SECURITIES & EXCHANGE COMMISSION EDGAR FILING
PARKERVISION INC
Form: 10-K
Date Filed: 2021-03-31
Corporate Issuer CIK: 914139
© Copyright 2021, Issuer Direct Corporation. All Right Reserved. Distribution of this document is strictly prohibited, subject to the terms of use.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
For the transition period from ________to__________
Commission file number 000-22904
PARKERVISION, INC.
(Exact Name of Registrant as Specified in its Charter)
Florida
(State of Incorporation)
59-2971472
(I.R.S. Employer ID No.)
4446-1A Hendricks Avenue, Suite 354,
Jacksonville, Florida 32207
(Address of Principal Executive Offices)
Registrant’s telephone number, including area code: (904) 732-6100
Title of Each Class
Common Stock, $.01 par value
Common Stock Rights
Securities registered pursuant to Section 12(b) of the Act:
Trading
Symbol(s)
PRKR
Name of Each Exchange on Which
Registered
OTCQB
OTCQB
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ( ) No
(X)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act. Yes ( ) No (X)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes (X) No ( )
of the Securities Exchange Act
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes (X) No ( )
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ( )
Non-accelerated filer (X)
Accelerated filer ( )
Smaller reporting company (X)
Emerging growth company ( )
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ( )
Indicate by check mark whether the registrant has filed a report on and attestation to its man agement’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit reports. ( )
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ( ) No (X)
As of June 30, 2020, the aggregate market value of the registrant’s common stock, $.01 par value, held by non-affiliates of the registrant was
approximately $23,474,499 (based upon $0. 49 share last sale price on that date, as reported by OTCQB).
As of March 30, 202 1, 69,886,849 shares of the Issuer's Common Stock were outstanding .
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TABLE OF CONTENTS
INTRODUCTORY NOTE
PART I
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions and Director Independence
Principal Accounting Fees and Services
Exhibits and Financial Statement Schedules
Form 10-K Summary
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
SIGNATURES
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INTRODUCTORY NOTE
Unless the context otherwise requires, in this Annual Report on Form 10-K (“Annual Report”), “we”, “us”, “our” and
the “Company” mean ParkerVision, Inc. and its wholly-owned German subsidiary, ParkerVision GmbH.
Forward-Looking Statements
We believe that it is important to communicate our future expectations to our shareholders and to the public. This
Annual Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act
of 1995, including, without limitation, statements about our future plans, objectives, and expectations under the
headings “Item 1. Business” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations.” Forward-looking statements include any statement that does not directly relate to any historical or
current fact. When used in this Annual Report and in future filings by the Company with the Securities and
Exchange Commission (“SEC”), the words or phrases “will likely result”, “management expects”, “we expect”, “will
continue”, “is anticipated”, “estimated” or similar expressions are intended to identify such “forward-looking
statements.” Readers are cautioned not to place undue reliance on such forward-looking statements, each of which
speaks only as of the date made. Such statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical results and those presently anticipated or projected, including the
risks and uncertainties set forth in this Annual Report under the heading “Item 1A. Risk Factors” and in our other
periodic reports. Examples of such risks and uncertainties include general economic and business conditions, the
outcome of litigation, unexpected changes in technologies and technological advances, reliance on our intellectual
property, and the ability to obtain adequate financing in the future. We have no obligation to publicly release the
results of any revisions that may be made to any forward-looking statements to reflect anticipated events or
circumstances occurring after the date of such statements.
Item 1. Business.
PART I
We are in the business of innovating fundamental wireless technologies and products. We have designed and
developed proprietary radio frequency (“RF”) technologies and integrated circuits for use in wireless communication
products.
We have expended significant financial and other resources to research and develop our RF technologies and to
obtain patent protection for those technologies in the United States of America (“U.S.”) and certain foreign
jurisdictions. We believe certain patents protecting our proprietary technologies have been broadly infringed by
others and therefore the primary focus of our business plan is the enforcement of our intellectual property rights
through patent infringement litigation and licensing efforts. We currently have patent enforcement actions ongoing in
various U.S. district courts against mobile handset providers and providers of smart televisions and other WiFi
products and, in certain cases, their chip suppliers for the infringement of several of our RF patents. We have made
significant investments in developing and protecting our technologies, the returns on which are dependent upon the
generation of future revenues for realization.
In 2018, we restructured our operations to reduce operating expenses in light of our limited capital resources. As
part of that restructuring, we made significant reductions in our investment in the development and marketing of a
consumer distributed WiFi product line marketed under the brand name Milo®. In early 2019, we ceased
substantially all ongoing research and development efforts and, where
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applicable, repurposed resources to support our patent enforcement and product sales and support efforts. We
ceased sales of our Milo products in the fourth quarter of 2019 and are currently focused exclusively on our patent
enforcement litigation and licensing efforts.
We spent much of 2020 supporting our two patent infringement cases against Qualcomm and others that were
scheduled for jury trials in Florida in 2020. As a result of the COVID-19 pandemic, in 2020, one of those trials was
rescheduled for mid-year 2021 and the second was stayed pending the outcome of the first case. In addition, in
2020, we filed a number of cases in Texas against alleged infringers of our patented technologies. See “Legal
Proceedings” in Note 12 to our consolidated financial statements included in Item 8 for a detailed description of our
various patent enforcement actions.
A significant portion of our litigation costs have been funded under a secured contingent payment arrangement with
Brickell Key Investments, LP (“Brickell”), contingent arrangements with legal counsel, and various debt and equity
financings. See “Liquidity and Capital Resources” included in Item 7 for a full discussion of our litigation funding
arrangements and our equity and debt financings.
Products
We produced and sold consumer WiFi products, under the tradename Milo, from 2017 to 2019. These products
offered a cost-effective networking system to enhance WiFi connectivity by effectively distributing the WiFi signal
from existing routers and modems throughout a broader coverage area. We marketed these products primarily to
consumers through Amazon.com and other online outlets, including our own direct-to-consumer online retail site.
We ceased sales of these WiFi products in 2019.
RF Technologies
Our RF technologies enable highly accurate transmission and reception of RF carriers at low power, thereby
enabling extended battery life, and certain size, cost, performance, and packaging advantages.
We believe the most significant hurdle to the licensing and/or sale of our technologies and related products is the
widespread use of certain of our technologies in infringing products produced by companies with significantly
greater financial, technical, sales, and marketing resources. We believe we can gain adoption and/or secure
licensing agreements with unauthorized current users of one or more of our technologies, and therefore compete,
based on a solid and defensible patent portfolio and the advantages enabled by our unique circuit architectures.
Patents and Trademarks
We consider our intellectual property, including patents, patent applications, trademarks, and trade secrets to be
significant to our business plan. We have a program to file applications for and obtain patents, copyrights, and
trademarks in the U.S. and in selected foreign countries where we believe filing for such protection is appropriate to
establish and maintain our proprietary rights in our technology and products. As of December 31, 2020, we had
approximately 86 active U.S. and foreign patents related to our RF technologies. In addition, we have a number of
recently expired patents that we believe continue to have significant economic value as a result of our ability to
assert past damages in our patent enforcement actions. We estimate the economic lives of our patents to be the
shorter of fifteen years from issuance or twenty years from the earliest application date. Our current portfolio of
issued patents have expirations ranging from 2021 to 2036.
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Employees
As of December 31, 2020, we had seven full-time and two part-time employees. We also outsource certain specialty
services, such as information technology, and utilize contract staff and third-party consultants from time to time to
supplement our workforce. Our employees are not represented by any collective bargaining agreements and we
consider our employee relations to be satisfactory.
We have taken measures to protect our workforce in response to the COVID-19 pandemic, including optional remote
worksites for all of our employees beginning in April 2020. Our management, with the oversight of our board of
directors, monitors the hiring, retention and management of our employees.
Available Information and Access to Reports
We file annual reports on Forms 10-K, quarterly reports on Forms 10-Q, proxy statements and other reports,
including any amendments thereto, electronically with the SEC. The SEC maintains an Internet site
(http://www.sec.gov) where these reports may be obtained at no charge. We also make copies of these reports
available, free of charge through our website (http://www.parkervision.com) via the link “SEC filings” as soon as
practicable after filing or furnishing such materials with the SEC.
Corporate Website
We announce investor information, including news and commentary about our business, financial performance and
related matters, SEC filings, notices of investor events, and our press and earnings releases, in the investor relations
section of our website (http://ir.parkervision.com). Additionally, if applicable, we webcast our earnings calls and
certain events we participate in or host with members of the investment community in the investor relations section
of our website. Investors and others can receive notifications of new information posted in the investor relations
section in real time by signing up for email alerts and/or RSS feeds. Further corporate governance information,
including our governance guidelines, Board committee charters, and code of conduct, is also available in the investor
relations section of our website under the heading “Corporate Governance.” The content of our website is not
incorporated by reference into this Annual Report or in any other report or document we file with the SEC, and any
references to our website are intended to be inactive textual references only.
Item 1A. Risk Factors.
In addition to other risks and uncertainties described in this Annual Report, the following risk factors should be
carefully considered in evaluating our business because such factors may have a significant impact on our business,
operating results, liquidity and financial condition. As a result of the risk factors set forth below, actual results could
differ materially from those projected in any forward-looking statements.
Financial and Operating Risks
Our financial condition raises substantial doubt as to our ability to continue as a going concern.
We have had significant losses and negative cash flows in every year since inception, and continue to have an
accumulated deficit which, at December 31, 2020, was approximately $421.4 million. Our net losses for the years
ended December 31, 2020 and 2019 were approximately $19.6 million and $9.5 million, respectively. Our
independent registered public accounting firm has included in their audit opinion on our consolidated financial
statements as of and for the year ended December 31, 2020, a statement with respect to substantial doubt about
our ability to continue as a going concern. Note 2 to our
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consolidated financial statements included in Item 8 includes a discussion regarding our liquidity and our ability to
continue as a going concern. Our consolidated financial statements have been prepared assuming we will continue
to operate as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the
normal course of business. If we become unable to continue as a going concern, we may have to liquidate our
assets and the values we receive for our assets in liquidation or dissolution could be significantly lower than the
values reflected in our consolidated financial statements. The substantial doubt as to our ability to continue as a
going concern may adversely affect our ability to negotiate reasonable terms with our vendors and may adversely
affect our ability to raise additional capital in the future.
We have had a history of losses which may ultimately compromise our ability to implement our business
plan and continue in operation.
To date, our technologies and products have not produced revenues sufficient to cover our operating costs. We will
continue to make expenditures on patent protection and enforcement and general operations in order to continue
our current patent enforcement and licensing efforts. Those efforts may not produce a successful financial outcome
in 2021, or at all. Without a successful financial outcome from one or more of our patent enforcement and licensing
efforts, we will not achieve profitability. Furthermore, our current capital resources may not be sufficient to sustain
our operations through 2021. If we are not able to generate sufficient revenues or obtain sufficient capital resources,
we may not be able to implement our business plan or meet our current obligations due within the twelve months
after the issuance date of our consolidated financial statements and investors will suffer a loss in their investment.
This may also result in a change in our business strategies.
We will need to raise substantial additional capital in the future to fund our operations. Failure to raise such
additional capital may prevent us from implementing our business plan as currently formulated.
Because we have had net losses and, to date, have not generated positive cash flow from operations, we have
funded our operating losses primarily from the sale of debt and equity securities, including our secured contingent
debt obligation. Our capital resources include cash and cash equivalents of $1.6 million at December 31, 2020 and
proceeds of approximately $5.6 million received during the first quarter of 2021 from various debt and equity
transactions, including the exercise of options and warrants. Although we implemented significant cost reduction
measures in 2019 and 2020, our business plan will continue to require expenditures for patent protection and
enforcement and general operations. For the years ended December 31, 2020 and 2019, we used $4.8 million and
$3.4 million, respectively in cash for operations which was funded primarily through the sale of convertible debt and
equity securities. In addition, we used $3.0 million of the proceeds received during the first quarter of 2021 to repay
outstanding obligations to one of our litigation firms. Our current capital resources may not be sufficient to meet our
working capital needs for the twelve months after the issuance of our consolidated financial statements and we may
require additional capital to fund our operations. Additional capital may be in the form of debt securities, the sale of
equity securities, including common or preferred stock, additional litigation funding, or a combination thereof. Failure
to raise additional capital may have a material adverse impact on our ability to achieve our business objectives.
Raising additional capital by issuing debt securities or additional equity securities may result in dilution
and/or impose covenants or restrictions that create operational limitations or other obligations.
We may require additional capital to fund our operations and meet our current obligations due within the twelve
months after the issuance date of our consolidated financial statements. Financing, if any, may be
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in the form of debt or sales of equity securities, including common or preferred stock. Debt instruments or the sale of
preferred stock may result in the imposition of operational limitations and other covenants and payment obligations,
any of which may be burdensome to us and may have a material adverse impact on our ability to implement our
business plan as currently formulated. The sale of equity securities, including common or preferred stock, may
result in dilution to the current stockholders’ ownership and may be limited by the number of shares we have
authorized and available for issuance.
We may be obligated to repay outstanding notes at a premium upon the occurrence of an event of default.
We have $1.0 million in secured and unsecured notes payable and $3.9 million in outstanding principal under
convertible notes payable at December 31, 2020. If we fail to comply with the various covenants set forth in each of
the notes, including failure to pay principal or interest when due or, under certain notes, consummating a change in
control, we could be in default thereunder. Upon an event of default under each of the notes, the interest rate of the
notes will increase to 12% per annum and the outstanding principal balance of the notes plus all accrued unpaid
interest may be declared immediately payable by the holders. We may not have sufficient available funds to repay
the notes upon an event of default, and we cannot provide assurances that we will be able to obtain other financing
at terms acceptable to us, or at all.
Our ability to utilize our tax benefits could be substantially limited if we fail to generate sufficient income or
if we experience an “ownership change.”
We have cumulative net operating loss carryforwards (“NOLs”) totaling approximately $323.2 million at
December 31, 2020, of which $294.1 million is subject to expiration in varying amounts from 2021 to 2037. Our
ability to fully recognize the benefits from those NOLs is dependent upon our ability to generate sufficient income
prior to their expiration. In addition, our NOL carryforwards may be limited if we experience an ownership change as
defined by Section 382 of the Internal Revenue Code (“Section 382”). In general, an ownership change under
Section 382 occurs if 5% shareholders increase their collective ownership of the aggregate amount of our
outstanding shares by more than 50 percentage points over a relevant lookback period. We have sold a significant
number of equity securities over the relevant lookback period which increases the risk of triggering an ownership
change under Section 382 from the future sale of additional equity securities. An ownership change under Section
382 will significantly limit our ability to utilize our tax benefits.
Our litigation funding arrangements may impair our ability to obtain future financing and/or generate
sufficient cash flows to support our future operations.
We have funded much of our cost of litigation through contingent financing arrangements with Brickell and others
and contingent fee arrangements with legal counsel. The repayment obligation to Brickell is secured by the majority
of our assets until such time that we have repaid a specified minimum return. Furthermore, our contingent
arrangements will result in reductions in the amount of net proceeds retained by us from litigation, licensing and
other patent-related activities. The contingent fees payable to legal counsel, Brickell and others will consume all of
our initial future proceeds up to specified limits and could exceed half of our proceeds thereafter depending on size
and timing of proceeds, among other factors. The long-term continuation of our business plan is dependent upon our
ability to secure sufficient financing to support our business, and our ability to generate revenues and/or patent
related proceeds sufficient to offset expenses and meet our contingent payment obligations. Failure to generate
revenue or other patent-related proceeds sufficient to repay our contingent obligations may impede our ability to
obtain additional financing which will have a material adverse effect on our ability to achieve our long-term business
objectives.
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Our litigation can be time-consuming, costly and we cannot anticipate the results.
Since 2011, we have spent a significant amount of our financial and management resources to pursue patent
infringement litigation against third parties. We believe this litigation, and other litigation matters that we may in the
future determine to pursue, will continue to consume management and financial resources for long periods of time.
There can be no assurance that our current or future litigation matters will ultimately result in a favorable outcome for
us or that our financial resources will not be exhausted before achieving a favorable outcome. In addition, even if we
obtain favorable interim rulings or verdicts in particular litigation matters, they may not be predictive of the ultimate
resolution of the matter. Unfavorable outcomes could result in exhaustion of our financial resources and could hinder
our ability to pursue licensing and/or product opportunities for our technologies in the future. Failure to achieve
favorable outcomes from one or more of our patent enforcement actions will have a material adverse impact on our
financial condition, results of operations, cash flows, and business prospects.
If our patents and intellectual property rights do not provide us with the anticipated market protections, our
competitive position, business, and prospects will be impaired.
We rely on our intellectual property rights, including patents and patent applications, to provide competitive
advantage and protect us from theft of our intellectual property. We believe that our patents are for entirely new
technologies and that our patents are valid, enforceable and valuable. However, third parties have made claims of
invalidity with respect to certain of our patents and other similar claims may be brought in the future. For example,
the Federal Patent Court in Munich recently invalidated one of our patents that was the subject of infringement cases
against LG and Apple in Germany following a nullity claim filed by Qualcomm. If our patents are shown not to be as
broad as currently believed, or are otherwise challenged such that some or all of the protection is lost, we will suffer
adverse effects from the loss of competitive advantage and our ability to offer unique products and technologies. As
a result, there would be an adverse impact on our financial condition and business prospects. Furthermore,
defending against challenges to our patents may give rise to material costs for defense and divert resources away
from our other activities.
Our business, results of operations, and financial condition may be impacted by the recent coronavirus
(COVID-19) outbreak.
The global spread of COVID-19 has created significant volatility and uncertainty in financial markets. If such
volatility and uncertainty persist, we may be unable to raise additional capital on terms that are acceptable to us, or
at all. Additionally, in response to the pandemic, governments and the private sector have taken a number of drastic
measures to contain the spread of COVID-19. While our employees currently have the ability and are encouraged to
work remotely, such measures may have a substantial impact on employee attendance or productivity, which, along
with the possibility of employees’ illness, may adversely affect our operations.
In addition, COVID-19 has negatively impacted the timing of our current patent infringement actions as a result of
office closures, travel restrictions and court closures. For example, our patent infringement trial in Orlando, Florida
has been delayed twice due to the impact of COVID-19. It is possible that further delays in our cases could occur.
Although COVID-19 is currently not material to our results of operations, there is significant uncertainty relating to the
potential impact of COVID-19 on our business. The extent to which COVID-19 impacts our ongoing patent
enforcement actions and our ability to obtain financing, as well as our results of operations and financial condition,
generally, will depend on future developments which are highly
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uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-
19 and the actions taken by governments and private businesses to contain COVID-19 or treat its impact, among
others. If the disruptions posed by COVID-19 continue for an extensive period of time, our business, results of
operations, and financial condition may be materially adversely affected.
We are subject to outside influences beyond our control, including new legislation that could adversely
affect our licensing and enforcement activities and have an adverse impact on the execution of our
business plan.
Our licensing and enforcement activities are subject to numerous risks from outside influences, including new
legislation, regulations and rules related to obtaining or enforcing patents. For instance, the U.S. has enacted
sweeping changes to the U.S. patent system including changes that transition the U.S. from a “first-to-invent” to a
“first-to-file” system and that alter the processes for challenging issued patents. To the extent that we are unable to
secure patent protection for our future technologies and/or our current patents are challenged such that some or all
of our protection is lost, we will suffer adverse effects to our ability to offer unique products and technologies. As a
result, there would be an adverse impact on our financial position, results of operations and cash flows and our ability
to execute our business plan.
Our industry is subject to rapid technological changes which if we are unable to match or surpass, will
result in a loss of competitive advantage and market opportunity.
Because of the rapid technological development that regularly occurs in the wireless technology industry, along with
shifting user needs and the introduction of competing products and services, we have historically devoted substantial
resources to developing and improving our technology and introducing new product offerings. As a result of our
limited financial resources, we have ceased our research and development activities which could result in a loss of
future market opportunity which could adversely affect our future revenue potential.
We are highly dependent on Mr. Jeffrey Parker as our chief executive officer. If his services were lost, it
would have an adverse impact on the execution of our business plan.
Because of Mr. Parker’s leadership position in the company, the relationships he has garnered in both the industry in
which we operate and the investment community and the key role he plays in our patent litigation strategies, the loss
of his services might be seen as an impediment to the execution of our business plan. If Mr. Parker was no longer
available to the company, investors might experience an adverse impact on their investment. We maintain $5 million
in key-employee life insurance for our benefit for Mr. Parker.
If we are unable to retain key executives and other highly skilled employees, we will not be able to execute
our current business plans.
Our business is dependent on having skilled and specialized key executives and other employees to conduct our
business activities. The inability to retain these key executives and other specialized employees would have an
adverse impact on the technical support activities and the financial reporting and regulatory compliance activities that
our business requires. These activities are instrumental to the successful execution of our business plan.
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Any disruptions to our information technology systems or breaches of our network security could interrupt
our operations, compromise our reputation, and expose us to litigation, government enforcement actions,
and costly response measures and could have a material adverse effect on our business, financial
condition and results of operations.
We rely on information technology systems, including third-party hosted servers and cloud-based servers, to keep
business, financial, and corporate records, communicate internally and externally, and operate other critical
functions. If any of our internal systems or the systems of our third-party providers are compromised due to computer
virus, unauthorized access, malware, and the like, then sensitive documents could be exposed or deleted, and our
ability to conduct business could be impaired. Cyber incidents can result from deliberate attacks or unintentional
events. These incidents can include, but are not limited to, unauthorized access to our systems, computer viruses or
other malicious code, denial of service attacks, malware, ransomware, phishing, SQL injection attacks, human error,
or other events that result in security breaches or give rise to the manipulation or loss of sensitive information or
assets. Cyber incidents can be caused by various persons or groups, including disgruntled employees and vendors,
activists, organized crime groups, and state-sponsored and individual hackers. Cyber incidents can also be caused
or aggravated by natural events, such as earthquakes, floods, fires, power loss, and telecommunications failures.
The risk of cybersecurity breach has generally increased as the number, intensity, and sophistication of attempted
attacks from around the world has increased. While we have cyber security procedures in place, given the evolving
nature of these threats, there can be no assurance that we will not suffer material losses in the future due to cyber-
attacks.
To date, we have not experienced any material losses relating to cyber-attacks, computer viruses or other systems
failures. Although we have taken steps to protect the security of data maintained in our information systems, it is
possible that our security measures will not be able to prevent the systems’ improper functioning or the improper
disclosure of personally identifiable information, such as in the event of cyber-attacks. In addition to operational and
business consequences, if our cybersecurity is breached, we could be held liable to our customers or other parties
in regulatory or other actions, and we may be exposed to reputation damages and loss of trust and business. This
could result in costly investigations and litigation, civil or criminal penalties, fines and negative publicity.
Risks Relating to our Common Stock
Our outstanding options and warrants may affect the market price and liquidity of the common stock.
At December 31, 2020, we had 58.6 million shares of common stock outstanding and had outstanding options and
warrants for the purchase of up to 25.1 million additional shares of common stock, of which approximately 22.3
million were exercisable as of December 31, 2020. In addition, as described more fully below, holders of convertible
notes may elect to receive a substantial number of shares of common stock upon conversion of the notes and we
may elect to pay accrued interest on the notes in shares of our common stock. All of the shares of common stock
underlying these securities are or will be registered for sale to the holder or for public resale by the holder. The
amount of common stock reserved for issuance may have an adverse impact on our ability to raise capital and may
affect the price and liquidity of our common stock in the public market. In addition, the issuance of these shares of
common stock will have a dilutive effect on current stockholders’ ownership.
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The conversion of outstanding convertible notes into shares of common stock, and the issuance of
common stock by us as payment of accrued interest upon the convertible notes, could materially dilute our
current stockholders.
We have an aggregate principal amount of $3.9 million in convertible notes outstanding at December 31, 2020. The
notes are convertible into shares of our common stock at fixed conversion prices, which may be less than the market
price of our common stock at the time of conversion. If the entire principal were converted into shares of common
stock, we would be required to issue an aggregate of up to 23.6 million shares of common stock. If we issue all of
these shares, the ownership of our current stockholders will be diluted.
Further, we may elect to pay interest on the notes, at our option, in shares of common stock, at a price equal to the
then-market price for our common stock. To date, we have issued approximately 2.5 million shares of common
stock as in-kind interest payments on our convertible notes. We currently do not believe that we will have the
financial ability to make payments on the notes in cash when due. Accordingly, we currently intend to make such
payments in shares of our common stock to the greatest extent possible. Such interest payments could further dilute
our current stockholders.
The price of our common stock may be subject to substantial volatility.
The trading price of our common stock has been and may continue to be volatile. Between January 1, 2019 and
March 19, 2021, the reported high and low sales prices for our common stock ranged between $0.06 and $1.91 per
share. The price of our common stock may continue to be volatile as a result of a number of factors, some of which
are beyond our control. These factors include, but are not limited to, developments in outstanding litigation, our
performance and prospects, general conditions of the markets in which we compete, and economic and financial
conditions, and the impact of COVID-19 on global financial markets. Such volatility could materially and adversely
affect the market price of our common stock in future periods.
Our common stock is quoted on OTCQB, an over-the-counter market. There can be no assurance that our
common stock will continue to trade on the OTCQB or on another over-the-counter market or securities
exchange.
Our common stock began trading on the OTCQB, an over-the-counter market, in August 2018 immediately following
delisting from Nasdaq, under the symbol “PRKR”. The over-the-counter market is a significantly more limited market
than a nationally-recognized securities exchange such as Nasdaq, and the quotation of our common stock on the
over-the-counter market has resulted in a less liquid market available for existing and potential stockholders to trade
shares of our common stock. Securities traded in the over-the-counter market generally have less liquidity due to
factors such as the reduced number of investors that will consider investing in the securities, the reduced number of
market makers in the securities, and the reduced number of securities analysts that follow such securities. As a
result, holders of shares of our common stock may find it difficult to resell their shares at prices quoted in the market
or at all. We are also subject to additional compliance requirements under applicable state laws relating to the
issuance of our securities. This could have a long-term adverse effect on our ability to raise capital, which ultimately
could adversely affect the market price of our common stock. We cannot provide any assurances as to if or when
we will be in a position to relist our common stock on a nationally-recognized securities exchange.
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Our common stock is classified as a “penny stock” under SEC rules, which means broker-dealers who
make a market in our stock will be subject to additional compliance requirements.
Our common stock is deemed to be a "penny stock" as defined in the Securities Exchange Act of 1934 (the
“Exchange Act”). Penny stocks are stocks (i) with a price of less than five dollars per share; (ii) that are not traded
on a recognized national exchange; (iii) whose prices are not quoted on an automated quotation system sponsored
by a recognized national securities association; or (iv) whose issuer has net tangible assets less than $2,000,000 (if
the issuer has been in continuous operation for at least three years); or $5,000,000 (if continuous operations for less
than three years); or with average revenues of less than $6,000,000 for the last three years. The Exchange Act
requires broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of
penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any
transaction in a penny stock for the investor’s account. Potential investors in our common stock are urged to obtain
and read such disclosure carefully before purchasing any shares that are deemed to be “penny stock.” Further, the
Exchange Act requires broker-dealers dealing in penny stocks to approve the account of any investor for
transactions in such stocks before selling any penny stock to that investor. These procedures require the broker-
dealer to (i) obtain from the investor information concerning his, her or its financial situation, investment experience
and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are
suitable for the investor, and that the investor has sufficient knowledge and experience as to be reasonably capable
of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the
basis on which the broker dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of
such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment
experience and investment objectives. Compliance with these requirements may affect the ability or willingness of
broker-dealers to sell our securities, and accordingly would affect the ability of stockholders to sell their securities in
the public market. These additional procedures could also limit our ability to raise additional capital in the future.
We do not currently pay dividends on our common stock and thus stockholders must look to appreciation of
our common stock to realize a gain on their investments.
We do not currently pay dividends on our common stock and intend to retain our cash and future earnings, if any, to
fund our business plan. Our future dividend policy is within the discretion of our board of directors and will depend
upon various factors, including our business, financial condition, results of operations and capital requirements. We
therefore cannot offer any assurance that our board of directors will determine to pay special or regular dividends in
the future. Accordingly, unless our board of directors determines to pay dividends, stockholders will be required to
look to appreciation of our common stock to realize a gain on their investment. There can be no assurance that this
appreciation will occur.
Provisions in our certificate of incorporation and by-laws could have effects that conflict with the interest of
shareholders.
Some provisions in our certificate of incorporation and by-laws could make it more difficult for a third party to acquire
control of us. For example, our board of directors is divided into three classes with directors having staggered terms
of office, our board of directors has the ability to issue preferred stock without shareholder approval, and there are
advance notification provisions for director nominations and submissions of proposals from shareholders to a vote
by all the shareholders under the by-laws. Florida law also has anti-takeover provisions in its corporate statute.
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We have a shareholder protection rights plan that may delay or discourage someone from making an offer
to purchase the company without prior consultation with the board of directors and management, which
may conflict with the interests of some of the shareholders.
On November 17, 2005, as amended on November 20, 2015 and November 20, 2020, our board of directors
adopted a shareholder protection rights plan which called for the issuance, on November 29, 2005, as a dividend, of
rights to acquire fractional shares of preferred stock. The rights are attached to the shares of common stock and
transfer with them. In the future, the rights may become exchangeable for shares of preferred stock with various
provisions that may discourage a takeover bid. Additionally, the rights have what are known as “flip-in” and “flip-
over” provisions that could make any acquisition of the company more costly. The principal objective of the plan is to
cause someone interested in acquiring the company to negotiate with the board of directors rather than launch an
unsolicited bid. This plan may limit, prevent, or discourage a takeover offer that some shareholders may find more
advantageous than a negotiated transaction. A negotiated transaction may not be in the best interests of the
shareholders.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 2. Properties.
Until the expiration of our lease in October 2020, our headquarters were located in a 3,000 square foot leased
facility in Jacksonville, Florida. Beginning in November 2020, we reverted to remote worksites for all of our
employees in light of the pandemic. We believe a remote work environment is currently suitable for the conduct of
our business. We have an additional 7,000 square foot leased facility in Lake Mary, Florida that was primarily for
engineering design activities. We have ceased use of the Lake Mary facility and are attempting to sublease the
facility for the remaining lease term. Refer to Note 8 to our consolidated financial statements included in Item 8 for
information regarding our outstanding lease obligations.
Item 3. Legal Proceedings.
We are a party to a number of patent enforcement actions initiated by us against others for the infringement of our
technologies, as well as proceedings brought by others against us in an attempt to invalidate certain of our patent
claims. These patent-related proceedings are more fully described in Note 12 to our consolidated financial
statements included in Item 8.
Item 4. Mine Safety Disclosures.
Not applicable.
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PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
Market Information
Since August 17, 2018, our Common Stock has been listed on the OTCQB, an over-the-counter market, under the
ticker symbol “PRKR”. Over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-
down, or commission, and may not necessarily represent actual transactions.
Holders
As of March 8, 2021, we had approximately 109 holders of record and we believe there are approximately 7,200
beneficial holders of our common stock.
Dividends
We do not currently pay dividends on our common stock and intend to retain our cash and future earnings, if any, to
fund our business plan. The payment of cash dividends in the future will be dependent upon our revenue and
earnings, if any, capital requirements and general financial condition. The payment of any dividends will be within
the discretion of our board of directors.
Purchases of Equity Securities by Issuer and Affiliated Purchasers
No purchases of our equity securities have been made by us or affiliated purchasers within the fourth quarter of the
fiscal year ended December 31, 2020.
Item 6. Selected Financial Data.
Not applicable.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Executive Overview
We are in the business of innovating fundamental wireless technologies and products. We have designed and
developed proprietary RF technologies and integrated circuits for use in wireless communication products. We have
expended significant financial and other resources to research and develop our RF technologies and to obtain patent
protection for those technologies in the U.S. and certain foreign jurisdictions. We believe certain patents protecting
our proprietary technologies have been broadly infringed by others and therefore our business plan primarily
consists of enforcement of our intellectual property rights through patent infringement litigation and licensing efforts.
We currently have patent enforcement actions ongoing in various U.S. district courts against providers of mobile
handsets, smart televisions and other WiFi products and, in certain cases, their chip suppliers for the infringement of
a number of our RF patents. We have made significant investments in developing and protecting our technologies,
the returns on which are dependent upon the generation of future revenues for realization.
In 2018, we restructured our operations to reduce operating expenses. As part of that restructuring, we made
significant reductions in our investment in the development and marketing of a consumer distributed WiFi product
line marketed under the brand name Milo®. Our cost reduction measures
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included the closure of our engineering design center in Lake Mary, Florida and a reduction in executive and
management salaries. In early 2019, we ceased substantially all ongoing research and development efforts and,
where applicable, repurposed resources to support our patent enforcement and product sales and support efforts.
We ceased sales of our Milo products in the fourth quarter of 2019 and are currently focused exclusively on our
patent enforcement litigation and licensing efforts.
We continue to aggressively pursue licensing opportunities with wireless communications companies that make, use
or sell chipsets and/or products that incorporate RF. We believe there are a number of wireless communications
companies that can benefit from the use of the RF technologies we have developed, whether through a license or, in
certain cases, a joint product venture that may include licensing rights. Our licensing efforts to date have required
litigation in order to enforce and/or defend our intellectual property rights. Since 2011, we have been involved in
patent infringement litigation against Qualcomm and others for the unauthorized use of our technology. Refer to
Note 12 to our consolidated financial statements included in Item 8 for a complete discussion of our legal
proceedings. We have expended significant resources since 2011 and incurred significant debt for the enforcement
and defense of our intellectual property rights.
Recent Developments
Equity and Debt Financings
In January 2021, we received aggregate proceeds of approximately $1.0 million from the sale of common stock to
accredited investors at a price of $0.35 per share. The securities purchase agreements include contingent payment
rights identical to the unsecured contingent payment obligations incurred in 2020 (see “Contingent Payment
Obligations” included under Financial Condition). Approximately $0.4 million in proceeds for this transaction was
received as of December 31, 2020 and recorded as an accrued liability until the consummation of the transaction.
We entered into registration rights agreements with the investors pursuant to which we will register the shares. We
have committed to file the registration statement by April 15, 2021 and to cause the registration statement to become
effective by June 30, 2021. The registration rights agreements provide for liquidated damages upon the occurrence
of certain events including failure by us to file the registration statement or cause it to become effective by the
deadlines set forth above. The amount of the liquidated damages is 1.0% of the aggregate subscription upon the
occurrence of the event, and monthly thereafter, up to a maximum of 6%, or approximately $0.06 million.
In March 2021, we received aggregate proceeds of approximately $4.2 million from the sale of common stock and
warrants to accredited investors at a price of $1.29 per share of common stock. The warrants have an exercise
price of $1.75 and expire in March 2026. We entered into registration rights agreements with the investors pursuant
to which we will register the shares. We have committed to file the registration statement within 30 days and to
cause the registration statement to become effective within 90 days. The registration rights agreements provide for
liquidated damages upon the occurrence of certain events including failure by us to file the registration statement or
cause it to become effective by the deadlines set forth above. The amount of the liquidated damages is 1.0% of the
aggregate subscription upon the occurrence of the event, and monthly thereafter, up to a maximum of 6%, or
approximately $0.25 million. The majority of the proceeds from this transaction were used to satisfy our obligations
to Mintz (see “Mintz Agreement” below).
Share Based Compensation Arrangements
On January 11, 2021, the Board amended the 2019 Long-Term Incentive Plan to increase the number of shares of
common stock reserved for issuance under the 2019 Plan from 12 million to 27 million shares.
The Board also approved grants, under the 2019 Plan, of two-year options, with an exercise price of $0.54 per
share, vesting in 8 equal quarterly installments commencing on March 31, 2021 and expiring on
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January 11, 2026. The grants under the 2019 Plan included an option to purchase 8,000,000 shares granted to
Jeffrey Parker, an option to purchase 1,000,000 shares granted to Cynthia French, an option to purchase 380,000
shares to each of the three non-employee directors, and options to purchase an aggregate of 2,900,000 shares
granted to other key employees.
On January 25, 2021, we amended our business consulting and retention agreement with Chelsea to increase the
compensation for services over the remaining term and to extend the term of the agreement through February
2024. As consideration for the amended agreement, we issued 500,000 shares of unregistered common stock in
exchange for a nonrefundable retainer for services valued at approximately $0.33 million. The value of the stock
issued is being recognized as consulting expense over the term of the agreement.
On March 9, 2021, we granted approximately 32,000 shares under our 2019 Long-Term Incentive Plan to a
consultant for business communications services over a one-year term valued at approximately $0.05 million.
Warrant and Option Exercises
During the three months ended March 31, 2021, we received aggregate proceeds of $0. 4 million from the exercise
of outstanding options and warrants at an average exercise price of $0.16 per share.
Mintz Agreement
As of December 31, 2020, we had approximately $3.1 million in accounts payable to Mintz and an outstanding
balance of approximately $0.03 million on a secured note payable to Mintz for legal fees and expenses. In addition,
we had approximately $3.6 million in disputed legal fees and expenses billed by Mintz that we treated as a loss
contingency that was not probable as of December 31, 2020 and 2019 and accordingly, for which we recognized no
expense in the consolidated financial statements. In March 2021, we entered into an agreement with Mintz to
satisfy our outstanding obligations and reduce any future contingency fees payable to Mintz. On March 29, 2021,
we paid Mintz a lump-sum payment of $3.0 million in satisfaction of our outstanding obligations to Mintz including the
Mintz note, our accounts payable to Mintz, and all disputed and unrecorded billings. Mintz waived all past defaults
on the Mintz note and agreed to a significant reduction in future success fees payable to Mintz from patent-related
proceeds.
Legal Proceedings
On March 26, 2021, the district court in the Middle District of Florida, Orlando Division, issued an order that, among
other things, postponed our trial date in ParkerVision v. Qualcomm citing backlog due to the pandemic as a factor. A
new trial date has not yet been set but is unlikely to be scheduled prior to November or December 2021 according to
the court.
Liquidity and Capital Resources
We have incurred significant losses from operations and negative cash flows in every year since inception, largely as
a result of our significant investments in developing and protecting our intellectual property. For the year ended
December 31, 2020, we incurred a net loss of approximately $19.6 million and negative cash flows from operations
of approximately $4.8 million. At December 31, 2020, we had a working capital deficit of approximately $3.8 million
and an accumulated deficit of approximately $421.4 million. Our independent registered public accounting firm has
included in their audit report an explanatory paragraph expressing substantial doubt about our ability to continue as
a going concern. See Note 2 to our consolidated financial statements included in Item 8 for a discussion of our
liquidity and our ability to continue as a going concern.
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Our working capital deficit is primarily the result of approximately $4.1 million in accounts payable related to
outstanding litigation fees and expenses. Our working capital improved by $1.7 million from 2019 to 2020, primarily
as the result of the increase in our cash and cash equivalents from debt and equity financings. Our use of cash for
operations increased 42%, from $3.4 million in 2019 to $4.8 million in 2020. This increase is primarily the result of
increased legal expenses associated with our patent enforcement efforts. Our operations in 2020 were primarily
funded through approximately $6.0 million in proceeds from debt and equity financings, as well as $1.6 million
received from the exercise of warrants. Comparatively, we received net proceeds of approximately $3.1 million from
debt financings in 2019. We used $1.3 million and $1.2 million in cash to repay outstanding debt obligations in 2020
and 2019, respectively. These debt repayments were primarily related to a secured note payable with Mintz which
had an outstanding balance of $0.03 million at December 31, 2020 and was repaid in full in the first quarter of 2021.
At December 31, 2020, we had approximately $0.19 million in current debt obligations, including $0.07 million related
to a Paycheck Protection Program loan, which we believe will be forgiven, based on the program criteria. This
represents a decrease of $1.3 million from our current debt obligations at December 31, 2019. The decrease in our
current debt repayment obligations is primarily the result of $1.2 million in repayments made on the Mintz note in
2020.
We had cash and cash equivalents of approximately $1.6 million at December 31, 2020. We received an additional
$5.6 million in proceeds from debt and equity financings and warrant and option exercises in the first quarter of 2021,
of which $3.0 million was used to settle outstanding accounts and notes payable for litigation costs. Our remaining
capital resources will be used to fund our current obligations and ongoing operating costs; however these resources
may not be sufficient to meet our liquidity needs for the next twelve months and we may be required to seek
additional capital.
Our ability to meet our short-term liquidity needs, including our debt repayment obligations, is dependent upon one or
more of (i) our ability to successfully negotiate licensing agreements and/or settlements relating to the use of our
technologies by others in excess of our contingent payment obligations to Brickell and legal counsel; and/or (ii) our
ability to raise additional capital from the sale of equity securities or other financing arrangements.
Significant portions of our litigation costs to date have been funded by contingent payment arrangements with legal
counsel. Fee discounts offered by legal counsel in exchange for contingent payments upon successful outcome in
our litigation are not recognized in expense until such time that the related proceeds on which the contingent fees
are payable are considered probable. Contingent fees vary based on each firm’s specific fee agreement. We
currently have contingent fee arrangements in place for all of our active cases.
In addition to contingent fee arrangements with legal counsel, we have a contingent repayment obligation to Brickell
that was recorded at its estimated fair value of $33.1 million at December 31, 2020. Brickell is entitled to a
priority, prorated payment of up to 100% of proceeds received by us from funded patent-related actions up to a
specified minimum return. Brickell’s minimum return is determined as a multiple of the outstanding funded amount
that increases over time. The estimated minimum return due to Brickell if repaid in full at December 31, 2020 is
approximately $42 million, an increase of approximately $3 million, or 8%, from the minimum return that would have
been due to Brickell as of December 31, 2019. In addition, in 2020 we incurred unsecured contingent payment
obligations in connection with various financings. These unsecured contingent payment obligations are recorded at
an aggregate estimated fair value of $5.2 million, with a maximum payment obligation of $9.7 million at December
31, 2020.
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Although current working capital will not be used to repay our contingent arrangements, based on our current
outstanding legal proceedings, funding arrangements and contingent payment arrangements, we estimate that up to
100% of our initial future proceeds will be used to repay contingent payment arrangements until Brickell’s minimum
return has been met. After repayment of Brickell’s minimum return, we estimate that 45% to 65% of estimated future
proceeds from current actions could be payable to others, depending on the proceeding and the nature, amount and
timing of proceeds, among other factors.
Patent enforcement litigation is costly and time-consuming and the outcome is difficult to predict. We expect to
continue to invest in the support of our patent enforcement and licensing programs. We expect that revenue
generated from patent enforcement actions and/or technology licenses in 2021, if any, after deduction of payment
obligations to Brickell and legal counsel, may not be sufficient to cover our operating expenses. In the event we do
not generate revenues, or other patent-related proceeds, sufficient to cover our operational costs and contingent
repayment obligation, we will be required to raise additional working capital through the sale of equity securities or
other financing arrangements.
