UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from ________to____________
PARKERVISION, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2971472
(State or other jurisdiction of I.R.S. Employer ID No.
incorporation or organization)
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8493 Baymeadows Way
Jacksonville, Florida 32256
(904) 737-1367
(Address of principal executive offices)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
APPLICABLE ONLY TO CORPORATE ISSUERS
As of October 25, 2002, 13,987,529 shares of the Issuer's Common Stock, $.01 par value, were outstanding.
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
PARKERVISION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
September 30,
2002 December 31,
ASSETS (unaudited) 2001
------ ------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 2,128,897 $ 4,563,535
Short-term investments 17,939,217 26,908,362
Accounts receivable, net of allowance for doubtful
accounts of $115,289 and $84,103 at September 30,
2002 and December 31, 2001, respectively 1,925,120 946,635
Interest and other receivables 214,295 406,133
Inventories, net 3,910,804 4,319,539
Prepaid expenses and other 1,364,214 2,642,966
------------ ------------
Total current assets 27,482,547 39,787,170
PROPERTY AND EQUIPMENT, net 6,538,548 7,003,465
OTHER ASSETS, net 8,368,819 7,383,169
------------ ------------
Total assets $ 42,389,914 $ 54,173,804
============ ============
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The accompanying notes are an integral part of these balance sheets.
PARKERVISION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
September 30,
2002 December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY (unaudited) 2001
------------------------------------ ------------ ------------
CURRENT LIABILITIES:
Accounts payable $ 1,098,992 $ 938,488
Accrued expenses:
Salaries and wages 846,928 1,184,780
Warranty reserves 253,347 212,107
Other accrued expenses 343,209 274,739
Deferred revenue 794,370 985,612
------------ ------------
Total current liabilities 3,336,846 3,595,726
DEFERRED INCOME TAXES 30,748 30,748
COMMITMENTS AND CONTINGENCIES
(Notes 5, 7 and 8)
------------ ------------
Total liabilities 3,367,594 3,626,474
------------ ------------
SHAREHOLDERS' EQUITY:
Convertible preferred stock, $1 par value,
5,000,000 shares authorized, 13,678 and
27,356 shares issued and outstanding at
September 30, 2002 and December 31, 2001,
respectively 13,678 27,356
Common stock, $.01 par value, 100,000,000 shares
authorized, 13,987,529 and 13,913,806 shares
issued and outstanding at September 30, 2002
and December 31, 2001, respectively 139,875 139,138
Warrants outstanding 16,807,505 16,807,505
Additional paid-in capital 90,411,656 89,804,504
Accumulated other comprehensive income 356,954 151,359
Accumulated deficit (68,707,348) (56,382,532)
------------ ------------
Total shareholders' equity 39,022,320 50,547,330
------------ ------------
Total liabilities and shareholders' equity $ 42,389,914 $ 54,173,804
============ ============
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The accompanying notes are an integral part of these statements.
PARKERVISION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended Nine months ended
September 30, September 30,
---------------------------- ----------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
Product revenue, net $ 1,956,242 $ 2,038,235 $ 7,467,032 $ 6,249,552
Support and other services revenue, net 324,354 280,790 863,679 713,877
------------ ------------ ------------ ------------
Total net revenues 2,280,596 2,319,025 8,330,711 6,963,429
------------ ------------ ------------ ------------
Cost of goods sold - products 1,244,385 1,289,152 4,293,539 3,726,340
Cost of goods sold - support and other services 288,710 295,612 886,308 794,289
------------ ------------ ------------ ------------
Total cost of goods sold 1,533,095 1,584,764 5,179,847 4,520,629
------------ ------------ ------------ ------------
Gross margin 747,501 734,261 3,150,864 2,442,800
------------ ------------ ------------ ------------
Research and development expenses 3,539,049 3,052,520 10,193,682 9,292,526
Marketing and selling expenses 707,131 1,000,746 2,528,586 3,055,029
General and administrative expenses 1,141,351 1,229,159 3,426,597 3,614,443
Loss (gain) on disposal of property and equipment (448) 539 51,643 2,563
------------ ------------ ------------ ------------
Total operating expenses 5,387,083 5,282,964 16,200,508 15,964,561
------------ ------------ ------------ ------------
Loss from operations (4,639,582) (4,548,703) (13,049,644) (13,521,761)
Interest and other income 239,260 420,111 724,828 1,352,856
------------ ------------ ------------ ------------
Net loss $ (4,400,322) $ (4,128,592) $(12,324,816) $(12,168,905)
============ ============ ============ ============
Basic and diluted net loss per common share $ (0.31) $ (0.30) $ (0.88) $ (0.89)
============ ============ ============ ============
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The accompanying notes are an integral part of these statements.
PARKERVISION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,400,322) $ (4,128,592) $(12,324,816) $(12,168,905)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 758,535 731,805 2,192,822 2,073,380
Amortization of discounts on investments 88,476 13,153 214,611 13,153
Provision for obsolete inventories 75,000 130,000 225,000 190,000
Stock compensation 290,816 333,270 984,575 1,445,298
Gain on sale of investments (88,523) 0 (102,772) 0
(Gain) loss on disposal of equipment (448) 0 51,643 0
Changes in operating assets and liabilities:
Accounts receivable, net (33) 125,301 (978,485) 991,357
Inventories 274,217 (248,043) (116,373) (872,851)
Prepaid and other assets (228,643) (362,335) 83,808 213,447
Accounts payable and accrued expenses 176,228 83,188 (67,638) 117,403
Deferred revenue (68,821) 239,890 (191,242) 156,141
------------ ------------ ------------ ------------
Total adjustments 1,276,804 1,046,229 2,295,949 4,327,328
------------ ------------ ------------ ------------
Net cash used in operating activities (3,123,518) (3,082,363) (10,028,867) (7,841,577)
------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments available for sale (7,689,821) (11,898,579) (15,499,492) (11,898,579)
Proceeds from sale and maturity of investments 6,902,572 1,002,141 24,562,394 5,002,141
Proceeds from sale of property and equipment 460 0 7,660
Purchase of property and equipment (120,875) (992,014) (797,611) (1,703,108)
Payment for patent costs (383,859) (142,357) (1,161,947) (1,287,435)
------------ ------------ ------------ ------------
Net cash provided by (used in)
investing activities (1,291,523) (12,030,809) 7,111,004 (9,886,981)
------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 0 0 2,500,000
Proceeds from exercise of options and warrants 100,000 436,932 483,225 3,747,040
------------ ------------ ------------ ------------
Net cash provided by 100,000 436,932 483,225 6,247,040
financing activities
------------ ------------ ------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS
(4,315,041) (14,676,240) (2,434,638) (11,481,518)
CASH AND CASH EQUIVALENTS, beginning of period
6,443,938 34,566,626 4,563,535 31,371,904
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 2,128,897 $ 19,890,386 $ 2,128,897 $ 19,890,386
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The accompanying notes are an integral part of these statements.
