<PAGE>
As filed with the Securities and Exchange Commission on September 23, 1998
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
REGISTRATION STATEMENT ON
FORM S-3
UNDER
THE SECURITIES ACT OF 1933
------------------------------------
IAT MULTIMEDIA, INC.
(Exact name of registrant as specified in its charter)
------------------------------------
Delaware 13-3920210
(State or other jurisdiction of (I.R.S. Employer I.D.
Incorporation) number)
------------------------------------
Geschaftshaus Wasserschloss
Aarestrasse 17
CH-5300 Vogelsang-Turgi, Switzerland
(011) (41) (56) 223-5022
(Address and telephone number of Registrant's principal executive offices)
------------------------------------
Klaus Grissemann, Chief Financial Officer
Geschaftshaus Wasserschloss
Aarestrasse 17
CH-5300 Vogelsang-Turgi, Switzerland
(011) (41) (56) 223-5022
(Name, address and telephone number of agent for service)
------------------------------------
Copies to:
Jill Cohen, Esq.
Bachner, Tally, Polevoy & Misher LLP
380 Madison Avenue
New York, New York 10017
(212) 687-7000
------------------------------------
Approximate date of proposed commencement of sale to public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), please 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 the earlier
registration statement for the same offering. [ ] ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
===============================================================================
<PAGE>
CALCULATION OF ADDITIONAL REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class Proposed Maximum Proposed Maximum
of Securities to be Amount Offering Price Aggregate Additional Amount of
Registered to be Registered (1)(2) Per Share (3) Offering Price (3) Registration Fee
---------- ----------------------- ------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value.................... 2,009,206 5.125 $10,297,180.75 $3,038
</TABLE>
(1) Registered for resale by certain stockholders of the Company.
(2) Also includes an indeterminate number of shares of Common Stock that
may become issuable to prevent dilution resulting from stock splits,
stock dividends and conversion price or exercise price adjustments,
which are included pursuant to Rule 416 under the Securities Act of
1933, as amended.
(3) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended,
based on the average of the high and low price of the Common Stock on
the Nasdaq National Market on September 21, 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
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to Completion, September 23, 1998
IAT MULTIMEDIA, INC.
2,009,206 shares of Common Stock
This Prospectus relates to the offer and sale from time to
time by the stockholders named herein (the "Selling Stockholders") of an
aggregate of 2,009,206 shares (the "Shares") of Common Stock, par value $.01
per share (the "Common Stock"), of IAT Multimedia, Inc. (the "Company"). The
Shares offered hereby are comprised of (i) 203,255 shares of Common Stock which
are issued and outstanding, (ii) 480,000 shares of Common Stock which are
issuable upon exercise of certain outstanding options ("Options"), (iii)
423,241 shares of Common Stock which are issuable upon exercise of certain
outstanding warrants ("Warrants") and (iv) 902,710 shares of Common Stock
(subject to adjustment based upon the market price of the Common Stock at the
time of conversion, see "Selling Stockholders") which are issuable upon
conversion of the Company's Series A Convertible Debentures (the "Debentures"),
including any accrued interest thereon. The Selling Stockholders may sell all
or a portion of the Shares from time to time after issuance in transactions on
the Nasdaq National Market or other exchanges or markets on which the Shares
may be traded, in the over-the-counter market, in negotiated transactions,
through the writing of options on the Shares or a combination of such methods
of sale or through other means. Sales may be effected at fixed prices that may
be changed, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices.
The Selling Stockholders may effect such transactions by
selling the Shares to or through broker-dealers (including broker-dealers which
may be affiliated with any such Selling Stockholder) and such broker-dealers
may receive compensation in the form of discounts, concessions or commissions
from the Selling Stockholders or the purchasers of the Shares for whom such
broker-dealers may act as agent or to whom they sell as principal or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions). See "Selling Stockholders" and "Plan of Distribution."
None of the proceeds from the sale of the Shares by the
Selling Stockholders will be received by the Company, although the Company
received $3,000,000 of loan proceeds from the sale of the Debentures and will
receive proceeds from the exercise of the Options and Warrants. The Company has
agreed to bear certain expenses in connection with the registration and sale of
the Shares being offered by the Selling Stockholders. The Company has agreed to
indemnify the Selling Stockholders against certain liabilities, including
certain liabilities under the Securities Act of 1933, as amended (the
"Securities Act").
The Common Stock is listed on the Nasdaq National Market
under the symbol "IATA". On September 22, 1998, the last sale price of the
Common Stock as reported on the Nasdaq National Market was $4.125 per share.
------------------------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS.
------------------------------------
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 ________ __ , 1998
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange
Commission (the "Commission"), Washington, D.C. a Registration Statement on
Form S-3 under the Securities Act covering the securities offered by this
Prospectus. This Prospectus does not contain all of the information set forth
in the Registration Statement and the exhibits thereto. Statements contained in
this Prospectus as to the contents of any contract or other document referred
to are not necessarily complete and in each instance such statement is
qualified by reference to each such contract or document filed (or incorporated
by reference) as an exhibit to the Registration Statement. 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 and other information with the Commission. Reports and other
information filed by the Company with the Commission can be inspected without
charge and copied at the public reference facilities maintained by the
Commission at the following addresses: New York Regional Office, Seven World
Trade Center, New York, New York 10048; and Chicago Regional Office, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained upon written request from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Information on the operation of the Public Reference Room may
be obtained by calling the Commission at 1-800-SEC-0330. The Commission
maintains a Web site at http://www.sec.gov that contains reports, proxy
statements and other information regarding issuers that file electronically
with the Commission. Reports and other information concerning the Company may
also be inspected at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The Common Shares are listed on the Nasdaq National Market under the
symbol "IATA". Certain information, reports and proxy statements of the Company
are also available for inspection at the offices of the Nasdaq National Market
Reports Section, 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No.
000-22101) pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, including any documents or portions thereof
incorporated by reference therein and all amendments thereto;
2. The Company's Quarterly Reports on Form 10-Q for the
periods ended March 31, 1998 and June 30, 1998;
3. The Company's Current Reports on Form 8-K dated March 5,
1998 and June 19, 1998, and on Form 8-K/A dated March 24, 1998;
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<PAGE>
4. The Company's Registration Statement on Form 8-A declared
effective on March 26, 1997, registering the Common Stock under the Exchange
Act; and
5. All documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of this offering, except the
Compensation Committee Report on Executive Compensation and the performance
graph included in the Proxy Statement filed pursuant to Section 14 of the
Exchange Act.
Any statement contained in any document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as 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 written or oral request of any such person, a copy of any or
all of the documents incorporated herein by reference (other than exhibits to
such documents which are not specifically incorporated by reference into such
documents). Requests for such documents should be directed to the Company,
Geschaftshaus Wasserschloss, Aarestrasse 17, CH- 5300 Vogelsang-Turgi,
Switzerland, Attention: Chief Financial Officer, telephone (011)(41) (56)
223-5022.
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<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements (including the notes thereto) appearing
elsewhere in this Prospectus or incorporated by reference herein. Investors
should also carefully consider the information set forth under the heading
"Risk Factors."
THE COMPANY
IAT Multimedia, Inc. (the "Company") markets high-performance personal
computers ("PCs") in Germany assembled according to customer specifications and
sold under the trade name "Trinology," as well as components and peripherals
for PCs. The Company's product line includes high-performance IBM-compatible
desktop PCs as well as components, such as motherboards, hard disks, graphic
cards and plug-in cards, and peripherals, such as printers, monitors and
cabinets, to its customers. The Company's clients include corporate customers,
such as industrial, pharmaceutical, service and trade companies, the military
and value-added resellers ("VARs"). Current customers of the Company include
BASF Germany, Bayer Leverkusen, Novartis Switzerland and the North Atlantic
Treaty Organization. The products of the Company are marketed directly through
its internal sales force to dealers and end-users and the Company also
maintains three retail showrooms and a mail-order department.
The Company works directly with a wide range of suppliers to evaluate
the latest developments in related technology and engages in extensive testing
to optimize the compatibility and speed of the components which are sold and
integrated into Trinology PCs. Components and peripherals used in Trinology PCs
and sold by the Company are manufactured by companies such as Actebis Computer
Handels GmbG, Peacock AG, CTX Computer GmbH, Ingram Micro GmbH, Iiyama, Asus
Computer GmbH, Yoku Computer Systems, Krystaltech, Matrox Electronic Systems
and US Robotics. The Company offers a comprehensive service and support program
to all end-users and the Company's Trinology PCs, components and peripherals
are delivered with warranties ranging from one to five years. The Company also
maintains a free service hotline providing operational and technical support
and a "support mailbox" for its customers, through which customers may send
inquiries to technical support personnel via computer.
The Company has also developed state-of-the-art, customizable
proprietary visual communications technology for multi-functional visual
communications systems, wavelet data compression/decompression software
technology for high-speed, high-quality still image transfer, and related
technology. The Company expects to receive licensing fees and royalty payments
from the licensing and sale of this technology. The Company intends to offer
products incorporating its visual communication system technology in Trinology
PCs.
The Company was incorporated in Delaware in September 1996 and
completed its initial public offering ("IPO") in March 1997. Unless the context
otherwise requires, the "Company" refers to the Company and (i) its majority
owned subsidiary FSE Computer-Handel GmbH & Co. KG, a German corporation
("FSE") and (ii) its wholly-owned subsidiaries IAT AG, a Swiss corporation
("IAT AG") and IAT Deutschland GmbH Interaktive Medien Systeme, a German
corporation ("IAT Germany").
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<PAGE>
RISK FACTORS
The securities offered hereby are highly speculative in nature and
involve a high degree of risk. Prior to making an investment decision,
prospective investors in the Company's securities should give careful
consideration to, among other things, the risk factors set forth below. This
Prospectus contains forward-looking statements within the meaning of the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.
Reference is made in particular to the description of the Company's plans and
objectives for future operations, assumptions underlying such plans and
objectives and other forward-looking terminology such as "may," "expects,"
"believes," "anticipates," "intends," "expects," "projects," or similar terms,
variations of such terms or the negative of such terms. Such forward-looking
statements are based on management's current expectations and are subject to a
number of factors and uncertainties which could cause actual results to differ
materially from those described in such forward-looking statements. The Company
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained herein to
reflect any change in the Company's expectations with regard thereto or any
changes in events, conditions or circumstances on which any such statement is
based. Factors which could cause such results to differ materially from those
described in the forward-looking statements include, amongst other items, those
set forth herein under "Risk Factors."
HISTORY OF OPERATING LOSSES. The Company has experienced significant
operating losses since inception and, at June 30, 1998, had an accumulated
deficit of approximately $20.2 million. For the year ended December 31, 1997
and the six months ended June 30, 1998, the Company incurred operating losses
of approximately $7.1 million and $746,000, respectively. In the year ended
December 31, 1997, the Company made significant expenditures of approximately
$2.4 million for the research and development of its technology. In March 1998,
the Company transferred substantially all of the assets and liabilities of its
research and development subsidiaries (the "Spinoffs") to two newly formed
corporations (the "Spinoff Entities"). In connection with the Spinoffs, the
Company contributed an aggregate of approximately $650,000 to the Spinoff
Entities, made loans of approximately $800,000 to the Spinoff Entities,
incurred expenses of approximately $400,000, received approximately a 15%
interest in each of the Spinoff Entities and granted a royalty bearing license
of the Company's visual communications technology to the Spinoff Entities. As a
result of the Spinoffs, substantially all of the Company's revenues are
generated from the sale and distribution of the Company's Trinology PCs and PC
components and peripherals through its FSE subsidiary which was acquired by the
Company in November 1997. Although FSE has been selling its products for
several years and has generated profits, it is subject to significant price
competition which substantially adversely affects profit margins and there can
be no assurance that it will continue to achieve profitability or that any
potential increase in sales or revenue will not be offset by devaluations of
the Deutsche Mark against the U.S. dollar. In addition, the Company's strategy
is growth through acquisitions. In connection with the FSE acquisition, the
Company incurred approximately $3.6 million of goodwill which is being
amortized over 10 years, resulting in annual expense of approximately $358,000
and, as the Company acquires additional businesses, the Company may incur
significant charges for depreciation and amortization which could adversely
affect the Company's future results of operations and may result in increased
net losses. There can be no assurance that the Company will ever achieve or
sustain profitability. See "--Limited History of Combined Operations; New
Business Activities" and "-- Risks Relating to Acquisitions and Managing
Growth; Future Charges to Operations and Losses; Need for Additional Funds."
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<PAGE>
LIMITED HISTORY OF COMBINED OPERATIONS; NEW BUSINESS ACTIVITIES. Prior
to the acquisition of FSE in November 1997, the Company's sole business was
developing and marketing visual communications technology and related products.
The sale and distribution of PCs and related hardware and software is a new
business for the Company and its management group and, accordingly, the Company
and its management group has only limited experience operating FSE's business.
Although the management personnel at FSE was retained by the Company in
connection with the FSE acquisition, there can be no assurance that the Company
will be able to retain such individuals or that the Company's management group
will be successful in managing the Company's new business. The failure of the
Company's management group to successfully manage this business would have a
material adverse effect on the Company's business, financial condition and
results of operations.
RISKS RELATING TO ACQUISITIONS AND MANAGING GROWTH; FUTURE CHARGES TO
OPERATIONS AND LOSSES; NEED FOR ADDITIONAL FUNDS. An integral part of the
Company's business strategy is growth through acquisitions. The acquisition of
FSE was the Company's first acquisition, and, therefore the Company has limited
experience in integrating and managing a new business. The Company's
acquisition strategy presents risks that could materially adversely affect the
Company's business and financial performance, including the diversion of
management's attention, the assimilation of the operations and personnel of the
acquired business, the contingent and latent risks associated with the past
operations of and other unanticipated problems arising in the acquired business
and increased competition for acquisition opportunities. As part of its
business strategy, the Company may seek opportunities to expand the marketing
and sale of its products into markets in the United States. In the event the
Company expands into the United States, it will face substantial increased
competition from companies with substantially greater name recognition and
marketing and other resources than the Company. In addition, the Company would
be required to make substantial expenditures for, among other things, marketing,
office space, sales and marketing personnel and other employees in the United
States. The Company's executive officers have no experience operating a
business in the United States, and would need to hire additional executive
officers in the United States. As the Company expands through acquisitions, the
Company will be required to hire and retain additional management and
administrative personnel and develop and expand operational systems to support
its growth. This growth will continue to place significant demands on the
Company's management, technical, financial and other resources. In addition,
there can be no assurance that the Company will be able to acquire additional
businesses on terms favorable to the Company, that the operations of any such
businesses can be successfully integrated into the Company's business, that any
anticipated benefits of completed acquisitions will be realized, or that there
will not be substantial unanticipated costs associated with such acquisitions.
The failure to manage growth effectively could have a material adverse effect
on the Company's business, financial condition and results of operations.
Based upon the Company's current level of operations, management
believes that existing cash resources and cash flow expected to be generated
from operations will be sufficient to meet the Company's capital requirements
for approximately the next 12 months, depending on cash requirements for future
acquisitions. Although the Company intends to use existing cash resources and
cash flow expected to be generated from operations for future acquisitions, it
may require additional funds for additional acquisitions and integration and
management of acquired businesses. As the Company acquires additional
businesses, the Company may incur significant charges for depreciation and
amortization and, to the extent financed through borrowing, interest expense
which could further adversely affect the Company's future results of operations
and may result in increased
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<PAGE>
net losses. The Company is evaluating and is in various stages of discussions
in connection with the potential acquisition of assets or equity of certain
related businesses. However, the Company has no agreements or arrangements with
respect to any particular acquisitions. Accordingly, there can be no assurance
that the Company will be able to acquire the assets or capital stock of or
profitably integrate and operate any other businesses that may be acquired in
the future.
COMPETITION. The German PC industry is highly competitive, especially
with respect to pricing and the introduction of new products and features. The
Company and its competitors compete primarily on the basis of adding new
performance features without corresponding price increases. There can be no
assurance that the Company will continue to compete successfully by introducing
products or performance features on a timely basis, or by adding new features
to its products without corresponding increases in prices. Furthermore, in
recent years the Company and many of its competitors regularly have lowered
prices, and the Company expects these pricing pressures to continue. If these
pricing pressures are not mitigated by increases in volume, cost reductions or
changes in product mix, the Company's revenues and profits could be
substantially reduced. Many of the Company's current and potential competitors
have significantly longer operating histories and/or significantly greater
managerial, financial, marketing, technical and other competitive resources, as
well as greater name recognition, than the Company. As a result, the Company's
competitors may be able to adapt more quickly to new or emerging technologies
and changes in customer requirements, may be able to devote greater resources
to the promotion and sale of their products and services and may be able to
respond more effectively to pricing pressures, all of which could have a
material adverse effect on the Company's business, financial condition and
results of operations. The Company also competes with other PC direct marketers
as well as with PC manufacturers that market their products in distribution
channels in which the Company has not participated. There can be no assurance
that the Company will be able to compete successfully with existing or new
competitors. In addition, competition could increase if new companies enter the
market, if existing competitors expand their service offerings or if the
Company expands into new markets. An increase in competition could result in
material price reductions or loss of market share by the Company and could have
a material adverse effect on the Company's business, financial condition and
results of operations. See "-- Dependence on New Products and Rapidly
Developing Technologies."
SUBSTANTIAL INDEBTEDNESS; EFFECT OF FINANCIAL LEVERAGE. As of June 30,
1998, the Company's consolidated indebtedness was approximately $4.1 million,
representing approximately 24.8% of the Company's total capitalization. The
Company's debt instruments do not limit the incurrence of additional debt by
the Company and its subsidiaries. The Company's indebtedness as of
September 17, 1998, consisted of borrowings under bank lines of credit in the
aggregate amount of approximately $700,000 which are due on demand and are
secured by the Company's accounts receivable and stockholder loans in the
aggregate amount of approximately $1.0 million and convertible debentures in
the aggregate amount of $3.0 million issued in connection with a private
placement by the Company in June 1998 (the "Private Placement"), both of which
are unsecured. In the event the Company defaults under any of its debt
instruments or if the Company's creditors demand payment of a portion or all of
the indebtedness of the Company, the Company may not have sufficient funds
available to make such payments and failure to repay such indebtedness would
have a material adverse effect on the Company's business, financial condition
and results of operations.
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<PAGE>
The degree to which the Company is leveraged could have additional
material consequences to the Company and the holders of shares of Common Stock,
including, but not limited to, the following: (i) the Company's ability to
obtain additional financing in the future for acquisitions, working capital,
capital expenditures, general corporate or other purposes may be impaired and
(ii) the Company will be more vulnerable to economic downturns, less able to
withstand competitive pressures and less flexible in reacting to changes in its
industry and general economic conditions. Certain of the Company's competitors
operate on a less leveraged basis, and have significantly greater operating and
financial flexibility than the Company.
DEPENDENCE ON KEY PERSONNEL. The Company's success depends upon the
contributions of its current executive officers, including Jacob Agam, the
Company's Chairman and Chief Executive Officer, as well as principal members of
its management team. The Company has not entered into an employment agreement
with Mr. Agam, who devotes only a portion of his time to the Company. There can
be no assurance that any of the Company's management personnel, including Mr.
