 28, 1999, between and among, the
Company, Rave Engineering Corporation and Randy J. Burnworth (the
"Settlement Agreement"); and
(b) 50,000 shares of Common Stock issuable upon exercise of options (the
"Options") issued in connection with the Settlement Agreement.
The issued and outstanding securities described in (a) above are
hereinafter referred to as the "Issued Securities." The securities issuable upon
exercise of the Options as described in (b) above are hereinafter referred to as
the "Issuable Securities."
The Issued Securities were issued in connection with the Settlement
Agreement.
In connection with the foregoing, we have reviewed such records, documents,
agreements and certificates, and examined such questions of law, as we have
considered necessary or appropriate for the purpose of this opinion. In making
our examination of records, documents, agreements and certificates, we have
assumed the authenticity of the same, the correctness of the information
contained therein, the genuineness of all signatures, the authority of all
persons entering and maintaining records or executing documents, agreements and
certificates (other than persons executing documents, agreements and
certificates on behalf of the Company), and the conformity to authentic
originals of all items submitted to us as copies (whether certified, conformed,
photostatic or by other electronic means) of records, documents, agreements or
certificates. In rendering our opinion we have relied as to factual matters upon
certificates of public officials and certificates and representations of
officers of the Company.
We have assumed that each of the Settlement Agreement and the Option have
been duly authorized, executed and delivered by the parties thereto. In
addition, the opinions expressed herein are based on states of law,
documentation and fact as they exist on the date hereof and we do not undertake
to advise you of any changes therein which hereafter may be brought to our
attention.
Based upon the foregoing and having regard for such legal considerations as
we deem relevant, we are of the opinion that:
21
<PAGE>
1. The Issued Securities are legally issued, fully paid and
non-assessable.
2. The Issuable Securities, when issued and paid for upon valid exercise
of the Options, in accordance with its terms, will be legally issued,
fully paid and non-assessable.
22
<PAGE>
This opinion is rendered to the Company in connection with the filing of
the Registration Statement and for no other purpose. We are members of the Bar
of the State of New York and express no opinion as to the laws of any
jurisdiction other than the laws of the United States of America, the State of
New York and, to the extent necessary to render the opinions set forth herein,
the General Corporation Law of the State of Delaware.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the prospectus which is included in the Registration Statement. In
giving the foregoing consent, we do not admit that we come within the category
of persons whose consent is required by the Act or the rules and regulations
promulgated thereunder.
Very truly yours,
/S/ DECHERT PRICE & RHOADS
23
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EXHIBIT 10.1
SETTLEMENT AGREEMENT AND RELEASE
This Agreement, dated as of May 28, 1999, between and among NUWAVE
Technologies, Inc. ("NUWAVE"), Rave Engineering Corporation ("Rave"), and Randy
J. Burnworth ("Burnworth").
WHEREAS, NUWAVE and Rave are parties to two agreements, a certain Exclusive
Worldwide Licensing Agreement dated as of July 21, 1995 (the "License
Agreement") and a certain Development Agreement dated as of July 21, 1995 (the
"License Agreement"); and
WHEREAS a dispute has arisen between the parties arising from their
respective obligations and performance under the License Agreement and the
Development Agreement; and
WHEREAS NUWAVE has instituted a proceeding against Rave and Burnworth
before the American Arbitration Association, No. [insert number] (the
"Arbitration"), and Rave has asserted counterclaims in the Arbitration; and
WHEREAS the parties desire to resolve their disputes on an amicable basis;
It is hereby stipulated and agreed by and between the parties:
1. Upon execution of this Agreement, NUWAVE will wire transfer the sum of
$175,000 to the attorney trust account of William C. Meier, Esq., for the
benefit of William C. Meier as Attorney for Rave Engineering Corporation and
Randy J. Burnworth.
