Exhibit 2.1
EXECUTION COPY
SILICON BANDWIDTH, INC.
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May __, 1999
The Panda Project, Inc.
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Re: Acquisition by Silicon Bandwidth, Inc. of Assets of
The Panda Project, Inc.
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Gentlemen:
This letter, upon your execution and delivery of a copy to
Silicon Bandwidth, Inc., a Delaware corporation ( Purchaser ), shall
constitute and confirm the binding agreement between The Panda
Project, Inc., a Florida corporation ("Seller"), and Purchaser
regarding the acquisition (the "Acquisition") by Purchaser from Seller
(and its subsidiary corporations and related divisions, if applicable)
of the Assets (as defined in Exhibit A), including, without
limitation, substantially all of the assets of Seller including, but
not limited to, trade names, intellectual property, patents, trade
secrets, accounts receivable, equipment and inventories used in, or
necessary for, the operation of the semiconductor packaging and
interconnect devices business of Seller (the "Business"), as further
described below.
Concurrently with the execution of this Agreement, and as a
condition and inducement to Purchaser's willingness to enter into this
Agreement, certain securityholders of Seller, which, in the aggregate,
own, or will own after the exercise or conversion of securities of
Seller owned by such securityholders, sufficient shares of capital
stock of Seller to assure all necessary Seller shareholder approvals
of the Acquisition, are entering into a voting agreement in the form
attached hereto as Exhibit B (the "Voting Agreement.")
Section 1. Purchase of Assets. Purchaser shall purchase
from Seller, and Seller shall sell, convey and assign to Purchaser,
free and clear of all claims, liens and interests except as is
provided for herein, all of Seller's right, title and interest in and
to the Assets; provided, that, Seller shall not assign to Purchaser
any Excluded Assets (as defined in Exhibit A).
Section 2. Assignment and Assumption of Contracts. The
term "Assets" includes any and all contracts and other rights (the
"Contracts") used in, or necessary for, the operation of the Business,
except for contracts which are Excluded Assets.
Section 3. Liabilities. On the Closing Date, Purchaser
shall assume (i) liabilities and obligations arising out of the
ownership, use and operation of the Business after the Closing Date;
and (ii) the other liabilities and obligations specified in Exhibit
C (the "Assumed Liabilities"). Purchaser shall not be liable for any
other liabilities or obligations of Seller or its respective
affiliates except as is otherwise specifically set forth herein.
Section 4. Payment of Purchase Price. On the Closing
Date, in consideration of the sale by Seller of the Business and
Assets to Purchaser, Purchaser will: (i) issue to Seller the shares
of common stock of Purchaser (the "Purchaser Common Stock") initially
representing 10% of the capital stock of Purchaser on a fully diluted
basis (counting the shares underlying the options pool referred to in
Section 9 hereof as outstanding as well as the 7,000,000 shares of
Series A Preferred Stock referred to in Section 7(iii) hereof); and
(ii) assume the liabilities specified in Section 3 hereof.
Section 5. Closing Date. The term "Closing Date means a
day set for the closing of the Acquisition and mutually agreeable to
Purchaser and Seller; provided, that in no event shall the Closing
Date be later than October 31, 1999. If the Closing Date shall not
have occurred by October 31, 1999, this agreement (or the Definitive
Agreement) shall terminate by written notice by either party, with no
continuing obligations of any party, except pursuant to Sections 17,
18 and 19 hereof.
Section 6. Representations and Warranties of Seller.
Seller hereby represents and warrants to Purchaser that:
(i) Organization and Qualification. Seller and each
directly and indirectly owned subsidiary of Seller has been duly
organized and is validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, as the case may
be, and has the requisite corporate power and authority and all
necessary governmental approvals to own, lease and operate its
properties and to carry on its agreements, limitations on voting
rights, charges and encumbrances of any nature whatsoever.
(ii) Authority Relative to This Letter. Seller has all
necessary corporate power and authority to execute and deliver this
letter and to perform its obligations hereunder and to consummate the
Acquisition. The execution and delivery of this letter by Seller and
the consummation by Seller of the Acquisition have been duly and
validly authorized by all necessary corporate action, and, to Seller's
knowledge, no other corporate proceedings on the part of Seller are
necessary to authorize this letter or to consummate the Acquisition
except the approval of the Definitive Agreement and the Acquisition by
holders of a majority of the common stock of Seller and the holders of
66 2/3 % of the Series A Preferred Stock of Seller. The
securityholders of Seller who are entering into the Voting Agreement
own, or will own after the exercise or conversion of securities of
Seller owned by such securityholders, sufficient shares of capital
stock of Seller to assure all necessary Seller shareholder approvals
of the Acquisition. This letter has been duly executed and delivered
by Seller and, assuming the due authorization, execution and delivery
by Purchaser, constitutes the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
(iii) No Conflict; Required Filings and Consents.
a. The execution and delivery of this letter by Seller
do not, and the performance by Seller of its
obligations hereunder and the consummation of the
Acquisition will not, (i) conflict with or violate
any provision of the articles of incorporation or
bylaws of Seller or any equivalent organizational
documents of any subsidiary of Seller, (ii) conflict
with or violate any law applicable to Seller or any
Seller subsidiaries or by which any property or asset
of Seller or any Seller subsidiaries is bound or
affected or (iii) result in any breach of or
constitute a default (or an event which, with the
giving of notice or lapse of time or both, could
reasonably be expected to become a default) under, or
give to others any right of termination, amendment,
acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any
property or asset of Seller or any Seller
subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation,
except, with respect to clauses (ii) and (iii), for
the Helix security interest and for any such
conflicts, violations, breaches, defaults or other
occurrences which are not reasonably expected,
individually or in the aggregate, to prevent or
materially delay the performance by Seller of its
obligations pursuant to this letter or the
consummation of the Acquisition.
b. The execution and delivery of this letter by Seller
do not, and the performance by Seller of its
obligations hereunder and the consummation of the
Acquisition will not, require any consent, approval,
authorization or permit of, or filing by Seller with
or notification by Seller to, any governmental
entity.
(iv) Properties. Seller has good and marketable title,
free and clear of all liens, to all their material properties and
assets, whether tangible or intangible, real, personal or mixed,
except liens arising in the ordinary course of business and except for
the Helix security interest. All buildings, and all fixtures,
equipment and other property and assets that are material to its
business on a consolidated basis, held under leases or sub-leases by
Seller or any subsidiary of Seller are held under valid instruments
enforceable in accordance with their respective terms, subject to
applicable laws of bankruptcy, insolvency or similar laws relating to
creditors' rights generally and to general principles of equity
(whether applied in a proceeding in law or equity). Substantially all
of Seller's and Seller's subsidiaries' equipment in regular use, which
is to be purchased by Purchaser, has been reasonably maintained and is
in serviceable condition, reasonable wear and tear excepted.
(v) Disclosure. No representation or warranty of
Seller in this letter contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the
statements contained herein not misleading.
Section 7. Representations and Warranties of Purchaser.
Purchaser hereby represents and warrants to Seller that:
(i) Organization and Qualification. Purchaser has been
duly organized and is validly existing and in good standing under the
laws of the state of Delaware.
