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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2 )*
DATA RACE, INC.
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(Name of Issuer)
Common Stock, no par value
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(Title of Class of Securities)
237842109
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(CUSIP Number)
John M. Liviakis, 2420 "K" St., #220, Sacramento, CA 95816, (916) 448-6084
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 15, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Potential persons who are to respond to the collection of information contained
in this form are not required to respond unless the form displays a currently
valid OMB control number.
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CUSIP NO. 237842109
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
Liviakis Financial Communications, Inc. 68-0311399
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(See Instructions) (b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
OO, WC
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or (e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
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7 SOLE VOTING POWER
NUMBER 2,424,253
OF -------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED --
BY -------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 2,424,253
WITH -------------------------------------------------------
10 SHARED DISPOSITIVE POWER
--
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,424,253
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW(11)EXCLUDES CERTAIN SHARES [X]
(See Instructions)
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.1%
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14 TYPE OF REPORTING PERSON (See Instructions)
CO
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2
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CUSIP NO. 237842109
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
John M. Liviakis
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(See Instructions) (b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
PF
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or (e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
NUMBER 61,400
OF -------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED 2,424,253
BY -------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 61,400
WITH -------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,424,253
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,485,653
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW(11)EXCLUDES CERTAIN SHARES [X]
(See Instructions)
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.4%
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14 TYPE OF REPORTING PERSON (See Instructions)
IN
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3
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CUSIP NO. 237842109
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
Renee A. Liviakis
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions) (a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
--
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or (e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
NUMBER --
OF -------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED 2,424,253
BY -------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON --
WITH -------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,424,253
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,424,253
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW(11)EXCLUDES CERTAIN SHARES
(See Instructions) [X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.1%
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14 TYPE OF REPORTING PERSON (See Instructions)
IN
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4
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CUSIP NO. 237842109
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
Robert B. Prag
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions) (a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
OO
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or (e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
NUMBER 468,825
OF -------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED 2,424,253
BY -------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 468,825
WITH -------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,424,253
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,893,078
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW(11)EXCLUDES CERTAIN SHARES
(See Instructions) [X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.2%
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14 TYPE OF REPORTING PERSON (See Instructions)
IN
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5
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1. SECURITY AND ISSUER.
The title of the class of equity securities to which this Amended
Statement relates is common stock, no par value (the "Common Stock"), issued by
Data Race, Inc., a Texas corporation (the "Corporation"). The principal offices
of the Corporation are located at 12400 Network Boulevard, San Antonio, Texas
78249.
2. IDENTIFY AND BACKGROUND.
This amended statement is filed by Liviakis Financial Communications,
Inc., a California corporation ("LFC"), John M. Liviakis ("JML"), Renee A.
Liviakis ("RAL") and Robert B. Prag ("RBP").
LFC's principal business is as a consultant in the areas of financial
and investor public relations and communications. LFC's principal business and
principal office address is 2420 "K" Street, Suite 220, Sacramento, California
95816.
LFC's President is JML, its Senior Vice President is RBP, and its
Treasurer, Chief Financial Officer and Secretary is RAL. JML, RBP and RAL are
the only executive officers of LFC. The activities associated with these
positions constitute the principal occupation and employment of JML, RBP and
RAL. JML, RBP and RAL are LFC's only directors, and JML and RAL are its sole
stockholders. JML, RBP and RAL are citizens of the United States, and their
business address is LFC's principal business address listed above.
During the last five years, none of LFC, JML, RBP and RAL has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), and during such period none of them has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction, the
result of which was to subject such person to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
This Amendment No. 2 to Schedule 13D is being filed to report (i)
1,935,364 shares of Common Stock held by LFC on November 20, 1998, (ii) 488,889
shares of Common Stock which under certain circumstances LFC would have the
right to acquire within sixty days of November 20, 1998 through the exercise of
stock purchase warrants, (iii) 61,400 shares of Common Stock held by JML on
November 20, 1998, and (iv) 468,825 shares of Common Stock held by RBP on
November 20, 1998.
