As filed with the Securities and Exchange Commission on November 23, 2001
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GENTNER COMMUNICATIONS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Utah 87-0398877
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
1825 Research Way
Salt Lake City, Utah 84119
(801) 975-7200
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
Frances M. Flood
Chairman of the Board and Chief Executive Officer
Gentner Communications Corporation
1825 Research Way
Salt Lake City, Utah 84119
(801) 975-7200
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service) Copies to:
Robinson Alston, Esq. James R. Tanenbaum, Esq.
Jones, Waldo, Holbrook & McDonough Stroock & Stroock & Lavan LLP
1500 First Interstate Plaza 180 Maiden Lane
170 South Main Street New York, NY 10038
Salt Lake City, Utah (212) 806-5400
(801) 521-3200
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement, as
determined by the selling security holders.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Proposed Proposed maximum
maximum aggregate
Title of each class of securities Amount to be offering price offering price Amount of
to be registered registered per unit (1) (1) registration fee
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Common Stock, par value $0.001 per 1,500,000 $17 $25,500,000 $6,375
share
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(1) Based on an offering price of $17.00 per share.
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Subject to completion dated November 23, 2001
PROSPECTUS
1,500,000 SHARES
GENTNER COMMUNICATIONS CORPORATION
Common Stock
We are registering these shares of our common stock for resale by the
selling security holders identified in this prospectus.
For a description of the plan of distribution of the resale shares, see
page 15 of this prospectus. We will receive none of the proceeds from sales by
the selling security holders.
Our common stock is currently traded on the Nasdaq National Market under
the symbol "GTNR." On November 21, 2001, the last reported sales price for our
common stock was $18.84 per share.
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Investment in our common stock involves a high degree of
risk. See "Risk Factors" beginning on page 4 of this Prospectus.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus ____________.
OUR BUSINESS
The Securities and Exchange Commission (the "SEC") allows us to
"incorporate by reference" certain information that we file with it, which means
that we can disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to be part of
this prospectus, and information that we file later with the SEC will update
automatically, supplement and/or supersede this information. Any statement
contained in a document incorporated or deemed to be incorporated by reference
in this prospectus shall be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained in this prospectus or
in any other document which also is or is deemed to be incorporated by reference
in this prospectus modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus. You should read the following summary
together with the more detailed information regarding our company, our common
stock and our financial statements and notes to those statements appearing
elsewhere in this prospectus or incorporated herein by reference. References in
this prospectus to "our company," "we," "our," and "us" refer to Gentner
Communications Corporation.
BUSINESS
We primarily develop, manufacture, market and distribute products and
services for the conferencing equipment, conferencing services, and broadcast
markets. Until 1991, our primary business was the sale of studio and
transmitter-related equipment to broadcast facilities. Since then, we have
applied our core digital audio technology to the development of products for
conferencing, sound reinforcement, and assistive listening applications. In
addition, we offer conferencing services, including conference calling,
Webconferencing, document conferencing, audio and video streaming, and customer
training and education.
We initially began selling our products to the telephone interface portion
of the broadcast market. These products are primarily used to put callers on the
air for call-in talk shows. In 1991, using the technological expertise gained in
the broadcast market, we commenced marketing products specifically developed for
the audioconferencing market. Our audioconferencing products provide users with
a natural, two-way method of conversation without the cut-offs, distortion,
noise and echo associated with traditional speakerphones. Audioconferencing
products are installed in conference rooms, courtrooms, and distance learning
facilities. We also develop assistive listening systems that provide enhanced
audio for those with hearing disabilities. Over the past two years, we have
expanded our market opportunity by introducing products targeting the
videoconferencing and sound reinforcement markets. Videoconferencing products
are typically installed in the same types of venues as our audioconferencing
products. Sound reinforcement products target larger venues, such as stadiums,
arenas, theaters, houses of worship and convention centers. Product sales from
continuing operations accounted for 71% of our total sales from continuing
operations during fiscal 2001, compared to 79% in fiscal 2000 and 84% in fiscal
1999.
In fiscal 1993, we introduced Gentner Conference Call(R) (1-800 LETS
MEET(R)), a comprehensive teleconferencing service. Over the past two years, we
have expanded its service offerings to include on-demand, reservationless
conference calling, Webconferencing, and audio and video streaming over the
Internet. During fiscal year 2001, sales from conferencing services accounted
for 29% of our total sales from continuing operations, compared to 21% in fiscal
2000 and 16% in fiscal 1999.
Our international sales were 13%, 12%, and 12% of our total sales from
continuing operations for fiscal years 2001, 2000, and 1999, respectively.
In fiscal year 2001, we changed our reportable operating segments to
reflect how we evaluate our operating performance and allocate resources. Prior
to fiscal year 2001, our reportable segments included RFM/Broadcast,
Conferencing Products, Conferencing Services and Other. On July 5, 2000, we
concluded the purchase of the assets of ClearOne, Inc. Through this purchase, we
obtained valuable technology for videoconferencing products, as well as existing
audioconferencing products and related technology. As of April 12, 2001, we sold
the assets of the remote control portion of the RFM/Broadcast division.
Subsequent to the disposal, we now operate in two different segments - Products
and 1-800 LETS MEET(R).
2
Our Products segment includes the following areas: room system
audioconferencing and videoconferencing products, sound reinforcement products,
broadcast telephone interface products, and assistive listening systems.
Our 1-800 LETS MEET(R) segment is responsible for all teleconferencing
services, including full-service conference calling; on-demand, reservationless
conference calling, Webconferencing, and audio and video streaming.
We are focused on increasing our share of target markets through new
product and service introductions, and through enhanced international efforts.
The acquisition of Ivron System, Ltd. discussed below reflects this focus.
CORPORATE INFORMATION
Our company was organized under the laws of the State of Utah on July 8,
1981 as Gentner Engineering Company, Inc. On March 26, 1985, Gentner Engineering
Company went public by way of a reverse purchase when Insular, Inc.
(incorporated in Utah on July 8, 1983), acquired Gentner Engineering and changed
its name to Gentner Electronics Corporation. On July 1, 1991, Gentner
Electronics Corporation changed its name to Gentner Communications Corporation
("Gentner") to more accurately reflect the expanding nature of our business.
Our executive offices are currently located at 1825 Research Way, Salt Lake
City, Utah 84119, and our telephone number is (801) 975-7200.
RECENT DEVELOPMENTS
At our annual meeting of shareholders held on November 14, 2001, our
shareholders approved an amendment to amend our corporate charter to change our
name to "ClearOne Communications Inc." The name change will be effective on
January 1, 2002. At that time, our trading symbol will become "CLRO." In
addition, our shareholders approved an amendment to our 1998 Stock Option Plan
to increase the number of shares of common stock reserved for issuance
thereunder by 800,000 shares, increasing to 2,500,000 the number of shares
available for issuance under the 1998 Plan.
On October 3, 2001, we acquired all of the issued and outstanding shares of
common stock of Ivron for an initial sum of approximately $6.0 million paid from
our cash reserves. Ivron shareholders may also receive approximately 450,000
shares of Gentner common stock in July 2001, contingent upon the completion of
certain product development targets. In accordance with the provisions of the
acquisition documents, if certain performance targets are met, the Ivron
shareholders can also earn up to an additional $18.0 million in a combination of
cash and shares over fiscal years 2003 and 2004. As of the date hereof, Ivron is
being operated as an indirect wholly-owned subsidiary of Gentner. Prior to the
acquisition, we had a contractual relationship with Ivron under which they had
agreed to provide us with certain video technology.
Michael Peirce, Ivron's founder and chairman of the board, has joined
Gentner's board of directors. In addition, Joe Stockton, the former President of
Ivron, has been appointed as our Vice President for Business Development.
Ivron's executive offices are located in Dublin, Ireland. Ivron is a
developer and supplier of hardware and software platforms for video
conferencing. As a result of the acquisition, we acquired a product already
being sold by Ivron, the VuLink videoconferencing product. Ivron will continue
its focus on developing new videoconferencing products.
A more detailed description of the Ivron transaction and detailed pro forma
combined financial information, has been included in our Current Report on Forms
8-K filed with the Commission on October 18, 2001, and 8-K/A filed on November
23, 2001, both incorporated herein by reference.
3
On October 23, 2001, we announced our intention to implement a new and
major marketing and advertising campaign. This campaign will focus on our being
a provider of an integrated suite of audio and video conferencing products and
services. We intend to build product demand through our current distribution
channel and increase end-user awareness of the Gentner (R) brand. We anticipate
that these marketing efforts will include a new advertising campaign, web site,
traditional and electronic direct marketing efforts, dealer road shows and
training programs, and collateral materials that support channel partner
efforts.
RISK FACTORS
Except for the historical information contained in this prospectus or
incorporated by reference, this prospectus (and the information incorporated by
reference in this prospectus) contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
discussed here or incorporated by reference. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
in the following section, as well as those discussed elsewhere in this
prospectus and in any other documents incorporated by reference.
Investment in our shares involves a high degree of risk. You should
consider the following discussion of risks as well as other information in this
prospectus and the incorporated documents before purchasing any shares. Each of
these risk factors could adversely affect our business, operating results,
prospects and financial condition, as well as adversely affect the value of an
investment in our common stock.
We may not be able to keep up with rapid technological change in the audio
and videoconferencing industries which could make our products obsolete and
reduce our revenues.
Our products and services markets are highly competitive and characterized
by rapid technological change. Our future performance will depend in large part
upon our ability to remain competitive and to develop and market new products
and services in these markets in a timely fashion that responds to customers'
needs and incorporates new technology and standards.
We may not be able to design and manufacture products that address customer
needs or achieve market acceptance. Any significant failure to design,
manufacture, and successfully introduce new products or services could
materially harm our business.
The markets in which we compete have historically involved the introduction
of new and technologically advanced products and services that cost less or
perform better. If we are not competitive in our research and development
efforts, our products may become obsolete or be priced above competitive levels.
Although we believe that, based on their performance and price, our
products and services are currently attractive to customers, we cannot assure
you that competitors will not introduce comparable or technologically superior
products or services, which are priced more favorably than ours.
We face intense competition in the audio and videoconferencing industries which
could significantly limit our growth.
The markets for our products and services are highly competitive. These
markets include our traditional dealer channel, the market for our conferencing
services, and our retail channel. We compete with businesses having
substantially greater financial, research and development, manufacturing,
marketing, and other resources. If we fail to maintain or enhance our
competitive position, we could experience pricing pressures and reduced sales,
margin, profits, and market share, each of which could materially harm us.
4
We have no control over general economic conditions which may adversely impact
our business.
As our business has grown, we have become increasingly subject to adverse
changes in general economic conditions, which can result in reductions in
capital expenditures by customers, longer sales cycles, deferral or delay of
purchase commitments for products, and increased price competition. Although
these factors have not materially impacted us in recent years, if the current
economic slowdown continues or worsens, these factors could adversely affect our
business and results of operations.
We may not be able to market our products and services effectively which may
adversely affect our revenues.
We are subject to the risks inherent in the marketing and sale of current
and new products and services in an evolving marketplace. We must effectively
allocate our resources to the marketing and sale of these products through
diverse channels of distribution. Our current strategy is to establish
distribution channels and direct selling efforts in markets where we believe
there is a growing need for our products and services. For example, with the
acquisition of the ClearOne assets we have expanded our products to include the
retail market. We cannot assure you that this strategy will prove successful.
