UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 1O-K
(Mark One) (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES ACT OF 1934
For the transition period from ________to__________
Commission file number 0-22904
PARKERVISION, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2971472
(State of Incorporation) (I.R.S. Employer ID No.)
8493 BAYMEADOWS WAY
JACKSONVILLE, FLORIDA 32256
(904) 737-1367
(Address of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes [X] No [ ]
Indicate by check mark if there is no disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K (X).
As of March 24, 2000, the aggregate market value of the Issuer's Common Stock,
$.01 par value, held by non-affiliates of the Issuer was approximately
$223,527,851 (based upon $30.50 per share closing price on that date, as
reported by The Nasdaq National Market).
As of March 24, 2000, 11,935,892 shares of the Issuer's Common Stock were
outstanding.
Documents incorporated by reference: Portions of the definitive Proxy Statement
to be delivered to stockholders in connection with the 2000 Annual Meeting are
incorporated by reference into Part III.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
ParkerVision, Inc. (the "Company") was incorporated under the laws of the state
of Florida on August 22, 1989. The Company's operations consist of two operating
segments - the Video Products Division ("Video Division ") and the Wireless
Technology Division ("Wireless Division").
Video Division
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The Video Division is engaged in the design, development and marketing of
automated video camera control systems and automated production systems. The
Company sells its video products and education-based studio systems primarily
through audiovisual dealers and other equipment manufacturers throughout the
United States as well as in Canada, Latin America and Asia. The Company also
engages in direct selling of its high-end automated production systems.
Approximately 89%, 97% and 100% of the Company's revenues in 1999, 1998 and 1997
have been generated from its automated video camera control systems, marketed
under the tradename CameraMan(R). These systems were developed to allow the
creation of professional-quality video communication by non-professional video
users. These systems include a proprietary "tracking" technology that allows a
video user to appear in the video while also controlling the camera. The Company
markets to certain educational and videoconferencing segments of the commercial
market where audiovisual solutions have become increasingly popular for
communication, training, presentation, instructional and educational needs. The
Company offers its CameraMan(R) products in a variety of application-specific
packages designed for the distance education and videoconferencing markets.
Since 1995, the Company has produced camera products for Vtel Corporation
("VTEL") under an OEM agreement. VTEL accounted for approximately 29% of the
Company's revenues in 1999 and approximately 35% of the Company's revenue in
1998 and 1997.
The Company's automated production systems, marketed under the tradenames
PVTV(TM) or STUDIO(TM), were designed specifically to meet the needs of studio
production markets. The PVTV(TM) product line includes a professional, broadcast
quality video production system that integrates video, audio, machine control
and camera control functions into an intelligent single-operator station. The
system was designed to allow organizations to economize their resources by
maximizing their production capabilities. A single operator can control, in
parallel, the production functions that traditionally require as many as six to
twelve individuals to operate.
The Company installed three PVTV(TM) beta sites in 1998 -- a cable network
operator, a broadcast news station and an educational facility. The Company
worked extensively with its beta sites during 1998 and increased the
technological capabilities of its system to include late breaking news
functionality and integration of a widely used news automation service. The
Company also focused much of 1998 on filing patents to protect its proprietary
technologies as they relate to the PVTV(TM) system.
The Company installed several "pilot" sites in 1999 within several vertical
markets including broadcast, corporate and education. In the broadcast sector,
this effort allowed for the integration of widely used third party equipment and
products such as news automation systems by AVSTAR and Associated Press and
video servers produced by Grass Valley/Tektronix and Leitch. Integration with
third party equipment manufacturers allows the Company to leverage the installed
base of existing
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equipment into its sales efforts. In addition, in 1999, the Company introduced a
digital version of its PVTV StudioNEWS(TM) system and integrated keying
capabilities, which allows for enhanced graphic effects.
During 1999, the Company also introduced the PVTV Learning program that packages
curriculum with Internet web tutorials for lower education (K-12) video
production. The PVTV Learning packages are aggressively priced to target the
large K-12 market in television education, distance learning, televised public
address (campus news) and intranet/WAN web casting. In addition, similar but
more sophisticated packages were developed for the higher education market. This
effort allows the education community to teach and produce students well-versed
in automation processes. Broadcasters looking for producers and directors to run
the advanced automated broadcast stations currently being installed will seek
these students.
The Company plans to continue to devote research and development efforts to the
PVTV(TM) product line and expects to introduce several additional systems and
features in 2000. These features include further integration of news automation
services to allow for automatic programming of the PVTV(TM) transition macros
directly from the news automation service, digital CameraMan(R) cameras, and
redundancy systems to enhance system reliability.
Wireless Division
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The Company's Wireless Division is engaged in the development and initial
commercialization of its Direct2Data(TM), or D2D(TM), technology. This
technology is a wireless Direct Conversion radio frequency ("RF") technology
that the Company believes will reduce cost, size, and power consumption while
improving performance of wireless devices such as cellular telephones and
wireless local area networks ("WLAN"), among others. The Company's Wireless
Division is in the early stages of commercialization and has not generated any
revenue to date.
The Company believes its D2D(TM) technology represents a completely new
electronic circuit architecture that has the capability of replacing RF
heterodyne architectures which the Company believes are the most widely deployed
current industry standard circuit architecture utilized in wireless
communications. In 1998, the Company announced that its D2D(TM) technology
allowed for a single-step direct conversion of an incoming RF carrier signal
directly to its baseband data, eliminating the need for the RF heterodyne
architecture in RF receiver design. The Company later determined that its D2D
technology could be applied to RF transmitter use as well. The Company's focus
has been on the creation of zero intermediate frequency ("zero IF") radio system
applications based on the D2D Direct Conversion technology. Zero IF radios
eliminate all of the intermediate frequency stages currently utilized in broadly
deployed heterodyne transmitters and receivers.
The Company believes the D2D(TM) architecture can be implemented in a wide range
of semiconductor processes allowing the opportunity to integrate other system
functions such as amplifiers, oscillators, and filters into the same IC as the
RF receiver, transmitter or transceiver. This technology breakthrough reduces
complexity, size, power consumption and cost of wireless communication systems.
The Company believes the technology for certain applications also improves
performance when compared to the traditional approaches, as it simplifies the
handling of the data extraction (receiver) process or the data transmission
(transmitter) process.
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The performance of the Company's D2D(TM) technology was independently confirmed
by Questar InfoComm, Inc. ("Questar"), a subsidiary of Questar Corporation,
which signed a letter of intent to jointly develop products utilizing the
Company's D2D(TM) technology in 1998. Questar also purchased $5 million in
ParkerVision common stock in a private placement transaction in December 1998.
The Company continues to work with Questar on the development of applications of
interest to Questar.
The Company focused much of 1998 and 1999 on filing patents to protect its
intellectual property and continuing to develop enhancements of the technology.
The Company's development efforts in the second half of 1999 became focused on
specific standards-based applications including the IEEE 802.11 WLAN standard,
GSM cellular application, CDMA IS-95 cellular application and the BlueTooth
personal area network standard.
The Company completed the development of a WLAN demonstrator that demonstrates
several of the technological breakthroughs made possible by the Company's
D2D(TM) technology. The Company also entered into a licensing agreement with
Symbol Technologies, Inc. ("Symbol"), a leading provider of mobile data
management systems and services for WLAN products. The agreement calls for
D2D(TM) to be incorporated into the majority of Symbol's future WLAN products
and for Symbol to be the sole licensee in the WLAN marketplace. Under the terms
of the agreement, the Company received prepaid royalties and will receive
additional payments over time for the sale by Symbol of products including the
D2D(TM) technology.
The Company also completed a D2D-based transmitter demonstration platform that
the Company believes meets or exceeds the requirements of the CDMA IS-95
standard. Early in 2000, the Company announced that the identical D2D(TM)
transmitter hardware was utilized to complete a demonstrator platform that the
Company believes exceeds the GSM standard as well. CDMA is the fastest growing
digital cellular standard in many regions and is considered to be the most
demanding of the current digital cellular standards in terms of radio
transceiver performance requirements. GSM is currently the world's most popular
digital cellular communications standard. The Company also announced its plans
to develop D2D(TM) based receiver platforms, which meet or exceed both the CDMA
IS-95 and GSM standards.
The Company has opened an office in California for the purpose of recruiting and
employing RF engineers for further development of the Company's wireless
technology. In addition to the Company's own engineering staff, the Company
engages third party consulting firms to provide application engineering and
design services for the Company's D2D(TM) technology.
The Company plans to continue its research and development efforts on D2D(TM)
into 2000 with a focus on the development of application-specific solutions
based on the D2D(TM) technology and further enhancements to the technology.
Early in 2000, the Company added application-engineering teams in Orlando,
Florida and Utah with a focus on these efforts.
PRODUCTS
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Video Division
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The Company's CameraMan(R) automated video camera control systems utilize a
portable, computerized base which pans and tilts simultaneously to achieve fluid
motion, into which is integrated a professional quality single-chip or
three-chip imaging camera that provides the system
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camera control functions, such as auto-focus and auto-image control. The base
unit also includes a proprietary automatic tracking capability. Additional
peripheral devices are available to control the automatic tracking functions and
to remotely control base unit and camera functions. CameraMan(R) camera products
are offered in a variety of application-specific packages.
For the distance education market, the Company offers Presenter and Student
Camera systems. The presenter system allows a presenter, or instructor, to wear
a tracking device with built-in microphone, so that the camera will
automatically follow the presenter's movements throughout a room. The student
system includes a student response feature allowing students to "raise their
hands" electronically by pressing a locator button on a microphone. The camera
will then automatically recall the student's location thereby providing
educators and students with an "eye to eye" level of communication. For the
videoconferencing market, the Company offers a Personal Locator system. This
system allows each videoconferencing participant to program his or her personal
location preset and then recall that preset at the touch of a button on that
individual's keypad. The system also includes a chairperson keypad with "system
lockout" functionality for meeting control. For general-purpose commercial
applications where a high-quality, full-featured pan/tilt system is desired but
tracking capability is not needed, the Company offers a General Pan/Tilt system.
This system is field upgradable to all other application-specific systems and,
as a result, is easily adaptable to distance education and videoconferencing
applications.
All of the Company's single-chip application-specific packages are available in
a VTEL-labeled product line. The basic difference between the VTEL-labeled
products and the Company's other products is the ability for the VTEL products
to be factory integrated with select VTEL equipment.
The Company's automated camera control systems have list prices ranging from
approximately $5,000 to $10,000 for a single-chip system and $19,000 to $30,000
for a three-chip system. Early in 2000 the Company completed development of a
3-CCD digital 4:3 aspect ratio CameraMan with an 18x broadcast lens. The Company
anticipates selling the digital camera system in broadband distance learning
applications, flash camera applications in newsrooms and packaged with PVTV
digital studios for "live" production studios. The list price for the digital
CameraMan is in the range of $30,000 to $40,000.
The Company's PVTV(TM) or STUDIO(TM) systems provides fully-integrated, PC-based
production systems with unique functionality. These systems incorporate two or
more CameraMan(R) single-chip or three-chip camera systems with additional
audio, video and machine control functions, a graphical user interface and
software based on a Microsoft(R) operating system. A proprietary "transition
macro" technology allows the system operator to build, revise and preview a
production in storyboard fashion and then run the entire live or live-to-tape
production with the press of one button. These systems also allow the operator
to manually pause or interrupt the automated production, as needed, for
insertion of changes. In addition to CameraMan(R) cameras, the PVTV(TM) systems
can work with other video sources such as satellite feeds,
compression/decompression devices and cameras produced by other manufacturers.
The PVTV(TM) product line is currently available in three application-specific
packages: StudioONE(TM) targeted for corporate environments, PVTV Learning
Studio(TM) targeted at lower education (K-12) and higher education (colleges and
universities) environments, and StudioNEWS(TM) targeted for broadcast and cable
production markets.
The StudioONE(TM) system is a base line system with limited video/audio
inputs/outputs ("I/O") and
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limited control ports. This system offers various options, which enhance the
system functionality. The StudioONE(TM) system has list price ranges from
$80,000 to $160,000, depending upon the upgrade options required.
The PVTV Learning Studio(TM) is similar in functionality with the PVTV
StudioONE(TM) product with the exception that for lower education market
segments, it comes packaged with curriculum and on-line CD-ROM and Internet
based tutorials. In addition, the systems are packaged with cameras,
teleprompters and a character generator for a complete single-source solution
that facilitates the specification, design and procurement process for the
customer. The PVTV Learning Studio(TM) package for the K-12 market segment is
priced in the $80,000 to $160,000 price range. For higher learning market
segments, higher functionality digital systems with 3-CCD CameraMan cameras are
provided aggressively priced in the $120,000 to $220,000 price range.
The StudioNEWS(TM) system is a switchable digital system that adds proprietary
functionality to allow for the insertion of late breaking news in a live
broadcast environment. In addition, StudioNEWS(TM) allows for multi-script
format and integration of a news automation system. The list price for a
StudioNEWS(TM) system ranges from $290,000 to $450,000 depending on selected
options.
The PVTV(TM) product line includes components that may be packaged with the base
STUDIO(TM) system to provide additional functionality. These systems include the
ScriptViewer(TM) and Shot Director(TM) systems. The ScriptViewer(TM) system is a
robotic, automated teleprompter system for CameraMan(R) cameras that integrates
with STUDIO(TM). The Shot Director(TM) is a joystick controller which is
compatible with both single-chip and three-chip CameraMan(R) camera systems and
provides real-time camera control and setup functionality for up to sixteen
CameraMan(R) cameras. The Shot Director(TM) is packaged with the STUDIO(TM) as
well as offered as a stand-alone system for use with CameraMan(R) cameras.
Wireless Division
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To date, the Company has not developed products for its wireless division, but
rather has focused its efforts on commercialization through licensing
arrangements with third parties. While the Company is continuing its licensing
efforts and is in discussions with a number of companies, early in 2000, the
Company announced plans to offer highly integrated RF front end ICs for WLAN
products. The initial WLAN IC to be offered will be for WLAN products built to
the IEEE 802.11b standard. The Company believes the D2D(TM) architecture will
allow manufacturers to reduce component costs, reduce power consumption and
simplify design and manufacturing of WLAN products. The Company anticipates the
introduction of samples for OEM customers during the latter half of 2000.
MARKETING AND SALES
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Video Division
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The CameraMan(R) video camera control systems and the PVTV(TM) automated
production systems are marketed to educators, corporate professionals and
broadcasters who use audiovisual, telecommunications and production systems in
distance education, videoconferencing, and live or live-to-tape broadcasts. In
the education market, the Company targets universities, colleges, primary
schools, hospitals/clinics, and corporate/government training facilities. The
Company believes
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telecommunications technologies are a trend in education resulting in teaching
programs which are more timely, more accessible, and more cost-effective per
student. In the videoconferencing market, the Company targets corporations who
are utilizing on-site videoconferencing rooms for long-distance training and
communication among corporate personnel, customers, clients and suppliers. In
the broadcast production market, the Company targets broadcast and cable
networks/stations, independent studios and corporate, education, healthcare,
religious and government studios.
System sales are directed by an internal sales staff and a network of authorized
audiovisual product dealers, telecommunication dealers and systems integrators
who design and specify audiovisual and production equipment of various
manufacturers. In addition, the Company maintains national account sales
arrangements, such as the program with VTEL, for specific applications and
targeted commercial markets. The majority of the Company's sales to date have
been generated through its authorized dealers, primarily located in the United
States. Since 1997, the Company has been expanding its audiovisual dealer
network to include the international market, with a focus on Asia. The Company
also sells certain of its automated production systems direct, primarily in the
broadcast and cable segment. In addition to system sales, the Company also
provides training and annual service and support contracts for its automated
production systems. These services are supported primarily by internal trainers,
project managers and support personnel.
The Company currently supports its distribution channels with marketing programs
to promote its products. These include targeted trade advertising, direct mail
campaigns, lead generation/fulfillment, tradeshow attendance and live
demonstration facilities. In addition, the Company provides training of its
dealers' and national accounts' sales, support and installation personnel.
The Company's revenues by distribution channel are as follows:
Distribution Channel 1999 1998 1997
------------------------- --------- --------- ---------
National Resellers 53% 50% 59%
OEM Customers 29% 39% 36%
International Resellers 8% 8% 5%
Direct 10% 3% 0%
VTEL accounted for approximately 29% of the Company's revenues in 1999 and
approximately 35% of the Company's revenues in 1998 and 1997. No other customer
accounted for more that 10% of the Company's revenues in 1999, 1998 or 1997.
Wireless Division
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The Company is marketing its technology to wireless product companies and
semiconductor companies. The Company plans to commercialize its D2D(TM) wireless
technology by pursuing strategic partnerships and licensing arrangements as well
as by producing and selling IC's to product manufacturers. Currently, Symbol is
the only licensee of the Company's wireless technology. The Company plans to
offer highly integrated RF front end IC's for WLAN products to product
manufacturers with sample IC's initially available in 2000. The Company will
contract with semiconductor foundries to manufacture the IC's based on the
Company's designs.
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The Company may also consider additional strategies for marketing its technology
including, but not limited to joint product development arrangements for the
development of specific products utilizing the wireless technology, and
developing and marketing its own wireless RF products.
COMPETITION
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Video Division
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The videoconferencing industry, which includes distance education, is highly
competitive. The Company is aware of certain other companies that have
commercialized or developed technologies and products, which are competitive
with certain functions of the CameraMan(R), automated camera control systems.
Several manufacturers of pan/tilt heads compete with the Company's camera
systems. Some of these pan/tilt heads have limited preset location capabilities,
but they offer no tracking capabilities and must be operated manually. Some of
the above mentioned products sell for more than the CameraMan(R) camera system
while others sell at prices similar to, or less than, that of the CameraMan(R)
system, but offer limited functions. Both Canon and Sony offer systems with
certain automatic tracking capabilities. The Canon system requires integration
of third party software and a personal computer with specific video hardware in
order to perform certain tracking functions. The Sony system offers a
visual/color-tracking technology embodied within their camera. While the Canon
and Sony systems are offered at prices similar to, or less than, the
CameraMan(R) system, the Company believes these systems have a significantly
lower level of performance than the CameraMan(R) system and do not have the
application-specific flexibility that is incorporated with the Company's
products. The Company believes that it competes principally on the basis of the
capabilities of the CameraMan(R) camera system, ease of system application, and
system flexibility.
The studio production industry is also highly competitive. Tektronics, Sony
Corporation, Panasonic Corporation, Ross, and Echolabs, among others, offer
video switchers and various other products for studio environments. A
traditional audio/video production environment involves the coordination of
multiple operators who independently operate various pieces of equipment in
parallel to achieve audio, video, machine control and camera control functions.
The Company is not aware of any competitors who currently offer a system
solution that integrates audio, video, machine control and camera control
through a single interface and provides the technology to allow these functions
to operate automatically and in parallel. The Company intends to compete based
on the acquisition of patents on its proprietary "transition macro" technology
and continued enhancements of its system to offer users more automation and
functionality than its competitors.
Many of the Company's competitors, in both the videoconferencing and studio
production industries, are well-established, have substantially greater
financial and other resources than the Company, have established reputations for
success in the development, sale and service of products, and have significant
advertising budgets to permit them to implement extensive advertising and
promotional campaigns in response to competitors. Certain of these competitors
dominate their respective industries and have the financial resources necessary
to enable them to withstand substantial price competition, which is expected to
increase, and downturns in the markets for communication products.
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Wireless Division
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The Company intends to compete in the wireless industry based on the unique
attributes of its patent-pending D2D(TM) technology which the Company believes
will provide lower cost, size, power consumption and better performance than
other technologies and approaches that the Company is aware of. The Company
believes that the competing approaches are fundamentally based on utilizing more
traditional devices to achieve the Direct Conversion function instead of the
approach that the Company has developed and for which the Company has filed for
patent protection. The Company has filed for multiple patents to protect its
technology. Although the Company expects to compete in this market on the basis
of its patent-pending technology, it is possible that competitors will attempt
to find alternative solutions or develop superior technology.
The Company believes its wireless technology represents a significant
advancement in RF technology and one of the primary sources of competition is
from older technological solutions which designers and manufacturers are
currently using and about which they are knowledgeable. The Company expects this
to persist until its technology is more widely acknowledged and utilized. It is
possible that there will be a continuing reliance on the older technological
solutions resulting in a slower market acceptance of the Company's new RF
technology.
The Company also expects competition to arise from other RF technologies that
are emerging or currently under development such as systems based on the use of
Impulse Samplers and Direct Conversion systems based on the use of heterodyne
mixers. One such system introduced in 1999 is the Direct Conversion Othello
chip-set developed by Analog Devices, Inc. ("ADI") for use in GSM cellular
applications. ADI predicts other applications will follow.
PRODUCTION AND SUPPLY
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Video Division
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The Company engages in assembly operations for its automated video camera
control and production systems at its facility in Jacksonville, Florida. The
Company's operations involve the inspection of each component, assembly of the
system's electronic circuitry and other components, a series of quality
specification measurements, and various other computer, visual and physical
tests, including product field testing to certify final performance
specifications. The Company believes that it has sufficient production capacity
to satisfy increased demand for these systems for the foreseeable future. The
Company obtains all of its component parts, including standard electronic
components and specially designed components, from third-party manufacturers.
The Company currently purchases all of its requirements of specially designed
component parts from single-source suppliers. The Company owns the design and
dies for such components and believes that alternative sources of supply for
such components are available. In addition, the Company purchases the camera
modules for its automated camera systems and several of the hardware components
for its automated production systems from single-source suppliers. Alternative
sources of supply would require modifications to existing systems. The Company
maintains blanket orders and/or purchase contracts with these suppliers. The
Company purchases other system components pursuant to purchase orders placed
from time to time in the ordinary course of business.
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For the years ended December 31, 1999, 1998 and 1997, one supplier accounted for
approximately 26%, 18% and 40%, respectively of the Company's component
purchases. This supplier is the single-source supplier of the Company's camera
modules for its automated camera systems. No other supplier accounted for more
than 10% of the Company's component purchases in 1999, 1998 or 1997.
At December 31, 1999, the Company had commitments to purchase camera modules and
other parts totaling approximately $337,000 through 2000. The Company is
substantially dependent on the ability of its suppliers, among other things, to
satisfy performance and quality specifications and dedicate sufficient
production capacity for components within scheduled delivery times. Failure or
delay by the Company's suppliers in supplying necessary components to the
Company would adversely affect the Company's ability to obtain and deliver
products on a timely and competitive basis. The Company endeavors to mitigate
the potential adverse effect of supply interruptions by carefully qualifying
vendors on the basis of quality and dependability, and by maintaining an
inventory of certain components, but there can be no assurances that such
components will be readily available when needed.
The Company's sales cycle for its camera and studio products is estimated to be
from one to eighteen months. The period from execution of a customer's purchase
order to delivery of a CameraMan(R) camera system is typically one to four
weeks. The period from execution of a customer's purchase contract to delivery
and installation for a studio system can range from three weeks to six months,
depending upon peripheral equipment requirements and the readiness of the
customer's site. The Company attempts to forecast orders and to purchase long
lead-time components in advance of receipt of purchase orders to permit it to
provide deliveries of completed systems within its standard delivery period. At
December 31, 1999, the Company maintained an inventory of standard electronic
and other system components of $2,328,805. Substantially all of the Company's
systems are delivered to customers by common carrier.
The Company offers a one-year limited warranty on its camera products and a
ninety-day warranty on its studio products covering defects in workmanship and
materials and software bugs. During the warranty period the Company will replace
parts and make repairs to system components at its expense. The Company records
a reserve for future warranty costs at the time of sale. Extended support and
service contracts are offered to the customer to cover hardware repair as well
as software support and upgrades for the studio systems. The revenues from these
extended support contracts are recognized ratably over the service period.
Wireless Division
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The Company plans to utilize semiconductor foundries for the production of RF
IC's. The Company will be substantially dependent upon these foundries to
satisfy performance and quality specifications and dedicate sufficient
production capacity for IC's within scheduled delivery times. Failure or delay
by the foundries in supplying IC's to the Company would adversely affect the
Company's ability to obtain and deliver such IC's on a timely and competitive
basis. The Company endeavors to mitigate the potential adverse effect of supply
interruptions by carefully qualifying foundries on the basis of quality and
dependability, and by maintaining vendor relationships with multiple foundries.
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PATENTS AND TRADEMARKS
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The Company currently holds eighteen United States utility patents, seven
foreign utility patents, three pending United States utility patent applications
and six foreign utility patent applications covering certain tracking functions
and methods for controlling the field of view in an automatic tracking camera
system. The Company has filed three United States utility patent applications
relating to its automated camera control systems and automated production
systems. The Company has filed twenty-five United States utility patent
applications, twenty-two United States provisional patent applications, six
Patent Cooperation Treaty patent applications and three Taiwan utility patent
applications relating to its wireless technology. The Company has filed and
obtained "Petition to Make Special" status with the United States Patent and
Trademark Office for certain of its United States utility patent applications on
its wireless technology and anticipates issuance of its initial United States
utility patents on this technology in 2000.
The Company promotes the ParkerVision, CameraMan and PVTV trademarks in
connection with its marketing activities and holds United States trademark
registrations for ParkerVision and CameraMan. In addition, the Company has
applied to register other trademarks, including PVTV(TM), Direct2Data(TM) and
D2D(TM).
GOVERNMENT REGULATION
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The Company utilizes wireless communications in its CameraMan(R) camera and
PVTV(TM) systems and in its D2D(TM) technology. These wireless communications
utilize infrared and radio frequency technology that is subject to regulation by
the Federal Communications Commission ("FCC"). The Company has obtained, is in
the process of obtaining, or will attempt to obtain all licenses and approvals
necessary for the operation of its products and technologies. There can be no
assurance that, in the future, the Company will be able to obtain required
licenses or that the FCC will not require the Company to comply with more
stringent licensing requirements. Failure or delay in obtaining required
licenses would have a material adverse effect on the Company. In addition,
expansion of the Company's operations into certain foreign markets may require
the Company to obtain additional licenses for its products. Amendments to
existing statutes and regulations, adoption of new statutes and regulations and
the Company's expansion into foreign jurisdictions, could require the Company to
alter methods of operations at costs that could be substantial, which could have
an adverse effect on the Company. There can be no assurance that the Company
will be able, for financial or other reasons, to comply with applicable laws and
regulations and licensing requirements.
RESEARCH AND DEVELOPMENT
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For the years ended December 31, 1999, 1998 and 1997, the Company expended
approximately $6,203,000, $3,825,000 and $3,296,000, respectively, on research
and development.
For the past three years, the Company's principal research and development
efforts have been devoted to the development of the PVTV(TM) product line in the
Video Division and the D2D(TM) technology in the Wireless Division.
11
<PAGE>
EMPLOYEES
- ---------
As of December 31, 1999, the Company had 100 full-time employees, of which
twenty-three are employed in manufacturing, twenty-nine in engineering research
and development, thirty-two in sales, support and marketing, and sixteen in
finance and administration. None of the Company's employees are represented by a
labor union. The Company considers its employee relations satisfactory.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's executive offices and Video Division manufacturing, sales and
distribution operations are located in approximately 33,000 square feet of
leased space on three acres of land in Jacksonville, Florida, pursuant to a
lease agreement with Jeffrey Parker, Chairman of the Board, Chief Executive
Officer and President of the Company, and Barbara Parker, Mr. Parker's mother.
The initial lease term expired in February 1997, and the Company exercised its
first of three five-year renewal options. The lease is on a triple net basis and
currently provides for a monthly rental payment of $25,867 through February
2002. The Company believes that its manufacturing facility is adequate for its
current and reasonably foreseeable future needs. The Company believes that
additional physical capacity at its current facility will accommodate expansion,
if required.
The Company leases approximately 1,200 square feet in Los Angeles, California as
a demonstration and training facility for the Company's video products. The
lease provides for a monthly rental payment of approximately $1,600 per month
through May 2002.
The Company leases approximately 5,300 square feet of office space in
Jacksonville, Florida for its Wireless Division engineering and business
development staff. The lease provides for a monthly rental payment of
approximately $7,200 through May 2000 with a one-year renewal option.
The Company also leases approximately 5,600 square feet of office space in
Pleasanton, California for the Wireless Division's West Coast engineering and
business development personnel. The lease term commenced in March 2000 and
provides for a monthly rental payment of approximately $13,700 through March
2005.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
12
<PAGE>
MARKET INFORMATION
- ------------------
The Company's common stock is traded under the symbol (PRKR) on the Nasdaq
National Market ("Nasdaq"), which is the principal market for the common stock.
Listed below is the range of the high and low bid prices of the common stock for
the last three fiscal years, as reported by Nasdaq. The amounts represent
inter-dealer quotations without adjustment for retail markups, markdowns or
commissions and do not necessarily represent the prices of actual transactions.
<TABLE>
<CAPTION>
1997 1998 1999
--------------------------- --------------------------- ---------------------------
High Low High Low High Low
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
1st Quarter $17.375 $11.750 $24.000 $12.188 $31.500 $22.063
2nd Quarter 21.250 12.625 27.250 19.250 37.313 25.938
3rd Quarter 32.125 18.500 23.500 10.813 39.063 21.875
4th Quarter 31.500 15.125 24.750 11.375 32.000 18.500
</TABLE>
HOLDERS
- -------
As of March 24, 2000, there were 95 holders of record. The Company believes
there are approximately 1,820 beneficial holders of the Company's common stock.
DIVIDENDS
- ---------
To date, the Company has not paid any dividends on its common stock. The payment
of dividends in the future is at the discretion of the board of directors and
will depend upon the Company's ability to generate earnings, its capital
requirements and financial condition, and other relevant factors. The Company
does not presently intend to declare any dividends in the foreseeable future,
but instead it intends to retain all earnings, if any, for use in the Company's
business.
SALES OF UNREGISTERED SECURITIES
- --------------------------------
<TABLE>
<CAPTION>
If option, warrant
Consideration received and Exemption or convertible
description of underwriting from security, terms
Date of Title of Number or other discounts to market registration of exercise or
sale security sold price afforded to purchasers claimed conversion
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11/99 Options to 414,100 Options granted - no 4(2) Exercisable for five
purchase consideration received by years from the date
common stock Company until exercise the options first
granted to become vested,
employees and options vest from
directors zero to ten years
pursuant to from the date of
stock option grant at an exercise
plan price of $23.25 per
share
</TABLE>
13
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth consolidated financial data for the Company as of
the dates and for the periods indicated. The data has been derived from the
audited financial statements of the Company included in Item 8. The financial
statements as of and for the year ended December 31, 1999 were audited by
PricewaterhouseCoopers LLP. The financial statements as of and for the two years
in the period ended December 31, 1998 were audited by Arthur Andersen LLP. The
selected financial data should be read in conjunction with the consolidated
financial statements of the Company and "Management's Discussion and Analysis of
Financial Condition and Results of Operations".
<TABLE>
<CAPTION>
For the years ended December 31,
----------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
(in thousands, except per share amounts)
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Revenues, net $10,549 $9,892 $10,799 $9,196 $3,903
Gross margin 4,015 4,009 4,684 3,209 1,462
Operating expenses 14,981 10,191 8,637 5,411 5,139
Interest income 1,297 1,477 1,019 614 399
Other expense 72 1 0 10 253
Interest expense 0 0 0 76 278
Net loss (9,741) (4,706) (2,934) (1,674) (3,809)
Basic and diluted net
loss per common share (0.83) (0.41) (0.28) (0.17) (0.43)
BALANCE SHEET DATA:
Total assets 32,771 40,250 38,685 18,162 10,955
Long term liabilities 30 18 5 3 3,035
Shareholders' equity 30,136 38,982 37,527 17,277 6,970
Working capital 22,733 25,290 24,424 8,214 8,680
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
- --------------------------
When used in the Form 10-K and in future filings by the Company with the
Securities and Exchange Commission, the words or phrases "expects" or "the
Company expects", "will continue," "is anticipated," "estimated" or similar
expressions are intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Readers are
cautioned not to place undue reliance on any such forward-looking statements,
each of which speak only as of the date made. Such statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from historical earnings and those presently anticipated or
projected. These risks include, but are not limited to, the continuing losses of
the Company which
14
<PAGE>
may result in the need for additional capital in the future or a change in
current operations, the need for substantial capital and use of current working
capital to develop new products and for research and development, uncertainty of
product development, technological obsolescence, market acceptance of its
products and dependence on third party suppliers and distributors. The Company
may also have to expend substantial employee time and financial resources to
meet governmental regulation requirements and for the protection of its
intellectual property rights. The Company has no obligation to publicly release
the result of any revisions that may be made to any forward-looking statements
to reflect anticipated or unanticipated events or circumstances occurring after
the date of such statements.
GENERAL
- -------
The Company has made significant investments in developing the technology and
manufacturing capability for its products, the returns on which are dependent
upon the generation of future revenues for realization. The Company has not yet
generated revenues sufficient to offset its operating expenses. To date the
Company has used the proceeds from the sale of its equity securities to fund its
operations. The Company anticipates increases in revenues in 2000. These
increases are subject to the Company continuing to expand its product lines and
attracting additional means of distribution and customers, among other things.
The Company intends to continue to use its working capital to build its
infrastructure to support future marketing and sales and research and
development activities for its products. No assurance can be given that such
expenditures will result in increased sales, new products, or technological
advances.
RESULTS OF OPERATIONS FOR EACH OF THE THREE YEARS ENDED DECEMBER 31, 1999, 1998
- --------------------------------------------------------------------------------
AND 1997
- --------
Revenues
- --------
Revenues for the years ended December 31, 1999, 1998 and 1997 were $10,549,081,
$9,891,543, and $10,799,067, respectively. The Company's revenues to date
consist of sales of its CameraMan(R) automated video camera control systems,
automated production systems and various accessories that complement those
systems. Revenues generated by the Company's major product lines as a percentage
of total revenues for the years ended December 31, 1999, 1998 and 1997 are as
follows:
1999 1998 1997
---------- ---------- ----------
CameraMan systems 89% 97% 100%
PVTV Studio systems 11% 3% 0%
15
<PAGE>
The number of stand-alone camera systems sold and the average selling price per
system for the years ended December 31, 1999, 1998 and 1997 are as follows:
#
Camera Avg. Selling
Systems Price Per
Sold System
------- ------------
1999 1,415 $6,600
1998 1,413 $6,800
1997 1,797 $6,000
The Company sold five automated production systems in 1999 at an average selling
price of approximately $240,000 (including cameras). This compares to two system
sales in 1998 at an average selling price of $150,000 per system. The increase
in average selling price is primarily due to beta site discounts allowed on the
1998 system sales.
The increase in revenues from 1998 to 1999 was primarily due to increased
automated production system sales, offset somewhat by a decrease in the average
selling price of camera systems. The change in average selling price of camera
systems was due to the mix of products sold as well as discounts offered on
slightly used camera systems to reduce the Company's inventory of finished
products used for demonstrations and tradeshows.
The decrease in revenues from 1997 to 1998 was a result of a decrease in the
number of camera systems sold, offset somewhat by an increase in the average
selling price per system, and revenues generated from the sales of initial
automated production systems to beta customers. Management believes the decrease
in the number of camera systems sold was primarily due to the focus of the
internal sales staff and management on the launch of its automated studio
production systems as well as increased competition from manufacturers of lower
priced camera systems.
The Company anticipates an increase in revenue in 2000, primarily from sales of
its PVTV(TM) automated production systems. These systems have list prices
ranging from approximately $80,000 to over $350,000 per system, as compared to
CameraMan(R) camera systems which range in selling price from $5,000 to $10,000
for single-chip systems and from $19,000 to $30,000 for three-chip systems. The
Company also anticipates increased training, service and support revenue related
to its PVTV system sales.
The Company is also attempting to commercialize its D2D(TM) RF technology, and
has entered into a licensing agreement with Symbol for the use of the Company's
D2D technology in the majority of Symbol's next generation WLAN products. This
license agreement, along with other commercialization efforts, could result in
initial product or licensing revenues in 2000.