(ii) Authority Relative to This Letter. Purchaser has
all necessary corporate power and authority to execute and deliver
this letter and to perform its obligations hereunder and to consummate
the Acquisition. The execution and delivery of this letter by
Purchaser and the consummation by Purchaser of the Acquisition have
been duly and validly authorized by all necessary corporate action,
and, to Purchaser's knowledge, no other corporate proceedings on the
part of Purchaser are necessary to authorize this letter or to
consummate the Acquisition. This letter has been duly executed and
delivered by Purchaser and, assuming the due authorization, execution
and delivery by Seller, constitutes the legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance
with its terms.
(iii) Capitalization. As of the Closing Date, the
authorized capital stock of Purchaser shall consist of 10,000,000
shares of preferred stock, 7,000,000 of which shall be issued and
outstanding, and 30,000,000 shares of common stock, 1,000,000 of which
shall be issued and outstanding to Seller pursuant to Section 4
hereof.
(iv) Financing Commitments. Purchaser has received
irrevocable commitments from investors to provide Purchaser equity
capital of not less than $6,000,000 in cash and commitments, subject
only to the closing of the Acquisition in accordance with the terms
and conditions of this Agreement.
(v) Purchaser's Business. Purchaser has not engaged in
any business of any kind or nature and will not engage in any
business, except as may be contemplated by this Agreement. Purchaser
has no indebtedness or liabilities of any kind or nature and will not
incur any indebtedness or liabilities from the date hereof through the
Closing Date, except as contemplated by this Agreement.
Section 8. Interim Period. From the date hereof to the
Closing Date, Purchaser and Seller will consult on all action
reasonably necessary or appropriate to preserve the value of the
Business and the Assets and to operate the Business in the ordinary
course; Seller will operate the Business in the ordinary course,
consistent with past practice and with a view to preserving its value
and goodwill and will not implement any material changes to the
operation of the Business without notifying Purchaser's prior written
approval, provided, that, ultimate control of the Business shall
remain exclusively with Seller until after the Closing Date. Subject
to the foregoing proviso, the Definitive Agreement will contain other
customary restrictions on the operation of the Business prior to the
Closing Date, and provided further, that Seller may take any action
with respect to Excluded Assets and excluded liabilities
notwithstanding the foregoing. Seller shall take no action nor allow
any action to be taken to cause any of the representations or
warranties of Seller under this Agreement to be untrue.
Section 9. Employee Matters. Following the Closing Date
Purchaser shall offer employment to all of the employees of the
Business other than selected individuals to be identified by Purchaser
at least 5 days prior to the Closing Date (collectively, the
"Employees"). Shares of Purchaser Common Stock equal to 20% of the
initial capital stock of Purchaser (computed on a fully diluted basis
including the issuance to Seller and the issuance of 7,000,000 shares
of Series A Preferred) will be reserved for issuance to Purchaser's
employees, officers and directors (specifically including the
Employees) upon the exercise of employee stock options with terms and
conditions, including vesting tied to continued employment by
Purchaser, customary to venture capital backed start-up companies.
Conditions to Acquisition. Unless waived in writing by
Purchaser, Purchaser's obligation to consummate the Acquisition shall
be subject to the satisfaction of the following conditions, among
others, to be contained in the Definitive Agreement:
(i) completion of, and satisfaction with the results
of, financial, business, technical and legal due diligence reviews of
Seller by the Purchaser;
(ii) Seller shall have solicited and received the
approval of the holders of common stock of Seller necessary to effect
the sale of substantially all of the assets of Seller;
(iii) if necessary to consummate the Acquisition,
Seller shall have solicited and received the approval of the holders
of 66-2/3% of the shares of Series A Preferred Stock of Seller;
(iv) Purchaser shall have received all permits,
authorizations, consents, agreements and approvals of all foreign or
domestic governmental agencies and other third parties which are
necessary or appropriate to permit Purchaser to use and operate the
Assets in a manner consistent with the manner in which they were used
and operated by Seller prior to the Closing Date (the "Approvals"),
which Approvals shall not contain any condition or restriction which
materially impairs Purchaser's ability to use, operate or enjoy the
Assets;
(v) there shall not be in effect any injunction, stay
or restraining order issued by a court of competent jurisdiction,
whether foreign or domestic, staying the effectiveness of any
Approval, and there shall not be any pending request for such an
injunction, stay or restraining order;
(vi) there shall not be threatened or pending any suit,
action, investigation, inquiry or other proceeding by or before any
court of competent jurisdiction or governmental agency which, in
Purchaser's reasonable judgment, could have a material adverse effect
on Purchaser's ability to acquire, use, operate or enjoy the Assets;
(vii) Seller shall have delivered to Purchaser
appropriate closing documents, including a ▇▇▇▇ of sale and other
title documents, satisfactory in form and substance to Purchaser;
(viii) Seller shall have delivered to Purchaser a
signed counterpart of a stockholders' agreement including the terms
set forth in Exhibit D hereto and otherwise satisfactory to Purchaser
(the "Stockholders' Agreement");
(ix) Purchaser shall be satisfied that applicable bulk
sale or similar requirements shall have been complied with by Seller
on a timely basis;
(x) No material adverse change in the Business or the
Assets shall have occurred since the date hereof;
(xi) Purchaser shall have received audited financial
statements of Seller for the fiscal year ended December 31, 1998;
(xii) the Contracts shall have been assigned as
contemplated by Section 2;
(xiii) All of the employees of Seller prior to the
Closing Date designated by the Purchaser as key employees on Exhibit
E ("Key Employees") shall have accepted the offer of employment by
Purchaser made pursuant to Section 9 above;
(xiv) Purchaser shall be satisfied in its sole
discretion that Seller is able to sell, convey and assign to
Purchaser, free and clear of all claims, liens and interests except as
is provided for herein, all of Seller's right, title and interest in
and to the Assets; and
(xv) Seller shall have complied in all material
respects with its covenants and agreements hereunder.
(a) Unless waived in writing by Seller, Seller's
obligation to consummate the transactions contemplated hereby shall be
subject to the satisfaction of the following conditions, among others
to be contained in the Definitive Agreement:
(i) the conditions set forth in subsections (a)(ii) and
(iii) shall have been satisfied;
(ii) Purchaser and its current stockholders shall each
have delivered to Seller a signed counterpart of the Stockholders'
Agreement;
(iii) Purchaser shall have been capitalized with equity
capital of not less than $6,000,000 in cash and commitments; and
(iv) Purchaser shall have complied in all material
respects with its covenants and agreements hereunder.
Section 11. Definitive Agreement. Seller and Purchaser
agree to negotiate in good faith and use their respective best efforts
towards the execution and delivery of the Definitive Agreement as
promptly as is practicable after the date hereof. The Definitive
Agreement shall contain terms and provisions, including
representations, warranties, warranty termination periods,
indemnities, etc., as are consistent with the terms hereof and as are
customary for transactions of this type.