The long-term continuation of our business plan is dependent upon our ability to secure sufficient financing to
support our business, and our ability to generate revenues and/or patent-related proceeds sufficient to offset
expenses and meet our contingent payment obligation and other long-term debt repayment obligations. Failure to
generate sufficient revenues, raise additional capital through debt or equity financings, and/or reduce operating costs
could have a material adverse effect on our ability to meet our short and long-term liquidity needs and achieve our
intended long-term business objectives.
Financial Condition
Intangible Assets
We consider our intellectual property, including patents, patent applications, trademarks, copyrights and trade
secrets to be significant to our business. Our intangible assets are pledged as security for our secured contingent
payment obligation with Brickell and our secured note payable with our litigation counsel. The net book value of our
intangible assets was approximately $2.2 million and $2.9 million as of December 31, 2020 and 2019,
respectively. These assets are amortized using the straight-line method over their estimated period of benefit,
generally fifteen to twenty years. The decrease in the carrying value of our intangible assets is primarily the result of
$0.4 million in patent amortization expense recognized in 2020 as our portfolio matures and a $0.3 million loss on
abandonment of certain patents and patent applications. Management evaluates the recoverability of intangible
assets periodically and takes into account events or circumstances that may warrant revised estimates of useful lives
or that may indicate impairment exists. As part of our ongoing patent maintenance program, we may, from time to
time, abandon a particular patent if we determine fees to maintain the patent exceed its expected recoverability. For
the years ended December 31, 2020 and 2019, we incurred losses of approximately $0.3 million and $0.4 million,
respectively, for the write-off of specific patent assets. These losses are included in operating expenses in the
accompanying consolidated statements of comprehensive loss.
Contingent Payment Obligations
We have a secured and unsecured contingent payment obligations recorded at an aggregate estimated fair value of
$38.3 million and $26.7 million as of December 31, 2020 and 2019, respectively. These repayment obligations are
contingent upon receipt of proceeds from patent enforcement and other patent monetization actions. As a result, we
have elected to account for these contingent payment obligations at their estimated fair values which are subject to
significant estimates and assumptions as discussed in “Critical Accounting Policies” below. Refer to Note 10 to
our consolidated financial statements
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included in Item 8 for a discussion of the fair value measurement of our contingent payment obligation.
Our secured contingent payment obligation is payable to Brickell under a 2016 funding agreement, as amended from
time to time. Brickell has a right to reimbursement and compensation from gross proceeds resulting from patent
enforcement and other patent monetization actions on a priority basis. The amount of our obligation varies based on
the magnitude, timing and nature of proceeds received by us.
In addition, in 2020, we incurred unsecured contingent payment obligations in connection with various funding
arrangements. The contingent payment obligations are payable from our share of patent-related proceeds after
satisfaction of our obligation to Brickell and payment of contingent fees to legal counsel.
The $11.6 million increase in estimated fair value of our contingent payment obligations from 2019 to 2020 is the
result of $3.2 million in new unsecured payment obligations incurred and an $8.4 million increase in the estimated
fair value of the contingent obligations. See “Change in Fair Value of Contingent Obligations” below for a discussion
of the increase in fair value.
Notes Payable
As of December 31, 2020, we had approximately $1.0 million in notes payable, including an unsecured promissory
note payable to Sterne, Kessler, Goldstein, & Fox, PLLC (“SKGF”), a related party, of approximately $0.8 million, a
secured promissory note payable to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (“Mintz”) of $0.03 million,
and a loan from the Paycheck Protection Program (PPP) of approximately $0.2 million. Failure to comply with the
payment terms of each of these notes constitutes an event of default which, if uncured, will result in the entire
unpaid principal balance of the note and any unpaid, accrued interest to become immediately due and payable. In
addition, an event of default results in an increase in the interest rate under the SKGF and Mintz notes to a default
rate of 12% per annum. We were in default on the payment provisions of the Mintz note since November 2019 and,
accordingly, accrued interest at the default rate. In March 2021, we settled our outstanding obligations with Mintz
(as more fully discussed in “Recent Developments”) and Mintz waived all past defaults on the note which has been
paid in full. In addition, in March 2021, we started the application process for forgiveness of the PPP loan. Based
on the PPP loan forgiveness criteria, we anticipate that we will qualify for forgiveness of the entire principal amount
of this loan.
Deferred Tax Assets and Related Valuation Allowance
Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on
differences between the financial statement carrying amounts and the tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are
established to reduce deferred tax assets when, based on available objective evidence, it is more likely than not that
the benefit of such assets will not be realized. As of December 31, 2020, we had net deferred tax assets of
approximately $94 million, primarily related to our NOL carryforwards, which were fully offset by a valuation
allowance due to the uncertainty related to realization of these assets through future taxable income. In addition, our
ability to benefit from our NOL and other tax credit carryforwards could be limited under Section 382 as more fully
discussed in Note 11 to our consolidated financial statements included in Item 8.
Results of Operations for Each of the Years Ended December 31, 2020 and 2019
Revenues and Gross Margins
We reported no licensing revenue for the years ended December 31, 2020 or 2019. Although we do anticipate
licensing revenue and/or settlement gains to result from our licensing and patent enforcement
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actions, the amount and timing is highly unpredictable and there can be no assurance that we will achieve our
anticipated results.
We reported no product revenue during the year ended December 31, 2020 and minimal product revenue for the
year ended December 31, 2019, from the sales of our Milo-branded products. We discontinued sales of Milo
products in the fourth quarter of 2019 and recognized an impairment charge for our remaining inventory, resulting in
negative gross margins on our product sales.
Research and Development Expenses
Research and development expenses consist primarily of engineering and related management and support
personnel costs; fees for outside engineering design services which we use from time to time to supplement our
internal resources; depreciation expenses related to certain assets used in product development; prototype
production and materials costs for both chips and end-user products; software licensing and support costs, which
represent the annual licensing and support maintenance for engineering design and other software tools; and rent
and other overhead costs for our engineering design facility. Personnel costs include share-based compensation
which represents the grant date fair value of equity-based awards to our employees which is attributed to expense
over the service period of the award. Subsequent to March 31, 2019, we halted substantially all research and
development efforts and, where applicable, repurposed prior engineering resources to support our patent
enforcement programs or our Milo sales and support.
The $0.3 million decrease in research and development expenses from 2019 to 2020 is primarily the result of $0.2
million in personnel and related costs being repurposed for selling, general and administrative purposes, including
litigation support and Milo sales and support as well as a $0.1 million reduction in research and
development personnel costs.
Selling, General, and Administrative Expenses
Selling, general and administrative expenses consist primarily of executive, director, sales and marketing, and
finance and administrative personnel costs, including share-based compensation, costs incurred for advertising,
insurance, shareholder relations and outside legal and professional services, including litigation expenses, and
amortization and maintenance expenses related to our patent assets.
Our selling, general and administrative expenses were approximately $10.7 million for the year ended December 31,
2020, as compared to approximately $7.6 million for the year ended December 31, 2019, representing an increase of
approximately $3.1 million or 41%. This increase is primarily due to the recognition of $2.2 million in noncash
charges upon amendment of equity-related agreements. In addition, we had a $1.3 million increase in litigation
expenses primarily related to preparation of the infringement case against Qualcomm and Apple in Florida in early
2020 and a $0.6 million increase in share-based compensation due to executive and Board equity awards granted in
August 2019 and the first quarter of 2020. These increases were somewhat offset by a decrease of $0.3 million in
board compensation expenses due to the reversal of prior board compensation expense upon the settlement of
previously accrued board fees in exchange for equity based awards in 2020, a decrease of $0.2 million in rent and
related overhead due to the down-sizing of our corporate headquarters in July 2019, and a decrease in depreciation
and amortization of $0.3 million resulting from lower cost bases of fixed assets and patents following disposals
during 2019 and 2020.
Change in Fair Value of Contingent Payment Obligations
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We have elected to measure our secured and unsecured contingent payment obligations at fair value which is based
on significant unobservable inputs. We estimated the fair value of our secured contingent payment obligations using
a probability-weighted income approach based on the estimated present value of projected future cash outflows
using a risk-adjusted discount rate. Increases or decreases in the significant unobservable inputs could result in
significant increases or decreases in fair value.
For the year ended December 31, 2020, we recorded an increase in the fair value of our secured and unsecured
contingent payment obligations of approximately $8.4 million. The change in fair value estimates are a result of
changes in estimated amounts and timing of projected future cash flows primarily due to the passage of time and
changes in the probabilities of future cash outflows based on the status of the funded actions. In addition, in 2020,
increases in fair value resulted from the sharp decrease in the risk-free interest rate used in the calculation as a
result of the Federal Reserve lowering rates to stimulate economic activity amidst the COVID-19 pandemic.
Critical Accounting Policies
We believe that the following are critical accounting policies and estimates that significantly impact the preparation of
our consolidated financial statements:
Contingent Payment Obligations
We have accounted for our secured and unsecured contingent payment obligations as long-term debt. Our
repayment obligations are contingent upon the receipt of proceeds from patent enforcement or other patent
monetization actions. We have elected to measure our contingent payment obligations at their estimated fair values
based on the variable and contingent nature of the repayment provisions. We have determined that the fair value of
our secured and unsecured contingent payment obligations falls within Level 3 in the fair value hierarchy, which
involves significant estimates and assumptions including projected future patent-related proceeds and the risk-
adjusted rate for discounting future cash flows. Actual results could differ from the estimates made. Changes in fair
value, including the component related to imputed interest, are included in the consolidated statements of
comprehensive loss under the heading “Change in fair value of contingent payment obligations.” Refer to Note 10 to
our consolidated financial statements included in Item 8 for a discussion of the significant estimates and
assumptions used in estimated the fair value of our contingent payment obligations.
Accounting for Share-Based Compensation
We calculate the fair value of share-based equity awards to employees, including restricted stock, stock options and
restricted stock units (“RSUs”), on the date of grant and recognize the calculated fair value as compensation expense
over the requisite service periods of the related awards. The fair value of stock option awards is determined using
the Black-Scholes option valuation model that requires the use of highly subjective assumptions and estimates
including how long employees will retain their stock options before exercising them and the volatility of our common
stock price over the expected life of the equity award. Changes in these subjective assumptions can materially
affect the estimate of fair value of share-based compensation and consequently, the related amount recognized as
expense in the consolidated statements of comprehensive loss.
New Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06 "Debt - Debt with Conversion and Other Options (Subtopic 470-20)
and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible
Instruments and Contracts in an Entity's Own Equity." This ASU simplifies accounting for convertible instruments by
removing major separation models required under current U.S. GAAP. Consequently, more convertible debt
instruments will be reported as a single liability instrument with no separate accounting for embedded conversion
features. The ASU removes certain settlement
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conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more
equity contracts to qualify for the exception. The ASU also simplifies the diluted earnings per share (EPS)
calculation in certain areas. The ASU is effective for fiscal years beginning after December 15, 2021 for accelerated
filers and for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, for
smaller reporting companies. Early adoption is permitted for fiscal years beginning after December 15, 2020. The
ASU provides for a modified retrospective method of adoption whereby the guidance is applied to transactions
outstanding at the beginning of the fiscal year of adoption with the cumulative effect of the change being recorded as
an adjustment to beginning retained earnings. We plan to adopt ASU 2020-06 as of January 1, 2021. Adoption of
ASU 2020-06 will result in an increase to our long-term debt of approximately $0.8 million, a decrease in additional
paid-in-capital of approximately $1.1 million and an adjustment to our beginning retained deficit of $0.3 million
resulting from the elimination of the previously recognized beneficial conversion feature as a debt discount.
Off-Balance Sheet Transactions
As of December 31, 2020, we had outstanding warrants to purchase 12.9 million shares of our common stock. The
estimated grant date fair value of these warrants of approximately $1.7 million is included in shareholders’ deficit in
our consolidated balance sheet for the year ended December 31, 2020. The outstanding warrants have an average
exercise price of $0.45 per share and a weighted average remaining life of approximately 3 years.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
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Item 8. Financial Statements and Supplementary Data.
Index to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (for the years ended
December 31, 2020 and 2019)
FINANCIAL STATEMENTS:
Consolidated Balance Sheets – December 31, 2020 and 2019
Consolidated Statements of Comprehensive Loss - for the years ended December 31, 2020 and
2019
Consolidated Statements of Shareholders’ Deficit - for the years ended December 31, 2020 and 2019
Consolidated Statements of Cash Flows - for the years ended December 31, 2020 and 2019
Notes to Consolidated Financial Statements - December 31, 2020 and 2019
Page
24
26
27
28
29
30
SUPPLEMENTARY DATA:
Not applicable
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of ParkerVision, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of ParkerVision, Inc. (the “Company”) and its
subsidiary as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive loss,
shareholders’ deficit and cash flows for each of the years in the two-year period ended December 31, 2020, and the
related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company and its subsidiary as
of December 31, 2020 and 2019, and the results of their operations and their cash flows for each of the years in the
two-year period ended December 31, 2020 in conformity with accounting principles generally accepted in the United
States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free
of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As a part of our audits, we are required to obtain
an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe
that our audits provide a reasonable basis for our opinion.
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Emphasis of Matter Regarding Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue
as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered
recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The
consolidated financial statements do not include any adjustments that might result from the outcome of this
uncertainty. Our opinion is not modified with respect to this matter.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,
providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Estimation of fair value of contingent payment obligations
As disclosed in Note 1 of the Company’s consolidated financial statements, the Company accounts for their secured
and unsecured contingent payment obligations as long-term debt. Their payment obligations are contingent upon the
receipt of proceeds from patent enforcement and/or patent monetization actions. The Company has elected to
measure their contingent payment obligations at their estimated fair values. The Company recorded the fair value of
their contingent payment obligations at approximately $38,279,000 as of December 31, 2020.
Auditing management’s estimate of the fair value of their contingent payment obligations involved subjective
evaluation and high degree of auditor judgement due to significant assumptions involved in estimating the receipt of
proceeds from patent enforcement and/or patent monetization actions.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. We obtained an understanding and evaluated the design of
internal controls that address the risks of material misstatement relating to recording the contingent payment
obligations at fair value. We tested the accuracy and completeness of the underlying data used in calculating the fair
value. We evaluated management’s ability to accurately estimate the assumptions used to develop the fair value of
the contingent payment obligations. We also involved an independent legal firm to assist in evaluating the
reasonableness of the assumptions of future litigation outcomes used by the Company in estimating the receipt of
proceeds from patent enforcement and/or patent monetization actions.
/s/ MSL, P.A.
We have served as the Company’s auditor since 2019.
Fort Lauderdale, Florida
March 31, 2021
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PARKERVISION, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2020 AND 2019
CURRENT ASSETS:
Cash and cash equivalents
Prepaid expenses
Other current assets
Total current assets
Property and equipment, net
Intangible assets, net
Operating lease right-of-use assets
Other assets, net
Total assets
CURRENT LIABILITIES:
Accounts payable
Accrued expenses:
Salaries and wages
Professional fees
Statutory court costs
Other accrued expenses
Related party note payable, current portion
Secured note payable, current portion
Unsecured notes payable
Operating lease liabilities, current portion
Total current liabilities
LONG-TERM LIABILITIES:
Secured contingent payment obligation
Unsecured contingent payment obligations
Convertible notes, net
Related party note payable, net of current portion
Operating lease liabilities, net of current portion
Other long-term liabilities
Total long-term liabilities
Total liabilities
COMMITMENTS AND CONTINGENCIES
$
$
$
2020
2019
1,627 $
599
8
2,234
30
2,170
10
12
4,456 $
4,318 $
19
128
251
936
100
26
65
146
5,989
33,057
5,222
3,018
703
159
129
42,288
48,277
57
505
117
679
70
2,878
283
16
3,926
2,328
78
499
369
1,081
86
1,222
225
250
6,138
26,651
-
2,733
793
305
403
30,885
37,023
SHAREHOLDERS' DEFICIT:
Common stock, $.01 par value, 140,000 and 110,000 shares authorized, 58,591 and
34,097 issued and outstanding at December 31, 2020 and 2019, respectively
Additional paid-in capital
Accumulated deficit
Total shareholders' deficit
Total liabilities and shareholders' deficit
$
586
376,954
(421,361)
(43,821)
4,456 $
341
368,345
(401,783)
(33,097)
3,926
The accompanying notes are an integral part of these consolidated financial statements.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
PARKERVISION, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(in thousands, except per share amounts)
Product revenue
Cost of sales - product
Loss on impairment of inventory
Gross margin
Research and development expenses
Selling, general, and administrative expenses
Total operating expenses
Interest and other income
Interest and other expense
Change in fair value of contingent payment obligations
Total interest and other
Net loss before income tax
Income tax expense
Net loss
Other comprehensive income, net of tax
Comprehensive loss
Basic and diluted net loss per common share
2020
2019
$
- $
-
-
-
-
10,664
10,664
-
(547)
(8,367)
(8,914)
(19,578)
-
74
73
6
(5)
334
7,602
7,936
3
(421)
(1,094)
(1,512)
(9,453)
-
(19,578)
(9,453)
-
-
(19,578) $
(9,453)
(0.42) $
(0.30)
$
$
Weighted average common shares outstanding
47,019
31,461
The accompanying notes are an integral part of these consolidated financial statements.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
PARKERVISION, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(in thousands)
Common
Stock, Par
Value
Additional
Paid-in
Capital
Accumulated
Deficit
Balance as of December 31, 2018
$
Cumulative effect of change in accounting principle
Issuance of common stock upon exercise of warrants
Issuance of common stock and warrants for services
Issuance of convertible debt with beneficial conversion
feature
Issuance of common stock upon conversion and payment of
interest in kind on convertible debt
Share-based compensation, net of shares withheld for taxes
Net loss for the year
Balance as of December 31, 2019
Issuance of common stock and warrants in private offerings,
net of issuance costs
Issuance of common stock upon exercise of warrants
Issuance of common stock and warrants for services
Issuance of convertible debt with beneficial conversion
feature
Issuance of common stock upon conversion and payment of
interest in kind on convertible debt
Issuance of common stock upon conversion of short-term
loans and payables
Share-based compensation, net of shares withheld for taxes
Net loss for the year
Balance as of December 31, 2020
$
287
-
29
6
-
19
-
-
341
148
45
7
-
15
22
8
-
586 $
366,695
-
-
234
(392,292)
(38)
-
-
550
-
277
589
-
368,345
-
-
(9,453)
(401,783)
4,618
1,530
297
173
437
-
-
-
-
318
1,236
-
376,954 $
-
-
(19,578)
(421,361) $
Total
Shareholders'
Deficit
(25,310)
(38)
29
240
550
296
589
(9,453)
(33,097)
4,766
1,575
304
173
452
340
1,244
(19,578)
(43,821)
The accompanying notes are an integral part of these consolidated financial statements.
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PARKERVISION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization
Share-based compensation
Noncash lease expense
Change in fair value of contingent payment obligation
Loss on disposal/impairment of equipment and other assets
Noncash expense for amendment of equity-related agreements
Inventory impairment charges
Changes in operating assets and liabilities:
Accounts receivable
Finished goods inventories
Prepaid expenses and other assets
Accounts payable and accrued expenses
Operating lease liabilities
Total adjustments
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment
Purchases of property and equipment
Payments for patent costs and other intangible assets
Net cash (used in)/provided by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock and contingent payment rights in
private offerings
Net proceeds from exercise of warrants
Net proceeds from debt financings
Debt repayments
Principal payments on finance lease obligation
Net cash provided by financing activities
NET CHANGE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, beginning of year
CASH AND CASH EQUIVALENTS, end of year
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest
Cash paid for income taxes
2020
2019
$
(19,578) $
(9,453)
632
1,244
61
8,367
487
2,211
-
-
-
292
1,757
(250)
14,801
(4,777)
2
(3)
-
(1)
4,801
1,575
1,244
(1,272)
-
6,348
1,570
57
1,627 $
61 $
- $
$
$
$
835
589
280
1,094
412
-
6
2
81
221
2,790
(230)
6,080
(3,373)
30
(5)
(18)
7
-
29
3,068
(1,200)
(1)
1,896
(1,470)
1,527
57
4
-
The accompanying notes are an integral part of these consolidated financial statements.
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PARKERVISION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 and 2019
1. SIGNIFICANT ACCOUNTING POLICIES
ParkerVision, Inc. and its wholly-owned German subsidiary, ParkerVision GmbH (collectively “ParkerVision”, “we” or
the “Company”) is in the business of innovating fundamental wireless hardware technologies and products. We
have determined that our business currently operates under a single operating and reportable segment.
We have designed and developed proprietary radio frequency (“RF”) technologies and integrated circuits for use in
wireless communication products. We have expended significant financial and other resources to research and
develop our RF technologies and to obtain patent protection for those technologies in the United States of America
(“U.S.”) and certain foreign jurisdictions. We believe certain patents protecting our proprietary technologies have
been broadly infringed by others, and therefore the primary focus of our business plan is the enforcement of our
intellectual property rights through patent infringement litigation and licensing efforts. We currently have patent
enforcement actions ongoing in various U.S. district courts against providers of mobile handsets, smart televisions
and other WiFi products and, in certain cases, their chip suppliers for the infringement of a number of our RF
patents. We have made significant investments in developing and protecting our technologies, the returns on which
are dependent upon the generation of future revenues for realization.
In 2018, we restructured our operations to reduce operating expenses. As part of that restructuring, we made
significant reductions in our investment in the development and marketing of a consumer distributed WiFi product
line marketed under the brand name Milo®. In early 2019, we ceased substantially all ongoing research and
development efforts and, where applicable, repurposed resources to support our patent enforcement and product
sales and support efforts. We ceased sales of our Milo products in the fourth quarter of 2019 and are currently
focused exclusively on our patent enforcement litigation and licensing efforts.
Basis of Presentation
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in
the U.S. (“GAAP”). Certain reclassifications have been made to prior period amounts to conform to the current
period presentation. The consolidated financial statements include the accounts of ParkerVision, Inc. and our
wholly-owned German subsidiary, ParkerVision GmbH, after elimination of all intercompany transactions and
accounts.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. The more significant estimates made by us
include projected future cash flows and risk-adjusted discount rates for estimating the fair value of our contingent
payment obligations, the volatility and estimated lives of share-based awards used in the estimate of the fair market
value of share-based compensation, the assessment of recoverability of long-lived assets, the amortization periods
for intangible and long-lived assets, and the valuation allowance for deferred taxes. Actual results could differ from
the estimates made. We periodically evaluate estimates used in the preparation of the financial statements for
continued reasonableness. Appropriate adjustments, if any, to the estimates used are made prospectively based
upon such periodic evaluation.
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Cash and Cash Equivalents
We consider cash and cash equivalents to include cash on hand, interest-bearing deposits, overnight repurchase
agreements and investments with original maturities of three months or less when purchased.
Inventory
Inventory is stated at the lower of actual cost, as determined under the first-in, first-out method, or estimated net
realizable value. We review our inventory for estimated obsolescence or unmarketable inventory and write down
inventory for the difference between cost and estimated market value based upon assumptions about future
demand. Future demand is affected by market conditions, technological obsolescence, new products and strategic
plans, each of which is subject to change. Due to the decision to discontinue Milo product sales in the fourth quarter
of 2019, a full reserve was recorded against the remaining inventory on hand at December 31, 2019. All remaining
inventory was disposed of during the year ended December 31, 2020.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is determined using the
straight-line method over the following estimated useful lives:
Manufacturing and office equipment
Leasehold improvements
Furniture and fixtures
Computer equipment and software
5-7 years
Shorter of useful life or remaining life of lease
7 years
3-5 years
The cost and accumulated depreciation of assets sold or retired are removed from their respective accounts, and
any resulting net gain or loss is recognized in the accompanying consolidated statements of comprehensive
loss. The carrying value of long-lived assets is reviewed on a regular basis for the existence of facts, both internally
and externally, that may suggest impairment. Recoverability of assets to be held and used is measured by
comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be
generated by the asset. If the carrying amount of the assets exceeds its estimated undiscounted future net cash
flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair
value of the assets.
Intangible Assets
We capitalize outside legal costs and agency filing fees incurred in connection with securing the rights to our
intellectual property. Patents, copyrights and other intangible assets are amortized using the straight-line method
over their estimated period of benefit. We estimate the economic lives of our patents and copyrights to be fifteen to
twenty years. Management evaluates the recoverability of intangible assets periodically and takes into account
events or circumstances that may warrant revised estimates of useful lives or that may indicate impairment
exists. As part of our ongoing patent maintenance program, we will, from time to time, abandon a particular patent if
we determine fees to maintain the patent exceed its expected recoverability. The cost and accumulated amortization
of abandoned intangible assets are removed from their respective accounts, and any resulting net loss is recognized
in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive
loss.
Contingent Payment Obligations
We have accounted for our secured and unsecured contingent payment obligations as long-term debt in accordance
with Accounting Standards Codification (“ASC”) 470-10-25, “Sales of Future Revenues or Various other Measures of
Income.” Our payment obligations are contingent upon the receipt of proceeds from patent enforcement and/or
patent monetization actions. We have elected to measure our contingent payment obligations at their estimated fair
values in accordance with ASC 825, “Financial Instruments” based on the variable and contingent nature of the
repayment provisions. We have determined that the fair
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value of our secured and unsecured contingent payment obligations falls within Level 3 in the fair value hierarchy,
which involves significant estimates, and assumptions including projected future patent-related proceeds and the
risk-adjusted rate for discounting future cash flows (see Note 10). Actual results could differ from the estimates
made. Changes in fair value, including the component related to imputed interest, are included in the accompanying
consolidated statements of comprehensive loss under the heading “Change in fair value of contingent payment
obligations.”
Leases
We adopted ASC 842, “Leases” as of January 1, 2019 which requires the recognition of lease right-of-use (“ROU”)
assets and lease liabilities on our consolidated balance sheets for finance and operating leases with initial lease
terms of more than 12 months. We elected to use the effective date as the initial application date. ASC 842 provides
a number of practical expedients in transition and we elected the package of practical expedients which permits us
not to reassess under the new standard our prior conclusions about lease identification, lease classification and
treatment of initial direct costs. The adoption of this new standard resulted in the recognition of operating lease ROU
assets and operating lease liabilities of approximately $0.56 million and $0.60 million, respectively, primarily related
to our facilities leases. Refer to Note 8 for additional disclosures related to our leases.
At inception of a lease, we determine if an arrangement contains a lease and whether that lease meets the
classification criteria of a finance or operating lease. Some of our lease arrangements contain lease components
(e.g. minimum rent payments) and non-lease components (e.g. services). For certain equipment leases, we account
for lease and non-lease components separately based on a relative fair market value basis. For all other leases, we
account for the lease and non-lease components (e.g. common area maintenance) on a combined basis.
For operating leases with terms greater than 12 months, we record the ROU asset and lease obligation at the
present value of lease payments over the term using the implicit interest rate, when readily available, or our
incremental borrowing rate for collateralized debt based on information available at the lease commencement
date. Certain of our leases include rental escalation clauses, renewal options and/or termination options that are
factored into our determination of lease payments when it is reasonably certain that the option will be exercised. We
do not recognize ROU assets and lease liabilities for leases with terms at inception of twelve months or less.
Finance leases are included in property and equipment and other accrued expenses on the consolidated balance
sheets. Finance leases are recorded as an asset and an obligation at an amount equal to the present value of the
minimum lease payments during the lease term. Amortization expense and interest expense associated with finance
leases are included in selling, general, and administrative expense and interest expense, respectively, on the
consolidated statements of comprehensive loss.
Convertible Debt
We have issued debt that is convertible, at the holder’s option, into shares of our common stock at fixed conversion
prices. Certain of the convertible notes were issued with conversion prices that were below market value of our
common stock on the closing date resulting in a beneficial conversion feature which we recorded to equity with a
corresponding discount to the debt. The discount is amortized over the life of the notes as interest expense.
In August 2020, the Financial Accounting Standards Board issued ASU 2020-06 "Debt - Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity's Own Equity." This ASU simplifies accounting for
convertible instruments by removing major separation models required under current U.S. GAAP. Consequently,
more convertible debt instruments will be
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reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU
removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope
exception, which will permit more equity contracts to qualify for the exception. The ASU also simplifies the diluted
earnings per share (EPS) calculation in certain areas. The ASU is effective for fiscal years beginning after
December 15, 2021 for accelerated filers and for fiscal years beginning after December 15, 2023, including interim
periods within those fiscal years, for smaller reporting companies. Early adoption is permitted for fiscal years
beginning after December 15, 2020. The ASU provides for a modified retrospective method of adoption whereby
the guidance is applied to transactions outstanding at the beginning of the fiscal year of adoption with the cumulative
effect of the change being recorded as an adjustment to beginning retained earnings.
We plan to adopt ASU 2020-06, using the modified retrospective method, as of January 1, 2021. Adoption of ASU
2020-06 will result in an increase to our long-term debt of approximately $0.8 million, a decrease in additional paid-in-
capital of approximately $1.1 million, and an adjustment to our beginning retained deficit of $0.3 million resulting from
the elimination of the previously recognized beneficial conversion feature as a debt discount.
Revenue Recognition
We account for revenue under ASC 606, “Revenue from Contracts with Customers” which implements a common
revenue standard that clarifies the principles for recognizing revenue. This revenue recognition model provides a
five-step analysis in determining when and how revenue is recognized.
We expect to derive future revenue from licensing of our intellectual property and settlements from patent
infringement disputes. The timing of revenue recognition and the amount of revenue recognized depends upon a
variety of factors, including the specific terms of each arrangement and the nature of our deliverables and
obligations. In general, we recognize revenue when the performance obligations to our customers have been
met. The consideration received from patent license and settlement agreements is allocated to the various elements
of the arrangement to the extent the revenue recognition differs between the elements of the
arrangement. Elements related to past and future royalties as well as elements related to settlement will be
recorded as revenue in our consolidated statements of comprehensive loss when our performance obligations
related to each element have been met.
For the year ended December 31, 2019, we recognized revenue from the sale of products. For product sales, the
performance obligation is generally met at the time product is delivered to the customer. Estimated product returns
are deducted from revenue and recorded as a liability. Revenue from the sale of our products includes shipping and
handling charged to the customer. Product revenue is recorded net of sales tax collected from customers,
discounts, and actual and estimated future returns.
Research and Development Expenses
Research and development costs are expensed as incurred and include salaries and benefits for employees
engaged in research and development activities, costs paid to third party contractors, prototype expenses, an
allocated portion of facilities costs, maintenance costs for software development tools, and depreciation.
Accounting for Share-Based Compensation
We have various share-based compensation programs which provide for equity awards including stock options,
restricted stock units (“RSUs”) and restricted stock awards (“RSAs”). We calculate the fair value of employee share-
based equity awards on the date of grant and recognize the calculated fair value as compensation expense over the
requisite service periods of the related awards. We estimate the fair value of stock option awards using the Black-
Scholes option valuation model. This valuation model requires the use of highly subjective assumptions and
estimates including how long employees will retain their
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
stock options before exercising them and the volatility of our common stock price over the expected life of the equity
award. Such estimates, and the basis for our conclusions regarding such estimates, are outlined in detail in Note
14. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons
who receive equity awards. We account for forfeitures of share-based awards as they occur.
As of January 1, 2019, we adopted ASU 2018-07, "Compensation - Stock Compensation (Topic 718):
Improvements to Nonemployee Share-Based Payment Accounting." The amendments in this update simplify the
accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments
to employees, with certain exceptions. At the time of adoption, we did not have any awards to nonemployees that
would require reassessment and therefore the adoption of ASU 2018-07 did not impact our consolidated financial
statements.
Income Taxes
The provision for income taxes is based on loss before taxes as reported in the accompanying consolidated
statements of comprehensive loss. Deferred tax assets and liabilities are recognized for the expected future tax
consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and
liabilities are determined based on differences between the financial statement carrying amounts and the tax basis of
assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to
reverse. Valuation allowances are established to reduce deferred tax assets when, based on available objective
evidence, it is more likely than not that the benefit of such assets will not be realized. Our deferred tax assets
exclude unrecognized tax benefits which do not meet a more-likely-than-not threshold for financial statement
recognition for tax positions taken or expected to be taken in a tax return.
As of January 1, 2019, we adopted ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic
220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” The amendments in
this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded
tax effects resulting from the Tax Cuts and Jobs Act. We have no stranded tax effects included in our other
comprehensive loss and therefore the adoption of ASU 2018-02 did not impact our consolidated financial
statements.
Loss per Common Share
Basic loss per common share is determined based on the weighted-average number of common shares outstanding
during each year. Diluted loss per common share is the same as basic loss per common share as all potential
common shares are excluded from the calculation, as their effect is anti-dilutive.
The number of shares underlying outstanding options, warrants, unvested RSUs, and convertible notes at
December 31, 2020 and 2019 were as follows (in thousands):
Options outstanding
Warrants outstanding
Unvested RSUs
Shares underlying convertible notes
2020
2019
12,240
12,850
187
23,557
48,834
11,410
12,150
-
20,846
44,406
These potential shares were excluded from the computation of diluted loss per share as their effect would have
been anti-dilutive.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
2. LIQUIDITY AND GOING CONCERN
The accompanying consolidated financial statements as of and for the year ended December 31, 2020 were
prepared assuming we will continue as a going concern, which contemplates that we will continue in operation and
will be able to realize our assets and settle our liabilities and commitments in the normal course of business for a
period of at least one year from the issuance date of these consolidated financial statements. These consolidated
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that could result should we be unable to
continue as a going concern.
We have incurred significant losses from operations and negative cash flows in every year since inception and have
utilized the proceeds from the sales of our equity and equity-linked securities and our contingent funding
arrangements with third-parties to fund our operations, including our litigation costs. For the year ended
December 31, 2020, we incurred a net loss of approximately $19.6 million and negative cash flows from operations
of approximately $4.8 million. At December 31, 2020, we had a working capital deficit of approximately $3.8 million
and an accumulated deficit of approximately $421.4 million. These circumstances raise substantial doubt about our
ability to continue to operate as a going concern for a period of one year after the issuance date of these
consolidated financial statements.
We had cash and cash equivalents of approximately $1.6 million at December 31, 2020. We received an additional
$5.6 million in proceeds from debt and equity financings and warrant and option exercises in the first quarter of 2021,
of which $3.0 million was used to settle outstanding accounts and notes payable for litigation costs (see Note
17). Our remaining capital resources will be used to fund our current obligations and ongoing operating costs;
however these resources may not be sufficient to meet our liquidity needs for the next twelve months and we may be
required to seek additional capital.
Our business plan is currently focused solely on our patent enforcement and technology licensing objectives. The
timing and amount of proceeds from our patent enforcement actions are difficult to predict and there can be no
assurance we will receive any proceeds from these enforcement actions.
Our ability to meet our liquidity needs for the twelve months after the issuance date of these financial statements is
dependent upon one or more of (i) our ability to successfully negotiate licensing agreements and/or settlements
relating to the use of our technologies by others in excess of our contingent payment obligations and (ii) our ability to
raise additional capital from the sale of debt or equity securities or other financing arrangements. We anticipate that
we will continue to invest in patent protection, licensing, and enforcement of our wireless technologies. We expect
that revenue generated from patent enforcement actions, and technology licenses over the twelve months after the
issuance date of these financial statements, if any, after deduction of payment obligations to our third-party litigation
funder and legal counsel, may not be sufficient to cover our operating expenses. In the event we do not generate
revenues, or other patent-asset proceeds, sufficient to cover our operational costs and contingent repayment
obligation, we will be required to raise additional working capital through the sale of equity securities or other
financing arrangements.
The long-term continuation of our business plan is dependent upon our ability to secure sufficient financing to
support our business, and our ability to generate revenues and/or patent-related proceeds sufficient to offset
expenses and meet our contingent payment obligation and other long-term debt repayment obligations. Failure to
generate sufficient revenues, raise additional capital through debt or equity financings, and/or reduce operating costs
could have a material adverse effect on our ability to meet our short and long-term liquidity needs and achieve our
intended long-term business objectives.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
3. INVENTORIES
As of December 31, 2019, we had $0.55 million in finished goods inventories that were fully offset by an inventory
reserve. All of our remaining inventories were disposed of in 2020.
The following table provides a reconciliation of our inventory reserves for the years ended December 31, 2020 and
2019, respectively (in thousands):
Inventory reserves at beginning of year
Impairment charges
Write down of impaired inventories
Disposal of inventory
Inventory reserves at end of year
4. PREPAID EXPENSES
2020
2019
$
$
550 $
-
-
(550)
- $
Prepaid expenses consisted of the following at December 31, 2020 and 2019 (in thousands):
Prepaid services
Prepaid bonds for German statutory costs
Prepaid insurance
Prepaid licenses, software tools and support
Other prepaid expenses
5. PROPERTY AND EQUIPMENT, NET
2020
2019
$
$
408 $
142
21
11
17
599 $
Property and equipment, at cost, consisted of the following at December 31, 2020 and 2019 (in thousands):
Equipment and software
Leasehold improvements
Furniture and fixtures
Less accumulated depreciation
2020
2019
$
$
218 $
19
30
267
(237)
30 $
982
6
(438)
-
550
221
188
62
17
17
505
260
33
43
336
(266)
70
Depreciation expense related to property and equipment was approximately $0.03 million and $0.04 million in 2020
and 2019, respectively.
In connection with the relocation of our corporate headquarters in July 2019 and October 2020, we disposed of a
number of assets that were no longer in use. For the years ended December 31, 2020 and 2019, we recorded a loss
on disposal of fixed assets of approximately $0.02 million and $0.01 million, respectively.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
In connection with the closure of our Lake Mary facility in 2018, we reclassified equipment with a net book value of
approximately $0.07 million to assets held for sale. We contracted with a third party for the consignment sale of
these assets and completed sales for several assets in 2019. For the year ended December 31, 2019, we
recognized a net loss of approximately $0.04 million on the sale and/or impairment of assets held for sale. The gains
and losses on the sale or impairment of held for sale assets is included in selling, general and administrative
expenses in the accompanying statements of comprehensive loss.
6. INTANGIBLE ASSETS
Intangible assets consisted of the following at December 31, 2020 and 2019 (in thousands):
Patents and copyrights
Less accumulated amortization
2020
2019
$
$
14,948 $
(12,778)
2,170 $
16,612
(13,734)
2,878
Amortization expense for each of the years ended December 31, 2020 and 2019 was approximately $0.4 million and
$0.6 million, respectively. For the years ended December 31, 2020 and 2019, we recorded losses on the disposal of
intangible assets of approximately $0.3 million and $0.4 million, respectively.
Future estimated amortization expense for intangible assets that have remaining unamortized amounts as of
December 31, 2020 is as follows (in thousands):
2021
2022
2023
2024
2025
2026 and thereafter
Total
7. ACCRUED LIABILITIES
$
$
358
321
283
270
231
707
2,170
Other accrued expenses consisted of the following at December 31, 2020 and 2019 (in thousands):
Advances
Board compensation
Other accrued expenses
2020
2019
882 $
-
54
936 $
500
413
168
1,081
$
$
Advances include amounts received from litigation counsel as advanced reimbursement of out-of-pocket expenses
expected to be incurred by us and, at December 31, 2020, includes approximately $0.4 million received from
investors for the purchase of equity securities in a January 2021 transaction (see Note 17).
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Board compensation of $0.4 million at December 31, 2019 represents accrued and unpaid board fees from prior
periods. In 2020, current and prior board members agreed to accept share-based compensation awards with an
aggregate grant-date fair value of approximately $0.1 million as partial payment for the outstanding fees and waived
the remaining unpaid fees.
8. LEASES
We lease our office and other facilities and certain office equipment under long-term, non-cancelable operating and
finance leases. No new finance or operating leases commenced during the years ended December 31, 2020 or
2019. During the year ended December 31, 2020, we recognized an impairment loss of approximately $0.2 million
on the ROU asset related to our Lake Mary office lease. We ceased use of this facility in 2018 as part of a
restructuring of our operations. The value of our ROU asset included estimated future sublease income. Due to a
number of factors, including the high vacancy rate of the building in which the space is located and the current
COVID-19 environment, we determined securing a sublease for the space would be unlikely. The impairment loss
recognized in 2020 represented the remaining carrying value of the asset and is included in selling, general,
and administrative expenses in our consolidated statements of comprehensive loss.
Lease expense for operating leases is generally recognized on a straight-line basis over the lease term and is
included in operating expenses on the consolidated statement of comprehensive loss. We recognized operating
lease costs of $0.1 million and $0.4 million for the years ended December 31, 2020 and 2019, respectively.
Supplemental Cash Flow Information
The following table summarizes the supplemental cash flow information related to leases, including the ROU assets
recognized upon adoption of the new lease standard (in thousands):
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
$
Non-cash activity
Right-of-use assets obtained in exchange for operating lease liabilities
Assets obtained in exchange for finance lease liabilities
Year Ended
December 31,
2020
Year Ended
December 31,
2019
315 $
-
-
-
-
314
-
1
563
-
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Other Information
The table below summarizes other supplemental information related to leases:
Weighted-average remaining lease term (in years):
Operating leases
Finance leases
Weighted average discount rate
Operating leases (1)
Finance leases
December 31,
2020
December 31,
2019
1.7
-
12.1%
-
2.7
0.3
12.0%
8.7%
(1) Upon adoption of the new lease standard, discount rates used for existing leases were established at January
1, 2019.
Undiscounted Cash Flows
The future maturities of lease liabilities consist of the following as of December 31, 2020 (in thousands):
2021
2022
2023
Thereafter
Total undiscounted lease payments
Less: imputed interest
Present value of lease liabilities
Less: current obligations under leases
Long-term lease obligations
9. LONG-TERM DEBT
Notes Payable
Operating Leases
Finance Leases
$
$
175 $
166
4
-
345
(40)
305
(146)
159 $
-
-
-
-
-
-
-
-
-
Note Payable to a Related Party
We have an unsecured promissory note payable of $0.8 million to Sterne, Kessler, Goldstein, & Fox, PLLC (“SKGF”),
a related party (see Note 15), for outstanding unpaid fees for legal services. The note, as amended, accrues interest
at 4% per annum and provides for monthly payments of principal and interest of $10,000 with a final balloon
payment of approximately $0.68 million due at the maturity date of April 30, 2022. We are currently in compliance
with all the terms of the note, as amended. For the years ended December 31, 2020 and 2019, we recognized
interest expense of approximately $0.03 million and $0.04 million, respectively, related to this note.
Unsecured Notes Payable
Unsecured notes payable at December 31, 2020 represents the current portion of our Paycheck Protection Program
loan, as described more fully below. Unsecured notes payable at December 31, 2019 represents the outstanding
principal balance of unsecured short-term promissory notes with accredited investors. The short-term
promissory notes, as amended, accrued interest at a rate of 20% per annum. During the year ended December
31, 2020, we issued an aggregate of 1,740,426 shares of our common stock as
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
an in-kind repayment of the $0.23 million in outstanding principal and $0.04 million of accrued interest on these short-
term notes. For the years ended December 31, 2020 and 2019, we recognized interest expense of approximately
$0.01 million and $0.03 million, respectively, related to these short-term notes.