While the Company strives for consistent revenue growth, there can be no
assurance that consistent revenue growth or profitability can be achieved. The
Company's ability to achieve revenue growth is dependent upon many factors,
including market acceptance of new products and technologies, ability of vendors
to supply key components, development of new products in a timely manner,
relationships with significant customers and resellers, and changes in capital
spending by customers. There can be no assurance that the Company will be able
to increase or even maintain its current level of revenues on a quarterly or
annual basis in the future.
16
<PAGE>
GROSS MARGIN
- ------------
For the years ended December 31, 1999, 1998 and 1997, gross margins as a
percentage of sales were 38%, 41% and 43%, respectively.
Fluctuations in margin are in part due to changes in the product mix and
discounts offered on used camera systems to reduce the Company's inventory of
finished products used for demonstrations and tradeshows. In addition, in 1999,
the Company's manufacturing labor costs increased due to an increased usage of
contract labor, increased indirect labor required for production of initial PVTV
systems and increased resources dedicated to replacing obsolete parts related to
the Company's camera systems. In addition, one of the automated production
systems sold in 1999 was a beta system with related third party equipment, which
was deeply discounted.
The decrease in margin from 1997 to 1998 was primarily due to initial production
costs related to the automated production systems and promotional price
discounts offered on certain single-chip products during the second half of
1998. The single-chip price discounts were offered in order to reduce inventory
of a particular single-chip camera module that had been discontinued by the
manufacturer.
While the Company continuously works to improve its gross margin through product
pricing, labor efficiencies, reduction of overhead, and product design, there
can be no assurance that gross margins will improve significantly over, or
remain stable with, the gross margins attained in 1999 due to the highly
competitive nature of the industry, the introduction of new products, and
fluctuations in the cost of component parts.
RESEARCH AND DEVELOPMENT EXPENSES
- ---------------------------------
The Company's research and development expenses increased by $2,377,523 or 62%
from 1998 to 1999 and increased by $529,762, or 16% from 1997 to 1998. Research
and development expenses as a percentage of revenues were 59%, 39%, and 31% in
1999, 1998 and 1997, respectively.
From 1997 to 1998 and from 1998 to 1999, the increase in research and
development expenses was primarily related to the Company's development of the
D2D(TM) RF technology. The increased expenses related to D2D(TM) included fees
for third-party application engineering services, increased depreciation due to
capital expenditures for test and development equipment, and increased prototype
expenses.
The markets for the Company's products and technologies are characterized by
rapidly changing technology, evolving industry standards and frequent new
product introductions. The Company's ability to successfully develop and
introduce, on a timely basis, new and enhanced products and technologies will be
a significant factor in the Company's ability to grow and remain competitive.
Although the percentage of revenues invested by the Company may vary from period
to period, the Company is committed to investing in its research and development
programs. The Company anticipates it will use a substantial portion of its
working capital for research and development activities in 2000.
17
<PAGE>
MARKETING AND SELLING EXPENSES
- ------------------------------
Marketing and selling expenses increased by $528,262, or 14% from 1998 to 1999
and increased by $286,121, or 8% from 1997 to 1998. Marketing and selling
expenses as a percentage of revenues were 41%, 38%, and 32% for the years ended
December 31, 1999, 1998 and 1997, respectively.
The increases in marketing and selling expenses from 1998 to 1999 were due to
increases in marketing expenses and project management and training personnel
for the Company's video division as well as increases in the wireless business
development expenses during the second half of 1999. The Video Division
increased its promotional expenses during the last half of 1999 in order to
promote the Company's PVTV Learning systems. In addition, the Company added
project management and training personnel for installation, training and support
of PVTV sales.
The Company's wireless division added several business development personnel,
including a general manager during the second half of 1999 to focus on the
commercialization of the D2D technology.
The increase in marketing and selling expenses from 1997 to 1998 was primarily
due to increased promotional expenses related to the Company's PVTV(TM) product
line, offset somewhat by decreases in personnel and related travel costs.
The Company is committed to continuing its investment in marketing and selling
efforts in order to continue to increase market awareness and penetration of its
products, and anticipates further increases in sales and marketing expenses in
2000 in order to support the Company's commercialization of its D2D(TM)
technology.
GENERAL AND ADMINISTRATIVE EXPENSES
- -----------------------------------
The Company's general and administrative expenses increased by $1,884,114, or
72% from 1998 to 1999 and increased by $738,080 or 39% from 1997 to 1998.
General and administrative expenses consist primarily of executive and
administrative personnel compensation, insurance costs and costs incurred for
outside professional services.
The increase in general and administrative expenses from 1998 to 1999 was
primarily due to outside professional fees for negotiation of wireless contracts
and increased use of investment bankers and other outside professionals during
1999.
The increase in general and administrative expenses from 1997 to 1998 was
primarily the result of increased personnel costs and outside professional fees.
During 1998, the Company expanded its executive management team with the
addition of a President and Chief Operating Officer. In addition, the Company
added an investor relations staff to coordinate shareholder communications and
activities. The Company also experienced increases in outside professional fees,
primarily legal fees, in connection with its wireless technology.
As a percentage of revenues, general and administrative expenses were 43%, 26%,
and 17% in 1999, 1998 and 1997, respectively. The Company does anticipate
further increases in general and administrative expenses in order to support the
commercialization of its D2D(TM) technology.
18
<PAGE>
INTEREST INCOME
- ---------------
Interest income decreased by $180,948 from 1998 to 1999 and increased by
$458,140 from 1997 to 1998. Interest income primarily represents interest earned
on the Company's investment of the proceeds from its initial public offering in
1993 and its subsequent sales of securities during 1997, 1998 and 1999. The
decrease in interest income from 1998 to 1999 is due to the use of proceeds from
maturing investments to fund increased operating expenses. The increase in
interest income from 1997 to 1998 is due to the investment of funds from the
Company's Regulation S offering in September 1997, offset somewhat by the use of
proceeds from maturing investments to fund operations in 1998.
LOSS AND LOSS PER SHARE
- -----------------------
The Company's net loss increased by $5,034,994, or $0.42 per common share from
1998 to 1999. This increase in net loss was primarily due to a $4.4 million
increase in operating expenses attributable to the Wireless Division, primarily
for research and development and business development activities. From 1997 to
1998, the Company's net loss increased by $1,772,151 or $0.13 per common share.
This increase in net loss was primarily due to a decrease in gross margin of
approximately $0.7 million and an increase in general and administrative
expenses of approximately $0.7 million.
BACKLOG
- -------
As of December 31, 1999, 1998 and 1997, the Company had a camera backlog of
approximately $390,000, $390,000, and $31,000, respectively. Backlog consists of
camera system orders received from customers, which generally have a specified
delivery schedule within one to four weeks of receipt. In addition, at December
31, 1999, the Company had studio sales pending completion of installation of
approximately $560,000.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At December 31, 1999, the Company had working capital of $22,732,559, including
$19,659,178 in cash, cash equivalents and short-term investments. The Company
used cash for operating activities of $7,555,809, $3,819,150, and $3,048,574 for
the years ended December 31, 1999, 1998 and 1997, respectively. The increases in
cash used for operating activities are primarily the result of increases in the
net losses generated by the Company due to increased expenditures related to its
wireless technology.
The Company used cash for investing activities of $1,814,673 for the year ended
December 31, 1999 and $19,147,225 for the year ended December 31, 1997 and
generated cash for investing activities of $6,739,212 for the year ended
December 31, 1998. The cash provided by and used for investing activities is
primarily a result of the purchase and maturity of investments in government
backed securities, the payment for intangible assets, and capital expenditures.
The Company incurred $1,655,032, $1,798,785, and $361,131 in connection with
patent costs primarily related to the Company's wireless technology1999, 1998
and 1997, respectively. The Company incurred $1,489,267, $962,003, and
$1,541,007 for capital expenditures in 1999, 1998 and 1997, respectively. These
capital expenditures primarily represent the purchase of certain research and
development test equipment, marketing and sales demonstration equipment and
computer and office equipment to
19
<PAGE>
support additional personnel. In 1997, capital expenditures also included
leasehold improvement costs incurred to remodel the Company's offices. The
Company was granted rent concessions in 1997 and 1998 to offset the remodeling
costs. At December 31, 1999, the Company was not subject to any significant
commitments to make additional capital expenditures.
The Company generated cash from financing activities of $929,789, $5,516,180,
and $22,774,260 for the years ended December 31, 1999, 1998 and 1997,
respectively. The cash generated from financing activities represents proceeds
from the exercise of employee stock options, issuance of common stock to
institutional investors in transactions exempt from registration under the
Securities Act of 1933 and from exercise of warrants issued to the underwriters
of the initial public offering in November 1993.
The Company's future business plans call for significant increases in research,
development and marketing costs related to its wireless technology. The Company
intends to utilize its working capital to fund these increases. The Company
believes it will need additional capital to fund its business plan. To the
extent that the Company is unable to acquire additional capital, it will have to
adjust its business plan accordingly.
The Company's principal source of liquidity at December 31, 1999 consisted of
$19.7 million in cash, cash equivalents and investments resulting from its
initial public offering and subsequent offerings. Until the Company generates
sufficient revenues from system and other sales, it will be required to continue
to utilize its cash and investments to cover the continuing expense of product
development, marketing and general administration. Based on the Company's
current estimates, it believes its cash and investment balances will provide
sufficient resources to meet its cash requirements for the next twelve months.
Thereafter, the Company will require a significant increase in revenues or
additional capital to continue to fund its operations and business plan. To the
extent that the Company requires additional capital, it will incur debt or sell
equity securities. The Company has no current arrangement with respect to any
additional financing.
YEAR 2000 READINESS
- -------------------
In the fourth quarter of 1999, the Company completed its evaluation and
remediation of its "Year 2000" (Y2K) issues. This issue concerns the inability
of information systems to properly recognize and process date sensitive
information relating to the year 2000 and beyond. The inability to properly
interpret dates beyond the year 1999 could lead to business disruptions.
The Company formed an internal Y2K team to assess the Company's products, its
internal information systems and processes, and its third party suppliers for
Y2K readiness. The team identified existing systems that required action and
completed developing and executing plans to make corrections in affected areas
prior to the issue causing any disruption of normal business activities.
All of the Company's products that are installed or available for sale have
either successfully passed Y2K compliance testing or have been deemed Y2K
not-applicable by virtue of the fact that they do not process date information
in any manner. Although the Company's Y2K compliant products have undergone the
Company's normal quality testing procedures, and to date, there have been no
detected errors or defects resulting from Y2K issues, there can be no assurance
that these products,
20
<PAGE>
or third-party products used with the Company's products, do not contain
undetected errors or defects associated with Y2K date functions that may
materially or adversely affect the Company.
The Company primarily utilizes third party software packages for its internal
information systems and processes. The Company was able to upgrade many such
packages to Y2K compliant versions as part of ongoing support agreements with
the product manufacturers, thus incurring minimal to no cost. As of December 31,
1999, the Company believes its principal internal management information systems
to be fully Y2K compliant.
The Company also faces risks and uncertainties to the extent that third-party
suppliers of products, services and systems on which the Company relies do not
have business systems or products that comply with the Y2K requirements. To
date, the Company has not encountered any supplier issues deemed to be related
to Y2K.
Based on the status of its assessment to date and the passage of the millineum,
the Company does not anticipate significant costs or lost revenue associated
with the Y2K issue that would have a material adverse effect on the Company's
operating results or financial condition.
21
<PAGE>
ITEM 8. FINANCIAL STATEMENTS
Index to Financial Statements
PAGE
----
REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 23-24
FINANCIAL STATEMENTS:
Balance Sheets - December 31, 1999 and 1998 25-26
Statements of Operations -- for the years ended
December 31, 1999, 1998 and 1997 27
Statements of Shareholders' Equity - for the years ended
December 31, 1999, 1998 and 1997 28
Statements of Cash Flows - for the years ended
December 31, 1999, 1998 and 1997 29
Notes to Financial Statements -- December 31, 1999, 1998
and 1997 30-45
FINANCIAL STATEMENT SCHEDULES:
Schedule II - Valuation and Qualifying Accounts 51
Schedules other than those listed have been omitted since they are either not
required, not applicable or the information is otherwise included.
22
<PAGE>
Report of Independent Certified Public Accountants
To the Board of Directors and Shareholders of ParkerVision, Inc.:
In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of
ParkerVision, Inc. at December 31, 1999, and the results of its operations and
its cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States. In addition, in our opinion, the
financial statement schedules for the year ended December 31, 1999 listed in the
accompanying index present fairly, in all material respects, the information set
forth therein when read in conjunction with the related financial statements.
These financial statements and financial statement schedules are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audit. We conducted our audit of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Jacksonville, Florida
March 10, 2000
23
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To ParkerVision, Inc.:
We have audited the accompanying balance sheets of PARKERVISION, INC. (a Florida
corporation) as of December 31, 1998 and the related statements of operations,
stockholders' equity, and cash flows for each of the two years in the period
ended December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ParkerVision, Inc. as of
December 31, 1998 and the results of its operations and its cash flows for each
of the two years in the period ended December 31, 1998 in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in Item 8, Financial
Statements and Supplementary Data, is presented for purposes of complying with
the Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in our audits of the basic financial statements for the two
years in the period ending December 31, 1998 and, in our opinion, based on our
audits, fairly states, in all material respects, the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
Arthur Andersen LLP
Jacksonville, Florida
February 24, 1999
24
<PAGE>
PARKERVISION, INC.
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 2,128,742 $10,569,435
Short-term investments 17,530,436 11,077,394
Accounts receivable, net of allowance for doubtful
accounts of $37,308 at December 31, 1999 and
1998, respectively 876,632 805,880
Interest and other receivables 11,130 183,823
Inventories, net 3,922,916 3,237,567
Prepaid expenses and other 867,654 666,203
----------- -----------
Total current assets 25,337,510 26,540,302
LONG-TERM INVESTMENTS 0 8,000,000
PROPERTY AND EQUIPMENT, net 3,284,755 2,760,335
OTHER ASSETS, net 4,149,153 2,949,373
----------- -----------
Total assets $32,771,418 $40,250,010
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
25
<PAGE>
PARKERVISION, INC.
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
CURRENT LIABILITIES:
<S> <C> <C>
Accounts payable $ 639,684 $ 609,523
Accrued expenses:
Salaries and wages 353,736 178,006
Warranty reserves 139,326 99,656
Rebates payable 73,004 108,185
Professional fees and other 563,213 221,175
Deferred revenue 835,988 33,404
------------ ------------
Total current liabilities 2,604,951 1,249,949
DEFERRED INCOME TAXES 30,144 18,091
COMMITMENTS AND CONTINGENCIES (Notes 7 and 11)
------------ ------------
Total liabilities 2,635,095 1,268,040
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value, 1,000,000 shares
authorized, none issued or outstanding 0 0
Common stock, $.01 par value, 20,000,000 shares
authorized, 11,790,048 and 11,718,678 shares
issued and outstanding at December 31, 1999 and
1998, respectively 117,900 117,187
Warrants outstanding 3,232,025 3,257,625
Additional paid-in capital 53,723,742 52,543,817
Accumulated other comprehensive income (loss) (187,052) 72,241
Accumulated deficit (26,750,292) (17,008,900)
------------ ------------
Total shareholders' equity 30,136,323 38,981,970
Total liabilities and shareholders' equity $ 32,771,418 $ 40,250,010
============ ============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
26
<PAGE>
PARKERVISION, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Revenues, net $ 10,549,081 $ 9,891,543 $ 10,799,067
Cost of goods sold 6,534,328 5,882,552 6,115,412
------------ ------------ ------------
Gross margin 4,014,753 4,008,991 4,683,655
Research and development expenses 6,202,937 3,825,414 3,295,652
Marketing and selling expenses 4,286,057 3,757,795 3,471,674
General and administrative expenses 4,492,029 2,607,915 1,869,835
------------ ------------ ------------
Total operating expenses 14,981,023 10,191,124 8,637,161
------------ ------------ ------------
Loss from operations (10,966,270) (6,182,133) (3,953,506)
Interest income 1,296,451 1,477,399 1,019,259
Other expense, net (71,573) (1,664) 0
------------ ------------ ------------
Net loss $ (9,741,392) $ (4,706,398) $ (2,934,247)
============ ============ ============
Basic loss per common share $ (0.83) $ (0.41) $ (0.28)
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
27
<PAGE>
PARKERVISION, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
Accumulated
Warrants Additional Other Total
Par Out- Paid-In Comprehensive Accumulated Shareholders'
Shares Value Standing Capital Income (Loss) Deficit Equity
---------- -------- ---------- ----------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996 10,032,604 $100,326 $1,152,360 $25,392,608 $0 $(9,368,255) $17,277,039
Issuance of common stock upon
employee stock option exercise 122,607 1,226 0 486,915 0 0 488,141
Issuance of common stock upon
warrant exercise 192,496 1,925 (222) 1,266,916 0 0 1,268,619
Issuance of common stock and
warrants on September 5, 1997,
net of cash offering costs
of $1,257,500 990,000 9,900 2,233,620 18,773,980 0 0 21,017,500
Issuance of options for
business consulting services 0 0 0 409,860 0 0 409,860
Net loss 0 0 0 0 0 (2,934,247)
Comprehensive loss 0 0 0 0 0 (2,934,247)
---------------------------------------------------------------------------------------
BALANCE, December 31, 1997 11,337,707 113,377 3,385,758 46,330,279 0 (12,302,502) 37,526,912
Issuance of common stock upon
employee stock option exercise 8,350 84 0 52,231 0 0 52,315
Issuance of common stock upon
warrant exercise 134,525 1,345 (128,133) 606,953 0 0 480,165
Issuance of common stock on
December 1, 1998 238,096 2,381 0 4,981,319 0 0 4,983,700
Issuance of options for consulting
services, net of forfeitures 0 0 0 573,035 0 0 573,035
Change in unrealized gain on
investments available for sale 0 0 0 0 72,241 0
Net loss 0 0 0 0 0 (4,706,398)
Comprehensive loss 0 0 0 0 (4,634,157)
---------------------------------------------------------------------------------------
BALANCE, December 31, 1998 11,718,678 117,187 3,257,625 52,543,817 72,241 (17,008,900) 38,981,970
Issuance of common stock upon
employee stock option exercise 61,370 613 0 829,176 0 0 829,789
Issuance of common stock upon
warrant exercise 10,000 100 (25,600) 125,500 0 0 100,000
Change in value of options issued
for services 0 0 0 225,249 0 0 225,249
Change in unrealized gain (loss)
on investments available for sale 0 0 0 0 (259,293) 0
Net loss 0 0 0 0 0 (9,741,392)
Comprehensive loss 0 0 0 0 (10,000,685)
---------------------------------------------------------------------------------------
BALANCE, December 31, 1999 11,790,048 $117,900 $3,232,025 $53,723,742 $(187,052) $(26,750,292) $30,136,323
========== ======== ========== =========== ========= ============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
28
<PAGE>
PARKERVISION, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net loss $ (9,741,392) $ (4,706,398) $ (2,934,247)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1,573,932 1,064,572 717,780
Amortization of discounts on investments (41,961) (194,792) (112,130)
Provision for obsolete inventories 240,000 210,000 100,000
Loss on sale of equipment 71,416 0 0
Changes in operating assets and liabilities:
Accounts receivable, net (70,752) (144,933) 482,174
Interest and other receivables 172,693 202,811 (244,260)
Inventories (925,349) (477,480) (1,112,191)
Prepaid and other expenses (189,398) 130,563 (217,746)
Accounts payable and accrued expenses 552,418 84,076 278,469
Deferred revenue 802,584 12,431 (6,423)
------------ ------------ ------------
Total adjustments 2,185,583 887,248 (114,327)
------------ ------------ ------------
Net cash used in operating activities (7,555,809) (3,819,150) (3,048,574)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments available for sale (5,740,892) 0 (10,009,375)
Purchase of investments held to maturity (3,929,482) (8,000,000) (12,735,712)
Proceeds from maturity of investments 11,000,000 17,500,000 5,500,000
Purchase of property and equipment (1,489,267) (962,003) (1,541,007)
Purchase of intangible assets (1,655,032) (1,798,785) (361,131)
------------ ------------ ------------
Net cash (used in) provided by
investing activities (1,814,673) 6,739,212 (19,147,225)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 929,789 5,516,180 22,774,260
------------ ------------ ------------
Net cash provided by financing activities 929,789 5,516,180 22,774,260
------------ ------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (8,440,693) 8,436,242 578,461
CASH AND CASH EQUIVALENTS, beginning of year 10,569,435 2,133,193 1,554,732
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, end of year $ 2,128,742 $ 10,569,435 $ 2,133,193
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
29
<PAGE>
PARKERVISION, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
1. THE COMPANY AND NATURE OF BUSINESS:
-----------------------------------
ParkerVision, Inc. (the "Company") was incorporated under the laws of the state
of Florida on August 22, 1989. The Company's operations are categorized into two
operating segments -- the Video Products Division ("Video Division") and the
Wireless Technology Division ("Wireless Division").
The Company operates in highly competitive industries with rapidly changing and
evolving technologies and an increasing number of market entrants. The Company's
potential competitors have substantially greater financial, technical and other
resources than those of the Company.
The Company has made significant investments in developing the technology and
manufacturing capability for its products, the returns on which are dependent
upon the generation of future revenues for realization. The Company has not yet
generated sufficient revenues to offset its expenses and, thus, has utilized
proceeds from the sale of equity securities to fund its operations. In the
opinion of management, the Company has adequate funds to meet its 2000 liquidity
needs. The Company also believes it will be able to generate increased revenues
and additional capital, if necessary, to sustain its operations on a longer-term
basis. The Company has no current arrangement with respect to additional
financing.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting periods. The more significant estimates made by management include
the allowance for doubtful accounts receivable, inventory reserves for potential
excess or obsolete inventory, the amortization period for intangible assets, and
warranty reserves. Actual results could differ from the estimates made.
Management periodically evaluates estimates used in the preparation of the
financial statements for continued reasonableness. Appropriate adjustments, if
any, to the estimates used are made prospectively based upon such periodic
evaluation.
CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, the Company considers cash and cash
equivalents to include cash on hand and interest-bearing deposits. Cash and cash
equivalents include overnight repurchase agreements and U.S. Treasury money
market investments with original maturities when purchased of three months or
less totaling approximately $1,934,000 and $10,032,000 at December 31, 1999 and
December 31, 1998, respectively.
30
<PAGE>
INVESTMENTS
Investments consist of funds invested in U.S. Treasury notes, U.S. Treasury
bills and mortgage- backed securities guaranteed by the U.S. government. The
Company accounts for investment securities under Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." Investments and mortgage-backed securities are
classified in the following categories:
Held to maturity - Securities that management has the intent and the
Company has the ability at the time of purchase to hold until maturity are
classified as securities held to maturity. Securities in this category are
carried at amortized cost adjusted for accretion of discounts and
amortization of premiums using the effective interest method over the
estimated life of the securities. If a security has a decline in fair value
below its amortized cost that is other than temporary, then the security
will be written down to its new cost basis by recording a loss in the
statement of income. At December 31, 1999 and 1998, short-term investments
included investments with maturity dates of less than one year classified
as held-to-maturity reported at their amortized cost of $3,976,596 and
$999,294, respectively. At December 31, 1998, long-term investments
included investments with maturities from one to two years classified as
held to maturity reported at their amortized cost of $8,000,000. In 1999,
these long-term investments were reclassed from held-to-maturity to
available-for-sale and reported at December 31, 1999 at their fair value of
$7,768,320. The reclassification of held-to-maturity investments is a
result of changes in the Company's anticipated liquidity needs related to
the commercialization of its wireless technology.
Available for sale - Securities to be held for indefinite periods of time
and not intended to be held to maturity are classified as available for
sale. Securities available for sale are recorded at fair value. Both
unrealized holding gains and losses on securities available for sale, net
of deferred income taxes, are included as a separate component of
shareholder's equity in the consolidated balance sheet until these gains or
losses are realized. If a security has a decline in fair value that is
other than temporary, then the security will be written down to its fair
value by recording a loss in the consolidated statement of income. At
December 31, 1999 and 1998, short-term investments included investments
with maturity dates from one to two years classified as available-for-sale
reported at their fair value of $13,553,840 and $10,078,100, respectively.
For the years ended December 31, 1999, 1998 and 1997, unrealized gains
(losses) of $(259,293), $72,241 and $0 were recognized.
INVENTORIES
Inventories are stated at the lower of average cost (which approximates the
first-in, first-out method) or market (net realizable value). Cost includes the
acquisition of purchased materials, labor and overhead. Purchased materials
inventory consists principally of components and subassemblies. The Company's
investment in inventory is maintained to meet anticipated future demand for its
product and the buildup of safety stock on single-source or long lead-time
components.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, less accumulated depreciation. The
cost and accumulated depreciation of assets sold or retired are removed from
their respective accounts, and any resulting gain or loss is recognized in the
accompanying statements of operations. Depreciation is determined using the
straight-line method over the following estimated useful lives:
31
<PAGE>
Leasehold improvements 7-10 years
Tools and dies 5-7 years
Manufacturing and office equipment 5-7 years
Furniture and fixtures 7 years
OTHER ASSETS
Included in other assets are patent costs, prepaid licensing fees and prepaid
consulting fees. Patent costs represent costs incurred to obtain patents and
trademarks for product concepts and methodologies developed by the Company. The
Company currently holds eighteen United States patents and seven foreign patents
and has submitted multiple patent applications that are currently pending.
Capitalized patent costs are being amortized over the estimated lives of the
related patents, ranging from five to twenty years. Prepaid licensing fees
represent costs incurred to obtain licenses for use of certain technologies in
future products. Prepaid licensing fees are being amortized over the estimated
terms of the licensing agreements, ranging from three to fourteen years. Prepaid
consulting fees represent the estimated fair market value of warrants and
options issued as consideration for consulting services (see Note 11). These
fees are being amortized over the terms of the related consulting agreements,
generally five years.
REVENUE RECOGNITION
Product revenues, recorded net of discounts, are recognized at the time a
product is shipped or services are performed and the Company has no significant
further obligations to the customer. Customer prepayments are deferred until
product shipment has occurred or services have been rendered and there are no
significant further obligations to the customer.
WARRANTY COSTS
The Company generally warrants against defects in workmanship and material for
one year for its camera products and ninety days for its automated production
systems. Estimated costs related to warranty are accrued at the time of revenue
recognition and are included in sales and marketing expense. For the years ended
December 31, 1999, 1998 and 1997, warranty expenses were approximately $110,000,
$95,000, and $55,000, respectively. The Company offers extended service and
support contacts on its camera and automated production systems. Service and
support contract revenue is recognized ratably over the life of the agreement,
generally one year.
LOSS PER COMMON SHARE
Basic loss per common share is determined based on the weighted-average number
of common shares assumed to be outstanding during each year. Diluted loss per
common share is the same as basic loss per common share as all common share
equivalents are excluded from the calculation, as their effect is anti-dilutive.
The weighted-average number of common shares assumed to be outstanding for the
years ended December 31, 1999, 1998 and 1997, was 11,763,380, 11,413,555, and
10,490,480, respectively.
IMPAIRMENT OF LONG-LIVED ASSETS
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," requires that long-lived assets and
certain identifiable intangibles of an entity be
32
<PAGE>
reviewed for impairment. If circumstances suggest that their values may be
impaired, an assessment of recoverability is performed prior to any write-down
of the asset. In performing the review for recoverability, the Company estimates
the future cash flows expected to result from the use of the asset and its
eventual disposition. If the sum of the expected future cash flows is less than
the carrying amount of the asset, an impairment loss is recognized. As of
December 31, 1999, the Company does not believe any assets that are subject to
SFAS No. 121 are impaired.
COMPREHENSIVE INCOME
The Company adopted SFAS No. 130, "Reporting Comprehensive Income," effective
January 1, 1998. SFAS No. 130 establishes standards for the reporting and
display of comprehensive income and its components. The Company's other
comprehensive income (loss) is comprised of unrealized gains (losses) on
investments available-for-sale which are included in accumulated other
comprehensive income in the statements of shareholders' equity. The Company's
other comprehensive income (loss) for the years ended December 31, 1999, 1998
and 1997 were $(259,293), $72,241, and $0, respectively. The Company's total
comprehensive loss for the years ended December 31, 1999, 1998 and 1997 were
$(10,000,685), $(4,634,157), and $(2,934,247), respectively.
STATEMENTS OF CASH FLOWS
The Company paid no interest during 1997, 1998 or 1999. In 1999, the Company
recorded an increase in the value of options issued in 1998 by approximately
$225,000. In 1998, the Company issued an aggregate of 90,000 options, valued at
approximately $901,000 for professional services and recorded the forfeiture of
40,000 options valued at approximately $328,000. In 1997, the Company issued
50,000 options, valued at approximately $410,000 for professional services.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1998 and 1997 financial
statements in order to conform to the 1999 presentation.
3. INVENTORIES:
-----------
Inventories consist of the following at December 31, 1999 and 1998:
1999 1998
----------- -----------
Purchased materials $ 2,328,805 $ 1,996,573
Work in process 95,253 241,676
Finished goods 2,002,670 1,406,664
----------- -----------
4,426,728 3,644,913
Less allowance for inventory
obsolescence (503,812) (407,346)
----------- -----------
$ 3,922,916 $ 3,237,567
=========== ===========
33
<PAGE>
4. PROPERTY AND EQUIPMENT, NET:
----------------------------
Property and equipment, at cost, consist of the following at December 31, 1999
and 1998:
1999 1998
----------- -----------
Manufacturing and office equipment $ 5,820,656 $ 4,592,604
Tools and dies 792,688 792,688
Leasehold improvements 473,301 426,624
Furniture and fixtures 213,441 181,452
----------- -----------
7,300,086 5,993,368
Less accumulated depreciation (4,015,331) (3,233,033)
----------- -----------
$ 3,284,755 $ 2,760,335
=========== ===========
Depreciation expense related to property and equipment was $893,431, $742,791,
and $516,569 in 1999, 1998, and 1997, respectively.
5. OTHER ASSETS
------------
Other assets consist of the following at December 31, 1999 and 1998:
1999 1998
----------- -----------
Patents and copyrights $ 3,777,749 $ 1,901,971
Prepaid consulting fees 880,184 880,184
Prepaid licensing fees 700,000 700,000
Other assets 9,598 5,095
----------- -----------
5,367,531 3,487,250
Less accumulated amortization (1,218,378) (537,877)
----------- -----------
$ 4,149,153 $ 2,949,373
=========== ===========
The Company has pursued an aggressive schedule for filing and aquiring patents
related to its wireless technology. Amortization of patents and copyrights was
$159,602, $43,843, and $47,591 in 1999, 1998 and 1997, respectively.
Amortization of prepaid consulting fees was $515,542, $168,361, and $153,620 in
1999, 1998 and 1997, respectively. Amortization of prepaid licensing fees was
$5,357 in 1999 and $5,351 in 1998 and 1997.
6. INCOME TAXES AND TAX STATUS:
----------------------------
The Company accounts for income taxes in accordance with SFAS No.109,
"Accounting for Income Taxes." A reconciliation between the provision for income
taxes and the expected tax benefit using the federal statutory rate of 34% for
the years ended December 31, 1999, 1998, and 1997 is as follows:
34
<PAGE>
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Tax benefit at statutory rate $(3,312,073) $(1,600,175) $ (997,644)
State tax benefit (353,613) (235,320) (146,712)
Increase in valuation allowance 4,236,628 2,522,765 1,295,305
Increase in research and
development credit (620,294) (681,798) (223,974)
Other 49,352 (5,472) 73,025
----------- ----------- -----------
$ 0 $ 0 $ 0
=========== =========== ===========
</TABLE>
The Company's deferred tax assets and liabilities relate to the following
sources and differences between financial accounting and the tax bases of the
Company's assets and liabilities at December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
------------ ------------
Current deferred taxes:
Current deferred tax assets:
<S> <C> <C>
Deferred revenue $ 259,575 $ 13,863
Inventory obsolescence reserve 188,930 169,049
Inventory capitalization 121,648 61,746
Warranty reserve 52,247 41,357
Vacation accrual 55,202 35,275
Allowance for doubtful accounts 13,991 15,483
Related-party payables and accruals 0 1,567
------------ ------------
691,593 338,340
Less valuation allowance (661,449) (320,249)
------------ ------------
Total current deferred tax assets
(included in prepaid expenses and other) $ 30,144 $ 18,091
============ ============
Noncurrent deferred taxes:
Noncurrent deferred tax assets:
Net operating loss carryforward $ 9,872,395 $ 6,773,503
Research and development credit carryforward 1,526,066 905,772
Patent amortization and other 464,005 237,759
------------ ------------
11,862,466 7,917,034
Less valuation allowance (11,421,062) (7,525,634)
------------ ------------
Total noncurrent deferred tax assets 441,404 391,400
------------ ------------
Noncurrent deferred tax liabilities:
Warrant exercise (294,146) (249,000)
Depreciation and other (177,402) (160,491)
------------ ------------
Total noncurrent deferred tax liabilities (471,548) (409,491)
------------ ------------
Net noncurrent deferred income tax liability $ (30,144) $ (18,091)
============ ============
</TABLE>
35
<PAGE>
The Company has recorded a valuation allowance to state its deferred tax assets
at estimated net realizable value due to the uncertainty related to realization
of these assets through future taxable income. The valuation allowance for
deferred tax assets as of December 31, 1999 and 1998 were $12,082,511, and
$7,845,883, respectively.
At December 31, 1999, the Company had net operating loss and research and
development carryforwards for income tax purposes of approximately $26,326,000
and $1,526,000, respectively, which expire beginning in 2008. The Company's
ability to benefit from the net operating loss and research and development
carryforwards could be limited under certain provisions of the Internal Revenue
Code if ownership of the Company changes by more than 50%, as defined.
7. COMMITMENTS AND CONTINGENCIES
-----------------------------
LEASE COMMITMENTS
The Company's executive offices and Video Division operations are located in
Jacksonville, Florida, pursuant to a noncancelable lease agreement (see Note 8).
The initial lease term expired in February 1997, and the Company exercised its
first of three five-year renewal options. The lease is on a triple net basis and
currently provides for a monthly rental payment of $25,867 through February
2002.
During 1999, the Company leased a demonstration and training facility in Los
Angeles, California pursuant to a noncancelable lease agreement. The lease
provides for a monthly rental payment of approximately $1,600 per month through
May 2002.
In November 1999, the Company entered into a lease arrangement for additional
office space in Jacksonville, Florida under a noncancelable lease agreement that
provides for a monthly rental payment of approximately $7,200 through May 2000
with a one-year renewal option.
In addition, the Company entered into a noncancelable lease arrangement for
office space in Pleasanton, California for the Wireless Division's West Coast
engineering and business development personnel. The lease term commences in
March 2000 and provides for a monthly rental payment of approximately $13,700
through March 2005.
Certain leases obligate the Company to pay property taxes, maintenance and
repair costs. Rent expense for the years ended December 31, 1999, 1998 and 1997
is $342,973, $325,218 and $174,465, respectively.
Future minimum lease payments under all noncancelable operating leases as of
December 31, 1999 were as follows:
36
<PAGE>
2000 499,000
2001 466,000
2002 190,000
2003 137,000
2004 137,000
-------------
1,429,000
=============
PURCHASE COMMITMENTS
At December 31, 1999, the Company has commitments to purchase materials
aggregating approximately $337,000 through 2000 from four suppliers. One of
these suppliers is a single-source supplier of the Company's camera modules and
accounted for approximately 26%, 18%, and 40% of the Company's component
purchases for the years ended December 31, 1999, 1998 and 1997, respectively. No
other supplier accounted for more than 10% of the Company's component purchases
in 1999, 1998, or 1997.