PARKERVISION, INC. AND SUBSIDIARY
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The accompanying unaudited consolidated financial statements of ParkerVision, Inc. and subsidiary (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. All normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the financial condition and results of operations have been included. Operating results for the three and nine month periods ended September 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002.
These interim consolidated financial statements should be read in conjunction with the Company's latest Annual Report on Form 10-K for the year ended December 31, 2001. There have been no changes in accounting policies from those stated in the Annual Report on Form 10-K for the year ended December 31, 2001.
COMPREHENSIVE INCOME. The Company's other comprehensive income is comprised of net unrealized gains (losses) on investments available-for-sale which are included in accumulated other comprehensive income in the consolidated balance sheets. The Company's other comprehensive income for the three-month periods ended September 30, 2002 and 2001 was $164,152 and $222,206 respectively. The Company's total comprehensive loss for the three-month periods ended September 30, 2002 and 2001 was $(4,236,170) and $(3,906,386), respectively. The Company's other comprehensive income for the nine-month periods ended September 30, 2002 and 2001 was $205,595 and $318,846, respectively. The Company's total comprehensive loss for the nine-month periods ended September 30, 2002 and 2001 was $(12,119,221) and $(11,850,059), respectively.
STATEMENTS OF CASH FLOWS. The Company paid no cash for income taxes or interest for the three or nine-month periods ended September 30, 2002 and 2001. For the three month period ended September 30, 2002 the Company capitalized inventory used in the business in the amount of $8,634 to property and equipment. For the nine month period ended September 30, 2002 the Company capitalized inventory used in the business in the amount of $300,108 to property and equipment.
RECLASSIFICATIONS. Certain reclassifications have been made to the 2001 financial statements in order to conform to the 2002 presentation.
Basic loss per share is determined based on the weighted average number of common shares outstanding during each period. Diluted loss per share is the same as basic loss per share as all common share equivalents are excluded from the calculation, as their effect is anti-dilutive. The weighted average number of common shares outstanding for the three-month periods ended September 30, 2002 and 2001 is 13,976,225 and 13,890,327, respectively. The weighted average number of common shares outstanding for the nine-month periods ended September 30, 2002 and 2001 is 13,940,916 and 13,745,004, respectively. The total number of options and warrants to
purchase 6,307,700 and 5,742,910 shares of common stock that were outstanding at September 30, 2002 and 2001, respectively, were excluded from the computation of diluted earnings per share as the effect of these options and warrants would have been anti-dilutive.
Inventories consist of the following:
September 30, December 31,
2002 2001
------------ ------------
Purchased materials $ 2,458,447 $ 2,726,813
Work in process 94,781 169,248
Finished goods 798,545 887,081
Spare parts and demonstration inventory 1,102,529 1,515,967
------------ ------------
4,454,302 5,299,109
Less allowance for inventory obsolescence (543,498) (979,570)
------------ ------------
$ 3,910,804 $ 4,319,539
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Obsolete inventory that was specifically identified and included in the allowance for inventory obsolescence was removed from inventory and the respective allowance for inventory obsolescence as of September 30, 2002.
Other assets consist of the following:
September 30, December 31,
2002 2001
------------ ------------
Patents and copyrights $ 9,217,598 $ 8,055,651
Prepaid licensing fees 750,000 0
Other intangible assets 364,830 364,830
Deposits and other 214,809 208,128
Prepaid compensation 0 243,488
Noncompete agreement 0 31,250
------------ ------------
10,547,237 8,903,347
Less accumulated amortization (2,178,418) (1,520,178)
------------ ------------
$ 8,368,819 $ 7,383,169
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For the quarter ended September 30, 2002, three broadcast customers accounted for an aggregate of approximately 41% of the Company's total revenues. For the quarter ended September 30, 2001, one broadcast ownership group accounted for approximately 17% of the Company's total revenues. For the nine months ended September 30, 2002, two broadcast customers, McGraw-Hill Broadcasting Company, Inc. and LIN Television Corporation accounted for an aggregate of approximately 33% of the Company's total revenues. For the nine months ended September 30, 2001, no one customer accounted for over 10% of the Company's total revenues. Three broadcast customers accounted for approximately 40% of accounts receivable at September 30, 2002. VTEL and one broadcast customer accounted for approximately 30% of accounts receivable at September 30, 2001. The Company closely monitors extensions of credit and has never experienced significant credit losses.
