<PAGE>
As filed with the Securities and Exchange Commission on December 29, 2000
Registration No. 333-_________
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- - - - - - - - - - - - - - - - - - - - - - - - - -
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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MICROWARE SYSTEMS CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
IOWA 98-0169495
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1500 NORTHWEST 118TH STREET, DES MOINES, IOWA 50325
(515) 223-8000
--------------------------------------------------
(Address, including zip code, and telephone number,
including area code of registrant's principal executive offices)
KENNETH B. KAPLAN
MICROWARE SYSTEMS CORPORATION
1500 NORTHWEST 118TH STREET
DES MOINES, IOWA 50325
(515) 223-8000
-------------------------------------------------------
(Name, address and telephone number of agent for service)
Copies to:
Arthur Don, Esq.
D'Ancona & Pflaum
111 E. Wacker Drive, Ste. 2800
Chicago, Illinois 60601
(312) 602-2000
FAX (312) 602-3000
- - - - - - - - - - - - - - - - - - - - - - - - - -
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
================================================================================
<PAGE>
[Registration Cover Page Continued]
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of securities to Amount to be Proposed maximum Proposed maximum Amount of
be registered registered offering price per aggregate offering Registration fee
share price
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<S> <C> <C> <C> <C>
Common Stock 18,711,358 $ 0.50 (3) $ 9,355,679 (3) $ 2,338.92 (3)
See notes (1) (2)
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Total Securities to be
Registered and 18,711,358 $ 2,338.92 (3)
Registration Fee
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</TABLE>
(1) Pursuant to the terms of a securities purchase agreement and private
equity credit agreement, the number of shares to be registered represents two
hundred percent (200%) of the following: (a) 3,288,032 shares issuable upon
conversion of the convertible debenture, a portion of which is currently held
by one of the selling shareholders, calculated by dividing the aggregate
value of the convertible debenture which the Company will have the right to
draw down ($2,000,000) by the conversion price (estimated to be $0.608 for
purposes of this registration statement), (b) 3,529,412 shares issuable upon
the exercise of put rights, calculated by dividing the aggregate value the
Company has drawn down ($1,500,000) by the purchase price per share
(estimated to be $0.425 for purposes of this registration statement) and (c)
2,538,235 shares issuable upon the exercise of warrants (consisting of (i)
warrants issued to the selling shareholders at the closings of the
convertible debenture and private equity credit transactions for the purchase
of 2,150,000 shares and (ii) warrants issued to the selling shareholders upon
the $1,500,000 draw down of the private equity credit for the purchase of
388,235 shares, calculated by dividing the aggregate value that Company has
drawn down ($1,500,000) by the purchase price per share (estimated to be
$0.425 for purposes of this registration statement) and further dividing the
resulting number by 10,000 and then multiplying by 1,100; for a total of
9,355,679 shares.
(2) This Registration Statement also relates to such indeterminate number
of additional shares of common stock as may be issuable as a result of stock
dividends, stock splits, reclassifications and other changes affecting the
common stock of the registrant. Notwithstanding the foregoing, this Registration
<PAGE>
Statement shall not cover any additional shares issuable and related to the
securities purchase agreement and the private equity credit agreement, beyond
the shares covered by this Registration Statement, including conversion rate
adjustments resulting from decreases in the market price of the common stock.
(3) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457 (c) under the Securities Act of 1933, based on the average
of the high and low prices per share of the common stock as reported on NASDAQ
on December 27, 2000.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
<PAGE>
-------------------
PROSPECTUS
-------------------
18,711,358 SHARES OF
COMMON STOCK OF
MICROWARE SYSTEMS CORPORATION
The selling shareholders identified in this prospectus, and any of their
pledgees, donees, transferees or other successors in interest, may offer to sell
up to a maximum of 18,711,358 shares of common stock of Microware Systems
Corporation. These shares of common stock may be offered by the selling
shareholders:
- in transactions on the NASDAQ National Market or such other markets on
which we may from time to time list our shares of common stock
- in privately negotiated transactions
- through a combination of these methods
This prospectus is part of a registration statement that we are filing at
this time to fulfill our contractual obligations with the selling shareholders.
We will not receive any of the proceeds from the sale of the common stock by the
selling shareholders.
Our common stock is listed on the NASDAQ National Market under the symbol
"MWAR." On December 27, 2000, the closing price for our common stock on the
NASDAQ National Market was $0.50/share.
You should carefully read the section named "Risk Factors" beginning on
page four of this prospectus before investing in our common stock.
NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. IT IS ILLEGAL FOR ANY
PERSON TO TELL YOU OTHERWISE.
The date of this prospectus is January __, 2001.
<PAGE>
TABLE OF CONTENTS
Page
----
Incorporation by Reference........................................ 2
Prospectus Summary................................................ 3
Risk Factors...................................................... 5
Use of Proceeds .................................................. 9
Selling Shareholders.............................................. 9
Plan of Distribution.............................................. 11
Legal Matters..................................................... 13
Experts .......................................................... 13
Forward-Looking Statements ....................................... 14
Where You Can Find More Information About Us...................... 14
------------------
INCORPORATION BY REFERENCE
The United States Securities and Exchange Commission (the "Commission")
allows us to incorporate by reference information filed with it, which means
that we can disclose important information to you by referring you directly to
those documents. The information incorporated by reference is considered to be
part of this prospectus. In addition, information that we file with the
Commission in the future will automatically update and supersede information
contained in this prospectus and any accompanying prospectus supplement. We are
incorporating by reference into this prospectus:
- our Annual Report on Form 10-K for the fiscal year ended March 31, 2000, as
amended under Form 10-K/A filed on July 19, 2000
- our Quarterly Report on Form 10-Q for the quarter ended June 30, 2000
- our Quarterly Report on Form 10-Q for the quarter ended September 30, 2000
- the description of our common stock on Form 8-A filed March 14, 1996,
including any amendment or report filed for the purpose of updating such
description
- any future filings made with the Commission under Sections 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934 until all of the shares
are sold.