Paycheck Protection Program Loan
In May 2020, we received approximately $0.2 million in proceeds from an approved loan under the Paycheck
Protection Program. Interest accrues on the outstanding principal balance at a rate of 1%, computed on a simple
interest basis. The loan principal and accrued interest are expected to be eligible for forgiveness in accordance with
the loan provisions. Payments of principal and interest are deferred until the date a decision on an application for
forgiveness is made. If no application is submitted, we will be required to make monthly repayments of
approximately $8,000 per month commencing May 1, 2021 and the loan will mature on May 3, 2022, at which time
any unpaid principal and accrued interest will be due and payable. We began the application process for loan
forgiveness in March 2021. The estimated current and noncurrent portions of this loan are included in the captions
“Unsecured notes payable” and “Other long-term liabilities” in the consolidated balance sheet as of December 31,
2020.
Other long-term liabilities at December 31, 2019 represents an advance payment from a potential litigation
funder. This liability was reclassified as an unsecured contingent payment obligation in 2020 (see “unsecured
contingent payment obligation” below).
Secured Note Payable
We have a note payable to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (“Mintz”) for outstanding, unpaid
attorney’s fees and costs associated with our patent enforcement program. The Mintz note is non-interest bearing,
except in the event of a default, and is secured by certain of our U.S. and foreign patents. The note, at Mintz’s option,
accelerates and becomes immediately due and payable in the case of standard events of default and/or in the event
of a sale or other transfer of substantially all of our assets or a transfer of more than 50% of our capital stock in one
or a series of transactions or through a merger or other similar transaction.
We were in default on the payment terms of the note at December 31, 2019, and accordingly, we accrued interest at
the default rate of 12% per annum. During the year ended December 31, 2020, we repaid $1.2 million of
outstanding principal and interest on the Mintz note, leaving an outstanding balance of accrued default
interest, at December 31, 2020 of approximately $0.03 million. In March 2021, we settled our outstanding
obligations with Mintz (see Note 17) and Mintz waived all past defaults on the note which has been paid in full.
At December 31, 2020, the aggregate maturities of our notes payable are as follows (in thousands):
2021
2022
Total
$
$
191
832
1,023
The estimated fair value of our notes payable at December 31, 2020 is approximately $0.9 million based on a risk-
adjusted discount rate.
Convertible Notes
Our convertible notes represent five-year promissory notes that are convertible, at the holders’ option, into shares of
our common stock at fixed conversion prices. Interest payments are made on a quarterly basis and are payable, at
our option and subject to certain equity conditions, in either cash, shares of our
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
common stock, or a combination thereof. To date, all interest payments on the convertible notes have been made in
shares of our common stock. We have recognized the convertible notes as debt in our consolidated financial
statements. The fixed conversion prices of certain of the notes were below the market value of our common stock
on the closing date resulting in the recognition of a beneficial conversion feature that is recorded as a discount on the
convertible notes with a corresponding increase to additional paid in capital.
Convertible notes payable at December 31, 2020 and 2019, consist of the following (in thousands):
Description
Convertible notes dated September 10,
2018
Convertible notes dated September 19,
2018
Convertible notes dated February/March
2019
Convertible notes dated June/July 2019
Convertible notes dated July 18, 2019
Convertible notes dated September 13,
2019
Convertible notes dated January 8, 2020
Total principal balance
Less unamortized discount
Fixed
Conversion
Rate
Effective
Interest
Rate 1
Maturity Date
December 31,
2020
2019
$0.40
$0.57
$0.25
$0.10
$0.08
$0.10
$0.13
23.4%
10.2%
8.0%
8.0%
46.1%
25.9%
20.3%
September 7, 2023 $
September 19,
2023
February 28, 2024
to March 13, 2024
June 7, 2024 to
July 15, 2024
July 18, 2024
September 13,
2024
January 8, 2025
$
600 $
425
700
425
1,300
1,300
340
700
50
450
3,865
847
3,018 $
390
700
50
-
3,565
832
2,733
1 The effective interest rate differs from the stated rate of interest on the notes as a result of beneficial
conversion features recognized as discounts on the debt.
The notes bear interest at a stated rate of 8% per annum, except for the July 18, 2019 notes which bear interest at a
stated rate of 7.5% per annum. We have the option to prepay the majority of the notes any time following the one-
year anniversary of the issuance of the notes, subject to a premium on the outstanding principal prepayment amount
of 25% prior to the two-year anniversary of the note issuance date, 20% prior to the three-year anniversary of the
note issuance date, 15% prior to the four-year anniversary of the note issuance date, or 10% thereafter. The notes
provide for events of default that include failure to pay principal or interest when due, breach of any of the
representations, warranties, covenants or agreements made by us, events of liquidation or bankruptcy, and a
change in control. In the event of default, the interest rate increases to 12% per annum and the outstanding principal
balance of the notes plus all accrued interest due may be declared immediately payable by the holders of a majority
of the then outstanding principal balance of the notes.
For the years ended December 31, 2020 and 2019, we sold five-year convertible promissory notes with an
aggregate face value of $0.45 million and $2.44 million, respectively and recorded debt discounts in an amount equal
to the beneficial conversion features on these notes of approximately $0.17 million and $0.55 million, respectively.
For the year ended December 31, 2020, convertible notes with a face value of $0.15 million were converted by the
holders into 750,000 shares of our common stock at an average conversion price of $0.20. For the year ended
December 31, 2019, convertible notes with a face value of $0.1 million were converted by the holders into 250,000
shares of our common stock at a fixed conversion price of $0.40. At the holders’ option, subject to ownership
limitations, the convertible notes
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
outstanding at December 31, 2020 could be converted into an aggregate of approximately 23.6 million shares of our
common stock based on the fixed conversion prices.
For the years ended December 31, 2020 and 2019, we recognized interest expense of approximately $0.47 million
and $0.32 million, respectively, including approximately $0.17 million and $0.12 million, respectively, related to
amortization of the discount and $0.3 million and $0.2 million, respectively, related to the contractual interest which
we elected to pay in shares of our common stock. For the years ended December 31, 2020 and 2019, we issued
approximately 710,000 and 1,600,000 shares of our common stock, respectively, as interest-in-kind payments on our
convertible notes. The unamortized discount on the convertible notes will be eliminated upon our adoption of ASU
2020-06 as of January 1, 2021 (see Note 1).
All of the shares underlying our convertible notes, including shares reserved for future in-kind interest payments on
the notes, have been registered for resale.
Secured Contingent Payment Obligation
The following table provides a reconciliation of our secured contingent payment obligation measured at estimated
fair market value for the years ended December 31, 2020 and 2019, respectively (in thousands).
Secured contingent payment obligation, beginning of year
Change in fair value
Secured contingent payment obligation, end of year
2020
2019
$
$
26,651 $
6,406
33,057 $
25,557
1,094
26,651
Our secured contingent payment obligation represents the estimated fair value of our repayment obligation to Brickell
Key Investments, LP (“Brickell”) under a February 2016 funding agreement, as amended from time to time (the
“CPIA”). To date, we have received aggregate proceeds of $18 million in exchange for Brickell’s right to
reimbursement and compensation from gross proceeds resulting from patent enforcement and other patent
monetization actions. No proceeds were received from Brickell in 2019 or 2020. To date, we have repaid an
aggregate of $3.3 million under the CPIA from patent license and settlement proceeds.
Brickell is entitled to priority payment of 55% to 100% of proceeds received from all patent-related actions until such
time that Brickell has been paid its minimum return. The minimum return is determined as a multiple of the funded
amount that increases over time. The estimated minimum return due to Brickell was approximately $42 million and
$39 million as of December 31, 2020 and 2019, respectively. In addition, Brickell is entitled to a pro rata portion of
proceeds from specified legal actions to the extent aggregate proceeds from those actions exceed the minimum
return.
Brickell holds a senior security interest in the majority of our assets until such time as the specified minimum return is
paid, in which case, the security interest will be released except with respect to the patents and proceeds related to
specific legal actions. The security interest is enforceable by Brickell in the event that we are in default under the
agreement which would occur if (i) we fail, after notice, to pay proceeds to Brickell, (ii) we become insolvent or
insolvency proceedings are commenced (and not subsequently discharged) with respect to us, (iii) our creditors
commence actions against us (which are not subsequently discharged) that affect our material assets, (iv) we,
without Brickell’s consent, incur indebtedness other than immaterial ordinary course indebtedness, or (v) there is an
uncured non-
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
compliance of our obligations or misrepresentations under the agreement. As of December 31, 2020, we are in
compliance with our obligations under this agreement.
In addition, in the event of a change in control of the Company, Brickell has the right to be paid its return as defined
under the CPIA based on the transaction price for the change in control event.
We have elected to measure our secured contingent payment obligation at its estimated fair value based on
probability-weighted estimated cash outflows, discounted back to present value using a discount rate determined in
accordance with accepted valuation methods (see Note 10). The secured contingent payment obligation is
remeasured to fair value at each reporting period with changes recorded in the consolidated statements of
comprehensive loss until the contingency is resolved.
Unsecured Contingent Payment Obligations
The following table provides a reconciliation of our unsecured contingent payment obligations, measured at
estimated fair market value, for the years ended December 31, 2020 and 2019, respectively (in thousands):
Unsecured contingent payment obligations, beginning of period
Reclassification of other liabilities
Issuance of contingent payment rights
Change in fair value
Unsecured contingent payment obligations, end of period
$
$
- $
1,003
2,258
1,961
5,222 $
-
-
-
-
-
2020
2019
Our unsecured contingent payment obligations represent amounts payable to others from future patent-related
proceeds including (i) a termination fee due to a litigation funder (“Termination Fee”) and (ii) contingent payment
rights (“CPRs”) issued to accredited investors primarily in connection with equity financings. We have elected to
measure these unsecured contingent payment obligations at their estimated fair value based on probability-weighted
estimated cash outflows, discounted back to present value using a discount rate determined in accordance with
accepted valuation methods. The unsecured contingent payment obligations will be remeasured to fair value at
each reporting period with changes recorded in the consolidated statements of comprehensive loss until the
contingency is resolved (see Note 10).
The Termination Fee is a result of advances received under a letter agreement with a third-party funder of $0.4
million in 2019 and $0.6 million in 2020. Based on the terms of the letter agreement, if a final funding arrangement
was not executed by March 31, 2020, we would be obligated to pay, from future patent-related proceeds, an
aggregate termination payment equal to five times the advances received, or approximately $5.0 million. We did not
consummate a funding agreement and accordingly the advances, which were initially recorded in other long-term
liabilities, were reclassified to unsecured contingent payment obligations at March 31, 2020, when the Termination
Fee obligation was incurred. As of December 31, 2020, the estimated fair value of unsecured contingent payment
obligations related to the Termination Fee is $2.7 million.
The CPRs represent the estimated fair value of rights provided to accredited investors who purchased shares of our
common stock and the fair value of a right issued to a third-party in connection with a service agreement during the
year ended December 31, 2020 (see Note 13). During the year ended December 31, 2020, we received aggregate
proceeds of $3.8 million from the sale of common stock with contingent payment rights, of
which approximately $1.8 million was allocated to the CPRs. In addition, on May 1, 2020, we amended certain
March 2020 equity purchase agreements with accredited
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
investors for the purchase of $0.9 million in common stock to add CPRs. This amendment resulted in a charge to
expense of $0.4 million for the initial estimated fair value of the CPRs. The terms of the CPRs provide that we
will pay each investor an allocated portion of our net proceeds from patent-related actions, after taking into account
fees and expenses payable to law firms representing us and amounts payable to Brickell. The investors’ allocated
portion of net proceeds will be determined by multiplying the net proceeds recovered by us (up to $10 million) by the
quotient of such investors’ subscription amount divided by $10 million, up to an amount equal to each investor’s
subscription amount, or an aggregate of $4.7 million. As of December 31, 2020, the estimated fair value
of our unsecured contingent payment obligations related to the CPRs is $2.5 million.
10. FAIR VALUE MEASUREMENTS
ASC 820, “Fair Value Measurements” establishes a fair value hierarchy that prioritizes the inputs to valuation
methods used to measure fair value. The three levels of the fair value hierarchy are as follows:
· Level 1: Quoted prices for identical assets or liabilities in active markets which we can access
· Level 2: Observable inputs other than those described in Level 1
· Level 3: Unobservable inputs
The following table summarizes financial assets and financial liabilities carried at fair value and measured on a
recurring basis as of December 31, 2020 and 2019, segregated by classification within the fair value hierarchy (in
thousands):
Fair Value Measurements
Quoted Prices in
Active Markets
(Level 1)
Significant Other
Observable
Inputs (Level 2)
Total
Significant
Unobservable
Inputs
(Level 3)
December 31, 2020:
Liabilities:
Secured contingent payment obligation
Unsecured contingent payment obligations
$
33,057 $
5,222
- $
-
$
-
-
33,057
5,222
December 31, 2019:
Liabilities:
Secured contingent payment obligation
26,651
-
-
26,651
For the years ended December 31, 2020 and 2019, respectively, we had no transfers of assets or liabilities between
the levels of the hierarchy.
The fair values of our secured and unsecured contingent payment obligations were estimated using a probability-
weighted income approach based on various cash flow scenarios as to the outcome of patent-related actions both in
terms of timing and amount, discounted to present value using a risk-adjusted rate. We used a risk-adjusted
discount rate of 14.15% at December 31, 2020, based on a risk-free rate of 0.15% as adjusted by 8% for credit risk
and 6% for litigation inherent risk.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
The following table provides quantitative information about the significant unobservable inputs used in the
measurement of fair value for both the secured and unsecured contingent payment obligations at December 31,
2020, including the lowest and highest undiscounted payout scenarios as well as a weighted average payout
scenario based on relative undiscounted fair value of each cash flow scenario.
Unobservable Inputs
Estimated undiscounted cash outflows (in
millions)
Duration (in years)
Estimated probabilities
Secured Contingent Payment
Obligation
Unsecured Contingent Payment
Obligations
Low
Weighted
Average
High
Low
Weighted
Average
High
$
0.0
1.0
5%
$
46.1
2.5
23%
$
70.2
3.5
25%
$
0.0
1.0
25%
$
7.3
2.5
25%
$
9.7
3.5
25%
We evaluate the estimates and assumptions used in determining the fair value of our contingent payment obligations
each reporting period and make any adjustments prospectively based on those evaluations. Changes in any of
these Level 3 inputs could result in a significantly higher or lower fair value measurement
11. INCOME TAXES AND TAX STATUS
Our net losses before income taxes for the years ended December 31, 2020 and 2019 are from domestic operations
as well as losses from our wholly-owned German subsidiary. We elected to treat our German subsidiary as a
disregarded entity for purposes of income taxes and accordingly, the losses from our German subsidiary have been
included in our operating results.
No current or deferred tax provision or benefit was recorded in 2020 or 2019 as a result of current losses and fully
deferred tax valuation allowances for all periods. We have recorded a valuation allowance to state our deferred tax
assets at their estimated net realizable value due to the uncertainty related to realization of these assets through
future taxable income.
A reconciliation between the provision for income taxes and the expected tax benefit using the federal statutory rate
of 21% for each of the years ended December 31, 2020 and 2019, respectively are as follows (in thousands):
Tax benefit at statutory rate
State tax benefit
Increase in valuation allowance
Other
2020
2019
(4,111) $
(842)
4,307
646
- $
(1,985)
(407)
2,341
51
-
$
$
45
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Our deferred tax assets and liabilities relate to the following sources and differences between financial accounting
and the tax bases of our assets and liabilities at December 31, 2020 and 2019 (in thousands):
Gross deferred tax assets:
Net operating loss carry-forward
Research and development credit carry-forward
Stock compensation
Patents and other
Contingent payment obligations
Inventories
Fixed assets
Accrued liabilities
Lease liabilities
Other
Less valuation allowance
Gross deferred tax liabilities:
Convertible debt
Net deferred tax asset
2020
2019
80,848 $
6,603
122
1,466
5,235
-
54
64
77
-
94,469
(94,245)
224
(224)
(224)
- $
83,865
7,608
(28)
1,479
3,119
139
3
200
142
3
96,530
(96,320)
210
(210)
(210)
-
$
$
Approximately $0.2 million, net of tax effect, of unrecognized tax benefit related to the beneficial conversion feature
of convertible debt would be recorded as an adjustment to contributed capital rather than a decrease in earnings, if
recognized.
At December 31, 2020, we had cumulative net operating loss (“NOL”) carry-forwards for income tax purposes of
$323.2 million, of which $294.1 million is subject to expiration in varying amounts from 2021 to 2037. At December
31, 2020, we also had research and development tax credit carryforwards of $6.6 million, which expire in varying
amounts from 2021 through 2038.
Our ability to benefit from the tax credit carry-forwards could be limited under certain provisions of the Internal
Revenue Code if there are ownership changes of more than 50%, as defined by Section 382 of the Internal Revenue
Code of 1986 (“Section 382”). Under Section 382, an ownership change may limit the amount of NOL, capital loss
and R&D credit carry-forwards that can be used annually to offset future taxable income and tax, respectively. In
general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of
certain shareholders or public groups in the stock of a corporation by more than 50 percentage points over a three-
year period. We conduct a study annually of our ownership changes. Based on the results of our studies, we have
determined that we do not have any ownership changes on or prior to December 31, 2020 which would result in
limitations of our NOL, capital loss or R&D credit carry-forwards under Section 382.
Uncertain Tax Positions
We file income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and Germany. We have
identified our Federal and Florida tax returns as our only major jurisdictions, as defined. The periods subject to
examination for those returns are the 2001 through 2020 tax years. The following table
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provides a reconciliation of our unrecognized tax benefits due to uncertain tax positions for the years ended
December 31, 2020 and 2019, respectively (in thousands):
Unrecognized tax benefits – beginning of year
Unrecognized tax benefits – end of year
2020
2019
$
$
927 $
927 $
927
927
Future changes in the unrecognized tax benefit will have no impact on the effective tax rate so long as we maintain
a full valuation allowance.
Our policy is that we recognize interest and penalties accrued on any unrecognized tax benefits as a component of
our income tax expense. We do not have any accrued interest or penalties associated with any unrecognized tax
benefits. For the years ended December 31, 2020 and 2019, we did not incur any income tax-related interest
income, expense or penalties.
12. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
From time to time, we are subject to legal proceedings and claims which arise in the ordinary course of our business.
These proceedings include patent enforcement actions initiated by us against others for the infringement of our
technologies, as well as proceedings brought by others against us at the Patent Trial and Appeal Board of the U.S.
Patent and Trademark Office (“PTAB”) and in the Federal Patent Court in Germany in an attempt to invalidate
certain of our patent claims.
We had several patent enforcement actions in Germany in which we did not prevail. Germany has a “loser pay”
system whereby the non-prevailing party is responsible for statutory attorney fees and costs. All of our German
actions were concluded in 2019. We have recorded an estimated loss for statutory attorney fees and costs in
current liabilities under the heading “statutory court costs” in the consolidated balance sheets. As of December 31,
2020 and 2019, we have accrued an aggregate of $0.25 million and $0.37 million, respectively, for our concluded
cases in Germany. We also have a bond posted in Germany that upon release will satisfy $0.14 million of these
accrued costs. The bond is recorded in prepaid expenses (see Note 4).
ParkerVision v. Qualcomm (Middle District of Florida)
We have a patent infringement complaint pending in the Middle District of Florida against Qualcomm and Qualcomm
Atheros, Inc. (collectively “Qualcomm”) seeking approximately $1.3 billion in damages for infringement of four of our
patents (the “Qualcomm Action”). HTC Corporation and HTC America, Inc. (collectively “HTC”) were also
defendants in this case but we voluntarily dismissed our claims against HTC and HTC dismissed their related
counter-claims against us in October 2020. Qualcomm has pending counterclaims against us for non-infringement
and invalidity for all patents in the case. The case was filed in May 2014 and stayed in February 2016 pending
decisions in other cases, including the appeal of a PTAB proceeding with regard to U.S. patent 6,091,940 (“the ‘940
Patent”) asserted in this case. In March 2017, the PTAB ruled in our favor on three of the six petitions (the method
claims), ruled in Qualcomm’s favor on two of the six petitions (the apparatus claims) and issued a split decision on
the claims covered in the sixth petition. In September 2018, the Federal Circuit upheld the PTAB’s decision with
regard to the ‘940 Patent and, in January 2019, the court lifted the stay in this case. In July 2019, the court issued
an order that granted our proposed selection of patent claims from four asserted patents, including the ‘940 Patent,
and denied Qualcomm’s request to limit the claims and patents. The court also agreed that we may elect to pursue
accused products that were at issue
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at the time the case was stayed, as well as new products that were released by Qualcomm during the pendency of
the stay. In September 2019, Qualcomm filed a motion for partial summary judgement in an attempt to exclude
certain patents from the case, including the ‘940 Patent. The court denied this motion in January 2020. In April
2020, the court issued its claim construction order in which the court adopted our proposed construction for seven of
the ten disputed terms and adopted slightly modified versions of our proposed construction for the remaining terms.
Due to the impact of COVID-19, a number of the scheduled deadlines in this case were moved including the trial
commencement date which was rescheduled from December 2020 to May 2021. We are seeking $1.3 billion in
royalties owed to us by Qualcomm for its unauthorized use of our technology, based on a report submitted by our
damages expert in this case in October 2020. Such amount excludes additional amounts requested by us for
interest and enhanced damages for willful infringement. Ultimately, the amount of damages, if any, will be
determined by the court. Discovery was expected to close in December 2020; however, the court allowed us to
designate a substitute expert due to medical issues with one of our experts in the case. Accordingly, the close of
discovery was delayed until January 2021. As a result of these delays, the court rescheduled the trial
commencement date from May 3, 2021 to July 6, 2021. Fact and expert discovery in this case are closed, expert
reports have been submitted, and summary judgement and Daubert briefings have been completed by the
parties. In March 2021, the court granted Qualcomm’s motion to strike certain of our 2020 infringement
contentions. A number of outstanding motions are pending decisions by the court. On March 26, 2021, the court
further delayed the trial date citing backlog due to the pandemic, among other factors. A new trial date has not yet
been set although the court indicated the case was unlikely to be tried before November or December 2021. We are
represented in this case on a full contingency fee basis.
ParkerVision v. Apple and Qualcomm (Middle District of Florida)
In December 2015, we filed a patent infringement complaint in the Middle District of Florida against Apple, LG,
Samsung and Qualcomm alleging infringement of four of our patents. In February 2016, the district court
proceedings were stayed pending resolution of a corresponding case filed at the International Trade Commission
(“ITC”). In July 2016, we entered into a patent license and settlement agreement with Samsung and, as a result,
Samsung was dismissed from the district court action. In March 2017, we filed a motion to terminate the ITC
proceedings and a corresponding motion to lift the stay in the district court case. This motion was granted in May
2017. In July 2017, we filed a motion to dismiss LG from the district court case and re-filed our claims against LG in
the District of New Jersey (see ParkerVision v. LG below). Also in July 2017, Qualcomm filed a motion to change
venue to the Southern District of California, and Apple filed a motion to dismiss for improper venue. In March 2018,
the district court ruled against the Qualcomm and Apple motions. The parties also filed a joint motion in March 2018
to eliminate three of the four patents in the case in order to expedite proceedings leaving our U.S. patent 9,118,528
as the only remaining patent in this case. A claim construction hearing was held on August 31, 2018. In July 2019,
the court issued its claim construction order in which the court adopted our proposed claim construction for two of
the six terms and the “plain and ordinary meaning” on the remaining terms. In addition, the court denied a motion
filed by Apple for summary judgment. Fact discovery has closed in this case and a jury trial was scheduled to begin
in August 2020. In March 2020, as a result of the impact of COVID-19, the parties filed a motion requesting an
extension of certain deadlines in the case. In April 2020, the court stayed this proceeding pending the outcome of the
Qualcomm Action. We are represented in this case on a limited success fee basis.
ParkerVision v. LG (District of New Jersey)
In July 2017, we filed a patent infringement complaint in the District of New Jersey against LG for the alleged
infringement of the same patents previously asserted against LG in the Middle District of Florida (see ParkerVision v.
Apple and Qualcomm above). We elected to dismiss the case in the Middle District of Florida and re-file in New
Jersey as a result of a Supreme Court ruling regarding proper venue. In March 2018, the court stayed this case
pending a final decision in ParkerVision v. Apple and Qualcomm
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in the Middle District of Florida. As part of this stay, LG has agreed to be bound by the final claim construction
decision in that case. We are represented in this case on a limited success fee basis.
ParkerVision v. Intel (Western District of Texas)
In February 2020, we filed a patent infringement complaint in the Western District of Texas against Intel alleging
infringement of eight of our patents. The complaint was amended in May 2020 to add two additional patents. In
June 2020, we requested that one of the patents be dropped from this case and filed a second case in the Western
District of Texas that included this dismissed patent (see ParkerVision v. Intel II below). Intel’s response to our
complaint was filed in June 2020 denying infringement and claiming invalidity of the patents. Intel also filed a motion
to transfer venue which the court denied in January 2021. The court issued its claim construction ruling in January
2021 in which the majority of the claims were decided in our favor. The case is scheduled for trial beginning
February 7, 2022. We are represented in this case on a full contingency fee basis.
Intel v. ParkerVision (PTAB)
Intel filed petitions for Inter Partes Review (IPR) against U.S. patent 7,539,474 (“the ‘474 Patent”), U.S. patent
7,110,444 (“the ‘444 Patent”) and U.S. patent 8,190,108 (“the ‘108 patent”), all of which are patents asserted
in ParkerVision v. Intel. In January 2021, the PTAB issued its decision to institute IPR proceeding for the ‘444
Patent and the ‘474 Patent. Our response to the instituted IPRs is due in April 2021. The PTAB has not yet issued
a decision for the ‘108 Patent.
ParkerVision v. Intel II (Western District of Texas)
In June 2020, to reduce the number of claims in ParkerVision v. Intel, we filed a second patent infringement
complaint in the Western District of Texas against Intel that included a single patent that we voluntarily dismissed
from the original case. In July 2020, we amended our complaint adding two more patents to the case. The claim
construction hearing is expected to be scheduled after May 2021 and the case is currently scheduled for trial
beginning March 17, 2022. We are represented in this case on a full contingency fee basis.
ParkerVision filed a number of additional patent cases in the Western District of Texas including cases against (i)
TCL Industries Holdings Co., Ltd, a Chinese company, TCL Electronics Holdings Ltd., Shenzhen TCL New
Technology Co., Ltd, TCL King Electrical Appliances (Huizhou) Co., Ltd., TCL Moka Int’l Ltd. and TCL Moka
Manufacturing S.A. DE C.V. (collectively “TCL”), (ii) Hisense Co., Ltd. and Hisense Visual Technology Co., Ltd
(collectively “Hisense”), a Chinese company, (iii) Buffalo Inc., a Japanese company (“Buffalo”)and (iv) Zyxel
Communications Corporation, a Chinese multinational electronics company headquartered in Taiwan,
(“Zyxel”). Each case alleges infringement of the same ten patents by products that incorporate modules containing
certain Wi-Fi chips manufactured by Realtek and/or MediaTek. Each of the defendants have filed responses
denying infringement and claiming invalidity of the patents, among other defenses. We are represented in each of
these cases on a full contingency fee basis.
13. STOCK AUTHORIZATION AND ISSUANCE
Preferred Stock
We have 15 million shares of preferred stock authorized for issuance at the direction of our board of directors (the
“Board”). On November 17, 2005, our Board designated 0.1 million shares of authorized preferred stock as the
Series E Preferred Stock in conjunction with its adoption of a Shareholder Protection Rights Agreement. As of
December 31, 2020, we had no outstanding preferred stock.
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Common Stock
We have 140 million shares of common stock authorized for issuance as of December 31, 2020. Our shareholders
approved amendments to our articles of incorporation in November 2019 increasing the number of our authorized
shares of common stock from 75 million to 110 million shares and in July 2020 increasing the number of our
authorized shares of common stock from 110 million to 140 million shares.
As of December 31, 2020, we have 25.3 million shares reserved for issuance under outstanding warrants, options,
and RSUs and 23.6 million shares reserved for issuance upon conversion of our outstanding convertible notes. In
addition, we have 0.2 million shares reserved for future issuance under equity compensation plans and 7.5 million
shares reserved for the payment of interest in-kind on our convertible notes.
Stock and Warrant Issuances – Equity Based Financings
During the year ended December 31, 2019, we did not issue any stock or warrants in financing transactions. The
following table presents a summary of completed equity-based financing transactions for the year ended December
31, 2020 (in thousands, except for per share amounts):
Date
Transaction
January 2020
February 2020
March 2020
April 2020
to December 2020
Private placement of common
stock
Warrant amendment
Private placement of common
stock, amended to add CPR
Private placement of common
stock with CPRs
(1)After deduction of applicable offering costs.
# of
Common
Shares/
Units Sold
Average
Price per
Share/Unit
# of
Warrants
Issued
(in 000’s)
Average
Exercise
Price per
Warrant
Net
Proceeds
(1)
1,335
-
$0.13
-
-
5,000
- $
$0.74 $
2,571
$0.35
10,858
$0.35
-
-
- $
- $
3,724
177
-
900
Private Placements
In January 2020, we entered into securities purchase agreements with accredited investors for an aggregate
of 1,169,232 shares of our common stock at a price of $0.13 per share and 166,667 shares of our common stock
at $0.15 per share for aggregate proceeds of approximately $0.2 million.
In March 2020, we entered into securities purchase agreements with accredited investors for an aggregate
of 2,571,432 shares of our common stock at a price of $0.35 per share for aggregate proceeds of $0.9 million. The
securities purchase agreements for the March 2020 transactions were amended on May 1, 2020, in order to add
a contingent payment right whereby we will pay each investor an allocated portion of our share of proceeds
from patent-related actions, after taking into account fees and expenses payable to law firms representing the
Company and amounts payable to Brickell, up to an amount equal to the investors’ aggregate subscription amount,
or $0.9 million (see “unsecured contingent payment obligations” in Note 9). The shares were registered for resale on
a registration statement that was declared effective on April 28, 2020 (File No. 333-237762).
From April to December 2020, we entered into securities purchase agreements with accredited investors for an
aggregate of 10,857,876 shares of our common stock at a price of $0.35 per share for aggregate proceeds
of $3.8 million. The securities purchase agreements include contingent payment rights. Approximately $1.8 million
of the proceeds were allocated to unsecured contingent payment obligations
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based on the initial fair value estimate of the CPRs (see Note 9). The shares sold from April to August, totaling
5,871,584 shares, were registered for resale on a registration statement that was declared effective on September 2,
2020 (File No. 333-248242).
For the shares sold subsequent to August 2020, we entered into registration rights agreements with the investors
pursuant to which we will register the shares. We have committed to file the registration statement by April 15, 2021
and to cause the registration statement to become effective by June 30, 2021. The registration rights agreements
provide for liquidated damages upon the occurrence of certain events including failure by us to file the registration
statement or cause it to become effective by the deadlines set forth above. The amount of the liquidated damages is
1.0% of the aggregate subscription upon the occurrence of the event, and monthly thereafter, up to a maximum of
6%, or approximately $0.1 million.
Warrant Amendment
On February 28, 2020, we entered into a warrant amendment agreement (the “Warrant Amendment Agreement”)
with Aspire Capital Fund, LLC (“Aspire”), with respect to warrants issued in July and September 2018 (the “2018
Warrants”) that are exercisable, collectively, into 5,000,000 shares of our common stock. The Warrant Amendment
Agreement provided for a reduction in the exercise price for the 2018 Warrants from $0.74 to $0.35 per share and
the issuance of a new warrant for the purchase of 5,000,000 shares of our common stock at an exercise price
of $0.74 per share (“New Aspire Warrant”). The New Aspire Warrant expires February 28, 2025 and is subject to
adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations,
reclassifications or similar events affecting our common stock and upon any distributions of assets to our
stockholders. The New Aspire Warrant contains provisions that prohibit exercise if the holder, together with its
affiliates, would beneficially own in excess of 9.99% of the number of shares of common stock outstanding
immediately after giving effect to such exercise. The holder of the New Aspire Warrant may increase (up to 19.99%)
or decrease this percentage by providing at least 61 days’ prior notice to the Company. In the event of certain
corporate transactions, the holder of the New Aspire Warrant will be entitled to receive, upon exercise of such New
Aspire Warrant, the kind and amount of securities, cash or other property that the holder would have received had
they exercised the New Aspire Warrant immediately prior to such transaction. The New Aspire Warrant does not
contain voting rights or any of the other rights or privileges as a holder of our common stock.
We recognized $1.78 million of non-cash warrant expense in connection with the Warrant Amendment Agreement
based on the difference between the Black-Scholes value of the warrants immediately before and after the
amendment. The Warrant Amendment Agreement added a call provision to the 2018 Warrants whereby we may,
after December 31, 2020, call for cancellation of all or any portion of the 2018 Warrants for which an exercise notice
has not yet been received, in exchange for consideration equal to $0.001 per warrant share and subject to certain
conditions. All other terms of the 2018 Warrants remained unchanged, including the original expiration dates of July
and September 2023. The shares underlying the New Aspire Warrant were registered for resale on a registration
statement that was declared effective on April 28, 2020 (File No. 333-237762). The shares underlying the 2018
Warrants are currently registered for resale pursuant to a registration statement on Form S-1 (File No. 333-226738).
In connection with the Warrant Amendment Agreement, Aspire exercised 1,430,000 shares of the 2018 Warrants for
aggregate proceeds to us of $0.5 million. An additional 3,070,000 shares of the 2018 Warrants were exercised
during the year ended December 31, 2020 for aggregate additional proceeds to us of approximately $1.1 million. We
did not exercise the call provision and the Aspire exercised the remaining 2018 Warrants in January 2021 (see Note
17).
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Stock and Warrant Issuances – Payment for Services
On February 10, 2020, we entered into a business consulting and retention agreement with Chelsea Investor
Relations (“Chelsea”) to provide business advisory services to us. As consideration for services to be provided under
the 24-month term of the consulting agreement, we issued 500,000 shares of unregistered common stock in
exchange for a nonrefundable retainer for services valued at approximately $0.15 million. The value of the stock
issued is being recognized as consulting expense over the term of the agreement. The shares were registered for
resale on a registration statement that was declared effective on April 28, 2020 (File No. 333-237762). The
agreement was amended in January 2021 (see Note 17).
On March 16, 2020, we entered into an agreement with Tailwinds Research Group LLC (“Tailwinds”) to provide
digital marketing services to us. As consideration for services to be provided under the twelve-month term of the
agreement, we issued warrants for the purchase up to 200,000 shares of our common stock with an exercise price
of $1.00 per share in exchange for a nonrefundable retainer for services, valued using the Black-Scholes method, at
approximately $0.06 million. The value of the warrants is being recognized as expense over the term of the
agreement. The Tailwinds warrants are exercisable immediately after issuance, expire March 16, 2023, and are
subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations,
reclassifications or similar events affecting our common stock. The shares underlying the warrant were
registered for resale on a registration statement that was declared effective on April 28, 2020 (File No. 333-237762).
On June 8, 2020, we entered into an agreement with a third party to provide media advisory services. As
consideration for services provided under the term of the agreement, which extended through December 31, 2020,
we issued 30,000 shares of unregistered common stock for a nonrefundable retainer for services valued at
approximately $0.01 million. The value of the stock issued was recognized as a consulting expense over the term of
the agreement. We are not obligated to register the shares for resale.
On October 30, 2020, we entered into a consulting services agreement with a third-party to provide shareholder
relations services. As consideration for services provided under the twelve-month term of the agreement, we issued
70,000 shares of unregistered common stock for a non-refundable retainer for services valued at approximately
$0.02 million. The agreement included a CPR to receive up to $0.02 million from patent-related proceeds. The CPR
was recorded as debt at its estimated fair value of approximately $0.1 million (see “unsecured contingent payment
obligations” in Note 9).
During the year ended December 31, 2020, we issued an aggregate of 100,000 shares of our unregistered common
stock, valued at approximately $0.05 million, as compensation for shareholder awareness services provided by a
third party. The agreement provides for future issuances of 50,000 shares for up to two successive three-month
periods over the term of the agreement, unless the services are terminated in accordance with the agreement. In
January 2021, we issued 50,000 shares valued at approximately $0.03 million as the third quarterly payment under
this agreement.
Common Stock Warrants
As of December 31, 2020 and 2019, we had outstanding warrants for the purchase of up to 12.9 million shares and
12.2 million shares of our common stock, respectively. The estimated grant date fair value of these warrants of
$1.7 million and $1.3 million at December 31, 2020 and 2019, respectively, is included in shareholders’ deficit in our
consolidated balance sheets. As of December 31, 2020, our outstanding warrants have an average exercise price
of $0.45 per share and a weighted average remaining life of approximately three years.
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Shareholder Protection Rights Agreement
On November 20, 2020, we adopted a second amendment to our Shareholder Protection Rights Agreement (“Rights
Agreement”) dated November 21, 2005, as amended. The amendment extends the expiration date of the Rights
Agreement from November 20, 2020 to November 20, 2023 and decreases the exercise price of the rights from
$14.50 to $8.54.
The Rights Agreement provided for the issuance, on November 29, 2005, as a dividend, rights to acquire fractional
shares of Series E Preferred Stock. We did not assign any value to the dividend, as the value of these rights is not
believed to be objectively determinable. The principal objective of the Rights Agreement is to cause someone
interested in acquiring us to negotiate with our Board rather than launch an unsolicited or hostile bid. The Rights
Agreement subjects a potential acquirer to substantial voting and economic dilution. Each share of common stock
issued by ParkerVision will include an attached right.
The rights initially are not exercisable and trade with the common stock of ParkerVision. In the future, the rights may
become exchangeable for shares of Series E Preferred Stock with various provisions that may discourage a
takeover bid. Additionally, the rights have what are known as “flip-in” and “flip-over” provisions that could make any
acquisition of us more costly to the potential acquirer. The rights may separate from the common stock following the
acquisition of 15% or more of the outstanding shares of common stock by an acquiring person. Upon separation,
the holder of the rights may exercise their right at an exercise price of $8.54 per right (the “Exercise Price”), subject
to adjustment and payable in cash. Upon payment of the Exercise Price, the holder of the right will receive from us
that number of shares of common stock having an aggregate market price equal to twice the Exercise Price, as
adjusted. The Rights Agreement also has a flip over provision allowing the holder to purchase that number of shares
of common/voting equity of a successor entity, if we are not the surviving corporation in a business combination, at
an aggregate market price equal to twice the Exercise Price. We have the right to substitute for any of our shares of
common stock that we are obligated to issue, shares of Series E Preferred Stock at a ratio of one ten-thousandth of
a share of Series E Preferred Stock for each share of common stock. The Series E Preferred Stock, if and when
issued, will have quarterly cumulative dividend rights payable when and as declared by the Board, liquidation,
dissolution and winding up preferences, voting rights and will rank junior to other securities of ParkerVision unless
otherwise determined by the Board. The rights may be redeemed upon approval of the Board at a redemption price
of $0.01. As of December 31, 2020, there are no Series E preferred shares outstanding.
14. SHARE-BASED COMPENSATION
The following table presents share-based compensation expense included in our consolidated statements of
comprehensive loss for the years ended December 31, 2020 and 2019, respectively (in thousands):
Research and development expense
Selling, general, and administrative expense
Total share-based compensation expense
2020
2019
$
$
-
1,244
1,244
$
$
5
584
589
We did not capitalize any expense related to share-based payments. As of December 31, 2020, there was
$0.36 million of total unrecognized compensation cost related to all non-vested share-based compensation
awards. That cost is expected to be recognized over a weighted-average period of approximately 0.5 years.
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Stock Incentive Plans
2019 Long-Term Incentive Equity Plan
We adopted a long-term incentive equity plan in August 2019 that provides for the grant of stock-based awards to
employees, officers, directors and consultants, not to exceed 12.0 million shares of common stock (the “2019 Plan”).
The 2019 Plan provides for benefits in the form of nonqualified stock options, stock appreciation rights, restricted
stock awards, and other stock based awards. Forfeited and expired options under the 2019 Plan become available
for reissuance. The plan provides that non-employee directors may not be granted awards that exceed the lesser of
1.0 million shares or $175,000 in value, calculated based on grant-date fair value. At December 31, 2020, 155,000
shares of common stock were available for future grants under the 2019 Plan. The 2019 Plan was amended in
January 2021 (see Note 17).
2011 Long-Term Incentive Equity Plan
We adopted a long-term incentive equity plan in September 2011 that, as amended in 2014, 2016 and 2017,
provides for the grant of stock-based awards to employees, officers, directors and consultants, not to exceed
3.0 million shares of common stock (the “2011 Plan”). The 2011 Plan provides for benefits in the form of incentive
stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, and other stock based
awards. Forfeited and expired options under the 2011 Plan become available for reissuance. The plan provides that
no participant may be granted awards in excess of 150,000 shares in any calendar year. At December 31, 2020,
25,627 shares of common stock were available for future grants under the 2011 Plan.
2008 Equity Incentive Plan
We adopted an equity incentive plan in August 2008 (the “2008 Plan”). The 2008 Plan provides for the grant of
stock-based awards to employees (excluding named executives), directors and consultants, not to exceed 50,000
shares of common stock. The 2008 Plan provides for benefits in the form of incentive stock options, nonqualified
stock options, stock appreciation rights, restricted stock awards, and other stock based awards. Forfeited and
expired options under the 2008 Plan become available for reissuance. The plan provides that no participant may be
granted awards in excess of 5,000 shares in any calendar year. At December 31, 2020, 20,473 shares of common
stock were available for future grants under the 2008 Plan.
Restricted Stock Awards
RSAs are issued as executive and employee incentive compensation and as payment for services to others. The
value of the award is based on the closing price of our common stock on the date of grant. RSAs are generally
immediately vested.
Restricted Stock Units
RSUs are issued as incentive compensation to executives, employees, and non-employee directors. Each RSU
represents a right to one share of our common stock, upon vesting. The RSUs are not entitled to voting rights or
dividends, if any, until vested. RSUs generally vest over a one to three year period for employee awards and a one
year period for non-employee director awards. The fair value of RSUs is generally based on the closing price of our
common stock on the date of grant and is amortized to share-based compensation expense over the estimated life of
the award, generally the vesting period.
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RSAs and RSUs
The following table presents a summary of RSA and RSU activity under the 2000, 2008, 2011, and 2019 Plans
(collectively, the “Stock Plans”) as of December 31, 2020 (shares in thousands):
Non-vested at beginning of year
Granted
Vested
Forfeited
Non-vested at end of year
Non-vested Shares
Weighted-Average
Grant Date Fair
Value
Shares
- $
1,016
(829)
-
187 $
-
0.31
0.31
-
0.33
The total fair value of RSAs and RSUs vested under the Stock Plans for the year ended December 31, 2020 was
approximately $0.3 million.
Stock Options
Stock options are issued as incentive compensation to executives, employees and non-employee directors. Stock
options are generally granted with exercise prices at or above fair market value of the underlying shares at the date
of grant. The fair value of options granted is estimated using the Black-Scholes option pricing model. Generally, fair
value is determined as of the grant date. Options for employees, including executives and non-employee directors,
are generally granted under the Stock Plans.