1,406,475 and 468,825 shares of Common Stock were issued to LFC and RBP,
respectively, by the Corporation pursuant to a Consulting Agreement dated
effective as of
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July 13, 1998 by and between the Corporation and LFC (the "Consulting
Agreement"). Under the Consulting Agreement, LFC undertakes to perform certain
investor communications, financial and investor public relations, and related
services for the Corporation through March 15, 1999. A copy of the Consulting
Agreement was filed with the original Schedule 13D as Exhibit "A".
From August 28, 1998 through September 1, 1998, LFC purchased 40,000
shares of Common Stock in the open market at an aggregate cost of $57,458. The
source of funds for those purchases was LFC's working capital. On August 28,
1998, JML purchased 61,400 shares of Common Stock in the open market at an
aggregate cost of $100,357. The source of funds for those purchases was JML's
personal funds.
On November 15, 1998, LFC entered into a Subscription Agreement (the
"Subscription Agreement") with the Corporation under which LFC agreed to
purchase a minimum of 488,889 units ("Units"), each consisting of one share of
Common Stock and a warrant (a "Unit Warrant") expiring two years after issuance
to purchase a share of Common Stock at an exercise price of $2.25 per share, at
a price of $2.25 per Unit. The exercisability of the Unit Warrants is
conditioned on the authorization of additional shares of Common Stock. LFC also
agreed in the Subscription Agreement to purchase up to 488,889 additional Units
in the event unrelated third parties failed to purchase such Units, but third
parties have purchased at least 444,444 additional Units. On or about November
18, 1998, LFC purchased 488,889 Units from the Corporation. A copy of the
Subscription Agreement is filed as Exhibit "D" to this Schedule 13D, as amended.
4. PURPOSE OF TRANSACTION.
An aggregate of 1,875,300 shares of Common Stock were issued to LFC and
RBP pursuant to the Consulting Agreement in consideration for consulting
services to be performed by LFC for the Corporation. An aggregate of 590,289
shares of Common Stock and 488,889 Unit Warrants were purchased by LFC and JML
for investment purposes.
LFC, JML and RBP have acquired and intend to hold the shares of Common
Stock so acquired for investment purposes. LFC, JML, RAL and RBP may acquire
additional shares of Common Stock and other securities issued by the Corporation
for investment purposes from time to time, although they do not have any present
plans to do so, except to the extent LFC is required to purchase additional
Units pursuant to the Subscription Agreement.
LFC, JML, RAL and RBP have no plans or proposals which relate to or
would result in: any extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Corporation or any subsidiary of the
Corporation; the sale or transfer of a material amount of assets of the
Corporation or any of its subsidiaries; any change in the Corporation's present
Board of Directors or management; any material change in the present
capitalization or dividend policy of the Corporation; any material change in the
Corporation's business or corporate structure; any changes in the Corporation's
charter, bylaws, or instruments corresponding thereto or other actions which may
impede the
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acquisition of control of the Corporation by any person; a class of securities
of the Corporation being delisted from a national securities exchange or ceasing
to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association; a class of equity securities of the
Corporation becoming eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act of 1934, as amended; or any
similar action.
5. INTEREST IN SECURITIES OF THE ISSUER.
LFC has the sole power to direct the vote or disposition of the
1,935,364 shares of Common Stock owned by LFC and would expect to have the sole
power to direct the vote or disposition of any of the 488,889 shares of Common
Stock it might acquire through the exercise of the Unit Warrants. LFC would
exercise its power to direct the vote or disposition of such securities through
its officers and directors, JML, RBP and RAL.
JML has the sole power to direct the vote or disposition of the 61,400
shares of Common Stock owned by JML. RAL has a community property interest in
such shares.