2. Upon execution of this Agreement NUWAVE will issue 75,000 shares of its
common stock to Rave and 25,000 shares of its common stock to William C. Meier
Trustee, (the "Settlement Shares"). NUWAVE will use Reasonable Efforts to cause
the Settlement Shares to be registered with the Securities Exchange Commission
and will bear the Costs of such registration. "Reasonable Efforts" shall mean
the filing of a registration statement under the Securities Act of 1933 (the
"Act") as promptly as practicable [no later than July 11, 1999] and NUWAVE's
best efforts to cause such registration to become effective and to remain
effective for such period not to exceed 90 days to enable the holders of the
Settlement Shares to sell. "Costs" shall mean all expenses in connection with
filing and effectiveness of such registration, including the fees and expenses
of NUWAVE's counsel and accountants, registration fees, costs of reproduction of
the prospectus but excluding the brokers' or underwriters' fees or other
compensation in connection with the sale of the Settlement Shares. The
Settlement Shares will be acquired for investment and not with a view to the
distribution thereof within the meaning of the Act and may not be sold or
otherwise disposed except pursuant to the above registration statement or an
exemption under the Act as set forth in an opinion of counsel satisfactory to
NUWAVE. The holders of the Settlement Shares acknowledge that the shares of
other security holders may be included in such registration statement. Rave and
Mr. Meier hereby acknowledge that the settlement shares (and in the case of Rave
also the options and the shares of common
24
<PAGE>
stock issued upon the exercise thereof) will be initially issued in reliance
upon the exemption from registration under the Act afforded by Regulation D and
by reason of the representations of Rave and Mr. Meier that each is an
"accredited investor" or within the meaning of Regulation D and (b) NUWAVE has
made no representations concerning the investment value of the Settlement Shares
or such options and Rave and Mr. Meier have made their own investigations
concerning NUWAVE, have read NUWAVE's Annual Report on Form 10K for the fiscal
year ended December 31, 1998 and its report on Form 10Q for the quarter ended
March 31, 1999.
3. Upon execution of this Agreement NUWAVE will issue to Rave or such
person or entity as Rave my direct in writing options to purchase 37,500 shares
of NUWAVE common stock exercisable within 36 months of the issue date at a price
of $1.462 (United States Dollars) per share, and to William C. Meier, Trustee,
options to purchase 12,500, shares of NUWAVE common stock exercisable within 36
months of the issue date at a price of $1.462 (United States Dollars) per share.
Such options and the shares of common stock issuable upon the exercise thereof
will be acquired for investment and not with a view to the distribution thereof
within the meaning of the Act and may not be sold or otherwise disposed absent
an exemption from registration under the Act in the opnion of counsel
satisfactory to NUWAVE. Rave and Mr. Meier hereby acknowledge that the
settlement shares will be initially issued in reliance upon the exemption from
registration under the Act afforded by Regulation D and by reason of the
representations of Rave and Mr. Meier that each is an "accredited investor" or
within the meaning of Regulation D and (b) NUWAVE has made no representations
concerning the investment value of the Settlement Shares or such options and
Rave and Mr. Meier have made their own investigations concerning NUWAVE, have
read NUWAVE's Annual Report on Form 10K for the fiscal year ended December 31,
1998 and its report on Form 10Q for the quarter ended March 31, 1999.
4. The License Agreement shall be, and upon execution of this Agreement,
is, terminated and of no further force and effect.
5. NUWAVE shall have an exclusive worldwide license to use, sell, make,
cause to be made, use, improve, commercially exploit and sublicense, the
Licensed Process as defined on Exhibit A, comprising the Randall Connectors
(U.S. Patent Nos. 5,788,511 and 5,793,620 and related technology)on certain of
the same terms as previously set forth in sections 1(F), 1(G), and (H) VI(A),
(B), (C), E(ii) and (G), VII, XV, XVI, XIX, XXIII, and XXVII of the License
Agreement, as set forth in full in attachment A hereto, such license to continue
until the expiration of the Randall Patents (collectively the "Randall Rights").
The Randall Rights shall not cause or create any continuation or resurrection of
all or part of either the License Agreement or the Development Agreement, and
shall not give rise to any rights under any other agreement, but rather it is
intended that NUWAVE shall have a new and independent license to on the terms
and conditions set forth herein.
6. Rave and Burnworth agree that neither the technology embodied in the
NUWAVE NVP video processor, the NUWAVE "Sofsets" or "Crystal Wave Sofsets" and
25
<PAGE>
disclosed in U.S. Patent No. 4,445,152 (clarity), and U.S. patent applications
numbers 09/040,232 and 09/040,233 (Sofsets), and 09/040,200 (NVP) nor any
product derived therefrom (collectively the "NUWAVE Products"), is a "Licensed
Product," Licensed Process," or "Result of Development" (as those terms were
defined in the License Agreement and/or the Development Agreement) nor are they
derivative of Licensed Product, Licensed Process, or Result of Development. Rave
and Burnworth further acknowledge that they did not develop, nor participate in
the development of, the NUWAVE Products nor in any products that NUWAVE develops
from them, and specifically disclaims any ownership interest in, or claims of
any kind to the NUWAVE Products or any products developed from them, or in or to
any income from them.
