<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 1, 1998
REGISTRATION NO. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------------------
NEXAR TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
------------------------------------
DELAWARE NO. 04-3268334
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
257 TURNPIKE ROAD
SOUTHBOROUGH, MASSACHUSETTS 01772
(508) 485-7900
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
ALBERT J. AGBAY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
NEXAR TECHNOLOGIES, INC.
257 TURNPIKE ROAD
SOUTHBOROUGH, MASSACHUSETTS 01772
(508) 485-7900
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------------
COPY TO:
DAVID A. CIFRINO, P.C.
MCDERMOTT, WILL & EMERY
75 STATE STREET
BOSTON, MASSACHUSETTS 02109
(617) 345-5000
------------------------------------
Approximate date of commencement of proposed sale to the public:
From time to time after effective date of this
Registration Statement.
------------------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, 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, check the following
box and list the Securities Act registration statement number of earlier
effective registration statement for the same offering. [_]
- ------------------
If this Form is a post-effective amendment filed pursuant to a 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. [_]
-----------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================
Title of Each Class of Proposed Maximum Proposed Maximum
Securities to Amount to be Offering Price Per Aggregate Offering Amount of
be Registered Registered (1) Unit(2) Price(2) Registration Fee
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $0.01 per share 5,460,000 shares $2.5625 $13,991,250 $4,128.00
=========================================================================================================
</TABLE>
(1) Plus such additional number of shares as may be required in the event of a
stock dividend, split-up of shares, recapitalization or other similar
change in the Common Stock.
(2) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(c) based on the average of the high and low bid prices
of Nexar Technologies, Inc. Common Stock as reported on the Nasdaq National
Market on April 27, 1998.
------------------------------------
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
PROSPECTUS
5,460,000 SHARES
NEXAR TECHNOLOGIES, INC.
COMMON STOCK
The Prospectus relates to the resale of up to 5,460,000 shares (the
"Shares") of Common Stock, $0.01 par value per share, of Nexar Technologies,
Inc. (the "Company" or "Nexar") by certain selling security holders of the
Company (the "Selling Shareholders"). 3,200,000 of the shares of Common Stock
covered by this Prospectus may be issued to certain of the Selling Shareholders
upon conversion of shares of the Series B Convertible Preferred Stock, $0.01 par
value per share ("Series B Preferred Stock"), of the Company which were issued
to the Selling Shareholders pursuant to the several Private Placement Purchase
Agreements between the Company and the Selling Shareholders, each dated as of
March 20, 1998 (collectively, the "Purchase Agreements"). 160,000 of the shares
of Common Stock covered by this Prospectus may be issued to Selling Shareholders
holding shares of Series B Preferred Stock in lieu of cash dividends payable
thereon. The remaining 2,100,000 shares of Common Stock covered by this
Prospectus may be issued to Selling Shareholders who received certain warrants
(the "Warrants") to acquire shares of Common Stock in connection with the
placement of the Series B Preferred Stock. See "The Purchase Agreements."
The shares covered by this Prospectus represent 200% of the number of
shares that may be issued as of the date of this Prospectus based upon a
conversion price of $2.00 per share in the case of shares issued upon conversion
of Series B Preferred Stock and a market value issue price of $2.00 per share in
the case of shares issued in lieu of cash dividends thereon. The actual number
of shares of Common Stock offered hereby is subject to adjustment and could be
materially less or more than the estimated amount indicated depending upon
factors which cannot be predicted by the Company at this time, including, among
others, market prices prevailing at the actual date of conversion. This
presentation is not intended to constitute a prediction as to the future market
price of the Common Stock or as to when Selling Shareholders will elect to
convert shares of the Series B Preferred Stock.
-------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. FOR A
DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED IN CONNECTION WITH THE
PURCHASE OF THESE SECURITIES, SEE "RISK FACTORS" BEGINNING ON PAGE 5.
-------------------------
The Selling Shareholders and their agents, donees, distributees, pledgees
and other successors in interest may offer and sell the Shares from time to time
in one or more transactions on The Nasdaq Stock Market, or otherwise, at market
prices then prevailing or in negotiated transactions. The Shares may also be
sold pursuant to option, hedging or other transactions with broker-dealers. The
Shares may also be offered in one or more underwritten offerings. The
underwriters in an underwritten offering, if any, and the terms and conditions
of any such offering will be described in a supplement to this Prospectus. See
"Selling Shareholders" and "Plan of Distribution." All of the Shares offered
hereunder are to be sold by the Selling Shareholders. The Company will not
receive any of the proceeds from the sale of the Shares by the Selling
Shareholders. See "Use of Proceeds". The Common Stock of the Company is traded
on the National Market of The Nasdaq Stock Market (the "Nasdaq National Market")
under the symbol "NEXR". On May __, 1998, the last reported sale price of
Common Stock on the Nasdaq National Market was $__ per share.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------
THE DATE OF THIS PROSPECTUS IS MAY __, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission
pursuant to the informational requirements of the Exchange Act may be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices located at Seven World Trade Center, 13th Floor, New York, New York
10048, and at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials also may be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Common Stock of the Company is
traded on the Nasdaq National Market. Reports, proxy statements and other
information concerning the Company also may be inspected at the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006. Certain documents filed by the Company with the Commission
electronically may also be obtained at the Commission's site on the World Wide
Web at www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Common Stock offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement and the exhibits
and schedules filed therewith. For further information with respect to the
Company and the Common Stock offered hereby, reference is hereby made to such
Registration Statement and to the exhibits and schedules filed therewith.
Statements contained in this Prospectus regarding the contents of any agreement
or other document are not necessarily complete, and in each instance reference
is made to the copy of such agreement or document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. The Registration Statement, including the exhibits and
schedules thereto, may be inspected without charge at the principal office of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of
all or any part thereof may be obtained from such office upon payment of the
prescribed fees. The Registration Statement may also be obtained at the
Commission's site on the World Wide Web at www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
0-29194) are incorporated herein by reference: (1) the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997 filed on March 31,
1998; (2) the Company's definitive Proxy Statement for the Annual Meeting of
Stockholders of the Company scheduled to be held June 8, 1998 filed on April 30,
1998; and (3) the Company's Registration Statement on Form 8-A registering the
Company's Common Stock under Section 12(g) of the Exchange Act filed on March
17, 1997.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the termination of the offering of the Common Stock registered hereby
shall be deemed to be incorporated by reference into this Prospectus and to be a
part hereof from the date of filing of such documents. Any statements contained
in a document incorporated or deemed to be incorporated by reference herein
2
<PAGE>
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus. The Company
will provide without charge to each person to whom this Prospectus is delivered,
upon a written request of such person, a copy of any or all of the foregoing
documents incorporated by reference into this Prospectus (other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
into such documents). Requests for such copies should be directed to the Chief
Financial Officer of the Company, 257 Turnpike Road, Southborough, Massachusetts
01772, Telephone: (508) 485-7900.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this Prospectus and in the documents incorporated
herein constitute "forward-looking statements" within the meaning of Section 27A
of the Securities Act and Section 2B of the Exchange Act. For this purpose, any
statements contained herein or incorporated herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "believes," "plans," "expects" and similar expressions
are intended to identify forward-looking statements. There are a number of
important factors that could cause the results of the Company to differ
materially from those indicated by such forward-looking statements. These
factors include those set forth in "Risk Factors" herein.
3
<PAGE>
THE COMPANY
The Company is a new class of personal computer (PC) manufacturer which has
developed what it believes is the industry's first "future-ready" PC that is
readily upgradable using industry-standard components. Nexar PCs, which are
based on patented and patent-pending technologies, enable end-users to reduce
total cost of ownership (TCO), protect their technology investments and extend
the lifecycle of their PC. Unlike conventional PCs, NEXAR systems allow end-
users to easily upgrade or switch important components of the PC to accommodate
emerging and future technologies, resulting in a significant extension of the
computer's useful life. NEXAR sells a high-performance system which can be
shipped to resellers without the key system-defining components (microprocessor,
memory and hard drive), but which is otherwise fully configured. This ability:
. Enables the end-user, whether corporate or individual, to buy a system
configured exactly to that customer's technical and budgetary
requirements and, later, to easily upgrade the PC's key components
with industry-standard products.
. Enables the Company's resellers to offer Build-to-Order capability in
order to compete with direct marketers, such as Dell Computer and
Gateway 2000, because a NEXAR PC provides resellers with the ability
to promptly deliver a custom-configured, high-performance PC at a
competitive price.
The Company's objective is to become the industry leader in designing and
marketing PCs with technology which enables resellers and end-users, in an easy
and cost-effective manner, to upgrade and transition the central processing unit
(CPU) and the other key system-defining components in accordance with the known
and anticipated roadmaps of various makers of fundamental and leading edge PC
technology. NEXAR's current PCs feature the Company's patent-pending Cross-
Processor Architecture(TM) (NEXAR XPA(TM)) in which any one of several state-of-
the-art CPUs can be initially included or later installed, including Intel
Corporation's Pentium, Pentium Pro, Pentium II, dual Pentium II and compatible
CPUs. The Company also intends to develop the NEXAR XPA technology to
accommodate microprocessors based on other technologies. The NEXAR XPA allows
the CPU, random access memory (RAM), and cache memory to be replaced by end-
users without technical assistance. The Company's PCs also feature a removable
hard drive, permitting its replacement and the further advantages of increased
data portability and security, and the use of multiple operating systems in a
single PC. The Company does not market its products directly to end-users, but
instead distributes its products through a network of international, national
and regional distributors, value-added and other resellers, original equipment
manufacturers (OEMs), system integrators, computer superstores, direct response
resellers, and independent dealers.
The Company's principal executive offices are located at 257 Turnpike Road,
Southborough, Massachusetts 01772, and its telephone number is (508) 485-7900.
The Company's logo, Cross-Processor Architecture, NEXAR XPA and XPA are
trademarks of the Company and Nexar and Nexar Technologies are trade names of
the Company. This Prospectus and the documents incorporated by reference herein
also include trademarks and trade names of companies other than Nexar.
4
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus and in
the documents incorporated herein by reference (see "Incorporation of Certain
Documents by Reference" above), the following factors should be considered
carefully in evaluating an investment in the Common Stock.
LIMITED OPERATING HISTORY; HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT
The Company was incorporated in March 1995 and commenced selling its PCs in
volume in April 1996. Accordingly, the Company has a limited operating history
upon which an evaluation of the Company and its prospects can be based. The
Company's prospects must be evaluated with regard to the risks encountered by a
company in an early stage of development, particularly in light of the
uncertainties relating to the intensely competitive market in which the Company
operates. As of December 31, 1997, the Company had an accumulated deficit of
approximately $23,118,000. The Company's ability to generate significant
revenue growth in the future is subject to substantial uncertainty.
SIGNIFICANT CAPITAL REQUIREMENTS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company's capital requirements in connection with its development and
marketing activities have been and will continue to be significant. The Company
believes that amounts available from cash generated from operations and the
recent sale of securities and future financing transactions which the Company
believes it can consummate as necessary will be sufficient to meet the Company's
cash requirements through at least the next twelve months. Cash requirements
for periods beyond the next twelve months depend on the Company's profitability,
its ability to manage working capital requirements and its growth rate. The
Company may need to raise additional funds sooner in order to fund more rapid
expansion, to develop new or enhanced products, or to respond to competitive
pressures. There can be no assurance that additional financing will be
available when needed on terms favorable to the Company or at all. If adequate
funds are not available or are not available on acceptable terms, the Company
may be unable to develop or enhance products or services, take advantage of
future opportunities, or respond to competitive pressures, which could have a
material adverse effect on the Company's business, financial condition or
operating results.
