As filed with the Securities and Exchange Commission on October 28, 1996
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
THE PANDA PROJECT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 65-0323354
------------------------------- -------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
901 YAMATO ROAD
BOCA RATON, FLORIDA 33431
(561) 994-2300
-------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
C. DARYL HOLLIS
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
THE PANDA PROJECT, INC.
901 YAMATO ROAD
BOCA RATON, FLORIDA 33431
(561) 994-2300
---------------------------------------------------------
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, check the following
box. [ ]
<PAGE>
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 in connection with dividend or interest
reinvestment plans, check the following box. [ X ]
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 THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM
CLASS OF AMOUNT OFFERING AGGREGATE AMOUNT OF
SECURITIES TO TO BE PRICE PER OFFERING REGISTRATION
BE REGISTERED REGISTERED UNIT* PRICE* FEE
- ------------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value
per share 2,927,849 shares $ 6.25 $18,299,056 $ 5,546
--------- --------- ------------
</TABLE>
*Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) and based upon the average of the high and low
prices for the Common Stock on October 23, 1996 reported on the Nasdaq National
Market.
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<PAGE>
PROSPECTUS
2,927,849 SHARES
THE PANDA PROJECT, INC.
COMMON STOCK
All of the shares of common stock, par value $.01 per share ("Common
Stock"), of The Panda Project, Inc. (the "Company") offered hereby (the
"Shares") are being sold by certain securityholders of the Company (the "Selling
Securityholders"). See "Selling Securityholders." The Company will not receive
any of the proceeds from the sale of the Shares by the Selling Securityholders.
The Selling Securityholders have advised the Company that they
propose to sell the Shares from time to time in the over-the-counter market, in
ordinary brokerage transactions or otherwise at market prices prevailing at the
time of sale or at negotiated prices. See "Plan of Distribution." The Common
Stock is traded on the Nasdaq National Market under the symbol "PNDA." On
October ___, 1996, the last reported sale price of the Common Stock on the
Nasdaq National Market was $_____ per share.
The shares of Common Stock offered hereby represent approximately
24.8% of the total number of shares outstanding at October , 1996. Sales of all
or part of the Shares offered hereby could have a negative impact on the market
price of the Common Stock and adversely affect the ability of the Company to
raise capital through the sale of its equity securities. See "Risk Factors
- --Negative Effect of Future Sales of Stock on Market Prices and Ability to Raise
Capital" and "Plan of Distribution."
The Company will pay all the expenses, estimated to be $60,000, in
connection with this offering, other than selling expenses and underwriting
discounts, if applicable.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 3.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is October ___, 1996.
<PAGE>
TABLE OF CONTENTS
PAGE
----
Available Information................................................... 3
Incorporation of Certain Documents
by Reference.......................................................... 4
Risk Factors............................................................ 5
Recent Developments..................................................... 12
Use of Proceeds......................................................... 14
Selling Securityholders................................................. 14
Plan of Distribution.................................................... 17
Experts................................................................. 18
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<PAGE>
AVAILABLE INFORMATION
The Panda Project, Inc. (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements and other information filed by the Company with the
Commission pursuant to the informational requirements of the Exchange Act may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's regional offices located at 7 World Trade Center, 13th Floor, New
York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such materials also may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The Common Stock of
the Company is traded on the Nasdaq National Market. Reports and other
information concerning the Company may be inspected at the National Association
of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement
on Form S-3 with respect to the Shares (herein, together with all amendments and
exhibits, referred to as the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"). This Prospectus does not contain all
of the information set forth in the Registration Statement and the exhibits and
schedules thereto, as certain items are omitted in accordance with the rules and
regulations of the Commission. For further information pertaining to the Company
and the Shares, reference is made to such Registration Statement and the
exhibits and schedules thereto, which may be inspected without charge at the
office of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of which may be obtained from the Commission at prescribed rates. The
Commission also makes electronic filings publicly available in the Internet
within 24 hours of acceptance. The Commission's Internet address is
http://www.sec.gov. The Commission's Web site also contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER WOULD
BE UNLAWFUL. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL.
INFORMATION CONTAINED IN THE COMPANY'S WEB SITE SHALL NOT BE DEEMED
TO BE PART OF THIS PROSPECTUS.
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1996;
(2) The Company's Current Report on Form 8-K dated July 19, 1996;
(3) The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996; and
(4) The Company's Registration Statement on Form 8-A filed
May 5, 1994, registering the Common Stock under Section 12(g) of the Exchange
Act.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the termination of the offering of the Common Stock
registered hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the documents incorporated by reference into this Prospectus
(without exhibits to such documents other than exhibits specifically
incorporated by reference into such documents). Requests for such copies should
be directed to The Panda Project, Inc., 901 Yamato Road, Boca Raton, Florida
33431, Attention: Chief Financial Officer, (561) 994-2300.
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<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE
FOLLOWING FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN
THE COMMON STOCK OFFERED BY THIS PROSPECTUS. THIS PROSPECTUS CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE RESULTS DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE,
BUT ARE NOT LIMITED TO, THOSE DISCUSSED BELOW AND ELSEWHERE IN THIS PROSPECTUS.
1. LIMITED PRODUCT DEVELOPMENT AND OPERATING HISTORY. Although the
Company has recently begun commercialization of certain products, other products
and technologies are undergoing additional testing and certification which may
ultimately lead to their commercialization. The Company's viability,
profitability and growth will depend in part upon successful commercialization
of these other products and technologies. There can be no assurance that these
efforts will be successful or that any of the proposed additional products will
be developed successfully. Further, the Company has a limited operating history
upon which an evaluation of its prospects can be made. Such prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered in the establishment of a new business in the evolving electronics
industry, which is characterized by an increasing number of market entrants and
intense competition, as well as those encountered in the shift from development
to commercialization of new products based on innovative technologies.
2. LIMITED REVENUES; HISTORY OF SIGNIFICANT LOSSES; ACCUMULATED
DEFICIT; ANTICIPATED FUTURE LOSSES. To date, the Company has generated limited
revenues from the sale of its Archistrat 4s servers; the Company does not
anticipate deriving larger revenues from operations until such time, if ever,
that greater numbers of its Archistrat 4s servers and other computers (the
"Archistrat Computers") are sold and its semiconductor packaging and connector
products (the "Archistrat Technology Products") are fully developed and can be
manufactured and licensed or successfully commercialized, as to which there can
be no assurance. Further, of the $596,569 of revenues recognized in the quarter
ended June 30, 1996, a total of $326,752 related to a barter transaction with a
software developer wherein the Company accepted software licenses in exchange
for 12 of its Archistrat 4s servers. Management believes the amount of $326,752
reflects the fair value of the licenses received and approximated the normal
selling price of the servers. Since inception (April 8, 1992), the Company has
incurred significant operating losses, including losses of $1,800,340,
$6,931,346, $23,894,426 and $7,788,113 during the fiscal year ended March 31,
1994, the fiscal year ended March 31, 1995, the fiscal year ended March 31,
1996, and the fiscal quarter ended June 30, 1996 respectively, resulting in an
accumulated deficit of $40,829,913 as of June 30, 1996. In addition, the Company
anticipates substantial losses to continue in the foreseeable future. Inasmuch
as the Company will continue to have a high level of operating expenses and will
be required to make significant expenditures in connection with its research and
development and manufacturing and marketing activities (including salaries of
executive, technical and research and development personnel), the Company
anticipates that such losses will continue until such time, if ever, as the
Company is able to generate sufficient revenues to support its operations. There
can be no assurance that the Company will ever be able to generate sufficient
revenues to achieve profitable operations.
3. SIGNIFICANT CAPITAL REQUIREMENTS; DEPENDENCE ON OFFERING
PROCEEDS; NEED FOR ADDITIONAL FINANCING. The Company's capital requirements in
connection with its operations and development activities have been and will
continue to be significant. The Company has been dependent upon the proceeds of
sales of its securities to fund its activities since inception. During the
period from inception through September 30, 1996, the Company raised capital of
approximately $58,000,000 (after deduction of underwriting discounts,
commissions and other selling costs) through the sale of Common Stock and
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<PAGE>
warrants, and from the exercise of warrants. The Company is dependent upon
additional financing to expand its marketing activities in order to obtain
additional orders for its Archistrat Computers, to purchase additional
components for the manufacture of these computers, to continue the efforts that
may lead to the commercialization of additional products and technologies and to
finance its other working capital requirements. The Company anticipates, based
on currently proposed plans and assumptions relating to its operations, that the
working capital of the Company at September 30, 1996, as augmented by the
Company's anticipated revenues from the sale of its Archistrat 4s servers, will
be sufficient to satisfy the Company's anticipated cash requirements through
March 31, 1997.
In the event the Company's plans change or its assumptions prove to
be inaccurate or the Company's working capital, as augmented by proceeds from
any sales revenue prove to be insufficient to fund operations (due to
unanticipated expenses, delays, problems, or otherwise), the Company would be
required to seek additional financing. Furthermore, depending upon the Company's
progress in the development of its products and technology and manufacturing
capabilities, acceptance of its products and technology by third parties, and
the state of the capital markets, the Company may also determine that it is
advisable to raise additional equity capital, possibly within the next six
months. In addition, in the event that the Company receives a larger than
anticipated number of purchase orders for its Archistrat 4s servers or VSPA
semiconductor package ("VSPA"), it may require resources substantially greater
than it currently has or than are otherwise available to the Company, and the
Company may be required to raise additional capital or engage third parties (as
to which engagement there can be no assurance) to assist the Company in meeting
such orders. The Company has no current arrangements with respect to, or sources
of, additional financing, and there can be no assurance that additional
financing will be available to the Company when needed on commercially
reasonable terms or at all. The inability of the Company to obtain additional
financing when needed would have a material adverse effect on the Company,
including possibly requiring the Company to significantly curtail or cease its
operations. To the extent that any future financing involves the sale of the
Company's equity securities, the Company's then existing stockholders may be
substantially diluted.
4. UNCERTAINTY OF MARKET ACCEPTANCE. The products and technologies
currently being sold or developed by the Company utilize newly developed
designs. Although the Company believes that its existing and proposed technology
and products represent significant advancements in semiconductor packaging and
computer technology, demand for the Company's existing and proposed products is
subject to a high degree of uncertainty, as is typical in the case of
newly-developed products. Achieving marketing acceptance for the Company's
technology and existing and proposed products will require substantial marketing
efforts and expenditure of significant funds to educate key original equipment
manufacturers ("OEMs") and value-added resellers ("VARs") and end users as to
the distinctive characteristics and anticipated benefits of the Company's
proposed products and technologies. Many OEMs and VARs manufacture and/or sell
components and computers competitive with those being developed by the Company
and have achieved significant market acceptance for their products. Accordingly,
due to their commitment to their own products, such entities may be inhibited
from doing business with the Company. In addition, many OEMs and VARs may be
reluctant to use or sell the Company's proposed products and technologies until
a sufficient number of other OEMs and VARs have already committed to do so. The
Company currently has limited marketing experience and limited financial,
personnel and other resources to undertake the extensive marketing activities
that will be necessary to market its proposed products and technologies as their
development is completed. The Company's ability to generate revenue from the
sale of Archistrat Computers or the licensing or sale of Archistrat Technology
Products and related technologies will be dependent upon, among other things,
its ability to build an effective sales organization. There can be no assurance
that the
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<PAGE>
Company will be able to formalize any marketing arrangements or that its
marketing efforts will be successful.
5. UNCERTAINTY OF PRODUCT AND TECHNOLOGY DEVELOPMENT; TECHNOLOGICAL
FACTORS; DEPENDENCE ON THIRD-PARTY PRODUCT DESIGN CHANGES. Although the
Company's Archistrat 4s server has been sold in limited quantities, the
Company's other Archistrat Computer models and its Archistrat Technology
Products remain in various stages of development. The Company's development
efforts are subject to all of the risks inherent in the development of new
products and technology (including unanticipated delays, expenses or technical
or other problems, as well as the possible insufficiency of funding to complete
development). The Company's success will depend in part upon its products and
technology meeting acceptable cost and performance criteria, and upon their
timely introduction into the marketplace. There can be no assurance that the
Company's products and technology which have not yet been commercialized will
ever be successfully developed, and even if developed, that they will
satisfactorily perform the functions for which they are designed, that they will
meet applicable price or performance objectives or that unanticipated technical
or other problems will not occur which would result in increased costs or
material delays in their development or commercialization. In addition,
technology as complex as that which will be incorporated into the Company's
proposed products may contain errors which become apparent subsequent to
widespread commercial use. Remedying such errors could delay the Company's plans
and cause it to incur additional costs which would have a material adverse
effect on the Company. The Company's success will also be dependent upon the
Company's ability to adapt its products to be compatible with the products of
third-party manufacturers of computer products. In addition, the Company will be
dependent on certain potential customers redesigning or otherwise modifying
their products to fully utilize the Company's proposed products and technology.
Although the Company believes that potential customers will undertake such
modifications to take advantage of the anticipated performance advantages of the
Company's proposed products, the costs of making such adaptations could prevent
them from doing so on a timely basis, or at all. The failure of the Company to
adapt its products and technology to be compatible with products of third-party
manufacturers or the failure of potential customers to make necessary
modifications or to redesign their products to accommodate the Company's
products could have a material adverse effect on the Company's ability to sell
or license its proposed products or technology.
6. COMPETITION; TECHNOLOGICAL OBSOLESCENCE. The markets that the
Company intends to enter are characterized by intense competition. The Company's
Archistrat 4s computers compete with "midrange" systems (server and workstation
systems having prices and performance characteristics between mainframe and
desktop computers and typically utilizing a proprietary operating system), such
as the Hewlett-Packard Net Server LS, Compaq 1500 and Compaq 4500. The related
Archistrat 4b multimedia personal computer (which is designed to stand alone or
be networked with the Archistrat 4s server computer) is expected, upon
commercialization, to compete with personal computers, such as those produced by
IBM, Apple Computer, Inc., Compaq Computer Corporation, Digital Equipment Corp.,
Hewlett-Packard Co., Gateway 2000, Inc. and Dell Computer Corp. The Company's
Archistrat Technologies Division will compete with numerous manufacturers of
semiconductor packages and connectors. All of these companies have substantially
greater financial, technical, personnel and other resources than the Company and
have established reputations for success in the development, licensing, sale and
servicing of their products and technology. Certain of these competitors
dominate their industries and have the financial resources necessary to enable
them to withstand substantial price competition or downturns in the market for
semiconductor packages, related technologies and/or computers. In addition,
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<PAGE>
certain companies may be developing technologies or products of which the
Company is unaware, which may be functionally similar, or superior, to some or
all of those being developed by the Company. The markets for the technology and
products being developed by the Company are characterized by rapid changes and
evolving industry standards often resulting in product obsolescence or short
product life cycles. Accordingly, the ability of the Company to compete will
depend on its ability to complete development and introduce to the marketplace
in a timely and cost-competitive manner additional products and technology, to
continually enhance and improve its existing and proposed products and
technology, to adapt its proposed products to be compatible with specific
products manufactured by others, and to successfully develop and market new
products and technology. There can be no assurance that the Company will be able
to compete successfully, that its competitors or future competitors will not
develop technologies or products that render the Company's proposed products and
technology obsolete or less marketable or that the Company will be able to
successfully enhance its proposed products or technology or adapt them
satisfactorily.
7. DEPENDENCE ON MANUFACTURERS AND SUPPLIERS; LACK OF MANUFACTURING
EXPERIENCE AND CAPABILITY. The Company has developed the capability to
manufacture VSPA as well as the Compass Connector products required for its
Archistrat Computers and is currently assembling the Compass Connector in
limited quantities in its own facility. The Company has also entered into an
agreement with Sun Precision Works, Pvt. Ltd. for the production of the male
connector component of the Compass Connector. Although the Company's supply of
this component is currently adequate to meet its needs, no assurance can be
given that such supplier can produce such component in sufficient quantities in
the future, or that the Company will be able to develop an alternative source of
supply within its projected development schedules, or at all. The Company
expects that significant commercialization of the Archistrat Technology Products
will require it to enter into direct licensing arrangements, joint ventures or
strategic alliances with respect to the manufacture of certain of its Archistrat
Technology Products. If the Company is unsuccessful in developing such
manufacturing capabilities or in licensing certain products and technology being
developed by its Archistrat Technologies Division or in developing relationships
with manufacturers and suppliers, its lack of manufacturing capabilities could
limit its ability to otherwise commercialize such products.
The Company anticipates that it will be dependent on third parties
for the manufacture and/or assembly of printed circuit boards, frame, exterior,
base fabrication and other subassemblies, as well as for the supply of various
of the components, incorporated into the Archistrat servers, and for performing
the final assembly configuration, certain quality control testing and delivery
of such servers. Although the Company has an existing agreement with Group
Technologies Corporation to manufacture and assemble the Company's Archistrat 4s
servers and has identified certain other potential manufacturers and suppliers
for its subassembly and component needs, it has not yet entered into any
additional manufacturing or supply arrangements. The Company believes it will be
able to negotiate satisfactory manufacturing and supply contracts; however, the
failure to do so could have a material adverse effect on the Company. Even if
the Company were able to enter into suitable manufacturing arrangements for
necessary subassemblies, there can be no assurance that such manufacturers will
dedicate sufficient production capacity to satisfy the Company's requirements
within scheduled delivery times or at all. In addition, the failure or delay by
the Company's suppliers in fulfilling its anticipated component needs would
adversely affect the Company's ability to develop and market its products and
technology. While the Company believes that these components are available from
multiple sources, the Company anticipates that it will obtain certain of them
from a single or limited number of sources of supply. In the event that certain
of such suppliers are unable or unwilling to provide the Company with components
to be used in the Archistrat Computers on commercially reasonable terms, or at
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<PAGE>
all, delays in securing alternative sources of supply could result in a material
adverse effect on the Company's operations.
At a future date, the Company may determine that the development of
manufacturing capabilities with respect to the Archistrat Computers (and/or
their subassemblies or components) is necessary or appropriate. To date, the
Company has manufactured limited commercial quantities of the Archistrat 4s
server configuration and the Archistrat 4s workstations. The Company does not
have the staff or the facilities necessary to manufacture, assemble and/or
configure its proposed computers internally in larger commercial quantities. The
establishment of manufacturing and/or assembly capabilities may result in
significant expense and is subject to numerous risks, including unanticipated
technological problems and delays. The failure of the Company to successfully
manufacture its Archistrat Computers would have a material adverse effect on the
Company.
8. DEPENDENCE ON KEY PERSONNEL. The success of the Company will be
dependent on the continued personal efforts of Stanford W. Crane, Jr., its
Chairman and Chief Executive Officer and the principal inventor of its
proprietary products and technologies, and certain other key personnel. Although
Mr. Crane has entered into a five-year employment agreement with the Company,
the agreement provides that he may resign by giving six months' notice at any
time. The loss of his services would have a material adverse effect on the
Company. The Company has obtained key-man insurance on Mr. Crane's life in the
amount of $2,000,000. The success of the Company also is dependent upon its
ability to hire and retain additional qualified executive, scientific,
production and marketing personnel. Although the Company has been able to hire
qualified personnel since its initial public offering in May 1994, there can be
no assurance that the Company will be able to hire additional qualified
personnel or retain such necessary personnel.
9. PATENTS AND PROPRIETARY INFORMATION. The Company's success will
depend on its ability to obtain patents, protect trade secrets, and operate
without infringing on the proprietary rights of others. The Company has pending
a total of 21 United States patent applications and 30 foreign patent
applications with respect to its VSPA, Compass PGA and Well Tech PCB designs and
Archistrat Computer designs and in connection with the use of the Compass
Connector in its Compass PGA semiconductor packages and the Archistrat
Computers. In addition, the Company has obtained an aggregate of four United
States design and utility patents and an aggregate of 33 foreign utility and
design patents and registrations with respect to Compass PGA and the Archistrat
Computers in several countries, including the Republic of China (Taiwan),
Germany, the United Kingdom, Ireland and France. The Company also intends to
file patent applications in several other foreign jurisdictions to secure
protection in those jurisdictions in accordance with the Patent Cooperation
Treaty and the Paris Convention for the Protection of Industrial Property (which
allows such filings to relate back to the original filing date in the United
States). To the extent possible, the Company also intends to file patent
applications with respect to products and technology that it may develop in the
future.
There can be no assurance that any of the Company's patent
applications will ultimately result in an issued patent. Moreover, the patent
laws of other countries may differ from those of the United States as to the
patentability of the Company's products or technology, and the degree of
protection afforded by foreign patents may be different from that in the United
States. The failure by the Company to obtain patents for which applications are
currently pending could have a material adverse effect on the Company's ability
to commercialize successfully its proposed technology and products. Even if the
Company is able
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<PAGE>
to obtain such patents, there can be no assurance that any such patents will
afford the Company commercially significant protection for its technology or
products. In addition, other companies may independently develop equivalent or
superior technologies or products and may obtain patent or similar rights with
respect to them. Although the Company believes that its technology has been
independently developed and that its technology does not infringe on the patents
or violate the proprietary rights of others, there can be no assurance that any
of the Company's technology or products, will not be determined to infringe upon
the patents or proprietary rights of others, or that patents or proprietary
rights of others will not have an adverse effect on the ability of the Company
to do business. If the Company's technology or products were determined to
infringe on the patents, trademarks or proprietary rights of others, the Company
could, under certain circumstances, become liable for damages, which also could
have a material adverse effect on the Company. Moreover, in the event that the
Company's technology or proposed products were deemed to infringe upon the
rights of others, the Company would be required to obtain licenses to utilize
such technology. There can be no assurance that the Company would be able to
obtain such licenses in a timely manner or on acceptable terms and conditions,
and the failure to do so could have a material adverse effect on the Company. If
the Company were unable to obtain such licenses, it could encounter significant
delays in product market introductions while it attempted to design around the
infringed upon patents or rights, or could find the development, manufacture or
sale of products requiring such licenses to be foreclosed. In addition, patent
disputes are common in the computer industry and there can be no assurance that
the Company will have the financial resources to enforce or defend a patent
infringement or proprietary rights action.
The Company also relies on trade secrets and proprietary know-how
and employs various methods, including confidentiality and nondisclosure
arrangements with its employees, consultants and others involved with the
Company's product and technological development efforts, to protect the
concepts, ideas and documentation relating to its proprietary technologies.
There can be no assurance that these arrangements will provide meaningful
protection to the Company or that other companies will not acquire information
which the Company considers to be proprietary. Moreover, there can be no
assurance that other companies have not or will not independently develop
know-how comparable to or superior to that of the Company.
10. DEPENDENCE ON THE CRANE-PANDA LICENSING AGREEMENT; POTENTIAL
CONFLICTS OF INTEREST. Pursuant to a license agreement entered into in January
1996 between the Company and Mr. Crane (the "Crane-Panda License"), Mr. Crane
has granted the Company the nonexclusive right to utilize the Compass Connector,
a key component in the commercialization of the Company's Archistrat Computers
and the development and commercialization of Compass PGA. The Crane-Panda
License was executed in connection with the conversion to a nonexclusive license
of the 3M License described below and supersedes an earlier license agreement
between Mr. Crane and the Company relating to the Compass Connector. Under the
Crane-Panda License, the Company is required to pay Mr. Crane a royalty on any
sales of Compass Connectors as discrete parts in the amount of 5% of the net
sales price for the first five years of the term of the agreement, 2.5% of the
net sales price for the next five years of the term of the agreement and 2% of
the net sales price thereafter, provided that no royalty is payable until
aggregate net sales of the Compass Connector as discrete parts exceed $100,000.