The following table presents a summary of option activity under the Stock Plans for the year ended December 31,
2020 (shares in thousands):
Outstanding at beginning of year
Granted
Exercised
Forfeited/Expired
Outstanding at end of year
Vested at end of year
Shares
11,410 $
843
-
(13)
12,240
9,490 $
Weighted-
Average
Exercise Price
Weighted-Average
Remaining
Contractual Term
Aggregate
Intrinsic
Value ($)
0.33
0.31
-
38.86
0.28
0.31
5.5 years $
5.5 years $
3,401
2,578
The weighted average per share fair value of options granted during the years ended December 31, 2020 and 2019
was $0.27 and $0.14, respectively. The total fair value of option shares vested was $0.9 million and $0.5 million for
the year ended December 31, 2020 and 2019, respectively.
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The fair value of option grants under the Stock Plans for the years ended December 31, 2020 and 2019,
respectively, was estimated using the Black-Scholes option-pricing model with the following assumptions:
Expected option term 1
Expected volatility factor 2
Risk-free interest rate 3
Expected annual dividend yield
Year ended December 31,
2020
5 years
127.4% to 135.3%
0.33% to 1.63%
0%
2019
5 years
119.1%
1.6%
0%
1 The expected term was generally determined based on historical activity for grants with similar terms and for
similar groups of employees and represents the period of time that options are expected to be outstanding. For
employee options, groups of employees with similar historical exercise behavior are considered separately for
valuation purposes.
2 The stock volatility for each grant is measured using the weighted average of historical daily price changes of our
common stock over the most recent period equal to the expected option life of the grant.
3 The risk-free interest rate for periods equal to the expected term of the share option is based on the U.S. Treasury
yield curve in effect at the measurement date.
Options by Price Range
The options outstanding at December 31, 2020 under all plans have exercise price ranges, weighted average
contractual lives, and weighted average exercise prices as follows (weighted average lives in years and shares in
thousands):
Options Outstanding
Options Vested
Range of Exercise
Prices
Number
Outstanding at
December 31,
2020
Wtd. Avg.
Exercise Price
Wtd. Avg.
Remaining
Contractual
Life
Number
Exercisable at
December 31,
2020
Wtd. Avg.
Exercise Price
Wtd. Avg.
Remaining
Contractual
Life
$0.171 - $0.33
$0.50 - $0.60
$1.98 - $2.13
$13.80
11,318 $
513
381
28
12,240 $
0.18
0.59
2.02
13.80
0.28
5.6
5.0
3.4
0.5
5.5
8,624 $
457
381
28
9,490 $
0.18
0.60
2.02
13.80
0.31
5.6
4.8
3.4
0.5
5.5
Upon exercise of options under all plans, we issue new shares of our common stock. For shares issued upon
exercise of equity awards granted under the Stock Plans, the shares of common stock are registered. For shares
issued upon exercise of non-plan awards, the shares are not registered unless they have been subsequently
registered by us on a registration statement. We had no option exercises for the years ended December 31, 2020 or
2019.
15. RELATED PARTY TRANSACTIONS
We paid approximately $0.01 million and $0.02 million in 2020 and 2019, respectively, for patent-related legal
services to SKGF, of which Robert Sterne, one of our directors since September 2006, is a partner. In addition, we
paid approximately $0.1 million in 2020 for principal and interest on the SKGF Note (refer to “Note Payable to a
Related Party” included Note 9). No payments were made in 2019 on the
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SKGF Note. The SKGF Note has an outstanding balance, including accrued interest, of approximately $0.8 million
at December 31, 2020.
In January 2020, we issued 500,000 in unregistered shares of our common stock as an in-kind payment of
approximately $0.08 million in outstanding amounts payable to Stacie Wilf, sister to Jeffrey Parker.
16. CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject us to a concentration of credit risk principally consist of cash and cash
equivalents. Cash and cash equivalents are primarily held in bank accounts and overnight investments. At times
our cash balances on deposit with banks may exceed the balance insured by the F.D.I.C.
17. SUBSEQUENT EVENTS
Equity and Debt Financings
In January 2021, we consummated the sale, on a private placement basis, of 2,976,430 shares of our common stock
at a price of $0.35 per share to accredited investors for aggregate proceeds of approximately $1.0 million. The
securities purchase agreements include contingent payment rights identical to the CPRs issued in 2020 (see
“unsecured contingent payment obligations” at Note 9). Approximately $0.4 million in proceeds for this transaction
was received as of December 31, 2020 and recorded as an accrued liability until the consummation of the
transaction (see Note 7). We entered into registration rights agreements with the investors pursuant to which we
will register the shares. We have committed to file the registration statement by April 15, 2021 and to cause the
registration statement to become effective by June 30, 2021. The registration rights agreements provide for
liquidated damages upon the occurrence of certain events including failure by us to file the registration statement or
cause it to become effective by the deadlines set forth above. The amount of the liquidated damages is 1.0% of the
aggregate subscription upon the occurrence of the event, and monthly thereafter, up to a maximum of 6%, or
approximately $0.06 million.
In March 2021, we consummated the sale, on a private placement basis of 3,230,942 shares of our common stock
and 1,619,289 warrants at a price of $1.29 per common share to accredited investors for aggregate proceeds of
approximately $4.2 million. The warrants have an exercise price of $1.75 per share and expire in March 2026. We
entered into registration rights agreements with the investors pursuant to which we will register the shares. We have
committed to file the registration statement within 30 days and to cause the registration statement to become
effective within 90 days. The registration rights agreements provide for liquidated damages upon the occurrence of
certain events including failure by us to file the registration statement or cause it to become effective by the
deadlines set forth above. The amount of the liquidated damages is 1.0% of the aggregate subscription upon the
occurrence of the event, and monthly thereafter, up to a maximum of 6%, or approximately $0.25 million. The
majority of the proceeds from this transaction were used to satisfy our obligations to Mintz (see “Mintz Agreement”
below).
Share Based Compensation Arrangements
On January 11, 2021, the Board amended the 2019 Long-Term Incentive Plan to increase the number of shares of
common stock reserved for issuance under the 2019 Plan from 12 million to 27 million shares.
The Board also approved grants, under the 2019 Plan, of two-year options, with an exercise price of $0.54 per
share, vesting in 8 equal quarterly installments commencing on March 31, 2021 and expiring on January 11, 2026.
The grants under the 2019 Plan included an option to purchase 8,000,000 shares granted to Jeffrey Parker, an
option to purchase 1,000,000 shares granted to Cynthia French, an option to
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purchase 380,000 shares to each of the three non-employee directors, and options to purchase an aggregate of
2,900,000 shares granted to other key employees.
On January 25, 2021, we amended our business consulting and retention agreement with Chelsea to increase the
compensation for services over the remaining term and to extend the term of the agreement through February
2024. As consideration for the amended agreement, we issued 500,000 shares of unregistered common stock in
exchange for a nonrefundable retainer for services valued at approximately $0.33 million. The value of the stock
issued is being recognized as consulting expense over the term of the agreement.
On March 9, 2021, we granted approximately 32,000 shares under our 2019 Long-Term Incentive Plan to a
consultant for business communications services over a one-year term valued at approximately $0.05 million.
Warrant and Option Exercises
During the three months ended March 31, 2021, we received aggregate proceeds of $0. 4 million from the exercise
of outstanding options and warrants at an average exercise price of $0.16 per share.
Mintz Agreement
As of December 31, 2020, we had approximately $3.1 million in accounts payable to Mintz and an outstanding
balance of approximately $0.03 million on a secured note payable to Mintz for legal fees and expenses. In addition,
we had approximately $3.6 million in disputed legal fees and expenses billed by Mintz that we treated as a loss
contingency that was not probable as of December 31, 2020 and 2019 and accordingly, for which we recognized no
expense in the consolidated financial statements. In March 2021, we entered into an agreement with Mintz to
satisfy our outstanding obligations and reduce any future contingency fees payable to Mintz. On March 29, 2021,
we paid Mintz a lump-sum payment of $3.0 million in satisfaction of our outstanding obligations to Mintz including the
Mintz note, our accounts payable to Mintz, and all disputed and unrecorded billings. Mintz waived all past defaults
on the Mintz note and agreed to a significant reduction in future success fees payable to Mintz from patent-related
proceeds.
Legal Proceedings
On March 26, 2021, the district court in the Middle District of Florida, Orlando Division, issued an order that, among
other things, postponed our trial date in ParkerVision v. Qualcomm citing backlog due to the pandemic as a factor. A
new trial date has not yet been set but is unlikely to be scheduled prior to November or December 2021 according to
the court.
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under Rules 13a-15(e) and 15d-15(e) of the Exchange Act, “disclosure controls and procedures” are controls and
other procedures that are designed to ensure that the information we are required to disclose in reports that we file
or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified under the rules and forms of the SEC. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that such information is accumulated and communicated to our
management, including our chief executive officer and our chief financial officer, as appropriate to allow timely
decisions regarding required disclosures. Our management, with the participation of our chief executive officer and
our chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of
December 31, 2020. Based on such evaluation, our chief executive officer and our chief financial officer have
concluded that as of December 31, 2020, our disclosure controls and procedures were effective.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting
and for the assessment of the effectiveness of internal control over financial reporting. Under Rules 13a-15(f) and
15d-15(f) of the Exchange Act, “internal control over financial reporting’’ is defined as a process designed by, or
under the supervision of, our chief executive officer and our chief financial officer, and effected by our board of
directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles.
Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records,
that in reasonable detail, accurately and fairly reflect our transactions and our dispositions of assets; provide
reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements
in accordance with generally accepted accounting; provide reasonable assurance that receipts and expenditures of
the company are made only in accordance with authorizations of management and directors; and provide
reasonable assurance regarding the prevention or the timely detection of the unauthorized acquisition, use or
disposition of the company’s assets that could have a material effect on our financial statements. Because of its
inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures
may deteriorate.
Management, with the participation of our chief executive officer and our chief financial officer, conducted an
evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2020 using the
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission in 2013. Based on this evaluation, management concluded that our
internal control over financial reporting was effective as of December 31, 2020.
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Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the fiscal quarter ended December 31,
2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
In accordance with and satisfaction of the requirements of Form 8-K, we include the following disclosure:
On March 29, 2021, we entered into securities purchase agreements (the “Purchase Agreements”) with the
accredited investors identified on Exhibit 10.87 hereof (the “Investors”) for the sale of an aggregate of 3,230,942
shares of common stock, $0.01 par value (“Shares”) and 1,619,289 warrants (“Warrants) at a price of $1.29 per
Share for aggregate proceeds of $4.2 million. The Warrants are exercisable for a period of five years at an exercise
price of $1.75 per share. The Purchase Agreements also contain customary representations and warranties of the
Investors. Proceeds of $3.0 million were used to satisfy outstanding obligations with one of our litigation firms,
including a reduction in future success fees owed to that firm. The remaining proceeds will be used for general
working capital purposes.
We entered into registration rights agreements (the “Registration Rights Agreement”) with the Investors pursuant to
which we will register the Shares and Warrant shares. We have committed to file the registration statement within
30 days and to cause the registration statement to become effective within 60 days (or, 90 days in the case of a
review by the Commission). The Registration Rights Agreement provides for liquidated damages upon the
occurrence of certain events including our failure to file the registration statement or cause it to become effective by
the deadlines set forth above. The amount of the liquidated damages is 1.0% of the aggregate subscription upon the
occurrence of the event, and monthly thereafter, up to a maximum of 6%.
The Shares and Warrants were offered and sold to the Investors on a private placement basis under Section 4(a)(2)
of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder.
The foregoing summaries of the Purchase Agreement, the Registration Rights Agreement and the Warrants are
qualified in their entirety by reference to the full text of the agreements, which are attached as Exhibits 10.84, 10.85
and 10.86 hereto and are incorporated herein by reference.
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Item 10. Directors, Executive Officers and Corporate Governance.
PART III
Directors
Our Board is divided into three classes with only one class of directors typically being elected in each year and each
class serving a three-year term. Our current directors, including their backgrounds and qualifications are as follows:
Name
Frank N. Newman
Jeffrey L. Parker
Paul A. Rosenbaum
Robert G. Sterne
Age Position with the Company
78 Class II Director, Audit Committee Member
64 Class I Director, Chairman of the Board and Chief Executive Officer
78 Class III Director, Audit Committee Chair
69 Class III Director
Frank N. Newman
Frank Newman has been a director of ours since December 2016. Mr. Newman has been the chief executive officer
and co-founder of PathGuard, Inc. (or its predecessors), a company offering hardware-based cybersecurity, since
2015. From 2011 until December 2018, Mr. Newman served as chairman of Promontory Financial Group China
Ltd., an advisory group for financial institutions and corporations in China. From 2005 to 2010, he served as
chairman and chief executive officer of Shenzhen Development Bank, a national bank in China. Prior to 2005, Mr.
Newman served as chairman, president, and chief executive officer of Bankers Trust and chief financial officer of
Bank of America and Wells Fargo Bank. Mr. Newman served as Deputy Secretary of the U.S. Treasury from 1994 to
1995 and as Under Secretary of Domestic Finance from 1993 to 1994. He has authored two books and several
articles on economic matters, published in the U.S., mainland China, and Hong Kong. Mr. Newman has served as
director of Aspirational Consumer Lifestyle Corp (NYSE: ASPL), a special purpose acquisition company, since
September 2020. He also serves as audit committee chair and a member of the compensation committee for
ASPL. Mr. Newman has previously served as a director for major public companies in the U.S., United Kingdom,
and China, and as a member of the Board of Trustees of Carnegie Hall. He earned his BA, magna cum laude, in
economics at Harvard. Mr. Newman brings a substantial knowledge of international banking and business
relationships to the Board. His financial background adds an important expertise to the Board with regard to
financing future business opportunities.
Jeffrey L. Parker
Jeffrey Parker has been the Chairman of our Board and our Chief Executive Officer since our inception in August
1989 and was our president from April 1993 to June 1998. From March 1983 to August 1989, Mr. Parker served as
executive vice president for Parker Electronics, Inc., a joint venture partner with Carrier Corporation performing
research, development, manufacturing, and sales and marketing for the heating, ventilation and air conditioning
industry. Mr. Parker is a named inventor on 31 U.S. patents. Among other qualifications, as Chief Executive Officer,
Mr. Parker has relevant insight into our operations, our industry, and related risks as well as experience bringing
disruptive technologies to market.
Paul A. Rosenbaum
Paul A. Rosenbaum has been a director of ours since December 2016 and a member of our Audit Committee since
September 2018. Mr. Rosenbaum has extensive experience as a director and executive officer for both public and
private companies in a number of industries. Since 1994, Mr. Rosenbaum has served as chief executive of SWR
Corporation, a privately-held corporation that designs, sells, and markets specialty industrial chemicals. In
September 2017, Mr. Rosenbaum was appointed to the Board of Commissioners for the Oregon Liquor Control
Commission and has served as chairman since March 2018. Since 2009, Mr.
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Rosenbaum has been a member of the Providence St. Vincent Medical Foundation Council of Trustees, and
previously served as president of the Council. In addition, from September 2000 until June 2009, Mr. Rosenbaum
served as chairman and chief executive officer of Rentrak Corporation (“Rentrak”), a Nasdaq publicly traded
company that provides transactional media measurement and analytical services to the entertainment and media
industry. From June 2009 until July 2011, Mr. Rosenbaum served in a non-executive capacity as chairman of
Rentrack. From 2007 until 2016, Mr. Rosenbaum served on the Board of Commissioners for the Port of Portland,
including as vice chairman from 2012 to 2016. Mr. Rosenbaum was chief partner in the Rosenbaum Law Center
from 1978 to 2000 and served in the Michigan Legislature from 1972 to 1978, during which time he chaired the
Michigan House Judiciary Committee, was legal counsel to the Speaker of the House of the state of Michigan and
wrote and sponsored the Michigan Administrative Procedures Act. Additionally, Mr. Rosenbaum served on the
National Conference of Commissioners on Uniform State Laws, as vice chairman of the Criminal Justice and
Consumer Affairs Committee of the National Conference of State Legislatures, and on a committee of the Michigan
Supreme Court responsible for reviewing local court rules. Among other qualifications, Mr. Rosenbaum has
extensive experience as a director and executive officer of a publicly held corporation and has relevant insights into
operations and our litigation strategies.
Robert G. Sterne
Robert Sterne has been a director of ours since September 2006 and also served as a director of ours from February
2000 to June 2003. Since 1978, Mr. Sterne has been a partner of the law firm of Sterne, Kessler, Goldstein & Fox
PLLC, specializing in patent and other intellectual property law. Mr. Sterne provides legal services to us as one of
our patent and intellectual property attorneys. Mr. Sterne has co-authored numerous publications related to patent
litigation strategies. He has received multiple awards for contributions to intellectual property law including Law
360’s 2016 Top 25 Icons of IP and the Financial Times 2015 Top 10 Legal Innovators in North America. Among
other qualifications, Mr. Sterne has an in-depth knowledge of our intellectual property portfolio and patent strategies
and is considered a leader in best practices and board responsibilities concerning intellectual property.
Information About Our Executive Officers
Our current executive officers are as follows:
Name
Jeffrey Parker
Cynthia French
Age
64
54
Position with the Company
Chairman of the Board and Chief Executive Officer (“CEO”)
Chief Financial Officer and Corporate Secretary (“CFO”)
The background for Mr. Jeffrey Parker is included above under the heading “Directors”.
Cynthia French (formerly Poehlman)
Cynthia French has been our chief financial officer since June 2004 and our corporate secretary since August
2007. From March 1994 to June 2004, Ms. French was our controller and our chief accounting officer. Ms. French
has been a certified public accountant in the state of Florida since 1989.
Former Executive Officers
Messrs. David Sorrells and Gregory Rawlins both served as our Chief Technology Officers (“CTO”) through March
2020, at which time, given our reduced scope of operations, in particular our research and development activities,
our Board determined to eliminate the Chief Technology Officer role. Both Mr. Sorrells and Mr. Rawlins remain
employed by us in technical support roles.
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Family Relationships
There are no family relationships among our officers or directors.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our officers, directors and persons who beneficially own more than ten
percent of our common stock to file reports of ownership and changes in ownership with the SEC. Based solely
upon a review of such forms and written representations received by the Company from certain reporting persons,
we believe that during the year ended December 31, 2020 all Section 16(a) filing requirements were complied with
in a timely manner, with the following exception: Messrs. Parker and Newman each inadvertently failed to timely file
one Form 4 report disclosing the November 9, 2020 acquisition of shares of our common stock upon vesting of an
RSU award. The relevant Form 4 reports were filed on February 10, 2021.
Code of Ethics
The Board has adopted a code of ethics applicable to all of our directors, officers and employees, including our chief
executive officer and our chief financial and accounting officer, that is designed to deter wrongdoing and to promote
honest and ethical conduct, full, fair, accurate, timely and understandable disclosure in reports that we file or submit
to the SEC and in our other public communications, compliance with applicable government laws, rules and
regulations, prompt internal reporting of violations of the code to an appropriate person designated in the code and
accountability for adherence to the code. A copy of the code of ethics may be found on our website at
www.parkervision.com.
Shareholder Nominations
There have been no material changes to the procedures by which security holders may recommend nominees to our
Board.
Audit Committee and Financial Expert
Messrs. Paul Rosenbaum and Frank Newman serve as the members of our audit committee. Our audit committee is
governed by a Board-approved charter which, among other things, establishes the audit committee’s membership
requirements and its powers and responsibilities. Our Board has determined that Mr. Rosenbaum and Mr. Newman
are audit committee financial experts within the meaning of the rules and regulations of the SEC.
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Item 11. Executive Compensation.
Summary Compensation Table
The following table summarizes the total compensation of each of our “named executive officers” as defined in Item
402(m) of Regulation S-K (the “Executives”) for the fiscal years ended December 31, 2020 and 2019. Given the
complexity of disclosure requirements concerning executive compensation, and in particular with respect to the
standards of financial accounting and reporting related to equity compensation, there is a difference between the
compensation that is reported in this table versus that which is actually paid to and received by the Executives. The
amounts in the Summary Compensation Table that reflect the full grant date fair value of an equity award, do not
necessarily correspond to the actual value that has been realized or will be realized in the future with respect to
these awards.
(a)
(b)
(c)
(d)
(g)
Bonus ($)
Salary
($)
Year
2020 $ 270,000 $
2019 260,000
2020 186,923
2019 180,000
2020 176,150
2019 158,577
(e)
Stock
Awards
($)(1)
(f)
Option
Awards
($)(1)
$ 99,000
$
-
-
-
-
49,500
-
845,766
42,750
140,961
-
-
2020 207,692
2019 200,000
49,500
-
-
105,721
-
-
-
-
-
-
-
-
-
-
-
-
-
-
All Other
($)
$ 24,923 2 $
24,000 2
(h)
Total
($)
393,923
1,129,766
229,673
320,961
225,650
158,577
257,192
305,721
Name and Principal Position
Jeffrey Parker, CEO
Cynthia French, CFO
David Sorrells, Former CTO
Gregory Rawlins, Former
CTO Heathrow
1. There were 27 biweekly pay periods in 2020 compared to 26 in 2019 resulting in an increase in reported base salaries.
2. The amounts represented in columns (e) and (f) represents the full grant date fair value of equity awards in accordance with
ASC 718. Refer to Note 14 to the consolidated financial statements for the year ended December 31, 2020 included in Item
8 for the assumptions made in the valuation of equity awards.
3. Represents an automobile allowance in the amount of $24,000 , paid biweekly. The additional amount in 2020 is the result
of 27 pay periods in 2020 compared to 26 in 2019.
In February 2020, our Board approved equity awards under our 2019 Long Term Incentive Plan including 300,000
RSUs to Mr. Parker, 150,000 RSUs to each of Messrs. Rawlins and Sorrells and 150,000 share options at an
exercise price of $0.33 per share to Ms. French. These awards vest over five quarters through May 2021. These
awards were, in part, in consideration of continuing voluntary salary reductions by our Executives.
We do not have employment agreements with any of our Executives. We have non-compete arrangements in place
with all of our employees, including our Executives, that impose post-termination restrictions on (i) employment or
consultation with competing companies or customers, (ii) recruiting or hiring employees for a competing company,
and (iii) soliciting or accepting business from our customers. We also have a tax-qualified defined contribution
401(k) plan for all of our employees, including our Executives. We did not make any employer contributions to the
401(k) plan in 2020 or 2019.
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Outstanding Equity Awards at Fiscal Year End
The following table summarizes information concerning the outstanding equity awards, including unexercised
options, unvested stock and equity incentive awards, as of December 31, 2020 for each of our Executives:
Option Awards
Stock Awards
Number of
securities
underlying
unexercised
options
(#)
exercisable
Number of
securities
underlying
unexercised
options
(#)
unexercisable
Name
(a)
(b)
Option
Exercise
Price
($)
(c)
Number of
shares or units
of stock that
have not
vested
(#)
Market Value
of shares or
units of stock
that have not
vested ($)(1)
Option
Expiration
Date
(d)
(e)
Jeffrey Parker
Cynthia French
David Sorrells
Gregory Rawlins
20,000 1
4,500,000 2
20,000 1
750,000 2
131,250 3
20,000 1
20,000 1
-
1,500,000 2
-
250,000 2
18,750 3
-
-
562,500 2
187,500 2
1.98 8/15/2024
0.17
8/7/2026
1.98 8/15/2024
8/7/2026
0.17
0.33
2/9/2027
1.98 8/15/2024
1.98 8/15/2024
8/7/2026
0.17
75,000 4 $
-
-
-
37,500 4 $
37,500 4 $
-
(f)
36,000
-
-
-
18,000
18,000
-
1 Options vested over four equal quarterly periods from August 31, 2017 to May 31, 2018.
2 Options vest over eight equal quarterly periods from September 1, 2019 to June 1, 2021.
3 Options vested 50% on grant date and the remaining 50% over four equal quarterly periods beginning May 9, 2020.
4 Unvested RSUs vest 50% on February 9, 2021 and 50% on May 9, 2021.
Director Compensation
Since September 2018, the Board compensation program has consisted exclusively of equity-based compensation,
generally awarded annually, in the form of nonqualified stock options, RSUs, or a combination thereof. Unvested
director equity compensation awards are forfeited if the director resigns or is removed from the Board for cause prior
to the vesting date. Nonqualified stock options generally expire seven year from grant date.
In February 2020, our non-employee directors were awarded, at their option, either 150,000 nonqualified stock
options at an exercise price of $0.33 per share or an RSU for 150,000 shares. Messrs. Rosenbaum and Sterne
opted to receive options, each with a grant-date fair value of approximately $43,000. Mr. Newman opted to receive a
RSU with a grant date fair value of approximately $50,000. Each of the awards vest 50% upon grant with the
remaining portion vesting in four equal quarterly installments from
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
May 2020 through February 2021. In addition, in February 2020, Mr. Sterne was awarded an immediately vested
nonqualified stock option for the purchase of 100,000 shares at $0.33 per share, with an estimated grant-date fair
value of approximately $29,000, as partial payment of accrued and unpaid fees for board and committee service
prior to 2019. Mr. Sterne waived approximately $70,000 in additional accrued and unpaid fees.
We reimburse our non-employee directors for their reasonable expenses incurred in attending meetings and we
encourage participation in relevant educational programs for which we reimburse all or a portion of the costs
incurred for these purposes.
Directors who are also our employees are not compensated for serving on our Board.
The following table summarizes the compensation of our non-employee directors for the year ended December 31,
2020.
Name
(a)
Frank Newman 2
Paul Rosenbaum 3
Robert Sterne 4
Stock
Awards($) 1
(b)
Option
Awards($) 1
(c)
Total
($)
(d)
$
49,500 $
-
-
-
$
42,750
71,250
49,500
42,750
71,250
1. The amounts represented in columns (b) and (c) represent the full grant date fair value of share-based awards in
accordance with ASC 718. Refer to Note 14 of the consolidated financial statements included in Item 8 for the assumptions
made in the valuation of stock awards.
2. At December 31, 2020, Mr. Newman has an aggregate of 18,750 unvested RSUs and 975,000 nonqualified stock options
outstanding, of which 775,000 are exercisable.
3. At December 31, 2020, Mr. Rosenbaum has an aggregate of 1,125,000 nonqualified stock options outstanding, of which
906,250 are exercisable.
4. At December 31, 2020, Mr. Sterne has 1,277,270 nonqualified stock options outstanding, of which 1,058,520 are
exercisable.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
Equity Compensation Plan Information
The following table gives information as of December 31, 2020 about shares of our common stock authorized for
issuance under all of our equity compensation plans (in thousands, except for per share amounts):
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding options,
warrants and rights
Plan Category
Equity compensation plans approved by security
holders 1,3
Equity compensation plans not approved by
security holders 2,3
Total
(a)
1,240
11,187
12,427
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(c)
$1.24
0.18
46
155
201
1.
2.
Includes the 2000 Plan, the 2008 Plan, and the 2011 Plan.
Includes the 2019 Plan.
3. The types of awards that may be issued under each of these plans is discussed more fully in Note 14 to our consolidated
financial statements included in Item 8.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Security Ownership of Certain Beneficial Holders
The following table sets forth certain information as of March 19, 2021 with respect to the stock ownership of (i)
those persons or groups who beneficially own more than 5% of our common stock, (ii) each of our directors, (iii)
each of our executive officers, and (iv) all of our directors and executive officers as a group (based upon information
furnished by those persons).
As of March 19, 2021, 66,347,539 shares of our common stock were issued and outstanding.
Name of Beneficial Owner
>5% HOLDERS (EXCLUDING EXECUTIVE OFFICERS AND DIRECTORS)
GEM Partners, LP
Thomas Staz Revocable Trust
EXECUTIVE OFFICERS AND DIRECTORS
Jeffrey Parker 10
Cynthia French 10
Frank Newman 10
Paul Rosenbaum 10
Robert Sterne 10
All directors and executive officers as a group (5 persons)
Amount and
Nature of
Beneficial
Ownership
Percent
of Class1
7,010,080
4,015,429
3,315,583
1,220,193
1,125,000
1,850,602
1,273,035
8,784,413
2
3
4
5
6
7
8
9
9.99%
6.05%
4.78%
1.81%
1.67%
2.73%
1.88%
11.87%
1 Percentage is calculated based on all outstanding shares of common stock plus, for each person or group, any shares of
common stock that the person or the group has the right to acquire within 60 days pursuant to options, warrants, conversion
privileges or other rights. Unless otherwise indicated, each person or group has sole voting and dispositive power over all
such shares of common stock.
2 GEM Investment Advisors, LLC (“ GEM Advisors”) is the general partner of GEM Partners LP (“ GEM”) and Flat Rock
Partners LP (“FlatRock”). Mr. Daniel Lewis is the controlling person of GEM Advisors. GEM Advisors and Mr. Lewis have
shared voting and dispositive power. Beneficial ownership includes (i) 4,899 shares held by FlatRock, (ii) 6,600 shares held
by Mr. Lewis, (iii) 3,181,658 shares held by GEM, and (iv) 3,091,103 shares underlying convertible notes held by GEM, but
excludes 6,685,000 shares underlying convertible notes held by GEM that are not convertible within 60 days due to exercise
limitations. The principal business address of GEM Advisors, FlatRock, and Mr. Lewis is 100 State Street, Suite 2B,
Teaneck, NJ 07666. Information derived from a Schedule 13G/A filed by GEM Advisors on March 9, 2021.
3
4
5
6
7
Thomas Staz is the trustee of the Thomas Staz Revocable Trust. The principal business address of the Thomas Staz
Revocable Trust is 1221 Brickell Avenue, Suite 2660, Miami, Florida 33131. Information provided by beneficial holder on
February 22, 2021.
Includes 2,970,000 shares of common stock issuable upon currently exercisable options, 190,824 shares held by Mr. Parker
directly, 117,259 shares held by Jeffrey Parker and Deborah Parker Joint Tenants in Common, over which Mr. Parker has
shared voting and dispositive power, and 37,500 RSUs subject to vest within 60 days. Excludes 7,750,000 shares of
common stock issuable upon options that may become exercisable in the future.
Includes 1,170,000 shares of common stock issuable upon currently exercisable options and excludes 1,000,000 shares of
common stock issuable upon options that may become exercisable in the future.
Includes 922,500 shares of common stock issuable upon currently exercisable options and excludes 432,500 shares of
common stock issuable upon options that may become exercisable in the future.
Includes 1,072,500 shares of common stock issuable upon currently exercisable options and 250,000 shares of common
stock issuable upon conversion of convertible notes. Excludes 432,500 shares of common stock
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
issuable upon options that may become exercisable in the future.
8
9
Includes 1,224,770 shares of common stock issuable upon currently exercisable options and excludes 432,500 shares of
common stock issuable upon options that may become exercisable in the future.
Includes 7,359,770 shares of common stock issuable upon currently exercisable options , 37,500 RSUs subject to vest within
60 days, and 250,000 shares of common stock issuable upon conversion of convertible notes held by directors and officers
and excludes 10,047,500 shares of common stock issuable upon options that may become exercisable in the future (see
notes 4, 5, 6, 7 and 8 above).
10 The person’s address is 4446-1A Hendricks Avenue, Suite 354, Jacksonville, Florida 32207.
Item 13. Certain Relationships and Related Transactions and Director Independence.
Related Party Transactions
We paid approximately $11,000 and $22,000 in 2020 and 2019, respectively for patent-related legal services to
SKGF, of which Robert Sterne, is a partner. In addition, we paid approximately $110,000 in 2020 for principal and
interest on an unsecured note payable to SKGF. The note was issued in 2016 to convert outstanding unpaid legal
fees to an unsecured promissory note. The note was amended multiple times in 2018 and 2019 to defer principal
payments. The note, as amended, allows for interest at 4% per annum, monthly installments of $10,000 per month
beginning January 2020, with a final balloon payment due on April 30, 2022. At December 31, 2020, the outstanding
balance of the note, including unpaid interest is approximately $803,000.
In January 2020, we issued 500,000 in unregistered shares of our common stock as an in-kind payment of
approximately $0.08 million in outstanding amounts payable to Stacie Wilf, sister to Jeffrey Parker.
Director Independence
We follow the rules of Nasdaq in determining if a director is independent. The Board also consults with our counsel
to ensure that the Board’s determination is consistent with those rules and all relevant securities and other laws and
regulations regarding the independence of directors. The Board has affirmatively determined that Messrs. Newman,
Rosenbaum, and Sterne are independent directors.
Item 14. Principal Accountant Fees and Services.
The firm of MSL, P.A. acts as our principal accountants. From April 2018 to September 2019, the firm of BDO USA,
LLP acted as our principal accountants (“Prior Accountants”). The following is a summary of fees paid to the
principal accountants and Prior Accountants for services rendered.
Audit Fees. For the years ended December 31, 2020 and 2019, the aggregate fees billed by our principal
accountants for professional services rendered for the audit of our annual financial statements, the review of our
financial statements included in our quarterly reports, and services provided in connection with regulatory filings
were approximately $148,300 and $101,200, respectively. In addition, for the years ended December 31, 2020 and
2019, the aggregate fees billed by our Prior Accountants for professional services rendered in connection with the
audit of our annual financial statements, the review of our financial statements included in our quarterly reports, and
services provided in connection with regulatory filings were approximately $70,000 and $188,700, respectively.
Audit Related Fees. For the years ended December 31, 2020 and 2019, there were no fees billed for professional
services by our principal accountants or Prior Accountants for assurance and related services.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Tax Fees. For the years ended December 31, 2020 and 2019, there were no fees billed for professional services
rendered by our principal accountants for tax compliance, tax advice or tax planning.
All Other Fees. For the years ended December 31, 2020 and 2019, there were no fees billed for other professional
services by our principal accountants.
All the services discussed above were approved by our audit committee. The audit committee pre-approves the
services to be provided by our principal accountants, including the scope of the annual audit and non-audit services
to be performed by the principal accountants and the principal accountants’ audit and non-audit fees.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) Documents filed as part of this report:
(1) Financial statements:
Consolidated Balance Sheets as of December 31, 2020 and 2019
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2020 and 2019
Consolidated Statements of Shareholders’ Deficit for the years ended December 31, 2020 and 2019
Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019
Notes to Consolidated Financial Statements for the years ended December 31, 2020 and 2019
(2) Financial statement schedules:
Not applicable.
(3) Exhibits.
Exhibit
Number
Description
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
Amended and Restated Articles of Incorporation (incorporated by reference from Exhibit 3.1 of Current
Report on Form 8-K filed March 29, 2016)
Amended and Restated Bylaws (incorporated by reference from Exhibit 3.1 of Current Report on Form 8-
K filed August 14, 2007)
Articles of Amendment to Amended and Restated Articles of Incorporation (incorporated by reference
from Exhibit 3.1 of Current Report on Form 8-K filed August 18, 2016)
Articles of Amendment to Amended and Restated Articles of Incorporation (incorporated by reference
from Exhibit 3.1 of Current Report on Form 8-K filed July 13, 2017)
Articles of Amendment to the Amended and Restated Articles of Incorporation (incorporated by reference
from Exhibit 3.5 of Form S-1 filed August 9, 2018)
Articles of Amendment to the Amended and Restated Articles of Incorporation (incorporated by reference
from Exhibit 3.1 of Current Report on Form 8-K filed October 30, 2018)
Articles of Amendment to the Amended and Restated Articles of Incorporation (incorporated by reference
from Exhibit 3.1 of Current Report on Form 8-K filed November 15, 2019)
Articles of Amendment to the Amended and Restated Articles of Incorporation (incorporated by reference
from Exhibit 3.1 of Current Report on Form 8-K filed September 4, 2020)
Certificate of Designations of the Preferences, Limitations and Relative Rights of Series E Preferred
Stock, dated November 21, 2005 (incorporated by reference from Exhibit 4.02 of Current Report on
Form 8-K filed November 22, 2005)
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
4.1
4.2
4.3
4.5
4.6
4.7
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
Form of common stock certificate (incorporated by reference from Exhibit 4.1 of Annual Report on Form
10-K for the year ended December 31, 2015)
Shareholder Protection Rights Agreement between the Registrant and American Stock Transfer & Trust
Company, as Rights Agent (incorporated by reference from Exhibit 4.01 of Form 8-K filed November 22,
2005)
First Amendment to Shareholder Protection Rights Agreement dated as of November 20, 2015 between
the Registrant and American Stock Transfer & Trust Company, as Rights Agent (incorporated by
reference from Exhibit 4.1 of Form 8-K filed November 23, 2015)
Second Amendment to Shareholder Protection Rights Agreement dated as of November 20, 2020
between the Registrant and American Stock Transfer and Trust Company, as Rights Agent (incorporated
by reference from Exhibit 4.1 of Form 8-K filed November 20, 2020)
Form of Rights Certificate pursuant to Second Amendment to Shareholder Protection Rights Agreement
dated November 20, 2020 (incorporated by reference from Exhibit 4.2 of Form 8-K filed November 23,
2020)
Description of Registered Securities *
Form of 2002 Indemnification Agreement for Directors and Officers (incorporated by reference from
Exhibit 10.1 of Quarterly Report on Form 10-Q for the period ended September 30, 2002, filed November
14, 2002) **
Standard Form of Employee Option Agreement (incorporated by reference from Exhibit 10.1 of Form 8-
K filed January 13, 2021)
2008 Equity Incentive Plan (Non-Named Executives), as amended (incorporated by reference from
Exhibit 4.1 of Form S-8 filed October 24, 2008) **
2011 Long-Term Incentive Equity Plan, as amended and restated (incorporated by reference from
Exhibit 10.1 of Form 8-K filed July 13, 2017)**
Claims Proceeds Investment Agreement between Registrant and Brickell Key Investments LP
(incorporated by reference from Exhibit 10.2 of Quarterly Report on Form 10-Q filed May 16, 2016)
Amendment to Claims Proceeds Investment Agreement between Registrant and Brickell Key
Investments LP (incorporated by reference from Exhibit 10.1 of Quarterly Report on Form 10-Q filed
August 15, 2016)
Warrant Agreement between Registrant and Brickell Key Investments LP dated May 26, 2016
(incorporated by reference from Exhibit 10.2 of Quarterly Report on Form 10-Q filed August 15, 2016)
Amendment to Claims Proceeds Investment Agreement between Registrant and Brickell Key
Investments LP dated December 28, 2017 (incorporated by reference from Exhibit 10.11 of Annual
Report on Form 10-K filed March 29, 2018)
Amendment to Claims Proceeds Investment Agreement between Registrant and Brickell Key
Investments LP dated April 26, 2018 (incorporated by reference from Exhibit 10.21 of Registration
Statement on Form S-1 filed August 9, 2018)
Notice of Exercise of Rights Under Claims Proceeds Investment Agreement between Registrant and
Brickell Key Investments LP dated December 20, 2018 (incorporated by reference from Exhibit 10.2 of
Current Report on Form 8-K/A filed December 28, 2018)
Warrant Agreement between Registrant and Brickell Key Investments LP (incorporated by reference
from Exhibit 10.1 of Current Report on Form 8-K filed December 21, 2018)
Settlement and Patent License Agreement between Registrant and Samsung Electronics Co., Ltd. dated
July 15, 2016 (incorporated by reference from Exhibit 10.1 of Quarterly Report on Form 10-Q filed
November 14, 2016)
Securities Purchase Agreement between Registrant and Aspire Capital Fund LLC dated July 26, 2018
(incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed July 30, 2018)
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
Form of Warrant Agreement between Registrant and Aspire Capital Fund LLC (incorporated by
reference from Exhibit 4.1 of Current Report on Form 8-K filed July 30, 2018)
Securities Purchase Agreement between Registrant and Holders of Convertible Notes dated September
10, 2018 (incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed September 11,
2018)
Form of Convertible Promissory Note dated September 10, 2018 (incorporated by reference from Exhibit
10.2 of Current Report on Form 8-K filed September 11, 2018)
List of Holders of Convertible Notes dated September 10, 2018 (incorporated by reference from Exhibit
10.4 of Current Report on Form 8-K filed September 11, 2018)
Patent Security Agreement Between Registrant and Mintz Levin Cohn Ferris Glovsky and Popeo, P.C.
(incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed September 14, 2018)
Secured Promissory Note Between Registrant and Mintz Levin Cohn Ferris Glovsky and Popeo, P.C.