RISKS ASSOCIATED WITH INTENSE COMPETITION
The desktop PC industry is intensely competitive and may become more so as
the result of, among other things, the introduction of new competitors
(including large multi-national, diversified companies) and possibly weakening
demand. The Company currently competes in the desktop PC market principally with
Acer America, Apple Computer, Compaq Computer, Dell Computer, Gateway 2000,
Hewlett-Packard, IBM and Packard Bell NEC. All of these companies have stronger
brand recognition, significantly greater financial, marketing, manufacturing,
technological and distribution resources, broader product lines and larger
installed customer bases than does the Company. Principal competitive factors
include product features, product performance, quality and reliability, the
ability to deliver product to customers in a timely fashion, customer service
and
5
<PAGE>
support, marketing and distribution capabilities and price. Also, in order to
compete successfully, the Company must attract and retain a sufficient number of
management, sales and technical personnel with high levels of relevant skills
and meaningful experience. Although the Company has assembled an experienced
senior management team, there can be no assurance that the Company will be able
to attract and retain sufficient numbers of additional personnel, as the need
for such individuals increases with the Company's anticipated growth, or
maintain or improve its current position with respect to any of these or other
competitive factors. This intense competition could result in loss of customers
or pricing pressures, which would negatively affect the Company's results of
operations.
The Company's ability to compete favorably is dependent, in significant
part, upon its ability to control costs, react timely and appropriately to
short- and long-term trends and competitively price its products while
preventing erosion of its margins, and there is no assurance that the Company
will be able to do so. Many of the Company's competitors can devote greater
managerial and financial resources than the Company can to develop, promote and
distribute products and provide related consulting and training services. Some
of the Company's competitors have established, or may establish, cooperative
arrangements or strategic alliances among themselves or with third parties, thus
enhancing their ability to compete with the Company. There can be no assurance
that the Company will be able to compete successfully against current or future
competitors or that the competitive pressures faced by the Company will not
materially and adversely affect its business, operating results and financial
condition.
DEPENDENCE ON SUBSTANTIAL CUSTOMER
In the fiscal year ended December 31, 1997, one customer of the Company,
Government Technology Services, Inc. (GTSI), a leading supplier of desktop
systems to United States government agencies, accounted for approximately 44% of
the Company's revenues. The Company expects that GTSI will continue to be an
important customer, but that sales to GTSI as a percentage of total revenues
will decline further as the Company further expands its distribution network and
increases its overall sales. The Company has entered into an agreement with GTSI
pursuant to which GTSI serves as the Company's exclusive federal reseller with
respect to Government Services Administration (GSA) scheduled purchases,
provided that GTSI purchases a specified minimum of the Company's products in
1998. GTSI is under no obligation, however, to purchase any products of the
Company. If GTSI makes fewer purchases in 1998 than the Company anticipates,
that would have a material adverse effect on the Company.
MANAGEMENT OF GROWTH
The anticipated growth in the size, geographic scope and complexity of the
Company's business and development of its customer base are expected to place a
significant strain on the Company's management, operations and capital needs.
The Company's continued growth, if any, will require it to attract, motivate and
retain additional highly skilled technical, managerial, consulting, sales and
marketing personnel both in the United States and abroad, and will also require
the Company to enhance its financial and managerial controls and reporting
systems. There is no assurance that the Company can manage its growth
effectively or that the Company will be able to attract and retain the necessary
personnel to meet its business challenges. If the Company is unable to manage
its growth effectively, the Company's business, financial condition and
operating results would be materially and adversely affected.
6
<PAGE>
DEPENDENCE ON NEW PRODUCTS; MARKET ACCEPTANCE
The Company's future success will be highly dependent upon its ability to
develop, produce and market products that incorporate new technology, are priced
competitively and achieve significant market acceptance. There can be no
assurance that the Company's products will be technically advanced or
commercially successful due to the rapid improvements in computer technology and
resulting product obsolescence. There is also no assurance that the Company will
be able to deliver commercial quantities of new products in a timely manner. The
success of new product introductions is dependent on a number of factors,
including market acceptance, the Company's ability to anticipate and manage
risks associated with product transitions, effective product marketing, proper
management of inventory levels in line with anticipated product demand and the
timely manufacturing of products in appropriate quantities to meet anticipated
demand. The Company currently has no other product lines, such as notebook
computers or other computer related products, planned. The failure of the
Company to develop, produce and market commercially viable products could result
in the Company's business, operating results and financial condition being
materially and adversely affected.
PRODUCT DEVELOPMENT RISKS
The Company's product development efforts will continue to require
substantial investments by the Company for third-party development, refinement
and testing, and there can be no assurance that the Company will have the
resources sufficient to make such investments. Participants in the PC industry
generally rely on the creation and implementation of technology standards to win
the broadest market acceptance for their products. The Company must successfully
monitor and participate in the development of standards while continuing to
differentiate its products in a manner valued by customers. Industry
participants generally accept, and may encourage, the use of their intellectual
property by third parties under license. Nonetheless, when intellectual property
owned by competitors or suppliers becomes accepted as an industry standard, the
Company must obtain a license, purchase components utilizing such technology
from the owners of such technology or their licensees, or otherwise acquire
rights to use such technology. The failure of the Company to license, purchase
or otherwise acquire rights to such technologies could result in the Company's
business, operating results and financial condition being materially and
adversely affected.
DEPENDENCE ON OUTSIDE PRODUCT ENGINEERING
The Company currently has only a limited product development staff. The
Company has engaged GDA Technologies, Inc. (GDA), a provider of computer
engineering services, to develop its new patent-pending NEXAR XPA technology and
to implement this technology on several motherboards for use in its XPA PCs.
Although the Company believes that it could find and engage equivalent
development and engineering services elsewhere within a reasonable period of
time, or hire sufficient capable engineers to perform such development work in-
house, the inability of GDA to adequately perform such services on a timely
basis could have a material adverse effect on the Company.
UNCERTAINTY REGARDING INTELLECTUAL PROPERTY RIGHTS
The Company's success is dependent in large part upon its intellectual
property rights. In September 1997, the United States Patent and Trademark
Office issued the Company a patent
7
<PAGE>
covering the essential technology which enables the easy installation, removal
and replacement of key components in the Company's original PCs, which was the
predecessor to its XPA architecture. The Company has filed an additional patent
application relating to the same technology covered by the patent which has
issued. The Company has also filed ten domestic and foreign patent
applications, the first in late 1996, covering its XPA technology. There can be
no assurance that any patents will be issued pursuant to the pending or future
patent applications of the Company. Even if issued, there can be no assurance
that the patent which has issued or any future patents would survive a legal
challenge to their validity or provide adequate protection. In addition, the
Company has not conducted any formal study of prior art and, therefore, has not
determined what effect any prior art may have on any such patents that may
issue. The Company also relies on copyrights, unpatented trade secrets and
trademarks to protect its proprietary technology. No assurance can be given
that the Company's competitors will not independently develop or otherwise
acquire substantially equivalent techniques or otherwise gain access to the
Company's proprietary technology or that the Company can ultimately protect its
rights to such proprietary technology. In addition, there can be no assurance
that the Company will be able to afford the expense of any litigation which may
be necessary to enforce its rights under any such patents that may issue. The
Company also relies on confidentiality agreements with its collaborators,
employees, advisors, vendors and consultants to protect its proprietary
technology. There can be no assurance that these agreements will not be
breached, that the Company would have adequate remedies for any breach or that
the Company's trade secrets will not otherwise become known or be independently
developed by competitors. Failure to obtain or maintain patent and trade secret
protection, for any reason, could have a material adverse effect on the
Company's business, financial condition and results of operations.
In addition, the Company has been advised by counsel for NEXOR Ltd.
("NEXOR"), an electronic messaging software company based in the United Kingdom,
that such company claims prior use of the name NEXOR and intends to oppose the
Company's registration of its NEXAR trademark, which is currently pending before
the United States Patent and Trademark Office. Such counsel has proposed an
agreement pursuant to which, among other things, the parties would each consent
to the other's use of their respective names so long as the respective parties
do not market classes of goods or services falling within the other party's
classes of goods or services. While the Company believes that it will be able to
resolve this potential dispute and continue to use the NEXAR trademark on its
current and anticipated products, there can be no assurance that an agreement
with NEXOR acceptable to the Company will be reached. The failure to reach a
satisfactory agreement could result in the inability of the Company to obtain
registration for the name NEXAR and/or litigation with NEXOR. An adverse
determination of any such litigation could result in the Company having to cease
use of the NEXAR trademark, which could have a material adverse effect on the
Company.
Also, NexTrend Technologies, Inc., a manufacturer of computer hardware has
filed a Notice of Opposition at the United States Patent and Trademark Office to
the Company's application to register the NEXAR mark for instructional manuals
in view of NexTrend's use of the NEXSTAR mark. NexTrend claims that the marks
are confusingly similar and that, as between the two parties it used its NEXSTAR
mark first. The Company has filed an answer to the Notice of Opposition denying
these allegations. Nonetheless, if NexTrend were to prevail in this matter and
then bring an action against NEXAR for trademark infringement an adverse
determination of such action could have a material adverse effect on NEXAR.
8
<PAGE>
POTENTIAL INFRINGEMENT OF PROPRIETARY TECHNOLOGY
Although the Company believes that its products do not infringe patents or
other proprietary rights of third parties, there can be no assurance that the
Company is aware of all patents or other proprietary rights that may be
infringed by the Company's products, that any infringement does not exist or
that infringement may not be alleged by third parties in the future. If
infringement is alleged, there can be no assurance that the necessary licenses
would be available on acceptable terms, if at all, or that the Company would
prevail in any related litigation. Patent litigation can be extremely protracted
and expensive even if the Company ultimately prevails, and involvement in such
litigation and related diversion of management attention and resources could
have a material adverse effect on the business, results of operations and
financial condition of the Company.
RISK OF TECHNOLOGICAL OBSOLESCENCE
There can be no assurance that products or technologies of the Company's
competitors will not render the Company's products or technologies
noncompetitive or obsolete. Although the Company's product lines have been
designed to forestall such obsolescence, there can be no assurance that the
Company's products will be competitive with products offered by other
manufacturers. In addition, delays in access to technology developed by
competitors and suppliers could slow the Company's design and manufacture of
components and subsystems that distinguish its products. If the Company is
unable for technological or other reasons to develop and introduce new or
enhanced products and services in a timely and effective manner, the Company's
business, operating results and financial condition would be materially and
adversely affected.
FORECASTING ISSUES
Because of the pace of technological advances in the computer industry, the
Company must introduce on a timely basis new products that offer customers
competitive technologies while managing the production and marketing cycles of
its existing products. Forecasting demand for newly-introduced products is
complicated by the availability of different product models, which may include
various types of built-in peripherals and software in certain markets. As a
result, while overall demand may be in line with the Company's projections and
manufacturing implementation, local market variations can lead to differences
between expected and actual demand and resulting delays in shipment, which can
affect the Company's financial results.
DEPENDENCE UPON THIRD PARTIES TO PERFORM SERVICE OBLIGATIONS
All of the Company's products are sold with a three year limited warranty
on hardware with one year on-site service. The Company currently lacks the
capability to provide technical support for its PCs in the field and it and
certain of its resellers have contracted with third party service providers,
including Wang, to perform the Company's warranty obligations with respect to
its products. These companies provide NEXAR's customers on-site hardware
support, including diagnostics and repair and also provides telephone support
for software products bundled with NEXAR's systems for a period of 90 days.
