Exhibit 99.1
DECEMBER 5, 2000 REOFFER PROSPECTUS
THE TRACKER CORPORATION
OF AMERICA
UP TO 8,000,000 SHARES OF COMMON STOCK
The selling stockholders pursuant to the 2001 Stock Wage and Fee
Payment Plan of The Tracker Corporation of America may offer up to 8,000,000
shares of our common stock.
The security holders may sell their shares of common stock after
delivery of this prospectus to purchasers, from time to time, through
broker-dealers or underwriters at the prevailing market price as listed on the
OTC Bulletin Board under the symbol "TRKR." We will not receive any of the
proceeds from the secondary offering and sale of the common stock by the
security holders.
See, RISK FACTORS on page 1.
Our principal offices are located at 1120 Finch Avenue West, Suite
303, North York, Ontario, Canada M3J 3H7. For more information, contact Bruce
Lewis at 1-800-822-8757.
-----------------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
-----------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SELLING SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
INTEREST OF NAMED EXPERTS AND COUNSEL . . . . . . . . . . . . . . . . . . . 8
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE . . . . . . . . . . . . . 9
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . 10
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RISK FACTORS
The securities offered in this prospectus involve a high degree of
risk. In addition to the other information contained in this prospectus, you
should consider the following risk factors before making an investment. The
occurrence of any the following risks could materially adversely affect our
business, financial condition and results of operations. Additional risks and
uncertainties not presently known to us or that we currently view as immaterial
might also materially adversely affect our business, financial condition or
results of operations. In such a case, the value of your investment could
decline and you may lose all or part of your investment.
This prospectus contains forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those
anticipated in such forward-looking statements as a result of a variety of
factors, including those set forth in the following risk factors and elsewhere
in this prospectus.
THE CONVERSION OF THE BRIDGE FINANCING NOTES AND THE EXERCISE OF THE WARRANTS
MAY CREATE IMMEDIATE AND SUBSTANTIAL DILUTION TO THE EXISTING SHAREHOLDERS.
As of September 30, 2000, we had 59,395,259 shares of common stock
outstanding, with a book value of $-0.06 per share. By a previous registration
statement, we have reserved shares of common stock for future issuance pursuant
to the conversion of notes and the exercise of certain warrants. We cannot
assure that the issuance of the common stock reserved for future issuance will
not materially adversely affect the prevailing market price of the common stock.
Furthermore, issuance of the shares of common stock as described below could
result in significant dilution to our stockholders.
We issued $1,700,000 in principal amount of bridge financing notes.
The notes are convertible into shares of common stock by the holders at a
conversion price dependent on the market price as of the date of issue and the
date of redemption. The notes also carry an attached repricing warrant that
entitled the holder to additional shares of common stock if the price drops
below certain levels. The conversion of the notes and the exercise of the
repricing warrants will not result in the receipt of any additional funds, but
will eliminate approximately $1,700,000 in debt. We estimate the dilution to
the book value of our common stock, which may have an accretive affect,
resulting from the conversion of the notes and attached repricing warrants as
follows:
Low conversion price High conversion price
(.05/share) (.40/share)
-------------------------------------------------
Book value before $-0.04 $-0.04
Shares converted/exercised 25,000,000 8,500,000
Book value after $-0.00 $-0.00
We also reserved additional shares of common stock for issuance
pursuant to the callable warrants, purchase warrants, and warrants issued to
Sovereign Capital Advisors, LLC as our placement agent, in the amount and up to
the following expirations from the original issue date, should we choose to call
the warrants:
Warrant Amount Expiration Date
------------------------------------------------------------------------
Callable up to 12,575,000 shares ($1,700,000 worth) 1 year
Purchase 340,000 shares 5 years
Sovereign 85,000 shares 3 years
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As of the date of this registration statement, all of the callable
warrants have expired. Any proceeds we may receive upon the exercise of the
remaining warrants will be used for general corporate purposes and for working
capital, which may include payment of salaries, research and development, and
marketing expenses. Should we convert the notes and the warrants be exercised,
the number of shares of common stock will increase. This could adversely affect
our stock price and other shareholders' ownership interests. Should we issue
additional shares in the future, the book value of our common stock may
experience further dilution.