Section 12. Due Diligence. Seller will provide
Purchaser, together with its accountants, counsel and other authorized
representatives, full and complete access during normal business hours
to all properties, books, records, agreements and facilities of Seller
(insofar as the same are relevant to the Business or the Assets),
wherever located, and Seller will make its officers, employees,
attorneys, agents, independent accountants and actuaries available to
discuss with Purchaser and its accountants, counsel and other
authorized representatives such aspects of the business, financial
condition or prospects of the Business and the Assets as Purchaser may
deem necessary or desirable. To the extent that the transactions
contemplated hereby are not consummated, all written information
provided by Seller to Purchaser or its aforementioned representatives
will promptly be returned following Seller's written request to
Purchaser. All material non-public information provided by Seller
will be treated as confidential and will not be disclosed by Purchaser
or its representatives to any third party (other than its accountants,
counsel and authorized representatives and prospective debt and equity
investors for the sole purpose of evaluating the transactions
contemplated herein) without the prior written consent of Seller,
except as required by law or in connection with any civil,
administrative, criminal or other legal proceedings and
investigations.
Section 13. Sales, Transfer and Recording Taxes.
Purchaser and Seller shall equally bear sales, transfer or recording
taxes and recording fees imposed in connection with the Acquisition.
Section 14. Affiliates. To the extent that any of the
Assets are owned or controlled by Seller's subsidiary corporations or
other affiliates, Seller shall cause such persons to convey such
Assets to Purchaser pursuant to the Definitive Agreement.
Section 15. Public Announcements. Seller and Purchaser
will cooperate in making, and coordinate the making of, any public
announcements of the terms hereof, the Definitive Agreement and/or the
Acquisition. Seller and Purchaser have agreed that upon the execution
and acceptance of this letter, Seller shall file a Form 8-K with the
Securities and Exchange Commission and issue a press release
announcing the Acquisition, the form of each of which has been agreed
upon by Seller and Purchaser.
Section 16. Exclusivity. From the date of execution of
this agreement until August 1, 1999 or, if earlier, until such time as
Purchaser shall state in writing to Seller that the Acquisition will
not be consummated and that negotiations are terminated unless the
parties shall have entered into the Definitive Agreement (the
"Exclusivity Period"), none of Seller nor any of its respective
directors, officers, agents or representatives will (i) solicit,
encourage, initiate or participate in any negotiations or discussions
with respect to, any offer or proposal to acquire all or any portion
of the Business or the Assets whether by purchase of assets or
otherwise, (ii) disclose any information not customarily disclosed to
any person concerning the Business or the Assets or afford to any
person or entity access to the properties, books or records of the
Business or the Assets or (iii) cooperate with any person to make any
proposal to purchase all or any part of the assets of the Business or
the Assets (directly or indirectly) other than inventory or non-
essential or excess assets sold in the ordinary course of business.
The Exclusivity Period may be extended to September 30, 1999 at
Purchaser's option by written notice to Seller if, on or prior to
August 1, 1999, Purchaser offers to extend a loan of $500,000 to
Seller to help finance the continued operations of Seller pending the
closing of the Acquisition. The terms of any such loan shall provide
that the loan be secured by a first priority perfected security
interest in all assets of Seller, bear interest at the rate of 6% per
annum, be due and payable September 30, 1999, and be convertible, at
Purchaser's option, into Seller's Common Stock at then current market
prices.
Section 17. Expenses. Except as is otherwise provided
herein, each party hereto shall be responsible for its own expenses
incurred in connection with this agreement, the Definitive Agreement
and the consummation of the transactions contemplated hereby and
thereby. This provision shall survive the termination of this
agreement. In the event that (i) Seller shall determine after the
date hereof to terminate negotiations regarding the Acquisition
(whether or not permitted hereby) in order to seek or entertain a
proposal for the purchase of all or a portion of the Business or the
Assets or (ii) Seller sells, or agrees to sell, all or a portion of
the Business or the Assets within the twelve month period following
the termination hereof or the Definitive Agreement, Seller shall
promptly reimburse to Purchaser, upon receipt of invoices, Purchaser's
and its affiliates' out-of-pocket expenses incurred in connection with
the Acquisition including, without limitation, legal fees, accounting
fees, independent consultant fees and other miscellaneous out-of-
pocket expenses. There shall be no obligation of Seller under clause
(ii) of this Section 17 if Purchaser terminates negotiations with
Seller regarding the Acquisition in a manner not permitted by this
Agreement or if Seller determines that a condition set forth in
Section 10(b) above has not been satisfied and such failure of
condition is not attributable to the failure of Seller to use it best
efforts.
Section 18. Specific Performance; Injunctive Relief.
Purchaser and Seller acknowledge that Purchaser will be irreparably
harmed and that there will be no adequate remedy at law for a
violation of any of the covenants or agreements of Seller set forth
herein. Therefore, it is agreed that, in addition to any other
remedies that may be available to Purchaser upon any such violation,
Purchaser shall have the right to enforce such covenants and
agreements by specific performance, injunctive relief or by any other
means available to Purchaser at law or in equity and Seller hereby
waives any and all defenses which could exist in its favor in
connection with such enforcement and waives any requirement for the
security or posting of any bond in connection with such enforcement.
Section 19. Reservation of Rights. Payment of the
expenses specified in Section 17 shall not in any manner limit any
remedies against Seller that Purchaser may have hereunder or under the
Definitive Agreement, or against Purchaser that Seller may have
hereunder or the Definitive Agreement, for breach hereof.
Section 20. Governing Law, Amendments, Etc. This
agreement and the Definitive Agreement shall in all respects be
governed by and construed in accordance with the laws of the State of
New York, without reference to principles of conflicts or choice of
law. This agreement may only be amended by a written instrument
signed by authorized representatives of each of the parties hereto,
and may only be terminated by a written instrument signed by the party
purporting to terminate the agreement. Purchaser may assign all or a
portion of this agreement or the Definitive Agreement to any
subsidiary of Purchaser, or any corporation formed by the stockholders
of Purchaser. None of such assignments shall relieve Purchaser of any
obligations it may have hereunder or under the Definitive Agreement.
This agreement may be executed by the parties hereto in counterparts
and by telecopy, each of which shall be deemed to constitute an
original, but all of which together shall constitute one and the same
instrument.
Please indicate your acceptance of and agreement to the
above by signing as indicated below.
Very truly yours,
SILICON BANDWIDTH, INC.
By:
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman
Accepted and Agreed to this
_______ day of May, 1999.
THE PANDA PROJECT, INC.
By:
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Name:
Title:
EXHIBIT A
Assets
The Assets include all assets and property used in, or necessary for
the operation of the business, including, without limitation, the
Approvals, the Equipment, the Contracts, Intellectual Property,
Inventory, Receivables, and Documents.
Approvals means all permits, authorizations, licenses and other
governmental and third party rights and privileges necessary to
operate the Business as currently conducted
Contracts has the meaning described in the agreement
Documents means all books, records, diskettes or electronics media,
logos and manuals owned or, to the extent legally transferable, used
by the Business and related to it's operations.
Equipment means all furniture, fixtures and all equipment supporting
he Business (including re-manufacturing equipment).
Intellectual Property means all patents, trade and service marks,
designs, drawings, software, trade names, copyrights, mask works,
applications thereof, licenses thereof, and similar intangible
property used primarily in the Business.
Inventory means all inventory used in connection with the Business.
Receivables means all accounts receivable of seller outstanding as of
the Closing Date
Excluded Assets means cash, bank accounts, minutes books and other
corporate documents and tax refunds.
EXHIBIT B
EXECUTION COPY
VOTING AGREEMENT
This Voting Agreement (the "Agreement"@) is made and entered
into as of May __, 1999, among Silicon Bandwidth, Inc., a Delaware
corporation ("Purchaser"), each undersigned shareholder
("shareholder") of The Panda Project, Inc., a corporation existing
under the laws of Florida ("Seller"), and Seller.
