As Filed with the Securities and Exchange Commission on September 21, 2005
Registration No. 333-127222
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Convera Corporation
(Exact name of registrant as specified in its charter)
Delaware 54-1987541
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1921 Gallows Road, Suite 200
Vienna, Virginia 22182
(703) 761-3700
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
_________________________________________________
Patrick C. Condo
President and Chief Executive Officer
Convera Corporation
1921 Gallows Road, Suite 200
Vienna, Virginia 22182
(703) 761-3700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
_________________________________________________
Copy to:
Stephen M. Davis, Esq.
Heller Ehrman LLP
Times Square Tower, 7 Times Square
New York, New York 10036
(212) 847-8798
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box.|_|
===================================================================================================================================
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered Offering Price Per Aggregate Registration Fee
Share (1) Offering Price (1)
- ---------------------------------- --------------- --------------------- ------------------------- --------------------------------
- ---------------------------------- --------------- --------------------- ------------------------- --------------------------------
Common Stock 5,555,556 $9.41 $52,277,782 $6,154(2)
- ---------------------------------- --------------- --------------------- ------------------------- --------------------------------
(1)Estimated solely for the purpose of computing the registration fee required pursuant to Section 6(b) of the
Securities Act and computed pursuant to Rule 457(c) of the Securities Act, based on the average of the high and low
prices of the Common Stock on August 1, 2005 as reported on the Nasdaq National Market.
(2) Previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS
EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO
SAID SECTION 8(a), MAY DETERMINE.
===================================================================================================================================
The information in this prospectus is not complete and may be changed. The
selling stockholder may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities, and is not soliciting an
offer to buy these securities, in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION DATED SEPTEMBER 21, 2005
PRELIMINARY PROSPECTUS
5,555,556 Shares of Common Stock
par value $0.01
Convera Corporation
_____________________
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using the "shelf" registration process. The
selling stockholder listed on page 11 may offer and resell up to an aggregate of
5,555,556 shares of our common stock under this prospectus from time to time.
We will not receive any of the proceeds from the offer and sale of the shares.
We will bear the costs relating to the registration of these shares.
Our common stock currently trades on the NASDAQ National Market under the symbol
"CNVR".
See "Risk Factors" beginning on page 3 to read about risks that you should
consider before buying shares of our common stock.
The Securities and Exchange Commission may take the view that, under certain
circumstances, the selling stockholder and any broker-dealers that participate
with the selling stockholder in the distribution of the shares may be deemed to
be "underwriters" within the meaning of the Securities Act of 1933, as amended,
which we refer to as the Securities Act. Commissions, discounts, or concessions
received by any such broker-dealer or agent may be deemed to be underwriting
commissions under the Securities Act.
Neither the Securities and Exchange Commission nor any other regulatory body has
approved or disapproved these securities or passed upon the adequacy or accuracy
of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is September__, 2005
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION..........................................1
SUMMARY......................................................................2
RISK FACTORS.................................................................3
USE OF PROCEEDS.............................................................10
SELLING STOCKHOLDER.........................................................10
PLAN OF DISTRIBUTION........................................................11
LEGAL MATTERS...............................................................13
EXPERTS.....................................................................13
You should rely only on the information contained or incorporated by reference
in this prospectus. We have not authorized any person to provide you with
information that differs from what is contained or incorporated by reference in
this prospectus. If any person does provide you with information that differs
from what is contained or incorporated by reference in this prospectus, you
should not rely on it. This prospectus is not an offer to sell or the
solicitation of an offer to buy any securities other than the securities to
which it relates, nor an offer or solicitation in any jurisdiction where offers
or sales are not permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, even though this prospectus may
be delivered or shares may be sold under this prospectus at a later date.
WHERE YOU CAN FIND MORE INFORMATION
We are a reporting company and file annual, quarterly and current reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy these reports, proxy statements and other information at
the Securities and Exchange Commission's public reference room at 100 F Street,
N. E., Washington, D.C. 20549. You can request copies of these documents by
writing to the Securities and Exchange Commission and paying a fee for the
copying cost. Please call the Securities and Exchange Commission at
1-800-SEC-0330 for more information about the operation of the public reference
room. Our Securities and Exchange Commission filings are also available at the
Securities and Exchange Commission's Web site at "http://www.sec.gov." In
addition, you can read and copy our Securities and Exchange Commission filings
at the office of the National Association of Securities Dealers, Inc. at 1735 K
Street, Washington, D.C. 20006.
The Securities and Exchange Commission allows us to "incorporate by reference"
information that we file with it, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is an important part of this prospectus, and
information that we file later with the Securities and Exchange Commission will
automatically update and supersede this information. Further, all filings we
make under the Securities Exchange Act of 1934, which we refer to as the
Exchange Act, after the date of the initial registration statement and prior to
effectiveness of the registration statement shall be deemed to be incorporated
by reference into this prospectus. We incorporate by reference the documents
listed below and any future filings we make with the Securities and Exchange
Commission under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act:
1. Our Annual Report on Form 10-K for the year ended January 31, 2005;
2. Our Quarterly Report on Form 10-Q for the quarter ended April 30,
2005;
3. Our Quarterly Report on Form 10-Q for the quarter ended July 31, 2005;
4. Our Current Report on Form 8-K dated March 2, 2005, as filed on March
2, 2005;
5. Our Current Report on Form 8-K dated March 22, 2005, as filed on March
28, 2005;
6. Our Current Report on Form 8-K dated May 25, 2005, as filed on May 26,
2005;
7. Our Current Report on Form 8-K dated June 1, 2005, as filed on June 2,
2005;
8. Our Current Report on Form 8-K dated July 1, 2005, as filed on July 5,
2005;
9. Our Current Report on Form 8-K dated July 29, 2005, as filed on August
4, 2005;
10. Our Current Report on Form 8-K dated August 24, 2005, as filed on
August 24, 2005;
11. Our Definitive Proxy Statement dated May 31, 2005 filed in connection
with our 2005 Annual Meeting of Stockholders;
12. The description of our common stock set forth in our Registration
Statement on Form 8-A, filed on November 21, 2000.
