8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 23, 2005

M-WAVE, INC.

(Exact name of registrant as specified in its charter)

Delaware	33-45449	36-3809819
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer  Identification No.)

475 Industrial Drive, West Chicago, Illinois        60185

(Address of principal executive offices)         (Zip Code)

Registrant’s telephone number, including area code: (630)562-5550

Section 2 – Financial Information

Item 2.01.      Completion of Acquisition or Disposition of Assets.

On February 25, 2005, we acquired substantially all of the assets of Jayco Ventures Inc., through our newly formed, wholly owned subsidiary, M-Wave DBS, Inc.  In consideration for the assets, we paid Jayco Ventures, Inc. approximately $1,400,000 in cash.  The amount of such consideration was determined by negotiation between the parties.

Concurrently with the acquisition, M-Wave DBS entered into three-year employment agreements with Jason Cohen and Joshua Blake.  Mr. Cohen, who founded Jayco Ventures, has been named the president of M-Wave DBS, and Mr. Blake, formerly EVP at Jayco Ventures, has been named executive vice president of operations for M-Wave DBS.

We are filing the press release, dated February 28, 2005, announcing such transaction, as Exhibit 99.2 to this Report.

Item 2.02.      Results of Operations and Financial Condition.

On February 25, 2005, we issued a press release regarding our expected operating results, on an unaudited basis, for the quarter and year ended December 31, 2004.  A copy of such press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

Item 2.03.      Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

We financed the purchase price of the acquisition of the assets of Jayco Ventures Inc., as described in Item 2.01 above, with a portion of the $1,550,000 in proceeds from the issuances on February 23, 2005 of $1,550,000 aggregate principal amount of promissory notes and warrants to purchase an aggregate of 434,783 shares of common stock.  The issuances were made to Mercator Momentum Fund, L.P., Monarch Pointe Fund, Ltd., and M.A.G. Capital, LLC (formerly Mercator Advisory Group, LLC), all of which are related entities.  We paid fees totaling $35,000 to M.A.G. Capital, LLC in connection with the financing.

The promissory notes accrue interest at 10% per annum and have a term of 18 months.  Upon sale of our real property at 215 Park Street, Bensenville, Illinois, we are required to prepay an aggregate of $325,000 under the promissory notes.

The warrants have a term of three years and an exercise price of $1.15 per share.  In the event that on or before April 15, 2005, we pre-pay not less than $325,000 of the principal amount due under the promissory notes described above, then warrants to purchase an aggregate of 65,217 shares shall automatically be canceled.

Section 9 – Financial Statements and Exhibits

Item 9.01.      Financial Statements and Exhibits.

The financial statements and pro forma financial statements required by Item 9.01 of Form 8-K will be filed not later than 71 days after the date that the acquisition described in Item 2.01 of this report was required to be filed.

Exhibit	Description
10.1	Asset Purchase Agreement, dated February 25, 2005 by and between Jayco Ventures, Inc. and M-Wave DBS, Inc.
10.2	Employment Agreement, dated February 25, 2005, between M-Wave DBS,  Inc. and Jason Cohen
10.3	Employment Agreement, dated February 25, 2005, between M-Wave DBS, Inc. and Joshua Blake
10.4	Promissory Note, dated February 23, 2005, issued by M-Wave, Inc. to Mercator Momentum Fund, L.P.
10.5	Promissory Note, dated February 23, 2005, issued by M-Wave, Inc. to Monarch Pointe Fund, Ltd.
10.6	Warrant, dated February 23, 2005, issued by M-Wave, Inc. to Mercator Momentum Fund, L.P.
10.7	Warrant, dated February 23, 2005, issued by M-Wave, Inc. to Monarch Pointe Fund, Ltd.
10.8	Warrant, dated February 23, 2005, issued by M-Wave, Inc. to M.A.G. Capital, LLC
99.1	Press Release dated February 25, 2005
99.2	Press Release dated February 28, 2005

SIGNATURES

            Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized.

	M-WAVE, INC.
	(Registrant)
	By /s/ Jim Mayer
	Jim Mayer
	Chief Executive Officer
Dated: March 2, 2005

EX-10

ASSET PURCHASE AGREEMENT

            THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is made and entered into this 25th day of February, 2005 by and between Jayco Ventures, Inc., a Florida corporation (the “Company”) and M-Wave DBS, Inc., an Illinois corporation (the “Purchaser”).  The Purchaser and the Company hereinafter are sometimes referred to individually as a “Party” and collectively as the “Parties.”  Jason Cohen (“Cohen”) and Joshua Blake (“Blake”) are parties to this Agreement solely with respect to Sections 3.3.4, 3.3.6, 6.2 and 8.2 below.

RECITALS:

WHEREAS, the Company is in the business of distributing Direct Broadcasting Satellite (DBS) industry products (the “Business”); and

WHEREAS, the Company desires to sell, transfer and assign to the Purchaser and the Purchaser desires to purchase from the Company substantially all of the assets of the Company, other than Excluded Assets (as defined in Section 1.2) for an amount in cash, all as herein provided and on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound hereby, agree as follows:

ARTICLE I

Purchase and Sale of the Purchased Assets

1.1       Purchased Assets.  On the Closing Date (as defined in Section 3.2), upon the terms and subject to the conditions of this Agreement, the Company will sell, assign, transfer, grant, bargain, setover, release, deliver, vest and convey to Purchaser or cause to be sold, assigned, transferred, granted, bargained, setover, released, delivered and conveyed to Purchaser, and Purchaser will purchase from the Company all of the assets, properties and goodwill of every kind and description, wherever located, whether tangible or intangible, real, personal or mixed, directly or indirectly owned by the Company, or to which it is directly or indirectly entitled and, in any case, belonging to or used or intended to be used in th e Business, free and clear of all liens, mortgages, pledges, security interests, claims, assessments, restrictions, encumbrances and charges of every kind (collectively, “Liens”), other than the assets described in Section 1.2 which shall be excluded from the sale (the assets to be purchased by Purchaser being referred to collectively as the “Purchased Assets” and the assets to be excluded being referred to collectively as the “Excluded Assets”).  The Purchased Assets shall include, without limitation, the following:

1.1.1       the going concern value of the Business;

1.1.2       the goodwill of the Company relating to the Business;

1.1.3       all other intangible rights and property of the Company as set forth on Schedule 4.9, including intangible rights and property of Cohen and/or Blake if such intangible rights and property was or is Used by the Company, including but not limited to, all of the Company’s, Cohen’s and Blake’s right, title and interest in, to and under (i) all patents, inventions (whether or not patented or able to be patented), works of authorship, mask works, data, technology, know-how, trade secrets, ideas and information, designs, formulas, algorithms, processes, methods, schematics and computer software (in source code and/or object code format); (ii) all trade names, trade and service marks, logos, domains, URLs, websites, addresses, and other designations (collectively, “Marks”); and (iii) patent rights, Mark rights, copyrights, mask work rights, sui generis database rights, trade secret rights, moral rights, and all other intellectual and industrial property rights of any sort throughout the world and all applications, registration, issuance’s and the like with respect thereto (collectively, the “Intellectual Property< /em>”), that was or is used, exercised or exploited (collectively, “Used”);

1.1.4       all machinery, equipment, tools, furniture, office equipment, computer hardware, supplies, materials, vehicles and other items of tangible personal property (other than Inventories) of every kind currently owned or leased by the Company (wherever located and whether or not carried on the Company’s books), together with any express or implied warranty by the manufacturers or sellers or lessors of any item or component part thereof and all maintenance records and other documents relating thereto (collectively, the “Tangible Personal Property”);

1.1.5       all contracts, agreements, leases, licenses, purchase and sales orders, quotations and other executory rights of the Company and commitments of third parties relating to the Business, as expressly listed on Schedule 1.1.5, (i) under which the Company  has, or may acquire, any rights or benefits; (ii) under which the Company has or may become subject to any obligation or liabi lity; or (iii) by which the Company, or any of the Purchased Assets owned by the Company or used in the Business, is or may become bound; and (iv) all outstanding offers or solicitations made by or to the Company to enter into any of the foregoing (collectively, the “Contracts”);

1.1.6       all rights of the Company relating to deposits and prepaid expenses, claims for refunds and rights to offset in respect thereof associated with any Purchased Asset, excluding any such deposits and prepaid expenses for rent, telephone and other utilities not purchased by Purchaser;

1.1.7       (i) all trade accounts receivable and other rights to payment from customers of the Company and the full benefit of all security for such accounts or rights to payment, including all trade accounts receivable representing amounts receivable in respect of goods shipped or products sold or services rendered to customers of the Company; (ii) all other accounts or notes receivable of the Company and the full benefit of all security for such accounts or notes; and (iii) any claim, remedy or other right  related to any of the foregoing t hat exists immediately prior to the Closing Date (collectively, the “Accounts Receivable”);

1.1.8       all inventories of the Company, that are directly or indirectly maintained, held, or stored, by or for the Company for use in or by the Business immediately prior to the Closing Date, and any prepaid deposits for the same, including raw materials, work in process, finished goods, office supplies, maintenance supplies, packaging materials, spare parts and similar items (collectively, the “Inventories”);

1.1.9       all information related to the Business that is stored on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form, including but not limited to, client and customer lists, service and warranty records, supplier lists, shipping and receiving records, research and development information, production reports, equipment logs, operating guides and manuals, financial, tax and accounting records, marketing, advertising and other creative materials, management reports, computer files, computer soft ware and programs and any rights thereto, correspondence and other similar documents and, to the extent allowed under applicable law, copies of all personnel records (collectively, the “Records”);

1.1.10   all insurance benefits, including rights and proceeds, arising from or relating to the Business, the Purchased Assets or the Assumed Liabilities prior to the Closing Date, unless expended in accordance with this Agreement;

1.1.11   all claims of the Company against third parties relating to the Purchased Assets or the Business, whether choate or inchoate, known or unknown, contingent or not contingent;

1.1.12   all permits, licenses, consents, registrations or authorizations issued, given or otherwise made available to the Company by or under the authority of any Governmental Authority, and all pending applications therefor, or renewals thereof, in each case to the extent transferable to Purchaser (collectively, the “Permits”); and

1.1.13   all rights of the Company immediately prior to the Closing Date in, to and under all other assets, rights and claims of every kind and nature used or intended to be used in the operation of, or residing with, the Business.

1.2       Excluded Assets.  Anything to the contrary in Section 1.1 notwithstanding, the Purchased Assets shall exclude the following assets of the Company (collectively, the “Excluded Assets”):

1.2.1    the Company’s rights under this Agreement and all documents and instruments executed in connection with this Agreement;

1.2.2    any life insurance policies, and the cash value thereof, of the Company;

1.2.3    the corporate charter, qualifications to conduct business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute books, stock transfer books, blank stock certificates and other documents relating to the organization, maintenance and existence as a corporation of the Company;

1.2.4    all real property leases to which the Company is a party;

1.2.5    the Company’s Tax Returns (as defined in Section 4.4.2) and rights to refunds of income taxes paid prior to the Closing Date;

1.2.6    all rights of the Company relating to lease deposits and claims for refunds and rights to offset in respect thereof; and  

1.2.7    any other asset specifically identified in Schedule 1.2.

1.3       Assignment of Contracts.  The Purchaser shall cooperate with the Company in obtaining any third party consents that may be required to transfer the Purchased Assets to the Purchaser, including the provision of such information of the Purchaser as may be reasonably requested by such third parties in the context of their review of requests for consent.  Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an assignment of any Contract, if an attempted assignment thereof, without the consent of a third party thereto, would constitute a breach thereof or in any way adversely affect the rights of the Purchaser thereunder.  If such consent is not obtained, or if an attempted assignment thereof would be ineffective or woul d affect the rights of the Company thereunder so that the Purchaser would not in fact receive all such rights, the Company will cooperate with the Purchaser, at Purchaser’s expense, in any reasonable arrangement designed to provide for the Purchaser the benefits under such claims, contracts, licenses, franchises, leases, commitments, sales orders, sales contracts, supply contracts, service agreements, purchase orders, purchase commitments or receivables.

1.4       Assumed Liabilities. The Purchaser will only assume liabilities and obligations of the Company pursuant to executory contracts, and orders and commitments specifically included in the Purchased Assets listed on Schedule 1.1.5 (collectively, the “Assumed Liabilities”):

1.5       Excluded Liabilities. Except for the Assumed Liabilities, the Purchaser shall not assume by virtue of this Agreement or the transactions contemplated hereby, and shall have no liability for, any liabilities of the Company (including, without limitation, those related to the Business) of any kind, character or description whatsoever, including but not limited to the following liabilities (collectively, the “Excluded Liabilities”):

1.5.1    any liability or obligation that arises out of the transactions contemplated by this Agreement or results from any breach or default by the Company under this Agreement or any agreement, certificate or other document or instrument that may be executed or delivered in connection with this Agreement or the transactions contemplated hereby, or any liability or obligation where the existence, imposition, nature or extent of such liability or obligation gives rise to or constitutes a breach or default by the Company under this Agreement or any other agreement, certificate or other document or instrument that may be executed or delivered by the Company in connection with this Agreement or the transactions contemplated hereby;

1.5.2    any liability, accruals for, or obligation relating to income taxes, franchise, sales, use, payroll, unemployment and withholding taxes, including deferred income taxes reflected on the Last Balance Sheet (as defined in Section 4.3), including any interest or penalties related thereto, incurred and payable by the Company on or prior to the Closing Date;

1.5.3    any liability or obligation relating to indebtedness for borrowed money of the Company and all interest thereon and all fees, charges, penalties and other amounts incurred in connection therewith;

1.5.4    other than an Assumed Liability, any liability or obligation relating to any violation of any law, statute,  rule or regulation by the Company that arises out of or results from the Closing or any act, omission, occurrence or state of facts prior to the Closing;

1.5.5    any liability related to the defects in products sold by the Company or negligence or omissions in the manner in which products of the Company are sold or distributed, whether within the nature of product liability and whether such liability arises from sales or events prior to the Closing;

1.5.6    any liability related to the employment practices of the Company prior to Closing;

1.5.7    any liability or obligation of the Company to its sole shareholder or his affiliates; and

1.5.9    any obligation or liability under any real property lease to which the Company is a party.

1.6       No Expansion of Third Party Rights.  The (a) assumption by the Purchaser of the Assumed Liabilities, (b) transfer thereof by the Company and (c) limitations in the description of Excluded Liabilities in Section 1.5 shall in no way expand the rights or remedies of any third party against the Purchaser or the Company as compared to the rights and remedies such third party would have had against the Company had the Purchaser not assumed such liabilities.  Without limiting the generality of the preceding sentence, the assumption by the Purchaser of the Assumed Liabilities shall not create any third party beneficiary rights.

1.7       Insurance Proceeds.  If any of the Purchased Assets are destroyed or damaged or taken in condemnation on or prior to the Closing Date, the insurance proceeds or condemnation award with respect thereto shall be a Purchased Asset; provided that, in the event the destruction, damage or condemnation has a material adverse effect on the Business and such destroyed, damaged or condemned Purchased Assets are not capable of being promptly replaced by the Company prior to the Closing, the Purchaser may, by delivering written notice to the Company, terminate this Agreement and all Parties’ obligations and rights hereunder.  At the Closing, the Company shall pay or credit to the Purchaser any such insurance proceeds or condemnation awards received by it on or prior to the Closi ng and shall assign to or assert for the benefit of the Purchaser all of its rights against any insurance companies, governmental or regulatory authorities and others with respect to such damage, destruction or condemnation.  As and to the extent that there is available insurance under policies maintained by the Company and its affiliates, predecessors and successors in respect of any Assumed Liability, except for any such insurance proceeds with respect to which the insured is directly or indirectly self-insured or has agreed to indemnify the insurer, the Company shall cause such insurance to be applied toward the payment of such Assumed Liability.

ARTICLE II

Purchase Price

2.1       Purchase Price.  In consideration for the Purchased Assets, the Purchaser shall pay to the Company One Million Three Hundred and Sixty Thousand Dollars ($1,360,000.00) (the “Purchase Price”).  In addition, at the Closing the Purchaser shall assume the Assumed Liabilities.

2.2       Payment of Purchase Price. 

2.2.1    At the Closing, the Purchaser shall pay to the Company, by wire transfer of immediately available funds to an account or accounts designated by the Company, an amount equal to the Purchase Price minus the Good Faith Deposit (as defined in Section 2.2.2 below) (the “Closing Payment”).

2.2.2    Pursuant to a letter agreement dated January 27, 2005 by and between the Parties (the “Good Faith Deposit Agreement”), the Purchaser deposited One Hundred Thirty-Six Thousand Dollars ($136,000) with Genovese, Joblove & Battista (the “Escrow Agent”) as a good faith deposit in connection with the transaction contemplated herein (the “Good Faith Deposit”).  At the Closing, the Escrow Agent shall disburse the Good Faith Deposit by wire transfer of immediately available funds to an account or accounts designated by the Company.  The Company shall provide Purchaser with the account information necessary to complete this transaction either prior to or at the Closing.

ARTICLE III

Pre-Closing; Closing Conditions; Pre-Closing Covenants; Execution

3.1       Pre-Closing.  From the date of this Agreement through the earlier of termination hereof or Closing, the Company shall use its commercially reasonable efforts to provide (or cause to be provided) the information, materials and access reasonably requested by the Purchaser.

3.2       Time and Place of the Closing.  The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Adorno & Yoss, LLP, 350 E. Las Olas Boulevard, Suite 1700, Fort Lauderdale, Florida 33301, or by mail or facsimile transmission of the documents, certificates and instruments required to consummate the transactions contemplated hereby, on February 25, 2005 or such other date and place as the Parties shall mutually determine (the “Closing Date”).  The Company agrees that the Purchaser shall have the right to extend the Closing Dated by up to five (5) business days at its sole discretion.

3.3       Closing Transactions.  Subject to the conditions set forth in this Agreement, the Parties shall consummate the following transactions (the “Closing Transactions”) on the Closing Date:

3.3.1    the Company and the Purchaser shall enter into an Assignment and Assumption Agreement, and a Bill of Sale and General Assignment in a form customary in transactions similar to the transaction contemplated herein and satisfactory to the Parties;

3.3.2    the Purchaser, or its designee, shall deliver the Closing Payment to the Company by wire transfer of immediately available funds to an account or accounts designated by the Company;

3.3.3    the parties shall deliver joint written instructions to the Escrow Agent directing the Escrow Agent to disburse the Good Faith Deposit by wire transfer of immediately available funds to an account or accounts designated by the Company;

3.3.4    the Purchaser, Cohen and Blake shall execute (A) an employment agreement between the Purchaser and Jason Cohen in the form attached hereto as Exhibit A-1, and (B) an employment agreement between the Purchaser and Joshua Blake in the form attached hereto as Exhibit A-2;

3.3.5    the Company shall deliver to the Purchaser, or leave at the Premises (as defined in Section 4.5) at which they are located, all of the books, records, documents and other materials relating to the Purchased Assets, except for those books, records, documents and other materials that are Excluded Assets;

3.3.6    the Company, Cohen and Blake shall enter into Patent Assignment Agreements with the Purchaser in a form customary in transactions similar to the transaction contemplated herein and satisfactory to the parties to such Patent Assignment Agreements.

3.3.7    the Company and the Purchaser shall also execute and deliver all such instruments, documents and certificates as may be reasonably requested by the other Party that are necessary, appropriate or desirable for the consummation at the Closing of the transactions contemplated by this Agreement.

3.4       The Company’s Closing Deliveries.  Subject to and conditioned upon the Closing, on or prior to the Closing Date, the Company shall have delivered to the Purchaser all of the following:

3.4.1    copies of all third party and governmental consents, approvals, filings, releases and terminations required in connection with the consummation of the transactions contemplated herein;

3.4.2    a certificate of the Secretary of State of the State of Florida that the Company is in good standing in such State;

3.4.3    Secretary’s certificate regarding the approval of the Agreement and transactions by the Company’s board of directors;

3.4.4    aletter by Adorno & Yoss, LLP, counsel to the Company, or another counsel reasonably satisfactory to the Purchaser substantially in the form attached hereto as Exhibit B; and

3.4.6    such other documents, instruments or certificates (including customary incumbency and bring down certificates) as the Purchaser may reasonably request to effect the transactions contemplated hereby.

3.5       The Purchaser’s Closing Deliveries.  Subject to and conditioned upon the Closing, on or prior to the Closing Date, the Purchaser shall have delivered to the Company, all of the following:

3.5.1    certificate of the Secretary of State of Illinois providing that the Purchaser is in good standing;

3.5.2    Secretary’s Certificate regarding the approval of the Agreement and transactions by the Purchaser’s board of directors;

3.5.3    a letter by Freeborn & Peters, LLP, in form reasonably acceptable to the Company and the Company’s counsel substantially in the form attached hereto as Exhibit C; and

3.5.4    such other documents, instruments or certificates (including customary incumbency and bring down certificates) as the Company may reasonably request to effect the transactions contemplated hereby.