The royalty rate will be reduced after the fifth anniversary of the agreement if
no patent remains in effect with respect to the Compass Connector. No royalty is
payable on sales of the Compass Connector as incorporated in the Archistrat
Computers or other computer system or assembly. The Company may grant
sublicenses under the Crane-Panda License, but only for the use of products as
incorporated in the Archistrat Computers or other computer system or assembly.
To date, there have been no sales requiring the payment of royalties to Mr.
Crane under the Crane-Panda License. The Crane-Panda License obligates the
Company to maintain
- 10 -
<PAGE>
proprietary information relating to the Compass Connector on a confidential
basis, notify Mr. Crane of any evidence of infringement with respect to the
Compass Connector and related technology, and cooperate with Mr. Crane to
contest any such infringement. In the event that the Company becomes bankrupt or
insolvent or defaults in any of its material obligations under the Crane-Panda
License and fails to cure any such defaults within specified cure periods, Mr.
Crane may terminate the Crane-Panda License. The Company is substantially
dependent upon the Crane-Panda License. The termination of the agreement under
any circumstances would have a material adverse effect on the Company. There can
be no assurance that conflicts of interest will not arise with respect to the
Crane-Panda License or that such conflicts will be resolved in a manner
favorable to the Company. In addition, Mr. Crane retains ownership of the
Compass Connector technology, and has the right to grant licenses to or
otherwise transfer rights to the Compass Connector technology to third parties.
In September 1992, Mr. Crane granted an exclusive license (the "3M
License") to Minnesota Mining and Manufacturing Co. ("3M") to develop,
manufacture, use and sell the Compass Connector other than as part of a computer
system. In February 1996, Mr. Crane and 3M agreed to convert the 3M License to a
nonexclusive license. The 3M License provides in certain circumstances for the
payment of a royalty to Mr. Crane. As of the date of this Prospectus, Mr. Crane
had received no such payments.
11. SUBSTANTIAL CONTROL BY MANAGEMENT. As of the date of this
Prospectus, officers and directors of the Company own of record and beneficially
approximately 39.5% of the issued and outstanding shares of Common Stock and are
thus able to exert substantial influence over the policies and affairs of the
Company.
12. RISKS RELATING TO POTENTIAL INTERNATIONAL OPERATIONS. Although
the Company currently prices all of its international sales in U.S. dollars,
future sales or licensing of its products or technologies outside the U.S., may
be subject to the risks associated with fluctuations in currency exchange rates.
The Company may also be subject to other risks associated with international
operations, including tariff regulations and requirements for export licenses,
particularly with respect to the export of certain technologies (which licenses
may on occasion be delayed or difficult to obtain), unexpected changes in
regulatory requirements, longer accounts receivable requirements, difficulties
in managing international operations, potentially adverse tax consequences,
economic and political instability, restrictions on repatriation of earnings,
and the burdens of complying with a wide variety of foreign laws. In addition,
the laws of certain countries do not protect the Company's products and
intellectual property rights to the same extent as do the laws of the United
States. There can be no assurance that such factors will not have a material
adverse effect on the Company's future international sales or licenses and,
consequently, on the Company's business and operations as a whole.
13. NEGATIVE EFFECT OF FUTURE SALES OF STOCK ON MARKET PRICE AND
ABILITY TO RAISE CAPITAL. Future sales of substantial amounts of Common Stock,
including the Shares offered hereby, or the perception that such sales could
occur, could have a negative impact on the market price of the Common Stock and
adversely affect the ability of the Company to raise capital through the sale of
its equity securities. Virtually all of the outstanding Common Stock, including
the Shares offered hereby, are freely tradeable in the public markets without
restriction, subject in some cases to the volume limitations imposed by Rule 144
under the Securities Act. The Shares offered hereby represent approximately
24.8% of the total number of shares of Common Stock outstanding at October 23,
1996. See "Plan of Distribution."
- 11 -
<PAGE>
14. ANTITAKEOVER STATUTES. Florida has enacted legislation that may
deter or frustrate takeovers of the Company. The Florida Control Share Act
generally provides that shares acquired in excess of certain specified
thresholds, starting at 20%, will not possess any voting rights unless such
voting rights are approved by a majority vote of a corporation's disinterested
shareholders. The Florida Affiliated Transactions Act generally requires
supermajority approval by disinterested directors or shareholders of certain
specified transactions between a corporation and holders of more than 10% of the
outstanding voting shares of the corporation or their affiliates.
15. POSSIBLE LACK OF RESOURCES OF SELLING SECURITYHOLDERS. The
Selling Securityholders may be deemed to be Underwriters pursuant to the
Securities Act, and in that regard may become liable to the purchasers of the
Common Stock offered hereby pursuant to the terms of the Securities Act if
certain provisions of the Securities Act are not complied with by them. There
can be no assurance that any of the Selling Securityholders have the financial
resources to discharge any such liability.
16. GENERAL. Because of factors discussed above and other factors,
past financial performance should not be considered an indicator of future
performance. Investors should not use historical trends to anticipate future
results and should be aware that the trading price of the Company's Common Stock
may be subject to wide fluctuations in response to quarter-to-quarter variations
in operating results, general conditions in the semiconductor packaging and
computer industries, changes in earnings estimates and recommendations by
analysts and other events.
RECENT DEVELOPMENTS
PRIVATE PLACEMENT. In July 1996, the Company completed a private
placement of 1,087,833 shares of its Common Stock to accredited investors (the
"Private Placement Financing") at a price of $9.00 per share, resulting in net
proceeds to the Company (after payment of placement and advisory fees) of
$9,193,713. In addition to the shares of Common Stock purchased by each
investor in the Private Placement Financing, such investor received a warrant to
purchase an equal number of shares of Common Stock at an exercise price of
$11.00 per share. The warrants expire in July 2001 and are callable by the
Company whenever the Company's Common Stock trades at a price of $26.00 per
share or more for 30 consecutive trading days. In connection with the Private
Placement Financing, the Company entered into a Registration Rights Agreement
with the purchasers under which the purchasers are entitled to cause the Company
to effect the registration under the Securities Act of the shares of Common
Stock (including shares issuable upon exercise of warrants) acquired in the
Private Placement Financing upon the terms and conditions set forth in the
Agreement. Southeast Research Partners, Inc. served as placement agent for the
Private Placement financing and received placement fees of $225,375 and J.P.
Morgan Securities Inc. served as financial advisor in connection with the
Private Placement Financing and received an advisory fee of $250,000. In
addition, the Company issued to certain designees of Southeast Research
Partners, Inc. warrants to purchase an aggregate of 52,183 shares of Common
Stock at a purchase price of $10.80 per share. The warrants expire in July 2001
and are callable by the Company whenever the Company's Common Stock trades at a
price of $26.00 per share or more for 30 consecutive trading days. See "Selling
Securityholders."
ANNUAL MEETING. The annual meeting of shareholders of the Company
was held on August 16, 1996. At the annual meeting, the shareholders, among
other actions (i) elected the following persons to serve as directors for the
ensuing year: Stanford W. Crane, Jr., James T.A. Wooder, Robert C. Butler, Claud
L. Gingrich
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<PAGE>
and Rao R. Tummala; (ii) approved the Company's 1995 Employee Stock Incentive
Plan; and (iii) approved an amendment to the Company's Amended and Restated
Articles of Incorporation increasing the authorized number of shares of Common
Stock of the Company from 20,000,000 shares to 50,000,000 shares.
LICENSE AGREEMENTS. In August 1996, the Company and Stanford W.
Crane, Jr., as licensors, entered into a License Agreement with Sun Precision
Works, Pvt. Ltd. ("Sun"), as licensee, under which Sun was granted a
non-exclusive license, for the term of the patents covered by the license
agreement, with respect to the Compass Connector technology owned by Mr. Crane
and certain enhanced Compass Connector technology owned by the Company. Under
this agreement, Sun is required to pay a royalty on sales of products
incorporating the licensed technology. The Company and Mr. Crane have agreed
that such royalty payments shall be made fifty percent to the Company and fifty
percent to Mr. Crane.
In September 1996, the Company entered into a License Agreement with
Pantronix Corporation ("Pantronix") under which Pantronix was granted the
non-exclusive right to manufacture and market the Company's VSPA product. Unless
otherwise terminated as provided in the agreement, the license shall continue in
effect until the last to expire of the patents covered by the agreement. The
Company is entitled to receive specified royalties on sales by Pantronix or its
affiliates of products incorporating the licensed products.
In October 1996, the Company and Mr. Crane, as licensors, entered
into a License Agreement with LG Cable & Machinery Ltd. ("LG"), as licensee,
under which LG was granted a non-exclusive license, for a term of ten years or
until the expiration of the last to expire of the patents covered by the
agreement, whichever is later, with respect to the Compass Connector technology
owned by Mr. Crane and certain enhanced Compass Connector technology owned by
the Company. Under the agreement, LG is required to pay a license fee within 15
days after execution of the agreement and on each of the first four
anniversaries of the agreement as well as specified royalties on sales by LG or
its affiliates. The Company and Mr. Crane have agreed that such payments shall
be made fifty percent to the Company and fifty percent to Mr. Crane.
STATUS OF VSPA DEVELOPMENT AND TESTING. The Company is continuing
testing and qualification activities with respect to the VSPA semiconductor
package. In August 1996 the Company announced that the VSPA package had
successfully passed temperature and humidity tests conducted by Integrated
Qualification Labs. In addition, the Company announced that JEDEC, the
semiconductor engineering standardization body of the Electronic Industries
Association, has voted to permit the Company to submit a proposed outline
registration ballot as part of the package registration process. The Company
anticipates that if the outline is accepted by JEDEC, it will be published as a
"registered outline," although there can be no assurance this will occur.
INVESTOR RELATIONS COUNSEL. In September, 1996, the Company entered
into an agreement with Mallory Factor Inc. ("MFI"), pursuant to which MFI will
serve as the Company's investor relations counsel. The agreement provides for
minimum monthly fees payable to MFI in the amount of $3,500 plus payment of
expenses and has a term of one year. In connection with this agreement, the
Company granted the principal of MFI, Mallory Factor, a warrant to purchase
400,000 shares of Common Stock of the Company at an exercise price of $8.00 per
share. The warrant
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<PAGE>
has a term of ten years and is exercisable (i) as to 100,000 shares at any time
during the term of the warrant, and (ii) as to the remaining 300,000 shares,
upon the attainment of certain milestones specified in the warrant. Mallory
Factor has the right to cause the shares covered by the warrant to be registered
under the Securities Act on the terms and conditions set forth in the warrant.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the
Shares by the Selling Securityholders.
SELLING SECURITYHOLDERS
All of the shares of Common Stock of the Company offered hereby are
being sold by the Selling Securityholders named below. The Company will receive
none of the proceeds from the sale of shares offered hereby. Other than Stanford
W. Crane, Jr., Philippi Investments Ltd., Torbay Company and Travelers Group,
none of the Selling Securityholders beneficially owns 5% or more of the
Company's outstanding Common Stock.
Of the 2,927,849 shares of Common Stock offered hereby, 1,087,833
currently outstanding shares of Common Stock were acquired by the Selling
Securityholders from the Company in the Private Placement Financing and
1,087,833 shares of Common Stock are issuable upon the exercise of warrants
acquired by the Selling Securityholders from the Company in the Private
Placement Financing. Such shares of Common Stock and warrants were issued to 18
accredited investors, all of whom are identified as Selling Securityholders
herein. The warrants have a term of five years, an exercise price of $11.00 per
share and are callable in the event the Company's Common Stock has a closing
market price of at least $26.00 per share for 30 consecutive days.
The remaining 752,183 shares of Common Stock offered hereby are
issuable upon the exercise of warrants held by (i) designees of Southeast
Research Partners, Inc., which served as placement agent in the Private
Placement Financing (the "SRP Warrants"), (ii) Mallory Factor, the principal of
MFI (the "MFI Warrant"), and (iii) Whale Securities Co., L.P. ("Whale"), which
was underwriter of the Company's initial public offering in May 1994 (the "Whale
Warrant"). The SRP Warrants and the MFI Warrant are described above under
"Recent Developments"). The Whale Warrant was issued pursuant to a Warrant
Agreement executed in May 1994 (the "Warrant Agreement") and entitles Whale to
purchase up to 200,000 shares of Common Stock at an exercise price of $6.75 per
share and to purchase up to 100,000 additional warrants (the "Underlying
Warrants") at an exercise price of $.135 per Underlying Warrant. Each Underlying
Warrant is exercisable for the purchase of one share of Common Stock of the
Company at an exercise price of $6.00 per share. The Whale Warrant is
exercisable as to the 200,000 shares of Common Stock covered thereby during the
three-year period commencing May 16, 1996. Each Underlying Warrant is
exercisable until May 16, 1997. Whale has the right to cause the securities
issued pursuant to the Warrant Agreement to be registered under the Securities
Act on the terms and conditions set forth in the agreement.
None of the above-described warrants to purchase Common Stock are
offered hereby.
- 14 -
<PAGE>
To the best of the Company's knowledge, the following table sets
forth certain information with respect to the Selling Securityholders as of
September 30, 1996:
<TABLE>
<CAPTION>
SHARES OWNED PRIOR SHARES SHARES OWNED
TO OFFERING OFFERED HEREBY AFTER OFFERING(1)
-------------------------- --------------------------------------- ---------------------
WARRANT WARRANT PERCENT
SELLING SECURITYHOLDERS SHARES SHARES(2) TOTAL SHARES(3) SHARES(2) TOTAL SHARES OF CLASS
- ----------------------- ------ --------- ------ --------- --------- ------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Ruegg Bank AG 15,000 15,000 30,000 15,000 15,000(4) 30,000 0
AGF Growth Equity 201,522 147,174 348,696 120,000 120,000(4) 240,000 108,696 1.1%
Torbay Company 330,610 220,470 551,080 180,000 180,000(4) 360,000 191,080 1.9%
Franklin Street Trust
Company(5) 76,500 75,000 151,500 75,000 75,000(4) 150,000 1,500
Spinnaker Technology
Fund, LP 66,500 66,500 133,000 66,500 66,500(4) 133,000 0
Lynn Factor(6) 89,500 30,000 119,500 30,000 30,000(4) 60,000 59,500
Robert Baron(7) 25,500 15,000 40,500 15,000 15,000(4) 30,000 10,500
James E. Lineberger 13,333 13,333 26,666 13,333 13,333(4) 26,666 0
Frog Hollow Partners 10,000 10,000 20,000 10,000 10,000(4) 20,000 0
Jerome E. Collins 5,000 5,000 10,000 5,000 5,000(4) 10,000 0
Philippi Investments
Ltd.(8) 1,145,533 371,022 1,516,555 200,000 200,000(4) 400,000 1,116,555 10.9%
C. Daryl Hollis 2,500 1,500 4,000 1,500 1,500(4) 3,000 1,000
Brant Investments
Ltd 86,940 70,000 156,940 70,000 70,000(4) 140,000 16,940
Davis U.S. Growth Fund 12,500 12,500 24,000 12,500 12,500(4) 25,000 0
Stanford W.
Crane, Jr. (9) 2,481,860 1,000 2,482,860 1,000 1,000(4) 2,000 2,480,860 24.7%
Robert T. McAleer 3,000 7,396 10,396 3,000 7,396(10) 10,396 0
Peter R. McMullin 3,000 11,213 14,213 3,000 11,213(11) 14,213 0
Travelers Group 267,000 267,000 534,000 267,000 267,000(4) 534,000 0
Gayle Bolton 0 1,964 1,964 0 1,964(12) 1,964 0
Arnold Brief 0 155 155 0 155(12) 155 0
David A. Buchsbaum 0 146 146 0 146(12) 146 0
Alexander Cotsalas 0 928 928 0 928(12) 928 0
Phillip L. Dodge 0 618 618 0 618(12) 618 0
Timothy L. Jones 0 1,082 1,082 0 1,082(12) 1,082 0
Peter L. Larkworthy 0 927 927 0 927(12) 927 0
Deborah J. Nash 0 310 310 0 310(12) 310 0
H. Hickman Powell 0 10,974 10,974 0 10,974(12) 10,974 0
Peter J. Quartararo, Jr 0 773 773 0 773(12) 773 0
</TABLE>
- 15 -
<PAGE>
<TABLE>
<CAPTION>
SHARES OWNED PRIOR SHARES SHARES OWNED
TO OFFERING OFFERED HEREBY AFTER OFFERING(1)
-------------------------- --------------------------------------- ---------------------
WARRANT WARRANT PERCENT
SELLING SECURITYHOLDERS SHARES SHARES(2) TOTAL SHARES(3) SHARES(2) TOTAL SHARES OF CLASS
- ----------------------- ------ --------- ------ --------- --------- ------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John J. Seaman 0 310 310 0 310(12) 310 0
Lawrence Talisman 0 5,000 5,000 0 5,000(12) 5,000 0
Jay M. Wasserman 0 464 464 0 464(12) 464 0
Robert Wasserman 0 155 155 0 155(12) 155 0
Josephthal, Lyon
& Ross, Inc. 0 15,768 15,768 0 15,768(12) 15,768 0
Mallory Factor 0 400,000 400,000 0 400,000(13) 400,000 0
Whale Securities
Co., L.P.(14) 0 87,213 87,213 0 87,213(15) 87,213 0
William G. Walters 0 175,011 175,011 0 175,011(15) 175,011 0
Elliot J. Smith 21,500 25,887 47,387 0 25,887(15) 25,887 21,500
Estate of
Howard D. Harlow 0(16) 9,609 9,609(16) 0 9,609(15)(16) 9,609 0(16)
Nicholas Anari 0 1,023 1,023 0 1,023(15) 1,023 0
Cynthia Buckwalter 0 285 285 0 285(15) 285 0
James D. Whitten 23,500(17) 972 24,472 0 972(15) 972 23,500(17)
<FN>
(1) Assumes all of the Selling Securityholders' shares of Common Stock offered
hereby are sold and no additional shares are acquired. If the amount exceeds one
percent of the total number of shares of Common Stock outstanding (10,065,108
shares of Common Stock as of September 30, 1996), the percent of class is set
forth. Each Selling Securityholder's percentage ownership is determined by
assuming that options or warrants that are held by such person (but not those
held by any other person) and which are exercisable within 60 days after
September 30, 1996 have been exercised.
(2) Represents shares of Common Stock issuable upon exercise of warrants issued
by the Company.
(3) Represents shares of Common Stock issued pursuant to the Private Placement
Financing and being offered hereby.
(4) Represents shares of Common Stock issuable upon exercise of warrants issued
in the Private Placement Financing and being offered hereby.
(5) Shares owned includes 1,500 shares of Common Stock held by George Salley,
an affiliate of Franklin Street Investment Company, none of which are
offered hereby.
(6) Shares owned includes 18,000 shares of Common Stock held by Ms. Lynn
Factor's husband, none of which are offered hereby.
(7) Shares owned includes 10,500 shares of Common Stock held by Mr. Baron's
wife, none of which are offered hereby.
(8) Shares owned includes 18,932 shares held by James T.A. Wooder or members of
his immediate family and 1,000 shares issuable upon the exercise within 60 days
after September 30, 1996 of options held by Mr. Wooder. Mr. Wooder, a director
of the Company, is a Vice President of Helix Investments (Canada) Inc., the sole
shareholder of Helix (PEI) Inc., which is the sole shareholder of Philippi
Investments Ltd.
(9) Shares and Warrant Shares owned includes 198,860 shares of Common Stock held
by Mr. Crane jointly with his wife and 1,000 shares issuable upon the exercise
of warrants held by Mr. Crane jointly with his wife.
(10) Includes 3,000 shares issuable upon exercise of warrants issued in the
Private Placement Financing and 4,396 shares issuable upon exercise of SRP
Warrants.
(11) Includes 3,000 shares issuable upon exercise of warrants issued in the
Private Placement Financing and 8,213 shares issuable upon exercise of SRP
Warrants.
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<PAGE>
(12) Represents shares of Common Stock issuable upon exercise of the SRP
Warrants and being offered hereby.
(13) Represents shares of Common Stock issuable upon exercise of the MFI Warrant
and being offered hereby.
(14) These securities are held in the name of Whale for the account of certain
equity owners and former equity owners on Whale. Does not include an
indeterminate number of shares of Common Stock held in Whale's tradng account.
(15) Represents shares of Common Stock issuable upon exercise of the Whale
Warrant and the Underlying Warrants and being offered hereby.
(16) Does not include 7,500 shares of Common Stock owned by the widow of Mr.
Harlow and 4,500 shares of Common Stock owned by her IRA.
(17) Represents 1,000 shares of Common Stock owned by Whitten Group, Inc., 1,000
shares of Common Stock held jointly with Mrs. Whitten. 7,500 shares of Common
Stock held by Mrs. Whitten, 6,500 shares of Common Stock held by Mr. Whitten's
IRA, 4,500 shares of Common Stock held by Mrs. Whitten's IRA, and 3,000 shares
of Common Stock held by trusts of which Mr. Whitten is the Trustee. Does not
include 10,000 shares of Common Stock and 10,000 Warrant Shares offered hereby
held by Frog Hollow Partners, of which Mrs. Whitten is the general partner.
</FN>
</TABLE>
PLAN OF DISTRIBUTION
The Shares may be offered for sale from time to time by the Selling
Securityholders to various purchasers, or pledged or hypothecated, or they may
be retained. The Selling Securityholders may elect to sell the Shares in
negotiated transactions at prices and on terms related to the then-current
market price or otherwise, or in market transactions, in each case without the
participation of underwriters, brokers or dealers. The Selling Securityholders
may also from time to time offer the Shares through brokers, dealers or agents,
or with the permission of the Company through underwriters, who may receive
underwriting discounts, concessions or commissions from the Selling
Securityholders and/or the purchasers for whom they act as agent. In that event,
the offers or sales may be made (i) by a block trade in which a broker or
dealer, engaged for the purpose, will attempt to sell the Shares as agent but
may position and resell a portion of the block as principal to facilitate the
transaction, (ii) by purchases by a broker or dealer as principal and resale by
such broker or dealer for its own account, (iii) by ordinary brokerage
transactions or transactions in which the broker solicits purchasers, (iv) with
the permission of the Company, in an underwritten transaction, or (v) otherwise.
In the event that brokers or dealers are engaged by the Selling Securityholders,
such brokers or dealers may arrange for other brokers or dealers to participate.
The Company has been advised by the Selling Securityholders that they have not,
as of the date hereof, entered into any arrangement with a broker-dealer for the
sale of Shares through a block trade, special offering, exchange distribution or
secondary distribution of a purchase by a broker-dealer.
Any Shares which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than pursuant to this
Prospectus.
In offering the Shares, the Selling Securityholders and any
broker-dealers and any other participating broker-dealers who execute sales for
the Selling Securityholders may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales, and any profits
realized by the Selling Securityholders and the compensation of such
broker-dealers may be deemed to be underwriting discounts and commissions.
The Selling Securityholders have advised the Company that, during
such time as they may be engaged in a distribution of the Shares, they will
comply with Rules 10b-6 and 10b-7 under the Exchange Act. Rule 10b-6 under the
Exchange Act prohibits participants in a distribution from bidding for or
purchasing, for an account in which the participant has a beneficial interest,
any of the securities that are the subject of the distribution. Rule 10b-7
governs bids and purchases made in order to stabilize the price of a security in
connection with a distribution of the security.