While the Company and its resellers selected these providers based on its belief
that these companies have the capability to perform these warranty obligations
on a timely and efficient basis, the failure of these providers to meet the
demands of the end-users of the Company's products could materially and
adversely affect the reputation of the Company and its products, which in turn
could result in lower sales and profits.
9
<PAGE>
DEPENDENCE ON MARKET SUCCESS OF THIRD PARTY CHANNEL DISTRIBUTION
The Company does not sell its products directly to end-users, but relies
instead on a variety of distribution channels, primarily distributors, value-
added and other resellers, original equipment manufacturers (OEMs), systems
integrators, direct response resellers, and independent dealers. The Company's
revenue is dependent, among other things, upon the ability of these distribution
channels to sell the Company's products to end-users. Factors affecting the
ability of these distribution channels to develop and sell their products
include competition, their ability to offer products that meet user requirements
at acceptable prices and overall economic conditions in both the United States
and foreign markets. The Company's business, results of operations and financial
condition would be materially and adversely affected if these distribution
channels are unsuccessful in selling the Company's products.
RELIANCE ON SUPPLIERS; RISK OF DELAY
The Company's manufacturing process requires a high volume of quality
components that are procured from third party suppliers. Reliance on suppliers,
as well as industry supply conditions generally, involves several risks,
including the possibility of defective parts, a shortage of components,
increases in component costs and reduced control over delivery schedules, any or
all of which could adversely affect the Company's financial results. As part of
the manufacturing process, the Company uses industry standard components for its
products. Most of these components are generally available from multiple
sources; however, the Company relies on two outside contractors to manufacture
motherboards used in its PCs. In addition, the Company relies on a single
supplier to produce its customized chassis and has several other single supplier
relationships for less critical components, and the lack of availability of
timely and reliable supply of components from these sources could adversely
affect the Company's business. Also, the Company ultimately is reliant on major
suppliers of key components, such as CPUs and chipsets sold by Intel, which are
included in the Company's products, either at the request of a customer prior to
shipment or by the Company's resellers. Occasionally, such components are
subject to allocations and the Company has at times experienced difficulty in
obtaining sufficient quantities of such products. In some cases, alternative
sources of supply are not readily available for some of the Company's single-
sourced components. In other cases, the Company may establish a working
relationship with a single source, even when multiple suppliers are available,
if the Company believes it is advantageous to do so due to performance, quality,
support, delivery, capacity or price considerations. Where alternative sources
are available, qualification of the alternative suppliers and establishment of
reliable supplies could result in delays, which could adversely affect the
Company's manufacturing processes and results of operations.
The Company occasionally experiences delays in receiving certain
components, which can cause delays in the shipment of some products to
customers. There can be no assurance that the Company will be able to continue
to obtain additional supplies of reliable components in a timely or cost-
effective manner.
RISKS ASSOCIATED WITH INVENTORY LEVELS
Although the design of the NEXAR PC provides the Company with the ability
to operate with reduced inventories of components and finished goods, shifts in
technology and market demand may nevertheless result in excess inventory,
declining inventory values or even obsolescence. Maintaining
10
<PAGE>
a low inventory level is dependent upon the Company's ability to achieve
targeted revenue and product mix. There can be no assurance that the Company
will be able to maintain optimal inventory levels in future periods.
DEPENDENCE ON KEY PERSONNEL
The Company's future success depends to a significant extent on certain key
personnel, including its Chairman and Chief Executive Officer, Albert J. Agbay,
and its other executive officers and certain technical, managerial, consulting,
sales and marketing personnel. The loss of the services of any of these
individuals or group of individuals could have a material adverse effect on the
Company's business, operating results and financial condition.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS
The Company's quarterly revenues, expenses and operating results are likely
to vary considerably in the future. Such fluctuations can be traced to many
factors, including the timing and terms of large transactions, delays in
customer acceptance, delays in receiving components, the length of sales cycles,
changes in the level of operating expenses, demand for the Company's products
and services, the introduction of new products and product enhancements by the
Company and its competitors, changes in customer budgets, competitive conditions
in the industry and general economic conditions. For example, during the third
quarter of 1997, the Company did not have in inventory and was unable to obtain
on a timely basis sufficient quantities of key components to meet outstanding
purchase orders, which caused the financial results for such period to be
adversely affected. The Company budgets its product development and other
expenses anticipating future revenues. If revenues fall below expectations, the
Company's business, operating results and financial condition are likely to be
materially and adversely affected because a proportionately smaller amount of
the Company's expenses vary with its revenues. As a result, the Company believes
that period-to-period comparisons of its operating results are not necessarily
meaningful and should not be relied upon to predict future performance. Due to
the foregoing factors, it is likely that, in some future quarters, the Company's
operating results will fall below the market's or investors' expectations, and,
in such event, the price of the Common Stock would likely be materially and
adversely affected.
RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION
The Company plans to expand its business into international markets.
To date, the Company has minimal experience in marketing and distributing its
products internationally and plans to establish alliances with sales
representative organizations and resellers with particular experience in
international markets. Accordingly, the Company's success in international
markets will be substantially dependent upon the skill and expertise of such
international participants in marketing the Company's products. There can be no
assurance that the Company will be able to successfully market, sell and deliver
its products in these markets. In addition, there are certain risks inherent in
doing business in international markets, such as unexpected changes in
regulatory requirements, export restrictions, tariffs and other trade barriers,
difficulties in staffing and managing foreign operations, political instability
and fluctuations in currency exchange rates and potentially adverse tax
consequences, which could adversely impact the success of the Company's
international operations. There can be no assurance that one or more of such
factors will not have a material adverse effect on the Company's future
international operations and, consequently, on the Company's business, financial
condition or operating results.
11
<PAGE>
RECENT DEVELOPMENTS
During 1997 many computer manufacturers, including industry leader Compaq
Computer, began offering PCs to home customers for less than $1,000. This has
led to growth in the home PC market, but also increased pressure on price
margins in the corporate, government and educational PC markets in which the
Company primarily competes. Industry forecasters are predicting that prices for
a wide range of PC hardware products will fall significantly during 1998 and
profit margins for makers of corporate PC systems will generally decline.
Although the Company believes that its relationships with its customers are good
and that its focus on increasing sales through private brand OEM agreements and
other strategic distribution agreements is a sound strategy for growth, there
can be no assurance that the recent trends in the industry identified above will
not have a material adverse effect on the Company and preclude it from achieving
profitability in the foreseeable future. Due to these factors, management of
the Company has determined that it is in the best interests of the Company and
its stockholders to explore the possibility of entering into strategic alliances
with larger industry participants. In March 1998, the Company engaged Southport
Partners, L.P., an investment banking firm based in Southport, Connecticut, to
provide advisory services to the Company concerning possible joint venture,
licensing and other potential transactions. The Company is not currently
engaged in any negotiations with respect to any such potential transaction nor
has any determination been made by the Company whether to enter into any such
transaction.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Shareholders.
12
<PAGE>
THE PURCHASE AGREEMENTS
GENERAL
On March 20, 1998, pursuant to the Purchase Agreements, the Company
consummated a private placement financing transaction (the "Private Placement")
resulting in gross proceeds to the Company of $3,200,000. The Company issued an
aggregate of 32,000 shares of the Company's Series B Preferred Stock in the
Private Placement. As compensation for services rendered in connection with the
Private Placement, the Company also issued to Adar Equities, LLC and Mueller &
Company, Inc. cash compensation of $80,000 each and warrants (the Warrants")
exercisable prior to March 20, 2002 for up to an aggregate of 2,100,000 shares
of Common Stock, subject to the Share Issuance Limit, at the following exercise
prices: 1,000,000 shares are exercisable at $4.00 per share; 550,000 shares are
exercisable at $4.25 per share and 550,000 shares are exercisable at $4.75 per
share. Each of the Warrants provide that they are not exercisable to the extent
that following any such exercise, the holder thereof would then be the
"beneficial owner" (as defined in Section 13(d) of the Exchange Act) of 10% or
more of the Company's then outstanding Common Stock. All of the securities sold
in the Private Placement were sold solely to accredited investors under the
Securities Act.
SUMMARY OF TRANSACTION TERMS
Set forth below is a summary of the material terms of the Private
Placement, which summary is qualified by reference to the full text of the
underlying documents which have been filed as exhibits to the Registration
Statement of which this Prospectus is a part.
Each share of Series B Preferred Stock is convertible into the number of
shares of Common Stock (subject to the Share Issuance Limit described in the
following paragraph) determined by dividing $100 by the lesser of (a) $3.25 and
(b) 75% of the average of the closing bid price of a share of the Common Stock
during the five trading days prior to such conversion. Until converted, each
share of Series B Preferred Stock is entitled to receive quarterly dividends at
the rate of $5.00 per share per annum, payable in cash or shares of Common Stock
having a market value equal to the dividend payable. The Company agreed to
register the shares of Common Stock issuable upon conversion of the Series B
Preferred Stock, shares of Common Stock issued in lieu of cash dividends thereon
at the option of the Company and shares of Common Stock issued upon exercise of
the Warrants for resale under the Securities Act no later than May 1, 1998. The
dividend increases to $18.00 per share per annum if resales of the Issuances are
not subject to an effective registration statement under the Securities Act by
June 30, 1998 and to $24.00 a share per annum if resales of shares issued in the
Issuances are not subject to such a registration statement by August 31, 1998.
Each share of Series B Preferred Stock is also entitled to a liquidation
preference of $100 per share, plus any accrued but unpaid dividends in
preference to any other class or series of capital stock of the Company. Except
as provided by applicable law, holders of shares of Series B Preferred Stock
have no voting rights. Shares of Series B Preferred Stock are convertible at any
time prior to March 1, 2000, on which date all outstanding shares of the Series
B Preferred Stock will automatically convert into shares of Common Stock at the
then applicable conversion rate.
The exact number of shares of Common Stock issuable upon conversion of the
Series B Preferred Stock and exercise of the Warrants (collectively, the
"Issuances") cannot currently be determined because the number of shares
issuable upon conversion of the Series B Preferred Stock
13
<PAGE>
is dependent on future events, principally consisting of the future trading
prices of the Common Stock and the conversion decisions of holders of shares of
the Series B Preferred Stock. The number of shares of Common Stock issuable as
a result of the conversion of the Series B Preferred Stock generally will vary
inversely with the market price of the Common Stock. Rules of the National
Association of Securities Dealers applicable to the Company require that the
Company obtain approval of its stockholders before the issuance at a price per
share below the greater of market or book value of the Common Stock of
securities (or securities convertible thereinto) having voting power equal to or
greater than 20% or more of the outstanding Common Stock of the Company.
Accordingly, the Warrants and the Certificate of Designation (the "Certificate")
for the Series B Preferred Stock each provide that no more than 2,001,810 shares
(the "Share Issuance Limit") of Common Stock (equal to approximately 19.99
percent of the Common Stock based on the 10,009,055 shares of Common Stock
outstanding as of March 20, 1998) are issuable upon the total aggregate of
conversions of the Series B Preferred Stock and the Warrants (on a first
converted/first exercised basis) until stockholder approval of the Issuances are
obtained. The Certificate and the Warrants require that the Company seek to
obtain stockholder approval of the Issuances at a meeting of stockholders on or
prior to June 30, 1998. It is presently expected that this approval will be
sought at a annual meeting of stockholders to be held on June 8, 1998. Under
the terms of Certificate and the Warrants, holders of shares of Common Stock
issued upon conversion of the Series B Preferred Stock or exercise of the
Warrants are not entitled to vote such shares at the annual meeting or any other
meeting at which such approval is sought. The Certificate also provides that
shares of the Series B Preferred Stock shall not be convertible at any time to
the extent that the holder of shares thereof would after such conversions be the
beneficial holder of more than 9.99% of the outstanding shares of Common Stock.