BECAUSE THE CONVERSION AND/OR EXERCISE PRICE IS TIED TO THE MARKET PRICE, THE
NUMBER OF SHARES THAT MAY BE ISSUED WILL INCREASE AS OUR STOCK PRICE DECREASES.
A potentially unlimited number of shares can be issued under the
conversion terms of the notes and related warrants since the exercise price of
the warrants is tied to the market price of our common stock. As such, the
number of shares that can be issued will increase as the price decreases.
Should this occur, the book value of our common stock may experience further
dilution.
RESALE RESTRICTIONS
We are registering restricted securities that were issued under an
employee benefit plan. Consequently, certain limitations apply to the resale of
these securities. Any sale of the securities subject to this registration
statement by the selling shareholders may not exceed, during any three-month
period, greater than the greater of:
- 1% of our outstanding common stock; or
- the average weekly reported trading volume of the common stock
during the four calendar weeks preceding the sale
BECAUSE NO CLEARLY IDENTIFIED MARKET EXISTS FOR OUR PRODUCTS AND SERVICES, WE
MAY LACK THE FINANCIAL RESOURCES TO DEVELOP ANY MARKET ACCEPTANCE.
Our future success entirely depends on the successful development,
commercialization and market acceptance of our personal property marking and
monitoring system. Our initial marketing efforts, which focused primarily on
consumer applications of our technology, were not successful. Identifying
markets that will respond favorably to our products and services will present
marketing and financial challenges to us. We are experimenting with new
business models that are speculative and untested to date. We cannot assure
that we will gain a significant level of commercial acceptance for our products
and services in any commercial market.
We have a large number of competitors across a variety of industries
that have substantially greater financial, technical, marketing, and management
resources. For example, we currently offer a pet registration service using our
technology. However, Pets.com and Petopia.com have recently launched web pages
as a lead in to the sale of pet related products. These marketing efforts may
hinder our success in the pet registration market. Similarly, we recently
launched a business asset management system in certain niche markets. One of
our competitors, Tangram Enterprise Solutions, has over twenty times greater
assets than us and ten times the work force. Should we compete directly with
them, their financial and personnel strength could prevent us from capturing
those markets. As a result, demand and market acceptance for our products and
services are subject to a high level of uncertainty.
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OUR FUTURE SUCCESS DEPENDS ON THE EXPERIENCE AND RETENTION OF KEY PERSONNEL.
Our success is largely dependent on our ability to attract and retain
key management and operating personnel. We particularly depend on the efforts
and skills of Bruce I. Lewis, Jay S. Stulberg, Christopher Creed, and Tizio
Panara. We have entered into employment agreements with Mr. Lewis and Mr.
Stulberg and are planning to enter into agreements with Mr. Creed and Mr.
Panara. The loss, incapacity, or unavailability of any of these individuals
could materially adversely affect our business, financial condition or results
of operation.
It may also be necessary for us to attract and retain additional
individuals to support our growth or to replace key personnel in the event of
their termination of employment. Because qualified individuals are in high
demand and are often subject to competing offers, we cannot assure that we can
attract and retain qualified personnel needed for our business.
BECAUSE OF OUR HISTORY OF OPERATING LOSSES AND EXPECTATION OF FUTURE LOSSES, OUR
INDEPENDENT AUDITORS EXPRESSED SUBSTANTIAL DOUBT ABOUT OUR FUTURE VIABILITY AS A
GOING CONCERN IN THEIR MOST RECENT AUDIT REPORT.
We have generated only modest revenue and have sustained significant
operating losses each year since our inception. In fact, we have not generated
any significant revenue since September 1997. We have accumulated a deficit of
$20,502,906 as of September 30, 2000. Our ability to generate revenue from
operations and achieve profitability is largely dependent upon a successful
transition from a development stage company to a fully operating company. In
order to achieve that, we will require significant additional financing to
penetrate new markets for our products and services. If we are unable to
attract such financing or achieve profitable operations, we may be forced to
cease or significantly limit our operations. As a result of the foregoing
conditions, our independent public accountants expressed doubt about our future
viability as a going concern in their audit report dated July 3, 2000.
