EXHIBIT 10.29
PROPOSED FINANCING
OF
ParkerVision
BY READING THE INFORMATION CONTAINED WITHIN THIS DOCUMENT, THE RECIPIENT AGREES
WITH PARKERVISION, INC. AND WELLS FARGO SECURITIES, LLC TO MAINTAIN IN
CONFIDENCE SUCH INFORMATION, TOGETHER WITH ANY OTHER NON-PUBLIC INFORMATION
REGARDING PARKERVISION, INC. OBTAINED FROM PARKERVISION, INC., WELLS FARGO
SECURITIES, LLC OR THEIR AGENTS DURING THE COURSE OF THE PROPOSED FINANCING.
PARKERVISION, INC. AND WELLS FARGO SECURITIES, LLC HAVE CAUSED THESE MATERIALS
TO BE DELIVERED TO YOU IN RELIANCE UPON SUCH AGREEMENT AND UPON RULE
100(B)(2)(II) OF REGULATION FD AS PROMULGATED BY THE SECURITIES AND EXCHANGE
COMMISSION.
[LOGO] Wells Fargo Securities
CONFIDENTIAL
SUMMARY OF TERMS AND CONDITIONS
This Confidential Summary of Terms and Conditions is not intended to be
contractually binding, other than the section entitled "Confidential
Information," and is subject in all respects (other than with respect to such
section) to the execution of the Stock Purchase Agreement.
Issuer:................................. ParkerVision, Inc., a Florida corporation (the "Company").
Securities Offered:..................... Up to 2,880,000 shares (the "Shares") of common stock, par
value $.01 per share (the "Common Stock"), and Warrants (the
"Warrants") to purchase up to 720,000 shares of Common Stock
(the "Warrant Shares"), in each case subject to adjustment by the
Company (the "Offering").
Pre- and Post-Offering Capitalization Type Pre-Financing Post-Financing
of the Company:......................... ---- Shares(1) Shares(2)
------ ------
Common Stock 18,007,574 20,887,574
Stock Options and Warrants(3) 6,620,603 7,340,603
Total 24,628,177 28,228,177
(1) As of December 31, 2004.
(2) Assumes 2,880,000 Shares and Warrants to purchase
720,000 Warrant Shares sold by the Company in the
Offering.
(3) Includes outstanding options that were vested as
of or vest within 60 days after December 31, 2004 but
excludes unvested options covering 1,198,099 shares.
Purchase Price: ........................ The purchase price of the Common Stock sold in the Offering will be
determined based upon the negotiations between the Company and the
investors participating in this Offering (the "Investors").
Use of Proceeds to Company:........... For continued research and development, manufacturing and marketing,
working capital and general corporate purposes.
Subscription Date and Closing Date: The Company and each Investor shall execute a Stock and Warrant
Purchase Agreement in substantially the form set forth herein and
each Investor shall execute an Investor Questionnaire in
substantially the form set forth herein. The date as of which the
Company has executed Stock and Warrant Purchase Agreements with
Investors for the purchase of at least 2,400,000 Shares and Warrants
to purchase at least 600,000 Warrant Shares and has notified the
placement agent for this Offering in writing that it is no longer
accepting Stock and Warrant Purchase Agreements from Investors is
sometimes referred to herein as the "Subscription Date." The closing
of the Offering shall occur, and certificates representing the Shares
and the Warrants shall be issued to the Investors and funds paid to
the Company therefor, on March 10, 2005 (the "Closing Date").
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Warrants: The Warrants will be immediately exercisable and may be exercised
until the fifth anniversary of the Closing Date. The exercise price
of the Warrants will be determined based upon the negotiations
between the Company and the Investors. The Warrant shall have the
rights, preferences, privileges and restrictions as set forth in the
form of Warrant attached as Exhibit B to the Stock and Warrant
Purchase Agreement.
Investor Qualifications: ............... Each Investor must be an "accredited investor" as defined in
Regulation D of the Securities Act of 1933, as amended (the
"Securities Act"), and must represent and warrant to the Company that
it is acquiring the Shares, the Warrant and the Warrant Shares for
investment with no present intention of distributing any of the
Shares, Warrants or Warrant Shares or must satisfy certain conditions
in respect of the investment. The Stock and Warrant Purchase
Agreement contains other appropriate representations and warranties
of the Investor to the Company. As part of the Stock and Warrant
Purchase Agreement signature page, the Company has included certain
questions for each Investor to complete regarding such Investor. In
addition, the Investor Questionnaire set forth herein contains
questions for each Investor regarding its status as an "accredited
investor." The Company will use the answers from each Investor as
part of its own procedures to confirm the accuracy of the statements
as to such Investor in the Registration Statement, including the
information in the sections to be entitled "Selling Stockholders" and
"Plan of Distribution." The Investors might be deemed "underwriters"
as that term is defined in the Securities Act. Underwriters have
statutory responsibilities as to the accuracy of any Registration
Statement used by them.
Registration of Common Stock:........... The Company will use its reasonable commercial efforts, subject to
receipt of necessary information from the Investors, to cause a
Registration Statement on Form S-3 relating to the resale of the
Common Stock (including the Warrant Shares underlying the Warrants)
by the Investors to be filed with the Securities and Exchange
Commission within 30 days following the Closing Date and to cause
such Registration Statement to become effective within 90 days of the
Closing Date. Subject to certain blackout periods, the Company is
obligated to use reasonable commercial efforts, with respect to each
Investor's Shares, and Warrant Shares issued upon the exercise of the
Warrant, purchased in the Offering, to maintain the Registration
Statement's effectiveness until the earlier of (i) the date on which
all Shares and Warrant Shares then held by the Investor may be
immediately sold to the public under Rule 144(k) of the Securities
Act or (ii) such time as all Shares and Warrant Shares purchased by
such Investor in the Offering have been sold pursuant to a
registration statement.
Liquidated Damages:..................... In the event that the Registration Statement: (i) is not filed by
the Company within 30 days after the Closing Date; (ii) is not
declared effective by the SEC on or prior to 90 days after the
Closing Date; or (iii) once effective, ceases to be effective and
available to Investor for any continuous period that exceeds 30 days
or for one or more periods that exceed in the aggregate 60 days in
any 12-month period (each, a "Registration Default"), the Company
shall pay the Investors, for each 30-day period of a Registration
Default, an amount in cash equal to 1% of the aggregate purchase
price paid by Investors; provided that in no event shall the
aggregate amount of cash to be paid exceed 10% of the aggregate
purchase price. The foregoing payments shall apply on a pro rata
basis for any portion of a 30-day period of a Registration Default.
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Limitations on Sales Pursuant to To resell Shares and Warrant Shares pursuant to the Registration
Registration Statement:................. Statement, the Investor will be required to:
(a) Deliver, prior to selling any Shares or Warrant Shares, a
current prospectus of the Company to the transferee (or
arrange for delivery to the transferee's broker). Upon
receipt of a written request therefor, the Company has
agreed to provide an adequate number of current prospectuses
to each Investor and to supply copies to any other parties
requiring such prospectuses. In certain circumstances, the
Company may suspend the effectiveness of the Registration
Statement for certain periods of time during which the
Investors will not be able to resell their Shares and
Warrant Shares. In the event of such a suspension, the
Company will notify each Investor in writing and, subject to
certain conditions, will use reasonable commercial efforts
to cause the use of the prospectus so suspended to be
resumed as soon as reasonably practicable within 20 business
days after such suspension begins, and will promptly deliver
a revised prospectus, if applicable, for each Investor's use.
(b) Deliver the stock certificate along with the Certificate of
Subsequent Sale in the form attached to the
Stock and Warrant Purchase Agreement to
the Company and its transfer agent so that
the Shares and Warrant Shares may be properly transferred.
Share Certificates:..................... Certificates evidencing the Shares and Warrants delivered to each
Investor on the Closing Date will bear a restrictive legend stating
that the Shares and Warrants have been sold pursuant to the Stock and
Warrant Purchase Agreement and that they (including the Warrant
Shares underlying the Warrants) may not be resold except as permitted
under the Securities Act pursuant to a Registration Statement that
has been declared effective or an exemption therefrom, and may be
resold subject to certain limitations and procedures agreed to in the
Stock and Warrant Purchase Agreement.
Indemnification:........................ By executing the Stock and Warrant Purchase Agreement, each
Investor will agree to indemnify the Company against certain
liabilities.
Risk Factors:........................... The Shares, Warrants and Warrant Shares offered hereby involve a high
degree of risk. See the disclosure relating to the risks
affecting the Company set forth in the documents filed by the
Company with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended.
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Nasdaq National Market ("Nasdaq") Symbol: PRKR
Confidential Information:............... The recipient of this Confidential Summary of Terms and Conditions
and the materials attached hereto agrees with the Company and Wells
Fargo Securities, LLC to maintain in confidence this disclosed
information, together with any other non-public information regarding
the Company obtained from the Company, Wells Fargo Securities, LLC or
their agents during the course of the proposed Offering. The Company
and Wells Fargo Securities, LLC have caused these materials to be
delivered to you in reliance upon such agreement and upon Rule
100(b)(2)(ii) of Regulation FD as promulgated by the Securities and
Exchange Commission.
Company's Counsel: ..................... Graubard Miller, The Chrysler Building, 405 Lexington Avenue, 19th Avenue,
New York, NY 10174
Transfer Agent:......................... American Stock Transfer & Trust Company
Placement Agent:........................ The Company has engaged Wells Fargo Securities, LLC to act as
placement agent in connection with the Offering. The placement agent
will receive from the Company a fee based on a percentage of the
gross proceeds from the sale of the Shares and Warrants.
Placement Agent's Counsel:.............. Goodwin Procter LLP, Exchange Place, Boston, MA 02109;
tel. (617) 570-1067, fax (617) 523-1231; Attn: Jocelyn M. Arel
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INSTRUCTION SHEET FOR INVESTOR
(to be read in conjunction with the entire Stock and Warrant Purchase Agreement,
the Warrant and the Investor Questionnaire)
A. Complete the following items in the Stock and Warrant Purchase Agreement
and in the Investor Questionnaire:
1. Provide the information regarding the Investor requested on the
signature page (page 9). Please submit a separate Stock and Warrant Purchase
Agreement and Investor Questionnaire for each individual fund/entity that will
hold the Shares and Warrants. The Stock and Warrant Purchase Agreement and the
Investor Questionnaire must be executed by an individual authorized to bind the
Investor.
2. Return the signed Stock and Warrant Purchase Agreement and Investor
Questionnaire to:
ParkerVision, Inc.
8493 Baymeadows Way
Jacksonville, FL 32256
Attn: Cindy Poehlman
Phone: (904) 737-1367 ext.116
Fax: (904) 448-6301
And fax copies to:
Wells Fargo Securities, LLC
600 California Street
Suite 1600
San Francisco, CA 94108
Attn: Seth Rubin
Phone: (415) 954-8332
Fax: (415) 954-8309
And
Graubard Miller
600 Third Avenue
New York, NY 10016
Attn: David Alan Miller
Phone: (212) 818-8661
Fax: (212) 818-8881
An executed original Stock and Warrant Purchase Agreement and Investor
Questionnaire or a fax thereof must be received by 2:00 p.m., New York
City time, on a date to be determined and distributed to the Investor
at a later date.