If stockholder approval of the Issuances is not approved by the
stockholders of the Company at a meeting held prior to June 30, 1998, the
holders of the Series B Preferred Stock shall have the right at any time to
require the Company to redeem any portion or all of any outstanding shares of
the Series B Preferred Stock at a price equal to $125 per share which sum would
accrue interest at the rate of 11% per annum until paid. If all 32,000 shares of
Series B Preferred Stock were so redeemed, the Company would be required to pay
the holders thereof a total of $4 million. In addition, during the absence of
such stockholder approval the holders of the Warrants shall have the right to
require the Company to redeem any portion of the Warrants designated by such
holders for redemption at a redemption price per share equal to the pre-tax
profit such holders would have earned had such holders, at the close of business
on the date of its demand for redemption, exercised the redeemed portion and
simultaneously sold the shares received on such exercise at the closing sales
price of the Common Stock on such date, such redemption price accruing interest
at 11% per annum until paid. There can be no assurance that the Company will
have available cash resources to redeem the Series B Preferred Stock or Warrants
if required to do so. In the event stockholder approval of the Issuances is not
obtained, redemption of a substantial number of shares of Series B Preferred
Stock or warrants could have a material adverse effect on the Company's
financial condition and its ability to implement its business strategy. Further,
if any such redemption causes the Company to fail to meet the listing
requirements of the Nasdaq National Market, including the requirement that the
Company have tangible net assets in excess of $4 million, the Company would be
subject to delisting. If delisted from the Nasdaq National Market, the Company
would attempt to become listed on another stock exchange where it is able to
meet the listing requirements or to arrange for the Common Stock to be traded on
the Nasdaq electronic bulletin board.
14
<PAGE>
SELLING SHAREHOLDERS
Set forth below is the number of shares of Common Stock beneficially owned
by the Selling Shareholders as of April 15, 1998, the number of Shares offered
pursuant to this Prospectus and the number of shares to be owned after
completion of the offering (assuming the sale of all the Shares offered
hereunder).
<TABLE>
<CAPTION>
Number of Number of Shares
Total Number of Shares to be to be Owned After
Name Shares Owned Offered or Sold the Offering (1)
- ---- ------------ --------------- ------------------
<S> <C> <C> <C>
Adar Equities, LLC 1,050,000(2) 1,050,000 0
Beauchamp Finance 315,000(3)(4) 315,000 0
Dora Fried 262,500(3)(5) 262,500 0
Ellanby Ltd. 262,500(3)(5) 262,500 0
Euro Factors Intl. Inc. 656,250(3)(6) 656,250 0
Mueller & Company, Inc. 1,050,000(2) 1,050,000 0
Olam Investments Ltd. 183,750(3)(7) 183,750 0
</TABLE>
_________________________
(1) Assumes that the Selling Shareholders will each sell all of the Shares
registered hereunder. The Selling Shareholders may sell all or any part of
its Shares pursuant to this Prospectus.
(2) Such Shares may be acquired upon exercise of Warrants acquired in the
Private Placement. See "The Purchase Agreements" above.
(3) Such beneficial ownership represents an estimate of the number of shares of
Common Stock issuable upon the conversion of shares of the Series B
Preferred Stock and shares issued in lieu of cash dividends payable thereon
beneficially owned by such person, assuming a price of $2.00 per share of
Common Stock was used to determine the number of shares of Common Stock
issuable upon conversion. The actual number of shares of Common Stock
offered hereby is subject to adjustment and could by materially less or
more than the estimated amount indicated depending upon factors which
cannot be predicted by the Company at this time, including, among others,
application of the conversion provisions based on market prices prevailing
at the actual date of conversion. This presentation is not intended to
constitute a prediction as to the future market price of the Common Stock
or as to when Selling Stockholders will elect to convert shares of
Convertible Preferred Stock issued in the Private Placement.
(4) Includes up to 15,000 shares of Common Stock which may be issued to such
person in lieu of cash dividends, assuming a fair market value basis of the
number of shares issuable of $2.00 per share.
(5) Includes up to 12,500 shares of Common Stock which may be issued to such
person in lieu of cash dividends, assuming a fair market value basis of the
number of shares issuable of $2.00 per share.
(6) Includes up to 31,250 shares of Common Stock which may be issued to such
person in lieu of cash dividends, assuming a fair market value basis of the
number of shares issuable of $2.00 per share.
(7) Includes up to 8,750 shares of Common Stock which may be issued to such
person in lieu of cash dividends, assuming a fair market value basis of the
number of shares issuable of $2.00 per share.
15
<PAGE>
PLAN OF DISTRIBUTION
The Selling Shareholders and their agents, donees, distributees, pledgees
and other successors in interest may, from time to time, offer for sale and sell
or distribute the Shares to be offered by them hereby (a) in transactions
executed on the Nasdaq National Market, or any securities exchange on which the
shares may be traded, through registered broker-dealers (who may act as
principals, pledgees or agents) pursuant to unsolicited orders or offers to buy,
(b) in negotiated transactions, or (c) through other means. The Shares may be
sold from time to time in one or more transactions at market prices prevailing
at the time of sale or a fixed offering price, which may be changed, or at
varying prices determined at the time of sale or at negotiated prices. Such
prices will be determined by the Selling Shareholders or by agreement between
the Selling Shareholders and their underwriters, dealers, brokers or agents.
The Shares may also be offered in one or more underwritten offerings. The
underwriters in an underwritten offering, if any, and the terms and conditions
of any such offering will be described in a supplement to this Prospectus.
In connection with distribution of the Shares, the Selling Shareholders may
enter into hedging or other option transactions with broker-dealers in
connection with which, among other things, such broker-dealers may engage in
short sales of the Shares pursuant to this Prospectus in the course of hedging
the positions they may assume with one or more of the Selling Shareholders. The
Selling Shareholders may also sell Shares short pursuant to this Prospectus and
deliver the Shares to close out such short positions. The Selling Shareholders
may also enter into option or other transactions with broker-dealers which may
result in the delivery of Shares to such broker-dealers who may sell such Shares
pursuant to this Prospectus. The Selling Shareholders may also pledge the
Shares to a broker-dealer and upon default the broker-dealer may effect the
sales of the pledged Shares pursuant to this Prospectus.
The distribution of the Shares by the Selling Shareholders is not subject
to any underwriting agreement. Any underwriters, dealers, brokers or agents
participating in the distribution of the Shares may receive compensation in the
form of underwriting discounts, concessions, commissions or fees from the
Selling Shareholders and/or purchasers of Shares, for whom they may act. Such
discounts, concessions, commissions or fees will not exceed those customary for
the type of transactions involved. In addition, the Selling Shareholders and
any such underwriters, dealers, brokers or agents that participate in the
distribution of Shares may be deemed to be underwriters under the Securities
Act, and any profits on the sale of Shares by them and any discounts,
commissions or concessions received by any of such persons may be deemed to be
underwriting discounts and commissions under the Securities Act. Those who act
as underwriter, broker, dealer or agent in connection with the sale of the
Shares will be selected by the Selling Shareholders and may have other business
relationships with the Company and its subsidiaries or affiliates in the
ordinary course of business.
The aggregate proceeds to the Selling Shareholders from the sale of the
Shares offered by the Selling Shareholders hereby will be the purchase price of
such Shares less any broker's commissions.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdiction only through registered
or licensed brokers or dealers. In addition, in certain states the Shares may
not be sold unless they have been registered or qualified for sale in the
16
<PAGE>
applicable state or an exemption from the registration of qualification
requirement is available and is complied with.
The Selling Shareholders and any broker-dealer, agent or underwriter that
participates with the Selling Shareholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of the Securities Act, in
which event any commissions received by such broker-dealers, agents or
underwriters and any profit on the resale of the Shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares offered hereby may not simultaneously
engage in market making activities with respect to the Shares for a period of
two business days prior to the commencement of such distribution. In addition,
and without limiting the foregoing, the Selling Shareholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Rules 10b-2, 10b-5, 10b-6 and 10b-7,
which provisions may limit the timing of sales of the Shares by the Selling
Shareholder.
There is no assurance that the Selling Shareholders will sell any or all of
the Shares described herein and may transfer, devise or gift such securities by
other means not described herein. The Company is permitted to suspend the use
of this Prospectus in connection with sales of the Shares by holders during
certain periods of time under certain circumstances relating to pending
corporate developments and public filings with the Commission and similar
events. Expenses of preparing and filing the registration statement all post-
effective amendments will be borne by the Company.
INTERESTS OF NAMED EXPERTS AND COUNSEL
The legality of the Common Stock offered hereby is being passed upon for
the Company by McDermott, Will & Emery (a partnership including professional
corporations), Boston, Massachusetts. David A. Cifrino, the Secretary of the
Company, is the President of David A. Cifrino, P.C., a Massachusetts
professional corporation which is a partner of McDermott, Will & Emery.
17
<PAGE>
================================================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
--------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information............................ 2
Incorporation of Certain Documents by
Reference...................................... 2
The Company...................................... 4
Risk Factors..................................... 5
Recent Developments.............................. 12
Use of Proceeds.................................. 12
The Purchase Agreements.......................... 13
Selling Shareholders............................. 15
Plan of Distribution............................. 16
Interests of Named Experts
and Counsel..................................... 17
</TABLE>
- --------------------------------------------------------------------------------
5,460,000 SHARES
NEXAR TECHNOLOGIES, INC.
COMMON STOCK
-------------------------
PROSPECTUS
MAY __, 1998
-------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by the
registrant in connection with the distribution of the securities being
registered hereunder. All of the amounts shown are estimates, except the
Securities and Exchange Commission registration fee.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission Registration Fee $ 4,128
Legal Fees and Expenses.............................. 10,000
Accountants' Fees and Expenses....................... 2,500
------
TOTAL........................................... $ 16,628
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
provides that a corporation may indemnify a director, officer, employee or agent
against expenses (including attorneys' fees), judgments, fines and for amounts
paid in settlement in respect of or in successful defense of any action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
Article Twelfth of the Company's Restated Certificate of Incorporation
provides that no director of the Company shall be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director, except for liability (i) for any breach of the director's duty of
loyalty, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law or (iv) for any transaction from which the
director derived an improper personal benefit. Article Twelfth further provides
that a director's personal liability shall be eliminated or limited in the
future to the fullest extent permitted from time to time by the Delaware General
Corporation Law.
Article Thirteenth of the Company's Restated Certificate of Incorporation
provides that the Company shall, to the fullest extent permitted from time to
time under the Delaware General Corporation Law, indemnify each of its directors
and officers against all expenses (including attorneys' fees and expenses),
judgments, fines and amounts paid in settlement in respect to any action, suit
or proceeding in which such director or officer may be involved or with which he
may be threatened, while in office or thereafter, by reason of his or her
actions or omissions in connection with services to the company, such
indemnification to include prompt payment of expenses in advance of the final
disposition of any such action, suit or proceeding.
The Company maintains a directors and officers liability insurance policy
for the benefit of its directors and officers.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number
- -------------
<S> <C>
4.1 Form of Private Placement Purchase Agreements between the Company and
the Selling Shareholders.