7. NUWAVE Agrees that it will not sue Rave and/or Burnworth for
infringement of U.S. Patent No. 4,445,152 (the "Clarity Patent") so long as Rave
and Burnworth do not use the circuit disclosed in the Clarity Patent or any
variation thereof (the "Clarity Circuit"), in ASIC form, do not license or
attempt to license the Clarity Circuit to any third party. Rave and Burnworth
agree that they will not, so long as the Clarity Patent is in force, use the
Clarity Circuit in ASIC form, will not license or attempt to license the Clarity
Circuit to any third party.
8. NUWAVE has previously funded a standby letter of credit to secure its
$300,000 guaranty of an equipment lease between Rave as Lessee and American Bank
Equipment Leasing as Lessor (the "Equipment Lease"). The parties acknowledge
that NUWAVE has paid approximately $280,000 in lease payments under the
Equipment Lease, and that its obligation with respect to the Equipment Lease and
guaranty terminates when its aggregate payments on account of the Equipment
Lease reach $300,000.
9. The parties agree that any public statements they make regarding this
Agreement and the settlement embodied and described herein will not disparage
the other parties. The parties will promptly attempt to agree on the wording of
a joint press release. Any disputes over the text or content of the joint press
release will be decided finally and without recourse by Philip E. Cutler, Esq.,
Cutler & Nylander, 3150 First Interstate Center, 999 Third Avenue, Seattle, WA
98104. It is acknowledged that (a) NUWAVE is obligated to disclose the economic
terms of this Settlement Agreement pursuant to its obligations under the federal
securities laws and by virtue of its listing agreement with the NASD and no
objection by Rave to publicity which NUWAVE's counsel, Dechert Price & Rhoads
shall advise is required shall prevent such required publicity.
10. Promptly following execution hereof, NUWAVE will return to Rave any and
all schematic drawings, technology books, documents floppy disks and prototypes
of all TBC's, FX-Cards, scan converters, floppy processors, TBC chips, 7120,
7130, 277 mini enhancers, or other Licensed Products in its possession, except
for those relating to or constituting the Randall Connectors and the Randall
Rights.
11. NUWAVE, on behalf of itself and all of its officers, directors,
employees,
26
<PAGE>
affiliates, successors, assigns and other agents, does hereby release,
relinquish, remise and/or waive any and all claims that it can, shall, or may
have against Rave and Burnworth and/or any of their respective officers,
directors, employees, affiliates, successors, assigns, administrators,
executors, heirs, devisees and other agents, of whatsoever kind or nature,
whether known or unknown, arising out of any matter, including, without
limitation, the claims that were asserted in, or which could have been asserted
in, the Arbitration, and any and all claims arising from the License Agreement
and/or the Development Agreement in any way, from the beginning of time, through
the date of execution hereof.
12. Rave and Burnworth, on behalf of themselves and all of their respective
officers, directors, employees, affiliates, successors, assigns, administrators,
executors, heirs, devisees and other agents, do hereby release, relinquish,
remise and/or waive any and all claims that it can, shall, or may have against
NUWAVE and/or any of its officers, directors, employees, affiliates, successors,
assigns and other agents, of whatsoever kind or nature, whether known or
unknown, arising out of any matter, including, without limitation, the claims
that were asserted in, or which could have been asserted in, the Arbitration,
and any and all claims arising from the License Agreement and/or the Development
Agreement in any way, and including, without limitation, any claim to damages
arising from, revenues derived from, or otherwise relating to, NUWAVE's sale or
license of any product or technology, from the beginning of time through the
date of execution hereof.
13. The parties agree that concurrently with the execution of this
Agreement, their respective counsel shall execute an stipulation of dismissal of
the Arbitration with prejudice in the form attached hereto as Attachment B, each
party to bear its own costs and fees. The parties acknowledge and agree that
there are no representations upon which they are relying in entering into this
agreement that are not set forth herein, and that they have had adequate
opportunity to consult with counsel regarding the terms of this agreement and
their decision to enter into it. The Agreement constitutes the entire and
complete agreeement of the parties with respect to the matters set forth herein,
and supercedes and integrates all prior and contemporaneous representations,
negotiations and agreements with respect to the subject matter hereof. This
Agreement cannot be altered or amended except in writing signed by all parties.
This Agreement may be executed in multiple counterparts, which, taken together,
constitute a single agreement.
27
<PAGE>
In witness whereof, the parties have set there hands as of the date set
forth above.
RANDY BURNWORTH RAVE ENGINEERING CORPORATION
________________________________ By:________________________________
Lorrie Burnworth
President
NUWAVE TECHNOLOGIES, INC.