We will provide to you at no cost a copy of any and all of the information
incorporated by reference into the registration statement of which this
prospectus is a part. You may make a request for copies of this information in
writing or by telephone. Requests should be directed to:
Convera Corporation
Attention: Chief Financial Officer
1921 Gallows Road, Suite 200
Vienna, Virginia 22182
(703) 761-3700
1
SUMMARY
This prospectus contains forward looking statements which involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward looking statements as a result of certain factors appearing
under "Risk Factors" and elsewhere in this prospectus.
The following summary does not contain all the information that may be important
to you. You should read the entire prospectus, including the financial
statements and other information incorporated by reference in this prospectus,
before making an investment decision.
We design, develop, market, implement and support enterprise search and
categorization software solutions that enable a broad range of mission critical
applications within government agencies and commercial enterprises. These
applications include knowledge management, enterprise portals, intelligence
gathering and analysis, safety and national security, law enforcement, research
and discovery, regulatory compliance and customer service. We believe our
flagship enterprise solution, RetrievalWare, offers customers the ability to
manage vast stores of unstructured information by providing highly scalable,
fast, accurate and secure search capabilities across more than 200 forms of
text, video, image and audio information, in more than 50 languages. We also
offer professional services for our software solutions to ensure our products
integrate seamlessly into customer environments. Training, consulting and
maintenance services are also provided to facilitate optimal use of our
technologies.
We maintain a portfolio of patented and proprietary technologies. Our core
technologies include: advanced computational linguistics and semantic networking
that leverage lexical knowledge using built-in knowledge bases to search not
only for specific word meanings, but also for related terms and concepts;
Adaptive Pattern Recognition Processing that identifies patterns in digital
data, providing the capability to build content-based analysis and retrieval
applications for any type of digital information; and intelligent real-time
video analysis that detects scene changes as they occur. Our latest software
release, RetrievalWare 8, includes technical advancements such as
categorization, dynamic classification, profiling and distributed indexing
capabilities. In addition, we have embarked on an advanced web indexing
development effort focused on applying portions of our existing core technology
to also locate contextually relevant information on the World Wide Web. This
next-generation search technology achieved its initial development milestone in
October 2004 by creating an "alpha" stage, search platform for open-source Web
content. We have since advanced our efforts to "beta" stage as the technology
presently contains more than three billion documents in the index. We have
developed this search technology in order to add structure to the Web through
the use of proprietary taxonomies and ontologies, semantic analysis and deep
knowledge resources capable of providing end-users with more relevant search
results. The technology also supports complex queries, offers built in video and
image search, and provides geo-locational data. The offering may be used in
concert with our RetrievalWare solution or with a customer's existing internal
application to create an integrated portal offering "blended" results from both
Intranet and open-source searches. We have also entered into a hosting facility
agreement with AT&T for this service offering in anticipation of a commercial
launch during fiscal 2006.
We are a Delaware corporation, and we were established through the combination
of the former Excalibur Technologies Corporation and Intel Corporation's
Interactive Media Services division on December 21, 2000. Our principal
corporate offices are located at 1921 Gallows Road, Suite 200, Vienna, Virgina
22182. Our telephone number at that address is: (703) 761-3700. Our website
address is www.convera.com. Information contained on our website is not a part
of this prospectus.
2
FORWARD LOOKING STATEMENTS
This prospectus contains forward looking statements. These statements relate to
future events or our future financial performance. We have identified forward
looking statements in this prospectus using words such as "anticipates,"
"believes," "could," "estimates," "expects," "intends," "may," "plans,"
"potential," "predicts," "should," or "will" or the negative of such terms or
other comparable terminology. These statements are based on our beliefs as well
as assumptions we made using information currently available to us. Because
these statements reflect our current views concerning future events, these
statements involve risks, uncertainties, and assumptions. These risks,
uncertainties, assumptions and other factors, including the risks outlined under
"Risk Factors," that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different from future
results, levels of actual activity, performance or achievements expressed or
implied by such forward looking statements.
Although we believe that the expectations reflected in the forward looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of such statements. We
are under no duty to update any of the forward looking statements after the date
of this prospectus to conform such statements to actual results, unless required
by law.
RISK FACTORS
An investment in our common stock involves a high degree of risk. We operate in
a dynamic and rapidly changing industry that involves numerous risks and
uncertainties. Before purchasing these securities, you should carefully consider
the following risk factors, as well as other information contained in this
prospectus or incorporated by reference into this prospectus, in evaluating an
investment in the securities offered by this prospectus. The risks and
uncertainties described below are not the only ones we face. Other risks and
uncertainties, including those that we do not currently consider material, may
impair our business. If any of the risks discussed below actually occur, our
business, financial condition, operating results or cash flows could be
materially adversely affected. This could cause the trading price of our common
stock to decline, and you may lose all or part of your investment.