OUR STOCK MAY EXPERIENCE SEVERE VOLATILITY BECAUSE OF THE LIMITED TRADING MARKET
AVAILABLE.
Our common stock is traded in the over-the-counter market and is
quoted on the OTC Bulletin Board. The market for the common stock must be
characterized as extremely limited due to the low trading volume and the small
number of brokerage firms acting as market makers. Because stocks traded on the
OTC Bulletin Board generally have limited brokerage and news coverage, the
market price of our common stock may not reflect our true value. As a result,
you may find it difficult to dispose of our common stock or to obtain accurate
quotations as to our value. Over the past eighteen months our stock has traded
at a price as low as $.05 per share and as high as $.41 per share. We cannot
assure that the over-the-counter market for our securities will continue, that a
more active market will develop, or that the prices in any such market will be
maintained at their current levels or otherwise. Furthermore, technological
innovations, new product developments, general trends in our industry and
quarterly variations in our results of operations may cause the market price of
the common stock to fluctuate significantly.
PENNY STOCK RULES
Our common stock is subject to the penny stock rules promulgated under
the Exchange Act of 1934. The penny stock rules regulate broker-dealer
practices in connection with transactions in equity securities with a price of
less than $5.00. This does not include securities registered on certain
national securities exchanges or quoted on the NASDAQ system as long as exchange
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or system provides current price and value information with respect to
transactions in such securities. The penny stock rules require a broker-dealer
to deliver a standardized risk disclosure document prepared by the SEC that
provides information about penny stocks and the nature and level of risks in the
penny stock market. This must occur prior to a transaction involving a penny
stock not otherwise exempt from the rules. The broker-dealer must provide the
customer with current bid and offer quotation for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid/offer quotations and the broker-dealer and
salesperson compensation information must be given to the customer orally or in
writing prior to effectuating the transaction. It also must be given to the
customer in writing before or with the customer's confirmation. In addition,
the penny stock rules require that he broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for our common stock. As such, you may find it
more difficult to sell our common stock in the over-the-counter market.
OUR CURRENT OWNERSHIP STRUCTURE AND THE PROVISIONS OF OUR ARTICLES OF
INCORPORATION AND BYLAWS MAY HINDER ANY MATERIAL CHANGE IN CONTROL.
Our directors, officers, principal stockholders and their affiliates
will continue to beneficially own approximately 7% of the common stock
immediately following this registration. This assumes the full exercise of
currently exercisable options and warrants and the conversion of outstanding
convertible debentures. As a result of such ownership, our directors, officers,
principal stockholders and their affiliates will effectively have the ability to
maintain, control and direct our business and affairs. Such concentration of
ownership may have the effect of delaying, deferring or preventing a change in
control. In addition, our articles of incorporation and bylaws contain
provisions that have the effect of retaining the control of current management
and may discourage any acquisition bids. Such provisions could limit the price
that investors might be willing to pay in the future for shares of the common
stock. It may also impede the ability of stockholders to replace management
should factors warrant such a change.
OUR FUTURE SUCCESS DEPENDS ON THE ACCEPTANCE OF OUR TECHNOLOGY IN THE
MARKETPLACE AND OUR FINANCIAL ABILITY TO KEEP UP WITH TECHNOLOGICAL CHANGES IN
OUR INDUSTRY.
We cannot assure that our competitors and potential competitors will
not succeed in developing or marketing technologies and products that will be
more accepted in the marketplace or render our technology obsolete or
noncompetitive. Most of our competitors and potential competitors have
substantially greater capital resources, research and development staffs and
facilities than us. Products based on new technologies such as radio frequency
or new industry standards may render our existing products obsolete and
unmarketable. Over the past two years we have invested minimal capital to
maintain and update our technology. Any delay in developing, testing and
releasing enhanced or new products could materially adversely affect our
business, operating results and financial condition.