Upon your request, we will furnish to you at no charge a copy of any
documents incorporated by reference. Requests should be addressed to 1500
Northwest 118th Street, Des Moines, Iowa 50325, or by telephoning us at (515)
223-8000, Attn: Beth E. Law.
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone to provide you with
any different information. You should not assume that the information in this
prospectus or the documents incorporated by
2
<PAGE>
reference is accurate as of any date other than the date on the front of the
prospectus or those documents.
PROSPECTUS SUMMARY
MICROWARE SYSTEMS CORPORATION
We develop, market and support sophisticated real-time operating system
software and development tools for the traditional embedded systems,
communications, and consumer products markets. Our product line is built around
the OS-9 real-time operating system, which was first introduced in 1980 and has
been continually refined to incorporate advances in technology. OS-9 is a
real-time operating system targeted at "embedded systems" - computers dedicated
to specialized tasks embedded within application-specific industrial or computer
products. We market our products through our sales forces in North America,
Europe and Japan.
Our business is focused on developing and marketing OS-9 for use in
traditional embedded systems, including industrial automation, transportation,
medical, and government/military systems; communications infrastructure
products, including networking equipment, ATM, ISDN, digital subscriber loop,
Ethernet and fast Ethernet, and custom connectivity applications; and higher
volume embedded systems for consumer and business uses, such as digital
television decoders, advanced wireless telephones and pagers, point-of-sale
equipment, workforce automation devices, in-car navigation systems and Internet
appliances.
Our principal executive office is 1500 Northwest 118th Street, Des Moines,
Iowa 50325, and our telephone number is (515) 223-8000.
Additional information regarding us, including our audited financial
statements and a more detailed description of our business, is contained in
the documents incorporated by reference in this prospectus. See
"Incorporation by reference" and "Where you can find more information about
us" on pages two and fourteen, respectively.
THE OFFERING
In November 2000, we entered into a securities purchase agreement with
Elder Court, LLC ("Elder Court"). Under the terms of the agreement, we issued to
Elder Court an 8% convertible debenture in the principal amount of $2 million.
The debenture is convertible into the number of shares of our common stock equal
to the lower of $0.69 or 80% of the average market price of the common stock of
any three trading days during the 20 trading days prior to conversion. The
purchase price for the debenture is payable in two tranches, the first $1
million of which was payable at the closing in November, 2000. We may draw down
the remainder three business days after the effective date of a subsequently
filed registration statement pertaining to the remainder of the debenture. In
addition, we issued to Elder Court a warrant to purchase 500,000 shares of
common stock. In connection with the issuance of the debenture, we also issued
to Roth Capital Partners, Inc. a warrant to purchase 45,000 shares of common
stock, and to Carbon Mesa Partners, LLC a warrant to purchase 5,000 shares of
common stock. The shares of common stock issuable upon conversion of the
debenture and exercise of these warrants may be sold under this prospectus.
3
<PAGE>
In December 2000, we entered into a private equity credit agreement with
Elder Court. Under the terms of the agreement, we have the right to issue and
sell to Elder Court up to 23,529,412 shares of our common stock, representing
$10 million aggregate principal amount of our common stock. We have an
obligation to issue and sell to Elder Court 3,529,412 shares of our common stock
representing a minimum $1.5 million draw down of the equity credit agreement. We
are registering the shares representing the minimum $1.5 million draw down and
we will register future issuances and sales to Elder Court upon future exercises
of the private equity credit agreement. The number of shares of our common stock
to be issued under the private equity credit agreement, each time we exercise
our right to sell such shares, is based on the average of the three lowest bid
prices for our common stock during the ten trading days prior to the day we give
notice that we are exercising our right, less a 15% discount. Each share
issuance will be subsequently registered. Elder Court may resell these shares
pertaining to the $ 1.5 million draw down of common stock under this prospectus.
The resale of shares related to future issuances and sales will be registered.
In addition, for each 10,000 shares of common stock that we issue and sell to
Elder Court, we will issue a warrant to Elder Court and to a placement agent to
purchase 1100 shares of our common stock. We also issued to the following
parties warrants to purchase shares of our common stock: (1) Elder Court - a
warrant to purchase 1,400,000 shares; (2) Roth Capital Partners, Inc. - a
warrant to purchase 126,000 shares; (3) Anthony Soich - a warrant to purchase
54,000 shares; and (iv) Carbon Mesa Partners, LLC - a warrant to purchase 20,000
shares. The shares issuable upon exercise of these warrants may also be sold
under this prospectus.