The Company's segments include the Video Products Division ("Video Division") and the Wireless Technology Division ("Wireless Division"). Segment results are as follows (in thousands):
Three months ended Nine months ended
------------------------ ------------------------
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
---------- ---------- ---------- ----------
NET SALES:
Video Division $ 2,281 $ 2,319 $ 8,331 $ 6,963
Wireless Division 0 0 0 0
---------- ---------- ---------- ----------
Total net sales $ 2,281 $ 2,319 $ 8,331 $ 6,963
========== ========== ========== ==========
LOSS FROM OPERATIONS:
Video Division $ (691) $ (975) $ (1,682) $ (2,222)
Wireless Division (3,949) (3,574) (11,368) (11,300)
---------- ---------- ---------- ----------
Total loss from operations $ (4,640) $ (4,549) $ (13,050) $ (13,522)
========== ========== ========== ==========
DEPRECIATION:
Video Division $ 140 $ 139 $ 407 $ 411
Wireless Division 377 360 1,096 1,041
---------- ---------- ---------- ----------
Total depreciation $ 517 $ 499 $ 1,503 $ 1,452
========== ========== ========== ==========
AMORTIZATION OF IDENTIFIABLE
INTANGIBLES AND OTHER ASSETS:
Video Division $ 36 $ 26 $ 97 $ 68
Wireless Division 205 206 592 553
---------- ---------- ---------- ----------
Total amortization $ 241 $ 232 $ 689 $ 621
========== ========== ========== ==========
CAPITAL EXPENDITURES:
Video Division $ 33 $ 72 $ 269 $ 250
Wireless Division 68 920 503 1,439
Corporate 20 0 26 14
---------- ---------- ---------- ----------
Total capital expenditures $ 121 $ 992 $ 798 $ 1,703
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September 30, December 31,
2002 2001
---------- ----------
ASSETS:
Video Division $ 7,613 $ 6,843
Wireless Division 13,662 14,229
Corporate 21,115 33,102
---------- ----------
Total assets $ 42,390 $ 54,174
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Corporate assets consist of the following:
September 30, December 31,
2002 2001
---------- ----------
Cash and investments $ 20,068 $ 31,466
Interest and other receivables 187 366
Prepaid expenses 238 599
Property and equipment, net 462 544
Other assets 160 127
---------- ----------
Total assets $ 21,115 $ 33,102
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For the three month period ended September 30, 2002 the Company granted stock options under the 1993 Stock Plan (the "1993 Plan") to purchase an aggregate of 47,500 shares of its common stock at exercise prices ranging from $13.64 to $18.50 per share in connection with hiring and retention of employees. These options vest ratably over five years and expire five years from the date they become vested.
The Company also granted a stock option under the 2000 Performance Equity Plan (the "2000 Plan") to an officer and director of the Company to purchase an aggregate of 50,000 shares of its common stock at an exercise price of $16.61 per share. These options vest ratably over five years and expire five years from the date they become vested.
As of September 30, 2002 options to purchase 3,029,340 and 394,886 shares of common stock were available for future grants under the 2000 and 1993 Plans, respectively.
In March 2000, the Company issued an aggregate of 114,019 shares of Series A, B, C and D Preferred Stock, $1 par value, $25 stated value, for the acquisition of substantially all of the assets of Signal Technologies, Inc., ("STI") as well as signing bonuses and compensation under employment contracts for certain former employees of STI.
In March 2001, the Series A and D preferred shares were converted into approximately 86,000 shares of common stock. In March 2002, the Series B shares were converted into approximately 16,600 shares of common stock. The Series C Preferred Stock will automatically convert to common stock on March 10, 2003.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Average Selling Price
Number of Systems Sold per System
------------------------ ------------------------
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
---------- ---------- ---------- ----------
PVTV(TM) SYSTEMS
Three month period 4 3 $ 246,000 $ 222,000
Nine month period 14 7 $ 348,000 $ 209,000
CAMERA SYSTEMS
Three month period 96 204 $ 10,100 $ 6,800
Nine month period 322 653 $ 8,100 $ 7,400
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The increases in PVTV(TM) revenues for the three and nine month periods were due to increased system sales as the PVTV(TM) product continued to gain market acceptance among broadcasters and increases in the average selling price per system due to the mix of product sold to broadcast customers in larger markets.
Camera revenues have declined due to declining unit sales of the Company's single chip product line. Earlier, in 2002, the Company announced the discontinuation of its single chip camera product line because of supply issues, declining demand and the Company's increasing focus on product development and marketing of its PVTV(TM) broadcast systems. The decline in camera unit sales has been somewhat offset by an increase in the average selling price per system due to a shift in the product mix towards the higher priced three-chip cameras.
The increase in support revenue was due to revenues from training and support for new PVTV(TM) systems sold and recurring support contracts related to the Company's growing installed base of PVTV(TM) systems.
ITEM 4. CONTROLS AND PROCEDURES.
Based on the evaluation conducted by the Chief Executive Officer ("CEO") and Chief Accounting Officer ("CAO"), as of a date within 90 days of the filing date of this quarterly report ("Evaluation Date"), of the effectiveness of the Company's disclosure controls and procedures, the CEO and CAO concluded that, as of the Evaluation Date, (1) there were no significant deficiencies or material weaknesses in the Company's disclosure controls and procedures, (2) there were no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the Evaluation Date and (3) no corrective actions were required to be taken.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters will not have a material adverse effect on its financial position, results of operations or liquidity.
ITEM 2. CHANGES IN SECURITIES.
Consideration received and Exemption If option, warrant or
description of underwriting or from convertible security,
Date of sale Title of Number other discounts to market price registration terms of exercise or
security sold afforded to purchasers claimed conversion
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7/02 - Options to 47,500 Option granted - no 4(2) Expire five years from
9/02 purchase consideration received by date vested, options
common stock Company until exercise vest ratably over five
granted to years at exercise prices
employees ranging from $13.64 to
$18.50 per share
7/31/02 Options to 50,000 Option granted - no 4(2) Expire five years from
purchase consideration received by date vested, options
common stock Company until exercise vest ratably over five
granted to years at an exercise
an officer price of $16.61 per
and director share
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable
ITEM 5. OTHER INFORMATION. Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS.