OUR LACK OF SIGNED AGREEMENTS WITH SUPPLIERS MAY PREVENT US FROM EFFECTIVELY
DISTRIBUTING OUR PRODUCTS AND SERVICES TO THE MARKET.
The ability to market, sell and operate our products and services
depends on the procurement of necessary goods and services. Although we have
preliminary understandings with suppliers, these may be difficult to enforce.
We cannot assure that we will achieve and maintain product quality and
reliability in the quantities required for commercial operations or within a
period that will permit us to introduce our products in a timely fashion. We
also cannot assure that we will be able to assemble and manufacture our products
at an acceptable cost.
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OUR FUTURE RELATIONSHIP WITH SYMBOL TECHNOLOGIES IS DEPENDENT ON OUR SALE OF A
MINIMUM NUMBER OF THEIR SCANNERS, WHICH WE PRESENTLY CANNOT FULFILL.
We procure scanning equipment from Symbol Technologies, particularly
the PDF 1000 laser scanner. This is the first laser scanner to read
two-dimensional bar code. On May 18, 1999 we entered into an agreement with
Symbol whereby we were granted the exclusive right to use the PDF 1000 laser
scanners in the United States, Canada, and Europe for personal property
identification and recovery purposes. This contract is subject to a minimum
annual purchase requirement of 5000 laser scanner units having a purchasing
effect of at least $10,000,000. We will likely not meet this requirement and
Symbol will be permitted to terminate the contract should it so choose. Should
Symbol terminate the agreement, our business may be harmed in two ways:
(1) we may no longer be capable of securing future orders due to a
lack of supply; and
(2) we may not be able to honor existing service agreements with
current customers using the Symbol scanners
Consequently, the termination of the Symbol Contract would directly affect our
general viability as a going concern.
BECAUSE OUR PRODUCTS AND SERVICES ARE SUBJECT TO LENGTHY SALES CYCLES, WE MAY
LACK THE FINANCIAL RESOURCES TO MAINTAIN OPERATIONS.
We typically experience long sales cycles that generally vary from
three to six months. Because the implementation of our products and services
involves significant capital expenditures by the customer, our sales are subject
to lengthy approval processes and delays. We often devote significant time and
resources to a prospective customer, including costs associated with multiple
site visits, product demonstrations, and feasibility studies without any
assurance that the prospective customer will decide to purchase our products.
OUR FUTURE SUCCESS IS DEPENDANT ON PATENTS AND PROPRIETARY TECHNOLOGY. WE
CURRENTLY DO NOT HAVE ANY PATIENTS, REGISTERED TRADEMARKS OR SERVICE MARKS.
Our success partly depends on our ability to obtain patent protection
for our proposed products and processes, to preserve our trade secrets and to
operate without infringing the proprietary rights of third parties. We rely on
a combination of trade secret, nondisclosure and other contractual agreements,
and technical measures to protect the confidential information, know-how and
proprietary rights relating to our personal property identification and recovery
system. In addition, we have an exclusive license with Global Tracker to use
the technology associated with an international patent application filed
pursuant to the Patent Cooperation Treaty for our personal property
identification and recovery system. We cannot assure, however, that this will
mature into an issued patent or that any patent, trademark or service mark
obtained or licensed by us will be held valid and enforceable if asserted by us
against another party. In addition, these protections may not preclude third
parties from asserting infringement claims against us. The successful assertion
of such claims could materially adversely affect our business, operating results
and financial condition.
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We do not have any registered trademarks or service marks.
Furthermore, we do not have any active trademark or service mark applications
pending before the U.S. Patent and Trademark Office or with any other
regulatory authorities.
Even if our pending patent is ultimately issued, other parties may
hold or receive patents that contain claims covering our technology. Should
this occur, it may delay or prevent the sale of our products and services. It
may also require licenses resulting in the payment of fees or royalties by us in
order to continue operations. We cannot assure that needed or potentially
useful licenses will be available to us in the future on acceptable terms. An
adverse determination in any litigation with respect to proprietary infringement
could subject us to significant liabilities to third parties. In such a case,
we may be required to seek licenses from, or pay royalties to, third parties.