RECITALS
WHEREAS, pursuant to a letter of agreement dated as of even
date herewith, by and between Purchaser and Seller (such agreement as
it may be amended or restated is hereinafter referred to as the
"Letter Agreement"), the parties agreed that on the signing of the
Letter Agreement, Purchaser and each Shareholder would execute and
deliver a Voting Agreement containing the terms and conditions set
forth in the Letter Agreement together with such other terms and
conditions as may be agreed to by the parties to the Letter Agreement
acting reasonably;
WHEREAS, a special committee of the board of directors of
Seller has determined that the transactions contemplated by the Letter
Agreement are fair to, and in the best interests of, the shareholders
of Seller and has approved such transactions;
WHEREAS, Purchaser has agreed to acquire substantially all of
the assets of Seller (the "Acquisition") in exchange for common stock
of Purchaser ("Purchaser Common Stock") and the assumption of certain
Seller liabilities by Purchaser;
WHEREAS, in order to induce Purchaser to consummate the
Acquisition, Seller has agreed to use its best efforts to solicit the
proxy of certain shareholders of Seller on behalf of Purchaser, and to
cause certain shareholders of Seller to execute and deliver voting
agreements to Purchaser;
WHEREAS, each Shareholder is the registered and beneficial
owner of at least such number of (i) shares of the outstanding capital
stock of Seller as is indicated on the signature page of this
Agreement (the "Shares") and/or (ii) securities convertible into or
exercisable for shares of capital stock of Seller as indicated on the
signature page of the Agreement (the "Share Equivalents");
WHEREAS, Helix (PEI), Inc. ("Helix") is an undersigned
Shareholder and holder of a security interest in certain assets of
Seller (the "Security Interest"); and
WHEREAS, in order to induce Purchaser to consummate the
Acquisition, Helix and Seller have agreed to renegotiate the terms of
the Security Interest.
NOW, THEREFORE, the parties agree as follows:
1. Share Ownership and Agreement to Retain Shares.
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1.1 Transfer and Encumbrance.
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(a) Purchaser acknowledges and agrees that, subject
to Section 1.2 hereof, this Agreement only pertains to the number of
Shares and Share Equivalents indicated on the signature page and that
Shareholder may be the beneficial owner of Shares and Share
Equivalents which are not subject to this Agreement.
(b) Each Shareholder is the beneficial owner of
that number of Shares and Share Equivalents set forth opposite such
Shareholder's name on the signature page hereto and, except as
otherwise set forth on the signature page hereto, has held such Shares
and Share Equivalents at all times since the date set forth on such
signature page. No other person or entity not a signatory to this
Agreement has a beneficial interest in or a right to acquire such
Shares or Share Equivalents or any portion of such Shares or Share
Equivalents. The Shares and Share Equivalents are and will be at all
times up until the Expiration Date free and clear of any liens,
claims, options, charges or other encumbrances.
(c) Each Shareholder agrees not to transfer (except
as may be specifically required by this Agreement, court order or by
operation of law), sell, exchange, pledge or otherwise dispose of or
encumber the Shares, Share Equivalents or any New Shares (as defined
below), or to make any offer or agreement relating thereto, at any
time prior to the Expiration Date. As used herein, the term
"Expiration Date" shall mean the earlier to occur of (i) the Closing
Date (as defined in the Letter Agreement) of the Acquisition, and (ii)
six months after the date of the termination of the Letter Agreement.
1.2 New Shares. Each Shareholder agrees that to the extent
necessary to achieve approval of such matters (if it is described in
Section (a)(i) or rejection of such matters described in Section
2(a)(ii)) shares of capital stock of Seller that such Shareholder
purchases or with respect to which such Shareholder otherwise acquires
beneficial ownership after the date of this Agreement and prior to the
Expiration Date ("New Shares") (such New Shares to exclude an
aggregate of 1,057,471 shares of Common Stock of Seller to be issued
to AGR Halifax Fund, Ltd., Leonardo, L.P., GAM Arbitrage Investments,
Inc., AG Super Fund International Partners, L.P., Raphael, L.P. and
Ramius Fund, L.P. upon the conversion of 27.6 shares of Series A
Preferred Stock of Seller) shall be subject to the terms and
conditions of this Agreement to the same extent as if they constituted
Shares.
2. Agreements Regarding Shares and Share Equivalents.
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(a) Prior to the Expiration Date, at every meeting
of the shareholders of Seller called with respect to any of the
following, and at every adjournment thereof, and on every action or
approval by written resolution of the shareholders of Seller with
respect to any of the following, each Shareholder shall vote the
Shares and any New Shares (i) in favor of approval of the Acquisition
and any matter that could reasonably be expected to facilitate the
Acquisition and (ii) against any proposal for any recapitalization,
merger, sale of assets or other business combination (other than the
Acquisition) between Seller and any person or entity other than
Purchaser.
(b) Prior to the record date set for the first
shareholders meeting relating to any matter covered by Section 2(a)
above, each undersigned holder of Share Equivalents shall exercise or
convert such number of Share Equivalents, as the case may be, into
capital stock of Seller, pro rata in the amount determined by
Purchaser to be necessary to achieve approval of such matters (if it
is described in Section 2(a)(i)) or rejection of such matters (if it
is described in Section 2(a)(ii)), and vote such shares as set forth
in Section 2(a) above.
3. Irrevocable Proxy. Each Shareholder is hereby
delivering to Purchaser a duly executed proxy in the form attached
hereto as Exhibit 1 (the "Proxy") with respect to each meeting of
shareholders of Seller, such Proxy to cover the total number of Shares
and New Shares in respect of which each Shareholder is entitled to
vote at any such meeting. Upon the execution of this Agreement by
each Shareholder, each Shareholder hereby revokes any and all prior
proxies given by it with respect to the Shares and agrees not to grant
any subsequent proxies with respect to the Shares or any New Shares
until after the Expiration Date.
4. Agreements Regarding Security Interest.
(a) Prior to the record date set for the first
shareholders meeting relating to any matter covered by Section 3(a)
above, Seller and Helix shall enter into an agreement to restructure
the indebtedness of Seller (the "Secured Debt") currently secured by
Helix's security interest in certain assets of Seller in the form
attached hereto as Exhibit 2 (the "Restructuring Agreement"), and
effective as of the Closing Seller and Helix shall effectuate such
restructuring.
(b) The Restructuring Agreement shall provide that
(i) Helix shall release its security interest in all assets of Seller
other than its intellectual property assets and (ii) the terms of the
Secured Debt shall be modified so that (A) the Secured Debt accrues
interest after the Closing at a rate of 6% per annum, calculated on a
monthly basis, (B) any interest accrued with respect to the Secured
Debt prior to the Closing is forgiven by Helix and (C) the Secured
Debt shall be subject to (x) a principal payment obligation of
$1,000,000 immediately after the Closing and (y) principal and
interest payments aggregating $100,000 per month on each of the
monthly anniversaries of the Closing (and such lesser amount on the
eleventh monthly anniversary of the Closing as shall satisfy all
remaining principal and interest on the Secured Debt).