RBP has the sole power to direct the vote or disposition of the 468,825
shares of Common Stock owned by RBP.
LFC disclaims any beneficial interest in any shares of Common Stock
owned by JML or RBP. RBP disclaims any beneficial interest in any shares of
Common Stock owned by LFC and JML, other than such beneficial interest in shares
owned by LFC as arises out of RBP's service as an officer and director of LFC.
JML and RAL disclaim any beneficial interest in any shares of Common Stock owned
by RBP.
The 1,935,364 shares of Common Stock that LFC owns, and as to which LFC
has the sole power to direct the vote or disposition, represent approximately
11.7% of that class of securities. The 488,889 shares of Common Stock that LFC
could acquire through the exercise of the Unit Warrants, and as to which LFC
would expect to have the sole power to direct the vote or disposition, represent
approximately 2.8% of that class of securities. The aggregate of 2,424,253
shares of Common Stock that LFC owns or has the right to acquire through
exercise of the Unit Warrants represents approximately 14.1% of that class of
securities. The 61,400 shares of Common Stock that JML owns, and as to which JML
has the sole power to direct the vote or disposition, represent approximately
0.4% of that class of securities. The 468,825 shares of Common Stock that RBP
owns, and as to which RBP has the sole power to direct the vote or disposition,
represent approximately 2.8% of that class of securities. The 2,485,653 shares
of Common Stock that LFC and JML in the aggregate own or have the right to
acquire through exercise of Unit Warrants, and as to which either LFC or JML has
or would expect to have the sole power to direct the vote or disposition,
represent approximately 14.4% of that class of securities. The 2,893,078 shares
of Common Stock that LFC and RBP in the aggregate own or have the right to
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acquire through exercise of Unit Warrants, and as to which either LFC or RBP has
or would expect to have the sole power to direct the vote or disposition,
represent approximately 16.8% of that class of securities. The 2,954,478 shares
of Common Stock that LFC, JML and RBP in the aggregate own or have the right to
acquire through exercise of Unit Warrants, and as to which LFC, JML or RBP has
or would expect to have the sole power to direct the vote or disposition,
represent approximately 17.2% of that class of securities. In each case, the
calculation of the percentage of the class of Common Stock is based on the
16,514,113 shares of Common Stock which the Corporation advised LFC were
outstanding on November 20, 1998.
During the past sixty days, LFC, JML, RAL and RBP have not engaged in
any transactions in Common Stock, other than LFC's purchase of Units pursuant to
the Subscription Agreement.
6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
The Corporation entered into the Consulting Agreement with LFC in
consideration for consulting services to be performed by LFC pursuant to the
Consulting Agreement from July 13, 1998 through March 15, 1999. In the
Consulting Agreement, the Corporation grants to LFC and RBP certain rights to
have shares of Common Stock registered under the Securities Act of 1933, as
amended. The Subscription Agreement also grants LFC certain rights to have
shares of Common Stock registered under the Securities Act of 1933, as amended.
In the Subscription Agreement, LFC agrees to enter into an agreement under which
it will be prohibited from selling prior to January 1, 2000 any shares of Common
Stock acquired pursuant to the Consulting Agreement, the Subscription Agreement
or the Unit Warrants.
Except for the Consulting Agreement and Subscription Agreement, there
are no contracts, arrangements, understandings or relationships between the
persons named in Item 2 above and any person with respect to any securities of
the Corporation.
7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A - Consulting Agreement, dated effective July 13, 1998, by and
between the Corporation and LFC.
Exhibit B - Agreement of LFC and RBP pursuant to Rule 13d-1(f).
Exhibit C - Agreement among LFC, JML, RAL and RBP pursuant to Rule
13d-1(f).
Exhibit D - Subscription Agreement between LFC and the Corporation
executed November 15, 1998.
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: November 25, 1998 LIVIAKIS FINANCIAL COMMUNICATIONS,
INC.