8. RELATED-PARTY TRANSACTIONS:
---------------------------
The Company leases its manufacturing and headquarters office facilities from the
Chairman and Chief Executive Officer of the Company and his mother. The lease's
current terms obligate the Company through February 28, 2002 at a monthly lease
payment of $25,867.
9. CONCENTRATIONS OF CREDIT RISK
-----------------------------
Financial instruments that potentially subject the Company to a concentration of
credit risk principally consist of cash, cash equivalents and trade receivables.
At December 31, 1999, the Company had cash balances on deposit with banks that
exceeded the balance insured by the F.D.I.C. The Company maintains its cash
investments with what management believes to be quality financial institutions
and limits the amount of credit exposure to any one institution.
One customer, Vtel Corporation ("VTEL") accounted for approximately 29% of the
Company's total revenues in 1999 and approximately 35% of total revenues in 1998
and 1997. No other customer accounted for more than 10% of total revenues in
1999, 1998 or 1997. VTEL and two other customers accounted for approximately 65%
of accounts receivable at December 31, 1999. The Company closely monitors
extensions of credit and has never experienced significant credit losses.
10. BUSINESS SEGMENT INFORMATION
----------------------------
The Company operates in two reportable segments, each of which is a strategic
business that is managed separately because each business develops and
commercializes distinct products and technologies. The segments are the Video
Division and Wireless Division.
37
<PAGE>
The Video Division is engaged in the design, development and marketing of
CameraMan(R) automated video camera control systems and PVTV Studio(R) automated
production systems. The Company sells its video products and education-based
automated production systems primarily through audiovisual dealers and other
equipment manufacturers throughout the United States as well as in Canada, Latin
America and Asia. The Company also engages in direct selling of its high-end
automated production systems.
The Company's Wireless Division is engaged in the development and initial
commercialization of its Direct2Data(TM), or D2D(TM), technology. This
technology is a wireless radio frequency ("RF") technology that the Company
believes will reduce cost, size, and power consumption while improving
performance of wireless devices such as cellular telephones and wireless local
area networks ("WLAN"), among others. The Company's Wireless Division is in the
early stages of commercialization and has not generated any revenues to date.
Management primarily evaluates the operating performance of its segments based
on net sales and income from operations. The accounting policies of the segments
are substantially the same as those described in the summary of significant
accounting polices discussed in Note 1.
Prior to 1999, the Company operated in a single reportable segment of
microelectronic hardware and software products and related technologies. As the
Company has completed the research of its wireless technology and is moving
toward commercialization of the technology, the Company redefined its reportable
segments effective July 1, 1999. Segment information for 1998 is restated to
reflect the revised segments, however it is impracticable to restate certain
1997 amounts. Segment results are as follows (in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
NET SALES:
<S> <C> <C> <C>
Video Division $ 10,549 $ 9,892 $ 10,799
Wireless Division 0 0 0
-------- -------- --------
Total net sales $ 10,549 $ 9,892 $ 10,799
======== ======== ========
LOSS FROM OPERATIONS:
Video Division $ (3,384) $ (2,941)
Wireless Division (7,653) (3,242)
Other (a) 1,296 1,477
-------- --------
Total net loss $ (9,741) $ (4,706) $ (2,934)
======== ======== ========
DEPRECIATION:
Video Division $ 539 $ 510
Wireless Division 354 233
-------- --------
Total depreciation $ 893 $ 743 $ 517
======== ======== ========
38
<PAGE>
1999 1998 1997
-------- -------- --------
AMORTIZATION OF INTANGIBLES AND OTHER ASSETS:
Video Division $ 183 $ 85
Wireless Division 498 133
-------- --------
Total amortization $ 681 $ 218 $ 207
======== ======== ========
CAPITAL EXPENDITURES:
Video Division $ 616 $ 422
Wireless Division 695 380
Other (b) 178 160
-------- --------
Total capital expenditures $ 1,489 $ 962 $ 1,541
======== ======== ========
ASSETS:
Video Division $ 7,345 $ 6,385
Wireless Division 4,610 2,753
Other (c) 20,816 31,112
-------- --------
Total assets $ 32,771 $ 40,250 $ 38,685
======== ======== ========
</TABLE>
(a) Other represents interest income from investments.
(b) Other represents corporate improvements, furniture and equipment.
(c) Other includes the following corporate assets (in thousands):
December 31, December 31,
1999 1998
----------- -----------
Cash and investments $19,659 $29,647
Interest and other receivables 11 184
Prepaid expenses 466 660
Property and equipment, net 670 616
Other assets 10 5
------- -------
Total $20,816 $31,112
======= =======
11. STOCK OPTIONS, WARRANTS AND STOCK-BASED COMPENSATION PLANS:
-----------------------------------------------------------
1993 STOCK PLAN
The Company adopted a stock plan in September 1993 (the "1993 Plan"). The 1993
Plan, as amended, provides for the grant of options and other Company stock
awards to employees, directors and consultants, not to exceed 3,500,000 shares
of common stock. The plan provides for benefits in the form of incentive stock
options, nonqualified stock options, stock appreciation rights, restricted
39
<PAGE>
share awards, bargain purchases of common stock, bonuses of common stock and
various stock benefits or cash. Under terms of the plan, incentive stock options
may not be granted at less than the fair market value of the common stock on the
date of grant and expire no later than ten years after the date of grant.
Options granted to employees and consultants under the 1993 Plan generally vest
for periods up to ten years and are exercisable for a period of five years from
the date the options become vested. Options granted to directors under the 1993
Plan are generally exercisable immediately and expire ten years from the date of
grant. Options to purchase 1,094,950 shares of common stock were available for
future grants under the 1993 Plan at December 31, 1999.
The following table summarizes activity under the 1993 Plan for each of the
years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------ ------------------------ ------------------------
Wtd. Avg. Wtd. Avg. Wtd. Avg.
Shares Ex. Price Shares Ex. Price Shares Ex. Price
---------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of year 1,937,530 $ 16.06 1,187,200 $ 13.46 297,275 $ 9.96
Granted 414,100 23.25 902,640 19.31 941,000 14.41
Exercised (61,370) 13.52 (8,350) 6.26 (39,800) 9.45
Forfeited (6,230) 21.55 (143,960) 15.63 (11,275) 14.40
---------- -------- ---------- -------- ---------- --------
Outstanding at
end of year 2,284,030 $ 17.41 1,937,530 $ 16.06 1,187,200 $ 13.46
========== ======== ========== ======== ========== ========
Exercisable at
end of year 812,020 $ 14.99 668,460 $ 14.11 398,800 $ 11.24
========== ======== ========== ======== ========== ========
Weighted average
fair value of
options granted $ 14.51 $ 12.37 $ 8.65
======== ======== ========
</TABLE>
The options outstanding at December 31, 1999 under the 1993 Plan have exercise
price ranges and weighted average contractual lives as follows:
40
<PAGE>
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------------------- ---------------------------------
Number Wtd.Avg. Number
Range of Outstanding at Remaining Wtd. Avg. Exercisable at Wtd. Avg.
Exercise December Contractual Exercise December 31, Exercise
Prices 31, 1999 Life Price 1999 Price
- ----------------------- ----------------- -------------- -------------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
$5.00-$6.625 29,100 5 years $6.07 23,500 $5.93
$7.875-$10.50 102,500 4 years $7.94 100,500 $7.89
$11.875-$15.625 1,025,700 10 years $14.21 400,200 $13.36
$18.75-$23.25 1,126,730 11 years $21.49 287,820 $20.47
--------- --------
2,284,030 812,020
========= ========
</TABLE>
Included in option grants under the 1993 Plan are 50,000 option shares granted
in 1998 to outside patent counsel for patent and other legal services. These
options were granted at an exercise price of $18.75 per share and vest ratably
over three years. The estimated fair value of these options at the date of grant
was approximately $10.62 per share or $532,000 based on a Black-Scholes
option-pricing model. In November 1999, the Company accelerated vesting for
these options and all remaining options are fully exercisable. The estimated
fair value of these options was measured as of the date of acceleration using
the Black-Scholes option pricing model with the following assumptions: risk free
interest rate of 4.50%, no expected dividend yield, expected life of four years
and expected volatility of 60%. This measurement date resulted in an increase in
the fair value estimate of approximately $145,000. The estimated fair value of
these options are included in other assets and amortized to expense over the
estimated life of the services.
Also included in options granted under the 1993 Plan are 50,000 options granted
in 1997 to outside counsel under a five year consulting agreement. These options
were granted at an exercise price of $15.125 per share and vested ratably over
five years. In 1998, the consulting agreement was cancelled, and 40,000 unvested
options were forfeited. The estimated fair value of the vested portion of the
option is approximately $8.20 per share or $82,000, which was amortized to
expense in 1998. The fair value of this option was estimated on the date of
grant using the Black-Scholes option pricing model with the following weighted
average assumptions: risk free interest rate of 6.63%, no expected dividend
yield, expected life of 7 years and expected volatility of 40%.
NON-PLAN OPTIONS/WARRANTS
The Company has granted options and warrants outside the 1993 Plan for
employment inducements, non-employee consulting services, and for underwriting
and other services in connection with stock offerings. Non-plan options and
warrants are generally granted with exercise prices equal to fair market value
at the date of grant. Non-plan options granted as employment inducements
generally vest over five to ten years and are generally exercisable for a period
of five years from the date the options become vested. Non-plan options or
warrants granted for consulting services vest over the term of the related
consulting agreement, generally one to five years, and expire five years from
the date the option or warrant becomes vested. Non-plan warrants issued in
connection with stock offerings are fully exercisable and expire five years from
the date of grant.
41
<PAGE>
The following table summarizes activity related to non-plan options and warrants
for each of the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------ ------------------------ ------------------------
Wtd. Avg. Wtd. Avg. Wtd. Avg.
Shares Ex. Price Shares Ex. Price Shares Ex. Price
---------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
Beginning of year 1,146,625 $ 16.78 680,000 $ 12.94 582,807 $ 8.34
Granted 625,000 28.65 516,625 21.17 430,000 18.21
Exercised (10,000) 10.00 (50,000) 10.00 (82,807) 1.36
Forfeited 0 0 (250,000) 15.13
---------- -------- ---------- -------- ---------- --------
Outstanding at
end of year 1,761,625 $ 21.03 1,146,625 $ 16.78 680,000 $ 12.94
========== ======== ========== ======== ========== ========
Exercisable at
end of year 750,650 $ 14.57 665,325 $ 13.55 680,000 $ 12.94
========== ======== ========== ======== ========== ========
Weighted average
fair value of
options granted $ 20.20 $ 14.11
======== ========
</TABLE>
The non-plan options and warrants outstanding at December 31, 1999 have exercise
price ranges and weighted- average contractual lives as follows:
<TABLE>
<CAPTION>
Options/Warrants Options/Warrants
Outstanding Exercisable
---------------------------------------------------- ----------------------------------
Number Wtd.Avg. Number
Range of Outstanding at Remaining Wtd. Avg. Exercisable at Wtd. Avg.
Exercise December Contractual Exercise December 31, Exercise
Prices 31, 1999 Life Price 1999 Price
- --------------------- ----------------- -------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
$5.00 50,000 4 years $5.00 50,000 $5.00
$10.00 390,000 2 years $10.00 390,000 $10.00
$15.125-$22.50 696,625 7 years $21.51 285,650 $21.72
$23.25-$30.00 625,000 12 years $28.65 25,000 $23.25
--------- -------
1,761,625 750,650
========= =======
</TABLE>
42
<PAGE>
Included in non-plan options and warrants are 25,000 option shares granted in
1998 to outside patent counsel for patent and other legal services. These
options were granted at an exercise price of $18.75 per share and vest ratably
over three years. The estimated fair value of these options at the date of grant
was approximately $10.62 per share or $265,000 based on a Black-Scholes
option-pricing model. In November 1999, the Company accelerated vesting for
these options and all remaining options are fully exercisable. The estimated
fair value of these options was measured as of the date of acceleration using
the Black-Scholes option pricing model with the following assumptions: risk free
interest rate of 4.50%, no expected dividend yield, expected life of four years
and expected volatility of 60%. This measurement date resulted in an increase in
the fair value estimate of approximately $72,000. The estimated fair value of
these options are included in other assets and amortized to expense over the
estimated life of the services.
Also included in non-plan options and warrants is an option to purchase 15,000
shares of the Company's common stock granted in November 1998 to an outside
consultant in exchange for administrative services rendered. This option has an
exercise price of $18.75 per share, is fully exercisable and expires five years
from the date of grant. The estimated fair value of this option is approximately
$6.95 per share or approximately $104,250, which has been expensed in the
accompanying statement of operations in 1998. The fair value is estimated on the
date of grant using the Black-Scholes option pricing model with the following
weighted average assumptions: risk free interest rate of 4.70%, no expected
dividend yield, expected life of two years and expected volatility of 62%.
Also included in non-plan options and warrants are 200,000 warrants granted in
1996 to Whale Securities Co., L.P. ("Whale") and its designees under a five year
financial consulting and advisory agreement. These warrants were granted with an
exercise price of $10.00 per share, are fully exercisable and expire five years
from the date of grant. The estimated fair value of the warrants at the date of
grant was $2.56 per share, or $512,000. The fair value was estimated using the
Black-Scholes option pricing model with the following weighted average
assumptions: risk free interest rate of 6.34%, no expected dividend yield,
expected life of two years and expected volatility of 40%. The fair value of
these warrants was included in other assets and amortized to expense over the
term of the consulting agreement. In 1999, the Company ceased utilizing services
under the agreement, and expensed the remaining unamortized portion of the fair
value related to these warrants in the accompanying statement of operations.
In connection with its Regulation S offering (see Note 12), on September 5,
1997, the Company granted warrants to an outside financial consultant to
purchase an aggregate of 180,000 shares of common stock of the Company at an
exercise price of $22.50 per share. The warrants have an estimated fair market
value of $12.41 per share, or $2,233,800. The fair value was estimated as of the
date of grant using the Black-Scholes option pricing model with the following
weighted average assumptions: risk free interest rate of 6.08%, no expected
dividend yield, an expected life of three years, and expected volatility of 64%.
In connection with its Regulation S offering (see Note 12), on April 12, 1996,
the Company granted warrants to outside financial consultants to purchase an
aggregate of 250,000 shares of common stock of the Company at an exercise price
of $10.00 per share. The warrants are exercisable for five years from the date
of consummation of the offering. The warrants have an estimated fair market
43
<PAGE>
value of $2.56 per share, or $640,000. The fair value was estimated as of the
date of grant using the Black-Scholes option pricing model with the following
weighted average assumptions: risk free interest rate of 6.34%, no expected
dividend yield, an expected life of two years, and expected volatility of 40%.
COMPENSATION COSTS
The Company's employee stock options are accounted for under APB Opinion No. 25,
under which no compensation cost has been recognized. Had compensation cost for
this plan been determined consistent with SFAS No.123, the Company's net loss
and net loss per share would have been increased to the following pro forma
amounts:
<TABLE>
<CAPTION>
1999 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
Net Loss: As Reported $ (9,741,392) $ (4,706,398) $ (2,934,247)
Pro Forma (13,772,578) (9,010,611) (4,786,415)
Basic Net Loss Per Share: As Reported $ (0.83) $ (0.41) $ (0.28)
Pro Forma (1.17) (0.79) (0.46)
</TABLE>
The fair value of each employee option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted average
assumptions used for grants in 1999, 1998 and 1997:
1999 1998 1997
--------------- -------------- --------------
Expected volatility 57%-60% 62% 55%
Risk free interest rate 5.31%-6.08% 4.70% to 5.98% 5.75% to 6.85%
Expected life 4-11 years 2-11 years 2-11 years
Dividend yield -- -- --
12. STOCK AUTHORIZATION AND ISSUANCE:
---------------------------------
PREFERRED STOCK
The Certificate of Incorporation of the Company authorizes the Board of
Directors to issue up to 1,000,000 shares of preferred stock, $1.00 par value.
No preferred shares have been issued or are outstanding at December 31, 1999.
Subsequent to December 31, 1999, in connection with the acquisition of
substantially all of the assets of Signal Technologies, Inc., the Board of
Directors issued 114,019 shares of Preferred Stock (see Note 13).
44
<PAGE>
COMMON STOCK
On December 1, 1998, the Company issued 238,096 shares of its common stock to
Questar InfoComm, Inc. in a private placement transaction. The shares, which
constituted approximately 2% of the Company's outstanding common stock on an
after-issued basis, were sold at a price of $21.00 per share, for net proceeds
of approximately $5,000,000.
On September 5, 1997, the Company issued 900,000 shares of its common stock to
overseas investors in a transaction pursuant to Regulation S of the Securities
Act of 1933, as amended (the "1997 Offering"). The shares, which constituted
approximately 8% of the Company's outstanding common stock on an after-issued
basis, were sold at a price of $22.50 per share. After deducting issuance and
offering costs of $1,257,500, the Company received net proceeds of $18,992,500.
Also on September 5, 1997, the Company issued 90,000 shares of its common stock
to three investors in a private placement transaction pursuant to Section 4(2)
of the Securities Act of 1933, as amended. These shares, which constituted
approximately 0.8% of the Company's outstanding common stock on an after-issued
basis, were sold at a price of $22.50 per share, and the Company received net
proceeds of $2,025,000.
13. SUBSEQUENT EVENT:
-----------------
On March 10, 2000, the Company acquired substantially all of the assets of
Signal Technologies, Inc., a subchapter S corporation specializing in
radio-frequency design services. The assets, which include property and
equipment, accounts receivable and intangible assets were acquired for a
purchase price of $1,996,700. The purchase price was fully paid in the Company's
newly issued Series D Preferred Stock.
45
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On November 12, 1999, the Company selected PricewaterhouseCoopers LLP to replace
Arthur Andersen LLP as its independent certified public accountants. The
decision to change auditors was approved by the board of directors of the
Company.
Arthur Andersen LLP's report on the financial statements of the Company as of
December 31, 1998 and for each of the two years in the period ended December 31,
1998, did not contain an adverse opinion or disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope or accounting principles.
During the two years ended December 31, 1998, and the subsequent interim period,
there were no disagreements with Arthur Andersen LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which disagreements, if not resolved to the satisfaction of Arthur
Andersen LLP would have caused Arthur Andersen LLP to make reference to the
subject matter of the disagreements in connection with their audit reports with
respect to financial statements of the Company.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The information contained under the captions "Election of Directors" in the
Company's definitive Proxy Statement for its 2000 Annual Meeting of
Stockholders, which will be filed with the Commission pursuant to Regulation 14A
under the Securities and Exchange Act of 1934, as amended, (the "1999 Proxy
Statement"), is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information contained under the caption "Election of Directors - Executive
Compensation" in the 1999 Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained under the caption "Security Ownership of Certain
Beneficial Owners" in the 1999 Proxy Statement is incorporated herein by
reference.
46
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained under the caption "Election of Directors - Certain
Relationships and Related Transactions" in the 1999 Proxy Statement is
incorporated herein by reference.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit Number Description
-------------- ---------------------------------------------------------
3.1 Articles of Incorporation, as amended (incorporated by
reference from Exhibit 3.1 of Registration Statement No.
33-70588-A)
3.2 Amendment to Amended Articles of Incorporation dated
March 6, 2000*
3.3 Bylaws, as amended (incorporated by reference from
Exhibit 3.2 of Annual Report on Form 10-K for the year
ended December 31, 1998)
4.1 Form of common stock certificate (incorporated by
reference from Exhibit 4.1 of Registration Statement No.
33-70588-A)
4.2 Purchase option agreement dated April 12, 1996 between
the Registrant and Financial Consultant (incorporated by
reference from Exhibit 10.3 of Quarterly Report on Form
10-QSB for the quarterly period ended March 31, 1996)
4.3 Purchase option agreement dated April 12, 1996 between
the Registrant and Financial Consultant (incorporated by
reference from Exhibit 10.4 of Quarterly Report on Form
10-QSB for the Quarterly period ended March 31, 1996)
4.4 Warrant agreement between the Registrant and Whale
Securities Co., L.P. dated July 16, 1996 (incorporated by
reference from Exhibit 4.1 of Quarterly Report on Form
10-QSB for the quarterly Period ended September 30, 1996)
4.5 Warrant agreement between the Registrant and Frog Hollow
Partners dated July 16, 1996 (incorporated by reference
from Exhibit 4.2 of Quarterly Report on Form 10-QSB for
the quarterly period ended September 30, 1996)
47
<PAGE>
4.6 Purchase option agreement dated September 5, 1997 between
the Registrant and Financial Consultant (incorporated by
reference from Exhibit 4.7 of Annual Report on Form
10-KSB for the period ended December 31, 1997)
10.1 Lease dated March 1, 1992 between the Registrant and
Jeffrey Parker and Barbara Parker for 8493 Baymeadows
Way, Jacksonville, Florida (incorporated by reference
from Exhibit 10.1 of Registration Statement No.
33-70588-A)
10.2 1993 Stock Plan, as amended (incorporated by reference
from the Company's Proxy Statement dated October 1, 1996)
10.3 Stock option agreement dated October 11, 1993 between the
Registrant and Jeffrey Parker (incorporated by reference
from Exhibit 10.13 of Registration Statement
No.33-70588-A)
10.4 Form of indemnification agreement between the Registrant
and each of the directors and officers of the Registrant
(incorporated by reference from Exhibit 10.15 of
Registration Statement No.33-70588-A)
10.5 First amendment to lease dated March 1, 1992 between the
Registrant and Jeffrey Parker and Barbara Parker for 8493
Baymeadows Way, Jacksonville, Florida (incorporated by
reference from Exhibit 10.21 of Annual Report on Form
10-KSB for the year ended December 31, 1995)
10.6 Second amendment to lease dated March 1, 1992 between the
Registrant and Jeffrey Parker and Barbara Parker for 8493
Baymeadows Way, Jacksonville, Florida (incorporated by
reference from Exhibit 10.1 of Quarterly Report on Form
10-QSB for the quarterly period ended March 31, 1996)
10.7 Consulting agreement between the Registrant and Whale
Securities Co., L.P. dated July 16, 1996, as amended
(incorporated by reference from Exhibit 10.1 of Quarterly
Report on Form 10-QSB for the quarterly period ended
September 30, 1996)
10.8 Third amendment to lease dated March 1, 1992 between the
Registrant and Jeffrey Parker and Barbara Parker for 8493
Baymeadows Way, Jacksonville, Florida (incorporated by
reference from Exhibit 10.19 of Annual Report on Form
10-KSB for the period ended December 31, 1996)
10.9 Employment agreement dated July 23, 1998 between the
Registrant and Richard L. Sisisky (incorporated by
reference from Exhibit 10.4 of Registration Statement No.
333- 62497)
48
<PAGE>
10.10 Stock option agreement (vesting) dated July 23, 1998
between the Registrant and Richard L. Sisisky
(incorporated by reference from Exhibit 10.4 of
Registration Statement No. 333- 62497)
10.11 Stock option agreement (acceleration) dated July 23, 1998
between the Registrant and Richard L. Sisisky
(incorporated by reference from Exhibit 10.4 of
Registration Statement No. 333- 62497)
10.12 Subscription agreement dated December 1, 1998 between the
Registrant and Questar InfoComm, Inc. (incorporated by
reference from Exhibit 10.12 of Annual Report on Form
10-K for the period ended December 31, 1998)
10.13 Asset Purchase Agreement dated March 2, 2000 between the
Registrant and Signal Technologies, Inc., a Florida
corporation*
10.14 License Agreement between the Registrant and Symbol
Technologies, Inc., a Delaware corporation*
23.1 Consent of PricewaterhouseCoopers LLP*
23.2 Consent of Arthur Andersen LLP*
27.1 Financial data schedule*
99.1 Risk Factors*
* Filed herewith
(B) REPORTS ON FORM 8-K
On November 16, 1999, the Company filed a report on Form 8-K to report that it
had dismissed Arthur Andersen LLP as its independent certified accountants and
engaged PricewaterhouseCoopers LLP as its new independent certified accountants.
49
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PARKERVISION, INC.
Date: March 30, 2000 By: /s/ Jeffrey L. Parker
---------------------
Jeffrey L. Parker
Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
By: /s/ Jeffrey L. Parker Chief Executive Officer and Chairman March 30, 2000
------------------------ of the Board (Principal Executive Officer)
Jeffrey L. Parker
By: /s/ Richard L. Sisisky President, Chief Operating Officer and March 30, 2000
------------------------ Director
Richard L. Sisisky
By: /s/ David F. Sorrells Chief Technical Officer and Director March 30, 2000
------------------------
David F. Sorrells
By: /s/ Stacie Parker Wilf Secretary, Treasurer and Director March 30, 2000
------------------------
Stacie Parker Wilf
By: /s/ Cynthia L. Poehlman Controller and Chief Accounting March 30, 2000
------------------------ Officer (Principal Accounting Officer)
Cynthia L. Poehlman
By: /s/ William A. Hightower Director March 30, 2000
------------------------
William A. Hightower
By: /s/ Todd Parker Director March 30, 2000
------------------------
By: /s/ William L. Sammons Director March 30, 2000
------------------------
William L. Sammons
By: /s/ Robert G. Sterne Director March 30, 2000
------------------------
Robert G. Sterne
By: /s/ Arthur G. Yeager Director March 30, 2000
------------------------
Arthur G. Yeager
</TABLE>
50
<PAGE>
PARKERVISION, INC.
VALUATION AND QUALIFYING ACCOUNTS
SCHEDULE II
<TABLE>
<CAPTION>
Balance at Provision Balance at
Valuation Allowance for Beginning Charged to End of
Inventory Obsolescence of Period Expense Write-Offs Period
---------------------- --------- ------- ---------- ------
<S> <C> <C> <C> <C>
Year ended December 31, 1997 $409,868 $100,000 $ (92,816) $417,052
Year ended December 31, 1998 417,052 210,000 (219,706) 407,346
Year ended December 31, 1999 407,346 240,000 (143,534) 503,812
<CAPTION>
Balance at Balance at
Valuation Allowance for Beginning End of
Income Taxes of Period Provision Write-Offs Period
------------ --------- --------- ---------- ------
<S> <C> <C> <C> <C>
Year ended December 31, 1997 $4,027,813 $1,295,305 $ 0 $ 5,323,118
Year ended December 31, 1998 5,323,118 2,522,765 0 7,845,883
Year ended December 31, 1999 7,845,883 4,236,628 0 12,082,511
</TABLE>
51
<PAGE>
INDEX TO EXHIBITS
3.2 Amendment to Amended Articles of Incorporation dated March 6, 2000
10.13 Asset Purchase Agreement dated March 2, 2000 between the Registrant
and Signal Technologies, Inc., a Florida corporation
10.14 License Agreement between the Registrant and Symbol Technologies,
Inc., a Delaware corporation
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Arthur Andersen LLP
27.1 Financial data schedule
99.1 Risk Factors
52
<PAGE>
EXHIBIT 3.2
ARTICLES OF AMENDMENT
PARKERVISION, INC.
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND OTHER RIGHTS AND QUALIFICATIONS OF
SERIES A PREFERRED STOCK,
SERIES B PREFERRED STOCK,
SERIES C PREFERRED STOCK
AND
SERIES D PREFERRED STOCK
----------------------------------
Pursuant to Section 1006 of the
Florida 1989 Business Corporation Law
----------------------------------
Pursuant to Section 607.1006 of the Florida 1989 Business Corporation Act,
the Board of Directors of ParkerVision, Inc. ("Corporation") at a meeting held
on February 25, 2000, have approved and adopted this Amendment to the Amended
Articles of Incorporation to designate the rights and preferences of the Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series
D Preferred Stock.
FIRST: The name of the corporation is ParkerVision, Inc.
SECOND: The following amendment to the Amended Articles of Incorporation
was approved and adopted on February 25, 2000, as prescribed by Section 607.1006
of the Florida 1989 Business Corporation Act, by the board of directors at a
meeting without shareholder approval, and approval by the shareholders of the
Corporation was not required.
THIRD: This amendment is to be effective immediately upon filing.
FOURTH: Article IV of the Amended Certificate of Incorporation is further
amended to add the following Sections 4.2 and 4.3 thereto, reading as follows:
SECTION 4.2. Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock
1. DESIGNATION AND AMOUNT; STATED VALUE.
(a) 6,795 shares of the Preferred Stock of the Corporation, par value
$1.00 per share, shall constitute a class of Preferred Stock designated as
"Series A Preferred Stock" ("Series A Preferred Stock").
(b) 13,678 shares of the Preferred Stock of the Corporation, par value
$1.00 per share, shall constitute a class of Preferred Stock designated as
"Series B Preferred Stock."
(c) 13,678 shares of the Preferred Stock of the Corporation, par value
$1.00 per
53
<PAGE>
share, shall constitute a class of Preferred Stock designated as "Series C
Preferred Stock."
(d) The Series A Preferred Stock, Series B Preferred Stock and Series
C Preferred Stock shall have a stated value of $25.00 per share ("Stated
Value").
2. REDEMPTION RIGHTS. The Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock shall not be subject to any right of
redemption by the Corporation or by the holder thereof, except as provided in
Subsection 6(g) of this Section 4.2.
3. DIVIDENDS. The holders of shares of Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock shall not be entitled to any
dividends.
4. RIGHTS ON LIQUIDATION, DISSOLUTION OR WINDING UP, ETC. In the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, as a result of which the assets of the Corporation, whether from
capital, surplus or earnings, shall be distributed to the stockholders of the
Corporation, such assets shall be distributed in the following order of
priority.
(i) The holders of the Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock and all other classes or series of
any class of capital stock which rank PARI PASSU therewith shall be
entitled to receive prior to and in preference to any distributions to
the holders of Junior Securities (as hereinafter defined in this
section) an amount equal to the Stated Value, pro rata among all such
securities based on their relative rights. After the distribution of
the Stated Value in respect of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock and any other classes or
series of any capital stock which rank PARI PASSU, the remaining
assets of the Corporation, if any, will be available for distribution
to the holders of the Corporation holding Junior Securities.
(ii) The Series A Preferred Stock, Series B Preferred Stock and Series
C Preferred Stock rank PARI PASSU with the Series D Preferred Stock.
(iii) Junior Securities means the Common Stock of the Corporation and
any other security of the Corporation not designated as ranking PARI
PASSU with the Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock.
(iv) The Corporation may issue any class or series of any class of
capital stock, other than Common Stock, which rank PARI PASSU with the
A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock with respect to rights on liquidation, and winding up or
dissolution of the Corporation.
5. VOTING RIGHTS. The holders of Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock shall not be entitled to vote on
any matter, except as may be required by law. Any amendment to this Certificate
of Designations for the modification, deletion or addition of any terms of the
Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock
may be amended by a vote of the holders of the Series A Preferred Stock, Series
B Preferred Stock or Series C Preferred Stock, as the case may be, holding a
majority of the shares, voting as a single class, and only the vote of the
majority of the Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock, as the case may be,
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shall be entitled to vote thereon. Each share of Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock shall have one vote on any
matter on which the series is entitled to vote.
6. CONVERSION RIGHTS.
(a) AUTOMATIC CONVERSION.
(i) Each share of Series A Preferred Stock shall automatically be
converted on March 10, 2001 ("Series A Initial Conversion Date") into that
number of shares of Common Stock, $.01 par value per share ("Common Stock"),
subject to adjustments as provided hereafter, determined by dividing the Stated
Value by the Market Value (as hereafter defined) of a share of Common Stock
("Conversion Rate"). If there has been a no Change of Control after the issuance
of the Series A Preferred Shares, the Series A Initial Conversion Date will be
delayed for ninety (90) days ("Series A Final Conversion Date") in the event
that less than five of the following persons, Gregory S. Rawlins, Michael M.
Arian, Michael W. Rawlins, Richard K. Dudney, Dennis W. Butler, Jorge Medina,
Trong D. Nguyen, Ahmad Rabah and Diane P. Richie, or their designated
replacements approved by the Chief Executive Officer of the Corporation, whose
approval shall not be unreasonably withheld, (together the "Core Team") are
working for the Corporation on the Series A Initial Conversion Date. If on the
Series A Final Conversion Date the Core Team does not consist of at least five
persons as above provided, then the Series A Preferred Stock will be not be
convertible and immediately canceled.
(ii) Each share of Series B Preferred Stock shall automatically
be converted on March 10, 2002 ("Series B Initial Conversion Date") into that
number of shares of Common Stock, subject to adjustments as provided hereafter,
determined by the Conversion Rate. If there has been no Change of Control after
the issuance of the Series B Preferred Stock, the Series B Initial Conversion
Date will be delayed for ninety (90) days ("Series B Final Conversion Date") in
the event that less than five of the following persons, Gregory S. Rawlins,
Michael M. Arian, Michael W. Rawlins, Richard K. Dudney, Dennis W. Butler, Jorge
Medina, Trong D. Nguyen, Ahmad Rabah and Diane P. Richie, or their designated
replacements approved by the Chief Executive Officer of the Corporation, whose
approval shall not be unreasonably withheld, (together the "Core Team") are
working for the Corporation on the Series B Initial Conversion Date. If on the
Series B Final Conversion Date the Core Team does not consist of at least five
persons as above provided, then the Series B Preferred Stock will be not be
convertible and immediately canceled.
(iii) Each share of Series C Preferred Stock shall automatically
be converted on March 10, 2003 ("Series C Initial Conversion Date") into that
number of shares of Common Stock, subject to adjustments as provided hereafter,
determined by the Conversion Rate. If there has been no Change of Control after
the issuance of the Series C Preferred Stock, the Series C Initial Conversion
Date will be delayed for ninety (90) days ("Series C Final Conversion Date") in
the event that less than five of the following persons, Gregory S. Rawlins,
Michael M. Arian, Michael W. Rawlins, Richard K. Dudney, Dennis W. Butler, Jorge
Medina, Trong D. Nguyen, Ahmad Rabah and Diane P. Richie, or their designated
replacements approved by the Chief Executive Officer of the Corporation, whose
approval shall not be unreasonably withheld, (together the "Core Team") are
working for the Corporation on the Series C Initial Conversion Date. If on the
Series C Final Conversion Date the Core Team does not consist of at least five
persons as above provided, then the Series C Preferred Stock will be not be
convertible and immediately canceled.
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(iv) The Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock of a holder ("Preferred Stock Holder") will not be
convertible and will be canceled upon termination of the Preferred Stock
Holder's employment with the Corporation or its affiliates if the termination is
by reason of death or for "cause" or by reason of his resignation prior to the
conversion of such shares. On any other termination of the Preferred Stock
Holder's employment with the Corporation or its affiliates the Series A
Preferred Stock, Series B Preferred Stock, or Series C Preferred Stock of such
holder will automatically convert into shares of Common Stock on the date of
termination at the Conversion Rate and in accordance with Section 6(e) of this
Section 4.2.
(b) DEFINITION OF CAUSE. As used herein, "cause" shall mean: (a) the
refusal or failure by the Preferred Stock Holder to carry out specific
directions of the his direct report which are of a material nature and
consistent with his employment status, or the refusal or failure by an employee
to perform a material part of the employee's duties; (b) the commission by the
Preferred Stock Holder of a material breach of any of the provisions of his
employment agreement with the Corporation; (c) fraud or dishonest action by the
Preferred Stock Holder in his relations with the Corporation or any of its
subsidiaries or affiliates, or with any customer or business contact of the
Corporation or any of its subsidiaries or affiliates ("dishonest" for these
purposes shall mean the Preferred Stock Holder's knowingly or recklessly making
of a material misstatement or omission for his personal benefit); (d) the
conviction of the Preferred Stock Holder of any crime involving an act of moral
turpitude; or (e) in the event there is a Change of Control (as defined below)
and the Preferred Stock is offered a similar position with the acquiring entity
in the metropolitan area in which he is working immediately before the Change of
Control and the Preferred Stock Holder rejects the offer. Notwithstanding the
foregoing, no "Cause" for termination shall be deemed to exist with respect to
the Preferred Stock Holder's acts described in clauses (a) or (b) above, unless
the Corporation shall have given written notice to the Preferred Stock Holder
specifying the "Cause" with reasonable particularity and, within ten calendar
days after such notice, the Preferred Stock Holder shall not have cured or
eliminated the event or behavior giving rise to such "Cause" or, if a cure
cannot reasonably be completed within ten days, the Preferred Stock Holder shall
not have commenced and shall not be diligently pursing such cure, which, in any
event, is completed within 30 days after such notice; provided, however, that a
repeated breach after notice and cure of any provision of clauses (a) or (b)
above involving the same or substantially similar actions or conduct shall be
grounds for termination for "Cause" without any additional notice from the
Corporation.