5. Representations and Warranties of Shareholder. Each
Shareholder hereby represents and warrants to Purchaser as follows:
(a) such Shareholder has all requisite power and authority to enter
into this Agreement and to consummate the transactions contemplated
hereby; (b) this Agreement has been duly authorized, executed and
delivered by such Shareholder and constitutes a valid and binding
obligation of such Shareholder enforceable against such Shareholder in
accordance with its terms; (c) if such Shareholder is a natural person
and is married, and the Shares constitute community property or
otherwise need spousal or other approval for this Agreement to be
legal, valid and binding, this Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding
agreement of, such Shareholder's spouse, enforceable against such
spouse in accordance with its terms, and (d) no trust of which such
Shareholder is a trustee requires the consent of any beneficiary to
the execution and delivery of this Agreement or to the consummation of
the transactions contemplated hereby.
6. Additional Documents. Each Shareholder hereby covenants
and agrees to execute and deliver any additional documents reasonably
required for the consummation of the Acquisition or to carry out the
purpose and intent of this Agreement.
7. Consent and Waiver. Each Shareholder hereby gives any
consents or waivers that are reasonably required for the consummation
of the Acquisition under the terms of any agreement to which such
Shareholder is a party or pursuant to any rights such Shareholder may
have.
8. Termination. This Agreement and the Proxy delivered in
connection herewith shall terminate and shall have no further force or
effect as of the Expiration Date.
9. Miscellaneous.
9.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, then the remainder
of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
9.2 Binding Effect and Assignment. This Agreement and
all of the provisions hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns, but, except as otherwise specifically provided
herein, neither this Agreement nor any of the rights, interests or
obligations of the parties hereto may be assigned by either of the
parties without the prior written consent of the other. This
Agreement is intended to bind each Shareholder as a shareholder of
Seller only with respect to the specific matters set forth herein.
9.3 Amendment and Modification. This Agreement may not
be modified, amended, altered or supplemented except by the execution
and delivery of a written agreement executed by the parties hereto.
9.4 Specific Performance; Injunctive Relief. The
parties hereto acknowledge that Purchaser will be irreparably harmed
and that there will be no adequate remedy at law for a violation of
any of the covenants or agreements of each Shareholder set forth
herein. Therefore, it is agreed that, in addition to any other
remedies that may be available to Purchaser upon any such violation,
Purchaser shall have the right to enforce such covenants and
agreements by specific performance, injunctive relief or by any other
means available to Purchaser at law or in equity and each Shareholder
hereby waives any and all defenses which could exist in its favor in
connection with such enforcement and waives any requirement for the
security or posting of any bond in connection with such enforcement.
9.5 Notices. All notices, requests, demands or other
communications that are required or may be given pursuant to the terms
of this Voting Agreement shall be in writing and shall be deemed to
have been duly given upon receipt by delivery in person, by telecopy
or facsimile, by registered or certified mail or by a nationally
recognized courier service to the respective parties as follows:
(a) If to a Shareholder, at the address set forth
below such Shareholder's signature at the end hereof.
(b) if to Purchaser, to:
Silicon Bandwidth, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to Seller, to:
The Panda Project
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
5300 First Union Financial Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party hereto may designate for itself
by notice given as herein provided.
9.6 Governing Law. This Agreement shall be governed
by, construed and enforced in accordance with the laws of the State of
New York, except to the extent mandatorily governed by the laws of the
State of Florida.
9.7 Entire Agreement. This Agreement and the Proxy
contain the entire understanding of the parties in respect of the
subject matter hereof, and supersede all prior negotiations and
understandings between the parties with respect to such subject
matter.
9.8 Counterpart. This Agreement may be executed in
several counterparts, each of which shall be an original, but all of
which together shall constitute one and the same agreement.
9.9 Effect of Headings. The section headings herein
are for convenience only and shall not affect the construction or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Voting Agreement
to be executed as of the date first above written.
SILICON BANDWIDTH, INC. SHAREHOLDER
By:
------------------------- -----------------------------
(Signature)
Name:
------------------------- -----------------------------
(Print Name)
Title:
------------------------- -----------------------------
(Print Address)
THE PANDA PROJECT, INC.
-----------------------------
(Print Address)
By:
------------------------- -----------------------------
(Print Telephone Number)
Name:
------------------------- -----------------------------
Title:
------------------------- -----------------------------
(Social Security or Tax I.D. Number)
Total Number of Shares and Share Equivalents owned on the date hereof:
Common Stock:
-----------------------------
Series A Preferred Stock:
-----------------------------
- - --------------------------------- -----------------------------
(Print type of Share Equivalents) (Number of Share Equivalents)
[SIGNATURE PAGE TO VOTING AGREEMENT]
EXHIBIT 1
IRREVOCABLE PROXY
TO VOTE STOCK OF
SELLER
The undersigned shareholder of The Panda Project, Inc., a
Florida corporation ("Seller"), hereby irrevocably (to the full extent
permitted by the Florida Business Corporations Act) appoints the
members of the Board of Directors of Silicon Bandwidth, Inc., a
Delaware corporation ("Purchaser"), and each of them, or any other
designee of Purchaser, as the sole and exclusive attorneys and proxies
of the undersigned, with full power of substitution and
resubstitution, to vote and exercise all voting and related rights (to
the full extent that the undersigned is entitled to do so) with
respect to all of the shares of capital stock of Seller that now are
or hereafter may be beneficially owned by the undersigned, and any and
all other shares or securities of Seller issued or issuable in respect
thereof on or after the date hereof (collectively, the "Shares") in
accordance with the terms of this Irrevocable Proxy. The Shares
beneficially owned by the undersigned shareholder of Seller as of the
date of this Irrevocable Proxy are listed on the final page of this
Irrevocable Proxy. Upon the undersigned's execution of this
Irrevocable Proxy, any and all prior proxies given by the undersigned
with respect to any Shares are hereby revoked and the undersigned
agrees not to grant any subsequent proxies with respect to the Shares
until after the Expiration Date (as defined below).
This Irrevocable Proxy is irrevocable (to the extent provided
in the Florida Business Corporations Act), is coupled with an
interest, including, but not limited to, that certain Voting Agreement
dated as of even date herewith by and among Purchaser, Seller, and the
undersigned, and is granted in consideration of Purchaser entering
into that certain letter agreement dated of even date herewith between
Seller and Purchaser (the "Letter Agreement"), which agreement
provides for the acquisition by Purchaser of substantially all of the
assets of Seller (the "Acquisition"). As used herein, the term
"Expiration Date" shall mean the earlier to occur of (i) such date and
time as the Acquisition shall become effective in accordance with the
terms and provisions of the Letter Agreement, and (ii) six months
after the date of termination of the Letter Agreement.
The attorneys and proxies named above, and each of them are
hereby authorized and empowered by the undersigned, at any time prior
to the Expiration Date, to act as the undersigned's attorney and proxy
to vote the Shares, and to exercise all voting and other rights of the
undersigned with respect to the Shares (including, without limitation,
the power to execute and deliver written consents pursuant to the
Florida Business Corporations Act), at every annual, special or
adjourned meeting of the shareholders of Seller and in every written
consent in lieu of such meeting (i) in favor of approval of the
Acquisition, in favor of any matter that could reasonably be expected
to facilitate the Acquisition and against any proposal for any
recapitalization, merger, sale of assets or other business combination
relating to the Seller (other than the Transaction) and (ii) against
any other action or agreement that would result in a breach of any
covenant, representation or warranty or any other obligation or
agreement of Seller under an acquisition agreement in respect of the
Transaction or which would result in any of the conditions to the
completion of the Transaction not being fulfilled.