By:_________________________________
Jeremiah F. O'Brien
Chief Financial Officer
28
<PAGE>
SCHEDULE A
DEFINITIONS
"Licensed Technology" shall mean the invention disclosed in U.S. Patent
Nos. 5,788,511 and 5,793,620, regarding the Randall Cconnectors, and any other
product developed therefrom and any improvements to such invention, and any
related know-how developed or acquired by NUWAVE.
"Licensed Product Sold" shall mean
except as provided for in the following subsection, all sales of physical
products embodying the Licensed Technology ("Licensed Products")
NUWAVE or its affiliates, including products which are leased or
transferred other than by sale, in which case the Net Sales Price
attributable to such lease or transfer other than by sale shall be,
(i) in the case of a lease or similar arrangement, the actual amount
of each lease payment at the time of actual receipt, and (ii) in the
case of transfers not capable of being valued by reference to specific
payment provisions, an amount corresponding to the most recent bona
fide invoiced sale for the same or a comparable product, to a third
party or should there be no such bona fide invoiced sale within six
(6) months of the transaction in question, then one hundred fifty
percent (150%) of the actual manufacturing cost, but in either case
less the deductions in paragraph G, subparagraphs (a) through (e)
hereof.
"Net Sales" shall mean the price for Licensed Products Sold by NUWAVE or
NUWAVE's affiliates for sale to third parties less the following:
Reasonable shipping, installation and packing charges or allowance, if any,
included in such amount;
Reasonable trade, quantity or cash discounts, and brokers' or agents'
commissions, if any, allowed or paid;
Credits or allowances given or expenses incurred in connection with store
level advertising, including cooperative advertising or similar
promotions;
Credits or allowances, if any, given or made on account of rejection or
return of defective Licensed Products Sold; and
<PAGE>
Any tax or other governmental charge included in such amount, which is
imposed directly on or measured by, the sale, lease or transfer,
transportation, delivery or use of such items, applicable.
Licensed Products used in testing or as marketing samples to develop or promote
Licensed Product shall not be included as Licensed Product Sold, provided such
product(s) are supplied to the user at no cost.
"Net Profit" shall mean the gross revenues received by NUWAVE or its
affiliates from the sale and licensing of the Licensed Products, less all costs,
fees and expenses associated with the manufacture, distribution, marketing and
sale thereof including, without limitation, all associated general and
administrative expenses and the deductions in paragraph C, subparagraphs (1)
through (5), as such amounts may be reasonably calculated by NUWAVE in
accordance with generally accepted accounting principles, and less any
associated federal or state income taxes.
ROYALTY
Commencing upon the earlier to occur of (i) Licensed Product Sales by
NUWAVE or NUWAVE's Affiliates reaching an accumulated Net Sales of $50,000,000
or (ii) NUWAVE's and NUWAVE's Affiliates aggregate Net Profit from Licensed
Product Sales equaling $5,000,000, NUWAVE agrees to pay to Rave an earned
royalty of two and one-half percent (2 1/2%) of its or NUWAVE Affiliates' Net
Sales of Licensed Product Sold in each case only with respect to subsequent Net
Sales.
In the event that NUWAVE sublicenses the Licensed Technology to any third
party (other than an affiliate of NUWAVE) Rave shall receive 7% of any licensing
revenue NUWAVE receives on the sublicensees' first $50,000,000 in net sales (as
defined above) of Licensed Products and 9% of revenues NUWAVE receives on the
sublicensees' sales in excess of $50,000,000.
In the event a sale or license of Licensed Products or Technology includes
Licensed Products or Licensed Technology and other products or technology, which
are not separable from, or paid for separately from, the Licensed Product or
Technology, the parties agree to negotiate in good faith to effect reasonable
Royalties for such sales and licenses.
The payments provided for in this Subsections A and B of this Section are
call the "Royalty."
TERMINATION
In the case of a failure by NUWAVE to pay the Royalties, Rave shall have
the right to terminate this Agreement and to become the licensor (or otherwise
succeed to the rights and obligations of
2
<PAGE>
NUWAVE) with respect to any and all licenses and other rights granted by NUWAVE
pursuant to the terms of this agreement (the "Termination Option"). Rave shall
exercise the foregoing Termination Option by written notice to NUWAVE on or
before thirty (30) days following any of the events giving rise to such option,
provided that within sixty (60) days from receipt by NUWAVE of said written
notice from Rave, NUWAVE may pay the applicable Royalties owing to Rave for such
period to maintain the exclusive license granted under this Agreement. If such
payment is made by NUWAVE to Rave within said sixty (60) day period, said
Termination Option shall have no force or effect and this Agreement shall
continue in full force and effect.