Agam, will continue to devote sufficient time to the Company's business. The
loss of services of, or a material reduction in the amount of time devoted to
the Company by, such individuals could adversely affect the Company's business.
DEPENDENCE ON NEW PRODUCTS AND RAPIDLY DEVELOPING TECHNOLOGIES. The PC
industry is characterized by short product life cycles resulting from rapid
changes in technology and consumer preferences and declining product prices. To
maintain its competitive position in the PC industry, the Company must continue
to introduce new products and features that address the needs and preferences
of its target consumer markets. There can be no assurance that the Company will
be able to compete successfully by introducing products or features on a timely
basis, that the introduction of new products or features by the Company's
competitors will not adversely affect the sale of the Company's products or
that the Company will be able to adapt to future changes in the PC industry.
Although the Company does not conduct internal research and development, the
Company works closely with PC component suppliers and other technology
developers to evaluate the latest developments in PC-related technology. There
can be no assurance that the Company will continue to have access to new
technology, will be successful in incorporating such new technology in its
products or will be able to deliver commercial quantities of new products or
features in a timely manner.
SUPPLY RISK. The Company requires a high volume of quality PC
components and peripherals for integration into its Trinology PCs and sale to
its customers. The Company does not maintain any supplier contracts and
generally uses one or two suppliers for certain components. Although the
Company believes that suitable alternative suppliers are available for the
components and peripherals it utilizes in its Trinology PCs and sells to its
customers, the PC industry periodically experiences shortages of certain
components and peripherals. Many of the suppliers that the Company relies upon
for PC components and peripherals are located in countries outside of Germany.
The availability of such PC components and peripherals is affected by factors
such as world-wide demand for components and peripherals, seasonal reductions
in business activities and political and economic downturns in the countries in
which such suppliers are located. The Company's inability to obtain key
components or peripherals in a timely manner could have a material adverse
effect on the Company's business, financial condition and results of
operations.
LIMITED PROPRIETARY PROTECTION. The Company believes the tradenames
FSE and Trinology are important to its businesses and intends to vigorously
protect these tradenames. The Company
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<PAGE>
also has a copyright and has a patent pending on certain of its visual
communication technology. However, there can be no assurance that the steps
taken by the Company to protect its proprietary rights will be adequate to
prevent misappropriation of such rights.
Substantially all of the Company's revenues in the six months ended
June 30, 1998 and in the years ended December 31, 1996 and 1997 were generated
from operations located in Germany and Switzerland, where the Company believes
that regardless of differences in legal systems, it enjoys substantially
equivalent protection for its proprietary protection rights as it would in the
United States. However, the laws of some foreign countries where the Company
may in the future sell its products, may not protect the Company's proprietary
rights to the same extent as do laws in the United States. There can be no
assurance that the protections afforded by the laws of such countries will be
adequate to protect the Company's proprietary rights, the unenforceability of
any of which could have a material adverse effect on the Company's business,
financial condition and results of operations. Litigation may be necessary to
enforce the Company's intellectual property rights or to protect the Company's
trade secrets. There can be no assurance that any such litigation would be
successful. Any such litigation, whether or not successful, could result in
substantial costs and diversion of resources and could have a material adverse
effect on the Company's business, financial condition and results of
operations.
The Company has not been charged with infringement of any proprietary
rights of others; however, there can be no assurance that third parties will
not assert infringement and other claims against the Company or that such
claims will not be successful. From time to time, the Company may receive in
the future notice of claims of infringement of other parties' proprietary
rights. Many participants in the Company's industry have frequently
demonstrated a readiness to commence litigation based on allegations of
intellectual property infringement. Regardless of the validity or the
successful assertion of any such claims, the Company could incur significant
costs and diversion of resources in defending such claims, which could have a
material adverse effect on the Company's business, financial condition and
results of operations. Furthermore, any party making such claims could secure a
judgment awarding substantial damages, as well as injunctive or other equitable
relief, which could effectively block the Company's ability to make, use, sell,
distribute or market its products and services in such jurisdiction. Any such
judgment could have a material adverse effect on the Company's business,
financial condition and results of operations. In circumstances where claims
relating to proprietary technology or information are asserted against the
Company, the Company may be required to seek licenses to such intellectual
property. There can be no assurance, however, that such licenses would be
available or, if available, that such licenses could be obtained on terms that
are commercially reasonable and acceptable to the Company. The failure to
obtain the necessary licenses or other rights could preclude the sale,
manufacture or distribution of the Company's products and, therefore, could
have a material adverse effect on the Company's business, financial condition
and results of operations.
FOREIGN MARKETS. Substantially all of the Company's revenues in the
year ended December 31, 1997 and the six months ended June 30, 1998 were
generated from operations located in Germany and Switzerland. While these
countries have well developed economic markets, annual growth of the gross
domestic product has averaged 2.9% in 1996 and 2.2% in 1997 for Germany and
0.2% in 1996 and 0.7% in 1997 for Switzerland. Historically, all of the
Company's revenues have been denominated in Swiss Francs and Deutsche Marks.
The Company anticipates that it will continue to generate most of its revenues
in these currencies in the foreseeable future. Any depreciation in the value of
the Swiss Franc or Deutsche Mark against the U.S. dollar that the
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Company is unable to offset through price adjustments could have a material
adverse effect on the Company's business, financial condition and results of
operations. Conducting an international business inherently involves a number
of other difficulties and risks, such as export restrictions, export controls
relating to technology, compliance with existing and changing regulatory
requirements, tariffs and other trade barriers, difficulties in staffing and
managing international operations, longer payment cycles, problems in
collecting accounts receivable, software piracy, political instability and
economic downturns, seasonal reductions in business activity in Europe during
the summer months and potentially adverse tax consequences. There can be no
assurance that one or more of these factors will not have a material adverse
effect on any international operations established by the Company and,
consequently, on the Company's business, financial condition and results of
operations. In addition, the Company may seek opportunities to expand its
operations into the United States and into other countries. There can be no
assurance that transfers of funds to and from those countries to Germany and
Switzerland will not be taxable events for the Company. The Company's results
of operations and the market price of the Common Stock may be affected by
changes in German and Swiss policy, taxation and economic developments.
The Company's subsidiaries are subject to German and Swiss law, which
require, among other things, that companies which incur losses have to take
appropriate measures to ensure that the claims of the Company's obligees are
covered by the assets of those companies. Such measures include, among others,
increasing paid-in capital or obtaining declarations from the obligees which
subordinate their claims. If those measures are not taken, the board of
directors of the subsidiaries must notify a judge in order to commence
bankruptcy proceedings which, under Swiss and German law, usually leads to the
dissolution of the corporate existence. While the Company has successfully
undertaken measures to obtain and maintain operating funds for its subsidiaries
in the past, there can be no assurance that such measures will not have to be
undertaken in the future or that the corporate existence of any of the
Company's subsidiaries can be maintained. Failure to maintain the corporate
existence of FSE would have a material adverse effect on the Company.
ENFORCEMENT OF CIVIL LIABILITIES. The Company is organized under the
laws of the State of Delaware. Investors in the Common Stock will be able to
effect service of process in the United States upon the Company. However, the
Company is primarily a holding company which holds stock in entities in
Switzerland and Germany and all or a substantial portion of the assets of the
Company are located outside the United States. In addition, all of the
Company's six directors and all of its executive officers are residents of
foreign countries and all or a substantial portion of the assets of such
directors and officers are located outside of the United States. As a result,
it may not be possible for investors to effect service of process upon the
Company's directors and officers or to enforce judgments of U.S. courts
predicated upon the civil liability provisions of U.S. laws against the
Company's directors' and officers' assets.
The Company has been advised that there is doubt as to the
enforceability in Switzerland of judgments of U.S. courts, and in Germany in
original actions for enforcement of judgments of U.S. courts, of civil
liabilities predicated solely upon the laws of the United States, in each case
against the Company's subsidiaries and against shareholders, directors,
officers and employees of the Company or its subsidiaries who are domiciled in
Switzerland and Germany. In addition, awards of punitive damages in actions
brought in the United States or elsewhere may be unenforceable in Switzerland
and in Germany. The market price of the Common Stock may be affected by the
difficulty for investors to enforce judgments of U.S. courts.
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RISK OF SYSTEM DEFECTS; PRODUCT LIABILITY EXPOSURE. The Trinology PCs
manufactured by the Company must meet standards established by the European FCC
(CE declarations), for radio frequency emissions, and must receive appropriate
certification prior to being marketed. A delay or inability to obtain
certification may delay or prevent the Company from introducing new products or
features, and therefore, could have a material adverse effect on the Company's
business, financial condition and results of operations. The Company had a
return rate of less than 1% in each of the year ended December 31, 1997 and the
six month period ended June 30, 1998. Any substantial increase in such rate
could have a material adverse effect on the Company's business, financial
condition and results of operations.
In addition, Trinology PCs assembled by the Company may contain
significant undetected operating errors when first installed on the premises of
a customer or as new versions are installed. Although the Company tests its
respective products before installation, there can be no assurance that
operating errors will not be found after customers begin to use the products.
Any operating error in the Company's products may result in decreased revenue
or increased expenses because of adverse publicity, reduced orders, product
returns, uncollectible accounts receivable, delays in collecting accounts
receivable, and additional and unexpected costs of further product development
to correct the errors. Sale of the Company's products involves the inherent
risk of product liability claims against the Company.
The Company currently does not maintain product liability insurance
and believes that it cannot obtain such insurance except at a substantial cost.
While no product liability claims have been made against the Company in the
past, there can be no assurance that such claims will not arise in the future.
Any substantial uninsured liability would have a material adverse effect on the
Company's business, financial condition and results of operations.
YEAR 2000 COMPLIANCE. Computers, software, and other equipment
utilizing microprocessors that use only two digits to identify a year in a date
field may be unable to process accurately certain date-based information at or
after the year 2000. This is commonly referred to as the "Year 2000 issue", and
the Company is addressing this issue. The Company believes that all hardware
products included in Trinology PCs shipped since the fourth quarter of 1997 are
Year 2000 compliant and hardware products included in Trinology PCs shipped
prior to such time can be made Year 2000 compliant through upgrades or software
patches. The Company has requested Year 2000 compliance certification from each
of its major vendors and suppliers for their hardware and software products and
for their internal business applications and processes. The Company has also
established a separate team to coordinate solutions to the Year 2000 issue for
its own internal information systems, with the goal of having all of its
internal systems Year 2000 complaint by the end of 1998. The Company currently
does not anticipate that the cost of its Year 2000 compliance program will be
material to its financial condition or results of operations or that its
business will be adversely affected by the Year 2000 issue in any material
respect. However, achieving Year 2000 compliance is dependent on many factors,
some of which are not completely within the Company's control. The failure of
the Company to achieve Year 2000 compliance for its internal systems or the
failure of its vendors or suppliers to achieve Year 2000 compliance for its
internal systems could have a material adverse effect on the Company's
business, financial condition and results of operations.
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POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS. The PC industry
generally, and the operating results of the Company's FSE subsidiary
specifically, have been subject to seasonality and to significant quarterly and
annual fluctuations. For the years ended December 31, 1996 and 1997,
approximately 30% of revenues of FSE were generated during the fourth calendar
quarter and the Company expects that this trend will continue for the year
ending December 31, 1998. Fluctuations in the PC industry can be the result of
a wide variety of factors, including new product developments or introductions,
availability of components and peripherals, changes in product mix and pricing,
product reviews and other media coverage and seasonal reductions in business
activity in Europe during the summer months. The Company's business is also
sensitive to the spending patterns of its customers, which in turn are subject
to prevailing economic conditions. The Company's revenues and net income are
subject to fluctuations in the value of the Deutsche Mark against the U.S.
dollar and the Company currently engages in limited hedging transactions which
are not material to its operations, to offset the risk of currency
fluctuations. There can be no assurance that such hedging activities will not
be increased or discontinued in the future or that such transactions will
offset the risk of currency fluctuations. As a result of the foregoing factors,
it is possible that in certain quarters the Company's results of operations
will be below results for the corresponding quarter of the prior fiscal year or
for the preceding quarters of the then current fiscal year or the expectations
of analysts and investors. In such event, the market price of the Common Stock
may be adversely affected. See "-- Foreign Markets."
CONTROL BY EXISTING STOCKHOLDERS; POTENTIAL ANTI-TAKEOVER PROVISIONS.
The Company's officers, directors and significant stockholders currently
control approximately 44.9% of the outstanding Common Stock of the Company. As
a result, such stockholders are able to influence the election of the Company's
directors and the outcome of corporate transactions or other matters submitted
for stockholder approval. Furthermore, pursuant to an Investor Rights Agreement
between Vertical Financial Holdings Establishment ("Vertical") and the Company,
so long as Vertical holds at least 10% of the 1,875,000 shares of Common Stock
issued by the Company upon conversion of its Series A Preferred Stock in April
1997, or the 1,875,000 shares of Common Stock issuable upon exercise of the
warrants issued to certain stockholders of the Company, Vertical has the right,
but not the obligation, to nominate two persons as members of the management
slate for election to the Company's Board of Directors. So long as Vertical
holds at least 5% of the 1,875,000 shares of Common Stock issued by the Company
upon conversion of its Series A Preferred Stock in April 1997, or 1,875,000
shares of Common Stock issuable upon exercise of the warrants issued to certain
stockholders of the Company, Vertical has the right, but not the obligation to
nominate one such person. As of the date of this Prospectus, Vertical held
890,152 of such shares of Common Stock and held warrants to purchase 690,152
shares of Common Stock. The existence of such rights solidifies control over
the Company by its existing stockholders. Pursuant to the Investor Rights
Agreement, Vertical has nominated, and the stockholders of the Company have
elected, Jacob Agam as a director of the Company and may nominate a second
director in the future. Pursuant to a Stock Purchase Agreement, Vertical
nominated and Mr. Agam was elected as the Chairman of the Company. Mr. Agam is
the Chairman of the Board of Vertical. In addition, pursuant to the Stock
Purchase Agreement, the Company will maintain an Underwriting Committee which
will consist of four members with two members appointed by each of Vertical and
the Company. The Underwriting Committee currently consists of Jacob Agam, Dr.
Viktor Vogt and Klaus Grissemann, all members of the Company's Board of
Directors. Mr. Agam, as designated by Vertical, serves as the Chairman of the
Underwriting Committee. Vertical has not yet named its second nominee to the
Underwriting Committee. The Underwriting Committee is vested with full and
exclusive responsibility and authority on behalf of the Company to select an
underwriter and to negotiate all of the terms and conditions of any
underwriting. In the event that the Underwriting Committee is unable to produce
a majority vote on any particular issue, such issue shall be decided by a vote
of the full Board of
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Directors provided that the resolution of any such issue by the Board of
Directors shall not be effectuated without the written consent of Vertical.
The Company is subject to a Delaware statute regulating business
combinations which could discourage, hinder or preclude an unsolicited
acquisition of the Company and could make it less likely that stockholders
receive a premium for their shares as a result of any such attempt. In
addition, the Company's Board of Directors is authorized to issue from time to
time, without stockholder approval, shares of preferred stock with such terms
and conditions as the Board of Directors may determine in its sole discretion.
CHARGE TO EARNINGS IN THE EVENT OF RELEASE OF ESCROW SHARES. 498,285
shares of Common Stock were deposited in escrow pursuant to an escrow agreement
(the "Escrow Shares") in connection with the Company's IPO. The Escrow Shares
will be released from escrow if the Company attains certain revenue levels for
the years ending December 31, 1998 and 1999 or if the Common Stock trades at
certain levels for any 30 consecutive trading days, commencing April 2, 1999.
The Escrow Shares will not be deemed to be outstanding for the purpose of
calculating earnings per share until either of such conditions is probable of
being met. The position of the Commission with respect to such escrow
arrangements provides that in the event any shares are released from escrow to
the stockholders of the Company who are officers, directors, employees or
consultants of the Company, a non-cash compensation charge will be recorded for
financial reporting purposes. Accordingly, in the event of the release of the
Escrow Shares, the Company will recognize during the period in which the
earnings thresholds are probable of being met or such stock levels achieved, a
substantial non-cash charge to operations, which will not be deductible for
income tax purposes, equal to the then fair value of such shares, which would
have the effect of significantly increasing the Company's loss or reducing or
eliminating earnings, if any, at such time. By way of example, if at the time
of the release of the Escrow Shares the market price of the Common Stock was
$14.00, the Company would be required to recognize compensation expense of
approximately $2.6 million. The recognition of such compensation expense may
depress the market price of the Company's Common Stock. Notwithstanding the
foregoing discussion, there can be no assurance that the Company's earnings or
its stock price will attain the targets that would enable the Escrow Shares to
be released from escrow.
POSSIBLE DELISTING OF COMMON STOCK FROM THE NASDAQ NATIONAL MARKET.
While the Common Stock currently meets the continued listing requirements of
the Nasdaq National Market where the Common Stock is quoted, there can be no
assurance that the Company will meet the criteria for continued listing.
Continued inclusion on Nasdaq National Market generally requires that (i) the
Company maintain at least $4,000,000 in "net tangible assets" (total assets
less total liabilities and goodwill), (ii) the minimum bid price of the Common
Stock be $1.00 per share, (iii) there be at least 750,000 shares in the public
float valued at $5,000,000 or more, (iv) the Common Stock have at least two
active market makers and (v) the Common Stock be held by at least 400 holders.
If the Company is unable to satisfy the Nasdaq National Market's
maintenance requirements, the Common Stock may be delisted from the Nasdaq
National Market. In such event, trading, if any, in the Common Stock would
thereafter be conducted on the Nasdaq SmallCap Market, subject to meeting the
requirements for listing on the Nasdaq SmallCap Market, or in the
over-the-counter market in the "pink sheets" or the National Association of
Securities Dealers, Inc.'s "Electronic Bulletin Board." Consequently, the
liquidity of the Company's securities could be impaired, not
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only in the number of securities which could be bought and sold, but also
through delays in the timing of transactions, reduction in security analysts
and the news media's coverage of the Company and lower prices for the Common
Stock than might otherwise be attained.
RISKS OF LOW-PRICED STOCK. If the Company's Common Stock was delisted
from Nasdaq National Market and could not be quoted on Nasdaq SmallCap Market
(see "-- Possible Delisting of Securities from the Nasdaq National Market"), it
could become subject to Rule 15g-9 under the Exchange Act of 1934, as amended
(the "Exchange Act"), which imposes additional sales practice requirements on
broker-dealers which sell such securities to persons other than established
customers and "accredited investors" (generally, individuals with net worth in
excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together
with their spouses). For transactions covered by this rule, a broker-dealer
must make a special suitability determination for the purchaser and have
received the purchaser's written consent to the transaction prior to sale.
Consequently, such rule may adversely affect the ability of broker-dealers to
sell the Common Stock and may adversely affect the ability of stockholders to
sell any of the shares of Common Stock in the secondary market.