B. Instructions regarding the transfer of funds for the purchase of Shares
and Warrant Shares will be faxed to the Investor by the Company at a
later date.
C. To resell the Shares and Warrant Shares after the Registration
Statement covering the Shares and Warrant Shares is effective:
1. Provided that a Suspension of the Registration Statement
pursuant to Section 7.2(c) of the Stock and Warrant Purchase Agreement
is not then in effect pursuant to the terms of the Stock and Warrant
Purchase Agreement, the Investor may sell Shares and Warrant Shares
under the Registration Statement, subject to the notification
provisions in the Stock and Warrant Purchase Agreement, provided that
it arranges for delivery of a current Prospectus to the transferee. The
Company has agreed to furnish to the Investor such number of copies of
the Registration Statement, Prospectuses and Preliminary Prospectuses
as the Investor may reasonably request.
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2. The Investor must also deliver to the Company's transfer
agent, with a copy to the Company, a Certificate of Subsequent Sale in
the form attached as Exhibit A to the Stock and Warrant Purchase
Agreement, so that the Shares and Warrant Shares may be properly
transferred.
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STOCK AND WARRANT PURCHASE AGREEMENT
ParkerVision, Inc.
8493 Baymeadows Way
Jacksonville, FL 32256
Ladies & Gentlemen:
The undersigned, [__________] (the "Investor"), hereby confirms its
agreement with you as follows:
1. This Stock and Warrant Purchase Agreement (the "Agreement") is made as of
March 10, 2005 between ParkerVision, Inc., a Florida corporation (the
"Company"), and the Investor.
2. The Company has authorized the sale and issuance of up to 2,880,000 shares
(the "Shares") of common stock of the Company, $.01 par value per share (the
"Common Stock"), and Warrants (the "Warrants") to purchase up to 720,000 shares
of Common Stock at an exercise price of $9.00 per share (the "Warrant Shares")
to certain investors in a private placement (the "Offering").
3. The Company and the Investor agree that the Investor will purchase from the
Company and the Company will issue and sell to the Investor [__________] Shares
and a Warrant to purchase [__________] Warrant Shares, for a purchase price of
$7.50 per share, or an aggregate purchase price of $[_____], pursuant to the
Terms and Conditions for Purchase of Shares and Warrants attached hereto as
Annex I and incorporated herein by reference as if fully set forth herein (the
"Terms and Conditions"). This Stock and Warrant Purchase Agreement, together
with the Terms and Conditions which are incorporated herein by reference as if
fully set forth herein, may hereinafter be referred to as the "Agreement."
Unless otherwise requested by the Investor, certificates representing the Shares
and the Warrant purchased by the Investor will be registered in the Investor's
name and address as set forth below. The Warrant shall have the rights,
preferences, privileges and restrictions as set forth in the form of Warrant
attached as Exhibit B.
4. The Investor represents that, except as set forth below, (a) it has had no
position, office or other material relationship within the past three years with
the Company or persons known to it to be affiliates of the Company, (b) neither
it, nor any group of which it is a member or to which it is related,
beneficially owns (including the right to acquire or vote) any securities of the
Company and (c) it has no direct or indirect affiliation or association with any
NASD member as of the date hereof. Exceptions:
- -------------------------------------------------------------------------------.
(If no exceptions, write "none." If left blank, response will be
deemed to be "none.")
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Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose. By executing
this Agreement, the Investor acknowledges that the Company may use the
information in paragraph 4 above and the name and address information below in
preparation of the Registration Statement (as defined in Annex 1). This
Agreement may be executed in separate counterparts, each of which shall be
deemed to be an original and all of which taken together shall constitute one
and the same instrument.
AGREED AND ACCEPTED:
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ParkerVision, Inc. Investor:
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By:
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By: Jeffrey L. Parker Print Name:
-----------------------------------
Title: Chairman and Chief
Executive Officer
Title:
----------------------------------------
Address:
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Tax ID No.:
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Contact name:
---------------------------------
Telephone:
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Name in which shares should be registered
(if different):
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ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF SHARES AND WARRANTS
1. Authorization and Sale of the Shares. Subject to these Terms and
Conditions, the Company has authorized the sale of up to 2,880,000 Shares and
Warrants to purchase up to 720,000 Warrant Shares. The Company reserves the
right to increase or decrease this number.
2. Agreement to Sell and Purchase the Shares; Subscription Date.
2.1 At the Closing (as defined in Section 3), the Company will
sell to the Investor, and the Investor will purchase from the Company, upon the
terms and conditions hereinafter set forth, the number of Shares and a Warrant
to purchase the number of Warrant Shares each as set forth in Section 3 of the
Stock and Warrant Purchase Agreement to which these Terms and Conditions are
attached at the purchase price set forth thereon.
2.2 The Company may enter into the same form of Stock and
Warrant Purchase Agreement, including these Terms and Conditions, with other
investors (the "Other Investors") and expects to complete sales of Shares and
Warrants to them. (The Investor and the Other Investors are hereinafter
sometimes collectively referred to as the "Investors," and the Stock and Warrant
Purchase Agreement to which these Terms and Conditions are attached and the
Stock and Warrant Purchase Agreements (including attached Terms and Conditions)
executed by the Other Investors are hereinafter sometimes collectively referred
to as the "Agreements.") The Company may accept executed Agreements from
Investors for the purchase of Shares and Warrants commencing upon the date on
which the Company provides the Investors with the proposed purchase price per
Share plus Warrant exercise price and concluding upon the date (the
"Subscription Date") on which the Company has (i) executed Agreements with
Investors for the purchase of at least 2,400,000 Shares and Warrants to purchase
at least 600,000 Warrant Shares, and (ii) notified Wells Fargo Securities, LLC,
in its capacity as placement agent for this transaction, in writing that it is
no longer accepting additional Agreements from Investors for the purchase of
Shares and Warrants. The Company may not enter into any Agreements after the
Subscription Date except in respect of up to 5,280 Shares and 1,320 Warrant
Shares offered to Tyco Sigma Limited, Leucadia National Corporation and David
Cumming pursuant to the exercise of pre-emptive rights previously granted to
such persons (the "Pre-emptive Rights").
2.3 The obligations of each Investor under any Agreement are
several and not joint with the obligations of any Other Investor, and no
Investor shall be responsible in any way for the performance of the obligations
of any other Investor under any Agreement. Nothing contained herein, and no
action taken by any Investor hereto, shall be deemed to constitute the Investors
as a partnership, an association, a joint venture or any other kind of entity,
or create a presumption that the Investors are in any way acting in concert or
as a group with respect to such obligations or the transactions contemplated
hereby, provided that such obligations or the transactions contemplated hereby
may be modified, amended or waived in accordance with Section 9 below. Each
Investor shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement (provided,
that such rights may be modified, amended or waived in accordance with Section 9
below), and it shall not be necessary for any Other Investor to be joined as an
additional party in any proceeding for such purpose.
3. Delivery of the Shares at Closing. The completion of the purchase
and sale of the Shares and Warrants (the "Closing") shall occur on March 10,
2005 (the "Closing Date"), at the offices of the Company's counsel. At the
Closing, the Company shall deliver to the Investor one or more stock
certificates representing the number of Shares and a Warrant representing the
number of Warrant Shares, in each case as set forth pursuant to Section 3 of the
Stock and Warrant Purchase Agreement, each such certificate to be registered in
the name of the Investor or, if so indicated on the signature page of the Stock
and Warrant Purchase Agreement, in the name of a nominee designated by the
Investor.
The Company's obligation to issue and deliver the Shares and Warrant to
the Investor shall be subject to the following conditions, any one or more of
which may be waived by the Company: (a) receipt by the Company of a certified or
official bank check or wire transfer of funds in the full amount of the purchase
price for the Shares and Warrant being purchased hereunder as set forth in
Section 3 of the Stock and Warrant Purchase Agreement; (b) completion of the
purchases and sales under the Agreements with the Other Investors; and (c) the
accuracy of the representations and warranties made by the Investors and the
fulfillment of those undertakings of the Investors to be fulfilled prior to the
Closing.
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The Investor's obligation to purchase the Shares and Warrant shall be
subject to the following conditions, any one or more of which may be waived by
the Investor: (a) Investors shall have executed Agreements for the purchase of
at least 2,400,000 Shares and Warrants to purchase at least 600,000 Warrant
Shares, (b) the representations and warranties of the Company set forth herein
shall be true and correct as of the Closing Date in all material respects
(except for representations and warranties that speak as of a specific date,
which representations and warranties shall be true and correct as of such date),
(c) the Investor shall have received such documents as such Investor shall
reasonably have requested, including, a standard opinion of the Company's
counsel as to the matters set forth in Section 4.2 and as to exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), of the sale of the Shares, (d) there shall not have occurred
a suspension or material limitation in trading in the Company's Common Stock on
the Nasdaq National Market, (e) all consents, approvals or authorizations of any
person required for the valid authorization, execution and delivery by the
Company of this Agreement or for the consummation of the transactions
contemplated by this Agreement shall have been obtained and (f) no action or
proceeding by or before any court, administrative body or governmental agency
shall have been instituted or threatened by a third party which seeks to enjoin,
restrain or prohibit this Agreement or consummation of the transactions
contemplated by this Agreement.
4. Representations, Warranties and Covenants of the Company. The
Company hereby represents and warrants to, and covenants with, the Investor, as
follows:
4.1 Organization. The Company is duly organized and validly
existing in good standing under the laws of the jurisdiction of its
organization. Each of the Company and its Subsidiaries (as defined in Rule 405
under the Securities Act) has full power and authority to own, operate and
occupy its properties and to conduct its business as presently conducted and as
described in the documents filed by the Company under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act"), since the end of its most recently completed fiscal year
through the date hereof, including, without limitation, its most recent report
on Form 10-K (the "Exchange Act Documents") and is registered or qualified to do
business and in good standing in each jurisdiction in which the nature of the
business conducted by it or the location of the properties owned or leased by it
requires such qualification and where the failure to be so qualified would have
a material adverse effect upon the condition (financial or otherwise), earnings,
business, properties or operations of the Company and its Subsidiaries,
considered as one enterprise (a "Material Adverse Effect"), and no proceeding
has been instituted in any such jurisdiction, revoking, limiting or curtailing,
or seeking to revoke, limit or curtail, such power and authority or
qualification.
4.2 Due Authorization and Valid Issuance. The Company has all
requisite power and authority to execute, deliver and perform its obligations
under the Agreements and the Warrants, and the Agreements and the Warrants have
been duly authorized and validly executed and delivered by the Company and
constitute legal, valid and binding agreements of the Company enforceable
against the Company in accordance with their terms, except as rights to
indemnity and contribution may be limited by state or federal securities laws or
the public policy underlying such laws, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
The Shares and the Warrant being purchased by the Investor hereunder and the
Warrant Shares issuable pursuant to the Warrant will, upon issuance and payment
therefor pursuant to the terms hereof, be duly authorized, validly issued,
fully-paid and nonassessable.