3.6       Conditions to the Purchaser’s Obligations.  The obligations of the Purchaser to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions as of the Closing Date:

3.6.1    the representations and warranties set forth in Article IV shall be true and correct in all material respects at and as of the Closing Date as though then made and as though the Closing Date were substituted for the date of this Agreement throughout such representations and warranties;

3.6.2    the Company shall have performed and complied in all material respects with all of the covenants and agreements required to be performed by it under this Agreement on or prior to the Closing;

3.6.3    the transactions contemplated by this Agreement shall not be prohibited by any applicable law or governmental regulation, shall not subject the Purchaser to any penalty, liability or other materially adverse condition under or pursuant to any applicable law or governmental regulation, and shall be permitted by laws and regulations of the jurisdictions to which the Purchaser is subject;

3.6.4    no action, suit, or proceeding shall be pending or threatened before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable judgment, decree, injunction, order or ruling would prevent the performance of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement, cause such transactions to be rescinded or materially and adversely affect the right of the Purchaser to own the Purchased Assets, and no judgment, decree, injunction, order or ruling shall have been entered which has any of the foregoing effects;

3.6.5    the Company shall have received proper termination statements (Form UCC-3) necessary to terminate the effectiveness of any financing statements filed with respect to the Purchased Assets;

3.6.6    the Purchaser shall have received all material permits, licenses, registrations and other governmental approvals required for the Purchaser’s operation of the Business and occupation of the Premises (including without limitation all permits, licenses, registrations and other governmental approvals required under Environmental Laws), provided, that the Purchaser has used commercially reasonable efforts to file applications to obtain or, to the extent any of the Company’s material permits, licenses, registrations or other governmental authorizations are transferable to the Purchaser and included in the Purchased Assets, to file requests to transfer, reissue or modify, any such permits, licenses, registrations and approvals;

3.6.7    the Purchaser shall have received all necessary approvals from its board of directors to consummate the transactions contemplated hereby;

3.6.8    the Purchaser shall have received all necessary approvals from Silicon Valley Bank to consummate the transactions contemplated hereby; and

3.6.9    the Purchaser shall have received, in writing, the right to co-occupy the premises leased by the Company in Florida following the Closing pursuant to the terms set forth in the stipulation between the Company and the landlord of such Florida premises dated February 10, 2005.  Additionally, the Purchaser shall have entered into a new sublease with Breg, Inc. for the premises subleased by the Company in California on substantially similar economic terms and conditions  to those currently in place between the Company, and the Purchaser shall have received a waiver from the landlord of such California premises

Any condition specified in this Section 3.6 may be waived pre-Closing by the Purchaser; provided that no such waiver shall be effective against the Purchaser unless it is set forth in a written instrument executed by the Purchaser.  In the event that the Purchaser elects to consummate the transactions contemplated by this Agreement even though certain of the conditions set forth in this Section 3.6 have not been satisfied, upon the Closing, any conditions in Section 3.6 that have not otherwise been satisfied shall be identified in a writing to be signed by the Parties and considered waived by the Purchaser.

3.7       Conditions to the Company’s Obligations.  The obligations of the Company to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions as of the Closing Date:

3.7.1    the representations and warranties set forth in Article V shall be true and correct in all material respects at and as of the Closing Date as though then made and as though the Closing Date were substituted for the date of this Agreement throughout such representations and warranties;

3.7.2    the Purchaser shall have performed and complied in all material respects with all of the covenants and agreements required to be performed by it under this Agreement on or prior to the Closing;

3.7.3    the transactions contemplated by this Agreement shall not be prohibited by any applicable law or governmental regulation, shall not subject the Company to any penalty, liability or other materially adverse condition under or pursuant to any applicable law or governmental regulation, and shall be permitted by laws and regulations of the jurisdictions to which the Company is subject; and

3.7.4    no action, suit, or proceeding shall be pending before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable judgment, decree, injunction, order or ruling would prevent the performance of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement, cause such transactions to be rescinded or materially and adversely affect the right of the Company to retain the Purchase Price, including the Closing Payment and the Good Faith Deposit, and no judgment, decree, injunction, order or ruling shall have been entered which has any of the foregoing effects.

Any condition specified in this Section 3.7 may be waived by the Company provided that no such waiver shall be effective against the Company unless it is set forth in a writing executed by the Company.  In the event that the Company elect to consummate the transactions contemplated by this Agreement even though certain of the conditions set forth in this Section 3.7 have not been satisfied, upon the Closing, any conditions in Section 3.7 that have not otherwise been satisfied shall be identified in a writing to be signed by the Parties and considered waived by the Company.

3.8       Affirmative Covenants of the Company.  Prior to the Closing, unless the Purchaser otherwise agrees in writing and except as expressly contemplated by this Agreement, the Company shall, except as set forth in the schedules to this Agreement, conduct the Business and operations only in the ordinary course of business, consistent with past practice.  Notwithstanding the foregoing, the Company shall obtain consent from the Purchaser before entering into any Contract or fulfilling any purchase and sales orders.

3.9       Negative Covenants of the Company.  Prior to the Closing, except as the Purchaser otherwise agrees in writing or as is expressly contemplated by this Agreement, the Company shall not:

3.9.1    establish or, except in the ordinary course of business consistent with past practice, contribute to any pension, retirement, profit sharing or stock bonus plan or multiemployer plan covering the employees of the Company;

3.9.2    enter into any material contract, agreement or transaction with third parties;

3.9.3    incur, guarantee, or become subject to any material liabilities;

3.9.4    acquire or dispose of any assets and properties used or held for use in the conduct of the Business or creating or incurring any Lien;

3.9.5    violate, breach or default under in any material respect, or take or fail to take any action that (with or without notice or lapse of time or both) would constitute a material violation or breach of, or default under, any term or provision of any Contract or any license;

3.9.6    make capital expenditures or commitments for additions to property, plant or equipment constituting capital assets on behalf of the Business in an aggregate amount; or

3.9.7    enter into any agreement to do or engage in any of the foregoing.

3.10     Covenants of the Purchaser.  Prior to the Closing, the Purchaser shall cooperate with the Company and use its reasonable best efforts to cause the conditions to the Company’s obligation to consummate the transactions contemplated by this Agreement to be satisfied, including, without limitation, the execution and delivery of all agreements contemplated hereunder to be so executed and delivered (including, without limitation, the making and obtaining of all third party and governmental filings, authorizations, approvals, consents, releases and terminations).

ARTICLE IV

Representations and Warranties of the Company

To induce the Purchaser to enter into this Agreement and to consummate the transactions contemplated hereunder, the Company makes the following representations and warranties.  All references to the “Company’s knowledge” or to words of similar import will be deemed to be references to the actual knowledge of its sole shareholder.

4.1       Organization, Power and Authority; Subsidiaries.

4.1.1    The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida and has all requisite corporate power and authority to own or lease its properties, to carry on its business as it is now being conducted and to enter into this Agreement and all other agreements contemplated hereby and to perform its obligations hereunder and thereunder.  The Company is legally qualified to transact business as a foreign corporation in each of the jurisdictions in which its business or property is such as to require that it be thus qualified, and it is in good standing in each of the jurisdictions in which it is so qualified and each such jurisdiction is listed on Schedule 4.1.

4.1.2    The Company does not directly or indirectly own any capital stock of, or other equity interests in, any corporation, partnership, joint venture or other entity.

4.2       Due Authorization; Binding Obligation; No Conflicts.  The execution, delivery and performance of this Agreement and all other agreements contemplated hereby and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action of the Company.  This Agreement has been duly executed and delivered by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and other similar laws affecting the enforceability of creditor’s rights generally, general equitable principles and the discretion of courts in granting equitable remedies.  Neither the execution and delivery of this Agreement nor the consummation of the tran sactions contemplated hereby will: (a) contravene any provision of the Certificate of Incorporation or by-laws of the Company; (b) violate or conflict with any federal, state or local law, statute, ordinance, rule, regulation or any decree, writ, injunction, judgment or order of any court or administrative or other governmental body or of any arbitration award which is either applicable to, binding upon or enforceable against the Company, except for such violations or conflicts that, taken in the aggregate, could not reasonably be expected to have a material adverse effect upon the Company; or (c) conflict with, result in any breach of or default (or an event which would, with the passage of time or the giving of notice or both, constitute a default) under any material mortgage, contract, agreement, lease, license, indenture, will, trust or other instrument which is either binding upon or enforceable against the Company.

4.3       Financial Statements.  The Company previously has furnished to the Purchaser the following financial statements (the “Financial Statements”) of the Company:

(a)        balance sheets as of December 31, 2001, December 31, 2002 and December 31, 2003, including the notes pertaining thereto, prepared and certified by the Company’s outside accountants;

(b)        balance sheet as of December 31, 2004 (the “Last Balance Sheet”);

(c)        statements of income for the years ended December 31, 2001, December 31, 2002 and December 31, 2003, including the notes pertaining thereto, prepared and certified by the Company’s outside accountants; and

(d)        statement of income for the twelve (12) months ended December 31, 2004.

The Financial Statements (including in all cases any notes thereto) are accurate and complete in all material respects, are consistent with the information contained in the books and records (which, in turn, are accurate and complete in all material respects), fairly present the financial condition and results of operations of the Company as of the times and for the periods referred to therein and have been prepared in accordance with generally accepted accounting principles of the United States consistently applied throughout the periods indicated, subject in the case of interim financial statements, to the absence of footnote disclosure and normal year-end adjustments.  

4.4       Tax Matters.  Except as set forth on Schedule 4.4:

4.4.1    All taxes, assessments, charges, duties, fees, levies or other governmental charges, including all U.S. and non-U.S. federal, state, local and other income, franchise, profits, capital gains, capital stock, transfer, sales, use, value added, occupation, property, excise, severance, windfall profits, stamp, license, payroll, withholding and other taxes, assessments, charges, duties, fees, levies or other governmental charges of any kind whatsoever, all estimated taxes, deficiency assessments, additions to tax, penalties and interest (collectively “Taxes”) required to be paid by  the Company on or before the date hereof have been timely paid, and any Taxes required to be paid by the Company after the date hereof relating to a period ending on or before the Closing Date or relating to the transactions contemplated by this Agreement shall be timely paid.

4.4.2    All material returns and other reports required to be filed by the Company with respect to Taxes (all such returns and other reports, “Tax Returns”) on or before the Closing Date have been timely filed and were true, correct and complete in all material respects.  All material Tax Returns required to be filed by or with respect to the Company after the date hereof relating to a period ending on or before the Closing Date shall be prepared and timely filed, in a manner consistent with prior years and applicable laws, rules and regulations and shall be true, correct and complete in all material respects.

4.4.3    Schedule 4.4 sets forth the status of federal, state, county, local and foreign tax audits of the Tax Returns of the Company for each fiscal year for which the statute of limitations has not expired, including amounts of any deficiencies and additions to Taxes, interest and penalties indicated on any notices of proposed deficiency or statutory notices of deficiency, and other amounts of any payments made by the Company.  Any adjustments made on any Tax Return of the Company as a result of any tax audit, amended Tax Return or otherwise have been timely and duly reported to each applicable state, county, local, federal and foreign taxing authority to the extent required by law.

4.5       Real Estate.  Schedule 4.5 sets forth a list of each lease or similar agreement under which the Company is lessee of, or holds or operates, any real property owned by any third Person (sometimes referred to herein as the “Leased Real Property” or the “Premises”).

4.6       Purchased Assets.

4.6.1    The Purchased Assets constitute all of the assets, tangible and intangible, of any nature whatsoever, necessary to operate the Business in the manner presently operated by the Company and include all of the operating assets of the Company.

4.6.2    the Company has the complete and unrestricted power and unqualified right to sell, assign, transfer, convey and deliver the Purchased Assets to the Purchaser without penalty or other adverse consequences.  Following the Closing and the execution of any necessary instruments of transfer, the Purchaser will own, with good, valid and marketable title, or lease, under valid and subsisting leases, or otherwise acquire the interests of the Company in the Purchased Assets, free and clear of any Liens, and without incurring any penalty or other adverse consequenc e, including, without limitation, any increase in rentals, royalties, or license or other fees imposed as a result of, or arising from, the Closing.  The Company has, and, following the Closing the Purchaser will have, the right to access any of the premises upon which any of the Purchased Assets are located and remove such Purchased Assets.

4.7       Accounts Receivables.  Except as set forth in Schedule 4.7, all of the Company’s accounts receivable (i) arose from bona fide sales transactions in the ordinary course of business and are payable on ordinary trade terms; (ii) are valid and legally binding obligations of the respective debtors, enforceable in accordance with their terms; and (iii) are fully collectible in accordance with their terms, but in any event not later than one hundred twenty (120) days after the Closing, net of any reserves set forth on the Financial Statements.

4.8       Licenses and Permits.  The Company possesses all material licenses and material required governmental or official approvals, permits or authorizations (collectively, the “Permits”) necessary for the business and operations of the Company.  Until immediately prior to the Closing, all such Permits are valid and in full force and effect, the Company is in compliance with their requirements, and no proceeding is pending or threatened to revoke or amend any of them.  Schedule 4.8 contains a complete list of all such Permits.  As to the Premises, the Company has not received a written notice from a governmental entity stating that it does not have any such required items.

4.9       Intellectual Property Rights.

4.9.1    Schedule 4.9 contains a complete and accurate list of all of the Intellectual Property owned or Used by the Company that are either material to the Business or are registered, except for off-the-shelf software and licenses implied in the sale of such software.

4.9.2    All licenses and agreements listed on Schedule 4.9 are, except as set forth thereon, evidenced by written agreements that have not been materially breached, terminated or canceled by the Company or the other party to such licenses and agreements and the Company does not have any knowledge of any anticipated breach, termination or cancellation by any other party to such licenses and agreements.

4.9.3    Except as set forth on Schedule 4.9, (a) the Company owns all right, title and interest in and to all of the Intellectual Property; (b) the Company has not received a notice of any claim by any third party asserting the invalidity, misuse, or unenforceability of the Intellectual Property, and, to the Company’s knowledge, there are no grounds for the same; (c) the Company has not received a notice of conflict with the asserted rights of others since the inception of the Company; and (d) to the Company’s knowledge, the conduct of the Business has not infringed any intellectual property rights of others.

4.10     Contracts and Agreements with Respect to the Company.  Schedule 4.10 sets forth a complete and accurate list of the following contracts and agreements to which the Company is a party:

(a)        any collective bargaining agreement or other contract with any labor union or any bonus, pension, profit sharing, retirement or any other form of deferred compensation plan or any stock purchase, stock option, hospitalization insurance or similar plan or practice;

(b)        any express contract for the employment of any officer, individual, employee or other Person (as defined in Section 4.18) on a full-time or consulting or independent sales representative basis and any severance agreements, plans or programs, or any other agreements, written or oral, providing for payments or benefits upon termination of employment or any consulting or independent sale representative arrangement;

(c)        any agreement or indenture relating to the borrowing of money or to mortgaging, pledging or otherwise placing a Lien on any of the Purchased Assets, including, without limitation, the documents related to any equipment financing;

(d)        any contract (excluding accounts receivable from customers in the ordinary course of business) under which the Company has advanced or loaned money to any other Person;

(e)        any agreement with respect to the lending or investing of funds;

(f)         any license or royalty agreement (excluding licenses or agreements pertaining to “off-the-shelf” software);

(g)        any guaranty of any obligation other than endorsements made for collection;

(h)        any lease or agreement under which it is lessee or permitted to hold or operate any property, real or personal, or is lessor of or permits any third party to hold or operate any property, real or personal, owned or controlled by it, except the existing lease of the Premises, which will be terminated at Closing;

(i)         any contract or group of related contracts with the same party or related party continuing over a period of more than six (6) months from the date or dates thereof, not terminable by it on thirty (30) days or less notice without penalties;

(j)         any confidentiality agreement or similar arrangement, other than those which were entered into with potential third-party purchasers of the Company or the Purchased Assets;

(k)        any non-compete or similar contract which prohibits it from freely engaging in business anywhere in the world; or

(l)         any other agreement material to it whether or not entered into in the ordinary course of business, except for this Agreement or the agreements contemplated hereby.

4.11     Litigation.  Except as set forth on Schedule 4.11, there are no actions, suits, claims, governmental investigations or arbitration proceedings  pending or to the knowledge of the Company threatened against the Company, or any of the Purchased Assets, or which question the validity or enforceability of this Agreement or any action contemplated herein.  Except as set forth on Schedule 4.11, there are no outstanding unsatisfied orders, decrees or stipulations issued by any federal, state, local or foreign judicial or administrative authority in any proceeding to which the Company is or was a party or which apply to any of the Purchased Assets.

4.12     Insurance. Schedule 4.12 lists each insurance policy maintained by the Company which is included in the Purchased Assets with respect to its properties, assets, including Purchased Assets, and business.  Except as set forth on Schedule 4.12, all premiums and other payments which have become due under the policies of insurance listed on Schedule 4.12 have been paid in full, all of such policies are now in full force and effect and the Company has not received notice from any insurer, agent or broker of the cancellation of, or any increase in premium with respect to, any of such poli cies or bonds.  Except as set forth on Schedule 4.12, the Company has no self-insurance or co-insurance programs, and the reserves set forth on the Last Balance Sheet are adequate to cover all anticipated liabilities with respect to any such self-insurance or coinsurance programs.

4.13     Absence of Certain Developments.  Except as set forth on Schedule 4.13 and except as expressly contemplated by this Agreement, since the date of the Last Balance Sheet, the Company has not:

(a)        suffered any material adverse change in the Business, the Purchased Assets, liabilities, properties or prospects of Company or in the financial condition or results of operations of the Company, other than changes occurring in the ordinary course of business consistent with past practice, or suffered any theft, damage, destruction or casualty to the Purchased Assets, whether or not covered by insurance or suffered any substantial destruction of its books and records;

(b)        incurred or become subject to any liabilities, except liabilities incurred in the ordinary course of business consistent with past practice;

(c)        subjected any portion of the Purchased Assets to any Lien which will not be discharged as of the Closing;

(d)        sold, leased, assigned or transferred (including, without limitation, transfers to the shareholder, officers and directors of the Company) any of the Purchased Assets, except for sales of inventory in the ordinary course of business consistent with past practice or in connection with replacement of equipment or as otherwise contemplated by this Agreement, or canceled without fair consideration any debts or claims owing to or held by it;

(e)        sold, assigned, licensed or transferred (including, without limitation, transfers to the Shareholder, officers and directors of the Company) any proprietary rights owned by, issued to or licensed to it or disclosed any confidential information (other than pursuant to agreements requiring the recipient of such confidential information to maintain the confidentiality of and preserving all its rights in such confidential information);

(f)         suffered any extraordinary losses or waived any rights of material value;

(g)        entered into, amended or terminated any material lease, contract, agreement or commitment, or taken any other action or entered into any other transaction other than in the ordinary course of business consistent with past practice;

(h)        except as contemplated in this Agreement, made any other material change in employment terms for any of its directors, officers, and employees;

(i)         made, paid or incurred any capital expenditures or commitments for capital expenditures;

(j)         made, paid or incurred any loans or advances to, or guarantees for the benefit of, any Person;

(k)        entered into, terminated, or received notice of termination of (i) any material license, distributorship, dealer, sales representative, joint venture, credit, or similar agreement, or (ii) any contract, agreement or transaction; or

(l)         committed, either orally or in writing, to do any of the foregoing.

4.14     Compliance with Laws.  The Company is in compliance with all laws, rules, regulations and orders applicable to it (excluding laws, rules, regulations and orders applicable to the Premises). Since December 31, 2003, the Company has not been cited, fined or otherwise notified of any asserted past or present failure to comply with any laws and no proceeding with respect to any such violation is pending.

4.15     Environmental Matters. The operations, processes, practices, equipment and activities of the Company comply and have complied in all material respects with applicable Environmental Laws and the Company has not received any written notice, report or other information regarding any actual or alleged violation of Environmental Laws.

4.15.1  For purposes of this Agreement, “Environmental Law(s) shall mean all applicable foreign, federal, state, regional, county or local, statutes, laws, regulations, ordinances, codes, rules, judgments, orders, decrees, permits, concessions, grants, agreements, licenses or other requirements or restrictions of law, including all common law, pertaining to protection of the indoor or outdoor environment, health, safety of persons, management or use of natural resources, protection or use of surface water and groundwater, conservation, wildlife, waste management, hazardous substances, materials or wastes or pollution (including, without limitation, regulation of releases and disposal to air, land, water and groundwater), each as amended and in effect on or prior to the Closing, and includes, without limitation, the Comprehensive Environmental Response, Compensation, a nd Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq., Solid Waste Disposal Act, as amended by the Resource Conversation and Recovery Act of 1986 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq., Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq., Clean Air Act of 1966, as amended, 42 U.S.C. §§ 7401 et seq., Toxic Substances Control Act of 1976, 15 U.S.C. §§ 2601 et seq., Hazardous Materials Transportation Act 49 U.S.C. App. §§ 1801 et seq., Occupational Safety and Health Act of 197 0, as amended 29 U.S.C. §§ 651 et seq., Oil Pollution Act of 1990, 33 U.S.C. §§ 2701 et seq., Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq., National Environmental Policy Act of 1969, 42 U.S.C. §§ 4321 et seq., Safe Drinking Water Act of 1974, as amended, 42 U.S.C. §§ 300(f) et seq., any similar or implementing state law, and all successor statutes, amendments, rules, orders, directives and regulations promulgated thereunder.

4.16     Labor Relations.  The Company is not a party to or bound by any collective bargaining agreement or any other agreement with a labor union. There is not pending or, to the knowledge of the Company, threatened any labor dispute, strike or work stoppage which affects or which may affect the Business of the Company or which may interfere with its continued operation.  The Company is not aware that any executive or key employee or group of employees has any plans to terminate his, her or their employment with the Company.