(c) DEFINITION OF CHANGE OF CONTROL. "Change of Control" shall mean:
A) (i) any "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) becomes the "beneficial owner" (within the meaning of Rule
13d-3 under the Exchange Act) of the Common Stock having thirty-five percent
(35%) or more of the total voting power of all of the Corporation's voting
capital stock then outstanding, unless such person or group is or includes (a)
an individual who, as of the date of this certificate of designations, is an
executive officer of the Corporation and holds beneficial ownership in excess of
twenty-five percent (25%) of the outstanding Common Stock of the Corporation, or
an Affiliate or Associate (within the meaning of Rule 12b-2 under the Exchange
Act) of such individual, or (b) an underwriter who obtains such thirty-five
percent (35%) interest in connection with a public offering; (ii) the merger or
consolidation of the Corporation other than one resulting in the Corporation's
voting securities outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least sixty-five percent
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(65%) of the combined voting power of the voting securities of the Corporation
and such surviving entity outstanding immediately after such merger or
consolidation; or (iii) the sale or other disposition of all, or substantially
all, of the Corporation's assets, or the approval of a plan of liquidation of
the Corporation other than a sale to an entity which is owned by the
shareholders of the Corporation in substantially the same proportion as they own
the Company immediately prior to such sale, and
B) the Preferred Stock Holder is not offered a similar position
with the acquiring entity in the same metropolitan area as the Preferred Stock
Holder is working immediately before the Change of Control.
(d) DEFINITION OF MARKET VALUE. Market Value shall mean the average
Closing Bid Price (as hereinafter defined) of the Common Stock for the five
consecutive trading days ending immediately prior to the date of conversion. The
"Closing Bid Price" shall mean the closing bid price for the Corporation's
Common Stock, as reported by The Nasdaq Stock Market if the Common Stock is
quoted on the Nasdaq National Market or Nasdaq SmallCap Market, or the last
sales price of the Common Stock if the Common Stock is listed on a national
securities exchange, whichever is the principal trading market for the Common
Stock. If the Common Stock is not listed on a national securities exchange or
quoted on the Nasdaq National Market or Nasdaq SmallCap Market, but is traded on
the over-the-counter market, the Closing Bid Price shall mean the closing bid
price for the Common Stock, as reported by the OTC Bulletin Board or the
National Quotation Bureau, Incorporated, or similar publisher of such
quotations. If the Closing Bid Price cannot be determined pursuant to the above,
the Closing Bid Price shall be such price as the Board of Directors of the
Company shall determine in good faith.
(e) MECHANICS OF CONVERSION. The conversion shall be deemed to have
been made immediately prior to the close of business on the date of conversion
of the Series A Preferred Stock, Series B Preferred Stock or Series C Preferred
Stock, as the case may be, and the person or persons entitled to receive the
Common Stock shall be treated for all purposes as the record holder or holders
of such shares of Common Stock as of such date. Upon conversion, the outstanding
Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock
will be deemed converted without the necessity of surrender of the certificates
representing the shares of such series, and the certificate representing the
Common Stock to be received will be issued promptly by the Corporation to the
holder of record of the series being converted and sent to the address of
record.
(f) FRACTIONAL SHARES. The Corporation shall not be required to issue
fractions of shares of Common Stock upon conversion of the Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock. If any fractions of
a share would, but for this Section, be issuable upon any conversion, in lieu of
such fractional share the Company shall round up or down to the nearest whole
number of shares.
(g) RESERVATION OF SHARES. The Corporation shall reserve and shall at
all times have reserved out of its authorized but unissued shares of Common
Stock sufficient shares of Common Stock to permit the conversion of the then
outstanding shares of the Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock. All shares of Common Stock which may be issued upon
conversion of shares of the Series A Preferred Stock, Series B Preferred Stock
or Series C Preferred Stock shall be validly issued, fully paid and
non-assessable.
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(h) ANTI-DILUTIVE ADJUSTMENTS. If there is any consolidation or merger
to which the Corporation is a party other than a consolidation or merger in
which the Corporation is the continuing corporation and which does not result in
any reclassification of, or change in, outstanding shares of Common Stock, then
in addition to all of the rights granted to the holders of the Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock as
designated herein, the Corporation, or such successor or purchasing corporation,
as the case may be, shall, as a condition precedent to such reclassification,
change, consolidation or merger ("Corporate Change"), provide in its certificate
of incorporation or other charter document that each outstanding share of the
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock,
shall be convertible into the kind and amount of shares of capital stock and
other securities and property (including cash) receivable upon such Corporate
Change by a holder of the number of shares of Common Stock deliverable upon
conversion of such series immediately prior to the Corporate Change. If, in the
case of any such Corporate Change, the stock or other securities and property
(including cash) receivable thereupon by a holder of Common Stock includes
shares of capital stock or other securities and property of a corporation other
than the corporation which is the successor of the Corporation in such Corporate
Change, then the certificate of incorporation or other charter document of such
other corporation shall contain additional provisions to protect the interests
of the holders of shares of outstanding Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock as the Board of Directors shall
reasonably consider necessary by reason of the foregoing. Notwithstanding the
foregoing, in the event of a Corporate Change, the Board of Directors at its
discretion may pay or arrange to pay the stated value of the outstanding Series
A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock to the
holders thereof upon the consummation of the Corporate Change and upon payment
cancel such outstanding shares. The provision of this Section 6(h) shall
similarly apply to successive reclassifications, changes, consolidations or
mergers.
(i) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the kind of securities into which the Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock is
convertible, the Corporation, at its expense, shall promptly compute such
adjustment or readjustment and prepare and furnish to each holder a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based.
(j) CANCELLATION. In the event any shares of Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred Stock shall be canceled or
converted pursuant to this Section 6 hereof, the shares so canceled or converted
shall be returned to the status of authorized and unissued shares of preferred
stock, without any class designation.
(k) IMPAIRMENT. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions for the
Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock
and in the taking of all such action as may be necessary or appropriate in order
to protect the conversion rights of the holders of such stock against
impairment.
(l) NOTICES. Any notice to be given to the holders of shares of Series
A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock shall be
deemed given if
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deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of this Corporation.
SECTION 4.3. SERIES D PREFERRED STOCK
1. DESIGNATION AND AMOUNT. 79,868 shares of the Preferred Stock of the
Corporation, par value $1.00 per share, shall constitute a class of Preferred
Stock designated as "Series D Preferred Stock" ("Series D Preferred Stock"). The
Series D Preferred Stock shall have a stated value of $25.00 per share ("Stated
Value").
2. REDEMPTION RIGHTS. The Series D Preferred Stock shall not be subject
to any right of redemption by the Corporation or by the holder thereof, except
as provided in Subsection 6(f) of this Section 4.3.
3. DIVIDENDS. The holders of shares of Series D Preferred Stock shall not
be entitled to any dividends.
4. RIGHTS ON LIQUIDATION, DISSOLUTION OR WINDING UP, ETC. In the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, as a result of which the assets of the Corporation, whether from
capital, surplus or earnings, shall be distributed to the stockholders of the
Corporation, such assets shall be distributed in the following order of
priority.
(i) The holders of the Series D Preferred Stock and all other classes
or series of any class of capital stock which rank PARI PASSU shall be
entitled to receive, prior and in preference to any distributions to
the holders of any Junior Securities (as hereinafter defined in this
section) an amount equal to the Stated Value, pro rata among all such
securities based on their relative rights. After the distribution of
the Stated Value in respect of the Series D Preferred Stock and all
other classes or series of any class of capital stock which rank PARI
PASSU, the remaining assets of the Corporation, if any, will be
available for distribution to the holders of the Corporation holding
Junior Securities.
(ii) The Series D Preferred Stock ranks PARI PASSU with the Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock.
(iii) Junior Securities means the Common Stock of the Corporation and
any other security of the Corporation not designated as ranking PARI
PASSU with the Series D Preferred Stock.
(iv) The Corporation may issue any class or series of any class of
capital stock, other than Common Stock, which ranks PARI PASSU with
the Series D Preferred Stock with respect to rights on liquidation,
and winding up or dissolution of the Corporation.
5. VOTING RIGHTS. The holders of Series A Preferred Stock shall not be
entitled to vote on any matter, except as may be required by law. Any amendment
to this Certificate of Designations for the modification, deletion or addition
of any terms of the Series D Preferred Stock may be amended by a vote of the
holders of the Series D Preferred Stock holding a majority of the shares, voting
as a single class, and only the vote of the majority of the Series D
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Preferred Stock shall be entitled to vote thereon. Each share of Series D
Preferred Stock shall have one vote on any matter on which the Series D
Preferred Stock is entitled to vote.
6. CONVERSION OF SERIES D PREFERRED STOCK.
(a) RIGHT TO CONVERT. The holders of the Series D Preferred Stock
shall have the right, at such holders' option, at any time or from time to time,
after March 10, 2001 to convert each share of Series D Preferred Stock, into
that number of shares of Common Stock, $.01 par value per share ("Common
Stock"), subject to adjustments as provided hereafter, equal to the Stated Value
divided by the Market Value (as hereinafter defined) of a share of Common Stock.
("Conversion Rate").
(b) AUTOMATIC CONVERSION. Each share of Series D Preferred Stock shall
automatically be converted at the Conversion Rate into shares of Common Stock on
March 10, 2002 ("Automatic Conversion Date").
(c) MARKET VALUE. Market Value shall mean the average Closing Bid
Price (as hereinafter defined) of the Common Stock for the five consecutive
trading days ending immediately prior to the date of notice of conversion
pursuant to Subsection (d) below or the Automatic Conversion Date. The "Closing
Bid Price" shall mean the closing bid price for the Corporation's Common Stock,
as reported by The Nasdaq Stock Market if the Common Stock is quoted on the
Nasdaq National Market or Nasdaq SmallCap Market, or the last sales price of the
Common Stock if the Common Stock is listed on a national securities exchange,
whichever is the principal trading market for the Common Stock. If the Common
Stock is not listed on a national securities exchange or quoted on the Nasdaq
National Market or Nasdaq SmallCap Market, but is traded on the over-the-counter
market, the Closing Bid Price shall mean the closing bid price for the Common
Stock, as reported by the OTC Bulletin Board or the National Quotation Bureau,
Incorporated, or similar publisher of such quotations. If the Closing Bid Price
cannot be determined pursuant to the above, the Closing Bid Price shall be such
price as the Board of Directors of the Company shall determine in good faith.
(d) MECHANICS OF CONVERSION. Before any holder of Series D Preferred
Stock shall be entitled to convert the same into Common Stock, the holder shall
surrender the certificate or certificates therefore, duly endorsed, at the
office of the Corporation or of any transfer agent for the Series D Preferred
Stock, and shall give written notice to the Corporation at its principal
corporate office, of the election to convert the same and shall state therein
the name or names in which the certificate or certificates for Common Stock are
to be issued. The Corporation shall, as soon as practicable thereafter, issue
and deliver to the holder of Series D Preferred Stock, or to the nominee or
nominees of such holder, at the address indicated in the notice of conversion a
certificate or certificates for the number of shares of Common Stock to which
the holder shall be entitled as aforesaid. The conversion shall be deemed to
have been made immediately prior to the close of business on the date of
surrender of the shares of Series D Preferred Stock to be converted, and the
person or persons entitled to receive the Common Stock shall be treated for all
purposes as the record holder or holders of such shares of Common Stock as of
such date. Upon the automatic conversion, the outstanding Series D Preferred
Stock will be deemed canceled or converted without the necessity of surrender of
the certificates representing the Series D Preferred Stock, and the date of
surrender will be deemed to be the date of automatic conversion and the
certificate representing the Common Stock to be received will be issued to the
holder of record of the Series D Preferred Stock and sent to the address of
record.
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(e) FRACTIONAL SHARES. The Corporation shall not be required to issue
fractions of shares of Common Stock upon conversion of the Series D Preferred
Stock. If any fractions of a share would, but for this Section, be issuable upon
any conversion of Series D Preferred Stock, in lieu of such fractional share the
Company shall round up or down to the nearest whole number of shares.
(f) RESERVATION OF SHARES. The Corporation shall reserve and shall at
all times have reserved out of its authorized but unissued shares of Common
Stock sufficient shares of Common Stock to permit the conversion of the then
outstanding shares of the Series D Preferred Stock. All shares of Common Stock
which may be issued upon conversion of shares of the Series D Preferred Stock
shall be validly issued, fully paid and non-assessable.
(g) ANTI-DILUTIVE ADJUSTMENTS. If there is any consolidation or merger
to which the Corporation is a party other than a consolidation or merger in
which the Corporation is the continuing corporation and which does not result in
any reclassification of, or change in, outstanding shares of Common Stock, then
in addition to all of the rights granted to the holders of the Series D
Preferred Stock as designated herein, the Corporation, or such successor or
purchasing corporation, as the case may be, shall, as a condition precedent to
such reclassification, change, consolidation or merger ("Corporate Change"),
provide in its certificate of incorporation or other charter document that each
share of the Series D Preferred Stock shall be convertible into the kind and
amount of shares of capital stock and other securities and property (including
cash) receivable upon such Corporate Change by a holder of the number of shares
of Common Stock deliverable upon conversion of the Series D Preferred Stock
thereon immediately prior to the Corporate Change. If, in the case of any such
Corporate Change, the stock or other securities and property (including cash)
receivable thereupon by a holder of Common Stock includes shares of capital
stock or other securities and property of a corporation other than the
corporation which is the successor of the Corporation in such Corporate Change,
then the certificate of incorporation or other charter document of such other
corporation shall contain additional provisions to protect the interests of the
holders of shares of the Series D Preferred Stock as the Board of Directors
shall reasonably consider necessary by reason of the foregoing. Notwithstanding
the foregoing, in the event of a Corporate Change, the Board of Directors at its
discretion may pay or arrange to pay the stated value of the outstanding Series
D Preferred Stock to the holders thereof upon the consummation of the Corporate
Change and upon payment cancel the Series D Preferred Stock. The provision of
this Section 6(g) shall similarly apply to successive reclassifications,
changes, consolidations or mergers.
(h) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the kind of securities into which the Series D
Preferred Stock is convertible, the Corporation, at its expense, shall promptly
compute such adjustment or readjustment and prepare and furnish to each holder
of Series D Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based.
(i) CANCELLATION. In the event any shares of Series D Preferred Stock
shall be converted pursuant to this Section 6 hereof, the shares of Series D
Preferred Stock so converted shall be canceled and returned to the status of
authorized and unissued shares of preferred stock, without any class
designation.
(j) IMPAIRMENT. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid
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the observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Certificate of Designation for the
Series D Preferred Stock and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion rights of the
holders of the Series D Preferred Stock against impairment.
(k) NOTICES OF RECORD DATE. If after the date the Series D Preferred
Stock is convertible and prior to Automatic Conversion Date, the Corporation
sets a record date of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Corporation shall
mail to each holder of Series D Preferred Stock, at least ten (10) days prior to
the Record Date, a notice specifying the date on which any such record is to be
taken for the purpose of such dividend, distribution or right, and the amount
and character of such dividend, distribution or right.
(l) NOTICES. Any notice to be given to the holders of shares of Series
D Preferred Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his address appearing
on the books of this Corporation.
IN WITNESS WHEREOF, we have executed this Certificate of Designation
this 6th day of March, 2000.
PARKERVISION, INC.
By: /s/Jeffrey L. Parker
--------------------
Jeffrey L. Parker,
Chairman of the Board
By: /s/ Stacie Parker Wilf
-----------------------------
Stacie Parker Wilf, Secretary
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EXHIBIT 10.13
ASSET PURCHASE AGREEMENT
----------------------------------------------------
BY AND AMONG
PARKERVISION, INC.
AND
SIGNAL TECHNOLOGIES INC.
AND
GREGORY RAWLINS AND SUSAN RAWLINS
DATED AS OF MARCH 2, 2000
----------------------------------------------------
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ASSET PURCHASE AGREEMENT
------------------------
ASSET PURCHASE AGREEMENT, dated as of March 2, 2000, by and among
GREGORY RAWLINS and SUSAN RAWLINS (together "Rawlins"), SIGNAL TECHNOLOGIES,
INC., a Florida corporation ("Seller"), and PARKERVISION, INC., a Florida
corporation ("Purchaser").
W I T N E S S E T H:
--------------------
WHEREAS, Seller is engaged in the business of providing electronic and
wireless engineering consulting services to various entities on a work for hire
basis; and
WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to
purchase from Seller all the assets of the Seller used in its business, upon the
terms and subject to the conditions set forth herein; and
WHEREAS, the Rawlins are the owners of all of the shares of capital
stock of Seller and Gregory Rawlins has been the chief executive officer of
Seller; and
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, Rawlins, Seller and Purchaser
hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings:
"ACTION" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with, such specified
Person.
"AFFILIATED PARTY TRANSACTION" means any agreement, arrangement or
transaction with any of its managers, members or with any relative of such
Person or any Affiliate of them.
"AGREEMENT" or "THIS AGREEMENT" means this Asset Purchase Agreement,
dated as of March 2, 2000, among Rawlins, Seller and Purchaser (including all of
the Exhibits and Schedules hereto), and all amendments hereto made in accordance
with the provisions of Section 9.1(e).
"BUSINESS DAY" means any day that is not a Saturday, Sunday or other
day on which banks are required or authorized by law to be closed in The City of
New York.
"CODE" means the Internal Revenue Code of 1986, as the same may be
amended from time to time.
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"CONTROL" (including the terms "controlling", "controlled by" and
"under common control with"), with respect to the relationship between or among
two or more Persons, means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"DOLLARS" and "$" means the lawful currency of the United States of
America.
"ENCUMBRANCE(S)" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement with a creditor or
restriction of any kind, including, without limitation, any restriction on the
use, voting, transfer, receipt of income or other exercise of any attributes of
ownership.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GOVERNMENTAL AUTHORITY" means any United States federal, state or
local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal (mediation, alternative
dispute resolution or otherwise) or judicial or arbitral body.
"GOVERNMENTAL ORDER" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"INDEBTEDNESS" means, with respect to any Person, (a) all indebtedness
of such Person, whether or not contingent, for borrowed money or for the
deferred purchase price of property or services, except trade accounts payable
and accrued liabilities that arise in the ordinary course of business, (b) all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (c) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (d) all obligations of such Person as lessee under
leases that have been or should be, in accordance with GAAP, recorded as capital
leases, (e) all obligations, contingent or otherwise, of such Person under
letters of credit, guaranties or similar facilities or agreements, (f) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
acquire for value any capital stock of such Person or any warrants, rights or
options to acquire such capital stock, and (g) all indebtedness referred to in
clauses (a) through (e) above secured by any Encumbrance on property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness.
"INTELLECTUAL PROPERTY" means (a) inventions, whether or not
patentable, (b) national (including the United States) and multinational
statutory invention registrations, patents, patent registrations and patent
applications and all rights therein provided by international treaties or
conventions and all improvements to the inventions disclosed in each such
registration, patent or application, (c) trademarks, service marks, trade dress,
logos, trade names, brand names and corporate names, whether or not registered,
including all common law rights, and registrations and applications for
registration thereof, and the goodwill of Seller relating thereto; (d)
copyrights (registered or otherwise) and registrations and applications for
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registration thereof, (e) computer software, including, without limitation,
source codes, operating systems and specifications, data, databases, files,
documentation and other materials related thereto, (f) trade secrets and
confidential, technical and business information, (g) whether or not
confidential, technology (including know-how), manufacturing and production
processes and techniques, procedures and processes owned by Seller, research and
development information, financial, marketing and business data, pricing and
cost information, business and marketing plans and customer and supplier lists
and information, (h) trade secrets of Seller, (i) ASIC design cells, (j) copies
and tangible embodiments of all the foregoing, (k) all rights to obtain and
rights to apply for patents, and to register trademarks and copyrights and to
register domain names, (l) all rights to sue or recover and retain damages and
costs and attorneys' fees for present and past infringement of any of the
foregoing, in each case used primarily in, or relating to, the operation of the
business of Seller, and (m) domain names and URL's of or relating to the
Company, but not the names "Signal Technologies, Inc.," "STI" and variations of
these names.
"IRS" means the Internal Revenue Service of the United States or any
successor agency.
"LAW" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law.
"LIABILITIES" means any and all debts (including all Indebtedness),
liabilities and obligations, whether accrued or fixed, absolute or contingent,
matured or unmatured or determined or determinable, including, without
limitation, those arising under any Law, Action or Governmental Order and those
arising under any contract, agreement, arrangement, commitment or undertaking.
"MATERIAL ADVERSE EFFECT" means any circumstance, change in, or effect
on the Acquired Assets or Seller that, individually or together with any other
circumstances: (a) is, or is reasonably likely to be, materially adverse to the
business, results of operations, business or financial prospects, condition
(financial or otherwise), employee relationships or customer or supplier
relationships of Seller or its operations, the Acquired Assets or Liabilities.
"PERMITTED ENCUMBRANCES" means imperfections or exceptions to title,
if any, as do not, and could not reasonably be expected to, individually or in
the aggregate, materially diminish the value of any material Acquired Asset,
materially interfere with the alienability, financeability, ownership, use,
occupancy or operation of any such property, or materially impair or interfere
with the operations of the business of Seller.
"PERSON" means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a "person"
under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
"RECEIVABLES" means any and all accounts receivable, notes and other
accounts receivable by Seller or Affiliates from third parties, billed or
unbilled arising exclusively from the conduct of the business of Seller before
the Closing Date.
"SEC" means the Securities and Exchange Commission.
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"SEC REPORTS" means those reports filed by the Purchaser in compliance
with the Exchange Act, including, but not limited to, Forms 10-K, 10-Q and 8-K
and proxy statement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER'S TRANSACTION COSTS" shall mean costs and expenses paid or
accrued to third parties by Seller in connection with the transactions
contemplated by this Agreement.
"TAX" or "TAXES" means federal, state, local or foreign (A) any and
all taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind
(together with any and all interest, penalties, additions to and additional
amounts imposed with respect thereto) imposed by any government or taxing
authority, including, without limitation: taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
disability, workers' compensation, unemployment compensation, natural resources,
occupation or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added, alternative minimum or
gains taxes or other tax of any kind whatsoever; license, registration and
documentation fees, and customs duties, tariffs, and similar charges and (B)
liability of Seller for the payment of any amounts of the type described in
clause (A) as a result of any express or implied obligation to indemnify or
otherwise assume or succeed to the liability of any other person.
"TAX RETURNS" means returns, declarations, reports, claims for refund,
information returns or other documents (including any related or supporting
schedules, statements or information) filed or required to be filed in
connection with the determination, assessment or collection of Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"TRANSACTION COSTS" means the costs of Seller's attorneys, accountants
and other agents employed by Seller in connection with this Agreement and the
Transaction Documents.
"TRANSACTION DOCUMENTS" means this Agreement and the other agreements,
certificates, documents and instruments executed and delivered by a party in
connection with the transactions contemplated hereby.
ARTICLE II
PURCHASE AND SALE
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SECTION 2.1 PURCHASE AND SALE OF ACQUIRED ASSETS; EXCLUDED ASSETS.
(a) PURCHASE AND SALE OF ACQUIRED ASSETS. Except as otherwise provided
in Section 2.1(b), pursuant to the terms and subject to the conditions set forth
in this Agreement, at the Closing, Seller shall sell, assign, transfer, convey
and deliver to Purchaser and Purchaser shall purchase and accept from Seller,
all of Seller's right, title and interest in, to the following assets as they
exist at the Closing Date (collectively the "Acquired Assets") used in or being
part of the business of the Seller:
(i) all items of Seller's tangible personal property set forth on
SCHEDULE 2.1(A)(I) (collectively "Tangible Personal Property");
(ii) Intellectual Property of Seller set forth on SCHEDULE
2.1(A)(II);
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(iii) accounts receivable of Seller from Purchaser ("ParkerVision
Accounts Receivable");
(iv) all prepaid expenses and deposits of Seller set forth on
SCHEDULE 2.1(A)(IV) (collectively "Prepaid Expenses");
(v) all contracts relating to the Tangible Personal Property,
Intellectual Property, ParkerVision Accounts and Prepaid Expenses ("Assigned
Contracts") set forth on SCHEDULE 2.1(A)(V);
(vi) all general, financial and other records, computer software
programs and data bases (including source codes), correspondence and other
files, operating data, and documents of Seller relating to or used with the
Tangible Personal Property, Intellectual Property, ParkerVision Accounts
Receivable, and Prepaid Expenses;
(vii) all claims, warranty rights, causes of action, chooses in
action, rights of recovery and rights of set-off of Seller of any kind
pertaining to or arising out of the Tangible Personal Property, Intellectual
Property, ParkerVision Accounts Receivable and Prepaid Expenses; and;
(viii) all rights to goods and services and all other economic
benefits arising out of prepayments, payments in advance and deposits by Seller
to the extent related to the Tangible Personal Property, Intellectual Property,
ParkerVision Accounts Receivable and Prepaid Expenses but excluding prepaid
taxes;
(b) EXCLUDED ASSETS. Notwithstanding anything to the contrary
contained in Section 2.1(a), it is expressly understood and agreed that all of
Seller's right, title and interest as of the Closing Date in and to the
following properties and assets (the "Excluded Assets") are specifically
excepted from the Acquired Assets to be transferred to Purchaser pursuant to
Section 2.1(a):
(i) Seller's right, title and interest in the contracts and
accounts receivable identified on SCHEDULE 2.1(B)(I) (the "Excluded Contracts");
(ii) all cash and cash equivalents or similar types of
investments, such as certificates of deposit, Treasury bills and other
marketable securities;
(iii) all owned or leased real property of Seller, including all
buildings, structures and other improvements situated thereon;
(iv) all insurance policies of Seller and all rights of Seller of
every nature and description under or arising out of such insurance policies;
(v) real estate prepaid rent amounts and real estate lease
deposits not specifically included on Schedule 2.1(a)(iv); and
(vi) the other assets listed on SCHEDULE 2.1(B)(VI).
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SECTION 2.2 ASSUMED LIABILITIES; EXCLUDED LIABILITIES.
(a) LIABILITIES ASSUMED BY PURCHASER. Purchaser shall undertake,
assume, perform and otherwise pay, satisfy and discharge, only the following
Liabilities and obligations of Seller (collectively, the "Assumed Liabilities"):
(i) all debts, obligations and liabilities of Seller which arise
on account of Purchaser's ownership or use of the Acquired Assets after the
Closing Date.
(b) EXCLUDED LIABILITIES. Except for the Assumed Liabilities,
Purchaser shall not assume or otherwise become liable for any Liabilities or
obligations of Seller, whether or not arising out of the operation of the
business of Seller (collectively, the "Excluded Liabilities"), all of which
shall be retained by Seller. The Excluded Liabilities shall include, without
limitation:
(i) any Indebtedness of Seller;
(ii) any Liability of Seller for any Taxes, including any sales
or other Taxes arising in connection with the consummation of the transactions
contemplated hereby;
(iii) any Liability of Seller for Seller's Transaction Costs;
(iv) any Liability of Seller resulting from, arising out of,
relating to, in the nature of, or caused by, any breach of warranty, product
liability, breach of contract, or tort arising or resulting from any actions
taken by Seller at any time, including without limitation (A) Liabilities or
obligations arising with respect to work performed by Seller prior to the
Closing Date, (B) Liabilities arising in connection with Seller's employment or
termination of employment of any employee or consultant prior to the Closing
Date (including, without limitation, severance payments, bonuses, deferred
compensation or commissions due to employees and consultants) and (C) any
Liabilities or obligations arising under the Excluded Assets or in connection
with the termination thereof or any dispute thereunder;
(v) any Liability of Seller resulting from, arising out of,
relating to, in the nature of, or caused by any infringement or violation of
Law;
(vi) any obligations of Seller pursuant to any Affiliated Party
Transaction; and
(vii) any obligation of Seller to indemnify any Person by reason
of the fact such Person was a director, officer, employee or agent of Seller or
was serving at the request of Seller as a director, officer, employee or agent
of another Person (whether such indemnification is pursuant to any statute,
charter, bylaw, agreement or otherwise).
SECTION 2.3 PURCHASE PRICE.
(a) PURCHASE PRICE. In consideration for the Acquired Assets, and
subject to the terms and conditions of this Agreement, Purchaser shall on the
Closing Date (i) assume the Assumed Liabilities as provided in Section 2.1(a),
and (ii) issue to the Seller 79,868 shares of the Series D Preferred Stock of
the Purchaser, (together the "Purchase Price") with the terms as set forth in
the Certificate of Designations attached hereto as EXHIBIT A, which will be
convertible into shares of Common Stock of the Purchaser on or after the
one-year anniversary
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of the Closing Date having a fair market value as determined in the terms of the
Series D Preferred Stock equivalent to $1,996,700 ("Preferred Stock Cash
Value").
(b) ALLOCATION OF PURCHASE PRICE. Purchaser and Seller agree that the
Purchase Price payable by Purchaser for the Acquired Assets and the
non-competition agreement set forth in Section 5.7 of this Agreement shall be
allocated as required by Section 1060 of the Code and the Treasury regulations
promulgated thereunder. Such allocation shall be $496,700.00 for goodwill and
intellectual property, $1,200,000.00 for assets, and $300,000.00 for
non-competition. All Tax Returns and reports filed by Purchaser and Seller with
respect to the transactions contemplated by this Agreement shall be consistent
with the allocation determined in accordance herewith.
(c) ADJUSTMENTS.
(i) If upon the sale of the underlying shares of Common Stock of
the Series D Preferred Stock within ten (10) business days of the
date of conversion of the Series D Preferred Stock, Seller does
not realize at least the Stated Value (as defined in the
Certificate of Designations) of the entire class of Series D
Preferred Stock, Purchaser will pay in cash or by check to Seller
the difference between the aggregate Stated Value of the entire
class of Series D Preferred Stock less (a) the stated value of
any Series D Preferred Stock relating to the Common Stock not
sold by the Seller by the close of business on such tenth day and
(b) the aggregate dollar amount realized by Seller from the sale
of any Common Stock received on conversion of the Series D
Preferred Stock sold prior to the close of business on such tenth
day. If upon the sale of the underlying shares of Common Stock of
the Series D Preferred Stock within ten (10) business days of the
date of conversion of the Series D Preferred Stock, Seller
receives aggregate net proceeds in excess of the Stated Value of
the entire class of Series D Preferred Stock, Seller will pay to
the Purchaser the difference between the Stated Value of the
Series D Preferred Stock and the aggregate net proceeds within
five business days after the receipt of the proceeds from the
sale of any Common Stock received on conversion of the Series D
Preferred Stock. The above ten day period may be extended by
written agreement between the Seller and Purchaser.
(ii) Nothwithstanding subparagraph 2.3(c)(i) above, if Seller is
unable to sell the Class D Preferred Stock and the Purchaser does
not pay the amount specified in subparagraph 2.3(c)(i) above,
then the Seller will not be obligated to repay any sum due from
Gregory Rawlins to the Purchaser under his Employment Agreement.
(iii) The provision of 2.3(c)(iii) shall survive the closing.
SECTION 2.4 CLOSING. Upon the terms and subject to all of the conditions of
this Agreement, the sale and purchase of the Acquired Assets contemplated by
this Agreement shall take place at a closing (the "Closing") to be held at the
offices of the Company, at 10:00 a.m. on the date which is three (3) Business
Days after the satisfaction of the conditions set forth in Section 6.2 hereof,
or at such other place or at such other time or on such other date as
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Purchaser and Seller may mutually agree upon in writing (the day on which the
Closing takes place being the "Closing Date").
SECTION 2.5 CLOSING DELIVERIES BY SELLER. At or before the Closing, Seller
shall deliver or cause to be delivered to Purchaser:
(a) an original counterpart, duly executed by Seller, of a bill of
sale ("Bill of Sale"), substantially in the form of EXHIBIT B, and sufficient to
transfer to Purchaser valid and marketable title to all the Tangible Personal
Property included in the Acquired Assets, free and clear of all Encumbrances;
(b) an original counterpart, duly executed by Seller, of an agreement
in the form attached as EXHIBIT C hereto ("Assignment and Assumption Agreement")
by which Seller transfers to Purchaser all of Seller's rights and interests to
the other property or interests included in the Acquired Assets and not
transferred under the Bill of Sale, free and clear of all Encumbrances, and
Purchaser assumes the Assumed Liabilities and an agreement in the form attached
as EXHIBIT D hereto ("Intellectual Property Assignment") by which Seller
transfers to Purchaser all of Sellers rights and interests to the Intellectual
Property;
(c) evidence of payment and discharge of the NationsBank Loan by
Seller and release of the security interest of NationsBank, N.A. in the Acquired
Assets;
(d) in form acceptable for recording, assignments of Intellectual
Property; and
(e) all other Transaction Documents required to be executed and
delivered by Seller hereunder.
SECTION 2.6 CLOSING DELIVERIES BY PURCHASER. At the Closing, Purchaser
shall deliver or cause to be delivered to Seller:
(a) 79,868 shares of the Series D Preferred Stock to be delivered at
Closing to Seller;
(b) an original counterpart, duly executed by Purchaser, of the
Assignment and Assumption Agreement;
(c) certified copy of the Certificate of Designations of the Series D
Preferred Stock as filed and accepted by the Secretary of State of Florida and
in effect; and
(d) all other Transaction Documents required to be executed and
delivered by Purchaser hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND RAWLINS
----------------------------------------------------
As an inducement to Purchaser to enter into this Agreement, Seller and
Rawlins hereby, jointly and severally, represent and warrant to Purchaser as
follows:
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SECTION 3.1 ORGANIZATION; AUTHORITY, ETC. Seller (i) is a company duly
organized, validly existing and in good standing under the laws of the State of
Florida, (ii) has all the requisite corporate power and authority to own, lease
and operate its properties and assets and to carry on its business as now being
conducted and (iii) has all necessary corporate power and authority to enter
into this Agreement and the Transaction Documents and to perform its obligations
as contemplated hereunder and thereunder. All action necessary to be taken by
Seller to authorize the execution, delivery and performance of this Agreement
and all other Transaction Documents delivered and to be delivered by it in
connection herewith has been duly and validly taken. This Agreement constitutes
the valid and binding obligation of Seller and Rawlins, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors rights generally or by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
SECTION 3.2 NO CONFLICTS; NO VIOLATION. The execution, delivery and
performance of this Agreement and the Transaction Documents by Seller and
Rawlins and the consummation of the transactions contemplated hereby and thereby
do not and will not (i) violate or result in any default under any provision of
the Certificate of Incorporation of By-Laws of Seller, (ii) violate or result in
any default under or give rise to any right of termination, revocation or
modification of any indenture, license or other agreement to which either of
them is a party or (iii) violate or result in any default under any law,
regulation, order, writ, judgment or decree applicable to either of them or any
of the Acquired Assets or by which the ability of either of them to consummate
the transactions to be consummated by it hereunder would be adversely affected
as a consequence of such violation or default (except in the case of clauses
(ii) and (iii), for such violations, defaults, terminations, revocations or
modifications, as the case may be, which would not have a Material Adverse
Effect). Except as described on SCHEDULE 3.2, the execution and delivery of this
Agreement and the Transaction Documents by Seller and Rawlins do not and will
not, and the performance of this Agreement and the Transaction Documents and the
consummation of the transactions contemplated hereby and thereby by them will
not, require any consent, approval, authorization or other action by, or filing
with or notification to, any Governmental Authority or other third party (except
for such consents, approvals, authorizations, actions, filings or notifications,
the absence of which or the result of which, as the case may be, would not have
a Material Adverse Effect). Seller is not in violation of any term of its
Certificate of Incorporation or By-Laws or the provisions of any mortgage,
indenture, contract, agreement, instrument, judgment, decree, order, statute,
rule or regulation or writ or decree of any court, governmental agency or
instrumentality to which it or any of the Acquired Assets is subject, a
violation of which would have a material adverse effect on its ability to
perform its obligations under this Agreement or the Transaction Documents.