4.3 Non-Contravention. The execution and delivery of the
Agreements and the Warrants, the issuance and sale of the Shares and the
Warrants under the Agreements and the Warrant Shares under the Warrant, the
fulfillment of the terms of the Agreements and the Warrants and the consummation
of the transactions contemplated thereby will not (A) conflict with or
constitute a violation of, or default (with the passage of time or otherwise)
under, (i) any material bond, debenture, note or other evidence of indebtedness,
lease, contract, indenture, mortgage, deed of trust, loan agreement, joint
venture or other agreement or instrument to which the Company or any Subsidiary
is a party or by which it or any of its Subsidiaries or their respective
properties are bound (other than notice required to be delivered to each of Tyco
Sigma Limited, Leucadia National Corporation and David Cumming relating to the
Pre-emptive Rights in respect of the Shares), (ii) the charter, by-laws or other
organizational documents of the Company or any Subsidiary, or (iii) any law,
administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company or any
Subsidiary or their respective properties, except in the case of clauses (i) and
(iii) for any such conflicts, violations or defaults which are not reasonably
likely to have a Material Adverse Effect or (B) result in the creation or
imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the material properties or assets of the Company or any
Subsidiary or an acceleration of indebtedness pursuant to any obligation,
agreement or condition contained in any material bond, debenture, note or any
other evidence of indebtedness or any material indenture, mortgage, deed of
trust or any other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them is bound or to which any of the
material property or assets of the Company or any Subsidiary is subject. No
consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency, or
other governmental body in the United States or any other person is required for
the execution and delivery of the Agreements and the Warrants, and the valid
issuance and sale of the Shares and Warrants to be sold pursuant to the
Agreements, and the valid issuance of the Warrant Shares under the Warrant,
other than such as have been made or obtained, and except for any post-closing
securities filings or notifications required to be made under federal or state
securities laws.
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4.4 Capitalization. The capitalization of the Company as of
September 30, 2004 is as set forth in the most recent applicable Exchange Act
Documents, increased as set forth in the next sentence. The Company has not
issued any capital stock since that date other than pursuant to (i) employee
benefit plans disclosed in the Exchange Act Documents, or (ii) outstanding
warrants, options or other securities disclosed in the Exchange Act Documents.
The Shares and the Warrants to be sold pursuant to the Agreements, and the
Warrant Shares to be issues pursuant to the Warrants, have been duly authorized,
and when issued and paid for in accordance with the terms of the Agreements and
the Warrants, as the case may be, will be duly and validly issued, fully paid
and nonassessable. The outstanding shares of capital stock of the Company have
been duly and validly issued and are fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and were not
issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities. Except as set forth in or contemplated by the Exchange
Act Documents, there are no outstanding rights (including, without limitation,
preemptive rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any unissued shares of capital stock or other equity
interest in the Company or any Subsidiary, or any contract, commitment,
agreement, understanding or arrangement of any kind to which the Company is a
party or of which the Company has knowledge and relating to the issuance or sale
of any capital stock of the Company or any Subsidiary, any such convertible or
exchangeable securities or any such rights, warrants or options. Without
limiting the foregoing, no preemptive right, co-sale right, right of first
refusal, registration right, or other similar right exists with respect to the
Shares, the Warrants or the Warrant Shares or the issuance and sale thereof. No
further approval or authorization of any stockholder, the Board of Directors of
the Company or others is required for the issuance and sale of the Shares, the
Warrants and the Warrant Shares. The Company owns the entire equity interest in
each of its Subsidiaries, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest, other than as described in the
Exchange Act Documents. Except as disclosed in the Exchange Act Documents, there
are no stockholders agreements, voting agreements or other similar agreements
with respect to the Common Stock to which the Company is a party or, to the
knowledge of the Company, between or among any of the Company's stockholders.
4.5 Legal Proceedings. There is no material legal or
governmental proceeding pending or, to the knowledge of the Company, threatened
to which the Company or any Subsidiary is or may be a party or of which the
business or property of the Company or any Subsidiary is subject that is not
disclosed in the Exchange Act Documents. There are no disagreements of any kind
presently existing, or reasonably anticipated by the Company to arise, between
the accountants and lawyers formerly or presently employed by the Company and
the Company is current with respect to any fees owed to its accountants and
lawyers.
4.6 No Violations. Neither the Company nor any Subsidiary is
in violation of its charter, bylaws, or other organizational document, or in
violation of any law, administrative regulation, ordinance or order of any court
or governmental agency, arbitration panel or authority applicable to the Company
or any Subsidiary, which violation, individually or in the aggregate, would be
reasonably likely to have a Material Adverse Effect, or is in default (and there
exists no condition which, with the passage of time or otherwise, would
constitute a default) in any material respect in the performance of any bond,
debenture, note or any other evidence of indebtedness in any indenture,
mortgage, deed of trust or any other material agreement or instrument to which
the Company or any Subsidiary is a party or by which the Company or any
Subsidiary is bound or by which the properties of the Company or any Subsidiary
are bound, which would be reasonably likely to have a Material Adverse Effect.
4.7 Governmental Permits, Etc. With the exception of the
matters which are dealt with separately in Sections 4.1, 4.12, 4.13 and 4.14,
each of the Company and its Subsidiaries has all necessary franchises, licenses,
certificates and other authorizations from any foreign, federal, state or local
government or governmental agency, department, or body that are currently
necessary for the operation of the business of the Company and its Subsidiaries
as currently conducted and as described in the Exchange Act Documents except
where the failure to currently possess could not reasonably be expected to have
a Material Adverse Effect.
-12-
4.8 Intellectual Property. Except as specifically disclosed in
the Exchange Act Documents (i) to the Company's knowledge, each of the Company
and its Subsidiaries owns or possesses sufficient rights to conduct its business
in the ordinary course, including, without limitation, rights to use all
material patents, patent rights, industry standards, trademarks, copyrights,
licenses, inventions, trade secrets, trade names and know-how (collectively,
"Intellectual Property") described or referred to in the Exchange Act Documents
as owned or possessed by it or that are necessary for the conduct of its
business as now conducted or as proposed to be conducted except where the
failure to currently own or possess would not have a Material Adverse Effect,
(ii) to the Company's knowledge, neither the Company nor any of its Subsidiaries
is infringing, or has received any notice of, or has any knowledge of, any
asserted infringement by the Company or any of its Subsidiaries of, any rights
of a third party with respect to any Intellectual Property that, individually or
in the aggregate, would have a Material Adverse Effect and (iii) neither the
Company nor any of its Subsidiaries has received any written notice of, or has
any actual knowledge of, infringement by a third party with respect to any
Intellectual Property rights of the Company or of any Subsidiary that,
individually or in the aggregate, would have a Material Adverse Effect. Except
as noted below, the Intellectual Property does not include any Publicly
Available Software and the Company has not used Publicly Available Software in
whole or in part in the development of any part of Intellectual Property in a
manner that may subject the Company or Intellectual Property in whole or in
part, to all or part of the license obligations of any Publicly Available
Software. "Publicly Available Software" means each of (i) any software that
contains, or is derived in any manner (in whole or in part) from, any software
that is distributed as free software, open source software (e.g., Linux), or
similar licensing and distribution models; and (ii) any software that requires
as a condition of use, modification, and/or distribution of such software that
such software or other software incorporated into, derived from, or distributed
with such software (a) be disclosed or distributed in source code form; (b) be
licensed for the purpose of making derivative works; or (c) be redistributable
at no or minimal charge. Publicly Available Software includes, without
limitation, software licensed or distributed under any of the following licenses
or distribution models similar to any of the following: (a) GNU General Public
License (GPL) or Lesser/Library GPL (LGPL), (b) the Artistic License (e.g.,
PERL), (c) the Mozilla Public License, (d) the Netscape Public License, (e) the
Sun Community Source License (SCSL), the Sun Industry Source License (SISL), and
the Apache Server License. The Company uses Publicly Available Software in its
five port wireless router product which is currently being developed.
4.9 Financial Statements. (a) The financial statements of the
Company and the related notes contained in the Exchange Act Documents present
fairly, in accordance with generally accepted accounting principles, the
financial position of the Company and its Subsidiaries as of the dates
indicated, and the results of its operations and cash flows for the periods
therein specified consistent with the books and records of the Company and its
Subsidiaries except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which are not expected to
be material in amount and to adjustment for certain preliminary unaudited 2004
year end information (the "2004 Preliminary Year End Information") provided to
Investors in connection with this Offering. Such financial statements (including
the related notes) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
therein specified, except as may be disclosed in the notes to such financial
statements, or in the case of unaudited statements, as may be permitted by the
Securities and Exchange Commission (the "SEC") on Form 10-Q under the Exchange
Act and except as disclosed in the Exchange Act Documents. The other financial
information contained in the Exchange Act Documents and the 2004 Preliminary
Year End Information has been prepared on a basis consistent with the financial
statements of the Company.
(b) After giving effect to the transactions contemplated by
this Agreement and the other agreements contemplated by the Offering, the
Company believes that it will have adequate working capital to sustain its
operations as currently conducted and pursuant to the current business plan for
at least the twelve months after the Closing Date.
(c) Except as set forth in any Exchange Act Documents, there
are no obligations of the Company to officers, directors, stockholders or
employees of the Company other than (i) for payment of salary for services
rendered and for bonus payments; (ii) reimbursements for reasonable expenses
incurred on behalf of the Company; (iii) for other standard employee benefits
made generally available to all employees (including stock option agreements
outstanding under any stock option plan approved by the Board of Directors of
the Company); and (iv) obligations listed in the Company's financial statements.
Except as described above or in any Exchange Act Filings, none of the officers,
directors or, to the best of the Company's knowledge, key employees or
stockholders of the Company or any members of their immediate families, are
indebted to the Company, individually or in the aggregate, in excess of $60,000
or have any direct or indirect ownership interest in any firm or corporation
with which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation which competes with the Company, other
than passive investments in publicly traded companies (representing less than
one percent (1%) of such company) which may compete with the Company. Except as
described above, no officer, director or stockholder, or any member of their
immediate families, is, directly or indirectly, interested in any material
contract with the Company and no agreements, understandings or proposed
transactions are contemplated between the Company and any such person. Except as
set forth in any Exchange Act Documents, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.
-13-
4.10 No Material Adverse Change. Except as disclosed in the
Exchange Act Documents and the 2004 Preliminary Year End Information provided to
Investors, since September 30, 2004, there has not been (i) any material adverse
change in the financial condition or earnings of the Company and its
Subsidiaries considered as one enterprise, (ii) any material adverse event
affecting the Company or its Subsidiaries, (iii) any obligation, direct or
contingent, that is material to the Company and its Subsidiaries considered as
one enterprise, incurred by the Company, except obligations incurred in the
ordinary course of business, (iv) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company or any of its
Subsidiaries, or (v) any loss or damage (whether or not insured) to the physical
property of the Company or any of its Subsidiaries which has been sustained
which has a Material Adverse Effect.