By /s/John M. Liviakis
---------------------------------
John M. Liviakis, President
/s/John M. Liviakis
------------------------------------
John M. Liviakis
/s/Renee A. Liviakis
------------------------------------
Renee A. Liviakis
/s/Robert B. Prag
------------------------------------
Robert B. Prag
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EXHIBIT D
DATA RACE, INC
SUBSCRIPTION AGREEMENT
CONFIDENTIAL
DATA RACE, Inc.
12400 Network Boulevard
San Antonio, Texas 78249
ATTN: President
1. SUBSCRIPTION. Liviakis Financial Communications, Inc. ("LFC") hereby
agrees to purchase 977,778 shares (the "Shares") of common stock, no par value
("Common Stock"), of DATA RACE, Inc., a Texas corporation (the "Company"), and
977,778 common stock purchase warrants (the "Warrants") to purchase an aggregate
of 977,778 shares of Common Stock (the "Warrant Shares"), on the terms and
conditions described herein. The purchase price for one Share and one Warrant is
$2.25. LFC agrees to purchase at least $1,100,000 of Shares and Warrants on
November 16, 1998, and agrees to purchase $1,100,000 of additional Shares and
Warrants on or before November 20, 1998. The date of any respective purchase is
referred to herein as the closing date.
2. ADDITIONAL PURCHASES. The Company acknowledges that LFC has
identified up to four other investors interested in participating in the
purchase of the purchase of the Shares and Warrants. The Company agrees that,
subject to the limitations described herein, LFC may assign its right to
purchase up to $1,100,000 of Shares and Warrants to up to four other investors,
provided that each such other investor (i) is an "accredited investor" within
the meaning of Regulation D promulgated pursuant to the Securities Act of 1933,
as amended (the "Securities Act"), (ii) executes and delivers to the Company a
subscription agreement substantially in the same form as this Subscription
Agreement, and (iii) delivers to the Company the aggregate purchase price for
the Shares and Warrants purchased by such other investor. Notwithstanding LFC's
right to permit other investors to participate in the purchase of the Shares and
Warrants, LFC hereby irrevocably commits to purchase on or before November 20,
1998, the additional $1,100,000 of Shares and Warrants to the extent not
purchased by such other investors as provided herein.
3. ADDITIONAL TERMS OF PURCHASE.
(a) Except as provided herein, each Warrant shall entitle the holder to
purchase one Warrant Share at an exercise price of $2.25 per share, at
any time on or before the second anniversary of the closing date.
Notwithstanding the foregoing, the Warrants may be exercised only if the
Company obtains shareholder approval to
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increase its authorized shares of Common Stock (in the manner described
in the Company's recent proxy statement), failing which approval the
Warrants shall not be exercisable. Subject to the specific terms
described herein, the Warrants shall be evidenced by a Warrant Agreement
in form similar to that delivered to the purchasers in the Company's
July 24, 1998 private placement, except that the Warrant Agreement shall
contain customary anti-dilution provisions for stock splits, reverse
stock splits and stock dividends and shall contain a net cashless
exercise provision permitting the holder to pay the exercise price using
shares of Common Stock otherwise issuable upon exercise of the Warrants
evidenced by the Warrant Agreement.
(b) The Company agrees to uses[sic] its best efforts to register the
Shares and the Warrant Shares for resale under the Securities Act by the
holders thereof on or before the first anniversary of the closing date.
If the Company files a Form S-3 registration statement under the
Securities Act covering the resale of other shares of Common Stock of
the Company on or after the date of the increase in the Company's
authorized shares, then the Company shall include in such registration
statement the Shares and the Warrant Shares for resale by the holders
thereof.
(c) LFC agrees to enter into a "lock-up agreement" pursuant to which LFC
will be prohibited from selling any Shares or Warrant Shares prior to
January 1, 2000. Any other investor purchasing Shares and Warrants shall
enter into a "lock-up agreement" pursuant to which such investor will be
prohibited from selling any Shares or Warrant Shares prior to the first
anniversary of the closing date.