We are registering a maximum of 18,711,358 shares of our common stock to be
offered for sale by the selling shareholders described in this prospectus. We
are required under the terms of the agreements with Elder Court to register 200%
of the aggregate number of shares into which each of the securities would be
convertible. The shares are issuable upon conversion of the debenture, under the
terms of the private equity credit agreement, and upon the exercise of the
warrants described above and consist of the following:
- 3,288,032 shares of common stock issuable upon the conversion of the
$2 million convertible debenture at $0.608 per share, which per share
price is based on the average closing bid price of the common stock on
December 1, 4 and 5, 2000 (the "Convertible Debenture Shares")
- 3,529,412 shares of common stock, representing $1.5 million aggregate
principal amount of our common stock at $0.425 per share, which per
share price is based on the average closing bid price of our common
stock on December 20, 21 and 22, 2000, less a 15% discount (the "Put
Shares"); and 388,235 shares of common stock issuable upon exercise of
warrants which could be issued pursuant to a draw down of the private
equity credit, consisting of warrants to purchase 1,100 shares of
common stock for every 10,000 Put Shares issued (the "Put Warrants")
- 1,600,000 shares of common stock issuable upon exercise of warrants at
an exercise price of $0.66 per share and 550,000 shares of common
stock issuable upon exercise of warrants at an exercise price of $0.50
per share (the "Warrants")
4
<PAGE>
Although we are registering 18,711,358 shares of the common stock which are
covered by this prospectus, registration of the common stock does not
necessarily mean that the selling shareholders will sell all or any portion of
the common stock. Furthermore, although we have the right to issue and sell
shares of our common stock representing $10 million under the private equity
credit agreement, we have an obligation to issue and sell 3,529,412 shares
related to the $1.5 million draw down. The exercise of additional draw-downs
under the private equity credit agreement may require shareholder approval.
Similarly, we may draw down an additional $1 million of the convertible
debenture after the effective date of the registration statement of which this
prospectus is a part.
We will not receive any proceeds if the selling shareholders decide to sell
any of the common stock offered under this prospectus.
RISK FACTORS
BEFORE YOU PURCHASE SHARES OF OUR COMMON STOCK FROM THE SELLING
SHAREHOLDERS, YOU SHOULD BE AWARE THAT THERE ARE VARIOUS RISKS IN MAKING SUCH AN
INVESTMENT, INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CAREFULLY CONSIDER THESE
RISK FACTORS TOGETHER WITH ALL OF THE INFORMATION INCLUDED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS BEFORE YOU DECIDE TO PURCHASE SHARES OF OUR COMMON
STOCK. THIS SECTION INCLUDES OR REFERS TO CERTAIN FORWARD-LOOKING STATEMENTS.
YOU SHOULD REFER TO THE EXPLANATION OF THE QUALIFICATIONS AND LIMITATIONS ON
SUCH FORWARD-LOOKING STATEMENTS DISCUSSED ON PAGE 13.
WE HAVE EXPERIENCED OPERATING LOSSES WHICH MAY CONTINUE IN THE FUTURE AND OUR
OPERATING RESULTS HAVE VARIED SUBSTANTIALLY FROM QUARTER TO QUARTER.
We have experienced significant operating losses for the past four fiscal
years. While we have taken a number of measures to increase our revenues,
decrease our operating expenses, and attain profitability, it is uncertain that
these measures will be successful or that we will become profitable. In
addition, our revenues and operating results have varied substantially from
quarter to quarter, remain difficult to foresee due to the nature of the
embedded systems market and our business, and should not be relied upon as an
indication of future performance.
WE HAVE INVESTED IN EMERGING MARKETS WHICH MAY NOT RESULT IN REVENUES OR
EARNINGS.
We have invested substantial resources in the development of emerging
markets, in particular the digital television and wireless and Internet
communications devices markets. While we have achieved a substantial number of
licenses from Original Equipment Manufacturers (OEMs) in these markets and a
number of the devices are currently in commercial deployment, these markets
remain at an early stage and are increasingly competitive, and it is therefore
uncertain that we will receive substantial revenues or earnings from products or
services in these markets.
We have continued our focus on the traditional embedded systems business in
an effort to decrease the variability of our quarterly operating results and
attain profitability. The traditional
5
<PAGE>
embedded systems business is diverse and increasingly competitive, and it is
uncertain that we will be able to substantially increase our revenues from that
particular market.
The communications infrastructure device market is highly fragmented, very
competitive, and technically demanding. While we believe the technological
sophistication and openness of our product architecture for the market will
allow us to establish a substantial revenue base in the communications
infrastructure market, it is uncertain that we will be able to do so.
WE MAY BE UNABLE TO KEEP PACE WITH OUR COMPETITORS AND THE RAPID CHANGES IN
TECHNOLOGY.
The embedded systems markets are highly diverse and do not have established
technology standards. A majority of embedded operating systems and applications
are developed in-house by Original Equipment Manufacturers (OEMs), and no single
processor platform accounts for a majority or even a substantial minority of the
embedded systems under development. Moreover, the market is increasingly
competitive, with a number of industry-leading companies with substantially
greater financial and technical resources than us devoting substantial resources
to the development of a significant market share in the embedded systems
business. While we try to support the industry-leading 32-bit microprocessors
which we believe represent the best market opportunities, and to offer the best
possible array of incremental software functionalities, it is uncertain that our
current products will meet the demands of the market in an environment of
increasing competition and rapid technological changes.
WE MAY EXPERIENCE DELAYS IN PRODUCT DEVELOPMENT AND TRANSITIONS.
We have experienced delays in software development in the past and we may
experience similar delays in the future. Such delays, which can occur because of
resource constraints, unforeseen technological obstacles within or outside our
control, and changes in market requirements, can have a material adverse effect
on our business.
THERE IS SUBSTANTIAL COMPETITION IN ALL OF OUR TARGETED MARKETS.