4.17     Employee Benefits.  Except as set forth on Schedule 4.17, neither the Company nor any trade or business, whether or not incorporated, that is, along with the Company, a member of a controlled group of corporations, a group of trades or businesses under common control, or an affiliated service group, as described in section 414(b), (c), or (m) of the Internal Revenue Code of 1986, as amended (the “Code”), has any liability with respect to any employee pension benefit plan, as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is a multiemployer plan, as defined in Section 3(37) of ERISA, or that is subject to Section 412 of the Code, except for contributions that have been made when due.

4.18     Affiliate Transactions.  Except as set forth on Schedule 4.18, no Shareholder nor any officer, director or employee of the Company or Affiliate of any such Person is a party to any agreement, contract, commitment or transaction with the Company or which is pertaining to the Business of the Company or has any interest in any property, real or personal or mixed, tangible or intangible, used in or pertaining to the Business of the Company (excluding items of personal property that are personal in nature).  “Affiliate” means, with respect to any particular Person, any Person controlling, controlled by or under common control with such Pers on.  “Person” means an individual, a partnership, a corporation, an association, a limited liability company, a joint stock company, a trust, a joint venture, an unincorporated organization, a governmental entity or any department, agency or political subdivision thereof or any other entity.

4.19     Closing Date.  All of the representations and warranties contained in this Article IV and elsewhere in this Agreement and all information delivered in any schedule, attachment or Exhibit hereto or in any writing delivered to the Purchaser are true and correct on the date of this Agreement and shall be true and correct on the Closing Date.

4.20     Governmental Authorization; Consents.  The execution, delivery and performance by the Company of this Agreement require no action by or in respect of, or filing with, any governmental body, agency, official or authority.  Except as set forth on Schedule 4.20, no consent, approval, waiver or other action by any private party under any contract, agreement, indenture, lease, instrument or other document to which the Company or any Shareholder is a party or by which the Company is bound is required for the execution, delivery and performance of this Agreement by the Company or any Shareholder or the consummation of the transactions contemplated hereby.

4.21     Warranty Claims.  Except as set forth on Schedule 4.21, there are no known warranty claims that remain unsatisfied with respect to products sold by the Company prior to the Closing.

4.22     No Misstatements.  No representation or warranty made by the Company in this Agreement, the Disclosure Schedules or any certificate delivered or deliverable pursuant to the terms hereof contains or will contain any untrue statement of a material fact, or omits, or will omit, when taken as a whole, to state a material fact, necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.   The Company has disclosed to the Purchaser all material information relating to the Purchased Assets, the Business, and the transactions contemplated by this Agreement

ARTICLE V

Representations and Warranties of Purchaser

To induce the Company to enter into this Agreement and to consummate the transactions contemplated hereunder, the Purchaser makes the following representations and warranties.

5.1       Organization, Power and Authority.  The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Illinois, and has all requisite corporate power and authority to enter into this Agreement and all other agreements contemplated hereby and to perform its obligations hereunder and thereunder.

5.2       Due Authorization; Binding Obligation; No Conflicts.  The execution, delivery and performance of this Agreement and all other agreements contemplated hereby and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action of the Purchaser.  This Agreement has been duly executed and delivered by the Purchaser and is a valid and binding obligation of the Purchaser enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and other similar laws affecting the enforceability of creditor’s rights generally, general equitable principles and the discretion of courts in granting equitable remedies.  Neither the execution and delivery of this Agreement nor the consummation of th e transactions contemplated hereby will: (a) contravene any provision of the Articles of Incorporation or by-laws of the Purchaser; (b) violate or conflict with any federal, state or local law, statute, ordinance, rule, regulation or any decree, writ, injunction, judgment or order of any court or administrative or other governmental body or of any arbitration award which is either applicable to, binding upon or enforceable against the Purchaser; or (c) conflict with, result in any breach of or default (or an event which would, with the passage of time or the giving of notice or both, constitute a default) under any material mortgage, contract, agreement, lease, license, indenture, will, trust or other instrument which is either binding upon or enforceable against the Purchaser.

5.3       Litigation.  There are no actions, suits, claims, governmental investigations or arbitration proceedings pending or, to the Purchaser’s actual knowledge, threatened against or affecting the Purchaser that question the validity or enforceability of this Agreement or any action contemplated herein.

5.4       Closing Date.  All of the representations and warranties contained in this Article V and made by Purchaser elsewhere in this Agreement and all information delivered in any schedule, attachment or exhibit hereto or in any writing delivered to the Company by Purchaser are true and correct on the date of this Agreement and shall be true and correct on the Closing Date, except to the extent that the Purchaser has advised the Company otherwise in writing prior to the Closing.

ARTICLE VI

Certain Actions After the Closing

6.1       Taxes; Tax Returns.

6.1.1    The Parties will file their respective income tax returns for 2004 and make any other required filings.  With respect to any Taxes of the Company that are not Assumed Liabilities pursuant to Section 1.4, the Company shall pay, and indemnify and hold harmless the Purchaser from and against any Taxes imposed upon the Company or the Purchaser attributable to the Company for all the taxable periods ending before the Closing Date and for that portion of any taxable period that includes the Closing Date, calculated as if the Closing Date were the end of a taxable period, including any taxes that may arise.

6.1.2    If any Taxes for which the Company is to indemnify the Purchaser pursuant to this Section 6.1 are payable after the Closing Date, the Company shall pay or cause to be paid to the Purchaser the amount of such Taxes no later than ten (10) business days before the date such Taxes are due and payable.  

6.2       Confidentiality.  Each party, including Cohen and Blake, hereto will hold, and will use its or his best efforts to cause its affiliates and their respective representatives to hold, in strict confidence from any Person (other than any such Affiliate or representative), all documents and information concerning the other party or any of its affiliates furnished to it by the other party or such other party’s representatives in connection with this Agreement or the transactions contemplated hereby, unless (i) compelled to disclose by judicial or administrative process (including without limitation in connection wit h obtaining the necessary approvals of this Agreement and the transactions contemplated hereby of governmental or regulatory authorities) or by other requirements of law or (ii) disclosed in an action or proceeding brought by a party hereto in pursuit of its rights or in the exercise of its remedies hereunder, except to the extent that such documents or information can be shown to have been (a) previously known by the party receiving such documents or information, (b) in the public domain (either prior to or after the furnishing of such documents or information hereunder) through no fault of such receiving party or  (c) later acquired by the receiving party from another source if the receiving party is not aware that such source is under an obligation to another party hereto to keep such documents and information confidential; provided that following the Closing the foregoing restrictions will not apply to Purchaser’s use of documents and information concerning the Business, the Purchased Ass ets or the Assumed Liabilities furnished by the Company hereunder.  In the event the transactions contemplated hereby are not consummated, upon the request of the other party, each party hereto will, and will cause its affiliates and their respective representatives to, promptly (and in no event later than five (5) Business Days after such request) redeliver or cause to be redelivered all copies of documents and information furnished by the other party in connection with this Agreement or the transactions contemplated hereby and destroy or cause to be destroyed all notes, memoranda, summaries, analyses, compilations and other writings related thereto or based thereon prepared by the party furnished such documents and information or its representatives, provided that notwithstanding the foregoing, legal counsel for each of the Parties shall be entitled to retain one (1) copy of such information, documents and materials in its files to be used only in the event of a dispute arising out of this Agreem ent or the transactions contemplated thereby.

6.3       Accounts Receivable.  The Company agrees to promptly remit to Purchaser the amount of any payments received with respect to the Purchased Assets by the Company or the Purchaser’s Accounts Receivable.  In addition to receipts in the Company’s lock box deposited after  5:00 p.m. EST on February 25, 2005, or other such date following the Closing as the parties may agree to in writing, all payments of Accounts Receivable to the Company otherwise received on or after the Closing Date will be for the sole benefit of Purchaser and, provided the Closing occurs, shall be promptly remitted by the Company or its bank, as the case may be, to the Purchaser.

6.4       Mail and Communications.  The Company will promptly remit to Purchaser any mail or other communications, including, without limitation, any written inquiries and payments received by the Company relating to the Purchased Assets and any mail, invoices or other communications received by the Company relating to Assumed Liabilities which are received by the Company from and after the Closing Date.  The Purchaser will promptly remit to the Company any mail or other communications, including, without limitation, any written inquiries and payments received by the Purchaser relating to the Excluded Assets, and any invoices received by the Purchaser relating to liabilities of the Company other than the Assumed Liabilities which are received by the Purchaser from and after the Closing Date.

ARTICLE VII

Indemnification

7.1       Indemnification.

7.1.1    The Company shall indemnify and hold harmless the Purchaser, and the Purchaser’s officers, directors, employees, members, managers, shareholders, subsidiaries, assigns and successors and the affiliates of the foregoing persons and entities (individually, a “Purchaser Indemnified Person” and collectively, the “Purchaser Indemnified Persons”), from and against and in respect of, and shall pay to the Indemnified Persons the amount of, any and all claims, demands, lawsuits, actions, causes of actions, administrative proceedings (including informal proceedings), losses, assessments, costs, damages, judgments, liabilities (including reasonable legal fees and disbursements incurred in defending any such matters or enforcing any covenant or obligation under this Agreement) of every kind, nature and description, whether or not involving a third party claim (collectively, “Indemnifiable Damages”) that arise or result from or relate to, directly or indirectly:

(a) any breach of any of the representations and warranties given or made by the Company in this Agreement or any certificate, document, or instrument delivered by or on behalf of the Company pursuant to this Agreement (a “Breach of Warranty Claim”);

(b) any violation by the Company of any covenant or agreement made by the Company in this Agreement, or any certificate, document, or instrument delivered by or on behalf of the Company pursuant to this Agreement; or

(c) any Excluded Liability.

7.1.2    The Purchaser shall indemnify and hold harmless the Company, the Company’s officers, directors, employees, members, managers, assigns and successors and the affiliates of the foregoing persons and entities (individually, a “Company Indemnified Person” and collectively, the “Company Indemnified Persons”), from and against and in respect of any and all Indemnifiable Damages that ari se or result from or relate to, directly or indirectly, (a) any breach of any of the representations, warranties, and covenants given or made by the Purchaser in this Agreement or any certificate, document, or instrument delivered by or on behalf of the Purchaser pursuant hereto or (b) any Assumed Liability.

7.2       Claims by Third Parties.  A party seeking indemnification pursuant to this Article VII (“Indemnified Party”) will give notice to the other party (“Indemnifying Party”) promptly after the Indemnified Party has actual knowledge of any claim from a third party, as to which indemnity may be sought, and will permit the Indemnifying Party (at its expense) to assume the defense of any claim or any litigation resulting therefrom; provided that (a) counsel for the Indemnifying Party who shall conduct the defense of such claim or litigation shall be reasonably s atisfactory to the Indemnified Party and (b) the failure or delay by the Indemnified Party to give notice as provided herein will not relieve the Indemnifying Party of its or their indemnification obligations under this Agreement, except to the extent such failure or delay shall have prejudiced the Indemnifying Party.  The Indemnified Party shall not be required to commence litigation or to take any action against any third party prior to making a claim for indemnification hereunder.  If the Indemnifying Party assumes the defense of such claim or litigation, no compromise or settlement of such claims may be effected by the Indemnifying Party without the Indemnified Party’s consent, which shall not be unreasonably withheld.  In the event that the Indemnifying Party does not accept the defense of any matter as above provided, the Indemnified Party will have the full right to defend against any such claim or demand, and will be entitled to settle or agree to pay in full such claim or demand, in its reasonable discretion.  In any event, the Indemnifying Party will cooperate in the defense of such action and the records of the Indemnifying Party shall be made reasonably available to the Indemnified Party with respect to such defense.

ARTICLE VIII

Termination; Exclusivity

8.1       Termination.  This Agreement may be terminated:

8.1.1    at any time prior to the Closing by mutual written consent of the Company and the Purchaser;

8.1.2    at any time prior to the Closing by the Company or the Purchaser, if events have occurred which have made it impossible to satisfy a condition precedent to the terminating Party’s obligations to consummate the transactions contemplated hereby, unless such terminating Party’s willful or knowing breach of this Agreement has caused the condition to be unsatisfied; or

8.1.3    at any time after March 4, 2005, by the Company or Purchaser upon notification of the non-terminating party by the terminating party if the Closing shall not have occurred on or before such date and such failure to consummate is not caused by a breach of this Agreement by the terminating party; or

8.1.4    by the Purchaser pursuant to Section 1.7 hereof.

8.2       Effect of Termination.  In the event of termination of this Agreement as provided in Section 8.1, this Agreement shall forthwith become void and there shall be no liability on the part of any Party to any other Party under this Agreement; provided, however, that (i) Section 6.2, 8.2, 8.3, 9.1, 9.7, 9.16, 9.17 and Article VII shall remain in full force and effect and survive any termination of this Agreement and (ii) nothing herein shall relieve any Party from liability for any breach of this Agreement prior to such termination.

8.3       Break-Up Fee.  If the Closing does not take place due to the fault of the Company, then the Company shall pay to a break-up fee equal to 100% of the Purchaser’s actual costs incurred with respect to the transactions contemplated herein, including costs for due diligence, legal and accounting fees, and other related expenses.

8.4       Exclusivity.  From the date of this Agreement until the earlier of the termination of this Agreement in accordance with this Article VIII or the Closing Date, the Company covenants and agrees that neither it nor its employees, directors, officers, affiliates, agents or representatives shall, directly or indirectly (a) solicit, initiate or encourage any inquiries, proposals or offers from any person relating to any sale, exchange, tender, acquisition or purchase of all or a material amount of the assets or securities (including those held by its sole shareholder) of the Company, or any merger, consolidation or business combination with the Company, or (b) with respect to any effort or attempt by any other person to do or seek any of the foregoing (i) participate in any disc ussions or negotiations, (ii) furnish to any other person any confidential information with respect to the Company or its Business, or (iii) otherwise cooperate in any way with, or assist or participate in, or facilitate or encourage any such effort.  The Company shall promptly notify the Purchaser if any such proposal or offer, or any inquiry or contact with any person with respect thereto, is made.  The Company agrees that taking any such action shall constitute a material breach of this Agreement.

ARTICLE IX

Miscellaneous

9.1       Transaction Expenses.  

9.1.1    The Purchaser will indemnify and hold harmless the Company from the commission, fee or claim of any Person employed or retained or claiming to be employed or retained by the Purchaser to bring about, or to represent it in, the transactions contemplated hereby.  

9.1.2    The Company will indemnify and hold harmless the Purchaser from the commission, fee or claim of any Person, firm or corporation employed or retained or claiming to be employed or retained by the Company to bring about, or to represent any of them in, the transactions contemplated hereby.  

9.1.3    In addition, and Section 8.3 notwithstanding, each Party shall pay their own expenses (including legal and accounting fees) incident to the negotiation and preparation of this Agreement and any other documents prepared in connection therewith, and the consummation of the transactions contemplated herein.

9.2       Amendment and Modification.  The Parties may amend, modify and supplement this Agreement in such manner as may be agreed upon by all of them in writing.

9.3       Entire Agreement.  This Agreement, including the exhibits, schedules, certificates and other documents and agreements delivered on the date hereof in connection herewith, and the Good Faith Deposit Agreement contains the entire agreement of the Parties with respect to the transactions contemplated by this Agreement, and supersedes all prior understandings and agreements (oral or written) of the Parties with respect to the subject matter hereof.  The Parties expressly represent and warrant that in entering into this Agreement they are not relying on any prior representations made by any other Party concerning the terms, conditions or effects of this Agreement which terms, conditions or effects are not expressly set forth herein.  Any reference herein to this Agreement shall be deemed to include the schedules and exhibits.

9.4       Interpretation.  When a reference is made in this Agreement to an article, section, paragraph, clause, schedule or exhibit, such reference shall be to an article, section, paragraph, clause, schedule or exhibit of this Agreement unless otherwise indicated.  The headings contained herein and on the schedules are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement or the schedules.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”  The term “knowledge” or “best of knowledge” when applied to any Person, shall mean the act ual knowledge, without further investigation, of such Person.  Time shall be of the essence in this Agreement.

9.5       Execution in Counterpart.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.  Execution and delivery of a facsimile of this Agreement shall have the same effect as the delivery of the original.

9.6       Notices.  All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by telecopier (with written confirmation of receipt), provided that a copy is mailed by registered mail, return receipt requested, or (c) three (3) days after deposited with a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses and telecopier numbers set forth below (or to such other addresses and telecopier numbers as a Party may designate by written notice to the other Parties):

If to the Company:

Jayco Ventures, Inc.

c/o Jason Cohen

5600 N.W.12th Avenue, Suite 303

Ft. Lauderdale, Florida 33309

with a copy to:

Bart A. Houston, Esq.

Adorno & Yoss, LLP

350 E. Las Olas Blvd.

Suite 1700

Ft. Lauderdale, Florida 33301

Fax:  954-766-7800

cc: Barry P. Gruher, Esq.

If to the Purchaser:

M-Wave DBS, Inc.

475 Industrial Dr.

West Chicago, IL 60185

Attention: Jim Mayer

with a copy to:

Freeborn and Peters, LLP

311 South Wacker Drive

Suite 3000

Chicago, Illinois 60606

Fax:  (312) 360-6571

Attention:  Carl Klein

Any Party may, by notice given as aforesaid, change its address for all subsequent notices. Notices shall be deemed given on the date delivered.

9.7       Governing Law Venue and Jurisdiction. The validity, interpretation and performance of this Agreement, and any and all transactions, demands, debts, claims, defenses, suits, causes of actions and other disputes whatsoever arising out of and related to thereto, including any other related documents hereby, shall be governed by, construed and enforced in accordance with the laws of the State of Illinois.  In the event that any litigation, action or proceeding results from or arises out of this Agreement, or the performance hereof, including the related documents, contemplated hereby, the parties agree to submit to the personal jurisdiction and venue of any State or Illinois Court having subject matter jurisdiction over such matters located in Cook County, State of Illinois, o r in any other such county and state where venue may properly lie, at the sole discretion and election by Purchaser, for purposes of trying and litigating any such controversy.  Furthermore, the Company waives any right it may have to assert the doctrine of forum non-conveniens as a defense and/or objection to such jurisdiction and venue provided herein.

9.8       Confidentiality; Publicity.  Except as may be required by law, rule or regulation or as otherwise permitted or expressly contemplated herein, or for the disclosure to the legal, financial and accounting advisors of the Company or the Purchaser who have a need to know such information, none of the Parties or their affiliates, agents or representatives shall disclose to any third party the subject matter or terms of this Agreement without the prior consent of the other Parties.  Notwithstanding the foregoing, the Purchaser may make a press release or other public announcement related to this Agreement or the transactions contemplated hereby at its sole discretion without the prior approval of the other Parties.

9.9       Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an

acceptable manner to the end that the transactions contemplated hereby are fulfilled to the greatest extent possible.

9.10     Assignment.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties hereto without the prior consent of the other Parties, and any attempt to do so will be void, except (a) for assignments and transfers by operation of law, and (b) the Purchaser may assign any or all of its rights, interests and obligations hereunder to (i) an affiliate or wholly-owned subsidiary, provided that any such affiliate or subsidiary agrees in writing to be bound by all of the terms, conditions and provisions contained herein, (ii) any post-Closing purchaser of all of the issued and outstanding ownership interests of the Purchaser or a substantial part of its assets or (iii) any financial institution providing purchase money or other financing to Purchaser from time to time as collateral security for such financing, but no such assignment referred to in clause (i), (ii) or (iii) shall relieve Purchaser of its obligations hereunder.  Subject to the preceding sentence, this Agreement is binding upon, inures to the benefit of and is enforceable by the parties hereto and their respective successors and assigns.

9.11     No Third-Party Beneficiaries.  Nothing herein expressed or implied shall be construed to give any other Person any legal or equitable rights hereunder; provided that the Purchaser’s lenders may rely on the representations, warranties and covenants of the Company, Cohen and Blake contained herein (subject to the limitations set forth herein).

9.12     Negotiation Representations.  Each Party expressly represents and warrants to all other Parties hereto that (a) before executing this Agreement, said Party has fully informed itself or himself of the terms, contents, conditions and effects of this Agreement; (b) except as otherwise specified herein, said Party has relied solely and completely upon its or his own judgment in executing this Agreement; (c) said Party has had the opportunity to seek and has obtained the advice of counsel before executing this Agreement; (d) said Party has acted voluntarily and of its or his own free will in executing this Agreement; (e) said Party is not acting under duress, whether economic or physical, in executing this Agreement; and (f) this Agreement is the result of arm’s-length negotiations condu cted by and among the Parties and their counsel.

9.13     Waiver.  The rights and remedies of the parties are cumulative and not alternative.  Neither the failure nor any delay by any Party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by either of the Purchaser or the Company, in whole or in part, by a waiver or renunciation of the cl aim or right unless in writing signed by the other affected Party; (b) no waiver that may be given by a Party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one Party will be deemed to be a waiver of any obligation of such Party or of the right of the Party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.

9.14     Further Assurances.  At any time and from time to time (including after the Closing), upon reasonable request of the Purchaser, the Company shall do, execute, acknowledge and deliver such further acts, assignments, transfers, conveyances and assurances as the Purchaser may deem necessary or desirable in order more effectively to transfer, convey and assign to the Purchaser, and to confirm the Purchaser’s title to, all of the Purchased Assets, and, to the full extent permitted by law, to put the Purchaser in actual possession and operating control of the Purchased Assets and to assist the Purchaser in exercising all rights with respect thereto.