We could also be prevented from manufacturing, selling or using our proposed
products.
WE WILL REQUIRE SIGNIFICANT FUTURE CAPITAL IN ORDER TO CONTINUE OPERATIONS. WE
CANNOT ASSURE THAT FUTURE CAPITAL WILL BE AVAILABLE.
We will require additional funds in the amount of $1,000,000 over the
next six months to successfully market and operate our business. We estimate
needing an additional $700,000 over the following twelve months. Our inability
to obtain financing or to raise additional capital when needed on favorable
terms could prevent or delay the marketing, sale and operation of our products
and services. Insufficient funds may require us to delay, scale back or
eliminate some or all of our programs designed to facilitate the commercial
introduction of our products and services or prevent such commercial
introduction altogether.
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USE OF PROCEEDS
We will not receive any part of the proceeds from the sale of the
shares of common stock offered by or for the account of the selling security
holders.
SELLING SECURITY HOLDERS
We are registering up to 8,000,000 shares of our common stock issued,
or to be issued, pursuant to the 2001 Stock Wage and Fee Payment Plan. The
following table describes the number of securities issued under this Plan and
the total number of securities to be sold after the offering.
As of November 10, 2000, there were approximately 365 record holders
of common stock. Percentage of ownership is based upon 59,395,259 issued and
outstanding shares of common stock beneficially owned on November 10, 2000,
including currently exercisable warrants to purchase 1,250,000 shares of common
stock, currently exercisable options to purchase 40,000 shares of common stock,
currently exercisable options to purchase 2,498,578 shares of common stock, and
currently exercisable options to purchase 200,000 shares reserved under an
option issued to Toda Corporation Limited for financial consulting services.
Shares Issued Total Shares Owned Percentage
Name and Position Under Plan As of November 10, 2000 (if >1%)
----------------------- ------------- ----------------------- -----------
BOB PENSE 50,000 0 N/A
Consultant
DENNIS OBERT 46,000 0 N/A
Consultant
STEVE OLSON 150,000 0 N/A
Consultant
GEORGE WOOD 150,000 0 N/A
Consultant
TONY WAGNER 150,000 0 N/A
Consultant
ALAN CARUTHERS 150,000 0 N/A
Consultant
STEVE SHERIFF 150,000 0 N/A
Consultant
ALAN HAMM 150,000 0 N/A
Consultant
JOHN ANDREWS 232,000 0 N/A
Consultant
EITAN SCHIBI 695,000 0 N/A
Consultant
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TERRY HENSLEY 347,000 0 N/A
Employee
TODD MEROLLA 170,000 0 N/A
Consultant
WENDY WOLMAN 579,000 0 N/A
Consultant
ARNOLD ZWEIG 160,000 0 N/A
Consultant
NENA-CENIC CIRIC 93,000 0 N/A
Employee
TOM MCCULLOUGH 75,000 0 N/A
Consultant
ROSEANNE BAKER THORNLEY 150,000 0 N/A
Consultant
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PLAN OF DISTRIBUTION
We will not receive any of the proceeds from the sale of the common
stock by the selling security holders. We anticipate the selling security
holders will offer the shares of common stock for sale either directly or
through broker-dealers or underwriters. The broker-dealers or underwriters may
act solely as agents or may acquire the shares of common stock as principals.
They may receive compensation in the form of usual and customary or specifically
negotiated underwriting discounts, concessions or commissions from the selling
security holders or the secondary purchasers of the shares of common stock
registered in this prospectus for whom they may act as agent.
The net proceeds to the selling security holders from the sale of
common stock will be the purchase price of the common stock sold less the
aggregate agents' commissions and underwriters' discounts, if any. The selling
security holders and any dealers or agents that participate in the distribution
of the common stock may be deemed to be an underwriter within the meaning of the
Securities Act of 1933.
The shares of common stock being offered by the selling security
holders will be sold in one or more transactions on the OTC Bulletin Board or on
any other market on which our common stock may be trading. The sale price to
the public may be the market price prevailing at the time of sale, or a
different price negotiated by the selling security holders. The selling
security holders shall have the sole and absolute discretion not to accept any
purchase offer or make any sale of shares of common stock if they deem the
purchase price to be unsatisfactory.