There is substantial competition in all of our targeted markets. Many of
our traditional competitors have grown substantially as a result of successful
exploitation of growth in the embedded systems market, and in some cases have
expanded their businesses in a manner which competes more directly with us. Wind
River Systems Incorporated is a strong competitor in all of the embedded
operating system markets. Microsoft Corporation has devoted substantial
resources to the development of the embedded operating system business with its
Windows CE product, which is attempting to capture a significant market share in
the handheld computer market. Sun Microsystems, Inc. has developed an embedded
operating system product called JavaOS which it markets together with its Java
technology, and has made a number of business and technology acquisitions in the
past fiscal years related to the development of its embedded systems business.
As a result, we may be unable to successfully attain new market share or even
maintain our existing market share in this increasingly competitive market.
OUR COMPETITIVE POSITION DEPENDS ON OUR ABILITY TO ATTRACT AND RETAIN QUALIFIED
PERSONNEL.
6
<PAGE>
Our future performance depends to a significant degree upon the continued
contributions of our key management, product development, marketing and sales
personnel, many of whom have joined us recently. We have experienced significant
turnover in personnel during the past few fiscal years. Our ability to execute
our market strategy will depend to a large degree upon our ability to integrate
new personnel into the Company. Competition for qualified personnel throughout
the software industry is intense and it is uncertain that we will be successful
in attracting and retaining such personnel.
WE DEPEND ON OUR INTERNATIONAL OPERATIONS WHICH INVOLVE CERTAIN RISKS.
In recent years, we received at least 50% of our total revenue from sales
outside North America, and this trend is anticipated to continue in the future.
This dependence on international operations subjects us to certain risks,
including tariffs and other barriers, difficulty in staffing and managing
foreign subsidiary operations, difficulty in managing distributors and
resellers, difficulty in accounts receivable collection, foreign currency
exposure and adverse tax consequences. We are also subject to the risks
associated with the imposition of protective import or export legislation and
regulations by the United States or other countries. We cannot predict whether
quotas, duties, taxes or other charges or restrictions will be implemented on
our products in the future. These factors and/or the adoption of restrictive
policies may have a material adverse effect on our business, financial condition
and results of operations.
WE DEPEND ON OUR PROPRIETARY TECHNOLOGY.
Because substantially all of our revenues are derived from OS-9, a
real-time operating system targeted at embedded systems, and related products,
any impairment of OS-9 could have a material adverse impact on our business. Our
business is therefore dependent on the adequacy of our intellectual property
protection through patents, copyrights, trade secrets, and license agreements;
the adequacy and continued availability of our licenses of integrated technology
from third parties; and the absence of any material technology litigation
related to our products.
OUR BOARD OF DIRECTORS HAS THE AUTHORITY TO ISSUE SHARES OF PREFERRED STOCK.
Our Board of Directors has the authority to issue, without vote or action
of stockholders, shares of preferred stock, including fixing the rights,
preferences, privileges and restrictions of any such series. Such preferred
stock could contain dividend rights, conversion rights, voting rights, terms of
redemption, redemption prices, liquidation preferences or other rights superior
to the rights of holders of common stock. Additionally, the selling shareholders
have certain rights to participate in future issuances of preferred stock, if
any.
WE HAVE ISSUED CERTAIN CONVERTIBLE DEBT, WARRANTS, PREFERRED STOCK AND OPTIONS.
We have issued or have an obligation to issue:
TO THE SELLING SHAREHOLDERS:
7
<PAGE>
- 1,644,016 shares of common stock issuable upon the conversion of the
$1 million convertible debenture at $.608 per share, which per share
price is based on the average closing bid price of the common stock on
December 1, 4 and 5, 2000
- 3,529,412 shares of common stock, representing the $ 1.5 million draw
down and exercise of the right to put shares under the terms of the
private equity credit agreement at $ 0.425 per share, which per share
price is based on the average closing bid price of our common stock on
December 20, 21 and 22, 2000 less a 15% discount; and 388,235 shares
of common stock issuable upon exercise of warrants which could be
issued pursuant to a draw down of the private equity credit agreement,
consisting of warrants to purchase 1,100 shares of common stock for
every 10,000 Put Shares issued
- 1,600,000 shares of common stock issuable upon exercise of warrants at
an exercise price of $0.66 per share and 550,000 shares of common
stock issuable upon exercise of warrants at an exercise price of $0.50
per share
TO ELLIOTT ASSOCIATES, L.P. AND WESTGATE INTERNATIONAL, L.P.:
- 3,500 shares of Series I Preferred Stock, of which 214 shares remain
outstanding, convertible into shares of common stock at a conversion
price of the lower of (a) $4.8497 or (b) the average of the two lowest
closing bid prices of the common stock, as recorded on NASDAQ, during
the fifteen trading days prior to the conversion date (there is no
minimum average closing price that fixes the maximum number of shares
issuable upon conversion of the Series I Preferred Stock)
- stock options to purchase 618,595 shares of common stock at an
exercise price of $4.8497 per share
- warrants to purchase 87,500 shares of common stock at an exercise
price of $5.3116 per share
TO MOTOROLA:
- warrants to acquire 1,803,728 shares of common stock for $10.81 per
share as may be adjusted, of which warrants to purchase 554,992 shares
have terminated and warrants to purchase 1,248,736 shares are
currently exercisable
The selling stockholders, through their ownership of the convertible debenture
and warrants, and through their rights to the additional Convertible Debenture
Shares, Put Shares, Put Warrants and Warrants, have the opportunity to profit
from a rise in the market price of our common stock, thus resulting in a
possible dilution in the interest of other security holders. Similarly, Elliott
Associates, L.P., Westgate International, L.P. and Motorola also have the
opportunity to profit from a rise in the market price of our common stock, thus
resulting in further dilution of the interest of other security holders. In
addition, we have issued and will continue to issue substantial stock options to
employees and directors.