The attorneys and proxies named above may not exercise this
Irrevocable Proxy on any other matter except as provided above. The
undersigned shareholder may vote the Shares on all other matters.
All authority herein conferred shall survive the death or
incapacity of the undersigned and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
This Irrevocable Proxy is coupled with an interest as
aforesaid and is irrevocable.
Dated: May __, 1999
-----------------------------
(Signature of Shareholder)
(Print Name of Shareholder)
-----------------------------
Shares beneficially owned:
_________ shares of Common Stock of Seller
_________ shares of Series A Preferred Stock
of Seller
-----------------------------
(Print type and number of Share Equivalents)
[SIGNATURE PAGE TO IRREVOCABLE PROXY]
Exhibit 2
---------
Restructuring Agreement
-----------------------
AGREEMENT
---------
THIS AGREEMENT is made and entered into as of May 12, 1999, by
and among THE PANDA PROJECT, INC., a Florida corporation (the
"Company"), HELIX (PEI) INC., a ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island, Canada
corporation ("Helix"), and SILICON BANDWIDTH, INC., a Delaware
corporation ("SBI").
WHEREAS, Helix holds the three promissory notes (the "Notes")
payable to it by the Company described below:
Principal Amount Date of the Note
---------------- ----------------
US$750,000 May 28, 1998
US$1,000,000 June 22, 1998; and
US$250,000 July 17, 1998
WHEREAS, the Notes are in default and the parties desire to
provide for the actions described in this Agreement in order to settle
the default;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein, the parties hereto
do hereby agree as follows:
1. Initial Payment and Accrued Interest Forgiveness. Upon
the closing of the acquisition of certain assets of the Company by SBI
(the "Closing"), SBI will pay $1,000,000 to Helix, with such payment
being applied solely toward principal on the Notes. In consideration
of such payment and the issuance of Panda common stock to Helix
pursuant to the Letter Agreement attached as Exhibit A, Helix hereby
forgives and irrevocably releases Panda from payment of all accrued
interest on the Notes remaining unpaid as of the date of such payment
of $1,000,000.
2. Forbearance. Helix agrees that all of the accrued and
unpaid interest and principal amount of each of the Notes shall be due
and payable in eleven payments. The first ten payments will be in the
amount of $100,000 each and are due on the first day of each of the
first ten months following the Closing. Helix will apply these ten
payments first toward accrued and unpaid interest and then principal
on the Notes. The eleventh and final payment will be in an amount
equal to all unpaid principal and interest outstanding on the Notes
and will be due on the first day of the eleventh month following
Closing. Helix agrees that, as a result, the Notes are no longer in
default. Interest on the Notes shall accrue at a rate of 6% per annum
from the Closing until the Notes are repaid. Immediately after
execution of this Agreement, Helix agrees to ▇▇▇▇ each of the Notes as
follows: "This Promissory Note has been modified and amended by that
certain Agreement dated as of May 12, 1999, by and between Payor,
Payee and Silicon Bandwidth, Inc."
3. Release of Security Interest. On the Closing Date, Helix
agrees to release its security interest in all royalties and fees
arising from the use or license of the Collateral as defined in that
certain Intellectual Property Security Agreement dated as of May 28,
1998 between Helix and the Company and that certain Intellectual
Property Security Agreement dated as of June 22, 1998 between Helix
and the Company. Helix's remaining security interest in the assets of
the Company will be released upon repayment in full of the Notes
pursuant to the terms of this Agreement or any promissory notes
replacing, or substituted for, the Notes provided for in Section 4
hereof.
4. Assumption. Helix agrees that the obligation to pay the
Notes may, at the Company's option, be assumed, without recourse to
the Company, by SBI. In the event of such assumption, Helix agrees to
cause SBI to issue a new note in lieu of the Notes, and to return the
original of each of the Notes to the Company, marked "Replaced."
Except for any different terms or conditions provided for in this
Agreement, Helix and SBI agree that such new note will include the
same terms and conditions as the Notes, as modified and amended by
this Agreement.
5. Indemnification. The Company, on the one hand, and
Helix, on the other hand, shall indemnify the other against any loss,
cost or damages (including reasonable attorneys' fees and expenses)
suffered or incurred as a result of such party's breach of any
representation, warranty, covenant or agreement in this Agreement. The
Company shall indemnify Helix against any loss, cost or damages
(including reasonable attorneys' fees and expenses) suffered or
incurred as a result of Helix's (i) entrance into this Agreement or
(ii) entrance into the Voting Agreement.
6. Governing Law; Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Florida
without regard to the principles of conflict of laws.
(b) Counterparts. This Agreement may be executed in two or
more identical counterparts, each or all of which shall be considered
one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other
party.
(c) Entire Agreement; Amendments. This Agreement, together
with the Notes, the Voting Agreements of even date among SBI, the
Company and certain Company shareholders, and the letter agreements,
supersede all other prior oral or written agreements between Helix,
the Company, their affiliates and persons acting on their behalf with
respect to the matters discussed herein, and contain the entire
understanding of the parties with respect to the matters covered
therein.
(d) Termination. If the Closing Date has not occurred by
October 31, 1999, this agreement will terminate by written notice by
either party, with no continuing obligations of either party.
(e) Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their
respective successors and assigns.
IN WITNESS WHEREOF, the Company and Helix have caused this
Agreement to be duly executed of the date first written above.
THE PANDA PROJECT, INC.
By ______________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: President
HELIX (PEI) INC.
By ______________________________
Name:
Title:
SILICON BANDWIDTH, INC.
By ______________________________
Name:
Title:
EXHIBIT A
---------
EXCHANGE AGREEMENT
------------------
THIS AGREEMENT is made and entered into as of May 12, 1999, by
and among THE PANDA PROJECT, INC., a Florida corporation (the
Company ), and the holders of the Company s Series A Preferred Stock
executing this Agreement ( Holders ).
WHEREAS, each of the Holders owns the number of shares of the
Company s Series A Preferred Stock (as defined in the Company s
Articles of Incorporation, as amended) set forth opposite its name at
the foot of this Agreement; and
WHEREAS, the Company desires to exchange shares of the
Company s common stock for shares of Series A Preferred Stock, and the
Holders desire to accept such shares of Company common stock, on the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein, the parties hereto
do hereby agree as follows:
1. Exchange of Shares. On the Closing Date, the Company
agrees to issue and deliver to each of the Holders, and each of the
Holders agrees to accept, the number of shares of Company common stock
set forth opposite Holder s name on Schedule A (the Exchange Shares )
in exchange for (a) all of Holder s shares of Series A Preferred Stock
and (b) the amount to be paid by Holders upon exchange, both as set
forth opposite the Holder s name on Schedule A (the Exchange ). On
or
prior to the Closing Date, each of the Holders agrees to deliver to
the Company the certificates representing the shares of Series A
Preferred Stock to be so exchanged, together with stock powers duly
endorsed to transfer the shares to the Company. Closing of the
Exchange shall be conditioned upon the representations, warranties and
agreements of the parties hereto being true and complete on the
Closing Date as if they had been made on such date. The Closing Date
for the Exchange will be on any day or days at least five business
days prior the record date for the Company shareholders meeting
relating to the sale of substantially all of its assets to Silicon
Bandwidth, Inc. ( Silicon ) (such sale is referred to herein as the
Acquisition ).