Commission regulations define a "penny stock" to be, among others, any
non-exchange listed equity security that has a Market Price (as therein
defined) of less than $5.00 per share or with an exercise price of less than
$5.00 per share, subject to certain exceptions. For any transaction involving a
penny stock, unless exempt, the rules require delivery, prior to any
transaction in a penny stock, of a disclosure schedule prepared by the
Commission relating to the penny stock market. Disclosure is also required to
be made about commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally, monthly
statements are required to be sent disclosing recent price information for the
penny stock held in the account and information on the limited market in penny
stocks.
The foregoing required penny stock restrictions will not apply to the
Common Stock if such securities are quoted on the Nasdaq National Market or the
Nasdaq SmallCap Market and have certain price and volume information provided
on a current and continuing basis or if the Company meets certain minimum net
tangible assets or average revenue criteria. There can be no assurance that the
Common Stock will qualify for exemption from these restrictions. In any event,
even if the Common Stock was exempt from such restrictions, it would remain
subject to Section 15(b)(6) of the Exchange Act, which gives the Commission the
authority to prohibit any person that is engaged in unlawful conduct while
participating in a distribution of a penny stock from associating with a
broker-dealer or participating in a distribution of a penny stock, if the
Commission finds that such a restriction would be in the public interest. If
the Common Stock were subject to the rules on penny stocks, the market
liquidity for the Common Stock could be severely adversely affected.
SHARES ELIGIBLE FOR FUTURE SALE; EFFECT OF OUTSTANDING OPTIONS AND
WARRANTS. Future sales of shares of Common Stock by existing stockholders
through the exercise of outstanding registration rights or through the issuance
of shares of Common Stock upon exercise of options, warrants or otherwise could
have an adverse effect on the price of the Common Stock. Of the 11,497,837
shares of Common Stock to be outstanding after this Offering (giving effect to
the exercise of the Options and the Warrants and the conversion of the
Debentures and payment of interest thereon at the Assumed Conversion Price (as
defined)), approximately 5,895,960 shares of Common Stock, including the shares
of Common Stock offered hereby, will be freely tradeable without restriction
under the Securities Act, except if any shares are purchased by "affiliates" as
defined in Rule 144 under the
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Securities Act. The remaining 5,601,877 shares of Common Stock outstanding
after this Offering are "restricted securities" as defined in Rule 144, and
under certain circumstances may be sold without registration pursuant to Rule
144 or otherwise. Such shares of Common Stock are eligible for sale under Rule
144 at varying periods, subject to the lock-up described below. Certain of the
Company's officers, directors and stockholders who hold, in the aggregate,
approximately 4,500,000 shares of Stock and approximately 2,500,000 vested
options and warrants, entered into lock-up agreements (the "Lock-Up
Agreements") with the underwriters in the Company's IPO (the "IPO
Underwriters") wherein they agreed not to sell or otherwise dispose of any
shares of Common Stock (other than shares of Common Stock acquired in the
public market) or to exercise registration rights without the prior written
consent of Royce Investment Group, Inc. ("Royce") until March 27, 1999;
provided, however, that the stockholders of the Company subject to the Lock-Up
Agreements (other than officers and directors of the Company) may sell or
otherwise dispose of shares of Common Stock in one or more private sales
without such consent if the acquirors (and any subsequent acquirors) of such
shares enter into a Lock-Up Agreement with the IPO Underwriters restricting the
transferability of such shares for the remainder of period between March 26,
1997 and March 26, 1999.
The Company has outstanding (i) warrants to purchase an aggregate of
2,771,726 shares of Common Stock (including the Warrants to purchase shares of
Common Stock being registered for resale in this Offering) issued to the IPO
Underwriters, certain investors and certain stockholders of the Company and
(ii) the Debentures (and the interest thereon) which are convertible into
694,392 shares of Common Stock at the Assumed Conversion Price. The actual
number of shares of Common Stock that may be issued upon conversions of the
Debentures and payments of interest on the Debentures in the form of shares of
Common Stock will depend on the conversion price in effect from time to time
during the term of the Debentures, the timing of any such conversions and the
decision by the Company to make any payments of interest in the form of shares
of Common Stock. The conversion price will vary from time to time during the
term of the Debentures. Therefore, it is not possible to estimate with any
degree of certainty the total number of shares of Common Stock that would
actually be issued upon any conversions of the Debentures, the total number of
shares of Common Stock, if available, that could be issued in payment of
interest, or the availability of shares of Common Stock for payments of
interest. The conversion price of the Debentures could be substantially below
the market price of the Company's Common Stock on any date of conversion. The
Company has also reserved for issuance 500,000 shares of Common Stock in
connection the Company's 1996 Stock Option Plan ("the Plan"), 100,000 of which
have been granted, and 430,000 shares of Common Stock issuable upon exercise of
Options granted outside of the Plan. The existence of these securities could
have an adverse effect on the price of the Company's outstanding securities. If
any of these securities are exercised, the value of the Common Stock held by
public investors will be diluted if the value of such stock immediately prior
to the exercise of such securities exceeds the exercise price thereof, with the
extent of such dilution depending upon such excess. These securities afford the
holders thereof the opportunity, at nominal cost, to profit from a rise in the
market price of the Common Stock, which may adversely affect the terms upon
which the Company could issue additional Common Stock during the term thereof.
In addition, holders of Warrants and Options are likely to exercise them when,
in all likelihood, the Company could obtain additional capital on terms more
favorable than those provided by the Warrants and Options. Further, while these
securities are outstanding, the Company's ability to obtain additional
financing on favorable terms may be adversely affected.
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The holders of an aggregate of approximately 2,348,485 shares of
Common Stock and warrants and options to purchase Common Stock (following this
Offering) have demand and piggy-back registration rights with respect to their
respective securities. The Company has received waivers from holders of
registration rights that are currently exercisable waiving their rights to have
their securities registered in this Offering (other than the shares of Common
Stock being registered for resale in this Offering). Sales of Common Stock or
the possibility of such sales, in the public market may adversely affect the
market price of the securities offered hereby.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of
the Shares by the Selling Stockholders, although the Company will receive
proceeds from the exercise of Options and Warrants. In the event that all of
the Options and Warrants exercisable for Shares offered hereby are exercised,
the Company would receive net proceeds of approximately $7.0 million. Holders
of the Options and Warrants are not obligated to exercise their Options and
Warrants and there can be no assurance that holders of the Options and Warrants
will choose to exercise all or any of the Options and the Warrants.
The Company intends to use the estimated net proceeds
received upon exercise of the Options and Warrants, if any, for working capital
and general corporate purposes, including future acquisitions. The Company is
evaluating and is engaged in discussions in connection with the potential
acquisition of assets or equity of certain similar or complementary businesses.
However, the Company has no agreements or commitments relating to any
particular acquisition and there can be no assurance that any such acquisitions
will be consummated.
SELLING STOCKHOLDERS
The Shares offered hereby are comprised of (i) 203,255 shares
of Common Stock which are issued and outstanding, (ii) 480,000 shares of Common
Stock which are issuable upon exercise of Options, (iii) 423,241 shares of
Common Stock which are issuable upon exercise of Warrants and (iv) 902,710
shares of Common Stock which are issuable upon conversion of the Debentures,
including any accrued interest thereon. The Shares are being registered to
permit public secondary trading of the Shares, and the Selling Stockholders may
offer all or any portion of the Shares for resale from time to time. See "Plan
of Distribution."
The Company has filed with the Commission under the Securities Act a
Registration Statement on Form S-3, of which this Prospectus forms a part, with
respect to the resale of the Shares. The Company has agreed, among other
things, to bear certain expenses in connection with the registration and sale
of the Shares being offered by the Selling Stockholders. See "Plan of
Distribution."
In March 1997, the Company issued Warrants to purchase 335,000
shares of Common Stock to Royce, an underwriter in the IPO. In connection with
the IPO, Royce received underwriting discounts and commissions of approximately
$882,500 and a non-accountable expense allowance of $502,500. In July 1997, the
Company issued an aggregate of 5,000 shares of Common Stock to Ballin & Partner
as consideration for investor relations services rendered to the Company
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from February 1997 to January 1998. In February 1998, the Company granted
Options to purchase 10,000 shares of Common Stock to Value Management &
Research (U.K.), Limited, as consideration for financing services rendered to
the Company in February 1998, and in March 1998, the Company granted Options to
purchase 80,000 shares of Common Stock to Value Management & Research S.A.,
Luxembourg, as consideration for financing services to be rendered to the
Company for the period from February 1998 through in March 1999.
At various times from July 1997 through June 1998, the Company granted
Options to purchase an aggregate of 390,000 shares of Common Stock to Andreas
Beyer, Klaus Grissemann, Reiner Hallauer, Viktor Vogt, Volker Walther, Arnold
Wasserman, Erich Weber and Robert Weiss. Mr. Beyer received is his Options as
consideration for investor relations services. Klaus Grissemann, is the Chief
Financial Officer and a director of the Company, Mr. Hallauer is the former
Managing Director of IAT Germany and a former director of the Company, Dr. Vogt
is a former Co-Chairman of the Company and is a director of the Company, Mr.
Wasserman is a former director of the Company and Messrs. Walther, Weber and
Weiss are directors of the Company.
On June 19, 1998, JNC Strategic Fund Ltd. ("Strategic") purchased
198,255 shares of Common Stock and Warrants to purchase an aggregate of 23,529
shares of Common Stock and JNC Opportunity Fund Ltd. ("Opportunity") purchased
an aggregate principal amount of $3,000,000 of the Debentures, due June 19,
2001 and Warrants to purchase an aggregate of 35,300 shares of Common Stock.
The Debentures are convertible (subject to certain limitations) into
shares of Common Stock at the option of the holder or at the option of the
Company. The holder of the Debentures may elect to convert the Debentures in
whole or in part, at any time provided that if the holder elects to convert,
the holder (the "Holder") of the Shares issuable upon conversion of the
Debentures is restricted from selling such shares until March 16, 1999. During
any 30-day period, thereafter, the Holder shall be permitted to resell the
greater of (x) the number of underlying shares issuable upon conversion of
$1,000,000 of Debentures and (y) 25% of the average of the daily trading volume
of the Common Stock during such 30-day period. In the event the Company elects
to convert the Debentures, then such Debentures may be converted, in whole or
in part, at any time after the date of this Prospectus (the "Effective Date")
into shares of the Common Stock and the Holder is not subject to the foregoing
restrictions. On the second anniversary of the Effective Date (the "Automatic
Conversion Date"), the principal amount of Debentures then outstanding is
subject to automatic conversion.
Pursuant to the terms of the Debentures, the Debentures are
convertible at a conversion price equal to the lesser of (i) $13.45 and (ii)
87% of the average of the five lowest closing prices of the Common Stock on the
Nasdaq National Market during the 15 trading days preceding the date of
conversion (the "Conversion Price"). The Debentures accrue interest at a rate
of 5% per annum payable quarterly in arrears commencing June 30, 1998, except
that interest shall cease to accrue if the closing price of the Common Stock is
equal to or greater than $13.50 for 30 consecutive trading days during any
calendar quarter. All overdue, accrued and unpaid interest will accrue interest
at a rate of 15% per annum. At the option of the Company, interest due on the
principal amount, but not on overdue interest, is payable in the form of cash
or shares of Common Stock at the conversion price then in effect.
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Based on the 15 trading day period preceding September 14, 1998, the
conversion price would have been $4.85 (the "Assumed Conversion Price"). If the
entire principal amount of the Debentures were converted at the Assumed
Conversion Price, the Debentures would be convertible into approximately
618,557 shares of Common Stock. Assuming that (i) no conversions were to occur
until the Automatic Conversion Date and (ii) the Effective Date will be
December 1, 1998, interest on the Debentures on the Automatic Conversion Date
would be approximately $367,800. At the Assumed Conversion Price, such amount
of accrued interest would be convertible into approximately 75,835 shares of
Common Stock assuming all such accrued interest is paid in the form of shares
of Common Stock. Based on such assumptions, an aggregate of 694,392 number of
shares of Common Stock may be issuable upon conversion of both the Debentures
and payments of accrued interest on the Debentures. However, pursuant to the
terms of the transactions with Strategic and Opportunity, the number of shares
of Common Stock required to be registered for resale by the holders of the
Debentures is 130% of the number of shares of Common Stock issuable upon
conversion of the Debentures and the interest thereon. No assurance can be
given that these assumptions would remain valid during the term of the
Debentures. The following table illustrates the varying amounts of shares of
Common Stock issuable upon conversion of the principal amount of Debentures at
the indicated conversion prices:
Number of Shares of Common
Stock Issuable Upon Conversion
Conversion Price of the Debentures and Interest Thereon
---------------- --------------------------------------
15.00 224,520
13.45 250,394
10.00 336,780
5.00 673,560
2.50 1,347,120
The actual number of shares of Common Stock that may be issued upon
conversions of the Debentures and payments of interest on the Debentures in the
form of shares of Common Stock will depend on the Conversion Price in effect
from time to time during the term of the Debentures, the timing of any such
conversions and the decision by the Company to make any payments of interest in
the form of shares of Common Stock. The Conversion Price will vary from time to
time during the term of the Debentures. Consequently, it is not possible to
estimate with any degree of certainty the total number of shares of Common
Stock that would actually be issued upon any conversions of the Debentures, the
total number of shares of Common Stock, if available, that could be issued in
payment of interest, or the availability of shares of Common Stock for payments
of interest. The Conversion Price of the Debentures could be substantially
below the market price of the Company's Common Stock on any date of conversion.
In connection with the transactions with Strategic and Opportunity,
Century City Securities, Inc., an advisor in such transaction received a Common
Stock purchase warrant to purchase an aggregate of 29,412 shares of Common
Stock.
As of September 23, 1998, (i) all of the Warrants to purchase an
aggregate of 423,241 shares of Common Stock are currently exercisable and (ii)
Options to purchase 324,166 shares of Common Stock are currently exercisable.
The remaining Options to purchase 155,834 shares of Common Stock will vest from
time to time from the date this Prospectus through March 2000. Certain of the
Selling Stockholders holding Options and Warrants to purchase an aggregate of
-18-
<PAGE>
175,000 shares of Common Stock have agreed not to offer, sell, contract to sell
or otherwise dispose of any shares of Common Stock (other than shares of Common
Stock acquired in the public market) until March 27, 1999.
Based on information provided by each Selling Stockholder, the
following table sets forth the names of each of the Selling Stockholders and
for each, the number of shares of Common Stock beneficially owned before the
commencement of the Offering, the number of shares of Common Stock issuable
upon conversion of the Debentures, the number of shares of Common Stock
issuable upon exercise of the Warrants, the number of shares of Common Stock
issuable upon exercise of the Options, the number of shares of Common Stock
offered for sale in this Offering and the number of shares and percentage of
Common Stock owned after the Offering:
<TABLE>
<CAPTION>
Number of Shares Number of Common Stock
of Common Shares Issuable Number of Number of Beneficially Owned
Stock Upon Shares Shares After Offering (15)
Beneficially Conversion of Issuable Upon Issuable Upon ----------------------------
Selling Owned Prior to Debentures and Exercise Exercise of Shares Being Number of Percent of
Security Holder Offering (1) Interest Thereon of Warrants Options Offered Shares Outstanding (16)
--------------- ------------- ----------------- ------------- ------------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ballin & Partner 5,000 5,000 0 0
Value Management 80,000(6) 80,000 0 0
& Research S.A.,
Luxembourg
10,000(7) 10,000 0 0
Value Management
& Research (U.K.),
Ltd.
Andreas Beyer 25,000(8) 25,000 0 0
Reiner Hallauer 75,000(7) 75,000 0 0
Viktor Vogt 262,129(2) 75,000(9) 75,000(12) 262,129(2) 2.2
Volker Walther 890,750(3) 50,000(10) 50,000(13) 890,750(3) 7.6
Arnold Wasserman 95,000(7) 95,000 0 0
Klaus Grissemann 189,395(2) 50,000(10) 50,000 189,395 1.6
Erich Weber 10,000(11) 10,000 0 0
Robert Weiss 10,000(11) 10,000 0 0
Royce Investment 335,000(5) 335,000 0 0
Group, Inc.
JNC Opportunity 694,392(4) 35,300(5) 938,010(14) 0 0
Fund, Ltd.
JNC Strategic Fund 198,255 23,529(5) 221,784 0 0
Ltd.
Century City 29,412(5) 29,412 0 0
Securities, Inc.
</TABLE>
- -----------------------
* Represents less than 1% of the outstanding Common Stock.
-19-
<PAGE>
(1) Excludes shares of Common Stock issuable upon exercise of the Debentures,
Warrants and Options.
(2) Such shares are not being registered for resale in this Offering.
(3) All of the shares of Common Stock are held by Walther Glas GmbH of which
Mr. Walther is a majority shareholder. Such shares are not being
registered for resale in this Offering.
(4) Based upon the Assumed Conversion Price. The actual number of shares of
Common Stock that will be issued upon conversions of the Debentures and
payments of interest on the Debentures in the form of shares of Common
Stock will depend on the conversion price in effect from time to time
during the term of the Debentures, the timing of any such conversions and
the decision by the Company to make any payments of interest in the form
of shares of Common Stock. Excludes an additional 208,318 shares of Common
Stock which are required to be registered for resale in this Offering
pursuant to terms of the transactions with Strategic and Opportunity to
provide for fluctuations of the Assumed Conversion Price. The Debentures
prohibit a holder thereof from utilizing its ability to convert Debentures
to the extent such conversion would result in such holder beneficially
owning in excess of 4.999% of the then issued and outstanding shares of
Common Stock following such conversion. Such prohibition may be waived as
to a particular holder upon not less than 75 days prior notice to the
Company.
(5) All of the Warrants are exercisable within 60 days of this Prospectus.
(6) Of these Options, 40,000 are exercisable within 60 days of the date of
this Prospectus. Of the remaining 40,000 Options, 20,000 will become
exercisable on December 31, 1998 and 20,000 will become exercisable on
March 31, 1999.
(7) All of these Options are exercisable within 60 days of the date of this
Prospectus.
(8) Of these Options, 12,500 are exercisable within 60 days of the date of
this Prospectus. The remaining 12,500 Options will become exercisable on
June 30, 1999.
(9) Of these Options, 41,666 are exercisable within 60 days of the date of
this Prospectus. Of the remaining 33,334 Options, 16,667 will become
exercisable on March 24, 1999 and 16,667 will become exercisable on March
24, 2000.
(10) Of these Options, 25,000 are exercisable within 60 days of the date of
this Prospectus. The remaining 25,000 Options will become exercisable on
April 21, 1999.
(11) All of these Options are exercisable on June 30, 1999.
(12) Represents 75,000 shares of Common Stock underlying Options held by Viktor
Vogt.
(13) Represents 50,000 shares of Common Stock underlying Options held by Volker
Walther.
(14) Includes an additional 208,318 shares of Common Stock which are required to
be registered for resale in this Offering pursuant to the terms of the
transactions with Strategic and Opportunity and which may be sold by such
Selling Stockholder in this Offering in the event the conversion price
on the actual date of conversion is less than the Assumed Conversion
Price.
(15) Assuming the sale of all Shares by such Selling Stockholder.
(16) The number of shares of Common Stock to be outstanding after this
Offering includes that number of shares of Common Stock which are issuable
upon conversion of the Debentures and payment of interest thereon at the
Assumed Conversion Price.