8
<PAGE>
Our ability to obtain additional capital might be adversely affected as
long as these convertible securities remain unexercised. Moreover, the holders
of such convertible securities may exercise such securities at a time when we
may be able to obtain capital by a new offering of our securities on terms more
favorable than those under which the existing warrants or options are
exercisable.
THE PUT SHARES, CONVERTIBLE DEBENTURE SHARES AND THE REMAINING PREFERRED STOCK
COULD LEAD TO SIGNIFICANT DILUTION OF THE PER SHARE VALUE OF THE COMMON STOCK
AND DEPRESS MARKET PRICES.
The total number of shares of common stock which may be issued to Elder
Court, Elliott Associates, L.P. and Westgate International, L.P. upon the
exercise of a put right, the conversion of the convertible debenture or the
conversion of the preferred stock are based on formulas which are tied to the
market price of the common stock just prior to the time of exercise or
conversion. Thus, the exercise of a put right, the conversion of the convertible
debt or the conversion of the remaining shares of preferred stock could
significantly dilute the per share value of the common stock held by the current
investors. More specifically, the lower the average of the lowest closing bid
prices of the common stock as recorded on NASDAQ and reported by the Bloomberg
financial network or an alternative source for a certain number of days during a
defined period of time prior to the exercise or conversion date, the greater the
number of shares of common stock that can be issued to Elder Court, Elliott
Associates, L.P. and Westgate International, L.P., and the greater the risk of
dilution to other investors. There is no minimum average closing price that
fixes the maximum number of shares issuable upon exercise of a put or conversion
of the convertible debenture or preferred stock. Additionally, a low exercise or
conversion price may cause Elder Court, Elliott Associates, L.P. and Westgate
International, L.P. to exercise a put or convert the convertible debenture or
the shares of preferred stock and immediately sell their common shares, thereby
contributing to a downward movement in the stock price of the common stock.
Similarly, the downward pressure on the trading price of the common stock could
encourage the selling shareholders and other shareholders to engage in short
sales of the common stock, which would further contribute to the downward
movement of the stock price of the common stock.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of common
stock sold by the selling shareholders.
SELLING SHAREHOLDERS
The following selling shareholders own or beneficially own as of December
27, 2000 and may offer hereby the number of shares of common stock set forth
opposite their respective names in the table below (assuming the exercise or
conversion of all of the Convertible Debenture Shares, Put Shares, Put Warrants
and Warrants held by or to be issued to such holders into shares of common stock
as of the date of this prospectus, without regard to restrictions on ownership
percentage applicable to said securities, and based on the assumptions and
estimates described
9
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herein, including those set forth in footnote (1) to this table). The shares may
be offered from time to time by the selling shareholders named below or their
nominees. The selling shareholders are under no obligation to sell all or any
portion of the shares pursuant to this prospectus. This prospectus relates to a
maximum of 18,711,358 shares of common stock which represents 200% of the shares
of common stock issuable to the selling shareholders upon exercise or conversion
of the Convertible Debenture Shares, Put Shares, Put Warrants and Warrants
(without regard to restrictions on ownership percentage applicable to said
securities).
To the knowledge of the Company, all persons listed below have sole voting
and investment power with respect to their securities. The information in the
table concerning the selling shareholders is based on information provided to,
or known by, the Company, except for the assumed conversion ratio and purchase
price of shares of common stock issuable under the terms of the convertible
debenture and private equity credit agreement, which is based solely on the
assumptions discussed or referenced in footnote (1) to the table. Information
concerning the selling shareholders may change from time to time after the date
of this prospectus.
<TABLE>
<CAPTION>
Name of Shares Held Shares Offered Beneficial
Selling Prior to Pursuant to Ownership
Shareholder Offering (1)(2) Offering (1)(2) After Offering (3)
-------------- --------------- --------------- ------------------
<S> <C> <C> <C>
[A] Elder Court, LLC 8,982,150 8,982,150 0
[B] Roth Capital Partners, Inc. 294,529 294,529 0
[C] Carbon Mesa Partners, LLC 25,000 25,000 0
[D] Anthony Soich 54,000 54,000 0
---------------------
</TABLE>
[A] Elder Court, LLC, a Cayman Islands limited liability company, is a private
investment company whose manager is Navigator Management.
[B] Roth Capital Partners, Inc., a California corporation, is a private
investment corporation whose president is Byron Roth.
[C] Carbon Mesa Partners, LLC, a Nevada limited liability company, is a private
investment company whose manager is Thomson Kernaghan & Co.
[D] Anthony Soich is a managing director of Roth Capital Partners, Inc.
(1) Other than with respect to the shares offered upon the exercise of
outstanding Warrants as described in footnote (2) below, the beneficial
ownership and shares offered data represent (a) 3,529,412 shares of common
stock related to the $ 1.5 million draw down and exercise of the right to put
shares under the terms of the private equity credit agreement, using a price
of $0.425 (the average of the three lowest closing bid prices of the common
stock during the ten trading days immediately prior to the filing date of
this registration statement less a 15% discount); and (b) 3,288,032 shares of
common stock estimated to be issuable upon the conversion of the convertible
debt, a portion of which is currently owned by Elder Court, using a price of
$0.608 (the average of any
10
<PAGE>
three closing bid prices of the common stock during the twenty trading days
immediately prior to the filing date of this registration statement less a
20% discount) in determining the number of shares of common stock issuable,
and without regard to restrictions on ownership percentage applicable to said
securities. The actual number of shares of common stock offered hereby is
subject to adjustment and could be materially less or more than the estimated
amount indicated depending upon factors which cannot be predicted by the
Company at this time, including, among others, application of the exercise
and conversion provisions based on market prices prevailing at the actual
date of exercise or conversion. This presentation is not intended to
constitute a prediction as to the future market price of the common stock.