2. Holder's Representations, Warranties and Agreements.
Each Holder represents and warrants to, and agrees with, the Company,
with respect to only itself, that:
(a) Investment Purpose. Such Holder is acquiring the
Exchange Shares for its own account for investment only and not with a
view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or exempted
under the Securities Act of 1933, as amended (the "1933 Act");
provided, however, the Holders may transfer the Exchange Shares to the
extent permitted in the Voting Agreement, dated May 12, 1999, by and
among Silicon, the shareholders of the Company listed therein and the
Company (the "Voting Agreement").
(b) Transfer or Resale. Such Holder understands that (i)
the Exchange Shares have not been and are not being registered under
the 1933 Act or any state securities laws, and may not be offered for
sale, sold, assigned or transferred unless (A) subsequently registered
thereunder, (B) such Holder shall have delivered to the Company an
opinion of counsel, in a form reasonably acceptable to the Company, to
the effect that such Exchange Shares to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an
exemption from such registration or (C) such Holder provides the
Company with reasonable assurance that such Exchange Shares can be
sold, assigned or transferred pursuant to Rule 144 promulgated under
the 1933 Act (or a successor rule thereto) ("Rule 144"); (ii) any sale
of the Exchange Shares made in reliance on Rule 144 may be made only
in accordance with the terms of Rule 144 and, further, if Rule 144 is
not applicable, any resale of the Exchange Shares under circumstances
in which the seller (or the person through whom the sale is made) may
be deemed to be an underwriter (as that term is defined in the ▇▇▇▇
▇▇▇) may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to
register such Exchange Shares under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any
exemption thereunder; provided, however, the Holders may transfer the
Exchange Shares to the extent permitted in the Voting Agreement.
(c) Legends. Such Holder understands that the certificates
or other instruments representing the Exchange Shares shall bear a
restrictive legend in substantially the following form (and a stop-
transfer order may be placed against transfer of such stock
certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO
THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS
SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and the Company
shall issue a certificate without such legend to the holder of the
Exchange Shares upon which it is stamped, if, unless otherwise
required by state securities laws, (i) such shares are sold pursuant
to registration under the 1933 Act, (ii) in connection with a sale
transaction, such holder provides the Company with an opinion of
counsel, in a generally acceptable form, to the effect that a public
sale, assignment or transfer of such shares may be made without
registration under the 1933 Act, or (iii) such holder provides the
Company with reasonable assurances that such shares can be sold
pursuant to Rule 144 without any restriction as to the number of
securities acquired as of a particular date that can then be
immediately sold.
(d) Authorization; Enforcement. This Agreement has been
duly and validly authorized, executed and delivered on behalf of such
Holder and is a valid and binding agreement of such Holder enforceable
in accordance with its terms, subject as to enforceability to general
principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
(e) Risk Factors. Such Holder has read and understands all
of the "Risk Factors" relating to an investment in the Exchange Shares
of the Company as set forth in the Prospectus contained in the
Company's Post-Effective Amendment No. 1 to Form S-3 Registration
Statement (No. 333-47595) filed with the Securities and Exchange
Commission on February 8, 1999. Such Risk Factors are incorporated
herein by reference. Receipt of a copy of such Prospectus is hereby
acknowledged by each of the Holders.
3. Representations, Warranties and Agreements of the
Company. The Company represents and warrants to, and agrees with,
each of the Holders that:
(a) Authorization. The Company has the requisite corporate
power and authority to enter into and perform this Agreement and to
issue and deliver the Exchange Shares in accordance with the terms
hereof. This Agreement constitutes the valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally, the enforcement of creditors' rights and
remedies.
(b) Issuance of Exchange Shares. The Exchange Shares to be
issued in the Exchange and the Penalty Shares (as defined herein) are
duly authorized and, upon issuance in accordance with the terms
hereof, shall be validly issued, fully paid and nonassessable.
(c) Delivery of Converted Shares. The Company agrees (i)
to cause delivery to each of the Holders of stock certificates
evidencing the shares of Company common stock into which such Holder
has converted shares of Series A Preferred Stock prior to this
Agreement and (ii) to comply with all the requirements of the
Company's Articles of Incorporation, as amended, when issuing such
shares of Company common stock upon conversion of the Series A
Preferred Stock.
(d) Liabilities. On or prior to the closing of the
Acquisition, the Company agrees to pay or otherwise provide for all of
its outstanding accounts payable.
(e) Registration Statement. The Company agrees to take all
actions necessary to maintain the effectiveness, for at least one year
from the date hereof, of the Registration Statement No. 333-47595 with
respect to shares issuable upon conversion of the Series A Preferred
Stock. The Company agrees to file a post-effective amendment updating
Registration Statement No. 333-47595 on or within one business day
after the date of the Company's public announcement of the expected
Silicon Transaction and to use best efforts to secure effectiveness of
such post-effective amendment.
(f) Special Committee Recommendation. The Company agrees
to deliver to the Holders copies of (i) the recommendation of the
Special Committee to the Board of Directors (the "Special Committee")
in favor of the acquisition of certain assets and liabilities of the
Company by Silicon (the "Silicon Transaction") (which shall not be
subject to conditions other than receipt of a fairness opinion) (ii)
the recommendation of the Special Committee in favor of the Silicon
Transaction not subject to any conditions and (iii) any fairness
opinion relied upon by the Special Committee in issuing its
recommendation.
(g) Amendment of the Articles of Incorporation. The
Company agrees to amend Section B.3.20 to allow waiver by the Company
of the limitation set forth therein upon sixty-one (61) days' prior
written notice by the Holder of its intent to exceed such limitation.
(h) No Other Representations. Except as set forth above,
the Company makes no other representations or warranties to the
Holders with respect to the Exchange Shares or the Company's business,
prospects or financial condition.
4. Penalty Shares. Upon execution of this Agreement, the
Company agrees to deliver 171 shares of Series A Preferred Stock to
the Holders in payment for penalties owed to such Holders. The
Holders hereby agree to waive all penalties owed by the Company to
such Holders pursuant to previously issued Company securities.
5. Series A Preferred Stock Standstill.
(a) Except as set forth in Section 5(b), from the date
hereof through the Expiration Date (as defined in the Voting
Agreement), each of the Holders agrees not be sell or otherwise
transfer or assign any shares of Series A Preferred Stock and agrees
not to covert into Company common stock any shares of Series A
Preferred Stock in accordance with the conversion rights of holders of
the Series A Preferred Stock contained in the Company's Articles of
Incorporation, as amended.
(b) Permitted Sales and Conversions. From the date hereof
through the Expiration Date, each of the Holders may, from time to
time, (i) sell or otherwise transfer or assign the number of Series A
Preferred Stock set forth on Schedule B opposite Holder's name and
(ii) convert into Company common stock the number of shares of Series
A Preferred Stock set forth on Schedule B opposite Holder's name in
accordance with the conversion rights of holders of the Series A
Preferred Stock contained in the Company's Articles of Incorporation,
as amended; provided, however, that the aggregate number of Series A
Preferred Stock sold, converted or otherwise transferred pursuant to
this Section 5(b) may not exceed the number of shares set forth on
Schedule B opposite Holder's name.