-20-
<PAGE>
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Stockholders, their
pledgees, donees, transferees or other successors-in-interest, may from time to
time, sell all or a portion of the Shares in privately negotiated transactions
or otherwise, at fixed prices that may be changed, at market prices prevailing
at the time of sale, at prices related to such market prices or at negotiated
prices. The Shares may be sold by the Selling Stockholders by one or more of
the following methods, without limitation: (a) block trades in which the broker
or dealer so engaged will attempt to sell the Shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction,
(b) purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus, (c) an exchange
distribution in accordance with the rules of the applicable exchange, (d)
ordinary brokerage transactions and transactions in which broker solicits
purchasers, (e) privately negotiated transactions, (f) short sales, (g) a
combination of any such methods of sale and (h) any other method permitted
pursuant to applicable law. The Selling Stockholders are not restricted as to
the price or prices at which they may sell their Shares. Sales of Shares by the
Selling Stockholders may depress the market price of the Company's Common Stock
since the number of Shares which may be sold by the Selling Stockholders is
relatively large compared to the historical average weekly trading of the
Company's Common Stock, and therefore, if the Selling Stockholders were to
sell, or attempt to sell, all of such Shares at once, the Company believes such
a transaction could adversely impact the market price for the Company's Common
Stock.
From time to time the Selling Stockholders may engage in short sales,
short sales against the box, puts and calls and other transactions in
securities of the Company or derivatives thereof, and can sell and deliver the
Shares in connection therewith or in settlement of securities loans. From time
to time the Selling Stockholders may pledge their Shares pursuant to the
margin provisions of its customer agreements with its brokers. Upon a default
by the Selling Stockholders, the broker may offer and sell the pledged Shares
from time to time.
In effecting sales, brokers and dealers engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate in such
sales. Brokers or dealers may receive commissions or discounts from the Selling
Stockholders (or, if any such broker-dealer acts as agent for the purchaser of
such shares, from such purchaser) in amounts to be negotiated which are not
expected to exceed those customary in the types of transactions involved.
Broker-dealers may agree with the Selling Stockholders to sell a specified
number of such Shares at a stipulated price per share, and to the extent such
broker-dealer is unable to do so acting as agent for a Selling Stockholder, to
purchase as principal any unsold Shares at the price required to fulfill the
broker-dealer commitment to the Selling Stockholders. Broker-dealers who
acquire Shares as principal may thereafter resell such Shares from time to time
in transactions (which may involve block transactions and sales to and through
other broker-dealers, including transactions of the nature described above) in
the over-the counter market or otherwise at prices and on terms then prevailing
at the time of sale, at prices then related to the then-current market price or
in negotiated transactions and, in connection with such sales, may pay to or
receive from the purchasers of such Shares commissions as described above. The
Selling Stockholders may also sell the Shares in accordance with Rule 144 under
the Securities Act, rather than pursuant to this Prospectus.
The Selling Stockholders and any broker-dealers or agents that
participate with the Selling Stockholders in sales of the Shares may be deemed
to be "underwriters" within the meaning of the Securities Act in connection
with such sales. In such event, any commissions received by such broker-dealers
or agents 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.
-21-
<PAGE>
The Company has been advised that Royce and Century City Securities,
both Selling Stockholders, are members of the NASD and engage in market making
activities with respect to the Common Stock. Royce and Century City Securities
will be deemed to be "underwriters" as that term is defined in the Securities
Act, and any commissions received by them and profit on any resale of the
Shares as principal will be deemed to be underwriting discounts and commissions
under the Securities Act.
The Company is required to pay all fees and expenses incident to the
registration of the Shares, including fees and disbursements of counsel to the
Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act. Selling Stockholders may agree to
indemnify any agent, dealer or broker-dealer that participates in transactions
involving sales of the Shares against certain liabilities, including
liabilities arising under the Securities Act. The Company will not receive any
proceeds from the sale of Shares by the Selling Stockholders although the
Company will receive proceeds from the exercise of the Options or Warrants.
At the time a particular offer of Shares is made, to the extent
required, a supplement to this Prospectus will be distributed which will
identify and set forth the aggregate amount of Shares being offered and the
terms of the offering.
The Selling Stockholders are subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including without
limitation, Regulation M, which provisions may limit the timing of purchases
and sales of the Shares by the Selling Stockholders.
In order to comply with certain states' securities laws, if
applicable, the Shares may be sold in such jurisdictions only through
registered or licensed brokers or dealers. In certain states the Shares may not
be sold unless the Shares have been registered or qualified for sale in such
state, or unless an exemption from registration or qualification is available
and is obtained.
LEGAL MATTERS
The validity of the securities offered hereby have been passed upon
for the Company by Bachner, Tally, Polevoy & Misher LLP, New York, New York.
EXPERTS
The financial statements incorporated in this Prospectus, by
reference to the Company's Annual Report on Form 10-K, for the years ended
December 31, 1997, 1996, and 1995, have been incorporated herein in reliance on
the report of Rothstein, Kass & Company, P.C., independent accountants, given
on the authority of that firm as experts in accounting and auditing.
-22-
<PAGE>
No dealer, salesman or any other person has been authorized to give
any information or to make any representation not contained or incorporated by
reference in this Prospectus in connection with the Offering herein contained,
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company or any underwriter. This
Prospectus does not constitute an offer to sell or a solicitation of any offer
to buy any of the securities offered hereby in any jurisdiction to any person
to whom it is unlawful to make such an offer or solicitation in such
jurisdiction. Neither the delivery of this Prospectus nor any sale hereunder
shall under any circumstances create any implication that there has been no
change in the affairs of the Company since any of the dates as of which
information is furnished herein or since the date hereof.
TABLE OF CONTENTS
Page
----
Available Information...............................................2
Incorporation of Certain Documents by Reference.....................2
Prospectus Summary..................................................4
Risk Factors........................................................5
Use of Proceeds....................................................16
Selling Stockholders...............................................16
Plan of Distribution...............................................21
Legal Matters......................................................22
Experts............................................................22
-23-
<PAGE>
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses payable by the Registrant in connection with
the issuance and distribution of the securities being registered are as
follows:
SEC Registration Fee.....................................$ 3,038
Accounting Fees and Expenses............................. 3,500
Legal Fees and Expenses.................................. 30,000
Miscellaneous Expenses................................... 18,462
---------
Total............................................... 55,000
Item 15. Indemnification of Directors and Officers.
The Certificate of Incorporation and By-Laws of the Company provide
that the Company shall indemnify any person to the full extent permitted by the
Delaware General Corporation Law.
Reference is hereby made to Section 145 of the Delaware General
Corporation Law relating to the indemnification of officers and directors which
Section is hereby incorporated herein by reference.
The Registrant also has Indemnification Agreements with each of its
directors.
Item 16. Exhibits.
(a) Exhibits
4.1 - Underwriters' Warrant
4.2 - Form of Option Agreement
4.3 - Common Stock Purchase Warrant issued to JNC
Opportunity Fund, Ltd.
4.4 - Common Stock Purchase Warrant issued to JNC Strategic
Fund, Ltd.
4.5 - Common Stock Purchase Warrant issued to Century City
Securities, Inc.
5.1 - Opinion of Bachner, Tally, Polevoy & Misher LLP*
10.1 - Securities Purchase Agreement, dated as of June 19, 1998,
by and among IAT Multimedia, Inc., JNC Opportunity Fund,
Ltd. and JNC Strategic Fund, Ltd.(1)
10.2 - Registration Rights Agreement dated as of June 19, 1998,
by and among IAT Multimedia, Inc. JNC Opportunity Fund,
Ltd. and JNC Strategic Fund, Ltd.(1)
10.6 - Spinoff Agreement dated as of March 5, 1998 by and among
the Company, Dr. Viktor Vogt and Swiss Newco(2)
23.1 - Consent of Rothstein, Kass & Company, P.C.
23.2 - Consent of Bachner, Tally, Polevoy & Misher LLP
- Included in Exhibit 5.1*
24 - Power of Attorney - Included on II - 3
----------------------
* To be filed by amendment.
II-1
<PAGE>
(1) Filed as Exhibit with identical exhibit number to the
Registrant's Current Report on Form 8-K dated June 19,
1998 and incorporated by reference thereto.
(2) Filed as Exhibit with identical exhibit number to the
Registrant's Current Report on Form 8-K dated March 5,
1998 and incorporated by reference thereto.
Item 17. Undertakings
Undertaking Required by Regulation S-K, Item 512(a).
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
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, as amended (the "Act"), each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
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.
Undertaking Required by Regulation S-K, Item 512(b).
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
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 initial bona
fide offering thereof.
Undertaking required by Regulation S-K, Item 512(h).
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or controlling
persons pursuant to the foregoing provisions, 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 Securities 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 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 Securities Act and will be governed by the final
adjudication of such issue.
II-2
<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 Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York on the __th day of September, 1998.
IAT MULTIMEDIA, INC.
By: /s/ Jacob Agam
--------------------------------------
Jacob Agam
Chairman of the Board of Directors
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below under the heading "Signature" constitutes and appoints
Klaus Grissemann and Jacob Agam or either of them, his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign any
or all amendments (including post-effective amendments) to this Registration
Statement and any related Registration Statement filed under Rule 462(b), and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, each acting alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully for all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Jacob Agam
- --------------------
Jacob Agam Chairman of the Board
and Chief Executive Officer September 23, 1998
(principal executive officer)
/s/Klaus Grissemann
- --------------------
Klaus Grissemann Chief Financial Officer
and Director (principal
financial officer) September 23, 1998
/s/Robert Weiss
- --------------------
Robert Weiss Director September 23, 1998
II-3
<PAGE>
/s/Viktor Vogt
- --------------------
Viktor Vogt Director September 23, 1998
/s/Volker Walther
- --------------------
Volker Walther Director September 23, 1998
/s/Erich Weber
- --------------------
Erich Weber Director September 23, 1998
II-4
<PAGE>
Exhibit Index
4.1 - Underwriters' Warrant
4.2 - Form of Option Agreement
4.3 - Common Stock Purchase Warrant issued to JNC Opportunity Fund, Ltd.
4.4 - Common Stock Purchase Warrant issued to JNC Strategic Fund, Ltd.
4.5 - Common Stock Purchase Warrant issued to Century City Securities, Inc.
5.1 - Opinion of Bachner, Tally, Polevoy & Misher LLP*
10.1 - Securities Purchase Agreement, dated as of June 19, 1998, by and among
IAT Multimedia, Inc., JNC Opportunity Fund, Ltd. and JNC Strategic Fund,
Ltd.(1)
10.2 - Registration Rights Agreement dated as of June 19, 1998, by and among
IAT Multimedia, Inc. JNC Opportunity Fund, Ltd. and JNC Strategic Fund,
Ltd.(1)
10.6 - Spinoff Agreement dated as of March 5, 1998 by and among the Company,
Dr. Viktor Vogt and Swiss Newco(2)
23.1 - Consent of Rothstein, Kass & Company, P.C.
23.2 - Consent of Bachner, Tally, Polevoy & Misher LLP - Included in Exhibit
5.1*
24 - Power of Attorney - Included on II - 3
- ------------------
* To be filed by amendment.
(1) Filed as Exhibit with identical exhibit number to the Registrant's
Current Report on Form 8-K dated June 19, 1998 and incorporated herein
by reference thereto.
(2) Filed as Exhibit with identical exhibit number to the Registrant's
Current Report on Form 8-K dated March 5, 1998 and incorporated by
reference thereto.
II-5
<PAGE>
Void after 5:00 p.m. New York Time, on April 1, 2002.
Warrant to Purchase 335,000 Shares of Common Stock.
WARRANT TO PURCHASE COMMON STOCK
OF
IAT MULTIMEDIA, INC.
This is to Certify That, FOR VALUE RECEIVED, Royce Investment
Group, Inc. ("Royce"), or assigns (collectively, the "Holder"), is entitled to
purchase, subject to the provisions of this Warrant, from IAT Multimedia, Inc.,
a Delaware corporation (the "Company"), 335,000 fully paid, validly issued and
nonassessable shares of Common Stock, par value $.01 per share, of the Company
("Common Stock") at a price of $9.90 per share at any time or from time to time
during the period from April 1, 1997 to April 1, 2002, but not later than 5:00
p.m. New York City Time, on April 1, 2002. The number of shares of Common Stock
to be received upon the exercise of this Warrant and the price to be paid for
each share of Common Stock may be adjusted from time to time as hereinafter set
forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Shares" and the exercise price of a share of Common Stock in effect at any time
and as adjusted from time to time is hereinafter sometimes referred to as the
"Exercise Price". This Warrant, together with warrants of like tenor,
constituting in the aggregate warrants (the "Warrants") to purchase 335,000
shares of Common Stock, was originally issued pursuant to an underwriting
agreement between the Company and Royce, in connection with a public offering
through Royce of 3,350,000 shares of Common Stock, in consideration of $335
received for the Warrants.
(a) EXERCISE OF WARRANT.
(1) This Warrant may be exercised in whole or in
part at any time or from time to time on or after April 1, 1998 and until
April 1, 2002 (the "Exercise Period"), subject to the provisions of Section (j)
(2) hereof; provided, however, that (i) if either such day is a day on which
banking institutions in the State of New York are authorized by law to close,
then on the next succeeding day which shall not be such a day, and (ii) in the
event of any merger, consolidation or sale of substantially all the assets of
the Company as an entirety, resulting in any distribution to the Company's
stockholders, prior to April 1, 2002, the Holder shall have the right to
exercise this Warrant commencing at such time through April 1, 2002 into the
kind and amount of shares of stock and other securities and property (including
cash) receivable by a holder of the number of shares of Common Stock into which
this Warrant might
<PAGE>
have been exercisable immediately prior thereto. This Warrant may be exercised
by presentation and surrender hereof to the Company at its principal office, or
at the office of its stock transfer agent, if any, with the Purchase Form
annexed hereto duly executed and accompanied by payment of the Exercise Price
for the number of Warrant Shares specified in such form. As soon as practicable
after each such exercise of the warrants, but not later than seven (7) days
from the date of such exercise, the Company shall issue and deliver to the
Holder a certificate or certificate for the Warrant Shares issuable upon such
exercise, registered in the name of the Holder or its designee. If this Warrant
should be exercised in part only, the Company shall, upon surrender of this
Warrant for cancellation, execute and deliver a new Warrant evidencing the
rights of the Holder thereof to purchase the balance of the Warrant Shares
purchasable thereunder. Upon receipt by the Company of this Warrant at its
office, or by the stock transfer agent of the Company at its office, in proper
form for exercise, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be physically delivered
to the Holder.
(2) At any time during the Exercise Period, the
Holder may, at its option, exchange this Warrant, in whole or in part (a
"Warrant Exchange"), into the number of Warrant Shares determined in accordance
with this Section (a)(2), by surrendering this Warrant at the principal office
of the Company or at the office of its stock transfer agent, accompanied by a
notice stating such Holder's intent to effect such exchange, the number of
Warrant Shares to be exchanged and the date on which the Holder requests that
such Warrant Exchange occur (the "Notice of Exchange"). The Warrant Exchange
shall take place on the date specified in the Notice of Exchange or, if later,
the date the Notice of Exchange is received by the Company (the "Exchange
Date"). Certificates for the shares issuable upon such Warrant Exchange and, if
applicable, a new warrant of like tenor evidencing the balance of the shares
remaining subject to this Warrant, shall be issued as of the Exchange Date and
delivered to the Holder within seven (7) days following the Exchange Date. In
connection with any Warrant Exchange, this Warrant shall represent the right to
subscribe for and acquire the number of Warrant Shares (rounded to the next
highest integer) equal to (i) the number of Warrant Shares specified by the
Holder in its Notice of Exchange (the "Total Number") less (ii) the number of
Warrant Shares equal to the quotient obtained by dividing (A) the product of
the Total Number and the existing Exercise Price by (B) the current market
value of a share of Common Stock. Current market value shall have the meaning
set forth Section (c) below, except that for purposes hereof, the date of
exercise, as used in such Section (c), shall mean the Exchange Date.
(b) RESERVATION OF SHARES. The Company shall at all times
reserve for issuance and/or delivery upon exercise of this Warrant such number
of shares of its Common Stock as shall be required for issuance and delivery
upon exercise of the Warrants.
(c) FRACTIONAL SHARES. No fractional shares or script
representing fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for upon any exercise
hereof, the Company shall pay to the Holder an amount in
2
<PAGE>
cash equal to such fraction multiplied by the current market value of a share,
determined as follows:
(1) If the Common Stock is listed on a national
securities exchange or admitted to unlisted trading
privileges on such exchange or listed for trading on the
Nasdaq National Market, the current market value shall be the
last reported sale price of the Common Stock on such exchange
or market on the last business day prior to the date of
exercise of this Warrant or if no such sale is made on such
day, the average closing bid and asked prices for such day on
such exchange or market; or
(2) If the Common Stock is not so listed or admitted
to unlisted trading privileges, but is traded on the Nasdaq
Small Cap Market, the current Market Value shall be the
average of the closing bid and asked prices for such day on
such market and if the Common Stock is not so traded, the
current market value shall be the mean of the last reported
bid and asked prices reported by the National Quotation
Bureau, Inc. on the last business day prior to the date of
the exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted
to unlisted trading privileges and bid and asked prices are
not so reported, the current market value shall be an amount,
not less than book value thereof as at the end of the most
recent fiscal year of the Company ending prior to the date of
the exercise of the Warrant, determined in such reasonable
manner as may be prescribed by the Board of Directors of the
Company.
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT.
This Warrant is exchangeable, without expense, at the option of the Holder, upon
presentation and surrender hereof to the Company or at the office of its stock
transfer agent, if any, for other warrants of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Common Stock purchasable hereunder. This Warrant is not transferable (other
than by will or pursuant to the laws of descent and distribution and except as
provided under Subsection (a)(1)(ii) hereof) and may not be assigned or
hypothecated for a period of one year from April 1, 1997, except to and among
the officers of Royce, any member of the selling group, or to and among the
officers of any member of the selling group. Upon surrender of this Warrant to
the Company at its principal office or at the office of its stock transfer
agent, if any, with the Assignment Form annexed hereto duly executed and funds
sufficient to pay any transfer tax, the Company shall, without charge, execute
and deliver a new Warrant in the name of the assignee named in such instrument
of assignment and this Warrant shall promptly be cancelled. This Warrant may be
divided or combined with other warrants which carry the same rights upon
presentation hereof at the principal office of the Company or at the office of
its stock transfer agent, if any, together with a written notice specifying the
names and denominations in which new Warrants are to be issued and signed by
the Holder hereof. The term "Warrant" as used herein includes any Warrants into
which this Warrant may be
3
<PAGE>
divided or exchanged. Upon receipt by the Company of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Warrant, and (in the
case of loss, theft or destruction) of reasonably satisfactory indemnification,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
will execute and deliver a new Warrant of like tenor and date. Any such new
Warrant executed and delivered shall constitute an additional contractual
obligation on the part of the Company, whether or not this Warrant so lost,
stolen, destroyed, or mutilated shall be at any time enforceable by anyone.