(2) This table assumes that an aggregate of 1,600,000 shares of common stock
(subject to adjustments) are issuable upon the exercise of Warrants to purchase
shares of common stock at an exercise price of $0.66 per share (subject to
adjustments) and 550,000 shares of common stock (subject to adjustments) are
issuable upon the exercise of Warrants to purchase shares of common stock at an
exercise price of $0.50 per share (subject to adjustments).
(3) This table assumes that all of the shares of common stock will be sold by
the selling shareholders.
The selling shareholders will receive all of the proceeds from the sale of
the shares offered hereby. The Company will not receive any proceeds from the
sale of such shares. However, 2,538,235 shares offered hereby are issuable upon
the exercise of outstanding Warrants to purchase shares of common stock (subject
to adjustments). If all of the Warrants were exercised by the selling
shareholders, the Company estimates that it would receive gross cash proceeds of
approximately $1,534,824 million in the aggregate (assuming none of the Warrants
were exercised pursuant to the cashless exercise provisions contained therein).
Holders of the Warrants have the right to exercise the Warrants held by them by
delivering shares of common stock as payment therefore pursuant to the terms of
the Warrants. The Company will bear the expenses of this offering. No selling
shareholder has held any position or office or had any other material
relationship with the Company.
PLAN OF DISTRIBUTION
Some of the maximum of 18,711,358 shares of our common stock being offered
under this prospectus may be sold by the selling shareholders. Such shares of
our common stock have been included in the registration statement of which this
prospectus forms a part.
The following table illustrates the increasing number and percentage of
shares of common stock that would be actually owned by all the selling
shareholders together which would result from an increasingly discounted trading
price of the common stock, assuming issuance of all of the Put Shares and the
Convertible Debt Shares at a conversion price equal to the following discounts
from the average trading price of the common stock on December 27, 2000
(assuming for these purposes that the limitations on percentage ownership and
other limitations contained in the terms of the private equity credit agreement
and convertible debenture, as described in footnote 3 to the table, did not
exist).
11
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Discount Conversion Shares of Common Stock Percentage Owned by Selling
Percentage Price (1) Issued (2) Shareholders Together (3)
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-- $.791 4,423,106 19.99%
--------------------------------------------------------------------------------------------------------------------
0% $.50 7,000,000 28.34%
--------------------------------------------------------------------------------------------------------------------
25% $.375 9,333,333 34.52%
--------------------------------------------------------------------------------------------------------------------
50% $.25 14,000,000 44.16%
--------------------------------------------------------------------------------------------------------------------
75% $.125 28,000,000 61.26%
--------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The conversion price is based on discounts of the average of the
high and low prices per share of the common stock as reported on NASDAQ on
December 27, 2000, or a value of $0.50, and is calculated by multiplying the
$0.50 value by 1.00 minus the appropriate discount percentage listed in the
table above. The actual purchase prices and conversion prices will be based
on the average of certain closing bid prices of the common stock, as recorded
on NASDAQ, for certain days during a set time period prior to the exercise or
conversion date. Again, there is no minimum average closing price that fixes
the maximum number of shares issuable upon conversion of the convertible debt
or exercise of the put rights.
(2) The shares of common stock issued is calculated by adding (1) the
aggregate value of the convertible debt ($2 million) to (2) the value of the
private equity credit drawdown ($1.5 million), and dividing the sum by the
conversion price. The number does not include any shares exercisable under the
Warrants granted to the selling shareholders.
(3) The percentage owned by the selling shareholders is calculated by
dividing the shares of common stock issued by the sum of the number of shares
of common stock outstanding as of December 27, 2000 (17,703,485 shares) and
the number of shares of common stock issued. The terms of the securities
purchase agreement and private equity credit agreement, however, set the
following limitations: (1) the number of shares of common stock that may be
acquired by Elder Court upon conversion of the convertible debenture, when
added to the total number of shares of common stock deemed beneficially owned
by such holder and the holder's affiliates that would be aggregated for
purposes of determining whether a group exists under Section 13(d) of the
Securities Exchange Act of 1934, as amended, shall not exceed 4.99% of the
total issued and outstanding shares of the common stock; and (2) the number
of shares of common stock issuable to Elder Court upon the exercise of a put
under the private equity credit agreement, together with the shares of common
stock previously issued under the private equity credit agreement and the
shares of common stock previously issued and issuable under the convertible
debenture, shall not exceed 19.99% of the shares of common stock then
outstanding, except upon shareholder approval. Thus, as illustrated in the
table above, although the selling shareholders are able to acquire an
increasing number of shares of common stock upon the exercise of put rights
and the conversion of the convertible debenture at an increasingly discounted
trading price of the common stock, the amount of shares acquired is limited
pursuant to the terms of the private equity credit agreement as described in
this paragraph.