- 17 -
<PAGE>
The public offering of the Shares by the Selling Securityholders
will terminate on the earlier of (a) nine months from the date of this
Prospectus, or (b) the date on which all Shares have been sold by the Selling
Securityholders. The Company has agreed with the Selling Securityholders to
prepare and file with the Commission any amendments or supplements to the
Registration Statement and this Prospectus as may be necessary to keep the
Registration Statement effective through such offering period.
The Company will pay certain expenses incidental to the offering and
sale of the Shares to the public estimated to be approximately $60,000. The
Company will not pay for, among other expenses, selling expenses or underwriting
discounts, if applicable.
EXPERTS
The financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of The Panda Project, Inc. for the
year ended March 31, 1996 have been so incorporated in reliance on the report
(which contains an explanatory paragraph relating to The Panda Project, Inc.'s
ability to continue as a going concern as described in Note 1 to the financial
statements) of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
- 18 -
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection
with the sale and distribution of the securities being registered, other than
any underwriting discounts and commissions. All these expenses will be paid by
the Company.
NATURE OF EXPENSE
SEC Registration fee........................................... $ 5,546
Nasdaq Listing Fee............................................. 14,000
Legal and accounting fees and expenses......................... 35,000*
Miscellaneous.................................................. 5,454*
-------
TOTAL $60,000*
=======
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. FLORIDA BUSINESS CORPORATION
ACT.
Section 607.0850(1) of the Florida Business Corporation Act (the
"FBCA") provides that a Florida corporation, such as the Registrant, shall have
the power to indemnify any person who is or was a party to any proceeding (other
than an action by, or in the right of, the corporation), by reason of the fact
that he is or was a director, officer, employee or agent of the corporation or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against liability incurred in connection with such proceeding,
including any appeal thereof, if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action of proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 607.0850(2) of the FBCA provides that a Florida corporation
shall have the power to indemnify any person who is or was a party to any
proceeding by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses and amounts paid in
settlement not exceeding, in the judgment of the board of directors, the
estimated expense of litigating the proceeding to conclusion, actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof. Such indemnification shall be
authorized if such person acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation,
except that no indemnification shall be made under Section 607.0850(2) in
respect of any claim, issue or matter as to
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<PAGE>
which such person shall have been adjudged to be liable unless, and only to the
extent that, the court in which such proceeding was brought, or any other court
of competent jurisdiction, shall determine upon application that, despite the
adjudication of liability but in view of all circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such court shall deem proper.
Section 607.0850 of the FBCA further provides that, to the extent
that a director, officer, employee or agent of a corporation has been successful
on the merits or otherwise in defense of any proceeding referred to in
subsection (1) or subsection (2), or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses actually and reasonably
incurred by him in connection therewith; that indemnification provided pursuant
to Section 607.0850 is not exclusive; and that the corporation may purchase and
maintain insurance on behalf of a director, officer, employee or agent of the
corporation against any liability asserted against him or incurred by him in any
such capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such liabilities under
Section 607.0850.
Notwithstanding the foregoing, Section 607.0850 of the FBCA provides
that indemnification of advancement of expenses shall not be made to or on
behalf of any director, officer, employee or agent if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action so adjudicated and constitute: (a) a violation of the
criminal law, unless the director, officer, employee or agent had reasonable
cause to believe his conduct was lawful or had no reasonable cause to believe
his conduct was unlawful; (b) a transaction from which the director, officer,
employee or agent derived an improper personal benefit; (c) in the case of a
director, a circumstance under which the liability provisions regarding unlawful
distributions are applicable; or (d) willful misconduct or a conscious disregard
for the best interests of the corporation in a proceeding by or in the right of
the corporation to procure a judgment in its favor or in a proceeding by or in
the right of a shareholder.
Section 607.0831 of the FBCA provides that a director of a Florida
corporation is not personally liable for monetary damages to the corporation or
any other person for any statement, vote, decision, or failure to act, regarding
corporate management or policy, by a director, unless: (a) the director breached
or failed to perform his duties as a director, and (b) the director's breach of,
or failure to perform, those duties constitutes: (1) a violation of the criminal
law, unless the director had reasonable cause to believe his conduct was lawful
or had no reasonable cause to believe his conduct was unlawful; (2) a
transaction from which the director derived an improper personal benefit, either
directly or indirectly; (3) a circumstance under which the liability provisions
regarding unlawful distributions are applicable; (4) in a proceeding by or in
the right of someone other than the corporation or a shareholder, recklessness
or an act or omission which was committed in bad faith or with malicious purpose
or in a manner exhibiting wanton and willful disregard of human rights, safety
or property.
ARTICLES OF INCORPORATION OF THE REGISTRANT
The Articles of Incorporation of the Registrant (the "Articles")
provide that, to the fullest extent permitted by applicable law, as amended from
time to time, the Registrant will indemnify any person who is or was a party or
is threatened to be made a party to an action, suit or proceeding (whether
civil, criminal, administrative or investigative) by reason of the fact that
such person
II-2
<PAGE>
is or was a director, officer, employee or agent of the Registrant or serves or
served any other enterprise at the request of the Registrant. This
indemnification includes the right to advancement of expenses when allowed
pursuant to applicable law.
In addition, the Articles provide that a director of the Registrant
shall not be personally liable to the Registrant or its shareholders for
monetary damages for breach of the director's fiduciary duty. However, the
Articles do not eliminate or limit the liability of a director for any of the
following reasons: (i) a breach of the director's duty of loyalty to the
Registrant or its shareholders; (ii) acts or omissions not in good faith or that
involve intentional misconduct or knowing violation of law; (iii) a violation
under Section 607.0834 of the FBCA (which imposes liability upon directors for
unlawful distributions); (iv) a transaction from which the director derived an
improper personal benefit; or (v) an act or omission occurring before the
effective date of the Articles.
INDEMNIFICATION
The Registrant has entered into or intends to enter into
Indemnification Agreements with its directors (collectively, the "Agreements")
which provide that each director is entitled to indemnification to the fullest
extent permitted by applicable law. Such indemnification will cover all
expenses, liabilities, judgments (including punitive and exemplary damages),
penalties, fines (including excise taxes relating to employee benefit plans and
civil penalties) and amounts paid in settlement which are incurred or imposed
upon the director if the director is a party or threatened to be made a party to
any threatened, pending or completed action, suit or proceeding of any kind,
whether civil, criminal, administrative or investigative (including actions by
or in the right of the Registrant and any preliminary inquiry or claim by any
person or authority), by reason of the fact that the director is or was a
director, officer, employee or agent of the Registrant or is or was serving at
the Registrant's request as a director, officer, employee or agent of another
corporation (including a subsidiary), partnership, joint venture, trust or other
enterprise against liability incurred in connection with such proceeding,
including any appeal thereof (collectively, the "Covered Matters"). Pursuant to
the Agreements, the directors are presumed to be entitled to indemnification
irrespective of whether the Covered Matter involves allegations of intentional
misconduct, alleged violations of Section 16(b) of the Exchange Act, alleged
violations of Section 10(b) of the Exchange Act (including Rule 10b-5
thereunder), breach of the director's fiduciary duties (including duties of
loyalty or care) or any other claim.
In addition to the foregoing, the Company maintains a director an
officer liability insurance policy insuring directors and officers of the
Registrant against certain liabilities.
ITEM 16. EXHIBITS.
See the Exhibit Index included immediately preceding the Exhibits to
this Registration Statement, which is incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
The Registrant hereby undertakes:
II-3
<PAGE>
(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 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this 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 this Registration
Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") that are incorporated by reference in this Registration
Statement.
(2) That, for the purposes of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the 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.
The Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) 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 the time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, 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
Securities 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 whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-4
<PAGE>
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 Boca Raton, State of Florida, on this 25th day
of October, 1996.
THE PANDA PROJECT, INC.
By: /s/ STANFORD W. CRANE, JR.
-----------------------------
Stanford W. Crane, Jr.
President
POWER OF ATTORNEY
We, the undersigned officers and directors of The Panda Project,
Inc., hereby severally constitute Stanford W. Crane, Jr. and C. Daryl Hollis,
and any of them singly, our true and lawful attorneys with full power to them,
and each of them singly, to sign for us and in our names in the capacities
indicated below, the Registration Statement on Form S-3 filed herewith and any
and all subsequent amendments to said Registration Statement, and generally to
do all such things in our names and behalf in our capacities as officers and
directors to enable The Panda Project, Inc. to comply with all requirements of
the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by said attorneys, or any of them, to said
Registration Statement and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ STANFORD W. CRANE, JR.
- ----------------------- Chief Executive Officer, ) October 25, 1996
Stanford W. Crane, Jr. President and Director )
(Principal Executive )
Officer) )
/s/ C. DARYL HOLLIS )
- ----------------------- Executive Vice President ) October 25, 1996
C. Daryl Hollis and Chief Financial Officer)
(Principal Financial and )
Accounting Officer) )
/s/ JAMES T.A. WOODER )
- ----------------------- Director ) October 25, 1996
James T.A. Wooder )
)
/s/ ROBERT C. BUTLER )
- ----------------------- Director ) October 25, 1996
Robert C. Butler )
II-5
<PAGE>
/s/ CLAUD L. GINGRICH
- ----------------------- Director ) October 25, 1996
Claud L. Gingrich )
)
/s/ RAO R. TUMMALA )
- ----------------------- Director ) October 25, 1996
Rao R. Tummala )
II-6
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF EXHIBIT PAGE
- ------- ---------------------- ----
3.1 -- Amended and Restated Articles of
Incorporation of the Company, as amended.......................
3.2 -- Amended and Restated By-Laws of the
Company (filed as Exhibit 3.2 to the
Company's Registration Statement on
Form SB-2 (File No. 33-76694-A))............................... *
4.1 -- Specimen Certificate of Common Stock of
the Company (filed as Exhibit 4.1 to the
Company's Registration Statement on
Form SB-2 (File No. 33-76694-A))............................... *
5.1 -- Opinion of Holland & Knight....................................
23.1 -- Consent of Holland & Knight (included in
Exhibit 5.1)...................................................
23.2 -- Consent of Price Waterhouse LLP................................
24.1 -- Power of Attorney (included on page II-5)......................
99.1 -- Registration Rights Agreement, dated as
of July, 1996, among the Company and the
Purchasers named therein (filed as Exhibit
10.1 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996)................. *
99.2 -- Warrant Agreement dated May 16, 1994
between the Company and Whale Securities
Co., L.P. (filed as Exhibit 4.4 to Amendment No. 1
to the Company's Registration Statement on
Form SB-2 (File No. 33-76694-A)).............................. *
99.3 -- Form of Warrant issued in Private Placement
Financing......................................................
99.4 -- Form of SRP Warrant............................................
99.5 -- License Agreement, dated as of
August 17, 1996, among Stanford W.
Crane, Jr., the Company and Sun Precision
Works, Pvt. Ltd.+...............................................
99.6 -- Letter Agreement dated as of September 10, 1996
between the Company and Mallory Factor Inc......................
99.7 -- Warrant dated September 10, 1996 issued by
the Company to Mallory Factor...................................
99.8 -- License Agreement, dated as of August 18, 1996,
between the Company and Pantronix Corporation+..................
II-7
<PAGE>
99.9 -- License Agreement, dated as of September 30,
1996, among Stanford W. Crane, Jr., the Company
and LG Cable & Machinery Ltd.+..................................
- -----------------
* Incorporated herein by reference.
+ Confidential treatment requested.
II-8
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
THE PANDA PROJECT, INC.
Pursuant to Section 607.1007 of the Florida Statutes, The Panda
Project, Inc., a Florida corporation (the "Corporation"), certifies that:
(1) The original Articles of Incorporation of the Corporation were
filed with the Secretary of State of the State of Florida on April 8, 1992.
(2) The Articles of Amendment to Articles of Incorporation of the
Corporation were filed with the Secretary of State of the State of Florida
on December 22, 1993.
(3) The Second Amendment to Articles of Incorporation of the
Corporation were filed with the Secretary of State of the State of Florida on
January 11, 1994.
(4) These Amended and Restated Articles of Incorporation contain
amendments requiring the approval of the holders of a majority of the issued and
outstanding shares of the common stock of the Corporation. The holders of a
majority of the issued and outstanding shares of the Corporation's outstanding
common stock approved such amendments pursuant to a written consent dated as of
March 15, 1994. The number of votes cast for the amendment was sufficient for
approval by the holders of common stock of the Corporation. These Amended and
Restated Articles of Incorporation were duly adopted by the Board of Directors
of the
- 1 -
<PAGE>
Corporation at a meeting held March 14, 1994.
The text of the Articles of Incorporation of the Corporation is hereby
amended and restated in its entirety, effective as of the date of filing with
the Secretary of State, to read as follows:
ARTICLE I - NAME
The name of the corporation is The Panda Project, Inc. (hereinafter
called the "Corporation").
ARTICLE II - PURPOSE
The Corporation is organized for the purpose of transacting any or all
lawful business for which corporations may be incorporated under The Florida
Business Corporation Act.
ARTICLE III - CAPITAL STOCK
The aggregate number of shares which the Corporation shall have the
authority to issue is 20,000,000 shares of Common Stock, par value $0.01 per
share.
Except as otherwise provided by law, the shares of stock of the
Corporation, regardless of class, may be issued by the Corporation from time to
time in such amounts, for such consideration and for such corporate purposes as
the Board of Directors may from time to time determine.
ARTICLES IV - REGISTERED AGENT
The street address of the registered office of the Corporation is 6421
Congress Avenue, Suite 114, Boca Raton,
- 2 -
<PAGE>
Florida 33487; and the name of the registered agent of the Corporation at that
address is Mr. Stanford W. Crane, Jr.
ARTICLE V - PRINCIPAL PLACE OF BUSINESS
The principal place of business and the mailing address of the
Corporation is 6421 Congress Avenue, Suite 114, Boca Raton, Florida 33487.
ARTICLE VI - INDEMNIFICATION
The corporation shall indemnify to the fullest extent authorized or
permitted by the Florida Business Corporation Act, as amended from time to time
(the "Act"), including any additional indemnification rights allowable pursuant
to future amendments to the Act, any person, and his or her heirs, executors,
administrators and legal representatives, who is made or threatened to be made a
party to an action, suit or proceeding (whether civil, criminal, administrative
or investigative) by reason of the fact that such person is or was a director,
officer, employee or agent of the Corporation or serves or served any other
enterprise at the request of the Corporation (an "Indemnifiable Party"). Such
indemnification shall include, without limitation, the advancement of expenses
when allowed pursuant to applicable law.
In addition, a director of the Corporation shall not be personally
liable to the Corporation or its shareholders for monetary damages for breach of
the director's fiduciary duty. However, this Article VI shall not eliminate or
limit the
- 3 -
<PAGE>
liability of a director for any of the following:
(a) a breach of the director's duty of loyalty to the Corporation
or its shareholders;
(b) acts or omissions not in good faith or that involve
intentional misconduct or knowing violation of law;
(c) a violation under Section 607.0834 of the Act;
(d) a transaction from which the director derived an improper
personal benefit; or
(e) an act or omission occurring before the effective date of this
Article VI.
Any repeal or modification of this Article VI by the shareholders of
the Corporation shall not adversely affect any right or protection of any
director of the Corporation existing at the time of, or for or with respect to,
any acts or omissions occurring before such repeal or modification.
The foregoing director liability provisions are intended to be in
addition to, and not in lieu or in limitation of, the director liability
standards set forth in Section 607.0831 of the Act, and no provision of this
Article VI shall be construed to limit the ability of the Company to indemnify
or make advances to an Indemnifiable Party under the Act.
IN WITNESS WHEREOF, the undersigned officer and director of the
Corporation has executed these Amended and Restated Articles of Incorporation as
of March 15, 1994.
THE PANDA PROJECT, INC.
a Florida corporation
/s/ DREW L. TAYLOR
------------------
By: Drew L. Taylor
Its: Vice President and Director
- 4 -
<PAGE>
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
THE PANDA PROJECT, INC.
Pursuant to Section 607.1007 of the Florida Statutes, The Panda
Project, Inc., a Florida corporation (the "Corporation"), certifies that:
(1) The original Articles of Incorporation of the Corporation were
filed with the Secretary of State of the State of Florida on April 8, 1992.
(2) The Articles of Amendment to Articles of Incorporation of the
Corporation were filed with the Secretary of State of the State of Florida
on December 22, 1993.
(3) The Second Amendment to Articles of Incorporation of the
Corporation was filed with the Secretary of State of the State of Florida on
January 11, 1994.
(4) Amended and Restated Articles of Incorporation of the Corporation
were filed with the Secretary of State of the State of Florida on
March 17, 1994.
(5) These Articles of Amendment of Amended and Restated Articles of
Incorporation contain an amendment which was approved by the shareholders of
the Corporation at a meeting on August 16, 1996 by the number of votes
sufficient for approval by the shareholders of the Corporation. These
Articles of Amendment of
- 5 -
<PAGE>
Amended and Restated Articles of Incorporation were duly adopted by the Board of
Directors of the Corporation at a meeting held June 19, 1996.
The text of the Amended and Restated Articles of Incorporation of the
Corporation is hereby amended, effective as of the date of filing of these
Articles of Amendment with the Secretary of State, by deleting Article III of
the Amended and Restated Articles of Incorporation in its entirety and inserting
in lieu thereof the following:
ARTICLE III - CAPITAL STOCK
The aggregate number of shares which the Corporation shall have
the authority to issue is 50,000,000 shares of Common Stock, par value
$0.01 per share.
Except as otherwise provided by law, the shares of stock of the
Corporation, regardless of class, may be issued by the Corporation from
time to time in such amounts, for such consideration and for such
corporate purposes as the Board of Directors may from time to time
determine.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has
executed these Articles of Amendment of Amended and Restated Articles of
Incorporation as of August __, 1996.
THE PANDA PROJECT, INC.
a Florida corporation
By: __________________
C. Daryl Hollis
Vice President
- 6 -
October 25, 1996
The Panda Project, Inc.
901 Yamato Road
Boca Raton, FL 33431
Re: The Panda Project, Inc. (the "Company") - Registration Statement
on Form S-3
Gentlemen:
You have requested our opinion in connection with the above-referenced
Registration Statement, (the "Registration Statement"), under which certain
shareholders (the "Selling Shareholders") intend to offer and sell in a public
offering, from time to time, an aggregate of 2,927,849 shares of the common
stock, $.01 par value per share, of the Company (the "Common Stock"), consisting
of: (i) 1,087,833 shares of Common Stock issued and outstanding in the name of
certain Selling Shareholders (the "Selling Shareholder Shares"); (ii) 1,740,016
shares of Common Stock (the "Warrant Shares") issuable upon exercise of warrants
held by certain Selling Shareholders (the "Warrants"); and (iii) 100,000 shares
of Common Stock (the "IPO Shares") issuable upon exercise of certain warrants
(the "Second Tier Warrants") that are issuable upon the exercise of certain
other warrants ("the "First Tier Warrants") .
We have reviewed copies of the Articles of Incorporation and Bylaws of the
Company, and have examined such corporate documents and records and other
certificates, and have made such investigations of law, as we have deemed
necessary in order to render the opinion hereinafter set forth.
Based upon and subject to the foregoing, we render the following opinions:
The Selling Shareholder Shares are duly authorized, validly issued, fully paid
and nonassessable.
The Warrant Shares are duly authorized, and when issued in accordance with the
terms of the Warrants, will be, assuming no change in the applicable law or
pertinent facts, validly issued, fully paid and nonassessable.
<PAGE>
The Panda Project, Inc.
October 25, 1996
Page 2
The IPO Shares are duly authorized and when (i) the Second Tier Warrants are
issued in accordance with the terms and conditions of the First Tier Warrants
and (ii) the IPO Shares are issued in accordance with the terms and conditions
of the Second Tier Warrants, the IPO Shares will be, assuming no change in the
applicable law or pertinent facts, validly issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the Registration
Statement. In giving this consent, we do not hereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
Holland & Knight
By: /s/ STEVEN SONBERG
---------------------------------
Steven Sonberg
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
June 24, 1996, appearing on page F-2 of The Panda Projects Inc.'s Annual Report
on Form 10-K for the year ended March 31, 1996. We also consent to the reference
to us under the heading "Experts" in such Prospectus.
/s/ PRICE WATERHOUSE LLP
- -------------------------
Price Waterhouse LLP
Fort Lauderdale, Florida
October 21, 1996
EXHIBIT 99.3
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 4 OF THIS WARRANT
Warrant No. ____ Number of Shares:________
(subject to adjustment)
Date of Issuance: July 12, 1996
THE PANDA PROJECT, INC.
COMMON STOCK PURCHASE WARRANT
(Void after July 11, 2001)
The Panda Project, Inc., a Florida corporation (the "Company"), for
value received, hereby certifies that ____________________________, or its
registered assigns (the "Registered Holder"), is entitled, subject to the terms
set forth below, to purchase from the Company, at any time or from time to time
on or after the date of issuance and on or before July 11, 2001 at not later
than 5:00 p.m. (Boca Raton, Florida time), ________ shares of Common Stock, $.01
par value per share, of the Company, at a purchase price of $11.00 per share.
The shares purchasable upon exercise of this Warrant, and the purchase price per
share, each as adjusted from time to time pursuant to the provisions of this
Warrant, are hereinafter referred to as the "Warrant Shares" and the "Purchase
Price," respectively.
1. EXERCISE; CALLABLE.
(a) This Warrant may be exercised by the Registered Holder, in
whole or in part, by surrendering this Warrant, with the purchase form appended
hereto as EXHIBIT I duly executed by such Registered Holder or by such
Registered Holder's duly authorized attorney, at the principal office of the
Company, or at such other office or agency as the Company may designate,
accompanied by payment in full, in lawful money of the United States, of the
Purchase Price payable in respect of the number of Warrant Shares purchased upon
such exercise.
(b) Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this
Warrant shall have been surrendered to the
<PAGE>
Company as provided in subsection 1(a) above. At such time, the person or
persons in whose name or names any certificates for Warrant Shares shall be
issuable upon such exercise as provided in subsection 1(c) below shall be deemed
to have become the holder or holders of record of the Warrant Shares represented
by such certificates.
(c) As soon as practicable after the exercise of this Warrant in
full or in part, and in any event within 10 days thereafter, the Company, at its
expense, will cause to be issued in the name of, and delivered to, the
Registered Holder, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full
Warrant Shares to which such Registered Holder shall be entitled upon such
exercise plus, in lieu of any fractional share to which such Registered Holder
would otherwise be entitled, cash in an amount determined pursuant to Section 3
hereof; and
(ii) in case such exercise is in part only, a new warrant or
warrants (dated the date hereof) of like tenor, calling in the aggregate on the
face or faces thereof for the number of Warrant Shares equal (without giving
effect to any adjustment therein) to the number of such shares called for on the
face of this Warrant minus the number of such shares purchased by the Registered
Holder upon such exercise.
(d) In the event the closing market price per share of the Common
Stock on such national securities exchange or automated quotation system on
which the Common Stock is listed or admitted to trading equals at least $26.00
per share (adjusted for stock splits, stock dividends and similar
recapitalizations) for at least thirty consecutive trading days, the Company
shall have the right by giving written notice to the Registered Holder of this
Warrant to call this Warrant, in which event the Registered Holder of this
Warrant shall surrender this Warrant to the Company, in the manner and at the
place designated by the Company in its notice, and thereupon this Warrant
(whether or not surrendered) shall be cancelled and of no further force or
effect.