4.11 Disclosure. The representations and warranties of the
Company contained in this Section 4 as of the date hereof and as of the Closing
Date, do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except with respect to the material terms and conditions of the
transaction contemplated by the Agreements and the Warrants , which shall be
publicly disclosed by the Company pursuant to Section 16(b) hereof, and except
for the 2004 Preliminary Year End Information provided to Investors, which
information shall be publicly disclosed by the Company on or prior to March 31,
2005, the Company confirms that neither it nor any person acting on its behalf
has provided Investor with any information that the Company believes constitutes
material, non-public information. The Company understands and confirms that
Investor will rely on the foregoing representations in effecting transactions in
securities of the Company.
4.12 Nasdaq Compliance. The Company's Common Stock is
registered pursuant to Section 12(g) of the Exchange Act and is listed on The
Nasdaq Stock Market, Inc. National Market (the "Nasdaq National Market"), and
the Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
de-listing the Common Stock from the Nasdaq National Market, nor has the Company
received any notification that the SEC or the National Association of Securities
Dealers, Inc. ("NASD") is contemplating terminating such registration or
listing.
4.13 Reporting Status. The Company has filed in a timely
manner all documents that the Company was required to file under the Exchange
Act during the 12 months preceding the date of this Agreement. The Company
currently is eligible to use Form S-3 to register the Shares to be offered for
the account of the Investors. The following documents complied in all material
respects with the SEC's requirements as of their respective filing dates, and
the information contained therein as of the date thereof did not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading:
(a) Annual Report on Form 10-K for the year ended
December 31, 2003, Quarterly Reports on Form 10-Q
for the quarters ended March 31, 2004, June 30, 2004
and September 30, 2004, Proxy Statements on Schedule
14A filed on March 26, 2004, April 6, 2004 and April
28, 2004 and Current Reports on Form 8-K filed on
March 2, 2004, March 11, 2004, May 18, 2004 and
November 19, 2004; and
(b) all other documents, if any, filed by the
Company with the SEC during the one-year period
preceding the date of this Agreement pursuant to the
reporting requirements of the Exchange Act.
4.14 Listing. The Company shall comply with all requirements
of the NASD and SEC with respect to the issuance of the Shares, the Warrant and
the Warrant Shares, and the listing of the Shares and Warrant Shares on the
Nasdaq National Market.
4.15 No Manipulation of Stock. The Company has not taken and
will not, in violation of applicable law, take, any action designed to or that
might reasonably be expected to cause or result in stabilization or manipulation
of the price of the Common Stock to facilitate the sale or resale of the Shares
or the Warrant Shares.
-14-
4.16 Company not an "Investment Company". The Company has been
advised of the rules and requirements under the Investment Company Act of 1940,
as amended (the "Investment Company Act"). To the best knowledge of the Company,
the Company is not, and immediately after receipt of payment for the Shares and
Warrants will not be, an "investment company" or an entity "controlled" by an
"investment company" within the meaning of the Investment Company Act and shall
conduct its business in a manner so that it will not become subject to the
Investment Company Act.
4.17 Foreign Corrupt Practices. Neither the Company, nor to
the best knowledge of the Company, any agent or other person acting on behalf of
the Company, has (i) directly or indirectly, used any corrupt funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
4.18 Accountants. To the Company's knowledge,
PricewaterhouseCoopers, LLP, who the Company expects will consent to the
incorporation by reference of its report dated February 28, 2004 with respect to
the consolidated financial statements of the Company included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2003 into the
Registration Statement (as defined below) and the prospectus which forms a part
thereof, are independent accountants as required by the Securities Act and the
rules and regulations promulgated thereunder.
4.19 Contracts. The contracts described in the Exchange Act
Documents that are material to the Company are in full force and effect on the
date hereof, and neither the Company nor, to the Company's knowledge, any other
party to such contracts is in breach of or default under any of such contracts
which would have a Material Adverse Effect. The Company has filed with the SEC
all contracts and agreements required to be filed by the Exchange Act.
4.20 Taxes. The Company has filed all necessary federal, state
and foreign income and franchise tax returns when due (or obtained appropriate
extensions for filing) and has paid or accrued all taxes shown as due thereon,
and the Company has no knowledge of a tax deficiency which has been or might be
asserted or threatened against it which would have a Material Adverse Effect.
4.21 Transfer Taxes. On the Closing Date, all stock transfer
or other taxes (other than income taxes) which are required to be paid in
connection with the sale and transfer of the Shares and the Warrants to be sold
to the Investor hereunder will be, or will have been, fully paid or provided for
by they Company and all laws imposing such taxes will be or will have been fully
complied with. Upon the issuance of the Warrants Shares pursuant to the Warrant
all stock transfer or other taxes (other than income taxes) which are required
to be paid in connection therewith will be, or will have been, fully paid or
provided for by the Company and all laws imposing such taxes will be or will
have been fully complied with.
4.22 Private Offering. Assuming the correctness of the
representations and warranties of the Investors set forth in Section 5 hereof,
the offer and sale of Shares and the Warrants hereunder is and, upon exercise of
the Warrants, the issuance of the Warrant Shares will be exempt from
registration under the Securities Act. The Company has not distributed and will
not distribute prior to the Closing Date any offering material in connection
with this Offering and sale of the Shares and the Warrants other than the
documents of which this Agreement is a part or the Exchange Act Documents. The
Company has not in the past nor will it hereafter take any action independent of
the placement agent to sell, offer for sale or solicit offers to buy any
securities of the Company which would bring the offer, issuance or sale of the
Shares and the Warrants as contemplated by this Agreement, or the issuance of
the Warrant Shares pursuant to the Warrant within the provisions of Section 5 of
the Securities Act, unless such offer, issuance or sale was or shall be within
the exemptions of Section 4 of the Securities Act. Neither the Company nor any
person acting on behalf of the Company (other than Wells Fargo Securities, LLC)
has offered or sold any of the Shares by any form of general solicitation or
general advertising. The Company has offered the Shares for sale only to the
Investors and certain other "accredited investors" within the meaning of Rule
501 under the Securities Act.
4.23 Disclosure Controls and Procedures. The Company is in
material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which
are applicable to it as of the Closing Date. The Company maintains a system of
internal control over financial reporting (as such term is defined in the
Exchange Act ) sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management's general or specific authorization,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
-15-
is taken with respect to any differences. The Company's certifying officers are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act) for the Company and they have (a) designed such
disclosure controls and procedures , or caused such disclosure controls and
procedures to be designed under their supervision, to ensure that material
information relating to the Company, including its Subsidiaries, is made known
to the certifying officers by others within those entities, particularly during
the periods in which the Exchange Act Documents have been prepared; (b)
evaluated the effectiveness of the Company's disclosure controls and procedures
and presented in the applicable Exchange Act Documents their conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of
the periods covered by such Exchange Act Documents based on such evaluation; and
(c) since the last evaluation date referred to in (b) above, there have been no
material changes in the Company's internal control over financial reporting (as
such term is defined in the Exchange Act) or, to the Company's knowledge, in
other factors that could significantly affect the Company's internal control
over financial reporting.
4.24 Transactions With Affiliates. Except as disclosed in the
Exchange Act Documents, none of the officers or directors of the Company is
presently a party to any transaction with the Company or any Subsidiary (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer or director or, to the knowledge of
the Company, any entity in which any officer or director has a substantial
interest or is an officer, director, trustee or partner.
4.25 No Registration Rights. Other than the registration
rights granted to the Investors in Section 7 of this Agreement, no person has
the right, which right has not been waived, to require the Company or any
Subsidiary to register any securities for sale under the Securities Act by
reason of the filing of the Registration Statement with the SEC or the issuance
and sale of the Shares, Warrants or Warrant Shares.
5. Representations, Warranties and Covenants of the Investor.
5.1 The Investor represents and warrants to, and covenants
with, the Company that: (i) either (A) the Investor is an "accredited investor"
as defined in Regulation D under the Securities Act and the Investor is also
knowledgeable, sophisticated and experienced in making, and is qualified to make
decisions with respect to investments in shares presenting an investment
decision like that involved in the purchase of the Shares and the Warrant,
including investments in securities issued by the Company and investments in
comparable companies, and has requested, received, reviewed and considered all
information it deemed relevant in making an informed decision to purchase the
Shares or (B) the Company has made available to the Investor, prior to the date
hereof, the opportunity to ask questions of and receive complete and correct
answers from representatives of the Company concerning the terms and conditions
of the Shares and to obtain any additional information relating to the financial
condition and business of the Company and the Investor has such knowledge and
experience in financial and business matters that the Investor is capable of
evaluating the merits and risks of the investment in the Shares and the Warrant;
(ii) the Investor is acquiring the number of Shares and the Warrant to purchase
the number of Warrant Shares, each as set forth in Section 3 of the Stock and
Warrant Purchase Agreement in the ordinary course of its business and for its
own account for investment only and with no present intention of distributing
any of such Shares, Warrant or Warrant Shares or any arrangement or
understanding with any other persons regarding the distribution of such Shares,
Warrant or Warrant Shares; (iii) the Investor will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Shares,
Warrant or Warrant Shares except in compliance with the Securities Act,
applicable state securities laws and the respective rules and regulations
promulgated thereunder; (iv) the Investor has answered all questions on the
Investor Questionnaire for use in preparation of the Registration Statement and
the answers thereto are true, correct and complete as of the date hereof and
will be true, correct and complete as of the Closing Date; (v) the Investor will
notify the Company of any change in any of such information immediately prior to
the Closing; and (vi) the Investor has, in connection with its decision to
purchase the number of Shares and the Warrant to purchase the number of Warrant
Shares, each as set forth in Section 3 of the Stock and Warrant Purchase
Agreement, relied only upon the Exchange Act Documents and the representations
and warranties of the Company contained herein. The Investor understands that
its acquisition of the Shares and the Warrant has not been registered under the
Securities Act or registered or qualified under any state securities law in
reliance on specific exemptions therefrom, which exemptions may depend upon,
among other things, the bona fide nature of the Investor's investment intent as
expressed herein. Subject to compliance with the Securities Act, applicable
securities laws and the respective rules and regulations promulgated thereunder,
nothing contained herein shall be deemed a representation or warranty by such
Investor to hold the Shares Warrant or Warrant Shares for any period of time.
The Investor has completed or caused to be completed and delivered to the
Company the Investor Questionnaire, which questionnaire is true, correct and
complete in all material respects.
-16-
5.2 The Investor acknowledges, represents and agrees that no
action has been or will be taken in any jurisdiction outside the United States
by the Company that would permit an offering of the Shares, Warrant or Warrant
Shares or possession or distribution of offering materials in connection with
the issue of the Shares, Warrant or Warrant Shares in any jurisdiction outside
the United States where legal action by the Company for that purpose is
required. Each Investor outside the United States will comply with all
applicable laws and regulations in each foreign jurisdiction in which it
purchases, offers, sells or delivers Shares, the Warrant or Warrant Shares or
has in its possession or distributes any offering material, in all cases at its
own expense.