SECTION 3.3 BOOKS AND RECORDS AND OPERATING DATA. To the best of Seller's
and Rawlins' knowledge, the books of account and other financial records of
Seller (i) reflect all material items of income and expense and all material
assets and Liabilities of Seller, (ii) are in all material respects complete and
correct and do not contain or reflect any material inaccuracies or discrepancies
and (iii) have been maintained in accordance with good business and accounting
practices in all material respects.
SECTION 3.4 LITIGATION. To Seller's or Rawlins' knowledge, there are no
Actions by any Person pending before any Governmental Authority or, , threatened
in writing to be brought by or before any Governmental Authority relating to the
Acquired Assets or which could hinder, prevent or materially delay the
consummation of the transactions contemplated by this Agreement. To Seller's or
Rawlins' knowledge, Seller is not subject to any Governmental Order
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relating to or affecting the Acquired Assets or Seller, nor, is any such
Governmental Order threatened in writing to be imposed by any Governmental
Authority.
SECTION 3.5 COMPLIANCE WITH LAWS. Seller has conducted and continues to
conduct the business of Seller in accordance with all applicable Laws and
Governmental Orders, and Seller is not in violation of any such Law or
Governmental Order, except where the failure to conduct its business in
accordance with, or where the violation of, such Laws and Governmental Orders
would not have a Material Adverse Effect.
SECTION 3.6 MATERIAL CONTRACTS. The material contracts and agreements
(including, without limitation, oral and informal arrangements) to which Seller
is a party with respect to Seller or the Acquired Assets are otherwise subject
(such contracts and agreements being "Material Contracts") are listed in
SCHEDULE 3.6 and true and complete copies of each of which have been heretofore
provided to Purchaser. Each Material Contract: (i) is valid and binding on
Seller and, to Seller's or Rawlins' knowledge, on the other respective parties
thereto and is in full force and effect and (ii) upon consummation of the
transactions contemplated by this Agreement, shall continue in full force and
effect without penalty or other adverse consequence. Seller is not, and to
Seller's or Rawlins' knowledge no other party thereto is, in material breach of,
or material default under, any Material Contract. Neither party to a Material
Contract has given notice to the other of termination of such contract or
asserted or threatened to assert any claims with respect to any such contract.
No other party to a Material Contract has prepaid any amount for work which has
not been performed.
SECTION 3.7 INTELLECTUAL PROPERTY. The Intellectual Property described in
SCHEDULE 2.1(A)(II) constitutes all the Intellectual Property (both owned and
licensed) being sold under this Agreement to Purchaser. Except as set forth on
SCHEDULE 3.7, to the best of Seller's and Rawlins' knowledge, Seller has clear
record title to or a presumably valid or subsisting license to use all such
Intellectual Property being sold under this Agreement, has not granted an
exclusive license to use such Intellectual Property being sold under this
Agreement to any third party, does not know of any third party that may be
infringing on such Intellectual Property being sold under this Agreement, has
not had asserted against it any claim for infringement of any trademark, service
mark, or trade name of another Person, and is not infringing any trademark,
service mark or trade name of another Person.
SECTION 3.8 OWNERSHIP OF ACQUIRED ASSETS.
(a) Seller owns, leases or has the legal right to use all the Acquired
Assets (other than the Intellectual Property), and, with respect to contract
rights related to the Acquired Assets, is a party to and enjoys the right to the
benefits of all contracts, agreements and other arrangements. Seller has good
and marketable title to all the Acquired Assets, free and clear of all
Encumbrances, except for Permitted Encumbrances, which are listed on SCHEDULE
3.8(A) hereto and the Intellectual Property.
(b) Seller has caused the Acquired Assets to be maintained, including
maintaining the value or benefits to Seller of any intangible property, in
accordance with good business practice and, if applicable, in good operating
condition and repair, ordinary wear and tear excepted.
(c) Following the consummation of the transactions contemplated by
this Agreement, Purchaser will own, pursuant to good and marketable title, or
otherwise retain Seller's respective interest in the Acquired Assets without
incurring any penalty or other adverse
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consequence, including, without limitation, any increase in royalties, or
licenses or other fees imposed as a result of, or arising from, the consummation
of the transactions contemplated by this Agreement except as maybe required as
per existing license agreements of items on SCHEDULE 3.8(A)
SECTION 3.9 TAXES. All Taxes payable by Seller and by any other person,
firm or corporation which will or may be liabilities of Seller, for all periods
ending on or before the Closing Date have been paid in full or have been fully
and specifically reserved. Seller has timely filed all federal, state, local and
foreign Tax Returns required to have been filed by it to the Closing Date. There
are no Actions now threatened or pending against Seller in respect of Taxes,
governmental charges or assessments.
SECTION 3.10 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's fee or other fee or commission in connection with the
purchase of the Acquired Assets contemplated by this Agreement.
SECTION 3.11 NO OTHER ARRANGEMENTS. The Seller has no other legal
obligation, absolute or contingent, to any other person or firm to sell or
effect a sale of any or all of the Acquired Assets.
SECTION 3.12 PRIVATE PLACEMENT.
(a) Seller understands that the issuance of the Series D Preferred
Stock is intended to be exempt from registration under the Securities Act
pursuant to Section 4(2) of the Securities Act and any applicable state
securities or blue sky laws.
(b) The Series D Preferred Stock to be acquired by Seller pursuant to
this Agreement is being acquired for its own account and without a view to the
resale or distribution of the Series D Preferred Stock or any interest therein
other than in a transaction exempt from registration under the Securities Act.
(c) Seller and its Control Persons have sufficient knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of its investment in the Series D Preferred Stock and
Seller and its Control Persons are capable of bearing the economic risks of such
investment, including a complete loss of its investment in the Series D
Preferred Stock. Seller and its Control Persons understand that Purchaser's
investment in the Securities involves a high degree of risk.
(d) Seller has been furnished with and the Control Persons have
carefully read a copy of the Form 10-K, each of the Form 10-Qs, the Form 8-K and
proxy statement comprising of the SEC Reports filed since January 1, 1999 and
this Agreement and has been given the opportunity to ask questions of, and
receive answers from, the Issuer concerning the terms and conditions of the
Series D Preferred Stock and other related matters. Purchaser has made available
to Seller or its agents all documents and information relating to an investment
in the Series D Preferred Stock requested by or on behalf of such Purchaser.
(e) Seller and its Control Persons understand that the Series D
Preferred Stock have not been and are not being registered under the Securities
Act or any state securities laws, and may not be offered, sold, pledged or
otherwise transferred except in compliance with the Securities Act and
applicable state securities laws.
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(f) Seller understands that the Series D Preferred Stock shall bear a
restrictive legend limiting the transferrability of the securities and
underlying Common Stock on conversion.
(g) Seller's principal place of business is in the State of Florida.
SECTION 3.13 FULL DISCLOSURE. No representation or warranty of Seller in
this Agreement, nor any statement or certificate furnished or to be furnished to
Purchaser pursuant to this Agreement, or in connection with the transactions
contemplated by this Agreement, contains or will contain any untrue statement of
a material fact, or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading.
SECTION 3.14 BULK SALES LAWS. The sale of the Acquired Assets is not
subject to the bulk sales laws of the State of Florida.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT
------------------------------------------------------
As an inducement to Seller to enter into this Agreement, Purchaser
represents and warrants to Seller as follows:
SECTION 4.1 ORGANIZATION; AUTHORITY, ETC. Purchaser (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida, (ii) has all the requisite corporate power and authority to
own, lease and operate its properties and assets and to carry on its business as
now being conducted and (iii) has all necessary power and authority to enter
into this Agreement and the Transaction Documents to which it is a party and to
perform its obligations as contemplated hereunder and thereunder. All action
necessary to be taken by Purchaser to authorize the execution, delivery and
performance of this Agreement and all other Transaction Documents delivered and
to be delivered by Purchaser in connection herewith has been duly and validly
taken. This Agreement constitutes the valid and binding obligation of Purchaser,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors rights generally or by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
SECTION 4.2 NO CONFLICTS; NO VIOLATION. The execution, delivery and
performance of this Agreement and the Transaction Documents by Purchaser and the
consummation of the transactions contemplated hereby and thereby do not and will
not (i) violate or result in any default under any provision of its Certificate
of Incorporation or By-Laws, (ii) violate or result in any default under or give
rise to any right of termination, revocation or modification of any indenture,
license or other agreement to which Purchaser is a party, or (iii) violate or
result in any default under any law, regulation, order, writ, judgment or decree
applicable to Purchaser or by which the ability of Purchaser to consummate the
transactions to be consummated hereunder would be adversely affected as a
consequence of such violation or default (except in the case of clauses (ii) and
(iii), for such violations, defaults, terminations, revocations or
modifications, as the case may be, which would not have a material adverse
effect on Purchaser or materially delay the ability of Purchaser to consummate
the transactions contemplated hereunder). The execution and delivery of this
Agreement and the Transaction Documents by Purchaser does not, and the
performance of this Agreement and the Transaction Documents and the consummation
of the transactions contemplated hereby and thereby by Purchaser will not,
require any consent, approval, authorization or other action by, or filing with
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or notification to, any Governmental Authority or other third party (except for
such consents, approvals, authorizations, actions, filings or notifications, the
absence of which, or the result of which, as the case may be, would not have a
material adverse effect on Purchaser or materially delay the ability of
Purchaser to consummate the transactions contemplated hereunder). Purchaser is
not in violation of any term of its Certificate of Incorporation or By-Laws or
the provisions of any mortgage, indenture, contract, agreement, instrument,
judgment, decree, order, statute, rule or regulation or writ or decree of any
court, governmental agency or instrumentality to which it is subject, a
violation of which would have a material adverse effect on its ability to
perform its obligations under this Agreement or the Transaction Documents.
SECTION 4.3 LITIGATION. There is no material Action pending to the
knowledge of Purchaser, threatened in any jurisdiction which seeks to restrain
or enjoin the consummation of the transactions contemplated by this Agreement.
SECTION 4.4 SEC REPORTS. Since January 1, 1999, the Purchaser has filed all
required SEC Reports when due (or within permitted extension periods) in
accordance with the Exchange Act. As of their respective dates (or, in the case
of any amended SEC Report, as of the date of the amendment), the SEC Reports
complied in all material respects with all applicable requirements of the
Exchange Act or the Securities Act, as the case may be. As of their respective
dates (or, in the case of any amended SEC Report, as of the date of the
amendment), none of the SEC Reports contained any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
SECTION 4.5 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties contained in this Agreement and the other
Transaction Documents, neither Purchaser nor any other Person makes any other
express or implied representation or warranty on behalf of Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
SECTION 5.1 CONDUCT OF BUSINESS OF SELLER PRIOR TO THE CLOSING. Seller and
Rawlins covenant and agree that, from the date hereof to the Closing Date,
Seller shall conduct its business in the ordinary course consistent with
Seller's prior practices, and Seller shall use its reasonable efforts to (A)
preserve intact its business organization, (B) continue in full force and effect
without material modification, except as agreed to by Purchaser, all existing
policies or binders of insurance currently maintained in respect of Seller, (C)
preserve Seller's current relationships with its customers, suppliers and other
Persons of Seller with which it has significant business relationships; (D)
exercise, but only after notice to Purchaser, any rights of renewal pursuant to
the terms of any Material Contract which by its terms would otherwise expire;
and (E) not engage in any practice, take any action, fail to take any action or
enter into any transaction which could cause any representation or warranty of
Seller in this Agreement to be untrue or result in a breach of any covenant made
by Seller herein.
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SECTION 5.2 ACCESS TO INFORMATION.
(a) From the date hereof until the Closing, upon reasonable notice,
Seller and Rawlins shall cause Seller and Seller's officers, directors,
employees, agents, representatives, accountants and counsel to: (i) afford the
officers, employees and authorized agents, accountants, counsel and
representatives of Purchaser reasonable access, during normal business hours, to
the offices, properties, plants, other facilities, books and records of Seller
as they relate to Seller and to those officers, directors, employees, agents,
accountants and counsel of Seller who have knowledge relating to Seller or its
business, and (ii) furnish to the officers, employees and authorized agents,
accountants, counsel and representatives of Purchaser such additional financial
and operating data and other information regarding the assets, properties and
goodwill of Seller (or legible copies thereof) as Purchaser may from time to
time reasonably request.
(b) In order to facilitate the resolution of any claims made by or
against Purchaser, Seller or Rawlins with respect to Seller or the Acquired
Assets after the Closing Date or for any other reasonable purpose, for a period
of seven years following the Closing, each party shall (i) retain the books and
records which relate to Seller or the Acquired Assets in their possession for
the period of time set forth in the record retention policies of each party as
of the date hereof or for such longer period as may be required by law or any
applicable court order; provided, however, that the parties shall retain books
and records relating to Taxes or Tax Returns until a date that is no earlier
than six months after the expiration of the applicable statute of limitations
with respect to such Taxes or Tax Returns and (ii) upon reasonable notice,
afford the officers, employees and authorized agents and representatives of
Purchaser, Seller or Rawlins, as the case may be, reasonable access (including
the right to make photocopies), during normal business hours, to such books and
records.
SECTION 5.3 CONFIDENTIALITY. Rawlins and Seller hereto agree, and shall
cause their respective agents, representatives, Affiliates, employees, officers
and directors to, treat and hold as confidential (and not disclose or provide
access to any Person) all non-public information of the other parties hereto,
including without limitation, information relating to trade secrets, processes,
patent and trademark applications, product development, price, customer and
supplier lists, pricing and marketing plans, policies and strategies, details of
client and consultant contracts, operations methods, product development
techniques, business acquisition plans, new personnel acquisition plans and all
other confidential information with respect to the other parties hereto and
their respective businesses and operations. In the event that Rawlins and Seller
or any agent, representative, Affiliate, employee, officer or director becomes
legally compelled to disclose any such information, such party shall provide the
other with prompt written notice of such requirement so that such other party
may seek a protective order or other remedy or waive compliance with this
Section 5.3. In the event that such protective order or other remedy is not
obtained, or such other party waives compliance with this Section 5.3, the
disclosing party shall furnish only that portion of such confidential
information which is legally required to be provided and shall exercise its
reasonable efforts to obtain assurances that confidential treatment will be
accorded such information. Each party hereto agrees and acknowledges that
remedies at law for any breach of its obligations under this Section 5.3 are
inadequate and that in addition thereto the other parties hereto shall be
entitled to seek equitable relief, including injunction and specific
performance, in the event of any such breach. Notwithstanding any other
provision of this Section 5.3, the obligations of Purchaser and its agents,
representatives, Affiliates, employees, officers and directors under this
Section 5.3, with respect to information regarding Seller, shall terminate upon
the Closing.
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SECTION 5.4 NOTICES AND CONSENTS. Seller shall promptly give such notices
to third parties and use its best efforts to obtain such third party consents
and as Purchaser may, in its reasonable discretion, deem necessary or desirable
in connection with the transactions contemplated by this Agreement.
SECTION 5.5 NOTICE OF DEVELOPMENTS. Prior to the Closing, each party to
this Agreement shall promptly notify the other parties to this Agreement in
writing of any of the following matters which come to such party's attention:
(i) all events, circumstances, facts and occurrences, including the commencement
or threat of any Action, which are reasonably likely to result in a breach of a
representation or warranty or covenant of such party in this Agreement or which
has the effect of making any representation or warranty of such party in this
Agreement untrue or incorrect, and (ii) all other material developments
affecting the Acquired Assets, Assumed Liabilities, business, operations,
customer or supplier relations of Seller or any other event which is reasonably
likely to prohibit or materially delay the consummation of the transactions
contemplated hereby.
SECTION 5.6 FURTHER ASSURANCES.
(a) Seller from time to time after the Closing, at Purchaser's
reasonable request, will execute, acknowledge and deliver to Purchaser such
other instruments of conveyance and transfer and will take such other actions
and execute and deliver such other documents, certifications and further
assurances as Purchaser may reasonably require in order to vest more effectively
in Purchaser, or to put Purchaser more fully in possession of, any of the
Acquired Assets, or to better enable Purchaser to complete, perform or discharge
any of the Assumed Liabilities.
(b) Subject to the terms and conditions of this Agreement, each of the
parties hereto agrees to use its best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws and regulations to consummate and make effective
the transactions contemplated by this Agreement.
SECTION 5.7 NON-COMPETITION. Seller and Rawlins (other than as an employee
or consultant of Purchaser) agree that neither they nor any of their Affiliates
under their control will, for a period of three (3) years from the Closing Date
(unless there is a Change of Control, in which case the foregoing period will be
two (2) years from the Closing Date) directly or indirectly, engage or
participate in any business that is the same as or similar to the business of
Seller or use any name used by Seller or any trade name used by Seller (other
than retained names, domain names or tradenames) as of the Closing Date. In the
event that Rawlins (other than as an employee or consultant of Purchaser),
Seller or any of their controlled Affiliates are asked to provide any of the
services prohibited by the first sentence of this Section 5.7, they agree that
they will, and will cause their controlled Affiliates to, make reasonable
efforts to recommend the Purchaser as the provider of those services, but they
will not provide any such services (other than as an employee or consultant of
Purchaser). Seller and Rawlins acknowledge and agree that a legally sufficient
portion of Purchase Price is attributable to the non-competition provisions of
this Section 5.7, and Seller and Rawlins expressly waive any right to assert
inadequacy of consideration as a defense to enforcement of the non-competition
provision of this Section 5.7 should such enforcement ever become necessary.
Seller and Rawlins acknowledge that a remedy at law for any breach or attempted
breach of this Section 5.7 will be inadequate and further agrees that any breach
of this Section 5.7 will result in irreparable harm to the business of Seller;
and Seller and Rawlins covenant and agree not to
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oppose any demand for specific performance and injunctive and other equitable
relief in case of any such breach or attempted breach. Whenever possible, each
provision of this Section 5.7 shall be interpreted in such manner as to be
effective and valid under applicable law but if any provision of this Section
5.7 shall be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Section 5.7. If any provision of this Section 5.7 shall, for any reason, be
judged by any court of competent jurisdiction to be invalid or unenforceable,
such judgment shall not affect, impair or invalidate the remainder of this
Section 5.7 but shall be confined in its operation to the provision of this
Section 5.7 directly involved in the controversy in which such judgment shall
have been rendered. In the event that the provisions of this Section 5.7 should
ever be deemed to exceed the time or geographic limitations permitted by the
applicable laws, then such provision shall be reformed to the maximum time or
geographic limitations permitted by applicable law.
SECTION 5.8 LEASE REIMBURSEMENT. Purchaser will reimburse Seller a monthly
fee of $6,602.00 for the use of its facilities located at 636 Florida Central
Parkway or the period from the Closing Date until the date Purchaser makes
available for general use by its employees office facilities in the greater
Orlando metropolitan area.
SECTION 5.9 ADJUSTMENT TO PURCHASE PRICE. Any adjustment to the Shares of
Series D Preferred Stock or indemnification payments made pursuant to this
Agreement will be deemed to be an adjustment to the Purchase Price.
ARTICLE VI
CONDITIONS TO CLOSING
---------------------
SECTION 6.1 CONDITIONS TO OBLIGATIONS OF SELLER. The obligation of Seller
to consummate the transactions contemplated by this Agreement shall be subject
to the fulfillment, at or prior to the Closing Date, of each of the following
conditions:
(a) Purchaser shall have delivered to Seller at the Closing the items
specified in Section 2.6 hereof.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions:
(a) Seller shall have delivered to Purchaser at the Closing the items
specified in Section 2.5 hereof;
(b) Evidence of payment and discharge of the NationsBank Loan by
Seller and release of the security interest of NationsBank, N.A. and Agilent
Technologies in the Acquired Assets under UCC-1 Financing Statements filed in
Florida Numbered 970000046879-9, 990000113371-1 and 200000014005-1;
(c) The acceptance for filing by the Secretary of State of Florida of
the Certificate of Designations of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock;
(d) Each of Gregory Rawlins, Richard Dudney, Michael Rawlins and
Michael Arian will have entered into written employment agreements with
Purchaser, satisfactory to
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Purchaser in its sole discretion, and each of Dennis Butler, Jorge Medina, Trong
Nguyen, Ahmad Rabah, Diane Richie and Walt Trzaskus will have accepted
employment on an at-will basis with ParkerVision, and each of the above will
have terminated their employment with the Seller.
ARTICLE VII
INDEMNIFICATION
---------------
SECTION 7.1 INDEMNIFICATION AND REIMBURSEMENT.
(a) (i) Seller and Rawlins, jointly and severally, shall indemnify,
defend and hold harmless Purchaser from and against, and shall reimburse
Purchaser for, any Damages (as hereinafter defined) which may be sustained,
suffered or incurred by Purchaser, whether as a result of third-party claims or
otherwise, and which arise from or in connection with or are attributable to (i)
the breach of any of representations, warranties or covenants of Seller
contained in this Agreement, (ii) the ownership and operation of the Acquired
Assets before the Closing Date, or (iii) any Excluded Liability. This indemnity
shall survive the Closing for a period of four years after the Closing Date
except that with respect to claims arising as a result of a breach or alleged
breach of the representations and warranties in Sections 3.7 and 3.8, they shall
survive without limitation as to time and that with respect to claims arising as
a result of a breach or alleged breach of the representations and warranties in
Section 3.9 it shall survive until three months after the expiration of the
statute of limitations with respect to each Tax at issue. Any claim for
indemnity asserted within the relevant period shall survive until resolved.
(ii) Notwithstanding the foregoing, the Seller shall not be
liable under this Section 7.1(a) unless the aggregate amount of Damages with
respect to all matters, other than the representations of Section 2.1(a)(i),
2.1(a)(v) and 3.8, (determined without regard to any materiality qualification
contained in any representation, warranty or covenant giving rise to the claim
for indemnity hereunder) exceeds $50,000, in which case Purchaser may claim all
Damages subject to indemnification hereunder provided that the maximum amount of
all damages claimed in the aggregate does not exceed the Class D Preferred Stock
cash value.
(b) Purchaser shall indemnify, defend and hold harmless Seller from
and against, and shall reimburse Seller for, any Damages which may be sustained,
suffered or incurred by Seller, whether as a result of third-party claims or
otherwise, and which arise from or in connection with or are attributable to (i)
the breach of any of the representations, warranties and covenants of Purchaser
contained in this Agreement, or (ii) any Assumed Liability. This indemnity shall
survive the Closing for a period of four years after the Closing Date. Any claim
for indemnity asserted within the relevant period shall survive until resolved.
(c) As used herein, the term "Damages" means the dollar amount of any
loss, damage, expense or liability, including, without limitation, reasonable
attorneys' fees and disbursements incurred by an Indemnified Party in any action
or proceeding between the indemnified party and the indemnifying party or
between the Indemnified Party and a third party, which is determined to have
been sustained, suffered or incurred by a party and to have arisen from or in
connection with an event or state of facts which is subject to indemnification
under this Agreement. The amount of Damages shall be the amount finally
determined by a court of competent jurisdiction (after the exhausting of all
appeals) or the amount agreed to upon settlement in accordance with the terms of
this Agreement, if a third-party claim, or by the parties, if a direct claim of
one party against another.
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(d) Any party seeking indemnification hereunder (an "Indemnified
Party") shall, with reasonable promptness, notify in writing the party required
to make such indemnification payment (the "Indemnifying Party") of such claim,
identifying the basis for such claim and the amount or the estimated amount
thereof to the extent then determinable, which estimate shall not be conclusive
of the final amount of such claim (the "Claim Notice"); provided, however, that
any failure to give such Claim Notice will not be deemed a waiver of any rights
of the Indemnified Party except to the extent the rights of the Indemnifying
Party are actually prejudiced by such failure. If such claim is a third party
claim, the Indemnifying Party, upon request of the Indemnified Party, shall
retain counsel (who shall be reasonably acceptable to the Indemnified Party) to
represent the Indemnified Party and shall pay the reasonable fees and expenses
of such counsel with regard thereto, provided; however, that any Indemnified
Party is hereby authorized, prior to the date on which it receives written
notice from the Indemnifying Party designating such counsel, to retain counsel,
whose reasonable fees and expenses shall be at the expense of the Indemnifying
Party, to file any motion, answer or other pleading and take such other action
which it reasonably shall deem necessary to protect its interests or those of
the Indemnifying Party until the date on which the Indemnified Party receives
such notice from the Indemnified Party. After the Indemnifying Party shall
retain such counsel, the Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties of any such proceeding (including any impleaded parties) included
both the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any claim or demand which the Indemnifying Party defends.
A claim or demand may not be settled by any party without the prior written
consent of the other party (which consent will not be unreasonably withheld)
unless, as part of such settlement, the Indemnified Party shall receive a full
and unconditional release reasonably satisfactory to it. Notwithstanding the
foregoing, the Indemnifying Party may settle any third-party claim without the
prior written consent of the Indemnified Party if such claim is exclusively for
monetary damages.
ARTICLE VIII
TERMINATION AND WAIVER
----------------------
SECTION 8.1 TERMINATION.
(a) This Agreement may be terminated at any time prior to the Closing
as follows:
(ii) by mutual written consent of Seller and Rawlins on the one
hand and Purchaser on the other hand;
(ii) by Seller, (A) if Purchaser shall have failed to perform any
of its covenants or agreements contained in this Agreement, which failure has
not been cured within 10 Business Days after Seller has given notice to
Purchaser of its intention to terminate or (B) if the conditions to the
obligations of Seller to consummate the transactions contemplated by this
Agreement shall not have occurred by twenty (20) days after the date of this
Agreement.
(iii) by Purchaser, (A) if Seller shall have failed to perform
any of its covenants in this Agreement, which failure has not been cured within
10 Business Days after
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Purchaser has given notice to Seller of its intention to terminate or (B) if the
conditions to the obligations of Purchaser to consummate the transactions
contemplated by this Agreement shall not have occurred by twenty (20) days after
the date of this Agreement.
(b) In the event of termination by Seller or Purchaser, or both,
pursuant hereto, written notice thereof shall forthwith be given to the other
party and all further obligations of the parties under this Agreement shall
terminate, no party shall have any right under this Agreement against any other
party except as set forth in this Article VIII, and each party shall bear its
own costs and expenses. In such event:
(i) If this Agreement is terminated by Seller pursuant to Section
8.1(a)(ii)(A) or by Purchaser pursuant to Section 8.1(a)(iii)(A), the
terminating party's right to pursue all legal and equitable remedies for breach
of contract or otherwise, including, without limitation, Damages relating
thereto, shall survive such termination unimpaired; and
(ii) Nothing herein shall preclude any party, upon a breach
hereof by another party, from pursuing all equitable remedies, including
specific performance, it being acknowledged and agreed by the parties that the
transactions contemplated hereby are of a special, unique and extraordinary
character and that any breach will cause irreparable injury to the non-breaching
party for which money damages will not provide a wholly adequate remedy.
ARTICLE IX
GENERAL PROVISIONS
------------------
SECTION 9.1 MISCELLANEOUS.
(a) Except as otherwise provided herein, all costs and expenses,
including, without limitation, fees and disbursements of representatives,
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs and expenses.
(b) All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered if delivered personally or by nationally recognized overnight
courier or by telecopy to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice, except that
notices of changes of address shall be effective upon receipt):
If to Seller or Rawlins:
Signal Technologies, Inc.
636 Florida Central Parkway
Longwood, FL 32750
Attention: Gregory Rawlins
Telecopier: (407) 260-0004
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If to Purchaser:
ParkerVision, Inc.
8493 Baymeadows Way
Jacksonville, FL 32256
Attention: Jeffrey L. Parker
Telecopier: (904) 636-6473
with a copy to:
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016
Attention: David Alan Miller, Esq.
Telecopier: (212) 818-8881
(c) No party shall make any public announcements in respect of this
Agreement or the transactions contemplated herein without the consent of the
other, which consent shall not unreasonably withheld or delayed, except that a
party may make any public announcement it deems necessary to comply with its
legal obligations (including disclosure by means of filings with the Securities
and Exchange Commission and other Governmental Authorities), and will use
reasonable efforts to provide a copy of such public announcement to Seller prior
to the public dissemination thereof.
(d) Purchaser may assign its rights under this Agreement, or any
portion thereof, to any wholly-owned direct subsidiary (including a
non-corporate subsidiary), provided that such assignee shall assume in writing
the rights and obligations so assigned and such assignment shall not relieve
Purchaser of its obligations hereunder to the extent not fulfilled by such
assignee. Seller shall not assign any of its rights under this Agreement without
the prior written consent of Purchaser.
(e) This Agreement may not be amended or modified except by an
instrument in writing signed by Seller and Purchaser, which instrument shall
thereupon be binding upon all the parties.
(f) Any party may (i) extend the time for the performance of any of
the obligations or other acts of any other party, (ii) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party to be bound thereby.
(g) If any provision of this Agreement is determined to be invalid,
illegal or incapable of being enforced by a court or regulatory agency of
competent jurisdiction, the other provisions of this Agreement shall not be
affected and shall remain in full force and effect and the parties shall
negotiate in good faith revisions to this Agreement so as to effect the original
intent of the parties pursuant to the provision so affected.
(h) This Agreement, together with the Schedules and Exhibits hereto
constitute the entire agreement, and supersede all prior agreements and
undertakings, both written and oral, among the parties, with respect to the
subject matter hereof and thereof and,
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except as otherwise expressly provided herein, are not intended to confer upon
any other person any rights or remedies hereunder.
(i) This Agreement shall inure to the benefit of and be binding upon
the successors, distributees and assigns of the parties.
(j) This Agreement shall be governed by, and construed in accordance
with, the law of the State of Florida, without regard to principles of conflicts
of law. EACH PARTY HEREBY IRREVOCABLY CONSENTS AND SUBMITS TO THE JURISDICTION
OF ANY FLORIDA STATE COURT OR UNITED STATES FEDERAL COURT SITTING IN THE STATE
OF FLORIDA, OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY
SUCH ACTION OR PROCEEDING BY REGISTERED MAIL ADDRESSED TO SUCH PARTY AT ITS
ADDRESS SPECIFIED IN SECTION 10.1(b). EACH PARTY FURTHER WAIVES ANY OBJECTION TO
VENUE IN FLORIDA AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE AND
COUNTY ON THE BASIS OF FORUM NON CONVENIENS. EACH PARTY ALSO WAIVES ANY RIGHT TO
TRIAL BY JURY.
(k) This Agreement may be executed in one or more counterparts, and by
the different parties in separate counterparts, each of which when executed
shall be deemed to be an original but all of which when taken together shall
constitute one and the same agreement.
(l) No provision of this Agreement or any other instrument or other
document delivered in connection with the transactions contemplated hereby will
be interpreted in favor of, or against, any of the parties by reason of the
extent to which such party or its counsel participated in the drafting hereof or
by reason of the extent to which any such provision is inconsistent with any
prior draft hereof or thereof.
IN WITNESS WHEREOF, each of Seller and Purchaser has caused this
Agreement to be executed by its respective officers thereunto duly authorized,
in each case, as of the date first written above.
SIGNAL TECHNOLOGIES, INC.
By: /s/ Gregory Rawlins
----------------------
Name: Gregory Rawlins
Title: President
/s/ Susan Rawlins
----------------------
SUSAN RAWLINS
PARKERVISION, INC.
By: /s/ Jeffrey L. Parker
----------------------
Name: Jeffrey L. Parker
Title: Chairman of the Board
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EXHIBIT 10.14
CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been
omitted and are filed separately with the Commission
WIRELESS TECHNOLOGY POOL
LICENSE AGREEMENT
BETWEEN
PARKERVISION, INC
AND
SYMBOL TECHNOLOGIES, INC.
This Agreement is entered into this 12th day of October, 1999 (hereinafter
called Effective Date), by and between ParkerVision, Inc, a Florida Corporation
with principal offices at 8493 Baymeadows Way, Jacksonville, FL 32256
(hereinafter called ParkerVision), and Symbol Technologies, Inc., a Delaware
corporation with principal offices at One Symbol Plaza, Holtsville, New York
11742-1300 (hereinafter called Licensee).
WHEREAS ParkerVision has developed and is developing certain wireless receiver
and transmitter technology, and
WHEREAS ParkerVision is developing certain trademarks for use with this
technology, and
WHEREAS ParkerVision desires to grant, and Licensee desires to obtain a license
to use, make, have made, sell, and offer to sell cores and integrated circuit
parts incorporating such certain technology, and products using such integrated
circuit parts, and accompanying such certain trademarks with same, and to
sublicense such license to others.
NOW, THEREFORE, IN CONSIDERATION OF THE ABOVE PREMISES AND THE MUTUAL COVENANTS
AND UNDERTAKINGS OF THE PARTIES BELOW, PARKERVISION AND LICENSEE AGREE AS
FOLLOWS:
1. DEFINITIONS
1.1. AVERAGE SELLING PRICE.
The "Average Selling Price" of a Royalty Bearing Unit for an
Assessment Period
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is the cumulative selling price of all Royalty Bearing Units Shipped
by Licensee and/or its sub-licensees during the Assessment Period
which have the same part, core, or product number or designator
divided by the number of Royalty Bearing Units Shipped by Licensee
and/or its sub-licensees during the Assessment Period which have
that same part, core, or product number or designator.
1.2. BASE FOREIGN COUNTRIES.
"Base Foreign Countries" means Japan, the Republic of Korea with
respect to Samsung only, United Kingdom, Austria, Belgium, Cyprus,
Denmark, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, Monaco, Netherlands, Portugal, Spain, Sweden, and
Switzerland/Liechtenstein.
1.3. BLUETOOTH.
"Bluetooth" shall mean a short range wireless connection that is
implemented according to and that operates within only the following
standards: (1) the Bluetooth system and future extensions thereof;
(2) other short range wireless connections existing as of the
Effective Date of this Agreement and functionally equivalent to the
Bluetooth system and including only the following: IEEE 802.15
(wireless personal area networking products), Licensee Nomad Radio,
Licensee Phaser Radio, Licensee RadPad Radio, Licensee Eclipse
Radio, and Licensee Saturn Radio; and (3) other short range wireless
connections existing as of the Effective Date of this Agreement and
functionally equivalent to the Bluetooth system, IEEE 802.15
(wireless personal area networking products), Licensee Nomad Radio,
Licensee Phaser Radio, Licensee RadPad Radio, Licensee Eclipse
Radio, or Licensee Saturn Radio. Additional specifications for short
range wireless connections that (a) are promulgated after the
Effective Date of this Agreement, and (b) are functionally
equivalent to the standards and specifications cited above, may be
added to the list with ParkerVision's consent, which shall not be
unreasonably withheld. In the event that the parties are not able to
reach agreement on (a) and/or (b), then the parties agree to accept
the findings of a neutral third-party expert in the wireless field
to be selected by mutual agreement of the parties. In no case shall
Bluetooth include WAN, WLL, WLAN.
1.4. COLLABORATOR.
"Collaborator" means any third party with whom ParkerVision is
collaborating.
1.5. CONFIDENTIAL INFORMATION.
"Confidential Information" shall mean any and all information
proprietary to one of the parties, which is designated in writing
(or by an appropriate stamp or legend) by the disclosing party to be
of a proprietary or confidential nature, and may be used only for
purposes of this Agreement, whether or not reduced to writing or
other 1tangible medium of expression, whether or not patented,
patentable, capable of trade secret protection, or protected as an
unpublished or
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published work under the United States Copyright Act of 1976 as
amended. Confidential Information shall include information
disclosed orally only if identified as Confidential Information at
the time of the first oral disclosure thereof to a party to this
Agreement, and reduced to writing and so designated within thirty
(30) days of the first oral disclosure.