5.1 Opinion of McDermott, Will & Emery as to validity of shares being
registered and Consent.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of McDermott, Will & Emery (included in Exhibit 5.1).
25.1 Power of Attorney (part of Signature Page).
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any material information with respect to the plan
of distribution not previously disclosed in the 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 of 1933, 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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) 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.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
II-2
<PAGE>
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus 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.
Insofar as indemnification of liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with any of the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of 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 the Town of Southborough, The Commonwealth of Massachusetts, on
the 30th day of April, 1998.
NEXAR TECHNOLOGIES, INC.
By: /s/ Albert J. Agbay
--------------------------------------------
Albert J. Agbay
President and Chief Executive Officer
II-4
<PAGE>
POWER OF ATTORNEY
We, the undersigned officers and directors of Nexar Technologies, Inc.,
hereby severally constitute and appoint Albert J. Agbay, Gerald Y. Hattori and
David A. Cifrino, and each of them singly, our true and lawful attorneys with
full power to them, and each of them singly, to sign for us and in our names in
the capacities indicated below, the Registration Statement on Form S-3 filed
herewith and any and all pre-effective and post-effective amendments to said
Registration Statement, and generally to do all such things in our names and on
our behalf in our capacities as officers and directors to enable Nexar
Technologies, Inc. to comply with the provisions of the Securities Act of 1933,
as amended, and all requirements of the Securities and Exchange Commission,
hereby ratifying and confirming our signatures as they may be signed by our said
attorneys or any of them, to said Registration Statement and any and all
amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on April 30, 1998 by the following
persons in the capacities indicated.
Signature Capacity
--------- --------
/s/ Albert J. Agbay
________________________________ President, Chief Executive Officer and
Albert J. Agbay Chairman of the Board of Directors
(Principal Executive Officer)
/s/ Gerald Y. Hattori
________________________________ Chief Financial Officer, Vice President of
Gerald Y. Hattori Finance and Treasurer (Principal
Financial Officer and Principal Accounting
Officer)
/s/ Buster C. Glosson
________________________________ Director
Buster C. Glosson
/s/ Steven Georgiev
________________________________ Director
Steven Georgiev
/s/ Joseph E. Levangie
________________________________ Director
Joseph E. Levangie
II-5
<PAGE>
INDEX TO EXHIBITS
4.1 Form of Private Placement Purchase Agreements between the Company and
the Selling Shareholders.
5.1 Opinion of McDermott, Will & Emery as to validity of shares being
registered and Consent.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of McDermott, Will & Emery (included in Exhibit 5.1).
25.1 Power of Attorney (part of Signature Page).
II-6
<PAGE>
Exhibit 4.1
-----------
PRIVATE PLACEMENT PURCHASE AGREEMENT
------------------------------------
Nexar Technologies, Inc.
257 Turnpike Road
Southborough, MA 01772
re: Purchase of Securities
Gentlemen:
1. Certain Representations; Opinion of Counsel.
(a) Nexar Technologies, Inc. (the "Company") represents and warrants
to the undersigned ("Holder") as follows:
(i) all filings which the Company has made with the Securities
and Exchange Commission ("SEC") during the past 12 months
were correct and accurate in all material respects as of the
date of their filing and in all material respects stated all
facts necessary to make such filings not misleading as of
the date of their filing;
(ii) there has been no material adverse change in the business,
assets or financial condition of the Company since the most
recent such filing, except for adverse changes in the
Company's financial condition and results of operations
since September 30, 1997;
(iii) the Company has the full power and authority to enter
into this Agreement and to carry out the transactions
contemplated hereby, all proceedings required to be taken by
it or its stockholders to authorize the execution, delivery
and performance of this Agreement and the agreements
relating hereto have been properly taken and this Agreement
constitutes a valid and binding obligation of the Company,
enforceable in accordance with its terms; and
(iv) neither the execution, delivery nor performance of this
Agreement by the Company will, with or without the giving of
notice or the passage of time, or both, conflict with,
result in a default, right to accelerate or loss of rights
under, or result in the creation of any lien, charge or
encumbrance pursuant to, any provision of the Company's
certificate of incorporation or by-laws or any franchise,
mortgage, deed of trust, lease, license, agreement,
understanding, law, rule or regulation or any order,
judgment or decree to which the Company is a party or by
which it may be bound or affected.
(b) Counsel to the Company is concurrently herewith rendering an
opinion to Holder in respect of the validity of the securities
issued hereby and on certain other matters.
<PAGE>
2. Sale of Securities.
(a) The Company hereby agrees to sell to Holder, and Holder hereby
agrees to purchase from the Company, the number of shares of
Series B Convertible Preferred Stock ("Preferred"), in multiples
of 200, set forth opposite Holder's name below. The purchase
price for each share of Preferred is $100, and is payable in cash
concurrently herewith.
(b) The Certificate of Designation of the Preferred is in the form of
Exhibit 1.
(c) The term "Purchasers" as used herein means Holders who in the
aggregate are on this date (the "Closing Date") purchasing 32,000
shares of Preferred under agreements of the same tenor as this
Agreement.
3. Commissions.
(a) The Company will pay to each of Adar Equities, LLC ("Adar") and
Mueller & Company , Inc. ("Mueller") a finder's fee equal to 2.5%
of the gross proceeds to the Company from the sale of the
Preferred.
(b) In addition, as a further fee, the Company shall concurrently
herewith issue:
(i) to Adar a warrant in the form of Exhibit 2A (an "A Warrant")
to purchase 1,000,000 shares of common stock of the Company
("common stock"),
(ii) to Adar a warrant in the form of Exhibit 2B (a "B Warrant")
to purchase 25,000 shares of common stock,
(iii) to Mueller a B Warrant to purchase 525,000 shares of
common stock, and
(iv) to Adar a warrant in the form of Exhibit 2C (a "C Warrant")
to purchase 25,000 shares of common stock, and
(v) to Mueller a C Warrant to purchase 525,000 shares of common
stock
(c) The warrants aforesaid are collectively referred to herein as the
"Warrants."
4. Registration.
(a) The Company will, on or before May 1, 1998 file a registration
statement on Form S-3 (the "Registration Statement") for the
public sale by Holder of the shares which are issuable on
conversion of the Preferred and for the public sale by Adar and
Mueller of shares issuable on exercise of the Warrants.
Sufficient shares shall be registered to cover conversions of the
Preferred at a Conversion Price (as defined in the Preferred) of
$2.00 and
<PAGE>
exercise of all of the Warrants. The Registration Statement shall
also cover such indeterminate number of shares as may be
permitted under Rules 416 and 457 under the Securities Act of
1933. If, as of the close of business on any date, the number of
shares registered under the Registration Statement or a
supplementary registration statement is less than 120% of the
number of shares then issuable under the Preferred (based on the
then Conversion Price) and Warrants, the Company shall forthwith
file a new or amended registration statement to cover conversions
at one-half of such Conversion Price; such additional
registration statement(s) shall also constitute a "Registration
Statement" for all purposes hereof. The shares to be covered by
the Registration Statement are collectively referred to as the
"registered shares."
(b) The Company shall be entitled to impose reasonable black-out
periods, not to extend beyond 30 days per black-out, and not to
exceed two black-out periods in any 12-month period, during which
sales may not be made under the Registration Statement as a
result of the occurrence of material developments which render
the Registration Statement incomplete or misleading. The Company
will within 10 days of the commencement of each black-out amend
or supplement the Registration Statement, if necessary, so as to
permit resumption of sales thereunder.
(c) In addition to, and without limiting Holder's other remedies, for
each month (pro rated for any part of a month) by which the
Company is late in filing the Registration Statement, the Company
will pay to Holder promptly upon demand an amount equal to 1% of
the purchase price paid by Holder for the Preferred hereunder.
For example, if the Registration Statement is filed on May 16,
1998 (i.e., 15 days late) and Holder has paid $100,000 for the
Preferred, the Company shall upon request pay to Holder $500.
(d) The Company shall use its diligent efforts to cause the
Registration Statement to become effective not later than 90 days
after the date of this Agreement, and to remain effective for two
years and thereafter so long as any Warrants remain exercisable.
The registration shall be accompanied by blue sky clearances in
such states as Holder may reasonably request. The Company will
file an acceleration request with the SEC no later than three
business days after SEC clearance to do so.
(e) The Company shall pay all expenses of the registration hereunder,
other than Holder's underwriting discounts, brokerage fees and
counsel or other fees and selling expenses.
(f) The Company shall supply to Holder a reasonable number of copies
of all registration materials and prospectuses. The Company and
Holder shall execute and deliver to each other indemnity
agreements which are conventional in registered offerings of this
type. The Holder shall reasonably cooperate with the Company in
the preparation and filing of the Registration Statement and
appropriate amendments thereto, and shall
<PAGE>
provide to the Company such information with respect to the
Holder as the Company may reasonably require in connection
therewith.
(g) Holder may transfer all or any part of its registration rights to
"permitted transferees" of the Preferred or portions thereof. A
"permitted transferee" is a person to whom a transfer of one or
more Preferred is made at one time in accordance with the terms
of this Agreement, but only if such transfer is in compliance
with applicable federal and state securities laws and only if the
transferee in a written notice addressed to the transferor and to
the Company (i) agrees to comply with all covenants and
agreements set forth in this Agreement, and (ii) can and does
make each of the representations and warranties of Holder set
forth in this Agreement.
(h) Once the registration statement is effective, the Company will
issue UNLEGENDED shares of common stock (in form which can be
transmitted electronically if desired by Holder):
(i) on conversion of the Preferred, whether or not such shares
are sold simultaneously with such conversion or exercise; or
(ii) in exchange for any legended shares of common stock which
were issued on prior conversion of the Preferred.
(i) Holder covenants that in connection with all sales pursuant to
the Registration Statement it will deliver to the buyer or its
agent a copy of the prospectus which shall constitute a part of
the Registration Statement.
(j) Should Holder from time to time or times give to the Company
notice that it has assigned the Warrants or any portion thereof,
the Company shall, within ten business days after receipt of such
notice as provided below, file a supplement to the registration
statement to reflect the name(s) of the transferee(s) as a
selling shareholder.
5. Until the 90/th/ day after the date of the effectiveness of the
Registration Statement, the Company shall not issue any securities pursuant to
Regulation D or Section 4(2) under the Securities Act of 1933, as amended (the
"Securities Act"). From the 91/st/ day until the 180/th/ day after the date of
the effectiveness of the Registration Statement, the Company shall not issue any
securities pursuant to Regulation D or Section 4(2) under the Securities Act
unless the Company first offers to the Purchasers the 30-day right of first
refusal to purchase such securities, allocated among Purchasers based on the
respective number of shares of Preferred purchased by them. So long as any
shares of Preferred are outstanding, the Company shall not issue any securities
under Regulation S under the Securities Act.
6. The Company represents that neither the issuance of the Preferred and
Warrants, nor the conversion or exercise thereof, will trigger any rights or
obligations under any outstanding securities of the Company.
7. The Company's obligations under this Agreement and under the
securities issuable hereunder shall not be subject to defense, offset or
counterclaim for any matter or thing. All
<PAGE>
claims by the Company against any holder of such securities shall be brought by
the Company in separate actions for monetary damages only, and injunctive relief
shall not be available.
8. Securities Representations.
(a) Holder represents and warrants that it is purchasing the
Preferred solely for investment solely for its own account and
not with a view to or for the resale or distribution thereof
except as permitted under the Registration Statement or as
otherwise permitted under the Securities Act.