5.3 The Investor hereby covenants with the Company not to make
any sale of the Shares, Warrant or Warrant Shares without complying with the
provisions of this Agreement and without causing the prospectus delivery
requirement under the Securities Act to be satisfied (whether by delivery of the
Prospectus or pursuant to and in compliance with an exemption from such
requirement), and the Investor acknowledges that the certificates evidencing the
Shares and Warrant Shares will be imprinted with a legend that prohibits their
transfer except in accordance therewith. The Investor acknowledges that there
may occasionally be times when the Company determines that it must suspend the
use of the Prospectus forming a part of the Registration Statement, as set forth
in Section 7.2(c).
5.4 The Investor agrees to promptly upon receipt approve the
plan of distribution for the Registration Statement sent to it by the Company
pursuant to 7.1(h).
5.5 If requested by the Company, the Investor will provide
for presentation in the Registration Statement, the names of the persons with
investment and voting authority over the Shares or Warrant Shares acquired
hereunder and register thereon, unless otherwise agreed to between such Investor
and the Company.
5.6 The Investor further represents and warrants to, and
covenants with, the Company that (i) the Investor has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement, and (ii) this
Agreement constitutes a valid and binding obligation of the Investor enforceable
against the Investor in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Investors
herein may be legally unenforceable.
5.7 Neither the Investor nor any person acting on its behalf
or at its direction has engaged in any purchase or sale of Common Stock
(including without limitation any short sale, pledge, transfer, establish an
open "put equivalent position" within the meaning of Rule 16a-1(h) under the
Exchange Act) during the ten trading days immediately preceding the date of this
Agreement. Investor agrees with the Company that the Company will be irreparably
harmed if the Investor engages in short sales and similar hedging transactions,
therefore Investor agrees that it will not directly or indirectly make or
participate in any sale of the shares of common stock of the Company, including
"short sales" as defined in Rule 200 under Regulation SHO, whether or not
exempt, until the earlier of (i) effective date of the Registration Statement or
(ii) the 120th day after the Closing Date. Investor will not use any of the
restricted Shares or the Warrant acquired pursuant to this Agreement, or the
Warrant Shares acquired pursuant to the Warrant, to cover any short position in
the Common Stock of the Company if doing so would be in violation of applicable
securities laws and otherwise will comply with federal securities laws in the
holding and sale of the Shares.
5.8 The Investor understands that nothing in the Exchange Act
Documents, this Agreement or any other materials presented to the Investor in
connection with the purchase and sale of the Shares and the Warrant constitutes
legal, tax or investment advice. The Investor has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of Shares and the Warrant.
5.9 The Company acknowledges and agrees that Investor does not
make or has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Sections 5 and 16(a) of this Agreement, or in the Investor Questionnaire.
5.10 The Investor hereby acknowledges that the Shares and
Warrants purchased pursuant to this Agreement are being purchased in full
satisfaction of the Investor's pre-emptive rights pursuant to Section 8 of the
Subscription Agreement between the Investor and the Company dated March 26,
2003, in respect of the Shares sold by the Company pursuant to the Agreements
and hereby waives its notice right pursuant to such provision in respect of the
Shares sold by the Company pursuant to the Agreements.
-17-
6. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Investor herein shall survive the execution of this Agreement, the delivery
to the Investor of the Shares and the Warrant being purchased and the payment
therefor.
7. Registration of the Shares; Compliance with the Securities Act.
7.1 Registration Procedures and Other Matters. The Company
shall:
(a) subject to receipt of necessary information from
the Investors after prompt request from the Company to the Investors to provide
such information, prepare and file with the SEC, within 30 days after the
Closing Date, a registration statement on Form S-3 (the "Registration
Statement") to enable the resale of the Shares and the Warrant Shares by the
Investors from time to time through the automated quotation system of the Nasdaq
National Market or in privately-negotiated transactions;
(b) subject to receipt of necessary information from
the Investors after prompt request from the Company to the Investors to provide
such information, use its reasonable commercial efforts to cause the
Registration Statement to become effective on or prior to the 90th day after the
Closing Date;
(c) use its reasonable commercial efforts to prepare
and file with the SEC such amendments and supplements to the Registration
Statement and the Prospectus used in connection therewith as may be necessary to
keep the Registration Statement current, effective and free from any material
misstatement or omission to state a material fact for a period (the
"Registration Period") not exceeding, with respect to each Investor's Shares
purchased hereunder and the Warrant Shares purchased under the Warrant, the
earlier of (i) the date on which all Shares and Warrant Shares then held by the
Investor may be immediately sold to the public under Rule 144(k) of the
Securities Act or (ii) such time as all Shares purchased by such Investor in
this Offering and Warrant Shares issuable pursuant to the Warrant have been sold
pursuant to a registration statement;
(d) furnish to the Investor with respect to the Shares
and the Warrant Shares registered under the Registration Statement such number
of copies of the Registration Statement, Prospectuses and Preliminary
Prospectuses in conformity with the requirements of the Securities Act and such
other documents as the Investor may reasonably request, in order to facilitate
the public sale or other disposition of all or any of the Shares or Warrant
Shares by the Investor; provided, however, that the obligation of the Company to
deliver copies of Prospectuses or Preliminary Prospectuses to the Investor shall
be subject to the receipt by the Company of reasonable assurances from the
Investor that the Investor will comply with the applicable provisions of the
Securities Act and of such other securities or blue sky laws as may be
applicable in connection with any use of such Prospectuses or Preliminary
Prospectuses;
(e) file documents required of the Company for normal
blue sky clearance in states specified in writing by the Investor and use its
reasonable commercial efforts to maintain such blue sky qualifications during
the period the Company is required to maintain the effectiveness of the
Registration Statement pursuant to Section 7.1(c); provided, however, that the
Company shall not be required to qualify to do business or consent to service of
process in any jurisdiction in which it is not now so qualified or has not so
consented;
(f) bear all expenses in connection with the procedures
in paragraph (a) through (e) of this Section 7.1 (other than underwriting
discounts or commissions, brokers' fees and similar selling expenses, and any
other fees or expenses incurred by the Investor, including attorney fees of the
Investor) and the registration of the Shares and Warrant Shares pursuant to the
Registration Statement;
(g) advise the Investor, promptly after it shall receive
notice or obtain knowledge of the issuance of any stop order by the SEC delaying
or suspending the effectiveness of the Registration Statement or of the
initiation or threat of any proceeding for that purpose; and it will promptly
use its reasonable commercial efforts to prevent the issuance of any stop order
or to obtain its withdrawal at the earliest possible moment if such stop order
should be issued; and
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(h) provide a "Plan of Distribution" section of the
Registration Statement that is reasonably acceptable to all Investors and which,
at a minimum, states that the selling stockholders may transfer the Shares in
various circumstances as permitted to the fullest extent of the law and SEC
practice, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of the Prospectus,
and shall otherwise be in all material respects in the form attached hereto as
Exhibit B, subject to any revisions required by the SEC.
Notwithstanding anything to the contrary herein, the Registration
Statement shall cover only the Shares and the Warrant Shares. In no event at any
time before the Registration Statement becomes effective with respect to the
Shares and the Warrant Shares shall the Company publicly announce or file any
other registration statement, other than registrations on Form S-8, without the
prior written consent of a majority in interest of the Investors.
The Company understands that the Investor disclaims being an
underwriter, but if the SEC deems the Investor to be an underwriter the Company
shall not be relieved of any obligations it has hereunder; provided, however
that if the Company receives notification from the SEC that the Investor is
deemed an underwriter, then the period by which the Company is obligated to
submit an acceleration request to the SEC shall be extended to the earlier of
(i) the 90th day after such SEC notification, or (ii) 120 days after the initial
filing of the Registration Statement with the SEC. If required by the rules and
regulations promulgated by the SEC, the Company may disclose the names of those
Investors that may be deemed underwriters in the Registration Statement.
7.2 Transfer of Shares After Registration; Suspension.
(a) The Investor agrees that it will not effect any
disposition of the Shares or its right to purchase the Shares or the Warrant
Shares that would constitute a sale within the meaning of the Securities Act
except as contemplated in the Registration Statement referred to in Section 7.1
and as described below or as otherwise permitted by law, and that it will
promptly notify the Company of any changes in the information set forth in the
Registration Statement regarding the Investor or its plan of distribution.
(b) Except in the event that paragraph (c) below applies,
the Company shall (i) if deemed necessary by the Company, prepare and file from
time to time with the SEC a post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or a supplement or amendment
to any document incorporated therein by reference or file any other required
document so that such Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
so that, as thereafter delivered to purchasers of the Shares and Warrant Shares
being sold thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; (ii) provide the Investor copies of any
documents filed pursuant to Section 7.2(b)(i) as the Investor may reasonably
request; and (iii) inform each Investor that the Company has complied with its
obligations in Section 7.2(b)(i) (or that, if the Company has filed a
post-effective amendment to the Registration Statement which has not yet been
declared effective, the Company will notify the Investor to that effect, will
use its reasonable commercial efforts to secure the effectiveness of such
post-effective amendment as promptly as possible and will promptly notify the
Investor pursuant to Section 7.2(b)(i) hereof when the amendment has become
effective).
(c) Subject to paragraph (d) below, in the event (i) of
any request by the SEC or any other federal or state governmental authority
during the period of effectiveness of the Registration Statement for amendments
or supplements to a Registration Statement or related Prospectus or for
additional information; (ii) of the issuance by the SEC or any other federal or
state governmental authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose;
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Shares or the Warrant Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; or (iv) of any event or
circumstance which, upon the advice of its counsel, necessitates the making of
any changes in the Registration Statement or Prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement of a
material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; then the Company shall
deliver a certificate in writing to the Investor (the "Suspension Notice") to
the effect of the foregoing and, upon receipt of such Suspension Notice, the
Investor will refrain from selling any Shares and Warrant Shares pursuant to the
Registration Statement (a "Suspension") until the Investor's receipt of copies
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of a supplemented or amended Prospectus prepared and filed by the Company, or
until it is advised in writing by the Company that the current Prospectus may be
used, and has received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in any such Prospectus. In the
event of any Suspension, the Company will use its reasonable commercial efforts
to cause the use of the Prospectus so suspended to be resumed as soon as
reasonably practicable within 20 business days after the delivery of a
Suspension Notice to the Investor. In addition to and without limiting any other
remedies (including, without limitation, at law or at equity) available to the
Investor, the Investor shall be entitled to specific performance in the event
that the Company fails to comply with the provisions of this Section 7.2(c).