We have had a history of operating losses and may incur future losses; if
we are unable to achieve profitability, our stock price will likely suffer and
steps which we may take to reduce our expenditures or preserve our existing
funds could harm our sales and financial results.
We believe that our future profitability will depend on our ability to
effectively market existing and newly developed software products through a
balanced multi-channel distribution network and on our ability to commercially
launch a Web indexing initiative. We cannot assure that our costs to develop,
introduce and promote enhanced or new products will not exceed our expectations,
or that these products will generate revenues sufficient to offset these
expenses. We have operated at a loss for each of the past three fiscal years.
For the fiscal years ended January 31, 2005, 2004, and 2003, our net losses were
approximately $19.8 million, $18.1 million, and $29.1 million, respectively.
These losses include our expenditures associated with selling software products
and further developing software products during these years. We plan to continue
to invest in these programs and, accordingly, we cannot assure that our
operating losses will not continue in the future. Continued losses could reduce
our liquidity and negatively affect our stock price. As of July 31, 2005, our
balances of cash, cash equivalents and short-term investments were approximately
$45.0 million. We believe our current balance of cash, cash equivalents and
short-term investments, combined with any funds generated from our operations
and available from credit facilities will be sufficient to fund our operations
for at least the next twelve months based upon our estimates of funds required
to operate our business during such period. However, if, at any point, due to
continued losses, we cease to have sufficient funds to continue our operations,
3
we would need to decrease our expenditures including those associated with the
Web indexing initiative. As a result of any decrease in expenditures, we may
need to terminate employees, curtail research and development programs and take
other steps to reduce the amount of funds we expend in our operations. This
could have a negative effect on our ability to develop product improvements or
new products that will achieve market acceptance. This could in turn, have a
negative impact on our sales and financial results.
We experience quarterly fluctuations in our operating results, which may
adversely affect our stock price
Our quarterly operating results have varied substantially in the past. For
example, our total revenues for our four fiscal quarters ending July 31, 2005
were $7.8 million, $5.1 million, $6.3 million and $6.1 million, respectively,
and the price per share of our common stock during those quarters ranged from
$2.17 to $8.83. Our quarterly operating results are likely to continue to vary
substantially from quarter to quarter in the future, due to a variety of factors
including the following:
o the downturn in capital spending by customers as a result of general
economic conditions;
o reduced customer demand for our products and services;
o the delay or deferral of customer implementations;
o the budget cycles of our customers;
o seasonality of individual customer buying patterns;
o an increase in competition in the software industry;
o the size and timing of individual transactions;
o the timing of new software introductions and software enhancements by
us and our competitors;
o changes in operating expenses and personnel;
o changes in accounting principles, such as a requirement that stock
options be included in compensation, which would increase our
compensation expense and have a negative effect on earnings;
o the overall trend towards industry consolidation; and
o changes in general economic and geo-political conditions and specific
economic conditions in the computer and software industries.
In particular, our period-to-period operating results have historically been
significantly dependent upon the timing of the closing of significant license
agreements. Because purchasing our software products often requires significant
capital investment, our customers may defer or decide not to make their
purchases. This means sales can involve long sales cycles of six months or more.
We derive a significant portion of our revenues from sales to agencies of the
U.S. Government, and therefore, the budget cycle of the U.S. Government impacts
our total revenues. For example, revenues derived from one customer accounted
for approximately 19% of our total revenues for the first six months of fiscal
year 2006. We have historically recorded a significant portion of our total
quarterly license revenues in the third month of a quarter, with a concentration
of these revenues occurring in the last half of that third month. We expect
these revenue patterns to continue. Despite these uncertainties in our revenue
4
patterns, we base our operating expenses upon anticipated revenue levels, and we
incur these expenses on an approximately ratable basis throughout a quarter. As
a result, if expected revenues are deferred or otherwise not realized in a
quarter for any reason, our business, operating results and financial condition
would be materially adversely affected.
In addition, steps which we have taken or may take in the future to control
operating expenses may hamper our development, sales and marketing efforts and,
ultimately, our operating results. For instance, we aligned our resources
through a number of restructurings during fiscal years 2002 through 2005 to
attempt to focus on markets that have been consistently successful for us. These
restructurings were intended to streamline our professional services, customer
support and sales organizations by reducing the number of our employees, improve
the productivity of each of those organizations and reduce management personnel
and other overhead costs in our marketing, development and administrative
organizations. However, the loss of key personnel in such restructurings and any
severance and other costs incurred in such restructurings could negatively
affect our quarterly operating results and adversely affect our stock price.
We derive a significant portion of our revenues from sales to U.S.
Government agencies which are subject to budget cuts and, consequently, a change
in the size and timing of our U.S. Government contracts may materially affect
our operating results.
For the quarter ended July 31, 2005, total revenues derived from sales to
agencies of the U.S. Government were approximately $5.5 million, representing
71% of total revenues. For the quarter ended July 31, 2004, revenues derived
from sales to agencies of the U.S. Government were approximately $2.4 million,
or 47% of total revenues. While the U.S. Government has at times increased
spending on defense, information systems and homeland security initiatives, some
government agencies have realized budget reductions which may adversely impact
their purchasing decisions and timing. We are actively pursuing several
opportunities for business with certain U.S. Government agencies. While the
nature and timing of these opportunities, as well as the ability to complete
business transactions related to these opportunities, is subject to certain
risks and uncertainties, successful completion of any of these transactions
could have a material impact on our future operating results and financial
position. There can be no assurance that we will complete any of these potential
transactions.