(incorporated by reference from Exhibit 10.2 of Current Report on Form 8-K filed September 19, 2018)
Securities Purchase Agreement between Registrant and Holders of Convertible Notes dated
September 18, 2018 (incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed
September 18, 2018)
Form of Convertible Promissory Note dated September 18, 2018 (incorporated by reference from Exhibit
10.2 of Current Report on Form 8-K filed September 19, 2018)
Securities Purchase Agreement between Registrant and Holders of Convertible Notes dated February
25, 2019 (incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed March 4,
2019)
Form of Convertible Promissory Note dated February 28, 2019 (incorporated by reference from Exhibit
10.2 of Current Report on Form 8-K filed March 4, 2019)
List of Holders of Convertible Notes dated February 28, 2019 (incorporated by reference from Exhibit
10.4 of Current Report on Form 8-K filed March 4, 2019)
Securities Purchase Agreement between Registrant and Holders of Convertible Notes dated March 13,
2019 (incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed March 14, 2019)
Form of Convertible Promissory Note dated March 13, 2019 (incorporated by reference from Exhibit 10.3
of Current Report on Form 8-K filed March 14, 2019)
List of Holders of Convertible Notes dated March 13, 2019 (incorporated by reference from Exhibit 10.4
of Current Report on Form 8-K filed March 14, 2019)
Securities Purchase Agreement between Registrant and Mark Fisher dated June 7, 2019 (incorporated
by reference from Exhibit 10.1 of Current Report on Form 8-K filed June 13, 2019)
Secured Note Agreement dated June 7, 2019 (incorporated by reference from Exhibit 10.2 of Current
Report on Form 8-K filed June 13, 2019)
Security Agreement dated June 7, 2019 (incorporated by reference from Exhibit 10.4 of Current Report
on Form 8-K filed June 13, 2019)
Form of Securities Purchase Agreement between Registrant and Holders of Convertible Notes dated
June 19, 2019 (incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed June 25,
2019)
Form of Convertible Promissory Note dated June 19, 2019 (incorporated by reference from Exhibit 10.2
of Current Report on Form 8-K filed June 25, 2019)
List of Holders of Convertible Notes dated June 19, 2019 (incorporated by reference from Exhibit 10.4 of
Current Report on Form 8-K filed June 25, 2019)
Warrant agreement dated July 22, 2019 (incorporated by reference from exhibit 4.1 of Current Report on
Form 8-K filed July 23, 2019)
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
10.44
10.45
10.46
10.47
10.48
10.49
10.50
10.51
10.52
10.53
Form of Securities Purchase Agreement between Registrant and Holders of Convertible Notes dated
July 18, 2019 (incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed July 23,
2019)
Form of Convertible Promissory Note dated July 18, 2019 (incorporated by reference from Exhibit 10.2 of
Current Report on Form 8-K filed July 23, 2019)
List of Holders of Convertible Notes dated July 18, 2019 (incorporated by reference from Exhibit 10.4 of
Current Report on Form 8-K filed July 23, 2019)
Consulting Agreement dated July 22, 2019 (incorporated by reference from Exhibit 10.5 of Current
Report on Form 8-K filed July 23, 2019)
2019 Long-term Incentive Plan dated August 9, 2019, as amended *
Form of Securities Purchase Agreement between Registrant and Holders of Convertible Notes dated
January 8, 2020 (incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed
January 10, 2020)
Form of Convertible Promissory Note dated January 8, 2020 (incorporated by reference from Exhibit
10.2 of Current Report on Form 8-K filed January 10, 2020)
Form of Registration Rights Agreement between Registrant and Holders of Convertible Notes dated
January 8, 2020 (incorporated by reference from Exhibit 10.3 of Current Report on Form 8-K filed
January 10, 2020)
List of Holders of Convertible Notes dated January 8, 2020 (incorporated by reference from Exhibit 10.4
of Current Report on Form 8-K filed January 10, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated January 9, 2020
(incorporated by reference from Exhibit 10.5 of Current Report on Form 8-K filed January 10, 2020)
Form of Registration Rights Agreement between Registrant and Accredited Investors dated January 9,
2020 (incorporated by reference from Exhibit 10.6 of Current Report on Form 8-K filed January 10, 2020)
List of Accredited Investors dated January 9, 2020 (incorporated by reference from Exhibit 10.7 of
Current Report on Form 8-K filed January 10, 2020)
Subscription Agreement between Registrant and an Accredited Investor dated January 20, 2020
(incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed January 21, 2020)
Registration Rights Agreement between Registrant and an Accredited Investor dated January 20, 2020
(incorporated by reference from Exhibit 10.2 of Current Report on Form 8-K filed January 21, 2020)
Warrant Amendment Agreement between Registrant and Aspire Capital Fund, LLC dated February 28,
2020 (incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed March 5, 2020)
Warrant Agreement between Registrant and Aspire Capital Fund, LLC dated February 28, 2020
(incorporated by reference from Exhibit 4.1 of Current Report on Form 8-K filed March 5, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated March 5, 2020
(incorporated by reference from Exhibit 10.2 of Current Report on Form 8-K filed March 5, 2020)
Form of Registration Rights Agreement between Registrant and Accredited Investors dated March 5,
2020 (incorporated by reference from Exhibit 10.3 of Current Report on Form 8-K filed March 5, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated March 13, 2020
(incorporated by reference from Exhibit 10.72 of Annual Report on Form 10-K filed April 14, 2020)
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10.54
10.55
10.56
10.57
10.58
10.59
10.60
10.61
10.62
10.63
10.64
10.65
10.66
10.67
10.68
10.69
10.70
10.71
Form of Registration Rights Agreement between Registrant and Accredited Investors dated March 13,
2020 (incorporated by reference from Exhibit 10.73 of Annual Report on Form 10-K filed April 14, 2020)
List of Accredited Investors to March 5, 2020 and March 13, 2020 Subscription Agreements
(incorporated by reference from Exhibit 10.74 of Annual Report on Form 10-K filed April 14, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated April 29, 2020
(incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed May 5, 2020)
Form of Registration Rights Agreement between Registrant and Accredited Investors dated April 29,
2020 (incorporated by reference from Exhibit 10.2 of Current Report on Form 8-K filed May 5, 2020)
List of Accredited Investors to April 29, 2020 Subscription Agreement (incorporated by reference from
Exhibit 10.3 of Current Report on Form 8-K filed May 5, 2020)
Amendment to Subscription Agreement between Registrant and Accredited Investors dated May 1, 2020
(incorporated by reference from Exhibit 10.4 of Current Report on Form 8-K filed May 5, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated May 22, 2020
(incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed May 29, 2020)
Form of Registration Rights Agreement between Registrant and Accredited Investors dated May 22,
2020 (incorporated by reference from Exhibit 10.2 of Current Report on Form 8-K filed May 29, 2020)
List of Accredited Investors to May 22, 2020 Subscription Agreement (incorporated by reference from
Exhibit 10.3 of Current Report on Form 8-K filed May 29, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated June 8, 2020
(incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed June 12, 2020)
Form of Registration Rights Agreement between Registrant and Accredited Investors dated June 8,
2020 (incorporated by reference from Exhibit 10.2 of Current Report on Form 8-K filed June 12, 2020)
List of Accredited Investors to June 8, 2020 Subscription Agreement (incorporated by reference from
Exhibit 10.3 of Current Report on Form 8-K filed June 12, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated June 29, 2020
(incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed July 6, 2020)
Form of Registration Rights Agreement between Registrant and Accredited Investors dated June 29,
2020 (incorporated by reference from Exhibit 10.2 of Current Report on Form 8-K filed July 6, 2020)
List of Accredited Investors to June 29, 2020 Subscription Agreement (incorporated by reference from
Exhibit 10.3 of Current Report on Form 8-K filed July 6, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated August 19, 2020
(incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed August 21, 2020)
Form of Registration Rights Agreement between Registrant and Accredited Investors dated August 19,
2020 (incorporated by reference from Exhibit 10.2 of Current Report on Form 8-K filed August 21, 2020)
List of Accredited Investors to August 19, 2020 Subscription Agreement (incorporated by reference from
Exhibit 10.3 of Current Report on Form 8-K filed August 21, 2020)
75
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
10.72
10.73
10.74
10.75
10.76
10.77
10.78
10.79
10.80
10.81
10.82
10.83
10.84
10.85
10.86
10.87
21.1
23.1
31.1
31.2
32.1
Form of Subscription Agreement between Registrant and Accredited Investors dated November 17,
2020 (incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed November 23,
2020)
Form of Registration Rights Agreement between Registrant and Accredited Investors dated November
17, 2020 (incorporated by reference from Exhibit 10.2 of Current Report on Form 8-K filed November 23,
2020)
List of Accredited Investors to November 17, 2020 Subscription Agreement (incorporated by reference
from Exhibit 10.3 of Current Report on Form 8-K filed November 23, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated December 11,
2020 (incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed November 23,
2020)
Form of Registration Rights Agreement between Registrant and Accredited Investors dated December
11, 2020 (incorporated by reference from Exhibit 10.2 of Current Report on Form 8-K filed November 23,
2020)
List of Accredited Investors to December 11, 2020 Subscription Agreement (incorporated by reference
from Exhibit 10.3 of Current Report on Form 8-K filed December 14, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated December 21,
2020 (incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed November 23,
2020)
Form of Registration Rights Agreement between Registrant and Accredited Investors dated December
21, 2020 (incorporated by reference from Exhibit 10.2 of Current Report on Form 8-K filed November 23,
2020)
List of Accredited Investors to December 21, 2020 Subscription Agreement (incorporated by reference
from Exhibit 10.3 of Current Report on Form 8-K filed December 23, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated January 5, 2021
(incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed November 23, 2020)
Form of Registration Rights Agreement between Registrant and Accredited Investors dated January 5,
2021 (incorporated by reference from Exhibit 10.2 of Current Report on Form 8-K filed November 23,
2020)
List of Accredited Investors to January 5, 2021 Subscription Agreement (incorporated by reference from
Exhibit 10.3 of Current Report on Form 8-K filed January 5, 2021)
Form of Subscription Agreement between Registrant and Accredited Investors dated March 29, 2021 *
Form of Registration Rights Agreement between Registrant and Accredited Investors dated March 29,
2021 *
Form of Warrant Agreement between Registrant and Accredited Investors dated March 29, 2021 *
List of Accredited Investors to March 29, 2021 Subscription Agreement *
Schedule of Subsidiaries (incorporated by reference from Exhibit 21.1 of Annual Report on Form 10-K
filed March 29, 2018)
Consent of MSL, P.A.*
Rule 13a-14 and 15d-14 Certification of Jeffrey L. Parker*
Rule 13a-14 and 15d-14 Certification of Cynthia L. French*
Section 1350 Certification of Jeffrey L. Parker and Cynthia L. French*
76
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
101.INS XBRL Instance Document*
101.SCH XBRL Taxonomy Extension Schema*
101.CAL XBRL Taxonomy Extension Calculation Linkbase*
101.DEF XBRL Taxonomy Extension Definition Linkbase*
101.LAB XBRL Taxonomy Extension Label Linkbase*
101.PRE XBRL Taxonomy Extension Presentation Linkbase*
* Filed herewith
** Management contract or compensatory plan or arrangement.
Item 16. Form 10-K Summary
None.
77
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Pursuant to the requirements of Section 13 of the Exchange Act, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: March 31, 2021
PARKERVISION, INC.
By: /s/ Jeffrey L. Parker
Jeffrey L. Parker
Chief Executive Officer
Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
By: /s/ Jeffrey L. Parker
Jeffrey L. Parker
By: /s/ Cynthia L. French
Cynthia L. French
By: /s/ Frank N. Newman
Frank N. Newman
By: /s/ Paul A. Rosenbaum
Paul A. Rosenbaum
By: /s/ Robert G. Sterne
Robert G. Sterne
Chief Executive Officer and
Chairman of the Board (Principal
Executive Officer)
Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer) and Corporate
Secretary
Director
Director
Director
78
March 31, 2021
March 31, 2021
March 31, 2021
March 31, 2021
March 31, 2021
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
DESCRIPTION OF REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
Exhibit 4.5
The following description of the securities of ParkerVision Inc. (the “Company”, “we”, “our” or similar terms) is based upon the
Company’s amended and restated articles of incorporation (“Charter”), the Company’s bylaws (“Bylaws”) and applicable
provisions of law. We have summarized certain portions of the Charter and Bylaws below. The summary is not complete and is
subject to, and is qualified in its entirety by express reference to, the provisions of our Charter and Bylaws, each of which is filed
as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.5 is a part.
Authorized Capital Stock
Pursuant to our Charter, our authorized capital stock consists of 155,000,000 shares, of which 1 40,000,000 is voting Common
Stock, $0.01 par value per share, and 15,000,000 is Preferred Stock, $1.00 per share.
Common Stock
Authorization. The outstanding shares of the Company’s common stock are duly authorized, validly issued, fully paid and
nonassessable.
Listing. The Company’s common stock is traded on the OTCQB Market under the ticker symbol “PRKR.”
Voting Rights. Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by
stockholders.
Preemptive Rights, Etc. Our stockholders have no preemptive or other subscription rights. There are no sinking fund provisions
applicable to our common stock, except that upon the consummation of our initial business combination, subject to the
limitations described herein, we will provide our stockholders with the opportunity to redeem their shares of our common stock
for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account.
Preferred Stock
Our Charter provides that shares of preferred stock may be issued from time to time in one or more series. Our board of
directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional
or other special rights and any qualifications, limitations and restrictions, applicable to the shares of each series. Our board of
directors will be able, without stockholder approval, to issue preferred stock with voting and other rights that could adversely
affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects.
Series E Preferred Stock
On November 17, 2005, the board of directors designated 100,000 shares of authorized preferred stock as the Series E
Preferred Stock in conjunction with its adoption of a Shareholder Protection Rights Plan (as described below). Certain rights of
this series of preferred stock are defined in terms of a “Reference Package.” The “Reference Package” is initially 1,000 shares
of common stock, as adjusted for stock dividends, subdivisions and combinations. The holders of full or fractional shares of this
series are entitled to receive dividends, when and as declared by the board of directors, on each date that dividends or other
distributions (other than dividends or distributions payable in our common stock) are payable on or in respect of common stock
comprising part of the Reference Package, in an amount per whole share of this series equal to the aggregate amount of
dividends or other distributions that would be payable on such date to a holder of the Reference Package. In addition, on the
last day of March, June, September and December in each year, the holders of this series are entitled to receive dividends in an
amount per whole share of this series equal to the excess (if any) of $100 over the aggregate dividends paid per whole share of
this series
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
during the three-month period ending on such last day. Dividends on each full and each fractional share of this series are
cumulative from the date such full or fractional share is originally issued. In the event of any liquidation, dissolution or winding
up of our affairs, whether voluntary or involuntary, the holders of full and fractional shares of this series shall be entitled, before
any distribution or payment is made on any date to the holders of the common stock or any other stock of ours ranking junior to
this series upon liquidation, to be paid in full an amount per whole share of this series equal to the greater of $100 or the
aggregate amount distributed or to be distributed in connection with such liquidation, dissolution or winding up to a holder of the
Reference Package, together with accrued dividends to such distribution or payment date, whether or not earned or declared.
Our Series E Preferred Stock shall rank junior to all other series or classes of our preferred stock, now existing or hereafter
created, as to payment of dividends and the distribution of assets, unless the terms of any such other series or class shall
provide otherwise.
Each whole share of this series shall, on any matter, vote as a class with any other capital stock comprising part of the
Reference Package and voting on such matter and shall have the number of votes thereon that a holder of the Reference
Package would have.
Shareholder Protection Rights Plan
We have a Shareholder Protection Rights Agreement (“Rights Agreement”), originally adopted on November 21, 2005 and
amended on November 20, 2015 and November 20, 2020 pursuant to which we issued, on November 29, 2005, as a dividend,
one right to acquire a fraction of a share of Series E Preferred Stock for each then outstanding share of Common Stock. Each
share of Common Stock issued by us after such date also has included, and any subsequent shares of Common Stock issued
by us prior to the Separation Time (as defined in the Rights Agreement) will include, an attached right. The following description
of the Rights Agreement, and any description of the Rights Agreement included in a prospectus supplement, may not be
complete and is subject to and qualified in its entirety by reference to the terms and provisions of the Rights Agreement.
The principal objective of the Rights Agreement is to cause someone interested in acquiring us to negotiate with our Board
rather than launch an unsolicited or hostile bid. The Rights Agreement subjects a potential acquirer to substantial voting and
economic dilution.
The rights initially are not exercisable and trade with our Common Stock. In the future, the rights may become exercisable with
various provisions that may discourage a takeover bid. If a potential acquirer initiates a takeover bid or becomes the beneficial
owner of 15% or more of our Common Stock, the rights will separate from the Common Stock. Upon separation, the holders of
the rights may exercise their rights at an exercise price of $14.50 per right (the “Exercise Price”), subject to adjustment and
payable in cash. Additionally, the rights have what are known as “flip-in” and “flip-over” provisions that could make any
acquisition of us more costly to the potential acquirer. The “flip-in” provision provides that, in the event a potential acquirer
acquires 15% or more of the outstanding shares of our Common Stock, upon payment of the exercise price, the holders of the
rights will receive from us that number of shares of Common Stock having an aggregate market price equal to twice the
Exercise Price, as adjusted. The “flip-over” provision allows the holder to purchase that number of shares of common/voting
equity of a successor entity, if we are not the surviving corporation in a business combination, with an aggregate market price
equal to twice the Exercise Price.
We have the right to substitute for any of our shares of Common Stock that we are obligated to issue, shares of Series E
Preferred Stock at a ratio of one thousandth of a share of Series E Preferred Stock for each share of Common Stock.
The rights may be redeemed upon approval of the Board at a redemption price of $0.01 per right. The Rights Agreement expires
on November 20, 2023.
Classified Board; Director Nominations; Special Meetings
Our Board is divided into three classes, with only one class of directors elected at each annual meeting, and our shareholders
may remove our directors only for cause. Nominations for our Board may be made by our Board or by any holder of Common
Stock. A shareholder entitled to vote for the election of directors may nominate a person for
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
election as director only if the shareholder provides written notice of his nomination to our secretary not later than 120 days in
advance of the same day and month that our proxy statement was released to shareholders in connection with the previous
year’s annual meeting of shareholders or, if no annual meeting was held in the previous year, then by the end of the fiscal year
to which the annual meeting in which the nomination will be made relates. A special meeting of our shareholders may be called
only by our Board or our chief executive officer. These provisions and the Board’s right to issue shares of our preferred stock
from time to time, in one or more classes or series without stockholder approval, are intended to enhance the likelihood of
continuity and stability in the composition of the policies formulated by our Board. These provisions are also intended to
discourage some tactics that may be used in proxy fights.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
PARKERVISION, INC.
2019 Long Term Incentive Plan
(As Amended and Restated)
Exhibit 10.39
Section 1.
Purpose; Definitions.
1.1.
Purpose. The purpose of the Plan is to enable the Company to offer to employees, officers and
directors of and consultants to the Company and its Subsidiaries, Parent and Affiliates whose past, present and/or
potential future contributions to the Company and its Subsidiaries have been, are or will be important to the success
of the Company, an opportunity to share monetarily in the success of and/or acquire a proprietary interest in the
Company. The various types of long-term incentive awards that may be provided under the Plan will enable the
Company to respond to changes in compensation practices, tax laws, accounting regulations and the size and
diversity of its businesses.
1.2.
Definitions. For purposes of the Plan, the following terms shall be defined as set forth below:
(a) “Affiliate” means a corporation, limited liability company or other entity that controls, is controlled
by, or is under common control with the Company and designated by the Committee from time to time as such.
(b) “Agreement” means the agreement between the Company and the Holder, or such other
document as may be determined by the Committee, setting forth the terms and conditions of an award under the
Plan.
(c) “Asset Sale” means an acquisition by any one person, or more than one person acting as a
group, together with acquisitions during the 12-month period ending on the date of the most recent acquisition by
such person or persons, of assets from the Company that have a total gross fair market value equal to or more
than 50% of the total gross fair market value of all of the assets of the Company immediately before such
acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the
Company, or the value of the assets being disposed of, determined without regard to any liabilities associated
with such assets.
(d) “Board” means the Board of Directors of the Company.
(e) “Change of Control” means a transaction in which any one person, or more than one person
acting as a group, acquires the ownership of stock of the Company that, together with the stock held by such
person or group, constitutes more than 50% of the total Fair Market Value or combined voting power of the stock
of the Company. A Change of Control caused by an increase in the percentage of stock owned by any one
person, or persons acting as a group, as a result of a transaction in which the Company acquires its stock in
exchange for property is not treated as a Change of Control for purposes of the Plan.
(f) “Code” means the Internal Revenue Code of 1986, as amended from time to time, the Treasury
Regulations thereunder, and any other relevant interpretive guidance issued by the Internal Revenue Service or
the Treasury Department.
(g) “Committee” means the committee of the Board designated to administer the Plan as provided in
Section 2.1. If no Committee is so designated, then all references in this Plan to “Committee” shall mean the
Board.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
(h) “Common Stock” means the Common Stock of the Company, par value $0.01 per share.
(i)
“Company” means ParkerVision, Inc., a corporation organized under the laws of the State of
Florida.
(j)
“Disability” means physical or mental impairment as determined under procedures established by
the Committee for purposes of the Plan.
(k) “Effective Date” means the date determined pursuant to Section 11.1.
(l)
“Fair Market Value,” unless otherwise required by any applicable provision of the Code or any
regulations issued thereunder, means, as of any given date: (i) if the Common Stock is listed on a national
securities exchange or is traded over-the-counter and last sale information is available, unless otherwise
determined by the Committee, the last sale price of the Common Stock in the principal trading market for the
Common Stock on such date, as reported by the exchange or by such source that the Committee deems
reliable, as the case may be; or (ii) if the fair market value of the Common Stock cannot be determined pursuant
to clause (i), such price as the Committee shall determine, in good faith.
(m) “Holder” means a person who has received an award under the Plan.
(n) “Non-qualified Stock Option” means any Stock Option that is not an “incentive stock option”
within the meaning of Section 422 of the Code.
(o) “Normal Retirement” means retirement from active employment with the Company or any
Subsidiary on or after such age which may be designated by the Committee as “retirement age” for any particular
Holder. If no age is designated, it shall be 65.
(p) “Other Stock-Based Award” means an award under Section 8 that is valued in whole or in part by
reference to, or is otherwise based upon, Common Stock.
(q) “Parent” means any present or future “parent corporation” of the Company, as such term is
defined in Section 424(e) of the Code.
(r) “Plan” means the ParkerVision, Inc. 2019 Long Term Incentive Plan, as hereinafter amended
from time to time.
(s) “Repurchase Value” shall mean the Fair Market Value if the award to be settled under Section
2.2(e) or repurchased under Section 5.2(l) is comprised of shares of Common Stock and the difference between
Fair Market Value and the exercise price (if lower than Fair Market Value) if the award is a Stock Option or Stock
Appreciation Right; in each case, multiplied by the number of shares subject to the award. “Repurchase Value” if
the award to be repurchased under Section 9.2 is comprised of shares of Common Stock shall mean the greater
of the Fair Market Value or the value of such award based upon the price per share of Common Stock received
or to be received by other shareholders of the Company in the event. “Repurchase Value” if the award to be
repurchased under Section 9.2 is comprised of Stock Options or Stock Appreciation Rights shall mean the
difference between the greater of (1) the Fair Market Value or the value of such award based upon the price per
share of Common Stock received or to be received by other shareholders of the Company in the event and (2)
the exercise price (if lower), multiplied by the number of shares subject to the award.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
(t)
“Restriction Period” means the time or times within which awards may be subject to forfeiture,
including upon termination of employment or failure of performance conditions.
(u) “Restricted Stock” means Common Stock received under an award made pursuant to Section 7
that is subject to restrictions under Section 7.
(v) “Restricted Stock Unit” means an unfunded, unsecured right to receive, on the applicable
settlement date, one share or an amount in cash or other consideration determined by the Committee to be of
equal value as of such settlement date, subject to certain vesting conditions and other restrictions.
(w) “SAR Value” means the excess of the Fair Market Value (on the exercise date) over (i) the
exercise price that the participant would have otherwise had to pay to exercise the related Stock Option or (ii) if a
Stock Appreciation Right is granted unrelated to a Stock Option, the Fair Market Value of a share of Common
Stock on the date of grant of the Stock Appreciation Right, in either case, multiplied by the number of shares for
which the Stock Appreciation Right is exercised.
(x) “Stock Appreciation Right” means the right to receive from the Company, without a cash payment
to the Company, either a number of shares of Common Stock equal to the SAR Value divided by the Fair Market
Value (on the exercise date), or, at the Company’s election, cash in the amount of the SAR Value.
(y) “Stock Option” or “Option” means any option to purchase shares of Common Stock which is
granted pursuant to the Plan. Stock Options shall be Non-qualified Stock Options.
(z) “Subsidiary” means any present or future “subsidiary corporation” of the Company, as such term
is defined in Section 424(f) of the Code.
(aa) “vest” means to become exercisable or to otherwise obtain ownership rights in an award.
Section 2.
Administration.
2.1.
Committee Membership. The Plan shall be administered by the Board or a Committee. If
administered by a Committee, such Committee shall be composed of at least two directors, all of whom are “non-
employee” directors within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended.
Committee members shall serve for such term as the Board may in each case determine and shall be subject to
removal at any time by the Board.
2.2.
Powers of Committee. The Committee shall have full authority to award, pursuant to the terms of
the Plan: (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, (iv) Restricted Stock Units, and/or (v)
Other Stock-Based Awards. For purposes of illustration and not of limitation, the Committee shall have the authority
(subject to the express provisions of this Plan):
(a) to select the officers, employees, directors and consultants of the Company, Parent, Subsidiary or
Affiliate to whom Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units and/or
Other Stock-Based Awards may from time to time be awarded hereunder;
(b) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award
granted hereunder (including, but not limited to, number of shares, share exercise price or types of consideration
paid upon exercise of such options, such as other securities of the Company or
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
other property, any restrictions or limitations, and any vesting, exchange, surrender, cancellation, acceleration,
termination, exercise or forfeiture provisions, as the Committee shall determine);
(c) to determine any specified performance goals or such other factors or criteria which need to be
attained for the vesting of an award granted hereunder;
(d) to determine the terms and conditions under which awards granted hereunder are to operate on a
tandem basis and/or in conjunction with or apart from other awards under this Plan and cash and non-cash
awards made by the Company, Parent, Subsidiary and/or Affiliate outside of this Plan; and
(e) to make payments and distributions with respect to awards (i.e., to “settle” awards) through cash
payments in an amount equal to the Repurchase Value.
(f) to make decisions with respect to outstanding awards that may become necessary upon a
Change of Control, Asset Sale, or an event that triggers anti-dilution adjustments under the terms of an
outstanding award.
The Committee may not modify or amend any outstanding Option or Stock Appreciation Right to reduce the
exercise price of such Option or Stock Appreciation Right, as applicable, below the exercise price as of the date of
grant of such Option or Stock Appreciation Right. In addition, no payment of cash or other property having a value
greater than the Repurchase Value may be made, and no Option or Stock Appreciation Right with a lower exercise
price may be granted, in exchange for, or in connection with, the cancellation or surrender of an Option or Stock
Appreciation Right.
2.3.
Interpretation of Plan. Subject to Section 10, the Committee shall have the authority to adopt, alter
and repeal such administrative rules, guidelines and practices governing the Plan as it shall from time to time deem
advisable, to interpret the terms and provisions of the Plan and any award issued under the Plan (and to determine
the form and substance of all Agreements relating thereto), and to otherwise supervise the administration of the Plan.
Subject to Section 10, all decisions made by the Committee pursuant to the provisions of the Plan shall be made in
the Committee’s sole discretion and shall be final and binding upon all persons, including the Company, its Parent,
Subsidiaries, Affiliates and Holders.
2.4 Award Agreements. The terms and conditions of each award made hereunder, as determined by the
Committee, shall be set forth in an Agreement, which shall be delivered to the person receiving such award upon, or
as promptly as reasonably practicable following, the grant of such award. The effectiveness of an award shall be
subject to the Holder’s acceptance of the Agreement, unless otherwise provided in the Agreement.
2.5 Indemnification. In addition to such other rights of indemnification as they may have as Directors or
members of the Committee, and to the extent allowed by Florida law, the Committee shall be indemnified by the
Company against the reasonable expenses, including attorney’s fees, actually incurred in connection with any
action, suit, or proceeding or in connection with any appeal therein, to which the Committee may be party by reason
of any action taken or failure to act under or in connection with the Plan or any award granted under the Plan, and
against all amounts paid by the Committee in settlement thereof (provided, however, that the settlement has been
approved by the Company, which approval shall not be unreasonably withheld) or paid by the Committee in
satisfaction of a judgment in any such action, suit, or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit, or proceeding that such Committee did not act in good faith and in a manner which
such person reasonably believed to be in the best interests of the Company, or in the case of a criminal proceeding,
had no reason to believe that the conduct complained of was unlawful; provided, however, that within 60 days after
the institution of any
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
such action, suit, or proceeding, such Committee shall, in writing, offer the Company the opportunity at its own
expense to handle and defend such action, suit or proceeding.
Section 3.
Stock Subject to Plan.
3.1.
Number of Shares. The total number of shares of Common Stock reserved and available for
issuance under the Plan shall be up to 27,000,000 shares of Common Stock (the “Shares”). Shares may consist, in
whole or in part, of authorized and unissued shares or treasury shares. The Company may make grants under this
Plan at such time or times when it does not have sufficient authorized and unissued shares or treasury shares
available to be reserved for such grants, provided that the issuance of Shares upon exercise or vesting of such grant,
as the case may be, will be subject to the Company having sufficient authorized and unissued shares or treasury
shares.
3.2.
Recycling Provision. If any shares of Common Stock that have been granted pursuant to a Stock
Option cease to be subject to a Stock Option, or if any shares of Common Stock that are subject to any Stock
Appreciation Right, Restricted Stock award, Restricted Stock Units or Other Stock-Based Award granted hereunder
are forfeited, or any such award otherwise terminates without a payment being made to the Holder in the form of
Common Stock, such shares shall again be available for distribution in connection with future grants and awards
under the Plan. If a Holder pays the exercise price of a Stock Option by surrendering any previously owned shares
and/or arranges to have the appropriate number of shares otherwise issuable upon exercise withheld to cover the
withholding tax liability associated with the Stock Option exercise, then, in the Committee’s discretion, the number of
shares available under the Plan may be increased by the lesser of (i) the number of such surrendered shares and
shares used to pay taxes; and (ii) the number of shares purchased under such Stock Option.
3.3.
Adjustment Upon Changes in Capitalization, Etc. In the event of any Common Stock dividend
payable on shares of Common Stock, Common Stock split or reverse split, combination or exchange of shares of
Common Stock, or other extraordinary or unusual event which results in a change in the shares of Common Stock
of the Company as a whole, the Committee shall determine, in its sole discretion, whether such change equitably
requires an adjustment in the terms of any award in order to prevent dilution or enlargement of the benefits available
under the Plan (including number of shares subject to the award and the exercise price) or the aggregate number of
shares reserved for issuance under the Plan. Any such adjustments will be made by the Committee, whose
determination will be final, binding and conclusive.
3.4.
Administrative Stand Still. In the event of any changes in capitalization described above in Section
3.3, or any other extraordinary transaction or change affecting the shares or the share price of Common Stock,
including any equity restructuring or any securities offering or other similar transaction, for administrative
convenience, the Committee may refuse to permit the exercise of any award for up to sixty days before and/or after
such transaction; provided, however, that the Committee may not refuse to permit the exercise of any award during
the last five trading days prior to the expiration of such award.
3.5.
Substitute Awards. In connection with an entity’s merger or consolidation with the Company or any
Subsidiary or Affiliate or the Company’s or any Subsidiary’s or Affiliate’s acquisition of an entity’s property or stock,
the Committee may grant awards in substitution for any options or other stock or stock-based awards granted before
such merger or consolidation by such entity or its affiliate. Substitute awards may be granted on such terms as the
Committee deems appropriate, notwithstanding limitations on awards in the Plan. Substitute awards will not count
against the plan limit.
3.6 Individual Limits. Non-employee directors may not be granted during any calendar year in excess of the
lesser of 1,000,000 shares of Common Stock or $175,000 (calculating the value of any awards
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
based on the grant date fair value).
Section 4.
Eligibility.
Awards may be made or granted to employees, officers, directors and consultants of the Company or its
Subsidiaries, Parent or Affiliates who are deemed to have rendered or to be able to render significant services to the
Company or its Subsidiaries and who are deemed to have contributed or to have the potential to contribute to the
success of the Company or Subsidiary and which recipients are qualified to receive options under the regulations
governing Form S-8 registration statements under the Securities Act of 1933, as amended (“Securities Act”).
Notwithstanding anything to the contrary, an award may be made or granted to a person in connection with his hiring
or retention, or at any time on or after the date he reaches an agreement (oral or written) with the Company or its
Subsidiaries, Parent or Affiliates with respect to such hiring or retention, even though it may be prior to the date the
person first performs services for the Company or its Subsidiaries; provided, however, that no portion of any such
award shall vest prior to the date the person first performs such services and the date of grant shall be deemed to be
the date hiring or retention commences.
Section 5.
Stock Options.
5.1.
Grant. Stock Options granted under the Plan shall be Non-qualified Stock Options. Any Stock
Option granted under the Plan shall contain such terms, not inconsistent with this Plan, as the Committee may from
time to time approve.
5.2.
and conditions:
Terms and Conditions. Stock Options granted under the Plan shall be subject to the following terms
(a) Option Term. The term of each Stock Option shall be fixed by the Committee; provided,
however, that no Stock Option may be exercisable after the expiration of ten years from the date of grant.
(b) Exercise Price. The exercise price per share of Common Stock purchasable under a Stock
Option shall be determined by the Committee at the time of grant; provided, however, that the exercise price of a
Stock Option may not be less than 100% of the Fair Market Value on the date of grant or, if greater, the par value
of a share of Common Stock.
(c) Exercisability. Stock Options shall be exercisable at such time or times and subject to such
terms and conditions as shall be determined by the Committee, provided that no Stock Option may be
exercisable unless and until the Company has sufficient authorized unissued shares or treasury shares available
for such exercise. The Committee intends generally to provide that Stock Options be exercisable only in
installments, i.e., that they vest over time, typically over a two- to five-year period. The Committee may waive
such installment exercise provisions at any time at or after the time of grant in whole or in part, based upon such
factors as the Committee determines.
(d) Method of Exercise. Subject to a sufficient number of Shares being available, and the
installment, exercise and waiting period provisions as set forth in the Agreement, Stock Options may be
exercised in whole or in part at any time during the term of the Option by giving written notice of exercise to the
Company specifying the number of shares of Common Stock to be purchased. Such notice shall be
accompanied by payment in full of the purchase price, which shall be in cash or, if provided in the Agreement,
either in shares of Common Stock (including Restricted Stock and other contingent awards under this Plan or a
reduction of the number of shares of Common Stock otherwise deliverable upon exercise of such Option) or
partly in cash and partly in such Common Stock, or such
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other means which the Committee determines are consistent with the Plan’s purpose and applicable law. Cash
payments shall be made by wire transfer, certified or bank check or personal check, in each case payable to the
order of the Company; provided, however, that the Company shall not be required to deliver certificates for
shares of Common Stock with respect to which an Option is exercised until the Company has confirmed the
receipt of good and available funds in payment of the purchase price thereof (except that, in the case of an
exercise arrangement approved by the Committee and described in the next sentence of this section, payment
may be made as soon as practicable after the exercise). The Committee may permit a Holder to elect to pay the
exercise price upon the exercise of a Stock Option by irrevocably authorizing a third party to sell shares of
Common Stock (or a sufficient portion of the shares) acquired upon exercise of the Stock Option and remit to the
Company a sufficient portion of the sale proceeds to pay the entire exercise price and any tax withholding
resulting from such exercise. The Committee may also authorize other means for paying the exercise price of a
Stock Option, including using the value of the Stock Option (as determined by the difference in the Fair Market
Value of the Common Stock and the exercise price of the Stock Option or other means determined by the
Committee).
(e) Stock Payments. Payments in the form of Common Stock shall be valued at the Fair Market
Value on the date of exercise. Such payments shall be made by delivery of stock certificates in negotiable form
that are effective to transfer good and valid title thereto to the Company, free of any liens or encumbrances.
(f) Transferability. Except as may be set forth in the next sentence of this Section or in the
Agreement, no Stock Option shall be transferable by the Holder other than by will or by the laws of descent and
distribution, and all Stock Options shall be exercisable, during the Holder’s lifetime, only by the Holder (or, to the
extent of legal incapacity or incompetency, the Holder’s guardian or legal representative). Notwithstanding the
foregoing, a Holder, with the approval of the Committee, may transfer a Stock Option (i) (A) by gift, for no
consideration, or (B) pursuant to a domestic relations order, in either case, to or for the benefit of the Holder’s
“Immediate Family” (as defined below), or (ii) to an entity in which the Holder and/or members of Holder’s
Immediate Family own more than fifty percent of the voting interest, subject to such limits as the Committee may
establish and the execution of such documents as the Committee may require, and the transferee shall remain
subject to all the terms and conditions applicable to the Stock Option prior to such transfer. The term “Immediate
Family” shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law,
including adoptive relationships, any person sharing the Holder’s household (other than a tenant or employee), a
trust in which these persons have more than fifty percent beneficial interest, and a foundation in which these
persons (or the Holder) control the management of the assets.
(g) Termination by Reason of Death. If a Holder’s employment by, or association with, the
Company, Parent, Subsidiary or Affiliate terminates by reason of death, any Stock Option held by such Holder,
unless otherwise determined by the Committee and set forth in the Agreement, shall thereupon automatically
terminate, except that the portion of such Stock Option that has vested on the date of death may thereafter be
exercised by the legal representative of the estate or by the legatee of the Holder under the will of the Holder, for
a period of one year (or such other greater or lesser period as the Committee may specify in the Agreement)
from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is
shorter.
(h) Termination by Reason of Disability. If a Holder’s employment by, or association with, the
Company, Parent, Subsidiary or Affiliate terminates by reason of Disability, any Stock Option held by such
Holder, unless otherwise determined by the Committee and set forth in the Agreement, shall thereupon
automatically terminate, except that the portion of such Stock Option that has vested
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on the date of termination may thereafter be exercised by the Holder for a period of one year (or such other
greater or lesser period as the Committee may specify in the Agreement) from the date of such termination or
until the expiration of the stated term of such Stock Option, whichever period is shorter.
(i)
Termination by Reason of Normal Retirement. Subject to the provisions of Section 12.3, if such
Holder’s employment by, or association with, the Company, Parent, Subsidiary or Affiliate terminates due to
Normal Retirement, any Stock Option held by such Holder, unless otherwise determined by the Committee and
set forth in the Agreement, shall thereupon automatically terminate, except that the portion of such Stock Option
that has vested on the date of termination may thereafter be exercised by the Holder for a period of one year (or
such other greater or lesser period as the Committee may specify in the Agreement) from the date of such
termination or until the expiration of the stated term of such Stock Option, whichever period is shorter.
(j)
Other Termination. Subject to the provisions of Section 12.3, if such Holder’s employment by, or
association with, the Company, Parent, Subsidiary or Affiliate terminates for any reason other than death,
Disability or Normal Retirement, any Stock Option held by such Holder, unless otherwise determined by the
Committee and set forth in the Agreement, shall thereupon automatically terminate, except that, if the Holder’s
employment is terminated by the Company, Parent, Subsidiary or Affiliate without cause, the portion of such
Stock Option that has vested on the date of termination may thereafter be exercised by the Holder for a period of
three months (or such other greater or lesser period as the Committee may specify in the Agreement) from the
date of such termination or until the expiration of the stated term of such Stock Option, whichever period is
shorter.
(k) Buyout and Settlement Provisions. The Committee may at any time, in its sole discretion, offer to
repurchase a Stock Option previously granted, at a purchase price not to exceed the Repurchase Value, based
upon such terms and conditions as the Committee shall establish and communicate to the Holder at the time that
such offer is made.
(l)
Rights as Shareholder. A Holder shall have none of the rights of a Shareholder with respect to
the shares subject to the Option until such shares shall be transferred to the Holder upon the exercise of the
Option.
Section 6.
Stock Appreciation Rights.
6.1.
Grant. Subject to the terms and conditions of the Plan, the Committee may grant Stock Appreciation
Rights in tandem with an Option (“Related Right”) or alone and unrelated to an Option. The Committee may grant
Stock Appreciation Rights to participants who have been or are being granted Stock Options under the Plan as a
means of allowing such participants to exercise their Stock Options without the need to pay the exercise price in
cash. In the case of a Non-qualified Stock Option, a Stock Appreciation Right may be granted either at or after the
time of the grant of such Non-qualified Stock Option.
6.2.
conditions:
Terms and Conditions. Stock Appreciation Rights shall be subject to the following terms and
(a) Exercisability. Stock Appreciation Rights shall be exercisable as shall be determined by the
Committee and set forth in the Agreement. Notwithstanding the foregoing, a Related Right shall be exercisable
only to the same extent as the related Option, provided that the Holder surrenders the applicable portion of the
related Stock Option upon exercise of the Related Right. Upon exercise of all or a portion of a Stock Appreciation
Right and, if applicable, surrender of the applicable portion of the related Stock Option, the Holder shall be
entitled to receive a number of shares of Common Stock equal
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to the SAR Value divided by the Fair Market Value on the date the Stock Appreciation Right is exercised or, at
the Company’s election, cash for the value so calculated.
(b) Termination. All or a portion of a Related Right shall terminate and shall no longer be
exercisable upon the termination or after the exercise of the applicable portion of the related Stock Option.
(c) Shares Available Under Plan. The granting of a Stock Appreciation Right in tandem with a Stock
Option shall not affect the number of shares of Common Stock available for awards under the Plan. The number
of shares available for awards under the Plan will, however, be reduced by the number of shares of Common
Stock acquirable upon exercise of the Stock Option to which such Stock Appreciation Right relates.
Section 7.
Restricted Stock; Restricted Stock Units.
7.1.
Grant. Shares of Restricted Stock and Restricted Stock Units may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine the eligible persons to whom, and
the time or times at which, grants of Restricted Stock will be awarded, the number of shares to be awarded, the price
(if any) to be paid by the Holder, any Restriction Period, the vesting schedule and rights to acceleration thereof, and
all other terms and conditions of the awards. In addition, the Committee shall determine the eligible persons to
whom, and the time or times at which, grants of Restricted Stock Units will be awarded, and the vesting and forfeiture
conditions during the applicable Restriction Period, as set forth in an Agreement. The Agreement will provide that
that the issuance of Shares upon vesting of Restricted Stock or a Restricted Stock Unit, as applicable, will be subject
to the Company having sufficient authorized and unissued shares or treasury shares.
7.2.
Restricted Stock Terms and Conditions. Each Restricted Stock award shall be subject to the
following terms and conditions:
(a) Certificates. Restricted Stock, when issued, will be represented by a stock certificate or
certificates registered in the name of the Holder to whom such Restricted Stock shall have been awarded. During
the Restriction Period, certificates representing the Restricted Stock and any securities constituting Retained
Distributions (as defined below) shall bear a legend to the effect that ownership of the Restricted Stock (and such
Retained Distributions) and the enjoyment of all rights appurtenant thereto are subject to the restrictions, terms
and conditions provided in the Plan and the Agreement. Such certificates shall be deposited by the Holder with
the Company, together with stock powers or other instruments of assignment, each endorsed in blank, which will
permit transfer to the Company of all or any portion of the Restricted Stock and any securities constituting
Retained Distributions that shall be forfeited or that shall not become vested in accordance with the Plan and the
Agreement.
(b) Rights of Holder. Restricted Stock shall constitute issued and outstanding shares of Common
Stock for all corporate purposes. The Holder will have the right to vote such Restricted Stock and to exercise all
other rights, powers and privileges of a holder of Common Stock with respect to such Restricted Stock, with the
exceptions that (i) the Holder will not be entitled to delivery of the stock certificate or certificates representing
such Restricted Stock until the Restriction Period shall have expired and unless all other vesting requirements
with respect thereto shall have been fulfilled; (ii) the Company will retain custody of the stock certificate or
certificates representing the Restricted Stock during the Restriction Period; (iii) the Company will retain custody
of all dividends and distributions (“Retained Distributions”) made, paid or declared with respect to the Restricted
Stock (and such Retained Distributions will be subject to the same restrictions, terms and conditions as are
applicable to the Restricted Stock) until such time, if ever, as the Restricted Stock with respect to which such
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Retained Distributions shall have been made, paid or declared shall have become vested and with respect to
which the Restriction Period shall have expired; and (iv) a breach by the Holder of any of the restrictions, terms
or conditions contained in this Plan or the Agreement or otherwise established by the Committee with respect to
any Restricted Stock or Retained Distributions will cause a forfeiture of such Restricted Stock and any Retained
Distributions with respect thereto.
(c) Vesting; Forfeiture. Upon the expiration of the Restriction Period with respect to each award of
Restricted Stock and the satisfaction of any other applicable restrictions, terms and conditions (i) all or part of
such Restricted Stock shall become vested in accordance with the terms of the Agreement, and (ii) any Retained
Distributions with respect to such Restricted Stock shall become vested to the extent that the Restricted Stock
related thereto shall have become vested. Any such Restricted Stock and Retained Distributions that do not vest
shall be forfeited to the Company and the Holder shall not thereafter have any rights with respect to such
Restricted Stock and Retained Distributions that shall have been so forfeited.