            9.15     Schedules and Exhibits.  The disclosures in the schedules and exhibits attached hereto shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth herein. Any matter disclosed by the Company on any one Schedule with respect to any representation, warranty or covenant of the Company shall be deemed disclosed for purposes of all other representations, warranties or covenants of the Company to the extent that it is reasonably apparent from such disclosure that is also relates to such other representations, warranties or covenants, and to the extent any matter disclosed on any Schedule conflicts with any represe ntation, warranty or covenant of the Company contained in this Agreement, this Agreement will control.

9.16     Attorney’s Fees and Costs. In the event that litigation results from or arises out of this Agreement or the performance hereof, including the related documents contemplated hereby, the Parties agree to an award of the prevailing party’s reasonable attorney’s fees, court costs, and all other expenses, whether or not taxable by the court as costs, in addition to any other relief to which the prevailing party may be entitled to, at both the trial court and appellate court levels.

9.17 Waiver of jury trial. The Company and Purchaser acknowledge and agree that the transactions and  matters set forth in this Agreement and any related documents contemplated herein are complex in nature and that any litigation arising therefrom would be most appropriately, economically and speedily resolved by a non-jury trial.  This provision is a material inducement for the Parties entering into and the transactions contemplated by this Agreement.  THE COMPANY AND PURCHASER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THAT EACH MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION, DIRECTLY OR INDIRECTLY, BASED ON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED DOCUMENTS CONTEMPLATED HEREBY, OR IN ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER WRITTEN OR ORAL) OR ACTIONS OR OMISSIONS OF ANY PARTY TO THIS AGREEMENT.

SIGNATURES

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed as of the day and year first above written.

JAYCO VENTURES, INC.,

a Florida corporation

By:                                                                   

        Jason Cohen, its President and Chief Executive Officer

M-WAVE DBS, INC.

an Illinois corporation

By:                                                                   

      Jim Mayer, its Chief Executive Officer

____________________________________

Jason Cohen, individually solely with respect to Sections 3.3.4. 3.3.6, 6.2 and 8.2 of this Agreement

____________________________________

Joshua Blake, individually solely with respect to Sections 3.3.4. 3.3.6, 6.2 and 8.2 of this Agreement

INDEX OF SCHEDULES AND EXHIBITS

TO ASSET PURCHASE AGREEMENT

DISCLOSURE SCHEDULES

Schedule 1.1.5    -        Purchased Contracts

Schedule 1.2       -        Excluded Assets

Schedule 1.4       -        Assumed Liabilities

Schedule 4.1       -        Organization, Power and Authority; Subsidiaries

Schedule 4.4       -        Tax Matters

Schedule 4.5       -        Leases

Schedule 4.7       -        Accounts Receivable

Schedule 4.8       -        Licenses and Permits

Schedule 4.9       -        Intellectual Property Rights

Schedule 4.10     -        Contracts and Agreements

Schedule 4.11     -        Litigation

Schedule 4.12     -        Insurance

Schedule 4.13     -        Absence of Certain Developments

Schedule 4.17     -        Employee Benefits Plans

Schedule 4.18     -        Affiliate Transactions

Schedule 4.20     -        Governmental Authorization; Consents

Schedule 4.21     -        Warranty Claims

EXHIBITS

Exhibit A-1       -           Form of Employment Agreement for Jason Cohen

Exhibit A-2       -           Form of Employment Agreement for Joshua Blake

Exhibit B          -           Form of Letter of the Company’s Counsel

Exhibit C          -           Form of Letter of the Purchaser’s Counsel

EX-10

EMPLOYMENT AGREEMENT

            THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into on February 25, 2005, by and between M-Wave DBS, Inc., an Illinois corporation ( the “Company”) and Jason Cohen (“Employee”).

WITNESSETH:

A.        The Company and Employee are concurrently herewith closing  an agreement (the “Asset Purchase Agreement”) for the Company to acquire certain assets of Jayco Ventures Incorporated (“JVI”), of which Employee is the sole  shareholder and currently a key employee, and pursuant to such agreement Company and Employee are joining in this Employment Agreement.

B.         The Company desires to obtain the benefits of Employee’s knowledge, skill, and experience by employing Employee upon the terms and subject to the conditions of this Agreement.

C.        Employee desires to be employed by the Company upon the terms and subject to the conditions of this Agreement.

AGREEMENTS:

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth below, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Employee hereby covenant and agree as follows:

                     Duties  Employee agrees to be employed by and to serve the Company as Divisional President, and the Company agrees to employ and retain Employee in such capacity, subject to the terms of this Agreement.  Employee shall devote all of his business time, energy and skill to the affairs of the Company, subject to the direction of the Board of Directors of the Company (“Board”) and of the Chief Operating Officer of M-Wave, Inc. (of which the Company is a wholly-owned subsidiary) (“COO”). Employee shall have powers and duties commensurate with his position, including but not limited to the following duties:  responsibility for inside and outside sales, marketing, advertising, customer services, public relations, administrative services and other duties determined by the Board or the COO.  Employee shall comply with the general management policies of the Company as announced from time to time.  Employee may perform his duties at a location in Fort Lauderdale, Florida but be required at various times to travel as part of his duties.

                     Term.   The term of this Agreement shall be for a period of three (3) years (the “Term”) from February 25, 2005 (the “Effective Date”), and s hall automatically renew for additional one-year periods unless either party provides written notice at least ninety (90) days prior to the expiration of the Term or the current renewal period.  

                     Salary, Benefits and Bonus Compensation.

                              Salary.  Commencing on the Effective Date of this Agreement, during the Term the Company agrees to pay Employee salary in the amount of $165,000 per annum pursuant to the Company’s regular payroll practices and schedules, and subject to withholding for taxes and applicable benefits.

                              Additional Benefits.  During the term of his employment, Employee shall be entitled to the following fringe benefits:

                                       Employee Benefits.  Employee shall be eligible to participate in the Company’s group health, dental, vision and other insurance or benefit plans, including stock option grants, bonuses, pension and deferred compensation, as may be generally available to executive employees of the Company.  It is intended that Employee shall be eligible to participate in the omnibus employee benefits package provided to management employees of M-Wave, Inc. and that the following benefits will be provided thereunder.     

                                       Business Expenses.  The Company shall reimburse Employee for all reasonable and necessary expenses incurred in carrying out his duties under this Agreement, including but not limited to travel and entertainment, and cell phone expenses, in accordance with the Company’s policies in effect from time to time.  Employee shall present to the Company an itemized account of such expenses in such form as may be required by the Company on a monthly basis.  In addition, the Company shall provide an automobile allowance of $500 per month in lieu of reimbursement for automobile mileage, pursuant to the Company’s policies for its senior management and budgets.

                                       Paid Time Off.  Employee shall be entitled to three (3) weeks of vacation per year during the Term, which shall accrue ratably, and other paid time off pursuant to the Company’s policies, during which time Employee’s compensation shall be paid in full.  In addition, Employee shall be entitled to paid holidays in accordance with the Company’s policies in effect from time to time.

                                    3.2.4    Cash Bonus.    The Company shall pay a cash bonus in an amount equal to .25 % (1/4 of 1%) of the Net Revenues of the Company in excess of $12,000,000 annually commencing with the Effective Date, which bonus shall b e paid within sixty (60) days after the end of the annual period. for which it is earned.

                                    3.2.5    Commission Override.   The Company shall pay a commission override in the amount of .25% (1/4 of 1%) of  Net Revenues of the Company  in excess of $15,000,000 annually commencing with the Effective Date, which commission override shall be paid within sixty (60) days after the end of the annual period for which it has been earned.

                                    3.2.6    Draw Against Commissions.   The Company may provide a monthly draw against commissions and other compensation, in an amount to be determined by Company and Employee for the purpose of covering certain unsecured debts of JVI that is personally guaranteed by Employee, with decision to provide such a draw and duration of s uch payments made on a demonstrated need basis.

                                    3.2.7   M-Wave Stock Option. Employee shall be granted concurrently herewith an option to purchase 200,000 shares of common stock of M-Wave, Inc. substantially in the form of Schedule B to this Agreement, such option to have a term of five (5) years, to vest in three (3) equal annual installments commencing with the first anniversary of the Effective Date, to have an exercise price equal to the clo sing price of the common stock on the NASDAQ Small Cap Market on the date prior to the Effective Date and to be granted under the M-Wave, Inc. 2003 Stock Incentive Plan.

            4.         Termination of Employment

                        4.1       Termination for Cause.  Termination for Cause (as defined in Subsection 6.1.1 herein) of Employee’s employment may be effected by the Company at any time without liability except as specifically set forth in this Subsection.  The termination shall b e effected by written notification to Employee and shall be effective as of the time set forth in such notice.  At the effective time of a Termination for Cause, the Company shall pay Employee all of his accrued and unpaid salary and any reasonable and necessary business expenses incurred by Employee in connection with his duties hereunder, all up to the effective time of termination.  

                        4.2     Termination By Company Other Than for Cause.  The Company may effect a Termination Other Than for Cause (as defined in Subsection 6.1.2 herein) of Employee’s employment at any time upon giving written notice to Employee of such termination and without liability except as specifically set forth in this Subsection.  The termination shall be effective as of the time set forth in such notice. At the effective time of any Termination Other Than for Cause, the Company shall commenc e to pay Employee an amount equal to 150% of his annual salary in equal monthly installments over the period of one (1) year, and any reasonable and necessary business expenses incurred by Employee in connection with his duties hereunder to the effective time of termination.

                        4.3       Termination by Reason of Disability.  If Employee, in the reasonable judgment of the executive officers of the Company, has failed to perform the essential elements of his position under this Agreement on account of illness or physical or mental incapacity, and suc h illness or incapacity continues for a period of more than three (3) months, then the question of whether Employee’s illness or incapacity is reasonably likely to continue shall be submitted to the Company or, if disability insurance is maintained by Employee, Employee’s disability insurance carrier for determination.  In the event the Company or such insurance carrier determines that Employee is subject to such an illness or incapacity, and is unable to perform the essential elements of his position with or without a reasonable accommodation by the Company, the Company shall have the right to terminate Employee’s employment (“Termination for Disability”) by written notification to Employee and shall immediately pay to Employee all of his accrued and unpaid salary and any reasonable and necessary business expenses incurred by Employee in connection with his duties hereunder, all to the date of termination.  

                        4.4       Death.  In the event of Employee’s death during the term of employment, Employee’s employment shall be deemed to have terminated as of the last day of the month during which his death occurs, and the Company shall pay to his estate all of his accrued an d unpaid salary and any reasonable and necessary business expenses incurred by Employee in connection with his duties hereunder, all to the effective date of termination.

                        4.5    Termination By Employee With Good Reason.  In the event that Employee terminates his employment with Good Reason (as defined in Subsection 6.1.3 herein), at the effective time of such termination, the Company shall commence to pay Employee an amount equal to 150% of his annual salary in equal monthly installments over the period of one (1) year, and any reason able and necessary business expenses incurred by Employee in connection with his duties hereunder to the date of termination.  

                        4.6.      Voluntary Termination.  In the event of a Voluntary Termination (as defined in Subsection 6.1.4 herein) by Employee, the Company shall immediately pay all of his accrued and unpaid salary and any reasonable and necessary business expenses incurred by Employee in connect ion with his duties hereunder, all to the date of termination.

            5.         Protection of the Company’s Business and Intellectual Property.  

                        5.1     Non-Competition.  In consideration of his employment by the Company, and recognizing the Company’s concerns regarding the protection of its business, Employee agrees to the terms of the Employee Non-Disclosure, Non-Competition and Development Agreement attached hereto as Schedule A and incorporated herein and shall concurrently herewith execute the same..

                        5.2      Intellectual Property.   Employee hereby represents and warrants to the Company that any invention, modification, discovery, design, development, improvement, process, software program, work of authorship, documentation, formula, data, technique, know-how, trade secret or intellectual property right used by JVI in its business a t any time prior to the date hereof, or any interest therein (whether or not patentable or registrable under copyright, trademark or similar statutes or subject to analogous protection), is solely the property of JVI and does not infringe upon the rights of any third parties, and Employee has no interest or ownership right or leasehold interest therein.

                        5.3     Life Insurance.  Employee agrees to cooperate and comply with the Company’s reasonable requests for information with regard to the Company’s application for life insurance coverage on Employee’s life, at the Company’s discretion, to benefit the Company.

                6.         Definitions.  For purposes of this Agreement, the following terms shall have the following meanings:

                        6.1       “Net Revenues” shall mean gross revenues less returns and allowances and discounts made available to customers by the Company.

                        6.2.      “Termination for Cause” shall mean termination by the Company of Employee’s employment by the Company by reason of (i) a material breach of Employee’s obligations under the terms of this Agreement, which is not cured by Employee within fifteen (15) da ys of receipt of written notice from the Company of the same, (ii) the commission by Employee of a felony (which in the case of a vehicular crime is a felony of serious nature relating to multiple offenses or to one offense involving meaningful harm to person or property), a crime involving moral turpitude or other act causing significant harm to the Company’s standing or reputation, (iii) conduct tending to bring the Company into public disgrace or disrepute or which could reasonably subject the Company to legal action, including but not limited to sexual or other illegal harassment, (iv) failure, after written notice, to perform duties reasonably directed by the Company, (v) gross negligence or willful misconduct with respect to the Company, or (vi) failure to comply with the terms and provisions of the Employee Non-Disclosure, Non-Competition and Developments Agreement attached hereto as Schedule A and incorporated herein in this Agreement as if same were fully set forth herein.  “Ca use” shall not mean, with respect to the acts or omissions of Employee, (a) bad judgment or negligence other than habitual neglect of duty; or (b) any act or omission believed by Employee in good faith to have been in or not opposed to the interest of the Company, or any parent or subsidiary or successor to the Company (without intention of Employee to gain therefrom, directly or indirectly, a profit to which he was not legally entitled); or (c) any act or omission in respect of which a determination could properly have been made by the Board of Directors of the Company or any parent or subsidiary or successor of the Company, that Employee met the applicable standard of conduct for indemnification or reimbursement as applicable to officers and directors under the bylaws or the laws and regulations under which such company is governed, in each case in effect at the time of such act or omission.

                        6.3       “Termination Other Than for Cause” shall mean termination by the Company of Employee’s employment by the Company, other than a Termination for Cause or Termination for Disability or Death.

                                6.4       “Termination by Employee with Good Reason” shall mean Employee’s resignation of employment with the Company because of a material change in the terms or conditions of Employee’s employment with the Company to Employee’s detriment which is not cured by the Company within fifteen (15) days of receipt of writtten notice from Employee of the same, including but not limited to (i) a material reduction in Employee ’s job duties, or the substitution of job duties requiring substantially less skill, independent judgment or experience, (ii) the diminution of rank or title accorded to Employee, (iii) a reduction of more than 10% in Employee’s compensation, including employee benefits and any applicable equity compensation, (iv) the relocation of Employee’s primary work location to a new location more than 100 miles away from the previous location, or (v) a material change in the nature of the Business of the Company (as defined in Schedule A attached hereto and incorporated herein).   

                        6.5       “Voluntary Termination” shall mean termination by Employee of Employee’s employment with the Company.  To effect Voluntary Termination, Employee shall give no less than six (6) weeks notice to the Company, and shall remain available to the Co mpany, at the Company's option, for the entire period of not less than six (6) weeks until the date of termination.

            7.         Remedies.

                        7.1       Costs.  If litigation is brought to enforce or interpret or is maintained to defend any provision contained herein, the court shall award reasonable attorneys’ fees and disbursements to the prevailing party as determined by the court.

                        7.2       Severability.  THE PARTIES HAVE CAREFULLY CONSIDERED ALL OF SECTIONS 4, 5, 6.2 – 6.5 AND 8 AND AGREE THAT THEY REPRESENT A PROPER BALANCING OF THEIR INTERESTS AND WILL NOT PREVENT EMPLOYEE FROM EARNING A LIVING AFTER TERMINATION OF HIS EMPLOYMENT.   It is the express intent of the parties hereto that the obligations of, and restrictions on, the parties as provided in Sections 5, 6 and 8 shall be enforced and given effect to the fullest extent legally permissible.  If, in any judicial proceeding, a court shall refuse to enforce one or more of the covenants or agreements contained in this Agreement because the duration thereof is too long, the scope thereof is too broad or some other reason, for the purpose of such proceeding, the court may reduce such duration or scope to the extent necessary to permit the enforcement of such obligations and restrictions.

            8.         Miscellaneous.

                        8.1       Waiver.  The waiver of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach of the same or other provision hereof.

                        8.2       Entire Agreement; Modifications.  Except for the letter agreement between the parties hereto of even date herewith, this Agreement represents the entire understanding between the parties with respect to the subject matter hereof, and this Agreement supersedes any a nd all prior understandings, agreements, plans and negotiations, whether written or oral, with respect to the subject matter hereof, including, without limitation, any understandings, agreements or obligations respecting any past or future compensation, bonuses, reimbursements or other payments to Employee from the Company.  All modifications to this Agreement must be in writing and signed by the party against whom enforcement of such modification is sought. Nothing in this Agreement shall reduce Employee’s obligations to Company under the Asset Purchase Agreement..

                        8.3       Notices.  All notices and other communications under this Agreement shall be in writing and shall be given by hand delivery, or first‑class mail, certified or registered with retur n receipt requested, or by commercial overnight courier or by fax and shall be deemed to have been duly given upon hand delivery, receipt if mailed, the first business day following delivery to a commercial overnight courier or upon receipt of a fax, addressed as follows:

            If to the Company:

M-Wave DBS, Inc.

c/o M-Wave, Inc.

475 Industrial Drive

West Chicago, Illinois 60185

Attention:  Joeseph A. Turek, Presidentt

            With a copy to:

                        Carl Klein, Esq.

                        Freeborn & Peters, LLP

                        311 South Wacker Drive, Suite 3000

                        Chicago, IL  60606

            If to Employee:

                        Jason Cohen

                        ____________

                        ____________

            With a copy to:

                        Gregory A. McLaughlin, Esq.

                        Tripp Scott, P.A.

                        110 S. E. 6th Street, 15th floor

                        Fort Lauderdale, Florida  33301

Any party may change such party’s address for notices by notice given pursuant to this Section 8.3.

                        8.4       Headings.  The Section headings herein are intended for reference and shall not by themselves determine the construction or interpretation of this Agreement.

            8.5       Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without application of its conflict of laws rules. Any claims or legal actions by one party against the other arising out of the relationship between the parties contemplated herein (whether or not arising under this Agreement) shall be governed by the laws of the State of Illinois and shall be commenced and maintained in any state or federal court located in Cook County, Illinois, and both parties hereby submit to the jurisdiction a nd venue of any such court.

                        8.6       Severability.  Should a court or other body of competent jurisdiction determine that any provision of this Agreement is excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforce able to the maximum extent possible, and all other provisions of the Agreement shall be deemed valid and enforceable to the extent possible.

                        8.7       Binding Effect; Assignment.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective executors, administrators, heirs, successors and assigns.  The provisions of this Agreement relating to the duties and ob ligations of the Company are transferable, assignable and delegable by the Company.  Those provisions relating to the duties and obligations of the Employee are not transferable, assignable or delegable.

                        8.8       Counterparts.  This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same Agreement.

                        8.9       Withholdings; Setoff.  All compensation and benefits to Employee hereunder shall be reduced by all federal, state, local and other withholdings and similar taxes and payments required by applicable law. The Company may withhold amounts due it from Employee arising out of Employee’s employment or other contractual relationships with the Company, including for example, overpayments of compensation and personal charges incurred on Company accounts, from amounts due under this Agreement to Employee.

            IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement on the date first above written.

EMPLOYEE	M-WAVE DBS, INC.
	By:
Jason Cohen
	Its:

Schedule A

EMPLOYEE NON-DISCLOSURE, NON-COMPETITION

AND DEVELOPMENTS AGREEMENT

In consideration and as a condition of my employment or continued employment by M-Wave DBS, Inc., an Illinois corporation (the “Company”), I hereby agree with the Company as follows:

1.     During the period of my employment by the Company (the “Employment Period”), and for one (1) year  thereafter, I agree that I will not, directly or indirectly, alone or as a partner, officer, director, employee, stockholder or creditor of any entity, (a) engage in any business in the United States that is engaged in  design, engineering, distribution, sales, marketing or manufacturing of direct Broadcast Satellite Installation Equipment (the “Business”), or (b) solicit or do any Business with any customer of the Company or any potential customer of the Company.  In the ev ent of a sale of all or substantially all of the assets of the Company to a third party, or the merger or consolidation of Company (other than in connection with the reincorporation of Company) with or into another entity in a transaction in which the holders of Company voting securities shall hold less than 50% of the voting securities of the surviving entity, the term “Company” in the preceding sentence shall mean Company, its parent, if any, and its subsidiaries, as they exist immediately prior to such event.  During the period of my employment and for two (2) years (or such shorter period, as set forth above) thereafter, I agree that I will not directly or indirectly, alone or as a partner, officer, director, employee, stockholder or creditor of any entity, solicit, or endeavor to entice any employee, independent contractor or consultant of the Company to leave the Company.