We depend on international sales, particularly in the United Kingdom, and
any economic downturn, changes in laws, changes in currency exchange rates or
political unrest in the United Kingdom or in other countries in which we sell
our products could have a material adverse effect on our business.
For the quarter ended July 31, 2005, total revenues derived from international
sales were approximately $1.6 million, representing approximately 20% of total
revenues. For the quarter ended July 31, 2004, revenues derived from
international sales were approximately $1.3 million, representing approximately
26% of total revenues. Most of our international sales are in the United
Kingdom. Our international operations have historically exposed us to longer
accounts receivable and payment cycles and fluctuations in currency exchange
rates. International sales are made mostly from our U.K. foreign subsidiary and
are denominated in British pounds or EUROs. As of July 31, 2005, approximately
15% and 6% of our total consolidated accounts receivable were denominated in
British pounds or EUROs, respectively. Additionally, our exposure to foreign
exchange rate fluctuations arises in part from intercompany accounts in which
royalties on our foreign subsidiary's sales are charged to our foreign
subsidiary and recorded as intercompany receivables on our books. We are also
exposed to foreign exchange rate fluctuations as the financial results of our
foreign subsidiary are translated into U.S. dollars in consolidation. Since
exchange rates vary, those results when translated may vary from expectations
and adversely impact overall expected profitability.
Our international operations expose us to a variety of other risks that could
seriously impede our financial condition and growth. These risks include the
following:
5
o potentially adverse tax consequences;
o difficulties in complying with regulatory requirements and standards;
o trade restrictions and changes in tariffs;
o import and export license requirements and restrictions; and
o uncertainty of the effective protection of our intellectual property
rights in certain foreign countries.
If any of these risks described above materialize, our international sales could
decrease and our foreign operations could suffer.
We are in an extremely competitive market, and if we fail to compete
effectively or respond to rapid technological change, our revenues and market
share will be adversely affected.
Our business environment and the computer software industry in general are
characterized by intense competition, rapid technological changes, changes in
customer requirements and emerging new market segments. Our competitors include
many companies that are larger and more established and have substantially more
resources than we do. Current and potential competitors have established or may
establish cooperative relationships among themselves or with third parties to
increase the ability of their products to address the needs of the markets
served by us. Accordingly, it is possible that new competitors or alliances
among competitors may emerge and rapidly acquire significant market share.
Increased competition may result in price reductions, reduced gross margins and
loss of market share, any of which could have a material adverse effect on our
business, financial condition or results of operations.
In order for our strategy to succeed and to remain competitive, we must leverage
our core technology to develop new product offerings, update existing features
and add new components to our current products such as support for new datatypes
and taxonomies for special vertical markets. These development efforts are
expensive, and we plan to fund these developments with our existing capital
resources, and other sources, such as equity issuances and borrowings, which may
be available to us. If these developments do not generate substantial revenues,
our business and results of operations will be adversely affected. We cannot
assure that we will successfully develop any new products, complete them on a
timely basis or at all, achieve market acceptance or generate significant
revenues.
We design our products to work with certain systems and changes to such
systems may render our products incompatible with these systems, and we may be
unable to sell our products.
Our ability to sell our products depends on the compatibility of our products
with other software and hardware products. These products may change or new
products may appear that are incompatible with our products. If we fail to adapt
our products to remain compatible with other vendors' software and hardware
products or fail to adapt our products as quickly as our competitors, we may be
unable to sell our products.
Our software products are complex and may contain errors that could damage
our reputation and decrease sales.
Our complex software products may contain errors that may be detected at any
point in the products' life cycles. We cannot assure that, despite our testing
and quality assurance efforts and similar efforts by current and potential
customers, errors will not be found. The discovery of an error may result in
loss of or delay in market acceptance and sales.
We depend on proprietary technology licensed from third parties. If we lose
these licenses, it could delay shipments of products incorporating this
technology and could be costly.
6
Our products use some of the technology that we license from third parties,
generally on a nonexclusive basis. We believe that there are alternative sources
for each of the material components of technology we license from third parties.
However, the termination of any of these licenses, or the failure of the
third-party licensors to adequately maintain or update their products, could
delay our ability to ship these products while we seek to implement technology
offered by alternative sources. Any required replacement licenses could prove
costly. Also, any delay, to the extent it becomes extended or occurs at or near
the end of a fiscal quarter, could harm our quarterly results of operations.
While it may be necessary or desirable in the future to obtain other licenses
relating to one or more of our products or relating to current or future
technologies, we cannot assure that we will be able to do so on commercially
reasonable terms or at all.
Because of the technical nature of our business, our intellectual property
is extremely important to our business, and adverse changes to our intellectual
property would harm our competitive position.
We believe that our success depends, in part, on our ability to protect our
proprietary rights and technology. Historically, we have relied on a combination
of copyright, patents, trademark and trade secret laws, employee confidentiality
and invention assignment agreements, distribution and OEM software protection
agreements and other methods to safeguard our technology and software products.
Risks associated with our intellectual property, include the following:
o pending patent applications may not be issued;
o intellectual property laws may not protect our intellectual property
rights;
o third parties may challenge, invalidate, or circumvent any patent
issued to us;
o rights granted under patents issued to us may not provide competitive
advantages to us;
o unauthorized parties may attempt to obtain and use information that we
regard as proprietary despite our efforts to protect our proprietary
rights;
o others may independently develop similar technology or design around
any patents issued to us; and
o effective protection of intellectual property rights may be limited or
unavailable in some foreign countries in which we operate.