7.3.
Restricted Stock Units Terms and Conditions. Each Restricted Stock Units award shall be subject to
the following terms and conditions:
(a) Settlement. The Committee may provide that settlement of Restricted Stock Units will occur
upon or as soon as reasonably practicable after the Restricted Stock Units vest or will instead be deferred, on a
mandatory basis or at the Holder’s election, in a manner intended to comply with Section 409A.
(b) No Rights as a Shareholder. A Holder will have no rights of a holder of Common Stock with
respect to shares subject to any Restricted Stock Unit unless and until the shares are delivered in settlement of
the Restricted Stock Unit. No shares of Common Stock will be issued at the time a Restricted Stock Unit is
granted.
(c) Dividend Equivalents. If the Committee provides, a grant of Restricted Stock Units may provide a
Holder with the right to receive dividend equivalents. Dividend equivalents may be paid currently or credited to
an account for the Holder, settled in cash or shares and subject to the same restrictions on transferability and
forfeitability as the Restricted Stock Units with respect to which the dividend equivalents are granted and subject
to other terms and conditions as set forth in the Agreement.
(d) Forfeiture. Upon the expiration of the Restriction Period with respect to each award of Restricted
Stock Units, if the applicable restrictions, terms, and conditions have not been met, all or part of such Restricted
Stock Units shall be forfeited to the Company and the Holder shall not thereafter have any rights with respect to
such Restricted Stock Units that shall have been so forfeited.
7.4
Removal of Restrictions. The Committee may remove any or all of the restrictions on Restricted
Stock or Restricted Stock Units upon the determination that, by reason of changes in applicable laws or other
changes in circumstances arising after the date of grant, such action is appropriate.
Section 8.
Other Stock-Based Awards.
Other Stock-Based Awards may be awarded, subject to limitations under applicable law, that are
denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of
Common Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including, without
limitation, purchase rights, shares of Common Stock awarded which are not subject to any restrictions or conditions,
convertible or exchangeable debentures, or other rights convertible into shares of Common Stock and awards
valued by reference to the value of securities of or the performance
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of specified Subsidiaries. These Other Stock-Based Awards may include performance shares or options, whose
award is tied to specific performance goals. Other Stock-Based Awards may be awarded either alone or in addition
to or in tandem with any other awards under this Plan or any other plan of the Company. Each Other Stock-Based
Award shall be subject to such terms and conditions as may be determined by the Committee, provided that no
Shares shall be issued in respect of Other Stock-Based Awards unless and until the Company has sufficient
authorized and unissued shares or treasury shares.
Section 9.
Accelerated Vesting and Exercisability.
9.1.
Non-Approved Transactions. If there is a Change of Control, and the Board does not authorize or
otherwise approve such transaction, then the vesting periods of any and all Stock Options and other awards granted
and outstanding under the Plan shall be accelerated and all such Stock Options and awards will immediately and
entirely vest, and the respective holders thereof will have the immediate right to purchase and/or receive any and all
Common Stock subject to such Stock Options and awards on the terms set forth in this Plan and the respective
Agreements respecting such Stock Options and awards, and all performance goals will be deemed achieved at
100% of target levels and all other terms and conditions will be deemed met.
9.2.
Approved Transactions. In the event of an Asset Sale or if there is a Change of Control that has
been approved by the Company’s Board of Directors, then the Committee may (i) accelerate the vesting of any and
all Stock Options and other awards granted and outstanding under the Plan; (ii) require a Holder of any Stock Option,
Stock Appreciation Right, Restricted Stock award or Other Stock-Based Award granted under this Plan to relinquish
such award to the Company upon the tender by the Company to Holder of cash, stock or other property, or any
combination thereof, in an amount equal to the Repurchase Value of such award; provided, however, that the
obligation to tender the Repurchase Value to such Holders may be subject to any terms and conditions to which the
tender of consideration to the Company’s shareholders in connection with the acquisition is subject, including any
terms and conditions of the acquisition providing for an adjustment to or escrow of such consideration; and provided,
further, that in the case of any Stock Option or Stock Appreciation Right with an exercise price that equals or
exceeds the price paid for a share of Common Stock in connection with the acquisition, the Committee may cancel
the Stock Option or Stock Appreciation Right without the payment of consideration therefor; and/or (iii) terminate all
incomplete performance periods in respect of awards in effect on the date the acquisition occurs, determine the
extent to which performance goals have been met based upon such information then available as it deems relevant
and cause to be paid to the Holder all or the applicable portion of the award based upon the Committee's
determination of the degree of attainment of performance goals, or on such other basis determined by the
Committee.
9.3.
Code Section 409A. Notwithstanding any provisions of this Plan or any award granted hereunder to
the contrary, no acceleration shall occur with respect to any award to the extent such acceleration would cause the
Plan or an award granted hereunder to fail to comply with Code Section 409A.
Section 10.
Amendment and Termination.
The Board may at any time, and from time to time, amend alter, suspend or discontinue any of the provisions
of the Plan or any Agreement, but no amendment, alteration, suspension or discontinuance shall be made that
would impair the rights of a Holder under any Agreement theretofore entered into hereunder, without the Holder’s
consent, except as set forth in this Plan or the Agreement.
Section 11.
Term of Plan.
11.1.
Effective Date. The Effective Date of the Plan shall be August 7, 2019.
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11.2.
Termination Date. Unless terminated by the Board, this Plan shall continue to remain effective until
such time as no further awards may be granted and all awards granted under the Plan are no longer outstanding.
Section 12.
General Provisions.
12.1.
Written Agreements. Each award granted under the Plan shall be confirmed by, and shall be
subject to the terms of, the Agreement executed by the Company and the Holder, or such other document as may be
determined by the Committee. The Committee may terminate any award made under the Plan if the Agreement
relating thereto is not executed and returned to the Company within 10 days after the Agreement has been delivered
to the Holder for his or her execution.
12.2.
Unfunded Status of Plan. The Plan is intended to constitute an “unfunded” plan for incentive and
deferred compensation. Neither the Company, the Board, nor the Committee shall be required to establish any
special or separate fund or to segregate any assets to ensure the performance of obligations under the Plan. With
respect to any payments not yet made to a Holder by the Company, nothing contained herein shall give any such
Holder any rights that are greater than those of a general creditor of the Company.
12.3.
Employees.
(a) Engaging in Competition with the Company; Solicitation of Customers and Employees;
Disclosure of Confidential Information. If a Holder’s employment with the Company, Parent, Subsidiary or
Affiliate is terminated for any reason whatsoever, and Holder (i) within three months after the date thereof,
accepts employment with any competitor of, or otherwise engages in competition with, the Company, Parent,
Subsidiary or Affiliate, (ii) within two years after the date thereof, solicits any customers or employees of the
Company, Parent, Subsidiary or Affiliate to do business with or render services to the Holder or any business
with which the Holder becomes affiliated or to which the Holder renders services or (iii) at any time uses or
discloses to anyone outside the Company any confidential information of the Company, Parent, Subsidiary or
Affiliate in violation of the Company’s policies or any agreement between the Holder and the Company, Parent,
Subsidiary or Affiliate, the Committee, in its sole discretion, may require such Holder to return (through the
payment of cash, return and transfer to the Company of shares of Common Stock or by other methods
determined by the Committee) to the Company the economic value of any award that was realized or obtained
by such Holder at any time during the period beginning on the date that is six months prior to the date such
Holder’s employment with the Company is terminated; provided, however, that if the Holder is a resident of the
State of California, such right must be exercised by the Company for cash within six months after the date of
termination of the Holder’s service to the Company or within six months after exercise of the applicable Stock
Option, whichever is later. In such event, Holder agrees to (1) remit to the Company, in cash, an amount equal to
the difference between the Fair Market Value of the shares subject to the award on the date of termination (or the
sales price of such Shares if the Shares were sold during such six month period) and the price the Holder paid
the Company for such shares, or (2) in the case of SARs, shall, at the Company’s election, return the full amount
paid to the Holder in connection therewith.
(b) Termination for Cause. If a Holder’s employment with the Company, Parent, subsidiary or
Affiliate is terminated for “cause” (as may be defined in the Agreement or an employment agreement entered
into by the Holder), the Committee may, in its sole discretion, require such Holder to return to the Company the
economic value of any award that was realized or obtained by such Holder at any time during the period
beginning on that date that is six months prior to the date such Holder’s employment with the Company is
terminated. In such event, Holder agrees to (1) remit to the Company, in cash, an amount equal to the difference
between the Fair Market Value of the shares on the date of
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termination (or the sales price of such Shares if the shares were sold during such six month period) and the price
the Holder paid the Company for such shares, (2) with the consent of the Company, which may be withheld for
any reason or no reason, surrender to the Company shares of Common Stock having Fair Market Value equal to
the Fair Market Value on the date they were acquired upon exercise of the Option or (3) in the case of SARs,
shall return the full amount paid to the Holder in connection therewith.
(c) No Right of Employment. Nothing contained in the Plan or in any award hereunder shall be
deemed to confer upon any Holder who is an employee of the Company, Parent, Subsidiary or Affiliate any right
to continued employment with the Company, Parent, Subsidiary or Affiliate, nor shall it interfere in any way with
the right of the Company, Parent, Subsidiary or Affiliate to terminate the employment of any Holder who is an
employee at any time.
12.4.
No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant
to the Plan. The Committee shall determine whether cash, additional awards or other securities or property shall be
issued or paid in lieu of fractional shares of Common Stock or whether any fractional shares should be rounded,
forfeited or otherwise eliminated.
12.5.
Limitations on Liability.
(a) Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, other
employee or agent of the Company or any Subsidiary, Parent or Affiliate will be liable to any Holder, former
Holder, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection
with the Plan or any award, and such individual will not be personally liable with respect to the Plan because of
any contract or other instrument executed in his or her capacity as member of the Committee, director, officer,
other employee or agent of the Company or any Subsidiary, Parent or Affiliate. The Company will indemnify and
hold harmless each director, officer, other employee and agent of the Company or any Subsidiary, Parent or
Affiliate that has been or will be granted or delegated any duty or power relating to the Plan’s administration or
interpretation, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in
settlement of a claim with the Committee’s approval) arising from any act or omission concerning this Plan
unless arising from such person’s own fraud or bad faith.
(b) Neither the Company nor any Subsidiary shall be liable to a Holder or any other person as to: (i)
the non-issuance or sale of shares as to which the Company has been unable to obtain from any regulatory body
having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and
sale of any shares hereunder; and (ii) any tax consequence expected, but not realized, by any Holder or other
person due to the receipt, exercise or settlement of any Award granted hereunder.
12.6.
Lock-Up Period. The Company may, at the request of any underwriter, placement agent or
otherwise, in connection with the registered offering of any Company securities under the Securities Act or pursuant
to an exemption therefrom, prohibit Holders from, directly or indirectly, selling or otherwise transferring any shares or
other Company securities acquired under this Plan during a period of up to one hundred eighty days following either
the effective date of a Company registration statement filed under the Securities Act, in the case of a registered
offering, or the closing date of the sale of the Company securities, in the case of an offering exempt from registration,
or for such longer period as determined by the underwriter or placement agent.
12.7.
Data Privacy. As a condition for receiving any award, each Holder explicitly and unambiguously
consents to the collection, use and transfer, in electronic or other form, of personal data as
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described in this paragraph by and among the Company and its Parent, Subsidiaries and Affiliates exclusively for
implementing, administering and managing the Holder’s participation in the Plan. The Company and its Parent,
Subsidiaries and Affiliates may hold certain personal information about a Holder, including the Holder’s name,
address and telephone number; birthdate; social security, insurance number or other identification number; salary;
nationality; job title(s); any shares held in the Company or its Parent, Subsidiaries and Affiliates; and award details,
to implement, manage and administer the Plan and awards (the “Data”). The Company and its Parent, Subsidiaries
and Affiliates may transfer the Data amongst themselves as necessary to implement, administer and manage a
Holder’s participation in the Plan, and the Company and its Parent, Subsidiaries and Affiliates may transfer the Data
to third parties assisting the Company with Plan implementation, administration and management. These recipients
may be located in the Holder’s country, or elsewhere, and the Holder’s country may have different data privacy laws
and protections than the recipients’ country. By accepting an award, each Holder authorizes such recipients to
receive, possess, use, retain and transfer the Data, in electronic or other form, to implement, administer and manage
the Holder’s participation in the Plan, including any required Data transfer to a broker or other third party with whom
the Company or the Holder may elect to deposit any shares. The Data related to a Holder will be held only as long
as necessary to implement, administer, and manage the Holder’s participation in the Plan. A Holder may, at any
time, view the Data that the Company holds regarding such Holder, request additional information about the storage
and processing of the Data regarding such Holder, recommend any necessary corrections to the Data regarding the
Holder or refuse or withdraw the consents in this Section 12.8 in writing, without cost, by contacting the local human
resources representative. The Company may cancel Holder’s ability to participate in the Plan and, in the
Committee’s discretion, the Holder may forfeit any outstanding awards if the Holder refuses or withdraws the
consents in this Section 12.8. For more information on the consequences of refusing or withdrawing consent,
Holders may contact their local human resources representative.
12.8.
Successor. The obligations of the Company under the Plan shall be binding upon any successor
corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon
any successor corporation or organization succeeding to all or substantially all of the assets and business of the
Company and its Subsidiaries, taken as a whole.
12.9.
Investment Representations; Company Policy. The Committee may require each person acquiring
shares of Common Stock pursuant to a Stock Option or other award under the Plan to represent to and agree with
the Company in writing that the Holder is acquiring the shares for investment without a view to distribution thereof.
Each person acquiring shares of Common Stock pursuant to a Stock Option or other award under the Plan shall be
required to abide by all policies of the Company in effect at the time of such acquisition and thereafter with respect to
the ownership and trading of the Company’s securities.
12.10.
Additional Incentive Arrangements. Nothing contained in the Plan shall prevent the Board from
adopting such other or additional incentive arrangements as it may deem desirable, including, but not limited to, the
granting of Stock Options and the awarding of Common Stock and cash otherwise than under the Plan; and such
arrangements may be either generally applicable or applicable only in specific cases.
12.11.
Withholding Taxes. Not later than the date as of which an amount must first be included in the
gross income of the Holder for Federal income tax purposes with respect to any Stock Option or other award under
the Plan, the Holder shall pay to the Company, or make arrangements satisfactory to the Committee regarding the
payment of, any Federal, state and local taxes of any kind required by law to be withheld or paid with respect to such
amount. If permitted by the Committee, tax withholding or payment obligations may be settled with Common Stock,
including Common Stock that is part of the award that gives rise to the withholding requirement. The obligations of
the Company under the Plan shall be conditioned upon such payment or arrangements and the Company or the
Holder’s employer (if not the
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Company) shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any
kind otherwise due to the Holder from the Company or any Subsidiary.
12.12.
Clawback. Notwithstanding any other provisions of the Plan, any award which is subject to
recovery under any law, government regulation or listing requirement of any national securities exchange on which
the Company’s securities are listed, will be subject to such deductions and clawback as may be required to be made
pursuant to such law, government regulation or listing requirement (or any policy adopted by the Company pursuant
to any such law, government regulation or listing requirement).
12.13.
Governing Law. The Plan and all awards made and actions taken thereunder shall be governed by
and construed in accordance with the law of the State of Florida (without regard to choice of law provisions).
12.14.
Other Benefit Plans. Any award granted under the Plan shall not be deemed compensation for
purposes of computing benefits under any retirement plan of the Company or any Parent, Subsidiary or Affiliate and
shall not affect any benefits under any other benefit plan now or subsequently in effect under which the availability
or amount of benefits is related to the level of compensation (unless required by specific reference in any such other
plan to awards under this Plan).
12.15.
Non-Transferability. Except as otherwise expressly provided in the Plan or the Agreement, no right
or benefit under the Plan may be alienated, sold, assigned, hypothecated, pledged, exchanged, transferred,
encumbered or charged, and any attempt to alienate, sell, assign, hypothecate, pledge, exchange, transfer,
encumber or charge the same shall be void.
12.16.
Applicable Laws. The obligations of the Company with respect to all Stock Options and other
awards under the Plan shall be subject to (i) all applicable laws, rules and regulations and such approvals by any
governmental agencies as may be required, including, without limitation, the Securities Act, and (ii) the rules and
regulations of any securities exchange on which the Common Stock may be listed. Notwithstanding anything herein
to the contrary, the Plan and all awards will be administered only in conformance with such applicable laws. To the
extent such applicable laws permit, the Plan and all Agreements will be deemed amended as necessary to conform
to such applicable laws.
12.17.
Conflicts. If any of the terms or provisions of the Plan or an Agreement conflict with the
requirements of Section 422 of the Code, then such terms or provisions shall be deemed inoperative to the extent
they so conflict with such requirements. Additionally, if this Plan or any Agreement does not contain any provision
required to be included herein under Section 422 of the Code, such provision shall be deemed to be incorporated
herein and therein with the same force and effect as if such provision had been set out at length herein and therein.
If any of the terms or provisions of any Agreement conflict with any terms or provisions of the Plan, then such terms
or provisions shall be deemed inoperative to the extent they so conflict with the requirements of the Plan.
Additionally, if any Agreement does not contain any provision required to be included therein under the Plan, such
provision shall be deemed to be incorporated therein with the same force and effect as if such provision had been
set out at length therein.
12.18.
Compliance with Section 409A of the Code. The Company intends that any awards be structured
in compliance with, or to satisfy an exemption from, Section 409A of the Code, such that there are no adverse tax
consequences, interest, or penalties pursuant to Section 409A of the Code as a result of the awards.
Notwithstanding the Company’s intention, in the event any award is subject to Section 409A of the Code, the
Committee may, in its sole discretion and without a participant’s prior consent, amend this Plan and/or outstanding
Agreements, adopt policies and procedures, or take any other actions (including amendments, policies, procedures
and actions with retroactive effect) as are necessary or appropriate to (i) exempt this Plan and/or any award from the
application of Section 409A of the Code, (ii) preserve the
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
intended tax treatment of any such award, or (iii) comply with the requirements of Section 409A of the Code,
including without limitation any such regulations guidance, compliance programs and other interpretive authority that
may be issued after the date of grant of an award. This Plan shall be interpreted at all times in such a manner that
the terms and provisions of the Plan and the awards are exempt from or comply with Section 409A of the Code.
12.19.
Sub-Plans. The Committee may from time to time establish sub-plans under the Plan for purposes
of satisfying blue sky, securities, tax or other laws of various jurisdictions in which the Company intends to grant
awards. Any sub-plans shall contain such limitations and other terms and conditions as the Committee determines
are necessary or desirable. All sub-plans shall be deemed a part of the Plan, but each sub-plan shall apply only to
the participants in the jurisdiction for which the sub-plan was designed.
12.20.
Non-Registered Stock. The shares of Common Stock to be distributed under this Plan have not
been, as of the Effective Date, registered under the Securities Act or any applicable state or foreign securities laws
and the Company has no obligation to any Holder to register the Common Stock or to assist the Holder in obtaining
an exemption from the various registration requirements, or to list the Common Stock on a national securities
exchange or any other trading or quotation system.
12.21.
Non-Uniform Treatment. The Committee's determinations under the Plan need not be uniform and
may be made by it selectively among persons who are eligible to receive, or actually receive, awards. Without
limiting the generality of the foregoing, the Committee shall be entitled to make non-uniform and selective
determinations, amendments and adjustments, and to enter into non-uniform and selective Agreements.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Exhibit 10.84
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this “Agreement”) is dated as of [•] between ParkerVision,
Inc., a Florida corporation (the “Company”), and each purchaser identified on the signature pages hereto
(each, including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).
WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section
4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated
thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and
not jointly, desires to purchase from the Company, securities of the Company as more fully described in
this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Company and each Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of
this Agreement, the following terms have the meanings set forth in this Section 1.1:
“Action” shall have the meaning ascribed to such term in Section 3.1(i).
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such terms are used in
and construed under Rule 405 under the Securities Act.
“Board of Directors” means the board of directors of the Company.
“Business Day” means any day except Saturday, Sunday, any day which is a federal legal
holiday in the United States or any day on which banking institutions in the State of New York are
authorized or required by law or other governmental action to close.
“Closing” means the closing of the purchase and sale of the Securities pursuant to Section
2.1.
“Closing Date” means the Trading Day when all of the Transaction Documents have been
executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the
Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver
the Securities have been satisfied or waived.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the common stock of the Company, par value $0.01 per share, and
any other class of securities into which such securities may hereafter be reclassified or changed
into.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
“Common Stock Equivalents” means any securities of the Company or any subsidiary which
would entitle the holder thereof to acquire at any time Common Stock, including, without limitation,
any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
“Company Counsel” means Graubard Miller, with offices located at The Chrysler Building,
405 Lexington Avenue, New York, New York 10174.
“Disclosure Schedules” means the Disclosure Schedules of the Company delivered
concurrently herewith and attached to this Agreement.
“Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(r).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“GAAP” shall have the meaning ascribed to such term in Section 3.1(g).
“Intellectual Property” shall have the meaning ascribed to such term in Section 3.1(❑).
“Legend Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).
“Lien” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive
right or other restriction.
“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(a).
“Material Permits” shall have the meaning ascribed to such term in Section 3.1(m).
“Minimum Amount” means the sum of $[•] which is the minimum amount that the Company
intends to receive in the aggregate from the Purchasers for the sale of the securities of the
Company pursuant to this Agreement.
“Per Share Purchase Price” equals $[•], subject to adjustment for reverse and forward stock
splits, stock dividends, stock combinations and other similar transactions of the Common Stock that
occur after the date of this Agreement and prior to the Closing Date.
“Person” means an
incorporated or
unincorporated association, joint venture, limited liability company, joint stock company, government
(or an agency or subdivision thereof) or other entity of any kind.
individual or corporation, partnership,
trust,
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, an informal investigation or partial proceeding, such as a deposition), whether
commenced or threatened.
“Public Information Failure” shall have the meaning ascribed to such term in Section 4.2(b).
“Public Information Failure Payments” shall have the meaning ascribed to such term in
Section 4.2(b).
“Purchaser Party” shall have the meaning ascribed to such term in Section 4.8.
“Registration Rights Agreement” means the Registration Rights Agreement, dated the date
hereof, among the Company and the Purchasers, in the form of Exhibit A attached hereto.
“Registration Statement” means a registration statement meeting the requirements set forth
in the Registration Rights Agreement and covering the resale by the Purchasers of the Shares.
“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(d).
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act,
as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission having substantially the same effect as such Rule.
“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(g).
“Securities” means the Shares, the Warrants and the Warrant Shares.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Shares” means the shares of Common Stock issued or issuable to each Purchaser pursuant
to this Agreement.
“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the
Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable
shares of Common Stock).
“Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for
Shares and Warrants purchased hereunder as specified below such Purchaser’s name on the
signature page of this Agreement and next to the heading “Subscription Amount,” in United States
dollars and in immediately available funds.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
“Trading Day” means a day on which the principal Trading Market is open for trading.
“Trading Market” means the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market,
the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the
Over-the-Counter Bulletin Board (the OTCQB, the OTCQX or the “Pink Sheets” published by The
OTC Markets Group, Inc. or a similar organization or agency succeeding to its functions or reporting
prices), or any successors to any of the foregoing.
“Transaction Documents” means this Agreement, the Registration Rights Agreement, the
Warrants, all exhibits and schedules thereto and hereto and any other documents or agreements
executed in connection with the transactions contemplated hereunder.
“Transfer Agent” means American Stock Transfer and Trust Company, the current transfer
agent of the Company, with a mailing address of 6201 15th Avenue, Brooklyn, NY 11219, and any
successor transfer agent of the Company.
“Warrants” means, collectively, the Common Stock purchase warrants delivered to the
Purchasers at Closing in accordance with Section 2.2(a) hereof, which Warrants shall be
exercisable from the Closing Date and have a term of exercise equal to five (5) years, in the form of
Exhibit B attached hereto.
“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein,
substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the
Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, up to an
aggregate of $[•] in Shares and Warrants. One business day prior to the Closing Date, each Purchaser
shall deliver to the Company via wire transfer of immediately available funds equal to its Subscription
Amount and the Company shall deliver to each Purchaser its respective Shares and a Warrant, as
determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items
set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set
forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of Company Counsel or such other
location as the parties shall mutually agree.
Deliveries.
(a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to
each Purchaser the following:
(i) this Agreement duly executed by the Company;
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
(ii) a Warrant registered in the name of such Purchaser to purchase up to a number
of shares of Common Stock equal to [•]% of such Purchaser’s Shares, with an exercise price
equal to $[•], subject to adjustment as described therein (such Warrant certificate may be
delivered within two Trading Days of the Closing Date); and
(iii) the Registration Rights Agreement duly executed by the Company.
(b) One business day prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following:
(i) this Agreement duly executed by such Purchaser;
(ii) an Accredited Investor Questionnaire executed by such Purchaser;
(iii) such Purchaser’s Subscription Amount by wire transfer to the account as
specified in writing by the Company; and
(iv) the Registration Rights Agreement duly executed by such Purchaser.
2.2 Closing Conditions.
(a) The obligations of the Company hereunder in connection with the Closing are subject to
the following conditions being met:
(i)
the accuracy in all material respects (or, to the extent representations or
warranties are qualified by materiality or Material Adverse Effect, in all respects) on the
Closing Date of the representations and warranties of the Purchasers contained herein
(unless as of a specific date therein in which case they shall be accurate as of such date);
(ii) all obligations, covenants and agreements of each Purchaser required to be
performed at or prior to the Closing Date shall have been performed; and
(iii) the delivery by each Purchaser of the items set forth in Section 2.2(b) of this
Agreement.
(b) The respective obligations of the Purchasers hereunder in connection with the Closing
are subject to the following conditions being met (provided, however, that any Purchaser, as to itself
only and without any effect whatsoever on the rights and obligations between the Company and the
other Purchasers, may waive any one or more than one of such Closing conditions by written notice
to the Company):
(i)
the accuracy in all material respects (or, to the extent representations or
warranties are qualified by materiality or Material Adverse Effect, in all respects) when made
and on the Closing Date of the representations and warranties of the Company contained
herein (unless as of a specific date therein in which case they shall be accurate as of such
date);
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
(ii) all obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been performed;
(iii)
Agreement;
the delivery by the Company of the items set forth in Section 2.2(a) of this
(iv) that the Company’s proceeds from the sale of the Shares and the Warrants to all
Purchasers exceed the Minimum Amount;
(v) that the Closing Date is no later than [•].
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth in the Disclosure
Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation
or otherwise made herein to the extent of the disclosure contained in the corresponding section of the
Disclosure Schedules, the Company hereby makes the following representations and warranties to each
Purchaser as of the date hereof and as of the Closing Date (unless as of a specific date therein):
(a) Subsidiaries; Organization and Qualification. All of the direct and indirect subsidiaries of
the Company are set forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of the
capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the
issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase
securities. The Company and each of its subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation
or organization (as applicable), with the requisite power and authority to own and use its properties
and assets and to carry on its business as currently conducted. Neither the Company nor any
subsidiary is in violation or default of any of the provisions of its articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and its subsidiaries is duly
qualified to conduct business and is in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good standing, as the case
may be, could not have or reasonably be expected to result in (i) a material adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the
results of operations, assets, business, prospects or condition (financial or otherwise) of the
Company, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in
any material respect its obligations under any Transaction Document (any of (i), (ii) or (iii), 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.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
(b) Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this Agreement and
each of the other Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and each of the other Transaction
Documents by the Company and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, the Board of Directors or the Company’s stockholders in
connection herewith or therewith other than in connection with the Required Approvals. This
Agreement and each other Transaction Document to which it is a party has been (or upon delivery
will have been) duly executed by the Company and, when delivered in accordance with the terms
hereof and thereof, will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii)
insofar as indemnification and contribution provisions may be limited by applicable law.
(c) No Conflicts. The execution, delivery and performance by the Company of this
Agreement and the other Transaction Documents by the Company, the issuance and sale of the
Securities and the consummation by the Company of the other transactions contemplated hereby
and thereby do not and will not (i) conflict with or violate any provision of the Company’s articles of
incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become a default) under, result
in the creation of any Lien upon any of the properties or assets of the Company under, or give to
others any rights of termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a
Company debt or otherwise) or other understanding to which the Company is a party or by which
any property or asset of the Company is bound or affected, or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority to which the Company
is subject (including federal and state securities laws and regulations), or by which any property or
asset of the Company is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not have or reasonably be expected to result in a Material Adverse Effect.
(d) Filings, Consents and Approvals. The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or registration with, any court
or other federal, state, local or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents, other than (i)
such filings, if any, as are required to be made under applicable Federal and state securities laws,
including the filings required pursuant to Section 4.4, the filing with the Commission of a Registration
Statement and the filing with the Commission of a Form D, (ii) such notices or applications, if any,
as are required to be given or made to the Trading Market for the issuance and sale of the
Securities and
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
the listing of the Shares and the Warrant Shares for trading thereon and (iii) such filings as are
required to be made under applicable state securities laws (the “Required Approvals”).
(e) Issuance of the Securities. The Securities are duly authorized and, when issued and
paid for in accordance with the applicable Transaction Documents, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents. The Company has reserved
from its duly authorized capital stock the maximum number of shares of Common Stock issuable
pursuant to this Agreement.
(f) Capitalization. Capitalization. The capitalization of the Company as of the date hereof
is as set forth on Schedule 3.1(f) of the Disclosure Schedules. Except as set forth in the SEC
Reports or Schedule 3.1(f), the Company has not issued any capital stock since its most recently
filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock
options and the vesting of restricted stock units under the Company’s equity incentive plans and
pursuant to the conversion or exercise or exchange of Common Stock Equivalents outstanding as of
the date of the most recently filed periodic report under the Exchange Act. No Person has any right
of first refusal, preemptive right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. Except as set forth in the SEC Reports
or Schedule 3.1(f) and except for outstanding awards under the Company’s equity incentive plans,
there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common
Stock or the capital stock of any Subsidiary, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to issue additional
shares of Common Stock or Common Stock Equivalents or capital stock of any Subsidiary. The
issuance and sale of the Securities will not obligate the Company or any Subsidiary to issue shares
of Common Stock or other securities to any Person (other than the Purchasers) and will not result in
a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset
price under any of such securities. There are no outstanding securities or instruments of the
Company or any Subsidiary that contain any redemption or similar provisions, and there are no
contracts, commitments, understandings or arrangements by which the Company or any Subsidiary
is or may become bound to redeem a security of the Company or such Subsidiary. All of the
outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid
and nonassessable, have been issued in compliance with all federal and state securities laws, and
none of such outstanding shares was issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. No further approval or authorization of any stockholder, the
Board of Directors or others is required for the issuance and sale of the Securities. There are no
stockholders agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders.
(g) SEC Reports; Financial Statements. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it under the
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Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
two years preceding the date hereof (or such shorter period as the Company was required by law
or regulation to file such material) (the foregoing materials filed prior to the date hereof, including
the exhibits thereto and documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their
respective dates, the SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. Such financial statements have
been prepared in accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in
such financial statements or the notes thereto and except that unaudited financial statements may
not contain all footnotes required by GAAP, and fairly present in all material respects the financial
position of the Company as of and for the dates thereof and the results of operations and cash flows
for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.
(h) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of
the latest audited financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports and schedule 3.1 (h), (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A)
trade payables and accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s financial statements
pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or purchased, redeemed or
made any agreements to purchase or redeem any shares of its capital stock, except in connection
with the payment of the exercise price of, or withholding taxes for, awards under the Company’s
equity incentive plans, and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to the Company’s existing equity incentive plans. The Company
does not have pending before the Commission any request for confidential treatment of information.
Except for the issuance of the Securities contemplated by this Agreement, no event, liability, fact,
circumstance, occurrence or development has occurred or exists with respect to the Company or its
business, properties, operations, financial condition or prospects that would be required to be
publicly disclosed by the Company under applicable securities laws at the time this representation is
made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this
representation is made, except as set forth in schedule 3.1(h).
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(i) Litigation. Except as set forth in the SEC Reports, there is no action, suit, inquiry, notice
of violation, Proceeding or investigation pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither
the Company, nor any director or officer thereof, is or has been the subject of any Action involving a
claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary
duty. To the knowledge of the Company, there is not pending or contemplated, any investigation by
the Commission involving the Company or any current or former director or officer of the Company.
The Commission has not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company under the Exchange Act or the Securities Act.
(j) Labor Relations. No material labor dispute exists or, to the knowledge of the Company,
is imminent with respect to any of the employees of the Company which could reasonably be
expected to result in a Material Adverse Effect. None of the Company’s employees is a member of a
union that relates to such employee’s relationship with the Company, and the Company is not a
party to a collective bargaining agreement, and the Company believes that its relationship with its
employees is good. No executive officer of the Company, to the knowledge of the Company, is, or is
now expected to be, in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment of each such
executive officer does not subject the Company to any liability with respect to any of the foregoing
matters. The Company is in compliance with all U.S. federal, state, local and foreign laws and
regulations relating to employment and employment practices, terms and conditions of employment
and wages and hours, except where the failure to be in compliance could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(k) Compliance. Except as set forth in the SEC Reports, the Company (i) is not in default
under or in violation of (and no event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Company under), nor has the Company
received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party or by which it or any of
its properties is bound (whether or not such default or violation has been waived), (ii) is not in
violation of any judgment, decree or order of any court, arbitrator or other governmental authority, or
(iii) is not and has not been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws applicable to its
business and all such laws that affect the environment, except in each case as could not reasonably
be expected to result in a Material Adverse Effect.
(l) Environmental Laws. The Company and its Subsidiaries (i) are in compliance with all
federal, state, local and foreign laws relating to pollution or protection
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of human health or the environment (including ambient air, surface water, groundwater, land
surface or subsurface strata), including laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or
wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations,
issued, entered, promulgated or approved thereunder (“Environmental Laws”); (ii) have received all
permits licenses or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses; and (iii) are in compliance with all terms and conditions of any
such permit, license or approval where in each clause (i), (ii) and (iii), the failure to so comply could
be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
(m) Regulatory Permits. The Company possesses all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to
conduct its business as described in the SEC Reports, except where the failure to possess such
permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”),
and the Company has not received any notice of proceedings relating to the revocation or
modification of any Material Permit.
(n) Title to Assets. The Company has good and marketable title in fee simple to all real
property owned by it that is material to the business of the Company and good and marketable title
in all personal property owned by it that is material to the business of the Company, in each case
free and clear of all Liens, except for Liens as do not materially affect the value of such property and
do not materially interfere with the use made and proposed to be made of such property by the
Company and Liens for the payment of federal, state or other taxes, the payment of which is neither
delinquent nor subject to penalties. Any real property and facilities held under lease by the
Company are held by it under valid, subsisting and enforceable leases with which the Company is
in compliance.
(o) Intellectual Property. The Company owns, possesses, or can acquire on reasonable
terms, all Intellectual Property necessary for the conduct of its business as now conducted or as
described in the SEC Reports to be conducted, except as such failure to own, possess, or acquire
such rights would not result in a Material Adverse Effect. Except as set forth in the SEC Reports, (i)
to the knowledge of the Company, there is no infringement, misappropriation or violation by third
parties of any such Intellectual Property, except as such infringement, misappropriation or violation
would not result in a Material Adverse Effect; (ii) there is no pending or, to the knowledge of the
Company, threatened action, suit, proceeding or claim by others challenging the Company’s rights
in or to any such Intellectual Property, and the Company is unaware of any facts which would form
a reasonable basis for any such claim; (iii) the Intellectual Property owned by the Company and to
the knowledge of the Company, the Intellectual Property licensed to the Company has not been
adjudged invalid or unenforceable, in whole or in part, and there is no pending or threatened action,
suit, proceeding or claim by others challenging the validity or scope of any such Intellectual
Property, and the Company is unaware of any facts which
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would form a reasonable basis for any such claim; (iv) there is no pending or threatened action,
suit, proceeding or claim by others that the Company infringes, misappropriates or otherwise
violates any Intellectual Property or other proprietary rights of others, the Company has not
received any written notice of such claim, and the Company is unaware of any other fact which
would form a reasonable basis for any such claim; and (v) to the Company’s knowledge, no
employee of the Company is in or has ever been in violation of any term of any employment
invention assignment agreement, non-competition
contract, patent disclosure agreement,
agreement, non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or
with a former employer where the basis of such violation relates to such employee’s employment
with the Company or actions undertaken by the employee while employed with the Company,
except as such violation would not result in a Material Adverse Effect. “Intellectual Property” shall
mean all patents, patent applications, trade and service marks, trade and service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets, technology, know-how and other
intellectual property.
(p) Insurance. The Company is insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are prudent and customary in the businesses
in which the Company is engaged, including, but not limited to, directors and officers insurance
coverage. The Company has no reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business without a significant increase in cost.
(q) Transactions With Affiliates and Employees. Except as set forth in the SEC Reports,
none of the officers or directors of the Company and, to the knowledge of the Company, none of the
employees of the Company is presently a party to any transaction with the Company (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, director or such
employee or, to the knowledge of the Company, any entity in which any officer, director, or any
such employee has a substantial interest or is an officer, director, trustee or partner, in each case in
excess of $120,000, other than for (i) payment of salary or consulting fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits,
including equity awards under any equity incentive plans of the Company.
(r) Sarbanes-Oxley. The Company is in compliance with any and all requirements of the
Sarbanes-Oxley Act of 2002 that are applicable to the Company, and any and all rules and
regulations promulgated by the Commission thereunder, that are applicable to the Company and
effective as of the date hereof and as of the Closing Date. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are
executed in accordance with management’s general or specific authorizations, (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
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compared with the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that information required to be disclosed by the
Company in the reports it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s rules and forms.
The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and
procedures of the Company as of the end of the period covered by the most recently filed periodic
report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its
most recently filed periodic report under the Exchange Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their evaluations as of
the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control
over financial reporting (as such term is defined in the Exchange Act) of the Company that have
materially affected, or is reasonably likely to materially affect, the internal control over financial
reporting of the Company.
(s) Certain Fees. Except for fees and commissions payable to Partner Capital Group, its
successors, affiliates and assigns for the offering of Securities, no brokerage or finder’s fees or
commissions are or will be payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect
to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type
contemplated in this Section that may be due in connection with the transactions contemplated by
the Transaction Documents.
(t) Private Placement. Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer
and sale of the Securities by the Company to the Purchasers as contemplated hereby. The
issuance and sale of the Securities hereunder does not contravene the rules and regulations of the
Trading Market.
(u) Investment Company. The Company is not, and is not an Affiliate of, and immediately
after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company”
within the meaning of the Investment Company Act of 1940, as amended. The Company shall
conduct its business in a manner so that it will not become an “investment company” subject to
registration under the Investment Company Act of 1940, as amended.
(v) Registration Rights. Other than with respect to the Company’s existing registration
statements filed under the Securities Act, or as otherwise disclosed in the SEC Reports or Schedule
3.1(v) and other than each of the Purchasers, no Person has any right to cause the Company or
any Subsidiary to effect the registration under the Securities Act of any securities of the Company or
any Subsidiaries.
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(w) Listing and Maintenance Requirements. The Company’s Common Stock is registered
pursuant to Section 12(b) of the Exchange Act. The Company has not, in the 12 months preceding
the date hereof, received notice from any Trading Market on which the Common Stock is or has
been listed or quoted to the effect that the Company is not in compliance with the maintenance
requirements of such Trading Market. The Common Stock is currently eligible for electronic transfer
through the Depository Trust Company or another established clearing corporation and the
Company is current in payment of the fees to the Depository Trust Company (or such other
established clearing corporation) in connection with such electronic transfer.
(x) Disclosure. Except with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any
information that it believes constitutes or might constitute material, non-public information. The
Company understands and confirms that the Purchasers will rely on the foregoing representation in
effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of
the Company to the Purchasers regarding the Company and its Subsidiaries, their respective
businesses and the transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, is true and correct and does not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. .
(y) Tax Status. Except for matters that could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect, the Company (i) has made or filed all
necessary federal, state, foreign and local income and franchise tax returns, reports and
declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations and (iii) has set aside on its books provision
reasonably adequate for the payment of all material taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company
know of no basis for any such claim.
(z) Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the
knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the
Company or any Subsidiary, has (i) directly or indirectly, used any 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 any Subsidiary (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 FCPA.
(aa) Accountants. The Company’s accounting firm is MSL, P.A. To the knowledge of the
Company, such accountants, who the Company expects will express their
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opinion with respect to the financial statements to be included in the Company’s next Annual Report
on Form 10-K, are a registered public accounting firm as required by the Securities Act.
(bb) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s
length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and
the transactions contemplated thereby and any advice given by any Purchaser or any of their
respective representatives or agents in connection with the Transaction Documents and the
transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the
Securities. The Company further represents to each Purchaser that the Company’s decision to enter
into this Agreement and the other Transaction Documents has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company and its
representatives.
(cc)
Acknowledgement Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(g) and 4.13
hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has
been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or
selling, long and/or short, securities of the Company, or “derivative” securities based on securities
issued by the Company or to hold the Securities for any specified term; (ii) past or future open
market or other transactions by any Purchaser, specifically including, without limitation, Short Sales
or “derivative” transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s publicly-traded securities;
(iii) any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a
party, directly or indirectly, presently may have a “short” position in the Common Stock, and (iv)
each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length
counter-party in any “derivative” transaction. The Company further understands and acknowledges
that (y) one or more Purchasers may engage in hedging activities at various times during the period
that the Securities are outstanding, and (z) such hedging activities (if any) could reduce the value of
the existing stockholders’ equity interests in the Company at and after the time that the hedging
activities are being conducted. The Company acknowledges that such aforementioned hedging
activities do not constitute a breach of any of the Transaction Documents.
(dd) Regulation M Compliance. During the applicable restricted period as defined in
Regulation M, the Company has not, and to its knowledge no one acting on its behalf has, (i) taken,
directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii)
sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities,
or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any
other securities of the Company.
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(ee) No General Solicitation. Neither the Company nor any person acting on behalf of the
Company has offered or sold any of the Securities by any form of general solicitation or general
advertising. The Company has offered the Securities for sale only to the Purchasers and certain
other “accredited investors” within the meaning of Rule 501 under the Securities Act.
(ff) No Disqualification Events. With respect to the Securities to be offered and sold
hereunder in reliance on Rule 506 under the Securities Act, none of the Company, any of its
predecessors, any affiliated issuer, any director, executive officer, other officer of the Company
participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s
outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as
that term is defined in Rule 405 under the Securities Act) connected with the Company in any
capacity at the time of sale (each, an "Issuer Covered Person" and, together, "Issuer Covered
Persons") is subject to any of the "Bad Actor" disqualifications described in Rule 506(d)(1)(i) to (viii)
under the Securities Act (a "Disqualification Event"), except for a Disqualification Event covered by
Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any
Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the
extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the
Purchasers a copy of any disclosures provided thereunder.