We may be unable to manage our rapid growth or implement our expansion strategy.
We are experiencing a period of significant expansion in personnel,
facilities and infrastructure, and we anticipate that further expansion will be
required to address potential growth in our customer base and market
opportunities. This expansion will require continued application of management,
operational and financial resources.
To manage the expected growth of operations and personnel, we may need to
improve our transaction processing, operational and financial systems,
procedures and controls. Our current and planned personnel, systems, procedures
and controls may not be adequate to support our future operations. Difficulties
in managing these challenges could adversely affect our financial performance.
Difficulties in estimating customer demand in our Products segment could harm
our operating results.
Orders from our resellers are based on demand from end-users. Prospective
end-user demand is difficult to measure. This means that any period could be
adversely impacted by lower end-user demand, which could in turn negatively
affect orders we receive from resellers. Our expectations for both short- and
long-term future net revenues are based on our own estimates of future demand as
well as backlog based on our blanket purchase order program in which certain
dealers commit to purchase specified quantities of products over a twelve month
period. We also base expense levels on those revenue estimates. If our estimates
are not accurate, our financial performance could be adversely affected.
Our profitability may be adversely affected by our continuing dependence on our
distribution chain.
We market our products primarily through a network of dealers and master
distributors. All of our agreements regarding such dealers and distributors are
non-exclusive and terminable at will by either party. Although we believe that
our relationships with such dealers and distributors are good, we cannot assure
you that any or all such dealers or distributors will continue to offer our
products.
Price discounts to our distribution channel are based on performance.
However, there are no obligations on the part of such dealers and distributors
to provide any specified level of support to our products or to devote any
specified time, resources or efforts to the marketing of our products. There are
no prohibitions on dealers or distributors offering products that are
competitive with ours. Most dealers do offer competitive products. We reserve
the right to maintain house accounts, which are for products sold directly to
customers. The loss of dealers or distributors could have a material adverse
effect on our business.
5
We will likely require future capital and are uncertain of the availability or
terms of additional funding. If our capital becomes insufficient and additional
funding is unavailable, inadequate or not available on acceptable terms, it may
adversely affect the value of shares of our stock.
As of June 30, 2001, we had approximately $6.9 million in cash and $17
million in working capital. As of September 30, 2001, we had approximately$7.9
million in cash and $18.5 million in working capital. Since September 30, 2001,
we spent $6 million in cash as a portion of the purchase price for the
acquisition of Ivron Systems, Ltd. We may be required to seek additional
financing if anticipated levels of revenue are not realized, if higher than
anticipated costs are incurred in the development, manufacture, or marketing of
our products, or if product demand exceeds expected levels. We cannot assure you
that any additional financing would be available on acceptable terms, or at all.
In addition, our $5 million revolving line of credit matures in December of
2001 and we cannot assure you that we will be able to extend the maturity date
of the line of credit or obtain a replacement line of credit from another
commercial institution. We had no outstanding balance payable on the line of
credit as of June 30, 2001 or September 30, 2001. To the extent the line of
credit is not extended or replaced and cash from operations is insufficient to
fund operations, we may be required to seek additional financing.
Service interruptions could affect our business.
We rely heavily on our network equipment, telecommunications providers,
data, and software, to support all of our functions. Our conference calling
service relies 100 percent on the network for its revenues. While we endeavor to
provide for failures in the network by providing back-up systems and procedures,
we cannot guarantee that these back-up systems and procedures will operate
satisfactorily in an emergency. Should we experience such a failure, it could
seriously jeopardize our ability to continue operations. In particular, should
our conference calling service experience even a short term interruption of our
network or telecommunication providers, our ongoing customers may choose a
different provider, and our reputation may be damaged, reducing our
attractiveness to new customers.
Our ability to provide products and services is dependent on our limited
suppliers.
Certain electronic components used in connection with our products can only
be obtained from single manufacturers and we are dependent upon the ability of
these manufacturers to deliver such components to our suppliers so that they can
meet our delivery schedules. We do not have a written commitment from such
suppliers to fulfill our future requirements. Our suppliers maintain an
inventory of such components, but there can be no assurance that such components
will always be readily available, available at reasonable prices, available in
sufficient quantities, or deliverable in a timely fashion. If such key
components become unavailable, it is likely that we will experience delays,
which could be significant, in production and delivery of our products unless
and until we can otherwise procure the required component or components at
competitive prices, if at all. The lack of availability of these components
could have a materially adverse effect on us.
We believe that most of the key components required for the production of
our products are currently available in sufficient quantities. We have
experienced long component lead times in the past, but we are experiencing
improved lead times on many products. Even though we have purchased more of
these "longer-lead-time" parts to ensure continued delivery of products,
reduction in these inventories have tracked with the reduction of lead times.
Suppliers of some of these components are currently or may become competitors of
ours, which might also affect the availability of key components to us. It is
possible that other components required in the future may necessitate custom
fabrication in accordance with specifications developed or to be developed by
us. Also, in the event we, or any of the manufacturers whose products we expect
to utilize in the manufacture of its products, are unable to develop or acquire
components in a timely fashion, our ability to achieve production yields,
revenues and net income may be adversely affected.
6
Our business could be adversely affected by unanticipated software problems.
We have developed custom software for our products and have licensed
additional software from third parties. This software may contain undetected
errors, defects or bugs. Although we have not suffered significant harm from any
errors or defects to date, we may discover significant errors or defects in the
future that we may or may not be able to fix or fix in a timely or cost
effective manner. Our inability to do so could harm our business.
Our business could be adversely affected if we were to experience technical
difficulties or delays.
While we have substantial experience in designing and manufacturing our
products, we may still experience technical difficulties and delays with the
manufacturing of our products. Potential difficulties in the design and
manufacturing process that could be experienced by us include difficulty in
meeting required specifications, difficulty in achieving necessary manufacturing
efficiencies, and difficulties in obtaining materials on a timely basis.
We cannot control all aspects of the distribution process which could cause
delays or reduce profit margins.
Our financial performance is dependent in part on our ability to provide
prompt, accurate, and complete services to customers on a timely and competitive
basis. Delays in distribution in our day-to-day operations or material increases
in our costs of procuring and delivering products could have an adverse effect
on our results of operations. Any failure of either our computer operating
systems, the Internet or our telephone system could adversely affect our ability
to receive and process customers' orders and ship products on a timely basis.
Strikes or other service interruptions affecting Federal Express Corporation,
United Parcel Service of America, Inc., or other common carriers used by us to
receive necessary components or other materials or to ship our products also
could impair our ability to deliver products on a timely and cost-effective
basis.
If we are unable to protect our intellectual property rights, our competitive
position could be harmed or we could be required to incur expenses to enforce
our rights.
We currently rely primarily on a combination of trade secret, copyright,
trademark, and nondisclosure agreements to establish and protect our proprietary
rights in our products. We cannot assure you that others will not independently
develop similar technologies, or duplicate or design around aspects of our
technology. We believe that our products and other proprietary rights do not
infringe any proprietary rights of third parties. We cannot assure you, however,
that third parties will not assert infringement claims in the future. Such
claims could divert our management's attention and be expensive, regardless of
their merit. In the event of a claim, we might be required to license third
party technology or redesign our products, which may not be possible or
economically feasible.
Our business may be adversely impacted if the government stopped funding certain
sales or if it changes regulations.
In the conferencing market, we are dependent on government funding to place
our distance learning sales and courtroom equipment sales. In the event
government funding was stopped, these sales would be negatively impacted.
Additionally, many of our products are subject to governmental regulations. New
regulations could significantly adversely impact sales.
We do not intend to pay dividends.
We have never paid cash dividends on our securities and do not intend to
declare or pay cash dividends in the foreseeable future. Earnings are expected
to be retained to finance and expand our business. Furthermore, our revolving
line of credit prohibits the payment of dividends on our common stock.
7
You may experience dilution from outstanding option exercises and any future
financings.
As of September 30, 2001, we have granted options to purchase 1,957,798
shares under our 1990 Incentive Plan and our 1998 Stock Option Plan. Holders of
these options are given an opportunity to profit from a rise in the market price
of our common stock with a resulting dilution in the interests of the other
stockholders. The holders of the options may exercise them at a time when we
might be able to obtain additional capital through a new offering of securities
on terms more favorable than those provided therein.
Prior to our November 14, 2001 annual shareholders meeting we had granted
all of the options available under the 1998 Stock Option Plan. However, as we
discuss elsewhere, at the annual shareholders meeting, our shareholders approved
an increase of 800,000 shares under our 1998 Stock Option Plan. Issuance of
these shares will have further dilutive effect.
Our future success depends on our ability to retain our Chief Executive Officer
and other key executives.
We are substantially dependent upon certain of our employees, including
Frances M. Flood, President and Chief Executive Officer and a director and
shareholder. The loss of Ms. Flood by our company could have a material adverse
effect on us. We currently have in place a key person life insurance policy on
the life of Ms. Flood in the amount of $5,000,000.
Existing directors and officers can exert considerable control over us.
The officers and directors of our company together had beneficial ownership
of approximately 29.0 percent of our common stock (including options that are
currently exercisable or exercisable within sixty (60) days) as of September 30,
2001. This significant holding in the aggregate places the officers and
directors in a position, when acting together, to effectively control our
company and could delay or prevent a change in control.
Our revenues could be adversely impacted if customers default on payments owed
to us.
We grant credit without requiring collateral to substantially all of our
customers. Although the possibility of a large percentage of customers
defaulting exists, we believe this scenario to be highly unlikely.
We face additional risks because we do business on an international level.
International sales represent a significant portion of our total revenue
from continuing operations. For example, international sales represented 13
percent of our total sales from continuing operations for fiscal 2001 and 12
percent for fiscal 2000. If we are unable to maintain international market
demand, our results of operations could be materially harmed. Our international
business is subject to the financial and operating risks of conducting business
internationally, including: unexpected changes in, or imposition of, legislative
or regulatory requirements; fluctuating exchange rates, tariffs and other
barriers; difficulties in staffing and managing foreign subsidiary operations;
export restrictions; greater difficulties in accounts receivable collection and
longer payment cycles; potentially adverse tax consequences; and potential
hostilities and changes in diplomatic and trade relationships.
During October 2000, we established Gentner Communications EuMEA GmbH, a
wholly owned subsidiary headquartered in Nuremberg, Germany. Our subsidiary
began operations during December 2000. Gentner EuMEA focuses on distribution,
technical support, and training in Europe, the Middle East and Africa.
Our sales in the international market are denominated in U.S. Dollars and
Gentner EuMEA transacts business in U.S. Dollars, however, its financial
statements are prepared in German Deutsche Marks according to German accounting
principles. Consolidation of Gentner EuMEA's financial statements with those of
our company, under United States generally accepted accounting principles,
requires remeasurement to U.S. Dollars which is subject to exchange rate risks.
Our business is susceptible to exchange rate risk.
On January 1, 1999, eleven member countries of the European Union
established fixed conversion rates between their existing currencies ("legal
currencies") and one common currency, the Euro. The Euro is now trading on
8
currency exchanges and may be used in certain transactions such as electronic
payments. Beginning in January 2002, new Euro-denominated notes and coins will
be used, and legacy currencies will be withdrawn from circulation. The
conversion to the Euro has eliminated currency exchange rate risk for
transactions between the member countries, which for us primarily consists of
sales to certain customers and payments to certain suppliers. We are currently
addressing the issues involved with the new currency, which include converting
information technology systems, recalculating currency risk, and revising
processes for preparing accounting and taxation records. Based on the work
completed so far, we do not believe the Euro conversion will have a significant
impact on the results of our operations or cash flows.