(b) Holder understands that it may sell or otherwise transfer the
Preferred or the shares issuable on conversion of the Preferred
only if such transaction is duly registered under the Securities
Act, under the Registration Statement or Rule 144 or otherwise,
or if Holder shall have received the favorable opinion of counsel
to the holder, which opinion shall be reasonably satisfactory to
counsel to the Company, to the effect that such sale or other
transfer may be made in the absence of registration under the
Securities Act, and registration or qualification in every
applicable state. The certificates representing the aforesaid
securities will be legended to reflect these restrictions, and
stop transfer instructions will apply. Holder realizes that the
Preferred are not a liquid investment.
(c) Holder has not relied upon the advice of a "Purchaser
Representative" (as defined in Regulation D of the Securities
Act) in evaluating the risks and merits of this investment.
Holder has the knowledge and experience to evaluate the Company
and the risks and merits relating thereto.
(d) Holder represents and warrants that Holder is an "accredited
investor" as such term is defined in Rule 501 of Regulation D
promulgated pursuant to the Securities Act, and shall be such on
the date any Preferred are issued to the holder; Holder
acknowledges that Holder is able to bear the economic risk of
losing Holder's entire investment in the shares and understands
that an investment in the Company involves substantial risks;
Holder has the power and authority to enter into this agreement,
and the execution and delivery of, and performance under this
agreement shall not conflict with any rule, regulation, judgment
or agreement applicable to the Holder; and Holder has invested in
previous transactions involving restricted securities. Holder has
had the opportunity to discuss the Company's affairs with the
Company's officers.
9. Fee. Concurrently herewith, the Company is paying to Oscar D. Folger,
as counsel to certain Purchasers, a fee in the amount of $15,000.
10. Hedging Transactions. Nothing contained herein shall limit the right
of Holder, to the extent permitted by law, to engage in hedging, short sale and
similar transactions in securities of the Company. The Holder represents that
Holder has no current short position in securities of the Company.
11. Miscellaneous.
<PAGE>
(a) This Agreement may not be changed or terminated except by written
agreement. It shall be binding on the parties and on their
personal representatives and permitted assigns. It sets forth all
agreements of the parties, and may be signed in counterparts. It
shall be enforceable by decrees of specific performance (without
posting bond or other security) as well as by other available
remedies. This Agreement shall be governed by, and construed in
accordance with, the laws of Delaware. The federal and state
courts sitting in Boston, Massachusetts shall have exclusive
jurisdiction over all matters relating to this Agreement. Trial
by jury is expressly waived.
(e) All notices, requests, service of process, consents, and other
communications under this Agreement shall be in writing and shall
be deemed to have been delivered (i) on the date personally
delivered or (ii) one day after properly sent by recognized
overnight courier, addressed to the respective parties at their
address set forth in this Agreement or (iii) on the day
transmitted by facsimile so long as a confirmation copy is
simultaneously forwarded by recognized overnight courier, in each
case addressed to the respective parties at their address set
forth in this Agreement. Either party hereto may designate a
different address by providing written notice of such new address
to the other party hereto as provided above.
12. Except as otherwise set forth herein, each party hereto shall be
responsible for its own expenses with regard to the negotiation and execution of
this Agreement.
Dated: March 20, 1998
HOLDER:
Signature: _________________________
Type or print name: ________________
Address: ___________________________
Fax No.
Social Security No or EIN: _______________
Number of shares of Preferred: ____________
AGREED:
NEXAR TECHNOLOGIES, INC.
BY_______________________
<PAGE>
EXHIBIT 1
Certificate of Designation
NEXAR TECHNOLOGIES, INC.
There is hereby created a series of the Preferred Stock of this corporation
to consist of 32,000 of the shares of Series B Convertible Preferred Stock, $.01
par value per share, which this corporation now has authority to issue.
1. The distinctive designation of the series shall be "Series B
Convertible Preferred Stock" (the "Preferred Stock" or the "Series B Preferred
Stock"). The number of shares of Series B Convertible Preferred Stock shall be
32,000.
2. For purposes of this Certificate of Designation and the Company's
Certificate of Incorporation, (i) any series of Preferred Stock of the Company
entitled to dividends and liquidation preference on a parity with the Series B
Preferred Stock shall be referred to as "Parity Preferred Stock," (ii) any
series of Preferred Stock ranking senior to the Series B and Parity Preferred
Stock with respect to dividends and liquidation preference shall be referred to
as "Senior Stock," and (iii) the Common Stock and any series of Preferred Stock
ranking junior to the Series B and Parity Preferred Stock with respect to
dividends and liquidation preference shall be referred to as "Junior Stock." As
of the date of this Certificate of Designation there is not outstanding any
Parity Preferred Stock. Without limiting the generality of the foregoing, the
outstanding 45,684 shares of the Company's Convertible Preferred Stock are and
shall be Junior Stock.
3. In the event of any liquidation, dissolution or winding up of the
Company, either voluntary or involuntary, after setting apart or paying in full
the preferential amounts due to holders of Senior Stock, the holders of Series B
Preferred Stock and Parity Preferred Stock shall be entitled to receive, prior
and in preference to any distribution of any of the assets or surplus funds of
the Company to the holders of Junior Stock or Common Stock by reason of their
ownership thereof, an amount equal to their full liquidation preference, which
in the case of shares of Series B Preferred Stock shall be $100 per share, plus
accrued and unpaid dividends (the "Redemption Value"). If, upon such
liquidation, dissolution or winding-up of the Company, the assets of the Company
available for distribution to the holders of its stock be insufficient to permit
the distribution in full of the amounts receivable as aforesaid by the holders
of Preferred Stock and Parity Preferred Stock, then all such assets of the
Company shall be distributed ratably among the holders of Preferred Stock and
Parity Preferred Stock in proportion to the amounts which each would have been
entitled to receive if such assets were sufficient to permit distribution in
full as aforesaid. Neither the consolidation nor merger of the Company nor the
sale, lease or transfer by the Company of all or any part of its assets shall be
deemed to be a liquidation, dissolution or winding-up of the Company for the
purposes of this paragraph.
4. Certain Definitions and References
(a) The Preferred Stock is being issued under Private Placement
Purchase Agreements between the Company and the holders of the
Preferred Stock (each, a "Subscription Agreement").
<PAGE>
(b) The terms "Registration Statement" and "Closing Date" shall have
the meanings attributed thereto in the Subscription Agreement,
and the term "Effective Date" means the date on which the
Registration Statement shall be declared to be effective.
5. Dividends
(a) The holders of the Preferred Stock shall be entitled to receive
a dividend, payable in arrears quarterly on the last day of each
calendar quarter commencing with the calendar quarter which
begins on April 1, 1998 or on earlier conversion or redemption of
the Preferred Stock, which accrues from the date of issuance at
the annual rate of $5 per share, provided that the annual rate
shall be $18 during any First Delay Period and the annual rate
shall be $24 during any Extended Delay Period.
(i) The reference to the "First Delay Period" shall apply only
if the Effective Date has not occurred by the close of
business on June 30, 1998 and means the period which begins
on July 1, 1998 and ends on the earlier of August 31, 1998
or the Effective Date.
(ii) The reference to the "Extended Delay Period" shall apply
only if the Effective Date has not occurred by August 31,
1998 and means the period which begins on September 1, 1998
and ends on the Effective Date.
(b) The dividends shall be payable at the option of the Company
either in cash or in shares of Common Stock which on the date of
the dividend payment are convertible into shares of Common Stock
which have a value equal to the dividend, provided that dividends
may be paid in Common Stock only if the public sale thereof is
permitted under a then effective registration statement. The
value of each share of Common Stock for the purposes of any
dividend payment shall be equal to the average of the last
reported sales prices therefor on the NASDAQ National or Small
Cap Market on the last five trading days prior to the date of the
payment.
(c) Nothing in this Certificate shall limit any other remedies which
may be available to the Holder by reason of any delay in the
filing or the effectiveness of the Registration Statement.
6. Conversion
(a) The holder shall have the right at any time (whether before or
after the Effective Date or otherwise) in its sole discretion, to
convert the Preferred Stock, in whole or in part, into a number
of shares (the "Conversion Shares") of the Company's common stock
(the "Common Stock") equal to $100 per share converted divided by
the Conversion Price. The Conversion Price means the lesser of
(1) $3.25 or (2) 75% of the average of the closing bid price of a
share of Common Stock of the Company during the five trading days
prior to such conversion.
<PAGE>
(b) In the event that the holder elects to exercise its conversion
rights hereunder, it shall give to the Company written notice (by
fax or overnight courier service or personal delivery) of such
election and shall surrender his Preferred Stock to the Company
for cancellation. Conversion shall be effective upon the giving
of such notice provided that the certificate for the converted
Preferred Stock is received by the Company within three days
thereafter. The Company shall, within three business days after
receipt by the Company of notice of conversion and the Preferred
Stock being converted, deliver irrevocable instructions to its
transfer agent (with a copy to Holder) to DWAC the shares of
Common Stock issuable on such conversion. In addition to, and
without limiting any other remedy available to Holder for any
breach by the Company of its obligation timely to DWAC shares
upon conversion as aforesaid , (1) Holder shall be entitled at
its option by notice to rescind any such conversion, and (2) the
Company shall forthwith upon Holder's demand from time to time or
times pay to Holder $50 per share for each day of delay in
fulfilling such obligation. Such obligation to pay such amount
shall accrue interest, payable on demand, at the rate of 11% per
annum.
(c) The Preferred Stock shall on March 1, 2000 automatically convert
into Common Stock at the then Conversion Price, provided that
such conversion shall occur on such date only if the Company's
listing on the NASDAQ Small Cap or National Market has then been
in effect at all times from and after January 1, 1999, and only
if all of the Common Stock issuable upon conversion of the
Preferred Stock may then be resold publicly pursuant to an
effective registration statement under the Securities Act of 1933
or under Rule 144 thereunder. If by reason of the proviso in the
preceding sentence the Preferred Stock shall not convert
automatically on March 1, 2000, the Holder may, in addition to
such Holder's other remedies, by written notice to the Company,
require the Company forthwith to redeem the Preferred Stock at a
redemption price equal to $100 per share plus accrued dividends.
The redemption price shall accrue interest payable on demand at
the rate of 15% per annum.
(d) The Company shall reserve for issuance on conversion and exercise
of the Preferred Stock and the Warrant (as defined in the
Subscription Agreement) the number of shares of Common Stock
which would be issuable under the Preferred Stock if converted at
a Conversion Price of $1.50, and shall reserve additional shares
as requisite should the Conversion Price decline below $1.50. The
Company shall use its diligent efforts promptly to list on NASDAQ
all shares of Common Stock which are issued upon conversion of
the Preferred Stock.
(e) The Preferred Stock shall be convertible at any time only to the
extent that Holder would not as a result of such exercise (and
after giving effect to any shares or warrants or other securities
owned by Holder) beneficially own more that 9.99% of the then
outstanding Common Stock. Beneficial ownership shall be defined
in accordance with Rule 13d-3 under the Securities Exchange Act
of 1934. The opinion of counsel to Holder shall
<PAGE>
prevail in the event of any dispute on the calculation of
Holder's beneficial ownership.