(d) Notwithstanding the foregoing paragraphs of this
Section 7.2, the Investor shall not be prohibited from selling Shares or Warrant
Shares under the Registration Statement as a result of Suspensions on more than
two occasions of not more than 30 days each in any twelve month period, unless,
in the good faith judgment of the Company's Board of Directors, upon the written
opinion of counsel of the Company, the sale of Shares and Warrant Shares under
the Registration Statement in reliance on this paragraph 7.2(d) would be
reasonably likely to cause a violation of the Securities Act or the Exchange Act
and result in liability to the Company.
(e) Provided that a Suspension is not then in
effect, the Investor may sell Shares under the Registration Statement, provided
that it arranges for delivery of a current Prospectus to the transferee of such
Shares. Upon receipt of a request therefor, the Company has agreed to provide an
adequate number of current Prospectuses to the Investor and to supply copies to
any other parties requiring such Prospectuses.
(f) In the event of a sale of Shares or Warrant
Shares by the Investor pursuant to the Registration Statement, the Investor must
also deliver to the Company's transfer agent, with a copy to the Company, a
Certificate of Subsequent Sale substantially in the form attached hereto as
Exhibit A, so that the Shares and Warrant Shares may be properly transferred.
7.3 Indemnification. For the purpose of this Section 7.3:
(i) the term "Selling Stockholder" means the Investor and
any affiliate of such Investor;
(ii) the term "Registration Statement" shall include the
Prospectus in the form first filed with the SEC pursuant to Rule 424(b) of the
Securities Act or filed as part of the Registration Statement at the time of
effectiveness if no Rule 424(b) filing is required, and any exhibit, supplement
or amendment included in or relating to the Registration Statement referred to
in Section 7.1; and
(iii) the term "Untrue Statement" means any untrue statement
or alleged untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(a) The Company agrees to indemnify and hold harmless
each Selling Stockholder from and against any losses, claims, damages or
liabilities to which such Selling Stockholder may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon (i) any breach of the representations or warranties of the Company
contained herein or failure to comply with the covenants and agreements of the
Company contained herein, (ii) any Untrue Statement, or (iii) any failure by the
Company to fulfill any undertaking included in the Registration Statement as
amended or supplemented from time to time, and the Company will reimburse such
Selling Stockholder for any reasonable legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim, or preparing to defend any such action, proceeding or
claim, provided, however, that the Company shall not be liable in any such case
to the extent that such loss, claim, damage or liability arises out of, or is
based upon, an Untrue Statement made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Selling
Stockholder specifically for use in preparation of the Registration Statement,
as amended or supplemented from time to time (including, without limitation,
information set forth in the Investor Questionnaire), or the failure of such
Selling Stockholder to comply with its covenants and agreements contained in
Section 7.2 hereof respecting sale of the Shares or Warrant Shares or any
statement or omission in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Selling Stockholder prior to the pertinent
sale or sales by the Selling Stockholder. The Company shall reimburse each
Selling Stockholder for the indemnifiable amounts provided for herein on demand
as such expenses are incurred.
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(b) The Investor agrees to indemnify and hold harmless
the Company (and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, each officer of the Company who
signs the Registration Statement and each director of the Company) from and
against any losses, claims, damages or liabilities to which the Company (or any
such officer, director or controlling person) may become subject (under the
Securities Act or otherwise), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, (i) any failure to comply with the covenants and agreements
contained in Section 7.2 hereof respecting sale of the Shares and Warrant
Shares, or (ii) any Untrue Statement if such Untrue Statement was made in
reliance upon and in conformity with written information furnished by or on
behalf of the Investor specifically for use in preparation of the Registration
Statement, as amended or supplemented from time to time (including, without
limitation, information set forth in the Investor Questionnaire), and the
Investor will reimburse the Company (or such officer, director or controlling
person), as the case may be, for any legal or other expenses reasonably incurred
in investigating, defending or preparing to defend any such action, proceeding
or claim. The Investor shall reimburse the Company or such officer, director or
controlling person, as the case may be, for the indemnifiable amounts provided
for herein on demand as such expenses are incurred. Notwithstanding the
foregoing, the Investor's aggregate obligation to indemnify the Company and such
officers, directors and controlling persons shall be limited to the net amount
received by the Investor from the sale of the Shares less the amount of any
other claims, damages or liabilities paid by the Investor in connection with
such Investor's sale of the Shares.
(c) Promptly after receipt by any indemnified person
of a notice of a claim or the beginning of any action in respect of which
indemnity is to be sought against an indemnifying person pursuant to this
Section 7.3, such indemnified person shall notify the indemnifying person in
writing of such claim or of the commencement of such action, but the omission to
so notify the indemnifying person will not relieve it from any liability which
it may have to any indemnified person under this Section 7.3 (except to the
extent that such omission materially and adversely affects the indemnifying
person's ability to defend such action) or from any liability otherwise than
under this Section 7.3. Subject to the provisions hereinafter stated, in case
any such action shall be brought against an indemnified person, the indemnifying
person shall be entitled to participate therein, and, to the extent that it
shall elect by written notice delivered to the indemnified person promptly after
receiving the aforesaid notice from such indemnified person, shall be entitled
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified person of its election to assume the defense thereof, such
indemnifying person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection with the
defense thereof, provided, however, that if there exists or shall exist a
conflict of interest that would make it inappropriate, in the opinion of counsel
to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel at
the expense of such indemnifying person; provided, however, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel (together with appropriate local counsel) for all indemnified parties.
In no event shall any indemnifying person be liable in respect of any amounts
paid in settlement of any action unless the indemnifying person shall have
approved the terms of such settlement; provided that such consent shall not be
unreasonably withheld or delayed. No indemnifying person shall, without the
prior written consent of the indemnified person, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified person is
or could have been a party and indemnification could have been sought hereunder
by such indemnified person, unless such settlement includes an unconditional
release of such indemnified person from all liability on claims that are the
subject matter of such proceeding.
(d) If the indemnification provided for in this Section
7.3 is unavailable to or insufficient to hold harmless an indemnified person
under subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying person shall contribute to the amount paid or payable by
such indemnified person as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and the Investor,
as well as any other Selling Shareholders under such Registration Statement on
the other in connection with the statements or omissions or other matters which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, in the case of an
Untrue Statement, whether the Untrue Statement relates to information supplied
by the Company on the one hand or an Investor or other Selling Shareholder on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such Untrue Statement. The Company and the
Investor agree that it would not be just and equitable if contribution pursuant
to this subsection (d) were determined by pro rata allocation (even if the
Investor and other Selling Shareholders were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified person as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified person in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), the Investor shall not be required to contribute any amount in
excess of the amount by which the net amount received by the Investor from the
sale of the Shares to which such loss relates exceeds the amount of any damages
which such Investor has otherwise been required to pay by reason of such Untrue
Statement. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Investor's obligations in this subsection to contribute shall be in proportion
to its Investor sale of Shares and Warrant Shares to which such loss relates and
shall not be joint with any other Selling Shareholders.
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(e) The parties to this Agreement hereby acknowledge
that they are sophisticated business persons who were represented by counsel
during the negotiations regarding the provisions hereof including, without
limitation, the provisions of this Section 7.3, and are fully informed regarding
said provisions. They further acknowledge that the provisions of this Section
7.3 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement as required by the Securities
Act and the Exchange Act. The parties are advised that federal or state public
policy as interpreted by the courts in certain jurisdictions may be contrary to
certain of the provisions of this Section 7.3, and the parties hereto hereby
expressly waive and relinquish any right or ability to assert such public policy
as a defense to a claim under this Section 7.3 and further agree not to attempt
to assert any such defense.
7.4 Termination of Conditions and Obligations. The conditions
precedent imposed by Section 5 or this Section 7 upon the transferability of the
Shares and Warrant Shares shall cease and terminate as to any particular number
of the Shares when such Shares shall have been effectively registered under the
Securities Act and sold or otherwise disposed of in accordance with the intended
method of disposition set forth in the Registration Statement covering such
Shares or at such time as an opinion of counsel reasonably satisfactory to the
Company shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act.
7.5 Information Available. So long as the Registration
Statement is effective covering the resale of Shares owned by the Investor, the
Company will furnish to the Investor:
(a) as soon as practicable after it is available, one
copy of (i) its Annual Report to Stockholders (which Annual Report shall contain
financial statements audited in accordance with generally accepted accounting
principles by a national firm of certified public accountants), (ii) its Annual
Report on Form 10-K and (iii) its Quarterly Reports on Form 10-Q (the foregoing,
in each case, excluding exhibits);
(b) upon the request of the Investor, all exhibits
excluded by the parenthetical to subparagraph (a) of this Section 7.5 as filed
with the SEC and all other information that is made available to shareholders;
and
(c) upon the reasonable request of the Investor, an
adequate number of copies of the Prospectuses to supply to any other party
requiring such Prospectuses; and upon the reasonable request of the Investor,
the President or the Chief Financial Officer of the Company (or an appropriate
designee thereof) will meet with the Investor or a representative thereof at the
Company's headquarters to discuss all information relevant for disclosure in the
Registration Statement covering the Shares and Warrant Shares and will otherwise
cooperate with any Investor conducting an investigation for the purpose of
reducing or eliminating such Investor's exposure to liability under the
Securities Act, including the reasonable production of information at the
Company's headquarters; provided, that the Company shall not be required to
disclose any confidential information to or meet at its headquarters with any
Investor until and unless the Investor shall have entered into a confidentiality
agreement in form and substance reasonably satisfactory to the Company with the
Company with respect thereto.
7.6 Legend; Restrictions on Transfer. The certificate or
certificates for the Shares and the Warrants (and any securities issued in
respect of or exchange for the Shares or Warrants) shall be subject to a legend
or legends restricting transfer under the Securities Act and referring to
restrictions on transfer herein, such legend to be substantially as follows:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, OR HYPOTHECATED UNLESS
AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF
COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF
THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.
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The Company and the Investor acknowledge and agree that the Investor may, as
permitted by law, from time to time pledge pursuant to a bona fide margin
agreement or grant a security interest in some or all of the Shares and Warrants
and, if required under the terms of such arrangement, Investor may, as permitted
by law, transfer pledged or secured Shares and Warrants to the pledgees or
secured parties. So long as Investor is not an affiliate of the Company, such a
pledge or transfer would not be subject to approval or consent of the Company,
provided that, upon the request of the Company, a legal opinion of legal counsel
to the pledgee, secured party or pledgor shall be obtained. At the Investor's
expense, so long as the Shares and Warrants are subject to the legend required
by this Section 7.6, the Company will use its reasonable commercial efforts to
execute and deliver such reasonable documentation as a pledgee or secured party
of Shares and Warrants may reasonably request in connection with a pledge or
transfer of the Shares and Warrants including such amendments or supplements to
the Registration Statement and Prospectus as may be reasonably required. The
foregoing does not affect Investor's obligations pursuant to Section 7.2(a).