The maximum of 18,711,358 shares of our common stock being offered by the
selling shareholders pursuant to this prospectus may be offered and sold from
time to time on the NASDAQ Stock Exchange, or such other markets upon which we
may list shares of our common stock from time to time, or in privately
negotiated transactions or otherwise. In addition, the selling shareholders may
engage in short sales and other transactions in the common stock or derivatives
thereof, and may pledge, sell, deliver or otherwise transfer the common stock
offered
12
<PAGE>
under this prospectus in connection with such transactions. The shares of our
common stock may be sold by one or more of the following methods, without
limitations:
- block trades in which a broker or dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction
- purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers
- face-to-face transactions between sellers and purchasers without a
broker/dealer
In effecting sales, brokers or dealers engaged by the selling shareholders
may arrange for other brokers or dealers to participate. These brokers or
dealers may receive commissions or discounts from the selling shareholders in
amounts to be negotiated. These brokers and dealers and any other participating
brokers and dealers may use this prospectus.
In the event of a "distribution" of the shares, the selling shareholders,
any selling broker or dealer and any "affiliated purchasers" may be subject to
Regulation M under the Exchange Act, which regulation would prohibit, with
certain exceptions, any such person from bidding for or purchasing any security
which is the subject of such distribution until his participation in that
distribution is completed. In addition, Regulation M prohibits any stabilizing
bid or stabilizing purchase for the purpose of pegging, fixing or stabilizing
the price of common stock in connection with this offering.
We have entered into agreements with the selling shareholders to register
the shares of common stock offered hereby under applicable federal and state
securities laws. The agreements between the selling shareholders and us provide
for cross-indemnification of the selling shareholders and us for losses, claims,
damages, liabilities, costs and expenses arising under certain circumstances.
To comply with certain states' securities laws, if applicable, the shares
of common stock registered hereunder will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers.
LEGAL MATTERS
Certain legal matters in connection with the shares of common stock offered
hereby will be passed upon for us by D'Ancona & Pflaum. Arthur Don, a member of
D'Ancona & Pflaum, is one of our directors.
13
<PAGE>
EXPERTS
The audited financial statements as of March 31, 1999 and 2000, and each of
the years in the three-year period ended March 31, 2000, incorporated by
reference in this prospectus have been audited by KPMG LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in auditing and accounting in giving such reports.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. Words such as
"expects", "anticipates", "intends", "believes", "plans", "seeks", "estimates"
and similar expressions or variations of these words are intended to identify
forward-looking statements, but are not the only means of identifying
forward-looking statements in this prospectus. Additionally, statements that
refer to our estimated or anticipated future results, sales or marketing
strategies, new product development or performance or other non-historical facts
are forward-looking and reflect our current perspective of existing information.
Forward-looking statements are inherently subject to risks and uncertainties
that cannot be predicted or quantified, and actual results and outcomes may
differ materially from the results and outcomes discussed in the forward-looking
statements depending on a variety of factors including our recent history of
losses, the dilution and potential dilution relating to the preferred stock,
options and warrants, the volume and timing of orders received during the
quarter, our ability to successfully market our products, our ability to keep
pace with our competition and with rapid technological change, our ability to
manage turnover in our sales and marketing and other personnel and to attract
and maintain personnel generally, as well as other risk factors mentioned
throughout this prospectus and in our other filings with the Securities and
Exchange Commission. Readers are urged not to place undue reliance on
forward-looking statements and we disclaim any obligation to update any of the
forward-looking statements contained in this prospectus to reflect any future
events or developments.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We have filed a Registration Statement on Form S-3 relating to the
securities offered by this prospectus with the Commission. This prospectus does
not contain all of the information set forth in the Registration Statement and
its accompanying exhibits. Statements contained in this prospectus as to the
contents of any contract or other document referred to are not necessarily
complete; however, all material information with respect to these contracts and
documents are disclosed in this prospectus. In each instance, we refer you to
the copy of the contract or other document filed as an exhibit to the
Registration Statement, each of those statements being qualified in all respects
by the actual contract or other document.
For further information with respect to us and the securities offered in
this prospectus, we refer you to the Registration Statement, exhibits and
schedules. A copy of the Registration Statement may be inspected by anyone
without charge at the public reference facilities maintained by the Commission
at:
Room 1024, Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
14
<PAGE>
and will also be available for inspection and copying at the regional offices of
the Commission located at:
Citicorp Atrium Center and and 7 World Trade Center
500 West Madison Street, Suite 1400 New York, New York 10048
Chicago, Illinois 60661
Copies of this material may also be obtained at prescribed rates from the Public
Reference Section of the Commission at:
450 Fifth Street, N.W.
Washington, D.C. 20549
This material may also be accessed electronically by means of the Commission's
home page on the Internet at HTTP://WWW.SEC.GOV.
We are governed by the reporting requirements of the Securities Exchange
Act of 1934 and, in accordance therewith, we file annual, quarterly and special
reports, proxy statements and other information with the Securities and Exchange
Commission.
These reports, proxy statements and other information can be inspected and
copied at the public reference facilities of the Commission set forth above, and
copies of these materials can be obtained from the Commission's Public Reference
Section at prescribed rates or from us at 1500 Northwest 118th Street, Des
Moines, Iowa (telephone: (515) 223-8000) Attn: Beth E. Law. We furnish our
stockholders with annual reports containing audited financial statements and any
other periodic reports we deem appropriate or as may be required by law.
15
<PAGE>
==============================================================================
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS,
INCORPORATED HEREIN OR BY REFERENCE OR CONTAINED IN A PROSPECTUS SUPPLEMENT.
NEITHER WE NOR EITHER OF THE SELLING SHAREHOLDERS HAS AUTHORIZED ANYONE ELSE TO
PROVIDE YOU WITH DIFFERENT OR ADDITIONAL INFORMATION. THE SELLING SHAREHOLDERS
ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS, OR
INCORPORATED HEREIN BY REFERENCE, OR IN ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS
OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THE DOCUMENTS.