10.1 Form of Indemnification Agreement
99.1 Risk Factors
(B) REPORTS ON FORM 8-K. Not applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ParkerVision, Inc. Registrant
November 13, 2002 By: /s/ Jeffrey L. Parker
----------------------
Jeffrey L. Parker
Chairman and Chief Executive Officer
November 13, 2002 By: /s/ Cynthia L. Poehlman
------------------------
Cynthia L. Poehlman
Chief Accounting Officer
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FORM OF CERTIFICATION
PURSUANT TO RULE 13A-14 AND 15D-14
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
CERTIFICATIONS
I, Jeffrey L. Parker, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of ParkerVision, Inc.;
2. based on my knowledge, this Quarterly Report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report;
3. based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this Quarterly Report (the "Evaluation Date"); and
(c) presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this Quarterly Report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: November 14, 2002 /s/ Jeffrey L. Parker
----------------- ---------------------
Name: Jeffrey L. Parker
Title: Chairman and Chief Executive Officer
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FORM OF CERTIFICATION
PURSUANT TO RULE 13A-14 AND 15D-14
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
CERTIFICATIONS
I, Cynthia L. Poehlman, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of ParkerVision, Inc.;
2. based on my knowledge, this Quarterly Report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report;
3. based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this Quarterly Report (the "Evaluation Date"); and
(c) presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this Quarterly Report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: November 14, 2002 /s/ Cynthia L. Poehlman
----------------- -----------------------
Name: Cynthia L. Poehlman
Title: Chief Accounting Officer
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CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ParkerVision, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.
November 14, 2002 By: /s/ Jeffrey L. Parker
----------------------
Jeffrey L. Parker
Chairman and Chief Executive Officer
November 14, 2002 By: /s/ Cynthia L. Poehlman
------------------------
Cynthia L. Poehlman
Chief Accounting Officer
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10.1
This Agreement, made and entered into effective as of the ___th day of ______, 2002 ("Agreement"), by and between ParkerVision, Inc., a Florida corporation ("Corporation"), and ________________ ("Indemnitee"):
WHEREAS, highly competent persons recently have become more reluctant to serve publicly-held corporations as directors, officers, or in other capacities, unless they are provided with better protection from the risk of claims and actions against them arising out of their service to and activities on behalf of such corporation; and
WHEREAS, the current impracticability of obtaining adequate insurance and the uncertainties related to indemnification have increased the difficulty of attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Corporation ("Board") has determined that the inability to attract and retain such persons is detrimental to the best interests of the Corporation's stockholders and that such persons should be assured that they will have better protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the Corporation to obligate itself contractually to indemnify such persons to the fullest extent permitted by applicable law so that such persons will serve or continue to serve the Corporation free from undue concern that they will not be adequately indemnified; and
WHEREAS, this Agreement is a supplement to and in furtherance of Article VII of the By-laws of the Corporation, and Section 6.4 of the Articles of Incorporation of the Corporation, as amended, and any resolutions adopted pursuant thereto and shall neither be deemed to be a substitute therefor nor to diminish or abrogate any rights of Indemnitee thereunder; and
WHEREAS, Indemnitee is willing to serve and to take on additional service for or on behalf of the Corporation on the condition that he or she be indemnified according to the terms of this Agreement;
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Corporation and Indemnitee do hereby covenant and agree as follows:
1.1 "Change in Control" means a change in control of the Corporation occurring after the date hereof of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended ("Act"), whether or not the Corporation is then subject to such reporting requirement provided, however, that, without limitation, such a Change in
Control shall be deemed to have occurred if after the date hereof (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Act) is or becomes "beneficial owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Corporation representing 20% or more of the combined voting power of the then outstanding securities of the Corporation without the prior approval of at least two-thirds of the members of the Board in office immediately prior to such person attaining such percentage interest; (ii) the Corporation is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board (including for this purpose any new director whose election or nomination for election by the Corporation's stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board.
1.2 "Corporate Status" means the status of a person who is or was a director, officer, employee, agent or fiduciary of the Corporation or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Corporation.
1.3 "Disinterested Director" means a director of the Corporation who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.
1.4 "Expenses" means all reasonable attorneys' fees, retainers, court costs (including trial and appeals), transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, appealing, preparing to appeal, investigating, or being or preparing to be a witness in a Proceeding.
1.5 "Independent Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Corporation or Indemnitee in any other matter material to either such party, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Corporation or Indemnitee in an action to determine Indemnitee's rights under this Agreement. Independent Counsel shall be selected by (a) the Disinterested Directors or (b) a committee of the Board consisting of two or more Disinterested Directors or if (a) and (b) above are not possible, then by a majority of the full Board.
1.6 "Proceeding" means any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding,
whether civil, criminal, administrative or investigative, except one initiated by an Indemnitee pursuant to Section 11 of this Agreement to enforce his rights under this Agreement.
Indemnitee agrees to serve as a director of the Corporation. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law).
The Corporation shall indemnify, and advance Expenses to, Indemnitee as provided in this Agreement to the fullest extent permitted by applicable law in effect on the date hereof and to such greater extent as applicable law may thereafter from time to time permit. The rights of Indemnitee provided under the preceding sentence shall include, but shall not be limited to, the rights set forth in the other Sections of this Agreement.
Indemnitee shall be entitled to the rights of indemnification provided in this Section if, by reason of his Corporate Status, he or she is, was or is threatened to be made, a party to any threatened, pending or completed Proceeding, other than a Proceeding by or in the right of the Corporation. Pursuant to this Section, Indemnitee shall be indemnified against Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with any such Proceeding or any claim, issue or matter therein, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal Proceeding, had no reasonable cause to believe his conduct was unlawful.
Indemnitee shall be entitled to the rights of indemnification provided in this Section if, by reason of his Corporate Status, he or she is, was or is threatened to be made, a party to any threatened, pending or completed Proceeding brought by or in the right of the Corporation to procure a judgment in its favor. Pursuant to this Section, Indemnitee shall be indemnified against Expenses and amounts paid in settlement (such settlement amounts not to exceed, in the judgment of the Board, the estimated expense of litigating the Proceeding to conclusion) actually and reasonably incurred by him or on his behalf in connection with any such Proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation. Notwithstanding the foregoing, no indemnification against such Expenses or amounts paid in settlement shall be made in respect of any claim, issue or matter in any such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Corporation if applicable law prohibits such indemnification unless the court in which such Proceeding shall have been brought, was brought or is pending, shall determine that
indemnification against Expenses or amounts paid in settlement may nevertheless be made by the Corporation.
Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he or she shall be indemnified against all Expenses (and, when eligible hereunder, amounts paid in settlement) actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Corporation shall indemnify Indemnitee against all Expenses (and, when eligible hereunder, amount paid in settlement) actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section, the term "successful, on the merits or otherwise," shall include, but not be limited to, (i) any termination, withdrawal, or dismissal (with or without prejudice) of any Proceeding against the Indemnitee without any express finding of liability or guilt against him, and (ii) the expiration of 90 days after the making of any claim or threat of a Proceeding without the institution of the same and without any promise or payment made to induce a settlement.
Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding, he or she shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.
The Corporation shall advance all Expenses, judgments, penalties, fines and, when eligible hereunder, amounts paid in settlement, incurred by or on behalf of Indemnitee in connection with any Proceeding within ten (10) days after the receipt by the Corporation of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses, judgments, penalties, fines and amounts paid in settlement, incurred by Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses, judgments, penalties, fines and amounts paid in settlement advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses, judgments, penalties, fines and, when eligible hereunder, amounts paid in settlement.
9.1 To obtain indemnification under this Agreement in connection with any Proceeding, and for the duration thereof, Indemnitee shall submit to the Corporation a
written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Corporation shall, promptly upon receipt of any such request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.
9.2 Upon written request by Indemnitee for indemnification pursuant to
Section 9.1 hereof, a determination, if required by applicable law, with respect
to Indemnitee's entitlement thereto shall be made in such case: (i) if a Change
in Control shall have occurred, by Independent Counsel (unless Indemnitee shall
request that such determination be made by the Board or the stockholders, in
which case in the manner provided for in clauses (ii) or (iii) of this Section
9.2) in a written opinion to the Board, a copy of which shall be delivered to
Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by the
Board by a majority vote of a quorum consisting of Disinterested Directors, or
(B) if a quorum of the Board consisting of Disinterested Directors is not
obtainable, by a majority of a committee of the Board consisting of two or more
Disinterested Directors, or (C) by Independent Counsel in a written opinion to
the Board, a copy of which shall be delivered to Indemnitee, or (D) by the
stockholders of the Corporation, by a majority vote of a quorum consisting of
stockholders who are not parties to the proceeding, or if no such quorum is
obtainable, by a majority vote of stockholders who are not parties to such
proceeding; or (iii) as provided in Section 10.2 of this Agreement. If it is so
determined that Indemnitee is entitled to indemnification, payment to Indemnitee
shall be made within ten (10) days after such determination. Indemnitee shall
cooperate with the person, persons or entity making such determination with
respect to Indemnitee's entitlement to indemnification, including providing to
such person, persons or entity upon reasonable advance request any documentation
or information which is not privileged or otherwise protected from disclosure
and which is reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys' fees and
disbursements) incurred by Indemnitee in so cooperating with the person, persons
or entity making such determination shall be borne by the Corporation
(irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Corporation hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
9.3 If a Change of Control shall have occurred, Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board), and Indemnitee shall give written notice to the Corporation advising it of the identity of Independent Counsel so selected. In either event, Indemnitee or the Corporation, as the case may be, may, within seven days after such written notice of selection shall have been given, deliver to the Corporation or to Indemnitee, as the case may be, a written objection to such selection. Such objection may be asserted only on the ground that Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in Section 1 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. If such written objection is made, Independent Counsel so selected may not serve as Independent Counsel unless and until a court has determined that such objection is without merit. If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 9.1
hereof, no Independent Counsel shall have been selected and not objected to, either the Corporation or Indemnitee may petition a court of competent jurisdiction, for resolution of any objection which shall have been made by the Corporation or Indemnitee to the other's selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by such court or by such other person as such court shall designate, and the person with respect to whom an objection is so resolved or the person so appointed shall act as Independent Counsel under Section 9.2 hereof. The Corporation shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with its actions pursuant to this Agreement, and the Corporation shall pay all reasonable fees and expenses incident to the procedures of this Section 9.3, regardless of the manner in which such Independent Counsel was selected or appointed. Upon the due commencement date of any judicial proceeding pursuant to Section 11.1(iii) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).
10.1 In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 9.1 of this Agreement, and the Corporation shall have the burden of proof to overcome that presumption by clear and convincing evidence in connection with the making by any person, persons or entity of any determination contrary to that presumption.
10.2 If the person, persons or entity empowered or selected under Section 9 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within thirty (30) days after receipt by the Corporation of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) prohibition of such indemnification under applicable law; provided, however, that such 30-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith require(s) such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, however, that the foregoing provisions of this Section 10.2 shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 9.2 of this Agreement and if (A) within 15 days after receipt by the Corporation of the request for such determination the Board has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within 75 days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within 15 days after such receipt for the purpose of making such determination, such meeting is held for such purpose within 60 days after having been so
called and such determination is made thereat, or (ii) if the determination of
entitlement to indemnification is to be made by Independent Counsel pursuant to
Section 9.2 of this Agreement. In connection with each meeting at which a
stockholder determination will be made, the Corporation shall solicit proxies
that expressly include a proposal to indemnify or reimburse the Indemnitee. The
Corporation shall afford the Indemnitee ample opportunity to present evidence of
the facts upon which the Indemnitee relies for indemnification in any
Corporation proxy statement relating to such shareholder determination. Subject
to the fiduciary duties of its members under applicable law, the Board will not
recommend against indemnification or reimbursement in any proxy statement
relating to the proposal to indemnify or reimburse the Indemnitee.