At any time after the third anniversary of this Agreement, NUWAVE shall
have the right to terminate this Agreement at any time with or without cause
upon twelve months prior written notice to Rave. Termination of this Agreement
shall not alter or affect the rights or obligations of either Party arising
prior to such termination.
Any cancellation by NUWAVE as provided by paragraph B above shall not
prejudice the right of either party to recover any earned royalty or other sums
owed and accrued at the time of such cancellation nor prejudice the right of
either party thereafter to maintain an action against the other for infringement
of its Patent or Patent Rights.
Upon any termination of this Agreement, NUWAVE shall be obligated to pay
Rave any Royalties due based on the Net Sales occurring during the term in which
this Agreement was in effect.
RECORDS AND REPORTS
Within forty-five (45) days after the end of each calendar quarter in which
Royalties are earned or otherwise become due under this Agreement, NUWAVE shall
furnish Rave with a written report setting forth the computation of the
royalties payable during the preceding calendar quarter. Each report shall be
accompanied by the amount due less any taxes required by a governmental agency
to be withheld solely in respect to royalties payable to Rave for that calendar
quarter of that year. Royalties shall be paid to Rave in U.S. dollars. In case a
conversion from one currency to another is involved in determining an earned
royalty payment, the exchange rate shall be the exchange rate in effect on the
last day of the applicable calendar quarter.
NUWAVE shall keep and maintain complete and accurate records in sufficient
detail to enable royalties payable to Rave hereunder to be determined (including
records on all conversion of currency under paragraph A above), and it shall
permit such records to be inspected quarterly upon written notice by Rave during
reasonable business hours by a certified public accountant or firm of certified
public accounts reasonably acceptable to NUWAVE and appointed by Rave for this
purpose; provided, however, that NUWAVE shall have the right to destroy or
discard such records in accordance with NUWAVE's record retention policy,
provided that such records shall be kept for a minimum or four (4) years after
the end of the calendar quarter to which they apply. Rave shall bear the cost
and expenses of such investigation by
3
<PAGE>
the accountants, unless the accountants determine that NUWAVE's determination of
the royalties due and owing to Rave was incorrect (in NUWAVE's favor) in an
amount exceeding four percent (4%) of the amount calculated by NUWAVE, in which
case NUWAVE shall bear cost and expense.
At NUWAVE's option, the Royalty specified in Section VI, the reports
required in Section VII and the records required in Section VII for sales by a
NUWAVE Affiliate or sublicensee may be paid or provided either by NUWAVE or
directly be the NUWAVE Affiliates or sublicensees to Rave, provided that NUWAVE
shall remain ultimately responsible for the payment or provision of any of the
foregoing.
RIGHT TO SELL INVENTORY AFTER TERMINATION
After termination of this Agreement for any reason by either Party, NUWAVE
may sell all of Licensed Products which it has on hand upon the date of such
termination; provided however, that such sales shall be completed not later than
one year from the date of such termination, and that such termination shall not
relieve NUWAVE from making the full earned royalty payments herein provided on
all Licensed Products sold by it either before or after the date of such
termination.
PREVAILING PARTY
If either Party commences an action or claim against the other to interpret
or enforce any of the terms of this Agreement or as a result of a breach by the
other Party of any terms hereof, the nonprevailing Party shall pay to the
prevailing Party reasonable attorneys' fees, costs and expenses incurred in
connection with the prosecution, defense or settlement of such action (including
at any appellate level).
NO THIRD PARTY RIGHTS
The provisions of this Agreement are for the exclusive benefit of the
Parties and no other party (including without limitation any creditor of any
Party) shall have any right or claim against any Party by reason of those
provisions or be entitled to enforce any of those provisions against any Party.
NON-ASSIGNMENT
The Parties have entered into this Agreement in contemplation of personal
performances, each by the other, and intend that the licenses, rights and duties
hereunder to a Party not be extended to any other entity or person, other than
NUWAVE Affiliates or sublicensees as expressly provided herein except in
connection with any merger, consolidation or sale of substantially all of the
assets of NUWAVE, in which event the resulting entity shall specifically assume
all of the obligations of NUWAVE pursuant to the terms of this agreement,
provided however, that such resulting entity shall be no less credit worth than
NUWAVE at the time of such assumption.