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue
hereof, be entitled to any rights of a shareholder in the Company, either at
law or equity, and the rights of the Holder are limited to those expressed in
the Warrant and are not enforceable against the Company except to the extent
set forth herein.
(f) ANTI-DILUTION PROVISIONS. The Exercise Price in
effect at any time and the number and kind of securities purchasable upon the
exercise of the Warrants shall be subject to adjustment from time to time upon
the happening of certain events as follows:
(1) In case the Company shall (i) declare a dividend
or make a distribution on its outstanding shares of Common
Stock in shares of Common Stock, (ii) subdivide or reclassify
its outstanding shares of Common Stock into a greater number
of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the
Exercise Price in effect at the time of the record date for
such dividend or distribution or of the effective date of
such subdivision, combination or reclassification shall be
adjusted so that it shall equal the price determined by
multiplying the Exercise Price by a fraction, the denominator
of which shall be the number of shares of Common Stock
outstanding after giving effect to such action, and the
numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such action. Such
adjustment shall be made successively whenever any event
listed above shall occur.
(2) Whenever the Exercise Price payable upon
exercise of each Warrant is adjusted pursuant to Subsection
(1) above, the number of Shares purchasable upon exercise of
this Warrant shall simultaneously be adjusted by multiplying
the number of Shares initially issuable upon exercise of this
Warrant by the Exercise Price in effect on the date hereof
and dividing the product so obtained by the Exercise Price,
as adjusted.
(3) No adjustment in the Exercise Price shall be
required unless such adjustment would require an increase or
decrease of at least five cents ($0.05) in such price;
provided, however, that any adjustments which by reason of
this Subsection (3) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment required to be made hereunder. All calculations
under this Section (f) shall be made to the nearest cent or
to the
4
<PAGE>
nearest one-hundredth of a share, as the case may be.
Anything in this Section (f) to the contrary notwithstanding,
the Company shall be entitled, but shall not be required, to
make such changes in the Exercise Price, in addition to those
required by this Section (f), as it shall determine, in its
sole discretion, to be advisable in order that any dividend
or distribution in shares of Common Stock, or any
subdivision, reclassification or combination of Common Stock,
hereafter made by the Company shall not result in any Federal
Income tax liability to the holders of Common Stock or
securities convertible into Common Stock (including
Warrants).
(4) Whenever the Exercise Price is adjusted, as
herein provided, the Company shall promptly but no later than
10 days after any request for such an adjustment by the
Holder, cause a notice setting forth the adjusted Exercise
Price and adjusted number of Shares issuable upon exercise of
each Warrant, and, if requested, information describing the
transactions giving rise to such adjustments, to be mailed to
the Holders at their last addresses appearing in the Warrant
Register, and shall cause a certified copy thereof to be
mailed to its transfer agent, if any. In the event the
Company does not provide the Holder with such notice and
information within 10 days of a request by the Holder, then
notwithstanding the provisions of this Section (f), the
Exercise Price shall be immediately adjusted to equal the
lowest Offering Price, Subscription Price or Conversion
Price, as applicable, since the date of this Warrant, and the
number of shares issuable upon exercise of this Warrant shall
be adjusted accordingly. The Company may retain a firm of
independent certified public accountants selected by the
Board of Directors (who may be the regular accountants
employed by the Company) to make any computation required by
this Section (f), and a certificate signed by such firm shall
be conclusive evidence of the correctness of such adjustment.
(5) In the event that at any time, as a result of an
adjustment made pursuant to Subsection (1) above, the Holder
of this Warrant thereafter shall become entitled to receive
any shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon
exercise of this Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common
Stock contained in Subsections (1) to (3), inclusive above.
(6) Irrespective of any adjustments in the Exercise
Price or the number or kind of shares purchasable upon
exercise of this Warrant, Warrants theretofore or thereafter
issued may continue to express the same price and number and
kind of shares as are stated in the similar Warrants
initially issuable pursuant to this Agreement.
(g) OFFICER'S CERTIFICATE. Whenever the Exercise Price
shall be adjusted as required by the provisions of the foregoing Section, the
Company shall forthwith file
5
<PAGE>
in the custody of its Secretary or an Assistant Secretary at its principal
office and with its stock transfer agent, if any, an officer's certificate
showing the adjusted Exercise Price determined as herein provided, setting
forth in reasonable detail the facts requiring such adjustment, including a
statement of the number of additional shares of Common Stock, if any, and such
other facts as shall be necessary to show the reason for and the manner of
computing such adjustment. Each such officer's certificate shall be made
available at all reasonable times for inspection by the holder or any holder of
a Warrant executed and delivered pursuant to Section (a) and the Company shall,
forthwith after each such adjustment, mail a copy by certified mail of such
certificate to the Holder or any such holder.
(h) NOTICES TO WARRANT HOLDERS. So long as this Warrant
shall be outstanding, (i) if the Company shall pay any dividend or make any
distribution upon the Common Stock or (ii) if the Company shall offer to the
holders of Common Stock for subscription or purchase by them any share of any
class or any other rights or (iii) if any capital reorganization of the
Company, reclassification of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation, sale, lease or transfer
of all or substantially all of the property and assets of the Company to
another corporation, or voluntary or involuntary dissolution, liquidation or
winding up of the Company shall be effected, then in any such case, the Company
shall cause to be mailed by certified mail to the Holder, at least fifteen days
prior the date specified in (x) or (y) below, as the case may be, a notice
containing a brief description of the proposed action and stating the date on
which (x) a record is to be taken for the purpose of such dividend,
distribution or rights, or (y) such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding
up is to take place and the date, if any is to be fixed, as of which the
holders of Common Stock or other securities shall receive cash or other
property deliverable upon such reclassification, reorganization, consolidation,
merger, conveyance, dissolution, liquidation or winding up.
(i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case
of any reclassification, capital reorganization or other change of outstanding
shares of Common Stock of the Company, or in case of any consolidation or
merger of the Company with or into another corporation (other than a merger
with a subsidiary in which merger the Company is the continuing corporation and
which does not result in any reclassification, capital reorganization or other
change of outstanding shares of Common Stock of the class issuable upon
exercise of this Warrant) or in case of any sale, lease or conveyance to
another corporation of the property of the Company as an entirety, the Company
shall, as a condition precedent to such transaction, cause effective provisions
to be made so that the Holder shall have the right thereafter by exercising
this Warrant at any time prior to the expiration of the Warrant, to purchase
the kind and amount of shares of stock and other securities and property
receivable upon such reclassification, capital reorganization and other change,
consolidation, merger, sale or conveyance by a holder of the number of shares
of Common Stock which might have been purchased upon exercise of this Warrant
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance. Any such provision shall include provision for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Warrant. The foregoing provisions of this Section (i) shall
similarly apply to successive reclassifications,
6
<PAGE>
capital reorganizations and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances. In the event that in connection
with any such capital reorganization or reclassification, consolidation,
merger, sale or conveyance, additional shares of Common Stock shall be issued
in exchange, conversion, substitution or payment, in whole or in part, for a
security of the Company other than Common Stock, any such issue shall be
treated as an issue of Common Stock covered by the provisions of Subsection (1)
of Section (f) hereof.
(j) REGISTRATION UNDER THE SECURITIES ACT OF 1933.
(1) The Company shall advise the Holder of this
Warrant or of the Warrant Shares or any then holder of
Warrants or Warrant Shares (such persons being collectively
referred to herein as "holders") by written notice at least
four weeks prior to the filing of any post-effective
amendment to the Company's Registration Statement No.
333-18529 on Form S-1 ("Registration Statement"), declared
effective by the Securities and Exchange Commission on March
26, 1997 or of any new registration statement or
post-effective amendment thereto under the Securities Act of
1933 (the "Act") covering securities of the Company and will
for a period of six years, commencing one year from the
effective date of the Registration Statement, upon the
request of any such holder, include in any such
post-effective amendment or registration statement such
information as may be required to permit a public offering of
the Warrants or the Warrant Shares. The Company shall supply
prospectuses and other documents as the Holder may request in
order to facilitate the public sale or other disposition of
the Warrants or Warrant Shares, qualify the Warrants and the
Warrant Shares for sale in such states as any such holder
designates and do any and all other acts and things which may
be necessary or desirable to enable such Holders to
consummate the public sale or other disposition of the
Warrants or Warrant Shares, and furnish indemnification in
the manner as set forth in Subsection (3)(C) of this Section
(j). Such holders shall furnish information and
indemnification as set forth in Subsection (3)(C) of this
Section (j), except that the maximum amount which may be
recovered from the Holder shall be limited to the amount of
proceeds received by the Holder from the sale of the Warrants
or Warrant Shares.
(2) If any majority holder (as defined in Subsection
(4) of this Section (j) below) shall give notice to the
Company at any time during the four year period commencing
one year from the effective date of the Registration
Statement to the effect that such holder contemplates (i) the
transfer of all or any part of his or its Warrants and/or
Warrant Shares, or (ii) the exercise and/or conversion of all
or any part of his or its Warrants and the transfer of all or
any part of the Warrants and/or Warrant Shares under such
circumstances that a public offering (within the meaning of
the Act) of Warrants and/or Warrant Shares will be involved,
and desires to register under the Act, the Warrants and/or
the Warrant Shares, then the Company shall, within two weeks
after receipt of
7
<PAGE>
such notice, file a post-effective amendment to the
Registration Statement or a new registration statement on
Form S-1 or such other form as the holder requests, pursuant
to the Act, to the end that the Warrants and/or Warrant
Shares may be sold under the Act as promptly as practicable
thereafter and the Company will use its best efforts to cause
such registration to become effective and continue to be
effective (current) (including the taking of such steps as
are necessary to obtain the removal of any stop order) until
the holder has advised that all of the Warrants and/or
Warrant Shares have been sold; provided that such holder
shall furnish the Company with appropriate information
(relating to the intentions of such holders) in connection
therewith as the Company shall reasonably request in writing.
In the event the registration statement is not declared
effective under the Act prior to April 1, 2002, then at the
holder's request, the Company shall purchase the Warrants
from the holders for a per share price equal to the fair
market value of the Common Stock less the per share Exercise
Price. The holder may, at its option, request the
registration of the Warrants and/or Warrant Shares in a
registration statement made by the Company as contemplated by
Subsection (1) of this Section (j) or in connection with a
request made pursuant to Subsection (2) of this Section (j)
prior to the acquisition of the Warrant Shares upon exercise
of the Warrants and even though the holder has not given
notice of exercise of the Warrants. The holder may thereafter
at its option, exercise the Warrants at any time or from time
to time subsequent to the effectiveness under the Act of the
registration statement in which the Warrant Shares were
included.
(3) The following provision of this Section (j)
shall also be applicable:
(A) Within ten days after receiving any
such notice pursuant to Subsection (2) of this
Section (j), the Company shall give notice to the
other holders of Warrants and Warrant Shares,
advising that the Company is proceeding with such
post-effective amendment or registration statement
and offering to include therein Warrants and/or
Warrant Shares of such other holders, provided that
they shall furnish the Company with such appropriate
information (relating to the intentions of such
holders) in connection therewith as the Company
shall reasonably request in writing. Following the
effective date of such post-effective amendment or
registration, the Company shall upon the request of
any owner of Warrants and/or Warrant Shares
forthwith supply such a number of prospectuses
meeting the requirements of the Act, as shall be
requested by such owner to permit such holder to
make a public offering of all Warrants and/or
Warrant Shares from time to time offered or sold to
such holder, provided that such holder shall from
time to time furnish the Company with such
appropriate information (relating to the intentions
of such holder) in connection therewith as the
Company shall request in writing. The Company shall
also use its best efforts to qualify the Warrant
Shares for sale in such states as such majority
holder shall designate.
8
<PAGE>
(B) The Company shall bear the entire cost
and expense of any registration of securities
initiated by it under Subsection (1) of this Section
(j) notwithstanding that Warrants and/or Warrant
Shares subject to this Warrant may be included in
any such registration. The Company shall also comply
with one request for registration made by the
majority holder pursuant to Subsection (2) of this
Section (j) at its own expense and without charge to
any holder of any Warrants and/or Warrant Shares;
and the Company shall comply with one additional
request made by the majority holder pursuant to
Subsection (2) of this Section (j) (and not deemed
to be pursuant to Subsection (1) of this Section
(j)) at the sole expense of such majority holder.
Any holder whose Warrants and/ or Warrant Shares are
included in any such registration statement pursuant
to this Section (j) shall, however, bear the fees of
his own counsel and any registration fees, transfer
taxes or underwriting discounts or commissions
applicable to the Warrant Shares sold by him
pursuant thereto.
(C) The Company shall indemnify and hold
harmless each such holder and each underwriter,
within the meaning of the Act, who may purchase from
or sell for any such holder any Warrants and/or
Warrant Shares from and against any and all losses,
claims, damages and liabilities caused by any untrue
statement or alleged untrue statement of a material
fact contained in the Registration Statement or any
post-effective amendment thereto or any registration
statement under the Act or any prospectus included
therein required to be filed or furnished by reason
of this Section (j) or caused by any omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statements therein not misleading, except
insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement
or alleged untrue statement or omission or alleged
omission based upon information furnished or
required to be furnished in writing to the Company
by such holder or underwriter expressly for use
therein, which indemnification shall include each
person, if any, who controls any such underwriter
within the meaning of such Act provided, however,
that the Company will not be liable in any such case
to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or
alleged omission made in said registration
statement, said preliminary prospectus, said final
prospectus or said amendment or supplement in
reliance upon and in conformity with written
information furnished by such Holder or any other
Holder, specifically for use in the preparation
thereof.
(D) Neither the giving of any notice by any
such majority holder nor the making of any request
for prospectuses shall impose any
9
<PAGE>
upon such majority holder or owner making such
request any obligation to sell any Warrants and/or
Warrant Shares, or exercise any Warrants.
(4) The term "majority holder" as used in this
Section (j) shall include any owner or combination of owners
of Warrants or Warrant Shares in any combination if the
holdings of the aggregate amount of:
(i) the Warrants held by him or among
them, plus
(ii) the Warrants which he or they would
be holding if the Warrants for the Warrant Shares
owned by him or among them had not been exercised,
would constitute a majority of the Warrants originally issued.
The Company's agreements with respect to Warrants or Warrant
Shares in this Section (j) shall continue in effect regardless of the exercise
and surrender of this Warrant.
(k) GOVERNING LAW.
This Agreement shall be governed by and in accordance
with the laws of the State of New York, without giving effect to the principles
of conflicts of law thereof.
10
<PAGE>
IN WITNESS WHEREOF, IAT Multimedia, Inc. has caused this
Stock Purchase Warrant to be signed by its duly authorized officers under its
corporate seal, and this Stock Purchase Warrant to be dated April , 1997.
IAT MULTIMEDIA, INC.
By: /s/ Viktor Vogt
------------------------
[SEAL]
Attest:
/s/ Klaus Grissemann
- ------------------------
Secretary
11
<PAGE>
PURCHASE FORM
-------------
Dated , 19
------------- --
The undersigned hereby irrevocably elects to exercise the
within Warrant to the extent of purchasing shares of Common Stock and
hereby makes payment of in payment of the actual exercise price thereof.
-------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
--------------------------------------
Name
------------------------------------------
(Please typewrite or print in block letters)
Address
---------------------------------------
Signature
-------------------------------------
<PAGE>
PURCHASE FORM
-------------
Dated , 19
------------- --
The undersigned hereby irrevocably elects to exercise the
within Warrant to the extent of purchasing shares of Common Stock and
hereby makes payment of in payment of the actual exercise price thereof.
-------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
--------------------------------------
Name
------------------------------------------
(Please typewrite or print in block letters)
Address
---------------------------------------
Signature
-------------------------------------
<PAGE>
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED, hereby sells, assigns and
transfers unto
Name
-------------------------------------------
(Please typewrite or print in block letters)
Address
----------------------------------------
the right to purchase Common Stock represented by this Warrant to the extent of
shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint as attorney, to transfer the same on the
books of the Company with full power of substitution in the premises.
Date , 19
------------- --
Signature
--------------------------------------
<PAGE>
********************************************************************************
STOCK PURCHASE WARRANT
To Purchase Common Stock of
IAT MULTIMEDIA, INC.
********************************************************************************
<PAGE>
EXHIBIT 4.2
NON-QUALIFIED STOCK OPTION AGREEMENT
This NON-QUALIFIED STOCK OPTION AGREEMENT dated as of , 1998,
between IAT MULTIMEDIA, INC., a Delaware corporation (the "Company"), and
(the "Optionee", which term as used herein shall be deemed to
include any successor to the Optionee by will or by the laws of descent and
distribution, unless the context shall otherwise require).
In consideration for [providing the Company with certain advisory
services, serving as a member of the Board of Directors of the Company] the
Company has agreed to issue the Optionee with a non-incentive option to
purchase [ ] shares of Common Stock, $0.01 par value, of the Company (the
"Common Stock"), at the price of $[ ] per share (the "Option Price"), upon the
terms and conditions hereinafter set forth, which option is not intended to
qualify for Federal income tax purposes as an "incentive stock option" within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code").
NOW, THEREFORE, in consideration of the mutual premises and undertakings
hereinafter set forth, the parties hereto agree as follows:
SECTION 1. OPTION; OPTION PRICE. The Company hereby grants to the
Optionee the option (the "Option") to purchase, subject to the terms and
conditions of this Agreement, [ ] shares of Common Stock at an exercise price
per share equal to the Option Price.
SECTION 2. TERMS AND CONDITIONS OF OPTION.
(a) Expiration Date. The term (the "Option Term") of the Option shall
commence on the date of this Agreement and shall expire on [ ].
(b) Vesting of Options. The Option shall become exercisable as to the
total number of shares of Common Stock subject to the Option as set forth in
EXHIBIT A hereto.
SECTION 3. PROCEDURE FOR EXERCISE.
(a) Notice. The Optionee may exercise the Option (for the shares of
Common Stock represented thereby) in whole or in part (but for the purchase of
whole shares of Common Stock only), by delivering a written notice (the
"Notice") to the Secretary of the Company. The Notice shall state that the
Optionee elects to exercise the Option; the number of shares of Common Stock
with respect to which the Option is being exercised (the "Optioned Shares");
the method of payment for the Optioned Shares, as hereinafter described, and
delivery of the stock certificate or certified check with respect to such
chosen method of payment; the date upon
<PAGE>
which the Optionee desires to consummate the purchase. The following forms of
payment may be used by the Optionee upon exercise of the Option: certified
check payable to the Company in an amount equal to the aggregate Option Price
with respect to the Optioned Shares; or stock certificates (in negotiable form)
representing shares of Common Stock having a market value, as reasonably
determined by the Board of Directors of the Company, equal to the aggregate
Option Price for the Optioned Shares.
(b) Issuance of Certificates. The Company shall issue stock certificates
in the name of the Optionee for the Optioned Shares as soon as practicable
after receipt of the Notice and payment of the aggregate Option Price for such
Optioned Shares.
SECTION 4. ADJUSTMENTS.