Confidential Information does not include information that
a) was already known to the receiving party prior to its
disclosure by the disclosing party as established by
written records;
b) becomes generally available to the public other than as
a result of breach of this Agreement;
c) is furnished to the receiving party by a third party who
is lawfully in possession of such information and who
lawfully conveys such information; or
d) is subsequently developed by the receiving party
independently of the information received from the
disclosing party.
1.6. DESIGN-IN PERIOD.
"Design-In Period" shall begin on the effective date of this
Agreement and ends [*] months thereafter.
1.7. FIRST CUSTOMER SHIPMENT.
"First Customer Shipment" means the first Shipment by Licensee or by
its sub-licensee(s) of any Royalty Bearing Unit.
1.8. [*].
1.9. INTELLECTUAL PROPERTY POOL LICENSEE.
"Intellectual Property Pool Licensee" means a party to a Wireless
Technology Pool License Agreement (containing all material
provisions regarding the ParkerVision Intellectual Property Pool
pursuant to Section 2.6) with ParkerVision other than a party to
this Agreement.
1.10. JOINTLY DEVELOPED TECHNOLOGY.
"Jointly Developed Technology" means all extensions, enhancements
and modifications based on the ParkerVision Technology, the
ParkerVision Technology Improvements, the ParkerVision Intellectual
Property Pool, and/or Licensee Technology Improvements, created or
developed jointly by ParkerVision and by Licensee.
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1.11. LEGACY PRODUCTS.
"Legacy Products" means radio-based products of Licensee listed on
Exhibit D attached hereto that are in commercial production and
being commercially shipped by Licensee prior to the effective date
of this Agreement.
1.12. LICENSED CORE.
"Licensed Core" means a design for an implementation as one or more
integrated circuits, directed to the Sole and Open Fields, having at
least one Licensed Sub-Part, and at least one of: (1) at least one
fully functional WLAN baseband processor as specified and required
by WLAN as defined herein; or (2) at least one fully functional WLAN
MAC (media access controller) as specified and required by WLAN as
defined herein, wherein such WLAN baseband processor or WLAN MAC is
a significant value added component, and is comparable to that
required by one or more of the following standards: IEEE 802.11,
IEEE 802.11a, IEEE 802.11b, HomeRF, Proxim Range LAN, Proxim Range
LAN2, Symbol Spectrum 1, Symbol Spectrum 24 as it existed prior to
adoption of IEEE 802.11, HiperLAN1, or HiperLAN2. Any Proprietary
Information from the ParkerVision Intellectual Property Pool
contained in a Licensed Core must be concealed within the Licensed
Core, such that no Proprietary Information from the ParkerVision
Intellectual Property Pool is apparent from or exposed in the
Licensed Core except through legally permissible reverse
engineering.
1.13. LICENSED PARKERVISION TRADEMARKS.
"Licensed ParkerVision Trademarks" means the trademarks itemized in
Exhibit C attached hereto and any other Trademarks which
ParkerVision elects to add to Exhibit C with Licensee's consent,
which shall not be unreasonably withheld.
1.14. LICENSED PART.
"Licensed Part" means an integrated circuit chip set, directed to
the Sole and Open Fields, having one or more integrated circuit dies
and having at least one Licensed Sub-Part, and at least one of: (1)
at least one fully functional WLAN baseband processor as specified
and required by WLAN as defined herein; or (2) at least one fully
functional WLAN MAC (media access controller) as specified and
required by WLAN as defined herein, wherein such WLAN baseband
processor or WLAN MAC is a significant value added component, and is
comparable to that required by one or more of the following
standards: IEEE 802.11, IEEE 802.11a, IEEE 802.11b, HomeRF, Proxim
Range LAN, Proxim Range LAN2, Symbol Spectrum 1, Symbol Spectrum 24
as it existed prior to adoption of IEEE 802.11, HiperLAN1, or
HiperLAN2. Any Proprietary Information from the ParkerVision
Intellectual Property Pool contained in a Licensed Part must be
concealed within the Licensed Part, such that no
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Proprietary Information from the ParkerVision Intellectual Property
Pool is apparent from or exposed in the Licensed Part except through
legally permissible reverse engineering.
1.15. LICENSED PRODUCT.
"Licensed Product" means a radio-based product including one or more
Licensed Parts and/or based on one or more Licensed Cores and
directed to the Sole and Open Fields, and must include an integrated
circuit chip set having at least one Licensed Sub-Part, and at least
one of: (1) at least one fully functional WLAN baseband processor as
specified and required by WLAN as defined herein; or (2) at least
one fully functional WLAN MAC (media access controller) as specified
and required by WLAN as defined herein, wherein such WLAN baseband
processor or WLAN MAC is a significant value added component, and is
comparable to that required by one or more of the following
standards: IEEE 802.11, IEEE 802.11a, IEEE 802.11b, HomeRF, Proxim
Range LAN, Proxim Range LAN2, Symbol Spectrum 1, Symbol Spectrum 24
as it existed prior to adoption of IEEE 802.11, HiperLAN1, or
HiperLAN2.
1.16. LICENSED SUB-PART.
"Licensed Sub-Part" is one of a receiver, a transmitter, a
transceiver or a transmitter/receiver pair implemented in integrated
circuit form, which incorporates Proprietary Information included in
the ParkerVision Intellectual Property Pool. Licensed Sub-Part
specifically excludes discrete implementations of a receiver, a
transmitter, a transceiver or a transmitter/receiver pair which
incorporates Proprietary Information included in the ParkerVision
Intellectual Property Pool.
1.17. LICENSEE PATENTED IMPROVEMENT.
"Licensee Patented Improvement" means any patent claim owned by
Licensee, and/or licensed by Licensee with a royalty free right to
sublicense to ParkerVision and to Intellectual Property Pool
Licensees, which covers one or more Licensee Technology
Improvements, and which has a priority date under 35 U.S.C. ss. 119
and/or 35 U.S.C. ss. 120 that is prior to a date equal to [*] after
termination of this Agreement, if this Agreement terminates after
the conclusion of [*], or (2) if this Agreement terminates prior to
the conclusion of [*], then the sooner of [*] after termination of
this Agreement, or [*] if this Agreement terminated at the
conclusion of [*].
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1.18. LICENSEE TECHNOLOGY IMPROVEMENTS.
"Licensee Technology Improvements" means all extensions,
enhancements and modifications based on the ParkerVision Technology,
and/or the ParkerVision Intellectual Property Pool, created or
developed by or for Licensee. Licensee Technology Improvements do
not include Proprietary Information in any patent applications owned
by Licensee, that were filed prior to the Effective Date of this
Agreement, and that are not based on ParkerVision Technology or
ParkerVision Technology Improvements. Notwithstanding Section 19(a)
of the Mutual Non-Disclosure Agreement (Exhibit F), ParkerVision
acknowledges that Licensee has pending applications in direct
conversion of EM signals technology using non-heterodyne techniques
filed prior to the Effective Date of this Agreement. Licensee agrees
that all work resulting from the [*] on behalf of Licensee [*] to
[*] thereafter, is presumed to be Licensee Technology Improvements,
and Licensee shall have the burden to rebut this presumption. Any
issued or granted patent claim, that was filed or amended after [*],
in patent applications covering work resulting from the [*], that
reads on any Proprietary Information in the ParkerVision
Intellectual Property Pool, is presumed to be Licensee Patented
Improvements, and Licensee shall have the burden to rebut this
presumption. [*].
1.19. MARKET SHORTFALL ROYALTY.
"Market Shortfall Royalty" is the difference between [*] for a
specific Measurement Period and the lesser of [*] that would have
been due if Licensee had achieved (1) a ranking by two or more
National Research Organizations as the [*] of market provider of
worldwide WLAN units Shipped; or (2) be identified by two or more
National Research Organizations as having a market share of at least
[*] of worldwide WLAN units Shipped.
1.20. MEASUREMENT PERIOD.
A "Measurement Period" shall consist of [*]. The first "Measurement
Period" shall begin at the end of the Design-In Period and end [*]
thereafter. Each successive Measurement Period shall last for the
succeeding [*] thereafter.
1.21. NATIONAL RESEARCH ORGANIZATION.
"National Research Organization" means any mutually agreed upon
organization that tracks and publishes statistics on the WLAN market
such as Gartner Group, IDC, Allied Business Intelligence, Dataquest,
etc.
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1.22. NEW LICENSED CORES, NEW LICENSED PARTS AND NEW LICENSED PRODUCTS.
"New Licensed Cores, New Licensed Parts and New Licensed Products"
means commercial production model Licensed Cores, Licensed Parts and
Licensed Products, respectively, that were not Shipped by Licensee
or its sub-licensee(s) prior to termination of [*], and that differ
in design and/or implementation from Pre-Termination Licensed Units.
1.23. NEW NON-LICENSED PRODUCTS.
"New Non-Licensed Products" means all radio-based cores, parts, and
products commercialized by Licensee after execution of this
Agreement which do not incorporate Proprietary Information included
in the ParkerVision Intellectual Property Pool and/or the
ParkerVision Technology Improvements.
1.24. OPEN FIELDS.
"Open Fields" mean the following fields:
(1) WLAN Client Devices, compliant with WLAN as defined herein,
that support dual-mode operation of one or more WLAN
operations with one or more WAN operations (dual-mode
capability), compliant with WAN as defined herein; and
(2) WLAN Client Devices, compliant with WLAN as defined herein,
that support tri-mode operation of one or more WLAN operations
with one or more WAN operations and one or more Bluetooth
operations (tri-mode capability), compliant with WAN and
Bluetooth as defined herein.
1.25. OPEN RIGHT.
"Open Right" means a right granted by ParkerVision to Licensee,
which ParkerVision may also grant to one or more third parties.
1.26. PARKERVISION DELIVERABLES.
"ParkerVision Deliverables" means the deliverables listed in Exhibit
B that are to be delivered by ParkerVision to Licensee.
1.27. PARKERVISION INTELLECTUAL PROPERTY POOL.
"ParkerVision Intellectual Property Pool" means all ParkerVision
Technology Intellectual Property, ParkerVision Patented
Improvements, Licensee Patented Improvements, Technology Pool
Licensee Patented Improvements, and at the sole discretion of
ParkerVision, ParkerVision Technology Improvements.
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1.28. PARKERVISION PATENTED IMPROVEMENTS.
"ParkerVision Patented Improvements" means any patent claim of an
issued or granted patent owned by ParkerVision, or licensed by
ParkerVision with a royalty free right to sublicense to Intellectual
Property Pool Licensees and to Licensee, which covers one or more
ParkerVision Technology Improvements.
1.29. PARKERVISION TECHNOLOGY.
"ParkerVision Technology" means technology that is owned by
ParkerVision relating to D2DTM wireless communications technology,
and that is described in documents listed in Exhibit A. ParkerVision
Technology does not include Proprietary Information in any patent
applications owned by ParkerVision, that were filed prior to the
Effective Date of this Agreement, and that are not listed in Exhibit
A, unless designated as such by ParkerVision at ParkerVision's sole
discretion.
1.30. PARKERVISION TECHNOLOGY IMPROVEMENTS.
"ParkerVision Technology Improvements" means all extensions,
enhancements and modifications based on the ParkerVision Technology,
Licensee Patented Improvements, and Technology Pool Licensee
Patented Improvements and owned by ParkerVision.
1.31. PARKERVISION TECHNOLOGY INTELLECTUAL PROPERTY.
"ParkerVision Technology Intellectual Property" means all patent,
copyright, chip mask, trade secret, Confidential Information,
know-how, and contract rights (excluding trademarks, trade dress and
trade name rights) in or based on the ParkerVision Technology that
ParkerVision owns or has a royalty free right to sublicense to
Intellectual Property Pool Licensees and to Licensee.
1.32. PERCENTAGE SHIPPED.
"Percentage Shipped" means the total number of New Non-Licensed
Products Shipped by Licensee during a Measurement Period divided by
the total number of radio-based products Shipped by Licensee during
the same Measurement Period.
1.33. PRE-TERMINATION LICENSED UNITS.
"Pre-Termination Licensed Units" means any Licensed Cores, Licensed
Parts and/or Licensed Products that were Shipped by Licensee and/or
its sub-licensee(s) prior to the end of [*].
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1.34. PROPRIETARY INFORMATION.
"Proprietary Information" means any information in which a party to
this Agreement or a third party has an ownership interest.
1.35. RECIPIENT.
Recipient shall mean any party and/or any third party to whom
Licensee and/or its sub-licensee(s) Ships Licensed Cores, Licensed
Parts, and/or Licensed Products.
1.36. ROYALTY BEARING UNIT.
"Royalty Bearing Unit" means any Licensed Core, Licensed Part,
and/or Licensed Product Shipped by Licensee and/or its
sub-licensee(s).
1.37. SECOND TERM OF CONTRACT.
"Second Term of Contract" shall begin at [*] (assuming no
termination), and shall continue until terminated.
1.38. SELECTED PATENT CLAIMS.
"Selected Patent Claims" means [*] U.S. independent claims issued
from the two U.S. patent applications listed in Exhibit A, and any
continuation and/or divisional applications thereof, but not
including any continuation-in-part applications. Selected Patent
Claims also means [*] independent claims, that are most closely
equivalent in scope to such [*] issued U.S. patent claims, in each
foreign country in which claims have issued or been granted from
foreign counterpart applications corresponding to the two U.S.
patent applications listed in Exhibit A. Such Selected Patent Claims
shall be selected by mutual agreement of ParkerVision and Licensee
after issuance or grant of each such patent application according to
criteria that include the commercial significance of a given claim,
and the validity and enforcement of a given claim. In any given
country, if [*] independent claims do not issue or are not granted,
then the parties shall mutually agree on dependent claims issued or
granted in such country such that the total number of Selected
Patent Claims in any given country at any given time is [*].
Issuance or grant of less than [*] claims at any given time and in
any given country shall not be considered a breach of this
Agreement.
1.39. SHIPPED.
"Shipped" (and variations such as "Ships" and "Shipments" and
"Ship") means the physical transfer of a Licensed Part, Licensed
Core, and/or a Licensed Product, and shall not require the transfer
of ownership and/or any payment to the shipping party.
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1.40. SOLE FIELDS.
"Sole Fields" mean the following fields:
(1) WLAN Infrastructure Devices and WLAN Client Devices compliant
with WLAN as defined herein, that support only one or more
WLAN operations (single-mode capability); or
(2) WLAN Infrastructure Devices, compliant with WLAN as defined
herein, that support only dual-mode operation of one or more
WLAN operations with one or more WAN operations (dual-mode
capability), compliant with WAN as defined herein; or
(3) WLAN Infrastructure Devices and WLAN Client Devices, compliant
with WLAN as defined herein, that support only dual-mode
operation of one or more WLAN operations with one or more
Bluetooth operations (dual-mode capability), compliant with
Bluetooth as defined herein; or
(4) WLAN Infrastructure Devices, compliant with WLAN as defined
herein, that support only tri-mode operation of one or more
WLAN operations with one or more WAN operations with one or
more Bluetooth operations (tri-mode capability), compliant
with WAN and Bluetooth as defined herein.
1.41. SOLE RIGHT.
"Sole Right" means a right granted by ParkerVision to Licensee,
which ParkerVision may not grant to a third party or third parties.
1.42. SUB-LICENSEE COUNTRIES.
"Sub-Licensee Countries" means the United States, Japan, Republic of
Korea, United Kingdom, Austria, Belgium, Cyprus, Denmark, Finland,
France, Germany, Greece, Ireland, Italy, Luxembourg, Monaco,
Netherlands, Portugal, Spain, Sweden, and Switzerland/Liechtenstein.
1.43. TECHNOLOGY POOL LICENSEE IMPROVEMENTS.
"Technology Pool Licensee Improvements" means all extensions,
enhancements and modifications based on the ParkerVision Technology,
and/or the ParkerVision Intellectual Property Pool, created or
developed by or for an Intellectual Property Pool Licensee.
1.44. TECHNOLOGY POOL LICENSEE PATENTED IMPROVEMENT.
"Technology Pool Licensee Patented Improvement" means any patent
claim of an issued or granted patent owned by an Intellectual
Property Pool Licensee or licensed by an Intellectual Property Pool
Licensee with a royalty free right to sublicense to ParkerVision and
to Intellectual Property Pool Licensees and to Licensee, which
covers one or more Technology Pool Licensee Improvements.
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1.45. WAN.
"WAN" shall mean a Wide Area Network that is implemented according
to and that operates within only the following standards: ITU IS-54,
ITU IS-95, or the cellular telephony standard based on 3G
promulgated by ITU after the Effective Date of this Agreement,
DCS1800 (GSM), IMT-2000 (Wideband CDMA Europe), PDC (Japan), ITU
IS-136, AMPS/NAMPS, TACS, NMT, US-136, GSM, CT2, DECT, PHF, CDPD,
UMTS, ITU/IMT 2000, RAM, MOBITEX, ARDIS. Additional specifications
that (a) are promulgated after the Effective Date of this Agreement,
and (b) are functionally equivalent to WAN as defined by the WAN
standards listed above, may be added to the list with ParkerVision's
consent, which shall not be unreasonably withheld. In the event that
the parties are not able to reach agreement on (a) and/or (b), then
the parties agree to accept the findings of a neutral third-party
expert in the wireless field to be selected by mutual agreement of
the parties. In no case shall WAN include WLAN, WLL, Bluetooth.
1.46. WLAN.
"WLAN" shall mean a Wireless Local Area Network that is implemented
according to and that operates within only the following standards:
IEEE 802.11, IEEE 802.11a, IEEE 802.11b, HomeRF, Proxim Range LAN,
Proxim Range LAN2, Symbol Spectrum 1, Symbol Spectrum 24 as it
existed prior to adoption of IEEE 802.11, HiperLAN1, or HiperLAN2.
Additional specifications that (a) are promulgated after the
Effective Date of this Agreement, and (b) are functionally
equivalent to WLAN as defined by the WLAN standards listed above,
may be added to the list with ParkerVision's consent, which shall
not be unreasonably withheld. In the event that the parties are not
able to reach agreement on (a) and/or (b), then the parties agree to
accept the findings of a neutral third-party expert in the wireless
field to be selected by mutual agreement of the parties. In no case
shall WLAN include WAN, WLL, Bluetooth.
1.47. WLAN CLIENT DEVICES.
"WLAN Client Devices" means hand held computers, personal data
assistants (PDAs), automatic identification data collection devices
(such as bar code scanners/readers, electronic article surveillance
readers, and radio frequency identification readers) and other
similar user devices compliant with and implementing WLAN (as
defined herein) for wireless communications.
1.48. WLAN INFRASTRUCTURE DEVICES.
"WLAN Infrastructure Devices" means Access Points and other similar
devices, compliant with and implementing WLAN as defined herein, and
used to provide the ability for WLAN Client Devices to connect to a
wired network and/or to provide the network functionality of a WLAN.
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1.49. WLL.
"WLL" (Wireless Local Loop) means radio communications that provide
the capability to replace wired elements of an at least partially
wired network (such as WAN as defined herein) with wireless
technology, and includes but is not limited to LMDS (local
multipoint distribution system), MMDS (microwave multipoint
distribution system), and ADML (Asymmetric Digital Microcell Link).
2. LICENSE GRANTS
2.1. SOLE LICENSE GRANT BY PARKERVISION.
Subject to the terms of Paragraph 2.3 below, ParkerVision hereby
grants to Licensee a world-wide, Sole Right to make, have made, use,
sell, and offer to sell Licensed Parts and Licensed Products in the
Sole Fields, subject to all terms, conditions, limitations, and
restrictions contained in this Agreement. No rights are granted
herein to make, have made, use, sell, and/or offer to sell Licensed
Sub-Parts, except to carry out the license grant specified in the
foregoing sentence. No rights are granted herein to make, have made,
use, sell, and/or offer to sell Licensed Cores, except as specified
in Section 2.9.
2.2. OPEN LICENSE GRANT BY PARKERVISION.
ParkerVision hereby grants to Licensee a world-wide, Open Right to
make, have made, use, sell, and offer to sell Licensed Parts and
Licensed Products in the Open Fields, subject to all terms,
conditions, limitations, and restrictions contained in this
Agreement. No rights are granted herein to make, have made, use,
sell, and/or offer to sell Licensed Sub-Parts, except to carry out
the license grant specified in the foregoing sentence. No rights are
granted herein to make, have made, use, sell, and/or offer to sell
Licensed Cores, except as specified in Section 2.9.
2.3. MAINTENANCE OF SOLE RIGHTS.
In order to maintain the sole license grant of Section 2.1 above,
Licensee agrees to satisfy the following requirements.
2.3.1. PRODUCT SHIPMENTS.
Subject to the following exceptions in Sections
2.3.1.1-2.3.1.4, Licensee agrees that beginning with [*],
Licensee's Percentage Shipped shall be [*] or less. Otherwise,
the sole license grants provided in Section 2.1 shall
immediately become Open Rights, [*].
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2.3.1.1. During the first Measurement Period, the Percentage
Shipped may be up to and including [*]. In order to
maintain the Sole Rights under Section 2.1 of this
Agreement, Licensee agrees to pay ParkerVision for the
first Measurement Period a minimum fee equal to [*]
times (minus any royalty bearing Shipments made by
Licensee during the Design-In Period) the greater of (a)
the respective royalty rate specified in the Royalty Fee
section of Exhibit E times the [*] of Royalty Bearing
Units actually Shipped by Licensee and its
sub-license(s) during the first Measurement Period, or
(b) [*].
2.3.1.2. During the second Measurement Period, the Percentage
Shipped may be up to and including [*]. In order to
maintain the Sole Rights under Section 2.1 of this
Agreement, Licensee agrees to pay ParkerVision for the
second Measurement Period a minimum fee equal to [*]
times the greater of (a) the respective royalty rate
specified in the Royalty Fee section of Exhibit E times
the [*] of Royalty Bearing Units actually Shipped by
Licensee and its sub-licensee(s) during the second
Measurement Period, or (b) [*].
2.3.1.3. During the third Measurement Period, the Percentage
Shipped may be no more than [*].
2.3.1.4. During the fourth Measurement Period, the Percentage
Shipped may be no more than [*].
2.3.1.5. During the fifth Measurement Period and all
Measurement Periods thereafter, the Percentage Shipped
may be no more than [*].
2.3.1.6. [*].
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2.3.1.7. Subject to Sections 2.3.1.1-2.3.1.4, should Licensee
decide to utilize a technology other than a technology
based on Proprietary Information from the ParkerVision
Intellectual Property Pool and/or ParkerVision
Technology Improvements in its radio-based products at
any time after the Effective Date of this Agreement such
that Licensee projects that the Percentage Shipped will
be greater than [*], Licensee agrees to immediately
notify ParkerVision of such decision and agrees not to
Ship New Non-Licensed Products with such other
technology for [*] from the date of such notice. Upon
receipt of such notice by ParkerVision, the Sole Rights
granted herein to Licensee shall immediately become Open
Rights for the remaining term of this Agreement.
Subject to Sections 2.3.1.1 - 2.3.1.4, if the total
Shipments by Licensee of New Non-Licensed Products that
utilize such other technology during a time period equal
to the [*] of Shipment of such New Non-Licensed Products
is greater than [*] of all radio-based products Shipped
by Licensee during the applicable time period, and
Licensee has not provided notice to ParkerVision [*]
prior to the start of the time period as specified in
this Section, then all Sole Rights granted herein shall
immediately revert to Open Rights, and Licensee shall
immediately pay to ParkerVision an amount equal to [*]
of such New Non-Licensed Products Shipped [*] of all
radio-based products Shipped by Licensee during the time
period (except that the amount shall be no less than [*]
for parts and cores, and [*] for products).
2.3.2. MARKET HURDLES.
To maintain the Sole Rights provided in Section 2.1, Licensee
must also satisfy the following requirements:
2.3.2.1. [Intentionally Left Blank.]
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2.3.2.2. Beginning with the third Measurement Period and
continuing for each subsequent Measurement Period during
the term of this Agreement, the Sole Rights granted
herein to Licensee shall remain Sole Rights so long as
Licensee shall be (1) ranked by two or more National
Research Organizations as the [*] of market provider of
worldwide WLAN units Shipped; or (2) be identified by
two or more National Research Organizations as having a
market share of at least [*] of worldwide WLAN units
Shipped.
The parties recognize that the National Research
Organizations may not track the same type of products as
contemplated in this Agreement and the parties agree to
make reasonable accommodations to take into account any
discrepancies. Specifically, any unit that is not
tracked by the National Research Organizations, that is
conclusively demonstrated by either party to be a WLAN
unit, shall be included for purposes of this section.
For example, to the extent that sales of radio-based
computer terminals are not tracked by the National
Research Organizations, sales of radio-based computer
terminals should be included for purposes of this
section. Furthermore, for purposes of this section,
sales by sub-licensees of Licensed Products should be
included in Licensee's sales, and omitted from
sub-licensee's sales.
If in any Measurement Period Licensee fails to meet both
of the two above requirements (i.e., Licensee has
satisfied the requirements of this Section if Licensee
satisfies either (1) or (2)), then the Sole Rights shall
become Open Rights [*].
2.3.2.3. Each party has the right to challenge the market
share and ranking information provided by the other
party. Both parties agree to negotiate in good faith to
reach an agreement on market share and ranking
information for Licensee. In the event that the parties
are not able to reach an agreement, the parties agree to
mediation as specified in Section 12.2.
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2.4. RIGHTS LIMITATIONS CONCERNING LICENSED SUB-PARTS AND/OR LICENSED
CORES AND/OR LICENSED PARTS.
No rights are given to Licensee and/or its sub-licensees by
ParkerVision under this Agreement to have made, sell, offer to sell,
and/or Ship Licensed Sub-Parts and/or Licensed Cores, except as
provided in Section 2.9.
All Licensed Parts made, have made, and/or sold pursuant to all
license grants contained herein must be used to make Licensed
Products in the Sole and Open Fields, and any other operation is
agreed to be operation outside the Sole and Open Fields.
2.5. RESERVATION OF RIGHTS BY PARKERVISION.
ParkerVision reserves the right to make, have made, use, sell,
and/or offer to sell, without restriction, Licensed Sub-Parts,
Licensed Cores, Licensed Parts, Licensed Products, and/or integrated
circuits that incorporate Proprietary Information included in the
ParkerVision Intellectual Property Pool and/or ParkerVision
Technology Improvements, in the Sole and Open Fields, by itself or
in collaboration with one or more Collaborators.
When collaborating in the Sole Fields, ParkerVision agrees that: (1)
ParkerVision will be responsible for designing Licensed Sub-Parts,
although ParkerVision may contract with any third party who is not a
Collaborator with ParkerVision in the Sole Fields, and who is not a
parent or subsidiary of a Collaborator with ParkerVision in the Sole
Fields, and who is not collaborating on a WLAN application with a
Collaborator with ParkerVision in the Sole Fields, to assist
ParkerVision with same; and (2) ParkerVision will be responsible for
integrating RF (radio frequency) front ends that incorporate
Proprietary Information included in the ParkerVision Intellectual
Property Pool and/or ParkerVision Technology Improvements, and that
optionally include one or more WLAN baseband processors and/or one
or more WLAN MACs, and ParkerVision may contract with any third
party who is not a Collaborator with ParkerVision in the Sole
Fields, and who is not a parent or subsidiary of a Collaborator with
ParkerVision in the Sole Fields, and who is not collaborating on a
WLAN application with a Collaborator with ParkerVision in the Sole
Fields, to assist ParkerVision with same. ParkerVision reserves the
right to make, have made, use, sell, and/or offer to sell, without
restriction, integrated circuits, Licensed Sub-Parts, Licensed
Cores, Licensed Parts, and/or Licensed Products, using and/or based
on such RF front ends, by itself or in collaboration with one or
more Collaborators.
ParkerVision reserves the right to sell and/or offer to sell in the
Sole and Open
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Fields, Licensed Sub-Parts, Licensed Cores, Licensed Parts, Licensed
Products, and/or integrated circuits that incorporate Proprietary
Information included in the ParkerVision Intellectual Property Pool
and/or ParkerVision Technology Improvements, made in collaboration
with one or more Collaborators, to any third party including any
Collaborator without restriction.
To the extent allowed by law, ParkerVision agrees that
ParkerVision's gross margin on any Licensed Part and Licensed
Product sold by ParkerVision in the Sole Fields shall be no less
than [*] and [*], respectively.
Further, all rights not granted herein by ParkerVision to Licensee
are hereby reserved by ParkerVision.
2.6. OPEN LICENSE GRANT BY LICENSEE.
Licensee hereby grants to ParkerVision a world-wide, non-exclusive,
royalty-free right to make, have made, use, sell, and/or offer to
sell sub-parts, cores, parts and products incorporating Licensee
Patented Improvements so long as those sub-parts, cores, parts and
products are used in conjunction with ParkerVision Intellectual
Property Pool and/or the ParkerVision Technology Improvements.
ParkerVision shall have the right to sublicense the rights granted
to ParkerVision by Licensee under this Section to all Intellectual
Property Pool Licensees that have agreed to a substantially similar
grant back provision to Licensee, except that if Licensee is sued by
an Intellectual Property Pool Licensee (or its successor, subsidiary
or affiliate) on a patent claim from the ParkerVision Intellectual
Property Pool, then the license rights granted herein by Licensee to
that Intellectual Property Pool Licensee may be terminated by
Licensee upon filing of such claim. Licensee agrees that, in the
event that Licensee sues an Intellectual Property Pool Licensee on a
patent claim from the ParkerVision Intellectual Property Pool, then
the license rights granted herein by that Intellectual Property Pool
Licensee to Licensee may be terminated by that Intellectual Property
Pool Licensee upon filing of such claim. Notwithstanding any other
provision of this Agreement, Licensee reserves to itself all
intellectual property rights except for those expressly stated
herein. Also, this Agreement does not restrict any right Licensee
may have on or in subject matter other than Licensee Technology
Improvements and/or Licensee Patented Improvements. Except as
provided in this Section, no licenses are granted by Licensee to
ParkerVision and/or any Intellectual Property Pool Licensee, and no
rights to grant sub-licenses are granted. The rights granted herein
to ParkerVision shall survive termination of this Agreement.
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2.7. COVENANT BY LICENSEE NOT TO SUE AND RELEASE OF CLAIMS.
Licensee hereby covenants not to sue, and releases from any and all
claims arising after the Effective Date of this Agreement that
Licensee may have had, may have, or may have in the future,
ParkerVision, and any third party and/or third parties in
collaboration with or assisting ParkerVision pursuant to Section
2.5, under any Licensee Patented Improvement. The covenant and
release contained herein shall survive termination of this
Agreement.
2.8. REVERSION TO OPEN GRANT.
Subject to the following, in the event that any of the Sole Rights
granted in Section 2.1 of this Agreement become Open Rights under
any term of this Agreement, such Open Rights shall be in effect for
the remaining [*] and the Second Term of Contract (if extended).
For each Measurement Period after the Sole Rights granted in Section
2.1 become Open Rights under any term of this Agreement, Licensee
agrees to pay ParkerVision a minimum fee of [*]. This minimum fee
shall be credited against any Royalty Fee actually due from Licensee
to ParkerVision under Section 4 of this Agreement. Thereafter, this
minimum fee will be increased [*]. If this fee is not paid by
Licensee to ParkerVision for each Measurement Period after the Sole
Rights granted in Section 2.1 become Open Rights under any term of
this Agreement, then ParkerVision shall have the right to terminate
this Agreement.
2.9. RIGHT TO SUB-LICENSE.
2.9.1.Licensee shall have the right to sub-license some or all of
the following rights in Sub-Licensee Countries, and companies
in other countries [*]:
The right to make, use, sell, and offer to sell Licensed Parts
and Licensed Products in the Sole and Open Fields, subject to
all terms, conditions, limitations, and restrictions contained
in this Agreement. All Licensed Parts made and/or sold
pursuant to this grant must be used to make Licensed Products
in the Sole and Open Fields. No rights are granted herein to
sub-license any right to make, have made, use, sell, and/or
offer to sell Licensed Sub-Parts or Licensed Cores, except to
carry out the license grant specified in the foregoing
sentence.
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2.9.2.The Royalty Fee according to Exhibit E shall be due and
payable to ParkerVision by Licensee for all Shipments of
Licensed Products and/or Licensed Parts by each sub-licensee.
2.9.3.Before any of the rights of Section 2.9.1 may be sub-licensed
by Licensee, [*]. Any material changes to the standard
sub-license agreement must be approved in writing by
ParkerVision [*]. If Licensee is uncertain whether a proposed
change is material, it shall request clarification from
ParkerVision prior to agreeing to such change, without having
to reveal to ParkerVision the identity of the potential
sub-licensee until after a sub-licensee agreement, if any, is
reached. After the standard sub-license agreement (and any
material changes contained therein) have been approved by
ParkerVision, then Licensee may sub-license the rights
specified in Section 2.9.1. Licensee agrees to provide the
identity of each sub-licensee and a copy of each sub-license
agreement to ParkerVision within thirty (30) days after
execution of each sub-licensee agreement, but Licensee shall
used reasonable efforts to inform ParkerVision of the
sub-license agreement prior to any public disclosure of the
sub-license agreement. [*]. The identity and sub-license
agreement of any of Licensee's sub-licensee shall be
maintained as Confidential Information by ParkerVision.
ParkerVision may disclose any such sub-license agreement to a
third party who is negotiating with ParkerVision to acquire
ParkerVision (or substantially all of the D2DTM division of
ParkerVision, and/or ParkerVision's rights in the ParkerVision
Intellectual Property Pool), as long as the third party agrees
in writing to maintain as confidential any terms and
conditions of such sub-licensee agreement disclosed to the
third party.
2.9.4.Licensee may disclose ParkerVision Proprietary Information
included in the ParkerVision Intellectual Property Pool and/or
ParkerVision Technology Improvements (to the extent Licensee
has been provided with same from ParkerVision) to a
sub-licensee or a potential sub-licensee who is headquartered
in one of the Sub-Licensee Countries, provided that the
following requirements are satisfied prior to any such
disclosure to the sub-licensee or potential
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sub-licensee: (1) the sub-licensee or the potential
sub-licensee has executed a non-disclosure agreement which has
been previously approved by ParkerVision in writing, which
approval shall not be unreasonably withheld; and (2) all
persons associated with the sub-licensee or potential
sub-licensee who are to receive ParkerVision Proprietary
Information included in the ParkerVision Intellectual Property
Pool and/or ParkerVision Technology Improvements have executed
individual Non-Disclosure Agreements similar to that attached
in Exhibit G. Licensee agrees that ParkerVision Proprietary
Information included in the ParkerVision Intellectual Property
Pool and/or ParkerVision Technology Improvements will not be
disclosed to [*] for any given sub-licensee or potential
sub-licensee, without first obtaining the consent of
ParkerVision [*]. Upon request of ParkerVision, Licensee shall
provide to ParkerVision copies of the non-disclosure
agreements referenced above. The foregoing restrictions on
disclosure in this Section 2.9.4 do not apply to information
contained in issued patents and published foreign patent
applications, and Licensee Technology Improvements that do not
disclose ParkerVision Confidential Information.
2.9.5.Licensee shall have the right to Ship Licensed Parts and
Licensed Products to its sub-licensees. Also, Licensee shall
have the right to Ship Licensed Cores to its sub-licensees for
the sole purpose of carrying out the license grant specified
above in Section 2.9.1.
2.9.6. No sub-license granted by Licensee may:
(1) Include the right to sub-license.
(2) Extend beyond the term of this Agreement.