7.7 Liquidated Damages. The Company and Investor agree that
Investor will suffer damages if the Company fails to fulfill its obligations
pursuant to Section 7.1 and 7.2 hereof and that it would not be possible to
ascertain the extent of such damages with precision. Accordingly, the Company
hereby agrees to pay liquidated damages ("Liquidated Damages") to Investor under
the following circumstances: (a) if the Registration Statement is not filed by
the Company on or prior to 30 days after the Closing Date (such an event, a
"Filing Default"); (b) if the Registration Statement is not declared effective
by the SEC on or prior to the 90th day after the Closing Date (such an event, an
"Effectiveness Default"); or (c) if the Registration Statement (after its
effectiveness date) ceases to be effective and available to Investor for any
continuous period that exceeds 30 days or for one or more period that exceeds in
the aggregate 60 days in any 12-month period (such an event, a "Suspension
Default" and together with a Filing Default and an Effectiveness Default, a
"Registration Default"). In the event of a Registration Default, the Company
shall as Liquidated Damages pay to Investor, for each 30 day period of a
Registration Default, an amount in cash equal to 1% of the aggregate purchase
price paid by Investor pursuant to this Agreement up to a maximum of 10% of the
aggregate purchase price of the Shares, provided that Liquidation Damages in
respect of a Suspension Default shall not be payable in relation to any Shares
not owned by the Investor at the time of the Suspension Default. The Company
shall pay the Liquidated Damages as follows: (i) in connection with a Filing
Default, on the 30th day after the Closing Date, and each 16th day thereafter
until the Registration Statement is filed with the SEC; (ii) in connection with
an Effectiveness Default, on the 91st day after the Closing Date and each 30th
day thereafter until the Registration Statement is declared effective by the
SEC; or (iii) in connection with a Suspension Default, on either (x) the 31st
consecutive day of any Suspension or (y) the 61st day (in the aggregate) of any
Suspensions in any 12-month period, and each 30th day thereafter until the
Suspension is terminated in accordance with Section 7.2. Notwithstanding the
foregoing, the Company shall have no liability for Liquidated Damages to any
Investor who is not named in an effective Registration Statement as a result of
any action or inaction of such Investor. The Liquidated Damages payable herein
shall apply on a pro rata basis for any portion of a 30-day period of a
Registration Default.
8. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within the United States
by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile, or (B) if delivered
from outside the United States, by International Federal Express (or other
recognized international express courier) or facsimile, and shall be deemed
given (i) if delivered by first-class registered or certified mail, three
business days after so mailed, (ii) if delivered by nationally recognized
overnight carrier, one business day after so mailed, (iii) if delivered by
International Federal Express (or other recognized international express
courier), two business days after so mailed, (iv) if delivered by facsimile,
upon electronic confirmation of receipt and shall be delivered as addressed as
follows:
(a) if to the Company, to:
ParkerVision, Inc.
8493 Baymeadows Way
Jacksonville, FL 32256
Attn: Jeffrey Parker and Cindy Poehlman
(b) with a copy to:
Graubard Miller
The Chrysler Building
405 Lexington Avenue, 19th Floor
New York, NY 10174
Attn: David Alan Miller
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(c) if to the Investor, at its address on the signature
page hereto, or at such other address or addresses as
may have been furnished to the Company in writing.
9. Changes. This Agreement may be modified, amended or waived only
pursuant to a written instrument signed by the Company and (a) Investors holding
a majority of the Shares issued and sold in the Offering, provided that such
modification, amendment or waiver is made with respect to all Agreements and
does not adversely affect the Investor without adversely affecting all Investors
in a similar manner; or (b) the Investor.
10. Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
11. Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
12. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York, without giving
effect to the principles of conflicts of law. The parties hereby agree that all
actions or proceedings arising directly or indirectly from or in connection with
this Agreement shall be litigated only in the Supreme Court of the State of New
York or the United States District Court for the Southern District of New York
located in New York County, New York. The Company consents and submits to the
jurisdiction and venue of the foregoing courts and consents that any process or
notice of motion or other application to either of said courts or a judge
thereof may be serviced on the Company inside or outside the State of New York
or the Southern District of New York (but with respect to any party hereto, such
consent shall not be deemed a general consent to jurisdiction and service for
any third parties) by registered mail, return receipt requested, directed to the
Company at its address proved in or pursuant to this Agreement (and service so
made shall be deemed complete three days after the same has been posted as
aforesaid) or by personal service or in such other manner as may be permissible
under the rules of said courts. The Company hereby waives any right to object to
a proceeding in such courts based on inconvenience of the forum and waives any
right to a jury trial in connection with any litigation pursuant to this
Agreement.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
14. Entire Agreement. This Agreement and the Warrants constitute the
entire agreement between the parties hereto and supersedes any prior
understandings or agreements concerning the purchase and sale of the Shares and
the resale registration of the Shares.
15. Rule 144. The Company covenants that it will timely file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder (or, if the Company
is not required to file such reports, it will, upon the request of any Investor
holding Shares purchased hereunder or Warrant Shares purchased under the
Warrants made after the first anniversary of the Closing Date, make publicly
available such information as necessary to permit sales pursuant to Rule 144
under the Securities Act), and it will take such further action as any such
Investor may reasonably request, all to the extent required from time to time to
enable such Investor to sell Shares purchased hereunder and Warrant Shares
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of the Investor, the Company will deliver
to such holder a written statement as to whether it has complied with such
information and requirements.
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16. Confidential Information.
(a) The Investor represents to the Company that, at all times
during the Company's offering of the Shares, the Investor has maintained in
confidence (i) all the material terms and conditions of the transaction
contemplated by the Agreements and the Warrants and (ii) the 2004 Preliminary
Year End Information provided to Investors (collectively, the "Confidential
Information"), and covenants that it will continue to maintain in confidence
such Confidential Information until the earlier of (i) such Confidential
Information becomes generally publicly available other than through a violation
of this provision by the Investor or its agents or (ii) March 31, 2005.
(b) The Company shall on the Closing Date issue a press
release disclosing the material terms of the transactions contemplated hereby
(including at least the number of Shares and Warrants sold and proceeds
therefrom). The Company shall not publicly disclose the name of Investor, or
include the name of Investor in any filing with the SEC or any state and federal
regulatory agency or the Nasdaq (other than the filing of the Agreements with
the SEC pursuant to the Exchange Act), without the prior written consent of
Investor, except to the extent such disclosure is required by law, regulation or
Nasdaq regulations. The Company shall publicly disclose the 2004 Preliminary
Year End Information on or prior to March 31, 2005.
17. No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.
18. Knowledge. The term "knowledge" in this Agreement shall mean the knowledge
of the directors and officers of the Company after due inquiry.
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PARKERVISION, INC.
INVESTOR QUESTIONNAIRE
(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)
To: ParkerVision, Inc.
8493 Baymeadows Way
Jacksonville, FL 32256
This Investor Questionnaire ("Questionnaire") must be completed by each
potential investor in connection with the offer and sale of the shares of the
common stock, par value $.01 per share (the "Common Stock"), and Warrants to
purchase shares of Common Stock, of ParkerVision, Inc. (collectively the
"Securities"). The Securities are being offered and sold by ParkerVision, Inc.
(the "Corporation") without registration under the Securities Act of 1933, as
amended (the "Act"), and the securities laws of certain states, in reliance on
the exemptions contained in Section 4(2) of the Act and on Regulation D
promulgated thereunder and in reliance on similar exemptions under applicable
state laws. The Corporation must determine that a potential investor meets
certain suitability requirements before offering or selling Securities to such
investor. The purpose of this Questionnaire is to assure the Corporation that
each investor will meet the applicable suitability requirements. The information
supplied by you will be used in determining whether you meet such criteria, and
reliance upon the private offering exemption from registration is based in part
on the information herein supplied.
This Questionnaire does not constitute an offer to sell or a
solicitation of an offer to buy any security. Your answers will be kept strictly
confidential. However, by signing this Questionnaire you will be authorizing the
Corporation to provide a completed copy of this Questionnaire to such parties as
the Corporation deems appropriate in order to ensure that the offer and sale of
the Securities will not result in a violation of the Act or the securities laws
of any state and that you otherwise satisfy the suitability standards applicable
to purchasers of the Securities. All potential investors must answer all
applicable questions and complete, date and sign this Questionnaire. Please
print or type your responses and attach additional sheets of paper if necessary
to complete your answers to any item.
A. BACKGROUND INFORMATION
Name:
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Business Address:
---------------------------------------------------------------
(Number and Street)
(City) (State) (Zip Code)
Telephone Number: (___)
--------------------------------------------------------
Residence Address:
--------------------------------------------------------------
(Number and Street)
(City) (State) (Zip Code)
Telephone Number: (___)
--------------------------------------------------------
If an individual:
Age: Citizenship: Where registered
----- ------------ to vote: -----------------
If a corporation, partnership, limited liability company, trust or other entity:
Type of entity:
--------------------------------------------------------
State of formation: Date of formation:
--------------------- --------------------
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Social Security or Taxpayer Identification No.
----------------------------------
Send all correspondence to (check one): __Residence Address __Business Address
Current ownership of securities of the Corporation:
__________ shares of common stock, par value $.01 per share (the
"Common Stock") options to purchase __________ shares of Common Stock.
B. STATUS AS ACCREDITED INVESTOR
I. The undersigned is an "accredited investor" as such term is defined in
Regulation D under the Act, as at the time of the sale of the Securities the
undersigned falls within one or more of the following categories (Please initial
one or more, as applicable):
____ (1) a bank as defined in Section 3(a)(2) of the Act, or a savings
and loan association or other institution as defined in Section 3(a)(5)(A) of
the Act whether acting in its individual or fiduciary capacity; a broker or
dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934;
an insurance company as defined in Section 2(13) of the Act; an investment
company registered under the Investment Corporation Act of 1940 or a business
development company as defined in Section 2(a)(48) of that Act; a Small Business
Investment Corporation licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan
established and maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions for the benefit of
its employees, if such plan has total assets in excess of $5,000,000; an
employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with the investment decisions made solely by persons that
are accredited investors;
____ (2) a private business development company as defined in Section
202(a)(22) of the Investment Adviser Act of 1940;
____ (3) an organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring the
Securities offered, with total assets in excess of $5,000,000;
____ (4) a natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of such person's purchase of the
Securities exceeds $1,000,000;
____ (5) a natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
____ (6) a trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the Securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) of
Regulation D; and
____ (7) an entity in which all of the owners are accredited investors
(as defined above).
II. The undersigned is not an "accredited investor" as such term is defined
in Regulation D under the Act, as at the time of the sale of the
Securities, and each of the following statements is true and correct:
_________ (initial)
(a) The Company has made available to the undersigned, during the
course of this transaction and prior to the acquisition of the
Securities, the opportunity to ask questions of and receive
complete and correct answers from representatives of the
Company concerning the terms and conditions of the Securities
and to obtain any additional information relating to the
financial condition and business of the Company;
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(b) The undersigned has such knowledge and experience in financial
and business matters that the undersigned is capable of
evaluating the merits and risks of the investment in the
Securities;
(c) The undersigned has received or been given access to all
information required to be furnished to the undersigned
pursuant to Rule 502(b) of the Securities Act.