(d) LFC agrees to enter into an agreement with the Company extending its
consulting agreement with the Company to January 1, 2000, in
consideration for the Company's issuance of 200,000 shares of Common
Stock (such issuance being subject to the increase in the Company's
authorized shares). LFC agrees that the lock-up on its original
consulting agreement shares and the additional consulting compensation
shares shall be extended to January 1, 2000.
4. CERTAIN INVESTMENT RISKS. LFC acknowledges that an investment in the
Company involves a high degree of risk which may result in the loss of the
entire amount of its investment. LFC acknowledges that there are numerous risks
associated with an investment in the Company, including, but not limited to,
those set forth in the Company's filings with the Securities and Exchange
Commission during the last 12 months (the "SEC Filings"). LFC acknowledges that
LFC has had full opportunity to review the Company's SEC Filings, including, but
not limited to, the Company's 10-K filed September 28, 1998, the Company's
definitive proxy statement filed October 14, 1998 and the Company's Form S-3
Registration Statement filed November 6, 1998, and LFC has reviewed the
Company's quarterly earnings release for September 30, 1998. Without limiting
the foregoing, LFC acknowledges that the Company is not currently in compliance
with the Nasdaq National Market net tangible assets requirement and LFC
acknowledges receipt of a copy of Nasdaq's letter to the Company, dated November
4, 1998, notifying the
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Company of such non-compliance. LFC further acknowledges that the issuance of
the Shares hereunder will require substantially all remaining authorized, but
unissued shares of Common Stock, and there can be no assurance that the Company
will receive requisite shareholder approval to increase its authorized shares.
5. INVESTOR REPRESENTATIONS AND WARRANTIES. LFC represents and warrants
to the Company that:
(a) The undersigned is an "accredited investor" within the meaning of
Regulation D promulgated pursuant to the Securities Act (insofar as LFC
is a Company, not formed for the specific purpose of requiring the
securities offered, with total assets in excess of $5,000,000). The
undersigned has such knowledge and experience in financial and business
matters that the undersigned is capable of evaluating the merits and
risks of a investment in the Company. The undersigned has made other
investments and, by reason of its business and financial experience, and
skill in investments of this nature. The undersigned has carefully
evaluated its financial resources and investment position, and the risks
associated with this investment and acknowledges that it is able to bear
the economic risks of this investment. The undersigned represents and
warrants that the investment being made does not exceed 20% of its net
worth.
(b) All documents, records and books pertaining to the undersigned's
proposed investment, which have been requested, have been made available
to undersigned and its advisors. The undersigned has had an opportunity
to ask questions of and receive satisfactory answers from the Company
concerning the Company and its business and the terms and conditions of
an investment in the Company, and all such questions have been answered
to the undersigned's full satisfaction.
(c) The undersigned is not acting on the basis of any promotional sales
materials, or representations and warranties by any person or contained
in any document, except for this document and the SEC Filings and any
other documents or information furnished by the Company upon request by
the undersigned. The undersigned has had full opportunity to be
represented by its own legal and tax counsel.
(d) The securities for which the undersigned is subscribing will be
acquired for its own account for investment purposes only and not with a
view to, or for resale in connection with, any distribution of
securities within the meaning of the Securities Act, and the undersigned
does not now have any reason to anticipate any change in circumstances
or other particular occasion or event which would cause the undersigned
to sell or transfer such securities.
(e) The address and Social Security number (or, if a Company,
partnership or other form of business, the federal employer
identification number) set forth herein are true and correct. The
undersigned is presently a bona fide resident of the state
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set forth on the signature page hereof and has no present intention of
becoming a resident of any other state or jurisdiction. If a Company,
partnership, trust or other form of business, the undersigned represents
and warrants that its principal place of business is within such state.