2.9.7.Termination of this Agreement pursuant to Section 10 shall
immediately terminate all sub-licenses that have been granted
by Licensee, and Licensee shall so notify all of its
sub-licensees of such termination.
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2.9.8.Licensee agrees that if Licensee identifies any sub-licensee
(of Licensee) who is operating outside the Sole Fields, if
any, or the Open Fields, to the extent the sub-licensee's
actions are attributable to Licensee or caused by Licensee's
actions, whether by notice from ParkerVision or otherwise,
then Licensee agrees to notify ParkerVision of the
non-compliance, and agrees to take appropriate action at
Licensee's expense to ensure that the sub-licensee operates
only within the Sole Fields, if any, or the Open Fields. If
Licensee does not take action to ensure that the sub-licensee
operates only within the Sole Fields, if any, or the Open
Fields, then ParkerVision may take such action, and
ParkerVision's reasonable and actual costs associated with
such action shall be paid by Licensee [*].
2.9.9.Licensee agrees to require each of its sub-licensees to
maintain sufficient shipping records and sales records of
Licensed Cores, Licensed Parts and Licensed Products to
accurately record sub-licensee's activity, and to allow that
at ParkerVision's option and expense, ParkerVision may have an
accounting firm of ParkerVision's choosing, and to which
sub-licensee has no reasonable objection, conduct an audit of
sub-licensee for the sole purpose of determining the accuracy
of sub-licensee's accounting of shipments and sales of
Licensed Cores, Licensed Parts and Licensed Products. Each
sub-licensee shall agree to provide the accounting firm with
reasonable access to its shipping and sales records during
normal business hours.
2.10. ENFORCEMENT OF SOLE AND OPEN FIELDS OF USE BY LICENSEE.
Licensee agrees to notify and require in writing any Recipient to
whom Licensee Ships any Licensed Part in the Sole Fields and/or the
Open Fields that such Licensed Part shall be used, sold, or offered
for sale by Recipient only in the applicable Sole Fields and/or Open
Field. Licensee shall maintain copies of such writings, and shall
provide copies of such writings to ParkerVision upon request of
ParkerVision. If Licensee identifies any Recipient who is operating
outside the Sole and Open Fields, whether by notice from
ParkerVision or otherwise, then Licensee agrees to notify
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ParkerVision of the non-compliance, and further agrees to take
appropriate action at Licensee's expense to ensure that the
Recipient operates within the Sole Fields and/or the Open Fields. If
Licensee does not take action to ensure that the Recipient operates
only within the Sole Fields, if any, or the Open Fields, then
ParkerVision may take such action, and ParkerVision's reasonable and
actual costs associated with such action shall be paid by Licensee
[*].
2.11. FUTURE LICENSES BY PARKERVISION.
2.11.1. ParkerVision represents and warrants that, prior to the
Effective Date of this Agreement, ParkerVision has not
licensed any third party under the ParkerVision Intellectual
Property Pool and/or ParkerVision Technology Improvements in
the Sole Fields defined herein. ParkerVision agrees that,
after the Effective Date of this Agreement, it will not grant
any license to any third party under the ParkerVision
Intellectual Property Pool and/or ParkerVision Technology
Improvements in the Sole Fields defined herein, as long as
Licensee retains any Sole Rights. ParkerVision agrees to
notify any future Intellectual Property Pool Licensee of
Licensee's rights in the Sole and Open Fields.
2.11.2. If ParkerVision identifies that another licensee of
ParkerVision is operating within the Sole Fields, whether by
notice from Licensee or otherwise, then ParkerVision agrees to
notify Licensee, and further agrees to take appropriate action
at ParkerVision's expense to cause the other licensee to cease
operation in the Sole Fields, as long as Licensee retains any
Sole Rights.
3. TRADEMARK LICENSE GRANTS AND RESTRICTIONS
3.1. TRADEMARK LICENSE.
ParkerVision hereby grants to Licensee, for the term of this
Agreement and not longer, a limited world-wide, Open Right to sell
Licensed Parts and Licensed Products bearing the Licensed
ParkerVision Trademarks. Licensee shall not use the Licensed
ParkerVision Trademarks except as expressly stated in this
Agreement. All rights in and to the Licensed ParkerVision Trademarks
not specifically granted to Licensee by this
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Agreement are reserved to ParkerVision for ParkerVision's own use
and benefit.
3.2. NO SUBLICENSE OF TRADEMARK LICENSE.
Licensee shall not have the right to license or sublicense any of
the rights granted herein with respect to the Licensed ParkerVision
Trademarks, except to the extent necessary under Section 5.2.6.
3.3. PROHIBITED USE OF LICENSED PARKERVISION TRADEMARKS.
In addition to all other restrictions imposed on Licensee pursuant
to this Agreement, during the term of this Agreement and thereafter,
Licensee shall not use any of the Licensed ParkerVision Trademarks:
a) as a portion of or in combination with any other trademarks,
except that during the term of this Agreement, Licensee may
use the Licensed ParkerVision Trademarks in combination with
Licensee's own trademarks including the Licensee trademark on
or in connection with Licensed Cores, Licensed Parts and
Licensed Products, provided that Licensee does not make the
Licensed ParkerVision Trademarks and Licensee's trademarks
appear to form a single trademark;
b) as all or part of a corporate name, trade name or any other
designation used by Licensee to identify its business;
c) for any other purpose other than as trademarks for Licensed
Cores, Licensed Parts and Licensed Products. At no time shall
Licensee or any parent, subsidiary, affiliated, or related
company, or any person or entity owned or controlled by
Licensee, use any name, trademark, service mark, trade name,
trade dress, or logo likely to cause confusion with any of the
Licensed ParkerVision Trademarks.
3.4. OWNERSHIP OF LICENSED PARKERVISION TRADEMARKS.
Licensee acknowledges that ParkerVision has sole and exclusive
ownership of all right, title, and interest in and to the Licensed
ParkerVision Trademarks, and all registrations and applications
therefor. All use by Licensee of the Licensed ParkerVision
Trademarks and all good will and benefit arising from such use shall
inure to the sole and exclusive benefit of ParkerVision.
3.5. LICENSEE NON-OWNERSHIP OF LICENSED PARKERVISION TRADEMARKS.
Licensee further acknowledges, represents, and warrants that it has
not acquired, and shall not acquire, whether by operation of law,
this Agreement, or otherwise, any right, title, interest, or other
ownership in
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or to the Licensed ParkerVision Trademarks or any part thereof.
Should any such right, title, interest, or other ownership become
vested in Licensee by operation of law, this Agreement, or
otherwise, Licensee agrees to assign (with any reasonable and actual
out-of-pocket expenses to be paid by ParkerVision), and hereby
assigns, all such right, title, interest, and other ownership to
ParkerVision free of additional consideration. Licensee shall
provide and execute all documents necessary to effectuate and record
such assignments to ParkerVision (with any reasonable and actual
out-of-pocket expenses to be paid by ParkerVision).
3.6. LICENSEE NOT TO INJURE.
Licensee shall not, during the term of this Agreement or thereafter,
do anything which would in any way damage, injure, or impair the
validity and substance of the Licensed ParkerVision Trademarks, nor
shall Licensee attack, dispute, or challenge, nor aid others to
dispute or challenge, ParkerVision's right, title, and interest in
and to the Licensed ParkerVision Trademarks.
3.7. REGISTRATIONS AND LICENSING FORMALITIES.
Licensee shall cooperate with ParkerVision in the execution, filing
and prosecution of any trademark applications that ParkerVision may
desire to file, and for that purpose Licensee shall supply to
ParkerVision from time to time samples, packaging, containers,
labels, tags, and similar materials as may be reasonably required
(with any reasonable and actual out-of-pocket expenses to be paid by
ParkerVision). Licensee also agrees to execute and deliver to
ParkerVision at any time whether during or after the term of this
Agreement and without further consideration, such instruments of
transfer and other documents as ParkerVision may reasonably request
for ParkerVision's trademark applications or to confirm
ParkerVision's ownership rights (with any reasonable and actual
out-of-pocket expenses to be paid by ParkerVision).
3.8. SEPARATE TRADEMARK AGREEMENTS.
The license to use the Licensed ParkerVision Trademarks granted to
Licensee by this Agreement shall be confirmed by a separate
trademark agreement for any country which requires a separate
agreement, including without limitation registered user agreements,
or where a separate trademark agreement is deemed appropriate by
ParkerVision. At ParkerVision's request, Licensee shall execute
whatever documents or forms are necessary to confirm the license, to
record Licensee as a registered user, and/or to record the license,
in any country in which Licensed Products are sold by Licensee (with
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any reasonable and actual out-of-pocket expenses to be paid by
ParkerVision).
3.9. TERMINATION OR CANCELLATION.
Expiration or termination of this Agreement shall immediately
terminate all registered user and other license recordal documents
filed or recorded pursuant to this Agreement. The parties expressly
agree that all documents filed or recorded with any trademark office
or other authority relating to the trademark license granted by this
Agreement may be canceled at any time by ParkerVision alone and
Licensee hereby agrees and consents to such cancellation.
3.10. NO LIMITATIONS OF PARKERVISION.
Nothing contained in this Agreement shall in any way restrict,
impair, limit, or affect ParkerVision's rights to use, permit others
to use, or license third parties to use the Licensed ParkerVision
Trademarks.
4. LICENSE FEES
4.1. PRE-PAID ROYALTY.
In consideration of the rights granted herein, Licensee agrees to
pay ParkerVision the Pre-paid Royalty specified in Exhibit E without
further invoice from ParkerVision. [*].
4.2 ROYALTY FEE.
In consideration of the rights granted herein, Licensee further
agrees to pay ParkerVision the Royalty Fee specified in Exhibit E
without further invoice from ParkerVision.
4.3. ASSESSMENT PERIOD.
The assessment period for the Royalty Fee specified in Exhibit E, is
[*] during the term of the Agreement.
4.4. SALES REPORTING.
Within [*] of the close of each Assessment Period during the term of
this Agreement, Licensee agrees to provide ParkerVision with an
accounting of all Royalty Bearing Units Shipped from Licensee or its
Sub-licensee(s) during the Assessment Period. Such accounting shall
include a list of
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Shipments by Licensee and any Sub-Licensee(s) of Royalty Bearing
Units during the Assessment Period by part number, average selling
price and total number of Royalty Bearing Units Shipped.
ParkerVision will treat this sales reporting information as
Confidential Information of Licensee, and shall not use it for any
purpose other than for Licensee's royalty calculations.
4.5. PAYMENT TERMS.
Licensee agrees that it shall pay ParkerVision all Royalty Fees due
within [*] of the close of the Assessment Period for which they are
due, and all payments made by Licensee after the close of the [*]
period shall incur a late fee of [*].
4.6. [Intentionally Left Blank]
4.7. INDEPENDENT AUDIT.
Licensee agrees to maintain sufficient shipping records and sales
records of Licensed Cores, Licensed Parts and Licensed Products to
accurately record Licensee's activity. At ParkerVision's option and
expense, ParkerVision may have an accounting firm of ParkerVision's
choosing, and to which Licensee has no reasonable objection, conduct
an audit of Licensee for the sole purpose of determining the
accuracy of Licensee's accounting of shipments and sales of Licensed
Cores, Licensed Parts and Licensed Products. Licensee agrees to
provide the accounting firm with reasonable access to its shipping
and sales records during normal business hours.
4.8. INDEPENDENT AUDIT FREQUENCY.
Audits by the independent accounting firm will be conducted not more
than once a year, unless a preceding audit revealed a discrepancy.
4.9. ADJUSTMENTS.
Prompt adjustment shall be made by Licensee to compensate for any
errors or omissions which resulted in an underpayment to
ParkerVision. Prompt refund of overpayment shall be made by
ParkerVision to correct for any errors or omissions which resulted
in an overpayment by Licensee, or a credit may be issued against
future amounts due, at ParkerVision's option.
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4.10. UNDERPAYMENT.
If an underpayment by Licensee exceeds [*] of the payments due in a
period covered by an audit, Licensee will pay the cost of the
independent audit.
4.11. [*].
4.12. [*].
5. OBLIGATIONS OF THE PARTIES
5.1. OBLIGATIONS OF PARKERVISION
5.1.1. NOTICE OF ISSUED PATENTS.
Within three (3) months of the issue or grant date of a patent
falling within the scope of the ParkerVision Technology
Intellectual Property or the ParkerVision Patented
Improvements, ParkerVision agrees to notify Licensee of the
country, patent number, issue date, and title of the patent.
Within three (3) months of being notified by any Intellectual
Property Pool Licensee of the issuance or grant of a patent
falling within the scope of the ParkerVision Intellectual
Property Pool, ParkerVision agrees to notify Licensee of the
country, patent number, issue date, and title of patent.
5.1.2. PARKERVISION DELIVERABLES.
All ParkerVision Deliverables shall be provided to Licensee by
ParkerVision before the Effective Date of this Agreement.
Licensee agrees that by executing this Agreement it has
received all ParkerVision Deliverables.
5.2. OBLIGATIONS OF LICENSEE
5.2.1. RESTRICTED ACCESS TO PARKERVISION INTELLECTUAL PROPERTY POOL.
Licensee agrees that only those persons listed in Exhibit H
will have access to the Confidential Information contained in
the ParkerVision Intellectual Property Pool, and that those
persons will maintain such information as confidential
consistent with the confidentiality terms of this Agreement
and the Mutual Non-Disclosure Agreement of [*] attached hereto
as Exhibit F.
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5.2.2. SEPARATION.
Licensee agrees to notify ParkerVision when any of the persons
listed in Exhibit H is no longer employed by or associated
with Licensee, and the last known location, if known, of the
person.
5.2.3. ADDITIONAL PERSONS.
Additional persons may be added to Exhibit H by Licensee with
ParkerVision's consent, which consent shall not be
unreasonably withheld. If the parties agree to add a person or
persons to the list in Exhibit H, then Licensee and
ParkerVision shall execute an Addendum to Exhibit H. Persons
listed in an Addendum to Exhibit H are bound by the same
obligations as persons in Exhibit H. Licensee is bound by the
same obligations for persons in an Addendum to Exhibit H as
for persons listed in Exhibit H. Attached as Exhibit G is an
individual Non-Disclosure Agreement form to be signed by each
person to be added to the list in Exhibit H.
5.2.4. SINGLE POINT OF CONTACT FOR LICENSEE.
The individual designated in Exhibit H as the Single Point of
Contact will act as the single point of contact for Licensee
for all technology transfer during the term of this Agreement.
Licensee may change this designee from time to time with
written notice to ParkerVision as Licensee deems necessary to
perform under this Agreement.
5.2.5. NOTICE OF ISSUED PATENTS.
Within three (3) months of the issue or grant date of a
Licensee Patented Improvement to Licensee, Licensee agrees to
notify ParkerVision of the country, patent number, issue date,
and title of the patent.
5.2.6. REQUIRED MARKINGS AND STATEMENTS.
Licensee agrees as follows:
a) Licensee shall include the Licensed ParkerVision
Trademarks, and the text "Technology Licensed From
ParkerVision," on all marketing materials, product
documentation, user manuals, data sheets, and packaging
accompanying Licensed Cores, Licensed Parts, and
Licensed Products Shipped by Licensee, and at Licensee's
sole option, on Licensed Cores, Licensed Parts, and/or
Licensed Products Shipped by Licensee and/or Licensee's
sub-licensees, to the same extent that Licensee includes
its own trademarks on same.
b) Licensee shall require each of its sub-licensees to
include the Licensed ParkerVision Trademarks on all
marketing materials,
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product documentation, user manuals, data sheets, and
packaging accompanying Licensed Cores, Licensed Parts,
and Licensed Products Shipped by the sub-licensee, to
the same extent that the sub-licensee includes
Licensee's trademarks on same.
c) After the Effective Date of this Agreement and prior to
the first anniversary of the Effective Date of this
Agreement, and at each anniversary of the Effective Date
of this Agreement, ParkerVision shall provide to
Licensee a list of patents in the ParkerVision
Intellectual Property Pool applicable to Licensed Cores,
Licensed Parts, and/or Licensed Products being Shipped
by Licensee. Licensee shall include a legally
appropriate patent notice of such list of patents on all
Licensed Cores, Licensed Parts, and Licensed Products
Shipped by Licensee.
d) After the Effective Date of this Agreement and prior to
the first anniversary of the Effective Date of this
Agreement, and at each anniversary of the Effective Date
of this Agreement, ParkerVision shall provide to each of
Licensee's sub-licensees a list of patents in the
ParkerVision Intellectual Property Pool applicable to
Licensed Cores, Licensed Parts, and/or Licensed Products
being Shipped by the sub-licensee. Licensee shall
require the sub-licensee to include a legally
appropriate patent notice of such list of patents on all
Licensed Cores, Licensed Parts, and Licensed Products
Shipped by the sub-licensee.
e) Licensee shall place and display such other legends,
markings, and notices as may be required by any law or
regulation in countries requiring separate agreements,
and Licensee's sub-licensees shall place and display
such other legends, markings, and notices as may be
required by any law or regulation in countries requiring
separate agreements, to the same extent that
sub-licensees place and display same on behalf of
Licensee.
5.2.7. QUALITY CONTROL.
The quality of Licensed Cores, Licensed Parts and Licensed
Products shall conform to the reasonable quality standards of
ParkerVision as it may issue from time to time; and are of a
standard consistent with the prestige and reputation which the
Licensed ParkerVision Trademarks have heretofore developed or
develop in the future.
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5.2.8. LIMITATIONS ON USE OF INFORMATION CONTAINED IN EXHIBIT A.
Licensee agrees that it will not use the information contained
in Exhibit A or the information referred to therein for any
purpose other than to perform its obligations under this
Agreement.
5.3. PARKERVISION AS A CUSTOMER OF LICENSEE.
During the term of this Agreement, Licensee agrees to sell its
Legacy Products, New Non-Licensed Products, Licensed Parts and
Licensed Products relating to the Sole and Open Fields to
ParkerVision for use in ParkerVision products under the same terms
and conditions as other customers of Licensee are offered similar
products under similar purchasing conditions, to the extent Licensee
sells same to resellers and/or OEMs. Should similar purchasing
conditions not exist, Licensee will offer ParkerVision the closest
most favorable terms to ParkerVision's purchasing conditions.
Notwithstanding the foregoing, ParkerVision shall only resell Legacy
Products, New Non-Licensed Products, Licensed Parts and Licensed
Products to end-users. Licensee reserves the right to not sell to
ParkerVision any Legacy Products, New Non-Licensed Products,
Licensed Parts and Licensed Products if ParkerVision violates the
foregoing restriction in this Section.
6. INTELLECTUAL PROPERTY OWNERSHIP
6.1. PARKERVISION OWNERSHIP.
All ParkerVision Technology and all ParkerVision Technology
Improvements are the sole property of ParkerVision.
6.2. LICENSEE OWNERSHIP.
All Licensee Technology Improvements are the sole property of
Licensee. Licensee agrees not to assign ownership rights in any
Licensee Technology Improvements and/or any Licensee Patented
Improvements during the term of this Agreement to any third party
who does not agree to be bound by the terms of Sections 1.17, 1.18,
1.27, 2.6, 2.7, 5.2.5, and 6.2 of this Agreement relating to such
Licensee Technology Improvements and/or any Licensee Patented
Improvements.
6.3. JOINTLY DEVELOPED TECHNOLOGY.
All Jointly Developed Technology is the joint property of
ParkerVision and Licensee. Either party to this Agreement may
initiate prosecution of any patent application to protect such
Jointly Developed Technology. If
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both parties agree to equally share the cost of filing and
prosecuting such patent application, then the parties shall equally
control such filing and prosecution. If only one party wishes to pay
for such filing and prosecution, then only that party shall control
the filing and prosecution of such patent application. In all cases,
any such patent application and any patents issued or granted
therefrom shall be jointly owned by ParkerVision and Licensee. The
parties agree to fully cooperate with each other, including signing
any documents, to perfect such rights.
6.4. FOREIGN PATENT APPLICATIONS.
ParkerVision agrees to provide Licensee with at least six (6) months
notice of deadlines for filing foreign patent applications
corresponding to the two currently pending U.S. patent applications
which contain the subject matter included in the documents listed in
Exhibit A. Licensee agrees that within three (3) months of such
notice, Licensee shall advise ParkerVision if it wishes ParkerVision
to file and prosecute patent applications corresponding to such U.S.
applications in Australia, China, Republic of Korea, and/or South
Africa. All reasonable and actual costs associated with filing and
prosecuting such foreign patent applications will be paid to
ParkerVision by Licensee as such costs are incurred. Prosecution of
such foreign applications shall be controlled solely by
ParkerVision, and all such patent applications and any patents
issued or granted therefrom shall be solely owned by ParkerVision.
The parties agree that non-compliance with any provision of this
Section 6.4 by either party, other than non-payment of costs by
Licensee to ParkerVision, and other than willful non-compliance with
any other term contained in this Section 6.4, does not constitute a
material breach of this Agreement.
7. ENFORCEMENT OF RIGHTS
7.1. INFRINGEMENT OF IP OWNED BY PARKERVISION.
Licensee shall use reasonable efforts to inform ParkerVision if
Licensee learns of any activities which may infringe any of the
rights now or hereafter in the ParkerVision Intellectual Property
Pool. [*].
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7.2. ASSISTANCE BY LICENSEE.
In the event that ParkerVision takes action to enforce its rights in
the ParkerVision Intellectual Property Pool, Licensee agrees to
cooperate with ParkerVision in such enforcement action, and
ParkerVision agrees it will reimburse Licensee for Licensee's
actual, reasonable expenses. Notwithstanding the foregoing, and
subject to Sections 2.6 and 2.7, Licensee reserves the right to
control or direct enforcement of its own intellectual property,
including its Licensee Patented Improvements.
7.3. RECOVERIES BY PARKERVISION.
Except as noted below, ParkerVision shall be entitled to retain all
recovery, including reimbursements of any costs and expenses
resulting from such enforcement action by ParkerVision, including
without limitation sums which might otherwise be due Licensee by
operation of law or otherwise.
7.4. ENFORCEMENT OF PARKERVISION IP IN THE SOLE FIELDS.
Within three (3) months after Licensee has objectively established
(1) a prima facie case of literal infringement by a third party of
one or more Selected Patent Claims in the Sole Fields in any
individual country; and (2) that such third party has generated
gross revenue in excess of [*] from such infringement in such
individual country, ParkerVision must inform Licensee whether it
intends to take action against the third party in the country in
which (1) and (2) above have been satisfied. If the parties disagree
over whether (1) and/or (2) are satisfied, then the parties agree to
accept the findings of a neutral third party or neutral third
parties agreeable to both parties.
In the event that ParkerVision elects to take such action, then all
decisions concerning such action shall be made solely by
ParkerVision, and such action shall be controlled solely by
ParkerVision, and all costs associated therewith will be (a) paid by
ParkerVision if enforcement occurs in the United States, (b) paid
equally by ParkerVision and Licensee if enforcement occurs in Base
Foreign Countries, and/or (c) [*] paid by ParkerVision and [*] paid
by Licensee if enforcement occurs in any other country. In the event
that ParkerVision is awarded damages by a court and/or jury as a
result of such enforcement, such damages shall be (a) the property
of ParkerVision if enforcement occurs in the United States, (b)
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first used to reimburse the parties for the actual costs paid
thereby, and then divided equally among the parties, if enforcement
occurs in Base Foreign Countries, and/or (c) first used to reimburse
the parties for the actual costs paid thereby, and then divided
equally among the parties, if enforcement occurs in any other
country. In all cases, if ParkerVision elects to take action, then
such action shall be controlled solely by ParkerVision.
In the event that ParkerVision elects to not take such action in any
country in which (1) and (2) have been satisfied, and Licensee has
requested that ParkerVision take action, the Royalty Fee otherwise
due under this Agreement in that country [*] if the infringing
activity in the country had been performed by Licensee and
authorized by ParkerVision [*], beginning three (3) months after
Licensee has objectively established (1) in that country, and [*]
ParkerVision takes action against the third party in that country.
7.5. ENFORCEMENT OF PARKERVISION IP IN THE OPEN FIELDS.
Licensee has no authority to enforce the intellectual property
rights owned by ParkerVision in the ParkerVision Intellectual
Property Pool in the Open Fields. Licensee has no right to demand or
control any enforcement action taken by ParkerVision to enforce such
rights in the Open Fields.
7.6. ENFORCEMENT BY LICENSEE AND ASSISTANCE BY PARKERVISION.
Licensee reserves the sole right to enforce Licensee Patented
Improvements.
In the event that Licensee takes action to enforce any Licensee
Patented Improvement, ParkerVision agrees to cooperate with Licensee
in such enforcement action, and Licensee agrees it will reimburse
ParkerVision for ParkerVision's actual, reasonable expenses.
7.7. RECOVERIES BY LICENSEE.
Licensee shall be entitled to retain all recovery, including
reimbursements of any costs and expenses resulting from such
enforcement action by Licensee according to Section 7.6, including
without limitation sums which might otherwise be due ParkerVision by
operation of law or otherwise.
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7.8. TRADEMARK ENFORCEMENT.
Licensee shall use reasonable efforts to inform ParkerVision
forthwith if Licensee learns of any goods or activities which may
infringe any of the Licensed ParkerVision Trademarks [*]. At the
request of ParkerVision, Licensee shall provide to ParkerVision any
necessary information, cooperation, and assistance concerning any
suspected infringements of the Licensed ParkerVision Trademarks,
including without limitation any further investigation or legal
action, and ParkerVision shall reimburse Licensee for all
reasonable, actual expenses. ParkerVision shall use reasonable
efforts to take whatever action, in ParkerVision's sole discretion,
it determines is necessary or appropriate under the circumstances to
enforce its rights in the Licensed ParkerVision Trademarks,
including without limitation legal action to suppress or eliminate
any such infringement where such infringement is or will materially
injure Licensee's business with respect to Licensed Cores, Licensed
Parts or Licensed Products on which, or with which, the Licensed
ParkerVision Trademarks are used. ParkerVision shall be entitled to
retain all recovery, including reimbursements of any costs, expenses
and damages resulting from such infringements, including without
limitation sums which might otherwise be due Licensee by operation
of law or otherwise. Licensee shall have no authority to enforce any
trademark rights of ParkerVision, nor shall Licensee have any right
to demand or control any action by ParkerVision to enforce such
rights.
8. CONFIDENTIAL INFORMATION.
8.1. USE AND DISCLOSURE.
Each party agrees to take reasonable steps to protect the
Confidential Information and the media containing such Confidential
Information. The parties agree not to:
a) use such Confidential Information except as required by the
normal and proper course of performing under this Agreement;
b) disclose such Confidential Information to a third party,
including any sub-licensee of Licensee who has not satisfied
the requirements of Section 2.9; and
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c) allow third party access, including access by any sub-licensee
of Licensee who has not satisfied the requirements of Section
2.9, to such Confidential Information without the prior
written approval of the other party.
8.2. DESIGNATION.
All Confidential Information and media containing such Confidential
Information is the property of the party whose Confidential
Information it is. The Parties agree to mark all Confidential
Information with the legend "Confidential".
8.3. ORAL CONVEYANCE.
If Confidential Information is provided orally, within 30 days the
disclosing party agrees to provide the receiving party with a
written summary of such Confidential Information, marked
"Confidential".
8.4. DISCLOSURE TO PROSPECTS, CUSTOMERS, AND DISTRIBUTION CHANNELS.
Licensee may not disclose any ParkerVision Confidential Information
to prospective customers who are not current Intellectual Property
Pool Licensees.
9. INDEMNIFICATIONS AND LIMITATIONS OF LIABILITY.
9.1. ABILITY TO LICENSE.
Each party represents and warrants that it has the ability to
license the rights granted herein for the purpose of this Agreement,
and that it has not made and will not make any commitments to third
parties that are inconsistent with or in derogation of such rights.
9.2. DISCLAIMER.
Nothing in this Agreement shall be deemed to be a representation or
warranty of (1) the accuracy, safety, or usefulness for any purpose
of the ParkerVision Technology and/or ParkerVision Technology
Improvements, or (2) that Licensed Sub-Parts, Licensed Cores,
Licensed Parts and/or Licensed Products will be free from claims of
infringement of any Patent, trademark, trade dress, copyright, or
other intellectual property right of any third party. Except for its
own negligence, ParkerVision shall have no liability whatsoever to
Licensee or any other person for or on account of any injury, loss,
or damage, of any kind or nature, sustained by, or any damage
assessed or asserted against, or any other liability incurred by or
imposed upon Licensee or any other person,
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arising out of or in connection with or resulting from (a) the
manufacture, use, or sale of Licensed Sub-Parts, Licensed Cores,
Licensed Parts and/or Licensed Products, or (b) any advertising or
promotional activities in connection with Licensed Sub-Parts,
Licensed Cores, Licensed Parts and/or Licensed Products.
9.3. REPRESENTATION BY PARKERVISION.
ParkerVision represents that ParkerVision has conducted a
patentability search related to the subject matter described in the
documents listed in Exhibit A (the references identified as a result
of such search have been delivered to Licensee as part of item 6 of
Exhibit B), and based on that search, ParkerVision has no knowledge
that the ParkerVision Technology or ParkerVision Technology
Improvements infringe any patents, copyrights, trade secrets, or
other applicable proprietary rights of any third party.
9.4. INDEMNIFICATION BY PARKERVISION.
ParkerVision agrees to indemnify and hold Licensee harmless from and
against any claim, suit, loss, damage, or expense (including
reasonable attorneys' fees) against Licensee, arising out of or
relating to any negligence by ParkerVision or breach by ParkerVision
of any representation and warranty by ParkerVision in this
Agreement. ParkerVision shall have the right, at its own expense, to
enter and defend against any such claim or suit against Licensee,
using counsel of ParkerVision's choice, or to settle such claim or
suit. Licensee shall have the right, at its own expense, to
participate in such claim or suit using Licensee's own counsel.
9.5. INDEMNIFICATION BY LICENSEE.
Licensee agrees to indemnify and hold ParkerVision harmless from and
against any claim, suit, loss, damage, or expense (including
reasonable attorneys' fees) against ParkerVision arising out of or
relating to any negligence or fault by Licensee or breach by
Licensee of any representation or warranty by Licensee in the
Agreement, or arising out of or relating to negligence or fault by
Licensee in the manufacture, marketing, or sale of any Licensed
Sub-Parts, Licensed Cores, Licensed Parts, and/or Licensed Products.
Licensee shall have the right, at its own expense, to enter and
defend against any such claim or suit against ParkerVision, using
counsel of the Licensee's choice, or to settle such claim or suit.
ParkerVision shall have the right, at its own expense, to
participate in such claim or suit using ParkerVision's own counsel.
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9.6. NOTIFICATION OF CLAIM.
Each party agrees to notify the other party of any claim or suit for
which the other party may have an obligation to indemnify the
notifying party within sixty (60) days of when the notifying party
learns of such claim or suit.
9.7. PROVIDED "AS IS".
THE PARKERVISION TECHNOLOGY, PARKERVISION TECHNOLOGY INTELLECTUAL
PROPERTY, PARKERVISION TECHNOLOGY IMPROVEMENTS, PARKERVISION
PATENTED IMPROVEMENTS, PARKERVISION INTELLECTUAL PROPERTY POOL, AND
JOINTLY DEVELOPED TECHNOLOGY ARE PROVIDED TO LICENSEE "AS IS"
WITHOUT WARRANTY OF ANY KIND, EXPRESS, IMPLIED, STATUTORY, OR
OTHERWISE, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
9.8. REMEDY.
Notwithstanding any other provision of this Agreement, a party's
monetary remedy for breach of this Agreement by the other party
cannot exceed the amount paid by Licensee to ParkerVision under this
Agreement up to the time of the breach. Notwithstanding the
foregoing, each party retains all applicable specific performance
remedies provided in law or equity against the other party.
9.9. ENTIRE LIABILITY.
The foregoing provisions of this Section 9 state the entire
liability and obligations of each party with respect to any causes
of action covered in this Section 9.
10. TERM AND TERMINATION
10.1. TERM.
The term of this Agreement shall commence as of the Effective Date
and unless and until terminated or extended by the parties, shall
continue until the end of [*]. Subject to the restrictions set forth
herein, the Second Term of Contract shall begin immediately
following the expiration of [*].
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10.2. TERMINATION.
This Agreement cannot be terminated by Licensee during the Design-In
Period, except pursuant to Section 10.2.4.
10.2.1. If Licensee breaches by (a) failing to pay to ParkerVision
the fees and amounts as specified herein, including but not
limited to the requirements of Section 2.8 and/or Exhibit E,
or (b) willfully violating the requirements of Sections 2.1,
2.2, and 2.4, then ParkerVision shall have the right, without
prejudice to any other rights ParkerVision may have, to
terminate this Agreement by giving thirty (30) days written
notice to Licensee. This notice shall automatically become
effective unless Licensee remedies the breach to
ParkerVision's reasonable satisfaction within the said thirty
(30) day period.
10.2.2. If ParkerVision materially fails to perform or otherwise
materially breaches any of its obligations under this
Agreement, Licensee shall have the right, without prejudice to
any other rights Licensee may have, to terminate this
Agreement by giving thirty (30) days written notice to
ParkerVision, or to adopt the rights and obligations of
Sections 10.9(a)-(c). This notice shall automatically become
effective unless ParkerVision remedies the breach to
Licensee's reasonable satisfaction within the said thirty (30)
day period.
10.2.3. After the end of [*], if Licensee objectively establishes
that (1) no patent claim in the ParkerVision Intellectual
Property Pool reads on any Licensed Sub-Part, Licensed Core,
Licensed Part, and/or Licensed Product that was made, had
made, used, sold, and/or offered for sale by Licensee and/or
any of its sub-licensees during the preceding twelve (12)
month period, and (2) there are no trade secrets in the
ParkerVision Intellectual Property Pool applicable to any
Licensed Sub-Part, Licensed Core, Licensed Part, and/or
Licensed Product that was made, had made, used, sold, and/or
offered for sale by Licensee and/or any of its sub-licensees
during the preceding twelve (12) month period, then Licensee
shall have the right to terminate this Agreement by giving
thirty (30) days written notice to ParkerVision.
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10.2.4. If (1) Licensee has made best efforts to use ParkerVision
Technology and ParkerVision Technology Improvements (to the
extent such ParkerVision Technology Improvements have been
provided by ParkerVision to Licensee) to develop a WLAN
implementation according to IEEE 802.11b, and (2) both parties
reasonably agree that ParkerVision Technology or ParkerVision
Technology Improvements (to the extent such ParkerVision
Technology Improvements have been provided by ParkerVision to
Licensee) cannot be used to develop a commercially reasonable
WLAN implementation according to IEEE 802.11b (or another
standard that the parties may reasonably agree upon), then (a)
this Agreement terminates as of the date of such mutual
agreement of (2), and (b) ParkerVision agrees that the
eighteen (18) month term specified in Section 19(a) of the
Mutual Non-Disclosure Agreement (attached hereto as Exhibit F)
shall be accelerated to the date of such mutual agreement.
10.3. EFFECT OF TERMINATION.
Upon termination of this Agreement under Sections 10.2 and
10.10.1.1, all rights granted herein by ParkerVision to Licensee
shall terminate.
10.4. SURVIVAL.
Certain provisions of this Agreement impose duties and obligations
or convey rights beyond the termination of this Agreement, and such
provisions shall be operative until such duties and obligations are
fully discharged or the specific time prescribed therefor expires or
such rights are exercised or the specific time therefor expires.
Those duties and obligations are:
a) In the event that this Agreement is terminated for any reason,
any amounts due and owing to ParkerVision will immediately
become due and payable, and payments made by Licensee to
ParkerVision prior to termination shall not be refundable to
Licensee;
b) The provisions of paragraphs 5.2.1. (Restricted Access to
ParkerVision Intellectual Property Pool) and 5.2.2.
(Separation), 5.2.5. (Notice of Issued Patents), 8.