The continued integration of our subsidiaries and the integration of any
additional acquired businesses involves uncertainty and risk.
We have dedicated and will continue to dedicate, substantial management
resources in order to achieve the anticipated operating efficiencies from
integrating ClearOne and Ivron Systems. Difficulties encountered in integrating
ClearOne's or Ivron Systems' operations could adversely impact the business,
results of operations or financial condition of our company. Also, we intend to
pursue acquisition opportunities in the future. The integration of acquired
businesses could require substantial management resources. There can be no
assurance that any such integration will be accomplished without having a short
or potentially long-term adverse impact on the business, results of operations
or financial condition of our company or that the benefits expected from any
such integration will be fully realized.
Our operating results are expected to be volatile and difficult to predict, and
in some future quarters, our operating results may fall below the expectations
of securities analysts and investors, which could result in material declines of
our stock price.
Our operating results may vary depending on a number of factors, including:
o demand for our audio and video systems and services;
o the timing, pricing and number of sales of our products;
o actions taken by our competitors, including new product introductions
and enhancements;
o changes in our price or the prices of our competitors;
o our ability to develop and introduce new products and to deliver new
services and enhancements that meet customer requirements in a timely
manner;
o the length of the sales cycle for our products;
o our ability to control costs;
o technological changes in our markets;
o deferrals of customer orders in anticipation of product enhancements
or new products;
o customer budget cycles and changes in these budget cycles;
o general economic factors; and
o other unforeseen events that may effect the economy such as the
terrorist attacks in New York, NY amd Washington, DC on September 11,
2001.
9
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement we filed with the SEC.
You should rely only on the information contained in this prospectus or
incorporated by reference. We have not authorized anyone else to provide you
with different information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front page of this prospectus, regardless of the time of delivery of this
prospectus or any sale of common stock.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read, without charge, and copy the documents
we file at the SEC's public reference rooms in Washington, D.C., New York, New
York and Chicago, Illinois. You can request copies of these documents by writing
to the SEC and paying a fee for the copying cost. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public at no cost from the SEC's website at
http://www.sec.gov.
We incorporate by reference the filed documents listed below, except as
superseded, supplemented or modified by this prospectus, and any future filings
we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"):
o our Annual Report on Form 10-K for the fiscal year ended June 30,
2001;
o our Notice of Annual Meeting and Proxy Statement for our Annual
Meeting of stockholders that was held on November 14, 2001;
o our Current Report on Form 8-K filed with the SEC on October 18, 2001
("8-K:);
o the Amendment to our 8-K filed form 8-K/A on November 23, 2001;
o our Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2001; and
o the description of our common stock contained in our Registration
Statement under Section 12 of the Exchange Act, including any
amendments or reports filed for the purpose of updating such
description.
The reports and other documents that we file after the date of this
prospectus will update, supplement and supersede the information in this
prospectus. You may request and obtain a copy of these filings, at no cost, by
writing or telephoning us at the following address or phone number:
Gentner Communications Corporation
1825 Research Way
Salt Lake City, Utah 84119
Telephone: (801) 975-7200
Attn: Investor Relations
10
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by reference,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Exchange Act. Any
statements about our expectations, beliefs, plans, objectives, assumptions or
future events or performance are not historical facts and may be
forward-looking. These statements are often, but not always, made through the
use of words or phrases such as "anticipate," "estimate," "plans," "projects,"
"continuing," "ongoing," "expects," "management believes," "we believe," "we
intend" and similar words or phrases. Accordingly, these statements involve
estimates, assumptions and uncertainties that could cause actual results to
differ materially from those expressed in them. Any forward-looking statements
are qualified in their entirety by reference to the factors discussed throughout
this prospectus. Among the key factors that could cause actual results to differ
materially from the forward-looking statements:
o competitive factors;
o general economic conditions;
o rapid technological change;
o dependence on our distribution network;
o governmental regulation and funding;
o our ability to raise additional needed capital;
o dependence on third party suppliers;
o manufacturing difficulties;
o lack of patent protection;
o changes in industry practices; and
o one-time or non-recurring events.
Because the risk factors referred to above, as well as the risk factors
beginning on page 4 of this prospectus, could cause actual results or outcomes
to differ materially from those expressed in any forward-looking statements made
by us or on our behalf, you should not place undue reliance on any
forward-looking statements. Further, any forward-looking statement speaks only
as of the date on which it is made, and we undertake no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which the statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time, and it is not possible for us to
predict which factors will arise. In addition, we cannot assess the impact of
each factor on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.
11
SECURITY HOLDERS
We are registering for resale shares of our common stock held by the
security holders identified below. The security holders acquired the resale
shares in a private placement transaction from us. We are registering the shares
to permit the security holders and their pledgees, donees, transferees and other
successors-in-interest that receive their shares from a stockholder as a gift,
partnership distribution or other non-sale related transfer after the date of
this prospectus to resell the shares when and as they deem appropriate. The
following table sets forth:
o the name of the security holders,
o the number and percent of shares of our common stock that the security
holders beneficially owned prior to the offering for resale of the
shares under this prospectus,
o the number of shares of our common stock that may be offered for
resale for the account of the security holders under this prospectus,
and
o the number and percent of shares of our common stock to be
beneficially owned by the security holders after the offering of the
resale shares (assuming all of the offered resale shares are sold by
the security holders).
The number of shares in the column "Number of Shares Being Offered"
represents all of the shares that each security holder may offer under this
prospectus. We do not know how long the security holders will hold the shares
before selling them or how many shares they will sell and we currently have no
agreements, arrangements or understandings with any of the security holders
regarding the sale of any of the resale shares. The shares offered by this
prospectus may be offered from time to time by the security holders listed
below. This table is prepared solely based on information supplied to us by the
listed security holders. The number of shares used in computing percentage of
ownership under "Shares Benficially Owned Prior to Offering" are based on an
aggregate of 10,161,894 shares of our common stock issued and outstanding on
November 21, 2001, adjusted on a pro forma basis to include the 1,500,000 shares
issued to the selling security holders in a private placement, and is calculated
pursuant to rules promulgated by the Securities and Exchange Commission.
12
SHARES NUMBER OF SHARES
BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO BEING OWNED AFTER
OFFERING OFFERED(1) OFFERING(2)
----------------- --------- ----------------
SECURITY HOLDERS Number Percent Number Percent
---------------- ------ ------- ------ -------
Smithwood Partners LLC 165,317 1.63% 165,317 0 0
Oberweis Micro-Cap Portfolio*
80,000 * 40,000 40,000 *
John P. Feighner & Anne C. Feighner TTEES
UTO 9/22/77 FBO Feighner Family Trust 10,000 * 10,000 0 0
Wedbush Morgan Securities CTDN Robert L.
IBSEN IRA Rollover 9-20-96 10,000 * 10,000 0 0
Stonestreet Limited Partnership
30,000 * 30,000 0 0
Lakeside Capital Management 50,000 * 50,000 0 0
Goldplate Investment Partners 11,765 * 11,765 0 0
Alpha Capital AG 35,294 * 35,294 0 0
Quantico Partners, LP 59,000 * 59,000 0 0
Gryphon Master Fund 298,294 2.94% 298,294 0 0
Langley Partners, LP 239,530 2.36% 239,530 0 0
Manuel Varveris 20,000 * 20,000 0 0
Dr. Delwar Hussain & Dilruba Hussain 10,000 * 10,000 0 0
Blue Fin Partners Inc. 7,500 * 7,500 0 0
Neil I. Anderson 10,000 * 10,000 0 0
James T. Hawley 2,500 * 2,500 0 0
* represents beneficial ownership of less than one percent of our common stock.
- ------------------------------------------
(1) This registration statement shall also cover any additional shares of common
stock which become issuable in connection with the shares registered for sale
hereby as a result of any stock dividend, stock split, recapitalization or other
similar transaction effected without the receipt of consideration which results
in an increase in the number of our outstanding shares of common stock.
(2) Assumes the sale of all shares offered hereby and no other purchases or
sales of our commons stock.
13
SHARES NUMBER OF SHARES
BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO BEING OWNED AFTER
OFFERING OFFERED OFFERING
----------------- --------- ----------------
SECURITY HOLDERS Number Percent Number Percent
---------------- ------ ------- ------ -------
U.S. Bancorp Piper Jaffray Asset Management 5,600 * 5,600 0 0
for the benefit of Posner Partners MicroCap
Fund
U.S. Bancorp Piper Jaffray Asset Management 500 * 500 0 0
for the benefit of ES Tallmadge Residuary
Trust (2)
U.S. Bancorp Piper Jaffray Asset Management 500 * 500 0 0
for the benefit of Jane Pettit MicroCap Fund
U.S. Bancorp Piper Jaffray Asset Management 13,200 * 13,200 0 0
for the benefit of Lyndhurst Associates
MicroCap Fund
U.S. Bancorp Piper Jaffray Asset Management 211,700 2.08% 211,700 0 0
for the benefit of First American MicroCap
Fund
U.S. Bancorp Piper Jaffray Asset Management 400 * 400 0 0
for the benefit of William M. Chester
Children's SmallCap Fund
U.S. Bancorp Piper Jaffray Asset Management 3,800 * 3,800 0 0
for the benefit of Milwaukee Foundation
First American MicroCap Fund
U.S. Bancorp Piper Jaffray Asset Management 3,000 * 3,000 0 0
for the benefit of Milwaukee Jewish
Federation
U.S. Bancorp Piper Jaffray Asset Management 11,300 * 11,300 0 0
for the benefit of John J. Frantschi Life
Trust MicroCap Fund
Vision Small Cap Stock Fund 22,400 * 13,100 9,300 *
SEI Institutional Investments Trust 135,600 1.33% 81,000 54,600 *
Undiscovered Managers Small Cap Growth Fund 27,600 * 16,600 11,000 *
SEI Institutional Managed Trust 185,000 1.82% 111,000 74,000 *
Les Schwab P/S Retirement Trust 16,000 * 9,600 6,400 *
Daughter's of Charity 32,600 * 19,500 13,100 *
* represents beneficial ownership of less than one percent of our common stock.
14
PLAN OF DISTRIBUTION
The selling security holders may sell the resale shares, for cash, from
time to time in one or more transactions at:
o fixed prices,
o market prices at the time of sale,
o varying prices and terms to be determined at the time of sale, or
o negotiated prices.
The selling security holders will act independently of us in making
decisions regarding the timing, manner and size of each sale. The security
holders may effect these transactions by selling the resale shares to or through
broker-dealers. Broker-dealers engaged by the security holders may arrange for
other broker-dealers to participate in the resales. The resale shares may be
sold in one or more of the following types of transaction:
o block trade(s) in which a broker-dealer attempts to sell the shares as
agent but may resell a portion of the block as principal to facilitate
the transaction,
o purchase(s) by a broker-dealer as principal and resale(s) by the
broker-dealer for its account under this prospectus,
o an exchange distribution in accordance with the rules of the exchange,
o ordinary brokerage transactions and transactions in which a broker
solicits purchasers,
o privately negotiated transactions between the selling security holders
and purchasers, without a broker-dealer, and
o a combination of any of the above transactions.