18,711,358 shares of
common stock of
Microware Systems Corporation
The date of this prospectus is January __, 2001.
==============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, payable in connection
with the sale of the shares of common stock being registered hereby. All amounts
are estimates: the total estimated fees set forth below shall be paid in full by
the Company.
SEC Registration Fees........................................... $ 2,339
Accountants' Fees and Expenses.................................. $ 10,000
Legal Fees and Expenses......................................... $ 75,000
Miscellaneous.................................................. $ 12,661
--------
Total...................................................... $100,000
========
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Sections 851 and 856 of the Iowa Business Corporation Act ("Iowa BCA")
empower a corporation, subject to certain limitations, to indemnify its
directors and officers against expenses (including attorney's fees, judgments,
fines and certain settlements) actually and reasonably incurred by them in
connection with any suit or proceeding to which they are a party so long as they
acted in good faith and in a manner reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to a criminal action
or proceedings, so long as they had no reasonable cause to believe their conduct
to have been unlawful. The Registrant's Restated and Amended Articles of
Incorporation provide that the Registrant shall indemnify its directors and such
of its officers, employees and agents as the Board of Directors may determine
from time to time, to the fullest extent permitted by Iowa law.
Section 832 of the Iowa BCA permits an Iowa corporation to include in its
articles of incorporation a provision eliminating or limiting a director's
liability to a corporation or its shareholders for monetary damages for breaches
of fiduciary duty. The enabling statute provides, however, that liability for
breaches of the duty of loyalty, acts or omissions not in good faith or
involving intentional misconduct, or knowing violation of the law, and the
unlawful purchase or redemption of stock or payment of unlawful dividends or the
receipt of improper personal benefits cannot be eliminated or limited in this
manner. The Registrant's Restated and Amended Articles of Incorporation include
a provision which eliminates, to the fullest extent permitted, director
liability for monetary damages for breaches of fiduciary duty.
ITEM 16. EXHIBITS
(a) Exhibits. The following exhibits are filed herewith or incorporated by
reference as indicated. Exhibit numbers refer to Item 601 of Regulation S-K.
5.1 Opinion of D'Ancona & Pflaum LLC
10.1 Securities Purchase Agreement, dated as of November 28,
2000, between the Company and Elder Court, LLC
II-1
<PAGE>
10.2 Registration Rights Agreement, dated as of November 28,
2000, between the Company and Elder Court, LLC
10.3 Form of Debenture, dated as of November 28, 2000, issued to
Elder Court, LLC
10.4 Form of Common Stock Purchase Warrant
10.5 Private Equity Credit Agreement, dated as of December 15,
2000, between the Company and Elder Court, LLC
10.6 Registration Rights Agreement, dated as of December 15, 2000,
between the Company and Elder Court, LLC
23.1 Consent of KPMG LLP
23.2 Consent of D'Ancona & Pflaum LLC (included in Exhibit 5.1)
---------------
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
II-2
<PAGE>
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this
section do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in the registration
statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities is asserted (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(e) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report pursuant
to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on behalf by the undersigned, thereunto duly authorized,
in the City of Des Moines, State of Iowa, on the 28 day of December, 2000.
Microware Systems Corporation
By: /s/ Kenneth B. Kaplan
----------------------------------
Kenneth B. Kaplan,
President and Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned directors and
officers of Microware Systems Corporation, an Iowa corporation, which is filing
a Registration Statement on Form S-3 with the Securities and Exchange Commission
under the provisions of the Securities Act of 1933, as amended, hereby
constitute and appoint Kenneth B. Kaplan, George E. Leonard, Beth E. Law, and
Arthur Don and each of them, each of their true and lawful attorneys-in-fact and
agents; with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any or all amendments
to the report to be filed with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all interests and purposes as
each of them might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Kenneth B. Kaplan Chairman, President and Chief December 28, 2000
----------------------------- Executive Officer (Principal
Kenneth B. Kaplan Executive Officer)
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
/s/ George E. Leonard Director, Executive Vice December 28, 2000
----------------------------- President, Chief Financial
George E. Leonard Officer, Chief Operating
Officer, Treasurer and
Secretary (Principal
Financial
Officer)
/s/ Beth E. Law Chief Accounting Officer, December 28, 2000
----------------------------- Controller and Assistant
Beth E. Law Treasurer (Principal
Accounting Officer)
/s/ Arthur Don
----------------------------- Director December 28, 2000
Arthur Don
----------------------------- Director December __, 2000
Daniel P. Howell
/s/ Robert A. Peiser
----------------------------- Director December 28, 2000
Robert A. Peiser
/s/ Dennis E. Young
----------------------------- Director December 28, 2000
Dennis E. Young
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
5.1 Opinion of D'Ancona & Pflaum LLC
10.1 Securities Purchase Agreement, dated as of November 28, 2000, between
the Company and Elder Court, LLC
10.2 Registration Rights Agreement, dated as of November 28, 2000, between
the Company and Elder Court, LLC
10.3 Form of Debenture, dated as of November 28, 2000, issued to Elder
Court, LLC
10.4 Form of Common Stock Purchase Warrant
10.5 Private Equity Credit Agreement, dated as of December 15, 2000,
between the Company and Elder Court, LLC
10.6 Registration Rights Agreement, dated as of December 15, 2000, between
the Company and Elder Court, LLC
23.1 Consent of KPMG LLP
23.2 Consent of D'Ancona & Pflaum LLC (included in Exhibit 5.1)
</TABLE>
---------------
II-6