2. ADJUSTMENTS.
(a) If outstanding shares of the Company's Common Stock shall be
subdivided into a greater number of shares or a dividend in Common Stock shall
be paid in respect of Common Stock, the Purchase Price in effect immediately
prior to such subdivision or at the record date of such dividend shall
simultaneously with the effectiveness of such subdivision or immediately after
the record date of such dividend be proportionately reduced. If outstanding
shares of Common Stock
- 2 -
<PAGE>
shall be combined into a smaller number of shares, the Purchase Price in effect
immediately prior to such combination shall, simultaneously with the
effectiveness of such combination, be proportionately increased. When any
adjustment is required to be made in the Purchase Price, the number of Warrant
Shares purchasable upon the exercise of this Warrant shall be changed to the
number determined by dividing (i) an amount equal to the number of shares
issuable upon the exercise of this Warrant immediately prior to such adjustment,
multiplied by the Purchase Price in effect immediately prior to such adjustment,
by (ii) the Purchase Price in effect immediately after such adjustment.
(b) If there shall occur any capital reorganization or
reclassification of the Company's Common Stock (other than a change in par value
or a subdivision or combination as provided for in subsection 2(a) above), or
any consolidation or merger of the Company with or into another corporation, or
a transfer of all or substantially all of the assets of the Company, then, as
part of any such reorganization, reclassification, consolidation, merger or
sale, as the case may be, lawful provision shall be made so that the Registered
Holder of this Warrant shall have the right thereafter to receive upon the
exercise hereof the kind and amount of shares of stock or other securities or
property which such Registered Holder would have been entitled to receive if,
immediately prior to any such reorganization, reclassification, consolidation,
merger or sale, as the case may be, such Registered Holder had held the number
of shares of Common Stock which were then purchasable upon the exercise of this
Warrant. In any such case, appropriate adjustment (as reasonably determined in
good faith by the Board of Directors of the Company) shall be made in the
application of the provisions set forth herein with respect to the rights and
interests thereafter of the Registered Holder of this Warrant, such that the
provisions set forth in this Section 2 (including provisions with respect to
adjustment of the Purchase Price) shall thereafter be applicable, as nearly as
is reasonably practicable, in relation to any shares of stock or other
securities or property thereafter deliverable upon the exercise of this Warrant.
(c) When any adjustment is required to be made in the Purchase
Price, the Company shall promptly mail to the Registered Holder a certificate
setting forth the Purchase Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. Such certificate shall also
set forth the kind and amount of stock or other securities or property into
which this Warrant shall be exercisable following the occurrence of any of the
events specified in subsection 2(a) or (b) above.
- 3 -
<PAGE>
3. FRACTIONAL SHARES. The Company shall not be required upon the
exercise of this Warrant to issue any fractional shares, but shall make an
adjustment therefor in cash on the basis of the fair market value per share of
the Common Stock.
4. REQUIREMENTS FOR TRANSFER.
(a) This Warrant and the Warrant Shares shall not be sold or
transferred unless either (i) they first shall have been registered under the
Securities Act of 1933, as amended (the "Act"), or (ii) the Company first shall
have been furnished with an opinion of legal counsel, reasonably satisfactory to
the Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Act.
(b) Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for (i) a transfer by a Registered Holder which is a
partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner, if the transferee agrees in writing to be subject to
the terms of this Section 4, or (ii) a transfer made in accordance with Rule 144
under the Act.
(c) Each certificate representing Warrant Shares shall bear a
legend substantially in the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be offered, sold or otherwise transferred, pledged or
hypothecated unless and until such securities are registered
under such Act or an opinion of counsel satisfactory to the
Company is obtained to the effect that such registration is
not required."
The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act.
5. NO IMPAIRMENT. The Company will not, by amendment of its charter
or through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against impairment.
- 4 -
<PAGE>
6. LIQUIDATING DIVIDENDS. If the Company pays a dividend or makes a
distribution on the Common Stock payable otherwise than in cash out of earnings
or earned surplus (determined in accordance with generally accepted accounting
principles) except for a stock dividend payable in shares of Common Stock (a
"Liquidating Dividend"), then the Company will pay or distribute to the
Registered Holder of this Warrant, upon the exercise hereof, in addition to the
Warrant Shares purchased upon such exercise, the Liquidating Dividend which
would have been paid to such Registered Holder if he had been the owner of
record of such Warrant Shares immediately prior to the date on which a record is
taken for such Liquidating Dividend or, if no record is taken, the date as of
which the record holders of Common Stock entitled to such dividends or
distribution are to be determined.
7. NOTICES OF RECORD DATE, ETC. In case:
(a) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time deliverable upon the exercise of
this Warrant) for the purpose of entitling or enabling them to receive any
dividend or other distribution, or to receive any right to subscribe for or
purchase any shares of stock of any class or any other securities, or to receive
any other right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the surviving entity), or any
transfer of all or substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then, and in each such case, the Company will mail or
cause to be mailed to the Registered Holder of this Warrant a notice specifying,
as the case may be, (i) the date on which a record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, or (ii) the effective date on
which such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or such other
stock or securities at the time deliverable upon the exercise of this Warrant)
shall be entitled to exchange their shares of Common Stock (or such other stock
or securities) for securities or other
- 5 -
<PAGE>
property deliverable upon such reorganization, reclassification, consolidation,
merger, transfer, dissolution, liquidation or winding-up. Such notice shall be
mailed at least ten (10) days prior to the record date or effective date for the
event specified in such notice.
8. RESERVATION OF STOCK. The Company will at all times reserve and
keep available, solely for issuance and delivery upon the exercise of this
Warrant, such number of Warrant Shares and other stock, securities and property,
as from time to time shall be issuable upon the exercise of this Warrant.
9. EXCHANGE OF WARRANTS. Upon the surrender by the Registered Holder
of any Warrant or Warrants, properly endorsed, to the Company at the principal
office of the Company, the Company will, subject to the provisions of Section 4
hereof, issue and deliver to or upon the order of such Holder, at the Company's
expense, a new Warrant or Warrants of like tenor, in the name of such Registered
Holder or as such Registered Holder (upon payment by such Registered Holder of
any applicable transfer taxes) may direct, calling in the aggregate on the face
or faces thereof for the number of shares of Common Stock called for on the face
or faces of the Warrant or Warrants so surrendered.
10. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
11. TRANSFERS, ETC.
(a) The Company will maintain a register containing the names and
addresses of the Registered Holders of this Warrant. Any Registered Holder may
change its or his address as shown on the warrant register by written notice to
the Company requesting such change.
(b) Subject to the provisions of Section 4 hereof, this Warrant
and all rights hereunder are transferable, in whole or in part, upon surrender
of this Warrant with a properly executed assignment (in the form of EXHIBIT II
hereto) at the principal office of the Company.
(c) Until any transfer of this Warrant is made in the warrant
register, the Company may treat the Registered Holder of this Warrant as the
absolute owner hereof for all purposes; PROVIDED, HOWEVER, that if and when this
Warrant is properly
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<PAGE>
assigned in blank, the Company may (but shall not be obligated to) treat the
bearer hereof as the absolute owner hereof for all purposes, notwithstanding any
notice to the contrary.
12. MAILING OF NOTICES, ETC. All notices and other communications from
the Company to the Registered Holder of this Warrant shall be mailed by
first-class certified or registered mail, postage prepaid, or by Federal Express
or other overnight courier service, to the address furnished to the Company in
writing by the last Registered Holder of this Warrant who shall have furnished
an address to the Company in writing. All notices and other communications from
the Registered Holder of this Warrant or in connection herewith to the Company
shall be mailed by first-class certified or registered mail, postage prepaid, to
the Company at its principal office set forth below. If the Company should at
any time change the location of its principal office to a place other than as
set forth below, it shall give prompt written notice to the Registered Holder of
this Warrant and thereafter all references in this Warrant to the location of
its principal office at the particular time shall be as so specified in such
notice.
13. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a stockholder of the Company.
14. CHANGE OR WAIVER. Any term of this Warrant may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of the change or waiver is sought.
15. HEADINGS. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.
16. GOVERNING LAW. This Warrant will be governed by and construed in
accordance with the laws of the State of Florida.
THE PANDA PROJECT, INC.
BY:________________________________
[CORPORATE SEAL] TITLE:_____________________________
ATTEST:
_________________________
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<PAGE>
EXHIBIT I
PURCHASE FORM
To:_________________ Dated:______________
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. ___), hereby irrevocably elects to purchase _____ shares of the
Common Stock covered by such Warrant. The undersigned herewith makes payment of
$____________, representing the full purchase price for such shares at the price
per share provided for in such Warrant.
Signature:_________________________
-
Address:___________________________
-
___________________________________
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<PAGE>
EXHIBIT II
ASSIGNMENT FORM
FOR VALUE RECEIVED, ________________________________________ hereby
sells, assigns and transfers all of the rights of the undersigned under the
attached Warrant (No. ____) with respect to the number of shares of Common Stock
covered thereby set forth below, unto:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
- ---------------- ------- -------------
Dated:______________
Signature:_______________________________
Dated:______________
Witness:_________________________________
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EXHIBIT 99.4
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 4 OF THIS WARRANT
Warrant No. ____ Number of Shares:________
(subject to adjustment)
Date of Issuance: July 12, 1996
THE PANDA PROJECT, INC.
COMMON STOCK PURCHASE WARRANT
(Void after July 11, 2001)
The Panda Project, Inc., a Florida corporation (the "Company"), for value
received, hereby certifies that ____________________________, or its registered
assigns (the "Registered Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company, at any time or from time to time on or
after the date of issuance and on or before July 11, 2001 at not later than 5:00
p.m. (Boca Raton, Florida time), ________ shares of Common Stock, $.01 par value
per share, of the Company, at a purchase price of $11.00 per share. The shares
purchasable upon exercise of this Warrant, and the purchase price per share,
each as adjusted from time to time pursuant to the provisions of this Warrant,
are hereinafter referred to as the "Warrant Shares" and the "Purchase Price,"
respectively.
1. EXERCISE; CALLABLE.
(a) This Warrant may be exercised by the Registered Holder, in whole
or in part, by surrendering this Warrant, with the purchase form appended hereto
as EXHIBIT I duly executed by such Registered Holder or by such Registered
Holder's duly authorized attorney, at the principal office of the Company, or at
such other office or agency as the Company may designate, accompanied by payment
in full, in lawful money of the United States, of the Purchase Price payable in
respect of the number of Warrant Shares purchased upon such exercise.
(b) Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this
Warrant shall have been surrendered to the Company as provided in subsection
1(a) above. At such time, the person or persons in whose name or names any
certificates for Warrant Shares shall be issuable upon such exercise as provided
- 1 -
<PAGE>
in subsection 1(c) below shall be deemed to have become the holder or holders of
record of the Warrant Shares represented by such certificates.
(c) As soon as practicable after the exercise of this Warrant in full
or in part, and in any event within 10 days thereafter, the Company, at its
expense, will cause to be issued in the name of, and delivered to, the
Registered Holder, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full Warrant
Shares to which such Registered Holder shall be entitled upon such exercise
plus, in lieu of any fractional share to which such Registered Holder would
otherwise be entitled, cash in an amount determined pursuant to Section 3
hereof; and
(ii) in case such exercise is in part only, a new warrant or
warrants (dated the date hereof) of like tenor, calling in the aggregate on the
face or faces thereof for the number of Warrant Shares equal (without giving
effect to any adjustment therein) to the number of such shares called for on the
face of this Warrant minus the number of such shares purchased by the Registered
Holder upon such exercise.
(d) In the event the closing market price per share of the Common
Stock on such national securities exchange or automated quotation system on
which the Common Stock is listed or admitted to trading equals at least $26.00
per share (adjusted for stock splits, stock dividends and similar
recapitalizations) for at least thirty consecutive trading days, the Company
shall have the right by giving written notice to the Registered Holder of this
Warrant to call this Warrant, in which event the Registered Holder of this
Warrant shall surrender this Warrant to the Company, in the manner and at the
place designated by the Company in its notice, and thereupon this Warrant
(whether or not surrendered) shall be cancelled and of no further force or
effect.
2. ADJUSTMENTS.
(a) If outstanding shares of the Company's Common Stock shall be
subdivided into a greater number of shares or a dividend in Common Stock shall
be paid in respect of Common Stock, the Purchase Price in effect immediately
prior to such subdivision or at the record date of such dividend shall
simultaneously with the effectiveness of such subdivision or immediately after
the record date of such dividend be proportionately reduced. If outstanding
shares of Common Stock shall be combined into a smaller number of shares, the
Purchase Price in effect immediately prior to such combination shall,
simultaneously with the effectiveness of such combination, be proportionately
increased. When any adjustment is required to be made in the Purchase Price, the
number of Warrant Shares purchasable upon the exercise of this Warrant shall be
changed to
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<PAGE>
the number determined by dividing (i) an amount equal to the number of shares
issuable upon the exercise of this Warrant immediately prior to such adjustment,
multiplied by the Purchase Price in effect immediately prior to such adjustment,
by (ii) the Purchase Price in effect immediately after such adjustment.
(b) If there shall occur any capital reorganization or
reclassification of the Company's Common Stock (other than a change in par value
or a subdivision or combination as provided for in subsection 2(a) above), or
any consolidation or merger of the Company with or into another corporation, or
a transfer of all or substantially all of the assets of the Company, then, as
part of any such reorganization, reclassification, consolidation, merger or
sale, as the case may be, lawful provision shall be made so that the Registered
Holder of this Warrant shall have the right thereafter to receive upon the
exercise hereof the kind and amount of shares of stock or other securities or
property which such Registered Holder would have been entitled to receive if,
immediately prior to any such reorganization, reclassification, consolidation,
merger or sale, as the case may be, such Registered Holder had held the number
of shares of Common Stock which were then purchasable upon the exercise of this
Warrant. In any such case, appropriate adjustment (as reasonably determined in
good faith by the Board of Directors of the Company) shall be made in the
application of the provisions set forth herein with respect to the rights and
interests thereafter of the Registered Holder of this Warrant, such that the
provisions set forth in this Section 2 (including provisions with respect to
adjustment of the Purchase Price) shall thereafter be applicable, as nearly as
is reasonably practicable, in relation to any shares of stock or other
securities or property thereafter deliverable upon the exercise of this Warrant.
(c) When any adjustment is required to be made in the Purchase Price,
the Company shall promptly mail to the Registered Holder a certificate setting
forth the Purchase Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. Such certificate shall also
set forth the kind and amount of stock or other securities or property into
which this Warrant shall be exercisable following the occurrence of any of the
events specified in subsection 2(a) or (b) above.
3. FRACTIONAL SHARES. The Company shall not be required upon the
exercise of this Warrant to issue any fractional shares, but shall make an
adjustment therefor in cash on the basis of the fair market value per share of
the Common Stock.
4. REQUIREMENTS FOR TRANSFER.
(a) This Warrant and the Warrant Shares shall not be sold or
transferred unless either (i) they first shall have been
- 3 -
<PAGE>
registered under the Securities Act of 1933, as amended (the "Act"), or (ii) the
Company first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Company, to the effect that such sale or transfer
is exempt from the registration requirements of the Act.
(b) Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for (i) a transfer by a Registered Holder which is a
partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner, if the transferee agrees in writing to be subject to
the terms of this Section 4, or (ii) a transfer made in accordance with Rule 144
under the Act.
(c) Each certificate representing Warrant Shares shall bear a legend
substantially in the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not
be offered, sold or otherwise transferred, pledged or hypothecated
unless and until such securities are registered under such Act or an
opinion of counsel satisfactory to the Company is obtained to the
effect that such registration is not required."
The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act.
5. NO IMPAIRMENT. The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all
- 4 -
<PAGE>
such action as may be necessary or appropriate in order to protect the rights of
the holder of this Warrant against impairment.
6. LIQUIDATING DIVIDENDS. If the Company pays a dividend or makes a
distribution on the Common Stock payable otherwise than in cash out of earnings
or earned surplus (determined in accordance with generally accepted accounting
principles) except for a stock dividend payable in shares of Common Stock (a
"Liquidating Dividend"), then the Company will pay or distribute to the
Registered Holder of this Warrant, upon the exercise hereof, in addition to the
Warrant Shares purchased upon such exercise, the Liquidating Dividend which
would have been paid to such Registered Holder if he had been the owner of
record of such Warrant Shares immediately prior to the date on which a record is
taken for such Liquidating Dividend or, if no record is taken, the date as of
which the record holders of Common Stock entitled to such dividends or
distribution are to be determined.
7. NOTICES OF RECORD DATE, ETC. In case:
(a) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time deliverable upon the exercise of
this Warrant) for the purpose of entitling or enabling them to receive any
dividend or other distribution, or to receive any right to subscribe for or
purchase any shares of stock of any class or any other securities, or to receive
any other right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the surviving entity), or any
transfer of all or substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then, and in each such case, the Company will mail or
cause to be mailed to the Registered Holder of this Warrant a notice specifying,
as the case may be, (i) the date on which a record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, or (ii) the effective date on
which such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or such other
stock or securities at the time deliverable upon the exercise of this Warrant)
shall be entitled to exchange their shares of Common
- 5 -
<PAGE>
Stock (or such other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
transfer, dissolution, liquidation or winding-up. Such notice shall be mailed at
least ten (10) days prior to the record date or effective date for the event
specified in such notice.
8. RESERVATION OF STOCK. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such number of Warrant Shares and other stock, securities and property, as from
time to time shall be issuable upon the exercise of this Warrant.
9. EXCHANGE OF WARRANTS. Upon the surrender by the Registered Holder of
any Warrant or Warrants, properly endorsed, to the Company at the principal
office of the Company, the Company will, subject to the provisions of Section 4
hereof, issue and deliver to or upon the order of such Holder, at the Company's
expense, a new Warrant or Warrants of like tenor, in the name of such Registered
Holder or as such Registered Holder (upon payment by such Registered Holder of
any applicable transfer taxes) may direct, calling in the aggregate on the face
or faces thereof for the number of shares of Common Stock called for on the face
or faces of the Warrant or Warrants so surrendered.
10. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
11. TRANSFERS, ETC.
(a) The Company will maintain a register containing the names and
addresses of the Registered Holders of this Warrant. Any Registered Holder may
change its or his address as shown on the warrant register by written notice to
the Company requesting such change.
(b) Subject to the provisions of Section 4 hereof, this Warrant and
all rights hereunder are transferable, in whole or in part, upon surrender of
this Warrant with a properly executed assignment (in the form of EXHIBIT II
hereto) at the principal office of the Company.
(c) Until any transfer of this Warrant is made in the warrant
register, the Company may treat the Registered Holder of this Warrant as the
absolute owner hereof for all purposes; PROVIDED, HOWEVER, that if and when this
Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer hereof as the absolute owner hereof for all
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<PAGE>
purposes, notwithstanding any notice to the contrary.
12. MAILING OF NOTICES, ETC. All notices and other communications from
the Company to the Registered Holder of this Warrant shall be mailed by
first-class certified or registered mail, postage prepaid, or by Federal Express
or other overnight courier service, to the address furnished to the Company in
writing by the last Registered Holder of this Warrant who shall have furnished
an address to the Company in writing. All notices and other communications from
the Registered Holder of this Warrant or in connection herewith to the Company
shall be mailed by first-class certified or registered mail, postage prepaid, to
the Company at its principal office set forth below. If the Company should at
any time change the location of its principal office to a place other than as
set forth below, it shall give prompt written notice to the Registered Holder of
this Warrant and thereafter all references in this Warrant to the location of
its principal office at the particular time shall be as so specified in such
notice.
13. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a stockholder of the Company.
14. CHANGE OR WAIVER. Any term of this Warrant may be changed or waived
only by an instrument in writing signed by the party against which enforcement
of the change or waiver is sought.
15. HEADINGS. The headings in this Warrant are for purposes of reference
only and shall not limit or otherwise affect the meaning of any provision of
this Warrant.
16. GOVERNING LAW. This Warrant will be governed by and construed in
accordance with the laws of the State of Florida.
THE PANDA PROJECT, INC.
By:________________________________
[Corporate Seal] Title:_____________________________
ATTEST:
________________________
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<PAGE>
REGISTERED HOLDER
________________________
(Print name)
________________________
(For holders other than
individuals, print name and
title of person signing on its
behalf)
________________________
(Signature)
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<PAGE>
EXHIBIT I
PURCHASE FORM
To:_________________ Dated:______________
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. ___), hereby irrevocably elects to purchase _____ shares of the
Common Stock covered by such Warrant. The undersigned herewith makes payment of
$____________, representing the full purchase price for such shares at the price
per share provided for in such Warrant.
Signature:__________________________
Address:____________________________
____________________________
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<PAGE>
EXHIBIT II
ASSIGNMENT FORM
FOR VALUE RECEIVED, ________________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (No. ____) with respect to the number of shares of Common Stock covered
thereby set forth below, unto:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
- ---------------- ------- -------------
Dated:______________
Signature:_______________________________
Dated:______________
Witness:_________________________________
- 10 -
EXHIBIT 99.5
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
LICENSE AGREEMENT
This License Agreement is made and entered into as of August
17, 1996, by and between STANFORD W. CRANE, JR. ("CRANE") of Boca Raton,
Florida, THE PANDA PROJECT, INC., a corporation existing under the laws of
Florida, which has its principal place of business in Boca Raton, Florida
("PANDA"), and SUN PRECISION WORKS, PVT. LTD., ("SUN" or "Licensee") a
corporation existing under the laws of India, which has its principal place of
business at Bangalore, India. CRANE and PANDA are referred to collectively as
"Licensors" and individually as "Licensor".
WHEREAS, Licensors possess certain valuable intellectual and
industrial property rights; and
WHEREAS, Licensors are willing to grant, and Licensee desires
to acquire, rights to use such rights on a worldwide basis in accordance with
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual
promises, terms and conditions of this License Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
I. DEFINITIONS
A. "Licensed Product" shall mean a high-density interconnect
system as described in the patent applications identified in Appendix A of this
License Agreement, and any improvements, modifications, and derivations thereof
and know-how related thereto owned, developed, or acquired (except in a grant
back from another CRANE or PANDA licensee) by CRANE or PANDA, and which CRANE or
PANDA has the right to license, during the term of this License Agreement.
B. "Licensed Process" shall mean any process or method
pertaining to the use, manufacture, or testing of Licensed Product and all
know-how related thereto.
<PAGE>
C. "Licensed Product Sold" or "Sale" of a Licensed Product
shall mean the sale, lease, or other transfer of a Licensed Product or a product
incorporating a Licensed Product by SUN or the use of a Licensed Product, by
SUN. A product shall be considered sold at the time of invoicing or shipment,
whichever is earlier, or if there is no such invoicing or shipment, in the case
of internal use, at the time of such use.
D. "Patent Rights" shall mean any United States or foreign
applications or patents, owned, controlled, or acquired by CRANE in whole or in
part, during the term of this License Agreement, relating to Licensed Product or
Licensed Process, and which CRANE has the right to license, which disclose and
claim Licensed Process or Licensed Product, including, but not limited to, the
construction thereof, methods for the manufacture and use thereof, and
improvements thereto, and to any reissues or extensions of such patents and all
divisions, continuations, and continuations-in-part. Such "Patent Rights" shall
not include licenses or sublicenses related to Licensed Products or Licensed
Process granted to CRANE or PANDA by either of their other licensees.