We may amend or supplement this prospectus from time to time to describe a
specific or additional plan of distribution. If the plan of distribution
involves an arrangement with a broker-dealer for the sale of shares through a
block trade, special offering, exchange distribution or secondary distribution,
or a purchase by a broker-dealer, the supplement will disclose:
o the name of the selling security holder and the participating
broker-dealer,
o the number of shares involved,
o the price at which the shares were sold,
o the commissions paid or discounts or concessions allowed to the
broker-dealer,
o that the broker-dealer did not conduct any investigation to verify the
information contained or incorporated by reference in this prospectus,
and
o any other facts material to the transaction.
In addition, if a selling security holder notifies us that a donee, pledgee
or other transferee of the security holder intends to sell more than 500 shares,
we will file a supplement to this prospectus. In addition, if a security holder
notifies us of any material change with respect to the plan of distribution of
the resale shares described herein, we will file a post-effective amendment to
the registration statement of which this prospectus forms a part.
The security holders may enter into hedging transactions with
broker-dealers in connection with distributions of the resale shares. In these
transactions, broker-dealers may engage in short sales of the shares to offset
the positions they assume with the security holders. The security holders also
may sell shares short and redeliver the shares to close out their short
positions. The security holders may enter into option or other transactions with
15
broker-dealers that require the delivery to the broker-dealer of the resale
shares. The broker-dealer may then resell or otherwise transfer the shares under
this prospectus. The security holders also may loan or pledge the resale shares
to a broker-dealer. The broker-dealer may sell the loaned or pledged shares
under this prospectus.
Broker-dealers or agents may receive compensation from security holders in
the form of commissions, discounts or concessions. Broker-dealers or agents may
also receive compensation from the purchasers of the resale shares for whom they
act as agents or to whom they sell as principals, or both. A broker-dealer's
compensation will be negotiated in connection with the sale and may exceed the
broker-dealer's customary commissions. Broker-dealers, agents or the security
holders may be deemed to be "underwriters" within the meaning of the Securities
Act in connection with sales of the resale shares. Any commission, discount or
concession received by these broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
discounts or commissions under the Securities Act.
Because the security holders may be deemed to be "underwriters" within the
meaning of the Securities Act, they will be subject to the prospectus delivery
requirements of the Securities Act. In addition, any securities covered by this
prospectus that qualify for resale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather than under this prospectus.
The selling security holders have advised us that they have not entered
into any agreements, understandings or arrangements with any underwriter or
broker-dealer regarding the sale of the resale shares. There is no underwriter
or coordinating broker acting in connection with the proposed sale of the resale
shares by the security holders.
The resale shares will be sold only through registered or licensed brokers
or dealers if so required under applicable state securities laws. In addition,
in certain states the resale shares may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption from
the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale shares may not simultaneously engage
in market making activities with respect to our common stock for a period of two
business days prior to the commencement of the distribution. In addition, the
security holders will be subject to applicable provisions of the Exchange Act
and the rules and regulations thereunder, including Regulation M, which may
limit the timing of purchases and sales of shares of our common stock by the
security holders or any other person. We will make copies of this prospectus
available to the selling security holders and we have informed them of the
requirement to deliver a copy of this prospectus to each purchaser at or prior
to the time of the sale.
We will pay all costs, expenses and fees associated with the registration
of the resale shares. The security holders will pay all commissions and
discounts, if any, associated with the sale of the resale shares. The security
holders may agree to indemnify any broker-dealer or agent that participates in
sales of the resale shares against specified liabilities, including liabilities
arising under the Securities Act. The security holders have agreed to indemnify
certain persons, including us and broker-dealers and agents, against specified
liabilities in connection with the offering of the resale shares, including
liabilities arising under the Securities Act.
16
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the resale shares
by the security holders. All proceeds from the sale of the resale shares will be
solely for the accounts of the security holders.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended June 30, 2001, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in this registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
KPMG Chartered Accountants, Dublin, Ireland, have audited the financial
statements of Ivron Systems, Ltd. for the three years ended December 31, 2000
included in our Form 8-K/A filed with the Securities and Exchange Commission on
November 23, 2001, which are incorporated by reference in this prospectus and
elsewhere in this registration statement. Ivron Systems, Ltd.'s financial
statements are incorporated by reference in reliance on KPMG Chartered
Accountant's report, given on their authority as experts in accounting and
auditing.
17
You should rely only on the ----------------------------------
information contained in this
prospectus. We have not authorized
anyone to provide you with
information different from that
contained in this prospectus or 1,500,000 Shares
any prospectus supplement. This
prospectus is not an offer of
these securities in any
jurisdiction where an offer and
sale is not permitted. The Common Stock
information contained in this
prospectus is accurate only as
of the date of this prospectus, GENTNER
regardless of the time of COMMUNICATIONS
delivery of this prospectus or CORPORATION
any sale of our common stock.
----------------------------------
TABLE OF CONTENTS
Page
----
Prospectus
Our Business.....................2
Risk Factors ....................4
Where You Can Find More
Information.................10 ----------------------------------
Disclosure Regarding Forward
Looking Statements..........11
Security Holders................12
Plan of Distribution............15 [________]
Use of Proceeds.................17
Experts ........................17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth all expenses payable by the Registrant in
connection with the sale of common stock being registered. The security holders
will not bear any portion of such expenses. All the amounts shown are estimates
except for the registration fee.
SEC Registration Fee.......................$5,750
Legal fees and expenses....................$85,000
Accounting fees and expenses...............$30,000
Miscellaneous..............................$10,000
Total..................................$130,750
Item 15. Indemnification of Officers and Directors
The Registrant's Articles of Incorporation provide for the indemnification
of the Registrant's directors and officers to the fullest extent permitted by
the Utah Revised Business Corporation Act ("URBCA"). The liability of directors
and officers of the Registrant is limited such that a director or officer is not
liable to the Registrant or its shareholders for any action taken or any failure
to take any action, as an officer or director, as the case may be, unless: (i)
the director or officer has breached or failed to perform the duties of the
office in compliance with Section 16-10a-841 of the URBCA; and (ii) the breach
or failure to perform constitutes gross negligence, willful misconduct, or
intentional infliction of harm on the Registrant or its shareholders. Directors
of the Registrant are personally liable if such director votes for or assents to
an unlawful distribution under the URBCA or the Registrant's Articles of
Incorporation.
The Registrant will pursuant to Section 16-10a-902 of the URBCA, indemnify
an individual, made party to a proceeding because he was a director, against
liability incurred in the proceeding if: (i) the director's conduct was in good
faith; (ii) the director reasonably believed that his conduct was in, or not
opposed to, the Registrant's best interests; and (iii) in the case of any
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful; provided that, the company may not indemnify the same director if (a)
indemnification is sought in connection with a proceeding by or in the right of
the Registrant in which the director was adjudged liable to the Registrant or
(b) indemnification is sought in connection with any other proceeding charging
that the director derived an impersonal personal benefit, whether or not
including action in his official capacity, in which proceeding he was adjudged
liable on the basis that he derived an improper personal benefit.
Indemnification under this Section in connection with a proceeding by or in the
right of the Registrant is limited to reasonable expenses incurred in connection
with the proceeding.
In accordance with Section 16-10a-903 of the URBCA the Registrant shall
indemnify a director or an officer, who is successful on the merits or
otherwise, in defense of any proceeding, or in the defense of any claim, issue
or matter in the proceeding, to which he was a party because he is or was a
director or an officer of the Registrant, as the case may be, against reasonable
expenses incurred by him in connection with the proceeding or claim with respect
to which he has been successful.
In accordance with Section 16-10a-904 of the URBCA, the Registrant will pay
or reimburse the reasonable expenses incurred by a party to a proceeding in
advance of the final disposition of the proceeding, provided that, (i) the
director furnishes the corporation a written affirmation of his good faith
belief that he has met the applicable standard of conduct described in Section
16-10a-902 of the URBCA; (ii) the director furnishes to the Registrant a written
undertaking, executed personally or on his behalf, to repay the advance of it is
ultimately determined that he did not meet such standard of conduct; and (iii) a
II-1
determination is made that the facts then known to those making the
determination would not preclude indemnification thereunder.
Section 16-10a-905 permits a director or officer who is or was a party to a
proceeding to apply for indemnification to the court conducting the proceeding
or another court of competent jurisdiction.
The Registrant will indemnify and advance expenses to an officer, employee,
fiduciary or agent of the Registrant to the same extent as a director; or to a
greater extent in some instances if not inconsistent with public policy.
The Registrant maintains a directors' and officers' liability insurance
policy which, subject to the limitations and exclusions stated therein, covers
the officers and directors of the Registrant for certain actions or inactions
that they may take or omit to take in their capacities as officers and directors
of the Registrant.
Insofar as indemnification liabilities arising under the Securities Act of
1933, as amended, may be permitted to officers and directors under any of the
foregoing provisions, the Registrant has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and is therefore
unenforceable.
Item 16. Exhibits
a) Exhibits.
Exhibit
Number Description of Document
------ -----------------------
4 Form of Purchase Agreement.
23.1 Consent of Ernst & Young, L.L.P., independent auditors.
23.2 Consent of KPMG Chartered Accountants.
24 Power of Attorney. Reference is made to page II-4.
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the provisions described in Item 15 or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; and
II-2
(iii)To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that subparagraphs (i) and (ii) above do not apply
if the information required to be included in a post-effective
amendment by these subparagraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in
this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective
amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, as amended, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated
by reference in this registration statement shall be deemed to be
a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Salt Lake City, State of Utah, on the 23rd day of
November, 2001.
GENTNER COMMUNICATIONS CORPORATION
By: Frances M. Flood
-----------------------------------------
Frances M. Flood, Chairman of the Board,
President, and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Frances M. Flood and Randall J.
Wichinski, and each of them, as his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for the undersigned
and in his or her name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to the Registration
Statement and to file the same, with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the following
persons in the capacities and on the dates indicated have signed this
Registration Statement below.
Frances M. Flood Chairman of the Board, President, November 23, 2001
- ---------------------- and Chief Executive Officer
Frances M. Flood (Principal Executive Officer)
Randall J. Wichinski Chief Financial Officer November 23, 2001
- ---------------------- (Principal Accounting and
Randall J. Wichinski Financial Officer)
Brad R. Baldwin Director November 23, 2001
- ----------------------
Brad R. Baldwin
Michael Peirce Director November 23, 2001
- ----------------------
Michael A. Peirce
David Wiener Director November 23, 2001
- ----------------------
David Wiener
Harry Spielberg Director November 23, 2001
- ----------------------
Harry Spielberg
II-4
INDEX TO EXHIBITS
Exhibit
Number Description of Document
------ -----------------------
4 Form of Purchase Agreement.
23.1 Consent of Ernst & Young, L.L.P., independent auditors for
the Registrant.
23.2 Consent of KPMG Chartered Accountants.
24 Power of Attorney. Reference is made to page II-4.
II-5
EXHIBIT 4
PURCHASE AGREEMENT
THIS AGREEMENT is made as of the __ day of October, 2001, by and between
Gentner Communications Corporation (the "Company"), a corporation organized
under the laws of the State of Utah, with its principal offices at 1825 Research
Way, Salt Lake City, Utah 84119, and the purchaser whose name and address is set
forth on the signature page hereof (the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and the Purchaser agree as follows:
SECTION 1. Authorization of Sale of the Shares. Subject to the terms and
conditions of this Agreement, the Company has authorized the sale of up to
1,500,000 shares (the "Shares") of common stock, par value $0.001 per share (the
"Common Stock"), of the Company.