We depend on our key personnel, the loss of whom would adversely affect our
business, and we may have difficulty attracting and retaining skilled employees.
Our success depends to a significant degree upon the continued contributions of
our key management, marketing, technical and operational personnel. We generally
do not utilize employment agreements for our key employees. The loss of the
services of one or more key employees could have a material adverse effect on
our operating results. We also believe that our future success will depend in
large part upon our ability to attract and retain additional highly skilled
management, technical, marketing, product development, operational personnel and
consultants. Competition for such personnel, particularly software developers,
professional service consultants and other technical personnel, is intense, and
pay scales in the software industry have significantly increased. There can be
no assurance that we will be successful in attracting and retaining such
personnel.
We may not be able to use net operating loss carryforwards.
7
As of January 31, 2005, we had net operating loss carryforwards of approximately
$165 million. The deferred tax assets representing the benefits of these
carryforwards have been offset completely by a valuation allowance due to our
lack of an earnings history. The realization of the benefits of these
carryforwards depends on sufficient taxable income in future years. Lack of
future earnings could adversely affect our ability to utilize these
carryforwards. Additionally, past or future changes in our ownership and control
could limit the ability to utilize these carryforwards. Despite the
carryforwards, we may have income tax liability in future years due to the
application of the alternative minimum tax rules of the United States Internal
Revenue Code.
While we believe we will have sufficient funds for our operations for at
least the next twelve months, it is possible that we will need additional
capital during or after that time. Additional capital may not be available on
acceptable terms, or at all, and if we do not receive any necessary additional
capital, it could harm our financial condition and future prospects.
As of July 31, 2005, our balances of cash, cash equivalents and short-term
investments were approximately $45.0 million. We believe our current balance of
cash, cash equivalents and short-term investments, combined with any funds
generated from our operations and available from credit facilities will be
sufficient to meet our working capital and capital expenditure requirements for
at least the next twelve months based upon our estimates of funds required to
operate our business during such period. However, during or after that time, we
may need to raise additional funds for the following purposes:
o fund our operations, including sales, marketing and research and
development programs including the Web initiative;
o fund any growth we experience;
o enhance and/or expand the range of products and services we offer; for
example, we may upgrade our existing products or develop new products,
including products capable of searching and/or indexing the Web, and
we may expand our training and other professional services for our
products;
o increase our promotional and marketing activities, or
o respond to competitive pressures and/or perceived opportunities, such
as investment, acquisition and international expansion activities.
We cannot reassure our investors that if we need additional capital that it will
be available, and if so, on terms beneficial to us. Historically, we have
obtained external financing primarily from sales of our common stock. To the
extent we raise additional capital by issuing equity securities, our
shareholders may experience substantial dilution. If we are unable to obtain
additional capital, we may then attempt to preserve our available resources by
various methods including deferring the creation or satisfaction of commitments,
reducing expenditures on our research and development programs or otherwise
scaling back our operations. If we were unable to raise such additional capital
or defer certain costs as described above, that inability would have an adverse
effect on our financial position, results of operations and prospects.
Our stock price may fluctuate which may make it difficult to resell shares
of our stock.
The market price of our common stock has been highly volatile. For example, in
the first six months of fiscal year 2006, the market price per share of our
common stock ranged from $3.92 to $8.83. This volatility may adversely effect
the price of our common stock, and our stockholders may not be able to resell
their shares of common stock following periods of volatility because of the
market's adverse reaction to this volatility. We anticipate that this
8
volatility, which frequently affects the stock of software companies, will
continue. Factors that could cause such volatility include:
o future announcements concerning us or our competitors;
o quarterly variations in our operating results;
o actual or anticipated announcements of technical innovations or new
product developments by us or our competitors;
o general conditions in our industry;
o developments concerning litigation; and
o worldwide economic and financial conditions.
On occasion, the equity markets, and in particular the markets for software
companies, have experienced significant price and volume fluctuations. These
fluctuations have affected the market price for many companies' securities even
though the fluctuations are often unrelated to the companies' operating
performance.
Our amended and restated certificate of incorporation, bylaws, ownership
and Delaware law contain provisions that could discourage a third party from
acquiring us and consequently decrease the market value of an investment in our
stock.
Some provisions of our amended and restated certificate of incorporation and
bylaws and of Delaware law could delay or prevent a change of control or changes
in our management that a stockholder might consider favorable. Any delay or
prevention of a change of control or change in management could cause the market
price of our common stock to decline.
Allen Holding Inc. and related parties exercise voting control over a
significant percentage of our shares and, our other shareholders may not have an
effective say in any matters upon which shareholders vote.
Allen Holding Inc., together with Allen & Company Incorporated, Herbert A. Allen
and certain related parties, beneficially own approximately 49% of our voting
power, and would therefore be able to effectively control the outcome of matters
requiring a stockholder vote. These matters could include offers to acquire us
and elections of directors. Allen Holding, Inc., Mr. Allen and Allen & Company
may have interests which are different than the interests of our other
stockholders.