E. "Proprietary Information" shall mean all information or
trade secrets of any description relating to Licensed Product or Licensed
Process developed by, owned, or controlled by a Licensor at any time prior to
the termination or expiration of this License Agreement, including, but not
limited to, the development, selling, marketing, use, properties, structures,
compositions, manufacture or quality control of Licensed Product or Licensed
Process, and including, but not limited in form, to samples, prototypes, data
books, manufacturing instructions, drawings, formulae, and customer lists. Any
information which is orally or visually disclosed to SUN or which is not
designated in writing as confidential, proprietary or secret at the time of
disclosure shall constitute Proprietary Information if within thirty (30) days
after such disclosure, a Licensor delivers to SUN a written document describing
such information and designating it as Proprietary Information. In addition, any
information which SUN has reason to know is considered by a Licensor to be
proprietary, confidential, or secret shall be considered Proprietary
Information. Proprietary Information does not include: (i) information which was
known by SUN prior to receipt from a Licensor; (ii) information lawfully
disclosed to SUN by a third party which did not derive the information from a
Licensor; and (iii) information which is or
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<PAGE>
becomes a matter of public knowledge or part of the public domain other than
through a breach of this License Agreement.
F. "SUN Affiliate" shall mean any corporation, firm,
partnership, proprietorship, or other form of business organization as to which
control of the business is exercised by SUN, and any corporation, firm,
partnership, proprietorship, or other form of business organization in which SUN
has at least a fifty-one percent (51%) ownership interest, or the maximum
ownership interest SUN is permitted to have in the country where such business
organization exists.
G. "Effective Date" shall mean the latest of the date of
signature of this License Agreement by authorized representatives of SUN and
PANDA and by CRANE.
II. GRANT OF LICENSES
Subject to the terms of this License Agreement, Licensors
agree to grant and do grant to SUN a non-exclusive, worldwide license during the
term of this License Agreement to make, have made for it, use, sell, or
otherwise dispose of Licensed Products and to use and have used the Licensed
Process under Patent Rights and Proprietary Information. Such license does not
include the right to grant sublicenses or assign this license.
III. CONFIDENTIALITY CLAUSE BY SUN
Except as may be required by law or by a governmental agency,
SUN agrees that it will not, directly or indirectly, disseminate, disclose or
otherwise make available to any third party whatsoever, or reverse engineer, any
Proprietary Information. Employees of SUN shall be provided access to
Proprietary Information by SUN only on a "need to know" basis and shall be
advised of the confidential nature thereof, and shall be bound to protect the
confidentiality of such information by written agreement substantially
equivalent to this Agreement. The provisions hereof shall survive expiration or
termination of this License Agreement for a period of ten (10) years.
IV. ROYALTY CLAUSE
A. The licenses granted under Section II, above, shall be
subject to a Royalty as provided for in Appendix C to this License Agreement for
Licensed Product Sold by SUN.
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<PAGE>
B. The Royalties provided herein are in consideration of the
trade secrets, know-how, Patent Rights, and Proprietary Information provided by
Licensors hereunder, and the ability of SUN to achieve a significant competitive
advantage by its early entry into the marketplace due to its access to such
intellectual property rights.
V. PAYMENTS, RECORDS AND REPORTS
A. Within sixty (60) days after the end of each calendar
quarter in which Royalties are earned or otherwise become due under this License
Agreement, SUN shall furnish Licensors with a written report setting forth the
computation of the Royalties payable during the preceding calendar quarter, and
shall make such payment. Royalties shall be paid to Licensors in U.S. dollars.
In case a conversion from one currency to another is involved in determining an
earned Royalty Payment, the exchange rate shall be the exchange rate in effect
at the Chase Manhattan Bank in New York City on the last day of the applicable
Calendar Quarter. Late payments shall bear interest at the rate of prime plus
two percent, as in effect at the Chase Manhattan Bank in New York City at the
time such payments originally became due.
B. SUN shall keep and maintain complete and accurate records
in sufficient detail to ascertain the Net Sales Prices of Licensed Products and
to enable Royalties payable to Licensors hereunder to be determined (including
records on all conversion of currency under Paragraph A above), and it shall
permit such records to be inspected once per year upon written notice by
Licensors during reasonable business hours by a certified public accountant or
firm of certified public accountants reasonably acceptable to SUN and appointed
by Licensors for this purpose; provided, however, that SUN shall have the right
to destroy or discard such records in accordance with SUN's record retention
policy, provided that such records shall be kept for a minimum of five (5) years
after the end of the Calendar Quarter to which they apply. Licensors shall bear
the cost and expense of such investigation by accountants, unless the
accountants determine that SUN's determination of the Royalties due and owing to
Licensors was incorrect (in SUN's favor) in an amount exceeding five percent
(5%) of the amount calculated by SUN, in which case SUN shall bear such cost and
expense.
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<PAGE>
VI. GRANTBACK OF LICENSE TO LICENSORS
SUN grants to Licensors a perpetual license under information
and inventions, whether patentable or not, related to improvements,
modifications, and derivatives of Licensed Products or Licensed Process
originated or invented during the term of this License Agreement by employees,
agents, contractors, or suppliers of SUN having access to Licensed Product,
Licensed Process or Proprietary Information. Such license to Licensors shall be
non-exclusive, irrevocable, perpetual, worldwide, and royalty free to make, have
made, use, import, sell and otherwise transfer products covered by such
information and inventions.
VII. TRANSFER OF PROPRIETARY INFORMATION
Within thirty (30) days of execution of this Agreement,
Licensors shall provide two (2) copies of the materials identified in Appendix
B.
VIII. ASSIGNMENT BY LICENSOR
A Licensor may assign any of his or its rights, including
rights to payments of earned Royalties, to any corporation or individual.
IX. TERM AND TERMINATION
A. This License Agreement shall become effective as of the
Effective Date and, unless otherwise terminated as provided herein, shall
continue in full force and effect until the last to expire of the Licensed
Patents.
B. Termination for Cause. After the occurrence of any of the
following events, this License Agreement may be terminated by SUN, on the one
hand, or CRANE and PANDA, on the other hand (respectively, the "Terminating
Party") by giving written notice of Termination to the other Party, such
Termination being immediately effective upon the giving of such Notice of
Termination:
(a) A material breach or default as to any obligation
hereunder by the other Party and the failure of the
other Party to promptly pursue (within fifteen (15)
days after receiving written notice thereof from
the Terminating Party) a reasonable remedy
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<PAGE>
designed to cure (in the reasonable judgment
of the Terminating party) such material breach
or default; or
(b) The filing of a petition in bankruptcy,
insolvency or reorganization against or by the
other Party, which petition shall not have
been dismissed within ninety (90) days of
filing thereof, or the other Party becoming
subject to a composition for Creditors,
whether by law or agreement, or the other
Party going into receivership or otherwise
becoming insolvent.
C. SUN shall have the right to terminate this License
Agreement at any time with or without cause upon six (6) months prior written
notice to Licensors. Termination of this License Agreement by SUN shall not
alter or affect the rights or obligations of either party arising prior to such
termination, nor shall termination pursuant to this Section relieve SUN of its
payment obligations hereunder. Any termination by SUN as provided in this
Paragraph shall not prejudice the right of Licensors to recover any earned
Royalty, or other sums owed or accrued at the time of such termination nor
prejudice the right of Licensors to maintain an action against SUN for
infringement of its patent or other intellectual property rights.
D. Licensee hereby undertakes to obtain all requisite
approvals from applicable governmental authorities and regulating bodies in
India relating to this Agreement, including without limitation any clearance
required for Licensee to pay the royalties called for by Article V above.
Licensors' obligations under this Agreement are subject to Licensee's receipt of
such approvals. Licensors shall have the right to terminate this Agreement if
such approvals are not obtained within 60 days after the Effective Date.
E. The parties agree that upon termination or expiration of
this License Agreement, Licensee shall immediately cease: (i) any use or
practice of the Licensed Product or the Licensed Process; and (ii), except as
provided in Section F below, any making, use, or sale of the Licensed Product,
including internal use within SUN or its Affiliates. Upon termination or
expiration of this License Agreement, SUN shall, at its own expense, return to
Licensors all Proprietary Information as soon as practicable after the date of
termination or expiration, but in no case more than fifteen (15) days after
termination or
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<PAGE>
expiration, including, but not limited to, the materials identified in Appendix
B, original documents, drawings, computer diskettes, models, samples, notes,
reports, notebooks, letters, manuals, prints, memoranda and any copies of any of
the foregoing. SUN shall certify to Licensors in a signed statement under pains
of perjury that all such materials and Proprietary Information have been
returned. All Proprietary Information and Patent Rights shall remain the
exclusive property of Licensors during the term of this License Agreement and
thereafter.
F. Upon termination or expiration of this License Agreement,
nothing shall be construed to release Licensee from its obligations to pay
Licensors any and all Royalties, license fees or other amounts accrued but
unpaid hereunder prior to the date of such termination or expiration.
G. After termination or expiration of this License Agreement
for any reason by either party, SUN may sell all Licensed Product which it has
on hand upon the date of termination or expiration provided however, that the
sales shall be completed not later than three (3) months from the date of the
termination or expiration and that the termination or expiration shall not
relieve SUN from making the full earned Royalty payments herein provided on all
Licensed Product by it either before or after the date of the termination or
expiration.
X. INFRINGEMENT
In the event Licensee shall learn of the infringement of any
patent included in the Patent Rights, Licensee shall promptly call Licensors'
attention thereto in writing and shall provide Licensor with evidence of the
infringement. The parties shall use their best efforts in cooperation with each
other to terminate the infringement without litigation. If the efforts of the
parties are not successful in abating the infringement within ninety (90) days
after the infringer has been formally notified by Licensors of the infringement,
either Licensor shall have the right to: (a) commence suit on its own account;
and (b) join Licensee in such suit; and such Licensor shall give timely notice
in writing to Licensee of its election. Any proceeds of such suit shall be the
property of the Licensor whose Patent Rights were infringed.
XI. PATENT MARKING
Licensee agrees to mark all Licensed Products made, used, or
sold under the terms of this License Agreement, or their container with the
numbers of applicable patents of Licensor or other appropriate marking in
accordance with the patent marking
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<PAGE>
laws of the country in which the Licensed Product is manufactured, used, or
sold.
XII. WAIVER OF DEFAULT
A waiver, express or implied, by either of the parties hereto
of any right hereunder or of any default, breach, or other failure to perform by
the other party hereto, shall not constitute or be deemed a future waiver of
that or any other right hereunder or of any default, breach or any other failure
to perform thereafter by such other party. All waivers to be effective must be
in writing and signed by the waiving party.
XIII. GOVERNING LAW
This License Agreement shall be governed, interpreted, and
construed in accordance with the laws of the State of Florida, USA, excluding
its conflict of law principles.
XIV. NO RIGHTS BY IMPLICATION
No rights or licenses with respect to Licensed Product or
Licensed Process are granted or deemed granted hereunder or in connection
herewith, other than those rights or licenses expressly granted in this License
Agreement.
XV. DEFENSIVE LITIGATION
Licensee shall defend and indemnify Licensors from and against
any damages, liabilities, costs, and expenses, including reasonable attorney's
fees and Court costs, either: (i) arising out of the manufacture, use, sale, or
other transfer of Licensed Product by Licensee or its customers; or (ii) arising
out of improvements, modifications, or derivatives of Licensed Product
introduced by Licensee or its customers; or (iii) arising out of injuries or
damages caused by Licensed Product.
XVI. DISPUTE RESOLUTION
A. Any dispute, controversy, or claim arising out of or
relating to this License Agreement, or to a breach thereof, including its
interpretation, performance, or termination shall be submitted to and finally
resolved by arbitration. The arbitration shall be conducted in the English
language in accordance with the Commercial Rules of the American Arbitration
Association (AAA) in Boca Raton, Florida, USA. The decision of the arbitrators
shall
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<PAGE>
be final and binding upon the parties hereto, and the expense of the arbitration
(including without limitation the award of attorney's fees to the prevailing
party) shall be paid as the arbitrators determine. The arbitration shall be
conducted by three (3) arbitrators to be selected by the American Arbitration
Association in accordance with its normal procedures.
B. Notwithstanding anything contained in this Section,
Licensor shall have the right to institute judicial proceedings or proceedings
in the International Trade Commission against SUN or anyone acting by, through
or under SUN, including any purchaser from SUN, in order to enforce such
Licensor's rights hereunder through reformation of contract, specific
performance, temporary restraining order, exclusion order or cease and desist
order, preliminary injunction, final injunction, or similar relief.
C. The provisions of this Section shall survive termination of
this Agreement for a period of five (5) years.
XVII. NOTICES
Each notice required or permitted to be sent under this
License Agreement shall be given by Federal Express or comparable express
delivery service, by telecopy, or by Certified or Registered mail, to Licensors
and to Licensee at the address or telecopy number indicated below.
For CRANE: Stanford W. Crane, Jr.
3934 Northwest 57th Street
Boca Raton, FL 33496
Telecopy Number: 407-
For PANDA: The Panda Project, Inc.
901 Yamato Road
Boca Raton, FL 33496
Attention: President
Telecopy Number: 561/994-2300
For Licensee: Sun Precision Works, Pvt. Ltd.
2712 II Cross, L51 Compound,
Mission Road
Bangalore 560 027 - India
Attention: Mr. S.P. Satish
Telecopy Number: (91)(80) 222-4768
A party may change its address for purposes of this License Agreement by giving
the other parties written notice of its new address.
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<PAGE>
XVIII. ENTIRE UNDERSTANDING
This License Agreement embodies the entire understanding
between the parties relating to the subject matter hereof, whether written or
oral, and there are no prior representations, warranties, or agreements that
relate to Licensed Product, Licensed Process, Proprietary Information, and
Patent Rights.
XIX. INVALIDITY
If any provision of this License Agreement is declared invalid
or unenforceable by an arbitration panel or by a court having competent
jurisdiction, it is mutually agreed that this License Agreement shall endure
except for the part declared invalid or unenforceable. The parties shall consult
and use their best efforts to agree upon a valid and enforceable provision,
which shall be a reasonable substitute for such invalid or unenforceable
provision, in light of the intent of this License Agreement.
XX. AMENDMENTS
Any amendment or modification of any provision of this License
Agreement must be in writing, dated and signed by both SUN and Licensors.
XXI. RESPONSIBILITY FOR TAXES
If Licensee is required to withhold taxes from any amount
payable by Licensee hereunder, then Licensee shall pay to Licensors an
additional amount as may be necessary so that each Licensor will receive, after
deduction of the withholding tax, the amount that such Licensor would have
received in the absence of the withholding tax.
XXII. COUNTERPARTS
This License Agreement may be executed in any number of
counterparts and each such counterpart shall be deemed to be an original.
XXIII. BINDING EFFECT
This License Agreement shall be binding upon, and inure to the
benefit of, the parties hereto and their successors, assigns, estates,
beneficiaries, representatives, and heirs.
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<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
XXIV. WARRANTY AND DISCLAIMER
A. Licensors and Licensee represent that they have full
corporate or other power and authority to enter into and perform this Agreement.
This Agreement has been duly authorized and duly executed and delivered by each
party, and it is valid, binding and enforceable against each party in accordance
with its terms.
B. In no event shall the aggregate liability or cost to CRANE
for any action or claim arising out of this License Agreement, including without
limitation the provisions of Appendix C or any of the warranties herein,
regardless of the form of such action or claim, exceed an amount equal to
**********
C. EXCEPT AS SET FORTH IN THIS SECTION, THE PARTIES
ACKNOWLEDGE AND AGREE THAT THERE ARE NO WARRANTIES, COVENANTS, REPRESENTATIONS,
OR AGREEMENTS BY CRANE OR PANDA AS TO MARKETABILITY, MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE OR OTHER ATTRIBUTES, TITLE, OR NON-INFRINGEMENT WHETHER
EXPRESS OR IMPLIED (IN LAW OR IN FACT), ORAL OR WRITTEN.
IN WITNESS WHEREOF, CRANE, PANDA and SUN have signed this
License Agreement.
STANFORD W. CRANE, JR.
/s/ STANFORD W. CRANE, JR.
- --------------------------------------------
Date: August 17 , 1996
THE PANDA PROJECT, INC.
By: STANFORD W. CRANE, JR.
- --------------------------------------------
Name: Stanford W. Crane
- --------------------------------------------
Title: President
- --------------------------------------------
Date: August 17 , 1996
- --------------------------------------------
SUN PRECISION WORKS, PVT. LTD.
By: /s/ S.P. SATISH
- --------------------------------------------
Name: S.P. Satish
- --------------------------------------------
Title: Vice President Business Development
- --------------------------------------------
Date: August 17 , 1996
- --------------------------------------------
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<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
APPENDIX A
CRANE PATENTS
APPLICATION
COUNTRY NUMBER ISSUE DATE
TW 81109972 11-Jan-1995
TW 83102272 11-May-1995
CRANE PATENT APPLICATIONS
APPLICATION
COUNTRY NUMBER FILING DATE
***** ********** **********
***** ********** **********
***** ********** **********
***** ********** **********
***** ********** **********
***** ********** **********
***** ********** **********
***** ********** **********
***** ********** **********
PANDA PATENT APPLICATIONS
APPLICATION
COUNTRY NUMBER FILING DATE
***** ********** **********
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<PAGE>
APPENDIX B
Proprietary Information Transferred to SUN may include the following:
(1) Drawings of relevant components
(2) Technical specifications for components
(3) Test results
(4) Manufacturing process information
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<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
APPENDIX C
Licensee agrees to pay to Licensors an earned Royalty of
**** ************ of its Net Sales Price on each Licensed Product Sold. Payments
shall be made 50% to Crane and 50% to Panda or as otherwise directed by
Licensors.
"Net Sales Price" shall mean the price for Licensed Product
Sold by SUN to third parties less the following:
(a) Reasonable shipping, installation and packing
charges or allowances, if any, included in such amounts;
(b) Reasonable trade, quantity, or cash discounts and
Brokers' or agents' commissions, but with respect to any of
the preceding adjustments, only insofar as actually allowed
or paid in connection with the sale in question;
(c) Credits or allowances, if any, given or made on
account of rejection or return of defective Licensed
Product Sold; and
(d) Sales taxes and manufactured goods duties actually paid
by Licensee with respect to any Licensed Product not
exceeding, in aggregate, **** of the price of such Licensed
Product.
If a "Licensed Product Sold" is leased, used, or transferred
other than by sale, the Net Sales Price attributable to such lease, use, or
transfer other than by sale shall be an amount corresponding to the most recent
bona fide invoiced sale for the same or a comparable product, less the
deductions in subparagraphs (a) through (c) above, to an unrelated third party,
or should there be no such bona fide invoiced sale within six (6) months of the
transaction in question, then ******************************** of the actual
manufacturing costs.
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EXHIBIT 99.6
September 10, 1996
Mr. C. Daryl Hollis
Chief Financial Officer
The Panda Project, Inc.
901 Yamato Road
Boca Raton, FL 33431
Dear Daryl:
This letter will confirm the terms and conditions under which Mallory Factor
Inc. ("Agency") will serve as Investor Relations Counsel to The Panda Project,
Inc. ("Client").
DUTIES:
As Investor Relations Counsel, the Agency will:
A) Advise Client management on the Investor Relations and Public
Relations aspects of the Client's policies, opportunities and
problems;
B) Develop, for approval and implementation, programs designed to
achieve the Client's Investor Relations and Public Relations
objectives;
C) Provide professional staff services as may be required to help
the Client carry out its Investor Relations and Public Relations
programs and objectives including use of the Agency's
proprietary investor data base.
SERVICE FEES:
The Client will pay the Agency for time expended by the Agency's professional
staff each month. The minimum monthly charge is $3,500. The Agency's services
are accounted for based on the standard hourly rates for participating
principals and staff as they are required to carry out the programs and
activities approved.
<PAGE>
The Panda Project, Inc. Page 2
OUT-OF-POCKET EXPENSES:
The Client will reimburse the Agency for all reasonable out-of-pocket
disbursements made in the performance of its duties under this agreement. The
Agency will maintain accurate records of all out-of-pocket expenditures incurred
on the Client's behalf. Disbursements to suppliers, such as photographers,
clipping services, messengers, etc., will be rebilled to the Client with a
standard agency commission added. The standard commission is 15% of the gross
rebilled amount. Other items, such as postage, luncheons with editors, etc.,
will be rebilled at net cost with no markup. Travel expenses for Mallory Factor
Inc. staff will be billed with no mark-up.
TERMS OF PAYMENT:
Billing will be done monthly for the previous month's expenses and fee charges
above the minimum fee, and for the following month's minimum fee.
Payment is due within thirty (30) days upon receipt of invoice. The Client
agrees that it will pay on any overdue balance(s) a finance charge of 1.5% per
month or any part thereof in addition to the stated agreement payments. In the
event that the Client questions the validity of a charge by the Agency, payment
for only that portion under question may be delayed without penalty provided the
Client expresses its objection in writing within ten (10) days upon receipt of
invoice.
LIABILITY:
The Client agrees to indemnify and hold the Agency harmless from and against any
and all losses, claims, damages, expenses or liabilities which the Agency may
incur based upon information, representations, reports or data furnished by the
Client to the extent that such material is furnished, prepared or approved by
the Client for use by the Agency.
The Agency agrees to indemnify and hold the Client harmless from and against any
and all losses, claims, damages, expenses or liabilities which the Client may
incur based upon the gross negligence of the Agency.
<PAGE>
The Panda Project, Inc. Page 3
NON-PROSELYTIZATION:
Recognizing that the Agency's most highly valued resource is its professional
staff, the Client agrees that it shall not employ, hire or retain, or recommend
to others the employment, hiring or retention of, directly or indirectly, any
person employed by the Agency without prior written consent of the Agency's
chairman.
"Indirectly" includes the Client hiring a competitor of the Agency which employs
a former Agency employee who worked directly on Client's matters. This
limitation would expire two (2) years after the employee has left the Agency's
employ. The liquidated damages due to the Agency shall be three (3) times the
last annualized total compensation paid by the Agency to any such person in
addition to relief at law or in equity.
TERMS OF AGREEMENT:
This agreement shall extend for twelve (12) months commencing September 10,
1996. This agreement will automatically be renewed for successive one (1) year
periods unless either party notifies the other in writing, at least ninety (90)
days prior to the expiration date, of its desire not to renew.
Any controversy or claim arising out of or relating to this agreement, or the
breach thereof, shall be settled by arbitration in New York, New York in
accordance with the rules of the American Arbitration Association, and judgement
upon the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction. Please reconfirm the Client's agreement to the above by endorsing
all three (3) copies and returning all three (3) copies to the Agency for
execution.
Sincerely,
MALLORY FACTOR INC.
By:_________________________________
ACCEPTED:
The Panda Project, Inc.
By:____________________________________
Title:_________________________________
Date:_______________________________
EXHIBIT 99.7
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND IS SUBJECT TO RESTRICTIONS ON EXERCISE
AND TRANSFER AS SET FORTH HEREIN
WARRANT
To Purchase Common Stock of
The Panda Project, Inc.