2.         I will not at any time whether during or after the Employment Period reveal, to any person or entity any of the trade secrets or confidential information concerning the organization, business or finances of the Company or of any third party which the Company is under an obligation to keep confidential (including but not limited to trade secrets or confidential information respecting inventions, products, designs, methods, know-how, techniques, systems, processes, software programs, works or authorship, customer lists, projects, plans and proposals), except as may be required in the ordinary course of performing my duties as an employee of the Company, a nd I have kept and I shall keep secret all such information given to me and shall not use or attempt to use any such information in any manner which may injure or cause loss or which is calculated to injure or cause loss, whether directly or indirectly, to the Company.  Further, I agree that during and after the Employment Period, I shall not make or use or grant permission to use any notes, memoranda, reports, lists, records, drawings, sketches, specifications, software programs, data, documentation or other materials of any nature relating to any matter within the scope of the business of the Company or concerning any of its dealings or affairs otherwise than for the benefit of the Company, it being agreed that all of the foregoing shall be and remain the sole and exclusive property of the Company, and that immediately upon the termination of my employment I shall deliver all of the foregoing, and all copies thereof, to the Company, at its main office, together with a written certification that I have fully complied with such obligation.

3.         If at any time or times during my employment, I (either alone or with others) have made, conceived, created, discovered, invented, or reduced to practice, or shall make, conceive, create, discover, invent, or reduce to practice, any invention, modification, discovery, design, development, improvement, process, software program, work of authorship, documentation, formula, data, technique, know-how, trade secret or intellectual property right whatsoever or any interest therein (whether or not patentable or registrable under copyright, trademark or similar statutes or subject to analogous protection) (herein called “Developments”), then:

(a)        such Developments and the benefits thereof are and shall immediately become the sole and absolute property of the Company and its assigns, as works made for hire or otherwise;

(b)        I shall promptly disclose to the Company (or any persons designated by it) each such Development;

(c)        as may be necessary to ensure the Company’s ownership of such Developments, I hereby assign any rights (including, but not limited to, any copyrights and trademarks) I may have or acquire in the Developments and benefits and/or rights resulting therefrom to the Company and its assigns without further compensation; and

(d)        I shall communicate, without cost or delay, and without disclosing to others the same, all available information relating thereto (with all necessary plans and models) to the Company.

Notwithstanding the foregoing, pursuant to the Illinois Patent Act, this Paragraph 3 shall not apply to Developments for which no equipment, supplies, facility, or trade secret information of the Company was used and which was developed entirely on my own time, unless (a) the Development related (i) to the Business of the Company, or (ii) to the Company's actual or demonstrably anticipated research or development, or (b) the Development results from any work performed by me for the Company. In addition, this paragraph does not apply to Developments developed by me prior to my employment with Company.

4.         I will, during and after the Employment Period, at the request and cost of the Company, promptly sign, execute, make and do all such deeds, documents, acts and things as the Company and its duly authorized agents may reasonably require:

(a)        to apply for, obtain, register and vest in the name of the Company alone (unless the Company otherwise directs) letters patent, copyrights, trademarks or other analogous protection in any country throughout the world and when so obtained or vested to renew and restore the same; and

(b)        to defend any judicial, opposition or other proceedings in respect of such applications and any judicial, opposition or other proceedings or petitions or applications for revocation of such letters patent, copyright, trademark or other analogous protection.

In event the Company is unable, after reasonable effort, to secure my signature on any application for letters patent, copyright or trademark registration or other documents regarding any legal protection relating to a Development, whether because of my physical or mental incapacity or for any other reason whatsoever, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney-in-fact, to act for and in my behalf and stead to execute and file any such application or applications or other documents and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent, copyright or trademark registrations or any other legal protection thereon with the same l egal force and effect as if executed by me.

5.         I agree that any breach of this Agreement by me will cause irreparable damage to the Company and that in the event of such breach the Company shall have, in addition to any and all remedies of law, the right to an injunction, specific performance or other equitable relief to prevent the violation of my obligations hereunder, without the necessity of a bond or other security.

6.         I understand that this Agreement does not create an obligation on the Company or any other person or entity to continue my employment.

7.         No claim of mine against the Company shall serve as a defense against the Company’s enforcement of any provision of this Agreement.

8.         I represent that the Developments identified in the pages, if any, attached hereto as Exhibit A comprise all the unpatented and unregistered copyrightable Developments which I have made, conceived or created prior to the Employment Period, which Developments are excluded from this Agreement.  I understand that it is only necessary to list the title and purpose of such Developments but not details thereof.

9.         I hereby represent that, except as I have disclosed in writing to the Company and as attached hereto as Exhibit B, I am not a party to, or bound by the terms of, any agreement with or obligation to any previous employer or other party to refrain from using or disclosing any trade secret or confidential or proprietary information in the course of my employment with the Company or to refrain from competing, directly or indirectly, with business of such previous employer or any other party.  I further represent that my performance of all the terms of this Agreement and as an employee of the Compa ny does not and will not breach any agreement or obligation to keep in confidence proprietary information, knowledge or data acquired by me in confidence or in trust prior to or during my employment with the Company, and I will not disclose to the Company or induce the Company to use any confidential or proprietary information or material belonging to any previous employer or others.  I have not entered into, and I agree I will not enter into, any agreement, either written or oral, in conflict with the terms of this Agreement.

10.       Any waiver by the Company of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach of such provision or any other provision hereof.

11.       I hereby agree that each provision herein shall be treated as a separate and independent clause, and the unenforceability of any one clause shall in no way impair the enforceability of any of the other clauses herein.  Moreover, if one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to scope, activity, subject or otherwise so as to be unenforceable at law, such provision or provisions shall be construed by the appropriate judicial body by limiting or reducing it or them, so as to be enforceable to the maximum extent compatible with the applicable law as it shall then appear.

12.       My obligations under this Agreement shall survive the termination of my employment regardless of the manner of such termination and shall be binding upon my heirs, executors, administrators and legal representatives.

13.       Except as limited in Paragraph 1 of this Agreement, The term “Company” shall include the Company and its former, current and future parents, and the Company's and such parents' subsidiaries, subdivisions and affiliates.  The Company shall have the right to assign this Agreement to its successors and assigns, by operation of law or otherwise, and all covenants and agreements hereunder shall inure to the benefit of and be enforceable by said successors or assigns.

14.       This Agreement shall be governed by and construed in accordance with the internal laws of the State of Illinois.  Any claims or legal actions by one party against the other arising out of the relationship between the parties contemplated herein (whether or not arising under this Agreement) shall be governed by the laws of the State of Illinois and shall be commenced and maintained in any state or federal court located in Cook County, Illinois, and both parties hereby submit to the jurisdiction and venue of any such court.

IN WITNESS WHEREOF, the undersigned has executed this Agreement as a sealed instrument on the 25th day of February , 2005.

Signature

Print Name: Jason Cohen

Address:

EXHIBIT A

Prior Developments

EXHIBIT B

Prior Agreements

EX-10

EMPLOYMENT AGREEMENT

            THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into on February 25, 2005, by and between M-Wave DBS, Inc., an Illinois corporation ( the “Company”) and Joshua Blake (“Employee”).

WITNESSETH:

A.        The Company and Employee are concurrently herewith closing  an agreement (“Asset Purchase Agreement”) for the Company to acquire certain assets of Jayco Ventures Incorporated (“JVI”), of which Employee is currently a key employee, and pursuant to such agreement Company and Employee are joining in this Employment Agreement.

B.         The Company desires to obtain the benefits of Employee’s knowledge, skill, and experience by employing Employee upon the terms and subject to the conditions of this Agreement.

C.        Employee desires to be employed by the Company upon the terms and subject to the conditions of this Agreement.

AGREEMENTS:

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth below, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Employee hereby covenant and agree as follows:

                     Duties  Employee agrees to be employed by and to serve the Company as Divisional Executive Vice President, Operations, and the Company agrees to employ and retain Employe e in such capacity, subject to the terms of this Agreement.  Employee shall devote all of his business time, energy and skill to the affairs of the Company, subject to the direction of the Board of Directors of the Company (“Board”), the Chief Operating Officer of M-Wave, Inc. (of which the Company is a wholly-owned subsidiary) (“COO”), and the Divisional President Employee shall have powers and duties commensurate with his position, including but not limited to the following duties:  responsibility for technical, engineering, product development and other duties determined by the Board, the COO, or the Divisional President.  Employee shall comply with the general management policies of the Company as announced from time to time.  Employee may perform his duties at a location in Fort Lauderdale, Florida but be required at various times to travel as part of his duties.

                     Term.   The term of this Agreement shall be for a period of three (3) years (the “Term”) from February 25, 2005 (the “Effective Date”), and s hall automatically renew for additional one-year periods unless either party provides written notice at least ninety (90) days prior to the expiration of the Term or the current renewal period.  

                     Salary, Benefits and Bonus Compensation.

                              Salary.  Commencing on the Effective Date of this Agreement, during the Term the Company agrees to pay Employee salary in the amount of $120,000 per annum pursuant to the Company’s regular payroll practices and schedules, and subject to withholding for taxes and applicable benefits.

                              Additional Benefits.  During the term of his employment, Employee shall be entitled to the following fringe benefits:

                                       Employee Benefits.  Employee shall be eligible to participate in the Company’s group health, dental, vision and other insurance or benefit plans, including stock option grants, bonuses, pension and deferred compensation, as may be generally available to executive employees of the Company.  It is intended that Employee shall be eligible to participate in the omnibus employee benefits package provided to management employees of M-Wave, Inc. and that the benefits herein will be provided thereunder.

                                       Business Expenses.  The Company shall reimburse Employee for all reasonable and necessary expenses incurred in carrying out his duties under this Agreement, including but not limited to travel and entertainment, and cell phone expenses, in accordance with the Company’s policies in effect from time to time.  Employee shall present to the Company an itemized account of such expenses in such form as may be required by the Company on a monthly basis.  The Company shall provide reimbursement for automobile mileage, pursuant to the Company’s policies and budgets.

                                       Paid Time Off.  Employee shall be entitled to three (3) weeks of vacation per year during the Term, which shall accrue ratably, and other paid time off pursuant to the Company’s policies, during which time Employee’s compensation shall be paid in full.  In addition, Employee shall be entitled to paid holidays in accordance with the Company’s policies in effect from time to time.

                                    3.2.4    Cash Bonus.    The Company shall pay a cash bonus in an amount equal to .15 % (15/100 of 1%)  of the Net Revenues of the Company in excess of $12,000,000 annually commencing with the Effective Date, which bonus shall be paid within sixty (60) days after the end of the annual period. for which it is earned.

                                    3.2.5   M-Wave Stock Option. Employee shall be granted concurrently herewith an option to purchase 100,000 shares of common stock of M-Wave, Inc. substantially in the form of Schedule B to this Agreement, such option to have a term of five (5) years, to vest in three (3) equal annual installments commencing with the first anniversary of the Effective Date, to have an exercise price equal to the clo sing price of the common stock on the NASDAQ Small Cap Market on the date prior to the Effective Date and to be granted under the M-Wave, Inc. 2003 Stock Incentive Plan.

            4.         Termination of Employment

                        4.1       Termination for Cause.  Termination for Cause (as defined in Subsection 6.2 herein) of Employee’s employment may be effected by the Company at any time without liability except as specifically set forth in this Subsection.  The termination shall be effected by written notification to Employee and shall be effective as of the time set forth in such notice.  At the effective time of a Termination for Cause, the Company shall pay Employee all of his accrued and unpaid salary and any reasonable and necessary business expenses incurred by Employee in connection with his duties hereunder, all to the effective time of termination.  

                        4.2     Termination By Company Other Than for Cause.  The Company may effect a Termination Other Than for Cause (as defined in Subsection 6.3 herein) of Employee’s employment at any time upon giving written notice to Employee of such termination and without liability except as specifically set forth in this Subsection.  The termination shall be effective as of the time set forth in such notice. At the effective time of any Termination Other Than for Cause, the Company shall commence to pay Employee an amount equal to 150% of his annual salary in equal monthly installments over the period of one (1) year, and any reasonable and necessary business expenses incurred by Employee in connection with his duties hereunder to the effective time of termination.

                        4.3       Termination by Reason of Disability.  If Employee, in the reasonable judgment of the executive officers of the Company, has failed to perform the essential elements of his position under this Agreement on account of illness or physical or mental incapacity, and suc h illness or incapacity continues for a period of more than three (3) months, then the question of whether Employee’s illness or incapacity is reasonably likely to continue shall be submitted to the Company or, if disability insurance is maintained by Employee, Employee’s disability insurance carrier for determination.  In the event the Company or such insurance carrier determines that Employee is subject to such an illness or incapacity, and is unable to perform the essential elements of his position with or without a reasonable accommodation by the Company, the Company shall have the right to terminate Employee’s employment (“Termination for Disability”) by written notification to Employee and shall immediately pay to Employee all of his accrued and unpaid salary and any reasonable and necessary business expenses incurred by Employee in connection with his duties hereunder, all to the date of termination.  

                        4.4       Death.  In the event of Employee’s death during the term of employment, Employee’s employment shall be deemed to have terminated as of the last day of the month during which his death occurs, and the Company shall pay to his estate all of his accrued an d unpaid salary and any reasonable and necessary business expenses incurred by Employee in connection with his duties hereunder, all to the effective date of termination.

                        4.5.      Termination By Employee With Good Reason.  In the event that Employee terminates his employment with Good Reason (as defined in Subsection 6.4 herein), at the effective time of such termination, the Company shall commence to pay Employee an amount equal to 150% of his a nnual salary in equal monthly installments over the period of one (1) year, and any reasonable and necessary business expenses incurred by Employee in connection with his duties hereunder to the date of termination.  

                        4.6.      Voluntary Termination.  In the event of a Voluntary Termination (as defined in Subsection 6.5 herein) by Employee, the Company shall immediately pay all of his accrued and unpaid salary and any reasonable and necessary business expenses incurred by Employee in connectio n with his duties hereunder, all to the date of termination.

            5.         Protection of the Company’s Business and Intellectual Property

                        5.1     Non-Competition.  In consideration of his employment by the Company, and recognizing the Company’s concerns regarding the protection of its business, Employee agrees to the terms of the Employee Non-Disclosure, Non-Competition and Development Agreement attached hereto as Schedule A and incorporated herein and shall concurrently herewith execute the same..

                        5.2      Intellectual Property.   Employee hereby represents and warrants to the Company that any invention, modification, discovery, design, development, improvement, process, software program, work of authorship, documentation, formula, data, technique, know-how, trade secret or intellectual property right used by JVI in its business a t any time prior to the date hereof, or any interest therein (whether or not patentable or registrable under copyright, trademark or similar statutes or subject to analogous protection), is solely the property of JVI and does not infringe upon the rights of any third parties, and Employee has no interest or ownership right or leasehold interest therein.

                        5.3       Life Insurance.   Employee agrees to cooperate and comply with the Company’s reasonable requests for information with regard to the Company’s application for life insurance coverage on Employee’s life, at the Company’s di scretion, to benefit the Company.

                6.         Definitions.  For purposes of this Agreement, the following terms shall have the following meanings:

                        6.1       “Net Revenues” shall mean gross revenues less returns and allowances and discounts made available to customers by the Company.

                        6.2.      “Termination for Cause” shall mean termination by the Company of Employee’s employment by the Company by reason of (i) a material breach of Employee’s obligations under the terms of this Agreement, which is not cured by Employee within fifteen (15) da ys of receipt of written notice from the Company of the same, (ii) the commission by Employee of a felony (which in the case of a vehicular crime is a felony of serious nature relating to multiple offenses or to one offense involving meaningful harm to person or property), a crime involving moral turpitude or other act causing significant harm to the Company’s standing or reputation, (iii) conduct tending to bring the Company into public disgrace or disrepute or which could reasonably subject the Company to legal action, including but not limited to sexual or other illegal harassment, (iv) failure, after written notice, to perform duties reasonably directed by the Company, (v) gross negligence or willful misconduct with respect to the Company, or (vi) failure to comply with the terms and provisions of the Employee Non-Disclosure, Non-Competition and Developments Agreement attached hereto as Schedule A and incorporated herein in this Agreement as if same were fully set forth herein.   &ld quo;Cause” shall not mean, with respect to the acts or omissions of Employee, (a) bad judgment or negligence other than habitual neglect of duty; or (b) any act or omission believed by Employee in good faith to have been in or not opposed to the interest of the Company, or any parent or subsidiary or successor to the Company (without intention of Employee to gain therefrom, directly or indirectly, a profit to which he was not legally entitled); or (c) any act or omission in respect of which a determination could properly have been made by the Board of Directors of the Company or any parent or subsidiary or successor of the Company, that Employee met the applicable standard of conduct for indemnification or reimbursement as applicable to officers and directors under the bylaws or the laws and regulations under which such company is governed, in each case in effect at the time of such act or omission.

                        6.3       “Termination Other Than for Cause” shall mean termination by the Company of Employee’s employment by the Company, other than a Termination for Cause or Termination for Disability or Death.

                                6.4        “Termination by Employee with Good Reason” shall mean Employee’s resignation of employment with the Company because of a material change in the terms or conditions of Employee’s employment with the Company to Employee’s detriment, which is not cured by the Company within fifteen (15) days of receipt of written notice from Employee of the same, including but not limited to (i) a material reduction in Employee’s job duties, or the substitution of j ob duties requiring substantially less skill, independent judgment or experience, (ii) the diminution of rank or title accorded to Employee, (iii) a reduction of more than 10% in Employee’s compensation, including employee benefits and any applicable equity compensation, (iv) the relocation of Employee’s primary work location to a new location more than 100 miles away from the previous location, or (v) a material change in the nature of the Business of the Company (as defined in Schedule A attached hereto and incorporated herein).   

                        6.5       “Voluntary Termination” shall mean termination by Employee of Employee’s employment with the Company.  To effect Voluntary Termination, Employee shall give no less than six (6) weeks notice to the Company, and shall remain available to the Co mpany, at the Company's option, for the entire period of not less than six (6) weeks until the date of termination.

            7.         Remedies.

                        7.1       Costs.  If litigation is brought to enforce or interpret or is maintained to defend any provision contained herein, the court shall award reasonable attorneys’ fees and disbursements to the prevailing party as determined by the court.

                        7.2       Severability.  THE PARTIES HAVE CAREFULLY CONSIDERED ALL OF SECTIONS 4, 5, 6.2 – 6.5 AND 8 AND AGREE THAT THEY REPRESENT A PROPER BALANCING OF THEIR INTERESTS AND WILL NOT PREVENT EMPLOYEE FROM EARNING A LIVING AFTER TERMINATION OF HIS EMPLOYMENT.   It is the express intent of the parties hereto that the obligations of, and restrictions on, the parties as provided in Sections 5, 6 and 8 shall be enforced and given effect to the fullest extent legally permissible.  If, in any judicial proceeding, a court shall refuse to enforce one or more of the covenants or agreements contained in this Agreement because the duration thereof is too long, the scope thereof is too broad or some other reason, for the purpose of such proceeding, the court may reduce such duration or scope to the extent necessary to permit the enforcement of such obligations and restrictions.

            8.         Miscellaneous.

                        8.1       Waiver.  The waiver of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach of the same or other provision hereof.

                        8.2       Entire Agreement; Modifications.  Except as set forth in the letter agreement of even date herewith between the parties, this Agreement represents the entire understanding between the parties with respect to the subject matter hereof, and this Agreement supersedes any and all prior understandings, agreements, plans and negotiations, whether written or oral, with respect to the subject matter hereof, including, without limitation, any understandings, agreements or obligations respecting any past or future compensation, bonuses, reimbursements or other payments to Employee from the Company.  All modifications to this Agreement must be in writing and signed by the party against whom enforcement of such modification is sought.  Nothing in this Agreement shall reduce Employee’s obligations to Company under the Asset Purchase Agreement..

                        8.3       Notices.  All notices and other communications under this Agreement shall be in writing and shall be given by hand delivery, or first‑class mail, certified or registered with retur n receipt requested, or by commercial overnight courier or by fax and shall be deemed to have been duly given upon hand delivery, receipt if mailed, the first business day following delivery to a commercial overnight courier or upon receipt of a fax, addressed as follows:

            If to the Company:

M-Wave DBS, Inc.

c/o M-Wave, Inc.

475 Industrial Drive

West Chicago, Illinois 60185

Attention: Joseph A. Turek, President

            With a copy to:

                        Carl Klein, Esq.

                        Freeborn & Peters, LLP

                        311 South Wacker Drive, Suite 3000

                        Chicago, IL  60606

            If to Employee:

                        Joshua Blake

                        ____________

                        ____________

            With a copy to:

Gregory A. McLaughlin, Esq.

Tripp Scott, P.A.

110 S. E. 6th Street, 15th floor

Fort Lauderdale, Florida  33301

Any party may change such party’s address for notices by notice given pursuant to this Section 8.3.

                        8.4       Headings.  The Section headings herein are intended for reference and shall not by themselves determine the construction or interpretation of this Agreement.

            8.5       Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without application of its conflict of laws rules. Any claims or legal actions by one party against the other arising out of the relationship between the parties contemplated herein (whether or not arising under this Agreement) shall be governed by the laws of the State of Illinois and shall be commenced and maintained in any state or federal court located in Cook County, Illinois, and both parties hereby submit to the jurisdiction a nd venue of any such court.