(f) If any consolidation or merger of the Company into another
corporation which has a market capitalization of not less than
$75 million, or the sale or conveyance of all or substantially
all of its assets to any such corporation, shall be effected,
then, at the election of the Company, exercisable by notice (an
"Automatic Conversion Notice") to the Holder given not later than
the 20/th/ business day prior to the consummation of such
transaction, the Preferred Stock shall be deemed automatically
converted immediately prior to the consummation of such
transaction as provided above, provided that:
(i) cash shall be payable in respect of the Company's common
stock in the transaction or the securities issuable in
respect of the Company's common stock in the transaction
shall be immediately freely and publicly tradeable; and
(ii) the Company shall give to the holders of the Preferred Stock
not less than 20 days' prior written notice of such
transaction. For purposes of this Section, "market
capitalization" shall mean the product of the number of
outstanding shares of the other corporation's stock
multiplied by the average of the closing bid prices for the
other corporation's stock (as quoted on a national
securities exchange or on NASDAQ) during the 20 trading days
prior to the measurement date.
(b) If the Company does not timely give an Automatic Conversion
Notice in respect of a transaction referred to above, or if any
other consolidation, merger or sale shall be effected, or if any
capital reorganization or reclassification of the Common Stock
shall be effected, then, as a condition precedent of such
transaction, appropriate provision shall be made to the end that
conversion rights hereunder (including, without limitation,
provisions for appropriate adjustments) shall thereafter be
applicable, as nearly as may be practicable in relation to the
kind of stock, securities or assets which are deliverable in
respect of Common Stock upon the consummation of such
transaction, to the end that the Holder shall have the right to
receive upon conversion the kind of shares of capital stock or
other securities or property which such Holder would have been
entitled to receive upon or as a result of such transaction had
the Preferred Stock been converted immediately prior to such
event.
(c) The Company covenants to call a special or annual meeting of
shareholders which will be held on or before June 30, 1998 and at
which the Company's shareholders will be asked to approve the
issuance of shares on conversion of the Preferred Stock and
Warrants issued to the Purchasers (each such terms as defined in
the Subscription Agreement). The Board of Directors of the
Company will recommend that the shareholders of the Company vote
in favor of such approval. Until such approval is obtained, the
maximum number of shares which will be issued
<PAGE>
on conversion of the Preferred Stock and exercise of the Warrants
is 2,001,810, issuable on a first converted-first exercised
basis. Should such approval not be obtained by the close of
business on June 30, 1998, then until such approval is obtained,
the Company shall on demand by Holder made at any time or times
redeem any portion of the Preferred Stock designated by Holder
for redemption (the "Redeemed Portion") at a redemption price per
share equal to $125 plus accrued dividends. The redemption price
shall be payable within five business days after demand for
redemption is made, and shall accrue interest payable on demand
at 11% per annum. The Holders of shares of common stock issued on
conversion of the Preferred Stock shall not vote their shares of
common stock at the meeting aforesaid.
7. Purchase for Investment. The Holder, by acceptance of shares of
Preferred Stock, acknowledges that the Preferred Stock (and the Common Stock
into which the Preferred Stock is convertible) has not been registered under the
Act, covenants and agrees with the Company that such Holder is taking and
holding the Preferred Stock (and the Common Stock into which the Preferred Stock
is convertible) for investment purposes and not with a view to, or for sale in
connection with, a distribution thereof and that the Preferred Stock (and the
Common Stock into which the Preferred Stock is convertible) may not be assigned,
hypothecated or otherwise disposed of in the absence of an effective
registration statement under the Act or an opinion of counsel for the Holder,
which counsel shall be reasonably satisfactory to the Company, to the effect
that such disposition is in compliance with the Act, and represents and warrants
that such Holder is an "accredited investor" that such Holder has, or with its
representative has, such knowledge and experience in financial and business
matters to be capable of evaluating the merits and risks in respect of this
Preferred Stock (and the Common Stock into which the Preferred Stock is
convertible) and is able to bear the economic risk of such investment.
8. The Company covenants and agrees that all shares of Common Stock which
may be issued upon conversion of this Preferred Stock will, upon issuance, be
duly and validly issued, fully paid and non-assessable and no personal liability
will attach to the holder thereof.
9. Certain Events of Mandatory Redemption.
(a) An "event of redemption" with respect to this Preferred Stock
shall exist if any of the following shall occur, if:
(i) The Company shall breach or fail to comply with any provision of
this Preferred Stock and such breach or failure shall continue
for 15 days after written notice by any Holder of any Preferred
Stock to the Company.
(ii) A receiver, liquidator or trustee of the Company or of a
substantial part of its properties shall be appointed by court
order and such order shall remain in effect for more than 15
days; or the Company shall be adjudicated bankrupt or insolvent;
or a substantial part of the property of the Company shall be
sequestered by court order and such order shall remain in effect
for more than 15 days; or a petition to reorganize the Company
under any bankruptcy, reorganization or insolvency law shall be
filed against the Company and shall not be dismissed within 45
days after such filing.
<PAGE>
(iii) The Company shall file a petition in voluntary bankruptcy or
request reorganization under any provision of any bankruptcy,
reorganization or insolvency law, or shall consent to the filing
of any petition against it under any such law.
(iv) The Company shall make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts
generally as they become due, or consent to the appointment of a
receiver, trustee or liquidator of the Company, or of all or any
substantial part of its properties.
(b) If an event of redemption shall occur, the Holder may, in
addition to such Holder's other remedies, by written notice to
the Company, require the Company forthwith to redeem the
Preferred Stock at a redemption price equal to $100 per share
plus accrued dividends. The redemption price shall accrue
interest payable on demand at the rate of 15% per annum.
10. Without the consent of a majority in interest of the holders of the
Preferred Stock, the Company shall not create any class of equity security which
is senior to or on parity with the Preferred Stock in liquidation rights, other
than in connection with the sale of shares to existing stockholders of the
Company; or to an entity whose relationship with the Company creates intangible
value for the Company; or to fund merger and/or acquisition related activity.
11. All share, redemption and similar amounts are subject to appropriate
adjustment in the event of stock splits, stock dividends, recapitalization and
similar events.
12. The Preferred Stock shall have no voting rights except as otherwise
required by law.
13. Miscellaneous.
(a) All notices and other communications required or permitted to be
given hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in
person, by telegram, by facsimile, recognized overnight mail
carrier, telex or other standard form of telecommunications, or
by registered or certified mail, postage prepaid, return receipt
requested, addressed as follows: (a) if to the Holder, to such
address as such Holder shall furnish to the Company in accordance
with this Section, or (b) if to the Company, to it at its
headquarters office, or to such other address as the Company
shall furnish to the Holder in accordance with this Section.
(b) The waiver of any event of default or the failure of the Holder
to exercise any right or remedy to which it may be entitled shall
not be deemed a waiver of any subsequent event of default or of
the Holder's right to exercise that or any other right or remedy
to which the Holder is entitled.
(c) The Holder shall be entitled to recover its legal and other costs
of collecting on the Preferred Stock, and such costs shall accrue
interest, payable on demand, at the rate of 15% per annum.
In addition to all other remedies to which the Holder may be entitled
hereunder, Holder shall also be entitled to decrees of specific performance
without posting bond or other security.
<PAGE>
Exhibit 2A, 2B and 2C
[Note that all exhibits are identical except as set forth in Section 1 regarding
the exercise price]
Neither this Warrant nor the shares of Common Stock issuable on exercise of
this Warrant have been registered under the Securities Act of 1933. None of such
securities may be transferred in the absence of registration under such Act or
an opinion of counsel to the effect that such registration is not required.
NEXAR TECHNOLOGIES, INC.
WARRANT
DATED:
Number of Shares:
Holder:
Address:
_______________________________
1. THIS CERTIFIES THAT the Holder is entitled to purchase from NEXAR
TECHNOLOGIES, INC., a Delaware corporation (hereinafter called the
"Company"), the number of shares of the Company's common stock ("Common
Stock") set forth above, at an exercise price per share equal to
1.1.1. [For Exhibit A] $4.00
1.1.2. [For Exhibit B] $4.25
1.1.3. [For Exhibit C] $4.75
2. All rights granted under this Warrant shall expire on the fourth
anniversary of the date of issuance of this Warrant, provided that this
Warrant may expire earlier as provided in Section 3.
3. Early Expiration.
3.1. The following terms shall have the following definitions:
3.1.1. Effective Date means the date of the effectiveness of the
registration statement (the "Registration Statement") referred
to in a Private Placement Purchase Agreement dated as of the
date of this Warrant.
3.1.2. The "30-day Price" means the closing bid price (on NASDAQ or
such other securities exchange where the common stock may then
be listed) of the Common Stock in a period of 30 consecutive
trading days (the "Test Period") which begins after the
Effective Date and through which the Registration Statement
continues to be effective.
<PAGE>
3.2. If any 30-day Price is not less than $7 per share in any Test Period,
then, upon notice given by the Company within 10 days after the end of such Test
Period, this Warrant shall expire.
4. This Warrant may be exercised in whole or in part at any time prior to
expiration.
5. Notwithstanding anything to the contrary contained herein, Holder shall not
have the right to exercise this Warrant so long as and to the extent that
at the time of such exercise, such exercise would cause the Holder then to
be the "beneficial owner" (as defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended) of 10% or more of the Company's then
outstanding Common Stock. The opinion of counsel to Holder shall prevail in
the event of any dispute on the calculation of Holder's beneficial
ownership.
6. This Warrant and the Common Stock issuable on exercise of this Warrant (the
"Underlying Shares") may be transferred, sold, assigned or hypothecated in
whole or in part, only if registered by the Company under the Securities
Act of 1933, as amended (the "Act"), or if the Company has received from
counsel to the Holder a written opinion to the effect that registration of
the Warrant or the Underlying Shares is not necessary in connection with
such transfer, sale, assignment or hypothecation. The Warrant and the
Underlying Shares shall be appropriately legended to reflect this
restriction and stop transfer instructions shall apply. The Holder shall
through its counsel provide such information as is reasonably necessary in
connection with such opinion. Notwithstanding the above, this Warrant may
only be transferred to a transferee that is, and has complied with the
requirements of, a "permitted transferee" (as defined in the Subscription
Agreement).
7. The holder of this Warrant is entitled to certain registration rights under
an Agreement dated of even date herewith (the "Subscription Agreement").
Upon each permitted transfer of this Warrant after the registration
statement has been declared effective, the Company will within ten business
days after receipt of notice thereof supplement the registration statement
to reflect the name of the transferee as a selling shareholder thereunder.
8. The Company covenants to call a special or annual meeting of shareholders
which will be held on or before June 30, 1998 and at which the Company's
shareholders will be asked to approve the issuance of shares on conversion
of the Warrants and the Preferred Stock issued to the Purchasers (each such
terms as defined in the Subscription Agreement). The Board of Directors of
the Company will recommend that the shareholders of the Company vote in
favor of such approval. Until such approval is obtained, the maximum number
of shares which will be issued on conversion of the Preferred Stock and
exercise of the Warrants is 2,001,810, issuable on a first converted-first
exercised basis. Should such approval not be obtained by the close of
business on June 30, 1998, then until such approval is obtained, the
Company shall on demand by Holder made at any time or times redeem any
portion of the Warrants designated by Holder for redemption (the "Redeemed
Portion") at a redemption price per share equal to the pre-tax profit
Holder would have earned had Holder, at the close of business on the date
of its demand for redemption, exercised the Redeemed Portion and
simultaneously sold the shares received on such exercise at the closing
NASDAQ sales price on such date. The redemption price shall be payable
within five business days after demand for redemption is made, and shall
accrue interest payable on demand at 11% per annum.
<PAGE>
The Holders of shares of common stock issued on conversion of the Warrants
shall not vote such shares of common stock at the meeting aforesaid.