(gg) Other Covered Persons. The Company is not aware of any person (other than any
Issuer Covered Person) that has been or will be paid (directly or indirectly) remuneration for
solicitation of purchasers in connection with the sale of any Regulation D Securities.
(hh) Notice of Disqualification Events. The Company will notify the Purchasers in writing,
prior to the Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person and
(ii) any event that would, with the passage of time, become a Disqualification Event relating to any
Issuer Covered Person.
(ii) No Additional Agreements. For the avoidance of doubt, each Purchaser has the same
rights with respect to the purchase of Shares as each of the other Purchasers other than as
explicitly set forth herein or in any of the other Transaction Documents.
3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other
Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the
Company as follows (unless as of a specific date therein):
(a) Organization; Authority. If such Purchaser is an entity, such purchaser duly organized,
validly existing and in good standing under the laws of the jurisdiction of its organization with full
right, corporate or partnership power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder. If such Purchaser is an entity, the execution and delivery of the Transaction
Documents and performance by such Purchaser of the transactions contemplated by the
Transaction Documents have been duly authorized by all necessary corporate or similar action on
the part of such Purchaser. Each Transaction
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Document to which it is a party has been duly executed by such Purchaser, and when delivered by
such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as
limited by general equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or
other equitable remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(b) Own Account. Such Purchaser understands that the Securities are “restricted
securities” and have not been registered under the Securities Act or any applicable state securities
law and is acquiring the Securities as principal for its own account and not with a view to or for
distributing or reselling such Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of such Securities in
violation of the Securities Act or any applicable state securities law and has no direct or indirect
arrangement or understandings with any other persons to distribute or regarding the distribution of
such Securities (this representation and warranty not limiting such Purchaser’s right to sell the
Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal
and state securities laws) in violation of the Securities Act or any applicable state securities
law. Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.
(c) Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as
of the date hereof it is, and on each date on which it exercises any Warrants, it will be, an
“accredited investor” as defined in Rule 501 under Securities Act.
(d) Experience of Such Purchaser. Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to
bear the economic risk of an investment in the Securities and, at the present time, is able to afford a
complete loss of such investment.
(e) General Solicitation. Such Purchaser is not purchasing the Securities as a result of any
advertisement, article, notice or other communication regarding the Securities published in any
newspaper, magazine or similar media or broadcast over television or radio or presented at any
seminar or any other general solicitation or general advertisement.
(f) Access to Information. Such Purchaser acknowledges that it has had the opportunity to
review the Transaction Documents (including all exhibits and schedules thereto) and the SEC
Reports and has been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company concerning the terms
and conditions of the offering of the Securities and the merits and risks of investing in the Securities;
(ii) access to information about the Company and its financial condition, results of operations,
business, properties, management and prospects sufficient to enable it to evaluate its investment;
and (iii) the opportunity to obtain such additional information that the Company possesses or can
acquire without
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unreasonable effort or expense that is necessary to make an informed investment decision with
respect to the investment.
(g) Certain Transactions and Confidentiality. Other than consummating the transactions
contemplated hereunder, such Purchaser has not directly or indirectly, nor has any Person acting
on behalf of or pursuant to any understanding with such Purchaser, executed any purchases or
sales, including Short Sales, of the securities of the Company during the period commencing from
the time that such Purchaser first received a term sheet (written or oral) from the Company or any
other Person representing the Company setting forth the material terms of the transactions
contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the
foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the representation set forth above shall only
apply with respect to the portion of assets managed by the portfolio manager that made the
investment decision to purchase the Securities covered by this Agreement. Other than to other
Persons party to this Agreement, such Purchaser has maintained the confidentiality of all
disclosures made to it in connection with this transaction (including the existence and terms of this
transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall
constitute a representation or warranty, or preclude any actions, with respect to the identification of
the availability of, or securing of, available shares to borrow in order to effect short sales or similar
transactions in the future.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Securities may only be disposed of in compliance with state and federal securities
laws. In connection with any transfer of Securities other than pursuant to an effective registration
statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection with a
pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable
to the Company, the form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such transferred Securities
under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be
bound by the terms of this Agreement and the Registration Rights Agreement and shall have the
rights of a Purchaser under this Agreement and the Registration Rights Agreement.
(b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a
legend on any of the Securities in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE
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SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS
AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a)
UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Company acknowledges and agrees that a Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security
interest in some or all of the Securities to a financial institution that is an “accredited investor” as
defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of
this Agreement and the Registration Rights Agreement and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees or
secured parties. Such a pledge or transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in
connection therewith. Further, no notice shall be required of such pledge. At the appropriate
Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a
pledgee or secured party of Securities may reasonably request in connection with a pledge or
transfer of the Securities, including, if the Securities are subject to registration pursuant to the
Registration Rights Agreement, the preparation and filing of any required prospectus supplement
under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders (as defined in the Registration Rights
Agreement) thereunder.
(c) Certificates evidencing the Shares and Warrant Shares shall not contain any legend
(including the legend set forth in Section 4.1(b) hereof), (i) while a registration statement covering
the resale of such security is effective under the Securities Act, (ii) following any sale of such
Shares pursuant to Rule 144 or pursuant to a Registration Statement, (iii) if such Shares are eligible
for sale under Rule 144, without the requirement for the Company to be in compliance with the
current public information required under Rule 144 as to such Securities and without volume or
manner-of-sale restrictions, or (iv) if such legend is not required under applicable requirements of
the Securities Act (including judicial interpretations and pronouncements issued by the staff of the
Commission). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent
promptly after such time if required by the Transfer Agent to effect the removal of the legend
hereunder. The Company agrees that, at such time as such legend is no longer required under this
Section 4.1(c), it will, no later than two Trading Days following the delivery by a Purchaser to the
Transfer Agent of a certificate representing Shares or Warrant Shares issued with a restrictive
legend, together with such documents or instruments as may be
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required by the Transfer Agent (such second Trading Day, the “Legend Removal Date”), deliver or
cause to be delivered to such Purchaser a certificate representing such shares that is free from all
restrictive and other legends. The Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section
4. Certificates for Securities subject to legend removal hereunder shall be transmitted by the
Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the
Depository Trust Company System as directed by such Purchaser.
(d) Each Purchaser, severally and not jointly with the other Purchasers, agrees that such
Purchaser will sell any Securities pursuant to either the registration requirements of the Securities
Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that
if Securities are sold pursuant to a Registration Statement, they will be sold in compliance with the
plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend
from certificates representing Securities as set forth in this Section 4.1 is predicated upon the
Company’s reliance upon this understanding.
4.2 Furnishing of Information; Public Information.
(e) Until the earliest of the time that no Purchaser owns Securities, the Company
covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange
Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the
Company is not then subject to the reporting requirements of the Exchange Act.
(f) At any time during the period commencing from the six (6) month anniversary of the
date hereof and ending at such time that all of the Securities may be sold without the requirement for the
Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to
Rule 144, if the Company (i) shall fail for any reason to satisfy the current public information requirement
under Rule 144(c) or (ii) has ever been an issuer described in Rule 144 (i)(1)(i) or becomes such an issuer
in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (a “Public
Information Failure”) then, in addition to such Purchaser’s other available remedies, the Company shall
pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such
delay in or reduction of its ability to sell the Securities, an amount in cash equal to one percent (1.0%) of
the aggregate Subscription Amount of such Purchaser’s Securities on the day of a Public Information
Failure and on every thirtieth (30th) day (pro rated for periods totaling less than thirty days) thereafter until
the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public
information is no longer required for the Purchasers to transfer the Underlying Shares pursuant to Rule
144, up to a maximum of three percent (3%) of the aggregate Subscription Amount of such Purchaser’s
Securities on the day of a Public Information Failure. The payments to which a Purchaser shall be entitled
pursuant to this Section 4.2(b) are referred to herein as “Public Information Failure Payments.” Public
Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during
which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business
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Day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event
the Company fails to make Public Information Failure Payments in a timely manner, such Public
Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months)
until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Public
Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or
in equity including, without limitation, a decree of specific performance and/or injunctive relief.
4.2 Intentionally left blank.
4.3 Securities Laws Disclosure; Publicity. The Company shall no later than the 4th Trading Day
immediately after the Closing Date, issue a Current Report on Form 8-K, disclosing the material terms of
the transactions contemplated hereby. From and after the issuance of such Current Report on Form 8-K to
be filed in accordance with clause (i) of the preceding sentence, the Company represents to the
Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the
Purchasers by the Company or any of its respective officers, directors, employees or agents in connection
with the transactions contemplated by the Transaction Documents. The Company and each Purchaser
shall consult with each other in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor
otherwise make any such public statement without the prior consent of the Company, with respect to any
press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press
release of the Company, which consent shall not unreasonably be withheld or delayed, except if such
disclosure is required by law, in which case the disclosing party shall promptly provide the other party with
prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall
not publicly disclose the name of any Purchaser or its investment advisor, or include the name of any
Purchaser or its investment advisor in any filing with the Commission or any regulatory agency or Trading
Market, without the prior written consent of such Purchaser, except: (a) as required by federal securities
law in connection with (i) any registration statement contemplated by the Registration Rights Agreement
and (ii) the filing of final Transaction Documents with the Commission and (b) to the extent such disclosure
is required by law or Trading Market regulations.
4.4 Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the
consent of the Company, any other Person, that any Purchaser is an “acquiring person” under any control
share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any
Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of
receiving Securities under the Transaction Documents.
4.5 Non-Public Information. Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, which shall be disclosed pursuant to Section
4.4, the Company covenants and agrees that neither it, nor any other Person acting on its behalf will
provide any Purchaser or its agents or counsel with any information that constitutes, or the Company
reasonably believes constitutes, material non-public information, unless prior thereto such Purchaser shall
have consented to the receipt of such information and agreed with the Company to keep such information
confidential. The Company understands and confirms that
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each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the
Company. To the extent that the Company delivers any material, non-public information to a Purchaser
without such Purchaser’s consent, the Company hereby covenants and agrees that such Purchaser shall
not have any duty of confidentiality to Company or any of its officers, directors, agents, employees or
Affiliates, or a duty to the Company or any of its officers, directors, agents, employees or Affiliates not to
trade on the basis of, such material, non-public information, provided that the Purchaser shall remain
subject to applicable law. To the extent that any notice provided pursuant to any Transaction Document
constitutes, or contains, material, non-public information regarding the Company, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The
Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the Company.
4.6 Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities
hereunder for working capital purposes, including the payment of past and future legal fees related to
patent infringement litigation.
4.7 Indemnification of Purchasers. Subject to the provisions of this Section 4.8, the Company will
indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners,
employees and agents (and any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other
title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in
settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction
Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or
their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser
Parties, with respect to any of the transactions contemplated by the Transaction Documents (unless such
action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under
the Transaction Documents or any agreements or understandings such Purchaser Parties may have with
any such stockholder or any violations by such Purchaser Parties of state or federal securities laws or any
conduct by such Purchaser Parties which constitutes fraud, gross negligence, willful misconduct or
malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity
may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense thereof with counsel of its own
choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to
employ separate counsel in any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the
employment thereof has been specifically authorized by the Company in writing, (ii) the Company has
failed after a reasonable period of time to assume such defense and to employ counsel or (iii)
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in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any
material issue between the position of the Company and the position of such Purchaser Party, in which
case the Company shall be responsible for the reasonable fees and expenses of no more than one such
separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y) for any
settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or
liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants
or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents.
4.8 Reservation of Common Stock. As of the date hereof, the Company has reserved and the
Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient
number of shares of Common Stock for the purpose of enabling the Company to issue Shares pursuant to
this Agreement and Warrant Shares pursuant to any exercise of the Warrants.
4.9 Listing of Common Stock. The Company hereby agrees to use best efforts to maintain the
listing or quotation of the Common Stock on the Trading Market on which it is currently listed, and
concurrently with the Closing, if required, the Company shall apply to list or quote all of the Shares and
Warrant Shares on such Trading Market. The Company further agrees, if the Company applies to have the
Common Stock traded on any other Trading Market, it will then include in such application all of the Shares
and Warrant Shares, and will take such other action as is necessary to cause all of the Shares and Warrant
Shares to be listed on such other Trading Market as promptly as possible. The Company will then take all
action reasonably necessary to continue the listing or quotation and trading of its Common Stock on a
Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Trading Market. The Company agrees to maintain the eligibility of the
Common Stock for electronic transfer through the Depository Trust Company or another established
clearing corporation, including, without limitation, by timely payment of fees to the Depository Trust
Company or such other established clearing corporation in connection with such electronic transfer.
4.10 Warrant Shares. If all or any portion of a Warrant is exercised at a time when there is an
effective registration statement to cover the reseal of the Warrant Shares, or if the Warrant is exercised via
cashless exercise and the Warrant Shares issued pursuant thereto may then be resold pursuant to Rule
144, or if a legend is not otherwise required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the staff of the Commission), the Warrant Shares
issued pursuant to any such exercise shall be issued free of all legends.
4.11 Equal Treatment of Purchasers. No consideration (including any modification of any
Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of any of the Transaction Documents unless the same consideration is also
offered to all of the parties to the Transaction Documents. For clarification purposes, this provision
constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each
Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be
construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or
voting of Securities or otherwise.
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in
the
included
information
the Transaction Documents and
4.12 Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the
other Purchasers, covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any
understanding with it will execute any purchases or sales, including Short Sales, of any of the Company’s
securities during the period commencing with the Discussion Time and ending at such time the
transactions contemplated by this Agreement are first publicly announced as described in Section 4.4.
Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the Company as described in
Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction
and
the Disclosure Schedules.
Notwithstanding the foregoing, and notwithstanding anything contained in this Agreement to the contrary,
the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation,
warranty or covenant hereby that it will not engage in effecting transactions in any securities of the
Company after the time that the transactions contemplated by this Agreement are first publicly announced
pursuant to Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in
any securities of the Company in accordance with applicable securities laws from and after the time that
the transactions contemplated by this Agreement are first publicly announced as described in Section 4.4
and (iii) no Purchaser shall have any duty of confidentiality to the Company or its subsidiaries with respect
to the transactions contemplated by this Agreement after the issuance of the Current Report on Form 8-K
as described in clause (i) of the first sentence of Section 4.4. Notwithstanding the foregoing, in the case of
a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets,
the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Securities covered by this Agreement.
4.13 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof, promptly upon request of any
Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary
in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing
under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence
of such actions promptly upon request of any Purchaser.
4.14 Delivery of Securities After Closing. The Company shall deliver, or cause to be delivered,
the respective Securities purchased by each Purchaser to such Purchaser within two (2) Trading Days of
the Closing Date.
ARTICLE V.
MISCELLANEOUS
5.1 Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s
obligations hereunder only and without any effect whatsoever on the obligations between the Company
and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated
on or before the fifth (5th) Trading Day following the date hereof;
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provided, however, that such termination will not affect the right of any party to sue for any breach by the
other party (or parties).
5.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to the
contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees,
stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the
Purchasers.
5.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules
thereto, contain the entire understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect to such matters, which
the parties acknowledge have been merged into such documents, exhibits and schedules.
5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the
date of transmission, if such notice or communication is delivered via email attachment at the email
address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time)
on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication
is delivered via email attachment at the email address as set forth on the signature pages attached hereto
on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the
second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight
courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The
address for such notices and communications shall be as set forth on the signature pages attached hereto.
To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains
material, non-public information regarding the Company, the Company shall simultaneously file such
notice with the Commission pursuant to a Current Report on Form 8-K.
5.5
Amendments; Waivers. No provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed, in the case of an amendment, by the
Company and the Purchasers holding at least a majority in interest of the Shares then outstanding or, in
the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No
waiver of any default with respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right.
5.6 Headings. The headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions hereof.
5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Company may not assign
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser
(other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any
Person to whom such Purchaser assigns or transfers any Securities, provided such transferee agrees in
writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction
Documents that apply to the “Purchasers.”
5.8 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, except as otherwise set forth in Section 4.8.
5.9 Governing Law. All questions concerning the construction, validity, enforcement and
interpretation of the Transaction Documents shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to the principles of conflicts of
law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the state and federal courts
sitting in the City of Jacksonville, Florida, County of Duval. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of Jacksonville, Florida, County of
Duval for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or
Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Action
or Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably
waives personal service of process and consents to process being served in any such Action or
Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If
any party shall commence an Action or Proceeding to enforce any provisions of the Transaction
Documents, then, in addition to the obligations of the Company under Section 4.10, the prevailing party in
such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation and prosecution of such
Action or Proceeding.
5.10 Survival. The representations and warranties contained herein shall survive the Closing and
the delivery of the Securities for the applicable statute of limitations.
5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when
taken together shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party, it being understood that
both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file,
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
such signature shall create a valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an
original thereof.
5.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no
way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to
be the intention of the parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and
without limiting any similar provisions of) any of the other Transaction Documents, whenever any
Purchaser exercises a right, election, demand or option under a Transaction Document and the Company
does not timely perform its related obligations within the periods therein provided, then such Purchaser
may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any
relevant notice, demand or election in whole or in part without prejudice to its future actions and rights;
provided, however that in the case of a recisssion of an exercise of a Warrant, the applicable Purchaser
shall be required to return any shares of Common Stock subject to any such rescinded exercise notice
concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for
such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such
Purchaser’s Warrant (including, issuance of a replacement warrant certificate evidencing such restored
right).
5.14 Replacement of Securities. If any certificate or instrument evidencing any Securities is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated
with the issuance of such replacement Securities.
5.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific
performance under the Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agrees to waive and not to assert in any action for specific
performance of any such obligation the defense that a remedy at law would be adequate.
5.16 Payment Set Aside. To the extent that the Company makes a payment or payments to any
Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside,
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law,
state or federal law, common law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff had not occurred.
5.17
Independent Nature of Purchasers’ Obligations and Rights. The obligations of each
Purchaser under any Transaction Document are several and not joint with the obligations of any other
Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of
the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in
any other Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be
deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own separate legal counsel in their review and
negotiation of the Transaction Documents. The Company has elected to provide all Purchasers with the
same terms and Transaction Documents for the convenience of the Company and not because it was
required or requested to do so by the Purchasers.
5.18 Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or
other amounts owing under the Transaction Documents is a continuing obligation of the Company and
shall not terminate until all unpaid partial liquidated damages and other amounts have been paid
notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.
5.19 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action
or the expiration of any right required or granted herein shall not be a Business Day, then such action may
be taken or such right may be exercised on the next succeeding Business Day.
5.20 Construction. The parties agree that each of them and/or their respective counsel has
reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of
construction to the effect that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of the Transaction Documents or any amendments hereto. In addition, each
and every reference to share prices and shares of Common Stock in any Transaction Document shall be
subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other
similar transactions of the Common Stock that occur after the date of this Agreement.
5.21 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY,
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED
BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND
EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated above.
Address for Notice:
4446-1A Hendricks Avenue
Suite 354
Jacksonville, FL 32207
Fax: (904) 732-6100
Cynthia (Poehlman) French
Chief Financial Officer
PARKERVISION, INC.
By:__________________________________________
Name: Cynthia (Poehlman) French
Title: Chief Financial Officer
With a copy to (which shall not constitute notice):
Graubard Miller
The Chrysler Building
405 Lexington Avenue, 11th Floor
New York, NY 10174
Attention: David Alan Miller, Esq.
Fax: (212) 818-8881
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[PURCHASER SIGNATURE PAGES FOLLOW]
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
[PURCHASER SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated above.
Name of Purchaser:______________________________________________________________
Signature of Authorized Signatory of Purchaser:_______________________________________
Name of Authorized Signatory:_____________________________________________________
Title of Authorized Signatory: _____________________________________________________
Email Address of Authorized Signatory:______________________________________________
Facsimile Number of Authorized Signatory:__________________________________________
Address for Notice of Purchaser:
______________________________________________________________________________
Address for Delivery of Securities for Purchaser (As a default, shares shall be issued via book entry at
American Stock Transfer & Trust).
______________________________________________________________________________
______________________________________________________________________________
Subscription Amount: $___________________
Shares: ___________________ Warrants: ___________________
Tax ID #___________________
[PURCHASER SIGNATURE PAGES CONTINUE]
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
REGISTRATION RIGHTS AGREEMENT
Exhibit 10.85
This Registration Rights Agreement (this “Agreement”) is made and entered into as of [•],
between ParkerVision, Inc., a Florida corporation (the “Company”), and each of the several
the
purchasers signatory hereto (each such purchaser, a “Purchaser” and, collectively,
“Purchasers”).
This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the
date hereof, between the Company and each Purchaser (the “Purchase Agreement”).
The Company and each Purchaser hereby agrees as follows:
1.
Definitions.
Capitalized terms used and not otherwise defined herein that are defined in the
Purchase Agreement shall have the meanings given such terms in the Purchase Agreement.
As used in this Agreement, the following terms shall have the following meanings:
“Advice” shall have the meaning set forth in Section 6(d).
“Effectiveness Date” means, with respect to the Initial Registration Statement required
to be filed hereunder, the 90th calendar day following the date hereof (or, in the event of a “full
review” by the Commission, t h e 120th calendar day following the date hereof) and with
respect to any additional Registration Statements which may be required pursuant to Section
2(c) or Section 3(c), the 90th calendar day following the date on which an additional
Registration Statement is required to be filed hereunder (or, in the event of a “full review” by
the Commission, the 90th calendar day following the date such additional Registration
Statement is required to be filed hereunder); provided, however, that in the event the
Company is notified by the Commission that one or more of the above Registration
Statements will not be reviewed or is no longer subject to further review and comments, the
Effectiveness Date as to such Registration Statement shall be the fifth Trading Day following
the date on which the Company is so notified if such date precedes the dates otherwise
required above, provided, further, if such Effectiveness Date falls on a day that is not a
Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.
“Effectiveness Period” shall have the meaning set forth in Section 2(a).
“Event” shall have the meaning set forth in Section 2(d).
“Event Date” shall have the meaning set forth in Section 2(d).
“Filing Date” means, with respect to the Initial Registration Statement required
hereunder, the 30th calendar day following the date hereof and, with
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
respect to any additional Registration Statements which may be required pursuant to Section
2(c) or Section 3(c), the earliest practical date on which the Company is permitted by SEC
Guidance to file such additional Registration Statement related to the Registrable Securities.
“Holder” or “Holders” means the holder or holders, as the case may be, from time to
time of Registrable Securities.
“Indemnified Party” shall have the meaning set forth in Section 5(c).
“Indemnifying Party” shall have the meaning set forth in Section 5(c).
“Initial Registration Statement” means the initial Registration Statement filed pursuant
to this Agreement.
“Losses” shall have the meaning set forth in Section 5(a).
“Plan of Distribution” shall have the meaning set forth in Section 2(a).
“Prospectus” means the prospectus included in a Registration Statement (including,
without limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon Rule 430A
promulgated by the Commission pursuant to the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by reference in such
Prospectus.
“Registrable Securities” means, as of any date of determination, (a) all Shares and
Warrant Shares (assuming on such date the Warrants are exercised in full without regard to
any exercise limitations therein) and (b) any securities issued or then issuable upon any
stock split, dividend or other distribution, recapitalization or similar event with respect to the
foregoing; provided, however, that any such Registrable Securities shall cease to be
Registrable Securities (and the Company shall not be required to maintain the effectiveness
of any, or file another, Registration Statement hereunder with respect thereto) if (a) a
Registration Statement with respect to the sale of such Registrable Securities is declared
effective by the Commission under the Securities Act and such Registrable Securities have
been disposed of by the Holder in accordance with such effective Registration Statement, (b)
such Registrable Securities have been previously sold in accordance with Rule 144, or (c)
such securities become eligible for resale without volume or manner-of-sale restrictions and
without current public information pursuant to Rule 144 as set forth in a written opinion letter
to such effect, addressed, delivered and acceptable to the Transfer Agent and the affected
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Holders, as reasonably determined by the Company, upon the advice of counsel to the
Company.
“Registration Statement” means any registration statement required to be filed
hereunder pursuant to Section 2(a) and any additional registration statements contemplated
by Section 2(c) or Section 3(c), including (in each case) the Prospectus, amendments and
supplements to any such registration statement or Prospectus, including pre- and post-
effective amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in any such registration statement.
“Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.
“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.
“Selling Stockholder Questionnaire” shall have the meaning set forth in Section 3(a).
“SEC Guidance” means (i) any publicly-available written or oral guidance of the
Commission staff, or any comments, requirements or requests of the Commission staff and
(ii) the Securities Act and the rules and regulations promulgated thereunder.
2.
Shelf Registration.
(a) On or prior to each Filing Date, the Company shall prepare and file with the Commission a
Registration Statement covering the resale of all of the Registrable Securities that are not
then registered on an effective Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415. Each Registration Statement filed hereunder shall be
on Form S-3 (except if the Company is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case, such registration shall be on another appropriate form
in accordance herewith, subject to the provisions of Section 2(e)) and shall contain (unless
otherwise directed by at least 85% in interest of the Holders) substantially the “Plan of
Distribution” attached hereto as Annex A; provided, however, that no Holder shall be
required to be named as an “underwriter” without such Holder’s express prior written
consent; provided, further, that in the event the Commission requires that a Holder be
named as an “underwriter” and such Holder does not so consent, the Company shall not be
required to include such Holder’s Registrable Securities in a Registration Statement,
notwithstanding any provision to the contrary contained
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
herein. Subject to the terms of this Agreement, the Company shall use its best efforts to
cause a Registration Statement filed under this Agreement (including, without limitation,
under Section 3(c)) to be declared effective under the Securities Act as promptly as possible
after the filing thereof, but in any event no later than the applicable Effectiveness Date, and
shall use its best efforts to keep such Registration Statement continuously effective under the
Securities Act until all Registrable Securities covered by such Registration Statement (i) have
been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-
of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be
in compliance with the current public information requirement under Rule 144, as determined
by the counsel to the Company pursuant to a written opinion letter to such effect, addressed
and acceptable to the Transfer Agent and the affected Holders (the “Effectiveness
Period”). The Company shall request effectiveness of a Registration Statement as of 5:00
p.m. Eastern Time on a Trading Day. The Company shall immediately notify the Holders via
facsimile or by e-mail of the effectiveness of a Registration Statement on the same Trading
Day that the Company telephonically confirms effectiveness with the Commission, which
shall be the date requested for effectiveness of such Registration Statement. The Company
shall, by 9:30 a.m. Eastern Time on the Trading Day after the effective date of such
Registration Statement, file a final Prospectus with the Commission as required by Rule
424. Failure to so notify the Holder within one (1) Trading Day of such notification of
effectiveness or failure to file a final Prospectus as foresaid shall be deemed an Event under
Section 2(d).
(b) Notwithstanding the registration obligations set forth in Section 2(a), if the
Commission informs the Company that all of the Registrable Securities cannot, as a result of
the application of Rule 415, be registered for resale as a secondary offering on a single
registration statement, the Company agrees to promptly inform each of the Holders thereof
and use its commercially reasonable efforts to file amendments to the Initial Registration
Statement as required by the Commission, covering the maximum number of Registrable
Securities permitted to be registered by the Commission, on Form S-1 , subject to the
provisions of Section 2(d) with respect to the payment of liquidated damages; provided,
however, that prior to filing such amendment, the Company shall be obligated to use diligent
efforts to advocate with the Commission for the registration of all of the Registrable Securities
in accordance with the SEC Guidance, including without limitation, Compliance and
Disclosure Interpretation 612.09.
(c) Notwithstanding any other provision of this Agreement and subject to the payment
of liquidated damages pursuant to Section 2(d), if the Commission or any SEC Guidance
sets forth a limitation on the number of Registrable Securities permitted to be registered on a
particular Registration Statement as a secondary offering (and notwithstanding that the
Company used diligent efforts to advocate with the Commission for the registration of all or a
greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as
to its Registrable
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Securities, the number of Registrable Securities to be registered on such Registration Statement
will be reduced as follows:
a. First, the Company shall reduce or eliminate any securities to be included by any
Person other than a Holder;
b. Second, the Company shall reduce Registrable Securities represented by Warrant
Shares (applied, in the case that some Warrant Shares may be registered, to the
Holders on a pro rata basis based on the total number of unregistered Warrant Shares
held by or issuable to such Holders, as determined in accordance with the definition of
Registrable Securities, and
c. Third, the Company shall reduce Registrable Securities represented by Shares
(applied, in the case that some Shares may be registered, to the Holders on a pro rata
basis based on the total number of unregistered Shares held by such Holders).
In the event of a cutback hereunder, the Company shall give the Holder at least five (5)
Trading Days prior written notice along with the calculations as to such Holder’s allotment. In
the event the Company amends the Initial Registration Statement in accordance with the
foregoing, the Company will use its best efforts to file with the Commission, as promptly as
allowed by Commission or SEC Guidance provided to the Company or to registrants of
securities in general, one or more registration statements on Form S-1 or such other form
available to register for resale those Registrable Securities that were not registered for resale
on the Initial Registration Statement, as amended.
(d) If: (i) the Initial Registration Statement is not filed on or prior to its Filing Date (if the
Company files the Initial Registration Statement without affording the Holders the opportunity
to review and comment on the same as required by Section 3(a) herein, the Company shall
be deemed to have not satisfied this clause (i)), or (ii) the Company fails to file with the
Commission a request for acceleration of a Registration Statement in accordance with Rule
461 promulgated by the Commission pursuant to the Securities Act, within five Trading Days
of the date that the Company is notified (orally or in writing, whichever is earlier) by the
Commission that such Registration Statement will not be “reviewed” or will not be subject to
further review, or (iii) prior to the effective date of a Registration Statement, the Company
fails to file a pre-effective amendment and otherwise respond in writing to comments made
by the Commission in respect of such Registration Statement within ten (10) calendar days
after the receipt of comments by or notice from the Commission that such amendment is
required in order for such Registration Statement to be declared effective, or (iv) a
Registration Statement registering for resale all of the Registrable Securities is not declared
effective by the Commission by the Effectiveness Date of the Initial Registration Statement,
or (v) after the effective date of a Registration Statement, such Registration Statement
ceases for any reason to remain continuously effective as to
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
all Registrable Securities included in such Registration Statement, or the Holders are otherwise not
permitted to utilize the Prospectus therein to resell such Registrable Securities, for more than ten
(10) consecutive calendar days or more than an aggregate of fifteen (15) calendar days (which
need not be consecutive calendar days) during any 12-month period, or (vi) any time during the
period commencing from the six (6) month anniversary of the date hereof and ending at such time
that all of the Registrable Securities may be sold without the requirement for the Company to be in
compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144,
if the Company shall fail for any reason to satisfy the current public information requirement under
Rule 144(c) (any such failure or breach being referred to as an “Event”, and for purposes of clauses
(i), (iv) and (vi), the date on which such Event occurs, and for purpose of clause (ii) the date on
which such five (5) Trading Day period is exceeded, and for purpose of clause (iii) the date which
such ten (10) calendar day period is exceeded, and for purpose of clause (v) the date on which
such ten (10) or fifteen (15) calendar day period, as applicable, is exceeded being referred to as
“Event Date”), then except during any period of time in which the Holders may sell the Registrable
Securities pursuant to Rule 144 without volume limitations, in addition to any other rights the
Holders may have hereunder or under applicable law, on each such Event Date and on each
monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by
such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in
cash, as liquidated damages and not as a penalty, equal to the product of 1.0% multiplied by the
aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement with
respect to the Registrable Securities affected by such Event and held by such Holder on such Event
Date and each monthly anniversary thereof, up to a maximum of 6.0% of the aggregate purchase
price paid by such Holder pursuant to the Purchase Agreement for such Registrable Securities. If
the Company fails to pay any liquidated damages pursuant to this Section in full within seven days
after the date payable, the Company will pay interest thereon at a rate of 12% per annum (or such
lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily
from the date such liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full. The liquidated damages pursuant to the terms hereof shall apply on a daily pro rata
basis for any portion of a month prior to the cure of an Event.
(e) If Form S-3 is not available for the registration of the resale of Registrable
Securities hereunder, the Company shall (i) register the resale of the Registrable Securities
on another appropriate form and (ii) undertake to register the Registrable Securities on Form
S-3 as soon as such form is available, provided that the Company shall maintain the
effectiveness of the Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared effective by
the Commission.
(f) Notwithstanding anything to the contrary contained herein, in no event shall the
Company be permitted to name any Holder or affiliate of a Holder
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
as any underwriter without the prior written consent of such Holder; provided, however, that in the
event the Commission requires that a Holder be named as an “underwriter” and such Holder does
not so consent, the Company shall not be required to include such Holder’s Registrable Securities
in a Registration Statement, notwithstanding any provision to the contrary contained herein.
3.
Registration Procedures.
In connection with the Company’s registration obligations hereunder, the Company shall:
(a) Not less than two (2) Trading Days prior to the filing of each Registration
Statement and not less than one (1) Trading Day prior to the filing of any related Prospectus
or any amendment or supplement thereto (including any document that would be
incorporated or deemed to be incorporated therein by reference), the Company shall (i)
furnish to each Holder copies of all such documents proposed to be filed, which documents
(other than those incorporated or deemed to be incorporated by reference) will be subject to
the review of such Holders, and (ii) cause its officers and directors, counsel and independent
registered public accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of respective counsel to each Holder, to conduct a reasonable
investigation within the meaning of the Securities Act. Notwithstanding the above, the
Company shall not be obligated to provide the Holders advance copies of any universal shelf
registration statement registering securities in addition to those required hereunder, or any
Prospectus prepared thereto. The Company shall not file a Registration Statement or any
such Prospectus or any amendments or supplements thereto to which the Holders of a
majority of the Registrable Securities shall reasonably object in good faith, provided that, the
Company is notified of such objection in writing no later than two (2) Trading Days after the
Holders have been so furnished copies of a Registration Statement or one (1) Trading Day
after the Holders have been so furnished copies of any related Prospectus or amendments
or supplements thereto. Each Holder agrees to furnish to the Company a completed
questionnaire in the form attached to this Agreement as Annex B (a “Selling Stockholder
Questionnaire”) on a date that is not less than two (2) Trading Days prior to the Filing Date or
by the end of the fourth (4th) Trading Day following the date on which such Holder receives
draft materials in accordance with this Section, whichever occurs first.
(b) (i) Prepare and file with the Commission such amendments, including post-
effective amendments, to a Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep a Registration Statement continuously effective as to
the applicable Registrable Securities for the Effectiveness Period and prepare and file with
the Commission such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement (subject to the terms of
this
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii)
respond as promptly as reasonably possible to any comments received from the Commission
with respect to a Registration Statement or any amendment thereto and provide as promptly
as reasonably possible to the Holders true and complete copies of all correspondence from
and to the Commission relating to a Registration Statement (provided that, the Company
shall excise any information contained therein which would constitute material non-public
information regarding the Company or any of its Subsidiaries), and (iv) comply in all material
respects with the applicable provisions of the Securities Act and the Exchange Act with
respect to the disposition of all Registrable Securities covered by a Registration Statement
during the applicable period in accordance (subject to the terms of this Agreement) with the
intended methods of disposition by the Holders thereof set forth in such Registration
Statement as so amended or in such Prospectus as so supplemented.
(c) If during the Effectiveness Period, the number of Registrable Securities at any time
exceeds 100% of the number of shares of Common Stock then registered in a Registration
Statement, then the Company shall file as soon as reasonably practicable, but in any case
prior to the applicable Filing Date, an additional Registration Statement covering the resale
by the Holders of not less than the number of such Registrable Securities.
(d) Notify the Holders of Registrable Securities to be sold (which notice shall, pursuant
to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend the use of
the Prospectus until the requisite changes have been made) as promptly as reasonably
possible (and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such
filing) and (if requested by any such Person) confirm such notice in writing no later than one
(1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed, (B) when the
Commission notifies the Company whether there will be a “review” of such Registration
Statement and whenever the Commission comments in writing on such Registration
Statement, and (C) with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the Commission or
any other federal or state governmental authority for amendments or supplements to a
Registration Statement or Prospectus or for additional information, (iii) of the issuance by the
Commission or any other federal or state governmental authority of any stop order
suspending the effectiveness of a Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that purpose, (iv) 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 Registrable Securities for sale in any jurisdiction, or
the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any
event or passage of time that makes the financial statements included in a Registration
Statement ineligible for inclusion therein or any statement made in a Registration Statement
or Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to a
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Registration Statement, Prospectus or other documents so that, in the case of a Registration
Statement or the Prospectus, as the case may be, it will not contain any untrue statement of
a material fact or omit to state any 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, and (vi) of the occurrence or existence of any pending corporate development
with respect to the Company that the Company believes may be material and that, in the
determination of the Company, makes it not in the best interest of the Company to allow
continued availability of a Registration Statement or Prospectus, provided, however, in no
event shall any such notice contain any information which would constitute material, non-
public information regarding the Company or any of its Subsidiaries.
(e) Use its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of
(i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any
suspension of the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.
(f) Furnish to each Holder, without charge, at least one conformed copy of each such
Registration Statement and each amendment thereto, including financial statements and
schedules, all documents incorporated or deemed to be incorporated therein by reference to
the extent requested by such Person, and all exhibits to the extent requested by such Person
(including those previously furnished or incorporated by reference) promptly after the filing of
such documents with the Commission; provided, that any such item which is available on the
EDGAR system (or successor thereto) need not be furnished in physical form.
(g) Subject to the terms of this Agreement, the Company hereby consents to the use
of such Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto, except after the giving of any
notice pursuant to Section 3(d).
(h) The Company shall cooperate with any broker-dealer through which a Holder
proposes to resell its Registrable Securities in effecting a filing with the FINRA Corporate
Financing Department pursuant to FINRA Rule 5110, as requested by any such Holder, and
the Company shall pay the filing fee required by such filing within two (2) Business Days of
request therefor.
(i) Prior to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders in connection
with the registration or qualification (or exemption from the Registration or qualification) of
such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws
of such jurisdictions within the United States as any Holder reasonably requests in writing, to
keep each registration or qualification (or exemption therefrom) effective during the
Effectiveness Period
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
and to do any and all other acts or things reasonably necessary to enable the disposition in
such jurisdictions of the Registrable Securities covered by each Registration Statement;
provided, that, the Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified, subject the Company to any material tax in any
such jurisdiction where it is not then so subject or file a general consent to service of process
in any such jurisdiction.
(j) If requested by a Holder, cooperate with such Holder to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to be delivered to
a transferee pursuant to a Registration Statement, which certificates shall be free, to the
extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and registered in such names as any
such Holder may request.
(k) Upon the occurrence of any event contemplated by Section 3(d), as promptly as
reasonably possible under the circumstances taking into account the Company’s good faith
assessment of any adverse consequences to the Company and its stockholders of the
premature disclosure of such event, prepare a supplement or amendment, including a post-
effective amendment, to a Registration Statement or a supplement to the related Prospectus
or any document incorporated or deemed to be incorporated therein by reference, and file
any other required document so that, as thereafter delivered, neither a Registration
Statement nor such Prospectus will 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. If the
Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(d)
above to suspend the use of any Prospectus until the requisite changes to such Prospectus
have been made, then the Holders shall suspend use of such Prospectus. The Company
will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly
as is practicable. The Company shall be entitled to exercise its right under this Section 3(k)
to suspend the availability of a Registration Statement and Prospectus, subject to the
payment of liquidated damages otherwise required pursuant to Section 2(d), for a period not
to exceed 60 calendar days (which need not be consecutive days) in any 12-month period.
(l) Comply with all applicable rules and regulations of the Commission.
(m) The Company shall use its best efforts to maintain eligibility for use of Form S-3
(or any successor form thereto) for the registration of the resale of Registrable Securities.
(n) The Company may require each selling Holder to furnish to the Company a
certified statement as to the number of shares of Common Stock beneficially owned by such
Holder and, if required by the Commission, the natural persons thereof that have voting and
dispositive control over the shares. During any periods that the Company is unable to meet
its obligations hereunder with respect
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
to the registration of the Registrable Securities solely because any Holder fails to furnish
such information within three Trading Days of the Company’s request, any liquidated
damages that are accruing at such time as to such Holder only shall be tolled and any Event
that may otherwise occur solely because of such delay shall be suspended as to such
Holder only, until such information is delivered to the Company.
Registration Expenses. All fees and expenses incident to the performance of or
4 .
compliance with, this Agreement by the Company shall be borne by the Company whether or not
any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses of the Company’s counsel and independent
registered public accountants) (A) with respect to filings made with the Commission, (B) with
respect to filings required to be made with any Trading Market on which the Common Stock is then
listed for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably
agreed to by the Company in writing (including, without limitation, fees and disbursements of
counsel for the Company in connection with Blue Sky qualifications or exemptions of the
Registrable Securities) and (D) if not previously paid by the Company in connection with an issuer
filing under FINRA Rule 5110, with respect to any filing that may be required to be made by any
broker through which a Holder intends to make sales of Registrable Securities with FINRA pursuant
to FINRA Rule 5110, so long as the broker is receiving no more than a customary brokerage
commission in connection with such sale, (ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal
expenses incurred in connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any securities exchange as
required hereunder. In no event shall the Company be responsible for any broker or similar
commissions of any Holder or, except to the extent provided for in the Transaction Documents, any
legal fees or other costs of the Holders.
5.
Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the officers,
directors, members, partners, agents, brokers (including brokers who offer and sell
Registrable Securities as principal as a result of a pledge or any failure to perform under a
margin call of Common Stock), investment advisors and employees (and any other Persons
with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of
such title or any other
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title) of each of them, each Person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members,
stockholders, partners, agents and employees (and any other Persons with a functionally equivalent
role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each
such controlling Person, to the fullest extent permitted by applicable law, from and against any and
all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’
fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or
alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or
any form of prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in the case of any
Prospectus or supplement thereto, in light of the circumstances under which they were made) not
misleading or (2) any violation or alleged violation by the Company of the Securities Act, the
Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with
the performance of its obligations under this Agreement, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use therein, or to the
extent that such information relates to such Holder or such Holder’s proposed method of distribution
of Registrable Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement
thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (ii) in
the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the use by such
Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for
use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section
6(d). The Company shall notify the Holders promptly of the institution, threat or assertion of any
Proceeding arising from or in connection with the transactions contemplated by this Agreement of
which the Company is aware. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such indemnified person and shall survive the transfer of any
Registrable Securities by any of the Holders in accordance with Section 6(h).