1. GRANT AND EXERCISE OF WARRANT.
1.1. GRANT OF WARRANTS. THIS WARRANT (the "Warrant") CERTIFIES THAT, for
value received, Mallory Factor (the "Holder"), is entitled to purchase at a
price of $8.00 per share (the "Warrant Price") from The Panda Project, Inc. a
Florida corporation (the "Company"), shares of common stock of the Company (the
"Common Stock") on the following terms and conditions. This Warrant permits the
Holder to purchase from the Company (i) 100,000 shares of Common Stock at the
Warrant Price at any time during the ten year period commencing on the date
hereof, (ii) 100,000 shares of Common Stock at the Warrant Price at any time
during the ten year period commencing on the vesting thereof, provided that the
Warrant referred to in this clause (ii) will vest and may only be exercised in
the event the Common Stock trades on the principal securities market trading the
Common Stock (the "Market") at a price equal to or greater than $12.00 per share
for ten consecutive days or average closing price for 15 consecutive days during
the five year period commencing on the date hereof, and the holder agrees not to
exercise or sell this 100,000 share warrant for one year after vesting or the
vesting of the 100,000 share warrant described in clause (iii) below, whichever
comes first, (iii) 100,000 shares of Common Stock at the Warrant Price at any
time during the ten year period commencing on the date of vesting thereof,
provided that the Warrant referred to in this clause (iii) will vest and may
only be exercised in the event the Common Stock closing price on the Market is
equal to or greater than $26.00 for 30 consecutive trading days, any time during
the five year period commencing on the date hereof, and (iv) 100,000 shares of
Common Stock at the Warrant Price at any time during the ten year period
commencing on the vesting thereof, provided that the Warrant referred to in this
clause (iv) will vest and may only be exercised in the event the Company sells
at least $15 million alone or in combination of debt, equity (Common Stock),
convertible debt, etc. securities in a public or private transaction(s) with one
or more investment bankers, bakers, financial institutions, private investors,
etc. introduced, participated in, and/or worked on by the Holder or his
company(s) for the Company at any time during the term or within two (2) years
following the termination of the Mallory Factor Inc. agreement dated September
10, 1996.
In the event of a "Change of Control," as defined herein, the
Warrants referred to in clauses (ii), (iii) and (iv) above shall immediately
vest and be exercisable.
<PAGE>
"Change of Control" shall mean the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition, in one or a series of
related transactions, of all or substantially all of the assets of the Company
to any "person" or "group" (as such terms are used in Sections 13(d)(3) and
14(d)(2) of the Securities Exchange Act of 1934 as amended (Exchange Act), (ii)
any person or group is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the total voting power of
the voting stock of the Company, including by way of merger, consolidation or
otherwise or (iii) during any period of two consecutive Company fiscal years
following the effective date of the Warrant, individuals who at the beginning of
such period constituted the Board (together with any new directors whose
election by such Board or whose nomination for election by the shareholders of
the Company was approved by a vote of a majority of the directors of the
Company, then still in office, who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board, then in
office.
1.2. EXERCISE OF WARRANTS. To exercise the Warrants in whole or in part,
the Holder shall deliver to the Company at its principal office (a) a written
notice of the Holder's election to exercise this Warrant, which notice shall
specify the number of shares of Common Stock to be purchased, (b) cash or a
certified check payable to the Company in an amount equal to the aggregate
purchase price of the number of shares of Common Stock being purchased, and (c)
this Warrant. The Company shall as promptly as practicable, and in any event
within 20 days thereafter, execute and deliver or cause to be executed and
delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in such
notice. The stock certificate or certificates so delivered shall be in the
denomination of 100 shares each or such lesser or greater denomination as may be
specified in such notice and shall be issued in the name of the Holder or such
other name as shall be designated in such notice. Such certificate or
certificates shall be deemed to have been issued and the Holder or any other
person so designated to be named therein shall be deemed for all purposes to
have become a holder of record of such shares as of the date such notice is
received by the Company as aforesaid. If this Warrant shall have been exercised
only in part, the Company shall, at the time of delivery of said certificate or
certificates, deliver to the Holder a new Warrant evidencing the rights of the
Holder to purchase the remaining shares of Common Stock provided for by this
Warrant, which new Warrant shall in all other respects be identical to this
Warrant, or, at the request of the Holder, appropriate notation may be made on
this Warrant and the same returned to the Holder. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issue and delivery of such stock certificates and new Warrants, except that, in
case such stock certificates or new Warrants shall be registered in a name or
names other than the name of the Holder, funds sufficient to pay all stock
transfer taxes that are payable upon the
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issuance of such stock certificate or certificates or new Warrants shall be paid
by the Holder at the time of delivering the notice of exercise mentioned above.
Prior to the issuance of any shares of Common Stock upon exercise of this
Warrant, the Company shall secure the listing of such shares of Common Stock
upon each national securities exchange or automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official notice of
issuance upon exercise of this Warrant) and shall maintain, so long as any other
shares of Common Stock shall be so listed, such listing of all shares of Common
Stock from time to time issuable upon the exercise of this Warrant.
2. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants that:
2.1. ORGANIZATION, STANDING, CAPITALIZATION, ETC. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation and has all requisite corporate power and
authority to enter into this Warrant. The Company has delivered to the Holder a
complete and correct copy of the Articles of Incorporation of the Company, and
all amendments thereto, as in effect on the date hereof, and a complete and
correct copy of the Bylaws of the Company as in effect on the date hereof. The
Company has an authorized equity capitalization as described in the Articles of
Incorporation. All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable.
2.2. QUALIFICATION. The Company is duly qualified and in good standing as
a foreign corporation authorized to transact business in each jurisdiction where
the conduct of the Company's business or the ownership of its properties
requires such qualification, or, if not so qualified, the Company's failure so
to qualify will not have a material adverse effect on the Company, its financial
condition or operations and will not impair the Company's right to enforce any
material agreement to which it is a party.
2.3. AGREEMENT AUTHORIZATION. This Warrant has been duly authorized,
executed and delivered by or on behalf of the Company and constitutes the
legal, valid and binding obligation of the Company enforceable in accordance
with its terms.
2.4. AUTHORIZATION AND LEGALITY OF THE WARRANTS AND THE COMMON STOCK. The
Board of Directors of the Company has duly authorized the grant of the Warrants.
There are no preemptive rights or similar rights on the part of the holders of
shares of the Company's capital stock. No approval or authorization of the
shareholders of the Company is required for the issuance and sale of the
Warrants as contemplated herein. The shares of Common Stock issuable upon
exercise of the Warrants have been duly
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authorized and, when delivered to the Holder upon such exercise, will be validly
issued and outstanding and fully paid and nonassessable. The issuance of the
securities and the consummation of the other transactions contemplated hereby
will not conflict with, or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, with or without notice or lapse
of time or both, (a) any contract, indenture, mortgage, deed of trust, loan
agreement, understanding or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is or may be bound or to which any of the property or assets of the
Company or any of its subsidiaries is or may be subject, which breach, violation
or default could reasonably be expected to have a material adverse effect on the
Company or its subsidiaries taken as a whole, or (b) the Articles of
Incorporation or Bylaws of the Company or of any order, judgment or decree of
any court or governmental agency, authority or instrumentality having
jurisdiction over the Company or any of its subsidiaries or any of their
material properties.
2.5. DISCLOSURE. Neither this Warrant nor any certificate or other
document referenced herein or therein and furnished to the Holder by the Company
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein or herein, in
light of the circumstances under which they were made, not misleading.
3. COVENANTS OF THE COMPANY.
3.1. REGISTRATION OBLIGATIONS. The Company covenants and agrees:
(a) If, at any time, Holder requests that the Company file a registration
statement under the Securities Act of 1933 (the "Securities Act"), as soon as
practicable thereafter the Company shall use its best efforts to file a
registration statement with respect to any or all of the Common Stock issuable
upon exercise of the Warrants (the "Warrant Shares"), (whether for primary
offering and sale by the Company to the Holder, or for a subsequent secondary
offering and sale by the Holder), that the Company has been so requested to
include and obtain the effectiveness thereof, and to take all other action
necessary under any Federal or state law or regulation to permit the Warrant
Shares specified in the notice of the Holder to be sold or otherwise disposed
of, and the Company shall maintain such compliance with each such Federal and
state law and regulation for the period necessary for Holder to effect the
proposed sale or other disposition; provided, however, the Company shall be
entitled to defer such registration for a period of up to 90 days if and to the
extent that its Board of Directors shall determine that such registration would
interfere with a pending corporate transaction. The Holder shall be entitled to
register, re-register or qualify, all or any portion of the Warrant Shares, and
the Company shall be required to effect a registration, re-registration or
qualification as requested by the Holder pursuant to this subsection 3.1(a) on
four occasions.
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(b) If at any time or from time to time prior to the date on which this
Warrant expires persuant to section 1.1 (Expiration Date), the Company proposes
to register any of its securities under the Securities Act on any form for the
registration of securities under such Act, whether or not for its own account
(other than by a registration statement on Form S-8 or Form S-4 or other form
which does not included substantially the same information as would be required
in a form for the general registration of securities or would not be available
for the Common Stock) (a "Piggyback Registration"), it shall as expeditiously as
possible give written notice to the Holder of this intention to do so and of
such Holder's rights under this Section 3.1(b). Such rights are referred to
hereinafter as "Piggyback Registration Rights." Upon the written request of the
Holder made within 20 days after receipt of any such notice (which request shall
specify the registrable securities intended to be disposed of by such Holder),
the Company shall include in the Registration Statement the registrable
securities which the Company has been so requested to register by the Holder
thereof and the Company shall keep such registration statement in effect and
maintain compliance with each Federal and state law or regulation for the period
necessary for such Holder to effect the proposed sale or other disposition.
If a Piggyback Registration involves an offering by or through underwriters, the
Company, except as otherwise provided herein, shall not be required to include
registrable shares therein if and to the extent the underwriter managing the
offering reasonably believes in good faith and advises in writing the Holder
requesting to have registrable securities included in the Company's Registration
Statement that marketing factors require a limitation on the number of shares to
be underwritten; provided that any such reduction or elimination shall be pro
rata to all other holders of the securities of the Company exercising "Piggyback
Registration Rights" similar to those set forth herein in proportion to the
respective number of shares they have requested to be registered.
(c) The Company shall pay all Registration Expenses in connection with the
registrations provided for the Section 3.1 (a) and (b).
(d) To update the Holder regarding any material developments related to
the registrations referred to above, including any stop orders issued by the
Securities and Exchange Commission or any other circumstances that make such
registration unavailable for any reason.
3.2. FINANCIAL STATEMENTS. So long as any of the Warrants are
outstanding, the Company shall deliver to the Holder:
(a) within 45 days after the end of each of the first three quarterly
fiscal periods in each fiscal year of the Company, a consolidated balance sheet
of the Company and its subsidiaries as at the end of such period and
consolidated statements of income and of cash flow of the Company and its
subsidiaries for each period and, in the case of the second and third quarterly
periods, for the period from the beginning of the then current fiscal year to
the end of such quarterly period, setting forth in each case in comparative
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form the figures for the corresponding period of the previous fiscal year, all
in reasonable detail; and
(b) Within 90 days after the end of each fiscal year of the Company, a
consolidated balance sheet of the Company and its subsidiaries as at the end of
such year and statements of income and of cash flows of the Company and its
subsidiaries for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and accompanied
by the opinion thereon of independent public accountants of recognized standing,
which opinion shall state that such financial statements have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with that of the preceding fiscal year, and that the audit by such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards.
3.3. NOTICES. In case the Company proposes
(a) to pay any dividend payable in stock (of any class or classes) or in
convertible securities upon its Common Stock or make any distribution (other
than ordinary cash dividend) to the holders of its Common Stock, or
(b) to grant to the holders of its Common Stock generally any rights or
options other than the options granted under the Company's incentive stock
option plans, or
(c) to effect any capital reorganization or reclassification of capital
stock of the Company, or
(d) to consolidate with, or merge into, any other corporation or to
transfer its property as an entirety or substantially as an entirety, or
(e) to effect the liquidation, dissolution or winding up of the Company,
then the Company shall cause notice of any such intended action to be given to
the Holder not less than 30 days before the date on which the transfer books of
the Company shall close or a record be taken for such stock dividend,
distribution or granting of rights or options, or the date when such capital
reorganization, reclassification, consolidation, merger, transfer, liquidation,
dissolution or winding up shall be effective, as the case may be.
3.4. RESERVATION OF SHARES. The Company covenants and agrees that it will
at all times reserve and set apart and have, free from preemptive rights, a
sufficient number of shares of authorized but unissued Common Stock, sufficient
to permit the exercise in full of the Warrants.
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<PAGE>
4. NO INCONSISTENT AGREEMENTS. The Company will not on or after the date
of this Warrant enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the Holder in this warrant or otherwise
conflicts with the provisions hereof. The rights granted to the Holder hereunder
do not in any way conflict with and are not inconsistent with the rights granted
to holders of the Company's securities under any other agreements.
5. EXPENSES. The Company will pay (a) all costs and expenses of the
Company's performance of and compliance with all agreements and conditions
contained herein on its part to be performed or complied with, including
registration, filing and qualification fees, blue sky fees, printing expenses
and accounting fees; and (b) the cost of complying with the securities or blue
sky laws of any jurisdiction with respect to the offering or sale of the Common
Stock issued upon exercise of the Warrants.
6. INDEMNIFICATION.
(a) In connection with any registration by the Company of the Common Stock
issuable upon exercise or conversation thereof, to the extent permitted by law,
the Company will indemnify and hold the Holder harmless against any losses,
claims, damages, or liabilities, joint or several, to which the Holder may
become subject under the Securities Act of 1933 as amended (Securities Act) or
otherwise, insofar as such losses, claims, damage, or liabilities (or actions in
respect thereof) arise out of or are based on any untrue or alleged untrue
statement of any material fact contained in any registration statement filed by
the Company, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements 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
or arise out of any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration; and will reimburse the Holder for any legal or other expenses
reasonably incurred by the Holder in connection with investigating or defending
any such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this Section shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld) nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in connection with such registration
statement, preliminary prospectus, final prospectus, or amendments or
supplements thereto, in reliance upon and in conformity with written information
furnished expressly for use by the Holder in connection with such registration.
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<PAGE>
(b) In connection with any registration statement described in Section
6(a), to the extent permitted by law, the Holder will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls the Company
within the meaning of the Securities Act, and each agent and any underwriter for
the Company (within the meaning of the Securities Act) against any losses,
claims, damages, or liabilities to which the Company or any such director,
officer, controlling person, agent, or underwriter may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements 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 such registration statement, preliminary or final
prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with written information furnished by the Holder expressly for use in
connection with such registration; and the Holder will reimburse any legal or
other expenses reasonably incurred by the Company or any such director, officer,
controlling person, agent, or underwriter in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this Section 6(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage liability, or action
if such settlement is effected without the Holder's consent (which consent shall
not be unreasonably withheld).
7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All agreements,
representations and warranties contained herein or made in writing by the Holder
or on behalf of the Company in connection with the transactions contemplated
hereby shall survive the execution and delivery of this Warrant. All the
statements contained in any instrument executed and delivered by the Company or
its duly authorized officers pursuant hereto in connection with the transactions
contemplated hereby shall be deemed representations by the Company hereunder.
8. LIMITATION OF LIABILITY; NOT A STOCKHOLDER. No provision of this
Warrant shall be construed as conferring upon the Holder the right to vote or to
consent or to receive dividends or to receive notice as a stockholder in respect
of meetings of stockholders for the election of directors of the Company or any
other matter whatsoever as a stockholder of the Company. No provision hereof, in
the absence of affirmative action by the Holder to purchase shares of Common
Stock, and no enumeration herein of the rights or privileges of the Holder,
shall give rise to any liability of the Holder for the purchase price or as a
stockholder of the Company, whether such liability is asserted by the Company,
creditors of the Company or others.
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<PAGE>
9. LOSS, DESTRUCTION, ETC. OF WARRANT. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction upon
delivery of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation upon surrender
and cancellation of the Warrant, the Company will make and deliver a new
Warrant, of like tenor, in lieu of such lost, stolen, destroyed or mutilated
Warrant. Any Warrant issued under the provisions of this Section in lieu of any
Warrant alleged to be lost, destroyed or stolen, or of any mutilated Warrant,
shall constitute an original contractual obligation on the part of the Company.
10. ADJUSTMENTS. In the event the Company engages in any reorganization,
recapitalization, stock dividend, stock split, merger, liquidation or any other
transaction described in Section 3.3 hereof, appropriate and equitable
adjustment in the number and type of equity units issuable upon exercise of this
Warrant and in the purchase price thereof and in the Market price at which the
Warrant granted in clauses (ii), (iii) and (iv) of Section 1.1 vests shall be
made in order that the Holder's economic interest in this Warrant is preserved
without dilution or prejudice.
11. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be mailed by first-class registered or
certified mail, postage prepaid, if to the Holder, at c/o Mallory Factor Inc.,
275 Seventh Avenue, New York, New York 10001-6788, or at such other address as
may have been furnished to the Company by the Holder in writing, or if the
Company, at The Panda Project, Inc., 901 Yamato Road, Boca Raton, FL 33431 or at
such other address as may have been furnished to the Holder in writing by the
Company.
12. AMENDMENTS AND WAIVERS. Except as otherwise provided herein, neither
this Agreement nor any term hereof may be changed, waived, discharged or
terminated orally or in writing, except that any term of this Agreement may be
amended and the observance of any such term may be waived (either generally or
in a particular instance and either retroactively or prospectively) with (but
only with) the written consent of the Holder and the Company.
13. SPLIT UP, COMBINATION, EXCHANGE, TRANSFER AND ASSIGNMENT. This Warrant
may be split up, combined or exchanged for another Warrant or Warrants
containing the same terms to purchase a like aggregate number of Warrant Shares.
If the Holder desires to split up, combine or exchange this Warrant, he shall
make such request in writing delivered to the Company and shall surrender to the
Company this Warrant and any other Warrants to be so split-up, combined or
exchanged. Upon any such surrender for a split-up, combination or exchange, the
Company shall execute and deliver to the
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person entitled thereto a Warrant or Warrants, as the case may be, as so
requested. The Company shall not be required to effect any split-up, combination
or exchange which will result in the issuance of a Warrant entitling the Holder
to purchase upon exercise a fraction of a share of Common Stock or a fractional
Warrant. The Company may require such Holder to pay a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
split-up, combination or exchange of Warrants.
This Warrant and the Warrant Shares may be encumbered, pledged or hypothecated
in accordance with and subject to the provisions of the Securities Act and the
rules and regulations promulgated thereunder.
14. ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company will not
take any action outside the ordinary course of business, or permit any change
within its control to occur outside the ordinary course of business, with
respect to the Warrants or Warrant Shares which is without a bona fide business
purpose, and which is intended to interfere with the ability of the Company to
include such securities in a registration undertaken pursuant to this Agreement.
15. SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provisions in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
16. MISCELLANEOUS. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida. All the terms of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto. The headings in
this Agreement are for convenience of reference only, and shall not limit or
otherwise affect the meaning hereof. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. EXPIRATION. This Warrant shall expire on the last day of the last
vesting period to be triggered pursuant to the terms of Section 1.1 hereof.
IN WITNESS WHEREOF, The Panda Project, Inc., has caused this Warrant to be
signed and delivered by its duly authorized officer as of this 10st day of
September, 1996.
____________________________
By: _______________________
Title
a Florida corporation
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EXHIBIT 99.8
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
LICENSE AGREEMENT
This License Agreement is made and entered into as of August
18, 1996, by and between THE PANDA PROJECT INC. ("PANDA" or "Licensor") a
corporation existing under the laws of Florida, which has its principal office
at Boca Raton, Florida, and PANTRONIX CORPORATION, ("PANTRONIX" or "Licensee"),
a corporation existing under the laws of California, which has its principal
office at San Jose, California.
WHEREAS, Licensor possesses certain valuable intellectual and
industrial property rights; and
WHEREAS, Licensor is willing to grant, and Licensee desires to
acquire, rights to use such rights on a worldwide basis in accordance with the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual
promises, terms and conditions of this License Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
I. DEFINITIONS
A. "Licensed Product" shall mean a semiconductor package as
described in the patent applications identified in Appendix A of this License
Agreement, and any improvements, modifications, and derivations thereof and
know-how related thereto owned, developed, or acquired (except in a grant back
from another PANDA licensee) by PANDA, and which PANDA has the right to license,
during the term of this License Agreement.
B. "Licensed Process" shall mean any process or method
pertaining to the use, manufacture, or testing of Licensed Product and all
know-how related thereto developed and supplied by Panda and/or its affiliates.
C. "Licensed Product Sold" or "Sale" of a Licensed Product
shall mean the sale, lease, or other transfer of a Licensed Product or a product
incorporating a Licensed Product to a third party by PANTRONIX; or the internal
use of a Licensed Product by PANTRONIX. A product shall be considered sold at
the time of invoicing or shipment, whichever is earlier, or if there is no such
invoicing or shipment, in the case of internal use, at the time of such use.
<PAGE>
D. "Patent Rights" shall mean any United States or foreign
applications or patents, owned, controlled, or acquired by PANDA in whole or in
part, during the term of this License Agreement, relating to Licensed Product or
Licensed Process, and which PANDA has the right to license, which disclose and
claim Licensed Process or Licensed Product, including, but not limited to, the
construction thereof, methods for the manufacture and use thereof, and
improvements thereto, and to any reissues or extensions of such patents and all
divisions, continuations, and continuations-in-part. Such "Patent Rights" shall
not include licenses or sublicenses related to Licensed Products or Licensed
Process hereafter granted to PANDA by its other licensees.
E. "Proprietary Information" shall mean all information or
trade secrets of any description relating to Licensed Product or Licensed
Process developed by, owned, or controlled by PANDA at any time prior to the
termination or expiration of this License Agreement, including, but not limited
to, the development, selling, marketing, use, properties, structures,
compositions, manufacture or quality control of Licensed Product or Licensed
Process, and including, but not limited in form, to samples, prototypes, data
books, manufacturing instructions, drawings, formulae, and customer lists.
Proprietary Information does not include: (i) information which was known by
PANTRONIX prior to receipt from PANDA; (ii) information lawfully disclosed to
PANTRONIX by a third party which did not derive the information from PANDA; and
(iii) information which is or becomes a matter of public knowledge or part of
the public domain other than through a breach of this License Agreement.
F. "PANTRONIX Affiliate" shall mean any corporation, firm,
partnership, proprietorship, or other form of business organization as to which
control of the business is exercised by PANTRONIX, and any corporation, firm,
partnership, proprietorship, or other form of business organization in which
PANTRONIX has at least a fifty-one percent (51%) ownership interest, or the
maximum ownership interest PANTRONIX is permitted to have in the country where
such business organization exists.
G. "PANDA Affiliate" shall mean any corporation, firm,
partnership, proprietorship, or other form of business organization as to which
control of the business is exercised by PANDA, and any corporation, firm,
partnership, proprietorship, or other form of business organization in which
PANDA has at least a fifty-one percent (51%) ownership interest, or the maximum
ownership interest PANDA is permitted to have in the country where such business
organization exists, and any entity under common control with PANDA.
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<PAGE>
H. "Effective Date" shall mean the later of the date of
signature of this License Agreement by authorized representatives of PANDA and
PANTRONIX.
II. GRANT OF LICENSES
Subject to the terms of this License Agreement, PANDA agrees
to grant and does grant to PANTRONIX a non-exclusive, worldwide license during
the term of this License Agreement to make, have made for it, use, sell, or
otherwise dispose of Licensed Product and to use and have used the Licensed
Process under Patent Rights and Proprietary Information; provided, that no
license is granted hereunder for PANTRONIX to make, have made for it, use, sell
or otherwise dispose of Licensed Products or to use or have used the Licensed
Process in the development, manufacture and sale or other distribution of
switches incorporating asynchronous transfer mode technology or switches
incorporating Fast Ethernet technology. Such license does not include the right
to grant sublicenses or assign this license. Upon PANTRONIX's written request,
PANDA agrees to grant the above license or any part thereof to a PANTRONIX
Affiliate (but only so long as such entity is a PANTRONIX Affiliate), with the
right of the PANTRONIX Affiliate to pay royalties directly to PANDA, provided
that such PANTRONIX Affiliate executes as Licensee, an agreement containing
terms substantially identical to this License Agreement (providing for the
payment of Royalties by the PANTRONIX Affiliate directly to PANDA). The grant of
the above license or any part thereof to a PANTRONIX Affiliate pursuant to this
Section II shall not release PANTRONIX from any of its obligations under this
License Agreement.