10.3 The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful.
For purposes of this Agreement, the Indemnitee shall be deemed to have
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, or, with respect to any
criminal Proceeding, to have had no reasonable cause to believe his conduct was
unlawful, if his action is based on (i) the records or books of account of the
Corporation, or another enterprise, including financial statements, (ii)
information supplied to him by the officers of the Corporation or another
enterprise in the course of their duties, (iii) the advice of legal counsel for
the Corporation or another enterprise, or of an independent certified public
accountant or an appraiser or other expert selected with reasonable care by the
Corporation or another enterprise. The term "another enterprise" as used in this
Section shall mean any other corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise of which the Indemnitee is or
was serving at the request of the Corporation as a director, officer, partner,
trustee, employee or agent. The provisions of this Section shall not be deemed
to be exclusive or to limit in any way the other circumstances in which the
Indemnitee may be deemed to have met the applicable standard of conduct set
forth herein.
11.1 In the event that (i) a determination is made pursuant to Section 9 of
this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 8
of this Agreement, (iii) the determination of indemnification is to be made by
Independent Counsel pursuant to Section 9.2 of this Agreement and such
determination shall not have been made and delivered in a written opinion within
60 days after receipt by the Corporation of the request for indemnification,
(iv) payment of indemnification is not made pursuant to
Section 7 of this Agreement within ten (10) days after receipt by the Corporation of a written request therefor, or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 9 or 10 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Florida, or in any other court of competent jurisdiction, of his or her entitlement to such indemnification or advancement of Expenses, judgments, penalties, fines or, when eligible hereunder, amounts paid in settlement. The Corporation shall not oppose Indemnitee's right to seek any such adjudication.
11.2 In the event that a determination shall have been made pursuant to
Section 9 of this Agreement that Indemnitee is not entitled to indemnification,
any judicial proceeding commenced pursuant to this Section shall be conducted in
all respects as a de novo trial on the merits and Indemnitee shall not be
prejudiced by reason of that adverse determination.
11.3 If a determination shall have been made or deemed to have been made pursuant to Section 9 or 10 of this Agreement that Indemnitee is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to this Section, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) prohibition of such indemnification under applicable law.
11.4 The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Corporation is bound by all the provisions of this Agreement.
11.5 In the event that Indemnitee, pursuant to this Section, seeks a judicial adjudication of his or her rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation against, any and all expenses (of the kinds described in the definition of Expenses) actually and reasonably incurred by him in such judicial adjudication, but only if he or she prevails therein. If it shall be determined in such judicial adjudication that Indemnitee is entitled to receive less than all of the indemnification or advancement of expenses sought, the expenses incurred by Indemnitee in connection with such judicial adjudication shall be appropriately prorated.
12.1 The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the certificate of incorporation or by-laws of the Corporation, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or any provision hereof shall be effective as to any Indemnitee with respect to
any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal.
12.2 To the extent that the Corporation maintains an insurance policy or policies providing liability insurance for directors, officers, employees, agents or fiduciaries of the Corporation or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person serves at the request of the Corporation, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee, agent or fiduciary under such policy or policies.
12.3 In the event of any payment under this Agreement, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are reasonably necessary to enable the Corporation to bring suit to enforce such rights.
12.4 The Corporation shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
12.5 (a) If a determination is made that Indemnitee is not entitled to indemnification, after Indemnitee submits a written request therefor, under this Agreement, then in respect of any threatened, pending or completed Proceeding in which the Corporation is jointly liability with the Indemnitee (or would be if joined in such Proceeding), the Corporation shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement by the Indemnitee in such proportion as is appropriate to reflect (i) the relative benefits received by the Corporation on the one hand and the Indemnitee on the other hand from the transaction from which Proceeding arose, and (ii) the relative fault of the Corporation on the one hand and of the Indemnitee on the other hand in connection with the events that resulted in such Expenses, judgments, fines or amounts paid in settlement, as well as any other relevant equitable considerations. The relative fault of the Corporation on the one hand and of the Indemnitee on the other hand shall be determined by reference to, among other things, the parties' relative intent, knowledge, access to information and opportunity to correct or prevent the circumstances resulting in such Expenses, judgments, fines or amounts paid in settlement. The Corporation agrees that it would not be just and equitable if contribution pursuant to this Section were determined by pro rata allocation or any other method of allocation that does not take into account the foregoing equitable considerations.
(b) The determination as to the amount of the contribution, if any, shall be made by:
(i) a court of competent jurisdiction upon the applicable of both the Indemnitee and the Corporation (if the Proceeding had been brought in, and final determination had been rendered by such court);
(ii) the Board by a majority vote of a quorum consisting of Disinterested Directors; or
(iii)Independent Counsel, if a quorum is not obtainable for purpose of (ii) above, or, even if obtainable, a quorum of Disinterested Directors so directs.
This Agreement shall continue until and terminate upon the later of: (a)
ten (10) years after the date that Indemnitee shall have ceased to serve as a
director of the Corporation, or (b) the final termination of all pending
Proceedings in respect of which Indemnitee is granted rights of indemnification
or advancement of Expenses, judgments, penalties, fines or amounts paid in
settlement hereunder and or any proceeding commenced by Indemnitee pursuant to
Section 11 of this Agreement. This Agreement shall be binding upon the
Corporation and its successors and assigns and shall inure to the benefit of
Indemnitee and his spouse, heirs, executors, personal representatives and
administrators.
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (a) the validity,
legality and enforceability of the remaining provisions of this Agreement
(including, without limitation, each portion of any Section of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby; and (b) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable.
This Agreement constitutes the entire agreement between the Corporation and
the Indemnitee with respect to the subject matter hereof and supercedes all
prior agreements, understanding, negotiations and discussion, both written and
oral, between the parties hereto with respect to such subject matter (the "Prior
Agreements"); provided, however, that if this Agreement shall ever be held void
or unenforceable for any reasons whatsoever, and is not reformed pursuant to
Section 14 hereof, then (i) this Agreement shall not be deemed to have
superceded any Prior Agreements; (ii) all of such Prior Agreements shall be
deemed to be in full force and effect notwithstanding the execution of this
Agreement; and (iii) the Indemnitee shall be entitled to maximum indemnification
benefits provided under any Prior Agreements, as well as those provided under
applicable law, the certificate of incorporation or by-laws of the Corporation,
a vote of stockholders or resolution of directors.