4
<PAGE>
SCHEDULE B
BEFORE THE AMERICAN ARBITRATION ASSOCIATION
NUWAVE TECHNOLOGIES, INC., :
:
Claimant, :
:
v. : AAA No. 75184 00327 98
:
RAVE ENGINEERING CORPORATION, :
AND RANDY BURNWORTH, :
:
Respondents. :
STIPULATION OF DISMISSAL
It is hereby stipulated and agreed by and between the undersigned counsel
for the respective parties hereto that the above-captioned proceeding be
dismissed with prejudice, each party to bear its own costs and fees. Dated: June
11, 1999 DECHERT PRICE & RHOADS
- ----------------------------- --------------------------
William C. Meier Arthur S. Gabinet
Central Park Tower 4000 Bell Atlantic Tower
2350 Airport Freeway, Suite 660 1717 Arch Street
Bedford, TX 76022 Philadelphia, PA 19103
Attorney for Rave Engineering Attorneys for NUWAVE
Corporation and Randy Burnworth Technologies, Inc.
<PAGE>
EXHIBIT 10.2
THIS OPTION 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.
THE TRANSFER OF THIS OPTION IS
RESTRICTED AS DESCRIBED HEREIN.
NUWAVE TECHNOLOGIES, INC.
Option for the Purchase of Shares of Common Stock,
par value $0.01 per share
THIS CLASS A OPTION EXPIRES ON MAY 28, 2002.
No. 1001 37,500 Shares
This certifies that, for value received, Rave Engineering Corp., with an
address at 12300 Stowe Drive, Building A and B, Poway, california 92064
(including any transferee, 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, at any time or from time to time
from the date hereof until 5:00 P.M. on May 28, 2002, New York time (the
"Exercise Period"), 37,500 shares of the Company's Common Stock, par value $0.01
per share ("Common Stock"), at a price (the "Exercise Price") equal to $1.462
per share. This option is one of the options (collectively, including any
options issued upon the exercise or transfer of any such options in whole or in
part, the "Option") issued pursuant to the Settlement Agreement, dated as of May
28, 1999 (the "Settlement Agreement"), among the Company, Rave Engineering, Inc.
and Randy J. Burnworth. Each Option not exercised prior to 5:00 p.m. on May 28,
2002, New York time, shall become null and void and all rights thereunder shall
cease as of such time.
The number of shares of Common Stock issuable upon exercise of the Options
(the "Option Shares") and the Exercise Price may be adjusted from time to time
as hereinafter set forth.
1. This Option may be exercised by the Holder, in whole or in part, at any
time and from time to time during the Exercise Period by delivery to the Company
at its principal executive offices at the address set forth in Section 10 of (i)
this Option; (ii) the form of exercise attached hereto as Exhibit A (the
"Exercise Form") duly executed by the Holder, and (iii) the full Exercise Price
for each share of Option Shares as to which this Option is exercised.
2. Upon receipt by the Company of the Option, the Option Exercise Form and
the aggregate Exercise Price for the Option Shares, the Holder shall be deemed
to be the holder
<PAGE>
of record of the Option 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 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 this Option, the Company shall issue and
cause to be delivered to the Holder a certificate or certificates for the Option
Shares issuable upon such exercise, registered in the name of the Holder or its
designee. If this Option should be exercised in part only, the Company shall,
upon surrender of this Option for cancellation, execute and deliver a new Option
evidencing the right of the Holder to purchase the remaining unexercised balance
of the Option Shares (or portions thereof) subject to purchase hereunder.
3. (a) Any Options issued upon the transfer or exercise in part of this
Option shall be numbered and shall be registered in an Option Register as they
are issued. The Company shall be entitled to treat the registered holder of any
Option on the Option 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 Option on the part of any other person, and shall not be liable for any
registration or transfer of Options 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. This Option shall be
transferable only on the books of the Company upon delivery thereof duly
endorsed by the Holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment, or authority to
transfer. In all cases of transfer by an attorney, his or its authority shall be
produced. Upon any registration of transfer, the Company shall cause to be
delivered a new Option or Options to the person entitled thereto. This Option
may be exchanged, at the option of the Holder thereof, for another Option, or
other Options of different denominations, of like tenor and representing in the
aggregate the right to purchase a like number of Option Shares (or portions
thereof), upon surrender to the Company or its duly authorized agent.
Notwithstanding the foregoing, the Company shall have no obligation to cause
Options to be transferred on its books 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.