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Certain limitations apply to the resale of these securities. Any sale
of the securities subject to this registration statement by the selling
shareholders may not exceed, during any three-month period, greater than the
greater of:
- 1% of our outstanding common stock; or
- the average weekly reported trading volume of the common stock
during the four calendar weeks preceding the sale
The selling security holders participating in the sale or distribution
of the shares of common stock will be subject to applicable provisions of the
Securities Exchange Act of 1934 and the rules and regulations passed by the SEC.
This may limit the timing of purchases and sales of any of the shares of the
common stock by the selling security holders. It may also affect the
marketability of the shares of common stock.
INTERESTS OF NAMED EXPERTS AND COUNSEL
A. Todd Merolla, of A. Todd Merolla, P.C., acted as our outside
securities counsel from October 1999 through the present. Over this time
period, he has received both cash and stock for his legal services, including
$10,000 worth of our common stock under this registration statement. He holds
approximately 170,000 shares of our common stock.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
We filed the following documents with the SEC which are hereby
incorporated herein by reference:
(1) Our annual report on Form 10-K for the year ended March 31, 2000;
and
(2) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since March 31, 2000.
In addition, all documents subsequently filed by us pursuant to
sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed incorporated by reference in this registration
statement and to be a part hereof from the date of filing such documents.
We will provide to each person, including any beneficial owner, to
whom a prospectus is delivered, a copy of any or all of the information that has
been incorporated by reference in the prospectus but not delivered with the
prospectus. We will provide this information upon written or oral request at no
cost to the requester. Any such request should be made in writing to 1120 Finch
Avenue West, Suite 303, North York, Ontario, Canada M3J 3H7 or by telephone to
Bruce I. Lewis at 1-800-822-8757.
We are required to file reports with the SEC. These reports include:
(1) an annual report on Form 10-K containing financial information examined and
reported upon by our certified public accountants; (2) quarterly reports on Form
10-Q containing unaudited financial statements for each of the first three
quarters of the fiscal year; and (3) additional information on Form 8-K
concerning our business and operations deemed appropriate by our board of
directors.
You may read and copy any materials we file with the SEC by visiting
the public reference room located at 450 Fifth Street, N.W., Washington, D.C.
20549 or by calling the SEC at 1-800-SEC-0330. Since we are an electronic
filer, you may also receive information about us through the SEC's internet
website that contains reports, proxy and information statements, and other
information at http://www.sec.gov.
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DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
We shall indemnify to the fullest extent permitted by the laws of
Delaware any person made or threatened to be made, a party to any legal action
or proceeding by reason of the fact the individual is or was our director,
officer or employee, or served as an agent for any other enterprise at our
request. The board of directors shall have the power to indemnify any person,
other than a director or officer, made a party to any legal action, suit or
proceeding by reason of the fact the individual was our employee.
Pursuant to our bylaws, we may indemnify and/or purchase indemnity
insurance for our directors, officers or other employees. We may also pay
and/or advance expenses to our directors, officers and other employees who are
eligible for or entitled to such payments or advances. The extent of any such
indemnification, payment or advance shall be expressly authorized by the board
of directors. Our right to indemnify such persons shall include, but not be
limited to, our authority to enter into written agreements for indemnification.
Subject to the laws of Delaware, our directors shall not be liable to
the company or our shareholders for monetary damages for an act or omission in
the director's capacity of a director, as long as the director acted in good
faith.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to our directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise, we have
been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act of 1933 and is therefore
unenforceable. In the event that a claim for indemnification against such is
asserted by such director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification is against
public policy as expressed in the Securities Act of 1933 and will be governed by
the final adjudication of such issue. This excludes any payment of expenses
incurred or paid by a director, officer or controlling person in the successful
defense of any action, suit or proceeding.
Indemnification of officers or persons controlling us for liabilities
arising under the Securities Act of 1933 is held to be against public policy by
the SEC, and is therefore unenforceable.
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