Except as provided in Section 11.5, Indemnitee shall not be entitled to indemnification or advancement of Expenses under this Agreement with respect to any Proceeding, or any claim therein, brought or made by him against the Corporation.
No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Corporation (or any of its subsidiaries) against the Indemnitee, his spouse, heirs, executors, personal representatives or administrators after the expiration of two (2) years from the date of accrual of such cause of action and any claim or cause of action of the Corporation (or any of its subsidiaries) shall be extinguished and deemed released unless asserted by the filing of a legal action within such two (2) year period; provided, however, that if any shorter period of limitation is otherwise applicable to any such cause of action, such shorter period shall govern.
This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.
The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
Indemnitee agrees promptly to notify the Corporation in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating any Proceeding or matter which may be subject to indemnification or advancement of Expenses, judgments, penalties, fines or amounts paid in settlement covered hereunder.
All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom such notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:
If to Indemnitee, to:
If to the Corporation, to:
ParkerVision, Inc.
8493 Baymeadows Way
Jacksonville, Florida 32256
Attention: Corporate Secretary
or to such other address or such other person as Indemnitee or the Corporation shall designate in writing in accordance with this Section, except that notices regarding changes in notices shall be effective only upon receipt.
The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Florida applicable to contracts made and performed in that state without giving effect to the principles of conflicts of laws.
Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.
PARKERVISION, INC.
INDEMNITEE
The preceding form has been executed by the following directors and officers:
Jeffrey L. Parker
Richard L. Sisisky
David F. Sorrells
Stacie Wilf
William A. Hightower
Richard A. Kashnow
Amy L. Newmark
Todd Parker
William L. Sammons
Oscar S. Schafer
Robert G. Sterne
Cynthia L. Poehlman
EXHIBIT 99.1
RISK FACTORS
PARKERVISION HAS A HISTORY OF LOSSES, AND ITS OPERATING LOSSES ARE EXPECTED TO CONTINUE ON A COMPANY WIDE BASIS.
ParkerVision has had losses in each year since its inception in 1989. There can be no assurance that revenues from the current PVTV(TM) or camera system 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.
Because ParkerVision has had net losses and has not generated positive cash flow from operations, it has funded its operating losses to date from the sale of equity securities. In addition, the Company's business plan for 2002 and thereafter requires significant expenditures. Although ParkerVision has working capital sufficient for at least the next twelve months, it may require additional capital in the future for research and development, manufacturing and continued operating losses. Financing, if any, may be in the form of loans or additional sales of equity securities. A loan or the sale of preferred stock may result in the imposition of operational limitations and other covenants and payment obligations, any of which may be burdensome to 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 improving its technology 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, a competitive position or market window opportunity may be lost, and therefore the revenues or the potential of revenues of ParkerVision may be adversely affected.
PARKERVISION EXPENDS SIGNIFICANT RESOURCES FOR RESEARCH AND DEVELOPMENT OF NEW PRODUCTS AND TECHNOLOGY THAT ULTIMATELY 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 technologies and products. If new technologies and products are not commercially accepted, the funds expended will not be recoverable, and ParkerVision's competitive and financial position may be adversely affected.
PARKERVISION NEEDS TO ACHIEVE MARKET ACCEPTANCE OF ITS D2D 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. In many respects, because the D2D technology is such a radically different approach in its industry, it is very difficult for ParkerVision to predict the final economic benefits to users of the technology and the financial rewards that ParkerVision might expect. If the D2D technology is not established in the market place as an improvement over current, traditional solutions in wireless communications, our business and financial condition will be adversely affected.
IF PARKERVISION'S PATENTS DO NOT PROVIDE THE ANTICIPATED MARKET PROTECTIONS, ITS COMPETITIVE POSITION WILL BE ADVERSELY AFFECTED.
ParkerVision has a large number of patents and patent applications relating to its microelectronic technologies. ParkerVision relies on these to provide competitive advantage and protect it from theft of its intellectual property. ParkerVision believes that many of these patents 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.
PARKERVISION WIRELESS COMMUNICATIONS USE RADIO FREQUENCY TECHNOLOGY SUBJECT TO REGULATION BY THE FEDERAL COMMUNICATIONS COMMISSION.
ParkerVision must obtain approvals from the United States Federal Communications Commission for the regulatory compliance of its products. ParkerVision may also have to obtain approvals from equivalent foreign government agencies where its products are sold internationally. The inability to obtain any required approvals, or a change in current regulation that impacts issued approvals or the approval process, may have an adverse impact on the ability of ParkerVision to market its products and on the business prospects of ParkerVision.
THE PVTV AND CAMERA SYSTEM PRODUCTS COMPETE WITH OTHER PRODUCTS.
The videoconferencing and broadcast studio production industries are highly competitive. There are many other companies that offer products that singly or in combination can compete directly or indirectly with those of ParkerVision. ParkerVision, however, believes that no one competing product offers the range of options and capabilities of the PVTV and Parkervision camera system products in the tasks for which these products have been designed. The principal competitors include Sony Corporation, Panasonic Corporation and Grass Valley Group. 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 and revenue opportunities.
PARKERVISION EXPECTS COMPETITION IN CONNECTION WITH ITS DIRECT2DATA TECHNOLOGY.
Although the D2D 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 OBTAINS CRITICAL COMPONENTS AND MANUFACTURING SERVICES FOR ITS PRODUCTS FROM VARIOUS SUPPLIERS WHICH PUTS PARKERVISION AT RISK IF THEY DO NOT FULFILL THE PARKERVISION NEEDS OR INCREASE PRICES THAT CANNOT BE PASSED ON.