SECTION 2. Agreement to Sell and Purchase the Shares. At the Closing (as
defined in Section 3), the Company will sell to the Purchaser, and the Purchaser
will buy from the Company, upon the terms and conditions hereinafter set forth,
the number of Shares (at the purchase price) shown below:
Price Per
Number to Be Share In Aggregate
Purchased Dollars Price
--------- ------- -----
The Company proposes to enter into substantially the same form of purchase
agreement with certain other investors (the "Other Purchasers") and expects to
complete sales of the Shares to them. The Purchaser and the Other Purchasers are
hereinafter sometimes collectively referred to as the "Purchasers," and this
Agreement and the agreements executed by the Other Purchasers are hereinafter
sometimes collectively referred to as the "Agreements." The term "Placement
Agent" shall mean Wedbush Morgan Securities, Inc.
SECTION 3. Delivery of the Shares at the Closing. The completion of the
purchase and sale of the Shares (the "Closing") shall occur as soon as
practicable and as agreed to by the parties hereto, following notification by
the Securities and Exchange Commission (the "Commission") to the Company of the
Commission's willingness to declare effective the registration statement to be
filed by the Company pursuant to Section 7.1 hereof (the "Registration
Statement") at a place and time (the "Closing Date") to be agreed upon by the
Company and the Placement Agent. The Company will promptly notify the Purchasers
by facsimile transmission or otherwise of the date, place and time of the
Closing; provided, however, that such date shall be no more than three business
days following the effectiveness of the Registration Statement.
At the Closing, the Company shall deliver to the Purchaser one or more
stock certificates registered in the name of the Purchaser, or, if so indicated
on the Stock Certificate Questionnaire attached hereto as Appendix I, in such
nominee name(s) as designated by the Purchaser, representing the number of
Shares set forth in Section 2 above and bearing an appropriate legend referring
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to the fact that the Shares were sold in reliance upon the exemption from
registration under the Securities Act of 1933, as amended (the "Securities Act")
provided by Section 4(2) thereof and Rule 506 thereunder. The Company will
promptly substitute one or more replacement certificates without the legend at
such time as the Registration Statement is effective. The name(s) in which the
stock certificates are to be registered are set forth in the Stock Certificate
Questionnaire attached hereto as Appendix I. The Company's obligation to
complete the purchase and sale of the Shares and deliver such stock
certificate(s) to the Purchaser at the Closing shall be subject to the following
conditions, any one or more of which may be waived by the Company: (a) receipt
by the Company of same-day funds in the full amount of the purchase price for
the Shares being purchased hereunder; (b) completion of the purchases and sales
under the Agreements with all of the Other Purchasers; and (c) the accuracy in
all material respects of the representations and warranties made by the
Purchasers and the fulfillment of those undertakings of the Purchasers to be
fulfilled prior to the Closing. The Purchaser's obligation to accept delivery of
such stock certificate(s) and to pay for the Shares evidenced thereby shall be
subject to the following conditions, any one or more of which may be waived by
the Purchaser: (a) the Commission has notified the Company of the Commission's
willingness to declare the Registration Statement effective on or prior to the
60th day after the date such Registration Statement was filed by the Company;
(b) each of the representations and warranties of the Company made herein shall
be accurate in all material respects at the Closing Date with the same effect as
though made at and as of such date; and (c) the fulfillment in all material
respects of those undertakings of the Company to be fulfilled prior to Closing.
The Purchaser's obligations hereunder are expressly not conditioned on the
purchase by any or all of the Other Purchasers of the Shares that they have
agreed to purchase from the Company.
SECTION 4. Representations, Warranties and Covenants of the Company. The
Company hereby represents and warrants to, and covenants with, the Purchaser as
follows:
4.1. Organization and Qualification. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Utah and the Company is qualified to do business as a foreign corporation in
each jurisdiction in which qualification is required, except where failure to so
qualify would not reasonably be expected to have a material adverse effect upon
the business, prospects, financial condition, properties or operations of the
Company and all of its subsidiaries, which are listed on Exhibit B (each a
"Subsidiary" and collectively the "Subsidiaries") taken as a whole (a "Material
Adverse Effect"). Each Subsidiary is a direct or indirect wholly-owned
subsidiary of the Company. Each Subsidiary is duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization and is
qualified to do business as a foreign entity in each jurisdiction in which
qualification is required, except where failure to so qualify would not have a
Material Adverse Effect.
4.2. Authorized Capital Stock. Except as disclosed in or contemplated by
the Confidential Private Placement Memorandum dated October 15, 2001 prepared by
the Company, including all Exhibits (except Exhibit E) supplements and
amendments thereto (the "Private Placement Memorandum"), the Company had
authorized and outstanding capital stock as set forth under the heading
"Capitalization" in the Private Placement Memorandum as of the date set forth
therein; the issued and outstanding shares of the Company's Common Stock have
II-7
been duly authorized and validly issued, are fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, were not
issued in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and conform in all material respects to
the description thereof contained in the Private Placement Memorandum. Except as
disclosed in the Private Placement Memorandum, the Company does not have
outstanding any options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities or obligations. The description
of the Company's stock, stock bonus and other stock plans or arrangements and
the options or other rights granted and exercised thereunder, set forth in the
Private Placement Memorandum accurately and fairly presents the information
required to be shown with respect to such plans, arrangements, options and
rights. With respect to each Subsidiary, (i) the Company owns, directly or
indirectly, 100% of the Subsidiary's capital stock (except for directors'
qualifying shares), (ii) all the issued and outstanding shares of the
Subsidiary's capital stock have been duly authorized and validly issued, are
fully paid and nonassessable, have been issued in compliance with applicable
federal and state securities laws, were not issued in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase securities,
and (iii) there are no outstanding options to purchase, or any preemptive rights
or other rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
the Subsidiary's capital stock or any such options, rights, convertible
securities or obligations.
4.3. Issuance, Sale and Delivery of the Shares. The Shares have been duly
authorized and, when issued, delivered and paid for in the manner set forth in
this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform in all material respects to the description
thereof set forth in the Private Placement Memorandum. No preemptive rights or
other rights to subscribe for or purchase exist with respect to the issuance and
sale of the Shares by the Company pursuant to this Agreement. No stockholder of
the Company has any right (which has not been waived or has not expired by
reason of lapse of time following notification of the Company's intent to file
the Registration Statement) to require the Company to register the sale of any
shares owned by such stockholder under the Securities Act in the Registration
Statement. No further approval or authority of the stockholders or the Board of
Directors of the Company will be required for the issuance and sale of the
Shares to be sold by the Company as contemplated herein.
4.4. Due Execution, Delivery and Performance of this Agreement. The Company
has full legal right, corporate power and authority to enter into this Agreement
and perform the transactions contemplated hereby. This Agreement has been duly
authorized, executed and delivered by the Company. The execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions herein contemplated will not violate any provision of the
organizational documents of the Company or any of its Subsidiaries and will not
result in the creation of any lien, charge, security interest or encumbrance
upon any assets of the Company or any of its Subsidiaries pursuant to the terms
or provisions of, and will not (i) conflict with, result in the breach or
violation of, or constitute, either by itself or upon notice or the passage of
time or both, a default under (A) any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which the Company
II-8
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective properties may be bound or affected and
in each case which would have a Material Adverse Effect, or (B) to the Company's
knowledge, any statute or any judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency or other governmental body
applicable to the Company or any of its Subsidiaries or any of their respective
properties where such conflict, breach, violation or default is likely to result
in a Material Adverse Effect. No consent, approval, authorization or other order
of any court, regulatory body, administrative agency or other governmental body
is required for the execution and delivery of this Agreement or the consummation
of the transactions contemplated by this Agreement, except for compliance with
the blue sky laws and federal securities laws applicable to the offering of the
Shares. Upon the execution and delivery of this Agreement, and assuming the
valid execution thereof by the Purchaser, this Agreement will constitute valid
and binding obligations of the Company, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of the Company in Section 7.3 hereof may be
legally unenforceable.
4.5. Accountants. The firm of Ernst & Young, L.L.P. which has expressed its
opinion with respect to the consolidated financial statements to be included in
the Registration Statement and the Prospectus which forms a part thereof, is an
independent accountant as required by the Securities Act and the rules and
regulations promulgated thereunder (the "Rules and Regulations").
4.6. No Defaults. Except as disclosed in the Private Placement Memorandum,
and except as to defaults, violations and breaches which individually or in the
aggregate would not have a Material Adverse Effect on the Company or any of its
Subsidiaries taken as a whole, neither the Company nor any of its Subsidiaries
is in violation or default of any provision of its certificate of incorporation
or bylaws, or in breach of or default with respect to any provision of any
agreement, judgment, decree, order, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which it is a party or by
which it or any of its properties are bound; and, to the Company's knowledge,
there does not exist any state of fact which, with notice or lapse of time or
both, would constitute an event of default on the part of the Company or any of
its Subsidiaries as defined in such documents, except such defaults which
individually or in the aggregate would not have a Material Adverse Effect.
4.7. Contracts. The contracts described in the Private Placement Memorandum
that are material to the Company or its Subsidiaries are in full force and
effect on the date hereof; and neither the Company nor any of its Subsidiaries
is, nor, to the Company's knowledge, is any other party in breach of or default
under any of such contracts which would have a Material Adverse Effect.
4.8. No Actions. Except as disclosed in the Private Placement Memorandum,
there are no legal or governmental actions, suits or proceedings pending or, to
II-9
the Company's knowledge, threatened in writing to which the Company or any of
its Subsidiaries is or may be a party or of which property owned or leased by
the Company or any of its Subsidiaries is or may be the subject, or related to
environmental or discrimination matters, which actions, suits or proceedings,
individually or in the aggregate, might prevent or might reasonably be expected
to materially and adversely affect the transactions contemplated by this
Agreement or result in a Material Adverse Effect; and no labor disturbance by
the employees of the Company exists, to the Company's knowledge, or is imminent
which might reasonably be expected to have a Material Adverse Effect. Neither
the Company nor any of its Subsidiaries is party to or subject to the provisions
of any material injunction, judgment, decree or order of any court, regulatory
body administrative agency or other governmental body.
4.9. Properties. Each of the Company and its Subsidiaries has good and
marketable title to all the properties and assets reflected as owned by it in
the consolidated financial statements included in the Private Placement
Memorandum, subject to no lien, mortgage, pledge, charge or encumbrance of any
kind except (i) those, if any, reflected in such consolidated financial
statements, or (ii) those which are not material in amount and do not adversely
affect the use made and intended to be made of such property by the Company or
any of its Subsidiaries. Each of the Company and its Subsidiaries holds its
leased properties under valid and binding leases, with such exceptions as are
not materially significant in relation to its business taken as a whole.