We have not yet been required to perform an assessment of our internal
control over financial reporting under Section 404 of the Sarbanes-Oxley Act of
2002 and we may, during our process, encounter delays in such process or
deficiencies with respect to certain internal control practices.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we will be required,
beginning with our fiscal year ending January 31, 2006, to include in our annual
report management's assessment of the effectiveness of our internal control over
financial reporting and our audited financial statements as of the end of our
prior fiscal year. Furthermore, our independent registered public accounting
firm will be required to express an opinion on management's assessment and an
opinion on the effectiveness of our internal control over financial reporting
based on its audit. We are in the initial stages of completing the documentation
of our internal controls. Due to the number of controls to be documented and
examined, the complexity of the project, as well as the subjectivity involved in
determining effectiveness of controls, we cannot be certain that we will
complete our Section 404 compliance work on a timely basis or, if we do, that
all of our internal controls will be considered effective. In addition, the
guidelines for the evaluation and attestation of internal control systems have
only recently been formalized, and the evaluation and attestation processes are
9
new and untested. Therefore, we can give no assurances that our systems will
satisfy the new regulatory requirements. If we fail to timely complete our
Section 404 compliance work, including this assessment, or if our independent
public accounting firm cannot timely attest to our assessment, we could be
subject to regulatory sanctions and a loss of public confidence in our internal
controls. Also, any failure to implement required new or improved controls, or
difficulties encountered in their implementation, could harm our operating
results or commercial relationships or cause us to fail to timely meet our
regulatory reporting obligations. Any of these failures could have a negative
effect on the trading price of our stock.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares offered and
sold pursuant to this prospectus.
The selling stockholder will not pay any of the expenses that are incurred in
connection with the registration of the shares, but it will pay all commissions,
discounts and any other compensation to any securities broker dealers through
whom it sells any of the shares.
SELLING STOCKHOLDER
The following table sets forth the name of the selling stockholder, the
aggregate number of shares of common stock beneficially owned by the selling
stockholder as of July 1, 2005, and the aggregate number of shares of common
stock that the selling stockholder may offer and sell pursuant to this
prospectus. Because the selling stockholder may offer all or a portion of the
shares of common stock offered by this prospectus at any time and from time to
time after the date hereof, no estimate can be made of the number of shares that
the selling stockholder may retain upon completion of this offering. However,
assuming all of the shares offered by this prospectus are sold by the selling
stockholder then, after completion of this offering, the selling stockholder
will not own more than one percent of the shares of common stock outstanding.
We are registering all of the shares of common stock offered for sale pursuant
to this prospectus as required by certain registration rights obligations.
In the following table, we have calculated shares of common stock beneficially
owned based upon the number of shares of common stock outstanding on July 1,
2005, together with options that are exercisable within 60 days of July 1, 2005
for the selling stockholder. Under the rules of the Securities and Exchange
Commission, beneficial ownership includes shares over which the named
stockholder exercises voting and/or investment power. Unless otherwise indicated
in the footnotes below, we believe that the persons and entities named in the
table have sole voting and investment power with respect to all shares
beneficially owned, subject to applicable community property laws. The
information with respect to beneficial ownership of common stock held by each
person is based upon record ownership data provided by our transfer agent,
information as supplied or confirmed by the selling stockholder, based upon
statements filed with the Securities and Exchange Commission or based upon our
actual knowledge.
10
Within the past three years, the selling stockholder has not held any position
or office with us or any of our affiliates or entered into a material
relationship with us or any of our affiliates.
Number of Shares
Beneficially Owned
(Excluding Shares Number of Shares Offered
Name Offered Hereby) Hereby
Legg Mason Opportunity Trust (1) 5,555,556 5,555,556
_________________________
(1) The selling stockholder is a series of Legg Mason Investment Trust,
Inc., an investment company registered under the Investment Company
Act of 1940. LMM, LLC acts as the investment manager for the selling
stockholder pursuant to an investment management agreement and
exercises the voting and dispositive powers with respect to the shares
to be offered for resale by the selling stockholder. LMM, LLC is an
investment adviser registered under the Investment Advisers Act of
1940. LMM, LLC is a subsidiary of Legg Mason, Inc., a publicly traded
company. LMM, LLC is not a registered broker-dealer; however, Legg
Mason, Inc. owns several broker-dealers. The selling stockholder is a
series of an investment company; it is not a broker-dealer, and it
acquired the shares in the ordinary course of its business and, at the
time of acquisition, did not have any understandings or arrangements
with any person, either directly or indirectly, to distribute the
shares.
The selling stockholder acquired the 5,555,556 shares of common stock included
in the table above at a price of $4.50 per share in a private placement which
closed on July 1, 2005. All of these shares of common stock were issued and sold
pursuant to an exemption from the registration requirements of the Securities
Act as provided by Rule 506 of Regulation D promulgated under the Securities
Act. We also paid Allen & Company LLC a fee as compensation for services as a
financial advisor to us in connection with the private placement.
PLAN OF DISTRIBUTION
We are registering the shares of common stock offered for sale by this
prospectus on behalf of the selling stockholder. As used in this section,
"selling stockholder" includes donees, pledgees, distributees, transferees or
other successors-in-interest, including, without limitation, their respective
affiliates, members and limited or general partners, all of which are referred
to as a group below as transferees, or certain counterparties to derivative
transactions with the selling stockholder or transferees. The selling
stockholder will act independently of us in making decisions with respect to the
timing, manner and size of each sale. We will pay all costs, expenses and fees
in connection with the registration of the shares. The selling stockholder will
pay all brokerage commissions, underwriting discounts, commissions, transfer
taxes and other similar selling expenses, if any, associated with the sale of
the shares of common stock by it.
An aggregate of 5,555,556 shares of common stock were originally issued to and
purchased by the selling stockholder at a price of $4.50 per share in a private
placement which closed on July 1, 2005. All of these shares of common stock were
issued and sold pursuant to an exemption from the registration requirements of
the Securities Act as provided by Rule 506 of Regulation D promulgated under the
Securities Act. We also paid Allen & Company LLC a fee as compensation for
services as a financial advisor to us.