The securities subscribed for have been offered and will be purchased in
such state.
(f) The undersigned understands that the undersigned must bear the
economic risk of an investment in the Shares and Warrant Shares for an
indefinite period of time because neither the Shares nor the Warrant
Shares have been registered under any securities laws and therefore
cannot be sold without registration under applicable securities laws or
an exemption from such registration is available.
(g) The execution and delivery of this Subscription Agreement and the
purchase of the securities of the Company hereunder is within the
undersigned's power and authority, and have been duly authorized by all
necessary action. Assuming due execution and delivery by the Company,
this Subscription Agreement constitutes a valid and binding obligation,
enforceable against the undersigned.
(h) The information provided to the Company herein is true and correct
in all respects as of the date hereof. The undersigned agrees to notify
the Company immediately if any of the statements made herein shall
become untrue.
6. RESTRICTIONS ON TRANSFER. The undersigned understands that it must
bear the economic risk of the purchase of the Shares and Warrant Shares for an
indefinite period of time, because (a) the securities have not been registered
under the Securities Act or applicable state securities laws; (b) the Shares and
Warrant Shares may therefore not be sold, transferred, pledged or otherwise
disposed of unless the shares are subsequently so registered or, in the opinion
of counsel for or satisfactory to the Company, registration under the Securities
Act or any applicable state securities laws is not required; and (c) the Company
is under no obligation to perfect any exemption for resale of the Common Stock.
The Shares, the Warrants and the Warrant Shares will bear appropriate legends
setting forth such restrictions on transfer.
7. GENERAL. This Agreement sets forth the entire understanding between
the parties hereto concerning the subject matter contained herein. Provisions of
this Agreement may be amended or waived only by written instrument executed by
the party against whom enforcement is sought. This Agreement shall be binding
upon the parties and the respective successors and assigns. The parties agree to
execute such additional documents and take such additional actions as may be
reasonably necessary to give effect to the purposes and intent of this
Agreement. This Agreement may be executed in one or more counterparts, any of
which shall be deemed to be an original, all of which taken together shall
constitute one and the same instrument. In the event any provision of this
Agreement is held to be unenforceable or invalid by any court of competent
jurisdiction, the validity and enforceability of the remaining provisions shall
not be affected thereby. This
14
<PAGE> 15
Agreement shall be governed by the laws of the State of Texas without regard to
conflicts of law rules.
THE SECURITIES SUBSCRIBED FOR HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES ACT AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF ABSENT SUCH REGISTRATION OR AN
EXEMPTION THEREFROM.
THIS SIGNATURE PAGE SHOULD BE DULY EXECUTED BY THE PURCHASER AND
THE ENTIRE EXECUTED SUBSCRIPTION AGREEMENT SHOULD BE DELIVERED TO
DATA RACE, INC., ATTN: PRESIDENT, AT 12400 NETWORK BOULEVARD, SAN
ANTONIO, TEXAS 78216.
The undersigned hereby irrevocably subscribes for 977,778 Shares and
977,778 Warrants (as defined in the Subscription Agreement), at an aggregate
price of $2,200,000.
The undersigned represents that the undersigned has read the above
Subscription Agreement and the representations therein made by me are true and
correct.
IN WITNESS WHEREOF, this Subscription Agreement has been executed by the
undersigned as of November 15, 1998.
LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
By: /s/John Liviakis
-----------------------------------------
Name: John Liviakis
---------------------------------------
Title: President
--------------------------------------
Address:
2420 K St.
--------------------------------------------
Sac., CA 95816
--------------------------------------------
--------------------------------------------
SSN or EIN: ###-##-#### [sic]
---------------------------------
SUBSCRIPTION ACCEPTED:
DATA RACE, INC.
By: /s/ W.B. Barker
-------------------------------
Dr. W.B. Barker, President and
Chief Executive Officer
Date: 15 November 1998
-----------------------------
15