(b) The Holder acknowledges that the has been advised by the Company that
neither this Option nor the Option Shares have been registered under the Act,
that this Option is being or has been issued and the Option Shares may 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 that the Company's reliance
thereon is based in part upon the representations made by the original Holder in
the Settlement Agreement. The Holder acknowledges that he 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 Holder agrees that
no sale, assignment or transfer of this Option or the Option Shares issuable
upon exercise hereof shall be valid or effective, and the Company shall not be
required to give any effect to any such sale, assignment or transfer, unless (i)
the sale, assignment or transfer of this Option or such Option Shares is
registered under the Act, it being understood that neither this Option nor such
Option Shares are currently registered for sale and that the Company has no
obligation or intention to so register this Option or such Option Shares or (ii)
this Option or such Option Shares 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
<PAGE>
not available at the time of the original issuance of this Option for the sale
of this Option or such Option Shares and that there can be no assurance that
Rule 144 sales will be available at any subsequent time, or (iii) such sale,
assignment, or transfer is otherwise exempt from registration under the Act.
4. The Company shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of providing for
the exercise of the rights to purchase Shares, granted pursuant to the
outstanding Options, such number of shares of Common Stock as shall, from time
to time, be sufficient therefor. The Company covenants that the Option Shares,
upon receipt by the Company of the full Exercise Price therefor, shall be
validly issued, fully paid, nonassessable, and free of preemptive rights.
5. The issuance of any shares or other securities upon the exercise of this
Option, and the delivery of certificates or other instruments representing such
shares or other securities, shall be made without charge to the 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 this Option 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 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.
6. The Option Shares issued upon exercise of the Options shall be subject
to a stop transfer order and the certificate or certificates evidencing such
Option Share 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, any Options issued upon transfer or any new Options issued
shall bear a similar legend.
7. Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction, or mutilation of any Option (and upon surrender of any Option if
mutilated),
<PAGE>
including an affidavit of the Holder thereof that the Option has been lost,
stolen, destroyed or mutilated, together with an indemnity against any claim
that may be made against the Company on account of such lost, stolen, destroyed
or mutilated Option, and upon reimbursement of the company's reasonable
incidental expenses, the Company shall execute and deliver to the Holder thereof
a new Option of like date, tenor, and denomination.
8. The Holder of any Option shall not have, solely on account of such
status, any rights of a stockholder of the Company, either at law or in equity,
or to any notice of meetings of stockholders or of any other proceedings of the
Company, except as provided in this Option.
9. This Option shall be construed in accordance with the laws of the State
of New York applicable to contracts made and performed within such State,
without regard to principles governing conflicts of law.
10. 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 One Passaic Avenue, Fairfield, New Jersey
07004, Attention: Jeremiah F. O'Brien, (ii) if to the Holder, at its address set
forth on the first 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 12. Notice to the estate of any party shall be sufficient if
addressed to the party as provided in this Section 12. Any notice or other
communication given by certified mail shall be deemed given at the time of
certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof. Any notice given by other
means permitted by this Section 12 shall be deemed given at the time of receipt
thereof.
11. No course of dealing and no delay or omission on the part of the Holder
in exercising any right or remedy shall operate as a waiver thereof or otherwise
prejudice the Holder's rights, powers or remedies. No right, power or remedy
conferred by this Option upon the Holder shall be exclusive of any other right,
power or remedy referred to herein or now or hereafter available at law, in
equity, by statute or otherwise, and all such remedies may be exercised singly
or concurrently.
<PAGE>
12. This Option may be amended only by a written instrument executed by the
Company and the Holder hereof. Any amendment shall be endorsed upon this Option
and all future Holders shall be bound thereby.
Dated: July 12, 1999
NUWAVE TECHNOLOGIES, INC.
By: /s/ Gerald Zarin
------------------------------
Name: Gerald Zarin
Title: President
/s/ Jeremiah F. O'Brien
- -----------------------
Jeremiah F. O'Brien
Secretary
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation in this registration statement on Form S-3
of our report dated March 10, 1999 on the financial statements of NUWAVE
Technologies, Inc. as of December 31, 1998 and for each of the years in the two
year period ended December 31, 1998 and the amounts for such years included in
the cumulative amounts for the period from July 17, 1995 to December 31, 1998.
We also consent to the reference to our firm under the caption "Experts."