Shares of common stock may be sold by the selling stockholder from time to time
in one or more types of transactions (which may include block transactions) on
The Nasdaq National Market or on any other market on which our common stock may
from time to time be trading or quoted at the time of sale, in the
over-the-counter market, in privately negotiated transactions, through put or
call options transactions relating to the shares, through short sales of such
shares, or a combination of such methods of sale, at market prices prevailing at
the time of sale, fixed prices, varying prices determined at the time of sale or
at negotiated prices. The selling stockholder will have the sole discretion not
to accept, in whole or in part, any purchase offer or make any sale of shares if
it deems the purchase price to be unsatisfactory at any particular time. Such
11
transactions may or may not involve brokers or dealers. To the best of our
knowledge, the selling stockholder has not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of its securities, nor is there an underwriter or coordinating broker
acting in connection with the proposed sale of shares of common stock offered by
this prospectus; however, the selling stockholder may enter into agreements,
understandings or arrangements with an underwriter or broker-dealer regarding
the sale of its shares in the future.
The selling stockholder may effect such transactions by selling shares of common
stock directly to purchasers or to or through broker-dealers, which may act as
agents or principals, or other agents. Such broker-dealers or other agents may
receive compensation in the form of discounts, concessions, or commissions from
the selling stockholder and/or the purchasers of shares of common stock for whom
such broker-dealers or other agents may act as agents or to whom they sell as
principal, or both (which compensation as to a particular broker-dealer or other
agent might be in excess of customary commissions). Market makers and block
purchasers purchasing the shares may do so for their own account and at their
own risk. It is possible that the selling stockholder will attempt to sell
shares of common stock in block transactions to market makers or other
purchasers at a price per share which may be below the then market price. There
can be no assurance that all or any part of the shares offered hereby will be
sold by the selling stockholder.
The selling stockholder may enter into hedging transactions with broker-dealers
or other financial institutions with respect to the shares. In connection with
these transactions, broker-dealers or other financial institutions may engage in
short sales of the shares in the course of hedging the positions they assume
with the selling stockholder. In addition, the selling stockholder may enter
into short sales in compliance with applicable law, and in such instances, this
prospectus may be delivered in connection with such short sales and the shares
offered hereby may be used to cover such short sales. The selling stockholder
may also enter into option or other transactions with broker-dealers or other
financial institutions that require the delivery of the shares to the
broker-dealer or other financial institutions, who may then resell or otherwise
transfer the shares. The selling stockholder may also loan or pledge the shares
to a financial institution or a broker-dealer and the financial institution or
the broker-dealer may sell the shares loaned or upon a default the financial
institution or the broker-dealer may effect sales of the pledged shares.
The selling stockholder and any brokers, dealers or agents that participate in
connection with the sale of shares of common stock might be deemed to be
"underwriters" within the meaning of the Securities Act and any commissions
received by such brokers, dealers or agents and any profit on the resale of the
shares sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act. We have agreed
to indemnify the selling stockholder against certain liabilities, including
liabilities arising under the Securities Act. The selling stockholder may agree
to indemnify any agent, dealer, broker-dealer or underwriter that participates
in transactions involving sales of the shares of common stock offered pursuant
to this prospectus against certain liabilities, including liabilities arising
under the Securities Act.
Because the selling stockholder may be deemed to be an "underwriter" within the
meaning of the Securities Act, the selling stockholder will be subject to the
prospectus delivery requirements of the Securities Act and the rules promulgated
thereunder and it may be subject to certain statutory liabilities under the
Securities Act, including, but not limited to, Sections 11, 12 and 17 of the
Securities Act and Rule 10b-5 under the Exchange Act. In addition, the selling
stockholder and any other person participating in the offering will be subject
12
to applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M under the Exchange Act, which may limit the
timing of purchases and sales. These restrictions may affect the marketability
of the common stock and the ability of any person to engage in market-making
activities with respect to the common stock.
Commencing on July 1, 2006, some of the shares of common stock covered by this
prospectus may qualify for resale pursuant to Rule 144 under the Securities Act
and such shares may be sold under Rule 144 rather than under the terms of this
prospectus. In addition, subject to applicable state and foreign laws, the
selling stockholder may sell its common stock outside the United States pursuant
to Rules 903 and 904 of Regulation S under the Securities Act.
To comply with the securities laws of certain jurisdictions, the shares of
common stock offered by this prospectus may need to be offered or sold only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions, the shares of common stock may not be offered or sold unless they
have been registered or qualified for sale or an exemption is available and
complied with.
If the selling stockholder notifies us that any material arrangement has been
entered into with a broker-dealer for the sale of shares of common stock through
a block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker, dealer or underwriter, we will file a supplement to
this prospectus, if required, pursuant to Rule 424(b) under the Securities Act.
In addition, to the extent required, we will amend or supplement this prospectus
to disclose other material arrangements regarding the plan of distribution.
LEGAL MATTERS
For the purpose of this offering, Heller Ehrman LLP, New York, New York is
giving an opinion of the validity of the issuance of the securities offered in
this prospectus.
EXPERTS
Ernst & Young LLP, independent registered public accounting firm, has audited
our consolidated financial statements included in our Annual Report on Form 10-K
for the year ended January 31, 2005, which is incorporated by reference in this
prospectus and elsewhere in this registration statement. Our financial
statements are incorporated by reference in reliance on Ernst & Young's report
given on their authority as experts in accounting and auditing.