4.10. No Material Change. Since June 30, 2001 and except as described in
the Private Placement Memorandum, (i) the Company and its Subsidiaries have not
incurred any material liabilities or obligations, indirect, or contingent, or
entered into any material verbal or written agreement or other transaction which
is not in the ordinary course of business (other than the agreement with Ivron
Systems Limited pursuant to which Ivron Systems Limited has been acquired as an
indirect wholly-owned subsidiary of the Company); (ii) the Company and its
Subsidiaries have not sustained any material loss or interference with its
businesses or properties from fire, flood, windstorm, accident or other calamity
not covered by insurance; (iii) the Company and its Subsidiaries have not paid
or declared any dividends or other distributions with respect to its capital
stock and neither the Company nor any of its Subsidiaries is in default in the
payment of principal or interest on any outstanding debt obligations; (iv) there
has not been any change in the capital stock of the Company or any of its
Subsidiaries other than the sale of the Shares hereunder, shares or options
issued pursuant to employee equity incentive plans or purchase plans approved by
the Company's Board of Directors and repurchases of shares or options pursuant
to repurchase plans already approved by the Company's Board of Directors, or
indebtedness material to the Company or any of its Subsidiaries (other than in
the ordinary course of business, or arising in connection with the Company's
transaction with Ivron Systems Limited, which have been disclosed by the Company
in the Private Placement Memorandum); and (v) any other event or change that
would have a Material Adverse Effect.
4.11. Intellectual Property.
(a) The Company has ownership or license or legal right to use all material
patent, copyright, trade secret and trademark rights known by it to be necessary
II-10
to the conduct of the business of the Company as now conducted (collectively,
"Intellectual Property") other than Intellectual Property generally available on
commercial terms from other sources.
(b) All material licenses or other material agreements under which (i) the
Company is granted rights in Intellectual Property, other than Intellectual
Property generally available on commercial terms from other sources, and (ii)
the Company has granted rights to others in Intellectual Property owned or
licensed by the Company, are in full force and effect and, to the knowledge of
the Company, there is no material default by the Company or any other party
thereto.
(c) The Company believes it has taken all steps required in accordance with
sound business practice and business judgment to establish and preserve its
ownership of all material copyright, trade secret and other proprietary rights
with respect to its products and technology.
(d) To the knowledge of the Company, the present business, activities and
products of the Company do not infringe any intellectual property of any other
person, except where such infringement would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. No proceeding charging
the Company with infringement of any adversely held Intellectual Property has
been filed. To the knowledge of the Company, the Company is not making
unauthorized use of any confidential information or trade secrets of any person.
To the Company's knowledge, the activities of the Company or any of its
employees on behalf of the Company do not violate any agreements or arrangements
known to the Company which any such employees have with other persons, if any.
(e) None of the Company's existing patents is material to its business,
operations or prospects, taken as a whole.
4.12. Compliance. Neither the Company nor any of its Subsidiaries has been
advised, nor has reason to believe, that it is not conducting its business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which it is conducting its business, including, without limitation, all
applicable local, state and federal environmental laws and regulations; except
where failure to be so in compliance would not have a Material Adverse Effect.
4.13. Taxes. Each of the Company and its Subsidiaries has filed all
necessary federal, state and foreign income and franchise tax returns and has
paid or accrued all taxes shown as due thereon, and neither the Company nor any
of its Subsidiaries has knowledge of a tax deficiency which has been or might be
asserted or threatened against it which could have a Material Adverse Effect.
4.14. Transfer Taxes. On the Closing Date, all stock transfer or other
taxes (other than income taxes) which are required to be paid in connection with
the sale and transfer of the Shares to be sold to the Purchaser hereunder will
be, or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been complied with.
II-11
4.15. Investment Company. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of 1940, as
amended.
4.16. Offering Materials. The Company has not distributed and will not
distribute prior to the Closing Date any offering material in connection with
the offering and sale of the Shares other than the Private Placement Memorandum
or any amendment or supplement thereto. The Company has not in the past nor will
it hereafter take any action independent of the Placement Agent to sell, offer
for sale or solicit offers to buy any securities of the Company which would
bring the offer, issuance or sale of the Shares, as contemplated by this
Agreement, within the provisions of Section 5 of the Securities Act, unless such
offer, issuance or sale was or shall be within the exemptions of Section 4 of
the Securities Act.
4.17. Insurance. The Company maintains insurance of the types and in the
amounts that the Company reasonably believes is adequate for its business,
including, but not limited to, insurance covering all real and personal property
owned or leased by the Company against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against by similarly situated
companies, all of which insurance is in full force and effect.
4.18. Contributions. At no times since incorporation has the Company,
directly or indirectly, (i) made any unlawful contribution to any candidate for
public office, or failed to disclose fully any contribution in violation of law,
or (ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States or
any jurisdiction thereof.
4.19. Additional Information. The information contained in the following
documents, which the Placement Agent has furnished to the Purchaser, or will
furnish prior to the Closing, does not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
in which they were made, not misleading, as of their respective final dates:
(a) the Company's Annual Report on Form 10-K for the year ended June 30,
2001;
(b) the Company's Proxy Statement on Form 14A filed with the Commission on
October 10, 2001;
(c) the Company's Press Release dated October 4, 2001;
(d) the Company's Current Report on Form 8-K to be filed with the
Commission prior to the Closing, and regarding the acquisition of Ivron Systems,
Ltd.;
(e) the draft Registration Statement;
(f) the Private Placement Memorandum, including all addenda and exhibits
thereto (other than the Appendices); and
II-12
(g) all other documents, if any, filed by the Company with the Commission
since June 30, 2001 pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
4.20. Legal Opinion. Prior to the Closing, James Valeo, Esq., General
Counsel of the Company will deliver a legal opinion to the Placement Agent
substantially in the form of Exhibit A hereto, with such changes therein as such
counsel rendering the opinion and the Placement Agent may agree upon. Such
opinion shall also state that each of the Purchasers may rely thereon as though
it were addressed directly to such Purchaser.
4.21. Certificate. At the Closing, the Company will deliver to Purchaser a
certificate executed by the Chairman of the Board or President and the chief
financial or accounting officer of the Company, dated the Closing Date, in form
and substance reasonably satisfactory to the Purchasers, to the effect that the
representations and warranties of the Company set forth in this Section 4 are
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date, and the Company has complied with all the agreements and
satisfied all the conditions herein on its part to be performed or satisfied on
or prior to such Closing Date.
4.22. Price of Common Stock. The Company has not taken, and will not take,
directly or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of the Common Stock to
facilitate the sale or resale of the Common Stock.
SECTION 5. Representations, Warranties and Covenants of the Purchaser. (a)
The Purchaser represents and warrants to, and covenants with, the Company that:
(i) the Purchaser is knowledgeable, sophisticated and experienced in making, and
is qualified to make, decisions with respect to investments in shares
representing an investment decision like that involved in the purchase of the
Shares, including investments in securities issued by the Company and comparable
entities, and has requested, received, reviewed and considered all information
it deems relevant in making an informed decision to purchase the Shares; (ii)
the Purchaser is acquiring the number of Shares set forth in Section 2 above in
the ordinary course of its business and for its own account for investment only
and with no present intention of distributing any of such Shares or any
arrangement or understanding with any other persons regarding the distribution
of such Shares (this representation and warranty not limiting the Purchaser's
right to sell pursuant to the Registration Statement or in compliance with the
Securities Act and the Rules and Regulations, or, other than with respect to any
claims arising out of a breach of this representation and warranty, the
Purchaser's right to indemnification under Section 7.3); (iii) the Purchaser
will not, directly or indirectly, offer, sell, pledge, transfer or otherwise
dispose of (or solicit any offers to buy, purchase or otherwise acquire or take
a pledge of) any of the Shares except in compliance with the Securities Act and
the Rules and Regulations; (iv) the Purchaser has completed or caused to be
completed the Registration Statement Questionnaire attached hereto as part of
Appendix I, for use in preparation of the Registration Statement, and the
answers thereto are true and correct as of the date hereof and will be true and
correct as of the effective date of the Registration Statement and the Purchaser
will notify the Company immediately of any material change in any such
II-13
information provided in the Registration Statement Questionnaire; (v) the
Purchaser has, in connection with its decision to purchase the number of Shares
set forth in Section 2 above, relied solely upon the Private Placement
Memorandum and the documents included therein or incorporated by reference and
the representations and warranties of the Company contained herein; and (vi) the
Purchaser is an "accredited investor" within the meaning of Rule 501(a) of
Regulation D promulgated under the Securities Act.
(b) The Purchaser understands that the Shares are being offered and sold to
it in reliance upon specific exemptions from the registration requirements of
the Securities Act, the Rules and Regulations and state securities laws and that
the Company is relying upon the truth and accuracy of, and the Purchaser's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of the Purchaser to acquire
the Shares.
(c) For the benefit of the Company, the Purchaser agreed orally with the
Placement Agent to keep confidential all information concerning this private
placement. The Purchaser understands that the information contained in the
Private Placement Memorandum is strictly confidential and proprietary to the
Company and has been prepared from the Company's publicly available documents
and other information and is being submitted to the Purchaser solely for such
Purchaser's confidential use. The Purchaser agrees to use the information
contained in the Private Placement Memorandum for the sole purpose of evaluating
a possible investment in the Shares and the Purchaser hereby acknowledges that
it is prohibited from reproducing or distributing the Private Placement
Memorandum, this Purchase Agreement, or any other offering materials or other
information provided by the Company in connection with the Purchaser's
consideration of its investment in the Company, in whole or in part, or
divulging or discussing any of their contents. Further, the Purchaser
understands that the existence and nature of all conversations and
presentations, if any, regarding the Company and this offering must be kept
strictly confidential. The Purchaser understands that the federal securities
laws impose restrictions on trading based on information regarding this
offering. In addition, the Purchaser hereby acknowledges that unauthorized
disclosure of information regarding this offering may cause the Company to
violate Regulation FD.
(d) The Purchaser understands that its investment in the Shares involves a
significant degree of risk and that the market price of the Common Stock has
been volatile and that no representation is being made as to the future value of
the Common Stock. The Purchaser has the knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of an
investment in the Shares and has the ability to bear the economic risks of an
investment in the Shares.
(e) The Purchaser understands that no United States federal or state agency
or any other government or governmental agency has passed upon or made any
recommendation or endorsement of the Shares.
(f) The Purchaser understands that, until such time as the Registration
Statement has been declared effective or the Shares may be sold pursuant to Rule
II-14
144 under the Securities Act without any restriction as to the number of
securities as of a particular date that can then be immediately sold, the Shares
may bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates for the
Shares):
"The securities represented by this certificate have not
been registered under the Securities Act of 1933, as
amended. The securities may not be sold, transferred or
assigned in the absence of an effective registration
statement for the securities under said Act, or an opinion
of counsel, in form, substance and scope reasonably
acceptable to the Company, that registration is not required
under said Act or unless sold pursuant to Rule 144 under
said Act."
(g) The Purchaser's principal executive offices are in the jurisdiction set
forth immediately below the Purchaser's name on the signature pages hereto.
(h) The Purchaser hereby covenants with the Company not to make any sale of
the Shares without complying in all material respects with the provisions of
this Agreement, and if applicable, without effectively causing the prospectus
delivery requirement under the Securities Act to be satisfied, and the Purchaser
acknowledges and agrees that such Shares are not transferable on the books of
the Company unless the certificate submitted to the transfer agent evidencing
the Shares is accompanied by a separate Purchaser's Certificate of Subsequent
Sale: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or
other authorized person designated by, the Purchaser, and (iii) to the effect
that (A) the Shares have been sold in accordance with the Registration
Statement, the Securities Act and any applicable state securities or blue sky
laws and (B), if applicable, the requirement of delivering a current prospectus
has been satisfied. The Purchaser acknowledges that there may occasionally be
times when the Company must suspend the use of the prospectus forming a part of
the Registration Statement (a "Suspension") until such time as an amendment to
the Registration Statement has been filed by the Company and declared effective
by the Commission, or until such time as the Company has filed an appropriate
report with the Commission pursuant to the Exchange Act. The Purchaser hereby
covenants that it will not sell any Shares pursuant to said prospectus during
the period commencing at the time at which the Company gives the Purchaser
written notice of the Suspension of the use of said prospectus and ending at the
time the Company gives the Purchaser written notice that the Purchaser may
thereafter effect sales pursuant to said prospectus. Notwithstanding the
foregoing, the Company agrees that no Suspension shall be for a period of longer
than 30 consecutive days, and no Suspensions shall be for a period of an
aggregate in any 365-day period of longer than 65 days, unless in the good faith
judgment of the Company's board of directors, upon advice of counsel, the sale
of Shares under the Registration Statement in reliance on the foregoing would be
reasonably likely to cause a violation of the Securities Act or the Exchange Act
or the Rules or Regulations promulgated under either act, and result in
potential liability to the Company.