(c) Conversion Price. The Company agrees to convert any
shares of Series A Preferred Stock converted into Company common stock
pursuant to Section 5(b) using a Conversion Date Market Price of $.261
per common stock share received.
6. Voting Agreement. In consideration of the Exchange and
as an inducement for Silicon to enter into the definitive agreement
relating to the Silicon Transaction, each of the Holders agrees, on
the date hereof, to enter into, and deliver to Silicon, the Voting
Agreement.
7. Indemnification. The Company, on the one hand, and each
Holder (severally and not jointly), on the other hand, shall indemnify
the other against any loss, cost or damages (including reasonable
attorneys' fees and expenses) suffered or incurred as a result of such
party's breach of any representation, warranty, covenant or agreement
in this Agreement. The Company shall indemnify each Holder against
any loss, cost or damages (including reasonable attorneys' fees and
expenses) suffered or incurred as a result of Holder's (i) entrance
into this Agreement or (ii) entrance into the Voting Agreement.
8. Releases.
(a) In consideration of this Agreement, the Company does
hereby release, acquit, satisfy and forever discharge each of the
Holders, in the absence of willful misconduct by such Holder, from and
against all actions, causes of action, indebtedness, accounts, claims
and demands of every kind and character, known or unknown, liquidated
or contingent, which it has or may have from the beginning of time to
the date hereof, except as created by this Agreement.
(b) In consideration of this Agreement, each of the Holders
does hereby release, acquit, satisfy and forever discharge the
Company, in the absence of willful misconduct by the Company, from and
against all actions, causes of action, indebtedness, accounts, claims
and demands of every kind and character, known or unknown, liquidated
or contingent, which it has or may have from the beginning of time to
the date hereof, except as created by this Agreement.
9. Termination. This Agreement, including all rights and
obligations of the parties hereunder, shall terminate upon the
Expiration Date (as defined in the Voting Agreement); provided,
however, that the provisions of Section 8(a), including all rights and
obligations of the parties thereunder, will survive the termination of
the Agreement under this Section 8 if the Holders have not breached
this Agreement.
10. Opinion of Counsel. The obligations of the Holders
under this Agreement are subject to their receipt of an opinion from
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel to the Company, dated May 12,
1999, to the effect that this Agreement constitutes the valid and
legally binding obligation of the Company under the laws of the State
of Florida, enforceable against the Company in accordance with its
terms except as such enforceability may be subject to bankruptcy,
moratorium, insolvency, reorganization, arrangement, fraudulent
conveyance and other similar laws affecting the rights of creditors
and except as such enforceability may be subject to the effect of
general principles of equity.
11. Public Announcement. Upon the execution of the
agreement and all related documents for the Silicon Transaction, the
Company agrees to issue a press release announcing the agreement. The
Company also agrees to issue a press release announcing the closing of
the acquisition of substantially all of the Company's assets by
Silicon.
12. Governing Law; Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Florida
without regard to the principles of conflict of laws.
(b) Counterparts. This Agreement may be executed in two or
more identical counterparts, each or all of which shall be considered
one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other
party. In the event all of the Holders do not execute and deliver
this Agreement, it will be and remain a binding agreement among the
Company and the Holders which do execute and deliver the Agreement.
(c) Entire Agreement; Amendments. This Agreement
supersedes all other prior oral or written agreements between the
Holders, the Company, their affiliates and persons acting on their
behalf with respect to the matters discussed herein, and this
Agreement contains the entire understanding of the parties with
respect to the matters covered herein.
(d) Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their
respective successors and assigns.
IN WITNESS WHEREOF, the Company and the Holders have caused
this Agreement to be duly executed of the date first written above.
COMPANY:
THE PANDA PROJECT, INC.
By _________________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: President
AGR HALIFAX FUND, LTD.
By: AG Ramius Partners, LLC,
Investment Advisor
By _________________________________
Name:
Title:
▇▇▇▇▇▇▇▇, L.P.
By: ▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co., L.P.,
General Partner
By _________________________________
Name:
Title:
GAM ARBITRAGE INVEST-
MENTS, INC.
By: ▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co., L.P.,
Investment Advisor
By _________________________________
Name:
Title:
AG SUPER FUND INTER-
NATIONAL PARTNERS, L.P.
By: ▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co., L.P.,
General Partner
By _________________________________
Name:
Title:
RAPHAEL, L.P.
By _________________________________
Name:
Title:
RAMIUS FUND, LTD.
By: AG Ramius Partners, LLC,
Investment Advisor
By _________________________________
Name:
Title:
SCHEDULE A
Exchange Shares
Shares of
Shares of Common Stock Amount to
Series A Preferred Received upon be Paid by
Shares to be Exchange of Series Holders
Holder Exchanged A Preferred Stock upon Exchange
SCHEDULE B
Permitted Sales and Conversions
Number of Shares of
Series A Preferred Stock
Which May Be Converted into
Holder Common Stock Prior to Closing
------ -----------------------------
AGR Halifax Fund, Ltd.
▇▇▇▇▇▇▇▇, L.P.
GAM Arbitrage Investments, Inc.
AG Super Fund International Partners, ▇.▇.
▇▇▇▇▇▇▇, L.P.
Ramius Fund, Ltd.
Exhibit C
Assumed Liabilities
(i) The trade accounts payable of Seller outstanding on
the Closing Date up to a maximum of $300,000;
(ii) Specific items included in the accrued payroll and
benefits account of Seller outstanding on the Closing, which shall not
exceed $100,000;
(iii) Specific items included in the "other current
liabilities" account of the Seller outstanding on the Closing Date,
which shall not exceed $100,000;
(iv) The executory liabilities and obligations of Seller
to be performed after the Closing Date under each Contract in effect
on the Closing Date; and
(v) Up to $2,000,000 of indebtedness of Seller to Helix
(PEI) Inc., effective upon such indebtedness' restructuring as
described in Section 4 of the Voting Agreement.
Exhibit D
Terms of Stockholders Agreement
-------------------------------
Transfer Any Purchaser Common Stock held by Seller would not be
Restrictions transferable for a period of five years from the Closing
Date, except pursuant to the drag along and registration
rights referred to below or, after Purchaser is a
publicly traded Company, to the shareholders of Seller.
Voting Seller shall agree to vote its shares of Purchaser
Common Stock proportionately in accordance with the vote
of all other holders of the Capital Stock of Purchaser.
Drag Rights Holders of 50% or more of Purchaser Series A Preferred
Stock, in connection with the disposition of 50% or more
or Purchaser Series A Preferred stock, may require the
holders of Purchaser Common Stock to sell their shares
on the same terms as the 50% or more holders.
First Right of first refusal in favor of Purchaser and other
Refusal holders in all sales (other than drag sales and
registered sales).
Registration Available to holders of Common Stock on substantially
Rights the same terms as Purchaser Series A Preferred Stock
subject to customary underwriter cutbacks and other
customary terms.
Purchaser Non-cumulative 6% dividends (will not ever be declared);
Series A participating preferred on Purchaser liquidation
Preferred (including merger or sale); weighed average anti-
Stock dilution protection; pro-rata right of first refusal on
Terms future Purchaser stock issuances; ability to appoint
majority of Purchaser Board of Directors.