(a) Changes in Capital Structure. If the Common Stock is changed by
reason of a stock split, reverse stock split or stock combination, stock
dividend or distribution, or recapitalization, or converted into or exchanged
for other securities as a result of a merger, consolidation or reorganization,
the Board shall make such adjustments in the number and class of shares of
Common Stock subject to the Option as shall be necessary to preserve to the
Optionee's rights substantially proportionate to his rights existing
immediately prior to such transaction or event (but subject to the limitations
and restrictions on such rights), including, without limitation, a
corresponding adjustment changing the number and class of shares allocated to,
and the Option Price of, the Option or portion thereof outstanding at the time
of such change.
(b) Special Rules. The following rules shall apply in connection with
Section 4(a) above: no adjustment shall be made for cash dividends or the
issuance to stockholders of rights to subscribe for additional shares of Common
Stock, or other securities; and any adjustments referred to in Section 4(a)
shall be made by the Board in its sole discretion and shall, absent manifest
error, be conclusive and binding on the Optionee.
SECTION 5. RESTRICTIONS ON OPTION AND OPTIONED SHARES Upon the exercise
of the Option at a time when there is not in effect a registration statement
under the Securities Act of 1933, as amended, relating to the shares of Common
Stock issuable upon exercise of the Option, the Board in its discretion may, as
a condition to any exercise of the Option, require the Optionee to represent in
writing that the securities received upon exercise of the Option are being
acquired for investment and not with a view to distribution and to make such
other representations and warranties as are deemed appropriate by the Company.
Stock certificates representing securities acquired upon the exercise of the
Option that have not been registered under the Securities Act of 1933, as
amended, shall, if required by the Board, bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
-2-
<PAGE>
"SECURITIES ACT"). THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES
UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL TO THE ISSUER
HEREOF THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT."
No shares of Common Stock shall be issued and delivered upon the
exercise of the Option unless and until the Company and/or the Optionee shall
have complied with all applicable Federal or state registration, listing and/or
qualification requirements and all other requirements of law or of any
regulatory agencies having jurisdiction.
SECTION 6. NON-TRANSFERABILITY. The Option shall not be transferable
other than by will or by the laws of descent and distribution. During the
lifetime of Optionee, the Option shall be exercisable only by Optionee.
Optionee shall not pledge, hypothecate or otherwise encumber or permit any
liens to attach to the Option.
SECTION 7. TAX WITHHOLDING. In the event the Company determines that it
is required to withhold amounts for payment of federal, state and local income
taxes, or any other taxes in connection with the exercise of the Option or the
disposition of shares of Common Stock issued pursuant to the exercise of the
Option, Optionee or any person succeeding to the rights of Optionee, as a
condition to such exercise or disposition, shall make arrangements satisfactory
to the Company to enable it to satisfy such withholding requirements.
SECTION 8. TERMINATION. Nothing contained in this Option Agreement shall
confer upon the Optionee any right to remain a [DIRECTOR, ADVISOR, AS
APPLICABLE] of the Company. If the Optionee's position with the Company is
terminated for any reason, or by reason of death or disability, the vested
portion of the Option may be exercised by Optionee, or his heirs, devises, or
legatees no later than [THREE] months from the date of termination and the
unvested portion shall be forfeited, but in no event shall any portion of the
Option remain exercisable after the expiration date of the Option as specified
in paragraph (a) of Section 2.
SECTION 9. TREATMENT OF OPTION AS NON-QUALIFIED STOCK OPTION. The
Company and Optionee acknowledge that the Option granted hereunder is not
qualified for Federal income tax purposes as an "incentive stock option" within
the meaning of Section 422 of the Code.
SECTION 10. GOVERNING LAW. All questions concerning the construction,
interpretation and validity of this Agreement shall be governed by and
construed and enforced in accordance with the domestic laws of the State of New
York, without giving effect to any choice or conflict of law provision or rule
(whether in the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
-3-
<PAGE>
In furtherance of the foregoing, the internal law of the State of New York will
control the interpretation and construction of this Agreement, even if under
such jurisdiction's choice of law or conflict of law analysis, the substantive
law of some other jurisdiction would ordinarily apply.
SECTION 11. NOTICES. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given and delivered if personally delivered or if sent
by nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
If to the Company, to it:
IAT Multimedia, Inc.
Geschaftshaus Wasserschloss
Aarestrasse 17, CH-5300
Vogelsang-Turgi, Switzerland
Telephone: 41-26-921-1292
Telecopier: 41-26-921-0093
Attention: Klaus Grissemann
with a copy to:
Bachner Tally Polevoy & Misher, LLP
380 Madison Avenue
18th Floor
New York, New York 10017
Attention: Steven Skolnick, Esq.
Telecopier: (212) 503-2171
Telephone: (212) 682-5729
and
if to the Optionee, to it at:
[ ]
Telecopier: ( )
Telephone: ( )
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such notice
or communication shall be deemed to have been received (i) in the case of
personal delivery, on the date of such delivery (or if such date is not a
business day, on the next business after the date of delivery), (ii) in the
case of nationally-recognized overnight courier, on the next business day after
the date sent, (iii) in the case of telecopy transmission, when received (or if
not sent on a business day, on the next
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<PAGE>
business day after the date sent), and (iv) in the case of mailing, on the
third business day following that on which the piece of mail containing such
communication is posted.
SECTION 12. OPTIONEE UNDERTAKING. The Optionee hereby agrees to take
whatever additional actions and execute whatever additional documents the
Company may in its reasonable judgment deem necessary or advisable in order to
carry out or effect one or more of the obligations or restrictions imposed on
the Optionee pursuant to the express provisions of this Agreement.
SECTION 13. MODIFICATION OF RIGHTS. The rights of the Optionee are
subject to modification and termination in certain events as provided in this
Agreement.
SECTION 14. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts made and to be wholly performed therein.
SECTION 15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
SECTION 16. ENTIRE AGREEMENT. This Agreement and the Plan constitute the
entire agreement between the parties with respect to the subject matter hereof,
and supersede all previously written or oral negotiations, commitments,
representations and agreements with respect thereto.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Option
Agreement as of the date first written above.
IAT MULTIMEDIA, INC.
By:
------------------------------
[ ]
---------------------------------
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<PAGE>
EXHIBIT A
_________ Options shall vest (if at all) as follows:
Number of
Time Options Vested
- ---- --------------
-7-
<PAGE>
NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO
WHICH SUCH SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
THEREUNDER AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
IAT MULTIMEDIA, INC.
WARRANT
Dated: June 19, 1998
IAT Multimedia, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, JNC Opportunity Fund Ltd., or its
registered assigns ("Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company up to a total of 35,300 shares of Common
Stock, $.01 par value per share (the "Common Stock"), of the Company (each such
share, a "Warrant Share" and all such shares, the "Warrant Shares") at an
exercise price equal to $13.45 per share (as adjusted from time to time as
provided in Section 9, the "Exercise Price"), at any time and from time to time
from and after the date hereof and through and including June 19, 2003 (the
"Expiration Date"), and subject to the following terms and conditions:
1. Registration of Warrant. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, and the Company shall
not be affected by notice to the contrary.
2. Registration of Transfers and Exchanges.
(a) The Company shall register the transfer of any portion of this
Warrant in the Warrant Register, upon surrender of this Warrant, with the Form
of Assignment attached hereto duly completed and signed, to the Transfer Agent
or to the Company at the office specified in or pursuant to Section 3(b)
together with the legal opinion of counsel to the Holder which is reasonably
satisfactory to the Company to the effect that such transfer is exempt from the
registration requirements of the Securities Act of 1933 as amended (the
"Securities Act"). Upon any such registration or transfer, a new warrant to
purchase Common
<PAGE>
Stock, in substantially the form of this Warrant (any such new warrant, a "New
Warrant"), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining portion of
this Warrant not so transferred, if any, shall be issued to the transferring
Holder. The acceptance of the New Warrant by the transferee thereof shall be
deemed the acceptance of such transferee of all of the rights and obligations
of a holder of a Warrant.
(b) This Warrant is exchangeable, upon the surrender hereof by the
Holder to the office of the Company specified in or pursuant to Section 3(b)
for one or more New Warrants, evidencing in the aggregate the right to purchase
the number of Warrant Shares which may then be purchased hereunder. Any such
New Warrant will be dated the date of such exchange.
3. Duration and Exercise of Warrants.
(a) This Warrant shall be exercisable by the registered Holder on any
business day before 5:30 P.M., Eastern time, at any time and from time to time
on or after the date hereof to and including the Expiration Date. At 5:30 P.M.,
Eastern time on the Expiration Date, the portion of this Warrant not exercised
prior thereto shall be and become void and of no value. Prior to the Expiration
Date, the Company may not call or otherwise redeem this Warrant without the
prior written consent of the Holder.
(b) Subject to Sections 2(b), 6 and 10, upon surrender of this Warrant,
with the Form of Election to Purchase attached hereto duly completed and
signed, to the Company at its address for notice set forth in Section 12 and
upon payment of the Exercise Price cash multiplied by the number of Warrant
Shares that the Holder intends to purchase hereunder, in lawful money of the
United States of America, in cash or by certified or official bank check or
checks, all as specified by the Holder in the Form of Election to Purchase, the
Company shall promptly (but in no event later than 3 business days after the
Date of Exercise) issue or cause to be issued and cause to be delivered to or
upon the written order of the Holder and in such name or names as the Holder
may designate, a certificate for the Warrant Shares issuable upon such
exercise, free of restrictive legends other than as required by applicable law
or the provisions of this Warrant. Any person so designated by the Holder to
receive Warrant Shares shall be deemed to have become holder of record of such
Warrant Shares as of the Date of Exercise of this Warrant.
A "Date of Exercise" means the date on which the Company shall have
received (i) this Warrant (or any New Warrant, as applicable), with the Form of
Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the holder hereof to be
purchased.
(c) This Warrant shall be exercisable, either in its entirety or, from
time to time, for a portion of the number of Warrant Shares. If less than all
of the Warrant
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<PAGE>
Shares which may be purchased under this Warrant are exercised at any time, the
Company shall issue or cause to be issued, at its expense, a New Warrant
evidencing the right to purchase the remaining number of Warrant Shares for
which no exercise has been evidenced by this Warrant.
4. Piggyback Registration Rights. Subsequent to the 270th day from the
date hereof and at any time during the term of this Warrant the Company may not
file any registration statement with the Securities and Exchange Commission
(other than registration statements of the Company filed on Form S-8 or Form
S-4, each as promulgated under the Securities Act pursuant to which the Company
is registering securities pursuant to a Company employee benefit plan or
pursuant to a merger, acquisition or similar transaction including supplements
thereto, but not additionally filed registration statements in respect of such
securities) at any time when there is not an effective registration statement
covering the resale of the Warrant Shares and naming the Holder as a selling
stockholder thereunder, unless the Company provides the Holder with not less
than 20 days notice of its intention to file such registration statement and
provides the Holder the option to include any or all of the applicable Warrant
Shares therein. The piggyback registration rights granted to the Holder
pursuant to this Section shall continue until all of the Holder's Warrant
Shares have been sold in accordance with an effective registration statement or
upon the Expiration Date. The Company will pay all registration expenses in
connection therewith.
5. Demand Registration Rights. Subsequent to the 270th day from the date
hereof and at any time during the term of this Warrant when the Warrant Shares
are not registered pursuant to an effective registration statement that names
the Holder as a selling stockholder thereunder, the Holder may make a written
request for the registration under the Securities Act (a "Demand
Registration"), of all of the Warrant Shares (the "Registrable Securities"),
and the Company shall use its best efforts to effect such Demand Registration
as promptly as possible, but in any case within 90 days thereafter. Any request
for a Demand Registration shall specify the aggregate number of Registrable
Securities proposed to be sold and shall also specify the intended method of
disposition thereof. The right to cause a registration of the Registrable
Securities under this Section 5 shall be limited to one such registration. In
any registration initiated as a Demand Registration, the Company will pay all
of its registration expenses in connection therewith. A Demand Registration
shall not be counted as a Demand Registration hereunder until the registration
statement filed pursuant to the Demand Registration has been declared effective
by the Securities and Exchange Commission and maintained continuously effective
for a period of at least 360 days or such shorter period when all Registrable
Securities included therein have been sold in accordance with such registration
statement, provided, however that any days on which such registration statement
is not effective or on which the Holder is not permitted by the Company or any
governmental authority to sell Warrant Shares under such registration statement
shall not count towards such 360-day period.
6. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or Warrants in a
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<PAGE>
name other than that of the Holder, and the Company shall not be required to
issue or cause to be issued or deliver or cause to be delivered the
certificates for Warrant Shares unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid. The Holder shall be responsible for all other tax liability
that may arise as a result of holding or transferring this Warrant or receiving
Warrant Shares upon exercise hereof.
7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and/or
substitution (as applicable) for and upon cancellation hereof, or in lieu of
and substitution for this Warrant, a New Warrant, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction and indemnity, if requested, satisfactory to it. Applicants for a
New Warrant under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable charges as
the Company may prescribe.
8. Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holder (taking into account the adjustments
and restrictions of Section 9). The Company covenants that all Warrant Shares
that shall be so issuable and deliverable shall, upon issuance and the payment
of the applicable Exercise Price in accordance with the terms hereof, be duly
and validly authorized, issued and fully paid and nonassessable.
9. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 9. Upon each such adjustment of the Exercise
Price pursuant to this Section 9, the Holder shall thereafter prior to the
Expiration Date be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting
from such adjustment.
(a) If the Company, at any time while this Warrant is outstanding, (i)
shall pay a stock dividend (except scheduled dividends paid on outstanding
preferred stock as of the date hereof which contain a stated divided rate) or
otherwise make a distribution or distributions on shares of its Common Stock
(as defined below) or on any other class of capital stock and not the Common
Stock) payable in shares of Common Stock, (ii) subdivide outstanding shares of
Common Stock into a larger number of shares, or (iii) combine outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding before
such event and of which the denominator shall be the
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<PAGE>
number of shares of Common Stock (excluding treasury shares, if any)
outstanding after such event. Any adjustment made pursuant to this Section
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and shall
become effective immediately after the effective date in the case of a
subdivision or combination, and shall apply to successive subdivisions and
combinations.
(b) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, the sale or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification, consolidation, merger, sale,
transfer or share exchange, and the Holder shall be entitled upon such event to
receive such amount of securities or property equal to the amount of Warrant
Shares such Holder would have been entitled to had such Holder exercised this
Warrant immediately prior to such reclassification, consolidation, merger,
sale, transfer or share exchange. The terms of any such consolidation, merger,
sale, transfer or share exchange shall include such terms so as to continue to
give to the Holder the right to receive the securities or property set forth in
this Section 9(b) upon any exercise following any such reclassification,
consolidation, merger, sale, transfer or share exchange.
(c) If the Company, at any time while this Warrant is outstanding, shall
distribute to all holders of Common Stock (and not to holders of this Warrant)
evidences of its indebtedness or assets or rights or warrants to subscribe for
or purchase any security (excluding those referred to in Sections 9(a), (b) and
(d)), then in each such case the Exercise Price shall be determined by
multiplying the Exercise Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution
by a fraction of which the denominator shall be the Exercise Price determined
as of the record date mentioned above, and of which the numerator shall be such
Exercise Price on such record date less the then fair market value at such
record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined
by the Company's independent certified public accountants that regularly
examines the financial statements of the Company (an "Appraiser").
(d) If, at any time while this Warrant is outstanding, the Company shall
issue or cause to be issued rights or warrants to acquire or otherwise sell or
distribute shares of Common Stock to all holders of Common Stock for a
consideration per share less than the Exercise Price then in effect, then,
forthwith upon such issue or sale, the Exercise Price shall be reduced to the
price (calculated to the nearest cent) determined by multiplying the Exercise
Price in effect immediately prior thereto by a fraction, the numerator of which
shall be the sum of (i) the number of shares of Common Stock outstanding
immediately prior to such issuance, and (ii) the number of shares of Common
Stock which the aggregate consideration received (or to be received, assuming
exercise or conversion in full of such rights, warrants and convertible
securities) for the issuance of such additional shares of Common Stock would
purchase at the
-5-
<PAGE>
Exercise Price, and the denominator of which shall be the sum of the number of
shares of Common Stock outstanding immediately after the issuance of such
additional shares. Such adjustment shall be made successively whenever such an
issuance is made.
(e) For the purposes of this Section 9, the following clauses shall also
be applicable:
(i) Record Date. In case the Company shall take a record of the holders
of its Common Stock for the purpose of entitling them (A) to receive a dividend
or other distribution payable in Common Stock or in securities convertible or
exchangeable into shares of Common Stock, or (B) to subscribe for or purchase
Common Stock or securities convertible or exchangeable into shares of Common
Stock, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
(ii) Treasury Shares. The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or for the account
of the Company, and the disposition of any such shares shall be considered an
issue or sale of Common Stock.
(f) All calculations under this Section 9 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be.
(g) Whenever the Exercise Price is adjusted pursuant to Section 9(c)
above, the Holder, after receipt of the determination by the Appraiser, shall
have the right to select an additional appraiser (which shall be a nationally
recognized accounting firm), in which case the adjustment shall be equal to the
average of the adjustments recommended by each of the Appraiser and such
appraiser. The Holder shall promptly mail or cause to be mailed to the Company,
a notice setting forth the Exercise Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment. Such adjustment
shall become effective immediately after the record date mentioned above.
(h) If:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
(iii) the Company shall authorize the granting to all holders of
the Common Stock rights or warrants to
-6-
<PAGE>
subscribe for or purchase any shares of capital stock of
any class or of any rights; or
(iv) the approval of any stockholders of the Company shall be
required in connection with any reclassification of the
Common Stock of the Company, any consolidation or merger
to which the Company is a party, any sale or transfer of
all or substantially all of the assets of the Company, or
any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property; or
(v) the Company shall authorize the voluntary dissolution,
liquidation or winding up of the affairs of the Company,
then the Company shall cause to be mailed to each Holder at their last
addresses as they shall appear upon the Warrant Register, at least 10 calendar
days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
10. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 11, be
issuable on the exercise of this Warrant, the Company shall pay an amount in
cash equal to the Exercise Price multiplied by such fraction.
11. Notices. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 4:30 p.m. (Eastern time) on a business day, (ii) the business
day after the date of transmission, if such notice or communication is
delivered
-7-
<PAGE>
via facsimile at the facsimile telephone number specified in this Section later
than 4:30 p.m. (Eastern time) on any date and earlier than 11:59 p.m. (Eastern
time) on such date, (iii) the business day following the date of mailing, if
sent by nationally recognized overnight courier service with instructions to
deliver by next Business Day, or (iv) upon actual receipt by the party to whom
such notice is required to be given. The addresses for such communications
shall be: (i) if to the Company, to Orinda Capital International, Inc., 221
East 61st Street, New York, NY 10021, Facsimile No.: (212) 754-4044, Attention:
Jacob Agam, or (ii) if to the Holder, to the Holder at the address or facsimile
number appearing on the Warrant Register or such other address or facsimile
number as the Holder may provide to the Company in accordance with this
Section 11.
12. Warrant Agent.
(a) The Company shall serve as warrant agent under this Warrant. Upon
ten (10) days' notice to the Holder, the Company may appoint a new warrant
agent.