(i) The Purchaser further represents and warrants to, and covenants with,
the Company (i) the Purchaser has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated hereby
II-15
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement, and (ii) upon the execution and delivery of this
Agreement, this Agreement shall constitute a legal, valid and binding obligation
of the Purchaser, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification agreements
of the Purchaser in Section 7.3 hereof may be legally unenforceable.
SECTION 6. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement or by the
Placement Agent, all covenants, agreements, representations and warranties made
by the Company and the Purchaser herein and in the certificates for the Shares
delivered pursuant hereto shall survive the execution of this Agreement, the
delivery to the Purchaser of the Shares being purchased and the payment
therefor.
SECTION 7. Registration of the Shares; Compliance with the Securities Act.
7.1. Registration Procedures and Expenses. The Company shall:
(a) as soon as practicable, prepare and file with the Commission the
Registration Statement on Form S-3 relating to the sale of the Shares
by the Purchaser from time to time through the automated quotation
system of the Nasdaq National Market or the facilities of any national
securities exchange on which the Company's Common Stock is then traded
or in privately-negotiated transactions;
(b) use its reasonable efforts, subject to the receipt of necessary
information from the Purchasers, to cause the Commission to notify the
Company of the Commission's willingness to declare the Registration
Statement effective within 60 days after the date the Registration
Statement is filed by the Company;
(c) prepare and file with the Commission such amendments and supplements
to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement
effective until the earliest of (i) two years after the effective date
of the Registration Statement, (ii) the date on which the Shares may
be resold by the Purchasers without registration by reason of Rule
144(k) under the Securities Act or any other rule of similar effect,
or (iii) such time as all Shares purchased by the Purchaser under this
Agreement have been sold;
(d) furnish to the Purchaser with respect to the Shares registered under
the Registration Statement (and to each underwriter, if any, of such
Shares) such reasonable number of copies of prospectuses in order to
facilitate the public sale or other disposition of all or any of the
II-16
Shares by the Purchaser; provided, however, that the obligation of the
Company to deliver copies of prospectuses to the Purchaser shall be
subject to the receipt by the Company of reasonable assurances from
the Purchaser that the Purchaser will comply with the applicable
provisions of the Securities Act and of such other securities or blue
sky laws as may be applicable in connection with any use of such
prospectuses;
(e) file documents required of the Company for normal blue sky clearance
in states specified in writing by the Purchaser; provided, however,
that the Company shall not be required to qualify to do business or
consent to service of process in any jurisdiction in which it is not
now so qualified or has not so consented; and
(f) bear all expenses in connection with the procedures in paragraphs (a)
through (f) of this Section 7.1 and the registration of the Shares
pursuant to the Registration Statement, other than fees and expenses,
if any, of counsel or other advisers to the Purchaser or the Other
Purchasers or underwriting discounts, brokerage fees and commissions
incurred by the Purchaser or the Other Purchasers, if any.
7.2. Transfer of Shares After Registration. The Purchaser agrees that it
will not effect any disposition of the Shares or its right to purchase the
Shares that would constitute a sale within the meaning of the Securities Act,
except as contemplated in the Registration Statement referred to in Section 7.1
or as otherwise permitted by law, and that it will promptly notify the Company
of any changes in the information set forth in the Registration Statement
regarding the Purchaser or its plan of distribution.
7.3. Indemnification. For the purpose of this Section 7.3:
(i) the term "Purchaser/Affiliate" shall mean any affiliate of the
Purchaser and any person who controls the Purchaser or any affiliate
of the Purchaser within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act; and
(ii) the term "Registration Statement" shall include any final prospectus,
exhibit, supplement or amendment included in or relating to, and any
document incorporated by reference in, the Registration Statement
referred to in Section 7.1.
(a) The Company agrees to indemnify and hold harmless each Purchaser and
each Purchaser/Affiliate against any losses, claims, damages, liabilities or
expenses, joint or several, to which such Purchaser or Purchaser/Affiliate may
become subject, under the Securities Act, the Exchange Act, or any other federal
or state statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
II-17
fact contained in the Registration Statement, including the prospectus,
financial statements and schedules, and all other documents filed as a part
thereof, as amended at the time of effectiveness of the Registration Statement,
including any information deemed to be a part thereof as of the time of
effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434,
of the Rules and Regulations, or the prospectus, in the form first filed with
the Commission pursuant to Rule 424(b) of the Regulations, or filed as part of
the Registration Statement at the time of effectiveness if no Rule 424(b) filing
is required (the "Prospectus"), or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state in any of
them a material fact required to be stated therein or necessary to make the
statements in any of them, in light of the circumstances under which they were
made, not misleading, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company contained in
this Agreement, or any failure of the Company to perform its obligations
hereunder or under law, and will reimburse each such Purchaser and each such
Purchaser/Affiliate for any legal and other expenses as such expenses are
reasonably incurred by such Purchaser or such Purchaser/Affiliate in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon (i) an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Purchaser expressly for use therein, or (ii)
the failure of such Purchaser to comply with the covenants and agreements
contained in Sections 5 or 7.2, or (iii) the inaccuracy of any representations
made by such Purchaser herein or (iv) any statement or omission in any
Prospectus that is corrected in any subsequent Prospectus that was delivered to
the Purchaser prior to the pertinent sale or sales by the Purchaser.
(b) Each Purchaser will severally indemnify and hold harmless the Company,
each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, against
any losses, claims, damages, liabilities or expenses to which the Company, each
of its directors, each of its officers who signed the Registration Statement or
controlling person may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Purchaser) insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon (i) any failure to comply
with the covenants and agreements contained in Sections 5 or 7.2 hereof, or (ii)
the inaccuracy of any representation made by such Purchaser herein, or (iii) any
untrue or alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Purchaser expressly
II-18
for use therein, and will reimburse the Company, each of its directors, each of
its officers who signed the Registration Statement or controlling person for any
legal and other expense reasonably incurred by the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action.
(c) Promptly after receipt by an indemnified party under this Section 7.3
of notice of the threat or commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 7.3 promptly notify the indemnifying party in writing
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party for
contribution or otherwise than under the indemnity agreement contained in this
Section 7.3 or to the extent it is not prejudiced as a result of such failure.
In case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the extent
that it may wish, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be a conflict
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 7.3 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party shall have
employed such counsel in connection with the assumption of legal defenses in
accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, approved by such indemnifying party,
representing all of the indemnified parties who are parties to such action) or
(ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of action, in each of which cases
the reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party. In no event shall any indemnifying party be liable in
respect of any amounts paid in settlement of any action unless the indemnifying
party shall have approved the terms of such settlement; provided that such
consent shall not be unreasonably withheld. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnification could have been sought hereunder by
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
II-19
(d) If the indemnification provided for in this Section 7.3 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a), (b) or
(c) of this Section 7.3 in respect to any losses, claims, damages, liabilities
or expenses referred to herein, then each applicable indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of any losses, claims, damages, liabilities or expenses referred to herein (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Purchaser from the placement of Common Stock or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but the relative fault of the Company and the
Purchaser in connection with the statements or omissions or inaccuracies in the
representations and warranties in this Agreement which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company on the one hand and each Purchaser on the other shall be deemed to be in
the same proportion as the amount paid by such Purchaser to the Company pursuant
to this Agreement for the Shares purchased by such Purchaser that were sold
pursuant to the Registration Statement bears to the difference (the
"Difference") between the amount such Purchaser paid for the Shares that were
sold pursuant to the Registration Statement and the amount received by such
Purchaser from such sale. The relative fault of the Company, one the one hand,
and each Purchaser on the other shall be determined by reference to, among other
things, whether the untrue or alleged statement of a material fact or the
omission or alleged omission to state a material fact or the inaccurate or the
alleged inaccurate representation and/or warranty relates to information
supplied by the Company or by such Purchaser and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in paragraph (c) of this
Section 7.3, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in paragraph (c) of this Section 7.3 with respect to the
notice of the threat or commencement of any threat or action shall apply if a
claim for contribution is to be made under this paragraph (d); provided,
however, that no additional notice shall be required with respect to any threat
or action for which notice has been given under paragraph (c) for purposes of
indemnification. The Company and each Purchaser agree that it would not be just
and equitable if contribution pursuant to this Section 7.3 were determined
solely by pro rata allocation (even if the Purchaser were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in this paragraph.
Notwithstanding the provisions of this Section 7.3, no Purchaser shall be
required to contribute any amount in excess of the amount by which the
Difference exceeds the amount of any damages that such Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Purchasers' obligations to contribute pursuant to this
Section 7.3 are several and not joint.
7.4. Termination of Conditions and Obligations. The restrictions imposed by
Section 5 or this Section 7 upon the transferability of the Shares shall cease
II-20
and terminate as to any particular number of the Shares upon the passage of two
years from the effective date of the Registration Statement covering such Shares
or at such time as an opinion of counsel satisfactory in form and substance to
the Company shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act.
7.5. Information Available. So long as the Registration Statement is
effective covering the resale of Shares owned by the Purchaser, the Company will
furnish to the Purchaser:
(a) as soon as practicable after available, one copy of (i) its Annual
Report to Stockholders (which Annual Report shall contain financial
statements audited in accordance with generally accepted accounting
principles by a national firm of certified public accountants), (ii)
if not included in substance in the Annual Report to Stockholders,
upon the request of Purchaser, its Annual Report on Form 10-K, (iii)
upon request of Purchaser, its quarterly reports on Form 10-Q, and
(iv) a full copy of the particular Registration Statement covering the
Shares (the foregoing, in each case, excluding exhibits);
(b) upon the reasonable request of the Purchaser, a reasonable number of
copies of the prospectuses, and any supplements thereto, to supply to
any other party requiring such prospectuses;
and the Company, upon the reasonable request of the Purchaser, will meet with
the Purchaser or a representative thereof at the Company's headquarters to
discuss information relevant for disclosure in the Registration Statement
covering the Shares and will otherwise cooperate with any Purchaser conducting
an investigation for the purpose of reducing or eliminating such Purchaser's
exposure to liability under the Securities Act, including the reasonable
production of information at the Company's headquarters, subject to appropriate
confidentiality limitations.
SECTION 8. Broker's Fee. The Purchaser acknowledges that the Company
intends to pay to the Placement Agent a fee in respect of the sale of the Shares
to the Purchaser. Each of the parties hereto hereby represents that, on the
basis of any actions and agreements by it, there are no other brokers or finders
entitled to compensation in connection with the sale of the Shares to the
Purchaser.