/s/ Richard A. Eisner & Company, LLP
August 9, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-3 of
our report dated March 26, 1997 on our audit of the statement of operations,
cash flows of NUWAVE TECHNOLOGIES, INC. (a development stage enterprise) for the
period from July 17, 1995 (inception) to December 31, 1996 included in the
cumulative amounts for the period from July 17, 1995 (inception) to December 31,
1998 (not presented separately herein), and the related statement of
stockholders' equity for the period from July 17, 1995 (inception) to December
31, 1995 and the year ended December 31, 1996. We also consent to the reference
to our firm under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
New York, New York
August 6, 1999
<PAGE>
EXHIBIT 24.1
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a Director of NUWAVE
Technologies, Inc., a Delaware corporation (the "Company"), constitutes and
appoints Gerald Zarin and/or Jeremiah O'Brien, and each of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign a Form S-3 registration statement for filing with the
Securities and Exchange Commission respecting the registration of shares of
Common Stock, par value $.01 per share, of the Company. Together with any and
all amendments (including post-effective amendments) to such registration
statement, and to file the same with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting such
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that such
attorneys-in-fact and agents, or each of them, may lawfully do or cause to be
done in virtue hereof.
DATED: August 6, 1999
--------------------------------
Lyle Gramley
<PAGE>
EXHIBIT 24.2
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a Director of NUWAVE
Technologies, Inc., a Delaware corporation (the "Company"), constitutes and
appoints Gerald Zarin and/or Jeremiah O'Brien, and each of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign a Form S-3 registration statement for filing with the
Securities and Exchange Commission respecting the registration of shares of
Common Stock, par value $.01 per share, of the Company. Together with any and
all amendments (including post-effective amendments) to such registration
statement, and to file the same with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting such
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that such
attorneys-in-fact and agents, or each of them, may lawfully do or cause to be
done in virtue hereof.
DATED: August 6, 1999
-------------------------------------
Joseph A. Sarubbi
<PAGE>
EXHIBIT 24.3
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a Director of NUWAVE
Technologies, Inc., a Delaware corporation (the "Company"), constitutes and
appoints Gerald Zarin and/or Jeremiah O'Brien, and each of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign a Form S-3 registration statement for filing with the
Securities and Exchange Commission respecting the registration of shares of
Common Stock, par value $.01 per share, of the Company. Together with any and
all amendments (including post-effective amendments) to such registration
statement, and to file the same with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting such
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that such
attorneys-in-fact and agents, or each of them, may lawfully do or cause to be
done in virtue hereof.
DATED: August 6, 1999
----------------------------
Edward Bohn
<PAGE>
EXHIBIT 99.1
PRESS RELEASE
Press Contact: Investor Contact:
Kimberly Kriger/Robert Siegfried Jerry O'Brien
Kekst and Company NUWAVE Technologies, Inc.
(212) 521-4800 (973) 882-8810 Ext. 212
NUWAVE TECHNOLOGIES AND RAVE ENGINEERING REACH AGREEMENT
ON VIDEO ENHANCEMENT TECHNOLOGY
FOR IMMEDIATE RELEASE
Fairfield, New Jersey, June 17, 1999 -- NUWAVE Technologies, Inc. (NASDAQ: WAVE)
and Rave Engineering today announced an agreement settling the claims each had
asserted against the other in arbitration commenced by NUWAVE.
As a result of the agreement, NUWAVE continues to maintain exclusive worldwide
rights to make, market and license its video enhancement technology free of any
claims of ownership or inventorship by Rave. In return, Rave and certain
individuals associated with Rave will receive from NUWAVE $175,000 cash as well
as 100,000 shares of NUWAVE common stock and three year options to purchase
50,000 of NUWAVE common stock at market value on the date of the agreement.
In connection with the settlement between NUWAVE and Rave, NUWAVE also announced
that it has reached an agreement with Prime Technologies, Inc. to terminate the
Prime Agency Agreement to which NUWAVE and Prime had been parties and pursuant
to which Prime was entitled to fees arising from NUWAVE's license of Rave's
licensed technology.
Gerald Zarin, Chairman, Chief Executive Officer and President of NUWAVE, stated,
"We are pleased to have reached this agreement with Rave in a manner which
serves the interests of all parties. The potential for this technology, we
believe, is quite substantial, given the enormous growth and convergence of the
t.v., computer and telecommunications markets."
NUWAVE Technologies, Inc. is a leading designer and developer of
state-of-the-art video enhancement technology designed to dramatically improve
video pictures with clearer, sharper details with more vibrant colors. NUWAVE
was founded in 1995. Its proprietary ASIC chip enhances video images at
breakthrough price points and is geared toward all video output products in the
rapidly expanding and converging multibillion-dollar video marketplace.
<PAGE>
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 Securities and Exchange Commission.
###
For additional information, please visit our website at http://www.nuwav.com