III. CONFIDENTIALITY CLAUSE BY PANTRONIX
A. Except as may be required by law or by a governmental
agency, PANTRONIX agrees that it will not, directly or indirectly, disseminate,
disclose or otherwise make available to any third party, or reverse engineer,
any Proprietary Information and will use the same degree of care to prevent
disclosure thereof that PANTRONIX uses to protect its own proprietary and
confidential information, but in any event no less than a reasonable level of
care. PANTRONIX agrees to obligate any Affiliates to abide by this
confidentiality obligation. Employees of PANTRONIX or its Affiliates shall be
provided access to Proprietary Information by PANTRONIX only on a "need to know"
basis and shall be advised of the confidential nature thereof, and shall be
bound by written agreement to protect the confidentiality of such information.
The provisions hereof shall survive expiration or termination of this License
Agreement for a period of seven (7) years.
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<PAGE>
B. PANTRONIX and its Affiliates are authorized to disclose to
its distributors and customers only such Proprietary Information received from
PANDA concerning the Licensed Process and Licensed Product as is reasonably
necessary to enable Licensed Product to be sold, leased, placed or used, and
PANTRONIX and its Affiliates are authorized to disclose to their respective
contractors and suppliers only such Proprietary Information received from PANDA
as is reasonably necessary to enable PANTRONIX or PANTRONIX's Affiliate to make
or have made the Licensed Product.
PANTRONIX shall have the obligation to bind by written
agreement any such distributor, customer, contractor, or supplier receiving
Proprietary Information to protect the confidentiality of such information.
IV. ROYALTY CLAUSE
A. The Licenses granted under Section II, above, shall be
subject to a Royalty as provided for in Appendix C to this License Agreement for
Licensed Product Sold by PANTRONIX or a PANTRONIX Affiliate.
B. The Royalties provided herein are in consideration of the
trade secrets, know-how, Patent Rights, and Proprietary Information provided by
PANDA hereunder, and the ability of PANTRONIX to achieve a significant
competitive advantage by its early entry into the marketplace due to its access
to such intellectual property rights.
V. PAYMENTS, RECORDS AND REPORTS
A. Within sixty (60) days after the end of each calendar
quarter in which Royalties are earned or otherwise become due under this License
Agreement, PANTRONIX shall furnish PANDA with a written report setting forth the
computation of the Royalties payable during the preceding calendar quarter, and
shall make such payment. Royalties shall be paid to PANDA in U.S. dollars. In
case a conversion from one currency to another is involved in determining an
earned Royalty Payment, the exchange rate shall be the exchange rate in effect
at the Chase Manhattan Bank in New York City on the last day of the applicable
Calendar Quarter. Late payments shall bear interest at the rate of prime plus
two percent, as in effect at the Chase Manhattan Bank in New York City at the
time such payments originally became due.
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<PAGE>
B. PANTRONIX shall keep and maintain complete and accurate
records in sufficient detail to enable Royalties payable to PANDA hereunder to
be determined (including records on all conversion of currency under Paragraph A
above), and it shall permit such records to be inspected once per year upon
written notice by PANDA during reasonable business hours by a certified public
accountant or firm of certified public accountants reasonably acceptable to
PANTRONIX and appointed by PANDA for this purpose; provided, however, that
PANTRONIX shall have the right to destroy or discard such records in accordance
with PANTRONIX's record retention policy, provided that such records shall be
kept for a minimum of five (5) years after the end of the Calendar Quarter to
which they apply. PANDA shall bear the cost and expense of such investigation by
accountants, unless the accountants determine that PANTRONIX's determination of
the Royalties due and owing to PANDA was incorrect (in PANTRONIX's favor) in an
amount exceeding four percent (4%) of the amount calculated by PANTRONIX, in
which case PANTRONIX shall bear such cost and expense.
VI. GRANTBACK OF LICENSE TO PANDA
PANTRONIX grants to PANDA a perpetual license under
information and inventions, whether patentable or not, related to improvements,
modifications, and derivatives of Licensed Products or Licensed Process
originated or invented during the term of this License Agreement by employees,
agents, contractors, or suppliers of PANTRONIX having access to Licensed
Product, Licensed Process or Proprietary Information. Such license to PANDA
shall be non-exclusive, irrevocable, perpetual, world-wide, and royalty free to
make, have made, use, import, sell and otherwise transfer products covered by
such information and inventions. PANDA may not sublicense or assign this right,
other than to a PANDA Affiliate, or as part of an acquisition of PANDA or sale
of PANDA assets.
VII. JOINT PUBLIC ANNOUNCEMENT
Upon the signing of this License Agreement by authorized
representatives of PANTRONIX and PANDA, a joint press release in a form mutually
agreed will be issued announcing the execution of this License Agreement.
VIII. USE OF PANDA'S TRADEMARKS
A. USE OF TRADEMARKS. Licensee may use (in the manner agreed
to by Licensor and Licensee from time to time during the term of this Agreement)
the trademark VSPA or other similar marks
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<PAGE>
(the "Trademarks") in connection with the sale, distribution, marketing and
promotion of the Licensed Products. Licensee shall not pay Licensor any
additional fee for such use. Licensee may not use third party trademarks,
tradenames, service marks and commercial symbols in connection with the sale,
distribution, marketing and promotion of the Licensed Products, but Licensee may
adopt and use its own trademarks, tradenames, service marks and commercial
symbols in connection therewith. Licensee shall give Licensor thirty (30) days
prior written notice before using any Trademarks for the first time in a
particular jurisdiction outside the United States. At Licensor's request and
expense, Licensee shall execute a registered user agreement and any other
documents which Licensor may reasonably request in order to establish or confirm
Licensor's right, title and interest with respect to the Trademarks.
B. QUALITY CONTROL.
Licensee shall apply the Trademarks only to Licensed Products
that have been manufactured in accordance with those specific quality control
standards that Licensor may from time to time promulgate and communicate to
Licensee with respect to such Licensed Products sold under the Trademarks;
PROVIDED, HOWEVER, that those standards shall be no higher than the standards by
which Licensor manufactures such Licensed Products itself.
Additionally, Licensee shall use the Trademarks in compliance
with all relevant laws and regulations and submit samples of Licensed Products
sold under the Trademarks, upon the request of Licensor, so as to enable
Licensor to inspect such samples and confirm that Licensee is in compliance with
its obligations under this Section. Licensor shall in no case delay approval or
rejection by more than thirty (30) days from the time of submittal by Pantronix.
Licensee shall not modify any of the Trademarks in any way and
not use any of the Trademarks on any goods or services other than the Licensed
Products.
If Licensee fails to use the Trademarks in compliance with
this Section, such failure shall be deemed to be a material breach of one of
Licensee's obligations under this Agreement, for the purposes of possible
termination of this Agreement.
IX. PURCHASE OF MANUFACTURING MACHINES
PANTRONIX shall have the option to purchase two or more
manufacturing machines to make the VSPA packages from PANDA.
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<PAGE>
PANDA shall make available to PANTRONIX one flexible machine (which can make
multi-chip modules and single chip packages); and one gang-loader high volume
machine (which makes single-chip type packages). A separate standard purchase
and sale agreement for each machine shall be executed by the parties, at prices
to be determined through negotiation.
X. MOLDS, PLASTIC FRAMES AND PINS
PANTRONIX will have the option to make the molds, plastic
frames, covers and pins, and PANDA will transfer drawings for such manufacture
if requested to do so, at cost. Alternatively, PANDA will supply molds, plastic
frames, covers and pins pursuant to a standard purchase and sale agreement to be
executed by the parties, at prices to be determined by negotiation.
XI. TRAINING OF PANTRONIX PERSONNEL
In the first year of this Agreement, PANTRONIX shall be
entitled to send two employees to Boca Raton for training with respect to
Licensed Product, Licensed Process, and Proprietary Information. Such training
shall not exceed three (3) weeks per person, and shall be done at a time agreed
to by PANDA and
PANTRONIX.
In each subsequent year, PANTRONIX shall be entitled to send
two employees to PANDA for training with respect to Licensed Product, Licensed
Process, and Proprietary Information. Such training shall not exceed two (2)
weeks per person per year and shall be done at a time agreed to by PANDA and
PANTRONIX.
PANTRONIX shall be responsible for all expenses and
liabilities of such employees.
XII. TRANSFER OF PROPRIETARY INFORMATION
Within fifteen (15) days of execution of this Agreement, PANDA
shall provide two (2) copies of the materials identified in Appendix B.
XIII. ASSIGNMENT BY PANDA
PANDA may assign any of its rights, including rights to
payments of earned Royalties, to any corporation or other entity which is an
Affiliate of PANDA.
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<PAGE>
XIV. TERM AND TERMINATION
A. This License Agreement shall become effective as of the
Effective Date and, unless otherwise terminated as provided herein, shall
continue in full force and effect until the last to expire of the Licensed
Patents. Thereafter, PANTRONIX may acquire a license to know-how and trade
secrets covered herein at a reduced royalty rate to be agreed upon between
PANTRONIX and PANDA.
B. Termination for Cause. After the occurrence of any of the
following events, this License Agreement may be terminated by either Party (the
"Terminating Party") by giving written notice of Termination to the other Party,
such Termination being immediately effective upon the giving of such Notice of
Termination:
(a) A material breach or default as to any
obligation hereunder by the other Party and
the failure of the other Party to promptly
pursue (within thirty (30) days after
receiving written notice thereof from the
Terminating Party) a reasonable remedy
designed to cure (in the reasonable judgment
of the Terminating party) such material breach
or default; or
(b) The filing of a petition in bankruptcy,
insolvency or reorganization against or by the
other Party, which petition shall not have
been dismissed within ninety (90) days of
filing thereof, or the other Party becoming
subject to a composition for Creditors,
whether by law or agreement, or the other
Party going into receivership or otherwise
becoming insolvent; or
C. PANTRONIX shall have the right to terminate this License
Agreement at any time with or without cause upon six (6) months prior written
notice to PANDA. Termination of this License Agreement by PANTRONIX shall not
alter or affect the rights or obligations of either party arising prior to such
termination, nor shall termination pursuant to this Section relieve PANTRONIX of
its payment obligations hereunder. Any termination by PANTRONIX as provided in
this Paragraph shall not prejudice the right of PANDA to recover any earned
Royalty, or other sums owed or accrued
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<PAGE>
t at the time of such termination nor prejudice the right of PANDA to maintain
an action against PANTRONIX for infringement of its patent or other intellectual
property rights.
D. The parties agree that upon termination or expiration of
this License Agreement Licensee shall immediately cease: (i) any use or practice
of the Licensed Product or the Licensed Process; and (ii), except as provided in
Section F below, any making, use, or sale of the Licensed Product, including
internal use within PANTRONIX or its Affiliates. Upon termination or expiration
of this License Agreement, PANTRONIX shall, at its own expense, return to PANDA
all Proprietary Information as soon as practicable after the date of termination
or expiration, including, but not limited to, the materials identified in
Appendix B, original documents, drawings, computer diskettes, models, samples,
notes, reports, notebooks, letters, manuals, prints, memoranda and any copies
thereof, which have been received by PANTRONIX. All Proprietary Information and
Patent Rights shall remain the exclusive property of PANDA during the term of
this License Agreement and thereafter.
E. Upon termination or expiration of this License Agreement,
nothing shall be construed to release Licensee from its obligations to pay
Licensor any and all Royalties, license fees or other amounts accrued but unpaid
hereunder prior to the date of such termination or expiration.
F. After termination or expiration of this License Agreement
for any reason by either party, PANTRONIX may sell all Licensed Product which it
has on hand upon the date of termination or expiration provided however, that
the sales shall be completed not later than six (6) months from the date of the
termination or expiration and that the termination or expiration shall not
relieve PANTRONIX from making the full earned Royalty payments herein provided
on all Licensed Product by it either before or after the date of the termination
or expiration.
XV. INFRINGEMENT
In the event Licensee shall learn of the infringement of any
patent included in the Patent Rights, Licensee shall promptly call Licensor's
attention thereto in writing and shall provide Licensor with evidence of the
infringement. Both parties shall use their best efforts in cooperation with each
other to terminate the infringement without litigation. If the efforts of the
parties are not successful in abating the infringement within ninety (90) days
after the infringer has been formally notified by
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<PAGE>
Licensor of the infringement, Licensor shall have the right to: (a) commence
suit on its own account; and (b) join Licensee in such suit; and Licensor shall
give timely notice in writing to Licensee of its election. Any proceeds of such
suit shall be the property of Licensor.
XVI. PATENT MARKING
Licensee agrees to mark all Licensed Products made, used, or
sold under the terms of this License Agreement, or their container with the
numbers of applicable patents of PANDA or other appropriate marking in
accordance with the patent marking laws of the country in which the Licensed
Product is manufactured, used, or sold.
XVII. WAIVER OF DEFAULT
A waiver, express or implied, by either of the parties hereto
of any right hereunder or of any default, breach, or other failure to perform by
the other party hereto, shall not constitute or be deemed a future waiver of
that or any other right hereunder or of any default, breach or any other failure
to perform thereafter by such other party. All waivers to be effective must be
in writing and signed by the waiving party.
XVIII. GOVERNING LAW
This License Agreement shall be governed, interpreted, and
construed in accordance with the laws of the State of Florida, USA, excluding
its conflict of law principles.
XIX. NO RIGHTS BY IMPLICATION
No rights or licenses with respect to Licensed Product or
Licensed Process are granted or deemed granted hereunder or in connection
herewith, other than those rights or licenses expressly granted in this License
Agreement.
XX. DEFENSIVE LITIGATION
Licensee shall defend and indemnify Licensor from and against
any damages, liabilities, costs, and expenses, including reasonable attorney's
fees and Court costs, either: (i) arising out of the manufacture, use, sale, or
other transfer of Licensed Product by Licensee or its customers; or (ii) arising
out of improvements, modifications, or derivatives of Licensed Product
introduced by Licensee or its customers; or (iii) arising out of
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<PAGE>
injuries or damages caused by Licensed Product; PROVIDED THAT, Licensee shall
have no liability under this indemnity with respect to any claim which alleges
that the Patent Rights infringe any rights of a third party.
XXI. DISPUTE RESOLUTION
A. Any dispute, controversy, or claim arising out of or
relating to this License Agreement, or to a breach thereof, including its
interpretation, performance, or termination shall be submitted to and finally
resolved by arbitration. The arbitration shall be conducted in the English
language in accordance with the Commercial Rules of the American Arbitration
Association (AAA) in Boca Raton, Florida, USA. The decision of the arbitrators
shall be final and binding upon the parties hereto, and the expense of the
arbitration (including without limitation the award of attorney's fees to the
prevailing party) shall be paid as the arbitrators determine. The arbitration
shall be conducted by three (3) arbitrators to be selected by the American
Arbitration Association in accordance with its normal procedures.
B. Notwithstanding anything contained in this Section, each
party shall have the right to institute judicial proceedings against the other
party or anyone acting by, through or under such other party in order to enforce
the instituting party's rights hereunder through reformation of contract,
specific performance, temporary restraining order, preliminary injunction, final
injunction, or similar equitable relief.
XXII. NOTICES
Each notice required or permitted to be sent under this
License Agreement shall be given by Federal Express or comparable express
delivery service to Licensor and to Licensee at the address indicated below.
For Licensor: The Panda Project
5201 Congress Avenue
Suite C-100
Boca Raton, Florida 33487
Attention: Stanford W. Crane, Jr.
For Licensee: PanTronix Corporation
145 Rio Robles Drive
San Jose, CA 95134
Attention: President
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<PAGE>
Either party may change its address for purposes of this License Agreement by
giving the other party written notice of its new address.
XXIII. ENTIRE UNDERSTANDING
This License Agreement embodies the entire understanding
between the parties relating to the subject matter hereof, whether written or
oral, and there are no prior representations, warranties, or agreements that
relate to Licensed Product, Licensed Process, Proprietary Information, and
Patent Rights.
XXIV. INVALIDITY
If any provision of this License Agreement is declared invalid
or unenforceable by an arbitration panel or by a court having competent
jurisdiction, it is mutually agreed that this License Agreement shall endure
except for the part declared invalid or unenforceable. The parties shall consult
and use their best efforts to agree upon a valid and enforceable provision,
which shall be a reasonable substitute for such invalid or unenforceable
provision, in light of the intent of this License Agreement.
XXV. AMENDMENTS
Any amendment or modification of any provision of this License
Agreement must be in writing, dated and signed by both PANTRONIX and PANDA.
XXVI. SURVIVABILITY
The following provisions, as well as any other provisions
whose survivability is reasonably intended by the terms of this Agreement, shall
survive after the termination or expiration of this Agreement: III, IV, V, VI,
VIII, XIII XIV, XVI, XVIII, XXI, and XXX.
XXVII. RESPONSIBILITY FOR TAXES
If Licensee is required to withhold taxes from any amount
payable by Licensee hereunder, then Licensee shall pay to Licensor an additional
amount as may be necessary so that Licensor will receive, after deduction of the
withholding tax, the amount that Licensor would have received in the absence of
the withholding tax.
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<PAGE>
XXVIII. COUNTERPARTS
This License Agreement may be executed in any number of
counterparts and each such counterpart shall be deemed to be an original.
XXIX. BINDING EFFECT
This License Agreement shall be binding upon, and inure to the
benefit of, the parties hereto and their successors, assigns, estates,
beneficiaries, representatives, and heirs.
XXX. WARRANTY AND DISCLAIMER
A. Each party represents and warrants that it has full
corporate power and authority to enter into and perform this Agreement. This
Agreement has been duly authorized and duly executed and delivered by Licensor
and Licensee, and it is valid, binding and enforceable against each party in
accordance with its terms.
B. EXCEPT AS SET FORTH IN THIS SECTION, THE PARTIES
ACKNOWLEDGE AND AGREE THAT THERE ARE NO WARRANTIES, COVENANTS, REPRESENTATIONS,
OR AGREEMENTS BY PANDA AS TO MARKETABILITY, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR OTHER ATTRIBUTES, TITLE, AND NON-INFRINGEMENT WHETHER
EXPRESS OR IMPLIED (IN LAW OR IN FACT), ORAL OR WRITTEN.
IN WITNESS WHEREOF, PANDA and PANTRONIX have signed this
License Agreement.
THE PANDA PROJECT, INC.
By: /s/ STANFORD W. CRANE, JR.
-------------------------------
Name: Stanford W. Crane, Jr.
-------------------------------
Title: President
-------------------------------
Date: August 18, 1996
-------------------------------
PANTRONIX CORPORATION
By:
-------------------------------
Name:
-------------------------------
Title: President
-------------------------------
Date: August 18, 1996
-------------------------------
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<PAGE>
APPENDIX A
STATUS REPORT OF VSPA PATENT APPLICATIONS
U.S. APPLICATIONS
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
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<PAGE>
FOREIGN PATENT AND APPLICATIONS
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
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<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
APPENDIX B
Identification of Proprietary Information transferred to PANTRONIX
(1) Design drawings for the VSPA-264 package (latest revision as of date of
signed agreement).
(a) ***************************
(b) ***************************************************
********************
(c) ***********************************
(d) ***********************************
(e) ***********************************
(f) ***********************************
(2) Materials list qualified for use for device assembly.
(3) Existing process specifications for relative assembly processes (incomplete
at this time).
(a) **********
(b) **********
(c) **********
(d) **********
(4) JEDEC registration documentation
(5) All pertinent reports and information relative to VSPA performance
evaluations, (electrical & thermal), materials evaluations, and
qualification testing.
(6) Existing designs and assembly process specifications for pin insertion
equipment.
(7) Existing design for a test socket for VSPA-264
(a) sample test socket for VSPA-264
Similar Panda design information **************************
***********************************************************
*********************
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<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
APPENDIX C
Royalty Schedule
NUMBER OF I/O PER PACKAGE ROYALTY PER I/O
*********** U.S. ******
*********** U.S. ******
*********** U.S. ******
*********** U.S. ******
****************** U.S. ******
********************
Licensor agrees that **********************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
If Licensor has not been paid at least ******** in Royalties under this
Agreement by the third anniversary of this Agreement, Licensee shall immediately
pay to Licensor a sum in cash equal to the difference between ******** and the
amount of Royalties that have been paid to Licensor under this Agreement as of
such third anniversary (the "minimum payment").
Notwithstanding the above, if Licensee terminates this License Agreement before
the third anniversary date of this Agreement, by giving notice as specified in
this Agreement, said minimum payment shall not be due. Said termination shall
not affect any other royalty payments which would otherwise be due.
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EXHIBIT 99.9
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
LICENSE AGREEMENT
This LICENSE AGREEMENT ("AGREEMENT"), dated September 30, 1996
("EFFECTIVE DATE"), is made by and between the Panda Project, Inc. ("PANDA"), a
corporation having its principal place of business at 901 Yamato Road, Boca
Raton, Florida 33431, Stanford W. Crane, Jr. in his individual capacity
("Crane"), of Boca Raton, Florida, and LG Cable & Machinery Ltd. ("LGC"), a
corporation having its principal place of business at 555, Hogye-dong, Dong
an-gu, Anyang-shi, Kyungki-do 430-080, Korea.
RECITALS
WHEREAS, Crane and Panda have developed a new connector
technology referred to herein as the "Compass Design" and wish to grant
specific, limited rights to this technology to LGC.
WHEREAS, LGC acknowledges that Crane and Panda have developed
the "Compass Design," and LGC desires to acquire such rights as are specified in
this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of these premises, and the
mutual undertakings, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the aforementioned parties agree
as follows:
1.00 DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
1.01 "EFFECTIVE DATE" means the date on which this Agreement is
executed by all parties.
1.02 "LICENSED PRODUCT" means any product which constitutes,
incorporates or uses all or a portion of the Compass Design, Compass Design
Technology or any improvement, modification, or derivative thereof.
1.03 "COMPASS DESIGN" means the connector design developed by Crane
and Panda for a high density connector as described in pending U.S. patent
applications serial numbers ******************
******************************************************************
*******************, and all divisionals and continuations thereof.
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
1.04 COMPASS DESIGN TECHNOLOGY" shall mean all technical
information, developments, data, results, formulae, processes, and other
information, developments, data, results, formulae, processes, and other
information developed by Crane or Panda, including any patent application,
patents, and trade secret information, and design improvements relating to the
Compass design and which Crane or Panda, as the case may be, have the right to
license.
1.05 "CRANE PATENT RIGHTS" shall mean all patents including foreign
counterparts, issuing from U.S. patent applications serial number
******************************************************
**************************************************, and all divisionals and
continuations thereof.
1.06 "ASSEMBLY EQUIPMENT" shall mean the equipment to be designed
and developed by LGC for the manufacture of the Compass Design. "Assembly
Equipment" does not include the plastic molds and contact pin dies.