(b) Any corporation into which the Company or any new warrant agent may
be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's
last address as shown on the Warrant Register.
13. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. This
Warrant may be amended only in writing signed by the Company and the Holder.
(b) Subject to Section 13(a), above, nothing in this Warrant shall be
construed to give to any person or corporation other than the Company and the
Holder any legal or equitable right, remedy or cause under this Warrant. This
Warrant shall inure to the sole and exclusive benefit of the Company and the
Holder.
(c) This Warrant shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York without regard to
the principles of conflicts of law thereof.
(d) The headings herein are for convenience only, do not constitute a
part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
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<PAGE>
(e) In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Warrant shall not in any way be affected
or impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by its authorized officer as of the date first indicated above.
IAT MULTIMEDIA, INC.
By: /s/ Jacob Agam
---------------------------------
Name: Jacob Agam
--------------------------------
Title: Chief Executive Officer
--------------------------------
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of
Common Stock under the foregoing Warrant)
To [ ]:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase
shares of Common Stock ("Common Stock"), $.01 par value per share, of IAT
Multimedia, Inc. and, encloses herewith $ in cash, certified or
official bank check or checks, which sum represents the aggregate Exercise
Price (as defined in the Warrant) for the number of shares of Common Stock to
which this Form of Election to Purchase relates, together with any applicable
taxes payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
--------------------------------------
- ------------------------------------------------------------------------------
(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is
entitled to purchase in accordance with the enclosed Warrant, the undersigned
requests that a New Warrant (as defined in the Warrant) evidencing the right to
purchase the shares of Common Stock not issuable pursuant to the exercise
evidenced hereby be issued in the name of and delivered to:
- ------------------------------------------------------------------------------
(Please print name and address)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Dated: ,
Name of Holder:
(Print)
--------------------------
(By:)
---------------------------
(Name:)
(Title:)
(Signature must conform in all respects to
name of holder as specified on the face of the
Warrant)
<PAGE>
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto the right represented by the
within Warrant to purchase shares of Common Stock of IAT
Multimedia, Inc. to which the within Warrant relates and appoints
attorney to transfer said right on the books of IAT
Multimedia, Inc. with full power of substitution in the premises.
Dated:
,
-----------------------------------------------------------
(Signature must conform in all respects to name of holder as
specified on the face of the Warrant)
-----------------------------------------------------------
Address of Transferee
-----------------------------------------------------------
-----------------------------------------------------------
In the presence of:
- --------------------------
<PAGE>
NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO
WHICH SUCH SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
THEREUNDER AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
IAT MULTIMEDIA, INC.
WARRANT
Dated: June 19, 1998
IAT Multimedia, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, JNC Strategic Fund Ltd., or its registered
assigns ("Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company up to a total of 23,529 shares of Common Stock, $.01
par value per share (the "Common Stock"), of the Company (each such share, a
"Warrant Share" and all such shares, the "Warrant Shares") at an exercise price
equal to $13.45 per share (as adjusted from time to time as provided in Section
9, the "Exercise Price"), at any time and from time to time from and after the
date hereof and through and including June 19, 2003 (the "Expiration Date"),
and subject to the following terms and conditions:
1. Registration of Warrant. The Company shall register this
Warrant, upon records to be maintained by the Company for that purpose (the
"Warrant Register"), in the name of the record Holder hereof from time to time.
The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, and the Company shall
not be affected by notice to the contrary.
2. Registration of Transfers and Exchanges.
(a) The Company shall register the transfer of
any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Transfer Agent or to the Company at the office specified in or pursuant
to Section 3(b) together with the legal opinion of counsel to the Holder which
is reasonably satisfactory to the Company to the effect that such transfer is
exempt from the registration requirements of the Securities Act of 1933 as
amended (the "Securities Act"). Upon any such registration or transfer, a new
warrant to purchase Common Stock, in substantially
<PAGE>
the form of this Warrant (any such new warrant, a "New Warrant"), evidencing
the portion of this Warrant so transferred shall be issued to the transferee
and a New Warrant evidencing the remaining portion of this Warrant not so
transferred, if any, shall be issued to the transferring Holder. The acceptance
of the New Warrant by the transferee thereof shall be deemed the acceptance of
such transferee of all of the rights and obligations of a holder of a Warrant.
(b) This Warrant is exchangeable, upon the
surrender hereof by the Holder to the office of the Company specified in or
pursuant to Section 3(b) for one or more New Warrants, evidencing in the
aggregate the right to purchase the number of Warrant Shares which may then be
purchased hereunder. Any such New Warrant will be dated the date of such
exchange.
3. Duration and Exercise of Warrants.
(a) This Warrant shall be exercisable by the
registered Holder on any business day before 5:30 P.M., Eastern time, at any
time and from time to time on or after the date hereof to and including the
Expiration Date. At 5:30 P.M., Eastern time on the Expiration Date, the portion
of this Warrant not exercised prior thereto shall be and become void and of no
value. Prior to the Expiration Date, the Company may not call or otherwise
redeem this Warrant without the prior written consent of the Holder.
(b) Subject to Sections 2(b), 6 and 10, upon
surrender of this Warrant, with the Form of Election to Purchase attached
hereto duly completed and signed, to the Company at its address for notice set
forth in Section 12 and upon payment of the Exercise Price cash multiplied by
the number of Warrant Shares that the Holder intends to purchase hereunder, in
lawful money of the United States of America, in cash or by certified or
official bank check or checks, all as specified by the Holder in the Form of
Election to Purchase, the Company shall promptly (but in no event later than 3
business days after the Date of Exercise) issue or cause to be issued and cause
to be delivered to or upon the written order of the Holder and in such name or
names as the Holder may designate, a certificate for the Warrant Shares
issuable upon such exercise, free of restrictive legends other than as required
by applicable law or the provisions of this Warrant. Any person so designated
by the Holder to receive Warrant Shares shall be deemed to have become holder
of record of such Warrant Shares as of the Date of Exercise of this Warrant.
A "Date of Exercise" means the date on which the
Company shall have received (i) this Warrant (or any New Warrant, as
applicable), with the Form of Election to Purchase attached hereto (or attached
to such New Warrant) appropriately completed and duly signed, and (ii) payment
of the Exercise Price for the number of Warrant Shares so indicated by the
holder hereof to be purchased.
(c) This Warrant shall be exercisable, either
in its entirety or, from time to time, for a portion of the number of Warrant
Shares. If less than all of the Warrant Shares which may be purchased under
this Warrant are exercised at any time, the Company shall issue or cause to be
issued, at its expense, a New Warrant evidencing the right to purchase the
remaining number of Warrant Shares for which no exercise has been evidenced by
this Warrant.
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<PAGE>
4. Piggyback Registration Rights. Subsequent to the 270th day
from the date hereof and at any time during the term of this Warrant the
Company may not file any registration statement with the Securities and
Exchange Commission (other than registration statements of the Company filed on
Form S-8 or Form S-4, each as promulgated under the Securities Act pursuant to
which the Company is registering securities pursuant to a Company employee
benefit plan or pursuant to a merger, acquisition or similar transaction
including supplements thereto, but not additionally filed registration
statements in respect of such securities) at any time when there is not an
effective registration statement covering the resale of the Warrant Shares and
naming the Holder as a selling stockholder thereunder, unless the Company
provides the Holder with not less than 20 days notice of its intention to file
such registration statement and provides the Holder the option to include any
or all of the applicable Warrant Shares therein. The piggyback registration
rights granted to the Holder pursuant to this Section shall continue until all
of the Holder's Warrant Shares have been sold in accordance with an effective
registration statement or upon the Expiration Date. The Company will pay all
registration expenses in connection therewith.
5. Demand Registration Rights. Subsequent to the 270th day
from the date hereof and at any time during the term of this Warrant when the
Warrant Shares are not registered pursuant to an effective registration
statement that names the Holder as a selling stockholder thereunder, the Holder
may make a written request for the registration under the Securities Act (a
"Demand Registration"), of all of the Warrant Shares (the "Registrable
Securities"), and the Company shall use its best efforts to effect such Demand
Registration as promptly as possible, but in any case within 90 days
thereafter. Any request for a Demand Registration shall specify the aggregate
number of Registrable Securities proposed to be sold and shall also specify the
intended method of disposition thereof. The right to cause a registration of
the Registrable Securities under this Section 5 shall be limited to one such
registration. In any registration initiated as a Demand Registration, the
Company will pay all of its registration expenses in connection therewith. A
Demand Registration shall not be counted as a Demand Registration hereunder
until the registration statement filed pursuant to the Demand Registration has
been declared effective by the Securities and Exchange Commission and
maintained continuously effective for a period of at least 360 days or such
shorter period when all Registrable Securities included therein have been sold
in accordance with such registration statement, provided, however that any days
on which such registration statement is not effective or on which the Holder is
not permitted by the Company or any governmental authority to sell Warrant
Shares under such registration statement shall not count towards such 360-day
period.
6. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the issuance of Warrant Shares upon the exercise of
this Warrant; provided, however, that the Company shall not be required to pay
any tax which may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or Warrants in a name other
than that of the Holder, and the Company shall not be required to issue or
cause to be issued or deliver or cause to be delivered the certificates for
Warrant Shares unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid. The
Holder
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<PAGE>
shall be responsible for all other tax liability that may arise as a result of
holding or transferring this Warrant or receiving Warrant Shares upon exercise
hereof.
7. Replacement of Warrant. If this Warrant is mutilated,
lost, stolen or destroyed, the Company shall issue or cause to be issued in
exchange and/or substitution (as applicable) for and upon cancellation hereof,
or in lieu of and substitution for this Warrant, a New Warrant, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft
or destruction and indemnity, if requested, satisfactory to it. Applicants for
a New Warrant under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable charges as
the Company may prescribe.
8. Reservation of Warrant Shares. The Company covenants that
it will at all times reserve and keep available out of the aggregate of its
authorized but unissued Common Stock, solely for the purpose of enabling it to
issue Warrant Shares upon exercise of this Warrant as herein provided, the
number of Warrant Shares which are then issuable and deliverable upon the
exercise of this entire Warrant, free from preemptive rights or any other
actual contingent purchase rights of persons other than the Holder (taking into
account the adjustments and restrictions of Section 9). The Company covenants
that all Warrant Shares that shall be so issuable and deliverable shall, upon
issuance and the payment of the applicable Exercise Price in accordance with
the terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable.
9. Certain Adjustments. The Exercise Price and number of
Warrant Shares issuable upon exercise of this Warrant are subject to adjustment
from time to time as set forth in this Section 9. Upon each such adjustment of
the Exercise Price pursuant to this Section 9, the Holder shall thereafter
prior to the Expiration Date be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of Warrant Shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of Warrant Shares issuable upon exercise of this Warrant
immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment.
(a) If the Company, at any time while this
Warrant is outstanding, (i) shall pay a stock dividend (except scheduled
dividends paid on outstanding preferred stock as of the date hereof which
contain a stated divided rate) or otherwise make a distribution or
distributions on shares of its Common Stock (as defined below) or on any other
class of capital stock and not the Common Stock) payable in shares of Common
Stock, (ii) subdivide outstanding shares of Common Stock into a larger number
of shares, or (iii) combine outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding before such event and of which the denominator
shall be the number of shares of Common Stock (excluding treasury shares, if
any) outstanding after such event. Any adjustment made pursuant to this Section
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and shall
become effective immediately after the effective date in the case of a
subdivision or combination, and shall apply to successive subdivisions and
combinations.
-4-
<PAGE>
(b) In case of any reclassification of the
Common Stock, any consolidation or merger of the Company with or into another
person, the sale or transfer of all or substantially all of the assets of the
Company or any compulsory share exchange pursuant to which the Common Stock is
converted into other securities, cash or property, then the Holder shall have
the right thereafter to exercise this Warrant only into the shares of stock and
other securities and property receivable upon or deemed to be held by holders
of Common Stock following such reclassification, consolidation, merger, sale,
transfer or share exchange, and the Holder shall be entitled upon such event to
receive such amount of securities or property equal to the amount of Warrant
Shares such Holder would have been entitled to had such Holder exercised this
Warrant immediately prior to such reclassification, consolidation, merger,
sale, transfer or share exchange. The terms of any such consolidation, merger,
sale, transfer or share exchange shall include such terms so as to continue to
give to the Holder the right to receive the securities or property set forth in
this Section 9(b) upon any exercise following any such reclassification,
consolidation, merger, sale, transfer or share exchange.
(c) If the Company, at any time while this
Warrant is outstanding, shall distribute to all holders of Common Stock (and
not to holders of this Warrant) evidences of its indebtedness or assets or
rights or warrants to subscribe for or purchase any security (excluding those
referred to in Sections 9(a), (b) and (d)), then in each such case the Exercise
Price shall be determined by multiplying the Exercise Price in effect
immediately prior to the record date fixed for determination of stockholders
entitled to receive such distribution by a fraction of which the denominator
shall be the Exercise Price determined as of the record date mentioned above,
and of which the numerator shall be such Exercise Price on such record date
less the then fair market value at such record date of the portion of such
assets or evidence of indebtedness so distributed applicable to one outstanding
share of Common Stock as determined by the Company's independent certified
public accountants that regularly examines the financial statements of the
Company (an "Appraiser").
(d) If, at any time while this Warrant is
outstanding, the Company shall issue or cause to be issued rights or warrants
to acquire or otherwise sell or distribute shares of Common Stock to all
holders of Common Stock for a consideration per share less than the Exercise
Price then in effect, then, forthwith upon such issue or sale, the Exercise
Price shall be reduced to the price (calculated to the nearest cent) determined
by multiplying the Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the sum of (i) the number of shares
of Common Stock outstanding immediately prior to such issuance, and (ii) the
number of shares of Common Stock which the aggregate consideration received (or
to be received, assuming exercise or conversion in full of such rights,
warrants and convertible securities) for the issuance of such additional shares
of Common Stock would purchase at the Exercise Price, and the denominator of
which shall be the sum of the number of shares of Common Stock outstanding
immediately after the issuance of such additional shares. Such adjustment shall
be made successively whenever such an issuance is made.
(e) For the purposes of this Section 9, the
following clauses shall also be applicable:
-5-
<PAGE>
(i) Record Date. In case the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them (A) to receive a dividend or other distribution payable in
Common Stock or in securities convertible or exchangeable into shares of Common
Stock, or (B) to subscribe for or purchase Common Stock or securities
convertible or exchangeable into shares of Common Stock, then such record date
shall be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
(ii) Treasury Shares. The number of
shares of Common Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Company, and the disposition of any
such shares shall be considered an issue or sale of Common Stock.
(f) All calculations under this Section 9 shall be
made to the nearest cent
or the nearest 1/100th of a share, as the case may be.
(g) Whenever the Exercise Price is adjusted
pursuant to Section 9(c) above, the Holder, after receipt of the determination
by the Appraiser, shall have the right to select an additional appraiser (which
shall be a nationally recognized accounting firm), in which case the adjustment
shall be equal to the average of the adjustments recommended by each of the
Appraiser and such appraiser. The Holder shall promptly mail or cause to be
mailed to the Company, a notice setting forth the Exercise Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment. Such adjustment shall become effective immediately after the record
date mentioned above.
(h) If:
(i) the Company shall declare a
dividend (or any other
distribution) on its Common
Stock; or
(ii) the Company shall declare a
special nonrecurring cash
dividend on or a redemption
of its Common Stock; or
(iii) the Company shall authorize
the granting to all holders
of the Common Stock rights or
warrants to subscribe for or
purchase any shares of
capital stock of any class or
of any rights; or
(iv) the approval of any
stockholders of the Company
shall be required in
connection with any
reclassification of the
Common Stock of the Company,
any consolidation or merger
to which the Company is a
party, any sale or transfer
of all or
-6-
<PAGE>
substantially all of the
assets of the Company, or any
compulsory share exchange
whereby the Common Stock is
converted into other
securities, cash or property;
or
(v) the Company shall authorize
the voluntary dissolution,
liquidation or winding up of
the affairs of the Company,
then the Company shall cause to be mailed to each Holder at their last
addresses as they shall appear upon the Warrant Register, at least 10 calendar
days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
10. Fractional Shares. The Company shall not be required to
issue or cause to be issued fractional Warrant Shares on the exercise of this
Warrant. The number of full Warrant Shares which shall be issuable upon the
exercise of this Warrant shall be computed on the basis of the aggregate number
of Warrant Shares purchasable on exercise of this Warrant so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section
11, be issuable on the exercise of this Warrant, the Company shall pay an
amount in cash equal to the Exercise Price multiplied by such fraction.
11. Notices. Any and all notices or other communications or
deliveries hereunder shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section prior to 4:30 p.m. (Eastern time) on a business day,
(ii) the business day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 4:30 p.m. (Eastern time) on any date and
earlier than 11:59 p.m. (Eastern time) on such date, (iii) the business day
following the date of mailing, if sent by nationally recognized overnight
courier service with instructions to deliver by next Business Day, or (iv) upon
actual receipt by the party to whom such notice is required to be given. The
addresses for such communications shall be: (i) if to the Company, to Orinda
Capital International, Inc., 221 East 61st Street, New York, NY 10021,
Facsimile No.: (212) 754-4044, Attention: Jacob Agam, or (ii) if to the Holder,
to the Holder at the address or facsimile number
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<PAGE>
appearing on the Warrant Register or such other address or facsimile number as
the Holder may provide to the Company in accordance with this Section 11.
12. Warrant Agent.
(a) The Company shall serve as warrant agent
under this Warrant. Upon ten (10) days' notice to the Holder, the Company may
appoint a new warrant agent.
(b) Any corporation into which the Company or
any new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or
any corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business
shall be a successor warrant agent under this Warrant without any further act.
Any such successor warrant agent shall promptly cause notice of its succession
as warrant agent to be mailed (by first class mail, postage prepaid) to the
Holder at the Holder's last address as shown on the Warrant Register.
13. Miscellaneous.
(a) This Warrant shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. This Warrant may be amended only in writing signed by the
Company and the Holder.
(b) Subject to Section 13(a), above, nothing in
this Warrant shall be construed to give to any person or corporation other than
the Company and the Holder any legal or equitable right, remedy or cause under
this Warrant. This Warrant shall inure to the sole and exclusive benefit of the
Company and the Holder.
(c) This Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York without regard to the principles of conflicts of law thereof.
(d) The headings herein are for convenience
only, do not constitute a part of this Warrant and shall not be deemed to limit
or affect any of the provisions hereof.
(e) In case any one or more of the provisions
of this Warrant shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Warrant shall
not in any way be affected or impaired thereby and the parties will attempt in
good faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by its authorized officer as of the date first indicated above.
IAT MULTIMEDIA, INC.