                        8.6       Severability.  Should a court or other body of competent jurisdiction determine that any provision of this Agreement is excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforce able to the maximum extent possible, and all other provisions of the Agreement shall be deemed valid and enforceable to the extent possible.

                        8.7       Binding Effect; Assignment.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective executors, administrators, heirs, successors and assigns.  The provisions of this Agreement relating to the duties and ob ligations of the Company are transferable, assignable and delegable by the Company.  Those provisions relating to the duties and obligations of the Employee are not transferable, assignable or delegable.

                        8.8       Counterparts.  This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same Agreement.

                        8.9       Withholdings; Setoff.  All compensation and benefits to Employee hereunder shall be reduced by all federal, state, local and other withholdings and similar taxes and payments required by applicable law. The Company may withhold amounts due it from Employee arising out of Employee’s employment or other contractual relationshipswith the Company, including for example, overpayments of compensation and personal charges incurred on Company accounts, from amounts due under this Agreement to Employee.

            IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement on the date first above written.

EMPLOYEE	M-WAVE DBS, INC.
	By:
Joshua Blake
	Its:

Schedule A

EMPLOYEE NON-DISCLOSURE, NON-COMPETITION

AND DEVELOPMENTS AGREEMENT

In consideration and as a condition of my employment or continued employment by M-Wave DBS, Inc., an Illinois corporation (the “Company”), I hereby agree with the Company as follows:

1.     During the period of my employment by the Company (the “Employment Period”), and for one (1) year thereafter, I agree that I will not, directly or indirectly, alone or as a partner, officer, director, employee, stockholder or creditor of any entity, (a) engage in any business  in the United States that is engaged in design, engineering, distribution,  sales, marketing or manufacturing of direct Broadcast Satellite Installation Equipment (the “Business”), or (b) solicit or do any Business with any customer of the Company or any potential customer of the Company.  In the ev ent of a sale of all or substantially all of the assets of the Company to a third party, or the merger or consolidation of Company (other than in connection with the reincorporation of Company) with or into another entity in a transaction in which the holders of Company voting securities shall hold less than 50% of the voting securities of the surviving entity, the term “Company” in the preceding sentence shall mean Company, its parent, if any, and its subsidiaries, as they exist immediately prior to such event.  During the period of my employment and for two (2) years (or such shorter period, as set forth above) thereafter, I agree that I will not directly or indirectly, alone or as a partner, officer, director, employee, stockholder or creditor of any entity, solicit, or endeavor to entice any employee, independent contractor or consultant of the Company to leave the Company.

2.         I will not at any time whether during or after the Employment Period reveal, to any person or entity any of the trade secrets or confidential information concerning the organization, business or finances of the Company or of any third party which the Company is under an obligation to keep confidential (including but not limited to trade secrets or confidential information respecting inventions, products, designs, methods, know-how, techniques, systems, processes, software programs, works or authorship, customer lists, projects, plans and proposals), except as may be required in the ordinary course of performing my duties as an employee of the Company, a nd I have kept and I shall keep secret all such information given to me and shall not use or attempt to use any such information in any manner which may injure or cause loss or which is calculated to injure or cause loss, whether directly or indirectly, to the Company.  Further, I agree that during and after the Employment Period, I shall not make or use or grant permission to use any notes, memoranda, reports, lists, records, drawings, sketches, specifications, software programs, data, documentation or other materials of any nature relating to any matter within the scope of the business of the Company or concerning any of its dealings or affairs otherwise than for the benefit of the Company, it being agreed that all of the foregoing shall be and remain the sole and exclusive property of the Company, and that immediately upon the termination of my employment I shall deliver all of the foregoing, and all copies thereof, to the Company, at its main office, together with a written certification that I have fully complied with such obligation.

3.         If at any time or times during my employment, I (either alone or with others) have made, conceived, created, discovered, invented, or reduced to practice, or shall make, conceive, create, discover, invent, or reduce to practice, any invention, modification, discovery, design, development, improvement, process, software program, work of authorship, documentation, formula, data, technique, know-how, trade secret or intellectual property right whatsoever or any interest therein (whether or not patentable or registrable under copyright, trademark or similar statutes or subject to analogous protection) (herein called “Developments”), then:

(a)        such Developments and the benefits thereof are and shall immediately become the sole and absolute property of the Company and its assigns, as works made for hire or otherwise;

(b)        I shall promptly disclose to the Company (or any persons designated by it) each such Development;

(c)        as may be necessary to ensure the Company’s ownership of such Developments, I hereby assign any rights (including, but not limited to, any copyrights and trademarks) I may have or acquire in the Developments and benefits and/or rights resulting therefrom to the Company and its assigns without further compensation; and

(d)        I shall communicate, without cost or delay, and without disclosing to others the same, all available information relating thereto (with all necessary plans and models) to the Company.

Notwithstanding the foregoing, pursuant to the Illinois Patent Act, this Paragraph 3 shall not apply to Developments for which no equipment, supplies, facility, or trade secret information of the Company was used and which was developed entirely on my own time, unless (a) the Development related (i) to the Business of the Company, or (ii) to the Company's actual or demonstrably anticipated research or development, or (b) the Development results from any work performed by me for the Company. In addition, this paragraph does not apply to Developments developed by me prior to my employment with Company.

4.         I will, during and after the Employment Period, at the request and cost of the Company, promptly sign, execute, make and do all such deeds, documents, acts and things as the Company and its duly authorized agents may reasonably require:

(a)        to apply for, obtain, register and vest in the name of the Company alone (unless the Company otherwise directs) letters patent, copyrights, trademarks or other analogous protection in any country throughout the world and when so obtained or vested to renew and restore the same; and

(b)        to defend any judicial, opposition or other proceedings in respect of such applications and any judicial, opposition or other proceedings or petitions or applications for revocation of such letters patent, copyright, trademark or other analogous protection.

In event the Company is unable, after reasonable effort, to secure my signature on any application for letters patent, copyright or trademark registration or other documents regarding any legal protection relating to a Development, whether because of my physical or mental incapacity or for any other reason whatsoever, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney-in-fact, to act for and in my behalf and stead to execute and file any such application or applications or other documents and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent, copyright or trademark registrations or any other legal protection thereon with the same l egal force and effect as if executed by me.

5.         I agree that any breach of this Agreement by me will cause irreparable damage to the Company and that in the event of such breach the Company shall have, in addition to any and all remedies of law, the right to an injunction, specific performance or other equitable relief to prevent the violation of my obligations hereunder, without the necessity of a bond or other security.

6.         I understand that this Agreement does not create an obligation on the Company or any other person or entity to continue my employment.

7.         No claim of mine against the Company shall serve as a defense against the Company’s enforcement of any provision of this Agreement.

8.         I represent that the Developments identified in the pages, if any, attached hereto as Exhibit A comprise all the unpatented and unregistered copyrightable Developments which I have made, conceived or created prior to the Employment Period, which Developments are excluded from this Agreement.  I understand that it is only necessary to list the title and purpose of such Developments but not details thereof.

9.         I hereby represent that, except as I have disclosed in writing to the Company and as attached hereto as Exhibit B, I am not a party to, or bound by the terms of, any agreement with or obligation to any previous employer or other party to refrain from using or disclosing any trade secret or confidential or proprietary information in the course of my employment with the Company or to refrain from competing, directly or indirectly, with business of such previous employer or any other party.  I further represent that my performance of all the terms of this Agreement and as an employee of the Compa ny does not and will not breach any agreement or obligation to keep in confidence proprietary information, knowledge or data acquired by me in confidence or in trust prior to or during my employment with the Company, and I will not disclose to the Company or induce the Company to use any confidential or proprietary information or material belonging to any previous employer or others.  I have not entered into, and I agree I will not enter into, any agreement, either written or oral, in conflict with the terms of this Agreement.

10.       Any waiver by the Company of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach of such provision or any other provision hereof.

11.       I hereby agree that each provision herein shall be treated as a separate and independent clause, and the unenforceability of any one clause shall in no way impair the enforceability of any of the other clauses herein.  Moreover, if one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to scope, activity, subject or otherwise so as to be unenforceable at law, such provision or provisions shall be construed by the appropriate judicial body by limiting or reducing it or them, so as to be enforceable to the maximum extent compatible with the applicable law as it shall then appear.

12.       My obligations under this Agreement shall survive the termination of my employment regardless of the manner of such termination and shall be binding upon my heirs, executors, administrators and legal representatives.

13.       Except as limited in Paragraph 1 of this Agreement, The term “Company” shall include the Company and its former, current and future parents, and the Company's and such parents' subsidiaries, subdivisions and affiliates.  The Company shall have the right to assign this Agreement to its successors and assigns, by operation of law or otherwise, and all covenants and agreements hereunder shall inure to the benefit of and be enforceable by said successors or assigns.

14.       This Agreement shall be governed by and construed in accordance with the internal laws of the State of Illinois.  Any claims or legal actions by one party against the other arising out of the relationship between the parties contemplated herein (whether or not arising under this Agreement) shall be governed by the laws of the State of Illinois and shall be commenced and maintained in any state or federal court located in Cook County, Illinois, and both parties hereby submit to the jurisdiction and venue of any such court.

IN WITNESS WHEREOF, the undersigned has executed this Agreement as a sealed instrument as of the _______ day of February , 2005.

Signature

Print Name: Joshua Blake

Address:

EXHIBIT A

Prior Developments

EXHIBIT B

Prior Agreements

EX-10

PROMISSORY NOTE

$500,000	February 23, 2005
	Los Angeles, California

FOR VALUE RECEIVED, the undersigned M-Wave, Inc., a Delaware corporation (the "Company"), promises to pay to the order of Mercator Momentum Fund, L.P., ("Payee"), at its addr ess c/o Mercator Advisory Group, LLC, 555 South Flower Street, Suite 4200, Los Angeles, CA  90071, or at such other place as the holder hereof may designate, in lawful money of the United States of America and in immediately available funds, the principal sum of Five Hundred Thousand Dollars ($500,000) with interest thereon as set forth herein.

1.                 INTEREST:

The outstanding principal balance of this Note shall bear interest from the date hereof (computed on the basis of a 360-day year, actual days elapsed) at a rate per annum equal to ten percent (10%).

2.                 PAYMENTS:

a.                 Interest Payments. Commencing on the date hereof through maturity, interest payments on the outstanding principal balance shall be due and payable monthly in arrears, prorated for any partial month.

b.                 Principal Payments.        Upon close of sale of that certain real property commonly known as 215 Park Street in Bensenville, IL, the Company shall make a mandatory principal payment of not less than $104,839.  Any outstanding principal balance and any accrued but unpaid interest shall be due and payable in full on August 23, 2006 (the "Maturity Date").

c.                 Application of Payments.   Each payment made on this Note shall be credited, first, to any interest then accrued on the principal amount to be paid and, second, to the outstanding principal balance hereof.

d.                 Prepayment.   The Company may prepay any amounts outstanding hereunder in whole or in part at any time without premium or penalty.

3.                 EVENTS OF DEFAULT:

The occurrence of any of the following shall constitute an "Event of Default" under this Note:

a.                 The Company fails to pay any principal or interest payment when due under of this Note.

b.                 The Company fails to perform any other obligation under this Note and such failure continues for five (5) days after notice thereof to the Company.

c.                 The Company becomes insolvent, or suffers or consents to or applies for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or generally fails to pay its debts as they become due, or makes a general assignment for the benefit of creditors; files a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under Title 11 of the United States Code, as amended or recodified from time to time (the "Bankruptcy Code"), or under any state, federal or other law granting relief to debtors, whether now or hereafter in effect; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against it and is pending for more than sixty (60) days, or it files an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or it is adjudicated a bankrupt, or an order for relief is entered against it by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state, federal or other law relating to bankruptcy, reorganization or other reli ef for debtors.

d.                 The dissolution or liquidation of the Company.

4.                 MISCELLANEOUS:

a.         Remedies.   Upon the occurrence of any Event of Default, the holder of this Note, at the holder's option, may declare all sums of principal and interest outstanding hereunder to be immediately due and payable without presentment, demand, notice of nonperformance, notice of protest , protest or notice of dishonor, all of which are expressly waived by the Company.  In addition, the Company shall pay to the holder immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including without limitation reasonable attorneys' fees and costs, expended or incurred by the holder in connection with the enforcement of the holder's rights and/or the collection of any amounts which become due to the holder under this Note, and the prosecution or defense of any action in any way related to this Note, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by the holder or any other person or entity) relating to the Company or any other person or entity.

b.         Governing Law and Consent to Jurisdiction.   This Note shall be governed by, and construed in accordance with, the laws of the State of CALIFORNIA WITHOUT GIVING EFFECT TO PROVISIONS RELATING TO CONFLICTS OF LAW TO THE EXTENT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

c.         DUE DILIGENCE AND LEGAL FEES.  In connection with the due diligence and preparation of this Promissory Note and related documents, the Company shall pay Mercator Advisory Group, LLC the sum of $9,677 for due diligence and $1,613 for legal fees, which sums shall be due and payable on the date hereof.

IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.

M-WAVE, INC.

a Delaware corporation

By   /s/Jim Mayer

Jim Mayer - CEO

[Printed Name and Title]

EX-10

PROMISSORY NOTE

$500,000	February 23, 2005
	Los Angeles, California

FOR VALUE RECEIVED, the undersigned M-Wave, Inc., a Delaware corporation (the "Company"), promises to pay to the order of Monarch Pointe Fund, Ltd. ("Payee"), at its address c/o Mercator Advisory Group, LLC, 555 South Flower Street, Suite 4200, Los Angeles, CA  90071, or at such other place as the holder hereof may designate, in lawful money of the United States of America and in immediately available funds, the principal sum of One Million Fifty Thousand Dollars ($1,050,000) with interest thereon as set forth herein.

1.                 INTEREST:

The outstanding principal balance of this Note shall bear interest from the date hereof (computed on the basis of a 360-day year, actual days elapsed) at a rate per annum equal to ten percent (10%).

2.                 PAYMENTS:

a.                 Interest Payments. Commencing on the date hereof through maturity, interest payments on the outstanding principal balance shall be due and payable monthly in arrears, prorated for any partial month.

b.                 Principal Payments.        Upon close of sale of that certain real property commonly known as 215 Park Street in Bensenville, IL, the Company shall make a mandatory principal payment of not less than $220,161.  Any outsta nding principal balance and any accrued but unpaid interest shall be due and payable in full on August 23, 2006 (the "Maturity Date").

c.                 Application of Payments.   Each payment made on this Note shall be credited, first, to any interest then accrued on the principal amount to be paid and, second, to the outstanding principal balance hereof.

d.                 Prepayment.   The Company may prepay any amounts outstanding hereunder in whole or in part at any time without premium or penalty.

3.                 EVENTS OF DEFAULT:

The occurrence of any of the following shall constitute an "Event of Default" under this Note:

a.                 The Company fails to pay any principal or interest payment when due under of this Note.

b.                 The Company fails to perform any other obligation under this Note and such failure continues for five (5) days after notice thereof to the Company.

c.                 The Company becomes insolvent, or suffers or consents to or applies for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or generally fails to pay its debts as they become due, or makes a general assignment for the benefit of creditors; files a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under Title 11 of the United States Code, as amended or recodified from time to time (the "Bankruptcy Code"), or under any state, federal or other law granting relief to debtors, whether now or hereafter in effect; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against it and is pending for more than sixty (60) days, or it files an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or it is adjudicated a bankrupt, or an order for relief is entered against it by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state, federal or other law relating to bankruptcy, reorganization or other reli ef for debtors.

d.                 The dissolution or liquidation of the Company.

4.                 MISCELLANEOUS:

a.         Remedies.   Upon the occurrence of any Event of Default, the holder of this Note, at the holder's option, may declare all sums of principal and interest outstanding hereunder to be immediately due and payable without presentment, demand, notice of nonperformance, notice of protest , protest or notice of dishonor, all of which are expressly waived by the Company.  In addition, the Company shall pay to the holder immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including without limitation reasonable attorneys' fees and costs, expended or incurred by the holder in connection with the enforcement of the holder's rights and/or the collection of any amounts which become due to the holder under this Note, and the prosecution or defense of any action in any way related to this Note, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by the holder or any other person or entity) relating to the Company or any other person or entity.

b.         Governing Law and Consent to Jurisdiction.   This Note shall be governed by, and construed in accordance with, the laws of the State of CALIFORNIA WITHOUT GIVING EFFECT TO PROVISIONS RELATING TO CONFLICTS OF LAW TO THE EXTENT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

c.         DUE DILIGENCE AND LEGAL FEES.  In connection with the due diligence and preparation of this Promissory Note and related documents, the Company shall pay Mercator Advisory Group, LLC the sum of $20,323 for due diligence and $3,387 for legal fees, which sums shall be due and payable on the date hereof.

IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.

M-WAVE, INC.

a Delaware corporation

By   /s/Jim Mayer

Jim Mayer - CEO

[Printed Name and Title]

EX-10

 THIS WARRANT AND THE SECURITIES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

WARRANT TO PURCHASE COMMON STOCK

Number of Shares:	Up to 114,783 shares (subject to adjustment)
Warrant Price:	$1.15 per share
Issuance Date:	February 23, 2005
Expiration Date:	February 23, 2008

EX-10

 THIS WARRANT AND THE SECURITIES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

WARRANT TO PURCHASE COMMON STOCK

Number of Shares:	Up to 233,043 shares (subject to adjustment)
Warrant Price:	$1.15 per share
Issuance Date:	February 23, 2005
Expiration Date:	February 23, 2008

THIS WARRANT CERTIFIES THAT for value received, Monarch Pointe Fund, Ltd., or its registered assigns (hereinafter called the “Holder”) is entitled to purchase from M-Wave, Inc. (hereinafter called the “Company”), the above referenced number of fully paid and nonassessable shares (the “Shares”) of common stock (the “Common Stock”), of Company, at the Warrant Price per Share referenced above; the number of shares purchasable upon exercise of this Warrant referenced above being subject to adjustment from time to time as described herein. This Warrant is issued in connection with that certain Promissory Note of even date herewith (the “Note”), by and between the Company and Holder. The exercise of this Warrant shall be subject to the provisions, limitations and restrictions contained herein.

1.      Term and Exercise.

1.1   Term.  This Warrant is exercisable in whole or in part (but not as to any fractional share of Common Stock), at any time and from time to time after the date hereof prior to 6:00 p.m. on the Expiration Date set forth above.  

1.2   Warrant Price.  The Warrant shall be exercisable at the Warrant Price described above.  

1.3   Maximum Number  of Shares.  The maximum number of Shares of Common Stock exercisable pursuant to this Warrant is 233,043 Shares.  However, notwithstanding anything herein to the contrary, in no event shall the Holder be permitted to exercise this Warrant for a number of Shares greater than the number that would cause the aggregate beneficial ownership of the Company’s Common Stock (calculated pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of (a) the Holder and its affiliates or (b) M.A.G Capital, LLC, and its affiliates, to equal 9.99% of the Company’s Common Stock then outstanding.  In the event that on or before April 15, 2005, the Company pre-pays not less than $220,161 of the principal amount due under the Note, then 34,956 Warrants shall cancel.

1.4   Procedure for Exercise of Warrant.  Holder may exercise this Warrant by delivering the following to the principal office of the Company in accordance with Section 5.1 hereof: (i) a duly executed Notice of Exercise in substantially the form attached as Schedule A, (ii) payment of the Warrant Price then in effect for each of the Shares being purchased, as designated in the Notice of Exercise, and (iii) this Warrant.  Payment of the Warrant Price may be in cash, certified or official bank check payable to the order of the Company, or wire transfer of funds to the Company’s account (or any combination of any of the foregoing) in the amount of the Warrant Price for each share being purchased.  

1.5   Delivery of Certificate and New Warrant.  In the event of any exercise of the rights represented by this Warrant, a certificate or certificates for the shares of Common Stock so purchased, registered in the name of the Holder or such other name or names as may be designated by the Holder, together with any other securities or other property which the Holder is entitled t o receive upon exercise of this Warrant, shall be delivered to the Holder hereof, at the Company’s expense, within a reasonable time, not exceeding fifteen (15) calendar days, after the rights represented by this Warrant shall have been so exercised; and, unless this Warrant has expired, a new Warrant representing the number of Shares (except a remaining fractional share), if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Holder hereof within such time.  The person in whose name any certificate for shares of Common Stock is issued upon exercise of this Warrant shall for all purposes be deemed to have become the holder of record of such shares on the date on which the Warrant was surrendered and payment of the Warrant Price was received by the Company, irrespective of the date of delivery of such certificate, except that, if the date of such surrender and payment is on a date when the stock transfer books of the Company are closed, such p erson shall be deemed to have become the holder of such Shares at the close of business on the next succeeding date on which the stock transfer books are open.

1.6   Restrictive Legend.  Each certificate for Shares shall bear a restrictive legend in substantially the form as follows, together with any additional legend required by (i) any applicable state securities laws and (ii) any securities exchange upon which such Shares may, at the time of such exercise, be listed:

The shares of stock evidenced by this certificate have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered, sold, pledged or otherwise transferred ("transferred") in the absence of such registration or an applicable exemption therefrom. In the absence of such registration, such shares may not be transferred unless, if the Company requests, the Company has received a written opinion from counsel in form and substance satisfactory to the Company stating that such transfer is being made in compliance with all applicable federal and state securities laws.