1.07 "AFFILIATE" shall mean any corporation, firm, partnership,
proprietorship, individual or other form of business organization as to which
control of the business shall be exercised by LGC, and any corporation, firm,
partnership, proprietorship, individual, or other form of business organization
in which LGC has a least a fifty percent (50%) ownership interest, or the
maximum ownership interest it is permitted to have in the country where such
business organization exists.
1.08 "NET SALES PRICE" shall mean the price for Licensed Products
sold or leased, used (including internal use) or otherwise transferred other
than by sale (in which case the Net Sales Price attributable to such lease, use
or other transfer shall be an amount corresponding to the most recent bona fide
invoice or sale for the same or a comparable product) by LGC or LGC's
Affiliates, less the following:
a. Reasonable shipping, installation and packing charges or allowances, if any,
included in such amounts;
b. Reasonable trade, quantity, or cash discounts and brokers' or agents'
commissions, but with respect to any of the preceding adjustments, only insofar
as actually allowed or paid in connection with the sale in question;
c. Credits or allowances, if any, given or made on account of rejection or
return of defective Licensed Products; and
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<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
d. Any tax or other governmental charge included in such amount, which is
imposed directly on or measured by, the transfer across borders, the sale, lease
or other transfer, transportation or delivery of such Licensed Products (other
than income taxes).
If there is no such bona fide invoice or sale, the net Sales
Price shall be **** of the fully allocated cost of production.
Licensed Products used in testing or as marketing samples to
develop or promote Licensed Products shall not be subject to a royalty, provided
the Licensed Products are supplied to the user at no cost, and as part of
commercially normal sampling procedures.
1.09 "ASSEMBLY EQUIPMENT TECHNOLOGY" shall mean all technical
information, developments, data, results, formulae, processes, and other
information, including patent applications, patents, and trade secret
information, relating to the "Assembly Equipment."
DEVELOPMENT OF PRODUCTS AND ASSEMBLY EQUIPMENT
2.00 DEVELOPMENT OF PRODUCTS AND ASSEMBLY EQUIPMENT. Each of Panda
and LGC agrees to use its best efforts to commercialize products incorporating
the Compass Design. Panda agrees to make its personnel reasonably available for
collaboration with LGC upon LGC's request for the purposes of the design and
development of the Assembly Equipment provided that Panda shall not be obligated
to provide its personnel for more than 80 man hours under this Agreement, or a
further amount of time as is mutually agreed to. LGC agrees to pay the
reasonable costs and expenses of Panda personnel during such collaboration.
2.01 INTELLECTUAL PROPERTY. Any intellectual property resulting form
LGC's design and development of the Assembly Equipment will be owned by LGC. LGC
hereby grants to Panda a non-exclusive perpetual worldwide license (without the
right to grant sublicenses) under Assembly Equipment Technology and any LGC
patent thereon developed by LGC to make, have made, use, import, sell, and offer
to sell products covered by such Technology. Such license shall be fully paid up
and shall survive any expiration or termination of this Agreement.
Notwithstanding the foregoing, LGC shall have no rights to the Compass Design,
Compass Design Technology or Crane Patent Rights except as set forth in Section
3.00 and 3.01.
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<PAGE>
2.02 MANUFACTURE OF ASSEMBLY EQUIPMENT. LGC will be solely
responsible for manufacture of the Assembly Equipment, including all costs
associated with such manufacture. All Assembly Equipment built by LGC will be
owned solely by LGC.
2.03 SALE OF ASSEMBLY EQUIPMENT TO PANDA. LGC agrees to sell
Assembly Equipment to Panda pursuant to a standard purchase and sale agreement
entered into after good faith negotiations. The sale price to Panda shall be no
less favorable than the sale price of similar equipment to entities unrelated to
LGC and after taking into account the sales volume and delivery and payment
terms for sales to such unrelated entities.
2.04 RIGHT OF FIRST REFUSAL TO MANUFACTURE. Panda hereby grants LGC
the right of first refusal, on a bid basis, to manufacture the Assembly
Equipment for sale by Panda to Panda's customers. Under such right of first
refusal, LGC shall have the right until three (3) years from Effective Date to
submit a bid of each sale of Assembly Equipment (or, if Panda is selling
Assembly Equipment to customers in a transaction including multiple sales, a bid
for such transaction) by Panda setting forth the terms on which it will
manufacture the Assembly Equipment for Panda. Panda shall notify LGC of such
proposed sale or transaction and LGC shall have the right to 30 days thereafter
to submit a bid to Panda. If LGC fails to submit a bid within such 30-day period
or if Panda does not accept LGC's bid to manufacture the Assembly Equipment,
Panda shall have the right to hire one or more third parties to manufacture the
Assembly Equipment for use or sale by Panda; provided, however, that the terms
upon which such third party agrees to manufacture the Assembly Equipment shall
have been determined by Panda in its reasonable discretion to be more favorable
than the terms (if any) offered by LGC. LGC shall have the right to manufacture
and sell the Assembly Equipment within LGC, to an LGC Affiliate, or to any other
Licensee of Panda for the Compass Design. Nothing herein shall require Panda to
purchase the Assembly Equipment from LGC. Panda also has the right to
manufacture the Assembly Equipment itself.
LICENSE GRANT, FEE, AND ROYALTY
3.00 CRANE'S GRANT AND PANDA'S GRANT OF COMPASS DESIGN LICENSE.
Subject to the terms of this Agreement, Crane and Panda hereby grant a
non-exclusive world-wide license to LGC and its Affiliates to make, have made,
use, import, sell and offer to sell products covered by the Compass Design, and
the Compass Design Technology, including improvements to the foregoing. LGC does
not
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<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
have the right to sublicense any of its rights under this Agreement. This
license specifically excludes any rights to Compass Pin Grid Array ("Compass
PGA") products, patents, or technology.
3.01 ********************** CRANE'S LICENSE GRANT AND PANDA'S
LICENSE GRANT. The license granted to LGC by Crane and Panda in Section 3.00
shall be *********************************************************************
******************************************************************************
******************************************************************************
******************************************************************************
******************************************************************************
************************************************Not withstanding the foregoing,
******************************************************************************
******************************************************************************
***********************************************************. This license
specifically excludes any rights to Compass PGA products, patents, or
technology.
3.02 LICENSE FEE AND ROYALTIES.
3.02(a) LICENSE FEE. In consideration for the licenses granted by
Crane and Panda under Section 3.00, LGC will pay Panda and Crane a total fee of
US ******************************** as an initial payment (the "License Fee" or
"Initial Payment"). The US ******************************** will be vested in
Panda and Crane on the Effective Date and shall not be subject to any right of
set-off or withholding, and shall be paid by LGC to Panda and Crane as follows:
i) within 15 days of the Effective Date of this Agreement,
LGC will pay to Panda and Crane US *********************
*****************;
ii) at one year from the Effective Date of this Agreement,
LGC will pay to Panda and Crane US *********************
*****************;
iii) at two years from the Effective Date of this Agreement,
LGC will pay to Panda and Crane US *********************
*****************;
iv) at three years from the Effective Date of this
Agreement, LGC will pay to Panda and Crane US *************
*************************; and
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
v) at four years from the Effective Date of this Agreement,
LGC will pay to Panda and Crane US **********************
****************.
If the Agreement is terminated by Panda and Crane for breach by LGC,
any unpaid portion of the License Fee shall be automatically due and payable to
Panda and Crane at the time.
3.02(b) ROYALTIES. In addition to the license fee and as further
consideration for the licenses granted in Sections 3.00 and 3.01, LGC will pay
to Panda and Crane a total running royalty of ***************** of the Net Sales
Price of Licensed Products, with the exception that there will be no royalty on
such products sold by LGC to Panda and Crane. A product shall be considered sold
at the time of invoicing or shipment, whichever is earlier, or if there is no
such invoicing or shipment, in the case of internal use, at the time of such
use. LGC will pay all royalties due on a quarterly basis within 30 days from the
end of each quarter and has no independent royalty obligation to Crane. LGC will
be responsible for all taxes associated with all license fee and royalty
payments, and will pay the full license fee and royalty amount due with on
deduction for such taxes. All royalties shall be paid in U.S. dollars. In case a
conversion from one currency to another is involved in determining a royalty
payment, the exchange rate shall be the exchange rate in effect at the Chase
Manhattan Bank in New York City on the last day of the applicable quarter. LGC
shall keep and maintain complete and accurate records in sufficient detail to
enable royalties payable to Panda and Crane hereunder to be determined, and
shall permit such records to be inspected during reasonable business hours by a
certified public accountant reasonably acceptable to LGC and appointed by Panda
and Crane for this purpose. Panda and Crane shall bear the cost and expense of
such investigation, unless the accountants determine that LGC's determination of
the royalties due and owning to Panda and Crane was incorrect (in LGC's favor)
in an amount exceeding five percent of the amount calculated by LGC, in which
case LGC shall bear the expense of such investigation. The Royalties and License
Fee provided herein are in consideration of the trade secrets, know-how, patent
rights, and proprietary information provided by Panda and Crane hereunder, and
the ability of LGC to achieve a significant competitive advantage by its early
entry into the marketplace due to its access to such intellectual property
rights. If Panda and Crane enter into an agreement with a third party with
respect to Licensed Product on terms and conditions substantially identical to
those applicable to LGC, but with a royalty rate lower than that specified in
this paragraph, Crane and Panda agree to execute
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an amendment to this Agreement whereby the royalty rate payable hereunder is
reduced to the royalty rate payable by such third party.
3.03 PATENTS RELATING TO COMPASS DESIGN. Crane and Panda agree i) to
use their best efforts to obtain patents covering the Compass Design; ii) to
provide LGC with copies of all pending patent application(s) relating to the
Compass Design; and iii) to regularly inform LGC of the status of any pending
patent applications covering the Compass Design.
3.04 COMPASS DESIGN PRODUCTS SOLD TO PANDA BY LGC. The price of
Compass Design products sold to Panda by LGC will be specified in a
later-executed addendum to this Agreement.
3.05 GRANTBACK TO PANDA. LGC grants to Panda and Crane a perpetual
license under information and inventions, whether patentable or not, related to
improvements, modifications, and derivatives of Compass Design products,
process, and technologies, including without limitation Compass Design
Technology, originated or invented during the term of this License Agreement by
employees, agents, contractors, or suppliers of LGC. Such license to Panda and
Crane shall be non-exclusive, irrevocable, perpetual, worldwide, and royalty
free to make, have made, use, import, sell and otherwise transfer products
covered by such information and inventions. Panda and Crane may not sublicense
this right granted by this Section 3.05.
CONFIDENTIALITY
4.00 CONFIDENTIALITY OF PROPRIETARY INFORMATION. Each party agrees
that it will not, directly or indirectly, disseminate, disclose or otherwise
make available to any third party (including any related company), or reverse
engineer, any Proprietary Information, as defined below, of the other parties
and will use the same degree of care to prevent disclosure thereof that it uses
to protect its own proprietary and confidential information, but in any event a
degree of care no less than reasonable. Each party agrees to obligate any
Affiliates to abide by this confidentiality obligation. Employees of a party or
its Affiliates shall be provided access to Proprietary Information of the other
party only on a "need to know" basis and shall be advised of the confidential
nature thereof, and shall be bound to protect the confidentiality of such
information. The provisions hereof shall survive expiration or termination of
this License Agreement for a period of seven (7) years.
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4.01 The foregoing confidentiality restrictions, however, shall not
extend to any part of the confidential or proprietary information which:
(a) was already own to Recipient at the time of disclosure
under this Agreement as can be established by written
documentation;
(b) was known or was generally available to the public at
the time of disclosure hereunder;
(c) becomes known or generally available to the public
(other than by act of Recipient) subsequent to its disclosure
hereunder;
(d) is disclosed or made available in writing to Recipient
by a third party having an apparent bona fide right to do so;
(e) is independently developed by Recipient without the use
of the confidential and proprietary information as can be
established by written documentation; or
(f) is approved for release by the express prior written
authorization of the disclosing party.
4.02 "Proprietary Information" shall mean all information or trade
secrets of any description relating to the Compass Design, Compass Design
Technology, Crane Patent Rights, and Assembly Equipment developed by, owned, or
controlled by any of the parties at any time prior to the termination or
expiration of this License Agreement, including but not limited to, the
development, selling, marketing, use, properties, structures, compositions,
manufacturer quality control of such products or technologies, and including,
but not limited in form to, samples, prototypes, data books, manufacturing
instructions, drawings, formulae, and customer lists.
REPRESENTATIONS AND WARRANTIES
5.00 REPRESENTATIONS, WARRANTY, AND DISCLAIMER OF WARRANTIES. Crane
and Panda warrant to LGC that they have the lawful right to transfer the Compass
Design and Compass Design Technology, and to grant the license as stated in this
Agreement.
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<PAGE>
5.01 Nothing in this Agreement shall be deemed to be a
representation or warranty by Panda or Crane of the validity of any patent or
improvements covering the Compass Design. LGC shall defend and indemnify Panda
and Crane from and against any damages, liabilities, costs, and expenses,
including reasonable attorney's fees and court costs, either: (i) arising out of
the manufacture, use, sale, or other transfer of Compass Design Products by LGC
or its customers; or (ii) arising out of improvements, modifications, or
derivatives of Compass Design Products introduced by LGC or its customers; or
(iii) arising out of injuries or damages caused by Compass Design Products.
Panda shall defend and indemnify LGC from and against any damages, liabilities,
costs, and expenses, including reasonable attorney's fees and Court costs,
either: (i) arising out of the manufacture, use, sale, or other transfer of
Assembly Equipment by Panda; or (ii) or arising out of improvements
modifications, or derivatives of Assembly Equipment introduced by Panda; or
(iii) arising out of injuries or damages caused by Panda's sale of Assembly
equipment.
5.02 Nothing in this Agreement:
i) is a warranty or representation that anything
made, used, sold, or offered for sale under any
license from Panda, Crane or LGC is or will be free
from infringement of patents of third parties;
ii) is an obligation to bring or prosecute actions or
suits against third parties for patent infringement.
TERMINATION
6.00 TERMINATION. The term of this Agreement shall commence on the
effective Date and terminate ten years from the Effective Date, or at the last
to expire of the patents in this Agreement, whichever is longer.
6.01 This Agreement may be terminated by LGC, Panda or Crane by
written notice as provided in Section 7.00 upon breach of any condition of this
Agreement by any other party.
6.02 In the event of a material breach of this Agreement by LGC,
Panda or Crane may, in addition to any other remedies that they may have, at any
time terminate all licenses and rights
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granted by them hereunder by not less then thirty (30) days written notice to
LGC specifying such breach, unless within the period of such notice, all
breaches specified therein shall have been remedied.
6.03 In the event of a material breach of this Agreement by Panda,
LGC may, in addition, to any other remedies that it may have, at any time
terminate all licenses and rights granted by it hereunder (with the exception of
those granted under Section 3.05) by not less than thirty (30) days written
notice to Panda specifying such breach, unless within the period of such notice,
all breaches specified therein shall have been remedied.
6.04 The work "termination" and cognate words, such as "term" and
"terminate," used in this Agreement are to be read, except where the contrary is
specifically indicated, as omitting from their effect the following rights and
obligations, all of which survive any termination to the degree necessary to
permit their complete fulfillment or discharge:
i) Panda and Crane's right to receive or recover and LGC's
obligation to pay royalties accrued or accruable for payment
at the time of any termination;
ii) Panda and Crane's right to receive or recover and LGC's
obligation to pay all or any portion of the Initial Payment
at the time of any termination;
iii) Any cause of action or claim of Panda, Crane, or LGC accrued
or to accrue, because of any breach or default by the other party.
6.05 The parties agree that upon termination or expiration of this
License Agreement, LGC shall immediately cease any use or practice of the
Compass Design, the Compass Design Technology, or Crane Patent Rights. Upon
termination or expiration of this License Agreement, LGC shall, at its own
expense, return to Panda and Crane all Proprietary Information of Panda and
Crane as soon as practicable after the date of termination or expiration, but in
no case later than thirty (30) days after such termination or expiration,
including, but not limited to original documents, drawings, computer diskettes,
models, samples, notes, reports, notebooks, letters, manuals, prints, memoranda
and any copies thereof, which have been received by LGC. All Proprietary
Information, shall remain the exclusive property of Panda and Crane during the
term of this License Agreement and thereafter. Notwithstanding the above, LGC
will not be precluded from practicing any technology which falls into the public
domain as
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the result of the expiration of the relevant patents. After the expiration or
termination of this License Agreement, the parties may enter into a know-how
and proprietary information license agreement on terms to be agreed upon.
MISCELLANEOUS
7.00 NOTICES. All notices to, demands, consents, or communications
which any party may desire or may be required to give to the other must be in
writing and shall be effective upon receipt by the other party after having been
sent by registered mail, certified mail, or by facsimile transmission. Receipt
shall be presumed on the date of proper transmission as to facsimile
transmissions and otherwise within seven (7) days as to notices sent by
registered or certified mail.
7.01 Any notice required or permitted by this Agreement shall be
addressed to the Party in question as follows:
If to Panda: If to Crane:
The Panda Project, Inc. Stanford W. Crane, Jr.
901 Yamato Road 3934 Northwest 57th Street
Boca Raton, Florida 33431 Boca Raton, Florida 33496
If to LGC:
LG Cable & Machinery Ltd.
555, Hogye-dong, Dong an-gu
Anyang-shi, Kyungki-do 430-080
Korea
or to such other address or addresses as may from time to time be given in
writing by a party to the others pursuant to the terms of this Agreement.
8.00 LITIGATION. Each of Panda, Crane and LGC shall notify the other
in writing as specified in Section 7.00 of any suspected infringement(s) of any
patents covering the Compass Design, or improvements thereof or the Assembly
Equipment or improvements thereof and shall inform the other parties of any
evidence of such infringement(s).
8.01 RIGHT TO FILE SUIT. Each of Panda, Crane and LGC shall have the
individual right to institute suit for infringement(s) of any patents owned by
such party which covers the Compass Design, or improvements thereof or the
Assembly Equipment or improvements thereof.
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8.02 RECOVERY OF DAMAGES. Panda and Crane shall be entitled to any
recovery of damages resulting from a lawsuit brought by Panda or Crane pursuant
to Sections 8.00 or 8.01 and LGC shall be entitled to any recovery of damages
resulting from a lawsuit brought by LGC pursuant to Section 8.00 or 8.01. If the
parties so agree, such recovery of damages may be shared between Panda, Crane,
and LGC.
9.00 ARBITRATION. Any controversy or dispute arising out of or in
connection with this Agreements, its interpretation, performance, or
termination, which the parties are unable to resolve within a reasonable time
after written notice by one party to the other of the existence of such
controversy or dispute, shall be finally settled by arbitration conducted in
accordance with the rules of conciliation and arbitration of the International
Chamber of Commerce in effect on the date hereof. Any such arbitration shall
take place in the State of Florida, United States of America.
The institution of any arbitration proceeding hereunder shall
not relieve LGC of its obligation to make payments accrued hereunder pursuant to
Section 3 hereof to Panda and Crane during the continuance of such proceeding.
The decision by the arbitrators shall be binding and conclusive upon the
parties, their successors, and assigns, and they shall comply with such decision
in good faith, and each party hereby submits itself to the jurisdiction of the
courts of the place where the arbitration is held, but only for the entry of
judgment with respect to the decision of the arbitrators hereunder.
Notwithstanding the foregoing, judgment upon the award may be entered in any
court where the arbitration takes place, or any court having jurisdiction.
10.00 MARKING. LGC shall place in a conspicuous location on all
products covered by the Compass Design a patent notice in accordance with 35
U.S.C. 282 for any patents of Panda or Crane covering such products sold by LGC.
LGC agrees to mark such products with the number of each patent and, with
respect to such patents, to respond to any request for disclosure under 35
U.S.C. 287(b)(4)(B) by only notifying Panda and Crane of the request for
disclosure. Additionally, Panda, Crane, and LGC agree to negotiate in good faith
to enter into an agreement with regard to the use of trademark(s) on products
covered by the Compass Design, and the Compass Design Technology.
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11.00 ASSIGNMENT OF AGREEMENT. Unless authorized in writing in
advance by Panda and Crane, LGC shall not have the right to assign this
Agreement and the licenses granted herein except in connection with the sale of
the entire connector businesses of LGC. Panda may assign this Agreement to any
fully or partly owned subsidiary, and Crane may assign this Agreement to any
individual related to him, or to any corporation of which he owns 50% or more or
controls. Panda may also assign this Agreement as part of an acquisition or sale
of assets.
12.00 SOLE AGREEMENT. This Agreement constitutes and embodies the
entire Agreement between the Parties with respect to the subject matter hereof,
and supersedes all previous agreements, understandings, negotiations,
discussions, offers, and acceptances with respect to such subject matter. This
Agreement may not be modified except in writing signed by authorized
representatives of both parties and may not be assigned by either party without
the written consent of the other, which consent shall not be unreasonably
withheld or delayed.
13.00 SEVERABILITY. Any of the provisions of this Agreement which
are determined to be invalid or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity or unenforceability in such
jurisdiction, without rendering invalid or unenforceable the remaining
provisions hereof or affecting the validity or unenforceability of any of the
terms of the Agreement in any other jurisdiction.
14.00 NO THIRD PARTY BENEFITS. Nothing in this Agreement, express or
implied, is intended to confer on any person other than the parties hereto or
their permitted assigns, any benefits, rights or remedies.
15.00 GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Florida or the United States of America.
16.00 NO WAIVER. A waiver by either party of a breach or violation
of any provision of this Agreement will not constitute or be construed as a
waiver of any breach or violation of that provision or as a waiver of any breach
or violation of any other provision of this Agreement.
17.00 HEADINGS. Any headings and captions included herein are for
convenience of reference only and shall not be used to construe this Agreement.
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18.00 COUNTERPARTS. This Agreement shall become binding when any one
or more counterparts hereof, individually or taken together, shall bear the
signature of each of the parties hereto. This Agreement may be executed in any
number of counterparts, each of which shall be an original as against any party
whose signature appears thereon, but all of which together shall constitute but
one and the same instrument.
19.00 AGENCY. This Agreement does not constitute any party hereto
the agent of another party for any purpose whatsoever, nor does any party have
the right or authority to assume, create, or incur any liability of any kind,
express, or implied, against or in the name or on behalf of another party.
20.00 COOPERATION. Each party shall execute any instruments
reasonably believed by the other party to be necessary to implement the
provisions of this Agreement.
21.00 EXPORTATION OF TECHNICAL INFORMATION. Panda and Crane agree to
comply with the laws and rules of the United States Government, and LGC agrees
to comply with the laws of the Korean Government, and the United States
Government, as may be applicable to LGC in connection with the exportation of
products or technical data.
22.00 In the event that the Korean government requires that it
review this Agreement, such review will be the responsibility of LGC, and if any
changes or modifications are made in the Agreement as required by the Korean
government, Panda will have the right to terminate this Agreement; provided
however, if any such changes or modifications are made or required after the
execution of this Agreement or the commencement of the license, such termination
will not relieve LGC from its obligation to pay the full License Fee required
under paragraph 3.02(a) and any accrued Royalty payments required under
paragraph 3.02(b).
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers of the respective dates hereinafter
set forth.
The Panda Project, Inc.
/s/ STANFORD W. CRANE, JR.
- ----------------------------
Title: President
- ----------------------------
Date: 9/30/96
- ----------------------------
Stanford W. Crane, Jr.
/s/ STANFORD W. CRANE, JR.
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Date: 9/30/96
- ----------------------------
LG Cable & Machinery Ltd.
By: Moon Ku Kwon
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Date: 9/30/96
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