9. Any permitted assignment of this Warrant shall be effected by the Holder by
(i) executing a standard form of assignment, (ii) surrendering the Warrant
for cancellation at the office of the Company, accompanied by the opinion
of counsel to the Holder referred to above; and (iii) unless in connection
with an effective registration statement which covers the sale of this
Warrant and or the shares underlying the Warrant, delivery to the Company
of a statement by the transferee (in a form acceptable to the Company and
its counsel) that transferee is, and has complied with the requirements of,
a "permitted transferee" (as defined in the Subscription Agreement).
10. The transferor will pay all relevant transfer taxes. Replacement warrants
shall bear the same legend as is borne by this Warrant.
11. The term "Holder" should be deemed to include any permitted transferee of
record of this Warrant.
12. Reservation of Shares. The Company covenants and agrees that all shares of
Common Stock which may be issued upon exercise hereof will, upon issuance,
be duly and validly issued, fully paid and non-assessable and no personal
liability will attach to the holder thereof. The Company further covenants
and agrees that, during the periods within which this Warrant may be
exercised, the Company will at all times have authorized and reserved a
sufficient number of shares of Common Stock for issuance upon exercise of
this Warrant and all other Warrants.
13. This Warrant shall not entitle the Holder to any voting rights or other
rights as a stockholder of the Company.
14. In the event that as a result of reorganization, merger, consolidation,
liquidation, recapitalization, stock split, combination of shares or stock
dividends payable with respect to such Common Stock, the outstanding shares
of Common Stock of the Company are at any time increased or decreased or
changed into or exchanged for a different number or kind of share or other
security of the Company or of another corporation, then appropriate
adjustments in the Exercise Price and in the number and kind of such
securities then subject to this Warrant shall be made effective as of the
date of such occurrence so that the position of the Holder upon exercise
will be the same as it would have been had it owned immediately prior to
the occurrence of such events the Common Stock subject to this Warrant.
Such adjustment shall be made successively whenever any event listed above
shall occur and the Company will notify the Holder of the Warrant of each
such adjustment. Any fraction of a share resulting from any adjustment
shall be eliminated and the price per share of the remaining shares subject
to this Warrant adjusted accordingly.
15 The rights represented by this Warrant may be exercised at any time within
the period above specified by faxed notice of exercise which is followed
within three business days by (i) surrender of this Warrant at the
principal executive office of the Company (or such other office or agency
of the Company as it may designate by notice in writing to the Holder at
the address of the Holder appearing on the books of the Company); (ii)
payment to the Company by wire transfer or certified or bank check of the
exercise price for the number of shares of common stock specified in the
above-mentioned purchase
<PAGE>
form together with applicable stock transfer taxes, if any; and (iii)
unless in connection with an effective registration statement which covers
the sale of the shares underlying the Warrant, the delivery to the Company
of a statement by the Holder (in a form acceptable to the Company and its
counsel) that such shares are being acquired by the Holder for investment
and not with a view to their distribution or resale (unless such
distribution or resale is permitted under the Act) and of an opinion of
Holder's counsel if reasonably requested by the Company. Notwithstanding
the above, unless in connection with an effective registration statement
which covers the sale of the shares underlying the Warrant, such shares may
only be transferred to a transferee that is, and has complied with the
requirements of, a "permitted transferee" (as defined in the Subscription
Agreement).
16. Within five business days following exercise of this Warrant or any part of
this Warrant (inclusive of payment of the exercise price therefor and
delivery of the documents required above in connection therewith), the
Company shall deliver to Holder, or, at Holder's request, DWAC,
certificates evidencing the shares of Common Stock so purchased. Such
certificates shall bear appropriate restrictive legends in accordance with
applicable securities laws, but shall be unrestricted and bear no legends
once the registration statement referred to above has been declared
effective. In the event the Company breaches its obligation timely to
deliver shares of common stock on conversion, then, without limiting
Holder's other rights and remedies, the Company shall forthwith pay to the
Holder an amount accruing at the rate of $1,000 per day for each day of
such breach for each 20,000 shares of common stock subject to this Warrant,
with pro rata payments for shares in an amount less than 20,000.
17. This Warrant shall be governed by and construed in accordance with the laws
of the State of Delaware. The federal and state courts in Boston,
Massachusetts shall have exclusive jurisdiction over this instrument and
the enforcement thereof. Service of process shall be effective if by
certified mail, return receipt requested. All notices shall be in writing
and shall be deemed given upon receipt by the party to whom addressed.
This instrument shall be enforceable by decrees of specific performances
well as other remedies.
<PAGE>
IN WITNESS WHEREOF, Nexar Technologies, Inc. has caused this Warrant to be
signed by its duly authorized officers under Its corporate seal, and to be dated
as of the date set forth above.
NEXAR TECHNOLOGIES, INC.
By__________________________
<PAGE>
Nexar Technologies, Inc.
257 Turnpike Road
Southborough, MA 01772
re: Purchase of Securities
Mueller & Company, Inc.
Adar Equities, Inc.
Gentlemen:
1. Reference is made to a Private Placement Purchase Agreements (each, an
"Agreement") dated as of this date by and among certain purchasers and Nexar
Technologies, Inc. (the "Company"). Capitalized terms used herein have the
meanings attributed thereto in the Agreements.
2. The Company confirms to you (the "Finders") the Company's fee and
registration obligations to Finders referred to in the Agreements.
3. Should either Finder from time to time or times give to the Company
notice that it has assigned the Warrants or any portion thereof, the Company
shall, within ten business days after receipt of such notice as provided below,
file a supplement to the Registration Statement to reflect the name(s) of the
transferee(s) as a selling shareholder.
4. The Company's obligations under this Agreement and under the Warrants
shall not be subject to defense, offset or counterclaim for any matter or thing.
All claims by the Company against any holder of such securities shall be brought
by the Company in separate actions for monetary damages only, and injunctive
relief shall not be available.
5. Securities Representations.
(a) Each Finder represents and warrants that it is acquiring the
Warrants solely for investment solely for its own account and not
with a view to or for the resale or distribution thereof except
as permitted under the Registration Statement or as otherwise
permitted under the Securities Act.
(b) Each Finder understands that it may sell or otherwise transfer
the shares issuable on exercise of the Warrants only if such
transaction is duly registered under the Securities Act, under
the Registration Statement or otherwise, or if Finder shall have
received the favorable opinion of counsel to the holder, which
opinion shall be reasonably satisfactory to counsel to the
Company, to the effect that such sale or other transfer may be
made in the absence of registration under the Securities Act, and
registration or qualification in every applicable state. The
certificates representing the aforesaid securities will be
legended to reflect these restrictions, and stop transfer
instructions will apply. Finder realizes that the Warrants are
not a liquid investment.
(c) Neither Finder has relied upon the advice of a "Purchaser
Representative" (as defined in Regulation D of the Securities
Act) in evaluating the risks
<PAGE>
and merits of this investment. Each Finder has the knowledge and
experience to evaluate the Company and the risks and merits
relating thereto.
(d) Each Finder represents and warrants that such Finder is an
"accredited investor" as such term is defined in Rule 501 of
Regulation D promulgated pursuant to the Securities Act; Finder
acknowledges that Finder is able to bear the economic risk of
losing Finder's entire investment in the shares and understands
that an investment in the Company involves substantial risks;
Finder has the power and authority to enter into this agreement,
and the execution and delivery of, and performance under this
agreement shall not conflict with any rule, regulation, judgment
or agreement applicable to the Finder; and Finder has invested in
previous transactions involving restricted securities. Finder has
had the opportunity to discuss the Company's affairs with the
Company's officers.
6. Miscellaneous.
(a) This Agreement may not be changed or terminated except by written
agreement. It shall be binding on the parties and on their
personal representatives and permitted assigns. It sets forth all
agreements of the parties, and may be signed in counterparts. It
shall be enforceable by decrees of specific performance (without
posting bond or other security) as well as by other available
remedies. This Agreement shall be governed by, and construed in
accordance with, the laws of Delaware. The federal and state
courts sitting in Boston, Massachusetts shall have exclusive
jurisdiction over all matters relating to this Agreement. Trial
by jury is expressly waived.
(e) All notices, requests, service of process, consents, and other
communications under this Agreement shall be in writing and shall
be deemed to have been delivered (i) on the date personally
delivered or (ii) one day after properly sent by recognized
overnight courier, addressed to the respective parties at their
address set forth in this Agreement or (iii) on the day
transmitted by facsimile so long as a confirmation copy is
simultaneously forwarded by recognized overnight courier, in each
case addressed to the respective parties at their address set
forth in this Agreement. Either party hereto may designate a
different address by providing written notice of such new address
to the other party hereto as provided above.
7. Except as otherwise set forth herein, each party hereto shall be
responsible for its own expenses with regard to the negotiation and execution of
this Agreement.
Dated: ________________________
ADAR EQUITIES, LLC
By __________________________
<PAGE>
MUELLER & COMPANY, INC.
BY __________________________
AGREED:
NEXAR TECHNOLOGIES, INC.
BY_______________________
<PAGE>
McDermott, Will & Emery
75 State Street
Boston, Massachusetts 02109
Telephone 617\345-5000
Facsimile 617\345-5077
Exhibit 5.1
April 30, 1998
Nexar Technologies, Inc.
257 Turnpike Road
Southborough, Massachusetts 01772
Gentlemen:
This opinion is delivered to you in connection with a registration
statement on Form S-3 (the "Registration Statement") to be filed on or about May
1, 1998, by Nexar Technologies, Inc. (the "Company") under the Securities Act of
1933, as amended, for registration under said Act of 5,460,000 shares of Common
Stock, $0.01 par value per share (the "Common Stock") of the Company. Terms not
otherwise defined herein shall be deemed to have the meaning ascribed such term
in the Registration Statement.
In connection with rendering this opinion, we have examined such corporate
records, certificates and other documents as we have considered necessary for
the purposes of this opinion. In such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to the original documents of all documents
submitted to us as copies and the authenticity of the originals of such latter
documents. As to any facts material to our opinion, we have, when relevant
facts were not independently established, relied upon the aforesaid records,
certificates and documents.
Based upon the foregoing, we are of the opinion that the shares of Common
Stock issuable upon conversion of the Series B Preferred Stock will be legally
issued, fully paid and non-assessable, and the shares of Common Stock issuable
upon exercise of the Warrants will be, upon payment of the full consideration
therefor, legally issued, fully paid and non-assessable.
We hereby consent to be named in the Registration Statement and in any
amendments thereto as counsel for the Company, to the statements with reference
to our firm made in the Registration Statement, and to the filing and use of
this opinion as an exhibit to the Registration Statement.
Very truly yours,
McDermott, Will & Emery
<PAGE>
Exhibit 23.1
------------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 13, 1998 (except for Note 10
which is as of March 20, 1998) included in Nexar Technologies, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1997 and all references to
our firm included in this Registration Statement.
BDO Seidman, LLP
Boston, Massachusetts
April 28, 1998
<PAGE>
Exhibit 23.2
------------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in the Registration Statement on Form S-3 of Nexar Technologies,
Inc. of our report dated January 24, 1997 (except with respect to the matter
discussed in Note 10 as to which the date is February 28, 1997) on the financial
statements of Nexar Technologies, Inc. as of December 31, 1995 and 1996, and for
the period from inception (March 7, 1995) to December 31, 1995 and for the year
ended December 31, 1996 included in Nexar Technologies, Inc. Form 10-K for the
year ended December 31, 1997 and to all references to our firm included in the
Registration Statement. It should be noted that we have not audited any
financial statements of Nexar Technologies, Inc. subsequent to December 31,
1996.
Arthur Andersen LLP
Boston, Massachusetts
April 29, 1998