Any certificate issued at any time in exchange or substitution for any certificate bearing such legend shall also bear such legend unless, in the opinion of counsel for the Holder thereof (which counsel shall be reasonably satisfactory to the Company), the securities represented thereby are not, at such time, required by law to bear such legend.

1.7   Fractional Shares.  No fractional Shares shall be issuable upon exercise or conversion of the Warrant.  In the event of a fractional interest, the number of Shares to be issued shall be rounded down to the nearest whole Share.  

2.      Representations, Warranties and Covenants.

2.1   Representations and Warranties.

(a)   The Company is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation and has all necessary power and authority to perform its obligations under this Warrant;

(b)   The execution, delivery and performance of this Warrant has been duly authorized by all necessary actions on the part of the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms; and

(c)   This Warrant does not violate and is not in conflict with any of the provisions of the Company’s Articles of Incorporation or Certificate of Determination, Bylaws and any resolutions of the Company’s Board of Directors or stockholders, or any agreement of the Company, and no event has occurred and no condition or circumstance exists that might (with or without notice or lapse of time) constitute or result directly or indirectly in such a violation or conflict.

2.2   Issuance of Shares.  The Company covenants and agrees that all shares of Common Stock that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof.  The Company further covenants and agrees that it will pay when due and payable any and all federal and state taxes which may be payable in respect of the issue of this Warrant or any Common Stock or certificates therefor issuable upon the exercise of this Warrant.  The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise in full of the rights represented by this Warrant.  If at any time the number of authorized but unissued shares of Common Stock of the Company shall not be sufficient to effect the exercise of the Warrant in full, subject to the limitations set forth in Section 1.3 hereto, then the Company will take all such corporate action as may, in the opinion of counsel to the Company, be necessary or advisable to increase the number of its authorized shares of Common Stock as shall be sufficient to permit the exercise of the Warrant in full, subject to the limitations set forth in Section 1.3 heret o, including without limitation, using its best efforts to obtain any necessary stockholder approval of such increase.  The Company further covenants and agrees that if any shares of capital stock to be reserved for the purpose of the issuance of shares upon the exercise of this Warrant require registration with or approval of any governmental authority under any federal or state law before such shares may be validly issued or delivered upon exercise, then the Company will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be.  If and so long as the Common Stock issuable upon the exercise of this Warrant is listed on any national securities exchange or the Nasdaq Stock Market, the Company will, if permitted by the rules of such exchange or market, list and keep listed on such exchange or market, upon official notice of issuance, all shares of such Common Stock issuable upon exercise of this Warrant.

3.      Other Adjustments.

3.1   Subdivision or Combination of Shares.  In case the Company shall at any time subdivide its outstanding Common Stock into a greater number of shares, the Warrant Price in effect immediately prior to such subdivision shall be proportionately reduced, and the number of Shares subject to this Warrant shall be proportionately increased, and conversely, in case the outstanding Common Stock of the Company shall be combined into a smaller number of shares, the Warrant Price in effect immediately prior to such combination shall be proportionately increased, and the number of Shares subject to this Warrant shall be proportionately decreased.

3.2   Dividends in Common Stock, Other Stock or Property.  If at any time or from time to time the holders of Common Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefor:

(a)   Common Stock, Options or any shares or other securities which are at any time directly or indirectly convertible into or exchangeable for Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution (other than options awarded in the ordinary course of business to employees, directors or consultants with a fair market value exercise price);

(b)   any cash paid or payable otherwise than as a regular cash dividend; or

(c)   Common Stock or additional shares or other securities or property (including cash) by way of spin-off, split-up, reclassification, combination of shares or similar corporate rearrangement (other than Common Stock issued as a stock split or adjustments in respect of which shall be covered by the terms of Section 3.1 above) and additional shares, other securities or property issued in connection with a Change (as defined below) (which shall be covered by the terms of Section 3.4 below), then and in each such case, the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Common Stock receivable thereupon, and without payment of any additional consideration therefor, the amount of stock and other securities and property (including cash in the cases referred to in clause (b) above and this clause (c)) which such Holder would hold on the date of such exercise had such Holder been the holder of record of such Common Stock as of the date on which holders of Common Stock received or became entitled to receive such shares or all other additional stock and other securities and property.

3.3   Reorganization, Reclassification, Consolidation, Merger or Sale.  If any recapitalization, reclassification or reorganization of the share capital of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its shares and/or assets or other transaction (including, without limitation, a sale of substantially all of its assets followed by a liquidation) shall be effected in such a way that holders of Common Stock shall be entitled to receive shares, securities or other assets or property (a “Change”), then, as a condition of such Change, lawful and adequate provisions shall be made by the Company whereby the Holder hereof shall thereafter have the right to purchase and receive (in lieu of the Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby) such shares, securities or other assets or property as may be issued or payable with respect to or in exchange for the number of outstanding Common Stock which such Holder would have been entitled to receive had such Holder exercised this Warrant immediately prior to the consummation of such Change.  The Company or its successor shall promptly issue to Holder a new Warrant for such new securities or other property.  The new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to give effect to the adjustments provided for in this Section 3 including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise of the new Warrant.  The provisions of this Section 3.3 shall similarly apply to successive Changes.

4.      Ownership and Transfer.

4.1   Ownership of This Warrant.  The Company may deem and treat the person in whose name this Warrant is registered as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by anyone other than the Company) for all purposes and shall not be affected by any notice to the contrary until presentation of this Warrant for registration of transfer as provide d in this Section 4.

4.2   Transfer and Replacement.  This Warrant and all rights hereunder are transferable in whole or in part upon the books of the Company by the Holder hereof in person or by duly authorized attorney, and a new Warrant or Warrants, of the same tenor as this Warrant but registered in the name of the transferee or transferees (and in the name of the Holder, if a partial transfer is effected) sha ll be made and delivered by the Company upon surrender of this Warrant duly endorsed, at the office of the Company in accordance with Section 5.1 hereof.  Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft or destruction, and, in such case, of indemnity or security reasonably satisfactory to it, and upon surrender of this Warrant if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu of this Warrant; provided that if the Holder hereof is an instrumentality of a state or local government or an institutional holder or a nominee for such an instrumentality or institutional holder an irrevocable agreement of indemnity by such Holder shall be sufficient for all purposes of this Warrant, and no evidence of loss or theft or destruction shall be necessary.  This Warrant shall be promptly cancelled by the Company upon the surrender hereof in connection with any transfer or replacement.  Except as otherwise provided above , in the case of the loss, theft or destruction of a Warrant, the Company shall pay all expenses, taxes and other charges payable in connection with any transfer or replacement of this Warrant, other than income taxes and stock transfer taxes (if any) payable in connection with a transfer of this Warrant, which shall be payable by the Holder.  Holder will not transfer this Warrant and the rights hereunder except in compliance with federal and state securities laws and except after providing evidence of such compliance reasonably satisfactory to the Company.

5.      Miscellaneous Provisions.

5.1   Notices. Any notice or other document required or permitted to be given or delivered to the Holder shall be delivered or forwarded to the Holder at c/o M.A.G. Capital, LLC, 555 South Flower Street, Suite 4200, Los Angeles, California 90071, Attention:  David F. Firestone (Facsimile No. 213/553‑8285), or to such other address or number as shall have been furnished to the Company in writing by the Holder, with a copy to Sheppard Mullin Richter & Hampton LLP, 333 South Hope Street, 48th Floor, Los Angeles, California 90071-1448 Attention David C. Ulich (Facsimile No. 213/620-1398).  Any notice or other document required or permitted to be given or delivered to the Company shall be delivered or forwarded to the Company at 475 Industrial Drive,West Chicago, Illinois  60185,  Attention Jim Mayer (facsimile No. 630-562-1775), with a copy to Freeborn & Peters, LLP,  Suite 3000, 311 South Wacker Drive, Chicago Illinois 60606, Attention: Carl R. Klein (Facsimile No. 312-360-6571)or to such other address or number as shall have been furnished to Holder in writing by the Company.  

5.2   All notices, requests and approvals required by this Warrant shall be in writing and shall be conclusively deemed to be given (i) when hand-delivered to the other party, (ii) when received if sent by facsimile at the address and number set forth above; provided that notices given by facsimile shall not be effective, unless either (a) a duplicate copy of such facsimile notice is promptly given by depositing the same in the mail, postage prepaid and addressed to the party as set forth below or (b) the receiving party deliv ers a written confirmation of receipt for such notice by any other method permitted under this paragraph; and further provided that any notice given by facsimile received after 5:00 p.m. (recipient’s time) or on a non-business day shall be deemed received on the next business day; (iii) five (5) business days after deposit in the United States mail, certified, return receipt requested, postage prepaid, and addressed to the party as set forth below; or (iv) the next business day after deposit with an international overnight delivery service, postage prepaid, addressed to the party as set forth below with next business day delivery guaranteed; provided that the sending party receives confirmation of delivery from the delivery service provider.

5.3   No Rights as Shareholder; Limitation of Liability.  This Warrant shall not entitle the Holder to any of the rights of a shareholder of the Company except upon exercise in accordance with the terms hereof.  No provision hereof, in the absence of affirmative action by the Holder to purchase shares of Common Stock, and no mere enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the Warrant Price hereunder or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

5.4   Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of California as applied to agreements among California residents made and to be performed entirely within the State of California, without giving effect to the conflict of law principles thereof.

5.5   Binding Effect on Successors.  This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets and/or securities.  All of the obligations of the Company relating to the Shares issuable upon the exercise of this Warrant shall survive the exercise and termination of this Wa rrant.  All of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder. Assignment of this Warrant in whole or in part is subject to prior written approval of Company, which approval shall not be unreasonably withheld or delayed.

5.6   Waiver, Amendments and Headings.  This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by both parties (either generally or in a  particular instance and either retroactively or prospectively).  The headings in this Warrant are for purposes of reference only and shall not affect the meaning or c onstruction of any of the provisions hereof.  

5.7   Jurisdiction.  Each of the parties irrevocably agrees that any and all suits or proceedings based on or arising under this Agreement may be brought only in and shall be resolved in the federal or state courts located in the City of Los Angeles, California and consents to the jurisdiction of such courts for such purpose.  Each of the parties irrevocably waives the defense of an inconvenient forum to the maintenance of such suit or proceeding in any such court.  Each of the parties further agrees that service of process upon such party mailed by first class mail to the address set forth in Section 9 shall be deemed in every respect effective service of process upon such party in any such suit or proceeding.  Nothing herein shall affect the right of either party to serve process in any other manner permitted by law.  Each of the parties agrees that a final non- appealable judgment in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner.  

5.8   Attorneys' Fees and Disbursements.  If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party or parties shall be entitled to receive from the other party or parties reasonable attorneys’ fees and disbursements in addition to any other relief to which the prevailing party or parties may be entitled.  

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer this 23rd day of  February, 2005.

COMPANY:
M-WAVE, INC.
By /s/ Jim Mayer

Print Name:  Jim Mayer

Title:CEO

SCHEDULE A

FORM OF NOTICE OF EXERCISE

[To be signed only upon exercise of the Warrant]

TO BE EXECUTED BY THE REGISTERED HOLDER

TO EXERCISE THE WITHIN WARRANT

The undersigned hereby elects to purchase _______ shares of Common Stock (the “Shares”) of M-Wave, Inc. under the Warrant to Purchase Common Stock dated February __ , 2005, which the undersigned is entitled to purchase pursuant to the terms of such Warrant.   The undersigned has delivered $_________, the aggregate Warrant Price for _____ Shares purchased herewith, in full in cash or by certified or official bank check or wire transfer.  

Please issue a certificate or certificates representing such shares of Common Stock in the name of the undersigned or in such other name as is specified below and in the denominations as is set forth below:

                                                                  &nb sp;                                                                                            ;                  
[Type Name of Holder as it should appear on the stock certificate]

                                                                              ;                                                                                                                   
[Requested Denominations – if no denomination is specified, a single certificate will be issued]

The initial address of such Holder to be entered on the books of Company shall be:

                                                                  &nb sp;                                             

The undersigned hereby represents and warrants that the undersigned is acquiring such shares for his own account for investment purposes only, and not for resale or with a view to distribution of such shares or any part thereof.

By:                                                                               &nbs p;                           

Print Name:                                                                                             

Title:                                                                                                       

Dated:                                                                                                      

FORM OF ASSIGNMENT

(ENTIRE)

[To be signed only upon transfer of entire Warrant]

TO BE EXECUTED BY THE REGISTERED HOLDER
TO TRANSFER THE WITHIN WARRANT

FOR VALUE RECEIVED ___________________________ hereby sells, assigns and transfers unto _______________________________ all rights of the undersigned under and pursuant to the within Warrant, and the undersigned does hereby irrevocably constitute and appoint _____________________ Attorney to transfer the said Warrant on the books of ________ _________, with full power of substitution.

                                                                                            
[Type Name of Holder]

By:                                                                                      ;  
Title:  

Dated:                                                                               & nbsp;  

NOTICE

The signature to the foregoing Assignment must correspond exactly to the name as written upon the face of the within Warrant, without alteration or enlargement or any change whatsoever.

FORM OF ASSIGNMENT
(PARTIAL)

[To be signed only upon partial transfer of Warrant]

TO BE EXECUTED BY THE REGISTERED HOLDER
TO TRANSFER THE WITHIN WARRANT

FOR VALUE RECEIVED ___________________________ hereby sells, assigns and transfers unto ____________________________ (i) the rights of the undersigned to purchase ____________________ shares of Common Stock under and pursuant to the within Warrant, and (ii) on a non-exclusive basis, all other rights of the undersigned under and pursuant to the within Warrant, it being understood that the undersigned shall retain, severally (and not jointly) with the transferee(s) named herein, all rights assigned on such non-exclusive basis.  The undersigned does hereby irrevocably constitute and appoint __________________________ Attorney to transfer the said Warrant on the books of M-Wave, Inc.,  with full power of substitution.

                                                                                            
[Type Name of Holder]

By:                                                                                      ;  
Title:  

Dated:                                                                                  

NOTICE

The signature to the foregoing Assignment must correspond exactly to the name as written upon the face of the within Warrant, without alteration or enlargement or any change whatsoever.

EX-10

 THIS WARRANT AND THE SECURITIES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

WARRANT TO PURCHASE COMMON STOCK

Number of Shares:	Up to 86,957 shares (subject to adjustment)
Warrant Price:	$1.15 per share
Issuance Date:	February 23, 2005
Expiration Date:	February 23, 2008

THIS WARRANT CERTIFIES THAT for value received, M.A.G. Capital, LLC., or its registered assigns (hereinafter called the “Holder”) is entitled to purchase from M-Wave, Inc. (hereinafter called the “Company”), the above referenced number of fully paid and nonassessable shares (the “Shares”) of common stock (the “Common Stock”), of Company, at the Warrant Price per Share referenced above; the number of shares purchasable upon exercise of this Warrant referenced above being subject to adjustment from time to time as described herein. This Warrant is issued in connection with those certain Promissory Notes of even date herewith (the “Notes”), by and between the Company and Mercator Momentum Fund, LP and Monarch Pointe Fund, Ltd. The exercise of this Warrant shall be subject to the provisions, limitations and restrictions contained herein.

1.      Term and Exercise.

1.1   Term.  This Warrant is exercisable in whole or in part (but not as to any fractional share of Common Stock), at any time and from time to time after the date hereof prior to 6:00 p.m. on the Expiration Date set forth above.  

1.2   Warrant Price.  The Warrant shall be exercisable at the Warrant Price described above.  

1.3   Maximum Number  of Shares.  The maximum number of Shares of Common Stock exercisable pursuant to this Warrant is 86,957 Shares.  However, notwithstanding anything herein to the contrary, in no event shall the Holder be permitted to exercise this Warrant for a number of Shares greater than the number that would cause the aggregate beneficial ownership of the Company’s Common Stock (calculated pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of (a) the Holder and its affiliates or (b) M.A.G Capital, LLC, and its affiliates, to equal 9.99% of the Company’s Common Stock then outstanding.  In the event that on or before April 15, 2005, the Company pre-pays not less than an aggregate of $325,000 of the principal amount due under the Notes, then 13,044 Warrants shall cancel.

1.4   Procedure for Exercise of Warrant.  Holder may exercise this Warrant by delivering the following to the principal office of the Company in accordance with Section 5.1 hereof: (i) a duly executed Notice of Exercise in substantially the form attached as Schedule A, (ii) payment of the Warrant Price then in effect for each of the Shares being purchased, as designated in the Notice of Exercise, and (iii) this Warrant.  Payment of the Warrant Price may be in cash, certified or official bank check payable to the order of the Company, or wire transfer of funds to the Company’s account (or any combination of any of the foregoing) in the amount of the Warrant Price for each share being purchased.  

1.5   Delivery of Certificate and New Warrant.  In the event of any exercise of the rights represented by this Warrant, a certificate or certificates for the shares of Common Stock so purchased, registered in the name of the Holder or such other name or names as may be designated by the Holder, together with any other securities or other property which the Holder is entitled t o receive upon exercise of this Warrant, shall be delivered to the Holder hereof, at the Company’s expense, within a reasonable time, not exceeding fifteen (15) calendar days, after the rights represented by this Warrant shall have been so exercised; and, unless this Warrant has expired, a new Warrant representing the number of Shares (except a remaining fractional share), if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Holder hereof within such time.  The person in whose name any certificate for shares of Common Stock is issued upon exercise of this Warrant shall for all purposes be deemed to have become the holder of record of such shares on the date on which the Warrant was surrendered and payment of the Warrant Price was received by the Company, irrespective of the date of delivery of such certificate, except that, if the date of such surrender and payment is on a date when the stock transfer books of the Company are closed, such p erson shall be deemed to have become the holder of such Shares at the close of business on the next succeeding date on which the stock transfer books are open.

1.6   Restrictive Legend.  Each certificate for Shares shall bear a restrictive legend in substantially the form as follows, together with any additional legend required by (i) any applicable state securities laws and (ii) any securities exchange upon which such Shares may, at the time of such exercise, be listed:

The shares of stock evidenced by this certificate have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered, sold, pledged or otherwise transferred ("transferred") in the absence of such registration or an applicable exemption therefrom. In the absence of such registration, such shares may not be transferred unless, if the Company requests, the Company has received a written opinion from counsel in form and substance satisfactory to the Company stating that such transfer is being made in compliance with all applicable federal and state securities laws.

Any certificate issued at any time in exchange or substitution for any certificate bearing such legend shall also bear such legend unless, in the opinion of counsel for the Holder thereof (which counsel shall be reasonably satisfactory to the Company), the securities represented thereby are not, at such time, required by law to bear such legend.

1.7   Fractional Shares.  No fractional Shares shall be issuable upon exercise or conversion of the Warrant.  In the event of a fractional interest, the number of Shares to be issued shall be rounded down to the nearest whole Share.  

2.      Representations, Warranties and Covenants.

2.1   Representations and Warranties.

(a)   The Company is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation and has all necessary power and authority to perform its obligations under this Warrant;

(b)   The execution, delivery and performance of this Warrant has been duly authorized by all necessary actions on the part of the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms; and

(c)   This Warrant does not violate and is not in conflict with any of the provisions of the Company’s Articles of Incorporation or Certificate of Determination, Bylaws and any resolutions of the Company’s Board of Directors or stockholders, or any agreement of the Company, and no event has occurred and no condition or circumstance exists that might (with or without notice or lapse of time) constitute or result directly or indirectly in such a violation or conflict.

2.2   Issuance of Shares.  The Company covenants and agrees that all shares of Common Stock that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof.  The Company further covenants and agrees that it will pay when due and payable any and all federal and state taxes which may be payable in respect of the issue of this Warrant or any Common Stock or certificates therefor issuable upon the exercise of this Warrant.  The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise in full of the rights represented by this Warrant.  If at any time the number of authorized but unissued shares of Common Stock of the Company shall not be sufficient to effect the exercise of the Warrant in full, subject to the limitations set forth in Section 1.3 hereto, then the Company will take all such corporate action as may, in the opinion of counsel to the Company, be necessary or advisable to increase the number of its authorized shares of Common Stock as shall be sufficient to permit the exercise of the Warrant in full, subject to the limitations set forth in Section 1.3 heret o, including without limitation, using its best efforts to obtain any necessary stockholder approval of such increase.  The Company further covenants and agrees that if any shares of capital stock to be reserved for the purpose of the issuance of shares upon the exercise of this Warrant require registration with or approval of any governmental authority under any federal or state law before such shares may be validly issued or delivered upon exercise, then the Company will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be.  If and so long as the Common Stock issuable upon the exercise of this Warrant is listed on any national securities exchange or the Nasdaq Stock Market, the Company will, if permitted by the rules of such exchange or market, list and keep listed on such exchange or market, upon official notice of issuance, all shares of such Common Stock issuable upon exercise of this Warrant.

3.      Other Adjustments.

3.1   Subdivision or Combination of Shares.  In case the Company shall at any time subdivide its outstanding Common Stock into a greater number of shares, the Warrant Price in effect immediately prior to such subdivision shall be proportionately reduced, and the number of Shares subject to this Warrant shall be proportionately increased, and conversely, in case the outstanding Common Stock of the Company shall be combined into a smaller number of shares, the Warrant Price in effect immediately prior to such combination shall be proportionately increased, and the number of Shares subject to this Warrant shall be proportionately decreased.