Both the video product and wireless divisions of ParkerVision obtain critical components from various suppliers and manufacturers. Some of these are single sources. Because ParkerVision depends on outside sources for supplies and manufacturing of various parts of its products, ParkerVision is at risk that it may no obtain these components on a timely basis, or at all due to lack of capacity, parts shortages in the overall marketplace and other fulfillment obligations of these sources, among other things. If ParkerVision is unable to obtain its components from the current sources, its business would be disrupted, and it might have to expend some of its resources to modify its products. In addition, ParkerVision is at risk for increases in prices imposed by these sources over which ParkerVision has no control. Any inability of ParkerVision to obtain components or absorb price increases may have an adverse effect on its own ability to fulfill orders and on its financial condition.
PARKERVISION IS DEPENDENT ON ACCEPTANCE OF ITS PVTV PRODUCTS IN HIGH PROFILE MARKETS. IF PVTV PRODUCTS DO NOT SUCCEED IN THESE MARKETS, PARKERVISION'S REVENUES WILL BE SIGNIFICANTLY AFFECTED.
The PVTV products have been marketed to a limited number of high profile potential users. If the products do not meet the expected requirements of these customers or the market in general, ParkerVision may lose product acceptance and market share in these and other comparable markets. The loss of these customers and markets would diminish future marketing opportunities and presence in the broadcast market segment in which it seeks to be a presence and adversely effect future revenue development.
PARKERVISION BELIEVES THAT IT WILL RELY IN THE NEAR FUTURE ON KEY BUSINESS RELATIONSHIPS FOR THE SUCCESSFUL COMMERCIALIZATION OF ITS D2D TECHNOLOGY, WHICH IF LOST, WILL HAVE AN ADVERSE IMPACT ON ACHIEVING MARKET AWARENESS AND ACCEPTANCE AND LOSS OF BUSINESS OPPORTUNITY.
To achieve market awareness and acceptance of its D2D technology, as part of its business strategy, ParkerVision will enter into a variety of business relationships with other companies which will incorporate the D2D technology into their products. Therefore,
ParkerVision's successful commercialization of the D2D technology will depend on its ability to meet its obligations under the contracts in respect of its D2D technology and related development requirements and the other parties using the D2D technology as agreed. The failure of the business relationships will limit the commercialization of the ParkerVision D2D technology which will have an adverse impact on the business development of the company and its ability to generate revenues and recover development expenses.
PARKERVISION HAS LIMITED EXPERIENCE IN THE COMMERCIAL DESIGN AND MANUFACTURE OF ELECTRONIC CHIPS WHICH MAY RESULT IN PRODUCTION INADEQUACIES, DELAYS AND REJECTION.
As ParkerVision begins to commercialize its D2D technology, it plans to manufacture some of the electronic chips that employ its proprietary designs for supply to end users. ParkerVision has limited experience in the commercial design and the manufacture of these kinds of electronic chips. If there are design flaws or manufacturing errors resulting from the inexperience, there may be resulting delays or loss of customer acceptance of the electronic chips. Either of these may be a breach of supply agreements or may cause a loss of customer willingness to use ParkerVision products. These may result in loss of commercialization opportunities as well as revenues and cause additional, unanticipated expenses with adverse financial effect.
PARKERVISION IS HIGHLY DEPENDENT ON MR. JEFFERY PARKER AS ITS CHIEF EXECUTIVE OFFICER.
Because of Mr. Parker's position in the company and the respect he has garnered in the industries in which ParkerVision operates and from the investment community, the loss of the services of Mr. Parker could be seen as an impediment to the execution of the ParkerVision business plan. If Mr. Parker were no longer available to the company, investors may experience an adverse impact on their investment.
PARKERVISION IS DEPENDENT ON HIRING HIGHLY SKILLED EMPLOYEES.
The business of ParkerVision is very specialized in the areas of automated broadcast and production systems and video camera control systems and wireless direct conversion technology. Because these areas of business are extremely specialized, ParkerVision is dependent on having skilled and specialized employees to conduct its research and development activities, manufacturing, marketing and support. The inability to obtain these kinds of persons will have an adverse impact on its business development and may prevent ParkerVision successfully implementing its current plans.
PARKERVISION FACES INTENSE COMPETITION IN ITS HIRING PROGRAM FOR THE KINDS OF EMPLOYEES IT REQUIRES.
Because ParkerVision needs highly skilled employees and persons with very specialized experience, there tends to be relatively few persons available that meet its requirements. Generally, ParkerVision has experienced a small pool of persons in the labor markets in which it must seek its employees. Therefore, when hiring, ParkerVision encounters intense competition from other telecommunications, electronics and technically orientated companies. To meet this competition ParkerVision often is required to fashion superior compensation packages and to
develop a working environment conducive to attracting the kinds of person the company needs. It also has to pay recruiting fees. ParkerVision may experience an inability to obtain the services of required personnel and a high cost of labor in some areas. The former may prevent ParkerVision from implementing its business plan as intended and the latter may result in additional expense in its operations which may not be recoverable. One or the other or both may place ParkerVision at an overall disadvantage comparative to other companies.
THE OUTSTANDING OPTIONS AND WARRANTS MAY EFFECT THE MARKET PRICE AND LIQUIDITY OF THE COMMON STOCK.
ParkerVision has outstanding options, warrants and purchase options to purchase 7,630,101 shares of its common stock at September 30, 2002. This represents about 55% of the common stock outstanding on a fully diluted basis. Approximately 98% of these securities have exercise prices at less than the current market price of the common stock. All of the underlying common stock of these securities is or will be 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 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 MARKET OF THE PARKERVISION COMMON STOCK HAS FLUCTUATED SIGNIFICANTLY, SOMETIMES IN A MANNER UNRELATED TO ITS PERFORMANCE.
The market price of the common stock has fluctuated widely 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 submissions of proposals from stockholders to a vote by all the stockholders under the by-laws. Florida law also has anti-takeover provisions.