SECTION 9. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, confirmed facsimile or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
dispatched and shall be delivered as addressed as follows:
(a) if to the Company, to:
Gentner Communications Corporation
1825 Research Way
Salt Lake City, Utah 84119
II-21
Facsimile: (801) 974-3742
Attn: General Counsel
with a copy to:
Jones, Waldo, Holbrook & McDonough
1500 First Interstate Plaza
170 South main Street
Salt Lake City, Utah 84101
Facsimile: (801) 328-0537
Attn: Robinson Alston, Esq.
or to such other person at such other place as the Company shall
designate to the Purchaser in writing; and
(b) if to the Purchaser, at its address as set forth at the end of this
Agreement, or at such other address or addresses as may have been
furnished to the Company in writing.
SECTION 10. Changes. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Purchaser. No
provision hereunder may be waived other than in a written instrument executed by
the waiving party.
SECTION 11. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
SECTION 12. Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
SECTION 13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York and the federal
law of the United States of America.
SECTION 14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered (including by facsimile) to the other parties.
SECTION 15. Entire Agreement. This Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters.
II-22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
GENTNER COMMUNICATIONS CORPORATION
By _________________________________
Print or Type:
Name of Purchaser
(Individual or Institution):
---------------------------------
Name of Individual representing
Purchaser (if an Institution):
---------------------------------
Title of Individual representing
Purchaser (if an Institution):
---------------------------------
Signature by:
Individual Purchaser or Individual
representing Purchaser:
---------------------------------
Address: ___________________________
Telephone: ___________________________
Telecopier: ___________________________
II-23
SUMMARY INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Purchase Agreement which follows)
A. Complete the following items on BOTH Purchase Agreements:
1. Pages 18 - Signature:
(i) Name of Purchaser (Individual or Institution)
(ii) Name of Individual representing Purchaser (if an Institution)
(iii) Title of Individual representing Purchaser (if an Institution)
(iv) Signature of Individual Purchaser or Individual representing
Purchaser
2. Appendix I - Stock Certificate Questionnaire/Registration Statement
Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire and the Registration Statement Questionnaire.
3. Return BOTH properly completed and signed Purchase Agreements
including the properly completed Appendix I to:
Wedbush Morgan Securities, Inc.
1000 Wilshire Blvd.
Los Angeles, California 90017
Attention: Michael Gardner
B. Instructions regarding the transfer of funds for the purchase of Shares
will be sent by facsimile to the Purchaser by the Placement Agent at a
later date.
C. Upon the resale of the Shares by the Purchasers after the Registration
Statement covering the Shares is effective, as described in the Purchase
Agreement, the Purchaser:
(i) must deliver a current prospectus of the Company to the buyer
(prospectuses must be obtained from the Company at the
Purchaser's request); and
(ii) must send a letter in the form of Appendix II to the Company so
that the Shares may be properly transferred.
II-24
Appendix I
(one of two)
GENTNER COMMUNICATIONS CORPORATION
STOCK CERTIFICATE QUESTIONNAIRE
- -------------------------------
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares are to be
registered in (this is the name that will
appear on your stock certificate(s)). You may
use a nominee name if appropriate: _________________________
2. The relationship between the Purchaser of the
Shares and the Registered Holder listed in
response to item 1 above: _________________________
3. The mailing address of the Registered Holder
listed in response to item 1 above: _________________________
_________________________
_________________________
_________________________
4. The Social Security Number or Tax
Identification Number of the Registered Holder
listed in response to item 1 above: _________________________
II-25
Appendix I
(two of two)
GENTNER COMMUNICATIONS CORPORATION
REGISTRATION STATEMENT QUESTIONNAIRE
------------------------------------
In connection with the preparation of the Registration Statement, please
provide us with the following information:
1. Pursuant to the "Selling Stockholder" section of the Registration
Statement, please state your or your organization's name exactly as it
should appear in the Registration Statement:
2. Please provide the number of shares that you or your organization will own
immediately after Closing, including those Shares purchased by you or your
organization pursuant to this Purchase Agreement and those shares purchased
by you or your organization through other transactions:
3. Have you or your organization had any position, office or other material
relationship within the past three years with the Company or its
affiliates?
_____ Yes _____ No
If yes, please indicate the nature of any such relationships
below:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
4. Are you (i) an NASD Member (see definition), (ii) a Controlling (see
definition) shareholder of an NASD Member, (iii) a Person Associated with a
Member of the NASD (see definition), or (iv) an Underwriter or a Related
Person (see definition) with respect to the proposed offering; or (b) do
you own any shares or other securities of any NASD Member not purchased in
the open market; or (c) have you made any outstanding subordinated loans to
any NASD Member?
Answer: [ ] Yes [ ] No If "yes," please describe below
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
NASD Member. The term "NASD member" means either any broker or dealer
admitted to membership in the National Association of Securities Dealers, Inc.
("NASD"). (NASD Manual, By-laws Article I, Definitions)
II-26
Control. The term "control" (including the terms "controlling," "controlled
by" and "under common control with") means the possession, direct or indirect,
of the power, either individually or with others, to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise. (Rule 405 under the
Securities Act of 1933, as amended)
Person Associated with a member of the NASD. The term "person associated
with a member of the NASD" means every sole proprietor, partner, officer,
director, branch manager or executive representative of any NASD Member, or any
natural person occupying a similar status or performing similar functions, or
any natural person engaged in the investment banking or securities business who
is directly or indirectly controlling or controlled by a NASD Member, whether or
not such person is registered or exempt from registration with the NASD pursuant
to its bylaws. (NASD Manual, By-laws Article I, Definitions)
Underwriter or a Related Person. The term "underwriter or a related person"
means, with respect to a proposed offering, underwriters, underwriters' counsel,
financial consultants and advisors, finders, members of the selling or
distribution group, and any and all other persons associated with or related to
any of such persons. (NASD Interpretation)
II-27
APPENDIX II
Attention:
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
------------------------------------------
The undersigned, [an officer of, or other person duly authorized by]
_____________________________________________________________ hereby certifies
[fill in official name of individual or institution]
that he/she [said institution] is the Purchaser of the shares evidenced by the
attached certificate, and as such, sold such shares on _______________ in
[date]
accordance with the terms of the Purchase Agreement and the Company, and in
accordance with Registration Statement number __________________________________
[fill in the number of or
____________________________________________ , and the requirement of delivering
otherwise identify Registration Statement]
a current prospectus by the Company has been complied with in connection with
such sale.
Print or Type:
Name of Purchaser
(Individual or
Institution): ______________________
Name of Individual
representing
Purchaser (if an
Institution) ______________________
Title of Individual
representing
Purchaser (if an
Institution): ______________________
Signature by:
Individual Purchaser
or Individual repre-
senting Purchaser: ______________________
II-28
EXHIBIT A
FORM OF OPINION
OF COMPANY COUNSEL
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Utah. The Company is qualified to
do business as a foreign corporation in good standing in ____________ which, to
our knowledge, are the only jurisdictions in which it owns or leases real
property. Each Subsidiary is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and is qualified to
do business as a foreign corporation in each jurisdiction in which it owns or
leases real property. The Company has all authority to own, lease, license and
operate its properties and assets and to conduct its business as described in
the Private Placement Memorandum.
2. The Company's authorized capital stock as of June 30, 2001 is as set
forth in the Private Placement Memorandum under the heading "Capitalization;"
there have been no changes in the authorized capital stock of the Company since
that date. The authorized capital stock of the Company conforms in all material
respects as to legal matters to the description thereof incorporated by
reference into the Private Placement Memorandum.
3. All of the outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable and were
not issued in violation of or subject to any statutory preemptive or, to our
knowledge, similar contractual rights.
4. The Shares have been duly authorized and, when issued and delivered to
the Investors against payment therefor in accordance with the terms of the
Agreements, will be validly issued, fully paid and nonassessable and free of any
statutory preemptive or, to our knowledge, similar contractual rights.
5. The form of the certificates for the Shares conforms to the requirements
of Utah General Corporation Law.
6. The Company has full corporate power and authority to enter into the
Agreements and the Engagement Letter and to issue, sell and deliver the Shares
to the Investors as provided in the Agreements, and the Agreements have been
duly authorized, executed and delivered by the Company and the Agreements are
the legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, subject to customary exceptions for
bankruptcy and equitable remedies and indemnification/contribution provisions.
7. The Company's execution, delivery and performance of the Agreements and
the Engagement Letter do not and will not (i) violate the Articles of
Incorporation or Bylaws of the Company, (ii) violate, result in a breach of or
constitute a default under (alone or with notice or passage of time or both) or
result in the creation or imposition of any lien, charge, claim, security
interest or encumbrance upon any property or assets of the Company under any
agreement, indenture, lease or other instrument to which the Company is a party
or by which it or any of its properties or assets is bound or subject that is
made an exhibit to the Company's Form S-4 or any Current Report on Form 8-K
II-29
filed by the Company subsequent to the filing of the Form S-4, or (iii) result
in any violation by the Company of any existing federal or Utah corporate law,
regulation or ruling which in our experience is normally reviewed in
transactions of the type contemplated by the Agreements (assuming compliance
with all applicable state securities and blue sky laws, the Securities Act of
1933, as amended (the "Securities Act"), and the Securities Exchange Act of
1934, as amended), or any judgment, injunction, order or decree specifically
naming the Company and known to us.
8. No consent, approval, authorization or order of, or registration or
filing with any federal or Utah corporate governmental authority is required on
the part of the Company for the performance by the Company of its obligations at
the closing of the transactions contemplated by the Agreements, except as may be
required under the Securities Act, by the National Association of Securities
Dealers, or such as may be required under the state securities or blue sky laws
in connection with the purchase and sale of the Shares.
9. To our knowledge, there are no actions, suits, arbitrations, claims,
governmental or other proceedings or investigations pending or threatened
against the Company or any of its operations, businesses, properties or assets
or which challenge the validity of any actions taken or to be taken by the
Company pursuant to the Agreements, the Engagement Letter or the transactions
contemplated thereby.
10. To our knowledge, no holders of securities of the Company have rights,
which have not been waived or complied with, to the registration of shares of
Common Stock or other securities of the Company because of the filing of the
Resale Registration Statement or the offering contemplated thereby.
II-30
EXHIBIT B
Name of Subsidiary Jurisdiction of Formation
Gentner Ventures, Inc. Utah
Gentner Holdings LLC Utah
Gentner Communications EuMEA GmbH Germany
Ivron Systems, Ltd. Republic of Ireland
Ivron Systems, Inc. Delaware
(indirect through Ivron Systems, Ltd.)
II-31
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Gentner
Communications Corporation for the registration of shares of its common stock
and to the incorporation by reference therein of our report dated July 27, 2001
with respect to the consolidated financial statements of Gentner Communications
Corporation included in its Annual Report (Form 10-K) for the year ended June
30, 2001, filed with the Securities and Exchange Commission.
Ernst & Young, LLP
---------------------------------
Ernst & Young, LLP
Salt Lake City, Utah
November 15, 2001
II-32
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Gentner
Communications Corporation for the registration of its common stock and to the
incorporation by reference therein of our report July 27, 2001, with respect to
the financial statements of Ivron Systems, Ltd. for the years ending December
31, 1998, 1999, 2000, included in Gentner Communications Corporation's Current
Report filed on Form 8-K/A on November 23, 2001, filed with the Securities and
Exchange Commission, and which Form 8-K/A is incorporated by reference into the
Registration Statement.
KPMG
- -----
KPMG
Chartered Accountants
Dublin, Ireland
November 23, 2001
II-33