(Confidential Information), 12. (Governing Law and Mediation),
and 14. (Miscellaneous) shall survive any termination of this
Agreement for any reason.
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10.5. RIGHT OF SELL-OFF.
Licensee has the right to sell off existing inventory of Licensed
Parts and Licensed Products for a period of [*] after termination of
this Agreement.
ParkerVision and any Intellectual Property Pool Licensee each has
the right to sell off existing inventory of sub-parts, parts, cores,
and/or products that include Licensee Patented Improvements for a
period of [*] after termination of this Agreement.
10.6. NO RIGHTS AFTER TERMINATION.
Licensee agrees that with the sole exception of the limited rights
of sell off under paragraph 10.5 above, no rights shall extend to
Licensee beyond the termination of this Agreement, and that Licensee
shall not be entitled to any compensatory payment on the termination
of this Agreement under Sections 10.2 and 10.10.1.1. Licensee
further agrees that upon termination of this Agreement under
Sections 10.2 and 10.10.1.1, Licensee shall immediately cease all
use of the Licensed ParkerVision Trademarks, with the sole exception
of Section 10.5, and that, at ParkerVision's request, Licensee shall
take all steps and actions as may be necessary to reflect or confirm
the termination, and/or surrender of Licensee's rights to use the
same.
10.7. IRREPARABLE INJURY
Licensee acknowledges and admits that failure herein to cease its
activities (except as provided in Section 10.5) as required upon
expiration or termination of this agreement will result in immediate
and irreparable damage to ParkerVision.
10.8. LICENSEE RIGHTS DURING SECOND TERM OF CONTRACT
In the event that this Agreement is not terminated prior to the end
of [*], and provided that Licensee satisfies the terms and
conditions of this Agreement including the license fee provisions of
Section 4, the Agreement shall continue for a Second Term of
Contract during which Licensee and its sub-licensees may:
(1) continue to operate according to the Sole Right of Section
2.1, subject to the maintenance of exclusivity provisions of
Section 2.3, and the Open Right of Section 2.2, with respect
to Pre-Termination Licensed Units; and
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(2) operate according to the Sole Right of Section 2.1, subject to
the maintenance of exclusivity provisions of Section 2.3, and
the Open Right of Section 2.2, with respect to New Licensed
Cores, New Licensed Parts and New Licensed Products, provided
that Licensee pays to ParkerVision an extended minimum royalty
fee per Measurement Period which shall be credited against any
Royalty Fee actually due from Licensee to ParkerVision for the
Measurement Period under Section 4 of this Agreement. The
initial extended minimum royalty fee is [*], and will be
increased [*] of the Second Term of Contract [*].
If Licensee does not pay to ParkerVision the extended minimum
royalty fee per each Measurement Period of the Second Term of
Contract as specified above, then Licensee and its
sub-licensees shall have no right thereafter to make, have
made, use, sell, and/or offer to sell any new Licensed Cores,
Licensed Parts and/or Licensed Products that differ in design,
implementation, technical specification or functionality from
Licensed Cores, Licensed Parts and/or Licensed Products that
were Shipped by Licensee or its sub-licensee(s) prior to such
non-payment.
10.9. EFFECT OF OTHER BREACH BY LICENSEE.
If Licensee (1) materially fails to perform or otherwise materially
breaches any of its obligations under this Agreement, other than
specified in Sections 10.2 and 10.10.1.1; or (2) commences or
becomes the subject of any case or proceeding under the bankruptcy,
insolvency, or equivalent laws of any country, or if a court
appoints a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) for Licensee or for any
substantial part of the property of Licensee, or if Licensee makes
an assignment for the benefit of creditors, or if Licensee takes
corporate action in furtherance of any of the foregoing; or (3)
asserts in a press release, to an administrative body including a
patent office, or a court, that any patent claim and/or patent
covering the ParkerVision Technology or the ParkerVision Patented
Improvements may be invalid or unenforceable, then:
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(a) All Sole Rights granted to Licensee and its sub-licensees
shall immediately revert to Open Rights, and Licensee shall
have no right to grant new sub-licenses after the occurrence
of (1), (2), and/or (3).
(b) Licensee and its sub-licensees shall be prohibited from
making, having made, using, selling, and/or offering to sell
any Licensed Sub-Part, Licensed Core, Licensed Part, and/or
Licensed Product that differ in design, implementation, and/or
technical specification or functionality from Licensed
Sub-Parts, Licensed Cores, Licensed Parts, and/or Licensed
Products commercially Shipped by Licensee and/or its
sub-licensees prior to the occurrence of (1), (2), and/or (3),
and all license grants contained herein and relating
theretoshall be revoked.
(c) provided that Licensee satisfies the terms and conditions of
this Agreement, including the license fee provisions of
Section 4, Licensee and its sub-licensees may continue to
operate in the Open Fields only with respect to Licensed
Sub-Parts, Licensed Cores, Licensed Parts, and/or Licensed
Products commercially Shipped by Licensee and/or its
sub-licensees prior to the occurrence of (1), (2), and/or (3).
10.10.BREACH OF TERMS RELATING TO SOLE AND/OR OPEN FIELDS.
10.10.1. WILLFUL BREACH.
10.10.1.1. If Licensee willfully violates the terms of Section
2.9.1, and/or willfully violates the requirement of
Section 2.10 to notify in writing any Recipient to whom
Licensee Ships any Licensed Part in the Sole Fields
and/or the Open Fields that such Licensed Part shall be
used, sold, or offered for sale by Recipient only in the
applicable Sole Fields and/or Open Field, and Licensee
fails to completely remedy the violation, then
ParkerVision at its option may terminate this Agreement.
10.10.1.2. If ParkerVision willfully violates the terms of
Section 2.11.1, and ParkerVision fails to completely
remedy the violation, then all fees specified herein as
to Licensee shall be reduced by [*] and all fees
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126
<PAGE>
specified herein as to Licensee's sub-licensees shall be
reduced by [*] although no fees already paid to
ParkerVision by Licensee shall be refundable to
Licensee, and Licensee shall be allowed to continue to
sub-license rights pursuant to Section 2.9 in the Open
Fields and Sole Fields (the parties agree that at this
point no Sole Rights may remain), and ParkerVision is
not allowed to further license third parties in the Sole
Fields.
10.10.2. NON-WILLFUL BREACH.
10.10.2.1. If Licensee violates the terms of Section 2.9.1,
and/or violates the requirement of Section 2.10 to
notify in writing any Recipient to whom Licensee Ships
any Licensed Part in the Sole Fields and/or the Open
Fields that such Licensed Part shall be used, sold, or
offered for sale by Recipient only in the applicable
Sole Fields and/or Open Field, and such violation is not
willful, upon notice pursuant to Section 11 of such
violation, and upon failure to cure within thirty (30)
days thereof, then all fees specified herein as to
Licensee only shall be increased by [*] in the countries
in which such violation occurred, and the fees shall
remain increased until Licensee completely remedies the
violation.
10.10.2.2. If ParkerVision violates the terms of Section
2.11.1, and such violation is not willful, upon notice
pursuant to Section 11 of such violation, and upon
failure to cure within thirty (30) days thereof, then
all fees specified herein as to Licensee only shall be
decreased by [*] in the countries in which such
violation occurred, and the fees shall remain decreased
until ParkerVision completely remedies the violation.
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respect to the omitted portion.
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11. NOTICES
11.1. PARKERVISION.
Any notices or other communications which are required under this
Agreement shall be sent to ParkerVision at:
ParkerVision, Inc.
8493 Baymeadows Way
Jacksonville, Florida 32256
Attn: Chief Financial Officer
11.2. LICENSEE.
Any notices or other communications which are required under this
Agreement shall be sent to Licensee at:
Symbol Technologies, Inc.
One Symbol Plaza
Holtsville, NY 11742-1300
Attn: President
11.3. EFFECTIVE DATE OF NOTICE.
Any notice shall be considered given and effective when delivered
personally, or three (3) business days after being sent by courier,
or seven (7) business days after being mailed via the United States
Post Office by registered or certified mail, return receipt
requested.
12. GOVERNING LAW AND MEDIATION
12.1. GOVERNING LAW.
This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Delaware, U.S.A., without reference to
conflict of laws principles.
12.2. MEDIATION.
All disputes and differences between Licensee and ParkerVision
arising out of or in connection with this Agreement shall be settled
amicably through negotiations between the parties. In case such
dispute or difference cannot be settled by such means, the parties
agree to mediate in good faith in English, in a location mutually
agreeable to the parties.
12.3. LITIGATION.
All litigation between ParkerVision and Licensee arising out of or
in connection with this Agreement shall be filed and litigated in
the State of Delaware, U.S.A. For the purpose of same, the parties
agree that they are subject to personal jurisdiction in the State of
Delaware.
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13. FORCE MAJEURE
Either party shall be excused from delays in performing or from its
failure to perform hereunder to the extent that such delays or failures
result from causes such as war or natural disasters which are beyond the
reasonable control of the party, provided that, in order to be excused
from delay or failure to perform, the party must act diligently to remedy
such delay or failure.
14. MISCELLANEOUS
14.1. CONFIDENTIALITY OF AGREEMENT.
Each party agrees that the terms and conditions of this Agreement
shall be treated as Confidential Information. Neither party will
disclose the terms or conditions to any third party without the
prior written consent of the other party, except that either party
may disclose the terms and conditions of this Agreement:
1) as required by any court or other governmental body;
2) as required otherwise by law;
3) to legal counsel of the parties, accountants, and other
professional advisors;
4) to a third party who is negotiating with ParkerVision or
Licensee to acquire ParkerVision (or substantially all of the
D2DTM division of ParkerVision, and/or ParkerVision's rights
in the ParkerVision Intellectual Property Pool) or Licensee
(or substantially all of the RF division of Licensee), as long
as the third party agrees in writing to maintain as
confidential any terms and conditions of this Agreement
disclosed to the third party;
5) to a third party who is negotiating with Licensee for a
sub-license, as long as the third party agrees in writing to
maintain as confidential any terms and conditions of this
Agreement disclosed to the third party, and all other
applicable conditions of Section 2.9 have been satisfied; or
6) to a third party who is negotiating with ParkerVision for a
license, as long as the third party agrees in writing to
maintain as confidential any terms and conditions of this
Agreement disclosed to the third party, except that no
financial terms of this Agreement shall be disclosed, and
Licensee's name and address will be redacted from any copy of
the Agreement shown to such third party, and ParkerVision
shall use reasonable efforts to otherwise protect against
disclosure of Licensee's identify to such third party.
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14.2. ANNOUNCEMENTS.
Notwithstanding that the terms and conditions of this Agreement are
confidential, Licensee and ParkerVision agree to issue a joint press
release where Licensee announces that it has chosen ParkerVision
Technology for use in Licensee's new radio-based products, and where
ParkerVision announces that it has provided Licensee, a leader in
the WLAN and Information Technology market and radio design, with a
sole license to ParkerVision Technology for the WLAN market. Both
parties agree to a mutually agreeable press release at signing.
14.3. ASSIGNMENT BY LICENSEE.
This Agreement is personal to Licensee. However, Licensee may assign
or transfer any of its rights or delegate any of its obligations
under this Agreement without the prior written consent of
ParkerVision only to a party who acquires Licensee (or substantially
all of Licensee's RF business operations).
14.4. ASSIGNMENT BY PARKERVISION.
This Agreement is personal to ParkerVision. However, ParkerVision
may assign or transfer any of its rights or delegate any of its
obligations under this Agreement without the prior written consent
of Licensee only to a party who acquires ParkerVision, or only to a
party who acquires ParkerVision's rights in the ParkerVision
Intellectual Property Pool and the ParkerVision Technology
Improvements.
14.5. BIND AND BENEFIT.
This Agreement shall be binding upon and shall inure to the benefit
of, the parties' respective successor.
14.6. RELATIONSHIP OF THE PARTIES.
ParkerVision and Licensee have entered into this Agreement as
independent contractors only and in no way is one party to be
construed as the agent, or acting as the agent, of the other party
in any respect. Nothing contained in this Agreement places or shall
be construed to place the parties in the relationship of partners,
joint venturers, agency, or legal representation, and neither party
shall have any authority or power to obligate or bind the other
party in any manner.
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14.7. PRIOR OBLIGATIONS.
Each party represents and warrants that by entering into and
performing under this Agreement they are not in conflict with any
prior obligations to any third party. Each party agrees that they
will not intentionally disclose to or use on behalf of the other
party any information proprietary to any third party, unless written
authorization from such third party is first obtained in form and
substance satisfactory to the other party.
14.8. SEVERABILITY.
The provisions of this Agreement are severable. If a court of
competent jurisdiction should declare any provision of this
Agreement unenforceable, the other provisions shall remain in full
force and effect, and the court is empowered to modify, if possible,
the unenforceable provision to the extent necessary to make it
enforceable.
14.9. HEADINGS.
The paragraph and section headings and numbering in this Agreement
are included solely for convenience of reference. They are not
intended to be complete or accurate descriptions of the section
contents, and shall not affect the interpretation or be considered a
part of this Agreement.
14.10. CHANGES TO THIS AGREEMENT.
No alteration, amendment, waiver, cancellation or other change in
any term or condition of this Agreement shall be valid or binding on
either party, unless the same shall have been mutually agreed to in
writing by duly authorized representatives of both parties.
14.11. WAIVER.
The failure of either party to insist upon strict adherence to any
provision of this Agreement on any occasion shall not constitute a
waiver, or deprive or limit that party's right thereafter to insist
upon strict adherence to that provision in a particular instance or
any provision in any instance. Any waiver shall be in writing signed
by the party granting the waiver.
14.12. AGREEMENT ONLY UPON FULL EXECUTION AND DELIVERY.
This Agreement shall not be binding upon either party, or constitute
a note or memorandum of the material terms of an agreement, until
each party has received delivery of a copy of this Agreement
executed on behalf of both parties.
131
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15. CHANGE OF CONTROL
In the event that ParkerVision is acquired by a third party who produces
or has produced semiconductors, and Licensee is outsourcing semiconductor
manufacturing for Licensee's Licensed Sub-Parts, Licensed Parts, and/or
Licensed Products in the Sole Field and/or the Open Field, then to the
extent Licensee is not otherwise restricted in its contract with a current
semiconductor manufacturing company, Licensee agrees to negotiate in good
faith to provide the acquiring party the first right of refusal to
manufacture the Licensed Sub-Parts, Licensed Parts, and/or Licensed
Products for Licensee as long as the acquiring party agrees to pay
Licensee's cost of transferring production to the acquiring party's
production line, and the quality and other terms of the acquiring party
are at least as favorable as those currently extended to Licensee by its
current semiconductor supplier for the same WLAN components.
16. PRIOR AGREEMENTS
16.1. This Agreement supercedes all prior agreements, understandings,
commitments, negotiations, and discussions between the parties,
whether oral or written, about the subject matter herein except for
the Mutual Non-Disclosure Agreement between the parties executed on
[*], attached hereto as Exhibit F. In the event that there is a
conflict between this Agreement and the Mutual Non-Disclosure
Agreement (see, for example, Sections 16 and 19), the terms of this
Agreement control.
16.2. NON-DISCLOSURE AGREEMENT FORMS. The parties agree to negotiate in
good faith to develop non-disclosure agreement forms that Licensee
can use with potential sub-licensees and with potential acquirers of
Licensee (or the RF division thereof). The parties agree that, in
developing such non-disclosure agreement forms, they will negotiate
in good faith to address Licensee's concern that third parties may
have difficulty with agreeing to at least the following provisions
of the Mutual Non-Disclosure Agreement (Exhibit F): Sections 3, 5,
16, and 19, and Section 7 of the Individual Non-Disclosure Agreement
(Exhibit G). The parties agree that they will work to finalize such
non-disclosure agreement forms within seven (7) days after the
Effective Date of this Agreement (Licensee will provide drafts of
such forms to ParkerVision), although failure to so finalize such
non-disclosure agreement forms shall not constitute a breach of this
Agreement. After the parties agree on such non-disclosure agreement
forms, Licensee may use such forms without further consultation with
ParkerVision. ParkerVision must approve in writing any material
changes to the non-disclosure agreement forms [*].
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17. ENTIRE AGREEMENT
Subject to Section 16 above, the terms and conditions contained herein
constitute the entire Agreement between the parties with respect to the
subject matter herein.
The undersigned represent that they are authorized to sign this Agreement on
behalf of the party for whom they are signing. Each party has relied upon said
representations in entering into this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by duly authorized representatives.
PARKERVISION, INC LICENSEE
/s/ Jeffrey L. Parker /s/ Richard
- ---------------------------- ------------
(signature) (signature)
By: Jeffrey L. Parker By: Richard
Title: CEO Title: SVP, GM
Date: 10/12/99 Date: 10/12/99
133
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EXHIBIT A - LIST OF DOCUMENTS DESCRIBING PARKERVISION TECHNOLOGY
- --------------------------------------------------------------------------------
DOCUMENT TITLE SERIAL NUMBER OF CORRESPONDING
U.S. PATENT APPLICATION
- --------------------------------------------------------------------------------
Receiver [*]
- --------------------------------------------------------------------------------
Transmitter [*]
- --------------------------------------------------------------------------------
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the Commission. Confidential treatment has been requested with respect to
the omitted portion.
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EXHIBIT B - LIST OF PARKERVISION DELIVERABLES
1. One complete ParkerVision Wireless LAN prototype consisting of both
transmit and receive units, and one additional modulator and demodulator
board from the Wireless LAN prototypes.
2. Ten or more Dual D2DTM Integrated Circuits.
3. Spice decks for D2DTM simulations. Licensee understands that such Spice
decks include information confidential to [*]. Licensee agrees that it will
not access any information from the Spice decks until it has executed an
appropriate Non-Disclosure Agreement with [*].
4. IEEE 802.11 prototype test data, contained in the ParkerVision IEEE 802.11
Application Note which is representative of the latest transmit and receive
data.
5. Patent Documents listed in Exhibit A. Licensee shall make no more than one
(1) copy of each of these Patent Documents listed in Exhibit A.
6. References of record in the U.S. patent applications listed in Exhibit A.
7. Slides from presentation to Licensee by ParkerVision on [*], a copy of
which is to be sent to Licensee within seven (7) days of the Effective Date
of this Agreement.
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EXHIBIT C - LIST OF LICENSED PARKERVISION TRADEMARKS
1. D2D logo (to be provided to Licensee from ParkerVision within fourteen (14)
days after the Effective Date of this Agreement).
2. Stylized Direct2Data logo (to be provided to Licensee from ParkerVision
within fourteen (14) days after the Effective Date of this Agreement).
3. D2D/ParkerVision logo (to be provided to Licensee from ParkerVision within
fourteen (14) days after the Effective Date of this Agreement).
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EXHIBIT D - LIST OF LICENSEE'S LEGACY PRODUCTS
[*]
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the omitted portion.
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EXHIBIT E
The monies specified herein are in U.S. dollars.
LICENSE FEES
As provided in Sections 4.1 and 4.2, Licensee shall pay to ParkerVision both the
Pre-Paid Royalty Fee and the Royalty Fee as defined below. A Royalty Fee as
specified herein shall be due from Licensee to ParkerVision upon the Shipment of
each Royalty Bearing Unit by Licensee and each of its sub-licensees, pursuant to
Section 4.3 (Assessment Period), during the term of this Agreement, including
the Design-In Period.
PRE-PAID ROYALTY FEE.
[*] to be paid to ParkerVision upon execution of this Agreement, and [*] upon
the occurrence of the first tape-out that is objectively satisfactory to
Licensee, of a Licensed Sub-Part, Licensed Core, Licensed Part or Licensed
Product by Licensee or its sub-licensee(s). After the end of the Design-In
Period, if Licensee has not completely paid the Pre-Paid Royalty Fee of [*],
then ParkerVision has the option of terminating this Agreement pursuant to
Section 10.
[*].
[*].
ROYALTY FEE.
ONE LICENSED SUB-PART. During the Design-In Period, and for each Measurement
Period following the Design-In Period, the Royalty Fee is equal to the greater
of (1) [*]of each Royalty Bearing Unit having a single Licensed Sub-Part Shipped
by Licensee or its parent, subsidiaries, partners, joint ventures, and/or
affiliates, and/or Licensee's sub-licensees, during each Assessment Period of
this Agreement, or (2) the Minimum Royalty Fee defined below. Notwithstanding
(1) and (2), the Royalty Fee [*] for each Royalty Bearing Unit having a single
Licensed Sub-Part Shipped by Licensee or its parent, subsidiaries, partners,
joint ventures, and/or affiliates, and/or Licensee's sub-licensees.
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TWO LICENSED SUB-PARTS. During the Design-In Period, and for each Measurement
Period following the Design-In Period, the Royalty Fee is equal to the greater
of (1) [*]of each Royalty Bearing Unit having two Licensed Sub-Parts Shipped by
Licensee or its parent, subsidiaries, partners, joint ventures, and/or
affiliates, and/or Licensee's sub-licensees, during each Assessment Period of
this Agreement, or (2) the Minimum Royalty Fee defined below. Notwithstanding
(1) and (2), the Royalty Fee [*] for each Royalty Bearing Unit having two
Licensed Sub-Parts Shipped by Licensee or its parent, subsidiaries, partners,
joint ventures, and/or affiliates, and/or Licensee's sub-licensees.
THREE LICENSED SUB-PARTS. During the Design-In Period, and for each Measurement
Period following the Design-In Period, the Royalty Fee is equal to the greater
of (1) [*] of each Royalty Bearing Unit having three Licensed Sub-Parts Shipped
by Licensee or its parent, subsidiaries, partners, joint ventures, and/or
affiliates, and/or Licensee's sub-licensees, during each Assessment Period of
this Agreement, or (2) the Minimum Royalty Fee defined below. Notwithstanding
(1) and (2), the Royalty Fee [*] for each Royalty Bearing Unit having three
Licensed Sub-Parts Shipped by Licensee or its parent, subsidiaries, partners,
joint ventures, and/or affiliates, and/or Licensee's sub-licensees.
FOUR OR MORE LICENSED SUB-PARTS. During the Design-In Period, and for each
Measurement Period following the Design-In Period, the Royalty Fee is equal to
the greater of (1) [*] of each Royalty Bearing Unit having four or more Licensed
Sub-Parts Shipped by Licensee or its parent, subsidiaries, partners, joint
ventures, and/or affiliates, and/or Licensee's sub-licensees, during each
Assessment Period of this Agreement, or (2) the Minimum Royalty Fee defined
below. Notwithstanding (1) and (2), the Royalty Fee [*] for each Royalty Bearing
Unit having four or more Licensed Sub-Parts Shipped by Licensee or its parent,
subsidiaries, partners, joint ventures, and/or affiliates, and/or Licensee's
sub-licensees.
Further to the above, during the Design-In Period, and for each Measurement
Period following the Design-In Period, the Royalty Fee for each Licensed Product
that includes network interface card (NIC) functionality Shipped by Licensee or
its parent, subsidiaries, partners, joint ventures, and/or affiliates, and/or
Licensee's sub-licensees shall be [*] Licensee's stand-alone commercial NIC(s)
that has/have a substantially equivalent technical specification as the NIC
functionality in the respective Licensed Product, if such stand-alone commercial
NIC(s) is/are being commercially Shipped by Licensee during the applicable
Measurement Period, or [*] the Licensed Product if Licensee is not commercially
Shipping any stand-alone commercial NIC(s) that has/have a substantially
equivalent technical specification as the NIC functionality in the Licensed
Product during the applicable Measurement Period.
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the omitted portion.
139
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In the event that this Agreement is terminated, any portion of the Royalty Fee
not already paid to ParkerVision will immediately become due and payable to
ParkerVision.
MINIMUM ROYALTY FEE.
[*] Royalty Bearing Units Shipped by Licensee and/or its sub-licensees, the
Minimum Royalty Fee is [*] per Royalty Bearing Unit Shipped by Licensee and/or
its sub-licensees to any Recipient.
For all Royalty Bearing Units Shipped by Licensee in excess of [*] Royalty
Bearing Units Shipped by Licensee and/or its sub-licensees, the Minimum Royalty
Fee is [*] per Licensed Part and/or Licensed Core Shipped by Licensee to any
Recipient, and [*] per Licensed Product Shipped by Licensee to any Recipient.
For all Royalty Bearing Units Shipped by Licensee's sub-licensees in excess of
[*] Royalty Bearing Units Shipped by Licensee and/or its sub-licensees, the
Minimum Royalty Fee is [*] per Royalty Bearing Unit Shipped by Licensee's
sub-licensees to any Recipient.
Licensee may allocate the [*] Royalty Bearing Units each having a Minimum
Royalty Fee of [*] over [*] Royalty Bearing Units Shipped by Licensee and/or its
sub-licensees, provided that Shipment of [*] Royalty Bearing Units occurs within
the first [*] years of [*].
In no event shall the Minimum Royalty Fee paid to ParkerVision by Licensee
during [*] be less than the fees specified in Sections 2.3.1.1 and 2.3.1.2. In
the event that this Agreement is terminated prior to the end of [*], and during
the first Measurement Period, then any portion of the fee specified in Section
2.3.1.1 not already paid to ParkerVision will immediately become due and payable
to ParkerVision. In the event that this Agreement is terminated prior to the end
of [*], and during or after the second Measurement Period, then any portion of
the fee specified in Sections 2.3.1.1 and 2.3.1.2 not already paid to
ParkerVision will immediately become due and payable to ParkerVision.
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the Commission. Confidential treatment has been requested with respect to
the omitted portion.
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EXHIBIT F - MUTUAL NON-DISCLOSURE AGREEMENT
141
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EXHIBIT G - INDIVIDUAL NON-DISCLOSURE AGREEMENT FORM
142
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EXHIBIT H - PERSONS HAVING ACCESS TO THE PARKERVISION INTELLECTUAL PROPERTY POOL
[*]
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the Commission. Confidential treatment has been requested with respect to
the omitted portion.
143
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EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 (No. 333-17683) and the Registration Statements on Form
S-8 (Nos. 33-93658 and 333-62497) of ParkerVision, Inc. of our report dated
March 10, 2000 relating to the financial statements and financial statement
schedules which appears in the Form 10-K.
PricewaterhouseCoopers LLP
Jacksonville, Florida
March 29, 2000
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EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K into the Company's
previously filed Registration Statement File Nos. 33-93658, 333-62497, and
333-17683.
Arthur Andersen LLP
Jacksonville, Florida
March 27, 2000
145
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 2,128,742
<SECURITIES> 17,530,436
<RECEIVABLES> 913,940
<ALLOWANCES> 37,308
<INVENTORY> 3,922,916
<CURRENT-ASSETS> 25,337,510
<PP&E> 7,300,086
<DEPRECIATION> 4,015,331
<TOTAL-ASSETS> 32,771,418
<CURRENT-LIABILITIES> 2,604,951
<BONDS> 0
117,900
0
<COMMON> 0
<OTHER-SE> 30,018,423
<TOTAL-LIABILITY-AND-EQUITY> 32,771,418
<SALES> 10,549,081
<TOTAL-REVENUES> 10,549,081
<CGS> 6,534,328
<TOTAL-COSTS> 6,534,328
<OTHER-EXPENSES> 14,981,023
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (9,741,392)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,741,392)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,741,392)
<EPS-BASIC> (0.83)
<EPS-DILUTED> (0.83)
</TABLE>
EXHIBIT 99.1
RISK FACTORS
PARKERVISION HAS A HISTORY OF LOSSES. ParkerVision has had losses in each year
since its inception in 1989. There can be no assurances that revenues from the
current CameraMan(R) or PVTV(TM) products, D2D(TM) technology or products and
technologies being developed will produce revenues that will cover operational
expenses or result in net profits.
PARKERVISION MAY REQUIRE ADDITIONAL CAPITAL TO FUND ITS OPERATIONS AND RESEARCH
AND DEVELOPMENT. Because ParkerVision has had net losses and positive cash flow
has not been generated from operations, it has funded its operating activities
to date from the sale of equity securities. In addition, the Company's business
plan for 2000 requires significant expenditures. Although ParkerVision had
working capital of $22,732,559 at December 31, 1999, it will require additional
capital in the future which may be in the form of loans or additional sales of
equity securities. A loan may result in the imposition of operational
limitations and will have payment obligations that may be burdensome to
ParkerVision. The sale of equity securities will result in dilution to the
current stockholders ownership of ParkerVision. ParkerVision does not have any
plans or arrangements for additional financing at this time.
MICROELECTRONIC HARDWARE AND SOFTWARE IS SUBJECT TO RAPID TECHNOLOGICAL CHANGES
THAT REQUIRE PARKERVISION TO DEVELOP AND MARKET ENHANCEMENTS TO CURRENT PRODUCTS
AND DEVELOP NEW PRODUCTS. Because of the rapid technological development that
regularly occurs in the microelectronics industry, ParkerVision must continually
devote substantial resources to developing and introducing new product offerings
and creating new products. This is necessary to establish and increase market
share and grow revenues. If another company offers better products, or
ParkerVision development lags, the competitive position and revenues of
ParkerVision may be adversely affected.
PARKERVISION HAS EXPENDED SIGNIFICANT RESOURCES FOR RESEARCH AND DEVELOPMENT OF
NEW PRODUCTS AND TECHNOLOGY THAT MAY NOT BE COMMERCIALLY ACCEPTED. ParkerVision
devotes substantial resources to research and development. There can be no
assurance that the results of the research and the product development will
produce commercially viable products and technologies. If new products and
technologies are not commercially accepted, the funds expended will not be
recoverable, and ParkerVision's competitive position and revenues may be
adversely affected.
PARKERVISION NEEDS TO ACHIEVE MARKET ACCEPTANCE OF ITS D2D(TM) TECHNOLOGY. The
ParkerVision wireless technology represents a significant change in the
architecture of wireless radio-frequency communications. To achieve market
acceptance, the Company will need to demonstrate the benefits of its technology
over more traditional solutions through the development of application solutions
and aggressive marketing to wireless products companies.
IF PARKERVISION'S PATENTS DO NOT PROVIDE THE ANTICIPATED MARKET PROTECTIONS, ITS
COMPETITIVE POSITION WILL BE ADVERSELY AFFECTED. ParkerVision has a number of
patents and patent applications relating to its microelectronic technologies.
ParkerVision relies on these to provide competitive advantage. It believes that
many of these are for entirely new technologies. If the patents are not issued
or issued patents are later shown not to be as broad as currently believed or
otherwise challenged such that some or all of the protection is lost,
ParkerVision will suffer adverse effects from the loss of competitive advantage
and its ability to offer unique products and technologies. Concomitantly, there
would be an adverse impact on its financial condition and business prospects.
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PARKERVISION WIRELESS COMMUNICATIONS USE INFRARED AND RADIO FREQUENCY TECHNOLOGY
SUBJECT TO REGULATION BY THE FEDERAL COMMUNICATIONS COMMISSION. ParkerVision
must obtain licenses and approvals from the FCC for the operation of its
products. ParkerVision may also have to obtain licenses and approvals from
foreign governments where its products are sold overseas. The inability to
obtain any required licenses and approvals, or a change in current regulation
that impacts issued licenses and approvals, will have an adverse impact on the
ability of ParkerVision to market its products. Therefore, there will be an
adverse impact on the revenues and business prospects of ParkerVision.
THE CAMERAMAN(R) AND PVTV(TM) PRODUCTS COMPETE WITH OTHER PRODUCTS. The
videoconferencing and studio production industries are highly competitive. There
are many other companies that offer products that compete with those of
ParkerVision. ParkerVision, however, believes that no one competing product
offers the range of options and capabilities of the CameraMan(R) and PVTV(TM)
products in the tasks for which these products have been designed. The principal
competitors include Sony Corporation, Panasonic Corporation and Tektronics. Each
of these companies are well established, have substantially greater financial
and other resources and have established reputations or success in the
development, sale and service of products. They also have significant
advertising budgets that permit them to implement extensive advertising and
promotional campaigns in response to competitors. If these or other companies
improve or change their products or launch significant marketing efforts in the
market segments in which ParkerVision operates, ParkerVision may lose market
share.
PARKERVISION EXPECTS COMPETITION IN CONNECTION WITH ITS DIRECT2DATA(TM)
TECHNOLOGY. Although the D2D(TM) technology of ParkerVision is believed to be a
significant technological advancement, it will face competition from older
technological solutions until the ParkerVision products are more widely
acknowledged and utilized. This technology may also face competition from other
technological advances which are under development and have not yet emerged.
PARKERVISION PURCHASES CRITICAL COMPONENTS FOR ITS CAMERAMAN(R) AND PVTV(TM)
SYSTEMS FROM SINGLE SOURCE SUPPLIERS. To change suppliers for any one of these
components would require modifications to existing systems. If ParkerVision is
unable to obtain its components from the current sources, its business would be
disrupted, and it would have to expend some of its resources to modify its
products.
IF PARKERVISION LOSES ITS SIGNIFICANT CUSTOMER FOR CAMERAMAN(R) CAMERAS, ITS
REVENUES WILL BE SIGNIFICANTLY AFFECTED. Vtel Corporation purchased
approximately 43% of the CameraMan(R) camera systems sold in 1999, which
represented 29% of ParkerVision's revenues for 1999. Vtel Corporation was also a
significant customer in each of 1998 and 1997. These CameraMan(R) systems are
used primarily in the distance education segment of the video conferencing
market. The loss of this customer will severely impact revenues of ParkerVision,
and the ParkerVision presence in this particular market would be diminished.
EFFECT OF OUTSTANDING OPTIONS AND WARRANTS ON MARKET PRICE AND LIQUIDITY.
ParkerVision has outstanding options and warrants to purchase 4,020,655 shares
of its common stock. This represents about 25% of the common stock outstanding
on a fully diluted basis. All of these have exercise prices at less than the
current market price of the common stock. Most of the underlying common stock is
registered for sale by ParkerVision to the option holder or for public sale by
the security holder. The amount of common stock available for the sales may have
an adverse impact on ParkerVision's ability to raise capital in the public
market and may affect the price and liquidity of
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the common stock in the public market. In addition, the issuance of these shares
of common stock will have a dilutive effect on the current stockholders
ownership of ParkerVision.
THE SALE OF A SUBSTANTIAL NUMBER OF SHARES OF THE COMMON STOCK IN THE PUBLIC
MARKET COULD ADVERSELY AFFECT THE MARKET PRICE. Substantially all of the
currently outstanding shares of common stock have been registered for the sale
under the Securities Act, are eligible for sale under an exemption from the
registration requirements of the Securities Act or are subject to registration
rights which require ParkerVision to register the shares in the future. Sales or
the expectation of sales, of a substantial number of shares of common stock in
the public market could adversely affect the prevailing market price of the
common stock.
THE MARKET OF THE PARKERVISION COMMON STOCK HAS FLUCTUATED SIGNIFICANTLY,
SOMETIMES IN A MANNER UNRELATED TO PARKERVISION'S PERFORMANCE. The market price
of the common stock has varied in response to various factors and events. These
include:
o the number of shares of common stock being sold and purchased in the
marketplace;
o variations in operating results;
o rumors of significant events which can circulate quickly in the
marketplace, particularly over the internet; and
o the difference between actual results and the results expected by investors
and analysts.
Since the common stock has been publicly traded, its market price has fluctuated
over a wide range and ParkerVision expects it to continue to do so in the
future. In addition, the stock market had experienced broad price and volume
fluctuations in recent years that have often been unrelated to the operating
performance of companies. These broad market fluctuations also may adversely
affect the market price of the common stock.
PROVISIONS IN THE CERTIFICATE OF THE INCORPORATION AND BY-LAWS COULD HAVE
AFFECTS THAT CONFLICT WITH THE INTEREST OF STOCKHOLDERS. Some provisions in the
certificate of incorporation and by-laws of ParkerVision could make it more
difficult for a third party to acquire control. For example, the board of
directors has the ability to issue preferred stock without stockholder approval
and there are pre-notification provisions for director nominations and proposals
by stockholders under the by-laws.
March 10, 2000
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