13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses to be paid by the
registrant in connection with the sale of the common stock being registered:
Securities and Exchange Commission registration fee...... $ 6,154
Legal fees and expenses.................................. $ 15,000
Accountants' fees and expenses........................... $ 17,000
Miscellaneous ......................................... $ 1,000
Total.................................................... $39,154
The foregoing items, except for the Securities and Exchange Commission
registration fee, are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware General Corporation Law. Section 145(a) of the Delaware General
Corporation Law (the "GCL") provides that a Delaware corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation or enterprise, against expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no cause to believe his or her conduct was unlawful.
Section 145(b) of the GCL provides that a Delaware corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if he or she acted under similar standards,
except that no indemnification may be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his or her duty to the
corporation unless and only to the extent that the court in which such action or
suit was brought shall determine that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to be indemnified for such expenses which the court shall
deem proper.
Section 145 of the GCL further provides that to the extent a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to in subsection (a) and (b) or in the defense of any claim,
issue or matter therein, such officer or director shall be indemnified against
expenses actually and reasonably incurred by him or her in connection therewith;
that indemnification provided for by Section 145 shall not be deemed exclusive
of any other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of a director or
officer of the corporation against any liability asserted against such officer
or director and incurred by him or her in any such capacity or arising out of
his or her status as such, whether or not the corporation would have the power
to indemnify him or her against such liabilities under Section 145.
Certificate of Incorporation and Bylaws. The Registrant's Bylaws provide,
pursuant to Section 145 of the GCL, for indemnification of officers, directors,
employees and agents of the Registrant and persons serving at the request of the
Registrant in such capacities within other business organizations against
certain losses, costs, liabilities and expenses incurred by reason of their
position with the Registrant or such other business organizations. Additionally,
the Bylaws provide for such indemnification to continue as to such persons even
after they have ceased holding their position with the Registrant.
II-1
ITEM 16. EXHIBITS
Exhibit
Number Description of Document
--------- -------------------------------------------------------------
5.1 Opinion of Heller Ehrman LLP.
10.1 Form of Subscription Agreement dated July 1, 2005 (1)
23.1 Consent of Heller Ehrman LLP (Included with 5.1).
23.2 Consent of Ernst & Young LLP.
24.1 Power of Attorney (Included with signature page)(1).
__________
(1) Previously filed as an exhibit to the Registration on Form S-3 (File
no. 333-127222) filed with the Securities and Exchange Commission on
August 5, 2005.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act, may
be permitted to directors, officers, and controlling persons of the registrant
pursuant to the provisions described in Item 15 or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
pursuant to this registration statement: (i) to include any prospectus
required by Section 10(a)(3) of the Securities Act; (ii) to reflect in
the prospectus any facts or events arising after the effective date of
the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; (iii) to include
any material information with respect to the distribution not
previously disclosed in the registration statement or any material
change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the registrant's annual
II-2
report pursuant to section 13(a) or section 15(d) of the Exchange Act that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
The undersigned registrant undertakes that: (1) for purpose of determining any
liability under the Securities Act, the information omitted from the form of
prospectus filed as part of the registration statement in reliance upon Rule
430A and contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of the registration statement as of the time it was declared effective; and
(2) for the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the Town of Vienna, Commonwealth of Virginia, this 20th day of
September, 2005.
CONVERA CORPORATION
By: /s/ PATRICK C. CONDO
Patrick C. Condo
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this report has been
signed below by the following persons on behalf of the registrant in the
capacities and on the dates indicated.
Signature Title Date
/s/ PATRICK C. CONDO President, Chief Executive Officer, September 20, 2005
Patrick C. Condo and Director
(Principal Executive Officer)
/s/ JOHN R. POLCHIN Chief Financial Officer and Secretary September 20, 2005
John R. Polchin (Principal Financial Officer and
Principal Accounting Officer)
/s/ RONALD J. WHITTIER* Chairman of the Board September 20, 2005
Ronald J. Whittier
/s/ HERBERT A. ALLEN* Director September 20, 2005
Herbert A. Allen
/s/ HERBERT A. ALLEN, III* Director September 20, 2005
Herbert A. Allen, III
/s/ STEPHEN D. GREENBERG* Director September 20, 2005
Stephen D. Greenberg
/s/ ELI S. JACOBS* Director September 20, 2005
Eli S. Jacobs
/s/ DONALD R. KEOUGH* Director September 20, 2005
Donald R. Keough
Director September __, 2005
Montgomery C. Meigs
/s/ CARL J. RICKERTSEN* Director September 20, 2005
Carl J. Rickertsen
/s/ JEFFREY WHITE* Director September 20, 2005
Jeffrey White
*By: /s/ Patrick C. Condo
Patrick C. Condo, Attorney-in-fact
II-4
ITEM 16. EXHIBITS
Exhibit
Number Description of Document
--------- -------------------------------------------------------------
5.1 Opinion of Heller Ehrman LLP.
10.1 Form of Subscription Agreement dated July 1, 2005 (1)
23.1 Consent of Heller Ehrman LLP (Included with 5.1).
23.2 Consent of Ernst & Young LLP.
24.1 Power of Attorney (Included with signature page)(1).
__________
(1) Previously filed as an exhibit to the Registration on Form S-3 (File
no. 333-127222) filed with the Securities and Exchange Commission on
August 5, 2005.