(b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify
and hold harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and against all
Losses, as incurred, only to the extent arising out of or based solely upon: (x) such Holder’s
failure to comply with any applicable prospectus delivery requirements of the Securities Act
through no fault of the Company or (y) any untrue or alleged untrue statement of a material
12
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under
which they were made) not misleading (i) to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing by such Holder to the
Company expressly for inclusion in such Registration Statement or such Prospectus or (ii) to the
extent, but only to the extent, that such information relates to such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved in writing by such
Holder expressly for use in a Registration Statement (it being understood that the Holder has
approved Annex A hereto for this purpose), such Prospectus or in any amendment or supplement
thereto or (iii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi),
to the extent, but only to the extent, related to the use by such Holder of an outdated, defective or
otherwise unavailable Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the
receipt by such Holder of the Advice contemplated in Section 6(d). In no event shall the liability of
any selling Holder under this Section 5(b) be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought (the
“Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the
defense thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, that, the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review) that such failure
shall have materially and adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the
Indemnifying Party has agreed in writing to pay such fees and expenses, (2) the
Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and
to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding,
or (3) the named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party
shall reasonably believe
13
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
that a material conflict of interest is likely to exist if the same counsel were to represent such
Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and the reasonable fees and expenses of no more than one separate
counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not
be liable for any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all liability on
claims that are the subject matter of such Proceeding.
Subject to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred in
connection with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten
Trading Days of written notice thereof to the Indemnifying Party; provided, that, the
Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such
fees and expenses applicable to such actions for which such Indemnified Party is finally
determined by a court of competent jurisdiction (which determination is not subject to appeal
or further review) not to be entitled to indemnification hereunder.
(d) Contribution. If the indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then
each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified
Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party
and Indemnified Party in connection with the actions, statements or omissions that resulted
in such Losses as well as any other relevant equitable considerations. The relative fault of
such Indemnifying Party and Indemnified Party shall be determined by reference to, among
other things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject to the
limitations set forth in this Agreement, any reasonable attorneys’ or other fees or expenses
incurred by such party in connection with any Proceeding to the extent such party would
have been indemnified for such fees or expenses if the indemnification provided for in this
Section was available to such party in accordance with its terms.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
The parties hereto agree that it would not be just and equitable if contribution pursuant
to this Section 5(d) were determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no
Holder shall be required to contribute pursuant to this Section 5(d), in the aggregate, any
amount in excess of the amount by which the net proceeds actually received by such Holder
from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of
any damages that such Holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission.
The indemnity and contribution agreements contained in this Section are in addition to
any liability that the Indemnifying Parties may have to the Indemnified Parties.
6.
Miscellaneous.
(a)
Remedies. In the event of a breach by the Company or by a Holder of any of their
respective obligations under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under this Agreement, including
recovery of damages, shall be entitled to specific performance of its rights under this
Agreement. Each of the Company and each Holder agrees that monetary damages would not
provide adequate compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any action for specific
performance in respect of such breach, it shall not assert or shall waive the defense that a remedy
at law would be adequate.
(b)
No Piggyback on Registrations; Prohibition on Filing Other Registration
Statements. Except as set forth on Schedule 6(b) attached hereto, neither the Company nor any of
its security holders (other than the Holders in such capacity pursuant hereto) may include securities
of the Company in any Registration Statements other than the Registrable Securities. The
Company shall not file any other registration statements until all Registrable Securities are
registered pursuant to a Registration Statement that is declared effective by the Commission,
provided that this Section 6(b) (i) shall not prohibit the Company from filing amendments to
registration statements filed prior to the date of this Agreement and (ii) shall not prohibit the
Company from filing a shelf registration statement on Form S-3 for a primary offering by the
Company, provided that the Company makes no offering of securities pursuant to such shelf
registration statement prior to the effective date of the Registration Statement required hereunder
that includes all of the Registrable Securities.
(c)
Compliance. Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it (unless an exemption
therefrom is available) in connection with sales of Registrable Securities pursuant to a Registration
Statement.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
(d)
Discontinued Disposition. By its acquisition of Registrable Securities, each Holder
agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind
described in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue disposition of such
Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”) by
the Company that the use of the applicable Prospectus (as it may have been supplemented or
amended) may be resumed. The Company will use its best efforts to ensure that the use of the
Prospectus may be resumed as promptly as is practicable. The Company agrees and
acknowledges that any periods during which the Holder is required to discontinue the disposition of
the Registrable Securities hereunder shall be subject to the provisions of Section 2(d).
(e)
Piggy-Back Registrations. If, at any time during the Effectiveness Period, there is
not an effective Registration Statement covering all of the Registrable Securities and the Company
shall determine to prepare and file with the Commission a registration statement relating to an
offering for its own account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or
their then equivalents relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in connection with the Company’s
stock option or other employee benefit plans, then the Company shall deliver to each Holder a
written notice of such determination and, if within fifteen days after the date of the delivery of such
notice, any such Holder shall so request in writing, the Company shall include in such registration
statement all or any part of such Registrable Securities such Holder requests to be registered;
provided, however, that the Company shall not be required to register any Registrable Securities
pursuant to this Section 6(e) that are eligible for resale pursuant to Rule 144 (without volume
restrictions or current public information requirements) promulgated by the Commission pursuant to
the Securities Act or that are the subject of a then effective Registration Statement.
(f)
Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the same shall be in
writing and signed by the Company and the Holders of a majority of the then outstanding
Registrable Securities. If a Registration Statement does not register all of the Registrable Securities
pursuant to a waiver or amendment done in compliance with the previous sentence, then the
number of Registrable Securities to be registered for each Holder shall be reduced pro rata among
all Holders and each Holder shall have the right to designate which of its Registrable Securities shall
be omitted from such Registration Statement. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates exclusively to the rights of a
Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may
be given only by such Holder or Holders of all of the Registrable Securities to which such waiver or
consent relates; provided, however, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the first sentence of this
Section 6(f). No consideration shall be offered or paid to any
16
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Person to amend or consent to a waiver or modification of any provision of this Agreement unless
the same consideration also is offered to all of the parties to this Agreement.
(g)
Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement.
(h)
Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and shall inure to the
benefit of each Holder. The Company may not assign (except by merger) its rights or obligations
hereunder without the prior written consent of all of the Holders of the then outstanding Registrable
Securities. Each Holder may assign their respective rights hereunder in the manner and to the
Persons as permitted under Section 5.7 of the Purchase Agreement.
(i)
No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has
entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date
of this Agreement, enter into any agreement with respect to its securities, that would have the effect
of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Except as set forth on Schedule 6(i), neither the Company nor any of its
Subsidiaries has previously entered into any agreement granting any registration rights with respect
to any of its securities to any Person that have not been satisfied in full.
(j)
Execution and Counterparts. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same counterpart. In the event
that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data
file, such signature shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.
(k)
Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be determined in accordance with the provisions of the
Purchase Agreement.
(l)
Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any other remedies provided by law.
(m)
Severability. If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties hereto shall use their
commercially reasonable efforts to find and employ an alternative means to achieve the same or
substantially the same result as
17
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(n)
Headings. The headings in this Agreement are for convenience only, do not
constitute a part of the Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
(o)
Independent Nature of Holders’ Obligations and Rights. The obligations of each
Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and
no Holder shall be responsible in any way for the performance of the obligations of any other
Holder hereunder. Nothing contained herein or in any other agreement or document delivered at
any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any other kind of group or
entity, or create a presumption that the Holders are in any way acting in concert or as a group or
entity with respect to such obligations or the transactions contemplated by this Agreement or any
other matters, and the Company acknowledges that the Holders are not acting in concert or as a
group, and the Company shall not assert any such claim, with respect to such obligations or
transactions. Each Holder shall be entitled to protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder
to be joined as an additional party in any proceeding for such purpose. The use of a single
agreement with respect to the obligations of the Company contained was solely in the control of the
Company, not the action or decision of any Holder, and was done solely for the convenience of the
Company and not because it was required or requested to do so by any Holder. It is expressly
understood and agreed that each provision contained in this Agreement is between the Company
and a Holder, solely, and not between the Company and the Holders collectively and not between
and among Holders.
********************
(Signature Pages Follow)
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first written above.
Exhibit 10.85
PARKERVISION, INC.
By:
Name: Cynthia (Poehlman) French
Title: Chief Financial Officer
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
[SIGNATURE PAGE OF HOLDERS TO PRKR RRA]
Exhibit 10.85
Name of Holder: __________________________
Signature of Authorized Signatory of Holder: __________________________
Name of Authorized Signatory: __________________________
Title of Authorized Signatory: __________________________
[SIGNATURE PAGES CONTINUE]
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Exhibit 10.85
Annex A
Plan of Distribution
Each Selling Stockholder (the “Selling Stockholders”) of the securities and any of their
pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their
securities covered hereby on the principal Trading Market or any other stock exchange, market or
trading facility on which the securities are traded or in private transactions. These sales may be at
fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods
when selling securities:
·
·
·
·
·
·
·
·
·
·
ordinary brokerage transactions and transactions in which the broker‑dealer solicits
purchasers;
block trades in which the broker‑dealer will attempt to sell the securities 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;
settlement of short sales;
in transactions through broker‑dealers that agree with the Selling Stockholders to sell a
specified number of such securities at a stipulated price per security;
through the writing or settlement of options or other hedging transactions, whether through
an options exchange or otherwise;
a combination of any such methods of sale; or
any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell securities under Rule 144 under the Securities Act of
1933, as amended (the “Securities Act”), if available, rather than under this prospectus.
Broker‑dealers engaged by the Selling Stockholders may arrange for other brokers‑dealers
to participate in sales. Broker‑dealers may receive commissions or discounts from the Selling
Stockholders (or, if any broker‑dealer acts as agent for the purchaser of securities, from the
purchaser) in amounts to be negotiated, but, except as set
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a
customary brokerage commission in compliance with FINRA Rule 2121; and in the case of a
principal transaction a markup or markdown in compliance with FINRA IM-2121.
In connection with the sale of the securities 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 securities in the course of hedging the positions they assume. The
Selling Stockholders may also sell securities short and deliver these securities to close out their
short positions, or loan or pledge the securities 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 create one or more derivative securities which require the
delivery to such broker-dealer or other financial institution of securities offered by this prospectus,
which securities such broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders and any broker-dealers or agents that are involved in selling the
securities may be deemed to be “underwriters” within the meaning of the Securities Act in
connection with such sales. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the securities purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has
informed the Company that it does not have any written or oral agreement or understanding, directly
or indirectly, with any person to distribute the securities.
The Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the securities. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including liabilities under the
Securities Act.
Because Selling Stockholders may be deemed to be “underwriters” within the meaning of the
Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act
including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify
for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than
under this prospectus. The Selling Stockholders have advised us that there is no underwriter or
coordinating broker acting in connection with the proposed sale of the resale securities by the
Selling Stockholders.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the
securities may be resold by the Selling Stockholders without registration and without regard to any
volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the
Company to be in compliance with the current public information under Rule 144 under the
Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to
this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale
securities will be sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition,
2
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
in certain states, the resale securities covered hereby may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the
distribution of the resale securities may not simultaneously engage in market making activities with
respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to
the commencement of the distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations thereunder, including
Regulation M, which may limit the timing of purchases and sales of securities of the common stock
by the Selling Stockholders or any other person. We will make copies of this prospectus available
to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus
to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under
the Securities Act).
3
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
PARKERVISION, INC.
Selling Stockholder Notice and Questionnaire
Annex B
The undersigned beneficial owner of common stock (the “Registrable Securities”) of
Parkervision, Inc., a Florida corporation (the “Company”), understands that the Company has filed or
intends to file with the Securities and Exchange Commission (the “Commission”) a registration
statement (the “Registration Statement”) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in
accordance with the terms of the Registration Rights Agreement (the “Registration Rights
Agreement”) to which this document is annexed. A copy of the Registration Rights Agreement is
available from the Company upon request at the address set forth below. All capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights
Agreement.
Certain legal consequences arise from being named as a selling stockholder in the
Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of
Registrable Securities are advised to consult their own securities law counsel regarding the
consequences of being named or not being named as a selling stockholder in the Registration
Statement and the related prospectus.
The undersigned beneficial owner (the “Selling Stockholder”) of Registrable Securities
hereby elects to include the Registrable Securities owned by it in the Registration Statement.
NOTICE
4
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
The undersigned hereby provides the following information to the Company and represents and
warrants that such information is accurate:
QUESTIONNAIRE
1.
Name.
(a)
Full Legal Name of Selling Stockholder
(b)
Full Legal Name of Registered Holder (if not the same as (a) above) through which
Registrable Securities are held:
(c)
Full Legal Name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose of the securities
covered by this Questionnaire):
2. Address for Notices to Selling Stockholder:
Telephone:
Fax:
Contact Person:
3. Broker-Dealer Status:
(a)
Are you a broker-dealer?
Yes ☐
No ☐
(b)
If “yes”
to Section 3(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company?
Yes ☐
No ☐
Note:
If “no” to Section 3(b), the Commission’s staff has indicated that you should be
identified as an underwriter in the Registration Statement.
5
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
(c)
Are you an affiliate of a broker-dealer?
Yes ☐
No ☐
(d)
If you are an affiliate of a broker-dealer, do you certify that you purchased the
Registrable Securities in the ordinary course of business, and at the time of the
purchase of the Registrable Securities to be resold, you had no agreements or
understandings, directly or indirectly, with any person to distribute the Registrable
Securities?
Yes ☐
No ☐
Note:
If “no” to Section 3(d), the Commission’s staff has indicated that you should be
identified as an underwriter in the Registration Statement.
4. Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder.
Except as set forth below in this Item 4, the undersigned is not the beneficial or registered
owner of any securities of the Company other than the securities issuable pursuant to the
Purchase Agreement.
(a)
Type and Amount of other securities beneficially owned by the Selling Stockholder:
6
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
5. Relationships with the Company:
Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors
or principal equity holders (owners of 5% of more of the equity securities of the undersigned)
has held any position or office or has had any other material relationship with the Company
(or its predecessors or affiliates) during the past three years.
State any exceptions here:
The undersigned agrees to promptly notify the Company of any inaccuracies or changes in
the information provided herein that may occur subsequent to the date hereof at any time while the
Registration Statement remains effective.
By signing below, the undersigned consents to the disclosure of the information contained
herein in its answers to Items 1 through 5 and the inclusion of such information in the Registration
Statement and the related prospectus and any amendments or supplements thereto. The
undersigned understands that such information will be relied upon by the Company in connection
with the preparation or amendment of the Registration Statement and the related prospectus and
any amendments or supplements thereto.
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
and Questionnaire to be executed and delivered either in person or by its duly authorized agent.
Date: __________________________ Beneficial Owner:
_______________________________
_______________________________
By:
Name:
Title:
PLEASE EMAIL A COPY OF THE COMPLETED AND EXECUTED DOCUMENT TO
cpoehlman@parkervision.com, ATTENTION: CINDY POEHLMAN
7
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Exhibit 10.86
THIS WARRANT HAS BEEN ACQUIRED AS AN INVESTMENT. NEITHER THIS SECURITY NOR THE
SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
ParkerVision, Inc.
WARRANT TO PURCHASE COMMON STOCK
Warrant No. 2021-00[ ]
Number of Shares: ______(subject to adjustment)
Issue Date: March 29, 2021
ParkerVision, Inc., a Florida corporation (the “Company”), hereby certifies that, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, [•], or its permitted registered
assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company up to
a total of [•] shares of common stock, $0.01 par value per share (the “Common Stock”), of the Company
(each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise price per
share equal to $1.75 per share (as adjusted from time to time as provided in Section 9 herein, the “Exercise
Price”), upon surrender of this warrant to purchase Common Stock (including any warrants to purchase
Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”) at any time and from
time to time on or after the date hereof (the “Original Issue Date”) and through and including 5:30 P.M., New
York City time, on the date that is five (5) years following the Original Issue Date (the “Expiration Date”), and
subject to the following terms and conditions:
1.
Definitions. For purposes of this Warrant, the following terms shall have the following meanings:
(a)
“Affiliate” of any Person means any other Person directly or indirectly controlling, controlled by
or under common control with such Person.
(b)
“Commission” means the United States Securities and Exchange Commission and any
successor entity thereto.
(c)
“Closing Sale Price” means, for any security as of any date, the last trade price for
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such security on the Principal Trading Market for such security, as reported by Bloomberg Financial
Markets, or, if such Principal Trading Market begins to operate on an extended hours basis and does not
designate the last trade price, then the last trade price of such security immediately prior to 4:00 P.M., New
York City time, as reported by Bloomberg Financial Markets, or if the foregoing do not apply, the last trade
price of such security in the over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg Financial Markets, or, if no last trade price is reported for such security by
Bloomberg Financial Markets, the average of the last bid and ask prices of any market makers for such
security as reported on OTC Pink (also known as the “pink sheets”) by the OTC Markets, Inc. If the Closing
Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the
Closing Sale Price of such security on such date shall be the fair market value as mutually determined by
the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market
value of such security, then the Board of Directors of the Company shall use its good faith judgment to
determine the fair market value of such security on such date. The Board of Directors’ determination shall
be binding upon all parties absent demonstrable error. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar transaction during the
applicable calculation period.
(d)
“Person” means any natural person, corporation, firm, joint venture, partnership, limited
liability company, association, enterprise, trust or other entity or organization, or any government or political
subdivision or any agency, department or instrumentality thereof.
(e)
“Principal Trading Market” means the trading market on which the Common Stock is primarily
listed on and quoted for trading, and which, as of the Original Issue Date shall be the OTCQB Venture
Market of the OTC Markets.
(f)
“Securities Act” means the Securities Act of 1933, as amended.
(g)
“Trading Day” means a day on which the Principal Trading Market is open for trading.
(h)
“Transfer Agent” means American Stock Transfer & Trust Company, the Company’s transfer
agent for the Common Stock (or any successor transfer agent the Company may engage), and the
Company or its designee, with respect to the Warrants.
2.
3.
Registration of Warrants. The Company shall, or shall cause its Transfer Agent to, register this
Warrant, upon records to be maintained by the Company or Transfer Agent for that purpose (the
“Warrant Register”), in the name of the record Holder (which shall include the initial Holder or, as the
case may be, any registered assignee to which this Warrant is permissibly assigned hereunder) from
time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.
Registration of Transfers. Subject to compliance with all applicable securities laws, the Company
shall, or shall cause its Transfer Agent to, register the transfer of all or any portion of this Warrant in
the Warrant Register, upon surrender of this Warrant, and payment of all applicable
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
transfer taxes. Upon any such registration of transfer, a new warrant to purchase Common Stock in
substantially the form of this Warrant (any such new warrant, a “New Warrant”) evidencing the portion of
this Warrant so transferred shall be issued to the transferee, and a New Warrant evidencing the remaining
portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance
of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of
the rights and obligations in respect of the New Warrant that the Holder had in respect of this Warrant. The
Company shall, or shall cause its Transfer Agent to, prepare, issue and deliver at the Company’s own
expense any New Warrant under this Section 3. Until due presentment for registration of transfer, the
Company may treat the registered Holder hereof as the owner and holder of this Warrant for all purposes,
and the Company shall not be affected by any notice to the contrary.
4.
Exercise and Duration of Warrants.
(a)
All or any part of this Warrant shall be exercisable by the registered Holder in any manner
permitted by this Warrant at any time and from time to time on or after the Original Issue Date and through
and including 5:30 P.M. New York City time, on the Expiration Date. At 5:30 P.M., New York City time, on
the Expiration Date, the portion of this Warrant not exercised prior thereto shall be void and of no value and
this Warrant shall terminate and no longer be outstanding.
(b)
The Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in
the form attached as Schedule 1 hereto (the “Exercise Notice”), completed and duly signed, and (ii) payment
of the Exercise Price for the number of Warrant Shares as to which this Warrant is being exercised (which
may take the form of a “net share exercise” if so indicated in the Exercise Notice pursuant to Section
10 below), and the date on which the last of such items is delivered to the Company (as determined in
accordance with the notice provisions hereof) is an “Exercise Date.” The Holder shall not be required to
deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise
Notice shall have the same effect as cancellation of the original Warrant and issuance of a New Warrant to
the Holder evidencing its right to purchase the remaining number of Warrant Shares. For the avoidance of
doubt, the Company may not substitute, and the Holder may not request, a cash payment in satisfaction of
the Company’s obligation to issue and deliver Warrant Shares pursuant to an Exercise Notice, other than as
specified in Sections 5(a), 9(c) or 12 of this Warrant.
5.
Delivery of Warrant Shares.
(a)
Upon exercise of this Warrant, the Company shall promptly (but in no event later than two (2)
Trading Days after the Exercise Date), upon the request of the Holder, credit such aggregate number of
shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its
designee’s balance account with The Depository Trust Company (“DTC”) through its Deposit Withdrawal
Agent Commission system, or if the Transfer Agent is not participating in the Fast Automated Securities
Transfer Program (the “FAST Program”) or if the certificates are required to bear a legend regarding
restriction on transferability, issue and dispatch by overnight courier to the address as specified in the
Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its
designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such
exercise. The Holder, or any Person permissibly so designated by the Holder to receive Warrant Shares,
shall be deemed to have become
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the holder of record of such Warrant Shares as of the Exercise Date, irrespective of the date such Warrant
Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such
Warrant Shares, as the case may be.
(b)
To the extent permitted by law, the Company’s obligations to issue and deliver Warrant
Shares in accordance with and subject to the terms hereof (including the limitations set forth in Section
11 below) are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the
same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination,
or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other Person, and irrespective of any other
circumstance that might otherwise limit such obligation of the Company to the Holder in connection with the
issuance of Warrant Shares. Nothing herein shall limit the Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
(c)
Except as set forth in Section 5(d) hereof, the Warrants Shares to be issued under this Warrant
shall be issued without any restrictive legend. The Company shall issue irrevocable instructions to its
Transfer Agent, to issue Common Stock in the name of the Holder for the Warrant Shares and the Company
warrants that the Warrant Shares shall be freely transferable on the books and records of the Company.
Notwithstanding anything herein to the contrary, the Warrant Shares shall not be required to contain any
legend if such shares are eligible for sale under Rule 144 of the Securities Act, or if such legend is not
required under other applicable requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the United Stated Securities & Exchange Commission). The Company shall
cause its counsel to issue a legal opinion to the Company’s transfer agent or the Holder if required by the
Company’s transfer agent to effect the removal of the legend hereunder, or if requested by the Purchaser,
respectively, provided that such legend is not required pursuant to the foregoing provisions of this
paragraph. The Company agrees that at such time as such legend is no longer required under this section
(including, without limitation, following the effective date of the Registration Statement), it will, no later than
the earlier of (i) two (2) Business Days and (ii) the number of Business Days comprising the Standard
Settlement Period (as defined below) following the delivery by the Purchaser to the Company or the
Company’s transfer agent of a certificate representing Warrant Shares issued with a restrictive legend (such
date, the “Legend Removal Date”), deliver or cause to be delivered to the Holder such shares that are free
from all restrictive and other legends in such manner as directed by the Holder. The Company may not
make any notation on its records or give instructions to the Company’s transfer agent that enlarge the
restrictions on transfer set forth in this section. The Company shall pay all reasonable fees and expenses
(including the reasonable fees and expenses of legal counsel) relating to the removal of the restrictive
legends. As used herein, “Standard Settlement Period” means the standard settlement period, expressed
in a number of Trading Days, on the Company’s Principal Trading Market with respect to the Common
Stock as in effect on the date of delivery of a certificate representing Warrant Shares, as the case may be,
issued with a restrictive legend.
(d)
If the Company files a registration statement to register any of its Common Stock or other
registerable securities, the Company shall also include the Securities in such new registration
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
statement in order to cover the resale of the Securities by the Buyer. If any Warrant Shares are issued and
are neither registered for sale nor eligible for sale pursuant to Rule 144 under the 1933 Act, they shall be
issued in certificated or restricted book-entry form and (subject to Section 5 (c) hereof) shall bear a
restrictive legend substantially similar to the following:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (2) AN OPINION OF HOLDER’S COUNSEL, IN A CUSTOMARY
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS.
6.
7.
8.
Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of Common Stock
upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer
tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that
the Company shall not be required to pay any tax that may be payable in respect of any transfer
involved in the registration of any certificates for Warrant Shares or the Warrants in a name other
than that of the Holder or an Affiliate thereof. The Holder shall be responsible for all other tax liability
that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon
exercise hereof.
Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu
of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction (in such case) and, in each case, a
customary and reasonable indemnity and surety bond, if requested by the Company. Applicants for a
New Warrant under such circumstances shall also comply with such other reasonable regulations
and procedures and pay such other reasonable third-party costs as the Company may prescribe. If a
New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver
such mutilated Warrant to the Company as a condition precedent to the Company’s obligation to
issue the New Warrant.
Reservation of Warrant Shares. The Company covenants that it will at all times while this Warrant is
outstanding reserve and keep available out of the aggregate of its authorized but unissued and
otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares
upon exercise of this Warrant as herein provided, the number of Warrant Shares that are initially
issuable and deliverable upon the exercise of this entire Warrant (less the number of Warrant Shares
so issued and delivered), free from preemptive rights or any other contingent purchase rights of
persons other than the Holder (taking into account the adjustments and restrictions of Section 9). The
Company covenants that all Warrant Shares so issuable and
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the
terms hereof, be duly and validly authorized and issued, and fully paid and nonassessable. The Company
will take all such action as may be reasonably necessary to assure that such shares of Common Stock may
be issued as provided herein without violation of any applicable law or regulation, or of any requirements of
any securities exchange or automated quotation system upon which the Common Stock may be listed.
9.
Certain Adjustments. The Exercise Price and number of Warrant Shares issuable upon exercise of
this Warrant are subject to adjustment from time to time as set forth in this Section 9.
(a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding, (i)
pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock
that is payable in shares of Common Stock, (ii) subdivides its outstanding shares of Common Stock into a
larger number of shares of Common Stock, (iii) combines its outstanding shares of Common Stock into a
smaller number of shares of Common Stock or (iv) issues by reclassification of shares of capital stock any
additional shares of Common Stock of the Company, then in each such case the Exercise Price shall be
multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding
immediately before such event and the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution; provided, however, that if such record date shall have been
fixed and such dividend is not fully paid on the date fixed therefor, the Exercise Price shall be recomputed
accordingly as of the close of business on such record date and thereafter the Exercise Price shall be
adjusted pursuant to this paragraph as of the time of actual payment of such dividends. Any adjustment
pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of
such subdivision or combination.
(b)
Fundamental Transactions. If, at any time while this Warrant is outstanding (i) the Company
effects any merger or consolidation of the Company with or into another Person, in which the Company is
not the surviving entity or the stockholders of the Company immediately prior to such merger or
consolidation do not own, directly or indirectly, at least 50% of the voting power of the surviving entity
immediately after such merger or consolidation, (ii) the Company effects any sale to another Person of all or
substantially all of its assets in one or a series of related transactions, (iii) pursuant to any tender offer or
exchange offer (whether by the Company or another Person), holders of capital stock who tender shares
representing more than 50% of the voting power of the capital stock of the Company and the Company or
such other Person, as applicable, accepts such tender for payment, (iv) the Company consummates a
stock purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than the 50% of the voting power of the capital stock of the Company or (v) the Company
effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the
Common Stock is effectively converted into or exchanged for other securities, cash or property (other than
as a result of a subdivision or combination of shares of Common Stock covered by Section 9(a) above) (in
any such case, a “Fundamental Transaction”), then following such Fundamental Transaction the Holder
shall have the right to receive, upon exercise of this Warrant, the same amount and kind of securities, cash
or property as it would have been entitled to receive upon the occurrence of such Fundamental
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of
Warrant Shares then issuable upon exercise in full of this Warrant without regard to any limitations on
exercise contained herein (the “Alternate Consideration”). The Company shall not effect any Fundamental
Transaction in which the Company is not the surviving entity or the Alternate Consideration includes
securities of another Person unless prior to or simultaneously with the consummation thereof, any
successor to the Company, surviving entity or other Person (including any purchaser of assets of the
Company) shall assume the obligation to deliver to the Holder, such Alternate Consideration as, in
accordance with the foregoing provisions, the Holder may be entitled to receive, and the other obligations
under this Warrant.
(c)
Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price
pursuant to paragraph (a) of this Section 9, the number of Warrant Shares that may be purchased upon
exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the
aggregate Exercise Price payable hereunder for the increased or decreased number of Warrant Shares
shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.
(d)
Calculations. All calculations under this Section 9 shall be made to the nearest cent or the
nearest share, as applicable.
(e)
Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 9,
the Company at its expense will, at the written request of the Holder, promptly compute such adjustment, in
good faith, in accordance with the terms of this Warrant and prepare a certificate setting forth such
adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant
Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the
transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is
based. Upon written request, the Company will promptly deliver a copy of each such certificate to the
Holder and to the Company’s transfer agent.
(f)
Notice of Corporate Events. If, while this Warrant is outstanding, the Company (i) declares a
dividend or any other distribution of cash, securities or other property in respect of its Common Stock,
including, without limitation, any granting of rights or warrants to subscribe for or purchase any capital stock
of the Company or any subsidiary, (ii) authorizes or approves, enters into any material definitive agreement
contemplating or solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the
voluntary dissolution, liquidation or winding up of the affairs of the Company, then, except if such notice and
the contents thereof shall be deemed to constitute material non-public information, the Company shall
deliver to the Holder a notice of such transaction at least ten (10) days prior to the applicable record or
effective date on which a Person would need to hold Common Stock in order to participate in or vote with
respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein
shall not affect the validity of the corporate action required to be described in such notice. In addition, if
while this Warrant is outstanding, if the Company enters into any material definitive agreement
contemplating or solicits stockholder approval for any Fundamental Transaction contemplated by Section
9(c), other than a Fundamental Transaction under clause (iii) of Section 9(c), the Company shall deliver to
the Holder a notice of such Fundamental Transaction at least fifteen (15) days prior to the date such
Fundamental Transaction is consummated. To the extent that any notice provided hereunder constitutes, or
contains, material, non-public information regarding the Company or any of its
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
subsidiaries, the Holder shall keep such information confidential until the Company shall file such notice
with the Commission pursuant to a Current Report on Form 8-K.
10.
Payment of Exercise Price. Notwithstanding anything contained herein to the contrary, if a
registration statement covering the Warrant Shares that are the subject of the Exercise Notice, or an
exemption from registration, is not available for the resale of the Warrant Shares to the public, the
Holder may, in its sole discretion, satisfy its obligation to pay the Exercise Price through a “net share
exercise”, in which event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:
X = Y [(A-B)/A]
where:
“X”
equals the number of Warrant Shares to be issued to the Holder;
“Y”
being exercised;
equals the total number of Warrant Shares with respect to which this Warrant is then
“A”
the Exercise Date; and
the Closing Sale Price of the shares of Common Stock on the date immediately preceding
B”
such exercise.
equals the Exercise Price then in effect for the applicable Warrant Shares at the time of
For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and
acknowledged that the Warrant Shares issued in a “cashless exercise” transaction shall be deemed to have
been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have
commenced, on the date this Warrant was originally issued (provided that the Commission continues to
take the position that such treatment is proper at the time of such exercise).
Notwithstanding anything herein to the contrary, on the Expiration Date, any remaining part of this Warrant
shall be automatically exercised via net share exercise pursuant to this Section 10 without any action being
required on the part of the Holder. The Company shall promptly deliver to the Holder the calculation made
pursuant to the preceding sentence, together with any Warrant Shares to which such Holder is entitled.
11.
Limitations on Exercise.
(a)
Notwithstanding anything to the contrary contained herein, the number of Warrant Shares that
may be acquired by the Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall be
limited to the extent necessary to ensure that, following such exercise (or other issuance), the total number
of shares of Common Stock then beneficially owned by the Holder and its Affiliates and any other Persons
whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), does not exceed
4.99% of the total number of then issued and outstanding shares of Common Stock (including for such
purpose the shares of Common Stock issuable upon such exercise), it being acknowledged by the Holder
that the Company is not
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
representing to such Holder that such calculation is in compliance with Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder and such Holder is solely responsible for any
schedules required to be filed in accordance therewith. To the extent that the limitation contained in this
Section 11(a) applies, the determination of whether this Warrant is exercisable (in relation to other securities
owned by such Holder and its Affiliates) and of which a portion of this Warrant is exercisable shall be in the
sole discretion of a Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s
determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder
and its Affiliates) and of which portion of this Warrant is exercisable, in each case subject to such aggregate
percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination under this Section 11(a) as to any group status shall be
determined by the Holder in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. For purposes of this Section 11(a), in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of
Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may
be, (y) a more recent public announcement by the Company that contains such number of shares or (z) any
other notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock
outstanding. Upon the written request of the Holder, the Company shall within one (1) Trading Day confirm
orally and in writing to such Holder the number of shares of Common Stock then outstanding. By written
notice to the Company, which will not be effective until the sixty-first (61st) day after such notice is delivered
to the Company, the Holder may waive the provisions of this Section 11(a) (but such waiver will not affect
any other holder) to change the beneficial ownership limitation to such percentage of the number of shares
of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common
Stock upon exercise of this Warrant as the Holder shall determine, in its sole discretion, and the provisions
of this Section 11(a) shall continue to apply. Upon such a change by a Holder of the beneficial ownership
limitation from such 4.99% limitation to such other percentage limitation, the beneficial ownership limitation
may not be further waived by such Holder without first providing the minimum notice required by this
Section 11(a). Notwithstanding the foregoing, at any time following notice of a Fundamental Transaction
under Section 9(g)(ii) with respect to a Section 9(c)(iii) Fundamental Transaction, the Holder may waive
and/or change the beneficial ownership limitation effective immediately upon written notice to the Company
and may reinstitute a beneficial ownership limitation at any time thereafter effective immediately upon
written notice to the Company.
(b)
Notwithstanding anything to the contrary contained herein, including Section 11(a), the
Company shall not effect any exercise of this Warrant, and the Holder shall not be entitled to exercise this
Warrant for a number of Warrant Shares in excess of that number of Warrant Shares which, upon giving
effect to such exercise, would cause (i) the aggregate number of shares of Common Stock beneficially
owned by the Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock
would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act, to exceed
14.99% of the total number of issued and outstanding shares of Common Stock of the Company following
such exercise, or (ii) the combined voting power of the securities of the Company beneficially owned by the
Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock would be
aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act to exceed 14.99% of the
combined voting power of all of the securities of the Company then outstanding following such exercise. For
purposes of
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
this Section 11(b), the aggregate number of shares of Common Stock or voting securities beneficially owned
by the Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock would
be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act shall include the shares
of Common Stock issuable upon the exercise of this Warrant with respect to which such determination is
being made, but shall exclude the number of shares of Common Stock which would be issuable upon (x)
exercise of the remaining unexercised and non-cancelled portion of this Warrant by the Holder and (y)
exercise or conversion of the unexercised, non-converted or non-cancelled portion of any other securities of
the Company that do not have voting power (including without limitation any securities of the Company
which would entitle the holder thereof to acquire at any time Common Stock, including without limitation any
debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock), are
subject to a limitation on conversion or exercise analogous to the limitation contained herein and are
beneficially owned by the Holder or any of its Affiliates and other Persons whose beneficial ownership of
Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act.
(c)
This Section 11 shall not restrict the number of shares of Common Stock which a Holder may
receive or beneficially own in order to determine the amount of securities or other consideration that such
Holder may receive in the event of a Fundamental Transaction as contemplated in Section 9 of this Warrant.
12.
13.
No Fractional Shares. No fractional Warrant Shares will be issued in connection with any exercise of
this Warrant. In lieu of any fractional shares that would otherwise be issuable, the number of Warrant
Shares to be issued shall be rounded down to the next whole number and the Company shall pay
the Holder in cash the fair market value (based on the Closing Sale Price) for any such fractional
shares.
Notices. Any and all notices or other communications or deliveries hereunder (including, without
limitation, any Exercise Notice) shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile or
confirmed e-mail at the facsimile number or e-mail address specified in the books and records of the
Transfer Agent prior to 5:30 P.M., New York City time, on a Trading Day, (ii) the next Trading Day
after the date of transmission, if such notice or communication is delivered via facsimile or confirmed
e-mail at the facsimile number or e-mail address specified in the books and records of the Transfer
Agent on a day that is not a Trading Day or later than 5:30 P.M., New York City time, on any Trading
Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight
courier service specifying next business day delivery, or (iv) upon actual receipt by the Person to
whom such notice is required to be given, if by hand delivery.
14. Warrant Agent. The Company shall initially serve as warrant agent under this Warrant. Upon thirty
(30) days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into
which the Company or any new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this Warrant without any
further act. Any such successor warrant agent shall promptly cause notice of
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the
Holder’s last address as shown on the Warrant Register.
15.
Miscellaneous.
(a)
No Rights as a Stockholder. The Holder, solely in such Person’s capacity as a holder of this
Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the
Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the
Holder, solely in such Person’s capacity as the Holder of this Warrant, any of the rights of a stockholder of
the Company or any right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation, merger, amalgamation, conveyance
or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due
exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any
liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a
stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the
Company.
(b)
Authorized Shares.
(i)
Except and to the extent as waived or consented to by the Holder, the Company shall
not by any action, including, without limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant
against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the
par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior
to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of
this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.
(ii)
Before taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
(c)
Successors and Assigns. Subject to the restrictions on transfer set forth in this Warrant and
compliance with applicable securities laws, this Warrant may be assigned by the Holder. This Warrant may
not be assigned by the Company without the written consent of the Holder except to a successor in the
event of a Fundamental Transaction. This Warrant shall be binding on and inure to the benefit of the
Company and the Holder and their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder
any legal or equitable right, remedy or cause of
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
action under this Warrant.
(d)
Amendment and Waiver. Except as otherwise provided herein, the provisions of the Warrants
may be amended and the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company has obtained the written consent of the Holders
of Warrants representing no less than a majority of the Warrant Shares obtainable upon exercise of the
Warrants then outstanding.
(e)
Acceptance. Receipt of this Warrant by the Holder shall constitute acceptance of and
agreement to all of the terms and conditions contained herein.
(f)
Governing Law; Jurisdiction. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH OF THE
COMPANY AND THE HOLDER HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF JACKSONVILLE,
FLORIDA, COUNTY OF DUVAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED
HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION
DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT,
ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT
IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. EACH OF
THE COMPANY AND THE HOLDER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.
(g)
Headings. The headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions hereof.
(h)
Severability. In case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this
Warrant shall not in any way be affected or impaired thereby, and the Company and the Holder will attempt
in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its
authorized officer as of the date first indicated above.
PARKERVISION, INC.
By:
Name: Cynthia (Poehlman) French
Title: Chief Financial Officer
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Schedule 1
FORM OF NOTICE OF EXERCISE
To:
ParkerVision, Inc.
Ladies and Gentlemen:
(1)
(2)
(3)
(4)
(5)
(6)
The undersigned is the Holder of Warrant No. _____ (the "Warrant") issued by ParkerVision, Inc., a Florida
corporation (the "Company"). Capitalized terms used herein and not otherwise defined herein have the
respective meanings set forth in the Warrant.
The undersigned hereby exercises its right to purchase _____Warrant Shares pursuant to the Warrant.
The Holder intends that payment of the Exercise Price shall be made as (check one or both):
□
a "cash exercise" with respect to Warrant Shares; and/or
□ a "net share exercise" pursuant to Section 10 of the Warrant with respect to
Warrant Shares.
In the event that the Holder has elected a "cash exercise" with respect to some or all of the Warrant
Shares, the Holder shall pay the Exercise Price in the sum of $_____ to the Company in accordance with
the terms of the Warrant.
Pursuant to this Exercise Notice, the Company shall deliver to the Holder Warrant Shares determined in
accordance with the terms of the Warrant. Please issue (check applicable box):
□
A certificate of certificates representing the Holder's Warrant Shares in the name of the
undersigned or in the following name: _____
□ The Holder's Warrant Shares in electronic form to the following account:
Name and Contact for Broker: _____
Broker no: _____
Account no: _____
Account holder: _____
By its delivery of this Exercise Notice, the undersigned represents and warrants to the Company that in
giving effect to the exercise evidenced hereby the Holder will not beneficially own in excess of the number
of shares of Common Stock (as determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended) permitted to be owned under Section 11(a) or Section 11(b), as applicable, of
the Warrant to which this notice relates.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Dated: _____
Name of Holder: _____
By: _____
Name: _____
Title: _____
(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Investor
Aspire Capital
Lewis Titterton
Jeffrey Titterton
Steven Lampe
Quetzel (Derrough)
John Levy
Harold Wrobel
William S. Lapp
Damvix Equities LLC
Aileen Gregoire
John Birdsall/Margaret Mintz
Atipax Bruder LLC
Juan Pablo Gomez
Joel Sutherland
David Heering
AskAlessandra, LLC
PRKR Society LLC
David S. Upson
Seth Gottlieb
Vincent Millacio
Peter M. Gillon
Josh Gillon (Gillon Consulting)
List of Accredited Investors
Subscription Amount
$1,000,000
$100,000
$100,000
$200,000
$150,000
$150,000
$300,000
$123,000
$100,500
$100,000
$30,000
$16,500
$35,000
$50,000
$20,000
$15,000
$1,160,005
$30,000
$200,000
$12,900
$75,000
$200,000
Exhibit 10.87
Warrant Shares
387,597
38,760
38,760
77,520
58,140
58,140
116,280
47,675
38,954
38,760
11,628
6,396
13,566
19,380
7,752
5,814
449,615
11,628
77,520
5,000
29,070
77,520
Shares
775,194
77,520
77,520
155,039
116,280
116,280
232,559
95,349
77,907
77,520
23,256
12,791
27,132
38,760
15,504
11,628
899,229
23,256
155,039
10,000
58,140
155,039
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
EXHIBIT 23.1
ParkerVision, Inc.
Jacksonville, Florida
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8
(Registration No. 333-157740, Registration No. 333-197741, Registration No. 333-178064,
Registration No. 333-214596, Registration No. 333-226784 and Registration No. 333-237761) of
ParkerVision, Inc. of our report dated March 31, 2021, relating to the consolidated financial
statements, which appears in this Form 10-K.
/s/ MSL P.A.
Fort Lauderdale, Florida
March 31, 2021
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
EXHIBIT 31.1
I, Jeffrey L. Parker, certify that:
SECTION 302 CERTIFICATION
1.
I have reviewed this Annual Report on Form 10-K of ParkerVision, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
(b) Designed such internal control over financial reporting or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons fulfilling the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
Ugust
Date: March 31, 2021
Name:/s/ Jeffrey L. Parker
Title: Chief Executive Officer (Principal Executive Officer)
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
I, Cynthia L. French certify that:
SECTION 302 CERTIFICATION
1. I have reviewed this Annual Report on Form 10-K of ParkerVision, Inc.;
EXHIBIT 31.2
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
fulfilling the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control over financial reporting.
Date: March 31, 2021
Name:/s/Cynthia L. French
Title: Chief Financial Officer (Principal Financial Officer and Principal
Accounting Officer)
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
SECTION 906 CERTIFICATION
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
In connection with the Annual Report of ParkerVision, Inc. (the “Company”) on Form 10-K, for the period ended
December 31, 2020 as filed with the Securities and Exchange Commission (the “Report”), each of the undersigned,
in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operation of the Company.
Dated: March 31, 2021
Dated: March 31, 2021
Name:
Title:
/s/ Jeffrey L. Parker
Chief Executive Officer
(Principal Executive Officer)
Name:
Title:
/s/ Cynthia L. French
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.