By: /s/ Jacob Agam
----------------------------------------
Name: Jacob Agam
--------------------------------------
Title: Chief Executive Officer
-------------------------------------
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of
Common Stock under the foregoing Warrant)
To [ ]:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase _____________
shares of Common Stock ("Common Stock"), $.01 par value per share, of IAT
Multimedia, Inc. and, encloses herewith $________ in cash, certified or
official bank check or checks, which sum represents the aggregate Exercise
Price (as defined in the Warrant) for the number of shares of Common Stock to
which this Form of Election to Purchase relates, together with any applicable
taxes payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
---------------------------------------
- -------------------------------------------------------------------------------
(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is
entitled to purchase in accordance with the enclosed Warrant, the undersigned
requests that a New Warrant (as defined in the Warrant) evidencing the right to
purchase the shares of Common Stock not issuable pursuant to the exercise
evidenced hereby be issued in the name of and delivered to:
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Dated: , Name of Holder:
-------------- ----
(Print)
-------------------------------
(By:)
-------------------------------
(Name:)
(Title:)
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant)
<PAGE>
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ________________________________ the right represented by the
within Warrant to purchase ____________ shares of Common Stock of IAT
Multimedia, Inc. to which the within Warrant relates and appoints
________________ attorney to transfer said right on the books of IAT
Multimedia, Inc. with full power of substitution in the premises.
Dated:
- ---------------, ----
---------------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant)
---------------------------------------
Address of Transferee
---------------------------------------
---------------------------------------
In the presence of:
- --------------------------
<PAGE>
NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO
WHICH SUCH SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
THEREUNDER AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
IAT MULTIMEDIA, INC.
WARRANT
Dated: June 19, 1998
IAT Multimedia, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, Century City Securities, Inc., or its
registered assigns ("Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company up to a total of 29,412 shares of Common
Stock, $.01 par value per share (the "Common Stock"), of the Company (each such
share, a "Warrant Share" and all such shares, the "Warrant Shares") at an
exercise price equal to $13.45 per share (as adjusted from time to time as
provided in Section 9, the "Exercise Price"), at any time and from time to time
from and after the date hereof and through and including June 19, 2003 (the
"Expiration Date"), and subject to the following terms and conditions:
1. Registration of Warrant. The Company shall register this
Warrant, upon records to be maintained by the Company for that purpose (the
"Warrant Register"), in the name of the record Holder hereof from time to time.
The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, and the Company shall
not be affected by notice to the contrary.
2. Registration of Transfers and Exchanges.
(a) The Company shall register the transfer of
any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Transfer Agent or to the Company at the office specified in or pursuant
to Section 3(b) together with the legal opinion of counsel to the Holder which
is reasonably satisfactory to the Company to the effect that such transfer is
exempt from the registration requirements of the Securities Act of 1933 as
amended (the "Securities Act"). Upon any such registration or transfer, a new
warrant to purchase Common Stock, in
<PAGE>
substantially the form of this Warrant (any such new warrant, a "New Warrant"),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance of such transferee of all of the rights and obligations of a holder
of a Warrant.
(b) This Warrant is exchangeable, upon the
surrender hereof by the Holder to the office of the Company specified in or
pursuant to Section 3(b) for one or more New Warrants, evidencing in the
aggregate the right to purchase the number of Warrant Shares which may then be
purchased hereunder. Any such New Warrant will be dated the date of such
exchange.
3. Duration and Exercise of Warrants.
(a) This Warrant shall be exercisable by the
registered Holder on any business day before 5:30 P.M., Eastern time, at any
time and from time to time on or after the date hereof to and including the
Expiration Date. At 5:30 P.M., Eastern time on the Expiration Date, the portion
of this Warrant not exercised prior thereto shall be and become void and of no
value. Prior to the Expiration Date, the Company may not call or otherwise
redeem this Warrant without the prior written consent of the Holder.
(b) Subject to Sections 2(b), 6 and 10, upon
surrender of this Warrant, with the Form of Election to Purchase attached
hereto duly completed and signed, to the Company at its address for notice set
forth in Section 12 and upon payment of the Exercise Price cash multiplied by
the number of Warrant Shares that the Holder intends to purchase hereunder, in
lawful money of the United States of America, in cash or by certified or
official bank check or checks, all as specified by the Holder in the Form of
Election to Purchase, the Company shall promptly (but in no event later than 3
business days after the Date of Exercise) issue or cause to be issued and cause
to be delivered to or upon the written order of the Holder and in such name or
names as the Holder may designate, a certificate for the Warrant Shares
issuable upon such exercise, free of restrictive legends other than as required
by applicable law or the provisions of this Warrant. Any person so designated
by the Holder to receive Warrant Shares shall be deemed to have become holder
of record of such Warrant Shares as of the Date of Exercise of this Warrant.
A "Date of Exercise" means the date on which the
Company shall have received (i) this Warrant (or any New Warrant, as
applicable), with the Form of Election to Purchase attached hereto (or attached
to such New Warrant) appropriately completed and duly signed, and (ii) payment
of the Exercise Price for the number of Warrant Shares so indicated by the
holder hereof to be purchased.
(c) This Warrant shall be exercisable, either
in its entirety or, from time to time, for a portion of the number of Warrant
Shares. If less than all of the Warrant
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<PAGE>
Shares which may be purchased under this Warrant are exercised at any time, the
Company shall issue or cause to be issued, at its expense, a New Warrant
evidencing the right to purchase the remaining number of Warrant Shares for
which no exercise has been evidenced by this Warrant.
4. Piggyback Registration Rights. Subsequent to the 270th day
from the date hereof and at any time during the term of this Warrant the
Company may not file any registration statement with the Securities and
Exchange Commission (other than registration statements of the Company filed on
Form S-8 or Form S-4, each as promulgated under the Securities Act pursuant to
which the Company is registering securities pursuant to a Company employee
benefit plan or pursuant to a merger, acquisition or similar transaction
including supplements thereto, but not additionally filed registration
statements in respect of such securities) at any time when there is not an
effective registration statement covering the resale of the Warrant Shares and
naming the Holder as a selling stockholder thereunder, unless the Company
provides the Holder with not less than 20 days notice of its intention to file
such registration statement and provides the Holder the option to include any
or all of the applicable Warrant Shares therein. The piggyback registration
rights granted to the Holder pursuant to this Section shall continue until all
of the Holder's Warrant Shares have been sold in accordance with an effective
registration statement or upon the Expiration Date. The Company will pay all
registration expenses in connection therewith.
5. Demand Registration Rights. Subsequent to the 270th day
from the date hereof and at any time during the term of this Warrant when the
Warrant Shares are not registered pursuant to an effective registration
statement that names the Holder as a selling stockholder thereunder, the Holder
may make a written request for the registration under the Securities Act (a
"Demand Registration"), of all of the Warrant Shares (the "Registrable
Securities"), and the Company shall use its best efforts to effect such Demand
Registration as promptly as possible, but in any case within 90 days
thereafter. Any request for a Demand Registration shall specify the aggregate
number of Registrable Securities proposed to be sold and shall also specify the
intended method of disposition thereof. The right to cause a registration of
the Registrable Securities under this Section 5 shall be limited to one such
registration. In any registration initiated as a Demand Registration, the
Company will pay all of its registration expenses in connection therewith. A
Demand Registration shall not be counted as a Demand Registration hereunder
until the registration statement filed pursuant to the Demand Registration has
been declared effective by the Securities and Exchange Commission and
maintained continuously effective for a period of at least 360 days or such
shorter period when all Registrable Securities included therein have been sold
in accordance with such registration statement, provided, however that any days
on which such registration statement is not effective or on which the Holder is
not permitted by the Company or any governmental authority to sell Warrant
Shares under such registration statement shall not count towards such 360-day
period.
6. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the issuance of Warrant Shares upon the exercise of
this Warrant; provided, however, that the Company shall not be required to pay
any tax which may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or Warrants in a
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name other than that of the Holder, and the Company shall not be required to
issue or cause to be issued or deliver or cause to be delivered the
certificates for Warrant Shares unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid. The Holder shall be responsible for all other tax liability
that may arise as a result of holding or transferring this Warrant or receiving
Warrant Shares upon exercise hereof.
7. Replacement of Warrant. If this Warrant is mutilated,
lost, stolen or destroyed, the Company shall issue or cause to be issued in
exchange and/or substitution (as applicable) for and upon cancellation hereof,
or in lieu of and substitution for this Warrant, a New Warrant, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft
or destruction and indemnity, if requested, satisfactory to it. Applicants for
a New Warrant under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable charges as
the Company may prescribe.
8. Reservation of Warrant Shares. The Company covenants that
it will at all times reserve and keep available out of the aggregate of its
authorized but unissued Common Stock, solely for the purpose of enabling it to
issue Warrant Shares upon exercise of this Warrant as herein provided, the
number of Warrant Shares which are then issuable and deliverable upon the
exercise of this entire Warrant, free from preemptive rights or any other
actual contingent purchase rights of persons other than the Holder (taking into
account the adjustments and restrictions of Section 9). The Company covenants
that all Warrant Shares that shall be so issuable and deliverable shall, upon
issuance and the payment of the applicable Exercise Price in accordance with
the terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable.
9. Certain Adjustments. The Exercise Price and number of
Warrant Shares issuable upon exercise of this Warrant are subject to adjustment
from time to time as set forth in this Section 9. Upon each such adjustment of
the Exercise Price pursuant to this Section 9, the Holder shall thereafter
prior to the Expiration Date be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of Warrant Shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of Warrant Shares issuable upon exercise of this Warrant
immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment.
(a) If the Company, at any time while this
Warrant is outstanding, (i) shall pay a stock dividend (except scheduled
dividends paid on outstanding preferred stock as of the date hereof which
contain a stated divided rate) or otherwise make a distribution or
distributions on shares of its Common Stock (as defined below) or on any other
class of capital stock and not the Common Stock) payable in shares of Common
Stock, (ii) subdivide outstanding shares of Common Stock into a larger number
of shares, or (iii) combine outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding before such event and of which the denominator
shall be the
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number of shares of Common Stock (excluding treasury shares, if any)
outstanding after such event. Any adjustment made pursuant to this Section
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and shall
become effective immediately after the effective date in the case of a
subdivision or combination, and shall apply to successive subdivisions and
combinations.
(b) In case of any reclassification of the
Common Stock, any consolidation or merger of the Company with or into another
person, the sale or transfer of all or substantially all of the assets of the
Company or any compulsory share exchange pursuant to which the Common Stock is
converted into other securities, cash or property, then the Holder shall have
the right thereafter to exercise this Warrant only into the shares of stock and
other securities and property receivable upon or deemed to be held by holders
of Common Stock following such reclassification, consolidation, merger, sale,
transfer or share exchange, and the Holder shall be entitled upon such event to
receive such amount of securities or property equal to the amount of Warrant
Shares such Holder would have been entitled to had such Holder exercised this
Warrant immediately prior to such reclassification, consolidation, merger,
sale, transfer or share exchange. The terms of any such consolidation, merger,
sale, transfer or share exchange shall include such terms so as to continue to
give to the Holder the right to receive the securities or property set forth in
this Section 9(b) upon any exercise following any such reclassification,
consolidation, merger, sale, transfer or share exchange.
(c) If the Company, at any time while this
Warrant is outstanding, shall distribute to all holders of Common Stock (and
not to holders of this Warrant) evidences of its indebtedness or assets or
rights or warrants to subscribe for or purchase any security (excluding those
referred to in Sections 9(a), (b) and (d)), then in each such case the Exercise
Price shall be determined by multiplying the Exercise Price in effect
immediately prior to the record date fixed for determination of stockholders
entitled to receive such distribution by a fraction of which the denominator
shall be the Exercise Price determined as of the record date mentioned above,
and of which the numerator shall be such Exercise Price on such record date
less the then fair market value at such record date of the portion of such
assets or evidence of indebtedness so distributed applicable to one outstanding
share of Common Stock as determined by the Company's independent certified
public accountants that regularly examines the financial statements of the
Company (an "Appraiser").
(d) If, at any time while this Warrant is
outstanding, the Company shall issue or cause to be issued rights or warrants
to acquire or otherwise sell or distribute shares of Common Stock to all
holders of Common Stock for a consideration per share less than the Exercise
Price then in effect, then, forthwith upon such issue or sale, the Exercise
Price shall be reduced to the price (calculated to the nearest cent) determined
by multiplying the Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the sum of (i) the number of shares
of Common Stock outstanding immediately prior to such issuance, and (ii) the
number of shares of Common Stock which the aggregate consideration received (or
to be received, assuming exercise or conversion in full of such rights,
warrants and convertible securities) for the issuance of such additional shares
of Common Stock would purchase at the
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Exercise Price, and the denominator of which shall be the sum of the number of
shares of Common Stock outstanding immediately after the issuance of such
additional shares. Such adjustment shall be made successively whenever such an
issuance is made.
(e) For the purposes of this Section 9, the
following clauses shall also be
applicable:
(i) Record Date. In case the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them (A) to receive a dividend or other distribution payable in
Common Stock or in securities convertible or exchangeable into shares of Common
Stock, or (B) to subscribe for or purchase Common Stock or securities
convertible or exchangeable into shares of Common Stock, then such record date
shall be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
(ii) Treasury Shares. The number of
shares of Common Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Company, and the disposition of any
such shares shall be considered an issue or sale of Common Stock.
(f) All calculations under this Section 9 shall be
made to the nearest cent or the nearest 1/100th of a share, as the case may be.
(g) Whenever the Exercise Price is adjusted
pursuant to Section 9(c) above, the Holder, after receipt of the determination
by the Appraiser, shall have the right to select an additional appraiser (which
shall be a nationally recognized accounting firm), in which case the adjustment
shall be equal to the average of the adjustments recommended by each of the
Appraiser and such appraiser. The Holder shall promptly mail or cause to be
mailed to the Company, a notice setting forth the Exercise Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment. Such adjustment shall become effective immediately after the record
date mentioned above.
(h) If:
(i) the Company shall declare a
dividend (or any other
distribution) on its Common
Stock; or
(ii) the Company shall declare a
special nonrecurring cash
dividend on or a redemption
of its Common Stock; or
(iii) the Company shall authorize
the granting to all holders
of the Common Stock rights or
warrants to
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subscribe for or
purchase any shares of
capital stock of any class or
of any rights; or
(iv) the approval of any
stockholders of the Company
shall be required in
connection with any
reclassification of the
Common Stock of the Company,
any consolidation or merger
to which the Company is a
party, any sale or transfer
of all or substantially all
of the assets of the Company,
or any compulsory share
exchange whereby the Common
Stock is converted into other
securities, cash or property;
or
(v) the Company shall authorize
the voluntary dissolution,
liquidation or winding up of
the affairs of the Company,
then the Company shall cause to be mailed to each Holder at their last
addresses as they shall appear upon the Warrant Register, at least 10 calendar
days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
10. Fractional Shares. The Company shall not be required to
issue or cause to be issued fractional Warrant Shares on the exercise of this
Warrant. The number of full Warrant Shares which shall be issuable upon the
exercise of this Warrant shall be computed on the basis of the aggregate number
of Warrant Shares purchasable on exercise of this Warrant so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section
11, be issuable on the exercise of this Warrant, the Company shall pay an
amount in cash equal to the Exercise Price multiplied by such fraction.
11. Notices. Any and all notices or other communications or
deliveries hereunder shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section prior to 4:30 p.m. (Eastern time) on a business day,
(ii) the business day after the date of transmission, if such notice or
communication is delivered
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<PAGE>
via facsimile at the facsimile telephone number specified in this Section later
than 4:30 p.m. (Eastern time) on any date and earlier than 11:59 p.m. (Eastern
time) on such date, (iii) the business day following the date of mailing, if
sent by nationally recognized overnight courier service with instructions to
deliver by next Business Day, or (iv) upon actual receipt by the party to whom
such notice is required to be given. The addresses for such communications
shall be: (i) if to the Company, to Orinda Capital International, Inc., 221
East 61st Street, New York, NY 10021, Facsimile No.: (212) 754-4044, Attention:
Jacob Agam, or (ii) if to the Holder, to the Holder at the address or facsimile
numberappearing on the Warrant Register or such other address or facsimile
number as the Holder may provide to the Company in accordance with this Section
11.
12. Warrant Agent.
(a) The Company shall serve as warrant agent
under this Warrant. Upon ten (10) days' notice to the Holder, the Company may
appoint a new warrant agent.
(b) Any corporation into which the Company or
any new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or
any corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business
shall be a successor warrant agent under this Warrant without any further act.
Any such successor warrant agent shall promptly cause notice of its succession
as warrant agent to be mailed (by first class mail, postage prepaid) to the
Holder at the Holder's last address as shown on the Warrant Register.
13. Miscellaneous.
(a) This Warrant shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. This Warrant may be amended only in writing signed by the
Company and the Holder.
(b) Subject to Section 13(a), above, nothing in
this Warrant shall be construed to give to any person or corporation other than
the Company and the Holder any legal or equitable right, remedy or cause under
this Warrant. This Warrant shall inure to the sole and exclusive benefit of the
Company and the Holder.
(c) This Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York without regard to the principles of conflicts of law thereof.
(d) The headings herein are for convenience
only, do not constitute a part of this Warrant and shall not be deemed to limit
or affect any of the provisions hereof.
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<PAGE>
(e) In case any one or more of the provisions
of this Warrant shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Warrant shall
not in any way be affected or impaired thereby and the parties will attempt in
good faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by its authorized officer as of the date first indicated above.
IAT MULTIMEDIA, INC.
By: /s/ Jacob Agam
---------------------------------------
Name: Jacob Agam
-------------------------------------
Title: Chief Executive Officer
------------------------------------
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of
Common Stock under the foregoing Warrant)
To [ ]:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase _____________
shares of Common Stock ("Common Stock"), $.01 par value per share, of IAT
Multimedia, Inc. and, encloses herewith $________ in cash, certified or
official bank check or checks, which sum represents the aggregate Exercise
Price (as defined in the Warrant) for the number of shares of Common Stock to
which this Form of Election to Purchase relates, together with any applicable
taxes payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
-------------------------------------
- -------------------------------------------------------------------------------
(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is
entitled to purchase in accordance with the enclosed Warrant, the undersigned
requests that a New Warrant (as defined in the Warrant) evidencing the right to
purchase the shares of Common Stock not issuable pursuant to the exercise
evidenced hereby be issued in the name of and delivered to:
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Dated: , Name of Holder:
--------- ----
(Print)
-------------------------------------
(By:)
--------------------------------------
(Name:)
(Title:)
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
<PAGE>
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ________________________________ the right represented by the
within Warrant to purchase ____________ shares of Common Stock of IAT
Multimedia, Inc. to which the within Warrant relates and appoints
________________ attorney to transfer said right on the books of IAT
Multimedia, Inc. with full power of substitution in the premises.
Dated:
---------------, ----
---------------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant)
---------------------------------------
Address of Transferee
---------------------------------------
---------------------------------------
In the presence of:
- --------------------------
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in the Registration Statement of IAT Multimedia,
Inc. (the "Company") on Form S-3 and the related Prospectus of the Company for
the registration of 2,009,205 of its shares of Common Stock and to the
incorporation by reference therein of our report dated March 25, 1998 with
respect to the financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997, filed with the Securities and
Exchange Commission on April 15, 1998.
/s/ Rothstein, Kass & Company, P.C.
-----------------------------------
ROTHSTEIN, KASS & COMPANY, P.C.
New York, New York
September 23, 1998