3.2   Dividends in Common Stock, Other Stock or Property.  If at any time or from time to time the holders of Common Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefor:

(a)   Common Stock, Options or any shares or other securities which are at any time directly or indirectly convertible into or exchangeable for Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution(other than options awarded in the ordinary course of business to employees, directors or consultants with a fair market value exercise price);

(b)   any cash paid or payable otherwise than as a regular cash dividend; or

(c)   Common Stock or additional shares or other securities or property (including cash) by way of spin-off, split-up, reclassification, combination of shares or similar corporate rearrangement (other than Common Stock issued as a stock split or adjustments in respect of which shall be covered by the terms of Section 3.1 above) and additional shares, other securities or property issued in connection with a Change (as defined below) (which shall be covered by the terms of Section 3.4 below), then and in each such case, the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Common Stock receivable thereupon, and without payment of any additional consideration therefor, the amount of stock and other securities and property (including cash in the cases referred to in clause (b) above and this clause (c)) which such Holder would hold on the date of such exercise had such Holder been the holder of record of such Common Stock as of the date on which holders of Common Stock received or became entitled to receive such shares or all other additional stock and other securities and property.

3.3   Reorganization, Reclassification, Consolidation, Merger or Sale.  If any recapitalization, reclassification or reorganization of the share capital of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its shares and/or assets or other transaction (including, without limitation, a sale of substantially all of its assets followed by a liquidation) shall be effected in such a way that holders of Common Stock shall be entitled to receive shares, securities or other assets or property (a “Change”), then, as a condition of such Change, lawful and adequate provisions shall be made by the Company whereby the Holder hereof shall thereafter have the right to purchase and receive (in lieu of the Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby) such shares, securities or other assets or property as may be issued or payable with respect to or in exchange for the number of outstanding Common Stock which such Holder would have been entitled to receive had such Holder exercised this Warrant immediately prior to the consummation of such Change.  The Company or its successor shall promptly issue to Holder a new Warrant for such new securities or other property.  The new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to give effect to the adjustments provided for in this Section 3 including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise of the new Warrant.  The provisions of this Section 3.3 shall similarly apply to successive Changes.

4.      Ownership and Transfer.

4.1   Ownership of This Warrant.  The Company may deem and treat the person in whose name this Warrant is registered as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by anyone other than the Company) for all purposes and shall not be affected by any notice to the contrary until presentation of this Warrant for registration of transfer as provide d in this Section 4.

4.2   Transfer and Replacement.  This Warrant and all rights hereunder are transferable in whole or in part upon the books of the Company by the Holder hereof in person or by duly authorized attorney, and a new Warrant or Warrants, of the same tenor as this Warrant but registered in the name of the transferee or transferees (and in the name of the Holder, if a partial transfer is effected) sha ll be made and delivered by the Company upon surrender of this Warrant duly endorsed, at the office of the Company in accordance with Section 5.1 hereof.  Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft or destruction, and, in such case, of indemnity or security reasonably satisfactory to it, and upon surrender of this Warrant if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu of this Warrant; provided that if the Holder hereof is an instrumentality of a state or local government or an institutional holder or a nominee for such an instrumentality or institutional holder an irrevocable agreement of indemnity by such Holder shall be sufficient for all purposes of this Warrant, and no evidence of loss or theft or destruction shall be necessary.  This Warrant shall be promptly cancelled by the Company upon the surrender hereof in connection with any transfer or replacement.  Except as otherwise provided above , in the case of the loss, theft or destruction of a Warrant, the Company shall pay all expenses, taxes and other charges payable in connection with any transfer or replacement of this Warrant, other than income taxes and stock transfer taxes (if any) payable in connection with a transfer of this Warrant, which shall be payable by the Holder.  Holder will not transfer this Warrant and the rights hereunder except in compliance with federal and state securities laws and except after providing evidence of such compliance reasonably satisfactory to the Company.

5.      Miscellaneous Provisions.

5.1   Notices. Any notice or other document required or permitted to be given or delivered to the Holder shall be delivered or forwarded to the Holder at c/o M.A.G. Capital, LLC, 555 South Flower Street, Suite 4200, Los Angeles, California 90071, Attention:  David F. Firestone (Facsimile No. 213/553‑8285), or to such other address or number as shall have been furnished to the Company in writing by the Holder, with a copy to Sheppard Mullin Richter & Hampton LLP, 333 South Hope Street, 48th Floor, Los Angeles, California 90071-1448 Attention David C. Ulich (Facsimile No. 213/620-1398).  Any notice or other document required or permitted to be given or delivered to the Company shall be delivered or forwarded to the Company at 475 Industrial Drive,West Chicago, Illinois  60185,  Attention Jim Mayer (facsimile No. 630-562-1775), with a copy to Freeborn & Peters, LLP,  Suite 3000, 311 South Wacker Drive, Chicago Illinois 60606, Attention: Carl R. Klein (Facsimile No. 312-360-6571)or to such other address or number as shall have been furnished to Holder in writing by the Company.  

5.2   All notices, requests and approvals required by this Warrant shall be in writing and shall be conclusively deemed to be given (i) when hand-delivered to the other party, (ii) when received if sent by facsimile at the address and number set forth above; provided that notices given by facsimile shall not be effective, unless either (a) a duplicate copy of such facsimile notice is promptly given by depositing the same in the mail, postage prepaid and addressed to the party as set forth below or (b) the receiving party deliv ers a written confirmation of receipt for such notice by any other method permitted under this paragraph; and further provided that any notice given by facsimile received after 5:00 p.m. (recipient’s time) or on a non-business day shall be deemed received on the next business day; (iii) five (5) business days after deposit in the United States mail, certified, return receipt requested, postage prepaid, and addressed to the party as set forth below; or (iv) the next business day after deposit with an international overnight delivery service, postage prepaid, addressed to the party as set forth below with next business day delivery guaranteed; provided that the sending party receives confirmation of delivery from the delivery service provider.

5.3   No Rights as Shareholder; Limitation of Liability.  This Warrant shall not entitle the Holder to any of the rights of a shareholder of the Company except upon exercise in accordance with the terms hereof.  No provision hereof, in the absence of affirmative action by the Holder to purchase shares of Common Stock, and no mere enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the Warrant Price hereunder or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

5.4   Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of California as applied to agreements among California residents made and to be performed entirely within the State of California, without giving effect to the conflict of law principles thereof.

5.5   Binding Effect on Successors.  This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets and/or securities.  All of the obligations of the Company relating to the Shares issuable upon the exercise of this Warrant shall survive the exercise and termination of this Wa rrant.  All of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder. Assignment of this Warrant in whole or in part is subject to prior written approval of Company, which approval shall not be unreasonably withheld or delayed.

5.6   Waiver, Amendments and Headings.  This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by both parties (either generally or in a  particular instance and either retroactively or prospectively).  The headings in this Warrant are for purposes of reference only and shall not affect the meaning or c onstruction of any of the provisions hereof.  

5.7   Jurisdiction.  Each of the parties irrevocably agrees that any and all suits or proceedings based on or arising under this Agreement may be brought only in and shall be resolved in the federal or state courts located in the City of Los Angeles, California and consents to the jurisdiction of such courts for such purpose.  Each of the parties irrevocably waives the defense of an inconvenient forum to the maintenance of such suit or proceeding in any such court.  Each of the parties further agrees that service of process upon such party mailed by first class mail to the address set forth in Section 9 shall be deemed in every respect effective service of process upon such party in any such suit or proceeding.  Nothing herein shall affect the right of either party to serve process in any other manner permitted by law.  Each of the parties agrees that a final non- appealable judgment in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner.  

5.8   Attorneys' Fees and Disbursements.  If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party or parties shall be entitled to receive from the other party or parties reasonable attorneys’ fees and disbursements in addition to any other relief to which the prevailing party or parties may be entitled.  

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer this 23rd day of  February, 2005.

COMPANY:
M-WAVE, INC.
By /s/ Jim Mayer

Print Name:  Jim Mayer

Title:CEO

SCHEDULE A

FORM OF NOTICE OF EXERCISE

[To be signed only upon exercise of the Warrant]

TO BE EXECUTED BY THE REGISTERED HOLDER

TO EXERCISE THE WITHIN WARRANT

The undersigned hereby elects to purchase _______ shares of Common Stock (the “Shares”) of M-Wave, Inc. under the Warrant to Purchase Common Stock dated February __ , 2005, which the undersigned is entitled to purchase pursuant to the terms of such Warrant.   The undersigned has delivered $_________, the aggregate Warrant Price for _____ Shares purchased herewith, in full in cash or by certified or official bank check or wire transfer.  

Please issue a certificate or certificates representing such shares of Common Stock in the name of the undersigned or in such other name as is specified below and in the denominations as is set forth below:

                                                                  &nb sp;                                                                                            ;                  
[Type Name of Holder as it should appear on the stock certificate]

                                                                              ;                                                                                                                   
[Requested Denominations – if no denomination is specified, a single certificate will be issued]

The initial address of such Holder to be entered on the books of Company shall be:

                                                                  &nb sp;                                             

The undersigned hereby represents and warrants that the undersigned is acquiring such shares for his own account for investment purposes only, and not for resale or with a view to distribution of such shares or any part thereof.

By:                                                                               &nbs p;                           

Print Name:                                                                                             

Title:                                                                                                       

Dated:                                                                                                      

FORM OF ASSIGNMENT

(ENTIRE)

[To be signed only upon transfer of entire Warrant]

TO BE EXECUTED BY THE REGISTERED HOLDER
TO TRANSFER THE WITHIN WARRANT

FOR VALUE RECEIVED ___________________________ hereby sells, assigns and transfers unto _______________________________ all rights of the undersigned under and pursuant to the within Warrant, and the undersigned does hereby irrevocably constitute and appoint _____________________ Attorney to transfer the said Warrant on the books of ________ _________, with full power of substitution.

                                                                                            
[Type Name of Holder]

By:                                                                                      ;  
Title:  

Dated:                                                                               & nbsp;  

NOTICE

The signature to the foregoing Assignment must correspond exactly to the name as written upon the face of the within Warrant, without alteration or enlargement or any change whatsoever.

FORM OF ASSIGNMENT
(PARTIAL)

[To be signed only upon partial transfer of Warrant]

TO BE EXECUTED BY THE REGISTERED HOLDER
TO TRANSFER THE WITHIN WARRANT

FOR VALUE RECEIVED ___________________________ hereby sells, assigns and transfers unto ____________________________ (i) the rights of the undersigned to purchase ____________________ shares of Common Stock under and pursuant to the within Warrant, and (ii) on a non-exclusive basis, all other rights of the undersigned under and pursuant to the within Warrant, it being understood that the undersigned shall retain, severally (and not jointly) with the transferee(s) named herein, all rights assigned on such non-exclusive basis.  The undersigned does hereby irrevocably constitute and appoint __________________________ Attorney to transfer the said Warrant on the books of M-Wave, Inc.,  with full power of substitution.

                                                                                            
[Type Name of Holder]

By:                                                                                      ;  
Title:  

Dated:                                                                                  

NOTICE

The signature to the foregoing Assignment must correspond exactly to the name as written upon the face of the within Warrant, without alteration or enlargement or any change whatsoever.

EX-99.1 CHARTER

M-WAVE ANNOUNCES Q4

AND YEAR-END 2004 RESULTS

2004 Revenues up 23% over 2003

Friday February 25, 2005 4:10 p.m. EST

WEST CHICAGO, IL. -- February 25, 2005 -- M-Wave, Inc. (NASDAQsc:”MWAV”), the “New Wave” in Global [electronic component] Sourcing, and “Virtual” Distribution announced today unaudited financial results from continuing operations for the fourth quarter and full-year ended December 31, 2004.

Total revenue for the fourth quarter ended December 31, 2004 is expected to be approximately $3.89 million, an increase of approximately 17% compared to revenues in the fourth quarter of 2003 of approximately $3.32 million. Gross margin for the fourth quarter of 2004 is expected to be approximately 21%, up from the prior level of approximately 8% for the fourth quarter 2003.

M-Wave is also expected to announce approximately $17.46 million in total revenue for fiscal year 2004, approximately a 23% increase from 2003 results of $14.19 million. Gross margins for the full year are also estimated to show improvement, increasing from a loss of approximately 12% in 2003 to a profit of approximately 18% for 2004.  The growth in revenue reflects an improvement in most sectors of the electronics assembly and manufactured products market and the Company’s effectiveness of its Asian supply chain in meeting demand both in the digital and telecom sectors.

The Company is expected to report a net loss attributed to common stockholders of approximately $2.24 million or approximately $0.49 per share in 2004 compared to a loss of approximately $12.05 million or approximately $2.71 per share in 2003.  Included in the 2004 results was a one-time charge of approximately $1.90 million related to the beneficial conversion feature on the preferred stock issued to the Mercator Group in the third quarter of 2004.  In addition, the Company recorded other income related to vendor debt forgiveness of approximately $1.01 million and received 1.5 million shares of stock in Integrated Performance Systems, Inc. (OTC Bulletin Board: IPFS), in consideration for a defaulted promissory note that had been fully reserved for in a prior year.  The shares were recorded with a net realizable value of approximately $0.23 million in the fourth quarter of 2004.

For the fourth quarter of 2004, the Company is expected to report net income attributable to common stockholders of approximately $0.09 million, or approximately $0.02 per share, compared to a loss of approximately $0.67 million, or approximately $0.15 per share in the fourth quarter of 2003.

M-Wave further indicated that losses in fiscal 2004 attributed to operations were approximately $1.23 million in comparison to approximately $12.95 million for fiscal 2003.  The improved results are attributable primarily to improved margins and a reduction of impairment charges on a year to year comparison.

Estimated revenue per employee based upon average headcount is expected to increase in 2004 to approximately $698,000 from approximately $179,000 for 2003 largely as a result of a major shift from actual manufacturing of printed circuit boards to a virtual model both in Asian manufacturing and distribution and a shift of human resources to sales and services from manufacturing to existing customers.

“2004 was the first year our non-manufacturing business model was in place, and considering significant restructuring costs; increased professional fees; non cash compensation; asset impairment; significant losses on conversions of preferred shares to discounted common equity in connection with the Mercator Advisory Group’s $3.00 million capital raise in third quarter; plus gains realized after forgiveness of debt and certain debt recoveries, we were very pleased with our results purely on an operating basis,” stated Jim Mayer, CEO.  He continued, “We are now moving aggressively to diversify our product and customer base organically, and position ourselves for strategic growth including acquisition of accretive assets during 2005 that will spread our compliance and public market costs across a broader revenue plain.”

M-Wave expects to release its audited fourth quarter and year-end results and host a conference call for investors in late March 2005.

About M-Wave Inc.

Established in 1988 and headquartered in the Chicago suburb of West Chicago, M-Wave is a value-added service provider of high performance circuit boards and a virtual distributor of custom and engineered electronic components produced domestically and imported on behalf of middle market original equipment manufacturers or their contract manufacturing firms. The company's products are used in a wide range of telecommunications and industrial electronics products.  M-Wave services customers in a variety of industries spanning warning devices to irrigation equipment and wireless infrastructure in the telecom sector to components found in consumer products. It additionally offers supply chain services and financing for its middle market customers including strategic stocking, in-plant stores, third-party logistics, consignment and agency procurement programs both on a domestic and international basis.  The company trades on the NASDAQ Small Cap market under the symbol MWAV. M-Wave's website is located at www.mwav.com.

The discussion above contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements by their nature involve substantial risks and uncertainties as described by M-Wave's periodic filings. Actual results may differ materially depending on a variety of factors, including, but not limited to the following: the achievement of M-Wave's projected operating results, the achievement of efficient volume production and related sales revenue, and the ability of M-Wave to identify and successfully pursue other business opportunities.  Additional information with respect to the risks and uncertainties faced by M-Wave may be found in, and the prior discussion is qualified in its entirety by, the Risk Factors contained in the company's filings with the Securities and Exchange Commission including M-Wave's Report on Form 10-K for the period ended December 31, 2003, Forms 10-QSB, and other SEC filings.

Investor contact:

   Aurelius Consulting Group:

   Dave Gentry 407/644-4256

   dave@aurcg.com

   http://www.runonideas.com/

EX-99.2 BYLAWS

M-WAVE ANNOUNCES STRATEGIC ACQUISITION

PURCHASING ASSETS OF JAYCO VENTURES, INC. 

Management Forecasts Revenue to Nearly Double in 2005 as Company

Enters the High-Growth Direct Broadcasting Satellite Components Market

WEST CHICAGO, IL.-- February 28, 2005 --M-Wave, Inc. (NASDAQsc: “MWAV”), a supply chain services and virtual distributor of printed circuit boards and custom electronic components sourced domestically and from Asia announced today the acquisition of substantially all the assets of Jayco Ventures Inc. [www.jviparts.com]  (“JVI”) for approximately $1.4 million.  

M-Wave, Inc. forecasts its revenues of $17.4 million (unaudited) in 2004 that may rise to approximately $34.6 million for 2005, or nearly double, with the addition of 10 months of JVI projected revenues approximately $15.3 million.  

Concurrently with the acquisition, M-Wave will split into two operating units.  The Company’s existing printed circuit board and related custom component business will become known as M-Wave EMG [Electro-Mechanical Group] under its newly named divisional president, Bob Duke, M-Wave’s current VP of Sales and Marketing.

JVI assets will be operated by the newly-formed subsidiary of M-Wave, Inc., M-Wave DBS [Digital Broadband Services], which acquired JVI, and will do business as JVI Technologies under newly named president Jason Cohen who founded JVI.  Mr. Cohen and Joshua Blake, formerly EVP, directing engineering at JVI, who was named executive vice president of operations for the new company, have been given three year employment contracts with M-Wave DBS that provide base compensation, incentive pay based on revenue increases annually and five year stock options granted by M-Wave, Inc. under its 2003 Stock Incentive Plan, with exercise at current market rate.

“This is what we’ve been saying to our shareholders and the public for some time, when we stated that M-Wave would grow inorganically in 2005. We were indeed fortunate to find an acquisition where the blending of customers, employees, product, and services fit so well,” commented Jim Mayer, M-Wave’s Chief Executive Officer.

Since the inception of Direct Broadcasting Satellite industry (“DBS”) in 1991, JVI provided a wide range of mid-priced products to the rapidly growing home and commercial installation industry, and responded to the constant technological demands by “virtually” manufacturing proprietary connective, signal splitting and attenuation parts domestically or in Asia, including TrunkLine Millenium™ and JVI’s branded products. The company’s management has, for over 10 years, been directly involved developing the industry standards from residential to commercial SMATV (Head end), MDU and L-Band installations. JVI products meet or exceed the specifications required by DIRECTV®, DISH NETWORK®, SKY®, STAR CHOICE®, and many other global satellite providers.

“We are really positive about JVI’s products and that their team fits so well with our existing business model and that together we can grow and diversify our product lines significantly through global sourcing and virtual distribution in exciting growth industries like Satellite. Our existing experience in broadband and telecom fit very nicely with what Jason and Josh bring to us,” stated Joe Turek, M-Wave, Inc. President and Chief Operating Officer.

Further commenting on the acquisition, Jason Cohen, JVI’s former principal stated, "I am very excited about what M-Wave brings to the Satellite Industry. They have a fresh approach to supply chain management that could change the market when combined with our proven product offerings that allow customers to work through annual forecast purchasing and strategic stocking agreements. We look forward to being a part of the New Wave team.” He further added, “M-Wave’s prowess in Asian markets and our joint engineering capabilities will no doubt lead to exciting new products for our customers and ultimately deliver value for the Company’s stakeholders.”

 “We have forecasted our pre-acquisition revenues growing to approximately $19.1 million in 2005 with operating income of approximately $200,000-250,000. But taking into account 10 months of projected, combined operations for both the DBS and the EMG units, we now estimate approximately $34.6 million in revenues, and operating income approximately $400,000-500,000 for 2005,” reported CEO Jim Mayer.

About M-Wave Inc.

Established in 1988 and headquartered in the Chicago suburb of West Chicago, M-Wave is a value-added service provider of high performance circuit boards and a virtual distributor of custom and engineered electronic components imported on behalf of middle market OEM’s and CM’s. The company's products are used in a wide range of telecommunications and industrial electronics products.  M-Wave services customers in a variety of industries spanning warning devices to irrigation equipment and wireless infrastructure in the telecom sector to components found in consumer products. It additionally offers supply chain services and financing for its middle market customers including strategic stocking, in-plant stores, third-party logistics, consignments and agency procurement programs both on a domestic and international basis.  The company trades on the NASDAQ Small Cap market under the symbol MWAV. M-Wave's webs ite is located at www.mwav.com. M-Wave DBS, Inc. doing business as JVI Technologies can be found at www.jviparts.com.

The discussion above contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements by their nature involve substantial risks and uncertainties as described by M-Wave's periodic filings. Actual results may differ materially depending on a variety of factors, including, but not limited to the following: the achievement of M-Wave's projected operating results, the achievement of efficient volume production and related sales revenue, the ability to integrate acquired companies into M-Wave’s existing business, and the ability of M-Wave to identify and successfully pursue other business opportunities.  Additional information with respect to the risks and uncertainties faced by M-Wave may be found in, and the prior discussion is qualified in its entirety by, t he Risk Factors contained in the company's filings with the Securities and Exchange Commission including M-Wave's Report on Form 10-K for the period ended December 31, 2003, Forms 10-QSB, and other SEC filings.

Investor contact:

   Aurelius Consulting Group:

   Dave Gentry 407/644-4256

   dave@aurcg.com

   http://www.runonideas.com/