C. REPRESENTATIONS
The undersigned hereby represents and warrants to the Corporation as
follows:
1. Any purchase of the Securities would be solely for the account of the
undersigned and not for the account of any other person or with a view
to any resale, fractionalization, division, or distribution thereof.
2. The information contained herein is complete and accurate and may be
relied upon by the Corporation.
3. There are no suits, pending litigation, or claims against the
undersigned that could materially affect the net worth of the
undersigned as reported in this Questionnaire.
4. The undersigned acknowledges that there may occasionally be times when
the Corporation determines that it must suspend the use of the
Prospectus forming a part of the Registration Statement (as such terms
are defined in the Stock Purchase Agreement to which this Questionnaire
is attached), as set forth in Section 7.2(c) of the Stock Purchase
Agreement. The undersigned is aware that, in such event, the Securities
will not be subject to ready liquidation, and that any Securities
purchased by the undersigned would have to be held during such
suspension. The overall commitment of the undersigned to investments
which are not readily marketable is not excessive in view of the
undersigned's net worth and financial circumstances, and any purchase
of the Securities will not cause such commitment to become excessive.
The undersigned is able to bear the economic risk of an investment in
the Securities.
5. The undersigned has carefully considered the potential risks relating
to the Corporation and a purchase of the Securities, and fully
understands that the Securities are speculative investments which
involve a high degree of risk of loss of the undersigned's entire
investment. Among others, the undersigned has carefully considered each
of the risks identified in the Exchange Act Documents.
IN WITNESS WHEREOF, the undersigned has executed this
Questionnaire this 10th day of March, 2005, and declares under oath
that it is truthful and correct.
Print Name
By:
--------------------------------------------
Signature
Title:
-----------------------------------------
(required for any purchaser that is a
corporation, partnership, trust or other
entity)
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[COMPANY LETTERHEAD]
_________, 200_
Re: ParkerVision, Inc.; Registration Statement on Form S-3
Dear Selling Shareholder:
Enclosed please find five (5) copies of a prospectus dated
______________, 200[__] (the "Prospectus") for your use in reselling your shares
of common stock, $.01 par value (the "Shares"), of ParkerVision, Inc. (the
"Company"), under the Company's Registration Statement on Form S-3 (Registration
No. 333- ) (the "Registration Statement"), which has been declared effective by
the Securities and Exchange Commission. AS A SELLING SHAREHOLDER UNDER THE
REGISTRATION STATEMENT, YOU HAVE AN OBLIGATION TO DELIVER A COPY OF THE
PROSPECTUS TO EACH PURCHASER OF YOUR SHARES, EITHER DIRECTLY OR THROUGH THE
BROKER-DEALER WHO EXECUTES THE SALE OF YOUR SHARES.
The Company is obligated to notify you in the event that it suspends
trading under the Registration Statement in accordance with the terms of the
Stock and Warrant Purchase Agreement between the Company and you. During the
period that the Registration Statement remains effective and trading thereunder
has not been suspended, you will be permitted to sell your Shares which are
included in the Prospectus under the Registration Statement. Upon a sale of any
Shares under the Registration Statement, you or your broker will be required to
deliver to the Transfer Agent, [Name of Transfer Agent] (1) your restricted
stock certificate(s) representing the Shares, (2) instructions for transfer of
the Shares sold, and (3) a representation letter from your broker, or from you
if you are selling in a privately negotiated transaction, or from such other
appropriate party, in the form of Exhibit A attached hereto (the "Representation
Letter"). The Representation Letter confirms that the Shares have been sold
pursuant to the Registration Statement and in a manner described under the
caption "Plan of Distribution" in the Prospectus and that such sale was made in
accordance with all applicable securities laws, including the prospectus
delivery requirements.
Please note that you are under no obligation to sell your Shares during
the registration period. However, if you do decide to sell, you must comply with
the requirements described in this letter or otherwise applicable to such sale.
Your failure to do so may result in liability under the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended. Please remember
that all sales of your Shares must be carried out in the manner set forth under
the caption "Plan of Distribution" in the Prospectus if you sell under the
Registration Statement. The Company may require an opinion of counsel reasonably
satisfactory to the Company if you choose another method of sale. YOU SHOULD
CONSULT WITH YOUR OWN LEGAL ADVISOR(S) ON AN ONGOING BASIS TO ENSURE YOUR
COMPLIANCE WITH THE RELEVANT SECURITIES LAWS AND REGULATIONS.
IN ORDER TO MAINTAIN THE ACCURACY OF THE PROSPECTUS, YOU MUST NOTIFY
THE UNDERSIGNED UPON THE SALE, GIFT, OR OTHER TRANSFER OF ANY SHARES BY YOU,
INCLUDING THE NUMBER OF SHARES BEING TRANSFERRED, AND IN THE EVENT OF ANY OTHER
CHANGE IN THE INFORMATION REGARDING YOU WHICH IS CONTAINED IN THE PROSPECTUS.
FOR EXAMPLE, YOU MUST NOTIFY THE UNDERSIGNED IF YOU ENTER INTO ANY ARRANGEMENT
WITH A BROKER-DEALER FOR THE SALE OF SHARES THROUGH A BLOCK TRADE, SPECIAL
OFFERING, EXCHANGE DISTRIBUTION OR SECONDARY DISTRIBUTION OR A PURCHASE BY A
BROKER-DEALER. DEPENDING ON THE CIRCUMSTANCES, SUCH TRANSACTIONS MAY REQUIRE THE
FILING OF A SUPPLEMENT TO THE PROSPECTUS IN ORDER TO UPDATE THE INFORMATION SET
FORTH UNDER THE CAPTION "PLAN OF DISTRIBUTION" IN THE PROSPECTUS.
Should you need any additional copies of the Prospectus, or if you have
any questions concerning the foregoing, please write to me at ParkerVision,
Inc., 8493 Baymeadows Way, Jacksonville, FL 32256. Thank you.
Sincerely,
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Exhibit A
CERTIFICATE OF SUBSEQUENT SALE
[Name of Transfer Agent]
[Address of Transfer Agent]
RE: Sale of Shares of Common Stock of ParkerVision, Inc. (the
"Company") pursuant to the Company's Prospectus dated ________,
200[__] (the "Prospectus")
Dear Sir/Madam:
The undersigned hereby certifies, in connection with the sale of shares
of Common Stock of the Company included in the table of Selling Shareholders in
the Prospectus, that the undersigned has sold the shares pursuant to the
Prospectus and in a manner described under the caption "Plan of Distribution" in
the Prospectus and that such sale complies with all securities laws applicable
to the undersigned, including, without limitation, the Prospectus delivery
requirements of the Securities Act of 1933, as amended.
Selling Shareholder (the beneficial owner):
Record Holder (e.g., if held in name of nominee):
-------------------------------
Restricted Stock Certificate No.(s):
--------------------------------------------
Number of Shares Sold:
----------------------------------------------------------
Date of Sale:
-------------------------------------------------------------------
In the event that you receive a stock certificate(s) representing more
shares of Common Stock than have been sold by the undersigned, then you should
return to the undersigned a newly issued certificate for such excess shares in
the name of the Record Holder and BEARING A RESTRICTIVE LEGEND. Further, you
should place a stop transfer on your records with regard to such certificate.
Very truly yours,
Dated: By:
----------------------- --------------------------------------
Print Name:
------------------------------
Title:
-----------------------------------
cc: ParkerVision, Inc.
8493 Baymeadows Way
Jacksonville, FL 32256
Attn: Chief Financial Officer
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Exhibit B
FORM OF PLAN OF DISTRIBUTION
The selling stockholders, which as used herein includes donees,
pledgees, transferees or other successors-in-interest selling shares of common
stock or interests in shares of common stock received after the date of this
prospectus from a selling stockholder as a gift, pledge, partnership
distribution or other transfer, may, from time to time, sell, transfer or
otherwise dispose of any or all of their shares of common stock or interests in
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These dispositions may
be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time
of sale, or at negotiated prices.
The selling stockholders may use any one or more of the following
methods when disposing of shares or interests therein:
- ordinary brokerage transactions and transactions in which the broker-
dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the
shares as agent, but may position and resell a portion of the block as principal
to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the broker-
dealer for its account;
- an exchange distribution in accordance with the rules of the
applicable exchange;
- privately negotiated transactions;
- short sales effected after the date the registration statement of
which this Prospectus is a part is declared effective by the SEC;
- through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise;
- broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The selling stockholders may, from time to time, pledge or grant a
security interest in some or all of the shares of common stock owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock, from
time to time, under this prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus. The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.
In connection with the sale of our common stock or interests therein,
the selling stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume. After the
effectiveness of the registration statement, the selling stockholders may also
sell shares of our common stock short and deliver these securities to close out
their short positions, or loan or pledge the common stock to broker-dealers that
in turn may sell these securities. The selling stockholders may also enter into
option or other transactions with broker-dealers or other financial institutions
or the creation of one or more derivative securities which require the delivery
to such broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).
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The aggregate proceeds to the selling stockholders from the sale of the
common stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any. Each of the selling stockholders reserves the
right to accept and, together with their agents from time to time, to reject, in
whole or in part, any proposed purchase of common stock to be made directly or
through agents. We will not receive any of the proceeds from this offering. Upon
any exercise of the warrants by payment of cash, however, we will receive the
exercise price of the warrants.
The selling stockholders also may resell all or a portion of the shares
in open market transactions in reliance upon Rule 144 under the Securities Act
of 1933, provided that they meet the criteria and conform to the requirements of
that rule.
The selling stockholders and any underwriters, broker-dealers or agents
that participate in the sale of the common stock or interests therein may be
"underwriters" within the meaning of Section 2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are "underwriters" within the meaning of Section 2(11)
of the Securities Act will be subject to the prospectus delivery requirements of
the Securities Act.
To the extent required, the shares of our common stock to be sold, the
names of the selling stockholders, the respective purchase prices and public
offering prices, the names of any agents, dealer or underwriter, any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if
applicable, the common stock may be sold in these jurisdictions only through
registered or licensed brokers or dealers. In addition, in some states the
common stock may not be sold unless it has been registered or qualified for sale
or an exemption from registration or qualification requirements is available and
is complied with.
We have advised the selling stockholders that the anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales of shares in the
market and to the activities of the selling stockholders and their affiliates.
In addition, we will make copies of this prospectus (as it may be supplemented
or amended from time to time) available to the selling stockholders for the
purpose of satisfying the prospectus delivery requirements of the Securities
Act. The selling stockholders may indemnify any broker-dealer that participates
in transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act.
We have agreed to indemnify the selling stockholders against
liabilities, including liabilities under the Securities Act and state securities
laws, relating to the registration of the shares offered by this prospectus.
We have agreed with the selling stockholders to keep the registration
statement of which this prospectus constitutes a part effective until the
earlier of (1) such time as all of the shares covered by this prospectus have
been disposed of pursuant to and in accordance with the registration statement
or (2) the date on which the shares may be sold pursuant to Rule 144(k) of the
Securities Act.
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